EXHIBIT 10.2
__________________________________________________________________________
$60,000,000
SENIOR UNSECURED NOTE AGREEMENT
Dated as of April 12, 1995
BCP/ESSEX HOLDINGS INC.,
as Guarantor
ESSEX GROUP, INC.,
as Borrower
CHEMICAL BANK,
as Administrative Agent
__________________________________________________________________________
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. THE TERM LOANS . . . . . . . . . . . . . . . . . . . . . 28
2.1 Term Loans . . . . . . . . . . . . . . . . . . . . . . . 28
2.2 Term Notes . . . . . . . . . . . . . . . . . . . . . . . 28
2.3 Procedure for Term Loan Borrowing . . . . . . . . . . . . 29
2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.5 Optional Prepayments . . . . . . . . . . . . . . . . . . 29
2.6 Mandatory Prepayments . . . . . . . . . . . . . . . . . . 30
2.7 Conversion and Continuation Options . . . . . . . . . . . 31
2.8 Minimum Amounts and Maximum Number of Eurodollar
Tranches . . . . . . . . . . . . . . . . . . . . . . . . 31
2.9 Interest Rates and Payment Dates . . . . . . . . . . . . 31
2.10 Computation of Interest and Fees . . . . . . . . . . . . 32
2.11 Inability to Determine Interest Rate . . . . . . . . . . 32
2.12 Pro Rata Treatment and Payments . . . . . . . . . . . . . 33
2.13 Requirements of Law . . . . . . . . . . . . . . . . . . . 33
2.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.15 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 37
2.16 Replacement Lenders . . . . . . . . . . . . . . . . . . . 38
SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 38
3.1 Financial Condition . . . . . . . . . . . . . . . . . . . 38
3.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . 39
3.3 Corporate Existence; Compliance with Law . . . . . . . . 40
3.4 Corporate Power; Authorization; Enforceable Obligations . 40
3.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . 40
3.6 No Material Litigation . . . . . . . . . . . . . . . . . 40
3.7 No Default . . . . . . . . . . . . . . . . . . . . . . . 41
3.8 No Burdensome Restrictions . . . . . . . . . . . . . . . 41
3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.10 Federal Regulations . . . . . . . . . . . . . . . . . . . 41
3.11 Labor Matters . . . . . . . . . . . . . . . . . . . . . . 41
3.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.13 Investment Company Act; Other Regulations . . . . . . . . 42
3.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 42
3.15 Purpose of Term Loans . . . . . . . . . . . . . . . . . . 42
3.16 Environmental Matters . . . . . . . . . . . . . . . . . . 42
3.17 Accuracy of Information . . . . . . . . . . . . . . . . . 43
3.18 Solvency . . . . . . . . . . . . . . . . . . . . . . . . 44
3.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 44
4.1 Conditions to Effectiveness . . . . . . . . . . . . . . . 44
4.2 Conditions to Term Loans . . . . . . . . . . . . . . . . 45
SECTION 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 46
5.1 Financial Statements . . . . . . . . . . . . . . . . . . 46
5.2 Certificates; Other Information . . . . . . . . . . . . . 47
5.3 Payment of Obligations . . . . . . . . . . . . . . . . . 48
5.4 Conduct of Business and Maintenance of Existence . . . . 48
5.5 Maintenance of Property; Insurance . . . . . . . . . . . 48
5.6 Inspection of Property; Books and Records; Discussions . 48
(i)
Page
5.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.8 Environmental Laws . . . . . . . . . . . . . . . . . . . 49
5.9 Holdings Merger . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 51
6.1 Financial Condition Covenants . . . . . . . . . . . . . . 51
6.2 Limitation on Secured Debt . . . . . . . . . . . . . . . 51
6.3 Limitation on Sale/Leaseback Transactions . . . . . . . . 53
6.4 Limitation on Company Debt . . . . . . . . . . . . . . . 53
6.5 Limitation on Debt and Preferred Stock of Subsidiaries . 55
6.6 Limitation on Restricted Payments . . . . . . . . . . . . 56
6.7 Limitation on Restrictions on Distributions from
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 60
6.8 Limitation on Sales of Assets and Subsidiary Stock . . . 61
6.9 Limitation on Transactions with Affiliates . . . . . . . 64
6.10 Change of Control . . . . . . . . . . . . . . . . . . . . 65
6.11 Mergers and Consolidations . . . . . . . . . . . . . . . 66
6.12 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 67
SECTION 8. THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . 69
8.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . 69
8.2 Delegation of Duties . . . . . . . . . . . . . . . . . . 69
8.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . 69
8.4 Reliance by Administrative Agent . . . . . . . . . . . . 70
8.5 Notice of Default . . . . . . . . . . . . . . . . . . . . 70
8.6 Non-Reliance on Administrative Agent and Other Lenders . 70
8.7 Indemnification . . . . . . . . . . . . . . . . . . . . . 71
8.8 Administrative Agent in Its Individual Capacity . . . . . 71
8.9 Successor Administrative Agent . . . . . . . . . . . . . 71
SECTION 9. GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . 72
9.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . 72
9.2 No Subrogation, Contribution, Reimbursement or Indemnity 72
9.3 Amendments, etc. with respect to the Obligations . . . . 73
9.4 Guarantee Absolute and Unconditional . . . . . . . . . . 73
9.5 Reinstatement . . . . . . . . . . . . . . . . . . . . . . 74
9.6 Payments . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 74
10.1 Amendments and Waivers . . . . . . . . . . . . . . . . . 74
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . 76
10.4 Survival of Representations and Warranties . . . . . . . 76
10.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . 76
10.6 Successors and Assigns; Assignments and Participations . 77
10.7 Adjustments; Setoff . . . . . . . . . . . . . . . . . . . 80
10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . 81
10.9 Severability . . . . . . . . . . . . . . . . . . . . . . 81
10.10 INTEGRATION . . . . . . . . . . . . . . . . . . . . . . . 81
10.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 81
10.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . 82
10.13 Acknowledgements . . . . . . . . . . . . . . . . . . . . 82
10.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . 82
10.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . 83
(ii)
Page
SCHEDULES:
1.1 Term Loan Commitments, Addresses
3.1(b) Liabilities, etc.
3.5 Legal Bar
3.14 Subsidiaries
6.9 Agreements with Affiliates
EXHIBITS:
A Term Note
B Closing Certificate
C-1 Opinion of Cravath, Swaine & Moore
C-2 General Counsel Opinion
D Assignment and Acceptance
E Confidentiality Letter
F Compliance Certificate
(iii)
SENIOR UNSECURED NOTE AGREEMENT, dated as of April 12, 1995, among
BCP/ESSEX HOLDINGS INC., a Delaware corporation ("Holdings"), ESSEX GROUP,
INC., a Michigan corporation (the "Company"), the several banks and other
financial institutions from time to time parties to this Agreement (the
"Lenders") and CHEMICAL BANK, a New York banking corporation, as
administrative agent for the Lenders hereunder.
PRELIMINARY STATEMENT:
The Company has requested that the Lenders make Term Loans (as
hereinafter defined) to the Company, the proceeds of which shall be used
(a) to pay a dividend to Holdings to finance the repurchase or redemption
of all or a portion of its 16% Debentures (as hereinafter defined) in
accordance with the terms hereof and (b) to pay reasonable fees and
expenses in connection with the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto hereby agree
as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"ABR Term Loans": Term Loans the rate of interest applicable
to which is based upon the Alternate Base Rate.
"Acquisitions": (a) the acquisition of the Company by
MS/Essex Holdings Inc. in 1988 and the financing thereof and (b) the
acquisition of the Company by B E Acquisition Corporation in 1992
through its merger with and into MS/Essex Holdings Inc., and the
financing thereof.
"Adjusted Net Cash Proceeds": with respect to any Issuance or
sale of Capital Stock, the cash proceeds of such Issuance or sale
net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage,
consultant and other fees actually incurred in connection with such
Issuance or sale and net of taxes paid or payable as a result
thereof.
"Administrative Agent": Chemical Bank, together with its
affiliates, as the arranger of the Term Loans and as administrative
agent for the Lenders under this Agreement and the other Term Loan
Documents.
"Affiliate": as to any Person, (a) any other Person which,
directly or indirectly, is in control of, is controlled by or is
under common control with, such specified Person or (b) any other
Person who is a director or officer (A) of such specified Person,
(B) of any subsidiary of such specified Person or (C) of any Person
described in clause (a) above. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such Person
whether by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. For
2
purposes of Section 6.9, shareholders and Affiliates of BSC that
would not be Affiliates of the Company other than by reason of being
shareholders or Affiliates of BSC and that neither in fact
participate in the management of any of BSC, BH or the Company, nor
are controlled by BSC, BH, the Company, or any of their respective
Affiliates who in fact participate in the management of any of BSC,
BH or the Company, shall not be deemed to be Affiliates of the
Company.
"Agreement": this Senior Unsecured Note Agreement, as
amended, supplemented or otherwise modified from time to time.
"Alternate Base Rate": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime
Rate" shall mean the rate of interest per annum publicly announced
from time to time by Chemical as its prime rate in effect at its
principal office in New York City; "Base CD Rate" shall mean the sum
of (a) the product of (i) the Three-Month Secondary CD Rate and (ii)
a fraction, the numerator of which is one and the denominator of
which is one minus the C/D Reserve Percentage and (b) the Assessment
Rate; "Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not
be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve
Bank of New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical Release
H.15(519) during the week following such day), or, if such rate
shall not be so reported on such day or such next preceding Business
Day, the average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such
day (or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Administrative Agent from three New
York City negotiable certificate of deposit dealers of recognized
standing selected by it; and "Federal Funds Effective Rate" shall
mean, for any day, 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 on the next
succeeding Business Day by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business
Day, the average of the quotations for the day of such transactions
received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate, or
both, for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance
with the terms hereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of the first sentence
of this definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the Alternate
3
Base Rate due to a change in the Prime Rate, the Three-Month
Secondary CD Rate, the C/D Reserve Percentage, the Assessment Rate
or the Federal Funds Effective Rate shall be effective on the
effective day of such change in the Prime Rate, the Three-Month
Secondary CD Rate, the C/D Reserve Percentage, the Assessment Rate
or the Federal Funds Effective Rate, respectively.
"Assessment Rate": for any day, as applied to any ABR Term
Loan, the annual assessment rate in effect on such day which is
payable by a member of the Bank Insurance Fund maintained by the
Federal Deposit Insurance Corporation or any successor (the "FDIC")
classified as well-capitalized and within supervisory subgroup "B"
(or a comparable successor assessment risk classification) within
the meaning of 12 C.F.R. Section 327.3(d) (or any successor
provision) to the FDIC for the FDIC's insuring time deposits at
offices of such institution in the United States.
"Asset Disposition": any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or
dispositions) of shares of Capital Stock of a Subsidiary (other than
directors' qualifying shares), property or other assets (each
referred to for the purposes of this definition as a "disposition")
by the Company or any of its Subsidiaries (including any disposition
by means of a merger, consolidation or similar transaction), other
than (i) a disposition by a Subsidiary to the Company or by the
Company or a Subsidiary to a Wholly Owned Subsidiary, (ii) a cash
contribution by the Company or a Wholly Owned Subsidiary to a Wholly
Owned Subsidiary or a Person which will become a Wholly Owned
Subsidiary as a result of such cash contribution, (iii) a
disposition of property or assets in the ordinary course of
business, (iv) a disposition which constitutes a Restricted Payment,
(v) a disposition which constitutes a Sale/Leaseback Transaction
(other than a Sale/ Leaseback Transaction to the extent deemed an
Asset Disposition pursuant to Section 6.3(ii)), (vi) a disposition
subject to Section 6.11 and (vii) a disposition by the Company of
idle property or assets relating to the Company's facilities in
Bennetsville, South Carolina, Newmarket, New Hampshire, Syracuse,
New York and Houston, Texas.
"Assignment and Acceptance": an Assignment and Acceptance
entered into by a Lender and an assignee, and consented to by the
Administrative Agent and the Company, substantially in the form of
Exhibit D.
"Attributable Debt": in respect of a Sale/Leaseback
Transaction, as at the time of determination, the present value
(discounted at 10% compounded annually) of the total obligations of
the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life": as of the date of determination, with respect
to any Debt or Preferred Stock, the quotient obtained by dividing
(i) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal
payment of such Debt or redemption or similar payment with respect
4
to such Preferred Stock multiplied by the amount of such payment by
(ii) the sum of all such payments.
"Bank Debt": any and all amounts payable under or in respect
of the Credit Agreement or a commercial financing arrangement (and
any other agreement or agreements which refinances or replaces the
Credit Agreement or a commercial financing arrangement in whole or
in part), as amended from time to time, including principal, premium
(if any), interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating
to the Company), fees, charges, expenses, reimbursement obligations,
guarantees and all other amounts payable thereunder or in respect
thereof; provided, however, that the principal amount of all Debt
payable under or in respect of the Credit Agreement or a commercial
financing arrangement (and such other agreement or agreements) shall
not exceed the sum of the amount of Debt permitted to be Issued by
the Company and its Subsidiaries pursuant to Sections 6.4 and 6.5.
"BH": Bessemer Holdings, L.P.
"Bessemer": Bessemer Partners & Co., BH and any of their
Affiliates.
"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Board of Directors": the Board of Directors of the Company
or any committee thereof duly authorized to act on behalf of such
Board.
"BSC": Bessemer Securities Corporation.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close; provided, however, that when used in
connection with a Eurodollar Term Loan, the term "Business Day"
shall also exclude any day on which commercial banks are not open
for dealings in Dollar deposits in the London interbank market.
"Capital Lease Financing Facility": any lease financing
facility entered into on or about the Effective Date by the Company
or any of its Subsidiaries.
"Capital Lease Obligations": as to any Person, any obligation
which is required to be classified and accounted for as a capital
lease on the face of a balance-sheet of such Person prepared in
accordance with GAAP; the amount of such obligation shall be the
capitalized amount thereof, determined in accordance with GAAP; and
the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee pursuant
to the terms of the lease without payment of a penalty.
"Capital Stock": any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of
5
or interests in (however designated) corporate stock, including any
Preferred Stock.
"Cash Equivalents": (a) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed
or insured by the United States Government or any agency thereof;
(b) certificates of deposit, time deposits, eurodollar time
deposits, overnight bank deposits, bankers acceptances and
repurchase agreements having maturities of one year or less from the
date of acquisition issued by any Lender or by any commercial bank
organized under the laws of the United States of America or any
state thereof having combined capital and surplus of not less than
$100,000,000; and (c) commercial paper of an issuer rated at least
A-1 by Standard & Poor's Ratings Group or P-1 by Moody's Investors
Service, Inc., or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating agencies
cease publishing ratings of investments, and, in either case,
maturing within six months from the date of acquisition.
"C/D Reserve Percentage": for any day, that percentage
(expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in New
York City with deposits exceeding one billion Dollars in respect of
new non-personal time deposits in Dollars in New York City having a
maturity approximately equal to three months and in an amount of
$100,000 or more.
"Change of Control" means the occurrence of any of the
following events:
(i) prior to the initial Public Equity Offering Consummation
Date with respect to an offering of common stock, any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act),
other than one or more Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all shares that any such Person has the
right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, or have the
absolute power to direct the vote of, with respect to the election
of directors of Holdings or the Company, shares of Capital Stock
entitled to cast more than the greater of (x) 25% or (y) the
Original Group Percentage of the votes entitled to be cast with
respect to the election of directors of Holdings or the Company, as
the case may be. The "Original Group Percentage" shall mean, as of
any date of determination, the percentage of the votes entitled to
be cast with respect to the election of directors of Holdings or the
Company, as the case may be, by the Permitted Holders and by Persons
who have agreed to vote as directed by Bessemer with respect to the
election of such directors and, for purposes of the calculation, any
shares of common stock Issuable upon exercise of the Warrants shall
be deemed to be issued and outstanding;
(ii) subsequent to the initial Public Equity Offering
Consummation Date with respect to an offering of common stock, any
6
"person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (i) above),
directly or indirectly, of more than 35% of the total voting power
of the Voting Stock of the Company; provided, however, that the
Permitted Holders "beneficially own" (as so defined), directly or
indirectly, in the aggregate a lesser percentage of the total voting
power of the Voting Stock of the Company than such other Person and
do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board
of Directors (for the purposes of this clause (ii), any Person shall
be deemed to beneficially own any Voting Stock of a corporation (the
"specified corporation") held by any other corporation (the "parent
corporation"), if such Person "beneficially owns" (as so defined),
directly or indirectly, more than 35% of the voting power of the
Voting Stock of such parent corporation and the Permitted Holders
"beneficially own" (as so defined), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting
Stock of such parent corporation and do not have the right or
ability by voting power, contract or otherwise to elect or designate
for election a majority of the board of directors of such parent
corporation); or
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors (together with any new directors elected by such Board of
Directors or nominated for election by the shareholders of the
Company by a vote of at least a majority of the directors of the
Company then still in office who were either directors at the
beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office.
"Chemical": Chemical Bank, a New York banking corporation.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment Percentage": as to any Lender at any time, the
percentage of the aggregate Term Loan Commitments then constituted
by such Lender's Term Loan Commitment.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Company and which is treated as a single employer under
Section 414(b) or (c) of the Code.
"Confidential Information": written information that
Holdings, the Company, any of their Subsidiaries or Affiliates, or
any of their authorized representatives furnishes to the
Administrative Agent or any Lender on a confidential basis, other
than any such information that becomes generally available to the
public other than as a result of a breach by the Administrative
Agent or any Lender of its obligations hereunder or that is or
becomes available to the Administrative Agent or such Lender from a
7
source other than Holdings, the Company, any of their Subsidiaries
or Affiliates, or any of their authorized representatives and that
is not, to the actual knowledge of the recipient thereof, subject to
obligations of confidentiality with respect thereto.
"Confidential Information Memorandum": the Confidential
Information Memorandum dated March 1995 and furnished to the
Lenders.
"Consolidated Adjusted Net Income": for any period, the net
income (or net loss) of the Company and its Subsidiaries determined
on a consolidated basis in accordance with GAAP; provided, however,
that there shall not be included in such Consolidated Adjusted Net
Income:
(i) any net income of any Person if such Person is not a
Subsidiary, except that:
(A) the Company's equity in the net income of any such
Person for such period shall be included in such Consolidated
Adjusted Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the
Company or a Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a
Subsidiary, to the limitations contained in clause (iii)
below), and
(B) the Company's equity in a net loss of any such
Person for such period shall be included in determining such
Consolidated Adjusted Net Income;
(ii) any net income of any Person acquired by the Company or
a Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition;
(iii) any net income of any Subsidiary if such Subsidiary is
subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions by such Subsidiary,
directly or indirectly, to the Company, except that:
(A) the Company's equity in the net income of any such
Subsidiary for such period shall be included in such
Consolidated Adjusted Net Income up to the aggregate amount of
cash actually distributed by such Subsidiary during such
period to the Company or another Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or
other distribution to another Subsidiary, to the limitation
contained in this clause),
(B) the Company's equity in a net loss of any such
Subsidiary for such period shall be included in determining
such Consolidated Adjusted Net Income and
(C) the Company's equity in a net loss of any such
Person that is a Non-Recourse Subsidiary for such period shall
be included in determining such Consolidated Adjusted Net
8
Income to the extent of any cash actually contributed, lent or
transferred by the Company or any Subsidiary to such
Non-Recourse Subsidiary in such period;
(iv) any gain or loss realized upon the sale or other
disposition of any property, plant or equipment of the Company or
its consolidated subsidiaries (including pursuant to any
Sale/Leaseback Transaction) which is not sold or otherwise disposed
of in the ordinary course of business and any gain or loss realized
upon the sale or other disposition of any Capital Stock of any
Person;
(v) the cumulative effect of a change in accounting
principles;
(vi) amortization of goodwill and financing costs arising in
connection with the Acquisitions; and
(vii) the increase in depreciation due to the write-up in
book values for tangible assets in connection with the Acquisitions
over the depreciation in respect of those tangible assets which
would have been charged against income had the write-up not
occurred.
"Consolidated Adjusted Net Worth": of any Person, the total
amounts shown on the balance sheet of such Person and its
Subsidiaries, determined on a consolidated basis in accordance with
GAAP, as of the end of the most recent fiscal quarter of such Person
ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as
(i) the par or stated value of all outstanding Capital Stock
of such Person plus
(ii) paid-in capital or capital surplus relating to such
Capital Stock plus
(iii) any retained earnings or earned surplus less
(A) any accumulated deficit and
(B) any amounts attributable to Redeemable Stock plus
(iv) non-cash charges related to acquisitions.
"Consolidated Capital Expenditures": for any period, any
expenditures (whether paid in cash or accrued as liabilities and
including Capital Lease Obligations) of the Company and its
Subsidiaries the amount of which, in conformity with GAAP, would be
capitalized on a consolidated balance sheet of the Company and its
Subsidiaries.
"Consolidated Current Assets": as a particular date, with
respect to any Person, all amounts (other than cash and Cash
Equivalents) which would, in conformity with GAAP, be set forth
opposite the caption "total current assets" (or any like caption) on
a consolidated balance sheet of such Person and its Subsidiaries at
9
such date, plus the amount of the LIFO reserve applied to such
Person's inventory as of such date.
"Consolidated Current Liabilities": at a particular date, with
respect to any Person, all amounts which would, in conformity with
GAAP, be set forth opposite the caption "total current liabilities"
(or any like caption) on a consolidated balance sheet of such Person
and its Subsidiaries at such date, but excluding (a) the current
portion of any Funded Debt of such Person and its Subsidiaries and
(b) without duplication of clause (a) above, all Debt consisting of
revolving credit loans under the Credit Agreement to the extent
otherwise included therein.
"Consolidated EBITDA": for any period, with respect to any
Person, Consolidated Net Income of such Person for such period plus,
without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum
of (i) total income tax expense, (ii) interest expense, amortization
or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with
Indebtedness (including the Term Loans), (iii) depreciation and
amortization expense, (iv) amortization of intangibles (including,
but not limited to, goodwill) and organization costs, (v) other
non-cash charges (including changes in inventory valuations) and
(vi) any extraordinary expenses or losses (including, whether or not
otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, losses on sales of assets
outside of the ordinary course of business) and minus, without
duplication and to the extent reflected as a credit in the statement
of such Consolidated Net Income for such period, the sum of (a) any
extraordinary income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated
Net Income for such period, gains on the sales of assets outside of
the ordinary course of business) and (b) total cash interest income
of such Person and its consolidated Subsidiaries for such period,
all as determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA Coverage Ratio": as of any date of
determination means the ratio of (i) the aggregate amount of EBITDA
for the Reference Period to (ii) Consolidated Interest Expense for
such Reference Period; provided, however, that (1) if the Company or
any Subsidiary has Issued any Debt since the beginning of such
period that remains outstanding or if the transaction giving rise to
the need to calculate the Consolidated EBITDA Coverage Ratio is an
Issuance of Debt, or both, EBITDA and Consolidated Interest Expense
for such period shall be calculated after giving effect on a pro
forma basis to such Debt as if such Debt had been Issued on the
first day of such period and to the discharge of any other Debt
repaid, repurchased, defeased or otherwise discharged with the
proceeds of such new Debt as if such discharge had occurred on the
first day of such period, (2) if, since the beginning of such
period, the Company or any Subsidiary shall have made any Asset
Disposition, the EBITDA for such period shall be reduced by an
amount equal to the EBITDA (if positive) directly attributable to
the assets which are the subject of such Asset Disposition for such
period, or increased by an amount equal to the EBITDA (if negative),
10
directly attributable thereto for such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal
to the Consolidated Interest Expense directly attributable to any
Debt of the Company or any Subsidiary repaid, repurchased, defeased
or otherwise discharged with respect to the Company and its
continuing Subsidiaries in connection with such Asset Disposition
for such period (or, if the Capital Stock of any Subsidiary is sold
or otherwise disposed of, the Consolidated Interest Expense for such
period directly attributable to the Debt of such Subsidiary to the
extent the Company and its continuing Subsidiaries are no longer
liable for such Debt after such sale or other disposition) and (3)
if, since the beginning of such period, the Company or any
Subsidiary (by merger or otherwise) shall have made an Investment in
any Subsidiary (or any person which becomes a Subsidiary) or an
acquisition of assets, including any acquisition of assets occurring
in connection with a transaction causing a calculation to be made
hereunder, which constitutes all or substantially all of an
operating unit of a business, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma
effect thereto (including the Issuance of any Debt) as if such
Investment or acquisition occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings
relating thereto, and the amount of Consolidated Interest Expense
associated with any Debt Issued in connection therewith, the pro
forma calculations shall be determined in good faith by a
responsible financial or accounting officer of the Company. If any
Debt bears a floating rate of interest and is being given pro forma
effect, the interest on such Debt shall be calculated as if the rate
in effect on the date of determination had been the applicable rate
for the entire period.
"Consolidated Interest Expense": for any period, interest
expense of the Company and its Subsidiaries (including amortization
of original issue discount or non-cash interest payments or accruals
and the interest component of capital leases but excluding the
amortization of debt Issuance costs), plus cash dividends paid on
any Preferred Stock of the Company and cash and non-cash dividends
paid on any Preferred Stock of any Subsidiary; provided, however,
that for purposes of calculating the Consolidated EBITDA Coverage
Ratio in Section 6.4(a) and Section 6.11, Consolidated Interest
Expense shall include distributions made to Holdings pursuant to
Section 6.6(b)(vii) which are used, directly or indirectly, to pay
cash interest on the 16% Debentures.
"Consolidated Net Cash Interest Expense": for any period as
to any Person, (a) total cash interest expense (including that
attributable to Capital Lease Obligations) of such Person and its
consolidated Subsidiaries for such period with respect to all
outstanding Indebtedness of such Person and its consolidated
Subsidiaries, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to letters of
credit (including participation fees but excluding fronting fees
payable solely to the issuer of any such letter of credit) and
bankers' acceptance financing and net costs under Interest Rate
Protection Agreements (which net costs may be allocated over the
11
term of any Interest Rate Protection Agreement in any manner
reasonably deemed appropriate by the Company) minus (b) total cash
interest income of such Person and its consolidated Subsidiaries for
such period, in each case determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income": for any period as to any Person,
the consolidated net income (or loss) of such Person and its
Subsidiaries, determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded the income (or deficit)
of any other Person (other than a Subsidiary of such Person) in
which such Person or any of its Subsidiaries has an ownership
interest, except to the extent that any such income is actually
received by such Person or such Subsidiary in the form of dividends
or similar distributions.
"Consolidated Net Tangible Assets": the total assets shown on
the balance sheet of the Company and its Subsidiaries, determined on
a consolidated basis in accordance with GAAP, as of any date
selected by the Company not more than 90 days prior to the taking of
any action for the purpose of which the determination is being made
less: (i) all current liabilities and minority interests and (ii)
goodwill and other intangibles.
"Consolidated Net Worth": of any Person means, at any date,
the excess of total assets of such Person and its consolidated
Subsidiaries over total liabilities of such Person and its
consolidated Subsidiaries on such date.
"Consolidated Working Capital": the excess of Consolidated
Current Assets over Consolidated Current Liabilities.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument
or other undertaking to which such Person is a party or by which it
or any of its property is bound.
"Credit Agreement": the Company's credit agreement existing
as of the Effective Date and replacements or extensions thereof.
"Debt": of any Person, without duplication,
(i) the principal of and premium (if any) in respect of
(A) indebtedness of such Person for money borrowed and
(B) indebtedness evidenced by notes, debentures, bonds
or other similar instruments for the payment of which such
Person is responsible or liable;
(ii) all Capital Lease Obligations of such Person;
(iii) all obligations of such Person Issued as the deferred
purchase price of property, all conditional sale obligations of such
Person and all obligations of such Person under any title retention
12
agreement (but excluding trade accounts payable arising in the
ordinary course of business);
(iv) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters
of credit securing obligations (other than obligations described in
(i) through (iii) above) entered into in the ordinary course of
business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the fifth Business Day following receipt by
such Person of a demand for reimbursement following payment on the
letter of credit);
(v) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Redeemable
Stock;
(vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons and all dividends of other Persons for
the payment of which, in either case, such Person is responsible or
liable as obligor or guarantor;
(vii) all obligations of the type referred to in clauses (i)
through (vi) of other Persons secured by any Lien on any property or
asset of such Person (whether or not such obligation is assumed by
such Person), the amount of such obligation being deemed to be the
lesser of the value of such property or assets or the amount of the
obligation so secured; and
(viii) all obligations under Interest Rate Protection
Agreements, foreign currency hedges and similar agreements.
"Default": any of the events specified in Section 7, whether
or not any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"EBITDA": for any period, Consolidated Adjusted Net Income for
such period plus (to the extent deducted in calculating such
Consolidated Adjusted Net Income) Consolidated Interest Expense for
such period, income taxes, depreciation expenses, amortization
expense and other non-cash charges (including changes in inventory
valuation) for such period (but, as to all of the foregoing, without
giving any effect to any extraordinary gain or loss).
"Effective Date": the date on which the conditions specified
in Section 4.1 shall have been satisfied.
"Environmental Claim": any written notice of any Governmental
Authority alleging potential liability for damage to the environment
or by any Person alleging potential liability for personal injury
(including sickness, disease or death), in either case, resulting
from or based upon (a) the presence or Release (including
13
intentional and unintentional, negligent and non-negligent, sudden
or non-sudden, accidental or non-accidental leaks or spills) of any
Hazardous Material at, in or from property, whether or not owned or
leased by Holdings, the Company or any of its Subsidiaries, or (b)
any other circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
"Environmental Laws": any and all foreign, federal, state,
local and municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental
Authority and requirements of law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment as now or may at any
time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Term Loan, the aggregate (without duplication) of
the rates (expressed as a decimal fraction) of the maximum reserve
requirements in effect on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained
by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Term Loan, the rate of
interest determined on the basis of the rate for deposits in Dollars
for a period equal to such Interest Period commencing on the first
day of such Interest Period appearing on Page 3750 of the Telerate
screen as of 11:00 A.M., London time, two Business Days prior to the
beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Telerate Service (or otherwise on
such service), the "Eurodollar Base Rate" shall be determined by
reference to such other publicly available service for displaying
eurodollar rates as may be designated by the Administrative Agent
or, if so specified by the Administrative Agent, the rate per annum
(rounded upward to the nearest 1/16th of 1%) equal to the rate
notified to the Administrative Agent by Chemical as the rate at
which Chemical offers Dollar deposits at or about 11:00 A.M., London
time, two Business Days prior to the beginning of such Interest
Period in the interbank eurodollar market where the eurodollar and
foreign currency and exchange operations in respect of its
Eurodollar Term Loans are then being conducted for delivery on the
first day of such Interest Period for the number of days comprised
therein and in an amount comparable to the amount of its Eurodollar
Term Loan to be outstanding during such Interest Period.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Term Loan, a rate per
annum determined for such day in accordance with the following
formula (rounded upward to the nearest 1/16th of 1%):
14
Eurodollar Base Rate
--------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Term Loans": Term Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.
"Eurodollar Tranche": the collective reference to Eurodollar
Term Loans the Interest Periods with respect to all of which begin
on the same date and end on the same later date.
"Event of Default": any of the events specified in Section 7,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Company, the
excess of (a) the sum, without duplication, of (i) Consolidated Net
Income of the Company for such fiscal year, (ii) an amount equal to
the amount of all non-cash charges deducted in arriving at such
Consolidated Net Income, (iii) the amount of returned surplus assets
of any Plan during such fiscal year to the extent not included in
arriving at such Consolidated Net Income, (iv) decreases in
Consolidated Working Capital of the Company for such fiscal year,
and (v) an amount equal to the aggregate net non-cash loss on the
sale, lease, transfer or other disposition of assets by the Company
and its Subsidiaries during such fiscal year (other than sales of
Inventory in the ordinary course of business), to the extent
deducted in arriving at such Consolidated Net Income over (b) the
sum, without duplication, of (i) an amount equal to the amount of
all non-cash credits included in arriving at such Consolidated Net
Income, (ii) the aggregate amount actually paid by the Company and
its Subsidiaries in cash during such fiscal year on account of
Consolidated Capital Expenditures and Investment Expenditures
(excluding the principal amount of Indebtedness incurred in
connection with such expenditures), (iii) the aggregate amount of
all payments or prepayments of the Term Loans during such fiscal
year pursuant to Section 2.2 or 2.5 and the aggregate principal
amount of all prepayments of revolving credit loans pursuant to the
Credit Agreement to the extent accompanied by a reduction in the
commitments thereunder, (iv) the aggregate amount of all regularly
scheduled principal payments of Funded Debt (including payments of
Capital Lease Obligations of the Company or any of its Subsidiaries
(other than any portion thereof allocable to cash interest expense)
made during such fiscal year) of the Company and its Subsidiaries
made during such fiscal year (other than under this Agreement), (v)
increases in Consolidated Working Capital of the Company for such
fiscal year, and (vi) an amount equal to the aggregate net non-cash
gain on the sale, lease, transfer or other disposition of assets by
the Company and its Subsidiaries during such fiscal year (other than
sales of inventory in the ordinary course of business), to the
extent included in arriving at such Consolidated Net Income.
"Excess Cash Flow Application Date": as defined in Section
2.6(a).
15
"Exchange Act": the Securities Exchange Act of 1934, as
amended.
"Exchange Debentures": the debentures which may be issued by
Holdings in exchange for the Preferred Stock. As used in this
definition, "Preferred Stock" shall mean the Series A Cumulative
Redeemable Exchangeable Preferred Stock of Holdings.
"Final Maturity Date": May 15, 2000.
"Foreign Subsidiary": a subsidiary that is incorporated in a
jurisdiction other than the United States or a State or territory
thereof or the District of Columbia and has a substantial portion of
its property, plant and equipment in a jurisdiction other than in
the United States or a State or territory thereof or the District of
Columbia.
"Funded Debt": as to any Person, all Indebtedness of such
Person (including Capital Lease Obligations but excluding
Indebtedness consisting of letters of credit) that matures more than
one year from the date of its creation or matures within one year
from such date but is renewable or extendible, at the option of the
debtor, to a date more than one year from such date or arises under
a revolving credit or similar agreement that obligates the lender or
lenders to extend credit during a period of more than one year from
such date, including, without limitation, all amounts of Funded Debt
required to be paid or prepaid within one year from the date of its
creation and, in the case of the Company, Indebtedness in respect of
the Term Loans.
"GAAP": generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the accounting profession), 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 from
time to time. For the purpose of certain calculations hereunder,
GAAP shall be modified in the manner described in Section 1.2(e).
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government (and, in the case of
references to "Governmental Authority" in Section 2, the National
Association of Insurance Commissioners).
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b)
another Person (including, without limitation, any bank under any
letter of credit) to induce the creation of which the guaranteeing
person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing
any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary
16
obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or
payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose
of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee Obligation
of any guaranteeing person shall be deemed to be the lower of (x) an
amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and
(y) the maximum amount for which such guaranteeing person may be
liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum
amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the
Company in good faith.
"Hazardous Materials": any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials, or wastes, defined or
regulated as such in or under any Environmental Law, including,
without limitation, asbestos, polychlorinated biphenyls, and urea-
formaldehyde insulation.
"Holdings": BCP/Essex Holdings Inc. or any successor thereto
(including, without limitation, New Holdings).
"Holdings Common Equity Offering": any primary offering or
sale (public or private) of shares of, or rights to purchase, common
stock of Holdings.
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money,
(b) all obligations of such Person for the deferred purchase price
of property or services (other than trade payables not overdue by
more than 60 days incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations of such
Person, (f) all obligations, contingent or otherwise, of such Person
as an account party under acceptance, letter of credit or similar
17
facilities, (g) all obligations of such Person to purchase, redeem,
retire or otherwise acquire for value any Capital Stock of such
Person or any warrants, rights or options to acquire such Capital
Stock, (h) all Guarantee Obligations of such Person in respect of
Indebtedness of any other Person and (i) all Indebtedness referred
to in clauses (a) through (g) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for
the payment of such Indebtedness.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Coverage Ratio": the ratio of (i) Consolidated
EBITDA of Holdings for the relevant Interest Coverage Test Period to
(ii) Consolidated Net Cash Interest Expense of Holdings for such
Interest Coverage Test Period. In calculating Consolidated Net Cash
Interest Expense pursuant to this definition after May 15, 1995, in
the case of the 16% Debentures, the amount of interest paid thereon
for the relevant period shall be the amount of interest accrued
during and allocable to such period and not the amount of interest
actually paid during such period.
"Interest Coverage Test Period": as of any date of
determination, the period of four consecutive fiscal quarters of
Holdings ending on such date.
"Interest Payment Date": (a) as to any ABR Term Loan, the
last day of each March, June, September and December to occur while
such Loan is outstanding and (b) as to any Eurodollar Term Loan, the
last day of the related Interest Period or, in the case of any
Eurodollar Term Loan having an Interest Period longer than three
months, each day which is three months, or a whole multiple thereof,
after the first day of such Interest Period and the last day of such
Interest Period.
"Interest Period": with respect to any Eurodollar Term Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Term Loan and ending one, two, three or six months thereafter (or,
if deposits of such duration are available to all Lenders and all
Lenders consent thereto, ending nine or twelve months thereafter),
as selected by the Company in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar
Term Loan and ending one, two, three or six months thereafter (or,
if deposits of such duration are available to all Lenders and all
Lenders consent thereto, ending nine or twelve months thereafter),
18
as selected by the Company by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the
last day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(2) no Interest Period shall extend beyond the Final
Maturity Date;
(3) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of
a calendar month; and
(4) the Company shall select Interest Periods so as not
to require a payment or prepayment of any Eurodollar Term Loan
during an Interest Period for such Term Loan.
"Interest Rate Protection Agreement": any interest rate swap
agreement, interest rate cap agreement or other financial agreement
or arrangement designed to protect the Company or any Subsidiary
against fluctuations in interest rates.
"Investment" in any Person, collectively, any direct or
indirect loan, advance or other extension of credit (including by
way of guarantee or similar arrangement), or capital contribution
to, or any acquisition of Capital Stock, securities or Debt, of, any
other person. For the purposes of Section 6.6, (i) "Investment"
shall include the fair market value of the net assets of any
Subsidiary at the time that such Subsidiary is designated a
Non-Recourse Subsidiary, (ii) the fair market value of the net
assets of any Non-Recourse Subsidiary that is designated a
Subsidiary shall be deducted from the aggregate amount of
Investments in computing the net amount of Investments and (iii) any
property transferred to or from a Non-Recourse Subsidiary shall be
valued at fair market value at the time of such transfer, in each
case as determined in good faith by the Board of Directors.
"Investment Expenditures": the cost or principal amount, as
the case may be, of any capital contribution to, acquisition of a
business (whether through the purchase of Capital Stock or assets)
of, or other similar investment in, any Person; provided that if any
such investment is made by the contribution of assets to another
Person, such assets shall, for the purpose of determining the cost
of such investment, be valued at fair market value.
19
"Investment Grade Debt": Debt rated in one of the four
highest generic categories by a nationally recognized credit rating
agency.
"Issue": issue, assume, guarantee, incur or otherwise become
liable for; provided, however, that any Debt or Capital Stock of a
Person existing at the time such Person becomes a Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall
be deemed to be Issued by such Subsidiary at the time it becomes a
Subsidiary. For purposes of this definition, the terms "Issuing,"
"Issuer," "Issuance" and "Issued" have meanings correlative to the
foregoing.
"Lien": any mortgage, pledge, security interest, deposit
arrangement, conditional sale or other title retention agreement or
other similar lien.
"Loan Parties: the collective reference to Holdings and the
Company.
"Management Agreements": the several Management Stock
Subscription Agreements, Management Option Continuation Agreements,
Management Stockholders and Registration Rights Agreements, Stock
Option Agreements and Amended and Restated Stock Option Agreements
among Holdings, the Company, several employees of the Company and
its Subsidiaries and, in the case of the Management Stockholders and
Registration Rights Agreements, BH (as successor in interest to
Bessemer Capital Partners), in each case as in effect on the
Effective Date or from time to time thereafter. For purposes of
this Agreement, "Management Agreements" shall be deemed to include
any agreements entered into after the Effective Date by Holdings
with any officer or employee of Holdings, the Company or any of its
Subsidiaries in connection with the purchase of common stock of
Holdings or options to purchase such common stock, so long as such
agreements contain provisions concerning the repurchase by Holdings
of its common stock or options with respect thereto which are no
less favorable to Holdings than, and otherwise substantially
identical to, those contained in the Management Agreements referred
to in the preceding sentence.
"Material Adverse Effect": a material adverse effect on (a)
the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or prospects of
Holdings, the Company and its Subsidiaries taken as a whole, (b) the
ability of the Company or any other Loan Party to perform its
obligations under this Agreement or any of the other Term Loan
Documents, or (c) the validity or enforceability of this Agreement
or any of the other Term Loan Documents or the rights or remedies of
the Administrative Agent or the Lenders hereunder or thereunder.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Available Cash": from an Asset Disposition, cash
payments as and when received (including any cash payments as and
when received by way of deferred payment of principal pursuant to a
20
note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form
of assumption by the acquiring Person of Debt or other obligations
relating to such properties or assets or received in any other
non-cash form) therefrom, in each case net of (i) all legal, title
and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local
taxes paid or required to be accrued as a liability under GAAP, as a
consequence of such Asset Disposition, (ii) all payments made on any
Debt which is secured by any assets subject to such Asset
Disposition, in accordance with the terms of any Lien upon or other
security agreement of any kind with respect to such assets, or which
must by its terms, or in order to obtain a necessary consent to such
Asset Disposition, or by applicable law be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and
other payments required to be made to minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition
and (iv) appropriate amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated
with the assets disposed of in such Asset Disposition and retained
by the Company or any Subsidiary after such Asset Disposition.
"Net Cash Proceeds": in connection with any issuance or sale
by any Person of equity securities, the cash proceeds received by
such Person from such issuance, net of investment banking fees,
reasonable and documented attorneys' fees, accountants' fees,
underwriting discounts and commissions and other customary fees
actually incurred in connection therewith.
"New Holdings": as defined in Section 5.9.
"New Subsidiary": a Subsidiary that has not acquired any
assets (other than cash) at any time directly or indirectly from the
Company or any Subsidiary.
"Non-Recourse Debt": Debt or that portion of Debt (a) as to
which neither the Company nor its Subsidiaries (other than a
Non-Recourse Subsidiary) (i) provides credit support (including any
undertaking, agreement or instrument which would constitute Debt);
(ii) is directly or indirectly liable; or (iii) constitutes the
lender and (b) no default with respect to which (including any
rights which the holders thereof may have to take enforcement action
against a Non-Recourse Subsidiary) would permit (upon notice, lapse
of time or both) any holder of any other Debt of the Company or any
Subsidiary (other than a Non-Recourse Subsidiary) to declare a
default on such other Debt or cause the payment thereof to be
accelerated or payable prior to its Stated Maturity.
"Non-Recourse Subsidiary": any Subsidiary which the Company
by resolution of its Board of Directors shall classify as a
Non-Recourse Subsidiary and any subsidiary of a Non-Recourse
Subsidiary until such time as (i) the Company may, by further
resolution of its Board of Directors, classify such Non-Recourse
Subsidiary as a Subsidiary, (ii) the Company or any of its
Subsidiaries becomes directly or indirectly liable in respect of any
contractual obligation or Debt of such Non-Recourse Subsidiary or
21
(iii) such Non-Recourse Subsidiary Issues Debt, a default with
respect to which (including any rights which the holders thereof may
have to take enforcement action against such Non-Recourse
Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Debt of the Company or any Subsidiary (other
than a Non-Recourse Subsidiary) to declare a default on such other
Debt or cause the payment thereof to be accelerated or payable prior
to its Stated Maturity. A Subsidiary of the Company may only be
classified as a Non-Recourse Subsidiary if immediately after such
classification, there would be no Default and the Company would have
only Investments in such Subsidiary which would be permitted by
Section 6.6; provided, however, that any Subsidiary may not be
reclassified more than once in any 13 month period. A Non-Recourse
Subsidiary may only be reclassified as a Subsidiary if immediately
after giving effect to such reclassification, there would be no
Default. Any valid classification shall be effective as of the date
specified in the applicable resolution of the Board of Directors,
which shall not be prior to the date such resolution is made.
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity
of the Term Loans and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Company, whether
or not a claim for post-filing or post-petition interest is allowed
in such proceeding) the Term Loans and all other obligations and
liabilities of the Company to the Administrative Agent or to any
Lender, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may
arise under, out of, or in connection with, this Agreement, any
other Term Loan Document or any other document made, delivered or
given in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees, charges
and disbursements of counsel to the Administrative Agent or to any
Lender that are required to be paid by the Company pursuant hereto)
or otherwise.
"Offer": as defined in Section 6.8(b).
"Offer Amount": as defined in Section 6.8(c)(ii).
"Offer Period": as defined in Section 6.8(c)(ii).
"Officer": the Chairman of the Board, the President, any Vice
President. the Treasurer or the Secretary of the Company.
"Officers' Certificate": a certificate signed by the Chairman
of the Board, the President or a Vice President of the Company, and
by the Treasurer or Secretary of the Company, and delivered to the
Administrative Agent.
"Opinion of Counsel": a written opinion from legal counsel
who is acceptable to the Administrative Agent. The counsel may be
an employee of or counsel to the Company or the Administrative
Agent.
22
"Participant": as defined in Section 10.6(f).
"Paying Agent": as defined in Section 6.8(c)(ii).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor
thereto).
"Permitted Holders": (i) Holdings, (ii) BH, Donaldson, Lufkin
& Jenrette, Inc. and Goldman, Sachs & Co. and any of their
Affiliates (including Donaldson, Lufkin & Jenrette, Inc. or any
Affiliate thereof in its capacity as custodian or collateral agent
for certain employees of Donaldson, Lufkin & Jenrette, Inc. and
Affiliates thereof) and (iii) any other Person who on the Effective
Date held Capital Stock of Holdings.
"Permitted Investments": (i) Investments in direct
obligations of the United States of America maturing within 180 days
of the date of acquisition thereof; (ii) Investments in certificates
of deposit maturing within 180 days of the date of acquisition
thereof Issued by a bank or trust company which is organized under
the laws of the United States or any state thereof having capital,
surplus and undivided profits aggregating in excess of $100,000,000;
(iii) Investments in commercial paper given the highest rating
(A1/P1 or their equivalent) by one established national credit
rating agency and maturing not more than 180 days from the date of
acquisition thereof; (iv) receivables owing to Holdings, the Company
or any Subsidiary, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary
trade terms; provided, however, that such trade terms may include
such concessionary trade terms as Holdings, the Company or any such
Subsidiary deems reasonable under the circumstances); (v) payroll,
travel and similar advances to cover matters that are expected at
the time of such advances ultimately to be treated as expenses for
accounting purposes and that are made in the ordinary course of
business; (vi) loans or advances to employees made in the ordinary
course of business; (vii) stock, obligations or securities received
in settlement of debts created in the ordinary course of business
and owing to Holdings, the Company or any Subsidiary or in
satisfaction of judgments; and (viii) transactions with Affiliates
permitted as described under Section 6.9.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": any employee benefit plan which is covered by ERISA
and in respect of which the Company or a Commonly Controlled Entity
is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Preferred Stock": as applied to the Capital Stock of any
corporation, Capital Stock of any class or classes (however
designated) which is preferred as to the payment of dividends, or as
to the distribution of assets upon any voluntary or involuntary
23
liquidation or dissolution of such corporation, over shares of
Capital Stock of any other class of such corporation.
"Prepayment Date": as defined in Section 6.8(c)(i).
"Public Equity Offering": an underwritten public offering of
equity securities of Holdings or the Company pursuant to a
registration statement filed pursuant to the Securities Act of 1933,
as amended.
"Public Equity Offering Consummation Date": the date on which
Holdings or the Company receives any proceeds from a Public Equity
Offering.
"Qualified Investment": any of the following: (i)
Investments in the Company, a Subsidiary or a Person that becomes a
Subsidiary as a result of such Investment; provided, however, that
such Investment is in a Related Business; (ii) Investments by the
Company or any Subsidiary in another Person, if as a result of such
Investment such other Person is merged or consolidated with or into,
or transfers or conveys all or substantially all of its assets to,
the Company; (iii) Investments by the Company in another Person or
Persons in a Related Business in a net aggregate amount not to
exceed at any time outstanding $40,000,000; and (iv) Permitted
Investments; provided, however, that with respect to clauses
(i)-(iii) above at the time of such Investment, no Default shall
have occurred and be continuing (or would result therefrom).
"Redeemable Stock": any Capital Stock that by its terms or
otherwise is (i) required to be redeemed on or prior to the first
anniversary of the Final Maturity Date, (ii) redeemable at the
option of the holder thereof at any time on or prior to the first
anniversary of the Final Maturity Date or (iii) convertible into or
exchangeable automatically or at the option of the holder for
Capital Stock referred to in clause (i) or (ii) or Debt; provided,
however, that any Capital Stock which would not constitute
Redeemable Stock but for the provisions thereof giving holders
thereof the right to require the Company to repurchase or redeem
such Capital Stock upon the occurrence of a change in control
occurring prior to the Final Maturity Date shall not constitute
Redeemable Stock if the change in control provisions applicable to
such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in Section 6.10 and such
Capital Stock specifically provides that the Company will not
repurchase or redeem any such stock pursuant to such provision prior
to the prepayment by the Company of the Term Loans as may be
required to be prepaid pursuant to the provisions of Section 6.10.
"Redemption Date": as defined in Section 4.1(c).
"Reference Period": with respect to any computation of the
Consolidated EBITDA Coverage Ratio, the most recent four consecutive
fiscal quarters ending at least 45 days prior to the date of
determination of the Consolidated EBITDA Coverage Ratio.
"Register": as defined in Section 10.6(d).
24
"Regulation U": Regulation U of the Board.
"Related Business": the Company's business on the date of
this Agreement and any business related, ancillary or complementary
thereto.
"Release": any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching or migration of Hazardous Materials into the
indoor or outdoor environment or into or out of any property owned
or operated by Holdings, the Company or any of its Subsidiaries,
including the movement of Hazardous Materials through or in the air,
soil, surface water, groundwater or other media.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under PBGC Reg. Section 2615.
"Required Lenders": at any date shall mean the holders of a
majority of the aggregate unpaid principal amount of the Term Loans
(but, in any event, including at least three Lenders).
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, 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.
"Responsible Officer": the chief executive officer,
president, chief financial officer or treasurer of Holdings or the
Company, as the case may be, but in any event, with respect to
financial matters, the chief financial officer or treasurer of
Holdings or the Company, as the case may be.
"Restricted Payment": as defined in Section 6.6(a).
"Sale/Leaseback Transaction": any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of any
real or tangible personal property (except for leases for a term of
not more than three years or between the Company and a Subsidiary or
between Subsidiaries), which property has been or is to be sold or
transferred by the Company or such Subsidiary to such Person in
contemplation of such leasing.
"Secured Debt": any Debt of the Company secured by a Lien.
"Senior Debt": the following:
(i) all Bank Debt;
25
(ii) all obligations consisting of the principal of and
premium, if any, and accrued and unpaid interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company to the extent post-filing
interest is allowed in such proceeding), whether existing on the
date of this Agreement or thereafter incurred, in respect of (A) the
Term Loans, (B) indebtedness of the Company for money borrowed and
(C) indebtedness evidenced by notes, debentures, bonds to other
similar instruments for the payment of which the Company is
responsible or liable;
(iii) all Capital Lease Obligations of the Company;
(iv) all obligations of the Company (A) for the reimbursement
of any obligor on any letter of credit, banker's acceptance or
similar credit transaction, (B) under Interest Rate Protection
Agreements and similar arrangements and foreign currency hedges
entered into in respect of any obligations described in clauses (i),
(ii) and (iii) or (C) Issued as the deferred purchase price of
property and all conditional sale obligations of the Company and all
obligations of the Company under any title retention agreement;
(v) all obligations of other persons of the type referred to
in clauses (ii), (iii) and (iv) and all dividends of other persons
for the payment of which, in either case, the Company is responsible
or liable as obligor, guarantor or otherwise; and
(vi) all obligations of the Company consisting of
modifications, renewals, extensions, replacements and refundings of
any obligations described in clauses (i), (ii), (iii), (iv) or (v);
provided, however, that Senior Debt shall not be deemed to include
(1) any obligation of the Company to any Subsidiary, (2) any
liability for Federal, state, local or other taxes owed or owing by
the Company, (3) any accounts payable or other liability to trade
creditors (including guarantees thereof or instruments evidencing
such liabilities), (4) any indebtedness, guarantee or obligation of
the Company which is subordinate or junior in any respect to any
other indebtedness, guarantee or obligation of the Company or (5)
any Debt Issued in violation of Sections 6.4 and 6.5.
"Significant Subsidiary": any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the Securities and Exchange
Commission.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"16% Debentures": Holdings' 16% Senior Discount Debentures
Due 2004.
"16% Debenture Indenture": the Indenture dated as of May 1,
1989 between Holdings (formerly MS/Essex Holdings Inc.) and United
States Trust Company of New York, as trustee, as amended,
supplemented or otherwise modified from time to time.
26
"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person will, as of such date,
exceed the amount of all "liabilities of such Person, contingent or
otherwise", as of such date, as such quoted terms are determined in
accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date,
be greater than the amount that will be required to pay the
liability of such Person on its debts as such debts become absolute
and matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition, (i) "debt" means liability
on a "claim", and (ii) "claim" means any (x) right to payment,
whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (y) right to
an equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured
or unmatured, disputed, undisputed, secured or unsecured.
"Specified Source": (a) internally generated cash and Cash
Equivalents held by the Company on or about the Redemption Date, (b)
proceeds of the Term Loans, (c) proceeds of the Capital Lease
Financing Facility and (d) proceeds of the loans under the Credit
Agreement.
"Stated Maturity": with respect to any security, the date
specified in such security as the fixed date on which the final
principal amount with respect to such security is due and payable.
"Subordinated Obligation": any Debt of the Company (whether
outstanding on the Effective Date or thereafter Issued) which is by
its terms expressly subordinate or junior in right of payment to the
Term Loans.
"Subsidiary": with respect to any Person, any corporation,
association, partnership or other business entity of which more than
50% of the total voting power of shares of Capital Stock or other
interests (including partnership interests) entitled (without regard
to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person; provided, however, that for
purposes of Sections 6.2 to 6.11 (together with the definitions
employed therein and any provision of Section 7 which relates to any
such Section), Non-Recourse Subsidiaries shall not be included in
the definition of "Subsidiary" (other than for the purpose of the
definition of "Non-Recourse Subsidiary"). For purposes of this
Agreement, unless the context otherwise requires, Subsidiaries shall
mean Subsidiaries of the Company.
27
"Tangible Property": all land, buildings, machinery and
equipment and leasehold interests and improvements which would be
reflected on a consolidated balance sheet of the Company prepared in
accordance with GAAP, excluding (i) all such tangible property
located outside the United States of America, (ii) all rights,
contracts and other intangible assets of any nature whatsoever and
(iii) all inventories and other current assets.
"10% Senior Note Indenture": the Indenture dated as of May 7,
1993 between the Company and NBD Bank, National Association, as
trustee, as amended, supplemented or otherwise modified from time to
time.
"10% Senior Notes": the Company's 10% Senior Notes Due 2003.
"Term Loan": any loan made by any Lender pursuant to this
Agreement.
"Term Loan Borrowing Date": the Business Day specified in a
notice pursuant to Section 2.3 as the date on which the Company
requests the Lenders to make Term Loans hereunder.
"Term Loan Commitment": as to any Lender, the obligation of
such Lender to make a Term Loan to the Company hereunder in a
principal amount not to exceed the amount set forth under the
heading "Term Loan Commitment" opposite such Lender's name on
Schedule 1.1.
"Term Loan Documents": the collective reference to this
Agreement and the Term Notes.
"Term Note": as defined in Section 2.2.
"Third Party Person": any Person other than the Company or
any Subsidiary.
"Transferee": as defined in Section 10.6(g).
"Trustee": the Trustee under the 10% Senior Note Indenture.
"Type": as to any Term Loan, its nature as an ABR Term Loan
or a Eurodollar Term Loan.
"Voting Stock": all classes of Capital Stock of a corporation
then outstanding and normally entitled to vote in the election of
directors.
"Warrants": the common stock purchase warrants Issued
pursuant to the Warrant Agreement dated as of October 9, 1992, among
B E Acquisition Corporation (predecessor of Holdings), certain
affiliates of Donaldson, Lufkin & Jenrette, Inc. and certain
affiliates of Goldman, Sachs & Co.
"Wholly Owned Subsidiary": a Subsidiary 100% of the Capital
Stock of which (other than directors' qualifying shares) is owned by
the Company or another Wholly Owned Subsidiary.
28
1.2 Other Definitional Provisions; Financial Calculations. (a)
Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the other Term Loan Documents
or any certificate or other document made or delivered pursuant hereto or
thereto.
(b) As used herein and in the other Term Loan Documents, and any
certificate or other document made or delivered pursuant hereto or
thereto, accounting terms relating to Holdings, the Company and its
Subsidiaries not defined in Section 1.1 and accounting terms partly
defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and
Section, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) Notwithstanding anything to the contrary herein, calculations
in connection with the covenants contained in Section 6 shall utilize
accounting principles and policies (including those in respect of
accounting for income taxes) in conformity with those used to prepare the
financial statements referred to in Section 3.1(b) for the fiscal year of
Holdings or the Company, as the case may be, ended December 31, 1994.
(f) Unless the context otherwise requires, (i) unsecured debt shall
not be deemed to be subordinate or junior to secured debt merely by virtue
of its nature as unsecured debt; (ii) the principal amount of any non-
interest bearing or other discount security at any date shall be the
principal amount thereof that would be shown on a balance sheet of the
Company dated such date prepared in accordance with GAAP and accretion of
principal on such security shall be deemed to be the Issuance of Debt and
(iii) the principal amount of any Redeemable Stock shall be (A) the
maximum liquidation value of such Redeemable Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Redeemable Stock, whichever is greater.
SECTION 2. THE TERM LOANS
2.1 Term Loans. (a) Subject to the terms and conditions hereof,
each Lender severally agrees to make a term loan (a "Term Loan") to the
Company on the Term Loan Borrowing Date in an amount not to exceed the
amount of the Term Loan Commitment of such Lender.
(b) The Term Loans may from time to time be (i) Eurodollar Term
Loans, (ii) ABR Term Loans or (iii) a combination thereof, as determined
by the Company and notified to the Administrative Agent in accordance with
Sections 2.3 and 2.7.
2.2 Term Notes. (a) The Term Loan made by each Lender shall be
evidenced by a promissory note of the Company, substantially in the form
of Exhibit A (a "Term Note"), with appropriate insertions therein as to
29
payee, date and principal amount, payable to the order of such Lender and
in a principal amount equal to the Term Loan of such Lender. Each Lender
is hereby authorized to record the date and amount of each payment or
prepayment of principal of its Term Loan on the schedule annexed to and
constituting a part of its Term Note, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so
recorded, provided that the failure to make any such recordation or any
error in such recordation shall not affect the Company's obligation to
repay the Term Loans. The Term Note of each Lender shall (a) be dated the
Effective Date, (b) provide for the payment of interest in accordance with
Section 2.9 and (c) provide for the payment of principal in accordance
with Section 2.2(b).
(b) The Company shall repay the Term Loans in 20 consecutive
quarterly installments on the 15th day of each August, November, February
and May, commencing on August 15, 1995, each of which shall aggregate
$3,000,000.
2.3 Procedure for Term Loan Borrowing. The Company shall give the
Administrative Agent irrevocable notice (which notice must be received by
the Administrative Agent prior to (a) 12:00 Noon, New York City time,
three Business Days prior to the Term Loan Borrowing Date, if all or any
part of the requested Term Loans are to be initially Eurodollar Term Loans
or (b) 12:00 Noon, New York City time, two Business Days prior to the
requested Term Loan Borrowing Date, otherwise) requesting that the Lenders
make the Term Loans on the Term Loan Borrowing Date (which shall be no
later than May 31, 1995) and specifying (i) the amount to be borrowed,
(ii) the requested Term Loan Borrowing Date, (iii) whether the borrowing
is to be of Eurodollar Term Loans, ABR Term Loans or a combination thereof
and (iv) if the borrowing is to be entirely or partly of Eurodollar Term
Loans, the respective amounts of each such Eurodollar Term Loan and the
respective lengths of the initial Interest Periods therefor. On the Term
Loan Borrowing Date each Lender shall make available to the Administrative
Agent at its office specified in Section 10.2 prior to 11:00 A.M., New
York City time, an amount in immediately available funds equal to the Term
Loan to be made by such Lender. Such borrowing will then be made
available to the Company by the Administrative Agent crediting the account
of the Company on the books of such office with the aggregate of the
amounts made available to the Administrative Agent by the Lenders in
immediately available funds.
2.4 Fees. (a) The Company agrees to pay to the Administrative
Agent, for its own account and, to the extent mutually agreed upon by the
Administrative Agent and the Lenders, for the account of the Lenders, the
fees in the amounts and on the dates previously agreed to in writing by
the Company and the Administrative Agent.
(b) The Company agrees to pay to the Administrative Agent a
commitment fee for the account of the Lenders for the period from and
including the Effective Date to the Term Loan Borrowing Date, computed at
a rate equal to 5/8 of 1% per annum on the amount of the Term Loan
Commitment of each such Lender, payable in arrears on the Term Loan
Borrowing Date.
2.5 Optional Prepayments. The Company may on the last day of any
Interest Period with respect thereto (or on any other day if the
30
prepayment referred to herein is accompanied by all amounts payable by the
Company pursuant to Section 2.15), in the case of Eurodollar Term Loans,
or at any time and from time to time, in the case of ABR Term Loans,
prepay the Term Loans, in whole or in part, without premium or penalty,
provided that the Company shall give the Administrative Agent irrevocable
notice (which notice must be received by the Administrative Agent prior to
(a) 12:00 Noon, New York City time, three Business Days prior to such
prepayment, in the case of Eurodollar Term Loans or (b) 11:00 A.M., New
York City time, on the date of such prepayment, in the case of ABR Term
Loans) specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Term Loans, ABR Term Loans or a combination
thereof, and, if a combination thereof, the amount allocable to each.
Upon receipt of any such notice the Administrative Agent shall promptly
notify each Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to such date on the amount
prepaid. Amounts prepaid on account of the Term Loans may not be
reborrowed. Partial prepayments shall be in an aggregate principal amount
of $1,000,000 or a whole multiple thereof and shall be applied in direct
order of maturity to the remaining installments of principal.
2.6 Mandatory Prepayments. (a) If, for any fiscal year of the
Company beginning on or after January 1, 1995, there shall be Excess Cash
Flow, the Company shall, on the relevant Excess Cash Flow Application
Date, apply toward the prepayment of the Term Loans as set forth in
Section 2.6(b) an amount equal to 50% of such Excess Cash Flow. Each such
prepayment shall be made on or before the date (an "Excess Cash Flow
Application Date") which is ten Business Days after the earlier of (i) the
date on which the financial statements of the Company referred to in
Section 5.1(a), for the fiscal year with respect to which such prepayment
is made, are required to be delivered to the Lenders and (ii) the date
such financial statements are actually delivered.
(b) All prepayments of the Term Loans pursuant to Section 2.6(a)
shall be applied pro rata to the remaining installments of principal
thereof. Amounts prepaid on account of the Term Loans may not be
reborrowed.
(c) The application of any prepayment pursuant to this Section 2.6
shall be made first to ABR Term Loans and second to Eurodollar Term Loans;
provided, that if on the date on which such prepayment is required to be
made the aggregate outstanding amount of ABR Term Loans and Eurodollar
Term Loans having an Interest Period expiring on such date is less than
the amount required to be prepaid, then, on such date, the Company may, at
its option, (i) prepay other Eurodollar Term Loans selected by the Company
in an amount up to the remaining amount required to be prepaid and/or (ii)
if no Default or Event of Default shall have occurred and be continuing,
place any amounts which the Company would otherwise be required to use to
prepay such other Eurodollar Term Loans in an interest-bearing cash
collateral account established with the Administrative Agent for the
benefit of the Lenders until the expiration of the Interest Periods
applicable thereto, at which time such amounts shall be applied to prepay
such Eurodollar Term Loans. Each prepayment of the Term Loans under this
Section 2.6 shall be accompanied by accrued interest to the date of such
prepayment on the amount prepaid.
31
2.7 Conversion and Continuation Options. (a) The Company may
elect from time to time to convert Eurodollar Term Loans to ABR Term
Loans, by giving the Administrative Agent at least three Business Days'
prior irrevocable notice of such election; provided that any such
conversion of Eurodollar Term Loans may only be made on the last day of an
Interest Period with respect thereto (or on any other day if on the date
of such conversion the Company pays to the Administrative Agent for the
account of the Lenders accrued interest on such Eurodollar Term Loans to
the date of such conversion together with all amounts payable pursuant to
Section 2.15). The Company may elect from time to time to convert ABR
Term Loans to Eurodollar Term Loans by giving the Administrative Agent at
least three Business Days' prior irrevocable notice of such election. Any
such notice of conversion to Eurodollar Term Loans shall specify the
length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice the Administrative Agent shall promptly notify
each Lender thereof. All or any part of outstanding Eurodollar Term Loans
or ABR Term Loans may be converted as provided herein; provided that (i)
no Term Loan may be converted into a Eurodollar Term Loan when any Default
or Event of Default has occurred and is continuing and the Administrative
Agent or the Required Lenders have determined that such a conversion is
not appropriate, (ii) any such conversion may only be made if, after
giving effect thereto, Section 2.8 shall not have been contravened and
(iii) no Term Loan may be converted into a Eurodollar Term Loan after the
date that is one month prior to the Final Maturity Date.
(b) Any Eurodollar Term Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Company giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section
1.1, of the length of the next Interest Period to be applicable to such
Term Loans; provided that no Eurodollar Term Loan may be continued as such
(i) when any Default or Event of Default has occurred and is continuing
and the Administrative Agent or the Required Lenders have determined that
such a continuation is not appropriate, (ii) if, after giving effect
thereto, Section 2.8 would be contravened or (iii) after the date that is
one month prior to the Final Maturity Date and provided, further, that if
the Company shall fail to give any required notice as described above in
this paragraph or if such continuation is not permitted pursuant to the
preceding proviso such Term Loans shall be automatically converted to ABR
Term Loans on the last day of such then expiring Interest Period. Upon
receipt of any notice referred to above, the Administrative Agent shall
promptly notify the Lenders thereof.
2.8 Minimum Amounts and Maximum Number of Eurodollar Tranches.
All borrowings, conversions and continuations of Term Loans hereunder and
all selections of Interest Periods hereunder shall be in such amounts and
be made pursuant to such elections so that, after giving effect thereto,
(a) the aggregate principal amount of the Term Loans comprising each
Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of
$1,000,000 in excess thereof and (b) there shall be no more than five
Eurodollar Tranches.
2.9 Interest Rates and Payment Dates. (a) Each Eurodollar Term
Loan shall bear interest for each day during each Interest Period with
respect thereto at a rate per annum equal to the Eurodollar Rate
determined for such day plus 3.75%.
32
(b) Each ABR Term Loan shall bear interest at a rate per annum
equal to the Alternate Base Rate plus 2.75%.
(c) During the continuation of any Event of Default pursuant to
Section 7(a), the Company shall pay, on demand, interest (after as well as
before judgment to the extent permitted by law) on (i) the principal
amount of all outstanding Term Loans at a rate per annum equal to the rate
of interest otherwise applicable in respect of such Term Loans pursuant to
Section 2.9(a) or (b), as the case may be, plus 2% and (ii) to the extent
permitted by applicable law, all interest and other amounts due and unpaid
hereunder, at a rate per annum equal to the Alternate Base Rate plus
4.75%; provided, however, that, on and after the expiration of the
Interest Period applicable to any Eurodollar Term Loan outstanding on the
date of occurrence of such Event of Default, the principal amount of such
Term Loan shall, during the continuation of such Event of Default, bear
interest at a rate per annum equal to the Alternate Base Rate plus 4.75%.
(d) Interest shall be payable in arrears on each Interest Payment
Date; provided that interest accruing pursuant to paragraph (c) of this
Section 2.9 shall be payable on demand.
2.10 Computation of Interest and Fees. (a) Interest on the Term
Loans and commitment fees shall be calculated on the basis of the actual
number of days elapsed over a year of 360 days or, on any date when the
Alternate Base Rate is determined by reference to the Prime Rate, a year
of 365 or 366 days, as appropriate. Any change in the interest rate on a
Term Loan resulting from a change in the Alternate Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening
of business on the day on which such change in the Alternate Base Rate is
announced or such change in the Eurocurrency Reserve Requirements becomes
effective, as the case may be.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Company and the Lenders in the absence of manifest error.
2.11 Inability to Determine Interest Rate. In the event that prior
to the first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Company)
that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Term Loans during
such Interest Period,
the Administrative Agent shall give telex, telecopy or telephonic notice
thereof to the Company and the Lenders as soon as practicable thereafter.
If such notice is given (x) any Eurodollar Term Loans requested to be made
on the first day of such Interest Period shall be made as ABR Term Loans,
33
(y) any Loans that were to have been converted on the first day of such
Interest Period to Eurodollar Term Loans shall be continued as ABR Term
Loans and (z) any outstanding Eurodollar Term Loans shall be converted, on
the first day of such Interest Period, to ABR Term Loans. Until such
notice has been withdrawn by the Administrative Agent, no further
Eurodollar Term Loans shall be made or continued as such, nor shall the
Company have the right to convert Term Loans to Eurodollar Term Loans.
2.12 Pro Rata Treatment and Payments. The borrowing by the Company
from the Lenders hereunder and the payment by the Company of commitment
fees hereunder shall be made pro rata according to the respective
Commitment Percentages of the Lenders. Except as otherwise expressly
provided herein, each payment (including each prepayment) by the Company
on account of principal of and interest on the Term Loans shall be made
pro rata according to the respective outstanding principal amounts of the
Term Loans then held by the Lenders. All payments (including prepayments)
to be made by the Company hereunder and under the Term Notes, whether on
account of principal, interest, fees or otherwise, shall be made without
setoff or counterclaim and shall be made prior to 1:30 P.M., New York City
time, on the due date thereof to the Administrative Agent, for the account
of the Lenders, at the Administrative Agent's office specified in Section
10.2, in Dollars and in immediately available funds. The Administrative
Agent shall distribute such payments to the Lenders promptly upon receipt
in like funds as received. If any payment hereunder (other than payments
on the Eurodollar Term Loans) becomes due and payable on a day other than
a Business Day, such payment shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon
shall be payable at the then applicable rate during such extension. If
any payment on a Eurodollar Term Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day (in which case interest thereon shall be
payable at the then applicable rate during such extension) unless the
result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
2.13 Requirements of Law. (a) In the event that any change after
the Effective Date in any Requirement of Law or in the interpretation or
application thereof or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank
or other Governmental Authority:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Eurodollar Term
Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for taxes covered by Section 2.14
and changes in the rate of tax on the net income or earnings of such
Lender (including, without limitation, changes in the U.S. branch
profits tax));
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account
of, advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
34
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such
Lender, by an amount which such Lender deems to be material, of making,
converting into, continuing or maintaining Eurodollar Term Loans, or to
reduce any amount receivable hereunder in respect thereof, then, in any
such case, the Company shall promptly pay such Lender, within 15 days
after its demand, any additional amounts necessary to compensate such
Lender for such increased cost or reduced amount receivable. If any Lender
has demanded compensation under this Section 2.13(a) with respect to any
Eurodollar Term Loan, the Company shall have the option to convert
immediately such Eurodollar Term Loan into an ABR Term Loan until the
circumstances giving rise to such demand for compensation no longer apply;
provided, that (i) no such conversion shall affect the Company's
obligation to pay compensation as provided herein which is due with
respect to the period prior to such conversion and (ii) on the date of
such conversion the Company shall pay to the Administrative Agent for the
benefit of the relevant Lender accrued interest on such Eurodollar Term
Loan to the date of conversion, together with any amounts payable pursuant
to Section 2.15.
(b) In the event that any Lender shall have determined that any
change after the Effective Date in any Requirement of Law regarding
capital adequacy or in the interpretation or application thereof or
compliance by such Lender or any corporation controlling such Lender with
any request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to the
Effective Date does or shall have the effect of reducing the rate of
return on such Lender's or such corporation's capital as a consequence of
its obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such change or compliance (taking
into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Lender to be
material, then from time to time, after submission by such Lender to the
Company (with a copy to the Administrative Agent) of a written request
therefor, the Company shall pay to such Lender, within 15 days after its
demand, such additional amount or amounts as will compensate such Lender
for such reduction.
(c) Prior to making any demand for payment pursuant to this Section
2.13 with respect to Eurodollar Term Loans, any Lender making a demand for
payment shall designate a different lending office with respect to
Eurodollar Term Loans if such designation will avoid the need for making
such demand and will not, in the sole judgment of such Lender, be illegal
or otherwise disadvantageous to such Lender.
(d) A certificate as to any additional amounts payable pursuant to
this Section 2.13 submitted by any Lender, through the Administrative
Agent, to the Company shall be conclusive in the absence of manifest
error. The covenants contained in this Section 2.13 shall survive the
termination of this Agreement and the payment of the Term Notes and all
other amounts payable hereunder.
35
2.14 Taxes. (a) All payments made by the Company under this
Agreement and the Term Notes to the Administrative Agent or any Lender
shall be made free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding taxes imposed on or with respect to or
measured by the net income of the Administrative Agent or any Lender and
franchise taxes imposed on the Administrative Agent or any Lender, as the
case may be, if the Administrative Agent or such Lender is subject to such
net income or franchise tax by reason of a present or former connection
between the jurisdiction of the government or taxing authority imposing
such tax and the Administrative Agent or such Lender (excluding a
connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or the Term Notes) or any
political subdivision or taxing authority thereof or therein (all such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called "Taxes"). If any Taxes are required
to be withheld from any amounts payable to the Administrative Agent or any
Lender hereunder or under the Term Notes, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent
necessary to yield to the Administrative Agent or such Lender after making
all required deductions (including deductions applicable to additional
sums payable under this Section 2.14) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this
Agreement and the Term Notes. Whenever any Taxes are payable by the
Company, as promptly as practicable thereafter the Company shall send to
the Administrative Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official
receipt received by the Company showing payment thereof if such a receipt
is issued by the relevant taxing authority and, if not, other
documentation reasonably satisfactory to the Administrative Agent or such
Lender, as the case may be, evidencing such payment. If the Company fails
to pay any Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent such required receipts or other
documentary evidence, the Company shall indemnify the Administrative Agent
and the Lenders for any incremental taxes, interest or penalties that may
become payable by the Administrative Agent or any Lender as a result of
any such failure. The agreements in this Section shall survive the
termination of this Agreement and the payment of the Term Notes and all
other amounts payable hereunder.
(b) Each Lender (or Transferee) that is not a citizen or resident
of the United States of America, a corporation, partnership or other
entity created or organized in or under the laws of the United States of
America (or any state thereof or the District of Columbia), or any estate
or trust that is subject to U.S. federal income taxation regardless of the
source of its income (a "Non-U.S. Lender") shall deliver to the Company
and the Administrative Agent (i) two copies of either U.S. Internal
Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S.
Lender claiming exemption from U.S. federal withholding tax under Section
871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a Form W-8, or any subsequent versions thereof or successors
thereto (and, if such Non-U.S. Lender delivers a Form W-8 pursuant to this
clause (i) in lieu of a Form 1001 or Form 4224, an annual certificate
36
representing that such Non-U.S. Lender is not a "bank" for purposes of
Section 881(c) of the Code, is not a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Code) of the Company and is not a
controlled foreign corporation related to the Company (within the meaning
of Section 864(d)(4) of the Code)), properly completed and duly executed
by such Non-U.S. Lender claiming complete exemption from U.S. federal
withholding tax on all payments by the Company under this Agreement and
the other Term Loan Documents, (ii) an Internal Revenue Service Form W-8
or W-9 or successor applicable forms and (iii) any other documentation as
may be required under applicable U.S. tax law and regulations to evidence
complete exemption from U.S. federal withholding tax on all payments by
the Company under this Agreement and the other Term Loan Documents. Such
forms and other documentation shall be delivered by each Non-U.S. Lender
on or before the date it becomes a party to this Agreement (or, in the
case of any Participant, on or before the date such Participant purchases
the related participation). Each such Lender shall certify, in the case
of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax. In addition, each Non-U.S. Lender shall
deliver such forms promptly upon the obsolescence or invalidity of any
form or other documentation previously delivered by it, and shall deliver
such additional forms and documentation as may subsequently be required
under applicable U.S. tax law and regulations to evidence complete
exemption from U.S. federal withholding tax on all payments by the Company
under this Agreement and the other Term Loan Documents unless in any such
case any Tax Law Change (as defined below) has occurred prior to the date
on which any such delivery would otherwise be required which renders all
such forms and other documentation previously delivered by it inapplicable
or which would prevent such Lender from duly completing and delivering any
such form or other documentation previously delivered by it with respect
to it and such Lender so advises the Company and the Administrative Agent.
Unless the Administrative Agent or the relevant Lender shall have
delivered to the Company the forms and other documentation referred to
above, the Company or the Administrative Agent shall withhold taxes from
payments to such Lender hereunder at the applicable statutory rate and the
Company shall not be required to pay any additional amounts to such
Lender pursuant to Section 2.14(a); provided that this sentence shall not
apply, and the Company shall be required to pay additional amounts to such
Lender pursuant to Section 2.14(a), if the Administrative Agent or such
Lender is unable to deliver such forms and other documentation as a result
of a Tax Law Change. For purposes of this Section 2.14(b), "Tax Law
Change" means, with respect to any Lender, a change in or amendment to the
Code or any tax treaty to which the United States is a party that occurs
after the date such Lender became a Lender hereunder the effect of which
is to cause any payment to such Lender to be subject to U.S. federal
withholding tax. Where, because of a Tax Law Change, the Administrative
Agent or any Lender is no longer entitled to a complete exemption from
U.S. federal withholding tax on payments by the Company to it but is
entitled to a reduced rate of taxation with respect to such payments, the
Administrative Agent or such Lender shall deliver to the Company such
documentation (including, without limitation, a Form 1001, if applicable)
as may be required under applicable U.S. tax law and regulations to
evidence such reduced rate of taxation, and, if the Administrative Agent
or such Lender fails to do so, the Company shall not be required to pay
additional amounts to the Administrative Agent or such Lender pursuant to
this Section 2.14(b) in an amount in excess of the additional amounts it
37
would have been required to so pay if the Administrative Agent or such
Lender had provided such documentation.
(c) If any Lender (or Transferee) shall have determined that it is
entitled to claim a refund from a Governmental Authority in respect of
Taxes with respect to which the Company has paid additional amounts
pursuant to Section 2.14(a), it shall promptly notify the Company of the
availability of such refund claim and shall, within 30 days after receipt
of a request by the Company, make a claim to such Governmental Authority
for such refund at the Company's expense. If any Lender (or Transferee)
receives a refund (including pursuant to a claim for refund made pursuant
to the preceding sentence) in respect of any Taxes with respect to which
the Company has paid additional amounts pursuant to Section 2.14(a), it
shall within 30 days from the date of such receipt pay over such refund to
the Company (but only to the extent of additional amounts paid by the
Company under Section 2.14(a) with respect to the Taxes giving rise to
such refund), net of all out-of-pocket expenses of the Lender (or
Transferee) and without interest (other than interest paid by the relevant
Governmental Authority with respect to such refund); provided, however,
that the Company, upon the request of the Lender (or Transferee), agrees
to repay the amount paid over to the Company (plus penalties, interest or
other charges) to the Lender (or Transferee) in the event the Lender (or
Transferee) is required to repay such refund to such Governmental
Authority.
(d) Notwithstanding anything to the contrary in this Section 2.14,
if the Internal Revenue Service determines that a Lender (or Transferee)
is a conduit entity knowingly participating in a conduit financing
arrangement as defined in Section 7701(1) of the Code and the regulations
thereunder and unless the Company expressly consented to such arrangement
with full knowledge of the relevant facts of such arrangement at the time
it was entered into (a "Conduit Financing Arrangement"), then the Company
shall have no obligation to pay additional amounts to the Lender (or
Transferee) for any Taxes with respect to any payments hereunder to the
extent the amount of such Taxes exceeds the amount that would have
otherwise been withheld or deducted had the Internal Revenue Service not
made such a determination. Each Lender (or Transferee) represents and
agrees that, at all times during the term of this Agreement, it is not and
will not be a conduit entity participating in a conduit financing
arrangement (as defined in Section 7701(1) of the Code and the regulations
thereunder) with respect to any borrowings hereunder. The agreement in
this Section 2.14(d) shall survive the termination of this Agreement and
the payment of the Term Loans and all other amounts payable hereunder.
2.15 Indemnity. The Company agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Company in payment
when due of the principal amount of or interest on any Eurodollar Term
Loan, (b) default by the Company in making a borrowing of, conversion into
or continuation of Eurodollar Term Loans after the Company has given a
notice requesting the same in accordance with the provisions of this
Agreement, (c) default by the Company in making any prepayment after the
Company has given a notice thereof in accordance with the provisions of
this Agreement or (d) the making of a prepayment or conversion of
Eurodollar Term Loans on a day which is not the last day of an Interest
Period with respect thereto, including, without limitation, in each case,
38
any such loss or expense arising from the reemployment of funds obtained
by it or from fees payable to terminate the deposits from which such funds
were obtained. Calculation of all amounts payable to a Lender under this
Section 2.15 shall be made as though such Lender had actually funded its
relevant Eurodollar Term Loan through the purchase of a deposit bearing
interest at the Eurodollar Rate in an amount equal to the amount of such
Eurodollar Term Loan and having a maturity comparable to the relevant
Interest Period; provided, however, that each Lender may fund each of its
Eurodollar Term Loans in any manner it sees fit, and the foregoing
assumption shall be utilized only for the calculation of amounts payable
under this Section 2.15. The Company shall endeavor to arrange the
borrowings and repayments pursuant to this Agreement so as to minimize any
amounts which would become payable pursuant to this Section 2.15. A
certificate as to any amounts payable pursuant to this Section 2.15
submitted by any Lender, through the Administrative Agent, shall be
conclusive in the absence of manifest error. The agreements in this
Section 2.15 shall survive the termination of this Agreement and the
payment of the Term Notes and all other amounts payable hereunder.
2.16 Replacement Lenders. In the event that the Company becomes
obligated to pay additional amounts to any Lender pursuant to Section 2.13
or 2.14, then, unless such Lender has theretofore removed or cured the
conditions which resulted in the obligation to pay such additional
amounts, the Company may, on ten Business Days' prior written notice to
the Administrative Agent and such Lender, cause such Lender to (and such
Lender shall) assign pursuant to Section 10.6 all of its rights and
obligations under this Agreement to another Person which is willing to
become a Lender and is acceptable (which acceptance shall not be
unreasonably withheld) to the Administrative Agent, for a purchase price
equal to the outstanding principal amount of the Term Loans payable to
such Lender plus any accrued but unpaid interest on such Term Loans and
any other amounts payable to such Lender under this Agreement, provided
that any expenses or other amounts owing to such Lender pursuant to any
indemnification provision hereof (including, if applicable, Section 2.15)
shall be for the account of the Company.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make or
maintain the Term Loans, Holdings and the Company hereby jointly and
severally represent and warrant to the Administrative Agent and each
Lender that:
3.1 Financial Condition. (a) The unaudited pro forma consolidated
balance sheet of Holdings and its consolidated Subsidiaries as at December
31, 1994 (including the notes thereto) (the "Pro Forma Balance Sheet"),
copies of which have heretofore been furnished to each Lender, has been
prepared giving effect (as if such events had occurred on such date) to
(i) the Indebtedness of the Company and its Subsidiaries contemplated to
be incurred on the Effective Date, (ii) the repayment or defeasance of any
Indebtedness of Holdings, the Company or its Subsidiaries contemplated to
occur on the Effective Date and (iii) the payment of fees and expenses in
connection with the foregoing. The Pro Forma Balance Sheet is based on
the best information available to Holdings and the Company as of the date
of delivery thereof, and presents fairly on a pro forma basis the
estimated financial position of Holdings and its consolidated Subsidiaries
39
as at December 31, 1994, assuming that the events specified in the
preceding sentence had actually occurred at December 31, 1994.
(b) The consolidated balance sheets of Holdings and its
consolidated Subsidiaries and of the Company and its consolidated
Subsidiaries as at December 31, 1993 and December 31, 1994 and the related
consolidated statements of income and stockholders' equity and cash flows
for the fiscal years ended on such dates, reported on by Ernst & Young,
copies of which have heretofore been furnished to each Lender, present
fairly the consolidated financial condition of Holdings and its
consolidated Subsidiaries or the Company and its consolidated
Subsidiaries, as the case may be, as at such dates, and the consolidated
results of their operations and cash flows for the fiscal years then
ended. All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants and as disclosed therein). Neither Holdings, the Company nor
any of their respective consolidated Subsidiaries had, at the date of the
most recent balance sheet referred to above, any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-term
lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange
transaction, which is not reflected in the foregoing statements or in the
notes thereto other than such obligations which are not required to be
disclosed under GAAP (which obligations are described on Schedule 3.1(b)).
During the period from December 31, 1994 to and including the Effective
Date there has been no sale, transfer or other disposition by Holdings,
the Company or any of their respective consolidated Subsidiaries of any
material part of its business or property and no purchase or other
acquisition of any business or property (including any Capital Stock of
any other Person) material in relation to the consolidated financial
condition of Holdings and its consolidated Subsidiaries or the Company and
its consolidated Subsidiaries, as the case may be, at December 31, 1994
(except for any sale, transfer or other disposition made in connection
with the Capital Lease Financing Facility).
(c) The projections dated March 2, 1995 furnished to the Lenders
were prepared based on good faith assumptions and the best information
available to Holdings and the Company on the date thereof, and all
assumptions and estimates set forth therein, on such date, were believed
by management of Holdings and the Company to be reasonable in light of
then current conditions and reflected Holdings' and the Company's
reasonable estimate of the results of operations and other information
projected therein, it being recognized by the Lenders that such
projections as they relate to future events are not to be viewed as fact
and that actual results during the period or periods covered by such
projections may differ from the projected results set forth therein.
3.2 No Change. Since December 31, 1994 (a) there has been no
development or event, which has had or could reasonably be expected to
have a Material Adverse Effect and (b) no dividends or other distributions
have been declared, paid or made upon the Capital Stock of Holdings or the
Company nor has any of the Capital Stock of the Company been redeemed,
retired, purchased or otherwise acquired for value by Holdings, the
Company or any of its Subsidiaries, except as expressly permitted by
Section 6.6.
40
3.3 Corporate Existence; Compliance with Law. Each of Holdings,
the Company and its Subsidiaries (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal
right, to own, pledge, mortgage and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires
such qualification except where the failure to be so qualified and/or in
good standing, in the aggregate, could not reasonably be expected to have
a Material Adverse Effect and (d) is in compliance with all Requirements
of Law except to the extent that the failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations. (a)
Each Loan Party has the corporate power and authority, and the legal
right, to make, deliver and perform each Term Loan Document to which it is
a party and, in the case of the Company, to borrow hereunder and has taken
all necessary corporate action to authorize the execution, delivery and
performance of each such Term Loan Document and, in the case of the
Company, to authorize the borrowing for its account on the terms and
conditions of this Agreement.
(b) No consent or authorization of, filing with or other act by or
in respect of, any Governmental Authority or any other Person is required
in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of this Agreement or any
other Term Loan Document.
(c) This Agreement and the other Term Loan Documents have been duly
executed and delivered on behalf of each Loan Party party thereto. This
Agreement and the other Term Loan Documents constitute a legal, valid and
binding obligation of each Loan Party party thereto, enforceable against
each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5 No Legal Bar. Except as set forth in Schedule 3.5, the
execution, delivery and performance of this Agreement and the other Term
Loan Documents, the borrowings hereunder and the use of the proceeds
thereof will not violate any Requirement of Law or material Contractual
Obligation of Holdings, the Company or of any of its Subsidiaries and will
not result in, or require, the creation or imposition of any Lien on any
of their respective properties or revenues pursuant to any such
Requirement of Law or Contractual Obligation.
3.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is
pending or, to the knowledge of Holdings or the Company, threatened by or
against Holdings, the Company or any of its Subsidiaries or against any of
their respective properties or revenues (a) with respect to this Agreement
or any other Term Loan Document, the Term Loans or the use of the proceeds
41
thereof or any Lien contemplated by the Term Loan Documents or (b) which
has a reasonable possibility of an adverse determination and, if adversely
determined, (i) would affect the legality, validity or enforceability of
any Term Loan Document or (ii) would have a Material Adverse Effect.
3.7 No Default. Neither Holdings, the Company nor any of its
Subsidiaries is in default or has received any notice of default under or
with respect to any of its Contractual Obligations in any respect which
could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
3.8 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation applicable to Holdings, the Company or any of its
Subsidiaries could reasonably be expected to have a Material Adverse
Effect.
3.9 Taxes. Each of Holdings, the Company and its Subsidiaries has
filed or caused to be filed all tax returns which are required to be filed
and has paid all taxes shown to be due and payable on said returns or on
any assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided
on the books of Holdings, the Company or its Subsidiaries, as the case may
be, and the non-payment of which does not have a reasonable likelihood of
having a Material Adverse Effect); no tax Lien has been filed with respect
to any material tax liability on the part of Holdings, the Company or any
of its Subsidiaries; and, to the knowledge of Holdings or the Company, no
proposed material tax assessment is pending against Holdings, the Company
or any of its Subsidiaries and all potential tax liabilities are
adequately provided for on the books of Holdings, the Company or its
Subsidiaries, as the case may be.
3.10 Federal Regulations. No part of the proceeds of the Term
Loans will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under
Regulation G, T, U or X of the Board as now and from time to time
hereafter in effect or for any purpose which violates the provisions of
the Regulations of the Board. If requested by any Lender or the
Administrative Agent, the Company will furnish to the Administrative Agent
and each Lender a statement to the foregoing effect in conformity with the
requirements of the appropriate FR Form referred to in said Regulation G,
T, U or X.
3.11 Labor Matters. There are no strikes or other labor disputes
against Holdings, the Company or any of its Subsidiaries pending or, to
the knowledge of Holdings or the Company, threatened that (individually or
in the aggregate) could reasonably be expected to have a Material Adverse
Effect. Hours worked by and payment made to employees of Holdings, the
Company and its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect. All payments due from
Holdings, the Company or any of its Subsidiaries on account of employee
health and welfare insurance that (individually or in the aggregate) could
42
reasonably be expected to have a Material Adverse Effect if not paid have
been paid or accrued as a liability on the books of Holdings, the Company
or such Subsidiary.
3.12 ERISA. No Reportable Event has occurred since March 1, 1990
with respect to any Plan which, if then terminated, has had or could
reasonably be expected to have a Material Adverse Effect, and each Plan
has complied in all respects with the applicable provisions of ERISA and
the Code except where such failure to comply could not reasonably be
expected to have a Material Adverse Effect. The actuarial present value
of all accrued benefits under each Single Employer Plan maintained by the
Company or any Commonly Controlled Entity (based on those assumptions used
to fund the Plans) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the
value of the assets of such Plan. Neither the Company nor any Commonly
Controlled Entity has had or could reasonably be expected to have a
complete or partial withdrawal from any Multiemployer Plan, and neither
the Company nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Company or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date on which this
representation is made or deemed made where such withdrawal or liability
could reasonably be expected to have a Material Adverse Effect. No such
Multiemployer Plan is in a Reorganization or an Insolvency where the
effect of such Reorganization or Insolvency could reasonably be expected
to have a Material Adverse Effect.
3.13 Investment Company Act; Other Regulations. No Loan Party is
an "investment company", or a company "controlled" by an "investment
company" (other than one which is exempt from the provisions of the
Investment Company Act of 1940, as amended), within the meaning of the
Investment Company Act of 1940, as amended. No Loan Party is subject to
regulation under any federal or state statute or regulation which limits
its ability to incur Indebtedness.
3.14 Subsidiaries. The Subsidiaries of Holdings listed on Schedule
3.14 constitute all the Subsidiaries of Holdings on the Effective Date.
3.15 Purpose of Term Loans. The proceeds of the Term Loans will be
used for the purposes identified in the Preliminary Statement.
3.16 Environmental Matters. Each of the representations and
warranties set forth in paragraphs (a) through (f) below is true and
correct with respect to each parcel of real property owned or operated by
the Company or any of its Subsidiaries (collectively, the "Properties"):
(a) The Properties do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute or constituted a violation
of, or (ii) could reasonably be expected to give rise to liability under,
Environmental Laws, except to the extent that such violations and
liabilities, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(b) (i) The Properties and all operations at the Properties are in
compliance in all material respects and in the last three years have been
in compliance in all material respects with all Environmental Laws, and
43
(ii) there is no contamination at or under the Properties, or violation of
any Environmental Law with respect to the Properties or the business of
Holdings, the Company or any of its Subsidiaries, except to the extent
that such contamination and violations, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(c) Neither Holdings, the Company nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to the Properties or the
business of Holdings, the Company or any of its Subsidiaries or with
regard to any Person or entity whose liabilities for environmental matters
Holdings, the Company or any of its Subsidiaries has retained or assumed,
in whole or in part, contractually, by operation of law or otherwise,
which, in the aggregate, could reasonably be expected to have a Material
Adverse Effect, nor does Holdings or the Company have knowledge or reason
to believe that any such notice will be received or is being threatened.
(d) Hazardous Materials have not been transported or disposed of
from the Properties, nor have Hazardous Materials been generated, treated,
stored or disposed of at, on or under any of the Properties, in violation
of any Environmental Law or in a manner that could reasonably give rise to
liability under any Environmental Law, nor do Holdings, the Company or any
of its Subsidiaries reasonably believe that they have retained or assumed
any liability, contractually, by operation of law or otherwise, with
respect to the generation, treatment, storage or disposal of Hazardous
Materials, except to the extent that the foregoing, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(e) (i) No material judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of Holdings or the
Company, threatened, under any Environmental Law to which Holdings, the
Company or any of its Subsidiaries is or will be named a party with
respect to (x) the Properties, (y) the business of Holdings, the Company
or any of its Subsidiaries or (z) any liabilities pursuant to
Environmental Laws reasonably believed by Holdings, the Company or any of
its Subsidiaries to be retained or assumed by Holdings, the Company or any
of its Subsidiaries, contractually, by operation of law or otherwise, and
(ii) there are no material consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect
to (x) the Properties, (y) the business of Holdings, the Company or any of
its Subsidiaries or (z) any liabilities pursuant to Environmental Laws
reasonably believed by Holdings, the Company or any of its Subsidiaries to
be retained or assumed by Holdings, the Company or any of its
Subsidiaries, contractually, by operation of law or otherwise.
(f) There has been no Release or threat of Release of Hazardous
Materials at or from the Properties, or arising from or in connection with
the Properties or otherwise in connection with the business of Holdings,
the Company or its Subsidiaries in violation of any Environmental Law in a
manner that, in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
3.17 Accuracy of Information. No factual statement or information
contained in this Agreement, any other Term Loan Document, the
44
Confidential Information Memorandum (as the same may have been
supplemented prior to the Effective Date) or any other document,
certificate or written statement furnished to the Administrative Agent or
the Lenders or any of them, by or on behalf of any Loan Party for use in
connection with the transactions contemplated by this Agreement or the
other Term Loan Documents (including, without limitation, any financial
information furnished pursuant to Section 5.1), other than trade data
contained in the Confidential Information Memorandum which relates to any
Person which is not a Loan Party or an Affiliate thereof, contained as of
the date such statement, information, document or certificate was so
furnished (or, in the case of the Confidential Information Memorandum, as
of the Effective Date) any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements
contained herein or therein not misleading. The projections and pro forma
financial information contained in the materials referenced above are
based upon good faith estimates and assumptions believed by management of
the Company to be reasonable at the time made, it being recognized by the
Lenders that such financial information as it relates to future events is
not to be viewed as fact and that actual results during the period or
periods covered by such financial information may differ from the
projected results set forth therein. There is no fact known to any Loan
Party that could reasonably be expected to have a Material Adverse Effect
that has not been expressly disclosed herein, in the other Term Loan
Documents, in the Confidential Information Memorandum or in such other
documents, certificates and statements furnished to the Administrative
Agent and the Lenders for use in connection with the transactions
contemplated hereby and by the other Term Loan Documents.
3.18 Solvency. Each Loan Party is, and after giving effect to the
incurrence or assumption of all Indebtedness and obligations being
incurred or assumed in connection herewith will be and will continue to
be, Solvent.
3.19 Insurance. Holdings, the Company and each of its Subsidiaries
maintain with financially sound and reputable insurance companies
insurance on all its properties in at least such amounts and against at
least such risks (but, including in any event, public liability, product
liability and business interruption) as are usually insured against in the
same general area by companies engaged in the same or a similar business.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Effectiveness. The effectiveness of this
Agreement is subject to the satisfaction of the following conditions
precedent on or prior to the Effective Date:
(a) Agreement. The Administrative Agent shall have received
(i) this Agreement, duly executed and delivered by each Lender and
by a duly authorized officer of Holdings and the Company, with a
counterpart for each Lender and (ii) a Term Note for each Lender,
duly executed and delivered by a duly authorized officer of the
Company.
(b) Financial Statements. The Administrative Agent and each
Lender shall have received copies of each of the financial
statements referred to in Section 3.1.
45
(c) 16% Debentures. The Administrative Agent shall be
reasonably satisfied that Holdings shall be in a position to
establish, on or promptly after the Effective Date, a redemption
date (the "Redemption Date") on or prior to May 31, 1995 for the
portion of the 16% Debentures expected to be redeemed with the
proceeds of the Term Loans.
(d) Closing Certificates. The Administrative Agent shall
have received a Closing Certificate of each Loan Party,
substantially in the form of Exhibit B, with appropriate insertions
and attachments (which attachments shall be in form and substance
reasonably satisfactory to the Administrative Agent).
(e) Payment of Fees. The Administrative Agent shall have
received the fees to be received on the Effective Date referred to
in Section 2.4, and the Administrative Agent shall have been
reimbursed for all syndication, legal and other fees, costs and
expenses of the kind described in Section 10.5 to the extent
invoiced on or prior to the Effective Date.
(f) Legal Opinions. The Administrative Agent shall have
received, with a counterpart for each Lender, the following executed
legal opinions:
(i) the executed legal opinion of Cravath,
Swaine & Moore, counsel to Holdings, substantially
in the form of Exhibit C-1; and
(ii) the executed legal opinion of the general counsel
of the Company, substantially in the form of Exhibit C-2.
Each such legal opinion shall cover such other matters incident to
the transactions contemplated by this Agreement and the other Term
Loan Documents as the Administrative Agent may reasonably require.
4.2 Conditions to Term Loans. The agreement of each Lender to
make its portion of the Term Loans is subject to the satisfaction of the
following conditions precedent on the Term Loan Borrowing Date:
(a) No Orders, etc. No order, judgment or decree shall
purport to enjoin or restrain (i) any Lender from making its portion
of the Term Loans on such date or (ii) Holdings from redeeming on
such date a portion of the 16% Debentures having an aggregate face
amount equal to the aggregate amount of such Term Loans.
(b) Absence of Certain Defaults. There shall not have
occurred (i) any Default or Event of Default pursuant to Section
7(a) or (f) or (ii) any payment default in respect of the 10% Senior
Notes.
(c) No Acceleration. No Person shall have declared any
Indebtedness described in Section 7(e) to be due and payable, in
whole or in part, prior to the stated maturity of such Indebtedness.
46
(d) Redemption Date. Holdings shall have established the
Redemption Date in accordance with the 16% Debenture Indenture.
The borrowing of Term Loans hereunder shall constitute a representation
and warranty by the Company as of the Term Loan Borrowing Date that the
conditions contained in this Section 4.2 have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
Holdings and the Company hereby jointly and severally agree that, so
long as any Term Loan Commitment remains in effect or any Term Loan
remains outstanding and unpaid or any other amount is owing to any Lender
or the Administrative Agent hereunder, Holdings and the Company shall, and
shall cause each of their respective Subsidiaries to, unless the Required
Lenders shall otherwise consent in writing:
5.1 Financial Statements. In the case of Holdings and the
Company, furnish to each Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of Holdings or the Company, as the
case may be, a copy of the consolidated balance sheet of Holdings
and its consolidated Subsidiaries and of the Company and its
consolidated Subsidiaries as at the end of such year and the related
consolidated statements of income and stockholders' equity and cash
flows for such year, setting forth in each case in comparative form
the figures for the previous year, reported on by Ernst & Young or
other independent certified public accountants acceptable to the
Required Lenders (which report shall not be qualified in any
material respect); and
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of
each fiscal year of Holdings or the Company, as the case may be, the
unaudited consolidated balance sheet of Holdings and its
consolidated Subsidiaries and of the Company and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidated statements of income and stockholders' equity and cash
flows for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative
form the figures for the previous year, certified by a Responsible
Officer of Holdings or the Company, as applicable, as fairly
presenting the financial condition and results of operations of
Holdings or the Company, as the case may be, on a consolidated basis
in accordance with GAAP (subject to normal year-end audit
adjustments);
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein and
with prior periods (except as approved by such accountants or officer, as
the case may be, and disclosed therein). It is understood that the
obligation to deliver any items described above which are contained in
Holdings' Form 10-K, as filed with the Securities and Exchange Commission
(in the case of Section 5.1(a)) or Holdings' Form 10-Q, as filed with the
47
Securities and Exchange Commission (in the case of Section 5.1(b)), may be
satisfied by delivery of such Form 10-K or Form 10-Q, as the case may be.
5.2 Certificates; Other Information. In the case of the Company,
or, if applicable, Holdings, furnish to each Lender:
(a) concurrently with the delivery of the financial
statements referred to in Section 5.1(a), (i) a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except
as specified in such certificate and (ii) copies of any management
letters when delivered to Holdings or the Company in connection with
such examination;
(b) concurrently with the delivery of the financial
statements referred to in Sections 5.1(a) and 5.1(b), (i) a
certificate of a Responsible Officer of each of Holdings and the
Company stating that, to the best of each such Responsible Officer's
knowledge, each Loan Party during such period has observed or
performed all of its covenants and other agreements, and satisfied
every condition, contained in this Agreement and in the other Term
Loan Documents to be observed, performed or satisfied by it, and
that such Responsible Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate
and (ii) a Compliance Certificate containing all information
necessary for determining compliance by Holdings, the Company and
its Subsidiaries with the provisions of this Agreement referred to
therein as of the last day of the fiscal quarter or fiscal year of
Holdings or the Company, as the case may be;
(c) by December 31 of each year, a copy of the projections
by Holdings and the Company of the operating budget and cash flow
budget and revenues of Holdings, the Company and its Subsidiaries
for the next succeeding fiscal year in form and substance reasonably
satisfactory to the Administrative Agent, setting forth in
reasonable detail the basis for all projections contained therein,
such projections to be accompanied by a certificate of a Responsible
Officer of each of Holdings and the Company to the effect that such
projections have been prepared in good faith using assumptions
believed by management to be reasonable and that such Responsible
Officer has no reason to believe they are misleading in any material
respect;
(d) within five days after the same are sent, copies of all
financial statements and reports which Holdings or the Company sends
to holders of any issue of its equity securities or debt securities
generally, and within five days after the same are filed, copies of
all financial statements and reports which Holdings or the Company
may make to, or file with, the Securities and Exchange Commission or
any successor or analogous Governmental Authority or any national
securities exchange; and
(e) promptly, such additional financial and other
information as any Lender may from time to time reasonably request
through the Administrative Agent.
48
5.3 Payment of Obligations. (a) Pay, discharge, perform, comply
with or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever nature,
except where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with
GAAP with respect thereto have been provided on the books of Holdings, the
Company or its Subsidiaries, as the case may be; (b) comply in all
material respects with all applicable Requirements of Law, except where
such Requirement of Law is being contested in good faith, a bona fide
dispute exists with respect thereto and the failure to comply therewith
has no reasonable likelihood of having a Material Adverse Effect; and (c)
comply with all applicable Contractual Obligations, except where the
failure to comply therewith has no reasonable likelihood of having a
Material Adverse Effect.
5.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it and
preserve, renew and keep in full force and effect its corporate existence
and take all reasonable action to maintain all rights, privileges,
licenses and franchises necessary or desirable in the normal conduct of
its business except as otherwise expressly permitted pursuant to Section
6.11.
5.5 Maintenance of Property; Insurance. Keep all property useful
and necessary in its business in good working order and condition;
preserve all of its registered trademarks, trade names and service marks,
the non-preservation of which has a reasonable likelihood of having a
Material Adverse Effect; maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts
and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same
or a similar business; and furnish to each Lender, upon written request,
full information as to the insurance carried.
5.6 Inspection of Property; Books and Records; Discussions. Keep
proper books of record and account in which complete and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and
permit representatives of the Administrative Agent (and, if an Event of
Default shall have occurred and be continuing, any Lender) to visit and
inspect any of its properties and examine and make copies of or abstracts
from any of its books and records at any reasonable time and as often as
may reasonably be desired and to discuss the business, operations,
properties and financial and other condition of Holdings, the Company and
its Subsidiaries with officers and employees of Holdings, the Company and
its Subsidiaries and with the independent certified public accountants of
Holdings or the Company.
5.7 Notices. In the case of the Company or, if applicable,
Holdings, promptly give notice to the Administrative Agent and each Lender
of:
(a) the occurrence of any Default or Event of Default;
49
(b) any (i) default or event of default under any Contractual
Obligation of Holdings, the Company or any of its Subsidiaries, (ii)
dispute between Holdings, the Company or any of its Subsidiaries and
any Governmental Authority or (iii) litigation, investigation or
proceeding which may exist at any time between Holdings, the Company
or any of its Subsidiaries and any Governmental Authority, which in
each case, if not cured or resolved or if adversely determined, as
the case may be, could reasonably be expected to have a Material
Adverse Effect;
(c) any litigation or proceeding (and any material
development in respect thereof) affecting Holdings, the Company or
any of its Subsidiaries in which (i) the amount involved is
$2,000,000 or more (or its equivalent in another currency or
currencies) and not covered by insurance as to which the relevant
insurance company has not disputed coverage or (ii) injunctive or
similar relief is sought;
(d) the following events, as soon as possible and in any
event within 30 days after Holdings or the Company knows or has
reason to know thereof: (i) the occurrence or expected occurrence of
any Reportable Event with respect to any Single Employer Plan, or
any withdrawal from, or the termination, Reorganization or
Insolvency of any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the
Company or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan; provided that notice
under this Section 5.7(d) will only be required if, individually or
in the aggregate, the amount of the liability of the Loan Parties
which could reasonably be expected would equal or exceed $2,000,000;
and
(e) a development or event which has had or could reasonably
be expected to have a Material Adverse Effect.
Each notice pursuant to this Section 5.7 shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action Holdings or the Company, as
the case may be, proposes to take with respect thereto.
5.8 Environmental Laws.
(a) Comply with, and use its best efforts to insure
compliance by all tenants and subtenants, if any, with, all
Environmental Laws and obtain and comply in all material respects
with and maintain, and use its best efforts to insure that all
tenants and subtenants obtain and comply with and maintain, any and
all licenses, approvals, registrations or permits required by
Environmental Laws, except to the extent that failure to do so would
not have any reasonable likelihood of having a Material Adverse
Effect;
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all
50
material respects with all lawful orders and directives of all
Governmental Authorities respecting Environmental Laws, except to
the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings would
not have any reasonable likelihood of having a Material Adverse
Effect;
(c) Without limiting the generality of the provisions of
Section 5.7, notify the Administrative Agent and each Lender of any
of the following which is reasonably likely to have a Material
Adverse Effect:
(i) any Environmental Claim which Holdings, the
Company or any of its Subsidiaries receives, including one to
take or pay for any remedial, removal, response or clean-up or
other action with respect to any Hazardous Materials contained
on any property presently or formerly owned or leased by
Holdings, the Company or any of its Subsidiaries;
(ii) any notice of any alleged violation of or
knowledge by Holdings, the Company or any of its Subsidiaries
of a condition which might reasonably result in a violation of
any law or regulation involving environmental, health or
safety matters; and
(iii) any commencement or threatened commencement of any
judicial or administrative proceeding or investigation
alleging a violation or potential violation of any requirement
of Environmental Law; and
(d) Defend, indemnify and hold harmless the Administrative
Agent and the Lenders, and their respective parents, subsidiaries,
affiliates, employees, agents, officers and directors, from and
against any and all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature
known or unknown, contingent or otherwise, arising out of, or in any
way relating to, the violation of, noncompliance with or liability
under any Environmental Laws applicable to the operations of
Holdings, the Company or any of its Subsidiaries or to the
Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation,
attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the
extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have
resulted primarily from the gross negligence or willful misconduct
of the party seeking indemnification therefor. Notwithstanding
anything to the contrary in this Agreement, this indemnity shall
continue in full force and effect regardless of the termination of
this Agreement.
5.9 Holdings Merger. In the event that Holdings shall be merged
with and into the Company (the "Holdings/Company Merger"), within three
Business Days after the consummation of the Holdings/Company Merger, the
Company shall deliver to the Administrative Agent an assumption agreement
in form and substance reasonably satisfactory to it pursuant to which a
51
holding company parent ("New Holdings") of the Company shall become a
party to this Agreement.
SECTION 6. NEGATIVE COVENANTS
Holdings and the Company hereby jointly and severally agree that, so
long as any Term Loan Commitment remains in effect or any Term Loan
remains outstanding and unpaid or any other amount is owing to any Lender
or the Administrative Agent hereunder, unless the Required Lenders shall
otherwise agree in writing:
6.1 Financial Condition Covenants.
(a) Consolidated Net Worth. Holdings and the Company shall
not permit the Consolidated Net Worth of Holdings at any time to be
less than the sum, without duplication, of (i) $80,000,000, (ii) 50%
of the Consolidated Net Income of Holdings for each fiscal quarter
of Holdings (beginning with the fiscal quarter ending March 31,
1995) for which such Consolidated Net Income is positive, (iii) 100%
of the Net Cash Proceeds of any Holdings Common Equity Offering
consummated after the Effective Date and (iv) 100% of any capital
contribution made to Holdings or the Company after the Effective
Date by any holder of its Capital Stock; provided, that for the
purposes of clauses (iii) and (iv) above, the amount of any Net Cash
Proceeds and capital contributions referred to in said clauses shall
be reduced to the extent (x) such proceeds or contributions are
concurrently applied to repurchase equity in accordance with this
Agreement and (y) Consolidated Net Worth (without giving effect to
such proceeds or contributions) would be reduced as a result of such
repurchase.
(b) Interest Coverage. Holdings and the Company shall not
permit the Interest Coverage Ratio as at the end of any Interest
Coverage Test Period (commencing with the Interest Coverage Test
Period ending June 30, 1995) to be less than 2.0 to 1.0.
6.2 Limitation on Secured Debt. The Company shall not, and shall
not permit any Subsidiary to, Issue, directly or indirectly, any Secured
Debt unless contemporaneously therewith effective provision is made to
secure the Term Loans equally and ratably with such Secured Debt for so
long as such Secured Debt is secured by a Lien. However, the Company and
the Subsidiaries shall not be required to equally and ratably secure the
Term Loans upon the Issuance of the following Secured Debt:
(i) Debt of the Company permitted under Section 6.4(b)(i) and
Debt of a Subsidiary permitted under Section 6.5(i);
(ii) Debt of the Company permitted under Section 6.4(a) that
is incurred to finance the acquisition of property or assets
(including Capital Stock) acquired by the Company or its
Subsidiaries after the Effective Date (including any construction on
or improvements, alterations or repairs to existing or future
acquired real property), so long as (1) such Debt is incurred and
the Lien securing such Debt is created within 180 days of the later
of (x) the date of acquisition of such property or assets or (y) the
completion of any such construction on or improvements, alterations
52
or repairs to, real property and (2) such Debt is not secured by any
property or assets of the Company or any Subsidiary other than the
property and assets so acquired and replacements thereof (other than
in the case of construction or improvement, any theretofore
unimproved real property or portion thereof on which the property is
so constructed, or the improvement is located);
(iii) Debt of the Company permitted under Section 6.4(a)
Issued in connection with the merger or consolidation of a
Subsidiary with the Company or in connection with the sale, lease or
other disposition of the Property or assets of a Subsidiary as an
entirety (or substantially as an entirety) to the Company; provided,
however, that (1) such Debt was existing immediately prior to the
time such Subsidiary was merged or consolidated with the Company or
the time of sale, lease or other disposition of the properties and
assets of such Subsidiary to the Company, (2) such Debt was neither
Issued as consideration in, or to provide all or any portion of the
funds or credit support used to consummate, or otherwise in
anticipation of, the transaction or series of related transactions
pursuant to which such Subsidiary previously became a Subsidiary (or
any refinancings thereof) nor Issued to acquire any Person or the
property or assets of any Person (or any refinancings thereof) and
(3) such Debt is not secured by any property or assets of the
Company or any Subsidiary other than the property or assets subject
thereto immediately prior to the time such Subsidiary was merged or
consolidated with the Company or the time of sale, lease or other
disposition of the properties and assets of such Subsidiary to the
Company;
(iv) Debt of a Subsidiary permitted under Section 6.5(iii) if
such Debt is not secured by any property or assets of the Company or
any Subsidiary other than the property or assets of such Subsidiary
(other than property or assets acquired, directly or indirectly,
from the Company or another Subsidiary) or the Capital Stock of such
Subsidiary;
(v) Debt of a Subsidiary permitted under Section 6.5(iv) if
such Debt is not secured by any property or assets of the Company or
any Subsidiary other than the property or assets of such Subsidiary;
(vi) Debt of a Subsidiary permitted under Section 6.5(vi), so
long as (1) the Debt exchanged, refunded or refinanced thereby was
Secured Debt and (2) the Debt so permitted is not secured by any
property or assets of the Company or any Subsidiary other than the
property securing the Secured Debt being exchanged, refunded or
refinanced or other property or assets of such Subsidiary;
(vii) Debt of the Company permitted under Section
6.4(b)(iii), Section 6.4(b)(viii) (to the extent that the Debt in
respect of which such Interest Rate Protection Agreement was entered
into is secured or to the extent that the collateral consists of
property otherwise subject to a Lien permitted by this Section 6.2)
or Section 6.4(b)(ix) and Debt of a Subsidiary permitted under
Section 6.5(viii) (to the extent that the Debt in respect of which
such Interest Rate Protection Agreement was entered into is secured
or to the extent that the collateral consists of property otherwise
53
subject to a Lien permitted by this Section 6.2), Section 6.5(ix) or
Section 6.5(x);
(viii) Secured Debt of the Company outstanding on the
Effective Date and Secured Debt Issued in exchange for, or the
proceeds of which are used to refund or refinance, Secured Debt of
the Company otherwise permitted by clauses (i)-(vii) of this Section
6.2 or Secured Debt of the Company permitted by this clause (viii);
provided, however, that the principal amount of the Secured Debt so
Issued shall not exceed the principal amount of the Secured Debt so
exchanged, refunded or refinanced and the Secured Debt so Issued
shall not be secured by any property or assets of the Company or any
Subsidiary other than the property or assets of the Company securing
the Secured Debt so exchanged, refunded or refinanced; and
(ix) Secured Debt of a Subsidiary outstanding on the
Effective Date and Secured Debt Issued in exchange for, or the
proceeds of which are used to refund or refinance, Secured Debt of
such Subsidiary otherwise permitted by clauses (i)-(vii) of this
Section 6.2 or Secured Debt of such Subsidiary permitted by this
clause (ix), provided, however, that the principal amount of the
Secured Debt so Issued shall not exceed the principal amount of the
Secured Debt so exchanged, refunded or refinanced and the Secured
Debt so Issued shall not be secured by any property or assets of the
Company or any Subsidiary other than the property or assets of such
Subsidiary securing the Secured Debt so exchanged, refunded or
refinanced.
6.3 Limitation on Sale/Leaseback Transactions. The Company shall
not, and shall not permit any Subsidiary to, enter into any Sale/Leaseback
Transaction unless:
(i) the Company or such Subsidiary would be entitled to
create a Lien on such property securing Debt in an amount equal to
the Attributable Debt with respect to such arrangement without
equally and ratably securing the Term Loans pursuant to Section 6.2;
or
(ii) at the election of the Company, the Company shall deem
such Sale/Leaseback Transaction to be an Asset Disposition subject
to Section 6.8, except that the Net Available Cash therefrom shall
be applied first in accordance with Section 6.8(a)(ii)(A), second in
accordance with Section 6.8(a)(ii)(C) and third in accordance with
Section 6.8(a)(ii)(D).
6.4 Limitation on Company Debt. (a) The Company shall not Issue,
directly or indirectly, any Debt unless the Consolidated EBITDA Coverage
Ratio determined on the date of Issuance of such Debt exceeds 2.0 to 1.0.
(b) Notwithstanding Section 6.4(a), the Company may Issue the
following Debt:
(i) Debt Issued pursuant to the Credit Agreement or other
financing arrangement in an aggregate principal amount outstanding
at any time of Issuance which, together with all Debt of
Subsidiaries then outstanding and Issued pursuant to Section 6.5(i),
54
does not exceed the greater of (1) $155,000,000 and (2) the sum of
(i) 50% of the book value of the inventory of the Company and its
Subsidiaries (before giving effect to any LIFO reserve with respect
to such inventory) and (ii) 80% of the book value of the accounts
receivable of the Company and its Subsidiaries; provided, however,
that, so long as a class of the Company's long-term senior unsecured
debt is Investment Grade Debt, the above percentages will be 60% of
the book value of inventory and 90% of the book value of accounts
receivable.
(ii) Debt owed to and held by a Wholly Owned Subsidiary;
provided, however, that any subsequent Issuance or transfer of any
Capital Stock that results in any such Subsidiary ceasing to be a
Wholly Owned Subsidiary or any transfer of such Debt (other than to
a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the Issuance of such Debt by the Company;
(iii) Debt represented by Capital Lease Obligations
(including the Capital Lease Financing Facility) and guarantees of
joint venture obligations not to exceed an aggregate amount of
$25,000,000 at any one time outstanding;
(iv) Debt Issued in any fiscal year to finance Consolidated
Capital Expenditures, which Debt in such year, together with any
Debt Issued during such year pursuant to Section 6.5(ix), does not
exceed $25,000,000;
(v) Debt outstanding on the Effective Date (other than Debt
permitted by clauses (i) and (ii) of this Section 6.4(b)) and, upon
the merger or consolidation of Holdings and the Company, the 16%
Debentures;
(vi) Debt Issued in exchange for, or the proceeds of which
are used to refund or refinance, any Debt permitted by Section
6.4(a) or by clauses (iii), (iv) or (v) of this Section 6.4(b) or
this clause (vi); provided, however, that, with the exception of any
Debt permitted by clause (iv) of this Section 6.4(b) with respect to
Debt represented by Capital Lease Obligations, (1) the principal
amount of the Debt so Issued shall not exceed the principal amount
of the Debt so exchanged, refunded or refinanced, (2) the Debt so
Issued (A) shall not mature prior to the Stated Maturity of the Debt
so exchanged, refunded or refinanced and (B) shall have an Average
Life equal to or greater than the remaining Average Life of the Debt
so exchanged, refunded or refinanced and (3) if, in the case the
Debt to be exchanged, refunded or refinanced is a Subordinated
Obligation, such Debt is subordinated to the Term Loans at least to
the extent and in the manner that the Debt to be exchanged, refunded
or refinanced is subordinate to the Term Loans;
(vii) the Term Loans and Debt Issued in exchange for, or the
proceeds of which are used to refund or refinance, any Debt
permitted by this Section 6.4(b)(vii); provided, however, that (1)
the principal amount of the Debt so Issued shall not exceed the
lesser of (a) the principal amount of the Debt so exchanged,
refunded or refinanced and (b) the amounts actually paid to redeem
or repurchase such Debt and (2) the Debt so Issued (A) shall not
55
mature prior to the Stated Maturity of the Debt so exchanged,
refunded or refinanced and (B) shall have an Average Life equal to
or greater than the remaining Average Life of the Debt so exchanged,
refunded or refinanced;
(viii) Debt of the Company represented by Interest Rate
Protection Agreements, foreign currency hedges and similar
agreements entered into in respect of any other Debt of the Company
otherwise permitted to be Issued under this Section 6.4; and
(ix) Debt in an aggregate principal amount which, together
with (1) all other Debt of the Company then outstanding (other than
Debt permitted by Section 6.4(a) or clauses (i) through (viii) of
Section 6.4(b)) and (2) all Debt and Preferred Stock of Subsidiaries
then outstanding permitted under Section 6.5(x), does not exceed
$25,000,000.
6.5 Limitation on Debt and Preferred Stock of Subsidiaries. The
Company shall not permit any Subsidiary to Issue, directly or indirectly,
any Debt or Preferred Stock except:
(i) Debt of a Subsidiary Issued pursuant to any revolving
credit or other financing arrangement in an aggregate principal
amount outstanding at any time which does not exceed the sum of (1)
50% of the book value of the inventory of such Subsidiary (before
giving effect to any LIFO reserve with respect to such inventory)
and (2) 80% of the book value of the accounts receivable of such
Subsidiary; provided, however, that so long as a class of the
Company's long-term senior unsecured debt is Investment Grade Debt,
the above percentages will be 60% of the book value of inventory and
90% of the book value of accounts receivable; provided further,
however, that the Company would have been permitted to Issue such
Debt pursuant to clause (i) of Section 6.4(b);
(ii) Debt or Preferred Stock Issued to and held by the
Company or by a Wholly Owned Subsidiary; provided, however, that any
subsequent Issuance or transfer of any Capital Stock that results in
any such Subsidiary ceasing to be a Wholly Owned Subsidiary or any
transfer of such Debt or Preferred Stock (other than to the Company
or a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the Issuance of such Debt or Preferred Stock by the
Issuer thereof;
(iii) Debt or Preferred Stock of a New Subsidiary Issued in
connection with the acquisition of a Third Party Person or any
property or assets of a Third Party Person including Debt or
Preferred Stock Issued as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
New Subsidiary became a Subsidiary or by which such New Subsidiary
acquired such Third Party Person or property and assets of such
Third Party Person if immediately thereafter, the Company could
Issue $1.00 of additional Debt under Section 6.4(a);
(iv) Debt or Preferred Stock of a Subsidiary Issued and
outstanding on or prior to the date on which such Subsidiary was
56
acquired by the Company (other than Debt or Preferred Stock Issued
as consideration in, or to provide all or any portion of the funds
or credit support utilized to consummate, or otherwise in
anticipation of, the transaction or series of related transactions
pursuant to which such Subsidiary became a Subsidiary or was
acquired by the Company), if immediately after the date on which
such Subsidiary was acquired by the Company, the Company could Issue
$1.00 of additional Debt under Section 6.4(a);
(v) Debt or Preferred Stock Issued and outstanding on or
prior to the Effective Date;
(vi) Debt or Preferred Stock Issued in exchange for, or the
proceeds of which are used to refund or refinance, Debt or Preferred
Stock referred to in clauses (iii), (iv) or (v) or this clause (vi)
of this Section 6.5; provided, however, that (1) the principal
amount of such Debt or Preferred Stock so Issued shall not exceed
the principal amount of the Debt or Preferred Stock so exchanged,
refunded or refinanced and (2) the Debt or Preferred Stock so Issued
(A) shall not mature prior to the Stated Maturity of the Debt or
final redemption date (if any) of the Preferred Stock being
exchanged, refunded or refinanced and (B) shall have an Average Life
equal to or greater than the remaining Average Life of the Debt or
Preferred Stock being exchanged, refunded or refinanced;
(vii) Non-Recourse Debt of a Non-Recourse Subsidiary;
provided, however, that if any such Debt ceases to be Non-Recourse
Debt of a Non-Recourse Subsidiary then such event shall be deemed to
constitute the Issuance of such Debt by the Issuer thereof;
(viii) Debt of any Subsidiary represented by Interest Rate
Protection Agreements, foreign currency hedges and similar
agreements entered into in respect of any other Debt of such
Subsidiary otherwise permitted under this Section 6.5;
(ix) Debt Issued by Foreign Subsidiaries in any fiscal year
to finance Consolidated Capital Expenditures, which Debt in such
year, together with any Debt Issued during such year pursuant to
Section 6.4(b)(iv), does not exceed $25,000,000; and
(x) Debt or Preferred Stock in an aggregate principal amount
which, together with (1) all other Debt and Preferred Stock of
Subsidiaries then outstanding (other than Debt or Preferred Stock
permitted by clauses (i) through (ix) of this Section 6.5) and (2)
Debt of the Company Issued under Section 6.4(b)(ix), does not exceed
$25,000,000.
6.6 Limitation on Restricted Payments. (a) The Company shall
not, and shall not permit any Subsidiary, directly or indirectly, to:
(i) declare or pay any dividend or make any distribution on
or in respect to its Capital Stock or to the direct or indirect
holders of its Capital Stock as such, including any payment in
connection with any merger or consolidation of the Company, except
for (1) any dividends or distributions payable solely in shares of
its Capital Stock that is not Redeemable Stock, (2) dividends or
57
distributions payable to the Company or a Subsidiary and (3)
dividends or distributions payable to holders (other than the
Company or any of its Affiliates) of a class of a Subsidiary's
Capital Stock that is held by the Company or a Subsidiary, which
dividends or distributions also were paid pro rata to the Company or
a Subsidiary;
(ii) purchase, redeem or otherwise acquire or retire for
value any Capital Stock of the Company;
(iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment any Subordinated
Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of
acquisition); or
(iv) make any Investment (other than any Qualified
Investment) in any Person
(any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Investment described in
clauses (i)-(iv) of this Section 6.6(a) being hereinafter referred to as a
"Restricted Payment") if at the time the Company or such Subsidiary makes
such Restricted Payment: (1) a Default shall have occurred and be
continuing (or would result therefrom); (2) the Company is not able to
Issue $1.00 of additional Debt under Section 6.4(a); or (3) the aggregate
amount of such Restricted Payment and all other Restricted Payments since
the Effective Date would exceed the sum of:
(A) 50% of the Consolidated Adjusted Net Income accrued for the
period (treated as one accounting period) commencing with the
fiscal quarter during which the Effective Date occurs to and
including the most recent fiscal quarter ending at least 45
days prior to the date of such Restricted Payment (or, in case
such Consolidated Adjusted Net Income shall be a deficit,
minus 100% of such deficit);
(B) the aggregate Adjusted Net Cash Proceeds received by the
Company from the Issue or sale of its Capital Stock (other
than Redeemable Stock) subsequent to the Effective Date (other
than the Issuance or sale to a Subsidiary or an employee stock
ownership plan);
(C) the aggregate Adjusted Net Cash Proceeds received by the
Company from the Issue or sale of its Capital Stock (other
than Redeemable Stock) to an employee stock ownership plan
subsequent to the Effective Date, but (if such employee stock
ownership plan Issues any Debt) only to the extent that any
such proceeds are equal to any increase in the Consolidated
Adjusted Net Worth of the Company resulting from principal
repayments made by such employee stock ownership plan with
respect to Debt Issued by it to finance the purchase of such
Capital Stock;
58
(D) the amount by which Debt of the Company is reduced on the
Company's balance sheet upon the conversion or exchange (other
than by a Subsidiary) subsequent to the Effective Date of any
Debt of the Company convertible or exchangeable for Capital
Stock (other than Redeemable Stock) of the Company (less the
amount of any cash, or other property, distributed by the
Company upon such conversion or exchange);
(E) the aggregate cash received by the Company after the Effective
Date as capital contributions to the Company; and
(F) to the extent an Investment made by the Company or a
Subsidiary after the Effective Date was included in the amount
of a Restricted Payment, the aggregate cash received by the
Company in connection with the disposition or repayment of or
return on such Investment made after the Effective Date, which
amount shall not exceed the amount of such Restricted Payment.
(b) The provisions of Section 6.6(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock or
Subordinated Obligations of the Company made by exchange for, or out
of the Adjusted Net Cash Proceeds of the substantially concurrent
sale of, Capital Stock of the Company (other than Redeemable Stock
and other than Capital Stock Issued or sold to a Subsidiary or an
employee stock ownership plan); provided, however, that (A) such
purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments and (B) the Adjusted Net Cash Proceeds
from such sale shall be excluded from clause (3)(B) of Section
6.6(a);
(ii) any purchase or redemption of Subordinated Obligations
of the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Debt of the Company; provided,
however, that such Debt (A) shall be subordinated to the Term Loans
at least to the same extent and in the manner that the Subordinated
Obligations so exchanged, purchased or redeemed are subordinated to
the Term Loans, (B) shall not mature prior to the Stated Maturity of
such Subordinated Obligations and (C) shall have an Average Life
greater than the remaining Average Life of such Subordinated
Obligations; provided further, however, that such purchase or
redemption shall be excluded in the calculation of the amount of
Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations
from Net Available Cash to the extent permitted by Section 6.8;
provided, however, that such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend
would have complied with this Section 6.6; provided, however, that
at the time of payment of such dividend, no other Default shall have
occurred and be continuing (or would result therefrom); provided
further, however, that such dividend shall be included in the
calculation of the amount of Restricted Payments;
59
(v) so long as no Default has occurred and is continuing or
would result from such transaction, any Restricted Payment to be
applied by Holdings to, or any Restricted Payment consisting of, the
repurchase of shares of Capital Stock of Holdings or the Company
from any present or former employee or director of Holdings, the
Company or any Subsidiary (or from such employee's or director's
respective heirs, legatees, personal representatives, successors and
permitted assigns, and permitted transferees) in connection with the
death, disability or termination of employment of such employee or
director in accordance with the terms of the Management Agreements
(or on terms more favorable to the Company); provided, however, that
the aggregate amount of such Restricted Payments in any fiscal year
shall not exceed the sum of (x) $5,000,000 and (y) an amount equal
to the aggregate Adjusted Net Cash Proceeds of any sale of shares of
common stock of Holdings or the Company to any officer or employee
of Holdings, the Company or any Subsidiary subsequent to the
Effective Date which, in the case of the common stock of Holdings,
shall have been contributed to the capital of the Company minus the
aggregate amount of Restricted Payments previously made pursuant to
this Section 6.6(b)(v); provided further, however, that the
aggregate Adjusted Net Cash Proceeds of any sale of shares of common
stock to Holdings or the Company under Section 6.6(b)(v)(y) which is
utilized to make a Restricted Payment under this Section 6.6(b)(v)
shall not be included under clauses (B) through (E) of Section
6.6(a); provided further, however, that such amount shall be
excluded in the calculation of the amount of Restricted Payments;
(vi) any payments which are permitted by clauses (i), (ii),
(iv) and (v) of Section 6.9; provided, however, that such payments
shall be excluded in the calculation of the amount of Restricted
Payments;
(vii) so long as no Event of Default or Default (except a
Default pursuant to clause (c) (other than pursuant to Section
6.11), (d), (f) (in the case of an involuntary proceeding) or (g) of
Section 7) shall have occurred and be continuing (or would result
therefrom), the declaration and payment of dividends (or the making
of loans or advances) to Holdings for the purpose of and in an
amount which shall not exceed the amount necessary for the payment
in cash of the interest expense on outstanding 16% Debentures as
such interest becomes due and payable in cash; provided, however,
that 50% of such dividends, loans or advances shall be included in
the calculation of the amount of Restricted Payments;
(viii) so long as no Default shall have occurred and be
continuing (or would result therefrom), the declaration and payment
of dividends (or the making of loans or advances) to Holdings for
the redemption, repurchase, defeasance or other acquisition or
retirement for value of the 16% Debentures on or prior to their
Stated Maturity; provided, however, that, at the time of the
declaration thereof, the Consolidated EBITDA Coverage Ratio, after
giving effect to the Issuance of any Debt in connection therewith,
would be greater than 1.75 to 1.0; provided further, however, that
such dividends, loans or advances shall be excluded in the
calculation of the amount of Restricted Payments to the extent the
60
same are funded from any Specified Source, and shall otherwise be
included in the calculation of the amount of Restricted Payments;
(ix) in the event the 16% Debentures become obligations of
the Company, the payment, or the redemption, repurchase, defeasance
or other acquisition or retirement for value, of the 16% Debentures
on or prior to their Stated Maturity; provided, however, that, at
the time of the redemption, repurchase, defeasance, acquisition or
retirement thereof, the Consolidated EBITDA Coverage Ratio would be
greater than 1.75:1; provided further, however, that such payment,
redemption, repurchase, defeasance or retirement for value shall be
excluded in the calculation of the amount of Restricted Payments to
the extent the same are funded from any Specified Source, and shall
otherwise be included in the calculation of the amount of Restricted
Payments;
(x) the payment of a management fee to Holdings in an amount
not to exceed $2.5 million annually; provided, however, that such
payment shall be excluded in the calculation of the amount of
Restricted Payments; and
(xi) so long as no Default has occurred and is continuing or
would result from such transaction, following the initial Public
Equity Offering of common stock, dividends in an aggregate amount in
any year not to exceed 6% of the aggregate Adjusted Net Cash
Proceeds received by the Company in connection with such initial
Public Equity Offering and any subsequent Public Equity Offering of
common stock; provided, however, that such dividends shall be
included in the calculation of the amount of Restricted Payments.
(c) Notwithstanding anything to the contrary in this Section 6.6,
in no event may the Company or any Subsidiary make any Restricted Payment
which it is not permitted to make pursuant to the terms of the 10% Senior
Note Indenture.
6.7 Limitation on Restrictions on Distributions from Subsidiaries.
The Company shall not, and shall not permit any Subsidiary to, create or
otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary to:
(i) pay dividends or make any other distributions on its
Capital Stock or pay any Debt or other obligation owed to the
Company;
(ii) make any loans or advances to the Company; or
(iii) transfer any of its property or assets to the Company;
other than
(A) any encumbrance or restriction pursuant to an agreement as in
effect on the Effective Date,
(B) any encumbrance or restriction with respect to a Subsidiary
pursuant to an agreement relating to any Debt Issued by such
Subsidiary on or prior to the date on which such Subsidiary
61
was acquired by the Company (other than Debt Issued as
consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, or otherwise
in anticipation of, the transaction or series of related
transactions pursuant to which such Subsidiary became a
Subsidiary or was acquired by the Company or otherwise in
anticipation of its becoming a Subsidiary) and outstanding on
such date,
(C) any encumbrance or restriction pursuant to an agreement
effecting a refinancing of Debt Issued pursuant to an
agreement referred to in the foregoing clauses (A) or (B);
provided, however, that the encumbrances and restrictions of
the type implicated by this Section 6.7 contained in any such
refinancing agreement are no less favorable to the Lenders
than encumbrances and restrictions contained in the agreement
covering Debt being refinanced,
(D) any such encumbrance or restriction consisting of customary
non-assignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer
of the lease,
(E) in the case of Section 6.7(iii), restrictions contained in
security agreements securing Debt of a Subsidiary to the
extent such restrictions restrict the transfer of the property
subject to such security agreements,
(F) any encumbrance or restriction relating to a Non-Recourse
Subsidiary,
(G) any restriction contained in a license agreement,
(H) any restriction with respect to a Subsidiary imposed pursuant
to an agreement entered into for the sale or disposition of
all or substantially all the Capital Stock or assets of such
Subsidiary pending the closing of such sale or disposition and
(I) any encumbrance or restriction relating to a Foreign
Subsidiary.
6.8 Limitation on Sales of Assets and Subsidiary Stock. (c) The
Company shall not, and shall not permit any Subsidiary to, make any Asset
Disposition unless:
(i) the Company or such Subsidiary receives consideration at
the time of such Asset Disposition at least equal to the fair value,
as determined in good faith by the Board of Directors (including as
to the value of all non-cash consideration), of the shares and
assets subject to such Asset Disposition and at least 75% of the
consideration thereof received by the Company or such Subsidiary is
in the form of cash or cash equivalents and
(ii) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by the Company (or such
Subsidiary, as the case may be):
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(A) first, to the extent the Company or such Subsidiary is
required by the terms thereof (including pursuant to the
terms of any consent to such Asset Disposition required
by the terms of such Debt) to prepay, repay or purchase
Debt permitted under Section 6.4(b)(i) or Section 6.5(i)
(other than Debt owed to the Company or an Affiliate of
the Company) within 60 days from the later of the date
of such Asset Disposition or the receipt of such Net
Available Cash;
(B) second, to the extent of the balance of such Net
Available Cash after application in accordance with
clause (A) and to the extent elected by the Company, to
the acquisition by the Company or any Wholly Owned
Subsidiary of (x) Tangible Property or (y) a controlling
interest in a business enterprise with products or
markets that are similar to or complementary with the
products or markets of the Company or any of its
Subsidiaries on the Effective Date;
(C) third, to the extent of the balance of such Net
Available Cash after application in accordance with
clauses (A) and (B), 270 days after receipt thereof to
make an offer pursuant to and subject to this Section to
the Lenders and the holders of any other Senior Debt
designated by the Company to prepay the principal amount
plus accrued interest of the Term Loans and purchase
such other Senior Debt at a purchase price of 100% of
the principal amount plus accrued interest; provided,
however, that if the principal amount of such Term Loans
and such Senior Debt, together with accrued interest to
the date of prepayment or repurchase (subject to record
date provisions), tendered for acceptance pursuant to
such offer exceeds the balance of such Net Available
Cash, then the Company will accept for prepayment the
Term Loans of each Lender and for repurchase such other
Senior Debt of each tendering holder on a pro rata basis
(rounded to minimum denominations) in accordance with
the principal amount so tendered; and
(D) fourth, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A), (B) and
(C), to either (x) the acquisition of Tangible Property or a
controlling interest in a business enterprise or (y) the
prepayment, repayment or purchase of Debt (other than any
Redeemable Stock) of the Company or Debt of any Subsidiary (in
each case other than Debt owed to the Company or an Affiliate
of the Company) and thereafter to the purchase of Redeemable
Stock of the Company (other than Redeemable Stock beneficially
owned by an Affiliate of the Company), in each case within one
year from the later of the receipt of such Net Available Cash
and the date the offer described in clause (C) is consummated.
Notwithstanding the foregoing provisions of the preceding sentence, the
Company and its Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section 6.8 until and only to the
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extent that the aggregate Net Available Cash from all Asset Dispositions
which are not applied in accordance with this Section 6.8 exceed
$15,000,000, provided, however, that if a class of the Company's long-term
unsecured debt is Investment Grade Debt (and such Asset Disposition does
not cause such Debt to not be Investment Grade Debt), the amount of
$15,000,000 in this sentence shall be the greater of $15,000,000 and 10%
of Consolidated Net Tangible Assets immediately after giving effect to
such Asset Disposition. Pending application of Net Available Cash
pursuant to this Section 6.8, such Net Available Cash shall be invested in
Permitted Investments of the types described in clauses (i)-(iii) of the
definition thereof. The Company shall not be required to make any
prepayment of Term Loans pursuant to this Section 6.8 if the Net Available
Cash available therefor (after application of the proceeds as provided in
clauses (A) and (B) above) is less than $5,000,000 for any particular
Asset Disposition (which lesser amounts shall not be aggregated and
carried forward for purposes of determining whether an offer is required
with respect to the Net Available Cash from any subsequent Asset
Disposition). For the purposes of this covenant, the following are deemed
to be cash: (x) the assumption of Debt of the Company or any Subsidiary
and the release of the Company or such Subsidiary from all liability on
such Debt in connection with such Asset Disposition and (y) securities
received by the Company or any Subsidiary from the transferee that are
promptly converted by the Company or such Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the
prepayment of Term Loans pursuant to Section 6.8(a)(ii)(C), the Company
will be required to prepay Term Loans and repurchase Senior Debt tendered
pursuant to an offer by the Company for the Term Loans and the Senior Debt
(the "Offer") at a purchase price of 100% of their principal amount plus
accrued interest in accordance with the procedures (including prorating in
the event of oversubscription) set forth in Section 6.8(c). If the
aggregate prepayment amount of Term Loans and purchase price of Senior
Debt tendered pursuant to the Offer is less than the Net Available Cash
allotted to the prepayment of the Term Loans and repurchase of Senior
Debt, the Company shall apply the remaining Net Available Cash in
accordance with Section 6.8(a)(ii)(D).
(c) (i) Promptly, and in any event within the earlier of (A) 300
days after the date of each Asset Disposition as to which the Company must
make an Offer or (B) the date that the Company determines that it will
make an offer in accordance with Section 6.8(a)(ii)(C), the Company shall
be obligated to deliver to the Administrative Agent and send, by
first-class mail to each Lender, a written notice stating that the Lender
may elect to have such Lender's Term Loans prepaid by the Company either
in whole or in part (subject to prorating as hereinafter described in the
event the Offer is oversubscribed) in integral multiples of $1,000 of
principal amount. The notice shall specify a prepayment date not less
than 30 days nor more than 60 days after the date of such notice (the
"Prepayment Date") and shall contain information concerning the business
of the Company which the Company in good faith believes will enable such
Lenders to make an informed decision (which at a minimum will include (i)
a description of material developments in the Company's business
subsequent to the date of the most recent financial statements delivered
to the Lenders and (ii) if material, appropriate pro forma financial
information) and all instructions and materials necessary to elect
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prepayment of the Term Loans pursuant to the Offer, together with the
information contained in clause (iii) below.
(ii) Not later than the date upon which written notice of an Offer
is delivered to the Administrative Agent as provided below, the Company
shall deliver to the Administrative Agent an Officers' Certificate as to
(A) the amount of the Offer (the "Offer Amount"), (B) the allocation of
the Net Available Cash from the Asset Dispositions pursuant to which such
Offer is being made and (C) the compliance of such allocation with the
provisions of Section 6.8(a). On such date, the Company shall also
irrevocably deposit with the Trustee or with a paying agent (or, if the
Company is acting as its own paying agent, segregate and hold in trust)
(the Trustee and any such paying agent being referred to herein as the
"Paying Agent") in immediately available funds an amount equal to the
Offer Amount to be held for payment in accordance with the provisions of
this Section. The Paying Agent shall, on the Prepayment Date, deliver
payment to each Lender in the amount of the prepayment. If the aggregate
prepayment amount of the Term Loans and purchase price of the other Senior
Debt properly tendered is less than the Offer Amount, the Paying Agent
shall deliver the excess to the Company immediately after the expiration
of the period for which the Offer remains open (the "Offer Period").
(iii) Lenders will be entitled to withdraw their election if the
Administrative Agent or the Company receives not later than three Business
Days prior to the Prepayment Date a telegram, telex, facsimile
transmission or letter setting forth the name of the Lender and a
statement that such Lender is withdrawing such election. If at the
expiration of the Offer Period the aggregate principal amount of Term
Loans and other Senior Debt properly tendered exceeds the Offer Amount,
the Company shall select the Term Loans and other Senior Debt to be
purchased on a pro rata basis (rounded to minimum denominations) in
accordance with the principal amount so tendered. Lenders whose Term
Loans are prepaid only in part will be issued new Term Notes equal in
principal amount to the portion of the Term Loans not prepaid.
6.9 Limitation on Transactions with Affiliates. The Company shall
not, and shall not permit any Subsidiary to, directly or indirectly, enter
into any transaction (including the purchase, sale, lease or exchange of
any property or the rendering of any service or any loans or advances)
with any Affiliate of the Company (other than (i) transactions between the
Company and any of its Subsidiaries or between Subsidiaries (other than,
in each case, any Subsidiary the minority interest in which is owned by
any Affiliate of the Company) and (ii) transactions with an employee stock
ownership plan for the benefit of the employees of the Company and its
Subsidiaries), unless any such transaction is on terms no less favorable
to the Company or such Subsidiary than those that could be obtained in a
comparable arm's length transaction with an independent third party;
provided, however, that prior to consummating any such transaction which
has a value equal to or greater than $10,000,000, either (1) the Company
will have obtained an opinion from a nationally recognized investment
banking firm or other reputable third party appraiser to the effect that
the terms of such transaction are fair to the Company or such Subsidiary
or at least as favorable as might reasonably have been obtained in a
comparable arm's length transaction with an independent third party or (2)
the terms of such transaction have been approved by a majority of the
disinterested members of the Board of Directors.
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Notwithstanding the foregoing, nothing in this covenant will
prohibit any of the following:
(i) (A) the payment of management or advisory fees not
exceeding $1,000,000 per annum to Bessemer or any successor in
ownership interest in the Company and (B) Bessemer providing asset
portfolio management services or other investment advisory services
to the Company or any of its benefit or compensation plans on a
basis no less favorable to the Company than that on which Bessemer
provides such services to unrelated third parties;
(ii) any transaction pursuant to any agreement described on
Schedule 6.9;
(iii) any transaction which is a Restricted Payment;
provided, however, that such Restricted Payment is not prohibited by
Section 6.6;
(iv) any payment or other transaction pursuant to any tax
sharing agreement between the Company and Holdings or any other
Person with which the Company is required to, or is permitted to,
file a consolidated tax return or with which the Company is or could
be part of a consolidated group for tax purposes; provided, however,
the amount payable by the Company pursuant thereto shall not exceed
the amount of taxes which the Company would have been liable for on
a stand-alone basis; or
(v) employment arrangements entered into in the ordinary
course of business with officers of the Company or any Subsidiary.
6.10 Change of Control. (a) Upon a Change of Control, each Lender
shall have the right to require the Company to prepay all or any part of
such Lender's Term Loan plus accrued and unpaid interest, if any, to the
date of prepayment, in accordance with the terms contemplated in Section
6.10(b).
(b) Within 30 days following any Change of Control, the Company
will mail a notice to each Lender with a copy to the Administrative Agent
stating:
(i) that a Change of Control has occurred and that such
Lender has the right to require the Company to prepay all or any
part of such Lender's Term Loan plus accrued and unpaid interest, if
any, to the date of prepayment;
(ii) the circumstances and relevant facts regarding such
Change of Control (including information with respect to pro forma
historical income, cash flow and capitalization after giving effect
to such Change of Control);
(iii) the prepayment date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed in
the event of a Change of Control); and
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(iv) the instructions, determined by the Company consistent
with this Section 6.10, that a Lender must follow in order to have
its Term Loans prepaid.
(c) Lenders will be entitled to withdraw their election to have all
or a portion of their Term Loans prepaid if the Company receives not later
than three Business Days prior to the purchase date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Lender and
a statement that such Lender is withdrawing such election.
6.11 Mergers and Consolidations. The Company shall not consolidate
with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person unless:
(i) the resulting, surviving or transferee Person (if not the
Company) shall be a Person organized and existing under the laws of
the United States of America or any State thereof or the District of
Columbia and shall assume expressly by a supplemental agreement,
executed and delivered to the Administrative Agent, in form
satisfactory to the Administrative Agent, all the obligations of the
Company under this Agreement and the Term Notes;
(ii) immediately prior to and after giving effect to such
transaction (and treating any Debt which becomes an obligation of
the resulting, surviving or transferee Person or any Subsidiary as a
result of such transaction as having been Issued by such Person or
such Subsidiary at the time of such transaction), no Default has
occurred and is continuing;
(iii) immediately after giving effect to such transaction,
either (A) the Consolidated EBITDA Coverage Ratio is greater than
2.0 to 1.0 or (B) the Consolidated EBITDA Coverage Ratio is greater
than the Consolidated EBITDA Coverage Ratio immediately before
giving effect to such transaction; provided, however, that the
Consolidated EBITDA Coverage Ratio exceeds 1.0 to 1.0;
(iv) immediately after giving effect to such transaction, the
resulting, surviving or transferee Person has Consolidated Adjusted
Net Worth in an amount which is not less than the Consolidated
Adjusted Net Worth of the Company prior to such transaction or, in
the case of a consolidation or merger of the Company and Holdings,
immediately after giving effect to such transaction, the resulting,
surviving or transferee Person has Consolidated Adjusted Net Worth
in an amount which is not less than the Consolidated Adjusted Net
Worth of Holdings prior to such transaction; and
(v) the Company has delivered to the Administrative Agent an
Opinion of Counsel and an Officers' Certificate, each stating that
such consolidation, merger or transfer and such supplemental
agreement (if any) comply with this Agreement.
The resulting, surviving or transferee Person shall be the successor
Company and shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under the Agreement, but the
predecessor Company in the case of a conveyance, transfer or lease shall
67
not be released from the obligation to pay the principal of or the
interest on the Term Loans when due.
6.12 Fiscal Year. Each of Holdings and the Company shall not
permit its fiscal year to end on a day other than December 31.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Company shall fail to pay any principal of any Term
Loan when due in accordance with the terms hereof (including
pursuant to Section 6.8 or 6.10); or the Company shall fail to pay
any interest on any Term Loan, or any other amount payable
hereunder, within five Business Days after any such interest or
other amount becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by the
Company or any other Loan Party herein or in any other Term Loan
Document or which is contained in any certificate, document or
financial or other statement furnished at any time under or in
connection with this Agreement or any other Term Loan Document shall
prove to have been incorrect in any material respect on or as of the
date made or deemed made; or
(c) Any Loan Party shall default in the observance or
performance of any agreement contained in Section 5.7(a), 5.9 or 6
of this Agreement; or
(d) The Company or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Term Loan Document (other than as provided in
paragraphs (a) through (c) of this Section 7), and such default
shall continue unremedied for a period of 30 days after the earlier
of (i) the date on which a senior officer of Holdings or the Company
first knew or reasonably should have known of such default or (ii)
the date on which written notice thereof shall have been given to
the Company by the Administrative Agent or the Required Lenders; or
(e) Holdings, the Company or any of its Significant
Subsidiaries shall (i) default in any payment when due of principal
of or interest on any Indebtedness (other than the Term Loans) or in
the payment of any Guarantee Obligation; or (ii) default in the
observance or performance of any other agreement or condition
relating to any such Indebtedness or Guarantee Obligation or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Guarantee Obligation (or a
trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, such Indebtedness to become due prior to
its stated maturity or such Guarantee Obligation to become payable;
provided, however, that a default, event or condition described in
clause (i) or (ii) above shall not constitute an Event of Default
under this Agreement unless, at the time of such default, defaults,
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events or conditions of the type described in subclauses (i) and
(ii) of this paragraph (e) shall have occurred and be continuing
with respect to Indebtedness and/or Guarantee Obligations the
outstanding principal amount of which exceeds in the aggregate
$10,000,000; or
(f) (i) Holdings, the Company or any of its Significant
Subsidiaries shall commence any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or
any substantial part of its assets, or Holdings, the Company or any
of its Significant Subsidiaries shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced
against Holdings, the Company or any of its Significant Subsidiaries
any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or
(iii) there shall be commenced against Holdings, the Company or any
of its Significant Subsidiaries any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (iv) Holdings, the
Company or any of its Significant Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) Holdings, the Company or any of its Significant
Subsidiaries shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due;
or
(g) One or more judgments or decrees shall be entered against
Holdings, the Company or any of its Significant Subsidiaries
involving in the aggregate a liability (not paid or fully covered by
insurance as to which the relevant insurance company has not
disputed coverage) of $10,000,000 or more and (i) all such judgments
or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 60 days from the entry thereof or (ii)
enforcement proceedings shall have been commenced by any creditor
upon such judgment or order;
then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) above with respect to the
Company, automatically the Term Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement shall
immediately become due and payable, and (B) if such event is any other
Event of Default, with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
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Administrative Agent shall, by notice of default to the Company, declare
the Term Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement to be due and payable forthwith,
whereupon the same shall immediately become due and payable.
Except as expressly provided above in this Section 7, presentment,
demand, protest and all other notices of any kind are hereby expressly
waived.
SECTION 8. THE ADMINISTRATIVE AGENT
8.1 Appointment. Each Lender hereby irrevocably designates and
appoints Chemical as the Administrative Agent of such Lender under this
Agreement and the other Term Loan Documents, and each Term Lender
irrevocably authorizes Chemical, as the Administrative Agent for such
Lender, to take such action on its behalf under the provisions of this
Agreement and the other Term Loan Documents and to exercise such powers
and perform such duties as are expressly delegated to the Administrative
Agent by the terms of this Agreement and the other Term Loan Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement,
the Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or
any other Term Loan Document or otherwise exist against the Administrative
Agent.
8.2 Delegation of Duties. The Administrative Agent may execute
any of its duties under this Agreement and the other Term Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
8.3 Exculpatory Provisions. Neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to
be taken by it or such Person under or in connection with this Agreement
or any other Term Loan Document (except for its or such Person's own gross
negligence or willful misconduct) or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties
made by the Company or any other Loan Party or any officer thereof
contained in this Agreement or any other Term Loan Document or in any
certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent under or in connection
with, this Agreement or any other Term Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Term Loan Document or for any failure of the
Company or any other Loan Party to perform its obligations hereunder or
thereunder. The Administrative Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance
of any of the agreements contained in, or conditions of, this Agreement or
any other Term Loan Document, or to inspect the properties, books or
records of the Company or any other Loan Party.
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8.4 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon
any Term Note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Term Note as the
owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified
in failing or refusing to take any action under this Agreement or any
other Term Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders (except as otherwise expressly
provided in Section 10.1) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Term Loan Documents in accordance with a
request of the Required Lenders (except as otherwise expressly provided in
Section 10.1), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future
holders of the Term Loans.
8.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or
Event of Default unless the Administrative Agent has received notice from
a Lender or the Company referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders.
The Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the
Required Lenders (except as otherwise expressly provided in Section 10.1);
provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
8.6 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no
act by the Administrative Agent hereafter taken, including any review of
the affairs of the Company or any other Loan Party, shall be deemed to
constitute any representation or warranty by the Administrative Agent to
any Lender. Each Lender represents to the Administrative Agent that it
has, independently and without reliance upon the Administrative Agent or
any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Company and the other Loan Parties and made its
71
own decision to make its Term Loans hereunder and enter into this
Agreement. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Agreement and the
other Term Loan Documents, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Company and the
other Loan Parties. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative
Agent hereunder, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Company or any other Loan
Party which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
8.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed
by the Company and without limiting the obligation of the Company to do
so), ratably according to the respective amounts of their Term Loan
Commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including,
without limitation, at any time following the payment of the Term Loans)
be imposed on, incurred by or asserted against the Administrative Agent in
any way relating to or arising out of this Agreement, any of the other
Term Loan Documents or any documents contemplated hereby or thereby or
referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Administrative Agent under
or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Administrative Agent's gross
negligence or willful misconduct. The agreements in this Section 8.7
shall survive the payment of the Term Loans and all other amounts payable
hereunder.
8.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Company as
though the Administrative Agent were not the Administrative Agent
hereunder and under the other Term Loan Documents. With respect to its
Term Loans made or renewed by it, any Term Note issued to it, the
Administrative Agent shall have the same rights and powers under this
Agreement and the other Term Loan Documents as any Lender and may exercise
the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its
individual capacity.
8.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders. If
the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Term Loan Documents, then the Required Lenders
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shall appoint from among the Lenders a successor agent for the Lenders,
which successor agent shall be approved by the Company (which approval
shall not be unreasonably withheld), whereupon such successor agent shall
succeed to the rights, powers and duties of the Administrative Agent, and
the term "Administrative Agent" shall mean such successor agent effective
upon its appointment, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other
or further act or deed on the part of such former Administrative Agent or
any of the parties to this Agreement or any holders of the Term Loans.
After any retiring Administrative Agent's resignation as Administrative
Agent, the provisions of this Section 8.9 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement and the other Term Loan Documents.
SECTION 9. GUARANTEE
9.1 Guarantee. In order to induce the Administrative Agent and
the Lenders to execute and deliver this Agreement and to make or maintain
the Term Loans hereunder, and in consideration thereof, Holdings hereby
unconditionally and irrevocably guarantees to the Administrative Agent,
for the ratable benefit of the Lenders, the prompt and complete payment
and performance by the Company when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations, and Holdings further agrees
to pay any and all expenses (including, without limitation, all reasonable
fees, charges and disbursements of counsel) which may be paid or incurred
by the Administrative Agent or by the Lenders in enforcing, or obtaining
advice of counsel in respect of, any of their rights under the guarantee
contained in this Section 9. The guarantee contained in this Section 9,
subject to Section 9.5, shall remain in full force and effect until the
Obligations are paid in full.
Holdings agrees that whenever, at any time, or from time to time, it
shall make any payment to the Administrative Agent or any Lender on
account of its liability under this Section 9, it will notify the
Administrative Agent and such Lender in writing that such payment is made
under the guarantee contained in this Section 9 for such purpose. No
payment or payments made by the Company or any other Person or received or
collected by the Administrative Agent or any Lender from the Company or
any other Person by virtue of any action or proceeding or any setoff or
appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations shall be deemed to modify,
reduce, release or otherwise affect the liability of Holdings under this
Section 9 which, notwithstanding any such payment or payments, shall
remain liable for the Obligations until, subject to Section 9.5, the
Obligations are paid in full.
9.2 No Subrogation, Contribution, Reimbursement or Indemnity.
Notwithstanding anything to the contrary in this Section 9, Holdings
hereby irrevocably waives all rights which may have arisen in connection
with the guarantee contained in this Section 9 to be subrogated to any of
the rights (whether contractual, under the Bankruptcy Code, including
Section 509 thereof, under common law or otherwise) of the Administrative
Agent or any Lender against the Company or against the Administrative
Agent or any Lender for the payment of the Obligations, until all amounts
owing to the Administrative Agent and the Lenders by the Company on
account of the Obligations are paid in full. Holdings hereby further
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irrevocably waives all contractual, common law, statutory and other rights
of reimbursement, contribution, exoneration or indemnity (or any similar
right) from or against the Company or any other Person which may have
arisen in connection with the guarantee contained in this Section 9, until
all amounts owing to the Administrative Agent and the Lenders by the
Company on account of the Obligations are paid in full. So long as the
Obligations remain outstanding, if any amount shall be paid by or on
behalf of the Company to Holdings on account of any of the rights waived
in this Section 9.2, such amount shall be held by Holdings in trust,
segregated from other funds of Holdings, and shall, forthwith upon receipt
by Holdings, be turned over to the Administrative Agent in the exact form
received by Holdings (duly indorsed by Holdings to the Administrative
Agent, if required), to be applied against the Obligations, whether
matured or unmatured, in such order as the Administrative Agent may
determine.
9.3 Amendments, etc. with respect to the Obligations. Holdings
shall remain obligated under this Section 9 notwithstanding that, without
any reservation of rights against Holdings, and without notice to or
further assent by Holdings, any demand for payment of or reduction in the
principal amount of any of the Obligations made by the Administrative
Agent or any Lender may be rescinded by the Administrative Agent or such
Lender, and any of the Obligations continued, and the Obligations, or the
liability of any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered
or released by the Administrative Agent or any Lender, and this Agreement,
any other Term Loan Document, and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented
or terminated, in whole or in part, as the Lenders (or the Required
Lenders, as the case may be) may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by the
Administrative Agent or any Lender for the payment of the Obligations may
be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for
the Obligations or for the guarantee contained in this Section 9 or any
property subject thereto.
9.4 Guarantee Absolute and Unconditional. Holdings waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agent
or any Lender upon the guarantee contained in this Section 9 or acceptance
of the guarantee contained in this Section 9; the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 9; and all dealings between the
Company or Holdings, on the one hand, and the Administrative Agent and the
Lenders, on the other, shall likewise be conclusively presumed to have
been had or consummated in reliance upon the guarantee contained in this
Section 9. Holdings waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Company or
Holdings with respect to the Obligations. The guarantee contained in this
Section 9 shall be construed as a continuing, absolute, irrevocable and
unconditional guarantee of payment without regard to (a) the validity or
74
enforceability of this Agreement or any other Term Loan Document, any of
the Obligations or any collateral security therefor or guarantee or right
of offset with respect thereto at any time or from time to time held by
the Administrative Agent or any Lender, (b) any defense, setoff or
counterclaim (other than a defense of payment or performance) which may at
any time be available to or be asserted by the Company against the
Administrative Agent or any Lender, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Company or
Holdings) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Company for the Obligations, or of
Holdings under the guarantee contained in this Section 9, in bankruptcy or
in any other instance. When the Administrative Agent or any Lender is
pursuing its rights and remedies under this Section 9 against Holdings,
the Administrative Agent or any Lender may, but shall be under no
obligation to, pursue such rights and remedies as it may have against the
Company or any other Person or against any collateral security or
guarantee for the Obligations or any right of offset with respect thereto,
and any failure by the Administrative Agent or any Lender to pursue such
other rights or remedies or to collect any payments from the Company or
any such other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Company or any such other Person or of any such collateral security,
guarantee or right of offset, shall not relieve Holdings of any liability
under this Section 9, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Administrative Agent and the Lenders against Holdings.
9.5 Reinstatement. The guarantee contained in this Section 9
shall continue to be effective, or be reinstated, as the case may be, if
at any time payment, or any part thereof, of any of the Obligations is
rescinded or must otherwise be restored or returned by the Administrative
Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Company or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, the Company or any substantial part of its property,
or otherwise, all as though such payments had not been made.
9.6 Payments. Holdings hereby agrees that any payments in respect
of the Obligations pursuant to this Section 9 will be paid to the
Administrative Agent without setoff or counterclaim in Dollars at the
office of the Administrative Agent specified in Section 10.2.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any other
Term Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10. With the written consent of the Required Lenders, the
Administrative Agent and each Loan Party party to the relevant Term Loan
Document may, from time to time, enter into written amendments,
supplements or modifications hereto and to the other Term Loan Documents
for the purpose of adding any provisions to this Agreement or the other
Term Loan Documents or changing in any manner the rights of the Lenders or
of the Company or the other Loan Parties hereunder or thereunder or
waiving, on such terms and conditions as the Administrative Agent may
specify in such instrument, any of the requirements of this Agreement or
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the other Term Loan Documents or any Default or Event of Default and its
consequences; provided, that no such waiver and no such amendment,
supplement or modification shall (a) forgive the principal amount or
extend the final stated maturity or any scheduled installment of any Term
Loan, or reduce the stated rate of interest on any Term Loan or extend the
scheduled time of payment of interest thereon or increase the amount of
any Lender's Term Loan Commitment, in each case without the written
consent of each Lender directly affected thereby; (b) amend, modify or
waive any provision of this Section 10.1 or reduce the percentage
specified in the definition of Required Lenders, or consent to the
assignment or transfer by Holdings or the Company of any of its rights and
obligations under this Agreement and the other Term Loan Documents
(except, in the case of Holdings, as expressly contemplated by Section
5.9) in each case without the written consent of all the Lenders; or (c)
amend, modify or waive any provision of Section 8 without the written
consent of the then Administrative Agent. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Company, the other Loan Parties, the
Lenders, the Administrative Agent and all future holders of the Term
Loans. In the case of any waiver, the Company, the other Loan Parties,
the Lenders and the Administrative Agent shall, to the extent provided in
such waiver, be restored to their former position and rights hereunder and
under the other Term Loan Documents, and any Default or Event of Default
waived shall be deemed to be cured and not continuing; but no such waiver
shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including
by telecopy, telegraph or telex), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by
hand, or three days after being deposited in the mail, postage prepaid,
or, in the case of telecopy notice, when received, or, in the case of
telegraphic notice, when delivered to the telegraph company, or, in the
case of telex notice, when sent, answerback received, addressed as follows
in the case of Holdings, the Company and the Administrative Agent, and as
set forth in Schedule 1.1 in the case of the other parties hereto, or to
such other address as may be hereafter notified by the respective parties
hereto and any future holders of the Term Loans:
Holdings: BCP/Essex Holdings Inc.
c/o Bessemer Holdings, L.P.
630 Fifth Avenue
New York, New York 10111
Attention: Robert D. Lindsay
Telecopy: 212-969-9032
with copies to: Essex Group, Inc. (at the address set forth
below)
and Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Kris F. Heinzelman, Esq.
Telecopy: 212-474-3700
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The Company: Essex Group, Inc.
1601 Wall Street
Fort Wayne, Indiana 46802
Attention: David A. Owen
Telecopy: 219-461-4762
with copies to: BCP/Essex Holdings Inc. (at
the address set forth above)
and Cravath, Swaine & Moore (at
the address set forth above)
The Administrative
Agent: Chemical Bank
c/o Chemical Securities Inc.
10 South LaSalle Street
Chicago, Illinois 60603
Attention: Jonathan E. Twichell
Telecopy: 312-807-4077
with copies to: Chemical Bank Agency Services Corporation
Grand Central Tower
140 East 45th Street
New York, New York 10017
Attention: John Bromage
Telecopy: 212-622-0854
provided that any notice, request or demand to or upon the Administrative
Agent or the Lenders pursuant to Section 2.3, 2.5 or 2.7 shall not be
effective until received. Each telecopy notice to any Lender shall be
followed by a hard copy thereof by mail or hand delivery, provided that
the failure to do so shall not affect the effectiveness of any such notice
as provided above.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
10.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, under the other Term Loan
Documents and in any document, certificate or statement delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery of this Agreement and the other Term Loan
Documents.
10.5 Payment of Expenses and Taxes. The Company agrees (a) to pay
or reimburse the Administrative Agent for all its out-of-pocket costs and
expenses and internally allocated charges and reasonable fees incurred in
connection with the development, preparation and execution of this
Agreement and the other Term Loan Documents and any other documents
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prepared in connection herewith or therewith, the consummation and
administration of the transactions contemplated hereby and thereby and the
syndication of the credit facilities contained herein, including, without
limitation, the reasonable fees, charges and disbursements of counsel to
the Administrative Agent, (b) to pay or reimburse the Administrative Agent
for all its reasonable costs and expenses incurred in connection with any
amendment, supplement or other modification to this Agreement, any other
Term Loan Documents or any other documents prepared in connection herewith
or therewith, including, without limitation, reasonable fees, charges and
disbursements of counsel to the Administrative Agent, (c) to pay or
reimburse each Lender and the Administrative Agent for all its reasonable
costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Term Loan
Documents and any other documents prepared in connection herewith or
therewith, including, without limitation, reasonable fees, charges and
disbursements of counsel to the Administrative Agent and to each Lender
(including the reasonable allocated costs of in-house counsel for any
Lender), (d) to pay, indemnify each Lender and the Administrative Agent
against, and hold each Lender and the Administrative Agent harmless from,
any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under
or in respect of, this Agreement, the other Term Loan Documents and any
other documents prepared in connection herewith or therewith, and (e) to
pay, and indemnify and hold harmless each Lender and the Administrative
Agent and their respective officers, directors, employees, affiliates,
agents and controlling persons (each, an "indemnitee") from and against,
any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, charges and disbursements of
any kind or nature whatsoever (including, without limitation, reasonable
fees, charges and disbursements of counsel to such indemnitee) with
respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Term Loan Documents and any
such other documents, or the use of proceeds of the Term Loans, or any
claim, litigation, investigation or proceeding relating to any of the
foregoing, regardless of whether any indemnitee is a party thereto or
whether any such claim, litigation, investigation or proceeding is brought
by the Company or by any other Person, and to reimburse each indemnitee
upon demand for any legal or other reasonable expenses incurred in
connection with investigating or defending any of the foregoing (all the
foregoing, collectively, the "indemnified liabilities"); provided that the
Company shall have no obligation hereunder to any indemnitee with respect
to indemnified liabilities to the extent such indemnified liabilities are
found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted primarily from the gross negligence or
willful misconduct of such indemnitee. The agreements in this Section
10.5 shall survive repayment of the Term Loans and all other amounts
payable hereunder.
10.6 Successors and Assigns; Assignments and Participations. (a)
This Agreement shall be binding upon and inure to the benefit of Holdings,
the Company, the Lenders, the Administrative Agent, all future holders of
the Term Loans, and their respective successors and assigns, except that
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neither Holdings nor the Company may assign or transfer any of its rights
or obligations under this Agreement (except, in the case of Holdings, as
expressly contemplated by Section 5.9) without the prior written consent
of each Lender.
(b) Each Lender may, with the prior consent of the Company and the
Administrative Agent (such consent not to be unreasonably withheld but in
the case of the Company it shall be deemed reasonable for the Company to
withhold its consent if as a result of any assignment the Company would be
required to pay any additional amounts pursuant to Section 2.13 or 2.14),
assign to one or more banks or other entities all or a portion of its
rights and obligations under this Agreement and the other Term Loan
Documents (including, without limitation, all or a portion of its Term
Loan); provided, however, that (i) except in the case of an assignment of
all of a Lender's rights and obligations under this Agreement, after
giving effect to each such assignment, the amount of the Term Loan of the
assigning Lender and the assignee Lender shall, in each case, be no less
than one-tenth of the aggregate principal amount of all Term Loans then
outstanding (or such lesser amount as the Company may consent to), and
(ii) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance and pay to the Administrative Agent a processing
and recordation fee of $4,000. Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in such
Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (y) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and,
in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement, the other Term Loan Documents or any other
instrument or document furnished pursuant hereto or thereto, or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, the other Term Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or
any other Loan Party or the performance or observance by the Company or
any other Loan Party of any of its obligations under this Agreement, the
other Term Loan Documents or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements referred to in Section 3.1 and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance; (iv) such
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assignee will, independently and without reliance upon the Administrative
Agent, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement, the other Term Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (v) such
assignee appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers and discretion
under this Agreement, the other Term Loan Documents or any other
instrument or document furnished pursuant hereto or thereto as are
delegated to the Administrative Agent by the terms hereof or thereof,
together with such powers and discretion as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, on behalf of the Company, shall
maintain at the address of the Administrative Agent referred to in Section
10.2 a copy of each Assignment and Acceptance delivered to it and a
register (the "Register") for the recordation of the names and addresses
of the Lenders and the Term Loan Commitment of, and principal amount of
the Term Loans owing to, each Lender from time to time. The entries in
the Register shall be conclusive, in the absence of manifest error, and
the Company, the Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register as the owner of a Term Loan
or other obligation hereunder as the owner thereof for all purposes of
this Agreement and the other Term Loan Documents, notwithstanding any
notice to the contrary. The Register shall be available for inspection by
the Company or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance accepted by an
assigning Lender and an assignee, the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the
form of Exhibit D, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt
notice thereof to the Company. Promptly following its receipt of such
notice, the Company, at its own expense, shall execute and deliver to the
Administrative Agent in exchange for the surrendered Term Note a new Term
Note to the order of such assignee in an amount equal to the Term Loan
assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a Term Loan hereunder, a new Term Note to
the order of the assigning Lender in an amount equal to the Term Loan
retained by it hereunder. Such new Term Note shall be in an aggregate
principal amount equal to the aggregate principal amount of such
surrendered Term Note, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A.
(f) Each Lender may sell participations to one or more banks or
other entities (each, a "Participant") in all or a portion of its rights
and obligations under this Agreement (including, without limitation, all
or a portion of its Term Loan); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder
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of the Term Note issued to it for all purposes of this Agreement, (iv) for
purposes of Section 2.14, such Lender shall continue to be treated as if
it had not sold any such participation, such that no Participant shall
have any right to any indemnity or additional payment under such Section,
and such Lender shall be entitled to receive additional payments pursuant
to such Section calculated on the assumption that it had not sold any such
participation, (v) the Company, 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 (vi) no Participant under any such participation shall have any right
to approve any amendment or waiver of any provision of any Term Loan
Document, or any consent to any departure by any Loan Party therefrom,
except to the extent that such amendment, waiver or consent would reduce
the principal of, or interest on, the Term Loans or any fees payable
hereunder, in each case to the extent subject to such participation, or
postpone the date of the final maturity of, or any date fixed for any
payment of interest on, the Term Loans, in each case to the extent subject
to such participation. Notwithstanding the foregoing, the Company agrees
that each such Participant shall, to the extent provided in its
participation, be entitled to the rights and benefits under Sections 2.13
and 2.15 and all rights to, or rights to request, information under this
Agreement with respect to its participating interest, in each case as if
such Participant were a Lender and in each case as with effect as from the
date of effectiveness of the applicable participation.
(g) The Company authorizes each Lender to disclose to any
Participant or assignee (each, a "Transferee") and any prospective
Transferee any and all financial information in such Lender's possession
concerning the Company and its Affiliates which has been delivered to such
Lender by or on behalf of the Company pursuant to this Agreement or which
has been delivered to such Lender by or on behalf of the Company in
connection with such Lender's credit evaluation of the Company and its
Affiliates prior to becoming a party to this Agreement; provided, that,
unless the Administrative Agent and the Company shall otherwise agree,
prior to any such disclosure such Transferee shall have executed a
Confidentiality Letter in the form of Exhibit E.
(h) Nothing herein shall prohibit any Lender from pledging or
assigning all or any portion of its Term Loans to any Federal Reserve Bank
in accordance with applicable law.
10.7 Adjustments; Setoff.
(a) If any Lender (a "benefitted Lender") shall at any time receive
any payment of all or part of its Term Loans, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or
involuntarily, by setoff, pursuant to events or proceedings of the nature
referred to in Section 7(f), or otherwise), in a greater proportion than
any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Term Loans, or interest thereon, such
benefitted Lender shall purchase for cash from the other Lenders such
portion of each such other Lender's Term Loans, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such collateral or proceeds ratably with
each of the Lenders; provided, however, that if all or any portion of such
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excess payment or benefits is thereafter recovered from such benefitted
Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.
The Company agrees that each Lender so purchasing a portion of another
Lender's Term Loans may exercise all rights of payment (including, without
limitation, rights of setoff) with respect to such portion as fully as if
such Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided
by law, upon the occurrence and during the continuance of an Event of
Default, each Lender shall have the right, without prior notice to
Holdings or the Company, any such notice being expressly waived by
Holdings and the Company to the extent permitted by applicable law, upon
any amount becoming due and payable by Holdings or the Company hereunder
or under any Term Notes (whether at the stated maturity, by acceleration
or otherwise) to set off and appropriate and apply against such amount any
and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender
or any branch or agency thereof to or for the credit or the account of
Holdings or the Company. Each Lender agrees promptly to notify Holdings,
the Company and the Administrative Agent after any such setoff and
application made by such Lender; provided that the failure to give such
notice shall not affect the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute
one and the same instrument. A set of the copies of this Agreement signed
by all the parties shall be lodged with the Company and the Administrative
Agent.
10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
10.10 INTEGRATION. THIS AGREEMENT REPRESENTS THE ENTIRE AGREEMENT
OF HOLDINGS, THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS WITH
RESPECT TO THE SUBJECT MATTER HEREOF, WHICH SUCH AGREEMENT MAY NOT BE
CONTRADICTED BY EVIDENCE OF ANY PRIOR OR CONTEMPORANEOUS ORAL AGREEMENT
BETWEEN OR AMONG ANY OF THE PARTIES HERETO, AND THERE ARE NO PROMISES,
UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES BY THE ADMINISTRATIVE AGENT OR
ANY LENDER RELATIVE TO THE SUBJECT MATTER HEREOF NOT EXPRESSLY SET FORTH
OR REFERRED TO HEREIN OR IN THE OTHER TERM LOAN DOCUMENTS.
10.11 GOVERNING LAW. THIS AGREEMENT AND ANY TERM NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND ANY TERM
NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
82
10.12 Submission To Jurisdiction; Waivers. Each of Holdings and the
Company hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Term Loan
Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of
the United States of America for the Southern District of New York,
and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail),
postage prepaid, to Holdings or the Company, as the case may be, at
its address set forth in Section 10.2 or at such other address of
which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this Section 10.12 any special, exemplary,
punitive or consequential damages.
10.13 Acknowledgements. Each of Holdings and the Company hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Term Loan
Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship to Holdings or the Company, and the
relationship between Administrative Agent and Lenders, on one hand,
and Holdings and the Company, on the other hand, is solely that of
creditor and debtor; and
(c) no joint venture exists among the Lenders or among
Holdings, the Company and the Lenders.
10.14 WAIVERS OF JURY TRIAL. HOLDINGS, THE COMPANY, THE
ADMINISTRATIVE AGENT AND EACH OF THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER TERM LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
83
10.15 Confidentiality. Neither the Administrative Agent nor any
Lender shall disclose any Confidential Information to any Person without
the prior consent of the Company, other than (a) to the Administrative
Agent's or such Lender's affiliates and their officers, directors,
employees, agents and advisors, (b) to actual or prospective assignees and
participants, and then only on a confidential basis as contemplated in
Section 10.6(g) and upon the prior delivery of the confidentiality letter
contemplated therein, (c) as required by any law, rule or regulation or
judicial process and (d) as requested or required by any state, federal or
foreign authority or examiner (including the National Association of
Insurance Commissioners) regulating or having jurisdiction over the
Administrative Agent or any Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in New York, New York by their proper and
duly authorized officers as of the day and year first above written.
BCP/ESSEX HOLDINGS INC.
By: /s/ David A. Owen
---------------------------
Name: David A. Owen
Title: Executive Vice President
ESSEX GROUP, INC.
By: /s/ David A. Owen
---------------------------
Name: David A. Owen
Title: Executive Vice President
The Administrative Agent:
CHEMICAL BANK
By: /s/ Lisa D. Benitez
---------------------------
Name: Lisa D. Benitez
Title: Vice President
The Lenders:
CHL HIGH YIELD LOAN PORTFOLIO, A UNIT
OF CHEMICAL BANK
By: /s/ Richard Stewart
---------------------------
Name: Richard Stewart
Title: Vice President
84
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Timothy M. Barnes
---------------------------
Name: Timothy M. Barnes
Title: Managing Director
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Jerome R. Powers
---------------------------
Name: Jerome R. Powers
Title: Vice President
ORIX USA CORPORATION
By: /s/ Masaaki Tashiro
---------------------------
Name: Massaaki Tashiro
Title: Deputy President & COO
PROTECTIVE LIFE INSURANCE COMPANY
By: /s/ Mark K. Okada
---------------------------
Name: Mark K. Okada
Title: Principal
Protective Asset Management Co.
THE TRAVELERS INDEMNITY COMPANY
By: /s/ John W. Petchler
---------------------------
Name: John W. Petchler
Title: Second Vice President
85
THE TRAVELERS INSURANCE COMPANY
By: /s/ John W. Petchler
---------------------------
Name: John W. Petchler
Title: Second Vice President
Schedule 1.1
Amount of Term
Name and Address of Lender Loan Commitment
-------------------------- ---------------
CHL HIGH YIELD LOAN PORTFOLIO,
A UNIT OF CHEMICAL BANK $15,000,000
270 Park Avenue, 8th Floor
New York, New York 10017
Attention: Richard W. Stewart
Telephone: 212-270-4679
Telecopy: 212-270-9647
THE FIRST NATIONAL BANK OF BOSTON $5,000,000
100 Federal Street
Boston, Massachusetts 02110
Attention: Tim Barnes
Telephone: 617-434-7976
Telecopy:
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY $15,000,000
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Jeffrey J. Lueken
Telephone: 414-299-2572
Telecopy: 414-299-7124
ORIX USA CORPORATION $5,000,000
780 Third Avenue
New York, New York 10017
Attention: Arnold Kawano
Telephone: 212-418-8355
Telecopy: 212-418-8308
PROTECTIVE LIFE INSURANCE COMPANY $5,000,000
13455 Noel Road, LB#45
Two Galleria Tower, Suite 1150
Dallas, Texas 75230
Attention: Mark Okada
Telephone: 214-233-4300
Telecopy: 214-233-4343
TRAL & CO. $15,000,000
One Tower Square
Hartford, Connecticut 06183
Attention: John W. Petchler
Telephone: 203-277-5346
Telecopy: 203-954-5243
Schedule 3.1(b)
LIABILITIES, ETC.
None
Schedule 3.5
LEGAL BAR
None
Schedule 3.14
SUBSIDIARIES
Diamond Wire & Cable Co.
Essex Group, Inc.
Essex Group Export Inc.
Essex International, Inc.
Essex Wire Corporation
ExCel Wire and Cable Co.
Interstate Industries Holdings Inc.
Interstate Industries, Inc.
US Samica Corporation
Bristol Wire Company
Essex Group Mexico Inc.
Essex Group Mexico, S.A. de C.V.
Schedule 6.9
AGREEMENTS WITH AFFILIATES
None
EXHIBIT A
FORM OF TERM NOTE
$__________ New York, New York
__________ ___, 1995
FOR VALUE RECEIVED, the undersigned, ESSEX GROUP, INC., a Michigan
corporation (the "Company"), hereby unconditionally promises to pay to the
order of _____________________(the "Lender") at the office of Chemical
Bank, located at 270 Park Avenue, New York, New York 10017, in lawful
money of the United States of America and in immediately available funds,
the principal amount of _______________________ DOLLARS ($_________), or,
if less, the unpaid principal amount of the Term Loan made by the Lender
pursuant to Section 2.1(a) of the Agreement, as hereinafter defined. The
principal amount hereof shall be paid in the amounts and on the dates
specified in Section 2.2 of the Agreement. The Company further agrees to
pay interest in like money at such office on the unpaid principal amount
hereof from time to time outstanding at the rates and on the dates
specified in Section 2.9 of such Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which
shall be attached hereto and made a part hereof the date, Type and amount
of the Term Loan made by the Lender and the date and amount of each
payment or prepayment of principal with respect thereto, each conversion
of all or a portion thereof to another Type, each continuation of all or a
portion thereof as the same Type and, in the case of Eurodollar Term
Loans, the length of each Interest Period with respect thereto. Each such
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement or any
error in such endorsement shall not affect the obligations of the Company
in respect of such Term Loan.
This Note (a) is one of the Term Notes referred to in the Senior
Unsecured Note Agreement dated as of April ___, 1995 (as amended,
supplemented or otherwise modified from time to time, the "Agreement";
terms defined therein being used herein as therein defined unless
otherwise defined herein), among BCP/Essex Holdings Inc., the Company, the
Lender, the other banks and financial institutions from time to time
parties thereto and Chemical Bank, as administrative agent, (b) is subject
to the provisions of the Agreement and (c) is subject to optional and
mandatory prepayment in whole or in part as provided in Sections 2.5 and
2.6, respectively, of the Agreement.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be
declared to be, immediately due and payable, all as provided in Section 7
of the Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Agreement and
used herein shall have the meanings given to them in the Agreement.
2
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
ESSEX GROUP, INC.
By: __________________________________
Name: __________________________
Title: _________________________
Schedule A
to Term Note
LOANS, CONVERSIONS AND REPAYMENTS OF ABR TERM LOANS
[CAPTION]
Amount of ABR Unpaid
Amount Amount Amount of Term Loans Principal
of ABR Converted to Principal of Converted to Balance of
Term ABR Term ABR Term Eurodollar ABR Term Notation
Date Loans Loans Loans Repaid Term Loans Loans Made By
---- ------- ------------ ------------ ------------- ---------- -------
/TABLE
Schedule B
to Term Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR TERM LOANS
[CAPTION]
Interest Amount of Amount of
Period and Principal Eurodollar Unpaid
Amount Eurodollar of Term Loans Principal
Amount of Converted to Rate with Eurodollar Converted Balance of
Eurodollar Eurodollar Respect Term Loans to ABR Eurodollar Notation
Date Term Loans Term Loans Thereto Repaid Term Loans Term Loans Made By
---- ---------- ------------ ---------- ---------- ---------- ---------- --------
/TABLE
EXHIBIT B
FORM OF CLOSING CERTIFICATE
Pursuant to Section 4.1(d) of the Senior Unsecured Note
Agreement, dated as of April __, 1995 (the "Agreement"; terms defined
therein being used herein as therein defined unless otherwise defined
herein) among BCP/ESSEX HOLDINGS INC., ESSEX GROUP, INC., the lenders
parties thereto (the "Lenders") and CHEMICAL BANK, as administrative agent
for the Lenders, the undersigned [Vice] President of [Name of Loan Party]
(the "Certifying Loan Party") hereby certifies as follows:
1. The representations and warranties of the Certifying
Loan Party contained in each Term Loan Document to which it is a
party or in any certificate, document or financial or other
statement furnished by or on behalf of the Certifying Loan Party
pursuant to or in connection with any Term Loan Document are true
and correct in all material respects on and as of the date hereof
with the same effect as if made on the date hereof except for
representations and warranties stated to relate to a specific
earlier date, in which case such representations and warranties were
true and correct in all material respects as of such earlier date;
2. No Default or Event of Default has occurred and is
continuing as of the date hereof or after giving effect to any
extensions of credit to be made on the date hereof;
3. ____________________ is and at all times since
______________ 19__, has been the duly elected and qualified
[Assistant] Secretary of the Certifying Loan Party and the signature
set forth on the signature line for such officer below is such
officer's true and genuine signature;
and the undersigned [Assistant] Secretary of the Certifying Loan Party
hereby certifies as follows:
4. There are no liquidation or dissolution proceedings
pending or to my knowledge threatened against the Certifying Loan
Party, nor has any other event occurred affecting or, to my
knowledge, threatening the corporate existence of the Certifying
Loan Party;
5. The Certifying Loan Party is a corporation duly
incorporated, validly existing and in good standing under the laws
of the State of _______________;
6. Attached hereto as Exhibit A is a complete and correct
copy of resolutions duly adopted by the Board of Directors of the
Certifying Loan Party on _________, 19__; such resolutions have not
in any way been amended, modified, revoked or rescinded and have
been in full force and effect since their adoption to and including
the date hereof and are now in full force and effect; such
resolutions are the only corporate proceedings of the Certifying
Loan Party now in force relating to or affecting the matters
referred to therein;
7. Attached hereto as Exhibit B is a complete and correct
copy of the by-laws of the Certifying Loan Party as in effect at all
2
times since _________________, 19__ to and including the date
hereof; and attached hereto as Exhibit C is a true and complete copy
of the certificate of incorporation of the Certifying Loan Party as
in effect at all times since ___________________, 19__ to and
including the date hereof;
8. The following persons are now duly elected and qualified
officers of the Certifying Loan Party holding the offices indicated
next to their respective names below, and such officers have held
such offices with the Certifying Loan Party at all times since
________________, 19__ to and including the date hereof, and the
signatures appearing opposite their respective names below are the
true and genuine signatures of such officers, and each of such
officers is duly authorized to execute and deliver on behalf of the
Certifying Loan Party any Term Loan Document to which it is a party
and any certificate or other document to be delivered by the
Certifying Loan Party pursuant to any Term Loan Document:
NAME OFFICE SIGNATURE
______________________ [Vice] President ______________________
______________________ [Assistant] Secretary ______________________
IN WITNESS WHEREOF, the undersigned have hereto set our names.
______________________________ ________________________________
Title: [Vice] President Title: [Assistant] Secretary
Date: April __, 1995
EXHIBIT C-1
[CRAVATH, SWAINE & MOORE LETTERHEAD]
April 12, 1995
SENIOR UNSECURED NOTE AGREEMENT
Dear Sirs:
We have acted as counsel to BCP/Essex Holdings Inc., a
Delaware corporation ("Holdings"), in connection with the preparation,
execution and delivery of (a) the Senior Unsecured Note Agreement dated as
of April 12, 1995 (the "Note Agreement"), among Holdings, Essex Group,
Inc., a Michigan corporation ("Essex"), the lenders parties thereto (the
"Lenders") and Chemical Bank, as administrative agent for the Lenders (in
such capacity, the "Administrative Agent") and (b) the Term Notes referred
to in the Note Agreement (collectively, the "Term Notes" and, together
with the Note Agreement, the "Term Loan Documents"). Unless otherwise
defined herein, terms defined in the Note Agreement are used herein as
therein defined. This opinion is furnished to you pursuant to
Section 4.1(f)(i) of the Note Agreement.
In connection with this opinion, we have examined (a) executed
copies of the Note Agreement and the Term Notes and (b) copies of such
corporate documents and records of the Loan Parties and certificates of
public officials and officers of the Loan Parties and such other documents
as we have deemed necessary or appropriate for the purposes of this
opinion. In our examination, we have assumed the genuineness of all
signatures, the due authorization, execution and delivery of the Note
Agreement and the Term Notes by the parties thereto (other than the Term
Loan Documents as executed by Holdings), the authenticity of all documents
submitted to us as originals and the conformity to authentic, original
documents of all documents submitted to us as certified, conformed or
photostatic copies.
Based upon and subject to the foregoing and to the further
qualifications set forth below, we are of opinion as follows:
1. Holdings is validly existing and in good standing under
the General Corporation Law of the State of Delaware (the "GCL").
Holdings has the corporate power and authority under the GCL to own and
operate its property and to conduct the business in which it is currently
engaged.
2. Holdings has the corporate power and authority, and the
legal right under the GCL, to make, deliver and perform each of the Term
Loan Documents to which it is a party. Holdings has taken all necessary
corporate action to authorize the execution, delivery and performance of
the Term Loan Documents to which it is a party. No consent or
authorization of, filing with or other act by or in respect of, any
Federal, New York or Delaware Governmental Authority is required in
connection with the execution, delivery or performance by each of the Loan
Parties, or the validity or enforceability, of any of the Term Loan
Documents as to which such Loan Party is a party. Each of the Term Loan
Documents constitutes a legal, valid and binding obligation of each Loan
Party party thereto, enforceable against each such Loan Party in
accordance with its respective terms. The opinions set forth above are
qualified to the following extent: (a) insofar as provisions contained in
2
the Term Loan Documents provide for indemnification, the enforcement
thereof may be limited by public policy considerations and (b) we express
no opinion as to the effect of the law of any jurisdiction other than the
State of New York wherein any Lender may be located or wherein enforcement
of the Term Loan Documents may be sought which limits the rates of
interest legally chargeable or collectible. Furthermore, it should be
noted that the remedy of specific performance is discretionary and
normally will not be ordered in respect of monetary obligations or if
monetary damages are reasonably ascertainable. No opinion is expressed
herein with respect to (i) Section 10.12(a) of the Note Agreement insofar
as such Section relates to the subject matter jurisdiction of the United
States District Court for the Southern District of New York to adjudicate
any controversy related to the Note Agreement and the Term Notes, (ii) the
waiver of inconvenient forum set forth in Section 10.12(b) of the Note
Agreement with respect to proceedings in the United States District Court
for the Southern District of New York and (iii) whether a Federal or state
court outside of the State of New York would give effect to the choice of
New York law provided for in the Note Agreement and the Term Notes. We
express no opinion as to (i) Section 10.7(b) of the Note Agreement to the
extent that it provides for a right of set-off in respect of participating
interests purchased pursuant to Section 10.7(a) of the Note Agreement or
(ii) any provision in any Term Loan Document insofar as it provides a
right of set-off in respect of claims, credits or other obligations that
are contingent or a right of set-off in respect of Obligations against
deposits, indebtedness or other obligations of any entity other than the
entity to which such Obligations are payable.
3. The execution, delivery and performance of the Term Loan
Documents by the Loan Parties and the borrowings under the Note Agreement
and the use of the proceeds thereof will not (a) violate any Requirement
of Law (including Regulation U, T, G or X of the Board of Governors of the
Federal Reserve System) under the laws of the United States, the laws of
the State of New York or the GCL, (b) violate the certificate of
incorporation or by-laws of Holdings, (c) violate any Contractual
Obligation of any Loan Party under any agreement listed on Schedule I
hereto or (d) result in or require the creation or imposition of any Lien
on any of the properties or revenues pursuant to any agreement listed on
Schedule I hereto.
4. No Loan Party is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940 (the "1940 Act") (other than an "investment
company" exempt from the provisions of the 1940 Act).
The foregoing opinions are subject to the following
qualifications:
(a) With respect to the opinions expressed above relating to
the legal, valid and binding nature of agreements or obligations of
any Loan Party and to the enforceability of such agreements or
obligations, such opinions are subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and
other similar laws affecting creditors' rights generally from time
to time in effect. In addition, the enforceability of any party's
obligations is also subject to general principles of equity,
regardless of whether such enforceability of any party's obligations
is considered in a proceeding in equity or at law.
3
(b) We understand that you are satisfying yourselves as to
the status under Section 548 of the Bankruptcy Code and applicable
state fraudulent conveyance laws of the obligations of the Loan
Parties under the Term Loan Documents and we express no opinion
thereon.
(c) Our opinion in paragraph 2 as to certain consents,
authorizations, filings or any other acts and our opinion in
paragraph 3 as to compliance with certain Requirements of Law are
based upon (i) those consents, authorizations, filings and other
acts and (ii) a review of those laws, statutes, rules and
regulations which, in our experience, are normally applicable to
transactions of the type contemplated by the Term Loan Documents.
(d) In connection with this opinion, including our opinion
contained in paragraph 3 as to there being no violation of certain
Contractual Obligations, we are not expressing any opinion as to
whether Holdings or Essex has, as a factual matter, complied with or
satisfied any applicable financial tests or ratios and have relied,
without any independent verification, on the certificates of
David A. Owen, the Chief Financial Officer of Essex, as to such
matters.
We are admitted to practice only in the State of New York and
express no opinion as to matters governed by any laws other than the laws
of the State of New York, the Federal laws of the United States of America
and the Delaware General Corporation Law.
This opinion is rendered only to the Administrative Agent and
the Lenders and their permitted transferees and is solely for their
benefit in connection with the above transactions. This opinion may not
be relied upon by the Administrative Agent or the Lenders or their
permitted transferees for any other purpose or relied upon by any other
person, firm or corporation for any purpose without our prior written
consent.
Very truly yours,
The Lenders Parties to the
Note Agreement
referred to above
Chemical Bank, as Administrative Agent
270 Park Avenue
New York, NY 10017
39NS
O
SCHEDULE I
Indenture dated as of May 1, 1989, between MS/Essex Holdings Inc.
and United States Trust Company of New York, as trustees.
Indenture dated as of May 7, 1993, between Essex Group, Inc., and
NBD Bank, National Association, as trustee.
OFFICER'S CERTIFICATE
16% SENIOR DISCOUNT DEBENTURES DUE 2004
The undersigned is the Chief Financial Officer of Essex Group,
Inc., a Michigan corporation and a wholly owned subsidiary of BCP/Essex
Holdings Inc. ("Essex"). The undersigned is familiar with the terms and
provisions of each of (i) the Indenture dated as of May 1, 1989 (the
"Indenture"), between MS/Essex Holdings and United States Trust Company of
New York in respect of the 16% Senior Discount Debentures Due 2004 of
MS/Essex Holdings, (ii) the Credit Agreement dated as of April 12, 1995
(the "Credit Agreement"), among Holdings, Essex, the Lenders named therein
and Chemical Bank, as agent, (iii) the Senior Unsecured Note Agreement
dated as of April 12, 1995 (the "Note Agreement"), among Holdings, Essex,
the Lenders named therein and Chemical Bank, as administrative agent, and
(iv) the Agreement and Lease dated as of April 12, 1995 (the "Lease"),
between Mellon Financial Services Corporation # 3 and Essex. In
connection with the foregoing, the undersigned hereby certifies that:
1. To the best of my knowledge, no violation of the terms and
provisions of or obligations under the Indenture has or will occur as a
result of the execution of the Credit Agreement, the Note Agreement or the
Lease and no violation of such terms and provisions or obligations has or
will result from the consummation of the transactions contemplated
thereby.
2. Specifically, and in connection with Section 4.07 of the
Indenture, the Essex Consolidated Cash Flow Ratio (as defined in the
Indenture), after giving effect to the incurrence of all Debt to be
incurred under the Credit Agreement, the Note Agreement and the Lease and
the receipt and application of the proceeds thereof, would be greater than
1.75 to 1 (the calculation of which is set forth on Exhibit A hereto).
3. The calculation attached hereto is true and correct and
has been made on good faith assumptions and has been calculated in
accordance with the terms and provisions of the Indenture.
_____________________________________
David A. Owen
Dated: April 12, 1995
EXHIBIT A
ESSEX GROUP, INC.
CONSOLIDATED CASH FLOW
Calculated on a ProForma basis as of 12/31/94. Assumes interest expense
of $40 million for the year.
[CAPTION]
Essex BCP/SX
Group, Inc. Holdings, Inc.
----------- --------------
Net Income 24,725 27,641
+ Interest Expense 40,000 40,000
+ Provision for Taxes 22,700 9,501
+ Depreciation 26,883 26,883
+ Other Amortizations:
Goodwill 4,064 4,064
Fixed Asset (G)L 1,279 1,279
Other 2,858 1,763
----- -----
8,201 8,201 7,106 7,106
----- -----
EBITDA 122,509 111,131
+/- Other Non-Cash Items:
Pension Expense 2,558 2,558
Provision for Bad Debt 1,288 1,288
Workers' Comp/Pub. Liability Exp. 3,238 3,238
Other Special Accruals:
Division 868 868
Corporate 3,170 3,170
----- -----
4,038 4,038 4,038 4,038
----- -----
Consolidated Cash Flow 133,631 122,253
Pro Forma Interest Expense 40,000 40,000
Yields Coverage Ratio of: 3.34 3.06
/TABLE
OFFICER'S CERTIFICATE
10% SENIOR NOTES DUE 2003
The undersigned is the Chief Financial Officer of Essex Group,
Inc., a Michigan corporation and a wholly owned subsidiary of BCP/Essex
Holdings Inc. ("Essex"). The undersigned is familiar with the terms and
provisions of each of (i) the Indenture dated as of May 7, 1993 (the
"Indenture"), between Essex Group, Inc. and NBD Bank, National
Association, in respect of the 10% Senior Notes Due 2003, (ii) the Credit
Agreement dated as of April 12, 1995 (the "Credit Agreement"), among
BCP/Essex Holdings, Inc. ("Holdings"), Essex, the lenders named therein
and Chemical Bank, as agent, (iii) the Senior Unsecured Note Agreement
dated as of April 12, 1995 (the "Note Agreement"), among Holdings, Essex,
the Lenders named therein and Chemical Bank, as administrative agent, and
(iv) the Agreement and Lease dated as of April 12, 1995 (the "Lease"),
between Mellon Financial Services Corporation # 3 and Essex. In
connection with the foregoing, the undersigned hereby certifies that:
1. To the best of my knowledge, no violation of the terms and
provisions of or obligations under the Indenture has or will occur as a
result of the execution of the Credit Agreement, the Note Agreement or the
Lease and no violation of such terms and provisions or obligations has or
will result from the consummation of the transactions contemplated
thereby.
2. Specifically, and in connection with Section 4.04(a) of
the Indenture, the Consolidated EBITDA Coverage Ratio (as defined in the
Indenture), after giving effect to the incurrence of all Debt to be
incurred under the Credit Agreement, the Note Agreement and the Lease and
the receipt and application of the proceeds thereof, would be greater than
2.0 to 1 (the calculation of which is set forth on Exhibit A hereto).
3. Specifically, and in connection with Section 4.04(b)(iv)
of the Indenture, the obligations of Essex, under the Lease are "Capital
Lease Obligations" under and as defined in the Indenture and do not exceed
in the aggregate, together with any other "Capital Lease Obligations" and
guarantees of joint venture obligations thereof, $25,000,000.
4. The calculation attached hereto is true and correct and
has been made on good faith assumptions and has been calculated in
accordance with the terms and provisions of the Indenture.
_______________________________
David A. Owen
Dated: April 12, 1995
EXHIBIT A
ESSEX GROUP, INC.
CONSOLIDATED EBITDA COVERAGE RATIO
As defined in the Sr. Note re Section 4.04(a). Calculated on a ProForma
basis as of 12/31/94. Assumes interest expense of $40 million for the
year.
[CAPTION]
Actual ProForma
Essex Essex
Group, Inc. Group, Inc.
----------- -----------
Net Income 30,171 14,725
+ Amortization of Goodwill 4,064 4,064
+ Purchase Accounting 10,919 10,919
------ ------
Consolidated Net Income 45,154 29,708
+ Interest Expense 21,924 40,000
+ Provision for Taxes 22,700 22,700
+ Depreciation (Excluding Purchase Acctg) 16,208 16,208
+ Amortization 2,858 2,858
+/- Other Non-Cash Items:
Pension Accruals 2,558 2,558
Inventory Valuation 2,500 2,500
Elim. of Extraordinary Gains/Losses:
Bennettsville Project 1,377 1,377
Other Comm. Restructuring 889 889
WCD Serv. Center Reserve 278 278
Lafayette Reserve Adj. (1,160) (1,160)
----- -----
1,384 1,384 1,384 1,384
----- -----
Defined EBITDA 115,286 117,916
Pro Forma Interest Expense 40,000 40,000
Consolidated EBITDA Coverage Ratio: 2.88 2.95
/TABLE
EXHIBIT C-2
[ESSEX GROUP, INC. LETTERHEAD]
April 12, 1995
Dear Sirs:
I have acted as counsel to Essex Group, Inc., a Michigan
corporation ("Essex") and BCP/Essex Holdings Inc., a Delaware corporation
("Holdings") in connection with the preparation, execution and delivery of
(i) the Senior Unsecured Note Agreement dated as of April 12, 1995 (the
"Note Agreement"), among Holdings, Essex, the lenders parties thereto (the
"Lenders") and Chemical Bank, as Administrative Agent (in such capacity,
the "Administrative Agent") and (ii) the Term Notes (collectively, the
"Term Notes", and together with the Note Agreement, the "Term Loan
Documents").
This opinion is furnished to you pursuant to Section 4.1(f) of
the Note Agreement. Unless otherwise defined herein, terms defined in the
Note Agreement are used herein as therein defined.
In connection with this opinion, I have examined (a) executed
copies of the Note Agreement and the Term Notes and (b) copies of such
corporate documents and records of the Essex Entities (as defined below)
and certificates of public officials and officers of the Essex Entities
and such other documents as I have deemed necessary or appropriate for the
purposes of this opinion. In my examination, I have assumed the
genuineness of all signatures, the due authorization, execution and
delivery of the Note Agreement and the Term Notes by the parties thereto
(other than the Essex Entities), the authenticity of all documents
submitted to me as originals and the conformity to authentic, original
documents of all documents submitted to me as certified, conformed or
photostatic copies. As to any facts material to this opinion set forth
below which I did not independently establish or verify, I have relied
upon representations of officers or representatives of the Essex Entities.
Based upon the foregoing, I am of the opinion that:
1. Each of Essex and Holdings (Essex and Holdings
constituting, collectively, the "Essex Entities") (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation, (b) has the corporate power and authority to own and
operate its property and to conduct the business in which it is currently
engaged and in which it proposes to be engaged after the Effective Date
and (c) is duly qualified as a foreign corporation and is in good standing
under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except where the failure to be so qualified and/or in good
standing, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
2. Each of the Essex Entities had, at the time they were
executed, the corporate power and authority, and the legal right, to make,
deliver and perform each of the Term Loan Documents to which it is a
party. Each of the Essex Entities has taken all necessary corporate
action to authorize the borrowings on the terms and conditions of the Note
Agreement and to authorize the execution, delivery and performance of the
Term Loan Documents to which it is a party. No consent or authorization
of, filing with or other act by or in respect of any Governmental
2
Authority or, to the best of my knowledge, any other Person is required in
connection with the execution, delivery or performance by each of the
Essex Entities, or the validity or enforceability, of any of the Term Loan
Documents to which such entity is a party. Each of the Term Loan
Documents to which any of the Essex Entities is a party has been duly
executed and delivered by such entity.
3. The execution, delivery and performance of the Term Loan
Documents by each of the Essex Entities and the borrowings under the Note
Agreement and the use of the proceeds thereof will not (a) violate any
Requirement of Law (excluding Regulations U, T, G and X of the Board of
Governors of the Federal Reserve System and excluding any Requirement of
Law other than under the laws of the United States, the State of Indiana
or the State of Michigan or the General Corporation Law of the State of
Delaware (the "GCL")), (b) to the best of my knowledge after due inquiry,
violate any order, writ, judgment, injunction, decree, determination or
award of any court or governmental instrumentality presently in effect
which affects or binds any of the Essex Entities or any of their
respective properties, (c) violate any Contractual Obligation of any of
the Essex Entities under any agreement listed on Schedule I hereto or, to
the best of my knowledge, any other Contractual Obligation of any of the
Essex Entities or (d) to my knowledge, result in, or require, the creation
or imposition of any Lien on any of the respective properties or revenues
pursuant to any Requirement of Law or Contractual Obligation of any of the
Essex Entities.
4. To the best of my knowledge after due inquiry, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or threatened by or against any of the
Essex Entities or against any of their respective properties or revenues
(a) with respect to any Term Loan Document or the Term Loans or the use of
the proceeds thereof or (b) which has a reasonable possibility of an
adverse determination and, if adversely determined, (i) would affect the
legality, validity or enforceability or any Loan Document or (ii) would
have a Material Adverse Effect.
My opinion in paragraph 3 as to compliance with certain
Requirements of Law is based upon a review of those laws, statutes, rules
and regulations which, in my experience, are normally applicable to
transactions of the type contemplated by the Term Loan Documents.
In connection with this opinion, including my opinion
contained in paragraph 3 as to there being no violation of certain
Contractual Obligations, I am not expressing any opinion as to whether
Essex has as a factual matter satisfied or complied with any applicable
financial tests or ratios and have relied, without any independent
verifications, on the certificates of David A. Owen, the Chief Financial
Officer of Essex, as to such matters.
I am admitted to practice in the State of Indiana. I express
no opinion as to matters governed by any laws other than the laws of the
State of Indiana, the laws of the State of Michigan, the Federal laws of
the United States of America and the Delaware General Corporation Law. I
have assumed that, insofar as the substantive laws of the State of
Michigan and the GCL may be applicable to any matters opined on herein,
such laws are identical to the substantive laws of the State of Indiana.
This opinion is rendered only to the Administrative Agent and
the Lenders and their permitted transferees and is solely for their
3
benefit in connection with the above transactions. This opinion may not
be relied upon by the Administrative Agent or the Lenders or their
permitted transferees for any other purpose or relied upon by any other
person, firm or corporation for any purpose without my prior written
consent.
Very truly yours,
Debra F. Minott
Senior Vice President &
General Counsel
The Lenders Parties to the
Note Agreement
referred to above
Chemical Bank, as Administrative Agent
270 Park Avenue
New York, NY 10017
SCHEDULE I
Indenture dated as of May 1, 1989, between MS/Essex Holdings Inc.
and United States Trust Company of New York, as Trustee.
Indenture dated as of May 7, 1993, between Essex Group, Inc., and
NBD Bank, National Association, as Trustee.
EXHIBIT D
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Senior Unsecured Note Agreement,
dated as of April __, 1995, as amended, supplemented or otherwise modified
from time to time (the "Agreement"), among Essex Group, Inc., BCP/Essex
Holdings Inc., the Lenders named therein and Chemical Bank, as
Administrative Agent. Terms defined in the Agreement are used herein with
the same meanings. This Assignment and Acceptance, between the Assignor
(as set forth on Schedule 1 hereto and made a part hereof) and the
Assignee (as set forth on Schedule 1 hereto and made a part hereof) is
dated as of the Effective Date (as set forth on Schedule 1 hereto and made
a part hereof, the "Effective Date").
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby
irrevocably purchases and assumes from the Assignor without recourse to
the Assignor, as of the Effective Date, a ___% interest (the "Assigned
Interest") in and to the Assignor's rights and obligations under the
Agreement respecting those credit facilities contained in the Agreement as
are set forth on Schedule 1 (the "Assigned Facilities"), in a principal
amount for each Assigned Facility as set forth on Schedule 1 provided,
however, it is expressly understood and agreed that (i) the Assignor is
not assigning to the Assignee and the Assignor shall retain (A) all of the
Assignor's rights under Section 2.14 of the Agreement with respect to any
cost, reduction or payment incurred or made prior to the Effective Date,
including, without limitation the rights to indemnification and to
reimbursement for taxes, costs and expenses and (B) any and all amounts
paid to the Assignor prior to the Effective Date and (ii) both Assignor
and Assignee shall be entitled to the benefits of Section 10.5 of the
Agreement.
2. The Assignor (i) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Agreement, any other
Term Loan Document or any other instrument or document furnished pursuant
thereto or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Agreement, any other Term Loan Document or any
other instrument or document furnished pursuant thereto; and (ii) makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of the Company, any of its Subsidiaries or any
other Loan Party or the performance or observance by the Company, any of
its Subsidiaries or any other Loan Party of any of their respective
obligations under the Agreement or any other Term Loan Document or any
other instrument or document furnished pursuant thereto;
3. The Assignee (i) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance; (ii)
confirms that it has received a copy of the Agreement, together with
copies of the financial statements delivered pursuant to Section 3.1
thereof and other such documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (iii) agrees that it will, independently
and without reliance upon the Assignor, the Administrative Agent or any
other Person which has become a Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Agreement
2
and each other Term Loan Document; (iv) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to
exercise such powers and discretion under the Agreement or any other Term
Loan Document as are delegated to the Administrative Agent by the terms
thereof, together with such powers and discretion as are incidental
thereto; and (v) agrees that it will be bound by the provisions of the
Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Agreement are required to be
performed by it as a Lender including, if it is organized under the laws
of a jurisdiction outside the United States, its obligation pursuant to
Section 2.14(b) of the Agreement to deliver on or prior to the date of
this Assignment and Acceptance and thereafter as specified in said Section
2.14, the forms prescribed by the Internal Revenue Service of the United
States certifying the Assignee's complete exemption from United States
federal withholding taxes with respect to all payments to be made to the
Assignee under the Agreement, or, where, because of a Tax Law Change, the
Assignee is no longer entitled to a complete exemption from the United
States federal withholding tax on such payments to it, but is entitled to
a reduced rate of taxation with respect to such payments, the Assignee
shall deliver such other documents as are necessary to indicate that all
such payments are subject to such reduced rate of taxation.
4. Following the execution of this Assignment and
Acceptance, it will be delivered to the Administrative Agent for
acceptance by it and recording by the Administrative Agent pursuant to
Section 10.6(d) of the Agreement, effective as of the Effective Date
(which shall not be earlier than five Business Days after the date of
acceptance and recording by the Administrative Agent of the executed
Assignment and Acceptance).
5. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in
respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignee whether such amounts
have accrued prior to the Effective Date or accrue subsequent to the
Effective Date. The Assignor and the Assignee shall make all appropriate
adjustments in payments by the Administrative Agent for periods prior to
the Effective Date or with respect to the making of this assignment
directly between themselves.
6. From and after the Effective Date, (i) the Assignee
shall be a party to the Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Term Loan Documents and shall be bound by
the provisions thereof and (ii) the Assignor shall, to the extent provided
in this Assignment and Acceptance, relinquish its rights and be released
from its obligations under the Agreement.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective duly
authorized officers on Schedule 1 hereto.
Schedule 1 to Assignment and Acceptance Respecting Senior Unsecured Note
Agreement, dated as of April __, 1995, among Essex Group, Inc., BCP/Essex
Holdings Inc., the Lenders
named therein and Chemical Bank as Administrative Agent
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Principal
Amount Assigned
---------------
[ASSIGNEE]
By____________________
Name:
Title:
[ASSIGNOR]
By____________________
Name:
Title:
Consented To:
ESSEX GROUP, INC.
By____________________
Name:
Title:
CHEMICAL BANK, as
Administrative Agent
By____________________
Name:
Title:
2
Accepted for Recordation in the Register:
CHEMICAL BANK, as Administrative Agent
By____________________
Name:
Title:
EXHIBIT E
[FORM OF CONFIDENTIALITY LETTER]
[BANK LETTERHEAD]
[Date]
Essex Group, Inc.
1601 Wall Street
Fort Wayne, IN 46801
Chemical Bank,
as Administrative Agent
270 Park Avenue
New York, New York 10017
[Name and address of Lender
selling a participation or making
an assignment under the Agreement
referred to below]
Dear Sirs:
We understand that Chemical Bank ("Chemical") is acting as
Administrative Agent under the Senior Unsecured Note Agreement dated as of
April __, 1995 (the "Agreement"; terms used herein and not otherwise
defined herein are used as defined therein) among BCP/Essex Holdings Inc.,
Essex Group, Inc. (the "Company"), the lenders named therein (the
"Lenders") and Chemical, as Administrative Agent. In connection with our
evaluation of a proposed purchase of a participation in or acceptance of
an assignment of, a portion of the Term Loans, Chemical and/or a Lender
have furnished, and will furnish, us with a copy of the Agreement and
Confidential Information. We understand that prior to receiving a copy of
the Agreement and Confidential Information, we are required under Section
10.6(g) of the Agreement to execute and deliver this letter.
We agree to keep confidential (and to cause our officers,
directors, employees, agents, attorneys, accountants and professional
advisors to keep confidential) to the extent provided in Section 10.15 of
the Agreement all Confidential Information. In the event we do not
participate or accept an assignment under the Agreement, at Chemical's,
such Lender's or the Company's request, we agree to return (and to cause
such other person to return) to Chemical, such Lender or the Company, as
the case may be, all written Confidential Information and all copies
thereof, extracts therefrom and analyses and other materials based
thereon, except that we shall be permitted to disclose details of the
Confidential Information (i) to the extent contemplated in Section 10.15
and (ii) to the extent Chemical and the Company shall have consented to
such disclosure in writing.
We further agree that we will use the Confidential Information
only in connection with our evaluation of becoming a possible participant
or assignee under the Agreement.
The undertakings contained herein are for the benefit of each
of you.
2
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[Name of Institution]
By: _______________________
Name:
Title:
EXHIBIT F
FORM OF COMPLIANCE CERTIFICATE
[For the Fiscal Quarter ending _____]
[For the Fiscal Year ending _____]
Pursuant to Section 5.2(b) of the Senior Unsecured Note
Agreement, dated as of April __, 1995 (as amended, supplemented or
otherwise modified from time to time, the "Agreement"; terms defined
therein being used herein as therein defined unless otherwise defined),
among Essex Group, Inc., a Michigan corporation (the "Company"), BCP/Essex
Holdings Inc. ("Holdings"), the financial institutions from time to time
parties thereto (the "Lenders"), and Chemical Bank, as agent for the
Lenders (in such capacity, the "Agent"), the undersigned, duly elected,
qualified and acting Responsible Officers of the Company and Holdings,
respectively, hereby certify that:
I. To the best of such Responsible Officer's knowledge, the
Company and each other Loan Party has, during the period or periods
referred to above, observed or performed in all material respects all of
its covenants and other agreements, and satisfied every condition,
contained in the Agreement and the other Term Loan Documents to which it
is a party to be observed, performed or satisfied by it, and as of the
date hereof such Responsible Officer has obtained no knowledge of any
Default or Event of Default except as follows: ____________________.
[II. The financial statements referred to in Section 5.1(a)
of the Agreement which are delivered concurrently with the delivery of
this Compliance Certificate are complete and correct in all material
respects and have been prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein
and with prior periods (except as approved by the accountants or such
Responsible Officer, as the case may be, and disclosed therein).]
[The financial statements referred to in Section 5.1(b) of the
Agreement which are delivered concurrently with the delivery of this
Compliance Certificate are complete and correct in all material respects
and fairly present the financial condition and results of operations of
Holdings or the Company, as the case may be (subject to normal year-end
audit adjustments) and have been prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein and with prior periods (except as approved by the accountants or
such Responsible Officer, as the case may be, and disclosed therein).]
(c) The covenants as listed and calculated below are based
on the Company's [unaudited] [audited] balance sheets and statements of
operations, shareholders' equity and cash flows for the fiscal [quarter]
[year] ended ________ __, 199_, a copy of which is attached hereto.
1. Consolidated Net Worth (Section 6.1(a))
without duplication:
2
(i) 50% of Consolidated $ __________
Net Income of Holdings and its consolidated
Subsidiaries for each fiscal quarter
of Holdings (beginning with the fiscal
quarter ending Mar. 31, 1995) for which
Consolidated Net Income is positive
(ii) 100% of Net Cash Proceeds of Holdings $__________
Common Equity Offering consummated
after the Effective Date
(iii) 100% of any capital contribution made $ __________
to Holdings or the Company after the
Effective Date by any holder of its Capital
Stock
(iv) Sum of (i), (ii) and (iii) and $ __________
$80,000,000
(v) Consolidated Net Worth of Holdings and $ __________
its consolidated subsidiaries (must be equal
to or greater than (iv) above)
(vi) Clauses (ii) and (iii) shall be reduced $ __________
to the extent (a) such proceeds or
contributions are applied to repurchase
of equity in accordance with the Agreement
and (b) Consolidated Net Worth would be reduced
as a result of repurchase
2. Interest Coverage (Section 6.1(b))
The ratio of
(i) Consolidated EBITDA of Holdings $ __________
and its consolidated Subsidiaries
for the relevant Interest Coverage
Test Period
to
(ii) Consolidated Net Cash Interest Expense $ __________
of Holdings and its consolidated
Subsidiaries for such Interest Coverage
Test Period
Ratio: (must be greater than 2.0 to 1.0) ____________
3
3. Limitation on Secured Debt (Section 6.2)
List types*/ and amounts of Secured Debt
outstanding as of the last day of the fiscal
period covered by this Certificate:
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
4. Limitation on Company Debt (Section 6.4)
List types*/ and amounts of Company Debt
outstanding as of the last day of the fiscal
period covered by this Certificate:
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
5. Limitation on Debt and Preferred Stock of Subsidiaries
(Section 6.5)
List types*/ and amounts of Debt and Preferred
Stock of Subsidiaries outstanding as of the last
day of the fiscal period covered by this
Certificate:
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________
*/ Must include reference to specific provisions of Agreement pursuant
to which each item was Issued.
4
6. Limitation on Restricted Payments (Section 6.6)
(i) List each of the following amounts for
the relevant fiscal [quarter] [year]:
(A) 50% of Consolidated Adjusted Net $ __________
Income (or, in case such
Consolidated Adjusted Net Income
shall be a deficit, minus 100% of
such deficit)
(B) the aggregate Adjusted Net Cash $ __________
Proceeds received by the Company
Company from the Issue or sale of
its Capital Stock (other than
Redeemable Stock) (other than
pursuant to clause (C) below)
(C) the aggregate Adjusted Net Cash $ __________
Proceeds received by the Company
from the Issue or sale of its
Capital Stock (other than
Redeemable Stock) to an employee
stock ownership plan, but (if such
employee stock ownership plan
Issues any Debt) only to the extent
that any such proceeds are equal to
any increase in the Consolidated
Adjusted Net Worth of the Company
resulting from principal repayments
made by such employee stock ownership
plan with respect to Debt Issued by it
to finance the purchase of such Capital Stock
(D) the amount by which Debt of the $ __________
Company is reduced on the Company's
balance sheet upon the conversion or
exchange (other than by a Subsidiary)
of any Debt of the Company convertible
or exchangeable for Capital Stock (other
than Redeemable Stock) of the Company
(less the amount of any cash, or other
property, distributed by the Company
upon such conversion or exchange)
(E) the aggregate cash received by the $ __________
Company as capital contributions
to the Company
(F) to the extent an Investment made by $ __________
the Company or a Subsidiary after
the Effective Date was included in
the amount of a Restricted Payment,
the aggregate cash received by the
Company in connection with the
disposition or repayment of or return
on such Investment made after the
Effective Date, which amount shall
not exceed the amount of such
5
Restricted Payment
(ii) List types**/ and amounts of
Restricted Payments made during fiscal
[quarter] [year]:
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
IN WITNESS WHEREOF, we have hereto set our names.
Dated:
___________________________
Title: [Responsible Officer
of the Company]
___________________________
Title: [Responsible Officer
of the Holdings]
_______________
**/ Must include reference to specific provisions of Agreement pursuant
to which each item was made.