UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1995
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission File Number 1-7418
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ESSEX GROUP, INC.
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(Exact name of registrant as specified in its charter)
MICHIGAN 35-1313928
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1601 WALL STREET, FORT WAYNE, INDIANA 46802
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (219) 461-4000
None
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(Former name, former address and former fiscal year, if
changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
[X ] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Number of Shares Outstanding
Common Stock As of March 31, 1995
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$.01 Par Value 100<PAGE>
ESSEX GROUP, INC.
FORM 10-Q INDEX
FOR QUARTERLY PERIOD ENDED MARCH 31, 1995
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations . . . . . . . . . . . 5
Consolidated Statements of Cash Flows . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . 8
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition . . . . . . . 12
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 17
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ESSEX GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
In Thousands of Dollars, Except Per Share Data (Unaudited)
--------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . $ 7,540 $ 16,894
Accounts receivable (net of allowance of
$3,578 and $3,537 . . . . . . . . . . . . . . . . . . 152,755 144,595
Inventories . . . . . . . . . . . . . . . . . . . . . 165,939 145,706
Other current assets . . . . . . . . . . . . . . . . . 11,838 20,496
-------- --------
Total current assets . . . . . . . . . . . . . 338,072 327,691
Property, plant and equipment, (net of accumulated
depreciation of $63,838 and $57,127) . . . . . . . . 272,411 276,134
Excess of cost over net assets acquired (net of
accumulated amortization of $10,161 and $9,145) . . . 132,084 133,100
Other intangible assets and deferred costs (net of
accumulated amortization of $5,780 and $5,146) . . . 10,929 11,563
Other assets . . . . . . . . . . . . . . . . . . . . . 1,799 1,812
-------- --------
$755,295 $750,300
======== ========
See Notes to Consolidated Financial Statements
3<PAGE>
ESSEX GROUP, INC.
CONSOLIDATED BALANCE SHEETS - Continued
March 31, December 31,
1995 1994
In Thousands of Dollars, Except Per Share Data (Unaudited)
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . $ 39,970 $ 47,421
Accrued liabilities . . . . . . . . . . . . . . . . . 46,244 45,821
Deferred income taxes . . . . . . . . . . . . . . . . 11,356 10,408
Due to Holdings . . . . . . . . . . . . . . . . . . . 33,718 32,979
-------- --------
Total current liabilities . . . . . . . . . . . 131,288 136,629
Long-term debt . . . . . . . . . . . . . . . . . . . . 200,000 200,000
Deferred income taxes . . . . . . . . . . . . . . . . 71,965 72,771
Other long-term liabilities . . . . . . . . . . . . . 8,955 6,997
Stockholders' equity:
Common stock, par value $.01 per share; 1,000 shares
authorized; 100 shares issued and outstanding; plus
additional paid in capital . . . . . . . . . . . . . 302,784 302,784
Retained earnings . . . . . . . . . . . . . . . . . . 40,303 31,119
-------- --------
Total stockholders' equity . . . . . . . . . . 343,087 333,903
-------- --------
$755,295 $750,300
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
4<PAGE>
ESSEX GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Month Period
Ended March 31,
--------------------------
In Thousands of Dollars 1995 1994
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REVENUES:
<S> <C> <C>
Net sales . . . . . . . . . . . . . . . . $289,649 $231,832
Interest income . . . . . . . . . . . . 206 36
Other income . . . . . . . . . . . . . . 859 129
-------- --------
290,714 231,997
-------- --------
COSTS AND EXPENSES:
Cost of goods sold . . . . . . . . . . . 247,223 191,648
Selling and administrative . . . . . . . 21,724 20,231
Interest expense . . . . . . . . . . . . 5,756 6,000
Other expense . . . . . . . . . . . . . . 127 335
-------- --------
274,830 218,214
-------- --------
Income before income taxes . . . . . . . . 15,884 13,783
Provision for income taxes . . . . . . . . 6,700 6,000
-------- --------
Net income . . . . . . . . . . . . . . . . $ 9,184 $ 7,783
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
5<PAGE>
ESSEX GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Month Period
Ended March 31,
------------------------
In Thousands of Dollars 1995 1994
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OPERATING ACTIVITIES
<S> <C> <C>
Net income . . . . . . . . . . . . . . . . . . . . . $9,184 $7,783
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . 8,168 7,589
Non cash interest expense . . . . . . . . . . . . . 581 668
Non cash pension expense . . . . . . . . . . . . . 642 632
Provision for losses on accounts receivable . . . . 138 224
Provision (benefit) for deferred income taxes . . . 142 (808)
(Gain) loss on disposal of property, plant
and equipment . . . . . . . . . . . . . . . . . (53) 212
Changes in assets and liabilities:
Increase in accounts receivable . . . . . . . . . (8,298) (15,616)
Increase in inventories . . . . . . . . . . . . . (20,233) (11,100)
Increase (decrease) in accounts payable and
accrued liabilities . . . . . . . . . . . . . . (7,092) 3,868
Net decrease in other assets and liabilities . . . 9,147 1,295
Increase in due to Holdings . . . . . . . . . . . 740 6,223
-------- --------
NET CASH PROVIDED BY (USED FOR) (6,934) 970
OPERATING ACTIVITIES . . . . . . . . . . . . . . -------- --------
INVESTING ACTIVITIES
Additions to property, plant and equipment . . . . . (4,205) (6,223)
Proceeds from disposal of property, plant
and equipment . . . . . . . . . . . . . . . . . . . 881 104
Investment in subsidiary and other . . . . . . . . . (159) (367)
Issuance of equity interest in a subsidiary . . . . 1,063 -
-------- ---------
NET CASH USED FOR INVESTING ACTIVITIES . . . . . . . (2,420) (6,486)
-------- --------
See Notes to Consolidated Financial Statements
6<PAGE>
ESSEX GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Unaudited)
Three Month Period
Ended March 31,
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In Thousands of Dollars 1995 1994
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FINANCING ACTIVITIES
Net increase in revolving loan . . . . . . . . . . . - 2,300
Net payments of other long-term debt . . . . . . . . - (396)
-------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES . . . . . - 1,904
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS . . . . . . (9,354) (3,612)
Cash and cash equivalents at beginning of period . . 16,894 10,346
-------- --------
Cash and cash equivalents at end of period . . . . . $7,540 $6,734
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
7<PAGE>
ESSEX GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
In Thousands of Dollars
-----------------------
NOTE 1 BASIS OF PRESENTATION
The unaudited interim consolidated financial statements contain all
adjustments, consisting of normal recurring adjustments, which are, in the
opinion of the management of Essex Group, Inc. (the "Company"), necessary
to present fairly the consolidated financial position of the Company as of
March 31, 1995, and the consolidated results of operations and cash flows
of the Company for the three month periods ended March 31, 1995 and 1994,
respectively. Results of operations for the periods presented are not
necessarily indicative of the results for the full fiscal year. These
financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1994.
NOTE 2 INVENTORIES
The components of inventories are as follows:
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
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<S> <C> <C>
Finished goods . . . . . . . . . . . . . $141,171 $130,236
Raw materials and work in process . . . . 65,662 54,560
-------- --------
206,833 184,796
LIFO reserve . . . . . . . . . . . . . . (40,894) (39,090)
-------- --------
$165,939 $145,706
======== ========
</TABLE>
The Company values a major portion of its inventories at the lower of
cost or market based on a last-in, first-out ("LIFO") method. Principal
elements of cost included in the Company's inventories are copper,
purchased materials, direct labor and manufacturing overhead. Inventories
valued using the LIFO method amounted to $160,415 and $141,847 at March
31, 1995 and December 31, 1994, respectively.
8<PAGE>
ESSEX GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
(Unaudited)
In Thousands of Dollars
-----------------------
NOTE 3 LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------- -------------
<S> <C> <C>
10% Senior notes . . . . . . . . . . . $200,000 $200,000
</TABLE>
There are no maturities of long-term debt within the next five years.
Bank Financing
In 1993, an amendment and restatement of the credit agreement dated
September 25, 1992 (the "Credit Agreement") became effective. The Credit
Agreement provides for $175,000 in revolving credit, subject to specified
percentages of eligible assets, reduced by outstanding letters of credit
($13,886 at March 31, 1995) (the "Revolving Credit"). Further, the amount
of Revolving Credit available to the Company is also subject to certain
debt limitation covenants contained in the indenture under which the 10%
Senior Notes due 2003 (the "Senior Notes") were issued. The Revolving
Credit expires in 1998. Revolving Credit loans bear interest at floating
rates at bank prime rate plus 1.25% or a reserve adjusted Eurodollar rate
(LIBOR) plus 2.25%. The effective interest rate can be reduced by 0.25%
to 0.75% if certain specified financial conditions are achieved.
Commitment fees during the revolving loan period are 0.5% of the average
daily unused portion of the available credit. The indebtedness under the
Credit Agreement is guaranteed by Holdings and all of the Company's
subsidiaries, and is secured by a pledge of the capital stock of the
Company and its subsidiaries and by a first lien on substantially all
assets.
Senior Notes
In May 1993, the Company issued $200,000 aggregate principal amount of
its Senior Notes which bear interest at 10% per annum, payable
semiannually and are due in May 2003. The Senior Notes rank pari passu in
right of payment with all other senior indebtedness of the Company. To
the extent that any other senior indebtedness of the Company is secured by
liens on the assets of the Company, the holders of such secured senior
indebtedness will have a claim prior to any claim of the holders of the
Senior Notes as to those assets.
9<PAGE>
ESSEX GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
(Unaudited)
In Thousands of Dollars, Except Per Share Data
----------------------------------------------
NOTE 4 HOLDINGS SENIOR DISCOUNT DEBENTURES AND SERIES A PREFERRED STOCK
In May 1989, Holdings (then known as MS/Essex Holdings Inc.) issued
$342,000 aggregate principal amount ($135,117 aggregate proceeds amount)
of its Senior Discount Debentures due 2004 (the "Holdings Debentures").
As of March 31, 1995 the Holdings Debentures had a carrying value of
$268,222. They will accrete to their full face value (an aggregate
principal amount of $272,850) on May 15, 1995. The Holdings Debentures
are unsecured debt of Holdings and are effectively subordinated to all
outstanding indebtedness of the Company, including the Senior Notes, and
will be effectively subordinated to other indebtedness incurred by direct
and indirect subsidiaries of Holdings if issued.
At March 31, 1995, Holdings had outstanding 1,821,128 shares of Series A
Cumulative Redeemable Exchangeable Preferred Stock, Liquidation Preference
$25 Per Share, (the "Series A Preferred Stock") and 5,666,738 warrants to
purchase an equivalent number of shares of common stock of Holdings at a
per share exercise price of approximately $2.86. The accreted balance of
the Series A Preferred Stock was $42,975 at March 31, 1995. Dividends on
the Series A Preferred Stock are payable quarterly at a rate of 15.0% per
annum. Under the terms of the Series A Preferred Stock, at the option of
Holdings, dividends may be paid in additional shares of Series A Preferred
Stock in lieu of cash through September 1998. The Restated Credit
Agreement permits Holdings to pay dividends in cash on the Series A
Preferred Stock subject to certain limitations. The Series A Preferred
Stock is subject to mandatory redemption on September 30, 2004. Holdings
may not redeem the Series A Preferred Stock until September 30, 1995.
Thereafter, the Series A Preferred Stock may be redeemed at the option of
Holdings at a percentage of liquidation preference declining from 107.5%
from and after September 30, 1995 to 100% beginning September 30, 1998.
Holdings is a holding company with no operations and has virtually no
assets other than its ownership of the outstanding common stock of the
Company. All of such stock is pledged, however, to the lenders under the
Restated Credit Agreement. Accordingly, Holdings' ability to meet its
obligations when due under the terms of its indebtedness will be dependent
on the Company's ability to pay dividends, to loan, or otherwise advance
or transfer funds, to Holdings in amounts sufficient to service Holdings'
debt obligations.
NOTE 5 SUBSEQUENT EVENT
In April, 1995, Holdings announced it would redeem all of its outstanding
Holdings Debentures on May 15, 1995 at their accreted principal amount,
which as of such date will be $272,850. In connection with the redemption
of the Holdings Debentures, the Company entered into three new facilities
in April, 1995: (i) a $260,000 Credit Agreement, (the "New Credit
Agreement"); (ii) a $60,000 Senior Unsecured Note Agreement, (the "Senior
Unsecured Note Agreement"); and (iii) a $25,000 Agreement and Lease, (the
10<PAGE>
ESSEX GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
(Unaudited)
In Thousands of Dollars, Except Per Share Data
----------------------------------------------
"Sale and Leaseback Agreement" and, together with the New Credit Agreement
and the Senior Unsecured Note Agreement, the "New Facilities").
The New Credit Agreement provides for up to $260,000 in revolving loans,
subject to specified percentages of eligible assets. In addition, the
Company's ability to borrow under the New Credit Agreement will be
restricted by the financial covenants contained therein as well as those
contained in the Senior Unsecured Note Agreement and to certain debt
limitation covenants contained in the indenture under which the Senior
Notes were issued. The New Credit Agreement also provides a $25,000
letter of credit subfacility.
The New Credit Agreement and Senior Unsecured Note Agreement have five-
year terms expiring in April, 2000. The Sale and Leaseback Agreement
provides for the sale and leaseback of certain of the Company's fixed
assets and has a seven-year term expiring in April, 2002. Borrowings
under the New Facilities bear floating rates of interest at bank prime or
a reserve adjusted Eurodollar rate (LIBOR) plus an applicable margin. The
remaining terms and conditions of these debt facilities are generally
comparable to the previous Credit Agreement.
On May 12, 1995 the Company expects to borrow the full amounts available
under the Senior Unsecured Note Agreement and Sale and Leaseback
Agreement. These funds, together with available cash and borrowings under
the New Credit Agreement will be paid to Holdings in the form of a cash
dividend and repayment of a portion of an intercompany liability totalling
$272,850. Holdings expects to apply such funds to redeem all of the
outstanding Holdings Debentures at 100% of their principal amount
($272,850) on May 15, 1995. The Company will recognize an extraordinary
charge of approximately $2,900 ($4,800 before applicable tax benefit) in
the second quarter 1995 for the write-off of unamortized deferred debt
expense in connection with the termination of the Credit Agreement.
11<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
Introduction
Essex Group, Inc. (the "Company") is engaged in one principal line of
business, the production of electrical wire and cable. It classifies its
operations into three major divisions based on the markets served: Wire
and Cable Division ("WCD"), Magnet Wire and Insulation Division ("MWI")
and Engineered Products Division ("EPD"). In 1994, the former
Telecommunication Products Division ("TPD") was merged with and into EPD.
The electrical wire products manufactured and sold by TPD were
incorporated within a new Communications business unit of EPD to
facilitate the realignment of its telecommunication wire manufacturing
capacity from primarily outside-plant telecommunication cables to a
broader mix of voice and data communication wire products.
In October 1992, MS/Essex Holdings Inc. ("Holdings") was acquired (the
"Acquisition") by merger (the "Merger") of BE Acquisition Corporation
("BE") with and into Holdings with Holdings surviving under the name
BCP/Essex Holdings Inc. BE was a newly organized Delaware corporation
formed for the purpose of effecting the Acquisition. The shareholders of
BE included Bessemer Capital Partners, L.P. ("BCP"), affiliates of
Goldman, Sachs & Co. ("Goldman Sachs"), affiliates of Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJ"), Chemical Equity Associates, A
California Limited Partnership ("CEA"), and members of management and
other employees of the Company. As a result of the Merger, the
stockholders of BE became stockholders of Holdings. During 1993, BCP
transferred its ownership in Holdings to Bessemer Holdings, L.P. ("BHLP"),
an affiliate of BCP. Prior to the Acquisition, the outstanding common
stock of Holdings was beneficially owned by The Morgan Stanley Leveraged
Equity Fund II, L.P., certain directors and members of management of
Holdings and the Company, and others. Holdings acquired the Company from
United Technologies Corporation ("UTC") in February 1988.
Results of Operations
Three Month Period Ended March 31, 1995
Net sales for the first quarter 1995 were $289.6 million or 24.9% higher
than the comparable period in 1994, primarily resulting from higher copper
prices. Copper is the Company s principal raw material. During the first
quarter 1995 the average price of copper on the New York Commodity
Exchange, Inc. ("COMEX") was 58.5% higher than the comparable period in
1994. Consistent with historical experience, this increase in copper
price (notwithstanding its magnitude) was generally passed on to customers
through product pricing during the first quarter 1995. The Company
experienced a nominal sales volume improvement in the first quarter 1995,
which was primarily attributable to increased demand for the Company s
magnet wire and automotive wire, offset by a reduction in building wire
and communications wire sales volume. MWI recorded significant sales
volume improvements in its automotive, motors and distribution products,
while EPD also experienced increased demand for its automotive wire
products. EPD s communications wire sales for the first quarter 1995
increased over the comparable period in 1994 due to improved product
pricing partially offset by a decline in sales volume, primarily export
sales. The increase in sales reported by WCD during the first quarter
1995 was attributable to a significant increase in copper prices partially
12<PAGE>
offset by a decline in sales volume and other pricing conditions.
Building wire market prices have recently experienced increased
competitive pressures resulting from a reduction in market demand coupled
with excess manufacturers' inventories.
Cost of goods sold for the first quarter 1995 was 29.0% higher than the
same period in 1994 due primarily to increased copper and other material
costs. The Company s cost of goods sold as a percentage of net sales was
85.4% and 82.7% in the first quarter 1995 and 1994, respectively. The
cost of goods sold percentage increase resulted primarily from the impact
of higher copper and other material costs as well as competitive pricing
conditions within the building wire market. These increases were
partially offset by lower manufacturing costs attributable to continued
capital investments and higher manufacturing volumes.
Selling and administrative expenses for the first quarter 1995 were 7.4%
above the comparable 1994 period, due primarily to higher sales
commissions related to increased sales.
Interest expense in the first quarter 1995 was $5.8 million,
approximating interest expense in the same period in 1994.
Income tax expense was 42.2% of pretax income in the first quarter 1995
compared with 43.5% for the same period in 1994. The effective income tax
rate of the Company is higher than the approximate statutory rate of 40%
due to the effect of the amortization of excess of cost over net assets
acquired which is not deductible for income tax purposes.
Liquidity, Capital Resources and Financial Condition
The Company had a ratio of debt to stockholder's equity of approximately
0.6 to 1 at March 31, 1995 and 0.6 to 1 at December 31, 1994.
In general, the Company requires liquidity for working capital, capital
expenditures, cash interest expenses and taxes. Of particular
significance to the Company is its working capital requirements which
increase whenever the Company experiences strong incremental demand in its
business and/or a significant rise in copper prices. Historically, the
Company has satisfied its liquidity requirements through a combination of
funds generated from operating activities together with funds available
under its credit facilities. Based upon historical experience and the
substantial availability of funds under its credit facilities, the Company
expects that its usual sources of liquidity will be more than sufficient
to enable it to meet its cash requirements for working capital, capital
expenditures, interest, taxes and payments to Holdings for 1995.
Net cash used for operating activities in the first quarter 1995 was $6.9
million, compared to net cash provided by operating activities of $1.0
million in the first quarter 1994. The increase in cash requirements was
needed primarily to fund higher inventory balances and to make required
tax payments under the tax sharing agreement with Holdings.
Capital expenditures of $4.2 million in the first three months of 1995
were $2.0 million lower than in the comparable period in 1994. The major
projects in 1995 entail increasing capacity and upgrading equipment. The
Company expects to make capital expenditures in 1995 approximating 1994
expenditure levels to expand capacity, complete modernization projects,
reduce costs and ensure continued compliance with regulatory provisions.
13<PAGE>
At March 31, 1995, approximately $9.0 million was committed to outside
vendors for capital expenditures. The Company's credit facilities,
including its new credit facilities discussed below, impose limitations on
the Company's capital expenditures, business acquisitions and investments.
In the first quarter 1995, there were no borrowings under the Company's
revolving credit facility compared to average borrowings of $1.5 million
in the first quarter 1994.
Subsequent Event
In April 1995, Holdings announced that it would redeem (the "Redemption")
all of its outstanding Senior Discount Debentures Due 2004 (the "Holdings
Debentures") on May 15, 1995 at their accreted principal amount which, as
of such date, will be $272.9 million, their full face amount. In
connection with the redemption, the Company has terminated its $175
million revolving credit facility and entered into three new facilities:
(i) a $260 million Credit Agreement, dated as of April 12, 1995 (the "New
Credit Agreement"), by and among the Company, Holdings, the lenders named
therein and Chemical Bank, as agent; (ii) a $60 million Senior Unsecured
Note Agreement, dated as of April 12, 1995 (the "Senior Unsecured Note
Agreement"), by and among the Company, Holdings, as guarantor, the lenders
named therein and Chemical Bank, as administrative agent; and (iii) a $25
million Agreement and Lease, dated as of April 12, 1995 (the "Sale and
Leaseback Agreement" and, together with the New Credit Agreement and the
Senior Unsecured Note Agreement, the "New Facilities"), by and between the
Company and Mellon Financial Services Corporation #3.
The Company believes that the New Facilities, together with cash flow
from operations, will provide adequate liquidity and capital resources to
enable it to effect the Redemption and to meet its ongoing cash
requirements. As a result of the Redemption, Holdings' cash requirements,
other than its obligation to pay taxes pursuant to its tax sharing
agreement with the Company, are expected to be immaterial for the next
several years. The Holdings Debentures would have begun to accrue cash
interest at the annual rate of 16% beginning on the date of Redemption.
Holdings' Series A Cumulative Redeemable Exchangeable Preferred Stock,
Liquidation Preference $25 Per Share (the "Series A Preferred Stock"),
which was issued in connection with the Acquisition and Merger, provides
that dividends may be paid in kind at the option of Holdings until 1998
and is not subject to mandatory redemption until 2004 (except upon the
occurrence of certain specified events). The Series A Preferred Stock may
be redeemed at the option of Holdings after September 30, 1995 at a
percentage of liquidation preference declining from 107.5% to 100%
beginning September 30, 1998, plus accumulated and unpaid dividends. The
New Credit Agreement permits the optional redemption of the Series A
Preferred Stock only out of the proceeds of a Holdings primary offering
(public or private), or in exchange for debentures with terms similar to
those of the Series A Preferred Stock or in exchange for other preferred
stock on terms no more onerous than those presently existing. Dividends
on the Series A Preferred Stock have historically been paid in additional
shares of Series A Preferred Stock. The New Credit Agreement prohibits
payment of such dividends in cash unless certain financial tests are met.
The New Credit Agreement provides for up to $260 million in revolving
loans, and a $25 million letter of credit subfacility. The amount of
borrowings available under the New Credit Agreement at any time is subject
to, and will be reduced by, outstanding borrowings thereunder and is
14<PAGE>
subject to reduction depending upon calculation of the Company's
"borrowing base" (as defined). In addition, the Company's ability to
incur borrowings under the New Credit Agreement will be restricted by the
financial covenants contained therein as well as those contained in the
Senior Unsecured Note Agreement and the indenture under which the Senior
Notes were issued (the "Indenture"). The restrictive covenants contained
in the New Facilities are described below. The New Credit Agreement
terminates five years from its effective date of April 12, 1995.
Borrowings under the New Credit Agreement bear interest at floating rates
calculated, at the Company's option, at either Chemical Bank's and Bank of
America Illinois' reserve adjusted Eurodollar rate ("LIBOR"), plus an
applicable margin ranging from 1% to 2.25% or Chemical Bank's prime rate,
plus an applicable margin ranging from 0% to 1.25%. The margin percentage
applied depends upon Holdings' leverage ratio and its interest coverage
ratio (in each case, as defined).
The New Credit Agreement requires the Company to effect interest rate
protection with respect to its floating rate indebtedness. Pursuant to
this requirement, the Company has purchased interest rate cap protection
through May 15, 1997 with respect to $150 million of debt. Such interest
rate protection carries a strike rate of 10% (three month LIBOR). In
addition, the Company must pay a commitment fee of 0.375% (increased to
0.5% depending upon Holdings' leverage ratio and interest coverage ratio)
on funds available but unused under the New Credit Agreement.
All borrowings under the New Credit Agreement are guaranteed by certain
subsidiaries of the Company and by Holdings and are secured by virtually
all of their, and the Company's, respective assets. In the case of
Holdings, its guarantee is secured by a pledge of all the outstanding
stock of the Company otherwise owned by it.
The Senior Unsecured Note Agreement provides for an aggregate of $60
million in term loans which mature five years from the date of borrowing,
which is expected to be not later than the Redemption date. Borrowings
under the Senior Unsecured Note Agreement must be made no later than May
31, 1995 and may only be used to pay a dividend to Holdings to finance the
Redemption and to pay related transaction fees and expenses. The Company
intends to borrow the entire amount available under this agreement.
Borrowings under the Senior Unsecured Note Agreement bear interest at
floating rates calculated, at the Company's option, at either a publicly
quoted LIBOR plus 3.75%, or Chemical Bank's prime rate plus 2.75%.
Principal payments on the term loans will be made in 20 equal installments
of $3.0 million commencing on August 15, 1995.
All borrowings under the Senior Unsecured Note Agreement rank pari passu
with the Company's Senior Notes; however, all payments under the Senior
Unsecured Note Agreement are due prior to the due date of the principal of
the Senior Notes. Indebtedness under the Senior Unsecured Note Agreement
is guaranteed by Holdings.
Both the New Credit Agreement and the Senior Unsecured Note Agreement
contain covenants requiring Holdings and/or the Company to maintain
certain financial ratios and restricting certain activities. For example,
the New Credit Agreement requires Holdings to maintain a minimum
consolidated current ratio, interest coverage ratio, leverage ratio,
senior secured leverage ratio and net worth. It also restricts incurrence
15<PAGE>
of indebtedness, liens, guarantees, mergers, sales of assets, lease
obligations, payment of dividends,negative pledge clauses, capital
expenditures and investments and, with certain exceptions, prohibits
prepayment of indebtedness, including the Senior Notes, and early
redemption of Holdings' outstanding preferred stock. Transactions with
affiliates are also restricted. The Senior Unsecured Note Agreement
prohibits, with certain exceptions, the incurrence by the Company of any
secured indebtedness unless the indebtedness under the Senior Unsecured
Note Agreement is equally and ratably secured. The failure by Holdings or
the Company to comply with any of the foregoing covenants, if such failure
is not timely cured or waived, could lead to acceleration of the
indebtedness covered by the applicable agreement and to cross-defaults and
cross-acceleration of other indebtedness of the Company. The Company has
calculated that it and Holdings will be in compliance with the foregoing
covenants at the time of the Redemption when it expects indebtedness under
such agreements to be outstanding.
The Sale and Leaseback Agreement provides for the sale of equipment used
in the Company's business by the Company for $25 million to Mellon
Financial Services Corporation #3 (the "Lessor"), and for the leasing back
of such equipment for a period of seven years. The principal component of
the rental is to be paid quarterly, with the amount of each of the first
27 of such payments to be equal to 2.5% of Lessor's cost of the equipment,
and the balance due at the final payment. The interest component is to be
paid on the unpaid principal balance and is to be calculated by Lessor
based upon an average LIBOR rate plus an applicable margin. The
applicable margin varies from 1.375% to 2.5% depending upon the Holdings'
leverage ratio and interest coverage ratio at the time of calculation.
The Company has the option to reacquire the equipment at the end of the
term of the lease for $1.00 or may opt to reacquire the equipment sooner,
on any rental payment date, and terminate the lease by paying Lessor the
balance of the principal payments which otherwise would have been due
under the terms of the lease had it not been terminated, together with any
unpaid interest accrued through the date of termination.
As of the date of Redemption, the Company expects that it will borrow the
full amount under the Senior Unsecured Note Agreement, will have received
$25 million in proceeds under the Sale and Leaseback Agreement and utilize
available cash and borrowings under the New Credit Agreement to finance
the Redemption through cash paid to Holdings in the form of a cash
dividend/repayment of intercompany liabilities in the amount of $272,850.
After giving effect to the foregoing, the Company believes that there will
be sufficient remaining funds available under the New Credit Agreement to
support working capital and other general corporate needs.
General Economic Conditions and Inflation
The Company faces various economic risks ranging from an economic
downturn adversely impacting the Company's primary markets to marked
fluctuations in copper prices. In the short-term, pronounced changes in
the price of copper tend to affect WCD's gross profits because such
changes affect raw material costs more quickly than those changes can be
reflected in the pricing of WCD's products. In the long-term, however,
copper price changes have not had a material adverse effect on gross
profits because cost changes generally have been passed through to
customers over time. In addition, the Company believes that its
sensitivity to downturns in its primary markets is less significant than
it might otherwise be due to its diverse customer base and its strategy of
16<PAGE>
attempting to match its copper purchases with its needs. The Company
cannot predict either the continuation of current economic conditions or
future results of its operations in light thereof.
The Company believes that it is not particularly affected by inflation
except to the extent that the economy in general is thereby affected.
Should inflationary pressures drive costs higher, the Company believes
that general industry competitive price increases would sustain operating
results, although there can be no assurance that this will be the case.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Item Exhibit Index
---- -------------
10.1 Credit Agreement dated as of April 12, 1995,
among BCP/Essex Holdings Inc., the registrant,
the lenders named therein and Chemical Bank, as
agent.
10.2 Senior Unsecured Note Agreement dated as of
April 12, 1995, among BCP/Essex Holdings Inc.,
as guarantor, the registrant, the lenders named
therein and Chemical Bank, as administrative
agent.
10.3 Agreement and Lease dated as of April 12, 1995
between Mellon Financial Services Corporation
#3 and the registrant.
(b) Reports on Form 8-K:
A Current Report on Form 8-K (Items 5 and 7) was
filed on February 17, 1995 to report 1994 net sales
and earnings.
17<PAGE>
SIGNATURE
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 thereunto duly authorized.
ESSEX GROUP, INC.
(Registrant)
May 12, 1995 /s/ David A. Owen
---------------------------------
David A. Owen
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
18<PAGE>
EXHIBIT 10.1
__________________________________________________________________________
$260,000,000
CREDIT AGREEMENT
Dated as of April 12, 1995
among
BCP/ESSEX HOLDINGS INC.,
ESSEX GROUP, INC.,
THE LENDERS NAMED HEREIN
and
CHEMICAL BANK,
as Agent
__________________________________________________________________________<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions; Financial
Calculations . . . . . . . . . . . . . . . . . . . 31
SECTION 2. THE REVOLVING CREDIT COMMITMENTS . . . . . . . . . 32
2.1 Revolving Credit Commitments . . . . . . . . . . . 32
2.2 Evidence of Loans; Repayment . . . . . . . . . . . 32
2.3 Procedure for Revolving Credit Borrowing . . . . . 33
2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . 33
2.5 Termination or Reduction of Revolving Credit
Commitments . . . . . . . . . . . . . . . . . . . . 34
2.6 Optional Prepayments . . . . . . . . . . . . . . . 34
2.7 Mandatory Prepayments . . . . . . . . . . . . . . . 34
2.8 Conversion and Continuation Options . . . . . . . . 35
2.9 Minimum Amounts and Maximum Number of Eurodollar
Tranches . . . . . . . . . . . . . . . . . . . . . 36
2.10 Interest Rates and Payment Dates . . . . . . . . . 36
2.11 Computation of Interest and Fees . . . . . . . . . 36
2.12 Inability to Determine Interest Rate . . . . . . . 37
2.13 Pro Rata Treatment and Payments . . . . . . . . . . 37
2.14 Requirements of Law . . . . . . . . . . . . . . . . 38
2.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . 40
2.16 Indemnity . . . . . . . . . . . . . . . . . . . . . 42
2.17 Replacement Lenders . . . . . . . . . . . . . . . . 43
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . 43
3.1 L/C Commitment . . . . . . . . . . . . . . . . . . 43
3.2 Procedure for Issuance of Letters of Credit . . . . 44
3.3 Fees and Other Charges . . . . . . . . . . . . . . 44
3.4 L/C Participations . . . . . . . . . . . . . . . . 45
3.5 Drawing and Reimbursement . . . . . . . . . . . . . 45
3.6 Obligations Absolute . . . . . . . . . . . . . . . 46
3.7 Letter of Credit Payments . . . . . . . . . . . . . 47
3.8 Application . . . . . . . . . . . . . . . . . . . . 47
3.9 Notices and Reports . . . . . . . . . . . . . . . . 47
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 48
4.1 Financial Condition . . . . . . . . . . . . . . . . 48
4.2 No Change . . . . . . . . . . . . . . . . . . . . . 49
4.3 Corporate Existence; Compliance with Law . . . . . 49
4.4 Corporate Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . . 49
4.5 No Legal Bar . . . . . . . . . . . . . . . . . . . 50
4.6 No Material Litigation . . . . . . . . . . . . . . 50
4.7 No Default . . . . . . . . . . . . . . . . . . . . 50
4.8 Ownership of Property; Liens . . . . . . . . . . . 50
4.9 Intellectual Property . . . . . . . . . . . . . . . 51
4.10 No Burdensome Restrictions . . . . . . . . . . . . 51
4.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . 51
4.12 Federal Regulations . . . . . . . . . . . . . . . . 51
4.13 Labor Matters . . . . . . . . . . . . . . . . . . . 52
4.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . 52
4.15 Investment Company Act; Other Regulations . . . . . 52
(i)<PAGE>
Page
4.16 Subsidiaries . . . . . . . . . . . . . . . . . . . 52
4.17 Purpose of Loans . . . . . . . . . . . . . . . . . 52
4.18 Environmental Matters . . . . . . . . . . . . . . . 53
4.19 Accuracy of Information . . . . . . . . . . . . . . 54
4.20 Security Documents . . . . . . . . . . . . . . . . 54
4.21 Solvency . . . . . . . . . . . . . . . . . . . . . 55
4.22 Insurance . . . . . . . . . . . . . . . . . . . . . 55
4.23 Regulation H . . . . . . . . . . . . . . . . . . . 55
SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 55
5.1 Conditions to Effectiveness . . . . . . . . . . . . 55
5.2 Conditions to Each Extension of Credit . . . . . . 58
5.3 Conditions to Redemption Loans . . . . . . . . . . 59
SECTION 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . 59
6.1 Financial Statements . . . . . . . . . . . . . . . 60
6.2 Certificates; Other Information . . . . . . . . . . 60
6.3 Payment of Obligations . . . . . . . . . . . . . . 62
6.4 Conduct of Business and Maintenance of Existence . 62
6.5 Maintenance of Property; Insurance . . . . . . . . 62
6.6 Inspection of Property; Books and Records;
Discussions . . . . . . . . . . . . . . . . . . . . 62
6.7 Notices . . . . . . . . . . . . . . . . . . . . . . 62
6.8 Environmental Laws . . . . . . . . . . . . . . . . 63
6.9 Interest Rate Protection . . . . . . . . . . . . . 65
6.10 Additional Collateral . . . . . . . . . . . . . . . 65
SECTION 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . 67
7.1 Financial Condition Covenants . . . . . . . . . . . 67
7.2 Limitation on Indebtedness . . . . . . . . . . . . 68
7.3 Limitation on Liens . . . . . . . . . . . . . . . . 70
7.4 Limitation on Guarantee Obligations . . . . . . . . 72
7.5 Limitations on Fundamental Changes . . . . . . . . 72
7.6 Limitation on Sale of Assets . . . . . . . . . . . 73
7.7 Limitation on Leases . . . . . . . . . . . . . . . 74
7.8 Limitation on Dividends . . . . . . . . . . . . . . 74
7.9 Limitation on Negative Pledge Clauses . . . . . . . 76
7.10 Limitation on Capital Expenditures, Investments,
Loans and Advances . . . . . . . . . . . . . . . . 76
7.11 Limitation on Optional Payments and Modifications
of Certain Agreements . . . . . . . . . . . . . . . 78
7.12 Transactions with Affiliates . . . . . . . . . . . 79
7.13 Corporate Documents . . . . . . . . . . . . . . . . 80
7.14 Fiscal Year . . . . . . . . . . . . . . . . . . . . 80
7.15 Limitation on Activities of Holdings . . . . . . . 80
SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . 80
SECTION 9. THE AGENT . . . . . . . . . . . . . . . . . . . . . 84
9.1 Appointment . . . . . . . . . . . . . . . . . . . . 84
9.2 Delegation of Duties . . . . . . . . . . . . . . . 84
9.3 Exculpatory Provisions . . . . . . . . . . . . . . 84
9.4 Reliance by Agent . . . . . . . . . . . . . . . . . 85
9.5 Notice of Default . . . . . . . . . . . . . . . . . 85
9.6 Non-Reliance on Agent and Other Lenders . . . . . . 86
9.7 Indemnification . . . . . . . . . . . . . . . . . . 86
(ii)<PAGE>
Page
9.8 Agent in Its Individual Capacity . . . . . . . . . 86
9.9 Successor Agent . . . . . . . . . . . . . . . . . . 87
9.10 Co-Lead Agent and Co-Agents . . . . . . . . . . . . 87
SECTION 10. GUARANTEE . . . . . . . . . . . . . . . . . . . . 87
10.1 Guarantee . . . . . . . . . . . . . . . . . . . . . 87
10.2 No Subrogation, Contribution, Reimbursement or
Indemnity . . . . . . . . . . . . . . . . . . . . . 88
10.3 Amendments, etc. with respect to the Obligations . 88
10.4 Guarantee Absolute and Unconditional . . . . . . . 89
10.5 Reinstatement . . . . . . . . . . . . . . . . . . . 89
10.6 Payments . . . . . . . . . . . . . . . . . . . . . 90
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . 90
11.1 Amendments and Waivers . . . . . . . . . . . . . . 90
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . 91
11.3 No Waiver; Cumulative Remedies . . . . . . . . . . 92
11.4 Survival of Representations and Warranties . . . . 92
11.5 Payment of Expenses and Taxes . . . . . . . . . . . 92
11.6 Successors and Assigns; Assignments and
Participations . . . . . . . . . . . . . . . . . . 93
11.7 Adjustments; Setoff . . . . . . . . . . . . . . . . 97
11.8 Counterparts . . . . . . . . . . . . . . . . . . . 97
11.9 Severability . . . . . . . . . . . . . . . . . . . 97
11.10 Releases . . . . . . . . . . . . . . . . . . . . . 98
11.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . 98
11.12 Submission To Jurisdiction; Waivers . . . . . . . . 98
11.13 Acknowledgements . . . . . . . . . . . . . . . . . 98
11.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . 99
11.15 Confidentiality . . . . . . . . . . . . . . . . . . 99
11.16 New Lenders; Commitment Increases . . . . . . . . . 99
11.17 INTEGRATION . . . . . . . . . . . . . . . . . . . . 99
(iii)<PAGE>
Page
SCHEDULES:
1.1A Revolving Credit Commitments, Addresses
1.1B Mortgaged Properties
1.1C Terms of Preferred Stock
4.1(b) Liabilities, etc.
4.5 Legal Bar
4.8 Owned and Leased Properties
4.9 Patents and Trademarks
4.16 Subsidiaries
4.20(b) UCC Filing Jurisdictions
4.20(c) Mortgage Filing Jurisdictions
5.1(f) Local Counsel
7.2(c) Existing Indebtedness
7.3(f) Existing Liens
7.7(a) Existing Leases
EXHIBITS:
A Revolving Credit Note
B-1 Borrowing Base Certificate
B-2 Senior Note Indenture Revolving Credit Incurrence Limit
Certificate
C Intercompany Note
D-1 Company Pledge Agreement
D-2 Holdings Pledge Agreement
D-3 Subsidiary Pledge Agreement
E-1 Company Security Agreement
E-2 Holdings Security Agreement
E-3 Subsidiary Security Agreement
F Subsidiary Guaranty
G-1 Opinion of Cravath, Swaine & Moore
G-2 General Counsel Opinion
G-3 Local Counsel Opinion
H Closing Certificate
I Assignment and Acceptance
J Mortgage
K Compliance Certificate
L Confidentiality Letter
(iv)<PAGE>
CREDIT AGREEMENT, dated as of April 12, 1995, among BCP/ESSEX HOLDINGS
INC., a Delaware corporation ("BCP Holdings"), ESSEX GROUP, INC., a
Michigan corporation (the "Company"), the several banks and other
financial institutions from time to time parties to this Agreement (the
"Lenders") and CHEMICAL BANK, a New York banking corporation, as agent for
the Lenders hereunder.
PRELIMINARY STATEMENTS:
(1) BCP Holdings, the Company, the banks and financial institutions
parties thereto and Chemical Bank, as agent, are parties to the Credit
Agreement, dated as of September 25, 1992, as amended and restated as of
April 22, 1993 (the "Existing Credit Agreement"). BCP Holdings and the
Company have requested that the Existing Credit Agreement be terminated on
the Effective Date (as hereinafter defined).
(2) The Company has requested that (a) the Lenders make Loans (as
hereinafter defined) to the Company, the proceeds of which shall be used
(A) to refund loans outstanding under the Existing Credit Agreement on the
Effective Date, (B) to finance the working capital requirements of the
Company and its Subsidiaries (as hereinafter defined), (C) to pay a
dividend to BCP Holdings to finance the repurchase or redemption of all or
a portion of its 16% Debentures (as hereinafter defined) in accordance
with the terms hereof, (D) to pay reasonable fees and expenses in
connection with the transactions contemplated hereby and (E) for general
corporate purposes and (b) the Issuing Lender (as hereinafter defined)
issue Letters of Credit (as hereinafter defined) for the account of the
Company in an aggregate amount not to exceed $25,000,000 at any time
outstanding.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto hereby agree
as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"ABR Loans": Loans the rate of interest applicable to which
is based upon the Alternate Base Rate.
"Accounts": as defined in the definition of "Eligible
Receivables".
"Affiliate": as to any Person, (a) any other Person which,
directly or indirectly, is in control of, is controlled by, or is
under common control with, such Person or (b) any Person who is a
director, officer, shareholder or partner (i) of such Person, (ii)
of any Subsidiary of such Person or (iii) of any Person described in
the preceding clause (a). For purposes of this definition,
"control" of a Person means the power, directly or indirectly,
either to (i) vote 10% or more of the securities having ordinary
voting power for the election of directors of such Person or (ii)
direct or cause the direction of the management and policies of such
Person whether by contract or otherwise. For the purposes of
Section 7.12, shareholders and Affiliates of BSC that would not be
Affiliates of Holdings, the Company or any of its Subsidiaries other
than by reason of being shareholders or Affiliates of BSC, and that
neither in fact participate in the management of any of BSC, BP Co.,<PAGE>
2
Holdings, the Company or any of its Subsidiaries, nor are controlled
by BSC, BP Co., Holdings, the Company or any of its Subsidiaries, or
any of their respective Affiliates who in fact participate in the
management of any of BSC, BP Co., Holdings, the Company or any of
its Subsidiaries, shall not be deemed to be Affiliates of Holdings,
the Company or any of its Subsidiaries.
"Agent": Chemical Bank, together with its affiliates, as the
arranger of the Revolving Credit Commitments and as the agent for
the Lenders under this Agreement and the other Loan Documents, and
any successor agent appointed and approved pursuant to Section 9.9.
"Aggregate Outstanding Revolving Extensions of Credit": at
any time, an amount equal to the sum of (a) the aggregate principal
amount of all Loans then outstanding, (b) the aggregate amount of
all L/C Obligations then outstanding and (c) the aggregate principal
amount of all Specified Basket Debt then outstanding.
"Agreement": this Credit Agreement, as amended, supplemented
or otherwise modified from time to time.
"Alternate Base Rate": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime
Rate" shall mean the rate of interest per annum publicly announced
from time to time by Chemical as its prime rate in effect at its
principal office in New York City; "Base CD Rate" shall mean the sum
of (a) the product of (i) the Three-Month Secondary CD Rate and (ii)
a fraction, the numerator of which is one and the denominator of
which is one minus the C/D Reserve Percentage and (b) the Assessment
Rate; "Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not
be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve
Bank of New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical Release
H.15(519) during the week following such day), or, if such rate
shall not be so reported on such day or such next preceding Business
Day, the average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such
day (or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Agent from three New York City
negotiable certificate of deposit dealers of recognized standing
selected by it; and "Federal Funds Effective Rate" shall mean, for
any day, the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business
Day, the average of the quotations for the day of such transactions
received by the Agent from three federal funds brokers of recognized
standing selected by it. If for any reason the Agent shall have<PAGE>
3
determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Base CD Rate or the
Federal Funds Effective Rate, or both, for any reason, including the
inability or failure of the Agent to obtain sufficient quotations in
accordance with the terms hereof, the Alternate Base Rate shall be
determined without regard to clause (b) or (c), or both, of the
first sentence of this definition, as appropriate, until the
circumstances giving rise to such inability no longer exist. Any
change in the Alternate Base Rate due to a change in the Prime Rate,
the Three-Month Secondary CD Rate, the C/D Reserve Percentage, the
Assessment Rate or the Federal Funds Effective Rate shall be
effective on the effective day of such change in the Prime Rate, the
Three-Month Secondary CD Rate, the C/D Reserve Percentage, the
Assessment Rate or the Federal Funds Effective Rate, respectively.
"Applicable Margin": for each Type of Loan, on any date, the
rate per annum set forth below opposite the Level then in effect:
[CAPTION]
<TABLE>
Level Eurodollar Loans ABR Loans
----- ---------------- ---------
<S> <C> <C>
I 1% 0%
II 1-1/4% 1/4%
III 1-1/2% 1/2%
IV 1-3/4% 3/4%
V 2% 1%
VI 2-1/4% 1-1/4%
</TABLE>
"Application": an application, in such form as the Issuing
Lender may specify from time to time, requesting the Issuing Lender
to open a Letter of Credit.
"Assessment Rate": for any day, as applied to any ABR Loan,
the annual assessment rate in effect on such day which is payable by
a member of the Bank Insurance Fund maintained by the Federal
Deposit Insurance Corporation or any successor (the "FDIC")
classified as well-capitalized and within supervisory subgroup "B"
(or a comparable successor assessment risk classification) within
the meaning of 12 C.F.R. Section 327.3(d) (or any successor
provision) to the FDIC for the FDIC's insuring time deposits at
offices of such institution in the United States.
"Assignment and Acceptance": an Assignment and Acceptance
entered into by a Lender and an assignee, and consented to by the
Agent, the Issuing Lender and the Company, substantially in the form
of Exhibit I.<PAGE>
4
"Available Revolving Credit Commitment": as to any Lender at
any time, an amount equal to the excess, if any, of (a) the amount
of such Lender's Revolving Credit Commitment over (b) such Lender's
Outstanding Revolving Extensions of Credit.
"BCP/Company Merger": as defined in Section 7.5(c).
"Bessemer Group": the collective reference to BSC, BH, any
Control Affiliate of BSC or BH (collectively, the "Bessemer
Affiliates"), any partner, member, stockholder, manager, director,
officer or employee of BSC, BH or a Bessemer Affiliate or of any
such partner, member, stockholder or manager (collectively,
"Bessemer Associates"), the heirs, executors, administrators,
testamentary trustees, legatees or beneficiaries of any Bessemer
Associate and a trust, the beneficiaries of which, or a corporation
or partnership, the stockholders, members or partners of which,
include BSC, BH, Bessemer Affiliates, Bessemer Associates, their
spouses or their lineal descendants, provided, however, that
"Bessemer Group" shall exclude any operating company "controlled"
(as defined in the definition of "Control Affiliate") by Bessemer
Holdings, L.P., Bessemer Capital Partners, L.P. or any partnership
or similar entity under common "control" (as defined in the
definition of "Control Affiliate") with Bessemer Holdings, L.P.
"BH": Bessemer Holdings, L.P. (as successor in interest to
Bessemer Capital Partners, L.P.) and any Person which is a
Subsidiary or Control Affiliate thereof.
"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Borrowing Base": as of any date of determination, an amount
equal to the sum of (a) 85% of Eligible Receivables as of such date
(the "Eligible Receivables Borrowing Base Value") and (b) the lesser
of (i) the sum of (x) 65% of Eligible Inventory (other than Eligible
Consigned Inventory and Raw Materials) as of such date, (y) 50% of
Eligible Consigned Inventory that constitutes Eligible Inventory as
of such date and (z) 30% of Raw Materials that constitute Eligible
Inventory as of such date and (ii) the Eligible Receivables
Borrowing Base Value as of such date. The amounts described in the
preceding sentence shall be determined by reference to the most
recent monthly Borrowing Base Certificate delivered to the Lenders
pursuant to Section 6.2(e).
"Borrowing Base Certificate": a certificate substantially in
the form of Exhibit B-1, with such changes as the Agent may from
time to time reasonably request for the purpose of monitoring the
Borrowing Base.
"Borrowing Date": any Business Day specified in a notice
pursuant to Section 2.3 as a date on which the Company requests the
Lenders to make Loans hereunder.
"BP Co.": Bessemer Partners & Co.
"BSC": Bessemer Securities Corporation.<PAGE>
5
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close; provided, however, that when used in
connection with a Eurodollar Loan, the term "Business Day" shall
also exclude any day on which commercial banks are not open for
dealings in Dollar deposits in the London interbank market.
"Capital Expenditures": for any period and with respect to
any Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a capital
lease) of fixed or capital assets or additions to equipment
(including replacements, capitalized repairs and improvements during
such period) which should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries,
excluding (a) any such expenditure made with the proceeds of any
sale of fixed or capital assets, so long as (i) such proceeds are so
applied within twelve months of such sale and (ii) the assets
acquired pursuant to such expenditure constitute Collateral as to
which the Agent, for the benefit of the Lenders, has a fully
perfected Lien, prior and superior in right to any other Person,
other than with respect to Liens expressly permitted by Section 7.3
(other than Section 7.3(g)(iii)) and (b) any such expenditure made
to restore, replace or rebuild property to the condition of such
property immediately prior to any damage, loss or destruction of
such property, to the extent such expenditure is made with insurance
proceeds relating to any such damage, loss or destruction. For the
purpose of this definition, the purchase price of equipment which is
purchased simultaneously with the trade-in of existing equipment
owned by such Person or any of its Subsidiaries shall be included in
Capital Expenditures only to the extent of the gross amount of such
purchase price less the credit granted by the seller of such
equipment for such equipment being traded in at such time.
"Capital Lease Financing Facility": any lease financing
facility entered into by the Company or any of its Subsidiaries so
long as the aggregate Capital Lease Obligations with respect thereto
shall not exceed $25,000,000 at any one time, provided, that (a) the
assets subject thereto, and the pricing, tenor and other terms
thereof, shall be reasonably satisfactory to the Required Lenders
and (b) the net proceeds thereof shall be applied as promptly as
practicable to redeem a portion of the 16% Debentures.
"Capital Lease Obligations": as to any Person, the
obligations of such Person to pay rent or other amounts under any
lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a
balance sheet of such Person under GAAP and, for the purposes of
this Agreement, the amount of such obligations at any time shall be
the capitalized amount thereof at such time determined in accordance
with GAAP.
"Capital Stock": any and all shares, interests,
participations or other equivalents (however designated) of capital
stock of a corporation, any and all equivalent ownership interests<PAGE>
6
in a Person (other than a corporation) and any and all warrants or
options to purchase any of the foregoing.
"Cash Equivalents": (a) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed
or insured by the United States Government or any agency thereof;
(b) certificates of deposit, time deposits, eurodollar time
deposits, overnight bank deposits, bankers' acceptances and
repurchase agreements having maturities of one year or less from the
date of acquisition issued by any Lender or by any commercial bank
organized under the laws of the United States of America or any
state thereof having combined capital and surplus of not less than
$100,000,000; and (c) commercial paper of an issuer rated at least
A-1 by Standard & Poor's Ratings Group or P-1 by Moody's Investors
Service, Inc., or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating agencies
cease publishing ratings of investments, and, in either case,
maturing within six months from the date of acquisition.
"C/D Reserve Percentage": for any day, that percentage
(expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in New
York City with deposits exceeding one billion Dollars in respect of
new non-personal time deposits in Dollars in New York City having a
maturity approximately equal to three months and in an amount of
$100,000 or more.
"Chemical": Chemical Bank, a New York banking corporation.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral": all property and interests in property and
proceeds thereof now owned or hereafter acquired by Holdings, the
Company or any of its Subsidiaries in or upon which a Lien is or
will be granted or purported to be granted under any of the Security
Documents.
"Commercial Letters of Credit": the collective reference to
Sight Letters of Credit and Usance Letters of Credit.
"Commitment Percentage": as to any Lender at any time, the
percentage of the aggregate Revolving Credit Commitments then
constituted by such Lender's Revolving Credit Commitment.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Company and which is treated as a single employer under
Section 414(b) or (c) of the Code.
"Company Pledge Agreement": the Pledge Agreement made by the
Company in favor of the Agent for the benefit of the Lenders
substantially in the form of Exhibit D-1, as the same may be
amended, supplemented or otherwise modified from time to time.<PAGE>
7
"Company Security Agreement": the Security Agreement made by
the Company in favor of the Agent for the benefit of the Lenders
substantially in the form of Exhibit E-1, as the same may be
amended, supplemented or otherwise modified from time to time.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer of each of Holdings and the Company in the form
of Exhibit K.
"Confidential Information": written information that
Holdings, the Company, any of their Subsidiaries or Affiliates, or
any of their authorized representatives furnishes to the Agent or
any Lender on a confidential basis, other than any such information
that becomes generally available to the public other than as a
result of a breach by the Agent or any Lender of its obligations
hereunder or that is or becomes available to the Agent or such
Lender from a source other than Holdings, the Company, any of their
Subsidiaries or Affiliates, or any of their authorized
representatives and that is not, to the actual knowledge of the
recipient thereof, subject to obligations of confidentiality with
respect thereto.
"Confidential Information Memorandum": the Confidential
Information Memorandum dated March 1995 and furnished to the
Lenders.
"Consolidated Current Assets": at a particular date, with
respect to any Person, all amounts (other than cash and Cash
Equivalents) which would, in conformity with GAAP, be set forth
opposite the caption "total current assets" (or any like caption) on
a consolidated balance sheet of such Person and its Subsidiaries at
such date, plus the amount of the LIFO reserve applied to such
Person's Inventory as of such date.
"Consolidated Current Liabilities": at a particular date,
with respect to any Person, all amounts which would, in conformity
with GAAP, be set forth opposite the caption "total current
liabilities" (or any like caption) on a consolidated balance sheet
of such Person and its Subsidiaries at such date, but excluding (a)
the current portion of any Funded Debt of such Person and its
Subsidiaries and (b) without duplication of clause (a) above, all
Indebtedness consisting of Loans to the extent otherwise included
therein.
"Consolidated EBITDA": for any period, with respect to any
Person, Consolidated Net Income of such Person for such period plus,
without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum
of (i) total income tax expense, (ii) interest expense, amortization
or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with
Indebtedness (including the Loans and L/C Obligations), (iii)
depreciation and amortization expense, (iv) amortization of
intangibles (including, but not limited to, goodwill) and
organization costs, (v) other non-cash charges (including changes in
inventory valuations) and (vi) any extraordinary expenses or losses<PAGE>
8
(including, whether or not otherwise includable as a separate item
in the statement of such Consolidated Net Income for such period,
losses on sales of assets outside of the ordinary course of
business) and minus, without duplication and to the extent reflected
as a credit in the statement of such Consolidated Net Income for
such period, the sum of (a) any extraordinary income or gains
(including, whether or not otherwise includable as a separate item
in the statement of such Consolidated Net Income for such period,
gains on the sales of assets outside of the ordinary course of
business) and (b) total cash interest income of such Person and its
consolidated Subsidiaries for such period, all as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Cash Interest Expense": for any period as
to any Person, (a) total cash interest expense (including that
attributable to Capital Lease Obligations) of such Person and its
consolidated Subsidiaries for such period with respect to all
outstanding Indebtedness of such Person and its consolidated
Subsidiaries, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to letters of
credit (including Participation Fees but excluding fronting fees
payable solely to the issuer of any such letter of credit) and
bankers' acceptance financing and net costs under Interest Rate
Protection Agreements (which net costs may be allocated over the
term of any Interest Rate Protection Agreement in any manner
reasonably deemed appropriate by the Company) minus (b) total cash
interest income of such Person and its consolidated Subsidiaries for
such period, in each case determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income": for any period as to any Person,
the consolidated net income (or loss) of such Person and its
Subsidiaries, determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded the income (or deficit)
of any other Person (other than a Subsidiary of such Person) in
which such Person or any of its Subsidiaries has an ownership
interest, except to the extent that any such income is actually
received by such Person or such Subsidiary in the form of dividends
or similar distributions.
"Consolidated Net Worth": of any Person means, at any date,
the excess of total assets of such Person and its consolidated
Subsidiaries over total liabilities of such Person and its
consolidated Subsidiaries on such date.
"Consolidated Working Capital": the excess of Consolidated
Current Assets over Consolidated Current Liabilities.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument
or other undertaking to which such Person is a party or by which it
or any of its property is bound.
"Control Affiliate": as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled by,
or is under common control with, such Person. For purposes of this<PAGE>
9
definition, "control" of a Person means the power, directly or
indirectly, to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Default": any of the events specified in Section 8, whether
or not any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Defaulted Account": as defined in the definition of
"Eligible Receivables".
"DLJ": Donaldson, Lufkin & Jenrette, Inc. and any Person
which is a Subsidiary or Control Affiliate thereof.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"EBITDA Basket Amount": for any fiscal year of Holdings, an
amount equal to the excess, if any, of (a) Consolidated EBITDA of
Holdings for the immediately preceding fiscal year over (b) the
product of 1.25 times Consolidated Net Cash Interest Expense of
Holdings for the immediately preceding fiscal year.
"Effective Date": the date on which the conditions specified
in Section 5.1 shall have been satisfied.
"Eligible Consigned Inventory": (a) Inventory (i) which is
consigned to and located at the premises of a Person for
incorporation in the ordinary course of such Person's business into
such Person's manufacturing process, (ii) which is segregated from
inventory not owned by the Company or the relevant Subsidiary and
identifiable as Inventory and (iii) in respect of which an Eligible
Receivable will be created immediately upon the use or incorporation
of such Inventory by such Person, and (b) Inventory which is
consigned to and located at the premises of a Person who is an agent
or distributor approved by the Agent in writing for the purposes of
this definition; provided, that the Company or the relevant
Subsidiary, as the case may be, in its capacity as consignor, shall
have filed appropriate Uniform Commercial Code financing statements
with respect to such Inventory; and provided, further, that the
Person holding such Inventory has entered into an agreement,
satisfactory in form and substance to the Agent, providing a waiver
of any applicable Lien and of any right of offset on the part of
such Person with respect to such Inventory and providing the Agent
with the right to repossess such Inventory upon the occurrence and
during the continuance of a Default or Event of Default.
"Eligible Inventory": all inventory of the Company or any of
its Subsidiaries ("Inventory"), valued at the lower of (i) cost
determined in accordance with GAAP (excluding any LIFO reserve) and
stated on a basis consistent with the historical practices of the
Company and its Subsidiaries as of the Effective Date or (ii) market
value, that the Agent, in its reasonable discretion, shall deem
eligible, reduced (or, in the case of any positive adjustment
pursuant to clause (x) below, increased) by (x) an adjustment,
positive or negative, equivalent to the sum of the previous two<PAGE>
10
months' purchase price variances that result when standard costs and
actual costs differ, (y) the value of reserves which have been
recorded by the Company or any of its Subsidiaries with respect to
obsolete, slow-moving or excess Inventory and (z) such other
reserves as the Agent, in its reasonable discretion after
consultation with the Company, shall deem appropriate. Without in
any way limiting the discretion of the Agent to deem an item of
Inventory eligible or ineligible, the Agent does not currently
intend to treat any item of Inventory as eligible if:
(a) such item of Inventory is not assignable or
a first priority security interest in such item of
Inventory in favor of the Agent for the benefit of the
Lenders has not been obtained and fully perfected by
filing Uniform Commercial Code financing statements
against the Company or the relevant Subsidiary, as the
case may be or, in the case of Inventory located in
Canada, by completing all steps required to fully
perfect a first priority security interest in such
Inventory;
(b) such item of Inventory is subject to any
Lien whatsoever, other than Liens in favor of the Agent
for the benefit of the Lenders;
(c) such item of Inventory (i) is damaged or not
in good condition (to the extent not provided for by
reserves as described above) or (ii) does not meet all
material standards imposed by any Governmental Authority
having regulatory authority over such item of Inventory,
its use or its sale;
(d) such item of Inventory is not currently
either readily usable or salable, at prices
approximating at least the cost thereof, in the normal
course of the business of the Company or the relevant
Subsidiary, as the case may be (to the extent not
provided for by reserves as described above);
(e) any event shall have occurred or any
condition shall exist with respect to such item of
Inventory which would substantially impede the ability
of the Company or the relevant Subsidiary, as the case
may be, to continue to use or sell such item of
Inventory in the normal course of business;
(f) any claim disputing the title of the Company
or the relevant Subsidiary, as the case may be, to, or
right to possession of or dominion over, such item of
Inventory shall have been asserted;
(g) any representation or warranty contained in
this Agreement or in any other Loan Document applicable
to either Inventory in general or to any such specific
item of Inventory has been breached with respect to such
item of Inventory;<PAGE>
11
(h) the Company or the relevant Subsidiary, as
the case may be, does not have good and marketable title
as sole owner of such item of Inventory;
(i) such item of Inventory is not Eligible
Consigned Inventory, is owned by the Company or any of
its Subsidiaries, and has been consigned to other
Persons, or is located at, or in the possession of, a
vendor of the Company or such Subsidiary, or is in
transit to or from, or held or stored by, third parties;
(j) such item of Inventory is work-in-process
(other than (i) the copper content of such item of
Inventory and (ii) Raw Materials);
(k) such item of Inventory is located on a
leasehold as to which the lessor has not entered into a
landlord's waiver and consent, satisfactory in form and
substance to the Agent, providing a waiver of any
applicable Lien and providing the Agent with the right
to receive notice of default, the right to repossess
such item of Inventory at any time upon the occurrence
or during the continuance of a Default or Event of
Default and such other rights as may be acceptable to
the Agent;
(l) such item of Inventory is located outside of
the United States, Puerto Rico, any United States
possession or protectorate which has adopted the Uniform
Commercial Code or Canada;
(m) such item of Inventory is evidenced by an
Account;
(n) such item of Inventory is subject to any
licensing, patent, royalty, trademark, trade name or
copyright agreements with any third party from whom the
Company or any of its Subsidiaries has received notice
of a dispute in respect of any such agreement;
(o) such item of Inventory consists of
chemicals, enamels or other raw materials (other than
(i) the copper content of such item of Inventory and
(ii) Raw Materials);
(p) such item of Inventory consists of packing,
packaging and/or shipping supplies or materials; or
(q) such item of Inventory has been otherwise
determined by the Agent (after consultation with the
Company), exercising its commercially reasonable
discretion, to be unacceptable because the Agent
believes that such item of Inventory is not readily
salable under the customary terms on which it is usually
sold.<PAGE>
12
Notwithstanding anything to the contrary in this Agreement,
Inventory having an aggregate value (as determined pursuant to the
first sentence of this definition) of up to $20,000,000 that does
not constitute Eligible Inventory solely as a result of the failure
to obtain (i) an agreement of the kind referred to in the second
proviso of the definition of "Eligible Consigned Inventory" or (ii)
a landlord's waiver and consent of the kind referred to in clause
(k) above may be included as Eligible Inventory in any determination
of the Borrowing Base; provided that the aggregate value of
Inventory described in clause (i) above which is included as
Eligible Inventory pursuant to this paragraph shall not exceed
$15,000,000.
"Eligible Receivables": the gross outstanding balance,
determined in accordance with GAAP and stated on a basis consistent
with the historical practices of the Company and its Subsidiaries as
of the Effective Date, of accounts receivable of the Company or any
of its Subsidiaries arising out of sales of goods or services made
by the Company or any of its Subsidiaries in the ordinary course of
business ("Accounts") that the Agent, in its reasonable discretion,
shall deem eligible, less all finance charges, late fees and other
fees that are unearned, and less (i) the value of any accrual which
has been recorded by the Company or any of its Subsidiaries with
respect to downward price adjustments and (ii) such other reserves
as the Agent, in its reasonable discretion after consultation with
the Company, shall deem appropriate. Without in any way limiting
the discretion of the Agent to deem an Account eligible or
ineligible, the Agent does not currently intend to treat an Account
as eligible if:
(a) the Company and its Subsidiaries have not
complied with all material Requirements of Law,
including, without limitation, all laws, rules,
regulations and orders of any governmental or judicial
authority relating to truth in lending, billing
practices, fair credit reporting, equal credit
opportunity, debt collection practices and consumer
debtor protection, applicable to such Account (or any
related contracts) or affecting the collectability of
such Account;
(b) such Account is not assignable or a first priority
security interest in such Account in favor of the Agent for
the benefit of the Lenders has not been obtained and fully
perfected by filing Uniform Commercial Code financing
statements against the Company or the relevant Subsidiary, as
the case may be;
(c) such Account is subject to any Lien
whatsoever, other than Liens in favor of the Agent for
the benefit of the Lenders;
(d) the Company or the relevant Subsidiary, as
the case may be, in order to be entitled to collect such
Account, is required to perform any additional service<PAGE>
13
for, or perform or incur any additional obligation to,
the Account debtor in respect of such Account;
(e) such Account does not constitute a legal,
valid and binding irrevocable payment obligation of the
Account debtor in respect of such Account to pay the
balance thereof in accordance with its terms or is
subject to any defense, setoff, recoupment or
counterclaim;
(f) the Account debtor in respect of such
Account is the Company or an Affiliate, Subsidiary,
division or employee of the Company or any of its
Subsidiaries (other than (i) any Account that is
otherwise an Eligible Receivable arising from a
transaction entered into in the ordinary course of
business on an arms'-length basis with (x) Femco or (y)
any other joint venture in which the Company or any of
its Subsidiaries owns an interest approved by the Agent
in writing for the purposes of this paragraph (f), in
each case, with respect to clauses (x) and (y) above,
upon fair and reasonable terms no less favorable to the
Company or such Subsidiary than would be obtained in a
comparable transaction with a Person not an Affiliate
and (ii) any Account having an outstanding principal
amount of less than $5,000 as to which the Account
debtor in respect of such Account is an employee of the
Company or any of its Subsidiaries);
(g) such Account is an account of the United
States government, the government of any state of the
United States or any political subdivision thereof, or
any agency or instrumentality of any of the foregoing;
(h) an estimated or actual loss has been
recognized in respect of such Account, as determined in
accordance with the Company's usual business practice
(each such Account, a "Defaulted Account");
(i) 20% or more of the aggregate outstanding
amount of all Accounts from the Account debtor in
respect of such Account and its Affiliates constitute
Defaulted Accounts;
(j) any representation or warranty contained in
this Agreement or in any other Loan Documents applicable
either to Accounts in general or to any such specific
Account has been breached with respect to such Account;
(k) 50% or more of the outstanding amount of all
Accounts from the Account debtor in respect of such
Account have become, or have been determined by the
Agent to be, ineligible;
(l) the Account debtor in respect of such
Account has filed a petition for relief under the United<PAGE>
14
States Bankruptcy Code (or similar action under any
successor law or under any comparable law), made a
general assignment for the benefit of creditors, had
filed against it any petition or other application for
relief under the United States Bankruptcy Code (or
similar action under any successor law or under any
comparable law), failed, suspended business operations,
become insolvent, called a meeting of its creditors for
the purpose of obtaining any financial concession or
accommodation, or had or suffered a receiver or a
trustee to be appointed for all or a significant portion
of its assets or affairs;
(m) any portion of such Account has remained
unpaid for a period exceeding 90 days from the due date
(but only to the extent of such overdue portion) or the
Company or any of its Subsidiaries has reason to believe
such Account is uncollectible;
(n) the sale represented by such Account is to
an Account debtor organized or located outside one of
the states of the United States, Puerto Rico, any United
States possession or protectorate which has adopted the
Uniform Commercial Code or Canada, unless (i) a letter
of credit deemed acceptable by the Agent is held against
such Account or (ii) such Account debtor has a Dun &
Bradstreet rating of at least 5A2 (or any equivalent
successor rating);
(o) the Account debtor in respect of such
Account is a supplier or creditor of the Company or any
of its Subsidiaries (but only to the extent of the
lesser of (i) the amount owing from such Account debtor
to the Company or the relevant Subsidiary, as the case
may be, pursuant to Accounts that are otherwise eligible
and (ii) the amount owing to such Account debtor by the
Company or the relevant Subsidiary, as the case may be),
provided that the aggregate amount of ineligible
Accounts under this clause (o) shall be deemed to be
$15,000 until such time as the Agent, in its reasonable
discretion, (x) determines that the foregoing provisions
of this clause (o) shall be applied for purposes of
calculating the Borrowing Base or (y) determines that
such amount shall otherwise be changed;
(p) such Account is not denominated in Dollars
(unless a currency swap or similar hedge has been
entered into with respect to such Account, the effect of
which is to cause payments in respect of such Account to
be denominated in Dollars) or is payable outside the
United States;
(q) the sale represented by such Account is on a
bill-and-hold, undelivered sale, guaranteed sale, sale-
or-return, consignment, or sale on approval basis or is
subject to any right of return, setoff or charge-back;<PAGE>
15
(r) the Agent believes, in its reasonable
discretion (after consultation with the Company), that
the collection of such Account is insecure or that such
Account may not be paid;
(s) the Company or the relevant Subsidiary, as
the case may be, or any other party to such Account, is
in default in the performance or observance of any of
the terms thereof in any material respect;
(t) the Company or the relevant Subsidiary, as
the case may be, does not have good and marketable title
to such Account as sole owner of such Account;
(u) such Account does not arise from the sale
and delivery of goods or rendition of services in the
ordinary course of business to the Account debtor in
respect of such Account;
(v) such Account is on terms other than those
normal or customary in the business of the Company or
the relevant Subsidiary, as the case may be;
(w) such Account has associated payment terms
exceeding 100 days from invoice date;
(x) if such Account were to constitute an
Eligible Receivable, more than 15% of all Eligible
Receivables would be owing from the Account debtor in
respect of such Account or any of its Affiliates;
(y) any amounts payable under or in connection
with such Account are evidenced by chattel paper,
promissory notes or other instruments, unless such
chattel paper, promissory notes or instruments have been
endorsed and delivered to the Agent;
(z) such Account has been paid by a check which
has been returned for insufficient funds if such check
is in an amount of at least $100,000, provided that, in
addition to the foregoing, a reserve in connection with
Accounts which have been paid by checks which have been
returned for insufficient funds shall be subtracted for
purposes of calculating the Borrowing Base, which
reserve shall equal $15,000 or such other amount as the
Agent, in its reasonable discretion, shall determine; or
(aa) such Account has been placed with an
attorney or other third party for collection.
"Environmental Claim": any written notice of any Governmental
Authority alleging potential liability for damage to the environment
or by any Person alleging potential liability for personal injury
(including sickness, disease or death), in either case, resulting
from or based upon (a) the presence or Release (including
intentional and unintentional, negligent and non-negligent, sudden<PAGE>
16
or non-sudden, accidental or non-accidental leaks or spills) of any
Hazardous Material at, in or from property, whether or not owned or
leased by Holdings, the Company or any of its Subsidiaries, or (b)
any other circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
"Environmental Laws": any and all foreign, federal, state,
local and municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental
Authority and requirements of law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment as now or may at any
time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Loan, the aggregate (without duplication) of the
rates (expressed as a decimal fraction) of the maximum reserve
requirements in effect on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained
by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the average (rounded upward to the nearest 1/16th of 1%) of
the respective rates notified to the Agent by each Reference Lender
as the rate at which such Reference Lender offers Dollar deposits at
or about 11:00 A.M., London time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for
delivery on the first day of such Interest Period for the number of
days comprised therein and in an amount comparable to the amount of
its Eurodollar Loan to be outstanding during such Interest Period.
"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, a rate per annum
determined for such day in accordance with the following formula
(rounded upward to the nearest 1/16th of 1%):
Eurodollar Base Rate
--------------------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Tranche": the collective reference to Eurodollar
Loans the Interest Periods with respect to all of which begin on the<PAGE>
17
same date and end on the same later date (whether or not such Loans
shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 8,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Excess Cash Flow": for any period , the excess of (a) the
sum, without duplication, of (i) Consolidated Net Income of the
Company for such period, (ii) an amount equal to the amount of all
non-cash charges deducted in arriving at such Consolidated Net
Income, (iii) the amount of returned surplus assets of any Plan
during such period to the extent not included in arriving at such
Consolidated Net Income, (iv) decreases in Consolidated Working
Capital of the Company for such period, and (v) an amount equal to
the aggregate net non-cash loss on the sale, lease, transfer or
other disposition of assets by the Company and its Subsidiaries
during such period (other than sales of Inventory in the ordinary
course of business), to the extent deducted in arriving at such
Consolidated Net Income over (b) the sum, without duplication, of
(i) an amount equal to the amount of all non-cash credits included
in arriving at such Consolidated Net Income, (ii) the aggregate
amount actually paid by the Company and its Subsidiaries in cash
during such period on account of Capital Expenditures and Investment
Expenditures (excluding the principal amount of Indebtedness
incurred in connection with such expenditures), (iii) the aggregate
amount of all payments or prepayments of the Senior Unsecured Term
Loans during such period (other than pursuant to any mandatory
excess cash flow prepayment provision of the Senior Unsecured Term
Loan Agreement) and the aggregate amount of all prepayments of the
Revolving Credit Loans made during such period to the extent
accompanied by a reduction of the Revolving Credit Commitments, (iv)
the aggregate amount of all regularly scheduled principal payments
of Funded Debt (including payments of Capital Lease Obligations of
the Company or any of its Subsidiaries (other than any portion
thereof allocable to cash interest expense) made during such period)
of the Company and its Subsidiaries made during such period, (v)
increases in Consolidated Working Capital of the Company for such
period, and (vi) an amount equal to the aggregate net non-cash gain
on the sale, lease, transfer or other disposition of assets by the
Company and its Subsidiaries during such period (other than sales of
Inventory in the ordinary course of business), to the extent
included in arriving at such Consolidated Net Income.
"Exchange Debentures": the debentures which may be issued by
Holdings in exchange for the Preferred Stock.
"Existing Credit Agreement": as defined in the Preliminary
Statements.
"Femco": Femco Magnet Wire Corporation, an Indiana
corporation.
"Femco Loans": as defined in Section 7.10(e).<PAGE>
18
"Foreign Subsidiary": any Subsidiary of the Company organized
under the laws of any jurisdiction outside the United States of
America.
"Funded Debt": as to any Person, all Indebtedness of such
Person (including Capital Lease Obligations but excluding
Indebtedness consisting of letters of credit) that matures more than
one year from the date of its creation or matures within one year
from such date but is renewable or extendible, at the option of the
debtor, to a date more than one year from such date or arises under
a revolving credit or similar agreement that obligates the lender or
lenders to extend credit during a period of more than one year from
such date, including, without limitation, all amounts of Funded Debt
required to be paid or prepaid within one year from the date of its
creation and, in the case of the Company, Indebtedness in respect of
the Loans.
"GAAP": generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the accounting profession), or in such other
statements by such other entity as may be in general use by
significant segments of the accounting profession, as in effect from
time to time. For the purpose of certain calculations hereunder,
GAAP shall be modified in the manner described in Section 1.2(e).
"Goldman": Goldman, Sachs & Co. and any Person which is a
Subsidiary or Control Affiliate thereof.
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b)
another Person (including, without limitation, any bank under any
letter of credit) to induce the creation of which the guaranteeing
person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing
any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary
obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or
payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose
of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such<PAGE>
19
primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee Obligation
of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and
(b) the maximum amount for which such guaranteeing person may be
liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum
amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the
Company in good faith.
"Hazardous Materials": any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials, or wastes, defined or
regulated as such in or under any Environmental Law, including,
without limitation, asbestos, polychlorinated biphenyls, and urea-
formaldehyde insulation.
"Holdings": BCP Holdings or any successor thereto (including,
without limitation, New Holdings).
"Holdings Common Equity Offering": any primary offering or
sale (public or private) of shares of, or rights to purchase, common
stock of Holdings.
"Holdings Pledge Agreement": the Pledge Agreement made by
Holdings in favor of the Agent for the benefit of the Lenders
substantially in the form of Exhibit D-2, as the same may be
amended, supplemented or otherwise modified from time to time.
"Holdings Security Agreement": the Security Agreement made by
Holdings in favor of the Agent for the benefit of the Lenders
substantially in the form of Exhibit E-2, as the same may be
amended, supplemented or otherwise modified from time to time.
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money,
(b) all obligations of such Person for the deferred purchase price
of property or services (other than trade payables not overdue by
more than 60 days incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations of such
Person, (f) all obligations, contingent or otherwise, of such Person
as an account party under acceptance, letter of credit or similar
facilities, (g) all obligations of such Person to purchase, redeem,
retire or otherwise acquire for value any Capital Stock of such<PAGE>
20
Person or any warrants, rights or options to acquire such Capital
Stock, (h) all Guarantee Obligations of such Person in respect of
Indebtedness of any other Person and (i) all Indebtedness referred
to in clauses (a) through (g) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for
the payment of such Indebtedness.
"Information": the information contained in the Confidential
Information Memorandum and the financial statements referred to in
Sections 4.1(a) and (b).
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intercompany Loans": as defined in Section 7.2(b).
"Intercompany Notes": promissory notes, substantially in the
form of Exhibit C, evidencing Intercompany Loans or Femco Loans.
"Interest Coverage Ratio": (a) in the case of any calculation
of the Interest Coverage Ratio for the purpose of determining the
Applicable Margin, the ratio of (i) Consolidated EBITDA of Holdings
for the relevant Interest Coverage Test Period to (ii) Consolidated
Net Cash Interest Expense of Holdings for such Interest Coverage
Test Period (or, in the case of this clause (ii), (x) in respect of
any Interest Coverage Test Period ending March 31, 1995 or June 30,
1995, an amount equal to $40,000,000 and (y) in respect of any
Interest Coverage Test Period ending September 30, 1995, December
31, 1995 or March 31, 1996, Consolidated Net Cash Interest Expense
of Holdings for the number of full fiscal quarters subsequent to the
Effective Date, multiplied by 4, 2, or 4/3, respectively).
(b) In the case of any calculation of the Interest Coverage
Ratio for the purpose of determining compliance with Section 7.1(c),
the ratio of (i) Consolidated EBITDA of Holdings for the relevant
Interest Coverage Test Period to (ii) Consolidated Net Cash Interest
Expense of Holdings for such Interest Coverage Test Period.
In calculating Consolidated Net Cash Interest Expense pursuant to
this definition after May 15, 1995, in the case of the 16%
Debentures, the amount of interest paid thereon for the relevant
period shall be the amount of interest accrued during and allocable
to such period and not the amount of interest actually paid during
such period.
"Interest Coverage Test Period": as of any date of
determination, the period of four consecutive fiscal quarters of
Holdings ending on such date.<PAGE>
21
"Interest Payment Date": (a) as to any ABR Loan, the last day
of each March, June, September and December to occur while such Loan
is outstanding and (b) as to any Eurodollar Loan, the last day of
the related Interest Period or, in the case of any Eurodollar Loan
having an Interest Period longer than three months, each day which
is three months, or a whole multiple thereof, after the first day of
such Interest Period and the last day of such Interest Period.
"Interest Period": with respect to any Eurodollar Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Loan and ending one, two, three or six months thereafter (or, if
deposits of such duration are available to all Lenders and all
Lenders consent thereto, ending nine or twelve months thereafter),
as selected by the Company in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar
Loan and ending one, two, three or six months thereafter (or, if
deposits of such duration are available to all Lenders and all
Lenders consent thereto, ending nine or twelve months thereafter),
as selected by the Company by irrevocable notice to the Agent not
less than three Business Days prior to the last day of the then
current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(2) no Interest Period shall extend beyond the Revolving
Credit Termination Date;
(3) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of
a calendar month; and
(4) the Company shall select Interest Periods so as not
to require a payment or prepayment of any Eurodollar Loan
during an Interest Period for such Loan.
"Interest Rate Protection Agreement": any interest rate swap
agreement, interest rate cap agreement or other financial agreement
or arrangement designed to protect any Person against fluctuations
in interest rates.<PAGE>
22
"Inventory": as defined in the definition of "Eligible
Inventory".
"Investment Expenditures": the cost or principal amount, as
the case may be, of any capital contribution to, acquisition of a
business (whether through the purchase of Capital Stock or assets)
of, or other similar investment in, any Person; provided that if any
such investment is made by the contribution of assets to another
Person, such assets shall, for the purpose of determining the cost
of such investment, be valued at fair market value.
"Investors": the collective reference to BSC, BH, DLJ,
Goldman and any officer or employee of Holdings, the Company or any
of its Subsidiaries, so long as a Management Proxy shall be in full
force and effect with respect to such officer or employee.
"Issue Date": the date of issuance of the Senior Notes.
"Issuing Lender": Comerica Bank, in its capacity as issuer of
any Letter of Credit.
"Issuing Lender Loans": as defined in Section 3.5(a).
"L/C Commitment": $25,000,000.
"L/C Fee Payment Date": the last day of each March, June,
September and December and the first Business Day following the last
day of the Revolving Credit Commitment Period.
"L/C Obligations": at any time, an amount equal to the sum of
(a) the aggregate then undrawn and unexpired amount of the then
outstanding Letters of Credit and (b) the aggregate amount of
drawings under Letters of Credit which have not then been reimbursed
pursuant to Section 3.5.
"L/C Participants": the collective reference to all the
Lenders other than the Issuing Lender.
"Letters of Credit": as defined in Section 3.1(a).
"Level": as of any date of determination, the level set forth
below then in effect, as determined in accordance with the following
provisions of this definition:
[CAPTION]
<TABLE>
Level Leverage Ratio Interest Coverage Ratio
----- -------------- -----------------------
<S> <C> <C>
I Less than or equal to 3.0 to 1.0 Greater than or equal to 3.75 to 1.0
II Less than or equal to 3.50 to 1.0 but Greater than or equal to 3.25 to 1.0 but
greater than 3.0 to 1.0 less than 3.75 to 1.0<PAGE>
23
III Less than or equal to 3.875 to 1.0 but Greater than or equal to 2.75 to 1.0 but
greater than 3.50 to 1.0 less than 3.25 to 1.0
IV Less than or equal to 4.0 to 1.0 but Greater than or equal to 2.50 to 1.0 but
greater than 3.875 to 1.0 less than 2.75 to 1.0
V Less than or equal to 4.25 to 1.0 but Greater than or equal to 2.25 to 1.0 but
greater than 4.0 to 1.0 less than 2.50 to 1.0
VI Greater than 4.25 to 1.0 Less than 2.25 to 1.0
</TABLE>
For the purposes of this definition, the Level shall be determined
as at the end of each of the first three quarterly periods of each
fiscal year of Holdings and as at the end of each fiscal year of
Holdings, for the period (a "Level Test Period") of four consecutive
fiscal quarters ending on the last day of such quarterly period or
fiscal year, as the case may be, based on the relevant financial
statements delivered pursuant to Section 6.1; changes in the Level
shall become effective on the date on which such financial
statements are delivered to the Lenders (but in any event not later
than the 50th day after the end of each of the first three quarterly
periods of each fiscal year or the 105th day after the end of each
fiscal year, as the case may be) and shall remain in effect until
the next change to be effected pursuant to this definition,
provided, that, until the effectiveness of any change in the Level
based upon the financial statements of Holdings for the quarterly
period ending March 31, 1995, the Level shall be deemed to be Level
III, and provided, further, that if any financial statements
referred to above are not delivered within the time periods
specified above, then, until such financial statements are
delivered, the Level as at the end of the fiscal period that would
have been covered thereby shall be deemed to be Level VI. In the
event that the Level corresponding to the Leverage Ratio and the
Interest Coverage Ratio shall differ in respect of any Level Test
Period, the higher-numbered Level (with Level VI being the highest-
numbered Level) shall govern until the next determination of the
Level pursuant to this definition. For the purposes of this
definition, in the event that Holdings shall consummate a Holdings
Common Equity Offering during any Level Test Period commencing after
June 30, 1995, the Interest Coverage Ratio shall be calculated after
giving effect on a pro forma basis to the discharge of any
Indebtedness repaid, repurchased, defeased or otherwise discharged
with the proceeds of such offering (but only to the extent, in the
case of revolving Indebtedness, accompanied by a commitment
reduction) as if such discharge had occurred on the first day of
such Level Test Period.
"Leverage Ratio": as of the last day of any period of four
consecutive fiscal quarters of Holdings, the ratio of (a) Total Debt
on such day to (b) Consolidated EBITDA of Holdings for such period.
"Lien": any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, encumbrance, lien (statutory
or other), or charge of any kind or nature whatsoever, or any
preference, priority, or other security agreement or preferential<PAGE>
24
arrangement of any kind or nature whatsoever having substantially
the same effect as any of the foregoing (including, without
limitation, any conditional sale or other title retention agreement,
any capital lease having substantially the same economic effect as
any of the foregoing, and the filing of any financing statement
under the Uniform Commercial Code or comparable law of any
jurisdiction in respect of any of the foregoing).
"Loan": any loan made by any Lender pursuant to this
Agreement.
"Loan Documents": this Agreement, any Revolving Credit
Note, the Applications, the Subsidiary Guarantee, the Security
Documents, and any Interest Rate Protection Agreement referred to in
Section 7.2(l), together with any amendment, supplement or other
modification to any of the foregoing. Notwithstanding the
foregoing, the Interest Rate Protection Agreements referred to above
shall not be deemed to constitute "Loan Documents" for the purposes
of any provision of this Agreement or any other Loan Document other
than (a) the definition of "Obligations" contained herein or in any
other Loan Document and (b) Section 10.
"Loan Parties: the collective reference to Holdings, the
Company and any Subsidiary of the Company which is a party to any
Loan Document.
"Management Equity Agreements": the collective reference to
the Management Stockholders and Registration Rights Agreement and
the Management Option Continuation Agreement, each entered into on
or prior to October 9, 1992 by and between BE Acquisition
Corporation and certain officers or employees of Holdings, the
Company or any of its Subsidiaries, as in effect on October 9, 1992.
For purposes of this Agreement, "Management Equity Agreements" shall
be deemed to include any agreements entered into after October 9,
1992 by Holdings with any officer or employee of Holdings, the
Company or any of its Subsidiaries in connection with the purchase
of common stock of Holdings or options to purchase such common
stock, so long as such agreements contain provisions concerning the
repurchase by Holdings of its common stock or options with respect
thereto which are no less favorable to Holdings than, and otherwise
substantially identical to, those contained in the Management Equity
Agreements referred to in the preceding sentence.
"Management Proxy": any proxy of any officer or employee of
Holdings, the Company or any of its Subsidiaries, directly or
indirectly, giving BH the right to vote the shares of Capital Stock
of Holdings owned by such officer or employee, substantially
identical in form and substance to the Management Proxies delivered
to the Agent prior to the Effective Date.
"Material Adverse Effect": a material adverse effect on (a)
the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or prospects of
Holdings, the Company and its Subsidiaries taken as a whole, (b) the
ability of the Company or any other Loan Party to perform its
obligations under this Agreement or any of the other Loan Documents,<PAGE>
25
or (c) the validity or enforceability of this Agreement or any of
the other Loan Documents or the rights or remedies of the Agent or
the Lenders hereunder or thereunder.
"Maximum Investment Amount": as of any date of determination,
the amount set forth below opposite the Level then in effect:
[CAPTION]
<TABLE>
Level Amount
----- ------
<S> <C> <C>
I $80,000,000
II 60,000,000
III 40,000,000
IV 40,000,000
V 40,000,000
VI 40,000,000
</TABLE>
"Modified Aggregate Outstanding Revolving Extensions of
Credit": at any time, an amount equal to (a) the Aggregate
Outstanding Revolving Extensions of Credits at such time minus (b)
the lesser of (i) the L/C Commitment and (ii) the sum of (x) the
aggregate amount of all L/C Obligations then outstanding and (y) an
amount which shall be increased each time Loans are made to
reimburse drawings under the Letters of Credit pursuant to Section
3.5, by an amount equal to the principal amount of the Loans so
made, and which shall be reduced (but not below zero) each time
Loans are prepaid pursuant to Section 2.6 or 2.7, by an amount equal
to the principal amount of the Loans so prepaid.
"Mortgage": each of the mortgages and deeds of trust made by
any Loan Party in favor of, or for the benefit of, the Agent for the
benefit of the Lenders, substantially in the form of Exhibit J (with
such changes thereto as shall be advisable under the law of the
jurisdiction in which such mortgage or deed of trust is to be
recorded), as the same may be amended, supplemented or otherwise
modified from time to time.
"Mortgaged Properties": the real properties or leasehold
interests therein, listed on Schedule 1.1B, as to which the Agent
for the benefit of the Lenders shall be granted a Lien pursuant to
the Mortgages.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Cash Proceeds": in connection with any issuance or sale
by any Person of equity securities, the cash proceeds received by
such Person from such issuance, net of investment banking fees,<PAGE>
26
reasonable and documented attorneys' fees, accountants' fees,
underwriting discounts and commissions and other customary fees
actually incurred in connection therewith.
"New Holdings": as defined in Section 7.5(c).
"Non-Facility L/C Obligations": at any time, an amount equal
to the sum of (a) the aggregate then undrawn and unexpired amount of
the then outstanding letters of credit issued pursuant to Section
7.2(d) and (b) the aggregate amount of drawings under such letters
of credit which have not then been reimbursed in accordance with the
terms thereof.
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity
of the Loans and Reimbursement Obligations and interest accruing
after the filing of any petition in bankruptcy, or the commencement
of any insolvency, reorganization or like proceeding, relating to
the Company, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and all other
obligations and liabilities of the Company to the Agent or to any
Lender (or, in the case of any Interest Rate Protection Agreement,
any Affiliate of any Lender), whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, this
Agreement, any other Loan Document, the Letters of Credit or any
other document made, delivered or given in connection herewith or
therewith, whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses (including, without
limitation, all fees, charges and disbursements of counsel to the
Agent or to any Lender that are required to be paid by the Company
pursuant hereto) or otherwise.
"Outstanding Revolving Extensions of Credit": as to any
Lender at any time, an amount equal to the sum of (a) the aggregate
principal amount of all Loans made by such Lender then outstanding,
(b) such Lender's Commitment Percentage of the L/C Obligations then
outstanding and (c) such Lender's Commitment Percentage of the
aggregate principal amount of all Specified Basket Debt then
outstanding; provided, that for the purpose of determining such
Lender's Available Revolving Credit Commitment pursuant to Section
2.4(a), the aggregate unpaid principal amount of Specified Basket
Debt then outstanding shall be deemed to be zero.
"Participant": as defined in Section 11.6(f).
"Participation Fee": any participation fee payable pursuant
to Section 3.3(a) or (b).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor
thereto).
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.<PAGE>
27
"Plan": any employee benefit plan which is covered by ERISA
and in respect of which the Company or a Commonly Controlled Entity
is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledge Agreements": collectively, the Holdings Pledge
Agreement, the Company Pledge Agreement and the Subsidiary Pledge
Agreement.
"Preferred Stock": the Series A Cumulative Redeemable
Exchangeable Preferred Stock of Holdings, having the terms and
conditions set forth on Schedule 1.1C.
"Prime Rate": as defined in the definition of "Alternate Base
Rate".
"Raw Materials": raw materials which are located at the
Marion, Indiana, PVC processing facility, the Lafayette, Indiana,
rubber compounding facility or the Fort Wayne, Indiana, chemical
processing facility.
"Redemption Date": as defined in Section 5.1(c)(ii).
"Redemption Loans": as defined in Section 5.1(c)(ii).
"Reference Lenders": Chemical and Bank of America Illinois.
"Register": as defined in Section 11.6(d).
"Regulation U": Regulation U of the Board.
"Reimbursement Obligation": as defined in Section 3.5.
"Release": any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching or migration of Hazardous Materials into the
indoor or outdoor environment or into or out of any property owned
or operated by Holdings, the Company or any of its Subsidiaries,
including the movement of Hazardous Materials through or in the air,
soil, surface water, groundwater or other media.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under PBGC Reg. Section 2615.
"Required Lenders": at any date, the holders of 51% of the
aggregate Revolving Credit Commitments, or, if the Revolving Credit
Commitments have been terminated, the aggregate unpaid principal
amount of the Loans.<PAGE>
28
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property
is subject.
"Responsible Officer": the chief executive officer,
president, chief financial officer or treasurer of Holdings or the
Company, as the case may be, but in any event, with respect to
financial matters, the chief financial officer or treasurer of
Holdings or the Company, as the case may be.
"Revolving Credit Commitment": as to any Lender, the
obligation of such Lender to make Loans to and/or issue or
participate in Letters of Credit issued on behalf of the Company
hereunder in an aggregate principal and/or face amount not to exceed
the amount set forth under the heading "Revolving Credit Commitment"
opposite such Lender's name on Schedule 1.1A, as the same may be
changed from time to time pursuant to the terms hereof.
"Revolving Credit Commitment Period": the period from and
including the Effective Date to but not including the Revolving
Credit Termination Date or such earlier date on which the Revolving
Credit Commitments shall terminate as provided herein.
"Revolving Credit Note": as defined in Section 11.6(h).
"Revolving Credit Termination Date": the date which is five
years from the Effective Date.
"Section 7.2(n) Indebtedness": any Indebtedness incurred
pursuant to Section 7.2(n).
"Security Agreements": collectively, the Holdings Security
Agreement, the Company Security Agreement and the Subsidiary
Security Agreement.
"Security Documents": the collective reference to the Pledge
Agreements, the Security Agreements, the Mortgages, and any other
collateral security document from time to time executed and
delivered in connection herewith or therewith.
"Senior Note Indenture": the Indenture dated as of May 7,
1993 between the Company and NBD Bank, a Michigan banking
corporation (formerly known as NBD Bank, N.A.), as trustee, as
amended, supplemented or otherwise modified from time to time in
accordance with Section 7.11.
"Senior Note Indenture Revolving Credit Incurrence Limit": as
of any date of determination, the maximum aggregate principal amount
of Loans which would be permitted to be incurred on such date
pursuant to Sections 4.04(b)(i) and 4.04(b)(x) of the Senior Note
Indenture (after taking into account any Indebtedness (other than<PAGE>
29
L/C Obligations and Specified Basket Debt) then outstanding pursuant
to said Sections).
"Senior Note Indenture Revolving Credit Incurrence Limit
Certificate": a certificate substantially in the form of Exhibit B-
2, with such changes as the Agent may from time to time reasonably
request for the purpose of monitoring the Senior Note Indenture
Revolving Credit Incurrence Limit.
"Senior Notes": the Company's 10% Senior Notes Due 2003.
"Senior Secured Leverage Ratio": as of the last day of any
period of four consecutive fiscal quarters of Holdings, the ratio of
(a) Total Senior Secured Debt on such day to (b) Consolidated EBITDA
of Holdings for such period.
"Senior Unsecured Term Loans": as defined in Section 7.2(k).
"Senior Unsecured Term Loan Agreement": the collective
reference to all documentation governing the terms of the Senior
Unsecured Term Loans.
"Sight Letter of Credit": as defined in Section 3.1(a).
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"16% Debentures": Holdings' 16% Senior Discount Debentures
Due 2004.
"16% Debenture Indenture": the Indenture dated as of May 1,
1989 between Holdings (formerly MS/Essex Holdings Inc.) and United
States Trust Company of New York, as trustee, as amended,
supplemented or otherwise modified from time to time in accordance
with Section 7.11.
"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person will, as of such date,
exceed the amount of all "liabilities of such Person, contingent or
otherwise", as of such date, as such quoted terms are determined in
accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date,
be greater than the amount that will be required to pay the
liability of such Person on its debts as such debts become absolute
and matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition, (i) "debt" means liability
on a "claim", and (ii) "claim" means any (x) right to payment,
whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (y) right to
an equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an<PAGE>
30
equitable remedy is reduced to judgment, fixed, contingent, matured
or unmatured, disputed, undisputed, secured or unsecured.
"Specified Basket Debt": any Indebtedness of the Company or
any of its Subsidiaries incurred pursuant to Section 7.2(o), other
than, in the case of any such Indebtedness which consists of term
loans or term notes, that portion (if any) of the principal amount
of such Indebtedness for which there are no scheduled repayments,
prepayments or redemptions prior to the Revolving Credit Termination
Date.
"Specified Event": (a) any Default or Event of Default
pursuant to Section 8(a) or (f), (b) any payment default in respect
of the Senior Notes or (c) the declaration by any Person of any
Indebtedness described in Section 8(e) (and having the minimum
principal amount specified therein) to be due and payable, in whole
or in part, prior to the stated maturity of such Indebtedness.
"Specified Properties": the plants and real properties owned
by the Company or its Subsidiaries located in New Market, New
Hampshire, Syracuse, New York, Bennettsville, South Carolina and
Houston, Texas.
"Specified Required Lenders": at any date, the holders of 51%
of the sum of (a) the aggregate Revolving Credit Commitments (or, if
the Revolving Credit Commitments have been terminated, the aggregate
unpaid principal amount of the Loans) and (b) the aggregate
outstanding principal amount of Indebtedness under the Capital Lease
Financing Facility.
"Standby Letter of Credit": as defined in Section 3.1(a).
"Subordinated Debt": the collective reference to (a) the 16%
Debentures and (b) the Exchange Debentures.
"Subsidiary": with respect to any Person, any corporation,
partnership, joint venture, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding Voting Stock, (b)
the interest in the capital or profits of such partnership or joint
venture or (c) the beneficial interest in such trust or estate, is
at the time directly or indirectly owned or controlled by such
Person and/or by one or more of such Person's other Subsidiaries.
Unless otherwise qualified, all references to a "Subsidiary" or to
"Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Company.
"Subsidiary Guarantee": the Guarantee made by the
Subsidiaries of the Company party thereto in favor of the Agent for
the benefit of the Lenders substantially in the form of Exhibit F,
as the same may be amended, supplemented or otherwise modified from
time to time.
"Subsidiary Guarantor": each of the Subsidiaries of the
Company which is a party to the Subsidiary Guarantee.<PAGE>
31
"Subsidiary Pledge Agreement": the Pledge Agreement made by
each Subsidiary Guarantor in favor of the Agent for the benefit of
the Lenders substantially in the form of Exhibit D-3, as the same
may be amended, supplemented or otherwise modified from time to
time.
"Subsidiary Security Agreement": the Security Agreement made
by each Subsidiary Guarantor in favor of the Agent for the benefit
of the Lenders substantially in the form of Exhibit E-3, as the same
may be amended, supplemented or otherwise modified from time to
time.
"Supermajority Lenders": at any date shall mean the holders
of 66-2/3% of the aggregate Revolving Credit Commitments, or, if the
Revolving Credit Commitments have been terminated, the aggregate
unpaid principal amount of the Loans.
"Tax Sharing Agreement": the tax sharing agreement dated
effective as of January 1, 1991 between Holdings and the Company, as
in effect on the Effective Date.
"Total Debt": as of any date of determination, all Funded
Debt of Holdings and its consolidated Subsidiaries at such date,
determined on a consolidated basis in conformity with GAAP.
"Total Senior Secured Debt": as of any date of determination,
the aggregate then outstanding principal amount of all secured
Funded Debt incurred by the Company or any of its Subsidiaries
pursuant to Section 7.2(a), (c)(iii), (f), (g), (m) or (n).
"Transferee": as defined in Section 11.6(g).
"Type": as to any Loan, its nature as an ABR Loan or a
Eurodollar Loan.
"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of
Commerce Publication No. 500, as the same may be amended,
supplemented or otherwise modified from time to time.
"Usance Letter of Credit": as defined in Section 3.1(a).
"Voting Stock": Capital Stock issued by any Person, the
holders of which are ordinarily, in the absence of contingencies,
entitled to vote for the election of directors (or persons
performing similar functions) of such Person, even though the right
so to vote has been suspended by the happening of such a
contingency.
1.2 Other Definitional Provisions; Financial Calculations. (a)
Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the other Loan Documents or
any certificate or other document made or delivered pursuant hereto or
thereto.<PAGE>
32
(b) As used herein and in the other Loan Documents, and any
certificate or other document made or delivered pursuant hereto or
thereto, accounting terms relating to Holdings, the Company and its
Subsidiaries not defined in Section 1.1 and accounting terms partly
defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and
Section, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) Notwithstanding anything to the contrary herein, calculations
in connection with the covenants contained in Section 7.1 shall utilize
accounting principles and policies (including those in respect of
accounting for income taxes) in conformity with those used to prepare the
financial statements referred to in Section 4.1(b) for the fiscal year of
Holdings or the Company, as the case may be, ended December 31, 1994.
SECTION 2. THE REVOLVING CREDIT COMMITMENTS
2.1 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof (including, without limitation, the applicable
conditions specified in Section 5), each Lender severally agrees to make
Loans to the Company from time to time during the Revolving Credit
Commitment Period. During the Revolving Credit Commitment Period the
Company may use the Revolving Credit Commitments by borrowing, prepaying
the Loans in whole or in part, and reborrowing, all in accordance with the
terms and conditions hereof.
(b) The Loans may from time to time be (i) Eurodollar Loans, (ii)
ABR Loans or (iii) a combination thereof, as determined by the Company and
notified to the Agent in accordance with Sections 2.3 and 2.8, provided
that no Loan shall be made as a Eurodollar Loan after the day that is one
month prior to the Revolving Credit Termination Date.
2.2 Evidence of Loans; Repayment. (a) Each Lender shall maintain
in accordance with its usual practice an account or accounts evidencing
indebtedness of the Company to such Lender resulting from each Loan of
such Lender from time to time, including the amounts of principal and
interest payable and paid to such Lender from time to time under this
Agreement.
(b) The Agent shall maintain the Register pursuant to Section
11.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, the Type thereof and
each Interest Period (if any) applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from
the Company to each Lender hereunder and (iii) both the amount of any sum
received by the Agent hereunder from the Company and each Lender's share
thereof.<PAGE>
33
(c) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.2(a) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Company therein recorded; provided,
however, that the failure of any Lender or the Agent to maintain the
Register or any such account, or any error therein, shall not in any
manner affect the obligation of the Company to repay (with applicable
interest) the Loans made to the Company by such Lender in accordance with
the terms of this Agreement.
(d) The Company shall repay all outstanding Loans on the Revolving
Credit Termination Date or such earlier date as the Revolving Credit
Commitments shall terminate hereunder.
2.3 Procedure for Revolving Credit Borrowing. The Company may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day; provided that the Company shall
give the Agent irrevocable notice (which notice must be received by the
Agent prior to (a) 12:00 Noon, New York City time, three Business Days
prior to the requested Borrowing Date, if all or any part of the requested
Loans are to be initially Eurodollar Loans or (b) 11:00 A.M., New York
City time, on the requested Borrowing Date, otherwise), specifying (i) the
amount to be borrowed, (ii) the requested Borrowing Date, (iii) whether
the borrowing is to be of Eurodollar Loans, ABR Loans or a combination
thereof and (iv) if the borrowing is to be entirely or partly of
Eurodollar Loans, the respective amounts of each such Loan and the
respective lengths of the initial Interest Periods therefor. Each
borrowing under the Revolving Credit Commitments shall be in an amount
equal to (x) in the case of ABR Loans, $500,000 or a whole multiple of
$100,000 in excess thereof (or, if the then Available Revolving Credit
Commitments are less than $500,000, such lesser amount) and (y) in the
case of Eurodollar Loans, $5,000,000 or a whole multiple of $1,000,000 in
excess thereof. Upon receipt of any such notice from the Company, the
Agent shall promptly notify each Lender thereof. Each Lender will make
the amount of its pro rata share of each borrowing available to the Agent
for the account of the Company at the office of the Agent specified in
Section 11.2 prior to 11:00 A.M., New York City time, in the case of
Eurodollar Loans, and 2:00 P.M., New York City time, in the case of ABR
Loans, on the Borrowing Date requested by the Company in funds immediately
available to the Agent. Such borrowing will then be made available to the
Company by the Agent crediting the account of the Company on the books of
such office with the aggregate of the amounts made available to the Agent
by the Lenders and in like funds as received by the Agent.
2.4 Fees. (a) The Company agrees to pay to the Agent a
commitment fee for the account of the Lenders for the period from and
including the Effective Date to the Revolving Credit Termination Date,
computed at a rate equal to (a) 3/8 of 1% per annum on any date on which
Level I, Level II, Level III or Level IV is in effect or (b) 1/2 of 1% per
annum on any date on which Level V or Level VI is in effect, on the
average daily amount of the Available Revolving Credit Commitment of each
Lender during the period for which payment is made, payable quarterly in
arrears on the last day of each March, June, September and December and on
the Revolving Credit Termination Date or such earlier date as the
Revolving Credit Commitments shall terminate as provided herein,
commencing on the first of such dates to occur after the Effective Date.<PAGE>
34
(b) The Company agrees to pay to the Agent, for its own account
and, to the extent mutually agreed upon by the Agent and the Lenders, for
the account of the Lenders, the fees in the amounts and on the dates
previously agreed to in writing by the Company and the Agent.
2.5 Termination or Reduction of Revolving Credit Commitments. The
Company shall have the right, upon not less than three Business Days'
notice to the Agent, to terminate the Revolving Credit Commitments or,
from time to time, to reduce the amount of the Revolving Credit
Commitments; provided that no such termination or reduction of Revolving
Credit Commitments shall be permitted if, after giving effect thereto and
to any prepayments of the Loans made on the effective date thereof, the
Aggregate Outstanding Revolving Extensions of Credit would exceed the
Revolving Credit Commitments then in effect. Any such reduction shall be
in an amount equal to $1,000,000 or a whole multiple thereof and shall
reduce permanently the Revolving Credit Commitments then in effect. Upon
receipt of any notice referred to above, the Agent shall promptly notify
each Lender thereof.
2.6 Optional Prepayments. The Company may on the last day of any
Interest Period with respect thereto (or on any other day if the
prepayment referred to herein is accompanied by all amounts payable by the
Company pursuant to Section 2.16), in the case of Eurodollar Loans, or at
any time and from time to time, in the case of ABR Loans, prepay the
Loans, in whole or in part, without premium or penalty, provided that the
Company shall give the Agent irrevocable notice (which notice must be
received by the Agent prior to (a) 12:00 Noon, New York City time, three
Business Days prior to such prepayment, in the case of Eurodollar Loans or
(b) 11:00 A.M., New York City time, on the date of such prepayment, in the
case of ABR Loans) specifying the date and amount of prepayment and
whether the prepayment is of Eurodollar Loans, ABR Loans or a combination
thereof, and, if a combination thereof, the amount allocable to each.
Upon receipt of any such notice the Agent shall promptly notify each
Lender thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together
with (except in the case of ABR Loans) accrued interest to such date on
the amount prepaid. Partial prepayments shall be in an aggregate
principal amount of $1,000,000 or a whole multiple thereof.
2.7 Mandatory Prepayments. (a) If on any date (including any
date on which a Borrowing Base Certificate is delivered pursuant to
Section 6.2(e)) the Modified Aggregate Outstanding Revolving Extensions of
Credit as of such date exceed the then applicable Borrowing Base, then,
without notice or demand, the Company shall, on such date, prepay the
Loans in an amount equal to such excess; provided that if the aggregate
principal amount of Loans then outstanding is less than the amount of such
excess (because Specified Basket Debt constitutes a portion thereof), the
Company shall, to the extent of the balance of such excess, repay such
Specified Basket Debt. The Company may, subject to the terms and
conditions of this Agreement, reborrow the amount of any prepayment made
under this Section 2.7(a).
(b) If on any date (including any date on which a Senior Note
Indenture Revolving Credit Incurrence Limit Certificate is delivered
pursuant to Section 6.2(e)) the sum of (i) the aggregate L/C Obligations
then outstanding and (ii) the aggregate principal amount of Specified<PAGE>
35
Basket Debt then outstanding exceeds the then applicable Senior Note
Indenture Revolving Credit Incurrence Limit, then, without notice or
demand, the Company shall, on such date, prepay the Loans in an amount
equal to such excess; provided that if the aggregate principal amount of
Loans then outstanding is less than the amount of such excess, the Company
shall, to the extent of the balance of such excess, terminate outstanding
Letters of Credit, repay Specified Basket Debt and/or deposit an amount in
cash in a cash collateral account established with the Agent for the
benefit of the Lenders. The Company may, subject to the terms and
conditions of this Agreement, reborrow the amount of any prepayment made
under this Section 2.7(b).
(c) The application of any prepayment pursuant to this Section 2.7
shall be made first to ABR Loans and second to Eurodollar Loans; provided,
that if on the date on which such prepayment is required to be made the
aggregate outstanding amount of ABR Loans and Eurodollar Loans having an
Interest Period expiring on such date is less than the amount required to
be prepaid, then, on such date, the Company may, at its option, (i) prepay
other Eurodollar Loans selected by the Company in an amount up to the
remaining amount required to be prepaid and/or (ii) if no Default or Event
of Default shall have occurred and be continuing, place any amounts which
the Company would otherwise be required to use to prepay such other
Eurodollar Loans in an interest-bearing cash collateral account
established with the Agent for the benefit of the Lenders until the
expiration of the Interest Periods applicable thereto, at which time such
amounts shall be applied to prepay such Eurodollar Loans. Each prepayment
of the Loans under this Section 2.7 (other than ABR Loans) shall be
accompanied by accrued interest to the date of such prepayment on the
amount prepaid.
2.8 Conversion and Continuation Options. (a) The Company may
elect from time to time to convert Eurodollar Loans to ABR Loans, by
giving the Agent at least three Business Days' prior irrevocable notice of
such election; provided that any such conversion of Eurodollar Loans may
only be made on the last day of an Interest Period with respect thereto
(or on any other day if on the date of such conversion the Company pays to
the Agent for the account of the Lenders accrued interest on such
Eurodollar Loans to the date of such conversion together with all amounts
payable pursuant to Section 2.16). The Company may elect from time to
time to convert ABR Loans to Eurodollar Loans by giving the Agent at least
three Business Days' prior irrevocable notice of such election. Any such
notice of conversion to Eurodollar Loans shall specify the length of the
initial Interest Period or Interest Periods therefor. Upon receipt of any
such notice the Agent shall promptly notify each Lender thereof. All or
any part of outstanding Eurodollar Loans or ABR Loans may be converted as
provided herein; provided that (i) no Loan may be converted into a
Eurodollar Loan when any Default or Event of Default has occurred and is
continuing and the Agent or the Required Lenders have determined that such
a conversion is not appropriate, (ii) any such conversion may only be made
if, after giving effect thereto, Section 2.9 shall not have been
contravened and (iii) no Loan may be converted into a Eurodollar Loan
after the date that is one month prior to the Revolving Credit Termination
Date.
(b) Any Eurodollar Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the<PAGE>
36
Company giving notice to the Agent, in accordance with the applicable
provisions of the term "Interest Period" set forth in Section 1.1, of the
length of the next Interest Period to be applicable to such Loans;
provided that no Eurodollar Loan may be continued as such (i) when any
Default or Event of Default has occurred and is continuing and the Agent
or the Required Lenders have determined that such a continuation is not
appropriate, (ii) if, after giving effect thereto, Section 2.9 would be
contravened or (iii) after the date that is one month prior to the
Revolving Credit Termination Date and provided, further, that if the
Company shall fail to give any required notice as described above in this
paragraph or if such continuation is not permitted pursuant to the
preceding proviso such Loans shall be automatically converted to ABR Loans
on the last day of such then expiring Interest Period. Upon receipt of
any notice referred to above, the Agent shall promptly notify the Lenders
thereof.
2.9 Minimum Amounts and Maximum Number of Eurodollar Tranches.
All borrowings, conversions and continuations of Loans hereunder and all
selections of Interest Periods hereunder shall be in such amounts and be
made pursuant to such elections so that, after giving effect thereto, (a)
the aggregate principal amount of the Loans comprising each Eurodollar
Tranche shall be equal to $5,000,000 or a whole multiple of $1,000,000 in
excess thereof and (b) there shall be no more than six Eurodollar
Tranches.
2.10 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for
such day plus the Applicable Margin.
(b) Each ABR Loan shall bear interest at a rate per annum equal to
the Alternate Base Rate plus the Applicable Margin.
(c) During the continuation of any Event of Default pursuant to
Section 8(a), the Company shall pay, on demand, interest (after as well as
before judgment to the extent permitted by law) on (i) the principal
amount of all outstanding Loans at a rate per annum equal to the rate of
interest otherwise applicable in respect of such Loans pursuant to Section
2.10(a) or (b), as the case may be, plus 2% and (ii) to the extent
permitted by applicable law, all interest and other amounts due and unpaid
hereunder, at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin plus 2%; provided, however, that, on and after the
expiration of the Interest Period applicable to any Eurodollar Loan
outstanding on the date of occurrence of such Event of Default, the
principal amount of such Loan shall, during the continuation of such Event
of Default, bear interest at a rate per annum equal to the Alternate Base
Rate plus the Applicable Margin plus 2%.
(d) Interest shall be payable in arrears on each Interest Payment
Date; provided that interest accruing pursuant to paragraph (c) of this
Section 2.10 shall be payable on demand.
2.11 Computation of Interest and Fees. (a) Interest on the Loans,
commitment fees, Participation Fees and fronting fees shall be calculated
on the basis of the actual number of days elapsed over a year of 360 days
or, on any date when the Alternate Base Rate is determined by reference to<PAGE>
37
the Prime Rate, a year of 365 or 366 days, as appropriate. Any change in
the interest rate on a Loan resulting from a change in the Alternate Base
Rate or the Eurocurrency Reserve Requirements shall become effective as of
the opening of business on the day on which such change in the Alternate
Base Rate is announced or such change in the Eurocurrency Reserve
Requirements becomes effective, as the case may be.
(b) Each determination of an interest rate by the Agent pursuant to
any provision of this Agreement shall be conclusive and binding on the
Company and the Lenders in the absence of manifest error.
(c) If any Reference Lender's Revolving Credit Commitment shall
terminate or all its Loans shall be assigned for any reason whatsoever,
such Reference Lender shall thereupon cease to be a Reference Lender, and
the Agent (after consultation with the Company and the Lenders) shall, by
notice to the Company and the Lenders, designate another Lender as a
Reference Lender so that there shall at all times be at least two
Reference Lenders.
(d) Each Reference Lender shall use its best efforts to furnish
quotations of rates to the Agent as contemplated hereby. If any of the
Reference Lenders shall be unable or shall otherwise fail to supply such
rates to the Agent upon its request, the rate of interest shall, subject
to the provisions of Section 2.12, be determined on the basis of the
quotations of the remaining Reference Lender.
2.12 Inability to Determine Interest Rate. In the event that prior
to the first day of any Interest Period:
(a) the Agent shall have determined (which determination
shall be conclusive and binding upon the Company) that, by reason of
circumstances affecting the relevant market, adequate and reasonable
means do not exist for ascertaining the Eurodollar Rate for such
Interest Period, or
(b) the Agent shall have received notice from the Required
Lenders that the Eurodollar Rate determined or to be determined for
such Interest Period will not adequately and fairly reflect the cost
to such Lenders (as conclusively certified by such Lenders) of
making or maintaining their affected Loans during such Interest
Period,
the Agent shall give telex, telecopy or telephonic notice thereof to the
Company and the Lenders as soon as practicable thereafter. If such notice
is given (x) any Eurodollar Loans requested to be made on the first day of
such Interest Period shall be made as ABR Loans, (y) any Loans that were
to have been converted on the first day of such Interest Period to
Eurodollar Loans shall be continued as ABR Loans and (z) any outstanding
Eurodollar Loans shall be converted, on the first day of such Interest
Period, to ABR Loans. Until such notice has been withdrawn by the Agent,
no further Eurodollar Loans shall be made or continued as such, nor shall
the Company have the right to convert Loans to Eurodollar Loans.
2.13 Pro Rata Treatment and Payments. (a) Except as otherwise
expressly provided herein, each borrowing by the Company from the Lenders
hereunder, each payment by the Company on account of any commitment fee<PAGE>
38
hereunder and any reduction of the Revolving Credit Commitments of the
Lenders shall be made pro rata according to the respective Commitment
Percentages of the Lenders. Except as otherwise expressly provided
herein, each payment (including each prepayment) by the Company on account
of principal of and interest on the Loans shall be made pro rata according
to the respective outstanding principal amounts of the Loans then held by
the Lenders. All payments (including prepayments) to be made by the
Company hereunder and under any Revolving Credit Note, whether on account
of principal, interest, fees or otherwise, shall be made without setoff or
counterclaim and shall be made prior to 1:30 P.M., New York City time, on
the due date thereof to the Agent, for the account of the Lenders, at the
Agent's office specified in Section 11.2, in Dollars and in immediately
available funds. The Agent shall distribute such payments to the Lenders
promptly upon receipt in like funds as received. If any payment hereunder
(other than payments on the Eurodollar Loans) becomes due and payable on a
day other than a Business Day, such payment shall be extended to the next
succeeding Business Day, and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during such
extension. If any payment on a Eurodollar Loan becomes due and payable on
a day other than a Business Day, the maturity thereof shall be extended to
the next succeeding Business Day (in which case interest thereon shall be
payable at the then applicable rate during such extension) unless the
result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
(b) Unless the Agent shall have been notified in writing by any
Lender prior to a Borrowing Date that such Lender will not make the amount
that would constitute its Commitment Percentage of the borrowing on such
date available to the Agent, the Agent may assume that such Lender has
made such amount available to the Agent on such Borrowing Date, and the
Agent may, in reliance upon such assumption, make available to the Company
a corresponding amount. If such amount is made available to the Agent on
a date after such Borrowing Date, such Lender shall pay to the Agent on
demand an amount equal to the product of (i) the daily average federal
funds rate during such period as quoted by the Agent, times (ii) the
amount of such Lender's Commitment Percentage of such borrowing, times
(iii) a fraction the numerator of which is the number of days that elapse
from and including such Borrowing Date to the date on which such Lender's
Commitment Percentage of such borrowing shall have become immediately
available to the Agent and the denominator of which is 360. A certificate
of the Agent submitted to any Lender with respect to any amounts owing
under this Section 2.13 shall be conclusive in the absence of manifest
error. If such Lender's Commitment Percentage of such borrowing is not in
fact made available to the Agent by such Lender within three Business Days
of such Borrowing Date, the Agent shall be entitled to recover such amount
with interest thereon at the rate per annum applicable to ABR Loans
hereunder, on demand, from the Company.
2.14 Requirements of Law. (a) In the event that any change after
the Effective Date in any Requirement of Law or in the interpretation or
application thereof or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank
or other Governmental Authority:<PAGE>
39
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Revolving Credit
Note, any Letter of Credit, any Application or any Eurodollar Loan
made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for taxes covered by Section 2.15
and changes in the rate of tax on the net income or earnings of such
Lender (including, without limitation, changes in the U.S. branch
profits tax));
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account
of, advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such
Lender, by an amount which such Lender deems to be material, of making,
converting into, continuing or maintaining Eurodollar Loans or issuing or
participating in Letters of Credit, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Company shall
promptly pay such Lender, within 15 days after its demand, any additional
amounts necessary to compensate such Lender for such increased cost or
reduced amount receivable. If any Lender has demanded compensation under
this Section 2.14(a) with respect to any Eurodollar Loan, the Company
shall have the option to convert immediately such Eurodollar Loan into an
ABR Loan until the circumstances giving rise to such demand for
compensation no longer apply; provided, that (i) no such conversion shall
affect the Company's obligation to pay compensation as provided herein
which is due with respect to the period prior to such conversion and (ii)
on the date of such conversion the Company shall pay to the Agent for the
benefit of the relevant Lender accrued interest on such Eurodollar Loan to
the date of conversion, together with any amounts payable pursuant to
Section 2.16.
(b) In the event that any Lender shall have determined that any
change after the Effective Date in any Requirement of Law regarding
capital adequacy or in the interpretation or application thereof or
compliance by such Lender or any corporation controlling such Lender with
any request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to the
Effective Date does or shall have the effect of reducing the rate of
return on such Lender's or such corporation's capital as a consequence of
its obligations hereunder or under or in respect of any Letter of Credit
to a level below that which such Lender or such corporation could have
achieved but for such change or compliance (taking into consideration such
Lender's or such corporation's policies with respect to capital adequacy)
by an amount deemed by such Lender to be material, then from time to time,
after submission by such Lender to the Company (with a copy to the Agent)
of a written request therefor, the Company shall pay to such Lender,
within 15 days after its demand, such additional amount or amounts as will
compensate such Lender for such reduction.<PAGE>
40
(c) Prior to making any demand for payment pursuant to this Section
2.14 with respect to Eurodollar Loans, any Lender making a demand for
payment shall designate a different lending office with respect to
Eurodollar Loans if such designation will avoid the need for making such
demand and will not, in the sole judgment of such Lender, be illegal or
otherwise disadvantageous to such Lender.
(d) A certificate as to any additional amounts payable pursuant to
this Section 2.14 submitted by any Lender, through the Agent, to the
Company shall be conclusive in the absence of manifest error. The
covenants contained in this Section 2.14 shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
2.15 Taxes. (a) All payments made by the Company under this
Agreement and any Revolving Credit Note to the Agent or any Lender shall
be made free and clear of, and without deduction or withholding for or on
account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding taxes imposed on or with respect to or
measured by the net income of the Agent or any Lender and franchise taxes
imposed on the Agent or any Lender, as the case may be, if the Agent or
such Lender is subject to such net income or franchise tax by reason of a
present or former connection between the jurisdiction of the government or
taxing authority imposing such tax and the Agent or such Lender (excluding
a connection arising solely from the Agent or such Lender having executed,
delivered or performed its obligations or received a payment under, or
enforced, this Agreement or any Revolving Credit Note) or any political
subdivision or taxing authority thereof or therein (all such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions and withholdings
being hereinafter called "Taxes"). If any Taxes are required to be
withheld from any amounts payable to the Agent or any Lender hereunder or
under any Revolving Credit Note, the amounts so payable to the Agent or
such Lender shall be increased to the extent necessary to yield to the
Agent or such Lender after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.15)
interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement and any Revolving Credit Note.
Whenever any Taxes are payable by the Company, as promptly as practicable
thereafter the Company shall send to the Agent for its own account or for
the account of such Lender, as the case may be, a certified copy of an
original official receipt received by the Company showing payment thereof
if such a receipt is issued by the relevant taxing authority and, if not,
other documentation reasonably satisfactory to the Agent or such Lender,
as the case may be, evidencing such payment. If the Company fails to pay
any Taxes when due to the appropriate taxing authority or fails to remit
to the Agent such required receipts or other documentary evidence, the
Company shall indemnify the Agent and the Lenders for any incremental
taxes, interest or penalties that may become payable by the Agent or any
Lender as a result of any such failure. The agreements in this Section
shall survive the termination of this Agreement and the payment of the
Loans and all other amounts payable hereunder.
(b) Each Lender (or Transferee) that is not a citizen or resident
of the United States of America, a corporation, partnership or other<PAGE>
41
entity created or organized in or under the laws of the United States of
America (or any state thereof or the District of Columbia), or any estate
or trust that is subject to U.S. federal income taxation regardless of the
source of its income (a "Non-U.S. Lender") shall deliver to the Company
and the Agent (i) two copies of either U.S. Internal Revenue Service Form
1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption
from U.S. federal withholding tax under Section 871(h) or 881(c) of the
Code with respect to payments of "portfolio interest", a Form W-8, or any
subsequent versions thereof or successors thereto (and, if such Non-U.S.
Lender delivers a Form W-8 pursuant to this clause (i) in lieu of a Form
1001 or Form 4224, an annual certificate representing that such Non-U.S.
Lender is not a "bank" for purposes of Section 881(c) of the Code, is not
a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of
the Code) of the Company and is not a controlled foreign corporation
related to the Company (within the meaning of Section 864(d)(4) of the
Code)), properly completed and duly executed by such Non-U.S. Lender
claiming complete exemption from U.S. federal withholding tax on all
payments by the Company under this Agreement and the other Loan Documents,
(ii) an Internal Revenue Service Form W-8 or W-9 or successor applicable
forms and (iii) any other documentation as may be required under
applicable U.S. tax law and regulations to evidence complete exemption
from U.S. federal withholding tax on all payments by the Company under
this Agreement and the other Loan Documents. Such forms and other
documentation shall be delivered by each Non-U.S. Lender on or before the
date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related
participation). Each such Lender shall certify, in the case of a Form W-8
or W-9, that it is entitled to an exemption from United States backup
withholding tax. In addition, each Non-U.S. Lender shall deliver such
forms promptly upon the obsolescence or invalidity of any form or other
documentation previously delivered by it, and shall deliver such
additional forms and documentation as may subsequently be required under
applicable U.S. tax law and regulations to evidence complete exemption
from U.S. federal withholding tax on all payments by the Company under
this Agreement and the other Loan Documents unless in any such case any
Tax Law Change (as defined below) has occurred prior to the date on which
any such delivery would otherwise be required which renders all such forms
and other documentation previously delivered by it inapplicable or which
would prevent such Lender from duly completing and delivering any such
form or other documentation previously delivered by it with respect to it
and such Lender so advises the Company and the Agent. Unless the Agent or
the relevant Lender shall have delivered to the Company the forms and
other documentation referred to above, the Company or the Agent shall
withhold taxes from payments to such Lender hereunder at the applicable
statutory rate and the Company shall not be required to pay any additional
amounts to such Lender pursuant to Section 2.15(a); provided that this
sentence shall not apply, and the Company shall be required to pay
additional amounts to such Lender pursuant to Section 2.15(a), if the
Agent or such Lender is unable to deliver such forms and other
documentation as a result of a Tax Law Change. For purposes of this
Section 2.15(b), "Tax Law Change" means, with respect to any Lender, a
change in or amendment to the Code or any tax treaty to which the United
States is a party that occurs after the date such Lender became a Lender
hereunder the effect of which is to cause any payment to such Lender to be
subject to U.S. federal withholding tax. Where, because of a Tax Law
Change, the Agent or any Lender is no longer entitled to a complete<PAGE>
42
exemption from U.S. federal withholding tax on payments by the Company to
it but is entitled to a reduced rate of taxation with respect to such
payments, the Agent or such Lender shall deliver to the Company such
documentation (including, without limitation, a Form 1001, if applicable)
as may be required under applicable U.S. tax law and regulations to
evidence such reduced rate of taxation, and, if the Agent or such Lender
fails to do so, the Company shall not be required to pay additional
amounts to the Agent or such Lender pursuant to this Section 2.15(b) in an
amount in excess of the additional amounts it would have been required to
so pay if the Agent or such Lender had provided such documentation.
(c) If any Lender (or Transferee) shall have determined that it is
entitled to claim a refund from a Governmental Authority in respect of
Taxes with respect to which the Company has paid additional amounts
pursuant to Section 2.15(a), it shall promptly notify the Company of the
availability of such refund claim and shall, within 30 days after receipt
of a request by the Company, make a claim to such Governmental Authority
for such refund at the Company's expense. If any Lender (or Transferee)
receives a refund (including pursuant to a claim for refund made pursuant
to the preceding sentence) in respect of any Taxes with respect to which
the Company has paid additional amounts pursuant to Section 2.15(a), it
shall within 30 days from the date of such receipt pay over such refund to
the Company (but only to the extent of additional amounts paid by the
Company under Section 2.15(a) with respect to the Taxes giving rise to
such refund), net of all out-of-pocket expenses of the Lender (or
Transferee) and without interest (other than interest paid by the relevant
Governmental Authority with respect to such refund); provided, however,
that the Company, upon the request of the Lender (or Transferee), agrees
to repay the amount paid over to the Company (plus penalties, interest or
other charges) to the Lender (or Transferee) in the event the Lender (or
Transferee) is required to repay such refund to such Governmental
Authority.
(d) Notwithstanding anything to the contrary in this Section 2.15,
if the Internal Revenue Service determines that a Lender (or Transferee)
is a conduit entity knowingly participating in a conduit financing
arrangement as defined in Section 7701(1) of the Code and the regulations
thereunder and unless the Company expressly consented to such arrangement
with full knowledge of the relevant facts of such arrangement at the time
it was entered into (a "Conduit Financing Arrangement"), then the Company
shall have no obligation to pay additional amounts to the Lender (or
Transferee) for any Taxes with respect to any payments hereunder to the
extent the amount of such Taxes exceeds the amount that would have
otherwise been withheld or deducted had the Internal Revenue Service not
made such a determination. Each Lender (or Transferee) represents and
agrees that, at all times during the term of this Agreement, it is not and
will not be a conduit entity participating in a conduit financing
arrangement (as defined in Section 7701(1) of the Code and the regulations
thereunder) with respect to any borrowings hereunder. The agreement in
this Section 2.15(d) shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.
2.16 Indemnity. The Company agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Company in payment
when due of the principal amount of or interest on any Eurodollar Loan,<PAGE>
43
(b) default by the Company in making a borrowing of, conversion into or
continuation of Eurodollar Loans after the Company has given a notice
requesting the same in accordance with the provisions of this Agreement,
(c) default by the Company in making any prepayment after the Company has
given a notice thereof in accordance with the provisions of this Agreement
or (d) the making of a prepayment or conversion of Eurodollar Loans on a
day which is not the last day of an Interest Period with respect thereto,
including, without limitation, in each case, any such loss or expense
arising from the reemployment of funds obtained by it or from fees payable
to terminate the deposits from which such funds were obtained.
Calculation of all amounts payable to a Lender under this Section 2.16
shall be made as though such Lender had actually funded its relevant
Eurodollar Loan through the purchase of a deposit bearing interest at the
Eurodollar Rate in an amount equal to the amount of such Eurodollar Loan
and having a maturity comparable to the relevant Interest Period;
provided, however, that each Lender may fund each of its Eurodollar Loans
in any manner it sees fit, and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this Section 2.16. The
Company shall endeavor to arrange the borrowings and repayments pursuant
to this Agreement so as to minimize any amounts which would become payable
pursuant to this Section 2.16. A certificate as to any amounts payable
pursuant to this Section 2.16 submitted by any Lender, through the Agent,
shall be conclusive in the absence of manifest error. The agreements in
this Section 2.16 shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
2.17 Replacement Lenders. In the event that the Company becomes
obligated to pay additional amounts to any Lender pursuant to Section 2.14
or 2.15, then, unless such Lender has theretofore removed or cured the
conditions which resulted in the obligation to pay such additional
amounts, the Company may, on ten Business Days' prior written notice to
the Agent and such Lender, cause such Lender to (and such Lender shall)
assign pursuant to Section 11.6 all of its rights and obligations under
this Agreement to another Person which is willing to become a Lender and
is acceptable (which acceptance shall not be unreasonably withheld) to the
Agent, for a purchase price equal to the outstanding principal amount of
the Loans payable to such Lender plus any accrued but unpaid interest on
such Loans, any accrued but unpaid commitment fees in respect of such
Lender's Revolving Credit Commitment and any other amounts payable to such
Lender under this Agreement, provided that any expenses or other amounts
owing to such Lender pursuant to any indemnification provision hereof
(including, if applicable, Section 2.16) shall be for the account of the
Company.
SECTION 3. LETTERS OF CREDIT
3.1 L/C Commitment. (a) Subject to the terms and conditions
hereof (including, without limitation, the applicable conditions specified
in Section 5), the Issuing Lender, in reliance on the agreements of the
other Lenders set forth in Section 3.4, agrees to issue letters of credit
("Letters of Credit") for the account of the Company on any Business Day
during the Revolving Credit Commitment Period in such form as may be
approved from time to time by the Issuing Lender; provided that the
Issuing Lender shall have no obligation to issue any Letter of Credit if,
after giving effect to such issuance, (i) the L/C Obligations would exceed
the L/C Commitment or (ii) the aggregate amount of L/C Obligations and<PAGE>
44
Non-Facility L/C Obligations would exceed $25,000,000. Each Letter of
Credit shall (i) be denominated in Dollars and shall be either (x) a
standby letter of credit issued (1) for the benefit of insurance companies
to guarantee insurance claims and premiums, (2) to provide bid and
performance guarantees or (3) to guarantee contested appeals (a "Standby
Letter of Credit"), or (y) a documentary sight letter of credit (a "Sight
Letter of Credit") or documentary time letter of credit (a "Usance Letter
of Credit") in respect of the purchase of goods or services by the Company
and its Subsidiaries in the ordinary course of business and (ii) expire no
later than the Revolving Credit Termination Date.
(b) Each Letter of Credit shall be subject to the Uniform Customs
and, to the extent not inconsistent therewith, the laws of the State of
New York.
(c) The Issuing Lender shall not at any time be obligated to issue
any Letter of Credit hereunder if such issuance would conflict with, or
cause the Issuing Lender or any L/C Participant to exceed any limits
imposed by, any applicable Requirement of Law.
(d) The terms of the Letters of Credit and the Company's
relationship with the Issuing Lender under this Agreement may be set forth
in a separate agreement among the Company, the Issuing Lender and the
Agent, provided that the provisions of such agreement are not inconsistent
with the provisions of this Agreement.
3.2 Procedure for Issuance of Letters of Credit. The Company may
from time to time request that the Issuing Lender issue a Letter of Credit
by delivering to the Issuing Lender at its address for notices specified
herein an Application therefor, completed to the satisfaction of the
Issuing Lender, and such other certificates, documents and other papers
and information as the Issuing Lender may request. Upon receipt of any
Application, the Issuing Lender will process such Application and the
certificates, documents and other papers and information delivered to it
in connection therewith in accordance with its customary procedures and
shall promptly issue the Letter of Credit requested thereby (but in no
event shall the Issuing Lender be required to issue any Letter of Credit
unless it has received the Application therefor and all such other
certificates, documents and other papers and information relating thereto
by 12:00 Noon, New York City time, on the Business Day immediately
preceding the day on which such Letter of Credit is to be issued) by
issuing the original of such Letter of Credit to the beneficiary thereof
or as otherwise may be agreed by the Issuing Lender and the Company. The
Issuing Lender shall furnish a copy of such Letter of Credit to the Agent
and the Company promptly following the issuance thereof.
3.3 Fees and Other Charges. (a) The Company shall pay to the
Agent, for the account of the Issuing Lender and the L/C Participants, a
participation fee with respect to the Commercial Letters of Credit (other
than Usance Letters of Credit in respect of which a banker's acceptance
has been issued or a deferred payment has been created) at a per annum
rate equal to 1-3/8% on the average daily aggregate amount available to be
drawn under such Commercial Letters of Credit during the period for which
payment is made. Such participation fee shall be payable to the Lenders
to be shared ratably among them in accordance with their respective<PAGE>
45
Commitment Percentages. Such participation fee shall be payable quarterly
in arrears on each L/C Fee Payment Date and shall be nonrefundable.
(b) The Company shall pay to the Agent, for the account of the
Issuing Lender and the L/C Participants, a participation fee with respect
to the Standby Letters of Credit and the Usance Letters of Credit in
respect of which a banker's acceptance has been issued or a deferred
payment has been created, at a per annum rate equal to the Applicable
Margin from time to time in effect with respect to Eurodollar Loans on the
average daily aggregate amount available to be drawn under such Letters of
Credit during the period for which payment is made. Such participation
fee shall be payable to the Lenders to be shared ratably among them in
accordance with their respective Commitment Percentages. Such
participation fee shall be payable quarterly in arrears on each L/C Fee
Payment Date and shall be nonrefundable.
(c) In addition to the foregoing fees, (i) the Company shall pay
to the Issuing Lender, for its own account, a fronting fee in respect of
each Letter of Credit equal to a per annum rate agreed upon between the
Company and the Issuing Lender on the average daily aggregate amount
available to be drawn under such Letter of Credit during the period for
which payment is made; such fronting fee shall be payable quarterly in
arrears on each L/C Fee Payment Date and shall be nonrefundable; and (ii)
the Company shall pay or reimburse the Issuing Lender for such normal and
customary costs and expenses as are incurred or charged by the Issuing
Lender in issuing, effecting payment under, amending or otherwise
administering any Letter of Credit.
(d) The Agent shall, promptly following its receipt thereof,
distribute to the Issuing Lender and the L/C Participants all fees
received by the Agent for their respective accounts pursuant to this
Section.
3.4 L/C Participations. The Issuing Lender irrevocably agrees to
grant and hereby grants to each L/C Participant, and, to induce the
Issuing Lender to issue Letters of Credit hereunder, each L/C Participant
irrevocably agrees to accept and purchase and hereby accepts and purchases
from the Issuing Lender, on the terms and conditions hereinafter stated,
for such L/C Participant's own account and risk an undivided interest
equal to such L/C Participant's Commitment Percentage of the Issuing
Lender's obligations and rights under or in respect of each Letter of
Credit issued hereunder and the amount of each draft paid by the Issuing
Lender thereunder.
3.5 Drawing and Reimbursement. (a) The payment by the Issuing
Lender of a draft drawn under any Letter of Credit shall constitute for
all purposes of this Agreement the making by the Issuing Lender on the
date of such payment of a Loan ("Issuing Lender Loans"), which shall be an
ABR Loan, in the amount of such draft (but without any requirement for
compliance with the provisions of Sections 2.1 and 2.3 or the conditions
set forth in Section 5). It is understood that, notwithstanding anything
to the contrary in this Section 3.5, interest on any unreimbursed Issuing
Lender Loan shall be payable by the Company from the date on which such
Loan is deemed to be made, at the interest rate then applicable to ABR
Loans. In the event that a drawing under any Letter of Credit is not
reimbursed by the Company by 12:00 Noon, New York City time, on the first<PAGE>
46
Business Day after such drawing, the Issuing Lender shall promptly notify
the Agent and, upon receipt of such notice, the Agent will in turn notify
each L/C Participant. Each L/C Participant shall, on the first Business
Day following such notification, make a Loan, which shall be an ABR Loan,
in an amount equal to its Commitment Percentage of such drawing for
application to reimburse the Issuing Lender (but without any requirement
for compliance with the provisions of Sections 2.1 and 2.3 or the
conditions set forth in Section 5) and shall make available to the Agent
for the account of the Issuing Lender, by deposit to the Agent's account,
in same day funds, the amount of such Loan. If and to the extent that any
Lender shall not have so made the amount of such Loan available to the
Agent, such L/C Participant and the Company severally agree to pay to the
Agent forthwith on demand such amount together with interest thereon, for
each day from the date of demand by the Issuing Lender until the date such
amount is paid to the Agent (such obligation on the part of the Company,
together with any comparable obligation with respect to participating
interests pursuant to Section 3.5(b), being referred to herein as a
"Reimbursement Obligation"), at (a) in the case of the Company, the
interest rate then applicable to ABR Loans and (b) in the case of such L/C
Participant, the daily average federal funds rate during the relevant
period as quoted by the Agent, calculated on the basis of the actual
number of days elapsed during such period over a year of 360 days. If
such L/C Participant shall pay to the Agent such amount, such amount so
paid shall constitute such L/C Participant's Loan for purposes of this
Agreement.
(b) If, for any reason (including as a result of the occurrence of
an Event of Default with respect to the Company pursuant to Section 8(f)),
ABR Loans may not be made pursuant to Section 3.5(a) by the L/C
Participants to repay Issuing Lender Loans, then, effective on the date
such ABR Loans would otherwise have been made, each L/C Participant
severally agrees that it shall unconditionally and irrevocably, without
regard to the occurrence of any Default or Event of Default, to the extent
of such L/C Participant's Commitment Percentage, purchase a participating
interest in such Issuing Lender Loans. Each L/C Participant will
immediately transfer to the Agent, in same day funds, the amount of its
participation, and the proceeds of such participation shall be distributed
by the Agent to the Issuing Lender. Each L/C Participant shall share on a
pro rata basis (calculated by reference to its participating interest in
such Issuing Lender Loans) in any interest which accrues thereon and in
all repayments thereof. If and to the extent that any Lender shall not
have so made the amount of such participating interest available to the
Agent, such L/C Participant and the Company severally agree to pay to the
Agent forthwith on demand such amount together with interest thereon, for
each day from the date of demand by the Issuing Lender until the date such
amount is paid to the Agent, at (a) in the case of the Company, the
interest rate then applicable to ABR Loans and (b) in the case of such L/C
Participant, the daily average federal funds rate during the relevant
period as quoted by the Agent, calculated on the basis of the actual
number of days elapsed during such period over a year of 360 days. If
such L/C Participant shall pay to the Agent such amount, such amount so
paid shall constitute such L/C Participant's participating interest in the
relevant Issuing Lender Loans for purposes of this Agreement.
3.6 Obligations Absolute. The Company's obligations under this
Section shall be absolute and unconditional under any and all<PAGE>
47
circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Company may have or have had against the Issuing Lender,
any L/C Participant or any beneficiary of a Letter of Credit. The Company
also agrees with the Issuing Lender and the L/C Participants that the
Issuing Lender and the L/C Participants shall not be responsible for, and
the Company's obligations under Section 3.5 shall not be affected by,
among other things, the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Company
and any beneficiary of any Letter of Credit or any other party to which
such Letter of Credit may be transferred or any claims whatsoever of the
Company against any beneficiary of such Letter of Credit or any such
transferee. The Issuing Lender and the L/C Participants shall not be
liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit, except, in the case of the Issuing
Lender, for errors or omissions caused by the Issuing Lender's gross
negligence or willful misconduct. The Company agrees that any action
taken or omitted by the Issuing Lender under or in connection with any
Letter of Credit or the related drafts or documents, if done in the
absence of gross negligence of willful misconduct and in accordance with
the standards of care specified in the Uniform Commercial Code of the
State of New York, shall be binding on the Company and shall not result in
any liability of the Issuing Lender or any L/C Participant to the Company.
3.7 Letter of Credit Payments. If any draft shall be presented
for payment under any Letter of Credit, the Issuing Lender shall promptly
notify the Company of the date and amount thereof. The responsibility of
the Issuing Lender to the Company in connection with any draft presented
for payment under any Letter of Credit shall, in addition to any payment
obligation expressly provided for in such Letter of Credit, be limited to
determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity
with such Letter of Credit.
3.8 Application. To the extent that any provision of any
Application related to any Letter of Credit is inconsistent with the
provisions of this Section 3, the provisions of this Section 3 shall
apply.
3.9 Notices and Reports. The Issuing Lender shall furnish (a) to
the Agent notice of any failure to issue, any extension or expiration of,
or any drawing under any Letter of Credit prior to 11:00 A.M. (New York
City time) on the day of such extension, expiration or drawing or, in the
case of a failure to issue, on the day on which the Issuing Lender
determines not to issue a Letter of Credit and (b) to the Agent on the
last Business Day (or such other day as is agreed between the Agent and
the Issuing Lender) of each month a written report setting forth the
average daily aggregate maximum amount available to be drawn (assuming
compliance with all conditions to drawing) during such month under all
Letters of Credit and summarizing issuance and expiration dates of Letters
of Credit issued during such month and drawings during such month under
all Letters of Credit. Upon receipt of any report referred to in clause
(b) above, the Agent shall deliver a copy thereof to each L/C Participant,
together with a calculation of each L/C Participant's participation in
each Letter of Credit referred to in such report.<PAGE>
48
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make or
maintain the Loans and issue or participate in the Letters of Credit,
Holdings and the Company hereby jointly and severally represent and
warrant to the Agent and each Lender that:
4.1 Financial Condition. (a) The unaudited pro forma
consolidated balance sheet of Holdings and its consolidated Subsidiaries
as at December 31, 1994 (including the notes thereto) (the "Pro Forma
Balance Sheet"), copies of which have heretofore been furnished to each
Lender, has been prepared giving effect (as if such events had occurred on
such date) to (i) the borrowings under this Agreement contemplated to be
made, and other Indebtedness of the Company and its Subsidiaries
contemplated to be incurred, on the Effective Date, (ii) the repayment or
defeasance of any Indebtedness of Holdings, the Company or its
Subsidiaries contemplated to occur on the Effective Date and (iii) the
payment of fees and expenses in connection with the foregoing. The Pro
Forma Balance Sheet is based on the best information available to Holdings
and the Company as of the date of delivery thereof, and presents fairly on
a pro forma basis the estimated financial position of Holdings and its
consolidated Subsidiaries as at December 31, 1994, assuming that the
events specified in the preceding sentence had actually occurred at
December 31, 1994.
(b) The consolidated balance sheets of Holdings and its
consolidated Subsidiaries and of the Company and its consolidated
Subsidiaries as at December 31, 1993 and December 31, 1994 and the related
consolidated statements of income and stockholders' equity and cash flows
for the fiscal years ended on such dates, reported on by Ernst & Young,
copies of which have heretofore been furnished to each Lender, present
fairly the consolidated financial condition of Holdings and its
consolidated Subsidiaries or the Company and its consolidated
Subsidiaries, as the case may be, as at such dates, and the consolidated
results of their operations and cash flows for the fiscal years then
ended. All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants and as disclosed therein). Neither Holdings, the Company nor
any of their respective consolidated Subsidiaries had, at the date of the
most recent balance sheet referred to above, any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-term
lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange
transaction, which is not reflected in the foregoing statements or in the
notes thereto other than such obligations which are not required to be
disclosed under GAAP (which obligations are described on Schedule 4.1(b)).
During the period from December 31, 1994 to and including the Effective
Date there has been no sale, transfer or other disposition by Holdings,
the Company or any of their respective consolidated Subsidiaries of any
material part of its business or property and no purchase or other
acquisition of any business or property (including any Capital Stock of
any other Person) material in relation to the consolidated financial
condition of Holdings and its consolidated Subsidiaries or the Company and
its consolidated Subsidiaries, as the case may be, at December 31, 1994<PAGE>
49
(except for any sale, transfer or other disposition made in connection
with the Capital Lease Financing Facility).
(c) The projections dated March 2, 1995 furnished to the Lenders
were prepared based on good faith assumptions and the best information
available to Holdings and the Company on the date thereof, and all
assumptions and estimates set forth therein, on such date, were believed
by management of Holdings and the Company to be reasonable in light of
then current conditions and reflected Holdings' and the Company's
reasonable estimate of the results of operations and other information
projected therein, it being recognized by the Lenders that such
projections as they relate to future events are not to be viewed as fact
and that actual results during the period or periods covered by such
projections may differ from the projected results set forth therein.
4.2 No Change. Since December 31, 1994 (a) there has been no
development or event, which has had or could reasonably be expected to
have a Material Adverse Effect and (b) no dividends or other distributions
have been declared, paid or made upon the Capital Stock of Holdings or the
Company nor has any of the Capital Stock of the Company been redeemed,
retired, purchased or otherwise acquired for value by Holdings, the
Company or any of its Subsidiaries, except as expressly permitted by
Section 7.8.
4.3 Corporate Existence; Compliance with Law. Each of Holdings,
the Company and its Subsidiaries (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal
right, to own, pledge, mortgage and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires
such qualification except where the failure to be so qualified and/or in
good standing, in the aggregate, could not reasonably be expected to have
a Material Adverse Effect and (d) is in compliance with all Requirements
of Law except to the extent that the failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
4.4 Corporate Power; Authorization; Enforceable Obligations. (a)
Each Loan Party has the corporate power and authority, and the legal
right, to make, deliver and perform each Loan Document to which it is a
party and, in the case of the Company, to borrow hereunder and to request
the issuance of Letters of Credit for its account, and has taken all
necessary corporate action to authorize the execution, delivery and
performance of each such Loan Document and, in the case of the Company, to
authorize the borrowings and the issuance of Letters of Credit for its
account on the terms and conditions of this Agreement and any Revolving
Credit Note.
(b) No consent or authorization of, filing with or other act by or
in respect of any Governmental Authority or any other Person is required
in connection with the borrowings hereunder or the issuance of Letters of
Credit or with the execution, delivery, performance, validity or
enforceability of this Agreement or any other Loan Document, other than<PAGE>
50
filings necessary to perfect the Agent's security interest in the
Collateral for the benefit of the Lenders (which consents, authorizations
and filings have been obtained or made and are in full force and effect).
(c) This Agreement and the other Loan Documents have been duly
executed and delivered on behalf of each Loan Party party thereto. This
Agreement and the other Loan Documents constitute a legal, valid and
binding obligation of each Loan Party party thereto, enforceable against
each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
4.5 No Legal Bar. Except as set forth in Schedule 4.5, the
execution, delivery and performance of this Agreement and the other Loan
Documents, the issuance of Letters of Credit, the borrowings hereunder and
the use of the proceeds thereof will not violate any Requirement of Law or
material Contractual Obligation of Holdings, the Company or of any of its
Subsidiaries and will not result in, or require, the creation or
imposition of any Lien on any of their respective properties or revenues
pursuant to any such Requirement of Law or Contractual Obligation (other
than the Liens created by the Security Documents).
4.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is
pending or, to the knowledge of Holdings or the Company, threatened by or
against Holdings, the Company or any of its Subsidiaries or against any of
their respective properties or revenues (a) with respect to this Agreement
or any other Loan Document, the Loans or the use of the proceeds thereof,
any Letter of Credit, or any Lien contemplated by the Loan Documents or
(b) which has a reasonable possibility of an adverse determination and, if
adversely determined, (i) would affect the legality, validity or
enforceability of any Loan Document or (ii) would have a Material Adverse
Effect.
4.7 No Default. Neither Holdings, the Company nor any of its
Subsidiaries is in default or has received any notice of default under or
with respect to any of its Contractual Obligations in any respect which
could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
4.8 Ownership of Property; Liens. Set forth on Schedule 4.8 is a
complete and accurate list of all real property owned by any Loan Party or
any of its Subsidiaries as of the Effective Date, showing as of the
Effective Date the street address, county or other jurisdiction and state
thereof. Also set forth on Schedule 4.8 is a complete and accurate list
of all leases of real property under which any Loan Party or any of its
Subsidiaries is the lessee, showing as of the Effective Date the street
address, county or other relevant jurisdiction, state, lessor, lessee,
expiration date and annual rental cost thereof. Each such lease is the
legal, valid and binding obligation of the lessor thereof, enforceable in
accordance with its terms, except as could not reasonably be expected to
have a Material Adverse Effect. Each of Holdings, the Company and each of
its Subsidiaries has good record and marketable (subject to Liens
expressly permitted by Section 7.3) title in fee simple to, or a valid<PAGE>
51
leasehold interest in, all its real property, and good title to all its
other property, and none of such property is subject to any Lien except as
expressly permitted by Section 7.3.
4.9 Intellectual Property. Set forth on Schedule 4.9 is a
complete and accurate list of all patents, trademarks, trade names,
service marks and copyrights, and all applications therefor and licenses
thereof, of any Loan Party or any of its Subsidiaries as of the Effective
Date, showing as of the Effective Date the jurisdiction in which
registered, the registration number, the date of registration and the
expiration date. Each of Holdings, the Company and each of its
Subsidiaries owns, or is licensed to use, all trademarks, trade names,
service marks, copyrights, technology, know-how and processes necessary
for the conduct of its business as currently conducted (the "Intellectual
Property") except for those the failure to own or license which could not
reasonably be expected to have a Material Adverse Effect. No claim has
been asserted and is pending by any Person challenging or questioning the
use of any such Intellectual Property or the validity or effectiveness of
any such Intellectual Property, nor does Holdings or the Company know of
any valid basis for any such claim, the use of such Intellectual Property
by Holdings, the Company and its Subsidiaries does not infringe on the
rights of any Person, and, to the knowledge of Holdings and the Company,
no Intellectual Property has been infringed, misappropriated or diluted by
any other Person, except for such claims, infringements, misappropriations
and dilutions that, in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
4.10 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation applicable to Holdings, the Company or any of its
Subsidiaries could reasonably be expected to have a Material Adverse
Effect.
4.11 Taxes. Each of Holdings, the Company and its Subsidiaries has
filed or caused to be filed all tax returns which are required to be filed
and has paid all taxes shown to be due and payable on said returns or on
any assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided
on the books of Holdings, the Company or its Subsidiaries, as the case may
be, and the non-payment of which does not have a reasonable likelihood of
having a Material Adverse Effect); no tax Lien has been filed with respect
to any material tax liability on the part of Holdings, the Company or any
of its Subsidiaries; and, to the knowledge of Holdings or the Company, no
proposed material tax assessment is pending against Holdings, the Company
or any of its Subsidiaries and all potential tax liabilities are
adequately provided for on the books of Holdings, the Company or its
Subsidiaries, as the case may be.
4.12 Federal Regulations. No part of the proceeds of any Loans or
Letters of Credit will be used for "purchasing" or "carrying" any "margin
stock" within the respective meanings of each of the quoted terms under
Regulation G, T, U or X of the Board as now and from time to time
hereafter in effect or for any purpose which violates the provisions of
the Regulations of the Board. If requested by any Lender or the Agent,<PAGE>
52
the Company will furnish to the Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of the appropriate FR
Form referred to in said Regulation G, T, U or X.
4.13 Labor Matters. There are no strikes or other labor disputes
against Holdings, the Company or any of its Subsidiaries pending or, to
the knowledge of Holdings or the Company, threatened that (individually or
in the aggregate) could reasonably be expected to have a Material Adverse
Effect. Hours worked by and payment made to employees of Holdings, the
Company and its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect. All payments due from
Holdings, the Company or any of its Subsidiaries on account of employee
health and welfare insurance that (individually or in the aggregate) could
reasonably be expected to have a Material Adverse Effect if not paid have
been paid or accrued as a liability on the books of Holdings, the Company
or such Subsidiary.
4.14 ERISA. No Reportable Event has occurred since March 1, 1990
with respect to any Plan which, if then terminated, has had or could
reasonably be expected to have a Material Adverse Effect, and each Plan
has complied in all respects with the applicable provisions of ERISA and
the Code except where such failure to comply could not reasonably be
expected to have a Material Adverse Effect. The actuarial present value
of all accrued benefits under each Single Employer Plan maintained by the
Company or any Commonly Controlled Entity (based on those assumptions used
to fund the Plans) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the
value of the assets of such Plan. Neither the Company nor any Commonly
Controlled Entity has had or could reasonably be expected to have a
complete or partial withdrawal from any Multiemployer Plan, and neither
the Company nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Company or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date on which this
representation is made or deemed made where such withdrawal or liability
could reasonably be expected to have a Material Adverse Effect. No such
Multiemployer Plan is in a Reorganization or an Insolvency where the
effect of such Reorganization or Insolvency could reasonably be expected
to have a Material Adverse Effect.
4.15 Investment Company Act; Other Regulations. No Loan Party is
an "investment company", or a company "controlled" by an "investment
company" (other than one which is exempt from the provisions of the
Investment Company Act of 1940, as amended), within the meaning of the
Investment Company Act of 1940, as amended. No Loan Party is subject to
regulation under any federal or state statute or regulation which limits
its ability to incur Indebtedness.
4.16 Subsidiaries. The Subsidiaries of Holdings listed on Schedule
4.16 constitute all the Subsidiaries of Holdings on the Effective Date.
4.17 Purpose of Loans. The proceeds of the Loans will be used for
the purposes identified in the second Preliminary Statement.<PAGE>
53
4.18 Environmental Matters. (a) The Mortgaged Properties do not
contain any Hazardous Materials in amounts or concentrations which (i)
constitute or constituted a violation of, or (ii) could reasonably be
expected to give rise to liability under, Environmental Laws, except to
the extent that such violations and liabilities, in the aggregate, could
not reasonably be expected to have a Material Adverse Effect.
(b) (i) The Mortgaged Properties and all operations at the Mortgaged
Properties are in compliance in all material respects and in the last
three years have been in compliance in all material respects with all
Environmental Laws, and (ii) there is no contamination at or under the
Mortgaged Properties, or violation of any Environmental Law with respect
to the Mortgaged Properties or the business of Holdings, the Company or
any of its Subsidiaries, except to the extent that such contamination and
violations, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(c) Neither Holdings, the Company nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to the Mortgaged Properties
or the business of Holdings, the Company or any of its Subsidiaries or
with regard to any Person or entity whose liabilities for environmental
matters Holdings, the Company or any of its Subsidiaries has retained or
assumed, in whole or in part, contractually, by operation of law or
otherwise, which, in the aggregate, could reasonably be expected to have a
Material Adverse Effect, nor does Holdings or the Company have knowledge
or reason to believe that any such notice will be received or is being
threatened.
(d) Hazardous Materials have not been transported or disposed of
from the Mortgaged Properties, nor have Hazardous Materials been
generated, treated, stored or disposed of at, on or under any of the
Mortgaged Properties in violation of any Environmental Law or in a manner
that could reasonably give rise to liability under any Environmental Law,
nor do Holdings, the Company or any of its Subsidiaries reasonably believe
that they have retained or assumed any liability, contractually, by
operation of law or otherwise, with respect to the generation, treatment,
storage or disposal of Hazardous Materials, except to the extent that the
foregoing, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(e) (i) No material judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of Holdings or the
Company, threatened, under any Environmental Law to which Holdings, the
Company or any of its Subsidiaries is or will be named a party with
respect to (x) the Mortgaged Properties, (y) the business of Holdings, the
Company or any of its Subsidiaries or (z) any liabilities pursuant to
Environmental Laws reasonably believed by Holdings, the Company or any of
its Subsidiaries to be retained or assumed by Holdings, the Company or any
of its Subsidiaries, contractually, by operation of law or otherwise, and
(ii) there are no material consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect
to (x) the Mortgaged Properties, (y) the business of Holdings, the Company
or any of its Subsidiaries or (z) any liabilities pursuant to<PAGE>
54
Environmental Laws reasonably believed by Holdings, the Company or any of
its Subsidiaries to be retained or assumed by Holdings, the Company or any
of its Subsidiaries, contractually, by operation of law or otherwise.
(f) There has been no Release or threat of Release of Hazardous
Materials at or from the Mortgaged Properties, or arising from or in
connection with the Mortgaged Properties or otherwise in connection with
the business of Holdings, the Company or its Subsidiaries in violation of
any Environmental Law in a manner that, in the aggregate, could reasonably
be expected to have a Material Adverse Effect.
(g) Each of the representations and warranties set forth in
paragraphs (a) through (f) above is true and correct with respect to each
parcel of real property owned or operated by Holdings, the Company or any
of its Subsidiaries (other than the Mortgaged Properties).
4.19 Accuracy of Information. No factual statement or information
contained in this Agreement, any other Loan Document, the Confidential
Information Memorandum (as the same may have been supplemented prior to
the Effective Date) or any other document, certificate or written
statement furnished to the Agent or the Lenders or any of them, by or on
behalf of any Loan Party for use in connection with the transactions
contemplated by this Agreement or the other Loan Documents (including,
without limitation, any financial information furnished pursuant to
Section 6.1), other than trade data contained in the Confidential
Information Memorandum which relates to any Person which is not a Loan
Party or an Affiliate thereof, contained as of the date such statement,
information, document or certificate was so furnished (or, in the case of
the Confidential Information Memorandum, as of the Effective Date) any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. The projections and pro forma financial information contained
in the materials referenced above are based upon good faith estimates and
assumptions believed by management of the Company to be reasonable at the
time made, it being recognized by the Lenders that such financial
information as it relates to future events is not to be viewed as fact and
that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein. There
is no fact known to any Loan Party that could reasonably be expected to
have a Material Adverse Effect that has not been expressly disclosed
herein, in the other Loan Documents, in the Confidential Information
Memorandum or in such other documents, certificates and statements
furnished to the Agent and the Lenders for use in connection with the
transactions contemplated hereby and by the other Loan Documents.
4.20 Security Documents. (a) Each of the Pledge Agreements is
effective to create in favor of the Agent, for the benefit of the Lenders,
a legal, valid and enforceable security interest in the Pledged Securities
described therein and proceeds thereof and, when the Pledged Notes
described therein and stock certificates representing the Pledged Stock
described therein are delivered to the Agent, each such Pledge Agreement
shall constitute a fully perfected first priority Lien on, and security
interest in, all right, title and interest of the relevant Loan Party in
such Pledged Securities and the proceeds thereof, in each case (except as
may be limited by applicable bankruptcy, insolvency, reorganization,<PAGE>
55
moratorium or similar laws affecting the enforcement of creditors' rights
generally) prior and superior in right to any other Person.
(b) Each of the Security Agreements is effective to create in favor
of the Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the Collateral described therein and
proceeds thereof; when financing statements in appropriate form are filed
in the offices specified on Schedule 4.20(b), each such Security Agreement
constitutes a fully perfected Lien on, and security interest in, all
right, title and interest of the Loan Parties in such Collateral and, to
the extent provided therein, the proceeds thereof, in each case (except as
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally) prior and superior in right to any other Person, other than
with respect to Liens expressly permitted by Section 7.3.
(c) Each of the Mortgages is effective to create in favor of the
Agent, for the benefit of the Lenders, a legal, valid and enforceable Lien
on the Mortgaged Properties described therein and, to the extent provided
therein, the proceeds thereof; when recorded in the offices specified on
Schedule 4.20(c), each such Mortgage shall constitute a fully perfected
Lien on, and security interest in, all right, title and interest of the
Loan Parties in the Mortgaged Properties and, to the extent provided
therein, the proceeds thereof, in each case (except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally) prior and
superior in right to any other Person, other than with respect to Liens
expressly permitted by Section 7.3.
4.21 Solvency. Each Loan Party is, and after giving effect to the
incurrence or assumption of all Indebtedness and obligations being
incurred or assumed in connection herewith will be and will continue to
be, Solvent.
4.22 Insurance. Holdings, the Company and each of its Subsidiaries
maintain with financially sound and reputable insurance companies
insurance on all its properties in at least such amounts and against at
least such risks (but, including in any event, public liability, product
liability and business interruption) as are usually insured against in the
same general area by companies engaged in the same or a similar business.
4.23 Regulation H. No Mortgage encumbers improved real property
which is located in an area that has been identified by the Secretary of
Housing and Urban Development as an area having special flood hazards and
in which flood insurance has been made available under the National Flood
Insurance Act of 1968, except for the real property located in Jonesboro,
Indiana, on which the Company maintains flood insurance.
SECTION 5. CONDITIONS PRECEDENT
5.1 Conditions to Effectiveness. The effectiveness of this
Agreement is subject to the satisfaction of the following conditions
precedent on or prior to the Effective Date:<PAGE>
56
(a) Agreement. The Agent shall have received this Agreement,
duly executed and delivered by a duly authorized officer of Holdings
and the Company, with a counterpart for each Lender.
(b) Financial Statements. The Agent and each Lender shall
have received copies of each of the financial statements referred to
in Section 4.1.
(c) Existing Credit Agreement; 16% Debentures. (i) (A) Any
outstanding "Loans" (as defined in the Existing Credit Agreement)
shall have been refunded with the proceeds of the Loans hereunder
and all other Indebtedness and other amounts (to the extent invoiced
prior to the Effective Date) owing by the Company or any other Loan
Party under the Existing Credit Agreement and any instrument or
document delivered in connection therewith shall have been paid in
full and (B) to the extent requested by the Agent, the Agent shall
have received appropriately executed termination statements and
releases, in proper form for filing in the relevant jurisdictions,
in respect of the security interests granted pursuant to the "Loan
Documents" under and as defined in the Existing Credit Agreement.
Without affecting any terms of the Existing Credit Agreement or the
"Loan Documents" under and as defined in the Existing Credit
Agreement which expressly survive the termination thereof, each of
the Agent and each Lender party to the Existing Credit Agreement
hereby waives any requirement of advance notice of commitment
termination contained in the Existing Credit Agreement and each of
Holdings, the Company, the Agent and each Lender hereby agrees that
the Existing Credit Agreement and the commitments thereunder,
together with the "Loan Documents" under and as defined in the
Existing Credit Agreement and all Liens and other security interests
created thereby, shall terminate simultaneously with the
satisfaction of the conditions to effectiveness set forth in this
Section 5.1.
(ii) The Agent shall be reasonably satisfied that Holdings
shall be in a position to establish, on or promptly after the
Effective Date, a redemption date on or prior to May 31, 1995 (the
"Redemption Date") for the portion of the 16% Debentures expected to
be redeemed with the proceeds of Loans ("Redemption Loans") to be
made on or about the Redemption Date.
(d) Closing Certificates. The Agent shall have received a
Closing Certificate of each Loan Party, substantially in the form of
Exhibit H, with appropriate insertions and attachments (which
attachments shall be in form and substance reasonably satisfactory
to the Agent).
(e) Payment of Fees. The Agent shall have received the fees
to be received on the Effective Date referred to in Section 2.4(b),
and the Agent shall have been reimbursed for all syndication, legal
and other fees, costs and expenses of the kind described in Section
11.5 to the extent invoiced on or prior to the Effective Date.
(f) Legal Opinions. The Agent shall have received, with a
counterpart for each Lender, the following executed legal opinions:<PAGE>
57
(i) the executed legal opinion of Cravath,
Swaine & Moore, counsel to Holdings, substantially
in the form of Exhibit G-1;
(ii) the executed legal opinion of the general counsel
of the Company, substantially in the form of Exhibit G-2; and
(iii) the executed legal opinion of each local counsel
listed on Schedule 5.1(f), substantially in the form of
Exhibit G-3.
Each such legal opinion shall cover such other matters incident to
the transactions contemplated by this Agreement and the other Loan
Documents as the Agent may reasonably require.
(g) Subsidiary Guarantee. The Agent shall have received the
Subsidiary Guarantee, duly executed and delivered by a duly
authorized officer of each Subsidiary Guarantor.
(h) Pledge Agreements; Pledged Stock; Intercompany Notes.
The Agent shall have received (i) each Pledge Agreement, duly
executed and delivered by a duly authorized officer of the pledgor
or pledgors named therein, (ii) (x) stock certificates representing
the Pledged Stock pledged pursuant to each such Pledge Agreement,
together with undated stock powers endorsed in blank for each stock
certificate representing such Pledged Stock, (y) Intercompany Notes
issued by each Loan Party to each other Loan Party, duly executed
and delivered by the issuer thereof and endorsed in blank by the
payee thereof and (z) any other documents or notifications required
by such Pledge Agreement, and (iii) an acknowledgement and consent
executed by each of the Issuers referred to in each such Pledge
Agreement.
(i) Security Agreements. The Agent shall have received each
of the Security Agreements, duly executed and delivered by a duly
authorized officer of the grantor or grantors named therein.
(j) Mortgages. The Agent shall have received each Mortgage,
duly executed and delivered by a duly authorized officer of the
relevant Loan Party.
(k) Title Insurance Policies. The Agent shall have received
in respect of each parcel of Mortgaged Property specified by the
Agent, a mortgagee's title insurance policy or marked up
unconditional binder for such insurance dated the Effective Date.
Such policy shall (i) be in an amount satisfactory to the Agent,
(ii) insure that each Mortgage creates a valid first mortgage lien
on the Mortgaged Property described therein free and clear of all
defects and encumbrances, except as otherwise specified therein and
acceptable to the Agent and except as otherwise expressly permitted
by Section 7.3, (iii) name the Agent, for the benefit of the
Lenders, as the insured thereunder, (iv) be in the form of ALTA Loan
Policy - 1990, if available, (v) contain such endorsements and
affirmative coverage as the Agent may reasonably request and (vi) be
issued by First American Title Insurance Company or such other title
company as shall be satisfactory to the Agent. The Agent shall also<PAGE>
58
have received evidence satisfactory to it that all premiums in
respect of each such policy have been paid or will be paid with
proceeds of the initial extension of credit.
(l) Lien Searches. The Agent shall have received
satisfactory results of a recent search by a Person acceptable to it
of Uniform Commercial Code filings which may have been filed with
respect to any Loan Party in the jurisdictions listed on Schedule
4.20(b).
(m) Filings, Registrations and Recordings. Each document
(including, without limitation, any Uniform Commercial Code
financing statement) required by the Security Documents or under law
or reasonably requested by the Agent to be filed, registered or
recorded in order to create in favor of the Agent, for the benefit
of the Lenders, a perfected Lien on the Collateral described
therein, prior and superior in right to any other Person (other than
with respect to Liens expressly permitted by Section 7.3), shall be
in proper form for filing, registration or recordation in each
jurisdiction in which the filing, registration or recordation
thereof is so required or requested.
(n) Certificates. The Agent shall have received (i) a
Borrowing Base Certificate, dated the Effective Date and setting
forth a calculation of the Borrowing Base as of February 28, 1995,
showing that the Modified Aggregate Outstanding Revolving Extensions
of Credit outstanding on the Effective Date (after giving effect to
the making of any extensions of credit on the Effective Date), shall
not exceed the Borrowing Base as set forth in such Certificate and
(ii) a Senior Note Indenture Revolving Credit Incurrence Limit
Certificate, dated the Effective Date and setting forth a
calculation of the Senior Note Indenture Revolving Credit Incurrence
Limit as of February 28, 1995, showing that the sum of (i) the
aggregate L/C Obligations then outstanding and (ii) the aggregate
principal amount of Specified Basket Debt then outstanding (after
giving effect to the making of any extensions of credit on the
Effective Date), shall not exceed the Senior Note Indenture
Revolving Credit Incurrence Limit as set forth in such Certificate.
(o) Borrowing Base Report. The Agent shall have received a
satisfactory report on the examination by its internal staff of the
Inventory and Accounts of the Company and its Subsidiaries as of
December 31, 1994.
(p) Insurance. The Agent shall have received evidence
satisfactory to it as to the adequacy of the insurance program of
the Loan Parties and that each Loan Party has obtained the insurance
coverage required by the Security Documents, including appropriate
evidence showing the Agent, for the benefit of the Lenders, as an
additional named insured or loss payee.
5.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any Loan (excluding Redemption Loans) or to issue any
Letter of Credit requested to be made or issued by it on any date is
subject to the satisfaction of the following conditions precedent:<PAGE>
59
(a) Representations and Warranties. Each of the
representations and warranties made by the Company and the other
Loan Parties in or pursuant to the Loan Documents shall be true and
correct on and as of such date as if made on and as of such date.
(b) No Default. No Default or Event of Default shall have
occurred and be continuing on such date or after giving effect to
the extension of credit requested to be made on such date.
(c) Credit Limitations. After giving effect to such
extension of credit, (i) the Aggregate Outstanding Revolving
Extensions of Credit shall not exceed the aggregate Revolving Credit
Commitments in effect on such date and (ii) no prepayment shall be
required to be made pursuant to Section 2.7.
Each borrowing by and issuance of a Letter of Credit on behalf of the
Company hereunder (other than the borrowing of Redemption Loans) shall
constitute a representation and warranty by the Company as of the date of
such extension of credit that the conditions contained in this Section 5.2
have been satisfied.
5.3 Conditions to Redemption Loans. The agreement of each Lender
to make its portion of the Redemption Loans is subject to the satisfaction
of the following conditions precedent on the borrowing date in respect
thereof:
(a) Credit Limitations. After giving effect to the making of
such Redemption Loans, (i) the Aggregate Outstanding Revolving
Extensions of Credit shall not exceed the aggregate Revolving Credit
Commitments in effect on such date, (ii) no prepayment shall be
required to be made pursuant to Section 2.7 and (iii) the condition
specified in the proviso contained in Section 7.11(a)(ii)(z) shall
have been satisfied.
(b) No Orders, etc. No order, judgment or decree shall
purport to enjoin or restrain (i) any Lender from making its portion
of the Redemption Loans on such date or (ii) Holdings from redeeming
on such date a portion of the 16% Debentures having an aggregate
face amount equal to the aggregate amount of such Redemption Loans.
(c) Absence of Specified Events. There shall not have
occurred any Specified Event.
The borrowing of Redemption Loans shall constitute a representation and
warranty by the Company as of the date of such borrowing that the
conditions contained in this Section 5.3 have been satisfied.
SECTION 6. AFFIRMATIVE COVENANTS
Holdings and the Company hereby jointly and severally agree that, so
long as the Revolving Credit Commitments remain in effect, any Loan or
Letter of Credit remains outstanding and unpaid or any other amount is
owing to any Lender or the Agent hereunder, Holdings and the Company
shall, and shall cause each of their respective Subsidiaries to, unless
the Required Lenders shall otherwise consent in writing:<PAGE>
60
6.1 Financial Statements. In the case of Holdings and the
Company, furnish to each Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of Holdings or the Company, as the
case may be, a copy of the consolidated balance sheet of Holdings
and its consolidated Subsidiaries and of the Company and its
consolidated Subsidiaries as at the end of such year and the related
consolidated statements of income and stockholders' equity and cash
flows for such year, setting forth in each case in comparative form
the figures for the previous year, reported on by Ernst & Young or
other independent certified public accountants acceptable to the
Required Lenders (which report shall not be qualified in any
material respect); and
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of
each fiscal year of Holdings or the Company, as the case may be, the
unaudited consolidated balance sheet of Holdings and its
consolidated Subsidiaries and of the Company and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidated statements of income and stockholders' equity and cash
flows for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative
form the figures for the previous year, certified by a Responsible
Officer of Holdings or the Company, as applicable, as fairly
presenting the financial condition and results of operations of
Holdings or the Company, as the case may be, on a consolidated basis
in accordance with GAAP (subject to normal year-end audit
adjustments);
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein and
with prior periods (except as approved by such accountants or officer, as
the case may be, and disclosed therein). It is understood that the
obligation to deliver any items described above which are contained in
Holdings' Form 10-K, as filed with the Securities and Exchange Commission
(in the case of Section 6.1(a)) or Holdings' Form 10-Q, as filed with the
Securities and Exchange Commission (in the case of Section 6.1(b)), may be
satisfied by delivery of such Form 10-K or Form 10-Q, as the case may be.
6.2 Certificates; Other Information. In the case of the Company,
or, if applicable, Holdings, furnish to each Lender:
(a) concurrently with the delivery of the financial
statements referred to in Section 6.1(a), (i) a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except
as specified in such certificate and (ii) copies of any management
letters when delivered to Holdings or the Company in connection with
such examination;
(b) concurrently with the delivery of the financial
statements referred to in Sections 6.1(a) and 6.1(b), (i) a<PAGE>
61
certificate of a Responsible Officer of each of Holdings and the
Company stating that, to the best of each such Responsible Officer's
knowledge, each Loan Party during such period has observed or
performed all of its covenants and other agreements, and satisfied
every condition, contained in this Agreement and in the other Loan
Documents to be observed, performed or satisfied by it, and that
such Responsible Officer has obtained no knowledge of any Default or
Event of Default except as specified in such certificate and (ii) a
Compliance Certificate containing all information necessary for
determining compliance by Holdings, the Company and its Subsidiaries
with the provisions of this Agreement referred to therein as of the
last day of the fiscal quarter or fiscal year of Holdings or the
Company, as the case may be;
(c) by December 31 of each year, a copy of the projections
by Holdings and the Company of the operating budget and cash flow
budget and revenues of Holdings, the Company and its Subsidiaries
for the next succeeding fiscal year in form and substance reasonably
satisfactory to the Agent, setting forth in reasonable detail the
basis for all projections contained therein, such projections to be
accompanied by a certificate of a Responsible Officer of each of
Holdings and the Company to the effect that such projections have
been prepared in good faith using assumptions believed by management
to be reasonable and that such Responsible Officer has no reason to
believe they are misleading in any material respect;
(d) within five days after the same are sent, copies of all
financial statements and reports which Holdings or the Company sends
to holders of any issue of its equity securities or debt securities
generally, and within five days after the same are filed, copies of
all financial statements and reports which Holdings or the Company
may make to, or file with, the Securities and Exchange Commission or
any successor or analogous Governmental Authority or any national
securities exchange;
(e) as soon as practicable, but in no event later than 20
days after the end of each month, (i) a Borrowing Base Certificate,
certifying in reasonable detail the Borrowing Base as of the last
day of such month and (ii) a Senior Note Indenture Revolving Credit
Incurrence Limit Certificate, certifying in reasonable detail the
Senior Note Indenture Revolving Credit Incurrence Limit as of the
last day of such month, which certificates shall be complete and
correct as of the date thereof;
(f) within five days after the same are received, copies of
any notices received by Holdings or the Company from any holder of
Subordinated Debt or the Senior Notes;
(g) within five days after the Company or any of its
Subsidiaries enters into a joint venture, notice thereof accompanied
by a description in reasonable detail of the business in which such
joint venture is engaged; and
(h) promptly, such additional financial and other
information as any Lender may from time to time reasonably request
through the Agent.<PAGE>
62
6.3 Payment of Obligations. (a) Pay, discharge, perform, comply
with or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever nature,
except where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with
GAAP with respect thereto have been provided on the books of Holdings, the
Company or its Subsidiaries, as the case may be; (b) comply in all
material respects with all applicable Requirements of Law, except where
such Requirement of Law is being contested in good faith, a bona fide
dispute exists with respect thereto and the failure to comply therewith
has no reasonable likelihood of having a Material Adverse Effect; and (c)
comply with all applicable Contractual Obligations, except where the
failure to comply therewith has no reasonable likelihood of having a
Material Adverse Effect.
6.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it and
preserve, renew and keep in full force and effect its corporate existence
and take all reasonable action to maintain all rights, privileges,
licenses and franchises necessary or desirable in the normal conduct of
its business except as otherwise expressly permitted pursuant to Section
7.5.
6.5 Maintenance of Property; Insurance. Keep all property useful
and necessary in its business in good working order and condition;
preserve all of its registered trademarks, trade names and service marks,
the non-preservation of which has a reasonable likelihood of having a
Material Adverse Effect; maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts
and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same
or a similar business; and furnish to each Lender, upon written request,
full information as to the insurance carried.
6.6 Inspection of Property; Books and Records; Discussions. Keep
proper books of record and account in which complete and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and
permit representatives of the Agent (and, if an Event of Default shall
have occurred and be continuing, any Lender) to visit and inspect any of
its properties and examine and make copies of or abstracts from any of its
books and records at any reasonable time and as often as may reasonably be
desired (including examinations of the Accounts and Inventory by
representatives of the Agent (and, if an Event of Default shall have
occurred and be continuing, any Lender)) and to discuss the business,
operations, properties and financial and other condition of Holdings, the
Company and its Subsidiaries with officers and employees of Holdings, the
Company and its Subsidiaries and with the independent certified public
accountants of Holdings or the Company.
6.7 Notices. In the case of the Company or, if applicable,
Holdings, promptly give notice to the Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;<PAGE>
63
(b) any (i) default or event of default under any Contractual
Obligation of Holdings, the Company or any of its Subsidiaries, (ii)
dispute between Holdings, the Company or any of its Subsidiaries and
any Governmental Authority or (iii) litigation, investigation or
proceeding which may exist at any time between Holdings, the
Company or any of its Subsidiaries and any Governmental Authority,
which in each case, if not cured or resolved or if adversely
determined, as the case may be, could reasonably be expected to have
a Material Adverse Effect;
(c) any litigation or proceeding (and any material
development in respect thereof) affecting Holdings, the Company or
any of its Subsidiaries in which (i) the amount involved is
$2,000,000 or more (or its equivalent in another currency or
currencies) and not covered by insurance as to which the relevant
insurance company has not disputed coverage or (ii) injunctive or
similar relief is sought;
(d) the following events, as soon as possible and in any
event within 30 days after Holdings or the Company knows or has
reason to know thereof: (i) the occurrence or expected occurrence of
any Reportable Event with respect to any Single Employer Plan, or
any withdrawal from, or the termination, Reorganization or
Insolvency of any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the
Company or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan; provided that notice
under this Section 6.7(d) will only be required if, individually or
in the aggregate, the amount of the liability of the Loan Parties
which could reasonably be expected would equal or exceed $2,000,000;
(e) any event or condition which, on any day, to the
knowledge of the Company, has caused the Borrowing Base to change
since the date of the most recent Borrowing Base Certificate
delivered pursuant to Section 6.2(e) if as a result of such change
the Aggregate Outstanding Revolving Extensions of Credit exceed the
Borrowing Base determined as of such day; and
(f) a development or event which has had or could reasonably
be expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement
of a Responsible Officer setting forth details of the occurrence referred
to therein and stating what action Holdings or the Company, as the case
may be, proposes to take with respect thereto.
6.8 Environmental Laws.
(a) Comply with, and use its best efforts to insure
compliance by all tenants and subtenants, if any, with, all
Environmental Laws and obtain and comply in all material respects
with and maintain, and use its best efforts to insure that all
tenants and subtenants obtain and comply with and maintain, any and
all licenses, approvals, registrations or permits required by
Environmental Laws, except to the extent that failure to do so would<PAGE>
64
not have any reasonable likelihood of having a Material Adverse
Effect;
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all
material respects with all lawful orders and directives of all
Governmental Authorities respecting Environmental Laws, except to
the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings would
not have any reasonable likelihood of having a Material Adverse
Effect;
(c) Without limiting the generality of the provisions of
Section 6.7, notify the Agent and each Lender of any of the
following which is reasonably likely to have a Material Adverse
Effect:
(i) any Environmental Claim which Holdings, the
Company or any of its Subsidiaries receives, including one to
take or pay for any remedial, removal, response or clean-up or
other action with respect to any Hazardous Materials contained
on any property presently or formerly owned or leased by
Holdings, the Company or any of its Subsidiaries;
(ii) any notice of any alleged violation of or
knowledge by Holdings, the Company or any of its Subsidiaries
of a condition which might reasonably result in a violation of
any law or regulation involving environmental, health or
safety matters; and
(iii) any commencement or threatened commencement of any
judicial or administrative proceeding or investigation
alleging a violation or potential violation of any requirement
of Environmental Law; and
(d) Defend, indemnify and hold harmless the Agent and the
Lenders, and their respective parents, subsidiaries, affiliates,
employees, agents, officers and directors, from and against any and
all claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way
relating to, the violation of, noncompliance with or liability under
any Environmental Laws applicable to the operations of Holdings, the
Company or any of its Subsidiaries or to the Mortgaged Properties,
or any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, attorney's and
consultant's fees, investigation and laboratory fees, response
costs, court costs and litigation expenses, except to the extent
that any of the foregoing are found by a final and nonappealable
decision of a court of competent jurisdiction to have resulted
primarily from the gross negligence or willful misconduct of the
party seeking indemnification therefor. Notwithstanding anything to
the contrary in this Agreement, this indemnity shall continue in
full force and effect regardless of the termination of this
Agreement.<PAGE>
65
6.9 Interest Rate Protection. In the case of the Company, effect
interest rate hedging arrangements reasonably satisfactory to the Agent in
respect of the Company's floating rate Indebtedness.
6.10 Additional Collateral. (a) With respect to any assets
acquired after the Effective Date by any Loan Party (other than any assets
described in paragraph (b) or (c) below) as to which the Agent, for the
benefit of the Lenders, does not have a perfected Lien (i) execute and
deliver to the Agent such amendments to this Agreement or the relevant
Security Agreement or such other documents as the Agent or the Required
Lenders deem necessary or advisable in order to grant to the Agent, for
the benefit of the Lenders, a security interest in such assets, (ii) take
all actions necessary or advisable to grant to the Agent, for the benefit
of the Lenders, a perfected first priority (subject to Liens expressly
permitted by Section 7.3) security interest in such assets, including
without limitation, the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be required by the appropriate
Security Agreement or by law or as may be requested by the Agent and (iii)
if requested by the Agent, deliver to the Agent legal opinions relating to
the matters described in the preceding clauses (i) and (ii), which
opinions shall be in form and substance, and from counsel, reasonably
satisfactory to the Agent.
(b) With respect to any fee or leasehold interest in any real
estate having a value (together with improvements thereof) of at least
$2,500,000 acquired after the Effective Date by the Company or any of its
Subsidiaries, (i) execute a first priority mortgage or deed of trust, as
the case may be (subordinate only to such mortgages or deeds of trust as
are necessary to permit the Company or such Subsidiary to purchase such
real estate and any other Liens expressly permitted by Section 7.3), in
favor of the Agent, for the benefit of the Lenders, covering such real
estate, in form and substance reasonably satisfactory to the Agent, (ii)
provide the Lenders with title and extended coverage insurance covering
such real estate in an amount equal to the purchase price of such real
estate as well as a current ALTA survey thereof, together with a
surveyor's certificate in form and substance reasonably satisfactory to
the Agent and (iii) if requested by the Agent, deliver to the Agent legal
opinions relating to the matters described in the preceding clauses (i)
and (ii), which opinions shall be in form and substance, and from counsel,
reasonably satisfactory to the Agent.
(c) With respect to any new Subsidiary (other than a Foreign
Subsidiary) created or acquired after the Effective Date by Holdings, the
Company or any of its Subsidiaries, (i) execute and deliver to the Agent
such amendments to the relevant Pledge Agreement as the Agent or the
Required Lenders deem necessary or advisable in order to grant to the
Agent, for the benefit of the Lenders, a perfected first priority security
interest in the Capital Stock of such new Subsidiary which is owned by
Holdings, the Company or any of its Subsidiaries, (ii) deliver to the
Agent the certificates representing such Capital Stock, together with
undated stock powers, in blank, executed and delivered by a duly
authorized officer of the Company or such Subsidiary, as the case may be,
(iii) cause such new Subsidiary (A) to become a party to the Subsidiary
Guarantee, the Subsidiary Pledge Agreement and the Subsidiary Security
Agreement, (B) to take such actions necessary or advisable to grant to the
Agent for the benefit of the Lenders a perfected first priority (subject<PAGE>
66
to Liens expressly permitted by Section 7.3) security interest in the
Collateral described in the Subsidiary Security Agreement with respect to
such new Subsidiary, including, without limitation, the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be
required by the Subsidiary Security Agreement or by law or as may be
requested by the Agent, and (C) to issue Intercompany Notes to each Loan
Party (which in turn shall be endorsed in blank and pledged by the
relevant Loan Party to the Agent for the benefit of the Lenders pursuant
to the relevant Pledge Agreement), (iv) in the case of the Company and
each existing Subsidiary, issue Intercompany Notes to such new Subsidiary
(which in turn shall be endorsed in blank and pledged by such new
Subsidiary to the Agent for the benefit of the Lenders pursuant to the
Subsidiary Pledge Agreement), and (v) if requested by the Agent, deliver
to the Agent legal opinions relating to the matters described in the
preceding clauses (i), (ii), (iii) and (iv), which opinions shall be in
form and substance, and from counsel, reasonably satisfactory to the
Agent.
(d) With respect to any Foreign Subsidiary created or acquired
after the Effective Date by Holdings, the Company or any of its
Subsidiaries, (i) execute and deliver to the Agent such amendments to the
relevant Pledge Agreement as the Agent or the Required Lenders deem
necessary or advisable in order to grant to the Agent, for the benefit of
the Lenders, a perfected first priority security interest in the Capital
Stock of such new Subsidiary which is owned by Holdings, the Company or
any of its Subsidiaries (provided that in no event shall Capital Stock
representing more than 65% of the voting power of the Capital Stock of any
such new Subsidiary be required to be so pledged) and (ii) deliver to the
Agent the certificates representing such Capital Stock, together with
undated stock powers, in blank, executed and delivered by a duly
authorized officer of Holdings, the Company or such Subsidiary, as the
case may be.
(e) The provisions of this Section 6.10 shall not apply to any
assets subject to any Lien permitted by Section 7.3 which secures
Indebtedness permitted by Section 7.2, to the extent compliance with such
provisions is prohibited by the terms of the documentation governing such
Lien or Indebtedness, but, in each case, only so long as any such
prohibition remains in effect.
(f) Notwithstanding anything to the contrary in this Agreement, no
dormant Subsidiary or non-wholly owned Subsidiary designated as such on
Schedule 4.16 shall be required to become a party to the Subsidiary
Guaranty, the Subsidiary Security Agreement or the Subsidiary Pledge
Agreement unless and until, (i) in the case of any such dormant
Subsidiary, such Subsidiary holds assets having an aggregate value in
excess of $500,000 and (ii) in the case of any such non-wholly owned
Subsidiary, such Subsidiary becomes a wholly owned direct or indirect
Subsidiary of the Company. If at any time the applicable conditions
specified in clause (i) or (ii) of the preceding sentence apply to any
such Subsidiary, the Company shall take or cause to be taken all of the
applicable actions specified in Section 6.10(c) with respect to such
Subsidiary. In addition, prior to satisfaction of such applicable
conditions, the Company shall have the option to take or cause to be taken
those actions specified in Section 6.10(c) which, in the reasonable<PAGE>
67
opinion of the Agent, are necessary to enable the Accounts and Inventory
of such Subsidiary to be included in the Borrowing Base.
SECTION 7. NEGATIVE COVENANTS
Holdings and the Company hereby jointly and severally agree that, so
long as the Revolving Credit Commitments remain in effect, any Loan or
Letter of Credit remains outstanding and unpaid or any other amount is
owing to any Lender or the Agent hereunder, Holdings and the Company shall
not, and shall not permit any of their respective Subsidiaries to,
directly or indirectly, unless the Required Lenders shall otherwise agree
in writing:
7.1 Financial Condition Covenants.
(a) Maintenance of Current Ratio. Permit the ratio of
Consolidated Current Assets of Holdings to Consolidated Current
Liabilities of Holdings at the end of any fiscal quarter of Holdings
to be less than 2.0 to 1.0.
(b) Consolidated Net Worth. Permit the Consolidated Net
Worth of Holdings at any time to be less than the sum, without
duplication, of (i) $80,000,000, (ii) 50% of the Consolidated Net
Income of Holdings for each fiscal quarter of Holdings (beginning
with the fiscal quarter ending March 31, 1995) for which such
Consolidated Net Income is positive, (iii) 100% of the Net Cash
Proceeds of any Holdings Common Equity Offering consummated after
the Effective Date and (iv) 100% of any capital contribution made to
Holdings or the Company after the Effective Date by any holder of
its Capital Stock; provided, that for the purposes of clauses (iii)
and (iv) above, the amount of any Net Cash Proceeds and capital
contributions referred to in said clauses shall be reduced to the
extent (x) such proceeds or contributions are concurrently applied
to repurchase equity in accordance with this Agreement and (y)
Consolidated Net Worth (without giving effect to such proceeds or
contributions) would be reduced as a result of such repurchase.
(c) Interest Coverage. Permit the Interest Coverage Ratio as
at the end of any Interest Coverage Test Period (commencing with the
Interest Coverage Test Period ending June 30, 1995) to be less than
2.0 to 1.0.
(d) Leverage Ratio. Permit the Leverage Ratio on the last
day of any period of four consecutive fiscal quarters of Holdings
ending during any period set forth below to be greater than the
corresponding ratio set forth below:
[CAPTION]
<TABLE>
Period Ending Ratio
<S> <C>
After March 31, 1995 and prior 4.50 to 1.0
to March 31, 1997 . . . . . . . . . .
On or after March 31, 1997 and
prior to March 31, 1998 . . . . . . . 4.25 to 1.0
March 31, 1998 and thereafter . . . . . 4.0 to 1.0<PAGE>
68
</TABLE>
(e) Senior Secured Leverage Ratio. Permit the Senior Secured
Leverage Ratio on the last day of any period of four consecutive
fiscal quarters of Holdings ending during any period set forth below
to be greater than the corresponding ratio set forth below:
[CAPTION]
<TABLE>
Period Ending Ratio
<S> <C>
After March 31, 1995 and prior 2.5 to 1.0
to March 31, 1997 . . . . . . . . . .
March 31, 1997 and thereafter . . . . . 2.25 to 1.0
</TABLE>
7.2 Limitation on Indebtedness. Create, incur, assume or suffer
to exist any Indebtedness or enter into or become liable for any
obligations in respect of any Interest Rate Protection Agreement, except:
(a) Indebtedness in respect of the Loans, the Letters of
Credit and the other obligations of the Loan Parties under the Loan
Documents;
(b) (i) Indebtedness of the Company to Holdings or any
Subsidiary Guarantor or any Subsidiary Guarantor to the Company or
any Subsidiary Guarantor and (ii) Indebtedness of Holdings to the
Company in connection with the loan made by the Company to Holdings
with a portion of the proceeds of the loans under the Existing
Credit Agreement (collectively, "Intercompany Loans"); provided that
(x) all such Indebtedness shall be evidenced by an Intercompany Note
and (y) each such Intercompany Note shall be pledged to the Agent
for the benefit of the Lenders pursuant to the relevant Pledge
Agreement;
(c) (i) Indebtedness of Holdings in respect of the 16%
Debentures, (ii) Indebtedness of the Company in respect of the
Senior Notes, and (iii) other Indebtedness of the Company or any of
its Subsidiaries outstanding on the Effective Date and listed on
Schedule 7.2(c) and, in the case of this clause (iii), any
replacement, extension or renewal (without increase in the
outstanding principal amount) thereof;
(d) Indebtedness of the Company in connection with the
issuance of letters of credit (i) for the benefit of insurance
companies to guarantee insurance claims and premiums; (ii) to
provide bid and performance guarantees; (iii) to guarantee contested
appeals; (iv) constituting commercial letters of credit in the
ordinary course of business and (v) for any other purpose of a
similar nature acceptable to the Required Lenders; provided that (x)
no Liens shall be incurred in respect of any letter of credit
described in clause (i), (ii), (iii) or (v) above and (y) the
aggregate amount of L/C Obligations and Non-Facility L/C Obligations
shall not exceed $25,000,000 at any time outstanding;<PAGE>
69
(e) Indebtedness of the Company resulting from the delivery
of a promissory note in the maximum amount of $5,000,000 to support
Indebtedness of the Company, in connection with the requirements of
the Company's insurance carriers to recognize casualty insurance
premiums; provided, however, that if Indebtedness pursuant to any
such promissory note is also supported by a letter of credit
permitted under Section 7.2(d), the principal amount of such
promissory note (to the extent supported by such letter of credit)
shall not be included in the computation of Total Debt for the
purposes of Section 7.1(a) or (d);
(f) (i) Indebtedness which is secured by Liens expressly
permitted by Section 7.3(g)(i) and (ii) Indebtedness which is (x)
secured by Liens expressly permitted by clause (iii) of Section
7.3(g) and (y) assumed in connection with the acquisition of the
assets subject to such Liens;
(g) Capital Lease Obligations expressly permitted by Section
7.7(a), (b) or (c);
(h) Indebtedness of Holdings in respect of the Preferred
Stock or any Exchange Debentures issued in accordance with Section
7.11, provided that all terms and conditions of such Exchange
Debentures (including, without limitation, the interest rate
applicable thereto, the covenants contained therein and the default,
redemption and subordination provisions thereof) shall be acceptable
to the Required Lenders in their sole discretion, as evidenced by
the prior written approval thereof by the Required Lenders;
(i) Indebtedness of Holdings, the Company or any of its
Subsidiaries consisting of Guarantee Obligations expressly permitted
by Section 7.4;
(j) any obligation of Holdings pursuant to a Management
Equity Agreement to repurchase common stock of Holdings or options
with respect thereto from the officer or employee of Holdings, the
Company or any of its Subsidiaries party thereto;
(k) unsecured term Indebtedness of the Company (the "Senior
Unsecured Term Loans") in a principal amount of up to $60,000,000,
provided, that (a) the pricing and other terms thereof shall be
substantially identical to those disclosed by the Company prior to
the Effective Date and otherwise reasonably satisfactory to the
Required Lenders and (b) the net proceeds thereof shall be applied
as promptly as practicable to redeem a portion of the 16%
Debentures;
(l) (i) Interest Rate Protection Agreements in respect of the
Senior Notes entered into by the Company with any one or more
Lenders having an aggregate notional amount not to exceed
$200,000,000 and such other terms and conditions as shall be
reasonably satisfactory to the Agent and (ii) Interest Rate
Protection Agreements referred to in Section 6.9;
(m) Indebtedness of the Company or any of its Subsidiaries
pursuant to the Capital Lease Financing Facility; <PAGE>
70
(n) additional Indebtedness not otherwise permitted by this
Section 7.2, which is either (i) unsecured, (ii) incurred in
connection with the acquisition of assets and secured only by such
assets or (iii) secured by assets acceptable to the Required
Lenders, aggregating not more than $20,000,000 at any one time
outstanding, provided, that any Indebtedness incurred pursuant to
this paragraph (n) shall amortize in equal annual installments over
a period of five years (or in a manner which, in the judgment of the
Agent, is more favorable to the Company); and
(o) additional unsecured Indebtedness not otherwise permitted
by this Section 7.2 aggregating not more than $25,000,000 at any one
time outstanding (so long as, in the case of Specified Basket Debt,
after giving effect to the incurrence thereof, no prepayment shall
be required to be made pursuant to Section 2.7).
7.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being contested
in good faith by appropriate proceedings; provided that adequate
reserves with respect thereto are maintained on the books of
Holdings, the Company or its Subsidiaries, as the case may be, in
conformity with GAAP;
(b) statutory landlords' Liens and carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like Liens arising
in the ordinary course of business for sums which are not overdue
for a period of more than 60 days or which are being contested in
good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of
business;
(e) easements, rights-of-way, restrictions, minor defects or
minor irregularities in title and other similar encumbrances
incurred in the ordinary course of business which do not in any case
materially interfere with the ordinary conduct of the business of
Holdings, the Company or any of its Subsidiaries or materially
impair the value of the property subject thereto for the purposes of
such business;
(f) Liens in existence on the Effective Date listed on
Schedule 7.3(f) and any replacement, extension or renewal thereof;
provided that (i) no such Lien is spread to cover any additional
property after the Effective Date and (ii) the amount of
Indebtedness secured thereby is not increased (except, in the case
of clauses (i) and (ii) above, to the extent expressly provided or<PAGE>
71
required by any agreement governing the terms of any such Lien as
such agreement is in effect on the Effective Date);
(g) (i) Liens securing Indebtedness (other than Capital Lease
Obligations) of the Company or any of its Subsidiaries incurred to
finance the acquisition, construction or improvement of any asset,
provided that (x) such Liens shall be created substantially
simultaneously with the acquisition, construction or improvement of
such asset, (y) such Liens do not at any time encumber any asset
other than the asset acquired, constructed or improved with the
proceeds of such Indebtedness and (z) the amount of Indebtedness
secured thereby shall not exceed the purchase price of such asset or
the amount expended solely to construct or improve such asset, as
the case may be; (ii) any Lien on any asset securing Indebtedness
permitted to be incurred in connection with sale-leaseback
transactions expressly permitted by Section 7.7(b), provided that
(x) the proceeds of such Indebtedness shall be at least equal to 80%
of the fair market value of such asset and (y) at the time of
incurrence of such Indebtedness, no Default or Event of Default
shall have occurred and be continuing or would result therefrom; and
(iii) any Lien on any asset acquired by the Company or any of its
Subsidiaries after the Effective Date which is not incurred in
contemplation of such acquisition; provided that the aggregate
outstanding amount of Indebtedness secured by Liens incurred
pursuant to this Section 7.3(g), when added to the aggregate
outstanding amount of Capital Lease Obligations incurred pursuant to
Section 7.7(c), shall not at any time exceed the sum of $25,000,000
and an amount equal to 10% of the Consolidated Net Worth of Holdings
at such time;
(h) Liens on equipment acquired in connection with the
incurrence of Capital Lease Obligations expressly permitted by
Section 7.7(c), provided that (x) such Liens shall be created
substantially simultaneously with the acquisition of such equipment,
(y) such Liens do not at any time encumber any asset other than the
equipment financed by such Indebtedness and (z) the amount of
Indebtedness secured thereby is not increased subsequent to the date
of incurrence thereof;
(i) Liens created by the Security Documents in favor of the
Agent for the benefit of the Lenders;
(j) judgment Liens created by or resulting from any judgment
not constituting an Event of Default under Section 8(h);
(k) any interest or title of a lessor under any lease
expressly permitted by Section 7.7(a) or (b);
(l) Liens securing Indebtedness of the Company or any of its
Subsidiaries pursuant to the Capital Lease Financing Facility;
(m) Liens securing Indebtedness incurred pursuant to Section
7.2(n) which is permitted to be secured by said Section; and
(n) leases or subleases granted by the Company or any of its
Subsidiaries in the ordinary course of business and not interfering<PAGE>
72
in any material respect with the conduct of the business of the
Company or such Subsidiary.
7.4 Limitation on Guarantee Obligations. Create, incur, assume or
suffer to exist any Guarantee Obligation except:
(a) Guarantee Obligations of Holdings pursuant to Section 10
or of any Subsidiary Guarantor pursuant to the Subsidiary Guarantee
or of the Company in respect of the Letters of Credit;
(b) guarantees made in the ordinary course of its business by
the Company of obligations of any Subsidiary Guarantor, which
obligations are otherwise permitted under this Agreement;
(c) guarantees by the Company or any of its Subsidiaries of
the obligations of joint ventures in which the Company or any of its
Subsidiaries is a party, not exceeding, when added to the aggregate
principal amount of Femco Loans, $18,000,000 in aggregate amount at
any time outstanding;
(d) surety, indemnity, performance, release and appeal bonds
and guarantees thereof issued by the Company or any of its
Subsidiaries, to the extent required in the ordinary course of
business or in connection with the enforcement of rights or claims
of the Company or its Subsidiaries or in connection with judgments
that do not result in an Event of Default, not exceeding $5,000,000
in aggregate amount at any time outstanding;
(e) reimbursement obligations of the Company pursuant to
letters of credit expressly permitted by Section 7.2(d); and
(f) unsecured guarantee obligations of Holdings and any
Subsidiary of the Company in respect of (i) the Capital Lease
Financing Facility or (ii) the Senior Unsecured Term Loans and any
other amounts owing by the Company under the Senior Unsecured Term
Loan Agreement.
7.5 Limitations on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer or otherwise dispose of all or substantially all of its
property, business or assets, or engage in any businesses other than
businesses engaged in by it on the Effective Date (or businesses
reasonably related thereto), or make any material change in its method of
conducting business on the Effective Date except:
(a) any Subsidiary of the Company may be merged or
consolidated with or into the Company (provided that the Company
shall be the continuing or surviving corporation) or with or into
any one or more Subsidiary Guarantors (provided that the Subsidiary
Guarantor or Subsidiary Guarantors shall be the continuing or
surviving corporation);
(b) any Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets (upon voluntary liquidation or
otherwise) to the Company or any Subsidiary Guarantor;<PAGE>
73
(c) BCP Holdings may be merged with and into the Company (the
"BCP/Company Merger"), provided that (i) the Company shall be the
surviving corporation, (ii) no violation of or default under any
material Requirement of Law or material Contractual Obligation
applicable to Holdings, the Company or any of its Subsidiaries shall
occur as a result thereof, (iii) within three Business Days after
the consummation of the BCP/Company Merger, the Agent shall have
received (with, where applicable, sufficient copies for each Lender)
(A) the Holdings Security Agreement and the Holdings Pledge
Agreement (together with an appropriate undated stock power), in
each case executed and delivered by a duly authorized officer of a
holding company parent ("New Holdings") of the Company created
simultaneously with the consummation of the BCP/Company Merger, (B)
an assumption agreement in form and substance satisfactory to the
Agent pursuant to which New Holdings shall become a party to this
Agreement, (C) from New Holdings, all certificates and documents of
the type delivered by Holdings on the Effective Date and described
in Section 5.1 and (D) the unqualified executed legal opinion of
Cravath, Swaine & Moore relating to the matters described in the
preceding clauses (A) and (B) and to the effect that all Obligations
constitute "Senior Debt" (as defined in the 16% Debenture Indenture
(if any 16% Debentures shall then be outstanding), which opinion
shall be in form and substance satisfactory to the Agent and (iv) if
the BCP/Company Merger shall occur prior to November 15, 1995, then,
no later than ten Business Days prior to the consummation of the
BCP/Company Merger, the Agent shall have received (with sufficient
copies for each Lender) the unqualified executed legal opinion of
Cravath, Swaine & Moore, which legal opinion (x) shall provide that
the BCP/Company Merger will not cause the deduction for interest or
original issue discount on the 16% Debentures to be limited,
deferred or disallowed, in whole or in part, and (y) shall otherwise
be in form and substance satisfactory to the Agent; and
(d) pursuant to any sale of assets expressly permitted by
Section 7.6.
7.6 Limitation on Sale of Assets. Convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, except:
(a) the sale or other disposition of any assets which have
become obsolete, outdated or surplus to the business of the Company
or any of its Subsidiaries, or have no remaining useful life, in
each case as reasonably determined in good faith by the Board of
Directors or the senior management of the Company or such
Subsidiary, as the case may be, in an aggregate amount not to exceed
$2,000,000 in any fiscal year of the Company;
(b) the sale of assets in connection with sale-leaseback
transactions expressly permitted by Section 7.7(b);
(c) the sale of Inventory in the ordinary course of business;
(d) as expressly permitted by Section 7.5(b); <PAGE>
74
(e) in connection with the Capital Lease Financing Facility;
and
(f) other sales or dispositions of assets by the Company or
any of its Subsidiaries; provided that (i) at the time of such sale
or disposition, no Default or Event of Default shall have occurred
and be continuing or would result therefrom, (ii) each such asset is
sold or disposed of at fair market value and (iii) the aggregate
fair market value of all assets so sold or disposed of by the
Company and its Subsidiaries (excluding assets constituting all or
any portion of any Specified Property) shall not exceed $20,000,000
in any fiscal year of the Company and shall not exceed $50,000,000
during the term of this Agreement.
7.7 Limitation on Leases. Create or suffer to exist any
obligations for the payment or rental for any property under leases or
agreements to lease (other than any arrangement pursuant to which the
Company or any of its Subsidiaries is lessor), except:
(a) (i) leases of the Company and its Subsidiaries in
existence on the Effective Date and listed on Schedule 7.7(a) and
any renewal, extension or refinancing thereof and (ii) operating
leases entered into by the Company or any of its Subsidiaries in the
ordinary course of business; provided that the aggregate amount of
lease payments made pursuant to this clause (a) does not exceed
$15,000,000 in the aggregate in any fiscal year;
(b) subject to Section 7.3(g)(ii), Capital Lease Obligations
incurred by the Company or any of its Subsidiaries in connection
with sale-leaseback transactions; provided that
(i) immediately prior to giving effect to such lease,
the property or asset subject to such lease was sold by the
Company or any Subsidiary to the lessor under such lease for
at least its fair market value; and
(ii) no Default or Event of Default would occur as a
result of such sale and subsequent lease;
(c) Capital Lease Obligations other than those expressly
permitted by paragraph (a) or (b) above, incurred by the Company or
any of its Subsidiaries to finance the acquisition of equipment;
provided that the aggregate outstanding amount of all Capital Lease
Obligations which would appear on a consolidated balance sheet of
the Company and its consolidated Subsidiaries in accordance with
GAAP, when added to the aggregate outstanding principal amount of
Indebtedness incurred pursuant to Section 7.2(f), shall not at any
time exceed the sum of $25,000,000 and an amount equal to 10% of the
Consolidated Net Worth of Holdings at such time; and
(d) in connection with the Capital Lease Financing Facility.
7.8 Limitation on Dividends. Declare or pay any dividend (other
than (i) dividends payable solely in common stock of Holdings or the
Company, as the case may be, and (ii) dividends on the Preferred Stock
payable solely in additional shares of Preferred Stock) on, or make any<PAGE>
75
payment on account of, or set apart assets for a sinking or other
analogous fund for, the purchase, redemption, defeasance, retirement or
other acquisition of, any shares of any class of Capital Stock of Holdings
or the Company or any warrants or options to purchase any such Capital
Stock, whether now or hereafter outstanding, or make any other
distribution in respect thereof, either directly or indirectly, whether in
cash or property or in obligations of Holdings, the Company or any
Subsidiary, except that:
(a) the Company may pay cash dividends to Holdings (i) on
and after November 15, 1995 to the extent, and only to the extent,
necessary to enable Holdings to make cash interest payments in
respect of the 16% Debentures which are required to be made pursuant
to the terms of the 16% Debenture Indenture, provided, that Holdings
shall make such interest payments no later than five Business Days
after the date on which the relevant dividend is made and (ii) to
pay any taxes or expenses required to be paid by Holdings in the
ordinary course of business, provided that in no event shall the
aggregate proceeds of dividends made pursuant to this clause (ii)
which have not been applied to pay the obligations in respect of
which such dividends were made exceed $100,000 for any period of
five consecutive Business Days;
(b) so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom (or, in the
case of clause (ii) below (to the extent the repurchase or
redemption referred to in said clause is being effected pursuant to
Section 7.11(a)(ii)(x), (y) or (z)), so long as no Specified Event
shall have occurred and be continuing), the Company may pay cash
dividends to Holdings (i) to the extent necessary to enable Holdings
to repurchase shares of its common stock or options to purchase such
common stock, subject to and in accordance with the Management
Equity Agreements, provided, that (x) the aggregate amount so
distributed to Holdings in any fiscal year shall not exceed the sum
of (I) $5,000,000 and (II) an amount equal to the aggregate Net Cash
Proceeds of any sale of shares of common stock by Holdings to any
officer or employee of Holdings, the Company or any of its
Subsidiaries consummated after the Effective Date which have been
contributed to the capital of the Company minus the aggregate amount
distributed to Holdings pursuant to this clause (II) for the purpose
of repurchasing common stock of Holdings or options to purchase such
common stock during any preceding fiscal year and (y) the Net Cash
Proceeds of any subsequent sale of shares of common stock by
Holdings to any officer or employee of Holdings, the Company or any
of its Subsidiaries shall promptly thereafter be contributed to the
capital of the Company to the extent of the aggregate amount of cash
distributions theretofore made pursuant to this clause (i), and
provided, further, that prior to making any dividend pursuant to
this clause (i), the Company shall deliver to the Agent a certified
copy of each Management Equity Agreement in respect of which such
dividend is being made; (ii) to the extent necessary to enable
Holdings to repurchase or redeem 16% Debentures in accordance with
Section 7.11; (iii) to the extent necessary to enable Holdings to
pay any annual management fee expressly permitted by Section 7.12;
(iv) constituting payments required to be made by the Company to
Holdings pursuant to the Tax Sharing Agreement and (v) to the extent<PAGE>
76
necessary to enable Holdings to pay cash dividends on the Preferred
Stock in accordance with Section 7.8(c); provided that Holdings
shall pay each obligation in respect of which a dividend is made
pursuant to this clause (b) no later than five Business Days after
the date on which such dividend is made;
(c) so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom, Holdings may
pay cash dividends on the Preferred Stock in accordance with the
terms thereof, provided, that (x) the aggregate amount so paid by
Holdings shall not exceed (i) $5,000,000 in any fiscal year ending
on or prior to December 31, 1998 or (ii) $10,000,000 in any fiscal
year thereafter and (y) the aggregate amount so paid by Holdings in
any fiscal year of Holdings, when added to the aggregate amount of
Capital Expenditures made during such fiscal year pursuant to
Section 7.10(g), shall not exceed the EBITDA Basket Amount for such
fiscal year; and
(d) Holdings may redeem the Preferred Stock to the extent
expressly permitted by Section 7.11.
7.9 Limitation on Negative Pledge Clauses. Enter into any
agreement, other than (a) in connection with purchase money Liens, the
Capital Lease Financing Facility or Capital Lease Obligations expressly
permitted by this Agreement (in which cases, any restriction referred to
below shall only be effective against the assets financed thereby), (b) in
connection with secured Section 7.2(n) Indebtedness (in which case, any
restriction referred to below shall only be effective against the assets
securing such Indebtedness) and (c) the Senior Note Indenture and the
Senior Unsecured Term Loan Agreement, with any Person other than the
Lenders pursuant hereto which in any way limits or imposes any condition
on the ability of Holdings, the Company or any of its Subsidiaries to
create, incur, assume or suffer to exist a perfected, first priority
security interest upon any of its property, assets or revenues, whether
now owned or hereafter acquired, securing the Obligations, any guarantee
of the Obligations or any other obligations of any Loan Party under any
Loan Document or any Indebtedness refinancing any of the foregoing.
7.10 Limitation on Capital Expenditures, Investments, Loans and
Advances. Make or commit to make (by way of the acquisition of securities
of a Person or otherwise) any Capital Expenditures or make or commit to
make any advance, loan, extension of credit (by way of guaranty or
otherwise) or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting a
business unit of, or make or commit to make any other investment in, any
Person, except:
(a) extensions of trade credit by the Company or any of its
Subsidiaries in the ordinary course of business;
(b) investments by the Company or any of its Subsidiaries in
Cash Equivalents;
(c) loans and advances to employees of the Company or its
Subsidiaries for travel, entertainment and relocation expenses in
the ordinary course of business consistent with the historical<PAGE>
77
practices of the Company and its Subsidiaries as of the Effective
Date, in an aggregate amount for the Company and its Subsidiaries
not to exceed $1,000,000 at any one time outstanding;
(d) investments by the Company in any Subsidiary Guarantor
and investments by Holdings or any Subsidiary of the Company in the
Company or in any Subsidiary Guarantor;
(e) (i) loans made by the Company to Femco ("Femco Loans"),
provided that (x) the aggregate principal amount thereof shall not
exceed $10,000,000 at any one time outstanding, (y) all Indebtedness
of Femco resulting therefrom shall be evidenced by an Intercompany
Note, and (z) such Intercompany Note shall be pledged to the Agent
for the benefit of the Lenders pursuant to the Company Pledge
Agreement and (ii) guarantees expressly permitted by Section 7.4(c);
provided that the aggregate principal amount of Femco Loans, when
added to the aggregate amount of guarantees referred to in clause
(ii) above, shall not exceed $18,000,000 at any time outstanding;
(f) promissory notes issued to the Company or any of its
Subsidiaries by the purchasers of assets sold in accordance with
Section 7.6(e);
(g) (i) Capital Expenditures of the Company and its
Subsidiaries made in the ordinary course of business and (ii)
Investment Expenditures of the Company and its Subsidiaries not
otherwise permitted by this Section 7.10; provided that (w) the
aggregate amount of such Capital Expenditures made during any fiscal
year of Holdings shall not exceed the sum of (I) $40,000,000 (the
"Basket Expenditure Amount") and (II) the aggregate amount of all
unutilized Basket Expenditure Amounts in respect of each preceding
fiscal year, (x) notwithstanding anything to the contrary in clause
(w) above, the aggregate amount of such Capital Expenditures made
during any fiscal year of Holdings, when added to the aggregate
amount of dividends on the Preferred Stock paid by Holdings during
such fiscal year pursuant to Section 7.8(c), shall not exceed the
EBITDA Basket Amount for such fiscal year (provided that this clause
(x) shall not be applicable in any fiscal year for which the
aggregate amount of such Capital Expenditures is less than
$24,000,000), (y) after giving effect to any such Investment
Expenditure, the aggregate amount of Investment Expenditures made
since the Effective Date shall not exceed the Maximum Investment
Amount then in effect, and (z) in no event shall the aggregate
amount of such Capital Expenditures and Investment Expenditures
(excluding up to $5,000,000 of Investment Expenditures constituting
capital contributions to Femco) which either (1) constitute capital
contributions or other investments in any Person which is not a
Subsidiary Guarantor or (2) are otherwise made to acquire assets
which do not constitute Collateral exceed $10,000,000 in any fiscal
year and $20,000,000 during the term of this Agreement; and
(h) (i) Capital Expenditures of the Company and its
Subsidiaries made in the ordinary course of business and (ii)
Investment Expenditures of the Company and its Subsidiaries not
otherwise permitted by this Section 7.10, in each case made with the
proceeds of any Holdings Common Equity Offering; provided, that<PAGE>
78
(x) the aggregate amount of such Capital Expenditures and Investment
Expenditures shall not exceed $75,000,000 during the term of this
Agreement, (y) in no event shall the aggregate amount of such
Capital Expenditures and Investment Expenditures which either (1)
constitute capital contributions or other investments in any Person
which is not a Subsidiary Guarantor or (2) are otherwise made to
acquire assets which do not constitute Collateral exceed $25,000,000
during the term of this Agreement and (z) on the date on which any
Investment Expenditure is made pursuant to this Section 7.10(h), the
Company shall deliver to the Agent a certificate of a Responsible
Officer of each of Holdings and the Company demonstrating that, on a
pro forma basis determined as if such expenditure had been made on
the date occurring twelve months prior to the last day of the most
recently ended fiscal quarter, Holdings and its consolidated
Subsidiaries would have been in compliance with Section 7.1 as of
the last day of such fiscal quarter.
7.11 Limitation on Optional Payments and Modifications of Certain
Agreements. (a) Optionally prepay, retire, redeem, purchase, defease or
exchange, or make any optional deposit or segregation of funds in respect
of, any principal of or interest or dividends on or other amounts payable
in respect of the Senior Notes, the Senior Unsecured Term Loans, any
Section 7.2(n) Indebtedness, any Subordinated Debt or the Preferred Stock
(other than (i) the refinancing, in whole or in part, of the Senior Notes
with the proceeds of a Holdings Common Equity Offering, provided, that the
aggregate amount so expended during the term of this Agreement (excluding
any premium, accrued interest, fees or expenses payable in connection with
any such refinancing) shall not exceed $100,000,000; (ii) the repurchase
or redemption of the 16% Debentures with the proceeds of dividends made by
the Company to Holdings from the proceeds (in each case as certified to
the Agent by an officer of the Company) of (w) internally generated cash
and Cash Equivalents held by the Company on or about the Redemption Date,
(x) the Senior Unsecured Term Loans, (y) the Capital Lease Financing
Facility or (z) the Loans (provided, that in the case of this clause (z),
on the date any such Loans are borrowed, after giving effect to such
borrowing and any other extension of credit hereunder on such date, the
Company shall be able to satisfy the conditions precedent specified in
Section 5.2(c) to the borrowing of an additional $30,000,000 of Loans);
(iii) the prepayment of the Senior Unsecured Term Loans and Section 7.2(n)
Indebtedness pursuant to scheduled amortization payments; (iv) the
prepayment, refinancing or redemption of the Senior Unsecured Term Loans
or the 16% Debentures in a principal amount not to exceed 75% of
cumulative Excess Cash Flow for the period from the beginning of the first
fiscal quarter of Holdings commencing after the Effective Date to the last
day of the most recent fiscal period for which financial statements have
been delivered pursuant to Section 6.1; (v) the prepayment, refinancing or
redemption, in whole or in part, of the Preferred Stock or Senior
Unsecured Term Loans with the proceeds of (x) a Holdings Common Equity
Offering or (y) preferred stock of Holdings having terms no more onerous
than those governing the Preferred Stock); (vi) the prepayment,
refinancing or redemption, in whole or in part, of the 16% Debentures with
the proceeds of a Holdings Common Equity Offering; and (vii) the issuance
of the Exchange Debentures in exchange for the Preferred Stock, subject to
the prior written consent of the Required Lenders), (b) amend, modify or
change, or consent or agree to any amendment, modification or change to,
any of the terms of any Subordinated Debt, any Section 7.2(n)<PAGE>
79
Indebtedness, the Senior Notes, the Senior Unsecured Term Loans or the
Capital Lease Financing Facility (other than any such amendment,
modification or change which (i) would extend the maturity date thereof or
reduce the amount of any principal payments in respect thereof, (ii) would
reduce the rate or extend the date for payment of interest thereon or
(iii) is of a technical or clarifying nature, does not affect the
interests of the Agent or any Lender under any Loan Document and can be
made without the consent of any holder of or participant in such
Subordinated Debt, such Section 7.2(n) Indebtedness, the Senior Notes, the
Senior Unsecured Term Loans or the Capital Lease Financing Facility, as
the case may be), or (c) amend, modify or change, or consent or agree to
any amendment, modification or change to, any of the terms of the
Preferred Stock (other than any such amendment, modification or change
which (i) would extend the mandatory redemption date thereof or reduce the
amount of any redemption payments in respect thereof, (ii) would reduce
the rate or extend the date for payment of dividends thereon or (iii) does
not affect the interests of the Agent or any Lender under any Loan
Document in any material respect, provided, that no amendment,
modification or change may be made pursuant to this clause (iii) which (w)
affects dividend or redemption payments, (x) affects the rights of the
holders of the Preferred Stock to elect directors of Holdings, (y) causes
the covenants or other terms of the Preferred Stock to be more restrictive
with respect to Holdings in any material respect or (z) requires the
payment of any fee to any holder of the Preferred Stock in connection with
obtaining the consent of such holder to such amendment, modification or
change, and provided, further, that a substantially final draft of any
proposed amendment, modification or change to the Preferred Stock pursuant
to this clause (iii) shall be delivered to the Agent at least five
Business Days prior to the effectiveness thereof). In no event shall the
purchase price paid in connection with any repurchase, redemption or
refinancing of 16% Debentures pursuant to Section 7.11(a) exceed the face
amount of such 16% Debentures.
7.12 Transactions with Affiliates. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of
property or the rendering of any service, with any Affiliate other than
any such transaction (a) between a Subsidiary Guarantor and the Company or
any other Subsidiary Guarantor which is otherwise permitted by this
Agreement or (b) entered into by Holdings, the Company or any of its
Subsidiaries which is (i) otherwise permitted under this Agreement, (ii)
in the ordinary course of Holdings', the Company's or such Subsidiary's
business, and (iii) upon fair and reasonable terms no less favorable to
Holdings, the Company or such Subsidiary, as the case may be, than it
would obtain in a comparable arm's length transaction with a Person not an
Affiliate; provided, that, (x) each of Holdings, the Company and its
Subsidiaries may enter into employment arrangements with its officers in
the ordinary course of business consistent with its historical practices
as of the Effective Date and (y) so long as no Default or Event of Default
shall have occurred and be continuing, (1) Holdings and the Company may
pay to BP Co. or any of its Affiliates an annual management and advisory
fee with respect to any fiscal year not to exceed $1,000,000 in the
aggregate, (2) the Company may make payments to Holdings required to be
made pursuant to the Tax Sharing Agreement, (3) Holdings may repurchase
shares of its common stock or options to purchase such common stock,
subject to and in accordance with the Management Equity Agreements and (4)
Holdings may sell shares of, or rights to purchase shares of, its common<PAGE>
80
stock to any of its Affiliates, provided, that any such sale to an
operating company "controlled" (as defined in the definition of "Control
Affiliate") by Bessemer Holdings, L.P., Bessemer Capital Partners, L.P. or
any partnership or similar entity under common "control" (as defined in
the definition of "Control Affiliate") with Bessemer Holdings, L.P. shall
be on an arm's-length basis.
7.13 Corporate Documents. Amend its certificate of incorporation
(except (a) to increase the number of authorized shares of common stock or
(b) to the extent necessary to consummate the BCP/Company Merger).
7.14 Fiscal Year. Permit the fiscal year of Holdings or the
Company to end on a day other than December 31.
7.15 Limitation on Activities of Holdings. In the case of
Holdings, (a) conduct, transact or otherwise engage in, or commit to
conduct, transact or otherwise engage in, any business or operations other
than (i) those incidental to its ownership of the Capital Stock of the
Company and (ii) those incidental to any refinancing or redemption of its
Indebtedness or Preferred Stock expressly permitted by this Agreement or
any Holdings Common Equity Offering; (b) incur, create, assume or suffer
to exist any Indebtedness, Guarantee Obligations or other liabilities or
financial obligations, except (i) nonconsensual obligations imposed by
operation of law, (ii) pursuant to the Loan Documents to which it is a
party, (iii) obligations with respect to its Capital Stock, (iv) pursuant
to the 16% Debentures and the Exchange Debentures, (v) the obligation to
pay any management or advisory fee expressly permitted by Section 7.12,
(vi) in connection with Intercompany Loans made by the Company to Holdings
in accordance with Section 7.2(b), (vii) in connection with the matters
described in clause (a)(ii) above and (viii) pursuant to any guarantee
entered into pursuant to Section 7.4(f); or (c) own, lease, manage or
otherwise operate any properties or assets (including cash and cash
equivalents) other than the ownership of (i) shares of Capital Stock of
the Company and (ii) additional assets having an aggregate value not to
exceed $1,000,000.
SECTION 8. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Company shall fail to pay any principal of any Loan
or any Reimbursement Obligation when due in accordance with the
terms hereof; or the Company shall fail to pay any interest on any
Loan, or any other amount payable hereunder, within three days after
any such interest or other amount becomes due in accordance with the
terms hereof; or
(b) Any representation or warranty made or deemed made by the
Company or any other Loan Party herein or in any other Loan Document
or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with
this Agreement or any other Loan Document shall prove to have been
incorrect in any material respect on or as of the date made or
deemed made; or<PAGE>
81
(c) (i) Any Loan Party shall default in the observance or
performance of any agreement contained in Section 6.7(a) or 7 of
this Agreement, Section 5(f), 5(g), 5(h), 5(i) or 5(n) of the
Holdings Security Agreement, Section 5(f), 5(g), 5(h), 5(i) or 5(n)
of the Company Security Agreement, Section 5(f), 5(g), 5(h), 5(i) or
5(n) of the Subsidiary Security Agreement, Paragraph 5(a) or 5(b) of
the Holdings Pledge Agreement, Paragraph 5(a) or 5(b) of the Company
Pledge Agreement, Paragraph 5(a) or 5(b) of the Subsidiary Pledge
Agreement or Paragraph 11 of the Subsidiary Guarantee (to the extent
such Paragraph 11 incorporates by reference the covenants contained
in Section 6.7(a) or 7 of this Agreement) or (ii) an Event of
Default (as defined in any Mortgage) shall have occurred; or
(d) The Company or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Section), and such default shall
continue unremedied for a period of 30 days after the earlier of (i)
the date on which a senior officer of Holdings or the Company first
knew or reasonably should have known of such default or (ii) the
date on which written notice thereof shall have been given to the
Company by the Agent or the Required Lenders; or
(e) (i) Holdings, the Company or any of its Subsidiaries
shall (x) default in any payment when due of principal of or
interest on any Indebtedness (other than the Loans) or in the
payment of any Guarantee Obligation; or (y) default in the
observance or performance of any other agreement or condition
relating to any such Indebtedness or Guarantee Obligation or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Guarantee Obligation (or a
trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, such Indebtedness to become due prior to
its stated maturity or such Guarantee Obligation to become payable;
provided, however, that a default, event or condition described in
subclause (x) or (y) of this clause (i) shall not constitute an
Event of Default under this Agreement unless, at the time of such
default, defaults, events or conditions of the type described in
subclauses (x) and (y) of this clause (i) shall have occurred and be
continuing with respect to Indebtedness and/or Guarantee Obligations
the outstanding principal amount of which exceeds in the aggregate
$5,000,000 or (ii) a "Default" under and as defined in the Senior
Note Indenture shall have occurred and be continuing as a result of
the taking by any Loan Party of any action, the consummation by any
Loan Party of any transaction, or the occurrence or existence of any
other event or circumstance, expressly permitted by Section 7 of
this Agreement; or
(f) (i) Holdings, the Company or any of its Subsidiaries shall
commence any case, proceeding or other action (A) under any existing
or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking
to have an order for relief entered with respect to it, or seeking<PAGE>
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to adjudicate it a bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
composition or other relief with respect to it or its debts, or (B)
seeking appointment of a receiver, trustee, custodian or other
similar official for it or for all or any substantial part of its
assets, or Holdings, the Company or any of its Subsidiaries shall
make a general assignment for the benefit of its creditors; or (ii)
there shall be commenced against Holdings, the Company or any of its
Subsidiaries any case, proceeding or other action of a nature
referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B)
remains undismissed, undischarged or unbonded for a period of 60
days; or (iii) there shall be commenced against Holdings, the
Company or any of its Subsidiaries any case, proceeding or other
action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of
its assets which results in the entry of an order for any such
relief which shall not have been vacated, discharged, or stayed or
bonded pending appeal within 60 days from the entry thereof; or (iv)
Holdings, the Company or any of its Subsidiaries shall take any
action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in clause (i), (ii),
or (iii) above; or (v) Holdings, the Company or any of its
Subsidiaries shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due;
or
(g) (i) Any Person shall engage in any "prohibited
transaction" (as defined in Section 406 of ERISA or Section 4975 of
the Code) involving any Plan, (ii) any "accumulated funding
deficiency" (as defined in Section 302 of ERISA), whether or not
waived, shall exist with respect to any Plan, (iii) a Reportable
Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to
administer or to terminate, any Single Employer Plan, which
Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders,
likely to result in the termination of such Plan for purposes of
Title IV of ERISA, (iv) any Single Employer Plan shall terminate for
purposes of Title IV of ERISA, (v) the Company or any Commonly
Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection
with a withdrawal from, or the Insolvency or Reorganization of, a
Multiemployer Plan or (vi) any other event or condition shall occur
or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other
such events or conditions, if any, could, in the judgment of the
Required Lenders, have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered against
Holdings, the Company or any of its Subsidiaries involving in the
aggregate a liability (not paid or fully covered by insurance as to
which the relevant insurance company has not disputed coverage) of
$2,000,000 or more and (i) all such judgments or decrees shall not
have been vacated, discharged, stayed or bonded pending appeal
within 30 days from the entry thereof or (ii) enforcement<PAGE>
83
proceedings shall have been commenced by any creditor upon such
judgment or order; or
(i) Any Security Document shall, at any time, cease to be in
full force and effect or shall be declared null and void, or the
validity or enforceability thereof shall be contested by any Loan
Party, or any of the Liens intended to be created by any Security
Document shall cease to be or shall not be a valid and perfected
Lien having the priority contemplated thereby, or the Subsidiary
Guarantee or the guarantee contained in Section 10 shall cease for
any reason to be in full force and effect or any Loan Party shall so
assert in writing; or
(j) (i) The Bessemer Group shall cease to own in the
aggregate, of record and beneficially, free and clear of all Liens
(other than Liens created by any provision of any agreement entered
into among any holders of the Capital Stock of Holdings, as in
effect on the Effective Date), directly, that percentage of the
common stock of Holdings representing at least 70% of the common
stock of Holdings owned by the Bessemer Group on the Effective Date;
or (ii) the Investors, collectively, shall cease to have the power
to vote or direct the voting of securities having at least 51% of
the ordinary voting power for the election of directors of Holdings
unless (x) the failure to have such power occurs solely as a result
of the primary sale of shares of common stock of Holdings pursuant
to any one or more public offerings thereof and (y) no Person or
group (within the meaning of Rule 13d-5 of the Securities and
Exchange Commission as in effect on the Effective Date), other than
any Person or group consisting solely of one or more Investors,
shall, directly or indirectly, have the power to vote or direct the
voting of securities representing more than 20% of the ordinary
voting power for the election of directors of Holdings; or (iii)
Holdings shall cease to own and control, of record and beneficially,
directly, 100% of each class of outstanding Capital Stock of the
Company free and clear of all Liens (except Liens created by the
Holdings Pledge Agreement); or (iv) the Company shall issue any
Capital Stock (or any security convertible into any of its Capital
Stock) which is not pledged to the Agent for the benefit of the
Lenders; or (v) a "Change of Control" (as defined in the Senior Note
Indenture) shall occur;
then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) above with respect to the
Company, automatically the Revolving Credit Commitments shall immediately
terminate and the Loans hereunder (with accrued interest thereon) and all
other amounts owing under this Agreement and any Revolving Credit Note
(including, without limitation, all amounts of L/C Obligations, whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) shall immediately become due
and payable, and (B) if such event is any other Event of Default, either
or both of the following actions may be taken: (i) with the consent of
the Required Lenders, the Agent may, or upon the request of the Required
Lenders, the Agent shall, by notice to the Company declare the Revolving
Credit Commitments to be terminated forthwith, whereupon the Revolving
Credit Commitments shall immediately terminate; and (ii) with the consent
of the Required Lenders, the Agent may, or upon the request of the<PAGE>
84
Required Lenders, the Agent shall, by notice of default to the Company,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and any Revolving Credit Note
(including, without limitation, all amounts of L/C Obligations, whether or
not the beneficiaries of the then outstanding Letters of Credit shall have
presented the documents required thereunder) to be due and payable
forthwith, whereupon the same shall immediately become due and payable.
With respect to all Letters of Credit with respect to which
presentment for honor shall not have occurred at the time of an
acceleration pursuant to the preceding paragraph, the Company shall at
such time deposit in a cash collateral account opened by the Agent an
amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be
applied by the Agent to the payment of drafts drawn under such Letters of
Credit, and the unused portion thereof after all such Letters of Credit
shall have expired or been fully drawn upon, if any, shall be applied to
repay other Obligations of the Company. After all such Letters of Credit
shall have expired or been fully drawn upon, all Reimbursement Obligations
shall have been satisfied and all other Obligations of the Company shall
have been paid in full, the balance, if any, in such cash collateral
account shall be returned to the Company.
Except as expressly provided above in this Section 8, presentment,
demand, protest and all other notices of any kind are hereby expressly
waived.
SECTION 9. THE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints Chemical as the Agent of such Lender under this Agreement and the
other Loan Documents, and each Lender irrevocably authorizes Chemical, as
the Agent for such Lender, to take such action on its behalf under the
provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Agent by the terms of this Agreement and the other Loan Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement,
the Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent.
9.2 Delegation of Duties. The Agent may execute any of its duties
under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning
all matters pertaining to such duties. The Agent shall not be responsible
for the negligence or misconduct of any agents or attorneys in-fact
selected by it with reasonable care.
9.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates
shall be (i) liable for any action lawfully taken or omitted to be taken
by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence<PAGE>
85
or willful misconduct) or (ii) responsible in any manner to any of the
Lenders for any recitals, statements, representations or warranties made
by the Company or any other Loan Party or any officer thereof contained in
this Agreement or any other Loan Document or in any certificate, report,
statement or other document referred to or provided for in, or received by
the Agent under or in connection with, this Agreement or any other Loan
Document or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan Document
or for any failure of the Company or any other Loan Party to perform its
obligations hereunder or thereunder. The Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance
or performance of any of the agreements contained in, or conditions of,
this Agreement or any other Loan Document, or to inspect the properties,
books or records of the Company or any other Loan Party.
9.4 Reliance by Agent. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any Revolving Credit Note,
writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order
or other document or conversation believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person or Persons and
upon advice and statements of legal counsel (including, without
limitation, counsel to the Company), independent accountants and other
experts selected by the Agent. The Agent may deem and treat the payee of
any Revolving Credit Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have
been filed with the Agent. The Agent shall be fully justified in failing
or refusing to take any action under this Agreement or any other Loan
Document unless it shall first receive such advice or concurrence of the
Required Lenders (except as otherwise expressly provided in Section 11.1)
as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any
such action. The Agent shall in all cases be fully protected in acting,
or in refraining from acting, under this Agreement and the other Loan
Documents in accordance with a request of the Required Lenders (except as
otherwise expressly provided in Section 11.1), and such request and any
action taken or failure to act pursuant thereto shall be binding upon all
the Lenders and all future holders of the Loans.
9.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default
unless the Agent has received notice from a Lender or the Company
referring to this Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default". In the event that
the Agent receives such a notice, the Agent shall give notice thereof to
the Lenders. The Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the
Required Lenders (except as otherwise expressly provided in Section 11.1);
provided that unless and until the Agent shall have received such
directions, the Agent may (but shall not be obligated to) take such
action, or refrain from taking such action, with respect to such Default
or Event of Default as it shall deem advisable in the best interests of
the Lenders.<PAGE>
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9.6 Non-Reliance on Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Agent nor any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates has made any
representations or warranties to it and that no act by the Agent hereafter
taken, including any review of the affairs of the Company or any other
Loan Party, shall be deemed to constitute any representation or warranty
by the Agent to any Lender. Each Lender represents to the Agent that it
has, independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Company and the other Loan Parties and made its
own decision to make its Loans hereunder and enter into this Agreement.
Each Lender also represents that it will, independently and without
reliance upon the Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make
its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness
of the Company and the other Loan Parties. Except for notices, reports
and other documents expressly required to be furnished to the Lenders by
the Agent hereunder, the Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, operations, property, condition (financial or otherwise),
prospects or creditworthiness of the Company or any other Loan Party which
may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates.
9.7 Indemnification. The Lenders agree to indemnify the Agent in
its capacity as such (to the extent not reimbursed by the Company and
without limiting the obligation of the Company to do so), ratably
according to the respective amounts of their Revolving Credit Commitments,
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of
any kind whatsoever which may at any time (including, without limitation,
at any time following the payment of the Loans) be imposed on, incurred by
or asserted against the Agent in any way relating to or arising out of
this Agreement, any of the other Loan Documents or any documents
contemplated hereby or thereby or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted
by the Agent under or in connection with any of the foregoing; provided
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting solely from the Agent's
gross negligence or willful misconduct. The agreements in this Section
shall survive the payment of the Loans and all other amounts payable
hereunder.
9.8 Agent in Its Individual Capacity. The Agent and its
affiliates may make loans to, accept deposits from and generally engage in
any kind of business with the Company as though the Agent were not the
Agent hereunder and under the other Loan Documents. With respect to its
Loans made or renewed by it, any Revolving Credit Note issued to it and
any Letter of Credit issued or participated in by it, the Agent shall have
the same rights and powers under this Agreement and the other Loan<PAGE>
87
Documents as any Lender and may exercise the same as though it were not
the Agent, and the terms "Lender" and "Lenders" shall include the Agent in
its individual capacity.
9.9 Successor Agent. The Agent may resign as Agent upon 10 days'
notice to the Lenders. If the Agent shall resign as Agent under this
Agreement and the other Loan Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall be approved by the Company (which approval shall not
be unreasonably withheld), whereupon such successor agent shall succeed to
the rights, powers and duties of the Agent, and the term "Agent" shall
mean such successor agent effective upon its appointment, and the former
Agent's rights, powers and duties as Agent shall be terminated, without
any other or further act or deed on the part of such former Agent or any
of the parties to this Agreement or any holders of the Loans. After any
retiring Agent's resignation as Agent, the provisions of this Section
shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Agent under this Agreement and the other Loan
Documents.
9.10 Co-Lead Agent and Co-Agents. Neither the Co-Lead Agent nor
any Co-Agent in its capacity as such shall have any rights, duties or
responsibilities hereunder, or any fiduciary relationship with any Lender,
and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or otherwise exist
against the Co-Lead Agent or any Co-Agent in its capacity as such.
SECTION 10. GUARANTEE
10.1 Guarantee. In order to induce the Agent and the Lenders to
execute and deliver this Agreement and to make or maintain the Loans
hereunder, and in consideration thereof, Holdings hereby unconditionally
and irrevocably guarantees to the Agent, for the ratable benefit of the
Lenders, the prompt and complete payment and performance by the Company
when due (whether at stated maturity, by acceleration or otherwise) of the
Obligations, and Holdings further agrees to pay any and all expenses
(including, without limitation, all reasonable fees, charges and
disbursements of counsel) which may be paid or incurred by the Agent or by
the Lenders in enforcing, or obtaining advice of counsel in respect of,
any of their rights under the guarantee contained in this Section 10;
provided, that, anything herein to the contrary notwithstanding, the
maximum liability of Holdings under the guarantee contained in this
Section 10 and under the other Loan Documents shall in no event exceed the
Maximum Guaranteed Amount (as defined below). As used in this Section 10,
"Maximum Guaranteed Amount" shall mean the maximum amount of obligations,
liabilities and indebtedness as to which Holdings may become liable
pursuant to the guarantee contained in this Section 10 and the other Loan
Documents, without causing a violation of any Contractual Obligation of
Holdings in effect on the Effective Date. Holdings agrees that the
Obligations may at any time and from time to time exceed the Maximum
Guaranteed Amount without impairing the guarantee contained in this
Section 10 or affecting the rights and remedies of the Agent and the
Lenders hereunder. The guarantee contained in this Section 10, subject to
Section 10.5, shall remain in full force and effect until the Obligations
are paid in full, the Revolving Credit Commitments are terminated and no<PAGE>
88
Letters of Credit are outstanding, notwithstanding that from time to time
prior thereto the Company may be free from any Obligations.
Holdings agrees that whenever, at any time, or from time to time, it
shall make any payment to the Agent or any Lender on account of its
liability under this Section 10, it will notify the Agent and such Lender
in writing that such payment is made under the guarantee contained in this
Section 10 for such purpose. No payment or payments made by the Company
or any other Person or received or collected by the Agent or any Lender
from the Company or any other Person by virtue of any action or proceeding
or any setoff or appropriation or application, at any time or from time to
time, in reduction of or in payment of the Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of Holdings
under this Section 10 which, notwithstanding any such payment or payments,
shall remain liable for the Obligations up to the Maximum Guaranteed
Amount until, subject to Section 10.5, the Obligations are paid in full,
the Revolving Credit Commitments are terminated and no Letters of Credit
are outstanding.
10.2 No Subrogation, Contribution, Reimbursement or Indemnity.
Notwithstanding anything to the contrary in this Section 10, Holdings
hereby irrevocably waives all rights which may have arisen in connection
with the guarantee contained in this Section 10 to be subrogated to any of
the rights (whether contractual, under the Bankruptcy Code, including
Section 509 thereof, under common law or otherwise) of the Agent or any
Lender against the Company or against the Agent or any Lender for the
payment of the Obligations. Holdings hereby further irrevocably waives
all contractual, common law, statutory and other rights of reimbursement,
contribution, exoneration or indemnity (or any similar right) from or
against the Company or any other Person which may have arisen in
connection with the guarantee contained in this Section 10. So long as
the Obligations remain outstanding, if any amount shall be paid by or on
behalf of the Company to Holdings on account of any of the rights waived
in this Section 10.2, such amount shall be held by Holdings in trust,
segregated from other funds of Holdings, and shall, forthwith upon receipt
by Holdings, be turned over to the Agent in the exact form received by
Holdings (duly indorsed by Holdings to the Agent, if required), to be
applied against the Obligations, whether matured or unmatured, in such
order as the Agent may determine. The provisions of this Section 10.2
shall survive the term of the guarantee contained in this Section 10 and
the payment in full of the Obligations and the termination of the
Revolving Credit Commitments.
10.3 Amendments, etc. with respect to the Obligations. Holdings
shall remain obligated under this Section 10 notwithstanding that, without
any reservation of rights against Holdings, and without notice to or
further assent by Holdings, any demand for payment of or reduction in the
principal amount of any of the Obligations made by the Agent or any Lender
may be rescinded by the Agent or such Lender, and any of the Obligations
continued, and the Obligations, or the liability of any other party upon
or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole
or in part, be renewed, extended, amended, modified, accelerated,
compromised, waived, surrendered or released by the Agent or any Lender,
and this Agreement, any other Loan Document, and any other documents
executed and delivered in connection therewith may be amended, modified,<PAGE>
89
supplemented or terminated, in whole or in part, as the Lenders (or the
Required Lenders, as the case may be) may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any
time held by the Agent or any Lender for the payment of the Obligations
may be sold, exchanged, waived, surrendered or released. Neither the
Agent nor any Lender shall have any obligation to protect, secure, perfect
or insure any Lien at any time held by it as security for the Obligations
or for the guarantee contained in this Section 10 or any property subject
thereto.
10.4 Guarantee Absolute and Unconditional. Holdings waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Agent or any Lender
upon the guarantee contained in this Section 10 or acceptance of the
guarantee contained in this Section 10; the Obligations, and any of them,
shall conclusively be deemed to have been created, contracted or incurred,
or renewed, extended, amended or waived, in reliance upon the guarantee
contained in this Section 10; and all dealings between the Company or
Holdings, on the one hand, and the Agent and the Lenders, on the other,
shall likewise be conclusively presumed to have been had or consummated in
reliance upon the guarantee contained in this Section 10. Holdings waives
diligence, presentment, protest, demand for payment and notice of default
or nonpayment to or upon the Company or Holdings with respect to the
Obligations. The guarantee contained in this Section 10 shall be
construed as a continuing, absolute, irrevocable and unconditional
guarantee of payment without regard to (a) the validity or enforceability
of this Agreement or any other Loan Document, any of the Obligations or
any collateral security therefor or guarantee or right of offset with
respect thereto at any time or from time to time held by the Agent or any
Lender, (b) any defense, setoff or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be
asserted by the Company against the Agent or any Lender, or (c) any other
circumstance whatsoever (with or without notice to or knowledge of the
Company or Holdings) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Company for the
Obligations, or of Holdings under the guarantee contained in this Section
10, in bankruptcy or in any other instance. When the Agent or any Lender
is pursuing its rights and remedies under this Section 10 against
Holdings, the Agent or any Lender may, but shall be under no obligation
to, pursue such rights and remedies as it may have against the Company or
any other Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any failure
by the Agent or any Lender to pursue such other rights or remedies or to
collect any payments from the Company or any such other Person or to
realize upon any such collateral security or guarantee or to exercise any
such right of offset, or any release of the Company or any such other
Person or of any such collateral security, guarantee or right of offset,
shall not relieve Holdings of any liability under this Section 10, and
shall not impair or affect the rights and remedies, whether express,
implied or available as a matter of law, of the Agent and the Lenders
against Holdings.
10.5 Reinstatement. The guarantee contained in this Section 10
shall continue to be effective, or be reinstated, as the case may be, if
at any time payment, or any part thereof, of any of the Obligations is
rescinded or must otherwise be restored or returned by the Agent or any<PAGE>
90
Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Company or upon or as a result of the appointment of
a receiver, intervenor or conservator of, or trustee or similar officer
for, the Company or any substantial part of its property, or otherwise,
all as though such payments had not been made.
10.6 Payments. Holdings hereby agrees that any payments in respect
of the Obligations pursuant to this Section 10 will be paid to the Agent
without setoff or counterclaim in Dollars at the office of the Agent
specified in Section 11.2.
SECTION 11. MISCELLANEOUS
11.1 Amendments and Waivers. Neither this Agreement, any other
Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section. With the written consent of the Required Lenders, the Agent and
each Loan Party party to the relevant Loan Document may, from time to
time, enter into written amendments, supplements or modifications hereto
and to the other Loan Documents for the purpose of adding any provisions
to this Agreement or the other Loan Documents or changing in any manner
the rights of the Lenders or of the Company or the other Loan Parties
hereunder or thereunder or waiving, on such terms and conditions as the
Agent may specify in such instrument, any of the requirements of this
Agreement or the other Loan Documents or any Default or Event of Default
and its consequences; provided, that no such waiver and no such amendment,
supplement or modification shall directly (a) (i) release all or
substantially all of the Collateral or release all or substantially all of
the Subsidiary Guarantors from their obligations under the Subsidiary
Guarantee (except, in each case, in connection with any sale or other
disposition of assets expressly permitted by Section 7.6) or (ii) amend,
modify or waive any provision of Section 8(j) without the written consent
of the Supermajority Lenders; (b) forgive the principal amount or extend
the final stated maturity of any Loan, or reduce the stated rate of
interest on any Loan or extend the scheduled time of payment of interest
thereon, or reduce any fee or letter of credit commission payable to any
Lender hereunder, or release the Company from its obligation to repay any
of the amounts described in this clause (b), or increase the amount of any
Lender's Revolving Credit Commitment, in each case without the written
consent of each Lender directly affected thereby; (c) amend, modify or
waive any provision of Section 7.1(b) or 7.1(c) without the written
consent of the Specified Required Lenders; (d) amend, modify or waive any
provision of this Section 11.1 or reduce the percentage specified in the
definition of Required Lenders, Specified Required Lenders or
Supermajority Lenders, or consent to the assignment or transfer by
Holdings or the Company of any of its rights and obligations under this
Agreement and the other Loan Documents (except, in the case of Holdings,
as expressly contemplated by Section 7.5(c)), in each case without the
written consent of all the Lenders; (e) amend, modify or waive any
provision of Section 3 without the written consent of the Issuing Lender;
or (f) amend, modify or waive any provision of Section 9 without the
written consent of the then Agent; and provided, further, that no exercise
by the Agent of its discretion pursuant to the introductory paragraphs of
the definitions of "Eligible Inventory" and "Eligible Receivables" which
would significantly, and from the point of view of the Lenders adversely,
alter (a) the basis upon which Inventory or Accounts are considered<PAGE>
91
"Eligible Inventory" or "Eligible Receivables" or (b) the calculation of
any reserve in respect of Eligible Inventory or Eligible Receivables,
shall be effective unless the Required Lenders shall have consented to
such exercise in writing (which consent shall not be unreasonably
withheld). Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be
binding upon the Company, the other Loan Parties, the Lenders, the Agent
and all future holders of the Loans. In the case of any waiver, the
Company, the other Loan Parties, the Lenders and the Agent shall be
restored to their former position and rights hereunder and under the other
Loan Documents, and any Default or Event of Default waived shall be deemed
to be cured and not continuing; but no such waiver shall extend to any
subsequent or other Default or Event of Default, or impair any right
consequent thereon.
11.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including
by telecopy, telegraph or telex), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by
hand, or three days after being deposited in the mail, postage prepaid,
or, in the case of telecopy notice, when received, or, in the case of
telegraphic notice, when delivered to the telegraph company, or, in the
case of telex notice, when sent, answerback received, addressed as follows
in the case of Holdings, the Company and the Agent, and as set forth in
Schedule 1.1A in the case of the other parties hereto, or to such other
address as may be hereafter notified by the respective parties hereto and
any future holders of the Loans:
Holdings: BCP/Essex Holdings Inc.
c/o Bessemer Holdings, L.P.
630 Fifth Avenue
New York, New York 10111
Attention: Robert D. Lindsay
Telecopy: 212-969-9032
with copies to: Essex Group, Inc. (at the address set forth
below)
and Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Kris F. Heinzelman, Esq.
Telecopy: 212-474-3700
The Company: Essex Group, Inc.
1601 Wall Street
Fort Wayne, Indiana 46802
Attention: David A. Owen
Telecopy: 219-461-4762
with copies to: BCP/Essex Holdings Inc. (at
the address set forth above)
and Cravath, Swaine & Moore (at
the address set forth above)<PAGE>
92
The Agent: Chemical Bank
c/o Chemical Securities Inc.
10 South LaSalle Street
Chicago, Illinois 60603
Attention: Jonathan E. Twichell
Telecopy: 312-807-4077
with copies to: Chemical Bank Agency Services Corporation
Grand Central Tower
140 East 45th Street
New York, New York 10017
Attention: John Bromage
Telecopy: 212-622-0854
provided that any notice, request or demand to or upon the Agent or the
Lenders pursuant to Section 2.3, 2.5, 2.6, 2.8, 2.12 or 3.2 shall not be
effective until received.
11.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof;
nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
11.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, under the other Loan
Documents and in any document, certificate or statement delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery of this Agreement and the other Loan Documents.
11.5 Payment of Expenses and Taxes. The Company agrees (a) to pay
or reimburse the Agent for all its out-of-pocket costs and expenses and
internally allocated charges and reasonable fees incurred in connection
with the development, preparation and execution of this Agreement and the
other Loan Documents and any other documents prepared in connection
herewith or therewith, the consummation and administration of the
transactions contemplated hereby and thereby and the syndication of the
credit facilities contained herein, including, without limitation, the
reasonable fees, charges and disbursements of counsel (including any local
or special counsel) to the Agent and of any professionals or consultants
acting on behalf of the Agent in connection with any audit or other review
of the business, assets or financial condition of the Loan Parties
(including any examination of Accounts, Inventory or other Collateral),
(b) to pay or reimburse the Agent for all its reasonable costs and
expenses incurred in connection with any amendment, supplement or other
modification to this Agreement, any other Loan Documents or any other
documents prepared in connection herewith or therewith, including, without
limitation, reasonable fees, charges and disbursements of counsel to the
Agent, (c) to pay or reimburse each Lender and the Agent for all its
reasonable costs and expenses incurred in connection with the enforcement
or preservation of any rights under this Agreement, the other Loan
Documents, the Letters of Credit, and any other documents prepared in
connection herewith or therewith, including, without limitation,<PAGE>
93
reasonable fees, charges and disbursements of counsel to the Agent and to
each Lender (including the reasonable allocated costs of in-house counsel
for any Lender), (d) to pay, indemnify each Lender and the Agent against,
and hold each Lender and the Agent harmless from, any and all recording
and filing fees and any and all liabilities with respect to, or resulting
from any delay in paying, stamp, excise and other taxes, if any, which may
be payable or determined to be payable in connection with the execution
and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the
other Loan Documents and any other documents prepared in connection
herewith or therewith, and (e) to pay, and indemnify and hold harmless
each Lender and the Agent and their respective officers, directors,
employees, affiliates, agents and controlling persons (each, an
"indemnitee") from and against, any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses, charges and disbursements of any kind or nature whatsoever
(including, without limitation, reasonable fees, charges and disbursements
of counsel to such indemnitee) with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the other
Loan Documents and any such other documents, or the use of the proceeds of
the Loans or the loans made pursuant to the Existing Credit Agreement, or
any claim, litigation, investigation or proceeding relating to any of the
foregoing, regardless of whether any indemnitee is a party thereto or
whether any such claim, litigation, investigation or proceeding is brought
by the Company or by any other Person, and to reimburse each indemnitee
upon demand for any legal or other reasonable expenses incurred in
connection with investigating or defending any of the foregoing (all the
foregoing, collectively, the "indemnified liabilities"); provided that the
Company shall have no obligation hereunder to any indemnitee with respect
to indemnified liabilities to the extent such indemnified liabilities are
found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted primarily from the gross negligence or
willful misconduct of such indemnitee. The agreements in this Section
shall survive repayment of the Loans and all other amounts payable
hereunder.
11.6 Successors and Assigns; Assignments and Participations. (a)
This Agreement shall be binding upon and inure to the benefit of Holdings,
the Company, the Lenders, the Agent, all future holders of the Loans, and
their respective successors and assigns, except that neither Holdings nor
the Company may assign or transfer any of its rights or obligations under
this Agreement (except, in the case of Holdings, as expressly contemplated
by Section 7.5(c)) without the prior written consent of each Lender.
(b) Each Lender may, with the prior consent of the Company, the
Issuing Lender and the Agent (such consent not to be unreasonably withheld
but in the case of the Company it shall be deemed reasonable for the
Company to withhold its consent if as a result of any assignment (x) the
total number of Lenders would be greater than 20 or (y) the Company would
be required to pay any additional amounts pursuant to Section 2.14 or
2.15), assign to one or more banks or other entities all or a portion of
its rights and obligations under this Agreement and the other Loan
Documents (including, without limitation, all or a portion of its
Revolving Credit Commitment and the Loans owing to it); provided, however,
that (i) except in the case of an assignment of all of a Lender's rights<PAGE>
94
and obligations under this Agreement, (x) the amount of the Revolving
Credit Commitment of the assigning Lender being assigned pursuant to each
such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall in no event be less than
$5,000,000 or such lesser amount as the Company may consent to and (y)
after giving effect to each such assignment, the amount of the Revolving
Credit Commitment of the assigning Lender shall in no event be less than
$5,000,000, and (ii) the parties to each such assignment shall execute and
deliver to the Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance and pay to the Agent a processing and
recordation fee of $4,000. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in such Assignment
and Acceptance, (x) the assignee thereunder shall be a party hereto and,
to the extent that rights and obligations hereunder have been assigned to
it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and (y) the Lender assignor thereunder
shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto). Upon the
effectiveness of any Assignment and Acceptance, Schedule 1.1A shall be
deemed amended to reflect the identities and Revolving Credit Commitments
of the Lenders after giving effect thereto.
(c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto, or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, the other Loan Documents or any other instrument
or document furnished pursuant hereto or thereto; (ii) such assigning
Lender makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Company or any other Loan
Party or the performance or observance by the Company or any other Loan
Party of any of its obligations under this Agreement, the other Loan
Documents or any other instrument or document furnished pursuant hereto or
thereto; (iii) such assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Section 4.1 and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the Agent, such assigning Lender or any other Lender
and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not
taking action under this Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (v) such
assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers and discretion under this
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto as are delegated to the Agent by the<PAGE>
95
terms hereof or thereof, together with such powers and discretion as are
reasonably incidental thereto; and (vi) such assignee agrees that it will
perform in accordance with their terms all of the obligations that by the
terms of this Agreement are required to be performed by it as a Lender.
(d) The Agent, on behalf of the Company, shall maintain at the
address of the Agent referred to in Section 11.2 a copy of each Assignment
and Acceptance delivered to it and a register (the "Register") for the
recordation of the names and addresses of the Lenders and the Revolving
Credit Commitment of, and principal amount of the Loans owing to, each
Lender from time to time. The entries in the Register shall be
conclusive, in the absence of manifest error, and the Company, the Agent
and the Lenders may (and, in the case of any Loan or other obligation
hereunder not evidenced by a Revolving Credit Note, shall) treat each
Person whose name is recorded in the Register as the owner of a Loan or
other obligation hereunder as the owner thereof for all purposes of this
Agreement and the other Loan Documents, notwithstanding any notice to the
contrary. Any assignment of any Loan or other obligation hereunder not
evidenced by a Revolving Credit Note shall be effective only upon
appropriate entries with respect thereto being made in the Register. The
Register shall be available for inspection by the Company or any Lender at
any reasonable time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance accepted by an
assigning Lender and an assignee, the Agent shall, if such Assignment and
Acceptance has been completed and is in substantially the form of Exhibit
I, (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to
the Company.
(f) Each Lender may sell participations to one or more banks or
other entities (each, a "Participant") in all or a portion of its rights
and obligations under this Agreement (including, without limitation, all
or a portion of its Revolving Credit Commitment and the Loans owing to
it); provided, however, that (i) such Lender's obligations under this
Agreement (including, without limitation, its Revolving Credit Commitment
to the Company hereunder) shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Lender shall remain the holder of any
Revolving Credit Note issued to it for all purposes of this Agreement,
(iv) for purposes of Section 2.15, such Lender shall continue to be
treated as if it had not sold any such participation, such that no
Participant shall have any right to any indemnity or additional payment
under such Section, and such Lender shall be entitled to receive
additional payments pursuant to such Section calculated on the assumption
that it had not sold any such participation, (v) the Company, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and (vi) no Participant under any such participation shall have
any right to approve any amendment or waiver of any provision of any Loan
Document, or any consent to any departure by any Loan Party therefrom,
except to the extent that such amendment, waiver or consent would reduce
the principal of, or interest on, the Loans or any fees payable hereunder,
in each case to the extent subject to such participation, or postpone the
date of the final maturity of, or any date fixed for any payment of
interest on, the Loans, in each case to the extent subject to such<PAGE>
96
participation. Notwithstanding the foregoing, the Company agrees that
each such Participant shall, to the extent provided in its participation,
be entitled to the rights and benefits under Sections 2.14 and 2.16 and
all rights to, or rights to request, information under this Agreement with
respect to its participating interest, in each case as if such Participant
were a Lender and in each case as with effect as from the date of
effectiveness of the applicable participation.
(g) The Company authorizes each Lender to disclose to any
Participant or assignee (each, a "Transferee") and any prospective
Transferee any and all financial information in such Lender's possession
concerning the Company and its Affiliates which has been delivered to such
Lender by or on behalf of the Company pursuant to this Agreement or which
has been delivered to such Lender by or on behalf of the Company in
connection with such Lender's credit evaluation of the Company and its
Affiliates prior to becoming a party to this Agreement; provided, that,
unless the Agent and the Company shall otherwise agree, prior to any such
disclosure such Transferee shall have executed a Confidentiality Letter in
the form of Exhibit L.
(h) Nothing herein shall prohibit any Lender from pledging or
assigning all or any portion of its Loans to any Federal Reserve Bank in
accordance with applicable law. In order to facilitate such pledge or
assignment, the Company hereby agrees that, upon request of any Lender at
any time and from time to time, the Company shall provide to such Lender,
at the Company's own expense, a promissory note (a "Revolving Credit
Note"), substantially in the form of Exhibit A, evidencing the Loans owing
to such Lender.
(i) If, after the date that any Lender becomes a Lender, the long-
term certificate of deposit rating of such Lender shall be downgraded by
both Standard & Poor's Ratings Group ("S&P") and Moody's Investors
Service, Inc. ("Moody's") (or, in the case of any Lender which is not so
rated by both S&P and Moody's on the date on which it becomes a Lender, by
Thompson's BankWatch and, if applicable, S&P or Moody's), and as a result
of such downgrade such Lender shall be rated below BBB- by S&P and below
Baa3 by Moody's, or the equivalent (or, in the case of any Lender which is
not so rated by both S&P and Moody's on the date on which it becomes a
Lender, below C by Thompson's BankWatch and, if applicable, below BBB- by
S&P or below Baa3 by Moody's, or the equivalent), then the Issuing Lender
shall have the right, but not the obligation, at its own expense, upon
notice to such Lender and the Agent, to replace (or to request that the
Company use its reasonable efforts to replace) such Lender with an
assignee (in accordance with and subject to the restrictions contained in
Section 11.6(b)), and such Lender hereby agrees to transfer and assign
without recourse (in accordance with and subject to the restrictions
contained in Section 11.6(b)) all its interests, rights and obligations
hereunder to such assignee; provided, that (i) no such assignment shall
conflict with any Requirement of Law of any Governmental Authority and
(ii) the Issuing Lender or such assignee, as the case may be, shall pay to
such Lender in immediately available funds on the date of such assignment
the principal of and interest accrued to the date of payment of the Loans
made by such Lender hereunder and all other amounts accrued for such
Lender's account or owed to it hereunder.<PAGE>
97
11.7 Adjustments; Setoff.
(a) If any Lender (a "benefitted Lender") shall at any time receive
any payment of all or part of its Loans, or interest thereon, or receive
any collateral in respect thereof (whether voluntarily or involuntarily,
by setoff, pursuant to events or proceedings of the nature referred to in
Section 8(f), or otherwise), in a greater proportion than any such payment
to or collateral received by any other Lender, if any, in respect of such
other Lender's Loans, or interest thereon, such benefitted Lender shall
purchase for cash from the other Lenders such portion of each such other
Lender's Loans, or shall provide such other Lenders with the benefits of
any such collateral, or the proceeds thereof, as shall be necessary to
cause such benefitted Lender to share the excess payment or benefits of
such collateral or proceeds ratably with each of the Lenders; provided,
however, that if all or any portion of such excess payment or benefits is
thereafter recovered from such benefitted Lender, such purchase shall be
rescinded, and the purchase price and benefits returned, to the extent of
such recovery, but without interest. The Company agrees that each Lender
so purchasing a portion of another Lender's Loans may exercise all rights
of payment (including, without limitation, rights of setoff) with respect
to such portion as fully as if such Lender were the direct holder of such
portion.
(b) In addition to any rights and remedies of the Lenders provided
by law, upon the occurrence and during the continuance of an Event of
Default, each Lender shall have the right, without prior notice to
Holdings or the Company, any such notice being expressly waived by
Holdings and the Company to the extent permitted by applicable law, upon
any amount becoming due and payable by Holdings or the Company hereunder
or under any Revolving Credit Note (whether at the stated maturity, by
acceleration or otherwise) to set off and appropriate and apply against
such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held
or owing by such Lender or any branch or agency thereof to or for the
credit or the account of Holdings or the Company. Each Lender agrees
promptly to notify Holdings, the Company and the Agent after any such
setoff and application made by such Lender; provided that the failure to
give such notice shall not affect the validity of such setoff and
application.
11.8 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute
one and the same instrument. A set of the copies of this Agreement signed
by all the parties shall be lodged with the Company and the Agent.
11.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.<PAGE>
98
11.10 Releases. Each Lender hereby authorizes the Agent to execute
such releases and termination statements as may be reasonably requested by
the Company in connection with the incurrence of any Lien expressly
permitted by Section 7.3 (as said Section may be amended from time to time
in accordance with Section 11.1).
11.11 GOVERNING LAW. THIS AGREEMENT AND ANY REVOLVING CREDIT NOTE
AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND ANY
REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
11.12 Submission To Jurisdiction; Waivers. Each of Holdings and the
Company hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of
the United States of America for the Southern District of New York,
and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail),
postage prepaid, to Holdings or the Company, as the case may be, at
its address set forth in Section 11.2 or at such other address of
which the Agent shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this Section 11.12 any special, exemplary,
punitive or consequential damages.
11.13 Acknowledgements. Each of Holdings and the Company hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan
Documents;
(b) neither the Agent nor any Lender has any fiduciary
relationship to Holdings or the Company, and the relationship
between Agent and Lenders, on one hand, and Holdings and the
Company, on the other hand, is solely that of creditor and debtor;
and<PAGE>
99
(c) no joint venture exists among the Lenders or among
Holdings, the Company and the Lenders.
11.14 WAIVERS OF JURY TRIAL. HOLDINGS, THE COMPANY, THE AGENT AND
EACH OF THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
11.15 Confidentiality. Neither the Agent nor any Lender shall
disclose any Confidential Information to any Person without the prior
consent of the Company, other than (a) to the Agent's or such Lender's
affiliates and their officers, directors, employees, agents and advisors,
(b) to actual or prospective assignees and participants, and then only on
a confidential basis as contemplated in Section 11.6(g) and upon the prior
delivery of the confidentiality letter contemplated therein, (c) as
required by any law, rule or regulation or judicial process and (d) as
requested or required by any state, federal or foreign authority or
examiner regulating or having jurisdiction over the Agent or any Lender.
11.16 New Lenders; Commitment Increases. (a) With the consent of
the Company and the Agent (which, in the case of the Agent, shall not be
unreasonably withheld), (i) one or more additional banks or other
financial institutions may become a party to this Agreement by executing a
supplement hereto, in form and substance satisfactory to such bank or
other financial institution, the Company and the Agent, whereupon such
bank or other financial institution (herein called a "New Lender") shall
become a Lender for all purposes hereof and to the same extent as if
originally a party hereto and shall be bound by and entitled to the
benefits of this Agreement, and Schedule 1.1A hereto shall be deemed to be
amended to add the name, address and Revolving Credit Commitment of such
New Lender and (ii) any Lender may increase the amount of its Revolving
Credit Commitment by executing a supplement hereto, in form and substance
satisfactory to such Lender, the Company and the Agent, whereupon such
Lender shall be bound by and entitled to the benefits of this Agreement
with respect to the full amount of its Revolving Credit Commitment as so
increased, and Schedule 1.1A hereto shall be deemed to be amended to
reflect such increase in the Revolving Credit Commitment of such Lender.
In no event may the aggregate Revolving Credit Commitments be increased
above $285,000,000 pursuant to any supplement described in this Section
11.16(a).
(b) If on the date upon which a bank or other financial
institution becomes a New Lender or upon which a Lender's Revolving Credit
Commitment is changed pursuant to Section 11.16(a), any Loans are then
outstanding, the Company shall borrow Loans from such Lender in an amount
such that, after giving effect thereto, the quotient of (x) the Loans of
such Lender of each Type (and, in the case of Eurodollar Loans, of each
Eurodollar Tranche) and (y) such Lender's Revolving Credit Commitment is
equal to the comparable quotient of each other Lender. Any Eurodollar
Loans borrowed pursuant to the preceding sentence shall bear interest at a
rate equal to the respective interest rates then applicable to the
Eurodollar Loans of the other Lenders in the same Eurodollar Tranche.
11.17 INTEGRATION. THIS AGREEMENT REPRESENTS THE ENTIRE AGREEMENT
OF HOLDINGS, THE COMPANY, THE AGENT AND THE LENDERS WITH RESPECT TO THE
SUBJECT MATTER HEREOF, WHICH AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE<PAGE>
100
OF ANY PRIOR OR CONTEMPORANEOUS ORAL AGREEMENT BETWEEN OR AMONG ANY OF THE
PARTIES HERETO, AND THERE ARE NO PROMISES, UNDERTAKINGS, REPRESENTATIONS
OR WARRANTIES BY THE AGENT OR ANY LENDER RELATIVE TO THE SUBJECT MATTER
HEREOF NOT EXPRESSLY SET FORTH OR REFERRED TO HEREIN OR IN THE OTHER LOAN
DOCUMENTS.
SECTION 11.17 ACKNOWLEDGEMENT:
No oral agreement
Date: 4-12-95
ESSEX GROUP, INC.
By: /s/ S.C. Craft
Title: President<PAGE>
101
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in New York, New York by their proper and
duly authorized officers as of the day and year first above written.
BCP/ESSEX HOLDINGS INC.
By: /s/ S.C. Craft
Name: S.C. Craft
Title: President
ESSEX GROUP, INC.
By: /s/ S.C. Craft
Name: S.C. Craft
Title: President
The Agent:
CHEMICAL BANK
By: /s/ Lisa D. Benitez
Name: Lisa D. Benitez
Title: Vice President
The Co-Lead Agent:
BANK OF AMERICA ILLINOIS
By: /s/ Patricia DelGrande
Name: Patricia DelGrande
Title: Vice President
The Lenders:
CHEMICAL BANK
By: /s/ Lisa D. Benitez
Name: Lisa D. Benitez
Title: Vice President
BANK OF AMERICA ILLINOIS
By: /s/ Patricia DelGrande
Name: Patricia DelGrande
Title: Vice President<PAGE>
102
THE BANK OF NOVA SCOTIA, as a
Co-Agent and as a Lender
By: /s/ F.C.H. Ashby
Name: F.C.H. Ashby
Title: Senior Manager
Loan Operations
COMERICA BANK, as a
Co-Agent and as a Lender
By: /s/ Philip A. Coosaia
Name: Philip A. Coosaia
Title: Assistant Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH, as a
Co-Agent and as a Lender
By: /s/ Jay Shankar
Name: Jay Shankar
Title: Vice President
NATIONSBANK, N.A. (CAROLINAS), as a
Co-Agent and as a Lender
By: /s/ Christopher A. Torie
Name: Christoper A. Torie
Title: Senior Vice President
NBD BANK, as a Co-Agent and
as a Lender
By: /s/ Michael F. Edwards
Name: Michael F. Edwards
Title: Second Vice President
THE BANK OF NEW YORK
By: /s/ Bruce C. Miller
Name: Bruce C. Miller
Title: Vice President<PAGE>
103
FORT WAYNE NATIONAL BANK
By: /s/ Don J. Mauch
Name: Don J. Mauch
Title: Senior Vice President
MELLON BANK, N.A.
By: /s/ Roger N. Stanier
Name: Roger N. Stanier
Title: Vice President<PAGE>
104
NATIONAL CITY BANK
By: /s/ Jeffrey J. Tengel
Name: Jeffrey J. Tengel
Title: Vice President
NORWEST BANK INDIANA,
NATIONAL ASSOCIATION
By: /s/ David L. Schnepp
Name: David L. Schnepp
Title: Vice President
UNITED STATES NATIONAL BANK
OF OREGON
By: /s/ Chris J. Karlin
Name: Chris J. Karlin
Title: Vice President<PAGE>
105
EXHIBIT A
REVOLVING CREDIT NOTE
$_________________ New York, New York
_____ __, ____
FOR VALUE RECEIVED, the undersigned, ESSEX GROUP, INC., a
Michigan corporation (the "Company"), hereby unconditionally promises to
pay on the Revolving Credit Termination Date (as defined in the Credit
Agreement referred to below) to the order of (the
"Lender"), the lesser of (a) __________ DOLLARS ($_____) and (b) the
aggregate unpaid principal amount of all Loans (as defined in the Credit
Agreement) made by the Lender to the Company pursuant to the Credit
Agreement referred to below, in lawful money of the United States of
America and in immediately available funds. Such payment shall be made
for the account of the Lender at the office of Chemical Bank located at
270 Park Avenue, New York, New York 10017.
The Company further agrees to pay interest in like money at
such office on the unpaid principal amount hereof from time to time
outstanding at the applicable interest rate per annum and on the dates
specified in Section 2.10 of the Credit Agreement, until paid in full
(both before and after judgment to the extent permitted by law).
The holder of this Revolving Credit Note is hereby authorized
to record the date, Type and amount of each Loan made by the Lender to the
Company, each continuation thereof, each conversion of all or a portion
thereof to another Type, the date and amount of each payment or prepayment
of principal thereof, and, in the case of Eurodollar Loans, the Interest
Period (in each case, as defined in the Credit Agreement) with respect
thereto, on the schedules annexed hereto and made a part hereof, or on a
continuation thereof which shall be attached hereto and made a part
hereof, and any such recordation shall constitute prima facie evidence of
the accuracy of the information so recorded in the absence of manifest
error; provided, however, that failure by any holder to make any such
recordation on such schedules or continuation thereof or any error in such
recordation shall not affect any of the obligations of the Company under
this Revolving Credit Note or the Credit Agreement.
This Revolving Credit Note is one of the Revolving Credit
Notes referred to in the Credit Agreement, dated as of April __, 1995 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among the Company, BCP/Essex Holdings Inc., the Lender, the
other Lenders parties thereto and Chemical Bank, as Agent, is entitled to
the benefits thereof and is subject to optional and mandatory prepayments
in whole or in part as provided in Sections 2.6 and 2.7 of the Credit
Agreement. Terms used herein which are defined in the Credit Agreement
shall have such defined meanings unless otherwise defined herein.<PAGE>
106
Upon the occurrence of any one or more of the Events of
Default (as defined in the Credit Agreement) specified in the Credit
Agreement, all amounts then remaining unpaid on this Revolving Credit Note
shall become, or may be declared to be, immediately due and payable as
provided in Section 8 of the Credit Agreement.
The Company hereby waives presentment, demand, protest or
notice of any kind in connection with this Revolving Credit Note.
THIS REVOLVING CREDIT NOTE AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS REVOLVING CREDIT NOTE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.
ESSEX GROUP, INC.
By:__________________________
Name:
Title:<PAGE>
Schedule to
Revolving
Credit Note
ABR LOANS AND CONVERSIONS AND
REPAYMENTS OF PRINCIPAL
[CAPTION]
<TABLE>
Amount of Amount of
ABR Loans Eurodollar
Converted Loans
into Converted Amount of Unpaid
Amount of Eurodollar into ABR Principal Principal Notation
Date ABR Loans Loans Loans Repaid Balance Made by
---- --------- ---------- ---------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
/TABLE
<PAGE>
EURODOLLAR LOANS AND CONVERSIONS
AND REPAYMENTS OF PRINCIPAL
[CAPTION]
<TABLE>
Amount of Amount
ABR Loans of Euro-
Converted dollar
Amount into Euro- Loans Nota-
of Euro- dollar Converted Amount of Unpaid tion
dollar Interest Loans into ABR Principal Principal Made
Date Loans Period --------- Loans Repaid Balance by
---- -------- -------- --------- --------- --------- -----
<S> <C> <C> <C> <C> <C> <C>
/TABLE
<PAGE>
EXHIBIT B-1
BORROWING BASE CERTIFICATE
TO: CHEMICAL BANK DATE:_______________
c/o Chemical Securities Inc.
10 South LaSalle Street
Chicago, IL 60603
Telecopy: (312) 807-4077
FROM: Essex Group, Inc.
Borrowing Base Certificate #:____________________
______________________________________________________________
We hereby certify the following information:
(1) Accounts Receivable as of the date of last
submitted certificate: $________
+ SALES $________
- COLLECTIONS $________
- CREDITS $________
- WRITEOFFS $________
- ADJUSTMENTS/
OTHER (DESCRIBE) $________
Accounts Receivable as of / / : $________
(2) Accounts Receivable Aging as of / / : $________
[CAPTION]
<TABLE>
1-30 31-60 61-90 90
Past Due Past Due Past Due Past Due
FUTURE CURRENT ---- ----- ----- ---- TOTAL
------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
Wire and Cable Division:
[CAPTION]
<TABLE>
1-30 31-60 61-90 90
Past Due Past Due Past Due Past Due
FUTURE CURRENT ---- ----- ----- ---- TOTAL
------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
/TABLE
<PAGE>
2
Magnet Wire Division:
[CAPTION]
<TABLE>
1-30 31-60 61-90 90
Past Due Past Due Past Due Past Due
FUTURE CURRENT ---- ----- ----- ---- TOTAL
------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
Engineered Products Division:
[CAPTION]
<TABLE>
1-30 31-60 61-90 90
Past Due Past Due Past Due Past Due
FUTURE CURRENT ---- ----- ----- ---- TOTAL
------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
Interstate Industries:
[CAPTION]
<TABLE>
1-30 31-60 61-90 90
Past Due Past Due Past Due Past Due
FUTURE CURRENT ---- ----- ----- ---- TOTAL
------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
Group Metals and Transportation:
[CAPTION]
<TABLE>
1-30 31-60 61-90 90
Past Due Past Due Past Due Past Due
FUTURE CURRENT ---- ----- ----- ---- TOTAL
------ ------- -----
<S> <C> <C> <C> <C> <C> <C>
</TABLE>
(3) COMPUTATION OF BORROWING BASE:
ELIGIBLE RECEIVABLES:
(A) TOTAL ACCOUNTS RECEIVABLE: $__________<PAGE>
3
+/- Adjustments: $__________
$__________
($________)
($________)
REVISED TOTAL ACCOUNTS RECEIVABLE: $__________
Less the following deductions:
($________)
($________)
($________)
($________)
($________)
TOTAL DEDUCTIONS: ($________)
NET ELIGIBLE RECEIVABLES: $_________
(B) RECEIVABLES AVAILABILITY (85% Advance): $_________
ELIGIBLE INVENTORY:
(C) TOTAL INVENTORY as of / / BY DIVISION:
Wire and Cable Division: $_________
Magnet Wire Division: $_________
Engineered Products Division: $_________
Group Metals and Transportation: $_________
Interstate Industries: $_________
+/- Purchase Price Variances:
Current Month: $_________
Prior Month $_________
REVISED TOTAL INVENTORY: $_________
Less the following deductions:
($________)
($________)
($________)
($________)
($________)
TOTAL DEDUCTIONS:* ($_________)
*To be submitted by division annually or at the Agents request.
Less:<PAGE>
4
Eligible Consigned Inventory ($________)
Raw Materials ($________)
NET ELIGIBLE INVENTORY BEFORE 65%: $________
(D) AVAILABLE (65% Advance): $________
ELIGIBLE CONSIGNED INVENTORY: $________
(E) AVAILABLE (50% Advance): $________
RAW MATERIALS: $________
(F) AVAILABLE (30% Advance): $________
(G) INVENTORY AVAILABILITY (NOT TO EXCEED
CLAUSE (B) ABOVE) $________
(H) TOTAL AVAILABILITY ON A/R AND INVENTORY
(SUM OF CLAUSE (B) AND (G) ABOVE): $
========
(I) (i) Loans: $________
(ii) Specified Basket Debt: $________
(iii) Lesser of
(x) L/C commitment ($25,000,000) or
(y) outstanding L/C Obligations plus amount
described in clause (y) of the definition
of Modified Aggregate Outstanding Revolving
Extensions of Credit $________
(iv) Modified Aggregate Outstanding Revolving
Extensions of Credit (sum of (i) and (ii)
minus (iii)) $________
(4) Comments or Other Information:
The undersigned hereby represents and warrants that this is a correct
statement regarding the status of accounts receivable and inventory
assigned to Chemical Bank, as agent (the "Agent") for the lenders (the
"Lenders") parties to the Credit Agreement, dated as of April __, 1995
(the "Credit Agreement"), among BCP/Essex Holdings Inc., the Company, the
Agent and the Lenders, that the figures set forth herein are accurate in
all material respects and have been computed in accordance with the Credit
Agreement and that no Tolled Inventory (as defined in the Company Security
Agreement or the Subsidiary Security Agreement, as the case may be) is
included in any of the computations including Inventory herein. The
undersigned further warrants and represents that, to the best knowledge of
the undersigned, the Company is in complete compliance with all the terms
and conditions contained in the agreements between us. The undersigned
further understands that the Lenders' extensions of credit to the Company
will be based upon the reliance on the information contained herein.
Terms used herein which are defined in the Credit Agreement shall have
such defined meanings when otherwise defined herein.<PAGE>
5
ESSEX GROUP, INC.
By:__________________________________
Name:
Title:<PAGE>
EXHIBIT B-2
SENIOR NOTE INDENTURE
REVOLVING CREDIT INCURRENCE LIMIT CERTIFICATE
TO: CHEMICAL BANK DATE:____________
c/o Chemical Securities Inc.
10 South LaSalle Street
Chicago, IL 60603
Telecopy: (312) 807-4077
FROM: Essex Group, Inc.
Senior Note Indenture Revolving Credit Incurrence Limit Certificate
#:____________________
______________________________________________________________
We hereby certify the following information:
COMPUTATION OF SENIOR NOTE INDENTURE REVOLVING CREDIT INCURRENCE LIMIT:
(a) Total Accounts Receivable: $__________
(b) Receivables availability (80% advance): $__________
(c) Total Inventory: $__________
(d) Inventory availability (50% advance): $__________
(e) Total availability on A/R and Inventory
(sum of clause (b) and (d) above): $__________
(f) Indebtedness outstanding pursuant to Section 4.04(b)(i) of Senior
Note Indenture (other than L/C Obligations and Specified Basket
Debt):
$__________
$__________
$__________
Total: $__________
(g) Excess of clause (e) over clause (f): $__________
(h) (i) Indebtedness outstanding pursuant to Section 4.04(b)(x) of
Senior Note Indenture (other than L/C Obligations and
Specified Basket Debt):
$__________
$__________
$__________<PAGE>
2
Total: $__________
(ii) $25,000,000 less aggregate amount described in clause (h)(i):
$__________
(i) Sum of clauses (g) and (h)(ii) above: $__________
(j) (i) L/C Obligations presently outstanding: $__________
(ii) Specified Basket Debt presently outstanding: $______
(iii) Sum of clauses (j)(i) and (j)(ii): $______
(k) Amount of clause (j)(iii) cannot exceed amount of clause (i).
COMMENTS OR OTHER INFORMATION:
The undersigned hereby represents and warrants to Chemical Bank, as agent
(the "Agent") for the lenders (the "Lenders") parties to the Credit
Agreement, dated as of April __, 1995 (the "Credit Agreement"), among
BCP/Essex Holdings Inc., the Company, the Agent and the Lenders, that the
figures set forth herein are accurate in all material respects and have
been computed in accordance with the Credit Agreement and the Senior Note
Indenture. The undersigned further warrants and represents that, to the
best knowledge of the undersigned, the Company is in complete compliance
with all the terms and conditions contained in the agreements between us.
The undersigned further understands that the Lenders' extensions of credit
to the Company will be based upon the reliance on the information
contained herein. Terms used herein which are defined in the Credit
Agreement shall have such defined meanings when otherwise defined herein.
ESSEX GROUP, INC.
By:_____________________________
Name:
Title:<PAGE>
EXHIBIT C
FORM OF INTERCOMPANY NOTE
New York, New York
_________ __, 199__
FOR VALUE RECEIVED, [Name of Payor], a ____________ corporation (the
"Borrower"), hereby promises to pay on demand to the order of [Name of
Payee] or its assigns (the "Payee"), in lawful money of the United States
of America in immediately available funds, at such location in the United
States of America as the Payee shall from time to time designate, the
unpaid principal amount of all loans and advances made by the Payee to the
Borrower.
The Borrower promises also to pay interest on the unpaid principal
amount hereof in like money at said office from the date hereof until paid
at such rate per annum as shall be agreed upon from time to time by the
Borrower and Payee. [, which in no event shall exceed the Prime Rate (as
defined in the Credit Agreement referred to below). Notwithstanding
anything to the contrary herein, no payment or prepayment of principal of
or interest on this Note may be made, directly or indirectly, if a Default
or Event of Default (each as defined in the Credit Agreement referred to
below) shall have occurred and be continuing or would result
therefrom.]*/
Upon the commencement of any bankruptcy, reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar proceeding of any jurisdiction
relating to the Borrower, the unpaid principal amount hereof shall become
immediately due and payable without presentment, demand, protest or notice
of any kind in connection with this Note.
This Note is one of the Intercompany Notes referred to in the Credit
Agreement, dated as of April __, 1995, among BCP/Essex Holdings Inc.,
Essex Group, Inc., the Lenders from time to time parties thereto and
Chemical Bank, as Agent (as amended, modified or supplemented from time to
time, the "Credit Agreement") and is subject to the terms thereof, and
shall be pledged by the Payee pursuant to the [Holdings] [Company]
[Subsidiary] Pledge Agreement (as defined in the Credit Agreement). The
Borrower hereby acknowledges and agrees that said Agent pursuant to and as
defined in the [Holdings] [Company] [Subsidiary] Pledge Agreement may
exercise all rights provided therein with respect to this Note.
The Payee is hereby authorized to record all loans and advances made
by it to the Borrower (all of which shall be evidenced by this Note), and
all repayments or prepayments thereof, in its books and records, such
books and records constituting prima facie evidence of the accuracy of the
information contained therein.
All payments under this Note shall be made without offset,
counterclaim or deduction of any kind.
*/ Insert in Intercompany Notes as to which Essex Group Inc. is the
Borrower.<PAGE>
2
The Borrower hereby waives presentment, demand, protest or notice of
any kind in connection with this Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[NAME OF PAYOR]
By_______________________________
Title:
Pay to the order of
_______________________
[NAME OF PAYEE]
By______________________
Title:<PAGE>
EXHIBIT D-1
FORM OF COMPANY PLEDGE AGREEMENT
COMPANY PLEDGE AGREEMENT, dated as of April ___, 1995, made by
ESSEX GROUP, INC., a Michigan corporation (the "Pledgor"), in favor of
CHEMICAL BANK, as agent (in such capacity, the "Agent") for the lenders
(the "Lenders") parties to the Credit Agreement, dated as of April __,
1995 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement"), among the Pledgor, BCP/Essex Holdings Inc., the
Lenders and the Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make Loans to the Pledgor upon the terms and subject
to the conditions set forth therein;
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to issue, or to participate in, Letters of Credit for the
account of the Pledgor upon the terms and subject to the conditions set
forth therein;
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective Loans to, and to issue or participate in
Letters of Credit for the account of, the Pledgor under the Credit
Agreement that the Pledgor shall have executed and delivered this Pledge
Agreement to the Agent for the ratable benefit of the Lenders; and
WHEREAS, each Issuer (as defined below) is a wholly owned
direct subsidiary of the Pledgor;
NOW, THEREFORE, in consideration of the premises and to induce
the Agent and the Lenders to enter into the Credit Agreement and to induce
the Lenders to make their respective Loans and issue or participate in
Letters of Credit under the Credit Agreement, the Pledgor hereby agrees
with the Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms
which are defined in the Credit Agreement and used herein are so used as
so defined, and the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code from time to time in
effect in the State of New York.
"Collateral" means the Pledged Securities and all Proceeds
thereof.
"Issuers" means each Subsidiary of the Pledgor listed on
Schedule I hereto.
"Obligations" means the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity
of the Loans and Reimbursement Obligations and interest accruing
after the filing of any petition in bankruptcy, or the commencement<PAGE>
2
of any insolvency, reorganization or like proceeding, relating to
the Pledgor whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and all other
obligations and liabilities of the Pledgor to the Agent and the
Lenders (or, in the case of any Interest Rate Protection Agreement,
any Affiliate of any Lender), whether direct or indirect, absolute
or contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of, or in connection with, the
Credit Agreement, any Revolving Credit Notes, any other Loan
Document, the Letters of Credit or this Pledge Agreement and any
other document made, delivered or given in connection therewith or
herewith, whether on account of principal, interest, reimbursement
obligations, fees, charges, indemnities, costs, expenses (including,
without limitation, all reasonable fees and disbursements of counsel
to the Agent and the Lenders that are required to be paid by the
Pledgor pursuant to the terms of the Credit Agreement) or otherwise.
"Pledge Agreement" means this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledged Notes" means all Intercompany Notes at any time
issued to the Pledgor and all other promissory notes issued to or
held by the Pledgor (other than promissory notes issued in
connection with extensions of trade credit by the Pledgor in the
ordinary course of business).
"Pledged Securities" means all of the Pledged Stock and
Pledged Notes.
"Pledged Stock" means the shares of capital stock listed on
Schedule I hereto, together with all stock certificates, options or
rights of any nature whatsoever that may be issued or granted by
such Issuer to the Pledgor in respect of the Pledged Stock while
this Pledge Agreement is in effect.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from the
Pledged Securities, collections thereon or distributions with
respect thereto.
2. Pledge; Grant of Security Interest. The Pledgor hereby
delivers to the Agent, for the ratable benefit of the Lenders, all the
Pledged Securities and hereby grants to the Agent, for the ratable benefit
of the Lenders, a first priority security interest in the Collateral, as
collateral security for the prompt and complete payment and performance
when due (whether at the stated maturity, by acceleration or otherwise) of
the Obligations.
3. Stock Powers and Endorsements. Concurrently with the
delivery to the Agent of each certificate representing one or more shares
of Pledged Stock to the Agent, the Pledgor shall deliver an undated stock
power covering such certificate, duly executed in blank by the Pledgor
with, if the Agent so requests, signature guaranteed. All Pledged Notes,
when delivered, shall be duly endorsed in blank. <PAGE>
3
4. Representations and Warranties. The Pledgor represents
and warrants that:
(a) the shares of Pledged Stock of each Issuer listed on
Schedule I constitute 100% (or, in the case of any Issuer which is a
Foreign Subsidiary, 65%) of the issued and outstanding shares of all
classes of the Capital Stock of such Issuer;
(b) all the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable;
(c) each of the Pledged Notes constitutes the legal, valid
and binding obligation of the obligor with respect thereto,
enforceable in accordance with its terms, except to the extent that
the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws generally affecting creditors' rights and by
general principles of equity (regardless of whether enforcement is
sought in equity or at law);
(d) the Pledgor is the record and beneficial owner of, and
has good and marketable title to, the Pledged Securities, free of
any and all Liens or options in favor of, or claims of, any other
Person, except the Lien created by this Pledge Agreement; and
(e) upon delivery to the Agent of the stock certificates and
instruments evidencing the Pledged Securities, the Lien granted
pursuant to this Pledge Agreement will constitute a valid, perfected
first priority Lien on the Collateral, enforceable as such against
all creditors of the Pledgor and any Persons purporting to purchase
any Collateral from the Pledgor (subject, in the case of Proceeds,
to Section 9-306 of the Code).
5. Covenants. The Pledgor covenants and agrees with the
Agent and the Lenders that, from and after the date of this Pledge
Agreement until the Obligations are paid in full and the Revolving Credit
Commitments are terminated:
(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or
rights, whether in addition to, in substitution of, as a conversion
of, or in exchange for, any shares of the Pledged Stock, or
otherwise in respect thereof, the Pledgor shall accept the same as
the agent of the Agent and the Lenders, hold the same in trust for
the Agent and the Lenders and deliver the same forthwith to the
Agent in the exact form received, duly endorsed by the Pledgor to
the Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by the Pledgor and
with, if the Agent so requests, signature guaranteed, to be held by
the Agent, subject to the terms hereof, as additional collateral
security for the Obligations. If an Event of Default shall have
occurred and be continuing, any sums paid upon or in respect of the<PAGE>
4
Pledged Securities upon the liquidation or dissolution of any Issuer
shall be paid over to the Agent to be held by it hereunder as
additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the
Pledged Securities or any property shall be distributed upon or with
respect to the Pledged Securities pursuant to the recapitalization
or reclassification of the capital of any Issuer or pursuant to the
reorganization thereof, the property so distributed shall be
delivered to the Agent to be held by it hereunder as additional
collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Securities
shall be received by the Pledgor while an Event of Default shall
have occurred and be continuing, the Pledgor shall, until such money
or property is paid or delivered to the Agent, hold such money or
property in trust for the Lenders, segregated from other funds of
the Pledgor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Agent, the
Pledgor will not (i) vote to enable, or take any other action to
permit, any Issuer to issue (other than to existing stockholders on
a proportionate basis) any stock or other equity securities of any
nature or to issue any other securities convertible into or granting
the right to purchase or exchange for any stock or other equity
securities of any nature of such Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option
with respect to, the Collateral other than pursuant to a transaction
permitted by the Credit Agreement, or (iii) create, incur or permit
to exist any Lien or option in favor of, or any claim of any Person
with respect to, any of the Collateral, or any interest therein,
except for the Lien provided for by this Pledge Agreement. The
Pledgor will defend the right, title and interest of the Agent and
the Lenders in and to the Collateral against the claims and demands
of all Persons whomsoever.
(c) At any time and from time to time, upon the written
request of the Agent, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Agent
may reasonably request for the purposes of obtaining or preserving
the full benefits of this Pledge Agreement and of the rights and
powers herein granted. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any
promissory note, other instrument or chattel paper, such promissory
note, other instrument or chattel paper shall be immediately
delivered to the Agent, duly endorsed in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this Pledge
Agreement.
(d) The Pledgor agrees to pay, and to save the Agent and the
Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales
or other taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the
transactions contemplated by this Pledge Agreement.<PAGE>
5
6. Cash Dividends and Other Distributions; Voting Rights.
Unless an Event of Default shall have occurred and be continuing and the
Agent shall have given notice to the Pledgor of the Agent's intent to
exercise its corresponding rights pursuant to paragraph 7 below, the
Pledgor shall be permitted to receive all cash dividends in respect of the
Pledged Stock and all payments in respect of the Pledged Notes, in each
case paid in the normal course of business of each Issuer and consistent
with past practice, to the extent permitted in the Credit Agreement, and
to exercise all voting and/or corporate rights with respect to the Pledged
Securities, provided, however, that no vote shall be cast or corporate
right exercised or other action taken which, in the Agent's reasonable
judgment, would impair the Collateral or which would be inconsistent with
or result in any violation of any provision of the Credit Agreement, this
Pledge Agreement or the other Loan Documents. At the expense of the
Pledgor, the Agent shall execute and deliver to the Pledgor, or cause to
be executed and delivered to the Pledgor, all such proxies, powers of
attorney and other instruments as the Pledgor may reasonably request for
the purpose of enabling it to exercise the voting and/or corporate rights
and powers which it is entitled to exercise pursuant to this paragraph 6.
7. Rights of the Lenders and the Agent. (a) If an Event of
Default shall have occurred and be continuing and the Agent shall have
given notice of its intent to exercise such rights to the Pledgor, (i) the
Agent shall have the right to receive any and all cash dividends and
amounts payable in respect of the Pledged Securities and make application
thereof to the Obligations in such order as the Agent may determine, and
(ii) all shares of the Pledged Securities shall be registered in or
transferred to the name of the Agent or its nominee, and the Agent or its
nominee may thereafter exercise (A) all voting, corporate and other rights
pertaining to the Pledged Securities at any meeting of shareholders of
each Issuer or otherwise and (B) any and all rights of conversion,
exchange, subscription and any other rights, privileges or options
pertaining to the Pledged Securities as if it were the absolute owner
thereof (including, without limitation, the right to exchange at its
discretion any and all of the Pledged Stock upon the merger,
consolidation, reorganization, recapitalization or other fundamental
change in the corporate structure of any Issuer, or upon the exercise by
the Pledgor or the Agent of any right, privilege or option pertaining to
such shares of the Pledged Stock, and in connection therewith, the right
to deposit and deliver any and all of the Pledged Stock with any
committee, depositary, transfer agent, registrar or other designated
agency upon such terms and conditions as it may determine), all without
liability except to account for property actually received by it, but the
Agent shall have no duty to the Pledgor to exercise any such right,
privilege or option and shall not be responsible for any failure to do so
or delay in so doing.
(b) The rights of the Agent and the Lenders hereunder shall
not be conditioned or contingent upon the pursuit by the Agent or any
Lender of any right or remedy against any Issuer or against any other
Person which may be or become liable in respect of all or any part of the
Obligations or against any collateral security therefor, guarantee
therefor or right of offset with respect thereto. Neither the Agent nor
any Lender shall be liable for any failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so, nor
shall the Agent be under any obligation to sell or otherwise dispose of<PAGE>
6
any Collateral upon the request of the Pledgor or any other Person or to
take any other action whatsoever with regard to the Collateral or any part
thereof.
8. Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Lenders, may exercise, in addition
to all other rights and remedies granted in this Pledge Agreement and in
any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing, the Agent, without
demand of performance or other demand, presentment, protest, advertisement
or notice of any kind (except any notice required by law referred to
below) to or upon the Pledgor, any Issuer or any other Person (all and
each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate
and realize upon the Collateral, or any part thereof, and/or may forthwith
sell, assign, give option or options to purchase or otherwise dispose of
and deliver the Collateral or any part thereof (or contract to do any of
the foregoing), in one or more parcels at public or private sale or sales,
in the over-the-counter market, at any exchange, broker's board or office
of the Agent or any Lender or elsewhere upon such terms and conditions as
it may deem advisable and at such prices as it may deem best, for cash or
on credit or for future delivery without assumption of any credit risk.
The Agent or any Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Pledgor, which right or equity
is hereby waived and released. The Agent shall apply any Proceeds from
time to time held by it and the proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred in respect thereof or
incidental to the care or safekeeping of any of the Collateral or in any
way relating to the Collateral or the rights of the Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to the Agent, to the payment in whole or in part
of the Obligations, in such order as the Agent may elect, and only after
such application and after the payment by the Agent of any other amount
required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Agent account for the surplus, if any,
to the Pledgor. To the extent permitted by applicable law, the Pledgor
waives all claims, damages and demands it may acquire against the Agent or
any Lender arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall
be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. The Pledgor
shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by
the Agent or any Lender to collect such deficiency.
9. Registration Rights; Private Sales. (a) If the Agent
shall determine to exercise its right to sell any or all of the Pledged
Stock pursuant to paragraph 8 hereof, and if in the opinion of the Agent
it is necessary or advisable to have the Pledged Stock, or that portion
thereof to be sold, registered under the provisions of the Securities Act
of 1933, as amended (the "Securities Act"), the Pledgor will cause each<PAGE>
7
Issuer to (i) execute and deliver, and cause the directors and officers of
such Issuer to execute and deliver, all such instruments and documents,
and do or cause to be done all such other acts as may be, in the opinion
of the Agent, necessary or advisable to register the Pledged Stock, or
that portion thereof to be sold, under the provisions of the Securities
Act, (ii) to use its best efforts to cause the registration statement
relating thereto to become effective and to remain effective for a period
of one year from the date of the first public offering of the Pledged
Stock, or that portion thereof to be sold, and (iii) to make all
amendments thereto and/or to the related prospectus which, in the opinion
of the Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. The Pledgor agrees
to cause each Issuer to use its best efforts to comply with the provisions
of the securities or "Blue Sky" laws of any and all jurisdictions which
the Agent shall designate and to make available to its security holders,
as soon as practicable, an earnings statement (which need not be audited)
which will satisfy the provisions of Section 11(a) of the Securities Act.
(b) The Pledgor recognizes that the Agent may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers which will
be obliged to agree, among other things, to acquire such securities for
their own account for investment and not with a view to the distribution
or resale thereof. The Pledgor acknowledges and agrees that any such
private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner (even if the Agent accepts the first offer
received or offers the Collateral or any portion thereof to only one
offeree). The Agent shall be under no obligation to delay a sale of any
of the Pledged Stock for the period of time necessary to permit such
Issuer to register such securities for public sale under the Securities
Act, or under applicable state securities laws, even if such Issuer would
agree to do so.
(c) The Pledgor further agrees to use its best efforts to do
or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Pledged Stock pursuant to this
paragraph 9 valid and binding and in compliance with any and all other
applicable Requirements of Law. The Pledgor further agrees that a breach
of any of the covenants contained in this paragraph 9 will cause
irreparable injury to the Agent and the Lenders, that the Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this paragraph 9
shall be specifically enforceable against the Pledgor, and, to the extent
permitted by applicable law, the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under
the Credit Agreement.
10. Limitation on Duties Regarding Collateral. The Agent's
sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of<PAGE>
8
the Code or otherwise, shall be to deal with it in the same manner as the
Agent deals with similar securities and property for its own account.
Except for the duty of the Agent described in this paragraph 10, and the
accounting by the Agent for moneys actually received by it hereunder,
neither the Agent nor any Lender shall have any duties hereunder as to any
Collateral (including, without limitation, as to ascertaining any matters
or taking any action with respect to any Collateral or as to taking any
necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral). Neither the Agent, any Lender nor
any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Collateral upon the request of the
Pledgor or otherwise.
11. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable
and powers coupled with an interest.
12. Severability. Any provision of this Pledge Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
13. Paragraph Headings. The paragraph headings used in this
Pledge Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the
interpretation hereof.
14. No Waiver; Cumulative Remedies. Neither the Agent nor
any Lender shall by any act (except by a written instrument pursuant to
paragraph 15 hereof) be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to
exercise and no delay in exercising, on the part of the Agent or any
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the Agent or
any Lender of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which the Agent or such
Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies
provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Pledge Agreement may be
amended, supplemented or otherwise modified except in accordance with
Section 11.1 of the Credit Agreement. All references herein to Schedule I
hereto shall be deemed to be references to Schedule I hereto as the same
shall be supplemented from time to time as agreed in writing by the
Pledgor and the Agent. This Pledge Agreement shall be binding upon the<PAGE>
9
successors and assigns of the Pledgor and shall inure to the benefit of
the Agent and the Lenders and their respective successors and assigns.
This Pledge Agreement shall be governed by, and construed and interpreted
in accordance with, the laws of the State of New York.
16. Notices. All notices, requests and demands hereunder
shall be given in accordance with Section 11.2 of the Credit Agreement.
17. Irrevocable Authorization and Instruction to Pledgor.
The Pledgor hereby authorizes and instructs each Issuer to comply with any
instruction received by it from the Agent in writing that (a) states that
an Event of Default has occurred and (b) is otherwise in accordance with
the terms of this Pledge Agreement, without any other or further
instructions from the Pledgor, and the Pledgor agrees that such Issuer
shall be fully protected in so complying.
18. Authority of Agent. The Pledgor acknowledges that the
rights and responsibilities of the Agent under this Pledge Agreement with
respect to any action taken by the Agent or the exercise or non-exercise
by the Agent of any option, voting right, request, judgment or other right
or remedy provided for herein or resulting or arising out of this Pledge
Agreement shall, as between the Agent and the Lenders, be governed by the
Credit Agreement and by such other agreements with respect thereto as may
exist from time to time among them, but, as between the Agent and the
Pledgor, the Agent shall be conclusively presumed to be acting as agent
for the Lenders with full and valid authority so to act or refrain from
acting, and neither the Pledgor nor any Issuer shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
19. Termination. This Agreement and the security interest
created hereby shall terminate when all the Obligations shall have been
paid in full, the Revolving Credit Commitments shall have been terminated
and no Letters of Credit shall be outstanding, at which time the Agent
shall, at the request and expense of the Pledgor, reassign and deliver
(without recourse and without any representation or warranty) to the
Pledgor, or such person or persons as the Pledgor shall designate, against
receipt, such portion of the Collateral as shall not have been sold or
otherwise applied by the Agent pursuant to the terms hereof and shall
still be held by it hereunder, together with appropriate instruments of
reassignment and release; provided, that any indemnity set forth herein
shall survive any such termination. Upon any sale or other disposition of
the Collateral by the Pledgor expressly permitted by the Credit Agreement,
the Agent, at the request and expense of the Pledgor, shall release the
Collateral being sold and shall reassign and deliver such Collateral to
the Pledgor (without recourse and without any representation or warranty),
together with appropriate instruments of reassignment and release;
provided that (i) at the time of such request and such release no Event of
Default shall have occurred and be continuing and (ii) the Pledgor shall
have delivered to the Agent, at least ten Business Days prior to the date
of the proposed release, a written request for release describing the item
of Collateral and the terms of the sale or other disposition in reasonable
detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Pledgor stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents.<PAGE>
10
IN WITNESS WHEREOF, the undersigned has caused this Pledge Agreement
to be duly executed and delivered as of the date first above written.
ESSEX GROUP, INC.
By:_______________________________________________
Title:<PAGE>
ACKNOWLEDGEMENT AND CONSENT
Each Issuer referred to in the foregoing Pledge Agreement
hereby acknowledges receipt of a copy thereof, agrees to be bound thereby
and to comply with the terms thereof insofar as such terms are applicable
to it. Each Issuer agrees to notify the Agent promptly in writing of the
occurrence of any of the events described in paragraph 5(a) of the Pledge
Agreement. Each Issuer further agrees that the terms of paragraphs 9(a)
and 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it under or pursuant to or
arising out of paragraph 9 of the Pledge Agreement.
DIAMOND WIRE & CABLE CO.
By:________________________________________
Title:
ESSEX INTERNATIONAL, INC.
By:________________________________________
Title:
ESSEX WIRE CORPORATION
By:________________________________________
Title:
EXCEL WIRE AND CABLE CO.
By:________________________________________
Title:
US SAMICA CORPORATION
By:________________________________________
Title:
ESSEX GROUP EXPORT INC.
By:________________________________________
Title:<PAGE>
Address for Notices for each of the above Issuers:
c/o Essex Group, Inc.
1601 Wall Street
Fort Wayne, Indiana 46802
Telecopy: 219-461-4762<PAGE>
SCHEDULE 1
To Pledge
Agreement
DESCRIPTION OF PLEDGED STOCK
Stock
Class of Certificate No. of
Issuer Stock No. Shares
------ -------- ----------- ------
[NAME OF SUBSIDIARY]<PAGE>
EXHIBIT D-2
FORM OF HOLDINGS PLEDGE AGREEMENT
HOLDINGS PLEDGE AGREEMENT, dated as of April ___, 1995, made
by BCP/ESSEX HOLDINGS INC., a Delaware corporation (the "Pledgor"), in
favor of CHEMICAL BANK, as agent (in such capacity, the "Agent") for the
lenders (the "Lenders") parties to the Credit Agreement, dated as of April
__, 1995 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among the Pledgor, Essex Group, Inc., a
Michigan corporation (the "Issuer"), the Lenders and the Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make Loans to the Issuer upon the terms and subject to
the conditions set forth therein;
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to issue, or to participate in, Letters of Credit for the
account of the Issuer upon the terms and subject to the conditions set
forth therein;
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective Loans to, and to issue or participate in
Letters of Credit for the account of, the Issuer under the Credit
Agreement that the Pledgor shall have executed and delivered this Pledge
Agreement to the Agent for the ratable benefit of the Lenders; and
WHEREAS, the Issuer is a wholly owned direct subsidiary of the
Pledgor;
NOW, THEREFORE, in consideration of the premises and to induce
the Agent and the Lenders to enter into the Credit Agreement and to induce
the Lenders to make their respective Loans and issue or participate in
Letters of Credit under the Credit Agreement, the Pledgor hereby agrees
with the Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms
which are defined in the Credit Agreement and used herein are so used as
so defined, and the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code from time to time in
effect in the State of New York.
"Collateral" means the Pledged Securities and all Proceeds
thereof.
"Obligations" means obligations, liabilities and indebtedness
of the Pledgor under the guarantee contained in Section 10 of the
Credit Agreement.
"Pledge Agreement" means this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.<PAGE>
2
"Pledged Notes" means all Intercompany Notes at any time
issued to the Pledgor and all other promissory notes issued to or
held by the Pledgor.
"Pledged Securities" means all of the Pledged Stock and
Pledged Notes.
"Pledged Stock" means the shares of capital stock listed on
Schedule I hereto, together with all stock certificates, options or
rights of any nature whatsoever that may be issued or granted by the
Issuer to the Pledgor in respect of the Pledged Stock while this
Pledge Agreement is in effect.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from the
Pledged Securities, collections thereon or distributions with
respect thereto.
2. Pledge; Grant of Security Interest. The Pledgor hereby
delivers to the Agent, for the ratable benefit of the Lenders, all the
Pledged Securities and hereby grants to the Agent, for the ratable benefit
of the Lenders, a first priority security interest in the Collateral, as
collateral security for the prompt and complete payment and performance
when due (whether at the stated maturity, by acceleration or otherwise) of
the Obligations.
3. Stock Powers and Endorsements. Concurrently with the
delivery to the Agent of each certificate representing one or more shares
of Pledged Stock to the Agent, the Pledgor shall deliver an undated stock
power covering such certificate, duly executed in blank by the Pledgor
with, if the Agent so requests, signature guaranteed. All Pledged Notes,
when delivered, shall be duly endorsed in blank.
4. Representations and Warranties. The Pledgor represents
and warrants that:
(a) the shares of Pledged Stock listed on Schedule I
constitute 100% of the issued and outstanding shares of all classes
of the Capital Stock of the Issuer;
(b) all the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable;
(c) each of the Pledged Notes constitutes the legal, valid
and binding obligation of the obligor with respect thereto,
enforceable in accordance with its terms, except to the extent that
the enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws generally affecting creditors' rights and by
general principles of equity (regardless of whether enforcement is
sought in equity or at law);
(d) the Pledgor is the record and beneficial owner of, and
has good and marketable title to, the Pledged Securities, free of<PAGE>
3
any and all Liens or options in favor of, or claims of, any other
Person, except the Lien created by this Pledge Agreement; and
(e) upon delivery to the Agent of the stock certificates and
instruments evidencing the Pledged Securities, the Lien granted
pursuant to this Pledge Agreement will constitute a valid, perfected
first priority Lien on the Collateral, enforceable as such against
all creditors of the Pledgor and any Persons purporting to purchase
any Collateral from the Pledgor (subject, in the case of Proceeds,
to Section 9-306 of the Code).
5. Covenants. The Pledgor covenants and agrees with the
Agent and the Lenders that, from and after the date of this Pledge
Agreement until the Obligations are paid in full and the Revolving Credit
Commitments are terminated:
(a) If the Pledgor shall, as a result of its ownership of the
Pledged Stock, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or
rights, whether in addition to, in substitution of, as a conversion
of, or in exchange for, any shares of the Pledged Stock, or
otherwise in respect thereof, the Pledgor shall accept the same as
the agent of the Agent and the Lenders, hold the same in trust for
the Agent and the Lenders and deliver the same forthwith to the
Agent in the exact form received, duly endorsed by the Pledgor to
the Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by the Pledgor and
with, if the Agent so requests, signature guaranteed, to be held by
the Agent, subject to the terms hereof, as additional collateral
security for the Obligations. If an Event of Default shall have
occurred and be continuing, any sums paid upon or in respect of the
Pledged Securities upon the liquidation or dissolution of the Issuer
shall be paid over to the Agent to be held by it hereunder as
additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the
Pledged Securities or any property shall be distributed upon or with
respect to the Pledged Securities pursuant to the recapitalization
or reclassification of the capital of the Issuer or pursuant to the
reorganization thereof, the property so distributed shall be
delivered to the Agent to be held by it hereunder as additional
collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Securities
shall be received by the Pledgor while an Event of Default shall
have occurred and be continuing, the Pledgor shall, until such money
or property is paid or delivered to the Agent, hold such money or
property in trust for the Lenders, segregated from other funds of
the Pledgor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Agent, the
Pledgor will not (i) vote to enable, or take any other action to
permit, the Issuer to issue any stock or other equity securities of
any nature or to issue any other securities convertible into or
granting the right to purchase or exchange for any stock or other<PAGE>
4
equity securities of any nature of the Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option
with respect to, the Collateral, or (iii) create, incur or permit to
exist any Lien or option in favor of, or any claim of any Person
with respect to, any of the Collateral, or any interest therein,
except for the Lien provided for by this Pledge Agreement. The
Pledgor will defend the right, title and interest of the Agent and
the Lenders in and to the Collateral against the claims and demands
of all Persons whomsoever.
(c) At any time and from time to time, upon the written
request of the Agent, and at the sole expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Agent
may reasonably request for the purposes of obtaining or preserving
the full benefits of this Pledge Agreement and of the rights and
powers herein granted. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any
promissory note, other instrument or chattel paper, such promissory
note, other instrument or chattel paper shall be immediately
delivered to the Agent, duly endorsed in a manner satisfactory to
the Agent, to be held as Collateral pursuant to this Pledge
Agreement.
(d) The Pledgor agrees to pay, and to save the Agent and the
Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales
or other taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the
transactions contemplated by this Pledge Agreement.
6. Cash Dividends and Other Distributions; Voting Rights.
Unless an Event of Default shall have occurred and be continuing and the
Agent shall have given notice to the Pledgor of the Agent's intent to
exercise its corresponding rights pursuant to paragraph 7 below, the
Pledgor shall be permitted to receive all cash dividends in respect of the
Pledged Stock and all payments in respect of the Pledged Notes, in each
case paid in the normal course of business of the Issuer or obligor and
consistent with past practice, to the extent permitted in the Credit
Agreement, and to exercise all voting and/or corporate rights with respect
to the Pledged Securities, provided, however, that no vote shall be cast
or corporate right exercised or other action taken which, in the Agent's
reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the
Credit Agreement, this Pledge Agreement or the other Loan Documents. At
the expense of the Pledgor, the Agent shall execute and deliver to the
Pledgor, or cause to be executed and delivered to the Pledgor, all such
proxies, powers of attorney and other instruments as the Pledgor may
reasonably request for the purpose of enabling it to exercise the voting
and/or corporate rights and powers which it is entitled to exercise
pursuant to this paragraph 6.
7. Rights of the Lenders and the Agent. (a) If an Event of
Default shall have occurred and be continuing and the Agent shall have
given notice of its intent to exercise such rights to the Pledgor, (i) the
Agent shall have the right to receive any and all cash dividends (other<PAGE>
5
than dividends expressly permitted by Section 7.8(a) of the Credit
Agreement and dividends to be used for the purpose referred to in the
parenthetical contained in Section 7.8(b) of the Credit Agreement) and
amounts payable in respect of the Pledged Securities and make application
thereof to the Obligations in such order as the Agent may determine, and
(ii) all shares of the Pledged Securities shall be registered in or
transferred to the name of the Agent or its nominee, and the Agent or its
nominee may thereafter exercise (A) all voting, corporate and other rights
pertaining to the Pledged Securities at any meeting of shareholders of the
Issuer or otherwise and (B) any and all rights of conversion, exchange,
subscription and any other rights, privileges or options pertaining to the
Pledged Securities as if it were the absolute owner thereof (including,
without limitation, the right to exchange at its discretion any and all of
the Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of
the Issuer, or upon the exercise by the Pledgor or the Agent of any right,
privilege or option pertaining to such shares of such Pledged Stock, and
in connection therewith, the right to deposit and deliver any and all of
such Pledged Stock with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as it
may determine), all without liability except to account for property
actually received by it, but the Agent shall have no duty to the Pledgor
to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(b) The rights of the Agent and the Lenders hereunder shall
not be conditioned or contingent upon the pursuit by the Agent or any
Lender of any right or remedy against the Issuer or against any other
Person which may be or become liable in respect of all or any part of the
Obligations or against any collateral security therefor, guarantee
therefor or right of offset with respect thereto. Neither the Agent nor
any Lender shall be liable for any failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so, nor
shall the Agent be under any obligation to sell or otherwise dispose of
any Collateral upon the request of the Pledgor or any other Person or to
take any other action whatsoever with regard to the Collateral or any part
thereof.
8. Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Lenders, may exercise, in addition
to all other rights and remedies granted in this Pledge Agreement and in
any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing, the Agent, without
demand of performance or other demand, presentment, protest, advertisement
or notice of any kind (except any notice required by law referred to
below) to or upon the Pledgor, the Issuer or any other Person (all and
each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate
and realize upon the Collateral, or any part thereof, and/or may forthwith
sell, assign, give option or options to purchase or otherwise dispose of
and deliver the Collateral or any part thereof (or contract to do any of
the foregoing), in one or more parcels at public or private sale or sales,
in the over-the-counter market, at any exchange, broker's board or office
of the Agent or any Lender or elsewhere upon such terms and conditions as
it may deem advisable and at such prices as it may deem best, for cash or<PAGE>
6
on credit or for future delivery without assumption of any credit risk.
The Agent or any Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in the Pledgor, which right or equity
is hereby waived and released. The Agent shall apply any Proceeds from
time to time held by it and the proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred in respect thereof or
incidental to the care or safekeeping of any of the Collateral or in any
way relating to the Collateral or the rights of the Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to the Agent, to the payment in whole or in part
of the Obligations, in such order as the Agent may elect, and only after
such application and after the payment by the Agent of any other amount
required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Agent account for the surplus, if any,
to the Pledgor. To the extent permitted by applicable law, the Pledgor
waives all claims, damages and demands it may acquire against the Agent or
any Lender arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall
be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. The Pledgor
shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by
the Agent or any Lender to collect such deficiency. The Pledgor further
waives and agrees not to assert any rights or privileges which it may
acquire under Section 9-112 of the Code.
9. Registration Rights; Private Sales. (a) If the Agent
shall determine to exercise its right to sell any or all of the Pledged
Stock pursuant to paragraph 8 hereof, and if in the opinion of the Agent
it is necessary or advisable to have the Pledged Stock, or that portion
thereof to be sold, registered under the provisions of the Securities Act
of 1933, as amended (the "Securities Act"), the Pledgor will cause the
Issuer to (i) execute and deliver, and cause the directors and officers of
the Issuer to execute and deliver, all such instruments and documents, and
do or cause to be done all such other acts as may be, in the opinion of
the Agent, necessary or advisable to register the Pledged Stock, or that
portion thereof to be sold, under the provisions of the Securities Act,
(ii) to use its best efforts to cause the registration statement relating
thereto to become effective and to remain effective for a period of one
year from the date of the first public offering of the Pledged Stock, or
that portion thereof to be sold, and (iii) to make all amendments thereto
and/or to the related prospectus which, in the opinion of the Agent, are
necessary or advisable, all in conformity with the requirements of the
Securities Act and the rules and regulations of the Securities and
Exchange Commission applicable thereto. The Pledgor agrees to cause the
Issuer to use its best efforts to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which the Agent
shall designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.<PAGE>
7
(b) The Pledgor recognizes that the Agent may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers which will
be obliged to agree, among other things, to acquire such securities for
their own account for investment and not with a view to the distribution
or resale thereof. The Pledgor acknowledges and agrees that any such
private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner (even if the Agent accepts the first offer
received or offers the Collateral or any portion thereof to only one
offeree). The Agent shall be under no obligation to delay a sale of any
of the Pledged Stock for the period of time necessary to permit the Issuer
to register such securities for public sale under the Securities Act, or
under applicable state securities laws, even if the Issuer would agree to
do so.
(c) The Pledgor further agrees to use its best efforts to do
or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Pledged Stock pursuant to this
paragraph 9 valid and binding and in compliance with any and all other
applicable Requirements of Law. The Pledgor further agrees that a breach
of any of the covenants contained in this paragraph 9 will cause
irreparable injury to the Agent and the Lenders, that the Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this paragraph 9
shall be specifically enforceable against the Pledgor, and, to the extent
permitted by applicable law, the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under
the Credit Agreement.
10. Limitation on Duties Regarding Collateral. The Agent's
sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of
the Code or otherwise, shall be to deal with it in the same manner as the
Agent deals with similar securities and property for its own account.
Except for the duty of the Agent described in this paragraph 10, and the
accounting by the Agent for moneys actually received by it hereunder,
neither the Agent nor any Lender shall have any duties hereunder as to any
Collateral (including, without limitation, as to ascertaining any matters
or taking any action with respect to any Collateral or as to taking any
necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral). Neither the Agent, any Lender nor
any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Collateral upon the request of the
Pledgor or otherwise.
11. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable
and powers coupled with an interest.<PAGE>
8
12. Severability. Any provision of this Pledge Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
13. Paragraph Headings. The paragraph headings used in this
Pledge Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the
interpretation hereof.
14. No Waiver; Cumulative Remedies. Neither the Agent nor
any Lender shall by any act (except by a written instrument pursuant to
paragraph 15 hereof) be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to
exercise and no delay in exercising, on the part of the Agent or any
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the Agent or
any Lender of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which the Agent or such
Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies
provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Pledge Agreement may be
amended, supplemented or otherwise modified except in accordance with
Section 11.1 of the Credit Agreement. All references herein to Schedule I
hereto shall be deemed to be references to Schedule I hereto as the same
shall be supplemented from time to time as agreed in writing by the
Pledgor and the Agent. This Pledge Agreement shall be binding upon the
successors and assigns of the Pledgor and shall inure to the benefit of
the Agent and the Lenders and their respective successors and assigns.
This Pledge Agreement shall be governed by, and construed and interpreted
in accordance with, the laws of the State of New York.
16. Notices. All notices, requests and demands given
hereunder shall be given in accordance with Section 11.2 of the Credit
Agreement.
17. Irrevocable Authorization and Instruction to Issuer. The
Pledgor hereby authorizes and instructs the Issuer to comply with any
instruction received by it from the Agent in writing that (a) states that
an Event of Default has occurred and (b) is otherwise in accordance with
the terms of this Pledge Agreement, without any other or further
instructions from the Pledgor, and the Pledgor agrees that the Issuer
shall be fully protected in so complying.
18. Authority of Agent. The Pledgor acknowledges that the
rights and responsibilities of the Agent under this Pledge Agreement with<PAGE>
9
respect to any action taken by the Agent or the exercise or non-exercise
by the Agent of any option, voting right, request, judgment or other right
or remedy provided for herein or resulting or arising out of this Pledge
Agreement shall, as between the Agent and the Lenders, be governed by the
Credit Agreement and by such other agreements with respect thereto as may
exist from time to time among them, but, as between the Agent and the
Pledgor, the Agent shall be conclusively presumed to be acting as agent
for the Lenders with full and valid authority so to act or refrain from
acting, and neither the Pledgor nor the Issuer shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
19. Termination. This Agreement and the security interest
created hereby shall terminate when all the Obligations shall have been
paid in full, the Revolving Credit Commitments shall have been terminated
and no Letters of Credit shall be outstanding, at which time the Agent
shall, at the request and expense of the Pledgor, reassign and deliver
(without recourse and without any representation or warranty) to the
Pledgor, or such person or persons as the Pledgor shall designate, against
receipt, such portion of the Collateral as shall not have been sold or
otherwise applied by the Agent pursuant to the terms hereof and shall
still be held by it hereunder, together with appropriate instruments of
reassignment and release; provided, that any indemnity set forth herein
shall survive any such termination.
IN WITNESS WHEREOF, the undersigned has caused this Pledge
Agreement to be duly executed and delivered as of the date first above
written.
BCP/ESSEX HOLDINGS INC.
By:__________________________
Title:<PAGE>
ACKNOWLEDGEMENT AND CONSENT
The Issuer referred to in the foregoing Pledge Agreement
hereby acknowledges receipt of a copy thereof, agrees to be bound thereby
and to comply with the terms thereof insofar as such terms are applicable
to it. The Issuer agrees to notify the Agent promptly in writing of the
occurrence of any of the events described in paragraph 5(a) of the Pledge
Agreement. The Issuer further agrees that the terms of paragraphs 9(a)
and 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it under or pursuant to or
arising out of paragraph 9 of the Pledge Agreement.
ESSEX GROUP, INC.
By_____________________________
Title:
Address for Notices:
_______________________________
_______________________________
_______________________________
Telex: _______________________
Rapifax: _____________________<PAGE>
SCHEDULE 1
To Pledge
Agreement
DESCRIPTION OF PLEDGED STOCK
Stock
Class of Certificate No. of
Issuer Stock No. Shares
------ -------- ----------- ------
Essex Group, Inc.<PAGE>
EXHIBIT D-3
FORM OF SUBSIDIARY PLEDGE AGREEMENT
SUBSIDIARY PLEDGE AGREEMENT, dated as of April ___, 1995, made
by the parties signatories hereto (each, a "Pledgor"; collectively, the
"Pledgors"), in favor of CHEMICAL BANK, as agent (in such capacity, the
"Agent") for the lenders (the "Lenders") parties to the Credit Agreement,
dated as of April __, 1995 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among BCP/Essex Holdings Inc.,
Essex Group, Inc. (the "Company"), a Michigan corporation, the Lenders and
the Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make Loans to the Company upon the terms and subject
to the conditions set forth therein;
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to issue, or to participate in, Letters of Credit for the
account of the Company upon the terms and subject to the conditions set
forth therein;
WHEREAS, the Pledgors are parties to the Subsidiary Guarantee,
dated as of April __, 1995 (as the same may be from time to time amended,
supplemented or modified, the "Subsidiary Guarantee");
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective Loans to, and to issue or participate in
Letters of Credit for the account of, the Company under the Credit
Agreement that the Pledgors shall have executed and delivered this Pledge
Agreement to the Agent for the ratable benefit of the Lenders; and
WHEREAS, each Issuer (as defined below) is a [wholly owned]
direct subsidiary of the Pledgor listed immediately above such Issuer's
name on Schedule I hereto;
NOW, THEREFORE, in consideration of the premises and to induce
the Agent and the Lenders to enter into the Credit Agreement and to induce
the Lenders to make their respective Loans and issue or participate in
Letters of Credit under the Credit Agreement, each Pledgor hereby agrees
with the Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms
which are defined in the Credit Agreement and used herein are so used as
so defined, and the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code from time to time in
effect in the State of New York.
"Collateral" means the Pledged Securities and all Proceeds
thereof; with respect to the representations, warranties and
covenants made by each Pledgor in Paragraphs 4 and 5 hereof, each
reference to "Collateral" shall be deemed to refer to the Collateral<PAGE>
2
in which such Pledgor has granted or hereby grants or purports to
grant a security interest under this Pledge Agreement.
"Issuers" means the collective reference to each issuer listed
on Schedule I hereto, immediately beneath the name of the Pledgor of
which it is a Subsidiary.
"Obligations" means, with respect to any Pledgor, all
obligations, liabilities and indebtedness of such Pledgor under the
Subsidiary Guarantee.
"Pledge Agreement" means this Pledge Agreement, as amended,
supplemented or otherwise modified from time to time.
"Pledged Notes" means all Intercompany Notes at any time
issued to any Pledgor and all other promissory notes issued to or
held by any Pledgor (other than promissory notes issued in
connection with extensions of trade credit by any Pledgor in the
ordinary course of business).
"Pledged Securities" means all of the Pledged Stock and
Pledged Notes.
"Pledged Stock" means the shares of capital stock of each
Issuer listed on Schedule I hereto, together with all stock
certificates, options or rights of any nature whatsoever that may be
issued or granted by such Issuer to any Pledgor in respect of the
Pledged Stock while this Pledge Agreement is in effect.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, shall
include, without limitation, all dividends or other income from the
Pledged Securities, collections thereon or distributions with
respect thereto.
2. Pledge; Grant of Security Interest. Each Pledgor hereby
delivers to the Agent, for the ratable benefit of the Lenders, all the
Pledged Securities and hereby grants to the Agent, for the ratable benefit
of the Lenders, a first priority security interest in the Collateral owned
by such Pledgor, as collateral security for the prompt and complete
payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of the Obligations.
3. Stock Powers and Endorsements. Concurrently with the
delivery to the Agent of each certificate representing one or more shares
of Pledged Stock to the Agent, the relevant Pledgor shall deliver an
undated stock power covering such certificate, duly executed in blank by
such Pledgor with, if the Agent so requests, signature guaranteed. All
Pledged Notes, when delivered, shall be duly endorsed in blank.
4. Representations and Warranties. Each Pledgor represents
and warrants that:
(a) the shares of Pledged Stock pledged by such Pledgor
hereunder constitute 100% (or, in the case of any Issuer which is a<PAGE>
3
Foreign Subsidiary, 65%) of all the issued and outstanding shares of
all classes of the Capital Stock of each of the Issuers;
(b) all the shares of the Pledged Stock pledged by such
Pledgor hereunder have been duly and validly issued and are fully
paid and nonassessable;
(c) each of the Pledged Notes pledged by such Pledgor
hereunder constitutes the legal, valid and binding obligation of the
obligor with respect thereto, enforceable in accordance with its
terms, except to the extent that the enforceability thereof may be
limited by applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws generally
affecting creditors' rights and by general principles of equity
(regardless of whether enforcement is sought in equity or at law);
(d) such Pledgor is the record and beneficial owner of, and
has good and marketable title to, the Pledged Securities pledged by
such Pledgor hereunder, free of any and all Liens or options in
favor of, or claims of, any other Person, except the Lien created by
this Pledge Agreement; and
(e) upon delivery to the Agent of the stock certificates and
instruments evidencing the Pledged Securities pledged by such
Pledgor hereunder, the Lien granted pursuant to this Pledge
Agreement will constitute a valid, perfected first priority Lien on
such Pledged Securities and the proceeds thereof, enforceable as
such against all creditors of such Pledgor and any Persons
purporting to purchase such Collateral from such Pledgor (subject,
in the case of Proceeds, to Section 9-306 of the Code).
5. Covenants. Each Pledgor covenants and agrees with the
Agent and the Lenders that, from and after the date of this Pledge
Agreement until the Obligations are paid in full and the Revolving Credit
Commitments are terminated:
(a) If such Pledgor shall, as a result of its ownership of
the Pledged Stock, become entitled to receive or shall receive any
stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with
any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or
rights, whether in addition to, in substitution of, as a conversion
of, or in exchange for, any shares of the Pledged Stock, or
otherwise in respect thereof, such Pledgor shall accept the same as
the agent of the Agent and the Lenders, hold the same in trust for
the Agent and the Lenders and deliver the same forthwith to the
Agent in the exact form received, duly endorsed by such Pledgor to
the Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Pledgor and
with, if the Agent so requests, signature guaranteed, to be held by
the Agent, subject to the terms hereof, as additional collateral
security for the Obligations. If an Event of Default shall have
occurred and be continuing, any sums paid upon or in respect of the
Pledged Securities upon the liquidation or dissolution of any Issuer
shall be paid over to the Agent to be held by it hereunder as<PAGE>
4
additional collateral security for the Obligations, and in case any
distribution of capital shall be made on or in respect of the
Pledged Securities or any property shall be distributed upon or with
respect to the Pledged Securities pursuant to the recapitalization
or reclassification of the capital of any Issuer or pursuant to the
reorganization thereof, the property so distributed shall be
delivered to the Agent to be held by it hereunder as additional
collateral security for the Obligations. If any sums of money or
property so paid or distributed in respect of the Pledged Securities
shall be received by such Pledgor while an Event of Default shall
have occurred and be continuing, such Pledgor shall, until such
money or property is paid or delivered to the Agent, hold such money
or property in trust for the Lenders, segregated from other funds of
such Pledgor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Agent, such
Pledgor will not (i) vote to enable, or take any other action to
permit, any Issuer to issue (other than existing stockholders on a
proportionate basis) any stock or other equity securities of any
nature or to issue any other securities convertible into or granting
the right to purchase or exchange for any stock or other equity
securities of any nature of such Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option
with respect to, the Collateral other than pursuant to a transaction
permitted by the Credit Agreement, or (iii) create, incur or permit
to exist any Lien or option in favor of, or any claim of any Person
with respect to, any of the Collateral, or any interest therein,
except for the Lien provided for by this Pledge Agreement. Such
Pledgor will defend the right, title and interest of the Agent and
the Lenders in and to the Collateral pledged by it hereunder against
the claims and demands of all Persons whomsoever.
(c) At any time and from time to time, upon the written
request of the Agent, and at the sole expense of such Pledgor, such
Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Agent
may reasonably request for the purposes of obtaining or preserving
the full benefits of this Pledge Agreement and of the rights and
powers herein granted. If any amount payable under or in connection
with any of the Collateral pledged by such Pledgor hereunder shall
be or become evidenced by any promissory note, other instrument or
chattel paper, such promissory note, other instrument or chattel
paper shall be immediately delivered to the Agent, duly endorsed in
a manner satisfactory to the Agent, to be held as Collateral
pursuant to this Pledge Agreement.
(d) Such Pledgor agrees to pay, and to save the Agent and the
Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales
or other taxes which may be payable or determined to be payable with
respect to any of the Collateral pledged by it hereunder or in
connection with any of the transactions contemplated by this Pledge
Agreement.
6. Cash Dividends and Other Distributions; Voting Rights.
Unless an Event of Default shall have occurred and be continuing and the<PAGE>
5
Agent shall have given notice to such Pledgor of the Agent's intent to
exercise its corresponding rights pursuant to paragraph 7 below, each
Pledgor shall be permitted to receive all cash dividends in respect of the
Pledged Stock and all payments in respect of the Pledged Notes, in each
case paid in the normal course of business of each Issuer or obligor and
consistent with past practice, to the extent permitted in the Credit
Agreement, and to exercise all voting and/or corporate rights with respect
to the Pledged Securities, provided, however, that no vote shall be cast
or corporate right exercised or other action taken which, in the Agent's
reasonable judgment, would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the
Credit Agreement, this Pledge Agreement or the other Loan Documents. At
the expense of the Pledgor, the Agent shall execute and deliver to the
Pledgor, or cause to be executed and delivered to the Pledgor, all such
proxies, powers of attorney and other instruments as the Pledgor may
reasonably request for the purpose of enabling it to exercise the voting
and/or corporate rights and powers which it is entitled to exercise
pursuant to this paragraph 6.
7. Rights of the Lenders and the Agent. (a) If an Event of
Default shall have occurred and be continuing and the Agent shall have
given notice of its intent to exercise such rights to any Pledgor, (i) the
Agent shall have the right to receive any and all cash dividends and
amounts payable in respect of the Pledged Securities pledged by such
Pledgor and make application thereof to the Obligations in such order as
the Agent may determine, and (ii) all shares of the Pledged Securities
pledged by such Pledgor shall be registered in or transferred to the name
of the Agent or its nominee, and the Agent or its nominee may thereafter
exercise (A) all voting, corporate and other rights pertaining to the
Pledged Securities at any meeting of shareholders of each Issuer or
otherwise and (B) any and all rights of conversion, exchange, subscription
and any other rights, privileges or options pertaining to the Pledged
Securities as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the
Pledged Stock upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of
any Issuer, or upon the exercise by such Pledgor or the Agent of any
right, privilege or option pertaining to such shares of such Pledged
Stock, and in connection therewith, the right to deposit and deliver any
and all of such Pledged Stock with any committee, depositary, transfer
agent, registrar or other designated agency upon such terms and conditions
as it may determine), all without liability except to account for property
actually received by it, but the Agent shall have no duty to any Pledgor
to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(b) The rights of the Agent and the Lenders hereunder shall
not be conditioned or contingent upon the pursuit by the Agent or any
Lender of any right or remedy against any Issuer or against any other
Person which may be or become liable in respect of all or any part of the
Obligations or against any collateral security therefor, guarantee
therefor or right of offset with respect thereto. Neither the Agent nor
any Lender shall be liable for any failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so, nor
shall the Agent be under any obligation to sell or otherwise dispose of
any Collateral upon the request of any Pledgor or any other Person or to<PAGE>
6
take any other action whatsoever with regard to the Collateral or any part
thereof.
8. Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Lenders, may exercise, in addition
to all other rights and remedies granted in this Pledge Agreement and in
any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing, the Agent, without
demand of performance or other demand, presentment, protest, advertisement
or notice of any kind (except any notice required by law referred to
below) to or upon any Pledgor, any Issuer or any other Person (all and
each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate
and realize upon the Collateral, or any part thereof, and/or may forthwith
sell, assign, give option or options to purchase or otherwise dispose of
and deliver the Collateral or any part thereof (or contract to do any of
the foregoing), in one or more parcels at public or private sale or sales,
in the over-the-counter market, at any exchange, broker's board or office
of the Agent or any Lender or elsewhere upon such terms and conditions as
it may deem advisable and at such prices as it may deem best, for cash or
on credit or for future delivery without assumption of any credit risk.
The Agent or any Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in any Pledgor, which right or equity
is hereby waived and released. The Agent shall apply any Proceeds from
time to time held by it and the proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred in respect thereof or
incidental to the care or safekeeping of any of the Collateral or in any
way relating to the Collateral or the rights of the Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to the Agent, to the payment in whole or in part
of the Obligations, in such order as the Agent may elect, and only after
such application and after the payment by the Agent of any other amount
required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Agent account for the surplus, if any,
to any Pledgor. To the extent permitted by applicable law, each Pledgor
waives all claims, damages and demands it may acquire against the Agent or
any Lender arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall
be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. Each
Pledgor shall remain liable for any deficiency if the proceeds of any sale
or other disposition of the Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by
the Agent or any Lender to collect such deficiency. Each Pledgor further
waives and agrees not to assert any rights or privileges which it may
acquire under Section 9-112 of the Code.
9. Registration Rights; Private Sales. (a) If the Agent
shall determine to exercise its right to sell any or all of the Pledged
Stock pursuant to paragraph 8 hereof, and if in the opinion of the Agent
it is necessary or advisable to have the Pledged Stock, or that portion
thereof to be sold, registered under the provisions of the Securities Act<PAGE>
7
of 1933, as amended (the "Securities Act"), each Pledgor will cause each
Issuer of the Pledged Stock owned by such Pledgor to (i) execute and
deliver, and cause the directors and officers of each Issuer to execute
and deliver, all such instruments and documents, and do or cause to be
done all such other acts as may be, in the opinion of the Agent, necessary
or advisable to register such Pledged Stock, or that portion thereof to be
sold, under the provisions of the Securities Act, (ii) to use its best
efforts to cause the registration statement relating thereto to become
effective and to remain effective for a period of one year from the date
of the first public offering of such Pledged Stock, or that portion
thereof to be sold, and (iii) to make all amendments thereto and/or to the
related prospectus which, in the opinion of the Agent, are necessary or
advisable, all in conformity with the requirements of the Securities Act
and the rules and regulations of the Securities and Exchange Commission
applicable thereto. Each Pledgor agrees to cause each Issuer to use its
best efforts to comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Agent shall designate and to
make available to its security holders, as soon as practicable, an
earnings statement (which need not be audited) which will satisfy the
provisions of Section 11(a) of the Securities Act.
(b) Each Pledgor recognizes that the Agent may be unable to
effect a public sale of any or all the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or
more private sales thereof to a restricted group of purchasers which will
be obliged to agree, among other things, to acquire such securities for
their own account for investment and not with a view to the distribution
or resale thereof. Each Pledgor acknowledges and agrees that any such
private sale may result in prices and other terms less favorable than if
such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been made in a
commercially reasonable manner (even if the Agent accepts the first offer
received or offers the Collateral or any portion thereof to only one
offeree). The Agent shall be under no obligation to delay a sale of any
of the Pledged Stock for the period of time necessary to permit any Issuer
to register such securities for public sale under the Securities Act, or
under applicable state securities laws, even if such Issuer would agree to
do so.
(c) Each Pledgor further agrees to use its best efforts to do
or cause to be done all such other acts as may be necessary to make such
sale or sales of all or any portion of the Pledged Stock pursuant to this
paragraph 9 valid and binding and in compliance with any and all other
applicable Requirements of Law. Each Pledgor further agrees that a breach
of any of the covenants contained in this paragraph 9 will cause
irreparable injury to the Agent and the Lenders, that the Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this paragraph 9
shall be specifically enforceable against such Pledgor, and, to the extent
permitted by applicable law, each Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under
the Credit Agreement.<PAGE>
8
10. Limitation on Duties Regarding Collateral. The Agent's
sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of
the Code or otherwise, shall be to deal with it in the same manner as the
Agent deals with similar securities and property for its own account.
Except for the duty of the Agent described in this paragraph 10, and the
accounting by the Agent for moneys actually received by it hereunder,
neither the Agent nor any Lender shall have any duties hereunder as to any
Collateral (including, without limitation, as to ascertaining any matters
or taking any action with respect to any Collateral or as to taking any
necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral). Neither the Agent, any Lender nor
any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation
to sell or otherwise dispose of any Collateral upon the request of any
Pledgor or otherwise.
11. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable
and powers coupled with an interest.
12. Severability. Any provision of this Pledge Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
13. Paragraph Headings. The paragraph headings used in this
Pledge Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the
interpretation hereof.
14. No Waiver; Cumulative Remedies. Neither the Agent nor
any Lender shall by any act (except by a written instrument pursuant to
paragraph 15 hereof) be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to
exercise and no delay in exercising, on the part of the Agent or any
Lender, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. A waiver by the Agent or
any Lender of any right or remedy hereunder on any one occasion shall not
be construed as a bar to any right or remedy which the Agent or such
Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies
provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Pledge Agreement may be
amended, supplemented or otherwise modified except in accordance with
Section 11.1 of the Credit Agreement. All references herein to Schedule I<PAGE>
9
hereto shall be deemed to be references to Schedule I hereto as the same
shall be supplemented from time to time as agreed in writing by the
Pledgor and the Agent. This Pledge Agreement shall be binding upon the
successors and assigns of each Pledgor and shall inure to the benefit of
the Agent and the Lenders and their respective successors and assigns.
This Pledge Agreement shall be governed by, and construed and interpreted
in accordance with, the laws of the State of New York.
16. Notices. All notices, requests and demands given
hereunder shall be given in accordance with Paragraph 16 of the Subsidiary
Guarantee.
17. Irrevocable Authorization and Instruction to Issuers.
Each Pledgor hereby authorizes and instructs each Issuer to comply with
any instruction received by it from the Agent in writing that (a) states
that an Event of Default has occurred and (b) is otherwise in accordance
with the terms of this Pledge Agreement, without any other or further
instructions from such Pledgor, and such Pledgor agrees that such Issuer
shall be fully protected in so complying.
18. Authority of Agent. Each Pledgor acknowledges that the
rights and responsibilities of the Agent under this Pledge Agreement with
respect to any action taken by the Agent or the exercise or non-exercise
by the Agent of any option, voting right, request, judgment or other right
or remedy provided for herein or resulting or arising out of this Pledge
Agreement shall, as between the Agent and the Lenders, be governed by the
Credit Agreement and by such other agreements with respect thereto as may
exist from time to time among them, but, as between the Agent and such
Pledgor, the Agent shall be conclusively presumed to be acting as agent
for the Lenders with full and valid authority so to act or refrain from
acting, and neither such Pledgor nor any Issuer shall be under any
obligation, or entitlement, to make any inquiry respecting such authority.
19. Termination. This Agreement and the security interest
created hereby shall terminate when all the Obligations shall have been
paid in full, the Revolving Credit Commitments shall have been terminated
and no Letters of Credit shall be outstanding, at which time the Agent
shall, at the request and expense of the Company, reassign and deliver
(without recourse and without any representation or warranty) to the
relevant Pledgor, or such person or persons as the Company shall
designate, against receipt, such portion of the Collateral as shall not
have been sold or otherwise applied by the Agent pursuant to the terms
hereof and shall still be held by it hereunder, together with appropriate
instruments of reassignment and release; provided, that any indemnity set
forth herein shall survive any such termination. Upon any sale or other
disposition of the Collateral by any Pledgor expressly permitted by the
Credit Agreement, the Agent, at the request and expense of the Company,
shall release the Collateral being sold and shall reassign and deliver
such Collateral to the relevant Pledgor (without recourse and without any
representation or warranty), together with appropriate instruments of
reassignment and release; provided that the Company shall have delivered
to the Agent, at least ten Business Days prior to the date of the proposed
release, a written request for release describing the item of Collateral
and the terms of the sale or other disposition in reasonable detail,
including the price thereof and any expenses in connection therewith,
together with a certification by the Company stating that such transaction<PAGE>
10
is in compliance with the Credit Agreement and the other Loan Documents.
At the request and expense of the Company, a Pledgor shall be released
from its obligations hereunder in the event that all the capital stock of
such Pledgor shall be sold, transferred or otherwise disposed of in
accordance with the terms of the Credit Agreement; provided that the
Company shall have delivered to the Agent, at least ten Business Days
prior to the date of the proposed release, a written request for release
identifying the relevant Pledgor and the terms of the sale or other
disposition in reasonable detail, including the price thereof and any
expenses in connection therewith, together with a certification by the
Company stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.
IN WITNESS WHEREOF, each of the undersigned has caused this
Pledge Agreement to be duly executed and delivered as of the date first
above written.
ESSEX INTERNATIONAL, INC.
By:____________________________
Title:
ESSEX WIRE CORPORATION
By:____________________________
Title:
EXCEL WIRE AND CABLE CO.
By:____________________________
Title:
DIAMOND WIRE & CABLE CO.
By:____________________________
Title:
US SAMICA CORPORATION
By:____________________________
Title:<PAGE>
ACKNOWLEDGEMENT AND CONSENT
Each Issuer referred to in the foregoing Pledge Agreement
hereby acknowledges receipt of a copy thereof, agrees to be bound thereby
and to comply with the terms thereof insofar as such terms are applicable
to it. Each Issuer agrees to notify the Agent promptly in writing of the
occurrence of any of the events described in paragraph 5(a) of the Pledge
Agreement. Each Issuer further agrees that the terms of paragraphs 9(a)
and 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it under or pursuant to or
arising out of paragraph 9 of the Pledge Agreement.
ESSEX GROUP EXPORT INC.
By_____________________________
Title:
Address for Notices:
_______________________________
_______________________________
_______________________________
Telex: _______________________
Rapifax: _____________________<PAGE>
ACKNOWLEDGEMENT AND CONSENT
Each Issuer referred to in the foregoing Pledge Agreement
hereby acknowledges receipt of a copy thereof, agrees to be bound thereby
and to comply with the terms thereof insofar as such terms are applicable
to it. Each Issuer agrees to notify the Agent promptly in writing of the
occurrence of any of the events described in paragraph 5(a) of the Pledge
Agreement. Each Issuer further agrees that the terms of paragraphs 9(a)
and 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it under or pursuant to or
arising out of paragraph 9 of the Pledge Agreement.
DIAMOND WIRE & CABLE CO.
By_____________________________
Title:
Address for Notices:
_______________________________
_______________________________
_______________________________
Telex: _______________________
Rapifax: _____________________<PAGE>
ACKNOWLEDGEMENT AND CONSENT
Each Issuer referred to in the foregoing Pledge Agreement
hereby acknowledges receipt of a copy thereof, agrees to be bound thereby
and to comply with the terms thereof insofar as such terms are applicable
to it. Each Issuer agrees to notify the Agent promptly in writing of the
occurrence of any of the events described in paragraph 5(a) of the Pledge
Agreement. Each Issuer further agrees that the terms of paragraphs 9(a)
and 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it under or pursuant to or
arising out of paragraph 9 of the Pledge Agreement.
ESSEX INTERNATIONAL, INC.
By_____________________________
Title:
Address for Notices:
_______________________________
_______________________________
_______________________________
Telex: _______________________
Rapifax: _____________________<PAGE>
ACKNOWLEDGEMENT AND CONSENT
Each Issuer referred to in the foregoing Pledge Agreement
hereby acknowledges receipt of a copy thereof, agrees to be bound thereby
and to comply with the terms thereof insofar as such terms are applicable
to it. Each Issuer agrees to notify the Agent promptly in writing of the
occurrence of any of the events described in paragraph 5(a) of the Pledge
Agreement. Each Issuer further agrees that the terms of paragraphs 9(a)
and 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it under or pursuant to or
arising out of paragraph 9 of the Pledge Agreement.
ESSEX WIRE CORPORATION
By_____________________________
Title:
Address for Notices:
_______________________________
_______________________________
_______________________________
Telex: _______________________
Rapifax: _____________________<PAGE>
ACKNOWLEDGEMENT AND CONSENT
Each Issuer referred to in the foregoing Pledge Agreement
hereby acknowledges receipt of a copy thereof, agrees to be bound thereby
and to comply with the terms thereof insofar as such terms are applicable
to it. Each Issuer agrees to notify the Agent promptly in writing of the
occurrence of any of the events described in paragraph 5(a) of the Pledge
Agreement. Each Issuer further agrees that the terms of paragraphs 9(a)
and 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it under or pursuant to or
arising out of paragraph 9 of the Pledge Agreement.
EXCEL WIRE AND CABLE CO.
By_____________________________
Title:
Address for Notices:
_______________________________
_______________________________
_______________________________
Telex: _______________________
Rapifax: _____________________<PAGE>
ACKNOWLEDGEMENT AND CONSENT
Each Issuer referred to in the foregoing Pledge Agreement
hereby acknowledges receipt of a copy thereof, agrees to be bound thereby
and to comply with the terms thereof insofar as such terms are applicable
to it. Each Issuer agrees to notify the Agent promptly in writing of the
occurrence of any of the events described in paragraph 5(a) of the Pledge
Agreement. Each Issuer further agrees that the terms of paragraphs 9(a)
and 9(c) of the Pledge Agreement shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it under or pursuant to or
arising out of paragraph 9 of the Pledge Agreement.
US SAMICA CORPORATION
By_____________________________
Title:
Address for Notices:
_______________________________
_______________________________
_______________________________
Telex: _______________________
Rapifax: _____________________<PAGE>
SCHEDULE 1
To Pledge
Agreement
DESCRIPTION OF PLEDGED STOCK
Stock
Class of Certificate No. of
Issuer Stock No. Shares
------ -------- ----------- ------
[NAME OF ISSUER]<PAGE>
EXHIBIT E-1
COMPANY SECURITY AGREEMENT
COMPANY SECURITY AGREEMENT, dated as of April __, 1995, made
by ESSEX GROUP, INC., a Michigan corporation (the "Company"), in favor of
CHEMICAL BANK, as Agent (in such capacity, the "Agent") for the lenders
(the "Lenders") parties to the Credit Agreement, dated as of April __,
1995 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement") among the Company, BCP/Essex Holdings Inc., the
Lenders and the Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make Loans to the Company upon the terms and subject
to the conditions set forth therein;
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to issue, or to participate in, Letters of Credit for the
account of the Company upon the terms and subject to the conditions set
forth therein; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective Loans to, and to issue or participate in
Letters of Credit for the account of, the Company under the Credit
Agreement that the Company shall have executed and delivered this Security
Agreement to the Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Agent and the Lenders to enter into the Credit Agreement and to induce
the Lenders to make their respective Loans and issue or participate in
Letters of Credit under the Credit Agreement, the Company hereby agrees
with the Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms
which are defined in the Credit Agreement and used herein are so used as
so defined; the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are
used herein as so defined: Accounts, Chattel Paper, Documents, Equipment,
Farm Products, General Intangibles, Instruments, Inventory and Proceeds;
and the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Collateral" shall have the meaning assigned to it in
Section 2 of this Security Agreement, provided, that
Collateral shall not include any property which is subject to
a Lien permitted under Section 7.3 of the Credit Agreement
securing Indebtedness permitted under Section 7.2 of the
Credit Agreement to the extent that the grant of a security
interest hereunder would be prohibited by such Lien or by the
terms of such Indebtedness (but only so long as such
prohibition is in effect).<PAGE>
2
"Contracts" means all contracts, agreements, instruments
and indentures in any form, and portions thereof, to which the
Company is a party or under which the Company has any right,
title or interest or to which the Company or any property of
the Company is subject, as the same may from time to time be
amended, supplemented or otherwise modified, including,
without limitation, (a) all rights of the Company to receive
moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of the Company to damages arising
out of, or for, breach or default in respect thereof and (c)
all rights of the Company to perform and to exercise all
remedies thereunder, in each case to the extent the grant by
the Company of a security interest pursuant to this Security
Agreement in its right, title and interest in such contract,
agreement, instrument or indenture is not prohibited by such
contract, agreement, instrument or indenture without the
consent of any other party thereto, or is permitted with
consent if all necessary consents to such grant of a security
interest have been obtained from the other parties thereto (it
being understood that the foregoing shall not be deemed to
obligate the Company to obtain such consents); provided, that
the foregoing limitation shall not affect, limit, restrict or
impair the grant by the Company of a security interest
pursuant to this Security Agreement in any Account or any
money or other amounts due or to become due under any such
contract, agreement, instrument or indenture.
"Intellectual Property" means (a) all intellectual and similar
property of the Company of every kind and nature now owned or
hereafter acquired by the Company, including, without limitation,
inventions, designs, patents, copyrights, licenses and license
agreements (whether the Company is the licensor or the licensee
under such agreements), trademarks, trade names and other business
names, logos, trade secrets, confidential or proprietary technical
and business information, know-how, show-how or other data or
information, software and databases and all embodiments or fixations
thereof and related documentation, registrations, applications and
franchises, and all additions, improvements and accessions to, and
books and records describing or used in connection with, any of the
foregoing and including, without limitation, any thereof referred to
in Schedule I hereto and (b) all renewals thereof. Notwithstanding
the foregoing, licenses and license agreements as to which the
Company is the licensee shall constitute "Intellectual Property" for
the purposes of this Agreement only to the extent the grant by the
Company of a security interest pursuant to this Security Agreement
in its right, title and interest in such license or license
agreement is not prohibited by such license or license agreement
without the consent of any other party thereto, or is permitted with
consent if all necessary consents to such grant of a security
interest have been obtained from the other parties thereto (it being
understood that the foregoing shall not be deemed to obligate the
Company to obtain such consents); provided, that the foregoing
limitation shall not affect, limit, restrict or impair the grant by
the Company of a security interest pursuant to this Security
Agreement in any Account or any money or other amounts due or to
become due under any such license or license agreement.<PAGE>
3
"Obligations" means the unpaid principal amount of and
interest on (including, without limitation, interest accruing
after the maturity of the Loans and Reimbursement Obligations
and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Company,
whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding) the Loans and all
other obligations and liabilities of the Company to the Agent
and the Lenders (or, in the case of any Interest Rate
Protection Agreement, any Affiliate of any Lender), whether
direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred, which may arise
under, out of, or in connection with, the Credit Agreement,
any Revolving Credit Notes, any other Loan Document, the
Letters of Credit or this Security Agreement and any other
document made, delivered or given in connection therewith or
herewith, whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all reasonable fees and
disbursements of counsel to the Agent and the Lenders that are
required to be paid by the Company pursuant to the terms of
the Credit Agreement) or otherwise.
"Security Agreement" means this Security Agreement, as
amended, supplemented or otherwise modified from time to time.
"Vehicles" means all cars, trucks, trailers,
construction and earth moving equipment and other vehicles
covered by a certificate of title law of any state and all
tires and other appurtenances to any of the foregoing.
2. Grant of Security Interest. As collateral security for
the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations, the
Company hereby grants to the Agent for the ratable benefit of the Lenders
a security interest in all of the following property now owned or at any
time hereafter acquired by the Company or in which the Company now has or
at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Intellectual Property;<PAGE>
4
(ix) all Inventory; and
(x) to the extent not otherwise included, all
Proceeds and products of any and all of the foregoing.
3. Rights of Agent and Lenders; Limitations on Agent's and
Lenders' Obligations; Limitation on Agent's and Lenders' Interest in
Tolled Inventory.
(a) Company Remains Liable under Accounts and Contracts.
Anything herein to the contrary notwithstanding, the Company shall remain
liable under each of the Accounts and Contracts to observe and perform all
the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
to each such Account and in accordance with and pursuant to the terms and
provisions of each such Contract. Neither the Agent nor any Lender shall
have any obligation or liability under any Account (or any agreement
giving rise thereto) or under any Contract by reason of or arising out of
this Security Agreement or the receipt by the Agent or any such Lender of
any payment relating to such Account or Contract pursuant hereto, nor
shall the Agent or any Lender be obligated in any manner to perform any of
the obligations of the Company under or pursuant to any Account (or any
agreement giving rise thereto) or under or pursuant to any Contract, to
make any payment, to make any inquiry as to the nature or the sufficiency
of any payment received by it or as to the sufficiency of any performance
by any party under any Account (or any agreement giving rise thereto) or
under any Contract, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or
times.
(b) Notice to Account Debtors and Contracting Parties. Upon
the request of the Agent at any time after the occurrence and during the
continuance of an Event of Default, the Company shall notify account
debtors on the Accounts and parties to the Contracts that the Accounts and
the Contracts have been assigned to the Agent for the ratable benefit of
the Lenders and that payments in respect thereof shall be made directly to
the Agent. Upon the occurrence and during the continuance of an Event of
Default, the Agent may in its own name or in the name of others
communicate with account debtors on the Accounts and parties to the
Contracts to verify with them to its satisfaction the existence, amount
and terms of any Accounts or Contracts.
(c) Analysis of Accounts. The Agent shall have the right to
make test verifications of the Accounts in any manner and through any
medium that it reasonably considers advisable at any reasonable time and
as often as may reasonably be desired, and the Company shall furnish all
such assistance and information as the Agent may reasonably require in
connection therewith. If an Event of Default shall have occurred and be
continuing, then upon the Agent's request and at the expense of the
Company, the Company shall cause independent public accountants or others
satisfactory to the Agent to furnish to the Agent reports showing
reconciliations, aging and test verifications of, and trial balances for,
the Accounts.<PAGE>
5
(d) Collections on Accounts. The Agent hereby authorizes the
Company to collect the Accounts, provided, that the Agent may curtail or
terminate said authority at any time upon the occurrence and during the
continuance of an Event of Default. If an Event of Default shall have
occurred and be continuing, any payments of Accounts, when collected by
the Company, shall be forthwith (and, in any event, within two Business
Days) deposited by the Company in the exact form received, duly endorsed
by the Company to the Agent if required, in a special collateral account
maintained by the Agent, subject to withdrawal by the Agent for the
account of the Agent and the Lenders only, as hereinafter provided, and,
until so turned over, shall be held by the Company in trust for the Agent
and the Lenders, segregated from other funds of the Company. Each deposit
of any such Proceeds shall be accompanied by a report identifying in
reasonable detail the nature and source of the payments included in the
deposit. All Proceeds constituting collections of Accounts while held by
the Agent (or by the Company in trust for the Agent and the Lenders) shall
continue to be collateral security for all of the Obligations and shall
not constitute payment thereof until applied as hereinafter provided. At
any time at the Agent's election, the Agent shall apply all or any part of
the funds on deposit in said special collateral account on account of the
Obligations in such order as the Agent may elect, and any part of such
funds which the Agent elects not so to apply and deems not required as
collateral security for the Obligations shall be paid over from time to
time by the Agent to the Company or to whomsoever may be lawfully entitled
to receive the same. At the Agent's reasonable request, the Company shall
deliver to, or make available for review by, the Agent all original and
other documents evidencing, and relating to, the agreements and
transactions which gave rise to the Accounts, including, without
limitation, all original orders, invoices and shipping receipts.
(e) Tolled Inventory. If any third Person (a "Tolling
Party") delivers possession of, but not title to, any raw materials, work-
in-process or other goods ("Tolled Inventory") pursuant to a bailment
arrangement with the Company under which such Tolled Inventory is to be
processed, improved or otherwise altered by the Company, the Agent agrees
and acknowledges that any security interest in or lien upon Inventory
created hereby does not apply to any Tolled Inventory which is owned by
the Tolling Party (rather than owned by the Company subject to a retention
of title by the Tolling Party which has the effect of creating a security
interest in favor of the Tolling Party which remains unperfected).
Notwithstanding anything in this Security Agreement to the contrary, the
Company shall be entitled to follow its normal tolling practices and may
deliver Tolled Inventory to or for the account of any Tolling Party free
of the lien of this Security Agreement.
4. Representations and Warranties . The Company hereby
represents and warrants that:
(a) Title; No Other Liens. Except for the Lien granted
to the Agent for the ratable benefit of the Lenders pursuant
to this Security Agreement and the other Liens permitted to
exist on the Collateral pursuant to the Credit Agreement, the
Company owns each item of the Collateral free and clear of any
and all Liens or claims of others. No security agreement,
financing statement or other public notice with respect to all
or any part of the Collateral is on file or of record in any<PAGE>
6
public office that would serve to grant the Person who filed
such security agreement, financing statement or other public
notice a perfected security interest in or lien on such
Collateral, except such as may have been filed in favor of the
Agent, for the ratable benefit of the Lenders, pursuant to
this Security Agreement or as may be permitted pursuant to the
Credit Agreement.
(b) Perfected First Priority Liens. Upon filing of
financing statements in the relevant offices identified in
Schedule 4.20(b) to the Credit Agreement, the Liens granted
pursuant to this Security Agreement constitute perfected Liens
on the Collateral in favor of the Agent, for the ratable
benefit of the Lenders, which are prior to all other Liens on
the Collateral created by the Company and in existence on the
date hereof (except other Liens expressly permitted by the
Credit Agreement) and which are enforceable as such against
all creditors of and purchasers from the Company and against
any owner or purchaser of the real property where any of the
Equipment is located and any present or future creditor
obtaining a Lien on such real property, except to the extent
that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws generally affecting
creditors' rights and by general principles of equity
(regardless of whether enforcement is sought in equity or at
law).
(c) Accounts. The amount represented by the Company to
the Lenders from time to time as owing by each account debtor
or by all account debtors in respect of the Accounts will at
such time be the correct amount actually owing by such account
debtor or debtors thereunder. Except as otherwise provided in
Section 5(a) hereof, no amount payable to the Company under or
in connection with any Account is evidenced by any Instrument
or Chattel Paper which has not been delivered to the Agent.
The place where the Company keeps its records concerning the
Accounts is 1510 Wall Street and 1710 Wall Street, Fort Wayne,
Indiana 46802.
(d) Inventory and Equipment. The Inventory and the
Equipment are kept at the locations listed on Schedule II
hereto or such other location specified pursuant to Section
5(n).
(e) Chief Executive Office. The Company's chief
executive office and chief place of business is located at
1601 Wall Street, Fort Wayne, Indiana 46802, or such other
location specified pursuant to Section 5(n).
(f) Farm Products; Vehicles. None of the Collateral
constitutes, or is the Proceeds of, Farm Products. No Vehicle
owned by the Company has a book value in excess of $50,000,
other than Vehicles as to which the Company has taken steps of
the type described in clauses (i) and (ii) of Section 6.10(a)<PAGE>
7
of the Credit Agreement (to the extent, and only to the
extent, reasonably requested by the Agent).
(g) Intellectual Property. Set forth on Schedule I is
a complete and accurate list of all patents, trademarks, trade
names, service marks and copyrights, and all applications
therefor and licenses thereof, of the Company on the Effective
Date, showing as of the Effective Date the jurisdiction in
which registered, the registration number, the date of
registration and the expiration date. The Company owns, or is
licensed to use, all trademarks, trade names, copyrights,
technology, know-how and processes necessary for the conduct
of its business as currently conducted except for those the
failure to own or license which could not reasonably be
expected to materially impair the value of the Collateral. No
claim has been asserted and is pending by any Person
challenging or questioning the use of any trademark, trade
name, copyright, technology, know-how or process necessary for
the conduct of its business as currently conducted, nor does
Company know of any valid basis for any such claim, the use of
the same by the Company does not infringe on the rights of any
Person and, to the knowledge of the Company, no Intellectual
Property has been infringed, misappropriated or diluted by any
other Person except for such claims, infringements,
misappropriations and dilutions that, in the aggregate, could
not reasonably be expected to materially impair the value of
the Collateral.
5. Covenants. The Company covenants and agrees with the
Agent and the Lenders that, from and after the date of this Security
Agreement until the Obligations are paid in full, the Revolving Credit
Commitments are terminated and no Letters of Credit shall be outstanding:
(a) Further Documentation; Pledge of Instruments and
Chattel Paper. At any time and from time to time, upon the
written request of the Agent, and at the sole expense of the
Company, the Company will promptly and duly execute and
deliver such further instruments and documents and take such
further action as the Agent may reasonably request for the
purpose of obtaining or preserving the full benefits of this
Security Agreement and of the rights and powers herein
granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform
Commercial Code in effect in any jurisdiction with respect to
the Liens created hereby. The Company also hereby authorizes
the Agent to file any such financing or continuation statement
without the signature of the Company to the extent permitted
by applicable law. A carbon, photographic or other
reproduction of this Security Agreement shall be sufficient as
a financing statement for filing in any jurisdiction. If any
amount payable under or in connection with any of the
Collateral shall be or become evidenced by any Instrument or
Chattel Paper having a principal amount in excess of $25,000,
such Instrument or Chattel Paper shall be immediately
delivered to the Agent, duly endorsed in a manner satisfactory
to the Agent, to be held as Collateral pursuant to this<PAGE>
8
Security Agreement; provided that in no event shall the
aggregate principal amount of Instruments and Chattel Paper
evidencing amounts payable under or in connection with any
Collateral (as such terms are defined in the Company Security
Agreement or the Subsidiary Security Agreement, as the case
may be) which have not been delivered to the Agent pursuant to
such Security Agreements exceed $100,000 at any one time
outstanding.
(b) Indemnification. The Company agrees to pay, and to
save the Agent and the Lenders harmless from, any and all
liabilities, costs and expenses (including, without
limitation, reasonable legal fees and expenses) (i) with
respect to, or resulting from any delay in paying, any and all
excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the Collateral
or (ii) with respect to, or resulting from, any delay in
complying with any Requirement of Law applicable to any of the
Collateral. In any suit, proceeding or action brought by the
Agent in accordance with the terms hereof under any Account or
Contract for any sum owing thereunder, or to enforce any
provisions of any Account or Contract, the Company will save,
indemnify and keep harmless the Agent and each Lender from and
against all expense, loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor
thereunder, arising out of a breach by the Company of any
obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of
such account debtor or obligor or its successors from the
Company.
(c) Maintenance of Records. The Company will keep and
maintain at its own cost and expense satisfactory and complete
records of the Collateral, including, without limitation, a
record of all payments received and all credits granted with
respect to the Accounts. The Company will mark its books and
records pertaining to the Collateral to evidence this Security
Agreement and the security interests granted hereby. For the
Agent's and the Lenders' further security, the Agent, for the
ratable benefit of the Lenders, shall have a security interest
in all of the Company's books and records pertaining to the
Collateral.
(d) Right of Inspection. The Agent shall at any
reasonable time or times during normal business hours have
access to all the books, correspondence and records of the
Company, and the Agent and its representatives may examine the
same, take extracts therefrom and make photocopies thereof,
and the Company agrees to render to the Agent, at the
Company's cost and expense to the extent expressly provided in
Section 11.5 of the Credit Agreement, such clerical and other
assistance as may be reasonably requested with regard thereto.
The Agent and its representatives shall at any reasonable time
or times during normal business hours also have the right to
enter into and upon any premises where any of the Inventory or<PAGE>
9
Equipment is located (or, in the case of any such premises not
owned or leased by the Company or any of its Subsidiaries, the
Company shall use its best efforts to grant to the Agent such
right) for the purpose of inspecting the same, observing its
use or otherwise protecting the Agent's and the Lenders'
interests therein.
(e) Compliance with Laws, etc. The Company will comply
in all material respects with all Requirements of Law
applicable to the Collateral or any part thereof or to the
operation of the Company's business, except where failure to
satisfy the foregoing requirement could not reasonably be
expected to have a material adverse effect on the value of the
Collateral taken as a whole or, with respect to any material
portion of the Collateral, have a material adverse effect on
the perfection or priority of the Liens contemplated hereby
relating to such Collateral; provided, however, that the
Company may contest any Requirement of Law in any reasonable
manner which shall not, in the sole opinion of the Agent,
adversely affect the Agent's or the Lenders' rights or the
priority of their Liens on the Collateral.
(f) Limitation on Liens on Collateral. The Company
will not create, incur or permit to exist, will defend the
Collateral against, and will take such other action as is
necessary to remove, any Lien or claim on or to the
Collateral, other than the Liens created hereby and other than
as permitted pursuant to the Credit Agreement, and will defend
the right, title and interest of the Agent and the Lenders in
and to any of the Collateral against the claims and demands of
all Persons whomsoever.
(g) Limitations on Dispositions of Collateral. The
Company will not sell, transfer, lease or otherwise dispose of
any of the Collateral, or attempt, offer or contract to do so,
except as expressly permitted by the Credit Agreement.
(h) Limitations on Modifications, Waivers, Extensions
of Agreements Giving Rise to Accounts. The Company will not
(i) except in the ordinary course of business consistent with
historical practices as of the date hereof, amend, modify,
terminate or waive any provision of any agreement giving rise
to an Account in any manner which could reasonably be expected
to materially adversely affect the value of Collateral taken
as a whole, (ii) fail to exercise promptly and diligently each
and every material right which it may have under each
agreement giving rise to an Account (other than any right of
termination), except in a manner consistent with the ordinary
and customary conduct of business as generally conducted by
the Company over a period of time or (iii) fail to deliver to
the Agent a copy of each material demand, notice or document
received by it relating in any way to any material agreement
giving rise to an Account which affects the interests of the
Agent and the Lenders hereunder.<PAGE>
10
(i) Limitations on Discounts, Compromises, Extensions
of Accounts. Other than in the ordinary course of business as
generally conducted by the Company over a period of time, the
Company will not, without the prior written consent of the
Agent, grant any extension of the time of payment of any of
the Accounts, compromise, compound or settle the same for less
than the full amount thereof, release, wholly or partially,
any Person liable for the payment thereof, or allow any credit
or discount whatsoever thereon.
(j) Maintenance of Equipment. The Company will
maintain each item of Equipment in good operating condition,
ordinary wear and tear and immaterial impairments of value and
damage by the elements excepted, and will provide all
maintenance, service and repairs necessary for such purpose.
(k) Maintenance of Insurance. The Company will
maintain, with financially sound and reputable companies,
insurance policies (i) insuring the Inventory and Equipment
against loss by fire, explosion, theft and such other
casualties as are usually insured against by companies engaged
in the same or similar business and (ii) insuring the Company
and the Agent, for the benefit of the Lenders, against
liability for personal injury and property damage relating to
such Inventory and Equipment, such policies to be in such form
and amounts and having such coverage as may be reasonably
satisfactory to the Agent, such losses of $1 million or more
shall be payable to the Company and the Agent, for the benefit
of the Lenders, as their respective interests may appear. All
such insurance shall (i) to the extent requested by the Agent,
provide for a 30-day standard cancellation notice, (ii) name
the Agent, for the benefit of the Lenders, as an insured party
and as loss payee and (iii) be reasonably satisfactory in all
other respects to the Agent. If reasonably requested by the
Agent, the Company shall deliver to the Agent and the Lenders
a report of a reputable insurance broker with respect to such
insurance, and such supplemental reports with respect thereto
as the Agent may from time to time reasonably request.
(l) Further Identification of Collateral. The Company
will furnish to the Agent and the Lenders from time to time
statements and schedules further identifying and describing
the Collateral and such other reports in connection with the
Collateral as the Agent may reasonably request, all in
reasonable detail.
(m) Notices. The Company will advise the Agent and the
Lenders promptly, in reasonable detail, at their respective
addresses set forth in the Credit Agreement, (i) of any Lien
(other than Liens created hereby or permitted under the Credit
Agreement) on, or claim asserted against, any of the
Collateral and (ii) of the occurrence of any other event which
could reasonably be expected to have a material adverse effect
on the aggregate value of the Collateral taken as a whole or,
with respect to any material portion of the Collateral, have a<PAGE>
11
material adverse effect on the perfection or priority of the
Liens contemplated hereby relating to such Collateral.
(n) Changes in Locations, Name, etc. The Company will
not (i) change the location of its chief executive
office/chief place of business from that specified in Section
4(e) hereof or remove its books and records from the location
specified in Section 4(c) hereof, (ii) permit any of the
Inventory or Equipment to be kept at a location other than
those listed on Schedule II hereto or (iii) change its name,
identity or corporate structure to such an extent that any
financing statement filed by the Agent in connection with this
Security Agreement would become seriously misleading, unless
(x) the Company shall have given the Agent at least 30 days'
prior written notice thereof (in the case of clauses (i) and
(iii) above) or at least one Business Day's prior written
notice thereof (in the case of clause (ii) above) and (y) the
Company shall have taken, and shall continue to take, all
steps necessary to ensure that the Agent, for the benefit of
the Lenders, shall have, and shall continue to have, a fully
perfected first priority security interest in the Collateral
(subject to Liens permitted by the Credit Agreement)
notwithstanding such actions.
(o) Intellectual Property. The Company will preserve all of
its registered trademarks, trade names, service marks and other
Intellectual Property, the non-preservation of which would have a
reasonable likelihood of materially impairing the value of the
Collateral taken as a whole. Whenever the Company, either by itself
or through any agent, employee, licensee or designee, shall file an
application for the registration of any patent or trademark with the
United States Patent and Trademark Office or any similar office or
agency in any other country or any political subdivision thereof,
the Company shall report such filing to the Agent and the Lenders
within five Business Days after the last day of the fiscal quarter
in which such filing occurs. Upon request of the Agent, the Company
shall execute and deliver any and all agreements, instruments,
documents, and papers as the Agent may reasonably request to
evidence the Agent's and the Lenders' security interest in any
patent or trademark and the goodwill and General Intangibles of the
Company relating thereto or represented thereby, and the Company
hereby constitutes the Agent its attorney-in-fact to execute and
file all such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power being
coupled with an interest is irrevocable until the Obligations are
paid in full and the Revolving Credit Commitments are terminated.
In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party in any material respect,
the Company shall promptly notify the Agent after it learns thereof.
(p) Government Obligors. If at any time the aggregate amount
owing on (i) all Accounts and Contracts as to which a Governmental
Authority is an obligor and (ii) all "Accounts" and "Contracts"
under and as defined in the Subsidiary Security Agreement as to
which a Governmental Authority is an obligor (collectively, "Total
Government Accounts and Contracts"), exceeds 5% of the aggregate<PAGE>
12
amount owing on (i) all Accounts and Contracts and (ii) all
"Accounts" and "Contracts" under and as defined in the Subsidiary
Security Agreement ( collectively, "Total Accounts and Contracts"),
the Company shall, if requested by the Agent, at the Company's sole
cost and expense, from and after the date on which such aggregate
amount first exceeds such percentage (regardless of whether the
aggregate amount owing on the Total Government Accounts and
Contracts shall equal less than 5% of the aggregate amount owing on
the Total Accounts and Contracts at any subsequent time), deliver to
the Agent such assignments, notices of assignment and other
documents or information as shall be necessary or otherwise
requested by the Agent to permit the assignment hereunder of all
Accounts and Contracts as to which a Governmental Authority is an
obligor pursuant to all applicable Requirements of Law (including,
without limitation, the Assignment of Claims Act of 1940, as
amended).
6. Agent's Appointment as Attorney-in-Fact.
(a) Powers. The Company hereby irrevocably constitutes and
appoints the Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Company and
in the name of the Company or in its own name, from time to time in the
Agent's discretion, for the purpose of carrying out the terms of this
Security Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or desirable
to accomplish the purposes of this Security Agreement, and, without
limiting the generality of the foregoing, the Company hereby gives the
Agent the power and right, on behalf of the Company, without notice to or
assent by the Company, to do the following:
(i) at any time when any Event of Default shall have
occurred and is continuing, in the name of the Company or its
own name, or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any Account,
Instrument, General Intangible or Contract or with respect to
any other Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Agent for the purpose of
collecting any and all such moneys due under any Account,
Instrument, General Intangible or Contract or with respect to
any other Collateral whenever payable;
(ii) in each case to the extent not paid, discharged
or effected by the Company as required by this Security
Agreement or the Credit Agreement, to pay or discharge taxes
and Liens levied or placed on or threatened against the
Collateral, to effect any repairs or any insurance called for
by the terms of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof; and
(iii) upon the occurrence and during the continuance of
any Event of Default, (A) to direct any party liable for any
payment under any of the Collateral to make payment of any and<PAGE>
13
all moneys due or to become due thereunder directly to the
Agent or as the Agent shall direct; (B) to ask or demand for,
collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any
time in respect of or arising out of any Collateral; (C) to
sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (D) to
commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any other
right in respect of any Collateral; (E) to defend any suit,
action or proceeding brought against the Company with respect
to any Collateral; (F) to settle, compromise or adjust any
suit, action or proceeding described in clause (E) above and,
in connection therewith, to give such discharges or releases
as the Agent may deem appropriate; (G) to assign any
Intellectual Property (along with the goodwill of the business
to which any such Intellectual Property pertains), throughout
the world for such term or terms, on such conditions, and in
such manner, as the Agent shall in its sole discretion
determine; and (H) generally, to sell, transfer, pledge and
make any agreement with respect to or otherwise deal with any
of the Collateral as fully and completely as though the Agent
were the absolute owner thereof for all purposes, and to do,
at the Agent's option and the Company's expense, at any time,
or from time to time, all acts and things which the Agent
deems necessary to protect, preserve or realize upon the
Collateral and the Agent's and the Lenders' Liens thereon and
to effect the intent of this Security Agreement, all as fully
and effectively as the Company might do.
The Company hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
(b) Other Powers. The Company also authorizes the Agent, at
any time and from time to time, to execute, in connection with any sale
provided for in Section 9 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
(c) No Duty on Agent or Lenders' Part. The powers conferred
on the Agent and the Lenders hereunder are solely to protect the Agent's
and the Lenders' interests in the Collateral and shall not impose any duty
upon the Agent or any Lender to exercise any such powers. Except for the
duty of the Agent described in Section 10 hereof, and the accounting by
the Agent for moneys actually received by it hereunder, neither the Agent
nor any Lender shall have any duties hereunder as to any Collateral
(including, without limitation, as to ascertaining any matters or taking
any action with respect to any Collateral or as to taking any necessary
steps to preserve rights against prior parties or any other rights
pertaining to Collateral). The Agent and the Lenders shall be accountable
only for amounts that they actually receive as a result of the exercise of
the powers conferred on the Agent and the Lenders hereunder, and neither
they nor any of their officers, directors, employees or agents shall be<PAGE>
14
responsible to the Company for any act or failure to act hereunder, except
for their own gross negligence or willful misconduct.
7. Performance by Agent of Company's Obligations. If the
Company fails to perform or comply with any of its agreements contained
herein and the Agent, as provided for by the terms of this Security
Agreement, shall itself perform or comply, or otherwise cause performance
or compliance, with such agreement, the expenses of the Agent incurred in
connection with such performance or compliance, together with interest
thereon at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin plus 2%, shall be payable by the Company to the Agent on
demand and shall constitute Obligations secured hereby. The Agent agrees
to notify the Company promptly after incurring any expenses pursuant to
this Section 7, provided that the failure of the Agent to so notify the
Company shall in no way impair the rights of the Agent under this Section
7.
8. Proceeds. In addition to the rights of the Agent and the
Lenders specified in Section 3(d) hereof with respect to payments of
Accounts, it is agreed that if an Event of Default shall occur and be
continuing (a) the Agent may require, by notice to the Company, all
Proceeds received by the Company consisting of cash, checks and other
near-cash items to be held by the Company in trust for the Agent and the
Lenders, segregated from other funds of the Company, and shall, forthwith
upon receipt by the Company, be turned over to the Agent in the exact form
received by the Company (duly endorsed by the Company to the Agent, if
required), and (b) any and all such Proceeds received by the Agent
(whether from the Company or otherwise) may, in the sole discretion of the
Agent, be held by the Agent for the ratable benefit of the Lenders as
collateral security for, and/or then or at any time thereafter may be
applied by the Agent against, the Obligations (whether matured or
unmatured), such application to be in such order as the Agent shall elect.
Any balance of such Proceeds remaining after the Obligations shall have
been paid in full, the Revolving Credit Commitments shall have been
terminated and no Letters of Credit shall be outstanding shall be paid
over to the Company or to whomsoever may be lawfully entitled to receive
the same.
9. Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Lenders, may exercise, in addition
to all other rights and remedies granted to them in this Security
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party
under the Code. Without limiting the generality of the foregoing, the
Agent, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required
by law referred to below) to or upon the Company or any other Person (all
and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate
and realize upon the Collateral, or any part thereof, and/or may forthwith
sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to
do any of the foregoing), in one or more parcels at public or private sale
or sales, at any exchange, broker's board or office of the Agent or any
Lender or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or<PAGE>
15
for future delivery without assumption of any credit risk. The Agent or
any Lender shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in the Company, which right or equity is
hereby waived and released. The Company further agrees, at the Agent's
request, to assemble the Collateral and make it available to the Agent at
places which the Agent shall reasonably select, whether at the Company's
premises or elsewhere. The Agent shall apply the proceeds of any such
collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein
or incidental to the care or safekeeping of any of the Collateral or in
any way relating to the Collateral or the rights of the Agent and the
Lenders hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the
Obligations, in such order as the Agent may elect, and only after such
application and after the payment by the Agent of any other amount
required by any provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Agent account for the surplus, if any,
to the Company. To the extent permitted by applicable law, the Company
waives all claims, damages and demands it may acquire against the Agent or
any Lender arising out of the exercise by them of any rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall
be required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. The Company
shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by
the Agent or any Lender to collect such deficiency.
10. Limitation on Duties Regarding Preservation of
Collateral. The Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Code or otherwise, shall be to deal with it in
the same manner as the Agent deals with similar property for its own
account. Neither the Agent, any Lender, nor any of their respective
directors, officers, employees or agents shall be liable for failure to
demand, collect or realize upon all or any part of the Collateral or for
any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of the Company or
otherwise.
11. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable
and powers coupled with an interest.
12. Severability. Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
13. Paragraph Headings. The paragraph headings used in this
Security Agreement are for convenience of reference only and are not to<PAGE>
16
affect the construction hereof or be taken into consideration in the
interpretation hereof.
14. No Waiver; Cumulative Remedies. Neither the Agent nor
any Lender shall by any act (except by a written instrument pursuant to
Section 15 hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise and no delay in exercising, on
the part of the Agent or any Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Agent or such Lender would otherwise have on
any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive
of any rights or remedies provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Security Agreement may be
waived, amended, supplemented or otherwise modified except in accordance
with Section 11.1 of the Credit Agreement. This Security Agreement shall
be binding upon the successors and assigns of the Company and shall inure
to the benefit of the Agent and the Lenders and their respective
successors and assigns. This Security Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the State of New
York.
16. Notices. All notices, requests and demands hereunder
shall be given in accordance with Section 11.2 of the Credit Agreement.
17. Authority of Agent. The Company acknowledges that the
rights and responsibilities of the Agent under this Security Agreement
with respect to any action taken by the Agent or the exercise or non-
exercise by the Agent of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Security Agreement shall, as between the Agent and the Lenders, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Agent and the Company, the Agent shall be conclusively presumed to be
acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and the Company shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
18. Termination. This Agreement and the security interest
created hereby shall terminate when all the Obligations have been paid in
full and the Revolving Credit Commitments shall have been terminated, at
which time the Agent shall execute and deliver to the Company, or such
person or persons as the Company shall reasonably designate, all Uniform
Commercial Code termination statements and similar documents prepared by
the Company at its expense which the Company shall reasonably request to
evidence such termination; provided, that any indemnity set forth herein
shall survive any such termination. Upon any sale or other disposition of
any item of Collateral by the Company expressly permitted by the Credit<PAGE>
17
Agreement (other than the sales of Inventory in the ordinary course of
business), the Agent, at the request and expense of the Company, shall
release the Collateral being sold and shall reassign and deliver such
Collateral to the Company (without recourse and without any representation
or warranty), together with appropriate instruments of reassignment and
release; provided that (i) at the time of such request and such release no
Event of Default shall have occurred and be continuing and (ii) the
Company shall have delivered to the Agent at least ten Business Days prior
to the date of the proposed release, a written request for release
describing the item of Collateral and the terms of the sale or other
disposition in reasonable detail, including the price thereof and any
expenses in connection therewith, together with a certification by the
Company stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents. Any execution and delivery of
termination statements or documents pursuant to this Section 18 shall be
without recourse to or representation or warranty by the Agent or any
Lender.
IN WITNESS WHEREOF, the Company has caused this Security
Agreement to be duly executed and delivered as of the date first above
written.
ESSEX GROUP, INC.
By:____________________________
Title:<PAGE>
SCHEDULE I
to Security
Agreement
DESCRIPTION OF INTELLECTUAL PROPERTY
Registration Date of Expiration
Property Jurisdiction Number Registration Date
-------- ------------ ------------ ------------ ----------<PAGE>
SCHEDULE II
to Security
Agreement
LOCATION OF INVENTORY AND EQUIPMENT<PAGE>
EXHIBIT E-2
HOLDINGS SECURITY AGREEMENT
HOLDINGS SECURITY AGREEMENT, dated as of April __, 1995, made
by BCP/ESSEX HOLDINGS INC., a Delaware corporation ("Holdings"), in favor
of CHEMICAL BANK, as Agent (in such capacity, the "Agent") for the lenders
(the "Lenders") parties to the Credit Agreement, dated as of April __,
1995 (as amended, supplemented or otherwise modified from time to time,
the "Credit Agreement") among Essex Group, Inc. (the "Company"), Holdings,
the Lenders and the Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make Loans to the Company upon the terms and subject
to the conditions set forth therein;
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to issue, or to participate in, Letters of Credit for the
account of the Company upon the terms and subject to the conditions set
forth therein;
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective Loans to, and to issue or participate in
Letters of Credit for the account of, the Company under the Credit
Agreement that Holdings shall have executed and delivered this Security
Agreement to the Agent for the ratable benefit of the Lenders; and
WHEREAS, the Company is a wholly owned direct subsidiary of
Holdings;
NOW, THEREFORE, in consideration of the premises and to induce
the Agent and the Lenders to enter into the Credit Agreement and to induce
the Lenders to make their respective Loans and issue or participate in
Letters of Credit under the Credit Agreement, Holdings hereby agrees with
the Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms
which are defined in the Credit Agreement and used herein are so used as
so defined; the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are
used herein as so defined: Accounts, Chattel Paper, Documents, Equipment,
Farm Products, General Intangibles, Instruments, Inventory and Proceeds;
and the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Collateral" shall have the meaning assigned to it in
Section 2 of this Security Agreement; provided, that
Collateral shall not include any property which is subject to
a Lien permitted under Section 7.3 of the Credit Agreement
securing Indebtedness permitted under Section 7.2 of the
Credit Agreement to the extent that the grant of a security
interest hereunder would be prohibited by such Lien or by the<PAGE>
2
terms of such Indebtedness (but only so long as such
prohibition is in effect).
"Contracts" means all contracts, agreements, instruments
and indentures in any form, and portions thereof, to which
Holdings is a party or under which Holdings has any right,
title or interest or to which Holdings or any property of
Holdings is subject, as the same may from time to time be
amended, supplemented or otherwise modified, including,
without limitation, (a) all rights of Holdings to receive
moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of Holdings to damages arising out
of, or for, breach or default in respect thereof and (c) all
rights of Holdings to perform and to exercise all remedies
thereunder, in each case to the extent the grant by Holdings
of a security interest pursuant to this Security Agreement in
its right, title and interest in such contract, agreement,
instrument or indenture is not prohibited by such contract,
agreement, instrument or indenture without the consent of any
other party thereto, or is permitted with consent if all
necessary consents to such grant of a security interest have
been obtained from the other parties thereto (it being
understood that the foregoing shall not be deemed to obligate
Holdings to obtain such consents); provided, that the
foregoing limitation shall not affect, limit, restrict or
impair the grant by Holdings of a security interest pursuant
to this Security Agreement in any Account or any money or
other amounts due or to become due under any such contract,
agreement, instrument or indenture.
"Intellectual Property" means (a) all intellectual and similar
property of Holdings of every kind and nature now owned or hereafter
acquired by Holdings, including, without limitation, inventions,
designs, patents, copyrights, licenses and license agreements
(whether Holdings is the licensor or the licensee under such
agreements), trademarks, trade names and other business names,
logos, trade secrets, confidential or proprietary technical and
business information, know-how, show-how or other data or
information, software and databases and all embodiments or fixations
thereof and related documentation, registrations, applications and
franchises, and all additions, improvements and accessions to, and
books and records describing or used in connection with, any of the
foregoing, including, without limitation, any thereof referred to in
Schedule I hereto and (b) all renewals thereof. Notwithstanding the
foregoing, licenses and license agreements as to which Holdings is
the licensee shall constitute "Intellectual Property" for the
purposes of this Agreement only to the extent the grant by Holdings
of a security interest pursuant to this Security Agreement in its
right, title and interest in such license or license agreement is
not prohibited by such license or license agreement without the
consent of any other party thereto, or is permitted with consent if
all necessary consents to such grant of a security interest have
been obtained from the other parties thereto (it being understood
that the foregoing shall not be deemed to obligate Holdings to
obtain such consents); provided, that the foregoing limitation shall
not affect, limit, restrict or impair the grant by Holdings of a<PAGE>
3
security interest pursuant to this Security Agreement in any Account
or any money or other amounts due or to become due under any such
license or license agreement.
"Obligations" means all obligations, liabilities and
indebtedness of Holdings under the guarantee contained in
Section 10 of the Credit Agreement.
"Security Agreement" means this Security Agreement, as
amended, supplemented or otherwise modified from time to time.
"Vehicles" means all cars, trucks, trailers,
construction and earth moving equipment and other vehicles
covered by a certificate of title law of any state and all
tires and other appurtenances to any of the foregoing.
2. Grant of Security Interest. As collateral security for
the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations,
Holdings hereby grants to the Agent for the ratable benefit of the Lenders
a security interest in all of the following property now owned or at any
time hereafter acquired by Holdings or in which Holdings now has or at any
time in the future may acquire any right, title or interest (collectively,
the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Intellectual Property;
(ix) all Inventory; and
(x) to the extent not otherwise included,
all Proceeds and products of any and all of the foregoing.
3. Rights of Agent and Lenders; Limitations on Agent's and
Lenders' Obligations.
(a) Holdings Remains Liable Under Accounts and Contracts.
Anything herein to the contrary notwithstanding, Holdings shall remain
liable under each of the Accounts and Contracts to observe and perform all
the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
to each such Account and in accordance with and pursuant to the terms and
provisions of each such Contract. Neither the Agent nor any Lender shall<PAGE>
4
have any obligation or liability under any Account (or any agreement
giving rise thereto) or under any Contract by reason of or arising out of
this Security Agreement or the receipt by the Agent or any such Lender of
any payment relating to such Account or Contract pursuant hereto, nor
shall the Agent or any Lender be obligated in any manner to perform any of
the obligations of Holdings under or pursuant to any Account (or any
agreement giving rise thereto) or under or pursuant to any Contract, to
make any payment, to make any inquiry as to the nature or the sufficiency
of any payment received by it or as to the sufficiency of any performance
by any party under any Account (or any agreement giving rise thereto) or
under any Contract, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or
times.
(b) Notice to Account Debtors and Contracting Parties. Upon
the request of the Agent at any time after the occurrence and during the
continuance of an Event of Default, Holdings shall notify account debtors
on the Accounts and parties to the Contracts that the Accounts and the
Contracts have been assigned to the Agent for the ratable benefit of the
Lenders and that payments in respect thereof shall be made directly to the
Agent. Upon the occurrence and during the continuance of an Event of
Default, the Agent may in its own name or in the name of others
communicate with account debtors on the Accounts and parties to the
Contracts to verify with them to its satisfaction the existence, amount
and terms of any Accounts or Contracts.
(c) Analysis of Accounts. The Agent shall have the right to
make test verifications of the Accounts in any manner and through any
medium that it reasonably considers advisable, and Holdings shall furnish
all such assistance and information as the Agent may reasonably require in
connection therewith. If an Event of Default shall have occurred and be
continuing, then upon the Agent's request and at the expense of Holdings,
Holdings shall cause independent public accountants or others satisfactory
to the Agent to furnish to the Agent reports showing reconciliations,
aging and test verifications of, and trial balances for, the Accounts.
(d) Collections on Accounts. The Agent hereby authorizes
Holdings to collect the Accounts, provided, that the Agent may curtail or
terminate said authority at any time upon the occurrence and during the
continuance of an Event of Default. If an Event of Default shall have
occurred and be continuing, any payments of Accounts, when collected by
Holdings, shall be forthwith (and, in any event, within two Business Days)
deposited by Holdings in the exact form received, duly endorsed by
Holdings to the Agent if required, in a special collateral account
maintained by the Agent, subject to withdrawal by the Agent for the
account of the Agent and the Lenders only, as hereinafter provided, and,
until so turned over, shall be held by Holdings in trust for the Agent and
the Lenders, segregated from other funds of Holdings. Each deposit of any
such Proceeds shall be accompanied by a report identifying in reasonable
detail the nature and source of the payments included in the deposit. All
Proceeds constituting collections of Accounts while held by the Agent (or
by Holdings in trust for the Agent and the Lenders) shall continue to be
collateral security for all of the Obligations and shall not constitute
payment thereof until applied as hereinafter provided. At any time at the
Agent's election, the Agent shall apply all or any part of the funds on<PAGE>
5
deposit in said special collateral account on account of the Obligations
in such order as the Agent may elect, and any part of such funds which the
Agent elects not so to apply and deems not required as collateral security
for the Obligations shall be paid over from time to time by the Agent to
Holdings or to whomsoever may be lawfully entitled to receive the same.
At the Agent's reasonable request, Holdings shall deliver to, or make
available for review by, the Agent all original and other documents
evidencing, and relating to, the agreements and transactions which gave
rise to the Accounts, including, without limitation, all original orders,
invoices and shipping receipts.
(e) Tolled Inventory. If any third Person (a "Tolling
Party") delivers possession of, but not title to, any raw materials, work-
in-process or other goods ("Tolled Inventory") pursuant to a bailment
arrangement with Holdings under which such Tolled Inventory is to be
processed, improved or otherwise altered by Holdings, the Agent agrees and
acknowledges that any security interest in or lien upon Inventory created
hereby does not apply to any Tolled Inventory which is owned by the
Tolling Party (rather than owned by Holdings subject to a retention of
title by the Tolling Party which has the effect of creating a security
interest in favor of the Tolling Party which remains unperfected).
Notwithstanding anything in this Security Agreement to the contrary,
Holdings shall be entitled to follow its normal tolling practices and may
deliver Tolled Inventory to or for the account of any Tolling Party free
of the lien of this Security Agreement.
4. Representations and Warranties. Holdings hereby
represents and warrants that:
(a) Title; No Other Liens. Except for the Lien granted
to the Agent for the ratable benefit of the Lenders pursuant
to this Security Agreement and the other Liens permitted to
exist on the Collateral pursuant to the Credit Agreement,
Holdings owns each item of the Collateral free and clear of
any and all Liens or claims of others. No security agreement,
financing statement or other public notice with respect to all
or any part of the Collateral is on file or of record in any
public office that would serve to grant the Person who filed
such security agreement, financing statement or other public
notice a perfected security interest in or lien on such
Collateral, except such as may have been filed in favor of the
Agent, for the ratable benefit of the Lenders, pursuant to
this Security Agreement or as may be permitted pursuant to the
Credit Agreement.
(b) Perfected First Priority Liens. Upon filing of
financing statements in the relevant offices identified in
Schedule 4.20(b) to the Credit Agreement, the Liens granted
pursuant to this Security Agreement constitute perfected Liens
on the Collateral in favor of the Agent, for the ratable
benefit of the Lenders, which are prior to all other Liens on
the Collateral created by Holdings and in existence on the
date hereof (except other Liens expressly permitted by the
Credit Agreement) and which are enforceable as such against
all creditors of and purchasers from Holdings and against any
owner or purchaser of the real property where any of the<PAGE>
6
Equipment is located and any present or future creditor
obtaining a Lien on such real property, except to the extent
that the enforceability thereof may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other similar laws generally affecting
creditors' rights and by general principles of equity
(regardless of whether enforcement is sought in equity or at
law).
(c) Accounts. The amount represented by Holdings to
the Lenders from time to time as owing by each account debtor
or by all account debtors in respect of the Accounts will at
such time be the correct amount actually owing by such account
debtor or debtors thereunder. No amount payable to Holdings
under or in connection with any Account is evidenced by any
Instrument or Chattel Paper which has not been delivered to
the Agent. The place where Holdings keeps its records
concerning the Accounts is 1510 Wall Street and 1710 Wall
Street, Fort Wayne, Indiana 46802.
(d) Inventory and Equipment. The Inventory and the
Equipment are kept at the locations listed on Schedule II
hereto or such other location specified pursuant to Section
5(n).
(e) Chief Executive Office. Holdings' chief executive
office and chief place of business is located at 1601 Wall
Street, Fort Wayne, Indiana 46802 or such other location
specified pursuant to Section 5(n).
(f) Farm Products; Vehicles. None of the Collateral
constitutes, or is the Proceeds of, Farm Products. No Vehicle
owned by Holdings has a book value in excess of $50,000 other
than Vehicles as to which Holdings has taken steps of the type
described in clause (i) and (ii) of Section 6.10(a) of the
Credit Agreement (to the extent, and only to the extent,
reasonably requested by the Agent).
(g) Intellectual Property. Set forth on Schedule I is
a complete and accurate list of all patents, trademarks, trade
names, service marks and copyrights, and all applications
therefor and licenses thereof, of Holdings, showing as of the
Effective Date the jurisdiction in which registered, the
registration number, the date of registration and the
expiration date. Holdings owns, or is licensed to use, all
trademarks, trade names, copyrights, technology, know-how and
processes necessary for the conduct of its business as
currently conducted except for those the failure to own or
license which could not reasonably be expected to materially
impair the value of the Collateral. No claim has been
asserted and is pending by any Person challenging or
questioning the use of any trademark, trade name, copyright,
technology, know-how or process necessary for the conduct of
its business as currently conducted, nor does Holdings know of
any valid basis for any such claim, the use of the same by
Holdings does not infringe on the rights of any Person and, to<PAGE>
7
the knowledge of Holdings, no Intellectual Property has been
infringed, misappropriated or diluted by any other Person,
except for such claims, infringements, misappropriations and
dilutions that, in the aggregate, could not reasonably be
expected to materially impair the value of the Collateral.
(h) Governmental Obligors. None of the obligors on any
Accounts, and none of the parties to any Contracts, is a
Governmental Authority.
5. Covenants. Holdings covenants and agrees with the Agent
and the Lenders that, from and after the date of this Security Agreement
until the Obligations are paid in full, the Revolving Credit Commitments
are terminated and no Letters of Credit shall be outstanding:
(a) Further Documentation; Pledge of Instruments and
Chattel Paper. At any time and from time to time, upon the
written request of the Agent, and at the sole expense of
Holdings, Holdings will promptly and duly execute and deliver
such further instruments and documents and take such further
action as the Agent may reasonably request for the purpose of
obtaining or preserving the full benefits of this Security
Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Liens created
hereby. Holdings also hereby authorizes the Agent to file any
such financing or continuation statement without the signature
of Holdings to the extent permitted by applicable law. A
carbon, photographic or other reproduction of this Security
Agreement shall be sufficient as a financing statement for
filing in any jurisdiction. If any amount payable under or in
connection with any of the Collateral shall be or become
evidenced by any Instrument or Chattel Paper, such Instrument
or Chattel Paper shall be immediately delivered to the Agent,
duly endorsed in a manner satisfactory to the Agent, to be
held as Collateral pursuant to this Security Agreement.
(b) Indemnification. Holdings agrees to pay, and to
save the Agent and the Lenders harmless from, any and all
liabilities, costs and expenses (including, without
limitation, reasonable legal fees and expenses) (i) with
respect to, or resulting from any delay in paying, any and all
excise, sales or other taxes which may be payable or
determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, any delay
in complying with any Requirement of Law applicable to any of
the Collateral or (iii) in connection with any of the
transactions contemplated by this Security Agreement. In any
suit, proceeding or action brought by the Agent in accordance
with the terms hereof under any Account or Contract for any
sum owing thereunder, or to enforce any provisions of any
Account or Contract, Holdings will save, indemnify and keep
harmless the Agent and each Lender from and against all
expense, loss or damage suffered by reason of any defense,
setoff, counterclaim, recoupment or reduction or liability<PAGE>
8
whatsoever of the account debtor or obligor thereunder,
arising out of a breach by Holdings of any obligation
thereunder or arising out of any other agreement, indebtedness
or liability at any time owing to or in favor of such account
debtor or obligor or its successors from Holdings.
(c) Maintenance of Records. Holdings will keep and
maintain at its own cost and expense satisfactory and complete
records of the Collateral, including, without limitation, a
record of all payments received and all credits granted with
respect to the Accounts. Holdings will mark its books and
records pertaining to the Collateral to evidence this Security
Agreement and the security interests granted hereby. For the
Agent's and the Lenders' further security, the Agent, for the
ratable benefit of the Lenders, shall have a security interest
in all of Holdings' books and records pertaining to the
Collateral.
(d) Right of Inspection. The Agent shall at any reasonable
time or times during normal business hours have access to all the
books, correspondence and records of Holdings, and the Agent and its
representatives may examine the same, take extracts therefrom and
make photocopies thereof, and Holdings agrees to render to the
Agent, at Holdings' cost and expense to the extent expressly
provided in Section 11.5 of the Credit Agreement, such clerical and
other assistance as may be reasonably requested with regard thereto.
The Agent and its representatives shall at any reasonable time or
times during normal business hours also have the right to enter into
and upon any premises where any of the Inventory or Equipment is
located (or, in the case of any such premises not owned or leased by
Holdings, the Company or any of its Subsidiaries, Holdings shall use
its best efforts to grant to the Agent such right) for the purpose
of inspecting the same, observing its use or otherwise protecting
the Agent's and the Lenders' interests therein.
(e) Compliance with Laws, etc. Holdings will comply in all
material respects with all Requirements of Law applicable to the
Collateral or any part thereof or to the operation of Holdings'
business, except where failure to satisfy the foregoing requirement
could not reasonably be expected to have a material adverse effect
on the value of the Collateral taken as a whole or, with respect to
any material portion of the Collateral, have a material adverse
effect on the perfection or priority of the Liens contemplated
hereby relating to such Collateral; provided, however, that Holdings
may contest any Requirement of Law in any reasonable manner which
shall not, in the sole opinion of the Agent, adversely affect the
Agent's or the Lenders' rights or the priority of their Liens on the
Collateral.
(f) Limitation on Liens on Collateral. Holdings will not
create, incur or permit to exist, will defend the Collateral
against, and will take such other action as is necessary to remove,
any Lien or claim on or to the Collateral, other than the Liens
created hereby and other than as permitted pursuant to the Credit
Agreement, and will defend the right, title and interest of the<PAGE>
9
Agent and the Lenders in and to any of the Collateral against the
claims and demands of all Persons whomsoever.
(g) Limitations on Dispositions of Collateral. Holdings will
not sell, transfer, lease or otherwise dispose of any of the
Collateral, or attempt, offer or contract to do so except as
expressly permitted by the Credit Agreement.
(h) Limitations on Modifications, Waivers, Extensions of
Agreements Giving Rise to Accounts. Holdings will not (i) except in
the ordinary course of business amend, modify, terminate or waive
any provision of or any agreement giving rise to an Account in any
manner which could reasonably be expected to materially adversely
affect the value of the Collateral taken as a whole, (ii) fail to
exercise promptly and diligently each and every material right which
it may have under each agreement giving rise to an Account (other
than any right of termination), except in a manner consistent with
the ordinary and customary conduct of business as generally
conducted by Holdings over a period of time or (iii) fail to deliver
to the Agent a copy of each material demand, notice or document
received by it relating in any way to any material agreement giving
rise to an Account which affects the interests of the Agent and the
Lenders hereunder.
(i) Limitations on Discounts, Compromises, Extensions of
Accounts. Other than in the ordinary course of business as
generally conducted by Holdings over a period of time, Holdings will
not, without the prior written consent of the Agent, grant any
extension of the time of payment of any of the Accounts, compromise,
compound or settle the same for less than the full amount thereof,
release, wholly or partially, any Person liable for the payment
thereof, or allow any credit or discount whatsoever thereon.
(j) Maintenance of Equipment. Holdings will maintain each
item of Equipment in good operating condition, ordinary wear and
tear and immaterial impairments of value and damage by the elements
excepted, and will provide all maintenance, service and repairs
necessary for such purpose.
(k) Maintenance of Insurance. Holdings will maintain, with
financially sound and reputable companies, insurance policies (i)
insuring the Inventory and Equipment against loss by fire,
explosion, theft and such other casualties as are usually insured
against by companies engaged in the same or similar business and
(ii) insuring Holdings and the Agent, for the benefit of the
Lenders, against liability for personal injury and property damage
relating to such Inventory and Equipment, such policies to be in
such form and amounts and having such coverage as may be reasonably
satisfactory to the Agent, such losses of $1 million or more shall
be payable to Holdings and the Agent, for the benefit of the
Lenders, as their respective interests may appear. All such
insurance shall (i) to the extent requested by the Agent, provide
for a 30-day standard cancellation notice, (ii) name the Agent, for
the benefit of the Lenders, as an insured party and (iii) be
reasonably satisfactory in all other respects to the Agent. If
reasonably requested by the Agent, Holdings shall deliver to the<PAGE>
10
Agent and the Lenders a report of a reputable insurance broker with
respect to such insurance, and such supplemental reports with
respect thereto as the Agent may from time to time reasonably
request.
(l) Further Identification of Collateral. Holdings will
furnish to the Agent and the Lenders from time to time statements
and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as the Agent
may reasonably request, all in reasonable detail.
(m) Notices. Holdings will advise the Agent and the Lenders
promptly, in reasonable detail, at their respective addresses set
forth in the Credit Agreement, (i) of any Lien (other than Liens
created hereby or permitted under the Credit Agreement) on, or claim
asserted against, any of the Collateral and (ii) of the occurrence
of any other event which could reasonably be expected to have a
material adverse effect on the aggregate value of the Collateral
taken as a whole or, with respect to any material portion of the
Collateral, have a material adverse effect on the perfection or
priority of the Liens contemplated hereby relating to such
Collateral.
(n) Changes in Locations, Name, etc. Holdings will not (i)
change the location of its chief executive office/chief place of
business from that specified in Section 4(e) hereof or remove its
books and records from the location specified in Section 4(c)
hereof, (ii) permit any of the Inventory or Equipment to be kept at
a location other than those listed on Schedule II hereto or (iii)
change its name, identity or corporate structure to such an extent
that any financing statement filed by the Agent in connection with
this Security Agreement would become seriously misleading, unless
(x) Holdings shall have given the Agent at least 30 days' prior
written notice thereof, (in the case of clause (i) and (iii) above
or at least one Business Day's prior written notice thereof (in the
case of clause (ii) above) and (y) Holdings shall have taken, and
shall continue to take, all steps necessary to ensure that the
Agent, for the benefit of the Lenders, shall have, and shall
continue to have, a fully perfected first priority security interest
in the Collateral (subject to the Liens permitted by the Credit
Agreement) notwithstanding such actions.
(o) Intellectual Property. Holdings will preserve all of its
registered trademarks, trade names, service marks and other
Intellectual Property, the non-preservation of which would have a
reasonable likelihood of materially impairing the value of the
Collateral taken as a whole. Whenever Holdings, either by itself or
through any agent, employee, licensee or designee, shall file an
application for the registration of any patent or trademark with the
United States Patent and Trademark Office or any similar office or
agency in any other country or any political subdivision thereof,
Holdings shall report such filing to the Agent and the Lenders
within five Business Days after the last day of the fiscal quarter
in which such filing occurs. Upon request of the Agent, Holdings
shall execute and deliver any and all agreements, instruments,
documents, and papers as the Agent may reasonably request to<PAGE>
11
evidence the Agent's and the Lenders' security interest in any
patent or trademark and the goodwill and General Intangibles of
Holdings relating thereto or represented thereby, and Holdings
hereby constitutes the Agent its attorney-in-fact to execute and
file all such writings for the foregoing purposes, all acts of such
attorney being hereby ratified and confirmed; such power being
coupled with an interest is irrevocable until the Obligations are
paid in full and the Revolving Credit Commitments are terminated.
In the event that any material Intellectual Property is infringed,
misappropriated or diluted by a third party, in any material respect
Holdings shall promptly notify the Agent after it learns thereof.
6. Agent's Appointment as Attorney-in-Fact.
(a) Powers. Holdings hereby irrevocably constitutes and
appoints the Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of Holdings and in
the name of Holdings or in its own name, from time to time in the Agent's
discretion, for the purpose of carrying out the terms of this Security
Agreement, to take any and all appropriate action and to execute any and
all documents and instruments which may be necessary or desirable to
accomplish the purposes of this Security Agreement, and, without limiting
the generality of the foregoing, Holdings hereby gives the Agent the power
and right, on behalf of Holdings, without notice to or assent by Holdings,
to do the following:
(i) at time when any Event of Default shall have
occurred and is continuing, in the name of Holdings or its own
name, or otherwise, to take possession of and endorse and
collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any Account,
Instrument, General Intangible or Contract or with respect to
any other Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Agent for the purpose of
collecting any and all such moneys due under any Account,
Instrument, General Intangible or Contract or with respect to
any other Collateral whenever payable;
(ii) in each case to the extent not paid, discharged
or effected by Holdings as required by this Security Agreement
or the Credit Agreement, to pay or discharge taxes and Liens
levied or placed on or threatened against the Collateral, to
effect any repairs or any insurance called for by the terms of
this Security Agreement and to pay all or any part of the
premiums therefor and the costs thereof; and
(iii) upon the occurrence and during the continuance of
any Event of Default, (A) to direct any party liable for any
payment under any of the Collateral to make payment of any and
all moneys due or to become due thereunder directly to the
Agent or as the Agent shall direct; (B) to ask or demand for,
collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any
time in respect of or arising out of any Collateral; (C) to<PAGE>
12
sign and endorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other
documents in connection with any of the Collateral; (D) to
commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to
collect the Collateral or any thereof and to enforce any other
right in respect of any Collateral; (E) to defend any suit,
action or proceeding brought against Holdings with respect to
any Collateral; (F) to settle, compromise or adjust any suit,
action or proceeding described in clause (E) above and, in
connection therewith, to give such discharges or releases as
the Agent may deem appropriate; (G) to assign any Intellectual
Property (along with the goodwill of the business to which any
such Intellectual Property pertains), throughout the world for
such term or terms, on such conditions, and in such manner, as
the Agent shall in its sole discretion determine; and (H)
generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral
as fully and completely as though the Agent were the absolute
owner thereof for all purposes, and to do, at the Agent's
option and Holdings' expense, at any time, or from time to
time, all acts and things which the Agent deems necessary to
protect, preserve or realize upon the Collateral and the
Agent's and the Lenders' Liens thereon and to effect the
intent of this Security Agreement, all as fully and
effectively as Holdings might do.
Holdings hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
(b) Other Powers. Holdings also authorizes the Agent, at any
time and from time to time, to execute, in connection with any sale
provided for in Section 9 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
(c) No Duty on Agent or Lenders' Part. The powers conferred
on the Agent and the Lenders hereunder are solely to protect the Agent's
and the Lenders' interests in the Collateral and shall not impose any duty
upon the Agent or any Lender to exercise any such powers. Except for the
duty of the Agent described in Section 10 hereof, and the accounting by
the Agent for moneys actually received by it hereunder, neither the Agent
nor any Lender shall have any duties hereunder as to the Collateral
(including, without limitation, as to ascertaining any matters or taking
any action with respect to any Collateral or as to taking any necessary
steps to preserve rights against prior parties or any other rights
pertaining to any Collateral). The Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of the powers conferred on the Agent and the Lenders hereunder,
and neither they nor any of their officers, directors, employees or agents
shall be responsible to Holdings for any act or failure to act hereunder,
except for their own gross negligence or willful misconduct.
7. Performance by Agent of Holdings' Obligations. If
Holdings fails to perform or comply with any of its agreements contained<PAGE>
13
herein and the Agent, as provided for by the terms of this Security
Agreement, shall itself perform or comply, or otherwise cause performance
or compliance, with such agreement, the expenses of the Agent incurred in
connection with such performance or compliance, together with interest
thereon at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin plus 2%, shall be payable by Holdings to the Agent on
demand and shall constitute Obligations secured hereby. The Agent agrees
to notify Holdings promptly after incurring any expenses pursuant to this
Section 7, provided that the failure of the Agent to so notify Holdings
shall in no way impair the rights of the Agent under this Section 7.
8. Proceeds. In addition to the rights of the Agent and the
Lenders specified in Section 3(d) hereof with respect to payments of
Accounts, it is agreed that if an Event of Default shall occur and be
continuing (a) the Agent may require, by notice to Holdings, all Proceeds
received by Holdings consisting of cash, checks and other near-cash items
to be held by Holdings in trust for the Agent and the Lenders, segregated
from other funds of Holdings, and shall, forthwith upon receipt by
Holdings, be turned over to the Agent in the exact form received by
Holdings (duly endorsed by Holdings to the Agent, if required), and (b)
any and all such Proceeds received by the Agent (whether from Holdings or
otherwise) may, in the sole discretion of the Agent, be held by the Agent
for the ratable benefit of the Lenders as collateral security for, and/or
then or at any time thereafter may be applied by the Agent against, the
Obligations (whether matured or unmatured), such application to be in such
order as the Agent shall elect. Any balance of such Proceeds remaining
after the Obligations shall have been paid in full, the Revolving Credit
Commitments shall have been terminated and no Letters of Credit shall be
outstanding shall be paid over to Holdings or to whomsoever may be
lawfully entitled to receive the same.
9. Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Lenders, may exercise, in addition
to all other rights and remedies granted to them in this Security
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party
under the Code. Without limiting the generality of the foregoing, the
Agent, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required
by law referred to below) to or upon Holdings or any other Person (all and
each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate
and realize upon the Collateral, or any part thereof, and/or may forthwith
sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to
do any of the foregoing), in one or more parcels at public or private sale
or sales, at any exchange, broker's board or office of the Agent or any
Lender or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or
for future delivery without assumption of any credit risk. The Agent or
any Lender shall have the right upon any such public sale or sales, and,
to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any
right or equity of redemption in Holdings, which right or equity is hereby
waived and released. Holdings further agrees, at the Agent's request, to
assemble the Collateral and make it available to the Agent at places which<PAGE>
14
the Agent shall reasonably select, whether at Holdings' premises or
elsewhere. The Agent shall apply the proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental
to the care or safekeeping of any of the Collateral or in any way relating
to the Collateral or the rights of the Agent and the Lenders hereunder,
including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in
such order as the Agent may elect, and only after such application and
after the payment by the Agent of any other amount required by any
provision of law, including, without limitation, Section 9-504(1)(c) of
the Code, need the Agent account for the surplus, if any, to Holdings. To
the extent permitted by applicable law, Holdings waives all claims,
damages and demands it may acquire against the Agent or any Lender arising
out of the exercise by them of any rights hereunder. If any notice of a
proposed sale or other disposition of Collateral shall be required by law,
such notice shall be deemed reasonable and proper if given at least 10
days before such sale or other disposition. Holdings shall remain liable
for any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorneys employed by the Agent or any Lender to
collect such deficiency. Holdings further waives and agrees not to assert
any rights or privileges which it may acquire under Section 9-112 of the
Code.
10. Limitation on Duties Regarding Preservation of
Collateral. The Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Code or otherwise, shall be to deal with it in
the same manner as the Agent deals with similar property for its own
account. Neither the Agent, any Lender, nor any of their respective
directors, officers, employees or agents shall be liable for failure to
demand, collect or realize upon all or any part of the Collateral or for
any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of Holdings or
otherwise.
11. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable
and powers coupled with an interest.
12. Severability. Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
13. Paragraph Headings. The paragraph headings used in this
Security Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the
interpretation hereof.
14. No Waiver; Cumulative Remedies. Neither the Agent nor
any Lender shall by any act (except by a written instrument pursuant to<PAGE>
15
Section 15 hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise and no delay in exercising, on
the part of the Agent or any Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Agent or such Lender would otherwise have on
any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive
of any rights or remedies provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Security Agreement may be
waived, amended, supplemented or otherwise modified except in accordance
with Section 11.1 of the Credit Agreement. This Security Agreement shall
be binding upon the successors and assigns of Holdings and shall inure to
the benefit of the Agent and the Lenders and their respective successors
and assigns. This Security Agreement shall be governed by, and construed
and interpreted in accordance with, the laws of the State of New York.
16. Notices. All notices, requests and demands hereunder
shall be given in accordance with Section 11.2 of the Credit Agreement.
17. Authority of Agent. Holdings acknowledges that the
rights and responsibilities of the Agent under this Security Agreement
with respect to any action taken by the Agent or the exercise or non-
exercise by the Agent of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Security Agreement shall, as between the Agent and the Lenders, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Agent and Holdings, the Agent shall be conclusively presumed to be acting
as agent for the Lenders with full and valid authority so to act or
refrain from acting, and Holdings shall not be under any obligation, or
entitlement, to make any inquiry respecting such authority.
18. Termination. This Security Agreement and the security
interest created hereby shall terminate when all the Obligations have been
paid in full and the Revolving Credit Commitments shall have been
terminated at which time the Agent shall execute and deliver to Holdings,
or such person or persons as Holdings shall reasonably designate, all
Uniform Commercial Code termination statements and similar documents
prepared by Holdings at its expense which Holdings shall reasonably
request to evidence such termination; provided, that <PAGE>
16
any indemnity set forth herein shall survive any such termination. Any
execution and delivery of termination statements or documents pursuant to
this Section 18 shall be without recourse to or representation or warranty
by the Agent or any Lender.
IN WITNESS WHEREOF, Holdings has caused this Security
Agreement to be duly executed and delivered as of the date first above
written.
BCP/ESSEX HOLDINGS INC.
By_____________________________
Title:<PAGE>
SCHEDULE I
to Security
Agreement
DESCRIPTION OF INTELLECTUAL PROPERTY
Registration Date of Expiration
Property Jurisdiction Number Registration Date
-------- ------------ ------------ ------------ ----------<PAGE>
SCHEDULE II
to Security
Agreement
LOCATION OF INVENTORY AND EQUIPMENT<PAGE>
EXHIBIT E-3
SUBSIDIARY SECURITY AGREEMENT
SUBSIDIARY SECURITY AGREEMENT, dated as of April __, 1995,
made by each of the parties signatories hereto (each, a "Subsidiary";
collectively, the "Subsidiaries"), in favor of CHEMICAL BANK, as Agent (in
such capacity, the "Agent") for the lenders (the "Lenders") parties to the
Credit Agreement, dated as of April __, 1995 (as amended, supplemented or
otherwise modified from time to time, the "Credit Agreement") among Essex
Group Inc. (the "Company"), BCP/Essex Holdings Inc., the Lenders and the
Agent.
W I T N E S S E T H :
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make Loans to the Company upon the terms and subject
to the conditions set forth therein;
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to issue, or to participate in, Letters of Credit for the
account of the Company upon the terms and subject to the conditions set
forth therein;
WHEREAS, the Subsidiaries are parties to the Subsidiary
Guarantee, dated as of April __, 1995 (as the same may be from time to
time amended, supplemented or modified, the "Subsidiary Guarantee"); and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective Loans to, and to issue or participate in
Letters of Credit for the account of, the Company under the Credit
Agreement that each Subsidiary shall have executed and delivered this
Security Agreement to the Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Agent and the Lenders to enter into the Credit Agreement and to induce
the Lenders to make their respective Loans and issue or participate in
Letters of Credit under the Credit Agreement, each Subsidiary hereby
agrees with the Agent, for the ratable benefit of the Lenders, as follows:
1. Defined Terms. Unless otherwise defined herein, terms
which are defined in the Credit Agreement and used herein are so used as
so defined; the following terms which are defined in the Uniform
Commercial Code in effect in the State of New York on the date hereof are
used herein as so defined: Accounts, Chattel Paper, Documents, Equipment,
Farm Products, General Intangibles, Instruments, Inventory and Proceeds;
and the following terms shall have the following meanings:
"Code" means the Uniform Commercial Code as from time to
time in effect in the State of New York.
"Collateral" shall have the meaning assigned to it in
Section 2 of this Security Agreement; with respect to the
representations, warranties and covenants made by each
Subsidiary in Paragraphs 4 and 5 hereof, each reference to<PAGE>
2
"Collateral" shall be deemed to refer to the Collateral in
which such Subsidiary has granted or hereby grants or purports
to grant a security interest under this Security Agreement,
provided, that Collateral shall not include any property which
is subject to a Lien permitted under Section 7.3 of the Credit
Agreement securing Indebtedness permitted under Section 7.2 of
the Credit Agreement to the extent that the grant of a
security interest hereunder would be prohibited by such Lien
or by the terms of such Indebtedness (but only so long as such
prohibition is in effect).
"Contracts" means, with respect to any Subsidiary, all
contracts, agreements, instruments and indentures in any form,
and portions thereof, to which such Subsidiary is a party or
under which such Subsidiary has any right, title or interest
or to which such Subsidiary or any property of such Subsidiary
is subject, as the same may from time to time be amended,
supplemented or otherwise modified, including, without
limitation, (a) all rights of such Subsidiary to receive
moneys due and to become due to it thereunder or in connection
therewith, (b) all rights of such Subsidiary to damages
arising out of, or for, breach or default in respect thereof
and (c) all rights of such Subsidiary to perform and to
exercise all remedies thereunder, in each case to the extent
the grant by such Subsidiary of a security interest pursuant
to this Security Agreement in its right, title and interest in
such contract, agreement, instrument or indenture is not
prohibited by such contract, agreement, instrument or
indenture without the consent of any other party thereto, or
is permitted with consent if all necessary consents to such
grant of a security interest have been obtained from the other
parties thereto (it being understood that the foregoing shall
not be deemed to obligate any Subsidiary to obtain such
consents); provided, that the foregoing limitation shall not
affect, limit, restrict or impair the grant by such Subsidiary
of a security interest pursuant to this Security Agreement in
any Account or any money or other amounts due or to become due
under any such contract, agreement, instrument or indenture.
"Intellectual Property" means, with respect to any Subsidiary,
(a) all intellectual and similar property of such Subsidiary of
every kind and nature now owned or hereafter acquired by such
Subsidiary, including, without limitation, inventions, designs,
patents, copyrights, licenses and license agreements (whether such
Subsidiary is the licensor or the licensee under such agreements),
trademarks, trade names and other business names, logos, trade
secrets, confidential or proprietary technical and business
information, know-how, show-how or other data or information,
software and databases and all embodiments or fixations thereof and
related documentation, registrations, applications and franchises,
and all additions, improvements and accessions to, and books and
records describing or used in connection with, any of the foregoing,
including, without limitation, any thereof referred to in Schedule I
hereto and (b) all renewals thereof. Notwithstanding the foregoing,
licenses and license agreements as to which any Subsidiary is the
licensee shall constitute "Intellectual Property" for the purposes<PAGE>
3
of this Agreement only to the extent the grant by any Subsidiary of
a security interest pursuant to this Security Agreement in its
right, title and interest in such license or license agreement is
not prohibited by such license or license agreement without the
consent of any other party thereto, or is permitted with consent if
all necessary consents to such grant of a security interest have
been obtained from the other parties thereto (it being understood
that the foregoing shall not be deemed to obligate any Subsidiary to
obtain such consents); provided, that the foregoing limitation shall
not affect, limit, restrict or impair the grant by any Subsidiary of
a security interest pursuant to this Security Agreement in any
Account or any money or other amounts due or to become due under any
such license or license agreement.
"Obligations" means, with respect to any Subsidiary, all
obligations, liabilities and indebtedness of such Subsidiary
under the Subsidiary Guarantee.
"Security Agreement" means this Security Agreement, as
amended, supplemented or otherwise modified from time to time.
"Vehicles" means all cars, trucks, trailers,
construction and earth moving equipment and other vehicles
covered by a certificate of title law of any state and all
tires and other appurtenances to any of the foregoing.
2. Grant of Security Interest. As collateral security for
the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations, each
Subsidiary hereby grants to the Agent for the ratable benefit of the
Lenders a security interest in all of the following property now owned or
at any time hereafter acquired by such Subsidiary or in which such
Subsidiary now has or at any time in the future may acquire any right,
title or interest (collectively, the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Contracts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Intellectual Property;
(ix) all Inventory; and
(x) to the extent not otherwise included, all
Proceeds and products of any and all of the foregoing.<PAGE>
4
3. Rights of Agent and Lenders; Limitations on Agent's and
Lenders' Obligations; Limitation on Agent's and Lenders' Interest in
Tolled Inventory.
(a) Subsidiary Remains Liable under Accounts and Contracts.
Anything herein to the contrary notwithstanding, each Subsidiary shall
remain liable under each of the Accounts and Contracts to observe and
perform all the conditions and obligations to be observed and performed by
it thereunder, all in accordance with the terms of any agreement giving
rise to each such Account and in accordance with and pursuant to the terms
and provisions of each such Contract. Neither the Agent nor any Lender
shall have any obligation or liability under any Account (or any agreement
giving rise thereto) or under any Contract by reason of or arising out of
this Security Agreement or the receipt by the Agent or any such Lender of
any payment relating to such Account or Contract pursuant hereto, nor
shall the Agent or any Lender be obligated in any manner to perform any of
the obligations of any Subsidiary under or pursuant to any Account (or any
agreement giving rise thereto) or under or pursuant to any Contract, to
make any payment, to make any inquiry as to the nature or the sufficiency
of any payment received by it or as to the sufficiency of any performance
by any party under any Account (or any agreement giving rise thereto) or
under any Contract, to present or file any claim, to take any action to
enforce any performance or to collect the payment of any amounts which may
have been assigned to it or to which it may be entitled at any time or
times.
(b) Notice to Account Debtors and Contracting Parties. Upon
the request of the Agent at any time after the occurrence and during the
continuance of an Event of Default, the relevant Subsidiary shall notify
account debtors on the Accounts and parties to the Contracts that the
Accounts and the Contracts have been assigned to the Agent for the ratable
benefit of the Lenders and that payments in respect thereof shall be made
directly to the Agent. Upon the occurrence and during the continuance of
an Event of Default, the Agent may in its own name or in the name of
others communicate with account debtors on the Accounts and parties to the
Contracts to verify with them to its satisfaction the existence, amount
and terms of any Accounts or Contracts.
(c) Analysis of Accounts. The Agent shall have the right to
make test verifications of the Accounts in any manner and through any
medium that it reasonably considers advisable, and each Subsidiary shall
furnish all such assistance and information as the Agent may reasonably
require in connection therewith. If an Event of Default shall have
occurred and be continuing, then upon the Agent's request and at the
expense of such Subsidiary, each Subsidiary shall cause independent public
accountants or others satisfactory to the Agent to furnish to the Agent
reports showing reconciliations, aging and test verifications of, and
trial balances for, the Accounts.
(d) Collections on Accounts. The Agent hereby authorizes
each Subsidiary to collect the Accounts, provided, that subject to the
Agent's direction and control, and the Agent may curtail or terminate said
authority at any time upon the occurrence and during the continuance of an
Event of Default. If an Event of Default shall have occurred and be
continuing, any payments of Accounts, when collected by such Subsidiary,
shall be forthwith (and, in any event, within two Business Days) deposited<PAGE>
5
by such Subsidiary in the exact form received, duly endorsed by such
Subsidiary to the Agent if required, in a special collateral account
maintained by the Agent, subject to withdrawal by the Agent for the
account of the Agent and the Lenders only, as hereinafter provided, and,
until so turned over, shall be held by such Subsidiary in trust for the
Agent and the Lenders, segregated from other funds of such Subsidiary.
Each deposit of any such Proceeds shall be accompanied by a report
identifying in reasonable detail the nature and source of the payments
included in the deposit. All Proceeds constituting collections of
Accounts while held by the Agent (or by any Subsidiary in trust for the
Agent and the Lenders) shall continue to be collateral security for all of
the Obligations and shall not constitute payment thereof until applied as
hereinafter provided. At any time at the Agent's election, the Agent
shall apply all or any part of the funds on deposit in said special
collateral account on account of the Obligations in such order as the
Agent may elect, and any part of such funds which the Agent elects not so
to apply and deems not required as collateral security for the Obligations
shall be paid over from time to time by the Agent to such Subsidiary or to
whomsoever may be lawfully entitled to receive the same. At the Agent's
reasonable request, each Subsidiary shall deliver to, or make available
for review by, the Agent all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to the
Accounts, including, without limitation, all original orders, invoices and
shipping receipts.
(e) Tolled Inventory. If any third Person (a "Tolling
Party") delivers possession of, but not title to, any raw materials, work-
in-process or other goods ("Tolled Inventory") pursuant to a bailment
arrangement with any Subsidiary under which such Tolled Inventory is to be
processed, improved or otherwise altered by such Subsidiary, the Agent
agrees and acknowledges that any security interest in or lien upon
Inventory created hereby does not apply to any Tolled Inventory which is
owned by the Tolling Party (rather than owned by such Subsidiary subject
to a retention of title by the Tolling Party which has the effect of
creating a security interest in favor of the Tolling Party which remains
unperfected). Notwithstanding anything in this Security Agreement to the
contrary, such Subsidiary shall be entitled to follow its normal tolling
practices and may deliver Tolled Inventory to or for the account of any
Tolling Party free of the lien of this Security Agreement.
4. Representations and Warranties . Each Subsidiary hereby
represents and warrants that:
(a) Title; No Other Liens. Except for the Lien granted to
the Agent for the ratable benefit of the Lenders pursuant to this
Security Agreement and the other Liens permitted to exist on the
Collateral pursuant to the Credit Agreement, such Subsidiary owns
each item of the Collateral free and clear of any and all Liens or
claims of others. No security agreement, financing statement or
other public notice with respect to all or any part of the
Collateral is on file or of record in any public office that would
serve to grant the Person who filed such security agreement,
financing statement or other public notice a perfected security
interest in or lien on such Collateral, except such as may have been
filed in favor of the Agent, for the ratable benefit of the Lenders,<PAGE>
6
pursuant to this Security Agreement or as may be permitted pursuant
to the Credit Agreement.
(b) Perfected First Priority Liens. Upon filing of financing
statements in the relevant offices identified in Schedule 4.20(b) to
the Credit Agreement, the Liens granted pursuant to this Security
Agreement constitute perfected Liens on the Collateral in favor of
the Agent, for the ratable benefit of the Lenders, which are prior
to all other Liens on the Collateral created by such Subsidiary and
in existence on the date hereof (except other Liens expressly
permitted by the Credit Agreement) and which are enforceable as such
against all creditors of and purchasers from such Subsidiary and
against any owner or purchaser of the real property where any of the
Equipment is located and any present or future creditor obtaining a
Lien on such real property, except to the extent that the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws generally affecting creditors' rights and by
general principles of equity (regardless of whether enforcement is
sought in equity or at law).
(c) Accounts. The amount represented by such Subsidiary or
the Company to the Lenders from time to time as owing by each
account debtor or by all account debtors in respect of the Accounts
will at such time be the correct amount actually owing by such
account debtor or debtors thereunder. Except as otherwise provided
in Section 5(a) hereof, no amount payable to such Subsidiary under
or in connection with any Account is evidenced by any Instrument or
Chattel Paper which has not been delivered to the Agent. The place
where such Subsidiary keeps its records concerning the Accounts is
1510 Wall Street and 1710 Wall Street, Fort Wayne, Indiana 46802.
(d) Inventory and Equipment. The Inventory and the Equipment
are kept at the locations listed on Schedule II hereto or such other
location specified pursuant to Section 5(n).
(e) Chief Executive Office. Such Subsidiary's chief
executive office and chief place of business is located at 1601 Wall
Street, Fort Wayne, Indiana 46802 or such other location specified
pursuant to Section 5(n).
(f) Farm Products; Vehicles. None of the Collateral
constitutes, or is the Proceeds of, Farm Products. No Vehicle owned
by such Subsidiary has a book value in excess of $50,000, other than
Vehicles as to which such Subsidiary has taken steps of the type
described in clauses (i) and (ii) of Section 6.10(a) of the Credit
Agreement (to the extent, and only to the extent, reasonably
requested by the Agent).
(g) Intellectual Property. Set forth on Schedule I is
a complete and accurate list of all patents, trademarks, trade
names, service marks and copyrights, and all applications
therefor and licenses thereof, of such Subsidiary showing as
of the Effective Date the jurisdiction in which registered,
the registration number, the date of registration and the
expiration date. Such Subsidiary owns, or is licensed to use,<PAGE>
7
all trademarks, trade names, copyrights, technology, know-how
and processes necessary for the conduct of its business as
currently conducted except for those the failure to own or
license which could not reasonably be expected to materially
impair the value of the Collateral. No claim has been
asserted and is pending by any Person challenging or
questioning the use of any trademark, trade name, copyright,
technology, know-how or process necessary for the conduct of
its business as currently conducted, nor does such Subsidiary
know of any valid basis for any such claim, the use of the
same by such Subsidiary does not infringe on the rights of any
Person and, to the knowledge of such Subsidiary, no
Intellectual Property has been infringed, misappropriated or
diluted by any other Person, except for such claims,
infringements, misappropriations and dilutions that, in the
aggregate, could not reasonably be expected to materially
impair the value of the Collateral.
5. Covenants. Each Subsidiary covenants and agrees with the
Agent and the Lenders that, from and after the date of this Security
Agreement until the Obligations are paid in full, the Revolving Credit
Commitments are terminated, and no Letter of Credit shall be outstanding:
(a) Further Documentation; Pledge of Instruments and Chattel
Paper. At any time and from time to time, upon the written request
of the Agent, and at the sole expense of such Subsidiary, such
Subsidiary will promptly and duly execute and deliver such further
instruments and documents and take such further action as the Agent
may reasonably request for the purpose of obtaining or preserving
the full benefits of this Security Agreement and of the rights and
powers herein granted, including, without limitation, the filing of
any financing or continuation statements under the Uniform
Commercial Code in effect in any jurisdiction with respect to the
Liens created hereby. Such Subsidiary also hereby authorizes the
Agent to file any such financing or continuation statement without
the signature of such Subsidiary to the extent permitted by
applicable law. A carbon, photographic or other reproduction of
this Security Agreement shall be sufficient as a financing statement
for filing in any jurisdiction. If any amount payable under or in
connection with any of the Collateral shall be or become evidenced
by any Instrument or Chattel Paper having a principal amount in
excess of $25,000, such Instrument or Chattel Paper shall be
immediately delivered to the Agent, duly endorsed in a manner
satisfactory to the Agent, to be held as Collateral pursuant to this
Security Agreement; provided, that in no event shall the aggregate
principal amount of Instruments and Chattel Paper evidencing amounts
payable under or in connection with any Collateral (as such terms
are defined in the Company Security Agreement or the Subsidiary
Security Agreement, as the case may be) which have not been
delivered to the Agent pursuant to such Security Agreements exceed
$100,000 at any one time outstanding.
(b) Indemnification. Such Subsidiary agrees to pay, and to
save the Agent and the Lenders harmless from, any and all
liabilities, costs and expenses (including, without limitation,
reasonable legal fees and expenses) (i) with respect to, or<PAGE>
8
resulting from any delay in paying, any and all excise, sales or
other taxes which may be payable or determined to be payable with
respect to any of the Collateral, (ii) with respect to, or resulting
from, any delay in complying with any Requirement of Law applicable
to any of the Collateral or (iii) in connection with any of the
transactions contemplated by this Security Agreement; provided, that
in the case of this clause (iii), such Subsidiary shall not be
liable for the payment of any portion of such liabilities, costs or
expenses to the extent that such portion of such liabilities, costs
or expenses are found by a final and nonappealable decision of a
court of competent jurisdiction to have resulted primarily from the
gross negligence or wilful misconduct of the Agent. In any suit,
proceeding or action brought by the Agent in accordance with the
terms hereof under any Account or Contract for any sum owing
thereunder, or to enforce any provisions of any Account or Contract,
such Subsidiary will save, indemnify and keep harmless the Agent and
each Lender from and against all expense, loss or damage suffered by
reason of any defense, setoff, counterclaim, recoupment or reduction
or liability whatsoever of the account debtor or obligor thereunder,
arising out of a breach by such Subsidiary of any obligation
thereunder or arising out of any other agreement, indebtedness or
liability at any time owing to or in favor of such account debtor or
obligor or its successors from such Subsidiary.
(c) Maintenance of Records. Such Subsidiary will keep and
maintain at its own cost and expense satisfactory and complete
records of the Collateral, including, without limitation, a record
of all payments received and all credits granted with respect to the
Accounts. Such Subsidiary will mark its books and records
pertaining to the Collateral to evidence this Security Agreement and
the security interests granted hereby. For the Agent's and the
Lenders' further security, the Agent, for the ratable benefit of the
Lenders, shall have a security interest in all of such Subsidiary's
books and records pertaining to the Collateral.
(d) Right of Inspection. The Agent shall at any reasonable
time or times during normal business hours have access to all the
books, correspondence and records of such Subsidiary, and the Agent
and its representatives may examine the same, take extracts
therefrom and make photocopies thereof, and such Subsidiary agrees
to render to the Agent, at such Subsidiary's cost and expense to the
extent expressly provided in Section 11.5 of the Credit Agreement,
such clerical and other assistance as may be reasonably requested
with regard thereto. The Agent and its representatives shall at any
reasonable time or times during normal business hours also have the
right to enter into and upon any premises where any of the Inventory
or Equipment is located (or, in the case of any such premises not
owned or leased by such Subsidiary or any of its Subsidiaries, such
Subsidiary shall use its best efforts to grant to the Agent such
right) for the purpose of inspecting the same, observing its use or
otherwise protecting the Agent's and the Lenders' interests therein.
(e) Compliance with Laws, etc. Such Subsidiary will comply
in all material respects with all Requirements of Law applicable to
the Collateral or any part thereof or to the operation of such
Subsidiary's business, except where failure to satisfy the foregoing<PAGE>
9
requirement could not reasonably be expected to have a material
adverse affect on the value of the Collateral taken as a whole or,
with respect to any material portion of the Collateral, have a
material adverse effect on the perfection or priority of the Liens
contemplated hereby relating to such Collateral; provided, however,
that such Subsidiary may contest any Requirement of Law in any
reasonable manner which shall not, in the sole opinion of the Agent,
adversely affect the Agent's or the Lenders' rights or the priority
of their Liens on the Collateral.
(f) Limitation on Liens on Collateral. Such Subsidiary will
not create, incur or permit to exist, will defend the Collateral
against, and will take such other action as is necessary to remove,
any Lien or claim on or to the Collateral, other than the Liens
created hereby and other than as permitted pursuant to the Credit
Agreement, and will defend the right, title and interest of the
Agent and the Lenders in and to any of the Collateral against the
claims and demands of all Persons whomsoever.
(g) Limitations on Dispositions of Collateral. Such
Subsidiary will not sell, transfer, lease or otherwise dispose of
any of the Collateral, or attempt, offer or contract to do so except
as expressly permitted by the Credit Agreement.
(h) Limitations on Modifications, Waivers, Extensions of
Agreements Giving Rise to Accounts. Such Subsidiary will not (i)
except in the ordinary course of business consistent with historical
practices as of the date hereof, amend, modify, terminate or waive
any provision of any agreement giving rise to an Account in any
manner which could reasonably be expected to materially adversely
affect the value of Collateral taken as a whole, (ii) fail to
exercise promptly and diligently each and every material right which
it may have under each agreement giving rise to an Account (other
than any right of termination), except in a manner consistent with
the ordinary and customary conduct of business as generally
conducted by such Subsidiary over a period of time or (iii) fail to
deliver to the Agent a copy of each material demand, notice or
document received by it relating in any way to any material
agreement giving rise to an Account which affects the interests of
the Agent and the Lenders hereunder.
(i) Limitations on Discounts, Compromises, Extensions of
Accounts. Other than in the ordinary course of business as
generally conducted by such Subsidiary over a period of time, such
Subsidiary will not, without the prior written consent of the Agent,
grant any extension of the time of payment of any of the Accounts,
compromise, compound or settle the same for less than the full
amount thereof, release, wholly or partially, any Person liable for
the payment thereof, or allow any credit or discount whatsoever
thereon.
(j) Maintenance of Equipment. Such Subsidiary will maintain
each item of Equipment in good operating condition, ordinary wear
and tear and immaterial impairments of value and damage by the
elements excepted, and will provide all maintenance, service and
repairs necessary for such purpose.<PAGE>
10
(k) Maintenance of Insurance. Such Subsidiary will maintain,
with financially sound and reputable companies, insurance policies
(i) insuring the Inventory and Equipment against loss by fire,
explosion, theft and such other casualties as are usually insured
against by companies engaged in the same or similar business and
(ii) insuring such Subsidiary and the Agent, for the benefit of the
Lenders, against liability for personal injury and property damage
relating to such Inventory and Equipment, such policies to be in
such form and amounts and having such coverage as may be reasonably
satisfactory to the Agent, such losses of $1 million or more shall
be payable to such Subsidiary and the Agent, for the benefit of the
Lenders, as their respective interests may appear. All such
insurance shall (i) to the extent requested by the Agent, provide
for a 30-day standard cancellation notice, (ii) name the Agent, for
the benefit of the Lenders, as an insured party and loss payee and
(iii) be reasonably satisfactory in all other respects to the Agent.
If reasonably requested by the Agent, such Subsidiary shall deliver
to the Agent and the Lenders a report of a reputable insurance
broker with respect to such insurance, and such supplemental reports
with respect thereto as the Agent may from time to time reasonably
request.
(l) Further Identification of Collateral. Such Subsidiary
will furnish to the Agent and the Lenders from time to time
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral
as the Agent may reasonably request, all in reasonable detail.
(m) Notices. Such Subsidiary will advise the Agent and the
Lenders promptly, in reasonable detail, at their respective
addresses set forth in the Credit Agreement, (i) of any Lien (other
than Liens created hereby or permitted under the Credit Agreement)
on, or claim asserted against, any of the Collateral and (ii) of the
occurrence of any other event which could reasonably be expected to
have a material adverse effect on the aggregate value of the
Collateral taken as a whole or, with respect to any material portion
of the Collateral, have a material adverse effect on the perfection
or priority of the Liens contemplated hereby relating to such
Collateral.
(n) Changes in Locations, Name, etc. Such Subsidiary will
not (i) change the location of its chief executive office/chief
place of business from that specified in Section 4(e) hereof or
remove its books and records from the location specified in Section
4(c) hereof, (ii) permit any of the Inventory or Equipment to be
kept at a location other than those listed on Schedule II hereto or
(iii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Agent in connection
with this Security Agreement would become seriously misleading,
unless (x) such Subsidiary shall have given the Agent at least 30
days' prior written notice thereof (in the case of clause (i) and
(iii) above) or at least one Business Day's days prior written
notice thereof (in the case of clause (ii) above) and (y) such
Subsidiary shall have taken, and shall continue to take, all steps
necessary to ensure that the Agent, for the benefit of the Lenders,
shall have, and shall continue to have, a fully perfected first<PAGE>
11
priority security interest in the Collateral (subject to Liens
permitted by the Credit Agreement) notwithstanding such actions.
(o) Intellectual Property. Such Subsidiary will preserve all
of its registered trademarks, trade names, service marks and other
Intellectual Property, the non-preservation of which would have a
reasonable likelihood of materially impairing the value of the
Collateral taken as a whole. Whenever such Subsidiary, either by
itself or through any agent, employee, licensee or designee, shall
file an application for the registration of any patent or trademark
with the United States Patent and Trademark Office or any similar
office or agency in any other country or any political subdivision
thereof, such Subsidiary shall report such filing to the Agent and
the Lenders within five Business Days after the last day of the
fiscal quarter in which such filing occurs. Upon request of the
Agent, such Subsidiary shall execute and deliver any and all
agreements, instruments, documents, and papers as the Agent may
reasonably request to evidence the Agent's and the Lenders' security
interest in any patent or trademark and the goodwill and General
Intangibles of such Subsidiary relating thereto or represented
thereby, and such Subsidiary hereby constitutes the Agent its
attorney-in-fact to execute and file all such writings for the
foregoing purposes, all acts of such attorney being hereby ratified
and confirmed; such power being coupled with an interest is
irrevocable until the Obligations are paid in full and the Revolving
Credit Commitments are terminated. In the event that any material
Intellectual Property is infringed, misappropriated or diluted by a
third party, in any material respect such Subsidiary shall promptly
notify the Agent after it learns thereof.
(p) Government Obligors. If an any time the aggregate amount
owing on (i) all Accounts and Contracts as to which a Governmental
Authority is an obligor and (ii) all "Accounts" and "Contracts"
under and as defined in the Company Security Agreement as to which a
Governmental Authority is an obligor (collectively, "Total
Government Accounts and Contracts"), exceeds 5% of the aggregate
owing on (i) all Accounts and Contracts and (ii) all "Accounts" and
"Contracts" under and as defined in the Company Security Agreement
(collectively, "Total Accounts and Contracts"), such Subsidiary
shall, if requested by the Agent, at such Subsidiary's sole cost and
expense, from and after the date on which such aggregate amount
first exceeds such percentage (regardless of whether the aggregate
amount owing on the Total Government Accounts and Contracts shall
equal less than 5% of the aggregate amount owing on the Total
Accounts and Contracts at any subsequent time), deliver to the Agent
such assignments, notices of assignment and other documents or
information as shall be necessary or otherwise requested by the
Agent to permit the assignment hereunder of all Accounts and
Contracts as to which a Governmental Authority is an obligor
pursuant to all applicable Requirements of Law (including, without
limitation, the Assignment of Claims Act of 1940, as amended).
6. Agent's Appointment as Attorney-in-Fact.
(a) Powers. Each Subsidiary hereby irrevocably constitutes
and appoints the Agent and any officer or agent thereof, with full power<PAGE>
12
of substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of such Subsidiary
and in the name of such Subsidiary or in its own name, from time to time
in the Agent's discretion, for the purpose of carrying out the terms of
this Security Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Security Agreement, and,
without limiting the generality of the foregoing, such Subsidiary hereby
gives the Agent the power and right, on behalf of such Subsidiary, without
notice to or assent by such Subsidiary, to do the following:
(i) at any time when any Event of Default shall have occurred
and is continuing, in the name of such Subsidiary or its own name,
or otherwise, to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other instruments for the
payment of moneys due under any Account, Instrument, General
Intangible or Contract or with respect to any other Collateral and
to file any claim or to take any other action or proceeding in any
court of law or equity or otherwise deemed appropriate by the Agent
for the purpose of collecting any and all such moneys due under any
Account, Instrument, General Intangible or Contract or with respect
to any other Collateral whenever payable;
(ii) in each case to the extent not paid, discharged or
effected by such Subsidiary as required by this Security Agreement
or the Credit Agreement, to pay or discharge taxes and Liens levied
or placed on or threatened against the Collateral, to effect any
repairs or any insurance called for by the terms of this Security
Agreement and to pay all or any part of the premiums therefor and
the costs thereof; and
(iii) upon the occurrence and during the continuance of any
Event of Default, (A) to direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys
due or to become due thereunder directly to the Agent or as the
Agent shall direct; (B) to ask or demand for, collect, receive
payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising
out of any Collateral; (C) to sign and endorse any invoices, freight
or express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications, notices and
other documents in connection with any of the Collateral; (D) to
commence and prosecute any suits, actions or proceedings at law or
in equity in any court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other right in respect
of any Collateral; (E) to defend any suit, action or proceeding
brought against such Subsidiary with respect to any Collateral; (F)
to settle, compromise or adjust any suit, action or proceeding
described in clause (E) above and, in connection therewith, to give
such discharges or releases as the Agent may deem appropriate; (G)
to assign any Intellectual Property (along with the goodwill of the
business to which any such Intellectual Property pertains),
throughout the world for such term or terms, on such conditions, and
in such manner, as the Agent shall in its sole discretion determine;
and (H) generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral as<PAGE>
13
fully and completely as though the Agent were the absolute owner
thereof for all purposes, and to do, at the Agent's option and such
Subsidiary's expense, at any time, or from time to time, all acts
and things which the Agent deems necessary to protect, preserve or
realize upon the Collateral and the Agent's and the Lenders' Liens
thereon and to effect the intent of this Security Agreement, all as
fully and effectively as such Subsidiary might do.
Each Subsidiary hereby ratifies all that said attorneys shall lawfully do
or cause to be done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.
(b) Other Powers. Each Subsidiary also authorizes the Agent,
at any time and from time to time, to execute, in connection with any sale
provided for in Section 9 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.
(c) No Duty on Agent or Lenders' Part. The powers conferred
on the Agent and the Lenders hereunder are solely to protect the Agent's
and the Lenders' interests in the Collateral and shall not impose any duty
upon the Agent or any Lender to exercise any such powers. Except for the
duty of the Agent described in Section 10 hereof, and the accounting by
the Agent for moneys actually received by it hereunder, neither the Agent
nor any Lender shall have any duties hereunder as to any Collateral
(including, without limitation, as to ascertaining any matters or taking
any action with respect to any Collateral or as to taking any necessary
steps to preserve rights against prior parties or any other rights
pertaining to any Collateral). The Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of the powers conferred on the Agent and the Lenders hereunder,
and neither they nor any of their officers, directors, employees or agents
shall be responsible to any Subsidiary for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct.
7. Performance by Agent of Subsidiary's Obligations. If any
Subsidiary fails to perform or comply with any of its agreements contained
herein and the Agent, as provided for by the terms of this Security
Agreement, shall itself perform or comply, or otherwise cause performance
or compliance, with such agreement, the expenses of the Agent incurred in
connection with such performance or compliance, together with interest
thereon at a rate per annum equal to the Alternate Base Rate plus the
Applicable Margin plus 2%, shall be payable by such Subsidiary to the
Agent on demand and shall constitute Obligations secured hereby. The
Agent agrees to notify such Subsidiary promptly after incurring any
expenses pursuant to this Section 7, provided that the failure of the
Agent to so notify such Subsidiary shall in no way impair the rights of
the Agent under this Section 7.
8. Proceeds. In addition to the rights of the Agent and the
Lenders specified in Section 3(d) hereof with respect to payments of
Accounts, it is agreed that if an Event of Default shall occur and be
continuing (a) the Agent may require, by notice to each Subsidiary, all
Proceeds received by each Subsidiary consisting of cash, checks and other
near-cash items to be held by such Subsidiary in trust for the Agent and
the Lenders, segregated from other funds of such Subsidiary, and shall,
forthwith upon receipt by such Subsidiary, be turned over to the Agent in<PAGE>
14
the exact form received by such Subsidiary (duly endorsed by such
Subsidiary to the Agent, if required), and (b) any and all such Proceeds
received by the Agent (whether from any Subsidiary or otherwise) may, in
the sole discretion of the Agent, be held by the Agent for the ratable
benefit of the Lenders as collateral security for, and/or then or at any
time thereafter may be applied by the Agent against, the Obligations
(whether matured or unmatured), such application to be in such order as
the Agent shall elect. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, the Revolving Credit Commitments
shall have been terminated and no Letters of Credit shall be outstanding
shall be paid over to the Subsidiaries or to whomsoever may be lawfully
entitled to receive the same.
9. Remedies. If an Event of Default shall occur and be
continuing, the Agent, on behalf of the Lenders, may exercise, in addition
to all other rights and remedies granted to them in this Security
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party
under the Code. Without limiting the generality of the foregoing, the
Agent, without demand of performance or other demand, presentment,
protest, advertisement or notice of any kind (except any notice required
by law referred to below) to or upon any Subsidiary or any other Person
(all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or
may forthwith sell, lease, assign, give option or options to purchase, or
otherwise dispose of and deliver the Collateral or any part thereof (or
contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the
Agent or any Lender or elsewhere upon such terms and conditions as it may
deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk. The
Agent or any Lender shall have the right upon any such public sale or
sales, and, to the extent permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the Collateral so sold, free
of any right or equity of redemption in any Subsidiary, which right or
equity is hereby waived and released. Each Subsidiary further agrees, at
the Agent's request, to assemble the Collateral and make it available to
the Agent at places which the Agent shall reasonably select, whether at
such Subsidiary's premises or elsewhere. The Agent shall apply the
proceeds of any such collection, recovery, receipt, appropriation,
realization or sale, after deducting all reasonable costs and expenses of
every kind incurred therein or incidental to the care or safekeeping of
any of the Collateral or in any way relating to the Collateral or the
rights of the Agent and the Lenders hereunder, including, without
limitation, reasonable attorneys' fees and disbursements, to the payment
in whole or in part of the Obligations, in such order as the Agent may
elect, and only after such application and after the payment by the Agent
of any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Agent account for
the surplus, if any, to any Subsidiary. To the extent permitted by
applicable law, each Subsidiary waives all claims, damages and demands it
may acquire against the Agent or any Lender arising out of the exercise by
them of any rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be
deemed reasonable and proper if given at least 10 days before such sale or<PAGE>
15
other disposition. Each Subsidiary shall remain liable for any deficiency
if the proceeds of any sale or other disposition of the Collateral are
insufficient to pay the Obligations and the fees and disbursements of any
attorneys employed by the Agent or any Lender to collect such deficiency.
Each Subsidiary further waives and agrees not to assert any rights or
privileges which it may acquire under Section 9-112 of the Code.
10. Limitation on Duties Regarding Preservation of
Collateral. The Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession,
under Section 9-207 of the Code or otherwise, shall be to deal with it in
the same manner as the Agent deals with similar property for its own
account. Neither the Agent, any Lender, nor any of their respective
directors, officers, employees or agents shall be liable for failure to
demand, collect or realize upon all or any part of the Collateral or for
any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of any Subsidiary or
otherwise.
11. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable
and powers coupled with an interest.
12. Severability. Any provision of this Security Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
13. Paragraph Headings. The paragraph headings used in this
Security Agreement are for convenience of reference only and are not to
affect the construction hereof or be taken into consideration in the
interpretation hereof.
14. No Waiver; Cumulative Remedies. Neither the Agent nor
any Lender shall by any act (except by a written instrument pursuant to
Section 15 hereof), delay, indulgence, omission or otherwise be deemed to
have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise and no delay in exercising, on
the part of the Agent or any Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Agent or such Lender would otherwise have on
any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive
of any rights or remedies provided by law.
15. Waivers and Amendments; Successors and Assigns;
Governing Law. None of the terms or provisions of this Security Agreement
may be waived, amended, supplemented or otherwise modified except in<PAGE>
16
accordance with Section 11.1 of the Credit Agreement. This Security
Agreement shall be binding upon the successors and assigns of each
Subsidiary and shall inure to the benefit of the Agent and the Lenders and
their respective successors and assigns. This Security Agreement shall be
governed by, and construed and interpreted in accordance with, the laws of
the State of New York.
16. Notices. All notices, requests and demands given
hereunder shall be given in accordance with Paragraph 16 of the Subsidiary
Guarantee.
17. Authority of Agent. Each Subsidiary acknowledges that
the rights and responsibilities of the Agent under this Security Agreement
with respect to any action taken by the Agent or the exercise or non-
exercise by the Agent of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Security Agreement shall, as between the Agent and the Lenders, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Agent and each Subsidiary, the Agent shall be conclusively presumed to be
acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and such Subsidiary shall not be under any
obligation, or entitlement, to make any inquiry respecting such authority.
18. Termination. This Security Agreement and the security
interest created hereby shall terminate when all the Obligations have been
paid in full and the Revolving Credit Commitments shall have been
terminated at which time the Agent shall execute and deliver to each
Subsidiary or such person or persons as such Subsidiary shall reasonably
designate, all Uniform Commercial Code termination statements and similar
documents prepared by such Subsidiary at its expense which such Subsidiary
shall reasonably request to evidence such termination; provided, that any
indemnity set forth herein shall survive any such termination. At the
request and expense of the Company, each Subsidiary shall be released from
its obligations hereunder, in the event that all the capital stock of such
Subsidiary shall be sold, transferred or otherwise disposed of in
accordance with the terms of the Credit Agreement; provided that the
Company shall have delivered to the Agent, at least ten Business Days
prior to the date of the proposed release, a written request for release
identifying the relevant Subsidiary and the terms of the sale or other
disposition in reasonable detail, including the price thereof and any
expenses in connection therewith, together with a certification by the
Company stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents. Upon any sale or other
disposition of any item of Collateral by any Subsidiary expressly
permitted by the Credit Agreement (other than sales of Inventory in the
ordinary course of business), the Agent, at the request and expense of the
Company, shall release the Collateral being sold and shall reassign and
deliver such Collateral to such Subsidiary (without recourse and without
any representation or warranty), together with appropriate instruments of
reassignment and release; provided that (i) at the time of such request
and such release no Event of Default shall have occurred and be continuing
and (ii) the Company shall have delivered to the Agent, at least ten
Business Days prior to the date of the proposed release, a written request
for release describing the item of Collateral and the terms of the sale or
other disposition in reasonable detail, including the price thereof and<PAGE>
17
any expenses in connection therewith, together with a certification by the
Company stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents. Any execution and delivery of
termination statements or documents pursuant to this Section 18 shall be
without recourse to or representation or warranty by the Agent or any
Lender.
IN WITNESS WHEREOF, each Subsidiary has caused this Security
Agreement to be duly executed and delivered as of the date first above
written.
ESSEX INTERNATIONAL, INC.
By__________________________________
Title:
ESSEX WIRE CORPORATION
By___________________________________
Title:
EXCEL WIRE AND CABLE CO.
By____________________________________
Title:
DIAMOND WIRE & CABLE CO.
By____________________________________
Title:
US SAMICA CORPORATION
By____________________________________
Title:<PAGE>
SCHEDULE I
to Security
Agreement
DESCRIPTION OF INTELLECTUAL PROPERTY
Registration Date of Expiration
Property Jurisdiction Number Registration Date
-------- ------------ ------------ ------------ ----------<PAGE>
SCHEDULE II
to Security
Agreement
LOCATION OF INVENTORY AND EQUIPMENT<PAGE>
EXHIBIT F
FORM OF SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE, dated as of April __, 1995, by each of
the corporations that are signatories hereto (the "Guarantors") in favor
of CHEMICAL BANK, a New York banking corporation, as agent (in such
capacity, the "Agent") for the lenders (the "Lenders") that are parties to
the Credit Agreement described below.
W I T N E S S E T H :
WHEREAS, Essex Group, Inc., a Michigan corporation (the
"Company"), is party to a Credit Agreement, dated as of April __, 1995,
among the Company, BCP/Essex Holdings Inc., the Agent and the Lenders (as
the same may from time to time be amended, supplemented or otherwise
modified, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Credit Agreement and the
other Loan Documents, the Lenders have agreed to make certain Extensions
of Credit (as hereinafter defined) to or for the benefit of the Company;
WHEREAS, the Company owns directly or indirectly all of the
issued and outstanding stock of each Guarantor;
WHEREAS, the Company and the Guarantors are engaged in related
businesses, and each Guarantor will derive substantial direct and indirect
benefit from the making of the Extensions of Credit; and
WHEREAS, the obligation of the Lenders to make the Extensions
of Credit is conditioned upon, among other things, the execution and
delivery by the Guarantors of this Guarantee;
NOW, THEREFORE, in consideration of the premises and to induce
the Lenders to enter into the Credit Agreement and to make the Extensions
of Credit, each Guarantor hereby agrees with and for the benefit of the
Agent and the Lenders as follows:
1. Defined Terms. As used in this Guarantee, terms defined
in the Credit Agreement are used herein as therein defined, and the
following terms shall have the following meanings:
"Adjusted Net Worth" of any Guarantor shall mean, as of any
date of determination thereof, the excess of (i) the amount of the
"present fair saleable value" of the assets of such Guarantor as of
the date of such determination, over (ii) the amount of all
"liabilities of such Guarantor, contingent or otherwise", as of the
date of such determination, as such quoted terms are determined in
accordance with applicable federal and state laws governing
determinations of the insolvency of debtors.
"Determination Date" shall mean, with respect to any
Guarantor, the earlier of (a) the date of commencement of a case
under Title 11 of the United States Code in which such Guarantor is<PAGE>
2
a debtor and (b) the date enforcement hereunder is sought with
respect to such Guarantor.
"Extensions of Credit" shall mean (i) all loans or advances
made to the Company under any Loan Document, (ii) all letters of
credit issued for the account of the Company under any Loan
Document, (iii) all bankers' acceptances created for the account of
the Company under any Loan Document and (iv) all other extensions of
credit to or for the benefit of the Company under any Loan Document.
"Maximum Guaranteed Amount" for any Guarantor shall mean, as
of the Determination Date for such Guarantor, the sum of (i) an
amount equal to the sum of each Extension of Credit (or portion
thereof) the proceeds of which are used to make a Valuable Transfer
(as hereinafter defined) to such Guarantor plus interest on such
amount at the rate specified in the Credit Agreement plus (ii) the
greater of (I) ninety-five percent (95%) of the Adjusted Net Worth
of such Guarantor at the date of the execution of this Guarantee
before giving effect to any Extensions of Credit made on such date
and (II) ninety-five percent (95%) of the Adjusted Net Worth of such
Guarantor at the Determination Date for such Guarantor. For
purposes hereof, the term "Valuable Transfer" shall mean to (i) make
a loan, advance or capital contribution to such Guarantor, (ii)
acquire from such Guarantor debt securities or other obligations of
such Guarantor, (iii) acquire property, any interest in which is
transferred to such Guarantor (but only to the extent of the
economic benefit to such Guarantor of the interest so transferred),
(iv) purchase equity securities of such Guarantor or (v) otherwise
confer, directly or indirectly, an economic benefit on such
Guarantor (but only to the extent of such benefit).
"Obligations" shall mean the unpaid principal of and interest
on (including, without limitation, interest accruing after the
maturity of the Loans and Reimbursement Obligations and interest
accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding,
relating to the Company, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Loans and
all other obligations and liabilities of the Company to the Agent
and the Lenders (or, in the case of any Interest Rate Protection
Agreement, any Affiliate of any Lender), whether direct or indirect,
absolute or contingent, due or to become due, now existing or
hereafter incurred, which may arise under, out of, or in connection
with, the Credit Agreement, the Loans, the other Loan Documents, the
Letters of Credit or any other document made, delivered or given in
connection therewith, whether on account of principal, interest,
reimbursement obligations, fees, charges, indemnities, costs,
expenses (including, without limitation, all reasonable fees and
disbursements of counsel to the Agent and the Lenders that are
required to be paid by the Company pursuant to the Credit Agreement)
or otherwise.
2. Guarantee (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Agent and
the Lenders and their respective successors, endorsees, transferees and
assigns, the prompt and complete payment and performance by the Company<PAGE>
3
when due (whether at the stated maturity, by acceleration or otherwise) of
the Obligations, and each Guarantor further agrees to pay any and all
expenses (including, without limitation, all reasonable fees and
disbursements of counsel) which may be paid or incurred by the Agent or
any Lender in enforcing, or obtaining advice of counsel in respect of, any
rights under this Guarantee; provided, however, that, anything herein or
in any other Loan Document to the contrary notwithstanding, the maximum
liability of each Guarantor hereunder and under the other Loan Documents
shall in no event exceed such Guarantor's Maximum Guaranteed Amount as
determined at the Determination Date for such Guarantor; and further
provided, that the Maximum Guaranteed Amount for each Guarantor hereunder
shall in no event exceed the amount which can be guaranteed by such
Guarantor under applicable federal and state laws relating to the
insolvency of debtors.
(b) Each Guarantor agrees that the Obligations may at any
time and from time to time exceed the Maximum Guaranteed Amount of such
Guarantor or of all of the Guarantors without impairing this Guarantee or
affecting the rights and remedies of the Agent and the Lenders hereunder.
(c) No payment or payments made by the Company, any of the
Guarantors, any other guarantor or any other Person or received or
collected by the Agent or any Lender from the Company, any of the
Guarantors, any other guarantor or any other Person by virtue of any
action or proceeding or any set-off or appropriation or application at any
time or from time to time in reduction of or in payment of the Obligations
shall be deemed to modify, reduce, release or otherwise affect the
liability of any Guarantor hereunder which shall, notwithstanding any such
payment or payments other than payments made by such Guarantor in respect
of the Obligations or payments received or collected from such Guarantor
in respect of the Obligations, remain liable for the Obligations up to its
Maximum Guaranteed Amount until the Obligations are paid in full, the
Revolving Credit Commitments are terminated and no Letters of Credit are
outstanding.
(d) Each Guarantor agrees that whenever, at any time, or from
time to time, it shall make any payment to the Agent or any Lender on
account of its liability hereunder, it will notify the Agent in writing
that such payment is made under this Guarantee for such purpose.
3. Right of Contribution. Each Guarantor hereby agrees that
to the extent that a Guarantor shall have paid more than its proportionate
share of any payment made hereunder, such Guarantor shall be entitled to
seek and receive contribution from and against any other Guarantor
hereunder who has not paid its proportionate share of such payment. Each
Guarantor's right of contribution shall be subject to the terms and
conditions of Paragraph 5 hereof. The provisions of this Paragraph 3
shall in no respect limit the obligations and liabilities of any Guarantor
to the Agent and the Lenders, and each Guarantor shall remain liable to
the Agent and the Lenders for the full amount guaranteed by such Guarantor
hereunder.
4. Right of Set-off. Each Guarantor hereby irrevocably
authorizes each Lender at any time and from time to time, if an Event of
Default shall have occurred and be continuing, without notice to such
Guarantor or any other Guarantor, any such notice being expressly waived<PAGE>
4
by each Guarantor to the extent permitted by applicable law, to set off
and appropriate and apply any and all deposits (general or special, time
or demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held
or owing by such Lender to or for the credit or the account of such
Guarantor, or any part thereof in such amounts as such Lender may elect,
against and on account of the obligations and liabilities of such
Guarantor to such Lender hereunder and claims of every nature and
description of such Lender against such Guarantor, in any currency,
whether arising hereunder, under the Credit Agreement or any Revolving
Credit Notes, as such Lender may elect, whether or not the Agent or any
Lender has made any demand for payment and although such obligations,
liabilities and claims may be contingent or unmatured. Each Lender agrees
to notify such Guarantor promptly of any such set-off and the application
made by such Lender, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of
each Lender under this paragraph are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which
such Lender may have.
5. No Subrogation. Notwithstanding any payment or payments
made by any of the Guarantors hereunder or any set-off or application of
funds of any of the Guarantors by any Lender, no Guarantor shall be
entitled to be subrogated to any of the rights of the Agent or any Lender
against the Company or any other Guarantor or any collateral security or
guarantee or right of offset held by any Lender for the payment of the
Obligations, nor shall any Guarantor seek or be entitled to seek any
contribution or reimbursement from the Company or any other Guarantor in
respect of payments made by such Guarantor hereunder, until all amounts
owing to the Agent and the Lenders by the Company on account of the
Obligations are indefeasibly paid in full, the Revolving Credit
Commitments are terminated and no Letters of Credit are outstanding. If
any amount shall be paid to any Guarantor on account of such subrogation
rights at any time when all of the Obligations shall not have been paid in
full, such amount shall be held by such Guarantor in trust for the Agent
and the Lenders, segregated from other funds of such Guarantor, and shall,
forthwith upon receipt by such Guarantor, be turned over to the Agent in
the exact form received by such Guarantor (duly endorsed by such Guarantor
to the Agent, if required), to be applied against the Obligations, whether
matured or unmatured, in such order as the Agent and the Lenders may
determine.
6. Amendments, etc. with respect to the Obligations; Waiver
of Rights. Each Guarantor shall remain obligated hereunder and under the
other Loan Documents notwithstanding that, without any reservation of
rights against any Guarantor and without notice to or further assent by
any Guarantor, any demand for payment of any of the Obligations made by
the Agent or any Lender may be rescinded by such party and any of the
Obligations continued, and the Obligations, or the liability of any other
party upon or for any part thereof, or any collateral security or
guarantee therefor or right of offset with respect thereto, may, from time
to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Agent or
any Lender and this Guarantee, the Credit Agreement, any Revolving Credit
Notes, the Loan Documents, any other collateral security document or other<PAGE>
5
guarantee or document in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, and any collateral
security, guarantee or right of offset at any time held by the Agent or
any Lender for the payment of the Obligations may be sold, exchanged,
waived, surrendered or released. Neither the Agent nor any Lender shall
have any obligation to protect, secure, perfect or insure any Lien at any
time held as security for the Obligations or for this Guarantee or any
property subject thereto. When making any demand hereunder against any of
the Guarantors, the Agent or any Lender may, but shall be under no
obligation to, make a similar demand on the Company or any other Guarantor
or guarantor, and any failure by the Agent or any Lender to make any such
demand or to collect any payments from the Company or any such other
Guarantor or guarantor or any release of the Company or such other
Guarantor or guarantor shall not relieve any of the Guarantors in respect
of which a demand or collection is not made or any of the Guarantors not
so released of their several obligations or liabilities hereunder, and
shall not impair or affect the rights and remedies, express or implied, or
as a matter of law, of the Agent or any Lender against any of the
Guarantors. For the purposes hereof "demand" shall include the
commencement and continuance of any legal proceedings.
7. Guarantee Absolute and Unconditional. To the extent
permitted by applicable law, each Guarantor waives any and all notice of
the creation, renewal, extension or accrual of any of the Obligations and
notice of or proof of reliance by the Agent or any Lender upon this
Guarantee or acceptance of this Guarantee, the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee; and all dealings between the Company or any of the Guarantors
and the Agent or any Lender shall likewise be conclusively presumed to
have been had or consummated in reliance upon this Guarantee. To the
extent permitted by applicable law, each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or
nonpayment to or upon the Company or any of the Guarantors with respect to
the Obligations. Each Guarantor understands and agrees that this
Guarantee shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity, regularity or
enforceability of the Credit Agreement, any Revolving Credit Notes, any of
the other Loan Documents, any of the Obligations or any other collateral
security therefor or guarantee or right of offset with respect thereto at
any time or from time to time held by the Agent or any Lender, (b) any
defense, set-off or counterclaim (other than a defense of payment or
performance) which may at any time be available to or be asserted by the
Company against the Agent or any Lender, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Company or such
Guarantor) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Company for the Obligations, or of
such Guarantor under this Guarantee, in bankruptcy or in any other
instance. When pursuing its rights and remedies hereunder against any
Guarantor, the Agent and any Lender may, but shall be under no obligation
to, pursue such rights and remedies as it may have against the Company or
any other Person or against any collateral security or guarantee for the
Obligations or any right of offset with respect thereto, and any failure
by the Agent or any Lender to pursue such other rights or remedies or to
collect any payments from the Company or any such other Person or to
realize upon any such collateral security or guarantee or to exercise any<PAGE>
6
such right of offset, or any release of the Company or any such other
Person or any such collateral security, guarantee or right of offset,
shall not relieve such Guarantor of any liability hereunder, and shall not
impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of the Agent or any Lender against such
Guarantor.
8. Reinstatement. This Guarantee shall continue to be
effective, or be reinstated, as the case may be, if at any time payment,
or any part thereof, of any of the Obligations is rescinded or must
otherwise be restored or returned by the Agent or any Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for,
the Company or any Guarantor or any substantial part of its property, or
otherwise, all as though such payments had not been made.
9. Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Agent without set-off or counterclaim in
U.S. Dollars at the office of the Agent located at 270 Park Avenue, New
York, New York 10017.
10. Representations and Warranties. Each Guarantor hereby
represents and warrants that the representations and warranties set forth
in Section 4 of the Credit Agreement as they relate to such Guarantor,
each of which is hereby incorporated herein by reference, are true and
correct, and the Agent and each Lender shall be entitled to rely on each
of them as if they were fully set forth herein, provided that each
reference in each such representation and warranty to the Company's
knowledge shall, for the purposes of this paragraph, be deemed to be a
reference to such Guarantor's knowledge.
Each Guarantor agrees that the foregoing representations and
warranties shall be deemed to have been made by such Guarantor on the date
of each borrowing by the Company, and on the date of issuance of each
Letter of Credit, under the Credit Agreement on and as of such date of
borrowing or issuance as though made hereunder on and as of such date
11. Covenants. Each Guarantor hereby agrees that, from and
after the Effective Date and so long as the Revolving Credit Commitments
remain in effect, any Revolving Credit Note or Letter of Credit remains
outstanding and unpaid or any other amount is owing to any Bank or the
Agent under the Credit Agreement or any other Loan Document, such
Guarantor shall take, or shall refrain from taking, as the case may be,
all actions that are necessary to be taken or not taken so that no
violation of any provision, covenant or agreement contained in Section 6
or 7 of the Credit Agreement, and so that no Default or Event of Default,
is caused by any act or failure to act of such Guarantor or any of its
Subsidiaries.
12. Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not<PAGE>
7
invalidate or render unenforceable such provision in any other
jurisdiction.
13. Paragraph Headings. The paragraph headings used in this
Guarantee are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
14. No Waiver; Cumulative Remedies. Neither the Agent nor
any Lender shall by any act (except by a written instrument pursuant to
Paragraph 15 hereof), delay, indulgence, omission or otherwise be deemed
to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise and no delay in exercising, on
the part of the Agent or any Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which the Agent or such Lender would otherwise have on
any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive
of any rights or remedies provided by law.
15. Integration; Waivers and Amendments; Successors and
Assigns; Governing Law. This Guarantee represents the entire agreement of
each Guarantor with respect to the subject matter hereof and there are no
promises or representations by the Agent or any Lender relative to the
subject matter hereof not reflected herein. None of the terms or
provisions of this Guarantee may be waived, amended or supplemented or
otherwise modified except in accordance with Section 11.1 of the Credit
Agreement. This Guarantee shall be binding upon the successors and
assigns of each Guarantor and shall inure to the benefit of the Agent and
the Lenders and their respective successors and assigns. This Guarantee
shall be governed by and be construed and interpreted in accordance with
the law of the State of New York.
16. Notices. All notices, requests and demands given
hereunder shall be given in accordance with Section 11.2 of the Credit
Agreement, provided that all notices, requests and demands to or upon a
Guarantor shall be addressed to such Guarantor at the address provided for
such Guarantor in Schedule I hereto or at such other address of which the
Agent shall have been notified pursuant to the Credit Agreement.
17. Counterparts. This Guarantee may be executed by one or
more of the parties hereto on any number of separate counterparts and all
of said counterparts taken together shall be deemed to constitute one and
the same instrument.
18. Submission To Jurisdiction; Waivers. Each of the
Guarantors hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Guarantee and the other Loan
Documents to which it is a party, or for recognition and enforcement<PAGE>
8
of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the Courts of the State of New York, the courts of
the United States of America for the Southern District of New York,
and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail),
postage prepaid, to such Guarantor at the address provided for such
Guarantor in Schedule I hereto or at such other address of which the
Agent shall have been notified pursuant to the Credit Agreement;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this Paragraph any special, exemplary,
punitive or consequential damages.
19. Termination. This Guarantee shall remain in full force
and effect and be binding in accordance with and to the extent of its
terms upon each Guarantor and the successors and assigns thereof, and
shall inure to the benefit of the Agent and the Lenders, and their
respective successors, endorsees, transferees and assigns, until all the
Obligations and the obligations of each Guarantor under this Guarantee
shall have been satisfied by payment in full, the Revolving Credit
Commitments shall be terminated and no Letters of Credit are outstanding.
At the request and expense of the Company, a Guarantor shall be released
from its obligations hereunder, in the event that all the capital stock of
such Guarantor shall be sold, transferred or otherwise disposed of in
accordance with the terms of the Credit Agreement; provided that the
Company shall have delivered to the Agent, at least ten Business Days
prior to the date of the proposed release, a written request for release
identifying the relevant Guarantor and the terms of the sale or other
disposition in reasonable detail, including the price thereof and any
expenses in connection therewith, together with a certification by the
Company stating that such transaction is in compliance with the Credit
Agreement and the other Loan Documents.
20. WAIVER OF JURY TRIAL. EACH OF THE GUARANTORS HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION
OR PROCEEDING RELATING TO THIS GUARANTEE OR ANY OTHER LOAN DOCUMENT TO
WHICH IT IS A PARTY AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee to be duly executed and delivered by its duly authorized
officer as of the day and year first above written.<PAGE>
9
ESSEX INTERNATIONAL, INC.
By ____________________________
Title:
ESSEX WIRE CORPORATION
By ____________________________
Title:
EXCEL WIRE AND CABLE CO.
By ____________________________
Title:
DIAMOND WIRE & CABLE CO.
By ____________________________
Title:
US SAMICA CORPORATION
By ____________________________
Title:<PAGE>
SCHEDULE I
Addresses of Guarantors<PAGE>
EXHIBIT G-1
[CRAVATH, SWAIN & MOORE LETTERHEAD]
April 12, 1995
CREDIT AGREEMENT
Dear Sirs:
We have acted as counsel to BCP/Essex Holdings Inc., a
Delaware corporation ("Holdings"), in connection with the preparation,
execution and delivery of (a) the Credit Agreement dated as of April 12,
1995 (the "Credit Agreement"), among Holdings, Essex Group, Inc., a
Michigan corporation ("Essex"), the lenders parties thereto (the
"Lenders") and Chemical Bank, as agent for the Lenders (in such capacity,
the "Agent") and (b) the Subsidiary Guarantee, the Pledge Agreements, the
Security Agreements and the Mortgages referred to in the Credit Agreement
(collectively, the "Security Documents" and, together with the Credit
Agreement, the "Loan Documents"). Unless otherwise defined herein, terms
defined in the Credit Agreement are used herein as therein defined.
This opinion is furnished to you pursuant to Section 5.1(f)(i)
of the Credit Agreement. References herein to the "UCC" are references to
the Uniform Commercial Code as in effect in the State of New York.
In connection with this opinion, we have examined (a) executed
copies of the Credit Agreement and each other Loan Document and (b) copies
of such corporate documents and records of the Loan Parties and
certificates of public officials and officers of the Loan Parties and such
other documents as we have deemed necessary or appropriate for the
purposes of this opinion. In our examination, we have assumed the
genuineness of all signatures, the due authorization, execution and
delivery of the Credit Agreement and the other Loan Documents by the
parties thereto (other than the Loan Documents as executed by Holdings and
Essex International, Inc. ("Essex International")), the authenticity of
all documents submitted to us as originals and the conformity to
authentic, original documents of all documents submitted to us as
certified, conformed or photostatic copies.
Based upon and subject to the foregoing and to the further
qualifications set forth below, we are of opinion as follows:
1. Each of Holdings and Essex International is validly
existing and in good standing under the General Corporation Law of the
State of Delaware (the "GCL"). Each of Holdings and Essex International
has the corporate power and authority under the GCL to own and operate its
property and to conduct the business in which it is currently engaged.
2. Each of Holdings and Essex International has the corporate
power and authority, and the legal right under the GCL, to make, deliver
and perform each of the Loan Documents to which it is a party. Each of
Holdings and Essex International has taken all necessary corporate action
to authorize the execution, delivery and performance of the Loan Documents
to which it is a party. No consent or authorization of, filing with or
other act by or in respect of, any Federal, New York or Delaware
Governmental Authority is required in connection with the execution,
delivery or performance by each of the Loan Parties, or the validity or
enforceability, of any of the Loan Documents as to which such Loan Party
is a party, other than filings in connection with the perfection or<PAGE>
2
recording of Liens created by the Security Documents to which such Loan
Party is a party and the termination of Liens created in connection with
the Existing Credit Agreement or the "Loan Documents" as defined in the
Existing Credit Agreement. Each of the Loan Documents to the extent it
purports to be governed by New York law constitutes a legal, valid and
binding obligation of each Loan Party party thereto, enforceable against
each such Loan Party in accordance with its respective terms. The
opinions set forth above are qualified to the following
extent: (a) except to the extent provided in paragraphs 5 and 6, we
express no opinion with respect to the creation, perfection or priority of
any security interest purported to be created in the Collateral (as
defined in the respective Security Agreements and Pledge Agreements);
(b) certain provisions of the Security Documents (including the Mortgages)
relating to the rights and remedies of the Lenders and the Agent in
respect of the Collateral (as defined in the relevant Pledge Agreement and
Security Agreement) and the Mortgaged Property (as defined in the relevant
Mortgage) and their security interest therein are or may be unenforceable
in whole or in part under the laws of the State of New York, but the
inclusion of such provisions does not affect the validity of the Security
Documents, and the Security Documents contain adequate provisions for the
practical realization of the rights and benefits afforded thereby, except
for economic consequences resulting from any delay imposed by, or any
procedure required by, applicable New York laws, rules, regulations and
court decisions and by constitutional requirements; (c) insofar as
provisions contained in the Loan Documents provide for indemnification,
the enforcement thereof may be limited by public policy considerations;
(d) we express no opinion as to the effect of the law of any jurisdiction
other than the State of New York wherein any Lender may be located or
wherein enforcement of the Security Documents may be sought which limits
the rates of interest legally chargeable or collectible; and (e) the
enforceability of the Security Agreements and the Mortgages may be subject
to the rights of lessees or other account debtors, the terms of the leases
or other contracts between the relevant Loan Party and such lessees or
other account debtors and any claims or defenses of such lessees or
account debtors against such Loan Party. Furthermore, it should be noted
that the remedy of specific performance is discretionary and normally will
not be ordered in respect of monetary obligations or if monetary damages
are reasonably ascertainable. No opinion is expressed herein with respect
to (i) the enforceability of any provisions contained in the Loan
Documents purporting to preserve a debtor's liability for any deficiency
after the sale of any collateral to the extent such sales are not
conducted in accordance with the applicable provisions of the laws of the
State of New York, (ii) Section 11.12(a) of the Credit Agreement and
Section 18 of the Subsidiary Guarantee insofar as such Sections relate to
the subject matter jurisdiction of the United States District Court for
the Southern District of New York to adjudicate any controversy related to
the Credit Agreement and the other Loan Documents, (iii) the waiver of
inconvenient forum set forth in Section 11.12(b) of the Credit Agreement
and Section 18 of the Subsidiary Guarantee with respect to proceedings in
the United States District Court for the Southern District of New York and
(iv) whether a Federal or state court outside of the State of New York
would give effect to the choice of New York law provided for in the Credit
Agreement and any other Loan Document. We express no opinion as to
(i) Section 11.7(b) of the Credit Agreement to the extent that it provides
for a right of set-off in respect of participating interests purchased
pursuant to Section 11.7(a) of the Credit Agreement or (ii) any provision
in any Loan Document insofar as it provides a right of set-off in respect
of claims, credits or other obligations that are contingent or a right of<PAGE>
3
set-off in respect of Obligations against deposits, indebtedness or other
obligations of any entity other than the entity to which such Obligations
are payable.
3. The execution, delivery and performance of the Loan
Documents by the Loan Parties and the borrowings under the Credit
Agreement and the use of the proceeds thereof will not (a) violate any
Requirement of Law (including Regulation U, T, G or X of the Board of
Governors of the Federal Reserve System) under the laws of the United
States, the laws of the State of New York or the GCL, (b) violate the
certificate of incorporation or by-laws of Holdings or Essex
International, (c) violate any Contractual Obligation of any Loan Party
under any agreement listed on Schedule I hereto or (d) result in or
require the creation or imposition of any Lien on any of the properties or
revenues pursuant to any agreement listed on Schedule I hereto.
4. No Loan Party is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940 (the "1940 Act") (other than an "investment
company" exempt from the provisions of the 1940 Act).
5. The provisions of each of the Security Agreements create
in favor of the Agent for the benefit of the Lenders a valid security
interest (as defined in the UCC) in all right, title and interest of each
Loan Party party thereto in the Collateral (as defined in the relevant
Security Agreement) thereunder as security for the Obligations (as defined
in the relevant Security Agreement), to the extent that the UCC governs
the creation of a security interest therein. The opinions set forth in
this paragraph 5 are qualified as follows:
(a) in the case of property which becomes Collateral after the
date hereof, Section 552 of Title 11 of the United States Code (the
"Bankruptcy Code") limits the extent to which property acquired by a
debtor after the commencement of a case under the Bankruptcy Code
may be subject to a security interest arising from a security
agreement entered into by the debtor before the commencement of such
case; and
(b) we express no opinion as to:
(i) any Loan Party's rights in or title to any
Collateral;
(ii) the perfection or priority of such security
interests;
(iii) the validity of such security interests as they
relate to any Collateral securing any accounts, chattel paper
or general intangibles; or
(iv) the validity of such security interests as they
relate to any interest in or claim in or under any policy of
insurance, any lease of real property or any Collateral which
consists of accounts resulting from the sale of farm products,
crops, timber, minerals and the like, letters of credit or
items which are subject to (A) a statute or treaty of the
United States which provides for a national or international
registration or a national or international certificate of<PAGE>
4
title for the creation of a security interest of (B) a
certificate of title statute.
6. Assuming the continued possession by the Agent of the
Pledged Notes referred to in each Pledge Agreement and the stock
certificates representing the Pledged Stock referred to in each Pledge
Agreement, together with undated stock powers or endorsements, as the case
may be, duly executed in blank relating thereto, and assuming that each of
the Lenders is without notice of any adverse claim (as defined in
Section 8-302 of the UCC), the provisions of each of the Pledge Agreements
create in favor of the Agent for the benefit of the Lenders a valid first-
priority security interest (as defined in the UCC) in all right, title and
interest of each Loan Party party thereto in the Collateral (as defined in
the relevant Pledge Agreement) thereunder as security for the Obligations
(as defined in the relevant Pledge Agreement), to the extent that the UCC
governs the creation of a security interest therein. No registration,
recordation or filing with any Governmental Authority in New York is
required for the perfection of the security interest in the Collateral
referred to in each Pledge Agreement. The opinions set forth in this
paragraph 6 are qualified as follows:
(a) in the case of the issuance of additional shares or
distributions of "instruments" as defined in Article 9 of the UCC in
respect of the Pledged Stock, interest on the Pledged Notes or
distributions of cash proceeds, interest or dividends (other than
any thereof which constitute "nonidentifiable cash proceeds" as
defined in Article 9 of the UCC), such perfected security interest
will continue only if exclusive possession and control of the
certificates representing such shares, such instruments or such cash
proceeds, interest or dividends, as the case may be, are maintained
by the Agent in accordance with the provisions of the relevant
Pledge Agreement;
(b) in the case of the issuance or distribution in respect of
the Pledged Stock or the Pledged Notes of nonidentifiable cash
proceeds or other proceeds not referred to in clause (a) above, the
continuation of perfection of such security interests is limited to
the extent set forth in Section 9-306 of the UCC;
(c) we express no opinion as to any Loan Party's rights in or
title to any Collateral;
(d) we express no opinion as to the priority of such security
interests as against any claim or lien in favor of the United States
or any agency or instrumentality thereof (including Federal tax
liens and liens under Title IV of the Employee Retirement Income
Security Act of 1974, as amended) or any other nonconsensual Federal
or state statutory lien; and
(e) in the case of property which becomes Collateral after the
date hereof, Section 552 of the Bankruptcy Code limits the extent to
which property acquired by a debtor after the commencement of a case
under the Bankruptcy Code may be subject to a security interest
arising from a security agreement entered into by the debtor before
the commencement of such case.
The foregoing opinions are subject to the following
qualifications:<PAGE>
5
(a) With respect to the opinions expressed above relating to
the legal, valid and binding nature of agreements or obligations of
any Loan Party and to the enforceability of such agreements or
obligations, such opinions are subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and
other similar laws affecting creditors' rights generally from time
to time in effect. In addition, the enforceability of any party's
obligations is also subject to general principles of equity,
regardless of whether such enforceability of any party's obligations
is considered in a proceeding in equity or at law.
(b) We understand that you are satisfying yourselves as to
the status under Section 548 of the Bankruptcy Code and applicable
state fraudulent conveyance laws of the obligations of the Loan
Parties under the Loan Documents and the security interests created
thereby and we express no opinion thereon.
(c) We understand that you are satisfying yourselves as to
the creation, perfection and priority of the security interests
created under each of the Mortgages in the Mortgaged Properties and
(to the extent that they do not purport to be governed by New York
law) the enforceability of such Mortgages and, to the extent that
this opinion addresses Loan Documents generally, we express no
opinion with respect to the Mortgages with respect to such matters.
(d) In rendering our opinions in paragraph 6 above, we have
assumed that the Agent and the Lenders will not waive, subordinate
or agree to any modification of the perfection or priority of the
security interests referred to in paragraph 6. In rendering our
opinions in paragraphs 5 and 6, we have assumed that the Agent and
the Lenders will not act in any way inconsistently with the
maintenance of such security interests, in the case of paragraphs 5
and 6, or perfection of such security interests, in the case of
paragraph 6.
(e) Our opinion in paragraph 2 as to certain consents,
authorizations, filings or any other acts, our opinion in
paragraph 3 as to compliance with certain Requirements of Law and
our opinion in paragraph 6 as to the priority of the security
interests referred to therein are based upon (i) those consents,
authorizations, filings and other acts and (ii) a review of the UCC
and of those laws, statutes, rules and regulations which, in our
experience, are normally applicable to transactions of the type
contemplated by the Loan Documents.
(f) In connection with this opinion, including our opinion
contained in paragraph 3 as to there being no violation of certain
Contractual Obligations, we are not expressing any opinion as to
whether Holdings or Essex has, as a factual matter, complied with or
satisfied any applicable financial tests or ratios and have relied,
without any independent verification, on the certificates of David
A. Owen, the Chief Financial Officer of Essex, as to such matters.
We are admitted to practice only in the State of New York and
express no opinion as to matters governed by any laws other than the laws
of the State of New York, the Federal laws of the United States of America
and the Delaware General Corporation Law.<PAGE>
6
This opinion is rendered only to the Agent and the Lenders and
their permitted transferees and is solely for their benefit in connection
with the above transactions. This opinion may not be relied upon by the
Agent or the Lenders or their permitted transferees for any other purpose
or relied upon by any other person, firm or corporation for any purpose
without our prior written consent.
Very truly yours,
The Lenders Parties to the
Credit Agreement
referred to above
Chemical Bank, as Agent
270 Park Avenue
New York, NY 10017
39NS
O<PAGE>
SCHEDULE I
Indenture dated as of May 1, 1989, between MS/Essex Holdings
Inc. and United States Trust Company of New York, as trustee.
Indenture dated as of May 7, 1993, between Essex Group, Inc.,
and NBD Bank, National Association, as trustee.
Senior Unsecured Note Agreement dated as of April 12, 1995,
among BCP/Essex Holdings Inc., Essex Group, Inc., the lenders parties
thereto and Chemical Bank, as administrative agent.<PAGE>
Officer's Certificate
16% Senior Discount Debentures Due 2004
The undersigned is the Chief Financial Officer of Essex Group,
Inc., a Michigan corporation and a wholly owned subsidiary of BCP/Essex
Holdings Inc. ("Essex"). The undersigned is familiar with the terms and
provisions of each of (i) the Indenture dated as of May 1, 1989 (the
"Indenture"), between MS/Essex Holdings and United States Trust Company of
New York in respect of the 16% Senior Discount Debentures Due 2004 of
MS/Essex Holdings, (ii) the Credit Agreement dated as of April 12, 1995
(the "Credit Agreement"), among Holdings, Essex, the Lenders named therein
and Chemical Bank, as agent, (iii) the Senior Unsecured Note Agreement
dated as of April 12, 1995 (the "Note Agreement"), among Holdings, Essex,
the Lenders named therein and Chemical Bank, as administrative agent, and
(iv) the Agreement and Lease dated as of April 12, 1995 (the "Lease"),
between Mellon Financial Services Corporation # 3 and Essex. In
connection with the foregoing, the undersigned hereby certifies that:
1. To the best of my knowledge, no violation of the terms and
provisions of or obligations under the Indenture has or will occur as a
result of the execution of the Credit Agreement, the Note Agreement or the
Lease and no violation of such terms and provisions or obligations has or
will result from the consummation of the transactions contemplated
thereby.
2. Specifically, and in connection with Section 4.07 of the
Indenture, the Essex Consolidated Cash Flow Ratio (as defined in the
Indenture), after giving effect to the incurrence of all Debt to be
incurred under the Credit Agreement, the Note Agreement and the Lease and
the receipt and application of the proceeds thereof, would be greater than
1.75 to 1 (the calculation of which is set forth on Exhibit A hereto).
3. The calculation attached hereto is true and correct and
has been made on good faith assumptions and has been calculated in
accordance with the terms and provisions of the Indenture.
_____________________________________
David A. Owen
Dated: April 12, 1995<PAGE>
EXHIBIT A
ESSEX GROUP, INC.
CONSOLIDATED CASH FLOW
Calculated on a ProForma basis as of 12/31/94. Assumes interest expense
of $40 million for the year.
[CAPTION]
<TABLE>
Essex BCP/SX
Group, Inc. Holdings, Inc.
----------- --------------
<S> <C> <C> <C> <C>
Net Income 24,725 27,641
+ Interest Expense 40,000 40,000
+ Provision for Taxes 22,700 9,501
+ Depreciation 26,883 26,883
+ Other Amortizations:
Goodwill 4,064 4,064
Fixed Asset (G)L 1,279 1,279
Other 2,858 1,763
----- -----
8,201 8,201 7,106 7,106
----- -----
EBITDA 122,509 111,131
+/- Other Non-Cash Items:
Pension Expense 2,558 2,558
Provision for Bad Debt 1,288 1,288
Workers' Comp/Pub. Liability Exp. 3,238 3,238
Other Special Accruals:
Division 868 868
Corporate 3,170 3,170
----- -----
4,038 4,038 4,038 4,038
----- -----
Consolidated Cash Flow 133,631 122,253
Pro Forma Interest Expense 40,000 40,000
Yields Coverage Ratio of: 3.34 3.06
/TABLE
<PAGE>
Officer's Certificate
10% Senior Notes Due 2003
The undersigned is the Chief Financial Officer of Essex Group,
Inc., a Michigan corporation and a wholly owned subsidiary of BCP/Essex
Holdings Inc. ("Essex"). The undersigned is familiar with the terms and
provisions of each of (i) the Indenture dated as of May 7, 1993 (the
"Indenture"), between Essex Group, Inc. and NBD Bank, National
Association, in respect of the 10% Senior Notes Due 2003, (ii) the Credit
Agreement dated as of April 12, 1995 (the "Credit Agreement"), among
BCP/Essex Holdings, Inc. ("Holdings"), Essex, the lenders named therein
and Chemical Bank, as agent, (iii) the Senior Unsecured Note Agreement
dated as of April 12, 1995 (the "Note Agreement"), among Holdings, Essex,
the Lenders named therein and Chemical Bank, as administrative agent, and
(iv) the Agreement and Lease dated as of April 12, 1995 (the "Lease"),
between Mellon Financial Services Corporation # 3 and Essex. In
connection with the foregoing, the undersigned hereby certifies that:
1. To the best of my knowledge, no violation of the terms and
provisions of or obligations under the Indenture has or will occur as a
result of the execution of the Credit Agreement, the Note Agreement or the
Lease and no violation of such terms and provisions or obligations has or
will result from the consummation of the transactions contemplated
thereby.
2. Specifically, and in connection with Section 4.04(a) of
the Indenture, the Consolidated EBITDA Coverage Ratio (as defined in the
Indenture), after giving effect to the incurrence of all Debt to be
incurred under the Credit Agreement, the Note Agreement and the Lease and
the receipt and application of the proceeds thereof, would be greater than
2.0 to 1 (the calculation of which is set forth on Exhibit A hereto).
3. Specifically, and in connection with Section 4.04(b)(iv)
of the Indenture, the obligations of Essex, under the Lease are "Capital
Lease Obligations" under and as defined in the Indenture and do not exceed
in the aggregate, together with any other "Capital Lease Obligations" and
guarantees of joint venture obligations thereof, $25,000,000.
4. The calculation attached hereto is true and correct and
has been made on good faith assumptions and has been calculated in
accordance with the terms and provisions of the Indenture.
_____________________________________
David A. Owen
Dated: April 12, 1995<PAGE>
EXHIBIT A
ESSEX GROUP, INC.
CONSOLIDATED EBITDA COVERAGE RATIO
As defined in the Sr. Note re Section 4.04(a). Calculated on a ProForma
basis as of 12/31/94. Assumes interest expense of $40 million for the
year.
[CAPTION]
<TABLE>
Actual ProForma
Essex Essex
Group, Inc. Group, Inc.
----------- -----------
<S> <C> <C> <C> <C>
Net Income 30,171 14,725
+ Amortization of Goodwill 4,064 4,064
+ Purchase Accounting 10,919 10,919
------ ------
Consolidated Net Income 45,154 29,708
+ Interest Expense 21,924 40,000
+ Provision for Taxes 22,700 22,700
+ Depreciation (Excluding Purchase Acctg) 16,208 16,208
+ Amortization 2,858 2,858
+/- Other Non-Cash Items:
Pension Accruals 2,558 2,558
Inventory Valuation 2,500 2,500
Elim. of Extraordinary Gains/Losses:
Bennettsville Project 1,377 1,377
Other Comm. Restructuring 889 889
WCD Serv. Center Reserve 278 278
Lafayette Reserve Adj. (1,160) (1,160)
----- -----
1,384 1,384 1,384 1,384
----- -----
Defined EBITDA 115,286 117,916
Pro Forma Interest Expense 40,000 40,000
Consolidated EBITDA Coverage Ratio: 2.88 2.95
/TABLE
<PAGE>
EXHIBIT G-2
[ESSEX GROUP, INC. LETTERHEAD]
April 12, 1995
Dear Sirs:
I have acted as counsel to Essex Group, Inc., a Michigan
corporation ("Essex"), BCP/Essex Holdings Inc., a Delaware corporation
("Holdings"), and the subsidiaries of Essex set forth in Schedule II (the
"Subsidiaries") in connection with the preparation, execution and delivery
of the Credit Agreement dated as of April 12, 1995 (the "Credit
Agreement"), among Holdings, Essex, the lenders parties thereto (the
"Lenders") and Chemical Bank, as Agent (in such capacity, the "Agent").
This opinion is furnished to you pursuant to Section 5.1(f) of
the Credit Agreement. Unless otherwise defined herein, terms defined in
the Credit Agreement are used herein as therein defined.
In connection with this opinion, I have examined (a) executed
copies of the Credit Agreement and each other Loan Document and (b) copies
of such corporate documents and records of the Essex Entities (as defined
below) and certificates of public officials and officers of the Essex
Entities and such other documents as I have deemed necessary or
appropriate for the purposes of this opinion. In my examination, I have
assumed the genuineness of all signatures, the due authorization,
execution and delivery of the Credit Agreement and the other Loan
Documents by the parties thereto (other than the Essex Entities), the
authenticity of all documents submitted to me as originals and the
conformity to authentic, original documents of all documents submitted to
me as certified, conformed or photostatic copies. As to any facts
material to this opinion set forth below which I did not independently
establish or verify, I have relied upon representations of officers or
representatives of the Essex Entities.
Based upon the foregoing, I am of the opinion that:
1. Each of Essex, Holdings and the Subsidiaries that are Loan
Parties (Essex, Holdings and such Subsidiaries constituting, collectively,
the "Essex Entities") (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, (b) has
the corporate power and authority to own and operate its property and to
conduct the business in which it is currently engaged and in which it
proposes to be engaged after the Effective Date and (c) is duly qualified
as a foreign corporation and is in good standing under the laws of each
jurisdiction where its ownership, lease or operation of property or the
conduct of its business requires such qualification, except where the
failure to be so qualified and/or in good standing, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
2. Each of the Essex Entities had, at the time they were
executed, the corporate power and authority, and the legal right, to make,
deliver and perform each of the Loan Documents to which it is a party.
Each of the Essex Entities has taken all necessary corporate action to
authorize the borrowings on the terms and conditions of the Credit
Agreement, to grant the Liens pursuant to the Security Documents to which
it is a party and to authorize the execution, delivery and performance of
the Loan Documents to which it is a party. Except as previously disclosed
to the Lenders and the Agent in the Credit Agreement, no consent or<PAGE>
2
authorization of, filing with or other act by or in respect of any
Governmental Authority or, to the best of my knowledge, any other Person
is required in connection with the execution, delivery or performance by
each of the Essex Entities, or the validity or enforceability, of any of
the Loan Documents to which such entity is a party, except for filings in
connection with the perfection of Liens created by the Security Documents
to which such entity is a party. Each of the Loan Documents to which any
of the Essex Entities is a party has been duly executed and delivered by
such entity.
3. The execution, delivery and performance of the Loan
Documents by each of the Essex Entities and the borrowings under the
Credit Agreement and the use of the proceeds thereof will not (a) violate
any Requirement of Law (excluding Regulations U, T, G and X of the Board
of Governors of the Federal Reserve System and excluding any Requirement
of Law other than under the laws of the United States, the State of
Indiana or the State of Michigan or the General Corporation Law of the
State of Delaware (the "GCL")), (b) to the best of my knowledge after due
inquiry, violate any order, writ, judgment, injunction, decree,
determination or award of any court or governmental instrumentality
presently in effect which affects or binds any of the Essex Entities or
any of their respective properties, (c) violate any Contractual Obligation
of any of the Essex Entities under any agreement listed on Schedule I
hereto or, to the best of my knowledge, any other Contractual Obligation
of any of the Essex Entities or (d) to my knowledge, result in, or
require, the creation or imposition of any Lien on any of the respective
properties or revenues pursuant to any Requirement of Law or Contractual
Obligation of any of the Essex Entities, except the Liens created pursuant
to the Security Documents.
4. To the best of my knowledge after due inquiry, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or threatened by or against any of the
Essex Entities or against any of their respective properties or revenues
(a) with respect to any Loan Document, the Loans or the use of the
proceeds thereof, any Letter of Credit or any Lien contemplated by the
Loan Documents or (b) which has a reasonable possibility of an adverse
determination and, if adversely determined, (i) would affect the legality,
validity or enforceability or any Loan Document or (ii) would have a
Material Adverse Effect.
5. Schedules II and III hereto set forth, as of the Effective
Date, with respect to each class of the Capital Stock of each of the Essex
Entities (a) the number of authorized, issued and outstanding shares of
such class and (b) the names of the beneficial owners of such shares and
the number of shares owned of record and beneficially by such owners. All
the shares of such Capital Stock of each of the Essex Entities described
on such Schedule are validly issued, fully paid and nonassessable. To the
best of my knowledge, there are no outstanding subscriptions, options,
warrants, calls, rights (including preemptive rights) or any other
agreements or commitments of any nature with respect to the Capital Stock
of Holdings, Essex or any of the Subsidiaries, except as set forth on
Schedule IV hereto.
My opinion in paragraph 3 as to compliance with certain
Requirements of Law is based upon a review of those laws, statutes, rules
and regulations which, in my experience, are normally applicable to
transactions of the type contemplated by the Loan Documents.<PAGE>
3
In connection with this opinion, including my opinion
contained in paragraph 3 as to there being no violation of certain
Contractual Obligations, I am not expressing any opinion as to whether
Essex has as a factual matter satisfied or complied with any applicable
financial tests or ratios and have relied, without any independent
verifications, on the certificate of David A. Owen, the Chief Financial
Officer of Essex, as to such matters.
I am admitted to practice in the State of Indiana. I express
no opinion as to matters governed by any laws other than the laws of the
State of Indiana, the laws of the State of Michigan, the Federal laws of
the United States of America and the Delaware General Corporation Law. I
have assumed that, insofar as the substantive laws of the State of
Michigan and the GCL may be applicable to any matters opined on herein,
such laws are identical to the substantive laws of the State of Indiana.
This opinion is rendered only to the Agent and the Lenders and
their permitted transferees and is solely for their benefit in connection
with the above transactions. This opinion may not be relied upon by the
Agent or the Lenders or their permitted transferees for any other purpose
or relied upon by any other person, firm or corporation for any purpose
without my prior written consent.
Very truly yours,
Debra F. Minott
Senior Vice President &
General Counsel
The Lenders Parties to the
Credit Agreement
referred to above
Chemical Bank, as Agent
270 Park Avenue
New York, NY 10017<PAGE>
SCHEDULE I
Indenture dated as of May 1, 1989, between MS/Essex Holdings
Inc. and United States Trust Company of New York, as Trustee.
Indenture dated as of May 7, 1993, between Essex Group, Inc.,
and NBD Bank, National Association, as Trustee.
Senior Unsecured Note Agreement dated as of April 12, 1995,
among BCP/Essex Holdings Inc., Essex Group, Inc., the lenders parties
thereto and Chemical bank, as administrative agent.<PAGE>
Schedule II
[CAPTION]
<TABLE>
Company Name Shares* Shareholder
(Domicile) Auth'd. Issued (# of Shares)
---------- ------- ------ -------------
<S> <C> <C> <C>
MS/Essex
Essex Group, Inc. (Michigan) Holdings Inc.
(Formerly UAE of Michigan, Inc.) 1,000 100 (100)
Essex Group, Inc. (Delaware) Essex Group, Inc.
(Formerly Unitrode Corporation) 1,000 100 (100)
Essex Group, Inc.
Essex International, Inc. (Delaware) 100 100 (100)
Essex Wire Corporation (Michigan) Essex Group, Inc.
(Formerly Essex International, Inc. 100 100 (100)
Essex Group, Inc.
US Samica Corporation (Vermont) 66,666 43,200 (43,200)
Essex Group, Inc.
Diamond Wire & Cable Co. (Illinois) 250 25 (25)
Essex Group, Inc.
ExCel Wire and Cable Co. (Illinois) 1,000 250 (250)
Essex Group Export Inc. (U.S. Virgin Essex Group, Inc.
Islands) 1,000 1,000 (1,000)
</TABLE>
*All shares are Common Stock<PAGE>
SCHEDULE III
The authorized Capital Stock of Holdings consists of
150,000,000 shares of Common Stock, divided into Class A Common Stock
($.01 par value) and Class B Common Stock ($.01 par value), and 5,000,000
shares of Preferred Stock issuable in series by the Board of Directors of
Holdings.
There are outstanding as of the date of the attached opinion
35,172,466 shares of Class A Common Stock and 1,821,128 shares of Series A
Cumulative Redeemable Exchangeable Preferred Stock.
There are outstanding as of the date of the attached opinion
warrants to purchase 5,666,738 shares of Common Stock of Holdings and
options to purchase 5,172,600 shares of Common Stock of Holdings.
Capitalized terms used herein have the meanings assigned
thereto in the attached opinion or the Credit Agreement (as defined in
such opinion).<PAGE>
SCHEDULE IV
Set forth below are agreements known to us on the date of the
attached opinion providing for subscriptions, options, warrants, calls,
rights (including preemptive rights) or any other agreement or commitments
of any nature with respect to the Capital Stock of BCP/Essex Holdings Inc.
(Capitalized terms used herein but not defined herein shall have the
meanings assigned thereto in the attached opinion or in the Credit
Agreement (as defined in such opinion).):
Amended and Restated Stock Option Agreement.
Amended and Restated Stock Option Plan.
BCP Stock Subscription Agreement dated as of October 9, 1992,
between Bessemer Capital and Acquisition Corporation.
Investors Stockholders Agreement dated as of October 9, 1992, among
Acquisition Corporation, Bessemer Capital, DLJ, Goldman and Chemical
Equity Associates ("CEA").
Irrevocable Proxies dated as of October 9, 1992, granted to Bessemer
Capital by each Management Investor.
Management Option Continuation Agreements dated as of October 9,
1992, between Acquisition Corporation and the Management
Optionholders.
Management Stock Subscription Agreements dated as of October 9,
1992, between Acquisition Corporation and each individual Management
Investor.
Management Stockholders and Registration Right Agreement dated as of
October 9, 1992, among Acquisition Corporation, Bessemer Capital and
each of the Management Investors.
Registration Rights Agreement dated as of October 9, 1992, among
Acquisition Corporation, DLJ, Goldman and CEA.
Stock and Warrant Subscription Agreement dated as of October 9,
1992, among Acquisition Corporation, DLJ, Goldman and CEA.
Stock Option Agreement.
The Certificate of Incorporation of Acquisition Corporation and
Holdings, including the Certificates of Designation relating to the
Series A Cumulative Redeemable Exchangeable Preferred Stock of
Acquisition Corporation and Holdings.
Warrant Agreement dated as of October 9, 1992, among Acquisition
Corporation, DLJ and Goldman.<PAGE>
EXHIBIT G-3
FORM OF OPINION OF LOCAL COUNSEL1/
April __,1995
The Lenders Parties to the
Credit Agreement
referred to below
Chemical Bank,
as Agent
270 Park Avenue
New York, New York 10017
Dear Sirs:
We have acted as special local counsel in the state of
________________ (the "State") to Chemical Bank, as Agent for the Lenders
referred to below, in connection with the preparation, execution and
delivery of the Credit Agreement, dated as of April __, 1995 (the "Credit
Agreement"), among BCP/Essex Holdings Inc., a Delaware corporation
("Holdings"), Essex Group, Inc., a Michigan corporation (the "Company"),
the lenders parties thereto (the "Lenders") and Chemical Bank, as agent
(in such capacity, the "Agent"), and the other Loan Documents referred to
in the Credit Agreement.
This opinion is furnished to you pursuant to Section 5.1(f)(iii) of
the Credit Agreement. Unless otherwise defined herein, terms defined in
the Credit Agreement are used herein as therein defined.
In connection with this opinion, we have examined execution copies
of (i) the Credit Agreement and (ii) each of the Security Documents listed
on Annex I hereto (the "State Security Documents;" together with the
Credit Agreement, the "Loan Documents"). We have also examined originals,
or copies certified or otherwise identified to our satisfaction, of such
corporate records, certificates of public officials, certificates of
officers of the Loan Parties, and such other documents as we have deemed
necessary or appropriate for the purpose of this opinion. For the
purposes of this opinion, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals
and the conformity to original documents of documents submitted to us as
certified or photostatic copies.
_______________
1/ This Form of opinion contains only basic provisions and is subject
to further comment by each Local Counsel. Certain assumptions and
exceptions particular to the laws of each local jurisdiction will be
included in the actual opinions delivered.<PAGE>
2
You have advised us that in rendering this opinion, we may assume
that (i) the actions of the parties to this transaction are permitted
under their respective charter documents; (ii) each of the Loan Documents
was duly authorized, executed and delivered by the respective parties
thereto in the form of the execution copies reviewed by us and (iii) each
of the Loan Documents was negotiated by the various parties thereto
principally in the State of New York and such documents were executed and
delivered in New York, where the closing and the funding are to take
place.
Based on the foregoing, we are of the opinion that:
1. Neither the execution and delivery by any Loan Party of the
Loan Documents to which it is a party nor the performance by such Loan
Party of any of its obligations thereunder does or will violate any
applicable Requirement of Law of the State.
2. No license, notice, authorization, consent, exemption,
franchise or other approval of, permit or action by, or registration,
declaration of filing with any Governmental Authority of the State or any
political subdivision thereof is required on the part of any Loan Party in
connection with its execution and delivery of, and the performance of its
obligations under, any of the Loan Documents or the grant of the liens and
security interests created by the State Security Documents, or for the
exercise by the Agent of its rights and remedies thereunder, except for
(i) the filing of the financing statements referred to in paragraph 3
below and (ii) the recordation of the Mortgages referred to in paragraph 5
hereof. The execution, delivery and performance by each Loan Party of the
Loan Documents to which it is a party will not violate any Requirement of
Law of the State or any political subdivision thereof.
3. Insofar as the laws of the State are concerned, the provisions
of each Security Agreement listed on Annex I hereto are effective to
create in favor of the Agent a legal, valid and enforceable security
interest in the Collateral described therein, and when UCC-1 financing
statements for each Loan Party to any such Security Agreement in the form
attached hereto as Annex II have been filed with the office of the
Secretary of State of the State [and with the [Appropriate Local Office]]
(the "Filing Offices"), the Agent shall have a fully perfected security
interest in all right, title and interest of the Loan Parties in the State
Collateral (as defined below) under the Uniform Commercial Code of the
State (the "UCC"), as security for the payment of the Obligations. As
used in this paragraph, "State Collateral" means all equipment and
inventory (as each such term is defined in the UCC) located in the State,
all accounts, chattel paper and general intangibles (as each such term is
defined in the UCC) of each Loan Party located in the State (within the
meaning of Section 9-103 of the UCC) and all other Collateral as to which
filing UCC-1 financing statements in the Filing Offices is an appropriate
method of perfection.
4. Section 9-103 of the UCC provides that the laws (including the
conflict of laws rules) of the jurisdiction of the chief executive office
or place of business of a debtor governs the perfection, and the effect of
perfection or non-perfection, of a security interest in the accounts,
general intangibles, and mobile goods, and of a non-possessory security
interest in chattel paper, of such debtor (each as defined in the UCC).
5. Each Mortgage listed on Annex I hereto (a) is in proper form
for execution and recording in the office referred to on Annex I with<PAGE>
3
respect so such Mortgage (the "Recorder's Office"), (b) constitutes a
valid mortgage [deed of trust] enforceable in accordance with its terms
under all applicable laws in effect in the State, (c) is effective to
create a legal, valid and enforceable lien on all right, title and
interest of the Loan Party thereto in the Mortgaged Property referred to
herein as security for the payment of the Obligations, enforceable as such
against such Loan Party and (d) when filed for recording in the Recorder's
Office, will constitute a fully perfected lien on such Mortgaged Property.
6. The courts of the State will enforce those provisions in the
Loan Documents which stipulate that the validity, construction and
enforceability of such agreement will be governed by the laws of the State
of New York, except to the extent that the laws of the State shall govern
the perfection and effect of perfection of the security interests created
thereunder and the enforceability of the security interest in the
collateral located in the State.
7. Neither the Agent nor any of the Lenders will become subject
to any income, franchise, or other tax imposed by a Government Authority
of the State solely by reason of the transactions contemplated by the Loan
Documents.
Very truly yours,
_______________________________<PAGE>
EXHIBIT H
FORM OF CLOSING CERTIFICATE
Pursuant to Section 5.1(d) of the Credit Agreement, dated as
of April __, 1995 (the "Credit Agreement"; terms defined therein being
used herein as therein defined unless otherwise defined herein) among
BCP/ESSEX HOLDINGS INC., ESSEX GROUP, INC., the lenders parties thereto
(the "Lenders") and CHEMICAL BANK, as agent for the Lenders, the
undersigned [Vice] President of [Name of Loan Party] (the "Certifying Loan
Party") hereby certifies as follows:
1. The representations and warranties of the Certifying
Loan Party contained in each Loan Document to which it is a party or
in any certificate, document or financial or other statement
furnished by or on behalf of the Certifying Loan Party pursuant to
or in connection with any Loan Document are true and correct in all
material respects on and as of the date hereof with the same effect
as if made on the date hereof except for representations and
warranties stated to relate to a specific earlier date, in which
case such representations and warranties were true and correct in
all material respects as of such earlier date;
2. No Default or Event of Default has occurred and is
continuing as of the date hereof or after giving effect to any
extensions of credit to be made on the date hereof;
[3. Attached hereto as Exhibit A are true and correct copies
of all consents, authorizations and filings (other than filings of
the type referred to in Section 5.1(m) of the Credit Agreement)
required to be obtained from or made with any Governmental Authority
or any other Person in connection with the execution, delivery,
performance, validity or enforceability of the Credit Agreement, and
such consents, authorizations and filings are in full force and
effect;1/]
4. ____________________ is and at all times since
______________ 19__, has been the duly elected and qualified
[Assistant] Secretary of the Certifying Loan Party and the signature
set forth on the signature line for such officer below is such
officer's true and genuine signature;
and the undersigned [Assistant] Secretary of the Certifying Loan Party
hereby certifies as follows:
5. There are no liquidation or dissolution proceedings
pending or to my knowledge threatened against the Certifying Loan
Party, nor has any other event occurred affecting or to my knowledge
threatening the corporate existence of the Certifying Loan Party;
_______________
1/ Insert in Closing Certificate of the Company only.<PAGE>
2
6. The Certifying Loan Party is a corporation duly
incorporated, validly existing and in good standing under the laws
of the State of _______________;
7. Attached hereto as Exhibit [A] [B] is a complete and
correct copy of resolutions duly adopted by the Board of Directors
of the Certifying Loan Party on _________, 19__; such resolutions
have not in any way been amended, modified, revoked or rescinded and
have been in full force and effect since their adoption to and
including the date hereof and are now in full force and effect; such
resolutions are the only corporate proceedings of the Certifying
Loan Party now in force relating to or affecting the matters
referred to therein;
8. Attached hereto as Exhibit [B] [C] is a complete and
correct copy of the by-laws of the Certifying Loan Party as in
effect at all times since _________________, 19__ to and including
the date hereof; and attached hereto as Exhibit [C] [D] is a true
and complete copy of the certificate of incorporation of the
Certifying Loan Party as in effect at all times since
___________________, 19__ to and including the date hereof;
9. The following persons are now duly elected and qualified
officers of the Certifying Loan Party holding the offices indicated
next to their respective names below, and such officers have held
such offices with the Certifying Loan Party at all times since
________________, 19__ to and including the date hereof, and the
signatures appearing opposite their respective names below are the
true and genuine signatures of such officers, and each of such
officers is duly authorized to execute and deliver on behalf of the
Certifying Loan Party any Loan Document to which it is a party and
any certificate or other document to be delivered by the Certifying
Loan Party pursuant to any Loan Document:
Name Office Signature
__________________ [Vice] President ________________________
__________________ [AssistantSecretary _____________________
IN WITNESS WHEREOF, the undersigned have hereto set our names.
________________________ _____________________________
Title: [Vice] President Title: [Assistant] Secretary
Date: April __, 1995<PAGE>
EXHIBIT I
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of April
__, 1995, as amended, supplemented or otherwise modified from time to time
(the "Credit Agreement"), among Essex Group, Inc., BCP/Essex Holdings
Inc., the Lenders named therein and Chemical Bank, as Agent. Terms
defined in the Credit Agreement are used herein with the same meanings.
This Assignment and Acceptance, between the Assignor (as set forth on
Schedule 1 hereto and made a part hereof) and the Assignee (as set forth
on Schedule 1 hereto and made a part hereof) is dated as of the Effective
Date (as set forth on Schedule 1 hereto and made a part hereof, the
"Effective Date").
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby
irrevocably purchases and assumes from the Assignor without recourse to
the Assignor, as of the Effective Date, a ___% interest (the "Assigned
Interest") in and to the Assignor's rights and obligations under the
Credit Agreement respecting those credit facilities contained in the
Credit Agreement as are set forth on Schedule 1 (the "Assigned
Facilities"), in a principal amount for each Assigned Facility as set
forth on Schedule 1 provided, however, it is expressly understood and
agreed that (i) the Assignor is not assigning to the Assignee and the
Assignor shall retain (A) all of the Assignor's rights under Section 2.15
of the Credit Agreement with respect to any cost, reduction or payment
incurred or made prior to the Effective Date, including, without
limitation the rights to indemnification and to reimbursement for taxes,
costs and expenses and (B) any and all amounts paid to the Assignor prior
to the Effective Date and (ii) both Assignor and Assignee shall be
entitled to the benefits of Section 11.5 of the Credit Agreement.
2. The Assignor (i) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement, any
other Loan Document or any other instrument or document furnished pursuant
thereto or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Credit Agreement, any other Loan Document or
any other instrument or document furnished pursuant thereto; and (ii)
makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Company, any of its Subsidiaries
or any other Loan Party or the performance or observance by the Company,
any of its Subsidiaries or any other Loan Party of any of their respective
obligations under the Credit Agreement or any other Loan Document or any
other instrument or document furnished pursuant thereto;
3. The Assignee (i) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance; (ii)
confirms that it has received a copy of the Credit Agreement, together
with copies of the financial statements delivered pursuant to Section 4.1
thereof and other such documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (iii) agrees that it will, independently
and without reliance upon the Assignor, the Agent or any other Person
which has become a Lender and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit<PAGE>
2
decisions in taking or not taking action under the Credit Agreement and
each other Loan Document; (iv) appoints and authorizes the Agent to take
such action as agent on its behalf and to exercise such powers and
discretion under the Credit Agreement or any other Loan Document as are
delegated to the Agent by the terms thereof, together with such powers and
discretion as are incidental thereto; and (v) agrees that it will be bound
by the provisions of the Credit Agreement and will perform in accordance
with its terms all the obligations which by the terms of the Credit
Agreement are required to be performed by it as a Lender including, if it
is organized under the laws of a jurisdiction outside the United States,
its obligation pursuant to Section 2.15(b) of the Credit Agreement to
deliver on or prior to the date of this Assignment and Acceptance and
thereafter as specified in said Section 2.15, the forms prescribed by the
Internal Revenue Service of the United States certifying the Assignee's
complete exemption from United States federal withholding taxes with
respect to all payments to be made to the Assignee under the Credit
Agreement, or where, because of a Tax Law Change, the Assignee is no
longer entitled to a complete exemption from United States federal
withholding tax on such payments to it but is entitled to a reduced rate
of taxation with respect to such payments, the Assignee shall deliver such
other documents as are necessary to indicate that all such payments are
subject to such reduced rate of taxation.
4. Following the execution of this Assignment and
Acceptance, it will be delivered to the Agent for acceptance by it and
recording by the Agent pursuant to Section 11.6(d) of the Credit
Agreement, effective as of the Effective Date (which shall not be earlier
than five Business Days after the date of acceptance and recording by the
Agent of the executed Assignment and Acceptance).
5. Upon such acceptance and recording, from and after the
Effective Date, the Agent shall make all payments in respect of the
Assigned Interest (including payments of principal, interest, fees and
other amounts) to the Assignee whether such amounts have accrued prior to
the Effective Date or accrue subsequent to the Effective Date. The
Assignor and the Assignee shall make all appropriate adjustments in
payments by the Agent for periods prior to the Effective Date or with
respect to the making of this assignment directly between themselves.
6. From and after the Effective Date, (i) the Assignee
shall be a party to the Credit Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and under the other Loan Documents and shall be bound by
the provisions thereof and (ii) the Assignor shall, to the extent provided
in this Assignment and Acceptance, relinquish its rights and be released
from its obligations under the Credit Agreement.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective duly
authorized officers on Schedule 1 hereto.<PAGE>
Schedule 1 to Assignment and Acceptance Respecting
Credit Agreement, dated as of April __, 1995, among Essex Group, Inc.,
BCP/Essex Holdings Inc., the Lenders named therein and Chemical Bank as
Agent
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Revolving Credit Commitment Percentage
Assigned
(to at least fifteen
decimals) (shown as
a percentage of
Principal aggregate principal
Amount Assigned Commitment Percentages of all Lenders)
[ASSIGNEE]
By____________________
Name:
Title:
[ASSIGNOR]
By____________________
Name:
Title:
Consented To:
ESSEX GROUP, INC.
By____________________
Name:
Title:
CHEMICAL BANK, as Agent
By____________________
Name:
Title:
COMERICA BANK, as Issuing
Lender
By____________________
Name:
Title:<PAGE>
2
Accepted for Recordation in the Register:
CHEMICAL BANK, as Agent
By____________________
Name:
Title:<PAGE>
EXHIBIT J
[Indiana]
MORTGAGE
from
ESSEX GROUP, INC., Mortgagor
to
CHEMICAL BANK, as Agent, Mortgagee
DATED AS OF APRIL 12, 1995
This Instrument was prepared by and
after recording, please return to:
Simpson Thacher & Bartlett
a partnership which includes
professional corporations
425 Lexington Avenue
New York, New York 10017
ATTN: Craig Friedman, Esq.<PAGE>
[Indiana]
MORTGAGE
THIS MORTGAGE, dated as of April 12, 1995 is made by ESSEX
GROUP, INC., a Michigan corporation ("Mortgagor"), whose address is 1601
Wall Street, Fort Wayne, Indiana 46802, to CHEMICAL BANK, a New York
banking corporation, as agent for itself and the other Lenders (as defined
below) (in such capacity, "Mortgagee"), whose address is 270 Park Avenue,
New York, New York 10017. References to this "Mortgage" shall mean this
instrument and any and all renewals, modifications, amendments,
supplements, extensions, consolidations, substitutions, spreaders and
replacements of this instrument.
Background
A. BCP/Essex Holdings Inc., Mortgagor, the several banks
and financial institutions from time to time parties thereto (the
"Lenders") and Mortgagee are parties to that certain Credit Agreement
dated as of the date hereof (as the same may be amended, supplemented,
modified, extended, restated or replaced from time to time, the "Credit
Agreement"). Capitalized terms used herein but not defined herein shall
have the respective meanings assigned to such terms in the Credit
Agreement. References in this Mortgage to the "Default Rate" shall mean
the interest rate provided for in Section 2.10(c)(ii) of the Credit
Agreement.
B. Mortgagor is the owner of the parcel(s) of real property
described on Schedule A attached (such real property, together with all of
the buildings, improvements, structures and fixtures now or subsequently
located thereon (the "Improvements"), being collectively referred to as
the "Real Estate").
C. Pursuant to the terms of the Credit Agreement, (i) the
Lenders have agreed to make to Mortgagor revolving credit loans (the
"Loans") in an aggregate principal amount not to exceed $260,000,000 and
(ii) the Issuing Lender has agreed to issue Letters of Credit for the
account of Mortgagor in an aggregate amount not to exceed $25,000,000 at
any time outstanding, on the condition, among others, that the Loans, all
amounts due in connection with the Letters of Credit and all other
obligations of Mortgagor to Mortgagee and the Lenders under the Credit
Agreement and the other Loan Documents (as defined below) be secured by a
mortgage lien upon, and a security interest in, the Mortgaged Property (as
defined below). The Loans mature on or before the Revolving Credit
Termination Date. The Credit Agreement is hereby incorporated into and
made a part of this Mortgage.
D. In order to satisfy the condition referred to in the
immediately preceding recital, Mortgagor has agreed to execute and deliver
this Mortgage.
Granting Clauses
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Mortgagor agrees that to
secure:<PAGE>
2
(a) (i) the repayment of the Loans, (ii) the payment of all
interest on, and fees payable in connection with, the Loans, (iii)
the payment of any and all reimbursement obligations in respect of,
and all other amounts due in connection with, the Letters of Credit
and/or the Applications, including, without limitation, all fees and
costs related thereto, (iv) payment of all commitment fees and other
amounts payable by Mortgagor pursuant to the terms of the Credit
Agreement and (v) all amounts payable by Mortgagor to the Lenders or
any affiliate thereof pursuant to the terms of any interest rate
swap agreements or other interest rate protection products entered
into by Mortgagor and the Lenders (the items set forth in clauses
(i) through and including (v) being referred to collectively as the
"Indebtedness");
(b) the performance of all covenants, agreements, obligations
and liabilities of Mortgagor (the "Obligations") under or pursuant
to the provisions of the Credit Agreement, the Letters of Credit,
the Applications, this Mortgage, any other document securing payment
of the Indebtedness (such other documents securing payment of the
Indebtedness together with this Mortgage, collectively, the
"Security Documents") and any amendments, supplements, extensions,
renewals, restatements, replacements or modifications of any of the
foregoing (the Credit Agreement, the Letters of Credit, the
Applications, the Security Documents and all other documents and
instruments from time to time evidencing, securing or guaranteeing
the payment of the Indebtedness or the performance of the
Obligations, as any of the same may be amended, supplemented,
extended, renewed, restated, replaced or modified from time to time,
are collectively referred to as the "Loan Documents") and
(c) this Mortgage shall secure: (i) the maximum principal
amount, exclusive of any items described in (ii) below, of Five
Hundred Million Dollars ($500,000,000), including any additional
advances made from time to time after the date hereof pursuant to
this Mortgage or the Credit Agreement whether made as an obligation,
made at the option of the Mortgagee and/or the Lenders, made after a
reduction to a zero (0) or other balance, or made otherwise, (ii)
all other amounts payable by Mortgagor, or advanced by Mortgagee
and/or the Lenders for the account, or on behalf, of Mortgagor,
pursuant to the Security Documents or the other Loan Documents,
including, without limitation, amounts advanced with respect to the
Mortgaged Property (as defined below) for the payment of taxes,
assessments and insurance premiums and costs incurred for the
protection of the Mortgaged Property to the same extent as if the
future obligations and advances were made on the date of execution
of this Mortgage; and (iii) future modifications, extensions, and
renewals of any Indebtedness or Obligations secured by this
Mortgage; pursuant to Indiana Code 32-8-11-9, the lien of this
Mortgage with respect to future advances, modifications, extensions,
and renewals referred to herein shall have the same priority to
which this Mortgage otherwise would be entitled as of the date this
Mortgage is executed and recorded without regard to the fact that
the future advance, modification, extension, or renewal may occur
after the Mortgage is executed and/or recorded;<PAGE>
3
MORTGAGOR HEREBY GRANTS TO MORTGAGEE A LIEN UPON AND A SECURITY INTEREST
IN, AND HEREBY MORTGAGES, WARRANTS, GRANTS, ASSIGNS, TRANSFERS AND SETS
OVER TO MORTGAGEE:
(A) the Real Estate;
(B) all the estate, right, title, claim or demand whatsoever
of Mortgagor, in possession or expectancy, in and to the Real Estate
or any part thereof;
(C) all right, title and interest of Mortgagor in, to and
under all easements, rights of way, gores of land, streets, ways,
alleys, passages, sewer rights, waters, water courses, water and
riparian rights, development rights, air rights, mineral rights and
all estates, rights, titles, interests, privileges, licenses,
tenements, hereditaments and appurtenances belonging, relating or
appertaining to the Real Estate, and any reversions, remainders,
rents, issues, profits and revenue thereof and all land lying in the
bed of any street, road or avenue, in front of or adjoining the Real
Estate to the center line thereof;
(D) all of the fixtures, chattels, business machines,
machinery, apparatus, equipment, furnishings, fittings and articles
of personal property of every kind and nature whatsoever, and all
appurtenances and additions thereto and substitutions or
replacements thereof (together with, in each case, attachments,
components, parts and accessories) currently owned or subsequently
acquired by Mortgagor and now or subsequently attached to, or
contained in or used or usable in any way in connection with any
operation or letting of the Real Estate, including but without
limiting the generality of the foregoing, all screens, awnings,
shades, blinds, curtains, draperies, artwork, carpets, rugs, storm
doors and windows, furniture and furnishings, heating, electrical,
and mechanical equipment, lighting, switchboards, plumbing,
ventilating, air conditioning and air-cooling apparatus,
refrigerating, and incinerating equipment, escalators, elevators,
loading and unloading equipment and systems, stoves, ranges, laundry
equipment, cleaning systems (including window cleaning apparatus),
telephones, communication systems (including satellite dishes and
antennae), televisions, computers, sprinkler systems and other fire
prevention and extinguishing apparatus and materials, security
systems, motors, engines, machinery, pipes, pumps, tanks, conduits,
appliances, fittings and fixtures of every kind and description (all
of the foregoing in this paragraph (D) being referred to as the
"Equipment");
(E) all right, title and interest of Mortgagor in and to all
substitutes and replacements of, and all additions and improvements
to, the Real Estate and the Equipment, subsequently acquired by or
released to Mortgagor or constructed, assembled or placed by
Mortgagor on the Real Estate, immediately upon such acquisition,
release, construction, assembling or placement, including, without
limitation, any and all building materials whether stored at the
Real Estate or offsite, and, in each such case, without any further
mortgage, conveyance, assignment or other act by Mortgagor; <PAGE>
4
(F) all right, title and interest of Mortgagor, as lessor,
in, to and under all leases, subleases, underlettings, concession
agreements, management agreements, licenses and other agreements
relating to the use or occupancy of the Real Estate or the Equipment
or any part thereof, now existing or subsequently entered into by
Mortgagor and whether written or oral and all guarantees of any of
the foregoing (collectively, as any of the foregoing may be amended,
restated, extended, renewed or modified from time to time, the
"Leases"), and all rights of Mortgagor in respect of cash and
securities deposited thereunder and the right to receive and collect
the revenues, income, rents, issues and profits thereof, together
with all other rents, royalties, issues, profits, revenue, income
and other benefits arising from the use and enjoyment of the
Mortgaged Property (as defined below) (collectively, the "Rents");
(G) all right, title and interest of Mortgagor in and to all
trade names, trade marks, logos, copyrights, good will and books and
records relating to or used in connection with the operation of the
Real Estate or the Equipment or any part thereof; all general
intangibles related to the operation of the Improvements now
existing or hereafter arising;
(H) all unearned premiums under insurance policies now or
subsequently obtained by Mortgagor relating to the Real Estate or
Equipment and Mortgagor's interest in and to all proceeds of any
such insurance policies (including title insurance policies)
including the right to collect and receive such proceeds, subject to
the provisions relating to insurance generally set forth below; and
all awards and other compensation, including the interest payable
thereon and the right to collect and receive the same, made to the
present or any subsequent owner of the Real Estate or Equipment for
the taking by eminent domain, condemnation or otherwise, of all or
any part of the Real Estate or any easement or other right therein;
(I) all right, title and interest of Mortgagor in and to (i)
all contracts from time to time executed by Mortgagor or any manager
or agent on its behalf relating to the ownership, construction,
maintenance, repair, operation, occupancy, sale or financing of the
Real Estate or Equipment or any part thereof and all agreements
relating to the purchase or lease of any portion of the Real Estate
or any property which is adjacent or peripheral to the Real Estate,
together with the right to exercise such options and all leases of
Equipment (collectively, the "Contracts"), (ii) all consents,
licenses, building permits, certificates of occupancy and other
governmental approvals relating to construction, completion,
occupancy, use or operation of the Real Estate or any part thereof
(collectively, the "Permits") and (iii) all drawings, plans,
specifications and similar or related items relating to the Real
Estate (collectively, the "Plans");
(J) any and all monies now or subsequently on deposit for the
payment of real estate taxes or special assessments against the Real
Estate or for the payment of premiums on insurance policies covering
the foregoing property or otherwise on deposit with or held by
Mortgagee as provided in this Mortgage; and <PAGE>
5
(K) all proceeds, both cash and noncash, of the foregoing
(except to the extent otherwise provided in the Credit Agreement);
(All of the foregoing property and rights and interests now
owned or held or subsequently acquired by Mortgagor and described in the
foregoing clauses (A) through (E) are collectively referred to as the
"Premises", and those described in the foregoing clauses (A) through (K)
are collectively referred to as the "Mortgaged Property").
TO HAVE AND TO HOLD the Mortgaged Property and the rights and
privileges hereby mortgaged unto Mortgagee, its successors and assigns for
the uses and purposes set forth, until the Indebtedness is fully paid and
the Obligations fully performed.
Terms and Conditions
Mortgagor further represents, warrants, covenants and agrees
with Mortgagee as follows:
1. Warranty of Title. Mortgagor warrants that Mortgagor has
good title to the Real Estate in fee simple and good title to the rest of
the Mortgaged Property, subject only to the matters that are set forth in
Schedule B of the title insurance policy or policies being issued to
Mortgagee to insure the lien of this Mortgage and the matters referred to
in Section 7.3 of the Credit Agreement (the "Permitted Exceptions") and
Mortgagor shall warrant, defend and preserve such title and the lien of
the Mortgage thereon against all claims of all persons and entities.
Mortgagor further warrants that it has the right to mortgage the Mortgaged
Property.
2. Payment of Indebtedness. Mortgagor shall pay the
Indebtedness at the times and places and in the manner specified in the
Credit Agreement and shall perform all the Obligations, without relief
from applicable valuation and appraisement laws.
3. Requirements.
(a) Mortgagor shall promptly comply with, or cause to be
complied with, and conform to all present and future laws, statutes,
codes, ordinances, orders, judgments, decrees, rules, regulations and
requirements, and irrespective of the nature of the work to be done, of
each of the United States of America, any State and any municipality,
local government or other political subdivision thereof and any agency,
department, bureau, board, commission or other instrumentality of any of
them, now existing or subsequently created (collectively, "Governmental
Authority") which has jurisdiction over the Mortgaged Property and all
covenants, restrictions and conditions now or later of record which may be
applicable to any of the Mortgaged Property, or to the use, manner of use,
occupancy, possession, operation, maintenance, alteration, repair or
reconstruction of any of the Mortgaged Property. All present and future
laws, statutes, codes, ordinances, orders, judgments, decrees, rules,
regulations and requirements of every Governmental Authority applicable to
Mortgagor or to any of the Mortgaged Property and all covenants,
restrictions, and conditions which now or later may be applicable to any
of the Mortgaged Property are collectively referred to as the "Legal
Requirements". <PAGE>
6
(b) From and after the date of this Mortgage, Mortgagor shall
not by act or omission permit any building or other improvement on any
premises not subject to the lien of this Mortgage to encroach upon or be
served by the Premises or any part thereof or any interest therein to
fulfill any Legal Requirement (except to the extent such encroachment or
service is pursuant to a Permitted Exception), and Mortgagor hereby
assigns to Mortgagee any and all rights to give consent for all or any
portion of the Premises or any interest therein to be so used. Mortgagor
shall not by act or omission impair the integrity of any of the Real
Estate as a single zoning lot separate and apart from all other premises.
Mortgagor represents that each parcel of the Real Estate constitutes a
legally subdivided lot, in compliance with all subdivision laws and
similar Legal Requirements. Any act or omission by Mortgagor which would
result in a violation of any of the provisions of this Section shall be
void.
4. Payment of Taxes and Other Impositions. (a) Mortgagor
shall pay and discharge, no later than the last day when same may be paid
without interest or penalty, all taxes of every kind and nature
(including, without limitation, all real and personal property, income,
franchise, withholding, transfer, gains, profits and gross receipts
taxes), all charges for any easement or agreement maintained for the
benefit of any of the Mortgaged Property, all general and special
assessments, levies, permits, inspection and license fees, all water and
sewer rents and charges and all other public charges even if unforeseen or
extraordinary, imposed upon or assessed against or which may become a lien
on any of the Mortgaged Property, or arising in respect of the occupancy,
use or possession thereof, together with any penalties or interest on any
of the foregoing (all of the foregoing are collectively referred to as the
"Impositions"). Mortgagor shall, within 30 days of specific request of
Mortgagee (which shall not be made prior to the earlier of the last day
when the Imposition in question may be paid without interest or penalty or
the date such Imposition is actually paid), deliver to Mortgagee (i)
original or copies of receipted bills and canceled checks evidencing
payment of such Imposition if it is a real estate tax or other public
charge or (ii) evidence reasonably acceptable to Mortgagee showing the
payment of any other such Imposition. If by law any Imposition, at
Mortgagor's option, may be paid in installments (whether or not interest
shall accrue on the unpaid balance of such Imposition), Mortgagor may
elect to pay such Imposition in such installments and shall be responsible
for the payment of such installments with interest, if any.
(b) Nothing herein shall affect any right or remedy of
Mortgagee under this Mortgage or otherwise, without notice or demand to
Mortgagor, to pay, if an Event of Default shall have occurred and be
continuing, any Imposition after the date such Imposition shall have
become due, and to add to the Indebtedness the amount so paid, together
with interest from the time of payment at the Default Rate. Any sums paid
by Mortgagee in discharge of any Impositions shall be (i) a lien on the
Premises secured hereby prior to any right or title to, interest in, or
claim upon the Premises subordinate to the lien of this Mortgage, and (ii)
payable on demand by Mortgagor to Mortgagee together with interest at the
Default Rate as set forth above.
(c) Mortgagor shall not claim, demand or be entitled to
receive any credit or credits toward the satisfaction of this Mortgage or<PAGE>
7
on any interest payable thereon for any taxes assessed against the
Mortgaged Property or any part thereof. Mortgagor shall not claim any
deduction from the taxable value of the Mortgaged Property by reason of
this Mortgage to the extent the same may or will result in any expense,
cost or loss to Mortgagee.
5. Insurance. (a) Mortgagor shall maintain or cause to be
maintained on all of the Premises insurance as required under Section 6.5
(Maintenance of Property; Insurance) of the Credit Agreement. Each
insurance policy (other than flood insurance written under the National
Flood Insurance Act of 1968, as amended, in which case to the extent
available) shall (i) provide (to the extent that such provisions are
generally commercially available from insurance companies having an A.M.
Best Company, Inc. rating of A or higher and a financial size category of
not less than XI) that it shall not be canceled, non-renewed or materially
amended without 30-days' prior written notice to Mortgagee, and (ii) with
respect to all property insurance, may provide for deductibles in
commercially reasonable amounts, and contain a "Replacement Cost
Endorsement" without any deduction made for depreciation and with no co-
insurance penalty (or attaching an agreed amount endorsement satisfactory
to Mortgagee), with loss payable solely to Mortgagee (except as otherwise
provided in Section 5(e) below) as Mortgagee's interest may appear, under
a "standard" or "New York" mortgagee clause acceptable to Mortgagee and be
written by insurance companies having an A.M. Best Company, Inc. rating of
A or higher and a financial size category of not less than XI, or
otherwise as approved by Mortgagee. Liability insurance policies shall
name Mortgagee as an additional insured. The amounts of each insurance
policy and the form of each such policy shall at all times be reasonably
satisfactory to Mortgagee. Each policy shall expressly provide that any
proceeds which are payable to Mortgagee (pursuant to the terms of Section
5(e) below) shall be paid by check payable to the order of Mortgagee only
and require the endorsement of Mortgagee only. If any required insurance
shall expire, be withdrawn, become void by breach of any condition thereof
by Mortgagor or by any lessee of any part of the Mortgaged Property or
become void or unsafe by reason of the failure or impairment of the
capital of any insurer, or if for any other reason whatsoever (sufficient
in Mortgagee's reasonable judgment) such insurance shall become
unsatisfactory to Mortgagee, Mortgagor shall promptly obtain new or
additional insurance satisfactory to Mortgagee (after notice from
Mortgagee in the case that Mortgagor's obligation so to obtain new or
additional insurance results solely from the fact that such insurance in
Mortgagee's reasonable judgment has become unsatisfactory to Mortgagee).
Mortgagor shall not take out any separate or additional insurance which is
contributing in the event of loss unless it is properly endorsed and
otherwise reasonably satisfactory to Mortgagee in all respects.
(b) Mortgagor shall deliver to Mortgagee a certificate or
certificates of the insurance required to be maintained hereunder
reasonably acceptable to Mortgagee. Mortgagor shall (i) pay all premiums
for insurance not later than the earlier of (A) 30 days after the
effective date or renewal date, as the case may be, of each insurance
policy or (B) 30 days after the date (not earlier than such effective or
renewal date, as the case may be) on which the bill for the premium for
such insurance is rendered by the insurer with respect thereto (but in any
event, not later than the last day before which the policy would be
terminated for failure to pay such premium) and (ii) not later than the<PAGE>
8
date of renewal of each policy to be furnished pursuant to the provisions
of this Section, deliver a renewed certificate of insurance with standard
non-contributory mortgage clauses in favor of and acceptable to Mortgagee.
Within 30 days of specific request of Mortgagee (which shall not be made
prior to earlier of the date the payment is required to be made under
hereunder or the date payment is actually made), Mortgagor shall deliver
to Mortgagee evidence of payment of the premium for such insurance
reasonably satisfactory to Mortgagee. In no event shall Mortgagor permit
the cancellation of the insurance coverage herein required due to non-
payment of premiums.
(c) If Mortgagor is in default beyond the applicable grace
period provided in the Credit Agreement of its obligations to insure or
deliver any such prepaid policy or policies, then Mortgagee, at its option
and without notice, may effect such insurance from year to year, and pay
the premium or premiums therefor, and Mortgagor shall pay to Mortgagee on
demand such premium or premiums so paid by Mortgagee with interest from
the time of payment at the Default Rate and the same shall be deemed to be
secured by this Mortgage and shall be collectible in the same manner as
the Indebtedness secured by this Mortgage.
(d) Mortgagor promptly shall comply with and conform to (i)
all provisions of each such insurance policy, and (ii) all requirements of
the insurers applicable to Mortgagor or to any of the Mortgaged Property
or to the use, manner of use, occupancy, possession, operation,
maintenance, alteration or repair of any of the Mortgaged Property.
Mortgagor shall not use or permit the use of the Mortgaged Property in any
manner which would permit any insurer to cancel any fire or "all-risks"
insurance policy or void the coverage provided thereunder. Mortgagor
shall not use or permit the use of the Mortgaged Property in any manner
which would permit any insurer to cancel any other insurance policy or
void coverage provided thereunder unless Mortgagor promptly replaces such
policy or coverage, as the case may be, with a policy or coverage, as the
case may be, in conformity with the provisions hereof and in the Credit
Agreement pertaining to insurance.
(e) If the Mortgaged Property, or any part thereof, shall be
destroyed or damaged by fire or any other casualty, whether insured or
uninsured, or in the event any material claim is made against Mortgagor
for any personal injury, bodily injury or property damage incurred on or
about the Premises, Mortgagor shall give prompt notice thereof to
Mortgagee. If the Mortgaged Property is damaged by fire or other casualty
and the reasonably estimated cost to repair such damage is less than the
lesser of (i) 50% of the replacement cost of the Improvements at the
affected Real Estate site and (ii) $1,000,000, then provided that no Event
of Default shall have occurred and be continuing, Mortgagor shall have the
right to adjust such loss, and the insurance proceeds relating to such
loss shall be paid over to Mortgagor; provided that Mortgagor shall,
promptly after any such damage and adjustment of the insurance loss, if
any, repair all such damage regardless of whether any insurance proceeds
have been received or whether such proceeds, if received, are sufficient
to pay for the costs of repair. If the Mortgaged Property is damaged by
fire or other casualty and an Event of Default shall have occurred and be
continuing, then Mortgagor authorizes and empowers Mortgagee, at
Mortgagee's option and in Mortgagee's sole discretion, as attorney-in-fact
for Mortgagor, to make proof of loss, to adjust and compromise any claim<PAGE>
9
under any insurance policy, to appear in and prosecute any action arising
from any policy, to collect and receive insurance proceeds and to deduct
therefrom Mortgagee's expenses incurred in the collection process. Each
insurance company concerned is hereby authorized and directed to make
payment for loss directly to Mortgagee if the Mortgaged Property is
damaged by fire or other casualty and the cost to repair such damage
exceeds the above limit or if an Event of Default shall have occurred and
is continuing. Unless such Mortgaged Property is described in Section
7.6(a) of the Credit Agreement, and except as otherwise provided in the
Credit Agreement, Mortgagee shall have the right to require Mortgagor to
repair or restore the Mortgaged Property, and, if an Event of Default
shall have occurred and be continuing, Mortgagor hereby designates
Mortgagee as its attorney-in-fact for the purpose of making any election
required or permitted under any insurance policy relating to repair or
restoration. The insurance proceeds or any part thereof received by
Mortgagee shall be applied by Mortgagee toward reimbursement of all costs
and expenses of Mortgagee in collecting such proceeds, and the balance,
(i) if an Event of Default shall have occurred and is continuing, at
Mortgagee's option in its sole and absolute discretion, to the principal
and interest due or to become due in respect of the Loans (in the manner
set forth for mandatory prepayments in Section 2.7(c) of the Credit
Agreement), to fulfill any other Obligation of Mortgagor, to the
restoration or repair of the property damaged, or released to Mortgagor or
(ii) if an Event of Default shall not have occurred and be continuing,
released to Mortgagor. In the event Mortgagee elects (or in accordance
with clause (ii) of the immediately preceding sentence, is obligated) to
release such proceeds to Mortgagor, Mortgagor shall be obligated to use
such proceeds to restore or repair the Mortgaged Property (except to the
extent otherwise provided in the Credit Agreement). Application by
Mortgagee of any insurance proceeds toward the last maturing installments
of principal and interest due or to become due under the Loans shall not
excuse Mortgagor from making any regularly scheduled payments due
thereunder, nor shall such application extend or reduce the amount of such
payments.
(f) In the event of foreclosure of this Mortgage or other
transfer of title to the Mortgaged Property in extinguishment of the
Indebtedness, all right, title and interest of Mortgagor in and to any
insurance policies then in force shall pass to the purchaser or grantee
and Mortgagor hereby appoints Mortgagee its attorney-in-fact, in
Mortgagor's name, to assign and transfer all such policies and proceeds to
such purchaser or grantee.
(g) Mortgagor may maintain insurance required under this
Mortgage by means of one or more blanket insurance policies maintained by
Mortgagor; provided, however, that (A) any such policy (to the extent
generally commercially available from insurance companies having an A.M.
Best Company, Inc. rating of A or higher and a financial size category of
not less than XI) shall specify, or Mortgagor shall furnish to Mortgagee a
written statement from the insurer so specifying, the maximum amount of
the total insurance afforded by such blanket policy that is allocated to
the Premises and the other Mortgaged Property and any sublimits in such
blanket policy applicable to the Premises and the other Mortgaged
Property, (B) each such blanket policy shall include an endorsement
providing that, in the event of a loss resulting from an insured peril,
property insurance coverage shall be allocated to the Mortgaged Property<PAGE>
10
in an amount equal to the replacement value of the Mortgaged Property and
liability insurance shall be allocated to the Mortgaged Property in an
amount equal to coverage required as provided above, and (C) the
protection afforded under any such blanket policy shall be no less than
that which would have been afforded under a separate policy or policies
relating only to the Mortgaged Property.
6. Restrictions on Liens and Encumbrances. Except as
permitted under Section 7.3 (Limitation on Liens) of the Credit Agreement,
except for the Liens of the Security Agreements and except for the lien of
this Mortgage and the Permitted Exceptions, Mortgagor shall not further
mortgage, nor otherwise encumber the Mortgaged Property nor create or
suffer to exist any lien, charge or encumbrance on the Mortgaged Property,
or any part thereof, whether superior or subordinate to the lien of this
Mortgage and whether recourse or non-recourse.
7. Due on Sale and Other Transfer Restrictions. Except as
permitted under Section 7.6 (Limitation on Sale of Assets) of the Credit
Agreement, Mortgagor shall not sell, transfer, convey or assign all or any
portion of, or any interest in, the Mortgaged Property.
8. Maintenance; No Alteration; Inspection; Utilities. (a)
Mortgagor shall maintain or cause to be maintained all the Improvements in
good condition and repair and shall not commit or suffer any waste of the
Improvements. Mortgagor shall repair, restore, replace or rebuild
promptly after adjustment of any applicable insurance claim of a loss any
part of the Premises which may be damaged or destroyed by any casualty
whatsoever except to the extent the same is no longer required for the
conduct of Mortgagor's business and Mortgagor has not received insurance
proceeds with respect thereto. The Improvements shall not be demolished
or materially altered without the prior written consent of Mortgagee;
provided, that Mortgagee shall not unreasonably withhold its consent to
any such alteration.
(b) Mortgagee and any persons authorized by Mortgagee shall
have the right to enter and inspect the Premises and the right to inspect
all work done, labor performed and materials furnished in and about the
Improvements and the right to inspect and make copies of all books,
contracts and records of Mortgagor relating to the Mortgaged Property.
(c) Mortgagor shall pay or cause to be paid when due all
utility charges which are incurred for gas, electricity, water or sewer
services furnished to the Premises and all other assessments or charges of
a similar nature, whether public or private, affecting the Premises or any
portion thereof, whether or not such assessments or charges are liens
thereon; provided, however, that such payment shall not be required with
respect to any such charge or assessment so long as (i) the validity or
amount of such charge or assessment shall be contested by Mortgagor in
good faith by proceedings that are, in Mortgagee's reasonable discretion,
appropriate, (ii) Mortgagor shall have given to Mortgagee prior notice of
such contest, (iii) Mortgagor shall have set aside on its books adequate
reserves as required by GAAP with respect thereto and (iv) Mortgagee shall
have determined, in its reasonable discretion, that (A) payment of the
Indebtedness and performance of the Obligations, (B) the liens and
security interests created hereby and (C) Mortgagee's rights and remedies<PAGE>
11
hereunder will not be impaired or endangered thereby in any material
respect.
9. Condemnation/Eminent Domain. Promptly after obtaining
knowledge of the institution of any proceedings for the condemnation of
the Mortgaged Property, or any portion thereof, Mortgagor will notify
Mortgagee of the pendency of such proceedings. After an Event of Default
shall have occurred and while such Event of Default is continuing,
Mortgagor authorizes Mortgagee, at Mortgagee's option and in Mortgagee's
sole discretion, as attorney-in-fact for Mortgagor, to commence, appear in
and prosecute, in Mortgagee's or Mortgagor's name, any action or
proceeding relating to any condemnation of the Mortgaged Property, or any
portion thereof, and to settle or compromise any claim in connection with
such condemnation. If Mortgagee does not participate in such condemnation
proceeding, then Mortgagor shall, at its expense, diligently prosecute any
such proceeding and shall consult with Mortgagee, its attorneys and
experts and cooperate with them in any defense of any such proceedings.
All awards and proceeds of condemnation shall be assigned to Mortgagee to
be applied in the same manner as insurance proceeds, as provided above,
and Mortgagor agrees to execute any such assignments of all such awards as
Mortgagee may request.
10. Restoration. If Mortgagee elects (or, in accordance with
Section 5(e) above, is obligated) to release funds to Mortgagor for
restoration of any of the Real Estate, then such restoration shall be
performed only in accordance with the following conditions:
(i) prior to the commencement of any restoration, the
plans and specifications for such restoration, and the budgeted
costs, shall be submitted to and approved by Mortgagee in its
reasonable discretion;
(ii) prior to making any advance of restoration funds,
Mortgagee shall be satisfied that the remaining restoration funds
are sufficient to complete the restoration;
(iii) at the time of any disbursement of the restoration
funds, (A) no Event of Default shall then exist and (B) if the
amount of such disbursement is $1,000,000 or more, a satisfactory
bring-down or continuation of title insurance on the Premises shall
be delivered to Mortgagee;
(iv) disbursements shall be made from time to time in
an amount not exceeding the cost of the work completed since the
last disbursement (which costs shall include the cost of materials
installed or delivered to the site and architectural, engineering
and other similar professional fees incurred in connection with the
restoration), upon receipt of a satisfactory architect's certificate
certifying as to the stage of completion and of performance of the
work in a good and workmanlike manner and in accordance with the
contracts, plans and specifications acceptable to Mortgagee;
(v) the restoration funds shall bear no interest and
may be commingled with Mortgagee's other funds;<PAGE>
12
(vi) except to the extent otherwise provided in the
Credit Agreement, any restoration funds remaining after Mortgagor
has been reimbursed for the restoration costs it incurred which are
reimbursable hereunder shall be retained by Mortgagee and may be
applied by Mortgagee, in its sole discretion, to the Indebtedness in
the inverse order of maturity.
11. Leases. Except as permitted under Sections 7.3(n), 7.6
(Limitation of Sale of Assets) and 7.7 (Limitation on Leases) of the
Credit Agreement, Mortgagor shall not (i) execute an assignment or pledge
of any Lease relating to all or any portion of the Mortgaged Property
other than in favor of Mortgagee, or (ii) without the prior written
consent of Mortgagee, execute or permit to exist any Lease of any of the
Mortgaged Property.
12. Further Assurances. To further assure Mortgagee's rights
under this Mortgage, Mortgagor agrees upon demand of Mortgagee to do any
act or execute any additional documents (including, but not limited to,
security agreements on any personalty included or to be included in the
Mortgaged Property and a separate assignment of each Lease in recordable
form) as may be reasonably required by Mortgagee to confirm the lien of
this Mortgage and all other rights or benefits conferred on Mortgagee.
13. Mortgagee's Right to Perform. If Mortgagor fails to
perform any of the covenants or agreements of Mortgagor after an Event of
Default shall have occurred and be continuing, Mortgagee, without waiving
or releasing Mortgagor from any obligation or default under this Mortgage,
may, at any time (but shall be under no obligation to) pay or perform the
same, and the amount or cost thereof, with interest at the Default Rate,
shall immediately be due from Mortgagor to Mortgagee and the same shall be
secured by this Mortgage and shall be a lien on the Mortgaged Property
prior to any right, title to, interest in or claim upon the Mortgaged
Property attaching subsequent to the lien of this Mortgage. No payment or
advance of money by Mortgagee under this Section shall be deemed or
construed to cure Mortgagor's default or waive any right or remedy of
Mortgagee.
14. Events of Default. The occurrence of any one or more of
the following events shall constitute an event of default (an "Event of
Default") hereunder:
(a) if any of the Mortgaged Property (other than any
Mortgaged Property which is described in Section 7.6(a) of the
Credit Agreement) is materially damaged or destroyed by an uninsured
casualty and Mortgagor does not promptly provide funds for the
restoration of the damage caused by such casualty; or
(b) if, except as permitted under Section 7.3 (Limitation on
Liens) of the Credit Agreement, Mortgagor shall further mortgage,
pledge or otherwise encumber the Mortgaged Property or any part
thereof or any interest therein or create or suffer to exist any
lien, charge or other encumbrance on the Mortgaged Property or any
part thereof, whether superior or subordinate to the lien of this
Mortgage, whether recourse or non-recourse; or <PAGE>
13
(c) if, except as permitted under Section 7.6 (Limitation on
Sale of Assets) of the Credit Agreement, Mortgagor shall sell,
transfer, convey or assign the Mortgaged Property or any part
thereof or any interest therein (by operation of law or otherwise);
or
(d) an "Event of Default", as defined in the Credit
Agreement, shall occur under the Credit Agreement.
15. Remedies. (a) Upon the occurrence of any Event of
Default, in addition to any other rights and remedies Mortgagee may have
pursuant to the Loan Documents, or as provided by law, and without
limitation, (a) if such event is an "Event of Default" specified in clause
(i) or (ii) of Section 8(f) of the Credit Agreement with respect to
Mortgagor, automatically the Indebtedness and all other amounts payable
with respect to the Loans, and payable under the Credit Agreement, this
Mortgage and the other Security Documents immediately shall become due and
payable, and (b) if such event is any other Event of Default, by notice to
Mortgagor, Mortgagee may declare the Indebtedness (together with accrued
interest thereon) and all other amounts payable with respect to the Loans,
and payable under the Credit Agreement, this Mortgage and the other
Security Documents to be immediately due and payable. Except as expressly
provided above in this Section, presentment, demand, protest and all other
notices of any kind are hereby expressly waived. In addition, upon the
occurrence of any Event of Default, Mortgagee may immediately take such
action, without notice or demand, as it deems advisable to protect and
enforce its rights against Mortgagor and in and to the Mortgaged Property,
including, but not limited to, the following actions, each of which may be
pursued concurrently or otherwise, at such time and in such manner as
Mortgagee may determine, in its sole discretion, without impairing or
otherwise affecting the other rights and remedies of Mortgagee:
(i) Mortgagee may, to the extent permitted by
applicable law, (A) institute and maintain an action of mortgage
foreclosure against all or any part of the Mortgaged Property, (B)
institute and maintain an action with respect to the Loans under the
Credit Agreement, (C) sell all or part of the Mortgaged Property
(Mortgagor expressly granting to Mortgagee the power of sale), or
(D) take such other action at law or in equity for the enforcement
of this Mortgage or any of the Loan Documents as the law may allow.
Mortgagee may proceed in any such action to final judgment and
execution thereon for all sums due hereunder, together with interest
thereon at the Default Rate and all costs of suit, including,
without limitation, reasonable attorneys' fees and disbursements.
Interest at the Default Rate shall be due on any judgment obtained
by Mortgagee from the date of judgment until actual payment is made
of the full amount of the judgment.
(ii) Mortgagee may, to the extent permitted by
applicable law, personally, or by its agents, attorneys and
employees and without regard to the adequacy or inadequacy of the
Mortgaged Property or any other collateral as security for the
Indebtedness and Obligations enter into and upon the Mortgaged
Property and each and every part thereof and exclude Mortgagor and
its agents and employees therefrom without liability for trespass,
damage or otherwise (Mortgagor hereby agreeing to surrender<PAGE>
14
possession of the Mortgaged Property to Mortgagee upon demand at any
such time) and use, operate, manage, maintain and control the
Mortgaged Property and every part thereof. Following such entry and
taking of possession, Mortgagee shall be entitled, without
limitation, (x) to lease all or any part or parts of the Mortgaged
Property for such periods of time and upon such conditions as
Mortgagee may, in its discretion, deem proper, (y) to enforce,
cancel or modify any Lease and (z) generally to execute, do and
perform any other act, deed, matter or thing concerning the
Mortgaged Property as Mortgagee shall deem appropriate as fully as
Mortgagor might do.
(b) The holder of this Mortgage, in any action to foreclose
it, shall be entitled, to the extent permitted by applicable law, to the
appointment of a receiver. In case of a foreclosure sale, the Real Estate
may be sold, at Mortgagee's election, in one parcel or in more than one
parcel and Mortgagee is specifically empowered, (without being required to
do so, and in its sole and absolute discretion) to cause successive sales
of portions of the Mortgaged Property to be held.
(c) In the event of any breach of any of the covenants,
agreements, terms or conditions contained in this Mortgage, and
notwithstanding to the contrary any exculpatory or non-recourse language
which may be contained herein, Mortgagee shall be entitled to enjoin such
breach and obtain specific performance of any covenant, agreement, term or
condition and Mortgagee shall have the right to invoke any equitable right
or remedy as though other remedies were not provided for in this Mortgage.
(d) To the extent applicable laws limit (i) the availability
of the exercise of any of the remedies set forth herein, including without
limitation the remedies involving a power of sale on the part of Mortgagee
and the right of Mortgagee to exercise self-help in connection with the
enforcement of the terms of this Mortgage, or (ii) the enforcement of
waivers and indemnities made by Mortgagor, such remedies, waivers, or
indemnities shall be exercisable or enforceable, any provisions in this
Mortgage to the contrary notwithstanding, if, and to the extent, permitted
by the laws in force at the time of the exercise of such remedies or the
enforcement of such waivers or indemnities without regard to the
enforceability of such remedies, waivers or indemnities at the time of the
execution and delivery of this Mortgage.
16. Right of Mortgagee to Credit Sale. Upon the occurrence
of any sale made under this Mortgage, whether made under the power of sale
or by virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale, Mortgagee may bid for and acquire the Mortgaged
Property or any part thereof. In lieu of paying cash therefor, Mortgagee
may make settlement for the purchase price by crediting upon the
Indebtedness or other sums secured by this Mortgage the net sales price
after deducting therefrom the expenses of sale and the cost of the action
and any other sums which Mortgagee is authorized to deduct under this
Mortgage. In such event, this Mortgage and any documents evidencing the
Loans or any expenditures secured hereby may be presented to the person or
persons conducting the sale in order that the amount so used or applied
may be credited upon the Indebtedness as having been paid.<PAGE>
15
17. Appointment of Receiver. If an Event of Default shall
have occurred and be continuing, Mortgagee as a matter of right and
without notice to Mortgagor, unless otherwise required by applicable law,
and without regard to the adequacy or inadequacy of the Mortgaged Property
or any other collateral as security for the Indebtedness and Obligations
or the interest of Mortgagor therein, shall have the right, to the extent
permitted by applicable law, to apply to any court having jurisdiction to
appoint a receiver or receivers or other manager of the Mortgaged
Property, and Mortgagor hereby irrevocably consents to such appointment
and waives notice of any application therefor (except as may be required
by law). Any such receiver or receivers shall have all the usual powers
and duties of receivers in like or similar cases and all the powers and
duties of Mortgagee in case of entry as provided in this Mortgage,
including, without limitation and to the extent permitted by law, the
right to enter into leases of all or any part of the Mortgaged Property,
and shall continue as such and exercise all such powers until the date of
confirmation of sale of the Mortgaged Property unless such receivership is
sooner terminated.
18. Extension, Release, etc. (a) Without affecting the lien
or charge of this Mortgage upon any portion of the Mortgaged Property not
then or theretofore released as security for the full amount of the
Indebtedness, Mortgagee may, from time to time and without notice, agree
to (i) release any person liable for the Indebtedness, (ii) extend the
maturity or alter any of the terms of the Indebtedness or any guaranty
thereof, (iii) grant other indulgences, (iv) release or reconvey, or cause
to be released or reconveyed at any time at Mortgagee's option any parcel,
portion or all of the Mortgaged Property, (v) take or release any other or
additional security for any obligation herein mentioned, or (vi) make
compositions or other arrangements with debtors in relation thereto. If
at any time this Mortgage shall secure less than all of the principal
amount of the Indebtedness, it is expressly agreed that any repayments of
the principal amount of the Indebtedness shall not reduce the amount of
the lien of this Mortgage until the lien amount shall equal the principal
amount of the Indebtedness outstanding.
(b) No recovery of any judgment by Mortgagee and no levy of
an execution under any judgment upon the Mortgaged Property or upon any
other property of Mortgagor shall affect the lien of this Mortgage or any
liens, rights, powers or remedies of Mortgagee hereunder, and such liens,
rights, powers and remedies shall continue unimpaired.
(c) If Mortgagee shall have the right to foreclose this
Mortgage, Mortgagor authorizes Mortgagee at its option to foreclose the
lien of this Mortgage subject to the rights of any tenants of the
Mortgaged Property. The failure to make any such tenants parties
defendant to any such foreclosure proceeding and to foreclose their rights
will not be asserted by Mortgagor as a defense to any proceeding
instituted by Mortgagee to collect the Indebtedness or to foreclose the
lien of this Mortgage.
(d) Unless expressly provided otherwise, in the event that
ownership of this Mortgage and title to the Mortgaged Property or any
estate therein shall become vested in the same person or entity, this
Mortgage shall not merge in such title but shall continue as a valid lien
on the Mortgaged Property for the amount secured hereby.<PAGE>
16
19. Security Agreement under Uniform Commercial Code. (a)
It is the intention of the parties hereto that this Mortgage shall
constitute a Security Agreement within the meaning of the Uniform
Commercial Code (the "Code") of the State in which the Mortgaged Property
is located. If an Event of Default shall occur and be continuing under
this Mortgage, then in addition to having any other right or remedy
available at law or in equity, Mortgagee shall have the option of either
(i) proceeding under the Code and exercising such rights and remedies as
may be provided to a secured party by the Code with respect to all or any
portion of the Mortgaged Property which is personal property (including,
without limitation, taking possession of and selling such property) or
(ii) treating such property as real property and proceeding with respect
to both the real and personal property constituting the Mortgaged Property
in accordance with Mortgagee's rights, powers and remedies with respect to
the real property (in which event the default provisions of the Code shall
not apply). If Mortgagee shall elect to proceed under the Code, then ten
days' notice of sale of the personal property shall be deemed reasonable
notice and the reasonable expenses of retaking, holding, preparing for
sale, selling and the like incurred by Mortgagee shall include, but not be
limited to, attorneys' fees and legal expenses. At Mortgagee's request,
Mortgagor shall assemble the personal property and make it available to
Mortgagee at a place designated by Mortgagee which is reasonably
convenient to both parties.
(b) Mortgagor and Mortgagee agree, to the extent permitted by
law, that: (i) all of the goods described within the definition of the
word "Equipment" are or are to become fixtures on the Real Estate; (ii)
this Mortgage upon recording or registration in the real estate records of
the proper office shall constitute a financing statement filed as a
"fixture filing" within the meaning of Sections 9-313 and 9-402 of the
Code; (iii) Mortgagor is the record owner of the Real Estate; and (iv) the
addresses of Mortgagor and Mortgagee are as set forth on the first page of
this Mortgage.
(c) Mortgagor, upon request by Mortgagee from time to time,
shall execute, acknowledge and deliver to Mortgagee one or more separate
security agreements, in form satisfactory to Mortgagee, covering all or
any part of the Mortgaged Property and will further execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, any
financing statement, affidavit, continuation statement or certificate or
other document as Mortgagee may request in order to perfect, preserve,
maintain, continue or extend the security interest under and the priority
of this Mortgage and such security instrument. Mortgagor further agrees
to pay to Mortgagee on demand all costs and expenses incurred by Mortgagee
in connection with the preparation, execution, recording, filing and re-
filing of any such document and all reasonable costs and expenses of any
record searches for financing statements Mortgagee shall reasonably
require. Mortgagor shall from time to time, on request of Mortgagee,
deliver to Mortgagee an inventory in reasonable detail of any of the
Mortgaged Property which constitutes personal property. If Mortgagor
shall fail to furnish any financing or continuation statement within 10
days after request by Mortgagee, then pursuant to the provisions of the
Code, Mortgagor hereby authorizes Mortgagee, without the signature of
Mortgagor, to execute and file any such financing and continuation
statements. The filing of any financing or continuation statements in the
records relating to personal property or chattels shall not be construed<PAGE>
17
as in any way impairing the right of Mortgagee to proceed against any
personal property encumbered by this Mortgage as real property, as set
forth above.
(d) With respect to the items of Mortgaged Property which
are also encumbered by the Company Security Agreement (other than those
items which are exclusively real property interests), to the extent that
the provisions under this Section conflict with the provisions of the
Company Security Agreement, the provisions of the Company Security
Agreement shall prevail.
20. Assignment of Rents. Mortgagor hereby assigns to
Mortgagee the Rents as further security for the payment of the
Indebtedness and performance of the Obligations, and Mortgagor grants to
Mortgagee the right to enter the Mortgaged Property for the purpose of
collecting the same and to let the Mortgaged Property or any part thereof,
and to apply the Rents on account of the Indebtedness. The foregoing
assignment and grant is present and absolute, to the extent permitted by
applicable law, and shall continue in effect until the Indebtedness is
paid in full, but Mortgagee hereby waives the right to enter the Mortgaged
Property for the purpose of collecting the Rents and Mortgagor shall be
entitled to collect, receive, use and retain the Rents until the
occurrence of an Event of Default under this Mortgage; such right of
Mortgagor to collect, receive, use and retain the Rents may be revoked by
Mortgagee upon the occurrence of any Event of Default under this Mortgage
by giving not less than five days' written notice of such revocation to
Mortgagor; in the event such notice is given, Mortgagor shall pay over to
Mortgagee, or to any receiver appointed to collect the Rents, any lease
security deposits, and shall pay monthly in advance to Mortgagee, or to
any such receiver, the fair and reasonable rental value as determined by
Mortgagee for the use and occupancy of the Mortgaged Property or of such
part thereof as may be in the possession of Mortgagor or any affiliate of
Mortgagor, and upon default in any such payment Mortgagor and any such
affiliate will vacate and surrender the possession of the Mortgaged
Property to Mortgagee or to such receiver, and in default thereof may be
evicted by summary proceedings or otherwise. Mortgagor shall not accept
prepayments of installments of Rent to become due for a period of more
than one month in advance (except for security deposits and estimated
payments of percentage rent, if any).
21. Trust Funds. All lease security deposits of the Real
Estate shall be treated as trust funds not to be commingled with any other
funds of Mortgagor. Within 30 days after request by Mortgagee, Mortgagor
shall furnish Mortgagee reasonably satisfactory evidence of compliance
with this Section, together with a statement of all lease security
deposits by lessees and copies of all Leases not previously delivered to
Mortgagee, which statement shall be certified by Mortgagor.
22. Additional Rights. The holder of any subordinate lien on
the Mortgaged Property shall have no right to terminate any Lease whether
or not such Lease is subordinate to this Mortgage nor shall any holder of
any subordinate lien join any tenant under any Lease in any action to
foreclose the lien or modify, interfere with, disturb or terminate the
rights of any tenant under any Lease. By recordation of this Mortgage all
subordinate lienholders are subject to and notified of this provision, and
any action taken by any such lienholder contrary to this provision shall<PAGE>
18
be null and void. Upon the occurrence of any Event of Default, Mortgagee
may, in its sole discretion and without regard to the adequacy of its
security under this Mortgage, apply all or any part of any amounts on
deposit with Mortgagee under this Mortgage against all or any part of the
Indebtedness. Any such application shall not be construed to cure or
waive any Default or Event of Default or invalidate any act taken by
Mortgagee on account of such Default or Event of Default.
23. Changes in Method of Taxation. In the event of the
passage after the date hereof of any law of any Governmental Authority
deducting from the value of the Premises for the purposes of taxation any
lien thereon, or changing in any way the laws for the taxation of
mortgages or debts secured thereby for federal, state or local purposes,
or the manner of collection of any such taxes, and imposing a tax, either
directly or indirectly, on mortgages or debts secured thereby, the holder
of this Mortgage shall have the right to declare the Indebtedness due on a
date to be specified by not less than 30 days' written notice to be given
to Mortgagor unless within such 30-day period Mortgagor shall assume as an
Obligation hereunder the payment of any tax so imposed until full payment
of the Indebtedness and such assumption shall be permitted by law.
24. Notices. All notices, requests, demands and other
communications hereunder shall be given in accordance with the terms of
the Credit Agreement.
25. No Oral Modification. This Mortgage may not be changed
or terminated orally. Any agreement made by Mortgagor and Mortgagee after
the date of this Mortgage relating to this Mortgage shall be superior to
the rights of the holder of any intervening or subordinate lien or
encumbrance.
26. Partial Invalidity. In the event any one or more of the
provisions contained in this Mortgage shall for any reason be held to be
invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision
hereof, but each shall be construed as if such invalid, illegal or
unenforceable provision had never been included. Notwithstanding anything
contained in this Mortgage or in any provisions of the Indebtedness or
Loan Documents to the contrary, the obligations of Mortgagor and of any
other obligor under the Indebtedness or Loan Documents shall be subject to
the limitation that Mortgagee shall not charge, take or receive, nor shall
Mortgagor or any other obligor be obligated to pay to Mortgagee, any
amounts constituting interest in excess of the maximum rate permitted by
law to be charged by Mortgagee.
27. Mortgagor's Waiver of Rights. To the fullest extent
permitted by law, Mortgagor waives the benefit of all laws now existing or
that may subsequently be enacted providing for (i) any appraisement before
sale of any portion of the Mortgaged Property, (ii) any extension of the
time for the enforcement of the collection of the Indebtedness or the
creation or extension of a period of redemption from any sale made in
collecting such debt and (iii) exemption of the Mortgaged Property from
attachment, levy or sale under execution or exemption from civil process.
To the full extent Mortgagor may do so, Mortgagor agrees that Mortgagor
will not at any time insist upon, plead, claim or take the benefit or
advantage of any law now or hereafter in force providing for any<PAGE>
19
appraisement, valuation, stay, exemption, extension or redemption, or
requiring foreclosure of this Mortgage before exercising any other remedy
granted hereunder and Mortgagor, for Mortgagor and its successors and
assigns, and for any and all persons ever claiming any interest in the
Mortgaged Property, to the extent permitted by law, hereby waives and
releases all rights of redemption, valuation, appraisement, stay of
execution, notice of election to mature or declare due the whole of the
secured indebtedness and marshalling in the event of foreclosure of the
liens hereby created. Notwithstanding anything contained herein or in
Indiana Code 32-8-16-1.5 to the contrary, no waiver made by Mortgagor in
this Section 28 or anywhere else in this Mortgage or in any of the other
terms and provisions of the Loan Documents or Security Documents shall
constitute the consideration for or be deemed to be a waiver or release by
Mortgagee or any judgment holder of the Indebtedness or Obligations hereby
secured of the right to seek a deficiency judgment against the Mortgagor
or any other person or entity who may be personally liable for the
Indebtedness or Obligations hereby secured, which right to seek a
deficiency judgment is hereby reserved, preserved and retained by
Mortgagee and its successors and assigns.
28. Remedies Not Exclusive. Mortgagee shall be entitled to
enforce payment of the Indebtedness and performance of the Obligations and
to exercise all rights and powers under this Mortgage or under any of the
other Loan Documents or other agreement or any laws now or hereafter in
force, notwithstanding some or all of the Indebtedness and Obligations may
now or hereafter be otherwise secured, whether by mortgage, security
agreement, pledge, lien, assignment or otherwise. Neither the acceptance
of this Mortgage nor its enforcement, shall prejudice or in any manner
affect Mortgagee's right to realize upon or enforce any other security now
or hereafter held by Mortgagee, it being agreed that Mortgagee shall be
entitled to enforce this Mortgage and any other security now or hereafter
held by Mortgagee in such order and manner as Mortgagee may determine in
its absolute discretion. No remedy herein conferred upon or reserved to
Mortgagee is intended to be exclusive of any other remedy herein or by law
provided or permitted, but each shall be cumulative and shall be in
addition to every other remedy given hereunder or now or hereafter
existing at law or in equity or by statute. Every power or remedy given
by any of the Loan Documents to Mortgagee or to which it may otherwise be
entitled, may be exercised, concurrently or independently, to the extent
permitted by applicable law, from time to time and as often as may be
deemed expedient by Mortgagee. In no event shall Mortgagee, in the
exercise of the remedies provided in this Mortgage (including, without
limitation, in connection with the assignment of Rents to Mortgagee, or
the appointment of a receiver and the entry of such receiver on to all or
any part of the Mortgaged Property), be deemed a "mortgagee in
possession," and Mortgagee shall not in any way be made liable for any
act, either of commission or omission, in connection with the exercise of
such remedies.
29. Multiple Security. If (a) the Premises shall consist of
one or more parcels, whether or not contiguous and whether or not located
in the same county, or (b) in addition to this Mortgage, Mortgagee shall
now or hereafter hold one or more additional mortgages, liens, deeds of
trust or other security (directly or indirectly) for the Indebtedness upon
other property in the State in which the Premises are located (whether or
not such property is owned by Mortgagor or by others) or (c) both the<PAGE>
20
circumstances described in clauses (a) and (b) shall be true, then to the
fullest extent permitted by law, Mortgagee may, at its election, commence
or consolidate in a single foreclosure action all foreclosure proceedings
against all such collateral securing the Indebtedness (including the
Mortgaged Property), which action may be brought or consolidated in the
courts of any county in which any of such collateral is located.
Mortgagor acknowledges that the right to maintain a consolidated
foreclosure action is a specific inducement to Mortgagee to extend the
Indebtedness, and Mortgagor expressly and irrevocably waives any
objections to the commencement or consolidation of the foreclosure
proceedings in a single action and any objections to the laying of venue
or based on the grounds of forum non conveniens which it may now or
hereafter have. Mortgagor further agrees that if Mortgagee shall be
prosecuting one or more foreclosure or other proceedings against a portion
of the Mortgaged Property or against any collateral other than the
Mortgaged Property, which collateral directly or indirectly secures the
Indebtedness, or if Mortgagee shall have obtained a judgment of
foreclosure and sale or similar judgment against such collateral, then,
whether or not such proceedings are being maintained or judgments were
obtained in or outside the State in which the Premises are located,
Mortgagee may commence or continue foreclosure proceedings and exercise
its other remedies granted in this Mortgage against all or any part of the
Mortgaged Property and Mortgagor waives any objections to the commencement
or continuation of a foreclosure of this Mortgage or exercise of any other
remedies hereunder based on such other proceedings or judgments, and
waives any right to seek to dismiss, stay, remove, transfer or consolidate
either any action under this Mortgage or such other proceedings on such
basis. Neither the commencement nor continuation of proceedings to
foreclose this Mortgage nor the exercise of any other rights hereunder nor
the recovery of any judgment by Mortgagee in any such proceedings shall
prejudice, limit or preclude Mortgagee's right to commence or continue one
or more foreclosure or other proceedings or obtain a judgment against any
other collateral (either in or outside the State in which the Premises are
located) which directly or indirectly secures the Indebtedness, and
Mortgagor expressly waives any objections to the commencement of,
continuation of, or entry of a judgment in such other proceedings or
exercise of any remedies in such proceedings based upon any action or
judgment connected to this Mortgage, and Mortgagor also waives any right
to seek to dismiss, stay, remove, transfer or consolidate either such
other proceedings or any action under this Mortgage on such basis. It is
expressly understood and agreed that to the fullest extent permitted by
law, Mortgagee may, at its election, cause the sale of all collateral
which is the subject of a single foreclosure action at either a single
sale or at multiple sales conducted simultaneously and take such other
measures as are appropriate in order to effect the agreement of the
parties to dispose of and administer all collateral securing the
Indebtedness (directly or indirectly) in the most economical and least
time-consuming manner.
30. Expenses; Indemnification. (a) Mortgagor shall pay or
reimburse Mortgagee for all expenses incurred by Mortgagee after the date
of this Mortgage with respect to any and all transactions contemplated by
this Mortgage including without limitation, the preparation of any
document reasonably required hereunder or any amendment, modification,
restatement or supplement to this Mortgage, the delivery of any consent,
non-disturbance agreement or similar document in connection with this<PAGE>
21
Mortgage or the enforcement of any of Mortgagee's rights. Such expenses
shall include, without limitation, all title and conveyancing charges,
recording and filing fees and taxes, mortgage taxes, intangible personal
property taxes, escrow fees, revenue and tax stamp expenses, insurance
premiums (including title insurance premiums), title search and title
rundown charges, brokerage commissions, finders' fees, placement fees,
court costs, surveyors', photographers', appraisers', architects',
engineers', consulting professional's, accountants' and attorneys' fees
and disbursements. Mortgagor acknowledges that from time to time
Mortgagor may receive statements for such expenses, including without
limitation attorneys' fees and disbursements. Mortgagor shall pay such
statements promptly upon receipt.
(b) If (i) any action or proceeding shall be commenced by
Mortgagee (including but not limited to any action to foreclose this
Mortgage or to collect the Indebtedness), or any action or proceeding is
commenced to which Mortgagee is made a party, or in which it becomes
necessary to defend or uphold the lien of this Mortgage (including,
without limitation, any proceeding or other action relating to the
bankruptcy, insolvency or reorganization of Mortgagor or any other Loan
Party), or in which Mortgagee is served with any legal process, discovery
notice or subpoena and (ii) in each of the foregoing instances such action
or proceeding in any manner relates to or arises out of this Mortgage or
Mortgagee's lending to Mortgagor or acceptance of a guaranty from a
guarantor of the Indebtedness or of any of the Obligations or any of the
transactions contemplated by this Mortgage, then Mortgagor will
immediately reimburse or pay to Mortgagee all of the expenses which have
been or may be incurred by Mortgagee with respect to the foregoing
(including reasonable counsel fees and disbursements), together with
interest thereon at the Default Rate, and any such sum and the interest
thereon shall be a lien on the Mortgaged Property, prior to any right, or
title to, interest in or claim upon the Mortgaged Property attaching or
accruing subsequent to the lien of this Mortgage, and shall be deemed to
be secured by this Mortgage. In any action or proceeding to foreclose
this Mortgage, or to recover or collect the Indebtedness, the provisions
of law respecting the recovering of costs, disbursements and allowances
shall prevail unaffected by this covenant.
(c) Mortgagor shall indemnify and hold harmless Mortgagee and
Mortgagee's affiliates, and the respective directors, officers, agents and
employees of Mortgagee and its affiliates from and against all claims,
damages, losses and liabilities (including, without limitation, reasonable
attorneys' fees and expenses) arising out of or based upon any matter
related to this Mortgage, the Mortgaged Property or the occupancy,
ownership, maintenance or management of the Mortgaged Property by
Mortgagor, including, without limitation, any claims based on the alleged
acts or omissions of any employee or agent of Mortgagor, provided that
Mortgagor shall have no obligation hereunder to Mortgagee or Mortgagee's
affiliates or any of their respective directors, officers, agents and
employees with respect to indemnified liabilities to the extent such
indemnified liabilities are found by a final and nonappealable decision of
a court of competent jurisdiction to have resulted primarily from the
gross negligence or willful misconduct of Mortgagee or Mortgagee's
affiliates or any of their respective directors, officers, agents and
employees. This indemnification shall be in addition to any other
liability which Mortgagor may otherwise have to Mortgagee.<PAGE>
22
31. Successors and Assigns. All covenants of Mortgagor
contained in this Mortgage are imposed solely and exclusively for the
benefit of Mortgagee and its successors and assigns, and no other person
or entity shall have standing to require compliance with such covenants or
be deemed, under any circumstances, to be a beneficiary of such covenants,
any or all of which may be freely waived in whole or in part by Mortgagee
at any time if in its sole discretion it deems such waiver advisable. All
such covenants of Mortgagor shall run with the land and bind Mortgagor,
the successors and assigns of Mortgagor (and each of them) and all
subsequent owners, encumbrancers and tenants of the Mortgaged Property,
and shall inure to the benefit of Mortgagee, its successors and assigns.
The word "Mortgagor" shall be construed as if it read "Mortgagors"
whenever the sense of this Mortgage so requires and if there shall be more
than one Mortgagor, the obligations of the Mortgagors shall be joint and
several.
32. No Waivers, etc. Any failure by Mortgagee to insist upon
the strict performance by Mortgagor of any of the terms and provisions of
this Mortgage shall not be deemed to be a waiver of any of the terms and
provisions hereof, and Mortgagee, notwithstanding any such failure, shall
have the right thereafter to insist upon the strict performance by
Mortgagor of any and all of the terms and provisions of this Mortgage to
be performed by Mortgagor. Mortgagee may release, regardless of
consideration and without the necessity for any notice to or consent by
the holder of any subordinate lien on the Mortgaged Property, any part of
the security held for the obligations secured by this Mortgage without, as
to the remainder of the security, in any way impairing or affecting the
lien of this Mortgage or the priority of such lien over any subordinate
lien.
33. Governing Law, etc. This Mortgage shall be governed by
and construed in accordance with the laws of the State of Indiana, except
that Mortgagor expressly acknowledges that by its terms the Credit
Agreement shall be governed and construed in accordance with the laws of
the State of New York, without regard to principles of conflict of law,
and for purposes of consistency, Mortgagor agrees that in any in personam
proceeding related to this Mortgage the rights of the parties to this
Mortgage shall also be governed by and construed in accordance with the
laws of the State of New York governing contracts made and to be performed
in that State, without regard to principles of conflict of law.
34. Waiver of Trial by Jury. Mortgagor and Mortgagee each
hereby irrevocably and unconditionally waive trial by jury in any action,
claim, suit or proceeding relating to this Mortgage and for any
counterclaim brought therein. Mortgagor hereby waives all rights to
interpose any counterclaim in any suit brought by Mortgagee hereunder
(unless the nonassertion thereof, as an affirmative defense, shall operate
as a waiver thereof) and all rights to have any such suit consolidated
with any separate suit, action or proceeding.
35. Certain Definitions. Unless the context clearly
indicates a contrary intent or unless otherwise specifically provided
herein, words used in this Mortgage shall be used interchangeably in
singular or plural form and the word "Mortgagor" shall mean "each
Mortgagor or any subsequent owner or owners of the Mortgaged Property or
any part thereof or interest therein," the word "Mortgagee" shall mean<PAGE>
23
"Mortgagee or any subsequent agent for the Lenders," the word "person"
shall include any individual, corporation, partnership, trust,
unincorporated association, government, governmental authority, or other
entity, and the words "Mortgaged Property" shall include any portion of
the Mortgaged Property or interest therein. Whenever the context may
require, any pronouns used herein shall include the corresponding
masculine, feminine or neuter forms, and the singular form of nouns and
pronouns shall include the plural and vice versa. The captions in this
Mortgage are for convenience or reference only and in no way limit or
amplify the provisions hereof.
36. Receipt of Copy. Mortgagor acknowledges that it has
received a true copy of this Mortgage.
37. Release Upon Payment. Notwithstanding anything to the
contrary contained herein, if the Indebtedness and all other amounts
secured hereby, and any extensions, modifications or renewals thereof,
shall be well and truly paid according to its and their tenor, the
Commitments shall have terminated and there shall be no Letters of Credit
outstanding, then this Mortgage shall become null and void and shall be
released in recordable form at the cost of the Mortgagor or the then owner
of the Mortgaged Property; otherwise this Mortgage shall remain in full
force and effect.
38. Release. Upon a sale or transfer of any Mortgaged
Property which, pursuant to the terms of the Credit Agreement, Mortgagor
is permitted to sell or otherwise transfer free of the lien of the
Security Documents, Mortgagee shall release such Mortgaged Property from
the lien of this Mortgage. In connection with any such sale or transfer,
the Mortgagee shall execute and deliver to Mortgagor, or to such person or
persons as Mortgagor shall reasonably designate, at the expense of
Mortgagor, a partial release and such other documents as Mortgagor may
reasonably request to evidence the release of this Mortgage with respect
to such Mortgaged Property.
This Mortgage has been duly executed by Mortgagor on the date
first above written.
ESSEX GROUP, INC.
By:____________________________
Stanley C. Craft
President
This Instrument was prepared by Craig Friedman.<PAGE>
STATE OF NEW YORK )
) SS:
COUNTY OF NEW YORK )
Before me, a Notary Public in and for said County and State,
personally appeared Stanley C. Kraft, the President of ESSEX GROUP, INC.,
a corporation organized and existing under the laws of the State of
Michigan, and acknowledged the execution of the foregoing instrument as
such officer acting for and on behalf of said corporation, and who, having
been duly sworn, stated that any representations therein contained are
true and correct.
Witness my hand and Notarial seal this __ day of April, 1995.
_________________________________
(signature)
[Notarial Seal]<PAGE>
Schedule A
Description of the Premises
[Attach Legal Description of all parcels]<PAGE>
EXHIBIT K
FORM OF COMPLIANCE CERTIFICATE
[For the Fiscal Quarter ending _____]
[For the Fiscal Year ending _____]
Pursuant to Section 6.2(b) of the Credit Agreement, dated as
of April __, 1995 (as amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"; terms defined therein being used
herein as therein defined unless otherwise defined), among Essex Group,
Inc., a Michigan corporation (the "Company"), BCP/Essex Holdings Inc.
("Holdings"), the financial institutions from time to time parties thereto
(the "Lenders"), and Chemical Bank, as agent for the Lenders (in such
capacity, the "Agent"), the undersigned, duly elected, qualified and
acting Responsible Officers of the Company and Holdings, respectively,
hereby certify that:
(a) To the best of such Responsible Officer's knowledge, the
Company and each other Loan Party has, during the period or periods
referred to above, observed or performed in all material respects all of
its covenants and other agreements, and satisfied every condition,
contained in the Credit Agreement and the other Loan Documents to which it
is a party to be observed, performed or satisfied by it, and as of the
date hereof such Responsible Officer has obtained no knowledge of any
Default or Event of Default except as follows: ____________________.
[(b) The financial statements referred to in Section 6.1(a)
of the Credit Agreement which are delivered concurrently with the delivery
of this Compliance Certificate are complete and correct in all material
respects and have been prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein
and with prior periods (except as approved by the accountants or such
Responsible Officer, as the case may be, and disclosed therein).]
[The financial statements referred to in Section 6.1(b) of the
Credit Agreement which are delivered concurrently with the delivery of
this Compliance Certificate are complete and correct in all material
respects and fairly present the financial condition and results of
operations of Holdings or the Company, as the case may be (subject to
normal year-end audit adjustments) and have been prepared in reasonable
detail and in accordance with GAAP applied consistently throughout the
periods reflected therein and with prior periods (except as approved by
the accountants or such Responsible Officer, as the case may be, and
disclosed therein).]
(c) The covenants as listed and calculated below are based
on the Company's [unaudited] [audited] balance sheets and statements of
operations, shareholders' equity and cash flows for the fiscal [quarter]
[year] ended ________ __, 199_, a copy of which is attached hereto.
1. Current Ratio (Section 7.1(a))
The ratio of
(i) Consolidated Current Assets $ __________
of Holdings and its consolidated<PAGE>
2
Subsidiaries
to
(ii) Consolidated Current Liabilities $ __________
of Holdings and its consolidated
Subsidiaries
Ratio: (must be greater 2.0 to 1.0) ____________
2. Consolidated Net Worth (Section 7.1(b))
without duplication:
(i) 50% of Consolidated $ __________
Net Income of Holdings and its consolidated
Subsidiaries for each fiscal quarter
of Holdings (beginning with the fiscal
quarter ending Mar. 31, 1995) for which
Consolidated Net Income is positive
(ii) 100% of Net Cash Proceeds of Holdings $________
Common Equity Offering consummated
after the Effective Date
(iii) 100% of any capital contribution made $_______
to Holdings or the Company after the
Effective Date by any holder of its Capital
Stock
(iv) Sum of (i), (ii) and (iii) and $ _________
$80,000,000
(v) Consolidated Net Worth of Holdings $ _________
and its consolidated subsidiaries
(must be equal to or greater than
(iv) above)
(vi) Clauses (ii) and (iii) shall be $ __________
reduced to the extent
(a) such proceeds or contributions are
applied to repurchase of equity in
accordance with the Credit Agreement
and (b) Consolidated Net Worth would
be reduced as a result of repurchase
3. Interest Coverage (Section 7.1(c))
The ratio of
(i) Consolidated EBITDA of Holdings $ __________
and its consolidated Subsidiaries
for the relevant Interest Coverage
Test Period<PAGE>
3
to
(ii) Consolidated Net Cash Interest Expense $______
of Holdings and its consolidated
Subsidiaries for such Interest Coverage
Test Period
Ratio: (must be greater 2.0 to 1.0) ____________
4. Leverage Ratio (Section 7.1(d))
The ratio of
(i) Total Debt of Holdings and its $ __________
consolidated Subsidiaries (as of
last day of any period of four
consecutive fiscal quarters
of Holdings)
to
(ii) Consolidated EBITDA of Holdings and its $______
consolidated Subsidiaries for such period
Ratio: (after March 31, 1995 and prior ____________
to March 31, 1997, must be less 4.50 to
1.0; on or after March 31, 1997 and prior
to March 31, 1998, must be less than
4.25 to 1.0; March 31, 1998 and thereafter,
must be less than 4.0 to 1.0)
5. Senior Secured Leverage Ratio (Section 7.1(e))
The ratio of
(i) Total Senior Secured Debt of Company $ _______
and its Subsidiaries (as of the last
day of any period of four consecutive
fiscal quarters of Holdings)
to
(ii) Consolidated EBITDA for such period $ ________
Ratio: (after March 31, 1995 and prior ____________
to March 31, 1997, must be less 2.50 to
1.0; March 31, 1997 and thereafter, must
be less than 2.25 to 1.0)
6. Limitation on Indebtedness (Section 7.2)
(i) (A) Aggregate amount of Non-Facility
L/C obligations $ __________
(B) Aggregate amount of L/C Obligations
(the sum of $ __________ <PAGE>
4
(A) and (B) may not exceed $25,000,000,
at any time)
(ii) Indebtedness of the Company resulting $ _______
from the delivery of a promissory note
to support Indebtedness of the Company, in connection
with the requirements of the Company's insurance
carriers to recognize casualty insurance premiums (may
not exceed $5,000,000 at any time)
(iii) Senior Unsecured Term Loans of the $ __________
Company (may not exceed $60,000,000
at any time)
(iv) Interest Rate Protection Agreements $ ________
in respect of the Senior Notes
(may not exceed $200,000,000 at any time)
(v) Additional unsecured indebtedness not $ _______
otherwise permitted by Section 7.2
which is (a) unsecured, (b) incurred in connection with
the acquisition of assets
and secured only by such assets or (c)
secured by assets acceptable to the
Required Lenders (may not exceed
$20,000,000 at any time)
(vi) Additional unsecured indebtedness not $________
otherwise permitted by Section 7.2 (may
not exceed $25,000,000 at any time)
7. Limitation on Liens (Section 7.3(g))
(i) Aggregate amount of Indebtedness secured $ ____
by Liens incurred as described in
Section 7.3(g)
(may not exceed $25,000,000 at any
time and 10% of Consolidated Net Worth
of Holdings and its
consolidated Subsidiaries)
8. Limitation on Guarantee Obligations (Section 7.4)
(i) Aggregate amount of guarantees by the $ _______
Company or any of its Subsidiaries of the
obligations of joint ventures in which
the Company or any of its Subsidiaries
is a party, as described in Section
7.4(c) (may not, when added to Femco
Loans, exceed $18,000,000)
(ii) Aggregate amount of surety, indemnity, $ ______
performance, release and appeal bonds
and guarantees thereof issued by the
Company or any of its Subsidiaries, as<PAGE>
5
described in Section 7.4(d) (may not
exceed $5,000,000 at any time)
9. Limitation on Sale of Assets (7.6)
(i) Aggregate amount of the sale or other $ _______
disposition of obsolete, outdated or
surplus assets as described in Section 7.6(a)
(may not exceed $2,000,000 in fiscal year)
(ii) Aggregate amount of fair market value of $ ____
all assets sold by the Company and its
Subsidiaries as described in Section
7.6(f) during the fiscal [quarter]
[year] of the Company ending _______,
19__ (may not exceed $20,000,000 in
fiscal year or $50,000,000 during the
term of the Credit Agreement)
10. Limitation on Leases (Section 7.7)
(i) Aggregate amount of lease payments $ _________
pursuant to leases listed
on Schedule 7.7(a) (including
replacements) and operating leases
entered into in the ordinary course of
business (may
not exceed $15,000,000 in fiscal year)
(ii) Aggregate outstanding amount of $ __________
Capital Lease Obligations
as described in Section 7.7(c) during
the fiscal [quarter] [year] ending
_______, 19__ (may not exceed the sum
of $25,000,000 and an amount equal to
10% of Consolidated Net Worth of
Holdings and its consolidated
Subsidiaries at any time)
11. Limitation on Dividends (Section 7.8) $ __________
(i) Aggregate amount of dividends to $ __________
Holdings as described in Section
7.8(b) since the beginning of the 19__
fiscal year
(ii) Aggregate amount of Net Cash $ __________
Proceeds of sale of Holdings common
stock to any officer or employee as
described in Section 7.8(b) since the
Effective Date
(iii) Aggregate amount distributed to $ __________
Holdings for repurchasing Holdings
common stock as described in Section
7.8(b) during preceding fiscal <PAGE>
6
year (ending _____________, 19__)
(iv) Sum of (a) $5,000,000 and (b) (ii) $ __________
minus (iii) (amount of (iv) may not
exceed (i) in any fiscal year)
(v) Aggregate amount of cash dividends $ __________
paid on the Preferred Stock since
the beginning of the 19__ fiscal year
(may not exceed $5,000,000 in any
fiscal year ending on or prior to
December 31, 1998 and $10,000,000 in
any fiscal year thereafter, provided
that in no event shall such dividends,
when added to Capital Expenditures
made pursuant to Section 7.10(g),
exceed the EBITDA Basket Amount for
such fiscal year)
12. Limitation on Capital Expenditures, Investments, Loans and
Advances (Section 7.10)
(i) Aggregate amount of loans and advances $______
of the Company and its Subsidiaries as
described in Section 7.10(c) (may not
exceed $1,000,000)
(ii) Aggregate amount outstanding of Loans $ _____
by the Company to FEMCO as described
in Section 7.10(e) (may not exceed
$10,000,000 at any time)
(iii) Aggregate amount the sum of (i) $ __________
outstanding of Loans by the
Company to FEMCO as described in
Section 7.10(e)(i) and (ii) the
aggregate amount of guarantees
described in Section 7.10(e)(ii) (may
not exceed $18,000,000 at any time)
(iii) (A) (1) Aggregate amount of Capital $ _______
Expenditures of the Company
and its Subsidiaries
since the beginning of the 19__
fiscal year
(2) Basket Expenditure Amount for $ _____
19__ fiscal year (as set forth
in Section 7.10(g)
(3) Unused Basket Expenditure $ _________
Amounts carried over from each
preceding fiscal year
(4) Amount of A(1) may not exceed $ _____
the sum of A(2) and A(3)<PAGE>
7
(provided that, unless
A(1) is less than
$24,000,000, the sum of
A(1) and the amount of
cash dividends on the
Preferred Stock made
during the current fiscal
year shall not exceed the
EBITDA Basket Amount)
(B) Investment Expenditures since the $ ______
Effective Date (may not exceed
Maximum Investment Amount then
in effect)
(C) (1) Capital Expenditures and $ __________
Investment Expenditures
(excluding up to $5,000,000 of
Investment Expenditures constituting
capital contributions to Femco) which
(a) constitute capital contributions
or other investments in any Person
that is not a Subsidiary Guarantor or
(b) are made to acquire assets which
do not constitute Collateral since the
beginning of the 19__ fiscal year (may
not exceed $10,000,000 in any fiscal
year and $20,000 during the term of
the Credit Agreement)
(2) Investment Expenditures $ __________
constituting capital
contributions to Femco made
since the Effective Date and
excluded pursuant to (C)(1)
(iv) (A) Capital Expenditures and $ __________
Investment Expenditures
of Company and Subsidiaries as
described in 7.10(h)(x) made with
proceeds from Holdings Common Equity
Offering since the Effective Date (may
not exceed $75,000,000)
(B) Capital Expenditures and $ __________
Investment Expenditures
of Company and Subsidiaries as
described in 7.10(h)(y) made with
proceeds from Holdings Common Equity
Offering since the Effective Date
which (a) constitute capital
contributions or other investments in
any Person that is not a Subsidiary
Guarantor or (b) are made to acquire
assets which do not constitute<PAGE>
8
Collateral since Effective Date (may
not exceed $25,000,000)
IN WITNESS WHEREOF, we have hereto set our names.
Dated:
___________________________
Title: [Responsible Officer
of the Company]
___________________________
Title: [Responsible Officer
of the Holdings]<PAGE>
EXHIBIT L
[FORM OF CONFIDENTIALITY LETTER]
[BANK LETTERHEAD]
[Date]
Essex Group, Inc.
1601 Wall Street
Fort Wayne, IN 46801
Chemical Bank,
as Agent
270 Park Avenue
New York, New York 10017
[Name and address of Lender
selling a participation or making
an assignment under the Credit
Agreement referred to below]
Dear Sirs:
We understand that Chemical Bank ("Chemical") is acting as
Agent under the Credit Agreement dated as of April __, 1995 (the "Credit
Agreement"; terms used herein and not otherwise defined herein are used as
defined therein) among Essex Group, Inc. (the "Company"), the lenders
named therein (the "Lenders") and Chemical, as Agent. In connection with
our evaluation of a proposed purchase of a participation in or acceptance
of an assignment of, a portion of the Loans, the Letters of Credit and the
Revolving Credit Commitments, Chemical and/or a Lender have furnished, and
will furnish, us with a copy of the Credit Agreement and Confidential
Information. We understand that prior to receiving a copy of the Credit
Agreement and Confidential Information, we are required under Section
11.6(g) of the Credit Agreement to execute and deliver this letter.
We agree to keep confidential (and to cause our officers,
directors, employees, agents, attorneys, accountants and professional
advisors to keep confidential) to the extent provided in Section 11.16 of
the Credit Agreement all Confidential Information. In the event we do not
participate or accept an assignment under the Credit Agreement, at
Chemical's, such Lender's or the Company's request, we agree to return
(and to cause such other person to return) to Chemical, such Lender or the
Company, as the case may be, all written Confidential Information and all
copies thereof, extracts therefrom and analyses and other materials based
thereon, except that we shall be permitted to disclose details of the
Confidential Information (i) to the extent contemplated in Section 11.16
and (ii) to the extent Chemical and the Company shall have consented to
such disclosure in writing.
We further agree that we will use the Confidential Information
only in connection with our evaluation of becoming a possible participant
or assignee under the Credit Agreement.
The undertakings contained herein are for the benefit of each
of you.<PAGE>
2
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[Name of Institution]
By: _______________________
Name:
Title:<PAGE>
Schedule 1.1A
Amount of Revolving
Name and Address of Bank Credit Commitment
------------------------ -------------------
Chemical Bank $25,000,000
c/o Chemical Securities Inc.
10 South LaSalle Street
Chicago, Illinois 60603
Attention: Jonathan Twichell
Telephone: 312-807-4038
Telecopy: 312-346-4077
Bank of America Illinois $25,000,000
231 South LaSalle Street
Chicago, Illinois 60697
Attention: Patricia DelGrande
Telephone: 312-828-3122
Telecopy: 312-765-2080
The Bank of Nova Scotia $25,000,000
181 West Madison, Suite 3700
Chicago, Illinois 60602
Attention: Barbara Siatczynski
Telephone: 312-201-4113
Telecopy: 312-201-4108
Comerica Bank $25,000,000
One Detroit Center
500 Woodward Avenue
Detroit, Michigan 48226-3279
Attention: Phillip A. Coosaia
Telephone: 313-222-7044
Telecopy: 313-963-3330
The Long-Term Credit Bank of Japan, $25,000,000
Limited, New York Branch
165 Broadway, 49th Floor
New York, New York 10006
Attention: Jay Shankar
Telephone: 212-335-4525
Telecopy: 212-608-2371
NationsBank, N.A. (Carolinas) $25,000,000
233 South Wacker, Suite 2800
Chicago, Illinois 60606-6308
Attention: Christopher B. Torie
Telephone: 312-234-5641
Telecopy: 312-234-5601
NBD Bank $25,000,000
611 Woodward Avenue
Detroit, Michigan 48226
Attention: Michael Edwards
Telephone: 313-225-3335
Telecopy: 313-225-3269<PAGE>
4
The Bank of New York $15,000,000
One Wall Street - 19th Floor
New York, New York 10286
Attention: David C. Siegel
Telephone: 212-635-1243
Telecopy: 212-635-1208/1209
Fort Wayne National Bank $15,000,000
110 West Berry Street
Fort Wayne, Indiana 46802
Attention: Drew D. Dunlavy
Telephone: 219-426-0555
Telecopy: 219-461-6238
Mellon Bank, N.A. $15,000,000
One Mellon Bank Center
Pittsburgh, PA 15258-0001
Attention: Roger N. Stainer
Telephone: 412-234-2347
Telecopy: 412-234-8888
National City Bank $15,000,000
1900 East Ninth Street, 10th Floor
Cleveland, OH 44114
Attention: Jeffrey J. Tengel
Telephone: 216-575-2953
Telecopy: 216-575-9396
United States National Bank $15,000,000
of Oregon
555 SW Oak Street, Suite 400
Portland, Oregon 97204
Attention: Chris Karlin
Telephone: 503-275-4940
Telecopy: 503-275-4297
Norwest Bank Indiana,
National Association $10,000,000
116 East Berry Street
Fort Wayne, Indiana 46802
Attention: David L. Schnepp
Telephone: 219-461-6376
Telecopy: 219-461-6495<PAGE>
Schedule 1.1B
MORTGAGED PROPERTIES
[CAPTION]
<TABLE>
Valuation Research
Appraised Value
----------------------
<S> <C>
1601 Wall Street $ 10,930,000
Fort Wayne, IN
Allen County
U.S. Highway 30 W. $ 10,510,000
Columbia City, IN
Whitley County
West Pearl Street $ 1,130,000
Jonesboro, IN
Grant County
Decker Road $ 3,500,000
Vincennes, IN
Knox County
Franklin, IN $ 4,500,000
Johnson County
800 W. Mitchell St. $ 1,780,000
Kendallville, IN
Noble County
2816 N. Main St. $ 2,580,000
Rockford, IL
Winnebago County
301 E. 23rd St. $ 810,000
Marion, IN
Grant County
Rt. 29 and Bear Creek Rd. $ 2,250,000
Pana, IL
Christian County
E. Union & US 52 $ 2,700,000
Lafayette, IN
Tippecanoe County
190 E. Polk St. $ 3,130,000
Orleans, IN
Morgan County
803 York Road $ 3,850,000
Chester, SC
Chester County<PAGE>
2
Valuation Research
Appraised Value
----------------------
Rt. 4 North $ 5,460,000
Hoisington, KS
Barton County
University & East St. $ 6,020,000
Pauline, KS
Shawnee County
1074 and 1075 Patt Street $ 4,790,000
Anaheim, CA
Orange County
108 Elm $ 4,110,000
Tiffin, OH
Seneca County
6588 Marbut Rd. $ 3,000,000
Lithonia, GA
DeKalb County
/TABLE
<PAGE>
Schedule 1.1C
TERMS OF PREFERRED STOCK
[Attach 1992 Certificate of Designation
plus attached Amendment]<PAGE>
Schedule 1.1C
CERTIFICATE OF DESIGNATION
OF
SERIES A CUMULATIVE REDEEMABLE
EXCHANGEABLE PREFERRED STOCK
OF
BCP/ESSEX HOLDINGS INC.
------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
------------------------------
BCP/Essex Holdings Inc., a corporation organized and existing under
the laws of the State of Delaware (the "Corporation"), HEREBY CERTIFIES
that pursuant to authority conferred upon the Board of Directors of the
Corporation by the provisions of the Restated Certificate of Incorporation
of the Corporation which authorize the issuance of up to 3,100,000 shares
of a class of capital stock designated as preferred stock, $0.01 par value
per share (the "Preferred Stock"), the Board of Directors of the
Corporation has duly designated a series of the Preferred Stock,
consisting of 3,100,000 shares, to be issued in a series entitled "Series
A Cumulative Redeemable Exchangeable Preferred Stock" the preferences and
privileges, relative, participating, optional and other special rights,
and qualifications, limitations and restrictions of all shares of such
series, in addition to those set forth in the Certificate of Incorporation
of the Corporation, are as follows:
SERIES A CUMULATIVE REDEEMABLE EXCHANGEABLE PREFERRED STOCK
1. NUMBER OF SHARES. (a) The designation of the series of Preferred
Stock provided for herein shall be "Series A Cumulative Redeemable
Exchangeable Preferred Stock" (hereinafter referred to as the "Series A
Preferred"), and the number of authorized shares constituting Series A
Preferred is 3,100,000. Unless specifically provided to the contrary, the
term Series A Preferred shall include Additional Shares (as hereinafter
defined). No shares of Series A Preferred shall be issued except pursuant
to the Stock Subscription Agreement (as hereinafter defined), and pursuant
to Section 2 hereof.
(b) All shares of Series A Preferred redeemed, purchased, exchanged
or otherwise acquired by the Corporation shall be retired and cancelled
and, upon the taking of any action required by applicable law, shall be
restored to the status of authorized but unissued shares of Preferred
Stock, without designation as to series, and may thereafter be issued, but
not as shares of Series A Preferred (except as Additional Shares).
(c) The Series A Preferred shall, with respect to dividend rights,
rights upon liquidation, winding up or dissolution, and redemption rights,
rank (i) junior to any other class or series of Preferred Stock hereafter
duly established by the Board of Directors of the Corporation in
accordance herewith, the terms of which shall specifically provide that<PAGE>
such series shall rank prior to the Series A Preferred as to the payment
of dividends and distribution of assets upon liquidation (the "Senior
Preferred Stock"), (ii) on a parity with any other class or series of
Preferred Stock hereafter duly established by the Board of Directors of
the Corporation in accordance herewith, the terms of which shall
specifically provide that such class or series shall rank on a parity with
the Series A Preferred as to the payment of dividends and distribution of
assets upon liquidation (the "Parity Preferred Stock"), and (iii) prior to
any other class or series of Preferred Stock or other class or series of
capital stock of or other equity interests in the Corporation, including,
without limitation, all classes of the common stock of the Corporation,
whether now existing or hereafter created (the "Common Stock"; all of such
classes or series of capital stock and other equity interests of the
Corporation to which the Series A Preferred ranks prior, including,
without limitation, the Common Stock, are collectively referred to herein
as the "Junior Securities").
2. DIVIDENDS. (a) The Holders (as hereinafter defined) shall be
entitled to receive, when and as declared by the Board of Directors of the
Corporation, dividends on the shares of Series A Preferred, cumulative
from the date of issuance of such shares, at a rate per annum of 15% of
the liquidation preference thereof (that is, at a rate of $3.75 per share
per annum). Dividends on the shares of Series A Preferred shall be
payable in equal quarterly amounts of $0.9375 on March 31, June 30,
September 30 and December 31 of each year, commencing on December 31,
1992, or if any such date is not a Business Day (as hereinafter defined),
on the next succeeding Business Day (each of such dates being a "Series A
Dividend Payment Date"), in preference to and in priority over dividends
on any Junior Securities. Such dividends shall be paid to the holders of
record of the Series A Preferred at the close of business on the record
date specified by the Board of Directors of the Corporation at the time
such dividend is declared; provided, however, that such record date shall
not be more than 60 days nor less than 10 days prior to the respective
Series A Dividend Payment Date. Dividends on the shares of Series A
Preferred shall be fully cumulative and shall accrue (whether or not
earned or declared and whether or not there are funds of the Corporation
legally available for the payment of dividends) from the initial date of
issuance of shares of Series A Preferred (the "Series A Initial Issuance
Date"), or, with respect to any Additional Shares, from the respective
initial date of issuance thereof, in each case based on a 91 day quarter
and the actual number of days elapsed.
(b) (i) On the first twenty-four (24) Series A Dividend Payment
Dates after the Series A Initial Issuance Date (the twenty-fourth (24th)
of such Series A Dividend Payment Dates being called the "Final Noncash
Dividend Payment Date"), any dividend on the Series A Preferred accrued
and payable as provided in this Section 2 shall be payable either, as
elected by the Corporation, (x) in cash or (y) by issuing a number of
additional shares (or fractional shares) of the Series A Preferred (the
"Additional Shares") in respect of each such share (or fractional share)
of Series A Preferred then outstanding equal to the dividend then payable
on each such share (or fractional share) of Series A Preferred (expressed
as a dollar amount) divided by the liquidation value of one share of
Series A Preferred (expressed as a dollar amount) or (z) in any
combination thereof; commencing on the twenty-fifth (25th) Series A
Dividend Payment Date after the Series A Initial Issuance Date, all
dividends on the Series A Preferred accrued after the Final Noncash
Dividend Payment Date and payable as provided in this Section 2
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(including, without limitation, Default Dividends (as hereinafter
defined)) shall be payable in cash.
(ii) If at any time dividends with respect to the shares of
Series A Preferred are not declared and paid in full on any Series A
Dividend Payment Date, whether in cash or Additional Shares or any
combination thereof (the "Omitted Dividends"), the Series A Preferred
shall accrue additional dividends as though such Omitted Dividends had
been paid in Additional Shares and such Additional Shares had thereafter
accrued dividends in accordance herewith (the "Default Dividends"). Such
Default Dividends shall be fully cumulative (whether or not earned or
declared and whether or not there are funds of the Corporation legally
available for the payment of dividends) and shall be deemed to constitute
accrued and unpaid dividends for all purposes hereof even if such
additional dividends are not specifically mentioned in any particular
context.
(c) (i) No dividend shall be declared or paid or set apart for
payment, directly or indirectly, upon any Parity Preferred Stock for any
period unless all accrued and unpaid dividends (including Default
Dividends and whether or not earned or declared and whether or not there
are funds of the Corporation legally available for the payment of
dividends) have been or contemporaneously are declared and paid in full or
as set forth in this paragraph and no cash dividends shall be declared or
paid or set apart for payment, directly or indirectly, upon any Parity
Preferred Stock for any period unless all accrued and unpaid dividends
(including Default Dividends and whether or not earned or declared and
whether or not there are funds of the Corporation legally available for
the payment of dividends) have been or contemporaneously are declared and
paid in full in cash or as set forth in this paragraph. When dividends
are not paid in full, as aforesaid, upon the shares of Series A Preferred,
all dividends declared on the Series A Preferred (including Default
Dividends) and any series of Parity Preferred Stock shall be declared and
paid either (x) pro rata so that (A) the amount of dividends so declared
on Series A Preferred (including Default Dividends) and such series of
Parity Preferred Stock shall in all cases bear to each other the same
ratio that accrued dividends on the shares of Series A Preferred
(including Default Dividends) and such series of Parity Preferred Stock
bear to each other and (B) the cash portion of dividends so declared and
paid on the Series A Preferred and such series of Parity Preferred Stock
shall in all cases bear to each other the same ratio that accrued
dividends on the shares of Series A Preferred (including Default
Dividends) and such series of Parity Preferred Stock bear to each other,
or (y) on another basis that is more favorable to the Series A Preferred.
So long as any shares of Series A Preferred are outstanding, (1) except
for dividends with respect to any Parity Preferred Stock declared and paid
in accordance with and to the extent authorized by the previous sentence,
the Corporation shall not make any distributions in cash, property,
securities or otherwise with respect to any shares of Parity Preferred
Stock and (2) neither the Corporation nor any of its Subsidiaries shall,
directly or indirectly, reclassify, redeem, repurchase or otherwise
acquire any shares of Parity Preferred Stock, in any such case for any
consideration, except in each case for cash, property or securities and
reclassifications, redemptions, repurchases and other acquisitions pro
rata so that the amounts received on the Series A Preferred and on such
series of Parity Preferred Stock, or the aggregate liquidation preferences
of the reclassified, redeemed, repurchased or otherwise acquired shares of
Series A Preferred and of the reclassified, redeemed, repurchased or
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otherwise acquired shares of such series of Parity Preferred Stock, shall
in all cases bear to each other the same ratio that the aggregate
liquidation preference plus accrued and unpaid dividends (including
Default Dividends and whether or not earned or declared and whether or not
there are funds of the Corporation legally available for the payment of
dividends) of the shares of Series A Preferred and such series of Parity
Preferred Stock bear to each other, or on another basis that is more
favorable to the Series A Preferred.
(ii) No dividend shall be declared or paid or set apart for
payment or other distribution declared or made (in each case, other than
dividends or distributions paid in Junior Securities or options, warrants
or rights to subscribe for or purchase Junior Securities), directly or
indirectly, upon any Junior Securities, nor shall any Junior Securities
(or any options, warrants or rights to subscribe for or purchase Junior
Securities) be, directly or indirectly, reclassified, redeemed, purchased
or otherwise acquired by the Corporation or any of its Subsidiaries
(including pursuant to a merger, consolidation or similar transaction), in
any such case for any consideration (other than Junior Securities or
options, warrants or rights to subscribe for or purchase Junior
Securities); provided, however, that at any time which is not during a
Default Period (as hereinafter defined), at which there are no accrued but
unpaid dividends with respect to the Series A Preferred, and at which
dividends have been paid in full in cash on the most recent Series A
Dividend Payment Date, the Corporation may pay cash dividends on Junior
Securities in an aggregate amount not to exceed 50% of (x) the
Consolidated Net Operating Income (as hereinafter defined) of the
Corporation on a cumulative basis since the beginning of the first full
fiscal quarter of the Corporation with respect to which dividends on the
Series A Preferred were consecutively paid in full in cash less (y) all
dividends paid or payable or accrued during such period with respect to
any preferred stock of the Corporation.
(iii) Nothing contained in this Certificate of Designation
shall prevent the repurchase, redemption or other acquisition by the
Corporation or any of its Subsidiaries of Junior Securities (including
options, warrants or rights to purchase Junior Securities) from any
present or former employee or director of the Corporation or any of its
Subsidiaries (or from such employee's or director's respective heirs,
legatees, personal representatives, successors and permitted assigns, and
permitted transferees), in connection with the death, disability or
termination of employment of such employee or director, or from any
employee or director who, as determined in good faith by the Board of
Directors of the Corporation, is suffering from bona fide financial
hardship, in each case in accordance with the terms (or on terms no less
favorable to the Corporation) of the Management Agreements as in effect on
the Series A Initial Issuance Date and in the circumstances contemplated
by such Management Agreements; provided, however, that (A) no such
repurchases may be made during a Default Period and (B) the aggregate fair
market value at the time of repurchase of the consideration (other than
Junior Securities or options, warrants or rights to purchase Junior
Securities) paid by the Corporation and its Subsidiaries in connection
with all such repurchases shall not exceed the aggregate sum of
$30,000,000 or the sum of $1O,000,000 during any twelve-month period.
(d) Any dividend payment made on shares of Series A Preferred shall
first be credited against the dividends accrued with respect to the
earliest quarterly period for which dividends have not been paid.
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(e) Additional Shares shall be identical in all respects to shares
of Series A Preferred and shall be treated alike (except that such
Additional Shares shall be dated as of the date of issuance thereof and
shall accrue dividends from such date).
(f) All dividends paid with respect to shares of Series A Preferred
pursuant to this Section 2 shall be paid pro rata to the holders entitled
thereto.
3. REDEMPTION. Shares of Series A Preferred shall be redeemable
by the Corporation as provided below (with all references in this Section
3 to a redemption price per share to be adjusted proportionally in respect
of fractional shares):
(a) OPTIONAL REDEMPTION. At the option of the Corporation, shares
of Series A Preferred may be redeemed at any time from and after September
30, 1995, as a whole or in part, at the redemption prices, payable in
cash, equal to the percentage set forth below of the per share liquidation
preference thereof for redemptions during the 12-month periods beginning
on September 30 in each of the years indicated below, plus, in each case,
an amount equal to accrued and unpaid dividends thereon (including Default
Dividends and whether or not earned or declared and whether or not there
are funds of the Corporation legally available for the payment of
dividends) to the date fixed for redemption.
Year Percentage
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1995................................. 107.5%
1996................................. 105.0%
1997................................. 102.5%
1998 and thereafter.................. 100.0%
(b) CHANGE OF CONTROL AND SIMILAR TRANSACTIONS. Prior to the
occurrence of a Change of Control (as hereinafter defined) the Corporation
shall offer (the "Change of Control Offer") to redeem or effect the
redemption of, on the Change of Control Date (as hereinafter defined), all
outstanding shares of Series A Preferred at a redemption price, payable in
cash, equal to the per share liquidation preference thereof, plus an
amount equal to accrued and unpaid dividends (including Default Dividends
and whether or not earned or declared and whether or not there are funds
of the Corporation legally available for the payment of dividends) to the
Change of Control Date.
Subject to compliance with any then applicable requirements of any
federal or state securities laws, notice of a Change of Control Offer
shall be mailed by the Corporation not less than 20 Business Days before
the Change of Control Date to the Holders. Such notice shall be mailed,
addressed to each Holder, by overnight mail, postage prepaid, or delivered
to each Holder at such Holder's address as the same appears on the stock
transfer books of the Corporation. Subject to compliance with any then
applicable requirements of any federal or state securities laws, the
Change of Control Offer shall remain open from the time of mailing until
the Change of Control Date (and in any event not less than 20 Business
Days). The notice, which shall govern the terms of the Change of Control
Offer, shall state:
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(A) that the Change of Control Offer is being made pursuant to
this Section 3(b) and that, at the election of each Holder, some or
all of such Holder's shares of Series A Preferred may be redeemed
pursuant to such Change of Control Offer and the provisions hereof;
(B) the redemption price and the Change of Control Date;
(C) that any shares of Series A Preferred not surrendered
pursuant to the Change of Control Offer will remain outstanding and
continue to accrue dividends;
(D) that Holders electing to have shares of Series A Preferred
redeemed pursuant to the Change of Control Offer will be required to
surrender the certificates representing such shares of Series A
Preferred to the Corporation at the address specified in the notice
prior to the close of business on the Change of Control Date;
(E) that Holders will be entitled to withdraw their election
to have the Corporation redeem some or all of their shares of Series
A Preferred if the Corporation receives, not later than the close of
business on the Change of Control Date, a telegram, telex, facsimile
transmission or letter setting forth the name of such Holder, the
number of shares of Series A Preferred the Holder of Series A
Preferred delivered for redemption and a statement that such Holder
is withdrawing his election to have some or all of such shares of
Series A Preferred redeemed; and
(F) that Holders whose shares of Series A Preferred are
redeemed only in part will be issued new certificates representing
shares of Series A Preferred equal in number to the unredeemed
number of the shares of Series A Preferred surrendered.
Notice having been given as aforesaid, and if on or before the
Change of Control Date an amount in cash sufficient to redeem in full on
the Change of Control Date and at the applicable redemption price,
together with an amount equal to accrued and unpaid dividends (including
Default Dividends and whether or not earned or declared and whether or not
there are funds of the Corporation legally available for the payment of
dividends) to such Change of Control Date, all shares of Series A
Preferred validly surrendered for redemption and not withdrawn as of the
Change of Control Date shall have been set apart and deposited in trust so
as to be available for such purpose and only for such purpose, or shall
have been paid to the Holders thereof, then effective as of the close of
business on such Change of Control Date, and unless there shall be a
subsequent default in the payment of the redemption price, the shares of
Series A Preferred so surrendered for redemption shall cease to accrue
dividends, and said shares shall no longer be deemed to be outstanding and
shall, upon the taking of any action required by applicable law, have the
status of authorized but unissued shares of Preferred Stock, undesignated
as to series, and all rights of the Holders thereof, as such, as
stockholders of the Corporation (except the right to receive from the
Corporation the redemption price and an amount equal to any accrued and
unpaid dividends (including Default Dividends and whether or not earned or
declared and whether or not there are funds of the Corporation legally
available for the payment of dividends) to the Change of Control Date)
shall cease. Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly endorsed or assigned for
transfer, if the notice shall so state), such shares shall be redeemed by
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the Corporation at the redemption price as aforesaid. In case fewer than
all the shares represented by any such certificate are redeemed, a new
certificate of like terms and having the same date of original issuance
shall be issued representing the unredeemed shares without cost to the
Holder thereof.
On the Change of Control Date, the Corporation shall accept for
payment shares of Series A Preferred surrendered for redemption pursuant
to the Change of Control Offer, promptly mail to the Holders of shares of
Series A Preferred so accepted payment in an amount equal to the
redemption price for all shares so accepted, and promptly mail to such
Holders a new certificate representing a number of shares equal to any
unredeemed portion of the shares of Series A Preferred surrendered.
In the event a Change of Control shall, despite the provisions
hereof, occur prior to the making of a Change of Control Offer, the
Corporation shall nevertheless, immediately upon the occurrence of such a
Change of Control, make a Change of Control Offer. In the event of any
such Change of Control Offer, the provisions of this Section 3(b) shall
apply, provided that such Change of Control Offer shall commence, and
notice thereof shall be given in accordance herewith, immediately upon
such Change of Control and such Change of Control Offer shall remain open
for at least 20 Business Days after such notice.
Notwithstanding the foregoing provision of this paragraph (b), in
lieu of the Corporation making a Change of Control Offer, the Corporation
may designate a third party to make an offer to purchase all the
outstanding Shares of Series A Preferred Stock at a price equal to the
price required to be paid pursuant to the Change of Control Offer, and
otherwise on terms and subject to conditions and procedures no less
favorable to the Holders than those set forth herein with respect to the
Change of Control Offer; provided, however, that the Corporation shall be
liable for any default by such third party to consummate such offer as if
such offer were the Change of Control Offer.
(c) OTHER MANDATORY REDEMPTIONS. The Corporation shall redeem all
outstanding shares of Series A Preferred on September 30, 2004 (the
"Mandatory Redemption Date") at a redemption price, payable in cash, equal
to the per share liquidation preference thereof, plus an amount equal to
accrued and unpaid dividends (including Default Dividends and whether or
not earned or declared and whether or not there are funds of the
Corporation legally available for the payment of dividends) to the
redemption date therefor.
(d) NOTICE OF REDEMPTION; OTHER REDEMPTION PROCEDURES. (i)
Whenever shares of Series A Preferred are to be redeemed pursuant to
Section 3(a) or 3(c), a notice of such redemption shall be mailed,
addressed to each Holder, by overnight mail, postage prepaid, or delivered
to each Holder of the shares to be redeemed at such Holder's address as
the same appears on the stock transfer books of the Corporation. Such
notice shall be mailed or delivered not less than 10 days and not more
than 60 days prior to the date fixed for redemption. Each such notice
shall state: (A) the date fixed for redemption; (B) the number of shares
of Series A Preferred to be redeemed; (C) the redemption price; (D) the
place or places where such shares of Series A Preferred are to be
surrendered for payment of the redemption price; and (E) that dividends on
the shares to be redeemed will cease to accrue on such date fixed for
redemption. If fewer than all shares of Series A Preferred held by a
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Holder are to be redeemed, the notice mailed to such Holder shall specify
the number of shares to be redeemed from such Holder.
(ii) Notice having been given as aforesaid, and if on or
before the redemption date specified in such notice an amount in cash
sufficient to redeem in full on the redemption date and at the applicable
redemption price, together with an amount equal to accrued and unpaid
dividends (including Default Dividends and whether or not earned or
declared and whether or not there are funds of the Corporation legally
available for the payment of dividends) to such redemption date, all
shares of Series A Preferred called for redemption shall have been set
apart and deposited in trust so as to be available for such purpose and
only for such purpose, or shall have been paid to the Holders thereof,
then effective as of the close of business on such redemption date, and
unless there shall be a subsequent default in the payment of the
redemption price, the shares of Series A Preferred so called for
redemption shall cease to accrue dividends, and said shares shall no
longer be deemed to be outstanding and shall have the status of authorized
but unissued shares of Preferred Stock, undesignated as to series, and all
rights of the Holders thereof, as such, as stockholders of the Corporation
(except the right to receive from the Corporation the redemption price and
an amount equal to any accrued and unpaid dividends (including Default
Dividends and whether or not earned or declared and whether or not there
are funds of the Corporation legally available for the payment of
dividends) to the redemption date) shall cease. Upon surrender in
accordance with said notice of the certificates for any shares so redeemed
(properly endorsed or assigned for transfer, if the notice shall so
state), such shares shall be redeemed by the Corporation at the redemption
price as aforesaid. In case fewer than all the shares represented by any
such certificate are redeemed, a new certificate of like terms and having
the same date of original issuance shall be issued representing the
unredeemed shares without cost to the Holder thereof.
(iii) In the event that fewer than all of the shares of
Series A Preferred are to be redeemed pursuant to Section 3(a), the
Corporation shall redeem shares of Series A Preferred pro rata among the
Holders, based on the number of shares of Series A Preferred held by each
Holder, except that the Corporation may redeem all of the shares of Series
A Preferred held by any Holders of fewer than 100 shares of Series A
Preferred (or all the shares of Series A Preferred held by Holders who
would hold less than 100 shares of Series A Preferred as a result of such
redemption).
(e) NO LIMITATIONS ON RIGHT TO PURCHASE SERIES A PREFERRED.
Nothing contained in this Certificate of Designation shall limit any legal
right of the Corporation or any Subsidiary or Affiliate to purchase or
otherwise acquire any shares of Series A Preferred at any price, whether
higher or lower than the redemption price.
4. LIQUIDATION. (a) Upon a liquidation, dissolution or winding
up of the affairs of the Corporation, whether voluntary or involuntary,
the Holders shall be entitled, before any assets of the Corporation shall
be distributed among or paid over to the holders of Junior Securities, but
after distribution of such assets among, or payment thereof over to,
creditors of the Corporation and to holders of any Senior Preferred Stock,
to receive from the assets of the Corporation available for distribution
to stockholders, an amount in cash or property (valued at its fair market
value), or a combination thereof, equal to $25 per share (pro rated for
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fractional shares), plus, in each such case, an amount in cash or property
(valued at its fair market value), equal to all accrued and unpaid
dividends thereon (including Default Dividends and whether or not earned
or declared and whether or not there are funds of the Corporation legally
available for the payment of dividends) to and including the date of final
distribution. After any such payment in full, the Holders shall not, as
such, be entitled to any further participation in any distribution of
assets of the Corporation. As used in this Certificate of Designation,
the terms "liquidation preference" and "liquidation value" (and other
terms of similar import) shall mean $25 per share.
(b) Neither the merger or consolidation of the Corporation into or
with any other corporation or the merger or consolidation of any other
corporation into or with the Corporation, nor the sale of all or
substantially all of the assets of the Corporation, shall be deemed to be
a liquidation, dissolution or winding up, voluntary or involuntary, for
the purposes of this Section 4.
(c) If, upon any such liquidation, dissolution or winding up of the
Corporation, whether voluntary or involuntary, the assets of the
Corporation shall be insufficient to make the full payments required by
subsection (a) of this Section 4 and all full distributions with respect
to all Parity Preferred Stock, no such distribution shall be made on
account of any shares of any Parity Preferred Stock or Series A Preferred
unless proportionate distributive amounts shall be paid on account of the
shares of Series A Preferred and Parity Preferred Stock, ratably, in
proportion to the full distributable amounts to which Holders and holders
of all such Parity Preferred Stock are respectively entitled upon such
dissolution, liquidation or winding up.
5. VOTING. (a) Except as required by law and except for any voting
by the Holders as part of a separate class or series and except as
otherwise provided in the Certificate of Incorporation of the Corporation,
the Holders shall not be entitled to any voting rights as shareholders of
the Corporation except as specified in this Section 5 or in Section 7. The
affirmative vote of the Holders of at least seventy five percent of the
outstanding shares of Series A Preferred, voting separately as a single
class on a one vote per share basis (pro rated for fractional shares), in
person or by proxy, at a special or annual meeting called for the purpose,
or by written consent in lieu of a meeting, shall be required to
liquidate, wind up or dissolve the Corporation and to amend, repeal or
change any provisions of this Certificate of Designation or the
Certificate of Incorporation of the Corporation in any manner which would
adversely affect, alter or change the powers, preferences or rights of any
share of Series A Preferred.
(b) In addition, without the affirmative vote of the Holders of at
least seventy five percent of the outstanding shares of Series A
Preferred, voting separately as a single class on a one vote per share
basis (pro rated for fractional shares), in person or by proxy, at a
special or annual meeting called for the purpose, or by written consent in
lieu of a meeting:
(i) the Corporation shall not merge with or into any Person,
or consolidate with any other Person, in one or a series of related
transactions, unless (A) all of the shares of Series A Preferred
shall continue to be or become duly and validly authorized
securities of the corporation (including the Corporation, if
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applicable) formed by or surviving any such consolidation or merger,
fully paid and nonassessable, with rights, preferences and powers
identical to the rights, preferences and powers set forth in this
Certificate of Designation, all of the terms and provisions of this
Certificate of Designation shall continue as, or become, a part of
the Certificate of Incorporation of such corporation, and each
reference herein to the Corporation shall be deemed to be a
reference to such corporation, (B) the corporation (including the
Corporation, if applicable) formed by or surviving any such
consolidation or merger shall have Consolidated Net Worth (as
hereinafter defined) immediately following and after giving effect
to such transaction equal to or greater than the Consolidated Net
Worth of the Corporation immediately prior to and without giving
effect to such transaction, and (C) if the Consolidated Coverage
Ratio (as hereinafter defined) of the Corporation immediately prior
to and without giving effect to such transaction is within the range
set forth in column (x) below, the pro forma Consolidated Coverage
Ratio of the corporation (including the Corporation. if applicable)
formed by or surviving any such consolidation or merger shall be at
least equal to the percentage of the pre-transaction Consolidated
Coverage Ratio of the Corporation set forth in column (y) below:
(x) (y)
--------------- -----
Below 1.11:1....................... 100%
1.11:1 to 1.99:1................... 90%
2.00:1 to 2.99:1................... 80%
3.00:1 to 3.99:1................... 70%
4.00:1 to 4.99:1................... 60%
5.00:1 or more..................... 50%
provided, however, that if the pro forma Consolidated Coverage Ratio
of the corporation (including the Corporation, if applicable) formed
by or surviving any such consolidation or merger is 3.00 to 1 or
greater, the ratio requirement in clause (C) above shall be
inapplicable and such transaction shall be deemed to have complied
with such requirement; provided, further, that the foregoing tests
shall not apply to any merger or consolidation the sole purpose of
which is (as determined in good faith by the Board of Directors of
the Corporation and evidenced by a resolution of such Board of
Directors) to change the state of incorporation of the Corporation,
in which the stockholders of the Corporation receive no
consideration (other than a corresponding interest in the surviving
corporation, if the Corporation is not the surviving corporation in
such merger, proportionate to their interest in the Corporation),
and which transaction does not have as one of its purposes or
effects the evasion of the limitation of this clause (i) and does
not adversely affect the Series A Preferred or any Holders; and
provided, further, that for the purposes of this clause (i) the
provisions of clause (iii) of the definition of Consolidated Net
Income shall not be taken into account in computing the Consolidated
Coverage Ratio.
(ii) the Corporation shall not, directly or indirectly, sell,
lease, exchange, transfer or otherwise dispose of all or
substantially all of its assets and property or all or substantially
all of the assets and property of Essex to another Person or Persons
(other than one or more wholly owned Subsidiaries of the
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Corporation) in one transaction or a series of related transactions,
unless the Corporation simultaneously redeems all of the shares of
Series A Preferred then outstanding pursuant to the provisions of
Section 3(a); provided, however, that nothing in this clause(ii)
shall be deemed to prohibit any merger described in the second
proviso to the foregoing clause (i);
(iii) the Corporation shall not at any time (A) own (or take
any action that would result in its owning) less than all of the
capital stock of and all other equity interests in Essex and its
direct and indirect Subsidiaries, other than (x) any minority
interests existing as of the Series A Initial Issuance Date in
Persons which are Subsidiaries of Essex as of such date, (y) any
minority interests in any Subsidiary of the Corporation acquired
after the Series A Initial Issuance Date, or (z) any minority
interests in a Subsidiary of Essex that was not a Significant
Subsidiary as of the Series A Initial Issuance Date or, if later,
the date that such Person first became a Subsidiary of the
Corporation, and, in the case of any such Subsidiary described in
this clause (z), was not, at any time prior to the creation of such
minority interest, a Significant Subsidiary by reason of additional
investments in and/or advances to such Subsidiary thereafter, or (B)
cause or allow any direct or indirect Subsidiary (other than a
wholly owned Subsidiary) to, directly or indirectly, pay, make or
effect any dividend, distribution or repurchase on or of any of the
capital stock of or other equity interest in such Subsidiary other
than on a pro rata basis among all of the holders of the class or
classes of capital stock with respect to which such dividend,
distribution or repurchase is effected (provided that this clause
(B) shall not prohibit any repurchase, otherwise permitted by the
terms of this Certificate of Designation, of any of the capital
stock of or other equity interest in any Subsidiary that was not a
Significant Subsidiary as of the Series A Initial Issuance Date or,
if later, the date that such Person first became a Subsidiary of the
Corporation, and, in the case of any such Subsidiary, was not, at
any time prior to the creation of such minority interest, a
Significant Subsidiary by reason of additional investments in and/or
advances to such Subsidiary thereafter);
(iv) the Corporation shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, enter into any
transaction (including, without limitation, the purchase, sale,
lease or exchange of any property or the rendering of any service or
any loans or advances) with any Affiliate of the Corporation (other
than transactions between the Corporation and any of its
Subsidiaries (other than Subsidiaries in which any Affiliate of the
Corporation has any interest other than through the Corporation's
ownership interest in such Subsidiary) or between Subsidiaries
(other than involving any Subsidiary in which any Affiliate of the
Corporation has any interest other than through the Corporation's
ownership interest in such Subsidiary) of the Corporation), unless
(x) any such transaction is on terms no less favorable to the
Corporation and its Subsidiaries than those that could be obtained
in a comparable arm's length transaction with an independent third
party, and (y) prior to consummating any such transaction which has
a value equal to or greater than $10 million, either (1) the
Corporation shall have obtained an opinion from a nationally
recognized investment banking firm or other reputable third party
-11-<PAGE>
appraiser that the terms of such transaction are no less favorable
to the Corporation and its Subsidiaries than those that could be
obtained in a comparable arm's length transaction with an
independent third party or (2) the terms of such transaction shall
be approved by a majority of the disinterested members of the Board
of Directors of the Corporation; provided, however, that nothing in
this Section 5(b)(iv) shall be deemed to prohibit, or to require the
Corporation to obtain the opinion referred to above from an
investment banking firm or other appraiser prior to consummating,
any of the following:
(A) the payment of management fees not exceeding
$1,000,000 per annum to Bessemer;
(B) the provision by Bessemer or an Affiliate of
Bessemer of asset portfolio management services or other
investment advisory services to the Corporation or any of its
benefit or compensation plans on a basis no less favorable to
the Corporation than that on which Bessemer or such Affiliate
provides such services to unrelated third parties;
(C) the payment of ordinary and customary fees and
expenses to directors of the Corporation who are not employees
or otherwise Affiliated with the Corporation or Bessemer;
(D) any transaction expressly contemplated pursuant to
any of the Related Agreements (as such term is defined in the
Stock Subscription Agreement), as in effect as of the date
hereof;
(E) any transaction with an Affiliate which is a joint
venture or other bona fide business arrangement and of which
no Affiliate of the Corporation and no non-wholly owned
Subsidiary of the Corporation is an Affiliate;
(F) the repurchase of shares of capital stock or
options, rights or warrants to acquire shares of capital stock
of the Corporation or any of its subsidiaries from any present
or former employee or director of the Corporation or any of
its Subsidiaries (or from such employee's or director's
respective heirs, legatees, personal representatives,
successors and permitted assigns, and permitted transferees)
in connection with the death, disability or termination of
employment of such employee or director, or from any employee
or director who, as determined in good faith by the Board of
Directors of the Corporation, is suffering from bona fide
financial hardship, in each case in accordance with the terms
(or on terms no less favorable to the Corporation) of the
Management Agreements (as defined in the Stock Subscription
Agreement) as in effect on the Series A Initial Issuance Date
and in the circumstances contemplated by such Management
Agreements, to the extent otherwise permitted by this
Certificate of Designation;
(G) the payment of fees to Bessemer or any of its
Affiliates in connection with the Acquisition, in an amount
not to exceed $3,800,000, and the reimbursement of the
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reasonable legal fees and out-of-pocket expenses of Bessemer
or any of its Affiliates in connection with the Acquisition;
(H) any transaction with Goldman, Sachs & Co. ("GS") or
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJSC")
or any of their respective Affiliates, DLJSC and GS and their
respective Affiliates hereby disclaiming that any of them are
Affiliates of the Corporation;
(I) any transaction with an Affiliate of DLJSC or GS
which is primarily engaged in an active operating business
(not including any investment banking, money management,
consulting or similar service business) and which is a
Subsidiary of DLJSC or GS or a Person organized by DLJSC or GS
or one of their Affiliates to invest in active operating
companies and which transaction is on terms no less favorable
to the Corporation and its Subsidiaries than those that could
be obtained in a comparable arm's length transaction with an
independent third party, is in the ordinary course of such
Affiliate's business, and is entered into by such Affiliate at
the direction of operating management of such Affiliate and
not at the direction of DLJ or Goldman Sachs, as the case may
be; or
(J) any payment or other transaction pursuant to any tax
sharing agreement between the Corporation and Essex or any
other Person with which the Corporation is required to, or is
permitted to, file a consolidated tax return or with which the
Corporation is or could be part of a consolidated group for
tax purposes;
(v) the Corporation shall not create, authorize or issue any
class or series of Senior Preferred Stock or Parity Preferred Stock;
provided, however, that the Corporation shall, despite the
prohibition of this clause, be permitted, without the vote or
consent of the Holders, to create, authorize and issue Senior
Preferred Stock or Parity Preferred Stock if: (A) the proceeds of
such issuance are used to refinance any indebtedness of the
Corporation or Essex that is existing immediately prior to the
consummation of the Acquisition or incurred by the Corporation or
Essex in connection with the Acquisition to fund the Acquisition (or
any subsequent refinancing of any such indebtedness); and (B) such
issuance would not, on a pro forma basis, cause the Corporation's
Consolidated Coverage Ratio to decrease (provided that for the
purposes of this clause (B) the provisions of clause (iii) of the
definition of Consolidated Net Income shall not be taken into
account in computing the Consolidated Coverage Ratio); or
(vi) prior to any exchange of Series A Preferred for Exchange
Debt, the Corporation shall not effect or allow any amendment,
alteration or repeal of any of the provisions of Exchange Debt (as
hereinafter defined) from those contained in the form of indenture
which is on file with the Secretary of the Corporation and available
to each Holder without charge upon request (the "Exchange Debt
Indenture"), other than such changes (A) which would be allowed
under the terms of the Exchange Debt Indenture without the vote or
consent of the holders of Exchange Debt if any Exchange Debt were
issued and outstanding, (B) which would make any provision of the
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Exchange Debt more (1) restrictive to the Corporation or (2)
beneficial to the holders of the Exchange Debt, (C) which add to
the covenants and agreements of the Corporation contained in the
Exchange Debt or remove any right or power therein reserved to or
conferred upon the Corporation, or (D) which are requested by the
Corporation in the event of any amendment to this Certificate of
Designation that effects a change in the terms of the Series A
Preferred, to conform (as nearly as may be possible taking into
account the differences between debt securities and equity
securities) the provisions of the Exchange Debt to the terms of the
Series A Preferred as so changed, and in each case does not have any
additional effects which are not permitted or in any way adversely
affects the rights and preferences of the Exchange Debt.
Notwithstanding the provisions hereof, this Certificate of Designation
shall not prohibit, (x) the merger of B E Acquisition Corporation with
and into MS/Essex Holdings, Inc. or (y) any merger involving only the
Corporation and Essex (the "Essex Merger") so long as, in either such
case, no consideration is received by the stockholders of the Corporation
in connection therewith (other than a corresponding interest in the
surviving corporation, if the Corporation is not the surviving
corporation in such merger, or a corresponding interest in a newly formed
corporation (a "New Holding Company") which shall, from and after the
Essex Merger, own all of the capital stock of and all other equity
interests in the surviving corporation and which shall have no other
business, assets or liabilities, in each case proportionate to their
interest in the Corporation), and provided that, in the event a New
Holding Company is formed in connection with the Essex Merger, each share
of Series A Preferred will be converted into one fully paid and
nonassessable share of preferred stock of the New Holding Company with
rights, preferences and powers identical to the rights, preferences and
powers set forth in this Certificate of Designation, all of the terms and
provisions of this Certificate of Designation shall become a part of the
Certificate of Incorporation of the New Holding Company, and each
reference herein to the Corporation shall be deemed to be a reference to
the New Holding Company and each reference herein to Essex shall be deemed
to be a reference to the surviving corporation in such merger.
(c) Within 15 days after the end of each fiscal year of the
Corporation commencing with the fiscal year of the Corporation in which
the Series A Initial Issuance Date occurs, the Corporation shall deliver a
certificate to each Holder (or, after the shares of Series A Preferred
have been distributed in a public offering, to the transfer agent for the
Series A Preferred, if one has been appointed (which transfer agent shall
agree to make copies of such certificate available to Holders who request
copies thereof)) certifying that during such period the Corporation has
not taken any action with respect to which the vote or consent of any
portion of the outstanding shares of Series A Preferred is required under
this Certificate of Designation without obtaining such vote or consent,
and that the Corporation has not taken any other action not permitted to
be taken by it hereunder.
6. EXCHANGE. (a) The Series A Preferred shall be exchangeable
for Exchange Debt in whole, but not in part, at any time (other than at
any time during which the Corporation is obligated to redeem or repurchase
shares of Series A Preferred pursuant hereto or pursuant to any other
agreement with any of the Holders) on any Series A Dividend Payment Date,
out of surplus of the Corporation legally available for such exchange, at
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the option of the Corporation; provided, however, that the Corporation may
not so exchange any Series A Preferred during a Default Period or if all
accrued and unpaid dividends thereon (whether or not earned or declared
and whether or not there are funds of the Corporation legally available
for the payment of dividends) shall not have been paid on such Series A
Dividend Payment Date or if on the date of such exchange there exists an
event of default, or if such exchange would give rise to an event of
default, under any indebtedness of the Corporation or if, immediately
after such exchange, there would exist a Default or an Event of Default
(as such terms are defined in the Exchange Debt Indenture). At the time of
any exchange, Holders of the shares of Series A Preferred being exchanged
will be entitled to receive Exchange Debt with a principal amount equal to
the aggregate liquidation preference of the shares of Series A Preferred
being exchanged.
Prior to the Exchange Date, the Corporation shall file at the office
of the exchange agent for the Series A Preferred (or with the books of the
Corporation if there is no exchange agent) and deliver to each Holder an
opinion of counsel addressed to the Corporation and the Holders being
exchanged to the effect (A) that the Exchange Debt has been duly
authorized and, when executed and authenticated in accordance with the
provisions thereof and of this Certificate of Designation and delivered in
exchange for the shares of Series A Preferred, will constitute valid and
binding obligations of the Corporation (subject to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or
affecting creditors' rights and to general principles of equity and
subject to other customary exceptions and assumptions), (B) that the
issuance and delivery of the Exchange Debt in exchange for the shares of
Series A Preferred will not violate the laws of the state of incorporation
of the Corporation, and (C) that (x)qualification of the Exchange Debt
Indenture is not required under the Trust Indenture Act of 1939, as
amended, or, if required, has been obtained, and (y) the issuance and
delivery of the Exchange Debt in exchange for the shares of Series A
Preferred is exempt from the registration or qualification requirements of
the Securities Act and applicable state securities laws or, if no such
exemption is available, that the Exchange Debt of such series has been
duly registered or qualified for such exchange under the Securities Act
and such applicable state securities laws.
Notice of any exchange of the Series A Preferred shall be mailed at
least 10 days but not more than 60 days prior to the Exchange Date to each
Holder of Series A Preferred to be exchanged, at such Holder's address as
it appears on the books of the Corporation. Such notice shall set forth
the procedures for exchanging certificates representing Series A Preferred
for Exchange Debt. Upon such exchange, the rights of the Holders of
Series A Preferred to be exchanged as stockholders of the Corporation
shall cease, and the person or persons entitled to receive the Exchange
Debt issuable upon such exchange shall be treated for all purposes as the
registered holder or holdersof such Exchange Debt.
(b) The shares of Series A Preferred which have been exchanged
shall no longer be deemed to be outstanding and shall be retired and all
rights with respect to such shares, including, without limitation, the
rights, if any, to receive dividends (including, without limitation,
accrued and unpaid dividends) and to receive notices and to vote or
consent, shall forthwith cease, except only the right of the Holders
thereof to receive Exchange Debt in exchange therefor.
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(c) Upon any exchange of shares of Series A Preferred in
accordance with this Section 6, the Corporation will pay any stock
transfer taxes which may be due with respect to the transfer and exchange
of such exchanged shares with the Corporation; provided, however, that if
the Exchange Debt into which the Series A Preferred is exchangeable
pursuant to this Section 6 is to be issued in the name of any person other
than the Holder of the shares of Series A Preferred to be so exchanged,
the amount of any transfer taxes (whether imposed on the Corporation, the
Holder or such other person) payable on account of the transfer to such
person will be payable by the Holder.
7. EVENT OF DEFAULT. (a) If and whenever, at any time or
times, (i) dividends payable on shares of Series A Preferred shall have
been in arrears and unpaid in an aggregate amount equal to or exceeding
the amount payable thereon for six full quarterly dividend periods or (ii)
the Corporation fails to honor any of its obligations under Section 3(b)
hereof (each such circumstance, an "Event of Default" under this
Certificate of Designation), in addition to any other remedies to which
the Holders may be entitled at law or otherwise, then the number of
directors then constituting the Board of Directors of the Corporation
shall be increased by two, and the Holders shall, automatically, and
without any further action by the Board of Directors or any stockholder or
stockholders of the Corporation, in addition to any other voting rights,
have the right, voting separately as a class on a one vote per share basis
(pro rated for fractional shares), in person, by proxy or by written
consent in lieu of a meeting, to elect such two additional directors.
Whenever such right of the Holders shall have vested, such right may be
exercised initially either at a special meeting of such Holders as
provided in Section 7(b) hereof or at any annual meeting of stockholders
held for the purpose of electing directors, and thereafter at such annual
meetings. The right of the Holders to elect such directors shall
continue, if arising as a result of the Event of Default specified in
clause (i) of the initial sentence of this Section 7(a), until such time
as all dividends accrued on outstanding shares of Series A Preferred to
the Dividend Payment Date next preceding the date of any such
determination shall have been paid in full, and, if arising as a result of
the Event of Default specified in clause (ii) of the initial sentence of
this Section 7(a), until the Corporation fulfills all its obligations
under Section 3(b) hereof, including the payment pursuant to the Change of
Control Offer of an amount equal to all accrued dividends through the date
of cure, at which time in either such event the right of the Holders so to
vote shall terminate, except as herein or by law expressly provided,
subject to revesting upon the occurrence of a subsequent default as
described above.
(b) At any time when the right of the Holders to elect directors
as provided in Section 7(a) hereof shall have vested, and if such right
shall not already have been initially exercised, but in any event within
30 days of the occurrence of an Event of Default, a proper officer of the
Corporation shall call a special meeting of the Holders for the purpose of
electing directors. Such meeting shall be held at the earliest
practicable date upon the same form of notice as is required for annual
meetings of stockholders of the Corporation at such suitable place in the
City of New York as is designated by such officer. If such meeting shall
not be called by a proper officer of the Corporation within such 30 day
period, then the Holders of at least 10% of the aggregate number of shares
of Series A Preferred at the time outstanding may designate in writing one
of their number to call such a meeting at the expense of the Corporation,
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and such meeting may be called by such person so designated and shall be
held at the place for the holding of annual meetings of stockholders of
the Corporation (or such other suitable place as is designated by such
person). Any Holder so designated shall have access to the registry books
of the Corporation for the purpose of causing a meeting of stockholders to
be called pursuant to this Section 7(b).
(c) At any meeting held for the purpose of electing directors at
which Holders shall have the right, voting together as a class to elect
directors as provided in Section 7(a) hereof, the presence, in person or
by proxy, of the Holders of a majority of the aggregate number of shares
of Series A Preferred at the time outstanding shall be required and be
sufficient to constitute a quorum of such class for the election of either
director pursuant to such Section 7(a). At any such meeting or
adjournment thereof, (i) the absence of a quorum of the shares of Series A
Preferred shall not prevent the election of the directors to be elected
otherwise than pursuant to Section 7(a) hereof, and (ii) in the absence of
a quorum, a majority of the Holders, present in person or by proxy, shall
have the power to adjourn the meeting for the election of directors whom
they are entitled to elect, from time to time without notice other than
announcement at the meeting or as otherwise required by law, until a
quorum shall be present.
(d) During any period when the Holders shall have the right to
vote together as a class for directors as provided in Section 7(a) hereof,
(i) the directors so elected by such Holders shall continue in office
until their successors shall have been elected by such Holders or until
termination of the rights of such Holders to vote as a class for directors
and (ii) any vacancies in the Board of Directors may be filled by a
majority (even if that be only a single director) of the remaining
directors theretofore elected by the Holders as a class. Immediately upon
termination of the right of Holders to vote as a class for directors, (i)
the term of office of the directors so elected shall terminate, and (ii)
the number of directors shall be such number as may be provided for in the
by-laws of the Corporation irrespective of any increase pursuant to the
provisions of Section 7(a) hereof.
(e) Notwithstanding the foregoing, nothing herein or otherwise in
the Corporation's Certificate of Incorporation or bylaws shall limit or
prevent the right of the Holders from, to the fullest extent allowed by
law, exercising the voting rights provided in this Section by written
consent of a majority of the outstanding shares of Series A Preferred.
(f) The voting rights and remedies, and the provisions setting
forth their terms and conditions, of the Holders set forth in Section 6.1
of the Stock Subscription Agreement (as the same may be from time to time
amended), a copy of which is on file with the Secretary of the Corporation
and available to each Holder without charge upon request, are hereby
incorporated herein by reference and made a part hereof.
8. REPORTS. The Corporation shall, so long as it is subject to
the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), send by first class mail to each
Holder, within 15 days after it files them with the SEC, copies of the
annual and quarterly reports and of the information, documents and other
reports or copies of such portions of any of the foregoing (as the SEC may
by rules and regulations prescribe) which the Corporation is required to
file with the Commission pursuant to Section 13 or 15(d) of the Exchange
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Act. If the Corporation is not subject to the requirements of Section 13
or 15(d) of the Exchange Act, the Corporation shall send by first class
mail to each Holder who shall (unless an Event of Public Distribution
shall previously have occurred) have undertaken to be bound by the
confidentiality provisions of Section 8.15 of the Subscription Agreement,
within 15 days after it would have been required to file with the SEC,
financial statements, including any notes thereto (and with respect to
annual reports, an auditors' report by a firm of independent public
accountants of established national reputation), and a "Management's
Discussion and Analysis of Financial Condition and Results of Operations,"
both comparable to that which the Corporation would have been required to
include in such annual or quarterly reports, information, documents or
other reports if the Corporation were subject to the requirements of
Section 13 or 15(d) of the Exchange Act.
9. Additional Definitions. As used in this Certificate of
Designation, the following terms have the meanings specified below:
"Acquisition" shall mean the merger of B E Acquisition Corporation
with and into MS/Essex Holdings, Inc. as contemplated by the Merger
Agreement (as such term is defined in the Subscription Agreement) and the
consummation of all related financing effectuated contemporaneously
therewith.
"Affiliate" (and, with a correlative meaning, "Affiliated") shall
mean, with respect to any Person, any other Person that directly, or
through one or more intermediaries, controls or is controlled by or is
under common control with such first Person; provided, however, (i) no
Person shall be deemed to be an Affiliate of the Corporation solely by
reason of its ownership of any Series A Preferred, Exchange Debt, Warrants
or shares of Common Stock issued upon exercise of the Warrants, or its
ability to elect directors of the Corporation as a result thereof or in
connection therewith, (ii) the Corporation and its Subsidiaries shall not
be deemed to be Affiliates of each other, (iii) shareholders and
Affiliates of Bessemer Securities Corporation ("BSC") that would not be
Affiliates of the Corporation other than by reason of being a shareholder
or Affiliate of BSC and that neither in fact participate in the management
of any of BSC, Bessemer or the Corporation, nor are controlled by BSC,
Bessemer, the Corporation, or any of their respective Affiliates who in
fact participate in the management of any of BSC, Bessemer or the
Corporation, shall not be deemed to be Affiliates of the Corporation, and
(iv) except as set forth in clause (iii) above, for so long as Bessemer is
an Affiliate of the Corporation, any Affiliate of Bessemer shall be deemed
to be an Affiliate of the Corporation. As used in this definition,
"control" (including, with correlative meanings, "controlled by" and
"under common control with") shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of a Person (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise).
"Bessemer" shall mean Bessemer Capital Partners, L.P.
"Business Day" shall mean any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York) on which banks
are authorized to be open for business in New York City.
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A "Change of Control" shall be deemed to have occurred if a Person
or group of Affiliated Persons or other "group" (within the meaning of
Section 13(d)(3) of the Exchange Act), other than Bessemer, any of the
Investors (as such term is defined in the Stock Subscription Agreement),
and any of their respective Affiliates, shall beneficially own, directly
or indirectly, or have the power to direct the vote of with respect to the
election of directors of the Corporation, shares of capital stock entitled
to cast more than the greater of (x) 25% or (y) the Original Group
Percentage of the votes entitled to be cast with respect to the election
of directors of the Corporation. For the purposes of this definition, the
"Original Group Percentage" shall mean, as of any date of determination,
the percentage of the votes entitled to be cast with respect to the
election of directors of the Corporation by Bessemer, Chemical Venture
Partners, L.P., the DLJ/GS Investors, and their respective Affiliates and
by Persons who have agreed to vote as directed by Bessemer or any of its
Affiliates with respect to the election of directors of the Corporation.
For the purposes of the calculation required by the first sentence of this
definition, any Warrant Shares issuable upon exercise of the Warrants
shall be deemed to be issued and outstanding if the Current Market Price
(as such term is defined in the Warrant Agreement) is greater than the
Exercise Price (as such term is defined in the Warrant Agreement).
"Change of Control Date" shall mean the date on which a Change of
Control of the Corporation shall occur.
"Consolidated Coverage Ratio" of any Person shall mean the ratio of
(i) the aggregate amount of Consolidated EBITDA of such Person for the
four fiscal quarters for which financial information in respect thereof is
available immediately prior to the date of the transaction giving rise to
the need to calculate the Consolidated Coverage Ratio to (ii) the
aggregate Consolidated Fixed Charges of such Person during such four
fiscal quarters; provided, that in making any such computation on a pro
forma basis, Consolidated Fixed Charges attributable to interest on any
indebtedness or dividends on any preferred stock (whether existing or
being incurred) and bearing a floating rate shall be computed as if the
rate in effect on the date of computation had been the applicable rate for
the entire period. When required to be calculated on a pro forma basis,
the Consolidated Coverage Ratio shall give effect to any indebtedness to
be incurred or repaid, equity to be issued or acquisition to be made as if
incurred or made on the first day of the four-fiscal-quarter period
referred to in clause (i) of the preceding sentence.
"Consolidated EBITDA" of any Person shall mean, for any period, the
sum of the amounts for such period of (i) Consolidated Net Operating
Income, (ii) Consolidated Fixed Charges, to the extent reducing
Consolidated Net Operating Income, (iii) provisions for taxes based on
income, (iv) depreciation expense, (v) amortization expense and (vi) all
other non-cash items, to the extent reducing Consolidated Net Operating
Income, minus all non-cash items, to the extent increasing Consolidated
Net Operating Income, all as determined on a consolidated basis for such
Person and its Subsidiaries in conformity with GAAP.
"Consolidated Fixed Charges" of any Person shall mean, for any
period, for such Person and its Subsidiaries, the aggregate amount of
interest in respect of indebtedness (including, without limitation,
amortization of original issue discount on any indebtedness, any
pay-in-kind and accreting interest obligation and the interest portion of
any deferred payment obligation, calculated in accordance with the
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effective interest method of accounting), the aggregate amount of
dividends with respect to preferred stock (including pay-in-kind and
accreting dividends), all commissions, discounts and other fees, costs
and charges owed with respect to any indebtedness or preferred stock
(including, without limitation, any letters of credit, bankers' acceptance
financing, and interest rate swaps, caps, options or similar
arrangements), and all but the principal component of rentals in respect
of all leases of any property (whether real, personal or mixed) the
discounted present value of the rental obligations of such Person as
lessee under which, in conformity with GAAP, is required to be capitalized
on the balance sheet of such Person, paid, accrued or scheduled to be paid
or accrued by such Person (or by any other Person where such obligation is
directly or indirectly guaranteed or supported by such Person) during such
period, all determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" of any Person shall mean, for any period
taken as one accounting period, the net income (or loss) of such Person
and its Subsidiaries on a consolidated basis for such period determined in
conformity with GAAP, but excluding (i) the income (or loss) of any Person
(other than a Subsidiary of such Person) that would otherwise be included
in such net income (or loss) in which any other Person (other than such
Person or any of its Subsidiaries) has a joint interest, except to the
extent of the amount of dividends or other distributions actually paid to
such Person or any of its wholly owned Subsidiaries by such other Person
during such period, (ii) the income (or loss) of any Person accrued prior
to the date it becomes a Subsidiary of such Person or is merged into or
consolidated with such Person or any of its Subsidiaries or that Person's
assets are acquired by such Person or any of its Subsidiaries, and (iii)
the income of any Subsidiary of such Person to the extent (and only to the
extent) that the declaration or payment of dividends or similar
distributions by such Subsidiary of that income to such Person is not at
the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary; it being understood
that if any such restriction on the payment of such income ceases to be
applicable, the full amount of income attributable to the period during
which such restriction was in effect that would have been included in
Consolidated Net Income but for the existence of such restriction shall be
included in Consolidated Net Income to the extent such amount is permitted
and available to be paid to such Person at the time of calculation.
"Consolidated Net Operating Income" of any Person shall mean, for
any period taken as one accounting period, the Consolidated Net Income of
such Person, adjusted by excluding (to the extent not otherwise excluded
in calculating Consolidated Net Income) any net extraordinary gain or net
extraordinary loss, as the case may be, during such period.
"Consolidated Net Worth" of any Person shall mean, as at any date of
determination, the consolidated stockholders' equity of such Person and
its Subsidiaries that would be accounted for as consolidated Subsidiaries
in such Person's financial statements in accordance with GAAP, as
determined on a consolidated basis in accordance with GAAP, but without
inclusion of any amounts attributable to any equity security of such
Person that by its terms or otherwise is required to be redeemed prior to
the Mandatory Redemption Date or is redeemable at the option of the holder
thereof prior to the Mandatory Redemption Date; provided that equity
securities held by present or former employees or directors of the
Corporation or by their heirs, legatees, personal representatives,
-20-<PAGE>
successors and permitted assigns and transferees, shall not for purposes
of this definition be considered to be redeemable as a result of
agreements permitting or requiring the Corporation to repurchase or redeem
such securities upon the death, disability or termination of employment of
such present or former employee or director at any time prior to the
Mandatory Redemption Date; provided, further, that the Consolidated Net
Worth of any Person, at any date, shall be calculated so as not to give
effect to the adoption and application by such Person of FAS 96 as
proposed by the Financial Accounting Standards Board on the date hereof or
as modified hereafter.
"Default Period" shall mean any time when an Event of Default has
occurred and is continuing.
"Essex" shall mean Essex Group, Inc., a Michigan corporation and a
wholly owned subsidiary of the Corporation.
"Event of Public Distribution" shall mean the earliest of (x) any
sale to the public in an offering registered under the Securities Act of
any equity of the Corporation, (y) such time as the Corporation would be
subject to the registration requirements of Section 12 of the Exchange Act
by virtue of the number of holders of its equity, or (z) such time as any
equity of the Corporation is listed on any securities exchange or on the
NASDAQ National Market System or listed, traded or quoted on another
similar public trading or reporting system.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Date" shall mean the date fixed for exchange of Exchange
Debt for Series A Preferred.
"Exchange Debt" shall mean the 15% Junior Subordinated Debentures of
the Corporation issued pursuant to the Exchange Debt Indenture, as
amended, modified, supplemented, restructured, replaced, extended, or
refinanced from time to time in accordance with the terms hereof and
thereof.
"Holder" shall mean a Holder of shares of Series A Preferred, as
reflected in the stock records of the Corporation; and each Holder's
address shall be as it appears in the stock records of the Corporation.
"GAAP" shall mean United States generally accepted accounting
principles as of the date hereof.
"Person" shall mean an individual, a partnership, a corporation, a
trust, an association, a joint venture, a joint stock corporation, an
unincorporated organization and any governmental or regulatory body or
political subdivision thereof or other agency or authority.
"SEC" shall mean the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Significant Subsidiary" shall mean any Subsidiary of the
Corporation that would be a "significant subsidiary" within the meaning of
Rule 1-02 of Regulation S-X under the Securities Act, as in effect on the
Series A Initial Issuance Date; provided, however, that for purposes
-21-<PAGE>
hereof each reference to "10 percent" in such definition shall be deemed
to be a reference to "15 percent".
"Stock Subscription Agreement" shall mean the Stock and Warrant
Subscription Agreement, dated as of the Series A Initial Issuance Date, by
and among the Corporation, the DLJ Investors, the GS Investors and
Chemical (as such terms are defined therein).
"Subsidiary" of any Person shall mean any corporation of which at
least a majority of the outstanding capital stock having voting power
under ordinary circumstances to elect directors of such corporation shall
at the time be held, directly or indirectly, by such Person, by such
Person and one or more Subsidiaries of such Person or by one or more
Subsidiaries of such Person.
"Warrants" shall mean the Warrants issued pursuant to the Warrant
Agreement (the "Warrant Agreement") between the Corporation and the
purchasers listed therein, dated as of the Series A Initial Issuance Date,
as the same may be amended, supplemented, or otherwise modified or
replaced (including by virtue of any change in the Persons party thereto)
from time to time.
10. Availability of Documents. Copies of all documents,
agreements and instruments referred to herein are available from the
Corporation upon request.
-22-<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Designation to be signed by its President and attested by its Secretary
this 9th day of October, 1992.
/s/ Robert D. Lindsay
---------------------------
President
ATTEST: /s/ Richard R. Davis
---------------------------
Secretary
-23-<PAGE>
Exhibit A
CERTIFICATE OF
AMENDMENT OF CERTIFICATE OF DESIGNATION OF
SERIES A CUMULATIVE REDEEMABLE
EXCHANGEABLE PREFERRED STOCK
OF
BCP/ESSEX HOLDINGS INC.
_________________________
Pursuant to Section 242 of the
General Corporation Law of the State of Delaware
The undersigned officers of BCP/Essex Holdings Inc., a corporation
organized and existing under the laws of the State of Delaware (HOLDINGS),
hereby certify as follows:
FIRST: That the Certificate of Designation (the Certificate of
Designation) of the Series A Cumulative Redeemable Exchangeable Preferred
Stock of HOLDINGS is amended as follows:
1. Clause (A) of the proviso to Section 5(b)(iv) of the
Certificate of Designation is hereby amended and restated as follows:
"(A) the payment of management or advisory fees not exceeding
$1,000,000 per annum to Bessemer or any Affiliate of
Bessemer;".
2. The definition of "Change of Control" in Section 9 of the
Certificate of Designation is hereby amended and restated as follows:
"A "Change of Control" shall be deemed to have occurred if a
Person or group of Affiliated Persons or other "group" (within
the meaning of Section 13(d)(3) of the Exchange Act), other
than Bessemer, any of the Investors (as such term is defined
in the Stock Subscription Agreement), and any of their
respective Affiliates, shall beneficially own, directly or
indirectly, or have the power to direct the vote of with
respect to the election of directors of the Corporation,
shares of capital stock entitled to case more than the greater
of (x) 25% or (y) the Original Group percentage of the votes
entitled to be cast with respect to the election of directors
of the Corporation. For the purpose of this definition, the
"Original Group Percentage" shall mean, as of any date of
determination, the percentage of the votes entitled to be cast
with respect to the election of directors of the Corporation
by Bessemer, Chemical Venture Partners, L.P., the DLJ/GS
Investors (as defined in the Stock Subscription Agreement),
and their respective Affiliates (including for this purpose
votes entitled to be cast by any Affiliate of a DLJ Investor
(as defined in the Stock Subscription Agreement) in its<PAGE>
capacity as Custodian or Collateral Agent under the Custody
Agreements (as defined in Amendment Number 1 dated as of April
1, 1993, to the Stock Subscription Agreement)) and by Persons
who have agreed to vote as directed by Bessemer or any of its
Affiliates with respect to the election of directors of the
Corporation. For the purposes of the calculation required by
the first sentence of this definition, any Warrant Shares
issuable upon exercise of the Warrants shall be deemed to be
issued and outstanding if the Current Market Price (as such
term is defined in the Warrant Agreement) is greater than the
Exercise Price (as such term is defined in the Warrant
Agreement)."
SECOND: That said amendment of the Certificate of Designation has
been duly adopted by the Board of Directors of HOLDINGS and by the
stockholders of HOLDINGS (including the holders of the Series A Cumulative
Redeemable Exchangeable Preferred Stock of HOLDINGS) in accordance with
Sections 242 and 228 of the General Corporation Law of the State of
Delaware and that the capital of HOLDINGS will not be reduced under or by
reason of said amendment.
IN WITNESS WHEREOF, the undersigned have executed this certificate
under the seal of the Corporation this 4th day of April, 1993.
/s/ Stanley C. Craft
__________________________________
Name: Stanley C. Craft
Title: President
Attested by:
/s/ Anthony J. Criso
________________________________
Name: Anthony J. Criso
Title: Vice President-Secretary
(Corporate Seal)<PAGE>
SCHEDULE 4.1(b)
LIABILITIES, ETC.
None<PAGE>
Schedule 4.5
LEGAL BAR
None<PAGE>
Schedule 4.8
OWNED AND LEASED PROPERTIES
ESSEX GROUP INC.
REAL ESTATE INVENTORY
[CAPTION]
<TABLE>
Location EGI Owned
-------- ---------
<S> <C>
1601 Wall Street Yes
Fort Wayne, IN
Allen County
U.S. Highway 30 W. Yes
Columbia City, IN
Whitley County
West Pearl Street Yes
Jonesboro, IN
Grant County
Decker Road Yes
Vincennes, IN
Knox County
Youngs Lane Yes
Newmarket, NH
Rockingham County
Main St./Bay Rd. Yes
Newmarket, NH
Rockingham County
Franklin, IN Yes
Johnson County
Southeast Parkway Dr. No. Long-term lease
Franklin, TN from Syrcar Assoc. at
Williamson County $1,077,000/yr. (ave.)
Exp. 12/31/08
800 W. Mitchell St. Yes
Kendallville, IN
Noble County
2816 N. Main St. Yes
Rockford, IL
Winnebago County
Windcrest Rd. No. US Samica
Rutland, VT Corporation
Rutland County<PAGE>
-2-
Location EGI Owned
-------- ---------
4008 Mount Royal Blvd. No. Leased from Gamma
Allison Park, PA 15101 Associates at $766/mo.
(Pittsburgh) Exp. 12/31/95
5405 Valley Belt No. Leased from
Suite D Valley Belt Industrial
Independence, OH Mall for $4,256/mo.
(Cleveland) 44131 Exp. 10/31/95
Cuyahoga County
1904 Engineers Rd. No. Leased from
Belle Chase, LA 70037 Louis D. Hausser
Plaquemines Parish Investments at
$2,500/mo.
Exp. 7/31/96
1409 Murray No. Leased from Leo
N. Kansas City, MO 64116 Eisenberg Co. at
Clay County $1,175/mo.
Exp. 4/30/97
39065 Webb Drive No. Leased from Aldo
Westland, MI 48185 Laune for $4,400/mo.
(ave.)
Exp. 7/31/99
2 Tech View Place No. Leased from Tech
Cincinnati, OH 45215 View Center $2,740/mo.
Hamilton County (ave.)
Exp. 10/31/97
6808-C Cedar Ave. No. Leased from
Lubbock, TX 79404 Albert Skibell for
Lubbock County $1,000/mo.
Exp. 4/30/97
10900-H South Commerce Blvd. No. Leased from
Charlotte, NC 28273 Equitable Life at
$6,480/mo.
Exp. 1/31/96
4232 Charter Ave. No. Leased from
#100 California Public Emp.
Oklahoma City, OK 73108 Ret. System.
Oklahoma County $1,551.75/mo.
Exp. 6/30/96
3 Commerce Way No. Leased from
Tewksbury, MA 01876 Tewksbury Assoc. at
Middlesex County $3,937.50/mo.
Exp. 6/30/98<PAGE>
-3-
Location EGI Owned
-------- ---------
Old Mike--Filthy Lucre Lode No. US Samica
Black Hills Corporation
Custer County, SD
24-Spur Drive No. Leased from
El Paso, TX Lincoln National Life
El Paso County at $16,104.27/mo.
Exp. 7/31/96
2601 S. Adams St. No. Leased from
Marion, IN Cablec Corp. at
Grant County $26,500/mo. on 90-day
term notice.
214 E. 24th St. Yes. Via Process
Marion, IN Materials, Inc.
Grant County Dissolution 4/10/63
Rt. 294 and Bear Creek Rd. Yes
Pama, IL
Christian County
E. Union & US 52 Yes
Lafayette, IN
Tippecanoe County
190 E. Polk St. Yes
Orleans, IL
Morgan County
State Highway 18 West No. Interstate
Lexington, MS 39095 Industries Inc.,
formerly Triple-A
Manufacturing.
Attela Industrial Park No. Tract One:
Kosciusko, MS 39090 Leased from Attela
County at $3K/yr, year
to year, w/normal
purchase option.
Tract Two: Interstate
Industries, Inc.,
formerly TAM, Inc.
803 York Road Yes
Chester, SC
Chester County
Rt. 4 East Yes
Hoisington, KS
Barton County<PAGE>
-4-
Location EGI Owned
-------- ---------
University & East St. Yes
Pauline, KS
Shawnee County
1074 and 1075 Patt Street Yes
Anaheim, CA
Orange County
108 Elm No. ExCel Wire &
Tiffin, OH Cable Co. (EGI owns
Seneca County RR-ROW)
6588 Marbut Rd. Yes
Lithonia, GA
De Kalb County
950 W. 40th St. Yes
Chicago, IL
Cook County
3959 S. Morgan
Chicago, IL
Cook County
6 Lee Blvd. Yes
Frazer, PA
1230 Crestside Drive Yes
Coppell, TX
Dallas County
4600 Holly St. Yes
Denver, CO
Colorado County
1050 Penser St. Yes
Houston, TX 77055
Harris County
23477 Cabot Blvd. No. Leased from
Hayward, CA 94545 Lincoln Hayward VIII,
Ltd. Partnership at
$12,623/mo.
Exp. 9/30/99
1704 Westbelt Dr. No. Leased from
Columbus, OH National Life Ins. Co.
Franklin County at $9,955/mo.
Exp. 5/31/98
2172 Wharf St. Yes
Memphis, TN
Shelby County<PAGE>
-5-
Location EGI Owned
-------- ---------
2444 Enterprise Drive No. Leased from the
Mendata Heights, MN 55120 2444 Transpar Drive
Partnership at
$9,558/mo.
Exp. 7/31/98
1900 NE 181st St. Yes
Portland, OR
Multnomah County
13884 Parks Steeds Drive No. Leased from
Earth City, MO Prudential Insurance
(St. Louis, MO) Co. at $7,504/mo.
Exp. 2/29/96
6715 53rd St. Yes
Tampa, FL
Hillsborough County
2625 S. Wilson No. Estate of Jason
Suite 102 Campbell at $5,288/mo.
Tempe, AZ 85282 Exp. 7/31/97
Maricopa County
469 E. Manilus St. No. Leased from Ther-
East Syracuse, NY ese Properties Co. at
Onondaga County $2,970/mo.
Exp. 4/30/95
9398 NW 101st St. No. Leased from
Medley, FL 33178 Petula Assoc. at
Orange County $7,362/mo.
Exp. 10/31/95
8775 McCowan Rd. N. No. Leased by Essex
Markham, Ontario L3P 1X1 International from
Canada Skelton Warehousing,
Inc. at US $2,400/mo.
(variable)
month-to-month
Bridgepointe Office Ctr. No. Leased by Bristol
Bridge Street & Middlesex Ave. Wire & Cable Co. from
Metuchen, NJ Bridgepointe Office
Middlesex County Center Condo Assoc. at
750/mo.
Exp. 7/31/95
620 N. Cook Yes. Presently for
P.O. Box 500, Gibson Hwy. sale. 1/2 leased to
Bennettsville, SC 29512 UTC to 2/28/96;
1/2 surplus
/TABLE
<PAGE>
Schedule 4.9
PATENTS AND TRADEMARKS
Patent Docket
[CAPTION]
<TABLE>
Patent
Country Number Title Issue Date
------- ------- ----- ----------
<S> <C> <C> <C>
CAN 1037843 Improved Brass Alloy Having a Low 9/5/78
Spring Back Coefficient and Shape
Memory Effect
CAN 1034846 Improved Brass Alloy Having a Low 7/18/78
Spring Back Coefficient and Shape
Memory Effect
US 4099991 Method for Effecting Reverse Shape 7/11/78
Memory Phenomena in CU-ZN-SI Brass
Alloy
US 4131714 Mixtures of Linear Polyesters Used 12/26/78
to Coat Metallic Strands
US 4290929 Aqueous Solutions of 9/22/81
Polyesterimides and Methods of
Making the Same
US 4253570 Reinforced Spool for Storing and 3/3/81
Transporting Strand Material and a
Package Assembly Utilizing the Same
US 4116422 Wire Annealing Apparatus 9/26/78
US 4190319 Fiber Option Ribbon and Cable Made 2/26/80
Therefrom
CAN 1116903 Fiber Option Ribbon and Cable Made 1/26/82
Therefrom
US 4196032 Splice for Optical Ribbon Having 4/1/80
Elongated Strain Relief Elements in
the Ribbon and Method of Splicing
the Same
CAN 1104395 Splice for Optical Ribbon Having 7/7/81
Elongated Strain Relief Elements in
the Ribbon and Method of Splicing
the Same<PAGE>
-7-
Patent
Country Number Title Issue Date
------- ------- ----- ----------
US 4253569 Reinforced Spool for Storing and 3/3/81
Transporting Strand Material and a
Package Assembly Utilizing the Same
US 4286010 Insulated Mica Paper and Tapes 8/25/81
Thereof
CAN 1157323 Insulated Mica Paper and Tapes 11/22/83
Thereof
US 4358202 Apparatus and Method for Monitoring 11/9/82
the Surface Character
US 4389510 Water Soluble Polymide Prepared 6/21/83
from 1,2,3,4 Butane Tetracarboxylic
Acid and Method of Preparation
CAN 1175598 Water Soluble Polymide Prepared 10/2/84
from 1,2,3,4 Butane Tetracarboxylic
Acid and Method of Preparation
US 4471022 Water Soluble Polyimide, Coated 9/11/84
Wire and Method of Coating
US 4606870 Preparing Magnet Wire Having 8/19/86
Electron Beam Curable Wire Enamels
US 4447472 Magnet Wire Coating Method and 5/8/84
Article
US 4374221 High Solids Polyamide-Imide Magnet 2/15/83
Wire Enamel
CAN 1193044 High Solids Polyamide-Imide Magnet 9/3/85
Wire Enamel
US 4396145 Self-Locking Carton 8/2/83
US 4374892 Moisture Resistant Insulating Mica 2/22/83
Tape Comprising a Monoalkoxy
Titanate
CAN 1171349 Moisture Resistant Insulating Mica 7/24/84
Tape Comprising a Monoalkoxy
Titanate
US 4350738 Power Insertable Polyamide-Imide 9/21/82
Coated Magnet Wire
US 4495130 Method of Molding an Electrical 1/22/85
Connector<PAGE>
-8-
Patent
Country Number Title Issue Date
------- ------- ----- ----------
CAN 1192797 Power Insertable Polyamide-Imide 9/3/85
Coated Magnet Wire
US 4348460 Power Insertable Polyamide-Imide 9/7/82
Coated Magnet Wire
CAN 1179216 Power Insertable Polyamide-Imide 12/11/84
Coated Magnet Wire
US 4385437 Method of Power Inserting 5/31/83
Polyamide-Imide Coated Magnet Wire
US 4420536 Self-Bonding Magnet Wire 12/13/83
US 4389587 Unitary Sleeving Insulation 6/21/83
US 4449290 Power Insertable Nylon Coated 5/22/84
Magnet Wire
US 4350737 Power Insertable Nylon Coated 9/21/82
Magnet Wire
US 4385436 Method of Power Inserting Nylon 5/31/83
Coated Magnet Wire
US 4418190 Dielectric Films from Water Soluble 11/29/83
Polyimides
CAN 1209765 Dielectric Films from Water Soluble 8/19/86
Polyimides
US 4503284 RF Suppressing Magnet Wire 3/5/85
US 4471161 Conductor Strand Formed of Solid 9/11/84
Wires and Method for Making the
Conductor Strand
US 4471920 Tapered Flange Wire Spool 9/18/84
US 4493462 Spool with Lifting Handles 1/15/85
US 4563095 Method and Apparatus for Monitoring 1/7/86
the Surface of Elongated Objects
US 4576207 Texturized Heat Shrinkable Tubing 3/18/86
Having Radial and Longitudinal
Shrinkage Memory
US 4661314 Method of Making Texturized Heat 4/28/87
Shrinkable Tubing<PAGE>
-9-
Patent
Country Number Title Issue Date
------- ------- ----- ----------
US 4485978 Method and Apparatus for Winding 12/4/84
Strand upon Spools Having Tapered
End Flanges
US 4521363 Extrusion of a Plastic Coating 6/4/85
about a Strand
US 4476279 High Solids Theic Polyester Enamels 10/9/84
US 4571450 Moisture Impervious Power Cable and 2/18/86
Condui-System
US 4704335 Highly Flexible Silicone Rubber 11/3/87
Coated Inorganic Yarn
US 4693936 Low Coefficient of Friction Magnet 9/15/87
Wire Enamels
US 4705657 Ethylene-Propylene Diene Terpolymer 11/10/87
Texturized Heat Shrinkable Tubing
US 4551398 Tetraalkyl Titanate Modified Nylon 11/5/85
Magnet Wire Insulation Coating
US 4599387 Tetraalkyl Titanate Modified Nylon 7/8/86
Magnet Wire Insulation Coating
US 4707209 Method of Making High Density 11/17/87
Moisture Resistant Mica Sheet
US 4601952 Method of Making High Density 7/22/86
Moisture Resistant Mica Sheet
US 4601931 High Density, Moisture Resistant 7/22/86
Mica Cylinders
US 4575016 Continuous Ribbon Feed Method and 3/11/86
System
US 4588344 Roll Transfer Robot 5/13/86
US 4555070 Method and Apparatus for Unwinding 11/26/85
and Splicing Successive Rolls
US 4564151 Core Latch Chuck Assembly 1/14/86
US 4586415 Assembly for Effecting Vertical and 5/6/86
Rotational Motion
US 4575017 Paster Rab and Method of Use 3/11/86<PAGE>
-10-
Patent
Country Number Title Issue Date
------- ------- ----- ----------
US 4591084 Method and Apparatus for Feeding 5/27/86
and Accumulating Ribbon Material
US 4545323 Felt Applicator 10/8/85
US 4622241 Method and Apparatus for Accurately 11/11/86
Dispensing a Solution
US 4604300 Method for Applying High Solids 8/5/86
Enamels to Magnet Wire
US 4574604 Process and Apparatus for High 3/11/86
Speed Fabrication of Copper
US 4615195 Process and Apparatus for High 10/7/86
Speed Fabrication of Copper
US 4717604 Die Bar Carrier 1/5/88
US 4568607 Aromatic Titanate Modified Nylon 2/4/86
Magnet Wire Insulation
US 4588784 Aromatic Titanate Modified Nylon 5/13/86
Magnet Wire Insulation
US 4614670 Method for Insulating a Magnet Wire 9/30/86
with an Aromatic Titanate Modified
Nylon
US 4550055 Titanium Chelate Modified Nylon 10/29/85
Magnet Wire Insulation Coating
US 4563369 Titanium Chelate Modified Nylon 1/7/86
Magnet Wire Insulation Coating
US 4759960 Die Bar with Integral Locking Means 7/26/88
US 4637852 Neoalkoxy Titanate in High Density 1/20/87
Mica Laminates
US 4603088 Neoalkoxy Titanate in High Density 7/29/86
Mica Laminates
US 4582198 Wire Shipping and Dispensing 4/15/86
Package
US 4704322 Resin Rich Mica Tape 11/3/87
US 4839444 High Solids Enamel 6/13/89
US D291172 Container Insert 8/4/87<PAGE>
-11-
Patent
Country Number Title Issue Date
------- ------- ----- ----------
US 4988980 Low Cost Verbal Annunciator 1/29/91
US 4599905 Method and Apparatus for 7/15/86
Determining the Elongation Property
of Copper Wire
US 4602751 Wire Spool with End Flange Having a 7/29/86
Wire Protection Groove
US 4624718 Polyester-Polyamide Tape Insulated 11/25/86
Magnet Wire and Method of Making
the Same
US 4786876 Continuity Test Method and Test 11/22/88
Card Circuit
US 4601918 Apparatus and Method for Applying 7/22/86
High Solids Enamels to Wire
US 4629145 Control of Traversing Guide in 12/16/86
Strand Winding Apparatus
US 4926928 Protective Device for Restraining 5/22/90
Rod Produced in a Continuous
Casting and Rolling Process
US 4716190 A Method for Equilibrating 12/29/87
Polyamide Magnet Wire Coatings and
Enamel Compositions
US 4775726 Method for Equilibrating Polyamide 10/4/88
Magnet Wire Coatings and Enamel
Compositions
US 4808436 A Method for Equilibrating 2/28/89
Polyamide Magnet Wire Coatings and
Enamel Compositions
US 4913963 Magnet Wire with Equilibrating 4/3/90
Polyamide Insulation Coatings and
Enamel Compositions
US 4803113 Corrugated Mica Product 2/7/89
US 4635046 Wire Tangle Sensor 1/6/87
US 4695830 Wire Runtogether Sensor 9/22/87
US 4740756 Continuity Test Method and 4/26/88
Apparatus
US 4700171 Ignition Wire 10/13/87<PAGE>
-12-
Patent
Country Number Title Issue Date
------- ------- ----- ----------
US 4775566 High Temperature Flexible Unitary 10/4/88
Sleeving Insulation
US 5032199 Method of Making a High Temperature 7/16/91
Flexible Unitary Sleeving
Insulation
US 4683162 Mica Product 7/28/87
US 783365 Mica Product 11/8/88
US 4752217 Wire Coating Oven Including Wire 6/21/88
Cooling Apparatus
US 4725010 Control Apparatus and Method 2/16/88
US RE33240 Control Apparatus and Method 4/19/88
US 4759953 Sealed Foam Applicators 7/26/88
US 4808926 Eddy-Current Apparatus and Method 2/28/89
for Controlling a Rod Mill on the
Basis of Faults Detected per Unit
Time
US 4725458 Urethane Modified Nylon Magnet Wire 2/16/88
Enamel
US 4808477 Urethane Modified Nylon Magnet Wire 2/28/89
Enamel
US 4689601 Multi-Layer Ignition Wire 8/25/87
US 4704596 Extrusion Coated Ignition Wire 11/03/87
US 4876316 High Temparature Magnet Wire Bond 10/24/89
Coat Polyamide/Aldehyde/ Aromatic
Alocohol Reaction Product
US 4773353 Die Bar Carrier 9/27/88
US 4891243 Die Bar Carrier 1/2/90
US 4826544 Hydrogen Cleaning of Hot Copper Rod 5/2/89
US 4836872 Method of Manufacturing a Fiber 6/6/89
Reinforced Heat Shrinkable Tubing
Article
US 4915139 Heat Shrinkable Tubing Article 4/10/90
Pending Heat Shrinkable Tubing Article<PAGE>
-13-
Patent
Country Number Title Issue Date
------- ------- ----- ----------
US 4812721 Wire Drawing Control Apparatus 3/14/89
US 4773438 Apparatus for Controlling the 9/27/88
Viscosity of Wire Coating Enamel
US 4869199 Manifold for Distributing Wire 9/26/89
Coating Enamel
US 4839205 Heated Supply Sheaves for Wire 6/13/89
Coating Apparatus
US 4844283 Closure Mechanism for Wire Coating 7/4/89
Oven
US 4839818 Magnet Wire Over Control Apparatus 6/13/89
US 4761520 Spiral Wrapped Insulated Magnet 8/2/88
Wire
US 4821880 Palletized Structure Containing 4/18/89
Spools
US 5045136 Heat Shrinkable Article 9/3/91
US 4817841 Threading Bar for Use with a Wire 4/4/89
Coating Apparatus Having Parallel
Transport Cables
US 4851060 Multilayer Wrapped Insulated Magnet 7/25/89
Wire
US 5106686 Multilayer Wrapped Insulated Magnet 4/21/92
Wire
US 4966932 Ultra-High Solids Theic Polyester 10/30/90
Enamels
US 4830689 Bonded Metallic Cable Sheathing 5/16/89
with Edge Forming
US 4752214 Oven Wall Straightener 6/21/88
US 4817645 In-Process Wire Cleaning 4/4/89
US 5048572 Vibration Damping Heat Shrinkable 9/17/92
Tubing
US 4795490 Inert Gas Purging During Shaft 1/3/89
Furnace Shut Down
US 4817796 Packing Box 4/4/89<PAGE>
-14-
Patent
Country Number Title Issue Date
------- ------- ----- ----------
US 4797662 Wire Prebreak/Break Detector 1/10/89
US 4808971 Alarm Apparatus 2/28/89
US 4705957 Wire Surface Monitor 11/10/87
US 4611747 Method for Producing Continuous 9/16/86
Length High Solids Enamel Coated
Magnet Wire
US 5023558 Ignition Wire Core Conductive 6/11/91
Irregularity Detector
US 4938428 Wire Winding System with Mobile 7/3/90
Transfer Cart
US 4964363 System of Assembly and Filling 10/23/90
Large Cables in a Single Pass at a
Single Station
US 4923133 Dancer Assembly 5/8/90
US 5304740 Fusible Link Wire 4/19/94
/TABLE
<PAGE>
-15-
Duration
US--17 Years (Subject to Maintenance Fees)
CAN--17 Years<PAGE>
-16-
TRADEMARKS AND TRADE NAMES
[CAPTION]
<TABLE>
Trademark and/or
Country Trade Name Registration Expiration
------- ---------------- ------------ ----------
<S> <C> <C> <C>
US ACRYFLEX 1,092,803 06/06/98
US ACRYLEX 656,059 12/24/97
US ALLEX 717,483 06/27/01
US ALPIC 861,614 12/10/08
US ASTRA 1,083,505 01/24/98
US ASTRAMELT 1,266,308 02/07/04
US ASTRATITE 1,057,610 02/01/97
US BIPIC 1,218,947 12/07/02
US BONDEX 687,491 11/03/99
US BRISTOL 1,601,641 06/12/00
US BRISTOL & Design 1,611,918 09/04/00
US CASPIC 1,189,207 02/09/02
US CL & Design 1,197,158 06/08/02
US CUPIC 861,615 12/10/08
Canada DIAMOND 192,723 07/13/03
US DIAMOND 676,255 03/31/99
US DIAMOND FIGURE Des 613,831 10/11/95
US DTX 1,043,400 07/13/96
Argentina ESSEX 1,176,315 10/07/05
Brazil ESSEX 692,303 04/25/99
Canada ESSEX 230,605 10/06/96
Canada ESSEX 193,620 08/31/03
Canada ESSEX 345,743 APPLN
China ESSEX 504,592 11/20/99
France ESSEX 1,331,108 11/15/95
Italy ESSEX 448,366 10/24/05
Italy ESSEX 356,324 03/23/98
Spain ESSEX 1,127,541 04/03/09
US ESSEX 961,503 06/19/03
US ESSEX 959,657 05/29/03
US ESSEX 954,253 03/06/03
US ESSEX 954,283 03/06/03
US ESSEX 1,411,176 09/30/06
US ESSEX 1,644,159 05/14/01
Mexico ESSEX Application
US ESSEX 618,128 12/27/95
US ESSEX 965,834 08/14/03
US ESSEX 536,430 01/16/01
US ESSEX 966,421 08/21/03
US ESSEX GROUP 1,313,285 01/08/05
US ESSEX GROUP 1,178,844 11/24/01
US ESSEX QTY MASTERS 1,205,233 08/17/02
China ESSEX (Chinese) 504,591 11/20/99
US ExCel & xl Des 780,919 12/01/04
US ExCelene 1,032,113 02/03/96
US FEMCO 1,584,450 02/27/00
US FLEXICONE 1,330,873 04/16/05
US GOPIC 969,536 10/02/03<PAGE>
-17-
Trademark and/or
Country Trade Name Registration Expiration
------- ---------------- ------------ ----------
<S> <C> <C> <C>
US HANDIWIRE 1,342,096 06/18/05
US IF IT'S P IT'S RIGHT 71,533,826 11/21/00
US IF IT'S P IT'S RIGHT 1,652,273 07/30/01
US ISOMICA 575,202 06/02/03
US IWI 635,106 10/02/96
US IWI Inv W/O Invest 658,007 02/04/98
US MACALLEN & Design 833,230 08/08/07
US MAGNAPAK 619,403 01/17/96
US MAGNA-PAK 628,592 06/12/96
US MAGWIRE 861,613 12/10/08
US MICANITE and Drawing 22,623 03/07/03
US MR-200 1,234,416 04/12/03
US NYTHERM 702,858 08/16/00
US N-900 683,175 08/11/99
US PARAFLEX 586,117 02/23/04
US PARANITE 1,548,127 07/18/09
US PARANITE 1890 & Des 630,803 07/17/96
US PARANITE & Design 537,580 12/13/01
US PARANITE & Design 535,200 12/26/00
US PARARITE 611,732 09/06/95
US PARASYN 529,926 08/29/00
US PAR-U-FLEX 674,901 03/03/99
US POLYBONDEX 1,172,079 10/06/01
US POLYFOAM 650,440 08/20/97
US REEL PAK 1,144,845 12/30/00
US RELI-A-BAND 1,286,015 07/17/04
US SAMICA 558,013 04/22/02
US SAMICAPOR 1,095,179 07/04/98
US SAMICATHERM 995,614 03/20/03
US SEALPIC 993,738 09/24/04
US SILVERFLEX 1,111,787 01/23/99
US SODERBOND 672,165 01/06/99
US SODEREX 672,138 01/06/99
US SODERON 672,164 01/06/99
US SOLIDEX 1,036,145 03/23/96
US SOLIDON 1,038,144 04/20/96
US SUBMINAX 621,750 02/21/96
US SUFLEX 960,771 06/12/03
US SUFLEX Logo 1,308,019 12/04/04
Canada SX N.S. 2026 08/30/08
Canada SX 162,851 APPLN
US SX 612,102 09/13/95
US SX 1,523,072 02/07/09
US SX & Design 1,525,063 02/21/09
US SX (Molder's Mark) 1,065,662 05/17/97
US TF 1,286,937 07/24/04
US THERMALEX 672,137 01/06/99
US THERMALEX 200 1,185,606 01/12/02
US TERHMALEX F 672,750 01/20/99
US THERMETEX 1,502,033 08/30/08
US THERMETEX GP200 844,472 02/20/08
US UTREX 1,326,775 03/26/05
US VINYLGLAS 965,445 08/07/03<PAGE>
-18-
Trademark and/or
Country Trade Name Registration Expiration
------- ---------------- ------------ ----------
<S> <C> <C> <C>
Mexico SX Application
/TABLE
<PAGE>
-19-
TECHNOLOGY LICENSING AGREEMENTS
[CAPTION]
<TABLE>
Parties Description
------- -----------
<S> <C>
ESSEX GROUP, INC. Patent license for technology relating to
American Telephone and coaxial cables and land lines
Telegraph Co.
ESSEX GROUP, INC. Cross license for intellectual property
Aismalibar S.A. rights.
ESSEX GROUP, INC. Agreement concerning intellectual property
Cablec Corporation concerning transmission, distribution,
power and control cable.
ESSEX GROUP, INC. Agreement concerning intellectual property
Chrysler Corporation relating to products used in the
manufacture of or in motor vehicles.
ESSEX GROUP, INC. Agreement for technology relating to magnet
Femco Magnet Wire wire.
Corporation
ESSEX GROUP, INC. Agreement for technology concerning the
Telephone Cables Limited manufacture of telephone cables.
ESSEX GROUP, INC. Agreement for technology concerning the
Telecommunication manufacture of telephone cables.
Consultants India Ltd.
ESSEX GROUP, INC. Agreement concerning intellectual property
Ford Motor Company relating to products used in the
manufacture of or in motor vehicles.
ESSEX GROUP, INC. Patent license for technology relating to
Groggins Plastic, Inc. spools and lifting handles.
ESSEX GROUP, INC. Cross license for intellectual property
Insulation Systems and rights.
Machines, Ltd.
ESSEX GROUP, INC. Cross license for intellectual property
Isola Essex A.G. rights.
ESSEX GROUP, INC. Agreement for technology concerning
Isola Essex A.G. conductors and insulators.
ESSEX GROUP, INC. Agreement for technology concerning
Windings, Inc. fabricating of packages and/or Reelex
Machines.<PAGE>
-20-
Parties Description
------- -----------
ESSEX GROUP, INC. Cross licenses for patents relating to
Southwire Company shaft furnaces for melting copper and to
apparatus for converting copper into copper
bar and rod.
/TABLE
<PAGE>
-21-
PENDING APPLICATIONS
[CAPTION]
<TABLE>
Country Serial No. Filing Date
------- ---------- -----------
<S> <C> <C>
US 07/708430 05/31/91
US 08/317506 10/03/94
US 08/261546 06/17/94
/TABLE
<PAGE>
Schedule 4.16
SUBSIDIARIES
Essex Group, Inc., a Michigan corporation (the "Company")
Diamond Wire & Cable Co.
Essex Group Export Inc.
Essex International, Inc.
Essex Wire Corporation
ExCel Wire and Cable Co.
US Samica Corporation
Dormant Subsidiaries:
Essex Group, Inc., a Delaware corporation
Bristol Wire Company
Essex Group Mexico Inc.
Essex Group Mexico, S.A. de C.V.
Non-Wholly Owned Subsidiaries:
Interstate Industries Holdings Inc. (80% directly owned by the Company)
Interstate Industries, Inc. (100% directly owned by Interstate Industries
Holdings Inc. and 80% indirectly owned by the Company)<PAGE>
Schedule 4.20(b)
List of Debtors and Jurisdictions
for UCC-1 Financing Statements
Essex Group, Inc.
United States
Alabama, Secretary of State
Arkansas, Secretary of State
Arizona, Secretary of State
California, Secretary of State
Colorado, Secretary of State
Connecticut, Secretary of State
Florida, Secretary of State
Georgia, Carroll County
Georgia, DeKalb County
Georgia, Fulton County
Georgia, Gwinett County
Illinois, Secretary of State
Indiana, Secretary of State
Indiana, Allen County
Kansas, Secretary of State
Kentucky, Secretary of State
Kentucky, Jefferson County
Louisiana, Secretary of State
Louisiana, Plaquemines Central Registry
Louisiana, Jefferson Central Registry
Maryland, Secretary of State
Maryland, Baltimore County
Massachusetts, Secretary of State
Massachusetts, Town of Tewksbury
Massachusetts, Town of Braintree
Michigan, Secretary of State
Minnesota, Secretary of State
Missouri, Secretary of State
Missouri, Clay County
Missouri, City of St. Louis (City Register)
Missouri, Howell County
Missouri, Laclede County
Missouri, Dunklin County
New Hampshire, Secretary of State
New Hampshire, Rockingham County
New Jersey, Secretary of State
New York, Secretary of State
New York, Onondaga County
North Carolina, Secretary of State
North Carolina, Guilford County
North Carolina, Mecklenberg County
Ohio, Secretary of State
Ohio, Cuyahoga County
Ohio, Franklin County
Ohio, Hamilton County
Ohio, Seneca County
Oklahoma, Oklahoma County
Oregon, Secretary of State
Pennsylvania, Allegheny
Pennsylvania, Butler County<PAGE>
2
Pennsylvania, Chester
Pennsylvania, Luzerne
Pennsylvania, Philadelphia
South Carolina, Secretary of State
Tennessee, Secretary of State
Texas, Secretary of State
Virginia, Secretary of State
Virginia, Bluefield County
Virginia, Washington County
Washington, Secretary of State
Wisconsin, Secretary of State
U.S. Samica Corporation
Indiana, Secretary of State
Indiana, Allen County
South Dakota, Secretary of State
South Dakota, Custer County
Vermont, Secretary of State
Vermont, Rutland County
Essex Wire Corporation
Indiana, Secretary of State
Indiana, Allen County
Essex International, Inc.
United States
Indiana, Secretary of State
Indiana, Allen County
Canada
Ontario, Sharon
Diamond Wire & Cable
Indiana, Secretary of State
Indiana, Allen County
ExCel Wire and Cable Co.
United States
Arizona, Secretary of State
California, Secretary of State
Connecticut, Secretary of State
Florida, Secretary of State
Ohio, Secretary of State
Ohio, Hamilton County
BCP/Essex Holdings Inc.
Indiana, Secretary of State<PAGE>
3
List of Debtors and Jurisdictions
for UCC-2 Financing Statements
Essex Group, Inc.
Indiana, Knox County
Indiana, Johnson County
Indiana, Allen County
Indiana, Noble County
Indiana, Whitley County
Indiana, Grant County
Indiana, Tippecanoe County
Indiana, Orange County<PAGE>
Schedule 4.20(c)
List of Mortgage Filing Jurisdictions
- Columbia City, Indiana
- Fort Wayne, Indiana
- Jonesboro, Indiana
- Vincennes, Indiana
- Franklin, Indiana
- Kendallville, Indiana
- Marion, Indiana
- Lafayette, Indiana
- Orleans, Indiana
- Pana, Illinois
- Rockford, Illinois
- Anaheim, California
- Lithonia, Georgia
- Tiffin, Ohio
- Hoisington, Kansas
- Pauline, Kansas
- Chester, South Carolina<PAGE>
SCHEDULE 5.1(f)
LOCAL COUNSEL
CALIFORNIA
Sheppard, Mullin, Richter & Hampton
No. 4 Embarcadero Center
17th Floor
San Francisco, California 94111
Attention: Bill Wyatt
GEORGIA
Freeman & Hawkins
2800 First Atlanta Tower
Atlanta, Georgia 30383
Attention: Howell Hollis III
ILLINOIS
Rudnick & Wolfe
203 N. LaSalle St. Suite 1500
Chicago, Illinois 60601
Attention: Sue Ann Fishbein
Alan Salle
INDIANA
Ice Miller Donadio & Ryan
One American Square
Suite 3400
Indianapolis, Indiana 46282-0002
Attention: Timothy Sullivan
KANSAS
Minter & Cash
1527 Broadway
Wichita, Kansas 67201-0367
Attention: Robert Minter
OHIO
Taft, Stettitius & Hollister
1800 Star Bank Center
Cincinnati, Ohio 45202
Attention: Jeffrey Schloemer<PAGE>
2
SOUTH CAROLINA
Nexen, Pruett, Jacobs & Pollard
1401 Main Street
12th Floor
Columbia, South Carolina 29202
Attention: Alan Lipsitz<PAGE>
SCHEDULE 7.2(c)
EXISTING INDEBTEDNESS
None<PAGE>
Schedule 7.3(f)
[CAPTION]
<TABLE>
NAME OF DESCRIPTION OF
STATE and NAME OF SECURED COLLATERAL
JURISDICTION DEBTOR PARTY COVERED
------------ ------- ------- ---------------
<S> <C> <C> <C>
Indiana, Secretary Essex Group, Storage Specified Electronic
of State Inc. Technology Data Processing
Corporation Equipment
Indiana, SOS Essex Group, Storage Specified Equipment
Inc. Technology
Corporation
Indiana, SOS Essex Group, Farmstead Specified Telephone
Inc. Telephone system
Group, Inc.
d/b/a
Farmstead
Leasing
Indiana, SOS Essex Group, Farmstead Specified Telephone
Inc Telephone system
Group, Inc.
d/b/a
Farmstead
Leasing
Indiana, SOS Essex Group, Fleet Credit Specified Farm
Inc. Corporation Machinery
Indiana, SOS Essex Group, BF Goodrich Specified Consigned
Inc. Company Goods (Geon Resins)
Indiana, SOS Essex Group, AT&T Credit Specified
Inc. Corporation Telecommunications
Equipment
Indiana, SOS Essex Group, AT&T Credit Specified System
Inc. Corporation Equipment and Wiring
Indiana, SOS Essex Group, AT&T Credit Specified System
Inc. Corporation Equipment and Wiring
Indiana, SOS Essex Group, AT&T Credit Specified
Inc. Corporation Telecommunications
Equipment
Indiana, SOS Essex Group, Indiana Various Assets
Inc. Corporate
Federal
Credit Union
Indiana, SOS Essex Group, First Fleet Specified Vehicles
Inc. Corporation
Indiana, SOS Essex Group, General Stocks of Copper
Inc. Electric
Company<PAGE>
2
NAME OF DESCRIPTION OF
STATE and NAME OF SECURED COLLATERAL
JURISDICTION DEBTOR PARTY COVERED
------------ ------- ------- ---------------
Indiana, SOS Essex Group, AT&T Credit Specified
Inc. Corporation Telecommunications
Equipment
Indiana, SOS Essex Group, First Fleet Specified Vehicles
Inc. Corporation
Indiana, SOS Essex Group, AT&T Credit Specified
Inc. Corporation Telecommunications
Equipment
Indiana, SOS Essex Group, Fleet Credit Various Assets
Inc. Corporation
Indiana, SOS Essex Group, Pitney Bowes Specified Farm
Inc. Credit Equipment
Corporation
Indiana, SOS Essex Group, Pitney Bowes Specified
Inc. Credit Telephone/Radio System
Corporation
Indiana, SOS Essex Group, Meridian Specified Computer
Inc. Leasing Equipment
Corporation
Indiana, SOS Essex Group, Meridian Specified Computer
Inc. Leasing Equipment
Corporation
Indiana, SOS Essex Group, Meridian Specified Computer
Inc. Leasing Equipment
Corporation
Indiana, SOS Essex Group, Pitney Bowes Not Listed
Inc. Credit
Corporation
Indiana, SOS Essex Group, Pitney Bowes Specified Paging
Inc. Credit Equipment
Corporation
Tennessee, Essex Group, Canon Specific Photocopying
Secretary of State Inc. Financial Equipment
Services,
Inc.
Texas, SOS Essex Group, Farmstead Specified Telephone
Inc. Telephone System
Group, Inc.
d/b/a
Farmstead
Leasing<PAGE>
3
NAME OF DESCRIPTION OF
STATE and NAME OF SECURED COLLATERAL
JURISDICTION DEBTOR PARTY COVERED
------------ ------- ------- ---------------
Texas, SOS Essex Group, Farmstead Collateral of above
Inc. Telephone assigned to Chancellor
Group, Inc. Asset Corporation
d/b/a
Farmstead
Leasing
Texas, SOS Essex Group, El Paso Ford Not Listed
Inc. New Holland
Illinois, SOS Essex Group, IBM Credit Specified Office
Inc. Corporation Equipment
Illinois, SOS Essex Group, Lexington Specified Office
Inc. Capital equipment
Corporation
Illinois, SOS Essex Group, AT&T Credit Specific
Inc. Corporation Telecommunications
Equipment
California, SOS Essex Group, BF Goodrich Specified Consigned
Inc. Company-Geon Goods (Geon Resin)
Vinyl
Division
California, SOS Essex Group, Farmstead Specified Telephone
Inc. Telephone System
Group, Inc.
d/b/a
Farmstead
Leasing
California, SOS Essex Group, Farmstead above collateral
Inc. Telephone assigned to Chancellor
Group, Inc. Asset Corporation
d/b/a
Farmstead
Leasing
Indiana, Allen Essex Group, Meridian Specified Computer
County Inc. Leasing Equipment
Corporation
Indiana, Allen Essex Group, Meridian Specified Computer
County Inc. Leasing Equipment
Corporation
Indiana, Allen Essex Group, Meridian Specified Computer
County Inc. Leasing Equipment
Corporation
Indiana, Allen Essex Group, Fleet Credit Various Assets
County Inc. Corporation<PAGE>
4
NAME OF DESCRIPTION OF
STATE and NAME OF SECURED COLLATERAL
JURISDICTION DEBTOR PARTY COVERED
------------ ------- ------- ---------------
Indiana, Allen Essex Group, First Fleet Specified Farm
County Inc. Corporation Vehicles
Indiana, Allen Essex Group, AT&T Credit Specific
County Inc. Corporation Telecommunications
Equipment
Indiana, Allen Essex Group, AT&T Credit Specific Systems
County Inc. Corporation Equipment and Wiring
Indiana, Allen Essex Group, AT&T Credit Specific Systems
County Inc. Corporation Equipment and Wiring
Indiana, Allen Essex Group, AT&T Credit Specified
County Inc. Corporation Telecommunications
Equipment
Indiana, Allen Essex Group, Farmstead Assignment of
County Inc. Telephone collateral to
Group, Inc. Chancellor Asset
d/b/a Corporation
Farmstead
Leasing
Indiana, Allen Essex Group, Farmstead Specified Telephone
County Inc. Telephone System
Group, Inc.
d/b/a
Farmstead
Leasing
Indiana, Allen Essex Group, Farmstead Specified Telephone
County Inc. Telephone System
Group, Inc.
d/b/a
Farmstead
Leasing
Indiana, Allen Essex Group, Farmstead Specified Telephone
County Inc. Telephone System
Group, Inc.
d/b/a
Farmstead
Leasing
Massachusetts, Essex Group, Danvers Various Assets
Secretary of the Inc. Savings Bank
Commonwealth
Massachusetts, Essex Group, Danvers Various Assets
Secretary of the Inc. Savings Bank
Commonwealth<PAGE>
5
NAME OF DESCRIPTION OF
STATE and NAME OF SECURED COLLATERAL
JURISDICTION DEBTOR PARTY COVERED
------------ ------- ------- ---------------
New Hampshire, Essex Group, AT&T Credit Specified
Secretary of State Inc. Corporation Telecommunications
Equipment
Kansas, Secretary Essex Group, Pitney Bowes Specified Paging
of State Inc. Credit System
Corporation
Indiana, Secretary Essex Wire StarBank, Various Assets
of State National
Association
/TABLE
<PAGE>
SCHEDULE 7.7(a)
EXISTING LEASES
Real Property Leases
--------------------
Southeast Parkway Dr.
Franklin, TN
Williamson County
Windcrest Rd.
Rutland, VT
Rutland County
5405 Valley Belt
Suite D
Independence, OH
(Cleveland) 44131
Cuyahoga County
4068 Mount Royal Blvd.
Allison Park, PA 15101
(Pittsburgh)
1904 Engineers Rd.
Belle Chase, LA 70037
Plaquemines Parish
1409 Murray
N. Kansas City, MO 64116
Clay County
39065 Webb Drive
Westland, MI 48185
2 Tech View Place
Cincinnati, OH 45215
Hamilton County
6808-C Cedar Ave.
Lubbock, TX 79404
Lubbock County
10900-H South Commerce Blvd.
Charlotte, NC 28273
4232 Charter Ave.
#100
Oklahoma City, OK 73108
Oklahoma County
3 Commerce Way
Tewksbury, MA 01876
Middlesex County
23447 Cabot Blvd.
Hayward, CA 94545<PAGE>
2
24-Spur Drive
El Paso, TX 79906
El Paso County
2601 S. Adams St.
Marion, IN
Grant County
1704 Westbelt Dr.
Columbus, OH 43228
Franklin County
2444 Enterprise Drive
Mendata Heights, MN 55120
13880 Parks Steeds Drive
Earth City, MO 63045
(St. Louis, MO)
2625 S. Wilson
Suite 102
Tempe, AZ 85282
Maricopa County
469 E. Manilus St.
East Syracuse, NY 13057
Onondaga County
9398 NW 101st St.
Medley, FL 33178
Orange County
State Highway 18 West
Lexington, MS 39095
8775 McCowan Rd. N.
Markham, Ontario L3P 1X1
Canada
Attala Industrial Park
Kosciuska, MS 39090
Bridgepointe Office Ctr.
Bridge Street & Middlesex Ave.
Metuchen, NJ
Middlesex County
Personal Property Leases
------------------------
AT&T Credit Corporation
Master Equipment Lease #03489 and
all schedule
Re: Telephone Systems<PAGE>
3
Pitney Bowes Credit Corporation
Master Equipment Lease Agreement
No. 7745110
Re: Machinery and Telephone Equipment
IBM Credit Corporation
Team Lease Master Agreements
#G4H 0949 and PM5 1558 and
all schedules
Re: Computers and Data Systems Equipment
Fleet Credit
Lease dated: January 1989
Re: 25 Truck Trailers
First Fleet Credit
Lease dated: November 1991
Re: 25 Truck Trailers
Fleet Credit
Lease dated: November 1988
Re: 15 Truck Tractors
Fleet Credit
Lease dated: February 1990
Re: 5 Truck Tractors
Fleet Credit
Lease dated: July 1993
Re: 4 Truck Tractors
Fleet Credit
Lease dated: July 1993
Re: 6 Truck Tractors
Pitney Bowes
Lease dated: August 1994
Re: 12 Truck Tractors
First Fleet
Lease dated: November 1992
Re: 30 Truck Trailers
Fleet Credit
Lease dated: January 1994
Re: 62 Truck Trailers<PAGE>
EXHIBIT 10.2
__________________________________________________________________________
$60,000,000
SENIOR UNSECURED NOTE AGREEMENT
Dated as of April 12, 1995
BCP/ESSEX HOLDINGS INC.,
as Guarantor
ESSEX GROUP, INC.,
as Borrower
CHEMICAL BANK,
as Administrative Agent
__________________________________________________________________________<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 2. THE TERM LOANS . . . . . . . . . . . . . . . . . . . . . 28
2.1 Term Loans . . . . . . . . . . . . . . . . . . . . . . . 28
2.2 Term Notes . . . . . . . . . . . . . . . . . . . . . . . 28
2.3 Procedure for Term Loan Borrowing . . . . . . . . . . . . 29
2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.5 Optional Prepayments . . . . . . . . . . . . . . . . . . 29
2.6 Mandatory Prepayments . . . . . . . . . . . . . . . . . . 30
2.7 Conversion and Continuation Options . . . . . . . . . . . 31
2.8 Minimum Amounts and Maximum Number of Eurodollar
Tranches . . . . . . . . . . . . . . . . . . . . . . . . 31
2.9 Interest Rates and Payment Dates . . . . . . . . . . . . 31
2.10 Computation of Interest and Fees . . . . . . . . . . . . 32
2.11 Inability to Determine Interest Rate . . . . . . . . . . 32
2.12 Pro Rata Treatment and Payments . . . . . . . . . . . . . 33
2.13 Requirements of Law . . . . . . . . . . . . . . . . . . . 33
2.14 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 35
2.15 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . 37
2.16 Replacement Lenders . . . . . . . . . . . . . . . . . . . 38
SECTION 3. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . 38
3.1 Financial Condition . . . . . . . . . . . . . . . . . . . 38
3.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . 39
3.3 Corporate Existence; Compliance with Law . . . . . . . . 40
3.4 Corporate Power; Authorization; Enforceable Obligations . 40
3.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . 40
3.6 No Material Litigation . . . . . . . . . . . . . . . . . 40
3.7 No Default . . . . . . . . . . . . . . . . . . . . . . . 41
3.8 No Burdensome Restrictions . . . . . . . . . . . . . . . 41
3.9 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 41
3.10 Federal Regulations . . . . . . . . . . . . . . . . . . . 41
3.11 Labor Matters . . . . . . . . . . . . . . . . . . . . . . 41
3.12 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3.13 Investment Company Act; Other Regulations . . . . . . . . 42
3.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 42
3.15 Purpose of Term Loans . . . . . . . . . . . . . . . . . . 42
3.16 Environmental Matters . . . . . . . . . . . . . . . . . . 42
3.17 Accuracy of Information . . . . . . . . . . . . . . . . . 43
3.18 Solvency . . . . . . . . . . . . . . . . . . . . . . . . 44
3.19 Insurance . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . 44
4.1 Conditions to Effectiveness . . . . . . . . . . . . . . . 44
4.2 Conditions to Term Loans . . . . . . . . . . . . . . . . 45
SECTION 5. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . 46
5.1 Financial Statements . . . . . . . . . . . . . . . . . . 46
5.2 Certificates; Other Information . . . . . . . . . . . . . 47
5.3 Payment of Obligations . . . . . . . . . . . . . . . . . 48
5.4 Conduct of Business and Maintenance of Existence . . . . 48
5.5 Maintenance of Property; Insurance . . . . . . . . . . . 48
5.6 Inspection of Property; Books and Records; Discussions . 48
(i)<PAGE>
Page
5.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.8 Environmental Laws . . . . . . . . . . . . . . . . . . . 49
5.9 Holdings Merger . . . . . . . . . . . . . . . . . . . . . 50
SECTION 6. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 51
6.1 Financial Condition Covenants . . . . . . . . . . . . . . 51
6.2 Limitation on Secured Debt . . . . . . . . . . . . . . . 51
6.3 Limitation on Sale/Leaseback Transactions . . . . . . . . 53
6.4 Limitation on Company Debt . . . . . . . . . . . . . . . 53
6.5 Limitation on Debt and Preferred Stock of Subsidiaries . 55
6.6 Limitation on Restricted Payments . . . . . . . . . . . . 56
6.7 Limitation on Restrictions on Distributions from
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . 60
6.8 Limitation on Sales of Assets and Subsidiary Stock . . . 61
6.9 Limitation on Transactions with Affiliates . . . . . . . 64
6.10 Change of Control . . . . . . . . . . . . . . . . . . . . 65
6.11 Mergers and Consolidations . . . . . . . . . . . . . . . 66
6.12 Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 7. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . 67
SECTION 8. THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . 69
8.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . 69
8.2 Delegation of Duties . . . . . . . . . . . . . . . . . . 69
8.3 Exculpatory Provisions . . . . . . . . . . . . . . . . . 69
8.4 Reliance by Administrative Agent . . . . . . . . . . . . 70
8.5 Notice of Default . . . . . . . . . . . . . . . . . . . . 70
8.6 Non-Reliance on Administrative Agent and Other Lenders . 70
8.7 Indemnification . . . . . . . . . . . . . . . . . . . . . 71
8.8 Administrative Agent in Its Individual Capacity . . . . . 71
8.9 Successor Administrative Agent . . . . . . . . . . . . . 71
SECTION 9. GUARANTEE . . . . . . . . . . . . . . . . . . . . . . . . 72
9.1 Guarantee . . . . . . . . . . . . . . . . . . . . . . . . 72
9.2 No Subrogation, Contribution, Reimbursement or Indemnity 72
9.3 Amendments, etc. with respect to the Obligations . . . . 73
9.4 Guarantee Absolute and Unconditional . . . . . . . . . . 73
9.5 Reinstatement . . . . . . . . . . . . . . . . . . . . . . 74
9.6 Payments . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 10. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 74
10.1 Amendments and Waivers . . . . . . . . . . . . . . . . . 74
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . 76
10.4 Survival of Representations and Warranties . . . . . . . 76
10.5 Payment of Expenses and Taxes . . . . . . . . . . . . . . 76
10.6 Successors and Assigns; Assignments and Participations . 77
10.7 Adjustments; Setoff . . . . . . . . . . . . . . . . . . . 80
10.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . 81
10.9 Severability . . . . . . . . . . . . . . . . . . . . . . 81
10.10 INTEGRATION . . . . . . . . . . . . . . . . . . . . . . . 81
10.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . 81
10.12 Submission To Jurisdiction; Waivers . . . . . . . . . . . 82
10.13 Acknowledgements . . . . . . . . . . . . . . . . . . . . 82
10.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . . . . 82
10.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . 83
(ii)<PAGE>
Page
SCHEDULES:
1.1 Term Loan Commitments, Addresses
3.1(b) Liabilities, etc.
3.5 Legal Bar
3.14 Subsidiaries
6.9 Agreements with Affiliates
EXHIBITS:
A Term Note
B Closing Certificate
C-1 Opinion of Cravath, Swaine & Moore
C-2 General Counsel Opinion
D Assignment and Acceptance
E Confidentiality Letter
F Compliance Certificate
(iii)<PAGE>
SENIOR UNSECURED NOTE AGREEMENT, dated as of April 12, 1995, among
BCP/ESSEX HOLDINGS INC., a Delaware corporation ("Holdings"), ESSEX GROUP,
INC., a Michigan corporation (the "Company"), the several banks and other
financial institutions from time to time parties to this Agreement (the
"Lenders") and CHEMICAL BANK, a New York banking corporation, as
administrative agent for the Lenders hereunder.
PRELIMINARY STATEMENT:
The Company has requested that the Lenders make Term Loans (as
hereinafter defined) to the Company, the proceeds of which shall be used
(a) to pay a dividend to Holdings to finance the repurchase or redemption
of all or a portion of its 16% Debentures (as hereinafter defined) in
accordance with the terms hereof and (b) to pay reasonable fees and
expenses in connection with the transactions contemplated hereby.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereto hereby agree
as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the following terms
shall have the following meanings:
"ABR Term Loans": Term Loans the rate of interest applicable
to which is based upon the Alternate Base Rate.
"Acquisitions": (a) the acquisition of the Company by
MS/Essex Holdings Inc. in 1988 and the financing thereof and (b) the
acquisition of the Company by B E Acquisition Corporation in 1992
through its merger with and into MS/Essex Holdings Inc., and the
financing thereof.
"Adjusted Net Cash Proceeds": with respect to any Issuance or
sale of Capital Stock, the cash proceeds of such Issuance or sale
net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees, discounts or commissions and brokerage,
consultant and other fees actually incurred in connection with such
Issuance or sale and net of taxes paid or payable as a result
thereof.
"Administrative Agent": Chemical Bank, together with its
affiliates, as the arranger of the Term Loans and as administrative
agent for the Lenders under this Agreement and the other Term Loan
Documents.
"Affiliate": as to any Person, (a) any other Person which,
directly or indirectly, is in control of, is controlled by or is
under common control with, such specified Person or (b) any other
Person who is a director or officer (A) of such specified Person,
(B) of any subsidiary of such specified Person or (C) of any Person
described in clause (a) above. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct
or cause the direction of the management and policies of such Person
whether by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. For<PAGE>
2
purposes of Section 6.9, shareholders and Affiliates of BSC that
would not be Affiliates of the Company other than by reason of being
shareholders or Affiliates of BSC and that neither in fact
participate in the management of any of BSC, BH or the Company, nor
are controlled by BSC, BH, the Company, or any of their respective
Affiliates who in fact participate in the management of any of BSC,
BH or the Company, shall not be deemed to be Affiliates of the
Company.
"Agreement": this Senior Unsecured Note Agreement, as
amended, supplemented or otherwise modified from time to time.
"Alternate Base Rate": for any day, a rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. For purposes hereof: "Prime
Rate" shall mean the rate of interest per annum publicly announced
from time to time by Chemical as its prime rate in effect at its
principal office in New York City; "Base CD Rate" shall mean the sum
of (a) the product of (i) the Three-Month Secondary CD Rate and (ii)
a fraction, the numerator of which is one and the denominator of
which is one minus the C/D Reserve Percentage and (b) the Assessment
Rate; "Three-Month Secondary CD Rate" shall mean, for any day, the
secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not
be a Business Day, the next preceding Business Day) by the Board
through the public information telephone line of the Federal Reserve
Bank of New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical Release
H.15(519) during the week following such day), or, if such rate
shall not be so reported on such day or such next preceding Business
Day, the average of the secondary market quotations for three-month
certificates of deposit of major money center banks in New York City
received at approximately 10:00 A.M., New York City time, on such
day (or, if such day shall not be a Business Day, on the next
preceding Business Day) by the Administrative Agent from three New
York City negotiable certificate of deposit dealers of recognized
standing selected by it; and "Federal Funds Effective Rate" shall
mean, for any day, the weighted average of the rates on overnight
Federal funds transactions with members of the Federal Reserve
System arranged by federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or,
if such rate is not so published for any day which is a Business
Day, the average of the quotations for the day of such transactions
received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. If for any reason
the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to
ascertain the Base CD Rate or the Federal Funds Effective Rate, or
both, for any reason, including the inability or failure of the
Administrative Agent to obtain sufficient quotations in accordance
with the terms hereof, the Alternate Base Rate shall be determined
without regard to clause (b) or (c), or both, of the first sentence
of this definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the Alternate<PAGE>
3
Base Rate due to a change in the Prime Rate, the Three-Month
Secondary CD Rate, the C/D Reserve Percentage, the Assessment Rate
or the Federal Funds Effective Rate shall be effective on the
effective day of such change in the Prime Rate, the Three-Month
Secondary CD Rate, the C/D Reserve Percentage, the Assessment Rate
or the Federal Funds Effective Rate, respectively.
"Assessment Rate": for any day, as applied to any ABR Term
Loan, the annual assessment rate in effect on such day which is
payable by a member of the Bank Insurance Fund maintained by the
Federal Deposit Insurance Corporation or any successor (the "FDIC")
classified as well-capitalized and within supervisory subgroup "B"
(or a comparable successor assessment risk classification) within
the meaning of 12 C.F.R. Section 327.3(d) (or any successor
provision) to the FDIC for the FDIC's insuring time deposits at
offices of such institution in the United States.
"Asset Disposition": any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or
dispositions) of shares of Capital Stock of a Subsidiary (other than
directors' qualifying shares), property or other assets (each
referred to for the purposes of this definition as a "disposition")
by the Company or any of its Subsidiaries (including any disposition
by means of a merger, consolidation or similar transaction), other
than (i) a disposition by a Subsidiary to the Company or by the
Company or a Subsidiary to a Wholly Owned Subsidiary, (ii) a cash
contribution by the Company or a Wholly Owned Subsidiary to a Wholly
Owned Subsidiary or a Person which will become a Wholly Owned
Subsidiary as a result of such cash contribution, (iii) a
disposition of property or assets in the ordinary course of
business, (iv) a disposition which constitutes a Restricted Payment,
(v) a disposition which constitutes a Sale/Leaseback Transaction
(other than a Sale/ Leaseback Transaction to the extent deemed an
Asset Disposition pursuant to Section 6.3(ii)), (vi) a disposition
subject to Section 6.11 and (vii) a disposition by the Company of
idle property or assets relating to the Company's facilities in
Bennetsville, South Carolina, Newmarket, New Hampshire, Syracuse,
New York and Houston, Texas.
"Assignment and Acceptance": an Assignment and Acceptance
entered into by a Lender and an assignee, and consented to by the
Administrative Agent and the Company, substantially in the form of
Exhibit D.
"Attributable Debt": in respect of a Sale/Leaseback
Transaction, as at the time of determination, the present value
(discounted at 10% compounded annually) of the total obligations of
the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life": as of the date of determination, with respect
to any Debt or Preferred Stock, the quotient obtained by dividing
(i) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal
payment of such Debt or redemption or similar payment with respect<PAGE>
4
to such Preferred Stock multiplied by the amount of such payment by
(ii) the sum of all such payments.
"Bank Debt": any and all amounts payable under or in respect
of the Credit Agreement or a commercial financing arrangement (and
any other agreement or agreements which refinances or replaces the
Credit Agreement or a commercial financing arrangement in whole or
in part), as amended from time to time, including principal, premium
(if any), interest (including interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating
to the Company), fees, charges, expenses, reimbursement obligations,
guarantees and all other amounts payable thereunder or in respect
thereof; provided, however, that the principal amount of all Debt
payable under or in respect of the Credit Agreement or a commercial
financing arrangement (and such other agreement or agreements) shall
not exceed the sum of the amount of Debt permitted to be Issued by
the Company and its Subsidiaries pursuant to Sections 6.4 and 6.5.
"BH": Bessemer Holdings, L.P.
"Bessemer": Bessemer Partners & Co., BH and any of their
Affiliates.
"Board": the Board of Governors of the Federal Reserve System
of the United States (or any successor).
"Board of Directors": the Board of Directors of the Company
or any committee thereof duly authorized to act on behalf of such
Board.
"BSC": Bessemer Securities Corporation.
"Business Day": a day other than a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or
required by law to close; provided, however, that when used in
connection with a Eurodollar Term Loan, the term "Business Day"
shall also exclude any day on which commercial banks are not open
for dealings in Dollar deposits in the London interbank market.
"Capital Lease Financing Facility": any lease financing
facility entered into on or about the Effective Date by the Company
or any of its Subsidiaries.
"Capital Lease Obligations": as to any Person, any obligation
which is required to be classified and accounted for as a capital
lease on the face of a balance-sheet of such Person prepared in
accordance with GAAP; the amount of such obligation shall be the
capitalized amount thereof, determined in accordance with GAAP; and
the Stated Maturity thereof shall be the date of the last payment of
rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee pursuant
to the terms of the lease without payment of a penalty.
"Capital Stock": any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of<PAGE>
5
or interests in (however designated) corporate stock, including any
Preferred Stock.
"Cash Equivalents": (a) securities with maturities of one
year or less from the date of acquisition issued or fully guaranteed
or insured by the United States Government or any agency thereof;
(b) certificates of deposit, time deposits, eurodollar time
deposits, overnight bank deposits, bankers acceptances and
repurchase agreements having maturities of one year or less from the
date of acquisition issued by any Lender or by any commercial bank
organized under the laws of the United States of America or any
state thereof having combined capital and surplus of not less than
$100,000,000; and (c) commercial paper of an issuer rated at least
A-1 by Standard & Poor's Ratings Group or P-1 by Moody's Investors
Service, Inc., or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating agencies
cease publishing ratings of investments, and, in either case,
maturing within six months from the date of acquisition.
"C/D Reserve Percentage": for any day, that percentage
(expressed as a decimal) which is in effect on such day, as
prescribed by the Board, for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in New
York City with deposits exceeding one billion Dollars in respect of
new non-personal time deposits in Dollars in New York City having a
maturity approximately equal to three months and in an amount of
$100,000 or more.
"Change of Control" means the occurrence of any of the
following events:
(i) prior to the initial Public Equity Offering Consummation
Date with respect to an offering of common stock, any "person" (as
such term is used in Sections 13(d) and 14(d) of the Exchange Act),
other than one or more Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a Person shall be deemed to have
"beneficial ownership" of all shares that any such Person has the
right to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, or have the
absolute power to direct the vote of, with respect to the election
of directors of Holdings or the Company, shares of Capital Stock
entitled to cast more than the greater of (x) 25% or (y) the
Original Group Percentage of the votes entitled to be cast with
respect to the election of directors of Holdings or the Company, as
the case may be. The "Original Group Percentage" shall mean, as of
any date of determination, the percentage of the votes entitled to
be cast with respect to the election of directors of Holdings or the
Company, as the case may be, by the Permitted Holders and by Persons
who have agreed to vote as directed by Bessemer with respect to the
election of such directors and, for purposes of the calculation, any
shares of common stock Issuable upon exercise of the Warrants shall
be deemed to be issued and outstanding;
(ii) subsequent to the initial Public Equity Offering
Consummation Date with respect to an offering of common stock, any<PAGE>
6
"person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than one or more Permitted Holders, is or
becomes the beneficial owner (as defined in clause (i) above),
directly or indirectly, of more than 35% of the total voting power
of the Voting Stock of the Company; provided, however, that the
Permitted Holders "beneficially own" (as so defined), directly or
indirectly, in the aggregate a lesser percentage of the total voting
power of the Voting Stock of the Company than such other Person and
do not have the right or ability by voting power, contract or
otherwise to elect or designate for election a majority of the Board
of Directors (for the purposes of this clause (ii), any Person shall
be deemed to beneficially own any Voting Stock of a corporation (the
"specified corporation") held by any other corporation (the "parent
corporation"), if such Person "beneficially owns" (as so defined),
directly or indirectly, more than 35% of the voting power of the
Voting Stock of such parent corporation and the Permitted Holders
"beneficially own" (as so defined), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting
Stock of such parent corporation and do not have the right or
ability by voting power, contract or otherwise to elect or designate
for election a majority of the board of directors of such parent
corporation); or
(iii) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of
Directors (together with any new directors elected by such Board of
Directors or nominated for election by the shareholders of the
Company by a vote of at least a majority of the directors of the
Company then still in office who were either directors at the
beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office.
"Chemical": Chemical Bank, a New York banking corporation.
"Code": the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment Percentage": as to any Lender at any time, the
percentage of the aggregate Term Loan Commitments then constituted
by such Lender's Term Loan Commitment.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Company and which is treated as a single employer under
Section 414(b) or (c) of the Code.
"Confidential Information": written information that
Holdings, the Company, any of their Subsidiaries or Affiliates, or
any of their authorized representatives furnishes to the
Administrative Agent or any Lender on a confidential basis, other
than any such information that becomes generally available to the
public other than as a result of a breach by the Administrative
Agent or any Lender of its obligations hereunder or that is or
becomes available to the Administrative Agent or such Lender from a<PAGE>
7
source other than Holdings, the Company, any of their Subsidiaries
or Affiliates, or any of their authorized representatives and that
is not, to the actual knowledge of the recipient thereof, subject to
obligations of confidentiality with respect thereto.
"Confidential Information Memorandum": the Confidential
Information Memorandum dated March 1995 and furnished to the
Lenders.
"Consolidated Adjusted Net Income": for any period, the net
income (or net loss) of the Company and its Subsidiaries determined
on a consolidated basis in accordance with GAAP; provided, however,
that there shall not be included in such Consolidated Adjusted Net
Income:
(i) any net income of any Person if such Person is not a
Subsidiary, except that:
(A) the Company's equity in the net income of any such
Person for such period shall be included in such Consolidated
Adjusted Net Income up to the aggregate amount of cash
actually distributed by such Person during such period to the
Company or a Subsidiary as a dividend or other distribution
(subject, in the case of a dividend or other distribution to a
Subsidiary, to the limitations contained in clause (iii)
below), and
(B) the Company's equity in a net loss of any such
Person for such period shall be included in determining such
Consolidated Adjusted Net Income;
(ii) any net income of any Person acquired by the Company or
a Subsidiary in a pooling of interests transaction for any period
prior to the date of such acquisition;
(iii) any net income of any Subsidiary if such Subsidiary is
subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions by such Subsidiary,
directly or indirectly, to the Company, except that:
(A) the Company's equity in the net income of any such
Subsidiary for such period shall be included in such
Consolidated Adjusted Net Income up to the aggregate amount of
cash actually distributed by such Subsidiary during such
period to the Company or another Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or
other distribution to another Subsidiary, to the limitation
contained in this clause),
(B) the Company's equity in a net loss of any such
Subsidiary for such period shall be included in determining
such Consolidated Adjusted Net Income and
(C) the Company's equity in a net loss of any such
Person that is a Non-Recourse Subsidiary for such period shall
be included in determining such Consolidated Adjusted Net<PAGE>
8
Income to the extent of any cash actually contributed, lent or
transferred by the Company or any Subsidiary to such
Non-Recourse Subsidiary in such period;
(iv) any gain or loss realized upon the sale or other
disposition of any property, plant or equipment of the Company or
its consolidated subsidiaries (including pursuant to any
Sale/Leaseback Transaction) which is not sold or otherwise disposed
of in the ordinary course of business and any gain or loss realized
upon the sale or other disposition of any Capital Stock of any
Person;
(v) the cumulative effect of a change in accounting
principles;
(vi) amortization of goodwill and financing costs arising in
connection with the Acquisitions; and
(vii) the increase in depreciation due to the write-up in
book values for tangible assets in connection with the Acquisitions
over the depreciation in respect of those tangible assets which
would have been charged against income had the write-up not
occurred.
"Consolidated Adjusted Net Worth": of any Person, the total
amounts shown on the balance sheet of such Person and its
Subsidiaries, determined on a consolidated basis in accordance with
GAAP, as of the end of the most recent fiscal quarter of such Person
ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as
(i) the par or stated value of all outstanding Capital Stock
of such Person plus
(ii) paid-in capital or capital surplus relating to such
Capital Stock plus
(iii) any retained earnings or earned surplus less
(A) any accumulated deficit and
(B) any amounts attributable to Redeemable Stock plus
(iv) non-cash charges related to acquisitions.
"Consolidated Capital Expenditures": for any period, any
expenditures (whether paid in cash or accrued as liabilities and
including Capital Lease Obligations) of the Company and its
Subsidiaries the amount of which, in conformity with GAAP, would be
capitalized on a consolidated balance sheet of the Company and its
Subsidiaries.
"Consolidated Current Assets": as a particular date, with
respect to any Person, all amounts (other than cash and Cash
Equivalents) which would, in conformity with GAAP, be set forth
opposite the caption "total current assets" (or any like caption) on
a consolidated balance sheet of such Person and its Subsidiaries at<PAGE>
9
such date, plus the amount of the LIFO reserve applied to such
Person's inventory as of such date.
"Consolidated Current Liabilities": at a particular date, with
respect to any Person, all amounts which would, in conformity with
GAAP, be set forth opposite the caption "total current liabilities"
(or any like caption) on a consolidated balance sheet of such Person
and its Subsidiaries at such date, but excluding (a) the current
portion of any Funded Debt of such Person and its Subsidiaries and
(b) without duplication of clause (a) above, all Debt consisting of
revolving credit loans under the Credit Agreement to the extent
otherwise included therein.
"Consolidated EBITDA": for any period, with respect to any
Person, Consolidated Net Income of such Person for such period plus,
without duplication and to the extent reflected as a charge in the
statement of such Consolidated Net Income for such period, the sum
of (i) total income tax expense, (ii) interest expense, amortization
or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with
Indebtedness (including the Term Loans), (iii) depreciation and
amortization expense, (iv) amortization of intangibles (including,
but not limited to, goodwill) and organization costs, (v) other
non-cash charges (including changes in inventory valuations) and
(vi) any extraordinary expenses or losses (including, whether or not
otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, losses on sales of assets
outside of the ordinary course of business) and minus, without
duplication and to the extent reflected as a credit in the statement
of such Consolidated Net Income for such period, the sum of (a) any
extraordinary income or gains (including, whether or not otherwise
includable as a separate item in the statement of such Consolidated
Net Income for such period, gains on the sales of assets outside of
the ordinary course of business) and (b) total cash interest income
of such Person and its consolidated Subsidiaries for such period,
all as determined on a consolidated basis in accordance with GAAP.
"Consolidated EBITDA Coverage Ratio": as of any date of
determination means the ratio of (i) the aggregate amount of EBITDA
for the Reference Period to (ii) Consolidated Interest Expense for
such Reference Period; provided, however, that (1) if the Company or
any Subsidiary has Issued any Debt since the beginning of such
period that remains outstanding or if the transaction giving rise to
the need to calculate the Consolidated EBITDA Coverage Ratio is an
Issuance of Debt, or both, EBITDA and Consolidated Interest Expense
for such period shall be calculated after giving effect on a pro
forma basis to such Debt as if such Debt had been Issued on the
first day of such period and to the discharge of any other Debt
repaid, repurchased, defeased or otherwise discharged with the
proceeds of such new Debt as if such discharge had occurred on the
first day of such period, (2) if, since the beginning of such
period, the Company or any Subsidiary shall have made any Asset
Disposition, the EBITDA for such period shall be reduced by an
amount equal to the EBITDA (if positive) directly attributable to
the assets which are the subject of such Asset Disposition for such
period, or increased by an amount equal to the EBITDA (if negative),<PAGE>
10
directly attributable thereto for such period and Consolidated
Interest Expense for such period shall be reduced by an amount equal
to the Consolidated Interest Expense directly attributable to any
Debt of the Company or any Subsidiary repaid, repurchased, defeased
or otherwise discharged with respect to the Company and its
continuing Subsidiaries in connection with such Asset Disposition
for such period (or, if the Capital Stock of any Subsidiary is sold
or otherwise disposed of, the Consolidated Interest Expense for such
period directly attributable to the Debt of such Subsidiary to the
extent the Company and its continuing Subsidiaries are no longer
liable for such Debt after such sale or other disposition) and (3)
if, since the beginning of such period, the Company or any
Subsidiary (by merger or otherwise) shall have made an Investment in
any Subsidiary (or any person which becomes a Subsidiary) or an
acquisition of assets, including any acquisition of assets occurring
in connection with a transaction causing a calculation to be made
hereunder, which constitutes all or substantially all of an
operating unit of a business, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma
effect thereto (including the Issuance of any Debt) as if such
Investment or acquisition occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings
relating thereto, and the amount of Consolidated Interest Expense
associated with any Debt Issued in connection therewith, the pro
forma calculations shall be determined in good faith by a
responsible financial or accounting officer of the Company. If any
Debt bears a floating rate of interest and is being given pro forma
effect, the interest on such Debt shall be calculated as if the rate
in effect on the date of determination had been the applicable rate
for the entire period.
"Consolidated Interest Expense": for any period, interest
expense of the Company and its Subsidiaries (including amortization
of original issue discount or non-cash interest payments or accruals
and the interest component of capital leases but excluding the
amortization of debt Issuance costs), plus cash dividends paid on
any Preferred Stock of the Company and cash and non-cash dividends
paid on any Preferred Stock of any Subsidiary; provided, however,
that for purposes of calculating the Consolidated EBITDA Coverage
Ratio in Section 6.4(a) and Section 6.11, Consolidated Interest
Expense shall include distributions made to Holdings pursuant to
Section 6.6(b)(vii) which are used, directly or indirectly, to pay
cash interest on the 16% Debentures.
"Consolidated Net Cash Interest Expense": for any period as
to any Person, (a) total cash interest expense (including that
attributable to Capital Lease Obligations) of such Person and its
consolidated Subsidiaries for such period with respect to all
outstanding Indebtedness of such Person and its consolidated
Subsidiaries, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to letters of
credit (including participation fees but excluding fronting fees
payable solely to the issuer of any such letter of credit) and
bankers' acceptance financing and net costs under Interest Rate
Protection Agreements (which net costs may be allocated over the<PAGE>
11
term of any Interest Rate Protection Agreement in any manner
reasonably deemed appropriate by the Company) minus (b) total cash
interest income of such Person and its consolidated Subsidiaries for
such period, in each case determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income": for any period as to any Person,
the consolidated net income (or loss) of such Person and its
Subsidiaries, determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded the income (or deficit)
of any other Person (other than a Subsidiary of such Person) in
which such Person or any of its Subsidiaries has an ownership
interest, except to the extent that any such income is actually
received by such Person or such Subsidiary in the form of dividends
or similar distributions.
"Consolidated Net Tangible Assets": the total assets shown on
the balance sheet of the Company and its Subsidiaries, determined on
a consolidated basis in accordance with GAAP, as of any date
selected by the Company not more than 90 days prior to the taking of
any action for the purpose of which the determination is being made
less: (i) all current liabilities and minority interests and (ii)
goodwill and other intangibles.
"Consolidated Net Worth": of any Person means, at any date,
the excess of total assets of such Person and its consolidated
Subsidiaries over total liabilities of such Person and its
consolidated Subsidiaries on such date.
"Consolidated Working Capital": the excess of Consolidated
Current Assets over Consolidated Current Liabilities.
"Contractual Obligation": as to any Person, any provision of
any security issued by such Person or of any agreement, instrument
or other undertaking to which such Person is a party or by which it
or any of its property is bound.
"Credit Agreement": the Company's credit agreement existing
as of the Effective Date and replacements or extensions thereof.
"Debt": of any Person, without duplication,
(i) the principal of and premium (if any) in respect of
(A) indebtedness of such Person for money borrowed and
(B) indebtedness evidenced by notes, debentures, bonds
or other similar instruments for the payment of which such
Person is responsible or liable;
(ii) all Capital Lease Obligations of such Person;
(iii) all obligations of such Person Issued as the deferred
purchase price of property, all conditional sale obligations of such
Person and all obligations of such Person under any title retention<PAGE>
12
agreement (but excluding trade accounts payable arising in the
ordinary course of business);
(iv) all obligations of such Person for the reimbursement of
any obligor on any letter of credit, banker's acceptance or similar
credit transaction (other than obligations with respect to letters
of credit securing obligations (other than obligations described in
(i) through (iii) above) entered into in the ordinary course of
business of such Person to the extent such letters of credit are not
drawn upon or, if and to the extent drawn upon, such drawing is
reimbursed no later than the fifth Business Day following receipt by
such Person of a demand for reimbursement following payment on the
letter of credit);
(v) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Redeemable
Stock;
(vi) all obligations of the type referred to in clauses (i)
through (v) of other Persons and all dividends of other Persons for
the payment of which, in either case, such Person is responsible or
liable as obligor or guarantor;
(vii) all obligations of the type referred to in clauses (i)
through (vi) of other Persons secured by any Lien on any property or
asset of such Person (whether or not such obligation is assumed by
such Person), the amount of such obligation being deemed to be the
lesser of the value of such property or assets or the amount of the
obligation so secured; and
(viii) all obligations under Interest Rate Protection
Agreements, foreign currency hedges and similar agreements.
"Default": any of the events specified in Section 7, whether
or not any requirement for the giving of notice, the lapse of time,
or both, or any other condition, has been satisfied.
"Dollars" and "$": dollars in lawful currency of the United
States of America.
"EBITDA": for any period, Consolidated Adjusted Net Income for
such period plus (to the extent deducted in calculating such
Consolidated Adjusted Net Income) Consolidated Interest Expense for
such period, income taxes, depreciation expenses, amortization
expense and other non-cash charges (including changes in inventory
valuation) for such period (but, as to all of the foregoing, without
giving any effect to any extraordinary gain or loss).
"Effective Date": the date on which the conditions specified
in Section 4.1 shall have been satisfied.
"Environmental Claim": any written notice of any Governmental
Authority alleging potential liability for damage to the environment
or by any Person alleging potential liability for personal injury
(including sickness, disease or death), in either case, resulting
from or based upon (a) the presence or Release (including<PAGE>
13
intentional and unintentional, negligent and non-negligent, sudden
or non-sudden, accidental or non-accidental leaks or spills) of any
Hazardous Material at, in or from property, whether or not owned or
leased by Holdings, the Company or any of its Subsidiaries, or (b)
any other circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
"Environmental Laws": any and all foreign, federal, state,
local and municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental
Authority and requirements of law (including common law) regulating,
relating to or imposing liability or standards of conduct concerning
protection of human health or the environment as now or may at any
time hereafter be in effect.
"ERISA": the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"Eurocurrency Reserve Requirements": for any day as applied
to a Eurodollar Term Loan, the aggregate (without duplication) of
the rates (expressed as a decimal fraction) of the maximum reserve
requirements in effect on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained
by a member bank of the Federal Reserve System.
"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Term Loan, the rate of
interest determined on the basis of the rate for deposits in Dollars
for a period equal to such Interest Period commencing on the first
day of such Interest Period appearing on Page 3750 of the Telerate
screen as of 11:00 A.M., London time, two Business Days prior to the
beginning of such Interest Period. In the event that such rate does
not appear on Page 3750 of the Telerate Service (or otherwise on
such service), the "Eurodollar Base Rate" shall be determined by
reference to such other publicly available service for displaying
eurodollar rates as may be designated by the Administrative Agent
or, if so specified by the Administrative Agent, the rate per annum
(rounded upward to the nearest 1/16th of 1%) equal to the rate
notified to the Administrative Agent by Chemical as the rate at
which Chemical offers Dollar deposits at or about 11:00 A.M., London
time, two Business Days prior to the beginning of such Interest
Period in the interbank eurodollar market where the eurodollar and
foreign currency and exchange operations in respect of its
Eurodollar Term Loans are then being conducted for delivery on the
first day of such Interest Period for the number of days comprised
therein and in an amount comparable to the amount of its Eurodollar
Term Loan to be outstanding during such Interest Period.
"Eurodollar Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Term Loan, a rate per
annum determined for such day in accordance with the following
formula (rounded upward to the nearest 1/16th of 1%):<PAGE>
14
Eurodollar Base Rate
--------------------
1.00 - Eurocurrency Reserve Requirements
"Eurodollar Term Loans": Term Loans the rate of interest
applicable to which is based upon the Eurodollar Rate.
"Eurodollar Tranche": the collective reference to Eurodollar
Term Loans the Interest Periods with respect to all of which begin
on the same date and end on the same later date.
"Event of Default": any of the events specified in Section 7,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Company, the
excess of (a) the sum, without duplication, of (i) Consolidated Net
Income of the Company for such fiscal year, (ii) an amount equal to
the amount of all non-cash charges deducted in arriving at such
Consolidated Net Income, (iii) the amount of returned surplus assets
of any Plan during such fiscal year to the extent not included in
arriving at such Consolidated Net Income, (iv) decreases in
Consolidated Working Capital of the Company for such fiscal year,
and (v) an amount equal to the aggregate net non-cash loss on the
sale, lease, transfer or other disposition of assets by the Company
and its Subsidiaries during such fiscal year (other than sales of
Inventory in the ordinary course of business), to the extent
deducted in arriving at such Consolidated Net Income over (b) the
sum, without duplication, of (i) an amount equal to the amount of
all non-cash credits included in arriving at such Consolidated Net
Income, (ii) the aggregate amount actually paid by the Company and
its Subsidiaries in cash during such fiscal year on account of
Consolidated Capital Expenditures and Investment Expenditures
(excluding the principal amount of Indebtedness incurred in
connection with such expenditures), (iii) the aggregate amount of
all payments or prepayments of the Term Loans during such fiscal
year pursuant to Section 2.2 or 2.5 and the aggregate principal
amount of all prepayments of revolving credit loans pursuant to the
Credit Agreement to the extent accompanied by a reduction in the
commitments thereunder, (iv) the aggregate amount of all regularly
scheduled principal payments of Funded Debt (including payments of
Capital Lease Obligations of the Company or any of its Subsidiaries
(other than any portion thereof allocable to cash interest expense)
made during such fiscal year) of the Company and its Subsidiaries
made during such fiscal year (other than under this Agreement), (v)
increases in Consolidated Working Capital of the Company for such
fiscal year, and (vi) an amount equal to the aggregate net non-cash
gain on the sale, lease, transfer or other disposition of assets by
the Company and its Subsidiaries during such fiscal year (other than
sales of inventory in the ordinary course of business), to the
extent included in arriving at such Consolidated Net Income.
"Excess Cash Flow Application Date": as defined in Section
2.6(a).<PAGE>
15
"Exchange Act": the Securities Exchange Act of 1934, as
amended.
"Exchange Debentures": the debentures which may be issued by
Holdings in exchange for the Preferred Stock. As used in this
definition, "Preferred Stock" shall mean the Series A Cumulative
Redeemable Exchangeable Preferred Stock of Holdings.
"Final Maturity Date": May 15, 2000.
"Foreign Subsidiary": a subsidiary that is incorporated in a
jurisdiction other than the United States or a State or territory
thereof or the District of Columbia and has a substantial portion of
its property, plant and equipment in a jurisdiction other than in
the United States or a State or territory thereof or the District of
Columbia.
"Funded Debt": as to any Person, all Indebtedness of such
Person (including Capital Lease Obligations but excluding
Indebtedness consisting of letters of credit) that matures more than
one year from the date of its creation or matures within one year
from such date but is renewable or extendible, at the option of the
debtor, to a date more than one year from such date or arises under
a revolving credit or similar agreement that obligates the lender or
lenders to extend credit during a period of more than one year from
such date, including, without limitation, all amounts of Funded Debt
required to be paid or prepaid within one year from the date of its
creation and, in the case of the Company, Indebtedness in respect of
the Term Loans.
"GAAP": generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and
statements and pronouncements of the Financial Accounting Standards
Board (or agencies with similar functions of comparable stature and
authority within the accounting profession), or in such other
statements by such other entity as may be in general use by
significant segments of the accounting profession, as in effect from
time to time. For the purpose of certain calculations hereunder,
GAAP shall be modified in the manner described in Section 1.2(e).
"Governmental Authority": any nation or government, any state
or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government (and, in the case of
references to "Governmental Authority" in Section 2, the National
Association of Insurance Commissioners).
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b)
another Person (including, without limitation, any bank under any
letter of credit) to induce the creation of which the guaranteeing
person has issued a reimbursement, counterindemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing
any Indebtedness, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary<PAGE>
16
obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary
obligation or any property constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or
payment of any such primary obligation or (2) to maintain working
capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose
of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or
(iv) otherwise to assure or hold harmless the owner of any such
primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee Obligation
of any guaranteeing person shall be deemed to be the lower of (x) an
amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and
(y) the maximum amount for which such guaranteeing person may be
liable pursuant to the terms of the instrument embodying such
Guarantee Obligation, unless such primary obligation and the maximum
amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantee
Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by the
Company in good faith.
"Hazardous Materials": any gasoline or petroleum (including
crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials, or wastes, defined or
regulated as such in or under any Environmental Law, including,
without limitation, asbestos, polychlorinated biphenyls, and urea-
formaldehyde insulation.
"Holdings": BCP/Essex Holdings Inc. or any successor thereto
(including, without limitation, New Holdings).
"Holdings Common Equity Offering": any primary offering or
sale (public or private) of shares of, or rights to purchase, common
stock of Holdings.
"Indebtedness": of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money,
(b) all obligations of such Person for the deferred purchase price
of property or services (other than trade payables not overdue by
more than 60 days incurred in the ordinary course of such Person's
business), (c) all obligations of such Person evidenced by notes,
bonds, debentures or other similar instruments, (d) all indebtedness
created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person
(even though the rights and remedies of the seller or lender under
such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations of such
Person, (f) all obligations, contingent or otherwise, of such Person
as an account party under acceptance, letter of credit or similar<PAGE>
17
facilities, (g) all obligations of such Person to purchase, redeem,
retire or otherwise acquire for value any Capital Stock of such
Person or any warrants, rights or options to acquire such Capital
Stock, (h) all Guarantee Obligations of such Person in respect of
Indebtedness of any other Person and (i) all Indebtedness referred
to in clauses (a) through (g) above secured by (or for which the
holder of such Indebtedness has an existing right, contingent or
otherwise, to be secured by) any Lien on property (including,
without limitation, accounts and contract rights) owned by such
Person, even though such Person has not assumed or become liable for
the payment of such Indebtedness.
"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Interest Coverage Ratio": the ratio of (i) Consolidated
EBITDA of Holdings for the relevant Interest Coverage Test Period to
(ii) Consolidated Net Cash Interest Expense of Holdings for such
Interest Coverage Test Period. In calculating Consolidated Net Cash
Interest Expense pursuant to this definition after May 15, 1995, in
the case of the 16% Debentures, the amount of interest paid thereon
for the relevant period shall be the amount of interest accrued
during and allocable to such period and not the amount of interest
actually paid during such period.
"Interest Coverage Test Period": as of any date of
determination, the period of four consecutive fiscal quarters of
Holdings ending on such date.
"Interest Payment Date": (a) as to any ABR Term Loan, the
last day of each March, June, September and December to occur while
such Loan is outstanding and (b) as to any Eurodollar Term Loan, the
last day of the related Interest Period or, in the case of any
Eurodollar Term Loan having an Interest Period longer than three
months, each day which is three months, or a whole multiple thereof,
after the first day of such Interest Period and the last day of such
Interest Period.
"Interest Period": with respect to any Eurodollar Term Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Term Loan and ending one, two, three or six months thereafter (or,
if deposits of such duration are available to all Lenders and all
Lenders consent thereto, ending nine or twelve months thereafter),
as selected by the Company in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and
(b) thereafter, each period commencing on the last day of
the next preceding Interest Period applicable to such Eurodollar
Term Loan and ending one, two, three or six months thereafter (or,
if deposits of such duration are available to all Lenders and all
Lenders consent thereto, ending nine or twelve months thereafter),<PAGE>
18
as selected by the Company by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the
last day of the then current Interest Period with respect thereto;
provided that, all of the foregoing provisions relating to Interest
Periods are subject to the following:
(1) if any Interest Period would otherwise end on a day
that is not a Business Day, such Interest Period shall be
extended to the next succeeding Business Day unless the result
of such extension would be to carry such Interest Period into
another calendar month in which event such Interest Period
shall end on the immediately preceding Business Day;
(2) no Interest Period shall extend beyond the Final
Maturity Date;
(3) any Interest Period that begins on the last Business
Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of
a calendar month; and
(4) the Company shall select Interest Periods so as not
to require a payment or prepayment of any Eurodollar Term Loan
during an Interest Period for such Term Loan.
"Interest Rate Protection Agreement": any interest rate swap
agreement, interest rate cap agreement or other financial agreement
or arrangement designed to protect the Company or any Subsidiary
against fluctuations in interest rates.
"Investment" in any Person, collectively, any direct or
indirect loan, advance or other extension of credit (including by
way of guarantee or similar arrangement), or capital contribution
to, or any acquisition of Capital Stock, securities or Debt, of, any
other person. For the purposes of Section 6.6, (i) "Investment"
shall include the fair market value of the net assets of any
Subsidiary at the time that such Subsidiary is designated a
Non-Recourse Subsidiary, (ii) the fair market value of the net
assets of any Non-Recourse Subsidiary that is designated a
Subsidiary shall be deducted from the aggregate amount of
Investments in computing the net amount of Investments and (iii) any
property transferred to or from a Non-Recourse Subsidiary shall be
valued at fair market value at the time of such transfer, in each
case as determined in good faith by the Board of Directors.
"Investment Expenditures": the cost or principal amount, as
the case may be, of any capital contribution to, acquisition of a
business (whether through the purchase of Capital Stock or assets)
of, or other similar investment in, any Person; provided that if any
such investment is made by the contribution of assets to another
Person, such assets shall, for the purpose of determining the cost
of such investment, be valued at fair market value.<PAGE>
19
"Investment Grade Debt": Debt rated in one of the four
highest generic categories by a nationally recognized credit rating
agency.
"Issue": issue, assume, guarantee, incur or otherwise become
liable for; provided, however, that any Debt or Capital Stock of a
Person existing at the time such Person becomes a Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall
be deemed to be Issued by such Subsidiary at the time it becomes a
Subsidiary. For purposes of this definition, the terms "Issuing,"
"Issuer," "Issuance" and "Issued" have meanings correlative to the
foregoing.
"Lien": any mortgage, pledge, security interest, deposit
arrangement, conditional sale or other title retention agreement or
other similar lien.
"Loan Parties: the collective reference to Holdings and the
Company.
"Management Agreements": the several Management Stock
Subscription Agreements, Management Option Continuation Agreements,
Management Stockholders and Registration Rights Agreements, Stock
Option Agreements and Amended and Restated Stock Option Agreements
among Holdings, the Company, several employees of the Company and
its Subsidiaries and, in the case of the Management Stockholders and
Registration Rights Agreements, BH (as successor in interest to
Bessemer Capital Partners), in each case as in effect on the
Effective Date or from time to time thereafter. For purposes of
this Agreement, "Management Agreements" shall be deemed to include
any agreements entered into after the Effective Date by Holdings
with any officer or employee of Holdings, the Company or any of its
Subsidiaries in connection with the purchase of common stock of
Holdings or options to purchase such common stock, so long as such
agreements contain provisions concerning the repurchase by Holdings
of its common stock or options with respect thereto which are no
less favorable to Holdings than, and otherwise substantially
identical to, those contained in the Management Agreements referred
to in the preceding sentence.
"Material Adverse Effect": a material adverse effect on (a)
the business, assets, liabilities (actual or contingent),
operations, condition (financial or otherwise) or prospects of
Holdings, the Company and its Subsidiaries taken as a whole, (b) the
ability of the Company or any other Loan Party to perform its
obligations under this Agreement or any of the other Term Loan
Documents, or (c) the validity or enforceability of this Agreement
or any of the other Term Loan Documents or the rights or remedies of
the Administrative Agent or the Lenders hereunder or thereunder.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
"Net Available Cash": from an Asset Disposition, cash
payments as and when received (including any cash payments as and
when received by way of deferred payment of principal pursuant to a<PAGE>
20
note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form
of assumption by the acquiring Person of Debt or other obligations
relating to such properties or assets or received in any other
non-cash form) therefrom, in each case net of (i) all legal, title
and recording tax expenses, commissions and other fees and expenses
incurred, and all Federal, state, provincial, foreign and local
taxes paid or required to be accrued as a liability under GAAP, as a
consequence of such Asset Disposition, (ii) all payments made on any
Debt which is secured by any assets subject to such Asset
Disposition, in accordance with the terms of any Lien upon or other
security agreement of any kind with respect to such assets, or which
must by its terms, or in order to obtain a necessary consent to such
Asset Disposition, or by applicable law be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and
other payments required to be made to minority interest holders in
Subsidiaries or joint ventures as a result of such Asset Disposition
and (iv) appropriate amounts to be provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated
with the assets disposed of in such Asset Disposition and retained
by the Company or any Subsidiary after such Asset Disposition.
"Net Cash Proceeds": in connection with any issuance or sale
by any Person of equity securities, the cash proceeds received by
such Person from such issuance, net of investment banking fees,
reasonable and documented attorneys' fees, accountants' fees,
underwriting discounts and commissions and other customary fees
actually incurred in connection therewith.
"New Holdings": as defined in Section 5.9.
"New Subsidiary": a Subsidiary that has not acquired any
assets (other than cash) at any time directly or indirectly from the
Company or any Subsidiary.
"Non-Recourse Debt": Debt or that portion of Debt (a) as to
which neither the Company nor its Subsidiaries (other than a
Non-Recourse Subsidiary) (i) provides credit support (including any
undertaking, agreement or instrument which would constitute Debt);
(ii) is directly or indirectly liable; or (iii) constitutes the
lender and (b) no default with respect to which (including any
rights which the holders thereof may have to take enforcement action
against a Non-Recourse Subsidiary) would permit (upon notice, lapse
of time or both) any holder of any other Debt of the Company or any
Subsidiary (other than a Non-Recourse Subsidiary) to declare a
default on such other Debt or cause the payment thereof to be
accelerated or payable prior to its Stated Maturity.
"Non-Recourse Subsidiary": any Subsidiary which the Company
by resolution of its Board of Directors shall classify as a
Non-Recourse Subsidiary and any subsidiary of a Non-Recourse
Subsidiary until such time as (i) the Company may, by further
resolution of its Board of Directors, classify such Non-Recourse
Subsidiary as a Subsidiary, (ii) the Company or any of its
Subsidiaries becomes directly or indirectly liable in respect of any
contractual obligation or Debt of such Non-Recourse Subsidiary or<PAGE>
21
(iii) such Non-Recourse Subsidiary Issues Debt, a default with
respect to which (including any rights which the holders thereof may
have to take enforcement action against such Non-Recourse
Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Debt of the Company or any Subsidiary (other
than a Non-Recourse Subsidiary) to declare a default on such other
Debt or cause the payment thereof to be accelerated or payable prior
to its Stated Maturity. A Subsidiary of the Company may only be
classified as a Non-Recourse Subsidiary if immediately after such
classification, there would be no Default and the Company would have
only Investments in such Subsidiary which would be permitted by
Section 6.6; provided, however, that any Subsidiary may not be
reclassified more than once in any 13 month period. A Non-Recourse
Subsidiary may only be reclassified as a Subsidiary if immediately
after giving effect to such reclassification, there would be no
Default. Any valid classification shall be effective as of the date
specified in the applicable resolution of the Board of Directors,
which shall not be prior to the date such resolution is made.
"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity
of the Term Loans and interest accruing after the filing of any
petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Company, whether
or not a claim for post-filing or post-petition interest is allowed
in such proceeding) the Term Loans and all other obligations and
liabilities of the Company to the Administrative Agent or to any
Lender, whether direct or indirect, absolute or contingent, due or
to become due, or now existing or hereafter incurred, which may
arise under, out of, or in connection with, this Agreement, any
other Term Loan Document or any other document made, delivered or
given in connection herewith or therewith, whether on account of
principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees, charges
and disbursements of counsel to the Administrative Agent or to any
Lender that are required to be paid by the Company pursuant hereto)
or otherwise.
"Offer": as defined in Section 6.8(b).
"Offer Amount": as defined in Section 6.8(c)(ii).
"Offer Period": as defined in Section 6.8(c)(ii).
"Officer": the Chairman of the Board, the President, any Vice
President. the Treasurer or the Secretary of the Company.
"Officers' Certificate": a certificate signed by the Chairman
of the Board, the President or a Vice President of the Company, and
by the Treasurer or Secretary of the Company, and delivered to the
Administrative Agent.
"Opinion of Counsel": a written opinion from legal counsel
who is acceptable to the Administrative Agent. The counsel may be
an employee of or counsel to the Company or the Administrative
Agent.<PAGE>
22
"Participant": as defined in Section 10.6(f).
"Paying Agent": as defined in Section 6.8(c)(ii).
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor
thereto).
"Permitted Holders": (i) Holdings, (ii) BH, Donaldson, Lufkin
& Jenrette, Inc. and Goldman, Sachs & Co. and any of their
Affiliates (including Donaldson, Lufkin & Jenrette, Inc. or any
Affiliate thereof in its capacity as custodian or collateral agent
for certain employees of Donaldson, Lufkin & Jenrette, Inc. and
Affiliates thereof) and (iii) any other Person who on the Effective
Date held Capital Stock of Holdings.
"Permitted Investments": (i) Investments in direct
obligations of the United States of America maturing within 180 days
of the date of acquisition thereof; (ii) Investments in certificates
of deposit maturing within 180 days of the date of acquisition
thereof Issued by a bank or trust company which is organized under
the laws of the United States or any state thereof having capital,
surplus and undivided profits aggregating in excess of $100,000,000;
(iii) Investments in commercial paper given the highest rating
(A1/P1 or their equivalent) by one established national credit
rating agency and maturing not more than 180 days from the date of
acquisition thereof; (iv) receivables owing to Holdings, the Company
or any Subsidiary, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary
trade terms; provided, however, that such trade terms may include
such concessionary trade terms as Holdings, the Company or any such
Subsidiary deems reasonable under the circumstances); (v) payroll,
travel and similar advances to cover matters that are expected at
the time of such advances ultimately to be treated as expenses for
accounting purposes and that are made in the ordinary course of
business; (vi) loans or advances to employees made in the ordinary
course of business; (vii) stock, obligations or securities received
in settlement of debts created in the ordinary course of business
and owing to Holdings, the Company or any Subsidiary or in
satisfaction of judgments; and (viii) transactions with Affiliates
permitted as described under Section 6.9.
"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.
"Plan": any employee benefit plan which is covered by ERISA
and in respect of which the Company or a Commonly Controlled Entity
is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Preferred Stock": as applied to the Capital Stock of any
corporation, Capital Stock of any class or classes (however
designated) which is preferred as to the payment of dividends, or as
to the distribution of assets upon any voluntary or involuntary<PAGE>
23
liquidation or dissolution of such corporation, over shares of
Capital Stock of any other class of such corporation.
"Prepayment Date": as defined in Section 6.8(c)(i).
"Public Equity Offering": an underwritten public offering of
equity securities of Holdings or the Company pursuant to a
registration statement filed pursuant to the Securities Act of 1933,
as amended.
"Public Equity Offering Consummation Date": the date on which
Holdings or the Company receives any proceeds from a Public Equity
Offering.
"Qualified Investment": any of the following: (i)
Investments in the Company, a Subsidiary or a Person that becomes a
Subsidiary as a result of such Investment; provided, however, that
such Investment is in a Related Business; (ii) Investments by the
Company or any Subsidiary in another Person, if as a result of such
Investment such other Person is merged or consolidated with or into,
or transfers or conveys all or substantially all of its assets to,
the Company; (iii) Investments by the Company in another Person or
Persons in a Related Business in a net aggregate amount not to
exceed at any time outstanding $40,000,000; and (iv) Permitted
Investments; provided, however, that with respect to clauses
(i)-(iii) above at the time of such Investment, no Default shall
have occurred and be continuing (or would result therefrom).
"Redeemable Stock": any Capital Stock that by its terms or
otherwise is (i) required to be redeemed on or prior to the first
anniversary of the Final Maturity Date, (ii) redeemable at the
option of the holder thereof at any time on or prior to the first
anniversary of the Final Maturity Date or (iii) convertible into or
exchangeable automatically or at the option of the holder for
Capital Stock referred to in clause (i) or (ii) or Debt; provided,
however, that any Capital Stock which would not constitute
Redeemable Stock but for the provisions thereof giving holders
thereof the right to require the Company to repurchase or redeem
such Capital Stock upon the occurrence of a change in control
occurring prior to the Final Maturity Date shall not constitute
Redeemable Stock if the change in control provisions applicable to
such Capital Stock are no more favorable to the holders of such
Capital Stock than the provisions contained in Section 6.10 and such
Capital Stock specifically provides that the Company will not
repurchase or redeem any such stock pursuant to such provision prior
to the prepayment by the Company of the Term Loans as may be
required to be prepaid pursuant to the provisions of Section 6.10.
"Redemption Date": as defined in Section 4.1(c).
"Reference Period": with respect to any computation of the
Consolidated EBITDA Coverage Ratio, the most recent four consecutive
fiscal quarters ending at least 45 days prior to the date of
determination of the Consolidated EBITDA Coverage Ratio.
"Register": as defined in Section 10.6(d).<PAGE>
24
"Regulation U": Regulation U of the Board.
"Related Business": the Company's business on the date of
this Agreement and any business related, ancillary or complementary
thereto.
"Release": any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge,
dispersal, leaching or migration of Hazardous Materials into the
indoor or outdoor environment or into or out of any property owned
or operated by Holdings, the Company or any of its Subsidiaries,
including the movement of Hazardous Materials through or in the air,
soil, surface water, groundwater or other media.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section
4043(b) of ERISA, other than those events as to which the thirty day
notice period is waived under PBGC Reg. Section 2615.
"Required Lenders": at any date shall mean the holders of a
majority of the aggregate unpaid principal amount of the Term Loans
(but, in any event, including at least three Lenders).
"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property
is subject.
"Responsible Officer": the chief executive officer,
president, chief financial officer or treasurer of Holdings or the
Company, as the case may be, but in any event, with respect to
financial matters, the chief financial officer or treasurer of
Holdings or the Company, as the case may be.
"Restricted Payment": as defined in Section 6.6(a).
"Sale/Leaseback Transaction": any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of any
real or tangible personal property (except for leases for a term of
not more than three years or between the Company and a Subsidiary or
between Subsidiaries), which property has been or is to be sold or
transferred by the Company or such Subsidiary to such Person in
contemplation of such leasing.
"Secured Debt": any Debt of the Company secured by a Lien.
"Senior Debt": the following:
(i) all Bank Debt;<PAGE>
25
(ii) all obligations consisting of the principal of and
premium, if any, and accrued and unpaid interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company to the extent post-filing
interest is allowed in such proceeding), whether existing on the
date of this Agreement or thereafter incurred, in respect of (A) the
Term Loans, (B) indebtedness of the Company for money borrowed and
(C) indebtedness evidenced by notes, debentures, bonds to other
similar instruments for the payment of which the Company is
responsible or liable;
(iii) all Capital Lease Obligations of the Company;
(iv) all obligations of the Company (A) for the reimbursement
of any obligor on any letter of credit, banker's acceptance or
similar credit transaction, (B) under Interest Rate Protection
Agreements and similar arrangements and foreign currency hedges
entered into in respect of any obligations described in clauses (i),
(ii) and (iii) or (C) Issued as the deferred purchase price of
property and all conditional sale obligations of the Company and all
obligations of the Company under any title retention agreement;
(v) all obligations of other persons of the type referred to
in clauses (ii), (iii) and (iv) and all dividends of other persons
for the payment of which, in either case, the Company is responsible
or liable as obligor, guarantor or otherwise; and
(vi) all obligations of the Company consisting of
modifications, renewals, extensions, replacements and refundings of
any obligations described in clauses (i), (ii), (iii), (iv) or (v);
provided, however, that Senior Debt shall not be deemed to include
(1) any obligation of the Company to any Subsidiary, (2) any
liability for Federal, state, local or other taxes owed or owing by
the Company, (3) any accounts payable or other liability to trade
creditors (including guarantees thereof or instruments evidencing
such liabilities), (4) any indebtedness, guarantee or obligation of
the Company which is subordinate or junior in any respect to any
other indebtedness, guarantee or obligation of the Company or (5)
any Debt Issued in violation of Sections 6.4 and 6.5.
"Significant Subsidiary": any Subsidiary that would be a
"Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the Securities and Exchange
Commission.
"Single Employer Plan": any Plan which is covered by Title IV
of ERISA, but which is not a Multiemployer Plan.
"16% Debentures": Holdings' 16% Senior Discount Debentures
Due 2004.
"16% Debenture Indenture": the Indenture dated as of May 1,
1989 between Holdings (formerly MS/Essex Holdings Inc.) and United
States Trust Company of New York, as trustee, as amended,
supplemented or otherwise modified from time to time.<PAGE>
26
"Solvent": when used with respect to any Person, means that,
as of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person will, as of such date,
exceed the amount of all "liabilities of such Person, contingent or
otherwise", as of such date, as such quoted terms are determined in
accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair
saleable value of the assets of such Person will, as of such date,
be greater than the amount that will be required to pay the
liability of such Person on its debts as such debts become absolute
and matured, (c) such Person will not have, as of such date, an
unreasonably small amount of capital with which to conduct its
business, and (d) such Person will be able to pay its debts as they
mature. For purposes of this definition, (i) "debt" means liability
on a "claim", and (ii) "claim" means any (x) right to payment,
whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured or unsecured or (y) right to
an equitable remedy for breach of performance if such breach gives
rise to a right to payment, whether or not such right to an
equitable remedy is reduced to judgment, fixed, contingent, matured
or unmatured, disputed, undisputed, secured or unsecured.
"Specified Source": (a) internally generated cash and Cash
Equivalents held by the Company on or about the Redemption Date, (b)
proceeds of the Term Loans, (c) proceeds of the Capital Lease
Financing Facility and (d) proceeds of the loans under the Credit
Agreement.
"Stated Maturity": with respect to any security, the date
specified in such security as the fixed date on which the final
principal amount with respect to such security is due and payable.
"Subordinated Obligation": any Debt of the Company (whether
outstanding on the Effective Date or thereafter Issued) which is by
its terms expressly subordinate or junior in right of payment to the
Term Loans.
"Subsidiary": with respect to any Person, any corporation,
association, partnership or other business entity of which more than
50% of the total voting power of shares of Capital Stock or other
interests (including partnership interests) entitled (without regard
to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by (i) such Person, (ii) such
Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person; provided, however, that for
purposes of Sections 6.2 to 6.11 (together with the definitions
employed therein and any provision of Section 7 which relates to any
such Section), Non-Recourse Subsidiaries shall not be included in
the definition of "Subsidiary" (other than for the purpose of the
definition of "Non-Recourse Subsidiary"). For purposes of this
Agreement, unless the context otherwise requires, Subsidiaries shall
mean Subsidiaries of the Company.<PAGE>
27
"Tangible Property": all land, buildings, machinery and
equipment and leasehold interests and improvements which would be
reflected on a consolidated balance sheet of the Company prepared in
accordance with GAAP, excluding (i) all such tangible property
located outside the United States of America, (ii) all rights,
contracts and other intangible assets of any nature whatsoever and
(iii) all inventories and other current assets.
"10% Senior Note Indenture": the Indenture dated as of May 7,
1993 between the Company and NBD Bank, National Association, as
trustee, as amended, supplemented or otherwise modified from time to
time.
"10% Senior Notes": the Company's 10% Senior Notes Due 2003.
"Term Loan": any loan made by any Lender pursuant to this
Agreement.
"Term Loan Borrowing Date": the Business Day specified in a
notice pursuant to Section 2.3 as the date on which the Company
requests the Lenders to make Term Loans hereunder.
"Term Loan Commitment": as to any Lender, the obligation of
such Lender to make a Term Loan to the Company hereunder in a
principal amount not to exceed the amount set forth under the
heading "Term Loan Commitment" opposite such Lender's name on
Schedule 1.1.
"Term Loan Documents": the collective reference to this
Agreement and the Term Notes.
"Term Note": as defined in Section 2.2.
"Third Party Person": any Person other than the Company or
any Subsidiary.
"Transferee": as defined in Section 10.6(g).
"Trustee": the Trustee under the 10% Senior Note Indenture.
"Type": as to any Term Loan, its nature as an ABR Term Loan
or a Eurodollar Term Loan.
"Voting Stock": all classes of Capital Stock of a corporation
then outstanding and normally entitled to vote in the election of
directors.
"Warrants": the common stock purchase warrants Issued
pursuant to the Warrant Agreement dated as of October 9, 1992, among
B E Acquisition Corporation (predecessor of Holdings), certain
affiliates of Donaldson, Lufkin & Jenrette, Inc. and certain
affiliates of Goldman, Sachs & Co.
"Wholly Owned Subsidiary": a Subsidiary 100% of the Capital
Stock of which (other than directors' qualifying shares) is owned by
the Company or another Wholly Owned Subsidiary.<PAGE>
28
1.2 Other Definitional Provisions; Financial Calculations. (a)
Unless otherwise specified therein, all terms defined in this Agreement
shall have the defined meanings when used in the other Term Loan Documents
or any certificate or other document made or delivered pursuant hereto or
thereto.
(b) As used herein and in the other Term Loan Documents, and any
certificate or other document made or delivered pursuant hereto or
thereto, accounting terms relating to Holdings, the Company and its
Subsidiaries not defined in Section 1.1 and accounting terms partly
defined in Section 1.1, to the extent not defined, shall have the
respective meanings given to them under GAAP.
(c) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and
Section, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(e) Notwithstanding anything to the contrary herein, calculations
in connection with the covenants contained in Section 6 shall utilize
accounting principles and policies (including those in respect of
accounting for income taxes) in conformity with those used to prepare the
financial statements referred to in Section 3.1(b) for the fiscal year of
Holdings or the Company, as the case may be, ended December 31, 1994.
(f) Unless the context otherwise requires, (i) unsecured debt shall
not be deemed to be subordinate or junior to secured debt merely by virtue
of its nature as unsecured debt; (ii) the principal amount of any non-
interest bearing or other discount security at any date shall be the
principal amount thereof that would be shown on a balance sheet of the
Company dated such date prepared in accordance with GAAP and accretion of
principal on such security shall be deemed to be the Issuance of Debt and
(iii) the principal amount of any Redeemable Stock shall be (A) the
maximum liquidation value of such Redeemable Stock or (ii) the maximum
mandatory redemption or mandatory repurchase price with respect to such
Redeemable Stock, whichever is greater.
SECTION 2. THE TERM LOANS
2.1 Term Loans. (a) Subject to the terms and conditions hereof,
each Lender severally agrees to make a term loan (a "Term Loan") to the
Company on the Term Loan Borrowing Date in an amount not to exceed the
amount of the Term Loan Commitment of such Lender.
(b) The Term Loans may from time to time be (i) Eurodollar Term
Loans, (ii) ABR Term Loans or (iii) a combination thereof, as determined
by the Company and notified to the Administrative Agent in accordance with
Sections 2.3 and 2.7.
2.2 Term Notes. (a) The Term Loan made by each Lender shall be
evidenced by a promissory note of the Company, substantially in the form
of Exhibit A (a "Term Note"), with appropriate insertions therein as to<PAGE>
29
payee, date and principal amount, payable to the order of such Lender and
in a principal amount equal to the Term Loan of such Lender. Each Lender
is hereby authorized to record the date and amount of each payment or
prepayment of principal of its Term Loan on the schedule annexed to and
constituting a part of its Term Note, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so
recorded, provided that the failure to make any such recordation or any
error in such recordation shall not affect the Company's obligation to
repay the Term Loans. The Term Note of each Lender shall (a) be dated the
Effective Date, (b) provide for the payment of interest in accordance with
Section 2.9 and (c) provide for the payment of principal in accordance
with Section 2.2(b).
(b) The Company shall repay the Term Loans in 20 consecutive
quarterly installments on the 15th day of each August, November, February
and May, commencing on August 15, 1995, each of which shall aggregate
$3,000,000.
2.3 Procedure for Term Loan Borrowing. The Company shall give the
Administrative Agent irrevocable notice (which notice must be received by
the Administrative Agent prior to (a) 12:00 Noon, New York City time,
three Business Days prior to the Term Loan Borrowing Date, if all or any
part of the requested Term Loans are to be initially Eurodollar Term Loans
or (b) 12:00 Noon, New York City time, two Business Days prior to the
requested Term Loan Borrowing Date, otherwise) requesting that the Lenders
make the Term Loans on the Term Loan Borrowing Date (which shall be no
later than May 31, 1995) and specifying (i) the amount to be borrowed,
(ii) the requested Term Loan Borrowing Date, (iii) whether the borrowing
is to be of Eurodollar Term Loans, ABR Term Loans or a combination thereof
and (iv) if the borrowing is to be entirely or partly of Eurodollar Term
Loans, the respective amounts of each such Eurodollar Term Loan and the
respective lengths of the initial Interest Periods therefor. On the Term
Loan Borrowing Date each Lender shall make available to the Administrative
Agent at its office specified in Section 10.2 prior to 11:00 A.M., New
York City time, an amount in immediately available funds equal to the Term
Loan to be made by such Lender. Such borrowing will then be made
available to the Company by the Administrative Agent crediting the account
of the Company on the books of such office with the aggregate of the
amounts made available to the Administrative Agent by the Lenders in
immediately available funds.
2.4 Fees. (a) The Company agrees to pay to the Administrative
Agent, for its own account and, to the extent mutually agreed upon by the
Administrative Agent and the Lenders, for the account of the Lenders, the
fees in the amounts and on the dates previously agreed to in writing by
the Company and the Administrative Agent.
(b) The Company agrees to pay to the Administrative Agent a
commitment fee for the account of the Lenders for the period from and
including the Effective Date to the Term Loan Borrowing Date, computed at
a rate equal to 5/8 of 1% per annum on the amount of the Term Loan
Commitment of each such Lender, payable in arrears on the Term Loan
Borrowing Date.
2.5 Optional Prepayments. The Company may on the last day of any
Interest Period with respect thereto (or on any other day if the<PAGE>
30
prepayment referred to herein is accompanied by all amounts payable by the
Company pursuant to Section 2.15), in the case of Eurodollar Term Loans,
or at any time and from time to time, in the case of ABR Term Loans,
prepay the Term Loans, in whole or in part, without premium or penalty,
provided that the Company shall give the Administrative Agent irrevocable
notice (which notice must be received by the Administrative Agent prior to
(a) 12:00 Noon, New York City time, three Business Days prior to such
prepayment, in the case of Eurodollar Term Loans or (b) 11:00 A.M., New
York City time, on the date of such prepayment, in the case of ABR Term
Loans) specifying the date and amount of prepayment and whether the
prepayment is of Eurodollar Term Loans, ABR Term Loans or a combination
thereof, and, if a combination thereof, the amount allocable to each.
Upon receipt of any such notice the Administrative Agent shall promptly
notify each Lender thereof. If any such notice is given, the amount
specified in such notice shall be due and payable on the date specified
therein, together with accrued interest to such date on the amount
prepaid. Amounts prepaid on account of the Term Loans may not be
reborrowed. Partial prepayments shall be in an aggregate principal amount
of $1,000,000 or a whole multiple thereof and shall be applied in direct
order of maturity to the remaining installments of principal.
2.6 Mandatory Prepayments. (a) If, for any fiscal year of the
Company beginning on or after January 1, 1995, there shall be Excess Cash
Flow, the Company shall, on the relevant Excess Cash Flow Application
Date, apply toward the prepayment of the Term Loans as set forth in
Section 2.6(b) an amount equal to 50% of such Excess Cash Flow. Each such
prepayment shall be made on or before the date (an "Excess Cash Flow
Application Date") which is ten Business Days after the earlier of (i) the
date on which the financial statements of the Company referred to in
Section 5.1(a), for the fiscal year with respect to which such prepayment
is made, are required to be delivered to the Lenders and (ii) the date
such financial statements are actually delivered.
(b) All prepayments of the Term Loans pursuant to Section 2.6(a)
shall be applied pro rata to the remaining installments of principal
thereof. Amounts prepaid on account of the Term Loans may not be
reborrowed.
(c) The application of any prepayment pursuant to this Section 2.6
shall be made first to ABR Term Loans and second to Eurodollar Term Loans;
provided, that if on the date on which such prepayment is required to be
made the aggregate outstanding amount of ABR Term Loans and Eurodollar
Term Loans having an Interest Period expiring on such date is less than
the amount required to be prepaid, then, on such date, the Company may, at
its option, (i) prepay other Eurodollar Term Loans selected by the Company
in an amount up to the remaining amount required to be prepaid and/or (ii)
if no Default or Event of Default shall have occurred and be continuing,
place any amounts which the Company would otherwise be required to use to
prepay such other Eurodollar Term Loans in an interest-bearing cash
collateral account established with the Administrative Agent for the
benefit of the Lenders until the expiration of the Interest Periods
applicable thereto, at which time such amounts shall be applied to prepay
such Eurodollar Term Loans. Each prepayment of the Term Loans under this
Section 2.6 shall be accompanied by accrued interest to the date of such
prepayment on the amount prepaid.<PAGE>
31
2.7 Conversion and Continuation Options. (a) The Company may
elect from time to time to convert Eurodollar Term Loans to ABR Term
Loans, by giving the Administrative Agent at least three Business Days'
prior irrevocable notice of such election; provided that any such
conversion of Eurodollar Term Loans may only be made on the last day of an
Interest Period with respect thereto (or on any other day if on the date
of such conversion the Company pays to the Administrative Agent for the
account of the Lenders accrued interest on such Eurodollar Term Loans to
the date of such conversion together with all amounts payable pursuant to
Section 2.15). The Company may elect from time to time to convert ABR
Term Loans to Eurodollar Term Loans by giving the Administrative Agent at
least three Business Days' prior irrevocable notice of such election. Any
such notice of conversion to Eurodollar Term Loans shall specify the
length of the initial Interest Period or Interest Periods therefor. Upon
receipt of any such notice the Administrative Agent shall promptly notify
each Lender thereof. All or any part of outstanding Eurodollar Term Loans
or ABR Term Loans may be converted as provided herein; provided that (i)
no Term Loan may be converted into a Eurodollar Term Loan when any Default
or Event of Default has occurred and is continuing and the Administrative
Agent or the Required Lenders have determined that such a conversion is
not appropriate, (ii) any such conversion may only be made if, after
giving effect thereto, Section 2.8 shall not have been contravened and
(iii) no Term Loan may be converted into a Eurodollar Term Loan after the
date that is one month prior to the Final Maturity Date.
(b) Any Eurodollar Term Loans may be continued as such upon the
expiration of the then current Interest Period with respect thereto by the
Company giving notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section
1.1, of the length of the next Interest Period to be applicable to such
Term Loans; provided that no Eurodollar Term Loan may be continued as such
(i) when any Default or Event of Default has occurred and is continuing
and the Administrative Agent or the Required Lenders have determined that
such a continuation is not appropriate, (ii) if, after giving effect
thereto, Section 2.8 would be contravened or (iii) after the date that is
one month prior to the Final Maturity Date and provided, further, that if
the Company shall fail to give any required notice as described above in
this paragraph or if such continuation is not permitted pursuant to the
preceding proviso such Term Loans shall be automatically converted to ABR
Term Loans on the last day of such then expiring Interest Period. Upon
receipt of any notice referred to above, the Administrative Agent shall
promptly notify the Lenders thereof.
2.8 Minimum Amounts and Maximum Number of Eurodollar Tranches.
All borrowings, conversions and continuations of Term Loans hereunder and
all selections of Interest Periods hereunder shall be in such amounts and
be made pursuant to such elections so that, after giving effect thereto,
(a) the aggregate principal amount of the Term Loans comprising each
Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of
$1,000,000 in excess thereof and (b) there shall be no more than five
Eurodollar Tranches.
2.9 Interest Rates and Payment Dates. (a) Each Eurodollar Term
Loan shall bear interest for each day during each Interest Period with
respect thereto at a rate per annum equal to the Eurodollar Rate
determined for such day plus 3.75%. <PAGE>
32
(b) Each ABR Term Loan shall bear interest at a rate per annum
equal to the Alternate Base Rate plus 2.75%.
(c) During the continuation of any Event of Default pursuant to
Section 7(a), the Company shall pay, on demand, interest (after as well as
before judgment to the extent permitted by law) on (i) the principal
amount of all outstanding Term Loans at a rate per annum equal to the rate
of interest otherwise applicable in respect of such Term Loans pursuant to
Section 2.9(a) or (b), as the case may be, plus 2% and (ii) to the extent
permitted by applicable law, all interest and other amounts due and unpaid
hereunder, at a rate per annum equal to the Alternate Base Rate plus
4.75%; provided, however, that, on and after the expiration of the
Interest Period applicable to any Eurodollar Term Loan outstanding on the
date of occurrence of such Event of Default, the principal amount of such
Term Loan shall, during the continuation of such Event of Default, bear
interest at a rate per annum equal to the Alternate Base Rate plus 4.75%.
(d) Interest shall be payable in arrears on each Interest Payment
Date; provided that interest accruing pursuant to paragraph (c) of this
Section 2.9 shall be payable on demand.
2.10 Computation of Interest and Fees. (a) Interest on the Term
Loans and commitment fees shall be calculated on the basis of the actual
number of days elapsed over a year of 360 days or, on any date when the
Alternate Base Rate is determined by reference to the Prime Rate, a year
of 365 or 366 days, as appropriate. Any change in the interest rate on a
Term Loan resulting from a change in the Alternate Base Rate or the
Eurocurrency Reserve Requirements shall become effective as of the opening
of business on the day on which such change in the Alternate Base Rate is
announced or such change in the Eurocurrency Reserve Requirements becomes
effective, as the case may be.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Company and the Lenders in the absence of manifest error.
2.11 Inability to Determine Interest Rate. In the event that prior
to the first day of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Company)
that, by reason of circumstances affecting the relevant market,
adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, or
(b) the Administrative Agent shall have received notice from
the Required Lenders that the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly
reflect the cost to such Lenders (as conclusively certified by such
Lenders) of making or maintaining their affected Term Loans during
such Interest Period,
the Administrative Agent shall give telex, telecopy or telephonic notice
thereof to the Company and the Lenders as soon as practicable thereafter.
If such notice is given (x) any Eurodollar Term Loans requested to be made
on the first day of such Interest Period shall be made as ABR Term Loans,<PAGE>
33
(y) any Loans that were to have been converted on the first day of such
Interest Period to Eurodollar Term Loans shall be continued as ABR Term
Loans and (z) any outstanding Eurodollar Term Loans shall be converted, on
the first day of such Interest Period, to ABR Term Loans. Until such
notice has been withdrawn by the Administrative Agent, no further
Eurodollar Term Loans shall be made or continued as such, nor shall the
Company have the right to convert Term Loans to Eurodollar Term Loans.
2.12 Pro Rata Treatment and Payments. The borrowing by the Company
from the Lenders hereunder and the payment by the Company of commitment
fees hereunder shall be made pro rata according to the respective
Commitment Percentages of the Lenders. Except as otherwise expressly
provided herein, each payment (including each prepayment) by the Company
on account of principal of and interest on the Term Loans shall be made
pro rata according to the respective outstanding principal amounts of the
Term Loans then held by the Lenders. All payments (including prepayments)
to be made by the Company hereunder and under the Term Notes, whether on
account of principal, interest, fees or otherwise, shall be made without
setoff or counterclaim and shall be made prior to 1:30 P.M., New York City
time, on the due date thereof to the Administrative Agent, for the account
of the Lenders, at the Administrative Agent's office specified in Section
10.2, in Dollars and in immediately available funds. The Administrative
Agent shall distribute such payments to the Lenders promptly upon receipt
in like funds as received. If any payment hereunder (other than payments
on the Eurodollar Term Loans) becomes due and payable on a day other than
a Business Day, such payment shall be extended to the next succeeding
Business Day, and, with respect to payments of principal, interest thereon
shall be payable at the then applicable rate during such extension. If
any payment on a Eurodollar Term Loan becomes due and payable on a day
other than a Business Day, the maturity thereof shall be extended to the
next succeeding Business Day (in which case interest thereon shall be
payable at the then applicable rate during such extension) unless the
result of such extension would be to extend such payment into another
calendar month, in which event such payment shall be made on the
immediately preceding Business Day.
2.13 Requirements of Law. (a) In the event that any change after
the Effective Date in any Requirement of Law or in the interpretation or
application thereof or compliance by any Lender with any request or
directive (whether or not having the force of law) from any central bank
or other Governmental Authority:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement or any Eurodollar Term
Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for taxes covered by Section 2.14
and changes in the rate of tax on the net income or earnings of such
Lender (including, without limitation, changes in the U.S. branch
profits tax));
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against
assets held by, deposits or other liabilities in or for the account
of, advances, loans or other extensions of credit by, or any other
acquisition of funds by, any office of such Lender which is not<PAGE>
34
otherwise included in the determination of the Eurodollar Rate
hereunder; or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such
Lender, by an amount which such Lender deems to be material, of making,
converting into, continuing or maintaining Eurodollar Term Loans, or to
reduce any amount receivable hereunder in respect thereof, then, in any
such case, the Company shall promptly pay such Lender, within 15 days
after its demand, any additional amounts necessary to compensate such
Lender for such increased cost or reduced amount receivable. If any Lender
has demanded compensation under this Section 2.13(a) with respect to any
Eurodollar Term Loan, the Company shall have the option to convert
immediately such Eurodollar Term Loan into an ABR Term Loan until the
circumstances giving rise to such demand for compensation no longer apply;
provided, that (i) no such conversion shall affect the Company's
obligation to pay compensation as provided herein which is due with
respect to the period prior to such conversion and (ii) on the date of
such conversion the Company shall pay to the Administrative Agent for the
benefit of the relevant Lender accrued interest on such Eurodollar Term
Loan to the date of conversion, together with any amounts payable pursuant
to Section 2.15.
(b) In the event that any Lender shall have determined that any
change after the Effective Date in any Requirement of Law regarding
capital adequacy or in the interpretation or application thereof or
compliance by such Lender or any corporation controlling such Lender with
any request or directive regarding capital adequacy (whether or not having
the force of law) from any Governmental Authority made subsequent to the
Effective Date does or shall have the effect of reducing the rate of
return on such Lender's or such corporation's capital as a consequence of
its obligations hereunder to a level below that which such Lender or such
corporation could have achieved but for such change or compliance (taking
into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Lender to be
material, then from time to time, after submission by such Lender to the
Company (with a copy to the Administrative Agent) of a written request
therefor, the Company shall pay to such Lender, within 15 days after its
demand, such additional amount or amounts as will compensate such Lender
for such reduction.
(c) Prior to making any demand for payment pursuant to this Section
2.13 with respect to Eurodollar Term Loans, any Lender making a demand for
payment shall designate a different lending office with respect to
Eurodollar Term Loans if such designation will avoid the need for making
such demand and will not, in the sole judgment of such Lender, be illegal
or otherwise disadvantageous to such Lender.
(d) A certificate as to any additional amounts payable pursuant to
this Section 2.13 submitted by any Lender, through the Administrative
Agent, to the Company shall be conclusive in the absence of manifest
error. The covenants contained in this Section 2.13 shall survive the
termination of this Agreement and the payment of the Term Notes and all
other amounts payable hereunder.<PAGE>
35
2.14 Taxes. (a) All payments made by the Company under this
Agreement and the Term Notes to the Administrative Agent or any Lender
shall be made free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding taxes imposed on or with respect to or
measured by the net income of the Administrative Agent or any Lender and
franchise taxes imposed on the Administrative Agent or any Lender, as the
case may be, if the Administrative Agent or such Lender is subject to such
net income or franchise tax by reason of a present or former connection
between the jurisdiction of the government or taxing authority imposing
such tax and the Administrative Agent or such Lender (excluding a
connection arising solely from the Administrative Agent or such Lender
having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or the Term Notes) or any
political subdivision or taxing authority thereof or therein (all such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions and
withholdings being hereinafter called "Taxes"). If any Taxes are required
to be withheld from any amounts payable to the Administrative Agent or any
Lender hereunder or under the Term Notes, the amounts so payable to the
Administrative Agent or such Lender shall be increased to the extent
necessary to yield to the Administrative Agent or such Lender after making
all required deductions (including deductions applicable to additional
sums payable under this Section 2.14) interest or any such other amounts
payable hereunder at the rates or in the amounts specified in this
Agreement and the Term Notes. Whenever any Taxes are payable by the
Company, as promptly as practicable thereafter the Company shall send to
the Administrative Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official
receipt received by the Company showing payment thereof if such a receipt
is issued by the relevant taxing authority and, if not, other
documentation reasonably satisfactory to the Administrative Agent or such
Lender, as the case may be, evidencing such payment. If the Company fails
to pay any Taxes when due to the appropriate taxing authority or fails to
remit to the Administrative Agent such required receipts or other
documentary evidence, the Company shall indemnify the Administrative Agent
and the Lenders for any incremental taxes, interest or penalties that may
become payable by the Administrative Agent or any Lender as a result of
any such failure. The agreements in this Section shall survive the
termination of this Agreement and the payment of the Term Notes and all
other amounts payable hereunder.
(b) Each Lender (or Transferee) that is not a citizen or resident
of the United States of America, a corporation, partnership or other
entity created or organized in or under the laws of the United States of
America (or any state thereof or the District of Columbia), or any estate
or trust that is subject to U.S. federal income taxation regardless of the
source of its income (a "Non-U.S. Lender") shall deliver to the Company
and the Administrative Agent (i) two copies of either U.S. Internal
Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S.
Lender claiming exemption from U.S. federal withholding tax under Section
871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a Form W-8, or any subsequent versions thereof or successors
thereto (and, if such Non-U.S. Lender delivers a Form W-8 pursuant to this
clause (i) in lieu of a Form 1001 or Form 4224, an annual certificate<PAGE>
36
representing that such Non-U.S. Lender is not a "bank" for purposes of
Section 881(c) of the Code, is not a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Code) of the Company and is not a
controlled foreign corporation related to the Company (within the meaning
of Section 864(d)(4) of the Code)), properly completed and duly executed
by such Non-U.S. Lender claiming complete exemption from U.S. federal
withholding tax on all payments by the Company under this Agreement and
the other Term Loan Documents, (ii) an Internal Revenue Service Form W-8
or W-9 or successor applicable forms and (iii) any other documentation as
may be required under applicable U.S. tax law and regulations to evidence
complete exemption from U.S. federal withholding tax on all payments by
the Company under this Agreement and the other Term Loan Documents. Such
forms and other documentation shall be delivered by each Non-U.S. Lender
on or before the date it becomes a party to this Agreement (or, in the
case of any Participant, on or before the date such Participant purchases
the related participation). Each such Lender shall certify, in the case
of a Form W-8 or W-9, that it is entitled to an exemption from United
States backup withholding tax. In addition, each Non-U.S. Lender shall
deliver such forms promptly upon the obsolescence or invalidity of any
form or other documentation previously delivered by it, and shall deliver
such additional forms and documentation as may subsequently be required
under applicable U.S. tax law and regulations to evidence complete
exemption from U.S. federal withholding tax on all payments by the Company
under this Agreement and the other Term Loan Documents unless in any such
case any Tax Law Change (as defined below) has occurred prior to the date
on which any such delivery would otherwise be required which renders all
such forms and other documentation previously delivered by it inapplicable
or which would prevent such Lender from duly completing and delivering any
such form or other documentation previously delivered by it with respect
to it and such Lender so advises the Company and the Administrative Agent.
Unless the Administrative Agent or the relevant Lender shall have
delivered to the Company the forms and other documentation referred to
above, the Company or the Administrative Agent shall withhold taxes from
payments to such Lender hereunder at the applicable statutory rate and the
Company shall not be required to pay any additional amounts to such
Lender pursuant to Section 2.14(a); provided that this sentence shall not
apply, and the Company shall be required to pay additional amounts to such
Lender pursuant to Section 2.14(a), if the Administrative Agent or such
Lender is unable to deliver such forms and other documentation as a result
of a Tax Law Change. For purposes of this Section 2.14(b), "Tax Law
Change" means, with respect to any Lender, a change in or amendment to the
Code or any tax treaty to which the United States is a party that occurs
after the date such Lender became a Lender hereunder the effect of which
is to cause any payment to such Lender to be subject to U.S. federal
withholding tax. Where, because of a Tax Law Change, the Administrative
Agent or any Lender is no longer entitled to a complete exemption from
U.S. federal withholding tax on payments by the Company to it but is
entitled to a reduced rate of taxation with respect to such payments, the
Administrative Agent or such Lender shall deliver to the Company such
documentation (including, without limitation, a Form 1001, if applicable)
as may be required under applicable U.S. tax law and regulations to
evidence such reduced rate of taxation, and, if the Administrative Agent
or such Lender fails to do so, the Company shall not be required to pay
additional amounts to the Administrative Agent or such Lender pursuant to
this Section 2.14(b) in an amount in excess of the additional amounts it<PAGE>
37
would have been required to so pay if the Administrative Agent or such
Lender had provided such documentation.
(c) If any Lender (or Transferee) shall have determined that it is
entitled to claim a refund from a Governmental Authority in respect of
Taxes with respect to which the Company has paid additional amounts
pursuant to Section 2.14(a), it shall promptly notify the Company of the
availability of such refund claim and shall, within 30 days after receipt
of a request by the Company, make a claim to such Governmental Authority
for such refund at the Company's expense. If any Lender (or Transferee)
receives a refund (including pursuant to a claim for refund made pursuant
to the preceding sentence) in respect of any Taxes with respect to which
the Company has paid additional amounts pursuant to Section 2.14(a), it
shall within 30 days from the date of such receipt pay over such refund to
the Company (but only to the extent of additional amounts paid by the
Company under Section 2.14(a) with respect to the Taxes giving rise to
such refund), net of all out-of-pocket expenses of the Lender (or
Transferee) and without interest (other than interest paid by the relevant
Governmental Authority with respect to such refund); provided, however,
that the Company, upon the request of the Lender (or Transferee), agrees
to repay the amount paid over to the Company (plus penalties, interest or
other charges) to the Lender (or Transferee) in the event the Lender (or
Transferee) is required to repay such refund to such Governmental
Authority.
(d) Notwithstanding anything to the contrary in this Section 2.14,
if the Internal Revenue Service determines that a Lender (or Transferee)
is a conduit entity knowingly participating in a conduit financing
arrangement as defined in Section 7701(1) of the Code and the regulations
thereunder and unless the Company expressly consented to such arrangement
with full knowledge of the relevant facts of such arrangement at the time
it was entered into (a "Conduit Financing Arrangement"), then the Company
shall have no obligation to pay additional amounts to the Lender (or
Transferee) for any Taxes with respect to any payments hereunder to the
extent the amount of such Taxes exceeds the amount that would have
otherwise been withheld or deducted had the Internal Revenue Service not
made such a determination. Each Lender (or Transferee) represents and
agrees that, at all times during the term of this Agreement, it is not and
will not be a conduit entity participating in a conduit financing
arrangement (as defined in Section 7701(1) of the Code and the regulations
thereunder) with respect to any borrowings hereunder. The agreement in
this Section 2.14(d) shall survive the termination of this Agreement and
the payment of the Term Loans and all other amounts payable hereunder.
2.15 Indemnity. The Company agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may
sustain or incur as a consequence of (a) default by the Company in payment
when due of the principal amount of or interest on any Eurodollar Term
Loan, (b) default by the Company in making a borrowing of, conversion into
or continuation of Eurodollar Term Loans after the Company has given a
notice requesting the same in accordance with the provisions of this
Agreement, (c) default by the Company in making any prepayment after the
Company has given a notice thereof in accordance with the provisions of
this Agreement or (d) the making of a prepayment or conversion of
Eurodollar Term Loans on a day which is not the last day of an Interest
Period with respect thereto, including, without limitation, in each case,<PAGE>
38
any such loss or expense arising from the reemployment of funds obtained
by it or from fees payable to terminate the deposits from which such funds
were obtained. Calculation of all amounts payable to a Lender under this
Section 2.15 shall be made as though such Lender had actually funded its
relevant Eurodollar Term Loan through the purchase of a deposit bearing
interest at the Eurodollar Rate in an amount equal to the amount of such
Eurodollar Term Loan and having a maturity comparable to the relevant
Interest Period; provided, however, that each Lender may fund each of its
Eurodollar Term Loans in any manner it sees fit, and the foregoing
assumption shall be utilized only for the calculation of amounts payable
under this Section 2.15. The Company shall endeavor to arrange the
borrowings and repayments pursuant to this Agreement so as to minimize any
amounts which would become payable pursuant to this Section 2.15. A
certificate as to any amounts payable pursuant to this Section 2.15
submitted by any Lender, through the Administrative Agent, shall be
conclusive in the absence of manifest error. The agreements in this
Section 2.15 shall survive the termination of this Agreement and the
payment of the Term Notes and all other amounts payable hereunder.
2.16 Replacement Lenders. In the event that the Company becomes
obligated to pay additional amounts to any Lender pursuant to Section 2.13
or 2.14, then, unless such Lender has theretofore removed or cured the
conditions which resulted in the obligation to pay such additional
amounts, the Company may, on ten Business Days' prior written notice to
the Administrative Agent and such Lender, cause such Lender to (and such
Lender shall) assign pursuant to Section 10.6 all of its rights and
obligations under this Agreement to another Person which is willing to
become a Lender and is acceptable (which acceptance shall not be
unreasonably withheld) to the Administrative Agent, for a purchase price
equal to the outstanding principal amount of the Term Loans payable to
such Lender plus any accrued but unpaid interest on such Term Loans and
any other amounts payable to such Lender under this Agreement, provided
that any expenses or other amounts owing to such Lender pursuant to any
indemnification provision hereof (including, if applicable, Section 2.15)
shall be for the account of the Company.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter into this Agreement and to make or
maintain the Term Loans, Holdings and the Company hereby jointly and
severally represent and warrant to the Administrative Agent and each
Lender that:
3.1 Financial Condition. (a) The unaudited pro forma consolidated
balance sheet of Holdings and its consolidated Subsidiaries as at December
31, 1994 (including the notes thereto) (the "Pro Forma Balance Sheet"),
copies of which have heretofore been furnished to each Lender, has been
prepared giving effect (as if such events had occurred on such date) to
(i) the Indebtedness of the Company and its Subsidiaries contemplated to
be incurred on the Effective Date, (ii) the repayment or defeasance of any
Indebtedness of Holdings, the Company or its Subsidiaries contemplated to
occur on the Effective Date and (iii) the payment of fees and expenses in
connection with the foregoing. The Pro Forma Balance Sheet is based on
the best information available to Holdings and the Company as of the date
of delivery thereof, and presents fairly on a pro forma basis the
estimated financial position of Holdings and its consolidated Subsidiaries<PAGE>
39
as at December 31, 1994, assuming that the events specified in the
preceding sentence had actually occurred at December 31, 1994.
(b) The consolidated balance sheets of Holdings and its
consolidated Subsidiaries and of the Company and its consolidated
Subsidiaries as at December 31, 1993 and December 31, 1994 and the related
consolidated statements of income and stockholders' equity and cash flows
for the fiscal years ended on such dates, reported on by Ernst & Young,
copies of which have heretofore been furnished to each Lender, present
fairly the consolidated financial condition of Holdings and its
consolidated Subsidiaries or the Company and its consolidated
Subsidiaries, as the case may be, as at such dates, and the consolidated
results of their operations and cash flows for the fiscal years then
ended. All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied
consistently throughout the periods involved (except as approved by such
accountants and as disclosed therein). Neither Holdings, the Company nor
any of their respective consolidated Subsidiaries had, at the date of the
most recent balance sheet referred to above, any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-term
lease or unusual forward or long-term commitment, including, without
limitation, any interest rate or foreign currency swap or exchange
transaction, which is not reflected in the foregoing statements or in the
notes thereto other than such obligations which are not required to be
disclosed under GAAP (which obligations are described on Schedule 3.1(b)).
During the period from December 31, 1994 to and including the Effective
Date there has been no sale, transfer or other disposition by Holdings,
the Company or any of their respective consolidated Subsidiaries of any
material part of its business or property and no purchase or other
acquisition of any business or property (including any Capital Stock of
any other Person) material in relation to the consolidated financial
condition of Holdings and its consolidated Subsidiaries or the Company and
its consolidated Subsidiaries, as the case may be, at December 31, 1994
(except for any sale, transfer or other disposition made in connection
with the Capital Lease Financing Facility).
(c) The projections dated March 2, 1995 furnished to the Lenders
were prepared based on good faith assumptions and the best information
available to Holdings and the Company on the date thereof, and all
assumptions and estimates set forth therein, on such date, were believed
by management of Holdings and the Company to be reasonable in light of
then current conditions and reflected Holdings' and the Company's
reasonable estimate of the results of operations and other information
projected therein, it being recognized by the Lenders that such
projections as they relate to future events are not to be viewed as fact
and that actual results during the period or periods covered by such
projections may differ from the projected results set forth therein.
3.2 No Change. Since December 31, 1994 (a) there has been no
development or event, which has had or could reasonably be expected to
have a Material Adverse Effect and (b) no dividends or other distributions
have been declared, paid or made upon the Capital Stock of Holdings or the
Company nor has any of the Capital Stock of the Company been redeemed,
retired, purchased or otherwise acquired for value by Holdings, the
Company or any of its Subsidiaries, except as expressly permitted by
Section 6.6.<PAGE>
40
3.3 Corporate Existence; Compliance with Law. Each of Holdings,
the Company and its Subsidiaries (a) is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its
organization, (b) has the corporate power and authority, and the legal
right, to own, pledge, mortgage and operate its property, to lease the
property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in
good standing under the laws of each jurisdiction where its ownership,
lease or operation of property or the conduct of its business requires
such qualification except where the failure to be so qualified and/or in
good standing, in the aggregate, could not reasonably be expected to have
a Material Adverse Effect and (d) is in compliance with all Requirements
of Law except to the extent that the failure to comply therewith could
not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations. (a)
Each Loan Party has the corporate power and authority, and the legal
right, to make, deliver and perform each Term Loan Document to which it is
a party and, in the case of the Company, to borrow hereunder and has taken
all necessary corporate action to authorize the execution, delivery and
performance of each such Term Loan Document and, in the case of the
Company, to authorize the borrowing for its account on the terms and
conditions of this Agreement.
(b) No consent or authorization of, filing with or other act by or
in respect of, any Governmental Authority or any other Person is required
in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of this Agreement or any
other Term Loan Document.
(c) This Agreement and the other Term Loan Documents have been duly
executed and delivered on behalf of each Loan Party party thereto. This
Agreement and the other Term Loan Documents constitute a legal, valid and
binding obligation of each Loan Party party thereto, enforceable against
each such Loan Party in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
3.5 No Legal Bar. Except as set forth in Schedule 3.5, the
execution, delivery and performance of this Agreement and the other Term
Loan Documents, the borrowings hereunder and the use of the proceeds
thereof will not violate any Requirement of Law or material Contractual
Obligation of Holdings, the Company or of any of its Subsidiaries and will
not result in, or require, the creation or imposition of any Lien on any
of their respective properties or revenues pursuant to any such
Requirement of Law or Contractual Obligation.
3.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is
pending or, to the knowledge of Holdings or the Company, threatened by or
against Holdings, the Company or any of its Subsidiaries or against any of
their respective properties or revenues (a) with respect to this Agreement
or any other Term Loan Document, the Term Loans or the use of the proceeds<PAGE>
41
thereof or any Lien contemplated by the Term Loan Documents or (b) which
has a reasonable possibility of an adverse determination and, if adversely
determined, (i) would affect the legality, validity or enforceability of
any Term Loan Document or (ii) would have a Material Adverse Effect.
3.7 No Default. Neither Holdings, the Company nor any of its
Subsidiaries is in default or has received any notice of default under or
with respect to any of its Contractual Obligations in any respect which
could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.
3.8 No Burdensome Restrictions. No Requirement of Law or
Contractual Obligation applicable to Holdings, the Company or any of its
Subsidiaries could reasonably be expected to have a Material Adverse
Effect.
3.9 Taxes. Each of Holdings, the Company and its Subsidiaries has
filed or caused to be filed all tax returns which are required to be filed
and has paid all taxes shown to be due and payable on said returns or on
any assessments made against it or any of its property and all other
taxes, fees or other charges imposed on it or any of its property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and
with respect to which reserves in conformity with GAAP have been provided
on the books of Holdings, the Company or its Subsidiaries, as the case may
be, and the non-payment of which does not have a reasonable likelihood of
having a Material Adverse Effect); no tax Lien has been filed with respect
to any material tax liability on the part of Holdings, the Company or any
of its Subsidiaries; and, to the knowledge of Holdings or the Company, no
proposed material tax assessment is pending against Holdings, the Company
or any of its Subsidiaries and all potential tax liabilities are
adequately provided for on the books of Holdings, the Company or its
Subsidiaries, as the case may be.
3.10 Federal Regulations. No part of the proceeds of the Term
Loans will be used for "purchasing" or "carrying" any "margin stock"
within the respective meanings of each of the quoted terms under
Regulation G, T, U or X of the Board as now and from time to time
hereafter in effect or for any purpose which violates the provisions of
the Regulations of the Board. If requested by any Lender or the
Administrative Agent, the Company will furnish to the Administrative Agent
and each Lender a statement to the foregoing effect in conformity with the
requirements of the appropriate FR Form referred to in said Regulation G,
T, U or X.
3.11 Labor Matters. There are no strikes or other labor disputes
against Holdings, the Company or any of its Subsidiaries pending or, to
the knowledge of Holdings or the Company, threatened that (individually or
in the aggregate) could reasonably be expected to have a Material Adverse
Effect. Hours worked by and payment made to employees of Holdings, the
Company and its Subsidiaries have not been in violation of the Fair Labor
Standards Act or any other applicable Requirement of Law dealing with such
matters that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect. All payments due from
Holdings, the Company or any of its Subsidiaries on account of employee
health and welfare insurance that (individually or in the aggregate) could<PAGE>
42
reasonably be expected to have a Material Adverse Effect if not paid have
been paid or accrued as a liability on the books of Holdings, the Company
or such Subsidiary.
3.12 ERISA. No Reportable Event has occurred since March 1, 1990
with respect to any Plan which, if then terminated, has had or could
reasonably be expected to have a Material Adverse Effect, and each Plan
has complied in all respects with the applicable provisions of ERISA and
the Code except where such failure to comply could not reasonably be
expected to have a Material Adverse Effect. The actuarial present value
of all accrued benefits under each Single Employer Plan maintained by the
Company or any Commonly Controlled Entity (based on those assumptions used
to fund the Plans) did not, as of the last annual valuation date prior to
the date on which this representation is made or deemed made, exceed the
value of the assets of such Plan. Neither the Company nor any Commonly
Controlled Entity has had or could reasonably be expected to have a
complete or partial withdrawal from any Multiemployer Plan, and neither
the Company nor any Commonly Controlled Entity would become subject to any
liability under ERISA if the Company or any such Commonly Controlled
Entity were to withdraw completely from all Multiemployer Plans as of the
valuation date most closely preceding the date on which this
representation is made or deemed made where such withdrawal or liability
could reasonably be expected to have a Material Adverse Effect. No such
Multiemployer Plan is in a Reorganization or an Insolvency where the
effect of such Reorganization or Insolvency could reasonably be expected
to have a Material Adverse Effect.
3.13 Investment Company Act; Other Regulations. No Loan Party is
an "investment company", or a company "controlled" by an "investment
company" (other than one which is exempt from the provisions of the
Investment Company Act of 1940, as amended), within the meaning of the
Investment Company Act of 1940, as amended. No Loan Party is subject to
regulation under any federal or state statute or regulation which limits
its ability to incur Indebtedness.
3.14 Subsidiaries. The Subsidiaries of Holdings listed on Schedule
3.14 constitute all the Subsidiaries of Holdings on the Effective Date.
3.15 Purpose of Term Loans. The proceeds of the Term Loans will be
used for the purposes identified in the Preliminary Statement.
3.16 Environmental Matters. Each of the representations and
warranties set forth in paragraphs (a) through (f) below is true and
correct with respect to each parcel of real property owned or operated by
the Company or any of its Subsidiaries (collectively, the "Properties"):
(a) The Properties do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute or constituted a violation
of, or (ii) could reasonably be expected to give rise to liability under,
Environmental Laws, except to the extent that such violations and
liabilities, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(b) (i) The Properties and all operations at the Properties are in
compliance in all material respects and in the last three years have been
in compliance in all material respects with all Environmental Laws, and<PAGE>
43
(ii) there is no contamination at or under the Properties, or violation of
any Environmental Law with respect to the Properties or the business of
Holdings, the Company or any of its Subsidiaries, except to the extent
that such contamination and violations, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(c) Neither Holdings, the Company nor any of its Subsidiaries has
received any notice of violation, alleged violation, non-compliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to the Properties or the
business of Holdings, the Company or any of its Subsidiaries or with
regard to any Person or entity whose liabilities for environmental matters
Holdings, the Company or any of its Subsidiaries has retained or assumed,
in whole or in part, contractually, by operation of law or otherwise,
which, in the aggregate, could reasonably be expected to have a Material
Adverse Effect, nor does Holdings or the Company have knowledge or reason
to believe that any such notice will be received or is being threatened.
(d) Hazardous Materials have not been transported or disposed of
from the Properties, nor have Hazardous Materials been generated, treated,
stored or disposed of at, on or under any of the Properties, in violation
of any Environmental Law or in a manner that could reasonably give rise to
liability under any Environmental Law, nor do Holdings, the Company or any
of its Subsidiaries reasonably believe that they have retained or assumed
any liability, contractually, by operation of law or otherwise, with
respect to the generation, treatment, storage or disposal of Hazardous
Materials, except to the extent that the foregoing, in the aggregate,
could not reasonably be expected to have a Material Adverse Effect.
(e) (i) No material judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of Holdings or the
Company, threatened, under any Environmental Law to which Holdings, the
Company or any of its Subsidiaries is or will be named a party with
respect to (x) the Properties, (y) the business of Holdings, the Company
or any of its Subsidiaries or (z) any liabilities pursuant to
Environmental Laws reasonably believed by Holdings, the Company or any of
its Subsidiaries to be retained or assumed by Holdings, the Company or any
of its Subsidiaries, contractually, by operation of law or otherwise, and
(ii) there are no material consent decrees or other decrees, consent
orders, administrative orders or other orders, or other administrative or
judicial requirements outstanding under any Environmental Law with respect
to (x) the Properties, (y) the business of Holdings, the Company or any of
its Subsidiaries or (z) any liabilities pursuant to Environmental Laws
reasonably believed by Holdings, the Company or any of its Subsidiaries to
be retained or assumed by Holdings, the Company or any of its
Subsidiaries, contractually, by operation of law or otherwise.
(f) There has been no Release or threat of Release of Hazardous
Materials at or from the Properties, or arising from or in connection with
the Properties or otherwise in connection with the business of Holdings,
the Company or its Subsidiaries in violation of any Environmental Law in a
manner that, in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
3.17 Accuracy of Information. No factual statement or information
contained in this Agreement, any other Term Loan Document, the<PAGE>
44
Confidential Information Memorandum (as the same may have been
supplemented prior to the Effective Date) or any other document,
certificate or written statement furnished to the Administrative Agent or
the Lenders or any of them, by or on behalf of any Loan Party for use in
connection with the transactions contemplated by this Agreement or the
other Term Loan Documents (including, without limitation, any financial
information furnished pursuant to Section 5.1), other than trade data
contained in the Confidential Information Memorandum which relates to any
Person which is not a Loan Party or an Affiliate thereof, contained as of
the date such statement, information, document or certificate was so
furnished (or, in the case of the Confidential Information Memorandum, as
of the Effective Date) any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements
contained herein or therein not misleading. The projections and pro forma
financial information contained in the materials referenced above are
based upon good faith estimates and assumptions believed by management of
the Company to be reasonable at the time made, it being recognized by the
Lenders that such financial information as it relates to future events is
not to be viewed as fact and that actual results during the period or
periods covered by such financial information may differ from the
projected results set forth therein. There is no fact known to any Loan
Party that could reasonably be expected to have a Material Adverse Effect
that has not been expressly disclosed herein, in the other Term Loan
Documents, in the Confidential Information Memorandum or in such other
documents, certificates and statements furnished to the Administrative
Agent and the Lenders for use in connection with the transactions
contemplated hereby and by the other Term Loan Documents.
3.18 Solvency. Each Loan Party is, and after giving effect to the
incurrence or assumption of all Indebtedness and obligations being
incurred or assumed in connection herewith will be and will continue to
be, Solvent.
3.19 Insurance. Holdings, the Company and each of its Subsidiaries
maintain with financially sound and reputable insurance companies
insurance on all its properties in at least such amounts and against at
least such risks (but, including in any event, public liability, product
liability and business interruption) as are usually insured against in the
same general area by companies engaged in the same or a similar business.
SECTION 4. CONDITIONS PRECEDENT
4.1 Conditions to Effectiveness. The effectiveness of this
Agreement is subject to the satisfaction of the following conditions
precedent on or prior to the Effective Date:
(a) Agreement. The Administrative Agent shall have received
(i) this Agreement, duly executed and delivered by each Lender and
by a duly authorized officer of Holdings and the Company, with a
counterpart for each Lender and (ii) a Term Note for each Lender,
duly executed and delivered by a duly authorized officer of the
Company.
(b) Financial Statements. The Administrative Agent and each
Lender shall have received copies of each of the financial
statements referred to in Section 3.1.<PAGE>
45
(c) 16% Debentures. The Administrative Agent shall be
reasonably satisfied that Holdings shall be in a position to
establish, on or promptly after the Effective Date, a redemption
date (the "Redemption Date") on or prior to May 31, 1995 for the
portion of the 16% Debentures expected to be redeemed with the
proceeds of the Term Loans.
(d) Closing Certificates. The Administrative Agent shall
have received a Closing Certificate of each Loan Party,
substantially in the form of Exhibit B, with appropriate insertions
and attachments (which attachments shall be in form and substance
reasonably satisfactory to the Administrative Agent).
(e) Payment of Fees. The Administrative Agent shall have
received the fees to be received on the Effective Date referred to
in Section 2.4, and the Administrative Agent shall have been
reimbursed for all syndication, legal and other fees, costs and
expenses of the kind described in Section 10.5 to the extent
invoiced on or prior to the Effective Date.
(f) Legal Opinions. The Administrative Agent shall have
received, with a counterpart for each Lender, the following executed
legal opinions:
(i) the executed legal opinion of Cravath,
Swaine & Moore, counsel to Holdings, substantially
in the form of Exhibit C-1; and
(ii) the executed legal opinion of the general counsel
of the Company, substantially in the form of Exhibit C-2.
Each such legal opinion shall cover such other matters incident to
the transactions contemplated by this Agreement and the other Term
Loan Documents as the Administrative Agent may reasonably require.
4.2 Conditions to Term Loans. The agreement of each Lender to
make its portion of the Term Loans is subject to the satisfaction of the
following conditions precedent on the Term Loan Borrowing Date:
(a) No Orders, etc. No order, judgment or decree shall
purport to enjoin or restrain (i) any Lender from making its portion
of the Term Loans on such date or (ii) Holdings from redeeming on
such date a portion of the 16% Debentures having an aggregate face
amount equal to the aggregate amount of such Term Loans.
(b) Absence of Certain Defaults. There shall not have
occurred (i) any Default or Event of Default pursuant to Section
7(a) or (f) or (ii) any payment default in respect of the 10% Senior
Notes.
(c) No Acceleration. No Person shall have declared any
Indebtedness described in Section 7(e) to be due and payable, in
whole or in part, prior to the stated maturity of such Indebtedness.<PAGE>
46
(d) Redemption Date. Holdings shall have established the
Redemption Date in accordance with the 16% Debenture Indenture.
The borrowing of Term Loans hereunder shall constitute a representation
and warranty by the Company as of the Term Loan Borrowing Date that the
conditions contained in this Section 4.2 have been satisfied.
SECTION 5. AFFIRMATIVE COVENANTS
Holdings and the Company hereby jointly and severally agree that, so
long as any Term Loan Commitment remains in effect or any Term Loan
remains outstanding and unpaid or any other amount is owing to any Lender
or the Administrative Agent hereunder, Holdings and the Company shall, and
shall cause each of their respective Subsidiaries to, unless the Required
Lenders shall otherwise consent in writing:
5.1 Financial Statements. In the case of Holdings and the
Company, furnish to each Lender:
(a) as soon as available, but in any event within 90 days
after the end of each fiscal year of Holdings or the Company, as the
case may be, a copy of the consolidated balance sheet of Holdings
and its consolidated Subsidiaries and of the Company and its
consolidated Subsidiaries as at the end of such year and the related
consolidated statements of income and stockholders' equity and cash
flows for such year, setting forth in each case in comparative form
the figures for the previous year, reported on by Ernst & Young or
other independent certified public accountants acceptable to the
Required Lenders (which report shall not be qualified in any
material respect); and
(b) as soon as available, but in any event not later than 45
days after the end of each of the first three quarterly periods of
each fiscal year of Holdings or the Company, as the case may be, the
unaudited consolidated balance sheet of Holdings and its
consolidated Subsidiaries and of the Company and its consolidated
Subsidiaries as at the end of such quarter and the related unaudited
consolidated statements of income and stockholders' equity and cash
flows for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative
form the figures for the previous year, certified by a Responsible
Officer of Holdings or the Company, as applicable, as fairly
presenting the financial condition and results of operations of
Holdings or the Company, as the case may be, on a consolidated basis
in accordance with GAAP (subject to normal year-end audit
adjustments);
all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein and
with prior periods (except as approved by such accountants or officer, as
the case may be, and disclosed therein). It is understood that the
obligation to deliver any items described above which are contained in
Holdings' Form 10-K, as filed with the Securities and Exchange Commission
(in the case of Section 5.1(a)) or Holdings' Form 10-Q, as filed with the<PAGE>
47
Securities and Exchange Commission (in the case of Section 5.1(b)), may be
satisfied by delivery of such Form 10-K or Form 10-Q, as the case may be.
5.2 Certificates; Other Information. In the case of the Company,
or, if applicable, Holdings, furnish to each Lender:
(a) concurrently with the delivery of the financial
statements referred to in Section 5.1(a), (i) a certificate of the
independent certified public accountants reporting on such financial
statements stating that in making the examination necessary therefor
no knowledge was obtained of any Default or Event of Default, except
as specified in such certificate and (ii) copies of any management
letters when delivered to Holdings or the Company in connection with
such examination;
(b) concurrently with the delivery of the financial
statements referred to in Sections 5.1(a) and 5.1(b), (i) a
certificate of a Responsible Officer of each of Holdings and the
Company stating that, to the best of each such Responsible Officer's
knowledge, each Loan Party during such period has observed or
performed all of its covenants and other agreements, and satisfied
every condition, contained in this Agreement and in the other Term
Loan Documents to be observed, performed or satisfied by it, and
that such Responsible Officer has obtained no knowledge of any
Default or Event of Default except as specified in such certificate
and (ii) a Compliance Certificate containing all information
necessary for determining compliance by Holdings, the Company and
its Subsidiaries with the provisions of this Agreement referred to
therein as of the last day of the fiscal quarter or fiscal year of
Holdings or the Company, as the case may be;
(c) by December 31 of each year, a copy of the projections
by Holdings and the Company of the operating budget and cash flow
budget and revenues of Holdings, the Company and its Subsidiaries
for the next succeeding fiscal year in form and substance reasonably
satisfactory to the Administrative Agent, setting forth in
reasonable detail the basis for all projections contained therein,
such projections to be accompanied by a certificate of a Responsible
Officer of each of Holdings and the Company to the effect that such
projections have been prepared in good faith using assumptions
believed by management to be reasonable and that such Responsible
Officer has no reason to believe they are misleading in any material
respect;
(d) within five days after the same are sent, copies of all
financial statements and reports which Holdings or the Company sends
to holders of any issue of its equity securities or debt securities
generally, and within five days after the same are filed, copies of
all financial statements and reports which Holdings or the Company
may make to, or file with, the Securities and Exchange Commission or
any successor or analogous Governmental Authority or any national
securities exchange; and
(e) promptly, such additional financial and other
information as any Lender may from time to time reasonably request
through the Administrative Agent.<PAGE>
48
5.3 Payment of Obligations. (a) Pay, discharge, perform, comply
with or otherwise satisfy at or before maturity or before they become
delinquent, as the case may be, all its obligations of whatever nature,
except where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with
GAAP with respect thereto have been provided on the books of Holdings, the
Company or its Subsidiaries, as the case may be; (b) comply in all
material respects with all applicable Requirements of Law, except where
such Requirement of Law is being contested in good faith, a bona fide
dispute exists with respect thereto and the failure to comply therewith
has no reasonable likelihood of having a Material Adverse Effect; and (c)
comply with all applicable Contractual Obligations, except where the
failure to comply therewith has no reasonable likelihood of having a
Material Adverse Effect.
5.4 Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same general type as now conducted by it and
preserve, renew and keep in full force and effect its corporate existence
and take all reasonable action to maintain all rights, privileges,
licenses and franchises necessary or desirable in the normal conduct of
its business except as otherwise expressly permitted pursuant to Section
6.11.
5.5 Maintenance of Property; Insurance. Keep all property useful
and necessary in its business in good working order and condition;
preserve all of its registered trademarks, trade names and service marks,
the non-preservation of which has a reasonable likelihood of having a
Material Adverse Effect; maintain with financially sound and reputable
insurance companies insurance on all its property in at least such amounts
and against at least such risks (but including in any event public
liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same
or a similar business; and furnish to each Lender, upon written request,
full information as to the insurance carried.
5.6 Inspection of Property; Books and Records; Discussions. Keep
proper books of record and account in which complete and correct entries
in conformity with GAAP and all Requirements of Law shall be made of all
dealings and transactions in relation to its business and activities; and
permit representatives of the Administrative Agent (and, if an Event of
Default shall have occurred and be continuing, any Lender) to visit and
inspect any of its properties and examine and make copies of or abstracts
from any of its books and records at any reasonable time and as often as
may reasonably be desired and to discuss the business, operations,
properties and financial and other condition of Holdings, the Company and
its Subsidiaries with officers and employees of Holdings, the Company and
its Subsidiaries and with the independent certified public accountants of
Holdings or the Company.
5.7 Notices. In the case of the Company or, if applicable,
Holdings, promptly give notice to the Administrative Agent and each Lender
of:
(a) the occurrence of any Default or Event of Default;<PAGE>
49
(b) any (i) default or event of default under any Contractual
Obligation of Holdings, the Company or any of its Subsidiaries, (ii)
dispute between Holdings, the Company or any of its Subsidiaries and
any Governmental Authority or (iii) litigation, investigation or
proceeding which may exist at any time between Holdings, the Company
or any of its Subsidiaries and any Governmental Authority, which in
each case, if not cured or resolved or if adversely determined, as
the case may be, could reasonably be expected to have a Material
Adverse Effect;
(c) any litigation or proceeding (and any material
development in respect thereof) affecting Holdings, the Company or
any of its Subsidiaries in which (i) the amount involved is
$2,000,000 or more (or its equivalent in another currency or
currencies) and not covered by insurance as to which the relevant
insurance company has not disputed coverage or (ii) injunctive or
similar relief is sought;
(d) the following events, as soon as possible and in any
event within 30 days after Holdings or the Company knows or has
reason to know thereof: (i) the occurrence or expected occurrence of
any Reportable Event with respect to any Single Employer Plan, or
any withdrawal from, or the termination, Reorganization or
Insolvency of any Multiemployer Plan or (ii) the institution of
proceedings or the taking of any other action by the PBGC or the
Company or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan; provided that notice
under this Section 5.7(d) will only be required if, individually or
in the aggregate, the amount of the liability of the Loan Parties
which could reasonably be expected would equal or exceed $2,000,000;
and
(e) a development or event which has had or could reasonably
be expected to have a Material Adverse Effect.
Each notice pursuant to this Section 5.7 shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action Holdings or the Company, as
the case may be, proposes to take with respect thereto.
5.8 Environmental Laws.
(a) Comply with, and use its best efforts to insure
compliance by all tenants and subtenants, if any, with, all
Environmental Laws and obtain and comply in all material respects
with and maintain, and use its best efforts to insure that all
tenants and subtenants obtain and comply with and maintain, any and
all licenses, approvals, registrations or permits required by
Environmental Laws, except to the extent that failure to do so would
not have any reasonable likelihood of having a Material Adverse
Effect;
(b) Conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions
required under Environmental Laws and promptly comply in all<PAGE>
50
material respects with all lawful orders and directives of all
Governmental Authorities respecting Environmental Laws, except to
the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings would
not have any reasonable likelihood of having a Material Adverse
Effect;
(c) Without limiting the generality of the provisions of
Section 5.7, notify the Administrative Agent and each Lender of any
of the following which is reasonably likely to have a Material
Adverse Effect:
(i) any Environmental Claim which Holdings, the
Company or any of its Subsidiaries receives, including one to
take or pay for any remedial, removal, response or clean-up or
other action with respect to any Hazardous Materials contained
on any property presently or formerly owned or leased by
Holdings, the Company or any of its Subsidiaries;
(ii) any notice of any alleged violation of or
knowledge by Holdings, the Company or any of its Subsidiaries
of a condition which might reasonably result in a violation of
any law or regulation involving environmental, health or
safety matters; and
(iii) any commencement or threatened commencement of any
judicial or administrative proceeding or investigation
alleging a violation or potential violation of any requirement
of Environmental Law; and
(d) Defend, indemnify and hold harmless the Administrative
Agent and the Lenders, and their respective parents, subsidiaries,
affiliates, employees, agents, officers and directors, from and
against any and all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature
known or unknown, contingent or otherwise, arising out of, or in any
way relating to, the violation of, noncompliance with or liability
under any Environmental Laws applicable to the operations of
Holdings, the Company or any of its Subsidiaries or to the
Properties, or any orders, requirements or demands of Governmental
Authorities related thereto, including, without limitation,
attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the
extent that any of the foregoing are found by a final and
nonappealable decision of a court of competent jurisdiction to have
resulted primarily from the gross negligence or willful misconduct
of the party seeking indemnification therefor. Notwithstanding
anything to the contrary in this Agreement, this indemnity shall
continue in full force and effect regardless of the termination of
this Agreement.
5.9 Holdings Merger. In the event that Holdings shall be merged
with and into the Company (the "Holdings/Company Merger"), within three
Business Days after the consummation of the Holdings/Company Merger, the
Company shall deliver to the Administrative Agent an assumption agreement
in form and substance reasonably satisfactory to it pursuant to which a<PAGE>
51
holding company parent ("New Holdings") of the Company shall become a
party to this Agreement.
SECTION 6. NEGATIVE COVENANTS
Holdings and the Company hereby jointly and severally agree that, so
long as any Term Loan Commitment remains in effect or any Term Loan
remains outstanding and unpaid or any other amount is owing to any Lender
or the Administrative Agent hereunder, unless the Required Lenders shall
otherwise agree in writing:
6.1 Financial Condition Covenants.
(a) Consolidated Net Worth. Holdings and the Company shall
not permit the Consolidated Net Worth of Holdings at any time to be
less than the sum, without duplication, of (i) $80,000,000, (ii) 50%
of the Consolidated Net Income of Holdings for each fiscal quarter
of Holdings (beginning with the fiscal quarter ending March 31,
1995) for which such Consolidated Net Income is positive, (iii) 100%
of the Net Cash Proceeds of any Holdings Common Equity Offering
consummated after the Effective Date and (iv) 100% of any capital
contribution made to Holdings or the Company after the Effective
Date by any holder of its Capital Stock; provided, that for the
purposes of clauses (iii) and (iv) above, the amount of any Net Cash
Proceeds and capital contributions referred to in said clauses shall
be reduced to the extent (x) such proceeds or contributions are
concurrently applied to repurchase equity in accordance with this
Agreement and (y) Consolidated Net Worth (without giving effect to
such proceeds or contributions) would be reduced as a result of such
repurchase.
(b) Interest Coverage. Holdings and the Company shall not
permit the Interest Coverage Ratio as at the end of any Interest
Coverage Test Period (commencing with the Interest Coverage Test
Period ending June 30, 1995) to be less than 2.0 to 1.0.
6.2 Limitation on Secured Debt. The Company shall not, and shall
not permit any Subsidiary to, Issue, directly or indirectly, any Secured
Debt unless contemporaneously therewith effective provision is made to
secure the Term Loans equally and ratably with such Secured Debt for so
long as such Secured Debt is secured by a Lien. However, the Company and
the Subsidiaries shall not be required to equally and ratably secure the
Term Loans upon the Issuance of the following Secured Debt:
(i) Debt of the Company permitted under Section 6.4(b)(i) and
Debt of a Subsidiary permitted under Section 6.5(i);
(ii) Debt of the Company permitted under Section 6.4(a) that
is incurred to finance the acquisition of property or assets
(including Capital Stock) acquired by the Company or its
Subsidiaries after the Effective Date (including any construction on
or improvements, alterations or repairs to existing or future
acquired real property), so long as (1) such Debt is incurred and
the Lien securing such Debt is created within 180 days of the later
of (x) the date of acquisition of such property or assets or (y) the
completion of any such construction on or improvements, alterations<PAGE>
52
or repairs to, real property and (2) such Debt is not secured by any
property or assets of the Company or any Subsidiary other than the
property and assets so acquired and replacements thereof (other than
in the case of construction or improvement, any theretofore
unimproved real property or portion thereof on which the property is
so constructed, or the improvement is located);
(iii) Debt of the Company permitted under Section 6.4(a)
Issued in connection with the merger or consolidation of a
Subsidiary with the Company or in connection with the sale, lease or
other disposition of the Property or assets of a Subsidiary as an
entirety (or substantially as an entirety) to the Company; provided,
however, that (1) such Debt was existing immediately prior to the
time such Subsidiary was merged or consolidated with the Company or
the time of sale, lease or other disposition of the properties and
assets of such Subsidiary to the Company, (2) such Debt was neither
Issued as consideration in, or to provide all or any portion of the
funds or credit support used to consummate, or otherwise in
anticipation of, the transaction or series of related transactions
pursuant to which such Subsidiary previously became a Subsidiary (or
any refinancings thereof) nor Issued to acquire any Person or the
property or assets of any Person (or any refinancings thereof) and
(3) such Debt is not secured by any property or assets of the
Company or any Subsidiary other than the property or assets subject
thereto immediately prior to the time such Subsidiary was merged or
consolidated with the Company or the time of sale, lease or other
disposition of the properties and assets of such Subsidiary to the
Company;
(iv) Debt of a Subsidiary permitted under Section 6.5(iii) if
such Debt is not secured by any property or assets of the Company or
any Subsidiary other than the property or assets of such Subsidiary
(other than property or assets acquired, directly or indirectly,
from the Company or another Subsidiary) or the Capital Stock of such
Subsidiary;
(v) Debt of a Subsidiary permitted under Section 6.5(iv) if
such Debt is not secured by any property or assets of the Company or
any Subsidiary other than the property or assets of such Subsidiary;
(vi) Debt of a Subsidiary permitted under Section 6.5(vi), so
long as (1) the Debt exchanged, refunded or refinanced thereby was
Secured Debt and (2) the Debt so permitted is not secured by any
property or assets of the Company or any Subsidiary other than the
property securing the Secured Debt being exchanged, refunded or
refinanced or other property or assets of such Subsidiary;
(vii) Debt of the Company permitted under Section
6.4(b)(iii), Section 6.4(b)(viii) (to the extent that the Debt in
respect of which such Interest Rate Protection Agreement was entered
into is secured or to the extent that the collateral consists of
property otherwise subject to a Lien permitted by this Section 6.2)
or Section 6.4(b)(ix) and Debt of a Subsidiary permitted under
Section 6.5(viii) (to the extent that the Debt in respect of which
such Interest Rate Protection Agreement was entered into is secured
or to the extent that the collateral consists of property otherwise<PAGE>
53
subject to a Lien permitted by this Section 6.2), Section 6.5(ix) or
Section 6.5(x);
(viii) Secured Debt of the Company outstanding on the
Effective Date and Secured Debt Issued in exchange for, or the
proceeds of which are used to refund or refinance, Secured Debt of
the Company otherwise permitted by clauses (i)-(vii) of this Section
6.2 or Secured Debt of the Company permitted by this clause (viii);
provided, however, that the principal amount of the Secured Debt so
Issued shall not exceed the principal amount of the Secured Debt so
exchanged, refunded or refinanced and the Secured Debt so Issued
shall not be secured by any property or assets of the Company or any
Subsidiary other than the property or assets of the Company securing
the Secured Debt so exchanged, refunded or refinanced; and
(ix) Secured Debt of a Subsidiary outstanding on the
Effective Date and Secured Debt Issued in exchange for, or the
proceeds of which are used to refund or refinance, Secured Debt of
such Subsidiary otherwise permitted by clauses (i)-(vii) of this
Section 6.2 or Secured Debt of such Subsidiary permitted by this
clause (ix), provided, however, that the principal amount of the
Secured Debt so Issued shall not exceed the principal amount of the
Secured Debt so exchanged, refunded or refinanced and the Secured
Debt so Issued shall not be secured by any property or assets of the
Company or any Subsidiary other than the property or assets of such
Subsidiary securing the Secured Debt so exchanged, refunded or
refinanced.
6.3 Limitation on Sale/Leaseback Transactions. The Company shall
not, and shall not permit any Subsidiary to, enter into any Sale/Leaseback
Transaction unless:
(i) the Company or such Subsidiary would be entitled to
create a Lien on such property securing Debt in an amount equal to
the Attributable Debt with respect to such arrangement without
equally and ratably securing the Term Loans pursuant to Section 6.2;
or
(ii) at the election of the Company, the Company shall deem
such Sale/Leaseback Transaction to be an Asset Disposition subject
to Section 6.8, except that the Net Available Cash therefrom shall
be applied first in accordance with Section 6.8(a)(ii)(A), second in
accordance with Section 6.8(a)(ii)(C) and third in accordance with
Section 6.8(a)(ii)(D).
6.4 Limitation on Company Debt. (a) The Company shall not Issue,
directly or indirectly, any Debt unless the Consolidated EBITDA Coverage
Ratio determined on the date of Issuance of such Debt exceeds 2.0 to 1.0.
(b) Notwithstanding Section 6.4(a), the Company may Issue the
following Debt:
(i) Debt Issued pursuant to the Credit Agreement or other
financing arrangement in an aggregate principal amount outstanding
at any time of Issuance which, together with all Debt of
Subsidiaries then outstanding and Issued pursuant to Section 6.5(i),<PAGE>
54
does not exceed the greater of (1) $155,000,000 and (2) the sum of
(i) 50% of the book value of the inventory of the Company and its
Subsidiaries (before giving effect to any LIFO reserve with respect
to such inventory) and (ii) 80% of the book value of the accounts
receivable of the Company and its Subsidiaries; provided, however,
that, so long as a class of the Company's long-term senior unsecured
debt is Investment Grade Debt, the above percentages will be 60% of
the book value of inventory and 90% of the book value of accounts
receivable.
(ii) Debt owed to and held by a Wholly Owned Subsidiary;
provided, however, that any subsequent Issuance or transfer of any
Capital Stock that results in any such Subsidiary ceasing to be a
Wholly Owned Subsidiary or any transfer of such Debt (other than to
a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the Issuance of such Debt by the Company;
(iii) Debt represented by Capital Lease Obligations
(including the Capital Lease Financing Facility) and guarantees of
joint venture obligations not to exceed an aggregate amount of
$25,000,000 at any one time outstanding;
(iv) Debt Issued in any fiscal year to finance Consolidated
Capital Expenditures, which Debt in such year, together with any
Debt Issued during such year pursuant to Section 6.5(ix), does not
exceed $25,000,000;
(v) Debt outstanding on the Effective Date (other than Debt
permitted by clauses (i) and (ii) of this Section 6.4(b)) and, upon
the merger or consolidation of Holdings and the Company, the 16%
Debentures;
(vi) Debt Issued in exchange for, or the proceeds of which
are used to refund or refinance, any Debt permitted by Section
6.4(a) or by clauses (iii), (iv) or (v) of this Section 6.4(b) or
this clause (vi); provided, however, that, with the exception of any
Debt permitted by clause (iv) of this Section 6.4(b) with respect to
Debt represented by Capital Lease Obligations, (1) the principal
amount of the Debt so Issued shall not exceed the principal amount
of the Debt so exchanged, refunded or refinanced, (2) the Debt so
Issued (A) shall not mature prior to the Stated Maturity of the Debt
so exchanged, refunded or refinanced and (B) shall have an Average
Life equal to or greater than the remaining Average Life of the Debt
so exchanged, refunded or refinanced and (3) if, in the case the
Debt to be exchanged, refunded or refinanced is a Subordinated
Obligation, such Debt is subordinated to the Term Loans at least to
the extent and in the manner that the Debt to be exchanged, refunded
or refinanced is subordinate to the Term Loans;
(vii) the Term Loans and Debt Issued in exchange for, or the
proceeds of which are used to refund or refinance, any Debt
permitted by this Section 6.4(b)(vii); provided, however, that (1)
the principal amount of the Debt so Issued shall not exceed the
lesser of (a) the principal amount of the Debt so exchanged,
refunded or refinanced and (b) the amounts actually paid to redeem
or repurchase such Debt and (2) the Debt so Issued (A) shall not<PAGE>
55
mature prior to the Stated Maturity of the Debt so exchanged,
refunded or refinanced and (B) shall have an Average Life equal to
or greater than the remaining Average Life of the Debt so exchanged,
refunded or refinanced;
(viii) Debt of the Company represented by Interest Rate
Protection Agreements, foreign currency hedges and similar
agreements entered into in respect of any other Debt of the Company
otherwise permitted to be Issued under this Section 6.4; and
(ix) Debt in an aggregate principal amount which, together
with (1) all other Debt of the Company then outstanding (other than
Debt permitted by Section 6.4(a) or clauses (i) through (viii) of
Section 6.4(b)) and (2) all Debt and Preferred Stock of Subsidiaries
then outstanding permitted under Section 6.5(x), does not exceed
$25,000,000.
6.5 Limitation on Debt and Preferred Stock of Subsidiaries. The
Company shall not permit any Subsidiary to Issue, directly or indirectly,
any Debt or Preferred Stock except:
(i) Debt of a Subsidiary Issued pursuant to any revolving
credit or other financing arrangement in an aggregate principal
amount outstanding at any time which does not exceed the sum of (1)
50% of the book value of the inventory of such Subsidiary (before
giving effect to any LIFO reserve with respect to such inventory)
and (2) 80% of the book value of the accounts receivable of such
Subsidiary; provided, however, that so long as a class of the
Company's long-term senior unsecured debt is Investment Grade Debt,
the above percentages will be 60% of the book value of inventory and
90% of the book value of accounts receivable; provided further,
however, that the Company would have been permitted to Issue such
Debt pursuant to clause (i) of Section 6.4(b);
(ii) Debt or Preferred Stock Issued to and held by the
Company or by a Wholly Owned Subsidiary; provided, however, that any
subsequent Issuance or transfer of any Capital Stock that results in
any such Subsidiary ceasing to be a Wholly Owned Subsidiary or any
transfer of such Debt or Preferred Stock (other than to the Company
or a Wholly Owned Subsidiary) shall be deemed, in each case, to
constitute the Issuance of such Debt or Preferred Stock by the
Issuer thereof;
(iii) Debt or Preferred Stock of a New Subsidiary Issued in
connection with the acquisition of a Third Party Person or any
property or assets of a Third Party Person including Debt or
Preferred Stock Issued as consideration in, or to provide all or any
portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such
New Subsidiary became a Subsidiary or by which such New Subsidiary
acquired such Third Party Person or property and assets of such
Third Party Person if immediately thereafter, the Company could
Issue $1.00 of additional Debt under Section 6.4(a);
(iv) Debt or Preferred Stock of a Subsidiary Issued and
outstanding on or prior to the date on which such Subsidiary was<PAGE>
56
acquired by the Company (other than Debt or Preferred Stock Issued
as consideration in, or to provide all or any portion of the funds
or credit support utilized to consummate, or otherwise in
anticipation of, the transaction or series of related transactions
pursuant to which such Subsidiary became a Subsidiary or was
acquired by the Company), if immediately after the date on which
such Subsidiary was acquired by the Company, the Company could Issue
$1.00 of additional Debt under Section 6.4(a);
(v) Debt or Preferred Stock Issued and outstanding on or
prior to the Effective Date;
(vi) Debt or Preferred Stock Issued in exchange for, or the
proceeds of which are used to refund or refinance, Debt or Preferred
Stock referred to in clauses (iii), (iv) or (v) or this clause (vi)
of this Section 6.5; provided, however, that (1) the principal
amount of such Debt or Preferred Stock so Issued shall not exceed
the principal amount of the Debt or Preferred Stock so exchanged,
refunded or refinanced and (2) the Debt or Preferred Stock so Issued
(A) shall not mature prior to the Stated Maturity of the Debt or
final redemption date (if any) of the Preferred Stock being
exchanged, refunded or refinanced and (B) shall have an Average Life
equal to or greater than the remaining Average Life of the Debt or
Preferred Stock being exchanged, refunded or refinanced;
(vii) Non-Recourse Debt of a Non-Recourse Subsidiary;
provided, however, that if any such Debt ceases to be Non-Recourse
Debt of a Non-Recourse Subsidiary then such event shall be deemed to
constitute the Issuance of such Debt by the Issuer thereof;
(viii) Debt of any Subsidiary represented by Interest Rate
Protection Agreements, foreign currency hedges and similar
agreements entered into in respect of any other Debt of such
Subsidiary otherwise permitted under this Section 6.5;
(ix) Debt Issued by Foreign Subsidiaries in any fiscal year
to finance Consolidated Capital Expenditures, which Debt in such
year, together with any Debt Issued during such year pursuant to
Section 6.4(b)(iv), does not exceed $25,000,000; and
(x) Debt or Preferred Stock in an aggregate principal amount
which, together with (1) all other Debt and Preferred Stock of
Subsidiaries then outstanding (other than Debt or Preferred Stock
permitted by clauses (i) through (ix) of this Section 6.5) and (2)
Debt of the Company Issued under Section 6.4(b)(ix), does not exceed
$25,000,000.
6.6 Limitation on Restricted Payments. (a) The Company shall
not, and shall not permit any Subsidiary, directly or indirectly, to:
(i) declare or pay any dividend or make any distribution on
or in respect to its Capital Stock or to the direct or indirect
holders of its Capital Stock as such, including any payment in
connection with any merger or consolidation of the Company, except
for (1) any dividends or distributions payable solely in shares of
its Capital Stock that is not Redeemable Stock, (2) dividends or<PAGE>
57
distributions payable to the Company or a Subsidiary and (3)
dividends or distributions payable to holders (other than the
Company or any of its Affiliates) of a class of a Subsidiary's
Capital Stock that is held by the Company or a Subsidiary, which
dividends or distributions also were paid pro rata to the Company or
a Subsidiary;
(ii) purchase, redeem or otherwise acquire or retire for
value any Capital Stock of the Company;
(iii) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity, scheduled
repayment or scheduled sinking fund payment any Subordinated
Obligations (other than the purchase, repurchase or other
acquisition of Subordinated Obligations purchased in anticipation of
satisfying a sinking fund obligation, principal installment or final
maturity, in each case due within one year of the date of
acquisition); or
(iv) make any Investment (other than any Qualified
Investment) in any Person
(any such dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition, retirement or Investment described in
clauses (i)-(iv) of this Section 6.6(a) being hereinafter referred to as a
"Restricted Payment") if at the time the Company or such Subsidiary makes
such Restricted Payment: (1) a Default shall have occurred and be
continuing (or would result therefrom); (2) the Company is not able to
Issue $1.00 of additional Debt under Section 6.4(a); or (3) the aggregate
amount of such Restricted Payment and all other Restricted Payments since
the Effective Date would exceed the sum of:
(A) 50% of the Consolidated Adjusted Net Income accrued for the
period (treated as one accounting period) commencing with the
fiscal quarter during which the Effective Date occurs to and
including the most recent fiscal quarter ending at least 45
days prior to the date of such Restricted Payment (or, in case
such Consolidated Adjusted Net Income shall be a deficit,
minus 100% of such deficit);
(B) the aggregate Adjusted Net Cash Proceeds received by the
Company from the Issue or sale of its Capital Stock (other
than Redeemable Stock) subsequent to the Effective Date (other
than the Issuance or sale to a Subsidiary or an employee stock
ownership plan);
(C) the aggregate Adjusted Net Cash Proceeds received by the
Company from the Issue or sale of its Capital Stock (other
than Redeemable Stock) to an employee stock ownership plan
subsequent to the Effective Date, but (if such employee stock
ownership plan Issues any Debt) only to the extent that any
such proceeds are equal to any increase in the Consolidated
Adjusted Net Worth of the Company resulting from principal
repayments made by such employee stock ownership plan with
respect to Debt Issued by it to finance the purchase of such
Capital Stock;<PAGE>
58
(D) the amount by which Debt of the Company is reduced on the
Company's balance sheet upon the conversion or exchange (other
than by a Subsidiary) subsequent to the Effective Date of any
Debt of the Company convertible or exchangeable for Capital
Stock (other than Redeemable Stock) of the Company (less the
amount of any cash, or other property, distributed by the
Company upon such conversion or exchange);
(E) the aggregate cash received by the Company after the Effective
Date as capital contributions to the Company; and
(F) to the extent an Investment made by the Company or a
Subsidiary after the Effective Date was included in the amount
of a Restricted Payment, the aggregate cash received by the
Company in connection with the disposition or repayment of or
return on such Investment made after the Effective Date, which
amount shall not exceed the amount of such Restricted Payment.
(b) The provisions of Section 6.6(a) shall not prohibit:
(i) any purchase or redemption of Capital Stock or
Subordinated Obligations of the Company made by exchange for, or out
of the Adjusted Net Cash Proceeds of the substantially concurrent
sale of, Capital Stock of the Company (other than Redeemable Stock
and other than Capital Stock Issued or sold to a Subsidiary or an
employee stock ownership plan); provided, however, that (A) such
purchase or redemption shall be excluded in the calculation of the
amount of Restricted Payments and (B) the Adjusted Net Cash Proceeds
from such sale shall be excluded from clause (3)(B) of Section
6.6(a);
(ii) any purchase or redemption of Subordinated Obligations
of the Company made by exchange for, or out of the proceeds of the
substantially concurrent sale of, Debt of the Company; provided,
however, that such Debt (A) shall be subordinated to the Term Loans
at least to the same extent and in the manner that the Subordinated
Obligations so exchanged, purchased or redeemed are subordinated to
the Term Loans, (B) shall not mature prior to the Stated Maturity of
such Subordinated Obligations and (C) shall have an Average Life
greater than the remaining Average Life of such Subordinated
Obligations; provided further, however, that such purchase or
redemption shall be excluded in the calculation of the amount of
Restricted Payments;
(iii) any purchase or redemption of Subordinated Obligations
from Net Available Cash to the extent permitted by Section 6.8;
provided, however, that such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments;
(iv) dividends paid within 60 days after the date of
declaration thereof if at such date of declaration such dividend
would have complied with this Section 6.6; provided, however, that
at the time of payment of such dividend, no other Default shall have
occurred and be continuing (or would result therefrom); provided
further, however, that such dividend shall be included in the
calculation of the amount of Restricted Payments;<PAGE>
59
(v) so long as no Default has occurred and is continuing or
would result from such transaction, any Restricted Payment to be
applied by Holdings to, or any Restricted Payment consisting of, the
repurchase of shares of Capital Stock of Holdings or the Company
from any present or former employee or director of Holdings, the
Company or any Subsidiary (or from such employee's or director's
respective heirs, legatees, personal representatives, successors and
permitted assigns, and permitted transferees) in connection with the
death, disability or termination of employment of such employee or
director in accordance with the terms of the Management Agreements
(or on terms more favorable to the Company); provided, however, that
the aggregate amount of such Restricted Payments in any fiscal year
shall not exceed the sum of (x) $5,000,000 and (y) an amount equal
to the aggregate Adjusted Net Cash Proceeds of any sale of shares of
common stock of Holdings or the Company to any officer or employee
of Holdings, the Company or any Subsidiary subsequent to the
Effective Date which, in the case of the common stock of Holdings,
shall have been contributed to the capital of the Company minus the
aggregate amount of Restricted Payments previously made pursuant to
this Section 6.6(b)(v); provided further, however, that the
aggregate Adjusted Net Cash Proceeds of any sale of shares of common
stock to Holdings or the Company under Section 6.6(b)(v)(y) which is
utilized to make a Restricted Payment under this Section 6.6(b)(v)
shall not be included under clauses (B) through (E) of Section
6.6(a); provided further, however, that such amount shall be
excluded in the calculation of the amount of Restricted Payments;
(vi) any payments which are permitted by clauses (i), (ii),
(iv) and (v) of Section 6.9; provided, however, that such payments
shall be excluded in the calculation of the amount of Restricted
Payments;
(vii) so long as no Event of Default or Default (except a
Default pursuant to clause (c) (other than pursuant to Section
6.11), (d), (f) (in the case of an involuntary proceeding) or (g) of
Section 7) shall have occurred and be continuing (or would result
therefrom), the declaration and payment of dividends (or the making
of loans or advances) to Holdings for the purpose of and in an
amount which shall not exceed the amount necessary for the payment
in cash of the interest expense on outstanding 16% Debentures as
such interest becomes due and payable in cash; provided, however,
that 50% of such dividends, loans or advances shall be included in
the calculation of the amount of Restricted Payments;
(viii) so long as no Default shall have occurred and be
continuing (or would result therefrom), the declaration and payment
of dividends (or the making of loans or advances) to Holdings for
the redemption, repurchase, defeasance or other acquisition or
retirement for value of the 16% Debentures on or prior to their
Stated Maturity; provided, however, that, at the time of the
declaration thereof, the Consolidated EBITDA Coverage Ratio, after
giving effect to the Issuance of any Debt in connection therewith,
would be greater than 1.75 to 1.0; provided further, however, that
such dividends, loans or advances shall be excluded in the
calculation of the amount of Restricted Payments to the extent the<PAGE>
60
same are funded from any Specified Source, and shall otherwise be
included in the calculation of the amount of Restricted Payments;
(ix) in the event the 16% Debentures become obligations of
the Company, the payment, or the redemption, repurchase, defeasance
or other acquisition or retirement for value, of the 16% Debentures
on or prior to their Stated Maturity; provided, however, that, at
the time of the redemption, repurchase, defeasance, acquisition or
retirement thereof, the Consolidated EBITDA Coverage Ratio would be
greater than 1.75:1; provided further, however, that such payment,
redemption, repurchase, defeasance or retirement for value shall be
excluded in the calculation of the amount of Restricted Payments to
the extent the same are funded from any Specified Source, and shall
otherwise be included in the calculation of the amount of Restricted
Payments;
(x) the payment of a management fee to Holdings in an amount
not to exceed $2.5 million annually; provided, however, that such
payment shall be excluded in the calculation of the amount of
Restricted Payments; and
(xi) so long as no Default has occurred and is continuing or
would result from such transaction, following the initial Public
Equity Offering of common stock, dividends in an aggregate amount in
any year not to exceed 6% of the aggregate Adjusted Net Cash
Proceeds received by the Company in connection with such initial
Public Equity Offering and any subsequent Public Equity Offering of
common stock; provided, however, that such dividends shall be
included in the calculation of the amount of Restricted Payments.
(c) Notwithstanding anything to the contrary in this Section 6.6,
in no event may the Company or any Subsidiary make any Restricted Payment
which it is not permitted to make pursuant to the terms of the 10% Senior
Note Indenture.
6.7 Limitation on Restrictions on Distributions from Subsidiaries.
The Company shall not, and shall not permit any Subsidiary to, create or
otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Subsidiary to:
(i) pay dividends or make any other distributions on its
Capital Stock or pay any Debt or other obligation owed to the
Company;
(ii) make any loans or advances to the Company; or
(iii) transfer any of its property or assets to the Company;
other than
(A) any encumbrance or restriction pursuant to an agreement as in
effect on the Effective Date,
(B) any encumbrance or restriction with respect to a Subsidiary
pursuant to an agreement relating to any Debt Issued by such
Subsidiary on or prior to the date on which such Subsidiary<PAGE>
61
was acquired by the Company (other than Debt Issued as
consideration in, or to provide all or any portion of the
funds or credit support utilized to consummate, or otherwise
in anticipation of, the transaction or series of related
transactions pursuant to which such Subsidiary became a
Subsidiary or was acquired by the Company or otherwise in
anticipation of its becoming a Subsidiary) and outstanding on
such date,
(C) any encumbrance or restriction pursuant to an agreement
effecting a refinancing of Debt Issued pursuant to an
agreement referred to in the foregoing clauses (A) or (B);
provided, however, that the encumbrances and restrictions of
the type implicated by this Section 6.7 contained in any such
refinancing agreement are no less favorable to the Lenders
than encumbrances and restrictions contained in the agreement
covering Debt being refinanced,
(D) any such encumbrance or restriction consisting of customary
non-assignment provisions in leases governing leasehold
interests to the extent such provisions restrict the transfer
of the lease,
(E) in the case of Section 6.7(iii), restrictions contained in
security agreements securing Debt of a Subsidiary to the
extent such restrictions restrict the transfer of the property
subject to such security agreements,
(F) any encumbrance or restriction relating to a Non-Recourse
Subsidiary,
(G) any restriction contained in a license agreement,
(H) any restriction with respect to a Subsidiary imposed pursuant
to an agreement entered into for the sale or disposition of
all or substantially all the Capital Stock or assets of such
Subsidiary pending the closing of such sale or disposition and
(I) any encumbrance or restriction relating to a Foreign
Subsidiary.
6.8 Limitation on Sales of Assets and Subsidiary Stock. (c) The
Company shall not, and shall not permit any Subsidiary to, make any Asset
Disposition unless:
(i) the Company or such Subsidiary receives consideration at
the time of such Asset Disposition at least equal to the fair value,
as determined in good faith by the Board of Directors (including as
to the value of all non-cash consideration), of the shares and
assets subject to such Asset Disposition and at least 75% of the
consideration thereof received by the Company or such Subsidiary is
in the form of cash or cash equivalents and
(ii) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by the Company (or such
Subsidiary, as the case may be):<PAGE>
62
(A) first, to the extent the Company or such Subsidiary is
required by the terms thereof (including pursuant to the
terms of any consent to such Asset Disposition required
by the terms of such Debt) to prepay, repay or purchase
Debt permitted under Section 6.4(b)(i) or Section 6.5(i)
(other than Debt owed to the Company or an Affiliate of
the Company) within 60 days from the later of the date
of such Asset Disposition or the receipt of such Net
Available Cash;
(B) second, to the extent of the balance of such Net
Available Cash after application in accordance with
clause (A) and to the extent elected by the Company, to
the acquisition by the Company or any Wholly Owned
Subsidiary of (x) Tangible Property or (y) a controlling
interest in a business enterprise with products or
markets that are similar to or complementary with the
products or markets of the Company or any of its
Subsidiaries on the Effective Date;
(C) third, to the extent of the balance of such Net
Available Cash after application in accordance with
clauses (A) and (B), 270 days after receipt thereof to
make an offer pursuant to and subject to this Section to
the Lenders and the holders of any other Senior Debt
designated by the Company to prepay the principal amount
plus accrued interest of the Term Loans and purchase
such other Senior Debt at a purchase price of 100% of
the principal amount plus accrued interest; provided,
however, that if the principal amount of such Term Loans
and such Senior Debt, together with accrued interest to
the date of prepayment or repurchase (subject to record
date provisions), tendered for acceptance pursuant to
such offer exceeds the balance of such Net Available
Cash, then the Company will accept for prepayment the
Term Loans of each Lender and for repurchase such other
Senior Debt of each tendering holder on a pro rata basis
(rounded to minimum denominations) in accordance with
the principal amount so tendered; and
(D) fourth, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A), (B) and
(C), to either (x) the acquisition of Tangible Property or a
controlling interest in a business enterprise or (y) the
prepayment, repayment or purchase of Debt (other than any
Redeemable Stock) of the Company or Debt of any Subsidiary (in
each case other than Debt owed to the Company or an Affiliate
of the Company) and thereafter to the purchase of Redeemable
Stock of the Company (other than Redeemable Stock beneficially
owned by an Affiliate of the Company), in each case within one
year from the later of the receipt of such Net Available Cash
and the date the offer described in clause (C) is consummated.
Notwithstanding the foregoing provisions of the preceding sentence, the
Company and its Subsidiaries shall not be required to apply any Net
Available Cash in accordance with this Section 6.8 until and only to the<PAGE>
63
extent that the aggregate Net Available Cash from all Asset Dispositions
which are not applied in accordance with this Section 6.8 exceed
$15,000,000, provided, however, that if a class of the Company's long-term
unsecured debt is Investment Grade Debt (and such Asset Disposition does
not cause such Debt to not be Investment Grade Debt), the amount of
$15,000,000 in this sentence shall be the greater of $15,000,000 and 10%
of Consolidated Net Tangible Assets immediately after giving effect to
such Asset Disposition. Pending application of Net Available Cash
pursuant to this Section 6.8, such Net Available Cash shall be invested in
Permitted Investments of the types described in clauses (i)-(iii) of the
definition thereof. The Company shall not be required to make any
prepayment of Term Loans pursuant to this Section 6.8 if the Net Available
Cash available therefor (after application of the proceeds as provided in
clauses (A) and (B) above) is less than $5,000,000 for any particular
Asset Disposition (which lesser amounts shall not be aggregated and
carried forward for purposes of determining whether an offer is required
with respect to the Net Available Cash from any subsequent Asset
Disposition). For the purposes of this covenant, the following are deemed
to be cash: (x) the assumption of Debt of the Company or any Subsidiary
and the release of the Company or such Subsidiary from all liability on
such Debt in connection with such Asset Disposition and (y) securities
received by the Company or any Subsidiary from the transferee that are
promptly converted by the Company or such Subsidiary into cash.
(b) In the event of an Asset Disposition that requires the
prepayment of Term Loans pursuant to Section 6.8(a)(ii)(C), the Company
will be required to prepay Term Loans and repurchase Senior Debt tendered
pursuant to an offer by the Company for the Term Loans and the Senior Debt
(the "Offer") at a purchase price of 100% of their principal amount plus
accrued interest in accordance with the procedures (including prorating in
the event of oversubscription) set forth in Section 6.8(c). If the
aggregate prepayment amount of Term Loans and purchase price of Senior
Debt tendered pursuant to the Offer is less than the Net Available Cash
allotted to the prepayment of the Term Loans and repurchase of Senior
Debt, the Company shall apply the remaining Net Available Cash in
accordance with Section 6.8(a)(ii)(D).
(c) (i) Promptly, and in any event within the earlier of (A) 300
days after the date of each Asset Disposition as to which the Company must
make an Offer or (B) the date that the Company determines that it will
make an offer in accordance with Section 6.8(a)(ii)(C), the Company shall
be obligated to deliver to the Administrative Agent and send, by
first-class mail to each Lender, a written notice stating that the Lender
may elect to have such Lender's Term Loans prepaid by the Company either
in whole or in part (subject to prorating as hereinafter described in the
event the Offer is oversubscribed) in integral multiples of $1,000 of
principal amount. The notice shall specify a prepayment date not less
than 30 days nor more than 60 days after the date of such notice (the
"Prepayment Date") and shall contain information concerning the business
of the Company which the Company in good faith believes will enable such
Lenders to make an informed decision (which at a minimum will include (i)
a description of material developments in the Company's business
subsequent to the date of the most recent financial statements delivered
to the Lenders and (ii) if material, appropriate pro forma financial
information) and all instructions and materials necessary to elect<PAGE>
64
prepayment of the Term Loans pursuant to the Offer, together with the
information contained in clause (iii) below.
(ii) Not later than the date upon which written notice of an Offer
is delivered to the Administrative Agent as provided below, the Company
shall deliver to the Administrative Agent an Officers' Certificate as to
(A) the amount of the Offer (the "Offer Amount"), (B) the allocation of
the Net Available Cash from the Asset Dispositions pursuant to which such
Offer is being made and (C) the compliance of such allocation with the
provisions of Section 6.8(a). On such date, the Company shall also
irrevocably deposit with the Trustee or with a paying agent (or, if the
Company is acting as its own paying agent, segregate and hold in trust)
(the Trustee and any such paying agent being referred to herein as the
"Paying Agent") in immediately available funds an amount equal to the
Offer Amount to be held for payment in accordance with the provisions of
this Section. The Paying Agent shall, on the Prepayment Date, deliver
payment to each Lender in the amount of the prepayment. If the aggregate
prepayment amount of the Term Loans and purchase price of the other Senior
Debt properly tendered is less than the Offer Amount, the Paying Agent
shall deliver the excess to the Company immediately after the expiration
of the period for which the Offer remains open (the "Offer Period").
(iii) Lenders will be entitled to withdraw their election if the
Administrative Agent or the Company receives not later than three Business
Days prior to the Prepayment Date a telegram, telex, facsimile
transmission or letter setting forth the name of the Lender and a
statement that such Lender is withdrawing such election. If at the
expiration of the Offer Period the aggregate principal amount of Term
Loans and other Senior Debt properly tendered exceeds the Offer Amount,
the Company shall select the Term Loans and other Senior Debt to be
purchased on a pro rata basis (rounded to minimum denominations) in
accordance with the principal amount so tendered. Lenders whose Term
Loans are prepaid only in part will be issued new Term Notes equal in
principal amount to the portion of the Term Loans not prepaid.
6.9 Limitation on Transactions with Affiliates. The Company shall
not, and shall not permit any Subsidiary to, directly or indirectly, enter
into any transaction (including the purchase, sale, lease or exchange of
any property or the rendering of any service or any loans or advances)
with any Affiliate of the Company (other than (i) transactions between the
Company and any of its Subsidiaries or between Subsidiaries (other than,
in each case, any Subsidiary the minority interest in which is owned by
any Affiliate of the Company) and (ii) transactions with an employee stock
ownership plan for the benefit of the employees of the Company and its
Subsidiaries), unless any such transaction is on terms no less favorable
to the Company or such Subsidiary than those that could be obtained in a
comparable arm's length transaction with an independent third party;
provided, however, that prior to consummating any such transaction which
has a value equal to or greater than $10,000,000, either (1) the Company
will have obtained an opinion from a nationally recognized investment
banking firm or other reputable third party appraiser to the effect that
the terms of such transaction are fair to the Company or such Subsidiary
or at least as favorable as might reasonably have been obtained in a
comparable arm's length transaction with an independent third party or (2)
the terms of such transaction have been approved by a majority of the
disinterested members of the Board of Directors.<PAGE>
65
Notwithstanding the foregoing, nothing in this covenant will
prohibit any of the following:
(i) (A) the payment of management or advisory fees not
exceeding $1,000,000 per annum to Bessemer or any successor in
ownership interest in the Company and (B) Bessemer providing asset
portfolio management services or other investment advisory services
to the Company or any of its benefit or compensation plans on a
basis no less favorable to the Company than that on which Bessemer
provides such services to unrelated third parties;
(ii) any transaction pursuant to any agreement described on
Schedule 6.9;
(iii) any transaction which is a Restricted Payment;
provided, however, that such Restricted Payment is not prohibited by
Section 6.6;
(iv) any payment or other transaction pursuant to any tax
sharing agreement between the Company and Holdings or any other
Person with which the Company is required to, or is permitted to,
file a consolidated tax return or with which the Company is or could
be part of a consolidated group for tax purposes; provided, however,
the amount payable by the Company pursuant thereto shall not exceed
the amount of taxes which the Company would have been liable for on
a stand-alone basis; or
(v) employment arrangements entered into in the ordinary
course of business with officers of the Company or any Subsidiary.
6.10 Change of Control. (a) Upon a Change of Control, each Lender
shall have the right to require the Company to prepay all or any part of
such Lender's Term Loan plus accrued and unpaid interest, if any, to the
date of prepayment, in accordance with the terms contemplated in Section
6.10(b).
(b) Within 30 days following any Change of Control, the Company
will mail a notice to each Lender with a copy to the Administrative Agent
stating:
(i) that a Change of Control has occurred and that such
Lender has the right to require the Company to prepay all or any
part of such Lender's Term Loan plus accrued and unpaid interest, if
any, to the date of prepayment;
(ii) the circumstances and relevant facts regarding such
Change of Control (including information with respect to pro forma
historical income, cash flow and capitalization after giving effect
to such Change of Control);
(iii) the prepayment date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed in
the event of a Change of Control); and<PAGE>
66
(iv) the instructions, determined by the Company consistent
with this Section 6.10, that a Lender must follow in order to have
its Term Loans prepaid.
(c) Lenders will be entitled to withdraw their election to have all
or a portion of their Term Loans prepaid if the Company receives not later
than three Business Days prior to the purchase date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Lender and
a statement that such Lender is withdrawing such election.
6.11 Mergers and Consolidations. The Company shall not consolidate
with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person unless:
(i) the resulting, surviving or transferee Person (if not the
Company) shall be a Person organized and existing under the laws of
the United States of America or any State thereof or the District of
Columbia and shall assume expressly by a supplemental agreement,
executed and delivered to the Administrative Agent, in form
satisfactory to the Administrative Agent, all the obligations of the
Company under this Agreement and the Term Notes;
(ii) immediately prior to and after giving effect to such
transaction (and treating any Debt which becomes an obligation of
the resulting, surviving or transferee Person or any Subsidiary as a
result of such transaction as having been Issued by such Person or
such Subsidiary at the time of such transaction), no Default has
occurred and is continuing;
(iii) immediately after giving effect to such transaction,
either (A) the Consolidated EBITDA Coverage Ratio is greater than
2.0 to 1.0 or (B) the Consolidated EBITDA Coverage Ratio is greater
than the Consolidated EBITDA Coverage Ratio immediately before
giving effect to such transaction; provided, however, that the
Consolidated EBITDA Coverage Ratio exceeds 1.0 to 1.0;
(iv) immediately after giving effect to such transaction, the
resulting, surviving or transferee Person has Consolidated Adjusted
Net Worth in an amount which is not less than the Consolidated
Adjusted Net Worth of the Company prior to such transaction or, in
the case of a consolidation or merger of the Company and Holdings,
immediately after giving effect to such transaction, the resulting,
surviving or transferee Person has Consolidated Adjusted Net Worth
in an amount which is not less than the Consolidated Adjusted Net
Worth of Holdings prior to such transaction; and
(v) the Company has delivered to the Administrative Agent an
Opinion of Counsel and an Officers' Certificate, each stating that
such consolidation, merger or transfer and such supplemental
agreement (if any) comply with this Agreement.
The resulting, surviving or transferee Person shall be the successor
Company and shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under the Agreement, but the
predecessor Company in the case of a conveyance, transfer or lease shall<PAGE>
67
not be released from the obligation to pay the principal of or the
interest on the Term Loans when due.
6.12 Fiscal Year. Each of Holdings and the Company shall not
permit its fiscal year to end on a day other than December 31.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) The Company shall fail to pay any principal of any Term
Loan when due in accordance with the terms hereof (including
pursuant to Section 6.8 or 6.10); or the Company shall fail to pay
any interest on any Term Loan, or any other amount payable
hereunder, within five Business Days after any such interest or
other amount becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by the
Company or any other Loan Party herein or in any other Term Loan
Document or which is contained in any certificate, document or
financial or other statement furnished at any time under or in
connection with this Agreement or any other Term Loan Document shall
prove to have been incorrect in any material respect on or as of the
date made or deemed made; or
(c) Any Loan Party shall default in the observance or
performance of any agreement contained in Section 5.7(a), 5.9 or 6
of this Agreement; or
(d) The Company or any other Loan Party shall default in the
observance or performance of any other agreement contained in this
Agreement or any other Term Loan Document (other than as provided in
paragraphs (a) through (c) of this Section 7), and such default
shall continue unremedied for a period of 30 days after the earlier
of (i) the date on which a senior officer of Holdings or the Company
first knew or reasonably should have known of such default or (ii)
the date on which written notice thereof shall have been given to
the Company by the Administrative Agent or the Required Lenders; or
(e) Holdings, the Company or any of its Significant
Subsidiaries shall (i) default in any payment when due of principal
of or interest on any Indebtedness (other than the Term Loans) or in
the payment of any Guarantee Obligation; or (ii) default in the
observance or performance of any other agreement or condition
relating to any such Indebtedness or Guarantee Obligation or
contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event shall occur or condition exist,
the effect of which default or other event or condition is to cause,
or to permit the holder or holders of such Indebtedness or
beneficiary or beneficiaries of such Guarantee Obligation (or a
trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, such Indebtedness to become due prior to
its stated maturity or such Guarantee Obligation to become payable;
provided, however, that a default, event or condition described in
clause (i) or (ii) above shall not constitute an Event of Default
under this Agreement unless, at the time of such default, defaults,<PAGE>
68
events or conditions of the type described in subclauses (i) and
(ii) of this paragraph (e) shall have occurred and be continuing
with respect to Indebtedness and/or Guarantee Obligations the
outstanding principal amount of which exceeds in the aggregate
$10,000,000; or
(f) (i) Holdings, the Company or any of its Significant
Subsidiaries shall commence any case, proceeding or other action (A)
under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or
relief of debtors, seeking to have an order for relief entered with
respect to it, or seeking to adjudicate it a bankrupt or insolvent,
or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian or other similar official for it or for all or
any substantial part of its assets, or Holdings, the Company or any
of its Significant Subsidiaries shall make a general assignment for
the benefit of its creditors; or (ii) there shall be commenced
against Holdings, the Company or any of its Significant Subsidiaries
any case, proceeding or other action of a nature referred to in
clause (i) above which (A) results in the entry of an order for
relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or
(iii) there shall be commenced against Holdings, the Company or any
of its Significant Subsidiaries any case, proceeding or other action
seeking issuance of a warrant of attachment, execution, distraint or
similar process against all or any substantial part of its assets
which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (iv) Holdings, the
Company or any of its Significant Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or
(iii) above; or (v) Holdings, the Company or any of its Significant
Subsidiaries shall generally not, or shall be unable to, or shall
admit in writing its inability to, pay its debts as they become due;
or
(g) One or more judgments or decrees shall be entered against
Holdings, the Company or any of its Significant Subsidiaries
involving in the aggregate a liability (not paid or fully covered by
insurance as to which the relevant insurance company has not
disputed coverage) of $10,000,000 or more and (i) all such judgments
or decrees shall not have been vacated, discharged, stayed or bonded
pending appeal within 60 days from the entry thereof or (ii)
enforcement proceedings shall have been commenced by any creditor
upon such judgment or order;
then, and in any such event, (A) if such event is an Event of Default
specified in clause (i) or (ii) of paragraph (f) above with respect to the
Company, automatically the Term Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement shall
immediately become due and payable, and (B) if such event is any other
Event of Default, with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the<PAGE>
69
Administrative Agent shall, by notice of default to the Company, declare
the Term Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement to be due and payable forthwith,
whereupon the same shall immediately become due and payable.
Except as expressly provided above in this Section 7, presentment,
demand, protest and all other notices of any kind are hereby expressly
waived.
SECTION 8. THE ADMINISTRATIVE AGENT
8.1 Appointment. Each Lender hereby irrevocably designates and
appoints Chemical as the Administrative Agent of such Lender under this
Agreement and the other Term Loan Documents, and each Term Lender
irrevocably authorizes Chemical, as the Administrative Agent for such
Lender, to take such action on its behalf under the provisions of this
Agreement and the other Term Loan Documents and to exercise such powers
and perform such duties as are expressly delegated to the Administrative
Agent by the terms of this Agreement and the other Term Loan Documents,
together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement,
the Administrative Agent shall not have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship
with any Lender, and no implied covenants, functions, responsibilities,
duties, obligations or liabilities shall be read into this Agreement or
any other Term Loan Document or otherwise exist against the Administrative
Agent.
8.2 Delegation of Duties. The Administrative Agent may execute
any of its duties under this Agreement and the other Term Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice
of counsel concerning all matters pertaining to such duties. The
Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
8.3 Exculpatory Provisions. Neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to
be taken by it or such Person under or in connection with this Agreement
or any other Term Loan Document (except for its or such Person's own gross
negligence or willful misconduct) or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties
made by the Company or any other Loan Party or any officer thereof
contained in this Agreement or any other Term Loan Document or in any
certificate, report, statement or other document referred to or provided
for in, or received by the Administrative Agent under or in connection
with, this Agreement or any other Term Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of
this Agreement or any other Term Loan Document or for any failure of the
Company or any other Loan Party to perform its obligations hereunder or
thereunder. The Administrative Agent shall not be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance
of any of the agreements contained in, or conditions of, this Agreement or
any other Term Loan Document, or to inspect the properties, books or
records of the Company or any other Loan Party.<PAGE>
70
8.4 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon
any Term Note, writing, resolution, notice, consent, certificate,
affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it
to be genuine and correct and to have been signed, sent or made by the
proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Company), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Term Note as the
owner thereof for all purposes unless a written notice of assignment,
negotiation or transfer thereof shall have been filed with the
Administrative Agent. The Administrative Agent shall be fully justified
in failing or refusing to take any action under this Agreement or any
other Term Loan Document unless it shall first receive such advice or
concurrence of the Required Lenders (except as otherwise expressly
provided in Section 10.1) as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. The Administrative Agent shall in all
cases be fully protected in acting, or in refraining from acting, under
this Agreement and the other Term Loan Documents in accordance with a
request of the Required Lenders (except as otherwise expressly provided in
Section 10.1), and such request and any action taken or failure to act
pursuant thereto shall be binding upon all the Lenders and all future
holders of the Term Loans.
8.5 Notice of Default. The Administrative Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or
Event of Default unless the Administrative Agent has received notice from
a Lender or the Company referring to this Agreement, describing such
Default or Event of Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders.
The Administrative Agent shall take such action with respect to such
Default or Event of Default as shall be reasonably directed by the
Required Lenders (except as otherwise expressly provided in Section 10.1);
provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
8.6 Non-Reliance on Administrative Agent and Other Lenders. Each
Lender expressly acknowledges that neither the Administrative Agent nor
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representations or warranties to it and that no
act by the Administrative Agent hereafter taken, including any review of
the affairs of the Company or any other Loan Party, shall be deemed to
constitute any representation or warranty by the Administrative Agent to
any Lender. Each Lender represents to the Administrative Agent that it
has, independently and without reliance upon the Administrative Agent or
any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Company and the other Loan Parties and made its<PAGE>
71
own decision to make its Term Loans hereunder and enter into this
Agreement. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and
based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit analysis, appraisals and
decisions in taking or not taking action under this Agreement and the
other Term Loan Documents, and to make such investigation as it deems
necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Company and the
other Loan Parties. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative
Agent hereunder, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, condition (financial or
otherwise), prospects or creditworthiness of the Company or any other Loan
Party which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
affiliates.
8.7 Indemnification. The Lenders agree to indemnify the
Administrative Agent in its capacity as such (to the extent not reimbursed
by the Company and without limiting the obligation of the Company to do
so), ratably according to the respective amounts of their Term Loan
Commitments, from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind whatsoever which may at any time (including,
without limitation, at any time following the payment of the Term Loans)
be imposed on, incurred by or asserted against the Administrative Agent in
any way relating to or arising out of this Agreement, any of the other
Term Loan Documents or any documents contemplated hereby or thereby or
referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by the Administrative Agent under
or in connection with any of the foregoing; provided that no Lender shall
be liable for the payment of any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting solely from the Administrative Agent's gross
negligence or willful misconduct. The agreements in this Section 8.7
shall survive the payment of the Term Loans and all other amounts payable
hereunder.
8.8 Administrative Agent in Its Individual Capacity. The
Administrative Agent and its affiliates may make loans to, accept deposits
from and generally engage in any kind of business with the Company as
though the Administrative Agent were not the Administrative Agent
hereunder and under the other Term Loan Documents. With respect to its
Term Loans made or renewed by it, any Term Note issued to it, the
Administrative Agent shall have the same rights and powers under this
Agreement and the other Term Loan Documents as any Lender and may exercise
the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its
individual capacity.
8.9 Successor Administrative Agent. The Administrative Agent may
resign as Administrative Agent upon 10 days' notice to the Lenders. If
the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Term Loan Documents, then the Required Lenders<PAGE>
72
shall appoint from among the Lenders a successor agent for the Lenders,
which successor agent shall be approved by the Company (which approval
shall not be unreasonably withheld), whereupon such successor agent shall
succeed to the rights, powers and duties of the Administrative Agent, and
the term "Administrative Agent" shall mean such successor agent effective
upon its appointment, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other
or further act or deed on the part of such former Administrative Agent or
any of the parties to this Agreement or any holders of the Term Loans.
After any retiring Administrative Agent's resignation as Administrative
Agent, the provisions of this Section 8.9 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement and the other Term Loan Documents.
SECTION 9. GUARANTEE
9.1 Guarantee. In order to induce the Administrative Agent and
the Lenders to execute and deliver this Agreement and to make or maintain
the Term Loans hereunder, and in consideration thereof, Holdings hereby
unconditionally and irrevocably guarantees to the Administrative Agent,
for the ratable benefit of the Lenders, the prompt and complete payment
and performance by the Company when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations, and Holdings further agrees
to pay any and all expenses (including, without limitation, all reasonable
fees, charges and disbursements of counsel) which may be paid or incurred
by the Administrative Agent or by the Lenders in enforcing, or obtaining
advice of counsel in respect of, any of their rights under the guarantee
contained in this Section 9. The guarantee contained in this Section 9,
subject to Section 9.5, shall remain in full force and effect until the
Obligations are paid in full.
Holdings agrees that whenever, at any time, or from time to time, it
shall make any payment to the Administrative Agent or any Lender on
account of its liability under this Section 9, it will notify the
Administrative Agent and such Lender in writing that such payment is made
under the guarantee contained in this Section 9 for such purpose. No
payment or payments made by the Company or any other Person or received or
collected by the Administrative Agent or any Lender from the Company or
any other Person by virtue of any action or proceeding or any setoff or
appropriation or application, at any time or from time to time, in
reduction of or in payment of the Obligations shall be deemed to modify,
reduce, release or otherwise affect the liability of Holdings under this
Section 9 which, notwithstanding any such payment or payments, shall
remain liable for the Obligations until, subject to Section 9.5, the
Obligations are paid in full.
9.2 No Subrogation, Contribution, Reimbursement or Indemnity.
Notwithstanding anything to the contrary in this Section 9, Holdings
hereby irrevocably waives all rights which may have arisen in connection
with the guarantee contained in this Section 9 to be subrogated to any of
the rights (whether contractual, under the Bankruptcy Code, including
Section 509 thereof, under common law or otherwise) of the Administrative
Agent or any Lender against the Company or against the Administrative
Agent or any Lender for the payment of the Obligations, until all amounts
owing to the Administrative Agent and the Lenders by the Company on
account of the Obligations are paid in full. Holdings hereby further<PAGE>
73
irrevocably waives all contractual, common law, statutory and other rights
of reimbursement, contribution, exoneration or indemnity (or any similar
right) from or against the Company or any other Person which may have
arisen in connection with the guarantee contained in this Section 9, until
all amounts owing to the Administrative Agent and the Lenders by the
Company on account of the Obligations are paid in full. So long as the
Obligations remain outstanding, if any amount shall be paid by or on
behalf of the Company to Holdings on account of any of the rights waived
in this Section 9.2, such amount shall be held by Holdings in trust,
segregated from other funds of Holdings, and shall, forthwith upon receipt
by Holdings, be turned over to the Administrative Agent in the exact form
received by Holdings (duly indorsed by Holdings to the Administrative
Agent, if required), to be applied against the Obligations, whether
matured or unmatured, in such order as the Administrative Agent may
determine.
9.3 Amendments, etc. with respect to the Obligations. Holdings
shall remain obligated under this Section 9 notwithstanding that, without
any reservation of rights against Holdings, and without notice to or
further assent by Holdings, any demand for payment of or reduction in the
principal amount of any of the Obligations made by the Administrative
Agent or any Lender may be rescinded by the Administrative Agent or such
Lender, and any of the Obligations continued, and the Obligations, or the
liability of any other party upon or for any part thereof, or any
collateral security or guarantee therefor or right of offset with respect
thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered
or released by the Administrative Agent or any Lender, and this Agreement,
any other Term Loan Document, and any other documents executed and
delivered in connection therewith may be amended, modified, supplemented
or terminated, in whole or in part, as the Lenders (or the Required
Lenders, as the case may be) may deem advisable from time to time, and any
collateral security, guarantee or right of offset at any time held by the
Administrative Agent or any Lender for the payment of the Obligations may
be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for
the Obligations or for the guarantee contained in this Section 9 or any
property subject thereto.
9.4 Guarantee Absolute and Unconditional. Holdings waives any and
all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agent
or any Lender upon the guarantee contained in this Section 9 or acceptance
of the guarantee contained in this Section 9; the Obligations, and any of
them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 9; and all dealings between the
Company or Holdings, on the one hand, and the Administrative Agent and the
Lenders, on the other, shall likewise be conclusively presumed to have
been had or consummated in reliance upon the guarantee contained in this
Section 9. Holdings waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon the Company or
Holdings with respect to the Obligations. The guarantee contained in this
Section 9 shall be construed as a continuing, absolute, irrevocable and
unconditional guarantee of payment without regard to (a) the validity or<PAGE>
74
enforceability of this Agreement or any other Term Loan Document, any of
the Obligations or any collateral security therefor or guarantee or right
of offset with respect thereto at any time or from time to time held by
the Administrative Agent or any Lender, (b) any defense, setoff or
counterclaim (other than a defense of payment or performance) which may at
any time be available to or be asserted by the Company against the
Administrative Agent or any Lender, or (c) any other circumstance
whatsoever (with or without notice to or knowledge of the Company or
Holdings) which constitutes, or might be construed to constitute, an
equitable or legal discharge of the Company for the Obligations, or of
Holdings under the guarantee contained in this Section 9, in bankruptcy or
in any other instance. When the Administrative Agent or any Lender is
pursuing its rights and remedies under this Section 9 against Holdings,
the Administrative Agent or any Lender may, but shall be under no
obligation to, pursue such rights and remedies as it may have against the
Company or any other Person or against any collateral security or
guarantee for the Obligations or any right of offset with respect thereto,
and any failure by the Administrative Agent or any Lender to pursue such
other rights or remedies or to collect any payments from the Company or
any such other Person or to realize upon any such collateral security or
guarantee or to exercise any such right of offset, or any release of the
Company or any such other Person or of any such collateral security,
guarantee or right of offset, shall not relieve Holdings of any liability
under this Section 9, and shall not impair or affect the rights and
remedies, whether express, implied or available as a matter of law, of the
Administrative Agent and the Lenders against Holdings.
9.5 Reinstatement. The guarantee contained in this Section 9
shall continue to be effective, or be reinstated, as the case may be, if
at any time payment, or any part thereof, of any of the Obligations is
rescinded or must otherwise be restored or returned by the Administrative
Agent or any Lender upon the insolvency, bankruptcy, dissolution,
liquidation or reorganization of the Company or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, the Company or any substantial part of its property,
or otherwise, all as though such payments had not been made.
9.6 Payments. Holdings hereby agrees that any payments in respect
of the Obligations pursuant to this Section 9 will be paid to the
Administrative Agent without setoff or counterclaim in Dollars at the
office of the Administrative Agent specified in Section 10.2.
SECTION 10. MISCELLANEOUS
10.1 Amendments and Waivers. Neither this Agreement, any other
Term Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10. With the written consent of the Required Lenders, the
Administrative Agent and each Loan Party party to the relevant Term Loan
Document may, from time to time, enter into written amendments,
supplements or modifications hereto and to the other Term Loan Documents
for the purpose of adding any provisions to this Agreement or the other
Term Loan Documents or changing in any manner the rights of the Lenders or
of the Company or the other Loan Parties hereunder or thereunder or
waiving, on such terms and conditions as the Administrative Agent may
specify in such instrument, any of the requirements of this Agreement or<PAGE>
75
the other Term Loan Documents or any Default or Event of Default and its
consequences; provided, that no such waiver and no such amendment,
supplement or modification shall (a) forgive the principal amount or
extend the final stated maturity or any scheduled installment of any Term
Loan, or reduce the stated rate of interest on any Term Loan or extend the
scheduled time of payment of interest thereon or increase the amount of
any Lender's Term Loan Commitment, in each case without the written
consent of each Lender directly affected thereby; (b) amend, modify or
waive any provision of this Section 10.1 or reduce the percentage
specified in the definition of Required Lenders, or consent to the
assignment or transfer by Holdings or the Company of any of its rights and
obligations under this Agreement and the other Term Loan Documents
(except, in the case of Holdings, as expressly contemplated by Section
5.9) in each case without the written consent of all the Lenders; or (c)
amend, modify or waive any provision of Section 8 without the written
consent of the then Administrative Agent. Any such waiver and any such
amendment, supplement or modification shall apply equally to each of the
Lenders and shall be binding upon the Company, the other Loan Parties, the
Lenders, the Administrative Agent and all future holders of the Term
Loans. In the case of any waiver, the Company, the other Loan Parties,
the Lenders and the Administrative Agent shall, to the extent provided in
such waiver, be restored to their former position and rights hereunder and
under the other Term Loan Documents, and any Default or Event of Default
waived shall be deemed to be cured and not continuing; but no such waiver
shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon.
10.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including
by telecopy, telegraph or telex), and, unless otherwise expressly provided
herein, shall be deemed to have been duly given or made when delivered by
hand, or three days after being deposited in the mail, postage prepaid,
or, in the case of telecopy notice, when received, or, in the case of
telegraphic notice, when delivered to the telegraph company, or, in the
case of telex notice, when sent, answerback received, addressed as follows
in the case of Holdings, the Company and the Administrative Agent, and as
set forth in Schedule 1.1 in the case of the other parties hereto, or to
such other address as may be hereafter notified by the respective parties
hereto and any future holders of the Term Loans:
Holdings: BCP/Essex Holdings Inc.
c/o Bessemer Holdings, L.P.
630 Fifth Avenue
New York, New York 10111
Attention: Robert D. Lindsay
Telecopy: 212-969-9032
with copies to: Essex Group, Inc. (at the address set forth
below)
and Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, New York 10019
Attention: Kris F. Heinzelman, Esq.
Telecopy: 212-474-3700<PAGE>
76
The Company: Essex Group, Inc.
1601 Wall Street
Fort Wayne, Indiana 46802
Attention: David A. Owen
Telecopy: 219-461-4762
with copies to: BCP/Essex Holdings Inc. (at
the address set forth above)
and Cravath, Swaine & Moore (at
the address set forth above)
The Administrative
Agent: Chemical Bank
c/o Chemical Securities Inc.
10 South LaSalle Street
Chicago, Illinois 60603
Attention: Jonathan E. Twichell
Telecopy: 312-807-4077
with copies to: Chemical Bank Agency Services Corporation
Grand Central Tower
140 East 45th Street
New York, New York 10017
Attention: John Bromage
Telecopy: 212-622-0854
provided that any notice, request or demand to or upon the Administrative
Agent or the Lenders pursuant to Section 2.3, 2.5 or 2.7 shall not be
effective until received. Each telecopy notice to any Lender shall be
followed by a hard copy thereof by mail or hand delivery, provided that
the failure to do so shall not affect the effectiveness of any such notice
as provided above.
10.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Administrative Agent or any
Lender, any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided
are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.
10.4 Survival of Representations and Warranties. All
representations and warranties made hereunder, under the other Term Loan
Documents and in any document, certificate or statement delivered pursuant
hereto or thereto or in connection herewith or therewith shall survive the
execution and delivery of this Agreement and the other Term Loan
Documents.
10.5 Payment of Expenses and Taxes. The Company agrees (a) to pay
or reimburse the Administrative Agent for all its out-of-pocket costs and
expenses and internally allocated charges and reasonable fees incurred in
connection with the development, preparation and execution of this
Agreement and the other Term Loan Documents and any other documents<PAGE>
77
prepared in connection herewith or therewith, the consummation and
administration of the transactions contemplated hereby and thereby and the
syndication of the credit facilities contained herein, including, without
limitation, the reasonable fees, charges and disbursements of counsel to
the Administrative Agent, (b) to pay or reimburse the Administrative Agent
for all its reasonable costs and expenses incurred in connection with any
amendment, supplement or other modification to this Agreement, any other
Term Loan Documents or any other documents prepared in connection herewith
or therewith, including, without limitation, reasonable fees, charges and
disbursements of counsel to the Administrative Agent, (c) to pay or
reimburse each Lender and the Administrative Agent for all its reasonable
costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Term Loan
Documents and any other documents prepared in connection herewith or
therewith, including, without limitation, reasonable fees, charges and
disbursements of counsel to the Administrative Agent and to each Lender
(including the reasonable allocated costs of in-house counsel for any
Lender), (d) to pay, indemnify each Lender and the Administrative Agent
against, and hold each Lender and the Administrative Agent harmless from,
any and all recording and filing fees and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other
taxes, if any, which may be payable or determined to be payable in
connection with the execution and delivery of, or consummation or
administration of any of the transactions contemplated by, or any
amendment, supplement or modification of, or any waiver or consent under
or in respect of, this Agreement, the other Term Loan Documents and any
other documents prepared in connection herewith or therewith, and (e) to
pay, and indemnify and hold harmless each Lender and the Administrative
Agent and their respective officers, directors, employees, affiliates,
agents and controlling persons (each, an "indemnitee") from and against,
any and all other liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses, charges and disbursements of
any kind or nature whatsoever (including, without limitation, reasonable
fees, charges and disbursements of counsel to such indemnitee) with
respect to the execution, delivery, enforcement, performance and
administration of this Agreement, the other Term Loan Documents and any
such other documents, or the use of proceeds of the Term Loans, or any
claim, litigation, investigation or proceeding relating to any of the
foregoing, regardless of whether any indemnitee is a party thereto or
whether any such claim, litigation, investigation or proceeding is brought
by the Company or by any other Person, and to reimburse each indemnitee
upon demand for any legal or other reasonable expenses incurred in
connection with investigating or defending any of the foregoing (all the
foregoing, collectively, the "indemnified liabilities"); provided that the
Company shall have no obligation hereunder to any indemnitee with respect
to indemnified liabilities to the extent such indemnified liabilities are
found by a final and nonappealable decision of a court of competent
jurisdiction to have resulted primarily from the gross negligence or
willful misconduct of such indemnitee. The agreements in this Section
10.5 shall survive repayment of the Term Loans and all other amounts
payable hereunder.
10.6 Successors and Assigns; Assignments and Participations. (a)
This Agreement shall be binding upon and inure to the benefit of Holdings,
the Company, the Lenders, the Administrative Agent, all future holders of
the Term Loans, and their respective successors and assigns, except that<PAGE>
78
neither Holdings nor the Company may assign or transfer any of its rights
or obligations under this Agreement (except, in the case of Holdings, as
expressly contemplated by Section 5.9) without the prior written consent
of each Lender.
(b) Each Lender may, with the prior consent of the Company and the
Administrative Agent (such consent not to be unreasonably withheld but in
the case of the Company it shall be deemed reasonable for the Company to
withhold its consent if as a result of any assignment the Company would be
required to pay any additional amounts pursuant to Section 2.13 or 2.14),
assign to one or more banks or other entities all or a portion of its
rights and obligations under this Agreement and the other Term Loan
Documents (including, without limitation, all or a portion of its Term
Loan); provided, however, that (i) except in the case of an assignment of
all of a Lender's rights and obligations under this Agreement, after
giving effect to each such assignment, the amount of the Term Loan of the
assigning Lender and the assignee Lender shall, in each case, be no less
than one-tenth of the aggregate principal amount of all Term Loans then
outstanding (or such lesser amount as the Company may consent to), and
(ii) the parties to each such assignment shall execute and deliver to the
Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance and pay to the Administrative Agent a processing
and recordation fee of $4,000. Upon such execution, delivery, acceptance
and recording, from and after the effective date specified in such
Assignment and Acceptance, (x) the assignee thereunder shall be a party
hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder and (y) the Lender assignor
thereunder shall, to the extent that rights and obligations hereunder have
been assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement (and,
in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other
than as provided in such Assignment and Acceptance, such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in or in
connection with this Agreement, the other Term Loan Documents or any other
instrument or document furnished pursuant hereto or thereto, or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, the other Term Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (ii) such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Company or
any other Loan Party or the performance or observance by the Company or
any other Loan Party of any of its obligations under this Agreement, the
other Term Loan Documents or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee confirms that it has
received a copy of this Agreement, together with copies of the financial
statements referred to in Section 3.1 and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance; (iv) such<PAGE>
79
assignee will, independently and without reliance upon the Administrative
Agent, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement, the other Term Loan Documents or any other
instrument or document furnished pursuant hereto or thereto; (v) such
assignee appoints and authorizes the Administrative Agent to take such
action as agent on its behalf and to exercise such powers and discretion
under this Agreement, the other Term Loan Documents or any other
instrument or document furnished pursuant hereto or thereto as are
delegated to the Administrative Agent by the terms hereof or thereof,
together with such powers and discretion as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance
with their terms all of the obligations that by the terms of this
Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, on behalf of the Company, shall
maintain at the address of the Administrative Agent referred to in Section
10.2 a copy of each Assignment and Acceptance delivered to it and a
register (the "Register") for the recordation of the names and addresses
of the Lenders and the Term Loan Commitment of, and principal amount of
the Term Loans owing to, each Lender from time to time. The entries in
the Register shall be conclusive, in the absence of manifest error, and
the Company, the Administrative Agent and the Lenders may treat each
Person whose name is recorded in the Register as the owner of a Term Loan
or other obligation hereunder as the owner thereof for all purposes of
this Agreement and the other Term Loan Documents, notwithstanding any
notice to the contrary. The Register shall be available for inspection by
the Company or any Lender at any reasonable time and from time to time
upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance accepted by an
assigning Lender and an assignee, the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the
form of Exhibit D, (i) accept such Assignment and Acceptance, (ii) record
the information contained therein in the Register and (iii) give prompt
notice thereof to the Company. Promptly following its receipt of such
notice, the Company, at its own expense, shall execute and deliver to the
Administrative Agent in exchange for the surrendered Term Note a new Term
Note to the order of such assignee in an amount equal to the Term Loan
assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a Term Loan hereunder, a new Term Note to
the order of the assigning Lender in an amount equal to the Term Loan
retained by it hereunder. Such new Term Note shall be in an aggregate
principal amount equal to the aggregate principal amount of such
surrendered Term Note, shall be dated the effective date of such
Assignment and Acceptance and shall otherwise be in substantially the form
of Exhibit A.
(f) Each Lender may sell participations to one or more banks or
other entities (each, a "Participant") in all or a portion of its rights
and obligations under this Agreement (including, without limitation, all
or a portion of its Term Loan); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) such Lender shall remain the holder<PAGE>
80
of the Term Note issued to it for all purposes of this Agreement, (iv) for
purposes of Section 2.14, such Lender shall continue to be treated as if
it had not sold any such participation, such that no Participant shall
have any right to any indemnity or additional payment under such Section,
and such Lender shall be entitled to receive additional payments pursuant
to such Section calculated on the assumption that it had not sold any such
participation, (v) the Company, the Administrative Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement
and (vi) no Participant under any such participation shall have any right
to approve any amendment or waiver of any provision of any Term Loan
Document, or any consent to any departure by any Loan Party therefrom,
except to the extent that such amendment, waiver or consent would reduce
the principal of, or interest on, the Term Loans or any fees payable
hereunder, in each case to the extent subject to such participation, or
postpone the date of the final maturity of, or any date fixed for any
payment of interest on, the Term Loans, in each case to the extent subject
to such participation. Notwithstanding the foregoing, the Company agrees
that each such Participant shall, to the extent provided in its
participation, be entitled to the rights and benefits under Sections 2.13
and 2.15 and all rights to, or rights to request, information under this
Agreement with respect to its participating interest, in each case as if
such Participant were a Lender and in each case as with effect as from the
date of effectiveness of the applicable participation.
(g) The Company authorizes each Lender to disclose to any
Participant or assignee (each, a "Transferee") and any prospective
Transferee any and all financial information in such Lender's possession
concerning the Company and its Affiliates which has been delivered to such
Lender by or on behalf of the Company pursuant to this Agreement or which
has been delivered to such Lender by or on behalf of the Company in
connection with such Lender's credit evaluation of the Company and its
Affiliates prior to becoming a party to this Agreement; provided, that,
unless the Administrative Agent and the Company shall otherwise agree,
prior to any such disclosure such Transferee shall have executed a
Confidentiality Letter in the form of Exhibit E.
(h) Nothing herein shall prohibit any Lender from pledging or
assigning all or any portion of its Term Loans to any Federal Reserve Bank
in accordance with applicable law.
10.7 Adjustments; Setoff.
(a) If any Lender (a "benefitted Lender") shall at any time receive
any payment of all or part of its Term Loans, or interest thereon, or
receive any collateral in respect thereof (whether voluntarily or
involuntarily, by setoff, pursuant to events or proceedings of the nature
referred to in Section 7(f), or otherwise), in a greater proportion than
any such payment to or collateral received by any other Lender, if any, in
respect of such other Lender's Term Loans, or interest thereon, such
benefitted Lender shall purchase for cash from the other Lenders such
portion of each such other Lender's Term Loans, or shall provide such
other Lenders with the benefits of any such collateral, or the proceeds
thereof, as shall be necessary to cause such benefitted Lender to share
the excess payment or benefits of such collateral or proceeds ratably with
each of the Lenders; provided, however, that if all or any portion of such<PAGE>
81
excess payment or benefits is thereafter recovered from such benefitted
Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.
The Company agrees that each Lender so purchasing a portion of another
Lender's Term Loans may exercise all rights of payment (including, without
limitation, rights of setoff) with respect to such portion as fully as if
such Lender were the direct holder of such portion.
(b) In addition to any rights and remedies of the Lenders provided
by law, upon the occurrence and during the continuance of an Event of
Default, each Lender shall have the right, without prior notice to
Holdings or the Company, any such notice being expressly waived by
Holdings and the Company to the extent permitted by applicable law, upon
any amount becoming due and payable by Holdings or the Company hereunder
or under any Term Notes (whether at the stated maturity, by acceleration
or otherwise) to set off and appropriate and apply against such amount any
and all deposits (general or special, time or demand, provisional or
final), in any currency, and any other credits, indebtedness or claims, in
any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender
or any branch or agency thereof to or for the credit or the account of
Holdings or the Company. Each Lender agrees promptly to notify Holdings,
the Company and the Administrative Agent after any such setoff and
application made by such Lender; provided that the failure to give such
notice shall not affect the validity of such setoff and application.
10.8 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute
one and the same instrument. A set of the copies of this Agreement signed
by all the parties shall be lodged with the Company and the Administrative
Agent.
10.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
10.10 INTEGRATION. THIS AGREEMENT REPRESENTS THE ENTIRE AGREEMENT
OF HOLDINGS, THE COMPANY, THE ADMINISTRATIVE AGENT AND THE LENDERS WITH
RESPECT TO THE SUBJECT MATTER HEREOF, WHICH SUCH AGREEMENT MAY NOT BE
CONTRADICTED BY EVIDENCE OF ANY PRIOR OR CONTEMPORANEOUS ORAL AGREEMENT
BETWEEN OR AMONG ANY OF THE PARTIES HERETO, AND THERE ARE NO PROMISES,
UNDERTAKINGS, REPRESENTATIONS OR WARRANTIES BY THE ADMINISTRATIVE AGENT OR
ANY LENDER RELATIVE TO THE SUBJECT MATTER HEREOF NOT EXPRESSLY SET FORTH
OR REFERRED TO HEREIN OR IN THE OTHER TERM LOAN DOCUMENTS.
10.11 GOVERNING LAW. THIS AGREEMENT AND ANY TERM NOTES AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND ANY TERM
NOTES SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.<PAGE>
82
10.12 Submission To Jurisdiction; Waivers. Each of Holdings and the
Company hereby irrevocably and unconditionally:
(a) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Term Loan
Documents to which it is a party, or for recognition and enforcement
of any judgment in respect thereof, to the non-exclusive general
jurisdiction of the courts of the State of New York, the courts of
the United States of America for the Southern District of New York,
and appellate courts from any thereof;
(b) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or
hereafter have to the venue of any such action or proceeding in any
such court or that such action or proceeding was brought in an
inconvenient court and agrees not to plead or claim the same;
(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered
or certified mail (or any substantially similar form of mail),
postage prepaid, to Holdings or the Company, as the case may be, at
its address set forth in Section 10.2 or at such other address of
which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or
proceeding referred to in this Section 10.12 any special, exemplary,
punitive or consequential damages.
10.13 Acknowledgements. Each of Holdings and the Company hereby
acknowledges that:
(a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Term Loan
Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship to Holdings or the Company, and the
relationship between Administrative Agent and Lenders, on one hand,
and Holdings and the Company, on the other hand, is solely that of
creditor and debtor; and
(c) no joint venture exists among the Lenders or among
Holdings, the Company and the Lenders.
10.14 WAIVERS OF JURY TRIAL. HOLDINGS, THE COMPANY, THE
ADMINISTRATIVE AGENT AND EACH OF THE LENDERS HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER TERM LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.<PAGE>
83
10.15 Confidentiality. Neither the Administrative Agent nor any
Lender shall disclose any Confidential Information to any Person without
the prior consent of the Company, other than (a) to the Administrative
Agent's or such Lender's affiliates and their officers, directors,
employees, agents and advisors, (b) to actual or prospective assignees and
participants, and then only on a confidential basis as contemplated in
Section 10.6(g) and upon the prior delivery of the confidentiality letter
contemplated therein, (c) as required by any law, rule or regulation or
judicial process and (d) as requested or required by any state, federal or
foreign authority or examiner (including the National Association of
Insurance Commissioners) regulating or having jurisdiction over the
Administrative Agent or any Lender.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered in New York, New York by their proper and
duly authorized officers as of the day and year first above written.
BCP/ESSEX HOLDINGS INC.
By: /s/ David A. Owen
---------------------------
Name: David A. Owen
Title: Executive Vice President
ESSEX GROUP, INC.
By: /s/ David A. Owen
---------------------------
Name: David A. Owen
Title: Executive Vice President
The Administrative Agent:
CHEMICAL BANK
By: /s/ Lisa D. Benitez
---------------------------
Name: Lisa D. Benitez
Title: Vice President
The Lenders:
CHL HIGH YIELD LOAN PORTFOLIO, A UNIT
OF CHEMICAL BANK
By: /s/ Richard Stewart
---------------------------
Name: Richard Stewart
Title: Vice President<PAGE>
84
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ Timothy M. Barnes
---------------------------
Name: Timothy M. Barnes
Title: Managing Director
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: /s/ Jerome R. Powers
---------------------------
Name: Jerome R. Powers
Title: Vice President
ORIX USA CORPORATION
By: /s/ Masaaki Tashiro
---------------------------
Name: Massaaki Tashiro
Title: Deputy President & COO
PROTECTIVE LIFE INSURANCE COMPANY
By: /s/ Mark K. Okada
---------------------------
Name: Mark K. Okada
Title: Principal
Protective Asset Management Co.
THE TRAVELERS INDEMNITY COMPANY
By: /s/ John W. Petchler
---------------------------
Name: John W. Petchler
Title: Second Vice President<PAGE>
85
THE TRAVELERS INSURANCE COMPANY
By: /s/ John W. Petchler
---------------------------
Name: John W. Petchler
Title: Second Vice President<PAGE>
Schedule 1.1
Amount of Term
Name and Address of Lender Loan Commitment
-------------------------- ---------------
CHL HIGH YIELD LOAN PORTFOLIO,
A UNIT OF CHEMICAL BANK $15,000,000
270 Park Avenue, 8th Floor
New York, New York 10017
Attention: Richard W. Stewart
Telephone: 212-270-4679
Telecopy: 212-270-9647
THE FIRST NATIONAL BANK OF BOSTON $5,000,000
100 Federal Street
Boston, Massachusetts 02110
Attention: Tim Barnes
Telephone: 617-434-7976
Telecopy:
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY $15,000,000
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Jeffrey J. Lueken
Telephone: 414-299-2572
Telecopy: 414-299-7124
ORIX USA CORPORATION $5,000,000
780 Third Avenue
New York, New York 10017
Attention: Arnold Kawano
Telephone: 212-418-8355
Telecopy: 212-418-8308
PROTECTIVE LIFE INSURANCE COMPANY $5,000,000
13455 Noel Road, LB#45
Two Galleria Tower, Suite 1150
Dallas, Texas 75230
Attention: Mark Okada
Telephone: 214-233-4300
Telecopy: 214-233-4343
TRAL & CO. $15,000,000
One Tower Square
Hartford, Connecticut 06183
Attention: John W. Petchler
Telephone: 203-277-5346
Telecopy: 203-954-5243<PAGE>
Schedule 3.1(b)
LIABILITIES, ETC.
None<PAGE>
Schedule 3.5
LEGAL BAR
None<PAGE>
Schedule 3.14
SUBSIDIARIES
Diamond Wire & Cable Co.
Essex Group, Inc.
Essex Group Export Inc.
Essex International, Inc.
Essex Wire Corporation
ExCel Wire and Cable Co.
Interstate Industries Holdings Inc.
Interstate Industries, Inc.
US Samica Corporation
Bristol Wire Company
Essex Group Mexico Inc.
Essex Group Mexico, S.A. de C.V.<PAGE>
Schedule 6.9
AGREEMENTS WITH AFFILIATES
None<PAGE>
EXHIBIT A
FORM OF TERM NOTE
$__________ New York, New York
__________ ___, 1995
FOR VALUE RECEIVED, the undersigned, ESSEX GROUP, INC., a Michigan
corporation (the "Company"), hereby unconditionally promises to pay to the
order of _____________________(the "Lender") at the office of Chemical
Bank, located at 270 Park Avenue, New York, New York 10017, in lawful
money of the United States of America and in immediately available funds,
the principal amount of _______________________ DOLLARS ($_________), or,
if less, the unpaid principal amount of the Term Loan made by the Lender
pursuant to Section 2.1(a) of the Agreement, as hereinafter defined. The
principal amount hereof shall be paid in the amounts and on the dates
specified in Section 2.2 of the Agreement. The Company further agrees to
pay interest in like money at such office on the unpaid principal amount
hereof from time to time outstanding at the rates and on the dates
specified in Section 2.9 of such Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which
shall be attached hereto and made a part hereof the date, Type and amount
of the Term Loan made by the Lender and the date and amount of each
payment or prepayment of principal with respect thereto, each conversion
of all or a portion thereof to another Type, each continuation of all or a
portion thereof as the same Type and, in the case of Eurodollar Term
Loans, the length of each Interest Period with respect thereto. Each such
endorsement shall constitute prima facie evidence of the accuracy of the
information endorsed. The failure to make any such endorsement or any
error in such endorsement shall not affect the obligations of the Company
in respect of such Term Loan.
This Note (a) is one of the Term Notes referred to in the Senior
Unsecured Note Agreement dated as of April ___, 1995 (as amended,
supplemented or otherwise modified from time to time, the "Agreement";
terms defined therein being used herein as therein defined unless
otherwise defined herein), among BCP/Essex Holdings Inc., the Company, the
Lender, the other banks and financial institutions from time to time
parties thereto and Chemical Bank, as administrative agent, (b) is subject
to the provisions of the Agreement and (c) is subject to optional and
mandatory prepayment in whole or in part as provided in Sections 2.5 and
2.6, respectively, of the Agreement.
Upon the occurrence of any one or more of the Events of Default, all
amounts then remaining unpaid on this Note shall become, or may be
declared to be, immediately due and payable, all as provided in Section 7
of the Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby
waive presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Agreement and
used herein shall have the meanings given to them in the Agreement.<PAGE>
2
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
ESSEX GROUP, INC.
By: __________________________________
Name: __________________________
Title: _________________________<PAGE>
Schedule A
to Term Note
LOANS, CONVERSIONS AND REPAYMENTS OF ABR TERM LOANS
[CAPTION]
<TABLE>
Amount of ABR Unpaid
Amount Amount Amount of Term Loans Principal
of ABR Converted to Principal of Converted to Balance of
Term ABR Term ABR Term Eurodollar ABR Term Notation
Date Loans Loans Loans Repaid Term Loans Loans Made By
---- ------- ------------ ------------ ------------- ---------- -------
<S> <C> <C> <C> <C> <C> <C>
/TABLE
<PAGE>
Schedule B
to Term Note
LOANS, CONTINUATIONS, CONVERSIONS AND REPAYMENTS OF EURODOLLAR TERM LOANS
[CAPTION]
<TABLE>
Interest Amount of Amount of
Period and Principal Eurodollar Unpaid
Amount Eurodollar of Term Loans Principal
Amount of Converted to Rate with Eurodollar Converted Balance of
Eurodollar Eurodollar Respect Term Loans to ABR Eurodollar Notation
Date Term Loans Term Loans Thereto Repaid Term Loans Term Loans Made By
---- ---------- ------------ ---------- ---------- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
/TABLE
<PAGE>
EXHIBIT B
FORM OF CLOSING CERTIFICATE
Pursuant to Section 4.1(d) of the Senior Unsecured Note
Agreement, dated as of April __, 1995 (the "Agreement"; terms defined
therein being used herein as therein defined unless otherwise defined
herein) among BCP/ESSEX HOLDINGS INC., ESSEX GROUP, INC., the lenders
parties thereto (the "Lenders") and CHEMICAL BANK, as administrative agent
for the Lenders, the undersigned [Vice] President of [Name of Loan Party]
(the "Certifying Loan Party") hereby certifies as follows:
1. The representations and warranties of the Certifying
Loan Party contained in each Term Loan Document to which it is a
party or in any certificate, document or financial or other
statement furnished by or on behalf of the Certifying Loan Party
pursuant to or in connection with any Term Loan Document are true
and correct in all material respects on and as of the date hereof
with the same effect as if made on the date hereof except for
representations and warranties stated to relate to a specific
earlier date, in which case such representations and warranties were
true and correct in all material respects as of such earlier date;
2. No Default or Event of Default has occurred and is
continuing as of the date hereof or after giving effect to any
extensions of credit to be made on the date hereof;
3. ____________________ is and at all times since
______________ 19__, has been the duly elected and qualified
[Assistant] Secretary of the Certifying Loan Party and the signature
set forth on the signature line for such officer below is such
officer's true and genuine signature;
and the undersigned [Assistant] Secretary of the Certifying Loan Party
hereby certifies as follows:
4. There are no liquidation or dissolution proceedings
pending or to my knowledge threatened against the Certifying Loan
Party, nor has any other event occurred affecting or, to my
knowledge, threatening the corporate existence of the Certifying
Loan Party;
5. The Certifying Loan Party is a corporation duly
incorporated, validly existing and in good standing under the laws
of the State of _______________;
6. Attached hereto as Exhibit A is a complete and correct
copy of resolutions duly adopted by the Board of Directors of the
Certifying Loan Party on _________, 19__; such resolutions have not
in any way been amended, modified, revoked or rescinded and have
been in full force and effect since their adoption to and including
the date hereof and are now in full force and effect; such
resolutions are the only corporate proceedings of the Certifying
Loan Party now in force relating to or affecting the matters
referred to therein;
7. Attached hereto as Exhibit B is a complete and correct
copy of the by-laws of the Certifying Loan Party as in effect at all<PAGE>
2
times since _________________, 19__ to and including the date
hereof; and attached hereto as Exhibit C is a true and complete copy
of the certificate of incorporation of the Certifying Loan Party as
in effect at all times since ___________________, 19__ to and
including the date hereof;
8. The following persons are now duly elected and qualified
officers of the Certifying Loan Party holding the offices indicated
next to their respective names below, and such officers have held
such offices with the Certifying Loan Party at all times since
________________, 19__ to and including the date hereof, and the
signatures appearing opposite their respective names below are the
true and genuine signatures of such officers, and each of such
officers is duly authorized to execute and deliver on behalf of the
Certifying Loan Party any Term Loan Document to which it is a party
and any certificate or other document to be delivered by the
Certifying Loan Party pursuant to any Term Loan Document:
NAME OFFICE SIGNATURE
______________________ [Vice] President ______________________
______________________ [Assistant] Secretary ______________________
IN WITNESS WHEREOF, the undersigned have hereto set our names.
______________________________ ________________________________
Title: [Vice] President Title: [Assistant] Secretary
Date: April __, 1995<PAGE>
EXHIBIT C-1
[CRAVATH, SWAINE & MOORE LETTERHEAD]
April 12, 1995
SENIOR UNSECURED NOTE AGREEMENT
Dear Sirs:
We have acted as counsel to BCP/Essex Holdings Inc., a
Delaware corporation ("Holdings"), in connection with the preparation,
execution and delivery of (a) the Senior Unsecured Note Agreement dated as
of April 12, 1995 (the "Note Agreement"), among Holdings, Essex Group,
Inc., a Michigan corporation ("Essex"), the lenders parties thereto (the
"Lenders") and Chemical Bank, as administrative agent for the Lenders (in
such capacity, the "Administrative Agent") and (b) the Term Notes referred
to in the Note Agreement (collectively, the "Term Notes" and, together
with the Note Agreement, the "Term Loan Documents"). Unless otherwise
defined herein, terms defined in the Note Agreement are used herein as
therein defined. This opinion is furnished to you pursuant to
Section 4.1(f)(i) of the Note Agreement.
In connection with this opinion, we have examined (a) executed
copies of the Note Agreement and the Term Notes and (b) copies of such
corporate documents and records of the Loan Parties and certificates of
public officials and officers of the Loan Parties and such other documents
as we have deemed necessary or appropriate for the purposes of this
opinion. In our examination, we have assumed the genuineness of all
signatures, the due authorization, execution and delivery of the Note
Agreement and the Term Notes by the parties thereto (other than the Term
Loan Documents as executed by Holdings), the authenticity of all documents
submitted to us as originals and the conformity to authentic, original
documents of all documents submitted to us as certified, conformed or
photostatic copies.
Based upon and subject to the foregoing and to the further
qualifications set forth below, we are of opinion as follows:
1. Holdings is validly existing and in good standing under
the General Corporation Law of the State of Delaware (the "GCL").
Holdings has the corporate power and authority under the GCL to own and
operate its property and to conduct the business in which it is currently
engaged.
2. Holdings has the corporate power and authority, and the
legal right under the GCL, to make, deliver and perform each of the Term
Loan Documents to which it is a party. Holdings has taken all necessary
corporate action to authorize the execution, delivery and performance of
the Term Loan Documents to which it is a party. No consent or
authorization of, filing with or other act by or in respect of, any
Federal, New York or Delaware Governmental Authority is required in
connection with the execution, delivery or performance by each of the Loan
Parties, or the validity or enforceability, of any of the Term Loan
Documents as to which such Loan Party is a party. Each of the Term Loan
Documents constitutes a legal, valid and binding obligation of each Loan
Party party thereto, enforceable against each such Loan Party in
accordance with its respective terms. The opinions set forth above are
qualified to the following extent: (a) insofar as provisions contained in<PAGE>
2
the Term Loan Documents provide for indemnification, the enforcement
thereof may be limited by public policy considerations and (b) we express
no opinion as to the effect of the law of any jurisdiction other than the
State of New York wherein any Lender may be located or wherein enforcement
of the Term Loan Documents may be sought which limits the rates of
interest legally chargeable or collectible. Furthermore, it should be
noted that the remedy of specific performance is discretionary and
normally will not be ordered in respect of monetary obligations or if
monetary damages are reasonably ascertainable. No opinion is expressed
herein with respect to (i) Section 10.12(a) of the Note Agreement insofar
as such Section relates to the subject matter jurisdiction of the United
States District Court for the Southern District of New York to adjudicate
any controversy related to the Note Agreement and the Term Notes, (ii) the
waiver of inconvenient forum set forth in Section 10.12(b) of the Note
Agreement with respect to proceedings in the United States District Court
for the Southern District of New York and (iii) whether a Federal or state
court outside of the State of New York would give effect to the choice of
New York law provided for in the Note Agreement and the Term Notes. We
express no opinion as to (i) Section 10.7(b) of the Note Agreement to the
extent that it provides for a right of set-off in respect of participating
interests purchased pursuant to Section 10.7(a) of the Note Agreement or
(ii) any provision in any Term Loan Document insofar as it provides a
right of set-off in respect of claims, credits or other obligations that
are contingent or a right of set-off in respect of Obligations against
deposits, indebtedness or other obligations of any entity other than the
entity to which such Obligations are payable.
3. The execution, delivery and performance of the Term Loan
Documents by the Loan Parties and the borrowings under the Note Agreement
and the use of the proceeds thereof will not (a) violate any Requirement
of Law (including Regulation U, T, G or X of the Board of Governors of the
Federal Reserve System) under the laws of the United States, the laws of
the State of New York or the GCL, (b) violate the certificate of
incorporation or by-laws of Holdings, (c) violate any Contractual
Obligation of any Loan Party under any agreement listed on Schedule I
hereto or (d) result in or require the creation or imposition of any Lien
on any of the properties or revenues pursuant to any agreement listed on
Schedule I hereto.
4. No Loan Party is an "investment company", or a company
"controlled" by an "investment company", within the meaning of the
Investment Company Act of 1940 (the "1940 Act") (other than an "investment
company" exempt from the provisions of the 1940 Act).
The foregoing opinions are subject to the following
qualifications:
(a) With respect to the opinions expressed above relating to
the legal, valid and binding nature of agreements or obligations of
any Loan Party and to the enforceability of such agreements or
obligations, such opinions are subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium and
other similar laws affecting creditors' rights generally from time
to time in effect. In addition, the enforceability of any party's
obligations is also subject to general principles of equity,
regardless of whether such enforceability of any party's obligations
is considered in a proceeding in equity or at law.<PAGE>
3
(b) We understand that you are satisfying yourselves as to
the status under Section 548 of the Bankruptcy Code and applicable
state fraudulent conveyance laws of the obligations of the Loan
Parties under the Term Loan Documents and we express no opinion
thereon.
(c) Our opinion in paragraph 2 as to certain consents,
authorizations, filings or any other acts and our opinion in
paragraph 3 as to compliance with certain Requirements of Law are
based upon (i) those consents, authorizations, filings and other
acts and (ii) a review of those laws, statutes, rules and
regulations which, in our experience, are normally applicable to
transactions of the type contemplated by the Term Loan Documents.
(d) In connection with this opinion, including our opinion
contained in paragraph 3 as to there being no violation of certain
Contractual Obligations, we are not expressing any opinion as to
whether Holdings or Essex has, as a factual matter, complied with or
satisfied any applicable financial tests or ratios and have relied,
without any independent verification, on the certificates of
David A. Owen, the Chief Financial Officer of Essex, as to such
matters.
We are admitted to practice only in the State of New York and
express no opinion as to matters governed by any laws other than the laws
of the State of New York, the Federal laws of the United States of America
and the Delaware General Corporation Law.
This opinion is rendered only to the Administrative Agent and
the Lenders and their permitted transferees and is solely for their
benefit in connection with the above transactions. This opinion may not
be relied upon by the Administrative Agent or the Lenders or their
permitted transferees for any other purpose or relied upon by any other
person, firm or corporation for any purpose without our prior written
consent.
Very truly yours,
The Lenders Parties to the
Note Agreement
referred to above
Chemical Bank, as Administrative Agent
270 Park Avenue
New York, NY 10017
39NS
O<PAGE>
SCHEDULE I
Indenture dated as of May 1, 1989, between MS/Essex Holdings Inc.
and United States Trust Company of New York, as trustees.
Indenture dated as of May 7, 1993, between Essex Group, Inc., and
NBD Bank, National Association, as trustee.<PAGE>
OFFICER'S CERTIFICATE
16% SENIOR DISCOUNT DEBENTURES DUE 2004
The undersigned is the Chief Financial Officer of Essex Group,
Inc., a Michigan corporation and a wholly owned subsidiary of BCP/Essex
Holdings Inc. ("Essex"). The undersigned is familiar with the terms and
provisions of each of (i) the Indenture dated as of May 1, 1989 (the
"Indenture"), between MS/Essex Holdings and United States Trust Company of
New York in respect of the 16% Senior Discount Debentures Due 2004 of
MS/Essex Holdings, (ii) the Credit Agreement dated as of April 12, 1995
(the "Credit Agreement"), among Holdings, Essex, the Lenders named therein
and Chemical Bank, as agent, (iii) the Senior Unsecured Note Agreement
dated as of April 12, 1995 (the "Note Agreement"), among Holdings, Essex,
the Lenders named therein and Chemical Bank, as administrative agent, and
(iv) the Agreement and Lease dated as of April 12, 1995 (the "Lease"),
between Mellon Financial Services Corporation # 3 and Essex. In
connection with the foregoing, the undersigned hereby certifies that:
1. To the best of my knowledge, no violation of the terms and
provisions of or obligations under the Indenture has or will occur as a
result of the execution of the Credit Agreement, the Note Agreement or the
Lease and no violation of such terms and provisions or obligations has or
will result from the consummation of the transactions contemplated
thereby.
2. Specifically, and in connection with Section 4.07 of the
Indenture, the Essex Consolidated Cash Flow Ratio (as defined in the
Indenture), after giving effect to the incurrence of all Debt to be
incurred under the Credit Agreement, the Note Agreement and the Lease and
the receipt and application of the proceeds thereof, would be greater than
1.75 to 1 (the calculation of which is set forth on Exhibit A hereto).
3. The calculation attached hereto is true and correct and
has been made on good faith assumptions and has been calculated in
accordance with the terms and provisions of the Indenture.
_____________________________________
David A. Owen
Dated: April 12, 1995<PAGE>
EXHIBIT A
ESSEX GROUP, INC.
CONSOLIDATED CASH FLOW
Calculated on a ProForma basis as of 12/31/94. Assumes interest expense
of $40 million for the year.
[CAPTION]
<TABLE>
Essex BCP/SX
Group, Inc. Holdings, Inc.
----------- --------------
<S> <C> <C> <C> <C>
Net Income 24,725 27,641
+ Interest Expense 40,000 40,000
+ Provision for Taxes 22,700 9,501
+ Depreciation 26,883 26,883
+ Other Amortizations:
Goodwill 4,064 4,064
Fixed Asset (G)L 1,279 1,279
Other 2,858 1,763
----- -----
8,201 8,201 7,106 7,106
----- -----
EBITDA 122,509 111,131
+/- Other Non-Cash Items:
Pension Expense 2,558 2,558
Provision for Bad Debt 1,288 1,288
Workers' Comp/Pub. Liability Exp. 3,238 3,238
Other Special Accruals:
Division 868 868
Corporate 3,170 3,170
----- -----
4,038 4,038 4,038 4,038
----- -----
Consolidated Cash Flow 133,631 122,253
Pro Forma Interest Expense 40,000 40,000
Yields Coverage Ratio of: 3.34 3.06
/TABLE
<PAGE>
OFFICER'S CERTIFICATE
10% SENIOR NOTES DUE 2003
The undersigned is the Chief Financial Officer of Essex Group,
Inc., a Michigan corporation and a wholly owned subsidiary of BCP/Essex
Holdings Inc. ("Essex"). The undersigned is familiar with the terms and
provisions of each of (i) the Indenture dated as of May 7, 1993 (the
"Indenture"), between Essex Group, Inc. and NBD Bank, National
Association, in respect of the 10% Senior Notes Due 2003, (ii) the Credit
Agreement dated as of April 12, 1995 (the "Credit Agreement"), among
BCP/Essex Holdings, Inc. ("Holdings"), Essex, the lenders named therein
and Chemical Bank, as agent, (iii) the Senior Unsecured Note Agreement
dated as of April 12, 1995 (the "Note Agreement"), among Holdings, Essex,
the Lenders named therein and Chemical Bank, as administrative agent, and
(iv) the Agreement and Lease dated as of April 12, 1995 (the "Lease"),
between Mellon Financial Services Corporation # 3 and Essex. In
connection with the foregoing, the undersigned hereby certifies that:
1. To the best of my knowledge, no violation of the terms and
provisions of or obligations under the Indenture has or will occur as a
result of the execution of the Credit Agreement, the Note Agreement or the
Lease and no violation of such terms and provisions or obligations has or
will result from the consummation of the transactions contemplated
thereby.
2. Specifically, and in connection with Section 4.04(a) of
the Indenture, the Consolidated EBITDA Coverage Ratio (as defined in the
Indenture), after giving effect to the incurrence of all Debt to be
incurred under the Credit Agreement, the Note Agreement and the Lease and
the receipt and application of the proceeds thereof, would be greater than
2.0 to 1 (the calculation of which is set forth on Exhibit A hereto).
3. Specifically, and in connection with Section 4.04(b)(iv)
of the Indenture, the obligations of Essex, under the Lease are "Capital
Lease Obligations" under and as defined in the Indenture and do not exceed
in the aggregate, together with any other "Capital Lease Obligations" and
guarantees of joint venture obligations thereof, $25,000,000.
4. The calculation attached hereto is true and correct and
has been made on good faith assumptions and has been calculated in
accordance with the terms and provisions of the Indenture.
_______________________________
David A. Owen
Dated: April 12, 1995<PAGE>
EXHIBIT A
ESSEX GROUP, INC.
CONSOLIDATED EBITDA COVERAGE RATIO
As defined in the Sr. Note re Section 4.04(a). Calculated on a ProForma
basis as of 12/31/94. Assumes interest expense of $40 million for the
year.
[CAPTION]
<TABLE>
Actual ProForma
Essex Essex
Group, Inc. Group, Inc.
----------- -----------
<S> <C> <C> <C> <C>
Net Income 30,171 14,725
+ Amortization of Goodwill 4,064 4,064
+ Purchase Accounting 10,919 10,919
------ ------
Consolidated Net Income 45,154 29,708
+ Interest Expense 21,924 40,000
+ Provision for Taxes 22,700 22,700
+ Depreciation (Excluding Purchase Acctg) 16,208 16,208
+ Amortization 2,858 2,858
+/- Other Non-Cash Items:
Pension Accruals 2,558 2,558
Inventory Valuation 2,500 2,500
Elim. of Extraordinary Gains/Losses:
Bennettsville Project 1,377 1,377
Other Comm. Restructuring 889 889
WCD Serv. Center Reserve 278 278
Lafayette Reserve Adj. (1,160) (1,160)
----- -----
1,384 1,384 1,384 1,384
----- -----
Defined EBITDA 115,286 117,916
Pro Forma Interest Expense 40,000 40,000
Consolidated EBITDA Coverage Ratio: 2.88 2.95
/TABLE
<PAGE>
EXHIBIT C-2
[ESSEX GROUP, INC. LETTERHEAD]
April 12, 1995
Dear Sirs:
I have acted as counsel to Essex Group, Inc., a Michigan
corporation ("Essex") and BCP/Essex Holdings Inc., a Delaware corporation
("Holdings") in connection with the preparation, execution and delivery of
(i) the Senior Unsecured Note Agreement dated as of April 12, 1995 (the
"Note Agreement"), among Holdings, Essex, the lenders parties thereto (the
"Lenders") and Chemical Bank, as Administrative Agent (in such capacity,
the "Administrative Agent") and (ii) the Term Notes (collectively, the
"Term Notes", and together with the Note Agreement, the "Term Loan
Documents").
This opinion is furnished to you pursuant to Section 4.1(f) of
the Note Agreement. Unless otherwise defined herein, terms defined in the
Note Agreement are used herein as therein defined.
In connection with this opinion, I have examined (a) executed
copies of the Note Agreement and the Term Notes and (b) copies of such
corporate documents and records of the Essex Entities (as defined below)
and certificates of public officials and officers of the Essex Entities
and such other documents as I have deemed necessary or appropriate for the
purposes of this opinion. In my examination, I have assumed the
genuineness of all signatures, the due authorization, execution and
delivery of the Note Agreement and the Term Notes by the parties thereto
(other than the Essex Entities), the authenticity of all documents
submitted to me as originals and the conformity to authentic, original
documents of all documents submitted to me as certified, conformed or
photostatic copies. As to any facts material to this opinion set forth
below which I did not independently establish or verify, I have relied
upon representations of officers or representatives of the Essex Entities.
Based upon the foregoing, I am of the opinion that:
1. Each of Essex and Holdings (Essex and Holdings
constituting, collectively, the "Essex Entities") (a) is duly organized,
validly existing and in good standing under the laws of the jurisdiction
of its incorporation, (b) has the corporate power and authority to own and
operate its property and to conduct the business in which it is currently
engaged and in which it proposes to be engaged after the Effective Date
and (c) is duly qualified as a foreign corporation and is in good standing
under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except where the failure to be so qualified and/or in good
standing, in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
2. Each of the Essex Entities had, at the time they were
executed, the corporate power and authority, and the legal right, to make,
deliver and perform each of the Term Loan Documents to which it is a
party. Each of the Essex Entities has taken all necessary corporate
action to authorize the borrowings on the terms and conditions of the Note
Agreement and to authorize the execution, delivery and performance of the
Term Loan Documents to which it is a party. No consent or authorization
of, filing with or other act by or in respect of any Governmental<PAGE>
2
Authority or, to the best of my knowledge, any other Person is required in
connection with the execution, delivery or performance by each of the
Essex Entities, or the validity or enforceability, of any of the Term Loan
Documents to which such entity is a party. Each of the Term Loan
Documents to which any of the Essex Entities is a party has been duly
executed and delivered by such entity.
3. The execution, delivery and performance of the Term Loan
Documents by each of the Essex Entities and the borrowings under the Note
Agreement and the use of the proceeds thereof will not (a) violate any
Requirement of Law (excluding Regulations U, T, G and X of the Board of
Governors of the Federal Reserve System and excluding any Requirement of
Law other than under the laws of the United States, the State of Indiana
or the State of Michigan or the General Corporation Law of the State of
Delaware (the "GCL")), (b) to the best of my knowledge after due inquiry,
violate any order, writ, judgment, injunction, decree, determination or
award of any court or governmental instrumentality presently in effect
which affects or binds any of the Essex Entities or any of their
respective properties, (c) violate any Contractual Obligation of any of
the Essex Entities under any agreement listed on Schedule I hereto or, to
the best of my knowledge, any other Contractual Obligation of any of the
Essex Entities or (d) to my knowledge, result in, or require, the creation
or imposition of any Lien on any of the respective properties or revenues
pursuant to any Requirement of Law or Contractual Obligation of any of the
Essex Entities.
4. To the best of my knowledge after due inquiry, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or threatened by or against any of the
Essex Entities or against any of their respective properties or revenues
(a) with respect to any Term Loan Document or the Term Loans or the use of
the proceeds thereof or (b) which has a reasonable possibility of an
adverse determination and, if adversely determined, (i) would affect the
legality, validity or enforceability or any Loan Document or (ii) would
have a Material Adverse Effect.
My opinion in paragraph 3 as to compliance with certain
Requirements of Law is based upon a review of those laws, statutes, rules
and regulations which, in my experience, are normally applicable to
transactions of the type contemplated by the Term Loan Documents.
In connection with this opinion, including my opinion
contained in paragraph 3 as to there being no violation of certain
Contractual Obligations, I am not expressing any opinion as to whether
Essex has as a factual matter satisfied or complied with any applicable
financial tests or ratios and have relied, without any independent
verifications, on the certificates of David A. Owen, the Chief Financial
Officer of Essex, as to such matters.
I am admitted to practice in the State of Indiana. I express
no opinion as to matters governed by any laws other than the laws of the
State of Indiana, the laws of the State of Michigan, the Federal laws of
the United States of America and the Delaware General Corporation Law. I
have assumed that, insofar as the substantive laws of the State of
Michigan and the GCL may be applicable to any matters opined on herein,
such laws are identical to the substantive laws of the State of Indiana.
This opinion is rendered only to the Administrative Agent and
the Lenders and their permitted transferees and is solely for their<PAGE>
3
benefit in connection with the above transactions. This opinion may not
be relied upon by the Administrative Agent or the Lenders or their
permitted transferees for any other purpose or relied upon by any other
person, firm or corporation for any purpose without my prior written
consent.
Very truly yours,
Debra F. Minott
Senior Vice President &
General Counsel
The Lenders Parties to the
Note Agreement
referred to above
Chemical Bank, as Administrative Agent
270 Park Avenue
New York, NY 10017<PAGE>
SCHEDULE I
Indenture dated as of May 1, 1989, between MS/Essex Holdings Inc.
and United States Trust Company of New York, as Trustee.
Indenture dated as of May 7, 1993, between Essex Group, Inc., and
NBD Bank, National Association, as Trustee.<PAGE>
EXHIBIT D
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Senior Unsecured Note Agreement,
dated as of April __, 1995, as amended, supplemented or otherwise modified
from time to time (the "Agreement"), among Essex Group, Inc., BCP/Essex
Holdings Inc., the Lenders named therein and Chemical Bank, as
Administrative Agent. Terms defined in the Agreement are used herein with
the same meanings. This Assignment and Acceptance, between the Assignor
(as set forth on Schedule 1 hereto and made a part hereof) and the
Assignee (as set forth on Schedule 1 hereto and made a part hereof) is
dated as of the Effective Date (as set forth on Schedule 1 hereto and made
a part hereof, the "Effective Date").
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby
irrevocably purchases and assumes from the Assignor without recourse to
the Assignor, as of the Effective Date, a ___% interest (the "Assigned
Interest") in and to the Assignor's rights and obligations under the
Agreement respecting those credit facilities contained in the Agreement as
are set forth on Schedule 1 (the "Assigned Facilities"), in a principal
amount for each Assigned Facility as set forth on Schedule 1 provided,
however, it is expressly understood and agreed that (i) the Assignor is
not assigning to the Assignee and the Assignor shall retain (A) all of the
Assignor's rights under Section 2.14 of the Agreement with respect to any
cost, reduction or payment incurred or made prior to the Effective Date,
including, without limitation the rights to indemnification and to
reimbursement for taxes, costs and expenses and (B) any and all amounts
paid to the Assignor prior to the Effective Date and (ii) both Assignor
and Assignee shall be entitled to the benefits of Section 10.5 of the
Agreement.
2. The Assignor (i) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Agreement, any other
Term Loan Document or any other instrument or document furnished pursuant
thereto or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Agreement, any other Term Loan Document or any
other instrument or document furnished pursuant thereto; and (ii) makes no
representation or warranty and assumes no responsibility with respect to
the financial condition of the Company, any of its Subsidiaries or any
other Loan Party or the performance or observance by the Company, any of
its Subsidiaries or any other Loan Party of any of their respective
obligations under the Agreement or any other Term Loan Document or any
other instrument or document furnished pursuant thereto;
3. The Assignee (i) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance; (ii)
confirms that it has received a copy of the Agreement, together with
copies of the financial statements delivered pursuant to Section 3.1
thereof and other such documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into
this Assignment and Acceptance; (iii) agrees that it will, independently
and without reliance upon the Assignor, the Administrative Agent or any
other Person which has become a Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under the Agreement<PAGE>
2
and each other Term Loan Document; (iv) appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to
exercise such powers and discretion under the Agreement or any other Term
Loan Document as are delegated to the Administrative Agent by the terms
thereof, together with such powers and discretion as are incidental
thereto; and (v) agrees that it will be bound by the provisions of the
Agreement and will perform in accordance with its terms all the
obligations which by the terms of the Agreement are required to be
performed by it as a Lender including, if it is organized under the laws
of a jurisdiction outside the United States, its obligation pursuant to
Section 2.14(b) of the Agreement to deliver on or prior to the date of
this Assignment and Acceptance and thereafter as specified in said Section
2.14, the forms prescribed by the Internal Revenue Service of the United
States certifying the Assignee's complete exemption from United States
federal withholding taxes with respect to all payments to be made to the
Assignee under the Agreement, or, where, because of a Tax Law Change, the
Assignee is no longer entitled to a complete exemption from the United
States federal withholding tax on such payments to it, but is entitled to
a reduced rate of taxation with respect to such payments, the Assignee
shall deliver such other documents as are necessary to indicate that all
such payments are subject to such reduced rate of taxation.
4. Following the execution of this Assignment and
Acceptance, it will be delivered to the Administrative Agent for
acceptance by it and recording by the Administrative Agent pursuant to
Section 10.6(d) of the Agreement, effective as of the Effective Date
(which shall not be earlier than five Business Days after the date of
acceptance and recording by the Administrative Agent of the executed
Assignment and Acceptance).
5. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in
respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignee whether such amounts
have accrued prior to the Effective Date or accrue subsequent to the
Effective Date. The Assignor and the Assignee shall make all appropriate
adjustments in payments by the Administrative Agent for periods prior to
the Effective Date or with respect to the making of this assignment
directly between themselves.
6. From and after the Effective Date, (i) the Assignee
shall be a party to the Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Term Loan Documents and shall be bound by
the provisions thereof and (ii) the Assignor shall, to the extent provided
in this Assignment and Acceptance, relinquish its rights and be released
from its obligations under the Agreement.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective duly
authorized officers on Schedule 1 hereto.<PAGE>
Schedule 1 to Assignment and Acceptance Respecting Senior Unsecured Note
Agreement, dated as of April __, 1995, among Essex Group, Inc., BCP/Essex
Holdings Inc., the Lenders
named therein and Chemical Bank as Administrative Agent
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
Principal
Amount Assigned
---------------
[ASSIGNEE]
By____________________
Name:
Title:
[ASSIGNOR]
By____________________
Name:
Title:
Consented To:
ESSEX GROUP, INC.
By____________________
Name:
Title:
CHEMICAL BANK, as
Administrative Agent
By____________________
Name:
Title:<PAGE>
2
Accepted for Recordation in the Register:
CHEMICAL BANK, as Administrative Agent
By____________________
Name:
Title:<PAGE>
EXHIBIT E
[FORM OF CONFIDENTIALITY LETTER]
[BANK LETTERHEAD]
[Date]
Essex Group, Inc.
1601 Wall Street
Fort Wayne, IN 46801
Chemical Bank,
as Administrative Agent
270 Park Avenue
New York, New York 10017
[Name and address of Lender
selling a participation or making
an assignment under the Agreement
referred to below]
Dear Sirs:
We understand that Chemical Bank ("Chemical") is acting as
Administrative Agent under the Senior Unsecured Note Agreement dated as of
April __, 1995 (the "Agreement"; terms used herein and not otherwise
defined herein are used as defined therein) among BCP/Essex Holdings Inc.,
Essex Group, Inc. (the "Company"), the lenders named therein (the
"Lenders") and Chemical, as Administrative Agent. In connection with our
evaluation of a proposed purchase of a participation in or acceptance of
an assignment of, a portion of the Term Loans, Chemical and/or a Lender
have furnished, and will furnish, us with a copy of the Agreement and
Confidential Information. We understand that prior to receiving a copy of
the Agreement and Confidential Information, we are required under Section
10.6(g) of the Agreement to execute and deliver this letter.
We agree to keep confidential (and to cause our officers,
directors, employees, agents, attorneys, accountants and professional
advisors to keep confidential) to the extent provided in Section 10.15 of
the Agreement all Confidential Information. In the event we do not
participate or accept an assignment under the Agreement, at Chemical's,
such Lender's or the Company's request, we agree to return (and to cause
such other person to return) to Chemical, such Lender or the Company, as
the case may be, all written Confidential Information and all copies
thereof, extracts therefrom and analyses and other materials based
thereon, except that we shall be permitted to disclose details of the
Confidential Information (i) to the extent contemplated in Section 10.15
and (ii) to the extent Chemical and the Company shall have consented to
such disclosure in writing.
We further agree that we will use the Confidential Information
only in connection with our evaluation of becoming a possible participant
or assignee under the Agreement.
The undertakings contained herein are for the benefit of each
of you.<PAGE>
2
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
[Name of Institution]
By: _______________________
Name:
Title:<PAGE>
EXHIBIT F
FORM OF COMPLIANCE CERTIFICATE
[For the Fiscal Quarter ending _____]
[For the Fiscal Year ending _____]
Pursuant to Section 5.2(b) of the Senior Unsecured Note
Agreement, dated as of April __, 1995 (as amended, supplemented or
otherwise modified from time to time, the "Agreement"; terms defined
therein being used herein as therein defined unless otherwise defined),
among Essex Group, Inc., a Michigan corporation (the "Company"), BCP/Essex
Holdings Inc. ("Holdings"), the financial institutions from time to time
parties thereto (the "Lenders"), and Chemical Bank, as agent for the
Lenders (in such capacity, the "Agent"), the undersigned, duly elected,
qualified and acting Responsible Officers of the Company and Holdings,
respectively, hereby certify that:
I. To the best of such Responsible Officer's knowledge, the
Company and each other Loan Party has, during the period or periods
referred to above, observed or performed in all material respects all of
its covenants and other agreements, and satisfied every condition,
contained in the Agreement and the other Term Loan Documents to which it
is a party to be observed, performed or satisfied by it, and as of the
date hereof such Responsible Officer has obtained no knowledge of any
Default or Event of Default except as follows: ____________________.
[II. The financial statements referred to in Section 5.1(a)
of the Agreement which are delivered concurrently with the delivery of
this Compliance Certificate are complete and correct in all material
respects and have been prepared in reasonable detail and in accordance
with GAAP applied consistently throughout the periods reflected therein
and with prior periods (except as approved by the accountants or such
Responsible Officer, as the case may be, and disclosed therein).]
[The financial statements referred to in Section 5.1(b) of the
Agreement which are delivered concurrently with the delivery of this
Compliance Certificate are complete and correct in all material respects
and fairly present the financial condition and results of operations of
Holdings or the Company, as the case may be (subject to normal year-end
audit adjustments) and have been prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein and with prior periods (except as approved by the accountants or
such Responsible Officer, as the case may be, and disclosed therein).]
(c) The covenants as listed and calculated below are based
on the Company's [unaudited] [audited] balance sheets and statements of
operations, shareholders' equity and cash flows for the fiscal [quarter]
[year] ended ________ __, 199_, a copy of which is attached hereto.
1. Consolidated Net Worth (Section 6.1(a))
without duplication:<PAGE>
2
(i) 50% of Consolidated $ __________
Net Income of Holdings and its consolidated
Subsidiaries for each fiscal quarter
of Holdings (beginning with the fiscal
quarter ending Mar. 31, 1995) for which
Consolidated Net Income is positive
(ii) 100% of Net Cash Proceeds of Holdings $__________
Common Equity Offering consummated
after the Effective Date
(iii) 100% of any capital contribution made $ __________
to Holdings or the Company after the
Effective Date by any holder of its Capital
Stock
(iv) Sum of (i), (ii) and (iii) and $ __________
$80,000,000
(v) Consolidated Net Worth of Holdings and $ __________
its consolidated subsidiaries (must be equal
to or greater than (iv) above)
(vi) Clauses (ii) and (iii) shall be reduced $ __________
to the extent (a) such proceeds or
contributions are applied to repurchase
of equity in accordance with the Agreement
and (b) Consolidated Net Worth would be reduced
as a result of repurchase
2. Interest Coverage (Section 6.1(b))
The ratio of
(i) Consolidated EBITDA of Holdings $ __________
and its consolidated Subsidiaries
for the relevant Interest Coverage
Test Period
to
(ii) Consolidated Net Cash Interest Expense $ __________
of Holdings and its consolidated
Subsidiaries for such Interest Coverage
Test Period
Ratio: (must be greater than 2.0 to 1.0) ____________<PAGE>
3
3. Limitation on Secured Debt (Section 6.2)
List types*/ and amounts of Secured Debt
outstanding as of the last day of the fiscal
period covered by this Certificate:
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
4. Limitation on Company Debt (Section 6.4)
List types*/ and amounts of Company Debt
outstanding as of the last day of the fiscal
period covered by this Certificate:
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
5. Limitation on Debt and Preferred Stock of Subsidiaries
(Section 6.5)
List types*/ and amounts of Debt and Preferred
Stock of Subsidiaries outstanding as of the last
day of the fiscal period covered by this
Certificate:
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________
*/ Must include reference to specific provisions of Agreement pursuant
to which each item was Issued.<PAGE>
4
6. Limitation on Restricted Payments (Section 6.6)
(i) List each of the following amounts for
the relevant fiscal [quarter] [year]:
(A) 50% of Consolidated Adjusted Net $ __________
Income (or, in case such
Consolidated Adjusted Net Income
shall be a deficit, minus 100% of
such deficit)
(B) the aggregate Adjusted Net Cash $ __________
Proceeds received by the Company
Company from the Issue or sale of
its Capital Stock (other than
Redeemable Stock) (other than
pursuant to clause (C) below)
(C) the aggregate Adjusted Net Cash $ __________
Proceeds received by the Company
from the Issue or sale of its
Capital Stock (other than
Redeemable Stock) to an employee
stock ownership plan, but (if such
employee stock ownership plan
Issues any Debt) only to the extent
that any such proceeds are equal to
any increase in the Consolidated
Adjusted Net Worth of the Company
resulting from principal repayments
made by such employee stock ownership
plan with respect to Debt Issued by it
to finance the purchase of such Capital Stock
(D) the amount by which Debt of the $ __________
Company is reduced on the Company's
balance sheet upon the conversion or
exchange (other than by a Subsidiary)
of any Debt of the Company convertible
or exchangeable for Capital Stock (other
than Redeemable Stock) of the Company
(less the amount of any cash, or other
property, distributed by the Company
upon such conversion or exchange)
(E) the aggregate cash received by the $ __________
Company as capital contributions
to the Company
(F) to the extent an Investment made by $ __________
the Company or a Subsidiary after
the Effective Date was included in
the amount of a Restricted Payment,
the aggregate cash received by the
Company in connection with the
disposition or repayment of or return
on such Investment made after the
Effective Date, which amount shall
not exceed the amount of such<PAGE>
5
Restricted Payment
(ii) List types**/ and amounts of
Restricted Payments made during fiscal
[quarter] [year]:
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
_______________________________________ $ __________
IN WITNESS WHEREOF, we have hereto set our names.
Dated:
___________________________
Title: [Responsible Officer
of the Company]
___________________________
Title: [Responsible Officer
of the Holdings]
_______________
**/ Must include reference to specific provisions of Agreement pursuant
to which each item was made.<PAGE>
EXHIBIT 10.3
AGREEMENT AND LEASE
dated as of April 12, 1995
between
MELLON FINANCIAL SERVICES CORPORATION #3, Lessor
and
ESSEX GROUP, INC., Lessee<PAGE>
TABLE OF CONTENTS
ARTICLE I. Certain Definitions . . . . . . . . . . . . . . . 1
ARTICLE II. Agreement to Lease . . . . . . . . . . . . . . . . 4
ARTICLE III. Delivery and Acceptance . . . . . . . . . . . . . 4
ARTICLE IV. Base Lease Term and Rent . . . . . . . . . . . . . 4
4.1. Term . . . . . . . . . . . . . . . . . . . . . . . 4
4.2. Basic Rent . . . . . . . . . . . . . . . . . . . 4
4.3. Additional Rent . . . . . . . . . . . . . . . . . 4
4.4. Payment of Rent . . . . . . . . . . . . . . . . . 5
4.5. No Set-Off . . . . . . . . . . . . . . . . . . . . 5
ARTICLE V. Representations and Warranties . . . . . . . . . . 5
5.1. Lessor's Representations and Warranties . . . . . 5
5.2. Lessee's Representations and Warranties . . . . . 6
5.3. Lessee's Business Covenants . . . . . . . . . . . 10
ARTICLE VI. Conditions Precedent . . . . . . . . . . . . . . . 11
6.1. Conditions to Effectiveness . . . . . . . . . . . 11
6.2. Conditions to Lessor's Duties and
Obligations . . . . . . . . . . . . . . . . . . 12
ARTICLE VII. Reports . . . . . . . . . . . . . . . . . . . . . 13
7.1. Financial Reports . . . . . . . . . . . . . . . . 13
7.2. Annual Certificate . . . . . . . . . . . . . . . . 14
7.3. Inspection . . . . . . . . . . . . . . . . . . . . 15
7.4. Accidents . . . . . . . . . . . . . . . . . . . . 15
7.5. Tax Liens . . . . . . . . . . . . . . . . . . . . 15
7.6. Movement of Equipment . . . . . . . . . . . . . . 15
ARTICLE VIII. Maintenance, Use and Operation . . . . . . . . . . 15
8.1. Maintenance and Operation . . . . . . . . . . . . 15
8.2. Insignia . . . . . . . . . . . . . . . . . . . . . 15
8.3. Supplies . . . . . . . . . . . . . . . . . . . . . 16
8.4. Accessories . . . . . . . . . . . . . . . . . . . 16
8.5. Personal Property . . . . . . . . . . . . . . . . 16
8.6. Sublease and Assignment . . . . . . . . . . . . . 16
8.7. Substitution of Units . . . . . . . . . . . . . . 16
ARTICLE IX. Liens . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE X. Insurance . . . . . . . . . . . . . . . . . . . . 17
10.1. Physical Damage Insurance . . . . . . . . . . . . 17
10.2. Liability Insurance . . . . . . . . . . . . . . . 17
10.3. General Insurance Provisions . . . . . . . . . . . 17
10.4. Payment of Premium by Lessor . . . . . . . . . . . 17<PAGE>
ARTICLE XI. Assumption of Risk; Indemnification;
Survival . . . . . . . . . . . . . . . . . . . . . 17
11.1. Assumption of Risk and Indemnification . . . . . . 17
11.2. Survival of Obligations . . . . . . . . . . . . . 18
ARTICLE XII. Damage to Property . . . . . . . . . . . . . . . . 19
12.1. Duty to Notify . . . . . . . . . . . . . . . . . . 19
12.2. Termination Value . . . . . . . . . . . . . . . . 19
12.3. Insurance and Condemnation Proceeds . . . . . . . 19
ARTICLE XIII. Return of Property . . . . . . . . . . . . . . . . 19
ARTICLE XIV. Defaults; Remedies . . . . . . . . . . . . . . . . 19
14.1. Defaults; Remedies . . . . . . . . . . . . . . . . 19
14.2. Additional Remedies . . . . . . . . . . . . . . . 23
14.3. Remedies Cumulative; Waiver of
Requirements . . . . . . . . . . . . . . . . . . 23
ARTICLE XV. Participation and Assignment by Lessor . . . . . . 23
ARTICLE XVI. Quiet Possession . . . . . . . . . . . . . . . . . 24
ARTICLE XVII. Further Assurances . . . . . . . . . . . . . . . . 24
ARTICLE XVIII. Lessee Options . . . . . . . . . . . . . . . . . . 24
18.1. Purchase Option . . . . . . . . . . . . . . . . . 24
18.2. Early Termination Option . . . . . . . . . . . . . 24
18.3. Conveyance Upon Termination . . . . . . . . . . . 25
ARTICLE XIX. Intention of Parties: Security
Agreement . . . . . . . . . . . . . . . . . . . . 25
19.1. Security Agreement . . . . . . . . . . . . . . . . 25
19.2. Tax Benefits . . . . . . . . . . . . . . . . . . . 25
ARTICLE XX. Miscellaneous . . . . . . . . . . . . . . . . . . 25
ARTICLE XXI. Notices . . . . . . . . . . . . . . . . . . . . . 26
Attachments:
Schedule 5.2(t) -- Financing Statements relating to
Chemical Liens
Schedule 5.2(w) -- Lessee's Offices
Lease Schedule
Exhibit A -- Form of Certificate of Acceptance
Exhibit B -- Form of Opinion
Exhibit C -- Form of Bill of Sale
-ii-<PAGE>
AGREEMENT AND LEASE
THIS AGREEMENT AND LEASE (this "Agreement"), dated as of April 12,
1995, between MELLON FINANCIAL SERVICES CORPORATION #3, a Pennsylvania
corporation ("Lessor"), and ESSEX GROUP, INC., a Michigan corporation
("Lessee");
W I T N E S S E T H T H A T :
WHEREAS, Lessee has requested that Lessor purchase and lease to
Lessee the personal property described herein, and Lessor is willing to do
so upon the terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, the parties hereto, in consideration of their
mutual covenants hereinafter set forth and intending to be legally bound
hereby, agree as follows:
ARTICLE I. Certain Definitions
In addition to the words and terms defined elsewhere in this
Agreement, the following words and terms shall have the following
meanings, respectively, unless the context hereof clearly otherwise
requires:
"Additional Rent" shall mean any and all amounts,
liabilities and obligations which Lessee assumes or agrees to pay
hereunder pursuant to Section 4.3 of this Agreement or otherwise,
other than Basic Rent.
"Agreement" shall mean this Agreement and Lease, as amended
or supplemented from time to time, and shall include the Lease
Schedule executed and delivered concurrently herewith and the
Certificate of Acceptance executed and delivered on the Closing
Date pursuant to this Agreement, in each case as so amended or
supplemented. Each reference herein to "this Agreement",
"herein", "hereunder", "hereof" or other like words shall include
this Agreement, the Lease Schedule, the Certificate of Acceptance
and any annex, exhibit or schedule attached hereto or thereto.
"Base Lease Term" and "Base Lease Term Commencement Date"
shall have the meanings assigned to such terms in the Lease
Schedule.
"Basic Rent" shall mean the amount payable as Basic Rent by
Lessee pursuant to Section 4.2 of this Agreement.
"Business Day" shall mean a day other than a Saturday,
Sunday or other day on which banks in Pittsburgh, Pennsylvania, or
Fort Wayne, Indiana, are required or authorized to close.
"Certificate of Acceptance" shall mean the certificate of
Lessee substantially in the form of Exhibit A hereto executed and
delivered under this Agreement.
"Chemical Liens" shall have the meaning assigned thereto in
Section 5.2(t).<PAGE>
"Closing Date" shall have the meaning assigned thereto in
Section 6.2 of this Agreement.
"Control Affiliate" as to any Person shall mean any other
Person which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. For
purposes hereof, "control" of a Person means the power, directly
or indirectly, to direct or cause the direction of the management
and policies of such Person whether by contract or otherwise.
"Credit Agreement" shall mean the Credit Agreement dated as
of April 12, 1995, among Lessee, Holdings, the Lenders named
therein and Chemical Bank, as Agent, as amended, supplemented or
otherwise modified from time to time in accordance with the terms
thereof.
"Effective Date" shall mean the date on which the conditions
specified in Section 6.1 have been satisfied.
"Equipment" shall mean all the Units described in the Lease
Schedule and Certificate of Acceptance executed and delivered
under this Agreement. The Equipment generally shall consist of
enamel ovens, wire drawing equipment and related equipment located
on the Premises.
"Event of Default" shall mean any of the events described in
Section 14.1 hereof.
"GAAP" shall mean generally accepted accounting principles
set forth in the opinions and pronouncements of the Accounting
Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board (or agencies with similar functions of
comparable stature and authority within the accounting
profession), or in such other statements by such other entity as
may be in general use by significant segments of the accounting
profession, as in effect from time to time.
"Holdings" shall mean BCP/Essex Holdings, Inc., a Delaware
corporation.
"Late Payment Rate" with respect to any Rent payable
hereunder shall mean the lesser of the rate per annum identified
as such in the Lease Schedule or the maximum rate permitted by
law.
"Law" shall mean any law, constitution, statute, treaty,
regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body.
"Lease Schedule" shall mean the Lease Schedule attached
hereto executed and delivered by Lessor and Lessee pursuant to,
currently with and as a part of this Agreement.
"Lessor's Cost" shall mean the purchase price of each Unit
to Lessor (which shall not exceed the amount set forth in the
Lease Schedule for such Unit and which shall be the invoice price
therefor) plus any excise, sales and use taxes paid or payable by
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Lessor with respect to the purchase thereof. Lessor's Cost shall
be allocated among the Units in direct proportion to the book
value thereof on the books of Lessee immediately prior to their
transfer to Lessor.
"Lien" shall mean any lien, security interest, mortgage,
option or other charge, encumbrance or right of others.
"Material Adverse Effect" shall mean a material adverse
effect on (a) the business, assets, liabilities (actual or
contingent), operations, condition (financial or otherwise) or
prospects of Holdings, Lessee and its Subsidiaries taken as a
whole, (b) the ability of Lessee to perform its obligations under
this Agreement or (c) the validity or enforceability of this
Agreement or the rights or remedies of Lessor hereunder.
"Official Body" shall mean any government or political
subdivision or any agency, authority, bureau, central bank,
commission, department or instrumentality of either, or any court,
tribunal, grand jury or arbitrator, in each case whether foreign
or domestic.
"Permitted Liens" shall have the meaning assigned thereto in
Article IX.
"Person" shall mean an individual, partnership, operation,
business trust, joint stock company, trust, unincorporated
association, joint venture or other entity of any nature.
"Premises" shall mean the locations described in Annex 3 to
the Lease Schedule.
"Rent" shall mean Additional Rent and Basic Rent,
collectively.
"Rental Payment Date" shall mean each date on which Basic
Rent is payable hereunder.
"Significant Subsidiary" of Lessee shall mean any Subsidiary
that would be a "significant subsidiary" of Lessee within the
meaning of Rule 1-02 under Regulation S-X promulgated by the
Securities and Exchange Commission.
"Subsidiary" of any Person shall mean any corporation,
partnership, joint venture, trust or estate of which (or in which)
more than 50% of (a) the issued and outstanding voting stock,
(b) the interest in the capital or profits of such partnership or
joint venture or (c) the beneficial interest in such trust or
estate, is at the time directly or indirectly owned or controlled
by such Person and/or by one or more of such Person's other
Subsidiaries.
"Termination Value" shall mean, as of a date, with respect
to each Unit the amount equal to the Lessor's Cost of such Unit
less the aggregate amount of the Principal Component of all
payments of Basic Rent made on or before such date in respect of
such Unit.
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"Term" shall mean the total period of time for which any one
or more of the Units is leased hereunder.
"UCC" shall have the meaning assigned thereto in
Section 14.2.
"Unit" shall mean each individual item of personal property
described in the Lease Schedule and Certificate of Acceptance
executed and delivered under this Agreement.
"Unmatured Default" shall mean an event, act or condition
which with notices or lapse of time or both would constitute an
Event of Default.
Capitalized terms used herein which are defined in the Credit
Agreement and not otherwise defined herein are used herein as so defined.
ARTICLE II. Agreement to Lease
Lessor hereby agrees to lease the Units to Lessee and Lessee
hereby agrees to lease same from Lessor, all upon the terms and subject to
the conditions of this Agreement.
ARTICLE III. Delivery and Acceptance
Lessee hereby acknowledges and represents and warrants to Lessor
with respect to each Unit that (i) such Unit is of a size, design,
capacity and manufacture selected by Lessee, (ii) such Unit conforms to
the applicable description set forth in the Lease Schedule, and (iii)
Lessee is satisfied that such Unit is suitable for its purposes.
ARTICLE IV. Base Lease Term and Rent
4.1. Base Lease Term. The Base Lease Term shall commence on the
Base Lease Term Commencement Date, as evidenced by the execution and
delivery by Lessee of the Certificate of Acceptance. Unless earlier
terminated in accordance with the express provisions hereof, the Base
Lease Term shall expire on the date determined in accordance with the
Lease Schedule.
4.2. Basic Rent. Lessee shall pay to Lessor Basic Rent in the
aggregate amount and in the installments and on the Rental Payment Dates
as specified in the Lease Schedule.
4.3. Additional Rent. The lease created pursuant to this
Agreement is a "net" lease. Lessee shall pay as Additional Rent all
amounts (in addition to Basic Rent) required to be paid under this
Agreement and (except as expressly provided herein) all costs, taxes,
assessments and other expenses of every character (whether seen or
unforeseen and whether or not expressly provided for herein) relating to
or arising in connection with the use, occupancy, ownership, maintenance,
repair, replacement or reconstruction of any Unit during the Term and, to
the extent expressly provided herein, thereafter. Lessee shall also pay to
Lessor as Additional Rent interest at the Late Payment Rate on each
overdue installment of Basic Rent and on each overdue payment of
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Additional Rent (other than Additional Rent paid pursuant to this
sentence).
4.4. Payment of Rent. Each installment of Basic Rent shall be
paid to Lessor at its office at 4444 One Mellon Bank Center, Pittsburgh,
Pennsylvania 15258, or as directed by Lessor, and all Additional Rent
shall be paid directly to the Person entitled thereto and, if such Person
is Lessor, at its office or as it directs as aforesaid. All payments of
Rent shall be made in funds immediately available on the due date and
shall become due at 2:00 P.M. Pittsburgh time on the date when due.
4.5. No Set-Off. Lessee shall not be entitled to any abatement
of Rent, reduction thereof or set-off, counterclaim, recoupment or defense
against Rent, including, but not limited to, abatements, reductions,
set-offs, counterclaims, recoupments or defenses due or alleged to be due
by reason of any past, present or future claims of Lessee against Lessor
or any other Person for any reason whatsoever; nor except as otherwise
expressly provided herein, shall this Agreement terminate or the
obligations of Lessee be otherwise affected by reason of any defect in the
title, condition, design, operation or fitness for use of any Unit or
damage to or loss of possession or loss of use or destruction of all or
any of such Units from whatsoever cause and of whatever duration or any
presently existing or hereafter created liens, encumbrances or rights of
others with respect to any Unit or the prohibition of or other restriction
against Lessee's use of all or any of such Unit or the interference with
such use by any Person or the invalidity or unenforceability or lack of
due authorization of this Agreement or any insolvency of or the
bankruptcy, reorganization or similar proceeding against Lessee, or for
any combination of such cause or any other cause whether similar or
dissimilar to the foregoing, any present or future Law to the contrary
notwithstanding, it being the intention of the parties hereto that the
Rent payable by Lessee hereunder shall continue to be payable in all
events in the manner and at the times herein provided unless the
obligation to pay the same shall be terminated pursuant to the express
provisions of this Agreement. To the extent permitted by applicable Law,
Lessee hereby waives any and all rights which it may now have or which at
any time hereafter may be conferred upon it, by statute or otherwise, to
terminate, cancel, quit or surrender the lease of any of the Units except
in accordance with the express terms hereof. Each payment of Rent made by
Lessee hereunder shall be final, and Lessee shall not seek to recover all
or any part of such payment from Lessor for any reason whatsoever.
Notwithstanding the foregoing, Lessee does not waive any remedies existing
at law or in equity in its favor relating to the breach by Lessor of its
representations, warranties or agreements hereunder.
ARTICLE V. Representations and Warranties
5.1. Lessor's Representations and Warranties. Lessor represents
and warrants to Lessee that Lessor has received whatever title was
conveyed to it by Lessee and that the Equipment is free of Liens which may
result from any claims in favor of any Person claiming by, through or
under Lessor, except to the extent that such Liens arise from the failure
of Lessee to perform any of Lessee's obligations hereunder. Lessor further
represents and warrants that it has full power, legal right and authority
to lease the Equipment to Lessee in accordance with the terms hereof. TO
THE EXTENT PERMITTED BY APPLICABLE LAW, THE WARRANTIES OF LESSOR SET FORTH
IN THIS SECTION 5.1 ARE EXCLUSIVE AND IN LIEU OF ALL OTHER REPRESENTATIONS
-5-<PAGE>
OR WARRANTIES OF LESSOR WHETHER STATUTORY, WRITTEN, ORAL OR IMPLIED, AND
LESSOR HAS NOT MADE AND DOES NOT HEREBY MAKE, NOR SHALL IT BE DEEMED BY
VIRTUE OF HAVING LEASED THE EQUIPMENT PURSUANT TO THIS AGREEMENT TO HAVE
MADE, ANY REPRESENTATION OR WARRANTY AS TO THE MERCHANTABILITY, FITNESS
FOR A PARTICULAR PURPOSE, DESIGN OR CONDITION OF, OR AS TO THE QUALITY OF
THE WORKMANSHIP IN, THE EQUIPMENT, but Lessor authorizes Lessee, at
Lessee's expense, to assert during the Term all of Lessor's rights under
any manufacturer's, vendor's or dealer's warranty with respect to the
Equipment, if any, and Lessor agrees to cooperate with Lessee in asserting
such rights or, at Lessee's request, to assert such rights on Lessee's
behalf at Lessee's sole cost and expense; provided, however, that Lessee
shall not attempt to enforce such rights unless (i) Lessee shall first
notify Lessor of Lessee's intention to enforce such rights and shall
furnish to Lessor such information with respect thereto as Lessor may
reasonably request and (ii) the enforcement of such rights does not, in
Lessor's reasonable judgment, involve any danger of sale, forfeiture or
loss of any Unit or create the danger of Lessor incurring criminal
liability or other liability for which indemnification by Lessee,
satisfactory to Lessor and its counsel, of Lessor and its successors,
assigns, representatives, directors, officers, employees, agents and
servants is not provided. Any amount received by Lessee as payment under
any warranty pursuant to the above authorization shall be applied to
restore the Equipment to as good a condition as it was or should have been
(but for defects giving rise to such payment under warranty) when
delivered to Lessee hereunder, ordinary and reasonable wear and tear
excepted, with the balance of such amount, if any, to be paid over to
Lessee unless an Event of Default or Unmatured Default shall have occurred
and be continuing, in which event such balance shall be paid over to
Lessee as soon as all Events of Default and Unmatured Defaults have been
cured by Lessee or waived by Lessor. The provisions of this Section 5.1
have been negotiated and agreed to by the parties hereto and, except to
the extent otherwise expressly provided in this Section 5.1 or not
permitted by applicable Law, are intended to be a complete negation and
exclusion of any representations or warranties by Lessor, express or
implied, whether arising pursuant to the UCC or any similar Law now or
hereafter in effect, or otherwise.
5.2. Lessee's Representations and Warranties. Lessee represents
and warrants that:
(a) Lessee and each of its Subsidiaries is a corporation duly
organized and existing in good standing under the laws of the state of its
incorporation, and is duly qualified to do business in those jurisdictions
(including, in the case of Lessee, each of those where the Equipment will
be located) where such qualification is necessary except where the failure
to comply therewith could not, in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(b) Lessee and each of its Subsidiaries has full power and
authority to own, pledge, mortgage and operate its property and to conduct
the business in which it is currently engaged and Lessee has full power,
authority and legal right to execute, deliver and perform its obligations
under this Agreement. This Agreement has been duly authorized by all
necessary corporate action on the part of Lessee; does not require the
approval of, or the giving of notice to, any Official Body (except such as
has already been given or obtained); does not contravene any Law binding
on Lessee; and does not contravene Lessee's charter or by-laws or any
indenture or agreement to which Lessee is a party or by which it or its
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property is bound except where the failure to comply therewith could not,
in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(c) This Agreement constitutes a legal, valid and binding
obligation of Lessee, enforceable in accordance with its terms except as
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other laws affecting
the enforcement of creditors' rights generally and by equitable principles
(whether enforcement is sought by proceedings in equity or at law).
(d) There are no pending or, to the knowledge of Lessee,
threatened actions or proceedings against Holdings, Lessee or any of its
Subsidiaries before any Official Body which have had or could reasonably
be expected to have a Material Adverse Effect.
(e) The consolidated balance sheets of Holdings and its
consolidated Subsidiaries and of the Lessee and its consolidated
Subsidiaries as at December 31, 1993 and December 31, 1994 and the related
consolidated statements of income and stockholders' equity and cash flows
for the fiscal years ended on such dates, reported on by Ernst & Young,
copies of which have heretofore been furnished to Lessor, present fairly
the consolidated financial condition of Holdings and its consolidated
Subsidiaries or Lessee and its consolidated Subsidiaries, as the case may
be, as at such dates, and the consolidated results of their operations and
cash flows for the fiscal years then ended. All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants and as disclosed
therein). Neither Holdings, Lessee nor any of their respective
consolidated Subsidiaries had, at the date of the most recent balance
sheet referred to above, any material Guarantee Obligation (as defined in
the Credit Agreement), contingent liability or liability for taxes, or any
long-term lease or unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction, which is not reflected in the foregoing statements or in the
notes thereto other than such obligations which are not required to be
disclosed under GAAP. During the period from December 31, 1994 to and
including the Closing Date, there has been no sale, transfer or other
disposition by Holdings, Lessee or any of their respective consolidated
Subsidiaries of any material part of its business or property and no
purchase or other acquisition of any business or property (including any
Capital Stock (as defined in the Credit Agreement) of any other Person)
material in relation to the consolidated financial condition of Holdings
and its consolidated Subsidiaries or Lessee and its consolidated
Subsidiaries, as the case may be, at December 31, 1994, except for any
transaction expressly permitted under this Agreement or the Credit
Agreement.
(f) Since December 31, 1994, there has been no development or
event, which has had or could reasonably be expected to have a Material
Adverse Effect (as defined in the Credit Agreement).
(g) Neither Holdings, Lessee nor any of its Subsidiaries is in
default or has received any notice of default under or with respect to any
of its Contractual Obligations (as defined in the Credit Agreement) in any
respect which could reasonably be expected to have a Material Adverse
-7-<PAGE>
Effect. No Unmatured Default or Event of Default has occurred and is
continuing.
(h) No requirement of Law or Contractual Obligation applicable
to Holdings, Lessee or any of its Subsidiaries could reasonably be
expected to have a Material Adverse Effect.
(i) Each of Holdings, Lessee and its Subsidiaries has filed or
caused to be filed all tax returns which are required to be filed and has
paid all taxes shown to be due and payable on said returns or on any
assessments made against it or any of its property and all other taxes,
fees or other charges imposed on it or any of its property by any Official
Body (other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of
Holdings, Lessee or its Subsidiaries, as the case may be, and the
nonpayment of which does not have a reasonable likelihood of having a
Material Adverse Effect); no tax Lien has been filed with respect to any
material tax liability on the part of Holdings, Lessee or any of its
Subsidiaries; and, to the knowledge of Holdings or Lessee, no proposed
material tax assessments is pending against Holdings, Lessee or any of its
Subsidiaries and all potential tax liabilities are adequately provided for
on the books of Holdings, Lessee or its Subsidiaries, as the case may be.
(j) No Reportable Event (as defined in the Credit Agreement) has
occurred since March 1, 1988 with respect to any Plan (as defined in the
Credit Agreement) which, if then terminated, has had or could reasonably
be expected to have a Material Adverse Effect, and each Plan has complied
in all respects with the applicable provisions of ERISA (as defined in the
Credit Agreement) and the Code (as defined in the Credit Agreement) except
where such failure to comply could not reasonably be expected to have a
Material Adverse Effect.
(k) The Premises do not contain any Hazardous Materials (as
defined in the Credit Agreement) in amounts or concentrations which
(i) constitute or constituted a violation of, or (ii) could reasonably
give rise to liability under, Environmental Laws (as defined in the Credit
Agreement), except to the extent that such violations and liabilities, in
the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(l) The Premises and all operations at the Premises are in
compliance in all material respects and in the last three years have been
in compliance in all material respects with all Environmental Laws, and
there is no contamination at or under the Premises, or violation of any
Environmental Law with respect to the Premises or the business of
Holdings, Lessee or any of its Subsidiaries, except to the extent that
such contamination and violations, in the aggregate, could not reasonably
be expected to have a Material Adverse Effect.
(m) Neither Holdings, Lessee nor any of its Subsidiaries has
received any notice of violation, alleged violation, noncompliance,
liability or potential liability regarding environmental matters or
compliance with Environmental Laws with regard to the Premises or the
business of Holdings, Lessee or any of its Subsidiaries or with regard to
any Person whose liabilities for environmental matters Holdings, Lessee or
any of its Subsidiaries has retrained or assumed, in whole or in part,
contractually, by operation of law or otherwise, which, in the aggregate,
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could reasonably be expected to have a Material Adverse Effect, nor does
Holdings or Lessee have knowledge or reason to believe that any such
notice will be received or is being threatened.
(n) Hazardous Materials have not been transported or disposed of
from the Premises, nor have Hazardous Materials been generated, treated,
stored or disposed of at, on or under any of the Premises, in violation of
any Environmental Law or in a manner that could reasonably give rise to
liability under any Environmental Law, nor do Holdings, Lessee or any of
its Subsidiaries reasonably believe that they have retained or assumed any
liability, contractually, by operation of law or otherwise, with respect
to the generation, treatment, storage or disposal of Hazardous Materials,
except to the extent that the foregoing, in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
(o) No material judicial proceedings or governmental or
administrative action is pending, or, to the knowledge of Holdings or
Lessee, threatened, under any Environmental Law to which Holdings, Lessee
or any of its Subsidiaries is or will be named a party with respect to
(x) the Premises, (y) the business of Holdings, Lessee or any of its
Subsidiaries or (z) any liabilities pursuant to Environmental Laws
reasonably believed by Holdings, Lessee or any of its Subsidiaries to be
retained or assumed by Holdings, Lessee or any of its Subsidiaries,
contractually, by operation of law or otherwise.
(p) There are no material consent decrees or other decrees,
consent orders, administrative orders or other orders, or other
administrative or judicial requirements outstanding under any
Environmental Law with respect to (x) the Premises, (y) the business of
Holdings, Lessee or any of its Subsidiaries or (z) any liabilities
pursuant to Environmental Laws reasonably believed by Holdings, Lessee or
any of its Subsidiaries to be retained or assumed by Holdings, Lessee or
any of its Subsidiaries, contractually, by operation of law or otherwise.
(q) There has been no Release (as defined in the Credit
Agreement) or threat of Release of Hazardous Materials at or from the
Premises, or arising from or in connection with the Premises or otherwise
in connection with the business of Holdings, Lessee or its Subsidiaries in
violation of any Environmental Law in a matter that, in the aggregate,
could reasonably be expected to have a Material Adverse Effect.
(r) Lessee is, and after giving effect to the consummation of
the transactions contemplated hereby and the application of the proceeds
of the sale of the Equipment by Lessee and to the incurrence or assumption
of all indebtedness, liabilities and obligations being incurred or assumed
in connection herewith will be and will continue to be, Solvent (as
defined in the Credit Agreement).
(s) Lessee maintains with financially sound and reputable
insurance companies insurance which meets the requirement of Article X
hereof.
(t) Prior to conveyance of the Equipment to Lessor, Lessee had,
and on the Closing Date Lessee will have conveyed to Lessor, good and
marketable title to the Equipment, free and clear of any Lien, except for
Permitted Liens and Liens in favor of the Lenders party to, and created
pursuant to, that certain Credit Agreement dated as of September 25,
1992, as amended and restated as of April 22, 1993, among Holdings, the
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Company, the Lenders named therein and Chemical Bank, as Agent (the
"Chemical Liens"). No effective financing statement or other item similar
in effect covering any Equipment is on file in any recording office,
except (1) those listed on Schedule 5.2(t) hereto relating to the Chemical
Liens and (2) such as may be filed in favor of Lessor relating to this
Agreement.
(u) This Agreement creates a valid security interest in the
Equipment in favor of Lessor securing the obligations of Lessee hereunder,
including without limitation the payment of Rent, which security interest
has been duly perfected and is prior to all other Liens other than the
Chemical Liens. All filings and other actions necessary or desirable to
perfect and protect such security interest in favor of Lessor have been
duly made and taken.
(v) No authorization, approval or other action by, and no notice
to or filing with, any Official Body is or will be necessary (i) for the
grant by Lessee of the security interest in the Equipment hereunder or for
the execution, delivery or performance of this Agreement by Lessee,
(ii) to ensure the validity, perfection or priority of the security
interest in the Equipment granted hereunder, or (iii) for the exercise by
Lessor of any of its rights or remedies hereunder, except for the filing
of (1) termination statements relating to the UCC financing statements
described in clause (1) of the second sentence of Section 5.2(t) above and
(2) UCC financing statements and continuation statements in appropriate
jurisdictions in favor of Lessor in connection with the security interest
granted hereunder.
(w) Schedule 5.2(w) identifies as of the date hereof the address
of the chief executive office of Lessee and of each office (whether
maintained by Lessee or otherwise) where books and records relating to the
Equipment are kept.
(x) Annex 3 to the Lease Schedule identifies as of the date
hereof the address of each Premises at which Equipment is located. Lessee
holds good and marketable fee simple title to each of the Premises,
subject only to the Chemical Liens.
(y) Lessee has exclusive possession and control of the Equipment.
5.3. Lessee's Business Covenants. (a) Lessee hereby covenants
and agrees that Lessee shall not convey title to any of the Premises to
any other Person unless Lessee shall have first obtained from such Person
an easement in form and substance satisfactory to Lessor granting to
Lessor the right to locate and keep at such Premises such of the Equipment
as is then or may thereafter be located on or at such Premises and
granting to Lessor the right to enter onto such Premises for the purpose
of operating, maintaining, replacing, removing or otherwise dealing with
the Equipment located thereon.
(b) The covenants and agreements contained in Sections 7.1(b) and
(c) of the Credit Agreement are hereby incorporated herein by reference,
and Lessee agrees with and for the benefit of Lessor from the date hereof
until the end of the Term to perform such covenants and agreements and to
comply therewith (it being understood and agreed, however, that Lessor is
subject to and bound by any amendment, modification or waiver of Section
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7.1(b) or (c) of the Credit Agreement made pursuant to Section 11.1(c) of
the Credit Agreement). References herein to the provisions of the Credit
Agreement include the definitions of terms used therein, references to
sections thereof and references to schedules thereto, except that
references therein to the "Company" shall be deemed to be references to
the Lessee hereunder and references therein to the "Effective Date" shall
be deemed to be references to the Effective Date hereunder.
ARTICLE VI. Conditions Precedent
6.1. Conditions to Effectiveness. The effectiveness of this
Agreement is subject to the satisfaction of the following conditions
precedent on or prior to the Effective Date, in each case in form,
substance and manner satisfactory to Lessor and its counsel.
(a) Each of the representations and warranties made by Lessee in
or pursuant to this Agreement shall be true and correct on and as of the
Effective Date.
(b) No Event of Default or Unmatured Default shall have occurred
and be continuing on the Effective Date.
(c) Lessor shall have received a copy of the resolutions of the
Board of Directors (and if applicable the shareholders) of Lessee, and a
copy of each of the articles of incorporation and the by-laws of Lessee,
each certified as of the Effective Date by the Secretary or an Assistant
Secretary of Lessee, duly authorizing the execution, delivery and
performance of this Agreement.
(d) Lessor shall have received a certificate of the Secretary or
an Assistant Secretary of Lessee dated the Effective Date as to the
incumbency and signatures of the person or persons authorized to execute
this Agreement and the other documents contemplated hereby on behalf of
Lessee.
(e) Lessor shall have received an opinion of counsel for Lessee
dated the Effective Date in substantially the form attached hereto as
Exhibit B.
(f) Lessor shall have received evidence satisfactory to Lessor
that Lessee has obtained insurance with respect to each Unit as required
by Article X.
(g) Lessor shall have received, with respect to each Unit to be
identified on Attachment 1 to the Certificate of Acceptance as exempt for
sales tax purposes, an exemption certificate.
(h) Lessor shall have received evidence reasonably satisfactory
to Lessor in Lessor's sole discretion that (i) the fair market value of
the Equipment on the Base Lease Term Commencement Date is not less than
$35,000,000 and (ii) the fair market value of the Equipment at the
expiration of the Base Lease Term is reasonably expected to be not less
than $15,000,000; provided, however, that the Lessee makes no
representation or warranty as to such fair market value.
(i) Lessor shall have received all documents, recordings and
filings as may be necessary or, in the opinion of Lessor, desirable to,
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and which, when recorded or filed will, create and perfect the security
interest created or purported to be created hereby as a valid, continuing
and perfected security interest in favor of Lessor securing the
obligations of Lessee hereunder, prior to all other Liens, evidence of the
taking of all other actions and evidence that any necessary fee, tax or
expense relating to such recordings or filings has been or will be paid.
Without limitation of the foregoing, Lessor shall receive executed
originals of all proper financing statements and all termination
statements required to be filed under the UCC as may be necessary or, in
the opinion of Lessor, desirable to create and perfect such security
interest in favor of Lessor.
(j) Lessor shall have received a search of UCC, real property,
tax, judgment and litigation dockets and records and other appropriate
registers revealing no filings or recordings in effect with respect to the
Equipment, except for filings relating to the Chemical Liens with respect
to which Lessor shall have received executed termination statements as
provided in Section 6.1(i) above, and such others as are acceptable to the
Lessor (it being understood that such acceptance does not limit the
obligations of Lessee with respect to the priority of the security
interest created hereby in favor of Lessor).
(k) Lessor shall have received a waiver, in form and substance
satisfactory to Lessor, from each Person having an interest, as a
mortgagee, in any of the Premises, pursuant to which such Person shall
have waived any interest such Person may have in and to any of the
Equipment.
(l) Lessor shall have received an executed Certificate of
Acceptance substantially in the form of Exhibit A hereto.
(m) Lessor shall have received an executed bill of sale for each
Unit substantially in the form of Exhibit C hereto.
(n) All other legal proceedings and details relative to this
Agreement shall be reasonably satisfactory to Lessor and its counsel, and
Lessor shall have been furnished with original or certified copies of such
other documents as it or its counsel may reasonably request.
All documents delivered by Lessee pursuant to this Section 6.1
shall be held by Lessor in escrow until the Closing Date and, in the event
that the Closing Date does not occur, such documents shall be returned to
Lessee.
6.2. Conditions to Lessor's Duties and Obligations. Lessor's
duties and obligations under this Agreement are subject, as of the date of
acceptance by Lessee of the Equipment (the "Closing Date"), of the
following conditions precedent:
(a) No order, judgment or decree shall purport to enjoin or
restrain (i) any Lender (as defined in the Credit Agreement) from making
its portion of the Redemption Loans (as defined in the Credit Agreement)
on such date, (ii) Lessor from purchasing the Equipment from Lessee for
Lessor's Cost and leasing the same to Lessee pursuant hereto on such date
or (iii) Holdings from redeeming on such date a portion of the 16%
Debentures (as defined in the Credit Agreement) having an aggregate face
amount equal to the aggregate amount of such Lessor's Cost.
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(b) There shall not have occurred (i) any Event of Default
pursuant to Section 14.1(a), (e) or (f) hereof, (ii) any payment default
in respect of the Senior Notes (as defined in the Credit Agreement) or
(iii) the declaration by any Person of any indebtedness described in
Section 14.1(g) (and having the minimum principal amount specified
therein) to be due and payable, in whole or in part, prior to the stated
maturity of such indebtedness.
The release by Lessee of the documents being held by Lessor in
escrow pursuant to Section 6.1 above shall constitute a representation and
warranty by Lessee as of the date of such acceptance that the conditions
contained in this Section 6.2 have been satisfied.
ARTICLE VII. Reports
7.1. Financial Reports.
(a) As soon as available, but in any event within 90 days after
the end of each fiscal year of Holdings or Lessee, as the case may be,
Lessee shall furnish to Lessor a copy of the consolidated balance sheet of
Holdings and its consolidated Subsidiaries and of Lessee and its
consolidated Subsidiaries as at the end of such year and the related
consolidated statements of income and stockholders' equity and cash flows
for such year, setting forth in each case in comparative form the figures
for the previous year, reported on by Ernst & Young or other independent
certified public accountants acceptable to Lessor (which report shall not
be qualified in any material respect); and
(b) As soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of Holdings or Lessee, as the case may be, Lessee shall furnish to
Lessor the unaudited consolidated balance sheet of Holdings and its
consolidated Subsidiaries and of Lessee and its consolidated Subsidiaries
as at the end of such quarter and the related unaudited consolidated
statements of income and stockholders' equity and cash flows for such
quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures for
the previous year, certified by a Responsible Officer (as defined in the
Credit Agreement) of Holdings or Lessee, as the case may be, as fairly
presenting the financial condition and results of operations of Holdings
or Lessee, as the case may be, on a consolidated basis in accordance with
GAAP (subject to normal year-end audit adjustments);
All such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with
GAAP applied consistently throughout the periods reflected therein and
with prior periods (except as approved by such accountants or officer, as
the case may be, and disclosed therein). It is understood that the
obligation to deliver any items described above which are contained in
Holdings' Form 10-K, as filed with the Securities and Exchange Commission
(in the case of Section 7.1(a)) or Holdings' Form 10-Q, as filed with the
Securities and Exchange Commission (in the case of Section 7.1(b)), may be
satisfied by delivery of such Form 10-K or Form 10-Q, as the case may be.
(c) Concurrently with the delivery of the financial statements
referred to in Section 7.1(a), Lessee shall deliver to Lessor (i) a
certificate of the independent certified public accountants reporting on
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such financial statements stating that in making the examination necessary
therefor no knowledge was obtained of any Event of Default or Unmatured
Default, except as specified in such certificate and (ii) copies of any
management letters delivered to Holdings or Lessee in connection with such
examination;
(d) Concurrently with the delivery of the financial statements
referred to in Sections 7.1(a) and 7.1(b), Lessee shall deliver to Lessor
(i) a certificate of a Responsible Officer of each of Holdings and Lessee
stating that such Responsible Officer has obtained no knowledge of any
Event of Default or Unmatured Default except as specified in such
certificate and (ii) a copy of the Compliance Certificate (as defined in
the Credit Agreement) delivered to the Lenders (as defined in the Credit
Agreement) pursuant to Section 6.2(b) of the Credit Agreement.
(e) Within five days after the same are sent, Lessee shall
deliver to Lessor copies of all financial statements and reports which
Holdings or Lessee sends to holders of any issue of its equity securities
or debt securities generally, and within five days after the same are
filed, copies of all financial statements and reports which Holdings or
Lessee may make to, or file with, the Securities and Exchange Commission
or any successor or analogous government authority or any national
securities exchange; and
(f) Lessee shall promptly furnish to Lessor such additional
financial and other information as Lessor shall reasonably request.
7.2. Annual Certificate. Lessee shall furnish to Lessor,
concurrently with the delivery of the annual financial statements of
Lessee required by Section 7.1 hereof, a certificate signed on behalf of
Lessee by a Responsible Officer of Lessee stating as of a recent date (but
not more than three months prior thereto):
(a) Information with respect to each Unit comparable to the
information set forth on Annex 2 to the Lease Schedule;
(b) The "RFA" number and "asset number" of any Unit that has
become lost, destroyed, irreparably damaged or otherwise permanently
rendered unfit or unavailable for use since the date of the previous
report delivered pursuant to this Section 7.2 (or since the commencement
of the Term in the case of the first such report);
(c) That the Equipment has been kept in good order and repair or
is then being repaired in accordance with Section 8.1 hereof;
(d) That the location requirements of Section 7.6 and
identification requirements of Section 8.2 hereof have been complied with
in the case of each Unit;
(e) That Lessee has filed all personal property tax returns in
respect of the Equipment required to be filed and has paid all taxes shown
thereon to be due; and
(f) That the signer of the certificate has made, or caused to be
made by persons under his authority and direction, a reasonable
investigation concerning the Equipment and Lessee's compliance with its
obligations hereunder, and that no Event of Default and no Unmatured
Default has occurred and is continuing or, if any Event of Default or
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Unmatured Default has occurred and is continuing, the nature thereof and
the steps which Lessee has taken or is taking to cure the same.
7.3. Inspection. Lessee shall permit any person designated by
Lessor to visit and inspect the Equipment and the records maintained in
connection therewith and to discuss the affairs, finances and accounts of
Lessee with the principal officers of Lessee, all at such reasonable times
and as often as Lessor may reasonably request.
7.4. Accidents. In the event of an accident arising out of
alleged or apparent defective design or manufacture or out of the use or
operation of any Unit, Lessee shall promptly file with the appropriate
governmental agencies all notices required by Law and shall promptly
deliver to its insurance carriers all notices called for under each policy
of insurance relating to such Unit. Concurrently with such filing or
delivery, Lessee shall deliver to Lessor a copy of the notice so filed or
delivered unless Lessee determines that the loss or liability as a result
of such accident is not reasonably expected to exceed $500,000. Lessee
shall also deliver to Lessor any additional information with respect to
such accident which Lessor shall reasonably request and shall promptly
make available to Lessor all correspondence, papers, notices and documents
whatsoever received by Lessee in connection with any claim or demand
involving or relating to any such accident, except for information which
is subject to the attorney client privilege or the work product doctrine.
7.5. Tax Liens. Lessee shall notify Lessor in writing, within 30
days after any day on which any Lien for taxes which are due and unpaid
shall attach to any Unit, of such Lien and of the location of such Unit on
such day.
7.6. Movement of Equipment. Lessee shall not move any Unit from
the Premises therefor specified in the Lease Schedule without the prior
written consent of Lessor, which shall not be unreasonably withheld.
ARTICLE VIII. Maintenance, Use and Operation
8.1. Maintenance and Operation. Lessee, at its own cost and
expense, shall service, repair, maintain and overhaul each Unit in
accordance with the procedures recommended or required by any service and
maintenance manuals and any subsequent bulletins or releases issued by any
manufacturer or dealer of the Units (and maintain complete records
relative thereto) and keep the same (i) in as good, safe and reliable
operating condition, repair and appearance as it was when delivered to
Lessee hereunder, ordinary and reasonable wear and tear excepted, and (ii)
in such condition as shall meet all applicable federal, state or local
Laws. Without limiting the foregoing, Lessee agrees to maintain each Unit
to the same extent as a prudent individual would in the management of its
own properties for the full useful life of a similar unit as if owned by
Lessee and without reference to the remaining Term hereof. Lessee shall
not use, operate or store any Unit in violation of this Agreement, of any
instructions therefor furnished by the manufacturer or vendor thereof or
of any applicable federal, state or local Law; nor use or operate any Unit
other than in a manner and for the use contemplated by the manufacturer
thereof.
8.2. Insignia. Lessee shall maintain on each Unit an insignia or
identification reasonably requested by Lessor and shall not remove, or
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permit the removal of, such insignia or identification without the prior
written consent of Lessor.
8.3. Supplies. Lessee shall pay for and provide all power, fuel
and supplies consumed by and required for each Unit and all repairs, parts
and supplies necessary therefor.
8.4. Accessories. Lessee shall not, without the prior written
consent of Lessor (which consent shall not be unreasonably withheld),
affix or install any accessory, equipment or device on any Unit if such
addition will materially impair the value or the originally intended
function or use of such Unit. All repairs, parts, supplies, accessories,
equipment and devices furnished or affixed to the Equipment shall
thereupon become the property of Lessor (except such as may be removed
without in any way materially affecting or impairing the value or the
originally intended function or use of the Equipment) and subject to the
Lien of, and security interest created in favor of Lessor under, this
Agreement. Immediately upon any replacement part becoming incorporated or
installed in or attached to the Equipment, without further act, title to
the removed part shall thereon vest in Lessee, free and clear of all
rights of Lessor.
8.5. Personal Property. Lessee shall not, without the prior
written consent of Lessor (which consent shall not be unreasonably
withheld) and subject to such conditions as Lessor may impose for its
protection, affix or install any Unit to or in any real property in such a
manner that it shall be or become real property or subject to any Lien or
other right in favor of any Person holding a Lien on any of the Premises,
it being the mutual intention of the parties that the Equipment at all
times shall be and remain personal property of Lessor. Lessee shall take
such steps as may be necessary to prevent any Person from acquiring any
rights in any Unit by reason of such Unit being claimed or deemed to be
real property.
8.6. Sublease and Assignment. Lessee shall not assign this
Agreement or sublease or let any Unit without the prior written consent of
Lessor, which consent shall not be unreasonably withheld.
8.7. Substitution of Units. At the request of Lessee, Lessor
shall permit Lessee to substitute replacement equipment (the "Replacement
Unit") for any Unit; provided that (i) the Replacement Unit shall be of at
least equal value, utility, salability and useful life of the Unit being
replaced, which determination shall be made by agreement between Lessee
and Lessor or, at the option of Lessor and the expense of Lessee, shall be
based upon an appraisal made by an appraiser selected by Lessor and
(ii) Lessee shall have taken all steps reasonably required by Lessor to
assure that title to the Replacement Unit has been duly transferred to
Lessor, that such Replacement Unit has been subjected to this Agreement
and that Lessor has a perfected security interest therein under the UCC
prior to the interest of any other Person.
ARTICLE IX. Liens
Lessee will not permit any Unit to be subject to any Lien
whatsoever except (i) the respective rights of Lessor and Lessee as herein
provided, (ii) Liens asserted by any person claiming by, through or under
Lessor and resulting from acts or omissions of Lessor, except to the
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extent that such Liens arise from the failure of Lessee to perform any of
Lessee's obligations hereunder, (iii) Liens for taxes not yet due, or so
long as any Event of Default shall not have occurred and remain continuing
hereunder, which taxes are being contested in good faith by appropriate
proceedings diligently pursued and as to which taxes any appropriate
reserves required by GAAP have been made on the books of the Lessee, and
(iv) inchoate, materialmen's, mechanics', workmen's, repairmen's,
employees' or other like Liens arising in the ordinary course of business
and not delinquent ("Permitted Liens").
ARTICLE X. Insurance
10.1. Physical Damage Insurance. At its own expense, Lessee
shall maintain physical damage insurance on each Unit against fire and
such other perils and in such amounts as are usually carried by
corporations engaged in the same or a similar business and similarly
situated to Lessee; provided, however, that in no event shall the amount
of such insurance at any time be less than the aggregate Termination Value
of all Units then leased hereunder.
10.2. Liability Insurance. At its own expense, Lessee shall
maintain insurance protecting the interests of both Lessor and Lessee
against liability for property damage to third persons and personal injury
or death arising out of the maintenance, use, operation and ownership of
the Equipment, in such amounts as are usually carried by corporations
engaged in the same or similar businesses and similarly situated to
Lessee.
10.3. General Insurance Provisions. All insurance required by
Sections 10.1 and 10.2 of this Agreement shall name the Lessor and Lessee
as insured parties, shall be maintained with responsible insurance
companies rated A or better by Best's and shall provide that the coverage
thereunder may be altered or cancelled only after not less than 30 days'
prior written notice to Lessor.
10.4. Payment of Premium by Lessor. In the event that Lessee
shall fail to obtain or maintain insurance in accordance with the
provisions of this Agreement, Lessor shall have the right, following not
less than 10 Business Days notice to Lessee, to obtain, and pay the
premiums on, such insurance as Lessor deems necessary and Lessee shall,
upon demand, reimburse Lessor in an amount equal to the amount of such
premiums paid plus interest at the Late Payment Rate from the date of such
payment to the date of such reimbursement.
ARTICLE XI. Assumption of Risk; Indemnification; Survival
11.1. Assumption of Risk and Indemnification. Lessee does hereby
assume liability for, and does hereby agree to indemnify, protect, save
and keep harmless Lessor and its successors, assigns, representatives,
directors, officers, employees, agents and servants (each such party
herein, for purposes of this Section 11.1, called an "Indemnitee") from
and against, and does hereby agree to pay, when due, as Additional Rent,
all liabilities, obligations, losses, damages, penalties, claims, actions,
suits, costs, expenses and disbursements, including reasonable legal fees
and expenses, of whatsoever kind or nature, whether seen or unforeseen,
imposed upon, incurred by or with respect to or asserted against any Unit
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or any Indemnitee, in any way relating to or arising out of the
manufacture, purchase, acceptance or rejection, ownership, delivery,
lease, use, possession, operation, condition, repair, replacement,
reconstruction, return or other disposition of any Unit, including without
limitation those in any way relating to or arising out of or alleged to
arise out of (i) any latent or other defects whether or not discoverable
by Lessor or Lessee, (ii) any claim for patent, trademark or copyright
infringement, (iii) any claim based on strict liability in tort and (iv)
any and all license fees, assessments and sales, use, rent, property and
other taxes now or hereafter imposed by any federal, state or local
government upon any Unit or its use or payments hereunder, or upon this
Agreement (excluding, however, taxes, fees and other charges (x) based
upon or measured by an Indemnitee's net income or its overall gross
receipts, (y) imposed by reason of the fact that an Indemnitee is not a
person organized under the Laws of the United States of America, any State
thereof or the District of Columbia or (z) imposed in connection with any
transfer, assignment or participation of all or any part of an
Indemnitee's interest in a Unit or in this Agreement to a Person other
than the Lessee prior to the occurrence and continuance of an Event of
Default, in each case together with interest and penalties with respect to
any such excluded taxes), whether the same shall be payable by or billed
or assessed to Lessor or Lessee, together with any penalties or interest
in connection therewith; provided, however, that nothing in this
Section 11.1 shall be construed so as to require Lessee to indemnify an
Indemnitee for its own gross negligence or willful misconduct or for any
material breach by Lessor of this Agreement. Lessee shall be obligated
under this Section 11.1 irrespective of whether an Indemnitee shall also
be indemnified with respect to the same matter under any other agreement
by any other person, except to the extent such Indemnitee recovers under
any insurance policies provided by Lessee hereunder. In the event Lessee
is required to make any payment under this Section 11.1, Lessee shall pay
to the Indemnitee an amount which after deduction of all taxes required to
be paid by the Indemnitee in respect of the receipt of such payment (after
giving credit for any savings in respect of any such taxes by reason of
deductions, credits or allowances in respect of the payment of the expense
indemnified against, and of such other taxes) shall be equal to the amount
of such payment. Lessee and Lessor each agree to give the other promptly
upon obtaining knowledge thereof written notice of any claim or liability
hereunder indemnified against; provided, however, that the failure to give
such notice shall affect, impair or diminish Lessee's obligations under
this Section 11.1 only and only to the extent of any damage or prejudice
caused to Lessee by such failure. Lessee shall not have any obligation to
indemnify any Indemnitee for any matter occurring subsequent to the
termination of this Agreement except to the extent that it relates to or
results from an act or event occurring prior to such termination or a
breach by Lessee of its obligations hereunder. Lessor shall permit
Lessee, at Lessee's expense, to contest any taxes, fees or other charges
or related penalties for which indemnification is provided hereunder so
long as Lessor, in its reasonable judgment, does not, as a result thereof,
risk criminal on other liability for which adequate indemnification may
not be provided. Lessee will keep Lessor fully informed as to the status
of any such contest.
11.2. Survival of Obligations. This Article XI shall remain in
effect notwithstanding the expiration or other termination of the Term
insofar as it relates to an event or state of facts which occurred or
existed or which is alleged to have occurred or existed prior to such
expiration or termination.
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ARTICLE XII. Damage to Property
12.1. Duty to Notify. In the event any Unit shall be lost,
stolen, destroyed, damaged beyond repair or permanently rendered unfit for
use for any reason whatsoever, or title thereto shall be requisitioned or
taken by any governmental authority under the power of eminent domain or
otherwise (herein referred to as an "Event of Loss"), Lessee shall
promptly notify Lessor as to the circumstances and time of such event.
12.2. Termination Value. Effective upon the happening of an
Event of Loss with respect to any Unit, Lessee shall become obligated,
without demand or notice, to pay to Lessor on the next Rental Payment Date
occurring more than 30 days following such Event of Loss an amount equal
to the Termination Value for such Unit as of such Rental Payment Date
together with all Basic Rent due on such Rental Payment Date. The
obligation of Lessee to pay Basic Rent for such Unit shall cease when such
payments have been made and such Unit shall cease to be part of the
Equipment leased hereunder effective as of such payment. Promptly
following receipt of such payments, Lessor will execute and deliver an
appropriate document amending the Certificate of Acceptance, but Lessor's
failure so to do shall not affect Lessee's obligations under this
Agreement, and Lessor will transfer to Lessee, without recourse or
warranty, all of Lessor's right, title and interest, if any, in and to
such Unit.
12.3. Insurance and Condemnation Proceeds. Any and all insurance
or other payments received by Lessor or Lessee (except under any insurance
policy maintained pursuant to Section 10.2 hereof) as a result of any
Event of Loss of a Unit shall be paid to or retained by Lessor and applied
against Lessee's obligation to pay the Termination Value. So long as no
Event of Default or Unmatured Default shall have occurred and be
continuing, any excess over such amount shall be paid by Lessor to Lessee.
If an Event of Default or Unmatured Default exists and is continuing, any
such excess shall be retained by Lessor and applied against Lessee's
obligation to pay the Termination Value until such Event of Default or
Unmatured Default shall be cured or waived, at which time any such excess
not so applied shall be paid to Lessee.
ARTICLE XIII. Return of Property
Upon the termination of the Base Lease Term prior to the scheduled
expiration thereof, if Lessor elects to retake possession of the
Equipment pursuant to Article XIV, Lessee shall return the Equipment to
Lessor in the condition required by Section 8.1 hereof. Lessee shall pay
or reimburse Lessor for the cost of all repairs reasonably necessary to
restore each Unit to such condition.
Notwithstanding any other provision hereof, upon termination of
the Base Lease Term, Lessor may, by written notice to Lessee, abandon the
Equipment to Lessee, whereupon title thereto and all liability and
responsibility therefor shall revert to Lessee.
ARTICLE XIV. Defaults; Remedies
14.1. Defaults; Remedies. If during the Term of this Agreement
one or more of the following events ("Events of Default") shall occur:
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(a) Default shall be made in the payment when due of any Rent
herein provided and such default shall continue until 2:00 P.M.,
Pittsburgh time on the third Business Day following the date upon which
such Rent is due; or
(b) Lessee shall attempt to remove, sell, transfer, encumber or
sublet any Unit without the prior written consent of the Lessor; or
(c) Default shall be made in the observance or performance of
any covenants, conditions or agreements on the part of Lessee contained or
incorporated by reference in Section 5.3 hereof;
(d) Default shall be made in the observance or performance of
any other covenants, conditions and agreements on the part of Lessee
contained herein and such Default shall continue for 30 days after written
notice from the Lessor to the Lessee specifying the Default and demanding
the same to be remedied; or
(e) A proceeding shall have been instituted in a court having
jurisdiction seeking a decree or order (i) for relief in respect of
Lessee, Holdings or any Significant Subsidiary of either in an involuntary
case under any applicable bankruptcy, insolvency or other similar law now
or hereafter in effect or (ii) for the appointment of a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official
of Lessee, Holdings or any Significant Subsidiary of either or of the
property of any of the foregoing, or (iii) for the winding up or
liquidation of the affairs of Lessee, Holdings or any Significant
Subsidiary of either; and either (I) any such proceeding shall remain
undismissed or unstayed and in effect for a period of 60 consecutive days
or (II) such court shall enter a decree or order granting the relief
sought in such proceeding; or
(f) Lessee, Holdings or any Significant Subsidiary of either
shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, shall consent
to the entry of an order for relief in an involuntary case under any such
law, or shall consent to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of Lessee, Holdings or any Significant Subsidiary of
either or for any substantial part of the property of any of the
foregoing, or shall make a general assignment for the benefit of
creditors, or shall fail generally to pay its debts as they become due, or
shall take any corporate action in furtherance of any of the foregoing; or
(g) Any material indebtedness of Lessee, Holdings or any
Subsidiary of either is not paid when due or within any applicable grace
period provided for in the agreement relating thereto or Lessee, Holdings
or any Subsidiary of either shall default in the performance of any
provision relating to any material indebtedness or contained in any
agreement pursuant to which such indebtedness is issued and as a result
thereof the holder of such indebtedness (or a trustee or agent on its
behalf) shall cause any material indebtedness of Lessee, Holdings or any
Subsidiary of either to be or become due and payable prior to its
specified maturity; for this purpose "material indebtedness" means any
indebtedness for borrowed money or for the deferred purchase price of
property or any capitalized lease obligation the aggregate amount of which
exceeds $5,000,000 or its equivalent; or
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(h) A Responsible Officer of Lessee shall have determined that
there has occurred and is continuing any condition, event, act or omission
which it reasonably believes constitutes an Event of Default or an
Unmatured Default, and shall fail promptly to notify Lessor of such
condition, event, act or omission; or
(i) Any representation or warranty made by Lessee in this
Agreement, or in the Certificate of Acceptance, or any information
furnished by Lessee in any instrument, certificate or other document
delivered by or on behalf of Lessee pursuant hereto or thereto, shall
prove to have been false and misleading in any material respect when
made;
(j) The Bessemer Group (as defined in the Credit Agreement)
shall cease to own in the aggregate, of record and beneficially, free and
clear of all Liens (other than Liens created by any provision of any
agreement entered into among any holders of the Capital Stock of Holdings,
as in effect on the Effective Date (as defined in the Credit Agreement)),
directly, that percentage of the common stock of Holdings representing at
least 70% of the common stock of Holdings owned by the Bessemer Group on
the Effective Date; or (ii) the Investors, collectively, shall cease to
have the power to vote or direct the voting of securities having at least
51% of the ordinary voting power for the election of directors of Holdings
unless (x) the failure to have such power occurs solely as a result of the
primary sale of shares of common stock of Holdings pursuant to any one or
more public offerings thereof and (y) no Person or group (within the
meaning of Rule 13d-5 of the Securities and Exchange Commission as in
effect on the Effective Date), other than any Person or group consisting
solely of one or more Investors, shall, directly or indirectly, have the
power to vote or direct the voting of securities representing more than
20% of the ordinary voting power for the election of directors of
Holdings; or (iii) Holdings shall cease to own and control, of record and
beneficially, directly, 100% of each class of outstanding Capital Stock of
the Company free and clear of all Liens (except Liens created by the
Holdings Pledge Agreement); or (iv) a "Change of Control" (as defined in
the Senior Note Indenture) shall occur (for purposes of this
Section 14.1(i), the terms "Liens", "Capital Stock", "Effective Date",
"Investors", "Holdings Pledge Agreement", "Senior Note Indenture", "Agent"
and "Lenders" shall have the respective meanings assigned to such terms in
the Credit Agreement);
(k) The validity or enforceability of this Agreement shall be
contested by Lessee, or any of the Liens intended to be created hereunder
shall cease to be or shall not be a valid and perfected Lien having the
priority contemplated hereby or Lessee shall so assert in writing;
then, in any such case, the Lessor at its option may:
A. Proceed by appropriate court action or actions either at law
or in equity to enforce performance by Lessee of the applicable duties and
obligations of Lessee under this Agreement or to recover from Lessee any
and all damages or expenses, including reasonable attorneys' fees, which
Lessor shall have sustained by reason of Lessee's Default or on account of
Lessor's enforcement of its remedies hereunder; or
B. By notice in writing to Lessee, terminate this Agreement,
whereupon all right of Lessee to the use of the Equipment shall absolutely
cease and terminate as though this Agreement had never been made, but
-21-<PAGE>
Lessee shall deliver possession of the Equipment to Lessor in accordance
with, and in the condition required by, Article XIII hereof and Lessee
shall remain liable as hereinafter provided; and thereupon, Lessor may by
its agents and without notice to Lessee enter upon the Premises or other
premises where the Units may be located and take possession of all or any
such Units and thenceforth hold, possess and enjoy the same free from any
right of Lessee, or its successors or assigns, to use the Units for any
purpose whatever.
C. Whether or not this Agreement is terminated, take immediate
possession of and remove any or all of the Equipment, wherever situated,
and for such purpose, enter upon the Premises without liability to the
Lessee for so doing, or may cause Lessee, at Lessee's expense, to
surrender and deliver possession of the Equipment in the same manner as
provided in Article XIII hereof;
D. Whether or not any action has been taken under A, B or C
above, sell any of the Equipment (with or without the concurrence or
request of Lessee) at public or private sale as Lessor may determine, free
and clear of any rights of Lessee;
E. Hold, use, occupy, operate, remove, lease or keep idle any
or all of the Equipment as Lessor in its sole discretion may determine,
without any duty to account to Lessee with respect to any such action or
inaction or for any proceeds thereof; and
F. Exercise any other right or remedy which may be available
under applicable Law and in general proceed by appropriate judicial
proceedings, either at law or in equity, to enforce the terms hereof or to
recover from Lessee or its damages for the breach hereof.
Upon termination of this Agreement, Lessor shall have the right to
recover forthwith from Lessee as damages for loss of the bargain and not
as a penalty and as reasonable rent for the use of the Equipment and for
the depreciation thereof, the sum of the following (without duplication):
(1) an amount equal to the Termination Value of the Equipment on
the date of termination;
(2) all due and unpaid Rent for the Equipment to the date of
termination;
(3) an amount equal to accrued taxes and other amounts payable
hereunder by Lessee with respect to the Equipment through the date of
termination;
(4) all reasonable costs, expenses, losses and damages incurred
or sustained by Lessor by reason of such Default; and
(5) interest at the Late Payment Rate on each of the foregoing
from the date upon which such amounts were first payable which date, in
the case of the amounts payable pursuant to clause (1) above, shall be the
termination date of this Agreement.
If on the date of such termination or repossession, any Unit be
damaged, lost, stolen or destroyed, or be subject to any levy, seizure,
assignment, application or sale for or by any creditor or governmental
agency, Lessee shall remain liable for the Termination Value pertaining to
-22-<PAGE>
such Unit less the amount of any insurance recovery received by Lessor in
connection therewith from insurance carried by Lessee in accordance with
Section 10.1 hereof.
14.2. Additional Remedies. It is Lessee's intention to grant to
and create in favor of Lessor a security interest under the Uniform
Commercial Code of the State of Indiana (the "UCC") in the Equipment as
security for the performance of the obligations hereunder and in lieu of
the remedies of Lessor set forth above, upon the occurrence of any Event
of Default, Lessor, at its option, may declare all sums deemed secured
hereby to be immediately due and payable, and in the event a voluntary or
involuntary case is commenced under any bankruptcy law by or against
Lessee as a debtor, all such obligations automatically will be due and
payable without any notice or declaration by Lessor, whereupon the same
shall become immediately due and payable without presentment, demand,
protest, notice of nonpayment or any other notice required by Law relative
thereto, all of which are expressly waived by Lessee. Lessor shall
thereupon have the rights and remedies of a secured party under the UCC,
including, without limitation, the right to take the Equipment or any
portion thereof into its possession by such means (without breach of the
peace) and through agents or otherwise as it may elect (and, in connection
therewith, demand that Lessee assemble the Equipment at a place or places
and in such manner as Lessor shall prescribe), and sell, lease or
otherwise dispose of the Equipment or any portion thereof in its then
condition or following any commercially reasonable preparation or
processing, which disposition may be by public or private proceedings, by
one or more contracts, as a unit or in parcels, at any time and place and
on any terms, so long as the same are commercially reasonable.
14.3. Remedies Cumulative; Waiver of Requirements. The remedies
in this Agreement provided in favor of Lessor shall not be deemed
exclusive, but shall be cumulative and shall be in addition to all other
remedies in its favor existing at law or in equity. TO THE EXTENT THAT
SUCH WAIVER IS PERMITTED BY LAW, LESSEE HEREBY WAIVES ANY MANDATORY
REQUIREMENTS OF LAW, NOW OR HEREAFTER IN EFFECT, WHICH MIGHT LIMIT OR
MODIFY ANY OF THE REMEDIES HEREIN PROVIDED, INCLUDING WITHOUT LIMITATION
ANY RIGHT WHICH LESSEE MAY HAVE TO NOTICE AND HEARING PRIOR TO THE
REPOSSESSION AND SALE OR LEASING OF ANY UNIT.
ARTICLE XV. Participation and Assignment by Lessor
Lessor shall have the right to participate its interest under this
Agreement and in and to the Equipment leased hereunder to a bank or other
lending institution or to others having an interest in the Equipment or
this transaction; provided, however, that (i) Lessor's obligations under
this Agreement shall remain unchanged, (ii) Lessor shall remain solely
responsible to Lessee for the performance of such obligations, (iii)
Lessee shall continue to deal solely and directly with Lessor in
connection with Lessor's rights and obligations under this Agreement and
(iv) no participant under any such participation shall have any right to
approve any amendment or waiver of any provision of this Agreement, or any
consent to any departure by Lessee therefrom, except to the extent that
such amendment, waiver or consent would reduce the Rent payable hereunder,
to the extent subject to such participation, or postpone the termination
date, or any Rental Payment Date, to the extent subject to such
participation. Notwithstanding the foregoing, Lessee agrees that each
such participant shall, to the extent provided in its participation, be
-23-<PAGE>
entitled to the rights and benefits under Section 11.1 hereof and Section
(b)(v) of Annex 1 attached hereto, and all rights to, or rights to
request, information under this Agreement with respect to its
participating interest, in each case as if such participant were the
Lessor and in each case with effect as from the date of effectiveness of
the applicable participation.
In addition, Lessor may, with the written consent of Lessee (which
consent shall not be unreasonably withheld) assign all, but not less than
all, of its interest in this Agreement to a bank or other entity. Upon
such assignment, the assignee shall be a party hereto and shall have the
rights and obligations of Lessor hereunder and Lessor shall relinquish its
rights and be released from its obligations under this Agreement and shall
cease to be a party hereto.
ARTICLE XVI. Quiet Possession
So long as no Event of Default hereunder shall have occurred and
be continuing, Lessor shall not do (nor suffer to be done by any Person
claiming by, through or under Lessor with respect to any claim resulting
from acts or omissions of Lessor, including without limitation permitting
any Lien of the type described in clause (ii) of Article IX, except to the
extent that such claim arises from the failure of Lessee to perform any of
Lessee's obligations hereunder) any act which will interfere with the
right of Lessee peaceably and quietly to hold, possess and use the
Equipment during the Term and in accordance with the provisions of this
Agreement.
ARTICLE XVII. Further Assurances
Lessee and Lessor will promptly and duly execute and deliver to
the other party hereto such further documents and assurances and take such
further action as Lessor or Lessee may from time to time reasonably
request in order to carry out more effectively the intent and purpose of
this Agreement and to establish and protect the rights and remedies
created or intended to be created in favor of Lessor or Lessee hereunder,
including, without limitation, if requested by Lessor or Lessee, in either
case at the expense of Lessee, the execution and delivery of supplements
or amendments hereto, in recordable form subjecting to this Agreement any
replacement property and the recording or filing of counterparts hereof,
or of financing statements with respect thereto in accordance with the
laws of such jurisdiction as Lessor or Lessee may from time to time deem
advisable, and the execution, delivery and filing or recording of all
continuation statements necessary to continue the perfection of the
security interest granted hereunder in favor of Lessor.
ARTICLE XVIII. Lessee Options
18.1. Purchase Option. So long as no Event of Default or
Unmatured Default shall have occurred and be continuing at the end of the
Base Lease Term, Lessee shall have the option to acquire the Equipment
from Lessor for the sum of $1.00.
18.2. Early Termination Option. Lessee shall have the option on
any Rental Payment Date, by delivery to Lessor of written notice not less
-24-<PAGE>
than 15 days prior thereto, which notice shall be irrevocable, to
terminate this Agreement and purchase all, but not less than all, of the
Equipment then subject hereto, by payment to Lessor on such Rental Payment
Date the sum of the Termination Value of such Equipment plus all Rent due
to Lessor on such Rental Payment Date. Notice having been given as
aforesaid, the amount payable pursuant to this Section 18.2 shall be due
and payable on such Rental Payment Date without further notice or action
from or by Lessor or Lessee.
18.3. Conveyance Upon Termination. Upon termination of this
Agreement and payment by Lessee to Lessor of all amounts required to be
paid by Lessee in connection therewith, Lessor shall deliver to Lessee a
bill of sale transferring the Equipment to Lessee as is, where is, and
with all faults, except that Lessor shall warrant that it is delivering to
Lessee whatever title was delivered to Lessor free and clear of Liens in
favor of any Person claiming by, through or under Lessor other than Liens
Lessee is required to remove pursuant to the terms hereof.
ARTICLE XIX. Intention of Parties; Security Agreement
19.1. Security Agreement. The lease created by this Agreement is
intended to be a lease intended as security in order to permit the Lessee
to obtain funds and to secure the repayment of such funds. Accordingly,
it is the intention of the parties hereto that this Agreement has the
purpose and function of creating a security interest in the Equipment,
rather than that of creating a true leasehold interest in the Equipment.
Consequently, this Agreement constitutes a "security agreement" within the
meaning of Section 9-105 of the UCC, and the Equipment includes all rights
and interests, whether tangible or intangible, of Lessee in the Equipment.
Lessee, by executing and delivering this Agreement, has created, and does
hereby create, in favor of Lessor a security interest in and to the
Equipment under the UCC.
19.2. Tax Benefits. It is also the intention of the parties to
this Agreement that any and all federal, state and local income tax
benefits associated with the ownership of the Equipment be solely for the
benefit of Lessee. Lessor agrees that it will not claim or attempt to
claim (nor suffer to be claimed by any Person claiming through or under
Lessor) any such benefits for its own account. Notwithstanding the
foregoing, Lessee understands and agrees that Lessor makes no
representations or warranties regarding either the effect of this
Agreement in light of any relevant tax laws affecting either Lessee or
Lessor, or the availability of any federal, state and local income tax
benefits associated with the ownership of the Equipment.
ARTICLE XX. Miscellaneous
Any cancellation or termination by Lessor pursuant to the
provisions of this Agreement shall not release Lessee from any then
outstanding obligations to Lessor hereunder. This Agreement constitutes
the entire agreement between the parties and there are no warranties (in
respect of the Equipment or otherwise), express or implied, or collateral
or contemporaneous agreements that affect its import other than such as
are contained herein. This Agreement may be modified, amended or mutually
rescinded only by a written instrument executed by each of the parties
hereto. This Agreement shall be binding upon and shall inure to the
-25-<PAGE>
benefit of the parties hereto and, subject to Section 8.6 hereof, their
respective successors and permitted assigns. Lessee agrees to pay the
out-of-pocket expenses of Lessor, including the reasonable fees and
expenses of counsel for Lessor, incurred in connection with the
negotiation, execution, delivery and closings under this Agreement, any
amendments or supplements hereto and the enforcement of Lessor's rights
hereunder. Time is of the essence of this Agreement. This Agreement shall
be governed by, and construed and enforced in accordance with, the laws of
the Commonwealth of Pennsylvania. Any document required to be delivered
hereunder in executed form or otherwise may be delivered by telecopier.
ARTICLE XXI. Notices
Any notices required or permitted under this Agreement, or by law
in respect of this Agreement, shall be in writing and shall be deemed to
have been duly given when personally delivered or when deposited in the
mail, first class, postage prepaid, or when sent by telex, telecopy,
courier or prepaid telegraph, addressed to the party required to receive
the same at the address set forth below such party's signature hereto, or
to such other address as such party shall specify by like notice.
IN WITNESS WHEREOF, the parties hereto have caused this instrument
to be executed as of the date first above written.
MELLON FINANCIAL SERVICES CORPORATION #3,
Lessor
By: /s/ Joan L. Balada
------------------------------------
Title: Vice President
---------------------------------
Address: 4444 One Mellon Bank Center
Pittsburgh, Pennsylvania 15258
Attention: President
Telex Number: 199103
Telecopy Number: 412/234-3948
ESSEX GROUP, INC., Lessee
By: /s/ David A. Owen
------------------------------------
Title: Executive Vice President
---------------------------------
Address: 1601 Wall Street
Fort Wayne, IN 46801-1601
Attention: David A. Owen
Executive Vice
President and Chief
Financial Officer
Telecopy Number: 219/461-4762
-26-<PAGE>
SCHEDULE 5.2(t)
<TABLE>
<CAPTION>
Jurisdiction/ Secured Party/ Date of
Item Creditor Filing No. Filing Collateral
------------- -------------- ---------- ------- ----------
<S> <C> <C> <C> <C>
1. Johnson Chemical Bank, 1499 10/14/92 Fixtures, machinery, equipment,
County, IN: as Agent etc., leases, intellectual
UCCs property, insurance premiums,
contracts, deposits, proceeds
(typical security agreement
language) relating to real
property described therein
2. Knox Chemical Bank, 1415 10/14/92 Fixtures, machinery, equipment,
County, IN: as Agent etc., leases, intellectual
UCCs property, insurance premiums,
contracts, deposits, proceeds
(typical security agreement
language) relating to real
property described therein
3. Tippecanoe Chemical Bank, 8868; 10/15/92; Fixtures, machinery, equipment,
County, IN: as Agent partial 12/5/94 etc., leases, intellectual
UCCs release property, insurance premiums,
2870 contracts, deposits, proceeds
(typical security agreement
language) relating to real
property described therein;
released telephone system
4. Whitley Chemical Bank, 1046-29 10/14/92 Fixtures, machinery, equipment,
County, IN: as Agent etc., leases, intellectual
UCCs property, insurance premiums,
contracts, deposits, proceeds
(typical security agreement
language) relating to real
property described therein
5. Orange Chemical Bank, 92-534 10/13/92 Fixtures, machinery, equipment,
County, IN: as Agent etc., leases, intellectual
UCCs property, insurance premiums,
contracts, deposits, proceeds
(typical security agreement
language) relating to real
property described therein
6. Secretary
of State of
IN:
UCCs Storage 1639753; 3/20/90; Data processing equipment
Technology 1675321 10/1/90
Corporation;
assigned to
Highline
Financial
Services<PAGE>
Jurisdiction/ Secured Party/ Date of
Item Creditor Filing No. Filing Collateral
------------- -------------- ---------- ------- ----------
Chemical Bank, 1807423; 10/13/92; Accounts, chattel paper,
as Agent partial 11/17/94 contracts, documents, equipment,
release general intangibles, instruments,
1950698 intellectual property, inventory;
released telephone system
Chemical Bank, 1807894; 10/14/94; Fixtures, machinery, equipment,
as Agent partial 11/17/94 etc., leases, intellectual
release property, insurance premiums,
1950699 contracts, deposits, proceeds
(typical security agreement
language) relating to real
property described therein;
released telephone system
</TABLE>
-2-<PAGE>
SCHEDULE 5.2(w)
1601 Wall Street
Ft. Wayne, IN 46801-1601
-1-<PAGE>
LEASE SCHEDULE
Dated as of the 12th day of April, 1995
to Agreement and Lease (the "Agreement")
dated as of April 12, 1995 between
MELLON FINANCIAL SERVICES CORPORATION #3 ("Lessor") and
ESSEX GROUP, INC. ("Lessee")
Lessor and Lessee hereby confirm that, pursuant to the Agreement,
the following shall apply to the Equipment specified below:
Base Lease Term Commencement Date: May 12, 1995
Base Lease Term: Seven (7) years
Equipment: Units covered by the Certificate of Acceptance,
which shall consist of enamel ovens, wire drawing
equipment and other personal property of the nature
described on Annex 2 hereto located at the premises
(the "Premises") described on Annex 3 hereto
Basic Rent: Per Annex 1 attached hereto
Rental Payment Dates: The last day of each Euro-Rate Funding Period
during the period that the Interest Component is
based upon the Euro-Rate and each August 12,
November 12, February 12 and May 12 during any
other period; provided, however, that in any event
a Rental Payment Date shall occur on May 12, 2002
or, if any such day is not a Business Day, the next
following Business Day.
Late Payment Rate: The sum of the Applicable Rate plus 2%
WITNESS the due execution hereof as of the day and year first
above written.
LESSOR:
MELLON FINANCIAL SERVICES
CORPORATION #3
By: /s/ Joan L. Balada
--------------------------
Title: Vice President
-------------------------
LESSEE:
ESSEX GROUP, INC.
By: /s/ David A. Owen
----------------------------
Title: Executive Vice President
-------------------------<PAGE>
ANNEX 1
TO
LEASE SCHEDULE
Basic Rent
(a) Basic Rent. Basic Rent shall be payable on each Rental
Payment Date in an amount equal to the sum of the Principal Component and
the Interest Component.
The Principal Component payable on each of the first 27 Rental
Payment Dates shall equal 2.5% of the initial Lessor's Cost of the
Equipment and the Principal Component payable on the final Rental Payment
Date shall be the unpaid amount of the initial Lessor's Cost of the
Equipment.
The Interest Component of Basic Rent payable on each Rental
Payment Date shall be an amount equal to interest on the unpaid balance of
Lessor's Cost of the Equipment then subject to this Agreement at a rate
per annum (based on a year of 360 days and actual days elapsed) computed
at the Applicable Rate (or, for any period during which an Event of
Default under Section 14.1(a) of the Agreement shall be continuing, the
Late Payment Rate) for the period commencing on the prior Rental Payment
Date (or in the case of the first Rental Payment Date the Base Lease Term
Commencement Date) and ending on the day before such Rental Payment Date.
(b) Interest Rate. "Applicable Rate" shall mean the "Applicable
Margin", as hereinafter defined, plus the "Euro-Rate", as hereinafter
defined, or, if pursuant to paragraph (iii) below the Euro-Rate Option is
not available, the "Base Rate", as hereinafter defined.
(i) Euro-Rate Option. "Euro-Rate" for any day, as used herein,
shall mean for each Euro-Rate Funding Period the rate per annum determined
by Lessor by dividing (the resulting quotient to be rounded upward to the
nearest 1/100 of 1%) (A) the rate of interest (which shall be the same for
each day in such Euro-Rate Funding Period) determined in good faith by
Lessor in accordance with its usual procedures (which determination shall
be conclusive) to be the average of the rates per annum for deposits in
Dollars offered to major money center banks in the London interbank market
at approximately 11:00 a.m., London time, two London Business Days prior
to the first day of such Euro-Rate Funding Period for delivery on the
first day of such Euro-Rate Funding Period in amounts comparable to the
outstanding balance on such day and having maturities comparable to such
Funding Period by (B) a number equal to 1.00 minus the Euro-Rate Reserve
Percentage.
The "Euro-Rate" may also be expressed by the following formula:
[average of the rates offered to major money ]
[center banks in the London interbank market ]
Euro-Rate = [determined by Lessor per clause (A) ]
-----------------------------------------------
[1.00 - Euro-Rate Reserve Percentage ]
"Euro-Rate Reserve Percentage" for any day shall mean the
percentage (expressed as a decimal, rounded upward to the nearest 1/100 of
1%), as determined in good faith by Lessor (which determination shall be
conclusive), which is in effect on such day as prescribed by the Board of<PAGE>
Governors of the Federal Reserve System (or any successor) representing
the maximum reserve requirement (including, without limitation,
supplemental, marginal and emergency reserve requirements) with respect to
eurocurrency funding (currently referred to as "Eurocurrency liabilities")
of a member bank in such System. The Euro-Rate shall be adjusted
automatically as of the effective date of each change in the Euro-Rate
Reserve Percentage. The Euro-Rate Option shall be calculated in
accordance with the foregoing whether or not Lessor is actually required
to hold reserves in connection with its eurocurrency funding or, if
required to hold such reserves, is required to hold reserves at the "Euro-
Rate Reserve Percentage" as herein defined.
Lessor shall give prompt notice to Lessee of the Euro-Rate
determined or adjusted in accordance with the definition of the Euro-Rate,
which determination or adjustment shall be conclusive if made in good
faith.
(ii) Euro-Rate Funding Periods. "Euro-Rate Funding Period" shall
mean, initially, the period commencing on the Base Lease Term Commencement
Date and ending three months thereafter; and thereafter, each period
commencing on the last day of the next preceding Euro-Rate Funding Period
and ending three months thereafter; provided that, (1) if any Euro-Rate
Funding Period would otherwise end on a day that is not a London Business
Day, such Euro-Rate Funding Period shall be extended to the next
succeeding London Business Day unless the result of such extension would
be to carry such Euro-Rate Funding Period into another calendar month in
which event such Euro-Rate Funding Period shall end on the immediately
preceding London Business Day; (2) no Euro-Rate Funding Period shall
extend beyond the end of the Base Lease Term; and (3) any Euro-Rate
Funding Period that begins on the last London Business Day of a calendar
month (or on a day for day in the calendar month at the end of such Euro-
Rate Funding Period) shall end on the last London Business Day of a
calendar month. Lessee shall, in slecting any Euro-Rate Funding Period,
allow for scheduled payments of Basic Rent; and
(iii) Base Rate Option. If
(A) on any date on which a Euro-Rate would otherwise be set
Lessor shall have determined in good faith (which determination shall be
conclusive) that:
(1) adequate and reasonable means do not exist for ascertaining
such Euro-Rate,
(2) the effective cost to Lessor of funding the outstanding
balance of Lessor's Cost from a Corresponding Source of Funds shall exceed
the Euro-Rate, or
(B) at any time Lessor shall have determined in good faith
(which determination shall be conclusive) that the making, maintenance or
funding of any part of the principal balance of Basic Rent at the
Euro-Rate Option has been made impracticable or unlawful by compliance by
Lessor in good faith with any Law or guideline or interpretation or
administration thereof by any Official Body charged with the
interpretation or administration thereof or with any request or directive
of any such Official Body (whether or not having the force of Law);
then, and in any such event, Lessor may notify Lessee of such
determination. Upon such date as shall be specified in such
notice (which shall not be earlier than the next Rental Payment<PAGE>
Date or such earlier date as shall be required by Law, the
outstanding principal balance of unpaid Lessor's Cost shall
automatically bear interest at the Base Rate plus the Applicable
Margin as of the date specified in such notice (and accrued
interest thereon shall be due and payable on such date).
The "Base Rate" for any day shall mean the greater of (A) the
Prime Rate for such day or (B) 0.50% plus the Federal Funds Effective Rate
for such day, such interest rate to change automatically from time to time
effective as of the effective date of each change in the Prime Rate or the
Federal Funds Effective Rate.
(iv) Applicable Margins.
The Applicable Margin for each interest rate Option for any day
shall mean the percentage set forth below opposite the relevant Level:
Level Euro-Rate Option Base Rate Option
----- ---------------- ----------------
I 1-3/8% 3/8%
II 1-5/8% 5/8%
III 1-7/8% 7/8%
IV 2-1/8% 1-1/8%
V 2-1/4% 1-1/4%
VI 2-1/2% 1-1/2%
As used herein, "Level" shall mean, as of any date of
determination, the level set forth below then in effect, as determined in
accordance with the following provisions:
Interest
Level Leverage Ratio Coverage Ratio
----- -------------- --------------
I Less than or equal to Greater than or equal
3.0 to 1.0 to 3.75 to 1.0
II Less than or equal to Greater than or equal
3.50 to 1.0 but greater to 3.25 to 1.0 but
than 3.0 to 1.0 less than 3.75 to 1.0
III Less than or equal to Greater than or equal
3.875 to 1.0 but greater to 2.75 to 1.0 but
than 3.50 to 1.0 less than 3.25 to 1.0
IV Less than or equal to Greater than or equal
4.0 to 1.0 but greater to 2.50 to 1.0 but
than 3.875 to 1.0 less than 2.75 to 1.0
V Less than or equal to Greater than or equal
4.25 to 1.0 but greater to 2.25 to 1.0 but
than 4.0 to 1.0 less than 2.50 to 1.0
VI Greater than 4.25 to Less than 2.25 to 1.0
1.0
-3-<PAGE>
For the purposes of this definition, the Level shall be determined as at
the end of each of the first three quarterly periods of each fiscal year
of Holdings and as at the end of each fiscal year of Holdings, for the
period (a "Level Test Period") of four consecutive fiscal quarters ending
on the last day of such quarterly period or fiscal year, as the case may
be, based on the relevant financial statements delivered pursuant to
Section 7.1; changes in the Level shall become effective on the date on
which such financial statements are delivered to Lessor (but in any event
not later than the 50th day after the end of each of the first three
quarterly periods of each fiscal year or the 105th day after the end of
each fiscal year, as the case may be) and shall remain in effect until the
next change to be effected pursuant to this definition, provided, that,
until the effectiveness of any change in the Level based upon the
financial statements of Holdings for the quarterly period ending March 31,
1995, the Level shall be deemed to be Level III, and provided, further,
that if any financial statements referred to above are not delivered
within the time periods specified above, then, until such financial
statements are delivered, the Level as at the end of the fiscal period
that would have been covered thereby shall be deemed to be Level VI. In
the event that the Level corresponding to the Leverage Ratio (as defined
in the Credit Agreement) and the Interest Coverage Ratio (as defined in
the Credit Agreement) shall differ in respect of any Level Test Period,
the higher-numbered Level (with Level VI being the highest-numbered
Level) shall govern until the next determination of the Level pursuant to
this definition. For the purposes of this definition, in the event that
Holdings shall consummate a Holdings Common Equity Offering (as defined in
the Credit Agreement) during any Level Test Period commencing after
June 30, 1995, the Interest Coverage Ratio shall be calculated after
giving effect on a pro forma basis to the discharge of any Indebtedness
(as defined in the Credit Agreement) repaid, repurchased, defeased or
otherwise discharged with the proceeds of such offering (but only to the
extent, in the case of revolving Indebtedness, accompanied by a commitment
reduction) as if such discharge had occurred on the first day of such
Level Test Period.
(v) Additional Compensation in Certain Circumstances.
(A) If any Law or guideline or interpretation or application
thereof by any Official Body charged with the interpretation or
administration thereof or compliance with any request or directive of any
Official Body (whether or not having the force of Law) now existing or
hereafter adopted:
(1) imposes, modifies or deems applicable any reserve,
special deposit or similar requirement against credits or
commitments to extend credit extended by, assets (funded or
contingent) of, deposits with or for the account of, other
acquisitions of funds by, Lessor (other than requirements
expressly included herein in the determination of the Euro-Rate
hereunder),
(2) imposes, modifies or deems applicable any capital
adequacy or similar requirement (a) against assets (funded or
contingent) of, or credits or commitments to extend credit
extended by, or (b) otherwise applicable to the obligations of
Lessor under this Agreement, or
-4-<PAGE>
(3) imposes upon Lessor any other condition or expense
with respect to this Agreement,
and the result of any of the foregoing is to increase the cost to, reduce
the income receivable by, or impose any expense (including loss of margin)
upon Lessor or any Person controlling Lessor, with respect to this
Agreement (or, in the case of any capital adequacy or similar requirement,
to have the effect of reducing the rate of return on Lessor's or
controlling Person's capital, taking into consideration Lessor's or such
controlling Person's policies with respect to capital adequacy) by an
amount which Lessor deems to be material (Lessor being deemed for this
purpose to have made, maintained or funded Lessor's Cost from a
Corresponding Source of Funds), Lessor may from time to time notify Lessee
of the amount determined in good faith (using any reasonable averaging and
attribution methods) by Lessor (which determination shall be conclusive)
to be necessary to compensate for such increase, reduction or imposition.
Such amount shall be due and payable by Lessee to Lessor ten Business Days
after such notice is given.
(B) In addition to all other amounts payable hereunder, if and to
the extent for any reason, at any time that Lessor's Cost is bearing
interest at the Euro-Rate Option, any Principal Component of Basic Rent
becomes due (by acceleration or otherwise), or is paid, prepaid or
converted to the Base Rate Option (whether or not such payment, prepayment
or conversion is mandatory or automatic and whether or not such payment or
prepayment is then due), on a day other than the last day of the
corresponding Euro-Rate Funding Period (the date such amount so becomes
due, or is so paid, prepaid or converted, being referred to as the
"Funding Breakage Date"), Lessee shall pay Lessor an amount ("Funding
Breakage Indemnity") equal to the loss or expense sustained or incurred by
Lessor as a consequence thereof, calculated as though Lessor had actually
funded such Principal Component through the purchase of a deposit bearing
interest at the Euro-Rate Option in an amount equal to the amount of such
Principal Component and having a maturity comparable to the relevant Euro-
Rate Funding Period; provided, however that Lessor may fund the Lessor's
Cost in any manner it sees fit, and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this Section
(v).
Such Funding Breakage Indemnity shall be due and payable on
demand. In addition, Lessee shall, on the due date for payment of any
Funding Breakage Indemnity, pay to Lessor an additional amount equal to
interest on such Funding Breakage Indemnity from the Funding Breakage Date
to but not including such due date at the Base Rate Option. The amount
payable to Lessor under this clause (v) shall be determined in good faith
by Lessor, and such determination shall be conclusive.
(c) Definitions. As used in this Annex 1, the following terms
shall have the following meanings:
"Corresponding Source of Funds" shall mean the proceeds of
hypothetical receipts by Lessor of one or more Dollar deposits in the
interbank eurodollar market at the beginning of the applicable Euro-Rate
Funding Period having maturities approximately equal to such Euro-Rate
Funding Period and in an aggregate amount approximately equal to the then
unpaid balance of Lessor's Cost.
-5-<PAGE>
"Debt/EBITDA Ratio" shall have the meaning assigned to that term
in the Credit Agreement.
"Dollar," "Dollars" and the symbol "$" shall mean lawful money of
the United States of America.
"Federal Funds Effective Rate" for any day shall mean the rate per
annum (rounded upward to the nearest 1/100 of 1%) determined by Lessor
(which determination shall be conclusive) to be the rate per annum
announced by the Federal Reserve Bank of New York (or any successor) on
such day as being the weighted average of the rates on overnight Federal
funds transactions arranged by Federal funds brokers on the previous
trading day, as computed and announced by such Federal Reserve Bank (or
any successor) in substantially the same manner as such Federal Reserve
Bank computes and announces the weighted average it refers to as the
"Federal Funds Effective Rate" as of the date of this Agreement; provided,
that if such Federal Reserve Bank (or its successor) does not announce
such rate on any day, the "Federal Funds Effective Rate" for such day
shall be the Federal Funds Effective Rate for the last day on which such
rate was announced.
"Interest Coverage Ratio" shall have the meaning assigned to that
term in the Credit Agreement.
"London Business Day" shall mean a day for dealing in deposits in
Dollars by and among banks in the London interbank market and which is a
Business Day.
"Prime Rate" as used herein, shall mean the interest rate per
annum announced from time to time by Mellon Bank, N.A. as its prime rate.
"Treasury Rate" as of any Funding Breakage Date shall mean the
rate per annum determined by Lessor (which determination shall be
conclusive) to be the semiannual equivalent yield to maturity (expressed
as a semiannual equivalent and decimal and, in the case of United States
Treasury bills, converted to a bond equivalent yield) for United States
Treasury securities maturing on the last day of the corresponding Euro-
Rate Funding Period and trading in the secondary market in reasonable
volume (or if no such securities mature on such date, the rate determined
by standard securities interpolation methods as applied to the series of
securities maturing as close as possible to, but earlier than, such date,
and the series of such securities maturing as close as possible to, but
later than, such date).
-6-<PAGE>
ANNEX 2
TO
LEASE SCHEDULE
<TABLE>
<CAPTION>
RFA# Description Location Year
---- ----------- -------- ----
<S> <C> <C> <C>
90310 DeAngeli No-slip Rod Mill Vincennes 1992
92095 22' Twin Acrometal Oven Replacement Vincennes 1993-94
92194 22' Twin Acrometal Oven Replacement Vincennes 1993-94
93193 22' Twin Acrometal Oven Replacement Vincennes 1994
94002 22' Twin Acrometal Oven Replacement Vincennes 1994
94027 2 - 14' Twin Acrometal Oven Replacements Vincennes 1994
92437 Wire Mill/Rod Mill Upgrade/Cabler/Bunchers Orleans 1993-94
93696 Used CV line Orleans 1994
93713 Wire Drawing, Bunching Equipment Orleans 1994
350-589 Conversion to 19 Wire Strand/Cabler Col City 1992-93
</TABLE>
LESS AND EXCEPT THE FOLLOWING:
<TABLE>
<CAPTION>
RFA # ASSET # DESCRIPTION
----- ------- -----------
<S> <C> <C> <C> <C>
350-589 AA75921 Payoff-Multiwire 10-Station
350-589 AA76836 Payoff-multiwire Buncher
350-589 AA76837 Payoff-multiwire Buncher
350-589 AA76838 Payoff-multiwire Buncher
350-589 AA76839 Payoff-multiwire Buncher
350-589 AA76840 Payoff-multiwire Buncher
350-589 AA76843 Payoff-multiwire
350-589 AA76844 Payoff-multiwire
350-589 AA76845 Payoff-multiwire
350-589 AA76846 Payoff-multiwire
350-589 AA76847 Payoff-multiwire
350-589 AA76848 Payoff-multiwire
350-589 AA76855 Single Wire Payoff<PAGE>
350-589 AA75921A Add'l Cost Multi-wire Payoff
350-589 AA76836A Add'l Cost Multi-wire Payoff
350-589 AA76837A Add'l Cost Multi-wire Payoff
350-589 AA76838A Add'l Cost Multi-wire Payoff
350-589 AA76839A Add'l Cost Multi-wire Payoff
350-589 AA76840A Add'l Cost Multi-wire Payoff
350-589 AA75943A Add'l Cost Multi-wire Payoff
350-589 AA76844A Add'l Cost Multi-wire Payoff
350-589 AA76845A Add'l Cost Multi-wire Payoff
350-589 AA76846A Add'l Cost Multi-wire Payoff
350-589 AA76847A Add'l Cost Multi-wire Payoff
350-589 AA76848A Add'l Cost Multi-wire Payoff
350-589 AA76855A Add'l Cost Single Wire Payoff
</TABLE>
<TABLE>
<CAPTION>
RFA# Description Location Year
---- ----------- -------- ----
<S> <C> <C> <C>
350-627 Line 22 T Wire Conversion/Rod Mill Upgrade Col City 1992-93-94
350-694 Upgrade Rod Mill - add 6" Extrusion Capacity Col City 1994
92462 Wire Mill and Insulating Operation Lafayette 1994
90185 Essex Plant Equipment Franklin IN 1993-94
323-098 Convert 091 Concast to 5/16" rod and In-line Coiling Col City Metals 1993-94
323-100 Add Second Concast Line MPC Rod Mills per Exhibit I Col City Metals 1994
See Exhibit I
94053 2 - 14' Twin Acrometal Oven Replacements Vincennes 1995
92462 Wire Mill and Insulating Operation Lafayette 1995
</TABLE>
-2-<PAGE>
EXHIBIT I
Asset No. Description Location Year
--------- ----------- -------- ----
2618 Rod Mill Orleans 1968
AA71257 Rod Mill Columbia City 1984
AA52753 Rod Mill Columbia City 1984
RAA52194 Rod Mill Lafayette 1989
-3-<PAGE>
ANNEX 3
TO
LEASE SCHEDULE
Decker Road
Vincennes, IN 47591-0259
3400 Union Street
Lafayette, IN 47903-7000
190 East Polk Street
Orleans, IN 47452-1027
3200 Earlywood Drive
Franklin, IN 46131
U.S. Highway 30 West & 600 East
Columbia City, IN 46725<PAGE>
EXHIBIT A
CERTIFICATE OF ACCEPTANCE
Dated the ___ day of
________________, 1995
to Agreement and Lease (the
"Agreement") dated as of April 12, 1995
between MELLON FINANCIAL SERVICES CORPORATION #3 ("Lessor") and
ESSEX GROUP, INC. ("Lessee")
THIS CERTIFICATE OF ACCEPTANCE is executed pursuant to the
Agreement and the terms herein shall have the meanings ascribed to them in
the Agreement.
Lessor and Lessee do hereby confirm and agree that (i) the Units
described in Attachment l hereto, having an aggregate Lessor's Cost as set
forth below, have been delivered as of the date hereof at the location or
locations indicated on said Attachment l, (ii) such Units have been duly
accepted by Lessee as the Equipment for leasing under the Agreement, (iii)
such Units are hereby made subject to, and the rights and duties of the
parties with respect thereto shall be governed by, the Agreement, and (iv)
Lessee has become obligated to pay Basic Rent in the amounts contemplated
by the Agreement:
Lessor's Cost: $25,000,000
Lessee hereby certifies to Lessor that the description of the
Units set forth in Attachment 1, including their status for sales tax
purposes, is accurate and complete and the representations and warranties
contained in Section 5.2 of the Agreement are true and correct on and as
of the date hereof and on the date hereof no Event of Default or Unmatured
Default has occurred and is continuing.
Lessee confirms that it has caused to be affixed to each Unit
described in Attachment l hereto the identification tag indicating
Lessor's ownership of such Unit as required by the Agreement.
WITNESS the due execution hereof as of the day and year first
above written.
LESSEE: LESSOR:
ESSEX GROUP, INC. MELLON FINANCIAL SERVICES
CORPORATION #3
By:__________________________ By:__________________________
Title:_______________________ Title:_______________________<PAGE>
ATTACHMENT 1
<TABLE>
<CAPTION>
RFA# Description Location Year
---- ----------- -------- ----
<S> <C> <C> <C>
90310 DeAngeli No-slip Rod Mill Vincennes 1992
92095 22' Twin Acrometal Oven Replacement Vincennes 1993-94
92194 22' Twin Acrometal Oven Replacement Vincennes 1993-94
93193 22' Twin Acrometal Oven Replacement Vincennes 1994
94002 22' Twin Acrometal Oven Replacement Vincennes 1994
94027 2 - 14' Twin Acrometal Oven Replacements Vincennes 1994
92437 Wire Mill/Rod Mill Upgrade/Cabler/Bunchers Orleans 1993-94
93696 Used CV line Orleans 1994
93713 Wire Drawing, Bunching Equipment Orleans 1994
350-589 Conversion to 19 Wire Strand/Cabler Col City 1992-93
</TABLE>
LESS AND EXCEPT THE FOLLOWING:
<TABLE>
<CAPTION>
RFA # ASSET # DESCRIPTION
----- ------- -----------
<S> <C> <C> <C> <C>
350-589 AA75921 Payoff-Multiwire 10-Station
350-589 AA76836 Payoff-multiwire Buncher
350-589 AA76837 Payoff-multiwire Buncher
350-589 AA76838 Payoff-multiwire Buncher
350-589 AA76839 Payoff-multiwire Buncher
350-589 AA76840 Payoff-multiwire Buncher
350-589 AA76843 Payoff-multiwire
350-589 AA76844 Payoff-multiwire
350-589 AA76845 Payoff-multiwire
350-589 AA76846 Payoff-multiwire
350-589 AA76847 Payoff-multiwire
350-589 AA76848 Payoff-multiwire
350-589 AA76855 Single Wire Payoff
350-589 AA75921A Add'l Cost Multi-wire Payoff<PAGE>
350-589 AA76836A Add'l Cost Multi-wire Payoff
350-589 AA76837A Add'l Cost Multi-wire Payoff
350-589 AA76838A Add'l Cost Multi-wire Payoff
350-589 AA76839A Add'l Cost Multi-wire Payoff
350-589 AA76840A Add'l Cost Multi-wire Payoff
350-589 AA75943A Add'l Cost Multi-wire Payoff
350-589 AA76844A Add'l Cost Multi-wire Payoff
350-589 AA76845A Add'l Cost Multi-wire Payoff
350-589 AA76846A Add'l Cost Multi-wire Payoff
350-589 AA76847A Add'l Cost Multi-wire Payoff
350-589 AA76848A Add'l Cost Multi-wire Payoff
350-589 AA76855A Add'l Cost Single Wire Payoff
</TABLE>
<TABLE>
<CAPTION>
RFA# Description Location Year
---- ----------- -------- ----
<S> <C> <C> <C>
350-627 Line 22 T Wire Conversion/Rod Mill Upgrade Col City 1992-93-94
350-694 Upgrade Rod Mill - add 6" Extrusion Capacity Col City 1994
92462 Wire Mill and Insulating Operation Lafayette 1994
90185 Essex Plant Equipment Franklin IN 1993-94
323-098 Convert 091 Concast to 5/16" rod and In-line Coiling Col City Metals 1993-94
323-100 Add Second Concast Line MPC Rod Mills per Exhibit I Col City Metals 1994
See Exhibit I
94053 2 - 14' Twin Acrometal Oven Replacements Vincennes 1995
92462 Wire Mill and Insulating Operation Lafayette 1995
/TABLE
<PAGE>
EXHIBIT I
Asset No. Description Location Year
--------- ----------- -------- ----
2618 Rod Mill Orleans 1968
AA71257 Rod Mill Columbia City 1984
AA52753 Rod Mill Columbia City 1984
RAA52194 Rod Mill Lafayette 1989
-3-<PAGE>
EXHIBIT B
[Counsel to Essex Group, Inc.]
April __, 1995
Mellon Financial Services
Corporation #3
c/o Mellon Bank, N.A.
One Mellon Bank Center
Pittsburgh, PA 15258
Ladies and Gentlemen:
I have acted as counsel to Essex Group, Inc., a Michigan
corporation ("Essex"), in connection with the negotiation, execution and
delivery of the Agreement and Lease dated as of April 12, 1995 (the
"Agreement"), between Essex and Mellon Financial Services Corporation #3
("MFSC") and the negotiation, execution and delivery of the Bill of Sale
and the Certificate of Acceptance (together with the Agreement,
collectively, the "Transaction Documents").
This opinion is furnished to you pursuant to Section 6.1(e) of the
Agreement. Unless otherwise defined herein, terms defined in the
Agreement are used herein as therein defined.
In rendering this opinion, I have reviewed the Agreement and the
other Transaction Documents, such corporate records of Essex and such
other documents and instruments, and have made such examinations of
matters of law as I have deemed necessary or relevant in connection with
the opinions set forth in this letter. In my examination, I have assumed
the genuineness of all signatures, the due authorization, execution and
delivery of the Transaction Documents by the parties thereto (other than
Essex), the authenticity of all documents submitted to me as originals and
the conformity to authentic, original documents of all documents submitted
to me as certified, conformed or photostatic copies. As to any facts
material to this opinion set forth below which I did not independently
establish or verify, I have relied upon representations of officers or
representatives of Essex.
Based on the foregoing, we are of the opinion that:
1. Essex is a corporation duly organized, validly existing and in
good standing under the laws of the State of Michigan. Essex is qualified
to do business as a foreign corporation and is in good standing in the
State of Indiana. Essex and each of its Subsidiaries is qualified to do
business in each jurisdiction where such qualification is necessary except
where the failure to so qualify could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
2. Essex and each of its Subsidiaries has the full corporate
power and authority to own, pledge, mortgage and operate its property and
to conduct the business in which it is currently engaged, and Essex has
full power, authority and legal right to execute and deliver the
Transaction Documents to which it is a party and to perform its<PAGE>
obligations thereunder, and all such action has been duly and validly
authorized by all necessary corporate proceedings on its part.
3. Assuming that the Transaction Documents are governed by the
laws of the State of Indiana rather than the laws of the Commonwealth of
Pennsylvania, the Transaction Documents have been duly and validly
executed and delivered by Essex and constitute legal, valid and binding
obligations of Essex, enforceable in accordance with the terms thereof,
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other laws of general
application affecting the enforcement of creditors' rights and by
equitable principles (whether enforcement is sought by proceedings in
equity or at law).
4. No authorization, consent, approval, license, exemption or
other action by, and no registration, qualification, designation,
declaration or filing with, any Official Body is or will be necessary or
advisable in connection with the execution and delivery of the Transaction
Documents, consummation of the transactions therein contemplated or
performance of or compliance with the terms and conditions thereof, other
than the filing of the Termination Statements and the Financing Statements
(each as hereinafter defined).
5. Neither the execution and delivery of the Transaction
Documents nor consummation of the transactions therein contemplated nor
performance of or compliance with the terms and conditions thereof will
(a) violate any Law, (b) conflict with or result in a breach of or a
default under the articles of incorporation or by-laws of Essex or, to the
best of our knowledge after due inquiry, any agreement or instrument to
which Essex is a party or by which Essex or any of its properties (now
owned or hereafter acquired) may be subject or bound or (c) to the best of
our knowledge after due inquiry, result in the creation or imposition of
any lien, charge, security interest or encumbrance upon any property (now
owned or hereafter acquired) of Essex other than the Lien and security
interest created by the Transaction Documents in favor of MFSC.
6. There are no pending or, to the best of our knowledge after
due inquiry, threatened actions or proceedings before any Official Body
against Holdings, Essex or any of its Subsidiaries which have had or could
reasonably be expected to have a Material Adverse Effect.
7. When the termination statements (the "Termination
Statements"), copies of which are attached hereto as Exhibit A, and the
financing statements (the "Financing Statements"), copies of which are
attached hereto as Exhibit B, have each been filed in the offices listed
on Exhibit C hereto, the Agreement shall constitute a fully perfected
security interest in all personal property and fixtures subject to the
Agreement. The Termination Statements and the Financing Statements are in
proper form for filing and for perfecting such security interest.
Very truly yours,
-2-<PAGE>
EXHIBIT C
BILL OF SALE
FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is
hereby acknowledged, and intending to be legally bound hereby, ESSEX
GROUP, INC. ("Essex") has bargained, sold, conveyed, transferred and
assigned and by these presents does hereby bargain, sell, convey, transfer
and assign to MELLON FINANCIAL SERVICES CORPORATION #3 ("Lessor"), its
permitted successors and assigns, forever, good and marketable title to
the personal property described in Attachment l attached hereto (the
"Units").
AND, Essex hereby covenants and warrants to Lessor, its permitted
successors and assigns, that Essex is the lawful owner of the Units and
has full power and authority to sell the same as aforesaid, and the Units
are on the date hereof free and clear of all claims, liens, encumbrances
and claims of any nature.
AND, the sale and assignment of the Units to Lessor is for the
purpose of permitting Essex to obtain funds and to secure the repayment by
Essex of such funds.
IN WITNESS WHEREOF Essex has caused this Bill of Sale to be
executed and delivered this ____ day of ______________, 1995.
ESSEX GROUP, INC.
By:______________________________________
Title:___________________________________<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AS
OF MARCH 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000033565
<NAME> ESSEX GROUP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 7,540
<SECURITIES> 0
<RECEIVABLES> 156,333
<ALLOWANCES> 3,578
<INVENTORY> 165,939
<CURRENT-ASSETS> 338,072
<PP&E> 336,249
<DEPRECIATION> 63,838
<TOTAL-ASSETS> 755,295
<CURRENT-LIABILITIES> 131,288
<BONDS> 200,000
<COMMON> 302,784
0
0
<OTHER-SE> 40,303
<TOTAL-LIABILITY-AND-EQUITY> 755,295
<SALES> 289,649
<TOTAL-REVENUES> 290,714
<CGS> 247,223
<TOTAL-COSTS> 247,223
<OTHER-EXPENSES> 21,851
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,756
<INCOME-PRETAX> 15,884
<INCOME-TAX> 6,700
<INCOME-CONTINUING> 9,184
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,184
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
