EXECUTION COPY
AMENDED AND RESTATED CREDIT AGREEMENT
This AMENDED AND RESTATED CREDIT AGREEMENT dated as of May 29, 1998 (as
amended, supplemented or modified from time to time, the "Agreement") is entered
into among STELLEX INDUSTRIES, INC., a Delaware corporation (the "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 ("SG"), 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 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 busi ness), 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 dis
charge 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, the
Xxxxxxx-Xxxxxxx Acquisition and the Monitor Acquisition.
"Acquisition Agreements" means, collectively, the Xxxxxxxx Acquisition
Agreement, the Xxxxxxx-Xxxxxxx Acquisition Agreement and the Monitor Acquisition
Agreement.
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"Acquisition Documents" means, collectively, the Xxxxxxxx Acquisition
Documents, the Xxxxxxx-Xxxxxxx Acquisition Documents and the Monitor Acquisition
Documents.
"Acquisition Term Loan Commitment" means, with respect to any Lender, the
obligation of such Lender to make Acquisition 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 "Acquisition Term
Loan Commitment" on Schedule I attached hereto 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 "Acquisition Term Loan
Commitments" means the aggregate principal amount of the Acquisition Term Loan
Commitments of all the Lenders, the maximum amount of which shall not at any
time exceed $25,000,000.
"Acquisition Term Loan Lender" means a Lender who has a Acquisition Term
Loan Commitment.
"Acquisition Term Loan Notes" has the meaning assigned thereto in Section
2.05(d).
"Acquisition Term Loans" has the meaning ascribed to such term in Section
2.02(a)(iii).
"Acquisition Term Loan Termination Date" means the day which is the
earliest of (A) December 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).
"Administrative Agent" has the meaning ascribed to such term in the
preamble hereto.
"Administrative Agent's Account" means SG'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 Borrower 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
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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 and the Collateral
Agent.
"Agreement" has the meaning ascribed to such term in the preamble hereto.
"Applicable Acquisition Term Loan Base Rate Margin" means initially a rate
equal to 1.50% per annum during the period from the Effective Date until the
last day of the fourth fiscal quarter of 1998. Beginning with the fourth fiscal
quarter of 1998, such rate will fluctuate quarterly on the first day of the
fiscal quarter immediately following the fiscal quarter in which the financial
statements are delivered to the Administrative Agent in accordance with Section
7.01(a) based upon the Leverage Ratio (as it may be adjusted on a Pro Forma
Basis for any Permitted Acquisition) for the twelve-month period ending as of
the last day of the fiscal quarter immediately preceding the fiscal quarter in
which such financial statements are delivered, as set forth below:
If the Leverage Applicable Acquisition Term
Ratio is: Loan Base Rate Margin
--------------- ---------------------------
Equal to or greater
than 5.5 1.75%
Less than 5.5 but equal to
or greater than 5.0 1.50%
Less than 5.0 but equal to
or greater than 4.5 1.25%
Less than 4.5 1.00%
"Applicable Acquisition Term Loan Eurodollar Rate Margin" means initially a
rate equal to 2.50% per annum during the period from the Effective Date until
the last day of the fourth fiscal quarter of 1998. Beginning with the fourth
fiscal quarter of 1998, such rate will fluctuate quarterly on the first day of
the fiscal quarter immediately following the fiscal quarter in which the
financial statements are delivered to the Administrative Agent in accordance
with Section 7.01(a) based upon the Leverage Ratio (as it may be adjusted on a
Pro Forma Basis for any Permitted Acquisition) for the twelve-month period
ending as of the last day of the fiscal quarter immediately preceding the fiscal
quarter in which such financial statements are delivered, as set forth below:
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If the Leverage Applicable Acquisition Term
Ratio is: Loan Eurodollar Rate Margin
--------------- ---------------------------
Equal to or greater
than 5.5 2.75%
Less than 5.5 but equal to
or greater than 5.0 2.50%
Less than 5.0 but equal to
or greater than 4.5 2.25%
Less than 4.5 2.00%
"Applicable Revolving Loan Base Rate Margin" means initially a rate equal
to 1.25% per annum during the period from the Effective Date until the last day
of the fourth fiscal quarter of 1998. Beginning with the fourth fiscal quarter
of 1998, such rate will fluctuate quarterly on the first day of the fiscal
quarter immediately following the fiscal quarter in which the financial
statements are delivered to the Administrative Agent in accordance with Section
7.01(a) based upon the Leverage Ratio (as it may be adjusted on a Pro Forma
Basis for any Permitted Acquisition) for the twelve-month period ending as of
the last day of the fiscal quarter immediately preceding the fiscal quarter in
which such financial statements are delivered, as set forth below:
If the Leverage Applicable Revolving Loan
Ratio is: Base Rate Margin
--------------- --------------------------
Equal to or greater
than 5.5 1.50%
Less than 5.5 but equal to
or greater than 5.0 1.25%
Less than 5.0 but equal to
or greater than 4.5 1.00%
Less than 4.5 0.75%
"Applicable Revolving Loan Eurodollar Rate Margin" means initially a rate
equal to 2.25% per annum during the period from the Effective Date until the
last day of the fourth fiscal quarter of 1998. Beginning with the fourth fiscal
quarter of 1998, such rate will fluctuate quarterly on the first day of the
fiscal quarter immediately following the fiscal quarter in which the financial
statements are delivered to the Administrative Agent in accordance with Section
7.01(a) based upon the Leverage Ratio (as it may be adjusted on a Pro Forma
Basis for any Permitted Acquisition) for the twelve-month period ending as of
the last day of the fiscal quarter immediately preceding the fiscal quarter in
which such financial statements are delivered, as set forth below:
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If the Leverage Applicable Revolving Loan
Ratio is: Eurodollar Rate Margin
--------------- ------------------------
Equal to or greater
than 5.5 2.50%
Less than 5.5 but equal to
or greater than 5.0 2.25%
Less than 5.0 but equal to
or greater than 4.5 2.00%
Less than 4.5 1.75%
"Applicable Term A Loan Base Rate Margin" means initially a rate equal to
1.25% per annum during the period from the Effective Date until the last day of
the fourth fiscal quarter of 1998. Beginning with the fourth fiscal quarter of
1998, such rate will fluctuate quarterly on the first day of the fiscal quarter
immediately following the fiscal quarter in which the financial statements are
delivered to the Administrative Agent in accordance with Section 7.01(a) based
upon the Leverage Ratio (as it may be adjusted on a Pro Forma Basis for any
Permitted Acquisition) for the twelve-month period ending as of the last day of
the fiscal quarter immediately preceding the fiscal quarter in which such
financial statements are delivered, as set forth below:
If the Leverage Applicable Term A Loan
Ratio is: Base Rate Margin
--------------- -----------------------
Equal to or greater
than 5.5 1.50%
Less than 5.5 but equal to
or greater than 5.0 1.25%
Less than 5.0 but equal to
or greater than 4.5 1.00%
Less than 4.5 0.75%
"Applicable Term A Loan Eurodollar Rate Margin" means initially a rate
equal to 2.25% per annum during the period from the Effective Date until the
last day of the fourth fiscal quarter of 1998. Beginning with the fourth fiscal
quarter of 1998, such rate will fluctuate quarterly on the first day of the
fiscal quarter immediately following the fiscal quarter in which the financial
statements are delivered to the Administrative
Agent in accordance with Section 7.01(a) based upon the Leverage Ratio (as it
may be adjusted on a Pro Forma Basis for any Permitted Acquisition) for the
twelve-month period ending as of the last day of the fiscal quarter immediately
preceding the fiscal quarter in which such financial statements are delivered,
as set forth below:
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If the Leverage Applicable Term A Loan
Ratio is: Eurodollar Rate Margin
--------------- ----------------------
Equal to or greater
than 5.5 2.50%
Less than 5.5 but equal to
or greater than 5.0 2.25%
Less than 5.0 but equal to
or greater than 4.5 2.00%
Less than 4.5 1.75%
"Applicable Term B Loan Base Rate Margin" means initially a rate equal to
1.75% per annum during the period from the Effective Date until the last day of
the fourth fiscal quarter of 1998. Beginning with the fourth fiscal quarter of
1998, such rate will fluctuate quarterly on the first day of the fiscal quarter
immediately following the fiscal quarter in which the financial statements are
delivered to the Administrative Agent in accordance with Section 7.01(a) based
upon the Leverage Ratio (as it may be adjusted on a Pro Forma Basis for any
Permitted Acquisition) for the twelve-month period ending as of the last day of
the fiscal quarter immediately preceding the fiscal quarter in which such
financial statements are delivered, as set forth below:
If the Leverage Applicable Term B Loan
Ratio is: Base Rate Margin
--------------- ----------------------
Equal to or greater
than 5.5 2.00%
Less than 5.5 but equal to
or greater than 5.0 1.75%
Less than 5.0 but equal to
or greater than 4.5 1.50%
Less than 4.5 1.50%
"Applicable Term B Loan Eurodollar Rate Margin" means initially a rate
equal to 2.75% per annum during the period from the Effective Date until the
last day of the fourth fiscal quarter of 1998. Beginning with the fourth fiscal
quarter of 1998, such rate will fluctuate quarterly on the first day of the
fiscal quarter immediately following the fiscal quarter in which the financial
statements are delivered to the Administrative Agent in accordance with Section
7.01(a) based upon the Leverage Ratio (as it may be adjusted on a Pro Forma
Basis for any Permitted Acquisition) for the twelve-month period ending as of
the last day of the fiscal quarter immediately preceding the fiscal quarter in
which such financial statements are delivered, as set forth below:
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If the Leverage Applicable Term B Loan
Ratio is: Eurodollar Rate Margin
--------------- ----------------------
Equal to or greater
than 5.5 3.00%
Less than 5.5 but equal to
or greater than 5.0 2.75%
Less than 5.0 but equal to
or greater than 4.5 2.50%
Less than 4.5 2.50%
"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.
"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 SG 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 SG 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).
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"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.
"Borrower" 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 determina tion, 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 the Borrower and its Subsidiaries on the
date hereof and any business located in the 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 govern mental action to close (i) in New York, New
York or Los Angeles, California, (ii) in the case of Eurodollar Rate Loans, in
London, England and (iii) in the case of Letter of Credit transactions for the
Issuing Bank, in the place where its office for issuance and administration of
the pertinent Letter of Credit is located.
"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
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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, (ii) any Permitted
Acquisition relating to an acquisition of assets and (iii) any expenditures made
with the proceeds of any Asset Sale in accordance with clause (i) of the
definition of "Excluded Proceeds."
"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.
"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 Loan Parties 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 one (1) year after the date of
acquisition thereof and, at the time of acquisition, having one of the two
highest ratings
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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 and cash.
"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 the Borrower and its
Subsidiaries on a consolidated basis, as determined in conformity with GAAP.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. xx.xx. 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 the Borrower;
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(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 the Borrower 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 the Borrower; or
(c) the first day on which a majority of the members of the Board of
Directors of the Borrower are not Continuing Directors.
"Chief Financial Officer" means the chief financial officer or vice
president of finance of the Borrower.
"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.
"Class" means, with respect to any Lender, its classification as a
Revolving Loan Lender, Term A Loan Lender, Term B Loan Lender or Acquisition
Term Loan Lender.
"Closing Date" means October 31, 1997.
"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 prop erty 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.
"Collateral Documents" means, collectively, the Security Agreements, the
Pledge Agreements, the Intellectual Property Security Agreement and the Cash
Collateral Pledge Agreement.
"Commercial Letter of Credit" means any documentary letter of credit issued
by an Issuing Bank pursuant to Section 2.04 for the account of the Borrower,
which is drawable upon presentation of documents evidencing the sale or shipment
of goods purchased by the Borrower or any of its Subsidiaries in the ordinary
course of their business.
"Commission" means the Securities and Exchange Commis sion and any Person
succeeding to the functions thereof.
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"Commitment" means, with respect to any Lender, such Lender's Revolving
Loan Commitment, Term A Loan Commitment, Term B Loan Commitment and Acquisition
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 $150,000,000.
"Commitment Fee Rate" means initially a rate equal to one-half of one
percent (1/2 of 1%) per annum during the period from the Effective Date until
the last day of the fourth fiscal quarter of 1998. Beginning with the fourth
fiscal quarter of 1998, such rate will fluctuate quarterly on the first day of
the fiscal quarter immediately following the fiscal quarter in which the
financial statements are delivered to the Administrative Agent in accordance
with Section 7.01(a) based upon the Leverage Ratio (as it may be adjusted on a
Pro Forma Basis for any Permitted Acquisition) for the twelve-month period
ending as of the last day of the fiscal quarter immediately preceding the fiscal
quarter in which such financial statements are delivered, as set forth below:
If the Leverage Commitment
Ratio is: Fee Rate
--------------- ----------
Equal to or greater
than 5.0 0.500%
Less than 5.0 0.375%
"Commitment Termination Date" means the day which is the earliest of (A)
December 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).
"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. ss.9601(33) or in 33 U.S.C. ss.1362(13)), hazardous substance (as that
term is defined in 42 U.S.C. ss.9601(14)), hazardous chemical (as that term is
defined by 29 CFR ss.1910.1200(c)), toxic substance, hazardous waste (as that
term is defined in 42 U.S.C. ss.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.
"Contractual Obligation" means, as applied to any Person, any provision of
any Securities issued by that Person or
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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 the Borrower 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 Amended & Restated Contribution
Agreement dated as of the Effective Date 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 determina tion, the total assets
of the Borrower 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 the Borrower 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, contracts (other than for the repayment of borrowed money), surety,
appeal and performance bonds, in all cases for
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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 encum brances 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 Schedule I attached hereto or on the Assignment and Acceptance
by which it became a Lender or such other United States office of such Lender as
it may from time to time specify by written notice to the Borrower and the
Administrative Agent.
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"EBITDA" means, for any Financial Covenant Period, (i) the Net Income,
determined on a consolidated basis for the Borrower 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.
"Effective Date" means the date on which all of the conditions precedent in
Sections 5.01 and 5.02 have been satisfied.
"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 the Borrower (which
acceptance shall not be unreasonably withheld), provided, however, if a Default
or Event of Default has occurred and is continuing, the acceptance by the
Borrower shall not be required.
"Eligible Inventory" means Inventory that is reflected on the consolidated
balance sheet of the Borrower as inventory, and unbilled receivables that are
reflected on the consolidated balance sheet of the Borrower as unbilled
receivables (but only to the extent such unbilled receivables do not exceed
$2,000,000), 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 the 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, provided however that Inventory in
the possession of outside processors and offloaded Inventory in the possession
of third parties, together
-15-
having an aggregate value of no more than $4,000,000 at any one time, may be
Eligible Inventory.
"Eligible Receivables" means those Receivables, that are reflected on the
consolidated balance sheet of the 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 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 the 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 the Borrower or any of its Subsidiaries 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 the Borrower or any of it
Subsidiaries with respect to the sale giving rise thereto; or
(ii) the Receivable does not arise out of a sale made in the ordinary
course of business of the Borrower or any Subsidiary of the Borrower, or is
to a Person which is an Affiliate or Subsidiary of the Borrower or
controlled by an Affiliate or Subsidiary of the 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
-16-
Administrative Agent (which letter of credit or acceptance has been
assigned to the Collateral Agent in a manner satisfactory to the
Administrative Agent), provided, however, that Receivables having an
aggregate value of not more than $2,000,000 at any one time where the sales
are to account debtors located in countries which are members of the OECD
may be Eligible Receivables; 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
(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 the Borrower or any Subsidiary of the
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,
-17-
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.
"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 Schedule I attached hereto 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 Borrower 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 Schedule I attached hereto 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
Borrower 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 SG as the rate per annum at which
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deposits in Dollars are offered by SG 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 SG 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.
"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, acquire any other assets or property constituting Collateral which
serve a similar purpose or have the same or similar function for the business as
the replaced assets 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 or acquires such asset or consummates
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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 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 KII Holding Corp. having an aggregate liquidation preference not
to exceed $200,000 and (iii) any Securities issued by any Subsidiary of the
Borrower to the Borrower or another Subsidiary of the Borrower, 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 and (iv) Management
Equity Interests.
"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 fluctu ating 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
-20-
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 succeed ing to its functions.
"Fee Letters" means, collectively, the Fee Letters between the Borrower and
each of the Agents.
"Financial Covenant Period" means the immediately preceding four fiscal
quarter period, provided that for the fourth quarter of 1997 and the first and
second quarters of 1998, the amount of EBITDA, Cash Interest Expense and Capital
Expenditures used in covenant calculations shall be the stipulated amounts set
forth on Schedule 1.01(C) (as adjusted on a pro forma basis for any Permitted
Acquisition consummatd after the date hereof) instead of the results calculated
in accordance with GAAP.
"Fiscal Year" means the fiscal year of the Borrower 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
-21-
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 Effective Date.
"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 (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.
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"Governmental Authority" means any nation or government, any federal,
state, local, foreign or other political subdivision thereof and any entity
exercising executive, legisla tive, judicial, regulatory or administrative
functions of or pertaining to government.
"Government Contracts" means (i) written contracts between any Loan Party
and the Government; and (ii) written subcontracts between any Loan Party 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.
"Guarantors" means, collectively, each Subsidiary of the Borrower
(including Monitor and its Subsidiaries).
"Guaranty" means the Amended and Restated 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, each Lender and each Issuing Bank.
"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 securi ties, debentures, acceptances, notes or other
similar instru ments, 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 indebted ness, 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
redemp tion; and (e) all contingent Contractual Obligations with respect to any
of the foregoing.
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"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 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 the Borrower in good faith determines should be furnished so
that the Information Package for the respective Business being acquired is, to
the best of the Borrower'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; provided, however, that with respect to the
projections described in clause (iii) above, the Borrower shall only be required
to represent that such projections were prepared in good faith.
"Intellectual Property Security Agreement" means the Amended and Restated
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
-24-
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, (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.
"Issue" means, with respect to any Letter of Credit, either issue, or
extend the expiry of, or renew, or increase the amount of, such Letter of
Credit, and the term "Issued" or "Issuance" shall have a corresponding meaning.
"Issuing Bank" means SG and any successor or assignee 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.
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"Xxxxxxxx Acquisition Documents" means, collectively, the Xxxxxxxx
Acquisition Agreement, the Xxxxxxxx Seller Note, and all documents, instruments
and agreements delivered in connection therewith.
"Xxxxxxxx Seller Note" means the promissory note made by KII Acquisition
Corp. in favor of Xxxxxxxx Industrie Holding AG in the principal amount of
$1,750,000, delivered pursuant to the Xxxxxxxx Acquisition Agreement.
"Lender" has the meaning ascribed to such term in the preamble hereto.
"Letter of Credit" means any Commercial Letter of Credit or Standby Letter
of Credit.
"Letter of Credit Fee" is defined in Section 4.03
"Letter of Credit Obligations" means, at any particular time, the sum of
(i) all outstanding Reimbursement Obligations, plus (ii) the aggregate undrawn
face amount of all outstanding Letters of Credit, plus (iii) the aggregate face
amount of all Letters of Credit requested by the Borrower but not yet issued
(unless the request for an unissued Letter of Credit has been denied pursuant to
Section 2.04(c)(i)).
"Letter of Credit Reimbursement Agreement" means, with respect to a Letter
of Credit, such form of application therefor and form of reimbursement agreement
therefor (whether in a single or several documents, taken together) as the
Issuing Bank from which the Letter of Credit is requested may employ in the
ordinary course of business for its own account, with such modifications thereto
as may be agreed upon by the Issuing Bank and the Borrower and as are not
materially adverse (in the reasonable judgment of the Issuing Bank) to the
interests of the Lenders; provided, however, in the event of any conflict
between the terms hereof and of any Letter of Credit Reimbursement Agreement,
the terms hereof shall control
"Leverage Ratio" means, for any Financial Covenant Period, the ratio of (i)
the outstanding Funded Debt for the Borrower and its Subsidiaries at the end of
such period, to (ii) EBITDA for such 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 (in each
case, net of insurance proceeds and excluding
-26-
amounts for which a Person is fully indemnified or for which a reimbursement
escrow has been established).
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit 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 ss. 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, the Letter of
Credit Reimbursement Agreements, any Interest Rate Contracts to which any Lender
or any Affiliate of a Lender is a party, any foreign exchange con tracts 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, any Issuing Bank or any Lender delivered to either such
Agent, such Issuing Bank or such Lender pursuant to or in connection with the
transactions contemplated hereby.
"Loan Parties" means the Borrower and the Guarantors. For avoidance of
doubt, a person shall be deemed to become a Loan Party only at the time it
becomes a Guarantor and a Subsidiary of the Borrower.
"Loans" means the Revolving Loans, the Term Loans and the Swing Loans.
"Management Agreement" means the Amended and Restated Management Advisory
Services Agreement dated May 29, 1998 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 the Borrower
or of a Subsidiary of the Borrower,
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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 the Borrower 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 the
Borrower or such Subsidiary, or which may be repurchased at the option of the
Borrower or such Subsidiary, in each case pursuant to the terms of any such
agreement under which such equity interests were issued, including, without
limitation, the Management Participation Agreement and the Monitor Management
Participation Agreement.
"Management Participation Agreement" means that certain Agreement dated as
of July 1, 1997 by and among KII Holding Corp., 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.
"Material Adverse Effect" means a material adverse effect upon (i) the
condition (financial or otherwise), operations, assets, business, properties or
performance of the Borrower 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, any Issuing Bank or any
Agent to enforce the Loan Documents.
"Material Contract" means any Government Contract in excess of $1,500,000.
"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.
"Monitor" means Monitor Aerospace Corp., a New York corporation.
"Monitor Acquisition" means the transactions contemplated by the Monitor
Acquisition Documents.
"Monitor Acquisition Agreement" means that certain Agreement and Plan of
Merger dated as of April 28, 1998 by and among Monitor, Stellex Aerospace
Holdings, Inc. and Soze Corp.
"Monitor Acquisition Documents" means, collectively, the Monitor
Acquisition Agreement and all documents, instruments and agreements delivered in
connection therewith.
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"Monitor Management Participation Agreement" means that certain agreement,
in form and substance satisfactory to the Agents, to be entered into with
certain members of management of Monitor, as such agreement may be amended,
supplemented or modified from time to time.
"Monitor Seller Note" means that certain Non-Negotiable Offset Promissory
Note dated May 29, 1998 made by Monitor in favor of Xxxxxxx Xxxxxxx in the
original principal amount of $5,180,000, delivered pursuant to the Monitor
Acquisition Agreement.
"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 the Borrower and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP.
"Net Worth" means the total assets of the Borrower and its Subsidiaries on
a consolidated basis less total liabilities of the Borrower 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, collectively, the Revolving Loan Notes, the Term Notes and
the Swing 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.
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"Obligations" means all Loans, advances, debts, liabilities, obligations,
covenants and duties owing by any Loan Party to any Agent, any Lender, any
Issuing Bank, any Affiliate of any Agent, any Lender or any Issuing Bank, 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 or not for the payment of money, whether
arising by reason of an extension of credit, opening or amendment of a Letter of
Credit or payment of a draft drawn thereunder, 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 charge able 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.
"OECD" means the Organization for Economic Cooperation and Development.
"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.
"Permits" means any permit, approval, authorization license, variance, or
permission required from a Governmental Authority under an applicable
Requirement of Law.
"Permitted Acquisition" means an acquisition by the Borrower or any of its
corporate Subsidiaries of (a) 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 the Borrower) or (b) at least 75% of the
capital stock of a Person engaged in the Business; provided that (i) such
acquisition is made in accordance with the provisions of this Agreement, (ii)
the conditions set forth in Section 5.03 have been satisfied, (iii) the total
consideration for such acquisition does not exceed $50,000,000 and (iv) no more
than $25,000,000 of the total consideration can be financed with
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the proceeds of the Loans and consideration in excess of $25,000,000 will be
financed by the issuance of equity or subordinated indebtedness with terms and
conditions acceptable to the Administrative Agent.
"Permitted Disposition" means an Asset Sale where (i) the consideration
therefor does not exceed $35,000,000; (ii) the Borrower 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 the Borrower with respect to an
Asset Sale the value of which does not exceed $15,000,000 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 $15,000,000; (iii) at least 75% of the consideration thereof
received by the Borrower or such Subsidiary is in the form of cash or Cash
Equivalents and 100% of the Net Cash Proceeds from such Asset Sale is applied in
accordance with Section 3.01(b)(i); and (iv) 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.
"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
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within the immediately preceding six (6) years was, an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreements" means, collectively, the Amended and Restated 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 in Article X and Schedule
5.03(b) and the calculation of the Leverage Ratio in the determination of
pricing and fees hereunder for the Borrower 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)with respect to a Revolving Loan Lender, such Lender's Revolving
Loan Commitment (or, if after the Commitment Termination Date, the outstanding
balances of such Lender's Revolving Loans) by the aggregate amount of all
Revolving Loan Lenders' Revolving Loan Commitments (or, if after the Commitment
Termination Date, the outstanding balances of all Revolving Loans; (ii) with
respect to an Acquisition Term Loan Lender, such Lender's unused Acquisition
Term Loan Commitment and the outstanding balances of such Lender's Acquisition
Term Loans by the aggregate amount of all Acquisition Term Loan Lenders'
Acquisition Term Loan Commitments (or, if after the Acquisition Term Loan
Termination Date, the outstanding balances of all Acquisition Loans; (iii) with
respect to a Term A Loan Lender,
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the outstanding amount of such Term A Loan Lender's Term A Loans by the
aggregate outstanding amount of all Term A Loans; (iv) with respect to a Term B
Loan Lender, the outstanding amount of such Term B Loan Lender's Term B Loans by
the aggregate outstanding amount of all Term B Loans; and (v) with respect to
each Lender, such Lender's Revolving Loan Commitment (or, if after the
Commitment Termination Date, the outstanding balance of such Lender's Revolving
Loans), such Lender's unused Acquisition Term Loan Commitment and the
outstanding balance of such Lender's Acquisition Term Loans, such Lender's
outstanding balance of Term A Loans and such Lender's outstanding balance of
Term B Loans by the sum of all the Lenders' Revolving Loan Commitments (or, if
after the Commitment Termination Date, the outstanding balance of all Revolving
Loans)plus all Lenders' Acquisition Term Loan Commitments and the outstanding
balance of all Acquisition Term Loans plus the outstanding balance of all Term A
Loans plus the outstanding balance of all Term B Loans.
"Put/Call Preferred Stock" means preferred stock which may be issued by the
Borrower or a Subsidiary of the Borrower to the holders of any Management Equity
Interests of the Borrower 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) (as such Section may be amended or modified
from time to time or any similar provision in any agreement relating to the
extension, substitution, renewal or refinancing of the Obligations) after giving
effect to all other Restricted Junior Payments made to any other Management
Equity Holders prior to or concurrently therewith.
"Put/Call Promissory Notes" means promissory notes which may be issued by
the Borrower or a Subsidiary of the Borrower to the holders of any Management
Equity Interests of the Borrower 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 the Borrower 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 that Restricted Junior
Payments would then be permitted to be made in accordance with Section 9.06(iii)
(as such Section may be amended or modified from time to time or any similar
provision in any agreement relating to the extension, substitution, renewal or
refinancing of the Obligations) after giving effect to all
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other Restricted Junior Payments made to any other Management Equity Holder
prior to or concurrently therewith and (d) such promissory notes are on terms
(other than pricing and maturity) and conditions no less favorable to the Loan
Party and the Lenders than the subordination terms in the Management
Participation Agreement.
"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, 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).
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"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.
"Reimbursement Date" is defined in Section 2.04(d)(i)(A).
"Reimbursement Obligations" means, as to the Borrower, the aggregate
reimbursement or repayment obligations of the Borrower with respect to amounts
drawn under Letters of Credit.
"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.
"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
the Borrower (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 U and
X, ERISA, the Fair Labor Standards Act and any certificate of occupancy, zoning
ordinance, building, environmental
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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 any Lender or 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 any Lender or 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 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 sum of
(i) the outstanding principal amount of the Swing Loans at such time, plus (ii)
the outstanding principal amount of the Revolving Loans at such time, plus (iii)
Letter of Credit Obligations outstanding 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 Schedule I attached hereto 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
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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 $35,000,000.
"Revolving Loan Lender" means a Lender who has a Revolving Loan Commitment.
"Revolving Loan Notes" has the meaning assigned thereto in Section 2.05(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 partici pations 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.
"Security Agreements" means, collectively, the Amended and Restated
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.
"SG" 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
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(iv) it has not conducted nor proposes to conduct a business for which
its assets would constitute unreasonably small capital.
"Standby Letter of Credit" means any letter of credit issued by an Issuing
Bank pursuant to Section 2.04 for the account of the Borrower, which is not a
Commercial Letter of Credit.
"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 the Borrower, the subsidiary guarantors party thereto 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.
"Swing Loan" is defined in Section 2.03(a).
"Swing Loan Lender" means SG, in its individual capacity or, in the event
SG is not the Administrative Agent, the Administrative Agent (or any Affiliate
of the Administrative Agent designated by the Administrative Agent), in its
individual capacity.
"Swing Loan Note" means one or more notes evidencing the Borrower's
Obligation to repay the Swing Loans.
"Syndication Agent" means First Union Capital Markets.
"Taxes" has the meaning ascribed to such term in Section 3.03(a).
"Term A Loan Commitment" means, with respect to any Lender, the obligation
of such Lender to make Term A 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 A Loan Commitment" on Schedule I
attached hereto or the signature page of the Assignment and Acceptance by which
it became (or becomes) a
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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 A Loan
Commitments" means the aggregate principal amount of the Term A Loan Commitments
of all the Lenders, the maximum amount of which shall not at any time exceed
$30,000,000.
"Term A Loan Lender" means a Lender who has a Term A Loan Commitment.
"Term A Loan Notes" has the meaning assigned thereto in Section 2.05(b).
"Term A Loans" has the meaning ascribed to such term in Section 2.02(a)(i).
"Term B Loan Commitment" means, with respect to any Lender, the obligation
of such Lender to make Term B 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 B Loan Commitment" on Schedule I
attached hereto 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 B Loan Commitments" means the aggregate principal amount
of the Term B Loan Commitments of all the Lenders, the maximum amount of which
shall not at any time exceed $60,000,000.
"Term B Loan Lender" means a Lender who has a Term B Loan Commitment.
"Term B Loan Notes" has the meaning assigned thereto in Section 2.05(c).
"Term B Loans" has the meaning ascribed to such term in Section
2.02(a)(ii).
"Term Loans" means, collectively, the Term A Loans, the Term B Loans and
the Acquisition Term Loans.
"Term Notes" means, collectively, the Term A Loan Notes, the Term B Loan
Notes and the Acquisition Term Loan Notes.
"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
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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 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 the Borrower all the
Capital Stock of which (other than directors' qualifying shares and Management
Equity Interests representing not in excess of 20% of the outstanding Capital
Stock of such Subsidiary) is owned by the Borrower or another Wholly Owned
Subsidiary.
"Working Capital" means, as at any date of determina tion, 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"
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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, 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 Agree ment, 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 Revolving Loan Lender hereby severally agrees to make revolving
loans (each individually, a "Revolving Loan" and, collectively, the "Revolving
Loans") to the Borrower from time to time during the period from the Effective
Date to the Business Day immediately preceding the Commitment Termination Date,
in an amount not to exceed such Revolving Loan Lender's Pro Rata Share of the
Availability at such time; provided, however, that the initial Borrowing of
Revolving Loans shall not exceed $20,000,000. Each Base 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.
Each Eurodollar Rate Loan shall be for a minimum amount of Two Million Dollars
($2,000,000) 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 Revolving
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Loan Lenders simultaneously and proportionately to their then respective Pro
Rata Shares, it being understood that no Revolving Loan Lender shall be
responsible for any failure by any other Revolving Loan Lender to perform its
obligation to make a Revolving Loan hereunder nor shall the Commitment of any
Revolving Loan Lender be increased or decreased as a result of any such failure.
Subject to the provisions of this Agreement, the Borrower may repay any
outstanding Revolving Loan made to it on any day which 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 Borrower desires to borrow under this
Section 2.01, the Borrower shall deliver to the Administrative Agent a Notice of
Borrowing, signed by it, 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 three (3) 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 Effective 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 Borrower 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 Revolving Loan Lender shall deposit
an amount equal to its Pro Rata Share of the amount requested by the Borrower 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 Borrower 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 Revolving Loan Lender to deposit the amount described
above with the Administrative Agent on the applicable Funding Date shall not
relieve any other Revolving Loan Lender of its obligations hereunder to make its
Revolving Loan on such Funding Date.
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(ii) Unless the Administrative Agent shall have been notified by any
Revolving Loan 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 Revolving
Loan Lender does not intend to fund its Revolving Loan requested to be made on
such Funding Date, the Administrative Agent may assume that such Revolving Loan
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 Borrower on the Funding Date. If the Revolving Loan proceeds
corresponding to that amount are advanced to the Borrower by the Administrative
Agent but are not in fact deposited with the Administrative Agent by such
Revolving Loan Lender on or prior to the applicable Funding Date, such Revolving
Loan Lender agrees to pay, and in addition the Borrower agrees 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 Borrower until the date such amount is paid or repaid to
the Administrative Agent, (A) in the case of the Borrower, at the interest rate
applicable to such Borrowing and (B) in the case of such Revolving Loan Lender,
at the Federal Funds Rate for the first Business Day, and thereafter at the
interest rate applicable to such Borrowing. If such Revolving Loan Lender shall
pay to the Administrative Agent the corresponding amount, the amount so paid
shall constitute such Revolving Loan Lender's Revolving Loan, and if both such
Revolving Loan Lender and the Borrower shall pay and repay such corresponding
amount, the Administrative Agent shall promptly pay to the Borrower such
corresponding amount. This Section 2.01(c)(ii) does not relieve any Revolving
Loan Lender of its obligation to make its Revolving Loan on any Funding Date;
nor does this Section relieve the Borrower of its obligation to pay or repay any
Revolving Loan 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) (i) Amount of Term A Loans. Subject to the terms and conditions set
forth in this Agreement, each Term A Loan Lender hereby severally agrees to make
term loans (each individually, a "Term A Loan" and, collectively, the "Term A
Loans") to the Borrower on the Effective Date in an amount not to exceed such
Lender's Term A Loan Commitment. Each Term A Loan shall be a Base Rate Loan on
the Funding Date. All Term A Loans shall be made by the Term A Loan Lenders
simultaneously and proportionately to their then respective Pro Rata Shares, it
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being understood that no Term A Loan Lender shall be responsible for any failure
by any other Term A Loan Lender to perform its obligation to make a Term A Loan
hereunder nor shall the Term A Loan Commitment of any Term A Loan Lender be
increased or decreased as a result of any such failure.
(ii) Amount of Term B Loans. Subject to the terms and conditions set forth
in this Agreement, each Term B Loan Lender hereby severally agrees to make term
loans (each individually, a "Term B Loan" and, collectively, the "Term B Loans")
to the Borrower on the Effective Date in an amount not to exceed such Lender's
Term B Loan Commitment. Each Term B Loan shall be a Base Rate Loan on the
Funding Date. All Term B Loans shall be made by the Term B Loan Lenders
simultaneously and proportionately to their then respective Pro Rata Shares, it
being understood that no Term B Loan Lender shall be responsible for any failure
by any other Term B Loan Lender to perform its obligation to make a Term B Loan
hereunder nor shall the Term B Loan Commitment of any Term B Loan Lender be
increased or decreased as a result of any such failure.
(iii) Amount of Acquisition Term Loans. Subject to the terms and conditions
set forth in this Agreement, each Acquisition Term Loan Lender hereby severally
agrees to make term loans (each individually, a "Acquisition Term Loan" and,
collec tively, the "Acquisition Term Loans") to the Borrower from time to time
during the period from the Effective Date to the Business Day immediately
preceding the Acquisition Term Loan Termination Date in an amount not to exceed
such Lender's Acquisition Term Loan Commitment. Each Acquisition 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
Acquisition Term Loans shall be made by the Acquisition Term Loan Lenders
simultaneously and proportionately to their then respective Pro Rata Shares, it
being understood that no Acquisition Term Loan Lender shall be responsible for
any failure by any other Acquisition Term Loan Lender to perform its obligation
to make a Acquisition Term Loan hereunder nor shall the Acquisition Term Loan
Commitment of any Acquisition Term Loan Lender be increased or decreased as a
result of any such failure. Any Acquisition Term Loan that has been repaid or
prepaid may not be reborrowed under this Section 2.02(a)(iii).
(b) Notice of Borrowing. When the Borrower desires to borrow under this
Section 2.02, the Borrower shall deliver to the Administrative Agent a Notice of
Borrowing, signed by it, no later than 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
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be Base Rate Loans on the Funding Date but after the Funding 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 Borrower at the Administrative Agent's office in New
York, New York 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 Borrower on the Funding Date. If the Term
Loan proceeds corresponding to that amount are advanced to the Borrower 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 Borrower agrees 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
Borrower until the date such amount is paid or repaid to the Administrative
Agent, (A) in the case of the Borrower, 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 Borrower shall pay such corresponding
amount, the Administrative Agent shall promptly pay to the Borrower such
corresponding 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 Borrower of its 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.
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(d)(i) Repayment of Term A Loans. The principal amount of the Term A Loans
shall be payable in twenty-two (22) consecutive quarterly installments on the
last day of September, December, March and June in each year, commencing on
September 30, 1998 in the principal amounts set forth below; 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 A Loans:
Installment Payment Date Amount
------------------------ ------
September 30, 1998 $ 750,000
December 31, 1998 750,000
March 31, 1999 750,000
June 30, 1999 750,000
September 30, 1999 750,000
December 31, 1999 750,000
March 31, 2000 750,000
June 30, 2000 750,000
September 30, 2000 1,125,000
December 31, 2000 1,125,000
March 31, 2001 1,125,000
June 30, 2001 1,125,000
September 30, 2001 1,500,000
December 31, 2001 1,500,000
March 31, 2002 1,500,000
June 30, 2002 1,500,000
September 30, 2002 2,250,000
December 31, 2002 2,250,000
March 31, 2003 2,250,000
June 30, 2003 2,250,000
September 30, 2003 2,250,000
December 31, 2003 2,250,000
(ii) Repayment of Term B Loans. The principal amount of the Term B Loans
shall be payable in thirty (30) consecutive quarterly installments on the last
day of September, December, March and June in each year, commencing on September
30, 1998 in the principal amounts set forth below; 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 B Loans:
Installment Payment Date Amount
------------------------ ------
September 30, 1998 $ 150,000
December 31, 1998 150,000
March 31, 1999 150,000
June 30, 1999 150,000
September 30, 1999 150,000
December 31, 1999 150,000
March 31, 2000 150,000
June 30, 2000 150,000
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September 30, 2000 150,000
December 31, 2000 150,000
March 31, 2001 150,000
June 30, 2001 150,000
September 30, 2001 150,000
December 31, 2001 150,000
March 31, 2002 150,000
June 30, 2002 150,000
September 30, 2002 150,000
December 31, 2002 150,000
March 31, 2003 150,000
June 30, 2003 150,000
September 30, 2003 150,000
December 31, 2003 150,000
March 31, 2004 7,000,000
June 30, 2004 7,000,000
September 30, 2004 7,000,000
December 31, 2004 7,000,000
March 31, 2005 7,000,000
June 30, 2005 7,000,000
September 30, 2005 7,000,000
December 31, 2005 7,700,000
(iii) Repayment of Acquisition Term Loans. The principal amount of the
Acquisition Term Loans outstanding on the Acquisition Term Loan Termination Date
(the "Outstanding Acquisition 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 Acquisition Term Loan Amount on the
last day of March, June, September and December in each year, commencing on
March 31, 2000 through and including September 30, 2003 and one (1) installment
in the principal amount equal to 37.45% of the Outstanding Term Loan Amount on
December 31, 2003; 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 Acquisition Term Loans.
2.03. Swing Loans. (a) Swing Loans. Subject to the terms and conditions set
forth herein, the Swing Loan Lender may, in its sole discretion, make loans (the
"Swing Loans")to the Borrower, from time to time after the Effective Date and
prior to the Commitment Termination Date, up to an aggregate principal amount at
any one time outstanding which shall not exceed an amount equal to $2,000,000.
The Swing Loan Lender shall have no duty to make or to continue to make Swing
Loans. All Swing Loans shall be payable on demand with accrued interest thereon
and shall be secured as part of the Obligations by the Collateral and shall
otherwise be subject to all the terms and conditions applicable to Revolving
Loans, except that (x) Swing Loans shall not have a minimum amount requirement
and (y) all interest on the Swing Loans made by the Swing Loan Lender shall be
payable to the Swing Loan Lender solely for its own account.
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(b) Notice of Borrowing. When the Borrower desires to borrow under this
Section 2.03, it shall deliver to the Administrative Agent an irrevocable Notice
of Borrowing, signed by it, no later than 12:00 p.m. (New York time) on the day
of the proposed Borrowing of a Swing Loan. Such Notice of Borrowing shall
specify (i) the date of the proposed Borrowing (which shall be a Business Day),
(ii) the amount of the proposed Borrowing and (iii) instructions for the
disbursement of the proceeds of the proposed Borrowing. In lieu of delivering
such a Notice of Borrowing, the Borrower shall give the Administrative Agent
irrevocable telephonic notice of any proposed Borrowing by 12:00 p.m. (New York
time) on the day of the proposed Borrowing, and shall confirm such notice by
delivery of the Notice of Borrowing by telecopy to the Administrative Agent
promptly, but in no event later than 3:00 p.m. (New York time) on the same day.
All Swing Loans shall be Base Rate Loans.
(c) Making of Swing Loans. The Swing Loan Lender shall deposit the amount
it intends to fund, if any, in respect of the Swing Loans requested by the
Borrower with the Administrative Agent at its office in New York, New York not
later than 3:00 p.m. (New York time) in immediately available funds on the date
of the proposed Borrowing applicable thereto. The Swing Loan Lender shall not
make any Swing Loan during the period commencing on the first Business Day after
it receives written notice from any Lender that one or more of the conditions
precedent contained in Section 5.02 shall not on such date be satisfied, and
ending when such conditions are satisfied, and the Swing Loan Lender shall not
otherwise be required to determine that, or take notice whether, the conditions
precedent set forth in Section 5.02 hereof have been satisfied in connection
with the making of any Swing Loan. Subject to the preceding sentence, the
Administrative Agent shall make such proceeds available to the Borrower at the
Administrative Agent's office in New York, New York on the date of the proposed
Borrowing and shall disburse such proceeds to the Borrower in accordance with
the Borrower's disbursement instructions set forth in the applicable Notice of
Borrowing.
(d) Repayment of Swing Loans. The Borrower shall repay the outstanding
Swing Loans owing to the Swing Loan Lender (i) upon demand by the Swing Loan
Lender and (ii) on the Commitment Termination Date. In the event that the
Borrower fails to repay any Swing Loans, together with interest thereon, as set
forth in the first sentence of this paragraph, then, upon the request of the
Swing Loan Lender, each Revolving Loan Lender shall make Revolving Loans to the
Borrower (irrespective of the satisfaction of the conditions in Section 5.02 or
the requirement to deliver a Notice of Borrowing in Section 2.01(b), which
conditions and requirement such Revolving Loan Lenders irrevocably waive) in an
amount equal to such Revolving Loan Lender's Pro Rata Share of the aggregate
amount of the Swing Loans then outstanding (net of that portion of such Swing
Loan,
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if any, owing to such Revolving Loan Lender in its capacity as a Swing Loan
Lender) after giving effect to any prepayments and repayments made by the
Borrower, and the Borrower hereby authorizes the Administrative Agent to apply
the proceeds of such Revolving Loans to the repayment of such Swing Loans. To
the extent the Administrative Agent receives any amounts in prepay ment or
repayment of outstanding Revolving Loans prior to such request, the
Administrative Agent shall apply such amounts when received to the repayment of
the Swing Loans then outstanding. The failure of any Revolving Loan Lender to
make available to the Administrative Agent its Pro Rata Share of such Revolving
Loans shall not relieve any other Revolving Loan Lender of its obligation
hereunder to make available to the Administrative Agent such other Revolving
Loan Lender's Pro Rata Share of such Revolving Loans on the date of such
request.
2.04. Letters of Credit. Subject to the terms and conditions set forth
herein, the Issuing Bank hereby agrees to Issue for the account of the Borrower
one or more Letters of Credit during the period from the Effective Date to the
date which is the thirtieth day prior to the Commitment Termination Date,
subject to the following provisions:
(a) Types and Amounts. The Issuing Bank shall not have any obligation to
Issue, and shall not Issue any Letter of Credit at any time:
(i) if the aggregate Letter of Credit Obligations with respect to the
Issuing Bank, after giving effect to the Issuance of the Letter of Credit
requested hereunder, shall exceed $10,000,000 or any limit imposed by law
or regulation upon the Issuing Bank;
(ii) if the Issuing Bank receives written notice (A) from the
Administrative Agent at or before 12:00 p.m. (New York time) on the date of
the proposed Issuance of such Letter of Credit that immediately after
giving effect to the Issuance of such Letter of Credit, (1) the Letter of
Credit Obligations at such time would exceed $10,000,000 or (2) the
Revolving Credit Obligations at such time would exceed the Maximum
Revolving Credit Amount at such time, or (B) from any of the Lenders at or
before 12:00 p.m. (New York time) on the date of the proposed Issuance of
such Letter of Credit that one or more of the condi tions precedent
contained in Article V, as applicable, would not on such date be satisfied
(or waived pursuant to Section 13.09), unless such conditions are
thereafter satisfied or waived and written notice of such satisfaction or
waiver is given to the Issuing Bank by the Administrative Agent (and the
Issuing Bank shall not otherwise be required to determine that, or take
notice whether, the conditions precedent set forth
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in Article V, as applicable, have been satisfied or waived); or
(iii) which has an expiration date later than the earlier of (A) the
date which occurs 180 days following the date of Issuance with respect to a
Commercial Letter of Credit or the date which occurs 360 days following the
date of Issuance with respect to a Standby Letter of Credit or (B) the
Business Day immediately preceding the Commitment Termination Date; or
(iv) which is in a currency other than Dollars.
(b) Conditions. In addition to being subject to the satisfaction of the
conditions precedent contained in Article V, as applicable, the obligation of
the Issuing Bank to Issue any Letter of Credit is subject to the satisfaction in
full of the following conditions:
(i) if the Issuing Bank so requests, the Borrower shall have executed
and delivered to such Issuing Bank and the Administrative Agent a Letter of
Credit Reimbursement Agreement and such other documents and materials as
may be required pursuant to the terms thereof;
(ii) the terms of the proposed Letter of Credit shall be satisfactory
to the Issuing Bank in its reasonable credit judgment; and
(iii) no order, judgment or decree of any court, arbitrator or
Governmental Authority shall purport by its terms to enjoin or restrain the
Issuing Bank from Issuing the Letter of Credit and no law, rule or
regulation applicable to the Issuing Bank and no request or directive
(whether or not having the force of law and whether or not the failure to
comply therewith would be unlawful) from a Governmental Authority with
jurisdiction over the Issuing Bank shall prohibit or request that the
Issuing Bank refrain from the Issuance of letters of credit generally or
the Issuance of such Letter of Credit.
(c) Issuance of Letters of Credit. (i) The Borrower shall give the Issuing
Bank and the Administrative Agent written notice that it is requesting that the
Issuing Bank Issue a Letter of Credit not later than 12:00 p.m. (New York time)
on the third Business Day preceding the requested date for Issuance thereof, or
such shorter notice as may be acceptable to such Issuing Bank and the
Administrative Agent. Such notice shall be irrevocable unless and until such
request is denied by the applicable Issuing Bank and shall specify (A) that the
requested Letter of Credit is either a Commercial Letter of Credit or a Standby
Letter of
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Credit, (B) the stated amount of the Letter of Credit requested, (C) the
effective date (which shall be a Business Day) of Issuance of such Letter of
Credit, (D) the date on which such Letter of Credit is to expire, (E) the Person
for whose benefit such Letter of Credit is to be Issued, (F) other relevant
terms of such Letter of Credit and (G) the amount of the then out standing
Letter of Credit Obligations. Such Issuing Bank shall notify the Administrative
Agent immediately upon receipt of a written notice from the Borrower requesting
that a Letter of Credit be Issued and, upon the Administrative Agent's request
therefor, send a copy of such notice to the Administrative Agent.
(ii) The Issuing Bank shall give the Administrative Agent written notice,
or telephonic notice confirmed promptly thereafter in writing, of the Issuance
of a Letter of Credit (which notice the Administrative Agent shall promptly
transmit by telegram, telex, telecopy, telephone or similar transmission to each
Lender).
(d) Reimbursement Obligations; Duties of Issuing Banks. (i) Notwithstanding
any provisions to the contrary in any Letter of Credit Reimbursement Agreement:
(A) the Borrower shall reimburse the Issuing Bank for amounts drawn
under such Letter of Credit pursuant to subsection (e)(ii) below, no later
than the date (the "Reimbursement Date") which is one (1) Business Day
after the Borrower receives written notice from the Issuing Bank that a
draft has been presented under such Letter of Credit by the beneficiary
thereof; and
(B) all Reimbursement Obligations with respect to any Letter of Credit
shall bear interest at the rate applicable to Base Rate Loans in accordance
with Section 4.01(a) from the date of the relevant drawing under such
Letter of Credit until the Reimbursement Date and thereafter at the rate
applicable in accordance with Section 4.01(d).
(ii) The Issuing Bank shall give the Administrative Agent written notice,
or telephonic notice confirmed promptly thereafter in writing, of all drawings
under a Letter of Credit and the payment (or the failure to pay when due) by the
Borrower on account of a Reimbursement Obligation (which notice the
Administrative Agent shall promptly transmit by telegram, telex, telecopy or
similar transmission to each Lender).
(iii) No action taken or omitted, in good faith and without gross
negligence, by the Issuing Bank under or in connection with any Letter of Credit
shall put the Issuing Bank under any resulting liability to any Revolving Loan
Lender, the Borrower or, so long as it is not Issued in violation of Section
2.04(a), relieve any Revolving Loan Lender of its obligations
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hereunder to the Issuing Bank. Solely as between the Issuing Bank and the
Revolving Loan Lenders, in determining whether to pay under any Letter of
Credit, the Issuing Bank shall have no obligation to the Revolving Loan Lenders
other than to confirm that any documents required to be delivered under a
respective Letter of Credit appear to have been delivered and that they appear
on their face to comply with the requirements of such Letter of Credit.
(e) Participations. (i) Immediately upon Issuance by the Issuing Bank of
any Letter of Credit in accordance with the procedures set forth in this Section
2.04, each Revolving Loan Lender shall be deemed to have irrevocably and
unconditionally purchased and received from the Issuing Bank, without recourse
or warranty, an undivided interest and participation in such Letter of Credit to
the extent of such Revolving Loan Lender's Pro Rata Share, including, without
limitation, all obligations of the Borrower with respect thereto (other than
amounts owing to the Issuing Bank under Section 2.04(g)) and any security
therefor and guaranty pertaining thereto.
(ii) If the Issuing Bank makes any payment under any Letter of Credit and
the Borrower does not repay such amount to the Issuing Bank on the Reimbursement
Date, the Issuing Bank shall promptly notify the Administrative Agent, which
shall promptly notify each Revolving Loan Lender, and each Revolving Loan Lender
shall promptly and unconditionally pay to the Administrative Agent for the
account of the Issuing Bank, in immediately available funds, the amount of such
Revolving Loan Lender's Pro Rata Share of such payment (net of that portion of
such payment, if any, made by such Revolving Loan Lender in its capacity as the
Issuing Bank), and the Administrative Agent shall promptly pay to the Issuing
Bank such amounts received by it, and any other amounts received by the
Administrative Agent for the Issuing Bank's account, pursuant to this Section
2.04(e). All such payments shall constitute Revolving Loans made to the Borrower
pursuant to Section 2.01 (irrespective of the satis faction of the conditions in
Section 5.02 or the requirement in Section 2.01(b) to deliver a Notice of
Borrowing, which conditions and requirement, for the purpose of refunding any
Reimbursement Obligation owing to the Issuing Bank, the Revolving Loan Lenders
irrevocably waive). If a Revolving Loan Lender does not make its Pro Rata Share
of the amount of such payment available to the Administrative Agent, such
Revolving Loan Lender agrees to pay to the Administrative Agent for the account
of the Issuing Bank, forthwith on demand, such amount together with interest
thereon, for the first Business Day after the date such payment was first due at
the Federal Funds Rate, and thereafter at the interest rate then applicable to a
Base Rate Loan in accordance with Section 4.01(a). The failure of any such
Revolving Loan Lender to make available to the Administrative Agent for the
account of an Issuing Bank its Pro Rata Share of any such payment shall neither
relieve any other Revolving Loan
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Lender of its obligation hereunder to make available to the Administrative Agent
for the account of the Issuing Bank such other Revolving Loan Lender's Pro Rata
Share of any payment on the date such payment is to be made nor increase the
obligation of any other Revolving Loan Lender to make such payment to the
Administrative Agent. This Section does not relieve the Borrower of its
obligation to pay or repay any Revolving Loan Lender funding its Pro Rata Share
of such payment pursuant to this Section interest on the amount of such payment
from such date such payment is to be made until the date on which payment is
repaid in full.
(iii) Whenever the Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, as to which any
Revolving Loan Lender has made a Revolving Loan pursuant to clause (ii) of this
Section, the Issuing Bank shall promptly pay to the Administrative Agent such
payment in accordance with Section 3.02. Each such payment shall be made by the
Issuing Bank or the Administrative Agent, as the case may be, on the Business
Day on which such Person receives the funds paid to such Person pursuant to the
preceding sentence, if received prior to 11:00 a.m. (New York time) on such
Business Day, and otherwise on the next succeeding Business Day.
(iv) Upon the request of any Lender, the Issuing Bank shall furnish such
Lender copies of any Letter of Credit or Letter of Credit Reimbursement
Agreement to which the Issuing Bank is party and such other documentation as
reasonably may be requested by such Lender.
(v) The obligations of a Revolving Loan Lender to make payments to the
Administrative Agent for the account of the Issuing Bank with respect to a
Letter of Credit shall be irrevocable, shall not be subject to any qualification
or exception whatsoever except willful misconduct or gross negligence of the
Issuing Bank, and shall be honored in accordance with this Article II
(irrespective of the satisfaction of the conditions described in Article V, as
applicable, which conditions, for the purposes of refunding any Reimbursement
Obligation owed to the Issuing Bank, such Revolving Loan Lenders irrevocably
waive) under all circumstances, including, without limitation, any of the
following circumstances:
(A) any lack of validity or enforceability hereof or of any of the
other Loan Documents;
(B) the existence of any claim, setoff, defense or other right which
the Borrower may have at any time against a beneficiary named in a Letter
of Credit or any transferee of a beneficiary named in a Letter of Credit
(or any Person for whom any such transferee may be acting), the
Administrative Agent, the Issuing Bank, any Lender, or any other Person,
whether in connection
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herewith, with any Letter of Credit, the transactions contemplated herein
or any unrelated transactions (including any underlying transactions
between the account party and beneficiary named in any Letter of Credit);
(C) any draft, certificate or any other document presented under the
Letter of Credit having been deter mined to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(D) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents;
(E) any failure by the Issuing Bank to make any reports required
pursuant to Section 2.04(h) or the inaccuracy of any such report; or
(F) the occurrence of any Event of Default or Default.
(f) Payment of Reimbursement Obligations. (i) The Borrower unconditionally
agrees to pay to the Issuing Bank, in Dollars, the amount of all Reimbursement
Obligations, interest and other amounts payable to the Issuing Bank under or in
connection with the Letters of Credit when such amounts are due and payable,
irrespective of any claim, setoff, defense or other right which the Borrower may
have at any time against the Issuing Bank or any other Person.
(ii) In the event any payment by the Borrower received by the Issuing Bank
with respect to a Letter of Credit and distributed by the Administrative Agent
to the Lenders on account of their participation is thereafter set aside,
avoided or recovered from the Issuing Bank in connection with any receiver ship,
liquidation or bankruptcy proceeding, each such Lender which received such
distribution shall, upon demand by the Issu ing Bank, contribute such Lender's
Pro Rata Share of the amount set aside, avoided or recovered together with
interest at the rate required to be paid by the Issuing Bank upon the amount
required to be repaid by it.
(g) Issuing Bank Charges. The Borrower shall pay to the Issuing Bank,
solely for its own account, the standard charges assessed by the Issuing Bank in
connection with the issuance, administration, amendment and payment or
cancellation of Letters of Credit and such compensation in respect of such
Letters of Credit for the Borrower's account as may be agreed upon by the
Borrower and the Issuing Bank from time to time.
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(h) Issuing Bank Reporting Requirements. The Issuing Bank shall, no later
than the tenth (10th) Business Day following the last day of each calendar
month, provide to the Administrative Agent and the Borrower separate schedules
for Commercial Letters of Credit and Standby Letters of Credit issued by it, in
form and substance reasonably satisfactory to the Administrative Agent, setting
forth the aggregate Letter of Credit Obligations outstanding to it at the end of
each month and any information requested by the Administrative Agent or the
Borrower relating to the date of issue, account party, amount, expiration date
and reference number of each Letter of Credit issued by it.
(i) Indemnification; Exoneration. (A) In addition to all other amounts
payable to an Issuing Bank, the Borrower hereby agrees to defend, indemnify, and
save the Administrative Agent, the Issuing Bank and each Lender harmless from
and against any and all claims, demands, liabilities, penalties, damages, losses
(other than loss of profits), costs, charges and expenses (including reasonable
attorneys' fees but excluding taxes) which the Administrative Agent, the Issuing
Bank or such Lender may incur or be subject to as a consequence, direct or
indirect, of (i) the Issuance of any Letter of Credit other than as a result of
the gross negligence or willful misconduct of the Issuing Bank, as determined by
a court of competent jurisdiction, or (ii) the failure of the Issuing Bank
issuing a Letter of Credit to honor a drawing under such Letter of Credit as a
result of any act or omission, whether rightful or wrongful, of any present or
future de jure or de facto government or Governmental Authority.
(B) As between the Borrower on the one hand and the Administrative Agent,
the Lenders and the Issuing Bank on the other hand, the Borrower assumes all
risks of the acts and omissions of, or misuse of Letters of Credit by, the
respective beneficiaries of the Letters of Credit. In furtherance and not in
limitation of the foregoing, subject to the provisions of the Letter of Credit
Reimbursement Agreements, the Administrative Agent, the Issuing Bank and the
Lenders shall not be responsible for (except to the extent resulting from their
gross negligence or willful misconduct, as determined by a court of competent
jurisdiction): (i) the form, validity, legality, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and Issuance of the Letters of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) the validity, legality or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason;
(iii) failure of the beneficiary of a Letter of Credit to comply duly with
conditions required in order to draw upon such Letter of Credit; (iv) errors,
omissions, interruptions or delays in transmission
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or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (v) errors in interpretation of technical
terms; (vi) any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any Letter of Credit or of the
proceeds thereof; (vii) the misapplication by the beneficiary of a Letter of
Credit of the proceeds of any drawing under such Letter of Credit; (viii) any
litigation, proceeding or charges with respect to such Letter of Credit; and
(ix) any consequences arising from causes beyond the control of the
Administrative Agent, the Issuing Bank or the Lenders.
2.05. Promise to Pay; Evidence of Debt. (a) The Borrower agrees to pay when
due the principal amount of each Revolving Loan which is made to the Borrower,
and further agrees 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 Revolving Loan Lenders. The Borrower shall execute
and deliver to each Revolving Loan Lender a promissory note to evidence the
Revolving Loans owing to such Revolving Loan Lender and agrees to execute and
deliver to such Revolving Loan Lender and any assignee of such Revolving Loan
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 Borrower agrees to pay when due the principal amount of each Term A
Loan which is made to the Borrower, and further agrees to pay all unpaid
interest accrued thereon, in accordance with the terms of this Agreement and the
promissory notes evidencing the Term A Loans owing to the Term A Loan Lenders.
The Borrower shall execute and deliver to each Term A Loan Lender a promissory
note to evidence the Term A Loans owing to such Term A Loan Lender and agrees to
execute and deliver to such Term A Loan Lender and any assignee of such Term A
Loan 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 A Loan Notes"; and "Term A Loan
Note" means any one of the Term A Loan Notes).
(c) The Borrower agrees to pay when due the principal amount of each Term B
Loan which is made to the Borrower, 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 B Loans owing to the Term B Loan Lenders.
The Borrower shall execute and deliver to each Term B
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Loan Lender a promissory note to evidence the Term B Loans owing to such Term B
Loan Lender and agrees to execute and deliver to such Term B Loan Lender and any
assignee of such Term B Loan 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-3 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 B Loan
Notes"; and "Term B Loan Note" means any one of the Term B Loan Notes).
(d) The Borrower agrees to pay when due the principal amount of each
Acquisition Term Loan which is made to the Borrower, and further agrees to pay
all unpaid interest accrued thereon, in accordance with the terms of this
Agreement and the promissory notes evidencing the Acquisition Term Loans owing
to the Acquisition Term Loan Lenders. The Borrower shall execute and deliver to
each Acquisition Term Loan Lender a promissory note to evidence the Acquisition
Term Loans owing to such Acquisition Term Loan Lender and agrees to execute and
deliver to such Acquisition Term Loan Lender and any assignee of such
Acquisition Term Loan 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-4 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 "Acquisition Term
Loan Notes"; and "Acquisition Term Loan Note" means any one of the Acquisition
Term Loan Notes).
(E) The Borrower agrees to pay when due the principal amount of each Swing
Loan which is made to the Borrower, and further agree to pay all unpaid interest
accrued thereon, in accordance with the terms of this Agreement and the
promissory notes evidencing the Swing Loans owing to the Swing Loan Lender. The
Borrower shall execute and deliver to the Swing Loan Lender a promissory note to
evidence the Swing Loans owing to the Swing Loan Lender and agrees to execute
and deliver to the Swing Loan Lender and any assignee of the Swing Loan 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-5
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 "Swing Loan Notes"; and "Swing Loan Note" means
any one of the Swing Loan Notes).
2.06. Use of Proceeds of Loans. (a) The proceeds of the Term A Loans and
the Term B Loans will be used (i) to finance the acquisition of Monitor pursuant
to the Monitor Acquisition Documents, (ii) to refinance certain indebtedness of
Monitor and (iii) to pay for the related transaction fees, costs and expenses.
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(b) The proceeds of the Acquisition Term Loans shall be used to fund
Permitted Acquisitions.
(c) The proceeds of the Revolving Loans shall be used to provide working
capital in the ordinary course of business of the Borrower and its Subsidiaries
and other general corporate purposes not prohibited hereunder (including to pay
a portion of the purchase price and/or the related transaction fees, costs and
expenses incurred in connection with the Monitor Acquisition).
2.07. Authorized Officers, Employees and Agents. On the Closing Date and
from time to time thereafter, the Borrower shall deliver to the Administrative
Agent an Officer's Certificate setting forth the names of the officers of the
Borrower, employees and agents of the Borrower authorized to request Loans and
Letters of Credit on behalf of the 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 the 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 or Letter of Credit 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 or Letter of Credit, 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 the Borrower. None of the Agents, the Issuing Banks or the
Lenders shall incur any liability to the 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 the Borrower.
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. Prepayments; Reductions in Revolving Loan Commitments.
(a) Voluntary Prepayments/Reductions.
(i) The Borrower may, at any time and from time to time, prepay the Loans
in whole or in part; provided, however, that any partial prepayment of Revolving
Loans shall be in minimum amounts of $500,000 and in multiples of $100,000 in
excess thereof and that any partial prepayment of Term Loans
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shall be in minimum amounts of $1,000,000 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 three (3) Business Days' 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 Borrower's 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 in the proportions
specified by the Borrower to the Term A Loans, the Term B Loans and the
Acquisition Term Loans but the amounts, if any, applied to each of the Term A
Loans, Term B Loans, and Acquisition Term Loans shall be applied pro rata to the
remaining principal installments of such 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 Borrower, 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 Acquisition 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
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to 100% of such Net Cash Proceeds. Each such prepayment of Term Loans shall be
applied pro rata to the Term A Loans, the Term B Loans and the Acquisition Term
Loans and the amounts applied to Term A Loans, Term B Loans and the Acquisition
Term Loans shall be applied pro rata to the remaining principal installments of
such Term Loans.
(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 Term A Loans, the Term B Loans and the
Acquisition Term Loans and the amounts applied to Term A Loans, Term B Loans and
Acquisition Term Loans shall be applied pro rata to the remaining principal
installments of such Term Loans.
(iii) On the 90th day following the last day of each Fiscal Year, the
Borrower 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
date of payment; provided, however, that no mandatory prepayment shall be
required hereunder if the Leverage Ratio of the Borrower 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 Term A Loans, the Term
B Loans and the Acquisition Term Loans and the amounts applied to Term A Loans,
Term B Loans and Acquisition Term Loans shall be applied pro rata to the
remaining principal installments of such Term Loans.
(iv) Immediately upon the Revolving Credit Obligations exceeding the
Maximum Revolving Credit Amount, the Borrower 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 con strued to constitute the
Lenders' consent to any transaction which is not expressly permitted by Article
IX.
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3.02. Payments. (a) Manner and Time of Payment. All payments of principal,
interest, fees, Reimbursement Obligations and other Obligations which are
payable to the Administrative Agent, any Lender or any Issuing Bank 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 (or, in the case of Reimbursement Obligations, to the
Issuing Bank) 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 (or such account of
the Issuing Bank, as it may designate). 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 Business
Day, if received thereafter, by the Administrative Agent.
(b) Apportionment of Payments. (i) Subject to the provisions of Section
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 Borrower;
(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.
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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 pay ment to be made by the
Borrower 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, 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 Borrower 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, the
Issuing Bank 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 juris diction in which
such Lender's office or, to the extent that the imposition of taxes, levies,
imposts, deductions, charges or withholdings results therefrom, any branch
office of such Lender is located from which such Lender makes or maintains any
extension of credit under this Agreement and (iii) the Governmental Authorities
in those jurisdictions in which such Person is organized 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"). Subject to Section 3.03(e), if the Borrower
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, any Issuing Bank 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, such Issuing Bank
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 Borrower shall make such withholdings or deductions, and (z) the Borrower
shall pay the full amount withheld or deducted to the relevant taxation
authority or other authority in accordance with applicable law.
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(b) Other Taxes. In addition, the Borrower agrees 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 Borrower will indemnify each Lender, each Issuing
Bank 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, such Issuing Bank 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 parties) arising there from
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 Borrower 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 Borrower 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
Borrower.
(d) Receipts. Within thirty (30) days after the date of any payment of
Taxes or Other Taxes by the Borrower, the Borrower 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 Borrower 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 Borrower
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and the Administrative Agent on or before the Effective 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 Borrower or the Administrative
Agent shall reasonably request in connection therewith or (C) in the case of a
Lender that is not a "bank" for purposes of Section 881(c) of the Code and that
is claiming exemption from U.S. federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest", a Form W-
8, or any subsequent versions thereof or successors thereto (and, if such Lender
delivers a Form W-8, a certificate representing that such Lender is not a "bank"
for purposes of Section 881(c) of the Code, is not a 10% shareholder (within the
meaning of Section 871(h)93)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning of
Section 864(d)(4) of the Code). 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) or additional
amounts in respect of Taxes pursuant to Section 3.03(a).
(ii) Each such Lender further agrees to deliver to the Borrower and the
Administrative Agent from time to time, a true and accurate certificate executed
in duplicate by a duly author ized 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 Borrower 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
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it is entitled to recover the full amount of any such deduction or
withholding from a source other than the Borrower;
(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
Effective 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 Borrower; 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 Effective Date or
the date on which a Lender became a Lender pursuant to Section 13.01.
Each Lender agrees to deliver to the Borrower 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 Borrower and the Administrative
Agent, unless any change in 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 Borrower 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 or Issuing Bank reasonably
determines that (i) the adoption or implementa tion 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, such Issuing Bank or banks or financial institutions generally (whether
or not having the force of law)
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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
such Issuing Bank or any corporation controlling such Lender or such Issuing
Bank and (ii) the amount of such capital is increased by or based upon (A) the
making or maintenance by any Lender of its Loans, any Lender's participation in
or obligation to participate in the Loans, Letters of Credit or other advances
made hereunder or under the Notes or the existence of any Lender's obligation to
make Loans or (B) the issuance or maintenance by the Issuing Bank of, or the
existence of the Issuing Bank's obligation to issue, Letters of Credit, then, in
any such case, upon demand by such Lender or such Issuing Bank (with a copy of
such demand to the Administrative Agent), the Borrower agrees to immediately pay
to the Administrative Agent for the account of such Lender or such Issuing Bank,
from time to time as specified by such Lender or such Issuing Bank, additional
amounts sufficient to compensate such Lender or such Issuing Bank 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.
3.05. Replacement of Lenders. (a) Upon the occurrence of any event giving
rise to the operation of Section 3.03(e)(ii)(C) or (D), Section 3.04, or Section
4.01(f) with respect to any Lender which results in such Lender charging to the
Borrower increased costs in excess of those being charged generally by the
Lenders, (b) if a Lender becomes in default of its obligations under this
Agreement, (c) in the case of a refusal by a Lender to consent to a proposed
change, waiver, discharge or termination with respect to this Agreement which
requires the consent of all Lenders and has been approved by the Requisite
Lenders and/or (d) if a Lender delivers a notice under Section 4.02(e), the
Borrower shall have the right, if no Event of Default then exists, to replace
such Lender (the "Replaced Lender") with one or more other Eligible Assignees,
none of whom shall be in default of its obligations under this Agreement at the
time of such replacement (collectively, the "Replacement Lender") reasonably
acceptable to the Administrative Agent, provided that (i) at the time of any
replacement pursuant to this Section 3.05, the Replacement Lender shall enter
into one or more Assignment and Acceptances pursuant to Section 13.01 (and with
all fees payable pursuant to Section 13.01(d) to be paid by the Replacement
Lender) pursuant to which the Replacement Lender shall acquire all of the
Commitments and outstanding Loans of the Replaced Lender and, in connection
therewith, shall pay to the Replaced Lender in respect thereof an amount equal
to the sum of (A) an amount equal to the principal of, and all accrued interest
on, all outstanding Loans of the Replaced Lender, (B) an amount equal to all
accrued, but theretofore unpaid, fees owing to the Replaced Lender under this
Agreement and (C) an amount equal to
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all other outstanding Obligations owing to the Replaced Lender, and (ii) all
obligations of the Borrower owing to the Replaced Lender (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid) shall be paid in full
to such Replaced Lender concurrently with such replacement. Upon the execution
of the respective Assignment and Acceptance, the payment of amounts referred to
in clauses (i) and (ii) above and, if so requested by the Replacement Lender,
delivery to the Replacement Lender of the appropriate instruments otherwise
required by this Agreement executed by the Borrower, the Replacement Lender
shall become a Lender hereunder and the Replaced Lender shall cease to
constitute a Lender hereunder, except with respect to indemnification provisions
applicable to the Replaced Lender under this Agreement, which shall survive as
to such Replaced Lender.
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 Swing Loans and 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:
(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 A 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
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Applicable Term A 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 A Loan Eurodollar Rate Margin in
effect from time to time during such Eurodollar Interest Period.
(iii) All Term B 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 B 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 B Loan Eurodollar Rate Margin in
effect from time to time during such Eurodollar Interest Period.
(iv) All Acquisition 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 Acquisition 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 Acquisition Term Loan Eurodollar Rate
Margin in effect from time to time during such Eurodollar Interest Period.
(v) All Swing 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), 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
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Revolving Loan Base Rate Margin in effect at such time minus 0.0025%.
(vi) The applicable basis for determining the rate of interest on the Loans
shall be selected by the Borrower at the time a Notice of Borrowing or a Notice
of Conversion/Continuation is delivered by the Borrower to the Administrative
Agent; provided, however, the Borrower 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 Effective 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 quarter,
commencing on the first such day following the making of such Base Rate Loan and
(B) on the Commitment Termination Date or such other date on which such Loans
become due and payable.
(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 or such other date on which such Loans
become due and payable.
(iii)Interest accrued on the balance of all other Obligations shall be
payable in arrears (A) on the first Business Day of each calendar quarter,
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 Borrower shall have the option (A)
to convert at any time all or any part of the outstanding Base Rate Loans (other
than Swing Loans) to Eurodollar Rate Loans; (B) to convert all or any part of
out standing Eurodollar Rate Loans having Eurodollar Interest Periods which
expire on the same date to Base Rate Loans on such expira tion 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 conver sion 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
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continuing. Any conversion into or continuation of Eurodollar Rate Loans under
this Section 4.01(c) shall be in a minimum amount of Two Million Dollars
($2,000,000) 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 Borrower
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/Continua tion
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 Borrower may give each Lender tele phonic 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 Borrower shall be bound to convert or continue in
accordance therewith.
(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 or any
Issuing Bank 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
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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 an Issuing Bank (or its Applicable Lending
Office) to charges (other than Taxes) of any kind which is applicable to
the Commitments of the Lenders and/or the Issuing Bank to make Eurodollar
Rate Loans or to issue and/or participate in Letters of Credit or changes
the basis of taxation of payments to that Lender or the Issuing Bank of
principal, fees, interest, or any other amount payable hereunder with
respect to Eurodollar Rate Loans or letters of Credit; 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 an Issuing Bank or any Applicable
Lending Office or Eurodollar Affiliate of that Lender or that Issuing Bank;
and the result of any of the foregoing is to increase the cost to that Lender or
that Issuing Bank of making, renewing or maintaining the Loans or its
Commitments or issuing or participating in the Letters of Credit or to reduce
any amount receivable thereunder; then, in any such case, upon written demand by
such Lender or such Issuing Bank (with a copy of such demand to the
Administrative Agent), the Borrower shall immediately pay to the Administrative
Agent for the account of such Lender or such Issuing Bank, from time to time as
specified by such Lender or such Issuing Bank, such amount or amounts as may be
necessary to compensate such Lender or such Issuing Bank 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 Borrower from
time to time, the Administrative Agent shall promptly provide to the Borrower
such information with respect to the applicable Eurodollar Rate as may be
reasonably requested.
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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 Two Million Dollars ($2,000,000) 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 Borrower 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 Borrower may only select, as to a partic ular 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 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 Borrower may not select a Eurodollar Interest Period as to
any Loan if such Eurodollar Interest Period terminates later than the
Commitment Termination Date;
(v) The Borrower may not select a Eurodollar Interest Period with
respect to any portion of princi pal of a Loan which extends beyond a date
on which the Borrower is required to make a scheduled payment of such
portion of principal; and
(vi) There shall be no more than ten (10) Eurodollar Interest Periods
in effect at any one time.
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(c) Determination of Interest Rate. As soon as prac ticable 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 Borrower and to each Lender. The Administrative
Agent's determination shall be presumed to be correct, absent manifest error,
and shall be binding upon the Borrower.
(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 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
Borrower, whereupon (until the Administrative Agent noti fies the Borrower that
the circumstances giving rise to such suspension no longer exist) the right of
the Borrower 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 Borrower to the contrary.
(e) Illegality. (i) If at any time any Lender deter mines (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties) that the making or
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continuation of any Eurodollar Rate Loan has become unlawful or impermissible by
compliance by that Lender with any law, govern mental rule, regulation or order
of any Governmental Authority (whether or not having the force of law and
whether or not fail ure 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 Borrower 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
Borrower's 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 Borrower 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
Borrower and the Administrative Agent, and the Administrative Agent shall
promptly transmit the notice to each other Lender. The Borrower's right to
request, and such Lender's obligation, if any, to make Eurodollar Rate Loans
shall thereupon be restored.
(f) Compensation. In addition to all amounts required to be paid by the
Borrower pursuant to Section 4.01, the Borrower 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 Borrower 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 Borrower 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
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Section 4.02(d) or (e) or (iv) as a consequence of any failure by the Borrower
to repay Eurodollar Rate Loans when required by the terms hereof. The Lender
making demand for such compensation shall deliver to the Borrower 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 Borrower agrees 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 an amount equal
to Revolving Credit Obligations minus the outstanding principal amount of the
Swing Loans for the period commencing on the Effective Date and ending on the
Commitment Termination Date, and (ii) the average amount by which the
Acquisition Term Loan Commitments exceeds the outstanding Acquisition Term Loans
for the period commencing on the Effective Date and ending on the Acquisition
Term Loan Termination Date, at the Commitment Fee Rate on such aggregate amount
payable quarterly, in arrears, on the first Business Day of each calendar
quarter and on the Commitment Termination Date.
(b) Letter of Credit Fee. In addition to any charges paid pursuant to
Section 2.04(g), the Borrower shall pay to the Agent, for the account of the
Lenders in accordance with their respective Pro Rata Shares:
(i) with respect to each Commercial Letter of Credit issued by the
Issuing Bank, a fee at a per annum rate equal to the Applicable Revolving
Loan Eurodollar Rate Margin on the undrawn face amount of such Letter of
Credit, payable quarterly in arrears on the first Business Day of each
calendar quarter,
(ii) with respect to each Standby Letter of Credit issued by the
Issuing Bank, a fee at a per annum rate equal to the Applicable Revolving
Loan Eurodollar Rate Margin on the undrawn face amount of such Letter of
Credit, payable quarterly in arrears on the first Business Day of each
calendar quarter, and
(iii) with respect to each Letter of Credit issued by the Issuing
Bank, during the occurrence and continuation of an Event of Default, an
additional fee in an amount equal to two percent (2%) per annum on the
undrawn face amount of
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such Letter of Credit, payable quarterly in arrears on the first Business
Day of each calendar quarter.
(c) 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 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 Effectiveness of the Amended and Restated
Credit Agreement. This Agreement shall become effective upon the satisfaction
of, and the obligation of each Lender on the Effective Date to make the Loans
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 Effective 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 the Borrower and its
Subsidiaries giving effect to the transactions contemplated in the
Transaction Documents, certified by the Chief Financial Officer (it being
understood that in preparing such balance sheet, the Borrower will use
Monitor's audited balance sheet as of February 28, 1998 and the balance
sheet of Stellex Industries, Inc. and Subsidiaries as of March 30, 1998);
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
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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).
(c) Monitor Acquisition Agreement and Related Matters. The Administrative
Agent and the Lenders shall be satisfied that: (i) the Monitor Acquisition
Documents which are to be entered into as of or prior to the Effective Date
shall have been duly approved and executed and delivered by the parties thereto,
(ii) all conditions precedent to closing under the Monitor Acquisition Agreement
and the other Monitor 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) 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 Effective 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.
(e) Consents. Except as set forth on Schedule 6.01(E), 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 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 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.
(f) No Change in Condition. No change in the condition (financial or
otherwise), business, performance,
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properties, assets or operations of the Borrower and its Subsidiaries, taken as
a whole, shall have occurred since December 31, 1997 (or since February 28,
1998, with respect to Monitor and its Subsidiaries) which change will have or is
reasonably likely to have a Material Adverse Effect.
(g) No Default. No Default or Event of Default shall have occurred and be
continuing or would result from the making of the Loans.
(h) Representations and Warranties. All of the repre sentations 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 Effective Date.
(i) 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 Effective Date, and all expenses (including,
without limitation, reasonable legal fees and expenses) due and payable pursuant
to the Loan Documents on or before the Effective Date.
5.02. Conditions Precedent to All Loans. The obligation of each Lender to
make each Loan requested to be made by it on any Funding Date on or after the
Effective Date, and the agreement of the Issuing Bank to Issue any Letter of
Credit, 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 as of the Effective Date), both
before and after giving effect to the Loans to be made or the Letter of Credit
to be Issued, 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 or the Issuance of the requested
Letter of Credit.
(c) No Change in Condition. As of such date, no change in the condition
(financial or otherwise), business, performance, properties, assets or
operations of the Borrower and its Subsidiaries, taken as a whole, shall have
occurred since December 31, 1997 (or since February 28, 1998, with respect to
Monitor and its Subsidiaries) which change will have or is reasonably likely to
have a Material Adverse Effect.
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Each request by the Borrower for a Loan, each submission by the Borrower of a
Notice of Borrowing, and each acceptance by the Borrower of the proceeds of each
Loan made hereunder, each submission by the Borrower to the Issuing Bank of a
request for Issuance of a Letter of Credit and the Issuance of such Letter of
Credit, shall constitute a representation and warranty by the Borrower as of the
Funding Date in respect of such Loan and as of the date of issuance of such
Letter of Credit, that all the conditions contained in this Section 5.02 have
been satisfied.
5.03. Conditions Precedent to the Acquisition Term Loans. The obligation of
each Lender to make any Acquisition Term Loan requested to be made by it on any
Funding Date on or after the Effective 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 the Chief Financial Officer of the Borrower, 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 Acquisition 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, (iv) the Borrower and its Subsidiaries are in compliance with
the covenants set forth on Schedule 5.03(B) and (v) after giving effect to the
incurrence of the Indebtedness with respect to the Acquisition Term Loans being
made on such Funding Date, the Borrower is compliance with Section 4.3 of the
Subordinated Note Indenture.
(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
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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).
(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 Acquisition 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 result in a Material Adverse Effect.
(e) Consents. The Borrower 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 material consents and authorizations of, and effected all material
notices to and filings with, any Governmental Authority required in connection
with such Permitted Acquisition, in each case, as may be necessary to allow the
Borrower or a Subsidiary of the Borrower, 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 the Borrower for a Acquisition Term Loan, each submission by the
Borrower of a Notice of Borrowing, and each acceptance by the Borrower of the
proceeds of each Acquisition Term Loan made hereunder, shall constitute a
representation and warranty by the Borrower as of the Funding Date in respect of
such Acquisition Term Loan that all the conditions contained in this Section
5.03 have been satisfied.
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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 and to
Issue the Letters of Credit, 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 its
jurisdiction of organization, and (ii) has all requisite power and 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 the Borrower
and its Subsidiaries as of the Effective Date. The Borrower has delivered to the
Administrative Agent true and complete copies of the Governing Documents for
each 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 on 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 termi nation 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
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creation or imposition of any Lien whatsoever upon any of the property or assets
of such Loan Party, other than Liens contem plated 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 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, (ii) filings under the Exchange Act with respect to the
Monitor Acquisition and this Agreement and (iii) consents and filings that have
been obtained or made.
(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. As of the Effective Date, the Borrower 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, 1997 and the related consolidated statements of operations, cash
flows and shareholders equity and the notes thereto of Stellex Industries, Inc.
and its Subsidiaries for such fiscal year then ended and the unaudited
consolidated balance sheet as at March 30, 1998 and the related consolidated
statements of operations, cash flow and shareholders equity of Stellex
Industries, Inc. and its Subsidiaries for such period then ended; and (ii) the
audited consolidated balance sheet as at February 28, 1998 and the related
consolidated statements of operations and cash flows and the notes thereto of
Monitor for the nine months 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 Stellex Industries, Inc. and its Subsidiaries and Monitor, as
applicable, for each of the periods covered thereby as at the respective
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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. The Borrower has delivered to each Lender pursuant to
Section 5.01(a) certain projected financial statements of the Borrower 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 Stellex Industries,
Inc. and its Subsidiaries and Monitor with respect to the financial statements
referred to in Section 6.01(h) nor in any financial statements of the Borrower
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, 1997 with respect to the
Borrower and its Subsidiaries (other than Monitor and its Subsidiaries) and
since February 28, 1998 with respect to Monitor and its Subsidiaries, 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 the Borrower 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 perfor xxxxx, observance or
fulfillment of any 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
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default with respect to any Contractual Obligation, which in the case of either
clause (i) or (ii), individually or in the aggregate, has had or is reasonably
likely to have a Material Adverse Effect.
(n) Disclosure. The representations and warranties of each Loan Party
contained in the Loan Documents and all certifi xxxxx and other documents
delivered pursuant to the terms thereof and the representations and warranties
of each Loan Party con tained in the Monitor Acquisition Documents and all
information, certificates and other documents delivered pursuant to the terms
thereof, taken as a whole, 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 Admini
strative 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-
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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 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 inter preted 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 that
would result in a Material Adverse Effect. 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
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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 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. As of the Effective Date, no Loan Party is a party to
any collective bargaining agreement. 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
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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.
(v) Assets and Properties. Each Loan Party has good and marketable title or
leasehold interests, as applicable, to all of its material 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 in effect as of the Effective Date 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
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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
as of the Effective Date.
ARTICLE VII
REPORTING COVENANTS
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. The Borrower shall main tain a system of
accounting established and administered in accordance with sound business
practices to permit preparation of consolidated financial statements of the
Borrower and its Subsidiaries in conformity with GAAP, and each of the financial
statements described below shall be prepared from such system and records. The
Borrower 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 the Borrower and its Subsidiaries as
at the end of such period and the related statements of income and cash flow of
the Borrower and its Subsidiaries for such fiscal quarter, certified by the
Chief Financial Officer of the Borrower as fairly presenting the financial
position of the Borrower 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 the Borrower 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 the Borrower 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, in all material respects, the xxxxx
cial position of the Borrower 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
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been made in accordance with generally accepted auditing stand ards.
(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
the Borrower 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 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 Borrower has taken, is taking and proposes
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
Borrower'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 Borrower's normal accounting procedures applied
on a consistent basis, for such Fiscal Year and for the four (4) 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 the Borrower and its Subsidiaries as at the end of such Fiscal Year
and (B) forecasted statements of income and cash flow of the Borrower and its
Subsidiaries for such Fiscal Year and changes in financial position of the
Borrower 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), the Borrower shall
provide the
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Administrative Agent with a replacement certificate substantially in the form of
Exhibit I attached hereto (the "Replacement Certificate"), signed by the
Borrower'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 Borrower 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 the
Borrower, on the thirtieth day following the last day of each month, or more
frequently if requested by the Administrative Agent. Each subsequent Borrowing
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 Borrower 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 the Borrower and its Subsidiaries. The Borrower, on or before the Effective
Date, shall deliver a letter addressed to its accountants instructing them to
disclose such information in compliance with this Section 7.03(a).
(b) The Borrower 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 the Borrower 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
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the Borrower to the public concerning material developments in the Borrower's
business.
(c) The Borrower 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 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 Two Million Five Hundred
Thousand Dollars ($2,500,000) or any actions, suits, proceedings or arbitration
which in the aggregate involve money or property valued in excess of Two Million
Five Hundred Dollars ($2,500,000), except where the same is fully covered by
insurance (other than the 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
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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 investi gation 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 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 the Borrower 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) that would have a Material Adverse
Effect has occurred, a statement of the Chief Financial Officer of the
Borrower describing such transaction;
(iii) within ten (10) days after the filing thereof with the DOL, the
IRS or the PBGC, copies of each
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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;
(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, the Borrower 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.
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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 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 Liabili ties 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 (a) entering
into any collective bargaining agreement and (b) learning 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.
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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.
8.03. Compliance with Laws, etc. Each Loan Party shall, (a) comply with all
Requirements of Law and all restric tive 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
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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 canceled
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 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 Borrower, at least ten days prior to taking any such action, and an
opportunity for the Borrower 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 or in
the aggregate not in excess of Fifteen Million Dollars ($15,000,000) 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 as follows: (i) if no Default or
Event of Default then
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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 twelve months. Thereafter, the Administrative Agent shall be entitled
to receive such proceeds to apply against the Obligations.
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 Borrower's expense; provided, however, so
long as no Event of Default exists, the Borrower 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.
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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
material 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 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 tak ing 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 authoriza
tion 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.
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8.13. Year 2000 Compliance. The Borrower shall take all actions necessary
to assure that all software necessary for the current operations of its business
and the businesses of its Subsidiaries will (i) record, store, process,
calculate, present and insert time and accurate dates and calculations for
calendar dates falling on or after January 1, 2000, (ii) record, store, process,
calculate and present any information dependent on or relating to such dates in
the same manner and with the same functionality, data integrity and performance
as the software records, stores, processes, calculates and presents calendar
dates on or before December 31, 1999, and (iii) lose no functionality with
respect to the introduction of records, including but not limited to back-up and
archived information and/or data, containing dates falling on or after January
1, 2000.
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;
(iv) to the extent permitted by Section 10.05, 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 Fifteen Million Dollars ($15,000,000);
(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) other unsecured Indebtedness incurred in the ordinary course of
business in an aggregate principal amount
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of up to Two Million Five Hundred Thousand Dollars ($2,500,000) 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), taken as a whole,
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), taken as a whole, 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 indebtedness, and (C) the proceeds of such
subordinated indebtedness are applied in accordance with Section
3.01(b)(ii);
(xii) Indebtedness of the Borrower 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
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the Borrower or a Subsidiary of the Borrower (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 the Borrower or a Subsidiary of the
Borrower) and Indebtedness assumed by the Borrower or a Subsidiary of the
Borrower 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 Ten Million Dollars ($10,000,000) 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 Twenty Million Dollars ($20,000,000) 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
principal amount outstanding at such time with respect to such Indebtedness
and (B) that such extension, substitution, renewal or replacement is on
terms (other than pricing) and conditions, taken as a whole, 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;
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(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
One Million Dollars ($1,000,000) in any Fiscal Year;
(iv) the disposition of Property by casualty or condemnation, provided
that the proceeds of any claim or settlement in connection therewith are
applied in accordance with Section 8.05(b);
(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;
(vi) Permitted Dispositions;
(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;
(viii) all licenses granted in connection with the Xxxxxxx-Xxxxxxx
Acquisition; and
(ix) dispositions contemplated by the Monitor Acquisition Documents.
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;
(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;
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(vi) Liens on property of a Person existing at the time such Person
becomes a Subsidiary of the Borrower, 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
the Borrower or a Subsidiary of the Borrower, 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 One Million Dollars
($1,000,000) 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 another Loan Party;
(iii) Investments in Interest Rate Contracts permitted pursuant to
Section 9.01(vii);
(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;
(v) the promissory note issued by DynaLantic to Monitor Aerospace
Corporation on May 1, 1996 in the principal amount of $250,000; and
(vi) 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 $5,000,000 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
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Bureau Guaranty, (iii) lease obligations in connection with office space in New
York, New York where the Borrower and Mentmore Holdings Corporation will be
joint tenants, (iv) Accommodation Obligations by one Loan Party on behalf of
another Loan Party but only in connection with Indebtedness permitted pursuant
to Section 9.01(i), (ii), (iii) (iv), (v), (vi), (vii), (viii), (x), (xi),
(xii), (xiv) or (xv), 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 the Borrower) to the Borrower or another Loan Party;
(ii) payments of interest on the Subordinated Notes or the other
subordinated indebtedness permitted pursuant to Section 9.01(x) or Section
9.01(xi), 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 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
$1,000,000 during any Fiscal Year; provided, further, that, with respect to
any Fiscal Year after December 31, 2000, (A) if the Leverage Ratio for the
Borrower 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 $3,500,000 and (B) if the Leverage Ratio
for the Borrower 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 $5,000,000; 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
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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 (other than another Loan Party) 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 or benefits (including deferred compensation, retirement
benefits, loan arrangements, equity participation arrangements and severance
benefits or pursuant to employment agreements, employee benefit plans, stock
option agreements, management equity subscription agreements or similar
management investor agreements) paid to current and former officers, directors
and managers of such Loan Party commensurate with salary, bonus, compensation
and benefit levels of other companies engaged in a similar business in similar
circumstances, (iii) transactions permitted under Sections 9.01(v), 9.01(xii)
9.01(xiii), 9.04(ii), 9.05, 9.06, 9.09 and 9.16, (iv) the Monitor Seller Note
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 reasonably
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satisfactory to the Administrative Agent and the Collateral Agent 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) in the event that such Permitted
Acquisition involves the acquisition of stock or other evidence of beneficial
ownership of any Person, the Loan Party acquires at least 75% of the equity
interests (including 75% of the Voting Stock) 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 Collateral Agent.
(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) 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 Collateral Agent.
(d) Except as permitted under this Agreement, no Loan Party shall change
its corporate, capital or legal structure in any material respect which is
adverse to the interests of the Lenders.
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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, other than the sale and leaseback of real property provided that the sale
of such real property is for fair market value to a Person that is not an
Affiliate and the proceeds are applied in accordance with Section 3.01(b)(i).
9.11. Margin Regulations. No Loan Party shall use all or any portion of the
proceeds of any Loan made under this Agree ment 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;
(iii) fail, or permit any ERISA Affiliate to fail, to pay timely
required contributions or annual install ments 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
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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. Amendment of Governing Documents. Except as permitted under this
Agreement, no Loan Party shall amend, supplement or otherwise change its
Governing Documents in any material respect which is adverse to the interests of
the Lenders.
9.14. Environmental Liabilities. Except as disclosed in Schedule 6.01(P),
no Loan Party shall become subject to any Liabilities and Costs which exceed Two
Million Dollars ($2,000,000) in a particular instance or Five Million Dollars
($5,000,000) 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.
9.15. 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.
9.16. 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 (which are subordinated on the terms set forth in the
Subordination Agreement dated as of the date hereof among the Borrower,
Mentmore Holdings Corporation, the Administrative Agent and the Collateral
Agent)in an amount not to exceed (A) One Million Dollars ($1,000,000)
during any Fiscal Year, exclusive of expenses, and (B) after December 31,
1998, additional payments in an amount not to exceed one percent (1%) of
sales for the Borrower 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 the Borrower 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;
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(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 Monitor Acquisition Documents in an amount not to
exceed One Million Dollars ($1,000,000), exclusive of expenses; 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,
exclusive of expenses.
9.17. 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.
9.18. Amendment of Subordinated Documents. No Loan Party shall (i) amend,
supplement or otherwise change the provisions of the Subordinated Note Documents
or any documents evidencing the subordinated indebtedness referred to in Section
9.01(xi) in any material respect which would be adverse to the interests of the
Lenders or (ii) designate any Indebtedness as "Designated Senior Indebtedness"
for purposes of the Subordinated Note Indenture.
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 the Borrower 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) $2,500,000 plus (ii) an amount
equal to 50% of Net Income since the Effective Date (excluding any losses).
10.02. Minimum Interest Coverage Ratio. The Interest Coverage Ratio (as it
may be adjusted on a Pro Forma Basis for any Permitted Acquisition) of the
Borrower and its Subsidiaries on a consolidated basis at the end of each
Financial Covenant
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Period set forth below shall not be less than the ratio set forth opposite such
date:
Financial Covenant
Period Ending: Ratio
------------------ -----
September 30, 1998 1.75 to 1.00
December 31, 1998 1.75 to 1.00
March 31, 1999 1.75 to 1.00
June 30, 1999 1.75 to 1.00
September 30, 1999 1.75 to 1.00
December 31, 1999 1.75 to 1.00
March 31, 2000 1.75 to 1.00
June 30, 2000 1.75 to 1.00
September 30, 2000 1.75 to 1.00
December 31, 2000 2.00 to 1.00
March 31, 2001 2.00 to 1.00
June 30, 2001 2.00 to 1.00
September 30, 2001 2.00 to 1.00
December 31, 2001 2.25 to 1.00
March 31, 2002 2.25 to 1.00
June 30, 2002 2.25 to 1.00
September 30, 2002 2.25 to 1.00
December 31, 2002 2.50 to 1.00
March 31, 2003 2.50 to 1.00
June 30, 2003 2.50 to 1.00
September 30, 2003 2.50 to 1.00
December 31, 2003 2.50 to 1.00
March 31, 2004 2.50 to 1.00
June 30, 2004 2.50 to 1.00
September 30, 2004 2.50 to 1.00
December 31, 2004 2.50 to 1.00
March 31, 2005 2.50 to 1.00
June 30, 2005 2.50 to 1.00
September 30, 2005 2.50 to 1.00
December 31, 2005 2.50 to 1.00
10.03. Minimum Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio
(as it may be adjusted on a Pro Forma Basis for any Permitted Acquisition) of
the Borrower and its Subsidiaries on a consolidated basis at the end of each
Financial Covenant Period set forth below shall not be less than ratio set forth
opposite such date:
Financial Covenant
Period Ending: Ratio
------------------ -----
September 30, 1998 1.10 to 1.00
December 31, 1998 1.10 to 1.00
March 31, 1999 1.10 to 1.00
June 30, 1999 1.10 to 1.00
September 30, 1999 1.10 to 1.00
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December 31, 1999 1.10 to 1.00
March 31, 2000 1.10 to 1.00
June 30, 2000 1.25 to 1.00
September 30, 2000 1.25 to 1.00
December 31, 2000 1.50 to 1.00
March 31, 2001 1.50 to 1.00
June 30, 2001 1.50 to 1.00
September 30, 2001 1.50 to 1.00
December 31, 2001 1.50 to 1.00
March 31, 2002 1.50 to 1.00
June 30, 2002 1.50 to 1.00
September 30, 2002 1.50 to 1.00
December 31, 2002 1.50 to 1.00
March 31, 2003 1.50 to 1.00
June 30, 2003 1.50 to 1.00
September 30, 2003 1.50 to 1.00
December 31, 2003 1.50 to 1.00
March 31, 2004 1.50 to 1.00
June 30, 2004 1.10 to 1.00
September 30, 2004 1.10 to 1.00
December 31, 2004 1.10 to 1.00
March 31, 2005 1.10 to 1.00
June 30, 2005 1.10 to 1.00
September 30, 2005 1.10 to 1.00
December 31, 2005 1.10 to 1.00
10.04. Maximum Leverage Ratio. The Leverage Ratio (as it may be adjusted on
a Pro Forma Basis for any Permitted Acquisition) of the Borrower 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
------------------ -----
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 5.50 to 1.00
September 30, 1999 5.50 to 1.00
December 31, 1999 5.25 to 1.00
March 31, 2000 5.25 to 1.00
June 30, 2000 5.25 to 1.00
September 30, 2000 5.25 to 1.00
December 31, 2000 4.50 to 1.00
March 31, 2001 4.50 to 1.00
June 30, 2001 4.50 to 1.00
September 30, 2001 4.50 to 1.00
December 31, 2001 4.25 to 1.00
March 31, 2002 4.25 to 1.00
June 30, 2002 4.25 to 1.00
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September 30, 2002 4.25 to 1.00
December 31, 2002 4.00 to 1.00
March 31, 2003 4.00 to 1.00
June 30, 2003 4.00 to 1.00
September 30, 2003 4.00 to 1.00
December 31, 2003 4.00 to 1.00
March 31, 2004 4.00 to 1.00
June 30, 2004 4.00 to 1.00
September 30, 2004 4.00 to 1.00
December 31, 2004 4.00 to 1.00
March 31, 2005 4.00 to 1.00
June 30, 2005 4.00 to 1.00
September 30, 2005 4.00 to 1.00
December 31, 2005 4.00 to 1.00
10.05. Capital Expenditures. None of the Loan Parties shall make or
incur any Capital Expenditures (a) during the Fiscal Year 1998 if, after giving
effect to such Capital Expenditures, the aggregate amount of all Capital
Expenditures made by the Loan Parties would exceed Twelve Million Dollars
($12,000,000) 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 Ten Million Dollars ($10,000,000) for such Fiscal Year; provided,
however, the Loan Parties may carry forward from one Fiscal Year to the next
Fiscal Year (but not to any subsequent Fiscal Year) any Capital Expenditures
permitted but not made or incurred in such Fiscal Year.
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 Borrower shall fail to pay
any principal of the Loans or the Reimbursement Obligations 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.
(b) Breach of Representation or Warranty. Any repre sentation 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.
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(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 those Sections of the
Loan Documents that are similar to the Sections referred to is in this Section
11.01(c).
(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)) or under any other Loan Document (other than as described in Section
11.01(c), 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 or (ii) the Xxxxxxxx Seller Note or the Monitor Seller Note
provided that the failure to make any payment under either the Xxxxxxxx Seller
Note or the Monitor Seller Note does not give rise to a default or event of
default under or in connection with any other Indebtedness which is in an
aggregate amount of $2,500,000 or more) if the aggregate amount of such other
Indebtedness is Two Million Five Hundred Thousand Dollars ($2,500,000) 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 Two Million Five Hundred Thousand Dollars
($2,500,000).
(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 sixty (60)
days; or a court
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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
sixty (60) 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 sixty
(60) 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.
(i) Dissolution. Any order, judgment or decree shall be entered against
any Loan Party decreeing its involuntary dis solution or split up and such order
shall remain undischarged and
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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 the 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 the Borrower's performance or malfeasance thereunder which
could reasonably result in a Material Adverse Effect; (iii) the 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 the Borrower which could reasonably result in criminal
liability, suspension, debarment or any other adverse administrative action
arising by reason of alleged fraud, willful misconduct or other wrongdoing; (v)
a Government investigation shall have been commenced in connection with any
Material Contract or the Borrower which could reasonably result in material
civil liability or any other material adverse administrative action
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arising by reason of alleged neglect or default or other wrongdoing; (vi) the
actual 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 (vii) a cure notice issued under any Material
Contract shall remain uncured beyond (A) the expiration of the time period
available to the Borrower pursuant to such Material 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
Material 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 Borrower, 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, valua tion 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 Borrower.
(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 SG 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
Collateral Agent of such Lender under this Agreement, and each Lender hereby
irrevocably authorizes 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 Collateral Agent
shall not be required to exercise any discretion or take any action.
Notwithstanding the foregoing, 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 Collateral Agent shall not be required to take any action which (i)
the Collateral Agent believes will expose it to personal liability unless the
Collateral 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
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applicable law. 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 the Borrower and the other Loan Parties in connection with the Loans
hereunder and shall make its own appraisal of the credit worthiness of the
Borrower 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 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
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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, represen tations
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 the Borrower 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 the Borrower 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.
12.05. Indemnification. To the extent that the Agents are not reimbursed
and indemnified by the Borrower, the Lenders will reimburse and indemnify each
Agent for and against any and all liabilities, obligations, losses, damages,
penalties,
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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, SG
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
SG and First Union in their respective individual capacities as a Lender or one
of the Requisite Lenders. Each of SG 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 Borrower 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 the Borrower (which may not be unreasonably withheld,
and shall not be required upon the occurrence and during the continuance of an
Event of Default or Default).
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(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 or Collateral 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
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
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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), (vi) and (vii) when the Collateral Agent receives a
certificate from the Borrower pursuant to which the Borrower represents and
warrants that the Collateral is being sold, assigned, transferred, conveyed or
otherwise disposed of in compliance with Section 9.02.
(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 the Borrower, 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 five (5) Business Days prior written request by the Borrower, the
Collateral Agent shall (and is hereby irrevocably authorized by Lenders to)
execute such documents as may be necessary to
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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 Borrower 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) Assign ments. 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 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 all of an assigning Lender's rights and
obligations in respect of any of its Loans or Commitments being assigned under
this Agreement and its related Note and, in the case of a partial
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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 that no fee shall be payable in the case
of an assignment to another Lender, an Affiliate of a Lender or an Approved
Fund; and provided further that in the case of contemporaneous assignments by a
Lender to more than one fund managed by the same investment advisor (which funds
are not then Lenders hereunder, Affiliates thereof or Approved Funds), only a
single fee of $3,500 shall be payable for all such contemporaneous assignments);
provided, however, any Lender may assign any or all of its rights and
obligations under this Agreement to any of its Affiliates or to any Approved
Fund without notice to or consent of the Borrower or the Administrative Agent
and without being subject to the foregoing conditions. For purposes of this
Section 13.01, an "Approved Fund" shall mean, with respect to any Lender that is
a fund that invests in bank loans, any other fund that invests in bank loans
which is managed or advised by the same investment advisor as such Lender or by
an affiliate of such investment advisor. 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 pur suant 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 obliga tions 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
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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 Borrower 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 Acceptance has
been accepted by the Administrative Agent and registered in the Register.
(d) Fee. Upon its receipt of an Assignment and Accep tance 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 informa tion contained therein in the Register and
(iii) give prompt notice thereof to the Borrower and the other Lenders.
(e) Participations. Each Lender may sell partici pations 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 Borrower, 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
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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 Borrower. Any Lender may, in connection
with any assignment or participation or pro posed assignment or participation
pursuant to this Section 13.01, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the Borrower
furnished to such Lender by any Agent or by or on behalf of the Borrower;
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 Agree ment to the contrary
notwithstanding, in the case of any participation, all amounts payable by the
Borrower 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 Borrower 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 Borrower 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 Borrower 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
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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 Borrower to such Lender under Section 13.05
hereof with respect to events occurring or obligations arising before such
replacement shall survive such replacement.
13.04. Expenses.
(a) Generally. The Borrower agrees 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 Borrower; (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 the 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 the 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 Borrower further agrees to pay or reimburse each
Agent and each Lender upon demand for all out-of-pocket costs and expenses,
including, without limitation,
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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, the 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 Borrower further agrees 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 the
Borrower or any of its predecessors in interest, or, the past, present or future
environmental condition of any Property of the Borrower, the presence of
asbestos-containing materials at any Property of the Borrower or the Release or
threatened Release of any Contaminant into the environment from any Property of
any (collectively, the "Indemnified Matters"); provided, however, the Borrower
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
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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 Borrower 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 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 the Borrower and
its Subsidiaries with the agree ment 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 the Borrower 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 the Borrower, 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 the 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 the Borrower against and on account of the Obligations of the
Borrower 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 con
nection 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
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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
the Borrower now or hereafter maintained with such Lender or any of its
Affiliates.
13.08. Ratable Sharing. The Lenders agree among them selves that (i)
with respect to all amounts received by them 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.
The 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 the 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 Borrower, and no termination or waiver of any provision of this
Agreement or the Notes, or consent to any departure by the Borrower therefrom,
shall be effective without the written
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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
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), provided that if all of the Lenders of a
particular Class consent in writing to a reduction in the rate or amount of
interest on the outstanding Loans of that Class or fees payable in connection
therewith, such consent shall be effective with respect to such Lenders, (d)
postponement of the Commitment Termination Date or any other date fixed for any
payment (including any mandatory prepayment) 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 Borrower in any case shall entitle the Borrower 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 Schedule I attached hereto or the signature
page of any
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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 Borrower agrees 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 Borrower; provided that the Borrower shall have no
obligation under this Section 13.10(b) to an 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 Borrower 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 the 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 the Borrower or
any other Person or against or in payment of any or all of the Obligations. To
the extent that the Borrower makes 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
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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 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 substan tive 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 the 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
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shall inure to the benefit of the parties thereto and the successors and
permitted assigns of the Lenders. The rights hereunder of the Borrower, 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 AND THE
BORROWER 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 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. THE
BORROWER 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 CLOSING DATE 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 BORROWER 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. THE BORROWER WAIVES IN ALL
DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING
THE DISPUTE.
(ii) THE BORROWER AGREES THAT EACH AGENT SHALL HAVE THE RIGHT TO PROCEED
AGAINST IT 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. THE BORROWER 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. THE
BORROWER 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. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE
OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES
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THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PROCESS AGENT
OR THE BORROWER'S NOTICE ADDRESS SPECIFIED BELOW. THE BORROWER 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 PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE AGENTS, THE LENDERS AND THE
BORROWER 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 supple ments 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 the 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 Borrower 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
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materials furnished by the Borrower; 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 Borrower in connection with
this Agreement.
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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, President, Chief
Executive Officer and Treasurer
SOCIETE GENERALE, as Administrative Agent
By: /s/ Xxxx X. Xxxxx
Title: Director
FIRST UNION COMMERCIAL CORPORATION, as
Collateral Agent
By: /s/ Xxxx XxXxxxx
Title: Vice President
FIRST UNION COMMERCIAL CORPORATION, as
Lender
By: /s/ Xxxx XxXxxxx
Title: Vice President
SOCIETE GENERALE, as Lender
By: /s/ Xxxx X. Xxxxx
Title: Director
FLEET NATIONAL BANK, as Lender
By: /s/ Xxxxx X. Xxxxx
Title: Assistant Vice President
GENERAL ELECTRIC CAPITAL CORPORATION,
as Lender
By: /s/ Xxxxx Xxxxx
Title: Risk Manager
SENIOR HIGH INCOME PORTFOLIO,INC.,
as Lender
By: /s/ Xxx Xxxxxxxx
Title: Vice President, Portfolio Manager
PARIBAS CAPITAL FUNDING LLC, as Lender
By: /s/ Xxxxxxx X. Xxxxx
Title: Director
EXHIBIT A
Form of Assignment and Acceptance
ASSIGNMENT AND ACCEPTANCE
ASSIGNMENT AND ACCEPTANCE dated as of ____________ __, 199_, between
_______________________ (the "Assignor") and __________________________ (the
"Assignee").
PRELIMINARY STATEMENTS
A. Reference is made to the Amended and Restated Credit Agreement dated as
of May 29, 1998 among Stellex Industries, Inc., (the "Borrower"), 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 capacity as collateral agent for the Lenders (the
"Collateral Agent", and together with the Administrative 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, [[Acquisition] Term
[A] [B] Loans in the principal amount of $_________ (the "Assigned
Interest")](1) [a ___ percent (____%) interest in the Assignor's Revolving Loan
Commitment (the "Assigned Percentage")](2) together with the Assignor's rights
and obligations under the Credit Agreement with respect to the Assigned
[Interest] [Percentage].
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(1) To be used for assignments of Term Loans and Term Loan Commitments of the
applicable type. The Assigned Interest shall be in compliance with the
minimum principle amount permitted for a partial assignment under Section
13.01(b) of the Credit Agreement.
(2) To be used for assignments of Revolving Loan and Revolving Loan
Commitments. The Assigned Percentage shall be in compliance with the
minimum principal amount permitted for a partial assignment under Section
13.01(b) of the Credit Agreement.
NOW, THEREFORE, the Assignor and the Assignee hereby agree as follows:
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 [Interest]
[Percentage], together with the Assignor's rights and obligations under the
Credit Agreement with respect to such Assigned [Interest] [Percentage].
2. The Assignor (i) 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; (ii) 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; (iii) 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 the Borrower of its obligations under the Credit
Agreement, any other Loan Document or any instrument or document furnished
pursuant thereto; and (iv) attaches the Note[s] delivered to it under the Credit
Agreement listed below, and has requested that the Borrower exchange such
Note[s] for the new Note[s] listed immediately thereafter:
I. Attached Note[s] being returned to the Borrower:
[Name of Assignor] [Type and Amount of Note]
II New Note[s] to be executed and delivered by the Borrower:
[Revolving] [[Acquisition] [Revolving][[Acquisition]
Term] [A] [B]
Term] [A] [B] Loan Loan Note Amount
Note Payable
to the Order of:
[Name of Assignor] $_________
[Name of Assignee] $_________
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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
clause (i) 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.
4. The effective date for this Assignment and Acceptance shall be
___________ __, 199_ (the "Effective Date").(3) Following the execution of this
Assignment and Acceptance, it will be delivered to the Administrative Agent for
acceptance by the 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]4.
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 [Interest] [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
[Interest] [Percentage] (including, without limitation, all payments of
principal, interest and fees with respect thereto) to the Assignee. The Assignor
and
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(3) 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.
(4) Insert applicable selection.
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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.
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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:________________________
[NAME OF ASSIGNEE]
By______________________________
Name:_________________________
Title:________________________
Notice Address:
Agreed to and accepted this ___
day of ___________, 199_
SOCIETE GENERALE, as Administrative Agent
By____________________________
The undersigned Borrower hereby confirms its acceptance of the Assignee as an
Eligible Assignee.
STELLEX INDUSTRIES, INC.
By____________________________
Name:
Title:
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EXHIBIT B
Form of Borrowing Base Certificate
BORROWING BASE CERTIFICATE
To: Societe General, 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 Amended and Restated Credit Agreement
dated as of May 29, 1998 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement") among Stellex Industries,
Inc.(the "Borrower"), the financial institutions from time to time party
thereto (the "Lenders"), the Administrative Agent and the Collateral 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 Borrower as of the close of business on _____________________
is true, accurate and complete.
A. Inventory
Total Inventory: ________________________
(less) non-Eligible Inventory: ________________________
equals Eligible Inventory: ________________________
Value of Eligible Inventory ________________________
consisting of unbilled ________________________
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1 Insert different title if being delivered by other office or member of
management of Stellex Industries, Inc. with significant responsibility for
its financial affairs.
receivables(2) ___________________________
Value of Eligible Inventory ___________________________
consisting of offloaded ___________________________
Inventory(3) ___________________________
50% of Eligible Inventory:
___________________________("T1")
B. Receivables
Total Receivables: ____________________________
(less) non-Eligible Receivables:
____________________________
____________________________
____________________________
equals Eligible Receivables:
____________________________
Value of Eligible
Receivables arising
from sales to account
debtors located in
OECD countries4
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.
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(2) May not exceed $2,000,000, valued in accordance with GAAP
(3) May not exceed $4,000,000, aggregate value in accordance with GAAP
(4) May not exceed $2,000,000
STELLEX INDUSTRIES, INC.
By:___________________________
Name:
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 Amended and Restated Credit Agreement dated as
of May 29, 1998 (as amended, restated, supplemented or otherwise modified
from time to time, the "Credit Agreement")1 among Stellex Industries, Inc.,
a Delaware corporation (the "Borrower"), the financial institutions from
time to time parties thereto as lenders (the "Lenders"), First Union
Commercial Corporation, in its capacity as collateral agent for the
Lenders, and the Administrative Agent.
Pursuant to Section [2.01(b)][2.02(b)] [2.03(b)] of the Credit Agreement,
this Notice of Borrowing (this "Notice") represents the request of the Borrower
to borrow on [the date hereof] [_______________, 199__ ](the "Funding Date")from
the Lenders the principal amount of [Revolving Loans](2) [Term Loans](3) [Swing
Loans](4) of $______________ as [Base Rate Loans] [Eurodollar Rate Loans](5).
[The Interest Period for such
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(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 three (3) 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.
(4) For Borrowings of Swing Loans, a Notice of Borrowing must be given no later
than 12:00 P.M. (New York time) on the day of the proposed Borrowing.
(5) 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.
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
$_____________.](6)
The undersigned certifies that as of the Funding Date all of the conditions
precedent contained in [Sections 5.01,](7) 5.02 [and 5.03](8) 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:___________________________
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(6) To be used for Revolving Loans.
(7) To be used for Loans to be made on the Closing Date.
(8) To be used for Acquisition Term Loans.
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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 Amended and Restated Credit Agreement dated as
of May 29, 1998 (as amended, restated, supplemented or otherwise modified
from time to time, the "Credit Agreement") among Stellex Industries, Inc.,
a Delaware corporation (the "Borrower"), the financial institutions from
time to time parties thereto as lenders (the "Lenders"), First Union
Commercial Corporation, in its capacity as collateral 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 Borrower
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.]
[2. Convert $_____________ in aggregate principal amount of
outstanding Eurodollar Rate Loans to Base Rate Loans on
__________________, 199__.(3)]
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(1) Must be in a principal amount of at least $2,000,000 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.
(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].
[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.]
[The Borrower 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 Borrower 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)
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:_________________________
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(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
$2,000,000 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.
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EXHIBIT F-1
Form of Revolving Loan Note
REVOLVING LOAN NOTE
$__________ May 29, 0000
Xxx Xxxx, Xxx Xxxx
For value received, the undersigned, STELLEX INDUSTRIES, INC., a Delaware
corporation (the "Borrower"), promises to pay to the order of ______________
(the "Lender"), on the Commitment Termination Date (as defined in the Credit
Agreement referred to below), the lesser of (i) the principal amount of
__________________________ ($__________) or (ii) the unpaid principal amount of
all Revolving Loans made by the Lender to the Borrower under the Credit
Agreement (referred to below).
The Borrower also promises 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 Amended and Restated Credit
Agreement dated as of May 29, 1998 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement") among the
Borrower, 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 capacity as collateral 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 Borrower
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 Borrower 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 Borrower 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 Borrower, 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 Borrower promises 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 Borrower hereby waives diligence,
presentment, protest, demand and notice of every kind except as required
pursuant to the Credit Agreement.
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.
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IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and at the
place first above written.
STELLEX INDUSTRIES, INC.
By:______________________________
Title:___________________________
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EXHIBIT F-2
Form of Term A Loan Note
TERM A LOAN NOTE
$__________ May 29, 0000
Xxx Xxxx, Xxx Xxxx
For value received, the undersigned, STELLEX INDUSTRIES, INC., a Delaware
corporation, promises to pay to the order of ______________________________ (the
"Lender") the principal amount of _______________ ($__________) in twenty-two
(22) consecutive quarterly installments on the dates and in the principal
amounts set forth in the Credit Agreement (referred to below); provided,
however, that the amount of the last such installment on December 31, 2003 shall
be in the amount necessary to repay in full the outstanding principal amount of
the Term A Loan represented by this Note.
The Borrower also promises 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 Amended and Restated Credit
Agreement dated as of May 29, 1998 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement") among the
Borrower, 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 capacity as collateral 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 A 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 Borrower
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 Borrower 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 A 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 Borrower 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 Borrower, 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 Borrower promises 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 Borrower hereby waives diligence,
presentment, protest, demand and notice of every kind except as required
pursuant to the Credit Agreement.
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.
-2-
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and at the
place first above written.
STELLEX INDUSTRIES, INC.
By:______________________________
Title:___________________________
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EXHIBIT F-3
Form of Term B Loan Note
TERM B LOAN NOTE
$__________ May 29, 0000
Xxx Xxxx, Xxx Xxxx
For value received, the undersigned, STELLEX INDUSTRIES, INC., a Delaware
corporation, promises to pay to the order of ______________________________ (the
"Lender") the principal amount of _______________ ($__________) in thirty (30)
consecutive quarterly installments on the dates and in the principal amounts set
forth in the Credit Agreement (referred to below); provided, however, that the
amount of the last such installment on December 31, 2005 shall be in the amount
necessary to repay in full the outstanding principal amount of the Term B Loan
represented by this Note.
The Borrower also promises 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 Amended and Restated Credit
Agreement dated as of May 29, 1998 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement") among the
Borrower, 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 capacity as collateral 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 B 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 Borrower
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 Borrower 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 B 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 Borrower 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 Borrower, 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 Borrower promises 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 Borrower hereby waives diligence,
presentment, protest, demand and notice of every kind except as required
pursuant to the Credit Agreement.
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.
-2-
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and at the
place first above written.
STELLEX INDUSTRIES, INC.
By:______________________________
Title:___________________________
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EXHIBIT F-4
Form of Term Acquisition Loan Note
ACQUISITION TERM LOAN NOTE
$__________ May 29, 0000
Xxx Xxxx, Xxx Xxxx
For value received, the undersigned, STELLEX INDUSTRIES, INC., a Delaware
corporation, promises to pay to the order of ______________________________ (the
"Lender") the lesser of (i) the principal amount of _______________
($__________) or (ii) the unpaid principal amount of all Acquisition Term Loans
made by the Lender to the Borrower under the Credit Agreement (referred to
below) in fifteen (15) consecutive quarterly installments on the dates and in
the principal amounts set forth in the Credit Agreement; provided, however, that
the amount of the last such installment on December 31, 2003 shall be in the
amount necessary to repay in full the outstanding principal amount of the
Acquisition Term Loan represented by this Note.
The Borrower also promises 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 Amended and Restated Credit
Agreement dated as of May 29, 1998 (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement") among the
Borrower, 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 capacity as collateral 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 Acquisition 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
Borrower 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 Borrower 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 Acquisition 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 Borrower
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 Borrower, 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 Borrower promises 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 Borrower hereby waives diligence,
presentment, protest, demand and notice of every kind except as required
pursuant to the Credit Agreement.
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.
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IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its duly authorized officers, as of the day and year and at the
place first above written.
STELLEX INDUSTRIES, INC.
By:______________________________
Title:___________________________
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EXHIBIT F-5
FORM OF SWING LOAN NOTE
SWING LOAN NOTE
$____________ May 29, 0000
Xxx Xxxx, Xxx Xxxx
For value received, the undersigned, STELLEX INDUSTRIES, INC., a Delaware
corporation (the "Borrower"), promises to pay to the order of _____________ (the
"Swing Loan Lender"), the lesser of (i) the principal amount of TWO MILLION
DOLLARS ($2,000,000) or (ii) unpaid principal amount of all Swing Loans made by
the Swing Loan Lender to the Borrower under the Credit Agreement. The principal
indebtedness evidenced hereby shall be payable on the dates and in accordance
with the payment terms set forth in the Credit Agreement.
The Borrower also promises to pay interest on the unpaid principal amount
of the Swing Loan Notes made 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 that certain
Amended and Restated Credit Agreement dated as of May 29, 1998 (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement") among the Borrower, 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 capacity as collateral
agent for the Lenders.
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 Swing 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 Borrower
hereunder. Terms defined in the Credit Agreement and not otherwise defined
herein are used herein with the meanings so defined.
All payments of principal and interest in respect of this Note shall be
made to the Administrative Agent's Account on demand in lawful money of the
United States of America in immediately available funds.
This Note may be prepaid at the option of the Borrower as provided in
Section 3.01(9) of the Credit Agreement, and must be prepaid as provided in
Section 3.01(b) 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 provision of this Note,
the Credit Agreement or the other Loan Documents shall alter or impair the
obligation of the Borrower, 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 Borrower promises 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 Borrower hereby waives diligence,
presentment, protest, demand and notice of every kind except as required
pursuant to the Credit Agreement.
The Credit Agreement and this Note shall be governed by, and shall be
construed and enforced in accordance with, the law of the State of New York.
2
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year and at the
place first above written.
STELLEX INDUSTRIES, INC.
By____________________________
Name:
Title:
3
EXHIBIT G
Form of Officer's Certificate to Accompany Reports
OFFICER'S CERTIFICATE
To: Societe Generale, in its capacity as agent (with its successors in such
capacity, the "Agent") for the Lenders (as defined below) under the Amended
and Restated Credit Agreement dated as of May 29, 1998 (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement") among Stellex Industries, Inc., a Delaware corporation (the
"Borrower"), the financial institutions from time to time party thereto as
lenders (the "Lenders"), First Union Commercial Corporation, in its
capacity as Collateral Agent for the Lenders and the Administrative Agent.
Pursuant to Section 7.01(d) of the Credit Agreement, the __________________
of the Borrower 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 Borrower
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 Borrower and its Subsidiaries.
STELLEX INDUSTRIES, INC.
By:_______________________
Name:
Title:
EXHIBIT H
FORM OF COMPLIANCE CERTIFICATE
This Compliance Certificate is delivered to you pursuant to Section
7.01(c)(ii)of the Amended and Restated Credit Agreement dated as of May 29, 1998
(as amended from time to time, the "Credit Agreement") among Stellex Industries,
Inc. (the "Borrower" or the "Company"), the financial institutions party thereto
(the "Lenders"), Societe Generale ("Societe Generale"), in its capacity as
administrative agent (in such capacity, the "Administrative Agent"), and First
Union Commercial Corporation, in its capacity as collateral agent (the
"Collateral Agent" and together with the Administrative Agent, the "Agents").
The Company hereby delivers to each Lender, together with the financial
statements being delivered to the Lenders pursuant to Section [7.01(a)]
[7.01(b)] of the Credit Agreement, this Compliance Certificate (this
"Certificate") for the accounting period from _________________, [199_] [200_]
to___________, [199_] [200_].(1) Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as therein defined. For purposes
hereof, section references herein refer to sections of the Credit Agreement, and
bracketed amounts or ratios refer to the maximum or minimum amounts or ratios
required under the relevant sections of the Credit Agreement.
I. NEGATIVE COVENANTS
A. INDEBTEDNESS (Section 9.01)
1. Section 9.01(iv)
Maximum aggregate amount of Indebtedness incurred in connection with
Capital Lease obligations and purchase money Indebtedness as permitted
under Section 10.05, outstanding at any time during the period covered
by this Certificate.
Outstanding Aggregate Amount $_________
Maximum Amount $15,000,000
2. Section 9.01(viii)
Maximum aggregate principal amount of other unsecured indebtedness
incurred in the ordinary course of business, outstanding at any time
during the period covered by this Certificate.
--------
(1) Insert dates representing the fiscal period covered by this Certificate.
Outstanding Aggregate Amount $_________
Maximum Amount $2,500,000
3. Sections 9.01(xiii) and (xiv)
(a) Maximum aggregate amount of Indebtedness (i) of the Company or a
Subsidiary of the Company (ii) assumed in connection with a Permitted
Acquisition outstanding at any time during the period covered by this
Certificate.
Outstanding Aggregate Amount $ _________
Maximum Amount $10,000,000
(b) Maximum aggregate amount of Indebtedness evidenced by an approved
subordinated note held by a seller in connection with a Permitted
Acquisition, outstanding at any time during the period covered by this
Certificate.
Outstanding Aggregate Amount $_________
(c) The aggregate amount of Indebtedness under clauses (a) and (b) above.
Outstanding Aggregate Amount $__________
Maximum Amount $20,000,000
B. SALES OF ASSETS (Section 9.02)
1. Section 9.02(iii)
Aggregate book value of assets (other than Inventory, obsolete
Equipment dispositions between Wholly Owned Subsidiaries of Loan
Parties, Permitted Dispositions, and certain permitted grants of
Licenses) sold, assigned, transferred, leased, conveyed or otherwise
disposed of in the ordinary course of business during the Fiscal Year
covered by this Certificate.
Aggregate Amount $__________
Maximum Amount $ 1,000,000
2. Section 9.02(vi) Permitted Dispositions
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(a) Aggregate value of consideration received by the Company or any
Subsidiary from all Asset Sales during the Fiscal Year covered by
this Certificate.
Aggregate Amount $__________
(b) Percentage of the aggregate value of the consideration received
therefor in the form of cash or Cash Equivalents:
Actual Percentage _________
Minimum Amount 75%
(c) Aggregate amount of Net Cash Proceeds received by the Company or
any Subsidiary from any Asset Sales during the period covered by
this Certificate.
Aggregate Amount $__________
C. LIENS (Section 9.03)
1. Section 9.03 (viii)
Aggregate amount of obligations incurred in the ordinary course of
business secured by liens outstanding at any time during the period
covered by this Certificate.
Aggregate Amount $__________
Maximum Amount $ 1,000,000
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D. INVESTMENTS (Section 9.04)
1. Section 9.04(vi)
Aggregate market value of Investments not otherwise permitted under
Section 9.04 as of the date the Investment was made, outstanding at
any time during the period covered by this Certificate.
Aggregate Amount $__________
Maximum Amount $ 5,000,000
E. RESTRICTED JUNIOR PAYMENTS (Section 9.06)
1. Sections 9.06(iii)
(a) Aggregate amount of Restricted Junior Payments made pursuant to
the Put/Call Promissory Notes or the Put/Call Preferred Stock or
to purchase Management Equity Interests during the Fiscal Year
covered by this Certificate.
Aggregate Amount $__________
[(b) The Leverage Ratio for the Company and its Subsidiaries on a
consolidated basis for the Fiscal Year immediately preceding the
fiscal year covered by this Certificate.
Leverage Ratio ___ to 1](2)
(c) Specify the maximum amount of Restricted Junior Payments
permitted to be made pursuant to the Put/Call Promissory Notes or
the Put/Call Preferred Stock during the Fiscal Year covered by
this Certificate.
Maximum Amount $__________
--------
(2) To be included for fiscal years after the Fiscal Year ending on December
31, 2000.
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F. MANAGEMENT AND CONSULTING FEES (Section 9.16)
1. Section 9.16(i)
(a) Aggregate Amount of management fees paid by any of the Loan
Parties to any Affiliate pursuant to the Management Agreement
during the Fiscal Year covered by this Certificate.
Aggregate Amount $_________
Maximum Amount $_________
2. Section 9.16(iv)
(a) Aggregate Amount of investment banking fees paid by any of the Loan
Parties to Mentmore Holdings Corporation in connection with any
Permitted Acquisition.
Aggregate Amount $__________
(b) The aggregate transaction value of the Permitted Acquisition.
Aggregate Value $__________
(c) Specify the maximum amount of investment banking fees permitted to be
paid by any of the Loan Parties to Mentmore Holdings Corporation in
connection with any Permitted Acquisition.
Maximum Amount $_________
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II. FINANCIAL COVENANTS
A. MINIMUM NET WORTH (Section 10.01)
Net Worth of the Company and its Subsidiaries, as determined at the end of
the period covered by this Certificate.
Actual Amount $_________
Minimum Amount $[ ](3)
B. MINIMUM INTEREST COVERAGE RATIO (Section 10.02)
Interest Coverage Ratio (as it may be adjusted on a Pro Forma Basis for any
Permitted Acquisition) of the Company and its Subsidiaries, as determined
at the end of the period covered by this Certificate.
Actual Ratio ___ to 1
Minimum Ratio [___ to 1]
C. MINIMUM FIXED CHARGE COVERAGE RATIO (Section 10.03)
Fixed Charge Coverage Ratio (as it may be adjusted on a Pro Forma Basis for
any Permitted Acquisition) of the Company and its Subsidiaries at the end
of the period covered by this Certificate.
Actual Amount _____ to 1
Minimum Ratio [____] to 1
D. MAXIMUM LEVERAGE RATIO (Section 10.04)
Leverage Ratio (as it may be adjusted on a Pro Forma Basis for any
Permitted Acquisition) of the Company and its Subsidiaries at the end of
the period covered by this Certificate.
Actual Ratio ___ to 1
Maximum Ratio [___] to 1
--------
(3) Equal to $2,500,000 plus an amount equal to 50% of Net Income since the
Effective Date.
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E. CAPITAL EXPENDITURES (Section 10.05)
(a) The cumulative aggregate amount of Capital Expenditures made or
incurred by the Company and its Subsidiaries on a consolidated basis
during the current Fiscal Year.(4)
Aggregate Amount $_________
(b) Specify the unused portion of Capital Expenditures permitted to be
made or incurred by the Company and its Subsidiaries on a consolidated
basis from the Fiscal Year immediately preceding the current Fiscal
Year.
Aggregate Amount $_________
(c) Specify the maximum amount of Capital Expenditures permitted to be
made or incurred by the Company and its Subsidiaries on a consolidated
basis during the current Fiscal Year.
Maximum Amount $_________
--------
(4) Capital Expenditures may be made by the Loan Parties (i) during Fiscal Year
1998, in an aggregate amount of up to $12,000,000 and (ii) for each
subsequent Fiscal Year, $10,000,000 plus the Aggregate Amount specified in
clause (b) immediately above.
-7-
We hereby certify, in our capacity as officers of the Company, that the
information set forth above is accurate as of _____________, [199_] [200_], to
the best of our knowledge after diligent inquiry.
Dated: ___________, [199_] [200_]
STELLEX INDUSTRIES, INC.
By:______________________
Name:
Title: Chief Financial Officer
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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 Amended and Restated Credit Agreement dated as
of May 29, 1998 (as amended, restated, supplemented or otherwise modified
from time to time, the "Credit Agreement") among Stellex Industries, Inc.,
a Delaware corporation (the "Borrower"), the financial institutions from
time to time party thereto as lenders (the "Lenders"), the Administrative
Agent, and First Union Commercial Corporation, in its capacity as
collateral agent for the Lenders.
Pursuant to Section 7.01(e) of the Credit Agreement,
______________________, the Chief Financial Officer of the Borrower, 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 Borrower
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
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
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EXHIBIT J
FORM OF AMENDED AND RESTATED GUARANTY
This AMENDED AND RESTATED GUARANTY (as amended, supplemented or otherwise
modified from time to time, this "Guaranty") is made as of May 29, 1998 by 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, an "Existing
Guarantor", and collectively, the "Existing Guarantors"), and by STELLEX
AEROSPACE HOLDINGS, INC., a Delaware corporation, MONITOR AEROSPACE CORPORATION,
a New York corporation, MONITOR AEROSPACE INTERNATIONAL CORP., a New York
corporation and MONITOR MARINE PRODUCTS INC., a New York corporation (each
individually, an "Additional Guarantor", collectively, the "Additional
Guarantors", and together with the Existing Guarantors, 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, the Existing Guarantors entered into the Guaranty dated as of
October 31, 1997 (the "Existing Guaranty") in connection with that certain
Credit Agreement dated as of October 31, 1997 (the "Existing Credit Agreement")
among the borrowers named therein, Societe Generale ("SG"), as administrative
agent thereunder, First Union Commercial Corporation ("First Union"), as
collateral agent and syndication agent thereunder, and the financial
institutions party thereto. 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 that certain Amended and Restated Credit Agreement
dated as of May 29, 1998 (the "Credit Agreement") among the Borrower, SG, as
administrative agent (the "Administrative Agent"), First Union as collateral
agent (the "Collateral Agent", and together with the Administrative Agent, the
"Agents"), and the financial institutions from time to time parties thereto (the
"Lenders"), that each Guarantor guarantee (x) the Obligations of the 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 the 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
the 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 Borrower relating to the Credit Agreement, the Existing
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-
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 action to enforce, all or
any part of the Guaranteed Obligations whether from or against the 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 the 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 the 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 the 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 Pledgor under a Pledge Agreement or as a Grantor under a Security
Agreement, may have and which it has not expressly waived therein.
-3-
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 the Borrower or any other 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 the 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 the 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
the 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, 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 Borrower, (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
-4-
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
Pledgor under a Pledge Agreement or as 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 the Borrower 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 marshal 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 the Borrower 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
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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 the Borrower, any other guarantor or any other
Person, or their respective estates, trustees, receivers or any other party,
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 the 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 Borrower
to the Agents and the Lenders.
9. Subordination. Each Guarantor agrees that any and all claims of such
Guarantor against the other Guarantors and the Borrower 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 Guarantor or the Borrower, all
rights and Liens of such Guarantor, whether now or hereafter arising and
howsoever existing, in any assets of the 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 the Borrower, or the proceeds thereof, are
subject to any distribution, division or application to the creditors of the
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
the Borrower is dissolved or if substantially all of the assets of the 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
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payable or deliverable upon or with respect to any Indebtedness of the Borrower
to the 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 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 the 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
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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 the
Borrower or any other guarantor of all or any part of the Guaranteed Obligations
or any other 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
Borrower 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
Borrower 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 Borrower and to
the Guarantors shall be deemed to include their respective
-8-
successors and permitted assigns. The successors and permitted assigns of the
Guarantors and the Borrower shall include, without limitation, their respective
receivers, trustees or 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 any Agent or any Lender and
such Guarantor.
17. 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.
18. 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.
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19. 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, 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.
20. 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.
21. 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.
22. 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.
23. 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 Pledgor under a Pledge Agreement or as a Grantor
under a Security Agreement, may have and which it has not expressly waived
therein.
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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:
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:
STELLEX AEROSPACE
HOLDINGS, INC.
By____________________________
Name:
Title:
MONITOR AEROSPACE CORPORATION
By
Name:
Title:
MONITOR AEROSPACE
INTERNATIONAL CORP.
By____________________________
Name:
Title:
MONITOR MARINE
PRODUCTS, INC.
By____________________________
Name:
Title:
-13-
EXHIBIT K
FORM OF
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 May 29, 1998, 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, an "Existing
Pledgor", and collectively, the "Existing Pledgors"), STELLEX AEROSPACE
HOLDINGS, INC., a Delaware corporation, MONITOR AEROSPACE CORPORATION, a New
York corporation, MONITOR AEROSPACE INTERNATIONAL CORP., a New York corporation,
and MONITOR MARINE PRODUCTS, INC., a New York corporation (each, individually,
an "Additional Pledgor" and collectively, the "Additional Pledgors", and
together with the Existing Pledgors, 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 Amended and Restated
Credit Agreement dated as of May 29, 1998 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement") among Stellex Industries,
Inc.,(the "Borrower"), Societe Generale ("SG"), as administrative agent (the
"Administrative Agent"), the Collateral Agent (together with the Administrative
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) Certain of the Pledgors have a special non-interest-bearing cash
collateral account (the "Account") with First Union National Bank which is
maintained at its office at 0000 Xxxxx Xxxxxx Xxxx, XX0000, XxXxxx, XX 00000,
Account No. 007 5050000000628, 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) The Existing Pledgors and the Collateral Agent have entered into the
Cash Collateral Pledge and Assignment Agreement dated as of October 31, 1997
(the "Existing Agreement")
with respect to the Account and in connection with that certain Credit Agreement
dated as of October 31, 1997 (the "Existing Credit Agreement") among the
borrowers named therein, the financial institutions from time to time party
thereto, SG, as administrative agent thereunder, and First Union, as syndication
agent and collateral agent thereunder;
(3) It is a condition precedent to the making and the continuation of Loans
and other financial accommodations 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 and continue 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.
Each Existing Pledgor reaffirms its pledge of a security interest in the
Pledged Collateral made as of October 31, 1997.
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SECTION 2. Security for Obligations. This Agreement secures the payment of
(i) all the Obligations (ii) all obligations of each Pledgor (other than the
Borrower) under the Amended and Restated Guaranty of even date herewith signed
and delivered by each such Pledgor as guarantor and (iii) 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.
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
-3-
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.
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
-4-
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
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
-5-
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
the Administrative 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 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
-6-
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
Administrative Agent 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 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 Guaranty signed by each of the Pledgors of even date herewith,
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 Administrative Agent, the Lenders, and
the other Holders, and each of their respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause
-7-
(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 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:
STELLEX AEROSPACE HOLDINGS, INC.
By____________________________
Name:
Title:
MONITOR AEROSPACE CORPORATION
By____________________________
Name:
Title:
MONITOR AEROSPACE INTERNATIONAL
CORP.
By____________________________
Name:
Title:
MONITOR MARINE PRODUCTS, INC.
By____________________________
Name:
Title:
S-2
Acknowledged and agreed to as of May 29, 1998.
FIRST UNION COMMERCIAL CORPORATION, as Collateral Agent
By:_____________________________
Name:
Title:
S-3
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 May 29, 1998, 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 Amended and Restated Credit Agreement dated as of
May 29, 1998 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement") among Stellex Industries, Inc., as the borrower (the
"Borrower"), Societe Generale, as administrative agent (the "Administrative
Agent"), the Collateral Agent (together with the Administrative 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.
6. All representatives and warranties of the Pledgor contained in the
Credit Agreement are true and correct as of
--------
(1) Chief Financial Officer, or other officer of the Pledgor with significant
supervisory responsibility for the financial affairs of the Pledgor.
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.
EXHIBIT L
FORM OF [AMENDED AND RESTATED] SECURITY AGREEMENT
THIS [AMENDED AND RESTATED] SECURITY AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "Security Agreement") dated as of May
29, 1998, by and among [NAME OF GRANTOR] (with its successors and permitted
assigns, the "Grantor"), and FIRST UNION COMMERCIAL CORPORATION ("First Union"),
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 Amended and Restated Credit Agreement
dated as of May 29, 1998 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement") among Stellex Industries, Inc. (the
"Borrower"), Societe Generale ("SG"), as administrative agent (the
"Administrative Agent") and the Collateral Agent (together with the
Administrative 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 parties hereto have entered into the Security Agreement dated
as of October 31, 1997 (the "Existing Security Agreement") in connection with
that certain Credit Agreement dated as of October 31, 1997 (the "Existing Credit
Agreement") among the borrowers named therein, the financial institutions from
time to time party thereto, SG, as administrative agent thereunder, and First
Union, as syndication agent and collateral agent thereunder;]
WHEREAS, in order to secure the prompt and complete payment, observance and
performance of (i) all of the Obligations, (ii) all of the Grantor's obligations
under the Amended and Restated Guaranty of even date herewith entered into in
connection with the Credit Agreement and (iii) 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
-2-
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,
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");
-3-
(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 instance whether now owned or hereafter acquired by the Grantor
(collectively, "Chattel Paper, Instruments and Documents");
(f) INVESTMENT PROPERTY: All investment property (as defined in Article 9
of the Uniform Commercial Code);
(g) 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 (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
(g) above with all accessions and additions thereto, substitutions therefor, and
replacements, proceeds and products thereof.
[The Grantor hereby reaffirms its grant of a security interest in the
Collateral made as of October 31, 1997.]
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
-4-
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 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. Except as permitted
under the Credit Agreement, the Grantor will
-5-
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 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:
-6-
(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 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
-7-
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 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)
Business 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
-8-
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 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
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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,
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
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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 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
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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.
(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 Collateral 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.
-12-
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 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;
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(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
(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
-14-
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 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
accordance 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
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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, given or delivered as provided in the Guaranty
signed by the Grantor of even date herewith.
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 the Guaranty signed by the Grantor of even date herewith 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.
-16-
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 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:
SCHEDULE 1
TO
SECURITY AGREEMENT
([Name of Grantor])
Dated as of May 29, 1998
Locations of Inventory and Equipment
and Status
Location Status
SCHEDULE 2
TO
SECURITY AGREEMENT
([Name of Grantor])
Dated as of May 29, 1998
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 May 29, 1998
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 [AMENDED AND RESTATED] PLEDGE AGREEMENT
THIS [AMENDED AND RESTATED] PLEDGE AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "Pledge Agreement") dated as of May,
29 1998, by and among [NAME OF PLEDGOR] (with its successors and permitted
assigns, the "Pledgor"), and FIRST UNION COMMERCIAL CORPORATION ("First Union"),
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 Amended and Restated Credit Agreement
dated as of May 29, 1998 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement") among the Stellex Industries, Inc., (the
"Borrower"), Societe Generale ("SG"), as administrative agent (the
"Administrative Agent"), the Collateral Agent, together (with the Administrative
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 parties hereto have entered into the Pledge Agreement dated
as of October 31, 1997 (the "Existing Pledge Agreement") in connection with that
certain Credit Agreement dated as of October 31, 1997 (the "Existing Credit
Agreement") among the borrowers named therein, the financial institutions from
time to time party thereto, SG, as administrative agent thereunder, and First
Union, as syndication agent and collateral agent thereunder;]
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
certificated 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 (ii) all of the Pledgors' Obligations under
the Amended and Restated Guaranty of even date herewith entered into in
connection with the Credit Agreement and (iii) all of the Pledgor's obligations
--------
(1) This and subsequent references to the Pledged Debt will be included in the
Amended and Restated Pledge Agreements executed by Pledgors who hold
indebtedness.
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 with the Borrower, 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 Borrower 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
-2-
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 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 certificated indebtedness of each issuer referred to in
Exhibit C attached hereto (the "Pledged Debt") and the instruments
evidencing such Pledged Debt in excess of $100,000 individually, 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 certificated indebtedness
in excess of $100,000 individually 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.
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[The Pledgor hereby reaffirms its grant of a security interest in the
Pledged Collateral made as of October 31, 1997 under the Existing Pledge
Agreement.]
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:
(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 certificated indebtedness in excess of $100,000
individually 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 [and
each obligor with respect to Pledged
-4-
Debt] 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 Collateral 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 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 constitutes a valid and
binding obligation of its respective obligor, enforceable in accordance
with its terms, except as such enforceability may be limited by (x)
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and (y) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(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
-5-
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 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
-6-
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 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
-7-
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 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
-8-
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 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
-9-
(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 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.
-10-
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.
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.
-11-
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 the Guaranty signed by the Pledgor of even date herewith 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 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
-12-
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 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 the Guaranty signed by the Pledgor of even
date herewith.
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.
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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.
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 May 29, 1998
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 May 29, 1998
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 May 29, 1998
Pledged Debt]
EXHIBIT N
FORM OF AMENDED AND RESTATED
PATENT SECURITY AGREEMENT
THIS AMENDED AND RESTATED PATENT SECURITY AGREEMENT (as amended,
supplemented or otherwise modified from time to time, this "Agreement"), dated
as of May 29, 1998, by and among [STELLEX MICROWAVE SYSTEMS, INC.] [TSMD
ACQUISITION CORP.] (with its successors and permitted assigns, the "Grantor"),
and FIRST UNION COMMERCIAL CORPORATION ("First Union"), 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 Amended and Restated Credit Agreement dated as of May
29, 1998 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement") among Stellex Industries, Inc. (the "Borrower"), the
Collateral Agent, Societe Generale ("SG"), as administrative agent (the
"Administrative Agent", together with 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 parties hereto have entered into the Patent Security Agreement
dated as of October 31, 1997 (the "Existing Patent Security Agreement") in
connection with that certain Credit Agreement dated as of October 31, 1997 (the
"Existing Credit Agreement") among the borrowers named therein, the financial
institutions from time to time party thereto, SG, as administrative agent
thereunder, and First Union, as syndication agent and collateral agent
thereunder;
WHEREAS, the Grantor and the Collateral Agent are parties to that certain
Amended and Restated 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 Grantor 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; (ii) all of the Grantor's obligations
under the Amended and Restated Guaranty of even date herewith entered into
in connection with the Credit Agreement; and (iii) 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 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. Grant of Security Interest in Patents. To secure the complete and timely
payment, performance and satisfaction of all of the Liabilities, the Grantor
hereby grants to the Collateral Agent, for the ratable benefit of the Agents,
the Lenders, and the other Holders of 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 Grantor's now owned and hereafter acquired:
(a) patents and material patent applications, and the inventions and
improvements described and claimed therein, including, without limitation,
those patents and material patent applications listed on Schedule A
attached hereto and made a part hereof, and (i)the reissues, divisions,
2
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 Grantor's rights
corresponding thereto throughout the world (all of the foregoing patents
and material 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 Grantor 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 Grantor and now or hereafter covered by such licenses (all of the
foregoing are hereinafter referred to collectively as the "Licenses").
The Grantor 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 Grantor
agrees to cooperate with the Collateral Agent as the Collateral Agent may
request in order to effectuate such filing or filings.
The Grantor hereby reaffirms its grant of a security interest in the Patents and
Licenses made as of October 31, 1997.
5. Restrictions on Future Agreements. The Grantor 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 Grantor 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 Grantor represents and warrants that, as
of the Closing Date, to the best of its knowledge, after reasonable inquiry, (a)
the Patents listed on
3
Schedule A include all of the patents and material patent applications now owned
or held by the Grantor, (b) the Licenses listed on Schedule B include all of the
patent license agreements under which the Grantor is the licensee or licensor
which are material individually or in the aggregate to the operation of the
business of the Grantor 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 Grantor to any Person other
than the Collateral Agent. If, prior to the termination of this Agreement, the
Grantor 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, 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 Grantor 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 Grantor shall use commercially reasonable efforts to insure that
such licenses are assignable for security purposes). The Grantor 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
Grantor hereby authorizes the Collateral Agent to modify this Agreement
unilaterally (i) by amending Schedule A to include any future patents and
material patent applications owned or held by the Grantor, and by amending
Schedule B to include any patent license agreements (A) to which the Grantor
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, material patent applications and license
agreements.
7. Royalties. The Grantor 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 Grantor'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 Grantor.
8. Further Assignments and Security Interests. Except as permitted under
Section 9.02 of the Credit Agreement, the Grantor agrees not to sell or assign
its respective interests in, or grant any license under, the Patents or the
Licenses
4
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 Grantor or its successors or assigns, and at the cost
and expense of the Grantor or its successors or assigns, the Collateral Agent
shall execute in a 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 Grantor
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 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.
10. Duties of the Grantor. The Grantor shall have the duty, to the extent
desirable in the normal conduct of the Grantor'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 Grantor
further agrees (i) not to abandon any
5
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 Grantor's business.
Any expenses incurred in connection with the foregoing shall be borne by the
Grantor. 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 be for the sole account of the Grantor 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 Grantor 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 Grantor 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 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 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
6
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 Grantor 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
Grantor's true and lawful attorney-in-fact, and authorizes the Collateral Agent
and any of the Collateral Agent's designees, in the Grantor'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 Grantor
of the Collateral Agent's intention to enforce its rights and claims against the
Grantor, to (i) endorse the Grantor'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 Grantor 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 Grantor 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
7
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 Grantor
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 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
Grantor 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
Grantor 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 Grantor's successors and assigns shall include, without limitation,
a receiver, trustee or debtor-in-possession of or for the Grantor; provided,
however, that the Grantor 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 the Guaranty
signed by the Grantor of even date herewith.
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
8
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 Grantor agrees that
the terms of the Guaranty signed by the Grantor of even date herewith with
respect to consent to jurisdiction and service of process shall apply equally to
this Agreement.
22. 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 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
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.
[NAME OF GRANTOR]
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:
Title:
SCHEDULE A
TO
PATENT SECURITY AGREEMENT
([NAME OF GRANTOR])
Dated as of May 29, 1998
Patents and Material Patent Applications
Serial/Patent
Project No/ No. Filing/
Status Title Inventor Issued Date
------ ----- -------- -----------
Pending Patent Disclosures
Case # Title Status
------ ----- ------
-11-
SCHEDULE B
TO
PATENT SECURITY AGREEMENT
([NAME OF GRANTOR])
Dated as of May 29, 1998
License Agreements
LICENSES FROM THE GRANTOR TO OTHER COMPANIES
Company Subject Term Royalties
------- ------- ---- ---------
LICENSES FROM OTHER COMPANIES TO THE GRANTOR
Company Subject/Type Term Royalties
------- ------------ ---- ---------
-12-
STATE OF ________ )
) SS
COUNTY OF ________ )
On the 29 day of May, 1998, 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 [NAME OF GRANTOR], 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 29 day of May, 1998, 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 I
TO
AMENDED AND RESTATED CREDIT AGREEMENT
Party Notice address:
----- ---------------
Stellex Industries, Inc. 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: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Party Notice address:
----- ---------------
Societe Generale, Societe Generale
as Administrative Agent 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
1
Party Notice address:
----- ---------------
First Union Commercial First Union Commercial Corporation
Corporation, as Collateral 0000 Xxxxx Xxxxxx Xxxx
Agent Mail Code VA1942
XxXxxx, XX 00000
Attn: Xxxx XxXxxxx
Telecopy: (000) 000-0000
Party Notice address:
----- ---------------
Societe Generale, Societe Generale
as Lender 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
Party Notice address:
----- ---------------
First Union Commercial First Union Commercial Corporation
Corporation, as Lender 0000 Xxxxx Xxxxxx Xxxx
Mail Code VA1942
XxXxxx, XX 00000
Attn: Xxxx XxXxxxx
Telecopy: (000) 000-0000
Party Notice address:
----- ---------------
Senior High Income Senior High Income Portfolio,
Portfolio, Inc. Inc.
c/o Merrill Xxxxx Assett Management
Prime Rate Portfolio
000 Xxxxxxxx Xxxx Xxxx
Xxxx 0X
2
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxx Xxxxx and
Xxxxx Xxxxxx
Telecopy: (000) 000-0000
Party Notice address:
----- ---------------
Paribas Capital Funding Paribas Capital Funding LLC
LLC, as Lender 000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxx
Telecopy: (000) 000-0000
Party Notice address:
----- ---------------
Fleet National Bank, Fleet National Bank
as Lender 0 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Mail Code MAOFD03C
Attn: Xxx Xxxxx
Telecopy: (000) 000-0000
Party Notice address:
----- ---------------
General Electric Capital General Electric Capital Corporation
Corporation, as Lender 000 Xxxx Xxxxx Xxxx
Xxxx. X
Xxxxxxxx, XX 00000
Attn: Xxxxx Xxxxx
Telecopy: (000) 000-0000
3
SCHEDULE I
TO
AMENDED AND RESTATED CREDIT AGREEMENT
Acquisition
Term Loan Revolving Loan Term A Loan Term B Loan
Lender Commitments Commitments Commitments. Commitments
------- -------------- -------------- -------------- --------------
First Union Commercial Corporation $ 7,638,888.89 $10,694,444.44 $ 9,166,666.67 $27,500,000.00
Societe Generale $ 7,638,888.89 $10,694,444.45 $ 9,166,666.67 $16,000,000.00
Senior High Income Portfolio, Inc. -- -- -- $ 5,500,000.00
General Electric Capital Corporation $ 5,555,555.55 $ 7,777,777.78 $ 6,666,666.67 --
Paribas Capital
Funding LLC -- -- -- $ 11,000,000
Fleet National Bank $ 4,166,666.67 $ 5,833,333.33 $ 5,000,000.00
-------------- -------------- -------------- -------------- ---------------
Total Commitments $25,000,000.00 $35,000,000.00 $30,000,000.00 $60,000,000.00 $150,000,000.00
-----------------
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, Reaffirmation of Guaranty, dated November 1, 1996, and
Second Reaffirmation of Guaranty, dated August 15, 1997, 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, as revised on
January 1, 1998.
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, as revised on
January 1, 1998.
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. 401(k) Plan adopted by TSMD Acquisition Corp. In connection with the
acquisition of Stellex Microwave Systems, Inc..
9. Capital Lease between Xxxxx Machining International ("Xxxxx") and DKM,
dated November 5, 1997 for AS-400 computer and MAPICS application software.
10. Capital Lease between Xxxxx and Dassault Systems, dated October 1, 1997,
for Catia-CADM Application Software and certain hardware equipment.
11. Capital Lease between General Inspection Laboratories, Inc. and Sunston
Equipment, Inc., dated April 22, 1998, for Komatsu forklift.
12. Stellex Microwave Quarterly Performance Sharing Plan
13. Stellex Microwave Annual Incentive Plan for Top Management
14. Stellex Microwave Annual Incentive Plan for Senior Management
15. Stellex Microwave Annual Incentive Plan for Middle Management
16. Stellex Microwave Annual Incentive Plan for Key Professionals
17. Employment Agreement between Stellex Microwave Systems ("Microwave") and
Xxxxx Xxxxxxx
18. Promissory Note issued by Monitor in favor of Xxxxxxx Xxxxxxx, in his
capacity as Majority Noteholder, in the principal amount of $5,180,000.
19. Agreements between Monitor and Catic International Leasing Co., Ltd.
regarding the purchase, sale, exchange or lease of four gantry profilers.
20. Monitor Aerospace Corporation Savings and Profit Sharing Plan.
21. Salary Continuation Agreements - Four senior executives of Monitor
participate in plan providing for deferral of between $20,000 and $60,000
of such executive's compensation and the purchase by the Monitor of
variable universal life insurance with such amount of deferred
compensation. Approved at September 1997 meeting, and currently being set
up. Annual cost is $100,000.
22. Monitor Aerospace Corporation Employees' Pension Plan and Trust. This plan
was "frozen" in 1997 and will be terminated in connection with the Monitor
Acquisition in accordance with the Monitor Acquisition Agreement.
23. Executive Incentive Compensation Program - Under this Program, Eight senior
executives of Monitor can earn annual bonuses of up to 30% of base salary.
Two- thirds of the bonus is paid if the Monitor meets or exceeds profit
goals of its business plan and one-third is paid if executive meets agreed
upon individual goals.
24. Monitor Aerospace Corporation Restricted Stock Bonus Plan - Adopted
December 15, 1983, as modified and amended by Board resolutions dated
January 6, 1997 and March 25, 1998.
25. Employment Agreement dated as of May 29, 1998 between Monitor and Xxxxxxx.
26. Other benefit plans and employment arrangements entered into by Stellex and
its Subsidiaries in the ordinary course of business where compensation is
based on the operating or financial performance of Stellex or any of its
Subsidiaries or that would otherwise constitute "profit sharing
arrangements".
27. Various intercompany loans between the Borrowers as described in the
attached Schedule 1.10(A)(11).
SCHEDULE 1.10(A)(11)
OBLIGOR OBLIGEE APPROXIMATE
------- ------- AGGREGATE AMOUNT
----------------
Xxxxx Machining International Aerospace $ 12,396,500
Paragon Aerospace $ 9,040,500
SEAL Aerospace $ 1,053,500
General Inspection Aerospace $ 892,000
Laboratories, Inc.
Stellex Microwave Systems, Stellex Industries, Inc. $ 96,769,061
Inc.
Stellex Aerospace Stellex Industries, Inc. $ 20,943,000
Monitor Stellex Industries, Inc. $ 95,000,000
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.
00-0000000 (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. 00-0000000.
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 Guaranty of Aerospace, dated September 6, 1991, Reaffirmation of
Guaranty, dated November 1, 1996, and Second Reaffirmation of Guaranty,
dated August 15, 1997, 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.
7. Precautionary filings of Uniform Commercial Code financing statements
relating to operating leases and financing statements relating to
Indebtedness and other obligations that have been repaid in full.
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 Guarantor other than Stellex
SCHEDULE 5.01(A)
ON SIDLEY SYSTEM INSERT
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), 6.01(E), 6.01(L), 6.01(P),
6.01(Q) and 6.01(V) may be modified and amended to give effect to matters in
respect of the Permitted Acquisition, and, as so modified and amended, shall be
reasonably satisfactory to the Agents.
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
material 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 Borrower would remain Solvent.
4. Substantially all assets and equity interests acquired by the 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 Interest Coverage Ratio of Stellex and its Subsidiaries on a
consolidated basis calculated on a Pro Forma Basis 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 Leverage Ratio of Stellex and its Subsidiaries on a consolidated
basis calculated on a Pro Forma Basis 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 Commitment Termination Date and
(b) 4.50 to 1.00 in connection with any Permitted Acquisition consummated
thereafter.
SCHEDULE 6.01(C)
OWNERSHIP
Borrowers Ownership
--------- ---------
Stellex Industries, Inc. 9.9% of common stock by Askrigg
Trust (1996) .9% of common stock by
CSP Equity Partners (VII), LLC
89.2% of common stock by Xxxxxxxxxx
Trust (1996)
46.3% of Series A Preferred Stock
by Sunderland Industrial Holdings
Corporation (106 of 229 outstanding
shares) 38.4% of Series A Preferred
Stock by A.J. 1989 Trust (88 of 229
outstanding shares) 9.6% of Series
A Preferred Stock by Equity
Resources Associates (22 of 229
outstanding shares) 3.5% of Series
A Preferred Stock by Xxxxxxxxxx
Corporation (8 of 229 outstanding
shares) 1.3% of Series A Preferred
Stock by Equity Resources Trust (3
of 229 outstanding shares) .9% of
Series A Preferred Stock by CSP
Equity Partners (VII), LLC (2 of
229 outstanding shares)
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.
Stellex Aerospace Holdings, Inc. 100% by Stellex Industries, Inc.
Monitor Aerospace Corporation 100% by Stellex Aerospace Holdings,
Inc.
Monitor Marine Products, Inc. 100% by Monitor Aerospace
Corporation
Monitor Aerospace International Corp. 100% by Monitor Aerospace
Corporation
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), which is incorporated herein by
reference. In addition the failure of the Loan Parties to obtain consents under
certain contracts or with respect to certain government licenses or permits may
constitute a violation of certain Requirements of Law and/or of certain material
Contractual Obligations to which such matters pertain. The effect on the Loan
Parties is not expected to be material.
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. In connection with certain programs, the Loan Parties have incurred
provisional losses which may constitute MLC's. These provisional losses are, as
of the date of this Agreement, not expected to exceed $750,000.
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.
3. Monitor has been informed in writing that there is "No Change" regarding
tax payments for a New York State tax audit for the years ending May 31,
1992 through May 31, 1994.
4. Monitor made the following accounting change for the fiscal year ended May
31, 1993 and thereafter: Inventory valuation method was changed from
last-in-first-out to first-in-first-out.
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. EPA Notifications of Regulated Waste Activity (EPA Form 8700-12) have
been filed as appropriate with the EPA concerning the generation and
disposal of hazardous waste. No waste is to be stored in excess of 90
days;
l. 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; and
p. Draft Phase I Environmental Site Assessment and Environmental, Health
and Safety Compliance Audit Report of the Monitor Aerospace
Corporation Facility, Amityville, New York, ENSR, May 1998.
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").
Neither Aerospace nor Paragon have been contacted by either DTSC or
U.S. EPA concerning the DTSC Investigation. Aerospace has been advised
that DTSC inspected the Pacoima Site in 1996 or 1997.
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. Paragon has received no
further communication with respect to this matter.
4. 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.
5. 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.
6. 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 was
transported by a licensed hazardous waste transporter for proper disposal
on October 13, 1997.
7. 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 Monitor Aerospace Corporation Employees' Pension Plan and Trust is a
Benefit Plan. In connection with the Monitor Acquisition, Monitor intends
to terminate this Plan. A portion of the Merger Consideration paid in
connection with the Monitor Acquisition equal to $4,000,000 has been placed
in escrow (the "Escrow Fund") for the purpose of paying all costs and
liabilities incurred by Monitor in connection with the termination of the
Plan. Section 2.4 of the Merger Agreement sets forth certain other terms in
respect of the disbursement of the Escrow Fund and the termination of the
Plan.
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.
