<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
Current Report Pursuant to
Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): May 18, 1994
THE CHERRY CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-8955 39-2977756
(Commission File Number) (I.R.S. Employer
Identification Number)
3600 Sunset Avenue, Waukegan, Illinois 60087
(Address of Principal Executive Offices) (Zip Code)
(708) 662-9200
(Registrant's Telephone Number, Including Area Code)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
EXHIBITS
Number Description of Exhibit
4a Second Amended and Restated Credit Agreement dated
as of May 9, 1994
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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.
THE CHERRY CORPORATION
By:_______________________________
Dan A. King
Treasurer, Secretary and
Corporate Controller
Dated: May 18, 1994
<PAGE>
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
To each of the Banks
signatory hereto:
Gentlemen:
The undersigned, The Cherry Corporation, a Delaware
corporation (the "Company"), refers to that certain Credit
Agreement dated as of May 24, 1991 as amended and as amended and
restated pursuant to that certain Amended and Restated Credit
Agreement dated as of April 22, 1993 (the "Existing Credit
Agreement") by and among each of you (individually, a "Bank" and
collectively, the "Banks"), Harris Trust and Savings Bank as
agent for the Banks (in such capacity, together with its
successors and assigns in such capacity, the "Agent") and the
Company.
The Company has requested that the Banks increase the amount
of the existing revolving credit facility (the "Revolving
Credit") and make certain further amendments to the Existing
Credit Agreement and, for the sake of convenience and clarity, to
amend and restate the Existing Credit Agreement in its entirety
as so amended. Accordingly, upon your acceptance hereof in the
space provided for that purpose below and upon satisfaction of
the conditions precedent to the effectiveness hereof hereinafter
set forth, the Existing Credit Agreement and all of the Exhibits
and Schedules thereto shall be amended and as so amended shall be
restated in their entirety to read as follows:
SECTION 1. THE REVOLVING CREDIT.
Section 1.1. General Terms. Subject to the terms and
conditions hereof, each Bank, by its acceptance hereof, severally
agrees to make a Revolving Credit available to the Company from
time to time on a revolving basis in the amount of its commitment
set forth on the applicable signature page hereof (its
"Commitment" and cumulatively for all the Banks the
"Commitments"), subject to any reductions thereof pursuant to
Section 2.4 hereof, through but not including the Termination
Date. The Revolving Credit may be utilized by the Company in the
form of loans (collectively the "Revolving Credit Loans" and
individually a "Revolving Credit Loan") and Letters of Credit,
all as more fully hereinafter set forth. At no time shall the
aggregate principal amount of outstanding Revolving Credit Loans
(which, in the case of Eurocurrency Loans denominated in an
Alternative Currency, means the Original Dollar Amount thereof)
and Letter of Credit Utilization exceed $45,000,000 less
outstanding Swing Line Loans.
Section 1.2. Revolving Credit Loans. Each Borrowing of
Revolving Credit Loans shall be made ratably from the Banks in
proportion to their respective Commitments. The Company may
elect that each Borrowing of Revolving Credit Loans be made
available by means of Domestic Rate Loans denominated in U.S.
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Dollars or Eurocurrency Loans denominated in either German
Deutschmarks, Japanese Yen, British Pounds Sterling or other
currency acceptable to the Banks and Agent, so long as such
currency is freely transferable and freely convertible into U.S.
Dollars (each an "Alternative Currency") or in U.S. Dollars, or
any combination thereof, which Loans may be repaid and the
principal amount thereof reborrowed prior to the Termination
Date, subject to all reductions in the Commitments and all other
terms and conditions hereof.
Section 1.3. Letters of Credit.
(a) General Terms. Subject to all of the terms and
conditions hereof, the Revolving Credit may be availed of in
the form of standby letters of credit issued by the Agent
for the account of the Company (individually, a "Letter of
Credit" and collectively, the "Letters of Credit") provided
however that the maximum Letter of Credit Utilization under
the Revolving Credit shall at no time exceed $5,000,000.
The Agent shall issue the Letters of Credit for the account
of the Banks and, accordingly, each Letter of Credit shall
be deemed to utilize a pro rata share of the Commitments of
each Bank. The Agent shall give each Bank prompt notice of
the issuance of each Letter of Credit hereunder together
with such information with respect thereto as any Bank shall
reasonably request.
(b) General Characteristics. Each Letter of Credit
issued hereunder shall be payable in U.S. dollars or an
Alternative Currency and shall expire or be terminable at
the option of the Agent within twelve (12) months from the
date of issuance thereof or be automatically renewable for
additional periods of twelve (12) months or less (or such
longer term as may be approved by the Required Banks) but in
no event later than the Termination Date, shall conform to
the general requirements of the Agent for the issuance of
letters of credit as to form and substance and shall be a
letter of credit which the Agent may lawfully issue.
(c) Applications and Agreements. At the time the
Company requests a Letter of Credit to be issued (or prior
to the first issuance of a Letter of Credit, in the case of
a continuing application), it shall execute and deliver to
the Agent an application for such Letter of Credit in the
form prescribed by the Agent (individually, an "Application"
and collectively, "Applications"). Subject to the other
provisions of this subsection, the obligation of the Company
to reimburse the Agent for drawings under a Letter of Credit
shall be governed by the Application for such Letter of
Credit. In the event a drawing is paid on a Letter of
Credit and the Company has not notified the Agent by 10:30
a.m. (Chicago time) on the date when such drawing is paid
that the Company intends to repay such reimbursement
obligation with funds not borrowed under this Agreement, the
Company shall be deemed to have irrevocably requested a
Borrowing of Domestic Rate Loans under the Revolving Credit
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on such day in the amount of the reimbursement obligation
then due, subject to Section 6.2 hereof (other than its
requirement that each Borrowing of Domestic Rate Loans be in
a certain minimum amount), which new Borrowing of Revolving
Credit Loans shall be applied to pay the reimbursement
obligation then due. Anything contained in the Applications
to the contrary notwithstanding (aa) the Company shall pay
fees in connection with Letters of Credit as set forth in
Section 3.2 hereof, (ab) in the event that the Agent is not
promptly reimbursed (whether out of the proceeds of a
Borrowing of Revolving Credit Loans or otherwise) for the
amount of any draft drawn under a Letter of Credit issued
hereunder after notice to the Company that such draft has
been received, the obligation of the Company to reimburse
the Agent for the amount of such draft shall bear interest
(which the Company hereby promises to pay) from and after
the date the draft is paid at a fluctuating rate determined
daily by adding 2% to the Domestic Rate as from time to time
in effect, (ac) prior to the occurrence of an Event of
Default, the Agent will not call for additional collateral
security for the obligations of the Company under the
Applications other than the collateral security consisting
of rights in goods and commodities (or documents of title
evidencing same) the payment for which is supported by the
Letters of Credit and (ad) prior to the occurrence of an
Event of Default, the Agent will not call for the funding of
a Letter of Credit prior to being presented with a draft
thereunder (or, in the event the draft is a time draft,
prior to its due date).
(d) Participations in Letters of Credit. Each Bank
(including the Agent in its individual capacity as a Bank)
shall participate on a pro rata basis in the Letters of
Credit issued by the Agent, which participation shall
automatically arise upon the issuance of each such Letter of
Credit (such participations to ratably count against the
Commitments of the Banks when the Letters of Credit are
issued). Each Bank unconditionally agrees that in the event
the Agent is not immediately reimbursed by the Company for
the amount paid by the Agent on any draft presented to it
under a Letter of Credit, then in that event such Bank shall
pay to the Agent that portion of the amount of each draft so
paid by the Agent which is equal to the same percentage of
the amount so paid as the percentage which its Commitment
bears to the aggregate Commitments and in return such Bank
shall automatically receive an equivalent percentage
participation in the rights of the Agent to obtain
reimbursement from the Company for the amount of such draft,
together with interest thereon as provided for herein. In
the event that any Bank fails to honor its obligation to
reimburse the Agent for its pro rata share of the amount of
any such draft then in that event (i) each other Bank shall
pay to the Agent its pro rata share of the payment then due
the Agent from the defaulting Bank, (ii) the defaulting Bank
shall have no right to participate in any recoveries from
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the Company in respect of such draft and (iii) all other
amounts to which the defaulting Bank would otherwise be
entitled under the terms of this Agreement or the Collateral
Documents (whether payments of interest, principal or fees
of any kind) shall first be applied to reimbursing the Agent
for the defaulting Bank s portion of the draft, together
with interest thereon at the rate provided for herein. Upon
reimbursement to the Agent (pursuant to clause (i) or (iii)
above) of the amount advanced by the Agent in respect of the
defaulting Bank s share of the draft, together with the
interest thereon as provided for in this Section 1.3(d), the
defaulting Bank shall thereupon be entitled to its
participation in the Agent s rights of recovery against the
Company in respect of the draft paid by the Agent. Nothing
herein contained shall release any defaulting Bank from its
liability hereunder nor limit any liability it would
otherwise have to the Agent or any Bank on account of such
breach.
Section 1.4. The Swing Line. (a) General. Subject to all
of the terms and conditions hereof, Harris Trust and Savings Bank
("Harris") agrees to make loans to the Company under the Swing
Line (individually, a "Swing Line Loan" and collectively, the
"Swing Line Loans") which shall not in the aggregate at any time
outstanding exceed the lesser of (i) $500,000 (the "Swing Line
Commitment") or (ii) the unused amount of the Commitments. The
Swing Line Commitment shall be available to the Company solely in
the form of Domestic Rate Loans which shall bear interest at the
rates and payable at the times as specified in Section 1.5(a) and
2.4 hereof and may be availed of by the Company from time to time
and borrowings thereunder may be repaid and used again during the
period ending on the Termination Date. Each Swing Line Loan made
to the Company under the Swing Line Commitment shall be in a
minimum amount of $100,000.
(b) Manner of Borrowing. The Company shall notify Harris
by 1:00 p.m. Chicago time of each request by it for a Swing Line
Loan, specifying the amount of such Loan requested and, subject
to all of the terms and conditions hereof, the proceeds of such
Loan shall be made available to the Company on the date of
request at the office of Harris in Chicago.
Section 1.5. Applicable Interest Rates;. (a) Domestic
Rate Loans. Each Domestic Rate Loan made by a Bank shall bear
interest (computed on the basis of a year of 360 days and actual
days elapsed) on the unpaid principal amount thereof from the
date such Loan is made until maturity (whether by acceleration or
otherwise) at a rate per annum equal to the Domestic Rate from
time to time in effect, payable on the last day of the applicable
Interest Period and at maturity (whether by acceleration or
otherwise).
(b) Eurocurrency Loans. (i) General. Each Eurocurrency
Loan made by a Bank shall bear interest (computed on the basis of
a year of 360 days and actual days elapsed) on the unpaid
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principal amount thereof from the date such Loan is made until
maturity (whether by acceleration or otherwise) at a rate per
annum equal to the sum of the applicable Eurocurrency Margin plus
the Adjusted LIBOR, payable on the last day of the applicable
Interest Period and at maturity (whether by acceleration or
otherwise), and, if the applicable Interest Period is longer than
three months, on each day occurring every three months after the
date such Loan is made.
"Adjusted LIBOR" means, for any Borrowing of Eurocurrency
Loans, a rate per annum determined in accordance with the
following formula:
Adjusted LIBOR = LIBOR
__________________________________
100% -Eurocurrency Reserve Percentage
"LIBOR" means, with respect to an Interest Period for a
Borrowing of Eurocurrency Loans, (a) the LIBOR Index Rate for
such Interest Period, if such rate is available, and (b) if the
LIBOR Index Rate cannot be determined, the arithmetic average of
the rate of interest per annum, as determined by the Agent
(rounded upwards, if necessary, to the nearest whole multiple of
1/16 of 1%), at which deposits of U.S. Dollars or the relevant
Alternative Currency in immediately available and freely
transferable funds are offered to the Agent at 11:00 a.m.
(London, England time) two Business Days prior to the
commencement of such Interest Period by major banks in the
interbank market for a period equal to such Interest Period and
in an amount approximately equal to the principal amount of the
Eurocurrency Loan scheduled to be made by the Agent as part of
such Borrowing.
"LIBOR Index Rate" means, for any Interest Period, the rate
per annum (rounded upwards, if necessary, to the next higher one
hundred-thousandth of a percentage point) for deposits in U.S.
Dollars or the relevant Alternative Currency for a period equal
to such Interest Period, which appears on the Telerate Page 3750
as of 11:00 a.m. (London, England time) on the day two Business
Days before the commencement of such Interest Period.
"Telerate Page 3750" means the display designated as "Page
3750" on the Telerate Service (or such other page as may replace
Page 3750 on that service or such other service as may be
nominated by the British Bankers Association as the information
vendor for the purpose of displaying British Bankers Association
Interest Settlement Rates for deposits in U.S. Dollars or the
relevant Alternative Currency).
"Eurocurrency Reserve Percentage" means, for any Borrowing
of Eurocurrency Loans, the daily average for the applicable
Interest Period of the maximum rate at which reserves (including,
without limitation, any supplemental, marginal and emergency
reserves) are imposed during such Interest Period by the Board of
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Governors of the Federal Reserve System (or any successor) under
Regulation D on "eurocurrency liabilities", as defined in such
Board s Regulation D, (or in respect of any other category of
liabilities that includes deposits by reference to which the
interest rate on Eurocurrency Loans is determined or any category
of extension of credit or other assets that include loans by
non-United States offices of any Bank to United States residents)
subject to any amendments of such reserve requirement by such
Board or its successor, taking into account any transitional
adjustments thereto. For purposes of this definition, the
Eurocurrency Loans shall be deemed to be "eurocurrency
liabilities" as defined in Regulation D without benefit or credit
for any prorations, exemptions or offsets under Regulation D.
"Eurocurrency Margin" means 1.00% subject to adjustment as
provided in Section 1.8 hereof.
(ii) Borrowings of Alternative Currencies. On the date the
Company requests a Borrowing of Eurocurrency Loans in an
Alternative Currency, as provided in Section 1.7(a) below, the
Agent shall promptly notify each Bank of the currency in which
such Borrowing is requested. If a Bank determines that such
Alternative Currency is not available to it in sufficient amount
and for a sufficient term to enable it to make the Loan requested
of it as part of such Eurocurrency Borrowing and so notifies the
Agent no later than 2:00 p.m. (Chicago time) on the same day it
receives notice from the Agent of such requested Loan, the Agent
shall promptly so notify the Company. If the Company
nevertheless desires such Borrowing, it must notify the Agent by
no later than 3:00 p.m. (Chicago time) on such day. If the Agent
does not receive such notice from the Company by 3:00 p.m.
(Chicago time), the Company shall automatically be deemed to have
revoked its request of the Eurocurrency Borrowing and the Agent
will promptly notify the Banks of such revocation. If the
Company does give such notice by 3:00 p.m. (Chicago time), each
Bank that did not notify the Agent by 2:00 p.m. (Chicago time)
that the requested Alternative Currency is unavailable to it to
fund the requested Loan shall, subject to Section 6 hereof, make
its Loan in the Alternative Currency requested in accordance with
Section 1.7(d) hereof. Each Bank that did so notify the Agent by
2:00 p.m. (Chicago time) that it would not be able to make the
Loan requested from it shall, subject to Section 6 hereof, make a
Eurocurrency Loan denominated in U.S. Dollars in the amount of
the Original Dollar Amount of, and with the same Interest Period
as, the Eurocurrency Loan such Bank was originally requested to
make. Such Eurocurrency Loan denominated in U.S. Dollars shall
be made by the affected Bank on the same day as the other Banks
make their Eurocurrency Loans denominated in the applicable
Alternative Currency as part of the relevant Borrowing of
Eurocurrency Loans, but shall bear interest with reference to the
Adjusted LIBOR applicable to U.S. Dollars rather than the
relevant Alternative Currency for the applicable Interest Period
and shall be made available in accordance with the procedures for
disbursing U.S. Dollar Loans under Section 1.7(d) hereof. Any
Loan made in an Alternative Currency shall be advanced in such
<PAGE>
currency, and all payments of principal and interest thereon
shall be made in such Alternative Currency.
(c) Rate Determinations. The Agent shall determine each
interest rate applicable to the Revolving Credit Loans and such
determination shall be conclusive and binding on the parties
hereto except in the case of manifest error or willful
misconduct.
Section 1.6. Minimum Borrowing Amount. Each Borrowing of
Revolving Loans shall be in an amount not less than (i) in the
case of Eurocurrency Loans denominated in an Alternative
Currency, an amount for which the U.S. Dollar Equivalent is not
less than $1,000,000 or, solely in the case of Refunding
Borrowing for a Borrowing in an Alternative Currency, if less,
the same amount of the Alternative Currency as the maturing
Borrowing, and (ii) in the case of Loans denominated in U.S.
Dollars $500,000 or any larger amount that is an integral
multiple of $100,000.
Section 1.7. Manner of Borrowing Revolving Credit Loans.
(a) Notice to the Agent. In order to borrow any Revolving Credit
Loans, the Company shall give telephonic or telecopy notice to
the Agent (which notice shall be irrevocable (except as set forth
in Section 1.5(b)(ii) hereof) once given and, if by telephone,
shall be promptly confirmed in writing) by no later than 10:00
a.m. (Chicago time) (i) on the date at least three (3) Business
Days prior to the date of each requested Borrowing of
Eurocurrency Loans and (ii) on the date of any requested
Borrowing of Domestic Rate Loans. Each such notice shall specify
the date of the requested Borrowing (which shall be a Business
Day), the amount of the requested Borrowing, the type of Loans to
comprise such Borrowing, if such Borrowing is to be comprised of
Eurocurrency Loans, the Interest Period applicable thereto, and,
if such Borrowing is of a Eurocurrency Loan denominated in an
Alternative Currency, the Alternative Currency in which such Loan
is to be denominated. The Company agrees that the Agent may rely
on any such telephonic or telecopy notice given by any person who
identifies himself or herself as being an Authorized
Representative of the Company without the necessity of
independent investigation and in the event any notice by such
means conflicts with the written confirmation, such notice shall
govern if the Agent has acted in reliance thereon.
(b) Notice to the Banks. The Agent shall give prompt
telephonic, telex or telecopy notice to each Bank of any
borrowing request it receives pursuant to Section 1.7(a) above
and, if such notice requests the Banks to make a Eurocurrency
Loan, the Agent shall give notice to the Company and each of the
Banks by like means of the interest rate applicable thereto (but,
if such notice is given by telephone, the Agent shall confirm
such rate in writing) promptly after the Agent has made such
determination.
(c) Company's Failure to Notify. In the event the Company
<PAGE>
fails to give notice pursuant to Section 1.7(a) above of the
reborrowing of the principal amount of any maturing Borrowing of
Loans denominated in U.S. Dollars and has not notified the Agent
by 10:00 A.M. (Chicago time) on the day such Borrowing matures
that it intends to repay such Borrowing, the Company shall be
deemed to have requested a Borrowing of Domestic Rate Loans on
such day in the amount of the maturing Borrowing of Loans,
subject to Section 6.2 hereof. In the event any Company fails to
give notice pursuant to Section 1.7(a) above of the reborrowing
of the principal amount of any maturing Borrowing of Loans
denominated in an Alternative Currency and has not notified the
Agent by 10:00 A.M. (Chicago time) three (3) Business Days before
the day such Borrowing matures that it intends to repay such
Borrowing, the Company shall be deemed to have requested a
Borrowing of Eurocurrency Loans denominated in the same currency
as the maturing Borrowing on such day in the amount of the
maturing Borrowing of Loans with an Interest Period of one (1)
month, subject to Section 6.2 hereof.
(d) Disbursement of Loans. Not later than 12:00 Noon
(Chicago time) on the date of any Borrowing of Revolving Credit
Loans denominated in U.S. Dollars, subject to Section 6 hereof,
each Bank shall make available its Loan in funds immediately
available in Chicago, Illinois at the principal office of the
Agent, except to the extent such Borrowing is a reborrowing, in
whole or in part, of the principal amount of a maturing Borrowing
of Revolving Credit Loans (a "Refunding Borrowing"), in which
case each Bank shall record the Loan made by it as a part of such
Refunding Borrowing on its books or records or on a schedule to
the appropriate Note, as provided in Section 1.9(c) hereof, and
shall effect the repayment, in whole or in part, as appropriate,
of its maturing Loan through the proceeds of such new Loan.
Subject to Section 6 hereof, the Agent shall make the proceeds of
each non-Refunding Borrowing denominated in U.S. Dollars
available to the Company at the Agent s principal office in
Chicago, Illinois. If a Borrowing is to be denominated in an
Alternative Currency, subject to Sections 1.5(b)(ii) and 6
hereof, each Bank shall make available its Loan in the
Alternative Currency at such office as the Agent has previously
notified to each Bank, for delivery to the Company at the Agent s
direction, in funds then customary for the settlement of
international transactions in such currency and no later than
such local time as is necessary for such funds to be received and
transferred to the Company for same day value, except to the
extent such Borrowing is a Refunding Borrowing, in which case
each Bank shall record the Loan made by it as part of such
Refunding Borrowing on its books and records or on a schedule to
its Revolving Credit Note, as provided in Section 1.9(c) hereof
and shall effect the repayment, in whole or in part, as
appropriate, of its maturing Loan through the proceeds of such
new Loan.
Section 1.8. Interest Rate Margin, Letter of Credit Fee
and Commitment Fee Adjustment. The applicable Eurocurrency
Margin specified in Section 1.5(b) hereof, the letter of credit
<PAGE>
fee specified in Section 3.2 and the commitment fee specified in
Section 3.1 hereof shall be subject to quarterly adjustment
(commencing with the fiscal quarter ending February 28, 1994) as
follows (the margins from time to time applicable to the
Eurocurrency Loans being hereinafter referred to as the
"Applicable Eurocurrency Margin", the letter of credit fee from
time to time in effect being hereinafter referred to as the
"Applicable Letter of Credit Fee" and the commitment fee from
time to time in effect being hereinafter referred to as the
"Applicable Commitment Fee") with the Interest Coverage Ratio
being computed for the immediately preceding four fiscal quarters
ended on each fiscal quarter end and the Leverage Ratio being
computed as in effect on the last day of each fiscal quarter:
Applicable
Eurocurrency Margin
and Applicable Letter
Applicable
If as of the last day of Credit Fee Shall
Commitment Fee
day of any fiscal quarter: Each Be: Shall Be:
LEVEL I: .75% .20%
Interest Coverage Ratio is greater
than or equal to 8.0 to 1 and Leverage
Ratio is less than or equal to 30%
LEVEL II: 1.00% .25%
Either (x) Interest Coverage Ratio
is less than 8.0 to 1 but greater than
or equal to 6.0 to 1 and Leverage Ratio
is greater than 30% but less than or equal
to 42% or (y) either of the Interest
Coverage Ratio or Leverage Ratio meets
Level I criteria above and the other meets
criteria specified in foregoing clause (x)
of this Level II criteria
LEVEL III: 1.25 .30%
Either (x) Interest Coverage Ratio is less
than 6.0 to 1 or Leverage Ratio is greater
than 42% or (y) either of the Interest
Coverage Ratio or Leverage Ratio meets
Level I or Level II criteria and the other
meets criteria specified in the foregoing
clause (x) of this Level III criteria
Not later than five Business Days after receipt by the Agent
of the financial statements and the compliance certificate called
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for by Section 7.6 hereof for the applicable quarter, the Agent
shall determine the Interest Coverage Ratio and Leverage Ratio
for the applicable period based on the information contained in
such financial statements and compliance certificate and shall
promptly notify the Company and the Banks of such determination
and of any change in the Applicable Eurocurrency Margin,
Applicable Letter of Credit Fee and Applicable Commitment Fee
resulting therefrom, any such change in the Applicable
Eurocurrency Margin, Applicable Letter of Credit Fee and
Applicable Commitment Fee to be effective as of the date the
Agent so notifies the Company, with such new Applicable
Eurocurrency Margin, Applicable Letter of Credit Fee and
Applicable Commitment Fee to continue in effect until the
effective date of the next quarterly redetermination in
accordance with the foregoing. Each determination of the
Interest Coverage Ratio, Leverage Ratio, Applicable Eurocurrency
Margin, Applicable Letter of Credit Fee and Applicable Commitment
Fee by the Agent in accordance with this Section shall be
conclusive and binding on the Company and the Banks absent
manifest error.
Section 1.9. The Notes. (a) All Revolving Credit Loans
made to the Company by a Bank shall be evidenced by a promissory
note of the Company in the form of Exhibit A hereto (individually
a "Revolving Credit Note" and collectively the "Revolving Credit
Notes"), each such Revolving Credit Note to be dated the date
hereof, payable to the order of the applicable Bank in the
principal amount of its Commitment and otherwise in the form of
Exhibit A hereto.
(b) All Swing Line Loans made to the Company by Harris
shall be evidenced by a promissory note of the Company in the
form of Exhibit B hereto (the "Swing Line Note"), such Note to be
dated the date hereof, payable to the order of Harris in the
principal amount of its Swing Line Commitment and otherwise in
the form of Exhibit B hereto.
(c) Each Bank and, in the case of the Swing Line, Harris,
shall record on its books and records or on a schedule to the
appropriate Note the amount of each Loan made by it to the
Company, the Interest Period thereof, all payments of principal
and interest and the principal balance from time to time
outstanding thereon, in respect to any Eurocurrency Loan, the
interest rate applicable thereto and the currency in which such
Loan is made; provided that prior to the transfer of any Note
such information relating to any outstanding Loans made by such
Bank or Harris, as appropriate, shall be recorded on the back of
such Note or on a schedule to such Note. The record thereof,
whether shown on such books and records of a Bank or Harris, as
appropriate, or on a schedule to any Note, shall be prima facie
evidence as to all such matters; provided, however, that the
failure of any Bank or Harris, as appropriate, to record any of
the foregoing or any error in any such record shall not limit or
otherwise affect the obligation of the Company to repay all Loans
made to it hereunder together with accrued interest thereon. At
<PAGE>
the request of any Bank or Harris, as appropriate, and upon such
Bank or Harris, as appropriate, tendering to the Company the Note
to be replaced, the Company shall furnish a new Note to such Bank
or Harris, as appropriate, to replace any outstanding Note and at
such time the first notation appearing on a schedule on the
reverse side of, or attached to, such Note shall set forth the
aggregate unpaid principal amount of all Loans, if any, then
outstanding thereon.
SECTION 2. GENERAL PROVISIONS APPLICABLE TO ALL LOANS.
Section 2.1. Interest Periods. At the time of each
request for the Borrowing of Loans hereunder the Company shall
select an Interest Period applicable to such Loans from among the
available options. The term "Interest Period" means the period
commencing on the date a Borrowing of Loans is made and ending,
(a) in the case of Domestic Rate Loans, on the last day of the
calendar quarter in which such Loan is made (i.e. the first to
occur of March 31, June 30, September 30, and December 31
following the date such Borrowing is made); and (b) in the case
of Eurocurrency Loans, the date, as the Company may select, 1, 2,
3 or 6 months thereafter; provided, however, that:
(a) any Interest Period for a Borrowing of Domestic
Rate Loans commencing less than 90 days before the
Termination Date shall end on the Termination Date;
(b) with respect to any Borrowing of Eurocurrency
Loans, the Company may not select an Interest Period that
extends beyond the Termination Date; and
(c) whenever the last day of any Interest Period would
otherwise be a day that is not a Business Day, the last day
of such Interest Period shall be extended to the next
succeeding Business Day, provided that, in the case of an
Interest Period for a Borrowing of Eurocurrency Loans, if
such extension would cause the last day of such Interest
Period to occur in the following calendar month, the last
day of such Interest Period shall be the immediately
preceding Business Day; and
(d) for purposes of determining the Interest Period
for a Borrowing of Eurocurrency Loans, a month means a
period starting on one day in a calendar month and ending on
the numerically corresponding day in the next calendar
month; provided, however, that if there is no numerically
corresponding day in the month in which such an Interest
Period is to end or if such an Interest Period begins on the
last Business Day of a calendar month, then such Interest
Period shall end on the last Business Day of the calendar
month in which such Interest Period is to end.
Section 2.2. Maturity of Loans. Each Loan shall mature
and become due and payable by the Company on the last day of the
Interest Period applicable thereto.
<PAGE>
Section 2.3. Default Rate. If any payment of principal on
any Loan is not made when due (whether by acceleration or
otherwise), such Loan shall bear interest (computed on the basis
of a year of 360 days and actual days elapsed) from the date such
payment was due until paid in full, payable on demand, at a rate
per annum equal to:
(a) with respect to any Domestic Rate Loan, the sum of
two percent (2%) plus the Domestic Rate from time to time in
effect;
(b) with respect to any Eurocurrency Loan denominated
in U.S. Dollars the sum of two percent (2%) plus the rate of
interest in effect thereon at the time of such default until
the end of the Interest Period applicable thereto and,
thereafter, at a rate per annum equal to the sum of two
percent (2%) plus the Domestic Rate from time to time in
effect; and
(c) with respect to any Eurocurrency Loan denominated
in an Alternative Currency, the sum of two percent (2%) plus
the rate of interest in effect thereon at the time of such
default until the end of the Interest Period applicable
thereto and, thereafter, at a rate per annum equal to the
sum of the Applicable Eurocurrency Margin, plus two percent
(2%) plus the rate of interest per annum as determined by
the Agent (rounded upwards, if necessary, to the nearest
whole multiple of one-sixteenth of one percent (1/16)) at
which overnight or weekend deposits of the appropriate
currency for delivery in immediately available and freely
transferable funds would be offered by the Agent to major
banks in the interbank market upon request of such major
banks for the applicable period as determined above and in
an amount comparable to the unpaid principal amount of any
such Eurocurrency Loan (or, if the Agent is not placing
deposits in such currency in the interbank market, then the
Agent s costs of funds in such currency for such period).
Section 2.4. Commitment Terminations. (a) Voluntary. The
Company shall have the right at any time and from time to time,
upon five (5) Business Days prior written notice to the Agent to
terminate without premium or penalty, in whole or in part, the
Commitments or the Swing Line Commitment, any partial termination
to be in an amount not less than $5,000,000 or any larger amount
that is an integral multiple of $1,000,000, and to reduce ratably
the respective Commitments of each Bank; provided that, the
Commitments may not be reduced to an amount less than the
aggregate principal amount of Letter of Credit Utilization and
Loans then outstanding (which, in the case of Eurocurrency Loans
denominated in an Alternative Currency, shall mean the Original
Dollar Amount thereof). Any termination of Commitments pursuant
to this Section 2.4 may not be reinstated.
(b) Mandatory. The Commitments shall be automatically and
ratably reduced by an amount equal to 50% of the net proceeds
<PAGE>
received by the Company after the date hereof from any Equity
Placement and (to the extent in excess of $5,000,000) from any
Debt Placement, in each case upon consummation thereof. Net
proceeds for such purposes shall be deemed equal to the gross
proceeds of the relevant Placement net only of reasonable
underwriting discounts and commissions and other reasonable costs
directly incurred and payable as a result of such Placement.
Section 2.5. Funding Indemnity. In the event any Bank
shall incur any loss, cost or expense (including, without
limitation, any loss of profit, and any loss, cost or expense
incurred by reason of the liquidation or re-employment of
deposits or other funds acquired by such Bank to fund or maintain
any Eurocurrency Loan or the relending or reinvesting of such
deposits or amounts paid or prepaid to such Bank) as a result of:
(a) any payment or prepayment of a Eurocurrency Loan
on a date other than the last day of its Interest Period,
(b) any failure (because of a failure to meet the
conditions of Section 6 or otherwise) by the Company to
borrow a Eurocurrency Loan on the date specified in a notice
given pursuant to Section 1.7 hereof (unless such notice was
revoked in accordance with Section 1.5(b)(ii) in the event a
Bank determined that the requested Alternate Currency in
which such Eurocurrency Loan was to be made was unavailable
to it),
(c) any failure by the Company to make any payment of
principal on any Eurocurrency Loan when due (whether by
acceleration or otherwise), or
(d) any acceleration of the maturity of a Eurocurrency
Loan as a result of the occurrence of any Event of Default
hereunder,
then, upon the demand of such Bank, the Company shall pay to such
Bank such amount as will reimburse such Bank for such loss, cost
or expense. If any Bank makes such a claim for compensation, it
shall provide to the Company, with a copy to the Agent, a
certificate executed by an officer of such Bank setting forth the
amount of such loss, cost or expense in reasonable detail
(including an explanation of the basis for and the computation of
such loss, cost or expense) and the amounts shown on such
certificate if reasonably calculated shall be conclusive.
SECTION 3. FEES, PAYMENTS, REDUCTIONS, APPLICATIONS,
EXTENSIONS AND CHANGE IN CIRCUMSTANCES.
Section 3.1. Commitment Fee. For the period from the date
hereof to and including the Termination Date, the Company shall
pay to the Agent for the ratable account of the Banks a
commitment fee at the rate of 1/4 of 1% per annum, subject to
adjustment as provided in Section 1.8 hereof (computed on the
basis of a year of 360 days for the actual number of days
<PAGE>
elapsed) on the average daily unused amount of the Commitments in
effect under this Agreement from time to time, such fee to be
payable in arrears on the last day of each May, August, November
and February (commencing May 31, 1994) to and including, and on,
the Termination Date, unless the Available Commitments are
terminated in whole on an earlier date, in which event the
commitment fees payable hereunder for the period to the date of
such termination shall be paid on the date of such termination.
Section 3.2. Letter of Credit Fees. (a) Standby Letters
of Credit. The Company shall pay to the Agent for the ratable
account of the Banks a letter of credit fee for each standby
Letter of Credit issued hereunder computed at a rate per annum
equal to 1% (subject to adjustment as provided in Section 1.8
hereof) on the maximum amount of each such standby Letter of
Credit such fee to be payable in advance on or before the
issuance of each Letter of Credit and on each anniversary
thereof.
(b) Transaction Charges. In addition to the letter of
credit fees called for by Section 3.2(a) hereof, the Company
further agree to pay to the Agent, for its own use and benefit,
such issuing, processing, amendment and transaction fees and
charges as the Agent from time to time customarily imposes in
connection with the issuance, negotiation and payment of letters
of credit and drafts drawn thereunder, together with express and
other out-of-pocket costs incurred by the Agent in connection
therewith.
Section 3.3. Agent's Fees. The Company shall pay to the
Agent for its own use and benefit such fees as the Company and
the Agent agree to pursuant to that certain Agent's fee letter
dated as of April 4, 1994.
Section 3.4. Closing Fee. The Company shall, on or before
the date of execution and delivery hereof by the Company and the
Banks currently party hereto, pay the Agent for the account of
the Banks, nonrefundable closing fees in the amount of $9,062.50
for Harris Trust and Savings Bank and $3,437.50 for Continental
Bank N.A.
Section 3.5. Voluntary Prepayments. The Company shall
have the privilege of prepaying without premium or penalty the
Domestic Rate Loans in whole or in part (but if in part then in
an aggregate minimum amount for all Banks of $500,000 or such
greater amount which is an integral multiple of $100,000) at any
time upon notice to the Agent (such notices, if received
subsequent to 12:00 p.m. (Chicago time) on a given day, to be
treated as though received at the opening of business on the next
Business Day), which shall promptly so notify the Banks, by
paying to the Agent for the account of the Banks the principal
amount to be prepaid and if such prepayment prepays the Notes in
full, accrued interest thereon to the date fixed for prepayment.
Eurocurrency Loans may not be voluntarily prepaid.
<PAGE>
Section 3.6. Mandatory Prepayments. (a) Commitment
Reductions or Currency Fluctuation. In the event that the
aggregate outstanding principal amount of the Notes should at any
time and for any reason (whether as a result of reductions in the
Commitments or due to changes in currency conversion rates or
otherwise) exceed the aggregate amounts of the Commitments or
Swing Line Commitment as then in effect, the Company shall
immediately and without notice or demand pay over the amount of
the excess to the Agent as and for a mandatory prepayment of the
Notes;
(b) Breakage. Concurrently with each prepayment called for
by this Section 3.6, if any such prepayment would necessitate a
prepayment of a Eurocurrency Loan prior to the last day of the
applicable Interest Period, then the Company (at its option)
shall either (i) pay any amount due the Banks in respect of such
prepayment under Section 2.5 hereof or (ii) deposit the amount
which would necessitate a prepayment of a Eurocurrency Loan with
the Agent to be held by it (and invested at the request of the
Company in investments of the type identified in subsections (a)
through (c) of Section 7.13 hereof maturing on or before the last
day of the relevant Interest Period, with the investment earnings
thereon to be released to the Company if and so long as no
Default or Event of Default has occurred and is continuing) and
applied to the payment of the relevant Eurocurrency Loan on the
last day of the Interest Period therefor. Any cash or
investments (and the proceeds thereof) held by the Agent pursuant
to this Section shall be and constitute collateral security for
the obligations of the Company hereunder and under the Collateral
Documents and the Notes and are hereby pledged to the Agent for
that purpose.
Section 3.7. Extension of the Revolving Credit Commitments
and Swing Line Commitment. No sooner than 120 days and no later
than 60 days prior to the Termination Date (as the same may have
been extended pursuant to this Section 3.7) the Company may
request in a written notice to the Agent that the scheduled
Termination Date then in effect be extended for one (1) year.
The Agent will promptly inform the Banks of such request and each
Bank shall notify the Agent in writing within 30 days of receipt
of such notice whether it agrees to such extension. In the event
that any Bank shall fail to so notify the Agent whether it agrees
to such extension, such Bank shall be deemed to have refused to
grant the requested extension. Upon receipt by the Agent of the
consent of all the Banks, the Company and the Banks shall enter
into such documents as the Agent may deem necessary or
appropriate to reflect such extension and to assure that all
extensions of credit pursuant to the Revolving Credit Commitments
and Swing Line Commitment as so extended are secured by the liens
of the Collateral Documents and the Agent may call for financing
statement searches and/or endorsements to its mortgagee's title
insurance policies to assure that such is the case, all costs and
expenses incurred by the Agent in connection therewith to be paid
by the Company. In no event shall the Termination Date be
extended beyond March 31, 1999.
<PAGE>
Section 3.8. Discretion of Bank as to Manner of Funding.
Notwithstanding any other provision of this Agreement, each Bank
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,
however, that for the purposes of this Agreement all
determinations hereunder shall be made as if each Bank had
actually funded and maintained each Fixed Rate Loan that is a
Committed Loan through the purchase of deposits in the relevant
market having a maturity corresponding to such Loan s Interest
Period and bearing an interest rate equal to LIBOR for such
Interest Period.
Section 3.9. Place and Application of Payments. All
payments of principal of and interest on the Loans and all
payments of facility and closing fees and all other amounts
payable under this Agreement shall be made to the Agent by no
later than 12:00 noon (Chicago time) at (a) the principal office
of the Agent in Chicago, Illinois (or such other location in the
United States of America as the Agent may designate to the
Company) or (b) if such payment is to be made in an Alternative
Currency, no later than 12:00 noon local time at the place of
payment to such office as the Agent has previously notified the
Company for the benefit of the Banks. All such payments shall be
made (i) in the case of obligations payable in U.S. Dollars, in
immediately available funds at the place of payment or (ii) in
the case of obligations payable in an Alternative Currency, in
such Alternative Currency in funds then customary for the
settlement of international transactions in such currency, in all
cases, without setoff or counterclaim and without reduction for,
and free from, any and all present or future taxes, levies,
imposts, duties, fees, charges, deductions, withholdings,
restrictions or conditions of any nature imposed by any
government or any political subdivision or taxing authority
thereof (other than taxes on the overall income or gross receipts
of such Bank or its Lending Office). The Agent will promptly
thereafter cause to be distributed like funds relating to the
payment of principal or interest (ratably in accord with the
respective amount of principal and interest owing each Bank) or
fees (ratably in accord with the amount owing each) to the Banks,
and like funds relating to the payment of any other amount
payable to any Bank to such Bank, in each case to be applied in
accordance with the terms of this Agreement. Payments under
Sections 2.5 and 3.12 hereof may be made by the Company directly
to the Banks entitled to the same and all payments with respect
to the Swing Line Loans shall be retained by Harris for its own
account. Prepayments under Section 3.5 shall be applied as
between the Revolving Credit Note and the Swing Line Note as the
Company directs and in the absence of such direction as the Agent
shall elect. Principal prepayments on the Revolving Credit Notes
shall be applied first to the Domestic Rate Loans and then to the
Eurocurrency Loans in the order of their maturity.
Anything contained herein to the contrary notwithstanding,
all payments and collections received in respect of the
indebtedness evidenced by the Notes and all proceeds of the
<PAGE>
Collateral received, in each instance, by the Agent or any of the
Banks after the occurrence of an Event of Default shall be
remitted to the Agent and distributed as follows:
(a) first, to the payment of any outstanding costs and
expenses incurred by the Agent or any security trustee in
monitoring, verifying, protecting, preserving or enforcing the
liens on the Collateral or in protecting, preserving or enforcing
rights under the Credit Agreement, the Collateral Documents or
the Notes and in any event including all costs and expenses of a
character which the Company has agreed to pay under Section 11.11
hereof (such funds to be retained by the Agent for its own
account unless it has previously been reimbursed for such costs
and expenses by the Banks, in which event such amounts shall be
remitted to the Banks to reimburse them for payments theretofore
made to the Agent);
(b) second, to the payment of any outstanding interest or
other fees or amounts due under the Notes, the Credit Agreement,
the Applications or the Collateral Documents other than for
principal, ratably as among the Banks in accord with the amount
of such interest and other fees or amounts owing each Bank;
(c) third, to the payment of the principal of the Notes and
principal amounts owing under the Applications, ratably as among
the Banks in accord with the amount of such principal owing each
Bank;
(d) fourth, to the Banks ratably in accord with the amounts
of any other indebtedness, obligations or liabilities of the
Company owing to each of them hereunder or in connection herewith
and secured by the Collateral Documents unless and until all such
indebtedness, obligations and liabilities have been fully paid
and satisfied; and
(e) fifth, to the Company or whoever may be lawfully
entitled thereto.
Section 3.10. Change of Law. Notwithstanding any other
provisions of this Agreement or any Note, if at any time after
the date hereof any change in applicable law or regulation or in
the interpretation thereof makes it unlawful for any Bank to make
or continue to maintain Eurocurrency Loans in the relevant
currency or to give effect to its obligations as contemplated
hereby, such Bank shall promptly give notice thereof to the
Company, with a copy to the Agent, and such Bank s obligations to
make or maintain Eurocurrency Loans under this Agreement in such
currency shall terminate until it is no longer unlawful for such
Bank to make or maintain such Eurocurrency Loans. The Company
shall prepay on demand the outstanding principal amount of any
such affected Eurocurrency Loans, together with all interest
accrued thereon and all other amounts then due and payable to
such Bank under this Agreement; provided, however, subject to all
of the terms and conditions of this Agreement, the Company may
then elect to borrow the principal amount of the affected
<PAGE>
Eurocurrency Loan, if denominated in U.S. Dollars, from such Bank
by means of a Domestic Rate Loan from such Bank that shall not be
made ratably by the Banks but only from such affected Bank and
payments whereon shall be made contemporaneously with payments on
the relevant Borrowing of Eurocurrency Loans.
Section 3.11. Unavailability of Deposits or Inability to
Ascertain, or Inadequacy of, LIBOR. If on or prior to the first
day of any Interest Period for any Borrowing of Eurocurrency
Loans:
(a) the Agent determines that deposits in the relevant
currency in the applicable amounts are not being offered to
it in the eurocurrency interbank market for such Interest
Period, or
(b) Banks having 50% or more of the aggregate amount
of the Commitments advise the Agent that LIBOR as determined
by the Agent will not adequately and fairly reflect the cost
to such Banks of funding their Eurocurrency Loans for such
Interest Period,
then the Agent shall forthwith give notice thereof to the Company
and the Banks, whereupon, until the Agent notifies the Company
that the circumstances giving rise to such suspension no longer
exist, the obligations of the Banks to make Eurocurrency Loans in
the affected currency shall be suspended.
Section 3.12. Increased Cost and Reduced Return. (a) If on
or after the date hereof, the Agent or any Bank shall determine
that the adoption of any applicable law, rule or regulation, or
any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Agent, any Bank (or
its Lending Office) with any request or directive (whether or not
having the force of law if of the type generally complied with by
the Agent, such Bank in accordance with its banking practices) of
any such authority, central bank or comparable agency shall:
(i) subject any Bank (or its Lending Office) to any
tax, duty or other charge with respect to its Eurocurrency
Loans, its Notes or its obligation to make Eurocurrency
Loans, or shall change the basis of taxation of payments to
any Bank (or its Lending Office) of the principal of or
interest on its Eurocurrency Loans or any other amounts due
under this Agreement in respect of its Eurocurrency Loans or
its obligation to make Eurocurrency Loans (except for
changes in the rate of tax on the overall net income of such
Bank or its Lending Office imposed by the jurisdiction in
which such Bank's principal executive office or Lending
Office is located); or
(ii) impose, modify or deem applicable any reserve,
special deposit or similar requirements (including, without
<PAGE>
limitation, any such requirement imposed by the Board of
Governors of the Federal Reserve System, but excluding with
respect to any Eurocurrency Loans any such requirement
included in an applicable Eurocurrency Reserve Percentage)
against assets of, deposits with or for the account of, or
credit extended by, any Bank (or its Lending Office) or
against any Letter of Credit or the Agent's or any Bank's or
the Company's liability with respect thereto or shall impose
on any Bank (or its Lending Office) or on the United States
market for certificates of deposit or the interbank market
any other condition affecting its Eurocurrency Loans, its
Notes or its obligation to make Eurocurrency Loans or impose
on the Agent or any Bank any penalty with respect to the
foregoing or any other condition regarding this Agreement,
any Application or any Letter of Credit;
and the result of any of the foregoing is to increase the cost to
the Agent or such Bank (or its Lending Office) of making or
maintaining any Eurocurrency Loan or of issuing, maintaining or
participating in the Letters of Credit hereunder, or to reduce
the amount of any sum received or receivable by the Agent or such
Bank (or its Lending Office) under this Agreement or under its
Notes with respect thereto, by an amount deemed by such Bank to
be material, then after demand by the Agent or such Bank (with a
copy to the Agent), the Company shall pay to the Agent or such
Bank, within ten (10) day after demand by such Bank, such
additional amount or amounts as will compensate the Agent or such
Bank for such increased cost or reduction; provided that the
Agent or such Bank shall have delivered to the Company a
certificate as required by this Section 3.12 no later than 90
days after incurring any such increased cost or reduced return.
The Agent or any Bank seeking compensation under this Section
3.12(a) shall submit to the Company a certificate describing in
reasonable detail the basis for and amount of such claim, which
certificate shall be conclusive in establishing the amount
payable if reasonably determined. In determining such amount,
the Agent and the Banks may use any reasonable averaging and
attribution methods.
(b) Capital Adequacy. If any Bank shall determine that the
adoption of any applicable law, rule or regulation regarding
capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the
interpretation or administration thereof or compliance by such
Bank (or its Lending Office) with any request or directive
regarding capital adequacy (whether or not having the force of
law) of any such authority, central bank or comparable agency,
has or would have the effect of reducing the rate of return on
such Bank's capital as a consequence of its Commitment or other
obligations hereunder or credit extended by it hereunder to a
level below that which such Bank could have achieved but for such
adoption, change or compliance (taking into consideration such
Bank's policies with respect to capital adequacy) by an amount
deemed by such Bank to be material, then from time to time as
<PAGE>
specified by such Bank the Company shall pay to such Bank, within
ten (10) days after demand by such Bank, such additional amount
or amounts as will compensate such Bank for such reduction. If
any Bank makes such a claim for compensation, it shall provide to
the Company a certificate executed by an officer of such Bank
setting forth the additional amount or amounts to be paid to it
hereunder in reasonable detail and such certificate shall be
deemed prima facie correct. In determining such amount, such
Bank may use any reasonable averaging and attribution methods.
Section 3.13. Lending Offices. Each Bank may, at its
option, elect to make its Loans hereunder at the branch, office
or affiliate specified on the appropriate signature page hereof
(each a "Lending Office") for each type of Loan available
hereunder or at such other of its branches, offices or affiliates
as it may from time to time elect and designate in a notice to
the Company and the Agent, provided that each Bank will designate
a different lending or funding office if such designation will
avoid the need for, or reduce the amount of, compensation payable
under Section 3.12 hereof and will not in the judgment of such
Bank, be otherwise disadvantageous (except for administrative
costs to such Bank in designating a different lending or funding
office to the extent such administrative costs are not material)
to such Bank.
SECTION 4. THE COLLATERAL AND GUARANTIES.
Section 4.1. (a) Description of Collateral. The Notes and
the other obligations of the Company hereunder and under the
Applications and the Collateral Documents together with all
obligations of the Company to any Bank with respect to Hedging
Liabilities, shall be secured by valid and perfected first liens
(subject to liens permitted by Section 7.12 hereof) on the
inventory, accounts receivable and general intangibles of the
Company and the Restricted Subsidiaries, in each instance whether
now owned or existing or hereafter acquired or arising
(collectively the "Collateral") and the Company agrees that it
will and will cause the Restricted Subsidiaries to from time to
time at the request of the Agent or the Required Banks execute
and deliver such documents and do such acts and things as the
Agent or the Required Banks may reasonably request in order to
provide for or perfect such liens.
(b) Release of Collateral under this Agreement. The Banks
agree, so long as no Default or Event of Default shall have
occurred and be continuing, to release all of the Collateral upon
request, and at the expense, of the Company in the event that
either (x) the rating assigned to the Company s outstanding
senior unsecured indebtedness is Baa or better, in the case of
ratings by Moody s Investors Services, Inc., BBB or better from
Standard & Poors Corp., BBB or better from Duff & Phelps or 2 or
better from NAIC or (y) the Company has maintained a Leverage
Ratio of the Company and its Restricted Subsidiaries of less than
or equal to 30% for two consecutive fiscal quarters.
<PAGE>
(c) Release of Fixed Asset Collateral under Existing Credit
Agreement. Upon the satisfaction of the conditions precedent to
the effectiveness of this Agreement set forth in Section 6 below,
the Banks shall release the liens granted on the real estate and
equipment of the Company and the Restricted Subsidiaries to
secure credit extended under the Existing Credit Agreement.
Section 4.2. Guaranties. Payment of the Notes and the
other obligations of the Company hereunder and under the
Applications and the Collateral Documents shall at all times be
guarantied by each of the Restricted Subsidiaries (whether or not
existing on the date hereof) pursuant to a guaranty from each
Restricted Subsidiary in form and substance satisfactory to the
Banks (each such guaranty as the same may, from time to time be
modified or amended, including by the acknowledgements referred
to in Section 6.1(c) hereof, being hereinafter referred to
individually as a "Guaranty Agreement" and collectively as the
"Guaranty Agreements").
SECTION 5. REPRESENTATION AND WARRANTIES.
The Company represents and warrants to each of the Banks as
follows:
Section 5.1. Corporate Organization and Authority. The
Company, and each Subsidiary,
(a) is a corporation duly organized, validly existing
and in good standing under the laws of its jurisdiction of
incorporation;
(b) has all requisite corporate power and authority
and all licenses and permits necessary in any respect
material to the Company and its Subsidiaries taken as a
whole to own and operate its properties and to carry on its
business substantially as now conducted and as presently
proposed to be conducted; and
(c) is duly licensed or qualified and is in good
standing as a foreign corporation in each jurisdiction in
which the nature of the business transacted by it or the
nature of the Property owned or leased by it makes such
licensing or qualification necessary and in which the
failure to be so licensed or qualified would materially and
adversely affect the business, properties or operations of
the Company and its Restricted Subsidiaries taken as a
whole.
Exhibit C hereto contains a complete and correct list of all
present Subsidiaries of the Company and correctly sets forth, as
to each, whether or not it constitutes a Restricted Subsidiary
and the jurisdiction of its incorporation. All of the issued and
outstanding shares of capital stock of each Subsidiary are
validly issued and outstanding and fully paid and nonassessable
and all such shares indicated in Exhibit C as owned by the
<PAGE>
Company or a Subsidiary are owned, beneficially and of record, by
the Company or such Subsidiary, free of any Lien other than Liens
permitted hereby.
Section 5.2. Outstanding Indebtedness. Exhibit D attached
hereto correctly describes all Indebtedness of the Company and
its Restricted Subsidiaries outstanding on the date hereof and
generally identifies all Liens securing such Indebtedness.
Section 5.3. Financial Statements. (a) The consolidated
balance sheet of the Company and its Subsidiaries as at February
28, 1993, and the related consolidated statement of income,
stockholders equity and changes in financial position for the
fiscal year ending on such date, accompanied by reports thereon
containing opinions by the Company s certified public accountants
(copies of which have been furnished to the Banks), have been
prepared in accordance with GAAP consistently applied and present
fairly the financial position of the Company and its Subsidiaries
as of such dates and the results of their operations and changes
in their financial position for such years. The unaudited
consolidated balance sheet of the Company and its Subsidiaries as
at November 30, 1993, and the related unaudited consolidated
statements of income and retained earnings and changes in
financial position for the nine months ended on said date (copies
of which have been furnished to the Banks), have been prepared in
accordance with GAAP consistently applied and present fairly the
financial position of the Company and its Subsidiaries as of that
date, and the results of their operations and changes in their
financial position for such period, subject to such year end
adjustments which have not yet been disclosed to the Banks in
writing and which are not expected to be material and except that
such unaudited statements do not contain all of the footnote
disclosures required by GAAP.
(b) Since November 30, 1993, there has been no material
adverse change in the condition, financial or otherwise, of the
Company and its Subsidiaries taken as a whole, from that shown on
the above-described balance sheet as of such date.
Section 5.4. Restrictions on Company and Subsidiaries. (a)
The Company is not a party to or bound by any note, contract,
indenture, agreement, instrument (including, without limitation,
any loan or note agreement or indenture relating to any
outstanding securities of any Affiliate to which the Company or
any Restricted Subsidiary is a party or by which the Company or
any Restricted Subsidiary may be bound), order of any court or
governmental agency, law or regulation which restricts or limits
the right or ability of the Company to incur the Indebtedness and
obligations contemplated herein.
(b) No Restricted Subsidiary is a party to or bound by any
contract, indenture, agreement, instrument, order of court or
governmental agency, law or regulation, under the terms of which
such Subsidiary s right to pay dividends or make other
distributions, on or in respect of its capital stock is
<PAGE>
restricted, except laws of general application to business
corporations, which restrict or prohibit payment of dividends or
distributions on or redemptions or purchases of capital stock
under certain circumstances.
Section 5.5. Pending Litigation. Except as set forth in
Exhibit E hereto, there are no proceedings pending or, to the
knowledge of the Company, threatened against or affecting the
Company or any Restricted Subsidiary in any court or before any
governmental authority or arbitration board or tribunal in which,
either individually or in the aggregate, there is a reasonable
possibility of an adverse decision which could result in any
material adverse change in the properties, business, profits or
condition (financial or otherwise) of the Company and its
Restricted Subsidiaries taken as a whole or could result in the
Company s obligation under this Agreement or the Notes or
Collateral Documents being declared invalid. Neither the Company
nor any Restricted Subsidiary is in default with respect to any
material order of any court or governmental authority or
arbitration board or tribunal.
Section 5.6. Title to Properties. The Company and each
Restricted Subsidiary has good and marketable title in fee simple
(or its equivalent under applicable law) to all the real property
and has good title to all the other Property it purports to own,
including that reflected in the most recent balance sheet
referred to in Section 7.6, except as sold or otherwise disposed
of in the ordinary course of business, subject only to Liens
permitted by Section 7.12 hereof and to survey exceptions,
encumbrances, easements, reservations, rights of others for
rights-of-way, utilities and other similar purposes or zoning or
other restrictions as to use of real properties and not arising
in connection with the borrowing of money or the obtaining of
advances or credit and which do not in any event impair the use
of the Property in the business of the Company or a Restricted
Subsidiary in any respect material to the Company and its
Restricted Subsidiaries taken as a whole.
Section 5.7. Patents, Trademarks and Franchises. The
Company and each Restricted Subsidiary owns or possesses all
patents, trademarks, trade names, service marks, copyrights,
licenses, franchises and rights necessary in any respect material
to the Company and is Restricted Subsidiaries taken as a whole
for the present and presently planned future conduct of their
respective business, without any known conflict with the rights
of others.
Section 5.8. Financing is Legal and Authorized. The
execution and delivery of the Collateral Documents, the Guaranty
Agreements, the Applications and this Agreement, Borrowings
hereunder, the issuance of the Notes in evidence thereof, the
requests for issuance of Letters of Credit hereunder, and
compliance by the Company and the Restricted Subsidiaries, as
appropriate, with all of the provisions hereof and of the Notes,
the Applications and Collateral Documents:
<PAGE>
(a) are within the corporate powers of the Company and
the Restricted Subsidiaries and have been duly authorized by
proper corporate action on the part of the Company and the
Restricted Subsidiaries; and
(b) will not violate any provisions of any law or any
order of any court or governmental authority or agency and
will not conflict with or result in any breach of any of the
terms, conditions or provisions of, or constitute a default
under, the Articles of Incorporation or By-laws of the
Company or any Restricted Subsidiary or any indenture or
other agreement or instrument (including, without
limitation, any loan or note agreement or indenture relating
to any outstanding securities of any Affiliate to which the
Company or any Restricted Subsidiary is a party or by which
the Company or any Restricted Subsidiary may be bound) to
which the Company or any Restricted Subsidiary is a party or
by which any of them may be bound or result in the
imposition of any Liens on any property of the Company or of
any Restricted Subsidiary not permitted hereby.
Section 5.9. No Defaults. No Default or Event of Default
has occurred and is continuing.
Section 5.10. Governmental Consent. No approval
authorization, consent or withholding of objection on the part of
any regulatory body, state, federal or local, is necessary in
connection with the execution and delivery of this Agreement, the
Applications or the Collateral Documents or the issuance of the
Notes or Letters of Credit or compliance by the Company or any
Restricted Subsidiary with any of the provisions of this
Agreement, the Applications, the Collateral Documents, the
Guaranty Agreements or the Notes.
Section 5.11. Taxes. All tax returns required to be filed
by the Company or any Subsidiary in any jurisdiction have, in
fact, been filed, and all taxes, assessments, fees and other
governmental charges upon the Company or any Subsidiary or upon
any of their respective properties, income or franchises, which
are shown to be due and payable in such filed returns have been
paid except as otherwise disclosed on Exhibit E. For all taxable
years ending on or before February 28, 1981, the Federal income
tax liability of the Company and its Subsidiaries has been
satisfied and either the period of limitations on assessment of
additional Federal income tax has expired or the Company and its
Subsidiaries have entered into an agreement with the Internal
Revenue Service closing conclusively the total tax liability for
the taxable year. The Company does not know of any proposed
additional tax assessment against it for which adequate provision
has not been made in its accounts in accordance with GAAP, and no
material controversy in respect of additional Federal or state
income taxes is pending or to the knowledge of the Company
threatened. The provisions for taxes on the books of the Company
and each Subsidiary are adequate in all material respects for all
open years, and for its current fiscal year.
<PAGE>
Section 5.12. Not an Investment Company. The Company is
not an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
Section 5.13. Use of Proceeds. None of the proceeds of the
Loans will be used, directly or indirectly, by the Company or any
Subsidiary for the purpose, whether immediate, incidental or
ultimate, of purchasing or carrying any "margin stock", within
the meaning of Regulation U of the Board of Governors of the
Federal Reserve System. The Company is not engaged principally,
or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any
such margin stock within the meaning of such Regulation U.
Section 5.14. ERISA. No "employee pension benefit plans",
as defined in ERISA ("Plans" and individually a "Plan"),
maintained by the Company or any Person which is under common
control with the Company within the meaning of Section 4001(b) of
ERISA, nor any trusts created thereunder, have incurred any
"accumulated funding deficiency" as defined in Section 302 of
ERISA nor does the present value of all benefits vested under all
Plans exceed the value of the assets of the Plans allocable to
such vested benefits, in either case in any respect material to
the Company and its Subsidiaries taken as a whole.
Section 5.15. Compliance with Law. (a) Except as set forth
in Exhibit E hereto, neither the Company nor any of its
Restricted Subsidiaries is (i) in default with respect to any
order, writ, injunction or decree of any court or (ii) in default
in any material respect under any law, ordinance, order,
regulation, license or demand (including ERISA, the Occupational
Safety and Health Act of 1970 and laws and regulations
establishing quality criteria and standards for air, water, land
and toxic waste) of any federal, state, municipal or other
governmental agency, default with respect to or under which might
have consequences which would materially and adversely affect the
business or properties of the Company and its Restricted
Subsidiaries on a consolidated basis.
(b) The Company and the Restricted Subsidiaries are in
compliance with all applicable state and federal environmental,
health and safety statutes and regulations, including, without
limitation, regulations promulgated under the Resource
Conservation and Recovery Act of 1976, 42 U.S.C. 6901 et seq.,
except where failure to be in compliance would not have a
material adverse effect on the Company and its Restricted
Subsidiaries taken as a whole and, to its knowledge, have not
acquired, incurred or assumed, directly or indirectly, any
material contingent liability in connection with the release of
any toxic or hazardous waste or substance into the environment.
Insofar as known to the responsible officers of the Company,
except as set forth in Exhibit D, neither the Company nor any
Restricted Subsidiary are the subject of any evaluation under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended by the Specified Amendments and
<PAGE>
Reauthorization Act of 1986, 42 U.S.C. 9601 et seq.
Section 5.16. Burdensome Contracts with Affiliates.
Neither the Company nor any Restricted Subsidiary is a party to
any contract, agreement or business arrangement material to the
Company and its Restricted Subsidiaries taken as a whole with any
Affiliate on terms and conditions more burdensome to the Company
or such Restricted Subsidiary than would be issued and customary
in similar contracts, agreements or business arrangements between
parties which are not affiliated with each other.
SECTION 6. CONDITIONS PRECEDENT.
The obligation of the Banks to make any Loan hereunder shall
also be subject to the following conditions precedent:
Section 6.1. Conditions to Initial Credit Extension.
Prior to the initial credit extension hereunder:
(a) each Bank shall have received an opinion of
counsel to the Company covering the matters set forth in
Exhibit F hereto;
(b) each Bank shall have received a Revolving Credit
Note in the amount of its Commitment and Harris shall have
received the Swing Line Note;
(c) the Agent shall have received a written
acknowledgement from each Restricted Subsidiary in form and
substance satisfactory to the Banks that the guaranty issued
by such Restricted Subsidiary under the Existing Credit
Agreement covers the Notes and the Company s other
obligations under this Agreement, the Applications and the
Collateral Documents;
(d) each Bank shall have received copies (executed or
certified as may be appropriate) of all legal documents or
proceedings taken in connection with the execution and
delivery of this Agreement, the Applications, the Collateral
Documents, the Guaranty Agreements and the Notes to the
extent the Banks or their counsel may reasonably request;
(e) the Agent shall have received such amendments and
supplements to the Collateral Documents as the Banks shall
request to confirm and assure that the Collateral secures
the Notes and the Company s other obligations under this
Agreement, the Applications and the Collateral Documents and
(ii) any financing statements requested by the Agent in
connection therewith;
(f) the Liens of the Collateral Documents shall have
been duly perfected in the manner required by law;
(g) the Agent shall have received evidence of the
maintenance of insurance by the Company and the Restricted
<PAGE>
Subsidiaries as required hereby and by the Collateral
Documents;
(h) the Agent shall have received for the account of
the Banks the closing fees required pursuant to Section 3.4
hereof;
(i) the Agent shall have received for its own account
such fees as are to be paid at the time of the initial
Borrowing pursuant to the Agent s fee letter described in
Section 3.3 hereof and thereafter the Company shall pay the
Agent such agency fees the Company and the Agent shall have
agreed upon pursuant to such Agent s fee letter;
(j) legal matters incident to the execution and
delivery of this Agreement, the Applications, the Collateral
Documents, the Guaranty Agreements and the Notes shall be
reasonably satisfactory to the Banks and their counsel.
(k) the Company shall have directed the Agent and the
Banks to make Loans and effect prepayment of Loans
outstanding as of the date hereof in such amounts as shall
be necessary so that after giving effect thereto the Loans
outstanding hereunder shall be held by the Banks pro rata in
accordance with their Commitments hereunder, any prepayment
of outstanding Eurodollar Loans to be accompanied by amounts
due the Banks under Section 2.5 hereof.
Section 6.2. Conditions to Each Extension of Credit. As
of the time of each extension of credit hereunder (including the
initial extension of credit):
(a) the Agent shall have received the notice required
under Section 1.7(a) hereof or, in the case of a Swing Line
Loan, Section 1.4(b) hereof;
(b) each of the representations and warranties set
forth in Section 5 hereof (except for the representation and
warranty appearing in Section 5.3(b) hereof) shall be and
remain true and correct as of said time, except that the
representations and warranties made in the last sentence of
Section 5.3(a) shall be deemed to refer to the most recent
quarterly or annual report, respectively, furnished to the
Banks pursuant to Section 7.6 hereof;
(c) no Default or Event of Default shall have occurred
and be continuing or will occur as a result of such
Borrowing or Loan;
(d) after giving effect to the proposed use of the
proceeds of any such Loan, the making of such Loan by any
Bank would not violate any applicable law, rule or
regulation, including, without limitation, Regulation U of
the Board of Governors of the Federal Reserve System;
<PAGE>
and the notice of the Company requesting that such Borrowing be
made (including any notice deemed given by the Company under
Section 1.7(c) hereof) shall be and constitute a warranty as to
the matters specified in subsections (b), (c) and (d) above. In
addition to the conditions set forth above, as of the time of
each Borrowing other than a Refunding Borrowing and each Swing
Line Loan, the representation and warranty set forth in Section
5.3(b) hereof shall be and remain true and correct as of said
time (except that such representation and warranty shall be
deemed to refer to the most recent financial statements furnished
to the Banks pursuant to Section 7.6 hereof), and the request for
such Borrowing shall be and constitute a representation and
warranty as to such matters.
SECTION 7. COMPANY COVENANTS.
The Company agrees that, so long as any Note is outstanding
hereunder or any credit is available to or in use by the Company
hereunder, except to the extent compliance in any case or cases
is waived in writing by the Required Banks:
Section 7.1. Corporate Existence, Etc. The Company will
preserve and keep in force and effect, and will cause each
Restricted Subsidiary (other than Cherry Systems Corporation) to
preserve and keep in force and effect, its corporate existence
and all material franchises, licenses and permits necessary to
the proper conduct of its business provided, however, that
neither the Company nor any Restricted Subsidiary shall be
required to preserve any such franchise, license or permit if the
Company shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company
and its Restricted Subsidiaries taken as a whole.
Section 7.2. Insurance. The Company will maintain, and
will cause each Restricted Subsidiary to maintain, insurance
coverage by financially sound and reputable insurers in such
forms and amounts, with such deductibles and against such risks,
as are customary for business entities of established reputation
engaged in the same or a similar business and owning and
operating similar properties and will upon request of any Bank
furnish a certificate setting forth its insurance coverages in
summary form.
Section 7.3. Taxes, Claims for Labor and Materials,
Compliance with Laws. (a) The Company will promptly pay and
discharge, and will cause each Restricted Subsidiary promptly to
pay and discharge, all lawful taxes, assessments and governmental
charges or levies imposed upon it or upon or in respect of all or
any part of its property or business and all claims for work,
labor or materials which, if unpaid, might become a Lien or
charge upon any of its Property material to the Company and its
Restricted Subsidiaries taken as a whole unless permitted by
Section 7.12 hereof; provided the Company or such Restricted
Subsidiary shall not be required to pay any such tax, assessment,
charge, levy, account payable or claim if (i) the validity,
<PAGE>
applicability or amount thereof is being contested in good faith
by appropriate actions or proceedings which will prevent the
forfeiture or sale of any Property of the Company or such
Restricted Subsidiary or any material interference with the use
nthereof by the Company or such Restricted Subsidiary, and (ii)
the Company or such Restricted Subsidiary shall set aside on its
books reserves deemed by the Company in its reasonable business
judgment to be adequate with respect thereto or such greater
amount as may be required by GAAP.
(b) The Company will comply, and will cause each Restricted
Subsidiary to comply, with all laws, ordinances or governmental
rules and regulations to which it is subject, including without
limitation, the Occupational Safety and Health Act of 1970, as
amended, ERISA and all laws, ordinances, governmental rules and
regulations relating to environmental protection in all
applicable jurisdictions, the violation of which would materially
and adversely affect the properties, business, profits or
condition of the Company and its Restricted Subsidiaries taken as
a whole or would result in any material Lien upon any Property of
the Company or any Restricted Subsidiary which is not permitted
under Section 7.12 hereof and which is material to the Company
and its Restricted Subsidiaries taken as a whole.
Section 7.4. Maintenance of Properties and Business. The
Company will maintain, preserve and keep, and will cause each
Restricted Subsidiary to maintain, preserve and keep, its
material Properties which are necessary in any respect material
to the Company and its Restricted Subsidiaries taken as a whole
for the conduct of its business (whether owned in fee or a
leasehold interest) in good repair and working order (ordinary
wear and tear excepted) and from time to time will make all
necessary repairs, replacements, renewals and additions so that
at all times the efficiency thereof shall be maintained.
Section 7.5. Nature of Business. Neither the Company nor
any Restricted Subsidiary will engage in any business or activity
if, as a result, the general nature of the business, taken on a
consolidated basis, which would then be engaged in by the Company
and its Restricted Subsidiaries would be substantially changed
from the general nature of the business engaged in by the Company
and its Restricted Subsidiaries on the date of this Agreement.
Section 7.6. Reports and Rights of Inspection. The
Company will keep, and will cause each Subsidiary to keep, proper
books of record and account in which full and correct entries
will be made of all dealings or transactions of or in relation to
the business and affairs of the Company or such Subsidiary in
accordance with GAAP consistently applied (except as to any
Subsidiary not organized under the laws of the United States or
any state thereof, in which case such books of records and
accounts need only be maintained in accordance with GAAP to the
extent applicable to such Subsidiary), and will furnish to each
Bank (in duplicate if so specified below or otherwise requested):
<PAGE>
(a) Quarterly Statements. As soon as available and in any
event within 45 days after the end of each quarterly fiscal
period of each fiscal year, copies of:
(1) consolidated and consolidating balance sheets of
the Company and its Restricted Subsidiaries and consolidated
and consolidating balance sheets of the Company and its
Subsidiaries as of the close of such quarterly period, and
(2) consolidated and consolidating statements of
income and changes in financial position (or cash flow) of
the Company and its Restricted Subsidiaries and consolidated
and consolidating statements of income and changes in
financial position (or cash flows) of the Company and its
Subsidiaries for such quarterly period and for the portion
of the fiscal year then ended,
in each case setting forth in comparative form the figures for
the corresponding period of the preceding fiscal year, all in
reasonable detail and certified as presenting fairly the
financial condition of the Company and its Restricted
Subsidiaries and of the Company and its Subsidiaries as of the
end of such period and the results of their operations for such
period, subject to changes resulting from year-end adjustments
(which the certificate shall indicate are not expected to be
material or, if expected to be material, the nature and scope
thereof shall be specified) and to footnote disclosures, by the
chief financial officer or treasurer of the Company;
(b) Annual Statements. As soon as available and in any
event within 90 days after the close of each fiscal year of the
Company, copies of:
(1) consolidated balance sheet of the Company and its
Subsidiaries as of the close of such fiscal year,
(2) consolidated statements of income, retained
earnings and changes in financial position (or cash flow) of
the Company and its Subsidiaries for such fiscal year,
(3) consolidating balance sheet of the Company and its
Subsidiaries and a consolidating balance sheet of the
Company and its Restricted Subsidiaries as of the close of
such fiscal year; and
(4) consolidating statements of income, retained
earnings and changes in financial position (or cash flow) of
the Company and its Subsidiaries and consolidating
statements of income, retained earnings and changes in
financial position (or cash flow) of the Company and its
Restricted Subsidiaries for such fiscal year,
and, with respect to clauses (1) and (2) above, setting forth in
comparative form the consolidated figures for the preceding
fiscal year, all in reasonable detail and accompanied by an
<PAGE>
opinion thereon of Arthur Andersen & Co. or another firm of
independent public accountants of recognized national standing,
selected by the Company (the "Auditors") and reasonably
acceptable to the Banks, to the effect that the consolidated
financial statements have been prepared in accordance with GAAP
consistently applied (except for changes in application in which
such accountants concur) and present fairly the consolidated
financial condition of the Company and its Subsidiaries as of the
end of such fiscal year and the results of their operations for
the fiscal year then ended and that the examination of such
accountants in connection with such financial statements has been
made in accordance with generally accepted auditing standards
and, accordingly, included such tests of the accounting records
and such other auditing procedures as were considered necessary
in the circumstances and, with respect to clauses (3) and (4),
all in reasonable detail and accompanied by a review letter of
the Auditors;
(c) SEC and Other Reports. Promptly upon their
becoming available, one copy of each financial statement,
report, notice or proxy statement sent by the Company to its
stockholders generally, and of each regular or periodic
report, and any registration statement or prospectus filed
by the Company or any Subsidiary with any securities
exchange or the Securities and Exchange Commission or any
successor agency, and of any order in any proceedings to
which the Company or any of its Subsidiaries is a party,
issued by any governmental agency, Federal or state, having
jurisdiction over the Company or any of its Subsidiaries
which order is material to the Company and its Restricted
Subsidiaries taken as a whole;
(d) Requested Information. With reasonable
promptness, such other data and information as any Bank may
reasonably request;
(e) Officers Certificates. Within the periods
provided in paragraph (a) above, a certificate of an
authorized financial officer of the Company stating that he
has reviewed the provisions of this Agreement and setting
forth: (i) the information and computations (in sufficient
detail) required in order to establish whether the Company
was in compliance with the requirements of Sections 7.7
through 7.10 hereof (both inclusive) at the end of the
period covered by the financial statements then being
furnished, and (ii) to the best of his knowledge, whether
there exists on the date of the certificate or existed at
any time during the period covered by such financial
statement any Default or Event of Default and, if any such
condition or event exists on the date of the certificate or
existed during such period, specifying the nature and period
of existence thereof and the action the Company is taking,
has taken or proposes to take with respect thereto and being
accompanied by a discussion of operations and financial
results for the quarter most recently completed, including
<PAGE>
comments on revenues, volumes of shipments, product prices,
production volumes, margins, and net income, for the
previous quarter and the year earlier quarter, as
appropriate;
(f) Accountants Certificates. Within the period
provided in paragraph (b) above, a certificate of the
Auditors stating that they have reviewed this Agreement and,
stating further, whether in making their audit, such
accountants have become aware of any Default or Event of
Default under any of the provisions of this Agreement
insofar as any such provisions pertain to or involve
accounting matters or determinations, and if any such
condition or event then exists or existed and came to their
attention in making their audit, specifying the nature and
period of existence thereof;
(g) Projections. As soon as available and in any
event within 75 days after the close of each calendar year
of the Company, projections prepared by the Company
containing reasonable forecasts as to future operations and
financial performance of the Company and its Subsidiaries
for the next three fiscal years; and
(h) Notices of Default. Promptly after knowledge
thereof shall have come to the attention of any responsible
officer of the Company, notice of any Default or Event of
Default hereunder.
Without limiting the foregoing, the Company will permit each Bank
(or such Persons as any Bank may designate), to visit and
inspect, under the Company s guidance, any of the properties of
the Company or any Subsidiary, to examine all their books of
account, records, reports and other papers, to make copies and
extracts therefrom (except with respect to confidential
proprietary information), and to discuss their respective
affairs, finances and accounts with their respective officers and
employees, all at such reasonable times and as often as may be
reasonably requested.
Section 7.7. Consolidated Tangible Net Worth for the
Company and its Subsidiaries. The Company shall, at all times
specified below, have Consolidated Tangible Net Worth of not less
than that indicated below:
<PAGE>
CONSOLIDATED TANGIBLE
NET WORTH SHALL NOT BE
LESS THAN THE SUM OF
100% OF NET PROCEEDS
RECEIVED BY THE COMPANY
FROM AGGREGATE EQUITY
PLACEMENTS FROM AND
AFTER 4/22/93 PLUS THE
FOLLOWING AMOUNTS:
FROM AND INCLUDING: TO AND INCLUDING:
2/28/94 2/27/95 $82,000,000
2/28/95 2/27/96 $92,000,000
2/28/96 2/27/97 $104,000,000
2/28/97 and at all $120,000,000
times thereafter
Section 7.8. Leverage Ratio for the Company and its
Restricted Subsidiaries and for the Company and its Subsidiaries.
At all times during the periods set forth below, the Leverage
Ratio computed on a consolidated basis for the Company and its
Restricted Subsidiaries and for the Company and its Subsidiaries
shall not be greater than:
LEVERAGE RATIO FOR:
COMPANY AND
RESTRICTED COMPANY AND
SUBSIDIARIES SUBSIDIARIES
FOR THE SHALL NOT BE
PERIOD: GREATER THAN
2/28/94 and through 2/27/95 45% 46%
At all times thereafter 45% 45%
Section 7.9. Cash Flow To Indebtedness Ratio for the
Company and its Restricted Subsidiaries. As of the last day of
each fiscal quarter (commencing with February 28, 1994) the
Company shall have a Cash Flow To Indebtedness Ratio for the
Company and its Restricted Subsidiaries of not less than 50%.
Section 7.10. Cash Flow Ratio for the Company and its
Restricted Subsidiaries. As of the last day of each fiscal
quarter ending during each of the periods specified below, the
Company shall have a Cash Flow Ratio for the Company and its
Restricted Subsidiaries for the four quarter period (taken as a
single accounting period) then ending of not less than:
FROM AND INCLUDING: TO AND INCLUDING: MINIMUM CASH
FLOW RATIO:
02/28/94 08/31/95 70%
09/01/95 11/30/95 80%
12/01/95 At all times thereafter 90%
Section 7.11. Incurrence of Indebtedness. The Company will
not, and will not permit any Subsidiary to, issue, assume,
<PAGE>
guarantee, incur or otherwise be or become liable in respect of
any Indebtedness other than:
(a) the Loans hereunder;
(b) Indebtedness of any Restricted Subsidiary to the
Company or to another Restricted Subsidiary or of the
Company to a Restricted Subsidiary and for the period
through December 31, 1996, indebtedness of Cherry
Semiconductor Corporation in respect of those certain Rhode
Island Industrial Facilities Corporation $1,000,000 Taxable
Industrial Development Revenue Bonds (Cherry Semiconductor
Corporation Project-1994 Series) (the "RIIFC Bonds") so long
as such RIIFC Bonds are held and owned by the Company;
(c) up to Deutschmark 45,000,000 of Indebtedness of
Cherry Mikroschalter GmbH at any one time outstanding;
(d) Indebtedness not otherwise permitted by this
Section 7.11 which is outstanding on the date hereof and
identified on Exhibit D;
(e) Capitalized Rentals;
(f) purchase money indebtedness secured by Liens
permitted by Section 7.12(h) hereof in an aggregate amount
not to exceed $1,000,000 at any one time outstanding;
(g) Indebtedness of the Company with respect to
Guaranties of Indebtedness of its Subsidiaries so long as
the principal amount of such Indebtedness does not exceed
$1,000,000 at any one time outstanding;
(h) Unsecured Indebtedness of the Company for borrowed
money not otherwise permitted by this Section 7.11
aggregating at any one time not more than the lesser of (a)
$35,000,000 or (b) $45,000,000 less outstanding Loans
hereunder;
(i) Indebtedness of Subsidiaries (other than
Restricted Subsidiaries and Cherry Mikroschalter GmbH) not
otherwise permitted hereunder aggregating not more than
$2,000,000 at any one time outstanding; and
(j) Indebtedness of the Company as a result of a Debt
Placement.
Section 7.12. Limitation on Liens. The Company will not,
and will not permit any Restricted Subsidiary to, create or
incur, or suffer to be incurred or to exist, any Lien of any kind
on its or their Property, whether now owned or hereafter
acquired, or upon any income or profits therefrom, or transfer
any Property for the purpose of subjecting the same to the
payment of obligations in priority to the payment of its or their
general creditors, or acquire or agree to acquire, or permit any
<PAGE>
Restricted Subsidiary to acquire or agree to acquire, any
Property or assets upon conditional sales agreements or other
title retention devices, except:
(a) Liens for property taxes and assessments or
governmental charges or levies and Liens securing claims or
demands of mechanics and materialmen, provided that payment
thereof is not at the time required by Section 7.3 hereof;
(b) Liens of or resulting from any judgment or award,
the time for the appeal or petition for rehearing of which
shall not have expired, or in respect of which the Company
or a Restricted Subsidiary shall at any time in good faith
be prosecuting an appeal or proceeding for review and in
respect of which a stay of execution pending such appeal or
proceeding for review shall have been secured;
(c) Liens and priority claims incidental to the
conduct of business or the ownership of Properties
(including warehousemen s and attorneys Liens and statutory
landlords Liens) and deposits, pledges or Liens to secure
the performance of bids, tenders or trade contracts, or to
secure statutory obligations, or other Liens of like general
nature incurred in the ordinary course of business and not
in connection with the borrowing of money or the obtaining
of advances or credit, provided in each case the obligation
secured is not overdue or, if overdue, is being contested in
good faith by appropriate actions or proceedings which
prevent enforcement of the matters under the contest;
(d) Liens securing Indebtedness of a Restricted
Subsidiary to the Company or to a Restricted Subsidiary;
(e) Liens of the Collateral Documents;
(f) Liens securing Indebtedness permitted under
Section 7.11(e) and liens currently securing Indebtedness as
disclosed on Exhibit D hereto; and
(g) Purchase money Liens by the vendor in respect of
equipment now owned or hereafter acquired by the Company or
any Restricted Subsidiary (not extending to any other
Property), or Liens on equipment so acquired (not extending
to any other Property) existing at the time of acquisition
thereof, or renewals, extensions and refundings of any such
Liens (not extending to any other Property), provided that
(i) the principal amount of Indebtedness secured by any such
Lien shall not exceed 80% of the cost or fair market value,
whichever is less, of the Property covered by such Lien at
the time of the creation thereof or the acquisition of such
Property and (ii) the sum of the aggregate principal amount
at any one time remaining unpaid on the Indebtedness so
secured, when taken together with the aggregate outstanding
liability of the Company and its Restricted Subsidiaries in
respect of Capitalized Rentals permitted by Section 7.11(e)
<PAGE>
hereof, does not exceed $1,000,000.
Section 7.13. Investments, Loans and Advances. The
Company will not and will not permit any Restricted
Subsidiary to, directly or indirectly, make, retain or have
outstanding any investments (whether through purchase of
stock or obligations or otherwise) in, or loans or advances
to, any other Person or acquire all or any substantial part
of the assets or business of any Person or subordinate any
claim or demand it may have to the claim or demand of any
other person, firm or corporation; provided, however, that
the foregoing provisions shall not apply to nor operate to
prevent:
(a) investments by the Company in direct obligations
of the United States of America or of any agency or
instrumentality thereof whose obligations constitute full
faith and credit obligations of the United States of America
provided that any such obligations shall mature within one
year from the date the same are acquired by the Company;
(b) investments by the Company in commercial paper
rated P-l by Moody s Investors Services, Inc. and A-l by
Standard & Poors Corporation maturing within one year of the
date of issuance thereof;
(c) investments by the Company in certificates of
deposit issued by any United States commercial bank having
capital and surplus of not less than $100,000,000;
(d) loans and advances to and investments in
Subsidiaries (other than Restricted Subsidiaries) if after
giving effect thereto the aggregate of the loans, advances
and investments so made subsequent to April 22, 1993 do not
exceed the aggregate of dividends actually received by the
Company from such Subsidiary to whom the loans, advances and
investments were so made during the same period by more than
$150,000;
(e) the present investments, loans and advances by the
Company in its Subsidiaries as disclosed on Exhibit C hereto
and the investment by the Company in the RIIFC Bonds through
December 31, 1996;
(f) additional investments by the Company in, and
loans and advances by the Company to Restricted
Subsidiaries, in addition to those permitted by clause (e)
above not exceeding $7,500,000 at any one time outstanding
provided that the Company s additional investments, loans
and advances to Cherry Systems Corporation shall not exceed
$1,000,000 at any one time outstanding;
(g) the present investment by the Company in Hirose
Cherry Precision Company, Limited;
<PAGE>
(h) Acquisitions of Restricted Subsidiaries by the
Company from and after April 22, 1993 so long as the
aggregate amount of consideration payable in connection with
such Acquisitions does not exceed $5,000,000; and
(i) investments, acquisitions, loans and advances not
otherwise permitted by this Section 7.13 aggregating not
more than $1,000,000 at any one time outstanding.
In determining the amount of investments, loans and advances
permitted under this Section 7.13, investments shall always be
taken at the original cost thereof, regardless of any subsequent
appreciation or depreciation therein and loans and advances shall
be taken at the principal amount thereof then remaining unpaid.
Section 7.14. Dividends and Other Restricted Payments. The
Company will not declare or pay any dividends on or make any
other distributions in respect of any class of its capital stock
(other than dividends payable solely in its capital stock) or
directly or indirectly purchase, redeem or otherwise acquire or
retire any of its capital stock, except out of the proceeds of,
or in exchange for, a substantially concurrent issue and sale of
capital stock of the Company (the foregoing nonexcepted
declarations, payments, purchases, redemptions, retirements and
acquisitions being hereinafter referred to as "Restricted
Payments"); provided however, that the Company may make or pay
Restricted Payments if at the time such Restricted Payment is
made and after giving effect thereto, no Default or Event of
Default occurs or is continuing hereunder.
Section 7.15. ERISA Compliance. (a) Relationship of Vested
Benefits to Pension Plan Assets. The Company will and will cause
each Subsidiary to at all times maintain the qualified status of
its Plans. The Company will not and will not permit any
Subsidiary to, at any time terminate any Plan unless on the date
of such termination the present value of all employee benefits
vested under such Plan does not exceed the present value of the
assets allocable to such vested benefits.
(b) Valuations. All assumptions and methods used to
determine the present value of vested employee benefits under
Plans at any time maintained by any one or more of the Company
and its Subsidiaries and the present value of assets of such
Plans shall be reasonable in the good faith judgment of the
Company and shall comply with all requirements of law in all
material respects.
(c) Prohibited Actions. Neither the Company nor any
Subsidiary nor any Plan at any time maintained by the Company or
any of its Subsidiaries will
(1) engage in any "prohibited transaction" (as such
term is defined in Section 406 or Section 2003(a) of ERISA)
which either by itself or because of any excise tax or other
penalty which may be imposed as a result thereof would
<PAGE>
materially and adversely affect the properties, business,
profits or condition of the Company and its Restricted
Subsidiaries taken as a whole;
(2) incur any "accumulated funding deficiency" (as
such term is defined in Section 302 of ERISA) whether or not
waived; or
(3) terminate any such Plan in a manner which could
result in the imposition of a Lien on the Property of the
Company or any Subsidiary pursuant to Section 4068 of ERISA.
Section 7.16. Mergers, Consolidations and Sales of Assets.
(a) The Company will not, and will not permit any Subsidiary to
(i) consolidate with or be a party to a merger with any other
Person, (ii) sell, lease or otherwise dispose of any substantial
part of the Properties of the Company and its Subsidiaries, (iii)
sell or discount any of its notes or accounts receivable (other
than any discount of receivables granted in the ordinary course
of business to enhance collection) or (iv) lease any Property
theretofore owned by the Company or any Subsidiary; provided,
however, that: (aa) any Restricted Subsidiary may merge or
consolidate with or into or sell, lease or otherwise dispose of
any of its Properties to the Company or any Restricted
Subsidiary, provided that in any such merger or consolidation
involving the Company, the Company shall be the surviving or
continuing corporation and that the survivors of such a merger or
consolidation or the lessee or purchaser of such assets shall
take such actions as the Agent may require to assure that its
Liens on the Collateral are unimpaired by the transaction in
question, (bb) the Company may lease its real property commonly
known as "Building 3" located in Waukegan, Illinois, the sale by
Cherry Systems Corporation of its real estate located in El Paso,
Texas and the Company may sublease its leasehold interest in the
El Paso, Texas facility, in each case in the ordinary course
(provided that at any one time any such lease shall not have a
term in excess of one year without the Agent s prior written
consent), and (cc) Cherry Semiconductor Corporation may convey
and lease back its Rhode Island facility pursuant to the terms of
the agreements executed in connection with the RIIFC Bonds;
(b) The Company will not sell, transfer or otherwise
dispose of any shares of stock in any Subsidiary or any
Indebtedness of any Restricted Subsidiary and will not permit any
Subsidiary to sell, transfer or otherwise dispose of (except to
the Company or a Restricted Subsidiary) any shares of stock or
any Indebtedness of any other Subsidiaries; and
(c) The Company will not permit any Restricted Subsidiary
to issue any additional shares of its capital stock of any class
unless, after giving effect thereto, such Restricted Subsidiary
will remain a Restricted Subsidiary.
For the purposes hereof, a sale or lease of 5% or more of
the consolidated assets of the Company and its Restricted
<PAGE>
Subsidiaries shall be deemed a sale or lease of a substantial
part of the Properties of the Company and its Subsidiaries.
Section 7.17. Transactions with Affiliates. The Company
will not, and will not permit any Restricted Subsidiary to, enter
into or be a party to any transaction or arrangement with any
Affiliate (including without limitation, the purchase from, sale
to or exchange of Property with, or the rendering of any service
by or for, any Affiliate), except pursuant to the reasonable
requirements of the Company s or such Restricted Subsidiary s
existing or proposed business and upon fair and reasonable terms
no less favorable to the Company or such Restricted Subsidiary
than would obtain in a comparable arm s-length transaction with a
Person other than an Affiliate.
Section 7.18. Terms of Collateral Documents Not Superceded.
Nothing contained herein shall be deemed or construed to permit
any act or omission which is prohibited by the terms of any
Collateral Document, the covenants and agreements contained
herein being in addition to and not in substitution for the
covenants and agreements contained in the Collateral Documents.
Section 7.19. Changes in Fiscal Year. The Company will not
change its fiscal year.
Section 7.20. Compliance with Collateral Documents and
Guaranty Agreements. The Company covenants and agrees, and shall
cause each Restricted Subsidiary to covenant and agree, that it
will comply with all terms and conditions of each of the Guaranty
Agreements and Collateral Documents applicable to it and that
each will, at any time and from time to time as reasonably
requested by the Agent, execute and deliver such further
instruments and perform such other acts as the Agent may deem
reasonably necessary to provide for or protect or perfect the
Lien of the Agent in the Collateral granted pursuant to the
Collateral Documents, in each case for the ratable benefit of the
Banks.
SECTION 8. EVENTS OF DEFAULT AND REMEDIES.
Section 8.l. Events of Default. Any one or more of the
following shall constitute an Event of Default hereunder:
(a) default in the payment when due of any part of the
principal of any Note or of any reimbursement obligation,
whether at the stated maturity thereof or at any other time
provided for in this Agreement (other than Section 3.6
hereof) or in the Applications, or default for 1 (one)
Business Day in the payment of any part of the principal of
the Note when due arising out of a mandatory prepayment
under Section 3.6 hereof;
(b) default in the payment of any part of the interest
on any Note when due, whether at the stated maturity thereof
or at any time provided for in this Agreement, or default in
<PAGE>
the payment when due of any fee, commission, charge or other
amount payable by the Company hereunder or under the
Collateral Documents in each case which is not remedied
within five (5) Business Days after receipt of notice
thereof by the Company from the Agent or any holder or
holders of a Note;
(c) default in the observance or performance of any
covenant set forth in Sections 7.7 through 7.10 hereof or
Sections 7.14 or 7.16 hereof or of any covenant hereof or of
any Collateral Document dealing with the use, disposition or
remittance of the proceeds of Collateral or the maintenance
of insurance thereon;
(d) default in the observance or performance of any
other provision hereof or of any of the Collateral Documents
which is not remedied within 30 days after notice thereof to
the Company by the Agent or by the holder or holders of a
Note;
(e) default shall occur in the payment when due
(subject to any applicable grace period) of any Indebtedness
aggregating greater than $1,000,000 which was incurred,
assumed or guaranteed by the Company (provided that a
default in the payment of the obligations identified in
paragraph 1 of Exhibit D hereto shall not constitute an
Event of Default unless and until a notice of default or
acceleration or of intent to accelerate has been issued in
respect of such bonds or the obligations of the Company or
any Subsidiary with respect thereto);
(f) any representation or warranty made herein or in
any of the Collateral Documents or pursuant hereto or
thereto or in connection with any transaction contemplated
hereby proves untrue in any material respect as of the date
of the issuance or making thereof;
(g) any judgment or judgments, writ or writs or
warrant or warrants of attachment, or any similar process or
processes in an aggregate amount in excess of $250,000 and
which is not fully covered by insurance shall be entered or
filed against the Company or any Restricted Subsidiary
against any of their property or assets and remains
undischarged, unvacated, unbonded or unstayed for a period
of 45 days;
(h) more than 49% of the Voting Stock of the Company
is at any time and for any reason owned by any Person or
group of Persons acting in concert other than Walter Cherry,
Peter Cherry and their wives and/or lineal descendants or
trusts for the benefit of their wives and/or lineal
descendants;
(i) any of the Collateral Documents (unless released
in accordance with the terms hereof) or the Guaranty
<PAGE>
Agreements shall, for any reason, not be or shall cease to
be in full force in effect or is declared to be null and
void or any Restricted Subsidiary shall repudiate or disavow
its obligations thereunder or any of the Collateral
Documents (unless released in accordance with the terms
hereof) shall not give or shall cease to give the Agent the
Lien, rights, powers and privileges purported to be created
thereby (including, without limitation, a first priority
perfected security interest in, and Lien on, all of the
Collateral subject thereto), in favor of the Agent, superior
to and prior to the rights of all third Persons and subject
to no other Liens (except to the extent expressly permitted
by Section 7.12 hereof), other than because such Collateral
Document is not then yet required to be executed and
delivered hereunder, or an event occurs which is specified
as an event of default in any of the Collateral Documents;
(j) bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other proceedings
for relief under any bankruptcy law or similar law for the
relief of debtors are instituted against the Company or any
Subsidiary and are not dismissed within 60 days after such
institution or a decree or order of a court having
jurisdiction in the premises for the appointment of a
trustee, custodian or receiver for the Company or any
Subsidiary or for the major part of any of their property is
entered and the trustee, custodian or receiver appointed
pursuant to such decree or order is not discharged within 60
days after such appointment; or
(k) the Company or any Subsidiary shall institute
bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other proceedings for relief
under any bankruptcy law or laws for the relief of debtors
or shall consent to the institution of such proceedings
against it by others or to the entry of any decree or order
adjudging it bankrupt or insolvent or approving as filed any
petition seeking reorganization under any bankruptcy or
similar law or shall apply for or shall consent to the
appointment of a receiver, custodian or trustee for any of
them or for the major part of any of their property or shall
make an assignment for the benefit of creditors or shall
take any corporate action authorizing any of the foregoing.
Section 8.2. Non-Bankruptcy Defaults. When any Event of
Default described in subsections 8.1(a) to 8.1(i), both
inclusive, has occurred and is continuing, the Agent shall, upon
request of the Required Banks, by notice to the Company, take any
or all of the following actions:
(a) terminate the obligation of the Banks to extend
any further credit hereunder on the date (which may be the
date thereof) stated in such notice;
(b) declare the principal of and the accrued interest
<PAGE>
on the Notes to be forthwith due and payable and thereupon
the Notes, including both principal and interest, and all
fees, charges and commissions payable hereunder, shall be
and become immediately due and payable without further
demand, presentment, protest or notice of any kind; and/or
(c) enforce any and all rights and remedies available
under the Collateral Documents.
Section 8.3. Bankruptcy Defaults. When any Event of
Default described in subsection 8.1(j) or 8.1(k) has occurred and
is continuing, then the then unpaid balance of the Notes,
including both principal and interest, and all fees, charges and
commissions payable hereunder, shall immediately become due and
payable without presentment, demand, protest or notice of any
kind, the obligation of the Banks to extend further credit
pursuant to any of the terms hereof shall immediately terminate
and the Agent may enforce any and all rights and remedies
available under the Collateral Documents.
Section 8.4. Collateral for Undrawn Letters of Credit.
When any Event of Default, other than an Event of Default
described in subsection (j) or (k) of Section 8.1, has occurred
and is continuing, the Company shall, upon demand of the Agent
(which demand shall be made upon the request of the Required
Banks), and when any Event of Default described in subsection (j)
or (k) of Section 8.1 has occurred the Company shall, without
notice or demand from the Agent, immediately pay to the Agent the
full amount of each Letter of Credit then outstanding, the
Company agreeing to immediately make such payment and
acknowledging and agreeing that the Bank would not have an
adequate remedy at law for failure of the Company to honor any
such demand and that the Agent and the Banks shall have the right
to require the Company to specifically perform such undertaking
whether or nor any draws have been made under any such Letters of
Credit.
SECTION 9. DEFINITIONS; INTERPRETATION OF AGREEMENT.
Section 9.1. Definitions. The following terms when used
herein shall have the following meanings, such terms to be
equally applicable to both the singular and the plural of the
terms defined:
"Acquisition" shall mean any transaction, or any series of
related transactions, consummated after the date of this
Agreement, by which the Company or any of the Restricted
Subsidiaries (i) acquires any going business or all or
substantially all of the assets of any Person or division
thereof, whether through purchase of assets, merger or otherwise,
or (ii) directly or indirectly acquires (in one transaction or as
the most recent transaction in a series of transactions) at least
a majority (in number of votes) of the Voting Stock of a
corporation or other firm.
<PAGE>
"Adjusted LIBOR" is defined in Section 1.3(b) hereof.
"Agent" shall mean Harris Trust and Savings Bank and its
successors as agent hereunder.
"Alternative Currency" is defined in Section 1.2 hereof.
"Application" is defined in Section 1.3(c) hereof.
"Applicable Commitment Fee" is defined in Section 1.8
hereof.
"Applicable Eurocurrency Margin" is defined in Section 1.8
hereof.
"Applicable Letter of Credit Fee" is defined in Section 1.8
hereof.
"Assignment Agreements" is defined in Section 11.13 hereof.
"Auditors" is defined in Section 7.6(d) hereof.
"Authorized Representative" shall mean any one of the Chief
Executive Officer, Chief Financial Officer or Treasurer or such
other persons as may from time to time be designated as such in a
writing from the Company to the Agent.
"Banks" shall mean Harris Trust and Savings Bank,
Continental Bank N.A. and all other lenders becoming parties
hereto pursuant to Section 11.13 hereof.
"Borrowing" shall mean the total of Revolving Loans of a
single type made by all the Banks on a single date and, if such
Loans are Eurocurrency Loans, for a single Interest Period and
denominated in the same currency.
"Business Day" means any day other than a Saturday or Sunday
on which banks are not authorized or required to close in
Chicago, Illinois and, if the applicable Business Day relates to
the borrowing or payment of a Eurocurrency Loan, on which banks
are dealing in United States Dollar deposits or the relevant
Alternative Currency in the interbank market in London, England
and Nassau, Bahamas and, if the applicable Business Day relates
to the borrowing or payment of a Eurocurrency Loan denominated in
an Alternative Currency, on which banks and foreign exchange
markets are open for business in the city where disbursements of
or payments on such Loans are to be made.
"Capital Expenditures" shall mean capital expenditures for
the Company and its Restricted Subsidiaries as defined and
classified in accordance with GAAP.
"Capitalized Lease" shall mean any lease the obligation for
Rentals with respect to which is required to be capitalized on a
balance sheet of the lessee in accordance with GAAP.
<PAGE>
"Capitalized Rentals" shall mean as of the date of any
determination the amount at which the aggregate Rentals due and
to become due under all Capitalized Leases under which the
Company or any Restricted Subsidiary is a lessee would be
reflected as a liability on a consolidated balance sheet of the
Company and its Restricted Subsidiaries prepared in accordance
with GAAP.
"Cash Flow Ratio" shall mean for any period for which the
same is to be determined, the ratio of Earnings Before Interest,
Taxes, Depreciation and Amortization to the sum of Interest
Expense, Capital Expenditures and Restricted Payments for the
Company and its Restricted Subsidiaries.
"Cash Flow To Indebtedness Ratio" shall mean the ratio of
Earnings Before Interest, Taxes, Depreciation and Amortization
for the four quarter period (taken as a single accounting period)
ending as of any date of determination to Indebtedness for the
Company and its Restricted Subsidiaries as of any date of
determination.
"Collateral" shall have the meaning set forth in Section 4
hereof.
"Collateral Documents" shall mean all security agreements,
financing statements and other documents as shall from time to
time secure the Notes or otherwise establish priorities with
respect to the Collateral.
"Commitments" shall mean, as defined in Section 1.1 hereof,
the commitments of the Banks to extend credit hereunder in the
amount set forth opposite their signatures hereto, as such
amounts may be reduced pursuant to Section 2.4 hereof.
"Consolidated Equity" of any Person shall mean as of the
date of any determination thereof, Consolidated Tangible Net
Worth of such Person plus gains or losses, if any, of such Person
resulting from cumulative foreign exchange translations.
"Consolidated Net Income" for any period shall mean the
gross revenues from any source of the Company and its Restricted
Subsidiaries for such period less all expenses and other proper
charges (including taxes on income), determined on a consolidated
basis in accordance with GAAP consistently applied and after
eliminating earnings or losses attributable to outstanding
Minority Interests, but excluding in any event:
(a) any gains or losses on the sale or other
disposition of investments or fixed or capital assets, and
any taxes on such excluded gains and any tax deductions or
credits on account of any such excluded losses;
(b) net earnings of any business entity (other than a
Restricted Subsidiary) in which the Company or any
Restricted Subsidiary has an ownership interest unless such
<PAGE>
net earnings shall have actually been received by the
Company or such Restricted Subsidiary in the form of cash
distributions or distributions in the form of property of
readily determinable objective value;
(c) any portion of the undistributed net earnings of
any Restricted Subsidiary which for any reason is
unavailable by reason of contract or law for payment of
dividends to the Company or any other Restricted Subsidiary
as a shareholder of such Restricted Subsidiary;
(d) earnings resulting from any reappraisal,
revaluation or write-up of assets;
(e) any deferred or other credit representing any
excess of the equity in any Subsidiary at the date of
acquisition thereof over the amount invested in such
Subsidiary; and
(f) any gain arising from the acquisition of any
equity securities of the Company or any Restricted
Subsidiary.
"Consolidated Tangible Net Worth" of any Person shall mean,
as of the date of any determination thereof, the sum of the
capital stock (including capital in excess of par and any other
capital surplus) accounts (net of treasury shares) plus (or minus
in the case of a deficit) the retained earnings determined on a
consolidated basis for such Person and its Restricted
Subsidiaries or Subsidiaries (as applicable) in accordance with
GAAP, including the making of appropriate deductions for Minority
Interests, if any, in Restricted Subsidiaries or Subsidiaries (as
applicable) minus Intangible Assets and computed before giving
effect to cumulative foreign exchange translation gains or
losses.
"Debt Placement" shall mean the issuance and sale by the
Company for consideration of debt securities (including debt
securities convertible into equity securities) issued by the
Company provided (i) no amount paid or prepaid on any such
security may be reborrowed and (ii) such securities have
maturities of no less than five years.
"Default" shall mean any event or condition the occurrence
of which would, with the lapse of time or the giving of notice,
or both, constitute an Event of Default.
"Domestic Rate" shall mean for any day the greater of:
(i) the rate of interest announced by Harris Trust and
Savings Bank from time to time as its prime commercial rate
(it being understood that such rate may not be such Bank s
best or lowest rate), with any change in the Domestic Rate
resulting from a change in said prime commercial rate to be
effective as of the date of the relevant change in said
<PAGE>
prime commercial rate; and
(ii) the sum of (x) the rate for that day set forth
opposite the caption "Federal Fund (Effective)" in the daily
statistical release designated as "Composite 3:30 P.M.
Quotations for U.S. Government Securities", or any successor
publication, published by the Federal Reserve Bank of New
York or, if such publication shall be suspended or
terminated, the rates quoted to the Agent as the prevailing
rates per annum (rounded upward, if necessary, to the next
higher 1/100 of 1%) bid at approximately 11:00 a.m. (New
York time) (or as soon thereafter as is practicable) on such
day by two or more New York or Chicago Federal funds dealers
of recognized standing selected by the Agent for the
purchase at face value of Federal funds in the secondary
market in an amount comparable to the principal amount owed
to the Agent for which such rate is being determined, plus
(y) 1/2 of 1%.
"Domestic Rate Loan" shall mean a Loan, whether made under
the Revolving Credit or the Swing Line, bearing interest as
specified in Section 1.2(a) hereof.
"Earnings Before Interest and Taxes" shall mean, with
reference to any period, Consolidated Net Income for such period
plus all amounts deducted in computing the same for Interest
Expense and federal, state and local income taxes.
"Earnings Before Interest, Taxes, Depreciation and
Amortization" shall mean, with reference to any period, Earnings
Before Interest and Taxes for such period plus all amounts
deducted in computing the same for depreciation of fixed assets
and amortization of intangibles.
"Equity Placement" means the issuance or sale for
consideration by the Company of shares of its capital stock.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974 as amended.
"Eurocurrency Loan" shall mean a Loan bearing interest as
specified in Section 1.5(b) hereof.
"Eurocurrency Rate Margin" shall have the meaning specified
in Section 1.5(b) hereof.
"Eurocurrency Reserve Percentage" shall have the meaning
specified in Section 1.5(b) hereof.
"Event of Default" shall mean any of the events specified in
Section 8.1 hereof.
"Exchange Rate" shall mean, when converting an Alternative
Currency into U.S. dollars, the rate quoted by the Agent at the
opening of business on the date any determination thereof is to
<PAGE>
be made, for the spot rate at which such Alternative Currency is
offered for sale by the Agent against delivery in U.S. Dollars.
"Fixed Rate Loan" means the Eurocurrency Loans.
"GAAP" shall mean generally accepted accounting principles
as in effect from time to time and applied in a manner consistent
with the audit report referred to in Section 5.3 hereof.
"Guaranties" by any Person shall mean all obligations (other
than endorsements in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any Indebtedness, dividend
or other obligation, of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including, without
limitation, all obligations incurred through an agreement,
contingent or otherwise, by such Person: (i) to purchase on
default such Indebtedness or obligation or any Property
constituting security therefor, (ii) to advance or supply funds
(x) for the purchase or payment of such Indebtedness or
obligation, (y) to maintain working capital or other balance
sheet condition or otherwise to advance or make available funds
for the purchase or payment of such Indebtedness or obligation,
or (iii) to lease property or to purchase securities or other
property or services primarily for the purpose of assuring the
owner of such Indebtedness or obligation of the ability of the
primary obligor to make payment of the Indebtedness or
obligation, or (iv) to otherwise assure the owner of the
Indebtedness or obligation of the primary obligor against loss in
respect thereof resulting from the primary obligor s failure to
pay or perform. For the purposes of all computations made under
this Agreement, a Guaranty in respect of any Indebtedness shall
be deemed to be Indebtedness equal to the principal amount of the
Indebtedness which has been guaranteed.
"Guaranty Agreement" is defined in Section 4.2 hereof.
"Hedging Liabilities" shall mean the liability of the
Company with respect to one or more interest rate exchange, cap,
collar, floor or other interest rate hedging agreements or
forward foreign exchange contracts or spot foreign exchange
transactions with any Bank for the purpose of hedging or
otherwise protecting the Company against changes in interest
rates on the Notes or changes in the exchange rate of certain
foreign currencies to U.S. Dollars.
"Indebtedness" of any Person shall mean and include all (i)
obligations of such Person for borrowed money or which have been
incurred in connection with the acquisition of Property or assets
(other than trade accounts payable arising in the ordinary course
of business), (ii) obligations secured by any Lien upon Property
owned by such Person, even though such Person has not assumed or
become liable for the payment of such obligations, (iii)
noncontingent obligations created or arising under any
conditional sale or other title retention agreement with respect
<PAGE>
to Property acquired by such Person, notwithstanding the fact
that the rights and remedies of the seller, lender or lessor
under such agreement in the event of default are limited to
repossession or sale of Property, (iv) obligations (other than
obligations under any lease which is not a Capitalized Lease and
obligations in an amount equal to the demand component of any
contract providing for usual and customary utility services,
including gas, water, electricity and wastewater treatment
services) to purchase any Property or to obtain the services of
another Person if the contract requires that payment for such
Property or services be made regardless of whether such Property
is delivered or such services are performed, except that no
obligation shall constitute Indebtedness solely because the
contract provides for liquidated damages or reimbursement of
expenses following cancellation, (v) all Guaranties by such
Person, (vi) Capitalized Rentals and (vii) obligations in respect
of letters of credit but only to the extent that the letter of
credit does not support an obligation of such Person already
included in Indebtedness, provided that the term "Indebtedness"
shall not include Hedging Liabilities.
"Intangible Assets" shall mean all assets of any Person
which are not Tangible Assets.
"Interest Coverage Ratio" shall mean as of any date the same
is to be determined the ratio of (a) Earnings Before Interest and
Taxes of the Company and its Restricted Subsidiaries for the four
quarter period (taken as a single accounting period) ended the
date of determination to (b) Interest Expense for such period.
"Interest Expense" shall mean with reference to any period
all interest charges (including amortization of debt discount and
expense) accrued for such period on a consolidated basis for the
Company and its Restricted Subsidiaries in accordance with GAAP,
whether or not paid and in any event including imputed interest
on Capitalized Leases.
"Interest Period" shall have the meaning specified in
Section 2.1 hereof.
"Lending Office" shall have the meaning specified in Section
3.12 hereof.
"Letter of Credit" is defined in Section 1.3(a) hereof.
"Letter of Credit Utilization" means, as at any date of
determination, the sum of (i) the maximum aggregate amount which
is or at any time thereafter may become available for drawings
under all Letters of Credit then outstanding plus (ii) the
aggregate amount of all drawings under Letters of Credit honored
by the Agent and not theretofore reimbursed by the Company
(whether out of the proceeds of a Borrowing of Revolving Credit
Loans or otherwise).
"Leverage Ratio" shall mean as of any date the same is to be
<PAGE>
determined the ratio for such Person (computed as a percentage)
of Indebtedness to the sum of Indebtedness and Consolidated
Equity.
"LIBOR" shall have the meaning specified in Section 1.3(b)
hereof.
"Lien" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner
of the Property, whether such interest is based on the common
law, statute or contract, including, without limitation, the
security interest or lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes and including any Capitalized
Lease. For the purpose of this Agreement, the Company or a
Restricted Subsidiary shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional
sale agreement or other arrangement pursuant to which title to
the Property has been retained by or vested in another Person for
security purposes.
"Loans" means and includes the Revolving Credit Loans and
the Swing Line Loans unless the context in which such term is
used shall otherwise require.
"Minority Interests" shall mean any shares of stock of any
class of a Restricted Subsidiary (other than directors
qualifying shares as required by law) that are not owned by the
Company and/or one or more of its wholly-owned Subsidiaries.
Minority Interests shall be valued by valuing Minority Interests
constituting preferred stock at the voluntary or involuntary
liquidation value of such preferred stock, whichever is greater,
and by valuing Minority Interests constituting common stock at
the book value of capital, paid-in-capital and retained earnings
applicable thereto adjusted, if necessary, to reflect any changes
from the book value of such common stock required by the
foregoing method of valuing Minority Interests in preferred
stock.
"Note" means and includes the Revolving Credit Notes and the
Swing Line Note unless the context in which such term is used
shall otherwise require.
"Original Dollar Amount" means in relation to any Loan
denominated in an Alternative Currency, the U.S. Dollar
Equivalent of such Loan on the day it is made.
"Person" shall mean an individual, partnership, corporation,
trust or unincorporated organization, and a government or agency
or political subdivision thereof.
"Plan" shall have the meaning set forth in Section 5.14
hereof.
"Property" shall mean any interest of any kind in property
<PAGE>
or assets, whether real, personal or mixed, and whether tangible
or intangible.
"Refunding Borrowing" is defined in Section 1.7(d) hereof.
"Rentals" shall mean and include all fixed rents (including
as such all payments which the lessee is obligated to make to the
lessor on termination of the lease or surrender of the Property)
payable by the Company or a Restricted Subsidiary, as lessee or
sublessee, under a lease of real or personal property, but shall
be exclusive of any amounts required to be paid by the Company or
a Restricted Subsidiary (whether or not designated as rents or
additional rents) on account of maintenance, repairs, insurance,
taxes and similar charges and inputed interest on Capitalized
Leases.
"Required Banks" shall mean Banks holding 75% or more of the
outstanding principal amount of the Loans (which, in the case of
Eurocurrency Loans denominated in an Alternative Currency, means
the Original Dollar Amount thereof) or, if no Loans are
outstanding, Banks granting 75% or more of the Commitments,
provided that if Harris Trust and Savings Bank and Continental
Bank N.A. are the only Banks hereunder at such time, the term
Required Banks shall mean Banks holding 76% or more of the
outstanding principal amount of the Loans (which, in the case of
Eurocurrency Loans denominated in an Alternative Currency, means
the Original Dollar Amount thereof) or, if no Loans are
outstanding, Banks granting 76% or more of the Commitments.
"Restricted Payments" shall have the meaning as set forth in
Section 7.14 hereof.
"Restricted Subsidiary" shall mean any Subsidiary (a) which
is organized under the laws of the United States or any State
thereof; (b) which conducts substantially all of its business and
has substantially all of its assets within the United States; and
(c) of which 100% (by number of votes) of the voting stock is at
all times owned by the Company and/or one or more Restricted
Subsidiaries.
"Revolving Credit Note" shall have the meaning as set forth
in Section 1.9(a) hereof.
"Subsidiary" shall mean, as to any particular parent
corporation, any corporation of which more than 50% (by number of
votes) of the voting stock shall be owned by such parent
corporation and/or one or more corporations which are themselves
wholly-owned Subsidiaries of such parent corporation.
"Swing Line Commitment" shall have the meaning specified in
Section 1.4 hereof.
"Swing Loans" shall have the meaning specified in Section
1.4 hereof.
<PAGE>
"Swing Line Note" shall have the meaning specified in
Section 1.9(b) hereof.
"Tangible Assets" of any Person shall mean, as of the date
of any determination thereof, the total amount of all assets of
such Person (less depreciation, depletion and other properly
deductible valuation reserves) after deducting the following:
goodwill, patents, trade names, trade marks, copyrights,
franchises, experimental expense, organization expense,
unamortized debt discount and expense, the excess of cost of
shares acquired over book value of related assets, any write up
in the book value of any asset resulting from a revaluation
thereof subsequent to February 28, 1990 (other than a revaluation
of foreign currency) and such other assets as are properly
classified as "intangible assets" in accordance with GAAP.
"Termination Date" shall mean March 31, 1997 or such later
date as may be agreed upon pursuant to Section 3.7 hereof.
"U.S. Dollars" means the lawful currency of the United
States of America.
"U.S. Dollar Equivalent" means the amount of U.S. Dollars
which would be realized by converting an Alternative Currency
into U.S. Dollars in the spot market at the exchange rate quoted
by the Agent at approximately 11:00 a.m. (London, England time)
two Business Days prior to the date on which a computation
thereof is required to be made, to major banks in the interbank
exchange market for the purchase of U.S. Dollars for such
Alternative Currency.
"Voting Stock" of any Person means capital stock of any
class or classes (however designated) having ordinary voting
power for the election of directors of such Person, other than
stock having such power only by reason of the happening of a
contingency.
Section 9.2. Accounting Principles. Where the character
or amount of any asset or liability or item of income or expense
is required to be determined or any consolidation or other
accounting computation is required to be made for the purposes of
this Agreement, the same shall be done in accordance with GAAP,
to the extent applicable, applied consistently (except for
changes in application with respect to which the Auditors concur)
with the principles used in preparation of the February 28, 1993
financial statements of the Company and its Subsidiaries
heretofore delivered to the Banks, except where such principles
are inconsistent with the specific provisions of this Agreement.
Section 9.3. Directly or Indirectly. Where any provision
in this Agreement refers to action to be taken by any Person, or
which such Person is prohibited from taking, such provision shall
be applicable whether the action in question is taken directly or
indirectly by such Person.
SECTION 10. THE AGENT.
<PAGE>
Section 10.1. Appointment and Authorization. Each Bank
hereby appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers hereunder and
under the Collateral Documents as are designated to the Agent by
the terms hereof and thereof together with such powers as are
reasonably incidental thereto. The Agent may resign at any time
by sending twenty (20) days prior written notice to the Company
and the Banks and may be removed by the Required Banks upon
twenty (20) days prior written notice to the Company and the
Banks. In the event of any such resignation or removal the
Required Banks may appoint a new agent reasonably acceptable to
the Company, which shall succeed to all the rights, powers and
duties of the Agent hereunder and under the Collateral Documents
and the Guaranty Agreements. Any resigning or removed Agent
shall be entitled to the benefit of all the protective provisions
hereof with respect to its acts as an agent hereunder, but no
successor Agent shall in any event be liable or responsible for
any actions of its predecessor. If the Agent resigns or is
removed and no successor is appointed, the rights and obligations
of such Agent shall be automatically assumed by the Required
Banks and (i) the Company shall be directed to make all payments
due each Bank hereunder directly to such Bank and (ii) the
Agent s rights in the Collateral Documents and Guaranty
Agreements shall be assigned without representation, recourse or
warranty to the Banks as their interests may appear.
Section 10.2. Rights as a Bank. The Agent has and reserves
all of the rights, powers and duties hereunder and under its
Note, the Collateral Documents and the Guaranty Agreements as any
Bank may have and may exercise the same as though it were not the
Agent and the terms "Bank" or "Banks" as used herein and in all
of such documents shall, unless the context otherwise expressly
indicates, include the Agent in its individual capacity as a
Bank. The Agent reserves the right to engage in other business
transactions with the Company and its affiliates.
Section 10.3. Standard of Care. The Banks acknowledge that
they have received and approved copies of the Collateral
Documents, Applications and the Guaranty Agreements, and such
other information and documents concerning the transactions
contemplated and financed hereby as they have requested to
receive and/or review. The Agent makes no representations or
warranties of any kind or character to the Banks with respect to
the validity, enforceability, genuineness, perfection, value,
worth or collectibility hereof or of the Notes, the Guaranty
Agreements, the Applications or Collateral Documents or of the
liens provided for thereby or of any other documents called for
hereby or thereby or of the Collateral. The Agent need not
verify the worth or existence of the Collateral. The Banks
acknowledge that the Agent is not perfecting a lien on vehicles
subject to a certificate of title law or taking possession of
documents of title or complying with Assignment of Claims Act or
making filings or registrations with respect to permits,
copyrights or trademarks. Neither the Agent nor any director,
officer employee, agent or representative thereof (including any
<PAGE>
security trustee therefor) shall in any event be liable for any
clerical errors or errors in judgment, inadvertence or oversight,
or for action taken or omitted to be taken by it or them
hereunder or under the Collateral Documents or under the Guaranty
Agreements or under the Applications or in connection herewith or
therewith except for its or their own gross negligence or willful
misconduct. The Agent shall incur no liability under or in
respect of this Agreement or the Collateral Documents or the
Applications or the Guaranty Agreements by acting upon any
notice, certificate, warranty, instruction or statement (oral or
written) of anyone (including anyone in good faith believed by it
to be authorized to act on behalf of the Company), unless it has
actual knowledge of the untruthfulness of same. The Agent agrees
to use the same care in protecting the interests of the Banks in
the Loans and Letters of Credit as it uses for similar loans and
letters of credit held by it solely for its own account. The
Agent shall be entitled to advice of counsel concerning all
matters pertaining to the agencies hereby created and its duties
hereunder, and shall incur no liability to anyone and be fully
protected in acting upon the advice of such counsel. The Agent
shall be entitled to assume that no Default or Event of Default
exists, absent actual knowledge thereof, unless notified to the
contrary by a Bank. The Agent shall in all events be fully
protected in acting or failing to act in accord with the
instructions of the Required Banks. Upon the occurrence of an
Event of Default hereunder, the Agent shall take such action with
respect to the enforcement of the Guaranty Agreements and the
enforcement of its liens on the Collateral and the preservation
and protection thereof as it shall be directed to take by the
Required Banks (and shall consult with the Banks as to actions to
be taken) but unless and until the Required Banks have given such
direction the Agent shall take or refrain from taking such
actions as it deems appropriate and in the best of interest of
all Banks. The Agent shall in all cases be fully justified in
failing or refusing to act hereunder unless indemnified to its
reasonable satisfaction by the Banks 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 Agent may
treat the owner of any Note as the holder thereof until written
notice of transfer shall have been filed with it signed by such
owner in form satisfactory to the Agent. Each Bank acknowledges
that it has independently and without reliance on the Agent or
any other Bank and based upon such information, investigations
and inquiries as it deems appropriate made its own credit
analysis and decision to extend credit to the Company. It shall
be the responsibility of each Bank to keep itself informed as to
the creditworthiness of the Company and its Subsidiaries and the
Agent shall have no liability to any Bank with respect thereto.
Section 10.4. Costs and Expenses. Each Bank agrees to
reimburse the Agent for all out-of-pocket costs and expenses
suffered or incurred by the Agent or any security trustee in
performing its duties hereunder and under the Collateral
Documents and under the Guaranty Agreements and under the
Applications or in the exercise of any right or power imposed or
<PAGE>
conferred upon the Agent hereby or thereby, to the extent that
the Agent is not promptly reimbursed for same by the Company or
out of the Collateral, all such costs and expenses to be borne by
the Banks ratably in accordance with the amounts of their
respective Commitments. If any Bank fails to reimburse the Agent
for its share of any such costs and expenses, such costs and
expenses shall be paid pro rata by the remaining Banks, but
without in any manner releasing the defaulting Bank from its
liability hereunder.
Section 10.5. Indemnity. The Banks shall ratably indemnify
and hold the Agent and its directors, officers, employees, agents
or representatives (including as such any security trustee
therefor) harmless from and against any liabilities, losses,
costs or expenses suffered or incurred by them hereunder or under
the Collateral Documents or under the Guaranty Agreements or
under the Applications or in connection with the transactions
contemplated hereby or thereby, regardless of when asserted or
arising, except to the extent they are promptly reimbursed for
the same by the Company or out of the Collateral and except to
the extent that any event giving rise to a claim was caused by
the gross negligence or willful misconduct of the party seeking
to be indemnified. If any Bank defaults in its obligations
hereunder, its share of the obligations shall be paid pro rata by
the remaining Banks, but without in any manner releasing the
defaulting Bank from its liability hereunder.
SECTION 11. MISCELLANEOUS.
Section 11.1 Waiver of Rights. No delay or failure on the
part of the Company, any Bank or the holder or holders of any
Note in the exercise of any power or right shall operate as a
waiver thereof, nor as an acquiescence in any default, nor shall
any single or partial exercise thereof, or the exercise of any
other power or right, preclude any other right or the further
exercise of any other rights, and the rights and remedies
hereunder of the Company, the Banks and of the holder or holders
of any Note are cumulative to, and not exclusive of, any rights
or remedies which any of them would otherwise have.
Section 11.2. Non-Business Day. (a) If any payment of
principal or interest on any Domestic Rate Loan shall fall due on
a day which is not a Business Day, interest at the rate such Loan
bears for the period prior to maturity shall continue to accrue
on such principal from the stated due date thereof to and
including the next succeeding Business Day on which the same is
payable.
(b) If any payment of principal or interest on any
Eurocurrency Loan shall fall due on a day which is not a Business
Day, the payment date therefor shall be extended to the next date
which is a Business Day and the Interest Period for such
Eurocurrency Loan shall be accordingly extended, unless as a
result thereof any payment date would fall in the next calendar
month, in which case such payment date shall be the immediately
<PAGE>
preceding Business Day and the relevant Interest Period shall be
correspondingly abbreviated. In either case the next Interest
Period shall be measured from the payment date so adjusted.
Section 11.3. Documentary Taxes. The Company agrees to pay
any documentary, stamp or similar taxes payable in respect to
this Agreement or any Note, Letter of Credit, Application,
Guaranty Agreement or Collateral Document, including interest and
penalties, in the event any such taxes are assessed irrespective
of when such assessment is made and whether or not any credit is
then in use or available hereunder.
Section 11.4. Survival of Representations. All
representations and warranties made herein or in certificates
given pursuant hereto shall survive the execution and delivery of
this Agreement and of the Notes and Applications, and shall
continue in full force and effect with respect to the date as of
which they were made as long as any credit is in use or available
hereunder.
Section 11.5. Survival of Indemnities. All indemnities and
all other provisions relative to reimbursement to the Banks of
amounts sufficient to protect the yield of the Banks hereunder,
including, but not limited to, Sections 2.5, 3.12, 11.15 and
11.16 hereof, shall survive the termination of this Agreement and
the payment of the Notes.
Section 11.6. Set-off Sharing. Each Bank agrees with each
other Bank that in the event that such Bank receives and retains
any payment, whether by setoff or application of deposit balances
or otherwise, on or in respect of any Note outstanding under this
Agreement in excess of the amount it would have received had such
payment been made to the Agent and distributed in accord with
Section 3.9 hereof then such Bank shall purchase for cash at face
value, but without recourse, ratably from each of the other Banks
such amounts of the Notes, held by each such other Bank as shall
be necessary to cause such Bank to share such excess payment in
the manner called for by Section 3.9 hereof, provided however
that if any such purchase is made by any Bank and if such excess
payment or part thereof is thereafter recovered from such
purchasing Bank, the related purchases from the other Banks shall
be rescinded ratably and the purchase price restored as to the
portion of such excess payment so recovered, but without
interest.
Section 11.7. Notices. All communications provided for
herein shall be in writing or by telex or by telegraph, except as
otherwise specifically provided for hereinabove, addressed, if to
the Company at 3600 Sunset Avenue, Waukegan, Illinois 60087
Attention: Chief Financial Officer or if to the Agent or Banks at
their respective addresses set forth opposite their respective
signatures hereto, or at such other address as shall be
designated by any party hereto in a written notice to each other
party pursuant to this Section 11.7. Any notice in writing shall
be deemed to have been given or made when served personally or
<PAGE>
when received if sent by United States mail, and any notice given
by telex or telegraphic means shall be deemed given when
transmitted (answerback confirmed); provided that any notice to
the Agent or any Bank under Sections 2 and 3 hereof shall only be
effective upon receipt.
Section 11.8. Counterparts. This Agreement may be executed
in any number of counterparts, and by the different parties on
different counterparts, each of which when executed shall be
deemed an original, but all such counterparts taken together
shall constitute one and the same instrument.
Section 11.9. Successors and Assigns. This Agreement shall
be binding upon the Company and its successors and assigns, and
shall be binding upon and inure to the benefit of the Banks and
their respective successors and permitted assigns, including any
subsequent holder of any Note. The Company may not assign its
rights or obligations hereunder without the prior written consent
of the Banks.
Section 11.10. Participants. Each Bank shall have the right
at its own cost to grant participations (to be evidenced by one
or more agreements or certificates of participation) in the Loans
made by such Bank at any time and from time to time to one or
more other financial institutions, provided that no such
participant shall have any rights under this Agreement or any
Note (the participant s rights against the Bank granting its
participation to be those set forth in the participation
agreement between the participant and such Bank) and no such Bank
shall agree with any such participant to refrain from agreeing to
waivers, amendments, modifications or releases hereunder or under
the Notes or Collateral Documents or Guaranty Agreements without
the consent of such participant except for waivers, amendments
and modifications which pursuant to the terms of Section 11.14
hereof require the consent of all Banks and except for consents
to releases of Collateral or Guaranty Agreements. Each such Bank
shall be entitled to the benefits of Sections 2.5 and 3.12 hereof
to the extent such Bank would have been so entitled had no such
participation been sold.
Section 11.11. Costs and Expenses. The Company agrees to
pay on demand all reasonable out-of-pocket costs and expenses of
the Banks in connection with the negotiation, preparation,
execution, delivery, recording and/or filing and/or release of
this Agreement, the Guaranty Agreements, the Notes, the
Applications and the Collateral Documents and the other
instruments and documents to be delivered hereunder or thereunder
or in connection with the transactions contemplated hereby or
thereby or in connection with any consents hereunder or
thereunder or waivers or amendments hereto or thereto, including
the fees and out-of-pocket expenses of counsel for the Agent with
respect to all of the foregoing, and all recording, filing, title
insurance or other fees, costs and taxes incident to perfecting a
lien upon the collateral security for the Notes, Applications and
other obligations of the Company (the fees of appraisers) or
<PAGE>
releasing any such lien, and all reasonable costs and expenses
(including reasonable attorneys fees), incurred by the Agent,
any security trustee for the Banks, the Banks or any other
holders of a Note in connection with a Default or the enforcement
of this Agreement, the Notes, the Applications, the Guaranty
Agreements or the Collateral Documents and the other instruments
and documents to be delivered hereunder or thereunder and all
costs, fees and taxes of the types enumerated above incurred in
supplementing (and recording or filing supplements to) the
Collateral Documents in connection with assignments contemplated
by Section 11.13 hereof if counsel to the Agent believes such
supplements to be appropriate or desirable. The Company shall
pay the Agent for field audits of the Collateral, provided that
the Company shall not be required to pay for more than two such
field audits per annum unless a Default or an Event of Default
has occurred and is continuing, in which case the Company shall
pay for all such field audits. The Company agrees to indemnify
and save the Banks, the Agent and any security trustee for the
Banks harmless from any and all liabilities, losses, costs and
expenses incurred by the Banks or the Agent in connection with
any action, suit or proceeding brought against the Agent, any
security trustee, or any Bank by any Person which arises out of
the transactions contemplated or financed hereby or by the Notes
or Collateral Documents or out of any action or inaction by the
Agent, any security trustee, or any Bank hereunder or thereunder
(except for such thereof as is caused by the gross negligence or
willful misconduct of the party indemnified) and against any
claims of brokers or finders in connection with the transactions
contemplated or financed hereby. The provisions of this Section
11.11 shall survive payment of the Notes.
Section 11.12. Construction. The parties hereto acknowledge
and agree that this Agreement shall not be construed more
favorably in favor of one than the other based upon which party
drafted the same, it being acknowledged that all parties hereto
contributed substantially to the negotiation and preparation of
this Agreement.
Section 11.13. Assignment Agreements. Each Bank may, from
time to time, with the consent of the Company and the Agent,
assign to other financial institutions part of the indebtedness
evidenced by the Note then owned by it together with an
equivalent proportion of its obligation to make Loans hereunder
pursuant to written agreements executed by the assignor, the
assignee and the Company, which agreements shall specify in each
instance the portion of the indebtedness evidenced by the Notes
which is to be assigned to each such assignee and the portion of
the Commitment of the assignor to be assumed by such assignee
(the "Assignment Agreements"), provided that the Company and/or
the Agent may in their sole discretion withhold their consent to
any assignment by a Bank of less than all of its Commitment if as
a result thereof either the assignor or the assignee will have a
Commitment hereunder of less than $5,000,000. Upon the execution
of each Assignment Agreement by the assignor, the assignee and
the Company (i) such assignee shall thereupon become a "Bank" for
<PAGE>
all purposes of this Agreement with a Commitment in the amount
set forth in such Assignment Agreement and with all the rights,
powers and obligations afforded a Bank hereunder, (ii) the
assignor shall have no further liability for funding the portion
of its Commitment assumed by such other Bank and (iii) the
address for notices to such Bank shall be as specified in the
Assignment Agreement executed by it. Concurrently with the
execution and delivery of such Assignment Agreement, the Company
shall execute and deliver a new Note to the assignee Bank in the
amount of its Commitment and a new Note to the assignor Bank in
the amount of its Commitment after giving effect to the reduction
occasioned by such assignment, all such notes to constitute
"Notes" for all purposes of this Agreement. The Company also
agrees to, at its expense, execute and deliver such documents and
do and provide such other acts and things as the Agent may
reasonably require to assure that the Company s obligations to
the assignee Bank are secured with the Collateral. Upon each
such assignment, the Bank granting such assignment shall pay to
the Agent for the Agent s sole account a fee of $2,500.
Section 11.14. Amendments and Waivers. No provision of this
Agreement or of the Collateral Documents may be amended or waived
except in writing signed by the Company and the Required Banks
and, if the rights or duties of the Agent are affected thereby,
by the Agent and no Collateral may be released except as provided
for herein or in the Collateral Documents without the consent of
the Required Banks; provided that no such amendment or waiver
shall, unless signed by all Banks, (i) increase or extend the
Commitment of any Bank or subject any Bank to any additional
obligation, (ii) reduce the principal of or rate of interest on
any Loan from any Bank or any fees due such Bank hereunder, (iii)
change the stated time or manner of any payment of principal of
or interest on any Loan from such Bank or any fees due such Bank
hereunder, (iv) change the percentage of the Commitments or of
the aggregate unpaid principal amount of the Notes, or the number
of Banks required for the Banks or any of them to take any action
under this Section 11.14 or any other provisions of this
Agreement or (v) release any Guaranty Agreement.
Section 11.15. Currency. Each reference in this Agreement
to U.S. Dollars or to an Alternative Currency (the "relevant
currency") is of the essence. To the fullest extent permitted by
law, the obligation of the Company in respect of any amount due
in the relevant currency under this Agreement shall,
notwithstanding any payment in any other currency (whether
pursuant to a judgment or otherwise), be discharged only to the
extent of the amount in the relevant currency that the Bank
entitled to receive such payment may, in accordance with normal
banking procedures, purchase with the sum paid in such other
currency (after any premium and costs of exchange) on the
Business Day immediately following the day on which such party
receives such payment. If the amount in the relevant currency
that may be so purchased for any reason falls short of the amount
originally due, the Company shall pay such additional amounts, in
the relevant currency, as may be necessary to compensate for the
<PAGE>
shortfall. Any obligations of the Company not discharged by such
payment shall, to the fullest extent permitted by applicable law,
be due as a separate and independent obligation and, until
discharged as provided herein, shall continue in full force and
effect.
Section 11.16. Currency Equivalence. If for the purposes of
obtaining judgment in any court it is necessary to convert a sum
due from the Company hereunder or under the Notes in the currency
expressed to be payable herein or under the Notes (the "specified
currency") into another currency, the parties agree that the rate
of exchange used shall be that at which in accordance with normal
banking procedures the Agent could purchase the specified
currency with such other currency on the Business Day preceding
that on which final judgment is given. The obligation of the
Company in respect of any such sum due to any Bank or the Agent
hereunder or under any Note shall, notwithstanding any judgment
in a currency other than the specified currency, be discharged
only to the extent that on the Business Day following receipt by
such Bank or the Agent, as the case may be, of any sum adjudged
to be so due in such other currency, such Bank or the Agent, as
applicable, may in accordance with normal banking procedures
purchase the specified currency with such other currency. If the
amount of the specified currency so purchased is less than the
sum originally due to such Bank or the Agent in the specified
currency, the Company agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Bank and the
Agent against such loss, and if the amount of the specified
currency so purchased exceeds the sum of (a) the amount
originally due to the applicable Bank or the Agent in the
specified currency plus (b) any amounts shared with other Banks
as a result of allocations of such excess as a disproportionate
payment to such Bank under Section 11.6 hereof, such Bank or the
Agent, as the case may be, agrees to remit such excess to the
Company.
Section 11.17. Governing Law. This Agreement and the Notes,
and the rights and duties of the parties hereto, shall be
construed and determined in accordance with and governed by the
laws of the State of Illinois without regard to principles of
conflicts of law.
Section 11.18. Entire Agreement. This Agreement constitutes
the entire understanding of the parties with respect to the
subject matter hereof and any prior agreements, whether written
or oral, with respect thereto are superseded hereby.
Section 11.19. Headings. Section headings used in this
Agreement are for reference only and shall not affect the
construction of this Agreement.
Upon your acceptance hereof in the manner hereinafter set
forth, this Agreement shall be a contract between us for the
purposes hereinabove set forth.
<PAGE>
Executed and delivered at Chicago, Illinois as of this 9th day of
May, 1994.
THE CHERRY CORPORATION
(Corporate Seal)
By_______________________
Its____________________
ATTEST:
_________________________________
Secretary
Accepted and agreed to as of the day and year last above
written.
Address and Amount of Commitments:
111 West Monroe Street HARRIS TRUST AND SAVING BANK,
Chicago, Illinois 60690 individually and as Agent
Attn: Ms. Sharon Dickey
By_________________________
Its Vice President
Revolving Credit Commitment: Lending Office:
$30,000,000 Harris Trust and Savings Bank
111 West Monroe Street
Chicago, Illinois 60690
231 South LaSalle Street CONTINENTAL BANK N.A.
Chicago, Illinois 60697
Attn: Northwest Suburban Office
Mr. Edmund H. Lester By_________________________
Its______________________
Revolving Credit Commitment: Lending Office:
$15,000,000 Continental Bank N.A.
231 South LaSalle Street
Chicago, Illinois 60697
<PAGE>
EXHIBIT A
THE CHERRY CORPORATION
REVOLVING CREDIT NOTE
May 9, 1994
Chicago, Illinois
FOR VALUE RECEIVED, the undersigned, The Cherry Corporation,
a Delaware corporation (the "Company") promises to pay to the
order of ___________________ (the "Bank") on the Termination Date
of the hereinafter defined Credit Agreement at the office of
Harris Trust and Savings Bank at 111 West Monroe Street, Chicago,
Illinois (or, in the case of Eurocurrency Loans denominated in an
Alternative Currency, at such office as the Agent has previously
notified the Company) in immediately available funds in the
currency in which Revolving Credit Loan was made, the aggregate
unpaid principal amount of all Revolving Credit Loans made by the
Bank to the Company under its Revolving Credit Commitment
provided for under the Credit Agreement hereinafter mentioned and
with each Loan to mature and become payable on the last day of
the Interest Period applicable thereto, but in no event later
than the Termination Date, together with interest on the
principal amount of each Loan from time to time outstanding
hereunder at the rates, and payable in the manner and on the
dates specified in said Credit Agreement.
The Bank shall record on its books or records or on a
schedule to this Note which is a part hereof the principal amount
and type of each Loan, all payments of principal and interest and
the principal balances from time to time outstanding, whether the
Loan is Eurocurrency Loan or Domestic Rate Loan and, in the case
of any Eurocurrency Loan, the currency thereof and the interest
rate and Interest Period applicable thereto; provided that prior
to the transfer of this Note all such amounts shall be recorded
on a schedule attached to this Note. The record thereof, whether
shown on such books or records or on a schedule to this Note,
shall be prima facie evidence as to all such amounts; provided,
however, that the failure of the Bank to record any of the
foregoing or any error in such record shall not limit or
otherwise affect the obligation of the Company to repay all
Loans, together with accrued interest thereon.
This Note is one of the Notes referred to in and issued
under that certain Credit Agreement dated as of May 24, 1991 as
amended and as amended and restated pursuant to that certain
Second Amended and Restated Credit Agreement dated May 9, 1994,
among the Company, Harris Trust and Savings Bank, as Agent, and
the other Banks named therein (the "Credit Agreement") and is
secured, inter alia by certain security agreements and other
instruments and documents from the Company and its Restricted
Subsidiaries and this Note and the holder hereof are entitled to
<PAGE>
all of the benefits provided for thereby or referred to therein,
to which Credit Agreement and collateral documents reference is
hereby made for a statement thereof. All defined terms used in
this Note, except terms otherwise defined herein, shall have the
same meaning as such terms have in said Credit Agreement. This
Note is executed in substitution and replacement for, and
evidences the same indebtedness currently evidenced by, that
certain Revolving Credit Note of the Company dated April 22, 1993
payable to the order of the Bank in the principal amount of
$________ and ______________________________.
Prepayments may and are required to be made on the Loans
evidenced hereby and this Note (and the Loans evidenced hereby)
may be declared due prior to the expressed maturity thereof, all
in the events, on the terms and in the manner as provided for in
said Credit Agreement. This Note shall be construed in
accordance with and governed by the laws of Illinois.
The Company hereby waives demand, presentment, protest or
notice of any kind hereunder.
THE CHERRY CORPORATION
By_________________________
Its______________________
<PAGE>
EXHIBIT B
THE CHERRY CORPORATION
SWING LINE NOTE
$500,000 Chicago, Illinois
May 9, 1994
On the Termination Date of the hereinafter defined Credit
Agreement, for value received, the undersigned, The Cherry
Corporation, a Delaware corporation (the "Company"), promises to
pay to the order of Harris Trust and Savings Bank (the "Bank"),
at its principal office in Chicago, Illinois, the principal sum
of Five Hundred Thousand and No/100 s Dollars ($500,000), or such
lesser amount as may at the time of the maturity hereof, whether
by acceleration or otherwise, be the aggregate unpaid principal
amount of all Swing Line Loans owing from the Company to the Bank
under the Swing Line provided for in said Credit Agreement.
This Note evidences Domestic Rate Loans made and to be made
by the Bank to the Company under the Swing Line provided for in
that certain Credit Agreement dated as of May 24, 1991 as amended
and as amended and restated pursuant to that certain Second
Amended and Restated Credit Agreement dated as of May 9, 1994 by
and between the Company, Harris Trust and Savings Bank
individually and as Agent and the other Banks named therein (the
"Credit Agreement") and the Company hereby promises to pay
interest at the office specified above on each Loan evidenced
hereby at the rates and times specified therefor in the Credit
Agreement.
Each Loan made under the Swing Line provided for in the
Credit Agreement by the Lender to the Company against this Note,
any repayment of principal hereon, and the interest rates
applicable thereto shall be endorsed by the Holder hereof on the
reverse side of this Note or recorded on the books and records of
the holder hereof (provided that such entries shall be endorsed
on the reverse side hereof prior to any negotiation hereof) and
the Company agrees that in any action or proceeding instituted to
collect or enforce collection of this Note, the entries so
endorsed on the reverse side hereof or recorded on the books and
records of the Bank shall be prima facie evidence of the unpaid
balance of this Note and of the interest rates and interest
periods applicable thereto.
This Note is issued by the Company under the terms and
provisions of the Credit Agreement and is secured, inter alia, by
certain security agreements, mortgages, deeds of trust and other
instruments and documents from the Company and its Restricted
Subsidiaries, and this Note and the holder hereof are entitled to
all of the benefits and security provided for thereby or referred
to therein, to which reference is hereby made for a statement
thereof. This Note may be declared to be, or be and become, due
<PAGE>
prior to its expressed maturity upon the occurrence of an event
of default specified in the Credit Agreement, voluntary
prepayments may be made hereon, and certain prepayments are
required to be made hereon, all in the events, on the terms and
with the effects provided in the Credit Agreement. This Note is
executed in substitution and replacement for, and evidences the
same indebtedness currently evidenced by, that certain Swing Line
Note of the Company dated April 22, 1993 payable to the order of
the Bank in the face principal amount of $500,000.
This Note shall be construed in accordance with, and
governed by, the internal laws of the State of Illinois without
regard to principles of conflict of law.
The Company hereby waives presentment for payment and
demand.
THE CHERRY CORPORATION
By_________________________
Its______________________
<PAGE>
EXHIBIT C
SUBSIDIARIES AS OF MAY 9, 1994
The Company's Subsidiaries, each of which has only a single
class of stock outstanding, are as follows:
A. RESTRICTED SUBSIDIARIES
PERCENTAGE
OF VOTING
NAME OF JURISDICTION OF STOCK OWNED BY 2/28/94 2/28/94
SUBSIDIARY INCORPORATION THE COMPANY LOANS INVESTMENT
Cherry Semiconductor Rhode Island 100% $10,816,000 $3,369,000
Corporation
Cherry Systems Texas 100% $10,945,000 $1,065,000
Corporation (f.k.a.
Cherry Display
Products Corporation)
B. SUBSIDIARIES (OTHER THAN RESTRICTED SUBSIDIARIES)
PERCENTAGE
OF VOTING
NAME OF JURISDICTION OF STOCK OWNED BY 2/28/94 2/28/94
SUBSIDIARY INCORPORATION THE COMPANY LOANS INVESTMENT
Cherry Mikroschalter Federal Republic 100% -0- $5,637,000
GmbH of Germany
Cherry Electrical United Kingdom 100% -0- $1,629,000
Products Ltd.
Cherry Sarl France 100% -0- $66,000
Cherasia Limited Hong Kong 100% -0- $13,000
Cherry Australia Australia 100% $7,000 $18,000
Pty. Ltd.
<PAGE>
EXHIBIT D
INDEBTEDNESS AND LIENS
1. Obligations guaranteed by the Company pursuant to that
certain Guaranty Agreement dated as of March 1, 1984
between the Company and First City National Bank of
Houston, as trustees, in effect on the date hereof
2. Long-term obligations secured by property, plant and
equipment located in Germany, entered into by Cherry
Mikroschalter GmbH or subsidiaries with the following
banks for the following amounts: (US dollars based upon
February 28, 1994 DM/US Dollar exchange rate)
Bayerische Vereinsbank 16,428,345
IKB Bank 4,360,465
Hypobank 2,446,609
Total 23,235,419
3. Various capitalized leases with an approximate net
present value of $2,800,000
4. Short-term uncommitted borrowings of Cherry
Mikroschalter of $5,736,346 (same exchange rate as
above)
5. Short-term uncommitted borrowings of the Company with
Harris Trust and Savings Bank (up to $10,000,000),
Societe Generale (up to $15,000,000) and Comerica Bank
(up to $10,000,000).
<PAGE>
Exhibit E
DISCLOSURE SCHEDULE
None
<PAGE>
EXHIBIT F
Description of Closing Opinion
of Counsel for the Company
The closing opinion of Messrs. McDermott, Will & Emery,
counsel for the Company, called for by the Credit Agreement,
shall be addressed to the Banks, and shall be to the effect that:
Unless otherwise defined therein, capitalized terms used
therein shall have the meanings assigned to such terms in that
certain Second Amended and Restated Credit Agreement dated
_______________, 1994 (the "Credit Agreement").
Such counsel is familiar with the corporate proceedings
taken by the Company and the Restricted Subsidiaries in
connection with the Credit Agreement and Notes and the
transactions contemplated thereby. In addition, such counsel has
examined and relied upon executed copies of such Credit Agreement
and Notes, the Articles of Incorporation and the Bylaws of the
Company and the Restricted Subsidiaries as in effect on the date
hereof, certified supporting resolutions adopted by the Board of
Directors of the Company and the Restricted Subsidiaries in
connection with the Credit Agreement and the transactions
contemplated thereby, a Certificate of corporate status issued by
the Secretary of State of Delaware with respect to the Company,
[certificates of corporate status issued by the Secretary s of
State of - list jurisdictions - Restricted Subsidiaries] and
other certificates executed by officers of the Company addressing
facts material to such counsel s opinions as such counsel
considers necessary or appropriate for the basis of the opinions
expressed.
In making the examination of such agreements and instruments
in connection with the opinions expressed therein, such counsel
has assumed the genuineness of all signatures (other than those
of the Company and its Restricted Subsidiaries) and the
authenticity of all documents submitted to such counsel as
originals and the conformity with the originals of all documents
submitted to such counsel as copies and has further assumed that
each of the Banks has the corporate power to enter into and
perform its obligations under the Credit Agreement and has
assumed with respect to each of them due authorization by all
requisite corporate action, due execution and delivery and the
valid and binding effect of such documents and agreements on the
Banks, and compliance by the Banks with applicable law.
Based upon the foregoing and such other assumptions as are
set forth therein, such counsel shall opine that:
(1) The Company is a corporation legally existing and
in good standing under the laws of the State of Delaware,
has corporate power and authority and is duly authorized to
enter into and perform the Credit Agreement and to issue the
Notes and incur the indebtedness to be evidenced thereby.
<PAGE>
(2) The execution, delivery and performance by the
Company of the Credit Agreement and the issuance by the
Company of the Notes thereunder and execution, delivery and
performance by the Company and its Restricted Subsidiaries
of the Collateral Documents and Guaranty Agreements do not
conflict with or result in any breach of any of the
provisions of or constitute a default under or result in the
creation or imposition of any Lien upon any of the Property
of the Company or any Restricted Subsidiary pursuant to the
provisions of the Certificate of Incorporation or By-laws of
the Company and the Restricted Subsidiaries, nor to the best
of the knowledge and belief of such counsel, under any
material agreement or other instrument to which the Company
or any Restricted Subsidiary is bound.
(3) The Credit Agreement, Collateral Documents,
Guaranty Agreements and Notes have each been duly
authorized, executed and delivered by the Company and
Restricted Subsidiaries (as appropriate) and each
constitutes the legal, valid and binding contract and
agreement of the Company and the Restricted Subsidiaries
enforceable in accordance with its terms, except as such
terms may be limited by bankruptcy, insolvency or similar
laws, and legal and equitable principles, affecting or
limiting the enforcement of creditors rights generally.
(4) To the best knowledge of such counsel, there are
no proceedings pending or threatened, against or affecting
the Company or any Restricted Subsidiary in any court or
before any governmental authority or arbitration board or
tribunal, not heretofore disclosed to the Banks in Exhibit E
to the Credit Agreement which involve the reasonable
possibility of materially and adversely affecting the
properties, business, prospects, profits or condition
(financial or otherwise) of the Company or its Restricted
Subsidiaries.
(5) No approval, consent or withholding of objection
of or on the part of, or filing, registration or
qualification with, any governmental body, is necessary in
connection with the execution and delivery of the Collateral
Documents, the Guaranty Agreements or Credit Agreement or
the issuance and delivery of the Notes thereunder.
With respect to matters of fact on which such opinion is
based, said counsel may reasonably rely on appropriate
certificates of public officials and officers of the Company.
Such opinion shall be delivered to the from time to time
Banks under the Credit Agreement for their use and the use of
their respective counsel. Such opinion may contain other
assumptions and qualifications approved by the Agent and its
counsel.
