============================================================ ===== CREDIT AGREEMENT Dated as of March 13, 1996 among FAIRCHILD HOLDING CORP. THE INSTITUTIONS FROM TIME TO TIME PARTY HERETO AS LENDERS THE INSTITUTIONS FROM TIME TO TIME PARTY HERETO AS ISSUING BANKS and CITICORP USA, INC. as Administrative Agent ============================================================ ===== CREDIT AGREEMENT This Credit Agreement dated as of March 13, 1996 (as amended, supplemented or modified from time to time, the "Agreement") is entered into among Fairchild Holding Corp., a Delaware corporation (the "Borrower"), the institutions from time to time a party hereto as Lenders, whether by execution of this Agreement or an Assignment and Acceptance, the institutions from time to time a party hereto as Issuing Banks, whether by execution of this Agreement or an Assignment and Acceptance, and Citicorp USA, Inc., a Delaware corporation ("Citicorp"), in its capacity as agent for the Lenders and the Issuing Banks hereunder (in such capacity, the "Administrative 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 one 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 that such Indebtedness, obligation or liability will be paid or discharged, or that any agreements relating thereto will be complied with, or that the holders thereof will be protected (in whole or in part) against loss in respect thereof including, without limitation, direct and indirect guarantees, endorsements (except for collection or deposit in the ordinary course of business), notes co-made or discounted, recourse agreements, take-or-pay agreements, keep-well agreements, put options, agreements to purchase or repurchase such Indebtedness, obligation or liability or any security therefor or to provide funds for the payment or discharge thereof, agreements to maintain solvency, assets, level of income, or other financial condition, and agreements to make payment other than for value received. The amount of any Accommodation Obligation shall be equal to the amount of the Indebtedness, obligation or liability so guaranteed or otherwise supported; provided, that (i) if the liability of the Person extending such guaranty or support is limited with respect thereto to an amount less than the Indebtedness, obligation or liability guaranteed or supported, or is limited to recourse against a particular asset or assets of such Person, the amount of the corresponding Accommodation Obligation shall be limited (in the case of a guaranty or other support limited by amount) to such lesser amount or (in the case of a guaranty or other support limited by recourse to a particular asset or assets) to the higher of the Fair Market Value of such asset or assets at the date for determination of the amount of the Accommodation Obligation or the value at which such asset or assets would, in conformity with GAAP, be reflected on or valued for the purposes of preparing a consolidated balance sheet of such Person as at such determination date; and (ii) if any obligation or liability is guaranteed or otherwise supported jointly and severally by a Person and others, then the amount of the obligation or liability of such Person with respect to such guaranty or other support to be included in the amount of such Person's Accommodation Obligation shall be the whole principal amount so guaranteed or otherwise supported. "Administrative Agent" means Citicorp and each successor Administrative Agent appointed pursuant to the terms of Article XIII of this Agreement. "Affiliate", as applied to any Person, means any other Person that directly or indirectly controls, is controlled by, or is under common control with, that 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 Person, means the possession, directly or indirectly, of the power to vote ten percent (10.0%) or more of the Securities having voting power for the election of directors of such Person or otherwise to direct or cause the direction of the management and policies of that Person, whether through the ownership of voting Securities or by contract or otherwise. "Agreement" is defined in the preamble hereto. "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. "Assignment and Acceptance" means an Assignment and Acceptance in substantially 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 15.01. "Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C. 101 et seq.), as amended from time to time, and any successor statute. "Base Eurodollar Rate" means, with respect to any Euro- dollar Interest Period applicable to a Borrowing of Eurodollar Rate Loans, an interest rate per annum determined by the Administrative Agent to be the average (rounded upward to the nearest whole multiple of one sixteenth of one percent (0.0625%) per annum if such average is not such a multiple) of the rates per annum specified by notice to the Administrative Agent by Citibank as the rate per annum at which deposits in Dollars are offered by the principal office of Citibank in London, England to major banks in the London interbank market at approximately 11:00 a.m. (London time) on the Eurodollar 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 outstanding to Citicorp for such Eurodollar Interest Period. "Base Rate" means, for any period, a fluctuating interest rate per annum as shall be in effect from time to time, which rate per annum shall at all times be equal to the highest of: (i) the rate of interest announced publicly by Citibank in New York, New York from time to time, as Citibank's base rate; and (ii) the sum of (A) one-half of one percent (0.50%) per annum plus (B) the Federal Funds Rate in effect from time to time during such period. "Base Rate Loans" means all Loans which bear interest at a rate determined by reference to the Base Rate as provided in Section 5.01(a). "Base Rate Margin" means a rate equal to one-half of one percent (0.50%) per annum. "Benefit Plan" means a defined benefit plan as defined in Section 3(35) of ERISA (other than a Multiemployer Plan or Foreign Employee Benefit Plan) in respect of which the Borrower or any ERISA Affiliate is, or within the immediately preceding five (5) years was, an "employer" as defined in Section 3(5) of ERISA. "Borrower" is defined in the preamble of this Agreement. "Borrowing" means a borrowing consisting of Loans of the same type made, continued or converted on the same day and, in the case of Eurodollar Rate Loans, having the same Eurodollar Interest Period. "Business Activity Report" means (A) a Notice of Business Activities Report from the State of New Jersey Division of Taxation or (B) a Minnesota Business Activity Report from the Minnesota Department of Revenue. "Business Day" means a day, in the applicable local time, which is not a Saturday or Sunday or a legal holiday and on which banks are not required or permitted by law or other governmental action to close (i) in New York, New York or Chicago, Illinois and (ii) in the case of Eurodollar Rate Loans, in London, England and (iii) in the case of Letter of Credit transactions for a particular Issuing Bank, in the place where its office for issuance or 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 Property 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 the Borrower's or any of its Subsidiaries' fixed asset accounts as reflected in the consolidated balance sheet of Borrower and its Subsidiaries; provided, however, (i) Capital Expenditures shall include, whether or not such a designation would be in conformity with GAAP, that portion of Capital Leases which is capitalized on the consolidated balance sheet of the Borrower and its Subsidiaries and (ii) Capital Expenditures shall exclude, whether or not such a designation would be in conformity with GAAP, expenditures made in connection with the replacement or restoration of Property, to the extent reimbursed or financed from insur- ance or other recoveries received on account of the loss of or damage to the Property being replaced or restored or from condemnation awards arising from the taking by condemnation or eminent domain of such Property being replaced. "Capital Lease" means any lease of any property (whether real, personal or mixed) by a 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" means money, currency or a credit balance in a Deposit Account. "Cash Collateral" means cash or Cash Equivalents held by the Administrative Agent, any of the Issuing Banks or any of the Lenders as security for the Obligations. "Cash Collateral Account" means an interest bearing account at Citibank's offices in New York, New York designated by the Administrative Agent into which Cash Collateral shall be deposited. The Cash Collateral Account shall be under the sole dominion and control of the Administrative Agent, provided that all amounts deposited therein shall be held by the Administrative Agent for the benefit of the Holders and shall be subject to the terms of Sections 4.05 and 4.06. "Cash Equivalents" means (i) marketable direct obligations issued or unconditionally guaranteed by the United States government and backed by the full faith and credit of the United States government; (ii) marketable direct obligations issued by any state of the United States or any political subdivision of any such state or any public instrumentality thereof which, at the time of acquisition thereof, have the highest rating obtainable from either Standard & Poor's Rating Group, a division of McGraw-Hill, Inc. ("S&P") or Moody's Investors Service, Inc. (or if not then rating such obligations, from such other nationally recognized rating services as are reasonably acceptable to the Administrative Agent); (iii) commercial paper which, at the time of acquisition thereof, has the highest rating obtainable from either S & P or Moody's Investors Service, Inc. (or if not then rating such obligations, from such other nationally recognized rating services as are reasonably acceptable to the Administrative Agent); and (iv) domestic and Eurodollar certificates of deposit and time deposits, bankers' acceptances and floating rate certificates of deposit issued by any Lender or any commercial bank organized under the laws of the United States, any state thereof, or the District of Columbia and having a combined capital and surplus in excess of $250,000,000, which, at the time of acquisition, are rated A-1 (or better) by S & P or P-1 (or better) by Moody's Investors Services, Inc.; provided, that the maturities of such Cash Equivalents shall not exceed ninety days. "Cash Interest Expense" means, for any period, total interest expense, whether paid or accrued, but without duplication, (including, without limitation, the interest component of Capital Leases, all commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing and net of the difference between payments received by the Borrower on all Hedge Agreements and payments made by the Borrower on all Hedge Agreements other than the initial payments made to enter into such Hedge Agreements; and excluding, interest expense not payable in cash (including amortization of discount) and legal, commitment and closing fees and expenses and other non-recurring fees and expenses and transaction costs payable in cash, including, without limitation, underwriting commissions and discounts, incurred in connection with the execution and delivery of this Agreement and the transactions contemplated hereby) of the Borrower, which is payable in cash, all as determined in conformity with GAAP. "CERCLA" means the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. 9601 et seq., any amendments thereto, any successor statutes, and any regulations promulgated thereunder. "Change of Control" means either (i) fifty percent (50%) (on a fully diluted basis) of the Capital Stock of RHI ceasing to be owned and controlled by Jeffrey J. Steiner and his "associates" as defined in the Securities Exchange Act or (ii) one hundred percent (100%) of the Capital Stock of Borrower ceasing to be owned and controlled by RHI. "Citibank" means Citibank, N.A., a national banking association. "Citicorp" is defined in the preamble of this Agreement. "Claim" means any claim or demand, by any Person, of whatsoever kind or nature for any alleged Liabilities and Costs, whether based in contract, tort, implied or express warranty, strict liability, criminal or civil statute, Permit, ordinance or regulation, common law or otherwise. "Closing Date" means March 13, 1996. "CM Letter of Credit" means that certain Irrevocable Stand-by Letter of Credit No. S-11096 in the face amount of $166,000,000 issued by Bankers Trust Company naming the Borrower as beneficiary. "CM Notes" means, collectively, (i) that certain 8% Secured Note dated January 26, 1996 in the principal amount of $166,000,000 payable to VSI Corporation and executed by Cincinnati Milacron Inc. and (ii) that certain 8% Unsecured Note dated January 26, 1996 in the principal amount of $5,376,555 payable to VSI Corporation and executed by Cincinnati Milacron Inc. "Collateral" means all Property and interests in Prop- erty now owned or hereafter acquired by the Borrower or any of its Subsidiaries upon which a Lien is granted under any of the Loan Documents. "Collection Account" means each lock-box and blocked depository account maintained by the Borrower or any of its Subsidiaries subject to a Collection Account Agreement for the collection of Receivables and other proceeds of Collateral. "Collection Account Agreement" means a written agreement, substantially in the form attached hereto as Exhibit B with such modifications as the Administrative Agent, from time to time, deems acceptable, among the Borrower or a Subsidiary of the Borrower, the Administrative Agent, and, as applicable, each of the banks at which the Borrower or a Subsidiary of the Borrower maintains a Collection Account. "Commercial Letter of Credit" means any documentary letter of credit issued by an Issuing Bank pursuant to Section 3.01 for the account of the Borrower or for the account of any of the Borrower's Subsidiaries if the Borrower is jointly and severally liable for reimbursement of amounts drawn under such letter of credit, which is drawable upon presentation of documents evidencing the sale or shipment of goods purchased by the Borrower or such Subsidiary in the ordinary course of its business. "Commission" means the Securities and Exchange Commis- sion and any Person succeeding to the functions thereof. "Commitment" means, with respect to any Lender at the time of determination thereof, the aggregate amount of such Lender's Revolving Credit Commitment and Term Loan Commitment and "Commitments" means the aggregate amount of all Term Loan Commitments and Revolving Credit Commitments. "Commitment Fee" is defined in Section 5.03(c). "Compliance Certificate" is defined in Section 8.01(a). "Concentration Account" means the depository account maintained at Citibank in New York, New York, or such other financial institution designated for such purpose by the Administrative Agent into which collections of Receivables of the Borrower and its Domestic Subsidiaries, other proceeds of Collateral and other amounts are transferred pursuant to the terms of the Collection Account Agreements or otherwise as described in Section 4.04. "Contaminant" means any waste, pollutant, hazardous substance, toxic substance, hazardous waste, special waste, petroleum or petroleum-derived substance or waste, radioactive materials, asbestos (in any form or condition), polychlorinated biphenyls (PCBs), lead paint, or any constituent of any such substance or waste, and includes, but is not limited to, these terms as defined in federal, state or local laws or regulations. "Contractual Obligation", as applied to any Person, means any provision of any Securities issued by that Person or any indenture, mortgage, deed of trust, security agreement, pledge agreement, guaranty, contract, undertaking, agreement or instrument to which that Person is a party or by which it or any of its properties is bound, or to which it or any of its properties is subject. "Convac" means Fairchild Convac GmbH, a corporation formed under the laws of the Republic of Germany and an indirect Subsidiary of the Borrower. "Convac Minority Interest" means an interest in the Capital Stock of Convac which is permitted to be issued by Convac or transferred (whether by sale, assignment, as the result of a merger, exchange of shares, or otherwise) by VSI Holdings, Inc., a Delaware corporation and Wholly-Owned Subsidiary of the Borrower, to a Person not an Affiliate of the Borrower provided that the issuance or transfer thereof does not result in Convac ceasing to be a Subsidiary of the Borrower. "Cure Loans" is defined in Section 4.02(f)(iii). "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 in all cases which are 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; (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 for amounts not yet due or which are being contested in good faith by appropriate proceedings and with respect to which adequate reserves or other appropriate provisions are being maintained in accordance with GAAP; (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, contracts (other than for the repayment of borrowed money), surety, appeal and performance bonds; provided that (A) all such Liens do not in the aggregate materially detract from the value of the Borrower's or any of its Subsidiaries' assets or Property or materially impair the use thereof in the operation of their respective businesses, and (B) all Liens of attachment or judgment and Liens securing bonds to stay judgments or in connection with appeals do not secure at any time an aggregate amount exceeding $500,000; and (iv) Liens arising with respect to zoning restrictions, easements, licenses, reservations, covenants, rights-of-way, utility easements, building restrictions and other similar charges or encumbrances on the use of Real Property which do not interfere with the ordinary conduct of the business of the Borrower or any of its Subsidiaries. "Deposit Account" means a demand, time, savings, passbook or like account with a bank, savings and loan association, credit union or like organization, other than an account evidenced by a negotiable certificate of deposit. "Designated Prepayment" means each mandatory prepayment required by clauses (i), (ii), and (iii) of Section 4.01(b). "DOL" means the United States Department of Labor and any Person succeeding to the functions thereof. "Dollars" and "$" mean the lawful money of the United States. "Domestic Lending Office" means, with respect to any Lender, such Lender's office, located in the United States, specified as the "Domestic Lending Office" under its name on the signature pages hereof or on the Assignment and Acceptance by which it became a Lender or such other United States office of such Lender as it may from time to time specify by written notice to the Borrower and the Administrative Agent. "Domestic Subsidiaries" means those Subsidiaries of the Borrower identified on Schedule 1.01.1 attached hereto and made a part hereof. "EBITDA" means, for any period, the amount calculated, without duplication, for such period as the sum of the Operating Units' Operating Profit and Equity Income/Minority Interest plus (to the extent deducted in the determination of such Operating Profit and Equity Income/Minority Interest) (i) depreciation expense, (ii) amortization expense, (iii) other non-recurring non-cash charges and expenses not requiring the use of Cash, (iv) losses arising other than in the ordinary course of business of the Operating Units which have been included in the determination of such Operating Profit and Equity Income/Minority Interest, and (v) increases in the LIFO reserve minus (to the extent included in the determination of such Operaing Profit and Equity Income/Minority Interest) (a) gains arising other than in the ordinary course of business of the Operating Units, (b) decreases in the LIFO reserve, and (c) other non-recurring credits and income not generating Cash. "11 7/8% Senior Subordinated Debenture Indenture" means the Indenture between Rexnord Acquisition Corp. and Irving Trust Company, as trustee, dated as of March 2, 1987, pursuant to which Senior Subordinated Debentures in the aggregate original principal amount of $126,000,000 were issued, as supplemented by the First Supplemental Indenture dated as of July 1, 1987 between Rexnord Corporation and Irving Trust Company, as trustee, and the Second Supplemental Indenture dated as of August 16, 1988, between RHI and Irving Trust Company, as trustee. "Eligible Assignee" means (i) a Lender or any Affiliate thereof; (ii) a commercial bank having total assets in excess of $2,500,000,000; (iii) the central bank of any country which is a member of the Organization for Economic Cooperation and Development; or (iv) a finance com- pany, insurance company, other financial institution or fund, acceptable to the Administrative Agent, which is regularly engaged in making, purchasing or investing in loans and having total assets in excess of $300,000,000. "Environmental, Health or Safety Requirements of Law" means all Requirements of Law derived from or relating to any federal, state or local law, ordinance, rule, regulation, Permit, license or other binding determination of any Governmental Authority relating to, imposing liability or standards concerning, or otherwise addressing, the environment, health and/or safety, including, but not limited to the Clean Air Act, the Clean Water Act, CERCLA, RCRA, any so-called "Superfund" or "Superlien" law, the Toxic Substances Control Act, OSHA, and public health codes, each as from time to time in effect. "Environmental Lien" means a Lien in favor of any Governmental Authority for any (i) liabilities under any Environmental, Health or Safety Requirement of Law, 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. "Environmental Property Transfer Acts" means any applicable Requirement of Law that conditions, restricts, prohibits or requires any notification or disclosure triggered by the transfer, sale, lease or closure of any Property or deed or title for any Property for environmental reasons, including, but not limited to, any so-called "Industrial Site Recovery Acts" or "Responsible Property Transfer Acts". "Equipment" means, with respect to any Person, all of such Person's present and future (i) equipment, including, without limitation, machinery, manufacturing, distribution, selling, 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 (other than such Person'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. "ERISA" means the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1000 et seq., any amendments thereto, any successor statutes, and any regulations or guidance promulgated thereunder. "ERISA Affiliate" means (i) any corporation which is a member of the same controlled group of corporations (within the meaning of Section 414(b) of the Internal Revenue Code) as the Borrower; (ii) a partnership or other trade or business (whether or not incorporated) which is under common control (within the meaning of Section 414(c) of the Internal Revenue Code) with the Borrower; and (iii) a member of the same affiliated service group (within the meaning of Section 414(m) of the Internal Revenue Code) as the Borrower, any corporation described in clause (i) above or any partnership or trade or business described in clause (ii) above. "ERISA Event" means (i) the occurrence with respect to a Plan of a Reportable Event, (ii) the provision by the administrator of any Plan of a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect to a plan amendment referred to in Section 4041(e) of ERISA), (iii) the cessation of operations at a facility of the Borrower or any ERISA Affiliate in the circumstances described in Section 4062(e) of ERISA, (iv) the withdrawal by the Borrower or an ERISA Affiliate from a Multiemployer Plan during a plan year for which it was a substantial employer, as defined in Section 4001(a)(2) of ERISA, (v) the conditions set forth in Section 302(f)(1)(A) and (B) of ERISA to the creation of a Lien upon Property or rights to Property of the Borrower or any ERISA Affiliate for failute to make a required payment to a Plan are satisfied, (vi) the adoption of an amendment to a Plan requiring the provision of security to such Plan, pursuant to Section 307 of ERISA, or (vii) the institution by the PBGC of proceedings to terminate a Plan, pursuant to Section 4042 of ERISA, or the occurrence of any event or condition described in Section 4042 of ERISA that constitutes grounds for the termination of, or the appointment of a trustee to administer, a Plan. "Eurodollar Affiliate" means, with respect to each Lender, the Affiliate of such Lender (if any) set forth below such Lender's name under the heading "Eurodollar Affiliate" on the signature pages hereof or on the Assignment and Acceptance by which it became a Lender or such Affiliate of a Lender as it may from time to time specify by written notice to the Borrower and the Administrative Agent. "Eurodollar Interest Payment Date" means, with respect to any Eurodollar Rate Loan, the last day of each Eurodollar Interest Period applicable to such Loan. "Eurodollar Interest Period" is defined in Section 5.02(b). "Eurodollar Interest Rate Determination Date" is defined in Section 5.02(c). "Eurodollar Lending Office" means, with respect to any Lender, the office or offices of such Lender (if any) set forth below such Lender's name under the heading "Eurodollar Lending Office" on the signature pages hereof or on the Assignment and Acceptance by which it became a Lender or such office or offices of such Lender as it may from time to time specify by written notice to the Borrower and the Administrative Agent. "Eurodollar Rate" means, with respect to any Eurodollar Interest Period applicable to a Eurodollar Rate Loan, an interest rate per annum obtained by dividing (i) the Base Eurodollar Rate applicable to that Eurodollar Interest Period by (ii) a percentage equal to 100% minus the Eurodollar Reserve Percentage in effect on the relevant Eurodollar Interest Rate Determination Date. "Eurodollar Rate Loans" means those Loans outstanding which bear interest at a rate determined by reference to the Eurodollar Rate and the Eurodollar Rate Margin as provided in Section 5.01(a). "Eurodollar Rate Margin" means a rate equal to one and one-half percent (1.50%) per annum. "Eurodollar Reserve Percentage" means, for any Eurodollar Interest Period, the reserve percentage which is applicable two (2) Business Days before the first day of such Eurodollar Interest Period under the regulations issued from time to time by the Federal Reserve Board for determining the actual 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 deposits exceeding Five Billion Dollars ($5,000,000,000) with respect to liabilities or assets consisting of or including "Eurocurrency Liabilities" (or with respect to any other category of liabilities which includes deposits by reference to which the interest rate on Eurodollar Rate Loans is determined) having a term equal to such Eurodollar Interest Period. "Event of Default" means any of the occurrences set forth in Section 12.01 after the expiration of any applicable grace period, as expressly provided in Section 12.01. "Excluded Dispositions" means (i) operations and/or assets of the Borrower or a Subsidiary of the Borrower located at Chatsworth, California, Farmingdale, New York, Redondo Beach, California, and Temple City, California (the "Natter property"); (ii) the "Greer real estate" located in Houston, Texas; (iii) the Convac Minority Interest; and (iv) the "Sloane Street real estate" located in London. "Fair Market Value" means, with respect to any asset, the value of the consideration obtainable in a sale of such asset in the open market, assuming a sale by a willing seller to a willing purchaser dealing at arm's length and arranged in an orderly manner over a reasonable period of time, each having reasonable knowledge of the nature and characteristics of such asset, neither being under any compulsion to act, and, if in excess of $500,000, as determined (a) in good faith by the Board of Directors of the Borrower or (b) in an appraisal of such asset, provided that for purposes of Section 10.02, such appraisal was performed relatively contemporaneously with such sale by an independent third party appraiser and the basic assumptions underlying such appraisal have not materially changed since the date thereof. "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 arranged by federal funds brokers, as published for such day (or, if such day is not a Business Day in New York, New York, for the next preceding Business Day) in New York, New York by the Federal Reserve Bank of New York, or if such rate is not so published for any day which is a Business Day in New York, New York, the average of the quotations for such day on such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by the Administrative Agent. "Federal Reserve Board" means the Board of Governors of the Federal Reserve System or any Governmental Authority succeeding to its functions. "Fee Letter" means that certain fee letter addressed to Citicorp Securities, Inc. from the Borrower dated January 22, 1996. "FII" means Fairchild Industries, Inc., a Delaware corporation. "Financial Statements" means (i) statements of income and retained earnings, statements of cash flow, and balance sheets, (ii) such other financial statements as TFC, RHI, the Borrower and its Subsidiaries shall routinely and regularly prepare and (iii) such other financial statements as the Administrative Agent or the Requisite Lenders may from time to time reasonably specify. "Fiscal Year" means the fiscal year of the Borrower and its Subsidiaries for accounting and tax purposes, which shall be the 12-month period ending on June 30 of each calendar year. "Foreign Employee Benefit Plan" means any employee benefit plan as defined in Section 3(3) of ERISA which is maintained or contributed to for the benefit of the employees of the Borrower, any of its Subsidiaries or any of its ERISA Affiliates and is not covered by ERISA pursuant to ERISA Section 4(b)(4). "Foreign Pension Plan" means any employee benefit plan as defined in Section 3(3) of ERISA which (i) is maintained or contributed to for the benefit of employees of the Borrower, any of its Subsidiaries or any of its ERISA Affiliates, (ii) is not covered by ERISA pursuant to Section 4(b)(4) of ERISA, and (iii) under applicable local law, is required to be funded through a trust or other funding vehicle. "Fronting Fee" is defined in Section 5.03(b). "Funding Date" means, with respect to any Loan, the date of funding of such Loan. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the American Institute of Certified Public Accountants' Accounting Principles Board and Financial Accounting Standards Board or in such other statements by such other entity as may be in general use by significant segments of the accounting profession as in effect on the date hereof (unless otherwise specified herein as in effect on another date or dates). "General Intangibles" means, with respect to any Person, all of such Person's present and future (i) general intangibles, (ii) rights, interests, choses in action, causes of action, claims and other intangible Property of every kind and nature (other than Receivables), (iii) corporate and other business records, (iv) loans, royalties, and other obligations receivable, (v) trademarks, registered trademarks, trademark applications, service marks, registered service marks, service mark applications, patents, registered patents, patent applications, trade names, rights of use of any name, labels, fictitious names, inventions, designs, trade secrets, computer programs, software, printouts and other computer materials, goodwill, registrations, copyrights, copyright applications, permits, licenses, franchises, customer lists, credit files, correspondence, and advertising materials, (vi) customer and supplier contracts, firm sale orders, rights under license and franchise agreements, rights under tax sharing agreements, and other contracts and contract rights, (vii) interests in partnerships and joint ventures, (viii) tax refunds and tax refund claims, (ix) right, title and interest under leases, subleases, licenses and concessions and other agreements relating to property, (x) deposit accounts (general or special) with any bank or other financial institution, (xi) credits with and other claims against third parties (including carriers and shippers), (xii) rights to indemnification and with respect to support and keep-well agreements, (xiii) reversionary interests in pension and profit sharing plans and reversionary, beneficial and residual interests in trusts, (xiv) letters of credit, guarantees, Liens, security interests and other security held by or granted to such Person and (xvi) uncertificated securities. "Governmental Authority" means any nation or government, any federal, state, local or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government. "Guarantors" means each of the Subsidiaries of the Borrower identified on Schedule 1.01.2 attached hereto and made a part hereof and any other Person executing and delivering a guaranty of payment and performance of all or any portion of the Obligations. "Hedge Agreement" means any agreement, including, without limitation, interest rate exchange, swap, collar or cap agreement, interest rate future or option contract, currency swap agreement, currency future or option contract, and other similar agreement, evidencing an agreement or arrangement intended to protect against fluctuation in interest rates and/or foreign exchange rates or conversion rates for conversion of foreign currencies to Dollars. "Holder" means any Person entitled to enforce any of the Obligations, whether or not such Person holds any evidence of Indebtedness, including, without limitation, the Administrative Agent, each Lender and each Issuing Bank. "Indebtedness", as applied to any Person, means, at any time, without duplication, (a) all indebtedness, obligations or other liabilities of such Person (i) for borrowed money or evidenced by debt Securities, debentures, acceptances, notes or other similar instruments, and any accrued interest, fees and charges relating thereto, (ii) under profit payment agreements or in respect of obligations to redeem, repurchase or exchange any Securities of such Person or to pay dividends in respect of any Capital 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, (vi) which are Accommodation Obligations or (vii) under warranties and indemnities; (b) all indebtedness, obligations or other liabilities of such Person or others secured by a 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, Hedge Agreements and foreign exchange contracts, net of liabilities owed to such Person by the counterparties thereon; (d) all preferred stock subject (upon the occurrence of any contingency or otherwise) to mandatory redemption; and (e) all contingent Contractual Obligations with respect to any of the foregoing. "Indemnified Matters" is defined in Section 15.03. "Indemnitees" is defined in Section 15.03. "Interest Coverage Ratio" means, for any period, the ratio of (i) Borrower's interest income (accrued or received)for such period to (ii) Cash Interest Expense for such period. "Internal Revenue Code" means the Internal Revenue Code of 1986, as amended to the date hereof and from time to time hereafter, any successor statute and any regulations or guidance promulgated thereunder. "Inventory" means, with respect to any Person, all of such Person'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 consigned goods and all other items which have previously constituted Equipment of such Person but are then currently being held for sale or lease in the ordinary course of such Person'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 Person'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 Person has a joint or other interest or right of any kind (including, without limitation, goods in which such Person has an interest or right as consignee), and (vi) goods which are returned to or repossessed by such Person; in each case whether in the possession of such Person, 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 loan, advance (other than deposits with financial institutions available for withdrawal on demand, prepaid expenses, accounts receivable, advances to employees and similar items made or incurred in the ordinary course of business) 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 and all Indebtedness to such Person which is not a current asset. 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. "Issuing Banks" means Citibank and each Lender designated as an "Issuing Bank" on the signature pages hereof or the signature page of the Assignment and Acceptance by which it became a Lender and each other Lender approved by the Administrative Agent and the Borrower who has agreed to become an Issuing Bank for the purpose of issuing Letters of Credit pursuant to Section 3.01. "Lender" means, as of the Closing Date, each financial institution a signatory hereto as a Lender and, at any other given time, each financial institution which is a party hereto as a Lender, whether as a signatory hereto or pursuant to an Assignment and Acceptance. "Letter of Credit" means any Commercial Letter of Credit or Standby Letter of Credit. "Letter of Credit Fee" is defined in Section 5.03(b). "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 by the designated Issuing Bank as referenced in Section 3.01(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 judgment of the Issuing Bank and Administrative Agent) to the interests of the Lenders; provided, however, in the event of any conflict between the terms of any Letter of Credit Reimbursement Agreement and this Agreement, the terms of this Agreement shall control. "Liabilities and Costs" means all liabilities, obligations, responsibilities, losses, damages, personal injury, death, punitive damages, economic damages, consequential damages, treble damages, intentional, willful or wanton injury, damage or threat to the environment, natural resources or public health or welfare, costs and expenses (including, without limitation, attorney, expert and consulting fees and costs and fees and costs associated with any investigation, feasibility or Remedial Action studies), fines, penalties and monetary sanctions, interest, direct or indirect, known or unknown, absolute or contingent, past, present or future. "Lien" means any mortgage, deed of trust, pledge, hypothecation, assignment, conditional sale agreement, deposit arrangement, security interest, encumbrance, lien (statutory or other and including, without limitation, any Environmental Lien), 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 9- 408 of the Uniform Commercial Code), naming the owner of such property as debtor, under the Uniform Commercial Code or other comparable law of any jurisdiction. "Loan Account" is defined in Section 4.03(b). "Loan Documents" means this Agreement, the Notes, Hedge Agreements to which any Lender or any Affiliate of a Lender is a party, foreign exchange contracts to which any Lender or any Affiliate of a Lender is a party, and all other instruments, agreements and written Contractual Obligations between the Borrower or any Subsidiary of the Borrower and any of the Administrative Agent, any Lender or any Issuing Bank delivered to either the Administrative Agent, such Lender or such Issuing Bank pursuant to or in connection with the transactions contemplated hereby. "Loans" means all Term Loans and Revolving Loans, whether Base Rate Loans or Eurodollar Rate Loans. "Margin Stock" means "margin stock" as such term is defined in Regulation U and Regulation G. "Material Adverse Effect" means a material adverse effect upon (i) the financial condition, operations, assets or prospects of the Borrower or any of its Subsidiaries, (ii) the ability of the Borrower or any of its Subsidiaries to perform their respective obligations under the Loan Docu- ments, or (iii) the ability of the Lenders, the Issuing Banks or the Administrative Agent to enforce any of the Loan Documents. "MIS" means computerized management information system for recording and maintenance of information regarding purchases, sales, aging, categorization, and locations of Inventory, creation and aging of Receivables, and accounts payable (including agings thereof). "Multiemployer Plan" means a "multiemployer plan" as defined in Section 4001(a)(3) of ERISA (other than a Foreign Employee Benefit Plan) which (i) is, or within the immediately preceding six (6) years was, contributed to by either the Borrower or any ERISA Affiliate or in respect of which the Borrower or any ERISA Affiliate has assumed any liability and (ii) is not a Foreign Employee Benefit Plan. "Net Cash Proceeds of Issuance of Equity Securities" means (i) net cash proceeds (including cash, equivalents readily convertible into cash, and such proceeds of any notes received as consideration or any other non-cash consideration) received by the Borrower or any of its Subsidiaries at any time after the Closing Date on account of the issuance of equity Securities of the Borrower or any of its Subsidiaries (other than (a) Capital Stock of a Subsidiary issued to the Borrower or to a Subsidiary of the Borrower and (b) Capital Stock issued to effect the transfer of the Convac Minority Interest) and (ii) proceeds received by the Borrower at any time after the Closing Date as a contribution to its capital on account of the issuance of equity Securities of the Borrower. "Net Cash Proceeds of Issuance of Indebtedness" means Indebtedness (other than Indebtedness permitted under Section 10.01) of the Borrower or any of its Subsidiaries, in each case net of all transaction costs and underwriters' discounts with respect thereto. "Net Cash Proceeds of Sale" means (i) proceeds received by the Borrower or any of its Subsidiaries in cash (including cash, equivalents readily convertible into cash, and such proceeds of any notes received as consideration or any other non-cash consideration) from the sale, assignment or other disposition of (but not the lease or license of) any Property, other than sales permitted under clauses (b) through (e) of Section 10.02, net of (A) the costs of sale, assignment or other disposition, (B) any income, franchise, transfer or other tax liability arising from such transaction and (C) amounts applied to the repayment of Indebtedness (other than the Obligations) secured by a Lien permitted by Section 10.03 on the asset disposed of, whether such net proceeds arise from any individual sale, assignment or other disposition or from any group of related sales, assignments or other dispositions; and (ii) to the extent provided in Section 9.07(b), proceeds of insurance on account of the loss of or damage to any such Property or Properties, and payments of compensation for any such Property or Properties taken by condemnation or eminent domain. "Net Income" means, for any period, the net income (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 Insurance and Condemnation Proceeds" means proceeds (including cash, equivalents readily convertible into cash, and such proceeds of any notes received in lieu of cash) of insurance policies described in Section 9.07 and proceeds of condemnation awards described in Section 9.07 required to be remitted to the Administrative Agent as provided in Section 9.07(b). "1992 Credit Agreement" is defined in Section 6.01(d). "Non Pro Rata Loan" is defined in Section 4.02(f). "Note" means a promissory note in the form attached hereto as Exhibit C payable to a Lender, evidencing certain of the Obligations of the Borrower to such Lender and executed by the Borrower as required by Section 4.03(a), as the same may be amended, supplemented, modified or restated from time to time, and any promissory note issued in substitution therefor; "Notes" means, collectively, all of such Notes outstanding at any given time. "Notice of Borrowing" means a notice substantially in the form of Exhibit D attached hereto and made a part hereof. "Notice of Conversion/Continuation" means a notice substantially in the form of Exhibit E attached hereto and made a part hereof with respect to a proposed conversion or continuation of a Loan pursuant to Section 5.01(c). "Obligations" means all Loans, advances, debts, liabilities, obligations, covenants and duties owing by the Borrower to the Administrative Agent, any Lender, any Issuing Bank, any Affiliate of the Administrative Agent, any Lender or any Issuing Bank, or any Person entitled to indemnification pursuant to Section 15.03 of this Agreement, of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other instrument, 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, opening or amendment of a Letter of Credit or payment of any draft drawn thereunder, loan, guaranty, indemnification, foreign exchange contract, Hedge Agreement 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 the Borrower under this Agreement or any other Loan Document. "Officer's Certificate" means, as to a corporation, a certificate executed on behalf of such corporation by the chairman or vice-chairman of its board of directors (if an officer of such corporation) or its president, any of its vice-presidents, its chief financial officer, or its treasurer. "Operating Profit and Equity Income/Minority Interest" means an amount equal to total sales minus cost of sales minus total operating expenses and includes other (income)/expense, Investment (income)/expense, goodwill amortization, equity (in earnings)/loss, and minority interest (income)/loss. "Operating Lease" means, as applied to any Person, any lease of any property (whether real, personal or mixed) by that Person as lessee which is not a Capital Lease. "Operating Units" means, collectively, those segments of the Borrower's business known as (i) Fairchild Fasteners U.S., (ii) Fairchild Fasteners - Europe, (iii) Camloc (UK) Gas Spring Division, and (iv) Convac GmbH; and each of the foregoing is an "Operating Unit". "Organizational Documents" means, with respect to any corporation, limited liability company, or partnership (i) the articles/certificate of incorporation (or the equivalent organizational documents) of such corporation or limited liability company, (ii) the partnership agreement executed by the partners in the partnership, (iii) the by-laws (or the equivalent governing documents) of the corporation, limited liability company or partnership, and (iv) 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 or such limited liability company's or partnership's equity or ownership interests. "OSHA" means the Occupational Safety and Health Act of 1970, 29 U.S.C. 651 et seq., any amendments thereto, any successor statutes and any regulations or guidance promulgated thereunder. "PBGC" means the Pension Benefit Guaranty Corporation and any Person succeeding to the functions thereof. "Permits" means any permit, approval, authorization license, variance, or permission required from a Governmental Authority or other Person under an applicable Requirement of Law. "Permitted Equity Securities Options" means the subscriptions, options, warrants, rights, convertible securities and other agreements or commitments relating to the issuance of equity Securities of the Borrower or any Subsidiary of the Borrower identified as such on Schedule 1.01.3. "Permitted Existing Accommodation Obligations" means those Accommodation Obligations of the Borrower and its Subsidiaries identified as such on Schedule 1.01.4. "Permitted Existing Indebtedness" means the Indebted- ness of the Borrower and its Subsidiaries identified as such on Schedule 1.01.5. "Permitted Existing Investments" means those Invest- ments identified as such on Schedule 1.01.6. "Permitted Existing Liens" means the Liens on assets of the Borrower or any of its Subsidiaries identified as such on Schedule 1.01.7. "Person" means any natural person, corporation, limited liability company, limited partnership, general partnership, joint stock company, joint venture, association, company, trust, bank, trust company, land trust, business trust 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 Foreign Employee Benefit Plan) (i) in respect of which the Borrower or any ERISA Affiliate is, or within the immediately preceding six (6) years was, an "employer" as defined in Section 3(5) of ERISA or the Borrower or any ERISA Affiliate has assumed any liability and (ii) which is not a Foreign Employee Benefit Plan. "Potential Event of Default" means an event which, with the giving of notice or the lapse of time, or both, would constitute an Event of Default. "Process Agent" is defined in Section 15.17(a)(i). "Pro Forma" means the unaudited pro forma opening balance sheet of the Borrower and its Subsidiaries attached hereto as Exhibit F, prepared in accordance with GAAP, dated December 31, 1995, and giving effect to the extensions of credit contemplated hereby, the sales of assets of the D-M-E Division of VSI and Fairchild Data Corporation, the merger of FII and Shared Technologies, Inc., the merger of D-M-E Normalien GmbH and Fairchild Convac GmbH, and the transfer of the Harco business to Banner Aerospace, Inc. "Projections" means the financial projections (including, without limitation, capital expenditure budget) and assumptions prepared by the Borrower dated February 16, 1996 and attached hereto as Exhibit G. "Property" means any Real Property or personal prop- erty, plant, building, facility, structure, underground storage tank or unit, Equipment, Inventory, General Intangible, Receivable, or other asset owned, leased or operated by the Borrower or any Subsidiary of the Borrower, as applicable, (including any surface water thereon, and soil and groundwater thereunder). "Proposal Letter" means that certain letter addressed to the Borrower from Citicorp Securities, Inc. dated January 16, 1996 and accepted by the Borrower on January 18, 1996. "Pro Rata Share" means, with respect to any Lender, the percentage obtained by dividing (i) the sum of such Lender's Term Loan Commitment and Revolving Credit Commitment (in each case, as adjusted from time to time in accordance with the provisions of this Agreement or any Assignment and Acceptance to which such Lender is a party) by (ii) the aggregate amount of all of the Term Loan Commitments and Revolving Credit Commitments (notwithstanding the termination of any such Commitments). "Protective Advance" is defined in Section 13.09(a). "RCRA" means the Resource Conservation and Recovery Act of 1976, 42 U.S.C. 6901 et seq., any amendments thereto, any successor statutes, and any regulations promulgated thereunder. "Real Property" means, with respect to any Person, all of such Person'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 appertaining 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, with respect to any Person, all of such Person'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 Person is named as beneficiary, (vi) claims against third parties for advances and other financial accommodations and any other obligations whatsoever owing to such Person, (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. "Refinanced Indebtedness" means the Indebtedness of the Borrower or any of its Subsidiaries which is to be repaid or defeased out of the proceeds of the Loans made on the Closing Date and identified as such on Schedule 1.01.8. "Register" is defined in Section 15.01(c). "Regulation A" means Regulation A of the Federal Reserve Board as in effect from time to time. "Regulation G" means Regulation G of the Federal Reserve Board as in effect from time to time. "Regulation T" means Regulation T of the Federal Reserve Board as in effect from time to time. "Regulation U" means Regulation U of the Federal Reserve Board as in effect from time to time. "Regulation X" means Regulation X of the Federal Reserve Board as in effect from time to time. "Reimbursement Date" is defined in Section 3.01(d)(i)(A). "Reimbursement Obligations" means the aggregate non- contingent reimbursement or repayment obligations of the Borrower with respect to amounts drawn under Letters of Credit. "Release" means any release, spill, emission, leaking, pumping, pouring, dumping, injection, deposit, disposal, abandonment, or discarding of barrels, containers or other receptacles, discharge, emptying, escape, dispersal, leaching or migration into the indoor or outdoor environment or into or out of any Property, including the movement of Contaminants through or in the air, soil, surface water, groundwater or Property. "Remedial Action" means actions 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; or (iii) investigate and determine if a remedial response is needed and to design such a response and post-remedial investigation, monitoring, operation and maintenance and care. "Replacement Proceeds" means the amount of (i) proceeds of insurance paid on account of the loss of or damage to any Property and awards of compensation for Property taken by condemnation or eminent domain to the extent actually used to replace, rebuild or restore the Property so lost, damaged or taken, provided that Borrower shall have delivered written notice to the Administrative Agent that it or its applicable Subsidiary intends to so replace, rebuild or restore such Property within 90 days after the Administrative Agent's receipt of the proceeds of such insurance payment or condemnation award if such proceeds exceed $500,000 and (ii) insurance paid on account of a business interruption occurrence to the extent actually used in the restoration or conduct of the business interrupted. "Reportable Event" means any of the events described in Section 4043(c) of ERISA and the regulations promulgated thereunder as in effect from time to time other than an event for which the thirty (30) day notice requirement has been waived by the PBGC. "Requirements of Law" means, as to any Person, the charter and by-laws or other organizational or governing documents of such Person, and any law, rule or regulation, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject including, without limitation, the Securities Act, the Securities Exchange Act, Regulations G, T, U and X, ERISA, the Fair Labor Standards Act, the Worker Adjustment and Retraining Notification Act, Americans with Disabilities Act of 1990, and any certificate of occupancy, zoning ordinance, building, environmental or land use requirement or Permit and Environmental, Health or Safety Requirement of Law. "Requisite Lenders" means Lenders whose Pro Rata Shares, in the aggregate, are greater than fifty-one percent (51%); provided, however, that, in the event any of the Lenders shall have failed to fund its Pro Rata Share of any Revolving Loan requested by the Borrower which such Lenders are obligated to fund under the terms of this Agreement and any such failure has not been cured, then for so long as such failure continues, "Requisite Lenders" means Lenders (excluding all Lenders whose failure to fund their respective Pro Rata Shares of such Revolving Loans have not been so cured) whose Pro Rata Shares represent more than fifty-one percent (51%) of the aggregate Pro Rata Shares of such Lenders; provided, further, however, that, in the event that the Commitments have been terminated pursuant to the terms of this Agreement, "Requisite Lenders" means Lenders (without regard to such Lenders' performance of their respective obligations hereunder) whose aggregate ratable shares (stated as a percentage) of the aggregate outstanding principal balance of all Loans 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 the Borrower or any of its Subsidiaries 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 equity Securities of the Borrower or any of its Subsidiaries 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 Indebtedness for borrowed money other than the Obligations 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 the Borrower or any of its Subsidiaries now or hereafter outstanding. "Revolving Credit Availability" means, at any particular time, the amount by which the Revolving Credit Commitments at such time exceed the Revolving Credit Obligations at such time. "Revolving Credit Commitment" means, with respect to any Lender, the obligation of such Lender to make Revolving Loans and to participate in Letters of Credit pursuant to the terms and conditions of this Agreement, in an aggregate amount at any time outstanding which shall not exceed the principal amount set forth opposite such Lender's name under the heading "Revolving Credit Commitment" on the signature pages hereof or the signature page of the Assignment and Acceptance by which it became a Lender, as modified from time to time pursuant to the terms of this Agreement or to give effect to any applicable Assignment and Acceptance, and "Revolving Credit Commitments" means the aggregate principal amount of the Revolving Credit Commitments of all the Lenders, the maximum amount of which shall be $50,000,000, as reduced from time to time pursuant to Section 4.01. "Revolving Credit Obligations" means, at any particular time, the sum of (i) the outstanding principal amount of the Revolving Loans at such time, plus (ii) the Letter of Credit Obligations at such time. "Revolving Credit Pro Rata Share" means, with respect to any Revolving Lender, the percentage obtained by dividing (i) such Revolving Lender's Revolving Credit Commitment (in each case, as adjusted from time to time in accordance with the provisions of this Agreement or any Assignment and Acceptance to which such Lender is a party) by (ii) the aggregate amount of all of the Revolving Credit Commitments. "Revolving Credit Termination Date" means the earliest to occur of (i) July 29, 1996 (or, if not a Business Day, the next preceding Business Day), (ii) the date of termination of the Revolving Credit Commitments pursuant to the terms of this Agreement, and (iii) the date of acceleration of the Obligations pursuant to Section 12.02. "Revolving Lenders" means those Lenders having a Revolving Credit Commitment; and "Revolving Lender" means one of the Revolving Lenders, individually. "Revolving Loan" is defined in Section 2.02(a). "Revolving Notes" means promissory notes executed by Borrower and delivered to the Lenders evidencing the Revolving Loans, as the same may be amended, supplemented, modified or restated from time to time, and any promissory note issued in substitution therefor, substantially in the form attached hereto as Exhibit C-1; and "Revolving Note" means any one of the Revolving Notes. "RHI" means RHI Holdings, Inc., a Delaware corporation. "Securities" means any Capital Stock, shares, voting trust certificates, limited partnership certificates, bonds, debentures, notes or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in general any instruments commonly known as "securities", including, without limitation, any "security" as such term is defined in Section 8-102 of the Uniform Commercial Code, or any certificates of interest, shares, or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire any of the foregoing, but shall not include the Notes or any other 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. "Solvent", when used with respect to any Person, means that at the time of determination: (i) the Fair Market Value of its assets is in excess of the total amount of its liabilities (including, without limitation, contingent liabilities); and (ii) the present fair saleable value of its assets is greater than its probable liability on its existing debts as such debts become absolute and matured; and (iii) it is then able and expects to be able to pay its debts (including, without limitation, contingent debts and other commitments) as they mature; and (iv) it has capital sufficient to carry on its business as conducted and as proposed to be conducted. "Standby Letter of Credit" means any letter of credit issued by an Issuing Bank pursuant to Section 3.01 for the account of the Borrower or for the account of any of the Borrower's Subsidiaries if the Borrower is jointly and severally liable for reimbursement of amounts drawn under such letter of credit, which is not a Commercial Letter of Credit. "Subsidiary" of a Person means any corporation, limited liability company, general or limited partnership, 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 with respect to such entity 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. Notwithstanding the foregoing, for purposes of this Agreement, Banner Aerospace, Inc. shall not be included as a Subsidiary of the Borrower. "Super-Majority Lenders" means Lenders whose Pro Rata Shares, in the aggregate, are greater than sixty-seven percent (67%); provided, however, that, in the event any of the Lenders shall have failed to fund its Pro Rata Share of any Revolving Loan requested by the Borrower which such Lenders are obligated to fund under the terms of this Agreement and any such failure has not been cured, then for so long as such failure continues, "Super-Majority Lenders" means Lenders (excluding all Lenders whose failure to fund their respective Pro Rata Shares of such Revolving Loans have not been so cured) whose Pro Rata Shares represent more than sixty-seven percent (67%) of the aggregate Pro Rata Shares of such Lenders. "Tax Allocation Agreement" means that certain Eighth Amended and Restated Tax Allocation Agreement dated as of March 13, 1996 among TFC, RHI, Borrower and certain Affiliates thereof, as in effect on the Closing Date. "Taxes" is defined in Section 14.01(a). "Term Lenders" means those Lenders having a Term Loan Commitment; and "Term Lender" means one of the Term Lenders, individually. "Term Loan" is defined in Section 2.01(a). "Term Loan Commitment" means, with respect to any Lender, the obligation of such Lender to make its Term Loan pursuant to the terms and conditions of this Agreement, in an amount equal to the amount set forth under such Lender's name under the heading "Term Loan Commitment" on the signature pages hereof or the signature page of the Assignment and Acceptance by which it became a Lender, as modified from time to time pursuant to the terms of this Agreement or to give effect to any applicable Assignment and Acceptance, and "Term Loan Commitments" means the aggregate principal amount of the Term Loan Commitments of all the Lenders, the maximum amount of which shall be $30,000,000, as reduced from time to time pursuant to Sections 2.01(d) or 4.01. "Term Loan Pro Rata Share" means, with respect to any Term Lender, the percentage obtained by dividing (i) the sum of such Term Lender's Term Loan Commitment (in each case, as adjusted from time to time in accordance with the provisions of this Agreement or any Assignment and Acceptance to which such Term Lender is a party) by (ii) the aggregate Term Loan Commitments. "Term Loan Termination Date" means the earlier of (i) July 29, 1996 and (ii) the date of acceleration of the Obligations pursuant to Section 12.02. "Term Notes" means promissory notes executed by the Borrower and delivered to the Lenders evidencing the Term Loans, as the same may be amended, supplemented, modified or restated from time to time, and any promissory not issued in substitution therefor, substantially in the form attached hereto as Exhibit C-2; and "Term Note" means any one of the Term Notes. "Termination Event" means (i) a Reportable Event with respect to any Benefit Plan; (ii) the withdrawal of the Borrower or any ERISA Affiliate from a Benefit Plan during a plan year in which the Borrower or such ERISA Affiliate was a "substantial employer" as defined in Section 4001(a)(2) of ERISA or the cessation of operations which results in the termination of employment of 20% of Benefit Plan participants who are employees of the Borrower or any ERISA Affiliate; (iii) the imposition of an obligation on the Borrower or any ERISA Affiliate under Section 4041 of ERISA to provide affected parties written notice of intent to terminate a Benefit Plan in a distress termination described in Section 4041(c) of ERISA; (iv) the institution by the PBGC or any similar foreign Governmental Authority of proceedings to terminate a Benefit Plan or a Foreign Pension Plan; (v) any event or condition which could reasonably be expected to constitute grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Benefit Plan; (vi) the appointment by a foreign Governmental Authority of, or the institution of proceedings by a foreign Governmental Authority to appoint, a trustee to administer any Foreign Pension Plan; or (vii) the partial or complete withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer Plan or a Foreign Pension Plan. "TFC" means The Fairchild Corporation, a Delaware corporation. "TFC/RHI Liquidity" means, as of any date of determination thereof, an amount equal to (i) the amount of consolidated Cash and Cash Equivalents of TFC and RHI as of such date of determination, plus (ii) the amount of the Revolving Credit Availability as of such date of determination after giving effect to any requests for Loans or Letters of Credit received by the Administrative Agent on such date, minus (iii) the amount of Cash and Cash Equivalents of TFC and RHI required to secure Contractual Obligations of TFC and RHI as of such date of determination. "Transaction Costs" means the fees, costs and expenses payable by the Borrower in connection with the execution, delivery and performance of the Loan Documents. "Transfer Documents" means, collectively, all corporate resolutions, agreements and instruments executed and delivered in connection with the capitalization of the Borrower and the transfer of assets of VSI to the Borrower; "Transfer Document" means any one of the Transfer Documents. "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. "VSI" means VSI Corporation, a Delaware corporation, and transferor of all assets and liabilities of the Borrower under the Transfer Documents. "Wholly-Owned Subsidiary" means a corporation (i) one hundred percent (100%) of the Capital Stock of which is owned by the Borrower or any Subsidiary of the Borrower or (ii) greater than ninety-eight percent (98%) of the Capital Stock of which is owned by the Borrower or a Subsidiary of the Borrower and the remainder of which Capital Stock is owned by a nominee of the Borrower or such Subsidiary solely to comply with the Requirements of Law of the jurisdiction governing such corporation's organization and existence. 1.02. Computation of Time Periods. In this Agreement, in the computation of periods of time from a specified date to a later specified date, the word "from" means "from and including" and the words "to" and "until" each mean "to but excluding". Periods of days referred to in this Agreement shall be counted in calendar days unless Business Days are expressly prescribed. Any period determined hereunder by reference to a month or months or year or years shall end on the day in the relevant calendar month in the relevant year, if applicable, immediately preceding the date numerically corresponding to the first day of such period; 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. Subject to Section 15.04, for purposes of this Agreement, all accounting terms not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP. 1.04. Other Terms. All other terms contained in this Agreement shall, unless the context indicates otherwise, have the meanings assigned to such terms by the Uniform Commercial Code to the extent the same are defined therein. ARTICLE II AMOUNTS AND TERMS OF LOANS 2.01. Term Loans. (a) Amount of Term Loans. Subject to the terms and conditions set forth in this Agreement, each Lender on the Closing Date hereby severally and not jointly agrees to make on the Closing Date, a term loan, in Dollars, to the Borrower in an amount equal to such Lender's Term Loan Commitment (each individually, a "Term Loan" and, collectively, the "Term Loans"). All Term Loans shall be made by the Lenders on the Closing Date simultaneously and proportionately to their respective Pro Rata Shares, it being understood that no Lender shall be responsible for any failure by any other Lender to perform its obligation to make any Term Loan hereunder nor shall the Term Loan Commitment of any Lender be increased or decreased as a result of any such failure. (b) Notice of Borrowing. The Borrower shall deliver to the Administrative Agent a Notice of Borrowing with respect to the Term Loans, signed by it, on the Closing Date. Such Notice of Borrowing shall specify (i) the aggre- gate amount of the Term Loans and (ii) instructions for the disbursement of the proceeds of the Term Loans. The Term Loans shall initially be Base Rate Loans and thereafter may be continued as Base Rate Loans or converted into Eurodollar Rate Loans in the manner provided in Section 5.01(c) and subject to the conditions and limitations therein set forth and set forth in Section 5.02. Any Notice of Borrowing given pursuant to this Section 2.01(b) shall be irrevocable. (c) Making of Term Loans. Promptly after receipt of the Notice of Borrowing under Section 2.01(b) in respect of the Term Loans, the Administrative Agent shall notify each Lender by facsimile transmission, or other similar form of transmission, of the proposed Borrowing. Each Lender shall deposit an amount equal to its Pro Rata Share of the Term Loans with the Administrative Agent at its office in New York, New York, in immediately available funds, on the Closing Date. Subject to the fulfillment of the conditions precedent set forth in Section 6.01, 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 the Closing Date and shall disburse such proceeds in accordance with the Borrower's disbursement instructions set forth in such Notice of Borrowing. The failure of any Lender to deposit the amount described above with the Administrative Agent on the Closing Date shall not relieve any other Lender of its obligations hereunder to make its Term Loan on the Closing Date. In the event the conditions precedent set forth in Section 6.01 are not fulfilled or duly waived as of the Closing Date, the Administrative Agent shall promptly return, by wire transfer of immediately available funds, the amount deposited by each Lender to such Lender. (d) Repayment of the Term Loans. (i) The Term Loans shall be repayable on July 29, 1996, unless the Term Loan Termination Date earlier occurs, and the Term Loan Commitments shall be permanently reduced by the amount of each installment on the date payment thereof is required to be made hereunder. (ii) The Borrower may make voluntary prepayments as and when described in Section 4.01(a)(i) and shall make the mandatory prepayments required in Section 4.01(b), for credit against the Term Loans pursuant to the provisions of Section 4.01(a)(ii) or Section 4.01(b)(vi), as applicable. 2.02. Revolving Credit Facility. (a) Availability. Subject to the terms and conditions set forth in this Agreement, each Lender hereby severally and not jointly agrees to make revolving loans, in Dollars (each individually, a "Revolving Loan" and, collectively, the "Revolving Loans") to the Borrower from time to time during the period from the Closing Date to the Business Day next preceding the Revolving Credit Termination Date, in an amount not to exceed such Lender's Pro Rata Share of the Revolving Credit Availability at such time. All Revolving Loans comprising the same Borrowing under this Agreement shall be made by the Lenders simultaneously and proportionately to their then respective Pro Rata Shares, it being understood that no Lender shall be responsible for any failure by any other Lender to perform its obligation to make a Revolving Loan hereunder nor shall the Revolving Credit Commitment of any 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 on any day which is a Business Day and any amounts so repaid may be reborrowed, up to the amount available under this Section 2.02(a) at the time of such Borrowing, until the Business Day next preceding the Revolving Credit Termination Date; provided, however, the Borrower shall, without notice or demand of any kind, immediately make such repayments of the Revolving Loans to the extent necessary to reduce the aggregate outstanding principal amount of the Revolving Loans to an amount less than or equal to the difference between the then Revolving Credit Availability and the Letter of Credit Obligations as of such time. Each requested Borrowing of Revolving Loans funded on any Funding Date for Revolving Loans shall be (i) if Base Rate Loans, in a principal amount of at least $100,000 and in integral multiples of $100,000 in excess of that amount and (ii) if Eurodollar Rate Loans, in a principal amount of at least $1,000,000 and in integral multiples of $100,000 in excess of that amount. (b) Notice of Borrowing. When the Borrower desires to borrow under this Section 2.02, it shall deliver to the Administrative Agent a Notice of Borrowing, signed by it, (i) on the Closing Date, in the case of a Borrowing of Revolving Loans on the Closing Date and (ii) no later than 11:00 a.m. (New York time) on the proposed Funding Date therefor, in the case of a Borrowing of Base Rate Loans after the Closing Date and (iii) no later than 12:00 noon (New York time) at least two (2) Business Days in advance of the proposed Funding Date therefor, in the case of a Borrowing of Eurodollar Rate Loans after the Closing Date. Such Notice of Borrowing shall specify (i) the proposed Funding Date (which shall be a Business Day), (ii) the amount of the proposed Borrowing, (iii) the Revolving Credit Availability as of the date of such Notice of Borrowing, (iv) whether the proposed Borrowing will be of Base Rate Loans or Eurodollar Rate Loans, (v) in the case of Eurodollar Rate Loans, the requested Eurodollar Interest Period, (vi) instructions for the disbursement of the proceeds of the proposed Borrowing, and (vii) the portion of the proposed Borrowing, if any, which will be used to pay a dividend on Borrower's Capital Stock. The Revolving Loans made on the Closing Date shall initially be Base Rate Loans and thereafter may be continued as Base Rate Loans or converted into Eurodollar Rate Loans, in the manner provided in Section 5.01(c) and subject to the conditions therein set forth and in Section 5.02. In lieu of delivering such a Notice of Borrowing (except with respect to a Borrowing of Revolving Loans on the Closing Date), the Borrower may give the Administrative Agent telephonic notice of any proposed Borrowing by the time required under this Section 2.02(b), if the Borrower confirms such notice by delivery of the required Notice of Borrowing to the Administrative Agent by facsimile transmission promptly, but in no event later than 5:00 p.m. (New York time) on the same day, the original of which facsimile copy shall be delivered to the Administrative Agent within three (3) days after the date of such transmission. Any Notice of Borrowing (or telephonic notice in lieu thereof) given pursuant to this Section 2.02(b) shall be irrevocable. (c) Making of Revolving Loans. (i) Promptly after receipt of a Notice of Borrowing under Section 2.02(b) (or telephonic notice in lieu thereof), the Administrative Agent shall notify each Revolving Lender by telex or telecopy, or other similar form of transmission, of the proposed Borrowing. Each Revolving Lender shall deposit an amount equal to its Pro Rata Share of the amount requested by the Borrower to be made as Revolving Loans with the Administrative Agent at its office in New York, New York, in immediately available funds, (A) on the Closing Date with respect to the Borrowing of Revolving Loans on such date specified in the initial Notice of Borrowing and (B) not later than 1:00 p.m. (New York time) on any other Funding Date for Revolving Loans. Subject to the fulfillment of the conditions precedent set forth in Section 6.01 or Section 6.02, as applicable, 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) and shall disburse such proceeds in accordance with the Borrower's disbursement instructions set forth in the applicable Notice of Borrow- ing. The failure of any Revolving Lender to deposit the amount described above with the Administrative Agent on the applicable Funding Date shall not relieve any other Revolving Lender of its obligations hereunder to make its Revolving Loan on such Funding Date. In the event the conditions precedent set forth in Section 6.01 or 6.02, as applicable, are not fulfilled as of the proposed Funding Date for any Borrowing, the Administrative Agent shall promptly return, by wire transfer of immediately available funds, the amount deposited by each Revolving Lender to such Lender. (ii) Unless the Administrative Agent shall have been notified by any Revolving Lender (A) on the Business Day immediately preceding the applicable Funding Date in respect of any Borrowing of Revolving Loans which are Eurodollar Rate Loans or (B) prior to the time of funding thereof as specified in Section 2.02(c) in respect of any Borrowing of Revolving Loans which are Base Rate Loans, that such Lender does not intend to fund its Revolving Loan requested to be made on such Funding Date, the Administrative Agent may assume that such Lender has funded its Revolving Loan and is depositing the proceeds thereof with the Administrative Agent on the Funding Date therefor, and the Administrative Agent in its sole discretion may, but shall not be obligated to, disburse a corresponding amount to the Borrower on the applicable 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 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, (1) in the case of the Borrower, at the interest rate applicable to such Borrowing and (2) in the case of such Revolving Lender, at the Federal Funds Rate for the first three (3) Business Days, and thereafter at the interest rate applicable to such Borrowing. If such Revolving Lender shall pay to the Administrative Agent the corresponding amount, the amount so paid shall constitute such Lender's Revolving Loan, and if both such Lender and the Borrower shall pay and repay 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 Revolving Lender of its obligation to make its Revolving Loan on any applicable Funding Date. (d) Revolving Credit Termination Date. The Revolving Credit Commitments shall terminate on the Revolving Credit Termination Date. Each Revolving Lender's obligation to make Revolving Loans shall terminate on the Business Day next preceding the Revolving Credit Termination Date. All outstanding Revolving Credit Obligations shall be paid in full (or, in the case of unmatured Letter of Credit Obliga- tions, provision for payment in cash shall be made to the satisfaction of the Issuing Banks and the Requisite Lenders) (i) if the Revolving Credit Commitments are terminated pursuant to Section 4.01, on the date such termination is effective, and (ii) otherwise, on the earlier to occur of (A) July 29, 1996 or, if not a Business Day, the next preceding Business Day, and (B) the date of acceleration of the Obligations pursuant to Section 12.02. (e) Maximum Revolving Credit Facility. Notwithstanding anything in this Agreement to the contrary, in no event shall the aggregate principal Revolving Credit Obligations exceed the Revolving Credit Commitments as in effect from time to time. 2.03. Authorized Officers and Administrative Agents. On the Closing Date the Borrower shall deliver, and from time to time thereafter the Borrower may deliver, to the Administrative Agent an Officer's Certificate setting forth the names of the officers, employees and agents authorized to request Loans and Letters of Credit and to request a conversion/continuation of any Loan, in each instance containing a specimen signature of each such officer, employee or Administrative 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 Administrative Agent, Lenders and Issuing Banks shall be entitled to rely conclusively on such officer's, employee's, or agent's authority to request such Loan or Letter of Credit or such conversion/continuation until the Administrative Agent, Lenders and Issuing Banks receive written notice to the contrary. None of the Administrative Agent, the Lenders, or the Issuing Banks shall have any duty to verify the authenticity of the signature appearing on any such Officer's Certificate, written Notice of Borrowing or Notice of Conversion/Continuation, or any other document, and, with respect to an oral request for such a Loan or Letter of Credit or such conversion/continuation, the Administrative Agent 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 Administrative Agent, any Lender or any Issuing Bank shall incur any liability to the Borrower or any other Person in acting upon any telephonic or facsimile notice referred to above which the Administrative Agent, such Lender, or such Issuing Bank believes to have been given by a duly authorized officer or other person authorized to borrow on behalf of the Borrower. 2.04. Use of Proceeds of Loans. The proceeds of the Loans made on the Closing Date shall be used to repay in full the Refinanced Indebtedness and the Transactions Costs, as well as for the purposes described in the following sentence. The proceeds of all other Loans shall be used for working capital in the ordinary course of the respective businesses of the Borrower and its Subsidiaries or for other lawful general corporate purposes. ARTICLE III LETTERS OF CREDIT 3.01. Letters of Credit. Subject to the terms and conditions set forth in this Agreement, each Issuing Bank hereby severally agrees to issue for the account of the Borrower, or for the account of any of the Borrower's Subsidiaries if the Borrower is jointly and severally liable for reimbursement of amounts drawn under such Letter of Credit, one or more Letters of Credit, subject to the following provisions: (a)Types and Amounts. An Issuing Bank shall not have any obligation to issue, amend or extend, and shall not issue, amend or extend, any Letter of Credit at any time: (i) if the aggregate Letter of Credit Obligations with respect to such Issuing Bank, after giving effect to the issuance, amendment or extension of the Letter of Credit requested hereunder, shall exceed any limit imposed by law or regulation upon such Issuing Bank; (ii) if the Issuing Bank receives written notice from the Administrative Agent at or before 11:00 a.m. (New York time) on the date of the proposed issuance, amendment or extension of such Letter of Credit that (A) immediately after giving effect to the issuance, amendment or extension of such Letter of Credit, (I) the Letter of Credit Obligations at such time would exceed $9,000,000, or (II) the Revolving Credit Obligations at such time would exceed the Revolving Credit Commitments in effect at such time, or (B) one or more of the conditions precedent con- tained in Sections 6.01 or 6.02, as applicable, would not on such date be satisfied, unless such conditions are thereafter satisfied and written notice of such satisfaction is given to the Issuing Bank by the Administrative Agent (and an Issuing Bank shall not otherwise be required to determine that, or take notice whether, the conditions precedent set forth in Sections 6.01 or 6.02, as applicable, have been satisfied); (iii) which is in a currency other than Dollars; or (iv) which has an expiration date later than the date one (1) year after the date of issuance (without regard to any automatic renewal provisions thereof); provided, however, that (A) the Letter(s) of Credit identified on Schedule 3.01-A attached hereto are permitted to have the expiry dates set forth on Schedule 3.01-A and (B) on the Revolving Credit Termination Date, Borrower shall deposit with the Administrative Agent (or respective Issuing Bank(s) at the direction of the Administrative Agent) Cash Collateral for deposit in the Cash Collateral Account or under other agreements satisfactory to the Administrative Agent and Issuing Bank(s) and in an amount equal to the then undrawn face amount of all Letters of Credit which will continue outstanding after the Revolving Credit Termination Date plus Letter of Credit Fees with respect to such Letters of Credit for the period commencing on the Revolving Credit Termination Date through the expiry date of such Letters of Credit. (b) Conditions. In addition to being subject to the satisfaction of the conditions precedent contained in Sections 6.01 and 6.02, as applicable, the obligation of an Issuing Bank to issue, amend or extend any Letter of Credit is subject to the satisfaction in full of the following conditions: (i) if the Issuing Bank so requests, the Borrower or, in the case of Letters of Credit issued for the account of any of the Borrower's Subsidiaries, the Borrower and such Subsidiary 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; and (ii) the terms of the proposed Letter of Credit shall be satisfactory to the Issuing Bank in its sole discretion. (c) Issuance of Letters of Credit. (i) The Borrower shall give an Issuing Bank and the Administrative Agent written notice that it has selected such Issuing Bank to issue a Letter of Credit not later than 11:00 a.m. (New York time) on the third (3rd) Business Day preceding the requested date for issuance thereof under this Agreement, 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 Credit, (B) that such Letter of Credit is solely for the account of the Borrower or the name of the Subsidiary of the Borrower which is jointly and severally applying for such Letter of Credit, (C) the stated amount of the Letter of Credit requested, (D) the effective date (which shall be a Business Day) of issuance of such Letter of Credit, (E) the date on which such Letter of Credit is to expire (which shall be a Business Day and no later than the Business Day immediately preceding the scheduled Revolving Credit Termination Date), (F) the Person for whose benefit such Letter of Credit is to be issued, (G) other relevant terms of such Letter of Credit, (H) the Revolving Credit Availability at such time, and (I) the amount of the then outstanding 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, or that an existing Letter of Credit be extended or amended and, upon the Administrative Agent's request therefor, send a copy of such notice to the Administrative Agent. (ii) The Issuing Bank shall give (A) the Administrative Agent written notice, or telephonic notice confirmed promptly thereafter in writing, of the issuance, amendment or extension of a Letter of Credit and (B) promptly after issuance thereof, provide the Administrative Agent with a copy of each Letter of Credit issued and each amendment thereto. (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, or cause its Subsidiary for whose account a Letter of Credit is issued to reimburse, the Issuing Bank for amounts drawn under such Letter of Credit, in Dollars, no later than the date (the "Reimbursement Date") which is the earlier of (I) the time specified in the applicable Letter of Credit Reimbursement Agreement and (II) one (1) Business Day after the Borrower receives written notice from the Issuing Bank that payment has been made under such Letter of Credit by the Issuing Bank; 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 5.01(a) from the date of the relevant drawing under such Letter of Credit until the Reimbursement Date and thereafter at the rate applicable to Base Rate Loans in accordance with Section 5.01(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 or its applicable Subsidiary 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 by an Issuing Bank under or in connection with any Letter of Credit shall put such Issuing Bank under any resulting liability to any Lender, the Borrower or any of its Subsidiaries or, so long as it is not issued in violation of Section 3.01(a), relieve any Lender of its obligations hereunder to such Issuing Bank. Solely as between the Issuing Banks and the Lenders, in determining whether to pay under any Letter of Credit, the respective Issuing Bank shall have no obligation to the 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 an Issuing Bank of any Letter of Credit in accordance with the procedures set forth in this Section 3.01 and immedi- ately upon conversion of a letter of credit of an Issuing Bank to a Letter of Credit pursuant to Section 3.02, each Revolving Lender shall be deemed to have irrevocably and unconditionally purchased and received from that Issuing Bank, without recourse or warranty, an undivided interest and participation in such Letter of Credit to the extent of such Lender's Revolving Credit Pro Rata Share, including, without limitation, all obligations of the Borrower with respect thereto (other than amounts owing to the Issuing Bank under Section 3.01(g)) and any security therefor and guaranty pertaining thereto. (ii) If any Issuing Bank makes any payment under any Letter of Credit and the Borrower or the Subsidiary of the Borrower for whose account the Letter of Credit was issued 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 Lender, and each Revolving Lender shall promptly and unconditionally pay to the Administrative Agent for the account of such Issuing Bank, in immediately available funds, the amount of such Lender's Revolving Credit Pro Rata Share of such payment (net of that portion of such payment, if any, made by such Lender in its capacity as an 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 3.01(e). All amounts so paid to the Issuing Bank shall be deemed to constitute Revolving Loans. If a Lender does not make its Revolving Credit Pro Rata Share of the amount of such payment available to the Administrative Agent, such 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 three (3) Business Days after the date such payment was first due at the Federal Funds Rate, and thereafter at the interest rate then applicable to Base Rate Loans in accordance with Section 5.01(a). The failure of any 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 Lender of its obligation hereunder to make available to the Administrative Agent for the account of such Issuing Bank such other Lender's Revolving Credit Pro Rata Share of any payment on the date such payment is to be made nor increase the obligation of any other Lender to make such payment to the Administrative Agent. (iii) Whenever an Issuing Bank receives a payment on account of a Reimbursement Obligation, including any interest thereon, as to which the Administrative Agent has previously received payments from any Lender for the account of such Issuing Bank pursuant to this Section 3.01(e), such Issuing Bank shall promptly pay to the Administrative Agent and the Administrative Agent shall promptly pay to such Lender an amount equal to such Lender's Revolving Credit Pro Rata Share thereof. Each such payment shall be made by such 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, an Issuing Bank shall furnish such Lender copies of any Letter of Credit or Letter of Credit Reimbursement Agreement to which such Issuing Bank is party and such other documentation as reasonably may be requested by such Lender. (v) The obligations of a Lender to make payments to the Administrative Agent for the account of any 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 such Issuing Bank, and shall be honored in accordance with this Article III (irrespective of the satisfaction of the conditions described in Sections 6.01 and 6.02, as applicable) under all circumstances, including, without limitation, any of the following circumstances: (A) any lack of validity or enforceability of this Agreement or 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 with this Agreement, any Letter of Credit, the transactions contemplated herein or any unrelated transactions (including any underlying trans- actions 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 determined 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 that Issuing Bank to make any reports required pursuant to Section 3.01(h) or the inaccuracy of any such report; or (F) the occurrence of any Event of Default or Potential Event of Default. (f) Payment of Reimbursement Obligations. (i) The Borrower unconditionally agrees to pay, or cause its Subsidiary for whose account a Letter of Credit is issued to pay, to each Issuing Bank, in Dollars, the amount of all Reimbursement Obligations, interest and other amounts payable to such 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 any Issuing Bank or any other Person. (ii) In the event any payment by the Borrower or such Subsidiary received by an Issuing Bank with respect to a Letter of Credit and distributed by the Administrative Agent to the Revolving Lenders on account of their participations is thereafter set aside, avoided or recovered from such Issuing Bank in connection with any receivership, liquida- tion or bankruptcy proceeding, each such Lender which received such distribution shall, upon demand by such Issu- ing Bank, contribute such Lender's Revolving Credit Pro Rata Share of the amount set aside, avoided or recovered together with interest at the rate required to be paid by such Issuing Bank upon the amount required to be repaid by it. (g) Issuing Bank Charges. The Borrower shall pay, or cause its Subsidiary for whose account a Letter of Credit is issued to pay, to each Issuing Bank, solely for its own account, the standard charges assessed by such 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 or such Subsidiary's account, as applicable, as may be agreed upon by the Borrower and such Issuing Bank from time to time. (h) Issuing Bank Reporting Requirements. Each Issuing Bank shall, no later than the tenth (10th) Business Day following the last day of each calendar month, provide to the Administrative Agent, the Borrower, and each Lender separate schedules for Commercial Letters of Credit and Standby Letters of Credit issued as Letters of Credit, 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, to the extent not otherwise provided in accordance with the provisions of Section 3.01(c)(ii), 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. (i) In addition to all other amounts payable to an Issuing Bank, the Borrower hereby agrees to defend, indemnify, and save the Administrative Agent, each 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, such Issuing Bank or such Lender may incur or be subject to as a consequence, direct or indirect, of (A) 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 (B) 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. (ii) As between the Borrower and any of its Subsidi- aries for whose account a Letter of Credit is issued on the one hand and the Administrative Agent, the Lenders and the Issuing Banks 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 Issuing Banks and the Lenders shall not be responsible for: (A) 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; (B) 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; (C) failure of the beneficiary of a Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (D) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; (E) errors in interpretation of technical terms; (F) 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; (G) the mis- application by the beneficiary of a Letter of Credit of the proceeds of any drawing under such Letter of Credit; and (H) any consequences arising from causes beyond the control of the Administrative Agent, the Issuing Banks or the Lenders. 3.02 Transitional Provisions. Schedule 3.02 contains a schedule of certain letters of credit issued prior to the Closing Date by Citibank or Union Bank for the account of VSI, the Borrower's predecessor in interest, on which the Borrower has become liable for reimbursement of amounts drawn thereunder, or for the account of a Subsidiary of the Borrower and on which the Borrower is jointly and severally liable for reimbursement of amounts drawn thereunder. Subject to the satisfaction of the conditions precedent contained in Section 6.01 on the Closing Date (i) such letters of credit, to the extent still outstanding, shall automatically and without further action of the parties thereto be converted into Letters of Credit issued pursuant to this Section 3.02 and subject to the provisions hereof, and for this purpose the fees specified in Section 5.03(b) shall be payable as if such letters of credit had been issued on the Closing Date, (ii) the face amount of such letters of credit shall be included in the calculation of Letter of Credit Obligations, and (iii) all liabilities of the Borrower with respect to such letters of credit shall constitute Obligations. No letter of credit converted in accordance with this Section 3.02 shall be amended, extended or renewed without the prior written consent of the Administrative Agent. 3.03 Obligations Several. The obligations of each Issuing Bank and each Revolving Lender under this Article III are several and not joint, and no Issuing Bank or Lender shall be responsible for the obligation to issue Letters of Credit or participation obligation hereunder, respectively, of any other Issuing Bank or Lender. ARTICLE IV PAYMENTS AND PREPAYMENTS 4.01. Prepayments; Reductions in Commitments. (a) Voluntary Prepayments/Reductions. (i) Notice. The Borrower may, upon at least three (3) Business Days' prior written notice to the Administrative Agent (which the Administrative Agent shall promptly transmit to each Lender), at any time and from time to time, prepay the Term Loans which are Base Rate Loans, in whole or in part. Term Loans which are Eurodollar Rate Loans may be prepaid in whole or in part upon at least five (5) Business Days' prior written notice to the Administrative Agent (which the Administrative Agent shall promptly transmit to each Lender), (A) on the expiration date of the then applicable Eurodollar Interest Period therefor, and (B) on any other date upon payment of the amounts described in Article XIV as referenced in Section 4.01(a)(iv) below. Any notice of prepayment given to the Administrative Agent under this Sec- tion 4.01(a)(i) shall specify the date (which shall be a Business Day) of prepayment, the aggregate principal amount of the prepayment and any allocation of such amount among Base Rate Loans and Eurodollar Rate Loans. When notice of prepayment is delivered as provided herein, the principal amount of the Term Loans specified in the notice shall become due and payable on the prepayment date specified in such notice. The Borrower may repay Revolving Loans, without prior written notice to the Administrative Agent or any Lender, at any time and from time to time. (ii) Amount; Application; Term Loan Commitment Reduction. Unless the aggregate outstanding principal balance of the Term Loans is to be prepaid in full, voluntary prepayments of the Term Loans shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $1,000,000 in excess of that amount. Each voluntary prepayment of the Term Loans shall be applied to the Term Loans, ratably, and shall be allocated first to Term Loans which are Base Rate Loans until paid in full and then to Term Loans which are Eurodollar Rate Loans, and shall permanently reduce the Term Loan Commitment of each Lender proportionately in accordance with its Pro Rata Share. (iii) Voluntary Revolving Credit Commitment Reductions. The Borrower, upon at least three (3) Business Days' prior written 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 in part the Revolving Credit Commitments; provided that the Borrower shall have made whatever payment may be required to reduce the Revolving Credit Obligations to an amount less than or equal to the Revolving Credit Commitments as reduced or terminated. Any partial reduction of the Revolving Credit Commitments shall be in an aggregate minimum amount of $1,000,000 and integral multiples of $1,000,000 in excess of that amount, and shall reduce the Revolving Credit Commitment of each Lender proportionately in accordance with its Pro Rata Share. Any notice of termination or reduction given to the Administrative Agent under this Sec- tion 4.01(a)(iii) shall specify 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. When notice of termination or reduction is delivered as provided herein, the principal amount of the Revolving Loans specified in the notice shall become due and payable on the date specified in such notice. (iv) Prepayment Fee. The prepayments and payments in respect of reductions and terminations described in this Section 4.01 may be made without premium or penalty (except as provided in Article XIV). (b) Mandatory Prepayments/Reductions. (i) Net Cash Proceeds of Sale. Within three (3) Business Days after the Borrower's or any of its Subsidiaries' receipt of any Net Cash Proceeds of Sale in excess of $100,000, the Borrower shall make or cause to be made a mandatory prepayment of the Obligations in an amount equal to one hundred percent (100%) of such Net Cash Pro- ceeds of Sale. (ii) Net Cash Proceeds of Issuance of Equity Securities. Immediately upon the Borrower's or any of its Subsidiaries' receipt of any Net Cash Proceeds of Issuance of Equity Securities, the Borrower shall make or cause to be made a mandatory prepayment in an amount equal to one hundred percent (100%) of such Net Cash Proceeds of Issuance of Equity Securities. (iii) Net Cash Proceeds of Issuance of Indebtedness. Immediately upon the Borrower's or any of its Subsidiaries' receipt of any Net Cash Proceeds of Issuance of Indebtedness, the Borrower shall make or cause to be made a mandatory prepayment in an amount equal to one hundred percent (100%) of such Net Cash Proceeds of Issuance of Indebtedness. (iv) No Waiver or Consent. Nothing in this Section 4.01(b) shall be construed to constitute the Lenders' consent to any transaction referenced in clauses (i) and (iii) above which is not expressly permitted by Article X. (v) Notice. The Borrower shall give the Administrative Agent prior written notice or telephonic notice promptly confirmed in writing (each of which the Administrative Agent shall promptly transmit to each Lender), when a Designated Prepayment will be made (which date of prepayment shall be no later than the date on which such Designated Payment becomes due and payable pursuant to this Section 4.01(b)). (vi) Application of Designated Prepayments. Designated Prepayments shall be allocated and applied to the Obligations as follows: (A) the amount of each Designated Prepayment shall be applied to the principal balance of the Term Loans ratably to all the Term Loans based on the relative outstanding principal balances thereof as of the date of application, with each application being made first to the Loans which are Base Rate Loans until paid in full and then to Loans which are Eurodollar Rate Loans and shall permanently reduce the Term Loan Commitment of each Term Lender proportionately in accordance with its Term Loan Pro Rata Share; (B) following the payment in full of the Term Loans, the remaining balance of each Designated Prepayment shall be applied to the outstanding principal balance of the Revolving Loans and shall permanently reduce the Revolving Credit Commitment of each Revolving Lender proportionately in accordance with its Revolving Credit Pro Rata Share; and (C) following the payment in full of the Revolving Loans, the remaining balance of each Designated Prepayment shall be applied to the principal balance of the Letter of Credit Obligations (or, to the extent such Letter of Credit Obligations are contingent, deposited in the Cash Collateral Account to provide Cash Collateral in respect of such Letter of Credit Obligations). 4.02. Payments. (a) Manner and Time of Payment. All payments of principal of and interest on the Loans and Reimbursement Obligations and other Obligations (including, without limitation, fees and expenses) which are payable to the Administrative Agent, the Lenders or any Issuing Bank shall be made without condition, set-off, or reservation of right, and, with respect to payments made other than from application of deposits in the Concentration Account, in immediately available funds, delivered to the Administrative Agent (or, in the case of Reimbursement Obligations, to the pertinent Issuing Bank) not later than 11:00 a.m. (New York time) on the date and at the place due, to such account of the Administrative Agent (or such Issuing Bank) as it may designate, for the account of the Administrative Agent, the Lenders or such Issuing Bank, as the case may be; and funds received by the Administrative Agent, including, without limitation, funds in respect of any Revolving Loans to be made on that date, not later than 11:00 a.m. (New York time) on any given Business Day shall be credited against payment to be made that day and funds received by the Administrative Agent after that time shall be deemed to have been paid on the next succeeding Business Day. Payments actually received by the Administrative Agent for the account of the Lenders or the Issuing Banks, or any of them, shall be paid to them by the Administrative Agent promptly after receipt thereof. (b) Pre-Default Apportionment of Payments. Subject to the provisions of Section 4.01 and Section 4.02(f), all payments of principal and interest in respect of outstanding Loans, all payments in respect of Reimbursement Obligations, all payments of fees and all other payments in respect of any other Obligations, shall be allocated among such of the Lenders and Issuing Banks as are entitled thereto, in proportion to their respective Revolving Credit Pro Rata Shares, Term Loan Pro Rata Shares, as applicable, or otherwise as provided herein. Except as provided in Section 4.02(c) with respect to payments and proceeds of Collateral received after the occurrence of an Event of Default, all other payments, proceeds of Collateral, and other amounts received by the Administrative Agent from or for the benefit of the Borrower shall be applied (A) first, to pay principal of and interest on any portion of the Revolving Loans which the Administrative Agent may have advanced on behalf of any Revolving Lender other than Citicorp for which the Administrative Agent has not then been reimbursed by such Lender or the Borrower, (B) second, to pay principal of and interest on any Protective Advance for which the Administrative Agent has not then been paid by the Borrower or reimbursed by the Lenders, (C) third, to pay the principal of the Term Loans and Revolving Loans then due and payable in the order described hereinbelow and interest on such Loans then due and payable, ratably, based on the then outstanding balances of the such Loans, (D) fourth, to pay all other Obligations then due and payable, ratably, and (E) fifth, as the Borrower so designates. All such principal and interest payments in respect of Term Loans and Revolving Loans shall be applied first, to the Term Loans (to installments and accrued interest then due and payable, ratably, in accordance with the Lenders' respective Pro Rata Shares) and second, to the Revolving Loans and accrued interest thereon; in either case, first, to repay outstanding Base Rate Loans and then to repay outstanding Eurodollar Rate Loans with those Eurodollar Rate Loans which have earlier expiring Eurodollar Interest Periods being repaid prior to those which have later expiring Eurodollar Interest Periods. (c) Post-Default Apportionment of Payments. After the occurrence of an Event of Default and while the same is continuing, the Administrative Agent shall apply all payments in respect of any Obligations and all proceeds of Collateral in the following order: (A) first, to pay principal of and interest on any portion of the Revolving Loans which the Administrative Agent may have advanced on behalf of any Revolving Lender other than Citicorp for which the Administrative Agent has not then been reimbursed by such Lender or the Borrower; (B) second, to pay principal of and interest on any Protective Advance for which the Administrative Agent has not then been paid by the Borrower or reimbursed by the Lenders; (C) third, to pay Obligations in respect of any fees, expense reimbursements or indemnities then due to the Administrative Agent; (D) fourth, to pay principal of and interest on Letter of Credit Obligations (or, to the extent such Obligations are contingent, deposited in the Cash Collateral Account to provide Cash Collateral in respect of such Obligations); (E) fifth, to pay Obligations in respect of any fees, expense reimbursements or indemnities then due to the Lenders and the Issuing Banks; (F) sixth, to pay interest due in respect of the Loans, ratably, in accordance with the Lenders' respective Revolving Credit Pro Rata Shares and Term Loan Pro Rata Shares, as applicable; (G) seventh, to the ratable payment or prepayment of principal outstanding on all Loans in accordance with the Lenders; respective Revolving Credit Pro Rata Shares and Term Loan Pro Rata Shares, as applicable; (H) eighth, to the ratable payment of Hedge Agreements to which any of the Lenders or any Affiliate of any of the Lenders is a party; and (I) ninth, to the ratable payment of all other Obligations. (d) Administrative Agent Authority to Apply Funds. The Administrative Agent, in its sole discretion subject only to the terms of this Section 4.02(d), may pay from the proceeds of Revolving Loans made to the Borrower hereunder, whether made following a request by the Borrower pursuant to Section 2.02 or a deemed request as provided in this Section 4.02(d), all amounts payable by the Borrower hereunder, including, without limitation, amounts payable with respect to payments of principal, interest, Reimbursement Obligations and fees and all reimbursements for expenses pursuant to Section 15.02. The Borrower hereby irrevocably authorizes the Revolving Lenders to make Revolving Loans, which Revolving Loans shall be Base Rate Loans, in each case, upon notice from the Administrative Agent as described in the following sentence for the purpose of paying principal, interest, Reimbursement Obligations and fees due from the Borrower, reimbursing expenses pursuant to Section 15.02 and paying any and all other amounts due and payable by the Borrower hereunder or under the Notes, and agrees that all such Revolving Loans so made shall be deemed to have been requested by it pursuant to Section 2.02 as of the date of the aforementioned notice. The Administrative Agent shall request Revolving Loans on behalf of the Borrower as described in the preceding sentence by notifying the Revolving Lenders by telecopy, telegram or other similar form of transmission (which notice the Administrative Agent shall thereafter promptly transmit to the Borrower), of the amount and Funding Date of the proposed Borrowing and that such Borrowing is being requested on the Borrower's behalf pursuant to this Section 4.02(d). On the proposed Funding Date for such Revolving Loan, the Revolving Lenders shall make the requested Revolving Loans in accordance with the procedures and subject to the conditions specified in Section 2.02. (e) Priorities and Distributions of Payments. The orders of priority set forth in Sections 4.02(b) and (c) and the related provisions of this Agreement are set forth solely to determine the rights and priorities of the Administrative Agent, the Lenders, the Issuing Banks and other Holders as among themselves. Subject to Section 4.02(f), the Administrative Agent shall promptly distribute to each Lender and Issuing Bank at its primary address set forth on the appropriate signature page hereof or the signature page to the Assignment and Acceptance by which it became a Lender or Issuing Bank, or at such other address as a Lender, an Issuing Bank or other Holder may request in writing, such funds as such Person may be entitled to receive, subject to the provisions of Article XIV; provided that the Administrative Agent shall under no circumstances be bound to inquire into or determine the validity, scope or priority of any interest or entitlement of any Holder and may suspend all payments or seek appropriate relief (including, without limitation, instructions from the Requisite Lenders or an action in the nature of interpleader) in the event of any doubt or dispute as to any apportionment or distribution contemplated hereby. (f) Defaulting Lenders. In the event that any Lender fails to fund its Pro Rata Share of any Revolving Loan requested by the Borrower which such Lender is obligated to fund under the terms of this Agreement (the funded portion of such Revolving Loan being hereinafter referred to as a "Non Pro Rata Loan"), until the earlier of such Lender's cure of such failure and the termination of the Revolving Credit Commitments, the proceeds of all amounts thereafter repaid to the Administrative Agent by the Borrower and otherwise required to be applied to such Lender's share of all other Obligations pursuant to the terms of this Agreement shall be advanced to the Borrower by the Administrative Agent on behalf of such Lender to cure, in full or in part, such failure by such Lender, but shall nevertheless be deemed to have been paid to such Lender in satisfaction of such other Obligations. Notwithstanding anything in this Agreement to the contrary: (i) the foregoing provisions of this Section 4.02(f) shall apply only with respect to the proceeds of payments of Obligations and shall not affect the conversion or continuation of Loans pursuant to Section 5.01(c); (ii) a Lender shall be deemed to have cured its failure to fund its Pro Rata Share of any Revolving Loan at such time as an amount equal to such Lender's original Pro Rata Share of the requested principal portion of such Revolving Loan is fully funded to the Borrower, whether made by such Lender itself or by operation of the terms of this Section 4.02(f), and whether or not the Non Pro Rata Loan with respect thereto has been repaid, converted or continued; (iii) amounts advanced to the Borrower to cure, in full or in part, any such Lender's failure to fund its Pro Rata Share of any Revolving Loan ("Cure Loans") shall bear interest at the rate in effect from time to time pursuant to Section 5.01 and for all other purposes of this Agreement shall be treated as if they were Base Rate Loans; and (iv) regardless of whether or not an Event of Default has occurred or is continuing, and notwithstanding the instructions of the Borrower as to its desired application, all repayments of principal which, in accordance with the other terms of this Section 4.02, would be applied to the outstanding Revolving Loans which are Base Rate Loans shall be applied first, ratably to all such Base Rate Loans constituting Non Pro Rata Loans, second, ratably to such Base Rate Loans other than those constituting Non Pro Rata Loans or Cure Loans and, third, ratably to such Base Rate Loans constituting Cure Loans. (g) 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 (except as set forth in Section 5.02(b)(iii) with respect to payments due on the next preceding Business Day), and any such extension of time shall be included in the computation of the payment of interest and fees hereunder. 4.03. Promise to Repay; Evidence of Indebtedness. (a) Promise to Repay. The Borrower hereby agrees to pay when due the principal amount of each Loan which is made to it, and further agrees to pay all unpaid interest accrued thereon, in accordance with the terms of this Agreement and the Notes. The Borrower shall execute and deliver to each Lender on the Closing Date a promissory note, in form and substance acceptable to the Administrative Agent and such Lender, evidencing the Loans and thereafter shall execute and deliver such other promissory notes as are necessary to evidence Loans owing to the Lenders after giving effect to any assignment thereof pursuant to Section 15.01, all in form and substance acceptable to the Administrative Agent and the parties to such assignment. (b) Loan Account. Each Lender shall maintain in accordance with its usual practice an account or accounts (a "Loan Account") evidencing the Indebtedness of the Borrower to such Lender resulting from each Loan owing to such Lender from time to time, including the amount of principal and interest payable and paid to such Lender from time to time hereunder and under the Notes. (c) Control Account. The Register maintained by the Administrative Agent pursuant to Section 15.01(c) shall include a control account, and a subsidiary account for each Lender, in which accounts (taken together) shall be recorded (i) the date and amount of each Borrowing made hereunder, the type of Loan comprising such Borrowing and any Eurodollar Interest Period applicable thereto, (ii) the effective date and amount of each Assignment and Acceptance delivered to and accepted by it and the parties thereto, (iii) the amount of any principal or interest due and payable or to become due and payable from the Borrower to each Lender hereunder or under the Notes, and (iv) the amount of any sum received by the Administrative Agent from the Borrower hereunder and each Lender's share thereof. (d) Entries Binding. The entries made in the Register and each Loan Account shall be conclusive and binding for all purposes, absent manifest error. 4.04. Proceeds of Collateral; Concentration Account Arrangements. (a) Establishment. The Borrower shall establish and maintain, and shall cause its Domestic Subsidiaries to establish and maintain, Collection Accounts into which all collections of Receivables shall be deposited and promptly transferred directly to the Concentration Account. Borrower shall cause all other proceeds of Collateral to be deposited in the Concentration Account or pursuant to other similar arrangements for the collection of such amounts established by the Borrower and the Administrative Agent. All collections of Receivables and other proceeds of Collateral which are received directly by the Borrower or any Subsidiary of the Borrower shall be deemed to have been received by the Borrower or such Subsidiary of the Borrower as the Administrative Agent's trustee and, upon the Borrower's or such Subsidiary's receipt thereof, the Borrower shall immediately transfer, or cause to be transferred, all such amounts into the Concentration Account in their original form. All collections of Receivables, all payments, and all proceeds of other Collateral received by the Administrative Agent, whether through payment, deposit in the Concentration Account as described above, or otherwise, will be deemed received by the Administrative Agent, will be the sole property of the Administrative Agent, and will be held by the Administrative Agent, for the benefit of the Holders (i) for application to the Obligations pursuant to Section 4.02 and (ii) thereafter, as Cash Collateral for the Obligations, subject to the rights of the Borrower set forth in Section 4.04(b) and the rights of the Administrative Agent set forth in Section 4.06. (b) Pre-Default Withdrawals from Concentration Account. If requested by the Borrower, the Administrative Agent shall, so long as no Event of Default shall have occurred and be continuing or unwaived, from time to time, (i) apply funds in the Concentration Account (A) promptly after deposit therein to payment of the Loans and (B) to payment of other Obligations as they become due and payable, (ii) after giving effect to the aforesaid payments, invest funds on deposit in the Concentration Account and accrued interest thereon, reinvest proceeds of any such investments which may mature or be sold, and invest interest or other income received from such investments, in such Cash Equivalents as the Borrower may select, and (iii) upon Borrower's request therefor after giving effect to the payments described in clause (i) above, transfer funds on deposit in the Concentration Account to Borrower's or its Subsidiaries' designated accounts. Such funds, interest, proceeds, or income which are not so disbursed, invested or reinvested shall be deposited and held in the Concentration Account for the benefit of the Holders as provided in Section 4.04(a). None of the Administrative Agent, any Lender or any Issuing Bank shall be liable to the Borrower or any Subsidiary of the Borrower for, or with respect to, any decline in value of amounts on deposit in the Concentration Account which shall have been invested pursuant to this Section 4.04(b). Cash Equivalents from time to time purchased and held pursuant to this Section 4.04(b) shall constitute Cash Collateral and shall, for purposes of this Agreement, be deemed to be part of the funds held in the Concentration Account in amounts equal to their respective outstanding principal amounts. (c) Reasonable Care. The Administrative Agent shall exercise reasonable care in the custody and preservation of any funds held in the Concentration Account and shall be deemed to have exercised such care if such funds are accorded treatment substantially equivalent to that which the Administrative Agent accords its own like property, it being understood that the Administrative Agent shall not have any responsibility for taking any steps necessary to preserve rights against any parties with respect to any such funds but may do so at its option. All reasonable expenses incurred in connection therewith shall be for the sole account of the Borrower and shall constitute Obligations hereunder. 4.05. Cash Collateral Account. (a) Investments. If requested by the Borrower, the Administrative Agent shall, so long as no Event of Default shall have occurred and be continuing, from time to time invest funds on deposit in the Cash Collateral Account and accrued interest thereon, reinvest proceeds of any such investments which may mature or be sold, and invest interest or other income received from any such Investments, in each case in such Cash Equivalents as the Borrower may select; provided, however, that such accrued interest and other income received from any such Investments, upon the request of the Borrower, shall be remitted to the Borrower. Such funds, interest, proceeds or income which are not so invested or reinvested in Cash Equivalents shall, except as otherwise provided above or in Section 4.05(b) and Section 4.06, be deposited and held by the Administrative Agent in the Cash Collateral Account. None of the Administrative Agent, any Lender or any Issuing Bank shall be liable to the Borrower for, or with respect to, any decline in value of amounts on deposit in the Cash Collateral Account which shall have been invested pursuant to this Section 4.05(a) at the direction of the Borrower. Cash Equivalents from time to time purchased and held pursuant to this Section 4.05(a) shall constitute Cash Collateral and shall, for purposes of this Agreement, be deemed to be part of the funds held in the Cash Collateral Account in amounts equal to their respective outstanding principal amounts. (b) Withdrawal Rights. Neither the Borrower nor any Person or entity claiming on behalf of or through the Borrower shall have any right to withdraw any of the funds held in the Cash Collateral Account, except that, upon the later to occur of (i) the expiration or termination of all of the Letters of Credit in accordance with their respective terms and (ii) the payment in full in cash of the Obligations, any funds remaining in the Cash Collateral Account shall be returned by the Administrative Agent to the Borrower or paid to whomever may be legally entitled thereto. (c) Additional Deposits. If at any time the Administrative Agent determines that any funds held in the Cash Collateral Account are subject to any interest, right, claim or Lien of any Person other than the Administrative Agent, the Borrower will, forthwith upon demand by the Administrative Agent, pay to the Administrative Agent, as additional funds to be deposited and held in the Cash Collateral Account, an amount equal to the amount of funds subject to such interest, right, claim or Lien. (d) Reasonable Care. The Administrative Agent shall exercise reasonable care in the custody and preservation of any funds held in the Cash Collateral Account and shall be deemed to have exercised such care if such funds are accorded treatment substantially equivalent to that which the Administrative Agent accords its own like property, it being understood that the Administrative Agent shall not have any responsibility for taking any necessary steps to preserve rights against any parties with respect to any such funds but may do so at its option. All expenses incurred in connection therewith shall be for the sole account of the Borrower and shall constitute Obligations hereunder. 4.06. Post-Default Withdrawals from the Concentration Account and Cash Collateral Account. Notwithstanding any other provision of this Agreement, from and after (a) the occurrence of an Event of Default described in Section 12.01(a) and for so long as the same is continuing unwaived or (b) the occurrence of any other Event of Default and the Administrative Agent's receipt of written notice from the Requisite Lenders that no further withdrawals may be made from the Concentration Account other than for application on the Obligations for so long as the same is continuing unwaived, neither the Borrower nor any Person or entity claiming on behalf of or through the Borrower shall have any right to withdraw any of the funds held in the Concentration Account. The Administrative Agent may, at any time during the period clause (a) or clause (b) above is applicable, sell or cause to be sold any Cash Equivalents being held by the Administrative Agent in the Concentration Account or as Cash Collateral at any broker's board or at public or private sale, in one or more sales or lots, at such price as the Administrative Agent may deem best, without assumption of any credit risk, and the purchaser of any or all such Cash Equivalents so sold shall thereafter own the same, absolutely free from any claim, encumbrance or right of any kind whatsoever. The Administrative Agent or any Holder may, in its own name or in the name of a designee or nominee, buy such Cash Equivalents at any public sale and, if permitted by applicable law, buy such Cash Equivalents at any private sale. The Administrative Agent shall apply the proceeds of any such sale, net of any reasonable expenses incurred in connection therewith, and any other funds deposited in the Concentration Account or Cash Collateral Account to the payment of the Obligations in accordance with Section 4.02(c), other than amounts which are being held as Cash Collateral for Reimbursement Obligations, which shall be applied to such Reimbursement Obligations without regard to Section 4.02(c). The Borrower agrees that any sale of Cash Equivalents conducted in conformity with reasonable commercial practices of banks, commercial finance companies, insurance companies or other financial institutions disposing of property similar to such Cash Equivalents shall be deemed to be commercially reasonable and any requirements of reasonable notice shall be met if such notice is given by the Administrative Agent within a commercially reasonable time prior to such disposition, the time of delivery of which notice the parties hereto agree shall in no event be required to be greater than five (5) Business Days before the date of the intended sale or disposition. Any other requirement of notice, demand or advertisement for sale is waived to the extent permitted by law. The Administrative Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor and such sale may, without further notice, be made at the time and place to which it was so adjourned. ARTICLE V INTEREST AND FEES 5.01. Interest on the Loans and other Obligations. (a) Rate of Interest. (i) All Loans and the outstanding principal balance of all other Obligations shall bear interest on the unpaid principal amount thereof from the date such Loans are made and such other Obligations are incurred until paid in full, except as otherwise provided in Section 5.01(d) or Section 14.04, as follows: (A) If a Base Rate Loan or such other Obligation, at a rate per annum equal to the sum of (1) the Base Rate, as in effect from time to time as interest accrues plus (2) the applicable Base Rate Margin; and (B) If a Eurodollar Rate Loan, at a rate per annum equal to the sum of (1) the Eurodollar Rate determined for the applicable Eurodollar Interest Period, plus (2) the applicable Eurodollar Rate Margin. (ii) 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 Conver- sion/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 (A) such Loan is to be made on the Closing Date or (B) at the time of such selection an Event of Default or a Potential 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 of this Agreement speci- fying 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 clause (i)(A) above. (b) Interest Payments. (i) Interest accrued on each Base Rate Loan shall be payable in arrears (A) on the first Business Day of each month, commencing with the month following the month in which such Loan was made, (B) if such Base Rate Loan is a Term Loan, upon the payment or prepayment thereof in full or in part, (C) upon conversion thereof to a Eurodollar Rate Loan, and (D) if not theretofore paid in full, at maturity (whether by acceleration or otherwise) of such Base Rate Loan. (ii) Interest accrued on each Eurodollar Rate Loan shall be payable in arrears (A) on each Eurodollar Interest Payment Date applicable to such Loan, (B) upon the payment or prepayment thereof in full or in part, and (C) if not theretofore paid in full, at maturity (whether by acceleration or otherwise) of such Eurodollar Rate Loan. (iii) Interest accrued on the principal balance of all other Obligations shall be payable in arrears (A) on the last day of each calendar month, commencing on the first such day following the incurrence of such Obligation, (B) upon repayment thereof in full or in part, and (C) if not theretofore paid in full, at the time such other Obligation becomes due and payable (whether by acceleration or otherwise). (c) Conversion or Continuation. (i) The Borrower shall have the option (A) to convert at any time all or any part of outstanding Base Rate Loans to Eurodollar Rate Loans; (B) to convert all or any part of outstanding Eurodollar Rate Loans having Eurodollar Interest Periods which expire on the same date to Base Rate Loans on such expiration date; or (C) to continue all or any part of outstanding Eurodollar Rate Loans having Eurodollar Interest Periods which expire on the same date as Eurodollar Rate Loans, and the succeeding Eurodollar Interest Period of such continued Loans shall commence on such expiration date; pro- vided, however, no such outstanding Loan may be continued as, or be converted into, a Eurodollar Rate Loan (i) if such continuation of, or conversion into, would violate any of the provisions of Section 5.02 or (ii) if an Event of Default or a Potential Event of Default would occur or has occurred and is continuing. Any conversion into or continuation of Eurodollar Rate Loans under this Section 5.01(c) shall be in a minimum amount of $1,000,000 and in integral multiples of $1,000,000 in excess of that amount except in the case of a conversion into or a continuation of an entire Borrowing of Non Pro Rata Loans. (ii) To convert or continue a Loan under Section 5.01(c)(i), the Borrower shall deliver a Notice of Conver- sion/Continuation to the Administrative Agent no later than 11:00 a.m. (New York time) at least two (2) Business Days in advance of the proposed conversion/continuation date. A Notice of Conversion/Continuation shall specify (A) the proposed conversion/continuation date (which shall be a Business Day), (B) the aggregate principal amount of the Loans to be converted/continued, (C) whether such Loan shall be converted and/or continued, and (D) in the case of a con- version 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 the Administrative Agent telephonic notice of any proposed conversion/continuation by the time required under this Section 5.01(c)(ii), and such notice shall be confirmed in writing delivered to the Administrative Agent by facsimile transmission promptly (but in no event later than 5:00 p.m. (New York time) on the same day), the original of which facsimile copy shall be delivered to the Administrative Agent within three (3) days after the date of such transmission. Promptly after receipt of a Notice of Conversion/Continuation under this Section 5.01(c)(ii) (or telephonic notice in lieu thereof), the Administrative Agent shall notify each Lender by telex or telecopy, or other similar form of transmission, of the proposed conversion/ continuation. 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 5.01(a), effective immediately upon (i) the occurrence of an Event of Default described in Sections 12.01(a), (b) (as it pertains to defaults under Article XI), (f), (g), (h), or (i) (except an Event of Default under (i) resulting from the gross negligence or willful misconduct of the Administrative Agent) or (ii) the occurrence of any other Event of Default and notice from the Requisite Lenders of the effectiveness of this Section 5.01(d), and for as long thereafter as such Event of Default shall be continuing unwaived, the principal balance of all Obligations, including, to the extent permitted by applicable law, accrued interest unpaid when due, shall bear interest, payable on demand, at a rate which is two percent (2.0%) per annum in excess of the rate of interest specified in Section 5.01(a)(i). (e) Computation of Interest. Interest on all Obliga- tions 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 or the first day of a Eurodollar Interest Period, as the case may be, shall be included and the date of payment or the expiration date of a Eurodollar Interest Period, as the case may be, 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. 5.02. Special Provisions Governing Eurodollar Rate Loans. With respect to Eurodollar Rate Loans: (a) Amount of Eurodollar Rate Loans. Each Borrowing of Eurodollar Rate Loans shall be for a minimum amount of $1,000,000 and in integral multiples of $1,000,000 in excess of that amount. (b) Determination of Eurodollar Interest Period. By giving notice as set forth in Section 2.02(b) (with respect to a Borrowing of Eurodollar Rate Loans) or Section 5.01(c) (with respect to a conversion into or continuation of Eurodollar Rate Loans), the Borrower shall have the option, subject to the other provisions of this Section 5.02, to select an interest period (each, 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 particular Borrowing of Eurodollar Rate Loans, a Eurodollar Interest Period of one, two, or three 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 will be no succeeding Business Day in such calendar month, the Eurodollar Interest Period shall expire on the immediately preceding Business Day; (iv) The Borrower may not select a Eurodollar Interest Period as to any Revolving Loan if such Eurodollar Interest Period terminates later than the scheduled Revolving Credit Termination Date; (v) The Borrower may not select a Eurodollar Interest Period as to any Term Loan if such Eurodollar Interest Period terminates later than the scheduled Term Loan Termination Date; (vi) The Borrower may not select a Eurodollar Interest Period with respect to any portion of principal of a Loan which extends beyond a date on which the Borrower is required to make a scheduled payment of such portion of principal; and (vii) There shall be no more than six (6) Eurodollar Interest Periods in effect at any one time. (c) Determination of Interest Rate. As soon as prac- ticable on the second Business Day prior to the first day of each Eurodollar Interest Period (the "Eurodollar 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 the 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 Eurodollar Interest Rate Determination Date: (i) the Administrative Agent is advised by Citibank that deposits in Dollars (in the applicable amounts) are not being offered by Citibank in the London interbank market for such Eurodollar Interest Period; or (ii) the Administrative Agent 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; or (iii) the Requisite Lenders advise the Administrative Agent that the Eurodollar Rate for Eurodollar Rate Loans comprising such Borrowing will not adequately reflect the cost to such Requisite Lenders of obtaining funds in Dollars in the London interbank market in the amount substantially equal to such Lenders' Eurodollar Rate Loans in Dollars and for a period equal to such Eurodollar Interest Period; then the Administrative Agent shall forthwith give notice thereof to the Borrower, whereupon (until the Administrative Agent notifies 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 Eurodollar Rate Loan shall be converted into a Base Rate Loan on the last day of the then current Eurodollar Interest Period therefor, notwithstanding any prior election by the Borrower to the contrary. (f) Booking of Eurodollar Rate Loans. Any Lender may make, carry or transfer Eurodollar Rate Loans at, to, or for the account of, its Eurodollar Lending Office or Eurodollar Affiliate or its other offices or Affiliates. No Lender shall be entitled, however, to receive any greater amount under Article XIV as a result of the transfer of any such Eurodollar Rate Loan to any office (other than such Eurodollar Lending Office) or any Affiliate (other than such Eurodollar Affiliate) than such Lender would have been entitled to receive immediately prior thereto, unless (i) the transfer occurred at a time when circumstances giving rise to the claim for such greater amount did not exist and (ii) such claim would have arisen even if such transfer had not occurred. (g) Affiliates Not Obligated. No Eurodollar Affiliate or other Affiliate of any Lender shall be deemed a party to this Agreement or shall have any liability or obligation under this Agreement. 5.03. Fees. (a) Administrative Agent's Fee. The Borrower shall pay to the Administrative Agent, solely for the account of the Administrative Agent, the fee provided in the Fee Letter as and when set forth therein during the term of this Agreement. (b) Letter of Credit Fee. In addition to any charges paid pursuant to Section 3.01(g), the Borrower shall pay (i) to the Issuing Bank, a fee equal to one-quarter of one percent (0.25%) on the face amount of each Letter of Credit issued by such Issuing Bank, upon issuance of such Letter of Credit (the "Fronting Fee") and (ii) to the Administrative Agent, for the account of the Revolving Lenders based on their respective Revolving Credit Pro Rata Shares, a fee (the "Letter of Credit Fee") accruing at a per annum rate equal to the Eurodollar Rate Margin on the undrawn face amount of each outstanding Letter of Credit, payable quarterly, in arrears, on the last day of each calendar quarter and the Revolving Credit Termination Date; provided, however, upon (A) the occurrence of an Event of Default referenced in Section 5.01(d)(i) or (B) the occurrence of any other Event of Default and notice from the Requisite Lenders of the effectiveness of Section 5.01(d), and for so long thereafter as such Event of Default shall be continuing unwaived, the rate at which the Letter of Credit Fees shall accrue and be payable shall be equal to two percent (2.0%) per annum plus the Eurodollar Rate Margin. (c) Commitment Fee. (i) The Borrower shall pay to the Administrative Agent, for the account of the Revolving Lenders in accordance with their respective Revolving Credit Pro Rata Shares, a fee (the "Commitment Fee"), accruing at the rate of one-half of one percent (0.50%) per annum on the average amount by which the Revolving Credit Commitments exceed the sum of (A) the outstanding principal amount of the Revolving Loans, plus (B) the outstanding Reimbursement Obligations, plus (C) the aggregate undrawn face amount of all outstanding Letters of Credit for the period commencing on the Closing Date and ending on the Revolving Credit Termination Date, such Commitment Fee being payable (1) quarterly, in arrears, commencing on the first day of the calendar quarter next succeeding the Closing Date and (2) on the Revolving Credit Termination Date. (ii) Notwithstanding the foregoing, in the event that any Revolving Lender fails to fund its Revolving Credit Pro Rata Share of any Revolving Loan requested by the Borrower which such Lender is obligated to fund under the terms of this Agreement, (A) such Lender shall not be entitled to any Commitment Fees with respect to its Revolving Credit Commitment until such failure has been cured in accordance with Section 4.02(f)(ii) and (B) until such time, the Commitment Fee shall accrue in favor of the Revolving Lenders which have funded their respective Revolving Credit Pro Rata Shares of such requested Revolving Loan, shall be allocated among such performing Revolving Lenders ratably based upon their relative Revolving Credit Commitments, and shall be calculated based upon the average amount by which the aggregate Revolving Credit Commitments of such performing Revolving Lenders exceeds the sum of (1) the outstanding principal amount of the Revolving Loans owing to such performing Revolving Lenders, plus (2) the outstanding Reimbursement Obligations owing to such performing Revolving Lenders, plus (3) the aggregate participation interests of such performing Revolving Lenders arising pursuant to Section 3.01(e) with respect to undrawn and outstanding Letters of Credit. (d) Calculation and Payment of Fees. All of the above fees shall be calculated on the basis of the actual number of days elapsed in a 360-day year. All such fees shall be payable in addition to, and not in lieu of, interest, compensation, expense reimbursements, indemnification and other Obligations, to the Administrative Agent at its office in New York, New York in immediately available funds. All fees shall be fully earned and nonrefundable when paid. All fees specified or referred to in this Agreement due to the Administrative Agent, any Issuing Bank or any Lender, including, without limitation, those referred to in this Section 5.03, shall bear interest, if not paid when due, at the interest rate for Base Rate Loans set forth in Section 5.01(d), shall constitute Obligations and shall be secured by all of the Collateral. ARTICLE VI CONDITIONS TO LOANS AND LETTERS OF CREDIT 6.01. Conditions Precedent to the Initial Loans and Letters of Credit. The obligation of each Lender on the Closing Date to make its Term Loan and any Revolving Loan requested to be made by it, and the agreement of each Issuing Bank on the Closing Date to issue Letters of Credit, shall be subject to the satisfaction of all of the following conditions precedent: (a) Documents. The Administrative Agent shall have received on or before the Closing Date all of the following: (i) this Agreement, the Notes and all other agreements, documents and instruments relating to the loan and other credit transactions contemplated by this Agreement and described in the List of Closing Documents attached hereto as Exhibit H attached hereto and made a part hereof, each duly executed where appropriate and in form and substance satisfactory to the Administrative Agent; without limiting the foregoing, the Borrower hereby directs its counsel, Cahill, Gordon & Reindel and General Counsel, Donald E. Miller, to prepare and deliver to the Administrative Agent, the Lenders, the Issuing Banks and Sidley & Austin, the opinions referred to in such List of Closing Documents; (ii) the Pro Forma and Projections, in form and substance satisfactory to the Administrative Agent; (iii) documentation deemed adequate by the Administrative Agent demonstrating full compliance by the Borrower and its Subsidiaries with any applicable Environmental Property Transfer Act; (iv) an Officer's Certificate executed and delivered by the president or vice president of the Borrower certifying that all conditions precedent have been met and no Potential Event of Default or Event of Default has occurred or is continuing; (v) a Tax Allocation Agreement in form and substance satisfactory to the Administrative Agent; and (vi) such additional documentation as the Administrative Agent may reasonably request. (b) Perfection of Liens; Title Insurance. Evidence that all financing statements, mortgages and leasehold mortgages relating to the Collateral have been filed or recorded, certificates representing Capital Stock included in the Collateral have been delivered to the Administrative Agent (with duly executed stock powers), the CM Letter of Credit and CM Notes shall have been delivered to the Administrative Agent (duly endorsed or with duly executed transfer instructions, as applicable), and all title charges, recording fees and filing taxes have been paid. (c) The Asset Transfers. The Lenders shall be satisfied in all material respects that the parties to the Transfer Documents complied with all applicable laws and regulatory approval requirements and all contractual approval and consent requirements, that the transfers contemplated thereby have been consummated, and that the CM Letter of Credit has been received by Borrower and delivered to the Administrative Agent. (d) STI Merger. The merger of FII with and into Shared Technologies, Inc. shall have become effective on terms (including, without limitation, terms of indemnities from TFC and its Subsidiaries) and pursuant to documentation acceptable, in form and substance, to the Administrative Agent and all of the obligations of FII and VSI under that certain Restated and Amended Credit Agreement dated as of July 27, 1992 (the "1992 Credit Agreement") which become obligations of Shared Technologies, Inc. upon the aforesaid merger becoming effective shall have been paid in full, in cash. (e) Due Diligence. The Administrative Agent and its counsel shall have completed their updated due diligence review of the financial condition, business, operations, assets, liabilities (environmental, by way of indemnification, and otherwise), pending and threatened litigation, corporate, capital, legal and management structure and Contractual Obligations of Borrower and each of its Subsidiaries, the results of which shall have provided the Administrative Agent, each Lender and each Issuing Bank with results and information which, in the judgment of such Person, are satisfactory to permit the Administrative Agent, each Lender and each Issuing Bank to enter into the financing transactions contemplated hereby. All Schedules to this Agreement shall be acceptable to the Administrative Agent and Lenders. (f) No Legal Impediments. No law, regulation, order, judgment or decree of any Governmental Authority shall, and the Administrative Agent shall not have received any notice that litigation is pending or threatened which is likely to, (i) enjoin, prohibit or restrain the making of the Term Loans and requested Revolving Loans and/or the issuance of Letters of Credit on the Closing Date or (ii) result in a Material Adverse Effect. (g) No Change in Condition. No change in the business, assets, management, operations, financial condition or prospects of the Operating Units or any business, assets, management, operations, financial condition or prospects of the Borrower's Subsidiaries shall have occurred since June 30, 1995, which change, in the judgment of the Requisite Lenders, will, or is reasonably likely to, result in a Material Adverse Effect. (h) No Loss of Material Agreements and Licenses. No agreement or license which, in the judgment of the Requisite Lenders, is material to the business, operations or employee relations of the Borrower or any of its Subsidiaries shall have been terminated, modified, revoked, breached or declared to be in default and each such Permit, agreement, and license shall have been transferred to the Borrower without any breach of the Contractual Obligation governing the same. (i) No Market Changes. Since January 16, 1996, no material adverse change shall have occurred in the conditions in the capital markets or the market for loan syndications generally. (j) No Default. No Event of Default or Potential Event of Default shall have occurred and be continuing or would result from the making of the Loans and no "Event of Default" (as defined in the 1992 Credit Agreement) shall have occurred and be continuing unwaived. (k) Representations and Warranties. All of the repre- sentations and warranties contained in Section 7.01 and in any of the other Loan Documents shall be true and correct in all material respects on and as of the Closing Date. (l) Fees and Expenses Paid. There shall have been paid to the Administrative Agent, for the accounts of the Lenders, Issuing Banks, and the Administrative Agent, as applicable, all fees and expenses due and payable on or before the Closing Date. 6.02. Conditions Precedent to All Subsequent Loans and Letters of Credit. The obligation of each Lender to make any Loan requested to be made by it on any Funding Date and the agreement of each Issuing Bank to issue any Letter of Credit on any date is subject to the following conditions precedent as of each such date, both before and after giving effect to the Loans to be made and/or the Letter of Credit to be issued on such date: (a) Representations and Warranties. All of the representations and warranties of the Borrower contained in Section 7.01 and in any other Loan Document (other than representations and warranties which expressly speak as of a different date) shall be true and correct in all material respects. (b) No Defaults. No Event of Default or Potential Event of Default shall have occurred and be continuing or would result from the making of the requested Loan or issuance of the requested Letter of Credit. (c) No Legal Impediments. No law, regulation, order, judgment or decree of any Governmental Authority shall, and the Administrative Agent shall not have received from any Lender or Issuing Bank notice that, in the judgment of such Lender or Issuing Bank, litigation is pending or threatened which is likely to, enjoin, prohibit or restrain, or impose or result in the imposition of any material adverse condi- tion upon, (i) such Lender's making of the requested Loan or participation in the requested Letter of Credit or (ii) such Issuing Bank's issuance of the requested Letter of Credit. (d) No Material Adverse Effect. No event shall have occurred since the date of this Agreement which has resulted, or is reasonably likely to result, in a Material Adverse Effect. Each submission by the Borrower to the Administrative Agent of a Notice of Borrowing with respect to any Loan or a Notice of Conversion/Continuation with respect to any Loan, each acceptance by the Borrower of the proceeds of each Loan made, converted or continued hereunder, each submission by the Borrower to an 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, the date of conversion or continuation and the date of issu- ance of such Letter of Credit, that all the conditions contained in this Section 6.02 have been satisfied or waived in accordance with Section 15.07. ARTICLE VII REPRESENTATIONS AND WARRANTIES 7.01. Representations and Warranties of the Borrower. In order to induce the Lenders and the Issuing Banks to enter into this Agreement and to make the Loans and the other financial accommodations to the Borrower and to issue the Letters of Credit described herein, the Borrower hereby represents and warrants to each Lender, each Issuing Bank and the Administrative Agent that the following statements are true, correct and complete: (a) Organization; Corporate Powers. (i) The Borrower and each of its Subsidiaries (A) is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (B) is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction in which failure to be so qualified and in good standing will have or is reasonably likely to have a Material Adverse Effect, (C) which is a Domestic Subsidiary has filed and maintained effective (unless exempt from the requirements for filing) a current Business Activity Report with the appropriate Governmental Authority in the states of Minnesota and New Jersey, and (D) has all requisite corporate power and authority to own, operate and encumber its Property and to conduct its business as presently conducted and as proposed to be conducted in connection with and following the consummation of the transactions contemplated by this Agreement. (ii) True, correct and complete copies of the Organizational Documents identified on Schedule 7.01-A attached hereto have been delivered to the Administrative Agent, each of which is in full force and effect, has not been modified or amended except to the extent indicated therein and, to the best of the Borrower's knowledge, there are no defaults under such Organizational Documents and no events which, with the passage of time or giving of notice or both, would constitute a default under such Organizational Documents. (b) Authority. (i) The Borrower and each of its Subsidiaries have the requisite corporate power and authority (A) to execute, deliver and perform each of the Loan Documents which have been executed by it as required by this Agreement on or prior to the Closing Date and (B) to file or record the Loan Documents which have been filed or recorded by it with any Governmental Authority as required by this Agreement on or prior to the Closing Date. (ii) The execution, delivery, performance and filing or recording, as the case may be, of each of the Loan Documents which have been executed, filed or recorded as required by this Agreement on or prior to the Closing Date and to which the Borrower or any of its Subsidiaries is party and the consummation of the transactions contemplated thereby, have been duly approved by the respective boards of directors and, if necessary, the shareholders of the Borrower and its Subsidiaries and such approvals have not been rescinded. No other corporate action or proceedings on the part of the Borrower or any of its Subsidiaries are necessary to consummate such transactions. (iii) Each of the Loan Documents to which the Borrower or any of its Subsidiaries is a party (A) has been duly executed, delivered, filed or recorded, as the case may be, by it, (B) where applicable, creates valid and perfected first Liens in the Collateral covered thereby securing the payment of all of the Obligations purported to be secured thereby, (C) constitutes the Borrower's or Subsidiary's respective legal, valid and binding obligation, enforceable against it in accordance with its terms, and (D) is in full force and effect and no material term or condition thereof has been amended, modified or waived from the terms and conditions contained therein as delivered to the Administrative Agent pursuant to Section 6.01(a) without the prior written consent of the Requisite Lenders. All parties to the Loan Documents have performed and complied with all the terms, provisions, agreements and conditions set forth therein and required to be performed or complied with by such parties on or before the Closing Date, all filings and recordings and other actions which are necessary or desirable to perfect and protect the Liens granted pursuant to the Loan Documents and preserve their required priority have been duly taken, and no Potential Event of Default, Event of Default or breach of any covenant by any such party exists thereunder. (c) Subsidiaries; Ownership of Equity Securities. Schedule 7.01-C attached hereto (i) contains a diagram indicating the corporate structure of the Borrower, its Subsidiaries and any other Person in which the Borrower or any of its Subsidiaries holds a direct or indirect partnership, joint venture or other equity interest and indicates the nature of such interest with respect to each Person included in such diagram; and (ii) accurately sets forth (A) the correct legal name of such Person, the jurisdiction of its incorporation or organization and the jurisdictions in which it is qualified to transact business as a foreign corporation or otherwise and (B) the authorized, issued and outstanding shares or interests of each class of equity Securities of the Borrower and each of its Subsidiaries and the owners of such shares or interests. None of such issued and outstanding equity Securities is subject to any vesting, redemption, or repurchase agreement, and there are no warrants or options (other than Permitted Equity Securities Options) outstanding with respect to such equity Securities. The outstanding equity Securities of the Borrower and each of its Subsidiaries are duly authorized, validly issued, fully paid and nonassessable free and clear of any Liens, except for the Liens granted pursuant to the Loan Documents, and are not Margin Stock. (d) No Conflict. The execution, delivery and perfor- mance of each of the Loan Documents to which the Borrower or any of its Subsidiaries is a party do not and will not (i) conflict with the Organizational Documents of the Borrower or any such Subsidiary, (ii) constitute a tortious interference with any Contractual Obligation of any Person or conflict with, result in a breach of or constitute (with or without notice or lapse of time or both) a default under any Requirement of Law or Contractual Obligation of the Borrower or any such Subsidiary, or require termination of any Contractual Obligation, the consequences of which violation, breach, default or termination, singly or in the aggregate, will, or is reasonably likely to, result in a Material Adverse Effect or may subject the Administrative Agent, any of the Lenders or any of the Issuing Banks to any liability, (iii) result in or require the creation or imposition of any Lien whatsoever upon any of the Property or assets of the Borrower or any such Subsidiary, other than Liens contemplated by the Loan Documents, or (iv) require any approval of the Borrower's or any such Subsidiary's shareholders, which has not been obtained. (e) Governmental Consents. Except as set forth on Schedule 7.01-E attached hereto, the execution, delivery and performance of each of the Loan Documents to which the Borrower or any of its Subsidiaries is a party 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, consents or notices which have been made, obtained or given and (ii) filings necessary to create or perfect security interests in the Collateral. (f) Governmental Regulation. Neither the Borrower, nor any of its Subsidiaries is subject to 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 which limits its ability to incur indebtedness or its ability to consummate the transactions contemplated hereby or by the Loan Documents. (g) Restricted Junior Payments. The Borrower has not directly or indirectly declared, ordered, paid or made or set apart any sum or Property for any Restricted Junior Payment or agreed to do so, except as permitted pursuant to Section 10.06 of this Agreement. (h) Financial Position. Complete and accurate copies of the following Financial Statements, materials and other information have been delivered to the Administrative Agent: (i) the Pro Forma and Projections and (ii) a statement as to the TFC/RHI Liquidity as of the Closing Date. All Financial Statements included in such materials were prepared in all material respects in conformity with GAAP, except as otherwise noted therein, and fairly present in all material respects the respective consolidated financial positions, and the consolidated results of operations and cash flows for each of the periods covered thereby of the applicable Person as at the respective dates thereof. Neither the Borrower nor any of its Subsidiaries has any Accommodation Obligation, contingent liability or liability for any taxes, long-term leases or commitments, not disclosed in writing to the Administrative Agent and the Lenders prior to the Closing Date, which will have or is reasonably likely to have a Material Adverse Effect. (i) Pro Forma Financials. The Pro Forma, copies of which have been furnished to the Lenders on the Closing Date, fairly presents on a pro forma basis the financial condition of the Operating Units as of the date designated therein. The Projections and the assumptions expressed in the Pro Forma are reasonable based on the information avail- able to the Borrower at the time so furnished. (j) Indebtedness; Refinanced Indebtedness. Schedule 1.01.5 sets forth all Indebtedness for borrowed money of the Borrower and there are no defaults in the payment of principal or interest on any such Indebtedness and no payments thereunder have been deferred or extended beyond their stated maturity (except as disclosed on such Schedule). The Refinanced Indebtedness and all accrued and unpaid interest thereon has been paid in full or provision for payment has been made such that, in accordance with the express provisions of the instruments governing such Indebtedness, the Borrower has been or will be upon payment in full of the Refinanced Indebtedness irrevocably released from all liability and Contractual Obligations with respect thereto other than customary continuing indemnities provided for in the Contractual Obligation evidencing such Refinanced Indebtedness, a copy of which has been delivered to the Lenders. Any and all Liens securing the Refinanced Indebtedness have been released or provision for release of such Liens satisfactory to the Administrative Agent has been made. (k) Litigation; Adverse Effects. Except as set forth in Schedule 7.01-K attached hereto, there is no action, suit, proceeding, Claim, investigation or arbitration before or by any Governmental Authority or private arbitrator pending or, to the knowledge of the Borrower or any of its Subsidiaries, threatened against VSI or FII (with respect to which the Borrower or any of the Borrower's Subsidiaries may have successor liability), TFC, RHI, the Borrower or any of the Borrower's Subsidiaries or any of the Property (i) challenging the validity or the enforceability of any of the Loan Documents, (ii) which will, or is reasonably likely to, result in any Material Adverse Effect, or (iii) under the Racketeering Influenced and Corrupt Organizations Act or any similar federal or state statute where such Person is a defendant in a criminal indictment that provides for the forfeiture of assets to any Governmental Authority as a criminal penalty. There is no material loss contingency within the meaning of GAAP which has not been reflected in the Pro Forma or, after the Closing Date, the consolidated Financial Statements of the Borrower. Neither VSI nor FII was, prior to the Closing Date, nor are any of TFC, RHI, the Borrower or any of its Subsidiaries (A) in violation of any applicable Requirements of Law which violation will result, or is reasonably likely to result, in a Material Adverse Effect, or (B) 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, or is reasonably likely to, result in a Material Adverse Effect. (l) No Material Adverse Effect. Since January 16, 1996, there has occurred no event with respect to VSI, FII the Borrower or any Affiliate of the Borrower which has resulted, or is reasonably likely to result, in a Material Adverse Effect. (m) Tax Examinations. The IRS has examined (or is foreclosed from examining by applicable statutes) the consolidated federal income tax returns of TFC for all tax periods prior to and including the taxable year ending June 30, 1991. All deficiencies which have been asserted against VSI or any of its Subsidiaries as a result of any federal, state, local or foreign tax examination for each taxable year in respect of which an examination has been conducted have been fully paid or finally settled or are being contested in good faith, and no issue has been raised in any such examination which, by application of similar principles, reasonably can be expected to result in assertion of a material deficiency for any other year not so examined which has not been reserved for in (i) VSI's consolidated Financial Statements heretofore delivered to the Administrative Agent and (ii) Borrower's consolidated Financial Statements delivered to the Administrative Agent, in each instance, to the extent, if any, required by GAAP. Neither VSI nor the Borrower has taken any reporting positions for which it does not have a reasonable basis and does not anticipate any further material adverse tax liability with respect to the years which have not been closed pursuant to applicable law and which are not reserved in the Financial Statements described above in clauses (i) and (ii). (n) Payment of Taxes. All tax returns and reports of each of TFC, the Borrower and its Subsidiaries (or the respective predecessors in interest of the Borrower and its Subsidiaries) required to be filed have been timely filed, and all taxes, assessments, fees and other charges of Governmental Authorities thereupon and upon or relating to their respective Property, assets, income and franchises which are shown in such returns or reports to be due and payable have been paid, except to the extent (i) such taxes, assessments, fees and other charges are being contested in good faith by an appropriate proceeding diligently pursued as permitted by the terms of Section 9.04 and (ii) non- payment of the amounts thereof would not, individually or in the aggregate, result in a Material Adverse Effect. The Borrower has no knowledge of any proposed tax assessment against TFC, the Borrower or any of its Subsidiaries (or the respective predecessors in interest of the Borrower and its Subsidiaries) that will, or is reasonably likely to, result in a Material Adverse Effect. (o) Performance. None of the Borrower, any of its Subsidiaries, or any predecessor in interest of the Borrower or any of its Subsidiaries, has received any notice, citation, or allegation, nor has actual knowledge, that (i) it is in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Contractual Obligation applicable to it, (ii) any Property of the Borrower or any of its Subsidiaries is in violation of any Requirement of Law, or (iii) any condition exists which, with the giving of notice or the lapse of time or both, would constitute a default with respect to any such Contractual Obligation, in each case, except where such default or defaults, if any, will not, or is not reasonably likely to, result in a Material Adverse Effect. (p) Disclosure. The representations and warranties of the Borrower and its Subsidiaries contained in the Loan Documents, and all certificates and other documents delivered to the Administrative Agent pursuant to the terms thereof, do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. The Borrower has not intentionally withheld any fact from the Administrative Agent, the Issuing Banks or the Lenders in regard to any matter which will, or is reasonably likely to, result in a Material Adverse Effect. (q) Requirements of Law. The Borrower and each of its Subsidiaries, respectively, are in compliance with all Requirements of Law applicable to them and their respective businesses, in each case where the failure to so comply individually or in the aggregate will, or is reasonably likely to, result in a Material Adverse Effect. (r) Environmental Matters. (i) Except as disclosed on Schedule 7.01-R attached hereto: (A) neither Borrower nor any Domestic Subsidiary of the Borrower (or any of their respective predecessors in interest) has received any unresolved notice from any federal, state or local agency to the effect that its operations are not in compliance with any applicable Environmental, Health or Safety Requirements of Law or the subject of any federal or state investigation evaluating whether any remedial action is needed to respond to a Release of a Contaminant into the environment; (B) to the knowledge of the Borrower, none of the Borrower or its Domestic Subsidiaries (or any of their respective predecessors in interest) or any of its their respective present or past Property or operations, are subject to or the subject of any judicial or administrative proceeding, order, judgment, decree, dispute, negotiations, agreement, or settlement respecting (I) any Environmental, Health or Safety Requirements of Law, (II) any Remedial Action, (III) any Claims or Liabilities and Costs arising from the Release or threatened Release of a Contaminant into the environment, or (IV) any violation of or liability under any Environmental, Health or Safety Requirement of Law that Borrower or its Domestic Subsidiaries reasonably believe will result in a material expenditure of money; (C) none of the Borrower, any of its Domestic Subsidiaries, or any of their respective predecessors in interest has filed any notice under any applicable Requirement of Law (I) reporting a Release of a Contaminant where remedial action has not been conducted to the satisfaction of the appropriate Governmental Authority; or (II) reporting a violation of any applicable Environmental, Health or Safety Requirement of Law where such violation has not been corrected to the satisfaction of the appropriate Governmental Authority; (D) none of the Borrower's or its Domestic Subsidiaries' present or past Property is listed or, to the knowledge of the Borrower, proposed for listing on the National Priorities List ("NPL") pursuant to CERCLA or on the Comprehensive Environmental Response Compensation Liability Information System List ("CERCLIS") or any similar state list of sites requiring Remedial Action; (E) to the knowledge of the Borrower, neither the Borrower nor any of its Domestic Subsidiaries has any material contingent liability in connection with any Release or threatened Release of any Contaminants into the environment; and (F) no Environmental Lien has attached to any Property. (ii) the Borrower and each of its Domestic Subsidiaries are conducting and will continue to conduct their respective business and operations in an environmentally responsible manner in material compliance with Environmental, Health or Safety Requirements of Law, and the Borrower and its Subsidiaries, taken as a whole, have not been, and have no reason to believe that they will be, subject to Liabilities and Costs arising out of or relating to environmental, health or safety matters that have or will result in material cash expenditures by the Borrower and its Domestic Subsidiaries in the aggregate for the Fiscal Year ending June 30, 1996 in excess of the reserves established therefor. (s) ERISA. Except as disclosed on Schedule 7.01-S attached hereto, (i) neither the Borrower nor any of Borrower's Subsidiaries contributes to any Benefit Plan, Multiemployer Plan or Foreign Pension Plan, (ii) no ERISA Event has occurred or is reasonably expected to occur that has resulted or is reasonably likely to result in a material liability of the Borrower or any Subsidiary of the Borrower, (iii) Schedule B (Actuarial Information) to the 1994 annual report (Form 5500 Series) for each Benefit Plan, copies of which have been filed with the Internal Revenue Service and furnished to the Administrative Agent, is complete and accurate and fairly presents the funding status of such Benefit Plan, and since the date of such Schedule B there has been no material adverse change in such funding status, (iv) neither the Borrower nor any ERISA Affiliate has incurred or is reasonably expected to incur any withdrawal liability to any Multiemployer Plan, (v) neither the Borrower nor any ERISA Affiliate has been notified by the sponsor of a Multiemployer Plan that such Multiemployer Plan is in reorganization or has been terminated, within the meaning of Title IV of ERISA, and no Multiemployer Plan is reasonably expected to be in reorganization or to be terminated, within the meaning of Title IV of ERISA, and (vi) the aggregate annualized cost (including, without limitation, the cost of insurance premiums) with respect to post-retirement benefits under Benefit Plans for which the Borrower is liable does not exceed $5,000,000. (t) Foreign Employee Benefit Matters. Each Foreign Employee Benefit Plan is in compliance in all material respects with all laws, regulations and rules applicable thereto and the respective requirements of the governing documents for such Plan. The aggregate of the liabilities to provide all of the accrued benefits under any Foreign Pension Plan does not exceed the current Fair Market Value of the assets held in the trust or other funding vehicle for such Plan. With respect to any Foreign Employee Benefit Plan maintained or contributed to by the Borrower, any of its Subsidiaries or any ERISA Affiliate (other than a Foreign Pension Plan), reasonable reserves have been established in accordance with prudent business practice or where required by ordinary accounting practices in the jurisdiction in which such Plan is maintained. The aggregate unfunded liabilities, after giving effect to any reserves for such liabilities, with respect to such Plans does not exceed the current fair market value of the assets held in the trust or other funding vehicle for such Plan. There are no actions, suits or claims (other than routine claims for benefits) pending or, to the best knowledge of the Borrower, threatened against the Borrower, any of its Subsidiaries or any ERISA Affiliate with respect to any Foreign Employee Benefit Plan. (u) Labor Matters. Schedule 7.01-U accurately sets forth all labor contracts to which the Borrower or any of its Subsidiaries is a party on the date hereof and the expiration date of each such contract. There are no strikes, lockouts or other grievances relating to any collective bargaining or similar agreement to which the Borrower or any of its Subsidiaries is a party. (v) Securities Activities. Neither the Borrower nor any of its Subsidiaries is engaged in the business of extending credit for the purpose of purchasing or carrying Margin Stock. (w) Solvency. After giving effect to the Loans to be made and Letters of Credit to be issued on the Closing Date or such other date as Loans requested hereunder are made or Letters of Credit requested hereunder are issued, and the disbursement of the proceeds of such Loans pursuant to the Borrower's instructions, the Borrower is and each of its Subsidiaries are Solvent. (x) Patents, Trademarks, Permits, Etc.; Government Approvals. (i) The Borrower and each of its Subsidiaries, as applicable, owns, is licensed or otherwise has the lawful right to use, or has all Permits and other governmental approvals, patents, trademarks, trade names, copyrights, technology, know-how, permits and processes used in or necessary for the conduct of its respective business as currently conducted which are material to its condition (financial or otherwise), operations, performance and prospects, taken as a whole. Except as set forth on Schedule 7.01-X attached hereto, no claims are pending or, to the best of Borrower's knowledge following diligent inquiry, threatened that the Borrower or any of its Subsidiaries 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, permits and processes, except for such claims and infringements as do not, in the aggregate, give rise to any liability on the part of the Borrower or any of its Subsidiaries which will, or is reasonably likely to, result in a Material Adverse Effect. (ii) The consummation of the transactions contemplated by the Transfer Documents and Loan Documents will not impair the 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, permits or processes by the Borrower or any of its Subsidiaries in any manner which will, or is reasonably likely to, result in a Material Adverse Effect. (y) Assets and Properties. The Borrower and each of its Subsidiaries has good and marketable title to all of the assets and Property (tangible and intangible) owned by it (except insofar as marketability may be limited by any laws or regulations of any Governmental Authority affecting such assets), and all such assets and Property are free and clear of all Liens except Liens securing the Obligations and Liens permitted under Section 10.03. Substantially all of the assets and Property owned by, leased to, or used by the Borrower and/or each such Subsidiary of the Borrower is in adequate operating condition and repair, ordinary wear and tear excepted, is 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 is 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, or is not reasonably likely to, result in a Material Adverse Effect. Neither this Agreement nor any other Loan Document, nor any transaction contemplated under any such agreement, will affect any right, title or interest of the Borrower or any Subsidiary of the Borrower in and to any of such assets in a manner that would, or is reasonably likely to, result in a Material Adverse Effect. (z) Insurance. Schedule 7.01-Z attached hereto accurately sets forth as of the Closing Date all insurance policies and programs currently in effect with respect to the respective Property and assets and business of the Borrower and its Subsidiaries, specifying for each such policy and program, (i) the amount thereof, (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. Borrower has delivered to the Administrative Agent copies of all such insurance policies. Such insurance policies and programs are currently in full force and effect, in compliance with the requirements of Section 9.05 and are in amounts sufficient to cover the replacement value of the respective Property and assets of the Borrower and its Subsidiaries. (aa) Asset Transfers. All conditions precedent to, and all consents necessary to the Transfer Documents' becoming effective, have been satisfied or delivered, or waived with the prior written consent of the Requisite Lenders, and no material breach of any term or provision of the Transfer Documents has occurred and no action has been taken by any competent authority which restrains, prevents or imposes material adverse conditions upon, or seeks to restrain, prevent or impose material adverse conditions upon, the effectiveness of the Transfer Documents. (bb) Pledge of Capital Stock. The grant and perfection of the security interest in the Capital Stock of the Subsidiaries of the Borrower constituting a portion of the Collateral for the benefit of the Holders, as contemplated by the terms of the Loan Documents, is not made in violation of the registration provisions of the Securi- ties Act, any applicable provisions of other federal securi- ties laws, state securities or "Blue Sky" law, foreign securities law, or applicable general corporation law or in violation of any other Requirement of Law. ARTICLE VIII REPORTING COVENANTS The Borrower covenants and agrees that so long as any Commitments are outstanding and thereafter until payment in full of all of the Obligations (other than indemnities not yet due), unless the Requisite Lenders shall otherwise give their prior written consent thereto: 8.01. Financial Statements; Communications with Accountants. (a) Monthly Financial Reports. The Borrower shall maintain, and cause each of its Subsidiaries to maintain, a system of accounting established and administered in accordance with sound business practices to permit preparation of consolidated Financial Statements 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 and the Lenders (i) consolidated balance sheets of each Operating Unit and the related consolidated statements of income as soon as practicable, and in any event by May 25, 1996 with respect to the quarter ending March 31, 1996, (ii) consolidated balance sheets of each Operating Unit and the related consolidated statements of income as soon as practicable, and in any event within fifty-five (55) days after April 28, 1996 and May 26, 1996, in each instance for the month then ending, and (iii) consolidated and consolidating balance sheets of TFC and its Subsidiaries and related consolidated and consolidating statements of income, cash flow and stockholders' equity as soon as practicable, and in any event by May 25, 1996 for the quarter ending March 31, 1996. An Officer's Certificate of the Borrower substantially in the form of Exhibit I attached hereto and made a part hereof shall accompany the Financial Statements referenced in clauses (i) and (ii) above certifying that such Financial Statements fairly present the consolidated financial position of the respective Operating Units as at the dates indicated and the results of their operations for the periods indicated in accordance with GAAP, subject to normal year end adjustments, and stating that the chief financial officer of the Borrower signatory thereto 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 Operating Units 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 Person 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 Potential Event of Default, or, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Borrower or any of its Subsidiaries has taken, is taking and proposes to take with respect thereto. Such Financial Statements shall also be accompanied by a certificate (the "Compliance Certificate"), signed by the Borrower's chief financial officer, setting forth calculations (with such specificity as the Administrative Agent may reasonably request) for the period then ended which demonstrate compliance, when applicable, with the provisions of Article XI, including, without limitation, the amount of Capital Expenditures made, on a cumulative basis, since the Closing Date. (b) Other Financial Information. With reasonable promptness, Borrower shall deliver such other information, reports, filings, projections, business plans and data with respect to Borrower and its Subsidiaries as from time to time may be reasonably requested by any Lender. (c) Communications with Accountants. Borrower authorizes (i) the Administrative Agent, after giving Borrower reasonable prior written notice of its intent to do so, to communicate directly with Borrower's independent certified public accountants concerning the Financial Statements; provided that Borrower is not precluded by the Administrative Agent from being present for such communication and (ii) such independent certified public accountants, upon the Administrative Agent's written request with a copy to Borrower, to provide to the Administrative Agent copies of any financial schedules prepared by such accountants for Borrower. 8.02. Events of Default. Promptly upon any of the chief executive officer, chief operating officer, chief financial officer, or treasurer of the Borrower obtaining knowledge (a) of any condition or event which constitutes an Event of Default or Potential Event of Default, or becoming aware that any Lender or the Administrative Agent has given any notice with respect to a claimed Event of Default or Potential Event of Default under this Agreement, (b) that any Person has given any notice to the Borrower or any Subsidiary of the Borrower or taken any other action with respect to a claimed default or event or condition of the type referred to in Section 12.01(e), or (c) of any condition or event which has resulted, or is reasonably likely to result, in a Material Adverse Effect or affect the value of, or the Administrative Agent's interest in, the Collateral in any material respect, the Borrower shall deliver to the Administrative Agent and the Lenders an Officer's Certificate specifying (i) the nature and period of existence of any such claimed default, Event of Default, Potential Event of Default, condition or event, (ii) the notice given or action taken by such Person in connection therewith, and (iii) what action the Borrower has taken, is taking and proposes to take with respect thereto. 8.03. Lawsuits. Promptly upon the Borrower obtaining knowledge of the institution of, or written threat of, any action, suit, proceeding, governmental investigation or arbitration against or affecting the Borrower or any of its Subsidiaries or any of the Property not previously disclosed pursuant to Section 7.01(k), which action, suit, proceeding, governmental investigation or arbitration exposes, or in the case of multiple actions, suits, proceedings, governmental investigations or arbitrations arising out of the same general allegations or circumstances which expose, in the Borrower's reasonable judgment, the Borrower and/or any of its Subsidiaries to liability in an amount aggregating $500,000 or more (exclusive of claims covered by insurance policies of the Borrower and its Subsidiaries unless the insurers of such claims have disclaimed coverage or reserved the right to disclaim coverage on such claims), the Borrower shall give written notice thereof to the Administrative Agent and the Lenders and provide such other information as may be reasonably available to enable each Lender and the Administrative Agent and its counsel to evaluate such matters. The Borrower upon request of the Administrative Agent or the Requisite Lenders shall promptly give written notice of the status of any action, suit, proceeding, governmental investigation or arbitration covered by a report delivered in accordance herewith and provide such other information as may be reasonably available to it to enable each Lender and the Administrative Agent and its counsel to evaluate such matters. 8.04. Declaration of Dividends and Other Distributions. Borrower shall provide to the Administrative Agent written notification (or telephonic notice promptly confirmed in writing) of a dividend or other distribution to be made on Borrower's Capital Stock no less than sixty (60) days prior to the payment date for such dividend or other distribution; provided, however, that Lenders acknowledge that a loan in the amount of DM 4,923,000 made by Fairchild Convac GmbH to RHI prior to the merger on February 26, 1996 of Fairchild Convac GmbH with and into D-M-E Normalien GmbH is anticipated to be recharacterized during the term of this Agreement as a dividend and notice of such recharacterization shall be required only upon the same becoming effective. 8.05. TFC/RHI Liquidity. The Borrower shall deliver to the Administrative Agent and the Lenders, within ten (10) days after March 31, 1996, an Officer's Certificate in the form of Exhibit J attached hereto setting forth the calculation of the TFC/RHI Liquidity as of March 31, 1996. 8.06. Environmental Notices. The Borrower shall notify the Administrative Agent and the Lenders in writing, promptly upon the Borrower's learning thereof, of any: (i) notice or claim to the effect that the Borrower or any Subsidiary of the Borrower is subject to investigation or may be subject to investigation or liable to any Person as a result of the Release or threatened Release of any Contaminant into the environment which could reasonably result in an expenditure over $2,000,000; (ii) notice that any Property is subject to an Environmental Lien; and (iii) notice to the Borrower or any Subsidiary of the Borrower of any material violation of any Environmental, Health or Safety Requirement of Law or the commencement or threat of any judicial or administrative proceeding alleging such a material violation by the Borrower or any Subsidiary of the Borrower. 8.07. Other Reports. The Borrower shall deliver or cause to be delivered to the Administrative Agent and the Lenders copies of all Financial Statements, reports and notices, if any, sent or made available generally by TFC, RHI, or the Borrower to its Securities holders or filed with the Commission and all press releases made available generally by TFC, RHI, the Borrower or any Subsidiary of the Borrower to the public concerning material developments in the business of the Borrower or any such Subsidiary of the Borrower, and all notifications received by the Borrower or any Subsidiary of the Borrower pursuant to the Securities Exchange Act and the rules promulgated thereunder. 8.08. Other Information. Promptly upon receiving a request therefor from the Administrative Agent or the Requisite Lenders, the Borrower shall prepare and deliver to the Administrative Agent and the Lenders such other information with respect to the Borrower, any of its Subsidiaries, or the Collateral, including, without limitation, schedules identifying and describing the Collateral and any dispositions thereof, as from time to time may be reasonably requested by the Administrative Agent or the Requisite Lenders. ARTICLE IX AFFIRMATIVE COVENANTS Borrower covenants and agrees that so long as any Commitments are outstanding and thereafter until payment in full of all of the Obligations (other than indemnities not yet due), unless the Requisite Lenders shall otherwise give prior written consent: 9.01. Corporate Existence, Etc. The Borrower shall, and shall cause each of its Subsidiaries to, at all times maintain its corporate 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 is not likely to result in a Material Adverse Effect. 9.02. Corporate Powers; Conduct of Business. The Borrower shall, and shall cause each of its Subsidiaries to, qualify and remain qualified to do business and maintain its good standing in each jurisdiction in which the nature of its business and the ownership of its Property requires it to be so qualified and in good standing. 9.03. Compliance with Laws, Etc. The Borrower shall, and shall cause each of its Subsidiaries to, (a) comply with all Requirements of Law and all restrictive covenants affecting it or its business, Property, assets or operations 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 is not reasonably likely to result in a Material Adverse Effect. 9.04. Payment of Taxes and Claims; Tax Consolidation. The Borrower shall, and shall cause each of its Subsidiaries to, pay (a) all taxes, assessments and other governmental charges imposed upon it or on any of its Property or assets or in respect of any of its franchises, business, income or Property before any penalty or interest accrues thereon, and (b) all Claims (including, without limitation, claims for labor, services, materials and supplies) for sums which have become due and payable and which by law have or may become a Lien (other than a Lien permitted by Section 10.03) upon any of the Borrower's or such Subsidiary's Property or assets, 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 pro- ceedings diligently instituted and conducted and if such reserve or other appropriate provision, if any, as shall be required in conformity with GAAP shall have been made therefor. The Borrower will not, nor will it permit any of its Subsidiaries to, file or consent to the filing of any consolidated income tax return with any Person (other than TFC and its Subsidiaries). 9.05. Insurance. The Borrower shall maintain for itself and its Subsidiaries, or shall cause each of its Subsidiaries to maintain in full force and effect the insurance policies and programs listed on Schedule 7.01-Z or substantially similar policies and programs or other policies and programs as are acceptable to the Administrative Agent. All such policies and programs shall be maintained with responsible and reputable insurance companies engaged in similar businesses and owning similar property in the same general geographic areas in which the Borrower and/or its Subsidiaries operate. Each certificate and policy relating to Property damage, boiler and machinery and/or business interruption coverage shall contain an endorsement, in form and substance acceptable to the Administrative Agent, showing loss payable to the Administrative Agent, for the benefit of the Holders, and, if required by the Administrative Agent, naming the Administrative Agent as an additional insured under such policy. Each certificate and policy relating to coverage other than the foregoing shall, if required by the Administrative Agent, contain an endorsement naming the Administrative Agent as an additional insured or mortgagee payee, as applicable, under such policy. Such endorsement or an independent instrument furnished to the Administrative Agent shall provide that the insurance companies will give the Administrative 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 Holders or cancelled and that no act, whether willful or negligent, or default of the Borrower, any of its Subsidiaries or any other Person shall affect the right of the Administrative Agent to recover under such policy or policies of insurance in case of loss or damage. In the event the Borrower or any of its Subsidiaries, at any time or times hereafter shall fail to obtain or maintain any of the policies or insurance required herein or to pay any premium in whole or in part relating thereto, then the Administrative Agent, without waiving or releasing any obligations 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. All sums so disbursed by the Administrative Agent shall constitute Protective Advances hereunder and be part of the Obligations, payable as provided in this Agreement. 9.06. Inspection of Property; Books and Records; Discussions. The Borrower shall, and shall cause each of its Subsidiaries to, permit any authorized representative(s) designated by either the Administrative Agent or any Lender to visit and inspect, whether by access to Borrower's and its Subsidiaries' MIS or otherwise, any of the Property, to examine, audit, check and make copies of its respective financial and accounting records, books, journals, orders, receipts and any correspondence (other than privileged correspondence with legal counsel) and other data relating to their respective businesses or the transactions contemplated hereby or referenced herein (including, without limitation, in connection with environmental compliance, hazard or liability), and to discuss their affairs, finances and accounts with their officers, management personnel, and independent certified public accountants, all upon reasonable written notice and at such reasonable times during normal business hours, as often as may be reasonably requested. 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 the Administrative Agent shall be at the Borrower's expense. The Borrower shall keep and maintain, and cause each of its Subsidiaries to keep and maintain, in all material respects on its MIS and otherwise proper books of record and account in which entries in conformity with GAAP shall be made of all dealings and transactions in relation to its respective 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, the Borrower, upon the Administrative Agent's request, shall, and shall cause each of its Subsidiaries to, turn over any such records to the Administrative Agent or its representatives; provided, however, that the Borrower may, in its discretion, retain copies of such records. 9.07. Insurance and Condemnation Proceeds. (a) Direction to Insurers. The Borrower hereby directs (and, if applicable, shall cause its Subsidiaries to direct) all insurers under policies of Property damage, boiler and machinery and business interruption insurance and payors of any condemnation claim or award relating to the Property to pay all proceeds payable under such policies or with respect to such claim or award directly to the Administrative Agent, for the benefit of the Administrative Agent, the Issuing Banks and the Lenders. In no case shall such proceeds be payable to the Borrower or one or more of its Subsidiaries and the Administrative Agent. (b) Application of Proceeds. The Administrative Agent shall, upon receipt of such proceeds, apply all of the proceeds so received in repayment of the Obligations in the manner set forth in Section 4.01(b)(vi). Notwithstanding the foregoing, in the event proceeds of insurance received by the Administrative Agent under property damage, boiler and machinery policies or business interruption insurance policies (i) is less than $250,000 or (ii) constitutes Replacement Proceeds, the Administrative Agent shall, upon receipt of such proceeds, remit the amount so received to the Borrower or a Subsidiary of the Borrower, as applicable provided that there shall not then exist an Event of Default which is continuing unwaived. 9.08. ERISA Compliance. The Borrower shall, and shall cause each of its Subsidiaries and ERISA Affiliates to, establish, maintain and operate all Plans to comply in all material respects with the provisions of ERISA, the Internal Revenue Code, all other applicable laws, and the regulations and interpretations thereunder and the respective requirements of the governing documents for such Plans. 9.09. Foreign Employee Benefit Plan Compliance. The Borrower shall, and shall cause each of its Subsidiaries and ERISA Affiliates to, establish, maintain and operate all Foreign Employee Benefit Plans to comply in all material respects with all laws, regulations and rules applicable thereto and the respective requirements of the governing documents for such Plans. 9.10. Collection Accounts. Within thirty (30) days after the Closing Date, the Borrower shall, and shall cause each of its Domestic Subsidiaries to, enter into Collection Account Agreements with respect to each of their respective depository accounts into which collections of Receivables and other proceeds of Collateral are deposited or, to the extent collection account agreements were executed and delivered in connection with the 1992 Credit Agreement, to amend such agreements on terms satisfactory to the Administrative Agent to become a Collection Account Agreement. 9.11. Maintenance of Property. The Borrower shall, and shall cause each of its Subsidiaries to, maintain in all material respects all of its respective owned and leased Property in good, safe and insurable condition and repair, and not permit, commit or suffer any waste or abandonment of any such Property and from time to time shall make or cause to be made all material repairs, renewal and replacements thereof, including, without limitation, any capital improvements which may be required; provided, however, that such Property may be altered or renovated in the ordinary course of Borrower's or its Subsidiaries' business. 9.12. Condemnation. Immediately upon learning of the institution of any proceeding for the condemnation or other taking of any of the owned or leased Real Property of the Borrower or any Subsidiary of the Borrower, the Borrower 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. 9.13. Tax Allocation Agreement. Borrower shall maintain or cause to be maintained, in full force and effect, the Tax Allocation Agreement, without amendment or modification unless consented to by the Requisite Lenders. 9.14. Performance of Material Contracts. Borrower shall, and shall cause each of its Subsidiaries to, perform and observe all the terms and provisions of each material Contractual Obligation to be performed or observed by it, maintain each such material Contractual Obligation in full force and effect, enforce each such material Contractual Obligation in accordance with its terms, take all such action to such end as may be from time to time requested by the Administrative Agent and, upon request of the Administrative Agent, make to each other party to each such material Contractual Obligation such demands and requests for information and reports or for action as the Borrower or such Subsidiary is entitled to make under such material Contractual Obligation. 9.15. CM Note and CM Letter of Credit. Borrower shall exercise, on June 28, 1996, its right to demand payment of the Indebtedness evidenced by the CM Notes and such demand shall be for payment of such Indebtedness by no later than July 29, 1996. Borrower shall exercise, no later than July 29, 1996, its right to draw on the CM Letter of Credit. 9.16. Real Property. Borrower shall obtain, upon the request of the Administrative Agent, surveys of owned or leased Real Property which is part of the Collateral and title commitments for title insurance policies in form and substance and from title insurers satisfactory to the Administrative Agent with respect to mortgages and leasehold mortgages of Real Property and/or interests in Real Property which is part of the Collateral for the benefit of the Administrative Agent, the Issuing Banks and the Lenders. ARTICLE X NEGATIVE COVENANTS Borrower covenants and agrees that it shall comply with the following covenants so long as any Commitments are out- standing and thereafter until payment in full of all of the Obligations (other than indemnities not yet due), unless the Requisite Lenders shall otherwise give prior written consent: 10.01. Indebtedness. The Borrower shall not and shall not permit any of its Subsidiaries to directly or indirectly create, incur, assume or otherwise become or remain directly or indirectly liable with respect to any Indebtedness, except: (a) the Obligations; (b) Indebtedness for trade payables, wages and other accrued expenses incurred in the ordinary course of business; (c) the Transaction Costs which have not been paid on or as of the Closing Date; (d) Permitted Existing Indebtedness and any extensions, renewals, refundings or replacements thereof, provided that any such extension, renewal, refunding or replacement is in an aggregate principal amount not greater than the principal amount of, and is on terms no less favorable to the Borrower or its Subsidiary than the terms of, the Permitted Existing Indebtedness so extended, renewed, refunded or replaced; (e) to the extent permitted by Article XI and in any event in an aggregate amount not to exceed $1,000,000 at any time, Capital Leases and purchase money Indebtedness incurred to finance the acquisition of fixed assets, and Indebtedness incurred to refinance such Capital Leases and purchase money Indebtedness; provided, however, prior to incurring Capital Lease obligations owing to any one lessor or group of affiliated or related lessors or purchase money Indebtedness owing to any one holder or group of affiliated or related holders thereof, which in either case aggregate(s) more than $750,000, the Borrower shall obtain, or cause such Subsidiary to obtain, from such lessor(s) or holder(s) a duly executed intercreditor agreement in form and substance satisfactory to the Administrative Agent; (f) Indebtedness in respect of taxes, assessments, governmental charges and Claims for labor, materials or supplies, to the extent that payment thereof is not required pursuant to Section 9.04; (g) Indebtedness constituting Accommodation Obligations permitted by Section 10.05; (h) Indebtedness arising from intercompany loans from the Borrower to any of its Subsidiaries which is a Guarantor or from any such Subsidiary to the Borrower or any other such Subsidiary; (i) Indebtedness in respect of profit sharing plans to the extent permitted under Section 10.04; (j) Indebtedness in respect of the Hedge Agreements in respect of interest rates or foreign exchange contracts containing terms reasonably acceptable to the Administrative Agent and purchased from a Lender, an Affiliate of a Lender or such other Person reasonably acceptable as a credit matter to the Administrative Agent; (k) Indebtedness with respect to reasonable warranties and indemnities made under any agreements for asset sales permitted under Section 10.02 and Contractual Obligations of the Borrower or any Subsidiary of the Borrower entered into in the ordinary course of its business; (l) Indebtedness under appeal bonds in connection with judgments which do not result in an Event of Default or a Potential Event of Default or any other breach hereunder, provided that the aggregate amount of all such Indebtedness does not exceed $1,000,000; and (m) in addition to the Indebtedness permitted by clauses (a) through (l) above, other unsecured Indebtedness in an aggregate amount which, when combined with outstanding Accommodation Obligations permitted under Section 10.05(d), does not to exceed $5,000,000 outstanding. 10.02. Sales of Assets. The Borrower shall not and shall not permit any of its Subsidiaries to sell, assign, transfer, lease, convey or otherwise dispose of any Property, whether now owned or hereafter acquired, or any income or profits therefrom, or enter into any agreement to do so, except: (a) the sale of Property for consideration not less than the Fair Market Value thereof so long as (i) any non- cash consideration resulting from such sale shall be pledged or assigned to the Administrative Agent, for the benefit of the Holders, pursuant to an instrument in form and substance acceptable to the Administrative Agent and (ii) the Borrower complies with the mandatory prepayment provisions set forth in Section 4.01(b) and the conditions to the release of Collateral described in Section 13.09(c); (b) the sale of Inventory in the ordinary course of Borrower's and its Subsidiaries respective businesses; (c) the disposition of Equipment if such Equipment is traded in for credit against the purchase price of replacement Equipment or the proceeds of such disposition are reasonably promptly applied to the purchase price of such replacement Equipment, is obsolete, or is no longer useful in the ordinary course of the Borrower's or such Subsidiary's business; (d) the sale of Investments in Cash Equivalents permitted pursuant to Section 10.04(a); and (e) the sale of Excluded Dispositions. 10.03. Liens. The Borrower shall not and shall not permit any of its Subsidiaries to directly or indirectly create, incur, assume or permit to exist any Lien or negative pledge on or with respect to any of their respective Property or assets except: (a) Liens created pursuant to the Loan Documents; (b) Permitted Existing Liens; and (c) Customary Permitted Liens. 10.04. Investments. The Borrower shall not and shall not permit any of its Subsidiaries to directly or indirectly make or own any Investment except: (a) Investments in Cash Equivalents; (b) Permitted Existing Investments, in each case increased or decreased as required under GAAP as a result of annual adjustments made to Investments accounted for under the equity method; (c) Investments in the form of advances to employees in the ordinary course of business for moving, relocation and travel expenses; (d) Investments received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business; (e) Investments by the Borrower in its Subsidiaries which, if in the form of intercompany loans, would be permitted under Section 10.01(h); (f) an Investment by (i) the Borrower, VSI Holdings, Inc. or Convac in connection with the acquisition of an additional thirty percent (30%) of the issued and outstanding Capital Stock of Voi-Shan Diessel GmbH, a Subsidiary of VSI Holdings, Inc. and (ii) Convac in up to sixty-nine percent (69%) of the seventy percent (70%) of the issued and outstanding Capital Stock of Voi-Shan Diessel GmbH owned, as of the Closing Date, by VSI Holdings, Inc.; (f) Investments in the form of intercompany loans made by the Borrower or its Subsidiaries to RHI or TFC prior to the occurrence of an Event of Default or Potential Event of Default; and (g) Investments in an aggregate amount not to exceed $2,500,000 made in connection with acquisitions of assets or Capital Stock of any Person engaged in a business substantially similar to a business in which Borrower and its Subsidiaries are engaged as of the Closing Date; provided that after giving effect to the making of such Investment, no Potential Event of Default or Event of Default would occur. 10.05. Accommodation Obligations. The Borrower shall not and shall not permit any of its Subsidiaries to directly or indirectly create or become or be liable with respect to any Accommodation Obligation, except: (a) recourse obligations resulting from endorsement of negotiable instruments for collection in the ordinary course of its business; (b) Permitted Existing Accommodation Obligations and any extensions, renewals or replacements thereof, provided that the aggregate Indebtedness under any such extension, renewal or replacement is not greater than the Indebtedness under, and shall be on terms no less favorable to the Borrower or such Subsidiary than the terms of, the Permitted Existing Accommodation Obligation so extended, renewed or replaced; (c) Accommodation Obligations arising under the Loan Documents; and (d) in addition to the Accommodation Obligations permitted by clauses (a) through (c) above, other unsecured Accommodation Obligations in an aggregate amount which, when combined with outstanding Indebtedness permitted by Section 10.01(m), does not exceed $5,000,000 at any time outstanding. 10.06. Restricted Junior Payments. The Borrower shall not and shall not permit any of its Subsidiaries to declare or make any Restricted Junior Payment, except: (a) dividends or distributions to the Borrower on the Capital Stock of any of its Wholly-Owned Subsidiaries or to any of the Borrower's Wholly-Owned Subsidiaries from any other Wholly-Owned Subsidiary of the Borrower or any Subsidiary of the Borrower existing on the date of this Agreement; and (b) dividends or distributions by the Borrower to RHI on its Capital Stock if the purpose thereof is to provide TFC with funds necessary to service Indebtedness (as defined in the 11 7/8% Senior Subordinated Debenture Indenture) of TFC, but only to the extent TFC does not have Cash, Cash Equivalents or readily marketable Securities available to provide funds to otherwise service such Intebtedness, after taking into account reasonable working capital needs of TFC and its Subsidiaries; provided that the exception set forth in this clause (b) shall not be effective if and to the extent and during the period that the holders of TFC's 12 1/4% Senior Subordinated Notes due 1996 have waived the benefits of Section 4.05 of the Indenture dated as of March 13, 1986 pursuant to which such Notes were issued, the holders of TFC's 13 1/8% Subordinated Debentures due 2006 have waived the benefits of Section 4.05 of the Indenture dated as of March 13, 1986 pursuant to which such Debentures were issued and the holders of TFC's Intermediate Subordinated Debentures due 2001 have waived the benefits of Section 4.05 of the Indenture dated as of October 15, 1986 pursuant to which such Debentures were issued; and provided, further, that such exception shall be available in any event only so long as at least one of the Indentures described above remains in effect and continues to restrict TFC from permitting any of its Subsidiaries from entering into an agreement restricting the payment of dividends or the making of other distributions on any Subsidiary's Capital Stock which are necessary to service Indebtedness of TFC; provided, however, such Restricted Junior Payments shall not be permitted after the occurrence and during the continuance of an Event of Default or a Potential Event of Default or if an Event of Default or a Potential Event of Default would result therefrom. 10.07. Conduct of Business. The Borrower shall not and shall not permit any of its Subsidiaries to engage in any business other than (a) the businesses engaged in by the Borrower and its Subsidiaries on the date hereof and (b) any business or activities which are substantially similar, related or incidental thereto. 10.08. Transactions with Shareholders and Affiliates. The Borrower shall not and shall not permit any of its Subsidiaries to directly or indirectly enter into or permit to exist any transaction (including, without limitation, the purchase, sale, lease or exchange of any property or the rendering of any service) with any Affiliate on terms that are less favorable to the Borrower or such Subsidiary of the Borrower, as applicable, than those that might be obtained in an arm's length transaction at the time from Persons who are not an Affiliate. Nothing contained in this Section 10.08 shall prohibit (a) any transaction expressly permitted by Sections 10.05 and 10.06; (b) increases in compensation and benefits for officers and employees of the Borrower or any of its Subsidiaries which are customary in the industry or consistent with the past business practice of the Borrower or such Subsidiary, provided that no Event of Default or Potential Event of Default has occurred and is continuing; (c) payment of customary directors' fees and indemnities; (d) performance of any obligations arising under the Transfer Documents or (e) performance of any obligations arising under the Tax Allocation Agreement. 10.09. Restriction on Fundamental Changes. The Borrower shall not and shall not permit any of its Subsidiaries to (a) enter into any merger or consolidation, or liquidate, wind-up or dissolve (or suffer any liquidation or dissolution), or (b) convey, lease, sell, transfer or otherwise dispose of, in one transaction or series of trans- actions, all or substantially all of such Person's business or Property, whether now or hereafter acquired. 10.10. Sales and Leasebacks. The Borrower shall not and shall not permit any of its Subsidiaries to become liable, directly, by assumption or by Accommodation Obligation, with respect to any lease, whether an Operating Lease or a Capital Lease, of any Property (whether real or personal or mixed) which it or one of its Subsidiaries (a) sold or transferred or is to sell or transfer to any other Person, or (b) intends to use for substantially the same purposes as any other Property which has been or is to be sold or transferred by it or one of its Subsidiaries to any other Person, in either instance, in connection with such lease. 10.11. Margin Regulations; Securities Laws. The Borrower shall not or permit any of its Subsidiaries to use all or any portion of the proceeds of any credit extended under this Agreement to purchase or carry Margin Stock. 10.12. ERISA. The Borrower shall not: (a) engage, or permit any of its Subsidiaries to engage, in any prohibited transaction described in Sections 406 of ERISA or 4975 of the Internal Revenue Code for which a statutory or class exemption is not available or a private exemption has not been previously obtained from the DOL; (b) permit to exist any accumulated funding deficiency (as defined in Sections 302 of ERISA and 412 of the Internal Revenue Code), with respect to any Benefit Plan, whether or not waived; (c) fail, or permit any ERISA Affiliate to fail, to pay timely required contributions or annual installments due with respect to any waived funding deficiency to any Benefit Plan; (d) terminate, or permit any ERISA Affiliate to terminate, any Benefit Plan which would result in any liability of Borrower or any ERISA Affiliate under Title IV of ERISA; (e) fail to make any contribution or payment to any Multiemployer Plan which Borrower or any ERISA Affiliate may be required to make under any agreement relating to such Multiemployer Plan, or any law pertaining thereto; (f) fail, or permit any ERISA Affiliate to fail, to pay any required installment or any other payment required under Section 412 of the Internal Revenue Code on or before the due date for such installment or other payment; (g) amend, or permit any ERISA Affiliate to amend, a Benefit Plan resulting in an increase in current liability for the plan year such that the Borrower or any ERISA Affiliate is required to provide security to such Plan under Section 401(a)(29) of the Internal Revenue Code; (h) permit any unfunded liabilities with respect to any Foreign Pension Plan; or (i) fail, or permit any of its Subsidiaries or ERISA Affiliates to fail, to pay any required contributions or payments to a Foreign Pension Plan on or before the due date for such required installment or payment if such event results, either singly or in the aggregate, after taking into account all other such events and any liabilities associated therewith, in an aggregate liability in excess of $2,000,000. 10.13. Issuance of Equity Securities. The Borrower shall not and shall not permit any of its Subsidiaries to issue any equity Securities except equity Securities of the Borrower pursuant to Permitted Equity Securities Options and in connection with effecting the transfer of the Convac Minority Interest. 10.14. Organizational Documents. The Borrower shall not and shall not permit any of its Subsidiaries to amend, modify or otherwise change any of the terms or provisions in any of their respective Organizational Documents as in effect on the Closing Date, except (a) with respect to which written notice shall have been provided to the Administrative Agent no less than ten (10) days prior to the effective date of any such amendment, modification or change and (b) if no Event of Default or Potential Event of Default would result therefrom. 10.15. Bank Accounts. The Borrower shall not and shall not permit any of its Domestic Subsidiaries to establish or maintain any Deposit Account into which collections of Receivables and proceeds of other Collateral are deposited other than those identified as existing on the Closing Date and disclosed on Schedule 10.15 attached hereto. 10.16. Fiscal Year. The Borrower shall not and shall not permit any of its Subsidiaries (other than Banner Aerospace, Inc. in the event it becomes a Subsidiary) to change its Fiscal Year for accounting or tax purposes from a period consisting of the 12-month period ending on June 30 of each calendar year. ARTICLE XI FINANCIAL COVENANTS The Borrower covenants and agrees that so long as any Commitments are outstanding and thereafter until payment in full of all of the Obligations (other than indemnities not yet due): 11.01. Interest Coverage Ratio. The Borrower shall maintain an Interest Coverage Ratio of at least 1.5 : 1.0, as determined as of the last day of (a) April, 1996 for the period commencing on the Closing Date and ending on April 30, 1996, and (b) May, 1996 for the period commencing on April 1, 1996 and ending on May 31, 1996. 11.02. Minimum EBITDA. The Operating Units shall have a minimum EBITDA of no less than $14,000,000 for the nine (9) months ended March 31, 1996. 11.03. Capital Expenditures. The Borrower and its Subsidiaries shall not make Capital Expenditures during the term of this Agreement in excess of $6,000,000, in the aggregate. ARTICLE XII EVENTS OF DEFAULT; RIGHTS AND REMEDIES 12.01. 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 (i) when due any principal of any Loan or any Reimbursement Obligation or (ii) within one Business Day after the due date therefor, any other Obligation. (b) Breach of Certain Covenants. The Borrower shall fail duly and punctually to perform or observe any agree- ment, covenant or obligation under Sections 9.01, 9.02, 9.03, 9.04, 9.06, 9.10, 9.13 or 9.15, Article X or Article XI. (c) Breach of Representation or Warranty. Any repre- sentation or warranty made or deemed made by the Borrower to the Administrative Agent, any Lender or any Issuing Bank herein or by the Borrower or any of its Subsidiaries in any of the other Loan Documents or in any statement or certificate at any time given by any such Person pursuant to any of the Loan Documents shall be false or misleading in any material respect on the date as of which made (or deemed made). (d) Other Defaults. The Borrower shall default in the performance of or compliance with any term contained in this Agreement (other than as identified in clauses (a), (b) or (c) of this Section 12.01) or any default or event of default shall occur under any of the other Loan Documents, and such default or event of default shall continue for fifteen (15) days after the occurrence thereof. (e) Default as to Other Indebtedness. The Borrower or any of its Subsidiaries shall fail to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) with respect to any other Indebtedness (other than an Obligation) of the Borrower and its Subsidiaries aggregating $1,000,000 or more; or any breach, default or event of default shall occur, or any other condition shall exist under any instrument, agreement or indenture pertaining to any such Indebtedness, if the effect thereof is to cause an acceleration, mandatory redemption or other required repurchase of such Indebtedness, or permit the holder(s) 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 the Borrower or any of its Subsidiaries (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof. (f) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) An involuntary case shall be commenced against the Borrower or any of its Subsidiaries and the petition shall not be (A) controverted within ten (10) days after the filing thereof and (B) dismissed, stayed, bonded or discharged within sixty (60) days after commencement of the case; or a court having jurisdiction in the premises shall enter a decree or order for relief in respect of the Borrower or any of its Subsidiaries 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. (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 the Borrower or any of its Subsidiaries or over all or a substantial part of the Property of the Borrower or any of its Subsidiaries shall be entered; or an interim receiver, trustee or other custodian of the Borrower or any of its Subsidiaries or of all or a substantial part of the Property of the Borrower or any of its Subsidiaries shall be appointed or a warrant of attachment, execution or similar process against any substantial part of the Property of the Borrower or any of its Subsidiaries shall be issued and any such event shall not be stayed, dismissed, bonded or discharged within thirty (30) days after entry, appointment or issuance. (g) Voluntary Bankruptcy; Appointment of Receiver, Etc. The Borrower or any of its Subsidiaries 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 Property; or the Borrower or any of its Subsidiaries shall make any assignment for the benefit of creditors or shall be unable or fail, or admit in writing its inability, to pay its debts as such debts become due; or the board of directors (or equivalent) of the Borrower or any of its Subsidiaries (or any committee thereof) adopts any resolution or otherwise authorizes any action to approve any of the foregoing. (h) Dissolution. Any order, judgment or decree shall be entered against the Borrower or any of its Subsidiaries decreeing its involuntary dissolution or split up and such order shall remain undischarged and unstayed for a period in excess of sixty (60) days; or the Borrower or any of its Subsidiaries shall otherwise dissolve, be dissolved, or cease to exist except as specifically permitted by this Agreement. (i) Loan Documents; Failure of Security. At any time, for any reason, (i) any Loan Document ceases to be in full force and effect or the Borrower or any of its Subsidiaries party thereto seeks to repudiate its obligations thereunder or the Liens intended to be created thereby are, or the Borrower or any such Subsidiary seeks to render such Liens, invalid or unperfected, or (ii) Liens in favor of the Administrative Agent for the benefit of the Holders 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. (j) 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 the Borrower or any of its Subsidiaries or any of their respective assets involving in any case an amount in excess of $500,000 is entered and shall remain undischarged, unvacated, unbonded or unstayed for a period of thirty (30) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; provided, however, if any such judgment, writ or warrant of attachment or similar process is in excess of $2,000,000, the entry thereof shall immediately constitute an Event of Default hereunder. (k) Termination Event. Any Termination Event occurs which could reasonably be expected to subject either the Borrower or any ERISA Affiliate to liability in excess of $2,000,000. (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 Internal Revenue Code and the Administrative Agent believes that the substantial business hardship upon which the application for the waiver is based could subject either the Borrower or any ERISA Affiliate to liability in excess of $2,000,000. (m) Change in Control. A Change of Control shall occur. (n) Material Adverse Effect. An event shall occur which results in a Material Adverse Effect. (o) TFC/RHI Liquidity. The TFC/RHI Liquidity as of March 31, 1996 shall be less than $30,000,000. (p) Public Debt Cross-Default. TFC shall fail to make any payment when due on any Indebtedness of TFC owing with respect to its (i) 12 1/4% Senior Subordinated Notes due 1996, (ii) 12% Intermediate Subordinated Debentures due 2001, (iii) 13 1/8% Subordinated Debentures due 2006, or (iv) 13% Junior Subordinated Debentures due 2007; or RHI shall fail to make any payment when due on any Indebtedness of RHI with respect to the 11 7/8% Senior Subordinated Debentures due 1999; or any breach, default or event of default shall occur under any instrument, agreement or indenture pertaining to any Indebtedness of TFC or RHI described above, if the effect thereof (with or without the giving of notice or lapse of time or both) is to accelerate (as distinguished from imposing a requirement to offer to purchase), or permit the holder(s) of such Indebtedness to accelerate (as distinguished from imposing a requirement to offer to purchase), the maturity of any such Indebtedness. (q) TFC. TFC shall (i) pay dividends on or redeem any of its shares of common stock or any Indebtedness prior to its stated maturity at any time when the TFC/RHI Liquidity is less than $30,000,000 or after giving effect to such dividend or redemption the TFC/RHI Liquidity would be less than $30,000,000 or (ii) permit any of its Subsidiaries (other than RHI and any of its Subsidiaries) to, directly or indirectly, make or own any Investment in any Person, or redeem or pay prior to the scheduled maturity thereof any of the Indebtedness of TFC referenced in clause (p) above, except: (A) Investments of TFC or any such Subsidiary in Cash Equivalents; (B) Investments of TFC or any such Subsidiary which represent defaulted or extended obligations previously contracted in the ordinary course of business thereof and payable on terms necessary to effectuate the collection thereof, in an amount not to exceed at any one time outstanding, in the aggregate for TFC and all of its Subsidiaries (other than RHI and any of its Subsidiaries) $2,000,000; provided that the amount of such Investments by TFC in any one obligor shall not exceed $1,000,000 in the aggregate at any one time outstanding; (C) Investments of TFC or any such Subsidiary arising from Indebtedness between TFC and its Subsidiaries; (D) Investments of TFC in the form of notes or other Securites taken by TFC in connection with sales of assets of TFC; (E) Investments in the Capital Stock of RHI and other Persons identified on Schedule 12.01-Q; (F) Investments in an aggregate amount not to exceed $100,000 at any time, or $100,000 in the aggregate during the term of this Agreement, consisting of capital contributions made by TFC or its Subsidiaries to Wholly- Owned Subsidiaries of TFC formed after the Closing Date; (G) other Investments in an aggregate amount not to exceed $5,000,000 during the term of this Agreement. An Event of Default shall be deemed "continuing" until cured or waived in writing in accordance with Section 15.07. 12.02. Rights and Remedies. (a) Acceleration and Termination. Upon the occurrence of any Event of Default described in Sections 12.01(f) or 12.01(g), the Revolving Lenders' respective obligations to make Revolving Loans under the Revolving Credit 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 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, by written notice to the Borrower, (i) declare that the Revolving Lenders' respective obligations to make Revolving Loans under the Revolving Credit Commitments are terminated, whereupon such obligation of each such Lender to make any Revolving Loan hereunder and of each such Lender or Issuing Bank to issue or participate in any Letter of Credit not then issued shall immediately terminate, and/or (ii) declare the unpaid principal amount of and any and all accrued and unpaid interest on the Obligations to be, and the same shall thereupon be, immediately due and payable, without presentment, demand, or protest or other requirements of any kind (including, without limitation, valuation and appraisement, diligence, presentment, notice of intent to demand or accelerate and of acceleration), all of which are hereby expressly waived by the Borrower. (b) Deposit for Letters of Credit. In addition, after the occurrence and during the continuance of an Event of Default, the Borrower shall, promptly upon demand by the Administrative Agent, deliver to the Administrative Agent, Cash Collateral in such form as requested by the Administrative Agent for deposit in the Cash Collateral Account, together with such endorsements, and execution and delivery of such documents and instruments, as the Administrative Agent may request in order to perfect or protect the Administrative Agent's Lien with respect thereto, in an aggregate principal amount equal to the then outstanding Letter of Credit Obligations. (c) Rescission. If at any time after termination of the Revolving Lenders' obligations to make Revolving Loans under the Revolving Credit Commitments and/or acceleration of the maturity of the Loans, the Borrower shall pay all arrears of interest and all payments on account of principal of the Loans and Reimbursement Obligations which shall have become due otherwise than by acceleration (with interest on principal and, to the extent permitted by law, on overdue interest, at the rates specified in this Agreement) and all Events of Default and Potential Events of Default (other than nonpayment of principal of and accrued interest on the Loans due and payable solely by virtue of acceleration) shall be remedied or waived pursuant to Section 15.07, then upon the written consent of the Requisite Lenders and written notice to the Borrower, the termination of the Revolving Lenders' respective obligations to make Revolving Loans under the Revolving Credit Commitments and the respective Revolving Lenders' and Issuing Banks' obligations to participate in or issue Letters of Credit and/or the aforesaid acceleration and its consequences may be rescinded and annulled; but such action shall not affect any subsequent Event of Default or Potential Event of Default or impair any right or remedy consequent thereon. The provisions of the preceding sentence are intended merely to bind the Lenders and the Issuing Banks to a decision which may be made at the election of the Requisite Lenders; they are not intended to benefit the Borrower and do not give the Borrower the right to require the Lenders to rescind or annul any termination of the aforesaid obligations of the Revolving Lenders or Issuing Banks or any acceleration here- under, even if the conditions set forth herein are met. (d) Enforcement. The Borrower acknowledges that in the event the Borrower or any of its Subsidiaries fails to perform, observe or discharge any of their respective obligations or liabilities under this Agreement or any other Loan Document, any remedy of law may prove to be inadequate relief to the Administrative Agent, the Issuing Banks and the Lenders; therefore, the Borrower agrees that the Administrative Agent, the Issuing Banks and the Lenders shall be entitled to temporary and permanent injunctive relief in any such case without the necessity of proving actual damages. ARTICLE XIII THE ADMINISTRATIVE AGENT 13.01. Appointment. (a) Each Lender and each Issuing Bank hereby designates and appoints Citicorp as the Administrative Agent of such Lender or such Issuing Bank under this Agreement, and each Lender and each Issuing Bank hereby irrevocably authorizes the Administrative Agent to take such action on its behalf under the provisions of this Agreement 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. The Administrative Agent agrees to act as such on the express conditions contained in this Article XIII. (b) The provisions of this Article XIII are solely for the benefit of the Administrative Agent, the Lenders and Issuing Banks, and neither the Borrower nor any Subsidiary of the Borrower shall have any rights to rely on or enforce any of the provisions hereof (other than as expressly set forth in Section 13.07). In performing its functions and duties under this Agreement, the Administrative Agent shall act solely as Administrative Agent of the Lenders and the Issuing Banks and does not assume and shall not be deemed to have assumed any obligation or relationship of agency, trustee or fiduciary with or for the Borrower or any Affiliate of the Borrower. The Administrative Agent may perform any of its duties hereunder, or under the other Loan Documents, by or through its Administrative Agents or employees. 13.02. Nature of Duties. The Administrative Agent shall not have any duties or responsibilities except those expressly set forth in this Agreement or in the Loan Documents. The duties of the Administrative Agent shall be mechanical and administrative in nature. The Administrative Agent 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 Administrative Agent any obligations in respect of this Agreement or any of the other Loan Documents except as expressly set forth herein or therein. Each Lender and each Issuing Bank shall make its own independent investigation of the financial condition and affairs of the Borrower and Affiliates in connection with the making and the continuance of the Loans hereunder and with the issuance of the Letters of Credit and shall make its own appraisal of the creditworthiness of the Borrower and Guarantors initially and on a continuing basis, and the Administrative Agent 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 Administrative Agent under the terms of this Agreement). If the Administrative Agent seeks the consent or approval of the Lenders to the taking or refraining from taking of any action hereunder, the Administrative Agent shall send notice thereof to each Lender. The Administrative Agent shall promptly notify each Lender at any time that the Lenders so required hereunder have instructed the Administrative Agent to act or refrain from acting pursuant hereto. As to any matters not expressly provided for by this Agreement (including, without limitation, enforcement or collection of the Notes or any amount payable under any provision of Article IV when due) 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, Issuing Banks and Holders of Notes; provided, however, the Administrative Agent shall not be required to take any action which (i) the Administrative Agent reasonably 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 other Loan Documents or applicable law. 13.03. Rights, Exculpation, Etc. (a) Liabilities; Responsibilities. None of the Administrative Agent, any Affiliate of the Administrative Agent, or any of their respective officers, directors, employees or Administrative Agents shall be liable to any Holder for any action taken or omitted by them hereunder 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. The Administrative Agent shall not be liable for any apportionment or distribution of payments made by it in good faith pursuant to Section 4.02(b), and if any such apportionment or distribution is subsequently determined to have been made in error the sole recourse of any Holder to whom payment was due, but not made, shall be to recover from other Holders any payment in excess of the amount to which they are determined to have been entitled. The Administrative Agent shall not be responsible to any Holder for any recitals, statements, representations or warranties herein or for the execution, effectiveness, genuineness, validity, legality, enforce- ability, collectibility, or sufficiency of this Agreement or any of the other Loan Documents or the transactions contemplated thereby, or for the financial condition of the Borrower or any of its Affiliates or the Guarantors. The Administrative Agent shall not be required to make any inquiry concerning either the performance or observance of any of the terms, provisions or conditions of this Agreement or any of the other Loan Documents, or the financial condition of the Borrower or any of its Affiliates or the Guarantors, or the existence or possible existence of any Potential Event of Default or Event of Default. (b) Right to Request Instructions. The Administrative Agent may at any time request instructions from the Lenders with respect to any actions or approvals which by the terms of any of the Loan Documents the Administrative Agent is permitted or required to take or to grant, and the Administrative 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 from whom the Administrative 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 the Administrative Agent as a result of the Administrative Agent acting or refraining from acting under the Loan Documents in accordance with the instructions of the Requisite Lenders or, where required by the express terms of this Agreement, a greater proportion of the Lenders. 13.04. Reliance. The Administrative 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 (including counsel for the Borrower), independent public accountants and other experts selected by it. 13.05. Indemnification. To the extent that the Administrative Agent is required to be reimbursed and indemnified by the Borrower but is not reimbursed and indemnified by the Borrower, the Lenders will reimburse and indemnify the Administrative Agent for and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by, or asserted against it in any way relating to or arising out of the Loan Documents or any action taken or omitted by the Administrative Agent under the Loan Documents, in proportion to each Lender's Pro Rata Share. The obligations of the Lenders under this Section 13.05 shall survive the payment in full of the Loans, the Reimbursement Obligations and all other Obligations and the termination of this Agreement. 13.06. Citicorp Individually. With respect to its Pro Rata Share of the Commitments hereunder, if any, and the Loans made by it, if any, Citicorp 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 Citicorp in its individual capacity as a Lender or one of the Requisite Lenders. Citicorp and its Affiliates may accept deposits from, lend money to, and generally engage in any kind of banking, trust or other business with the Borrower or any of its Affiliates as if it were not acting as the Administrative Agent pursuant hereto. 13.07. Successor Administrative Agents. (a) Resignation. The Administrative Agent may resign from the performance of all its functions and duties hereunder at any time by giving at least thirty (30) Business Days' prior written notice to the Borrower and the Lenders. Such resignation shall take effect upon the acceptance by a successor Administrative Agent of appointment pursuant to this Section 13.07. (b) Appointment by Requisite Lenders. Upon any such notice of resignation, the Requisite Lenders shall have the right to appoint a successor Administrative 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). (c) Appointment by Retiring Administrative Agent. If a successor Administrative Agent shall not have been appointed within the thirty (30) Business Day period provided in clause (a) of this Section 13.07, the retiring Administrative Agent, with the consent 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), shall then appoint a successor Administrative Agent who shall serve as Administrative Agent until such time, if any, as the Requisite Lenders appoint a successor Administrative Agent as provided above. (d) Rights of the Successor and Retiring Administrative Agents. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Administrative Agent's resignation hereunder as Administrative Agent, the provisions of this Article XIII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Administrative Agent under this Agreement. 13.08. Relations Among Lenders. Each Lender and each Issuing Bank agrees (except as provided in Section 15.05) that it will not take any legal action, nor institute any actions or proceedings, against the Borrower or any other obligor hereunder 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, or unilaterally terminate its Commitments except in accordance with Section 12.02(a). 13.09. Concerning the Collateral and the Loan Documents. (a) Protective Advances. The Administrative Agent may from time to time, before or after the occurrence of an Event of Default, make such disbursements and advances pursuant to the Loan Documents which the Administrative Agent, in its sole discretion, deems necessary or desirable to preserve or protect the Collateral or any portion thereof or to enhance the likelihood or maximize the amount of repayment of the Loans and other Obligations ("Protective Advances"). The Administrative Agent shall notify the Borrower and each Lender in writing of each such Protective Advance, which notice shall include a description of the purpose of such Protective Advance. The Borrower agrees to pay the Administrative Agent, upon demand, the principal amount of all outstanding Protective Advances, together with interest thereon at the rate from time to time applicable to Base Rate Loans from the date of such Protective Advance until the outstanding principal balance thereof is paid in full. If the Borrower fails to make payment in respect of any Protective Advance within one (1) Business Day after the date the Borrower receives written demand therefor from the Administrative Agent, the Administrative Agent shall promptly notify each Revolving Lender and each Revolving Lender agrees that it shall thereupon make available to the Administrative Agent, in Dollars in immediately available funds, the amount equal to such Revolving Lender's Pro Rata Share of such Protective Advance. If such funds are not made available to the Administrative Agent by such Revolving Lender within one (1) Business Day after the Administrative Agent's demand therefor, the Administrative Agent will be entitled to recover any such amount from such Revolving Lender together with interest thereon at the Federal Funds Rate for each day during the period commencing on the date of such demand and ending on the date such amount is received. The failure of any Revolving Lender to make available to the Administrative Agent its Pro Rata Share of any such Protective Advance shall neither relieve any other Revolving Lender of its obligation hereunder to make available to the Administrative Agent such other Revolving Lender's Pro Rata Share of such Protective Advance on the date such payment is to be made nor increase the obligation of any other Revolving Lender to make such payment to the Administrative Agent. All outstanding principal of, and interest on, Protective Advances shall constitute Obligations secured by the Collateral until paid in full by the Borrower. (b) Authority. Each Lender and each Issuing Bank authorizes and directs the Administrative Agent to enter into the Loan Documents relating to the Collateral for the benefit of the Lenders and the Issuing Banks. Each Lender and each Issuing Bank agrees that any action taken by the Administrative Agent or the Requisite Lenders (or, where required by the express terms of this Agreement, a greater proportion of the Lenders) in accordance with the provisions of this Agreement or the other Loan Documents, and the exercise by the Administrative Agent or the Requisite Lenders (or, where so required, such greater 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 and Issuing Banks. Without limiting the generality of the foregoing, the Administrative Agent shall have the sole and exclusive right and authority to (i) act as the disbursing and collecting Administrative Agent for the Lenders and the Issuing Banks with respect to all payments and collections arising in connection with this Agreement and the Loan Documents relating to the Collateral; (ii) execute and deliver each Loan Document relating to the Collateral and accept delivery of each such agreement delivered by the Borrower, any of its Subsidiaries or any Guarantor a party thereto; (iii) act as collateral agent for the Lenders and the Issuing Banks for purposes of the perfection of all security interests and Liens created by such agreements and all other purposes stated therein; provided, however, the Administrative Agent hereby appoints, authorizes and directs the Lenders and the Issuing Banks to act as collateral sub- agent for the Administrative Agent, the Lenders and the Issuing Banks for purposes of the perfection of all security interests and Liens with respect to the Property at any time in the possession of such Lender or such Issuing Bank, including, without limitation, Deposit Accounts maintained with, and cash and Cash Equivalents held by, such Lender or such Issuing Bank; (iv) manage, supervise and otherwise deal with the Collateral; (v) 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 (vi) except as may be otherwise specifically restricted by the terms of this Agreement or any other Loan Document, exercise all remedies given to the Administrative Agent, the Lenders or the Issuing Banks with respect to the Collateral under the Loan Documents relating thereto, applicable law or otherwise. (c) Release of Collateral. (i) Each Lender and each Issuing Bank hereby directs, in accordance with the terms of this Agreement, the Administrative Agent to release any Lien held by the Administrative Agent for the benefit of the Holders: (A) against all of the Collateral, upon final and indefeasible payment in full of the Obligations and termina- tion of this Agreement; (B) against any part of the Collateral sold or disposed of by the Borrower or any of its Subsidiaries, if such sale or disposition is permitted by Section 10.02 or is otherwise consented to by the Requisite Lenders, as certified to the Administrative Agent by the Borrower in an Officer's Certificate; and/or (C) against any part of the Collateral consisting of a promissory note, upon final and indefeasible payment in full of the Indebtedness evidenced thereby. (ii) Each Lender and each Issuing Bank hereby directs the Administrative 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 13.09(c) promptly upon the effectiveness of any such release. ARTICLE XIV YIELD PROTECTION 14.01. Taxes. (a) Payment of Taxes. Any and all payments by the Borrower hereunder or under any Note or other document evidencing any Obligations shall be made, in accordance with Section 4.02, free and clear of and without reduction for any and all present or future taxes, levies, imposts, deductions, charges, withholdings, and all stamp or documentary taxes, excise taxes, ad valorem taxes and other taxes imposed on the value of the Property, charges or levies which arise from the execution, delivery or registration, or from payment or performance under, or otherwise with respect to, any of the Loan Documents or the Commitments and all other liabilities with respect thereto excluding, in the case of each Lender, each Issuing Bank and the Administrative Agent, taxes imposed on or measured by net income or overall gross receipts and capital and franchise taxes imposed on it by (i) the United States, (ii) the Governmental Authority of the jurisdiction in which such Lender's Applicable Lending Office is located or any political subdivision thereof or (iii) the Governmental Authority in which such Person is organized, managed and controlled or any political subdivision thereof (all such non-excluded taxes, levies, imposts, deductions, charges and withholdings being hereinafter referred to as "Taxes"). If the Borrower shall be required by law to withhold or deduct any Taxes from or in respect of any sum payable hereunder or under any such Note or document to any Lender, any Issuing Bank or the Administrative Agent, (x) the sum payable to such Lender, Issuing Bank, or the Administrative Agent shall be increased as may be necessary so that after making all required withholding or deductions (including withholding or deductions applicable to additional sums payable under this Section 14.01) 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 withholding or deductions been made, (y) the Borrower shall make such withholding 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. (b) Indemnification. The Borrower will indemnify each Lender, each Issuing Bank and the Administrative Agent against, and reimburse each on demand for, the full amount of all Taxes (including, without limitation, any Taxes imposed by any Governmental Authority on amounts payable under this Section 14.01 and any additional income or franchise taxes resulting therefrom) incurred or paid by such Lender, such Issuing Bank or the Administrative Agent (as the case may be) or any of their respective Affiliates and any liability (including penalties, interest, and out- of-pocket expenses paid to third parties) arising therefrom or with respect thereto, whether or not such Taxes were lawfully payable. A certificate as to any additional amount payable to any Person under this Section 14.01 submitted by it to the Borrower shall, absent manifest error, be final, conclusive and binding upon all parties hereto. Each Lender and each Issuing Bank agrees, within a reasonable time after receiving a written request from the Borrower, to provide the Borrower and the Administrative Agent with such certificates as are reasonably required, and take such other actions as are reasonably necessary to claim such exemptions as such Lender or such Issuing Bank may be entitled to claim in respect of all or a portion of any Taxes which are otherwise required to be paid or deducted or withheld pursuant to this Section 14.01 in respect of any payments under this Agreement or under the Notes. (c) Receipts. Within thirty (30) days after the date of any payment of Taxes by the Borrower, it will furnish to the Administrative Agent, at its address referred to in Section 15.08, the original or a certified copy of a receipt evidencing payment thereof. (d) 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 and the Administrative Agent on the Closing Date or the date on which such Lender becomes a Lender pursuant to Section 15.01 hereof a true and accurate certif- icate 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 (I) 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)), (II) 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)), or (III) due to such Lender's not being a "bank" as such term is used in Section 881(c)(3)(A) of the Internal Revenue Code (in which case, the certificate shall be accompanied by two accurate and complete original signed copies of IRS Form W-8 (or any successor or substitute form or forms)). (ii) Each Lender further agrees to deliver to the Bor- rower and the Administrative Agent from time to time, a true and accurate certificate executed in duplicate by a duly authorized officer of such Lender before or promptly upon the occurrence of any event requiring a change in the most recent certificate previously delivered by it to the Borrower and the Administrative Agent pursuant to this Section 14.01(d). Each certificate required to be delivered pursuant to this Section 14.01(d)(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 14.01(a) because it is entitled to recover the full amount of any such deduction or withholding from a source other than the Borrower; or (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 and that it is not capable of recovering the full amount of the same from a source other than the Borrower. Each Lender agrees to deliver to the Borrower and the Administrative Agent further 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 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 that it is not capable of receiving payments hereunder and under the Notes without any deduction or withholding of United States federal income tax. 14.02. Increased Capital. If after the date hereof any Lender or Issuing Bank determines that (i) the adoption or implementation of or any change in or in the interpretation or administration of any law or regulation or any guideline or request from any central bank or other Governmental Authority or quasi-governmental authority exercising jurisdiction, power or control over any Lender, Issuing Bank or banks or financial institutions generally (whether or not having the force of law), compliance with which affects or would affect the amount of capital required or expected to be maintained by such Lender or Issuing Bank or any Person controlling such Lender or 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 the existence of any Lender's obligation to make Loans or (B) the issuance or maintenance by any Issuing Bank of, or the existence of any Issuing Bank's obligation to issue, Letters of Credit, then, in any such case, upon written demand by such Lender or 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 Issuing Bank, from time to time as specified by such Lender or Issuing Bank, additional amounts sufficient to compensate such Lender or Issuing Bank or such Person 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. 14.03. Changes; Legal Restrictions. If after the date hereof any Lender or Issuing Bank determines that the adoption or implementation of or any change in or in the interpretation or administration of any law or regulation or any guideline or request from any central bank or other Governmental Authority or quasi-governmental authority exercising jurisdiction, power or control over any Lender, Issuing Bank or over banks or financial institutions generally (whether or not having the force of law), compliance with which: (a) does or will subject a Lender or an Issuing Bank (or its Applicable Lending Office or Eurodollar Affiliate) to charges (other than taxes) of any kind which such Lender or Issuing Bank reasonably determines to be applicable to the Commitments of the Lenders and/or the Issuing Banks to make Eurodollar Rate Loans or issue and/or participate in Letters of Credit or change the basis of taxation of payments to that Lender or Issuing Bank of principal, fees, interest, or any other amount payable hereunder with respect to Eurodollar Rate Loans or Letters of Credit; or (b) does or will impose, modify, or hold applicable, in the determination of a Lender or an Issuing Bank, 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 Issuing Bank; and the result of any of the foregoing is to increase the cost to that Lender or Issuing Bank of making, renewing or maintaining the Loans or its Commitments with respect to, 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 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 Issuing Bank, from time to time as specified by such Lender or Issuing Bank, such amount or amounts as may be necessary to compensate such Lender or 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 brief summary of the basis for such demand. Such statement shall be conclusive and binding for all purposes, absent manifest error. 14.04. Illegality. (i) If at any time any Lender determines (which determination shall, absent manifest error, be final and conclusive and binding upon all parties) that the making or continuation of or conversion into any Eurodollar Rate Loan has become unlawful or impermissible by compliance by that Lender with any law, governmental rule, regulation or order of any Governmental Authority (whether or not having the force of law and whether or not failure to comply therewith would be unlawful or would result in costs or penalties), then, and in any such event, such Lender may give notice of that determination, in writing, to the 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 14.04(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 appli- cable 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 14.04(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. 14.05. Compensation. In addition to all amounts required to be paid by the Borrower pursuant to Section 5.01, 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 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 Conver- sion/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 5.01(c), including, without limitation, pursuant to Section 5.02(e), (ii) if for any reason any Eurodollar Rate Loan is prepaid (including, without limitation, mandatorily pursuant to Section 4.01) on a date which is not the last day of the applicable Eurodollar Interest Period, (iii) as a consequence of a required conversion of a Eurodollar Rate Loan to a Base Rate Loan as a result of any of the events indicated in Section 5.02(e), or (iv) as a consequence of any failure by the Borrower to repay Eurodollar Rate Loans when required by the terms of this Agreement. 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. 14.06. Limitation on Additional Amounts Payable by the Borrower. Notwithstanding the provisions of Section 14.01(a), the Borrower shall not be required to pay any additional amounts hereunder to a Lender or Issuing Bank if (a) the obligation to pay such additional amounts would not have arisen but for a failure by the Lender or Issuing Bank to comply with the requirements described in Section 14.01 or (b) the Lender or Issuing Bank shall not have furnished the Borrower with such forms or shall not have taken such other action as reasonably may be available to it under applicable tax laws and any applicable tax treaty to obtain an exemption from, or reduction (to the lowest applicable rate) of withholding of such United States federal income tax; provided, however, the Borrower's obligation to pay such additional amounts shall be reinstated upon receipt of such forms or evidence that action with respect to obtaining such exemption or reduction has been taken. 14.07. Change in Lending Office. Any Lender claiming any additional amounts payable pursuant to Section 14.01 shall use reasonable efforts (consistent with its internal policy and legal and regulatory restrictions) to change the Domestic Lending Office designated by it for purposes of this Agreement to a Domestic Lending Office in another jurisdiction, if the making of such a change would avoid the need for, or reduce the amount of, any such additional amounts which may thereafter accrue and would not, in the judgment of such Lender, be otherwise disadvantageous to such Lender. ARTICLE XV MISCELLANEOUS 15.01. Assignments and Participations. (a) Assign- ments. No assignments or participations of any Lender's rights or obligations under this Agreement shall be made except in accordance with this Section 15.01. Each Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all of its rights and obligations with respect to the Term Loans, the Revolving Loans and the Letters of Credit) in accordance with the provisions of this Section 15.01. (b) Limitations on Assignments. Each assignment shall be subject to the following conditions: (i) each such assignment may be on a non-pro-rata basis, but shall be of a constant, and not a varying, ratable percentage of all of the assigning Lender's rights and obligations under this Agreement which are subject to such assignment and, in the case of a partial assignment to a Person which is not a Lender, shall be in a minimum principal amount aggregating $5,000,000, (ii) each such assignment shall be to an Eligible Assignee consented to by the Issuing Banks, which consent shall not be unreasonably withheld or delayed, (iii) the Borrower shall have the right to approve each such Eligible Assignee which is not an Affiliate of a Lender, which approval shall not be unreasonably withheld or delayed and (iv) the parties to each such assignment shall execute and deliver to the Administrative Agent, for its acceptance and recording in the Register, an Assignment and Acceptance. Upon such execution, delivery, acceptance and recording in the Register, from and after the effective date specified in each Assignment and Acceptance and agreed to by the Administrative Agent, (A) 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, (B) the assigning Lender shall, to the extent that rights and obligations hereunder have been assigned by it pursuant to such Assignment and Acceptance, relinquish its rights and be released from its obligations under this Agreement (and, in the case of an Assignment and Acceptance covering all or the remaining portion of such assigning Lender's rights and obligations under this Agreement, the assigning Lender shall cease to be a party hereto), and (C) the Borrower shall execute and deliver to the assignee thereunder one or more Notes, as applicable, evidencing its obligations to such assignee with respect to the Loans. (c) The Register. The Administrative Agent shall maintain at its address referred to in Section 15.08 a copy of each Assignment and Acceptance delivered to and accepted by it and a register (the "Register") for the recordation of the names and addresses of the Lenders and the Commitment under each Loan of, and principal amount of the Loans under each facility owing to, 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 entries in the Register shall be conclusive and binding for all purposes, absent manifest error, and the Borrower and each of its Subsidiaries, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder for all purposes of this Agreement. 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. (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 $3,000 (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, (i) accept such Assignment and Acceptance, (ii) record the information 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 other financial institutions 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 and its undivided interest in the Letters of Credit); 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 Administrative Agent 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) increase in the Commitment of the Lender from whom such participant purchased a participation, (B) reduction of the principal of, or rate or amount of interest on the Loans(s) subject to such participation (other than by the payment or prepayment thereof), (C) postponement of any date fixed for any payment of principal of, or interest on, the Loan(s) subject to such participation and (D) release of any guarantor of the Obligations or all or a substantial portion of the Collateral except as provided in Section 13.09(c). (f) 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; provided, however, that each participant shall be the beneficiary of the provisions of Article XIV to the extent amounts payable thereunder do not exceed the amounts payable thereunder to the Lender from which such participation has been purchased. (g) 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 (including, without limitation, Obligations owing to it and any Notes held by it) in favor of any Federal Reserve bank in accordance with Regulation A of the Federal Reserve Board. (h) Assignments by Citicorp. If Citicorp ceases to be a Lender under this Agreement by virtue of any assignment made pursuant to this Section 15.01, then, as of the effective date of such cessation, Citibank's obligations to issue Letters of Credit pursuant to Section 3.01 shall terminate and Citibank shall be an Issuing Bank hereunder only with respect to outstanding Letters of Credit issued prior to such date. (i) Information Regarding the Borrower. Any Lender may, in connection with any assignment or participation or proposed assignment or participation pursuant to this Section 15.01, disclose to the assignee or participant or proposed assignee or participant, any information relating to the Borrower or its Subsidiaries furnished to such Lender by the Administrative 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 15.20 the confidentiality of any confidential information described therein. 15.02. Expenses. (a) Generally. The Borrower agrees upon demand to pay, or reimburse the Administrative Agent for, all of the Administrative Agent's reasonable internal and external 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 Sidley & Austin, local legal counsel, auditors, accountants, appraisers, printers, insurance and environmental advisers, and other consultants and Administrative Agents) incurred by the Administrative Agent in connection with (i) the Administrative Agent's review and investigation of the Borrower and its Affiliates and the Collateral in connection with the preparation, negotiation, and execution of the Loan Documents and the Administrative Agent's periodic reviews and audits of the Borrower; (ii) the preparation, negotiation, execution and interpretation of this Agreement (including, without limitation, the satisfaction or attempted satisfaction of any of the conditions set forth in Article VI) and the other Loan Documents and the making of the Loans hereunder; (iii) the creation, perfection or protection of the Liens under the Loan Documents (including, without limitation, any reasonable fees and expenses for local counsel in various jurisdictions); (iv) the ongoing administration of this Agreement, the other Loan Documents and the Loans, including consultation with attorneys in connection therewith and with respect to the Administrative Agent's rights and responsibilities under this Agreement and the other Loan Documents; (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 Property, the Borrower, any of its Subsidiaries, 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 the Administrative Agent is served or deposition or other proceeding in which the Administrative Agent is called to testify, in each case, relating in any way to the Obligations, the Property, the Borrower, any of its Subsidiaries, 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 the Administrative Agent, the Issuing Banks and the Lenders upon demand for all out-of-pocket costs and expenses, including, without limitation, reasonable attorneys' fees (including allocated costs of internal counsel and costs of settlement) incurred by the Administrative Agent, any Issuing Bank or any Lender after the occurrence of an Event of Default (i) in enforcing any Loan Document or Obligation 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 or any of its Subsidiaries 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. 15.03. Indemnity. The Borrower further agrees (a) to defend, protect, indemnify, and hold harmless the Administrative Agent and each and all of the Lenders and Issuing Banks and each of their respective officers, direc- tors, employees, attorneys and Administrative Agents (including, without limitation, those retained in connection with the satisfaction or attempted satisfaction of any of the conditions set forth in Article VI) (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 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 (i) this Agreement or the other Loan Documents, or any act, event or transaction related or attendant thereto or to the transfers evidenced by the Transfer Documents, the making of the Loans and the issuance of and participation in Letters of Credit hereunder, the management of such Loans or Letters of Credit, the use or intended use of the proceeds of the Loans or Letters of Credit hereunder, or any of the other transactions contemplated by any of the Loan Documents, or (ii) any Liabilities and Costs relating to any violation by the Borrower, its Subsidiaries, or the Guarantors, or their respective predecessors-in-interest of any Environmental, Health or Safety Requirements of Law, the past, present or future operations of the Borrower, its Subsidiaries, any Guarantor, or any of their respective predecessors in interest, or, the past, present or future environmental, health or safety condition of any respective past, present or future Property of the Borrower, any of its Subsidiaries, or any Guarantor, the presence of asbestos-containing materials at any respective past, present or future Property of the Borrower, any of its Subsidiaries, or any Guarantor, or the Release or threatened Release of any Contaminant into the environment by the Borrower, its Subsidiaries, any Guarantor, or their respective predecessors-in-interest, or the Release or threatened Release of any Contaminant into the environment from or at any facility to which the Borrower, any of its Subsidiaries, or any Guarantor, or their respective predecessors-in-interest sent or directly arranged the transport of any Contaminant (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 and (b) not to assert any claim against any of the Indemnified Parties on any theory of liability for special, indirect, consequential or punitive damages arising out of, or in any way in connection with, the Commitments, the Obligations or any other matters governed by this Agreement and/or the other Loan Documents. 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. The Administrative Agent, Lenders and the Issuing Banks agree to notify the Borrower of the institution or assertion of any Indemnified Matter, but the parties hereto hereby agree that the failure to so notify the Borrower shall not release the Borrower from its obligations hereunder. 15.04. 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 8.01 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 with the agreement of its independent certified public accountants and such changes result in a change in the method of calculation of any of the covenants, standards or terms found in Article IX, Article X, and Article XI, 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 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. 15.05. 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, each Issuing Bank and any Affiliate of any Lender or Issuing Bank is hereby authorized by the Borrower at any time or 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 trust accounts)) and any other Indebtedness at any time held or owing by such Lender, Issuing Bank or any of their 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, Issuing Bank or any of their Affiliates, including, but not limited to, all Loans and Letters of Credit and all claims of any nature or description arising out of or in connection with this Agreement, irrespective of whether or not (i) such Lender or Issuing Bank 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 to be due and payable as permitted by Article XII and even though such Obligations may be contingent or unmatured. Each Lender and each Issuing Bank 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, any of its Subsidiaries, or Guarantor now or hereafter maintained with such Lender, Issuing Bank or any Affiliate of such Lender or Issuing Bank. 15.06. 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 Section 5.03 and Article XIV), 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 described in Section 5.03 and Article XIV) 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 15.06 may, to the fullest extent permitted by law, exercise all its rights of payment (including, subject to Section 15.05, 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. 15.07. Amendments and Waivers. (a) General Provisions. Unless otherwise provided for or required in this Agreement, no amendment or modification of any provision of this Agreement or any of the other Loan Documents shall be effective without the written agreement of the Requisite Lenders (which the Requisite Lenders shall have the right to grant or withhold in their sole discretion) and the Borrower. No termination or waiver of any provision of this Agreement or any of the other Loan Documents, or consent to any departure by the Borrower therefrom, shall be effective without the written concurrence of the Requisite Lenders, which the Requisite Lenders shall have the right to grant or withhold in their sole discretion. All amendments, modifications, waivers and consents not specifically reserved to Lenders, Issuing Banks, and the Administrative Agent in Section 15.07(b), Section 15.07(c) and in other provisions of this Agreement shall require only the approval of the Requisite Lenders. 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. (b) Amendments, Consents and Waivers by Super- Majority Lenders. Any amendment, modification, termination, waiver or consent with respect to any of the provisions of Section 4.01(b) of this Agreement shall be effective only by a written agreement signed by the Super-Majority Lenders. (c) Amendments, Consents and Waivers by All Lenders. Any amendment, modification, termination, waiver or consent with respect to any of the following provisions of this Agreement shall be effective only by a written agreement, signed by each Lender: (i) increase in the amount of any of the Commitments of such Lender, (ii) reduction of the principal of, rate or amount of interest on the Loans, the Reimbursement Obligations, or any fees or other amounts payable to the Lenders or Issuing Banks (other than by the payment or prepayment thereof), (iii) postponement of the Revolving Credit Termination Date, the Term Loan Termination Date or any date fixed for any payment of principal of, or interest on, the Loans, the Reimbursement Obligations or any fees or other amounts payable to the Lenders or the Issuing Banks, (iv) the orders of priority of applications set forth in Section 4.01, (v) change in the definitions of Revolving Credit Commitments or Term Loan Commitments, (vi) waiver of any of the conditions specified in Sections 6.01 or 6.02 or the covenant set forth in Section 9.15, (vii) release of any guarantor of the Obligations, the Lien on the CM Notes or CM Letter of Credit, or all or a substantial portion of the Collateral (except as provided in Section 13.09(c)), (viii) change in the (A) definitions of Requisite Lenders Super-Majority Lenders or (B) the aggregate Pro Rata Share of the Lenders which shall be required for the Lenders or any of them to take action under this Agreement or the other Loan Documents, (ix) amendment of Section 15.01 or this Section 15.07, (x) assignment of any right or interest in or under this Agreement or any of the other Loan Documents by the Borrower, and (xi) waiver of any Event of Default described in Sections 12.01(a), (f), (g), (h), and (n). (d) Administrative Agent Authority. The Administrative Agent may, but shall have no obligation to, with the written concurrence of any Lender, execute amendments, modifications, waivers or consents on behalf of that Lender. Notwithstanding anything to the contrary contained in this Section 15.07, no amendment, modification, waiver or consent shall affect the rights or duties of the Administrative Agent under this Agreement or the other Loan Documents, unless made in writing and signed by the Administrative Agent in addition to the Lenders required above to take such action; and the order of priority set forth in clauses (A) through (C) of Section 4.02(b) may be changed only with the prior written consent of the Administrative Agent. Notwithstanding anything herein to the contrary, in the event that the Borrower shall have requested, in writing, that any Lender agree to an amendment, modification, waiver or consent with respect to any particular provision or provisions of this Agreement or the other Loan Documents, and such Lender shall have failed to state, in writing, that it either agrees or disagrees (in full or in part) with all such requests (in the case of its statement of agreement, subject to satisfactory documentation and such other conditions it may specify) within thirty (30) days after such request, then such Lender shall be deemed to not have approved such amendment, modification, waiver or consent and the Administrative Agent shall thereupon determine whether the Lenders required above to take the requested action have approved the same within the required time and communicate such determination to the Borrower and the Lenders. 15.08. Notices. Unless otherwise specifically pro- vided herein, any notice or other communication herein required or permitted to be given shall be in writing and may be personally served, sent by facsimile transmission or 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 facsimile transmission, or four (4) Business Days after deposit in the United States mail with postage prepaid and properly addressed. Notices to the Administrative Agent pursuant to Articles II, IV or XIII shall not be effective until received by the Administrative Agent. For the purposes hereof, the addresses of the parties hereto (until notice of a change thereof is delivered as provided in this Section 15.08) shall be as set forth below each party's name on the signature pages hereof or the signature page of any applicable Assignment and Acceptance, or, as to each party, at such other address as may be designated by such party in a written notice to all of the other parties to this Agreement. 15.09. Survival of Warranties and Agreements. All representations and warranties made herein and all covenants and other 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, the issuance and discharge of Letters of Credit hereunder 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 the Administrative Agent, any of the Issuing Banks or any of the Lenders may have come into possession or control of any of the Borrower's or its Subsidiaries' Property. 15.10. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or delay on the part of the Administrative Agent, any Lender or any Issuing Bank in the exercise of any power, right or privilege under any of the 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 the Loan Documents are cumulative to and not exclusive of any rights or remedies otherwise available. 15.11. Marshalling; Payments Set Aside. None of the Administrative Agent, any Lender or any Issuing Bank shall be under any obligation to marshall 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 Administrative Agent, the Lenders or the Issuing Banks or any of such Persons receives payment from the proceeds of the Collateral or exercises its rights of setoff, and such payment or payments or the proceeds of such enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party, then to the extent of such recovery, the obligation or part thereof originally intended to be satisfied, and all Liens, right and remedies therefor, shall be revived and continued in full force and effect as if such payment had not been made or such enforcement or setoff had not occurred. 15.12. Severability. In case any provision in or obligation under this Agreement 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. 15.13. Headings. Section headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement or be given any substantive effect. 15.14. 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. 15.15. Limitation of Liability. No claim may be made by the Borrower, any Lender, any Issuing Bank, the Administrative Agent or any other Person against the Administrative Agent, any other Issuing Bank 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 any act, omission or event occurring in connection therewith; and each of the Borrower, each Lender, each Issuing Bank and the Administrative Agent hereby waives, releases and agrees not to sue upon any such claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor. 15.16. Successors and Assigns. This Agreement and the other Loan Documents shall be binding upon the parties hereto and their respective successors and assigns and shall inure to the benefit of the parties hereto and the successors and permitted assigns of the Lenders and the Issuing Banks. The rights hereunder of the Borrower, or any interest therein, may not be assigned without the written consent of all Lenders. 15.17. Certain Consents and Waivers of the Borrower. (a) Personal Jurisdiction. (i) EACH OF THE ADMINISTRATIVE AGENT, THE LENDERS, THE ISSUING BANKS 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 OR ANY OTHER LOAN DOCUMENT, 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 TFC, 110 EAST 59TH STREET, 30TH FLOOR, NEW YORK, NEW YORK 10022, AS ITS AGENT (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 ADMINISTRATIVE AGENT, THE LENDERS, THE ISSUING BANKS 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 THE ADMINISTRATIVE AGENT SHALL HAVE THE RIGHT TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION TO ENABLE THE ADMINISTRATIVE AGENT, THE ISSUING BANKS 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 THE ADMINISTRATIVE AGENT, ANY ISSUING BANK OR ANY LENDER. THE BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY ISSUING BANK TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY ISSUING BANK. THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE ADMINISTRATIVE AGENT, ANY ISSUING BANK 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 THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO THE PROCESS AGENT OR THE BORROWER'S NOTICE ADDRESS SPECIFIED BELOW, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. 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 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 THE ADMINISTRATIVE AGENT TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS OF ANY OTHER JURISDICTION. (c) Waiver of Jury Trial. EACH OF THE ADMINISTRATIVE AGENT, LENDERS, ISSUING BANKS, AND THE BORROWER IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT. ANY OF THE BORROWER, THE ADMINISTRATIVE AGENT, LENDERS, OR ISSUING BANKS 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. 15.18. Counterparts; Effectiveness; Inconsistencies. This Agreement and any amendments, waivers, consents, or supplements hereto may be executed in counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument. This Agreement shall become effective against the Borrower, each Lender, each Issuing Bank and the Administrative Agent on the Closing Date. 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 of this Agreement are actually inconsistent with the terms and conditions of any other Loan Document, this Agreement shall govern. 15.19. Limitation on Agreements. All agreements between the Borrower, the Administrative Agent, each Lender and each Issuing Bank in the Loan Documents are hereby expressly limited so that in no event shall any of the Loans or other amounts payable by the Borrower under any of the Loan Documents be directly or indirectly secured (within the meaning of Regulation U) by Margin Stock. 15.20. Confidentiality. Subject to Section 15.01(f), the Lenders and the Issuing Banks 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 or such Issuing Bank's cus- tomary 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 15.20. In no event shall any Lender or any Issuing Bank be obligated or required to return any 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. Any and all confidentiality agreements entered into between any Lender or any Issuing Bank and the Borrower shall survive the execution of this Agreement. 15.21. 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. 15.22. Advice of Counsel. The Borrower and each Lender and Issuing Bank understand that the Administrative Agent's counsel represents only the Administrative Agent's and its Affiliates' interests and that the Borrower, other Lenders and other Issuing Banks are advised to obtain their own counsel. The Borrower represents and warrants to the Administrative Agent and the other Holders that it has discussed this Agreement with its counsel. IN WITNESS WHEREOF, this Agreement has been duly exe- cuted as of the date first above written. BORROWER: FAIRCHILD HOLDING CORP. By: Karen L. Schneckenburger Title: Vice President & Treasurer Notice Address: 300 West Service Road Chantilly, Virginia 22021 Attn: Michael T. Alcox Telecopier No. (703) 478-5915 and Donald E. Miller Telecopier No. (703) 478-5775 with a copy to: Cahill Gordon & Reindel Eighty Pine Street New York, New York 10005-1702 Attn: James J. Clark Telecopier No. (212) 269-5420 ADMINISTRATIVE AGENT: CITICORP USA, INC., as Administrative Agent By: Marjorie Futornick Title: Vice President Notice Address: Citicorp USA, Inc. c/o Citicorp Securities, Inc. 200 South Wacker Drive 31st Floor Chicago, Illinois 60606 Attn: Colin M. Cohen Telecopier No. (312) 993-1050 with a copy to: Sidley & Austin One First National Plaza Chicago, Illinois 60603 Attn: DeVerille A. Huston Telecopier No. (312) 853-7036 ISSUING BANK: CITIBANK, N.A. By: David L. Hains Title: Vice President Notice Address: Citibank, N.A. 399 Park Avenue 10th Floor, Zone 3 New York, New York 10043 Attn: Gail Rodriguez Telecopier No. (212) 793-4806 LENDERS: CITICORP USA, INC. By: Marjorie Futornick Title: Vice President Notice Address: Citicorp USA, Inc. c/o Citicorp Securities, Inc. 200 South Wacker Drive 31st Floor Chicago, Illinois 60606 Attn: Colin M. Cohen Telecopier No. (312) 993-1050 Domestic Lending Office and Eurodollar Lending Office or Eurodollar Affiliate: Citicorp USA, Inc. c/o Citibank, N.A. 399 Park Avenue 10th Floor, Zone 3 New York, New York 10043 Attn: Gail Rodriguez Telecopier No. (212) 793-4806 Pro Rata Share: 43.75% Term Loan Commitment: $13,125,000 Revolving Credit Commitment: $21,875,000 NATIONSBANK, N.A. By: John D. Mindnick Title: Senior Vice President Notice Address and Domestic and Eurodollar Lending Office: NationsBank, N.A. 6610 Rockledge Drive 1st Floor Bethesda, Maryland 20817-1876 Attn: John Mindnich Telecopier No. (301) 571-0719 Pro Rata Share: 18.75% Term Loan Commitment: $ 5,625,000 Revolving Credit Commitment: $ 9,375,000 THE LONG-TERM CREDIT BANK OF JAPAN, LTD. By: Brady S. Sadek Title: Vice President & Deputy General Manager Notice Address and Domestic and Eurodollar Lending Office: The Long-Term Credit Bank of Japan, Ltd. 190 South LaSalle Street Suite 800 Chicago, Illinois 60603 Attn: Kris Grosshans Telecopier No. (312) 704-8505 Pro Rata Share: 18.75% Term Loan Commitment: $ 5,625,000 Revolving Credit Commitment: $ 9,375,000 CAISSE NATIONALE DE CREDIT AGRICOLE By: David Bouhl F.V.P Title: Head of Corporate Banking, Chicago Notice Address and Domestic Eurodollar Lending Office: Caisse Nationale de Credit Agricole 55 East Monroe Street Suite 4700 Chicago, Illinois 60603 Attn: Roger H. Weis Telecopier No. (312) 372-3724 Pro Rata Share: 6.25% Term Loan Commitment: $ 1,875,000 Revolving Credit Commitment: $ 3,125,000 THE BANK OF NOVA SCOTIA By: F.C.H. Ashby____________ Title: Senior Manager Loan Operations Notice Address and Domestic and Eurodollar Lending Office: The Bank of Nova Scotia 181 West Madison Street Suite 3700 Chicago, Illinois 60602-4514 Attn: Michael Manick Telecopier No. (312) 201-4108 Pro Rata Share: 6.25% Term Loan Commitment: $ 1,875,000 Revolving Credit Commitment: $ 3,125,000 UNION BANK, as Lender and Issuing Bank By: Kristine A. Kasselman Title: Vice President Notice Address and Domestic and Eurodollar Lending Office: Union Bank Multi-National Banking Dept. 445 S. Figueroa St. 12th Floor Los Angeles, California 90071 Attn: Patrick Cassidy Telecopier No. (213) 236-6701 and to: Commercial Portfolio Administration 445 S. Figueroa St. 16th Floor Los Angeles, California 90071 Attn: Kristine Kasselman Telecopier No. (213) 236-7814 Pro Rata Share: 6.25% Term Loan Commitment: $1,875,000 Revolving Credit Commitment $3,125,000 TABLE OF CONTENTS ARTICLE I DEFINITIONS 1.01. Certain Defined Terms 1 1.02. Computation of Time Periods 30 1.03. Accounting Terms 31 1.04. Other Terms 31 ARTICLE II AMOUNTS AND TERMS OF LOANS 2.01. Term Loans 32 2.02. Revolving Credit Facility 33 2.03. Authorized Officers and Administrative Agents 36 2.04. Use of Proceeds of Loans 36 ARTICLE III LETTERS OF CREDIT 3.01. Letters of Credit 37 3.02 Transitional Provisions 44 3.03 Obligations Several 44 ARTICLE IV PAYMENTS AND PREPAYMENTS 4.01. Prepayments; Reductions in Commitments 45 4.02. Payments 47 4.03. Promise to Repay; Evidence of Indebtedness 52 4.04. Proceeds of Collateral; Concentration Account Arrangements 52 4.05. Cash Collateral Account 54 4.06. Post-Default Withdrawals from the Concentration Account and Cash Collateral Account 55 ARTICLE V INTEREST AND FEES 5.01. Interest on the Loans and other Obligations 57 5.02. Special Provisions Governing Eurodollar Rate Loans 59 5.03. Fees 61 ARTICLE VI CONDITIONS TO LOANS AND LETTERS OF CREDIT 6.01. Conditions Precedent to the Initial Loans and Letters of Credit 64 6.02. Conditions Precedent to All Subsequent Loans and Letters of Credit 66 ARTICLE VII REPRESENTATIONS AND WARRANTIES 7.01. Representations and Warranties of the Borrower 68 ARTICLE VIII REPORTING COVENANTS 8.01. Financial Statements; Communications with Accountants 78 8.02. Events of Default 79 8.03. Lawsuits 79 8.04. Declaration of Dividends and Other Distributions 80 8.05. TFC/RHI Liquidity 80 8.06. Environmental Notices 80 8.07. Other Reports 81 8.08. Other Information 81 ARTICLE IX AFFIRMATIVE COVENANTS 9.01. Corporate Existence, Etc 82 9.02. Corporate Powers; Conduct of Business 82 9.03. Compliance with Laws, Etc. 82 9.04. Payment of Taxes and Claims; Tax Consolidation 82 9.05. Insurance 83 9.06. Inspection of Property; Books and Records; Discussions 83 9.07. Insurance and Condemnation Proceeds 84 9.08. ERISA Compliance 84 9.09. Foreign Employee Benefit Plan Compliance 85 9.10. Collection Accounts 85 9.11. Maintenance of Property 85 9.12. Condemnation 85 9.13. Tax Allocation Agreement 85 9.14. Performance of Material Contracts 85 9.15. CM Note and CM Letter of Credit 86 9.16. Real Property 86 ARTICLE X NEGATIVE COVENANTS 10.01. Indebtedness 87 10.02. Sales of Assets 88 10.03. Liens 89 10.04. Investments 89 10.05. Accommodation Obligations 90 10.06. Restricted Junior Payments 90 10.07. Conduct of Business 91 10.08. Transactions with Shareholders and Affiliates 91 10.09. Restriction on Fundamental Changes 92 10.10. Sales and Leasebacks 92 10.11. Margin Regulations; Securities Laws 92 10.12. ERISA 92 10.13. Issuance of Equity Securities 93 10.14. Organizational Documents 94 10.15. Bank Accounts 94 10.16. Fiscal Year 94 ARTICLE XI FINANCIAL COVENANTS 11.01. Interest Coverage Ratio 95 11.02. Minimum EBITDA 95 11.03. Capital Expenditures 95 ARTICLE XII EVENTS OF DEFAULT; RIGHTS AND REMEDIES 12.01. Events of Default 96 12.02. Rights and Remedies 100 ARTICLE XIII THE ADMINISTRATIVE AGENT 13.01. Appointment 102 13.02. Nature of Duties 102 13.03. Rights, Exculpation, Etc. 103 13.04. Reliance 104 13.05. Indemnification 104 13.06. Citicorp Individually 104 13.07. Successor Administrative Agents 105 13.08. Relations Among Lenders 105 13.09. Concerning the Collateral and the Loan Documents 106 ARTICLE XIV YIELD PROTECTION 14.01. Taxes 109 14.02. Increased Capital 111 14.03. Changes; Legal Restrictions 112 14.04. Illegality 113 14.05. Compensation 113 14.06. Limitation on Additional Amounts Payable by the Borrower 114 14.07. Change in Lending Office 114 ARTICLE XV MISCELLANEOUS 15.01. Assignments and Participations 115 15.02. Expenses 117 15.03. Indemnity 119 15.04. Change in Accounting Principles 120 15.05. Setoff 120 15.06. Ratable Sharing 121 15.07. Amendments and Waivers 121 15.08. Notices 123 15.09. Survival of Warranties and Agreements 124 15.10. Failure or Indulgence Not Waiver; Remedies Cumulative124 15.11. Marshalling; Payments Set Aside 124 15.12. Severability 125 15.13. Headings 125 15.14. Governing Law 125 15.15. Limitation of Liability 125 15.16. Successors and Assigns 125 15.17. Certain Consents and Waivers of the Borrower 125 15.18. Counterparts; Effectiveness; Inconsistencies 127 15.19. Limitation on Agreements 127 15.20. Confidentiality 127 15.21. Entire Agreement 128 15.22. Advice of Counsel 128 EXHIBITS Exhibit A -- Form of Assignment and Acceptance Exhibit B -- Form of Collection Account Agreement Exhibit C-1 -- Form of Revolving Credit Note Exhibit C-2 -- Form of Term Loan Note Exhibit D -- Form of Notice of Borrowing Exhibit E -- Form of Notice of Conversion/Continuation Exhibit F -- Pro Forma Financial Statements Exhibit G -- Projections Exhibit H -- List of Closing Documents Exhibit I -- Form of Officer's Certificate to Accompany Reports Exhibit J -- Form of TFC/RHI Liquidity Calculation SCHEDULES Schedule 1.01.1 -- Domestic Subsidiaries Schedule 1.01.2 -- Guarantors Schedule 1.01.3 -- Permitted Equity Securities Options Schedule 1.01.4 -- Permitted Existing Accommodation Obligations Schedule 1.01.5 -- Permitted Existing Indebtedness Schedule 1.01.6 -- Permitted Existing Investments Schedule 1.01.7 -- Permitted Existing Liens Schedule 1.01.8 -- Refinanced Indebtedness Schedule 3.01-A -- Letter of Credit Exceptions Schedule 3.02 -- Existing Letters of Credit Schedule 7.01-A -- Organizational Documents Schedule 7.01-C -- Organizational Structure Schedule 7.01-E -- Governmental Consents Schedule 7.01-K -- Pending Actions Schedule 7.01-R -- Environmental Matters Schedule 7.01-S -- ERISA Matters Schedule 7.01-U -- Labor Contracts Schedule 7.01-X -- Patent, Trademark & Permit Claims Pending Schedule 7.01-Z -- Insurance Policies Schedule 10.15 -- Collection Accounts Schedule 12.01-Q -- TFC Permitted Existing Investments