<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
---------------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 21, 1999
----------------------
AAVID THERMAL TECHNOLOGIES, INC.
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 0-27308 02-0466826
---------------------------- ----------- -------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
One Eagle Square, Suite 509
Concord, New Hampshire 03301
- ---------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (603) 224-1117
------------------
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
- --------------------------------------------------------------------------------
This Form 8-K/A is filed herewith solely to include Exhibit 23--Consent of
Independent Auditors (Ernst & Young), that was inadvertently omitted by the
Printer in the original Form 8-K filed on November 5, 1999.
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On October 21, 1999, Aavid Thermal Technologies, Inc. (the "Company")
acquired the Thermalloy Division of Bowthorpe plc. The Thermalloy Division's
business is substantially similar to the Company's thermal management products
business. As part of the acquisition from Bowthorpe, the Company also acquired
65.2%, representing Bowthorpe's entire shareholding, of Curamik Electronics
GmbH, a German corporation which manufactures direct bonded copper substrates
used in the packaging and cooling of high power electronic devices. The total
purchase price was $80.5 million (including estimated transaction costs of $2
million), and is subject to further adjustment based on changes in the value of
the Thermalloy Division's inventory between December 31, 1998 and July 31, 1999.
The purchase price paid at closing includes an estimate of the inventory related
purchase price adjustment. The Company used $13.8 million of its cash on hand
and $79.3 million of borrowings under its new credit facility described below
under Item 5 to pay the purchase price for the Thermalloy Division, repay $12.6
million of outstanding debt and pay estimated transaction costs. The Company
paid $3.5 million of the $80.5 million purchase price into escrow pending
receipt of the necessary Malaysian governmental approvals of the transfer of the
Thermalloy Division's Malaysian operations to Aavid. In addition, on October 28,
1999 the Company purchased an additional 20.2% of Curamik from the two minority
shareholders of Curamik for approximately $3.3 million, thereby increasing its
ownership of Curamik to 85.4%.
The Thermalloy Division designs, manufactures and sells a wide range of
standard and proprietary heatsinks and associated products for the cooling of
semiconductors, power hybrid circuits, high power electronics and other
electronic devices, primarily within the aerospace, automotive, computer,
construction and telecommunications industries. The Thermalloy Division, like
the Company, possesses both the engineering and production capability to design
and manufacture solutions to meet customers' thermal management requirements.
The Thermalloy Division has manufacturing facilities in Dallas, Texas; Monterey,
Mexico; Swindon, England; Corby, England; Milan, Italy; Hong Kong and Malaysia,
engineering staff in the United States and Europe and additional sales staff in
France, Germany, Japan and Singapore. The Thermalloy Division, including
Curamik, had revenues of approximately $102 million for the year ended December
31, 1998 and $50 million for the first half of 1999.
The Company's future success will depend, in part, on its ability to
fully integrate the operations and management of the Thermalloy Division. A
successful integration requires, among other things, the integration of
Thermalloy's product offerings and technology into Aavid's and the coordination
of their sales and marketing and financial reporting efforts with Aavid's. There
can be no assurance that the Company will accomplish the integration smoothly or
successfully or that Aavid will realize the anticipated benefits of the
Thermalloy Division acquisition. The success of the integration will require the
dedication of management and other personnel resources which may temporarily
distract their attention from the Company's day-to-day business.
-2-
<PAGE> 3
The Company has experienced substantial growth in its thermal
management products business and has significantly expanded its operations
through manufacturing capacity additions, the acquisition of the Thermalloy
Division and geographic expansion. The Company intends to continue to increase
its thermal products and software businesses overseas, expand the products and
services it offers, and make selective acquisitions. This growth and expansion
has placed, and will continue to place, a significant strain on Aavid's
production, technical, financial and other management resources. To manage
growth effectively, Aavid must maintain a high level of manufacturing quality,
efficiency, delivery and performance and must continue to enhance its
operational, financial and management systems, and attract, train, motivate and
manage its employees. The Company may not be able to effectively manage this
expansion, and any failure to do so could have a material adverse effect on its
business and financial condition.
ITEM 5. OTHER EVENTS.
On October 21, 1999, in connection with the closing of the acquisition
of the Thermalloy Division, the Company entered into a $100 million revolving
credit and term loan facility with Canadian Imperial Bank of Commerce, as
Administrative Agent, and certain other lenders (the "Credit Facility"). The
Credit Facility consists of an $80 million term loan facility (the "Term
Facility") and a $20 million revolving credit facility, including a $2 million
letter of credit subfacility (the "Revolving Facility"). The Term Facility, all
of which was borrowed on October 21, 1999 to pay the purchase price for the
Thermalloy Division, pay transaction costs and provide working capital to the
Thermalloy Division, matures on September 30, 2004, and will be amortized in 19
consecutive quarterly installments, commencing March 31, 2000, as follows: four
quarterly payments of $2 million each; four quarterly payments of $3 million
each; four quarterly payments of $4 million each; four quarterly payments of $5
million each; and three quarterly payments of $8 million each. The Revolving
Facility matures on September 30, 2004. The Credit Facility bears interest at a
rate equal to, at the Company's option, either (1) in the case of Eurodollar
loans, the sum of (x) the interest rate in the London interbank market for loans
in an amount substantially equal to the amount of borrowing and for the period
of borrowing selected by Aavid and (y) a margin of between one and one-half
percent and two percent (depending on the Company's consolidated leverage ratio
(as defined in the credit agreement)) or (2) the sum of (A) the higher of (x)
Canadian Imperial Bank of Commerce's prime or base rate or (y) one-half percent
plus the latest overnight federal funds rate plus (y) a margin of between one
quarter percent and three quarters percent (depending on the Company's
consolidated leverage ratio). The Credit Facility may be prepaid at any time in
whole or in part without penalty, and must be prepaid to the extent of certain
equity or asset sales.
The Credit Facility limits the Company's ability to incur debt, to sell
or dispose of assets, to create or incur liens, to make additional acquisitions,
to pay dividends, to purchase or redeem its stock and to merge or consolidate
with any other person other than the previously announced merger with an entity
formed by Willis Stein & Partners. In addition, the Credit Facility requires
that the Company meet certain financial ratios, and provides the banks with the
right to require the payment
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<PAGE> 4
of all amounts outstanding under the facility, and to terminate all commitments
thereunder, if there is a change in control of Aavid other than as contemplated
by the merger agreement with entities formed by Willis Stein & Partners. The
Credit Facility is guaranteed by all of the Company's domestic subsidiaries and
secured by the Company's assets (including the assets and stock of its domestic
subsidiaries and a portion of the stock of its foreign subsidiaries).
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
The combined balance sheets of the Thermalloy Group as of
December 31, 1998 and 1997, and the related combined profit
and loss accounts, statements of total recognized gains and
losses, movements in invested capital and cash flows for the
years ended December 31, 1998, 1997 and 1996, and the notes
thereto, and the report of Ernst & Young, are included herein.
The condensed combined balance sheets of the Thermalloy Group
as of June 30, 1999 and 1998, and the related condensed
combined profit and loss accounts, statements of total
recognized gains and losses, movements in invested capital and
cash flows for the six months ended June 30, 1999 and 1998,
and the notes thereto, are included herein.
(b) PRO FORMA FINANCIAL INFORMATION.
It is impracticable for the Company to provide the required
pro forma financial information on the date this report is
being filed. The Company intends to file the required
financial information under cover of Form 8-K/A as soon as
practicable, but not later than 60 days after the date this
report must have been filed.
-4-
<PAGE> 5
(c) EXHIBITS.
2.1 Stock Purchase Agreement by and among Bowthorpe plc,
Bowthorpe B.V., Bowthorpe International Inc.,
Bowthorpe GmbH (collectively, "Bowthorpe") and Aavid
Thermal Technologies, Inc., dated as of August 23,
1999 (incorporated herein by reference to Exhibit 2.1
to the Company's Current Report on Form 8-K dated
August 23, 1999).
10.1 Credit Agreement, dated as of October 21, 1999, among
Aavid Thermal Technologies, Inc., as Borrower, the
several lenders from time to time party hereto, CIBC
World Markets Corp., as Lead Arranger and Bookrunner,
and Canadian Imperial Bank of Commerce, as Issuer and
Administrative Agent.
23. Consent of Ernst & Young.
-5-
<PAGE> 6
COMBINED
FINANCIAL STATEMENTS
THERMALLOY GROUP
December 31, 1998
6
<PAGE> 7
THERMALLOY GROUP
Combined Financial Statements
December 31, 1998
CONTENTS
Report of Independent Auditors.................................................8
Combined Profit and Loss Accounts for the years ended December 31, 1998,
1997 and 1996..............................................................9
Combined Statements of Total Recognized Gains and Losses for the years
ended December 31, 1998, 1997 and 1996....................................10
Combined Balance Sheets at December 31, 1998 and 1997.........................11
Combined Statements of Movements in Invested Capital for the years
ended December 31, 1998, 1997 and 1996 ...................................12
Combined Cash Flow Statements for the years ended December 31, 1998,
1997 and 1996.............................................................13
Notes to Combined Financial Statements .......................................14
7
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THERMALLOY GROUP
REPORT OF INDEPENDENT AUDITORS
To The Board of Directors
Bowthorpe plc
We have audited the combined balance sheets of Thermalloy Group as at December
31, 1998 and 1997, and the related combined profit and loss accounts and
combined statements of total recognized gains and losses, movements in invested
capital and cash flows for each of the three years in the period ended December
31, 1998. These financial statements are the responsibility of Thermalloy
Group's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with United Kingdom generally accepted
auditing standards which do not differ in any significant respect from United
States generally accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of Thermalloy Group at
December 31, 1998 and 1997, and the combined results of its operations, and its
combined cash flows for each of the three years in the period ended December 31,
1998 in conformity with accounting principles generally accepted in the United
Kingdom which differ in certain respects from those generally accepted in the
United States (see Note 21 of Notes to Combined Financial Statements).
Ernst & Young
London, England
October 18, 1999
8
<PAGE> 9
THERMALLOY GROUP
COMBINED PROFIT AND LOSS ACCOUNTS
YEAR ENDED DECEMBER 31
----------------------------
NOTES 1998 1997 1996
---- ---- ----
(US $000'S)
SALES 3 102,332 94,668 80,885
Operating costs less other income 4 92,763 85,074 71,359
------- ------ ------
OPERATING PROFIT 3,4 9,569 9,594 9,526
Finance costs (1) 7 1,147 658 569
------- ------ ------
Profit before taxation 8,422 8,936 8,957
Taxation 8 2,947 3,424 3,545
------- ------ ------
Profit for the year (2) 5,475 5,512 5,412
======= ====== ======
- ---------------------
(1) The finance costs are not necessarily representative of the charges that
would have been incurred by Thermalloy Group on a stand-alone basis.
(2) A summary of the significant adjustments to profit for the year that would
be required if United States generally accepted accounting principles were
applied, instead of those generally accepted in the United Kingdom, is set
forth in Note 21 of Notes to Combined Financial Statements.
The Notes to Combined Financial Statements form part of these Financial
Statements
9
<PAGE> 10
THERMALLOY GROUP
COMBINED STATEMENTS OF TOTAL RECOGNIZED GAINS AND
LOSSES
YEAR ENDED DECEMBER 31
------------------------
1998 1997 1996
---- ---- ----
(US $000'S)
PROFIT FOR THE YEAR 5,475 5,512 5,412
Currency translation 365 (235) 392
----- ----- -----
Total recognized gains and losses
relating to the year (1) 5,840 5,277 5,804
===== ===== =====
- -------------------------
(1) The combined statement of comprehensive income required under United States
generally accepted accounting principles is set forth in Note 21 of Notes
to Combined Financial Statements.
The Notes to Combined Financial Statements form part of these Financial
Statements
10
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THERMALLOY GROUP
COMBINED BALANCE SHEETS
DECEMBER 31
----------------
NOTES 1998 1997
---- ----
(US $000'S)
FIXED ASSETS
Intangible assets 9 405 --
Tangible assets 10 28,656 17,770
------ ------
29,061 17,770
------ ------
CURRENT ASSETS
Inventories 11 12,279 12,264
Debtors: amounts falling due within one year 12 19,485 18,197
Debtors: amounts falling due after one year 12 22 412
Cash at bank and in hand 2,322 2,335
------ ------
34,108 33,208
CREDITORS: AMOUNTS FALLING DUE WITHIN
ONE YEAR 13 18,007 19,695
------ ------
NET CURRENT ASSETS 16,101 13,513
------ ------
TOTAL ASSETS LESS CURRENT LIABILITIES 45,162 31,283
CREDITORS: AMOUNTS FALLING DUE AFTER MORE
THAN ONE YEAR 14 20,603 9,594
PROVISIONS FOR LIABILITIES AND CHARGES 17 229 753
MINORITY INTERESTS (250) 11
------ ------
NET ASSETS 24,580 20,925
====== ======
INVESTED CAPITAL (1) 24,580 20,925
====== ======
- ----------------------
(1) A summary of the significant adjustments to invested capital that would be
required if United States generally accepted accounting principles were
applied, instead of those generally accepted in the United Kingdom, is set
forth in Note 21 of Notes to Combined Financial Statements.
The Notes to Combined Financial Statements form part of these Financial
Statements
11
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THERMALLOY GROUP
COMBINED STATEMENTS OF MOVEMENTS IN INVESTED CAPITAL
YEAR ENDED DECEMBER 31
--------------------------------------
1998 1997 1996
---- ---- ----
(US $000'S)
At January 1 20,925 19,476 18,315
Profit for the year 5,475 5,512 5,412
Net distributions (2,185) (3,828) (4,643)
Currency translation 365 (235) 392
------ ------ ------
At December 31 (1) 24,580 20,925 19,476
====== ====== ======
- ----------------------------
(1) At December 31, 1998 the cumulative amount of goodwill charged to reserves
is $21,575,000 (1997 $21,445,000; 1996 $22,225,000).
The Notes to Combined Financial Statements form part of these Financial
Statements
12
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THERMALLOY GROUP
COMBINED CASH FLOW STATEMENTS
YEAR ENDED DECEMBER 31
--------------------------------
1998 1997 1996
---- ---- ----
(US $000'S)
NET CASH INFLOW FROM
OPERATING ACTIVITIES 14,505 11,453 10,893
RETURNS ON INVESTMENTS AND
SERVICING OF FINANCE
Interest paid (1) (1,247) (750) (670)
Interest received (1) 100 93 102
Minority dividend paid (257) (388) (493)
------ ------ ------
(1,404) (1,045) (1,061)
TAX PAID (3,604) (4,170) (3,059)
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Purchase of tangible fixed assets (15,373) (8,433) (4,814)
Sale of tangible fixed assets 203 2,050 134
Purchase of intangible
fixed assets (482) -- --
------ ------ ------
(15,652) (6,383) (4,680)
FINANCING (1)
Distribution to Bowthorpe Group, net (3,810) (3,496) (3,685)
Movement on external loans and
finance lease obligations 4,620 2,567 814
Movement in amounts due to and
from Bowthorpe Group 6,256 855 811
------ ------ ------
7,066 (74) (2,060)
------ ------ ------
INCREASE (DECREASE) IN CASH 911 (219) 33
====== ====== ======
The Notes to Combined Financial Statements form part of these Financial
Statements
13
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THERMALLOY GROUP
COMBINED CASH FLOW STATEMENTS (continued)
The reconciliation of operating profit to net cash flow from operating
activities is as follows:
YEAR ENDED DECEMBER 31
--------------------------------
1998 1997 1996
---- ---- ----
(US $000'S)
OPERATING PROFIT 9,569 9,594 9,526
Depreciation charge 4,942 3,407 3,383
Amortization of other intangibles 88 -- --
Decrease (increase) in inventories 130 (1,476) 31
Increase in debtors (268) (3,611) (2,781)
Increase in creditors and provisions 44 3,539 734
------ ------ ------
NET CASH INFLOW FROM OPERATING
ACTIVITIES 14,505 11,453 10,893
====== ====== ======
- -------------------------
(1) Transactions with Bowthorpe Group, interest received (paid) and financing
cash flows are not necessarily representative of the amounts that would
have been borne by Thermalloy Group on a stand-alone basis.
(2) The significant differences between the cash flow statements presented
above and those required under United States generally accepted accounting
principles are set forth in Note 21 of Notes to Combined Financial
Statements.
The reconciliation of operating profit to net cash flow from operating
activities is as follows:
14
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THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
These financial statements are a combination of the financial statements of the
thermal management companies of Bowthorpe Group comprising Thermalloy Inc.,
Redpoint Thermalloy Limited, Redpoint Limited, Thermalloy Investment Company
Inc., Thermalloy SA de CV, Thermalloy Limited, Thermalloy International Limited,
Elbomec Thermalloy SRL, Thermalloy (Malaysia) Sdn Bhd, Curamik Electronics GmbH,
Curamik Electronics Inc. (together, "Thermalloy Group") of Bowthorpe plc, a UK
company, including purchased goodwill arising on Bowthorpe's acquisition of
these companies. These financial statements have been prepared in conjunction
with the planned divestiture of Thermalloy Group.
These combined financial statements have been prepared in accordance with
accounting principles generally accepted in the United Kingdom ("UK GAAP"). All
intra-Thermalloy Group transactions and balances have been eliminated on
combination.
The combined financial statements include interest income and expense actually
earned or paid by Thermalloy Group. During the three years ended December 31,
1998, Thermalloy Group's operations were principally funded by share capital,
loans from Bowthorpe Group companies and loans from third parties. These
financing arrangements were designed and implemented on a Bowthorpe Group basis,
rather than from the perspective of the financing needs of Thermalloy Group. The
decisions as to whether to finance companies with share capital or loans and as
to whether to charge interest on any particular loan were taken based on the
financial position of the companies and local taxation considerations. Where
interest was charged, the rate charged varied, but was generally in line with
commercial borrowing rates. The Bowthorpe Group loans generally did not have set
repayment terms.
The combined financial statements reflect the actual tax charges suffered by the
entities within Thermalloy Group.
The combined financial statements reflect management costs charged to the
Thermalloy Group by the Bowthorpe Group based either on direct costs incurred or
on assets employed. Management believes this is a reasonable basis.
The basis of funding, interest charges and financing cash flows and related cash
flows and management charges are not necessarily representative of those that
would have been incurred by Thermalloy Group on a stand alone basis, or of those
that may be incurred by Thermalloy Group in the future.
The combined financial statements are presented in US dollars, although
Bowthorpe Group's functional currency is the pound sterling. The following
exchange rates have been used to translate to US dollars:
<TABLE>
<CAPTION>
1998 1997 1996
<S> <C> <C> <C>
Profit and loss account and cash flow - average rate for the year $1.66:(pound)1 $1.64:(pound)1 $1.56:(pound)1
Balance sheet - year end rate $1.66:(pound)1 $1.65:(pound)1 $1.71:(pound)1
</TABLE>
15
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THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
2. ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The combined financial statements are prepared under the historical cost
convention and in accordance with applicable UK accounting standards and
specifically in accordance with the following accounting policies.
INTANGIBLE ASSETS
As permitted by FRS 10, goodwill arising on the acquisition of a subsidiary
undertakings prior to January 1, 1998 representing the excess of cost over the
fair value of the attributable assets and liabilities acquired has been written
off against profit and loss account reserve. In accordance with UITF 3, goodwill
which has been written off the profit and loss account reserve would be charged
to the profit and loss account on the subsequent disposal of the business to
which it related.
Other separately identifiable intangible assets such as patent fees, licence
fees and trade marks are capitalised in the balance sheet only when the value
can be measured reliably or the intangible asset is purchased in the acquisition
of a business. Such intangible assets are amortised over their useful economic
lives up to a maximum of 20 years. The carrying value of intangible assets is
reviewed for impairment at the end of the first full year following acquisition
and in other periods if events or changes in circumstances indicate the carrying
value may not be recoverable.
FOREIGN CURRENCIES
Transactions in non sterling currencies are recorded at the rate ruling at the
date of transaction. The results of non UK entities are translated into sterling
using average rates.
Monetary assets and liabilities denominated in currencies other than sterling
are translated at the rates ruling at December 31. Profits and losses arising
from the re-translation of opening net assets of overseas entities, treating
long term intra-group loans as part of the equity investment, and exchange
adjustments arising from the translation of the results of overseas subsidiary
entities, are dealt with through reserves. All other exchange profits and losses
are taken to the profit and loss account.
SALES
Sales represent the amounts invoiced to customers for goods and services during
the year, excluding tax and intra-group transactions.
PRODUCT DEVELOPMENT
Product development expenditure is charged to profit and loss account in the
year in which it is incurred.
PENSION COSTS
In the United Kingdom the Bowthorpe Group operates two pension schemes for the
benefit of employees. These schemes require contributions to be made to
separately administered funds, based on triennial actuarial valuations.
16
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THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
2. ACCOUNTING POLICIES (continued)
PENSION COSTS
Contributions to the Bowthorpe Group United Kingdom and United States defined
benefit pension schemes are charged to the profit and loss account so as to
spread the cost of pensions over the employees' working lives within the
Bowthorpe Group. Differences between the amounts funded and the amounts charged
to profit and loss account are treated as either creditors or prepayments in the
balance sheet. Variations in the pension costs, which are identified as a result
of actuarial valuations, are amortised over the average expected working lives
of employees.
Contributions payable to Bowthorpe Group's other plans are charged to profit and
loss account in the year for which they are due.
DEFERRED TAXATION
Deferred taxation is provided using the liability method on all timing
differences to the extent that they are expected to reverse in the future,
calculated at the rate at which it is estimated that tax will be payable.
INVENTORIES
Inventories are valued at the lower of cost and estimated net realisable value.
Cost includes all costs in bringing each product to its present location and
condition, being the full manufacturing cost on a first in, first out basis,
including all attributable overheads based on a normal level of activity. Net
realisable value represents selling prices less further costs to be incurred to
completion and on sale.
TANGIBLE ASSETS
Depreciation is not provided on freehold land where the value is separately
identifiable. Depreciation is provided to write off all other assets over their
estimated useful lives at rates which take into account commercial conditions at
their location. Usual asset lives are as follows:
<TABLE>
<S> <C> <C>
Freehold buildings 50 years
Leasehold properties 50 years or lease period if less
Plant and machinery 3-8 years
Fixtures, fittings and equipment: Building installations 20 years or lease period if less
Fittings and equipment 3-8 years
Motor vehicles 3-5 years
Business systems software 4 years
</TABLE>
The carrying values of tangible fixed assets are reviewed for impairment in
periods where events or changes in circumstances indicate the carrying value may
not be recoverable.
Assets obtained under finance leases and hire purchase contracts are capitalised
in the balance sheet and are depreciated over their estimated useful lives. The
interest elements of the rental obligations are charged to the profit and loss
account over the periods of the leases and hire purchase contracts in proportion
to the balance of capital repayments outstanding.
Operating lease rentals are charged to profit and loss account over the period
of the lease.
17
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THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
3. SEGMENT ANALYSIS
YEAR ENDED DECEMBER 31
--------------------------------
1998 1997 1996
---- ---- ----
(US $000'S)
SALES
BY GEOGRAPHICAL AREA OF MARKET:
Europe 42,144 39,089 35,873
United States 52,198 47,648 36,651
Rest of World 7,990 7,931 8,361
------- ------ ------
102,332 94,668 80,885
======= ====== ======
BY GEOGRAPHICAL AREA OF ORIGIN:
Europe 42,755 39,604 36,608
United States 52,558 48,912 40,054
Rest of World 7,019 6,152 4,223
------- ------ ------
102,332 94,668 80,885
======= ====== ======
OPERATING PROFIT
BY GEOGRAPHICAL AREA OF ORIGIN:
Europe 6,361 5,825 5,864
United States 2,856 3,026 3,116
Rest of World 352 743 546
------- ------ ------
9,569 9,594 9,526
======= ====== ======
NET OPERATING ASSETS
DECEMBER 31
------------------
1998 1997
---- ----
(US $000'S)
Europe 19,043 11,972
United States 23,174 20,261
Rest of World 3,809 2,731
------ ------
46,026 34,964
====== ======
18
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THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
4. OPERATING PROFIT
YEAR ENDED DECEMBER 31
-----------------------------
1998 1997 1996
---- ---- ----
(US $000'S)
ANALYSIS OF OPERATING COSTS LESS OTHER INCOME:
Cost of sales 69,755 62,743 53,898
Selling and distribution 14,025 13,813 10,514
Administration 9,825 8,008 7,010
Other (income)/costs (842) 510 (63)
------ ------ ------
92,763 85,074 71,359
====== ====== ======
OPERATING PROFIT IS STATED AFTER CHARGING:
Depreciation of owned tangible fixed assets 4,518 3,187 3,134
Depreciation of finance leased assets 423 220 249
Amortization of other intangibles 88 -- --
Research and development 3,582 3,086 2,529
Auditors' remuneration 81 129 119
Other fees paid to Ernst & Young -- 26 --
Operating lease rentals
Property 751 629 160
Hire of plant and machinery 776 275 182
5. EMPLOYEES
YEAR ENDED DECEMBER 31
-----------------------------
1998 1997 1996
---- ---- ----
(NUMBERS)
The average number of people employed by the
Thermalloy Group during the year was:
Manufacturing 743 697 568
Selling and distribution 114 111 95
Administration 46 39 34
------ ------ ------
903 847 697
====== ====== ======
YEAR ENDED DECEMBER 31
-----------------------------
1998 1997 1996
---- ---- ----
(US $000'S)
Their payroll costs were:
Remuneration 25,160 23,707 20,094
Social security costs 3,239 3,194 3,118
Other pension costs 666 733 564
------ ------ ------
29,065 27,634 23,776
====== ====== ======
19
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THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
6. PENSION AND OTHER POST-RETIREMENT BENEFITS
The principal Bowthorpe pension plans are a funded defined benefit plan and a
defined contribution plan with a defined benefit underpin in the United Kingdom,
and a defined contribution plan in the United States. Contributions to the
Bowthorpe UK plans are made in accordance with the recommendations of the
independent actuary of the relevant plan.
The latest actuarial valuations of the Bowthorpe UK defined benefit plans were
undertaken as at April 1, 1997 using the projected unit credit method and the
principal results and assumptions were as follows:
ASSUMPTION STAFF PENSION PLAN RETIREMENT CASH PLAN
- ---------- ------------------ --------------------
Return on investments 9.0% pa 9.0% pa
Salary inflation average 6.5% pa 6.0% pa
Price inflation 4.5% pa 4.5% pa
Pension increases 4.5% pa 4.5% pa
Dividend growth 4.75% pa 4.75% pa
Market value of assets (pound)72.4 million (pound)3.8 million
Level of funding 114% 99%
Employer contribution rate 7.5% 6%
The level of funding represents the actuarial value of assets expressed as a
percentage of the value of liabilities that have accrued to members after
allowing for the assumed future increases in salary. For accounting purposes in
accordance with SSAP24, the actuarial surplus is being spread over the average
expected remaining service of plan members being 13 years.
With the exception of the United States defined benefit schemes, contributions
payable to other Bowthorpe Group overseas plans are charged to profit and loss
account in the year for which they are due.
7. FINANCE COSTS
YEAR ENDED DECEMBER 31
----------------------------
1998 1997 1996
---- ---- ----
(US $000'S)
Interest payable on:
Bank overdrafts and loans 283 366 393
Finance lease obligations 562 260 277
Amounts due to Bowthorpe Group 402 125 --
----- --- ---
1,247 751 670
Interest receivable on:
Bank and other deposits 68 57 71
Amounts due from Bowthorpe Group 32 36 30
----- --- ---
100 93 101
----- --- ---
Net finance costs 1,147 658 569
===== === ===
As explained in Note 1, finance costs are not necessarily representative of
those that would have been incurred by Thermalloy Group on a stand-alone basis
or that will be incurred by Thermalloy Group in the future.
20
<PAGE> 21
THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
8. TAXATION
The companies within Thermalloy Group have calculated tax on their own results
with no account taken of other Bowthorpe Group companies for the three years
ended December 31, 1998. Where tax has been borne by individual companies within
Thermalloy Group, these amounts are included in the combined financial
statements.
Taxation is analyzed as follows:
YEAR ENDED DECEMBER 31
---------------------------------
1998 1997 1996
---- ---- ----
(US $000'S)
UK current taxation 1,414 1,402 1,022
UK deferred taxation 33 (153) --
Overseas current taxation 1,500 2,182 2,550
Over-provision in prior years -- (7) (27)
----- ----- -----
2,947 3,424 3,545
===== ===== =====
9. INTANGIBLE ASSETS
(US $000'S)
COST:
At January 1, 1997 --
Exchange adjustment --
Additions --
---
At December 31, 1997 --
Exchange adjustment --
Additions 494
---
At December 31, 1998 494
---
AMORTIZATION:
At January 1, 1997 --
Exchange adjustment --
Charge for the year --
---
At December 31, 1997 --
Exchange adjustment 1
Charge for the year 88
---
At December 31, 1998 89
---
NET BOOK VALUE:
At December 31, 1997 --
===
At December 31, 1998 405
===
21
<PAGE> 22
THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
10. TANGIBLE ASSETS
LAND FIXTURES AND
AND PLANT FITTINGS,
BUILDINGS AND EQUIPMENT
FREEHOLD LEASEHOLD MACHINERY AND VEHICLES TOTAL
-------- --------- --------- ------------ ------
(US $000'S)
Cost:
At January 1, 1997 1,778 4,514 24,171 8,325 38,788
Exchange adjustment (173) (11) (1,147) (211) (1,542)
Additions -- 870 5,813 1,587 8,270
Disposals (1,459) -- (1,293) (1,058) (3,810)
----- ----- ------ ------ ------
At December 31, 1997 146 5,373 27,544 8,643 41,706
Exchange adjustment 11 2 582 89 684
Additions 46 4,395 8,252 3,060 15,753
Disposals -- -- (1,882) (653) (2,535)
----- ----- ------ ------ ------
At December 31, 1998 203 9,770 34,496 11,139 55,608
----- ----- ------ ------ ------
DEPRECIATION:
At January 1, 1997 336 2,760 14,490 5,566 23,152
Exchange adjustment (47) (5) (697) (86) (835)
Charge for year 8 215 2,249 935 3,407
Disposals (297) -- (706) (785) (1,788)
----- ----- ------ ------ ------
At December 31, 1997 -- 2,970 15,336 5,630 23,936
Exchange adjustment -- 11 341 49 401
Charge for year 1 409 3,307 1,224 4,941
Disposals -- -- (1,722) (604) (2,326)
----- ----- ------ ------ ------
At December 31, 1998 1 3,390 17,262 6,299 26,952
----- ----- ------ ------ ------
NET BOOK VALUE:
At December 31, 1997 146 2,403 12,208 3,013 17,770
===== ===== ====== ====== ======
At December 31, 1998 202 6,380 17,234 4,840 28,656
===== ===== ====== ====== ======
11. INVENTORIES
DECEMBER 31
----------------
1998 1997
---- ----
(US $000'S)
Raw materials 3,413 2,819
Finished goods 1,949 2,744
Work in progress 6,917 6,701
------ ======
12,279 12,264
====== ======
The replacement cost of inventories as at December 31, 1998 and 1997
approximates to the value at which they are stated in the financial statements.
22
<PAGE> 23
THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
12. DEBTORS
DECEMBER 31
---------------------
1998 1997
---- ----
(US $000'S)
Due within one year:
Trade debtors 17,198 16,053
Other debtors 624 1,096
Amounts due from Bowthorpe Group 25 51
Tax recoverable 687 349
Prepayments and accrued income 951 648
------ ------
19,485 18,197
====== ======
Due after more than one year:
Other debtors 22 412
====== ======
The balances due from Bowthorpe Group are not necessarily representative of the
amounts that would be due to Thermalloy Group on a stand-alone basis.
13. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
DECEMBER 31
---------------------
1998 1997
---- ----
(US $000'S)
Bank overdrafts 128 1,083
Trade creditors 7,404 8,001
Amounts due to Bowthorpe Group 1,539 488
Dividends payable-minority interest 174 230
Distributions payable to Bowthorpe Group 1,084 2,853
Bank loans 287 1,023
Other loans and finance leases 614 366
Other creditors 1,769 771
Accruals and deferred income 2,711 2,638
Corporate taxation 1,418 1,747
Other taxes including VAT and social
security 879 495
------ ------
18,007 19,695
====== ======
Under their banking arrangements, certain entities accumulate overdraft and cash
balances which are offset. Such offsets are reflected in the combined balance
sheets as appropriate. Loans of $431,000 at December 31, 1998 are secured by
floating charges on the assets of the borrowing business.
23
<PAGE> 24
THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
14. CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR
DECEMBER 31
---------------------
1998 1997
---- ----
(US $000'S)
Bank loans 5,351 3,909
Other loans and finance leases 7,317 3,074
Amounts due to Bowthorpe Group 6,588 1,239
Other creditors 1,347 1,372
------ -----
20,603 9,594
====== =====
The balances due to Bowthorpe Group are not necessarily representative of the
amounts that would be due by Thermalloy Group on a stand-alone basis. Loans of
$5,888,000 at December 31, 1998 are secured by floating charges on the assets of
the borrowing business. The long term bank and other loans bear interest at an
average rate of approximately 5.5%.
15. BORROWINGS
This analysis is not necessarily representative of the total level of the net
borrowings that would have been incurred by Thermalloy Group on a stand-alone
basis.
Maturity analysis of external borrowings:
DECEMBER 31
---------------------
1998 1997
---- ----
(US $000'S)
Amounts falling due are repayable as follows:
Bank loans:
Amounts falling due
Between two and five years 5,136 3,499
Between one and two years 215 410
Within one year 415 2,106
------ -----
5,766 6,015
------ -----
Other loans and finance leases:
Amounts falling due
After five years 4,623 1,417
Between two and five years 2,117 993
Between one and two years 577 665
Within one year 614 366
------ -----
7,931 3,441
------ -----
Total loans and finance leases 13,697 9,456
====== =====
24
<PAGE> 25
THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
16. NET DEBT
The following definitions have been used:
Cash: Cash in hand and deposits repayable on demand if available within 24 hours
without penalty, less overdrafts.
External borrowings: borrowings, less overdrafts which have been treated as
cash, and finance lease obligations.
ANALYSIS OF NET DEBT
DECEMBER 31
---------------------------------
1998 1997 1996
---- ---- ----
(US $000'S)
Cash in hand 2,322 2,335 1,704
Overdrafts (128) (1,083) (186)
------- ------- ------
Net cash 2,194 1,252 1,518
External borrowings (13,569) (8,372) (6,267)
Amounts due to Bowthorpe Group (8,102) (1,676) (1,127)
------- ------- ------
Total borrowings (21,671) (10,048) (7,394)
------- ------- ------
Total net debt (19,477) (8,796) (5,876)
======= ======= ======
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
YEAR ENDED DECEMBER 31
------------------------------
1998 1997 1996
---- ---- ----
(US $000'S)
Increase (decrease) in cash 911 (219) 33
Cash inflow from increase in debt (4,620) (2,567) (814)
Cash inflow from increase in group loan (6,256) (855) (811)
------- ------ ------
Change in net debt from cashflows (9,965) (3,641) (1,592)
Exchange movements (716) 721 (11)
------- ------ ------
Movement in net debt in the year (10,681) (2,920) (1,603)
Net debt at January 1 (8,796) (5,876) (4,273)
------- ------ ------
Net debt at December 31 (19,477) (8,796) (5,876)
======= ====== ======
25
<PAGE> 26
THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
17. PROVISIONS FOR LIABILITIES AND CHARGES
DEFERRED
PENSIONS TAXATION OTHER TOTAL
-------- -------- ----- -----
(US $000'S)
At January 1, 1997 307 382 61 750
Currency translation -- 9 (2) 7
Provisions utilized -- -- (11) (11)
Charged/(released) in the year 123 (153) 37 7
--- --- --- ---
At December 31, 1997 430 238 85 753
Currency translation -- 2 1 3
Provisions utilized (400) (306) (86) (792)
Charged/(released) in the year 265 -- -- 265
--- --- --- ---
At December 31, 1998 295 (66) -- 229
=== === === ===
Other provisions relate to warranties and litigation.
18. FINANCIAL COMMITMENTS
DECEMBER 31
---------------
1998 1997
---- ----
(US $000'S)
Contracted capital expenditure 1,848 6,803
===== =====
Annual commitments under operating leases at December 31,
were as follows:
Land and buildings:
Expiring in the first year -- 299
Expiring in the second to fifth years inclusive -- 25
Expiring after the fifth year 257 83
----- -----
257 407
===== =====
Fixtures and fittings, equipment and vehicles:
Expiring in the first year 70 --
Expiring in the second to fifth years inclusive -- --
Expiring after the fifth year -- --
----- -----
70 --
===== =====
19. CONTINGENT LIABILITIES
The management of Thermalloy Group is not aware of any legal or arbitration
proceedings pending or threatened against any member of Thermalloy Group which
may result in any liabilities significantly in excess of provisions in the
financial statements.
26
<PAGE> 27
THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
20. RELATED PARTY DISCLOSURE
Thermalloy Group does not operate as a separate group and consequently there
were a number of related party transactions between its companies and other
companies and businesses within Bowthorpe Group. These include transactions
relating to insurance, treasury and taxation, together with other central
services supplied by Bowthorpe Group to Thermalloy Group. These transactions
have not been identified individually as it is not practical to do so.
21. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The combined financial statements are prepared in accordance with accounting
principles generally accepted in the United Kingdom ("UK GAAP"), which differ in
certain respects from those generally accepted in the United States ("US GAAP").
The significant differences applicable to Thermalloy Group are described below.
Goodwill
Under UK GAAP, goodwill arising on acquisitions prior to January 1, 1998 was
written off to reserves. Under US GAAP, such goodwill would be capitalized and
amortized to the income statement over the estimated useful lives of the assets
over its estimated useful lives not exceeding 40 years. For the purpose of the
US GAAP reconciliations, goodwill is amortized over 20 years.
Under US GAAP, if any impairment indicators were present, the Group would
evaluate the recoverability of goodwill and other intangible fixed assets, based
on undiscounted cash flows.
Taxation
Under UK GAAP, deferred taxation is provided using the liability method in
respect of timing differences. Provision is made, or recovery anticipated, where
timing differences are expected to reverse without replacement in the
foreseeable future. US GAAP requires taxes to be computed on a stand-alone basis
by a member of a group if it issues separate financial statements.
Under US GAAP, deferred taxation is provided on the full liability basis on all
temporary differences between the tax and book bases of assets and liabilities
including the differences between the assigned fair values and tax bases of
assets and liabilities acquired. Future taxation benefits are recognized as
deferred taxation assets, subject to a valuation allowance to the extent that it
is more likely than not that any part will not be realized.
There are no material differences in deferred taxation resulting from the
application of US GAAP.
Pensions
The Group provides for the cost of retirement benefits based upon consistent
percentages of employees' pensionable pay as recommended by independent
qualified actuaries. Under US GAAP, the projected benefit obligation (pension
liability) in respect of the Group's defined benefit plans would be matched
against the fair value of the plans' assets and would be adjusted to reflect any
unrecognized obligations or assets in determining the pension cost or credit for
the year.
There are no material differences in pension costs resulting from the
application of US GAAP.
27
<PAGE> 28
THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
21. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)
PROFIT FOR THE YEAR AND COMPREHENSIVE INCOME
YEAR ENDED DECEMBER 31
----------------------
1998 1997 1996
---- ---- ----
(US $000'S)
Profit for the year as reported in the combined
profit and loss account in accordance with UK GAAP 5,475 5,512 5,412
Adjustments:
Goodwill amortization (1,039) (1,066) (1,014)
----- ----- -----
Net income as adjusted to accord with
US GAAP 4,436 4,446 4,398
Items of comprehensive income:
Currency translation 365 (235) 392
----- ----- -----
US GAAP comprehensive income 4,801 4,211 4,790
===== ===== =====
INVESTED CAPITAL
DECEMBER 31
-------------
1998 1997
---- ----
(US $000'S)
Invested capital as reported in the combined balance
sheet in accordance with UK GAAP 24,580 20,925
Adjustments:
Goodwill:
Cost 21,575 21,445
Accumulated amortization (12,023) (10,918)
------ ------
Net book value 9,552 10,527
------ ------
Invested capital as adjusted to accord
with US GAAP 34,132 31,452
====== ======
28
<PAGE> 29
THERMALLOY GROUP
NOTES TO COMBINED FINANCIAL STATEMENTS (continued)
21. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)
CONSOLIDATED STATEMENT OF CASH FLOWS
The consolidated statements of cash flows prepared under UK GAAP present
substantially the same information as those required under US GAAP but they
differ, however, with regard to classification of items within them and as
regards the definition of cash and cash equivalents.
Under UK GAAP, cash is defined as cash in hand and deposits repayable on demand
less overdrafts repayable on demand. Under US GAAP, cash and cash equivalents
would not include bank overdrafts but would include cash deposits repayable
within three months. Under UK GAAP, cash flows are presented separately for
operating activities, returns on investments and servicing of finance, taxation,
capital expenditure and financial investment, acquisitions, equity dividends,
management of liquid resources and financing. US GAAP, however, requires only
three categories of cash flow activity to be reported: operating, investing and
financing. Cash flows from taxation and returns on investments and servicing of
finance shown under UK GAAP would be included as operating activities under US
GAAP. The payment of dividends would be included as a financing activity under
US GAAP. Under US GAAP, capital expenditure and financial investment and
acquisitions would be reported within investing activities.
The categories of cash flow activity under US GAAP can be summarized as follows:
YEAR ENDED DECEMBER 31
--------------------------
1998 1997 1996
---- ---- ----
(US $ 000'S)
Cash inflow from operating activities 8,799 7,523 6,621
Cash outflow on investing activities (15,652) (6,383) (4,680)
Cash inflow/(outflow) from financing activities 6,809 (462) (2,553)
------ ----- -----
(Decrease)/increase in cash and cash equivalents (44) 678 (612)
Effect of foreign exchange rates changes 31 (47) (138)
Cash and cash equivalents at January 1 2,335 1,704 2,454
------ ----- -----
Cash and cash equivalents at December 31 2,322 2,335 1,704
====== ===== =====
29
<PAGE> 30
CONDENSED COMBINED
UNAUDITED FINANCIAL
STATEMENTS
THERMALLOY GROUP
June 30, 1999
30
<PAGE> 31
THERMALLOY GROUP
Condensed Combined Unaudited Financial Statements
June 30, 1999
CONTENTS
Condensed Combined Unaudited Profit and Loss Accounts for the six months
ended June 30, 1999 and 1998............................................ 32
Condensed Combined Unaudited Statements of Total Recognized Gains and
Losses for the six months ended June 30, 1999 and 1998.................. 33
Condensed Combined Unaudited Balance Sheets at June 30, 1999 and 1998....... 34
Condensed Combined Unaudited Statements of Movements in Invested
Capital for the six months ended June 30, 1999 and 1998................. 35
Condensed Combined Unaudited Cash Flow Statements for the six months
ended June 30, 1999 and 1998............................................ 36
Notes to Condensed Combined Unaudited Financial Statements ................. 37
31
<PAGE> 32
THERMALLOY GROUP
CONDENSED COMBINED UNAUDITED PROFIT AND LOSS ACCOUNTS
SIX MONTHS
ENDED JUNE 30
------------------
NOTES 1999 1998
---- ----
(US $000'S)
SALES 2 50,298 52,372
Operating costs less other income 3 47,613 46,403
------ ------
OPERATING PROFIT 2 2,685 5,969
Finance costs (1) 651 517
------ ------
Profit before taxation 2,034 5,452
Taxation 1,052 2,078
------ ------
Profit for the period (2) 982 3,374
====== ======
- ----------------------
(1) The finance costs are not necessarily representative of the charges that
would have been incurred by Thermalloy Group on a stand-alone basis.
(2) A summary of the significant adjustments to profit for the year that would
be required is United States generally accepted accounting principles were
applied, instead of those generally accepted in the United Kingdom, is set
forth in Note 8 of Notes to Condensed Combined Unaudited Financial
Statements.
The Notes to Condensed Combined Unaudited Financial Statements form part of
these Condensed Combined Unaudited Financial Statements
32
<PAGE> 33
THERMALLOY GROUP
CONDENSED COMBINED UNAUDITED STATEMENTS OF TOTAL
RECOGNIZED GAINS AND LOSSES
SIX MONTHS
ENDED JUNE 30
------------------
1999 1998
---- ----
(US $000'S)
PROFIT FOR THE YEAR 982 3,374
Currency translation (324) 157
--- -----
Total recognized gains and losses
relating to the period (1) 658 3,531
=== =====
- ----------------
(1) The combined statement of comprehensive income required under United States
generally accepted accounting principles is set forth in Note 8 of Notes to
Condensed Combined Unaudited Financial Statements.
The Notes to Condensed Combined Unaudited Financial Statements form part of
these Condensed Combined Unaudited Financial Statements
33
<PAGE> 34
THERMALLOY GROUP
CONDENSED COMBINED UNAUDITED BALANCE SHEETS
JUNE 30
-----------------
NOTES 1999 1998
---- ----
(US $000'S)
FIXED ASSETS
Intangible assets 397 55
Tangible assets 27,986 25,029
------ -----
28,383 25,084
------ -----
CURRENT ASSETS
Inventories 4 13,695 12,566
Debtors: amounts falling due within one year 5 19,035 18,560
Debtors: amounts falling due after one year 5 433 1,045
Cash at bank and in hand 1,468 2,958
------ -----
34,631 35,129
CREDITORS: AMOUNTS FALLING DUE WITHIN
ONE YEAR 6 20,091 19,199
------ -----
NET CURRENT ASSETS 14,540 15,930
------ -----
TOTAL ASSETS LESS CURRENT LIABILITIES 42,923 41,014
CREDITORS: AMOUNTS FALLING DUE AFTER MORE
THAN ONE YEAR 7 18,669 17,522
PROVISIONS FOR LIABILITIES AND CHARGES 338 611
MINORITY INTERESTS (416) (111)
------ -----
NET ASSETS 24,332 22,992
====== ======
INVESTED CAPITAL (1) 24,332 22,992
====== ======
- ---------------------
(1) A summary of the significant adjustments to invested capital that would be
required if the United States generally accepted accounting principles were
applied, instead of those generally accepted in the United Kingdom, is set
forth in Note 8 of Notes to Condensed Combined Unaudited Financial
Statements.
The Notes to Condensed Combined Unaudited Financial Statements form part of
these Condensed Combined Unaudited Financial Statements
34
<PAGE> 35
THERMALLOY GROUP
CONDENSED COMBINED UNAUDITED STATEMENTS OF MOVEMENTS
IN INVESTED CAPITAL
SIX MONTHS
ENDED JUNE 30
------------------------
1999 1998
---- ----
(US $000'S)
At January 1 24,580 20,925
Profit for the period 982 3,374
Net distributions (906) (1,464)
Currency translation (324) 157
------ ------
At June 30 (1) 24,332 22,992
====== ======
(1) At June 30, 1999 the cumulative amount of goodwill charged to reserves is
$20,535,000 (1998 $21,575,000).
The Notes to Condensed Combined Unaudited Financial Statements form part of
these Condensed Combined Unaudited Financial Statements
35
<PAGE> 36
THERMALLOY GROUP
CONDENSED COMBINED UNAUDITED CASH FLOW STATEMENTS
SIX MONTHS
ENDED JUNE 30
-----------------
1999 1998
---- ----
(US $000'S)
NET CASH INFLOW FROM OPERATING ACTIVITIES 2,160 6,533
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest paid (1) (686) (567)
Interest received (1) 36 50
----- -----
(650) (517)
TAX PAID (475) (1,617)
CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT
Purchase of tangible fixed assets (3,770) (9,563)
Sale of tangible fixed assets 7 23
Purchase of intangible fixed assets (84) (108)
----- -----
3,847) (9,648)
FINANCING (1)
Net Distributions (728) (2,164)
Movement on external loans and finance lease obligations (1,089) 3,551
Movement in amounts due to and from Bowthorpe Group 1,842 4,939
----- -----
25 6,326
----- -----
(DECREASE) INCREASE IN CASH (2,787) 1,077
===== =====
The reconciliation of operating profit to net cash flow
from operating activities is as follows:
OPERATING PROFIT 2,685 5,969
Depreciation charge 2,913 2,181
Amortization of other intangibles 63 53
Increase in inventories (1,767) (322)
Increase in debtors (809) (928)
Decrease in creditors and provisions (925) (420)
----- -----
NET CASH INFLOW FROM OPERATING ACTIVITIES 2,160 6,533
===== =====
- --------------------------
(1) Transactions with Bowthorpe Group, interest received (paid) and financing
cash flows are not necessarily representative of the amounts that would
have been borne by Thermalloy Group on a stand-alone basis.
(2) The significant differences between the cash flow statements presented
above and those required under United States generally accepted accounting
principles are set forth in Note 8 of Notes to Condensed Combined Unaudited
Financial Statements.
The Notes to Condensed Combined Unaudited Financial Statements form part of
these Condensed Combined Unaudited Financial Statements
36
<PAGE> 37
THERMALLOY GROUP
NOTES TO CONDENSED COMBINED UNAUDITED FINANCIAL
STATEMENTS
1. BASIS OF PREPARATION
These condensed combined financial statements are unaudited; however, in the
opinion of the management of Thermalloy Group, all adjustments (consisting of
normal recurring adjustments) necessary for a fair presentation have been made.
Operating results for the six-month period ended June 30 are not necessarily
indicative of the results that may be expected for the full year.
The condensed combined unaudited financial statements have been prepared in
accordance with the basis of preparation of the Group's Combined Financial
Statements for the year ended December 31, 1998.
The condensed combined unaudited financial statements are presented in US
dollars, although Bowthorpe Group's functional currency is British pounds. The
following exchange rates have been used to translate to US dollars:
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Profit and loss account and cash flow - average rate for the period $1.62:(pound)1 $1.65:(pound)1
Balance sheet - period end rate $1.58:(pound)1 $1.66:(pound)1
</TABLE>
37
<PAGE> 38
THERMALLOY GROUP
NOTES TO UNAUDITED COMBINED FINANCIAL
STATEMENTS (continued)
2. SEGMENT ANALYSIS
SALES
SIX MONTHS
ENDED JUNE 30
---------------------
1999 1998
---- ----
(US $000'S)
BY GEOGRAPHICAL AREA OF MARKET:
Europe 20,053 20,761
United States 25,750 27,297
Rest of World 4,495 4,314
------ ------
50,298 52,372
====== ======
BY GEOGRAPHICAL AREA OF ORIGIN:
Europe 20,288 20,898
United States 27,079 27,851
Rest of World 2,931 3,623
------ ------
50,298 52,372
====== ======
OPERATING PROFIT
BY GEOGRAPHICAL AREA OF ORIGIN:
Europe 1,581 3,008
United States 1,028 2,763
Rest of World 76 198
------ ------
2,685 5,969
====== ======
JUNE 30
---------------------
1999 1998
---- ----
(US $000'S)
NET OPERATING ASSETS
Europe 17,690 17,821
United States 27,111 21,764
Rest of World 3,567 4,228
------ ------
48,368 43,813
====== ======
38
<PAGE> 39
THERMALLOY GROUP
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
(continued)
3. OPERATING PROFIT
SIX MONTHS
ENDED JUNE 30
------------------------
1999 1998
---- ----
(US $000'S)
ANALYSIS OF OPERATING COSTS LESS OTHER INCOME:
Cost of sales 35,280 34,953
Selling and distribution 6,991 7,182
Administration 5,712 4,296
Other income (370) (28)
------ ------
47,613 46,403
====== ======
4. INVENTORIES
JUNE 30
------------------------
1999 1998
---- ----
(US $000'S)
Raw materials 3,654 3,055
Finished goods 2,092 2,973
Work in progress 7,949 6,538
------ ------
13,695 12,566
====== ======
5. DEBTORS
JUNE 30
------------------------
1999 1998
---- ----
(US $000'S)
Due within one year:
Trade debtors 17,450 16,702
Other debtors 559 819
Amounts due from Bowthorpe Group 29 189
Tax recoverable 550 323
Prepayments and accrued income 447 527
------ ------
19,035 18,560
====== ======
Due after more than one year:
Other debtors 433 1,045
------ ------
The balances due from Bowthorpe Group are not necessarily representative of the
amounts that would be due to Thermalloy Group on a stand-alone basis.
39
<PAGE> 40
THERMALLOY GROUP
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
(continued)
6. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
JUNE 30
-------------------
1999 1998
---- ----
(US $000'S)
Bank overdrafts 2,074 629
Trade creditors 6,819 7,090
Amounts due to Bowthorpe Group 2,490 1,321
Dividends payable-minority interest 310 308
Distributions payable to Bowthorpe Group 1,012 2,065
Bank loans 333 279
Other loans and finance leases 692 435
Other creditors 1,362 1,307
Accruals and deferred income 2,640 3,088
Corporate taxation 1,747 2,200
Other taxes including VAT and social
security 612 477
------ ------
20,091 19,199
====== ======
The balances due to Bowthorpe Group are not necessarily representative of the
amounts that would be due by Thermalloy Group on a stand-alone basis. Loans are
secured by floating charges on the assets of the borrowing business.
7. CREDITORS: AMOUNTS FALLING DUE AFTER ONE YEAR
JUNE 30
-------------------
1999 1998
---- ----
(US $000'S)
Bank loans 5,382 4,242
Other loans and finance leases 4,856 6,903
Amounts due to Bowthorpe Group 7,266 5,408
Other creditors 1,165 969
------ ------
18,669 17,522
====== ======
The balances due to Bowthorpe Group are not necessarily representative of the
amounts that would be due by Thermalloy Group on a stand-alone basis. Loans are
secured by floating charges on the assets of the borrowing business.
40
<PAGE> 41
THERMALLOY GROUP
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
(continued)
8. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
The combined financial statements are prepared in accordance with accounting
principles generally accepted in the United Kingdom ("UK GAAP"), which differ in
certain respects from those generally accepted in the United States ("US GAAP").
The significant differences applicable to Thermalloy Group are described in Note
21 of Notes to Combined Financial Statements for the year ended December 31,
1998.
PROFIT FOR THE YEAR AND COMPREHENSIVE INCOME
SIX MONTHS
ENDED JUNE 30
-----------------
1999 1998
---- ----
(US $ 000'S)
Profit for the year as reported in the combined
profit and loss account in accordance with UK GAAP 982 3,374
Adjustments:
Goodwill amortization (507) (516)
--- -----
Net income as adjusted to accord with
US GAAP 475 2,858
Items of comprehensive income:
Currency translation (324) 157
--- -----
US GAAP comprehensive income 151 3,015
=== =====
INVESTED CAPITAL
AT JUNE 30
-----------------
1999 1998
---- ----
(US $ 000'S)
Invested capital as reported in the combined balance
sheet in accordance with UK GAAP 24,332 22,992
Adjustments:
Goodwill:
Cost 20,535 21,575
Accumulated amortization (11,938) (11,504)
------ ------
Net book value 8,597 10,071
------ ------
Invested capital as adjusted to accord with US GAAP 32,929 33,063
====== ======
41
<PAGE> 42
THERMALLOY GROUP
NOTES TO UNAUDITED COMBINED FINANCIAL STATEMENTS
(continued)
8. DIFFERENCES BETWEEN UNITED KINGDOM AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES (continued)
CASH FLOWS
The categories of cash flow activity under US GAAP can be summarized as follows:
SIX MONTHS
ENDED JUNE 30
------------------
1999 1998
---- ----
(US $000'S)
Cash inflow from operating activities 2,962 3,934
Cash outflow on investing activities (3,847) (10,293)
Cash inflow from financing activities 43 6,983
----- ------
(Decrease)/increase in cash and cash equivalents (842) 624
Effect of foreign exchange rates changes (12) (1)
Cash and cash equivalents at January 1 2,322 2,335
----- ------
Cash and cash equivalents at June 30 1,468 2,958
===== ======
42
<PAGE> 43
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AAVID THERMAL TECHNOLOGIES, INC.
By: /s/ John W. Mitchell
------------------------------------
Name: John W. Mitchell
Title: General Counsel
Date: November 5, 1999
43
<PAGE> 44
Exhibit Index
2.1 Stock Purchase Agreement by and among Bowthorpe plc, Bowthorpe
B.V., Bowthorpe International Inc., Bowthorpe GmbH
(collectively, "Bowthorpe") and Aavid Thermal Technologies,
Inc., dated as of August 23, 1999 (incorporated herein by
reference to Exhibit 2.1 to the Company's Current Report on
Form 8-k dated August 23, 1999).
10.1 Credit Agreement, dated as of October 21, 1999, among Aavid
Thermal Technologies, Inc., as Borrower, the several lenders
from time to time party hereto, CIBC World Markets Corp., as
Lead Arranger and Bookrunner, and Canadian Imperial Bank of
Commerce, as Issuer and Administrative Agent.
23. Consent of Ernst & Young.
44
<PAGE> 1
Exhibit 10.1
EXECUTION COPY
================================================================================
CREDIT AGREEMENT
AMONG
AAVID THERMAL TECHNOLOGIES, INC.
THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO,
CIBC WORLD MARKETS CORP.
AS LEAD ARRANGER AND BOOKRUNNER,
AND
CANADIAN IMPERIAL BANK OF COMMERCE
AS ISSUER AND ADMINISTRATIVE AGENT
DATED AS OF OCTOBER 21, 1999
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE 1. DEFINITIONS........................................................1
1.1 Defined Terms................................................1
1.2 Other Definitional Provisions...............................24
ARTICLE 2. AMOUNT AND TERMS OF COMMITMENTS...................................24
2.1 Revolving Credit Commitments................................24
2.2 Revolving Credit Notes......................................25
2.3 Procedure for Revolving Credit Borrowing....................25
2.4 Commitment Fee; Administrative Fee..........................26
2.5 Termination or Reduction of Revolving Credit Commitments....26
2.6 Term Loans..................................................27
2.7 Term Notes..................................................27
2.8 Procedures for Term Loan Borrowing..........................28
2.9 Optional and Mandatory Prepayments..........................28
2.10 Conversion and Continuation Options.........................31
2.11 Maximum Amounts of Tranches.................................31
2.12 Interest Rates and Payment Dates............................32
2.13 Computation of Interest and Fees............................32
2.14 Inability to Determine Interest Rate........................33
2.15 Pro Rata Treatment and Payments; Funding Reliance...........33
2.16 Illegality..................................................34
2.17 Requirements of Law.........................................34
2.18 Taxes.......................................................35
2.19 Indemnity...................................................38
2.20 Discretion of Lender as to Manner of Funding................38
2.21 Letters of Credit...........................................38
2.22 Defaulting Lenders..........................................41
ARTICLE 3. REPRESENTATIONS AND WARRANTIES....................................42
3.1 Financial Condition.........................................42
3.2 No Change...................................................44
3.3 Corporate Existence; Compliance with Law....................44
3.4 Corporate Power; Authorization; Enforceable Obligations.....44
3.5 No Legal Bar................................................45
3.6 No Material Litigation......................................45
3.7 No Default..................................................45
3.8 Ownership of Property; Liens................................45
3.9 Intellectual Property.......................................46
3.10 No Burdensome Restrictions..................................46
3.11 Taxes.......................................................46
3.12 Federal Regulations.........................................46
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<PAGE> 3
3.13 ERISA.......................................................46
3.14 Holding Company; Investment Company Act; Other Regulations..47
3.15 Purpose of Loans............................................47
3.16 Environmental Matters.......................................48
3.17 Acquisition.................................................49
3.19 Subsidiaries................................................49
3.20 Labor Matters...............................................49
3.21 Insurance...................................................50
3.22 Acquisition Documents.......................................50
3.23 Security Documents..........................................50
3.24 Accuracy and Completeness of Information....................51
3.25 Leaseholds, Permits, etc....................................52
3.26 Solvency....................................................52
3.27 Existing Indebtedness.......................................52
3.28 Inactive Subsidiaries.......................................52
3.29 Year 2000 Compliance........................................52
ARTICLE 4. CONDITIONS PRECEDENT..............................................53
4.1 Conditions to Initial Credit Extension......................53
4.2 Conditions to Each Credit Extension.........................57
ARTICLE 5. AFFIRMATIVE COVENANTS.............................................58
5.1 Financial Statements........................................59
5.2 Certificates; Other Information.............................59
5.3 Payment of Obligations......................................60
5.4 Maintenance of Existence....................................61
5.5 Maintenance of Property; Insurance..........................61
5.6 Inspection of Property; Books and Records; Discussions......61
5.7 Notices.....................................................62
5.8 Environmental Laws..........................................62
5.9 Hedging Agreements..........................................63
5.10 ERISA.......................................................63
5.11 Use of Proceeds.............................................64
5.12 Year 2000 Compliance........................................64
5.13 Post-Closing Matters........................................64
5.14 Further Assurances..........................................65
ARTICLE 6. NEGATIVE COVENANTS................................................65
6.1 Financial Condition Covenants...............................65
6.2 Limitation on Indebtedness..................................65
6.3 Limitation on Liens.........................................66
6.4 Limitation on Guarantee Obligations.........................67
6.5 Limitation on Fundamental Changes...........................67
6.6 Limitation on Sale of Assets................................67
6.7 Limitation on Dividends; Prepayment of Indebtedness.........68
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<PAGE> 4
6.8 Limitation on Capital Expenditures..........................68
6.9 Limitation on Investments, Loans and Advances...............69
6.10 Limitation on Transactions with Affiliates..................69
6.11 Limitation on Sales and Leasebacks..........................70
6.12 Limitation on Changes in Fiscal Year or Charter.............70
6.13 Limitation on Negative Pledge Clauses.......................70
6.14 Limitation on Lines of Business.............................70
6.15 New Subsidiaries............................................70
6.16 Amendments to Material Agreements...........................70
ARTICLE 7. EVENTS OF DEFAULT.................................................71
ARTICLE 8. THE AGENTS........................................................73
8.1 Appointment.................................................73
8.2 Delegation of Duties........................................74
8.3 Exculpatory Provisions......................................74
8.4 Reliance by Administrative Agent............................74
8.5 Notice of Default...........................................75
8.6 Non-Reliance on Agents and Other Lenders....................75
8.7 Indemnification.............................................75
8.8 Agent in Its Individual Capacity............................76
8.9 Successor Administrative Agent..............................76
8.10 Release of Collateral.......................................76
ARTICLE 9. MISCELLANEOUS.....................................................77
9.1 Amendments and Waivers......................................77
9.2 Notices.....................................................78
9.3 No Waiver; Cumulative Remedies..............................79
9.4 Survival of Representations and Warranties..................79
9.5 Payment of Expenses and Taxes; Indemnification..............79
9.6 Successors and Assigns; Participations and Assignments......80
9.7 Adjustments; Setoff.........................................82
9.8 Confidentiality.............................................83
9.9 Counterparts................................................83
9.10 Severability................................................83
9.11 Integration.................................................83
9.12 Governing Law...............................................84
9.13 Submission To Jurisdiction; Waivers.........................84
9.14 Acknowledgments.............................................84
9.15 Waivers of Jury Trial.......................................85
-iii-
<PAGE> 5
EXHIBITS
Exhibit A -- Form of Revolving Credit Note
Exhibit B -- Form of Term Note
Exhibit C-1 -- Form of Notice of Borrowing
Exhibit C-2 -- Form of Notice of Conversion/Continuation
Exhibit D -- Form of Domestic Custody Agreement
Exhibit E -- Form of Borrower Intellectual Property Security
Agreement
Exhibit F -- Form of Borrower Pledge Agreement
Exhibit G -- Form of Borrower Security Agreement
Exhibit H -- Form of Contribution Agreement
Exhibit I -- Form of Foreign Subsidiary Custody Agreement
Exhibit J -- Form of Subsidiary Pledge Agreement
Exhibit K -- Form of Subsidiary Guarantee
Exhibit L -- Form of Subsidiary Intellectual Property Security
Agreement
Exhibit M -- Form of Subsidiary Security Agreement
Exhibit N-1 -- Form of Legal Opinion of New York Counsel to Loan
Parties
Exhibit N-2 -- Form of Legal Opinion of New Hampshire and Texas
Counsel to Loan Parties
Exhibit N-3 -- Form of Provisions For Legal Opinion of Foreign
Counsel to Loan Parties
Exhibit O -- Form of Closing Certificate
Exhibit P -- Form of Compliance Certificate
Exhibit Q -- Form of Commitment Transfer Supplement
Exhibit R -- Form of Landlord Waiver
Exhibit S -- Form of Joinder Agreement
Exhibit T -- Form of Mortgage
SCHEDULES
Schedule I Lenders, Addresses and Commitments
Schedule 1.1 Inactive Subsidiaries
Schedule 3.1(b) Reconciliation of UK GAAP and U.S. GAAP
Schedule 3.1(d) Guarantee Obligations, Liabilities, Transfers and
Dispositions
Schedule 3.1(f) Business Forecast
Schedule 3.4 Consents, Authorizations and Filings
Schedule 3.6 Litigation
Schedule 3.8 Ownership of Property and Liens; Corporate Names and
Jurisdictions
Schedule 3.11 Tax Liens and Claims
Schedule 3.13 Employee Benefit Plans
Schedule 3.16 Environmental Matters
Schedule 3.17 Terms of Acquisition
Schedule 3.18 Capitalization
Schedule 3.19 Subsidiaries
Schedule 3.20 Labor Matters
Schedule 3.22 Acquisition Documents
Schedule 3.23 UCC Filings
-iv-
<PAGE> 6
Schedule 4.1(p) Filings, Registrations and Recordings
Schedule 4.1(r) Sources and Uses
Schedule 4.1(t) Existing Indebtedness
Schedule 4.1(v) Landlord Waivers
Schedule 4.1(w) Material Adverse Effect
Schedule 5.13 Post-Closing Matters
-v-
<PAGE> 7
CREDIT AGREEMENT, dated as of October 21, 1999, among AAVID
THERMAL TECHNOLOGIES, INC., a Delaware corporation (the "BORROWER"), the several
banks and other financial institutions from time to time parties to this
Agreement (the "LENDERS"), CIBC WORLD MARKETS CORP., as Lead Arranger and
Bookrunner (in such capacity, the "LEAD ARRANGER"), CANADIAN IMPERIAL BANK OF
COMMERCE, as issuer of certain letters of credit (the "ISSUER"), and CANADIAN
IMPERIAL BANK OF COMMERCE, as agent for the Lenders hereunder (in such capacity,
the "ADMINISTRATIVE AGENT").
W I T N E S E T H
- - - - - - - - -
WHEREAS, the Borrower is engaged, directly and indirectly
through its Subsidiaries, in the Thermal Management Solutions Business (as
hereinafter defined);
WHEREAS, each of Redpoint Thermalloy Limited, a company formed
under the laws of England and Wales ("REDPOINT"), El.Bo.Mec. S.r.l., an Italian
corporation ("EL BO"), Thermalloy (Malaysia) Sdn Bhd, a Malaysian corporation
("THERMALLOY MALAYSIA"), Thermalloy Limited (Hong Kong), a Hong Kong corporation
("THERMALLOY HONG KONG"), Thermalloy Investment Company, a Texas corporation
("THERMALLOY INVESTMENT"), and Curamik Electronics GmbH, a German corporation
("CURAMIK"; together with Redpoint, El Bo, Thermalloy Malaysia and Thermalloy
Investment, the "TARGET COMPANIES"), are engaged in the production of thermal
management products for the digital and power electronics industry;
WHEREAS, the Borrower has entered into the Stock Purchase
Agreement dated as of August 23, 1999 (the "ACQUISITION AGREEMENT") with
Bowthorpe plc, a company organized under the laws of England and Wales
("BOWTHORPE PLC"), Bowthorpe B.V., a Netherlands corporation ("BOWTHORPE B.V."),
Bowthorpe International Inc., a Delaware corporation ("BOWTHORPE
INTERNATIONAL"), and Bowthorpe GmbH, a German corporation ("BOWTHORPE GMBH";
together with Bowthorpe plc, Bowthorpe B.V. and Bowthorpe International, the
"SELLERS"), pursuant to which the Borrower shall acquire all the Capital Stock
of the Target Companies other than Curamik and 65.2% of the Capital Stock of
Curamik (the "ACQUISITION");
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and for other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
ARTICLE 1. DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings:
"ACQUISITION" shall have the meaning ascribed thereto in the
recitals.
"ACQUISITION AGREEMENT" shall have the meaning ascribed
thereto in the recitals.
<PAGE> 8
"ACQUISITION DOCUMENTS" shall mean the collective reference to
the Acquisition Agreement and each of the agreements, real property
leases, notes, guarantees, consents, instruments, certificates and
opinions delivered by the Borrower or any other Person in connection
with the Acquisition.
"ADMINISTRATIVE AGENT" shall have the meaning ascribed thereto
in the heading hereto and shall include such other Lender or financial
institution as shall have subsequently been appointed as the successor
Administrative Agent pursuant to SECTION 8.9.
"AFFILIATE" shall mean, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by, or
is under common control with, such Person. For purposes of this
definition, "control" of a Person shall mean the power, directly or
indirectly, either (a) to vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person or
(b) to direct or cause the direction of the management and policies of
such Person, whether by contract or otherwise.
"AGENTS" shall mean the collective reference to the
Administrative Agent and the Lead Arranger.
"AGREEMENT" shall mean this Credit Agreement, as amended,
supplemented or otherwise modified from time to time.
"ALTERNATE BASE RATE" shall mean, on any particular date, a
rate of interest per annum equal to the higher of:
(a) the rate of interest most recently announced by
CIBC-Bank at its Domestic Lending Office as its prime
rate (which rate is not necessarily intended to be
the lowest rate of interest charged by CIBC-Bank in
connection with extensions of credit); and
(b) the Federal Funds Rate for such date plus 0.50%.
"ALTERNATE BASE RATE LOANS" shall mean Loans the rate of
interest applicable to which is based upon the Alternate Base Rate.
"APPLICABLE LENDING OFFICE" shall mean, with respect to each
Lender, such Lender's Domestic Lending Office in the case of an
Alternate Base Rate Loan and such Lender's Eurodollar Lending Office in
the case of a Eurodollar Loan.
"APPLICABLE MARGIN" shall mean a percentage per annum
determined by reference to the Total Leverage Ratio as set forth below:
Alternate Base
Total Leverage Ratio Rate Loans Eurodollar Loans
-------------------- ---------- ----------------
-2-
<PAGE> 9
1.75 to 1.00 or greater 0.75% 2.00%
1.50 to 1.00 or greater,
but less than 1.75 to 1.00 0.50% 1.75%
less than 1.50 to 1.00 0.25% 1.50%
The Total Leverage Ratio shall be determined initially on the basis of
the Compliance Certificate provided pursuant to SECTION 4.1(z) and
subsequently on the basis of the most recent Compliance Certificate
delivered by the Borrower pursuant to SECTION 5.2(c). Any change in the
Applicable Margin as a result of a change in the Total Leverage Ratio
shall be adjusted to the Applicable Margin set forth for such Type of
Loan opposite the Total Leverage Ratio in effect on such Business Day;
PROVIDED that if the Borrower fails timely to deliver such certificate,
without otherwise limiting the rights of the Lenders under this
Agreement, the Total Leverage Ratio shall be deemed to be greater than
1.75 to 1.0 for purposes of calculating the Applicable Margin hereunder
until such time as such certificate is delivered; PROVIDED FURTHER that
if the Borrower shall default in the observance or performance of any
agreement contained in SECTION 5.13, without otherwise limiting the
rights of the Lenders under this Agreement, the Applicable Margin shall
be increased by 0.50% until such default is cured.
"APPROVED SUBSIDIARY" shall mean (i) each Domestic Subsidiary
and (ii) each Foreign Subsidiary (a) that has entered into an agreement
in form and substance satisfactory to the Administrative Agent pursuant
to which such Foreign Subsidiary becomes an additional borrower under
this Agreement and has granted to the Administrative Agent, for the
benefit of the Lenders, a first priority perfected Lien on all its
assets in accordance with SECTION 5.13, (b) 65% of the outstanding
Capital Stock of which has been pledged to the Administrative Agent,
for the benefit of the Lenders, pursuant to the Borrower Pledge
Agreement, with the remaining 35% of such outstanding Capital Stock
delivered in accordance with the terms of the Domestic Custody
Agreement to the custodian named therein or (c) that is wholly-owned,
directly or indirectly, by a Foreign Subsidiary that has satisfied the
requirements of the foregoing clause (a) or (b).
No Inactive Subsidiary shall be an Approved Subsidiary.
"ASSIGNEE" shall have the meaning ascribed thereto in SECTION
9.6(c).
"AVAILABLE REVOLVING CREDIT COMMITMENT" shall mean, as to any
Lender at any time, an amount equal to the product obtained by
multiplying (i) such Lender's Revolving Credit Commitment Percentage at
such time by (ii) (A) an amount equal to the aggregate principal amount
of all Revolving Credit Commitments at such time MINUS (B) the sum of
the (i) the aggregate principal amount of all Revolving Credit Loans
which are then outstanding, (ii) the Stated Amount of the Letters of
Credit then outstanding and (iii) the aggregate amount drawn under the
Letters of Credit (including interest thereon computed in accordance
with SECTION 2.21(d)) for which the Issuer has not been reimbursed.
-3-
<PAGE> 10
"BENEFIT PLAN" shall mean a defined benefit plan as defined in
Section 3(35) of ERISA (other than a Multiemployer Plan) in respect of
which the Borrower or any Commonly Controlled Entity is an "employer"
as defined in Section 3(5) of ERISA.
"BORROWER" shall have the meaning ascribed thereto in the
heading hereto and shall include any Foreign Subsidiary that has
entered into an agreement in form and substance satisfactory to the
Administrative Agent pursuant to which such Foreign Subsidiary becomes
an additional borrower under this Agreement.
"BORROWER INTELLECTUAL PROPERTY SECURITY AGREEMENT" shall mean
the Intellectual Property Security Agreement between the Borrower and
the Administrative Agent, for the benefit of the Lenders, substantially
in the form of EXHIBIT E, as the same may be amended, supplemented or
otherwise modified from time to time.
"BORROWER PLEDGE AGREEMENTS" shall mean the collective
reference to the (i) Pledge Agreement between the Borrower and the
Administrative Agent, for the benefit of the Lenders, substantially in
the form of EXHIBIT F, and (ii) each other agreement, in form and
substance satisfactory to the Administrative Agent, between the
Borrower and the Administrative Agent pursuant to which the Capital
Stock of a Foreign Subsidiary is pledged by the Borrower under
applicable law, in each case of clause (i) and (ii), as the same may be
amended, supplemented or otherwise modified from time to time.
"BORROWER SECURITY AGREEMENT" shall mean the Security
Agreement between the Borrower and the Administrative Agent, for the
benefit of the Lenders, substantially in the form of EXHIBIT G, as the
same may be amended, supplemented or otherwise modified from time to
time.
"BORROWING" shall mean a borrowing hereunder consisting of
Loans made on the same Business Day by the Lenders ratably in
accordance with their respective Commitment Percentages and, in the
case of Eurodollar Loans, having the same Interest Periods.
"BORROWING DATE" shall mean any Business Day specified in a
notice pursuant to SECTION 2.3 or SECTION 2.8 as a date on which the
Borrower requests that a Borrowing be made.
"BUSINESS" shall have the meaning ascribed thereto in SECTION
3.16(b).
"BUSINESS DAY" shall mean (a) a day other than a Saturday,
Sunday or other day on which commercial banks in New York, New York are
authorized or required by law to close and (b) with respect to the date
of:
(i) making or continuing any Loans as, or
converting such Loans from or into,
Eurodollar Loans,
-4-
<PAGE> 11
(ii) making any payment or prepayment or
principal of or payment of interest on any
portion of the principal amount of any such
Loans being maintained as Eurodollar Loans,
or
(iii) the Borrower giving any notice (or the
number of Business Days to elapse prior to
the effectiveness thereof) in connection
with any matter referred to in the
immediately preceding clause (b)(i) or
(b)(ii),
any such day on which dealings are also carried on in the interbank
market in London, England.
"CAPITAL EXPENDITURES" of the Borrower and its Subsidiaries
for any period shall mean any expenditure in respect of the purchase or
other acquisition of (including any expenditures under any Financing
Leases with respect to) fixed or capital assets of the Borrower or such
Subsidiary but during such period, shall exclude any fixed or capital
assets purchased or acquired in connection with normal replacement and
maintenance programs that, in accordance with U.S. GAAP, would be
properly charged to current operations.
"CAPITAL STOCK" shall mean any and all shares, share capital,
ordinary shares, quota, company shares, interests, participations or
other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing.
"CASH EQUIVALENTS" shall mean (a) securities issued or
directly and fully guaranteed or insured by the United States
Government or any agency or instrumentality thereof having maturities
of not more than twelve months from the date of acquisition, (b)
securities issued or directly and fully guaranteed or insured by any
state of the United States of America or any agency or instrumentality
thereof having maturities of not more than twelve months from the date
of acquisition and, at the time of acquisition, having the highest
rating generally obtainable from either S&P or Moody's, (c) time
deposits and certificates of deposit of any Lender or any domestic
commercial bank having capital and surplus in excess of $500,000,000,
in each case, having maturities of not more than twelve months from the
date of acquisition, (d) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in
clauses (a), (b) and (c) above entered into with any Lender or any
domestic commercial bank meeting the qualifications specified in clause
(c) above, (e) commercial paper rated at least A-1 or the equivalent
thereof by S&P or P-1 or the equivalent thereof by Moody's and (f)
shares of money market mutual or similar funds which invest exclusively
in assets satisfying the requirements of clauses (a) through (e) of
this definition.
"CHANGE OF CONTROL" shall mean the occurrence of any of the
following:
-5-
<PAGE> 12
(a) (i) the acquisition directly or indirectly by any Person,
or two or more Persons acting in concert, of beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange
Commission under the Securities Exchange Act of 1934) of at least
thirty percent (30%) of the Fully Diluted Outstanding Voting Securities
of the Borrower; or (ii) during any period of up to 24 consecutive
months, commencing before or after the date of this Agreement,
individuals who at the beginning of such 24-month period were directors
of the Borrower and persons who were recommended for election by a
majority of the directors then in office shall cease for any reason to
constitute a majority of the board of directors of the Borrower; or
(iii) any Person or two or more Persons acting in concert shall have
acquired by contract or otherwise, or shall have entered into a
contract or arrangement that, upon consummation, will result in its or
their acquisition of the power to exercise, directly or indirectly, a
controlling influence over the management or policies of the Borrower;
PROVIDED, that consummation of the WSP Transaction shall not constitute
a "Change of Control" hereunder;
(b) the failure of the Borrower, at all times, to own,
directly or indirectly, all the issued and outstanding Capital Stock of
each of its Subsidiaries, free and clear of all Liens (other than the
Lien of any Pledge Agreement in favor of the Administrative Agent, for
the benefit of the Lenders); or
(c) the Borrower or any Subsidiary shall be liquidated or
dissolved.
"CIBC-BANK" shall mean Canadian Imperial Bank of Commerce, a
Canadian chartered bank, or one or more of its agencies, branches or
affiliates in its or their respective capacity or capacities, as the
case may be, as the Issuer or a Lender or Lenders hereunder.
"CLASS" shall mean, with respect to any Lender, its
classification as a Term Lender or a Revolving Credit Lender, as the
case may be.
"CLOSING DATE" shall mean the date on which the conditions
precedent set forth in SECTION 4.1 shall be satisfied or waived.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
"COLLATERAL" shall mean all assets of the Borrower or any
Subsidiary, now owned or hereafter acquired, upon which a Lien is
purported to be created by any Security Document.
"COMMITMENTS" shall mean the collective reference to the Term
Loan Commitments and the Revolving Credit Commitments.
"COMMITMENT PERCENTAGE" shall mean, as to any Lender, such
Lender's Revolving Credit Commitment Percentage or Term Loan Commitment
Percentage, as applicable.
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"COMMITMENT TRANSFER SUPPLEMENT" shall have the meaning
ascribed thereto in SECTION 9.6(c).
"COMMONLY CONTROLLED ENTITY" shall mean an entity, whether or
not incorporated, which is under common control with the Borrower
within the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.
"COMPLIANCE CERTIFICATE" shall have the meaning ascribed
thereto in SECTION 5.2(c).
"CONTRACTUAL OBLIGATION" shall mean, as to the Borrower or any
Subsidiary, any provision of any security issued by the Borrower or
such Subsidiary or of any agreement, instrument or other undertaking to
which the Borrower or any such Subsidiary is a party or by which it or
any of its property is bound.
"CONTRIBUTION AGREEMENT" shall mean the Contribution Agreement
among the Subsidiary Guarantors and substantially in the form of
EXHIBIT H, as the same may be amended, supplemented or otherwise
modified from time to time.
"CONVERSION/CONTINUATION DATE" shall mean the date on which
any Loan is converted or continued pursuant to SECTION 2.10.
"CREDIT EXTENSION" shall mean the collective reference to (a)
any Loan by a Lender and (b) any participation by a Revolving Credit
Lender in a Letter of Credit.
"CURAMIK" has the meaning ascribed thereto in the recitals to
this Agreement.
"CURAMIK DOCUMENTS" shall mean the collective reference to
each of the agreements, notes, guarantees, consents, instruments,
certificates and opinions delivered by the Borrower or any other Person
in connection with the proposed sale of the Capital Stock of Curamik to
the Borrower by the minority shareholders.
"CUSTODY AGREEMENTS" shall mean the collective reference to
the Domestic Custody Agreement and the Foreign Subsidiary Custody
Agreements.
"DEFAULT" shall mean any of the events specified in SECTION
7.1, whether or not any requirement for the giving of notice, the lapse
of time, or both, or any other condition, has been satisfied.
"DEFAULTING LENDER" shall have the meaning ascribed thereto in
SECTION 2.22.
"DOLLAR EQUIVALENT" of any Foreign Currency on any date shall
mean the equivalent in Dollars of such Foreign Currency determined by
using the quoted spot rate at which the Administrative Agent's
principal office in London offers to exchange Dollars for such Foreign
Currency in London prior to 4:00 p.m. (London time) on such date.
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<PAGE> 14
"DOLLARS" and "$" shall mean dollars in lawful currency of the
United States of America.
"DOMESTIC CUSTODY AGREEMENT" shall mean the collective
reference to (a) the Custody Agreement between the Borrower and the
Administrative Agent, for the benefit of the Lenders, and (b) each
other Custody Agreement between each Domestic Subsidiary that owns the
outstanding Capital Stock of any Foreign Subsidiary, in each case
substantially in the form of EXHIBIT D, as the same may be amended,
supplemented or otherwise modified from time to time.
"DOMESTIC LENDING OFFICE" shall mean, initially, the office of
each Lender designated as such in SCHEDULE I (or designated pursuant to
a Commitment Transfer Supplement), and thereafter, such other office of
such Lender, if any, which shall be making or maintaining Alternate
Base Rate Loans as may be designated from time to time by notice from
such Lender to the Borrower and the Administrative Agent.
"DOMESTIC SUBSIDIARY" shall mean any Subsidiary other than a
Foreign Subsidiary.
"EBITDA" shall mean, for any period of determination, an
amount equal to the sum of (without duplication) (a) Net Income for
such period, after exclusion of (i) all items which should be
classified as extraordinary, all determined in accordance with U.S.
GAAP, (ii) all insurance proceeds (other than proceeds of business
interruption insurance) received during such period to the extent, if
any, included in Net Income and (iii) tax gains and losses upon the
disposition of capital assets, PLUS (b) all amounts deducted in
computing such Net Income in respect of (i) Interest Expense (after
giving effect to all Hedging Agreements and payments and receipts
thereunder), (ii) non-cash amortization expense (including amortization
of financing costs, noncurrent assets and non-cash charges), (iii)
depreciation, (iv) income taxes, (v) all other non-cash charges (other
than for minority interests) LESS extraordinary gains, (vi)
non-recurring transaction expenses and underwriting fees, (vii)
one-time, non-recurring expenses associated with facility closings and
headcount reductions related to the Acquisition and agreed to by the
Borrower's independent accounting firm, in each case of the Borrower
and its Subsidiaries, (viii) solely for purposes of calculating EBITDA
for any period including December 31, 2000, the excess of (A) the value
of the inventory sold during such period as would be set forth on the
balance sheet of the Target Companies on the date the Acquisition is
consummated (after giving effect to the Acquisition) over (B) the value
of such inventory as would be set forth on the balance sheet of the
Target Companies on such date (immediately prior to giving effect to
the Acquisition) and (ix) solely for purposes of calculating EBITDA for
any period including July 3, 1999, the corporate overhead costs and
expenses allocated to the Target Companies by the Sellers and paid to
the Sellers during such period LESS (c) solely for purposes of
calculating EBITDA for any period prior to the date that the German
Lease is deemed to be an operating lease for financial accounting
purposes and not a Financing Lease, the amount by which EBITDA during
such period is increased as a result of such Lease being deemed a
Financing Lease for financial accounting purposes.
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"ENVIRONMENTAL LAWS" shall mean any and all foreign, Federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority
or other Requirements of Law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
public health, public and workplace safety or protection of the
environment, as now or may at any time hereafter be in effect.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time.
"EURODOLLAR BASE RATE" shall mean with respect to each day
during each Interest Period pertaining to a Eurodollar Loan, the rate
per annum determined on the basis of the rate for deposits in U.S.
Dollars for a period equal to such Interest Period commencing on the
first day of such Interest Period and appearing on Page 3750 of the
Telerate screen at or about 11:00 a.m., London time, two Business Days
prior to the commencement of such Interest Period or, if such rate does
not appear on such page or otherwise on such service, such rate shall
be determined by reference to such other publicly available service for
displaying eurodollar rates as may be agreed between the Administrative
Agent and the Borrower or, in the absence of such agreement, the
"Eurodollar Base Rate" shall be the rate of interest per annum equal to
the average (rounded upwards, if necessary, to the nearest 1/100 of 1%)
of the rates per annum at which deposits in Dollars in immediately
available funds are offered by CIBC-Bank to prime international banks
in the offshore dollar market at or about 11:00 a.m., New York time,
two Business Days prior to the beginning of such Interest Period for
delivery on the first day of such Interest Period, and in an amount
approximately equal to the amount of CIBC-Bank's Eurodollar Loan and
for a period approximately equal to such Interest Period.
"EURODOLLAR LOANS" shall mean Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.
"EURODOLLAR LENDING OFFICE" shall mean, initially, the office
of each Lender designated as such in SCHEDULE I (or designated pursuant
to a Commitment Transfer Supplement), and thereafter, such other office
of such Lender, if any, which shall be making or maintaining Eurodollar
Loans as may be designated from time to time by notice from such Lender
to the Borrower and the Administrative Agent.
"EURODOLLAR RATE" shall mean with respect to each day during
each Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/100th of 1%):
Eurodollar Base Rate
--------------------------------------
1.00 - Eurodollar Reserve Requirements
"EURODOLLAR RESERVE REQUIREMENTS" shall mean, for any day as
applied to a Eurodollar Loan, the aggregate (without duplication) of
the rates (expressed as a decimal fraction) of reserve requirements in
effect on such day (including, without limitation, basic,
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<PAGE> 16
supplemental, marginal and emergency reserves) under any regulations of
the Board of Governors of the Federal Reserve System 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
such Board) maintained by a member bank of such System.
"EVENT OF DEFAULT" shall mean any of the events specified in
SECTION 7.1; 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" shall mean, with respect to any fiscal
year, EBITDA for such fiscal year LESS the sum of (a) optional
prepayments of principal of the Term Loans during such fiscal year,
PLUS (b) Fixed Charges for such fiscal year, PLUS (c) optional
prepayments of principal in respect of the Revolving Credit Loans paid
during such fiscal year.
"EXISTING INDEBTEDNESS" shall mean all Indebtedness of the
Borrower and its Subsidiaries set forth on SCHEDULE 4.1(t).
"EXPIRY DATE" shall mean, as to any Letter of Credit, the
earlier of (a) the one year anniversary of the issuance of such Letter
of Credit and (b) the Maturity Date.
"FDIC" shall mean the Federal Deposit Insurance Corporation or
any successor thereto.
"FEDERAL FUNDS RATE" shall mean for any particular date, an
interest rate per annum equal to the interest rate offered in the
interbank market to the Administrative Agent as the overnight Federal
Funds Rate at or about 10:00 a.m., New York City time, on such day (or,
if such day is not a Business Day, on the next preceding Business Day).
"FEE LETTER" shall mean the letter dated as of the Closing
Date between the Borrower and the Administrative Agent, as the same may
be amended, supplemented or otherwise modified from time to time.
"FINANCING LEASE" shall mean any lease of property, real or
personal, the obligations of the lessee in respect of which are
required in accordance with GAAP to be capitalized on a balance sheet
of the lessee.
"FIXED CHARGES" shall mean, with respect to any period, the
sum (without duplication) of (a) cash Interest Expense for such period,
(b) Capital Expenditures during such period, (c) income or other taxes
actually paid or payable during such period, (d) regularly scheduled
payments of principal on the Term Loans during such period and (e)
regularly scheduled payments of principal on other Funded Debt of the
Borrower and its Subsidiaries during such period.
"FIXED CHARGES RATIO" shall mean, in respect of any period,
the ratio of :
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(i) EBITDA for the preceding four consecutive
fiscal quarters to
(ii) Fixed Charges for the preceding four
consecutive fiscal quarters.
"FOREIGN CURRENCY" shall mean any lawful currency (other than
Dollars) that is freely transferable or convertible into Dollars.
"FOREIGN SUBSIDIARY" shall mean any Subsidiary of the Borrower
that is a "controlled foreign corporation" within the meaning of
Section 957(a) of the Code and the regulations thereunder.
"FOREIGN SUBSIDIARY CUSTODY AGREEMENTS" shall mean the
collective reference to each Custody Agreement entered into by each
Foreign Subsidiary which does not become an additional Borrower with
respect to 100% of the Capital Stock of each second tier Foreign
Subsidiary, in substantially the form of EXHIBIT I, in each case as
amended, supplemented or otherwise modified from time to time.
"FULLY DILUTED OUTSTANDING" shall mean with respect to the
determination of the number of Voting Securities outstanding on any
date, the sum of (a) all Voting Securities outstanding on such date and
(b) all Voting Securities that would be outstanding if all outstanding
rights, warrants or options that may be exercised, exchanged or
converted into Voting Securities were exercised, exchanged or converted
on such date but shall exclude any warrants or options held by any
Lender or any affiliate thereof.
"FUNDED DEBT" shall mean, as of any date of determination, the
sum of the aggregate outstanding amount of all Indebtedness (other than
Indebtedness of the type set forth in clause (f), (g) or (h) (to the
extent arising under the Guarantee Obligations of a liability arising
under clause (f) or (g) of the definition of Indebtedness) of the
definition of Indebtedness) of the Borrower and its Subsidiaries
determined on a consolidated basis in accordance with GAAP; PROVIDED
that solely for purposes of calculating the Total Leverage Ratio as set
forth in the Compliance Certificate required to be delivered pursuant
to SECTION 4.1(z) there shall be excluded from such sum any
Indebtedness (in an amount not to exceed the Dollar Equivalent of
$4,200,000) resulting from the determination that for financial
accounting purposes the German Lease is deemed to be a Financing Lease
and not an operating lease.
"GERMAN LEASE" shall mean the Lease Agreement between Curamik
Electronics GmbH and SARIO G-Vmbh & Co. relating to the property Am
Stadtwald 2, 92676 Eschenbach.
"GOVERNMENTAL AUTHORITY" shall mean any national government
(United States or foreign), any state or other political subdivision
thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.
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<PAGE> 18
"GUARANTEE OBLIGATION" shall mean 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, counter-indemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, lease, dividend or other obligation (the "PRIMARY
OBLIGATION") of any other third Person (the "PRIMARY 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 (x) for the purchase or payment of any such primary
obligation or (y) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth, liquidity 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 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 (a) an
amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and
(b) 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 Borrower in good
faith.
"HEDGING AGREEMENTS" shall mean (a) any interest rate
protection agreement, interest rate future, interest rate option,
interest rate swap, interest rate cap or other interest rate hedge or
arrangement under which the Borrower is a party or a beneficiary and
(b) any other agreement or arrangement designed to limit or eliminate
the risk and/or exposure of the Borrower to fluctuations in currency
exchange rates.
"INACTIVE SUBSIDIARY" shall mean any Subsidiary of the
Borrower (i) the operations of which are inactive and (ii) the tangible
assets of which do not exceed the Dollar Equivalent of $50,000 in the
aggregate.
"INDEBTEDNESS" of any Person at any date shall mean, without
duplication, (a) all indebtedness of such Person for borrowed money or
for the deferred purchase price of property or services (other than
current trade liabilities and accrued expenses incurred in the ordinary
course of business and payable within 180 days), (b) any other
indebtedness of such Person which is evidenced by a note, bond,
debenture or similar instrument, (c) all obligations of such Person
under Financing Leases, (d) all obligations of such Person in respect
of outstanding letters of credit, acceptances and similar obligations
issued or created for the account of such Person, (e) all liabilities
secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise
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<PAGE> 19
become liable for the payment thereof, (f) liabilities arising under
Hedging Agreements (other than interest rate caps) of such Person, (g)
withdrawal liabilities of such Person or any Commonly Controlled Entity
under any Plan and (h) all Guarantee Obligations of such Person, if the
primary obligations would constitute Indebtedness of another Person
under clauses (a) through (g) of this definition.
"INSOLVENCY" shall mean with respect to any Multiemployer
Plan, the condition that such Plan is insolvent within the meaning of
Section 4245 of ERISA.
"INSOLVENT" shall mean pertaining to a condition of
Insolvency.
"INTELLECTUAL PROPERTY" shall have the meaning ascribed
thereto in SECTION 3.9.
"INTEREST COVERAGE RATIO" shall mean, as of any date of
determination, the ratio of:
(i) EBITDA for the preceding four consecutive fiscal
quarters to
(ii) cash Interest Expense for such four quarters;
PROVIDED that for purposes of calculating the Interest
Coverage Ratio for (a) the first full fiscal quarter ending
April 1, 2000, Interest Expense shall be based on Interest
Expense for such fiscal quarter MULTIPLIED by 4, (b) the
second full fiscal quarter ending July 1, 2000, Interest
Expense shall be based on Interest Expense for the six month
period ending on such date MULTIPLIED by 2 and (c) the third
full fiscal quarter ending September 30, 2000, Interest
Expense shall be based on Interest Expense for the nine month
period ending on such date MULTIPLIED by 4/3.
"INTEREST EXPENSE" shall mean, for any period, the sum of (a)
all interest in respect of all Indebtedness of the Borrower and its
Subsidiaries accrued or capitalized during such period (whether or not
actually paid during such period), PLUS (b) the net amounts payable (or
minus the net amounts receivable) under Hedging Agreements accrued
during such period, PLUS (c) all financing or commitment fees or costs
in respect of Indebtedness (exclusive of any transaction or "up front"
fees incurred in establishing or entering into any such Hedging
Agreement) of the Borrower or any Subsidiary and any management fees
accrued or capitalized during such period (whether or not actually paid
during such period) but shall exclude any arrangement or underwriting
fees or costs paid on the Closing Date in respect of the Indebtedness
created under this Agreement.
"INTEREST PAYMENT DATE" shall mean (a) as to any Alternate
Base Rate Loan, the last day of each March, June, September and
December to occur while such Loan is outstanding, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the
last day of such Interest Period, and (c) as to any Eurodollar 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 Loan shall
mean:
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<PAGE> 20
(a) initially, the period commencing on the borrowing
or conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one, two, three or six months
thereafter, as selected by the Borrower 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 Loan and ending one, two, three or six months
thereafter, as selected by the Borrower 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, the foregoing provisions relating to Interest Periods
are subject to the following:
(i) if any Interest Period pertaining to a Eurodollar
Loan 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;
(ii) any Interest Period that would otherwise extend
beyond the Maturity Date shall end on the Maturity Date;
(iii) any Interest Period pertaining to a Eurodollar
Loan 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
(iv) the Borrower shall select Interest Periods so as
not to require a payment or prepayment of any Eurodollar Loan
during an Interest Period for such Loan.
"INVENTORY" shall mean any "inventory" (as such term is
defined in Section 9-109(4) of the Uniform Commercial Code of the State
of New York as in effect from time to time) of the Borrower or any
Subsidiary.
"ISSUER" shall have the meaning ascribed thereto in the
heading hereto and shall include CIBC-Bank or any other Lender or
financial institution which shall be the issuer of the Letters of
Credit hereunder. The Issuer shall be deemed a Lender for purposes of
SECTION 5.7, SECTION 5.8(c), and ARTICLE 8 of this Agreement and for
purposes of having the benefit of each of the Security Documents.
"JOINDER AGREEMENT" shall mean the collective reference to
each Joinder Agreement substantially in the form of EXHIBIT S entered
into from time to time by any
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<PAGE> 21
Subsidiary of the Borrower which executes a Subsidiary Guarantee in
favor of the Administrative Agent, for the benefit of the Lenders.
"LANDLORD WAIVERS" shall mean the collective references to the
Landlord Waivers, each substantially in the form of EXHIBIT R, as the
same may be amended, supplemented or otherwise modified from time to
time.
"LEAD ARRANGER" shall have the meaning ascribed thereto in the
heading hereto.
"LENDERS" shall have the meaning ascribed thereto in the
heading hereto.
"LETTERS OF CREDIT" shall mean the collective reference to
each irrevocable standby letter of credit opened by the Issuer for the
account of the Borrower from time to time pursuant to the terms hereof.
"LIEN" shall mean (a) any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or
other), charge or other security interest or any preference, priority
or other security agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any conditional sale
or other title retention agreement and any Financing Lease having
substantially the same economic effect as any of the foregoing and the
filing of any financing statement under the Uniform Commercial Code or
comparable law of any jurisdiction), (b) any arrangement or agreement
which prohibits the Borrower or any Subsidiary from creating any
mortgage, pledge, hypothecation, deposit arrangement, encumbrance,
lien, charge or other security interest, or from entering into any
agreement or arrangement described in clause (a) of this definition or
(c) the sale, assignment, pledge or transfer for security of any
accounts, general intangibles or chattel paper of the Borrower or any
Subsidiary with or without recourse.
"LOAN" shall mean any loan made by any Lender pursuant to this
Agreement.
"LOAN DOCUMENTS" shall mean this Agreement and each other
agreement, instrument or certificate executed and delivered to either
Agent, the Issuer or any Lender pursuant hereto including, without
limitation, the Notes, the Security Documents, the Subsidiary
Guarantees, each Letter of Credit, the Custody Agreements, the
Contribution Agreement, each Joinder Agreement, the Landlord Waivers
and the Fee Letter.
"LOAN PARTIES" shall mean the Borrower, each Subsidiary and
any other Person (other than either Agent, the Issuer or any of the
Lenders) which is or becomes a party to a Loan Document.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on (a) the business, operations, properties, condition (financial or
otherwise) or prospects of Fluent, Inc. and its Subsidiaries, taken as
a whole, of Aavid Thermal Products, Inc. and its Subsidiaries, taken as
a whole or of the Borrower and its Subsidiaries, taken as a whole, (b)
the validity or enforceability of this Agreement, any of the Notes or
any of the other Loan Documents,
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<PAGE> 22
the Liens created hereunder or thereunder or the rights or remedies of
the Administrative Agent or the Lenders hereunder or thereunder or (c)
the ability of any Loan Party to perform its Obligations under any Loan
Document or Acquisition Document to which it is or is to be a party.
"MATERIALS OF ENVIRONMENTAL CONCERN" shall mean 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.
"MATURITY DATE" means the earlier of September 30, 2004 and
the date of termination in whole of the Revolving Credit Commitments
and the Term Loan Commitments as provided herein.
"MOODY'S" shall mean Moody's Investors Service, Inc.
"MORTGAGES" shall mean the Mortgage delivered by the Borrower
to the Administrative Agent, for the benefit of the Lenders,
substantially in the form of EXHIBIT T, and any other Mortgage
delivered by any Loan Party in connection with this Agreement, in each
case, as the same may be amended, supplemented or otherwise modified
from time to time.
"MULTIEMPLOYER PLAN" shall mean a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"NET DISPOSITION PROCEEDS" shall mean the gross cash proceeds
(including any cash received by way of deferred payment pursuant to, or
monetization of, a note receivable or otherwise but only as and when
received) received by the Borrower or any Subsidiary from the sale,
lease (other than a lease in the ordinary course of business), transfer
or other disposition of any of its assets less the sum of (a)
reasonable and customary selling expenses paid to non-affiliated third
parties, (b) any Indebtedness secured by a Lien on such asset or
property permitted to exist under clause (e) of SECTION 6.3 to the
extent the Borrower or such Subsidiary is required to make a payment
with respect thereto, (c) the amount of taxes payable by the Borrower
or such Subsidiary with respect to any gain realized as a result of
such sale, lease, transfer or other disposition and which taxes are
payable by the Borrower or such Subsidiary within two years of the date
of such sale, lease, transfer or other disposition or within two years
of any installment payment with respect thereto and (d) any amounts
required to be placed in escrow in connection with such transaction or
amounts that the Borrower reasonably determines are required to meet
post-closing purchase price adjustments in connection with such
transactions, in either case to the extent any such amounts are
actually applied from escrow or to such post-closing purchase price
adjustments.
"NET INCOME" for any period shall mean, net income (or
deficit) of the Borrower and its Subsidiaries determined on a
consolidated basis in accordance with U.S. GAAP.
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"NET INSURANCE PROCEEDS" shall mean the proceeds (including
any proceeds from the termination or unwinding of any interest rate
cap) and awards of compensation received by the Borrower or any
Subsidiary from the damage to or destruction or condemnation of all or
any portion of its assets or property (regardless of whether such
compensation is from any action in tort or contract or otherwise or
from any governmental proceeding or action).
"NET SECURITIES PROCEEDS" shall mean, with respect to any sale
of Capital Stock of the Borrower or any Subsidiary or the exercise by
any Person of any right with respect to such Capital Stock, the excess
of (a) gross cash proceeds received by the Borrower or any Subsidiary
from such sale over (b) all reasonable fees and expenses with respect
to underwriting discounts or commissions, legal, investment banking and
accounting fees and disbursements, printing expenses and any
governmental fees incurred in connection with such sales, in each case,
which are not payable to any Affiliate of the Borrower or any
Subsidiary.
"NON-EXCLUDED TAXES" shall have the meaning ascribed thereto
in SECTION 2.18.
"NOTES" shall mean the collective reference to the Revolving
Credit Notes and the Term Notes.
"NOTICE OF BORROWING" shall have the meaning ascribed thereto
in SECTION 2.3.
"NOTICE OF CONVERSION/CONTINUATION" shall have the meaning
ascribed thereto in SECTION 2.10.
"OBLIGATIONS" shall mean the unpaid principal of and interest
on (including, without limitation, interest accruing after the maturity
of the 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 Borrower or any Subsidiary, as
applicable, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding and whether the Administrative
Agent, for the benefit of the Lenders, is oversecured or undersecured
with respect to such Loans) the Notes and all other obligations and
liabilities of the Borrower or any Subsidiary, as applicable, to the
Agents and the Lenders or any of their respective Affiliates, including
any Reimbursement Obligations and any obligation of the Borrower under
any Hedging Agreement entered into with either Agent, any Lender or any
of their respective Affiliates, whether direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter incurred,
which may arise under, out of, or in connection with, the Credit
Agreement, the Notes, the other Loan Documents or any Hedging Agreement
with either Agent, any Lender or any of their respective Affiliates or
any other document made, delivered or given in connection therewith or
herewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without
limitation, all fees and disbursements of counsel to either Agent or to
the Lenders that are required to be paid by the Borrower or any
Subsidiary, as applicable, pursuant to the terms of the Credit
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<PAGE> 24
Agreement, any other Loan Document or any Hedging Agreement with either
Agent, any Lender or any of their respective Affiliates) or otherwise.
"PARTICIPANT" shall have the meaning ascribed thereto in
SECTION 9.6(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any
successor thereto.
"PERSON" shall mean an individual, partnership, corporation,
limited liability company, business trust, joint stock company, trust,
unincorporated association, joint venture, Governmental Authority or
other entity of whatever nature.
"PLAN" shall mean at a particular time, any employee benefit
plan which is covered by ERISA and in respect of which the Borrower is,
an "employer" as defined in Section 3(5) of ERISA, other than a
Multiemployer Plan.
"PLEDGE AGREEMENTS" shall mean the collective reference to (i)
the Borrower Pledge Agreements, (ii) the Subsidiary Pledge Agreements
and (iii) any other Pledge Agreement entered into by any Person in
favor of the Administrative Agent, for the benefit of the Lenders, to
secure the Obligations or to secure the Obligations of such Person
under a Subsidiary Guarantee.
"PLEDGED STOCK" shall have the meaning ascribed thereto in
each Pledge Agreement.
"PRO FORMA BALANCE SHEET" shall have the meaning ascribed
thereto in SECTION 3.1(c).
"PROPERTIES" shall have the meaning ascribed thereto in
SECTION 3.16(a).
"QFL NOTE" shall have the meaning ascribed thereto in SECTION
2.18(c).
"QUALIFIED FOREIGN LENDER" shall have the meaning ascribed
thereto in SECTION 2.18(c).
"REGISTER" shall have the meaning ascribed thereto in SECTION
9.6(d).
"REGULATION T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as in effect from time to time.
"REGULATION U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as in effect from time to time.
"REGULATION X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as in effect from time to time.
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<PAGE> 25
"REIMBURSEMENT OBLIGATIONS" shall mean the obligation of the
Borrower to reimburse the Issuer and the Revolving Credit Lenders for
all amounts drawn under the Letters of Credit and any other amounts
under SECTION 2.21.
"REORGANIZATION" shall mean with respect to any Multiemployer
Plan, the condition that such plan is in reorganization within the
meaning of Section 4241 of ERISA.
"REPLACED NOTE" shall have the meaning ascribed thereto in
SECTION 2.18(c).
"REPLACEMENT LENDER" shall have the meaning ascribed thereto
in SECTION 2.22(b)
"REPORTABLE EVENT" shall mean any of the events set forth in
section 4043(c) of ERISA other than those events for which the notice
requirement has been waived under applicable regulations.
"REQUIRED LENDERS" at any time shall mean Lenders whose
Commitment Percentages aggregate at least 51% at such time.
"REQUIREMENT OF LAW" as to any Person shall mean 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" shall mean, with respect to any Person,
the chairman of the board of directors, the chief executive officer,
the president, executive vice president or vice president of such
Person or, with respect to financial matters, the chief financial
officer, vice president, treasurer or secretary of such Person.
"REVOLVING CREDIT COMMITMENT" shall mean, as to any Revolving
Credit Lender, the obligation of such Lender to make Revolving Credit
Loans to the Borrower in an aggregate principal amount at any one time
outstanding not to exceed the amount set forth under the heading
"Revolving Credit Commitments" opposite such Lender's name on SCHEDULE
I, as such amount may be reduced from time to time pursuant to this
Agreement. As of the date of this Agreement, the aggregate amount of
the Revolving Credit Commitments is equal to $20,000,000.
"REVOLVING CREDIT COMMITMENT PERCENTAGE" shall mean, as to any
Revolving Credit Lender at any time, the percentage which such Lender's
Revolving Credit Commitment then constitutes of the aggregate Revolving
Credit Commitments.
"REVOLVING CREDIT COMMITMENT PERIOD" shall mean the period
from and including the date hereof to, but not including, the Maturity
Date or such earlier date on which the Revolving Credit Commitments
shall terminate as provided herein.
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<PAGE> 26
"REVOLVING CREDIT LENDERS" shall mean the collective reference
to all Lenders having Revolving Credit Commitments or holding
outstanding Revolving Credit Loans or participating interests in any
Letter of Credit.
"REVOLVING CREDIT LOANS" shall have the meaning ascribed
thereto in SECTION 2.1.
"REVOLVING CREDIT NOTE" shall have the meaning ascribed
thereto in SECTION 2.2.
"S&P" shall mean Standard & Poor's Rating Group.
"SECURITY AGREEMENTS" shall mean the collective reference to
the Borrower Security Agreement, the Borrower Intellectual Property
Security Agreement, the Subsidiary Security Agreements, the Subsidiary
Intellectual Property Security Agreements and any other security
agreements entered into by any Person in favor of the Administrative
Agent, for the benefit of the Lenders, to secure the Obligations or to
secure the Obligations of such Person under a Subsidiary Guarantee.
"SECURITY DOCUMENTS" shall mean the collective reference to
the Pledge Agreements, the Security Agreements, the Mortgages and all
other security documents hereafter delivered to the Administrative
Agent granting a Lien on any asset or assets of the Borrower or any
Subsidiary to secure the obligations and liabilities of the Borrower
under the Notes and/or under any of the other Loan Documents or to
secure any guarantee by such Loan Party of any such obligations and
liabilities.
"SELLERS" shall have the meaning ascribed thereto in the
recitals to this Agreement.
"SINGLE EMPLOYER PLAN" shall mean any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"SOLVENT" shall mean, with respect to the Borrower or any
Subsidiary (a) the property of the Borrower or such Subsidiary, at fair
valuation, will exceed the debts of the Borrower or such Subsidiary, as
the case may be, (b) the Borrower or such Subsidiary will be able to
pay its debts as such debts become absolute and matured, and (c) the
Borrower or such Subsidiary will have, as of such date, sufficient
capital with which to conduct its business. For purposes of this
definition, "debt" means "liability on a claim" and "claim" means (i)
any right to payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (ii)
any 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,
unmatured, disputed, undisputed, secured or unsecured.
"STATED AMOUNT" of a Letter of Credit shall mean the total
amount available to be drawn under such Letter of Credit upon the
issuance thereof.
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<PAGE> 27
"STOCK OPTION PLAN" shall mean collectively the Borrower's (i)
1994 Stock Option Plan, (ii) 1995 Non-Employee Director Stock Option
Plan and (iii) 1995 Employee Stock Purchase Plan.
"SUBSIDIARY" of a Person shall mean a corporation, partnership
or other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the occurrence of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless the context otherwise requires, all references to
Subsidiaries are to Subsidiaries of the Borrower.
"SUBSIDIARY GUARANTEES" shall mean the collective reference to
the guarantees executed by each of the Subsidiary Guarantors in favor
of the Administrative Agent for the benefit of the Lenders,
substantially in the form of EXHIBIT K, in each case, as the same may
be amended, supplemented or otherwise modified from time to time.
"SUBSIDIARY GUARANTORS" shall mean the collective reference to
Fluent, Inc., Applied Thermal Technologies, Inc., Aavid Thermal
Products, Inc., Thermalloy Investment Company, Aavid Thermal Products
of Texas, Inc., Thermalloy, Inc. and any other Person who, pursuant to
the terms of this Agreement, shall enter into a guarantee (in form and
substance satisfactory to the Administrative Agent) pursuant to which
such Person shall guarantee the Obligations.
"SUBSIDIARY INTELLECTUAL PROPERTY SECURITY AGREEMENTS" shall
mean the collective reference to the Intellectual Property Security
Agreement, between the Subsidiaries of the Borrower and the
Administrative Agent, for the benefit of the Lender, each substantially
in the form of EXHIBIT L, in each case, as the same may be amended,
supplemented or otherwise modified from time to time.
"SUBSIDIARY PLEDGE AGREEMENTS" shall mean the collective
reference to (i) the Pledge Agreement between each Domestic Subsidiary
that owns Capital Stock to pledge and the Administrative Agent, for the
benefit of the Lenders, substantially in the form of EXHIBIT J, and
(ii) each other agreement, in form and substance satisfactory to the
Administrative Agent, between a Foreign Subsidiary and the
Administrative Agent, for the benefit of the Lenders, pursuant to which
the Capital Stock of a Foreign Subsidiary is pledged under applicable
law, in each case of clause (i) and (ii) as amended, supplemented or
otherwise modified from time to time.
"SUBSIDIARY SECURITY AGREEMENTS" shall mean the collective
reference to the (i) Security Agreements between the Subsidiary
Guarantors and the Administrative Agent, for the benefit of the
Lenders, substantially in the form of EXHIBIT M and (ii) in the case of
any Foreign Subsidiary that becomes an additional Borrower hereunder,
each other agreement, in form and substance satisfactory to the
Administrative Agent, between such Foreign Subsidiary and the
Administrative Agent pursuant to which such Foreign
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<PAGE> 28
Subsidiary grants a first priority, perfected Lien on all its assets
and properties in favor of the Administrative Agent, for the benefit of
the Lenders, under applicable law, in each case of clause (i) and (ii),
as the same may be amended, supplemented or otherwise modified from
time to time.
"TARGET COMPANIES" shall have the meaning specified in the
recitals to this Agreement.
"TERM LENDERS" shall mean the collective reference to all
Lenders having Term Loan Commitments or holding outstanding Term Loans.
"TERM LOANS" shall have the meaning ascribed thereto in
SECTION 2.6.
"TERM LOAN COMMITMENT" shall mean, with respect to each Term
Lender, the amount set forth under the heading "Term Loan Commitments"
opposite such Lender's name on SCHEDULE I. As of the date of this
Agreement, the aggregate amount of the Term Loan Commitments is
$80,000,000.
"TERM LOAN COMMITMENT PERCENTAGE" shall mean, as to any Term
Lender, at any time, the percentage which such Lender's Term Loan
Commitment then constitutes of the aggregate Term Loan Commitments (or,
at any time after the Term Loan Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such
Lender's Term Loans then outstanding constitutes of the aggregate
principal amount of the Term Loans then outstanding).
"TERM NOTE" shall have the meaning ascribed thereto in SECTION
2.7.
"THERMAL MANAGEMENT SOLUTIONS BUSINESS" shall mean (i) the
production and distribution of thermal control products and
computational fluid dynamics software for the digital and power
electronics industry, (ii) providing consulting services regarding heat
dissipation techniques to the digital and power electronics industry
and (iii) the production and distribution of direct bonded copper
substrates used in the packaging and cooling of high power electronic
devices.
"THERMALLOY MALAYSIA" shall have the meaning ascribed thereto
in the recitals to this Agreement.
"TOTAL LEVERAGE RATIO" shall mean, as of any date of
determination, the ratio of
(a) Funded Debt outstanding as of such date to
(b) EBITDA for the four fiscal quarters then most
recently ended.
"TRANCHE" shall mean the collective reference to Eurodollar
Loans, the then current Interest Periods with respect to all of which
begin on the same date and end on the same later date (whether or not
such Loans shall originally have been made on the same day).
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<PAGE> 29
"TRANSFEREE" shall have the meaning ascribed thereto in
SECTION 9.6(f).
"TYPE" shall mean as to any Loan, its nature as an Alternate
Base Rate Loan or a Eurodollar Loan.
"UK GAAP" shall mean generally accepted accounting principles
in the United Kingdom consistent with those utilized in preparing the
audited financial statements of the Target Companies referred to in
SECTION 3.1.
"UNIFORM CUSTOMS" shall mean the Uniform Customs Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, as the same may be amended, supplemented or
modified from time to time.
"U.S. GAAP" shall mean generally accepted accounting
principles in the United States of America consistent with those
utilized in preparing the audited financial statements of the Borrower
referred to in SECTION 3.1.
"VOTING SECURITIES" shall mean any class of Capital Stock of
the Borrower or any Subsidiary, as applicable, pursuant to which the
holders thereof have the general voting power under ordinary
circumstances to vote for the election of directors (irrespective of
whether or not at the time any other class will have or might have
voting power by reason of the occurrence of any contingency).
"WSP TRANSACTION" shall mean the consummation of either (a)
the merger of Heat Merger Corp., a Delaware corporation and a
wholly-owned, indirect Subsidiary of Willis, Stein & Partners, with and
into the Borrower, with the Borrower being the surviving company of
such merger, or (b) the offer by Heat Merger Corp. to purchase all the
outstanding Capital Stock of the Borrower, in either case pursuant to
and in accordance with the terms and conditions of the Agreement and
Plan of Merger dated as of August 23, 1999 among Heat Holdings Corp., a
Delaware corporation and a wholly-owned, indirect Subsidiary of Willis,
Stein & Partners, Heat Merger Corp. and the Borrower; PROVIDED that (i)
the Borrower shall be the surviving corporation, (ii) immediately after
giving effect thereto, no event shall occur and be continuing that
constitutes a Default, (iii) such changes to this Agreement (including
changes to SECTION 6.1) are made as may be necessary to conform to the
financing structure and terms set forth in the Commitment Letter dated
as of August 23, 1999 among Heat Merger Corp., Willis Stein & Partners
II, L.P., CIBC-Bank and CIBC World Markets, and (iv) all action
necessary or desirable or as the Administrative Agent may request, in
order to preserve the Liens, and continue the perfection thereof with
the same priority as granted and provided for or purported to be
granted and provided for by the Security Documents, shall have been
taken.
"YEAR 2000 PROBLEM" means any significant risk that computer
hardware or software used in the Borrower's or any Subsidiary's
business or operations will not, in the case of dates or time periods
occurring after December 31, 1999, function at least as effectively as
in the case of dates or time periods occurring prior to January 1,
2000.
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1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless otherwise
specified therein, all terms defined in this Agreement shall have their
respective defined meanings when used in the Notes or any certificate or other
document made or delivered pursuant hereto.
(b) As used herein, in the Notes and in any certificate or
other document made or delivered pursuant hereto, accounting terms relating to
the Borrower and any Subsidiary 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 U.S. 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 Article,
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.
ARTICLE 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 REVOLVING CREDIT COMMITMENTS. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans in Dollars ("REVOLVING CREDIT LOANS") to the Borrower
from time to time during the Revolving Credit Commitment Period in an aggregate
principal amount at any one time outstanding not to exceed such Lender's
Revolving Credit Commitment; PROVIDED that no Lender shall be permitted or
required to make any Revolving Credit Loan if after giving effect thereto
(i) the sum of the outstanding principal amount of
Revolving Credit Loans made by such Lender, such Lender's Revolving
Credit Commitment Percentage of the aggregate stated amount of all
Letters of Credit outstanding and such Lender's Percentage of the
aggregate amount drawn under all Letters of Credit for which the Issuer
has not been reimbursed would exceed such Lender's Revolving Credit
Commitment; or
(ii) the sum of the outstanding principal amount of
the Revolving Credit Loans made by all the Lenders, the aggregate
stated amount of all Letters of Credit outstanding and the aggregate
amount drawn under all Letters of Credit for which the Issuer has not
been reimbursed would exceed the Revolving Credit Commitments.
Subject to the foregoing, during the Revolving Credit
Commitment Period, the Borrower may use the Revolving Credit Commitments by
borrowing, prepaying the Revolving Credit Loans in whole or in part, and
reborrowing, all in accordance with the terms and conditions hereof.
(b) Subject to the last sentence of SECTION 2.3, the Revolving
Credit Loans may from time to time be (i) Eurodollar Loans, (ii) Alternate Base
Rate Loans or (iii) a combination thereof, as determined by the Borrower and
notified to the Administrative Agent in accordance
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with SECTION 2.3 and SECTION 2.10; PROVIDED that no Revolving Credit Loan shall
be made as a Eurodollar Loan after the day that is one month prior to the
Maturity Date.
2.2 REVOLVING CREDIT NOTES. The Revolving Credit Loans made by
each Revolving Credit Lender shall be evidenced by a promissory note of the
Borrower, substantially in the form of EXHIBIT A, with appropriate insertions as
to payee, date and principal amount (a "REVOLVING CREDIT NOTE"), payable to the
order of such Lender and in a principal amount equal to the lesser of (a) the
amount of the initial Revolving Credit Commitment of such Lender and (b) the
aggregate unpaid principal amount of all Revolving Credit Loans made by such
Lender. Each Revolving Credit Lender is hereby authorized to record the date,
Type and amount of each Revolving Credit Loan made by such Lender, each
continuation thereof, each conversion of all or a portion thereof to another
Type, the date and amount of each payment or prepayment of principal thereof
and, in the case of Eurodollar Loans, the length of each Interest Period with
respect thereto, on the schedule annexed to and constituting a part of its
Revolving Credit Note, and any such recordation shall constitute PRIMA FACIE
evidence of the accuracy of the information so recorded absent manifest error;
PROVIDED that neither the failure to so record nor any error in such recordation
shall affect the Borrower's obligations under the Revolving Credit Note. Each
Revolving Credit Note shall (i) be dated the Closing Date, (ii) be stated to
mature on the Maturity Date and (iii) provide for the payment of interest in
accordance with SECTION 2.12.
2.3 PROCEDURE FOR REVOLVING CREDIT BORROWING. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day; PROVIDED that the Borrower shall give the
Administrative Agent an irrevocable notice substantially in the form of EXHIBIT
C-1 (a "NOTICE OF BORROWING") (which notice must be received by the
Administrative Agent prior to 11:00 a.m., New York City time, (a) three Business
Days prior to the requested Borrowing Date, if all or any part of the requested
Revolving Credit Loans are to be Eurodollar Loans initially and (b) one Business
Day prior to the requested Borrowing Date, in the case of Alternate Base Rate
Loans, specifying, in each case: (i) the amount of the Borrowing, (ii) the
requested Borrowing Date, (iii) whether the Borrowing is to be of Eurodollar
Loans, Alternate Base Rate Loans or a combination thereof and (iv) if the
Borrowing is to be entirely or partly of Eurodollar Loans, the amounts of such
Eurodollar Loans and the lengths of the initial Interest Periods therefor. Each
Borrowing under the Revolving Credit Commitments shall be in an amount equal to
(x) in the case of Alternate Base Rate Loans, $100,000 or a whole multiple of
$100,000 in excess thereof (or, if the then Available Revolving Credit
Commitments are less than $100,000, such lesser amount) and (y) in the case of
Eurodollar Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof.
Upon receipt of any such notice from the Borrower, the Administrative Agent
shall promptly notify each Revolving Credit Lender thereof. Each Revolving
Credit Lender will make the amount of its Revolving Credit Commitment Percentage
of each Borrowing available for the account of its Applicable Lending Office to
the Administrative Agent for the account of the Borrower at the office of the
Administrative Agent specified in SECTION 9.2 prior to 1:00 p.m., New York City
time, on the Borrowing Date requested by the Borrower, in funds immediately
available to the Administrative Agent. Such Borrowing will then be made
available to the Borrower by the Administrative Agent in the manner specified by
the Borrower in such Notice of Borrowing in the aggregate of the amounts made
available to the Administrative Agent by the Revolving Credit Lenders and in
like funds as received by the Administrative Agent. If the Notice of Borrowing
fails to specify the
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duration of the Interest Period for any Borrowing comprised of Eurodollar Rate
Loans, such Interest Period shall be three months. Notwithstanding anything to
the contrary contained herein, Revolving Credit Loans, if any, made on the
Closing Date must be Alternate Base Rate Loans.
2.4 COMMITMENT FEE; ADMINISTRATIVE FEE. (a) The Borrower
agrees to pay to the Administrative Agent for the account of each Revolving
Credit Lender (other than a Defaulting Lender for so long as such Lender is a
Defaulting Lender hereunder) a commitment fee for the period from and including
the first day of the Revolving Credit Commitment period to the Maturity Date,
payable quarterly in arrears on the last day of each March, June, September and
December and on the Maturity Date or such earlier date as the Revolving Credit
Commitments shall reduce or terminate as provided herein, commencing on the
first of such dates to occur after the date hereof. Such fee shall be computed
at the rate of (i) 0.50% per annum on the average daily amount of the Available
Revolving Credit Commitment of such Lender, if the Total Leverage Ratio for the
period most recently ended prior to each such payment date is greater than or
equal to 1.50 to 1.00, and (ii) .375% per annum if the Total Leverage Ratio for
the period most recently ended prior to each such payment date is less than 1.50
to 1.00.
(b) The Borrower agrees to pay to the Administrative Agent,
for its own account, the fees in the amounts and at the times referred to in the
Fee Letter.
2.5 TERMINATION OR REDUCTION OF REVOLVING CREDIT COMMITMENTS
REPAYMENT. (a) OPTIONAL. The Borrower shall have the right, upon not less than
three Business Days' notice to the Administrative Agent, to terminate the
Revolving Credit Commitments or, from time to time, to reduce the amount of the
Revolving Credit Commitments. Any such termination or reduction shall be in an
amount equal to $500,000 or a whole multiple of $100,000 in excess thereof;
PROVIDED that no such termination or reduction shall be permitted if, after
giving effect thereto and to any prepayments of the Revolving Credit Loans made
on the effective date thereof, the sum of (a) aggregate principal amount of the
Revolving Credit Loans then outstanding and (b) the aggregate amount of the
Stated Amount of all Letters of Credit would exceed the Revolving Credit
Commitments then in effect. Any reduction of the Revolving Credit Commitments
shall be accompanied by payment in full of all accrued commitment fees on the
amount so reduced to and including the date of such reduction and, to the extent
any Revolving Credit Loans that are Eurodollar Loans are prepaid in connection
with such reduction, shall be accompanied by payment in full of all accrued
interest thereon, to and including the date of such prepayment, together with
any additional amounts owing pursuant to SECTION 2.19 and any outstanding fees
and expenses due and owing. The Administrative Agent agrees to promptly notify
the Revolving Credit Lenders of any notice of reduction or termination received
by the Administrative Agent.
(b) The Borrower shall repay the aggregate outstanding
principal amount of all Revolving Credit Loans on the Maturity Date.
2.6 TERM LOANS. Subject to the terms and conditions hereof,
each Term Lender severally agrees to make term loans ("TERM LOANS") to the
Borrower on the Closing Date in an amount not to exceed the amount of the Term
Loan Commitment of such Lender then in effect. The Term Loans may from time to
time be (a) Eurodollar Loans, (b) Alternate Base Rate
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<PAGE> 33
Loans or (c) a combination thereof, as determined by the Borrower and set forth
in a notice to the Administrative Agent in accordance with SECTION 2.8 and
SECTION 2.10; PROVIDED that the Term Loans made on the Closing Date must be
Alternate Base Rate Loans. Any amounts borrowed under this SECTION 2.6 and
repaid or prepaid may not be reborrowed.
2.7 TERM NOTES. The Term Loan made by each Term Lender shall
be evidenced by a promissory note of the Borrower, substantially in the form of
EXHIBIT B (a "TERM NOTE"), with appropriate insertions therein as to payee, date
and principal amount, payable to the order of such Lender and in a principal
amount equal to the aggregate unpaid principal amount of all Term Loans made by
such Lender. Each Term Lender is hereby authorized to record the date, Type and
amount of each Term Loan made by such Lender, each continuation thereof, each
conversion of all or a portion thereof to another Type, the date and amount of
each payment or prepayment of principal thereof and, in the case of Eurodollar
Loans, the length of each Interest Period with respect thereto, 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 absent manifest error; PROVIDED that neither the failure to so record
nor any error in such recordation shall affect the Borrower's obligations under
the Term Note. The Term Note of each Term Lender (i) shall be dated the Closing
Date, (ii) shall be payable on the last day of each March, June, September and
December commencing on March 31, 2000; each of which payments shall be in an
amount equal to such Lender's Term Loan Commitment Percentage of the amount set
forth below opposite each such date:
DATE AMOUNT
---- ------
March 31, 2000 $2,000,000
June 30, 2000 2,000,000
September 30, 2000 2,000,000
December 31, 2000 2,000,000
March 31, 2001 3,000,000
June 30, 2001 3,000,000
September 30, 2001 3,000,000
December 31, 2001 3,000,000
March 31, 2002 4,000,000
June 30, 2002 4,000,000
September 30, 2002 4,000,000
December 31, 2002 4,000,000
March 31, 2003 5,000,000
June 30, 2003 5,000,000
September 30, 2003 5,000,000
December 31, 2003 5,000,000
March 31, 2004 8,000,000
June 30, 2004 8,000,000
September 30, 2004 8,000,000
; PROVIDED that if the aggregate amount of Term Loans made by the Term Lenders
is less than the amount contemplated by the foregoing amortization schedule, an
appropriate PRO RATA adjustment shall be made to the amount due to each Term
Lender on each scheduled payment date, and (iii)
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shall provide for the payment of interest in accordance with SECTION 2.12. The
Borrower shall repay the aggregate outstanding amount of all Term Loans on the
Maturity Date.
2.8 PROCEDURES FOR TERM LOAN BORROWING. The Borrower may
borrow under the Term Loan Commitment on the Closing Date; PROVIDED that the
Borrower shall give the Administrative Agent an irrevocable Notice of Borrowing
(which notice must be received by the Administrative Agent prior to 11:00 a.m.,
New York City time, one Business Day prior to the requested Borrowing Date,
requesting that the Lenders make Term Loans and specifying (i) the amount to be
borrowed and (ii) the requested Borrowing Date. Upon receipt of any such notice
from the Borrower, the Administrative Agent shall promptly notify each Term Loan
Lender thereof. Each Term Lender shall make available for the account of its
Applicable Lending Office to the Administrative Agent, for the account of the
Borrower at the Administrative Agent's office specified in SECTION 9.2 prior to
1:00 p.m., New York City time, on the Closing Date, the amount of such Lender's
Term Loan Commitment Percentage of such Borrowing, in each case, in immediately
available funds. The Administrative Agent shall on such date make available, in
the manner specified by the Borrower in Notice of Borrowing, the aggregate of
the amounts made available to the Administrative Agent by the Term Lenders and
in like funds as received by the Administrative Agent. The Term Loan Commitments
shall be reduced to zero on the Closing Date to the extent not utilized by 5:00
p.m. (New York City time) on such date.
2.9 OPTIONAL AND MANDATORY PREPAYMENTS. (a) Subject to SECTION
2.19, the Borrower may, at any time and from time to time prepay the Loans, in
whole or in part, without premium or penalty, upon at least three Business Days'
irrevocable written notice to the Administrative Agent, specifying the date and
amount of prepayment and whether the prepayment is of Eurodollar Loans,
Alternate Base Rate Loans or a combination thereof, and, if of 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 any amounts payable pursuant to
SECTION 2.19, accrued interest to such date on the amount prepaid that
constitutes Eurodollar Loans and any outstanding fees and expenses then due and
owing. Partial prepayments of the Revolving Credit Loans under this SECTION
2.9(a) shall be applied to the Revolving Credit Loans but shall not reduce the
Revolving Credit Commitments unless the Borrower so specifies in its written
notice to the Administrative Agent in which case the Revolving Credit
Commitments shall be reduced in the manner set forth in SECTION 2.5. Partial
prepayments of the Term Loans under this SECTION 2.9(a) shall be applied FIRST,
to the scheduled installments of principal of the Term Loans in inverse order of
maturity and SECOND, if the Term Loans have been repaid in full, to the
Revolving Credit Loans. Amounts prepaid on account of the Term Loans or to
reduce the Revolving Credit Commitments may not be reborrowed. Partial
prepayments shall be in an aggregate principal amount of $250,000 or a whole
multiple of $100,000 in excess thereof.
(b) With respect to any fiscal year of the Borrower,
commencing with the fiscal year ending December 31, 2001, the Borrower shall,
within ninety days after the end of such fiscal year, prepay an amount equal to
50% of the Excess Cash Flow for such fiscal year, which prepayment shall be
applied FIRST, to the scheduled installments of principal of the Term Loans in
inverse order of maturity and SECOND, if the Term Loans have been repaid in
full, to the Revolving
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Credit Loans. Each prepayment of the Loans pursuant to this SECTION 2.9(b) shall
be accompanied by payment in full of all accrued interest thereon, to and
including the date of such prepayment, together with any additional amounts
owing pursuant to SECTION 2.19 and any outstanding fees and expenses due and
owing.
(c) The Borrower shall deliver to the Administrative Agent
100% of any Net Disposition Proceeds; PROVIDED that the Borrower, by written
notice to the Administrative Agent delivered within three Business Days after
receipt thereof (together with a certificate in reasonable detail setting forth
the calculation of such Net Disposition Proceeds), may elect to defer applying
up to $5,000,000 of such Net Disposition Proceeds in such manner if and only if
(i) concurrent with such notice, such deferred proceeds are applied to repay the
Revolving Credit Loans (with a concomitant temporary reduction in the Revolving
Credit Commitments), and (ii) within 180 days after receipt by the
Administrative Agent of such deferred proceeds, the Borrower, subject to SECTION
2.5 and SECTION 2.9 (a), (b), (d), and (e), shall obtain Revolving Credit Loans
for purposes of acquiring replacement assets which are, in the ordinary course,
used and useful in the operation of the Thermal Management Solutions Business of
the Borrower and its Approved Subsidiaries (it being understood that (A) upon
expiration of such 180-day period, any portion of such deferred proceeds that
has not been utilized by the Borrower as a Revolving Credit Loan to acquire such
replacement assets shall be applied in accordance with the next succeeding
sentence, (B) subject to SECTION 2.5 and SECTION 2.9 (a), (b), (d), and (e), (1)
the Revolving Credit Commitments, upon each disbursement of such deferred
proceeds as a Revolving Credit Loan for purposes of acquiring replacement assets
which are, in the ordinary course, used and useful in the operation of the
Thermal Management Solution Business of the Borrower and its Approved
Subsidiaries shall be restored by the amount of such disbursement and (2) upon
application of such proceeds in accordance with the next succeeding sentence and
subject to the limitations set forth therein, to the extent not previously done,
the Revolving Credit Commitments shall be restored and (C) if any Default shall
occur during such 180-day period, the Administrative Agent may, in its
discretion, and shall, if directed by the Required Lenders, apply such deferred
proceeds as a mandatory prepayment in accordance with the next sentence and the
Borrower shall be deemed to have requested Revolving Credit Loans in an amount
equal to such deferred proceeds (as such amount may have been reduced hereunder)
and, in the case of any mandatory prepayment, such Revolving Credit Loans shall
be made regardless of the failure of the Borrower to satisfy the conditions set
forth in SECTION 4.2). Any Net Disposition Proceeds shall be applied, FIRST, to
the scheduled installments of principal of the Term Loans in inverse order of
maturity and SECOND, if the Term Loans have been repaid in full, to the
Revolving Credit Loans.
(d) The Borrower shall deliver to the Administrative Agent
100% of any Net Insurance Proceeds which, in the aggregate during the term of
this Agreement, exceed $25,000,000, within three Business Days of the receipt
thereof for application in the manner set forth in the next sentence; PROVIDED
that the Borrower, by written notice to the Administrative Agent delivered
within such three Business Day period (together with a certificate in reasonable
detail setting forth the calculation of such Net Insurance Proceeds), may elect
to defer applying such Net Insurance Proceeds in such manner if and only if (i)
concurrent with such notice, such deferred proceeds are applied to repay the
Revolving Credit Loans (with a concomitant temporary reduction in the Revolving
Credit Commitments), and (ii) within 270 days after receipt by the
Administrative Agent of such deferred proceeds, the Borrower, subject to SECTION
2.5 and SECTION
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2.9 (a), (b), (c), and (e), shall obtain Revolving Credit Loans for purposes of
acquiring replacement assets which are, in the ordinary course, used and useful
in the operation of the Thermal Management Solutions Business of the Borrower
and its Approved Subsidiaries (it being understood that (A) upon expiration of
such 270-day period, any portion of such deferred proceeds that has not been
utilized by the Borrower as a Revolving Credit Loan to acquire such replacement
assets shall be applied in accordance with the next succeeding sentence, (B)
subject to SECTION 2.5 and SECTION 2.9 (a), (b), (c), and (e), (1) the Revolving
Credit Commitments, upon each disbursement of such deferred proceeds as a
Revolving Credit Loan for purposes of acquiring replacement assets which are, in
the ordinary course, used and useful in the operation of the Thermal Management
Solutions Business of the Borrower and its Approved Subsidiaries shall be
restored by the amount of such disbursement and (2) upon application of such
proceeds in accordance with the next succeeding sentence and subject to the
limitations set forth therein, to the extent not previously done, the Revolving
Credit Commitments shall be restored and (C) if any Default shall occur during
such 270-day period, the Administrative Agent may, in its discretion, and shall,
if directed by the Required Lenders, apply such deferred proceeds as a mandatory
prepayment in accordance with the next sentence and the Borrower shall be deemed
to have requested Revolving Credit Loans in an amount equal to such deferred
proceeds (as such amount may have been reduced hereunder) and, in the case of
any mandatory prepayment, such Revolving Credit Loans shall be made regardless
of the failure of the Borrower to satisfy the conditions set forth in SECTION
4.2). Any Net Insurance Proceeds shall be applied FIRST, to the scheduled
installments of principal of the Term Loans in inverse order of maturity and
SECOND, if the Term Loans have been repaid in full, to the Revolving Credit
Loans.
(e) Subject to SECTION 2.19, the Borrower shall concurrently
with the receipt of any Net Securities Proceeds by the Borrower or any
Subsidiary other than in connection with the Stock Option Plan, pay to the
Administrative Agent an amount equal to such Net Securities Proceeds, which
shall be applied in the same manner as Net Disposition Proceeds as set forth in
SECTION 2.9(c).
(f) If, at any time, (i) the sum of (x) the outstanding
aggregate principal amount of the Revolving Credit Loans, (y) the aggregate
Stated Amount of all Letters of Credit then outstanding and (z) any amounts
drawn under any Letter of Credit (including interest thereon computed in
accordance with SECTION 2.21(d)) for which the Issuer has not been reimbursed
exceeds (ii) the then aggregate amount of the Revolving Credit Commitments,
then, the Borrower shall prepay at such time an aggregate principal amount of
the Revolving Credit Loans in an aggregate amount equal to such excess, and to
the extent of any excess remaining, deliver cash collateral for the Stated
Amount of the Letter of Credit outstanding and any amount drawn under the Letter
of Credit for which the Issuer has not been reimbursed.
(g) Each prepayment of Term Loans and Revolving Credit Loans
pursuant to this SECTION 2.9 shall be accompanied by payment in full of any
outstanding fees and expenses then due and owing and, in the case of any
prepayment of Eurodollar Loans, by payment in full of all accrued interest
thereon, to and including the date of such prepayment and any additional amounts
owing pursuant to SECTION 2.19.
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2.10 CONVERSION AND CONTINUATION OPTIONS. (a) The Borrower
may, upon irrevocable written notice to the Administrative Agent in accordance
with this SECTION 2.10 (i) elect, as of any Business Day, in the case of
Alternate Base Rate Loans, or as of the last day of the applicable Interest
Period, in the case of any other Type of Loans, to convert any such Loans (or
any part thereof in an amount not less than $1,000,000, or that is an integral
multiple of $100,000 in excess thereof) into Loans of any other Type; or (ii)
elect, as of the last day of the applicable Interest Period, to continue any
Loans having Interest Periods expiring on such day (or any part thereof in an
amount not less than $1,000,000, or that is in an integral multiple of $100,000
in excess thereof.
(b) The Borrower shall deliver a written notice, substantially
in the form of EXHIBIT C-2 (a "NOTICE OF CONVERSION/CONTINUATION") to be
received by the Administrative Agent not later than 11:00 a.m. (New York City
time) at least (i) three Business Days in advance of the Conversion/
Continuation Date, if the Loans are to be converted from or into or continued as
Eurodollar Rate Loans; and (ii) on the Conversion/Continuation Date, if the
Loans are to be converted into Alternate Base Rate Loans.
(c) If upon the expiration of any Interest Period applicable
to Eurodollar Rate Loans made to the Borrower, the Borrower has failed to select
timely a new Interest Period to be applicable to such Loans, or if any Default
or Event of Default then exists, the Borrower shall be deemed to have elected to
convert such Eurodollar Rate Loans into Alternate Base Rate Loans effective as
of the expiration date of such Interest Period.
(d) Upon receipt of any Notice of Conversion/Continuation, the
Administrative Agent shall promptly notify each Lender thereof. All or any part
of the outstanding Eurodollar Loans and Alternate Base Rate Loans may be
converted or continued as provided herein; PROVIDED that (i) no Loan may be
converted into, or continued as, a Eurodollar Loan when any Default has occurred
and is continuing and (ii) no Loan may be converted into, or continued as, a
Eurodollar Loan after the date that is one month prior to the Maturity Date.
2.11 MAXIMUM AMOUNTS OF TRANCHES. All borrowings, conversions
and continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and shall be made pursuant to such elections
so that, after giving effect thereto, the aggregate principal amount of the
Loans comprising each Tranche shall be equal to $500,000 or a whole multiple of
$100,000 in excess thereof. There shall never be more than ten Tranches at any
one time outstanding.
2.12 INTEREST RATES AND PAYMENT DATES. (a) Each Eurodollar
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 the
first day of such Interest Period (subject to daily adjustments, if any,
required by changes in the Eurocurrency Reserve Requirements) PLUS the
Applicable Margin.
(b) Each Alternate Base Rate Loan shall bear interest at a
rate per annum equal to the Alternate Base Rate PLUS the Applicable Margin.
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(c) In the event an Event of Default under SECTION 7.1(a) or
(e) has occurred and is continuing, the Loans shall bear interest at a rate per
annum equal to the rate that would otherwise be applicable thereto pursuant to
the foregoing provisions of this Section plus 2% from the date of occurrence of
such Event of Default until the date such Event of Default is cured or waived
(after as well as before judgment). In addition, should any interest on such
Loans or any commitment fee or other amount (other than principal) payable
hereunder not be paid when due (whether at the stated maturity, by acceleration
or otherwise), such overdue amount shall bear interest (to the extent permitted
by law in the case of interest on interest) at a rate per annum which is the
rate described in SECTION 2.12(b) plus 2%, in each case, from the date of such
non-payment until such amount is paid in full (after as well as before
judgment).
(d) Interest shall be payable in arrears on each Interest
Payment Date; PROVIDED that interest accruing pursuant to SECTION 2.12(c) shall
be payable from time to time on demand.
2.13 COMPUTATION OF INTEREST AND FEES. (a) Commitment fees and
Alternate Base Rate interest shall be calculated on the basis of a 365/366 day
year and Eurodollar Rate interest shall be calculated on the basis of a 360-day
year for the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrower and the Lenders of each determination of a
Eurodollar Rate. Any change in the interest rate on a 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
becomes effective. The Administrative Agent shall as soon as practicable notify
the Borrower and the Lenders of the effective date and the amount of each such
change in interest rate.
(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 Borrower and the Lenders in the absence of
manifest error. The Administrative Agent, at the request of the Borrower, shall
deliver to the Borrower a statement showing the quotations used by the
Administrative Agent in determining any interest rate pursuant to SECTION
2.12(a).
(c) All payments to be made by the Borrower shall be made
without setoff, recoupment or counterclaim. Except as otherwise expressly
provided herein, all payments by the Borrower shall be made to the
Administrative Agent for the account of the Lenders at the Administrative
Agent's office specified in SECTION 9.2 and shall be made in Dollars. Such
payments shall be made in like funds received, and no later than 12:00 p.m. (New
York City time) on the date specified herein. The Administrative Agent will
promptly distribute to each Lender its pro rata share (or other applicable share
as expressly provided herein) of such principal, interest, fees or other
amounts, in like funds as received for the account of the Lenders' respective
Applicable Lending Office. Any payment which is received by the Administrative
Agent later than 12:00 p.m. (New York City time) shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall
continue to accrue.
2.14 INABILITY TO DETERMINE INTEREST RATE. If the
Administrative Agent shall have determined (which determination shall be
conclusive and binding upon the Borrower) that, by reason of circumstances
affecting the relevant market, adequate and reasonable means do not exist for
ascertaining the Eurodollar Rate for any requested Interest Period, or that the
Eurodollar
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Rate determined or to be determined for such Interest Period will not adequately
and fairly reflect the cost to the Lenders of making or maintaining their
affected Loans, the Administrative Agent shall give telecopy or telephonic
notice thereof to the Borrower and the Lenders as soon as practicable
thereafter. If such notice is given, (x) any Eurodollar Loans requested to be
made on the first day of such Interest Period shall be made as Alternate Base
Rate Loans, (y) any Loans that were to have been converted on the first day of
such Interest Period to Eurodollar Loans shall be continued as Alternate Base
Rate Loans and (z) any outstanding Eurodollar Loans shall be converted, on the
first day of such Interest Period, to Alternate Base Rate Loans. Until such
notice has been withdrawn by the Administrative Agent, no further Eurodollar
Loans shall be made or continued as such, nor shall the Borrower have the right
to convert Alternate Base Rate Loans to Eurodollar Loans.
2.15 PRO RATA TREATMENT AND PAYMENTS; FUNDING RELIANCE. (a)
Each Borrowing by the Borrower from the Lenders hereunder, each payment by the
Borrower on account of any commitment fee hereunder and any reduction of the
Revolving Credit Commitments or the Term Loan Commitments of the Lenders shall
be made PRO RATA according to the respective Revolving Credit Commitments or
Term Loan Commitments of the Lenders. Each payment (including each prepayment)
by the Borrower on account of principal of and interest on the Loans or any
Letter of Credit shall (except as may be required as a result of SECTION 2.16)
be made pro rata according to the respective Revolving Credit Commitment
Percentages or Term Loan Commitments Percentages, as applicable. All payments
(including prepayments) to be made by the Borrower hereunder and under the
Notes, whether on account of principal, interest, fees or otherwise, or on
account of any Letter of Credit, shall be made without setoff or counterclaim
and shall be made prior to 12:00 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 9.2, in Dollars and in
immediately available funds. The Administrative Agent shall distribute such
payments to the Lenders for the account of their respective Applicable Lending
Offices promptly upon receipt in like funds as received. If any payment
hereunder (other than payments on the Eurodollar 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 and interest
thereon, shall be payable at the then applicable rate during such extension. If
any payment on a Eurodollar 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 (and, with respect to payments of principal and 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.
(b) Unless the Administrative Agent shall have been notified
in writing by any Lender prior to a Borrowing that such Lender will not make
available to the Administrative Agent the amount that would constitute its
applicable Commitment Percentage of such Borrowing, the Administrative Agent may
assume that such Lender is making such amount available to the Administrative
Agent, and the Administrative Agent may, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If such amount is not made
available to the Administrative Agent by the required time on the Borrowing Date
therefor, such Lender shall pay to the Administrative Agent, on demand, such
amount with interest thereon at a rate equal to the
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daily average Federal Funds Rate for the period until such Lender makes such
amount immediately available to the Administrative Agent. A certificate of the
Administrative Agent submitted to any Lender with respect to any amounts owing
under this Section shall be conclusive in the absence of manifest error. If such
Lender's applicable Commitment Percentage of such Borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Alternate Base Rate Loans hereunder, on demand, from the Borrower.
2.16 ILLEGALITY. Notwithstanding any other provision herein,
if the adoption of or any change in any Requirement of Law or in the
interpretation or application thereof shall make it unlawful for any Lender to
make or maintain Eurodollar Loans as contemplated by this Agreement, (a) the
commitment of such Lender hereunder to make Eurodollar Loans, continue
Eurodollar Loans as such and convert Alternate Base Rate Loans to Eurodollar
Loans shall forthwith be canceled and (b) such Lender's Loans then outstanding
as Eurodollar Loans, if any, shall be converted automatically to Alternate Base
Rate Loans on the respective last days of the then current Interest Periods with
respect to such Loans or within such earlier period as required by law. If any
such conversion of a Eurodollar Loan occurs on a day which is not the last day
of the then current Interest Period with respect thereto, the Borrower shall pay
to such Lender such amounts, if any, as may be required pursuant to SECTION
2.19.
2.17 REQUIREMENTS OF LAW. (a) If the adoption of or any change
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 made
subsequent to the date hereof:
(i) shall subject any Lender to any tax of
any kind whatsoever with respect to this Agreement, any Note or any
Eurodollar Loan made by it, or change the basis of taxation of payments
to such Lender in respect thereof (except for Non- Excluded Taxes
covered by SECTION 2.18 and changes in the rate of tax on the overall
net income of such Lender);
(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
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 Loans or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable. If
any Lender becomes entitled to claim any additional amounts pursuant to this
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Section, it shall promptly notify the Borrower, through the Administrative
Agent, of the event by reason of which it has become so entitled. A certificate
as to any additional amounts payable pursuant to this Section submitted by such
Lender, through the Administrative Agent, to the Borrower shall be conclusive in
the absence of manifest error. This covenant shall survive the termination of
this Agreement and the payment of the Obligations hereunder.
(b) If any Lender shall have determined that the adoption of
or any change 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 date hereof has 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 Borrower (with a
copy to the Administrative Agent) of a written request therefor, the Borrower
shall pay to such Lender such additional amount or amounts as will compensate
such Lender for such reduction. This covenant shall survive the termination of
this Agreement and the payment of the Obligations hereunder.
2.18 TAXES. (a) All payments made by the Borrower under this
Agreement and the Notes 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 net income taxes and franchise taxes (imposed
in lieu of net income taxes) imposed on the Administrative Agent or any Lender
as a result of a present or former connection between the Administrative Agent
or such Lender and the jurisdiction of the Governmental Authority imposing such
tax or any political subdivision or taxing authority thereof or therein (other
than any such 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 Notes). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("NON-EXCLUDED TAXES") are required to be withheld from any amounts
payable to the Administrative Agent or any Lender hereunder or under the 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 payment of all Non-Excluded Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement and the Notes; PROVIDED that the Borrower shall not be required to
increase any such amounts payable to any Lender that is not organized under the
laws of the United States of America or a state thereof if such Lender fails to
comply with the requirements of paragraph (b) of this Section. Whenever any
Non-Excluded Taxes are payable by the Borrower, as promptly as possible
thereafter, the Borrower 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 Borrower showing payment
thereof. If the Borrower fails to pay any Non-Excluded Taxes when due to the
appropriate taxing authority or fails to remit to the Administrative Agent the
required receipts or other required documentary evidence,
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the Borrower 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
covenants in this Section shall survive the termination of this Agreement and
the payment of the Notes and payment of the Obligations hereunder.
(b) Each Lender shall:
(i) deliver to the Borrower and the
Administrative Agent (A) in the case of a Lender that is not organized
under the laws of the United States or any State thereof, either (x)
two duly completed copies of United States Internal Revenue Service
Form 1001 or 4224, or successor applicable form, as the case may be,
or, (y) if such Lender is not a "bank" within the meaning of Section
881(c)(3)(A) of the Code and intends to claim exemption from U.S.
Federal withholding tax under Section 871(h) or Section 881(c) of the
Code with respect to payments of "portfolio interest", a Form W-8, or
any subsequent versions thereof or successors thereto together with a
certificate executed by such Lender representing that (1) such 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 Borrower and is not a controlled foreign corporation
related to the Borrower (within the meaning of Section 864(d)(4) of the
Code), claiming complete exemption from U.S. Federal withholding tax on
payments of interest by the Borrower under this Agreement and the other
Loan Documents and (2) that the Lender has received in replacement of
any Note held by or assigned to it, a QFL Note in accordance with this
SECTION 2.18, and (B) in the case of any other Lender, an Internal
Revenue Service Form W-8 or W-9, as applicable, or successor applicable
form, as the case may be;
(ii) deliver to the Borrower and the
Administrative Agent two further copies of any such form or
certification on or before the date that any such form or certification
expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recent form previously delivered by it
to the Borrower; and
(iii) obtain such extensions of time for
filing and complete such forms or certifications as may reasonably be
requested by the Borrower or the Administrative Agent;
unless in any such case an event (including, without limitation, any change in
treaty, law or regulation) has occurred prior to the date on which any such
delivery would otherwise be required which renders all such forms inapplicable
or which would prevent such Lender from duly completing and delivering any such
form with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Such Lender shall certify (i) in the case of a Form 1001
or 4224, that it is entitled to receive payments under this Agreement without
deduction or withholding of any United States federal income taxes and (ii) in
the case of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax. Each Person that shall become a Lender or a
Participant pursuant to SECTION 9.6 shall, upon the effectiveness of the related
transfer, be required to provide all the forms and statements required pursuant
to this Section; PROVIDED that, in the case of a Participant, such Participant
shall furnish all such required
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forms and statements to the Lender from which the related participation shall
have been purchased.
(c) Any Lender that is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and satisfies the requirements of SECTION
2.18(b)(i)(A)(y), (a "QUALIFIED FOREIGN LENDER") shall upon receipt of the
written request of the Administrative Agent or the Borrower and may, upon its
own written request to the Administrative Agent, exchange any Note held by or
assigned to it for a qualified foreign lender Note (a "QFL NOTE"). A QFL Note
shall be in the form of the Revolving Credit Note or Term Note, as applicable,
but shall contain the following legend, "This Note is a QFL Note, and as such,
ownership of the obligation represented by such QFL Note may be transferred only
in accordance with Section 2.18 of the Credit Agreement." Any QFL Note issued in
replacement of any existing Note pursuant to this Section shall be (i) dated the
Closing Date, (ii) issued in the name of the entity in whose name such existing
Note was issued and (iii) issued in the same principal amount as such existing
Note. Any Note replaced pursuant to this Section is sometimes referred to herein
as a "REPLACED NOTE".
(d) The Borrower agrees that, upon the request of or delivery
of a request to a Qualified Foreign Lender pursuant to paragraph (c) of this
Section, it shall execute and deliver a QFL Note to the Administrative Agent in
replacement of the Replaced Note surrendered in connection with such request
conforming to the requirements of this paragraph. Each Qualified Foreign Lender
shall surrender its Note in connection with any replacement pursuant to this
SECTION 2.18. Upon receipt by the Administrative Agent, in connection with any
replacement, of a QFL Note and the existing Note to be replaced by such QFL Note
in accordance with this paragraph, the Administrative Agent shall forward the
QFL Note to the Lender which has surrendered its Note for replacement by such
QFL Note and shall forward the surrendered Note to the Borrower marked
"canceled". Once issued, QFL Notes (i) shall be deemed to and shall be "Notes"
for all purposes under the Loan Documents, (ii) may not be exchanged for Notes
which are not QFL Notes, notwithstanding anything to the contrary in the Loan
Documents and (iii) shall at all times thereafter be QFL Notes, including,
without limitation, following any transfer or assignment thereof.
(e) Notwithstanding anything to the contrary in the Loan
Documents, the QFL Notes are registered obligations as to both principal and
interest with the Borrower and transfer of the obligations underlying such QFL
Note may be effected only by surrender of the QFL Note to the Borrower and
either reissuance by the Borrower of such QFL Note to the transferee or issuance
by the Borrower of a new QFL Note to the transferee. A QFL Note shall only
evidence the Lender's or an assignee's right, title and interest in and to the
related obligation, and in no event is a QFL Note to be considered a bearer
instrument or obligation. This SECTION 2.18 shall be construed so that the
obligations underlying the QFL Notes are at all times maintained in "registered
form" within the meaning of Sections 871(h)(2) and 881(c)(3) of the Code.
2.19 INDEMNITY. The Borrower 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 Borrower in payment when
due of the principal amount of or interest on any Eurodollar Loan, (b) default
by the Borrower in making a borrowing of, conversion into or continuation of
Eurodollar Loans after the Borrower has given a notice
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requesting the same, (c) default by the Borrower in making any prepayment after
the Borrower has given a notice thereof or (d) the making of a prepayment or
conversion of Eurodollar Loans on a day which is not the last day of an Interest
Period with respect thereto including, without limitation, in each case, any
such loss or expense arising from the redeployment of funds obtained by it or
from fees payable to terminate the deposits from which such funds were obtained.
This covenant shall survive the termination of this Agreement and the payment of
the Obligations hereunder.
2.20 DISCRETION OF LENDER AS TO MANNER OF FUNDING.
Notwithstanding any other provisions of this Agreement, each Lender shall be
entitled to fund and maintain its funding of all or any part of its Loans in any
manner it sees fit, it being understood that for the purposes of this Agreement
all determinations hereunder shall be made assuming each Lender had actually
funded and maintained each Eurodollar Loan through the purchase of deposits of
Dollars for such Loan in the eurocurrency interbank market having a maturity
corresponding to each Loan's Interest Period and bearing an interest rate equal
to the Eurodollar Rate for such Interest Period.
2.21 LETTERS OF CREDIT. (a) Subject to the terms and
conditions hereof, and in reliance on the agreements set forth in clauses (c)
and (e) hereof, from time to time, on any Business Day, the Issuer agrees to
issue Letters of Credit for the account of the Borrower in such form as may be
approved from time to time by the Issuer; PROVIDED that (i) the sum of the
aggregate face amount of all Letters of Credit outstanding and the aggregate
amount drawn under all Letters of Credit for which the Issuer has not been
reimbursed at any time shall not exceed $2,000,000 and (ii) the sum of the
Revolving Credit Loans, the aggregate face amount of all Letters of Credit
outstanding and the aggregate amount drawn under all Letters of Credit for which
the Issuer has not been reimbursed shall not, at any time, exceed the Revolving
Credit Commitment (as reduced from time to time pursuant to SECTION 2.5 and
SECTION 2.9).
(b) Each Letter of Credit (i) shall be opened pursuant to a
written request from the Borrower on the Issuer's then current form of
application for letter of credit which application shall be completed to the
satisfaction of the Issuer and shall be delivered to the Issuer together with
such other certificates, documents and other instruments and information as the
Issuer may reasonably request, (ii) shall be denominated in Dollars, (iii) shall
be governed by the Uniform Customs and, to the extent not inconsistent
therewith, the laws of the State of New York and (iv) shall expire on the Expiry
Date. The Issuer shall not at any time be obligated to issue any Letter of
Credit if such issuance would conflict with, or cause the Issuer or any
Revolving Credit Lender to exceed any limits imposed by an applicable
Requirement of Laws.
(c) The Issuer agrees to allot and does allot, to itself and
each Revolving Credit Lender and, to induce the Issuer to issue the Letter of
Credit, each Revolving Credit Lender severally and irrevocably agrees to take
and does hereby take for its own account and risk an undivided participating
interest in a percentage equal to such Revolving Credit Lender's Revolving
Credit Commitment Percentage of the Issuer's Obligations.
(d) The Borrower agrees (i) to reimburse the Issuer forthwith
upon its demand for any payment made by the Issuer under a Letter of Credit and
(ii) to pay interest on any unreimbursed portion of any such payment from the
date of such payment until reimbursement in
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full thereof at a rate per annum equal to (A) prior to the date which is one
Business Day after the day on which reimbursement from the Borrower for such
payment is due, the rate which would then be payable on any outstanding
Alternate Base Rate Loans which are not overdue and (B) thereafter, the rate
which would then be payable on any outstanding Alternate Base Rate Loans which
are overdue. In addition to the foregoing, the Borrower shall reimburse the
Issuer for any taxes, fees, charges or other costs or expenses incurred by the
Issuer in connection with such payment. All payments hereunder shall be made to
the Issuer at its address for notices specified herein in Dollars in immediately
available funds.
(e) (i) In the event that the Issuer makes a payment under a
Letter of Credit and is not reimbursed in full therefor forthwith, upon demand
of the Issuer referred to in SECTION 2.21(d), the Issuer shall promptly make
demand for such any amount for which it has not received reimbursement upon each
Lender. Each Revolving Credit Lender unconditionally and irrevocably agrees that
forthwith upon its receipt of any such demand for reimbursement, such Revolving
Credit Lender shall transfer to the Issuer, in immediately available funds, an
amount equal to such Revolving Credit Lender's PRO RATA share of the
unreimbursed portion of such payment; PROVIDED that, if such demand is made
prior to 12:00 noon, New York City time, on a Business Day, such Revolving
Credit Lender shall make such payment to the Issuer prior to the end of such
Business Day and otherwise such Revolving Credit Lender shall make such payment
on the next succeeding Business Day. Whenever, at any time after the Issuer has
made a payment under a Letter of Credit and has received from any Revolving
Credit Lender such Revolving Credit Lender's PRO RATA share of the unreimbursed
portion of such payment, the Issuer receives any reimbursement on account of
such unreimbursed portion or any payment of interest on account thereof, the
Issuer shall distribute to such Revolving Credit Lender its PRO RATA share
thereof; PROVIDED that in the event that the receipt by the Issuer of such
reimbursement or such payment of interest (as the case may be) is required to be
returned, such Revolving Credit Lender will return to the Issuer any portion
thereof previously distributed by the Issuer to such Revolving Credit Lender.
(ii) Upon the occurrence and during the
continuation of any Event of Default under SECTION 7.1(e) or SECTION 7.1(f) or,
with notice from the Administrative Agent, upon the occurrence of any other
Event of Default that is continuing (x) an amount equal to the outstanding
Letters of Credit shall, without demand upon or notice to the Borrower, be
deemed to have been paid or disbursed by the Issuer upon such Letters of Credit
(notwithstanding that such amount may not in fact have been paid or disbursed);
and (y) without further notice in the case of an Event of Default under SECTION
7.1(e) or SECTION 7.1(f) or, in the case of any other Event of Default that has
occurred and is continuing, upon notice by the Administrative Agent to the
Borrower of its Obligations hereunder, the Borrower shall be immediately
obligated to reimburse the Issuer for the amount deemed to have been paid or
disbursed by the Issuer. Any amount so payable by the Borrower shall be
deposited by the Borrower in cash into an account located in the United States
designated by and under the sole dominion and control of the Administrative
Agent which cash and the proceeds thereof shall be held as collateral security
for the Obligations in connection with any Letter of Credit issued by the
Issuer. The Borrower hereby grants to the Administrative Agent, for the benefit
of the Issuer and the Revolving Credit Lenders, a security interest in such cash
collateral to secure all Obligations of the Borrower under this Agreement and
the other Loan Documents. Amounts held in such cash collateral account
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shall be applied by the Administrative Agent to the payments of drafts drawn
under any Letter of Credit, and the unused portion thereof after all Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay other Obligations. After all Letters of Credit shall have expired or been
fully drawn upon, all Reimbursement Obligations shall have been fully satisfied
and all other Obligations shall have been paid in full, the balance, if any, in
such cash collateral account shall be returned to the Borrower. The Borrower
shall execute and deliver to the Administrative Agent, for the account of the
Issuer, such further documents and instruments as the Administrative Agent may
request to evidence the creation and perfection of the security interest in such
cash collateral account.
(f) The Borrower shall pay to the Administrative Agent for the
pro rata account of the Issuer and the Revolving Credit Lenders in respect of
each Letter of Credit a fee in an amount equal to the Applicable Margin then in
effect for Revolving Credit Loans that bear interest at the Eurodollar Rate
(calculated on the basis of the actual number of days elapsed over a 360-day
year) multiplied by the Stated Amount of the Letter of Credit, such fee to be
payable for the period from the date of issuance to the Expiry Date of such
Letter of Credit, quarterly in arrears on each Interest Payment Date for each
quarter prior to such Expiry Date.
(g) The Borrower agrees to pay to the Issuer, for its own
account, for services rendered by the Issuer, an issuance fee for each Letter of
Credit in the amount equal to .25% of the Stated Amount of such Letter of Credit
on the date of issuance of such Letter of Credit, payable on such date. The
Borrower shall also pay or reimburse the Issuer for such normal and customary
costs and expenses as are incurred or charged by the Issuer on issuing,
effecting payment under, amending or otherwise administering any Letter of
Credit.
(h) The Reimbursement Obligations of the Borrower with respect
to the Letter of Credit related thereto shall be unconditional and irrevocable
and shall be paid strictly in accordance with the terms of this Agreement under
all circumstances, including, without limitation, the following: (i) the
existence of any claim, set-off, defense or other right which the Borrower may
have at any time against any beneficiary, or any transferee, of such Letter of
Credit (or any Persons for whom any such beneficiary or any such transferee may
be acting), the Administrative Agent, the Issuer, any Lender or any other
Person, whether in connection with this Agreement or the transactions
contemplated herein, or any unrelated transaction; (ii) any statement or any
other document presented under such Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any statement therein
being untrue or inaccurate in any respect; (iii) payment by the Issuer under
such Letter of Credit against presentation of a draft or certificate which does
not comply with the terms of such Letter of Credit or any other circumstances or
happening whatsoever, whether or not similar to any of the foregoing (PROVIDED,
that such payment by the Issuer or such circumstance or happening does not
constitute gross negligence or willful misconduct of the Issuer).
(i) To the extent that any provision of any application for
the opening of a Letter of Credit is inconsistent with the provisions of this
SECTION 2.21, the provisions in this Section shall apply.
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2.22 DEFAULTING LENDERS. (a) Any Lender which (i) has refused
(which refusal has not been retracted) to make available its portion of any
Borrowing or to fund its portion of any unreimbursed payment under SECTION
2.21(e) or (ii) has given notice to the Administrative Agent and/or the Borrower
that it does not intend to comply with its obligations under SECTIONS 2.1, 2.6
or 2.21(e), as a result of the appointment of a receiver or conservator with
respect to such Lender at the direction or request of any regulatory agency or
authority (and such non-compliance is continuing) (a "DEFAULTING LENDER"):
(x) shall not be deemed a Required Lender hereunder and such
Defaulting Lender's (A) Commitments, (B) Loans and (C) participation of
Letters of Credit shall be excluded from the calculations set forth in
the definition of Required Lenders; and
(y) shall not be entitled to receive any commitment fee
payable in respect of such Defaulting Lender's Revolving Loan
Commitment.
In addition to the foregoing, if any Lender shall fall within the description
set forth in CLAUSE (I) or (II) above, the Issuer shall not be required to issue
any Letter of Credit, unless arrangements reasonably satisfactory to the Issuer
have been entered into to eliminate the Issuer's risk with respect to the
participation in Letters of Credit by such Lender, including providing cash
collateral for such Lender's portion of any outstanding Letters of Credit.
(b) The Borrower may designate another Person which is
reasonably acceptable to the Administrative Agent (a "REPLACEMENT LENDER") to
purchase for cash all of the Notes of such Defaulting Lender and all of such
Defaulting Lender's rights hereunder, without recourse to or warranty (other
than title) by, or expense to, such Defaulting Lender for a purchase price equal
to the outstanding principal amount of the Notes payable to such Defaulting
Lender plus any accrued but unpaid interest on such Notes and accrued but unpaid
commitment and other fees, expense reimbursements and indemnities in respect of
such Defaulting Lender's Commitments. Such Defaulting Lender shall consummate
such sale in accordance with such terms (and, if such Lender is an Issuer, such
other terms as may be necessary to compensate fully such Lender) within a
reasonable time not exceeding 45 days from the date the Borrower designates a
Replacement Lender, and thereupon such Defaulting Lender shall no longer be a
party hereto or have any obligations or rights hereunder (except rights which,
pursuant to the provisions of this Agreement, survive the termination of this
Agreement and the repayment of the Notes), and the Replacement Lender shall
succeed to such obligations and rights.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
To induce the Administrative Agent, the Issuer and the Lenders
to enter into this Agreement, the Issuer to issue the Letter of Credit and the
Lenders to make the Loans, the Borrower hereby represents and warrants to the
Administrative Agent, the Issuer and each Lender that:
3.1 FINANCIAL CONDITION. (a) The audited balance sheet of
Aavid Thermal Technologies, Inc. as at December 31, 1996, 1997, 1998 and the
related audited statements of
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operations, stockholders equity and cash flows for the fiscal years ended on
such dates, certified as true and complete by a Responsible Officer of the
Borrower and reported on by Arthur Andersen LLP, copies of which have heretofore
been furnished to each Lender, are complete and correct in all material respects
and present fairly in all material respects the financial condition of Aavid
Thermal Technologies, Inc. as at such dates, and the results of its operations
and its stockholders' equity and cash flows for each of the fiscal years then
ended. The unaudited balance sheet of Aavid Thermal Technologies, Inc. as at
July 3, 1999 and the related unaudited statements of operations, stockholders'
equity and cash flows for the six-month period ended on such date, certified by
a Responsible Officer of Aavid Thermal Technologies, Inc., copies of which have
heretofore been furnished to each Lender, present fairly in all material
respects the financial condition of Aavid Thermal Technologies, Inc. at such
date, and the results of its operations, stockholders equity and cash flows for
the six-month period then ended (subject to normal year end audit adjustments).
All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with U.S. GAAP applied consistently
throughout the periods involved (except as approved by such accountants or
Responsible Officer, as the case may be, and as disclosed therein and except
that the unaudited financial statements do not have all footnotes required).
(b) The audited combined balance sheets of the Target
Companies as of December 31, 1997 and 1998 and the related audited combined
statements of income and cash flows for each of the years ended December 31,
1996, 1997 and 1998, accompanied by an unqualified report of the Sellers'
independent accountants, Ernst & Young, have been prepared in accordance with UK
GAAP, are complete and correct in all material respects and present fairly in
all material respects and on a consistent basis the financial condition and
income and cash flows of the Target Companies on a combined basis as of the
dates or for the periods indicated. The unaudited balance sheet and related
statements of income and cash flows of the Target Companies on a combined basis
for the six-month period ending July 4, 1999, certified as true and complete by
a Responsible Officer of the Borrower, copies of which have heretofore been
furnished to each Lender, are complete and correct in all material respects and
present fairly in all material respects and on a consistent basis the financial
condition and results of operations and cash flows of the Target Companies on a
combined basis as of the date or for the period indicated. All such Target
Companies financial statements have been prepared in accordance with UK GAAP,
except that the unaudited financial statements do not contain all footnotes
required by UK GAAP. Set forth on SCHEDULE 3.1(b) is a reconciliation of the
audited combined financial statements of the Target Companies from UK GAAP to
U.S. GAAP.
(c) The PRO FORMA balance sheet of the Borrower and its
Subsidiaries (the "PRO FORMA BALANCE SHEET") is the balance sheet of the
Borrower and its Subsidiaries as at July 3, 1999 adjusted to give effect (as if
such events had occurred on the date the Acquisition is consummated) (i) to the
Acquisition, (ii) to the repayment of the Borrower's and the Target Companies'
existing Indebtedness that is to be repaid on the Closing Date and (iii) to the
Loans expected to be made by the Lenders on the Closing Date. The Pro Forma
Balance Sheet, together with the notes thereto, presents fairly in all material
respects on a PRO FORMA basis the financial position of the Borrower and its
Subsidiaries as at July 3, 1999 assuming that the events and the assumptions
specified in the preceding sentence had actually occurred on such date.
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(d) Except as set forth in SCHEDULE 3.1(d), neither the
Borrower nor any of the Subsidiaries has, at the date of the Pro Forma 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. Except as set forth in SCHEDULE 3.1(d), during the
period from December 31, 1998 to and including the date hereof there has been no
sale, transfer or other disposition by the Borrower or any Subsidiary 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 financial condition of the Borrower or any
Subsidiary at such date other than the Acquisition.
(e) All balance sheets, all statements of operations and
stockholders equity and of cash flows and all other financial information which
shall hereafter be furnished by or on behalf of the Borrower and its
Subsidiaries to the Administrative Agent or any Lender for the purposes of, or
in connection with, this Agreement or any transaction contemplated hereby have
been or will be prepared in accordance with U.S. GAAP consistently applied
throughout the periods involved (except as disclosed therein) and do or will
present fairly in all material respects the financial condition of the Borrower
and its Subsidiaries as at the dates thereof and the results of their operations
and their stockholders equity and cash flows for the periods then ended.
(f) The business forecast of the Borrower and its Subsidiaries
calculated for the period commencing on the Closing Date to and including the
Maturity Date, prepared by a Responsible Officer of the Borrower (and presented
on a consolidated and segment by segment basis) all as set forth in SCHEDULE
3.1(f) have been prepared in good faith and utilizing reasonable assumptions.
The Borrower has no reason to believe such business forecast and projections are
materially incorrect or misleading in any material respect, it being recognized
by the Lenders that such business forecast as to future events is not to be
viewed as fact and that actual results during the periods covered by such
forecast may differ from the forecast results.
3.2 NO CHANGE. Since December 31, 1998, (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 the Borrower or any Subsidiary,
nor has any of the Capital Stock of the Borrower or any Subsidiary been
redeemed, retired, purchased or otherwise acquired by the Borrower, any
Subsidiary or any Person under the control of either the Borrower or a
Subsidiary for value, except for (1) the purchase of the Capital Stock of the
Target Companies in accordance with the terms and conditions of the Acquisition
Documents, (2) dividends and distributions contemplated or permitted by the
Acquisition Documents, (3) dividends and distributions reflected in the
financial statements delivered pursuant to SECTION 3.1 and (4) dividends and
distributions by a Subsidiary to its stockholders.
3.3 CORPORATE EXISTENCE; COMPLIANCE WITH LAW. Each of the
Borrower and each Subsidiary (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 and operate its
property, to lease the property it operates as lessee and to conduct the
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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 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 reasonably be expected to have a Material Adverse
Effect.
3.4 CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS.
Each of the Borrower and each Subsidiary has the corporate power and authority,
and the legal right, to make, deliver and perform the Loan Documents to which it
is a party and to authorize the execution, delivery and performance of the Loan
Documents to which it is a party. The Borrower has appropriate power and
authority to borrow hereunder and has taken all necessary corporate action to
authorize the borrowings on the terms and conditions set forth in this Agreement
and in the Notes. Except as set forth in SCHEDULE 3.4, (a) no consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority (including any filing, termination of any notice period
or consent under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended) is required in connection with the borrowings hereunder or with the
execution, delivery or performance by the Borrower or any Subsidiary of, or the
validity or enforceability of the Loan Documents and (b) no consent or
authorization of, filing with, notice to or other act by or in respect of any
other Person is required in connection with the borrowings hereunder or with the
execution, delivery, performance, validity or enforceability of the Loan
Documents or the Acquisition Documents to which the Borrower or any Subsidiary
is a party. This Agreement has been, and each other Loan Document to which it is
a party will be, duly executed and delivered on behalf of the Borrower and each
Subsidiary. This Agreement constitutes, and each other Loan Document to which
the Borrower or any Subsidiary, as the case may be, is a party when executed and
delivered will constitute, a legal, valid and binding obligation of the Borrower
or such Subsidiary, as the case may be, enforceable against the Borrower or such
Subsidiary, as the case may be, in accordance with its terms, except as the
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting the rights of creditors generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
3.5 NO LEGAL BAR. The execution, delivery and performance of
the Loan Documents to which the Borrower or any Subsidiary is a party, the
borrowings by the Borrower hereunder and the use of the proceeds thereof will
not violate any Requirement of Law applicable to the Borrower or any Subsidiary
or Contractual Obligation of the Borrower or any Subsidiary, except such
violations which, in the aggregate, could not reasonably be expected to result
in liability in excess of the Dollar Equivalent of $500,000, will not accelerate
or result in the acceleration of any payment obligations of the Borrower or any
Subsidiary and will not result in, or require, the creation or imposition of any
Lien on any of the respective properties or revenues of the Borrower or any
Subsidiary pursuant to any such Requirement of Law or Contractual Obligation
other than as contemplated by the Security Documents.
3.6 NO MATERIAL LITIGATION. Except as set forth in SCHEDULE
3.6, no litigation or proceeding or, to the Borrower's actual and constructive
knowledge, investigation of or before any arbitrator or Governmental Authority
is pending or, to the knowledge of the Borrower or any
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Subsidiary, threatened by or against the Borrower or any Subsidiary or against
any of the respective properties or revenues of the Borrower or any Subsidiary
(a) which purports to affect the legality, validity or enforceability of the
Acquisition, any Acquisition Document, this Agreement or any other Loan Document
or the consummation of any transaction contemplated thereby or hereby or (b)
which could reasonably be expected to have a Material Adverse Effect.
3.7 NO DEFAULT. Neither the Borrower nor any Subsidiary is in
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 OWNERSHIP OF PROPERTY; LIENS. Except as set forth in
SCHEDULE 3.8, each of the Borrower and the Subsidiaries has good record and
marketable title in fee simple to, or a valid leasehold interest in, all its
real property, and good title to, or a valid leasehold interest in, all its
other property, other than property having a value equal to the Dollar
Equivalent of $500,000 in the aggregate. None of such property is subject to any
Lien except as permitted by SECTION 6.3. The corporate names and the
jurisdictions set forth below each such corporate name on SCHEDULE 3.8 are the
only corporate names and jurisdictions for which lien searches with respect to
the assets of the Borrower or any Domestic Subsidiary (including, without
limitation, any Domestic Subsidiary acquired in connection with the Acquisition)
are necessary to confirm such assets are not subject to any Liens, other than
Liens in favor of the Administrative Agent for the benefit of the Lenders or
Liens permitted by SECTION 6.3.
3.9 INTELLECTUAL PROPERTY. Each of the Borrower and the
Subsidiaries owns, or is licensed to use, all trademarks, trade names,
copyrights, technology, know-how, processes, logos and insignia necessary for
the conduct of its business as currently conducted except for those which the
failure to own or license could not reasonably be expected to have a Material
Adverse Effect (the "INTELLECTUAL PROPERTY"). No claim has been asserted and is
pending by any Person challenging or questioning the use of any such
Intellectual Property or the validity or effectiveness of any such Intellectual
Property, nor does the Borrower or any such Subsidiary know of any valid basis
for any such claim. To the Borrower's knowledge, the use of such Intellectual
Property by the Borrower and its Subsidiaries does not infringe on the rights of
any Person, except for such claims and infringements that, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
3.10 NO BURDENSOME RESTRICTIONS. No Requirement of Law
applicable to, or Contractual Obligation of, the Borrower or any Subsidiary
could reasonably be expected to have a Material Adverse Effect.
3.11 TAXES. Each of the Borrower and the Subsidiaries has
filed or caused to be filed all tax returns which, to the knowledge of the
Borrower and the Subsidiaries, 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 tax, fee
or other charge the amount or validity of which is currently being contested in
good faith by appropriate proceedings and with respect to which reserves in
conformity with U.S. GAAP have been provided on the
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books of the Borrower or such Subsidiary, as the case may be); and, except as
set forth in SCHEDULE 3.11, no tax Lien has been filed, and, to the knowledge of
the Borrower, no claim is being asserted, with respect to any such tax, fee or
other charge.
3.12 FEDERAL REGULATIONS. No part of the proceeds of any Loans
and no part of any Letter of Credit will be used for "purchasing" or "carrying"
any "margin stock" within the respective meanings of each of the quoted terms
under Regulation T, U and X of the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect or for any purpose which
violates the provisions of the Regulations of such Board of Governors. If
requested by any Lender or the Administrative Agent, the Borrower will furnish
to the Agent and each Lender a statement to the foregoing effect in conformity
with the requirements of FR Form G-1 and FR Form U-1. No proceeds of any Loan or
drawings under any Letter of Credit will be used to acquire any equity security
of a class that is registered pursuant to Section 12 of the Securities Exchange
Act of 1934.
3.13 ERISA. Neither the Borrower nor any Subsidiary maintains
or contributes to any Plan other than those listed on SCHEDULE 3.13. Except as
disclosed in SCHEDULE 3.13, neither the Borrower nor any Subsidiary maintains,
contributes to or has any material obligation with respect to, any welfare plan
(as defined in Section(3)(1) of ERISA) which provides benefits to employees
after termination of employment other than as required by Part 6 of Title I of
ERISA or similar state laws regarding continuation of benefits. Except as
disclosed on SCHEDULE 3.13, each Plan has complied and is in compliance in all
material respects with the applicable provisions of ERISA and the Code. Neither
the Borrower, nor any Subsidiary has breached any of the responsibilities,
obligations or duties imposed on it by ERISA, the Code, or regulations
promulgated thereunder with respect to any Plan, which breach could reasonably
be expected to have a Material Adverse Effect. Neither the Borrower, nor any
Subsidiary nor any fiduciary of any Plan who is an officer or an employee of the
Borrower or any Subsidiary has engaged in a nonexempt prohibited transaction
described in Section 406 of ERISA or 4975 of the Code with respect to a Plan
which could reasonably be expected to have a Material Adverse Effect. With
respect to any employee benefit plan (as defined in Section 3(3) of ERISA)
currently or formerly maintained or contributed to by any Commonly Controlled
Entity, no liability exists and no event has occurred which could subject the
Borrower or any Subsidiary to any liability. Except as disclosed on SCHEDULE
3.13, neither the Borrower nor any Subsidiary has maintained, contributed to, or
had an obligation to contribute to any Multiemployer Plan or any Single Employer
Plan, at any time during the six years prior to the date on which this
representation is made or deemed made. Except as disclosed on SCHEDULE 3.13,
neither the Borrower nor any Subsidiary has any material obligation to make any
payment to any employee pursuant to any existing employment contract or
arrangement. The Borrower has given to the Administrative Agent copies of all
the following: each Single Employer Plan and related trust agreement (including
all amendments to such Plan and trust) in existence as of the Closing Date and
the most recent summary plan description, actuarial report, determination letter
issued by the IRS and Form 5500 (including all schedules thereto) filed in
respect of each existing Single Employer Plan; a listing of all the
Multiemployer Plans with the aggregate amount of the most recent annual
contributions required to be made by the Borrower or any Subsidiary to each such
Multiemployer Plan, the most recent information which has been provided to the
Borrower or any Subsidiary regarding withdrawal liability under any
Multiemployer Plan and the collective bargaining agreement pursuant to which
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such contribution is required to be made. Except as disclosed in SCHEDULE 3.13,
neither the Borrower nor any Subsidiary has liability, direct or indirect,
contingent or otherwise, under Section 4201 or 4204 or 4212(c) of ERISA. The
Borrower nor any Subsidiary has any outstanding liability in respect of (i) a
failure to make a required contribution or payment to a Multiemployer Plan or
(ii) a complete or partial withdrawal under Section 4203 or 4205 of ERISA from
such a plan.
3.14 HOLDING COMPANY; INVESTMENT COMPANY ACT; OTHER
REGULATIONS. Neither the Borrower nor any Subsidiary is a "holding company", a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company", as such terms are defined in the Public Utility Holding Company Act of
1935, as amended. Neither the Borrower nor any Subsidiary is an "investment
company" or a company "controlled" by an "investment company", within the
meaning of the Investment Company Act of 1940, as amended. Neither the Borrower
nor any Domestic Subsidiary entering into any Loan Document is subject to
regulation under any Federal or state statute, regulation, decree or order which
limits its ability to incur Indebtedness or conditions such ability upon any
act, approval or consent of any Governmental Authority.
3.15 PURPOSE OF LOANS. The proceeds of all Revolving Credit
Loans made after the Closing Date shall be used (i) to finance Capital
Expenditures by the Borrower and its Subsidiaries, (ii) to fund working capital
for the Borrower and its Subsidiaries and (iii) to fund Letters of Credit in an
amount not to exceed $2,000,000 in the aggregate. The proceeds of the Term Loans
and the Revolving Credit Loans (if any) that are, in each case, made on the
Closing Date shall be used (i) to finance the Acquisition and (ii) to pay
transaction fees and expenses incurred in connection therewith.
3.16 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE
3.16:
(a) The facilities and properties owned, leased or operated by
the Borrower and its Subsidiaries (the "PROPERTIES") do not contain, and have
not previously contained, any materials of Environmental Concern in amounts or
concentrations which could reasonably be expected to have a Material Adverse
Effect or to materially affect the value of any of the Properties.
(b) The Properties and all operations at the Properties are in
compliance with all applicable Environmental Laws, and there is no contamination
at, under or about the Properties in violation of Environmental Laws or for
which under Environmental Laws there is a remedial obligation or violation of
any Environmental Law with respect to the Properties or the business operated by
the Borrower and its Subsidiaries (the "BUSINESS") which could interfere with
the continued operation of any of the Properties, except where the failure to
satisfy the same could not reasonably be expected to have a Material Adverse
Effect or to materially affect the sale of any of the Properties owned by the
Borrower or any Subsidiary.
(c) Neither the Borrower nor any Subsidiary has received any
written notice of violation, alleged violation, non-compliance, liability or
potential liability regarding environmental matters or compliance with
Environmental Laws with regard to any of the Properties or the
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Business which has not been remedied, nor does the Borrower or any Subsidiary
have knowledge that any such notice will be received or is being threatened.
(d) Materials of Environmental Concern have not been
transported or disposed of by the Borrower or any Subsidiary from any of the
Properties in violation of, or, to the Borrower's knowledge, in a manner or to a
location which could reasonably be expected to have a Material Adverse Effect,
nor have any Materials of Environmental Concern been generated, treated, stored
or disposed of at, on or under any of the Properties in violation of, or in a
manner that could reasonably be expected to give rise to liability under, any
applicable Environmental Law that could reasonably be expected to have a
Material Adverse Effect or to materially affect the value of any of the
Properties.
(e) No judicial proceeding or governmental or administrative
action is pending or, to the knowledge of the Borrower, threatened, under any
Environmental Law to which the Borrower or any Subsidiary is or, to the
Borrower's knowledge, will be named as a party with respect to any of the
Properties or the Business, nor are there any 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
any of the Properties or the Business.
(f) There has been no release or threat of release of
Materials of Environmental Concern at or from any of the Properties, or arising
from or related to the operations of the Borrower or any Subsidiary in
connection with any of the Properties or otherwise in connection with the
Business, in violation of Environmental Laws or in amounts or in a manner that
could reasonably be expected to have a Material Adverse Effect or to materially
affect the value of any of the Properties.
3.17 ACQUISITION. SCHEDULE 3.17 sets forth the terms of the
Acquisition, including all material steps to be taken in connection therewith
(including the sources and uses of funds) upon completion of the Acquisition.
3.18 CAPITALIZATION OF THE BORROWER. As of October 13, 1999,
the authorized Capital Stock of the Borrower consists of 4,000,000 shares of
preferred stock, none of which is outstanding, and 25,000,000 shares of common
stock of which 9,601,973 shares are issued and outstanding. Except as set forth
in SCHEDULE 3.18, there are no outstanding subscriptions, options, warrants,
calls, puts, rights (including preemptive rights) or any other agreements or
commitments of any nature with respect to such Capital Stock of the Borrower. No
Person has or will have any preemptive rights to subscribe for any additional
Capital Stock of the Borrower. All the Borrower's issued and outstanding Capital
Stock has been issued in compliance in all material respects with all applicable
Federal and state securities laws and regulations.
3.19 SUBSIDIARIES. On the Closing Date and upon consummation
of the Acquisition, the Borrower's only Subsidiaries are those listed on
SCHEDULE 3.19. The authorized issued and outstanding Capital Stock of each
Subsidiary is set forth in SCHEDULE 3.19. Except as set forth in SCHEDULE 3.19,
all the issued and outstanding Capital Stock of each Subsidiary is owned
beneficially and of record by the Borrower or the Subsidiary indicated as the
owner
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thereof on such date, free and clear of all liens, options or rights of others
except as provided in the Pledge Agreements. Except as set forth in SCHEDULE
3.19, there are no outstanding subscriptions, options, warrants, calls, put
rights (including preemptive rights) or any other agreements or commitments of
any nature with respect to the Capital Stock of any Subsidiary. No Person has or
will have any preemptive rights to subscribe for any additional Capital Stock of
any Subsidiary.
3.20 LABOR MATTERS. Except as set forth in SCHEDULE 3.20,
neither the Borrower nor any Subsidiary is a party to any collective bargaining
agreements. There are no strikes, lockouts or, except as set forth in SCHEDULE
3.20, other labor disputes pending or, to the Borrower's knowledge, threatened
against the Borrower or any Subsidiary which, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect. The hours worked
and payments made to employees of the Borrower and its Subsidiaries have not
been in violation of the Fair Labor Standards Act of 1938, as amended, or any
other applicable Requirement of Law, except to the extent such violations could
not, individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect. Except as set forth in SCHEDULE 3.20, all material payments due
from the Borrower or any Subsidiary, as applicable, on account of wages and
employee health and welfare insurance and other benefits have been paid or
accrued as a liability on the books of the Borrower, or such Subsidiary, as
applicable.
3.21 INSURANCE. All policies of insurance of any kind or
nature maintained by or issued to the Borrower or any Subsidiary, including,
without limitation, policies of life, fire, theft, earthquake, business
interruption, product liability, public liability, property damage, other
casualty, employee fidelity, worker's compensation, employee health and welfare,
title, property and liability insurance, are in full force and effect in all
material respects and are of a nature and provide such coverage as is sufficient
and as is customarily carried by companies of similar size and character.
3.22 ACQUISITION DOCUMENTS. (a) The Borrower has delivered to
the Lenders and the Administrative Agent true, complete and correct copies of
each of the Acquisition Documents and the Curamik Documents (including all
exhibits, schedules and disclosure letters referred to therein or delivered
pursuant thereto, if any) and all amendments thereto, waivers relating thereto
and other side letters or agreements affecting the terms thereof, each of which
are set forth on SCHEDULE 3.22. None of such documents and agreements has been
amended or supplemented, nor have any of the provisions thereof been waived,
except pursuant to a written agreement or instrument which has heretofore been
consented to by the Lenders and no consent or waiver has been granted by the
Borrower thereunder. Each of the Acquisition Documents has been duly executed
and delivered by the Loan Party thereto and each other party thereto and is a
legal, valid and binding obligation of such Loan Party and each other party
thereto enforceable, in all material respects, in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting the rights of creditors generally and by general
equitable principles (whether enforcement is sought by proceedings in equity or
at law).
(b) The representations and warranties of the Borrower and
each other party to the Acquisition Documents are true and correct in all
material respects on the Closing Date as if made on and as of such date. Such
representations and warranties, together with the definitions
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of all defined terms used therein, are by this reference deemed incorporated
herein MUTATIS MUTANDIS, and each Lender is entitled to rely on the accuracy of
such representations and warranties.
(c) Each party to the Acquisition Documents has complied in
all material respects with all terms and provisions contained therein on its
part to be observed and the Acquisition has been duly consummated in accordance
with the terms of the Acquisition Documents.
3.23 SECURITY DOCUMENTS. (a) Each Security Agreement is
effective to create in favor of the Administrative Agent, for the benefit of the
Lenders, a legal, valid and enforceable security interest in all right, title
and interest of the Loan Party which is party thereto in the collateral
described therein 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). When
financing statements have been filed in the offices in the jurisdictions listed
in SCHEDULE 3.23, each such Security Agreement shall, except as set forth
therein and except for Liens contemplated under SECTION 6.3(a), (c), (e) or (g),
constitute a fully perfected first Lien on, and security interest in, all right,
title and interest of such Loan Party in the Collateral in which a Lien can be
perfected by filing a financing statement.
(b) 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), each Pledge
Agreement is effective to create in favor of the Administrative Agent, for the
benefit of the Lenders, a legal, valid and enforceable security interest in the
Pledged Stock and the proceeds thereof and, when stock certificates representing
such Pledged Stock have been delivered to the Administrative Agent, such Pledge
Agreement shall constitute a fully perfected first Lien on, and security
interest in, all right, title and interest of the Borrower or such other Loan
Party which is a party thereto in the pledged securities and the proceeds
thereof described therein subject to continuous possession of the pledged
securities by the Administrative Agent or its representative. Each Custody
Agreement is effective to transfer custody of the Capital Stock subject to such
agreement.
(c) 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), each
Mortgage is effective to grant to the Administrative Agent, for the benefit of
the Lenders, a legal, valid and enforceable mortgage lien on all right, title
and interest of the applicable Loan Party in the mortgaged property described
therein. When such Mortgage has been duly recorded in the appropriate filing
office in the county in which the subject real property is located and the
mortgage recording fees and taxes in respect thereof are paid, such Mortgage
shall constitute a fully perfected Lien, on, and security interest in, such
mortgaged property and when a financing statement has been filed in the
governmental office for the state and county named in the schedule to such
Mortgage, such Mortgage shall also create a legal,
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valid, enforceable and perfected security interest in, all right, title and
interest of the applicable Loan Party in all real and personal property which is
the subject of such Mortgage.
3.24 ACCURACY AND COMPLETENESS OF INFORMATION. All
information, reports and other papers and data (other than forecasts,
projections and pro forma financial information) with respect to the Borrower or
any Subsidiary (in each case, prior to and after giving effect to the
Acquisition furnished in writing to the Lenders by or on behalf of the Borrower
or any Subsidiary, were, at the time furnished, complete and correct in all
material respects, or have been subsequently supplemented by other information,
reports or other papers or data, to the extent necessary to give the Lenders a
true and accurate knowledge of the subject matter in all material respects. All
projections, forecasts and pro forma financial information with respect to the
Borrower or any Subsidiary, furnished by the Borrower, were prepared and
presented in good faith by the Borrower based upon facts and assumptions that
the Borrower believes to be reasonable in light of current and foreseeable
conditions, it being recognized by the Lenders that such projections, forecasts
and pro forma financial information as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any such
projections, forecasts and pro forma financial information may differ from the
projected results. No document furnished or statement made in writing to the
Lenders by or on behalf of the Borrower or any Subsidiary in connection with the
negotiation, preparation or execution of this Agreement, at the time furnished,
contains any untrue statement of a material fact, or omits to state any such
material fact necessary in order to make the statements contained therein not
misleading, in either case which has not been corrected, supplemented or
remedied by subsequent documents furnished or statements made in writing to the
Lenders. There is no fact relating to the Borrower, any Subsidiary or their
respective businesses (other than facts relating to the economy in general)
known to the Borrower or any Subsidiary which has, or could reasonably be
expected to have, a Material Adverse Effect.
3.25 LEASEHOLDS, PERMITS, ETC. Each of the Borrower and the
Subsidiaries possesses or has the right to use, all leaseholds, easements,
franchises and permits and all authorizations and other rights which are
material to and necessary for the conduct of its business. Except for such
noncompliance with the foregoing which could not reasonably be expected to have
a Material Adverse Effect, all the foregoing are in full force and effect, and
each of the Borrower and the Subsidiaries is in substantial compliance with the
foregoing without any known conflict with the valid rights of others. No event
has occurred which permits, or after notice or lapse of time or both would
permit, the revocation or termination of any such leasehold, easement,
franchise, license or other right, which termination or revocation, considered
as a whole, could reasonably be expected to have a Material Adverse Effect.
3.26 SOLVENCY. On the Closing Date, after giving effect to the
Acquisition, and on each date on which Borrowings are made or any Letter of
Credit is issued hereunder, each of the Borrower and its Subsidiaries is
Solvent. Neither the Borrower nor any other Loan Party has incurred any
obligations or liabilities (contingent or otherwise) under this Agreement, any
other Loan Document or any Acquisition Document, nor has the Borrower or any
other Loan Party made any conveyance pursuant to or in connection therewith,
with actual intent to hinder, delay or defraud either present or future
creditors of the Borrower or any of its Subsidiaries.
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3.27 EXISTING INDEBTEDNESS. Set forth on SCHEDULE 4.1(t)
hereto is a complete and accurate list of all Existing Indebtedness, showing as
of the date hereof the principal amount outstanding thereunder, the maturity
date thereof and, if applicable, the property upon which any Liens have been
granted to secure the repayment thereof.
3.28 INACTIVE SUBSIDIARIES. Set forth on SCHEDULE 1.1 hereto
is a complete and accurate list of all Inactive Subsidiaries, showing the
corporate name and principal location of each such Inactive Subsidiary.
3.29 YEAR 2000 COMPLIANCE. The Borrower (a) has reviewed its
operations and those of the Subsidiaries with a view to assessing whether each
of its or the Subsidiaries' respective businesses will, in the receipt,
transmission, processing, manipulation, storage, retrieval, retransmission or
other utilization of data, be vulnerable to a Year 2000 Problem, and (b) has
taken into account the costs to be incurred by the Borrower and such
Subsidiaries to address any Year 2000 Problem in the preparation of all
projections provided to the Lenders with respect to the Borrower and any such
Subsidiary. Based on the review in clause (a) of the previous sentence, the
Borrower has no reason to believe that a Material Adverse Effect will occur with
respect to its or any of its Subsidiaries' businesses or operations resulting
from a Year 2000 Problem.
ARTICLE 4. CONDITIONS PRECEDENT
4.1 CONDITIONS TO INITIAL CREDIT EXTENSION. The agreement of
each Lender to make the Loans on the Closing Date, or of the Issuer to issue any
Letter of Credit, is subject to the satisfaction, immediately prior to or
concurrently with such Credit Extension, of the following conditions precedent:
(a) LOAN DOCUMENTS. The Administrative Agent shall have
received (i) this Agreement, executed and delivered by a duly
authorized officer of the Borrower, with a counterpart for each Lender,
(ii) for the account of each Lender, a Revolving Credit Note and a Term
Note conforming to the requirements hereof and executed by a duly
authorized officer of the Borrower, (iii) the Pledge Agreements,
executed and delivered by a duly authorized officer of each of the
pledgors party thereto, with a counterpart or a conformed copy for each
Lender, (iv) the Security Agreements, executed and delivered by a duly
authorized officer of each of the Borrower and each Domestic Subsidiary
party thereto, with a counterpart or a conformed copy for each Lender,
(v) the Mortgages, executed and delivered by a duly authorized officer
of each of the Borrower and each applicable Domestic Subsidiary party
thereto, (vi) the Subsidiary Guarantees, executed and delivered by a
duly authorized officer of each Subsidiary Guarantor, (vii) the Custody
Agreements, executed and delivered by a duly authorized officer of each
Loan Party party thereto, (viii) the Contribution Agreement, executed
by a duly authorized officer of each Loan Party party thereto, and (ix)
the Fee Letter, executed and delivered to the Administrative Agent by a
duly authorized officer of the Borrower.
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(b) CORPORATE PROCEEDINGS OF THE BORROWER. The Agent shall
have received, with a counterpart for each Lender, a copy of the
resolutions, in form and substance satisfactory to the Administrative
Agent, of the Board of Directors of the Borrower authorizing (i) the
execution, delivery and performance of this Agreement, the Notes and
the other Loan Documents to which it is a party, (ii) the borrowings
contemplated hereunder and (iii) the execution, delivery and
performance of the Acquisition Documents and all closing documents
delivered in connection therewith, certified by the Secretary or an
Assistant Secretary of the Borrower as of the Closing Date, which
certificate shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded and shall be in form and
substance satisfactory to the Administrative Agent.
(c) BORROWER INCUMBENCY CERTIFICATES. The Agent shall have
received, with a counterpart for each Lender, a certificate of the
Borrower, dated the Closing Date, as to the incumbency and signature of
the officers of the Borrower executing any Loan Document and any
related documents, satisfactory in form and substance to the Agent,
executed by the President or any Vice President and the Secretary or an
Assistant Secretary of the Borrower.
(d) CORPORATE PROCEEDINGS OF THE SUBSIDIARIES. The
Administrative Agent shall have received, with a counterpart for each
Lender, a copy of the resolutions of the Board of Directors of each
Subsidiary authorizing (i) the execution, delivery and performance of
each Loan Document to which it is or, pursuant to SECTION 5.13 will be,
a party and (ii) the execution, delivery and performance of the
Acquisition Documents to which such Subsidiary is a party and all
closing documents delivered in connection therewith, certified by the
Secretary or an Assistant Secretary of such Subsidiary as of the
Closing Date, which certificate shall state that the resolutions
thereby certified have not been amended, modified, revoked or rescinded
and shall be in form and substance satisfactory to the Administrative
Agent.
(e) SUBSIDIARY INCUMBENCY CERTIFICATE. The Administrative
Agent shall have received, with a counterpart for each Lender, a
certificate of each Subsidiary, dated the Closing Date, as to the
incumbency and signature of the officers of each Subsidiary executing
any Loan Document, Acquisition Document and any related documents
satisfactory in form and substance to the Administrative Agent,
executed by the President or any Vice President and the Secretary or an
Assistant Secretary of such Subsidiary.
(f) CORPORATE DOCUMENTS. The Administrative Agent shall have
received, with a counterpart for each Lender, true and complete copies
of the charter documents of the Borrower and each of its Subsidiaries
(together with, in the case of each Foreign Subsidiary, copies of
available English translations thereof), certified as of the Closing
Date as complete and correct copies thereof by the Secretary or an
Assistant Secretary of the Borrower and such Subsidiary, as the case
may be.
(g) CONSENTS, LICENSES AND APPROVALS. The Administrative Agent
shall have received, with a counterpart for each Lender, a certificate
of a Responsible Officer of the Borrower (i) attaching copies of all
consents, authorizations and filings referred to in
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SCHEDULE 3.4, and (ii) stating that such consents, licenses and filings
are in full force and effect, and each such consent, authorization and
filing shall be in form and substance satisfactory to the
Administrative Agent.
(h) CLOSING FEES AND EXPENSES. The Administrative Agent shall
have received the fees to be received on the Closing Date referred to
in the Fee Letter and the reimbursement of all costs and expenses
(including the fees and expenses of counsel and local counsel to the
Administrative Agent) and the Issuer shall have received the fees to be
received on the Closing Date.
(i) LEGAL OPINIONS. The Administrative Agent shall have
received, with a counterpart for each Lender, the executed legal
opinions of (A) New York counsel to the Loan Parties, substantially in
the form of EXHIBIT N-1, (B) New Hampshire and Texas counsel to the
Loan Parties, substantially in the form of EXHIBIT N-2 and (C) foreign
counsel to the Loan Parties in the United Kingdom covering such matters
as are set forth on EXHIBIT N-3, and, in each case, covering such other
matters incident to the transactions contemplated by this Agreement as
the Administrative Agent may reasonably require.
(j) ACQUISITION DOCUMENTS; CERTIFICATE. The Administrative
Agent shall have received, with copies for each Lender, (i) true and
correct copies of each of the Acquisition Documents including all
schedules and exhibits thereto and side letters affecting the terms
thereof or otherwise delivered in connection therewith together with
all closing documents, opinions and certificates executed in connection
therewith, all of which shall be in full force and effect and (ii) true
and complete copies of each of the Curamik Documents including all
schedules and exhibits thereto and side letters affecting the terms
thereof or otherwise delivered in connection therewith. The Acquisition
Documents shall not have been amended, supplemented or otherwise
modified since the date thereof, except as may have been consented to
in writing by the Lenders. The Acquisition Documents shall be
accompanied by a certificate, dated the Closing Date, of a Responsible
Officer of the Borrower to such effect. The transactions described in
the Acquisition Documents shall have been consummated in all material
respects in accordance with the terms and provisions thereof and the
Borrower and each other party to the Acquisition Documents shall be in
material compliance with all the terms of the Acquisition Documents to
which it is a party and the Administrative Agent shall have received,
with a copy for each Lender, a certificate of a Responsible Officer of
the Borrower certifying that the only condition to the consummation of
the Acquisition remaining to be satisfied under the Acquisition
Documents (which condition shall be satisfied substantially
simultaneously with the making of the initial Loans) is the delivery of
funds sufficient to pay the consideration under the Acquisition
Documents.
(k) OPINIONS RELATING TO ACQUISITION DOCUMENTS. The
Administrative Agent shall have received, with a counterpart for each
Lender, a favorable legal opinion of counsel to the Loan Parties in the
United Kingdom, covering such matters and such laws relating to the
Acquisition and the Capital Stock acquired in connection therewith as
the Administrative Agent may reasonably require, in form and substance
satisfactory to the Administrative Agent.
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(l) CORPORATE STRUCTURE. The Administrative Agent and the
Lenders shall be satisfied with the legal arrangements among the
Borrower and the Subsidiaries, including any tax and cost sharing
agreements and arrangements.
(m) CLOSING CERTIFICATE. The Administrative Agent shall have
received, with a counterpart for each Lender, a closing certificate of
the Borrower substantially in the form of EXHIBIT O, dated the Closing
Date.
(n) FINANCIAL INFORMATION; PROJECTIONS. The Administrative
Agent shall have received, with copies for each Lender, (i) each of the
financial statements referred to in SECTION 3.1 and (ii) the business
forecast of the Borrower and its Subsidiaries referred to in SECTION
3.1(f) in form and substance satisfactory to the Administrative Agent
and the Lenders.
(o) PLEDGED STOCK; STOCK POWERS. The Administrative Agent
shall have received certificates representing the Pledged Stock
pursuant to the Pledge Agreements, together with an undated stock power
executed in blank for each such certificate, an acknowledgment of and
consent to each such Pledge Agreement by the Borrower or the applicable
Subsidiary and any other items required under the terms of any such
Pledge Agreement.
(p) FILINGS, REGISTRATIONS AND RECORDINGS. All filings,
registrations and recordings listed in SCHEDULE 4.1(p) have been
delivered to the Administrative Agent for filing, registration or
recording in each jurisdiction listed in SCHEDULE 4.1(p). Any documents
(including, without limitation, financing statements) required to be
filed under any of the Security Documents in order to create, in favor
of the Administrative Agent, a perfected security interest in the
collateral thereunder shall have been delivered to the Administrative
Agent for filing, registration or recording in each office in each
jurisdiction listed in the Security Agreement, and such filings are the
only ones required in order to create in favor of the Administrative
Agent for the benefit of the Lenders a perfected Lien on the respective
collateral described therein in the jurisdictions listed on SCHEDULE
4.1(p).
(q) INSURANCE. The Administrative Agent shall have received
evidence satisfactory to it of the existence of the insurance required
hereunder and pursuant to the Security Documents and the Administrative
Agent for the benefit of the Lenders, shall have been named as loss
payee under each insurance policy maintained by the Borrower or any
Subsidiary (other than worker's compensation, public liability,
employee benefits and welfare insurance).
(r) SOURCES AND USES. The Administrative Agent shall have
received, with a copy for each Lender, a schedule of sources and uses
substantially in the form of SCHEDULE 4.1(r), setting forth the
application of the proceeds of the Loans made on the Closing Date and
the other amounts received or paid in connection with the Acquisition
and the financing thereof, such schedule to be certified by a
Responsible Officer of the Borrower.
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(s) LIEN SEARCHES. The Administrative Agent shall have
received (i) lien searches with respect to the assets of the Sellers,
the Target Companies, the Borrower and the Subsidiaries under such
names and in such jurisdictions as the Administrative Agent shall have
requested and the results of such lien searches shall be in form and
substance satisfactory to the Administrative Agent and (ii) without
limiting the foregoing, duly executed financing statements on form
UCC-3 (or comparable statements under applicable law), and evidence
satisfactory to the Administrative Agent of any other actions necessary
or, in the opinion of the Administrative Agent, desirable to terminate
any existing liens created with respect to the assets of the Sellers
(insofar as such assets are to be acquired pursuant to the
Acquisition), Target Companies, the Borrower or any Subsidiary.
(t) INDEBTEDNESS. Immediately after the consummation of the
Acquisition, the Borrower and the Subsidiaries shall have only the
Existing Indebtedness.
(u) ENVIRONMENTAL SURVEY. The Administrative Agent shall have
received the results of an environmental survey performed by an
environmental consultant acceptable to the Lenders on the Properties of
the Borrower and each Subsidiary that are owned by any such Loan Party
or are manufacturing facilities, which survey including the results
thereof shall be reasonably satisfactory to the Lenders.
(v) LIEN WAIVERS. The Administrative Agent shall have
received, with a counterpart for each Lender, Landlord Waivers executed
by each Person listed on SCHEDULE 4.1(v).
(w) NO MATERIAL ADVERSE EFFECT. Except as set forth on
SCHEDULE 4.1(w), since December 31, 1998, no Material Adverse Effect
shall have occurred with respect to the Target Companies or the
Borrower and its Subsidiaries, taken as a whole.
(x) SOLVENCY CERTIFICATE. The Administrative Agent shall have
received, with a counterpart for each Lender, a certificate of the
Chief Financial Officer of each Loan Party certifying as to the
Solvency of the Loan Party, both before and after giving effect to the
Loans on the Effective Date.
(y) LITIGATION. There shall exist no action, suit,
investigation, litigation or proceeding affecting any Loan Party or the
Target Companies pending or threatened before any court, governmental
agency or arbitrator that could reasonably be expected to have a
Material Adverse Effect or purports to affect the legality, validity or
enforceability of the Acquisition, this Agreement or any other Loan
Document.
(z) COMPLIANCE CERTIFICATE: The Administrative Agent shall
have received a Compliance Certificate dated as of the Closing Date
demonstrating as of the Closing Date (after giving effect to the
Acquisition) EBITDA for the 12 months ended July 3, 1999 of at least
$36,500,000 and a Total Leverage Ratio at July 3, 1999 (after giving
effect to the borrowings hereunder and the prepayment of Indebtedness
of the Borrower and each Subsidiary) of 2.5 to 1.00 or less.
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4.2 CONDITIONS TO EACH CREDIT EXTENSION. The agreement of each
Lender to make any Loan requested to be made by it on any date (including,
without limitation, its initial Loan) and of the Issuer to issue any Letter of
Credit is subject to the satisfaction of the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Borrower and each other Loan
Party in or pursuant to the Loan Documents shall be true and correct in
all material respects on and as of such date as if made on and as of
such date.
(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to the
Credit Extension requested to be made on such date.
(c) AGGREGATE STATED AMOUNT. Immediately before and
immediately after giving effect to such Loan, the aggregate outstanding
principal amount of the Revolving Credit Loans made by the Lender, the
aggregate Stated Amount of all Letters of Credit outstanding and the
aggregate amount drawn under all Letters of Credit for which the Issuer
has not been reimbursed shall not exceed the Available Revolving Credit
Commitment.
(d) FEES AND EXPENSES. The Borrower shall have paid all
accrued fees and expenses of the Administrative Agent and the Lenders
(including the accrued fees and expenses of counsel to the
Administrative Agent).
(e) ADDITIONAL MATTERS. All corporate and other proceedings,
and all documents, instruments and other legal matters in connection
with the transactions contemplated by this Agreement, the other Loan
Documents and the Acquisition Documents shall be satisfactory in form
and substance to the Administrative Agent, and the Administrative Agent
shall have received such other documents, instruments and legal
opinions in respect of any aspect or consequence of the transactions
contemplated hereby or thereby as it shall reasonably request.
Each borrowing by the Borrower hereunder and each request by the Borrower to the
Issuer to issue the Letter of Credit shall constitute a representation and
warranty by the Borrower as of the date of such Loan or the issuance of such
Letter of Credit that the conditions contained in this SECTION 4.2 have been
satisfied.
ARTICLE 5. AFFIRMATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Note remains outstanding and unpaid or any Obligation is
owing to any Lender, the Issuer or the Agent hereunder, the Borrower shall and
shall cause each Subsidiary to:
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5.1 FINANCIAL STATEMENTS. Furnish to each Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of the Borrower, a copy of the
consolidated and consolidating balance sheet of the Borrower and its
Subsidiaries as at the end of such year and the related statements of
operations, stockholders' equity and cash flows for such year, setting
forth in each case in comparative form the figures as of the end of and
for the previous year, reported on, in the case of the consolidated
financial statement, without a "going concern" or like qualification or
exception, or qualification arising out of the scope of the audit with
respect to the consolidated statements, by Arthur Andersen LLP, or
other independent certified public accountants of nationally recognized
standing;
(b) as soon as available, but in any event not later than 45
days after the end of each quarterly period for each fiscal year of the
Borrower, the unaudited consolidated and consolidating balance sheet of
the Borrower and its Subsidiaries as at the end of such quarter and the
related unaudited statements of operations and cash flows of the
Borrower and its Subsidiaries for such quarter and the portion of the
fiscal year through the end of such quarter and setting forth in each
case in comparative form the figures from the budget for such fiscal
year furnished to the Lenders pursuant to SECTION 5.2(d) and the actual
figures for the corresponding date or period in the previous year,
certified by a Responsible Officer as being fairly stated in all
material respects; and
(c) as soon as available, but in any event not later than 5
days after the Borrower's receipt thereof, copies of all financial
statements delivered to the Borrower pursuant to the terms of the
Acquisition Agreement.
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with U.S.
GAAP applied consistently throughout the periods reflected therein and with
prior periods, except for the statements delivered pursuant to clause (c) which
shall be in accordance with UK GAAP.
5.2 CERTIFICATES; OTHER INFORMATION. Furnish to each Lender
or, in the case of clause (h), the requesting Lender and the Administrative
Agent:
(a) concurrently with the delivery of the financial statements
referred to in SECTION 5.1(a), 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;
(b) concurrently with the delivery of the financial statements
referred to in SECTION 5.1(a) and SECTION 5.1(b), a certificate of a
Responsible Officer of the Borrower, stating that, during the period
covered by such financial statements, the Borrower and each of its
Subsidiaries, during such period has observed or performed all its
covenants and other agreements, and satisfied every condition,
contained in this Agreement and in each other Loan Document to which it
is a party to be observed, performed or satisfied by
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it, and that such Responsible Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate;
(c) concurrently with the delivery of the financial statements
referred to in SECTION 5.1(a) and SECTION 5.1(b), a certificate of a
Responsible Officer of the Borrower, substantially in the form of
EXHIBIT P hereto (the "COMPLIANCE CERTIFICATE"), showing compliance by
the Borrower and its Subsidiaries with the covenants contained in
SECTION 6.1 and SECTION 6.8;
(d) not later than 30 days after the end of each fiscal year
of the Borrower, a copy of the projections by the Borrower of the
operating budget and cash flow budget of the Borrower and its
Subsidiaries for the succeeding fiscal year set forth on a monthly
basis together with a narrative description setting forth the
assumptions upon which such projections are based, such projections to
be accompanied by a certificate of a Responsible Officer to the effect
that such Responsible Officer has no reason to believe that such
projections are incorrect or misleading in any material respect or that
such assumptions are not reasonable;
(e) within five days after the same are sent, copies of all
financial statements and reports which the Borrower or any Subsidiary
generally sends to all of its stockholders, and within five days after
the same are filed, copies of all financial statements and reports
which the Borrower or any Subsidiary may make to, or file with, the
Securities and Exchange Commission or any successor or analogous
Governmental Authority;
(f) promptly upon receipt thereof, copies of all substantive
management letters and other substantive material reports which are
submitted to the Borrower or any of its Subsidiaries by its independent
accountants in connection with any annual or interim audit of the books
of the Borrower or such Subsidiary made by such accountants;
(g) promptly (and in any event within 30 days), upon any
issuance by the Borrower of Capital Stock (other than pursuant to the
Stock Option Plan) or any transfer of shares of the Borrower's Capital
Stock by any Person who owns at least 5% of any class of the Capital
Stock of the Borrower of which the Borrower becomes aware, a
certificate of a Responsible Officer of the Borrower notifying the
Agent of such transfer; and
(h) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
5.3 PAYMENT OF OBLIGATIONS. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, as the case may
be, all its obligations of whatever nature, including all material taxes imposed
upon it or upon its income or profits or in respect of its property, except
where the amount or validity thereof is currently being contested in good faith
by appropriate proceedings and reserves in conformity with U.S. GAAP with
respect thereto have been provided on the books of the Borrower or any of its
Subsidiaries, as the case may be.
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5.4 MAINTENANCE OF EXISTENCE. Renew and keep in full force and
effect its corporate existence, take all reasonable action to maintain all
rights, privileges and franchises necessary in the normal conduct of its
business except to the extent such failure to maintain could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect and comply
with all material Contractual Obligations and Requirements of Law.
5.5 MAINTENANCE OF PROPERTY; INSURANCE. Keep all property
useful and necessary in its business in good working order and condition,
ordinary wear and tear excepted, 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,
business interruption, storm damage and earthquake) and with such deductibles or
self-insurance retentions as are usually insured against in the same general
areas by companies engaged in the same or a similar business and name the
Administrative Agent, for the benefit of the Lenders, as loss payee under each
such policy (other than worker's compensation, public liability, employee
benefits and welfare insurance); and furnish to each Lender, upon request, full
information as to the insurance carried including certified copies of policies
and certificates of insurance from the Borrower's insurance broker, or such
other recognized insurance broker reasonably acceptable to the Required Lenders.
If the Borrower or any Subsidiary receives any Net Insurance Proceeds (other
than workmen's compensation, public liability, employee benefits and welfare
insurance) the Borrower shall promptly, and, in any event, within thirty days
after receipt thereof, deliver such Net Insurance Proceeds to the Administrative
Agent for application in accordance with SECTION 2.9(D).
5.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
(a) Keep proper books of records and account in which full, true and correct
entries in conformity with U.S. GAAP and all Requirements of Law shall be made
of all dealings and transactions in relation to its business and activities;
permit representatives of any Lender, upon reasonable prior notice unless an
Event of Default shall have occurred and be continuing, to visit and inspect any
of its properties and examine and make 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 the Borrower and its Subsidiaries with officers and employees of the Borrower
and its Subsidiaries and with their independent certified public accountants;
(b) if any Loan Party that is a party to a Custody Agreement shall have
requested the release of any of the Capital Stock which is subject to such
Custody Agreement, present such Capital Stock to the Administrative Agent for
its inspection provided that so long as an Event of Default shall have occurred
which is continuing, such request shall not be made more frequently than once in
any 60- day period.
5.7 NOTICES. Promptly after the Borrower knows or has reason
to know thereof, and, in any event, within 5 days thereof with respect to any
notice under clause (a) or 10 days with respect to any other notice under this
Section, give notice to the Administrative Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
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(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any Subsidiary or (ii) litigation,
investigation or proceeding which may exist at any time between the
Borrower or any Subsidiary and any Governmental Authority, which in
either case, if not cured or if adversely determined, as the case may
be, could reasonably be expected to have a Material Adverse Effect;
(c) any litigation or proceeding affecting the Borrower or any
Subsidiary in which the amount involved is the Dollar Equivalent of
$1,000,000 or more and is not covered by insurance or in which
injunctive or similar relief is sought;
(d) any material labor dispute to which the Borrower or any
Subsidiary may become a party and which involves any group of
employees, any strikes or walkouts relating to any of its plants or
facilities and the expiration or termination of any labor contract to
which the Borrower or any Subsidiary is a party or by which the
Borrower or such Subsidiary is bound;
(e) the purchase of the Capital Stock of Curamik pursuant to
the Curamik Documents;
(f) the release from escrow of either the Capital Stock of
Thermalloy Malaysia or the cash deposited into escrow in connection
with the sale of such Capital Stock; and
(g) any development or event which could reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Borrower proposes to take with respect thereto.
5.8 ENVIRONMENTAL LAWS. (a) Comply in all material respects,
and ensure compliance in all material respects by all tenants and subtenants, if
any, with all applicable Environmental Laws and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants,
if any, obtain and comply in all material respects with and maintain, any and
all licenses, approvals, notifications, registrations or permits required by
applicable Environmental Laws.
(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 material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings could not be
reasonably expected to have a Material Adverse Effect.
(c) 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 claims, demands,
penalties, fines, liabilities, settlements, damages,
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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 the Borrower, any of its Subsidiaries, or the Properties, or any
orders, requirements or demands of Governmental Authorities related thereto,
including, without limitation, reasonable 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 arise out of the gross
negligence or willful misconduct of the party seeking indemnification therefor.
This indemnity shall continue in full force and effect regardless of the
termination of this Agreement.
5.9 HEDGING AGREEMENTS. If the Eurodollar Base Rate for
three-month loans has exceeded 6.5% for five consecutive Business Days and,
during the 90-day period after the Closing Date, upon notice from the
Administrative Agent as to such increased interest rate, then within 30 days
after such fifth Business Day or receipt of such notice, enter into and maintain
one or more interest rate Hedging Agreements in an aggregate notional principal
amount not less than 50% of the aggregate outstanding amount of the Indebtedness
of the Borrower; PROVIDED that (i) any such Hedging Agreement shall be
reasonably satisfactory to the Administrative Agent and (ii) no Hedging
Agreement other than a Hedging Agreement with the Administrative Agent or any
Lender or Affiliate of any Lender shall create a Lien on or be secured by the
assets of the Borrower or any of the Subsidiaries.
5.10 ERISA. (a) Establish, maintain and operate all Plans to
comply in all material respects with the applicable provisions of ERISA, the
Code, and all other applicable laws, and the regulations and interpretations
thereunder and the respective requirements of the governing documents for such
Plans;
(b) Within ten days after receipt by the Borrower or any
Subsidiary of any unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the Code, and promptly following
the request of the Administrative Agent for any favorable determination letters,
provide the Administrative Agent and the Lenders with copies of each such
letter;
(c) Within ten days after the filing thereof, provide the
Administrative Agent and the Lenders with copies of any annual report (IRS Form
5500 series) with respect to a Single Employer Plan, including Schedule B
thereto;
(d) Within ten days after the Borrower or any Subsidiary knows
or has reason to know that a non-exempted prohibited transaction (defined in
Sections 406 of ERISA and 4975 of the Code) has occurred which could reasonably
be expected to have a Material Adverse Effect, provide the Administrative Agent
and the Lenders with a statement of the chief financial officer of the Borrower
or such Subsidiary describing such transaction and the action which the Borrower
or such Subsidiary, as applicable, has taken, is taking or proposes to take with
respect thereto;
(e) Within ten days after the filing thereof, provide the
Administrative Agent and the Lender with copies of each actuarial report for any
Single Employer Plan and each actuarial report and annual report received from
any Multiemployer Plan;
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(f) Within ten days after the occurrence thereof, provide the
Administrative Agent and the Lenders with notification of any material increase
in the benefits of any existing Single Employer Plan or the establishment by the
Borrower or any Subsidiary of any new Single Employer Plan or the commencement
of contributions by the Borrower or any Subsidiary to any Single Employer Plan
to which the Borrower or such Subsidiaries was not previously contributing; and
(g) Within ten days after the Borrower, any Subsidiary or any
Commonly Controlled Entity knows or has reason to know thereof provide the
Administrative Agent and the Lenders with: (i) the occurrence of any Reportable
Event with respect to any Benefit Plan or Multiemployer Plan which could
reasonably be expected to have a Material Adverse Effect, a failure to make any
required contribution to a Benefit Plan or Multiemployer Plan, the creation of
any Lien in favor of the PBGC or a Benefit Plan or Multiemployer Plan or any
withdrawal from, or the receipt of notice with respect to the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the institution
of proceedings or the receipt of notice from the PBGC or any Multiemployer Plan
with respect to the withdrawal from, or the termination, Reorganization or
Insolvency of, any Benefit Plan or Multiemployer Plan.
5.11 USE OF PROCEEDS. The proceeds of the Loans shall be
utilized only for the respective purposes set forth in SECTION 3.15.
5.12 YEAR 2000 COMPLIANCE. The Borrower shall take all action
necessary to assure that its computer-based systems and those of any Subsidiary,
are able to effectively process data, including through dates on and after
January 1, 2000, except where the failure to be able to do so could not
reasonably be expected to have a Material Adverse Effect. At the request of the
Administrative Agent or any Lender, the Borrower shall provide the
Administrative Agent and the Lenders with assurances reasonably acceptable to
the Administrative Agent of the Borrower's and any Subsidiary's year 2000
capability.
5.13 POST-CLOSING MATTERS. The Borrower shall cause each of
the requirements set forth on SCHEDULE 5.13 to be satisfied on or before the
date set forth therein for each such requirement.
5.14 FURTHER ASSURANCES. From time to time hereafter, execute
and deliver, or cause to be executed and delivered, such additional instruments,
certificates or documents, and take all such actions, as the Administrative
Agent or the Lenders may reasonably request, for the purposes of implementing or
effectuating the Loan Documents, or of more fully perfecting, preserving or
renewing the rights of the Lenders with respect to the Collateral (or with
respect to any additions thereto or replacements or proceeds thereby or with
respect to any other property or assets hereafter acquired by the Borrower which
may be deemed to be part of the Collateral) pursuant hereto or thereto.
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ARTICLE 6. NEGATIVE COVENANTS
The Borrower hereby agrees that, so long as the Commitments
remain in effect, any Note remains outstanding and unpaid or any Obligation is
owing to any Lender, the Issuer or either Agent hereunder, the Borrower shall
not and shall not permit any Subsidiary to:
6.1 FINANCIAL CONDITION COVENANTS.
(a) INTEREST COVERAGE RATIO. On the last day of any fiscal
quarter of the Borrower, permit the Interest Coverage Ratio for the twelve-month
period ending on the last day of such fiscal quarter to be less than 3.0 to 1.0.
(b) FIXED CHARGES RATIO. On the last day of any fiscal quarter
of the Borrower, permit the Fixed Charges Ratio for the twelve-month period
ending on the last day of such fiscal quarter to be less than 1.15 to 1.0.
(c) TOTAL LEVERAGE RATIO. Permit the Total Leverage Ratio
during any period to exceed the ratio set forth opposite such period below:
PERIOD TOTAL LEVERAGE RATIO
------ --------------------
Closing through June 30, 2000 2.5 to 1.0
July 1, 2000 through December 31, 2001 2.0 to 1.0
January 1, 2002 and thereafter 1.5 to 1.0
6.2 LIMITATION ON INDEBTEDNESS. Create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness under this Agreement or under any Hedging
Agreement;
(b) Indebtedness of the Borrower or any Subsidiary (including
Financing Leases) incurred to finance the purchase price of equipment,
fixtures and other similar property of the Borrower or such Subsidiary
in an amount not to exceed the Dollar Equivalent of $1,000,000 at any
one time outstanding;
(c) Unsecured Indebtedness incurred in the ordinary course of
business and aggregating not more than the Dollar Equivalent of
$1,000,000 at any time outstanding;
(d) Unsecured Indebtedness in respect of lines of credit from
commercial banks advised in writing and available to the Foreign
Subsidiaries and aggregating not more than the Dollar Equivalent of
$3,000,000 at any time outstanding;
(e) Unsecured Indebtedness of (i) any Approved Subsidiary owed
to the Borrower or any other Approved Subsidiary or (ii) of the
Borrower owed to any Approved Subsidiary; and
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(f) Existing Indebtedness.
6.3 LIMITATION ON LIENS. Create, incur, assume or suffer to
exist any Lien upon any of its properties, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) inchoate Liens for taxes, assessments or governmental
charges or levies or Liens for taxes, assessments, governmental charges
or levies not yet due or which are being contested in good faith by
appropriate proceedings; PROVIDED that adequate reserves with respect
thereto are maintained on the books of the Borrower or its
Subsidiaries, as the case may be, in conformity with U.S. GAAP;
(b) statutory Liens of carriers', warehousemen's, mechanics',
materialmen's, repairmen's or other similar Liens arising in the
ordinary course of business which are not overdue for a period of more
than 90 days or which are being contested in good faith by appropriate
proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation; deposits securing liability to insurance carriers under
insurance or self-insurance arrangements; and deposits to secure true
leases in the ordinary course;
(d) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and landlords'
Liens which, in the aggregate, are not substantial in amount and which
do not in any case materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of
the business of the Borrower;
(e) Liens securing Indebtedness permitted under SECTION 6.2(b)
(including financing statements filed in connection with Financing
Leases permitted under SECTION 6.2(b); PROVIDED that such Liens shall
extend only to the equipment, fixtures and other similar property so
financed (and improvements or attachments thereto) and the proceeds
thereof);
(f) any attachment or judgment Lien not constituting an Event
of Default under SECTION 7.1(h);
(g) Liens described in SCHEDULE 4.1(t) and securing Existing
Indebtedness; and
(h) Liens created pursuant to, or permitted by the terms of,
the Security Documents.
6.4 LIMITATION ON GUARANTEE OBLIGATIONS. Create, incur, assume
or suffer to exist any Guarantee Obligation other than the Subsidiary
Guarantees.
6.5 LIMITATION ON FUNDAMENTAL CHANGES. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution),
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or convey, sell, lease, assign, transfer or otherwise dispose of, all or
substantially all its property, business or assets, or make any material change
in its present method of conducting business except:
(a) (i) any Subsidiary may be merged or consolidated with or
into the Borrower (provided that the Borrower shall be the continuing
or surviving corporation), (ii) any Domestic Subsidiary of the Borrower
may be merged or consolidated with or into any one or more Domestic
Subsidiaries of the Borrower and (iii) any Foreign Subsidiary may be
merged or consolidated with or into any Domestic Subsidiary (provided
that the Domestic Subsidiary shall be the continuing or surviving
corporation);
(b) any Subsidiary may sell, lease, transfer or otherwise
dispose of any or all its assets (upon voluntary liquidation or
otherwise) to the Borrower or any Approved Subsidiary; and
(c) the Borrower may consummate the WSP Transaction.
6.6 LIMITATION ON SALE OF ASSETS. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, any Capital Stock, receivables and fee or
leasehold interests), whether now owned or hereafter acquired, in each case, in
one transaction or a series of transactions to any Person, except:
(a) the sale or other disposition of (i) Inventory in the
ordinary course of business, (ii) obsolete or worn out property in the
ordinary course of business and (iii) equipment no longer useful for
the business of the Borrower or any of its Subsidiaries, provided that
such determination as to usefulness is made in good faith by (x)
management of such Person if the then aggregate fair market value of
such equipment does not exceed the Dollar Equivalent of $1,000,000 or
(y) the board of directors of such Person if the then aggregate fair
market value of such equipment exceeds the Dollar Equivalent of
$1,000,000;
(b) the sale or discount without recourse of accounts
receivable arising in the ordinary course of business in connection
with the compromise or collection thereof;
(c) sales of property, business or assets (other than Capital
Stock) to the Borrower or any wholly-owned Subsidiary;
(d) the issuance of any Capital Stock of the Borrower from
time to time (i) pursuant to the Stock Option Plan and (ii) if the WSP
Transaction shall not have been consummated, the proceeds of which are
applied in accordance with SECTION 2.9(c) and that does not constitute
a Change of Control;
(e) any sale or disposition permitted under SECTION 6.5(b);
(f) the sale of up to 40% of the outstanding Capital Stock of
Thermalloy Malaysia in accordance with Malaysian law; and
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(g) license agreements entered into, as licensor, in the
ordinary course of business, for the use of any Intellectual Property
or other intangible assets.
6.7 LIMITATION ON DIVIDENDS; PREPAYMENT OF INDEBTEDNESS. (a)
Declare or pay any dividend on, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any shares of any class of
Capital Stock of the Borrower or any warrants or options to purchase any such
Capital Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in cash
or property or in obligations of the Borrower, other than (i) dividends paid by
a wholly-owned Subsidiary to the Borrower or an Approved Subsidiary and (ii) the
purchase of shares of the Capital Stock of Curamik pursuant to the Curamik
Documents in the form delivered to the Administrative Agent on the Closing Date.
(b) Prepay, redeem, purchase, defease or otherwise satisfy
prior to the scheduled maturity thereof in any manner, or make any payment in
violation of any subordination terms of, any Indebtedness, other than the
prepayment of the Loans in accordance with the terms of this Agreement.
6.8 LIMITATION ON CAPITAL EXPENDITURES. Make or commit to make
(by way of the acquisition of securities of a Person or otherwise) any Capital
Expenditures exceeding, in the aggregate, the Dollar Equivalent of (a)
$5,000,000 from the Closing Date to December 31, 1999; (b) $17,500,000 in fiscal
year 2000; (c) $21,000,000 in fiscal year 2001; (d) $25,000,000 in fiscal year
2002; and (e) $30,000,000 in each of fiscal year 2003 and fiscal year 2004;
PROVIDED that the maximum amount of Capital Expenditures permitted to be made by
the Borrower and its Subsidiaries in any fiscal year shall be increased by the
amount of Capital Expenditures that the Borrower and its Subsidiaries were
permitted to make in the immediately prior fiscal year (commencing with the
fiscal year ending December 31, 1999) as set forth above but failed to expend in
such year (the "CARRYOVER AMOUNT") (it being understood that (i) Capital
Expenditures shall be deemed to have been spent as follows: FIRST, amounts
attributable to the present fiscal year and SECOND, any Carryover Amount), and
(ii) no carryover shall be permitted for any fiscal year from periods prior to
the prior fiscal year immediately prior to such fiscal year.
6.9 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES. Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person,
except:
(a) any extension of trade credit in the ordinary course of
business and investments in customer accounts or notes receivable for
inventory sold or services rendered in the ordinary course of business
and consistent with past practice;
(b) any investment in Cash Equivalents;
(c) Capital Expenditures permitted under SECTION 6.8;
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(d) any investment by the Borrower in any Approved Subsidiary
or any wholly-owned, direct or indirect Subsidiary of an Approved
Subsidiary and any investment by any Subsidiary in the Borrower or any
Approved Subsidiary or any wholly-owned, direct or indirect Subsidiary
of an Approved Subsidiary;
(e) investments received in connection with the bankruptcy of
suppliers and customers or received pursuant to a plan of
reorganization of any supplier or customer, in each case, in settlement
of delinquent obligations or disputes with such suppliers or customers;
(f) deposits permitted under SECTION 6.3(c);
(g) any advance or loan by the Borrower or any Domestic
Subsidiary to any Foreign Subsidiary, PROVIDED that the aggregate
principal amount of all such advances or loans shall not exceed the
Dollar Equivalent of $5,000,000 in any fiscal year;
(h) the purchase by the Borrower or any Subsidiary of the
shares of Capital Stock of Curamik pursuant to the Curamik Documents;
(i) loans and advances to Subsidiaries in connection with the
Acquisition; and
(j) loans and advances to employees of the Borrower and its
Subsidiaries in the ordinary course of business (including without
limitation for travel, entertainment and relocation expenses) in an
aggregate amount for the Borrower and its Subsidiaries not to exceed
$2,000,000 at any one time outstanding.
6.10 LIMITATION ON TRANSACTIONS WITH AFFILIATES. Enter into
any transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is otherwise permitted under this Agreement or (a) in the
ordinary course of the Borrower's or a Subsidiary's business and (b) upon fair
and reasonable terms no less favorable to the Borrower or such Subsidiary, as
the case may be, than it would obtain in a comparable arm's length transaction
with a Person which is not an Affiliate.
6.11 LIMITATION ON SALES AND LEASEBACKS. Enter into any
arrangement with any Person providing for the leasing by the Borrower or any
Subsidiary of real or personal property which has been or is to be sold or
transferred by the Borrower or such Subsidiary to such Person or to any other
Person to whom funds have been or are to be advanced by such Person on the
security of such property or rental obligations of the Borrower or such
Subsidiary.
6.12 LIMITATION ON CHANGES IN FISCAL YEAR OR CHARTER. Permit
the fiscal year of any Loan Party to end other than on December 31 or amend any
charter document of any Loan Party, except for any amendment which could not
reasonably be expected to have a Material Adverse Effect or which does not
impair the value of any Collateral.
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6.13 LIMITATION ON NEGATIVE PLEDGE CLAUSES.
(a) Enter into with any Person any agreement and other than
(i) this Agreement or (ii) any Lien permitted under or Financing Leases
permitted by this Agreement (in which case, any prohibition or limitation shall
be effective only against the assets financed thereby) which prohibits or limits
the ability of the Borrower or any Subsidiary to create, incur, assume or suffer
to exist any Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired; and
(b) enter into any agreement or arrangement which prohibits,
limits or restricts the rights or ability of any Subsidiary to declare or pay
any dividends in cash or property or to make loans or advances or other payments
of any nature or to make any distributions or transfers of its assets in each
case to the Borrower or any other Person as to which such Subsidiary is a
Subsidiary.
6.14 LIMITATION ON LINES OF BUSINESS. Enter into or engage in
any business, except for those customarily engaged in connection with the
Thermal Management Solutions Business.
6.15 NEW SUBSIDIARIES. Create or permit to exist any
Subsidiary other than those listed on SCHEDULE 3.19; PROVIDED that the Borrower
may create wholly-owned Subsidiaries that are Approved Subsidiaries and have
entered into security arrangements with respect to their assets as are
acceptable to the Administrative Agent.
6.16 AMENDMENTS TO MATERIAL AGREEMENTS. Enter into or consent
to any amendment of, or waive any rights under, any Acquisition Document or
amend, waive any rights under or terminate any other agreement which amendment,
waiver or termination of such other agreement could reasonably be expected to
result in a Material Adverse Effect.
ARTICLE 7. EVENTS OF DEFAULT
7.1 If any of the following events shall occur and be
continuing:
(a) (i) The Borrower shall fail to pay any principal of any
Note when due in accordance with the terms thereof or hereof; or (ii)
the Borrower shall fail to pay any Reimbursement Obligation with
respect to the Letter of Credit or deposit cash collateral pursuant to
SECTION 2.21 when due in accordance with the terms thereof or (iii) the
Borrower shall fail to pay any interest on any Note, or any fees or
other amount payable hereunder, within five days after any such
interest, fees or other amount becomes due in accordance with the terms
thereof or hereof; or
(b) Any representation or warranty made or deemed made by the
Borrower or any other Loan Party herein or in any other Loan Document
or which is contained in any certificate, document or financial or
other statement furnished by it at any time under or in
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connection with this Agreement or any such other Loan Document shall
prove to have been incorrect in any material respect on or as of the
date made or deemed made;
(c) The Borrower or any other Loan Party shall default in the
observance or performance of any agreement contained in ARTICLE 6,
SECTION 5.1, SECTION 5.2, SECTION 5.4, SECTION 5.7, or SECTION 5.9
hereof, clauses (b) and (c) of SECTION 5 of each Pledge Agreement,
clauses (h), (i), (j) and (p) of SECTION 5 of each Security Agreement,
SECTION 1.1 and clauses (a), (b), (c) and (e) of SECTION 3 of the
Pledge Agreement governing the pledge of the Capital Stock of Aavid
Thermal Products UK Holdings Limited, SECTION 7.1(a) of the Pledge
Agreement governing the pledge of the Capital Stock of the Subsidiary
organized under the laws of the Federal Republic of Germany, or SECTION
10.1(B) or (C) of the Subsidiary Pledge Agreement governing the pledge
of the Capital Stock of the Subsidiary organized under the laws of
Italy; or
(d) The Borrower or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document, and such default shall continue
unremedied for a period of 30 days; or
(e) The Borrower or any Subsidiary shall (i) default in any
payment (regardless of amount) of principal of or interest on any
Indebtedness having an aggregate principal amount in excess of the
Dollar Equivalent of $1,000,000 (other than the Notes) beyond the
period of grace (not to exceed 30 days), if any, provided in the
instrument or agreement under which such Indebtedness was created or
(ii) default beyond the period of grace (not to exceed 30 days), if
any, in the observance or performance of any other agreement or
condition relating to any such Indebtedness 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 to cause, with the giving of
notice, if required, such Indebtedness to become due prior to its
stated maturity; or
(f) (i) The Borrower or any Subsidiary 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, conservator or other similar official for
it or for all or any substantial part of its assets, or the Borrower or
any Subsidiary shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any
Subsidiary, any case, proceeding or other action 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 the Borrower or any Subsidiary 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
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stayed or bonded pending appeal within 60 days from the entry thereof;
or (iv) the Borrower or any Subsidiary 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) the Borrower or any Subsidiary 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) (i) Any Person shall engage in any non-exempt "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of the
Code) involving any Plan, (ii) any "accumulated funding deficiency" (as
defined in Section 302 of ERISA), whether or not waived, shall exist
with respect to any Plan or any Lien in favor of the PBGC or a Plan
shall arise on the assets of the Borrower, any Subsidiary or any
Commonly Controlled Entity, (iii) a Reportable Event shall occur with
respect to, or proceedings shall commence to have a trustee appointed,
or a trustee shall be appointed, to administer or to terminate, any
Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion
of the Required Lenders, likely to result in the termination of such
Plan pursuant to Section 4041(c) or 4042 of ERISA, (iv) any Single
Employer Plan shall terminate pursuant to Section 4041(c) or 4042 of
ERISA, (v) the Borrower, any Subsidiary or any Commonly Controlled
Entity shall, or in the reasonable opinion of the Required Lenders is
likely to, incur any liability in connection with a withdrawal from, or
the Insolvency or Reorganization of, a Multiemployer Plan or (vi) any
other event or condition shall occur or exist with respect to a Plan;
and in each case in clauses (i) through (vi) above, such event or
condition, together with all other such events or conditions, if any,
could reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
the Borrower or any Subsidiary involving in the aggregate a liability
(to the extent not covered by third-party insurance as to which the
insurer has acknowledged coverage) of the Dollar Equivalent of
$1,000,000 or more and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 30
days from the entry thereof; or
(i) (x) Any of the Security Documents shall cease, for any
reason, to be in full force and effect, or the Borrower or any other
Loan Party which is a party to any of the Security Documents shall so
assert, (y) the Lien created by any of the Security Documents shall
cease to be enforceable and of the same effect and priority purported
to be created thereby or (z) the Administrative Agent shall not have,
for any reason whatsoever, a valid and perfected first security
interest for the benefit of the Lenders in the Collateral, subject only
to Liens permitted under SECTION 6.3; or
(j) Any Subsidiary Guarantee shall, for any reason other than
the satisfaction in full of all the Obligations and termination of this
Agreement, cease to be in full force and effect or shall be declared to
be null and void, or any Subsidiary Guarantor shall deny that it has
any further liability, including with respect to future advances by the
Lenders, under its Subsidiary Guarantee or any Subsidiary Guarantor
gives notice to such effect; or
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(k) A Change of Control shall occur; or
(l) An event shall exist or occur which has a Material Adverse
Effect; 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 any Loan Party, automatically the Commitments shall
immediately terminate and the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement and the Notes
shall immediately become due and payable, and (B) if such event is any
other Event of Default, either or both of the following actions may be
taken: (i) with the consent of the Required Lenders, the Administrative
Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall, by notice to the
Borrower, declare the Loans hereunder (with accrued interest thereon)
and all other amounts owing under this Agreement and the Notes to be
due and payable forthwith, whereupon the same shall immediately become
due and payable. Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are
hereby expressly waived.
ARTICLE 8. THE AGENTS
8.1 APPOINTMENT. Each Lender hereby irrevocably designates and
appoints Canadian Imperial Bank of Commerce as Administrative Agent of such
Lender, under this Agreement and the other Loan Documents. Each Lender hereby
irrevocably authorizes Canadian Imperial Bank of Commerce, as the Administrative
Agent for such Lender, to serve as security trustee for each Lender, to take
such action on behalf of each Lender under the provisions of this Agreement and
the other 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 Loan Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, the Agents 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 Loan Document or otherwise exist against either Agent.
8.2 DELEGATION OF DUTIES. The Administrative Agent may execute
any of its duties, rights or remedies under this Agreement and the other 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. (a) Neither Agent nor any of its
respective officers, directors, employees, agents, attorneys-in-fact or
Affiliates (a) 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
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Agreement or any other Loan Document (except for its or their 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 Borrower, any other Loan Party or any officer or any of them contained in
this Agreement or any other Loan Document or in any certificate, report,
statement or other document referred to or provided for in, or received by such
Agent under or in connection with, this Agreement or any other Loan Document or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or the Notes or any other Loan Document or the
perfection or priority of any Lien created or purported to be created
thereunder, or for any failure of the Borrower or any other Loan Party to
perform its obligations hereunder or thereunder. The Agents 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 Loan Document, or to inspect the properties, books or
records of the Borrower or any of the Subsidiaries.
(b) The Lead Arranger, as such, shall have no duties or
obligations whatsoever with respect to this Agreement, the Notes or any other
document or any matter related thereto.
8.4 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
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 Borrower),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any 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 Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders 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 Notes and the other Loan Documents in accordance with a
request of the Required Lenders, 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 Notes.
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
Borrower 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; 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
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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 AGENTS AND OTHER LENDERS. Each Lender
expressly acknowledges that neither Agent nor any of its respective 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 Borrower, shall be
deemed to constitute any representation or warranty by the Agents to any Lender.
Each Lender represents to the Agents that it has, independently and without
reliance upon the Agents 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 Borrower and its Subsidiaries made its own
decision to make its Loans hereunder and enter into this Agreement. Each Lender
also represents that it will, independently and without reliance upon the Agents
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 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 Borrower and its Subsidiaries. Except for
notices, reports and other documents expressly required to be furnished to the
Lenders by the Agents hereunder or furnished to the Administrative Agent for the
account of, or with a counterpart or copy for, each Lender, no Agent shall 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 Borrower or any of its
Subsidiaries which may come into its possession or any officer, director,
employee, agent, attorney-in-fact or Affiliate.
8.7 INDEMNIFICATION. The Lenders agree to indemnify each Agent
in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective aggregate Commitment Percentages in effect on the date on which
indemnification is sought under this Section (or, if indemnification is sought
after the date upon which the Commitments shall have terminated and the Loans
shall have been paid in full, ratably in accordance with their Commitment
Percentages immediately prior to such date), 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 Notes)
be imposed on, incurred by or asserted against either Agent in any way relating
to or arising out of this Agreement, any of the other Loan Documents or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by either 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 such Agent's gross negligence or willful
misconduct. The agreements in this Section shall survive the payment of the
Obligations hereunder.
8.8 AGENT IN ITS INDIVIDUAL CAPACITY. Each Agent and its
respective Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the
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Borrower and any Subsidiary as though such Agent were not acting in such
capacity hereunder and under the other Loan Documents. With respect to Credit
Extensions made or renewed by it and any Note issued to it, the Administrative
Agent shall have the same rights and powers under this Agreement and the other
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 20 days' notice to the Lenders and the
Borrower. If the Administrative Agent shall resign or be terminated, as the case
may be, as Administrative Agent under this Agreement and the other Loan
Documents, then the Required Lenders shall appoint a successor Administrative
Agent who shall be reasonably acceptable to the Borrower (so long as no Event of
Default shall have occurred which is continuing), whereupon such successor
Administrative Agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall mean such
successor Administrative Agent effective upon such appointment and approval, and
the former Administrative Agent's rights, powers and duties as the
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 Notes. After the Administrative Agent's
resignation or termination, as Administrative Agent, the provisions of this
Section shall inure to the benefit of the Administrative Agent, as to any
actions taken or omitted to be taken by it while it was the Administrative
Agent, under this Agreement and the other Loan Documents.
8.10 RELEASE OF COLLATERAL. (a) Each of the Agents and the
Lenders hereby directs, in accordance with the terms hereof, the Administrative
Agent to release any Lien held by the Administrative Agent for the benefit of
the Lenders:
(i) against all of the Collateral, upon
final payment in full of the Obligations and termination hereof; and
(ii) against any part of the Collateral sold
or disposed of by the Borrower or any Subsidiary, if such sale or
disposition is permitted by SECTION 6.6.
(b) Each of the Lenders hereby directs the Administrative
Agent to execute and deliver or file such termination and partial release
statements and do such other things as are necessary to release Liens to be
released pursuant to this SECTION 8.10 promptly upon the effectiveness of any
such release.
(c) Without in any manner limiting the Administrative Agent's
authority to act without any specific or further authorization or consent by the
Lenders (as set forth in clause (a) above), each Lender agrees to confirm in
writing, upon request by the Administrative Agent, the authority to release
Collateral conferred upon the Administrative Agent under (i) and (ii) of clause
(a) above. So long as no Event of Default is then continuing, upon receipt by
the Administrative Agent of any such written confirmation from the Lenders of
the Administrative Agent's authority to release any particular items or types of
Collateral, and in any event upon any sale and transfer of Collateral which is
expressly permitted pursuant to the terms of this Agreement, the
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Administrative Agent shall (and is hereby irrevocably authorized by the Lenders
to) execute such documents as may be necessary to evidence the release of the
Liens upon such Collateral granted to the Administrative Agent for the benefit
of the Lenders; PROVIDED, HOWEVER, that (i) the Administrative Agent shall not
be required to execute any such document on terms which, in the Administrative
Agent's opinion, would expose the Administrative Agent to liability or create
any obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations of
the Borrower or any of its Subsidiaries in respect of) all interests retained by
the Borrower and/or its Subsidiaries, including without limitation the proceeds
of any sale, all of which shall continue to constitute part of the Collateral.
ARTICLE 9. MISCELLANEOUS
9.1 AMENDMENTS AND WAIVERS. Neither this Agreement, any Note
or any other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section. The Required Lenders may, or, with the written consent of the Required
Lenders, the Administrative Agent may, from time to time, (a) enter into with
the Borrower written amendments, supplements or modifications hereto or any
other Loan Document for the purpose of adding any provisions to or changing in
any manner the rights of the Lenders or of the Borrower hereunder or thereunder,
(b) enter into with any Loan Party written amendments, supplements or
modifications to the Loan Documents to which such Loan Party is a party for the
purpose of adding provisions to such other Loan Documents or changing in any
manner the rights of the Lenders or such other Loan Party thereunder or (c)
waive, on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement, the Notes or the other Loan Documents or any
Default or Event of Default and its consequences; PROVIDED that no such waiver
and no such amendment, supplement or modification (i) shall reduce the amount or
extend the scheduled date of maturity of any Note or of any installment thereof,
or reduce the stated rate of any interest or fee payable hereunder or extend the
scheduled date of any payment thereof or extend the expiration date of any
Lender's Commitments, in each case, without the consent of each Lender, (ii)
shall amend, modify or waive any provision of this Agreement or any other Loan
Document which specifically by its terms requires the approval or consent of all
the Lenders or reduce the percentage specified in the definition of Required
Lenders, or consent to the assignment or transfer by the Borrower or any other
Loan Party of any of its rights and obligations under this Agreement, the Notes
and the other Loan Documents, or terminate any Subsidiary Guarantee or release
all or any substantial portion of the Collateral, in each case, without the
written consent of all the Lenders, (iii) shall increase the Stated Amount of
the Letter of Credit without the consent of the Issuer, (iv) shall increase the
aggregate amount of any Lender's Commitment, without the consent of such Lender,
(v) shall adversely affect the interest, rights or obligations of the Issuer,
without the consent of the Issuer or (vi) shall amend, modify or waive any
provision of ARTICLE 8 without the written consent of the Administrative Agent
and, in the case of any amendment, modification or waiver of SECTION 8.1,
SECTION 8.6, or SECTION 8.7, the Lead Arranger. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the Lenders
and shall be binding upon the Borrower, the Lenders, the Agents and all future
holders of the Notes. In the case of any waiver, the
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Borrower, the Lenders and the Agents shall be restored to their former position
and rights hereunder and under the outstanding Notes and any other 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.
9.2 NOTICES. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered by hand, or, in the case of notice
by mail, when received, or, in the case of telecopy notice, when received,
addressed as follows in the case of the Borrower, the Administrative Agent and
the Issuer, and as set forth in SCHEDULE I under the heading "Domestic Lending
Office" in the case of the Lenders, or to such other address as may be hereafter
notified by the respective parties hereto and any future holders of the Notes:
The Borrower: Aavid Thermal Technologies, Inc.
One Eagle Square
Suite 500
Concord, New Hampshire 03301
Attention: Chief Executive Officer
Telecopy: (603) 224-6673
The Administrative
Agent: Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: David Benyaminy
Telecopy: (212) 856-3761
The Issuer: Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: Mary Beth Ross
Telecopy: (212) 856-3763
; PROVIDED that any notice, request or demand to or upon the Administrative
Agent or the Lenders pursuant to SECTION 2.3, SECTION 2.5, SECTION 2.8, SECTION
2.9, SECTION 2.10 or SECTION 2.15 shall not be effective until received.
9.3 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 or under the other Loan
Documents 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.
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9.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made hereunder, in the other Loan Documents and
in any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the Notes and the making of the Loans hereunder.
9.5 PAYMENT OF EXPENSES AND TAXES; INDEMNIFICATION. The
Borrower agrees (a) to pay or reimburse the Administrative Agent for all its
reasonable out-of-pocket costs and expenses incurred in connection with the
development, preparation and execution of, and any amendment, supplement or
modification to, this Agreement, the Notes and the other Loan Documents and any
other documents prepared in connection herewith or therewith, and the
consummation and administration of the transactions contemplated hereby and
thereby, including, without limitation, the fees and disbursements of counsel to
the Administrative Agent, (b) to pay or reimburse each Lender and the
Administrative Agent for all its costs and expenses incurred in connection with
the negotiation of any restructuring or "work-out," whether or not consummated,
and the enforcement or preservation of any rights under this Agreement, the
Notes, the other Loan Documents and any such other documents, including, without
limitation, the fees and disbursements of counsel to the Administrative Agent
and to each Lender, and (c) to pay, and indemnify and hold harmless each Lender
and the Agents 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 Notes, the other Loan Documents and any such other
documents, and (d) to pay, and indemnify and hold harmless each Lender and the
Agents (including each of their respective parents, subsidiaries, officers,
directors, employees, agent and affiliates) from and against, any and all other
claims, demands, liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, settlements, expenses or disbursements of whatever kind
or nature arising from, in connection with or with respect to the execution,
delivery, enforcement, performance and administration of this Agreement, the
Notes, the other Loan Documents, the Acquisition Documents, or any other
documents or the use of the proceeds of the Loans in connection with the
Acquisition or the purchase of the shares of Capital Stock of Curamik pursuant
to the Curamik Documents or any other purpose (all the foregoing in this clause
(d), collectively, the "indemnified liabilities"); PROVIDED that the Borrower
shall not have any obligation hereunder to either Agent or any Lender with
respect to indemnified liabilities arising from the gross negligence or willful
misconduct of such Agent or such Lender. The agreements in this SECTION 9.5
shall survive repayment of the Obligations hereunder.
9.6 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS.
(a) This Agreement shall be binding upon and inure to the benefit of the
Borrower, the Lenders, the Issuer, the Administrative Agent, all future holders
of the Notes and their respective successors and assigns, except that the
Borrower may not assign or transfer any of its rights or obligations under this
Agreement without the prior written consent of each Lender.
(b) Any Lender may, in the ordinary course of its lending
business and in accordance with applicable law, at any time sell to one or more
banks or other entities ("PARTICIPANTS") participating interests in any Loan
owing to such Lender, any Note held by such
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Lender, any Commitment of such Lender or any other interest of such Lender
hereunder and under the other Loan Documents; PROVIDED that after giving effect
to any such sale, such Lender must have either (x) retained at least $5,000,000
of Commitments not subject to any participating interests or (y) sold
participating interests to Participants in all its Loans and Commitments. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Note for all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Administrative Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents. The Borrower agrees that if amounts
outstanding under this Agreement and the Notes are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this Agreement
and any Note to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement or any Note; PROVIDED
that, in purchasing such participating interest, such Participant shall be
deemed to have agreed to share with the Lenders the proceeds thereof as provided
in SECTION 9.7(a) as fully as if it were a Lender hereunder. The Borrower also
agrees that each Participant shall be entitled to the benefits of SECTION 2.17,
SECTION 2.18 and SECTION 2.19 with respect to its participation in the
Commitments and the Loans outstanding from time to time as if it were a Lender;
PROVIDED that, in the case of SECTION 2.18, such Participant shall have complied
with the requirements of said Section and PROVIDED, FURTHER, that no Participant
shall be entitled to receive any greater amount pursuant to any such Section
than the transferor Lender would have been entitled to receive in respect of the
amount of the participation transferred by such transferor Lender to such
Participant had no such transfer occurred.
(c) Any Lender may, in the ordinary course of its lending
business and in accordance with applicable law, at any time and from time to
time assign to any Lender or any affiliate thereof or, with the consent of the
Borrower (which consent shall not be unreasonably withheld and shall not be
required if an Event of Default shall have occurred) and with the consent of the
Administrative Agent (which consent shall not be unreasonably withheld), to an
additional bank or financial institution (an "ASSIGNEE") all or any part of its
rights and obligations under this Agreement and the Notes pursuant to a
Commitment Transfer Supplement, substantially in the form of EXHIBIT Q (a
"COMMITMENT TRANSFER SUPPLEMENT") executed by such Assignee, such assigning
Lender (and, in the case of an Assignee that is not then a Lender or an
affiliate thereof, by the Borrower (so long as no Event of Default shall have
occurred which is continuing) and the Administrative Agent) and delivered to the
Administrative Agent for its acceptance and recording in the Register; PROVIDED
that (i) any such assignment must (unless to an institution which was a Lender
immediately prior thereto) be in a minimum amount equal to the lesser of (x)
$5,000,000 (or such lesser amount as may be acceptable to the Administrative
Agent and the Borrower (so long as no Event of Default shall have occurred which
is continuing) and (y) the aggregate Commitments and outstanding Loans of such
Lender then in effect, and (ii) after giving effect to any such assignment, such
Lender shall have either (x) sold all its rights and obligations hereunder and
under the Notes or (y) retained at least $5,000,000 of the aggregate
Commitments. Upon such execution, delivery, acceptance and recording, from and
after the effective date determined
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pursuant to such Commitment Transfer Supplement, (1) the Assignee thereunder
shall be a party hereto and, to the extent provided in such Commitment Transfer
Supplement, have the rights and obligations of a Lender hereunder with a
Commitment as set forth therein and (2) the assigning Lender thereunder, to the
extent provided in such Commitment Transfer Supplement, shall be released from
its obligations under this Agreement (and, in the case of a Commitment Transfer
Supplement covering all or the remaining portion of an assigning Lender's rights
and obligations under this Agreement, such assigning Lender shall cease to be a
party hereto; PROVIDED that the provisions of SECTION 2.17, SECTION 2.18,
SECTION 2.19 and SECTION 9.5 shall continue to benefit such assigning Lender to
the extent required by such Sections).
(d) The Administrative Agent shall maintain, at its address
referred to in SECTION 9.2 a copy of each Commitment Transfer Supplement
delivered to it and a register (the "REGISTER") for the recordation of the names
and addresses of the Lenders and the Commitments of, and principal amount of the
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 Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as the owner of the Loan recorded therein for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower or any Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of a Commitment Transfer Supplement
executed by an assigning Lender and an Assignee (and, in the case of an Assignee
that is not then a Lender or an affiliate thereof, by the Borrower and the
Administrative Agent) together with payment to the Administrative Agent of a
registration and processing fee of $3,500, the Administrative Agent shall
promptly accept such Commitment Transfer Supplement and, on the effective date
determined pursuant thereto, shall record the information contained therein in
the Register and give notice of such acceptance and recordation to the Lenders
and the Borrower. On or prior to such effective date, the Borrower, at its own
expense, shall execute and deliver to the Administrative Agent (in exchange for
the Revolving Credit Note or Term Note of the assigning Lender) a new Revolving
Credit Note or Term Note, as the case may be, to the order of such Assignee in
an amount equal to the Revolving Credit Commitment or Term Loan, as the case may
be, assumed by such Assignee pursuant to such Commitment Transfer Supplement
and, if the assigning Lender has retained a Revolving Credit Commitment or Term
Loan hereunder, a new Revolving Credit Note or Term Note as the case may be, to
the order of the assigning Lender in an amount equal to the Revolving Credit
Commitment or Term Loan, as the case may be, retained by it hereunder. Such new
Notes shall be dated the Closing Date and shall otherwise be in the form of the
Notes replaced thereby.
(f) The Borrower 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
Borrower and their respective Affiliates which has been delivered to such Lender
by or on behalf of the Borrower pursuant to this Agreement or which has been
delivered to such Lender by or on behalf of the Borrower in connection with such
Lender's credit evaluation of the Borrower and their respective Affiliates prior
to becoming a party to this Agreement.
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(g) Nothing herein shall prohibit any Lender from pledging or
assigning any Note to any Federal Reserve Bank in accordance with applicable
law.
9.7 ADJUSTMENTS; SETOFF. (a) If any Lender (a "BENEFITTED
LENDER") shall at any time receive any payment of all or part of its Credit
Extensions, 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 7.1(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 Credit Extensions, or interest
thereon, such benefitted Lender shall purchase for cash from the other Lenders a
participating interest in such portion of each such other Lender's 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 that if all or any portion of such 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.
(b) In addition to any rights and remedies of the Lenders
provided by law, each Lender shall have the right, without prior notice to the
Borrower, any such notice being expressly waived by the Borrower to the extent
permitted by applicable law, upon any amount becoming due and payable by the
Borrower hereunder and under the 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 the Borrower. Each Lender
agrees promptly to notify the Borrower 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.
9.8 CONFIDENTIALITY. Each Lender agrees to exercise all
reasonable efforts (consistent with its customary methods for keeping
information confidential) to keep any information delivered or made available by
the Borrower or any Subsidiary confidential from anyone other than persons
employed or retained by such Lender who are or are expected to become engaged in
evaluating, approving, structuring or administering the Loans; PROVIDED, that
nothing herein shall prevent any Lender from disclosing such information (a) to
any Affiliate of such Lender or to any other Lender, (b) upon the order of any
court or administrative agency, (c) upon the request or demand of any regulatory
agency or authority having jurisdiction over such Lender, (d) that has been
publicly disclosed, (e) in connection with any litigation relating to the Loans,
this Agreement or any transaction contemplated hereby to which any Loan Party,
any Lender or the Administrative Agent may be a party, (f) to the extent
reasonably required in connection with the exercise of any remedy hereunder, (g)
to such Lender's legal counsel and independent auditors and (h) to any actual or
proposed participant or assignee of all or any part of its Loans hereunder, if
such other Person, prior to such disclosure, agrees, in writing, for the benefit
of the Borrower to comply with the provisions of this SECTION 9.8.
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9.9 COUNTERPARTS. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
(including by telecopy), and all 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 Borrower and the
Administrative Agent.
9.10 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.
9.11 INTEGRATION. This Agreement and the other Loan Documents
represent the agreement of the Borrower, the Administrative Agent and the
Lenders with respect to the subject matter hereof and thereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof or thereof not expressly
set forth or referred to herein or in the other Loan Documents.
9.12 GOVERNING LAW. THIS AGREEMENT AND THE NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND THE NOTES SHALL
BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF
OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW
YORK.
9.13 SUBMISSION TO JURISDICTION; WAIVERS. The Borrower hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other 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 the Borrower at its address set forth in SECTION 9.2 or at
such other address of which the Administrative Agent shall have been
notified pursuant thereto;
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(d) agrees that nothing contained 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 any special, exemplary, punitive or
consequential damages.
9.14 ACKNOWLEDGMENTS. The Borrower hereby acknowledges that:
(a) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Borrower or any Subsidiary
arising out of or in connection with this Agreement or any of the other
Loan Documents, and the relationship between the Administrative Agent
and the Lenders, on the one hand, the Borrower, on the other hand, in
connection herewith or therewith is solely that of creditor and debtor;
and
(b) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions
contemplated hereby among the Lenders or among the Borrower, any
Subsidiary and the Lenders.
9.15 WAIVERS OF JURY TRIAL. THE BORROWER, THE AGENTS AND THE
LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
AAVID THERMAL TECHNOLOGIES, INC.
By: /s/ Bharatan Patel
--------------------------------------
Name: Bharatan Patel
Title: President
CIBC WORLD MARKETS CORP.,
as Lead Arranger and Bookrunner
By: /s/ Keith Labbate
--------------------------------------
Name: Keith Labbate
Title: Executive Director
CIBC World Markets Corp., as
Agent
CANADIAN IMPERIAL BANK OF COMMERCE,
as Issuer and Administrative Agent
By: /s/ Keith Labbate
--------------------------------------
Name: Keith Labbate
Title: Executive Director
CIBC World Markets Corp., as
Agent
LENDERS:
CIBC INC.
By: /s/ Keith Labbate
--------------------------------------
Name: Keith Labbate
Title: Executive Director
CIBC World Markets Corp., as
Agent
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EXHIBIT A
TO CREDIT
AGREEMENT
FORM OF REVOLVING CREDIT NOTE
$_____________ New York, New York
October 21, 1999
FOR VALUE RECEIVED, the undersigned, AAVID THERMAL
TECHNOLOGIES, INC., a Delaware corporation (the "BORROWER"), hereby
unconditionally promises to pay to the order of _____________ (the "LENDER"), on
the Maturity Date as defined in the Credit Agreement hereinafter referred to, at
the office of Canadian Imperial Bank of Commerce, as administrative agent for
such Lender and the other financial institutions under the aforementioned Credit
Agreement (the "ADMINISTRATIVE AGENT"), located at 425 Lexington Avenue, New
York, New York 10017, or such other address as may be specified from time to
time by the Administrative Agent, in lawful money of the United States of
America and in immediately available funds, the principal amount of the lesser
of (a) ______________________ ($__________) and (b) the aggregate unpaid
principal amount of all Revolving Credit Loans made by the Lender to the
undersigned pursuant to Section 2.1 of the Credit Agreement.
The Borrower hereby unconditionally further agrees to pay
interest in like money at such office on the unpaid principal amount hereof from
time to time outstanding from the date hereof, and on any unpaid interest
payable hereon, from the date such interest is due hereunder, at the applicable
rates per annum and on the dates specified in Section 2.12 of the Credit
Agreement until such principal amount is paid in full (both before and after
judgment).
The holder of this Revolving Credit Note is authorized to
record the date, Type and amount of each Revolving Credit Loan made by the
Lender pursuant to Section 2.2 of the Credit Agreement, each continuation
thereof, each conversion of all or a portion thereof to another Type, the date
and amount of each payment or prepayment of principal thereof and, in the case
of Eurodollar Loans, the length of each Interest Period with respect thereto, on
the schedules annexed hereto and made a part hereof, and any such recordation
shall constitute PRIMA FACIE evidence of the accuracy of the information so
recorded absent manifest error; PROVIDED that the failure of the Lender to make
such recordation (or any error in such recordation) shall not affect the
obligations of the Borrower hereunder or under the Credit Agreement.
This Revolving Credit Note is one of the Revolving Credit
Notes referred to in the Credit Agreement, dated as of October 21, 1999 (as
further amended, supplemented, waived or otherwise modified from time to time,
the "CREDIT AGREEMENT"; terms defined therein being used herein as defined
therein), among the Borrower, the several banks and other financial institutions
parties thereto (including the Lender), Canadian Imperial Bank of Commerce, as
Issuer, the Administrative Agent and CIBC World Markets Corp., as Lead Arranger,
and is entitled to the benefits thereof, and is subject to optional and
mandatory prepayment in whole or in part as provided therein.
<PAGE> 92
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts remaining unpaid on this
Revolving Credit Note shall become, or may be declared to be, immediately due
and payable all as provided therein.
This Revolving Credit Note is secured as provided in the
Security Documents. Reference is hereby made to the Security Documents for a
description of the properties and assets in which a security interest has been
granted, the nature and extent of the security and the obligations secured, the
terms and conditions upon which the security interest was granted and the rights
of the holder of this Revolving Credit Note in respect thereof. Payment and
performance of this Revolving Credit Note is guaranteed as set forth in the
Subsidiary Guarantees. The undersigned hereby unconditionally agrees to pay the
costs and expenses incurred by the Lender in connection with the enforcement of
its rights and remedies under the Credit Agreement and said Security Documents
as provided therein.
All parties now and hereafter liable with respect to this
Revolving Credit Note, whether maker, principal, surety, guarantor, endorser or
otherwise, hereby waive presentment, demand, protest and all other notices of
any kind.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW).
AAVID THERMAL TECHNOLOGIES, INC.
By:______________________________________
Name:
Title:
-2-
<PAGE> 93
SCHEDULE A
TO REVOLVING CREDIT NOTE
LOANS, CONVERSIONS AND
PAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
========== =============== ==================== ================ ==================== =============== ==============
<S> <C> <C> <C> <C> <C> <C>
Amount
Amount of of
Alternate Base Interest Eurodollar
Rate Loans Period and Loans Amount
Converted Eurodollar Converted of
Amount of into Rate with into Principal
Eurodollar Eurodollar Respect Alternate Base Repaid or Notation
Date Loans Made Loans Thereto Rate Loans Prepaid Made by
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
========== =============== ==================== ================ ==================== =============== ==============
</TABLE>
-3-
<PAGE> 94
SCHEDULE B
TO REVOLVING CREDIT NOTE
LOANS, CONVERSIONS AND
PAYMENTS OF ALTERNATE BASE RATE LOANS
<TABLE>
<CAPTION>
========== ==================== ==================== ================ ================ =============== ==============
<S> <C> <C> <C> <C> <C> <C>
Amount of
Amount of Alternate
Eurodollar Base Interest
Loans Rate Loans Period and
Amount of Converted Converted Eurodollar Amount
Alternate Base into into Rate with of
Rate Loans Alternate Base Eurodollar Respect Principal Notation
Date Made Rate Loans Loans Thereto Repaid Made by
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
========== ==================== ==================== ================ ================ =============== ==============
</TABLE>
<PAGE> 95
EXHIBIT B
TO CREDIT
AGREEMENT
FORM OF TERM NOTE
$____________ New York, New York
October 21, 1999
FOR VALUE RECEIVED, the undersigned, AAVID THERMAL
TECHNOLOGIES, INC., a Delaware corporation (the "BORROWER"), hereby
unconditionally promises to pay to the order of _______________ (the "LENDER")
at the office of Canadian Imperial Bank of Commerce, as administrative agent for
such Lender and the other financial institutions under the Credit Agreement
hereinafter referred to (the "ADMINISTRATIVE AGENT"), located at 425 Lexington
Avenue, New York, New York 10017, or such other address as may be specified from
time to time by the Administrative Agent, in lawful money of the United States
of America and in immediately available funds, the principal amount of the
lesser of (a) ______________________ ($__________) and (b) the aggregate unpaid
principal amount of the Term Loan made by the Lender to the undersigned pursuant
to Section 2.6 of the Credit Agreement (as defined hereinafter), which sum shall
be payable in installments in accordance with Section 2.7 of the Credit
Agreement.
The Borrower hereby unconditionally further agrees to pay
interest in like money at such office on the unpaid principal amount hereof from
time to time outstanding from the date hereof, and on any unpaid interest
payable hereon, from the date such interest is due hereunder, at the applicable
rates per annum and on the dates set forth in Section 2.12 of the Credit
Agreement until such principal amount is paid in full (both before and after
judgment).
The holder of this Term Note is authorized to record the date,
Type and amount of the Term Loan made pursuant to Section 2.6 of the Credit
Agreement, each continuation thereof, each conversion of all or a portion
thereof to another Type, the date and amount of each payment or prepayment of
principal thereof and, in the case of Eurodollar Loans, the length of each
Interest Period with respect thereto, on the schedules annexed hereto and made a
part hereof, which recordation shall constitute PRIMA FACIE evidence of the
accuracy of the information so recorded absent manifest error; PROVIDED that
failure by the Lender to make any such recordation (or any error in such
recordation) on this Term Note shall not affect the obligations of the Borrower
under this Term Note or the Credit Agreement.
This Term Note is one of the Term Notes referred to in the
Credit Agreement, dated as of October 21, 1999 (as further amended,
supplemented, waived or otherwise modified from time to time, the "CREDIT
AGREEMENT"; terms defined therein being used herein as defined therein), among
the Borrower, the several banks and other financial institutions parties thereto
(including the Lender), Canadian Imperial Bank of Commerce, as Issuer, the
Administrative Agent and CIBC World Markets Corp., as Lead Arranger, and is
entitled to the benefits thereof, and is subject to optional and mandatory
prepayment in whole or in part as provided therein.
<PAGE> 96
Upon the occurrence of any one or more of the Events of
Default specified in the Credit Agreement, all amounts then remaining unpaid on
this Term Note shall become, or may be declared to be, immediately due and
payable, all as provided therein.
This Term Note is secured as provided in the Security
Documents. Reference is hereby made to the Security Documents for a description
of the properties and assets in which a security interest has been granted, the
nature and extent of the security and the obligations secured, the terms and
conditions upon which the security interest was granted and the rights of the
holder of this Term Note in respect thereof. Payment and performance of this
Term Note is guaranteed as set forth in the Subsidiary Guarantees. The
undersigned hereby unconditionally agrees to pay all costs and expenses incurred
by the Lender in connection with the enforcement of its rights and remedies
under the Credit Agreement and said Security Documents as provided therein.
All parties now and hereafter liable with respect to this Term
Note, whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
THIS TERM NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF (OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATION LAW).
AAVID THERMAL TECHNOLOGIES, INC.
By: ___________________________
Name:
Title:
-2-
<PAGE> 97
SCHEDULE A
TO TERM NOTE
LOANS, CONVERSIONS AND
PAYMENTS OF EURODOLLAR LOANS
<TABLE>
<CAPTION>
========== =============== ==================== ================ ==================== =============== ==============
<S> <C> <C> <C> <C> <C> <C>
Amount
Amount of of
Alternate Base Interest Eurodollar
Rate Loans Period and Loans Amount
Converted Eurodollar Converted of
Amount of into Rate with into Principal
Eurodollar Eurodollar Respect Alternate Base Repaid or Notation
Date Loans Made Loans Thereto Rate Loans Prepaid Made by
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
- ---------- --------------- -------------------- ---------------- -------------------- --------------- --------------
========== =============== ==================== ================ ==================== =============== ==============
</TABLE>
-3-
<PAGE> 98
SCHEDULE B
TO TERM NOTE
LOANS, CONVERSIONS AND
PAYMENTS OF ALTERNATE BASE RATE LOANS
<TABLE>
<CAPTION>
========== ==================== ==================== ================ ================ =============== ==============
<S> <C> <C> <C> <C> <C> <C>
Amount of
Amount of Alternate
Eurodollar Base Interest
Loans Rate Loans Period and
Amount of Converted Converted Eurodollar Amount
Alternate Base into into Rate with of
Rate Loans Alternate Base Eurodollar Respect Principal Notation
Date Made Rate Loans Loans Thereto Repaid Made by
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
- ---------- -------------------- -------------------- ---------------- ---------------- --------------- --------------
========== ==================== ==================== ================ ================ =============== ==============
</TABLE>
-4-
<PAGE> 99
EXHIBIT C-1
TO CREDIT
AGREEMENT
FORM OF NOTICE OF BORROWING
To: Canadian Imperial Bank of Commerce, as Administrative Agent for the
Lenders under the Credit Agreement dated as of October __, 1999 among
Aavid Thermal Technologies, Inc., a Delaware corporation (the
"BORROWER"), the Lenders, Canadian Imperial Bank of Commerce, as
Issuer, the Administrative Agent and CIBC World Markets Corp., as Lead
Arranger and Bookrunner (as amended, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT").
Pursuant to Section [2.3] [2.8] of the Credit Agreement, this
Notice of Borrowing ("NOTICE") represents the request of Borrower to borrow on
[the date hereof] [________, [19] [20] ] (the "BORROWING DATE")(1) from the
Lenders the principal amount of [$___________] in [Term Loans] [Revolving Credit
Loans] as [Alternate Base Rate Loans] [Eurodollar Loans]. [$_________ of such
Loans will be Eurodollar Loans.] [The initial Interest Period for such
Eurodollar Loans is requested to be a [one, two, three or six] month period.]
Proceeds of such Loans are to be wire-transferred in accordance with the
following wire instructions:
---------------------------
---------------------------
---------------------------
[The Revolving Credit Commitment on the Borrowing Date is
$___________.] [The Revolving Credit Commitment has been temporarily reduced by
$_________ attributable to Net Insurance Proceeds received by the Borrower prior
to the Borrowing Date and less than 270 days after the date of loss prior to the
acquisition of replacement assets. The aggregate amount of the Revolving Credit
Commitment (after giving effect to any Revolving Credit Loans outstanding and
any such temporary reductions in the Revolving Credit Commitment) available on
the Borrowing Date is $__________.](2) [$_________ of the Revolving Credit Loans
requested hereunder are to be applied [to restore, rebuild or replace any loss
for which Net Insurance Proceeds are available] [in accordance with the last
sentence of Section 2.9(d)] and subject to the conditions set forth in Section
2.9(d), the Revolving Credit Commitment shall be restored to $______________.]
- ---------------
(1) Which notice must be given (i) three Business Days prior to the requested
Borrowing Date, if all or any part of the requested Loans are to be
Eurodollar Loans initially, or (ii) one Business Day prior to the requested
Borrowing Date, otherwise.
(2) To be used only when there are Net Insurance Proceeds which have not been
applied pursuant to Section 2.9(d) to prepay the Loans or for use in the
acquisition of replacement assets.
<PAGE> 100
The undersigned hereby certifies that, as of the Borrowing
Date, all the conditions contained in [Sections 4.1 and 4.2](1) [Section 4.2](2)
of the Credit Agreement have been satisfied (or waived pursuant to Section 9.1
of the Credit Agreement), no Default or Event of Default has occurred and is
continuing, and represents and warrants that all representations and warranties
set forth in Article 3 of the Credit Agreement are true and correct in all
material respects on the Borrowing Date.
Unless otherwise defined herein, terms defined in the Credit
Agreement shall have the same meanings in this Notice.
Dated this ___ day of _______, ____.
AAVID THERMAL TECHNOLOGIES, INC.
By:_______________________________
Name:
Title:
- ----------------
(1) To be used for Loans made on the Closing Date.
(2) To be used for Revolving Credit Loans made after the Closing Date other than
Revolving Credit Loans made in respect of Net Disposition Proceeds and Net
Insurance Proceeds.
-2-
<PAGE> 101
EXHIBIT C-2
TO CREDIT
AGREEMENT
FORM OF NOTICE OF CONVERSION/CONTINUATION
Canadian Imperial Bank of Commerce,
as Administrative Agent for the below-referenced Lenders
425 Lexington Avenue
New York, New York 10017
Attention: Syndications, Manager of Administration
AAVID THERMAL TECHNOLOGIES, INC.
Gentlemen and Ladies:
This Notice of Conversion/Continuation (this "NOTICE") is
delivered to you pursuant to SECTION 2.10 of the Credit Agreement, dated as of
October 21, 1999 (as amended, supplemented, or other modified from time to time,
the "CREDIT AGREEMENT"), among Aavid Thermal Technologies, Inc., a Delaware
corporation (the "BORROWER"), the several banks and other financial institutions
from time to time parties thereto (the "LENDERS"), Canadian Imperial Bank of
Commerce, as issuer of certain letters of credit, Canadian Imperial Bank of
Commerce, as administrative agent for the Lenders (the "ADMINISTRATIVE AGENT"),
and CIBC World Markets Corp., as lead arranger and bookrunner. Unless otherwise
defined herein or the context otherwise requires, terms used herein have the
meanings provided in the Credit Agreement.
The Borrower hereby requests that on __________, ___:*
(1) $_________ of the currently outstanding principal amount
of the [Term Loan] [Revolving Credit Loan]** originally made on
__________, ____ and currently being maintained as [Alternate Base Rate
Loans] [[one] [two] [three] [six] month Eurodollar Loans]**,
(2) be [converted into] [continued as],
(3) [Eurodollar Loans having an Interest Period of [one] [two]
[three] [six] months, which Interest Period will expire on __________,
____] [Alternate Base Rate Loans].***
- -------------
*Conversion of Eurodollar Loans may be made only on the last day of an Interest
Period with respect thereto.
**Select appropriate option.
***Insert appropriate interest rate option, and, if applicable, number of months
(for Eurodollar Rate Loans).
<PAGE> 102
In the event that such Loans are to be converted into, or
continued as, Eurodollar Rate Loans, the Borrower hereby:
(a) certifies, represents and warrants that no Default has
occurred and is continuing or will (after giving effect to the
continuation or conversion requested hereby) occur and be continuing;
(b) certifies, represents and warrants that all
representations and warranties contained in Article 3 of the Credit
Agreement and in the other Loan Documents are, and will continue to be
(after giving effect to such continuation or conversion requested
hereby), true and correct in all material respects as if made on the
date of continuation or conversion hereunder[, except in the following
respects: [describe] and the Administrative Agent and the Required
Lenders have waived such exception to the representations and
warranties in writing dated __________]; and
(c) agrees that if prior to the time of such conversion or
continuation any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify the
Administrative Agent. Except to the extent, if any, that prior to the
time of the conversion or continuation requested hereby the
Administrative Agent shall receive written notice to the contrary from
the Borrower, each matter certified, represented and warranted to
herein shall be deemed to be certified, represented and warranted at
the date of such [conversion] [continuation] as if then made. [The
Borrower agrees to remit to the Administrative Agent for the benefit of
the Lenders, on the date of such conversion, an interest payment in the
amount of $_________.]*
IN WITNESS WHEREOF, the Borrower has caused this Notice to be
executed and delivered, and the certification, representations and warranties
contained herein to be made, by an authorized officer this ____ day of
__________, ____.
AAVID THERMAL TECHNOLOGIES, INC.
By: ______________________________
Name:
Title:
- ----------------------
*To be inserted upon a conversion of a Eurodollar or Alternate Base Rate Loan
with the amount of accrued interest thereon through the conversion date.
-2-
<PAGE> 103
EXHIBIT D
TO CREDIT
AGREEMENT
FORM OF DOMESTIC CUSTODY AGREEMENT
THIS CUSTODY AGREEMENT (this "AGREEMENT") dated as of October __,
1999, is entered into between [AAVID THERMAL TECHNOLOGIES, INC.] [DOMESTIC
SUBSIDIARY], a [____________] corporation, as Depositor (the "DEPOSITOR") and
CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC"), as Custodian (the "CUSTODIAN").
PRELIMINARY STATEMENT
WHEREAS, Aavid Thermal Technologies, Inc. (the "BORROWER"), the banks
and other financial institutions (the "LENDERS") from time to time parties
thereto, Canadian Imperial Bank of Commerce, as issuer of certain letters of
credit, Canadian Imperial Bank of Commerce, as administrative agent (the
"ADMINISTRATIVE AGENT"), and CIBC World Markets Corp., as lead arranger and
bookrunner, have entered into the Credit Agreement dated as of October 21, 1999
(such agreement, as amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"), pursuant to which the Lenders have agreed to
provide Revolving Credit Loans and Term Loans upon the terms and conditions of
the Credit Agreement;
WHEREAS, it is a condition precedent to the agreement of each Lender
to make the initial Loans requested to be made by it that the Administrative
Agent shall have received this Agreement, executed and delivered by the
Depositor with a counterpart for each Lender; and
WHEREAS, CIBC is willing to act in the capacity of Custodian,
hereunder;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings specified in the Credit
Agreement and the following terms shall have the following meanings:
"DEPOSIT NOTICE" has the meaning specified in Section 2.03(d).
"DEPOSITED STOCK" means [___ shares of the [common stock] of
________________] and the related stock certificates, [in each case] to be
deposited with the Custodian pursuant to SECTION 2.03, and any stock dividends
in respect of such stock.
"RECEIPT" has the meaning specified in SECTION 2.03(B).
"RELEASE NOTICE" has the meaning specified in SECTION 2.08(A).
"SUBSIDIARIES" shall mean [NAMES OF SUBSIDIARIES].
<PAGE> 104
"TERMINATION DATE" means that date on which the Administrative Agent
shall notify the Custodian in writing that the Depositor has satisfied and
discharged in full all its Obligations under the Credit Agreement.
ARTICLE II
CUSTODIAN
SECTION 2.01. DESIGNATION AND APPOINTMENT OF CIBC AS CUSTODIAN. CIBC
is hereby designated as, and hereby agrees to perform the duties and obligations
of, the Custodian under and as set forth in this Agreement. CIBC shall serve as
Custodian from the date hereof until the Termination Date, subject to
resignation or removal pursuant to SECTION 3.04 hereof.
SECTION 2.02. DUTIES OF THE CUSTODIAN. At all times that CIBC shall be
the Custodian, it shall duly discharge its duties of receiving and holding the
Deposited Stock in accordance with this Agreement. As to any matters not
expressly provided for by this Agreement, the Custodian shall be required to act
or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the written instructions of the Administrative
Agent; PROVIDED, HOWEVER, that the Custodian shall not be required to take any
action which is contrary to this Agreement or applicable law, or which is not
reasonably incidental to its duties and responsibilities under this Agreement or
is of a type unrelated to its business.
SECTION 2.03. DEPOSITED STOCK. (a) On the Closing Date, the Deposited
Stock shall be delivered by the Depositor to the Custodian. All such Deposited
Stock shall be held by the Custodian pursuant to the terms hereof.
(b) On the Closing Date, upon the delivery of the Deposited Stock by
the Depositor to the Custodian hereunder, the Custodian shall deliver to the
Depositor (with copies to the Administrative Agent) a receipt (the "RECEIPT")
substantially in the form of EXHIBIT A attached hereto identifying the Deposited
Stock that it has received and confirming that it holds such Deposited Stock, as
Custodian hereunder.
(c) On each date that the Depositor shall receive any stock dividend
in respect of the Deposited Stock the Depositor shall deliver such stock to the
Custodian and the Custodian will issue a revised Receipt.
(d) The Custodian shall hold the Deposited Stock as Custodian on the
terms and conditions hereinafter set forth.
(e) On the Closing Date, concurrent with the delivery of the Deposited
Stock to the Custodian, the Depositor shall deliver to each Subsidiary a deposit
notice (the "DEPOSIT NOTICE") substantially in the form of EXHIBIT B attached
hereto notifying such Subsidiary of the grant of custody of the Deposited Stock
to the Custodian hereunder.
SECTION 2.04. DEPOSITED STOCK HELD BY THE CUSTODIAN. All Deposited
Stock coming into the possession of the Custodian shall be held by it as
Custodian consistent with its customary practice and procedure as a custodian.
-2-
<PAGE> 105
SECTION 2.05 NO LIENS OR ENCUMBRANCES. (a) Each of the parties hereto
acknowledges and agrees that nothing contained herein is intended to create or
shall be construed as creating any sale, transfer, assignment, pledge, lien,
security interest, encumbrance upon or other disposition of the Deposited Stock.
(b) The Custodian hereby agrees not to assert any statutory or
possessory liens or encumbrances of any kind with respect to the Deposited Stock
held by it and hereby waives all such liens and encumbrances.
SECTION 2.06. MAINTENANCE OF RECORDS. The Custodian shall implement
and maintain administrative and operating procedures pursuant to which it shall
keep and maintain all records and information necessary to permit the regular
identification of all Deposited Stock held or released by it.
SECTION 2.07. OTHER INFORMATION. (a) From time to time upon reasonable
prior notification, during normal business hours, the Administrative Agent and
any of its respective authorized agents, employees or representatives, shall
have the right (i) to visit the office of the Custodian where the Deposited
Stock is kept, (ii) to examine the facilities for the storage and safekeeping
thereof and (iii) to discuss matters relating to the Deposited Stock and the
Custodian's performance hereunder with any officer of the Custodian having
knowledge of such matters.
(b) The Custodian shall provide to the Administrative Agent such other
information as the Administrative Agent may from time to time reasonably
request, concerning the Deposited Stock which is in the possession of the
Custodian.
SECTION 2.08. REMOVAL OF DEPOSITED STOCK. At any time, the Depositor
may request the Custodian to release the Deposited Stock held by the Custodian
to the Depositor, by delivering a written notice substantially in the form of
EXHIBIT C hereto (a "RELEASE NOTICE") to the Custodian (with simultaneous
delivery thereof by facsimile to the Administrative Agent) specifying a date for
such release that shall be not less than 10 days after the date of such Release
Notice. The Custodian shall also forward a copy of the Release Notice to the
Administrative Agent within 2 days of receipt thereof. On the date specified in
the Release Notice, the Custodian shall release such Deposited Stock to the
Depositor.
SECTION 2.09. CUSTODIAN'S INDEMNIFICATION. The Custodian shall have no
liability whatsoever by reason of any error of judgment for any act done or step
taken or omitted by it, or for any mistake of fact or law for anything which it
may do or refrain from doing in connection herewith, unless caused by or arising
out of its own gross negligence or willful misconduct. Furthermore, the
Depositor agrees to hold the Custodian harmless from any and all losses,
expenses, damages and costs (including, without limitation, attorneys fees)
incurred by either of them as a result of their execution of, or performance of
their respective obligations under, this Agreement, unless however, such losses,
expenses, damages and costs are caused by or arise out of the Custodian's gross
negligence or willful misconduct. The provisions of this SECTION 2.09 shall be
continuing and shall survive the termination of this Agreement.
ARTICLE III
MISCELLANEOUS
-3-
<PAGE> 106
SECTION 3.01. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement nor consent to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by each party hereto,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 3.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telex communication and
communication by facsimile copy) and mailed, telexed, transmitted or delivered,
as to each party hereto, at its address set forth under its name on the
signature pages hereof or at such other address as shall be designated by such
party in a written notice to the other parties hereto. All such notices and
communications shall be effective, upon receipt, or in the case of delivery by
facsimile copy, when verbal communication of receipt is obtained, in each case
addressed as aforesaid.
SECTION 3.03. BINDING EFFECT; ASSIGNABILITY; TERM. This Agreement
shall be binding upon and inure to the benefit of the Depositor and the
Custodian and their respective successors and assigns. This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
Termination Date, PROVIDED, HOWEVER, that the provisions of SECTION 2.09 shall
be continuing and shall survive the termination of this Agreement.
SECTION 3.04. RESIGNATION AND REMOVAL. The Custodian may resign at any
time by giving written notice thereof to the Depositor and the Administrative
Agent not less than 120 days' prior to the effective date of such resignation.
The Custodian may be removed by the Administrative Agent at any time, with or
without cause, by giving written notice thereof to the Custodian (with copies to
the Depositor) not less than ten (10) days prior to the effective date of such
removal. Upon any such resignation or removal, the Administrative Agent shall
have the right to appoint a successor Custodian. Any such successor shall, upon
its acceptance thereof, succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Custodian, and the retiring
Custodian shall be discharged from its duties and obligations as Custodian under
this Agreement.
SECTION 3.05. NO RIGHT OF SET-OFF. Nothing contained herein shall
grant any right to the Custodian to setoff or otherwise apply any or all
Deposited Stock at any time held hereunder to or for the credit or account of
the Depositor against any or all obligations of the Borrower now or hereafter
existing under the Credit Agreement or any other Loan Document (as defined in
the Credit Agreement).
SECTION 3.06. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws and decisions of the State of New York.
SECTION 3.07. EXECUTION IN COUNTERPARTS; SEVERABILITY. This Agreement
may be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement. In case any provision in or obligation under this Agreement shall be
invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
-4-
<PAGE> 107
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
[AAVID THERMAL TECHNOLOGIES, INC.]
[DOMESTIC SUBSIDIARY], as Depositor
By: _______________________________
Name:
Title:
Notice Address:
[___________________________]
[___________________________]
Attention:
Telecopy:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Custodian
By: _______________________________
Name:
Title:
Notice Address:
425 Lexington Avenue
New York, New York 10017
Attention: Mary Beth Ross
Telecopy: (212) 856-3763
<PAGE> 108
EXHIBIT A to
Custody Agreement
RECEIPT
[Date]
[Aavid Thermal Technologies, Inc.][DOMESTIC SUBSIDIARY]
[________________]
[________________]
Attention:
Re: [AAVID THERMAL TECHNOLOGIES, INC.][DOMESTIC SUBSIDIARY]
Ladies and Gentlemen:
We are sending this letter to you pursuant to Section 2.03(b) of that
certain Custody Agreement dated as of ____________ (the "CUSTODY AGREEMENT")
among [Aavid Thermal Technologies, Inc.] [DOMESTIC SUBSIDIARY], as Depositor,
and Canadian Imperial Bank of Commerce, as Custodian. Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed thereto
in the Custody Agreement.
The undersigned hereby confirms to you its receipt of the following
Deposited Stock.
[Identify Deposited Stock by stock certificate numbers]
The undersigned hereby confirms that it shall hold the above-listed Deposited
Stock as Custodian in accordance with the terms of the Custody Agreement.
Very truly yours,
CANADIAN IMPERIAL BANK OF COMMERCE,
as Custodian
By: _______________________________
Name:
Title
<PAGE> 109
EXHIBIT B to
Custody Agreement
DEPOSIT NOTICE
[Date]
[SUBSIDIARY]
[________________]
[________________]
Attention:
Re: [AAVID THERMAL TECHNOLOGIES, INC.][DOMESTIC SUBSIDIARY]
Ladies and Gentlemen:
You are hereby advised that [Aavid Thermal Technologies, Inc.]
[DOMESTIC SUBSIDIARY] has granted custody of 35% of the shares of capital stock
of [SUBSIDIARY] owned by [Aavid Thermal Technologies, Inc.] [DOMESTIC
SUBSIDIARY] to Canadian Imperial Bank of Commerce (the "Custodian"), as
custodian pursuant to a Custody Agreement dated as of ___________ between [Aavid
Thermal Technologies, Inc.] [DOMESTIC SUBSIDIARY] and the Custodian, a copy of
which is attached hereto.
Please acknowledge your receipt of this letter by signing where
indicated below and returning the same to the undersigned's attention as soon as
possible.
Very truly yours,
[AAVID THERMAL TECHNOLOGIES, INC.]
[DOMESTIC SUBSIDIARY]
By: _______________________________
Name:
Title:
Receipt acknowledged this ___ day of ___________.
[SUBSIDIARY]
By: ________________________
Name:
Title:
<PAGE> 110
EXHIBIT C to
Custody Agreement
RELEASE NOTICE
[Date]
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: Mary Beth Ross
Re: [AAVID THERMAL TECHNOLOGIES, INC.] [DOMESTIC SUBSIDIARY] --
RELEASE OF DEPOSITED STOCK
Ladies and Gentlemen:
Pursuant to SECTION 2.08 of that certain Custody Agreement dated as of
____________ (the "CUSTODY AGREEMENT"; capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed thereto in the Custody
Agreement) among [Aavid Thermal Technologies, Inc.] [DOMESTIC SUBSIDIARY], as
Depositor, and Canadian Imperial Bank of Commerce, as Custodian, the undersigned
hereby requests that the following Deposited Stock be delivered into our
possession:
[Identify Deposited Stock to be released by stock certificate numbers]
In connection with the foregoing, the undersigned hereby represents
and warrants that a copy of this notice has been delivered to the Administrative
Agent simultaneously with delivery to the Custodian.
Very truly yours,
[AAVID THERMAL TECHNOLOGIES, INC.]
[DOMESTIC SUBSIDIARY]
By: _______________________________
Name:
Title
<PAGE> 111
EXHIBIT E
TO CREDIT
AGREEMENT
BORROWER INTELLECTUAL PROPERTY SECURITY AGREEMENT
THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT (this "AGREEMENT") is
made as of October 21, 1999, by and between AAVID THERMAL TECHNOLOGIES, INC., a
Delaware corporation (the "BORROWER"), and CANADIAN IMPERIAL BANK OF COMMERCE,
as administrative agent (in such capacity, the "ADMINISTRATIVE AGENT") for the
several banks and other financial institutions (the "LENDERS") from time to time
parties to the Credit Agreement dated as of October 21, 1999 (as amended,
supplemented or otherwise modified from time to time, the "CREDIT AGREEMENT")
among the Borrower, the Lenders, Canadian Imperial Bank of Commerce, as issuer
of certain letters of credit, the Administrative Agent, and CIBC World Markets
Corp., as lead arranger and bookrunner.
WITNESSETH:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Borrower under the Credit Agreement that
the Borrower shall have executed and delivered this Agreement to the
Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and the
Lenders to make their respective Loans to the Borrower under the Credit
Agreement, the Borrower hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit Agreement. Unless otherwise defined herein or in the
Credit Agreement, all terms defined in Article 9 of the Uniform Commercial Code
in effect as of the date hereof in the State of New York are used herein as
defined therein as of the date hereof.
(b) The words "hereof", "herein" and "hereunder" and words of like
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section references are to
this Agreement unless otherwise specified.
<PAGE> 112
(c) All terms defined in this Agreement in the singular shall have
comparable meanings when used in the plural, and VICE VERSA, unless otherwise
specified.
2. SECURITY INTEREST IN INTELLECTUAL PROPERTY. To secure the
complete and timely payment, performance and satisfaction of all the
Obligations, the Borrower hereby grants to the Administrative Agent, for the
benefit of the Administrative Agent and the Lenders, a security interest in, as
and by way of a first mortgage and security interest having priority over all
other security interests, with power of sale to the extent permitted by
applicable law, all the Borrower's now owned or existing and hereafter acquired
or arising:
(i) trademarks, registered trademarks, trademark applications, service
marks, registered service marks and service mark applications, including,
without limitation, the trademarks, registered trademarks, trademark
applications, service marks, registered service marks and service mark
applications listed on SCHEDULE A attached hereto and made a part hereof,
and (a) all renewals thereof, (b) all income, royalties, damages and
payments now and hereafter due and/or payable under and with respect
thereto, including, without limitation, payments under all licenses entered
into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (c) the right to sue for past, present
and future infringements and dilutions thereof, (d) the goodwill of the
Borrower's business symbolized by the foregoing and connected therewith,
and (e) all the Borrower's rights corresponding thereto throughout the
world (all the foregoing trademarks, registered trademarks and trademark
applications, and service marks, registered service marks and service mark
applications, together with the items described in CLAUSES (A)-(E) in this
PARAGRAPH 2(I), are sometimes hereinafter individually and/or collectively
referred to as the "TRADEMARKS");
(ii) rights under or interest in any patent license agreements,
trademark license agreements or service mark license agreements with any
other party, whether the Borrower is a licensee or licensor under any such
license agreement, including, without limitation, those patent license
agreements, trademark license agreements and service mark license
agreements listed on SCHEDULE B attached hereto and made a part hereof, in
each case to the extent assignable without violation thereof, together with
any goodwill connected with and symbolized by any such trademark license
agreements or service mark license agreements, and the right to prepare for
sale and sell any and all Inventory now or hereafter owned by the Borrower
and now or hereafter covered by such licenses (all the foregoing are
hereinafter referred to collectively as the "LICENSES"); and
(iii) patents and patent applications, and the inventions and
improvements described and claimed therein, including, without limitation,
those patents and patent applications listed on SCHEDULE A attached hereto
and made a part hereof, and (a) the reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof, (b) all income,
royalties, damages and payments now and hereafter due and/or payable under
and with respect thereto, including, without limitation, payments under all
licenses entered into in connection therewith and damages and payments for
past or future infringements thereof, (c) the right to sue for past,
present and future infringements thereof, (d) all patented technology and
know-how, and (e) all of the Borrower's rights corresponding thereto
throughout the world (all of the foregoing patents and applications,
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<PAGE> 113
together with the items described in CLAUSES (A)-(E) in this PARAGRAPH
2(III) are sometimes hereinafter individually and/or collectively referred
to as the "PATENTS").
3. RESTRICTIONS ON FUTURE AGREEMENTS. The Borrower will not, without
the Administrative Agent's prior written consent, enter into any agreement,
including, without limitation, any license agreement, which is inconsistent with
this Agreement, and the Borrower further agrees that, without the Administrative
Agent's prior written consent, it will not take any action, and will use its
best efforts not to permit any action to be taken by others, including, without
limitation, licensees, or fail to take any action, which would in any respect
adversely affect the validity or enforcement of the rights transferred to the
Administrative Agent under this Agreement or the rights associated with any
Patents, Trademarks or Licenses, and in particular, the Borrower will not permit
to lapse or become abandoned any Patent, Trademark or License; PROVIDED that
nothing contained herein shall restrict the Borrower's ability to license its
software in the ordinary course of its business consistent with prior practice.
4. NEW PATENTS, TRADEMARKS AND LICENSES. The Borrower represents and
warrants that (a) the Patents and Trademarks listed on SCHEDULE A include all
the registered patents, patent applications, trademarks, common law trademarks,
trademark applications, registered service marks and service mark applications
now owned or held by the Borrower, (b) the Licenses listed on SCHEDULE B include
all the patent license agreements, trademark license agreements and service mark
license agreements under which the Borrower is the licensee or licensor and
which are material individually or in the aggregate to the operation of the
business of the Borrower and (c) other than the rights of any party to the
Licenses with respect to the Patents and the Trademarks, no Liens in such
Patents, Trademarks and Licenses have been granted by the Borrower to any Person
other than the Administrative Agent. If, prior to the termination of this
Agreement, the Borrower shall (i) obtain rights to any new patentable
inventions, trademarks, registered trademarks, trademark applications, service
marks, registered service marks or service mark applications, (ii) become
entitled to the benefit of any patent, patent application, license or any
reissue, division, continuation, renewal, extension or continuation-in-part of
any Patent or any improvement on any Patent or License or any trademarks,
registered trademarks, trademark applications, trademark licenses, trademark
license renewals, service marks, registered service marks, service mark
applications, service mark licenses or service mark license renewals whether as
licensee or licensor, or (iii) enter into any new patent license agreement,
trademark license agreement or service mark license agreement, the provisions of
PARAGRAPH 3 above shall automatically apply thereto. The Borrower shall give to
the Administrative Agent written notice of events described in CLAUSES (I), (II)
and (III) of the preceding sentence within 30 days of the occurrence of any such
event. The Borrower hereby authorizes the Administrative Agent to modify this
Agreement unilaterally (i) by amending SCHEDULE A to include any future patents,
trademarks, registered trademarks, trademark applications, service marks, patent
applications, registered service marks and service mark applications owned or
held by Borrower or to prepare this Agreement for filing with the Patent and
Trademark Office and by amending SCHEDULE B to include any patent license
agreements, trademark license agreements and service mark license agreements to
which Borrower becomes a party, which are Trademarks or Licenses under PARAGRAPH
2 above or under this PARAGRAPH 4, and (ii) by filing with the Patent and
Trademark Office, in addition to and not in substitution for this Agreement, a
duplicate original of this Agreement containing on SCHEDULE A or B thereto, as
the case may be, such future patents, trademarks, registered trademarks,
trademark applications, service marks, patent applications,
-3-
<PAGE> 114
registered service marks and service mark applications, and patent license
agreements, trademark license agreements and service mark license agreements.
5. ROYALTIES. The Borrower hereby agrees that the use by the
Administrative Agent of the Patents, Trademarks and Licenses as authorized
hereunder in connection with the Administrative Agent's exercise of its rights
and remedies under PARAGRAPH 13 or pursuant to the Security Agreements shall be
coextensive with the Borrower's rights thereunder and with respect thereto and
without any liability for royalties or other related charges from the
Administrative Agent and the Lenders to the Borrower.
6. FURTHER ASSIGNMENTS AND SECURITY INTERESTS. The Borrower agrees
not to sell or assign its respective interests in, or grant any license under,
the Patents, the Trademarks or the Licenses without the prior and express
written consent of the Administrative Agent.
7. NATURE AND CONTINUATION OF THE ADMINISTRATIVE AGENT'S SECURITY
INTEREST; TERMINATION OF THE ADMINISTRATIVE AGENT'S SECURITY INTEREST; RELEASE
OF COLLATERAL. This Agreement is made for collateral security purposes only.
This Agreement shall create a continuing security interest in the Patents,
Trademarks and Licenses and shall terminate only when the Obligations have been
paid in full in cash and the Credit Agreement and the Security Agreements have
been terminated. Upon such termination and at the written request of the
Borrower or its successors or assigns, and at the cost and expense of the
Borrower or its successors or assigns, the Administrative Agent shall execute in
a timely manner such instruments, documents or agreements as are necessary or
desirable to terminate the Administrative Agent's security interest in the
Patents, the Trademarks and the Licenses, subject to any disposition thereof
which may have been made by the Administrative Agent pursuant to this Agreement
or the Security Agreements.
8. DUTIES OF THE BORROWER. Subject to the second sentence of this
Section 8, the Borrower shall have the duty (i) to prosecute diligently any
patent application, trademark application or service mark application that is
part of the Trademarks pending as of the date hereof or hereafter until the
termination of this Agreement and (ii) to make any application for and
diligently prosecute the registration of (x) any trademark or service mark that
the Borrower has not created as of the date hereof which the Administrative
Agent, after consultation with the Borrower, reasonably determines may have
significant value and (y) any unpatented but patentable invention. The Borrower
further agrees (i) not to abandon any Trademark or License without the prior
written consent of the Administrative Agent if such abandonment would have a
Material Adverse Effect, and (ii) to use its reasonable best efforts to obtain
and maintain in full force and effect the Patents, the Trademarks and the
Licenses that are or shall be necessary or economically desirable in the
operation of the Borrower's business. Any expenses incurred in connection with
the foregoing shall be borne by the Borrower. Neither the Administrative Agent
nor any of the Lenders shall have any duty with respect to the Patents,
Trademarks and Licenses. Without limiting the generality of the foregoing,
neither the Administrative Agent nor any of the Lenders shall be under any
obligation to take any steps necessary to preserve rights in the Patents, the
Trademarks or Licenses against any other parties, but the Administrative Agent
may do so at its option from and after the occurrence of an Event of Default,
and all expenses incurred in connection therewith shall be for the sole account
of the Borrower and shall be added to the Obligations secured hereby.
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<PAGE> 115
9. THE ADMINISTRATIVE AGENT'S RIGHT TO SUE. Upon the occurrence and
during the continuance of an Event of Default, the Administrative Agent shall
have the right, but shall not be obligated, to bring suit in its own name to
enforce the Patents, the Trademarks and the Licenses and, if the Administrative
Agent shall commence any such suit, the Borrower shall, at the request of the
Administrative Agent, do any and all lawful acts and execute any and all proper
documents required by the Administrative Agent in aid of such enforcement. The
Borrower shall, upon demand, promptly reimburse the Administrative Agent for all
actual costs and expenses incurred by the Administrative Agent in the exercise
of its rights under this PARAGRAPH 9 (including, without limitation, reasonable
fees and expenses of counsel for the Administrative Agent).
10. WAIVERS. The Administrative Agent's failure, at any time or times
hereafter, to require strict performance by the Borrower of any provision of
this Agreement shall not waive, affect or diminish any right of the
Administrative Agent thereafter to demand strict compliance and performance
therewith nor shall any course of dealing between the Borrower and the
Administrative Agent have such effect. No single or partial exercise of any
right hereunder shall preclude any other or further exercise thereof or the
exercise of any other right. None of the undertakings, agreements, warranties,
covenants and representations of the Borrower contained in this Agreement shall
be deemed to have been suspended or waived by the Administrative Agent unless
such suspension or waiver is in writing signed by an officer of the
Administrative Agent and directed to the Borrower specifying such suspension or
waiver.
11. SEVERABILITY. If any provision of this Agreement is held to be
prohibited or unenforceable in any jurisdiction the substantive laws of which
are held to be applicable hereto, such prohibition or unenforceability shall not
affect the validity or enforceability of the remaining provisions hereof and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
12. MODIFICATION. This Agreement cannot be altered, amended or
modified in any way, except as specifically provided in PARAGRAPH 4 hereof or by
a writing signed by the parties hereto.
13. CUMULATIVE REMEDIES; POWER OF ATTORNEY. The Borrower agrees, upon
the request of the Administrative Agent and promptly following such request, to
take any action and execute any instrument which the Administrative Agent may
deem necessary or advisable to accomplish the purposes of this Agreement. The
Borrower hereby irrevocably designates, constitutes and appoints the
Administrative Agent (and all Persons designated by the Administrative Agent in
its sole and absolute discretion) as the Borrower's true and lawful
attorney-in-fact, and authorizes the Administrative Agent and any of the
Administrative Agent's designees, in the Borrower's or the Administrative
Agent's name, from and after the occurrence and during the continuance of an
Event of Default, to take any action and execute any instrument which the
Administrative Agent may deem necessary or advisable to accomplish the purposes
of this Agreement, including, without limitation, (i) to endorse the Borrower's
name on all applications, documents, papers and instruments necessary or
desirable for the Administrative Agent in the use, prosecution or protection of
the Patents, the Trademarks or the Licenses, (ii) to assign, pledge, convey or
otherwise transfer title in or dispose of the Trademarks or the Licenses to
anyone on commercially reasonable terms, (iii) to grant or issue any exclusive
or nonexclusive license under the Patents, the Trademarks or the Licenses, to
anyone on commercially reasonable
-5-
<PAGE> 116
terms, and (iv) to take any other actions with respect to the Patents or the
Trademarks or, to the extent permitted, the Licenses as the Administrative Agent
deems in its own or the Lenders' best interest. The Borrower hereby ratifies all
that such attorney shall lawfully do or, to the extent permitted, cause to be
done by virtue hereof. This power of attorney is coupled with an interest and
shall be irrevocable until all the Obligations shall have been paid in full in
cash and the Credit Agreement shall have been terminated. The Borrower
acknowledges and agrees that this Agreement is not intended to limit or restrict
in any way the rights and remedies of the Administrative Agent or the other
Lenders under the Agreement, but rather is intended to facilitate the exercise
of such rights and remedies.
The Administrative Agent shall have, in addition to all other rights
and remedies given it by the terms of this Agreement, all rights and remedies
allowed by law and the rights and remedies of a secured party under the Uniform
Commercial Code as enacted in any jurisdiction in which the Trademarks or the
Licenses may be located or deemed located. If an Event of Default has occurred
and is continuing and the Administrative Agent has elected to exercise any of
its remedies under Section 9-504 or Section 9-505 of the Uniform Commercial Code
with respect to the Patents, Trademarks and Licenses, the Borrower agrees to
assign, convey and otherwise transfer all of its title in and to the Patents,
the Trademarks and the Licenses to the Administrative Agent or any transferee of
the Administrative Agent and to execute and deliver to the Administrative Agent
or any such transferee all such agreements, documents and instruments as may be
necessary, in the Administrative Agent's sole discretion, to effect such
assignment, conveyance and transfer; PROVIDED that in the case of any Patents,
Trademarks and Licenses licensed to the Borrower by third parties, such transfer
shall be solely to the extent any of the foregoing are transferable pursuant to
operative agreements between the Borrower and such third party. All the
Administrative Agent's rights and remedies with respect to the Patents, the
Trademarks and the Licenses, whether established hereby, by the Security
Agreements, by any other agreements or by law, shall be cumulative and may be
exercised separately or concurrently. Notwithstanding anything set forth herein
to the contrary, it is hereby expressly agreed that if an Event of Default has
occurred and is continuing, the Administrative Agent may exercise any of the
rights and remedies provided in this Agreement, the Security Agreements and any
of the other Loan Documents. The Borrower agrees that any notification of
intended disposition of any of the Patents, Trademarks and Licenses required by
law shall be deemed reasonably and properly given if given at least ten (10)
days before such disposition; PROVIDED, that the Administrative Agent may give
any shorter notice that is commercially reasonable under the circumstances.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Borrower and its successors and assigns, and shall inure to the benefit of each
of the Lenders and its nominees, successors and assigns. The Borrower's
successors and assigns shall include, without limitation, a receiver, trustee or
debtor-in-possession of or for the Borrower; PROVIDED, that the Borrower shall
not voluntarily assign or transfer its rights or obligations hereunder without
the Administrative Agent's prior written consent.
15. GOVERNING LAW. This Agreement shall be governed by, and be
construed and interpreted in accordance with, the law (without regards to
conflict of law provisions (other than Section 5-1401 of the General Obligations
Law)) of the State of New York, except for perfection and enforcement of
security interests and liens in other jurisdictions to the extent the law of
another jurisdiction is, pursuant to the laws of such jurisdiction, mandatorily
applicable.
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<PAGE> 117
16. NOTICES. All notices or other communications hereunder shall be
given in the manner and to the addresses set forth in Section 9.2 of the Credit
Agreement.
17. AUTHORITY OF ADMINISTRATIVE AGENT. The Borrower acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, right, request, judgment
or other right or remedy provided for herein or resulting or arising out of this
Agreement shall, as between the Administrative Agent and the Lenders, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Borrower, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and the Borrower shall not be under
any obligation, or entitlement, to make any inquiry respecting such authority.
18. TERMINATION; RELEASE. Upon the repayment of all the Obligations
in full and the termination of the Commitments, this Agreement shall terminate,
and the Administrative Agent, at the request and expense of the Borrower, will
promptly execute and deliver to the Borrower the proper instruments
acknowledging the termination of this Agreement, and will duly assign, transfer
and deliver to Borrower (without recourse and without any representation or
warranty of any kind) such of the Collateral as may be in the possession of the
Administrative Agent and has not theretofore been disposed of or otherwise
applied or released.
19. REINSTATEMENT. This Agreement shall continue to be effective or
be reinstated, as the case may be, if at any time any amount received by the
Lenders in respect of the Obligations is rescinded or must otherwise be restored
or returned by such Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Borrower or upon the appointment of any
intervenor or conservator of, or trustee or similar official for, the Borrower
or any substantial part of its assets, or upon the entry of an order by a
bankruptcy court avoiding payment of such amount, or otherwise, all as though
such payments had not been made.
20. SECTION TITLES. The section titles herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
21. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
22. SUBMISSION TO JURISDICTION AND SERVICE OF PROCESS. The Borrower
hereby irrevocably and unconditionally agrees that the terms of Section 9.13 of
the Credit Agreement with respect to submission to jurisdiction and service of
process shall apply equally to this Agreement.
23. WAIVER OF BOND. The Borrower waives the posting of any bond
otherwise required of the Administrative Agent in connection with any judicial
process or proceeding to realize on any of the Patents, Trademarks or Licenses
or any other security for the Obligations, to enforce any judgment or other
court order entered in favor of the Administrative Agent, or to enforce by
specific performance, temporary restraining order, or preliminary or permanent
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<PAGE> 118
injunction, this Agreement or any other agreement or document between the
Administrative Agent and the Borrower.
24. WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE ADMINISTRATIVE
AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND THE BORROWER
ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR
ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH. EITHER THE BORROWER OR THE ADMINISTRATIVE AGENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
<PAGE> 119
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
AAVID THERMAL TECHNOLOGIES, INC.
By: _______________________________
_____________________________________________ Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By: ______________________________
Name:
Title:
<PAGE> 120
STATE OF _____________)
) SS
COUNTY OF ____________)
On the _____ day of ___________, 1999, before me personally came
________________________, to me known, who being by me duly sworn, did depose
and say that he/she resides at ____________________________________________;
that he/she is a _________________________ of Aavid Thermal Technologies, Inc.,
the corporation described in and which accepted and agreed to the foregoing
instrument; and that he/she signed his/her name thereto by authority of the
board of directors of said corporation.
____________________________
Notary Public
<PAGE> 121
STATE OF _____________)
) SS
COUNTY OF ____________)
On the _____ day of ___________, 1999, before me personally came
________________________, to me known, who being by me duly sworn, did depose
and say that he/she resides at ____________________________________________;
that he/she is a _________________________ of Canadian Imperial Bank of
Commerce, the entity described in and which accepted and agreed to the foregoing
instrument; and that he/she signed his/her name thereto by appropriate
authority.
_____________________________
Notary Public
<PAGE> 122
Schedule A
to
Borrower Intellectual Property Security Agreement
Dated as of October 19, 1999
TRADEMARKS, SERVICE MARKS, ETC., AND APPLICATIONS
<TABLE>
<CAPTION>
Trademark Country Application No. Registration No.
--------- ------- --------------- ----------------
<S> <C> <C> <C>
</TABLE>
PATENTS AND APPLICATIONS
<PAGE> 123
Schedule B
to
Borrower Intellectual Property Security Agreement
Dated as of October 19, 1999
LICENSE AGREEMENTS
<PAGE> 124
EXHIBIT F
TO CREDIT
AGREEMENT
FORM OF BORROWER PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of October , 1999 made by AAVID THERMAL
TECHNOLOGIES, INC., a Delaware corporation (the "PLEDGOR"), in favor of CANADIAN
IMPERIAL BANK OF COMMERCE, as administrative agent (in such capacity, the
"ADMINISTRATIVE AGENT") for the several banks and other financial institutions
(the "LENDERS") from time to time parties to the Credit Agreement, dated as of
October 21, 1999 (as amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"), among the Pledgor, the Lenders, Canadian Imperial
Bank of Commerce, as issuer of certain letters of credit, the Administrative
Agent, and CIBC World Markets Corp., as lead arranger and bookrunner.
WITNESSETH:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Pledgor upon the terms and subject to the conditions
set forth therein, to be evidenced by the Notes issued by the Pledgor
thereunder;
WHEREAS, the Pledgor is the legal and beneficial owner of all the
shares of Pledged Stock (as hereinafter defined) issued by each of the Issuers (
as hereinafter defined); and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Pledgor under the Credit Agreement that
the Pledgor shall have executed and delivered this Pledge Agreement to the
Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and the
Lenders to make their respective Loans under the Credit Agreement, the Pledgor
hereby agrees with the Administrative Agent, for the ratable benefit of the
Lenders, as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein are used as defined therein, and the
following terms shall have the following meanings:
"CODE" shall mean the Uniform Commercial Code from time to time in
effect in the State of New York.
"COLLATERAL" shall mean the Pledged Stock and all Proceeds (as defined
below).
"ISSUERS" shall mean the collective reference to Fluent, Inc., a New
Hampshire corporation, Applied Thermal Technologies, Inc., a New Hampshire
corporation, Aavid
<PAGE> 125
Thermal Products, Inc., a New Hampshire corporation, and Aavid Engineering
Export, Inc., a company incorporated under the laws of Barbados.
"OBLIGATIONS" shall mean the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of the
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 Borrower or any Subsidiary, as applicable, whether or not a
claim for post-filing or post-petition interest is allowed in such
proceeding and whether the Administrative Agent, for the benefit of the
Lenders, is oversecured or undersecured with respect to such Loans) the
Notes and all other obligations and liabilities of the Borrower or any
Subsidiary, as applicable, to the Agents and the Lenders or any of their
respective Affiliates, including any Reimbursement Obligations and any
obligation of the Borrower under any Hedging Agreement entered into with
either Agent, any Lender or any of their respective Affiliates, whether
direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, the Notes, the other Loan Documents
or any Hedging Agreement with either Agent, any Lender or any of their
respective Affiliates or any other document made, delivered or given in
connection therewith or herewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees and disbursements of counsel to
either Agent or to the Lenders that are required to be paid by the Borrower
or any Subsidiary, as applicable, pursuant to the terms of the Credit
Agreement, any other Loan Document or any Hedging Agreement with either
Agent, any Lender or any of their respective Affiliates) or otherwise.
"PLEDGE AGREEMENT" shall mean this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"PLEDGED STOCK" shall mean the shares of Capital Stock of the Issuers
listed on Schedule I hereto, together with all stock certificates, options
or rights of any nature whatsoever that may be issued or granted by any
Issuer to the Pledgor while this Pledge Agreement is in effect.
"PROCEEDS" shall mean all "proceeds" as such term is defined in
Section 9-306(1) of the Code and, in any event, shall include, without
limitation, all dividends or other income from the Pledged Stock,
collections thereon or distributions with respect thereto.
2. PLEDGE; GRANT OF SECURITY INTEREST. The Pledgor hereby delivers
to the Administrative Agent, for the ratable benefit of the Lenders, all the
Pledged Stock, and hereby grants to the Administrative Agent, for the ratable
benefit of the Lenders, a first priority security interest in the Collateral, as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the
Obligations.
3. STOCK POWERS. Concurrently with the delivery to the
Administrative Agent of each certificate representing one or more shares of
Pledged Stock to the Administrative Agent, the Pledgor shall deliver an undated
stock power covering such certificate, duly executed in blank by the Pledgor.
<PAGE> 126
4. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants that:
(a) with the exception of Aavid Engineering Export, Inc., of which
the shares of Pledged Stock listed on Schedule I represent 65% of the
issued and outstanding shares of each class of the Capital Stock, the
shares of Pledged Stock listed on Schedule I constitute all the issued and
outstanding shares of each class of the Capital Stock of each of the
Issuers listed on Schedule I;
(b) all the shares of Pledged Stock have been duly and validly issued
and are fully paid and nonassessable;
(c) the Pledgor is the sole record and beneficial owner of, and has
good and marketable title to, the Pledged Stock listed on Schedule I, free
of any and all Liens or options in favor of, or claims of, any other
Person, except the Lien created by this Pledge Agreement; PROVIDED that any
such sale of the Pledged Stock would be subject to compliance with or an
exemption from transfer restrictions under applicable securities laws;
(d) upon delivery to the Administrative Agent of the stock
certificates evidencing the Pledged Stock, the Lien granted pursuant to
this Pledge Agreement will constitute a valid, perfected first priority
Lien on the Collateral, enforceable as such against all creditors of the
Pledgor and any Persons purporting to purchase any Collateral from the
Pledgor, except as enforceability may be limited by 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); and
(e) The chief executive office of the Pledgor and the office where
the Pledgor keeps its records concerning all contracts is located at One
Eagle Square, Concord, New Hampshire 03301. The Pledgor shall not establish
a new location for its chief executive office or change its name until (i)
it has given to the Administrative Agent not less than 30 days' prior
written notice of its intention to do so, clearly describing such new
location or specifying such new name, as the case may be, and (ii) with
respect to such new location or such new name, as the case may be, it shall
have taken all action, satisfactory to the Administrative Agent, necessary
to maintain the security interest of the Administrative Agent in the
Collateral intended to be granted hereby at all times fully perfected and
in full force and effect.
5. COVENANTS. The Pledgor covenants and agrees with the
Administrative Agent and the Lenders that, from and after the date of this
Pledge Agreement until the Obligations are paid in full and the Commitments are
terminated:
(a) If the Pledgor, as a result of its ownership of the Pledged
Stock, shall become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), option or rights, whether in addition to, in
substitution of, as a
<PAGE> 127
conversion of, or in exchange for any shares of the Pledged Stock, or
otherwise in respect thereof, the Pledgor shall accept the same as the
agent of the Administrative Agent and the Lenders, hold the same in trust
for the Administrative Agent and the Lenders and deliver the same forthwith
to the Administrative Agent in the exact form received, duly endorsed by
the Pledgor to the Administrative Agent, if required, together with an
undated stock power covering such certificate duly executed in blank by the
Pledgor to be held by the Administrative Agent, subject to the terms
hereof, as additional collateral security for the Obligations. Any sums
paid upon or in respect of the Pledged Stock upon the liquidation or
dissolution of any Issuer and any distribution of capital in respect of the
Pledged Stock or any cash pursuant to the recapitalization or
reclassification of the capital of any Issuer or pursuant to the
reorganization thereof shall, within 15 days after receipt thereof by the
Administrative Agent and in the sole discretion of the Administrative
Agent, either be (i) applied in payment of the Obligations in such order as
the Administrative Agent may elect or (ii) paid over to the Pledgor for its
use in the operation of its business, and in case any distribution of
capital shall be made on or in respect of the Pledged Stock or any property
shall be distributed upon or with respect to the Pledged Stock pursuant to
the recapitalization or reclassification of the capital of any Issuer or
pursuant to the reorganization thereof, the property so distributed shall
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Stock shall be
received by the Pledgor, the Pledgor shall, until such money or property is
paid or delivered to the Administrative Agent, hold such money or property
in trust for the Lenders, segregated from other funds of the Pledgor, as
additional collateral security for the Obligations.
(b) Without the prior written consent of the Administrative Agent,
the Pledgor will not (i) vote to enable, or take any other action to
permit, any Issuer to issue any stock or other equity securities of any
nature or to issue any other securities convertible into or granting the
right to purchase or exchange for any stock or other equity securities of
any nature of any Issuer, (ii) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Collateral,
or (iii) create, incur or permit to exist any other Lien or option in favor
of, or any claim of any Person with respect to, any of the Collateral, or
any interest therein, except for the Lien provided for by this Pledge
Agreement. The Pledgor will defend and will indemnify and hold harmless the
Administrative Agent and the Lenders against the claims and demands of all
Persons whomsoever with respect to any claim arising from or in connection
with the right, title and interest of the Administrative Agent and the
Lenders in and to the Collateral.
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver such further instruments
and documents and take such further actions as the Administrative Agent may
reasonably request for the purposes of obtaining or preserving the full
benefits of this Pledge Agreement and of the rights and powers herein
granted. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note, other
instrument or chattel paper, such note, instrument or chattel paper shall
be immediately delivered to the Administrative Agent, duly endorsed in a
manner satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Pledge Agreement.
<PAGE> 128
(d) The Pledgor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamps, excise, sales or
other taxes which may be payable or determined to be payable with respect
to any of the Collateral or in connection with any of the transactions
contemplated by this Pledge Agreement.
(e) The Pledgor agrees that, within 30 days of any corporation
becoming a Subsidiary (as defined in the Credit Agreement), in the case of
shares of stock of such Subsidiary, it shall (i) upon the request of the
Administrative Agent, deliver to the Administrative Agent all such shares
(or, in the case of any Foreign Subsidiary, 65% of such shares) owned by
the Pledgor, together with, in each case, appropriate undated stock powers
duly executed in blank and (ii) execute and deliver a new pledge agreement
(or a supplement to this Pledge Agreement) covering such shares. Upon such
delivery, such shares shall constitute a representation and warranty as of
the date of such delivery that the representations and warranties contained
in SECTION 4 above are true and correct on such date after giving effect to
such delivery. The Pledgor shall also furnish to the Lenders such legal
opinions confirming such representations and warranties as the
Administrative Agent or any Lender may reasonably request.
6. CASH DIVIDENDS; VOTING RIGHTS. Unless a Default or Event of
Default shall have occurred and be continuing, the Pledgor shall be permitted to
receive all cash dividends paid in respect of the Pledged Stock to the extent
permitted in the Credit Agreement; PROVIDED that any such cash dividends
received by the Pledgor during the pendency of any Default or Event of Default,
as applicable, shall be returned promptly to the issuer of such cash dividends,
respectively, and any such cash dividends received during the pendency of any
Event of Default or during the pendency of a Default but not returned prior to
such Event of Default shall be delivered promptly to the Administrative Agent.
Unless an Event of Default shall have occurred and be continuing, the Pledgor
shall be permitted to exercise all voting and corporate rights with respect to
the Pledged Stock; PROVIDED that no vote shall be cast or corporate right
exercised or other action taken which, in the Administrative Agent's reasonable
judgment, would impair the Collateral or which would be inconsistent with or
result in any violation of any provision of the Credit Agreement, the Notes, the
other Loan Documents or this Pledge Agreement.
7. RIGHTS OF THE LENDERS AND THE ADMINISTRATIVE AGENT. (a) If an
Event of Default shall occur and be continuing, (i) the Administrative Agent
shall have the right to receive any and all cash dividends paid in respect of
the Pledged Stock, and to make application thereof to the Obligations in such
order as the Administrative Agent may determine and (ii) all shares of the
Pledged Stock shall be registered in the name of the Administrative Agent or its
nominee, and the Administrative Agent or its nominee may thereafter exercise (A)
all voting, corporate and other rights pertaining to such shares of the Pledged
Stock at any meetings of shareholders of any Issuer or otherwise, and (B) any
and all rights of conversion, exchange, subscription and any other rights,
privileges or options, pertaining to any of such shares of the Pledged Stock as
if it were the absolute owner thereof (including, without limitation, the right
to exchange at its discretion any and all the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of any Issuer, or upon the exercise by the Pledgor or
the Administrative Agent of any right, privilege or option pertaining to any of
such shares of the Pledged Stock, and in connection therewith, the right to
deposit and deliver any and all of the Pledged Stock with any committee,
depositary, transfer agent, registrar
<PAGE> 129
or other designated agency upon such terms and conditions as it may determine),
all without liability to the Administrative Agent except to account for property
actually received by it, but the Administrative Agent shall have no duty to the
Pledgor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(b) The rights of the Administrative Agent and the Lenders hereunder
shall not be conditioned or contingent upon the pursuit by the Administrative
Agent or any Lender of any right or remedy against the Pledgor, any Issuer, any
guarantor or against any other Person which may be or become liable in respect
of all or any part of the Obligations or against any collateral security
therefor, guarantee therefor or right of offset with respect thereto. Neither
the Administrative Agent nor any Lender shall be liable for any failure to
demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so, nor shall the Administrative Agent be under any obligation to
sell or otherwise dispose of any Collateral upon the request of the Pledgor or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
8. REMEDIES. If an Event of Default shall occur and be continuing,
the Administrative Agent, on behalf of the Lenders, may exercise, in addition to
all other rights and remedies granted in this Pledge Agreement and in any other
instrument or agreement securing, evidencing or relating to the Obligations, all
rights and remedies of a secured party under the Code. Without limiting the
generality of the foregoing, the Administrative Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon the
Pledgor, any Issuer, any guarantor or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived to the maximum
extent permitted by law), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, give option or options to purchase or otherwise dispose
of and deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, in the
over-the-counter market, at any exchange, broker's board or office of the
Administrative Agent or any Lender or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The
Administrative Agent or any Lender shall have the right upon any such public
sale or sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of the Collateral so sold free of
any right or equity of redemption in the Pledgor, which right or equity is
hereby waived or released to the maximum extent permitted by law. The
Administrative Agent shall apply any Proceeds from time to time held by it and
the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred in respect thereof or incidental to the care or safekeeping of any
of the Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Lenders hereunder, including, without limitation,
attorneys' fees and disbursements of counsel to the Administrative Agent, to the
payment in whole or in part of the Obligations, in such order as the
Administrative Agent may elect, and only after such application and after the
payment by the Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of the
Code, need the Administrative Agent account for the surplus, if any, to the
Pledgor. To the extent permitted by applicable law, the Pledgor waives all
claims, damages and demands it may acquire against the Administrative Agent or
any Lender arising out of the exercise by them of any rights hereunder. If any
notice of a proposed sale or
<PAGE> 130
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition. The Pledgor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
9. PRIVATE SALES. (a) The Pledgor recognizes that the Administrative
Agent may be unable to effect a public sale of any or all the Pledged Stock, by
reason of certain prohibitions contained in the Securities Act of 1933 (the
"SECURITIES ACT") and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Administrative Agent shall be under no obligation to
delay a sale of any of the Pledged Stock for the period of time necessary to
permit any Issuer or the Pledgor to register such securities for public sale
under the Securities Act, or under applicable state securities laws, even if
such Issuer or the Pledgor would agree to do so.
(b) The Pledgor further agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Stock pursuant to this SECTION 9 valid and
binding and in compliance with any and all other applicable Requirements of Law.
The Pledgor further agrees that a breach of any of the covenants contained in
this SECTION 9 will cause irreparable injury to the Administrative Agent and the
Lenders, that the Administrative Agent and the Lenders have no adequate remedy
at law in respect of such breach and, as a consequence, that each and every
covenant contained in this SECTION 9 shall be specifically enforceable against
the Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Credit Agreement.
10. LIMITATION ON DUTIES REGARDING COLLATERAL. The Administrative
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar securities and property for its own
account. None of the Administrative Agent, the Lenders or any of their
respective directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or otherwise.
11. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
12. SEVERABILITY. Any provision of this Pledge 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.
<PAGE> 131
13. SECTION HEADINGS. The section headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
14. NO WAIVER; CUMULATIVE REMEDIES. Neither the Administrative Agent
nor any Lender shall by any act (except by a written instrument pursuant to
SECTION 15) be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
15. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS; GOVERNING LAW.
None of the terms or provisions of this Pledge Agreement may be amended,
supplemented or otherwise modified except by a written instrument executed by
the Pledgor and the Administrative Agent; PROVIDED that any provision of this
Pledge Agreement may be waived by the Administrative Agent in a letter or
agreement executed by the Administrative Agent or by telex or facsimile
transmission from the Administrative Agent. This Pledge Agreement shall inure to
the benefit of the Administrative Agent and the Lenders and their respective
successors and assigns. THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN SECTION 5-1401 OF THE
GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK.
16. NOTICES. Notices may be given by mail, by telex or by facsimile
transmission, addressed or transmitted to the Person to which it is being given
at such Person's address or transmission number set forth in the Credit
Agreement and shall be effective (a) in the case of mail, three days after
deposit in the postal system, first class postage pre-paid, and (b) in the case
of telex or facsimile notices, when sent if receipt is confirmed by telephone.
The Pledgor and the Issuers may change their respective addresses and
transmission numbers by written notice to the Administrative Agent.
17. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO ISSUERS. The Pledgor
hereby authorizes and instructs each Issuer to comply with any instruction
received by it from the Administrative Agent in writing that (a) states that an
Event of Default has occurred and (b) is otherwise in accordance with the terms
of this Pledge Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Issuers shall be fully protected in so
complying.
18. AUTHORITY OF AGENT. The Pledgor acknowledges that the rights and
responsibilities of the Administrative Agent under this Pledge Agreement with
respect to any
<PAGE> 132
action taken by the Administrative Agent or the exercise or non-exercise by the
Administrative Agent of any option, voting right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this Pledge
Agreement shall, as between the Administrative Agent and the Lenders, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Pledgor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and neither the Pledgor nor any
Issuer shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
19. TERMINATION; RELEASE. Upon the repayment of all the Obligations
in full and the termination of the Commitments, this Pledge Agreement shall
terminate, and the Administrative Agent, at the request of and sole expense of
the Pledgor, will execute and deliver to the Pledgor the proper instruments
(including Uniform Commercial Code termination statements on form UCC-2 or
UCC-3, as applicable) acknowledging the termination of this Pledge Agreement,
and will duly assign, transfer and deliver to the Pledgor (without recourse and
without any representation or warranty of any kind) such of the Collateral as
may be in the possession of the Administrative Agent and has not theretofore
been disposed of or otherwise applied or released.
20. COUNTERPARTS. This Pledge Agreement may be executed in
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
<PAGE> 133
IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement
to be duly executed and delivered as of the date first above written.
AAVID THERMAL TECHNOLOGIES, INC.
By: ____________________________
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By: ____________________________
Name:
Title:
<PAGE> 134
ACKNOWLEDGMENT AND CONSENT
FLUENT, INC., a New Hampshire corporation ("Fluent"), one of the
Issuers referred to in the foregoing Pledge Agreement, hereby acknowledges
receipt of a copy thereof, agrees to be bound thereby and to comply with the
terms thereof insofar as such terms are applicable to it. Fluent agrees to
notify the Administrative Agent promptly in writing of the occurrence of any of
the events described in SECTION 5(a) of the Pledge Agreement. Fluent further
agrees that the terms of SECTION 9(b) of the Pledge Agreement shall apply to it,
MUTATIS MUTANDIS, with respect to all actions that may be required of it under
or pursuant to or arising out of SECTION 9 of the Pledge Agreement.
FLUENT, INC.
By: ____________________________
Name:
Title:
Address for Notices:
With copies to:
<PAGE> 135
ACKNOWLEDGMENT AND CONSENT
APPLIED THERMAL TECHNOLOGIES, INC., a New Hampshire corporation
("Applied Thermal"), one of the Issuers referred to in the foregoing Pledge
Agreement, hereby acknowledges receipt of a copy thereof, agrees to be bound
thereby and to comply with the terms thereof insofar as such terms are
applicable to it. Applied Thermal agrees to notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in SECTION
5(a) of the Pledge Agreement. Applied Thermal further agrees that the terms of
SECTION 9(b) of the Pledge Agreement shall apply to it, MUTATIS MUTANDIS, with
respect to all actions that may be required of it under or pursuant to or
arising out of SECTION 9 of the Pledge Agreement.
APPLIED THERMAL TECHNOLOGIES, INC.
By: ____________________________
Name:
Title:
Address for Notices:
With copies to:
<PAGE> 136
ACKNOWLEDGMENT AND CONSENT
AAVID THERMAL PRODUCTS, INC., a New Hampshire corporation ("ATP"), one
of the Issuers referred to in the foregoing Pledge Agreement, hereby
acknowledges receipt of a copy thereof, agrees to be bound thereby and to comply
with the terms thereof insofar as such terms are applicable to it. ATP agrees to
notify the Administrative Agent promptly in writing of the occurrence of any of
the events described in SECTION 5(a) of the Pledge Agreement. ATP further agrees
that the terms of SECTION 9(b) of the Pledge Agreement shall apply to it,
MUTATIS MUTANDIS, with respect to all actions that may be required of it under
or pursuant to or arising out of SECTION 9 of the Pledge Agreement.
AAVID THERMAL PRODUCTS, INC.
By: ____________________________
Name:
Title:
Address for Notices:
With copies to:
<PAGE> 137
ACKNOWLEDGMENT AND CONSENT
AAVID ENGINEERING EXPORT, INC., a company incorporated under the laws
of Barbados ("Aavid Export"), one of the Issuers referred to in the foregoing
Pledge Agreement, hereby acknowledges receipt of a copy thereof, agrees to be
bound thereby and to comply with the terms thereof insofar as such terms are
applicable to it. Aavid Export agrees to notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in SECTION
5(a) of the Pledge Agreement. Aavid Export further agrees that the terms of
SECTION 9(b) of the Pledge Agreement shall apply to it, MUTATIS MUTANDIS, with
respect to all actions that may be required of it under or pursuant to or
arising out of SECTION 9 of the Pledge Agreement.
AAVID ENGINEERING EXPORT, INC.
By: ____________________________
Name:
Title:
Address for Notices:
With copies to:
<PAGE> 138
SCHEDULE I
TO BORROWER
PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
<TABLE>
<CAPTION>
Stock
Class of Certificate No. of
Issuer of Pledged Stock Stock* No. Shares
- ----------------------- -------- ----------- ------
<S> <C> <C> <C>
Fluent, Inc.
Applied Thermal Technologies, Inc.
Aavid Thermal Products, Inc.
Aavid Engineering Export, Inc.
</TABLE>
- ------------------------------------
* Common unless otherwise indicated.
<PAGE> 139
EXHIBIT G
TO CREDIT
AGREEMENT
FORM OF BORROWER SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of October , 1999, made by AAVID THERMAL
TECHNOLOGIES, INC., a Delaware corporation (the "BORROWER"), in favor of
CANADIAN IMPERIAL BANK OF COMMERCE, as administrative agent (in such capacity,
the "ADMINISTRATIVE AGENT") for the several banks and other financial
institutions (the "LENDERS") from time to time parties to the Credit Agreement,
dated as of October 21, 1999 (as amended, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT"), among the Borrower, the Lenders,
Canadian Imperial Bank of Commerce, as issuer of certain letters of credit, the
Administrative Agent, and CIBC World Markets Corp., as lead arranger and
bookrunner.
WITNESSETH:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Borrower under the Credit Agreement that
the Borrower shall have executed and delivered this Security Agreement to the
Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and the
Lenders to make their respective Loans to the Borrower under the Credit
Agreement, the Borrower hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein are used herein as defined therein. The
following terms which are defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof are used herein as defined therein:
Accounts, Chattel Paper, Documents, Equipment, Farm Products, General
Intangibles, Instruments, Inventory, Investment Property and Proceeds. The
following terms shall have the following meanings:
"CODE" shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York.
"COLLATERAL" shall have the meaning assigned to it in Section 2.
"CONTRACTS" shall mean (a) any Acquisition Document to which the
Borrower is a party, (b) any Hedging Agreement to which the Borrower is a
party and (c) all other contracts executed from time to time by the
Borrower, including, without limitation, with
<PAGE> 140
respect to an Account, in each case, as the same may from time to time be
amended, supplemented or otherwise modified, including, without limitation,
(i) all rights of the Borrower to receive moneys due and to become due to
it thereunder or in connection therewith, (ii) all rights of the Borrower
to damages arising out of, or for, breach or default in respect thereof,
(iii) all rights of the Borrower to receive Proceeds of any insurance,
indemnity, warranty or guaranty with respect thereto and (iv) all rights of
the Borrower to perform and to exercise all remedies thereunder.
"OBLIGATIONS" shall mean the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of the
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 Borrower or any Subsidiary, as applicable, whether or not a
claim for post-filing or post-petition interest is allowed in such
proceeding and whether the Administrative Agent, for the benefit of the
Lenders, is oversecured or undersecured with respect to such Loans) the
Notes and all other obligations and liabilities of the Borrower or any
Subsidiary, as applicable, to the Agents and the Lenders or any of their
respective Affiliates, including any Reimbursement Obligations and any
obligation of the Borrower under any Hedging Agreement entered into with
either Agent, any Lender or any of their respective Affiliates, whether
direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter incurred, which may arise under, out of, or in
connection with, the Credit Agreement, the Notes, the other Loan Documents
or any Hedging Agreement with either Agent, any Lender or any of their
respective Affiliates or any other document made, delivered or given in
connection therewith or herewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees and disbursements of counsel to
either Agent or to the Lenders that are required to be paid by the Borrower
or any Subsidiary, as applicable, pursuant to the terms of the Credit
Agreement, any other Loan Document or any Hedging Agreement with either
Agent, any Lender or any of their respective Affiliates) or otherwise.
"SECURITY AGREEMENT" shall mean this Security Agreement, as amended,
supplemented or otherwise modified from time to time.
2. GRANT OF SECURITY INTEREST. As collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Obligations, the Borrower hereby grants to
the Administrative Agent for the ratable benefit of the Lenders a security
interest in all the following property now owned or at any time hereafter
acquired by the Borrower or in which the Borrower now has or at any time in the
future may acquire any right, title or interest (collectively, the
"COLLATERAL"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
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<PAGE> 141
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Investment Property; PROVIDED that with respect to the
Capital Stock of any Foreign Subsidiary, such security
interest, together with any security interest created
through a pledge of such Investment Property pursuant to a
Pledge Agreement, shall be in an amount equal to 65% of such
Capital Stock or such higher percentage as may be allowed
under Treas. Reg. ss. 1.956-2(c)(2) under the Code; and
(x) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing;
PROVIDED that nothing contained herein shall create a collateral assignment with
respect to any Contract if the grant of such collateral assignment is (or is
determined by non-appealable adjudication of a court or other dispute resolution
tribunal to be) prohibited by the terms of such Contract.
3. RIGHTS OF ADMINISTRATIVE AGENT AND LENDERS; LIMITATIONS ON
ADMINISTRATIVE AGENT'S AND LENDERS' OBLIGATIONS.
(a) BORROWER REMAINS LIABLE UNDER ACCOUNTS AND CONTRACTS. Anything
herein to the contrary notwithstanding, the Borrower shall remain liable under
each of the Accounts and Contracts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account and in
accordance with and pursuant to the terms and provisions of each such Contract.
Neither the Administrative Agent nor any Lender shall have any obligation or
liability under any Account (or any agreement giving rise thereto) or under any
Contract by reason of or arising out of this Security Agreement or the receipt
by the Administrative Agent or any such Lender of any payment relating to such
Account or Contract pursuant hereto, nor shall the Administrative Agent or any
Lender be obligated in any manner to perform any of the obligations of the
Borrower under or pursuant to any Account (or any agreement giving rise thereto)
or under or pursuant to any Contract, to make any payment, to make any inquiry
as to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Account (or any agreement
giving rise thereto) or under any Contract, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to it or to which it may be entitled at any
time or times.
(b) NOTICE TO ACCOUNT DEBTORS AND CONTRACTING PARTIES. At any time
after the occurrence and during the continuance of an Event of Default, the
Administrative Agent shall have the right at any time, upon written notice to
the Borrower of its intention to do so, to notify account debtors or obligors on
the Accounts and parties to the Contracts that the Accounts and the Contracts
have been assigned to the Administrative Agent for the ratable benefit of the
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Lenders and that payments due or to become due to the Borrower in respect
thereof shall be made directly to the Administrative Agent and, upon such
notification, and at the expense of the Borrower, to enforce collection of any
such Accounts. The Administrative Agent may, at any time, in its own name or in
the name of the Lenders or the Borrower communicate with account debtors on the
Accounts and parties to the Contracts to verify with them to its satisfaction
the existence, amount and terms of any Accounts or Contracts. Unless an Event of
Default shall have occurred and be continuing, the Administrative Agent shall
not exercise its right under this clause (b) more than once in any 12-month
period.
(c) COLLECTIONS ON ACCOUNTS. The Administrative Agent hereby
authorizes the Borrower to collect the Accounts; PROVIDED that the
Administrative Agent may curtail or terminate said authority at any time after
the occurrence of an Event of Default. If required by the Administrative Agent
at any time after the occurrence and during the continuance of an Event of
Default, any payments of Accounts, when collected by the Borrower, shall be
forthwith (and, in any event, within two Business Days) deposited by the
Borrower in the exact form received, duly endorsed by the Borrower to the
Administrative Agent if required, in a special collateral account maintained by
the Administrative Agent, subject to withdrawal by the Administrative Agent for
the account of the Lenders only, as hereinafter provided, and, until so turned
over, shall be held by the Borrower in trust for the Administrative Agent and
the Lenders, segregated from other funds of the Borrower. Each deposit of any
such Proceeds shall be accompanied by a report identifying in reasonable detail
the nature and source of the payments included in the deposit. All Proceeds
constituting collections of Accounts while held by the Administrative Agent (or
by the Borrower in trust for the Administrative Agent and the Lenders) shall
continue to be collateral security for all the Obligations and shall not
constitute payment thereof until applied as hereinafter provided. At such
intervals as may be agreed upon by the Borrower and the Administrative Agent,
or, if an Event of Default shall have occurred and be continuing, at any time at
the Administrative Agent's election, the Administrative Agent shall apply all or
any part of the funds on deposit in said special collateral account on account
of the Obligations in such order as the Administrative Agent may elect, and any
part of such funds which the Administrative Agent elects not so to apply and
deems not required as collateral security for the obligations shall be paid over
from time to time by the Administrative Agent to the Borrower or to whomsoever
may lawfully be entitled to receive the same (it being understood that (i) prior
to any Event of Default that is continuing, the Borrower shall be permitted to
use such funds in the operation of its business in a manner consistent with the
terms of the Credit Agreement and (ii) within fifteen days after the occurrence
of any Event of Default, the Administrative Agent shall, in its sole discretion,
either apply such funds in payment of the Obligations in such order as the
Administrative Agent may elect or permit the Borrower to use such funds in the
operation of its business). Upon the occurrence of an Event of Default that is
continuing, at the Administrative Agent's request, the Borrower shall deliver to
the Administrative Agent all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to the Accounts,
including, without limitation, all original orders, invoices and shipping
receipts.
(d) ANALYSIS OF ACCOUNTS. The Administrative Agent shall have the
right to make test verifications of the Accounts in any manner and through any
medium that it reasonably considers advisable, and the Borrower shall furnish
all such assistance and information as the Administrative Agent may require in
connection therewith; PROVIDED that the Administrative Agent shall use its
reasonable efforts to minimize any disruption of the Borrower's business
resulting from such verifications. At any time and from time to time if the
Administrative Agent
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<PAGE> 143
concludes in its reasonable judgment, based upon its evaluation of the general
creditworthiness of the Borrower, that such examination is required, and so
requests, the Borrower at its own expense shall cause independent public
accountants or other parties that are not Affiliates of the Borrower and are
reasonably satisfactory to the Administrative Agent to furnish to the
Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts. Unless an Event of
Default shall have occurred and be continuing, the Administrative Agent shall
not exercise its right under this clause (d) more than once in any 12-month
period.
4. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents
and warrants that:
(a) TITLE; NO OTHER LIENS. Except as permitted under Section 6.3 of
the Credit Agreement, the Borrower owns or has a valid leasehold interest
in each item of the Collateral free and clear of any and all Liens or
claims of others. Except as permitted under Section 6.3(e) of the Credit
Agreement, no security agreement, financing statement or other public
notice with respect to all or any part of the Collateral is on file or of
record in any public office, except (i) such as may have been filed in
favor of the Administrative Agent, for the ratable benefit of the Lenders,
pursuant to this Security Agreement and (ii) financing statements filed by
lessors solely for information purposes in respect of "true" leases.
(b) PERFECTED FIRST PRIORITY LIENS. Except as permitted under Section
6.3(e) of the Credit Agreement, the Liens granted pursuant to this Security
Agreement will, upon the filing of appropriate financing statements,
constitute valid and perfected first priority Liens on the Collateral in
favor of the Administrative Agent, for the ratable benefit of the Lenders,
and against any owner or purchaser of the real property where any of the
Equipment is located and any present or future creditor obtaining a Lien on
such real property, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditor's rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at
law).
(c) ACCOUNTS. The amount represented by the Borrower to the Lenders
from time to time as owing by each account debtor or by all account debtors
in respect of the Accounts will at such time be the correct amount actually
owing by such account debtor or debtors thereunder. No amount payable to
the Borrower under or in connection with any Account is evidenced by any
Instrument or Chattel Paper which has not been delivered to the
Administrative Agent. The place where the Borrower keeps its records
concerning the Accounts is One Eagle Square, Concord, New Hampshire 03301.
(d) CONTRACTS. Except as set forth in Schedule 3.4 to the Credit
Agreement, no consent of any party (other than the Borrower) to any
Contract is required in connection with the execution, delivery and
performance by the Borrower of this Security Agreement. Each Contract is in
full force and effect and constitutes a valid and legally enforceable
obligation of the parties thereto, except as enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditor's rights generally and by general
equitable principles (whether enforcement is
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<PAGE> 144
sought by proceedings in equity or at law). No consent or authorization of,
filing with or other act by or in respect of any Governmental Authority is
required in connection with the execution, delivery or performance by the
Borrower of, or the validity or enforceability of, any of the Contracts by
any party thereto other than those which have been duly obtained, made or
performed, are in full force and effect and do not subject the scope of any
such Contract to any material adverse limitation, either specific or
general in nature. Neither the Borrower nor (to the best of the Borrower's
knowledge) any other party to any Contract is in default in any material
respect in the performance or observance of any of the terms thereof. The
Borrower has fully performed in all material respects all its obligations
under each Contract. The right, title and interest of the Borrower in, to
and under each Contract are not subject to any defense, offset,
counterclaim or claim which would materially adversely affect the value of
such Contract as Collateral, nor have any of the foregoing been asserted or
alleged against the Borrower as to any Contract. The Borrower has delivered
to the Administrative Agent a complete and correct copy of each material
Contract, including all amendments, supplements and other modifications
thereto and will deliver any other Contract which the Administrative Agent
may request. No amount payable to the Borrower under or in connection with
any Contract is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Administrative Agent.
(e) INVENTORY AND EQUIPMENT. The Inventory and the Equipment are kept
at the locations listed on Schedule I hereto.
(f) CHIEF EXECUTIVE OFFICE. The Borrower's chief executive office and
chief place of business is located at One Eagle Square, Concord, New
Hampshire 03301.
(g) FARM PRODUCTS. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
(h) GOVERNMENTAL OBLIGORS. None of the obligors on any Accounts, and
none of the parties to any Contracts, is a Governmental Authority.
(i) INVESTMENT PROPERTY. The Investment Property consists of the
items set forth on Annex A.
5. COVENANTS. The Borrower covenants and agrees with the
Administrative Agent and the Lenders that, from and after the date of this
Security Agreement until the Obligations are paid in full and the Commitments
are terminated:
(a) FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS AND CHATTEL PAPER.
At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of the Borrower, the Borrower
will promptly and duly execute and deliver such further instruments and
documents and take such further action as the Administrative Agent may
reasonably request for the purpose of obtaining or preserving the full
benefits of this Security Agreement and of the rights and powers herein
granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the Liens created hereby. The Borrower also
hereby authorizes the Administrative Agent to file any
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<PAGE> 145
such financing or continuation statement without the signature of the
Borrower to the extent permitted by applicable law. A carbon, photographic
or other reproduction of this Security Agreement shall be sufficient as a
financing statement for filing in any jurisdiction. If any amount payable
under or in connection with any of the Collateral shall be or become
evidenced by any Instrument or Chattel Paper, such Instrument or Chattel
Paper shall be immediately delivered to the Administrative Agent, duly
endorsed in a manner satisfactory to the Administrative Agent, to be held
as Collateral pursuant to this Security Agreement.
(b) INDEMNIFICATION. The Borrower agrees to pay, and to save the
Administrative Agent and the Lenders harmless from, any and all
liabilities, costs and expenses (including, without limitation, legal fees
and expenses) (i) with respect to, or resulting from, any delay in paying
any and all excise, sales or other taxes which may be payable or determined
to be payable with respect to any of the Collateral, (ii) with respect to,
or resulting from, any delay in complying with any Requirement of Law
applicable to any of the Collateral or (iii) in connection with any of the
transactions contemplated by this Security Agreement, except resulting from
the Administrative Agent's or any Lender's gross negligence or willful
misconduct. In any suit, proceeding or action brought by the Administrative
Agent or any Lender under any Account or Contract for any sum owing
thereunder, or to enforce any provisions of any Account or Contract, the
Borrower will save, indemnify and keep the Administrative Agent and such
Lender harmless from and against all expense, loss or damage suffered by
reason of any defense, setoff, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor thereunder, arising
out of a breach by the Borrower of any obligation thereunder or arising out
of any other agreement, indebtedness or liability at any time owing to or
in favor of such account debtor or obligor or its successors from the
Borrower, except resulting from the Administrative Agent's or any Lender's
gross negligence or willful misconduct.
(c) MAINTENANCE OF RECORDS. The Borrower will keep and maintain at
its own cost and expense satisfactory and complete records of the
Collateral, including, without limitation, a record of all payments
received and all credits granted with respect to the Accounts. The Borrower
will mark its books and records pertaining to the Collateral to evidence
this Security Agreement and the security interests granted hereby in such
manner as the Administrative Agent may request. For the Administrative
Agent's and the Lenders' further security, the Administrative Agent, for
the ratable benefit of the Lenders, shall have a security interest in all
the Borrower's books and records pertaining to the Collateral, and the
Borrower shall, during the continuance of a Default under Section 7.1(a) of
the Credit Agreement or Section 7.1(c) of the Credit Agreement as it
relates to Section 6.1 of the Credit Agreement, turn over copies of such
books and records and during the continuation of an Event of Default turn
over any such books and records, in each case, to the Administrative Agent
or to its representatives at the request of the Administrative Agent.
(d) RIGHT OF INSPECTION. The Administrative Agent and the Lenders
shall at all times have full and free access during normal business hours
and, so long as no Event of Default shall have occurred and be continuing,
upon reasonable prior notice, to all books, correspondence and records of
the Borrower, and the Administrative Agent and the Lenders and their
respective representatives may examine the same, take extracts therefrom
and make photocopies thereof, and the Borrower agrees to render to the
Administrative Agent and the Lenders, at the Borrower's cost and expense,
such clerical
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<PAGE> 146
and other assistance as may be reasonably requested with regard thereto.
The Administrative Agent and the Lenders and their respective
representatives shall at all times and, so long as no Event of Default
shall have occurred and be continuing, upon reasonable prior notice, also
have the right to enter into and upon any premises where any of the
Inventory or Equipment is located for the purpose of inspecting the same,
observing its use or otherwise protecting its interests therein.
(e) COMPLIANCE WITH LAWS. The Borrower will comply in all material
respects with all Requirements of Law applicable to the Collateral or any
part thereof or to the operation of the Borrower's business; PROVIDED that
the Borrower may contest any Requirement of Law in any reasonable manner
which shall not, in the sole opinion of the Administrative Agent, adversely
affect the Administrative Agent's or the Lenders' rights or the priority of
their Liens on the Collateral.
(f) COMPLIANCE WITH TERMS OF CONTRACTS. The Borrower will perform and
comply in all material respects with all its obligations under the
Contracts and all its other Contractual Obligations relating to the
Collateral.
(g) PAYMENT OF OBLIGATIONS. The Borrower will pay promptly when due
all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to the Collateral, except
that no such charge need be paid if (i) the validity thereof is being
contested in good faith by appropriate proceedings, (ii) such proceedings
do not involve any material danger of the sale, forfeiture or loss of any
of the Collateral or any interest therein and (iii) such charge is
adequately reserved against on the Borrower's books in accordance with
GAAP.
(h) LIMITATION ON LIENS ON COLLATERAL. The Borrower will not create,
incur or permit to exist, will defend the Collateral against, and will take
such other action as is necessary to remove, any Lien or claim on or to the
Collateral, other than the Liens created hereby and other than as permitted
pursuant to Section 6.3 of the Credit Agreement, and will defend the right,
title and interest of the Administrative Agent and the Lenders in and to
any of the Collateral against the claims and demands of all Persons
whomsoever.
(i) LIMITATIONS ON DISPOSITIONS OF COLLATERAL. The Borrower will not
sell, transfer, lease or otherwise dispose of any of the Collateral, or
attempt, offer or contract to do so except as permitted pursuant to Section
6.6 of the Credit Agreement.
(j) LIMITATIONS ON MODIFICATIONS, WAIVERS, EXTENSIONS OF CONTRACTS
AND AGREEMENTS GIVING RISE TO ACCOUNTS. Subject to subsection (k) below,
the Borrower will not (i) amend, modify, terminate or waive any provision
of any Material Contract or any agreement giving rise to an Account in any
manner which could reasonably be expected to materially adversely affect
the value of such Contract or Account as Collateral, (ii) fail to exercise
promptly and diligently each and every material right which it may have
under each Contract and each agreement giving rise to an Account (other
than any right of termination) or (iii) fail to deliver to the
Administrative Agent a copy of each material
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<PAGE> 147
demand, notice or document received by it relating in any way to any
Contract or any agreement giving rise to an Account. As used in this clause
(j), a "Material Contract" shall mean (x) any purchase order or license
agreement by Fluent, Inc. with a value of more than $750,000 in any
12-month period or (y) any other contract with a stated duration (including
any extension periods contained therein) of more than 12 months and with a
value of more than $750,000.
(k) LIMITATIONS ON DISCOUNTS, COMPROMISES, EXTENSIONS OF ACCOUNTS.
Other than in the ordinary course of business, the Borrower will not grant
any extension of the time of payment of any of the Accounts, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partially, any Person liable for the payment thereof, or allow
any credit or discount whatsoever thereon.
(l) MAINTENANCE OF EQUIPMENT. The Borrower will maintain each item of
Equipment not subject to Section 6.6(a) of the Credit Agreement in good
operating condition, ordinary wear and tear and immaterial impairments of
value and damage by the elements excepted, and will provide all
maintenance, service and repairs necessary for such purpose.
(m) MAINTENANCE OF INSURANCE. The Borrower will maintain, with
financially sound and reputable companies, insurance policies as required
under the Credit Agreement. All such policies shall (i) contain a breach of
warranty clause in favor of the Administrative Agent and the Lenders, (ii)
provide that no cancellation, material reduction in amount or material
change in coverage thereof shall be effective until at least 30 days after
receipt by the Administrative Agent and the Lenders of written notice
thereof, (iii) name the Administrative Agent as loss payee of each such
policy, (iv) name the Administrative Agent and the Lenders as insured to
the extent of their interests under each such policy and (v) be reasonably
satisfactory in all material respects to the Administrative Agent. The
Borrower shall deliver to the Administrative Agent and each Lender upon
request, full information as to the insurance carried, including certified
copies of policies and certificates of insurance from a recognized
insurance broker reasonably acceptable to the Administrative Agent.
(n) FURTHER IDENTIFICATION OF COLLATERAL. The Borrower will furnish
to the Administrative Agent and the Lenders from time to time statements
and schedules further identifying and describing the Collateral and such
other reports in connection with the Collateral as the Administrative Agent
may reasonably request, all in reasonable detail.
(o) NOTICES. The Borrower will advise the Administrative Agent
promptly, in reasonable detail, at its address set forth in the Credit
Agreement, (i) of any Lien (other than Liens created hereby or permitted
under the Credit Agreement) on, or claim asserted against, any of the
Collateral and (ii) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the aggregate
value of the Collateral or on the Liens created hereunder.
(p) CHANGES IN LOCATIONS, NAME, ETC. Unless the Borrower gives 30
days' prior written notice to the Administrative Agent, the Borrower will
not (i) change the location of its chief executive office/chief place of
business from that specified in Section
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4(f) or remove its books and records from the location specified in Section
4(c), (ii) permit any of the Inventory or Equipment to be kept at a
location other than those listed on Schedule I hereto or (iii) change its
name, identity or corporate structure to such an extent that any financing
statement filed by the Administrative Agent in connection with this
Security Agreement would become seriously misleading.
6. ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) POWERS. The Borrower hereby irrevocably constitutes and appoints
the Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Borrower and in the name of
the Borrower or in its own name, from time to time in the Administrative Agent's
discretion, for the purpose of carrying out the terms of this Security
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Security Agreement, and, without limiting the generality of the
foregoing, the Borrower hereby gives the Administrative Agent the power and
right, on behalf of the Borrower, without notice to or assent by the Borrower,
to do the following:
(i) in the case of any Account, at any time when the authority of
the Borrower to collect the Accounts has been curtailed or terminated
pursuant to the first sentence of Section 3(c), or in the case of any other
Collateral, at any time when any Event of Default shall have occurred and
is continuing, in the name of the Borrower or its own name, or otherwise,
to take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Instrument, General Intangible or Contract or with respect to any
other Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by
the Administrative Agent for the purpose of collecting any and all such
moneys due under any Account, Instrument, General Intangible or Contract or
with respect to any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof; and
(iii) upon the occurrence and during the continuance of any Event
of Default, (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (B) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (C)
to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (D) to commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought against
the Borrower with respect to any
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Collateral; (F) to settle, compromise or adjust any suit, action or
proceeding described in clause (E) above and, in connection therewith, to
give such discharges or releases as the Administrative Agent may deem
appropriate; and (G) generally, to sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though the Administrative Agent were the absolute
owner thereof for all purposes, and to do, at the Administrative Agent's
option and the Borrower's expense, at any time, or from time to time, all
acts and things which the Administrative Agent deems necessary to protect,
preserve or realize upon the Collateral and the Administrative Agent's and
the Lenders' Liens thereon and to effect the intent of this Security
Agreement, all as fully and effectively as the Borrower might do.
The Borrower hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
(b) OTHER POWERS. The Borrower also authorizes the Administrative
Agent and the Lenders, at any time and from time to time, to execute, in
connection with the sale provided for in this SECTION 6 or in SECTION 9 hereof,
any endorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral.
(c) NO DUTY ON ADMINISTRATIVE AGENT OR LENDERS' PART. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent's and the Lenders' interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7. PERFORMANCE BY ADMINISTRATIVE AGENT OF BORROWER'S OBLIGATIONS. If
the Borrower fails to perform or comply with any of its agreements contained
herein and the Administrative Agent, as provided for by the terms of this
Security Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the
Administrative Agent incurred in connection with such performance or compliance,
together with interest thereon at a rate per annum 2% above the Alternate Base
Rate, shall be payable by the Borrower to the Administrative Agent on demand and
shall constitute Obligations secured hereby.
8. PROCEEDS. In addition to the rights of the Administrative Agent
and the Lenders specified in Section 3(c) with respect to payments of Accounts,
it is agreed that if an Event of Default shall occur and be continuing (a) upon
written notice by the Administrative Agent to the Borrower, all Proceeds
received by the Borrower consisting of cash, checks and other near-cash items
shall be held by the Borrower in trust for the Administrative Agent and the
Lenders, segregated from other funds of the Borrower, and, forthwith upon
receipt by the Borrower, shall be turned over to the Administrative Agent in the
exact form received by the Borrower (duly endorsed by the Borrower to the
Administrative Agent, if required), and (b) any and all such Proceeds received
by the Administrative Agent (whether from the Borrower or otherwise) shall
within fifteen days thereafter, in the sole discretion of the Administrative
Agent, either be applied by the Administrative Agent for the ratable benefit of
the Lenders against the
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<PAGE> 150
Obligations (whether matured or unmatured), such application to be in such order
as the Administrative Agent shall elect or be available for use by the Borrower
in the operation of its business. Any balance of such Proceeds remaining after
the Obligations shall have been paid in full and the Commitments shall have been
terminated shall be paid over to the Borrower or to whomsoever may be lawfully
entitled to receive the same.
9. REMEDIES. If an Event of Default shall occur and be continuing,
the Administrative Agent, on behalf of the Lenders, may exercise, in addition to
all other rights and remedies granted to them in this Security Agreement and in
any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code. Without
limiting the generality of the foregoing, the Administrative Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to below) to or
upon the Borrower, any guarantor, or any other Person (all and each of which
demands, defenses, advertisements and notices being hereby waived to the maximum
extent permitted by applicable law), may in such circumstances forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option or options to
purchase, or otherwise dispose of and deliver the Collateral or any part thereof
(or contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the
Administrative Agent or any Lender or elsewhere upon such terms and conditions
as it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The
Administrative Agent or any Lender shall have the right upon any such public
sale or sales, and, to the extent permitted by applicable law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in the Borrower, which right or
equity is hereby waived or released to the maximum extent permitted by
applicable law. The Borrower further agrees, at the Administrative Agent's
request, to assemble the Collateral and make it available to the Administrative
Agent at such places as the Administrative Agent shall reasonably select,
whether at the Borrower's premises or elsewhere. The Administrative Agent shall
apply the net proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of every
kind incurred therein or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Administrative Agent and the Lenders hereunder, including, without limitation,
reasonable attorneys' fees and disbursements, to the payment in whole or in part
of the Obligations, in such order as the Administrative Agent may elect, and
only after such application and after the payment by the Administrative Agent of
any other amount required by any provision of law, including, without
limitation, Section 9-504(i)(c) of the Code, need the Administrative Agent
account for the surplus, if any, to the Borrower. To the extent permitted by
applicable law, the Borrower waives all claims, damages and demands it may
acquire against the Administrative Agent or any Lender arising out of the
exercise by them of any rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition. The Borrower shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
10. LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL. The
Administrative Agent's sole duty with respect to the custody, safekeeping and
physical
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<PAGE> 151
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. Neither
the Administrative Agent, any Lender, nor any of their respective directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Borrower or otherwise.
11. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
12. LIMITATION ON LINES OF BUSINESS. Nothing in this Security
Agreement shall be deemed or construed as modifying in any way the restrictions
on the Borrower's activities as set forth in Section 6.14 of the Credit
Agreement.
13. SEVERABILITY. Any provision of this Security 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.
14. SECTION HEADINGS. The section headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
15. NO WAIVER; CUMULATIVE REMEDIES. Neither the Administrative Agent
nor any Lender shall by any act (except by a written instrument pursuant to
SECTION 16), delay, indulgence, omission or otherwise be deemed to have waived
any right or remedy hereunder or to have acquiesced in any Default or Event of
Default or in any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of the Administrative
Agent or any Lender, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Administrative Agent or
any Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Administrative Agent or such
Lender would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
16. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS. None of the terms
or provisions of this Security Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Borrower and
the Administrative Agent; PROVIDED that any provision of this Security Agreement
may be waived by the Administrative Agent in a written letter or agreement
executed by the Administrative Agent or by telex or facsimile transmission from
the Administrative Agent. This Security Agreement shall be binding upon the
successors and assigns of the Borrower and shall inure to the benefit of the
Administrative Agent and the Lenders and their respective successors and
assigns.
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<PAGE> 152
17. GOVERNING LAW. THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, EXCEPT
FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER
JURISDICTIONS TO THE EXTENT THE LAW OF ANOTHER JURISDICTION IS MANDATORILY
APPLICABLE PURSUANT TO THE LAWS OF SUCH JURISDICTION.
18. NOTICES. Notices hereunder may be given by mail, by telex or by
facsimile transmission, addressed or transmitted to the Person to which it is
being given at such Person's address or transmission number set forth in the
Credit Agreement and shall be effective (a) in the case of mail, three days
after deposit in the postal system, first class postage pre-paid and (b) in the
case of telex or facsimile notices, when sent if receipt is confirmed by
telephone. The Borrower may change its address and transmission number by
written notice to the Administrative Agent, and the Administrative Agent or any
Lender may change its address and transmission number by written notice to the
Borrower and, in the case of any Lender, to the Administrative Agent.
19. AUTHORITY OF ADMINISTRATIVE AGENT. The Borrower acknowledges that
the rights and responsibilities of the Administrative Agent under this Security
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Security Agreement shall, as between the Administrative
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Borrower, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Lenders with full
and valid authority so to act or refrain from acting, and the Borrower shall not
be under any obligation, or entitlement, to make any inquiry respecting such
authority.
20. COUNTERPARTS. This Security Agreement may be executed in
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
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<PAGE> 153
IN WITNESS WHEREOF, the Borrower and the Administrative Agent have
caused this Security Agreement to be duly executed and delivered as of the date
first above written.
AAVID THERMAL TECHNOLOGIES, INC.
By: _______________________________
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By: _______________________________
Name:
Title:
<PAGE> 154
SCHEDULE I
TO BORROWER
SECURITY AGREEMENT
AAVID THERMAL TECHNOLOGIES, INC.
One Eagle Square
Concord, New Hampshire 03301
LOCATION OF INVENTORY
One Eagle Square
Concord, New Hampshire 03301
LOCATION OF EQUIPMENT
One Eagle Square
Concord, New Hampshire 03301
<PAGE> 155
ANNEX A
TO BORROWER
SECURITY AGREEMENT
AAVID THERMAL TECHNOLOGIES, INC.
One Eagle Square
Concord, New Hampshire 03301
LIST OF INVESTMENT PROPERTY
<PAGE> 156
EXHIBIT H
TO CREDIT
AGREEMENT
FORM OF CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (this "AGREEMENT") is entered into as of
October 21, 1999 among [DOMESTIC SUBSIDIARY GUARANTORS] (each a "SUBSIDIARY"
and, collectively, the "SUBSIDIARIES").
WITNESSETH:
WHEREAS, Aavid Thermal Technologies, Inc., a Delaware corporation (the
"BORROWER"), has entered into the Credit Agreement dated as of October 21, 1999
among the Borrower, the several banks and other financial institutions (the
"LENDERS") from time to time party thereto, Canadian Imperial Bank of Commerce,
as issuer of certain letters of credit, Canadian Imperial Bank of Commerce, as
administrative agent for the Lenders (the "ADMINISTRATIVE AGENT"), and CIBC
World Markets Corp., as lead arranger and bookrunner (as the same may hereafter
be amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"; terms used therein being used as therein defined);
WHEREAS, in connection therewith, each Subsidiary has entered into a
Guarantee dated as of the date hereof in favor of the Administrative Agent for
the benefit of the Lenders, pursuant to which such Subsidiary has guaranteed all
the Obligations of the Borrower (such Guarantees, as the same may be amended,
supplemented or modified from time to time, are collectively referred to as the
"SUBSIDIARY GUARANTEES"); and
WHEREAS, the Borrower owns, directly or indirectly, all the Capital
Stock of each of the Subsidiaries, and each of the Subsidiaries derives
substantial benefit from the Borrower entering into the Credit Agreement and
obtaining Loans thereunder;
NOW, THEREFORE, in consideration of the premises and the covenants
hereafter contained, and to induce each of the Subsidiaries to enter into its
respective Subsidiary Guarantee, it is agreed as follows:
The parties agree as among themselves that, to the extent any payment
of the Obligations of the Borrower is required to be made under a Subsidiary
Guarantee, each Subsidiary shall be responsible for a portion of such payment
equal to the product of (a) a fraction, the numerator of which is the net worth
(determined in accordance with U.S. GAAP) of such Subsidiary on the date the
Indebtedness which is the subject of such payment was incurred and the
denominator of which is the aggregate net worth (computed as aforesaid) of the
Subsidiaries (such fraction is referred to in the case of any Subsidiary as its
"NET WORTH FRACTION"), MULTIPLIED BY (b) the amount of such payment (such
product being such Subsidiary's "CONTRIBUTION AMOUNT"). To the extent that any
Subsidiary (the "PAYING SUBSIDIARY") shall make a payment in respect of the
Obligations of the Borrower under its Subsidiary Guarantee in excess of its
Contribution Amount, each of the other Subsidiaries shall reimburse the Paying
Subsidiary in an amount equal to the product of (x) such other Subsidiary's Net
Worth Fraction multiplied by (y) such excess.
<PAGE> 157
This Agreement is only intended to define the relative rights of the
Subsidiaries, and nothing set forth in this Agreement is intended to or shall
impair the obligations of the Subsidiaries, jointly and severally, to pay to the
Agents and the Lenders the Obligations as and when the same shall become due and
payable in accordance with the terms of their respective Subsidiary Guarantees.
The parties hereto acknowledge that the right to contribution
hereunder shall constitute an asset in favor of the Subsidiaries to which such
contribution is owing.
The parties hereto acknowledge and agree that the Administrative
Agent, for the benefit of the Lenders and the Issuer, is an intended third-party
beneficiary of this Agreement and that until the indefeasible payment of all the
Obligations and the termination of the Commitments, this Agreement may not be
terminated, amended or modified in a manner that would adversely affect either
Agent or the Lenders without the prior written consent of the Administrative
Agent.
The parties hereto acknowledge and agree that this Agreement has been
entered into so as to support the arrangement set forth in the Credit Agreement
which is governed by the laws of the State of New York. The parties hereto
desire that this Agreement be interpreted in a manner consistent with the
interpretation of the Credit Agreement and to that end have agreed that this
Agreement will be governed by and construed in accordance with the laws of the
State of New York and in such selection have relied, among other items, upon
Section 5-1401 of the General Obligations Law of the State of New York.
IN WITNESS WHEREOF, each of the Subsidiaries has executed and
delivered this Agreement as of the date first above written.
[SUBSIDIARY GUARANTORS]
By:_______________________________
Name:
Title:
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<PAGE> 158
EXHIBIT I
TO CREDIT
AGREEMENT
FORM OF FOREIGN SUBSIDIARY CUSTODY AGREEMENT
THIS CUSTODY AGREEMENT (this "AGREEMENT") dated as of _________, is
entered into between [DEPOSITOR], a [____________________], as Depositor (the
"DEPOSITOR") and CANADIAN IMPERIAL BANK OF COMMERCE ("CIBC"), as Custodian (the
"CUSTODIAN").
PRELIMINARY STATEMENT
WHEREAS, Aavid Thermal Technologies, Inc. (the "BORROWER"), the banks
and other financial institutions (the "LENDERS") from time to time parties
thereto, Canadian Imperial Bank of Commerce, as issuer of certain letters of
credit, Canadian Imperial Bank of Commerce, as administrative agent (the
"ADMINISTRATIVE AGENT"), and CIBC World Markets Corp., as lead arranger and
bookrunner, have entered into the Credit Agreement dated as of October 21, 1999
(such agreement, as amended, supplemented or otherwise modified from time to
time, the "CREDIT AGREEMENT"), pursuant to which the Lenders have agreed to
provide Revolving Credit Loans and Term Loans upon the terms and conditions of
the Credit Agreement;
WHEREAS, the Depositor is a wholly-owned [direct] [indirect] Foreign
Subsidiary of the Borrower;
WHEREAS, it is a condition precedent to the agreement of each Lender
to make the initial Loans requested to be made by it that the Administrative
Agent shall have received this Agreement, executed and delivered by the
Depositor with a counterpart for each Lender; and
WHEREAS, CIBC is willing to act in the capacity of Custodian,
hereunder;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. Unless otherwise defined herein,
capitalized terms used herein shall have the meanings specified in the Credit
Agreement and the following terms shall have the following meanings:
"DEPOSIT NOTICE" has the meaning specified in Section 2.03(d).
"DEPOSITED STOCK" means [___ shares of the [common stock] of
________________] and the related stock certificates, [in each case] to be
deposited with the Custodian pursuant to SECTION 2.03, and any stock dividends
in respect of such stock.
"RECEIPT" has the meaning specified in SECTION 2.03(b).
<PAGE> 159
"RELEASE NOTICE" has the meaning specified in SECTION 2.08(a).
"SUBSIDIARIES" shall mean [NAMES OF SUBSIDIARIES].
"TERMINATION DATE" means that date on which the Administrative Agent
shall notify the Custodian in writing that the Depositor has satisfied and
discharged in full all its Obligations under the Credit Agreement.
ARTICLE II
CUSTODIAN
SECTION 2.01. DESIGNATION AND APPOINTMENT OF CIBC AS CUSTODIAN. CIBC
is hereby designated as, and hereby agrees to perform the duties and obligations
of, the Custodian under and as set forth in this Agreement. CIBC shall serve as
Custodian from the date hereof until the Termination Date, subject to
resignation or removal pursuant to SECTION 3.04 hereof.
SECTION 2.02. DUTIES OF THE CUSTODIAN. At all times that CIBC shall be
the Custodian, it shall duly discharge its duties of receiving and holding the
Deposited Stock in accordance with this Agreement. As to any matters not
expressly provided for by this Agreement, the Custodian shall be required to act
or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the written instructions of the Administrative
Agent; PROVIDED, HOWEVER, that the Custodian shall not be required to take any
action which is contrary to this Agreement or applicable law, or which is not
reasonably incidental to its duties and responsibilities under this Agreement or
is of a type unrelated to its business.
SECTION 2.03. DEPOSITED STOCK. (a) On the Closing Date, the Deposited
Stock shall be delivered by the Depositor to the Custodian. All such Deposited
Stock shall be held by the Custodian pursuant to the terms hereof.
(b) On the Closing Date, upon the delivery of the Deposited Stock by
the Depositor to the Custodian hereunder, the Custodian shall deliver to the
Depositor (with copies to the Administrative Agent) a receipt (the "RECEIPT")
substantially in the form of EXHIBIT A attached hereto identifying the Deposited
Stock that it has received and confirming that it holds such Deposited Stock, as
Custodian hereunder.
(c) On each date that the Depositor shall receive any stock dividend
in respect of the Deposited Stock the Depositor shall deliver such stock to the
Custodian and the Custodian will issue a revised Receipt.
(d) The Custodian shall hold the Deposited Stock as Custodian on the
terms and conditions hereinafter set forth.
(e) On the Closing Date, concurrent with the delivery of the Deposited
Stock to the Custodian, the Depositor shall deliver to each Subsidiary a deposit
notice (the "DEPOSIT NOTICE") substantially in the form of EXHIBIT B attached
hereto notifying such Subsidiary of the grant of custody of the Deposited Stock
to the Custodian hereunder.
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<PAGE> 160
SECTION 2.04. DEPOSITED STOCK HELD BY THE CUSTODIAN. All Deposited
Stock coming into the possession of the Custodian shall be held by it as
Custodian consistent with its customary practice and procedure as a custodian.
SECTION 2.05 NO LIENS OR ENCUMBRANCES. (a) Each of the parties hereto
acknowledges and agrees that nothing contained herein is intended to create or
shall be construed as creating any sale, transfer, assignment, pledge, lien,
security interest, encumbrance upon or other disposition of the Deposited Stock.
(b) The Custodian hereby agrees not to assert any statutory or
possessory liens or encumbrances of any kind with respect to the Deposited Stock
held by it and hereby waives all such liens and encumbrances.
SECTION 2.06. MAINTENANCE OF RECORDS. The Custodian shall implement
and maintain administrative and operating procedures pursuant to which it shall
keep and maintain all records and information necessary to permit the regular
identification of all Deposited Stock held or released by it.
SECTION 2.07. OTHER INFORMATION. (a) From time to time upon reasonable
prior notification, during normal business hours, the Administrative Agent and
any of its respective authorized agents, employees or representatives, shall
have the right (i) to visit the office of the Custodian where the Deposited
Stock is kept, (ii) to examine the facilities for the storage and safekeeping
thereof and (iii) to discuss matters relating to the Deposited Stock and the
Custodian's performance hereunder with any officer of the Custodian having
knowledge of such matters.
(b) The Custodian shall provide to the Administrative Agent such other
information as the Administrative Agent may from time to time reasonably
request, concerning the Deposited Stock which is in the possession of the
Custodian.
SECTION 2.08. REMOVAL OF DEPOSITED STOCK. At any time, the Depositor
may request the Custodian to release the Deposited Stock held by the Custodian
to the Depositor, by delivering a written notice substantially in the form of
EXHIBIT C hereto (a "RELEASE NOTICE") to the Custodian (with simultaneous
delivery thereof by facsimile to the Administrative Agent) specifying a date for
such release that shall be not less than 10 days after the date of such Release
Notice. The Custodian shall also forward a copy of the Release Notice to the
Administrative Agent within 2 days of receipt thereof. On the date specified in
the Release Notice, the Custodian shall release such Deposited Stock to the
Depositor.
SECTION 2.09. CUSTODIAN'S INDEMNIFICATION. The Custodian shall have no
liability whatsoever by reason of any error of judgment for any act done or step
taken or omitted by it, or for any mistake of fact or law for anything which it
may do or refrain from doing in connection herewith, unless caused by or arising
out of its own gross negligence or willful misconduct. Furthermore, the
Depositor agrees to hold the Custodian harmless from any and all losses,
expenses, damages and costs (including, without limitation, attorneys fees)
incurred by either of them as a result of their execution of, or performance of
their respective obligations under, this Agreement, unless however, such losses,
expenses, damages and costs are caused by
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<PAGE> 161
or arise out of the Custodian's gross negligence or willful misconduct. The
provisions of this SECTION 2.09 shall be continuing and shall survive the
termination of this Agreement.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. AMENDMENTS, ETC. No amendment or waiver of any provision
of this Agreement nor consent to any departure therefrom, shall in any event be
effective unless the same shall be in writing and signed by each party hereto,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given.
SECTION 3.02. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including telex communication and
communication by facsimile copy) and mailed, telexed, transmitted or delivered,
as to each party hereto, at its address set forth under its name on the
signature pages hereof or at such other address as shall be designated by such
party in a written notice to the other parties hereto. All such notices and
communications shall be effective, upon receipt, or in the case of delivery by
facsimile copy, when verbal communication of receipt is obtained, in each case
addressed as aforesaid.
SECTION 3.03. BINDING EFFECT; ASSIGNABILITY; TERM. This Agreement
shall be binding upon and inure to the benefit of the Depositor and the
Custodian and their respective successors and assigns. This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
Termination Date, PROVIDED, HOWEVER, that the provisions of SECTION 2.09 shall
be continuing and shall survive the termination of this Agreement.
SECTION 3.04. RESIGNATION AND REMOVAL. The Custodian may resign at any
time by giving written notice thereof to the Depositor and the Administrative
Agent not less than 120 days' prior to the effective date of such resignation.
The Custodian may be removed by the Administrative Agent at any time, with or
without cause, by giving written notice thereof to the Custodian (with copies to
the Depositor) not less than ten (10) days prior to the effective date of such
removal. Upon any such resignation or removal, the Administrative Agent shall
have the right to appoint a successor Custodian. Any such successor shall, upon
its acceptance thereof, succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Custodian, and the retiring
Custodian shall be discharged from its duties and obligations as Custodian under
this Agreement.
SECTION 3.05. NO RIGHT OF SET-OFF. Nothing contained herein shall
grant any right to the Custodian to setoff or otherwise apply any or all
Deposited Stock at any time held hereunder to or for the credit or account of
the Depositor against any or all obligations of the Borrower now or hereafter
existing under the Credit Agreement or any other Loan Document (as defined in
the Credit Agreement).
SECTION 3.06. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws and decisions of the State of New York.
SECTION 3.07. EXECUTION IN COUNTERPARTS; SEVERABILITY. This Agreement
may be executed in any number of counterparts and by different parties hereto in
separate counterparts,
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each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same agreement. In case
any provision in or obligation under this Agreement shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
[FOREIGN SUBSIDIARY], as Depositor
By: _______________________________
Name:
Title:
Notice Address:
[___________________________]
[___________________________]
Attention:
Telecopy:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Custodian
By: _______________________________
Name:
Title:
Notice Address:
425 Lexington Avenue
New York, New York 10017
Attention: Mary Beth Ross
Telecopy: (212) 856-3763
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<PAGE> 164
EXHIBIT A to
Custody Agreement
RECEIPT
[Date]
[DEPOSITOR]
[________________]
[________________]
Attention:
Re: [DEPOSITOR]
Ladies and Gentlemen:
We are sending this letter to you pursuant to Section 2.03(b) of that
certain Custody Agreement dated as of ____________ (the "CUSTODY AGREEMENT")
among [DEPOSITOR], as Depositor, and Canadian Imperial Bank of Commerce, as
Custodian. Capitalized terms used herein and not otherwise defined herein shall
have the meanings ascribed thereto in the Custody Agreement.
The undersigned hereby confirms to you its receipt of the following
Deposited Stock.
[Identify Deposited Stock by stock certificate numbers]
The undersigned hereby confirms that it shall hold the above-listed Deposited
Stock as Custodian in accordance with the terms of the Custody Agreement.
Very truly yours,
CANADIAN IMPERIAL BANK OF COMMERCE,
as Custodian
By: ______________________________
Name:
Title
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<PAGE> 165
EXHIBIT B to
Custody Agreement
DEPOSIT NOTICE
[Date]
[SUBSIDIARY]
[________________]
[________________]
Attention:
Re: [DEPOSITOR]
Ladies and Gentlemen:
You are hereby advised that [DEPOSITOR] has granted custody of 100% of
the shares of capital stock of [FOREIGN SUBSIDIARY] owned by [DEPOSITOR] to
Canadian Imperial Bank of Commerce (the "Custodian"), as custodian pursuant to a
Custody Agreement dated as of ___________ between [DEPOSITOR] and the Custodian,
a copy of which is attached hereto.
Please acknowledge your receipt of this letter by signing where
indicated below and returning the same to the undersigned's attention as soon as
possible.
Very truly yours,
[DEPOSITOR]
By: _______________________________
Name:
Title:
Receipt acknowledged this ___ day of ___________.
[SUBSIDIARY]
By: ________________________
Name:
Title:
<PAGE> 166
EXHIBIT C to
Custody Agreement
RELEASE NOTICE
[Date]
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: Mary Beth Ross
Re: [DEPOSITOR] -- RELEASE OF DEPOSITED STOCK
Ladies and Gentlemen:
Pursuant to SECTION 2.08 of that certain Custody Agreement dated as of
____________ (the "CUSTODY AGREEMENT"; capitalized terms used herein and not
otherwise defined herein shall have the meanings ascribed thereto in the Custody
Agreement) among [DEPOSITOR], as Depositor, and Canadian Imperial Bank of
Commerce, as Custodian, the undersigned hereby requests that the following
Deposited Stock be delivered into our possession:
[Identify Deposited Stock to be released by stock certificate numbers]
In connection with the foregoing, the undersigned hereby represents
and warrants that a copy of this notice has been delivered to the Administrative
Agent simultaneously with delivery to the Custodian.
Very truly yours,
[DEPOSITOR]
By: _______________________________
Name:
Title
<PAGE> 167
EXHIBIT J
TO CREDIT
AGREEMENT
FORM OF SUBSIDIARY PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of [________], 1999 made by [PLEDGOR], a
[________________] (the "PLEDGOR"), in favor of CANADIAN IMPERIAL BANK OF
COMMERCE, as administrative agent (in such capacity, the "ADMINISTRATIVE AGENT")
for the several banks and other financial institutions (the "LENDERS") from time
to time parties to the Credit Agreement, dated as of October 21, 1999 (as
amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among Aavid Thermal Technologies, Inc. (the "BORROWER"), the
Lenders, Canadian Imperial Bank of Commerce, as issuer of certain letters of
credit, the Administrative Agent, and CIBC World Markets Corp., as lead arranger
and bookrunner.
WITNESSETH:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder;
WHEREAS, the Pledgor is the legal and beneficial owner of all the
shares of Pledged Stock (as hereinafter defined) issued by each of the Issuers (
as hereinafter defined); and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Borrower under the Credit Agreement that
the Pledgor shall have executed and delivered this Pledge Agreement to the
Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and the
Lenders to make their respective Loans under the Credit Agreement, the Pledgor
hereby agrees with the Administrative Agent, for the ratable benefit of the
Lenders, as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein are used as defined therein, and the
following terms shall have the following meanings:
"CODE" shall mean the Uniform Commercial Code from time to time in
effect in the State of New York.
"COLLATERAL" shall mean the Pledged Stock and all Proceeds (as defined
below).
"ISSUERS" shall mean the collective reference to
[___________________].
<PAGE> 168
"GUARANTEE OBLIGATIONS" shall mean all obligations of the Pledgor
under the Guarantee including, without limitation, in respect of the
Obligations (as defined in the Credit Agreement) to the extent set forth in
the Guarantee.
"PLEDGE AGREEMENT" shall mean this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"PLEDGED STOCK" shall mean the shares of Capital Stock of the Issuers
listed on Schedule I hereto, together with all stock certificates, options
or rights of any nature whatsoever that may be issued or granted by any
Issuer to the Pledgor while this Pledge Agreement is in effect.
"PROCEEDS" shall mean all "proceeds" as such term is defined in
Section 9-306(1) of the Code and, in any event, shall include, without
limitation, all dividends or other income from the Pledged Stock,
collections thereon or distributions with respect thereto.
2. PLEDGE; GRANT OF SECURITY INTEREST. The Pledgor hereby delivers
to the Administrative Agent, for the ratable benefit of the Lenders, all the
Pledged Stock, and hereby grants to the Administrative Agent, for the ratable
benefit of the Lenders, a first priority security interest in the Collateral, as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of the
Obligations.
3. STOCK POWERS. Concurrently with the delivery to the
Administrative Agent of each certificate representing one or more shares of
Pledged Stock to the Administrative Agent, the Pledgor shall deliver an undated
stock power covering such certificate, duly executed in blank by the Pledgor.
4. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants that:
(a) [with the exception of _______________., of which the shares of
Pledged Stock listed on Schedule I represent 65% of the issued and
outstanding shares of each class of the Capital Stock,] the shares of
Pledged Stock listed on Schedule I constitute all the issued and
outstanding shares of each class of the Capital Stock of each of the
Issuers listed on Schedule I;
(b) all the shares of Pledged Stock have been duly and validly issued
and are fully paid and nonassessable;
(c) the Pledgor is the sole record and beneficial owner of, and has
good and marketable title to, the Pledged Stock listed on Schedule I, free
of any and all Liens or options in favor of, or claims of, any other
Person, except the Lien created by this Pledge Agreement; PROVIDED that any
such sale of the Pledged Stock would be subject to compliance with or an
exemption from transfer restrictions under applicable securities laws;
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(d) upon delivery to the Administrative Agent of the stock
certificates evidencing the Pledged Stock, the Lien granted pursuant to
this Pledge Agreement will constitute a valid, perfected first priority
Lien on the Collateral, enforceable as such against all creditors of the
Pledgor and any Persons purporting to purchase any Collateral from the
Pledgor, except as enforceability may be limited by 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); and
(e) The chief executive office of the Pledgor and the office where
the Pledgor keeps its records concerning all contracts is located at
___________________________. The Pledgor shall not establish a new location
for its chief executive office or change its name until (i) it has given to
the Administrative Agent not less than 30 days' prior written notice of its
intention to do so, clearly describing such new location or specifying such
new name, as the case may be, and (ii) with respect to such new location or
such new name, as the case may be, it shall have taken all action,
satisfactory to the Administrative Agent, necessary to maintain the
security interest of the Administrative Agent in the Collateral intended to
be granted hereby at all times fully perfected and in full force and
effect.
5. COVENANTS. The Pledgor covenants and agrees with the
Administrative Agent and the Lenders that, from and after the date of this
Pledge Agreement until the Obligations are paid in full and the Commitments are
terminated:
(a) If the Pledgor, as a result of its ownership of the Pledged
Stock, shall become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any shares of the
Pledged Stock, or otherwise in respect thereof, the Pledgor shall accept
the same as the agent of the Administrative Agent and the Lenders, hold the
same in trust for the Administrative Agent and the Lenders and deliver the
same forthwith to the Administrative Agent in the exact form received, duly
endorsed by the Pledgor to the Administrative Agent, if required, together
with an undated stock power covering such certificate duly executed in
blank by the Pledgor to be held by the Administrative Agent, subject to the
terms hereof, as additional collateral security for the Obligations. Any
sums paid upon or in respect of the Pledged Stock upon the liquidation or
dissolution of any Issuer and any distribution of capital in respect of the
Pledged Stock or any cash pursuant to the recapitalization or
reclassification of the capital of any Issuer or pursuant to the
reorganization thereof shall, within 15 days after receipt thereof by the
Administrative Agent and in the sole discretion of the Administrative
Agent, either be (i) applied in payment of the Obligations in such order as
the Administrative Agent may elect or (ii) paid over to the Pledgor for its
use in the operation of its business, and in case any distribution of
capital shall be made on or in respect of the Pledged Stock or any property
shall be distributed upon or with respect to the Pledged Stock pursuant to
the recapitalization or reclassification of the capital of any Issuer or
pursuant to the reorganization thereof, the property so distributed shall
be delivered to the Administrative Agent to be held by it hereunder as
additional collateral security for the Obligations. If
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<PAGE> 170
any sums of money or property so paid or distributed in respect of the
Pledged Stock shall be received by the Pledgor, the Pledgor shall, until
such money or property is paid or delivered to the Administrative Agent,
hold such money or property in trust for the Lenders, segregated from other
funds of the Pledgor, as additional collateral security for the
Obligations.
(b) Without the prior written consent of the Administrative Agent,
the Pledgor will not (i) vote to enable, or take any other action to
permit, any Issuer to issue any stock or other equity securities of any
nature or to issue any other securities convertible into or granting the
right to purchase or exchange for any stock or other equity securities of
any nature of any Issuer, (ii) sell, assign, transfer, exchange, or
otherwise dispose of, or grant any option with respect to, the Collateral,
or (iii) create, incur or permit to exist any other Lien or option in favor
of, or any claim of any Person with respect to, any of the Collateral, or
any interest therein, except for the Lien provided for by this Pledge
Agreement. The Pledgor will defend and will indemnify and hold harmless the
Administrative Agent and the Lenders against the claims and demands of all
Persons whomsoever with respect to any claim arising from or in connection
with the right, title and interest of the Administrative Agent and the
Lenders in and to the Collateral.
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver such further instruments
and documents and take such further actions as the Administrative Agent may
reasonably request for the purposes of obtaining or preserving the full
benefits of this Pledge Agreement and of the rights and powers herein
granted. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note, other
instrument or chattel paper, such note, instrument or chattel paper shall
be immediately delivered to the Administrative Agent, duly endorsed in a
manner satisfactory to the Administrative Agent, to be held as Collateral
pursuant to this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Administrative Agent
and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamps, excise, sales or
other taxes which may be payable or determined to be payable with respect
to any of the Collateral or in connection with any of the transactions
contemplated by this Pledge Agreement.
(e) The Pledgor agrees that, within 30 days of any corporation
becoming a Subsidiary (as defined in the Credit Agreement), in the case of
shares of stock of such Subsidiary, it shall (i) upon the request of the
Administrative Agent, deliver to the Administrative Agent all such shares
(or, in the case of any Foreign Subsidiary, 65% of such shares) owned by
the Pledgor, together with, in each case, appropriate undated stock powers
duly executed in blank and (ii) execute and deliver a new pledge agreement
(or a supplement to this Pledge Agreement) covering such shares. Upon such
delivery, such shares shall constitute a representation and warranty as of
the date of such delivery that the representations and warranties contained
in SECTION 4 above are true and correct on such date after giving effect to
such delivery. The Pledgor shall also furnish to the Lenders such legal
opinions confirming such representations and warranties as the
Administrative Agent or any Lender may reasonably request.
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<PAGE> 171
6. CASH DIVIDENDS; VOTING RIGHTS. Unless a Default or Event of
Default shall have occurred and be continuing, the Pledgor shall be permitted to
receive all cash dividends paid in respect of the Pledged Stock to the extent
permitted in the Credit Agreement; PROVIDED that any such cash dividends
received by the Pledgor during the pendency of any Default or Event of Default,
as applicable, shall be returned promptly to the issuer of such cash dividends,
respectively, and any such cash dividends received during the pendency of any
Event of Default or during the pendency of a Default but not returned prior to
such Event of Default shall be delivered promptly to the Administrative Agent.
Unless an Event of Default shall have occurred and be continuing, the Pledgor
shall be permitted to exercise all voting and corporate rights with respect to
the Pledged Stock; PROVIDED that no vote shall be cast or corporate right
exercised or other action taken which, in the Administrative Agent's reasonable
judgment, would impair the Collateral or which would be inconsistent with or
result in any violation of any provision of the Credit Agreement, the Notes, the
other Loan Documents or this Pledge Agreement.
7. RIGHTS OF THE LENDERS AND THE ADMINISTRATIVE AGENT. (a) If an
Event of Default shall occur and be continuing, (i) the Administrative Agent
shall have the right to receive any and all cash dividends paid in respect of
the Pledged Stock, and to make application thereof to the Obligations in such
order as the Administrative Agent may determine and (ii) all shares of the
Pledged Stock shall be registered in the name of the Administrative Agent or its
nominee, and the Administrative Agent or its nominee may thereafter exercise (A)
all voting, corporate and other rights pertaining to such shares of the Pledged
Stock at any meetings of shareholders of any Issuer or otherwise, and (B) any
and all rights of conversion, exchange, subscription and any other rights,
privileges or options, pertaining to any of such shares of the Pledged Stock as
if it were the absolute owner thereof (including, without limitation, the right
to exchange at its discretion any and all the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental change in
the corporate structure of any Issuer, or upon the exercise by the Pledgor or
the Administrative Agent of any right, privilege or option pertaining to any of
such shares of the Pledged Stock, and in connection therewith, the right to
deposit and deliver any and all of the Pledged Stock with any committee,
depositary, transfer agent, registrar or other designated agency upon such terms
and conditions as it may determine), all without liability to the Administrative
Agent except to account for property actually received by it, but the
Administrative Agent shall have no duty to the Pledgor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.
(b) The rights of the Administrative Agent and the Lenders hereunder
shall not be conditioned or contingent upon the pursuit by the Administrative
Agent or any Lender of any right or remedy against the Pledgor, any Issuer, any
guarantor or against any other Person which may be or become liable in respect
of all or any part of the Obligations or against any collateral security
therefor, guarantee therefor or right of offset with respect thereto. Neither
the Administrative Agent nor any Lender shall be liable for any failure to
demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so, nor shall the Administrative Agent be under any obligation to
sell or otherwise dispose of any Collateral upon the request of the Pledgor or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof.
8. REMEDIES. If an Event of Default shall occur and be continuing,
the Administrative Agent, on behalf of the Lenders, may exercise, in addition to
all other rights and remedies granted in this Pledge Agreement and in any other
instrument or agreement securing,
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evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon the Pledgor, any Issuer, any
guarantor or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived to the maximum extent permitted by
law), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
assign, give option or options to purchase or otherwise dispose of and deliver
the Collateral or any part thereof (or contract to do any of the foregoing), in
one or more parcels at public or private sale or sales, in the over-the-counter
market, at any exchange, broker's board or office of the Administrative Agent or
any Lender or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Administrative Agent or any
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold free of any right or equity of
redemption in the Pledgor, which right or equity is hereby waived or released to
the maximum extent permitted by law. The Administrative Agent shall apply any
Proceeds from time to time held by it and the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred in respect
thereof or incidental to the care or safekeeping of any of the Collateral or in
any way relating to the Collateral or the rights of the Administrative Agent and
the Lenders hereunder, including, without limitation, attorneys' fees and
disbursements of counsel to the Administrative Agent, to the payment in whole or
in part of the Obligations, in such order as the Administrative Agent may elect,
and only after such application and after the payment by the Administrative
Agent of any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Administrative Agent
account for the surplus, if any, to the Pledgor. To the extent permitted by
applicable law, the Pledgor waives all claims, damages and demands it may
acquire against the Administrative Agent or any Lender arising out of the
exercise by them of any rights hereunder. If any notice of a proposed sale or
other disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or other
disposition. The Pledgor shall remain liable for any deficiency if the proceeds
of any sale or other disposition of Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
9. PRIVATE SALES. (a) The Pledgor recognizes that the Administrative
Agent may be unable to effect a public sale of any or all the Pledged Stock, by
reason of certain prohibitions contained in the Securities Act of 1933 (the
"SECURITIES ACT") and applicable state securities laws or otherwise, and may be
compelled to resort to one or more private sales thereof to a restricted group
of purchasers which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not with a view to the
distribution or resale thereof. The Pledgor acknowledges and agrees that any
such private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner. The Administrative Agent shall be under no obligation to
delay a sale of any of the Pledged Stock for the period of time necessary to
permit any Issuer or the Pledgor to register such securities for public sale
under the Securities Act, or under applicable state securities laws, even if
such Issuer or the Pledgor would agree to do so.
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(b) The Pledgor further agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales of
all or any portion of the Pledged Stock pursuant to this SECTION 9 valid and
binding and in compliance with any and all other applicable Requirements of Law.
The Pledgor further agrees that a breach of any of the covenants contained in
this SECTION 9 will cause irreparable injury to the Administrative Agent and the
Lenders, that the Administrative Agent and the Lenders have no adequate remedy
at law in respect of such breach and, as a consequence, that each and every
covenant contained in this SECTION 9 shall be specifically enforceable against
the Pledgor, and the Pledgor hereby waives and agrees not to assert any defenses
against an action for specific performance of such covenants except for a
defense that no Event of Default has occurred under the Credit Agreement.
10. LIMITATION ON DUTIES REGARDING COLLATERAL. The Administrative
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar securities and property for its own
account. None of the Administrative Agent, the Lenders or any of their
respective directors, officers, employees or agents shall be liable for failure
to demand, collect or realize upon any of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or otherwise.
11. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
12. SEVERABILITY. Any provision of this Pledge 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.
13. SECTION HEADINGS. The section headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
14. NO WAIVER; CUMULATIVE REMEDIES. Neither the Administrative Agent
nor any Lender shall by any act (except by a written instrument pursuant to
SECTION 15) be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of any of the
terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
15. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS; GOVERNING LAW.
None of the terms or provisions of this Pledge Agreement may be amended,
supplemented or otherwise
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modified except by a written instrument executed by the Pledgor and the
Administrative Agent; PROVIDED that any provision of this Pledge Agreement may
be waived by the Administrative Agent in a letter or agreement executed by the
Administrative Agent or by telex or facsimile transmission from the
Administrative Agent. This Pledge Agreement shall inure to the benefit of the
Administrative Agent and the Lenders and their respective successors and
assigns. THIS PLEDGE AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
UNDER THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK.
16. NOTICES. Notices may be given by mail, by telex or by facsimile
transmission, addressed or transmitted to the Person to which it is being given
at such Person's address or transmission number set forth in the Credit
Agreement and shall be effective (a) in the case of mail, three days after
deposit in the postal system, first class postage pre-paid, and (b) in the case
of telex or facsimile notices, when sent if receipt is confirmed by telephone.
The Pledgor and the Issuers may change their respective addresses and
transmission numbers by written notice to the Administrative Agent.
17. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO ISSUERS. The Pledgor
hereby authorizes and instructs each Issuer to comply with any instruction
received by it from the Administrative Agent in writing that (a) states that an
Event of Default has occurred and (b) is otherwise in accordance with the terms
of this Pledge Agreement, without any other or further instructions from the
Pledgor, and the Pledgor agrees that the Issuers shall be fully protected in so
complying.
18. AUTHORITY OF AGENT. The Pledgor acknowledges that the rights and
responsibilities of the Administrative Agent under this Pledge Agreement with
respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, voting right, request,
judgment or other right or remedy provided for herein or resulting or arising
out of this Pledge Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Pledgor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and neither the Pledgor nor any
Issuer shall be under any obligation, or entitlement, to make any inquiry
respecting such authority.
19. TERMINATION; RELEASE. Upon the repayment of all the Obligations
in full and the termination of the Commitments, this Pledge Agreement shall
terminate, and the Administrative Agent, at the request of and sole expense of
the Pledgor, will execute and deliver to the Pledgor the proper instruments
(including Uniform Commercial Code termination statements on form UCC-2 or
UCC-3, as applicable) acknowledging the termination of this Pledge Agreement,
and will duly assign, transfer and deliver to the Pledgor (without recourse and
without any representation or warranty of any kind) such of the Collateral as
may be in the possession of the Administrative Agent and has not theretofore
been disposed of or otherwise applied or released.
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<PAGE> 175
20. COUNTERPARTS. This Pledge Agreement may be executed in
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
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<PAGE> 176
IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement
to be duly executed and delivered as of the date first above written.
[PLEDGOR]
By: ____________________________
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By: ____________________________
Name:
Title:
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<PAGE> 177
ACKNOWLEDGMENT AND CONSENT
[ISSUER], a [____________] corporation ("[_________]"), one of the
Issuers referred to in the foregoing Pledge Agreement, hereby acknowledges
receipt of a copy thereof, agrees to be bound thereby and to comply with the
terms thereof insofar as such terms are applicable to it. [_________] agrees to
notify the Administrative Agent promptly in writing of the occurrence of any of
the events described in SECTION 5(a) of the Pledge Agreement. [_________]
further agrees that the terms of SECTION 9(b) of the Pledge Agreement shall
apply to it, MUTATIS MUTANDIS, with respect to all actions that may be required
of it under or pursuant to or arising out of SECTION 9 of the Pledge Agreement.
[ISSUER]
By: ____________________________
Name:
Title:
Address for Notices:
[_____________________________]
[_____________________________]
[_____________________________]
With copies to: [_____________________________]
[_____________________________]
[_____________________________]
[_____________________________]
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<PAGE> 178
SCHEDULE I
TO SUBSIDIARY
PLEDGE AGREEMENT
DESCRIPTION OF PLEDGED STOCK
<TABLE>
<CAPTION>
Stock
Class of Certificate No. of
Issuer of Pledged Stock Stock* No. Shares
- ----------------------- -------- ----------- ------
<S> <C> <C> <C>
</TABLE>
- ------------------------------------
* Common unless otherwise indicated.
-12-
<PAGE> 179
EXHIBIT K
TO CREDIT
AGREEMENT
FORM OF SUBSIDIARY GUARANTEE
GUARANTEE (this "Guarantee"), dated as of October __, 1999, made by
[NAME OF SUBSIDIARY GUARANTOR], a ________________ corporation (the GUARANTOR"),
in favor of CANADIAN IMPERIAL BANK OF COMMERCE, as administrative agent (in such
capacity, the "ADMINISTRATIVE AGENT") for the several banks and other financial
institutions (the "LENDERS") from time to time parties to the Credit Agreement,
dated as of October 21, 1999 (as amended, supplemented or otherwise modified
from time to time, the "CREDIT AGREEMENT"), among Aavid Thermal Technologies,
Inc., a Delaware corporation (the "BORROWER), the Lenders, Canadian Imperial
Bank of Commerce, as issuer of certain letters of credit, the Administrative
Agent and CIBC World Markets Corp., as lead arranger and bookrunner.
WITNESSETH:
WHEREAS, pursuant to the terms of the Credit Agreement, the Lenders
have agreed to make certain Loans to or for the benefit of the Borrower;
WHEREAS, the Borrower owns directly or indirectly all the issued and
outstanding Capital Stock of the Guarantor; and
WHEREAS, the obligation of the Lenders to make the Loans is
conditioned upon, among other things, the execution and delivery by the
Guarantor of this Guarantee to the Administrative Agent for the ratable benefit
of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Lenders to enter into the Credit Agreement and to make the Loans, the Guarantor
hereby agrees with and for the benefit of the Administrative Agent and the
Lenders as follows:
1. DEFINED TERMS. As used in this Guarantee, terms defined in the
Credit Agreement are used herein as therein defined, and the following term
shall have the following meanings:
"OBLIGATIONS" shall mean the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity of the
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 Borrower or any Subsidiary, as applicable, whether or not a
claim for post-filing or post-petition interest is allowed in such
proceeding and whether the Administrative Agent, for the benefit of the
Lenders, is oversecured or undersecured with respect to such Loans) the
Notes and all other obligations and liabilities of the Borrower or any
Subsidiary, as applicable, to the Agents and the Lenders or any of their
respective Affiliates, including any Reimbursement Obligations and any
obligation of the Borrower under any Hedging Agreement entered into with
either Agent, any Lender or any of their respective Affiliates, whether
direct or
<PAGE> 180
indirect, absolute or contingent, due or to become due, now existing or
hereafter incurred, which may arise under, out of, or in connection with,
the Credit Agreement, the Notes, the other Loan Documents or any Hedging
Agreement with either Agent, any Lender or any of their respective
Affiliates or any other document made, delivered or given in connection
therewith or herewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses (including,
without limitation, all fees and disbursements of counsel to either Agent
or to the Lenders that are required to be paid by the Borrower or any
Subsidiary, as applicable, pursuant to the terms of the Credit Agreement,
any other Loan Document or any Hedging Agreement with either Agent, any
Lender or any of their respective Affiliates) or otherwise.
2. GUARANTEE. (a) The Guarantor hereby unconditionally and
irrevocably guarantees to the Administrative Agent and the Lenders and their
respective successors, endorsees, transferees and assigns, the prompt and
complete payment by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations, and the Guarantor further agrees
to pay any and all expenses (including, without limitation, all fees and
disbursements of counsel) which may be paid or incurred by the Administrative
Agent or any Lender in enforcing, or obtaining advice of counsel in respect of,
any rights with respect to, or collecting, any or all the Obligations and/or
enforcing any rights with respect to, or collecting against, the Guarantor under
this Guarantee; PROVIDED, that the obligations of the Guarantor hereunder shall
be limited to an aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance under Section 548 of the
United States Bankruptcy Code or any comparable provisions of any applicable
state law.
(b) No payment or payments made by the Borrower, any other guarantor
or any other Person or received or collected by the Administrative Agent or any
Lender from the Borrower, any other guarantor 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 the
Guarantor hereunder which shall, notwithstanding any such payment or payments
other than payments made by the Guarantor in respect of the Obligations or
payments received or collected from the Guarantor in respect of the Obligations,
remain liable for the Obligations until the Obligations are paid in full and the
Commitments are terminated.
(c) The Guarantor 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 hereunder, it will notify the Administrative Agent in
writing that such payment is made under this Guarantee for such purpose.
3. RIGHT OF SETOFF. Upon the occurrence of any Event of Default
specified in the Credit Agreement, the Guarantor hereby irrevocably authorizes
the Administrative Agent at each Lender at any time and from time to time
without notice to the Guarantor or any other guarantor, any such notice being
expressly waived by the Guarantor, to setoff and appropriate and apply 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 the Administrative Agent and/or such
Lender to or for the credit or the account of the Guarantor, or any part thereof
in such amounts as the Administrative Agent or such may elect, against and on
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<PAGE> 181
account of the obligations and liabilities of the Guarantor to the
Administrative Agent or such Lender hereunder and claims of every nature and
description of the Administrative Agent or such Lender against the Guarantor, in
any currency, whether arising hereunder, under the Credit Agreement, the Notes,
the Security Documents, any other Loan Document, any Hedging Agreement with
either Agent, any Lender or any of their respective Affiliates or otherwise, as
the Administrative Agent or such Lender may elect, whether or not the
Administrative Agent or any Lender has made any demand for payment and although
such obligations, liabilities and claims may be contingent or unmatured. The
Administrative Agent and each Lender agrees to notify the Guarantor promptly of
any such setoff and the application made by the Administrative Agent or such
Lender; PROVIDED that the failure to give such notice shall not affect the
validity of such setoff and application. The rights of the Administrative Agent
and each Lender under this paragraph are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which the
Administrative Agent or such Lender may have.
4. NO SUBROGATION. Notwithstanding any payment or payments made by
the Guarantor hereunder or any setoff or application of funds of the Guarantor
by the Administrative Agent or any Lender, until all Obligations have been
irrevocably and indefeasibly paid in full in cash (and therefore the payment
thereof is no longer subject to being set aside or returned under applicable
law), the Guarantor hereby waives any claim, right or remedy which the Guarantor
may now have or may hereafter acquire against the Borrower that arises hereunder
and/or from the performance by the Guarantor hereunder including, without
limitation, any claim, remedy or right of subrogation, reimbursement,
exoneration, contribution, indemnification or participation in any claim, right
or remedy of the Lenders and the Administrative Agent against the Borrower or
any security which the Lenders and the Administrative Agent now have or
hereafter acquire, whether or not such claim, right or remedy arises in equity,
under contract, by statute, under common law or otherwise; PROVIDED that if the
foregoing standstill is not sufficient to permit indefeasible payment in full of
all the Obligations, then the Guarantor shall be deemed to have waived any such
claim, right or remedy to the maximum extent permitted by law. If any amount
shall be paid to the Guarantor on account of such subrogation rights at any time
when all the Obligations shall not have been paid in full, such amount shall be
held by the Guarantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of the Guarantor, and shall, forthwith upon receipt
by the Guarantor, be turned over to the Administrative Agent in the exact form
received by the Guarantor (duly endorsed by the Guarantor 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.
5. AMENDMENTS, ETC, WITH RESPECT TO THE OBLIGATIONS: WAIVER OF
RIGHTS. The Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against the Guarantor and without notice to or
further assent by the Guarantor, any demand for payment of any of the
Obligations made by the Administrative Agent or any Lender may be rescinded by
such party 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, in accordance with
the terms of such agreement, by the Administrative Agent or any Lender and the
Credit Agreement, the Notes, the Security Documents, the other Loan Documents,
any Hedging Agreement with either Agent or Lender and any other collateral
security document or other guarantee or document in connection therewith may be
amended, modified, supplemented or
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<PAGE> 182
terminated, in whole or in part, in accordance with the terms of such agreement,
as the Administrative Agent and/or any Lender 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 as security for the Obligations or for this
Guarantee or any property subject thereto. When making any demand hereunder
against the Guarantor, the Administrative Agent or any Lender may, but shall be
under no obligation to, make a similar demand on the Borrower or any other
guarantor, and any failure by the Administrative Agent or any Lender to make any
such demand or to collect any payments from the Borrower or any such other
guarantor or any release of the Borrower or such other guarantor shall not
relieve the Guarantor of its obligations or liabilities hereunder, and shall not
impair or affect the rights and remedies, express or implied, or as a matter of
law, of the Administrative Agent against the Guarantor. For the purposes hereof,
"demand" shall include the commencement and continuance of any legal
proceedings.
6. GUARANTEE ABSOLUTE AND UNCONDITIONAL. The Guarantor 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 this Guarantee or acceptance of this Guarantee, 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 this
Guarantee; and all dealings between the Borrower or the Guarantor and the
Administrative Agent or any Lender shall likewise be conclusively presumed to
have been had or consummated in reliance upon this Guarantee. The Guarantor
waives diligence, presentment, protest, demand for payment and notice of default
or nonpayment to or upon the Borrower or the Guarantor with respect to the
Obligations. The Guarantor understands and agrees that this Guarantee shall be
construed as a continuing, absolute and unconditional guarantee of payment
without regard to (a) the validity, regularity or enforceability of the Credit
Agreement, the Notes, any of the Security Documents, any other Loan Document,
any of the obligations or any other 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 Borrower against Administrative Agent or any
Lender, or (c) any other circumstance whatsoever (with or without notice to or
knowledge of the Borrower or the Guarantor) which constitutes, or might be
construed to constitute, an equitable or legal discharge of the Borrower for the
Obligations, or of the Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against the
Guarantor, the Administrative Agent and any Lender may, but shall be under no
obligation to, pursue such rights and remedies as it may have against the
Borrower 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 Borrower 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 Borrower or any such other Person or any
such collateral security, guarantee or right of offset, shall not relieve the
Guarantor of any liability hereunder, and shall not impair or affect the rights
and remedies, whether express, implied or available as a matter of law, of the
Administrative Agent or any Lender against the Guarantor. This Guarantee shall
remain in full force and effect and be binding in accordance with and to the
extent of its terms upon the Guarantor and the successors and assigns thereof,
and shall inure to
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<PAGE> 183
the benefit of the Administrative Agent and the Lenders, and its respective
successors, endorsees, transferees and assigns, until all the Obligations and
the obligations of the Guarantor under this Guarantee shall have been satisfied
by payment in full and the Commitments shall be terminated, notwithstanding that
from time to time during the term of the Credit Agreement the Borrower may be
free from any Obligations.
7. REINSTATEMENT. This Guarantee 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 Borrower or the Guarantor, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower or the Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.
8. PAYMENTS. The Guarantor hereby guarantees that payments hereunder
will be paid to the Administrative Agent for the benefit or the Lenders without
setoff or counterclaim in U.S. Dollars at the office of the Administrative Agent
located at 425 Lexington Avenue, New York, New York 10017 or such other location
as the Administrative Agent may from time to time direct the Guarantor.
9. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents
and warrants that:
(a) the Guarantor has the corporate power and authority, and the
legal right, to execute, deliver and perform its obligations under, this
Guarantee and the other Loan Documents to which the Guarantor is a party, and
has taken all necessary corporate action to authorize the execution, delivery
and performance of this Guarantee and the other Loan Documents to which the
Guarantor is a party;
(b) this Guarantee and the other Loan Documents to which the
Guarantor is a party each constitute a legal, valid and binding obligation of
the Guarantor enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors, rights generally or by general
principles of equity (whether enforcement is sought by proceedings in equity or
at law);
(c) the execution, delivery and performance by the Guarantor of this
Guarantee or any other Loan Document to which the Guarantor is a party will not
violate any Requirement of Law or Contractual Obligation of the Guarantor,
except for such violations which could not reasonably be expected to result in
liability in excess of $__________ in the aggregate, and will not result in, or
require, the creation or imposition of any Lien on any of the properties or
revenues of the Guarantor pursuant to any such Requirement of Law or Contractual
Obligation except Liens created pursuant to the Loan Documents; and
(d) except as set forth in SCHEDULE 9(d), no consent or authorization
of, filing with or other act by or in respect of, any Governmental Authority or
any other Person (including, without limitation, any stockholder or creditor of
the Guarantor) is required in
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<PAGE> 184
connection with the execution, delivery, performance, validity or enforceability
of this Guarantee or any other Loan Document to which the Guarantor is a party.
The Guarantor agrees that the foregoing representations and warranties
shall be deemed to have been made by the Guarantor on the date of each borrowing
by the Borrower under the Credit Agreement on and as of such date of borrowing
as though made hereunder on and as of such date.
10. SEVERABILITY. (a) Any provision of this Guarantee 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.
(b) The parties hereto have agreed as provided in SECTION 13 of this
Guarantee and in the Credit Agreement, that New York law is to govern, among
other matters, the amount of interest that may lawfully be charged, received or
contracted for in connection with the Obligations. If, notwithstanding such
agreement, a court of competent jurisdiction applies the law of any other
jurisdiction to such interest, then the following shall apply:
It is expressly stipulated and agreed to be the intent of the
Guarantor and the Administrative Agent at all times to comply with applicable
state law governing the maximum rate or amount of interest payable with respect
to the Obligations (or applicable United States federal law to the extent that
it permits the Administrative Agent to contract for, charge, take, reserve or
receive a greater amount of interest than under state law, including, without
limitation, 12 U.S.C. ss. 85 (1994)). If the applicable law is ever judicially
interpreted so as to render usurious any amount called for under the Obligations
or under this Guarantee, or contracted for, charged, taken, reserved or received
with respect to the Obligations, then it is the Guarantor's and the
Administrative Agent's express intent that all excess amounts theretofore
collected by the Administrative Agent be credited on the principal balance of
the Obligations (or, if the Obligations have been or would thereby be paid in
full, refunded to the Guarantor), and the provisions of this Guarantee and all
other documents immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new documents, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for hereunder
or thereunder.
11. SECTION HEADINGS. The section headings used in this Guarantee are
for convenience of reference only and are not to affect the construction hereof
or be taken into consideration in the interpretation hereof.
12. NO WAIVER: CUMULATIVE REMEDIES. Neither the Administrative Agent
nor any Lender shall by any act (except by a written instrument pursuant to
SECTION 13), delay, indulgence, omission or otherwise be deemed to have waived
any right or remedy hereunder or to have acquiesced in any Default or Event of
Default or in any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of the Administrative
Agent or any Lender, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or
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<PAGE> 185
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of any
rights or remedies provided by law.
13. INTEGRATION; WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS;
GOVERNING LAW. This Guarantee represents the agreement of the Guarantor with
respect to the subject matter hereof and there are no promises or
representations by the Administrative Agent or any Lender relative to the
subject matter hereof not reflected herein. None of the terms or provisions of
this Guarantee may be waived, amended or supplemented or otherwise modified
except by a written instrument executed by the Guarantor and the Administrative
Agent; PROVIDED that any provision of this Guarantee may be waived by the
Administrative Agent and the Lenders in a letter or agreement executed by the
Administrative Agent or by telex or facsimile transmission from the
Administrative Agent. This Guarantee shall be binding upon the successors and
assigns of the Guarantor and shall inure to the benefit of the Administrative
Agent and their and their respective successors and assigns. THIS GUARANTEE AND
THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS GUARANTEE SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK.
14. NOTICES. All notices, requests and demands to or upon the
Guarantor or the Administrative Agent or any Lender to be effective shall be in
writing or by telegraph or telex and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by hand,
or, in the case of mail, three days after deposit in the postal system, first
class postage prepaid, or, in the case of telegraphic notice, when sent,
answerback received, addressed to a party at the address provided for such party
in the Credit Agreement or set forth under its signature below, as the case may
be.
15. SUBMISSION TO JURISDICTION: WAIVERS. (A) The Guarantor hereby
irrevocably and unconditionally:
(i) submits for itself and its property in any legal action or
proceeding relating to this Guarantee or any other Loan Document to which it is
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;
(ii) 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 any inconvenient court and agrees not to plead or
claim the same;
(iii) 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
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<PAGE> 186
of mail), postage prepaid, to the Guarantor at its address set forth below or at
such other address of which the Administrative Agent shall have been notified
pursuant thereto; and
(iv) 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
(v) 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 any special, exemplary, punitive or consequential damages.
(B) THE GUARANTOR AND THE ADMINISTRATIVE AGENT HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS GUARANTEE AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be
duly executed and delivered by its duly authorized officer as of the day and
year first above written.
[NAME OF SUBSIDIARY GUARANTOR]
By: ___________________________
Name:
Title:
Address for Notices:
[___________________________]
[___________________________]
[___________________________]
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<PAGE> 187
EXHIBIT L
TO CREDIT
AGREEMENT
FORM OF SUBSIDIARY INTELLECTUAL PROPERTY SECURITY AGREEMENT
THIS INTELLECTUAL PROPERTY SECURITY AGREEMENT (this "AGREEMENT") is
made as of__________, 1999 by and between [GRANTOR], a [__________] (the
"GRANTOR"), and CANADIAN IMPERIAL BANK OF COMMERCE, as administrative agent (in
such capacity, the "ADMINISTRATIVE AGENT") for the several banks and other
financial institutions (the "LENDERS") from time to time parties to the Credit
Agreement dated as of October 21, 1999 (as amended, supplemented or otherwise
modified from time to time, the "CREDIT AGREEMENT") among Aavid Thermal
Technologies, Inc. (the "BORROWER"), the Lenders, Canadian Imperial Bank of
Commerce, as issuer of certain letters of credit, the Administrative Agent, and
CIBC World Markets Corp., as lead arranger and bookrunner.
WITNESSETH:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder; and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Borrower under the Credit Agreement that
the Grantor shall have executed and delivered this Agreement to the
Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and the
Lenders to make their respective Loans to the Borrower under the Credit
Agreement, the Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit Agreement. Unless otherwise defined herein or in the
Credit Agreement, all terms defined in Article 9 of the Uniform Commercial Code
in effect as of the date hereof in the State of New York are used herein as
defined therein as of the date hereof.
(b) The words "hereof", "herein" and "hereunder" and words of like
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and section references are to
this Agreement unless otherwise specified.
(c) All terms defined in this Agreement in the singular shall have
comparable meanings when used in the plural, and VICE VERSA, unless otherwise
specified.
<PAGE> 188
2. SECURITY INTEREST IN INTELLECTUAL PROPERTY. To secure the
complete and timely payment, performance and satisfaction of all the
Obligations, the Grantor hereby grants to the Administrative Agent, for the
benefit of the Administrative Agent and the Lenders, a security interest in, as
and by way of a first mortgage and security interest having priority over all
other security interests, with power of sale to the extent permitted by
applicable law, all the Grantor's now owned or existing and hereafter acquired
or arising:
(i) trademarks, registered trademarks, trademark applications, service
marks, registered service marks and service mark applications, including,
without limitation, the trademarks, registered trademarks, trademark
applications, service marks, registered service marks and service mark
applications listed on SCHEDULE A attached hereto and made a part hereof,
and (a) all renewals thereof, (b) all income, royalties, damages and
payments now and hereafter due and/or payable under and with respect
thereto, including, without limitation, payments under all licenses entered
into in connection therewith and damages and payments for past or future
infringements or dilutions thereof, (c) the right to sue for past, present
and future infringements and dilutions thereof, (d) the goodwill of the
Grantor's business symbolized by the foregoing and connected therewith, and
(e) all the Grantor's rights corresponding thereto throughout the world
(all the foregoing trademarks, registered trademarks and trademark
applications, and service marks, registered service marks and service mark
applications, together with the items described in CLAUSES (a)-(e) in this
PARAGRAPH 2(i), are sometimes hereinafter individually and/or collectively
referred to as the "TRADEMARKS");
(ii) rights under or interest in any patent license agreements,
trademark license agreements or service mark license agreements with any
other party, whether the Grantor is a licensee or licensor under any such
license agreement, including, without limitation, those patent license
agreements, trademark license agreements and service mark license
agreements listed on SCHEDULE B attached hereto and made a part hereof, in
each case to the extent assignable without violation thereof, together with
any goodwill connected with and symbolized by any such trademark license
agreements or service mark license agreements, and the right to prepare for
sale and sell any and all Inventory now or hereafter owned by the Grantor
and now or hereafter covered by such licenses (all the foregoing are
hereinafter referred to collectively as the "LICENSES"); and
(iii) patents and patent applications, and the inventions and
improvements described and claimed therein, including, without limitation,
those patents and patent applications listed on SCHEDULE A attached hereto
and made a part hereof, and (a) the reissues, divisions, continuations,
renewals, extensions and continuations-in-part thereof, (b) all income,
royalties, damages and payments now and hereafter due and/or payable under
and with respect thereto, including, without limitation, payments under all
licenses entered into in connection therewith and damages and payments for
past or future infringements thereof, (c) the right to sue for past,
present and future infringements thereof, (d) all patented technology and
know-how, and (e) all of the Grantor's rights corresponding thereto
throughout the world (all of the foregoing patents and applications,
together with the items described in CLAUSES (a)-(e) in this PARAGRAPH
2(iii) are sometimes hereinafter individually and/or collectively referred
to as the "PATENTS").
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<PAGE> 189
3. RESTRICTIONS ON FUTURE AGREEMENTS. The Grantor will not, without
the Administrative Agent's prior written consent, enter into any agreement,
including, without limitation, any license agreement, which is inconsistent with
this Agreement, and the Grantor further agrees that, without the Administrative
Agent's prior written consent, it will not take any action, and will use its
best efforts not to permit any action to be taken by others, including, without
limitation, licensees, or fail to take any action, which would in any respect
adversely affect the validity or enforcement of the rights transferred to the
Administrative Agent under this Agreement or the rights associated with any
Patents, Trademarks or Licenses, and in particular, the Grantor will not permit
to lapse or become abandoned any Patent, Trademark or License; PROVIDED that
nothing contained herein shall restrict the Grantor's ability to license its
software in the ordinary course of its business consistent with prior practice.
4. NEW PATENTS, TRADEMARKS AND LICENSES. The Grantor represents and
warrants that (a) the Patents and Trademarks listed on SCHEDULE A include all
the registered patents, patent applications, trademarks, common law trademarks,
trademark applications, registered service marks and service mark applications
now owned or held by the Grantor, (b) the Licenses listed on SCHEDULE B include
all the patent license agreements, trademark license agreements and service mark
license agreements under which the Grantor is the licensee or licensor and which
are material individually or in the aggregate to the operation of the business
of the Grantor and (c) other than the rights of any party to the Licenses with
respect to the Patents and the Trademarks, no Liens in such Patents, Trademarks
and Licenses have been granted by the Grantor to any Person other than the
Administrative Agent. If, prior to the termination of this Agreement, the
Grantor shall (i) obtain rights to any new patentable inventions, trademarks,
registered trademarks, trademark applications, service marks, registered service
marks or service mark applications, (ii) become entitled to the benefit of any
patent, patent application, license or any reissue, division, continuation,
renewal, extension or continuation-in-part of any Patent or any improvement on
any Patent or License or any trademarks, registered trademarks, trademark
applications, trademark licenses, trademark license renewals, service marks,
registered service marks, service mark applications, service mark licenses or
service mark license renewals whether as licensee or licensor, or (iii) enter
into any new patent license agreement, trademark license agreement or service
mark license agreement, the provisions of PARAGRAPH 3 above shall automatically
apply thereto. The Grantor shall give to the Administrative Agent written notice
of events described in CLAUSES (i), (ii) and (iii) of the preceding sentence
within 30 days of the occurrence of any such event. The Grantor hereby
authorizes the Administrative Agent to modify this Agreement unilaterally (i) by
amending SCHEDULE A to include any future patents, trademarks, registered
trademarks, trademark applications, service marks, patent applications,
registered service marks and service mark applications owned or held by Grantor
or to prepare this Agreement for filing with the Patent and Trademark Office and
by amending SCHEDULE B to include any patent license agreements, trademark
license agreements and service mark license agreements to which Grantor becomes
a party, which are Trademarks or Licenses under PARAGRAPH 2 above or under this
PARAGRAPH 4, and (ii) by filing with the Patent and Trademark Office, in
addition to and not in substitution for this Agreement, a duplicate original of
this Agreement containing on SCHEDULE A or B thereto, as the case may be, such
future patents, trademarks, registered trademarks, trademark applications,
service marks, patent applications, registered service marks and service mark
applications, and patent license agreements, trademark license agreements and
service mark license agreements.
-3-
<PAGE> 190
5. ROYALTIES. The Grantor hereby agrees that the use by the
Administrative Agent of the Patents, Trademarks and Licenses as authorized
hereunder in connection with the Administrative Agent's exercise of its rights
and remedies under PARAGRAPH 13 or pursuant to the Security Agreements shall be
coextensive with the Grantor's rights thereunder and with respect thereto and
without any liability for royalties or other related charges from the
Administrative Agent and the Lenders to the Grantor.
6. FURTHER ASSIGNMENTS AND SECURITY INTERESTS. The Grantor agrees
not to sell or assign its respective interests in, or grant any license under,
the Patents, the Trademarks or the Licenses without the prior and express
written consent of the Administrative Agent [; provided that no consent shall be
required for Fluent, Inc. to license its software in the ordinary course of its
business consistent with past practice]*.
7. NATURE AND CONTINUATION OF THE ADMINISTRATIVE AGENT'S SECURITY
INTEREST; TERMINATION OF THE ADMINISTRATIVE AGENT'S SECURITY INTEREST; RELEASE
OF COLLATERAL. This Agreement is made for collateral security purposes only.
This Agreement shall create a continuing security interest in the Patents,
Trademarks and Licenses and shall terminate only when the Obligations have been
paid in full in cash and the Credit Agreement and the Security Agreements have
been terminated. Upon such termination and at the written request of the Grantor
or its successors or assigns, and at the cost and expense of the Grantor or its
successors or assigns, the Administrative Agent shall execute in a timely manner
such instruments, documents or agreements as are necessary or desirable to
terminate the Administrative Agent's security interest in the Patents, the
Trademarks and the Licenses, subject to any disposition thereof which may have
been made by the Administrative Agent pursuant to this Agreement or the Security
Agreements.
8. DUTIES OF THE GRANTOR. Subject to the second sentence of this
Section 8, the Grantor shall have the duty (i) to prosecute diligently any
patent application, trademark application or service mark application that is
part of the Trademarks pending as of the date hereof or hereafter until the
termination of this Agreement and (ii) to make any application for and
diligently prosecute the registration of (x) any trademark or service mark that
the Grantor has not created as of the date hereof which the Administrative
Agent, after consultation with the Grantor, reasonably determines may have
significant value and (y) any unpatented but patentable invention. The Grantor
further agrees (i) not to abandon any Trademark or License without the prior
written consent of the Administrative Agent if such abandonment would have a
Material Adverse Effect, and (ii) to use its reasonable best efforts to obtain
and maintain in full force and effect the Patents, the Trademarks and the
Licenses that are or shall be necessary or economically desirable in the
operation of the Grantor's business. Any expenses incurred in connection with
the foregoing shall be borne by the Grantor. Neither the Administrative Agent
nor any of the Lenders shall have any duty with respect to the Patents,
Trademarks and Licenses. Without limiting the generality of the foregoing,
neither the Administrative Agent nor any of the Lenders shall be under any
obligation to take any steps necessary to preserve rights in the Patents, the
Trademarks or Licenses against any other parties, but the Administrative Agent
may do so at its option from and after the occurrence of an Event of Default,
and all expenses incurred in connection therewith shall be for the sole account
of the Grantor and shall be added to the Obligations secured hereby.
- ----------------------
*To be included in Fluent, Inc.'s subsidiary intellectual property agreement.
-4-
<PAGE> 191
9. THE ADMINISTRATIVE AGENT'S RIGHT TO SUE. Upon the occurrence and
during the continuance of an Event of Default, the Administrative Agent shall
have the right, but shall not be obligated, to bring suit in its own name to
enforce the Patents, the Trademarks and the Licenses and, if the Administrative
Agent shall commence any such suit, the Grantor shall, at the request of the
Administrative Agent, do any and all lawful acts and execute any and all proper
documents required by the Administrative Agent in aid of such enforcement. The
Grantor shall, upon demand, promptly reimburse the Administrative Agent for all
actual costs and expenses incurred by the Administrative Agent in the exercise
of its rights under this PARAGRAPH 9 (including, without limitation, reasonable
fees and expenses of counsel for the Administrative Agent).
10. WAIVERS. The Administrative Agent's failure, at any time or times
hereafter, to require strict performance by the Grantor of any provision of this
Agreement shall not waive, affect or diminish any right of the Administrative
Agent thereafter to demand strict compliance and performance therewith nor shall
any course of dealing between the Grantor and the Administrative Agent have such
effect. No single or partial exercise of any right hereunder shall preclude any
other or further exercise thereof or the exercise of any other right. None of
the undertakings, agreements, warranties, covenants and representations of the
Grantor contained in this Agreement shall be deemed to have been suspended or
waived by the Administrative Agent unless such suspension or waiver is in
writing signed by an officer of the Administrative Agent and directed to the
Grantor specifying such suspension or waiver.
11. SEVERABILITY. If any provision of this Agreement is held to be
prohibited or unenforceable in any jurisdiction the substantive laws of which
are held to be applicable hereto, such prohibition or unenforceability shall not
affect the validity or enforceability of the remaining provisions hereof and
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
12. MODIFICATION. This Agreement cannot be altered, amended or
modified in any way, except as specifically provided in PARAGRAPH 4 hereof or by
a writing signed by the parties hereto.
13. CUMULATIVE REMEDIES; POWER OF ATTORNEY. The Grantor agrees, upon
the request of the Administrative Agent and promptly following such request, to
take any action and execute any instrument which the Administrative Agent may
deem necessary or advisable to accomplish the purposes of this Agreement. The
Grantor hereby irrevocably designates, constitutes and appoints the
Administrative Agent (and all Persons designated by the Administrative Agent in
its sole and absolute discretion) as the Grantor's true and lawful
attorney-in-fact, and authorizes the Administrative Agent and any of the
Administrative Agent's designees, in the Grantor's or the Administrative Agent's
name, from and after the occurrence and during the continuance of an Event of
Default, to take any action and execute any instrument which the Administrative
Agent may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, (i) to endorse the Grantor's name on
all applications, documents, papers and instruments necessary or desirable for
the Administrative Agent in the use, prosecution or protection of the Patents,
the Trademarks or the Licenses, (ii) to assign, pledge, convey or otherwise
transfer title in or dispose of the Trademarks or the Licenses to anyone on
commercially reasonable terms, (iii) to grant or issue any exclusive or
nonexclusive license under the Patents, the Trademarks or the Licenses, to
anyone on commercially reasonable
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<PAGE> 192
terms, and (iv) to take any other actions with respect to the Patents or the
Trademarks or, to the extent permitted, the Licenses as the Administrative Agent
deems in its own or the Lenders' best interest. The Grantor hereby ratifies all
that such attorney shall lawfully do or, to the extent permitted, cause to be
done by virtue hereof. This power of attorney is coupled with an interest and
shall be irrevocable until all the Obligations shall have been paid in full in
cash and the Credit Agreement shall have been terminated. The Grantor
acknowledges and agrees that this Agreement is not intended to limit or restrict
in any way the rights and remedies of the Administrative Agent or the other
Lenders under the Agreement, but rather is intended to facilitate the exercise
of such rights and remedies.
The Administrative Agent shall have, in addition to all other rights
and remedies given it by the terms of this Agreement, all rights and remedies
allowed by law and the rights and remedies of a secured party under the Uniform
Commercial Code as enacted in any jurisdiction in which the Trademarks or the
Licenses may be located or deemed located. If an Event of Default has occurred
and is continuing and the Administrative Agent has elected to exercise any of
its remedies under Section 9-504 or Section 9-505 of the Uniform Commercial Code
with respect to the Patents, Trademarks and Licenses, the Grantor agrees to
assign, convey and otherwise transfer all of its title in and to the Patents,
the Trademarks and the Licenses to the Administrative Agent or any transferee of
the Administrative Agent and to execute and deliver to the Administrative Agent
or any such transferee all such agreements, documents and instruments as may be
necessary, in the Administrative Agent's sole discretion, to effect such
assignment, conveyance and transfer; PROVIDED that in the case of any Patents,
Trademarks and Licenses licensed to the Borrower by third parties, such transfer
shall be solely to the extent any of the foregoing are transferable pursuant to
operative agreements between the Borrower and such third party. All the
Administrative Agent's rights and remedies with respect to the Patents, the
Trademarks and the Licenses, whether established hereby, by the Security
Agreements, by any other agreements or by law, shall be cumulative and may be
exercised separately or concurrently. Notwithstanding anything set forth herein
to the contrary, it is hereby expressly agreed that if an Event of Default has
occurred and is continuing, the Administrative Agent may exercise any of the
rights and remedies provided in this Agreement, the Security Agreements and any
of the other Loan Documents. The Grantor agrees that any notification of
intended disposition of any of the Patents, Trademarks and Licenses required by
law shall be deemed reasonably and properly given if given at least ten (10)
days before such disposition; PROVIDED, that the Administrative Agent may give
any shorter notice that is commercially reasonable under the circumstances.
14. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the
Grantor and its successors and assigns, and shall inure to the benefit of each
of the Lenders and its nominees, successors and assigns. The Grantor's
successors and assigns shall include, without limitation, a receiver, trustee or
debtor-in-possession of or for the Grantor; PROVIDED, that the Grantor shall not
voluntarily assign or transfer its rights or obligations hereunder without the
Administrative Agent's prior written consent.
15. GOVERNING LAW. This Agreement shall be governed by, and be
construed and interpreted in accordance with, the law (without regards to
conflict of law provisions (other than Section 5-1401 of the General Obligations
Law)) of the State of New York, except for perfection and enforcement of
security interests and liens in other jurisdictions to the extent the law of
another jurisdiction is, pursuant to the laws of such jurisdiction, mandatorily
applicable.
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<PAGE> 193
16. NOTICES. All notices or other communications hereunder shall be
given in the manner and to the addresses set forth in Section 9.2 of the Credit
Agreement.
17. AUTHORITY OF ADMINISTRATIVE AGENT. The Grantor acknowledges that
the rights and responsibilities of the Administrative Agent under this Agreement
with respect to any action taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any option, right, request, judgment
or other right or remedy provided for herein or resulting or arising out of this
Agreement shall, as between the Administrative Agent and the Lenders, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Grantor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and the Grantor shall not be under
any obligation, or entitlement, to make any inquiry respecting such authority.
18. TERMINATION; RELEASE. Upon the repayment of all the Obligations
in full and the termination of the Commitments, this Agreement shall terminate,
and the Administrative Agent, at the request and expense of the Grantor, will
promptly execute and deliver to the Grantor the proper instruments acknowledging
the termination of this Agreement, and will duly assign, transfer and deliver to
Grantor (without recourse and without any representation or warranty of any
kind) such of the Collateral as may be in the possession of the Administrative
Agent and has not theretofore been disposed of or otherwise applied or released.
19. REINSTATEMENT. This Agreement shall continue to be effective or
be reinstated, as the case may be, if at any time any amount received by the
Lenders in respect of the Obligations is rescinded or must otherwise be restored
or returned by such Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Grantor or upon the appointment of any
intervenor or conservator of, or trustee or similar official for, the Grantor or
any substantial part of its assets, or upon the entry of an order by a
bankruptcy court avoiding payment of such amount, or otherwise, all as though
such payments had not been made.
20. SECTION TITLES. The section titles herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
21. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which taken together shall constitute one and the same agreement.
22. SUBMISSION TO JURISDICTION AND SERVICE OF PROCESS. The Grantor
hereby irrevocably and unconditionally agrees that the terms of Section 9.13 of
the Credit Agreement with respect to submission to jurisdiction and service of
process shall apply equally to this Agreement.
23. WAIVER OF BOND. The Grantor waives the posting of any bond
otherwise required of the Administrative Agent in connection with any judicial
process or proceeding to realize on any of the Patents, Trademarks or Licenses
or any other security for the Obligations, to enforce any judgment or other
court order entered in favor of the Administrative Agent, or to enforce by
specific performance, temporary restraining order, or preliminary or permanent
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<PAGE> 194
injunction, this Agreement or any other agreement or document between the
Administrative Agent and the Grantor.
24. WAIVER OF JURY TRIAL. EACH OF THE GRANTOR AND THE ADMINISTRATIVE
AGENT WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT AND THE GRANTOR
ARISING OUT OF OR RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR
ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH. EITHER THE GRANTOR OR THE ADMINISTRATIVE AGENT MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF
THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
[GRANTOR]
By: ______________________________
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By: ______________________________
Name:
Title:
<PAGE> 195
STATE OF _____________)
) SS
COUNTY OF ____________)
On the _____ day of ___________, 1999, before me personally came
________________________, to me known, who being by me duly sworn, did depose
and say that he/she resides at ____________________________________________;
that he/she is a _________________________ of [GRANTOR], the corporation
described in and which accepted and agreed to the foregoing instrument; and that
he/she signed his/her name thereto by authority of the board of directors of
said corporation.
____________________________
Notary Public
<PAGE> 196
STATE OF _____________)
) SS
COUNTY OF ____________)
On the _____ day of ___________, 1999, before me personally came
________________________, to me known, who being by me duly sworn, did depose
and say that he/she resides at ____________________________________________;
that he/she is a _________________________ of Canadian Imperial Bank of
Commerce, the entity described in and which accepted and agreed to the foregoing
instrument; and that he/she signed his/her name thereto by appropriate
authority.
_____________________________
Notary Public
<PAGE> 197
Schedule A
to
Subsidiary Intellectual Property Security Agreement
Dated as of ___________
TRADEMARKS, SERVICE MARKS, ETC., AND APPLICATIONS
<TABLE>
<CAPTION>
Trademark Country Application No. Registration No.
--------- ------- --------------- ----------------
<S> <C> <C> <C>
</TABLE>
PATENTS AND APPLICATIONS
<PAGE> 198
Schedule B
to
Subsidiary Intellectual Property Security Agreement
Dated as of ___________
LICENSE AGREEMENTS
<PAGE> 199
EXHIBIT M
TO CREDIT
AGREEMENT
FORM OF SUBSIDIARY SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of October __, 1999, made by [GRANTOR], a
[________________] (the "GRANTOR"), in favor of CANADIAN IMPERIAL BANK OF
COMMERCE, as administrative agent (in such capacity, the "ADMINISTRATIVE AGENT")
for the several banks and other financial institutions (the "LENDERS") from time
to time parties to the Credit Agreement, dated as of October 21, 1999 (as
amended, supplemented or otherwise modified from time to time, the "CREDIT
AGREEMENT"), among Aavid Thermal Technologies, Inc. (the "BORROWER"), the
Lenders, Canadian Imperial Bank of Commerce, as issuer of certain letters of
credit, the Administrative Agent, and CIBC World Markets Corp., as lead arranger
and bookrunner.
WITNESSETH:
WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to the Borrower upon the terms and subject to the
conditions set forth therein, to be evidenced by the Notes issued by the
Borrower thereunder;
WHEREAS, the Grantor has guaranteed the Obligations of the Borrower
described above pursuant to the Guarantee, dated as of October __, 1999,
executed by the Grantor (as amended, supplemented or otherwise modified from
time to time, the "GUARANTEE"); and
WHEREAS, it is a condition precedent to the obligation of the Lenders
to make their respective Loans to the Borrower under the Credit Agreement that
the Grantor shall have executed and delivered this Security Agreement to the
Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and the
Lenders to make their respective Loans to the Borrower under the Credit
Agreement, the Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms defined in
the Credit Agreement and used herein are used herein as defined therein. The
following terms which are defined in the Uniform Commercial Code in effect in
the State of New York on the date hereof are used herein as defined therein:
Accounts, Chattel Paper, Documents, Equipment, Farm Products, General
Intangibles, Instruments, Inventory, Investment Property and Proceeds. The
following terms shall have the following meanings:
"CODE" shall mean the Uniform Commercial Code as from time to time in
effect in the State of New York.
<PAGE> 200
"COLLATERAL" shall have the meaning assigned to it in Section 2.
"CONTRACTS" shall mean all contracts executed from time to time by the
Grantor, including, without limitation, with respect to an Account, in each
case, as the same may from time to time be amended, supplemented or
otherwise modified, including, without limitation, (i) all rights of the
Grantor to receive moneys due and to become due to it thereunder or in
connection therewith, (ii) all rights of the Grantor to damages arising out
of, or for, breach or default in respect thereof and (iii) all rights of
the Grantor to perform and to exercise all remedies thereunder.
"GUARANTEE OBLIGATIONS" shall mean all obligations of the Grantor
under the Guarantee including, without limitation, in respect of the
Obligations (as defined in the Credit Agreement) to the extent set forth in
the Guarantee.
"SECURITY AGREEMENT" shall mean this Security Agreement, as amended,
supplemented or otherwise modified from time to time.
2. GRANT OF SECURITY INTEREST. As collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Obligations, the Grantor hereby grants to
the Administrative Agent for the ratable benefit of the Lenders a security
interest in all the following property now owned or at any time hereafter
acquired by the Grantor or in which the Grantor now has or at any time in the
future may acquire any right, title or interest (collectively, the
"COLLATERAL"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Investment Property; PROVIDED that with respect to the
Capital Stock of any Foreign Subsidiary, such security
interest, together with any security interest created
through a pledge of such Investment Property pursuant to a
Pledge Agreement, shall be in an amount equal to 65% of such
Capital Stock or such higher percentage as may be allowed
under Treas. Reg. ss. 1.956-2(c)(2) under the Code; and
<PAGE> 201
(x) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing;
PROVIDED that nothing contained herein shall create a collateral assignment with
respect to any Contract if the grant of such collateral assignment is (or is
determined by non-appealable adjudication of a court or other dispute resolution
tribunal to be) prohibited by the terms of such Contract.
3. RIGHTS OF ADMINISTRATIVE AGENT AND LENDERS; LIMITATIONS ON
ADMINISTRATIVE AGENT'S AND LENDERS' OBLIGATIONS.
(a) GRANTOR REMAINS LIABLE UNDER ACCOUNTS AND CONTRACTS. Anything
herein to the contrary notwithstanding, the Grantor shall remain liable under
each of the Accounts and Contracts to observe and perform all the conditions and
obligations to be observed and performed by it thereunder, all in accordance
with the terms of any agreement giving rise to each such Account and in
accordance with and pursuant to the terms and provisions of each such Contract.
Neither the Administrative Agent nor any Lender shall have any obligation or
liability under any Account (or any agreement giving rise thereto) or under any
Contract by reason of or arising out of this Security Agreement or the receipt
by the Administrative Agent or any such Lender of any payment relating to such
Account or Contract pursuant hereto, nor shall the Administrative Agent or any
Lender be obligated in any manner to perform any of the obligations of the
Grantor under or pursuant to any Account (or any agreement giving rise thereto)
or under or pursuant to any Contract, to make any payment, to make any inquiry
as to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Account (or any agreement
giving rise thereto) or under any Contract, to present or file any claim, to
take any action to enforce any performance or to collect the payment of any
amounts which may have been assigned to it or to which it may be entitled at any
time or times.
(b) NOTICE TO ACCOUNT DEBTORS AND CONTRACTING PARTIES. At any time
after the occurrence and during the continuance of an Event of Default, the
Administrative Agent shall have the right at any time, upon written notice to
the Grantor of its intention to do so, to notify account debtors or obligors on
the Accounts and parties to the Contracts that the Accounts and the Contracts
have been assigned to the Administrative Agent for the ratable benefit of the
Lenders and that payments due or to become due to the Grantor in respect thereof
shall be made directly to the Administrative Agent and, upon such notification,
and at the expense of the Grantor, to enforce collection of any such Accounts.
The Administrative Agent may, at any time, in its own name or in the name of the
Lenders or the Grantor communicate with account debtors on the Accounts and
parties to the Contracts to verify with them to its satisfaction the existence,
amount and terms of any Accounts or Contracts. Unless an Event of Default shall
have occurred and be continuing, the Administrative Agent shall not exercise its
right under this clause (b) more than once in any 12-month period.
(c) COLLECTIONS ON ACCOUNTS. The Administrative Agent hereby
authorizes the Grantor to collect the Accounts; PROVIDED that the Administrative
Agent may curtail or terminate said authority at any time after the occurrence
of an Event of Default. If required by the Administrative Agent at any time
after the occurrence and during the continuance of an Event of Default, any
payments of Accounts, when collected by the Grantor, shall be forthwith (and, in
any event, within two Business Days) deposited by the Grantor in the exact form
received, duly
<PAGE> 202
endorsed by the Grantor to the Administrative Agent if required, in a special
collateral account maintained by the Administrative Agent, subject to withdrawal
by the Administrative Agent for the account of the Lenders only, as hereinafter
provided, and, until so turned over, shall be held by the Grantor in trust for
the Administrative Agent and the Lenders, segregated from other funds of the
Grantor. Each deposit of any such Proceeds shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments included
in the deposit. All Proceeds constituting collections of Accounts while held by
the Administrative Agent (or by the Grantor in trust for the Administrative
Agent and the Lenders) shall continue to be collateral security for all the
Obligations and shall not constitute payment thereof until applied as
hereinafter provided. At such intervals as may be agreed upon by the Grantor and
the Administrative Agent, or, if an Event of Default shall have occurred and be
continuing, at any time at the Administrative Agent's election, the
Administrative Agent shall apply all or any part of the funds on deposit in said
special collateral account on account of the Obligations in such order as the
Administrative Agent may elect, and any part of such funds which the
Administrative Agent elects not so to apply and deems not required as collateral
security for the obligations shall be paid over from time to time by the
Administrative Agent to the Grantor or to whomsoever may lawfully be entitled to
receive the same (it being understood that (i) prior to any Event of Default
that is continuing, the Grantor shall be permitted to use such funds in the
operation of its business in a manner consistent with the terms of the Credit
Agreement and (ii) within fifteen days after the occurrence of any Event of
Default, the Administrative Agent shall, in its sole discretion, either apply
such funds in payment of the Obligations in such order as the Administrative
Agent may elect or permit the Grantor to use such funds in the operation of its
business). Upon the occurrence of an Event of Default that is continuing, at the
Administrative Agent's request, the Grantor shall deliver to the Administrative
Agent all original and other documents evidencing, and relating to, the
agreements and transactions which gave rise to the Accounts, including, without
limitation, all original orders, invoices and shipping receipts.
(d) ANALYSIS OF ACCOUNTS. The Administrative Agent shall have the
right to make test verifications of the Accounts in any manner and through any
medium that it reasonably considers advisable, and the Grantor shall furnish all
such assistance and information as the Administrative Agent may require in
connection therewith; PROVIDED that the Administrative Agent shall use its
reasonable efforts to minimize any disruption of the Grantor's business
resulting from such verifications. At any time and from time to time if the
Administrative Agent concludes in its reasonable judgment, based upon its
evaluation of the general creditworthiness of the Grantor, that such examination
is required, and so requests, the Grantor at its own expense shall cause
independent public accountants or other parties that are not Affiliates of the
Grantor and are reasonably satisfactory to the Administrative Agent to furnish
to the Administrative Agent reports showing reconciliations, aging and test
verifications of, and trial balances for, the Accounts. Unless an Event of
Default shall have occurred and be continuing, the Administrative Agent shall
not exercise its right under this clause (d) more than once in any 12-month
period.
4. REPRESENTATIONS AND WARRANTIES. The Grantor hereby represents and
warrants that:
(a) TITLE; NO OTHER LIENS. Except as permitted under Section 6.3 of
the Credit Agreement, the Grantor owns or has a valid leasehold interest in
each item of the Collateral free and clear of any and all Liens or claims
of others. Except as permitted under Section 6.3(e) of the Credit
Agreement, no security agreement, financing statement
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or other public notice with respect to all or any part of the Collateral is
on file or of record in any public office, except (i) such as may have been
filed in favor of the Administrative Agent, for the ratable benefit of the
Lenders, pursuant to this Security Agreement and (ii) financing statements
filed by lessors solely for information purposes in respect of "true"
leases.
(b) PERFECTED FIRST PRIORITY LIENS. Except as permitted under Section
6.3(e) of the Credit Agreement, the Liens granted pursuant to this Security
Agreement will, upon the filing of appropriate financing statements,
constitute valid and perfected first priority Liens on the Collateral in
favor of the Administrative Agent, for the ratable benefit of the Lenders,
and against any owner or purchaser of the real property where any of the
Equipment is located and any present or future creditor obtaining a Lien on
such real property, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditor's rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at
law).
(c) ACCOUNTS. The amount represented by the Grantor to the Lenders
from time to time as owing by each account debtor or by all account debtors
in respect of the Accounts will at such time be the correct amount actually
owing by such account debtor or debtors thereunder. No amount payable to
the Grantor under or in connection with any Account is evidenced by any
Instrument or Chattel Paper which has not been delivered to the
Administrative Agent. The place where the Grantor keeps its records
concerning the Accounts is _________________________________.
(d) CONTRACTS. Except as set forth in Schedule 3.4 to the Credit
Agreement, no consent of any party (other than the Grantor) to any Contract
is required in connection with the execution, delivery and performance by
the Grantor of this Security Agreement. Each Contract is in full force and
effect and constitutes a valid and legally enforceable obligation of the
parties thereto, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditor's rights generally and by general equitable
principles (whether enforcement is sought by proceedings in equity or at
law). No consent or authorization of, filing with or other act by or in
respect of any Governmental Authority is required in connection with the
execution, delivery or performance by the Grantor of, or the validity or
enforceability of, any of the Contracts by any party thereto other than
those which have been duly obtained, made or performed, are in full force
and effect and do not subject the scope of any such Contract to any
material adverse limitation, either specific or general in nature. Neither
the Grantor nor (to the best of the Grantor's knowledge) any other party to
any Contract is in default in any material respect in the performance or
observance of any of the terms thereof. The Grantor has fully performed in
all material respects all its obligations under each Contract. The right,
title and interest of the Grantor in, to and under each Contract are not
subject to any defense, offset, counterclaim or claim which would
materially adversely affect the value of such Contract as Collateral, nor
have any of the foregoing been asserted or alleged against the Grantor as
to any Contract. The Grantor has delivered to the Administrative Agent a
complete and correct copy of each material Contract, including all
amendments, supplements and other modifications thereto and will deliver
any other Contract which the Administrative Agent may request. No
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amount payable to the Grantor under or in connection with any Contract is
evidenced by any Instrument or Chattel Paper which has not been delivered
to the Administrative Agent.
(e) INVENTORY AND EQUIPMENT. The Inventory and the Equipment are kept
at the locations listed on Schedule I hereto.
(f) CHIEF EXECUTIVE OFFICE. The Grantor's chief executive office and
chief place of business is located at ________________________________.
(g) FARM PRODUCTS. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
(h) GOVERNMENTAL OBLIGORS. None of the obligors on any Accounts, and
none of the parties to any Contracts, is a Governmental Authority.
(i) INVESTMENT PROPERTY. The Investment Property consists of the
items set forth on Annex A.
5. COVENANTS. The Grantor covenants and agrees with the
Administrative Agent and the Lenders that, from and after the date of this
Security Agreement until the Obligations are paid in full and the Commitments
are terminated:
(a) FURTHER DOCUMENTATION; PLEDGE OF INSTRUMENTS AND CHATTEL PAPER.
At any time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of the Grantor, the Grantor
will promptly and duly execute and deliver such further instruments and
documents and take such further action as the Administrative Agent may
reasonably request for the purpose of obtaining or preserving the full
benefits of this Security Agreement and of the rights and powers herein
granted, including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect in any
jurisdiction with respect to the Liens created hereby. The Grantor also
hereby authorizes the Administrative Agent to file any such financing or
continuation statement without the signature of the Grantor to the extent
permitted by applicable law. A carbon, photographic or other reproduction
of this Security Agreement shall be sufficient as a financing statement for
filing in any jurisdiction. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any Instrument
or Chattel Paper, such Instrument or Chattel Paper shall be immediately
delivered to the Administrative Agent, duly endorsed in a manner
satisfactory to the Administrative Agent, to be held as Collateral pursuant
to this Security Agreement.
(b) INDEMNIFICATION. The Grantor agrees to pay, and to save the
Administrative Agent and the Lenders harmless from, any and all
liabilities, costs and expenses (including, without limitation, legal fees
and expenses) (i) with respect to, or resulting from, any delay in paying
any and all excise, sales or other taxes which may be payable or determined
to be payable with respect to any of the Collateral, (ii) with respect to,
or resulting from, any delay in complying with any Requirement of Law
applicable to any of the Collateral or (iii) in connection with any of the
transactions contemplated by this Security Agreement, except resulting from
the Administrative Agent's or any Lender's
<PAGE> 205
gross negligence or willful misconduct. In any suit, proceeding or action
brought by the Administrative Agent or any Lender under any Account or
Contract for any sum owing thereunder, or to enforce any provisions of any
Account or Contract, the Grantor will save, indemnify and keep the
Administrative Agent and such Lender harmless from and against all expense,
loss or damage suffered by reason of any defense, setoff, counterclaim,
recoupment or reduction or liability whatsoever of the account debtor or
obligor thereunder, arising out of a breach by the Grantor of any
obligation thereunder or arising out of any other agreement, indebtedness
or liability at any time owing to or in favor of such account debtor or
obligor or its successors from the Grantor, except resulting from the
Administrative Agent's or any Lender's gross negligence or willful
misconduct.
(c) MAINTENANCE OF RECORDS. The Grantor will keep and maintain at its
own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all
credits granted with respect to the Accounts. The Grantor will mark its
books and records pertaining to the Collateral to evidence this Security
Agreement and the security interests granted hereby in such manner as the
Administrative Agent may request. For the Administrative Agent's and the
Lenders' further security, the Administrative Agent, for the ratable
benefit of the Lenders, shall have a security interest in all the Grantor's
books and records pertaining to the Collateral, and the Grantor shall,
during the continuance of a Default under Section 7.1(a) of the Credit
Agreement or Section 7.1(c) of the Credit Agreement as it relates to
Section 6.1 of the Credit Agreement, turn over copies of such books and
records and during the continuation of an Event of Default turn over any
such books and records, in each case, to the Administrative Agent or to its
representatives at the request of the Administrative Agent.
(d) RIGHT OF INSPECTION. The Administrative Agent and the Lenders
shall at all times have full and free access during normal business hours
and, so long as no Event of Default shall have occurred and be continuing,
upon reasonable prior notice, to all books, correspondence and records of
the Grantor, and the Administrative Agent and the Lenders and their
respective representatives may examine the same, take extracts therefrom
and make photocopies thereof, and the Grantor agrees to render to the
Administrative Agent and the Lenders, at the Grantor's cost and expense,
such clerical and other assistance as may be reasonably requested with
regard thereto. The Administrative Agent and the Lenders and their
respective representatives shall at all times and, so long as no Event of
Default shall have occurred and be continuing, upon reasonable prior
notice, also have the right to enter into and upon any premises where any
of the Inventory or Equipment is located for the purpose of inspecting the
same, observing its use or otherwise protecting its interests therein.
(e) COMPLIANCE WITH LAWS. The Grantor will comply in all material
respects with all Requirements of Law applicable to the Collateral or any
part thereof or to the operation of the Grantor's business; PROVIDED that
the Grantor may contest any Requirement of Law in any reasonable manner
which shall not, in the sole opinion of the Administrative Agent, adversely
affect the Administrative Agent's or the Lenders' rights or the priority of
their Liens on the Collateral.
<PAGE> 206
(f) COMPLIANCE WITH TERMS OF CONTRACTS. The Grantor will perform and
comply in all material respects with all its obligations under the
Contracts and all its other Contractual Obligations relating to the
Collateral.
(g) PAYMENT OF OBLIGATIONS. The Grantor will pay promptly when due
all taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to the Collateral, except
that no such charge need be paid if (i) the validity thereof is being
contested in good faith by appropriate proceedings, (ii) such proceedings
do not involve any material danger of the sale, forfeiture or loss of any
of the Collateral or any interest therein and (iii) such charge is
adequately reserved against on the Grantor's books in accordance with GAAP.
(h) LIMITATION ON LIENS ON COLLATERAL. The Grantor will not create,
incur or permit to exist, will defend the Collateral against, and will take
such other action as is necessary to remove, any Lien or claim on or to the
Collateral, other than the Liens created hereby and other than as permitted
pursuant to Section 6.3 of the Credit Agreement, and will defend the right,
title and interest of the Administrative Agent and the Lenders in and to
any of the Collateral against the claims and demands of all Persons
whomsoever.
(i) LIMITATIONS ON DISPOSITIONS OF COLLATERAL. The Grantor will not
sell, transfer, lease or otherwise dispose of any of the Collateral, or
attempt, offer or contract to do so except as permitted pursuant to Section
6.6 of the Credit Agreement.
(j) LIMITATIONS ON MODIFICATIONS, WAIVERS, EXTENSIONS OF CONTRACTS
AND AGREEMENTS GIVING RISE TO ACCOUNTS. Subject to subsection (k) below,
the Grantor will not (i) amend, modify, terminate or waive any provision of
any Material Contract or any agreement giving rise to an Account in any
manner which could reasonably be expected to materially adversely affect
the value of such Contract or Account as Collateral, (ii) fail to exercise
promptly and diligently each and every material right which it may have
under each Contract and each agreement giving rise to an Account (other
than any right of termination) or (iii) fail to deliver to the
Administrative Agent a copy of each material demand, notice or document
received by it relating in any way to any Contract or any agreement giving
rise to an Account. As used in this clause (j), a "Material Contract" shall
mean (x) any purchase order or license agreement by Fluent, Inc. with a
value of more than $750,000 in any 12-month period or (y) any other
contract with a stated duration (including any extension periods contained
therein) of more than 12 months and with a value of more than $750,000.
(k) LIMITATIONS ON DISCOUNTS, COMPROMISES, EXTENSIONS OF ACCOUNTS.
Other than in the ordinary course of business, the Grantor will not grant
any extension of the time of payment of any of the Accounts, compromise,
compound or settle the same for less than the full amount thereof, release,
wholly or partially, any Person liable for the payment thereof, or allow
any credit or discount whatsoever thereon.
<PAGE> 207
(l) MAINTENANCE OF EQUIPMENT. The Grantor will maintain each item of
Equipment not subject to Section 6.6(a) of the Credit Agreement in good
operating condition, ordinary wear and tear and immaterial impairments of
value and damage by the elements excepted, and will provide all
maintenance, service and repairs necessary for such purpose.
(m) MAINTENANCE OF INSURANCE. The Grantor will maintain, with
financially sound and reputable companies, insurance policies as required
under the Credit Agreement. All such policies shall (i) contain a breach of
warranty clause in favor of the Administrative Agent and the Lenders, (ii)
provide that no cancellation, material reduction in amount or material
change in coverage thereof shall be effective until at least 30 days after
receipt by the Administrative Agent and the Lenders of written notice
thereof, (iii) name the Administrative Agent as loss payee of each such
policy, (iv) name the Administrative Agent and the Lenders as insured to
the extent of their interests under each such policy and (v) be reasonably
satisfactory in all material respects to the Administrative Agent. The
Grantor shall deliver to the Administrative Agent and each Lender upon
request, full information as to the insurance carried, including certified
copies of policies and certificates of insurance from a recognized
insurance broker reasonably acceptable to the Administrative Agent.
(n) FURTHER IDENTIFICATION OF COLLATERAL. The Grantor will furnish to
the Administrative Agent and the Lenders from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Administrative Agent may
reasonably request, all in reasonable detail.
(o) NOTICES. The Grantor will advise the Administrative Agent
promptly, in reasonable detail, at its address set forth in the Credit
Agreement, (i) of any Lien (other than Liens created hereby or permitted
under the Credit Agreement) on, or claim asserted against, any of the
Collateral and (ii) of the occurrence of any other event which could
reasonably be expected to have a material adverse effect on the aggregate
value of the Collateral or on the Liens created hereunder.
(p) CHANGES IN LOCATIONS, NAME, ETC. Unless the Grantor gives 30
days' prior written notice to the Administrative Agent, the Grantor will
not (i) change the location of its chief executive office/chief place of
business from that specified in Section 4(f) or remove its books and
records from the location specified in Section 4(c), (ii) permit any of the
Inventory or Equipment to be kept at a location other than those listed on
Schedule I hereto or (iii) change its name, identity or corporate structure
to such an extent that any financing statement filed by the Administrative
Agent in connection with this Security Agreement would become seriously
misleading.
6. ADMINISTRATIVE AGENT'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) POWERS. The Grantor hereby irrevocably constitutes and appoints
the Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Grantor and in the name of the
Grantor or in its own name, from time to time in the Administrative Agent's
discretion, for the purpose of carrying out the terms of this Security
<PAGE> 208
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Security Agreement, and, without limiting the generality of the
foregoing, the Grantor hereby gives the Administrative Agent the power and
right, on behalf of the Grantor, without notice to or assent by the Grantor, to
do the following:
(i) in the case of any Account, at any time when the authority of the
Grantor to collect the Accounts has been curtailed or terminated pursuant
to the first sentence of Section 3(c), or in the case of any other
Collateral, at any time when any Event of Default shall have occurred and
is continuing, in the name of the Grantor or its own name, or otherwise, to
take possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Account, Instrument, General Intangible or Contract or with respect to any
other Collateral and to file any claim or to take any other action or
proceeding in any court of law or equity or otherwise deemed appropriate by
the Administrative Agent for the purpose of collecting any and all such
moneys due under any Account, Instrument, General Intangible or Contract or
with respect to any other Collateral whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof; and
(iii) upon the occurrence and during the continuance of any Event of
Default, (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (B) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (C)
to sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (D) to commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought against
the Grantor with respect to any Collateral; (F) to settle, compromise or
adjust any suit, action or proceeding described in clause (E) above and, in
connection therewith, to give such discharges or releases as the
Administrative Agent may deem appropriate; and (G) generally, to sell,
transfer, pledge and make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though the
Administrative Agent were the absolute owner thereof for all purposes, and
to do, at the Administrative Agent's option and the Grantor's expense, at
any time, or from time to time, all acts and things which the
Administrative Agent deems necessary to protect, preserve or realize upon
the Collateral and the Administrative Agent's and the Lenders' Liens
thereon and to effect the intent of this Security Agreement, all as fully
and effectively as the Grantor might do.
The Grantor hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof. This power of attorney is a power coupled with an
interest and shall be irrevocable.
<PAGE> 209
(b) OTHER POWERS. The Grantor also authorizes the Administrative
Agent and the Lenders, at any time and from time to time, to execute, in
connection with the sale provided for in this SECTION 6 or in SECTION 9 hereof,
any endorsements, assignments or other instruments of conveyance or transfer
with respect to the Collateral.
(c) NO DUTY ON ADMINISTRATIVE AGENT OR LENDERS' PART. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent's and the Lenders' interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to the Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7. PERFORMANCE BY ADMINISTRATIVE AGENT OF GRANTOR'S OBLIGATIONS. If
the Grantor fails to perform or comply with any of its agreements contained
herein and the Administrative Agent, as provided for by the terms of this
Security Agreement, shall itself perform or comply, or otherwise cause
performance or compliance, with such agreement, the expenses of the
Administrative Agent incurred in connection with such performance or compliance,
together with interest thereon at a rate per annum 2% above the Alternate Base
Rate, shall be payable by the Grantor to the Administrative Agent on demand and
shall constitute Obligations secured hereby.
8. PROCEEDS. In addition to the rights of the Administrative Agent
and the Lenders specified in Section 3(c) with respect to payments of Accounts,
it is agreed that if an Event of Default shall occur and be continuing (a) upon
written notice by the Administrative Agent to the Grantor, all Proceeds received
by the Grantor consisting of cash, checks and other near-cash items shall be
held by the Grantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of the Grantor, and, forthwith upon receipt by the
Grantor, shall be turned over to the Administrative Agent in the exact form
received by the Grantor (duly endorsed by the Grantor to the Administrative
Agent, if required), and (b) any and all such Proceeds received by the
Administrative Agent (whether from the Grantor or otherwise) may, in the sole
discretion of the Administrative Agent, be held by the Administrative Agent for
the ratable benefit of the Lenders as collateral security for, and/or then or at
any time thereafter shall within fifteen days thereafter, in the sole discretion
of the Administrative Agent, either be applied by the Administrative Agent for
the ratable benefit of the Lenders against the Obligations (whether matured or
unmatured), such application to be in such order as the Administrative Agent
shall elect or be available for use by the Grantor in the operation of its
business. Any balance of such Proceeds remaining after the Obligations shall
have been paid in full and the Commitments shall have been terminated shall be
paid over to the Grantor or to whomsoever may be lawfully entitled to receive
the same.
9. REMEDIES. If an Event of Default shall occur and be continuing,
the Administrative Agent, on behalf of the Lenders, may exercise, in addition to
all other rights and remedies granted to them in this Security Agreement and in
any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code. Without
limiting the generality of the foregoing, the Administrative Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice
<PAGE> 210
of any kind (except any notice required by law referred to below) to or upon the
Grantor, any guarantor, or any other Person (all and each of which demands,
defenses, advertisements and notices being hereby waived to the maximum extent
permitted by applicable law), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give option or options to purchase, or
otherwise dispose of and deliver the Collateral or any part thereof (or contract
to do any of the foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of the Administrative Agent or
any Lender or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Administrative Agent or any
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by applicable law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Grantor, which right or equity is hereby waived or
released to the maximum extent permitted by applicable law. The Grantor further
agrees, at the Administrative Agent's request, to assemble the Collateral and
make it available to the Administrative Agent at such places as the
Administrative Agent shall reasonably select, whether at the Grantor's premises
or elsewhere. The Administrative Agent shall apply the net proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Administrative Agent and the
Lenders hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Administrative Agent may elect, and only after such application and
after the payment by the Administrative Agent of any other amount required by
any provision of law, including, without limitation, Section 9-504(i)(c) of the
Code, need the Administrative Agent account for the surplus, if any, to the
Grantor. To the extent permitted by applicable law, the Grantor waives all
claims, damages and demands it may acquire against the Administrative Agent or
any Lender arising out of the exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of Collateral shall be required
by law, such notice shall be deemed reasonable and proper if given at least 10
days before such sale or other disposition. The Grantor shall remain liable for
any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorneys employed by the Administrative Agent or any
Lender to collect such deficiency.
10. LIMITATION ON DUTIES REGARDING PRESERVATION OF COLLATERAL. The
Administrative Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Administrative Agent deals with similar property for its own account. Neither
the Administrative Agent, any Lender, nor any of their respective directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of the Grantor or otherwise.
11. POWERS COUPLED WITH AN INTEREST. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.
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12. LIMITATION ON LINES OF BUSINESS. Nothing in this Security
Agreement shall be deemed or construed as modifying in any way the restrictions
on the Grantor's activities as set forth in Section 6.14 of the Credit
Agreement.
13. SEVERABILITY. Any provision of this Security 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.
14. SECTION HEADINGS. The section headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
15. NO WAIVER; CUMULATIVE REMEDIES. Neither the Administrative Agent
nor any Lender shall by any act (except by a written instrument pursuant to
SECTION 16), delay, indulgence, omission or otherwise be deemed to have waived
any right or remedy hereunder or to have acquiesced in any Default or Event of
Default or in any breach of any of the terms and conditions hereof. No failure
to exercise, nor any delay in exercising, on the part of the Administrative
Agent or any Lender, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. A waiver by the Administrative Agent or
any Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Administrative Agent or such
Lender would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
16. WAIVERS AND AMENDMENTS; SUCCESSORS AND ASSIGNS. None of the terms
or provisions of this Security Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Grantor and
the Administrative Agent; PROVIDED that any provision of this Security Agreement
may be waived by the Administrative Agent in a written letter or agreement
executed by the Administrative Agent or by telex or facsimile transmission from
the Administrative Agent. This Security Agreement shall be binding upon the
successors and assigns of the Grantor and shall inure to the benefit of the
Administrative Agent and the Lenders and their respective successors and
assigns.
17. GOVERNING LAW. THIS SECURITY AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS SECURITY AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF OTHER THAN
SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK, EXCEPT
FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER
JURISDICTIONS TO THE EXTENT THE LAW OF ANOTHER JURISDICTION IS MANDATORILY
APPLICABLE PURSUANT TO THE LAWS OF SUCH JURISDICTION.
<PAGE> 212
18. NOTICES. Notices hereunder may be given by mail, by telex or by
facsimile transmission, addressed or transmitted to the Person to which it is
being given at such Person's address or transmission number set forth in the
Credit Agreement and shall be effective (a) in the case of mail, three days
after deposit in the postal system, first class postage pre-paid and (b) in the
case of telex or facsimile notices, when sent if receipt is confirmed by
telephone. The Grantor may change its address and transmission number by written
notice to the Administrative Agent, and the Administrative Agent or any Lender
may change its address and transmission number by written notice to the Grantor
and, in the case of any Lender, to the Administrative Agent.
19. AUTHORITY OF ADMINISTRATIVE AGENT. The Grantor acknowledges that
the rights and responsibilities of the Administrative Agent under this Security
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Security Agreement shall, as between the Administrative
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Grantor, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Lenders with full
and valid authority so to act or refrain from acting, and the Grantor shall not
be under any obligation, or entitlement, to make any inquiry respecting such
authority.
20. COUNTERPARTS. This Security Agreement may be executed in
counterparts, and all of such counterparts taken together shall be deemed to
constitute one and the same instrument.
IN WITNESS WHEREOF, the Grantor and the Administrative Agent have
caused this Security Agreement to be duly executed and delivered as of the date
first above written.
[GRANTOR]
By: _______________________________
Name:
Title:
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By: _______________________________
Name:
Title:
<PAGE> 213
SCHEDULE I
TO SUBSIDIARY
SECURITY AGREEMENT
[GRANTOR]
[Address]
LOCATION OF INVENTORY
LOCATION OF EQUIPMENT
<PAGE> 214
ANNEX A
TO SUBSIDIARY
SECURITY AGREEMENT
[GRANTOR]
[Address]
LIST OF INVESTMENT PROPERTY
<PAGE> 215
EXHIBIT O
TO CREDIT
AGREEMENT
FORM OF CLOSING CERTIFICATE
AAVID THERMAL TECHNOLOGIES, INC.
Pursuant to Section 4.1(m) of the Credit Agreement dated as of October
, 1999 among Aavid Thermal Technologies, Inc., a Delaware corporation (the
"BORROWER"), the several banks and other financial institutions from time to
time parties thereto (the "LENDERS"), Canadian Imperial Bank of Commerce, as
issuer of certain letters of credit, Canadian Imperial Bank of Commerce, as
administrative agent for the Lenders, and CIBC World Markets Corp., as lead
arranger and bookrunner (the "CREDIT AGREEMENT"; terms defined therein shall
have their defined meanings when used herein), the undersigned hereby certifies
that he/she is the ___________________ of the Borrower and in such capacity
further certifies as follows:
i. The representations and warranties of the Borrower set forth in
the Credit Agreement and each of the other Loan Documents to which the Borrower
is a party, or which are contained in any certificate, document or financial or
other statement furnished pursuant to or in connection therewith or any such
other document are true and correct in all material respects on and as of the
date hereof with the same effect as if made on and as of the date hereof.
ii. The Borrower has received all documents and instruments,
including all consents, authorizations and filings, required under any
Requirement of Law or Contractual Obligation of the Borrower in connection with
the execution, delivery, performance, validity and enforceability of the Credit
Agreement, the Notes, the Loan Documents and the Acquisition Documents except as
expressly set forth in each document. I have examined SCHEDULE 3.4 to the Credit
Agreement, and attached hereto as EXHIBIT A are copies of all consents,
authorizations and filings referred to in SCHEDULE 3.4 of the Credit Agreement,
which consents, authorizations and filings are in full force and effect as of
the date hereof.
3. Attached hereto as EXHIBIT B are true and correct copies of each
of the Acquisition Documents, together with all schedules and exhibits attached
thereto and side letters affecting the terms thereof or otherwise delivered in
connection therewith, together with all closing documents, opinions and
certificates executed in connection therewith, including a copy of the
Notification and Report Form in respect of Merger furnished to the Department of
Justice and the Federal Trade Commission pursuant to the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, all of which are in full force and effect.
The attached Acquisition Documents have not been amended, supplemented or
otherwise modified since the respective dates thereof, except as may have been
consented to in writing by the Lenders.
<PAGE> 216
4. The only condition to consummation of the Acquisition remaining
to be satisfied under the Acquisition Documents is the delivery of funds
sufficient to pay the consideration under the Acquisition Documents.
5. Attached hereto as EXHIBIT C is a true, complete and correct copy
of the schedule of sources and uses substantially in the form of SCHEDULE 4.1(r)
to the Credit Agreement, setting forth the application of the proceeds of the
Loans made under the Credit Agreement on the Closing Date and the other amounts
received or paid in connection with the Acquisition and the financing thereof.
6. No Default or Event of Default has occurred and is continuing as
of the date hereof or after giving effect to the making of the Loans on the date
hereof.
7. There are no liquidation or dissolution proceedings pending or to
my knowledge threatened against the Borrower, nor has any other event occurred
affecting or threatening the existence of the Borrower.
IN WITNESS WHEREOF, the undersigned has hereunto set his/her name.
AAVID THERMAL TECHNOLOGIES, INC.
By:______________________________
Name:
Title:
Date: ______________________, 1999
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<PAGE> 217
EXHIBIT P
TO CREDIT
AGREEMENT
AAVID THERMAL TECHNOLOGIES, INC
FORM OF COMPLIANCE CERTIFICATE
Pursuant to Section 5.2(c) of the Credit Agreement dated as of October
__, 1999 among Aavid Thermal Technologies, Inc., a Delaware corporation (the
"Borrower"), the several banks and other financial institutions from time to
time party thereto (the "Lenders"), Canadian Imperial Bank of Commerce, as
issuer of certain letters of credit, Canadian Imperial Bank of Commerce, as
administrative agent for the Lenders (the "Administrative Agent") and CIBC World
Markets Corp., as lead arranger and bookrunner (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"; certain defined
terms are used herein as defined therein), the undersigned hereby certifies that
he is the Chief Financial Officer of the Borrower and further certifies as
follows:
1. No Default or Event of Default has occurred and is continuing as
of the date hereof, except as set forth in this Certificate.
2. [The Borrower has entered into, and is maintaining as of the date
hereof, one or more Hedging Agreements in an aggregate notional
principal amount not less than 50% of the aggregate outstanding
amount of Indebtedness of the Borrower, which Hedging Agreement
other than a Hedging Agreement with the Administrative Agent or
any Lender or Affiliate of any Lender, does not create a Lien on,
and is not secured by, the assets of the Borrower or any of its
Subsidiaries.](1)
[3. As of ___________________ (the "Computation Date"), EBITDA for
the previous twelve months was $__________, as shown on
Attachment 1.](2)
4. As the Computation Date:
4.1 The Total Leverage Ratio was ____:1.00, as computed on
Attachment 1 hereto.
4.2 The Fixed Charges Ratio for the previous four fiscal
quarters was _____ :1.00, as computed on Attachment 2
hereto.
- ---------------------------
(1) To be entered into if at any time the Eurodollar Base Rate for three-month
loans exceeds 6.5% for five consecutive Business Days and, during the 90-day
period after the Closing Date, upon notice from the Administrative Agent as to
such increased interest rate.
(2) To be included on the Closing Date only.
<PAGE> 218
4.3 The Interest Coverage Ratio for the previous four fiscal
quarters was _____ :1.00, as computed on Attachment 4
hereto.
5. Capital Expenditures:
a. For the current fiscal year (up to the Computation Date) the
Capital Expenditures by the Borrower and its Subsidiaries
were $_____________ in the aggregate.
b. Capital Expenditures for the current fiscal year less the
Carryover Amount were $_________.
c. The amount set forth in paragraph 5(b) above does not exceed
$___________(3) of Capital Expenditures that the Borrower
may expend for the applicable fiscal year.
6. As of the date hereof, the aggregate Net Disposition Proceeds
received by the Borrower since the Closing Date is
$_____________.
IN WITNESS WHEREOF, the undersigned has hereunto set his name on this
__ day of ________, ____.
AAVID THERMAL TECHNOLOGIES, INC.
By:_________________________
Name:
Title: Chief Financial Officer
- -----------------------
(3) $5,000,000 from the Closing Date to December 31, 1999; (b) $17,500,000 in
fiscal year 2000; (c) $21,000,000 in fiscal year 2001; (d) $25,000,000 in fiscal
year 2002; and (e) $30,000,000 in each of fiscal year 2003 and fiscal year 2004.
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<PAGE> 219
ATTACHMENT 1
EBITDA
1. Net Income for Borrower and its Subsidiaries
(excluding (i) all items classified as
extraordinary, all determined in accordance
with U.S. GAAP, (ii) all insurance proceeds
(other than proceeds of business interruption
insurance) received during such period to the
extent, if any, included in Net Income and
(iii) tax gains and losses upon the
disposition of capital assets $_________
2. Sum of all amounts deducted in computing Net
Income for such period in respect of:
(a) Interest Expense (after giving effect to
all Hedging Agreements and payments and
receipts thereunder) (item 4 of
Attachment 8) $_________
(b) non-cash amortization expense (including
amortization of financing costs,
non-current assets and non-cash charges) $_________
(c) depreciation $_________
(d) income taxes $_________
(e) all other non-cash expenses (other than
for minority interests) less
extraordinary gains $_________
(f) non-recurring transaction expenses and
underwriting fees $_________
(g) one-time, non-recurring expenses
associated with facility closings and
headcount reductions related to the
Acquisition and agreed to by Borrower's
independent accounting firm, in each
case of Borrower and its Subsidiaries $_________
(h) [the excess of (A) the value of the
inventory sold during such period as
would be set forth on the balance sheet
of the Target Companies on the date the
Acquisition is consummated (after giving
effect to the Acquisition) over (B) the
value of such inventory as would be set
forth on the balance sheet of the Target
Companies on such date (immediately
prior to giving effect to the
Acquisition)](4) $_________
- ---------------------
(4) Solely for purposes of calculating EBITDA for any period including December
31, 2000.
-3-
<PAGE> 220
(i) [the corporate overhead costs and
expenses allocated to the Target
Companies by the Sellers and paid to the
Sellers during such period](5) $_________
Total of (a) through (i) $_________
3. EBITDA (sum of item 1 and item 2) $_________
4. [Covenant minimum EBITDA (as set forth in
Section 4.1(z) of the Credit Agreement): $36,500,000](6)
- -----------------------------
(5) Solely for purposes of calculating EBITDA for any period including July 3,
1999.
(6) To be included on the Closing Date only.
-4-
<PAGE> 221
ATTACHMENT 2
TOTAL LEVERAGE RATIO
1. Funded Debt of Borrower (on the Computation
Date) (item 5 of Attachment 6) $_________
2. EBITDA (item 3 of Attachment 1) $_________
3. Total Leverage Ratio (item 1 divided by item 2) 1.0
4. Covenant Total Leverage Ratio (as set forth
in Section 6.1(c) or Section 4.1(z), as
applicable, of the Credit Agreement): _____:1.0
<TABLE>
<CAPTION>
Period Total Leverage Ratio
------ --------------------
<S> <C>
Closing Date through June 30, 2000 2.5 to 1.0
July 1, 2000 through December 31, 2001 2.0 to 1.0
January 1, 2002 and thereafter 1.5 to 1.0
</TABLE>
-5-
<PAGE> 222
ATTACHMENT 3
FIXED CHARGES RATIO
1. EBITDA (item 3 of Attachment 1) $_________
2. Interest Expense of Borrower (item 4 of
Attachment 8) $_________
3. Capital Expenditures of Borrower (item 5(a)
of the Compliance Certificate) $_________
4. Income or other taxes paid or payable in cash
during the relevant period $_________
5. Regularly scheduled payments on the Term
Loans during the relevant period $_________
6. Regularly scheduled payments of all other
Funded Debt of Borrower and its Subsidiaries
during the relevant period $_________
7. Fixed Charges (sum of item 2, item 3, item 4,
item 5 and item 6) $_________
8. Fixed Charges Ratio (item 1 divided by item 7) ____:1.00
9. Covenant Fixed Charges Ratio (as set forth in
Section 6.1(b) of the Credit Agreement) 1.15:1.00
-6-
<PAGE> 223
ATTACHMENT 4
INTEREST COVERAGE RATIO
1. EBITDA (item 3 of Attachment 1) $_________
2. Interest Expense (item 4 of Attachment 8)(7) $_________
3. Interest Coverage Ratio (item 1 divided by
item 2) _____:1.0
4. Covenant Interest Coverage Ratio (as set
forth in Section 6.1(a) of the Credit
Agreement) 3.0:1.0
- --------------------------
(7) (x) for the fiscal quarter ending March 31, 2000, Interest Expense for such
fiscal quarter multiplied by four; (y) for the fiscal quarter ending June 30,
2000, Interest Expense for such fiscal quarter multiplied by two; and (z) for
the fiscal quarter ending September 30, 2000, Interest Expense for such fiscal
quarter multiplied by four-thirds.
-7-
<PAGE> 224
ATTACHMENT 5
EXCESS CASH FLOW
1. EBITDA (item 3 of Attachment 1) $_________
2. Optional prepayments of principal of Term
Loans $_________
3. Fixed Charges (item 7 of Attachment 3) $_________
4. Optional prepayments of principal of
Revolving Credit Loans $_________
5. Excess Cash Flow (item 1 minus the sum of
item 2, item 3 and item 4) $_________
-8-
<PAGE> 225
ATTACHMENT 6
FUNDED DEBT
1. Indebtedness of Borrower and its Subsidiaries
(item 9 of Attachment 7) $__________
2. Liabilities arising under Hedging Agreements
(other than interest rate caps) (item 6 of
Attachment 7) $__________
3. Withdrawal liabilities of Borrower or any
Commonly Controlled Entity to a Plan (item 7
of Attachment 7) $__________
4. Guarantee Obligations, if the primary
obligations would constitute Indebtedness of
another Person under item 1 through item 7 of
Attachment 7 (to the extent arising under the
Guarantee Obligations of a liability arising
under item 6 or item 7 of Attachment 7) $__________
5. Funded Debt (item 1 minus the sum of item 2,
item 3 and item 4) $__________
-9-
<PAGE> 226
ATTACHMENT 7
INDEBTEDNESS
1. Indebtedness for borrowed money or for the
deferred purchase price of property or
services (other than current trade
liabilities and accrued expenses incurred in
the ordinary course of business and payable
in accordance with customary practices and
payable within 90 days) $__________
2. To the extent not included above,
indebtedness evidenced by a note, bond,
debenture or similar instrument $__________
3. Obligations under Financing Leases $__________
4. Obligations under outstanding letters of
credit, acceptances and similar obligations $__________
5. To the extent not included above, liabilities
secured by any Lien on owned property even if
not assumed or otherwise liable for payment $__________
6. To the extent not included above, liabilities
arising under Hedging Agreements (other than
interest rate caps) $__________
7. To the extent not included above, withdrawal
liabilities of Borrower or any Commonly
Controlled Entity to a Plan $__________
8. To the extent not included above, Guarantee
Obligations, if the primary obligations would
constitute Indebtedness of another Person
under item 1 through item 7 $__________
9. Indebtedness (sum of item 1, item 2, item 3,
item 4, item 5, item 6, item 7 and item 8) $__________
-10-
<PAGE> 227
ATTACHMENT 8
INTEREST EXPENSE
1. All interest in respect of Indebtedness of
Borrower and its Subsidiaries accrued or
capitalized during the relevant period $__________
2. Net amounts payable (or minus the net amounts
receivable) under Hedging Agreements accrued
during the relevant period (excluding
transaction or "up front" fees incurred in
establishing or entering into any Hedging
Agreement) $__________
3. Financing or commitment fees in respect of
Indebtedness of Borrower or any Subsidiary
and management fees accrued or capitalized
during the relevant period (excluding
arrangement or underwriting fees or costs
paid on the Closing Date in respect of
Indebtedness) $__________
4. Interest Expense (sum of item 1, item 2 and
item 3) $__________
-11-
<PAGE> 228
EXHIBIT Q
TO CREDIT
AGREEMENT
FORM OF COMMITMENT TRANSFER SUPPLEMENT
COMMITMENT TRANSFER SUPPLEMENT, dated as of the date set forth in Item
1 of Schedule I hereto, among the Transferor Bank set forth in Item 2 of
Schedule I hereto (the "TRANSFEROR BANK"), each Purchasing Bank set forth in
Item 3 of Schedule I hereto (each, a "PURCHASING BANK"), and CANADIAN IMPERIAL
BANK OF COMMERCE, as administrative agent for the Lenders under the Credit
Agreement described below (in such capacity, the "ADMINISTRATIVE AGENT").
WITNESSETH:
WHEREAS, this Commitment Transfer Supplement is being executed and
delivered in accordance with Section 9.6(c) of the Credit Agreement, dated as of
October __, 1999, among Aavid Thermal Technologies, Inc., a Delaware corporation
(the "BORROWER"), the Transferor Bank and the other Lenders party thereto,
Canadian Imperial Bank of Commerce, as issuer of certain letters of credit, the
Administrative Agent and CIBC World Markest Corp., as lead arranger and
bookrunner (as from time to time amended, supplemented or otherwise modified in
accordance with the terms thereof, the "CREDIT AGREEMENT"; terms defined therein
being used herein as therein defined);
WHEREAS, each Purchasing Bank (if it is not already a Lender party to
the Credit Agreement) wishes to become a Lender party to the Credit Agreement;
and
WHEREAS, the Transferor Bank is selling and assigning to each
Purchasing Bank, rights, obligations and commitments under the Credit Agreement;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Upon receipt by the Administrative Agent of (i) a counterpart of
this Commitment Transfer Supplement, to which is attached a fully completed
Schedule I and Schedule II, and which has been executed by the Transferor Bank,
each Purchasing Bank and any other person required by the Credit Agreement to
consent to the transfer evidenced by this Commitment Transfer Supplement, and
(ii) the processing fee referred to in Section 9.6(e) of the Credit Agreement,
the Administrative Agent will transmit to the Borrower, the Transferor Bank and
each Purchasing Bank, a Transfer Effective Notice, substantially in the form of
Schedule III to this Commitment Transfer Supplement (a "TRANSFER EFFECTIVE
NOTICE"). Such Transfer Effective Notice shall set forth, INTER ALIA, the date
on which the transfer effected by this Commitment Transfer Supplement shall
become effective (the "TRANSFER EFFECTIVE DATE"), which date shall be the fifth
Business Day following the date of such Transfer Effective Notice. From and
after the Transfer Effective Date, each Purchasing Bank shall be a Lender party
to the Credit Agreement for all purposes thereof.
<PAGE> 229
2. At or before 12:00 noon, local time of the Transferor Bank on the
Transfer Effective Date, each Purchasing Bank shall pay to the Transferor Bank,
in immediately available funds, an amount equal to the purchase price, as agreed
between the Transferor Bank and such Purchasing Bank (the "PURCHASE PRICE"), of
the portion being purchased by such Purchasing Bank (such Purchasing Bank's
"PURCHASED PERCENTAGE") of the outstanding Loans and other amounts owing to the
Transferor Bank under the Credit Agreement and its Note(s). Effective upon
receipt by the Transferor Bank of the Purchase Price from a Purchasing Bank, the
Transferor Bank hereby irrevocably sells, assigns and transfers to such
Purchasing Bank, without recourse, representation or warranty, and each
Purchasing Bank hereby irrevocably purchases, takes and assumes from the
Transferor Bank, such Purchasing Bank's Purchased Percentage of the Commitments
and the presently outstanding Loans and other amounts owing to the Transferor
Bank under the Credit Agreement and its Note(s) together with all instruments,
documents and collateral security pertaining thereto.
3. The Transferor Bank has made arrangements with each Purchasing
Bank with respect to (i) the portion, if any, to be paid, and the date or dates
for payment, by the Transferor Bank to such Purchasing Bank of any fees
heretofore received by the Transferor Bank pursuant to the Credit Agreement
prior to the Transfer Effective Date and (ii) the portion, if any, to be paid,
and the date or dates for payment, by such Purchasing Bank to the Transferor
Bank of fees or interest received by such Purchasing Bank pursuant to the Credit
Agreement from and after the Transfer Effective Date.
4. (a) All principal payments that would otherwise be payable from
and after the Transfer Effective Date to or for the account of the Transferor
Bank pursuant to the Credit Agreement and its Note(s) shall, instead, be payable
to or for the account of the Transferor Bank and the Purchasing Banks, as the
case may be, in accordance with their respective interests as reflected in this
Commitment Transfer Supplement.
(b) All interest, fees and other amounts that would otherwise accrue
for the account of the Transferor Bank from and after the Transfer Effective
Date pursuant to the Credit Agreement and its Note(s) shall, instead, accrue for
the account of, and be payable to, the Transferor Bank and the Purchasing Banks,
as the case may be, in accordance with their respective interests as reflected
in this Commitment Transfer Supplement. In the event that any amount of
interest, fees or other amounts accruing prior to the Transfer Effective Date
was included in the Purchase Price paid by any Purchasing Bank, the Transferor
Bank and each Purchasing Bank will make appropriate arrangements for payment by
the Transferor Bank to such Purchasing Bank of such amount upon receipt thereof
from the Borrower.
5. On or prior to the Transfer Effective Date, the Transferor Bank
will deliver to the Administrative Agent its Note(s). On or prior to the
Transfer Effective Date, the Borrower will deliver to the Administrative Agent a
new Note or Notes of the Borrower for each Purchasing Bank, and (if the
Transferor Bank shall, after giving effect to the transfer effected by this
Commitment Transfer Supplement, remain a Lender party to the Credit Agreement)
the Transferor Bank, in each case in principal amounts reflecting, in accordance
with the Credit Agreement, their Commitments as adjusted pursuant to this
Commitment Transfer Supplement. Each new Note shall be dated the Closing Date.
Promptly after the Transfer Effective Date, the Administrative Agent will send
to each of the Transferor Bank and the Purchasing Banks its new
-2-
<PAGE> 230
Note(s) and will send to the Borrower the superseded Note(s) of the Transferor
Bank, marked "cancelled".
6. Concurrently with the execution and delivery hereof, the
Transferor Bank will provide to each Purchasing Bank (if it is not already a
Lender party to the Credit Agreement) conformed copies of all documents
delivered to such Transferor Bank on the Closing Date and the Effective Date in
satisfaction of the conditions precedent set forth in the Credit Agreement.
7. Each of the parties to this Commitment Transfer Supplement agrees
that at any time and from time to time upon the written request of any other
party, it will execute and deliver such further documents and do such further
acts and things as such other party may reasonably request in order to effect
the purposes of this Commitment Transfer Supplement.
8. By executing and delivering this Commitment Transfer Supplement,
the Transferor Bank and each Purchasing Bank confirm to and agree with each
other and the Administrative Agent and the Lenders as follows: (i) other than
the representation and warranty that it is the legal and beneficial owner of the
interest being assigned hereby free and clear of any adverse claim, the
Transferor Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Credit
Agreement, the Note(s) or any other instrument or document furnished pursuant
thereto; (ii) the Transferor Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under the Credit Agreement, the Note(s) or any other instrument or
document furnished pursuant hereto; (iii) each Purchasing Bank confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements referred to in Section 3.1 of the Credit Agreement, the
financial statements delivered pursuant to Section 5.1 of the Credit Agreement,
if any, and such other documents and information as it has deemed appropriate to
make its own credit analysis and decision to enter into this Commitment Transfer
Supplement; (iv) each Purchasing Bank will, independently and without reliance
upon the Administrative Agent, the Transferor Bank 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 of not taking action under
the Credit Agreement; (v) each Purchasing Bank appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to exercise
such powers under the Credit Agreement and the other Loan Documents as are
delegated to the Administrative Agent by the terms thereof, together with such
powers as are reasonably incidental thereto, all in accordance with Article 9 of
the Credit Agreement; and (vi) each Purchasing Bank agrees that it will perform
in accordance with their terms all the obligations which, by the terms of the
Credit Agreement, are required to be performed by it as a Lender.
9. Each Purchasing Bank agrees to comply with Section 2.18(b) of the
Credit Agreement to the same extent as if it were one of the original Lenders
signatory to the Credit Agreement.
10. Schedule II hereto sets forth the revised Commitment and
Commitment Percentage of the Transferor Bank and each Purchasing Bank as well as
administrative information with respect to each Purchasing Bank.
-3-
<PAGE> 231
11. THIS COMMITMENT TRANSFER SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
-4-
<PAGE> 232
IN WITNESS WHEREOF, the parties hereto have caused this Commitment
Transfer Supplement to be executed by their respective duly authorized officers
on Schedule I hereto as of the date set forth in Item 1 of Schedule I hereto.
SCHEDULE I
TO COMMITMENT
TRANSFER
SUPPLEMENT
COMPLETION OF INFORMATION AND
SIGNATURES FOR COMMITMENT
TRANSFER SUPPLEMENT
Item 1 (Date of Commitment
Transfer Supplement):
Item 2 (Transferor Bank):
Item 3 (Purchasing Bank):
Item 4 (Signatures of Parties
to Commitment Transfer
Supplement):
____________________, as
Transferor Bank
By:______________________
Name:
Title:
____________________, as
Purchasing Bank
By:______________________
Name:
Title:
I-1
<PAGE> 233
The undersigned consents to
the transfer hereunder in
favor of the Purchasing
Bank(s) specified herein:
AAVID THERMAL TECHNOLOGIES, INC.,
as Borrower
By:____________________________
Name:
Title:
ACCEPTED FOR RECORDATION
IN REGISTER:
CANADIAN IMPERIAL BANK OF COMMERCE, as Administrative Agent
By:_______________________
Name:
Title:
I-2
<PAGE> 234
SCHEDULE II
TO COMMITMENT
TRANSFER
SUPPLEMENT
LIST OF LENDING OFFICES, ADDRESSES
FOR NOTICES AND COMMITMENT AMOUNTS
[Name of Transferor
Bank]
REVISED COMMITMENT AMOUNT: $
REVISED COMMITMENT PERCENTAGE:
[Name of Purchasing
Bank]
NEW COMMITMENT AMOUNT: $
NEW COMMITMENT PERCENTAGE:
ADDRESS FOR NOTICES:
[Address]
Attention: _________________
Telephone: _________________
Telecopy: _________________
Telephone
Confirmation:_________________
EURODOLLAR LENDING OFFICE:
______________________
______________________
______________________
DOMESTIC LENDING OFFICE:
______________________
______________________
______________________
II-1
<PAGE> 235
SCHEDULE III
TO COMMITMENT
TRANSFER
SUPPLEMENT
Form of Transfer Effective Notice
To: Aavid Thermal Technologies, Inc., [Transferor Bank and each Purchasing
Bank]
The undersigned, as Administrative Agent under the Credit Agreement,
dated as of October __, 1999, among Aavid Thermal Technologies, Inc., a Delaware
corporation (the "BORROWER"), the Transferor Bank and the other Lenders party
thereto, Canadian Imperial Bank of Commerce, as issuer of certain letters of
credit, Canadian Imperial Bank of Commerce, as administrative agent, and CIBC
World Markest Corp., as lead arranger and bookrunner, acknowledges receipt of an
executed counterpart of a completed Commitment Transfer Supplement. Terms
defined in such Commitment Transfer Supplement are used herein as therein
defined.
1. Pursuant to such Commitment Transfer Supplement, you are advised
that the Transfer Effective Date will be ____________ [insert fifth Business Day
following date of Transfer Effective Notice].
2. Pursuant to such Commitment Transfer Supplement, the Transferor
Bank is required to deliver to the Administrative Agent on or before the
Transfer Effective Date its Notes.
3. Pursuant to such Commitment Transfer Supplement, the Borrower is
required to deliver to the Administrative Agent on or before the Transfer
Effective Date the following Notes, each dated the Effective Date.
[Describe each new Note for Transferor Bank and Purchasing Bank as to
principal amount and payee.]
4. Pursuant to such Commitment Transfer Supplement each Purchasing
Bank is required to pay its Purchase Price to the Transferor Bank at or before
12:00 noon on the Transfer Effective Date in immediately available funds.
Very truly yours,
CANADIAN IMPERIAL BANK OF COMMERCE,
as Administrative Agent
By: __________________________
Name:
Title:
III-1
<PAGE> 236
EXHIBIT R
TO CREDIT
AGREEMENT
FORM OF LANDLORD WAIVER
To: Canadian Imperial Bank of Commerce, as Administrative Agent
425 Lexington Avenue
New York, New York 10017
[INSERT APPLICABLE LOAN PARTY], a ________________ corporation (the
"Company"), is the lessee under a lease between the Company and
_____________________, a _____________ corporation (the "Lessor"), covering the
premises located at ____________ (the "Premises"), as more fully described in
the lease attached hereto as EXHIBIT A and as modified by any amendments, if
any, attached thereto (collectively, the "Lease"). The Lessor is the sole owner
of the Premises. The Company has certain of its assets located on the Premises.
[The Company] [Aavid Thermal Technologies, Inc.] (the "Borrower"),
intends to enter into certain financing arrangements with a group of lenders
(the "Lenders") for which Canadian Imperial Bank of Commerce is acting as agent
(the "Administrative Agent"). As a condition to the Lenders agreeing to make
loans and other financial accommodations and extensions of credit to the
Borrowers, the Administrative Agent requires, among other things, liens on all
of the Company's personal property located on the Premises ("Collateral") and
that the Company grant a mortgage in favor of the Administrative Agent covering
the Company's leasehold estate created by and under the Lease.
In order to induce the Lenders (together with their agents, successors
and assigns) to enter into said financing arrangements, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged:
(a) The Lessor hereby consents to the execution, delivery,
performance and recordation of a leasehold mortgage in substantially the form of
that attached hereto as Exhibit B (as the same may be amended, supplemented or
otherwise modified from time to time, the "Leasehold Mortgage"), covering the
Premises, and the Lessor agrees that the execution, delivery, performance and
recordation of the Leasehold Mortgage will not constitute a breach of or default
under the Lease;
(b) The Lessor hereby endeavors to provide the Administrative Agent
with notification of any modification or amendment to the Lease; provided,
however, in no event shall Lessor's failure to provide notice constitute a
default under this Waiver or the Lease;
(c) The Lessor hereby certifies and agrees that:
(i) the Lease is in full force and effect, all conditions to the
commencement of the term of the Lease have been satisfied, and, except as
set forth on EXHIBIT A, there are no amendments, modifications, or
supplements, whether oral or written, thereto;
<PAGE> 237
(ii) the Company is not in default under the Lease, nor are there any
events or conditions which, by the passage of time or giving of notice or
both, would constitute a default thereunder by the Company;
(iii) Lessor is not aware of any dispute, action, suit, condemnation
proceeding, claim, or right of setoff pending or threatened with respect to
the Lease or the Premises;
(iv) none of the Collateral shall be deemed to be fixtures;
(v) Lessor will not assert against any of the Company's assets any
statutory or possessory liens, including, without limitation, rights of
levy or distraint for rent, all of which Lessor hereby waives;
(vi) Lessor will notify the Administrative Agent prior to taking any
action to evict the Company or terminate the Lease and allow the
Administrative Agent the same period provided to the Company to cure any
such defaults, such cure period offered to the Administrative Agent to
commence upon the giving of such notice;
(vii) if any Borrower defaults on its obligations to the Lenders and
the Administrative Agent undertakes to enforce its security interest in the
Collateral, the Administrative Agent may, at its option and by written
notice to the Lessor, (1) lease the Premises from Lessor on the same terms
as set forth in the Lease and exercise the other rights as lessee
thereunder as described therein and/or (2) assign the Lease and/or the
attornment rights hereunder to, or enter into a sublease with, a purchaser
of all or any part of the Collateral, which purchaser is acceptable to the
Lessor in its sole discretion; provided, however, Lessor agrees that any
purchaser which is an institutional lender or an affiliate of the
Administrative Agent, and the Lessor shall cooperate with any such
enforcement action or foreclosure and consent to the assumption of the
Lease, the sublet of the Premises or foreclosure sale of the leasehold
estate to a party reasonably satisfactory to the Lessor;
(viii) if any Borrower defaults on its obligations to the Lenders and
the Administrative Agent undertakes to enforce its security interest in the
Collateral, but chooses not to exercise its attornment rights under clause
(vii) above, the Lessor will cooperate with the Administrative Agent in its
efforts to assemble all of the Collateral located on the Premises, will
permit the Administrative Agent to remain on the Premises for thirty (30)
days after the Administrative Agent declares the default, provided the
Administrative Agent pays the rental payments due under the Lease for the
period of time the Administrative Agent uses the Premises, or, at the
Administrative Agent's option, to remove the Collateral from the Premises
within a reasonable time, not to exceed thirty (30) days after the Lenders
declare the default, provided the Administrative Agent pays the rental
payments due under the Lease for the period of time the Administrative
Agent uses the Premises, and will not hinder the Administrative Agent's
actions in enforcing its liens on the Collateral; and
(ix) in the event that the Company shall become a debtor under the
Federal Bankruptcy Code and, in connection therewith, the Company shall
reject the Lease as an executory contract, then upon the written request by
the Administrative Agent made
III-2
<PAGE> 238
within thirty (30) days following such rejection, the Lessor shall enter
into a new lease of the Premises with the Administrative Agent, an
institutional lender or an affiliate of the Administrative Agent (provided
the Administrative Agent guarantees the obligations of such affiliate
pursuant to a guarantee reasonably acceptable to the Administrative Agent
and Lessor) or for the benefit of the Lenders which new lease (1) shall be
effective as of the date of the termination of the Lease, (2) shall be for
a term expiring as of the last day of the term of the Lease, and (3) shall
be on substantially the same terms and conditions as the Lease (including
any provisions for renewal or extension of the term of the Lease); PROVIDED
that the Administrative Agent or such designee, as the case may be, shall
be required, as a condition to the effectiveness of such new lease, to pay
the Lessor an amount equal to any rent remaining unpaid by the Company
under the Lease.
(d) The Lessor hereby represents that it has obtained all necessary
consents to the execution, delivery, performance and recordation of this waiver.
(e) The Administrative Agent shall repair or restore any damage to
the Premises resulting from its entry thereon and the removal of the Collateral
to the condition as existed prior to such removal.
(f) Upon the expiration or earlier termination of the Lease, the
Administrative Agent, to the extent that the Company fails to do so, shall have
the right to remove the Collateral. If the Administrative Agent fails to
exercise such right and so remove such Collateral within 30 days of such Lease
expiration or termination, such Collateral shall be deemed abandoned by the
Administrative Agent and the undersigned shall be entitled to remove and dispose
of such Collateral in such manner as the undersigned shall in its sole
discretion, deem appropriate, without any liability to the Administrative Agent
therefor.
(g) The Administrative Agent shall pay, protect, indemnify, save and
hold harmless the undersigned and its officers, directors, partners, members of
employees (each an "INDEMNITEE") from and against any and all liabilities,
losses, damages (including punitive damages), penalties costs, causes of action,
suits, claims, demands or judgments of any nature whatsoever, without regard to
the form of action and whether based on strict liability, negligence or any
other theory of recovery at law or in equity, arising from the Administrative
Agent's removal of the Collateral in accordance with this waiver.
Any notice(s) required or desired to be given hereunder shall be
directed to the party to be notified at the address stated herein.
The agreements contained herein shall continue in force until the
earlier of (i) the expiration date of the Lease (provided no provision is made
for the extension or renewal of the Lease) and (ii) the date on which all of
Borrowers' and the Company's obligations and liabilities to the Lenders are paid
and satisfied in full and all financing arrangements between the Lenders and the
Borrowers have been terminated.
The Lessor will notify all successor owners, transferees, purchasers
and mortgagees of the existence of this waiver. This waiver may not be modified
or terminated orally and shall be binding upon the successors, assigns and
personal representatives of the Lessor, upon
III-3
<PAGE> 239
any successor owner or transferee of the Premises, and upon any purchasers,
including any mortgagee, from the Lessor.
THE LESSOR AGREES THAT NOTHING CONTAINED IN THIS WAIVER SHALL BE
CONSTRUED AS AN ASSUMPTION BY THE ADMINISTRATIVE AGENT OR ANY LENDER OF ANY
OBLIGATIONS OF THE COMPANY CONTAINED IN THE LEASE.
THIS WAIVER SHALL NOT IMPAIR OR OTHERWISE AFFECT THE COMPANY'S
OBLIGATIONS TO PAY RENT AND ANY OTHER SUMS PAYABLE BY THE COMPANY OR TO
OTHERWISE PERFORM ITS OBLIGATIONS TO THE LESSOR PURSUANT TO THE TERMS OF THE
LEASE.
Executed and delivered this ___ day of ________, l999, at
________,________.
[Name of Lessor]
By:__________________________
Title:
Address:
________________________
________________________
[Name of Applicable Loan Party]
By:________________________________
Title:
Address:
________________________
________________________
III-4
<PAGE> 240
ACKNOWLEDGMENT (CORPORATE)
STATE OF __________________)
) SS.
COUNTY OF _________________)
Before me, a Notary Public in and for said County, personally appeared
_______________________, a ____________________ corporation, by the
_______________________ of such corporation, who acknowledged that (s)he did
sign the foregoing instrument on behalf of said corporation and that said
instrument is the voluntary act and deed of said corporation and his/her
voluntary act and deed as such officer of said corporation.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed
my official seal this _____ day of ____________________, 19__ at
_____________________, ____________________________________.
____________________
Notary Public
My Commission Expires:
(Notarial Seal)
III-5
<PAGE> 241
ACKNOWLEDGMENT (CORPORATE)
STATE OF __________________)
) SS.
COUNTY OF _________________)
Before me, a Notary Public in and for said County, personally appeared
_______________________, a ____________________ corporation, by the
_______________________ of such corporation, who acknowledged that (s)he did
sign the foregoing instrument on behalf of said corporation and that said
instrument is the voluntary act and deed of said corporation and his/her
voluntary act and deed as such officer of said corporation.
IN TESTIMONY WHEREOF, I have hereunto subscribed my name and affixed
my official seal this _____ day of ____________________, 19__ at
_____________________, ____________________________________.
____________________
Notary Public
My Commission Expires:
(Notarial Seal)
III-6
<PAGE> 242
EXHIBIT A
to
Landlord Waiver
LEASE
(attached hereto)
III-7
<PAGE> 243
EXHIBIT S
TO CREDIT
AGREEMENT
FORM OF JOINDER AGREEMENT
This Agreement is entered into as of _______________ among [INITIAL
SUBSIDIARY GUARANTORS and SUPPLEMENTAL GUARANTOR] (each a "Subsidiary" and,
collectively, the "Subsidiaries").
WITNESSETH:
WHEREAS, Aavid Thermal Technologies, Inc., a Delaware corporation (the
"BORROWER") has entered into the Credit Agreement dated as of October 21, 1999
among the Borrower, the financial institutions from time to time party thereto
as lenders (the "LENDERS"), Canadian Imperial Bank of Commerce, as issuer of
certain letters of credit, Canadian Imperial Bank of Commerce, as administrative
agent for the Lenders (the "ADMINISTRATIVE AGENT"), and CIBC World Markets
Corp., as lead arranger and bookrunner (as the same may hereafter be amended or
modified from time to time, the "CREDIT AGREEMENT"; terms defined in the Credit
Agreement and not otherwise defined herein being used as therein defined);
WHEREAS, in connection therewith, each of [INITIAL SUBSIDIARY
GUARANTORS] has entered into a Guarantee dated as of October __, 1999 in favor
of the Administrative Agent for the benefit of the Lenders, pursuant to which
each such Subsidiary has guaranteed all the Obligations of the Borrower (such
Guarantees, as the same may be amended, supplemented or modified from time to
time, are collectively referred to as the "SUBSIDIARY GUARANTEES");
WHEREAS, [INITIAL SUBSIDIARY GUARANTORS] (the "Initial Guarantors")
have entered into a Contribution Agreement dated as of October 21, 1999 (the
"Contribution Agreement") pursuant to which each such Subsidiary has agreed
that, to the extent any payment of the Obligations of the Borrower is required
to be made under a Subsidiary Guarantee, each Subsidiary shall be responsible
for a portion of such payment equal to its Contribution Amount (as such term is
defined in the Contribution Agreement);
WHEREAS, [insert description of acquisition and/or formation of the
Supplemental Guarantor];
WHEREAS, the [acquisition] [formation] by the Borrower of [NAME OF
SUPPLEMENTAL GUARANTOR] (the "Supplemental Guarantor") is conditioned upon,
among other things, the execution and delivery by the Supplemental Guarantor of
a Subsidiary Guarantee to the Administrative Agent for the ratable benefit of
the Lenders; and
WHEREAS, each of the Initial Guarantors and the Supplemental Guarantor
desires that the Supplemental Guarantor become a party to the Contribution
Agreement;
NOW, THEREFORE, in consideration of the premises and the covenants
hereafter contained, the parties hereto agree as follows:
<PAGE> 244
[SUPPLEMENTAL GUARANTOR] is joined as a party to the Contribution
Agreement as if an original signatory thereto.
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute but one and the same agreement.
This Agreement will be governed by, and construed in accordance with,
the laws of the State of New York.
IN WITNESS WHEREOF, each of the Subsidiaries has executed and
delivered this Agreement as of the date first above written.
[______________________]
By:_______________________________
Name:
Title:
[______________________]
By:_______________________________
Name:
Title:
III-2
<PAGE> 245
EXHIBIT T
TO CREDIT
AGREEMENT
FORM OF MORTGAGE, SECURITY AGREEMENT,
FINANCING STATEMENT AND
ASSIGNMENT OF RENTS AND LEASES
THIS MORTGAGE, SECURITY AGREEMENT, FINANCING STATEMENT AND ASSIGNMENT
OF RENTS AND LEASES ("Mortgage") entered into this 21st day of October, 1999 by
AAVID THERMAL PRODUCTS, INC., (formerly Aavid Engineering, Inc.) a New Hampshire
corporation ("Mortgagor"), having its principal place of business at One Kool
Path, 67 Primrose Drive, Laconia, New Hampshire to CANADIAN IMPERIAL BANK OF
COMMERCE, with an office located at 425 Lexington Avenue, New York, New York
10017 ("Mortgagee"), as Administrative Agent for the "Lenders" as defined in
that certain Credit Agreement dated as of October 21, 1999, by and among Aavid
Thermal Technologies, Inc., a Delaware corporation, as the Borrower
("Borrower"), CIBC World Markets Corp., as Lead Arranger and Bookrunner, and
Mortgagee as Issuer and Administrative Agent (such Credit Agreement and any and
all renewals, extensions for any period, amendments, restatements, increases or
rearrangements thereof or hereafter is hereinafter referred to as the "Credit
Agreement"). Except as otherwise provided herein, all capitalized terms used but
not defined herein shall have the respective meanings given to them in the
Credit Agreement.
WITNESSETH:
WHEREAS, in furtherance of the provisions of the Credit Agreement,
Borrower has executed and delivered to Mortgagee for the benefit of the Lenders
(i) those certain Term Notes, dated of even date herewith, in the aggregate
principal amount of Eighty Million and no/100 Dollars ($80,000,000.00), and (ii)
those certain Revolving Credit Notes, dated of even date herewith, in the
aggregate principal amount of Twenty Million and no/100 Dollars ($20,000,000.00)
(the Term Notes and the Revolving Credit Notes and any and all renewals,
extensions for any period, increases or rearrangements thereof is hereinafter
referred to as the "Notes"); and
This document was prepared
by and after recording
should be returned to:
James L. Marovitz
Sidley & Austin
Bank One Plaza
10 South Dearborn Street
Chicago, Illinois 60603
<PAGE> 246
WHEREAS, Mortgagor is a Subsidiary of Borrower and will derive direct
and indirect economic benefit from the loans and financial accommodations being
made by Lenders, and Mortgagor has executed and delivered to Mortgagee for the
benefit of the Lenders a certain Subsidiary Guarantee, dated as of even date
herewith (as amended from time to time, the "Guaranty"), pursuant to which
Mortgagor has guaranteed the payment and performance of the Obligations
described in the Credit Agreement; and
WHEREAS, as a condition to Mortgagee's extension of certain financial
accommodations to Mortgagor and the other Borrowers, including, without
limitation, the extension of credit evidenced by the Notes and pursuant to the
Credit Agreement, Mortgagee has required that Mortgagor enter into this Mortgage
and grant to Mortgagee the liens and security interests referred to herein to
secure (i) prompt and complete payment and performance of all of Mortgagor's
obligations under the Guaranty; (ii) the payment of the principal amount
evidenced by the Notes together with interest thereon; (iii) payment of the
principal amount, together with interest thereon, of all present and future
advances of money made by Mortgagee to Mortgagor, including without limitation,
the reborrowing of principal previously repaid pursuant to the Credit Agreement,
as well as all other Obligations (all as defined and provided in the Credit
Agreement) of Mortgagor to Mortgagee; and (iv) other payment and performance
obligations related to this Mortgage (the aforesaid Obligations of Mortgagor to
Mortgagee, together with the obligations evidenced by the Notes plus interest
and other payment and performance obligations being hereinafter referred to
collectively as the "Liabilities"); and
WHEREAS, the Liabilities secured hereby shall not exceed an aggregate
principal amount, at any one time outstanding of One Hundred Fifty Million and
no/100 Dollars ($150,000,000.00) including future advances, PROVIDED, that the
foregoing limitation shall apply only to the lien upon the real property created
by this Mortgage, and it shall not in any manner limit, affect or impair any
grant of a security interest or other right in favor of the Mortgagee under the
provisions of the Credit Agreement or under any other security agreement at any
time executed by Mortgagor;
NOW, THEREFORE, to secure payment of the Liabilities and for
consideration paid, receipt whereof is hereby acknowledged, Mortgagor does
hereby grant, remise, release, alien, convey, mortgage and warrant to Mortgagee,
its successors and assigns, the following described real estate (the "Land") in
Belknap and Merrimack Counties, New Hampshire, and does further grant a security
interest to Mortgagee in all Mortgaged Property (as defined below) as may be
secured under the Uniform Commercial Code (the "Code") in effect in the State of
New Hampshire (the "State"):
See Exhibit A attached hereto and by this reference made
a part hereof for the legal description of the Land
which Land, together with all right, title and interest, if any, which Mortgagor
may now have or hereafter acquire in and to all improvements, buildings and
structures now or hereafter located thereon of every nature whatsoever, is
herein called the "Premises".
TOGETHER WITH all right, title and interest, if any, including any
after-acquired right, title and interest, and including any right of use or
occupancy, which Mortgagor may now have or hereafter acquire in and to (a) all
easements, rights of way, gores of land or any lands
III-2
<PAGE> 247
occupied by streets, ways, alleys, passages, sewer rights, water courses, water
rights and powers, and public places adjoining said Land, and any other
interests in property constituting appurtenances to the Premises, or which
hereafter shall in any way belong, relate or be appurtenant thereto, and (b) all
hereditaments, gas, oil, minerals (with the right to extract, sever and remove
such gas, oil and minerals), and easements, of every nature whatsoever, located
in or on the Premises and all other rights and privileges thereunto belonging or
appertaining and all extensions, additions, improvements, betterments, renewals,
substitutions and replacements to or of any of the rights and interests
described in subparagraphs (a) and (b) above (hereinafter the "Property
Rights").
TOGETHER WITH all right, title and interest, if any, including any
after-acquired right, title and interest, and including any right of use or
occupancy, which Mortgagor may now or hereafter acquire in and to all fixtures
and appurtenances of every nature whatsoever now or hereafter located in, on or
attached to, and used or intended to be used in connection with, or with the
operation of, the Premises, including, but not limited to (a) all apparatus,
machinery and equipment of Mortgagor and (b) all extensions, additions,
improvements, betterments, renewals, substitutions and replacements to or of any
of the foregoing (the items described in the foregoing clauses (a) and (b) being
the "Fixtures"). It is mutually agreed, intended and declared that the Premises
and all of the Property Rights and Fixtures owned by Mortgagor (referred to
collectively herein as the "Real Property") shall, so far as permitted by law,
be deemed to form a part and parcel of the Land and for the purpose of this
Mortgage to be real estate and covered by this Mortgage. It is also agreed that
if any of the property herein mortgaged is of a nature so that a security
interest therein can be perfected under the Code in effect in the State, this
instrument shall constitute a security agreement, fixture filing and financing
statement, and Mortgagor agrees to execute, deliver and file or refile any
financing statement, continuation statement, or other instruments Mortgagee may
reasonably require from time to time to perfect or renew such security interest
under the Code. To the extent permitted by law, (i) all of the Fixtures are or
are to become fixtures on the Land and (ii) this instrument, upon recording or
registration in the real estate records of the proper office, shall constitute a
"fixture-filing" within the meaning of Sections 9-313 and 9-402 of the Code.
Subject to the terms and conditions of the Credit Agreement, the remedies for
any violation of the covenants, terms and conditions of the agreements herein
contained shall be as prescribed herein or by general law, or, as to that part
of the security in which a security interest may be perfected under the Code, by
the specific statutory consequences now or hereafter enacted and specified in
the Code, all at Mortgagee's sole election.
TOGETHER WITH all the estate, right, title and interest of the
Mortgagor in and to (i) all judgments, insurance proceeds, awards of damages and
settlements resulting from condemnation proceedings or the taking of the Real
Property, or any part thereof, under the power of eminent domain or for any
damage (whether caused by such taking or otherwise) to the Real Property, or any
part thereof, or to any rights appurtenant thereto, and all proceeds of any
sales or other dispositions of the Real Property or any part thereof; and
(except as otherwise provided herein or in the Credit Agreement) the Mortgagee
is hereby authorized to collect and receive said awards and proceeds and to give
proper receipts and acquittances therefor, and to apply the same as provided in
the Credit Agreement; and (ii) all contract rights, general intangibles, actions
and rights in action relating to the Real Property including, without
limitation, all rights to insurance proceeds and unearned premiums arising from
or relating to damage to the Real Property; and (iii) all proceeds, products,
replacements, additions, substitutions, renewals
III-3
<PAGE> 248
and accessions of and to the Real Property. (The rights and interests described
in this paragraph shall hereinafter be called the "Intangibles".)
As additional security for the Liabilities secured hereby, Mortgagor
(i) does hereby pledge and assign to Mortgagee from and after the date hereof
(including any period of redemption), primarily and on a parity with the Real
Property, and not secondarily, all the rents, issues and profits of the Real
Property and all rents, issues, profits, revenues, royalties, bonuses, rights
and benefits due, payable or accruing (including all deposits of money as
advance rent, for security or as earnest money or as down payment for the
purchase of all or any part of the Real Property) (the "Rents") under any and
all present and future leases, contracts or other agreements relative to the
ownership or occupancy of all or any portion of the Real Property, and (ii)
except to the extent such a transfer or assignment is not permitted by the terms
thereof, does hereby collaterally transfer and assign to Mortgagee all such
leases and agreements (including all Mortgagor's rights under any contracts for
the sale of any portion of the Mortgaged Property and all revenues and royalties
under any oil, gas and mineral leases relating to the Real Property) (the
"Leases"). Mortgagee hereby grants to Mortgagor the right to collect and use the
Rents as they become due and payable under the Leases, but not more than one (1)
month in advance thereof, unless an Event of Default (as hereinafter defined)
shall have occurred and be continuing, PROVIDED that the existence of such right
shall not operate to subordinate this assignment to any subsequent assignment,
in whole or in part, by Mortgagor, and any such subsequent assignment shall be
subject to the rights of the Mortgagee under this Mortgage. Mortgagor further
agrees to execute and deliver such assignments of leases or assignments of land
sale contracts as Mortgagee may from time to time request. In the event of, and
for so long as such an Event of Default continues, (1) the Mortgagor agrees,
upon demand, to deliver to the Mortgagee all of the Leases with such additional
assignments thereof as the Mortgagee may request and agrees that the Mortgagee
may assume the management of the Real Property and collect the Rents, applying
the same upon the Liabilities in the manner provided in the Credit Agreement,
and (2) the Mortgagor hereby authorizes and directs all tenants, purchasers or
other persons occupying or otherwise acquiring any interest in any part of the
Real Property to pay the Rents due under the Leases to the Mortgagee upon
request of the Mortgagee. Mortgagor hereby appoints Mortgagee as its true and
lawful attorney in fact to manage said property and collect the Rents, with full
power to bring suit for collection of the Rents and possession of the Real
Property, giving and granting unto said Mortgagee and unto its agent or attorney
full power and authority to do and perform all and every act and thing
whatsoever requisite and necessary to be done in the protection of the security
hereby conveyed; PROVIDED, HOWEVER, that (i) this power of attorney and
assignment of rents shall not be construed as an obligation upon said Mortgagee
to make or cause to be made any repairs that may be needful or necessary and
(ii) Mortgagee agrees that until such Event of Default as aforesaid, and
following the cure, if any, of such Event of Default, Mortgagee shall permit
Mortgagor to perform the aforementioned management responsibilities. Upon
Mortgagee's receipt of the Rents, at Mortgagee's option, it may use the proceeds
of the Rents to pay: (1) reasonable charges for collection thereof, costs of
necessary repairs and other costs requisite and necessary during the continuance
of this power of attorney and assignment of rents, (2) general and special
taxes, insurance premiums, and (3) any or all of the Liabilities pursuant to the
provisions of the Credit Agreement. This power of attorney and assignment of
rents shall be irrevocable until this Mortgage shall have been satisfied and
released of record and the releasing of this Mortgage shall act as a revocation
of this power of attorney and assignment of rents. Subject to Mortgagor's rights
to perform management responsibilities as set forth above, Mortgagee shall have
and hereby expressly reserves the right and privilege (but assumes no
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obligation) to demand, collect, sue for, receive and recover the Rents, or any
part thereof, now existing or hereafter made, and apply the same in accordance
with the provisions of the Credit Agreement.
All of the property described above, and each item of property therein
described, not limited to but including the Land, the Premises, the Property
Rights, the Fixtures, the Primary Lease, the Real Property, the Intangibles, the
Rents and the Leases, is herein referred to as the "Mortgaged Property."
Nothing herein contained shall be construed as constituting the
Mortgagee a mortgagee-in-possession in the absence of the taking of actual
possession of the Mortgaged Property by the Mortgagee. Nothing contained in this
Mortgage shall be construed as imposing on Mortgagee any of the obligations of
the lessor under any Lease of the Mortgaged Property in the absence of an
explicit assumption thereof by Mortgagee. In the exercise of the powers herein
granted the Mortgagee, except as provided in the Credit Agreement, no liability
shall be asserted or enforced against the Mortgagee, all such liability being
expressly waived and released by Mortgagor, excepting, however, any liability
which may arise from Mortgagee's gross negligence or willful misconduct.
In addition to each and every condition hereinafter contained, this
Mortgage is given upon the statutory conditions.
TO HAVE AND TO HOLD the Mortgaged Property, properties, rights and
privileges hereby conveyed or assigned, or intended so to be, unto Mortgagee,
its beneficiaries, successors and assigns, forever for the uses and purposes
herein set forth. Mortgagor hereby releases and waives all rights under and by
virtue of the Homestead Exemption Laws, if any, of the State and Mortgagor
hereby covenants, represents and warrants that, at the time of the ensealing and
delivery of these presents, Mortgagor is well seised of the Mortgaged Property
in fee simple and with lawful authority to sell, assign, convey and mortgage the
Mortgaged Property, and that the title to the Mortgaged Property described in
Exhibit A hereto is free and clear of all encumbrances, except as described on
Exhibit B attached hereto and made a part hereof, and that, except for the
encumbrances set forth on Exhibit B, Mortgagor will forever defend the same
against all lawful claims.
The following provisions shall also constitute an integral part of
this Mortgage:
1. PAYMENT OF TAXES ON THE MORTGAGE. Without limiting any of the
provisions of the Credit Agreement, Mortgagor agrees that, if the United States
or any department, agency or bureau thereof or if the State or any of its
subdivisions having jurisdiction shall at any time require documentary stamps to
be affixed to this Mortgage or shall levy, assess, or charge any tax, assessment
or imposition upon this Mortgage or the credit or indebtedness secured hereby or
the interest of Mortgagee in the Premises or upon Mortgagee by reason of or as
holder of any of the foregoing then, Mortgagor shall pay for such documentary
stamps in the required amount and deliver them to Mortgagee or pay (or reimburse
Mortgagee for) such taxes, assessments or impositions. Mortgagor agrees to
exhibit to Mortgagee, at any time upon request, official receipts showing
payment of all taxes, assessments and charges which Mortgagor is required or
elects to pay under this paragraph. Mortgagor agrees to indemnify Mortgagee
against liability on account of such documentary stamps, taxes, assessments or
impositions, whether such liability
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arises before or after payment of the Liabilities and regardless of whether this
Mortgage shall have been released.
2. LEASES AFFECTING THE REAL PROPERTY. Mortgagor agrees faithfully to
perform all of its obligations under all present and future Leases at any time
assigned to Mortgagee as additional security, and, except as Mortgagor may
exercise its commercially reasonable rights as landlord under any such Lease in
the event of a default by a tenant, to refrain from any action or inaction which
would result in termination of any such Leases or in the diminution of the value
thereof or of the Rents due thereunder. All future lessees under any Lease made
after the date of recording of this Mortgage shall, at Mortgagee's option and
without any further documentation, attorn to Mortgagee as lessor if for any
reason Mortgagee becomes lessor thereunder, and, upon demand, pay rent to
Mortgagee, and Mortgagee shall not be responsible under such Lease for matters
arising prior to Mortgagee becoming lessor thereunder. In addition, Mortgagee
shall have the right at any time hereafter, upon notice to the lessee
thereunder, but without any further documentation or consent, to unilaterally
subordinate the lien of this Mortgage to any Lease made after the date of
recording of this Mortgage.
3. USE OF THE REAL PROPERTY. Mortgagor agrees that it shall not permit
the public to use the Real Property in any manner that might tend, in
Mortgagee's reasonable judgment, to impair Mortgagor's title to such property or
any portion thereof, or to make possible any claim or claims of easement by
prescription or of implied dedication to public use.
4. INDEMNIFICATION. Mortgagor shall not use or permit the use of any
part of the Real Property for an illegal purpose which shall have a Material
Adverse Effect upon the Mortgagor, including, without limitation, the violation
of any environmental laws, statutes, codes, regulations or practices arising as
a result of Mortgagor's failure to comply in all material respects with such
environmental laws, statutes, codes, regulations or practices. Without limiting
any indemnification Mortgagor has granted in the Credit Agreement, Mortgagor
agrees to indemnify and hold harmless Mortgagee from and against any and all
losses, suits, liabilities, fines, damages, judgments, penalties, claims,
charges, costs and expenses (including reasonable attorneys' and paralegals'
fees, court costs and disbursements) which may be imposed on, incurred or paid
by or asserted against the Real Property by reason or on account of or in
connection with (i) the construction, reconstruction or alteration of the Real
Property, (ii) any negligence or misconduct of Mortgagor, any lessee of the Real
Property, or any of their respective agents, contractors, subcontractors,
servants, employees, licensees or invitees, (iii) any accident, injury, death or
damage to any person or property occurring in, on or about the Real Property or
any street, drive, sidewalk, curb or passageway adjacent thereto, or (iv) any
other transaction arising out of or in any way connected with the Mortgaged
Property.
5. INSURANCE. Mortgagor shall, at its sole expense, obtain for,
deliver to, assign and maintain for the benefit of Mortgagee, until the
Liabilities are paid in full, insurance policies as specified in the Credit
Agreement. In the event of a casualty loss, the net insurance proceeds from such
insurance policies shall be paid and applied as specified in the Credit
Agreement.
6. CONDEMNATION AWARDS. Mortgagor hereby assigns to Mortgagee, as
additional security, all awards of damage resulting from condemnation
proceedings or the taking of or injury to the Real Property for public use, and
Mortgagor agrees that the proceeds of all such awards shall be paid and applied
as specified in the Credit Agreement.
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<PAGE> 251
7. REMEDIES. Subject to the provisions of the Credit Agreement, upon
the occurrence and any time during the continuance of an Event of Default under
the terms of the Credit Agreement ("Event of Default"), in addition to any
rights and remedies provided for in the Credit Agreement, and to the extent
permitted by applicable law, the following provisions shall apply:
(a) MORTGAGEE'S POWER OF ENFORCEMENT. It shall be lawful for Mortgagee
to (i) immediately sell the Mortgaged Property either in whole or in separate
parcels, as prescribed by the State law, under the STATUTORY POWER OF SALE,
which power is hereby granted to Mortgagee to the full extent permitted by the
State law, and thereupon, to make and execute to any purchaser(s) thereof deeds
of conveyance pursuant to applicable law or (ii) immediately foreclose this
Mortgage by judicial action. The court in which any proceeding is pending for
the purpose of foreclosure of this Mortgage may, at once or at any time
thereafter, either before or after sale, without notice and without requiring
bond, and without regard to the solvency or insolvency of any person liable for
payment of the Liabilities secured hereby, and without regard to the then value
of the Mortgaged Property or the occupancy thereof as a homestead, appoint a
receiver (the provisions for the appointment of a receiver and assignment of
rents being an express condition upon which the Loan hereby secured is made) for
the benefit of Mortgagee, with power to collect the Rents, due and to become
due, during such foreclosure suit and the full statutory period of redemption
notwithstanding any redemption. The receiver, out of the Rents when collected,
may pay costs incurred in the management and operation of the Real Property,
prior and subordinate liens, if any, and taxes, assessments, water and other
utilities and insurance, then due or thereafter accruing, and may make and pay
for any necessary repairs to the Real Property, and may pay all or any part of
the Liabilities or other sums secured hereby or any deficiency decree entered in
such foreclosure proceedings. Upon or at any time after the filing of a suit to
foreclose this Mortgage, the court in which such suit is filed shall have full
power to enter an order placing Mortgagee in possession of the Real Property
with the same power granted to a receiver pursuant to this subparagraph and with
all other rights and privileges of a mortgagee-in-possession under applicable
law.
(b) MORTGAGEE'S RIGHT TO ENTER AND TAKE POSSESSION, OPERATE AND APPLY
INCOME. Mortgagee shall, at its option, have the right, acting through its
agents or attorneys, either with or without process of law, forcibly or
otherwise, to enter upon and take possession of the Real Property, expel and
remove any persons, goods, or chattels occupying or upon the same, to collect or
receive all the Rents, and to manage and control the same, and to lease the same
or any part thereof, from time to time, and, after deducting all reasonable
attorneys' fees and expenses, and all reasonable expenses incurred in the
protection, care, maintenance, management and operation of the Real Property,
distribute and apply the remaining net income in accordance with the terms of
the Credit Agreement or upon any deficiency decree entered in any foreclosure
proceedings.
8. APPLICATION OF THE RENTS OR PROCEEDS FROM FORECLOSURE OR SALE. In
any foreclosure of this Mortgage by judicial action, or any sale of the
Mortgaged Property by advertisement, in addition to any of the terms and
provisions of the Credit Agreement, there shall be allowed (and included in the
decree for sale in the event of a foreclosure by judicial action) to be paid out
of the Rents or the proceeds of such foreclosure proceeding and/or sale:
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<PAGE> 252
(a) LIABILITIES. All of the Liabilities and other sums secured hereby
which then remain unpaid; and
(b) OTHER ADVANCES. All other items advanced or paid by Mortgagee
pursuant to this Mortgage; and
(c) COSTS, FEES AND OTHER EXPENSES. All court costs, reasonable
attorneys' and paralegals' fees and expenses, appraiser's fees, advertising
costs, filing fees and transfer taxes, notice expenses, expenditures for
documentary and expert evidence, stenographer's charges, publication costs, and
costs (which may be estimated as to items to be expended after entry of the
decree) of procuring all abstracts of title, title searches and examinations,
title guarantees, title insurance policies, Torrens certificates and similar
data with respect to title which Mortgagee in the reasonable exercise of its
judgment may deem necessary. All such expenses shall become additional
Liabilities secured hereby when paid or incurred by Mortgagee in connection with
any proceedings, including but not limited to probate and bankruptcy
proceedings, to which Mortgagee shall be a party, either as plaintiff, claimant
or defendant, by reason of this Mortgage or any indebtedness hereby secured or
in connection with the preparations for the commencement of any suit for the
foreclosure, whether or not actually commenced, or sale by advertisement. The
proceeds of any sale (whether through a foreclosure proceeding or Mortgagee's
exercise of the power of sale) shall be distributed and applied in accordance
with the terms of the Credit Agreement.
9. CUMULATIVE REMEDIES; DELAY OR OMISSION NOT A WAIVER. Each remedy or
right of Mortgagee shall not be exclusive of but shall be in addition to every
other remedy or right now or hereafter existing at law or in equity. No delay in
the exercise or omission to exercise any remedy or right accruing on the
occurrence or existence of any Event of Default shall impair any such remedy or
right or be construed to be a waiver of any such Event of Default or
acquiescence therein, nor shall it affect any subsequent Event of Default of the
same or different nature. Every such remedy or right may be exercised
concurrently or independently and when and as often as may be deemed expedient
by Mortgagee.
10. MORTGAGEE'S REMEDIES AGAINST MULTIPLE PARCELS. If more than one
property, lot or parcel is covered by this Mortgage, and if this Mortgage is
foreclosed upon, or judgment is entered upon any Liabilities secured hereby, or
if Mortgagee exercises its power of sale, execution may be made upon or
Mortgagee may exercise its power of sale against any one or more of the
properties, lots or parcels and not upon the others, or upon all of such
properties or parcels, either together or separately, and at different times or
at the same time, and execution sales or sales by advertisement may likewise be
conducted separately or concurrently, in each case at Mortgagee's election.
11. NO MERGER. In the event of a foreclosure of this Mortgage or any
other mortgage or deed of trust securing the Liabilities, the Liabilities then
due the Mortgagee shall not be merged into any decree of foreclosure entered by
the court, and Mortgagee may concurrently or subsequently seek to foreclose one
or more mortgages or deeds of trust which also secure said Liabilities.
12. NOTICES. Unless otherwise specifically provided herein, any notice
or other communication herein required or permitted to be given shall be in
writing and may be personally
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<PAGE> 253
served, telecopied or sent by courier service or United States certified mail
and shall be deemed to have been given when delivered in person or by courier
service, upon receipt of a telecopy or if deposited in the United States mail,
with postage prepaid and properly addressed, when received. For the purposes
hereof, the addresses of the parties hereto (until notice of a change thereof is
delivered as provided herein) shall be as set forth below, or, as to each party,
at such other address as may be designated by such party in a written notice to
all of the other parties to this Mortgage.
if to Mortgagor:
Aavid Thermal Products, Inc.
c/o Aavid Thermal Technologies, Inc.
One Eagle Square
Suite 509
Concord, New Hampshire 03301
Attention: General Counsel
Telecopy: (603) 224-6673
and a copy to:
Sulloway & Hollis, P.L.L.C.
9 Capitol Stret, P.O. Box 1256
Concord, New Hampshire 03302
Attention: John M. Sullivan, Esq.
Telecopy: (603) 226-2404
if to Mortgagee:
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: David Benyaminy
Telecopy: (212) 856-3761
With copies to:
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: Agency Services, Loan Underwriting and Distribution
Telecopy: (212) 856-3763
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<PAGE> 254
and
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: Irving L. Rotter
Telecopy: (212) 906-2021
Mortgagor or Mortgagee shall, from time to time, have the right to specify as
the proper addressee and/or address for the purposes of this Mortgage any other
party or address in the United States upon giving five (5) days' written notice
thereof.
13. EXTENSION OF PAYMENTS. Mortgagor agrees that, without affecting
the liability of any person for payment of the Liabilities secured hereby or
affecting the lien of this Mortgage upon the Mortgaged Property or any part
thereof (other than persons or property explicitly released as a result of the
exercise by Mortgagee of its rights and privileges hereunder), Mortgagee may at
any time and from time to time, on request of the Mortgagor, without notice to
any person liable for payment of any Liabilities secured hereby, but otherwise
subject to the provisions of the Credit Agreement, extend the time, or agree to
alter or amend the terms of payment of such Liabilities. Mortgagor further
agrees that any part of the security herein described may be released with or
without consideration without affecting the remainder of the Liabilities or the
remainder of the security.
14. GOVERNING LAW. Mortgagor agrees that this Mortgage is to be
construed, governed and enforced in accordance with the laws of the State.
Wherever possible, each provision of this Mortgage shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Mortgage shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Mortgage.
15. SATISFACTION OF MORTGAGE. Upon full payment of all the
Liabilities, at the time and in the manner provided in the Credit Agreement, or
upon satisfaction of the conditions set forth in the Credit Agreement for
release of the Mortgaged Property from this Mortgage, this conveyance or lien
shall be null and void and, upon demand therefor following such payment or
satisfaction of the conditions set forth in the Credit Agreement for release of
the Mortgaged Property, as the case may be, a satisfaction of mortgage or
reconveyance of the Mortgaged Property shall promptly be provided by Mortgagee
to Mortgagor.
16. SUCCESSORS AND ASSIGNS INCLUDED IN PARTIES. This Mortgage shall be
binding upon the Mortgagor and upon the successors, assigns and vendees of the
Mortgagor and shall inure to the benefit of the Mortgagee's successors and
assigns; all references herein to the Mortgagor and to the Mortgagee shall be
deemed to include their respective successors and assigns. Mortgagor's
successors and assigns shall include, without limitation, a receiver, trustee or
debtor in possession of or for the Mortgagor. Wherever used, the singular number
shall include the plural, the plural shall include the singular, and the use of
any gender shall be applicable to all genders.
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<PAGE> 255
17. WAIVER OF APPRAISEMENT, VALUATION, STAY, EXTENSION AND REDEMPTION
LAWS. Mortgagor agrees, to the full extent permitted by law, that at all times
following an Event of Default, and for so long as it is continuing, neither
Mortgagor nor anyone claiming through or under it shall or will set up, claim or
seek to take advantage of any appraisement, valuation, stay, or extension laws
now or hereafter in force, in order to prevent or hinder the enforcement or fore
closure of this Mortgage or the absolute sale of the Mortgaged Property or the
final and absolute putting into possession thereof, immediately after such sale,
of the purchaser thereat; and Mortgagor, for itself and all who may at any time
claim through or under it, hereby waives, to the full extent that it may
lawfully so do, the benefit of all such laws and any and all right to have the
assets comprising the Mortgaged Property marshaled upon any foreclosure of the
lien hereof and agrees that Mortgagee or any court having jurisdiction to
foreclose such lien may sell the Mortgaged Property in part or as an entirety.
To the full extent permitted by law, Mortgagor hereby waives any and all
statutory or other rights of redemption from sale under any order or decree of
foreclosure of this Mortgage, on its own behalf and on behalf of each and every
person acquiring any interest in or title to the Mortgaged Property subsequent
to the date hereof.
18. INTERPRETATION WITH OTHER DOCUMENTS. Notwithstanding anything in
this Mortgage to the contrary, but subject to the provisions of Paragraph 7
hereof, in the event of a conflict or inconsistency between the Mortgage and the
Credit Agreement, the provisions of the Credit Agreement shall govern.
19. FUTURE ADVANCES. This Mortgage is given for the purpose of
securing loan advances which the Mortgagee may make to or for Mortgagor pursuant
and subject to the terms and provisions of the Credit Agreement. The parties
hereto intend that, in addition to any other debt or obligation secured hereby,
this Mortgage shall secure unpaid balances of loan advances made after this
Mortgage is delivered to the appropriate recording offices of the County and the
State, whether made pursuant to an obligation of Mortgagee or otherwise, and in
such event, such advances shall be secured to the same extent as if such future
advances were made on the date hereof, although there may be no advance made at
the time of execution hereof and although there may be no indebtedness
outstanding at the time any advance is made. Such loan advances may or may not
be evidenced by notes executed pursuant to the Credit Agreement.
20. INVALID PROVISIONS TO AFFECT NO OTHERS. In the event that any of
the covenants, agreements, terms or provisions contained in this Mortgage shall
be invalid, illegal or unenforceable in any respect, the validity of the
remaining covenants, agreements, terms or provisions contained herein or in the
Credit Agreement shall not be in any way affected, prejudiced or disturbed
thereby. In the event that the application of any of the covenants, agreements,
terms or provisions of this Mortgage is held to be invalid, illegal or
unenforceable, those covenants, agreements, terms and provisions shall not be in
any way affected, prejudiced or disturbed when otherwise applied.
21. CHANGES. Neither this Mortgage nor any term hereof may be changed,
waived, discharged or terminated orally, or by any action or inaction, but only
by an instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought. To the extent permitted by
law, any agreement hereafter made by Mortgagor and Mortgagee relating to this
Mortgage shall be superior to the rights of the holder of any intervening lien
or encumbrance.
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<PAGE> 256
22. TIME OF ESSENCE. Time is of the essence with respect to the
provisions of this Mortgage.
23. FURTHER ASSURANCES. Mortgagor agrees, upon request of the
Mortgagee, from time to time, to execute, acknowledge, deliver and cause to be
recorded (if so requested) all such additional documents and further assurances
of title and do or cause to be done all such further acts as may be reasonably
necessary to preserve the liens and security interests created hereby, including
the priority thereof.
24. NO STRICT CONSTRUCTION. The parties hereto have participated
jointly in the negotiation and drafting of this Mortgage. In the event an
ambiguity or question of intent or interpretation arises, this Mortgage shall be
construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Mortgage.
[Remainder of page intentionally left blank]
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<PAGE> 257
IN WITNESS WHEREOF, this instrument is executed as of the day and year
first above written by the person or persons identified below on behalf of
Mortgagor (and said person or persons hereby represent that they possess full
power and authority to execute this instrument).
THE MORTGAGOR HEREBY DECLARES AND ACKNOWLEDGES THAT THE MORTGAGOR HAS
RECEIVED, WITHOUT CHARGE, A TRUE COPY OF THIS MORTGAGE.
MORTGAGOR:
AAVID THERMAL PRODUCTS, INC.
By____________________________
Its ______ President
Attest:
______________________
Its _____ Secretary
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<PAGE> 258
State of _____________
County of ____________
I, the undersigned, a Notary Public in and for said County, in said
State, hereby certify that ___________________ and ___________, whose names as
____ President and __________ Secretary of Aavid Thermal Products, Inc., a New
Hampshire corporation, are signed to the foregoing instrument, and who are known
to me, acknowledged before me on this day that, being informed of the contents
of the instrument, they, as such officers and with full authority, executed the
same voluntarily for and as the act of said corporation.
Given under my hand and Official seal this _____ day of October, 1999.
_____________________________
Notary Public
(Seal)
My Commission Expires: ______
______________________________
Notary Public in and for the
State of ____________
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<PAGE> 259
EXHIBIT A
LEGAL DESCRIPTION OF THE LAND
TRACT I - LACONIA, N.H.
A tract of land, with the buildings and other improvements thereon, on the
west side of Primrose Drive in Laconia, Belknap County, New Hampshire, shown on
"Plan of Land, Aavid Engineering, Inc., Primrose Drive," by Harold E. Johnson,
Inc., dated July 19, 1993, revised September 30, 1993, recorded in the Belknap
County Registry of Deeds at Plan Drawer L-19, Plan No. 66, the tract being
described as follows:
Beginning at an iron pipe on the west side of Primrose Drive at the
southeast corner of land now or formerly of Amatex Corp., this pipe being
located 780 feet, more or less, as measured southeasterly from the
centerline intersection of Primrose Drive and Lexington Drive; thence
running South 18(degree) 24' 30" East along Primrose Drive a distance of
178.76 feet to a point of curvature;
thence running southerly along Primrose Drive on a curve to the right, an
arc distance of 31.81 feet to a point of reverse curvature; this curve
having a central angle of 72(degree) 53' 50", a radius of 25.00 feet and a
chord of South 18(degree) 02' 25" West a distance of 29.71 feet;
thence running counter-clockwise along Primrose Drive on a curve to the
left, an arc distance of 264.83 feet, to a point on line of land now or
formerly of Tangent Realty Co., this curve having a central angle of
252(degree) 53' 50", a radius of 60.00 feet and a chord of South 71(degree)
57' 35" East a distance of 96.53 feet;
thence running South 18(degree) 24' 30" East along said land of Tangent
Realty Co., a distance of 215.30 feet;
thence running North 71(degree) 35' 30" East along said Tangent Realty Co.
land, a distance of 204.99 feet to land now or formerly of Belknap County
Home;
thence running South 18(degree) 22' 05" East along said Belknap County Home
land, a distance of 354.08 feet to an iron pipe on land now or formerly of
Wingate Associates;
thence running South 73(degree) 20' 06" West along said land of Wingate
Associates, land now or formerly of McKerley Health Care Center-Laconia,
Inc. and land now or formerly of Keewaydin Realty Trust, a distance of
1,065.23 feet to an iron pipe;
thence running North 18(degree) 24' 30" West along said Keewaydin Realty
Trust land, a distance of 1,146.97 feet to an iron pipe at land now or
formerly of Central New Hampshire Realty, Inc.;
thence running North 71(degree) 35' 30" East along said land of Central New
Hampshire Realty, Inc., a distance of 360.00 feet to an iron pipe at said
land of Amatex Corp.;
<PAGE> 260
thence running South 18(degree) 24' 30" East along said Amatex Corp. land,
a distance of 350.00 feet to an iron pipe;
thence running North 71(degree) 35' 30" East along said Amatex Corp. land,
a distance of 440.00 feet to the iron pipe begun at.
There is excepted from this tract a cemetery located on the premises and
described as follows:
Beginning at the apparent southeast corner of the cemetery at a point which
is located North 88(degree) 10' 00" West and a distance of 116.59 feet from
the iron pipe marking the southwest corner of said land of Amatex Corp.;
thence running the following bearings and distances along land of Aavid
Thermal Products, Inc. (formerly known as Aavid Engineering, Inc.):
South 72(degree) 18' 55" West, a distance of 40.83 feet;
North 17(degree) 2' 02" West, a distance of 10.14 feet;
North 31(degree) 44' 41" West, a distance of 42.37 feet to an iron pipe;
North 09(degree) 45' 48" West, a distance of 112.29 feet to an iron pipe;
North 09(degree) 58' 02" West, a distance of 62.46 feet to an iron pipe;
North 84(degree) 22' 10" East, a distance of 53.31 feet to an iron pipe;
South 23(degree) 39' 13" West, a distance of 4.33 feet;
South 08(degree) 50' 29" East, a distance of 90.58 feet;
South 13(degree) 49' 50" East, a distance of 120.74 feet to the point
of beginning.
This tract was conveyed to Aavid Engineering, Inc. by warranty deed of
Keewaydin Shores, Inc. of February 13, 1980, Belknap County Registry of Deeds
Book 785, Page 664, as two adjacent tracts, Parcels One and Two, as shown on
"Subdivision Plan of Land, Primrose Drive," surveyed by W. Robert Nolte &
Associates, June 1979, recorded in Map Book 78, Page 17; the tract includes
appurtenant easements, in common with others, to construct, maintain and use a
storm and surface water drainage line and a sanitary sewer line, each extending
westerly from the southwest boundary of the tract, as described in Book 785,
Page 664.
TRACT II - FRANKLIN, N.H.
A certain tract of land, with improvements thereon, situate in Franklin,
Merrimack County, New Hampshire, bounded and described as follows:
Beginning at a granite bound on the northerly side of Industrial Park Drive
(also known as Industrial Road), being the southeasterly corner of the lot
herein conveyed;
thence N 51(degree) 30' 48" W along the northerly side of said Industrial
Park Drive a distance of 382.72 feet;
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<PAGE> 261
thence N 53(degree) 01' 14" W along the northerly side of said Industrial
Park Drive a distance of 165.23 feet to a drill hole;
thence N 51(degree) 58' 04" W along land now or formerly of Franklin
Developments, Inc., a distance of 771.04 feet to a granite bound at land
now or formerly of Stanley S. Weglarz;
thence N 19(degree) 52' 48" E along said Weglarz land a distance of 382.00
feet to an iron pipe at land now or formerly of Harold C. and Jeannette B.
Therrien;
thence S 89(degree) 54' 34" E along said Therrien land a distance of 558.15
feet to a granite bound;
thence S 66(degree) 50' 35" E along said Therrien land a distance of 223.80
feet to a drill hole in a stone wall;
thence N 21(degree) 13' 53" E along said stone wall and land now or
formerly of Therrien a distance of 405.44 feet to a drill hole in said
stone wall at land now or formerly of Ronald J. and Geraldine M. Cote;
thence N 21(degree) 49' 51" E along said Cote land a distance of 32.07 feet
to a drill hole at the corner of said stone wall at land now or formerly of
Wayne S. and Barbara A. Jackson;
thence S 77(degree) 40' 29" E along said stone wall and said Jackson land a
distance of 166.26 feet to a point at land now or formerly of Raymond D.
and Louise E. Barney;
thence S 79(degree) 06' 22" E along said stone wall and said Barney land a
distance of 228.13 feet to a drill hole in said stone wall;
thence S 78(degree) 51' 47" E along said Barney land a distance of 79.71
feet to a spike in a twin oak at land now or formerly of Arwood
Corporation;
thence S 18(degree) 54' 20" W along said Arwood Corporation land a distance
of 1476.29 feet to the point of beginning.
Said premises are shown as Lot 1A on a plan entitled, "SUBDIVISION OF LAND
OWNED BY FRANKLIN DEVELOPMENTS, INC., MERRIMACK CO., FRANKLIN, N.H.," Scale 1" =
100', dated November 10, 1986, revised November 25, 1986, by Lepene, Knowlton &
Darbyshire Associates, Inc., recorded in the Merrimack County Registry of Deeds
as Plan No. 9318; and on a plan entitled, "AS-BUILT SITE PLAN FOR JARL
EXTRUSIONS, INC., INDUSTRIAL ROAD, FRANKLIN, N.H., MERRIMACK CO.," Scale 1" =
60', dated August 26, 1988, by Lepene, Knowlton & Darbyshire Associates, Inc.,
recorded in the Merrimack County Registry of Deeds as Plan No. 10586; and on a
revision of the last mentioned plan dated December 23, 1988, recorded in the
Merrimack County Registry of Deeds as Plan No. 10810.
III-17
<PAGE> 262
Together with a drainage easement over adjoining property as reserved in
deed from Franklin Developments, Inc., to Arwood Corporation dated February 23,
1981, recorded in the said Registry at Book 1388, Page 589.
Meaning and intending to describe the same property conveyed to Aavid
Engineering, Inc., by warranty deed of Alumax Extrusions, Inc., dated September
16, 1996, and recorded in the said Registry at Book 2034, Page 1264.
III-18
<PAGE> 263
EXHIBIT B
PERMITTED EXCEPTIONS TO TITLE
AS TO TRACT I ONLY
1. Liens for taxes and assessments by the City of Laconia, not yet due
and payable.
2. Cemetery, as described in Exhibit A, Tract I, as reserved from
conveyance to owner, dated February 13, 1980 and recorded in the Belknap County
Registry of Deeds, Book 785, Page 664, with access easement by foot and vehicle
for all purposes normally associated with use of a cemetery, including
additional burials.
3. Sewer easement granted to City of Laconia, 1965, recorded in the
Belknap County Registry of Deeds at Book 459, Page 343.
4. Rights of others to share use of storm and surface water drainage and
sanitary sewer easements of Aavid Thermal Products, Inc., as identified in
Exhibit A, Tract I.
AS TO TRACT II ONLY
5. Liens for taxes and assessments by the City of Franklin, not yet due
and payable.
6. Water line easement contained in deed from Franklin Developments,
Inc., to City of Franklin dated July 14, 1980, recorded in the Merrimack County
Registry of Deeds at Book 1374, Page 1051; and shown on Plans No. 10586 and
10810 recorded in the said Registry.
7. Drainage easement and obligation to maintain pipes and ditches
contained in deed from Franklin Developments, Inc., to Arwood Corporation dated
February 23, 1981, recorded in the said Registry at Book 1388, Page 589; the
said drainage easement also being shown on Plans No. 10586 and 10810 recorded in
the said Registry.
8. Easement from Third Creek Realty to Public Service Company of New
Hampshire and New England Telephone and Telegraph Company dated May 20, 1987,
recorded in the said Registry at Book 1671, Page 987; and shown on Plans No.
10586 and 10810 recorded in the said Registry.
9. Restriction to industrial use and prohibition against further
subdivision contained in deed from Franklin Developments, Inc., to Third Creek
Realty dated December 18, 1986, recorded in the said Registry at Book 1613, Page
950.
<PAGE> 1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statements (Form
S-8: Nos. 333-17925, 333-17927, 333-17931, 333-17933 and 333-51111) of Aavid
Thermal Technologies Inc., of our report dated October 18, 1999, with respect to
the consolidated financial statements of the Thermalloy Group as of December 31,
1998 and 1997 and for the years ended December 31, 1998, 1997 and 1996, included
in the Current Report on Form 8-K of Aavid Thermal Technologies Inc. dated
October 21, 1999.
Ernst & Young
London, England
November 5, 1999
