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 September 30, 1996
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 September 30, 1996
-------------- ----------------------------
$.01 Par Value 100<PAGE>
ESSEX GROUP, INC.
FORM 10-Q INDEX
FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
Page No.
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets . . . . . . . . . . . . . . . . 3
Consolidated Statements of Income . . . . . . . . . . . . . 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 . . . . . . . 13
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . 19
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ESSEX GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
In Thousands of Dollars (Unaudited)
--------------------------------------------------------------------------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . $ 3,874 $ 3,157
Accounts receivable (net of allowance of
$4,409 and $3,930) . . . . . . . . . . . . . . . . . 169,302 154,584
Inventories . . . . . . . . . . . . . . . . . . . . . 172,599 166,076
Other current assets . . . . . . . . . . . . . . . . . 17,210 8,988
-------- --------
Total current assets . . . . . . . . . . . . . 362,985 332,805
Property, plant and equipment, (net of accumulated
depreciation of $105,546 and $84,341) . . . . . . . . 264,542 270,546
Excess of cost over net assets acquired (net of
accumulated amortization of $16,343 and $13,221) . . 127,665 129,943
Other intangible assets and deferred costs (net of
accumulated amortization of $4,846 and $3,102) . . . 7,443 9,187
Other assets . . . . . . . . . . . . . . . . . . . . . 3,525 1,987
-------- --------
$766,160 $744,468
======== ========
See Notes to Consolidated Financial Statements
3<PAGE>
ESSEX GROUP, INC.
CONSOLIDATED BALANCE SHEETS - Continued
September 30, December 31,
1996 1995
In Thousands of Dollars, Except Per Share Data (Unaudited)
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LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Notes payable to banks . . . . . . . . . . . . . . . . $ 10,536 $ 11,760
Current portion of long-term debt . . . . . . . . . . 11,576 24,734
Accounts payable . . . . . . . . . . . . . . . . . . . 51,847 66,797
Accrued liabilities . . . . . . . . . . . . . . . . . 54,927 45,864
Deferred income taxes . . . . . . . . . . . . . . . . 16,377 15,345
Due to Holdings . . . . . . . . . . . . . . . . . . . 3,365 384
-------- --------
Total current liabilities . . . . . . . . . . . 148,628 164,884
Long-term debt . . . . . . . . . . . . . . . . . . . . 401,334 388,016
Deferred income taxes . . . . . . . . . . . . . . . . 63,114 66,809
Other long-term liabilities . . . . . . . . . . . . . 12,812 10,081
Stockholder's equity:
Common stock, par value $.01 per share; 1,000 shares
authorized; 100 shares issued and outstanding; plus
additional paid in capital . . . . . . . . . . . . . 104,036 104,036
Retained earnings . . . . . . . . . . . . . . . . . . 36,236 10,642
-------- --------
Total stockholder's equity . . . . . . . . . . 140,272 114,678
-------- --------
$766,160 $744,468
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
4<PAGE>
ESSEX GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Month Period Nine Month Period
Ended September 30, Ended September 30,
------------------------ -----------------------
In Thousands of Dollars 1996 1995 1996 1995
----------------------------------------------------------------------------------------------
REVENUES:
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . $328,777 $308,288 $974,720 $886,471
Interest income . . . . . . . . . . . . . 7 10 55 390
Other income . . . . . . . . . . . . . . . 305 (91) 870 1,238
-------- -------- -------- --------
329,089 308,207 975,645 888,099
-------- -------- -------- --------
COSTS AND EXPENSES:
Cost of goods sold . . . . . . . . . . . . 269,813 263,523 813,106 761,682
Selling and administrative . . . . . . . . 28,881 21,892 86,331 65,175
Interest expense . . . . . . . . . . . . . 9,555 10,284 29,879 24,466
Other expense . . . . . . . . . . . . . . . 819 1,991 1,235 2,551
-------- -------- -------- --------
309,068 297,690 930,551 853,874
-------- -------- -------- --------
Income before income taxes and
extraordinary charge . . . . . . . . . . . . 20,021 10,517 45,094 34,225
Provision for income taxes . . . . . . . . . 8,500 4,400 19,500 14,880
-------- -------- -------- --------
Income before extraordinary charge . . . . . 11,521 6,117 25,594 19,345
Extraordinary charge - repurchase of debt,
net of income tax benefit . . . . . . . . . - - - 2,971
-------- -------- -------- --------
Net income . . . . . . . . . . . . . . . . . $ 11,521 $ 6,117 $ 25,594 $ 16,374
======== ======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
5<PAGE>
ESSEX GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Month Period
Ended September 30,
------------------------
In Thousands of Dollars 1996 1995
-------------------------------------------------------------------------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income . . . . . . . . . . . . . . . . . . . . $25,594 $ 16,374
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization . . . . . . . . . . . 25,489 24,493
Non cash interest expense . . . . . . . . . . . . . 1,585 1,501
Non cash pension expense . . . . . . . . . . . . . 2,170 1,710
Loss on debt retirement . . . . . . . . . . . . . . - 4,951
Provision for losses on accounts receivable . . . . 958 372
Benefit for deferred income taxes . . . . . . . . . (2,664) (337)
Loss on disposal of property, plant and equipment 1,045 2,093
Changes in operating assets and liabilities:
Increase in accounts receivable . . . . . . . . . (15,572) (25,878)
(Increase) decrease in inventories . . . . . . . . (1,813) 14,354
Increase (decrease) in accounts payable and
accrued liabilities . . . . . . . . . . . . . . . (5,349) 21,046
Net (increase) decrease in other assets and
liabilities . . . . . . . . . . . . . . . . . . . (9,377) 10,591
Increase (decrease) in due to Holdings . . . . . 2,980 (33,128)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES . . . . . . 25,046 38,142
-------- --------
INVESTING ACTIVITIES
Additions to property, plant and equipment . . . . . (15,677) (18,069)
Proceeds from disposal of property, plant
and equipment . . . . . . . . . . . . . . . . . . . 405 1,151
Acquisitions and other investments . . . . . . . . . (7,993) (25,392)
Issuance of equity interest in a subsidiary . . . . - 1,063
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES . . . . . . . (23,265) (41,247)
-------- --------
See Notes to Consolidated Financial Statements
6<PAGE>
ESSEX GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Unaudited)
Nine Month Period
Ended September 30,
------------------------
In Thousands of Dollars 1996 1995
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FINANCING ACTIVITIES
Proceeds from long-term debt . . . . . . . . . . . . 110,800 374,040
Repayment of long-term debt . . . . . . . . . . . . (110,640) (157,665)
Proceeds from notes payable to banks . . . . . . . . 390,259 72,345
Repayment of notes payable to banks . . . . . . . . (391,483) (56,945)
Dividend paid to Holdings . . . . . . . . . . . . . - (238,748)
Debt issuance costs . . . . . . . . . . . . . . . . - (4,437)
-------- --------
NET CASH USED FOR FINANCING ACTIVITIES . . . . . . . (1,064) (11,410)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 717 (14,515)
Cash and cash equivalents at beginning of period . . 3,157 16,894
-------- --------
Cash and cash equivalents at end of period . . . . . $ 3,874 $ 2,379
======== ========
</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
September 30, 1996, and the consolidated results of operations for the
three month and nine month periods ended September 30, 1996 and 1995,
respectively, and cash flows of the Company for the nine month periods
ended September 30, 1996 and 1995, 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, as amended,
filed with the Securities and Exchange Commission for the year ended
December 31, 1995.
NOTE 2 INVENTORIES
The components of inventories are as follows:
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- -------------
<S> <C> <C>
Finished goods . . . . . . . . . . . . . $128,006 $146,821
Raw materials and work in process . . . . 43,955 52,366
-------- --------
171,961 199,187
LIFO reserve . . . . . . . . . . . . . . 638 (33,111)
-------- --------
$172,599 $166,076
======== ========
</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 $166,519 and $161,449 at
September 30, 1996 and December 31, 1995, 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>
September 30, December 31,
1996 1995
------------- -------------
<S> <C> <C>
10% Senior notes . . . . . . . . . . . $200,000 $200,000
Revolving loan . . . . . . . . . . . . 157,000 135,000
Term loan . . . . . . . . . . . . . . . 34,035 54,000
Lease obligation . . . . . . . . . . . 21,875 23,750
-------- --------
412,910 412,750
Less: current portion . . . . . . . . . 11,576 24,734
-------- --------
$401,334 $388,016
======== ========
</TABLE>
Bank Financing
In April 1995, in connection with the redemption (the "Redemption") by
BCP/Essex Holdings Inc. ("Holdings"), holding company of the Company, of
all of its outstanding 16% Senior Discount Debentures due 2004 (the
"Holdings Debentures"), the Company terminated its previous credit
agreement (the "Former Credit Agreement") and entered into three new
facilities: (i) a $260,000 revolving credit agreement, dated as of April
12, 1995, by and among the Company, Holdings, the Lenders named therein,
and Chemical Bank, as agent (the "Revolving Credit Agreement"); (ii) a
$60,000 senior unsecured note agreement, dated as of April 12, 1995, by
and among the Company, Holdings, as guarantor, the Lenders named therein,
and Chemical Bank, as administrative agent (the "Term Loan", together with
the Revolving Credit Agreement, the "Credit Facilities"); and (iii) a
$25,000 agreement and lease, dated as of April 12, 1995, by and between
the Company and Mellon Financial Services Corporation #3 (the "Sale and
Leaseback Agreement"). The Company recognized an extraordinary charge of
$2,971, net of applicable tax benefit ($1,980), in the second quarter 1995
for the write-off of unamortized deferred debt expense in connection with
the termination of its Former Credit Agreement.
On May 12, 1995, the Company borrowed the full amount available under the
Term Loan and the Sale and Leaseback Agreement. These funds, together
with available cash and borrowings under the Revolving Credit Agreement,
were paid to Holdings in the form of a cash dividend ($238,748) and
repayment of a portion of an intercompany liability ($34,102) totaling
$272,850. Holdings applied such funds to redeem all of its outstanding
Holdings Debentures at 100% of their principal amount of $272,850 on May
9<PAGE>
ESSEX GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
(Unaudited)
In Thousands of Dollars
-----------------------
15, 1995.
The Revolving Credit Agreement provides for up to $260,000 in revolving
loans, subject to specified percentages of eligible assets, reduced by
outstanding borrowings under the Company's Canadian credit agreement and
unsecured bank lines of credit ($4,476 and $6,060, respectively, at
September 30, 1996), as described below. The Revolving Credit Agreement
also provides a $25,000 letter of credit subfacility. The Company's
ability to borrow under the Revolving Credit Agreement is restricted by
the financial covenants contained therein as well as those contained in
the Term Loan and to certain debt limitation covenants contained in the
indenture under which the 10% Senior Notes due 2003 (the "Senior Notes")
were issued (the "Senior Note Indenture"). The Revolving Credit Agreement
terminates five years from its effective date of April 12, 1995.
Revolving Credit Agreement loans bear floating rates of interest, at the
Company's option, at bank prime plus 1.25% or a reserve adjusted
Eurodollar rate (LIBOR) plus 2.25%. The effective interest rate can be
reduced by 0.25% to 1.25%, in 0.25% increments, if certain specified
financial conditions are achieved. Commitment fees during the revolving
loan period are .375% or .5% of the average daily unused portion of the
available credit based upon certain specified financial conditions.
Indebtedness under the Revolving 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. See Note 5 for further information.
The Term Loan provides for an aggregate of $60,000 in term loans, the
last payment of which is due in May 2000. Borrowings under the Term Loan
bear floating rates of interest at bank prime plus 2.75% or LIBOR plus
3.75%. Principal payments on the term loans will be made in 20 equal
quarterly installments, subject to the loan's excess cash provision,
commencing August 15, 1995. The Term Loan requires 50% of excess cash, as
defined, to be applied against the outstanding term loan balance. The
excess cash calculation for the year ended December 31, 1995 required the
Company to repay $12,427 of the term loan. Such payment was made in March
1996. After the 1996 excess cash repayment, principal payments will be
made in 17 equal quarterly installments of $2,269. Amounts repaid with
respect to the excess cash provision may not be reborrowed.
The Sale and Leaseback Agreement provides $25,000 for the sale and
leaseback of certain of the Company's fixed assets. The Sale and
Leaseback Agreement has a seven-year term expiring in May 2002. The
principal component of the rental is to be paid quarterly, with the amount
of each of the first 27 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 at LIBOR plus 2.5%. The effective interest rate can
be reduced by 0.25% to 1.125% if certain specified financial conditions
are achieved.
10<PAGE>
ESSEX GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
(Unaudited)
In Thousands of Dollars
-----------------------
On May 30, 1996, a subsidiary of the Company entered into a $12,000
(Canadian dollar) credit agreement by and between the subsidiary and a
Canadian chartered bank (the "Canadian Credit Agreement"). Borrowings are
restricted to meeting the working capital requirements of the subsidiary
and are secured by the subsidiary's accounts receivable. As of September
30, 1996, $4,476 was outstanding under the Canadian Credit Agreement and
denoted as notes payable to banks in the Consolidated Balance Sheets. The
Canadian Credit Agreement bears interest at rates similar to the Revolving
Credit Agreement and terminates one year from its effective date of May
30, 1996, although it may be extended for successive one year periods upon
the mutual consent of the subsidiary and lending bank.
In addition, the Company also has uncommitted bank lines of credit which
provide for unsecured borrowings for working capital of up to $25,000, of
which $6,060 and $11,760 were outstanding at September 30, 1996 and
December 31, 1995, respectively. Amounts outstanding under these lines of
credit are also denoted as notes payable to banks in the Consolidated
Balance Sheets and bear interest at rates subject to agreement between the
Company and the lending banks. At September 30, 1996 and December 31,
1995, such rates of interest averaged 6.7%.
The Company has purchased interest rate cap protection through May 15,
1997 with respect to $150,000 of debt with a strike rate of 10.0% (three
month LIBOR).
11<PAGE>
ESSEX GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
(Unaudited)
In Thousands of Dollars
-----------------------
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.
NOTE 4 CONTINGENT LIABILITIES
There are various environmental claims and legal proceedings pending
against the Company which have arisen out of the ordinary course of its
business. Pursuant to the February 29, 1988 acquisition of the Company by
Holdings from United Technologies Corporation ("UTC"), UTC agreed to
indemnify the Company against all losses (as defined) resulting from or in
connection with damage or pollution to the environment and arising from
events, operations, or activities of the Company prior to February 29,
1988 or from conditions or circumstances existing at February 29, 1988.
Except for certain matters relating to permit compliance, the Company is
fully indemnified with respect to conditions, events or circumstances
known to UTC prior to February 29, 1988. The sites covered by this
indemnity are handled directly by UTC and all payments required to be made
are paid directly by UTC. The amounts related to this environmental
contingency are not material to the Company's consolidated financial
statements. UTC also provided a second environmental indemnity which
deals with losses related to environmental events, conditions or
circumstances existing at or prior to February 29, 1988, which only became
known in the five year period commencing February 29, 1988. As to any
such losses, the Company is responsible for the first $4,000 incurred.
Management and its legal counsel periodically review the probable outcome
of pending proceedings and the costs reasonably expected to be incurred.
The Company accrues for these costs when it is probable that a liability
has been incurred and the amount of the loss can be reasonably estimated.
After consultation with counsel during the current quarter, in the opinion
of management, the ultimate cost to the Company, exceeding amounts
provided, will not materially affect the consolidated financial position
or results of operations.
NOTE 5 SUBSEQUENT EVENTS
On October 31, 1996, the Company acquired substantially all of the assets
of Triangle Wire and Cable, Inc. of Lincoln, Rhode Island ("Triangle"),
related to the sales, marketing, manufacturing and distribution of
electrical wire and cable and the assets of its Canadian affiliate, FLI
Royal Wire and Cable. The acquisition included four manufacturing
facilities which produce a broad range of building and industrial wire and
cable. The total purchase price for the net assets of Triangle
12<PAGE>
ESSEX GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-Continued
(Unaudited)
In Thousands of Dollars
-----------------------
approximated $75,000, subject to post closing adjustment. The acquisition
was financed from proceeds received under the Company's new revolving
credit agreement as detailed in the following paragraph.
In connection with the Triangle acquisition, the Company terminated the
Revolving Credit Agreement and entered into a new revolving credit
agreement, dated as of October 31, 1996, by and among the Company,
Holdings, the Lenders named therein, and The Chase Manhattan Bank, as
administrative agent (the "New Revolving Credit Agreement"). The New
Revolving Credit Agreement provides for up to $370,000 in revolving loans
and bears terms and conditions similar to the terminated Essex Revolving
Credit Agreement. The Company will recognize an extraordinary charge of
approximately $1,183 ($1,971 before applicable income tax benefit) in the
fourth quarter 1996 for the write-off of unamortized deferred debt expense
associated with the termination of the Revolving Credit Agreement.
13<PAGE>
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition
Introduction
Essex Group, Inc. (the "Company"), founded in Detroit, Michigan in 1930,
is engaged in one principal line of business, the development, production
and marketing of electrical wire and cable and electrical insulation
products. Among the Company's products are building wire for residential
and commercial applications; magnet wire for electromechanical devices
such as motors, transformers and electrical controls; voice and data
communication wire; automotive wire and specialty wiring assemblies for
automobiles and trucks; industrial wire for applications in appliances,
construction and recreational vehicles and insulation products including
mica paper and mica-based composites.
In October 1992, MS/Essex Holdings Inc. ("Holdings") was acquired (the
"Acquisition") by merger (the "Merger") of B E Acquisition Corporation
("BE") with and into Holdings with Holdings surviving under the name
BCP/Essex Holdings Inc. ("Holdings"). BE was a newly organized Delaware
corporation formed for the purpose of effecting the Acquisition.
Shareholders of BE included Bessemer Holdings, L.P. (an affiliate and
successor in interest to Bessemer Capital Partners, L.P. ["BCP"])
("BHLP"), 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. As a result of the Merger, the stockholders of BE became
stockholders of Holdings. Holdings is the holding company of the Company.
The principal asset of Holdings is all the outstanding common stock of the
Company. Holdings acquired the Company from United Technologies
Corporation ("UTC") in February 1988.
Results of Operations
Three Month Period Ended September 30, 1996
Net sales for the third quarter 1996 were $328.8 million or 6.6% higher
than the comparable period in 1995, resulting primarily from improved
sales volumes and increased sales attributable to the distribution
operations acquired in September 1995, partially offset by lower copper
prices, the Company's principal raw material. During the third quarter
1996, the average price of copper on the New York Commodity Exchange, Inc.
("COMEX") was 33.0% lower than the comparable period in 1995. Copper
costs are generally passed on to customers through product pricing. Third
quarter 1996 sales volumes were at record levels with respect to
historical third quarter operating performance and exceeded the third
quarter 1995 by 16.5%. Sales volumes improved due primarily to increased
demand for the Company's building wire and magnet wire products. Building
wire sales for the third quarter 1996 increased as compared to the third
quarter 1995 due primarily to higher sales volumes and an increase in
product pricing (without regard to copper costs), partially offset by
decreased copper prices. Although the building wire market has been
experiencing very competitive conditions due primarily to excess industry
capacity, product pricing improved during the third quarter 1996. The
Company believes this improvement to be the result of higher end user
demand coupled with low distributor inventories. Sales of magnet wire
during the third quarter 1996 improved from the comparable 1995 period due
to improved sales volumes partially offset by declining copper prices.
Improved sales volumes were attributable to increased demand for magnet
14<PAGE>
wire in the transformer market as well as increased sales to distributors.
Voice and data communication wire sales for the third quarter 1996
declined from the comparable period in 1995 due to lower copper prices,
decreased sales to regional Bell operating companies and reduced export
sales. Continued strong growth in premise wire sales, however, have
partially offset those unfavorable sales conditions. Automotive wire
sales in the third quarter 1996 were below the comparable 1995 period due
primarily to the decline in copper prices as sales volumes were
essentially unchanged.
Cost of goods sold for the third quarter 1996 was 2.4% higher than the
same period in 1995 due primarily to higher sales volumes and increased
sales attributable to the distribution operations acquired in September
1995, partially offset by lower copper prices. The Company's cost of
goods sold as a percentage of net sales was 82.1% and 85.5% in the third
quarter 1996 and 1995, respectively. The cost of goods sold percentage
decrease resulted primarily from the sharp decline in copper prices,
improved building wire product prices (without regard to copper costs), a
change in product mix associated with the distribution operations acquired
in September 1995 and higher manufacturing volumes.
Selling and administrative expenses for the third quarter 1996 were 31.9%
above the comparable 1995 period, due primarily to increased overhead
expenses related to the distribution operations acquired in September
1995.
Interest expense in the third quarter 1996 was $0.7 million lower than
the same period in 1995 due primarily to lower interest rates.
Income tax expense was 42.5% of pretax income in the third quarter 1996
compared with 41.8% for the same period in 1995. 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.
Nine Month Period Ended September 30, 1996
Net sales for the first nine months of 1996 were $974.7 million or 10.0%
higher than the comparable period in 1995, resulting primarily from
improved sales volumes and increased sales attributable to the
distribution operations acquired in September 1995, partially offset by
lower copper prices, the Company's principal raw material. During the
first nine months of 1996, the average COMEX price of copper was 20.2%
lower than the comparable period in 1995. Copper costs are generally
passed on to customers through product pricing. Sales volumes for the
first nine months of 1996 were at record levels with respect to historical
first nine months operating performance and exceeded the comparable 1995
period by 13.4%. Improved sales volumes resulted primarily from increased
demand for the Company's building wire and magnet wire products. Building
wire sales for the first nine months of 1996 increased as compared to the
first nine months of 1995 due primarily to an increase in sales volumes,
partially offset by declining copper prices. Building wire market demand
has exhibited continued growth during 1996 on the strength of new non-
residential construction and sustained expansion of the repair and
remodeling segment of the market. The Company believes this continued
growth in demand coupled with low distributor inventories, has led to an
improvement in the depressed market conditions of the most recent quarters
resulting in improved product pricing during the third quarter 1996. The
Company cannot, however, provide assurances that such favorable market
15<PAGE>
conditions will continue into 1997. Sales of magnet wire during the first
nine months of 1996 improved from the comparable 1995 period due to
improved sales volumes partially offset by declining copper prices.
Improved sales volumes were attributable to increased demand for magnet
wire in the electric motor and transformer markets as well as increased
sales to distributors. Communication wire sales for the first nine months
of 1996 are below the comparable period in 1995 due to the decrease in
copper prices partially offset by improved product pricing, increased
domestic sales volume and sales of premise wire products, which are up 18%
as compared to year-to-date 1995, reflecting continued strong growth in
this segment of the communication wire market. Automotive wire sales in
the first nine months of 1996 were below the comparable 1995 period due to
the decrease in copper prices partially offset by improved sales volumes.
Cost of goods sold for the first nine months of 1996 was 6.8% higher than
the same period in 1995 due primarily to higher sales volumes and
increased sales attributable to the distribution operations acquired in
September 1995, partially offset by lower copper prices. The Company's
cost of goods sold as a percentage of net sales was 83.4% and 85.9% in the
first nine months of 1996 and 1995, respectively. The cost of goods sold
percentage decrease resulted primarily from the marked decline in copper
costs, improved building wire and communications product pricing (without
regard to copper costs), a change in product mix associated with the
distribution operations acquired in September 1995 and higher
manufacturing volumes.
16<PAGE>
Selling and administrative expenses for the first nine months of 1996
were 32.5% above the comparable 1995 period, due primarily to increased
overhead expenses attributable to the distribution operations acquired in
September 1995.
Interest expense in the first nine months of 1996 was $5.4 million higher
than the same period in 1995 due primarily to additional borrowings under
the Company's new credit facilities to effect the May 1995 redemption (the
"Redemption") of all of Holdings' outstanding Senior Discount Debentures
due 2004 (the "Debentures"). See "Liquidity, Capital Resources and
Financial Condition" under this caption.
Income tax expense was 43.2% of pretax income in the first nine months of
1996 compared with 43.5% for the same period in 1995. 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.
The Company recorded net income of $25.6 million for the first nine
months of 1996 compared to net income of $16.4 million for the comparable
period last year. The 1995 results include an extraordinary charge of
$3.0 million ($5.0 million before applicable tax benefit) for the write-
off of unamortized deferred debt expense associated with the Company s
former revolving credit agreement. The former revolving credit agreement
was terminated in connection with the Redemption of Holding's Debentures.
Liquidity, Capital Resources and Financial Condition
The Company's financial position at September 30, 1996 was highly
leveraged. The Company's aggregate notes payable to banks plus long-term
debt totalled $423.4 million and its stockholder's equity was $140.3
million. The Company's ratio of debt to stockholder's equity was
approximately 3.0 to 1 at September 30, 1996 and 3.7 to 1 at December 31,
1995.
In general, the Company requires liquidity for working capital, capital
expenditures, debt repayments, interest and taxes. Of particular
significance to the Company is its working capital requirements which
increase whenever it 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
availability of funds under its credit facilities, the Company expects
that its usual sources of liquidity will be sufficient to enable it to
meet its cash requirements for working capital, capital expenditures, debt
repayments, interest and taxes for the remainder of 1996 and for 1997. As
of September 30, 1996, the Company was in compliance with all covenants
under the agreements governing its outstanding indebtedness.
In April 1995, in connection with the Redemption of all of Holdings'
outstanding Debentures at their principal amount of $272.9 million, the
Company terminated its previous credit agreement (the "Former Credit
Agreement") and entered into three new facilities: (i) a $260.0 million
revolving credit agreement, dated as of April 12, 1995 by and among the
Company, Holdings, the lenders named therein and Chemical Bank, as agent
(the "Revolving Credit Agreement"); (ii) a $60.0 million senior unsecured
note agreement, dated as of April 12, 1995 by and among the Company,
17<PAGE>
Holdings, as guarantor, the lenders named therein and Chemical Bank, as
administrative agent (the "Term Loan", together with the Revolving Credit
Agreement, the "Credit Facilities"); and (iii) a $25.0 million agreement
and lease dated as of April 12, 1995 by and between the Company and Mellon
Financial Services Corporation #3 (the "Sale and Leaseback Agreement").
The Company recognized an extraordinary charge of approximately $3.0
million, net of applicable tax benefit, in the second quarter 1995 for the
write-off of unamortized deferred debt expense in connection with the
termination of its Former Credit Agreement.
On May 12, 1995 the Company borrowed the full amounts available under the
Term Loan and Sale and Leaseback Agreement. These funds, together with
available cash and borrowings under the Revolving Credit Agreement, were
paid to Holdings in the form of a cash dividend ($238.8 million) and
repayment of a portion of an intercompany liability ($34.1 million)
totaling $272.9 million. Holdings applied such funds to effect the
redemption of its Debentures, at 100% of their principal amount of $272.9
million, on May 15, 1995.
On October 31, 1996, the Company acquired substantially all of the assets
of Triangle Wire and Cable, Inc. of Lincoln, Rhode Island ("Triangle") and
the assets of its Canadian affiliate, FLI Royal Wire and Cable. See
"Subsequent Event" under this caption for further information. In
connection with the Triangle acquisition, the Company terminated the
revolving credit agreement and entered into a new revolving credit
agreement, dated as of October 31, 1996, by and among the Company,
Holdings, the Lenders named therein, and The Chase Manhattan Bank, as
administrative agent (the "New Revolving Credit Agreement"). The New
Revolving Credit Agreement provides for up to $370.0 million in revolving
loans, subject to specified percentages of eligible assets reduced by
outstanding borrowings under the Company's Canadian credit facility and
unsecured bank lines of credit. The New Revolving Credit Agreement also
provides a $25.0 million letter of credit subfacility. The Company's
ability to borrow under the New Revolving Credit Agreement is restricted
by the financial covenants contained therein as well as those contained in
the Term Loan (together with the New Revolving Credit Agreement, the "New
Credit Facilities") and by debt limitation covenants contained in the
indenture under which the 10% Senior Notes due 2003 (the "Senior Notes")
were issued (the "Senior Note Indenture"). The New Revolving Credit
Agreement terminates five years from its effective date of October 31,
1996. The New Revolving Credit Agreement loans bear floating rates of
interest, at the Company's option, at bank prime plus 1.25% or a reserve
adjusted Eurodollar rate (LIBOR) plus 2.25%. The effective interest rate
can be reduced by 0.25% to 1.50%, in 0.25% increments, if certain
specified financial conditions are achieved. Commitment fees during the
revolving loan period are .25%, .375% or .5% of the average daily unused
portion of the available credit based upon certain specified financial
conditions. Holdings is a party to the New Credit Facilities and has
guaranteed the Company's obligations under the New Revolving Credit
Agreement. Holdings has secured its obligations pursuant to the guarantee
of the New Revolving Credit Agreement by a pledge of all of the
outstanding stock of the Company to the lending banks.
The Term Loan provides for an aggregate $60.0 million in term loans, and
is to be repaid in 20 equal quarterly installments, subject to the loan's
excess cash provision, beginning August 15, 1995 and ending May 15, 2000.
The Term Loan bears floating rates of interest at bank prime plus 2.75% or
LIBOR plus 3.75%. The Term Loan requires 50% of excess cash, as defined,
18<PAGE>
to be applied against the outstanding term loan balance. The excess cash
calculation for the year ended December 31, 1995 required the Company to
repay $12.4 million of the term loan. Such payment was made in March
1996. After the 1996 excess cash repayment, the remaining principal
payments will be made in 17 equal quarterly installments of $2.3 million.
Amounts repaid with respect to the excess cash provision may not be
reborrowed.
The Sale and Leaseback Agreement provides $25.0 million for the sale and
leaseback of certain of the Company's fixed assets. The lease obligation
has a seven-year term expiring in May 2002. The principal component of
the rental is paid quarterly, with the amount of each of the first 27
payments equal to 2.5% of Lessor's cost of the equipment, and the balance
due at the final payment. The interest component is paid on the unpaid
principal balance and is calculated by Lessor at LIBOR plus 2.5%. The
effective interest rate can be reduced by 0.25% to 1.125% if certain
specified financial conditions are achieved.
On May 30, 1996, a subsidiary of the Company entered into a $12.0 million
(Canadian dollar) credit agreement by and between the subsidiary and a
Canadian chartered bank (the "Canadian Credit Agreement"). Borrowings are
restricted to meeting the working capital requirements of the subsidiary
and are secured by the subsidiary's accounts receivable. As of September
30, 1996, $4.5 million was outstanding under the Canadian Credit Agreement
and denoted as notes payable to banks in the Consolidated Balance Sheets.
The Canadian Credit Agreement bears interest at rates similar to the New
Revolving Credit Agreement and terminates one year from its effective date
of May 30, 1996, although it may be extended for successive one year
periods upon the mutual consent of the subsidiary and lending bank.
The Company also has uncommitted bank lines of credit which provide for
unsecured borrowings for working capital of up to $25.0 million of which
$6.0 million was outstanding at September 30, 1996 and also denoted as
notes payable to banks in the Consolidated Balance Sheets. These lines of
credit bear interest at rates subject to agreement between the Company and
the lending banks. At September 30, 1996, such rates of interest averaged
6.7%.
The Company has purchased interest rate cap protection through May 15,
1997 with respect to $150.0 million of debt with a strike rate of 10.0%
(three month LIBOR).
The New Revolving Credit Agreement restricts incurrence of indebtedness,
liens, guarantees, mergers, sales of assets, lease obligations, payment of
dividends, capital expenditures and investments and, with certain
exceptions, limits prepayment of indebtedness, including the Senior Notes.
Transactions with affiliates are also restricted subject to certain
exceptions. The Term Loan and the Senior Note Indenture prohibit, with
certain exceptions, the incurrence by the Company of any secured
indebtedness unless such indebtedness 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.
Net cash provided by operating activities of the Company through the
first nine months of 1996 was $25.0 million, compared to $38.1 million
19<PAGE>
during the same period in 1995. The decrease in cash provided was due to
a reduction in accounts payable and accrued liabilities, increased
inventory levels to accommodate higher sales volumes, and the collection
in 1995 of a miscellaneous receivable. Partially offsetting the decrease
in cash provided by operating activities was the 1995 repayment of an
intercompany liability with Holdings in the amount of $34.1 million
coupled with reduced growth in accounts receivable attributable to a
marked decline in copper prices.
Capital expenditures of $15.7 million in the first nine months of 1996
were $2.4 million less than the comparable period in 1995. Capital
expenditures for the remainder of 1996 and for 1997 will be used for
modernization projects, to enhance efficiency, expand capacity and ensure
continued compliance with regulatory requirements. At September 30, 1996,
approximately $5.4 million was committed to outside vendors for capital
expenditures. On March 25, 1996, the Company acquired the Canadian
building wire operations of BICC Phillips, Inc. The acquisition consisted
primarily of inventory and equipment and was financed from proceeds
received under the Company's Revolving Credit Agreement. Future cash
requirements of this and the Triangle operations are expected to be
satisfied through the Company's traditional sources of liquidity as
previously discussed.
Regarding long-term liquidity issues, future capital expenditures are
anticipated to be at recent historical levels while the Senior Notes
mature in 2003 and are expected to be replaced by similar financing at
that time. The terms of the Sale and Leaseback Agreement include a
balloon payment of $8.1 million in 2002. The Company expects that its
traditional sources of liquidity will enable it to meet its long-term cash
requirements for working capital, capital expenditures, interest and
taxes, as well as its debt repayment obligations under both the Term Loan
and the Sale and Leaseback Agreement.
The Company's operations involve the use, disposal and clean-up of
certain substances regulated under environmental protection laws. The
Company has accrued $0.9 million for environmental remediation and
restoration costs. The accruals were based upon management's best
estimate of the Company's exposure in light of relevant available
information including the allocations and remedies set forth in applicable
consent decrees, third party estimates of remediation costs, the estimated
ability of other potentially responsible parties to pay their
proportionate share of remediation costs, the nature of each site and the
number of participating parties. Subject to the difficulty in estimating
future environmental costs, the Company expects that any sum it may have
to pay in connection with environmental matters in excess of the amounts
recorded or disclosed will not have a material adverse effect on its
financial position, results of operations or cash flows.
Considerations Relating to Holdings' Cash Obligations
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
New Revolving Credit Agreement. Accordingly, Holdings' ability to meet
its cash obligations is 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' obligations.
20<PAGE>
The Company expects that it may make certain cash payments to Holdings
from time to time to the extent cash is available and to the extent it is
permitted under the terms of the New Credit Facilities and the Senior Note
Indenture. Such payments may include (i) an amount necessary under the
tax sharing agreement between the Company and Holdings to enable Holdings
to pay the Company's taxes as if computed on an unconsolidated basis; (ii)
an annual management fee to an affiliate of BHLP of up to $1.0 million;
(iii) amounts necessary to repurchase management stockholders' shares of
Holdings' common stock under certain specified conditions; and (iv) other
amounts to meet ongoing expenses of Holdings (such amounts are considered
to be immaterial both individually and in the aggregate, however, because
Holdings has no operations, other than those conducted through the
Company, or employees). To the extent the Company makes any such
payments, it will do so out of operating cash flow, borrowings under the
New Revolving Credit Agreement or other sources of funds it may obtain in
the future subject to the extent such payments are permitted under the
terms of the New Credit Facilities and the Senior Note Indenture.
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 gross profits within the building wire
product line because such changes affect raw material costs more quickly
than those changes can be reflected in the pricing of building wire
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 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.
Subsequent Event
On October 31, 1996, the Company acquired substantially all of the assets
of Triangle related to the sales, marketing, manufacturing and
distribution of electrical wire and cable and the assets of its Canadian
affiliate, FLI Royal Wire and Cable. The acquisition included four
manufacturing facilities which produce a broad range of building and
industrial wire and cable. The total purchase price for the net assets of
Triangle approximated $75 million, subject to post closing adjustment.
The acquisition was financed from proceeds received under the Company's
New Revolving Credit Agreement. See "Liquidity, Capital Resources and
Financial Condition" under this caption.
21<PAGE>
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 October 31, 1996 among
BCP/Essex Holdings Inc., the registrant, the Lenders
named therein and The Chase Manhattan Bank, as
administrative agent.
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
A Current Report on Form 8-K (Items 5 and 7) was filed on July
12, 1996 to report second quarter 1996 earnings.
22<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)
November 13, 1996 /s/ David A. Owen
---------------------------------
David A. Owen
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
23<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q AS
OF SEPTEMBER 30, 1996 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,874
<SECURITIES> 0
<RECEIVABLES> 173,711
<ALLOWANCES> 4,409
<INVENTORY> 172,599
<CURRENT-ASSETS> 362,985
<PP&E> 370,088
<DEPRECIATION> 105,546
<TOTAL-ASSETS> 766,160
<CURRENT-LIABILITIES> 148,628
<BONDS> 401,334
0
0
<COMMON> 104,036
<OTHER-SE> 36,236
<TOTAL-LIABILITY-AND-EQUITY> 766,160
<SALES> 974,720
<TOTAL-REVENUES> 975,645
<CGS> 813,106
<TOTAL-COSTS> 813,106
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,879
<INCOME-PRETAX> 45,094
<INCOME-TAX> 19,500
<INCOME-CONTINUING> 25,594
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,594
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
CONFORMED RESTATED CERTIFICATE OF INCORPORATION
OF
BCP/ESSEX HOLDINGS INC.
BCP/Essex Holdings Inc. (the "Corporation"), a corporation
organized and existing under the laws of the State of Delaware, does
hereby certify as follows:
FIRST: The name of the Corporation is BCP/Essex Holdings Inc.
BCP/Essex Holdings Inc. was originally incorporated under the name
MS/Essex Group Inc., and the original Certificate of Incorporation of the
Corporation was filed with the Secretary of State of the State of Delaware
on February 16, 1988.
SECOND: Pursuant to Sections 242, 245 and 228 of the General
Corporation Law of the State of Delaware, this Restated Certificate of
Incorporation restates and integrates and further amends the provisions of
the Certificate of Incorporation of the Corporation.
THIRD: The Certificate of Incorporation of the Corporation is
hereby amended and restated to read in its entirety as follows:
ARTICLE FIRST
The name of the corporation is BCP/Essex Holdings Inc. (The
"Corporation").
ARTICLE SECOND
The address of the registered office of the Corporation in the
State of Delaware is 1013 Centre Road, City of Wilmington, County of New
Castle. The name of the registered agent of the Corporation at such
address is Corporation Service Company.
ARTICLE THIRD
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of the State of Delaware.
ARTICLE FOURTH
The total number of shares of stock that the Corporation shall
have authority to issue is 5,000,000 shares of preferred stock, par value
$0.01 per share (the "Preferred Stock"), and 150,000,000 shares of common
stock, divided into two classes consisting of Class A Common Stock, par
value $0.01 per share ("Class A Common Stock") and Class B Common Stock,<PAGE>
par value $0.01 per share ("Class B Common Stock"). Class A Common Stock
and Class B Common Stock are hereinafter sometimes collectively referred
to as "Common Stock". The Corporation may issue, from time to time,
shares of Common Stock either as Class A Common Stock or Class B Common
Stock; provided that the total number of shares of both classes issued at
any time shall not exceed 150,000,000 shares.
(a) Preferred Stock. Shares of the Preferred Stock of the
Corporation may be issued from time to time in one or more classes
or series, each of which class or series shall have such distinctive
designation or title as shall be fixed by the Board of Directors of
the Corporation prior to the issuance of any shares thereof. Each
such class or series of Preferred Stock shall have such voting
powers, full or limited, or no voting powers, and such preferences
and relative, participating, optional or other special rights and
such qualifications, limitations or restrictions thereof, as shall
be stated in such resolution or resolutions providing for the
issuance of such class or series of Preferred Stock as may be
adopted from time to time by the Board of Directors prior to the
issuance of any shares thereof pursuant to the authority hereby
expressly vested in it, all in accordance with the laws of the State
of Delaware. The initial series of Preferred Stock has been
designated as a series of 3,100,000 shares of Series A Cumulative
Redeemable Exchangeable Preferred Stock (the "Series A Preferred
Stock") as set forth in the Certificate of Designation of the Series
A Preferred Stock filed with the Secretary of State of Delaware.
(b) Class A and Class B Common Stock. Except as otherwise
provided herein, all shares of Class A Common Stock and Class B
Common Stock will be identical and will entitle the holders thereof
to the same rights and privileges.
(i) Dividends. The Board of Directors may cause dividends to
be paid to holders of shares of Common Stock out of funds legally
available for the payment of dividends. Any dividend or
distribution on Common Stock shall be payable on shares of Class A
Common Stock and Class B Common Stock share and share alike;
provided that in the case of dividends payable in shares of Common
stock of the Corporation, or options, warrants or rights to acquire
shares of such Common Stock, or securities convertible into or
exchangeable for shares of such Common Stock, the shares, options,
warrants, rights or securities so payable shall be payable in shares
of, options, warrants or rights to acquire, or securities
convertible into or exchangeable for, Common Stock of the same class
upon which the dividend or distribution is being paid.
(ii) Conversion.
Conversion of Class A Common Stock. Subject to this paragraph
(ii), any Class A Common Stock may be converted into the same number
of shares of Class B Common Stock. This paragraph shall not
restrict the ability of the Corporation to issue Class B Common
Stock.<PAGE>
Conversion of Class B Common Stock. Subject to this
paragraph (ii), each record holder of Class B Common Stock (a) must
convert any of or all the shares of such holder's Class B Common
Stock, as specified by the Corporation, into the same number of
shares of Class A Common Stock (a "Mandatory Conversion") and
(b) shall be entitled at any time and from time to time in such
holder's sole discretion and at such holder's option, to convert any
of or all the shares of such holder's Class B Common Stock into the
same number of shares of Class A Common Stock. Notwithstanding
clauses (a) and (b) of the preceding sentence, Class B Common Stock
constituting Restricted Stock (defined below) with respect to a
particular Regulated Stockholder (defined below) may not be
converted into Class A Common Stock to the extent that immediately
prior thereto, or as a result of such conversion, the number of
shares of Class A Common Stock that constitute Restricted Stock with
respect to such Regulated Stockholder would exceed the number of
shares of Class A Common Stock that such Regulated Stockholder and
its Affiliates (defined below) may own, control or have the power to
vote under any law, regulation, rule or other requirement of any
governmental authority at any time applicable to such Regulated
Stockholder or its Affiliates, as determined by such Regulated
Stockholder in its sole discretion; provided, however, that each
holder of Class B Common Stock may convert such shares into Class A
Common Stock if such holder reasonably believes that such converted
shares will be transferred within 15 days pursuant to a Conversion
Event (defined below) and such holder agrees not to vote any shares
of Class A Common Stock prior to such Conversion Event and
undertakes promptly to convert such shares back into Class B Common
Stock if such shares are not transferred pursuant to a Conversion
Event. Each Regulated Stockholder may provide for further
restrictions upon the conversion of any shares of Restricted Stock
by providing the Corporation with signed, written instructions
specifying such additional restrictions and legending such shares as
to the existence of such restrictions.
Conversion Procedures. Each conversion (other than a
Mandatory Conversion) of shares of Class A Common Stock into shares
of Class B Common Stock, or shares of Class B Common Stock into
shares of Class A Common Stock, shall be effected by the surrender
of the certificate or certificates representing the shares to be
converted (the "Converting Shares") and at the principal office of
the Corporation at any time during its usual business hours together
with written notice of the holder of such Converting Shares, stating
that such holder desires to convert the Converting Shares, or a
stated number of the shares represented by such certificate or
certificates, into an equal number of shares of the other class of
Common Stock (the "Converted Shares"). Such notice shall also state
the name or names of (with addresses) and denominations in which the
certificate or certificates or Converted Shares shall be issued and
shall include instructions for the delivery thereof. The
Corporation shall promptly notify each Regulated Stockholder of its
receipt of such notice. Promptly after such surrender and the
receipt of such notice, the Corporation shall issue and deliver in
accordance with the surrendering holder's instructions the<PAGE>
certificate or certificates evidencing the Converted Shares issuable
upon such conversion, and the Corporation shall deliver to the
converting holder a certificate representing any of the Converting
Shares that were represented by the certificate or certificates that
were delivered to the Corporation in connection with such conversion
but that were not converted. Such conversion, to the extent
permitted by law, shall be deemed to have been effected as of the
close of business on the date on which such certificate or
certificates shall have been surrendered and such notice shall have
been received by the Corporation, and at such time the rights of the
holder of the Converting Shares as such holder shall cease and the
person or persons in whose name or names the certificate or
certificates for the Converted Shares are to be issued upon such
conversion shall be deemed to have become the holder or holders of
record of the Converted Shares. Upon issuance of shares in
accordance with this paragraph (ii), such Converted Shares shall be
deemed to be duly authorized, validly issued, fully paid and
nonassessable. The Corporation shall take such actions that may be
necessary to ensure that all of the Converted Shares may be issued
without violation of any applicable law or governmental regulation
or any requirements of any domestic securities exchange upon which
the Converted Shares may then be listed (except for official notice
of issuance, which will be immediately transmitted to the
Corporation upon issuance). The Corporation shall not close its
books against the transfer of shares of Class A Common Stock or
Class B Common Stock in any manner that would interfere with the
timely conversion of any of the Converted Shares.
The Mandatory Conversion of shares of Class B Common Stock
into shares of Class A Common Stock shall (subject to the second
sentence of the paragraph above headed "Conversion of Class B Common
Stock") be effective upon the Corporation giving to the record
holders of the Converted Shares written notice of such conversion,
whereupon the Converted Shares shall represent the same number of
shares of Class A Common Stock and the rights of any holder of the
Converted Shares shall cease, except only the right of such holder
to receive any previously declared but unpaid dividends on the
Converted Shares, and the certificate or certificates for the
Converted Shares shall be deemed to represent the same number of
shares of Class A Common Stock. At any time after a Mandatory
Conversion, the holders of the Converted Shares may surrender the
certificate or certificates that previously represented such
Converted Shares for a certificate or certificates representing the
same number of shares of Class A Common Stock in the manner set
forth above.
As used in this paragraph (ii):
"Affiliate" shall mean, with respect to any person, any other
person that is (a) directly or indirectly controlling, controlled by
or under common control with such person and (b) subject to the
provisions of Regulation Y of the Board of Governors of the Federal
Reserve System, 12 C.F.R. Part 225 (or any successor to such
regulation). For the purpose of the above definition, the term<PAGE>
"control" (including, with correlative meaning, the terms
"controlling", "controlled by" and "under common control with"), as
used with respect to any person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the
management and policies of such person, whether through the
ownership of voting securities or by contract or otherwise.
"Conversion Event" shall mean (a) any public offering or
public sale of securities of the Corporation (including a public
offering registered under the Securities Act of 1933 and a public
sale pursuant to Rule 144 of the Securities and Exchange Commission
or any similar rule then in force), (b) any sale of securities of
the Corporation to a person or group or persons (within the meaning
of the Securities Exchange Act of 1934, as amended (the "1934 Act"))
if, after such sale, such person or group of persons in the
aggregate would own or control securities that possess in the
aggregate the ordinary voting power to elect a majority of the
Corporation's directors (provided that such sale has been approved
by the Corporation's Board of Directors or a committee thereof),
(c) any sale of securities of the Corporation to a person or group
of persons (within the meaning of the 1934 Act) if, after such sale,
such person or group of persons in the aggregate would own or
control securities of the Corporation (excluding any Class B Common
Stock being converted and disposed of in connection with such
Conversion Event) that possess in the aggregate the ordinary voting
power to elect a majority of the Corporation's directors, (d) any
sale of securities of the Corporation to a person or group of
persons (within the meaning of the 1934 Act) if, after such sale,
such person or group of persons would not, in the aggregate, own,
control or have the right to acquire more than 2% of the outstanding
securities of any class of voting securities of the Corporation, and
(e) a merger, consolidation or similar transaction involving the
Corporation if, after such transaction, a person or group of persons
(within the meaning of the 1934 Act) in the aggregate would own or
control securities which possess in the aggregate the ordinary
voting power to elect a majority of the surviving corporation's
directors (provided that the transaction has been approved by the
Corporation's Board of Directors or a committee thereof).
"Regulated Stockholder" shall mean any person (a) that is
subject to the provisions of Regulation Y of the Board of Governors
of the Federal Reserve System, 12 C.F.R. Part 225 (or any successor
to such regulation), (b) that is acquiring or holds of record shares
of Class A Common Stock or Class B Common Stock and (c) that has
provided notice to the Corporation of its status as a "Regulated
Stockholder" hereunder.
"Restricted Stock" shall mean, with respect to any Regulated
Stockholder, any outstanding shares of Class A Common Stock and/or
Class B Common Stock ever held of record by such Regulated
Stockholder or its Affiliates, excluding treasury shares; provided,
however, that any such shares shall cease to be Restricted Stock
with respect to such Regulated Stockholder when such shares are
transferred in a transaction that is a Conversion Event or are<PAGE>
acquired by the Corporation or any subsidiary of the Corporation.
The Corporation shall have no responsibility for determining whether
any outstanding shares of Class A Common Stock and/or Class B Common
Stock constitute Restricted Stock with respect to any particular
Regulated Stockholder, but shall instead be entitled to receive, and
rely exclusively upon, a written notice provided by such Regulated
Stockholder designating such shares as Restricted Stock.
(iii) Subdivision and Combination of Shares. If the
Corporation shall in any manner subdivide (by stock split, stock
dividend or otherwise) or combine (by reverse stock split or
otherwise) the outstanding shares of any class of Common Stock, or
shall increase or decrease the number of shares of any class of
Common Stock by reclassification thereof, then the outstanding
shares of the other classes of Common Stock shall be subdivided or
combined, as the case may be, to the same extent, share and share
alike, and effective provision shall be made for the protection of
the conversion rights hereunder.
(iv) Distribution of Assets. In the event of the voluntary
or involuntary liquidation, dissolution or winding up of the
Corporation, holders of Common stock will be entitled to receive,
and will participate equally in, all of the remaining assets of the
Corporation available for distribution to its stockholders after
payment or provision for payment of the debts and other liabilities
of the Corporation and all amounts to which the holders of Preferred
Stock are entitled have been paid or set aside for payment.
(v) Voting Rights. The holders of Class A Common stock shall
have the general right to vote for all purposes, including the
election of directors, as provided by law. Each holder of Class A
Common Stock shall be entitled to one vote for each share thereof
held. Except as otherwise provided herein or required by law, the
holders of Class B Common stock shall have no voting rights and
shares of Class B Common Stock shall not be included in determining
the number of shares voting or entitled to vote on any such matters.
On any matter on which the holders of shares of Class A Common Stock
and the holders of Class B Common Stock are entitled to vote, except
as otherwise required by law, all classes of Common Stock entitled
to vote shall vote together as a single class, and each holder of
shares of Class B Common stock entitled to vote shall be entitled to
one vote for each share of such stock held by such holder; provided,
however, that holders of shares of the Class B Common Stock shall be
entitled to vote as a separate class on any amendment to this
Article FOURTH (b)(v) and on any amendment, repeal or modification
of any provision of this Certificate of Incorporation
that adversely affects the powers, preferences or
special rights of holders of Class B Common Stock.
(vi) Merger, etc. In connection with any merger,
consolidation, reclassification or recapitalization in which holders
of Class A Common stock generally receive, or are given the
opportunity to receive, consideration for their shares, all holders<PAGE>
of Class B Common Stock shall be given the opportunity to receive
the same form of consideration for their shares as is received by
holders of Class A Common Stock."
ARTICLE FIFTH
For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation and
regulation of the powers of the Corporation and of its directors and
stockholders, it is further provided that:
(a) the number of directors of the Corporation shall be fixed
by, or in the manner provided in, the By-laws of the Corporation;
(b) in furtherance and not in limitation of the powers
conferred by the laws of the State of Delaware, the Board of
Directors is expressly authorized and empowered to make, alter,
amend or repeal the By-laws of the Corporation in any manner not
inconsistent with the laws of the State of Delaware or this
Certificate of Incorporation, subject to the power of the stock-
holders of the Corporation having voting power to alter, amend or
repeal the By-laws of the Corporation;
(c) in addition to the powers and authorities herein or by
statute expressly conferred upon it, the Board of directors may
exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation, subject, nevertheless, to the
provision of the laws of the State of Delaware, this Certificate of
Incorporation and the By-laws of the Corporation;
(d) any director or any officer elected or appointed by the
stockholders or by the Board of Directors, or any Committee thereof,
may be removed at any time by a unanimous consent of the
stockholders or in such other manner as shall be provided in the By-
laws of the Corporation
(e) unless and except to the extent that the By-laws of the
Corporation shall so require, the election of directors of the
Corporation need not be by written ballot; and
(f) Stockholders of the Corporation shall not have any
preemptive rights to subscribe for additional issues of stock of the
Corporation except as may be agreed from time to time by the
Corporation and any such stockholders. Copies of any agreements
granting any stockholder preemptive rights, as amended from time to
time, will be kept on file with the Secretary of the Corporation.
ARTICLE SIXTH
No director shall be personally liable to the Corporation or
any of its stockholders for monetary damages for breach of fiduciary duty
as a director, except for liability (a) for any breach of the director's<PAGE>
duty of loyalty to the Corporation or its stockholders, (b) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (c) pursuant to Section 174 of the Delaware
General Corporation Law or (d) for any transaction from which the director
derived an improper personal benefit. Any repeal or modification of this
Article SIXTH by the stockholders of the Corporation shall not adversely
affect any right or protection of a director of the Corporation existing
at the time of such repeal or modification with respect to acts or
omissions occurring prior to such repeal or modification.
ARTICLE SEVENTH
No contract or transaction between the Corporation and one or
more of its directors or officers (or between the Corporation and any
other corporation, partnership, associa-tion or other organization in
which one or more of its directors or officers are directors or officers,
or have a financial interest) shall be void or voidable solely for such
reason, or solely because the director or officer is present at or
participates in the meeting of the Board of Directors or committee thereof
that authorizes the contract or transaction, or solely because his, her or
their votes are counted for such purpose, if:
(a) the material facts as to his, her or their relationship
or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or the committee, and the Board
or committee in good faith authorizes the contract or transaction by
the affirmative votes of a majority of disinterested directors, even
though the disinterested directors be less than a quorum;
(b) the material facts as to his, her or their relationship
or interest and as to the contract or transaction are disclosed or
are known to the shareholders entitled to vote thereon, and the
contract or transaction is specifically approved in good faith by
vote of the stockholders; or
(c) the contract or transaction is fair as to the Corporation
as of the time it is authorized, approved or ratified by the Board
of Directors, a committee thereof or the stockholders.
Common or interested directors shall be counted in determining
the presence of a quorum at a meeting of the Board of Directors or of a
committee that authorizes any such contract or transaction. No director
of officer shall be liable to account to the Corporation for any profit
realized by him or her from or through such contract or transaction solely
by reason of the fact that he or she or any other corporation,
partnership, association or other organization in which he or she is a
director or officer, or has a financial interest, was interested in such
contract or transaction.
ARTICLE EIGHTH
The Corporation shall indemnify any person who was or is a<PAGE>
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he or she is
or was a director, officer, employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
judgments, fines and amounts in connection with such action, suit or
proceeding, in accordance with the laws of the State of Delaware, and to
the full extent permitted by such laws except as the By-laws of the
Corporation may otherwise provide. Such indemnification shall not be
deemed exclusive of any other rights to which those seeking
indemnification may be entitled under any by-law agreement, vote of
stockholders or disinterested directors or otherwise, including insurance
purchased and maintained by the Corporation, both as to action in his or
her official capacity and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
heirs, executors and administrators of such a person.
ARTICLE NINTH
The corporation reserves the right at any time and from time
to time to amend, alter, change or repeal any provision contained in this
Certificate of Incorporation (including provisions as may hereafter be
added or inserted in this Certificate of Incorporation as authorized by
the laws of the State of Delaware) in the manner now or hereafter
prescribed by law; and all rights, preferences and privileges of
whatsoever nature conferred upon stockholders, directors or any other
persons whomsoever by and pursuant to this Certificate of Incorporation in
its current form or as hereafter amended are granted subject to the right
reserved in this Article NINTH.
FOURTH: That the foregoing amendment has been duly adopted in
accordance with the provisions of
Sections 242, 245 and 228 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, BCP/Essex Holdings Inc. has caused this
Restated Certificate of Incorporation to be executed in its corporate name
as of this 9th day of October, 1992.
BCP/ESSEX HOLDINGS INC.
By /s/ Robert D. Lindsay
---------------------------
Name: Robert D. Lindsay
Title: President<PAGE>
ATTEST:
By /s/ Richard R. Davis
-----------------------
Name: Richard R. Davis
Title: Secretary<PAGE>
1
CREDIT AGREEMENT, dated as of October 31, 1996, 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"; individually a "Lender") and THE CHASE MANHATTAN BANK, a New
York banking corporation, as administrative agent for the Lenders
hereunder.
PRELIMINARY STATEMENTS:
(1) BCP Holdings, the Company, the banks and other financial
institutions parties thereto and The Chase Manhattan Bank, as agent, are
parties to the Credit Agreement, dated as of April 12, 1995 (as amended
through the date hereof, 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 finance the
acquisition and assumption (the "Triangle Acquisition") of substantially
all of the assets and certain related liabilities of certain businesses of
Triangle Wire & Cable, Inc. ("Triangle") and related costs and expenses,
(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": Revolving Credit Loans the rate of interest
applicable to which is based upon the Alternate Base Rate.
"Accounts": as defined in the definition of "Eligible
Receivables".
"Administrative Agent": The Chase Manhattan Bank, together
with its affiliates, as the arranger of the Revolving Credit
Commitments and as the administrative agent for the Lenders under
this Agreement and the other Loan Documents, and any successor
administrative agent appointed and approved pursuant to Section 9.9.
"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<PAGE>
2
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 or BS 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 or BS, and that none in fact participate in the
management of any of BSC, BS, BP Co., Holdings, the Company or any
of its Subsidiaries, nor are controlled by BSC, BS, 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, BS, 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.
"Aggregate Outstanding Extensions of Credit": at any time, an
amount equal to the sum of (a) the Aggregate Outstanding Revolving
Extensions of Credit at such time and (b) the aggregate principal
amount of the Competitive Loans then outstanding.
"Aggregate Outstanding Revolving Extensions of Credit": at
any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit 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 Chase 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<PAGE>
3
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
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 Revolving Credit Loan,
on any date, the rate per annum set forth below opposite the Level
then in effect:
<TABLE>
<CAPTION>
Level Eurodollar Loans ABR Loans
----- ---------------- ---------
<S> <C> <C>
I 3/4% 0%
II 1% 0%
III 1-1/4% 1/4%
IV 1-1/2% 1/2%
V 1-3/4% 3/4%
VI 2% 1%
VII 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.<PAGE>
4
"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
Administrative Agent, the Issuing Lender and the Company,
substantially in the form of Exhibit I.
"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.
"Bank of Montreal Credit Facility": the credit agreement,
dated as of May 30, 1996, between Bank of Montreal and Essex
International, as amended, supplemented or otherwise modified from
time to time.
"BCP/Company Merger": as defined in Section 7.5(c).
"Bessemer Group": the collective reference to BSC, BH, BS,
Bessec, any Control Affiliate of any of them (collectively, the
"Bessemer Affiliates"), any partner, member, stockholder, manager,
director, officer or employee of BSC, BH, BS, Bessec, 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, BS, Bessec, 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.
"Bessec": Bessec Holdings, L.P. and any Person which is a
Subsidiary or Control Affiliate thereof.
"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.
"BICC Phillips Purchase Agreement": the purchase agreement
between Essex International and BICC Phillips, Inc. to purchase
certain equipment, finished goods, inventory and contracts for an
aggregate purchase price expected to be approximately $8,000,000.<PAGE>
5
"BS": Bessemer Securities LLC 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). Notwithstanding anything to the
contrary in this Agreement, the portion of the Borrowing Base
attributable to the Inventory and Accounts of Triangle shall be
deemed to equal $62,000,000 until the first date after the 30th day
after the Effective Date on which a Borrowing Base Certificate is
scheduled to be delivered, at which time (i) the Company shall
deliver a new Borrowing Base Certificate reflecting the Inventory
and Accounts of Triangle and (ii) the Administrative Agent shall
have received a satisfactory report on the examination by the
internal staff of the Administrative Agent of the Inventory and
Accounts of Triangle (which examination shall not be commenced prior
to the Effective Date unless otherwise agreed by the Company).
"Borrowing Base Certificate": a certificate substantially in
the form of Exhibit B-1, with such changes as the Administrative
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 2.2 or 2.3, as the case may be, as a date on
which the Company requests the Lenders to make Loans hereunder.
"BP Co.": Bessemer Partners & Co.
"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 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,<PAGE>
6
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 Administrative 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": the collective reference
to (a) the Agreement and Lease dated as of April 12, 1995, between
the Company, as lessee, and Mellon Financial Services Corporation
#3, as lessor and (b) any other lease financing facility entered
into by the Company or any of its Subsidiaries (provided, that the
assets subject thereto, and the pricing, tenor and other terms
thereof, shall be reasonably satisfactory to the Required Lenders),
in each case as amended, supplemented or otherwise modified from
time to time in accordance with Section 7.11.
"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
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 Services or P-1 by Moody's<PAGE>
7
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.
"Chase": The Chase Manhattan 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 Administrative 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.
"Company Security Agreement": the Security Agreement made by
the Company in favor of the Administrative 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.
"Competitive Advance Accept/Reject Letter": a notification
made by the Company pursuant to Section 2.3(f), substantially in the
form of Exhibit C-1.
"Competitive Advance Invitation": an invitation made by the
Company pursuant to Section 2.3(c), substantially in the form of
Exhibit C-2.<PAGE>
8
"Competitive Advance Offer": an offer by a Lender to make a
Competitive Loan pursuant to Section 2.3(d), substantially in the
form of Exhibit C-3.
"Competitive Advance Rate": (a) in the case of a Eurodollar
Competitive Loan, the applicable Eurodollar Rate plus (or minus) the
Margin, and (b) in the case of a Fixed Rate Competitive Loan, the
fixed rate of interest offered by the relevant Lender pursuant to
the related Competitive Advance Offer.
"Competitive Advance Request": a request made pursuant to
Section 2.3(b), substantially in the form of Exhibit C-4.
"Competitive Borrowing": a borrowing consisting of a
Competitive Loan or concurrent Competitive Loans from the Lender or
Lenders whose Competitive Advance Offers for such borrowing have
been accepted by the Company pursuant to Section 2.3(f).
"Competitive Loan": a Loan (which shall be a Eurodollar
Competitive Loan or a Fixed Rate Competitive Loan) made by a Lender
pursuant to Section 2.3.
"Competitive Loan Maturity Date": as to any Competitive Loan,
the date specified by the Company pursuant to Section 2.3(b)
pursuant to the relevant Competitive Advance Request.
"Competitive Loan Period": as to any Competitive Loan, the
period from the applicable Borrowing Date to the applicable
Competitive Loan Maturity Date.
"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
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
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 September 1996 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<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
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, L/C Obligations and Non-Facility
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 (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;
provided, that for the purposes of calculating the Leverage Ratio
and the Senior Secured Leverage Ratio pursuant to Section 7.1, for
any period ending on any date set forth below, Consolidated EBITDA
will be increased by the corresponding amount set forth below:
<TABLE>
<CAPTION>
Date Amount
---- ------
<S> <C>
September 30, 1996 . . . . . . . . Add $10,583,000
December 31, 1996 . . . . . . . . . Add $7,937,000
March 31, 1997 . . . . . . . . . . Add $8,452,000
June 30, 1997 . . . . . . . . . . . Add $6,950,000<PAGE>
10
</TABLE>
"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
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".<PAGE>
11
"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 Administrative 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 Administrative
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 Administrative 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 Administrative 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 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 Administrative Agent, in its reasonable
discretion after consultation with the Company, shall deem
appropriate. Without in any way limiting the discretion of the
Administrative Agent to deem an item of Inventory eligible or
ineligible, the Administrative Agent does not currently intend to
treat any item of Inventory as eligible if:<PAGE>
12
(a) such item of Inventory is not assignable or a
first priority security interest in such item of
Inventory in favor of the Administrative 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
Administrative 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;
(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;<PAGE>
13
(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 Administrative Agent, providing a
waiver of any applicable Lien and providing the
Administrative 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 Administrative
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 Administrative Agent (after
consultation with the Company), exercising its
commercially reasonable discretion, to be unacceptable
because the Administrative Agent believes that such item
of Inventory is not readily salable under the customary
terms on which it is usually sold.
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 $30,000,000 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<PAGE>
14
Eligible Inventory pursuant to this paragraph shall not exceed
$25,000,000.
In addition, notwithstanding anything to the contrary in this
Agreement, until October 31, 1997, Triangle Inventory that does not
constitute Eligible Inventory solely as a result of the failure to
obtain 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.
"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 Administrative 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 Administrative Agent, in its
reasonable discretion after consultation with the Company, shall
deem appropriate. Without in any way limiting the discretion of the
Administrative Agent to deem an Account eligible or ineligible, the
Administrative 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
Administrative 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
Administrative 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
for, or perform or incur any additional obligation to,
the Account debtor in respect of such Account;
<PAGE>
15
(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 Administrative 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
Administrative Agent to be, ineligible;
(l) the Account debtor in respect of such Account
has filed a petition for relief under the United 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<PAGE>
16
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 Administrative 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 Administrative 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;
(r) the Administrative 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;<PAGE>
17
(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 Administrative 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
Administrative Agent, in its reasonable discretion,
shall determine; or
(aa) such Account has been placed with an
attorney or other third party for collection.
"Eligible Receivables Borrowing Base Value": as defined in the
definition of Borrowing Base.
"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
or non-sudden, accidental or non-accidental leaks or spills) of any
Hazardous Material at, in or from property, whether or not owned or<PAGE>
18
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.
"Essex International": Essex International, Inc., a Delaware
corporation.
"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": in the case of any Eurodollar Loan,
with respect to each day during each Interest Period or Competitive
Loan Period pertaining to such Eurodollar Loan, the rate of interest
determined on the basis of the rate for deposits in Dollars for a
period equal to such Interest Period or Competitive Loan Period
commencing on the first day of such Interest Period or Competitive
Loan 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 or Competitive Loan Period, provided, that in
the event that such rate does not appear on Page 3750 of the
Telerate screen (or otherwise on the Telerate Service), the
"Eurodollar Base Rate" shall be determined by reference to such
other publicly available service for displaying eurodollar rates as
may be agreed upon by the Administrative Agent and the Company. In
the absence of such agreement, the "Eurodollar Base Rate" shall
instead be the rate per annum equal to the average (rounded upward,
if necessary, to the nearest 1/16th of 1%) of the respective rates
notified to the Administrative Agent by each of the Reference
Lenders as the rate at which such Reference Lender is offered Dollar
deposits at or about 10:00 A.M., New York time, two Business Days
prior to the beginning of the relevant Interest Period or
Competitive Loan 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 or Competitive
Loan Period for the number of days comprised therein and in an
amount comparable to the amount of its Eurodollar Revolving Credit<PAGE>
19
Loan to be outstanding during such Interest Period or the amount of
the relevant Competitive Loan, as the case may be.
"Eurodollar Competitive Loan": any Competitive Loan the rate
of interest applicable to which is based upon the Eurodollar Rate.
"Eurodollar Loans": any Eurodollar Competitive Loan or
Eurodollar Revolving Credit Loan.
"Eurodollar Rate": with respect to each day during each
Interest Period or Competitive Loan 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 Revolving Credit Loan": any Revolving Credit Loan
the rate of interest applicable to which is based upon the
Eurodollar Rate.
"Eurodollar Tranche": the collective reference to Eurodollar
Revolving Credit Loans the Interest Periods with respect to all of
which begin on the same date and end on the same later date (whether
or not such Loans shall originally have been made on the same day).
"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<PAGE>
20
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.
"Existing Credit Agreement": as defined in the Preliminary
Statements.
"Femco": Femco Magnet Wire Corporation, an Indiana
corporation.
"Fixed Rate Competitive Loan": any Competitive Loan bearing
interest at a fixed percentage rate per annum specified by the
Lender making such Loan in its Competitive Advance Offer (as opposed
to a rate comprised of the Eurodollar Rate plus or minus a Margin).
"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<PAGE>
21
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
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 Administrative 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.<PAGE>
22
"Holdings Security Agreement": the Security Agreement made by
Holdings in favor of the Administrative 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
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 A, evidencing Intercompany Loans or Joint Venture
Loans.
"Interest Coverage Ratio": the ratio of (a) Consolidated
EBITDA of Holdings for the relevant Interest Coverage Test Period to
(b) Consolidated Net Cash Interest Expense of Holdings for such
Interest Coverage Test 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>
23
"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, (b) as to any Eurodollar Revolving Credit Loan, the
last day of the related Interest Period or, in the case of any
Eurodollar Revolving Credit 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 and (c) as to any Competitive
Loan, the last day of the related Competitive Loan Period and, if
specified in the relevant Competitive Advance Request, in the case
of any Competitive Loan having a Competitive Loan Period longer than
three months, each day which is three months, or a whole multiple
thereof, after the first day of such Competitive Loan Period and the
last day of such Competitive Loan Period.
"Interest Period": with respect to any Eurodollar Revolving
Credit Loan:
(a) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such Eurodollar
Revolving Credit 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
Revolving Credit 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 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
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<PAGE>
24
(4) the Company shall select Interest Periods so as not
to require a payment or prepayment of any Eurodollar Revolving
Credit 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.
"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).
"Joint Venture": any Person (other than a Subsidiary
Guarantor) in which the Company or any of its Subsidiaries has an
equity interest, including, without limitation, Femco.
"Joint Venture Loans": as defined in Section 7.10(e).
"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).<PAGE>
25
"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 2.0 to 1.0 Greater than or equal to 4.00 to 1.0
II Less than or equal to 3.25 to 1.0 Greater than or equal to 3.50 to 1.0
III Less than or equal to 3.75 to 1.0 Greater than or equal to 3.00 to 1.0
IV Less than or equal to 4.00 to 1.0 Greater than or equal to 2.50 to 1.0
V Less than or equal to 4.25 to 1.0 Greater than or equal to 2.25 to 1.0
VI Less than or equal to 4.50 to 1.0 Less than 2.25 to 1.0
VII Greater than 4.50 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 fiscal year
ending December 31, 1996, the Level shall be deemed to be Level IV,
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 VII. 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 VII 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,
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. <PAGE>
26
"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
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, 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 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 Administrative Agent prior to the Effective Date.
"Margin": as to any Eurodollar Competitive Loan, the margin
to be added to or subtracted from the Eurodollar Rate in order to
determine the interest rate applicable to such Loan, as specified in
the Competitive Advance Offer relating to such Loan.
"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,
or (c) the validity or enforceability of this Agreement or any of
the other Loan Documents or the rights or remedies of the
Administrative Agent or the Lenders hereunder or thereunder.<PAGE>
27
"Maximum Investment Amount": as of any date of determination,
the amount set forth below opposite the Level then in effect:
Level Amount
I $100,000,000
II 100,000,000
III 80,000,000
IV 60,000,000
V 40,000,000
VI 40,000,000
VII 40,000,000
"Modified Aggregate Outstanding Extensions of Credit": at any
time, an amount equal to (a) the Aggregate Outstanding 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 2.7 or
2.8, 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
Administrative 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
Administrative 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,
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.<PAGE>
28
"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 Administrative
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 Administrative 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 Revolving Credit 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.
"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": any preferred stock of Holdings issued for
the purpose of prepaying, refinancing or redeeming, or issued in<PAGE>
29
exchange for, (a) the Senior Unsecured Term Loans or (b) other
preferred stock of Holdings, in each case in accordance with Section
7.11(a).
"Preliminary Statements": the clauses that appear after the
preamble of this Agreement under the title "Preliminary Statements".
"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.
"Reference Lenders": Chase 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 or for the purposes of determining
whether to accelerate the Loans pursuant to Section 8, the aggregate
unpaid principal amount of the Loans.
"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<PAGE>
30
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 Revolving Credit 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 Loans": as defined in Section 2.1(a).
"Revolving Credit Termination Date": October 31, 2001.
"Section 7.2(n) Indebtedness": any Indebtedness incurred
pursuant to Section 7.2(n).
"Section 7.2(p) Indebtedness": any Indebtedness incurred
pursuant to Section 7.2(p).
"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 Revolving Credit Loans which would be permitted to be incurred,
in accordance with this Agreement, 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 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 Administrative 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.<PAGE>
31
"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 (a) the Senior Unsecured Note Agreement, dated as of
April 12, 1995, among Holdings, the Company, the lenders parties
thereto and The Chase Manhattan Bank, as administrative agent, as in
effect on the Effective Date and (b) any other agreement governing
unsecured term Indebtedness of the Company so long as the pricing
and other terms thereof are no less favorable to the Company and the
Lenders than those then contained in the agreement referred to in
clause (a) above, in each case as amended, supplemented or otherwise
modified from time to time in accordance with Section 7.11.
"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.
"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 Basket Debt": (a) 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 and (b) any Section 7.2(p) Indebtedness.
"Specified Properties": the plants and real properties owned
by the Company or its Subsidiaries located in Florence, Alabama;
Glendale, Arizona; Chicago, Illinois; Sikeston, Missouri; New<PAGE>
32
Market, New Hampshire; Pawtucket, Rhode Island; and Bennettsville,
South Carolina.
"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).
"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
Administrative 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.
"Subsidiary Pledge Agreement": the Pledge Agreement made by
each Subsidiary Guarantor in favor of the Administrative 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 Administrative 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.<PAGE>
33
"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).
"Triangle": as defined in the Preliminary Statements.
"Triangle Acquisition": as defined in the Preliminary
Statements.
"Triangle Acquisition Documents": as defined in Section
5.1(d).
"Triangle Inventory": Inventory located at any leased
facility listed on Schedule 1.1C.
"Type": (a) as to any Revolving Credit Loan, its nature as an
ABR Loan or a Eurodollar Loan, and (b) as to any Competitive Loan,
its nature as a Eurodollar Competitive Loan or a Fixed Rate
Competitive 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.
(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.<PAGE>
34
(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, 1995.
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
revolving credit loans ("Revolving Credit 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 Revolving Credit Loans in
whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof.
(b) The Revolving Credit 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 Administrative Agent in
accordance with Sections 2.2 and 2.9, provided that no Revolving Credit
Loan shall be made as a Eurodollar Loan after the day that is one month
prior to the Revolving Credit Termination Date.
2.2 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 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 requested Borrowing Date, if
all or any part of the requested Revolving Credit Loans are to be
initially Eurodollar Revolving Credit 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 Revolving Credit Loans, ABR Loans or
a combination thereof and (iv) if the borrowing is to be entirely or
partly of Eurodollar Revolving Credit 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 Revolving Credit 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 Administrative Agent shall promptly notify
each Lender thereof. Each Lender will make the amount of its pro rata
share of each borrowing available to the Administrative Agent for the
account of the Company at the office of the Administrative Agent specified
in Section 11.2 prior to 11:00 A.M., New York City time, in the case of
Eurodollar Revolving Credit 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 Administrative Agent. Such borrowing
will then be made available to the Company by the Administrative Agent<PAGE>
35
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 and in like funds as received by the Administrative Agent.
2.3 Competitive Borrowings.
(a) The Competitive Advance Option. In addition to the Revolving
Credit Loans which may be made available pursuant to the foregoing
provisions of this Section 2, the Company may, as set forth in this
Section 2.3, request the Lenders to make offers to make Competitive Loans
to the Company during the Revolving Credit Commitment Period. The Lenders
may, but shall have no obligation to, make such offers, and the Company
may, but shall have no obligation to, accept any such offers in the manner
set forth in this Section 2.3.
(b) Competitive Advance Request. When the Company wishes to
request offers to make Competitive Loans under this Section 2.3, it shall
transmit to the Administrative Agent a Competitive Advance Request to be
received no later than 12:00 Noon (New York City time) on (x) the fourth
Business Day prior to the date of borrowing proposed therein, in the case
of a borrowing of Eurodollar Competitive Loans or (y) the Business Day
immediately preceding the date of borrowing proposed therein, in the case
of Fixed Rate Competitive Loans, specifying:
(i) the proposed date of the Competitive Borrowing, which
shall be a Business Day;
(ii) the aggregate principal amount of such borrowing, which
shall be $5,000,000 or a whole multiple of $1,000,000 in excess
thereof;
(iii) the Competitive Loan Maturity Date applicable to the
Competitive Loans to be made pursuant thereto, provided, that the
Competitive Loan Maturity Date for each Fixed Rate Competitive Loan
shall be not less than 7 days nor more than 360 days after the
Borrowing Date therefor and the Competitive Loan Maturity Date for
each Eurodollar Competitive Loan shall be not less than one month
nor more than twelve months after the Borrowing Date therefor, and
in any event shall be not later than the Revolving Credit
Termination Date; and
(iv) whether the Competitive Borrowing then being requested
is to be of Eurodollar Competitive Loans or Fixed Rate Competitive
Loans.
A Competitive Advance Request that does not conform substantially to the
format of Exhibit C-4 may be rejected by the Administrative Agent in its
sole discretion, and the Administrative Agent shall promptly notify the
Company of such rejection. The Company may request offers to make
Competitive Loans having any one or more Competitive Loan Maturity Dates
in a single Competitive Advance Request. No Competitive Advance Request
shall be given within three Business Days of any other Competitive Advance
Request pursuant to which the Company has borrowed a Competitive Loan.
(c) Competitive Advance Invitation. Promptly after its receipt of
a Competitive Advance Request (but, in any event, no later than 3:00 P.M.,
New York City time, on the date of such receipt) conforming to the<PAGE>
36
requirements of paragraph (b) above, the Administrative Agent shall send
to each of the Lenders a Competitive Advance Invitation which shall
constitute an invitation by the Company to each such Lender to offer, on
the terms and conditions of this Agreement, to make Competitive Loans
pursuant to the Competitive Advance Request.
(d) Submission and Contents of Competitive Advance Offers.
(i) Each Lender may submit a Competitive Advance Offer containing an offer
or offers to make Competitive Loans in response to such Competitive
Advance Invitation. Each Competitive Advance Offer must comply with the
requirements of this paragraph (d) and must be submitted to the
Administrative Agent at its offices specified in Section 11.2 not later
than (x) 9:30 A.M. (New York City time) on the third Business Day prior to
the proposed date of borrowing, in the case of a borrowing of Eurodollar
Competitive Loans or (y) 9:30 A.M. (New York City time) on the date of the
proposed borrowing, in the case of a Fixed Rate Loan; provided, that any
Competitive Advance Offers submitted by the Administrative Agent in the
capacity of a Lender may only be submitted if the Administrative Agent
notifies the Company of the terms of the offer or offers contained therein
not later than fifteen minutes prior to the deadline for the other
Lenders. A Competitive Advance Offer submitted by a Lender pursuant to
this paragraph (d) shall be irrevocable.
(ii) Each Competitive Advance Offer shall be in substantially
the form of Exhibit C-3 and shall specify:
(A) the date of the proposed Competitive Borrowing,
(B) the principal amount of the Competitive Loan for
which each such offer is being made, which principal amount
(w) may be greater than, equal to or less than the Revolving
Credit Commitment of the quoting Lender, (x) must be in a
minimum principal amount of $5,000,000 or a whole multiple of
$1,000,000 in excess thereof, (y) may not exceed the principal
amount of Competitive Loans for which offers were requested
and (z) may be subject to a limitation as to the maximum
aggregate principal amount of Competitive Loans for which
offers being made by such quoting Lender may be accepted,
(C) in the case of a borrowing of Eurodollar
Competitive Loans, the Margin offered for each such
Competitive Loan, expressed as a percentage (specified in
increments of 1/10,000th of 1%) to be added to or subtracted
from the Eurodollar Rate,
(D) in the case of a borrowing of Fixed Rate
Competitive Loans, the rate of interest per annum (specified
in increments of 1/10,000th of 1%) offered for each such
Competitive Loan, and
(E) the identity of the quoting Lender.
A Competitive Advance Offer may set forth up to five separate offers by
the quoting Lender with respect to each Competitive Loan requested in the
related Competitive Advance Invitation. Any Competitive Advance Offer may
be disregarded by the Administrative Agent if the Administrative Agent
determines that it: (A) is not substantially in the form of Exhibit C-3<PAGE>
37
or does not specify all of the information required by Section 2.3(d)(ii);
(B) contains qualifying, conditional or similar language (except for a
limitation on the maximum principal amount which may be accepted); (C)
proposes terms other than or in addition to those set forth in the
applicable Competitive Advance Invitation or (D) arrives after the time
set forth in Section 2.3(d)(i).
(e) Notice to Company. The Administrative Agent shall promptly
(and, in any event, by 10:00 A.M., New York City time) notify the Company,
by telecopy, of all the Competitive Advance Offers made (including all
disregarded offers), the Competitive Advance Rate and the principal amount
of each Competitive Loan in respect of which a Competitive Advance Offer
was made and the identity of the Lender that made each offer. The
Administrative Agent shall send a copy of all Competitive Advance Offers
(including all disregarded offers) to the Company for its records as soon
as practicable after completion of the offering process set forth in this
Section 2.3.
(f) Acceptance and Notice by Company. The Company may in its sole
discretion, subject only to the provisions of this paragraph (f), accept
or reject any Competitive Advance Offer (other than any disregarded offer)
referred to in paragraph (e) above. The Company shall notify the
Administrative Agent by telephone, confirmed thereafter by telecopy in the
form of a Competitive Advance Accept/Reject Letter, whether and to what
extent it wishes to accept any or all of the offers referred to in
paragraph (e) above not later than (x) 10:30 A.M. (New York City time) on
the third Business Day prior to the proposed date of borrowing, in the
case of Eurodollar Competitive Loans or (y) 10:30 A.M. (New York City
time) on the proposed date of borrowing, in the case of Fixed Rate
Competitive Loans; provided that:
(i) the failure by the Company to give such notice shall be
deemed to be a rejection of all the offers referred to in paragraph
(e) above;
(ii) the aggregate principal amount of the Competitive
Advance Offers accepted by the Company may not exceed the lesser of
(A) the principal amount set forth in the related Competitive
Advance Request and (B) the excess, if any, of the aggregate
Revolving Credit Commitments of all Lenders then in effect over the
aggregate principal amount of the Aggregate Outstanding Extensions
of Credit immediately prior to the making of such Competitive Loans
(and after giving effect to the use of proceeds thereof),
(iii) the principal amount of each Competitive Borrowing must
be $5,000,000 or a whole multiple of $1,000,000 in excess thereof,
(iv) unless there are any limitations contained in a quoting
Lender's Competitive Advance Offer, the Company may not accept a
Competitive Advance Offer made at a particular Competitive Advance
Rate if it has decided to reject any portion of a offer made at a
lower Competitive Advance Rate for the same Type of Competitive Loan
and the same Competitive Loan Period, and
(v) the Company may not accept any Competitive Advance Offer
that is disregarded by the Administrative Agent pursuant to Section<PAGE>
38
2.3(d)(ii) or that otherwise fails to comply with the requirements
of this Agreement.
A notice given by the Company pursuant to this paragraph (f) shall be
irrevocable.
(g) Allocation by Administrative Agent. If offers are made by two
or more Lenders with the same Competitive Advance Rates for a greater
aggregate principal amount than the amount in respect of which such offers
are accepted for the related Competitive Loan Period, the principal amount
of Competitive Loans in respect of which such offers are accepted shall be
allocated by the Administrative Agent among such Lenders as nearly as
possible (in integral multiples of $1,000,000, as the Administrative Agent
may deem appropriate) in proportion to the aggregate principal amounts of
such offers.
(h) Notification of Acceptance. The Administrative Agent shall
promptly (and, in any event, by 11:00 A.M., New York City time) notify
each offering Lender whether or not its Competitive Advance Offer has been
accepted (and if so, in what amount and at what Competitive Advance Rate),
and each successful offering Lender will thereupon become bound, subject
to the other applicable conditions hereof, to make the Competitive Loan in
respect of which its offer has been accepted.
2.4 Fees. (a) 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 Revolving Credit Termination Date,
computed at a rate equal to (i) 0.250% per annum on any date on which
Level I or Level II is in effect, (ii) 0.375% per annum on any date on
which Level III, Level IV or Level V is in effect or (iii) 0.500% per
annum on any date on which Level VI or Level VII 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.
(b) 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.
2.5 Evidence of Loans; Repayment. 1. 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 Administrative 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, whether such
Loan is a Revolving Credit Loan or a Competitive Loan, the Type thereof
and each Interest Period or Competitive Loan Period (if any) applicable
thereto, (ii) the amount of any principal or interest due and payable or<PAGE>
39
to become due and payable from the Company to each Lender hereunder and
(iii) both the amount of any sum received by the Administrative Agent
hereunder from the Company and each Lender's share thereof.
(c) The entries made in the Register and the accounts of each
Lender maintained pursuant to Section 2.5(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 Administrative 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 Revolving Credit Loans
on the Revolving Credit Termination Date or such earlier date as the
Revolving Credit Commitments shall terminate hereunder. The Company shall
repay each Competitive Loan on the Competitive Loan Maturity Date
applicable thereto.
2.6 Termination or Reduction of Revolving Credit Commitments. The
Company shall have the right, upon not less than three Business Days'
notice to the Administrative Agent, to terminate the Revolving Credit
Commitments or, from time to time, to reduce the amount of the Revolving
Credit Commitments; 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, (a) the Aggregate Outstanding Extensions of Credit would exceed
the Revolving Credit Commitments then in effect or (b) the Outstanding
Revolving Extensions of Credit of any Lender would exceed such Lender's
Revolving Credit Commitment 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 Administrative Agent shall
promptly notify each Lender thereof.
2.7 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 2.17), in the case of Eurodollar Revolving
Credit Loans, or at any time and from time to time, in the case of ABR
Loans, prepay the Revolving Credit 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
Revolving Credit 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 Revolving
Credit Loans, ABR 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 (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. Notwithstanding anything to the<PAGE>
40
contrary contained herein, the Company shall not prepay any Competitive
Loan without the consent of the holder or holders thereof (which consent
may be withheld in its or their sole discretion), except in connection
with an acceleration of the maturity thereof pursuant to Section 8.
2.8 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 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 Revolving
Credit Loans and, if necessary, cash collateralize the Letters of Credit
and/or the Competitive Loans in an aggregate principal amount equal to
such excess; provided that if the amount of the Aggregate Outstanding
Extensions of Credit 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
2.8(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
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 Revolving Credit Loans
and, if necessary, cash collateralize the Competitive Loans to the extent
necessary to eliminate such excess; provided that if any such excess
remains after giving effect to such prepayment and cash collateralization,
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
Administrative 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 2.8(b).
(c) The application of any prepayment pursuant to this Section 2.8
shall be made first to ABR Loans and second to Eurodollar Revolving Credit
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
Revolving Credit 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 Revolving Credit
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 Revolving
Credit 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 Revolving Credit Loans.
Each prepayment of the Loans under this Section 2.8 (other than ABR Loans)
shall be accompanied by accrued interest to the date of such prepayment on
the amount prepaid.<PAGE>
41
2.9 Conversion and Continuation Options. (a) The Company may
elect from time to time to convert Eurodollar Revolving Credit Loans to
ABR Loans, by giving the Administrative 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 Administrative 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 2.17). The Company may elect from time to time to convert ABR
Loans to Eurodollar Revolving Credit Loans by giving the Administrative
Agent at least three Business Days' prior irrevocable notice of such
election. Any such notice of conversion to Eurodollar Revolving Credit
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 Revolving Credit Loans or ABR Loans may be
converted as provided herein; provided that (i) no Loan may be converted
into a Eurodollar Revolving Credit 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 2.10 shall not have been contravened and (iii) no
Loan may be converted into a Eurodollar Revolving Credit Loan after the
date that is one month prior to the Revolving Credit Termination Date.
(b) Any Eurodollar Revolving Credit 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 Loans; provided that no Eurodollar Revolving Credit
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 2.10 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 Administrative Agent shall promptly notify the Lenders thereof.
2.10 Minimum Amounts and Maximum Number of Eurodollar Tranches.
All borrowings, conversions and continuations of Eurodollar Revolving
Credit 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
Eurodollar Revolving Credit 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 ten Eurodollar Tranches.
2.11 Interest Rates and Payment Dates. (a) Each Eurodollar
Revolving Credit 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.<PAGE>
42
(b) Each ABR Loan shall bear interest at a rate per annum equal to
the Alternate Base Rate plus the Applicable Margin.
(c) (i) each Eurodollar Competitive Loan shall bear interest for
each day during the Competitive Loan Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus (or
minus, as the case may be) the Margin offered by the Lender making such
Loan and accepted by the Company pursuant to Section 2.3, and (ii) each
Fixed Rate Competitive Loan shall bear interest at a rate per annum equal
to the fixed rate of interest offered by the Lender making such Loan and
accepted by the Company pursuant to Section 2.3.
(d) 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
2.11(a), (b), or (c) 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 Revolving
Credit 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%.
(e) Interest shall be payable in arrears on each Interest Payment
Date; provided that interest accruing pursuant to paragraph (d) of this
Section 2.11 shall be payable on demand.
2.12 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
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 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.
(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 Administrative 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 Administrative Agent as contemplated hereby.
If any of the Reference Lenders shall be unable or shall otherwise fail to<PAGE>
43
supply such rates to the Administrative Agent upon its request, the rate
of interest shall, subject to the provisions of Section 2.13, be
determined on the basis of the quotations of the remaining Reference
Lender.
2.13 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 Eurodollar
Revolving Credit 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 Revolving Credit 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 Revolving Credit Loans
shall be continued as ABR Loans and (z) any outstanding Eurodollar
Revolving Credit Loans shall be converted, on the first day of such
Interest Period, to ABR Loans. Until such notice has been withdrawn by
the Administrative Agent, no further Eurodollar Revolving Credit Loans
shall be made or continued as such, nor shall the Company have the right
to convert Loans to Eurodollar Revolving Credit Loans.
2.14 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
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 Revolving Credit Loans shall be made
pro rata according to the respective outstanding principal amounts of the
Revolving Credit Loans then held by the Lenders. All payments (including
prepayments) to be made by the Company hereunder, 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 11.2,
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 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<PAGE>
44
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 Administrative 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 share of the borrowing on such
date available to the Administrative Agent, the Administrative Agent may
assume that such Lender has made such amount available to the
Administrative Agent on such Borrowing Date, and the Administrative Agent
may, in reliance upon such assumption, make available to the Company a
corresponding amount. If such amount is made available to the
Administrative Agent on a date after such Borrowing Date, such Lender
shall pay to the Administrative Agent on demand an amount equal to the
product of (i) the daily average federal funds rate during such period as
quoted by the Administrative Agent, times (ii) the amount of such Lender's
share 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 share of such borrowing shall have become
immediately available to the Administrative Agent and the denominator of
which is 360. A certificate of the Administrative Agent submitted to any
Lender with respect to any amounts owing under this Section 2.14 shall be
conclusive in the absence of manifest error. If such Lender's share of
such borrowing is not in fact made available to the Administrative Agent
by such Lender within three Business Days of such Borrowing Date, the
Administrative 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.
2.15 Requirements of Law. 2. 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, 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 2.16 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;<PAGE>
45
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 2.15(a) with respect to any Eurodollar Revolving Credit Loan,
the Company shall have the option to convert immediately such Eurodollar
Revolving Credit 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 Administrative Agent for the benefit of the relevant Lender accrued
interest on such Eurodollar Revolving Credit Loan to the date of
conversion, together with any amounts payable pursuant to Section 2.17.
(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
Administrative Agent) of a written request therefor, the Company shall pay
to such Lender or such corporation, 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
2.15 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 2.15 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 2.15 shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.
2.16 Taxes. (a) All payments made by the Company under this
Agreement 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,<PAGE>
46
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 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, 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 2.16) interest or
any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement. 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 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
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
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<PAGE>
47
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 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 2.16(a); provided that this sentence shall not apply,
and the Company shall be required to pay additional amounts to such Lender
pursuant to Section 2.16(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 2.16(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 2.16(b) in an amount in excess of the additional amounts it 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 2.16(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<PAGE>
48
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 2.16(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 2.16(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 2.16,
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 2.16(d) shall survive the termination of this Agreement and
the payment of the Loans and all other amounts payable hereunder.
2.17 Indemnity. The Company agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense (including, but not
limited to, any such loss or expense arising from interest or fees payable
by such Lender to lenders of funds obtained by it in order to maintain its
Eurodollar Revolving Credit Loans or Competitive Loans, but excluding loss
of the Applicable Margin or any positive Margin applicable to Eurodollar
Loans), 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 Revolving Credit Loan or Competitive Loan, (b)
default by the Company in making a borrowing of, conversion into or
continuation of Eurodollar Revolving Credit Loans or Competitive Loans
after the Company has given a notice requesting (or, in the case of
Competitive Loans, accepting) 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 Revolving Credit Loans or a Competitive Loans on
a day which is not the last day of an Interest Period or the Competitive
Loan Period, as the case may be, 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<PAGE>
49
payable to a Lender under this Section 2.17 with respect to Eurodollar
Loans 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 or
Competitive Loan 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 2.17. 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 2.17. A
certificate as to any amounts payable pursuant to this Section 2.17
submitted by any Lender, through the Administrative Agent, shall be
conclusive in the absence of manifest error. The agreements in this
Section 2.17 shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder.
2.18 Replacement Lenders. In the event that the Company becomes
obligated to pay additional amounts to any Lender pursuant to Section 2.15
or 2.16 (other than solely with respect to Competitive Loans), 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 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
Administrative 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 2.17) 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
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<PAGE>
50
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
Administrative 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
Administrative Agent and the Company promptly following the issuance
thereof.
3.3 Fees and Other Charges. (a) The Company shall pay to the
Administrative 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 the Applicable Margin from time to
time in effect with respect to Eurodollar Revolving Credit Loans minus
0.25% 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 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 Administrative 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<PAGE>
51
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
Revolving Credit 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 Administrative Agent shall, promptly following its receipt
thereof, distribute to the Issuing Lender and the L/C Participants all
fees received by the Administrative 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 Revolving Credit 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 2.2 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 Business Day after such drawing, the Issuing
Lender shall promptly notify the Administrative Agent and, upon receipt of
such notice, the Administrative Agent will in turn notify each L/C
Participant. Each L/C Participant shall, on the first Business Day
following such notification, make a Revolving Credit 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 2.2 or<PAGE>
52
the conditions set forth in Section 5) and shall make available to the
Administrative Agent for the account of the Issuing Lender, by deposit to
the Administrative 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 Administrative Agent, such L/C
Participant and the Company severally agree to pay to the Administrative
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 Administrative 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 Administrative 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 Administrative
Agent such amount, such amount so paid shall constitute such L/C
Participant's Revolving Credit 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 Administrative Agent, in same day funds, the
amount of its participation, and the proceeds of such participation shall
be distributed by the Administrative 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 Administrative Agent, such L/C
Participant and the Company severally agree to pay to the Administrative
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 Administrative 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 Administrative 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 Administrative
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 3 shall be absolute and unconditional under any and all
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<PAGE>
53
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 Administrative 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
Administrative Agent on the last Business Day (or such other day as is
agreed between the Administrative 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 Administrative
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.
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,<PAGE>
54
Holdings and the Company hereby jointly and severally represent and
warrant to the Administrative 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 September 30, 1996 (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, (iii) the
consummation of the Triangle Acquisition and (iv) 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 September 30, 1996, assuming that the events specified in the
preceding sentence had actually occurred at September 30, 1996.
(b) The consolidated balance sheets of Holdings and its
consolidated Subsidiaries and of the Company and its consolidated
Subsidiaries as at December 31, 1994 and December 31, 1995 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. The unaudited consolidated balance sheets of Holdings and its
consolidated Subsidiaries and of the Company and its consolidated
Subsidiaries as at June 30, 1996, and the related unaudited consolidated
statements of income and stockholder's equity and cash flows for the six-
month period ended on such date, certified by a Responsible Officer,
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 date, and the consolidated
results of their operations and cash flows for the six-month period then
ended (subject to normal year-end audit adjustments). All such financial
statements, including the related schedules and notes thereto, have been
prepared in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants or such
Responsible Officer, as the case may be, 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, 1995 to and including the Effective Date there has been no
sale, transfer or other disposition by Holdings, the Company, or any of<PAGE>
55
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, 1995 (except in
connection with the Triangle Acquisition).
(c) The projections dated September 12, 1996 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, 1995 (a) there has been no
development or event, which has had or could reasonably be expected to
have a Material Adverse Effect and (b) except as disclosed in the
Confidential Information Memorandum, 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.<PAGE>
56
(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
filings necessary to perfect the Administrative 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).
The consummation of the Triangle Acquisition will not violate any
material Requirement of Law.
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<PAGE>
57
Subsidiaries is the lessee, showing as of the Effective Date the street
address, county or other relevant jurisdiction, state, lessor, lessee and
expiration date. 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 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.<PAGE>
58
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
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.
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.<PAGE>
59
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.
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 respects and in the last
three years have been in compliance in all 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 any instance of non-compliance
referred to in clause (i) above or any instance of contamination or
violation referred to in clause (ii) above, 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<PAGE>
60
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
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 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 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 Administrative 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 Administrative 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<PAGE>
61
Pledged Stock described therein are delivered to the Administrative 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, 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 Administrative 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
Administrative 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<PAGE>
62
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:
(a) Agreement. The Administrative 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 Administrative Agent and each
Lender shall have received copies of (i) each of the financial
statements referred to in Section 4.1 and (ii) audited financial
statements of Triangle for the fiscal years ended December 31, 1994
and December 31, 1995 and unaudited financial statements of Triangle
for the fiscal quarter ended June 30, 1996.
(c) Existing Credit Agreement. (i) 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
(ii) to the extent requested by the Administrative Agent, the
Administrative 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 other "Loan Documents" under and as
defined in the Existing Credit Agreement which expressly survive the
termination thereof, each of the Administrative 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
Administrative 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.
(d) Triangle Acquisition. The Triangle Acquisition shall
have been consummated pursuant to a structure and terms (including
without limitation those set forth in an asset purchase agreement
and other related documentation (the "Triangle Acquisition
Documents") reasonably satisfactory to the Administrative Agent; and
the Triangle Acquisition Documents shall in each case not have been
waived (except in respect of any survey requirements in connection
with the Triangle Acquisition), amended, supplemented or otherwise
modified in any material respect unless otherwise agreed to by the
Required Lenders.
(e) Closing Certificates. The Administrative Agent shall
have received a Closing Certificate of each Loan Party,
substantially in the form of Exhibit H, with appropriate insertions<PAGE>
63
and attachments (which attachments shall be in form and substance
reasonably satisfactory to the Administrative Agent).
(f) Payment of Fees. The Administrative Agent shall have
received the fees to be received on the Effective Date referred to
in Section 2.4(b), and the Administrative 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.
(g) 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 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(g), 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 Administrative Agent may reasonably require.
(h) Subsidiary Guarantee. The Administrative Agent shall
have received the Subsidiary Guarantee, duly executed and delivered
by a duly authorized officer of each Subsidiary Guarantor.
(i) Pledge Agreements; Pledged Stock; Intercompany Notes.
The Administrative 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.
(j) Security Agreements. The Administrative 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.
(k) Mortgages. The Administrative Agent shall have received
each Mortgage, duly executed and delivered by a duly authorized
officer of the relevant Loan Party.<PAGE>
64
(l) Title Insurance Policies. The Administrative Agent shall
have received in respect of each parcel of Mortgaged Property
specified by the Administrative 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 Administrative 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 Administrative Agent and except as otherwise expressly
permitted by Section 7.3, (iii) name the Administrative 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 Administrative 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 Administrative Agent. The Administrative Agent
shall also 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.
(m) Lien Searches. The Administrative 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 those jurisdictions
listed on Schedule 4.20(b), to the extent relating to assets
acquired in connection with the Triangle Acquisition, specified by
the Administrative Agent.
(n) 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 Administrative Agent to be filed,
registered or recorded in order to create in favor of the
Administrative 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.
(o) Certificates. The Administrative Agent shall have
received (i) a Borrowing Base Certificate, dated the Effective Date
and setting forth a calculation of the Borrowing Base as of
September 30, 1996, showing that the Modified Aggregate Outstanding
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 September 30, 1996, showing that the sum of
(x) the aggregate L/C Obligations then outstanding and (y) the
aggregate principal amount of Specified Basket Debt then outstanding
(after giving effect to the making of any extensions of credit on<PAGE>
65
the Effective Date), shall not exceed the Senior Note Indenture
Revolving Credit Incurrence Limit as set forth in such Certificate.
(p) Insurance. The Administrative 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 Administrative Agent, for the
benefit of the Lenders, as an additional named insured or loss
payee.
(q) Environmental Report. The Administrative Agent shall
have received (i) copies of the existing Phase I environmental
assessments with respect to each property acquired pursuant to the
Triangle Acquisition (the properties located in Florence, Alabama;
Glendale, Arizona; Sikeston, Missouri; and Pawtucket, Rhode Island)
and (ii) copies of the existing Phase II environmental audits with
respect to the Pawtucket, Rhode Island and Sikeston, Missouri
facilities acquired pursuant to the Triangle Acquisition.
(r) Bank of Montreal Credit Facility. The Administrative
Agent shall have received satisfactory evidence that the terms of
the Bank of Montreal Credit Facility have been, or shall promptly
after the Effective Date be, conformed to the terms of this
Agreement.
5.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any Loan 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:
(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 Extensions of
Credit shall not exceed the aggregate Revolving Credit Commitments
in effect on such date, (ii) the Outstanding Revolving Extensions of
Credit of each Lender shall not exceed such Lender's Revolving
Credit Commitment in effect on such date and (iii) no prepayment
shall be required to be made pursuant to Section 2.8.
Each borrowing by and issuance of a Letter of Credit on behalf of the
Company hereunder 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.
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<PAGE>
66
Letter of Credit 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:
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<PAGE>
67
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
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 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;
(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
the Senior Notes;
(g) within five days after the Company or any of its
Subsidiaries enters into a joint venture, notice thereof accompanied<PAGE>
68
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
Administrative Agent.
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 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 (including examinations of the Accounts and
Inventory by representatives of the Administrative 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.<PAGE>
69
6.7 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;
(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
$3,000,000 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 $3,000,000;
(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 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<PAGE>
70
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
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 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 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<PAGE>
71
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.
6.9 Interest Rate Protection. In the case of the Company, effect
interest rate hedging arrangements reasonably satisfactory to the
Administrative 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 Administrative
Agent, for the benefit of the Lenders, does not have a perfected Lien (i)
execute and deliver to the Administrative Agent such amendments to this
Agreement or the relevant Security Agreement or such other documents as
the Administrative Agent or the Required Lenders deem necessary or
advisable in order to grant to the Administrative Agent, for the benefit
of the Lenders, a security interest in such assets, and (ii) take all
actions necessary or advisable to grant to the Administrative 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
Administrative 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 Administrative Agent, for the benefit of the Lenders,
covering such real estate, in form and substance reasonably satisfactory
to the Administrative 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 Administrative Agent and (iii) if requested
by the Administrative Agent, deliver to the Administrative 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 Administrative 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
Administrative Agent such amendments to the relevant Pledge Agreement as
the Administrative Agent or the Required Lenders deem necessary or
advisable in order to grant to the Administrative 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 Administrative
Agent the certificates representing such Capital Stock, together with
undated stock powers, in blank, executed and delivered by a duly<PAGE>
72
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
Administrative Agent for the benefit of the Lenders a perfected first
priority (subject 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 Administrative 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
Administrative 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 Administrative Agent for the benefit of the Lenders
pursuant to the Subsidiary Pledge Agreement), and (v) if requested by the
Administrative Agent, deliver to the Administrative 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 Administrative 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 Administrative Agent such
amendments to the relevant Pledge Agreement as the Administrative Agent or
the Required Lenders deem necessary or advisable in order to grant to the
Administrative 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 Administrative 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<PAGE>
73
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
opinion of the Administrative 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 Administrative 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 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:<PAGE>
74
[CAPTION]
<TABLE>
Period Ending Ratio
<S> <C>
After the Effective Date and prior 5.00 to 1.0
to March 31, 1998 . . . . . . . . . .
On or after March 31, 1998 and
prior to March 31, 1999 . . . . . . . 4.50 to 1.0
On or after March 31, 1999 and
prior to March 31, 2000 . . . . . . . 4.25 to 1.0
March 31, 2000 and thereafter . . . . . 4.00 to 1.0
</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 the Effective Date and prior
to March 31, 1998 . . . . . . . . . . 3.0 to 1.0
On or after March 31, 1998 and
prior to March 31, 1999 . . . . . . . 2.75 to 1.0
On or after March 31, 1999 and
prior to March 31, 2000 . . . . . . . 2.50 to 1.0
March 31, 2000 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
Administrative Agent for the benefit of the Lenders pursuant to the
relevant Pledge Agreement;
(c) (i) Indebtedness of the Company in respect of the Senior
Notes, and (ii) 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 (ii), any
replacement, extension or renewal (without increase in the
outstanding principal amount) thereof;<PAGE>
75
(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;
(e) Indebtedness of the Company resulting from the delivery
of a promissory note in the maximum amount of $10,000,000 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 any Preferred
Stock issued in accordance with Section 7.11;
(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 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) any unsecured term Indebtedness of the Company pursuant
to any Senior Unsecured Term Loan Agreement (the "Senior Unsecured
Term Loans") in an aggregate principal amount of up to $60,000,000;
(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 Administrative 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 in an aggregate<PAGE>
76
principal amount of up to $25,000,000 minus the then outstanding
aggregate principal amount of Indebtedness comprised of the assumed
capital leases of Triangle listed on Schedule 7.2(c);
(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
Administrative Agent, is more favorable to the Company);
(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 2.8); and
(p) additional Indebtedness of Essex International not
otherwise permitted by this Section 7.2 aggregating not more than
$15,000,000 (or the Dollar equivalent thereof in any other currency)
at any one time outstanding (so long as, after giving effect to the
incurrence thereof, no prepayment shall be required to be made
pursuant to Section 2.8), provided, that any such Indebtedness shall
be either (i) unsecured or (ii) secured only by assets owned by
Essex International which are either located in Canada or which
constitute accounts receivable generated in respect of assets
located in Canada.
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;<PAGE>
77
(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
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
Administrative Agent for the benefit of the Lenders;
<PAGE>
78
(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 listed
in Schedule 4.8 or expressly permitted by Section 7.7(a) or (b), as
well as any Lien affecting the fee interest of such lessor or any
underlying lessor;
(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;
(n) leases or subleases granted by the Company or any of its
Subsidiaries in the ordinary course of business and not interfering
in any material respect with the conduct of the business of the
Company or such Subsidiary; and
(o) Liens securing Section 7.2(p) Indebtedness which is
permitted to be secured by said Section.
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, not exceeding, when added to the
aggregate principal amount of Joint Venture Loans, $25,000,000 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 $10,000,000
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);
(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; and
(g) unsecured guarantee obligations of the Company in respect
of (i) Section 7.2(p) Indebtedness or (ii) purchase price adjustment<PAGE>
79
and indemnity obligations of Essex International under the BICC
Phillips Purchase 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;
(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, and (iii) within three Business Days
after the consummation of the BCP/Company Merger, the Administrative
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 Administrative 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), which opinion shall be in form and substance satisfactory to
the Administrative 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<PAGE>
80
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
$3,000,000 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);
(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 $30,000,000
in any fiscal year of the Company and shall not exceed $60,000,000
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
$20,000,000 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<PAGE>
81
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
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 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 (a) which have
not been applied to pay the obligations in respect of which such
dividends were made exceed $200,000 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, 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), the
Company shall deliver to the Administrative Agent a certified copy
of each agreement in respect of which such dividend is being made;
(ii) to the extent necessary to enable Holdings to pay any annual
management fee expressly permitted by Section 7.12;
(iii) constituting payments required to be made by the Company to
Holdings pursuant to the Tax Sharing Agreement and (iv) to the<PAGE>
82
extent 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;
(d) so long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom, Holdings may
repurchase common stock of Holdings owned by former or existing
employees of the Company, provided that, such repurchases are funded
entirely with the proceeds of sales of newly issued common stock of
Holdings to employees; and
(e) Holdings may redeem or exchange any 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 or secured Section
7.2(p) 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;<PAGE>
83
(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
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 any Joint Venture
("Joint Venture Loans"), provided that (x) the aggregate principal
amount thereof shall not exceed $18,000,000 at any one time
outstanding, (y) all Indebtedness of Joint Venture resulting
therefrom shall be evidenced by an Intercompany Note, and (z) such
Intercompany Note shall be pledged to the Administrative 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 Joint Venture Loans, when
added to the aggregate amount of guarantees referred to in clause
(ii) above, shall not exceed $25,000,000 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(f);
(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 (including, without limitation, the unutilized Basket
Expenditure Amount under the Existing Credit Agreement in respect of
fiscal year 1995, which amount is equal to $19,800,000), (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 $30,000,000), (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 any
Joint Venture) which either (1) constitute capital contributions or
other investments in any Person which is not a Subsidiary Guarantor<PAGE>
84
or (2) are otherwise made to acquire assets which do not constitute
Collateral exceed $20,000,000 in any fiscal year and $30,000,000
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
(x) the aggregate amount of such Capital Expenditures and Investment
Expenditures shall not exceed $100,000,000 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 $50,000,000
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 Administrative 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.
Notwithstanding anything to the contrary contained herein, in no event
shall the aggregate amount of any advance, loan, extension of credit (by
way of guaranty or otherwise) or capital contribution to, or any other
investment in, SX Mauritius Holding, Inc. or any of its Subsidiaries
exceed $10,000,000.
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 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 prepayment of the
Senior Unsecured Term Loans and Section 7.2(n) Indebtedness pursuant to
scheduled amortization payments; (iii) the prepayment, refinancing or
redemption of the Senior Unsecured Term Loans in a principal amount not to
exceed 75% of cumulative Excess Cash Flow for the period from the
beginning of the fiscal quarter of Holdings ended September 30, 1995 to
the last day of the most recent fiscal period for which financial
statements have been delivered pursuant to Section 6.1; (iv)(1) the
prepayment, refinancing or redemption, in whole or in part, of any
Preferred Stock or the 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 set forth on Schedule 7.11, or (2)
the exchange, in whole or in part, of the Preferred Stock for preferred
stock of Holdings having terms no more onerous than those set forth on
Schedule 7.11,<PAGE>
85
(b) amend, modify or change, or consent or agree to any amendment,
modification or change to, any of the terms of any Section 7.2(n)
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 Administrative Agent or any Lender under any Loan
Document, 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 any 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 Administrative 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) grants additional rights to the holders of the
Preferred Stock in respect of the election of 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 any 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 any Preferred
Stock pursuant to this clause (iii) shall be delivered to the
Administrative Agent at least five Business Days prior to the
effectiveness thereof).
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 and may reimburse BP Co. or any of its Affiliates for any
reasonable out of pocket expenses (with respect to services associated
with or incurred on behalf of the Company), (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<PAGE>
86
options to purchase such common stock, (4) Holdings may sell shares of, or
rights to purchase shares of, its common 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
and (5) Holdings may exchange, in whole or in part, any Preferred Stock
held by an Affiliate of Holdings for preferred stock of Holdings having
terms no more onerous than those governing the Preferred Stock and may
execute and deliver, and perform its obligations under, any and all
agreements, instruments and documents relating to the secondary offering
of the Preferred Stock or such exchange, including the registration of the
Preferred Stock and any such preferred stock issued in any such exchange
under the Securities Act of 1933.
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 exchange, 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)
the obligation to pay any management or advisory fee expressly permitted
by Section 7.12, (v) in connection with Intercompany Loans made by the
Company to Holdings in accordance with Section 7.2(b), (vi) in connection
with the matters described in clause (a)(ii) above and (vii) 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<PAGE>
87
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
(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 Administrative 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<PAGE>
88
(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 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<PAGE>
89
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
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 Administrative 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 (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
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Company declare the Revolving<PAGE>
90
Credit Commitments to be terminated forthwith, whereupon the Revolving
Credit Commitments shall immediately terminate; and (ii) with the consent
of the Required Lenders, the Administrative Agent may, or upon the request
of the Required Lenders, the Administrative Agent shall, by notice of
default to the Company, declare the Loans hereunder (with accrued interest
thereon) and all other amounts owing under this Agreement (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
Administrative 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 Administrative 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 ADMINISTRATIVE AGENT
9.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents, and each Lender irrevocably
authorizes the Administrative Agent, in such capacity, 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 Administrative Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as
are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the 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 Loan Document or otherwise
exist against the Administrative Agent.
9.2 Delegation of Duties. The Administrative 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
Administrative Agent shall not be responsible for the negligence or
misconduct of any agents or attorneys in-fact selected by it with
reasonable care.<PAGE>
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9.3 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 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 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 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 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 Loan Document, or to inspect the properties, books or records of
the Company or any other Loan Party.
9.4 Reliance by Administrative Agent. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon
any 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
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 Administrative 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 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 11.1);
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<PAGE>
92
respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
9.6 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
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 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 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.
9.7 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 Revolving Credit
Commitments or, if the Revolving Credit Commitments have terminated,
ratably according to the respective amounts of their Loans, 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 Administrative 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 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 shall survive the payment of
the Loans and all other amounts payable hereunder.<PAGE>
93
9.8 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 Loan Documents. With respect to its Loans
made or renewed by it and any Letter of Credit issued or participated in
by it, the Administrative Agent shall have the same rights and powers
under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not the Administrative Agent, and the
terms "Lender" and "Lenders" shall include the Administrative Agent in its
individual capacity.
9.9 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 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 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 Loans. After any
retiring Administrative Agent's resignation as Administrative 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 Administrative 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 Administrative 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 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 10. 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 Letters of Credit are outstanding, notwithstanding that
from time to time prior thereto the Company may be free from any
Obligations.<PAGE>
94
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 10, it will notify the
Administrative 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 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 10 which, notwithstanding any such payment or payments, shall
remain liable for the Obligations 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 Administrative
Agent or any Lender against the Company or against the Administrative
Agent or any Lender for the payment of the Obligations, until the
Obligations have been paid in full and the Revolving Credit Commitments
have been terminated. 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, until the
Obligations have been paid in full and the Revolving Credit Commitments
have been terminated. 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 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. 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 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 Loan Document, and any other documents executed and delivered in<PAGE>
95
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 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 Administrative 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 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 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 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
10, in bankruptcy or in any other instance. When the Administrative Agent
or any Lender is pursuing its rights and remedies under this Section 10
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 10, 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.
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 Administrative<PAGE>
96
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.
10.6 Payments. Holdings hereby agrees that any payments in respect
of the Obligations pursuant to this Section 10 will be paid to the
Administrative Agent without setoff or counterclaim in Dollars at the
office of the Administrative 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
Administrative 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 Administrative 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) so long as the covenants
contained in Section 7.1(b) or 7.1(c) are incorporated by reference in the
Capital Lease Financing Facility, amend, modify or waive any provision of
Section 7.1(b) or 7.1(c), as the case may be, 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 Administrative Agent; and provided, further,
that no exercise by the Administrative Agent of its discretion pursuant to
the introductory paragraphs of the definitions of "Eligible Inventory" and<PAGE>
97
"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 "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 Administrative Agent and all future holders of the Loans. In the case
of any waiver, the Company, the other Loan Parties, the Lenders and the
Administrative 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 Administrative Agent, and as
set forth in the administrative questionnaire delivered to the
Administrative Agent on or prior to the Effective Date 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<PAGE>
98
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: The Chase Manhattan Bank
c/o Chase Securities Inc.
10 South LaSalle Street
Chicago, Illinois 60603
Attention: Jonathan E. Twichell
Telecopy: 312-807-4550
with copies to: Chase Agent Bank Services Group
Grand Central Tower
140 East 45th Street
New York, New York 10017
Attention: Jesus Sang
Telecopy: 212-622-0122
provided that any notice, request or demand to or upon the Administrative
Agent or the Lenders pursuant to Section 2.2, 2.3, 2.6, 2.7, 2.9, 2.11 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 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.
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 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 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 Administrative Agent and of any professionals
or consultants acting on behalf of the Administrative 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 Administrative
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<PAGE>
99
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 Loan
Documents, the Letters of Credit, 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 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
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 Administrative 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 Administrative Agent (such consent not to be
unreasonably withheld but in the case of the Company it shall be deemed<PAGE>
100
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 2.15 or 2.16), 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) in the case of each assignment of a Revolving Credit
Commitment, except in the case of an assignment of all of a Lender's
Revolving Credit Commitment, (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 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). 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 Administrative Agent, such assigning Lender or<PAGE>
101
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 Administrative 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 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
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 Administrative Agent and the Lenders 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 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 Administrative 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) for purposes of Section 2.16, 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, (iv) 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 (v) 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<PAGE>
102
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 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 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 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, in form and substance
reasonably satisfactory to the Company, evidencing the Loans so pledged or
assigned 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 Services ("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 Administrative 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<PAGE>
103
payment of the Loans made by such Lender hereunder and all other amounts
accrued for such Lender's account or owed to it hereunder.
11.7 Adjustments; Setoff.
(a) Except to the extent that this Agreement provides for payments
to be allocated to Revolving Credit Loans or Competitive Loans, as the
case may be, if any Lender (a "benefitted Lender") shall at any time
receive any payment of all or part of any category 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
(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.
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 Administrative
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<PAGE>
104
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
11.10 Releases. Each Lender hereby authorizes the Administrative
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 THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT 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 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 11.12 any special, exemplary,
punitive or consequential damages.<PAGE>
105
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 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.
11.14 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 LOAN DOCUMENT AND FOR ANY
COUNTERCLAIM THEREIN.
11.15 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 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
Administrative Agent or any Lender.
11.16 New Lenders; Commitment Increases. (a) With the consent of
the Company and the Administrative Agent (which, in the case of the
Administrative 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 Administrative 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 Administrative 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 $400,000,000 pursuant to any supplement described in this Section
11.16(a).<PAGE>
106
(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 Revolving Credit
Loans are then outstanding, the Company shall borrow Revolving Credit
Loans from such Lender in an amount such that, after giving effect
thereto, the quotient of (x) the Revolving Credit Loans of such Lender of
each Type (and, in the case of Eurodollar Revolving Credit 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
Revolving Credit Loans borrowed pursuant to the preceding sentence shall
bear interest at a rate equal to the respective interest rates then
applicable to the Eurodollar Revolving Credit Loans of the other Lenders
in the same Eurodollar Tranche or such other rate as may be agreed upon by
the Company and such Lender.
11.17 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 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 LOAN DOCUMENTS.
* * *<PAGE>
107
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: Vice President
ESSEX GROUP, INC.
By: /s/ Debra F. Minott
-----------------------------
Name: Debra F. Minott
Title: Senior Vice President
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a Lender
By: /s/ Lawrence Palumbo, Jr.
-----------------------------
Name: L. Palumbo
Title: Vice President and
Attorney-in-fact
BANK OF AMERICA ILLINOIS, as Co-Lead
Agent and as a Lender
By: /s/ R. Guy Stapleton
_____________________________
Name: R. Guy Stapleton
Title: Managing Director
THE BANK OF NEW YORK, as Co-Agent
and as a Lender
By: /s/ John M. Lokay, Jr.
-----------------------------
Name: John M. Lokay, Jr.
Title: Vice President
THE BANK OF NOVA SCOTIA, as Co-Agent
and as a Lender
By: /s/ M.D. Smith
-----------------------------
Name: M.D. Smith
Title: Agent<PAGE>
108
COMERICA BANK, as Co-Agent and as
a Lender
By: /s/ Phillip A. Coosaia
-----------------------------
Name: Phillip A. Coosaia
Title: Vice President<PAGE>
109
NBD BANK, N.A., as Co-Agent and
as a Lender
By: /s/ John C. Otteson
-----------------------------
Name: John C. Otteson
Title: Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH, as Co-Agent
and as a Lender
By: /s/ Shuichi Tajima
----------------------------
Name: Shuichi Tajima
Title: Deputy General Manager
NATIONSBANK, N.A., as Co-Agent
and as a Lender
By: /s/ Wallace W. Harris
-----------------------------
Name: Wallace W. Harris
Title: Vice President
FORT WAYNE NATIONAL BANK, as a Lender
By: /s/ Robert C. Marshall
-----------------------------
Name: Robert C. Marshall
Title: Vice President
MELLON BANK, N.A., as a Lender
By: /s/ Roger N. Stanier
-----------------------------
Name: Roger N. Stanier
Title: Vice President
NATIONAL CITY BANK OF INDIANA,
as a Lender
By: /s/ Reagan K. Rick
-----------------------------
Name: Reagan K. Rick
Title: Vice President
UNITED STATES NATIONAL BANK
OF OREGON, as a Lender<PAGE>
110
By: /s/ Chris J. Karlin
-----------------------------
Name: Chris J. Karlin
Title: Vice President
NORWEST BANK INDIANA,
NATIONAL ASSOCIATION, as a Lender
By: /s/ Sook-Ja Hansen
-----------------------------
Name: Sook-Ja Hansen
Title: Asst. Vice President
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST, as a Lender
By: /s/ Jeffrey W. Maillet
-----------------------------
Name: Jeffrey W. Maillet
Title: Sr. Vice President,
Portfolio Mgr.
BANK OF MONTREAL, as a Lender
By: /s/ Erin M. Keyser
-----------------------------
Name: Erin M. Keyser
Title: Director
BHF-BANK AKTIENGELSELLSCHAFT, as
a Lender
By: /s/ John Sykes/Evon Contos
----------------------------
Name: John Sykes/Evon Contos
Title: AVP/VP
CAISSE NATIONALE DE CREDIT AGRICOLE,
as a Lender
By: /s/ Dean Balice
----------------------------
Name: Dean Balice
Title: Senior Vice President,
Branch Manager
KEY BANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ Matthew P. Tudhey<PAGE>
111
----------------------------
Name: Matthew P. Tudhey
Title: Assistant Vice President<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . 1
1.2 Other Definitional Provisions; Financial
Calculations . . . . . . . . . . . . . . . . . . . 28
SECTION 2. THE REVOLVING CREDIT COMMITMENTS . . . . . . . . . 29
2.1 Revolving Credit Commitments . . . . . . . . . . . 29
2.2 Procedure for Revolving Credit Borrowing . . . . . 29
2.3 Competitive Borrowings . . . . . . . . . . . . . . 30
2.4 Fees . . . . . . . . . . . . . . . . . . . . . . . 33
2.5 Evidence of Loans; Repayment . . . . . . . . . . . 33
2.6 Termination or Reduction of Revolving Credit
Commitments . . . . . . . . . . . . . . . . . . . . 33
2.7 Optional Prepayments . . . . . . . . . . . . . . . 33
2.8 Mandatory Prepayments . . . . . . . . . . . . . . . 34
2.9 Conversion and Continuation Options . . . . . . . . 35
2.10 Minimum Amounts and Maximum Number of Eurodollar
Tranches . . . . . . . . . . . . . . . . . . . . . 35
2.11 Interest Rates and Payment Dates . . . . . . . . . 36
2.12 Computation of Interest and Fees . . . . . . . . . 36
2.13 Inability to Determine Interest Rate . . . . . . . 37
2.14 Pro Rata Treatment and Payments . . . . . . . . . . 37
2.15 Requirements of Law . . . . . . . . . . . . . . . . 38
2.16 Taxes . . . . . . . . . . . . . . . . . . . . . . . 39
2.17 Indemnity . . . . . . . . . . . . . . . . . . . . . 41
2.18 Replacement Lenders . . . . . . . . . . . . . . . . 42
SECTION 3. LETTERS OF CREDIT . . . . . . . . . . . . . . . . . 42
3.1 L/C Commitment . . . . . . . . . . . . . . . . . . 42
3.2 Procedure for Issuance of Letters of Credit . . . . 43
3.3 Fees and Other Charges . . . . . . . . . . . . . . 43
3.4 L/C Participations . . . . . . . . . . . . . . . . 44
3.5 Drawing and Reimbursement . . . . . . . . . . . . . 44
3.6 Obligations Absolute . . . . . . . . . . . . . . . 45
3.7 Letter of Credit Payments . . . . . . . . . . . . . 45
3.8 Application . . . . . . . . . . . . . . . . . . . . 45
3.9 Notices and Reports . . . . . . . . . . . . . . . . 45
SECTION 4. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . 46
4.1 Financial Condition . . . . . . . . . . . . . . . . 46
4.2 No Change . . . . . . . . . . . . . . . . . . . . . 47
4.3 Corporate Existence; Compliance with Law . . . . . 47
4.4 Corporate Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . . . 47
4.5 No Legal Bar . . . . . . . . . . . . . . . . . . . 48
4.6 No Material Litigation . . . . . . . . . . . . . . 48
4.7 No Default . . . . . . . . . . . . . . . . . . . . 48
4.8 Ownership of Property; Liens . . . . . . . . . . . 48
4.9 Intellectual Property . . . . . . . . . . . . . . . 49
4.10 No Burdensome Restrictions . . . . . . . . . . . . 49
4.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . 49
4.12 Federal Regulations . . . . . . . . . . . . . . . . 49
4.13 Labor Matters . . . . . . . . . . . . . . . . . . . 49
4.14 ERISA . . . . . . . . . . . . . . . . . . . . . . . 50
4.15 Investment Company Act; Other Regulations . . . . . 50
4.16 Subsidiaries . . . . . . . . . . . . . . . . . . . 50<PAGE>
Page
4.17 Purpose of Loans . . . . . . . . . . . . . . . . . 50
4.18 Environmental Matters . . . . . . . . . . . . . . . 50
4.19 Accuracy of Information . . . . . . . . . . . . . . 51
4.20 Security Documents . . . . . . . . . . . . . . . . 52
4.21 Solvency . . . . . . . . . . . . . . . . . . . . . 52
4.22 Insurance . . . . . . . . . . . . . . . . . . . . . 52
4.23 Regulation H . . . . . . . . . . . . . . . . . . . 53
SECTION 5. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . 53
5.1 Conditions to Effectiveness . . . . . . . . . . . . 53
5.2 Conditions to Each Extension of Credit . . . . . . 56
SECTION 6. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . 56
6.1 Financial Statements . . . . . . . . . . . . . . . 56
6.2 Certificates; Other Information . . . . . . . . . . 57
6.3 Payment of Obligations . . . . . . . . . . . . . . 58
6.4 Conduct of Business and Maintenance of Existence . 58
6.5 Maintenance of Property; Insurance . . . . . . . . 58
6.6 Inspection of Property; Books and Records;
Discussions . . . . . . . . . . . . . . . . . . . . 59
6.7 Notices . . . . . . . . . . . . . . . . . . . . . . 59
6.8 Environmental Laws . . . . . . . . . . . . . . . . 60
6.9 Interest Rate Protection . . . . . . . . . . . . . 61
6.10 Additional Collateral . . . . . . . . . . . . . . . 61
SECTION 7. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . 62
7.1 Financial Condition Covenants . . . . . . . . . . . 63
7.2 Limitation on Indebtedness . . . . . . . . . . . . 63
7.3 Limitation on Liens . . . . . . . . . . . . . . . . 65
7.4 Limitation on Guarantee Obligations . . . . . . . . 67
7.5 Limitations on Fundamental Changes . . . . . . . . 67
7.6 Limitation on Sale of Assets . . . . . . . . . . . 68
7.7 Limitation on Leases . . . . . . . . . . . . . . . 69
7.8 Limitation on Dividends . . . . . . . . . . . . . . 69
7.9 Limitation on Negative Pledge Clauses . . . . . . . 70
7.10 Limitation on Capital Expenditures, Investments,
Loans and Advances . . . . . . . . . . . . . . . . 70
7.11 Limitation on Optional Payments and Modifications
of Certain Agreements . . . . . . . . . . . . . . . 72
7.12 Transactions with Affiliates . . . . . . . . . . . 73
7.13 Corporate Documents . . . . . . . . . . . . . . . . 73
7.14 Fiscal Year . . . . . . . . . . . . . . . . . . . . 73
7.15 Limitation on Activities of Holdings . . . . . . . 73
SECTION 8. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . 74
SECTION 9. THE AGENT . . . . . . . . . . . . . . . . . . . . . 77
9.1 Appointment . . . . . . . . . . . . . . . . . . . . 77
9.2 Delegation of Duties . . . . . . . . . . . . . . . 77
9.3 Exculpatory Provisions . . . . . . . . . . . . . . 77
9.4 Reliance by Agent . . . . . . . . . . . . . . . . . 77
9.5 Notice of Default . . . . . . . . . . . . . . . . . 78
9.6 Non-Reliance on Agent and Other Lenders . . . . . . 78
9.7 Indemnification . . . . . . . . . . . . . . . . . . 78
9.8 Agent in Its Individual Capacity . . . . . . . . . 79
9.9 Successor Agent . . . . . . . . . . . . . . . . . . 79
9.10 Co-Lead Agent and Co-Agents . . . . . . . . . . . . 79<PAGE>
Page
SECTION 10. GUARANTEE . . . . . . . . . . . . . . . . . . . . 79
10.1 Guarantee . . . . . . . . . . . . . . . . . . . . . 79
10.2 No Subrogation, Contribution, Reimbursement or
Indemnity . . . . . . . . . . . . . . . . . . . . . 80
10.3 Amendments, etc. with respect to the Obligations . 80
10.4 Guarantee Absolute and Unconditional . . . . . . . 80
10.5 Reinstatement . . . . . . . . . . . . . . . . . . . 81
10.6 Payments . . . . . . . . . . . . . . . . . . . . . 81
SECTION 11. MISCELLANEOUS . . . . . . . . . . . . . . . . . . 81
11.1 Amendments and Waivers . . . . . . . . . . . . . . 81
11.2 Notices . . . . . . . . . . . . . . . . . . . . . . 82
11.3 No Waiver; Cumulative Remedies . . . . . . . . . . 83
11.4 Survival of Representations and Warranties . . . . 83
11.5 Payment of Expenses and Taxes . . . . . . . . . . . 83
11.6 Successors and Assigns; Assignments and
Participations . . . . . . . . . . . . . . . . . . 84
11.7 Adjustments; Setoff . . . . . . . . . . . . . . . . 87
11.8 Counterparts . . . . . . . . . . . . . . . . . . . 87
11.9 Severability . . . . . . . . . . . . . . . . . . . 87
11.10 Releases . . . . . . . . . . . . . . . . . . . . . 88
11.11 GOVERNING LAW . . . . . . . . . . . . . . . . . . . 88
11.12 Submission To Jurisdiction; Waivers . . . . . . . . 88
11.13 Acknowledgements . . . . . . . . . . . . . . . . . 88
11.14 WAIVERS OF JURY TRIAL . . . . . . . . . . . . . . . 88
11.15 Confidentiality . . . . . . . . . . . . . . . . . . 89
11.16 New Lenders; Commitment Increases . . . . . . . . . 89
11.17 INTEGRATION . . . . . . . . . . . . . . . . . . . . 89<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(g) Local Counsel
7.2(c) Existing Indebtedness
7.3(f) Existing Liens
7.7(a) Existing Leases
7.11 Terms of Preferred Stock
EXHIBITS:
A Form of Intercompany Note
B-1 Form of Borrowing Base Certificate
B-2 Form of Senior Note Indenture Revolving Credit Incurrence
Limit
Certificate
C-1 Form of Competitive Accept/Reject Letter
C-2 Form of Competitive Advance Invitation
C-3 Form of Competitive Advance Offer
C-4 Form of Competitive Advance Request
D-1 Form of Company Pledge Agreement
D-2 Form of Holdings Pledge Agreement
D-3 Form of Subsidiary Pledge Agreement
E-1 Form of Company Security Agreement
E-2 Form of Holdings Security Agreement
E-3 Form of Subsidiary Security Agreement
F Form of Subsidiary Guarantee
G-1 Form of Opinion of Cravath, Swaine & Moore
G-2 Form of General Counsel Opinion
G-3 Form of Local Counsel Opinion
H Form of Closing Certificate
I Form of Assignment and Acceptance
J Form of Mortgage
K Form of Compliance Certificate
L Form of Confidentiality Letter<PAGE>
EXECUTION COPY
--------------------------------------------------------------------------
$370,000,000
CREDIT AGREEMENT
Dated as of October 31, 1996
among
BCP/ESSEX HOLDINGS INC.,
ESSEX GROUP, INC.,
THE LENDERS NAMED HEREIN
and
THE CHASE MANHATTAN BANK,
as Administrative Agent
--------------------------------------------------------------------------<PAGE>
Schedule 1.1A
ESSEX GROUP, INC.
REVOLVING CREDIT COMMITMENTS
$370,000,000
<TABLE>
<CAPTION>
<S> <C> <C>
TITLE BANKS Commitment
----- ----- ----------
Administrative THE CHASE MANHATTAN BANK $30,000,000
Agent
Co-Lead Agent: BANK OF AMERICA ILLINOIS $30,000,000
Co-Agents: THE BANK OF NEW YORK $30,000,000
THE BANK OF NOVA SCOTIA $30,000,000
COAMERICA BANK $30,000,000
NBD BANK N.A. $30,000,000
THE LONG-TERM CREDIT BANK OF JAPAN, $30,000,000
LIMITED, NEW YORK BRANCH
NATIONSBANK, N.A. (CAROLINAS) $30,000,000
Lenders: FORT WAYNE NATIONAL BANK $16,500,000
MELLON BANK, N.A. $16,500,000
NATIONAL CITY BANK $16,500,000
UNITED STATES NATIONAL BANK OF OREGON $16,500,000
NORWEST BANK INDIANA, NATIONAL $12,000,000
ASSOCIATION
VAN KAMPEN MERRITT $12,000,000
BANK OF MONTREAL $10,000,000
BHF - BANK AKTIENGESELLSCHAFT $10,000,000
CAISSE NATIONALE DE CREDIT AGRICOLE $10,000,000
KEY BANK $10,000,000
-----------
TOTALS $370,000,000
/TABLE
<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
LEASED TRIANGLE FACILITIES
State Name and Address
----- ----------------
AL Triangle Wire & Cable
3112 Northington Court
Florence, AL 35631
MO Triangle Wire & Cable
1620 East Malone Avenue
Sikeston, MO 63801-0859
RI Triangle Wire & Cable (Dean Whse)
One IGA Way
Cumberland, RI 02864
AZ Triangle Wire & Cable (Economy Whse)
4002 West Turney Avenue
Phoenix, AZ 85505
NJ Thea Enterprises, LLC
232 Entin Road
Clifton, NJ 07014
NC The T.F. Farmer Company
U.S. Highway 90 North
Greensboro, NC 27405
FL Florida Electrical Sales
1101 North Ward Street
Tampa, FL 33607
FL Michael Frisch Associates
9650 Solar Drive
Tampa, FL 33619-4417
GA Berry-Eisberry Company
745 Trabert Avenue NW
Atlanta, GA 30325
OH Allen Fields & Associates
Building A, 2950 Robertson Avenue
Cincinnati, OH 45209
IL Hanke Company
1001 Fargo Avenue
Elk Grove Village, IL 60009-1166
MI Electrical Materials, Inc.
44262 Phoenix Drive
Sterling Heights, MI 48314
TX Bell & McCoy
2633 Andjon Street
Dallas, TX 75220<PAGE>
4
TX Bell & McCoy
3311 Canal Street
Houston, TX 77003
UT Aurich Associates
2210 West Alexander Street
Salt Lake City, UT 84119
CA Headline Sales, Inc.
7271 South Paramount Boulevard
Pico Riviera, CA 90660<PAGE>
CA H&J Electrical Sales
30047 Ahern Street
Union City, CA 94587
OR Cascade Western Representatives
2729 Southeast Sixth Avenue
Portland, OR 97242
Quebec Fli-Royal Wire & Cable
368 Rue Isabey
Saint Laurent, Quebec H4T 1W1
Ontario Intralec Electrical Products, Ltd.
Unit 1, 1200 Cardiff
Mississauga, Ontario L5S 1P6
British Columbia Ron Marshall Agencies
101-590 Ebury Place
Delta, British Columbia V4M 6B7
Manitoba Electro-Tech Sales, Ltd.
Unit 10, 2166 Notre Dame Avenue
Winnepeg, Manitoba R3H 0K2<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
3200 Earlywood Drive Yes
Franklin, IN
Johnson County
Southeast Parkway Dr. No. Long-term lease
Franklin, TN from Sycar 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<PAGE>
2
Location EGI Owned
-------- ---------
Windcrest Rd. No. US Samica
Rutland, VT Corporation
Rutland County
5405 Valley Belt No. Leased from
Suite D Valley Belt Industrial
Independence, OH Mall for $4,256/mo.
(Cleveland) 44131 Exp. 10/31/97
Cuyahoga County
1904 Engineers Rd. No. Leased from
Belle Chase, LA 70037 Louis D. Hausser
Plaquemines Parish Investments at
$2,500/mo.
Exp. 7/31/99
1409 Murray No. Leased from
N. Kansas City, MO 64116 Northtown Devco at
Clay County $1,175/mo.
Exp. 4/30/00
39065 Webb Drive No. Leased from Aldo
Westland, MI 48185 Launi for $4,400/mo.
(ave.)
Exp. 7/31/99
6808-C Cedar Ave. No. Leased from
Lubbock, TX 79404 Albert Skibell for
Lubbock County $1,000/mo.
Exp. 4/30/98
4232 Charter Ave. No. Leased from
#100 California Public Emp.
Oklahoma City, OK 73108 Ret. System.
Oklahoma County $1,551.75/mo.
Exp. 6/30/01
3 Commerce Way No. Leased from
Tewksbury, MA 01876 Tewksbury Assoc. at
Middlesex County $3,937.50/mo.
Exp. 6/30/98
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. 7/31/01<PAGE>
3
Location EGI Owned
-------- ---------
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
Attela Industrial Park No. Tract One:
Kosciusko, MS 39090 Leased from Attala
County at $3K/yr, year
to year, w/nominal
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
University & East St. Yes
Pauline, KS
Shawnee County
1075 Patt Street Yes
Anaheim, CA
Orange County
108 Elm Yes
Tiffin, OH
Seneca County
6588 Marbut Rd. Yes
Lithonia, GA
De Kalb County<PAGE>
4
Location EGI Owned
-------- ---------
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
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
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
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<PAGE>
5
Location EGI Owned
-------- ---------
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
4667 Somerton Road No. Subleased from
Bensalem Twp., PA (Trevose) Metro Ind'l Park.
Bucks County Exp. 5/31/99
3028 - 7th Ave. So. No. Leased from
Birmington, AL Jeffco Finance &
Jefferson County Discount Co. @
$2,400/mo.
Exp. 2/28/99
140 Southpointe Drive N. Subleased from
Bridgeville, PA (Pittsburgh) Southpointe 79 Assoc.
Allegheny County @ $2,912/mo.
Exp. 9/29/97
3201 Woodpark Blvd. No. Subleased from
Charlotte, NC 28207 The Lincoln Nat'l Life
Mecklenburg County Ins Co. @ $10,150/mo.
Exp. 1/31/2001
501 Busse Road No. Leased from
Elk Grove Village, IL LaSalle National
Cook County Trust, N.A.
5690 Southfield Court No. Leased from AMB
Forest Park, GA Ind'l Income Fund LP.
Clayton County Exp. 2/28/99
5601 Anglum Court No. Anglum Road Joint
Hazelwood, MO 63042 Venture
St. Louis County
376 Garden Oaks Blvd. No. Subleased from
Houston, TX Houston Pine Forest,
Harris County Ltd. @ $3,176/mo.
Exp. 9/29/97
7001 S. 33rd St. No. Leased from
McAllen, TX Wilson Partnership @
Hidalgo County $9,500/mo.
Exp.
6850 NW 74th St. No. Subleased from
Miami, FL Marcia M. Simon @
Cade County $5,430.76/mo.
Exp. 9/29/98<PAGE>
6
Location EGI Owned
-------- ---------
7 Rimini Mews Unit C No. Leased from A.
Mississauga, Ontario Mantella & Sons Ltd.
Canada L5N 4K1 Exp. 3/31/2001
Not Available
933 Lakeside Drive No. Subleased from
Mobile, AL Carwie Properties @
Mobile County $2,300/mo.
Exp. 6/29/00
555 Brick Church Park Dr. No. Subleased from
Nashville, TN Brick Church Bus. Park
Davidson County @ $9,633.33/mo.
Exp. 1/30/98
4855 Brookside Court No. Subleased from
Norfolk, VA Brookside Dev. Group @
Norfolk City County $3,007.58/mo.
Exp. 6/29/97
3713 Vineland Road No. Subleased from
Orlando, FL Vineland Commerce Ctr.
Orange County @ $2,018.98/mo.
Exp. 9/29/97
525 Wall Street No. Leased from
Tiffin, OH Tiffin Wall Street
Seneca Properties Ltd. @
$1,350/mo.; mo-to-mo
basis
TRIANGLE OWNED AND LEASED PROPERTIES
------------------------------------
3112 Northington Ct. No
Florence, AL
Lauderdale County
1620 East Malone Ave. No
Sikeston, MO
Scott County
One IGA Way No
Cumberland, RI
Providence County
4002 W. Turney Ave. No
Phoenix, AZ
Maricopa County
368 Rue Isabey No
St. Laurent, Quebec
Not available<PAGE>
7
Location EGI Owned
-------- ---------
95 Grand Ave. Yes
Pawtucket, RI
Providence County
1620 E. Malone Ave. Yes
Sikeston, MO
Scott County
4251 Helton Dr. Yes
Florence, AL
Lauderdale County
6050 No. 55th Ave. Yes
Glendale, AZ
Maricopa County
/TABLE
<PAGE>
Schedule 4.9
PATENTS AND TRADEMARKS
Patent Docket
[CAPTION]
<TABLE>
Patent
Country Number Title Issue Date
------- ------- ----- ----------
<S> <C> <C> <C>
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 4190319 Fiber Option Ribbon and Cable Made 2/26/80
Tehrefrom
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
US 4253569 Reinforced Spol 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
and Surface Character
US 4389510 Water Soluble Polymide Prepared 6/21/83
from 1,2,3,4 Butane Tetracarboxylic
Acid and Method of Preparation<PAGE>
2
Patent
Country Number Title Issue Date
------- ------- ----- ----------
CAN 1175598 Water Soluble Polymide Prepared 10/2/84
from 1,2,3,4 Butane Tetracarboxylic
Acid and Method of Preparation
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
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 4389587 Unitary Sleeving Insulation 6/21/83
US 4385436 Method of Power Inserting Nylon 5/31/83
Coated Magnet Wire
CAN 1209765 Dielectric Films from Water Soluble 8/19/86
Polyimides
US 4471161 Conductor Strand Formed of Solid 9/11/84
Wires and Method for Making the
Conductor Strand<PAGE>
3
Patent
Country Number Title Issue Date
------- ------- ----- ----------
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
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<PAGE>
4
Patent
Country Number Title Issue Date
------- ------- ----- ----------
US 4588344 Roll Transfer Robot 5/13/86
US 4555070 Method and Apparatus for Unwinding 11/26/85
and Splicing Successive Rolls
US 4586415 Assembly for Effecting Vertical and 5/6/86
Rotational Motion
US 4575017 Paster Rab and Method of Use 3/11/86
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 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 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<PAGE>
5
Patent
Country Number Title Issue Date
------- ------- ----- ----------
US 4704322 Resin Rich Mica Tape 11/3/87
US 4839444 High Solids Enamel 6/13/89
US D291172 Container Insert 8/4/87
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 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 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 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
US 4775566 High Temperature Flexible Unitary 10/4/88
Sleeving Insulation<PAGE>
6
Patent
Country Number Title Issue Date
------- ------- ----- ----------
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 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 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
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 4821880 Palletized Structure Containing 4/18/89
Spools<PAGE>
7
Patent
Country Number Title Issue Date
------- ------- ----- ----------
US 5045136 Heat Shrinkable Article 9/3/91
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 5048572 Vibration Damping Heat Shrinkable 9/17/92
Tubing
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>
8
Duration
US--17 Years (Subject to Maintenance Fees)
CAN--17 Years<PAGE>
9
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 BROWNELL ELECTRO 1,781,418 07/13/03
INC. & Design
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
Argentina ESSEX 1,176,315 10/07/05
Brazil ESSEX 692,303 04/25/99
Canada ESSEX 193,620 08/31/03
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 496,193 03/22/05
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
India ESSEX Application
Mexico ESSEX 496,194 03/22/05
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
Renewal filed
US FEMCO 1,584,450 02/27/00
US FLEXICONE 1,330,873 04/16/05
US GOPIC 969,536 10/02/03<PAGE>
10
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
Renewal filed
US IWI Inv W/O Invest 658,007 02/04/98
US LELAND FARADAY 1,827,220 03/22/04
US LF Logo 1,830,155 04/12/04
US MACALLEN & Design 833,230 08/08/07
US MAGNAPAK 628,592 06/12/06
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 & Design 537,580 12/13/01
US PARANITE & Design 535,200 12/26/00
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 SUFLEX 960,771 06/12/03
US SUFLEX Logo 1,308,019 12/04/04
Canada SX N.S. 2026 08/30/08
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 GP200 844,472 02/20/08
US UTREX 1,326,775 03/26/05
US VINYLGLAS 965,445 08/07/03
Mexico SX 496,192 03/22/05
Mexico SX 496,195 03/22/05
India SX Application<PAGE>
11
Trademark and/or
Country Trade Name Registration Expiration
------- ---------------- ------------ ----------
<S> <C> <C> <C>
US ULTRASHIELD Application
US VANGUARD 1,827,219 03/22/04
/TABLE
<PAGE>
12
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 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
Windings, Inc. fabricating of packages and/or Reelex
Machines.
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>
13
PENDING APPLICATIONS
[CAPTION]
<TABLE>
Country Serial No. Filing Date
------- ---------- -----------
<S> <C> <C>
US 08/317506 10/03/94
US 08/261546 06/17/94
US 08/557513 11/14/95
/TABLE
<PAGE>
14
Intellectual Property
Triangle Wire & Cable, Inc.
(a)
1. Master Lease Agreement No. 137815 dated as of February 16, 1995
between Computer Sales International, Inc. and Triangle Wire &
Cable, Inc.
2. Master Lease Agreement No. 050394A between EMC Corporation and
Triangle Wire & Cable, Inc., dated June 3, 1994.
Assignment of Master Lease Agreement between EMC Corporation and
Triangle Wire & Cable, Inc. and Supplement No. 3 thereto from EMC
Corporation to MetLife Capital, dated April 25, 1996.
3. Software License Agreement between EMC Corporation and Triangle Wire
& Cable, Inc., dated March 28, 1996.
4. Master Agreement dated September 7, 1995 between ADVANCED
BusinessLink Corporation and Triangle Wire & Cable, Inc.
5. Master Communication Services Agreement No. 1 between Cylix
Communications Corporation and Triangle Wire and Cable, Inc., dated
June 7, 1994.
6. Software License Agreement between The Summit Group, Inc. and
Triangle Wire & Cable, Inc. dated December 29, 1995.
7. Master License Agreement between Advance BusinessLink and Triangle
Wire & Cable, Inc., and SubAgreement Customer Care Program dated
September 5, 1995.
8. Software License Agreement between Allen Systems Group, Inc. and
Triangle Wire & Cable, Inc., dated June 12, 1995
9. Term Software License Agreement between Sterling Software and
Triangle Wire & Cable, Inc., dated April 29, 1994.
10. Software License Agreement between QCC and Triangle Wire & Cable,
Inc., and Addendum to QCC Software License Agreement between QCC,
Inc. and Triangle Wire & Cable, Inc., dated October 31, 1995.
11. Term Lease Master Agreement between IBM Credit Corporation and
Triangle Wire & Cable, Inc. with Term Lease Supplement thereto,
dated December 21, 1995.
12. License Agreement No. L950404 between RICOMM Systems, Inc. and
Triangle Wire & Cable, Inc., dated May 5, 1995.
13. Nonexclusive License between Triangle Wire & Cable, Inc. and Lawson
Associates, Inc. regarding General Accounting Software III (General
Ledger/Report Writer/Accounts Payable/Payroll/Personnel/Fixed
Assets).
14. Program Products License Agreement between Herbert Friedman &
Associates, Inc. and Triangle PWC, dated December 19, 1990.<PAGE>
15
15. Invoice No. 28728 dated May 22, 1996 from hawkeye Information
Systems, Inc. to Triangle Wire & Cable, Inc. for the purchase of
Pathfinder Services Pathfinder Programmer Documentation Utility.
16. Maintenance Information sheet from Prodata Computer Services, Inc.
regarding maintenance for DBU 4.1 (Database Utility).
17. Software License Agreement between Triangle Wire & Cable, Inc. and
ShowCase Corporation regarding purchase of ShowCase Vista Pro
Software with 10 concurrent users.
18. Agreement dated October 6, 1993 between Triangle Wire & Cable, Inc.
and, by assignment from the Dow Chemical Company effective April 1,
1996, DuPont Dow Elastomers, L.L.C. regarding end use applications
of Samples.
19. Agreement dated March 17, 1994 between Triangle Wire & Cable, Inc.
and Cobra Wire & Cable, Inc. to develop new product.
20. Agreement dated June 17, 1996 between Triangle Wire & Cable, Inc.
and DuPont Dow Elastomers regarding evaluation of polymers.
21. MBA License Agreement relating to Job Scheduler software.<PAGE>
16
Intellectual Property
(a)
Patents
[CAPTION]
<TABLE>
Patent No. Issue Date Title
-------- ---------- -----------
<S> <C> <C>
4,606,311 08/19/86 Fuel Injection Cleaning
System and Apparatus
4,542,335 09/17/85 Electronic Control Circuit
systems Analyzer
4,520,773 06/04/84 Fuel Injection Cleaning
and Testing System and
Apparatus
4,265,283 05/05/81 Work Bench Structure
4,029,234 06/14/77 Plastic Hinge Construction
3,793,160 02/19/74 Method for Forming Case
Hardened Metals by
Electrolysis
3,637,030 01/25/72 Case-Hardened Metals
4,319,800 03/16/82 Barrier for Molded Female
Power cord Connector
Bodies
3,668,602 06/06/72 Portable Safety Lamp
Structure
3,832,666 08/27/74 Electric Fuse
3,940,228 02/24/76 Telephone Cord mundrel end
retainer
3,945,708 03/23/76 Electrical connector with
premold
3,998,517 12/21/76 Multiple outlet electrical
connector
4,386,813 06/07/83 Current tap ground contact
4,861,288 08/29/89 Electrical cordset
3,346,887 10/17/67 Sanitary Drain System
Method and fittings
therefor
3,293,337 12/20/66 Apparatus and Method for
Filling a Void with a
Resinous Foan
3,287,885 11/29/66 Air Separator for Drain
Pipes
3,211,818 10/12/65 Extruder and Method
3,166,441 1/19/65 Machine for Color Coding
Strands
3,166,440 1/19/65 Apparatus for Coating
Elongated Bodies
3,105,653 10/1/63 Coil Former
3,634,145 1/11/72 Case-Hardened Metals
4,861,288 8/29/89 Electrical Cordset
830,106 1969 Current Tap with Ground
(Canada)
802,440 1968 Appliance Connector
(Canada)<PAGE>
17
Patent No. Issue Date Title
-------- ---------- -----------
938,689 1973 Portable Safety Lamp
(Canada) Structure
Grantee Licensed Item
The Dow Patent No. 4,861,288
Chemical (Electrical cordset)
Company
/TABLE
<PAGE>
18
Intellectual Property
Trademark Registration
Date: 05/29/96 Status Report Page: 1
Time: 14:03:23
Client: Triangle Wire & Cable, Inc.
Country Mark Application Registration
Number/Date Number/Date
------------------------------------------------------------------------
Canada POWERFLEX 779427 454023
04/04/95 02/09/96
Status: Registered
Renewal Due: 02/09/11
Goods:
ELECTRICAL WIRE AND CABLE
-----------------------------------------------------------------------
Canada POWERFLEX 90 782161
05/08/95
Status: Pending
Action Due: RESPONSE Due Date: 02/06/96
Goods:
ELECTRICAL WIRE AND CABLE.
Remarks: RESPONSE TO OFFICE ACTION FILED 6FEB96. AWAITING NOTICE OF
ALLOWANCE.
-----------------------------------------------------------------------
Canada ROYAL 782160
05/08/95
Status: Pending
Action Due: RESPONSE Due Date: 07/27/96
Goods:
ELECTRICAL WIRE AND CABLE.
Remarks: EXAMINED (ASSOCIATES' 18OCT95 LETTER); AWAIT EXPUNCTION OF CITED
MARK; RESPONSE DUE 27JUL96. FILE SENT TO CEJ 14MAY96.
-----------------------------------------------------------------------
United States A-Z 034707
12/20/95
Status: Pending
Intent to Use: no
Classes: 9
Goods:
ELECTRICAL WIRE AND CABLE.
Remarks: AWAITING EXAMINATION.
-----------------------------------------------------------------------<PAGE>
19
Date: 05/29/96 Status Report Page: 2
Time: 14:03:24
Client: Triangle Wire & Cable, Inc.
Country Mark Application Registration
Number/Date Number/Date
------------------------------------------------------------------------
United States AMERICAN COPPER 204317 1780915
PRODUCTS CORP. 09/17/91 07/06/93
Status: Registered
Renewal Due: 07/06/03
Affidavit Due: 07/06/99 Filed: no
Classes: 9
Goods:
ELECTRIC CABLE
-----------------------------------------------------------------------
United States AMERICAN METAL 204472 1727222
MOULDING ...* 09/17/91 10/27/92
Status: Registered
Renewal Due: 10/27/02
Affidavit Due: 10/27/98 Filed: no
Classes: 9
Goods:
ELECTRICAL CABLE.
*
COMPLETE MARK: AMERICAN METAL MOULDING COMPANY
-----------------------------------------------------------------------
United States ARMA GARD 140067 1119935
09/06/77 06/12/79
Status: Registered
Renewal Date: 06/12/99
Affidavit Due: 06/12/85 Filed: Yes
Classes: 9
Goods:
INSULATED ELECTRICAL CABLE AND WIRE.
-----------------------------------------------------------------------
United States COBRA 375989 920113
11/13/70 09/14/71
Status: Renewed
Renewal Due: 9/14/01
Affidavit Due: 09/14/77
Classes: 9
Goods:
ELECTRICAL WIRE AND CABLE.
-----------------------------------------------------------------------<PAGE>
20
Date: 05/29/96 Status Report Page: 3
Time: 14:03:25
Client: Triangle Wire & Cable, Inc.
Country Mark Application Registration
Number/Date Number/Date
------------------------------------------------------------------------
United States CONTRACTOR POWER 075464 1736311
07/05/90 01/12/93
Status: Registered
Renewal Due: 01/12/03
Affidavit Due: 01/12/99 Filed: no
Classes: 9
Goods:
ELECTRIC POWER CORDS.
-----------------------------------------------------------------------
United States CROWN DESIGN 679492 1965739
05/23/95 04/02/96
Status: Registered
Renewal Due: 04/02/06
Affidavit Due: 04/02/02 Filed: no
Classes: 9
Goods:
ELECTRICAL WIRE AND CABLE.
-----------------------------------------------------------------------
United States DOUBLE CROWN 679491 1965738
DESIGN 05/23/95 04/02/96
Status: Registered
Renewal Date: 04/02/06
Affidavit Due: 04/02/02 Filed: No
Classes: 9
Goods:
ELECTRICAL WIRE AND CABLE.
-----------------------------------------------------------------------
United States E-Z DO 769145 1594939
12/09/88 05/08/90
Status: Registered
Renewal Due: 05/08/00
Affidavit Due: 05/08/96 Filed: yes
Classes: 9
Goods:
ELECTRIC CABLE.
Remarks: AFFIDAVIT OF USE FILED 4MAR96; AWAITING NOTICE OF ACCEPTANCE.
-----------------------------------------------------------------------<PAGE>
21
Date: 05/29/96 Status Report Page: 4
Time: 14:03:27
Client: Triangle Wire & Cable, Inc.
Country Mark Application Registration
Number/Date Number/Date
------------------------------------------------------------------------
United States E-Z-C 452739 1305793
11/14/83 11/20/84
Status: Registered
Renewal Due: 11/20/04
Affidavit Due: 11/20/90 Filed: yes
Classes: 9
Goods:
ELECTRIC CABLE.
-----------------------------------------------------------------------
United States EVERENE 276716 865248
07/24/67 02/25/69
Status: Renewed
Renewal Due: 02/25/99
Affidavit Due: 02/25/75 Filed: yes
Classes: 9
Goods:
INSULATED ELECTRICAL CONDUCTORS.
-----------------------------------------------------------------------
United States EZC EXTRA 613877 1480522
08/08/86 03/15/88
Status: Registered
Renewal Date: 03/15/08
Affidavit Due: 03/15/94 Filed: yes
Classes: 9
Goods:
ELECTRICAL POWER CORD.
-----------------------------------------------------------------------
United States N-A 227956 814368
09/16/65 09/06/66
Status: Renewed
Renewal Due: 09/06/06
Affidavit Due: 09/06/72 Filed: yes
Classes: 9
Goods:
ELECTRICAL CONDUCTORS AND CABLES.
-----------------------------------------------------------------------<PAGE>
22
Date: 05/29/96 Status Report Page: 5
Time: 14:03:28
Client: Triangle Wire & Cable, Inc.
Country Mark Application Registration
Number/Date Number/Date
------------------------------------------------------------------------
United States NATC 634599 1450518
12/10/86 08/04/87
Status: Registered
Renewal Due: 08/04/07
Affidavit Due: 08/04/93 Filed: yes
Classes: 9
Goods:
ELECTRICAL CONDUCTORS AND CABLES.
Remarks: SECTION 8 and 15 DECLARATION FILED BY DARBY & DARBY.
-----------------------------------------------------------------------
United States POWERFLEX 105 613843 1478355
PLUS 08/08/86 03/01/88
Status: Registered
Renewal Due: 03/01/08
Affidavit Due: 03/01/94 Filed: yes
Classes: 9
Goods:
ELECTRICAL POWER CORD.
-----------------------------------------------------------------------
United States POWERFLEX 90 679169 1965737
05/23/95 04/02/96
Status: Registered
Renewal Date: 04/02/06
Affidavit Due: 04/02/02 Filed: no
Classes: 9
Goods:
ELECTRICAL WIRE AND CABLE.
-----------------------------------------------------------------------
United States PRIDE THROUGH 411509 1860321
QUALITY 07/09/93 10/25/94
Status: Registered
Renewal Due: 10/25/04
Affidavit Due: 10/25/00 Filed: no
Classes: 9
Goods:
ELECTRICAL WIRE AND CABLE.
-----------------------------------------------------------------------<PAGE>
23
Date: 05/29/96 Status Report Page: 6
Time: 14:03:29
Client: Triangle Wire & Cable, Inc.
Country Mark Application Registration
Number/Date Number/Date
------------------------------------------------------------------------
United States PWC & DESIGN 444526 1850611
10/06/93 08/23/94
Status: Registered
Renewal Due: 08/23/04
Affidavit Due: 08/23/00 Filed: no
Classes: 9
Goods:
ELECTRICAL WIRE, CABLE AND CORD SETS.
-----------------------------------------------------------------------
United States QUAD-RATED 325817 908468
04/29/69 02/23/71
Status: Renewed
Renewal Due: 02/23/01
Affidavit Due: 02/23/77 Filed: yes
Classes: 9
Goods:
ELECTRICAL WIRE.
-----------------------------------------------------------------------
United States QUADRUPLE CROWN 679166 1965734
DESIGN 05/23/95 04/02/96
Status: Registered
Renewal Date: 04/02/06
Affidavit Due: 04/02/02 Filed: no
Classes: 9
Goods:
ELECTRICAL WIRE AND CABLE.
-----------------------------------------------------------------------
United States QUINTUPLE CROWN 679168 1965736
DESIGN 05/23/95 04/02/96
Status: Registered
Renewal Due: 04/02/06
Affidavit Due: 04/02/02 Filed: no
Classes: 9
Goods:
ELECTRICAL WIRE AND CABLE.
-----------------------------------------------------------------------<PAGE>
24
Date: 05/29/96 Status Report Page: 7
Time: 14:03:30
Client: Triangle Wire & Cable, Inc.
Country Mark Application Registration
Number/Date Number/Date
------------------------------------------------------------------------
United States ROYAL 235674 837470
01/03/66 10/24/67
Status: Renewed
Renewal Due: 10/24/07
Affidavit Due: 10/24/73 Filed: yes
Classes: 9
Goods:
ELECTRICAL WIRE AND CABLE, FUSES AND WIRING DEVICES.
-----------------------------------------------------------------------
United States ROYAL AND DESIGN 392267 1931948
05/18/93 10/31/95
Status: Registered
Renewal Due: 10/31/05
Affidavit Due: 10/31/01 Filed: no
Classes: 9
Goods:
COPPER WIRE AND CABLE PRODUCTS, NAMELY, PORTABLE CORDS, POWER AND
CONTROL CABLES, BUILDING WIRE-APPLIANCE WIRE, CORD SETS, RETRACTILE
CORDS AND INDUSTRIAL CABLES.
-----------------------------------------------------------------------
United States ROYAL ELECTRIC 392734 1824265
AND DESIGN 05/18/93 03/01/94
Status: Registered
Renewal Date: 03/01/04
Affidavit Due: 03/01/00 Filed: no
Classes: 9
Goods:
COPPER WIRE AND CABLE PRODUCTS; NAMELY, PORTABLE CORDS, POWER AND
CONTROL CABLES, BUILDING WIRE-APPLIANCE WIRE, CORD SETS, RETRACTILE
CORDS AND INDUSTRIAL CABLES.
-----------------------------------------------------------------------
United States ROYALOK 623681 605038
01/16/52 04/26/55
Status: Renewed
Renewal Due: 04/26/05
Affidavit Due: 04/26/61 Filed: yes
Classes: 9
Goods:
ELECTRICAL RECEPTACLES, CAPS, CONNECTORS, PLUGS AND SOCKETS.
-----------------------------------------------------------------------<PAGE>
25
Date: 05/29/96 Status Report Page: 8
Time: 14:03:32
Client: Triangle Wire & Cable, Inc.
Country Mark Application Registration
Number/Date Number/Date
------------------------------------------------------------------------
United States SDN 066491 1038746
10/20/75 05/04/76
Status: Registered
Renewal Due: 05/04/96
Affidavit Due: 05/04/82 Filed: yes
Classes: 9
Goods:
ELECTRICAL WIRE AND CABLE.
Remarks: APPLICATION TO RENEW FILED 4MAR96; AWAITING CERTIFICATE OF
RENEWAL.
-----------------------------------------------------------------------
United States SDT 252373 1195561
03/03/80 05/18/82
Status: Registered
Renewal Due: 05/18/02
Affidavit Due: 05/18/88 Filed: yes
Classes: 9
Goods:
ELECTRICAL CABLE.
-----------------------------------------------------------------------
United States TEMPRACORD 310338 1191603
05/14/81 03/09/82
Status: Registered
Renewal Date: 03/09/02
Affidavit Due: 03/09/88 Filed: yes
Classes: 9
Goods:
FLEXIBLE ELECTRICAL CORDS AND WIRES.
-----------------------------------------------------------------------
United States THERMACURE 130052 1089623
06/13/77 04/18/78
Status: Registered
Renewal Due: 04/18/98
Affidavit Due: 04/18/84 Filed: yes
Classes: 9
Goods:
PLASTIC COATED ELECTRICAL CONDUIT AND WIRE, FLAME AND HEAT RESISTANT
CABLES.
-----------------------------------------------------------------------<PAGE>
26
Date: 05/29/96 Status Report Page: 9
Time: 14:03:33
Client: Triangle Wire & Cable, Inc.
Country Mark Application Registration
Number/Date Number/Date
------------------------------------------------------------------------
United States THERMO-TRIEX 104962 717481
09/21/60 06/27/61
Status: Renewed
Renewal Due: 06/27/01
Affidavit Due: 06/27/67 Filed: yes
Classes: 9
Goods:
NON-METALLIC SHEATHED ELECTRIC CABLE.
-----------------------------------------------------------------------
United States TRIANGLE AND 680570 1484145
DESIGN 08/25/87 04/12/88
Status: Registered
Renewal Due: 04/12/08
Affidavit Due: 04/12/94 Filed: yes
Classes: 9
Goods:
ELECTRIC WIRE, CABLE AND CONDUIT.
-----------------------------------------------------------------------
United States TRIANGLE DESIGN 833117 1638209
10/23/89 03/19/91
Status: Registered
Renewal Date: 03/19/01
Affidavit Due: 03/19/97 Filed: no
Classes: 9
Goods:
CL. 9: ELECTRICAL WIRE AND CABLE OF VARIOUS TYPES AND SIZES AND
ELECTRICAL CONDUIT. CL.35: BUSINESS SERVICES CONSISTING OF PROVIDING
CORPORATE MANAGEMENT SERVICES AND ACCOUNTING SERVICES. CL. 36
FINANCIAL ANALYSIS AND CONSULTING SERVICES, EMPLOYEE BENEFIT
CONSULTING SERVICES.
GOODS DELETED IN CL. 35 (AS OF 24SEP91): AND CORPORATE ACQUISITIONS
AND DIVESTITURES CONSULTING SERVICES.
-----------------------------------------------------------------------
United States TRIEX 034704
12/20/95
Status: Pending
Intent to Use: no
Classes: 9
Goods:
ELECTRICAL WIRE AND CABLE.
Remarks: AWAITING EXAMINATION.
-----------------------------------------------------------------------<PAGE>
27
Date: 05/29/96 Status Report Page: 10
Time: 14:03:34
Client: Triangle Wire & Cable, Inc.
Country Mark Application Registration
Number/Date Number/Date
------------------------------------------------------------------------
United States TRIPLE CROWN 679167 1965735
DESIGN 05/23/95 04/02/96
Status: Registered
Renewal Due: 04/02/06
Affidavit Due: 04/02/02 Filed: no
Classes: 9
Goods:
ELECTRICAL WIRE AND CABLE.
-----------------------------------------------------------------------
United States ULTIMA 477148 1865679
01/07/94 12/06/94
Status: Registered
Renewal Due: 12/06/04
Affidavit Due: 12/06/00 Filed: no
Classes: 9
Goods:
PORTABLE ELECTRICAL CORDS.
-----------------------------------------------------------------------
United States X-50 166596 775616
04/11/63 08/25/64
Status: Renewed
Renewal Due: 08/25/04
Affidavit Due: 08/25/70 Filed: yes
Classes: 6
Goods:
HEAT INSULATED CONDUIT.
-----------------------------------------------------------------------<PAGE>
28
2. Copyright protection
2.1 ITT Royal Electric: wide world of wire and cable & 2 other titles.
Copyright assignment.
Party of the first: Royal Electric, Inc.
Party of the second: Royal Wire & Cable, Inc.
Type of document: assignment of copyright
Date of execution: 071891
Date of recordation: 012292
Microfilm: V002722P497
2.2 ITT Royal Electric: wide world of wire and cable & 1 other title.
Certificate of amendment to certificate of incorporation of
Royal Technologies
USA, Inc.
Party of the first: Royal Technologies USA, Inc., changed to
Royal Electric, Inc.
Type of document: assignment of copyright
Date of execution: 121488
Dates of certification: 011392; 012092
Date of recordation: 012292
Microfilm: V002722P492
2.3 The Royal Electric product catalog & reference manual.
Class: TX (Textual Works)
LC retrieval code: B (Monographic works of a non-dramatic
literary nature)
Status: Registered
Registration number: TX3007846
Date of registration: 011891
Date of creation: 1990
Date of publication: 022090
Author: Royal Electric, Inc.
Owner: Royal Electric, Inc.
Registration deposit: lv.<PAGE>
29
(b)
1. Patent Collateral Assignment and Security Agreement dated March 24,
1994 between Triangle Wire and Cable Inc. and Congress Financial
Corporation.
2. Trademark Collateral Assignment and Security Agreement dated March
25, 1994 between Triangle Wire & Cable, Inc. and Congress Financial
Corporation.
3. License Agreement between Triangle Wire & Cable, Inc. and the Dow
Chemical Company relating to Patent No. 4,861,288 (electrical
cordset).<PAGE>
Schedule 4.16
SUBSIDIARIES
Direct Subsidiaries of BCP/Essex Holdings Inc.
----------------------------------------------
Essex Group, Inc., a Michigan corporation (the "Company")
Direct Subsidiaries of the Company
----------------------------------
Diamond Wire & Cable Co.
Essex Group Export Inc.
Essex International, Inc.
US Samica Corporation
SX Mauritius Holding, Inc. (Foreign)
Dormant Subsidiaries (each a direct subsidiary of the Company):
--------------------------------------------------------------
Essex Group, Inc., a Delaware corporation
Essex Group Mexico Inc.
Essex Group Mexico, S.A. de C.V.
Essex Wire Corporation
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)
UCC Filing Jurisdictions
----------------------
List of Debtors and Jurisdictions
for UCC-1 Financing Statements
BCP/Essex Holdings Inc.
Indiana, Secretary of State
Essex Group, Inc. (Michigan corporation)
United States
Alabama, Secretary of State
Arizona, Secretary of State
Arkansas, Secretary of State
Arkansas, Clay County
Arkansas, Cleburne County
Arkansas, Craighead County
California, Secretary of State
Colorado, Secretary of State
Connecticut, Secretary of State
Florida, Secretary of State
Georgia, Carroll County
Georgia, Clayton County
Georgia, DeKalb County
Georgia, Fulton County
Georgia, Gwinett County
Illinois, Secretary of State
Indiana, Secretary of State
Indiana, Allen County
Indiana, Grant County
Indiana, Johnson County
Indiana, Knox County
Indiana, Noble County
Indiana, Orange County
Indiana, Tippecanoe County
Indiana, Whitley County
Kansas, Secretary of State
Kentucky, Secretary of State
Louisiana, Jefferson Parish
Louisiana, Plaquemines Central Registry
Massachusetts, Secretary of State
Massachusetts, Town of Braintree
Massachusetts, Town of Tewksbury
Michigan, Secretary of State
Minnesota, Secretary of State
Missouri, Secretary of State
Missouri, Clay County
Missouri, City of St. Louis (City Register)
Missouri, Dunklin County
Missouri, Howell County
Missouri, Laclede County
Missouri, Scott County
New Hampshire, Secretary of State
New Hampshire, Rockingham County
New Jersey, Secretary of State<PAGE>
2
New York, Secretary of State
New York, Chenango County
New York, Erie County
New York, Madison County
New York, Oneida County
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, Secretary of State
Pennsylvania, Allegheny County
Pennsylvania, Bucks County
Pennsylvania, Butler County
Pennsylvania, Chester County
Pennsylvania, Delaware County
Pennsylvania, Luzerne County
Pennsylvania, Philadelphia County
Rhode Island, Secretary of State
South Carolina, Secretary of State
Tennessee, Secretary of State
Texas, Secretary of State
Utah, Secretary of State
Virginia, Secretary of State
Virgina, Independence City - Seat of Henrico County
Virginia, Norfolk City County
Virginia, Tazewall County
Virginia, Washington County
Washington, Secretary of State
Wisconsin, Secretary of State
Essex Group, Inc. (Michigan corporation)
Canada
British Columbia, Delta
Manitoba, Winnipeg
Ontario, Mississauga
Quebec, Saint Laurent
Diamond Wire & Cable Co.
Indiana, Secretary of State
Indiana, Allen County
Essex Group Export Inc.
Indiana, Secretary of State
Indiana, Allen County
Essex International, Inc.<PAGE>
3
United States
Indiana, Secretary of State
Indiana, Allen County
Canada
Ontario, Mississauga
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
Interstate Industries Holdings Inc.
Mississippi, Secretary of State
Mississippi, Attala County
Interstate Industries, Inc.
Mississippi, Secretary of State
Mississippi, Attala County<PAGE>
4
List of Debtors and Jurisdictions
for UCC-2 Financing Statements
Essex Group, Inc. (Michigan corporation)
Indiana, Allen County
Indiana, Grant County
Indiana, Johnson County
Indiana, Knox County
Indiana, Noble County
Indiana, Orange County
Indiana, Tippecanoe County
Indiana, Whitley 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(g)
LOCAL COUNSEL
INDIANA
-------
ICE MILLER DONODIO & RYAN
One American Square
Post Office Box 82001
Indianapolis, IN 46282-0002
Telephone: 317-236-2100
Telecopier: 317-236-2219
Attention: Tim Sullivan
KANSAS
------
BRYAN CAVE LLP
3500 One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2100
Telephone: 816-374-3200
Telecopier: 816-374-3300
Attention: Thomas Kreamer<PAGE>
SCHEDULE 7.2(c)
EXISTING INDEBTEDNESS
Triangle Capital Leases:
Lease Date Amount
EMC June, 1994 $226,000
EMC January, 1995 32,000
IBM January, 1991 3,000
IBM June, 1994 516,000
IBM December, 1995 213,000<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
Rhode Island, SOS Triangle Wire M & G Specified Vehicles
616540 & Cable Materials
Handling Co.
Rhode Island, SOS Triangle Wire IBM Credit Specified Equipment
624197 & Cable Corporation
Rhode Island, SOS Triangle Wire IBM Credit Specified Equipment
646744 & Cable Corporation
Rhode Island, SOS Triangle Wire EMC Specified Equipment
625837 & Cable Corporation
(assigned to
Romax Finance
Corporation)
Rhode Island, SOS Triangle Wire EMC Specified Equipment
635232 & Cable Corporation
(assigned to
Romax Finance
Corporation)
Rhode Island, SOS Triangle Wire EMC Specified Equipment
650415 & Cable Corporation
(assigned to
Metlife
Capital
Corporation)
Arizona, SOS Triangle Wire Sanwa Leasing Specified Computer
709082 & Cable Corp. Equipment
Arizona, SOS Triangle PWC Pitney Bowes Specified Equipment
927946 Incorporated Credit Corp.
Missouri, SOS Triangle PWC Pitney Bowes Specified Equipment
2270047 Inc. Credit Corp.
/TABLE
<PAGE>
SCHEDULE 7.7(a)
EXISTING LEASES
Real Property Leases
--------------------
See Schedule 4.8
Personal Property Leases
------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
Lessor Date Equipment
------ ---- ---------
AT&T Credit Corp Master Lease Telephone System
Pitney Bowes Credit Corporation " " Machinery & Telephone Equipment
IBM Credit Corp " " Computers and Data Systems Equip
Fleet Credit Jan 1989 25 Truck Trailers
First Fleet Credit Nov 1991 25 Truck Trailers
Fleet Credit Nov 1988 15 Truck Tractors
" " Feb 1990 5 Truck Tractors
" " July 1993 4 Truck Tractors
" " July 1993 6 Truck Tractors
Pitney Bowes Aug 1994 12 Truck Tractors
First Fleet Nov 1992 30 Truck Trailers
Fleet Credit Jan 1994 62 Truck Trailers
Meridian Leasing Technology Master Lease Disk Drive Equip
First Fleet Oct 1995 20 Truck Tractors
Jan 1996 36 Truck Trailers
Copelco 1/30/94 Copiers
Ikon Capital 5/23/96 "
" " 2/28/96 "
" " 3/31/96 "
" " 9/17/96 "
" " 9/17/96 "
" " 9/30/93 "
Copelco 1/7/93 "
" 4/8/93 "
Ikon Capital 10/28/92 "
" " 4/6/95 "
" " 10/27/92 "
" " 12/28/92 "
" " 12/21/93 "
Needham's Business Machines 7/21/92 "
Triangle Personal Property Leases:
---------------------------------
Pawtucket, RI:
-------------
Bonneville monthly Market monitor
Pitney Bowes 2/94 Mail machine
" " 5/93 6 fax machines<PAGE>
2
" " 2/95 2 copiers
" " 12/95 1 copier
" " 8/93 1 copier
" " monthly 1 UL print head
" " monthly 2 UL meters
Amp monthly Var. Equip
AT&T monthly Phone System
GEIS monthly EDI mailbox
Computer Sales CRT/Printers
5/95 Laser printers
JBM 7/94 AS400
" 7/94 "
" 12/95 "
" 12/95 "
" 7/94 "
EMC 3/96 AS400
Sunguard monthly Tape storage
Forsythe 2/95 PC equip
Caterpillar 8/90 1 towmotor
" 9/92 21 towmotors
" 9/92 1 floor sweeper
PHH 1/93 1 '93 Ford Taurus
" 7/95 1 '95 Ford Taurus
Florence, AL:
------------
Brask 6/95 Trash Compactor
Pitney Bowes 2/94 1 mail machine
" " 8/93 1 copier
" " monthly 2 UL meters
" " 8/93 1 copier
" " 1 fax
" " 1 fax
Simplex Time clocks
Yale Carolina 1 battery charger
M&M monthly 1 towmotor
Yale 8/92 1 towmotor
" 12/92 1 towmotor
" 10/92 1 towmotor
" 12/93 1 towmotor
" 8/92 1 towmotor
" 10/92 1 towmotor
" 10/92 1 towmotor
Citicorp 12/93 1 towmotor
" 12/93 1 towmotor
" 12/93 1 towmotor
Caterpillar 9/90 1 towmotor
" 12/91 1 towmotor
" 12/91 1 towmotor
" 9/90 1 towmotor
" 9/90 1 towmotor
" 8/90 1 towmotor
" 8/90 1 towmotor
" 9/90 1 towmotor
C&I Crane 7/95 Trailer
GE Capital 12/95 Port. Bldg.<PAGE>
3
PHH 9/94 1 '95 Ford Taurus
" 4/92 1 "92 Ford Pick-up
AT&T Phone System
Forsythe 2/95 1 PC
Phoenix, AZ:
-----------
Nauman Hobbs 9/91 1 towmotor
" " 11/91 1 towmotor
Pitney Bowes 4/93 1 fax machine
" " 8/93 1 copier
" " 2/94 1 postage meter
AT&T monthly Phone system
PHH 9/95 1 '96 Ford Taurus
Air Liquide 1/96 1 Tank (liq. nitrogen)
/TABLE
<PAGE>
Schedule 7.11
TERMS OF PREFERRED STOCK
See attached 1992 Certificate of Designation with attached amendment<PAGE>
Schedule 7.11
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
-2-<PAGE>
(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
-3-<PAGE>
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.
-4-<PAGE>
(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
---- ----------
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
-7-<PAGE>
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
-8-<PAGE>
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
-9-<PAGE>
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
-10-<PAGE>
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
-14-<PAGE>
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
-17-<PAGE>
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,
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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
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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.
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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
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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>
EXHIBIT A
FORM OF INTERCOMPANY NOTE
New York, New York
October 31, 1996
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 October 31, 1996, among BCP/Essex Holdings Inc.,
Essex Group, Inc., the Lenders from time to time parties thereto and The
Chase Manhattan Bank, as Administrative 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
Administrative 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>
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 B-1
Form of Borrowing Base Certificate
Date:
---------
(000's)
TO: The Chase Manhattan Bank
Asset Based Lending Operations
Ten South LaSalle Street
Chicago, IL 60603-1097
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
- Change in Reserve for Doubtful Accounts ____
Accounts Receivable as of / / : $_____
--------
- Notes Receivable
- Miscellaneous Accounts Receivable
- Unbilled
+ Reserved for Doubtful Accounts
+ Reserve for Sales Allowances ____
(2) Accounts Receivable Aging as of / / : ____
--------
Division:
[CAPTION]
<TABLE>
1-30 31-60 61-90 91 or more
FUTURE CURRENT Past Due Past Due Past Due Past Due TOTAL
------ ------- ---- ----- ----- ---- -----
<S> <C> <C> <C> <C> <C> <C>
Magnet Wire and
Insulation
Automotive
Communications
Interstate<PAGE>
2
Industrial
Building Wire
Other
Total $ $ $ $ $ $
</TABLE>
(3) Computation of the Borrowing Base:<PAGE>
3
Borrowing Base Certificate
Date:________
(000's)
ELIGIBLE RECEIVABLES:
(+/- Adjustments)
(A) Total Accounts Receivable
determined in accordance with GAAP $___
Additions:
Reserve for Doubtful Accounts $___
Deductions:
Miscellaneous A/R for MWI, Automotive,
Communications, Interstate, Industrial,
Building Wire and Other $___
Competitive Price Accrual
Revised Total Accounts Receivable $___
---
Less the following Deductions:
($____)
Total Deductions $___
Total Eligible Receivables (before 85%) $___
(B) Eligible Receivables Borrowing Base Value
(i.e., 85% of Eligible Receivables) $___
---
ELIGIBLE INVENTORY:
(C) Total Inventory - as of / / BY DIVISION
--------
(determined in accordance with GAAP; does not consider
LIFO reserve)
Magnet Wire and Insulation
Automotive
Communications
Interstate
Industrial
Building Wire
Other ____
Total Inventory $____
Plus or Minus Purchase Price Variances:
- Current Month
- Prior Month ____
Revised Total Inventory $___
Less the following Deductions: ($____)
Total Deductions $___
Net Eligible Inventory before Eligible Consigned
Inventory and Raw Materials $___<PAGE>
4
Less:
Eligible Consigned Inventory ($____)
Raw Materials ($____)
Net Eligible Inventory before 65% $_____
-----
(D) 65% of Eligible Inventory ---<PAGE>
5
Borrowing Base Certificate
Date:_______
(000's)
Eligible Consigned Inventory
(E) 50% of Eligible Consigned Inventory ___
Raw Material
(F) 30% of Raw Materials ___
---
(G) Total Eligible Inventory $____
----
Note: Total Eligible Inventory Borrowing Base Value cannot exceed
Eligible Receivables Borrowing Base Value
(H) Grand Total Borrowing Base $____
(Sum of (B) and (G) above) ----
Effective Date
_______,
199__
Aggregate Outstanding Revolving Extension of Credit:
(a) (i) Aggregate Principal Amount of Loans ____
(ii) Aggregate L/C ____
(iii) Aggregate Canadian Loan Facility ____
(iv) Aggregate Principal Amount of all
Specified Basket Debt Outstanding ____
(b) Sum of (a)(i) through (a)(iv) above $____
Modified Aggregate Outstanding Extensions of Credit:
(a) Aggregate Outstanding Extensions of Credit
(b) Minus the Lesser of:
(i) Letter of Credit Commitment and
(ii) Aggregate Amount of all Letter of Credit
Obligations outstanding $____
+/- any loans to reimburse L/C drawings $____
(c) Sum of (a) and (b) $____
----
Loans Available under Borrowing Base (Based on maximum
allowable $370 million) $____
The undersigned hereby represents and warrants that this is a correct
statement regarding the status of accounts receivable and inventory
assigned to The Chase Manhattan Bank, as administrative agent (the
"Administrative agent") for the lenders (the "Lenders") parties to the
Credit Agreement dated as of October 31, 1996 (the "Credit Agreement"),
among BCP/Essex Holdings Inc., the Company, the Administrative Agent and<PAGE>
6
the Lenders, that the figures set forth herein are accurage 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),
referred to in the Credit Agreement is included in any of the computations
including inventory herein. The undersigned further warrants and
represents that 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.
ATTEST:
ESSEX GROUP, INC.
By:___________________
Name:
Title:<PAGE>
EXHIBIT B-2
FORM OF SENIOR NOTE INDENTURE
REVOLVING CREDIT INCURRENCE LIMIT CERTIFICATE
TO: THE CHASE MANHATTAN BANK DATE:____________
c/o Chase 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 The Chase Manhattan
Bank, as administrative agent (the "Administrative Agent") for the lenders
(the "Lenders") parties to the Credit Agreement, dated as of October 31,
1996 (the "Credit Agreement"), among BCP/Essex Holdings Inc., the Company,
the Administrative 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-1
[FORM OF COMPETITIVE ADVANCE ACCEPT/REJECT LETTER]
__________, 199__
The Chase Manhattan Bank,
as Administrative Agent
c/o Chase Agent Bank Services Group
Grand Central Tower
140 East 45th Street
New York, New York 10017
Attention: Jesus Sang
Reference is made to the Credit Agreement, dated as of October
31, 1996, among BCP/Essex Holdings Inc., the undersigned, the Lenders
named therein and The Chase Manhattan Bank, as Administrative Agent (as
the same may be amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"). Terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
In accordance with Section 2.3(f) of the Credit Agreement, the
undersigned [rejects] [accepts and confirms] the offers by the Lender(s)
to make Competitive Loans to the undersigned on ________, 199__ under
Section 2.3 in the (respective) amount(s) set forth on the attached list
of Competitive Loans offered.
Very truly yours,
ESSEX GROUP, INC.
By:
----------------------------
Name:
Title:
[NOTE: The Company must attach the Competitive Loan offer list prepared
by the Administrative Agent with the [rejected] [accepted] amount entered
by the Company to the right of each Competitive Loan offer].<PAGE>
EXHIBIT C-2
[FORM OF COMPETITIVE ADVANCE INVITATION]
--------------, 199___
The Lenders of Essex Group, Inc.
(the "Lenders")
Reference is made to the Credit Agreement, dated as of
October 31, 1996, among BCP/Essex Holdings Inc., the Company, the Lenders
named therein and The Chase Manhattan Bank, as Administrative Agent (as
the same may be amended, supplemented or otherwise modified from time to
time, the "Credit Agreement") and the Competitive Advance Request by the
Company, dated as of _______________, 199__. Terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the
Credit Agreement.
This is an invitation by the Company to each of the Lenders to
make a Competitive Advance Offer to the Company which pursuant to Section
2.3 of the Credit Agreement has requested offers for the following
Competitive Loans:
Loan 1 Loan 2 Loan 3
Aggregate Principal Amount $______ $______ $______
Date of Competitive Borrowing
Competitive Loan Maturity Date
Very truly yours,
THE CHASE MANHATTAN BANK, as
Administrative Agent
By:
--------------------------
Name:
Title:
ESSEX GROUP, INC.
By:
--------------------------
Name:
Title:<PAGE>
EXHIBIT C-3
COMPETITIVE ADVANCE OFFER
, 199
The Chase Manhattan Bank, as Administrative Agent
c/o Chase Agent Bank Services Group
Grand Central Tower
140 East 45th Street
New York, New York 10017
Attention: Jesus Sang
Reference is made to the Credit Agreement, dated as of October
31, 1996, among BCP/Essex Holdings, Inc., the Company, the Lenders named
therein and The Chase Manhattan Bank, as Administrative Agent (as the same
may be amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"). Terms defined in the Credit Agreement and used
herein shall have the meanings given to them in the Credit Agreement.
In accordance with Section 2.3 of the Credit Agreement, the
undersigned Lender offers**/ to make Competitive Loans thereunder in the
following amounts with the following maturity dates:
Date of Competitive Borrowing: Aggregate Principal Amount: $_______
_________, 199__
Competitive Loan Maturity Date 1: Maximum Amount: $________
_________, 199__ $________ offered at _______*
$________ offered at _______*
Competitive Loan Maturity Date 2: Maximum Amount: $________
_________, 199__ $________ offered at _______*
$________ offered at _______*
Competitive Loan Maturity Date 3: Maximum Amount: $________
_________, 199__ $________ offered at _______*
$________ offered at _______*
[NOTE: Insert the interest rate offered for the specified Competitive
Loan where indicated by an asterisk (*). In the case of Eurodollar
Competitive Loans, insert a Margin bid. In the case of Fixed Rate
Competitive Loans, insert a fixed rate bid.]
Very truly yours,
The Chase Manhattan Bank,
as Administrative Agent
By: ____________________________
Name:
Title:
Telephone No.:
Telecopy No.:<PAGE>
6
---------------
**/ Each Lender may make up to five separate offers with respect to each
Competitive Loaan requested in the related Competitive Advance Invitation.<PAGE>
EXHIBIT C-4
COMPETITIVE ADVANCE REQUEST
----------, 199_
The Chase Manhattan Bank, as Administrative Agent
c/o Chase Agent Bank Services Group
Grand Central Tower
140 East 45th Street
New York, New York 10017
Attention: Jesus Sang
Reference is made to the Credit Agreement, dated as of
October 31, 1996, among BCP/Essex Holdings, Inc., the Company, the Lenders
named therein and The Chase Manhattan Bank, as Administrative Agent (as
the same may be amended, supplemented or otherwise modified from time to
time, the "Credit Agreement"). Terms defined in the Credit Agreement and
used herein shall have the meanings given to them in the Credit Agreement.
This is a [Fixed Rate] [Eurodollar] Competitive Loan Request
pursuant to Section 2.3 of the Credit Agreement requesting offers for the
following Competitive Loans:
Loan 1 Loan 2 Loan 3
Aggregate Principal Amount $______ $______ $______
Date of Competitive Borrowing
Competitive Loan Maturity Date
[NOTE: Pursuant to the Credit Agreement, a Competitive Advance
Request may be transmitted in writing, by telecopy, or by telephone,
immediately confirmed by telecopy. In any case, a Competitive
Advance Request shall contain the information specified in the
second paragraph of this form.]
Very truly yours,
[BORROWER]
By:
------------------------
Name:
Title:<PAGE>
EXHIBIT D-1
FORM OF COMPANY PLEDGE AGREEMENT
COMPANY PLEDGE AGREEMENT, dated as of October 31, 1996, made
by ESSEX GROUP, INC., a Michigan corporation (the "Pledgor"), in favor of
THE CHASE MANHATTAN BANK, as administrative agent (in such capacity, the
"Administrative Agent") for the lenders (the "Lenders") parties to the
Credit Agreement, dated as of October 31, 1996 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), among
the Pledgor, BCP/Essex Holdings Inc., the Lenders and the Administrative
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 Administrative 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 Administrative 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 Administrative 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.<PAGE>
2
"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
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 Administrative
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 Administrative 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 Administrative Agent, for the ratable benefit of the
Lenders, all the Pledged Securities and hereby grants to the
Administrative Agent, for the ratable benefit of the Lenders, a first
priority security interest in the Collateral, as collateral security for
the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations.<PAGE>
3
3. Stock Powers and Endorsements. Concurrently with the
delivery to the Administrative Agent of each certificate representing one
or more shares of Pledged Stock to the Administrative Agent, the Pledgor
shall deliver an undated stock power covering such certificate, duly
executed in blank by the Pledgor with, if the Administrative 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 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 Administrative 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
Administrative 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 Administrative Agent and the Lenders, hold the same<PAGE>
4
in trust for the Administrative Agent and the Lenders and deliver
the same forthwith to the Administrative Agent in the exact form
received, duly endorsed by the Pledgor to the Administrative Agent,
if required, together with an undated stock power covering such
certificate duly executed in blank by the Pledgor and with, if the
Administrative Agent so requests, signature guaranteed, to be held
by the Administrative 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 Administrative
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 Administrative
Agent to be held by it hereunder as additional collateral security
for the Obligations. If any sums of money or property so paid or
distributed in respect of the Pledged 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 Administrative Agent, hold such money or
property in trust for the Lenders, segregated from other funds of
the Pledgor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Administrative
Agent, the Pledgor will not (i) vote to enable, or take any other
action to permit, any Issuer to issue (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 Administrative 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 Administrative Agent, and at the sole expense of the
Pledgor, the Pledgor will promptly and duly execute and deliver such
further instruments and documents and take such further actions as
the Administrative Agent may reasonably request for the purposes of
obtaining or preserving the full benefits of this Pledge Agreement
and of the rights and powers herein granted. If any amount payable
under or in connection with any of the Collateral shall be or become
evidenced by any promissory note, other instrument or chattel paper,
such promissory note, other instrument or chattel paper shall be
immediately delivered to the Administrative Agent, duly endorsed in<PAGE>
5
a manner satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all
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
Administrative Agent shall have given notice to the Pledgor of the
Administrative 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 Administrative Agent's reasonable judgment,
would impair the Collateral or which would be inconsistent with or result
in any violation of any provision of the Credit Agreement, this Pledge
Agreement or the other Loan Documents. At the expense of the Pledgor, the
Administrative 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 Administrative Agent. (a)
If an Event of Default shall have occurred and be continuing and the
Administrative Agent shall have given notice of its intent to exercise
such rights to the Pledgor, (i) the Administrative 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 Administrative Agent may determine, and (ii) all
shares of the Pledged Securities shall be registered in or transferred to
the name of the Administrative Agent or its nominee, and the
Administrative Agent or its nominee may thereafter exercise (A) all
voting, corporate and other rights pertaining to 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 Administrative 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<PAGE>
6
received by it, but the Administrative Agent shall have no duty to the
Pledgor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.
(b) The rights of the Administrative Agent and the Lenders
hereunder shall not be conditioned or contingent upon the pursuit by the
Administrative Agent or any Lender of any right or remedy against 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 Administrative Agent nor any Lender shall be liable
for any failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so, nor shall the Administrative
Agent be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part
thereof.
8. Remedies. If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Lenders, may
exercise, in addition to all other rights and remedies granted in this
Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a
secured party under the Code. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon the
Pledgor, any Issuer 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
Administrative Agent or any Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of
any credit risk. The Administrative Agent or any Lender shall have the
right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any
part of the Collateral so sold, free of any right or equity of redemption
in the Pledgor, which right or equity is hereby waived and released. The
Administrative 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 Administrative Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to the Administrative Agent, to the payment in
whole or in part of the Obligations, in such order as the Administrative
Agent may elect, and only after such application and after the payment by
the Administrative Agent of any other amount required by any provision of
law, including, without limitation, Section 9-504(1)(c) of the Code, need
the Administrative Agent account for the surplus, if any, to the Pledgor. <PAGE>
7
To the extent permitted by applicable law, the Pledgor waives all claims,
damages and demands it may acquire against the Administrative Agent or any
Lender arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. The Pledgor
shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by
the Administrative Agent or any Lender to collect such deficiency.
9. Registration Rights; Private Sales. (a) If the
Administrative 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 Administrative 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 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 Administrative 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
Administrative 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 Administrative 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 Administrative Agent may
be unable to effect a public sale of any or all the Pledged Stock, by
reason of certain prohibitions contained in the Securities Act 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
Administrative Agent accepts the first offer received or offers the
Collateral or any portion thereof to only one offeree). The
Administrative Agent shall be under no obligation to delay a sale of any
of the Pledged Stock for the period of time necessary to permit such
Issuer to register such securities for public sale under the Securities<PAGE>
8
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 Administrative Agent and the Lenders, that the
Administrative Agent and the Lenders have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this 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
Administrative Agent's sole duty with respect to the custody, safekeeping
and physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it in the
same manner as the Administrative Agent deals with similar securities and
property for its own account. Except for the duty of the Administrative
Agent described in this paragraph 10, and the accounting by the
Administrative Agent for moneys actually received by it hereunder, neither
the Administrative 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 Administrative
Agent, any Lender nor any of their respective directors, officers,
employees or agents shall be liable for failure to demand, collect or
realize upon 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
Administrative Agent nor any Lender shall by any act (except by a written<PAGE>
9
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
Administrative Agent or any Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Administrative Agent or any Lender of
any right or remedy hereunder on any one occasion shall not be construed
as a bar to any right or remedy which the Administrative Agent or such
Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies
provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Pledge Agreement may be
amended, supplemented or otherwise modified except 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 Administrative Agent. This Pledge Agreement shall be
binding upon the successors and assigns of the Pledgor and shall inure to
the benefit of the Administrative 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 Administrative Agent in writing that
(a) states that an Event of Default has occurred and (b) is otherwise in
accordance with the terms of this Pledge Agreement, without any other or
further instructions from the Pledgor, and the Pledgor agrees that such
Issuer shall be fully protected in so complying.
18. Authority of Administrative Agent. The Pledgor
acknowledges that the rights and responsibilities of the Administrative
Agent under this Pledge Agreement with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative
Agent of any option, voting right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Pledge
Agreement shall, as between the Administrative Agent and the Lenders, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Pledgor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and
valid authority so to act or refrain from acting, and neither the Pledgor
nor any Issuer shall be under any obligation, or entitlement, to make any
inquiry respecting such authority.<PAGE>
10
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
Administrative 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 Administrative 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 Administrative 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 Administrative 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.
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 Administrative 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:______________________________
Name:
Title:
ESSEX GROUP EXPORT INC.
By:______________________________
Name:
Title:
ESSEX INTERNATIONAL, INC.
By:_____________________________
Name:
Title:
ESSEX INTERNATIONAL, INC.
By:_____________________________
Name:
Title:
US SAMICA CORPORATION
By:____________________________
Name:
Title:
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 State of
Issuer Stock No. Shares Incorporation
------ -------- ----------- ------ ------------
Essex Common 1 100 Delaware
International,
Inc.
US Samica Common 3 43,200 Vermont
Corporation
Diamond Wire & Common 1 25 Illinois
Cable Co.
Essex Export Common 1 650 U.S. Virgin
Company, Inc. Islands
(predecessor
to Essex Group
Export Inc.)
Interstate Common B-2 42.656 Delaware
Industries
Holdings Inc.<PAGE>
EXHIBIT D-2
FORM OF HOLDINGS PLEDGE AGREEMENT
HOLDINGS PLEDGE AGREEMENT, dated as of October 31, 1996, made
by BCP/ESSEX HOLDINGS INC., a Delaware corporation (the "Pledgor"), in
favor of THE CHASE MANHATTAN BANK, as administrative agent (in such
capacity, the "Administrative Agent") for the lenders (the "Lenders")
parties to the Credit Agreement, dated as of October 31, 1996 (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 Administrative 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 Administrative 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 Administrative 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 Administrative 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.<PAGE>
2
"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.
"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 Administrative Agent, for the ratable benefit of the
Lenders, all the Pledged Securities and hereby grants to the
Administrative Agent, for the ratable benefit of the Lenders, a first
priority security interest in the Collateral, as collateral security for
the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations.
3. Stock Powers and Endorsements. Concurrently with the
delivery to the Administrative Agent of each certificate representing one
or more shares of Pledged Stock to the Administrative Agent, the Pledgor
shall deliver an undated stock power covering such certificate, duly
executed in blank by the Pledgor with, if the Administrative 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<PAGE>
3
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 Administrative 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
Administrative 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 Administrative Agent and the Lenders, hold the same
in trust for the Administrative Agent and the Lenders and deliver
the same forthwith to the Administrative Agent in the exact form
received, duly endorsed by the Pledgor to the Administrative Agent,
if required, together with an undated stock power covering such
certificate duly executed in blank by the Pledgor and with, if the
Administrative Agent so requests, signature guaranteed, to be held
by the Administrative 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 Administrative
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 Administrative
Agent to be held by it hereunder as additional collateral security
for the Obligations. If any sums of money or property so paid or
distributed in respect of the Pledged 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 Administrative Agent, hold such money or<PAGE>
4
property in trust for the Lenders, segregated from other funds of
the Pledgor, as additional collateral security for the Obligations.
(b) Without the prior written consent of the Administrative
Agent, the Pledgor will not (i) vote to enable, or take any other
action to permit, 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 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 Administrative 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 Administrative Agent, and at the sole expense of the
Pledgor, the Pledgor will promptly and duly execute and deliver such
further instruments and documents and take such further actions as
the Administrative Agent may reasonably request for the purposes of
obtaining or preserving the full benefits of this Pledge Agreement
and of the rights and powers herein granted. If any amount payable
under or in connection with any of the Collateral shall be or become
evidenced by any promissory note, other instrument or chattel paper,
such promissory note, other instrument or chattel paper shall be
immediately delivered to the Administrative Agent, duly endorsed in
a manner satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Pledge Agreement.
(d) The Pledgor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all
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
Administrative Agent shall have given notice to the Pledgor of the
Administrative 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 Administrative Agent's reasonable judgment,
would impair the Collateral or which would be inconsistent with or result
in any violation of any provision of the Credit Agreement, this Pledge
Agreement or the other Loan Documents. At the expense of the Pledgor, the
Administrative Agent shall execute and deliver to the Pledgor, or cause to<PAGE>
5
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 Administrative Agent. (a)
If an Event of Default shall have occurred and be continuing and the
Administrative Agent shall have given notice of its intent to exercise
such rights to the Pledgor, (i) the Administrative Agent shall have the
right to receive any and all cash dividends (other 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 Administrative Agent may determine, and
(ii) all shares of the Pledged Securities shall be registered in or
transferred to the name of the Administrative Agent or its nominee, and
the Administrative Agent or its nominee may thereafter exercise (A) all
voting, corporate and other rights pertaining to 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 Administrative 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 Administrative Agent shall have no duty
to the Pledgor to exercise any such right, privilege or option and shall
not be responsible for any failure to do so or delay in so doing.
(b) The rights of the Administrative Agent and the Lenders
hereunder shall not be conditioned or contingent upon the pursuit by the
Administrative Agent or any Lender of any right or remedy against the
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 Administrative Agent nor any Lender shall be liable
for any failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so, nor shall the Administrative
Agent be under any obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part
thereof.
8. Remedies. If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Lenders, may
exercise, in addition to all other rights and remedies granted in this
Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a
secured party under the Code. Without limiting the generality of the<PAGE>
6
foregoing, the Administrative Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon the
Pledgor, 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
Administrative Agent or any Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of
any credit risk. The Administrative Agent or any Lender shall have the
right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any
part of the Collateral so sold, free of any right or equity of redemption
in the Pledgor, which right or equity is hereby waived and released. The
Administrative 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 Administrative Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to the Administrative Agent, to the payment in
whole or in part of the Obligations, in such order as the Administrative
Agent may elect, and only after such application and after the payment by
the Administrative Agent of any other amount required by any provision of
law, including, without limitation, Section 9-504(1)(c) of the Code, need
the Administrative Agent account for the surplus, if any, to the Pledgor.
To the extent permitted by applicable law, the Pledgor waives all claims,
damages and demands it may acquire against the Administrative Agent or any
Lender arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. The Pledgor
shall remain liable for any deficiency if the proceeds of any sale or
other disposition of the Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by
the Administrative Agent or any Lender to collect such deficiency. 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
Administrative 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 Administrative 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 Administrative Agent, necessary or
advisable to register the Pledged Stock, or that portion thereof to be<PAGE>
7
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 Administrative 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
Administrative 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 Administrative Agent may
be unable to effect a public sale of any or all the Pledged Stock, by
reason of certain prohibitions contained in the Securities Act 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
Administrative Agent accepts the first offer received or offers the
Collateral or any portion thereof to only one offeree). The
Administrative Agent shall be under no obligation to delay a sale of any
of the Pledged Stock for the period of time necessary to permit 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 Administrative Agent and the Lenders, that the
Administrative Agent and the Lenders have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this 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
Administrative Agent's sole duty with respect to the custody, safekeeping
and physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it in the
same manner as the Administrative Agent deals with similar securities and<PAGE>
8
property for its own account. Except for the duty of the Administrative
Agent described in this paragraph 10, and the accounting by the
Administrative Agent for moneys actually received by it hereunder, neither
the Administrative 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 Administrative
Agent, any Lender nor any of their respective directors, officers,
employees or agents shall be liable for failure to demand, collect or
realize upon 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
Administrative 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
Administrative Agent or any Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Administrative Agent or any Lender of
any right or remedy hereunder on any one occasion shall not be construed
as a bar to any right or remedy which the Administrative Agent or such
Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies
provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Pledge Agreement may be
amended, supplemented or otherwise modified except 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 Administrative Agent. This Pledge Agreement shall be<PAGE>
9
binding upon the successors and assigns of the Pledgor and shall inure to
the benefit of the Administrative 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 Administrative Agent in writing that
(a) states that an Event of Default has occurred and (b) is otherwise in
accordance with the terms of this Pledge Agreement, without any other or
further instructions from the Pledgor, and the Pledgor agrees that the
Issuer shall be fully protected in so complying.
18. Authority of Administrative Agent. The Pledgor
acknowledges that the rights and responsibilities of the Administrative
Agent under this Pledge Agreement with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative
Agent of any option, voting right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Pledge
Agreement shall, as between the Administrative Agent and the Lenders, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Administrative Agent and the Pledgor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and
valid authority so to act or refrain from acting, and neither the Pledgor
nor 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
Administrative 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 Administrative 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:__________________________
Name:<PAGE>
10
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 Administrative 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_____________________________
Name:
Title:
Address for Notices:
_______________________________
_______________________________
_______________________________
Telex: _______________________
Rapifax: _____________________<PAGE>
SCHEDULE 1
To Pledge
Agreement
DESCRIPTION OF PLEDGED STOCK
Stock
Class of Certificate No. of State of
Issuer Stock No. Shares Incorporation
------ -------- ----------- ------ -------------
Essex Group, Common 4 100 Michigan
Inc.<PAGE>
EXHIBIT D-3
FORM OF SUBSIDIARY PLEDGE AGREEMENT
SUBSIDIARY PLEDGE AGREEMENT, dated as of October 31, 1996,
made by the parties signatories hereto (each, a "Pledgor"; collectively,
the "Pledgors"), in favor of THE CHASE MANHATTAN BANK, as administrative
agent (in such capacity, the "Administrative Agent") for the lenders (the
"Lenders") parties to the Credit Agreement, dated as of October 31, 1996
(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 Administrative
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 Administrative 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 Administrative 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 Administrative 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.<PAGE>
2
"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
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 Administrative Agent, for the ratable benefit of the
Lenders, all the Pledged Securities and hereby grants to the
Administrative 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 Administrative Agent of each certificate representing one
or more shares of Pledged Stock to the Administrative Agent, the relevant
Pledgor shall deliver an undated stock power covering such certificate,
duly executed in blank by such Pledgor with, if the Administrative Agent
so requests, signature guaranteed. All Pledged Notes, when delivered,
shall be duly endorsed in blank.<PAGE>
3
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
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 Administrative 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
Administrative 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 Administrative Agent and the Lenders, hold the same
in trust for the Administrative Agent and the Lenders and deliver
the same forthwith to the Administrative Agent in the exact form
received, duly endorsed by such Pledgor to the Administrative Agent,
if required, together with an undated stock power covering such
certificate duly executed in blank by such Pledgor and with, if the<PAGE>
4
Administrative Agent so requests, signature guaranteed, to be held
by the Administrative 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 Administration
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 Administrative
Agent to be held by it hereunder as additional collateral security
for the Obligations. If any sums of money or property so paid or
distributed in respect of the Pledged 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 Administrative 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 Administrative
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 Administrative 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 Administrative 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 Administrative Agent may reasonably request for the purposes
of obtaining or preserving the full benefits of this Pledge
Agreement and of the rights and powers herein granted. If any
amount payable under or in connection with any of the Collateral
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 Administrative Agent, duly endorsed in
a manner satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Pledge Agreement.<PAGE>
5
(d) Such Pledgor agrees to pay, and to save the
Administrative Agent and the Lenders harmless from, any and all
liabilities with respect to, or resulting from any delay in paying,
any and all 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
Administrative Agent shall have given notice to such Pledgor of the
Administrative 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 Administrative Agent's reasonable judgment,
would impair the Collateral or which would be inconsistent with or result
in any violation of any provision of the Credit Agreement, this Pledge
Agreement or the other Loan Documents. At the expense of the Pledgor, the
Administrative 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 Administrative Agent. (a)
If an Event of Default shall have occurred and be continuing and the
Administrative Agent shall have given notice of its intent to exercise
such rights to any Pledgor, (i) the Administrative 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 Administrative 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
Administrative Agent or its nominee, and the Administrative 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 Administrative 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 Administrative Agent shall have no duty to any Pledgor to exercise<PAGE>
6
any such right, privilege or option and shall not be responsible for any
failure to do so or delay in so doing.
(b) The rights of the Administrative Agent and the Lenders
hereunder shall not be conditioned or contingent upon the pursuit by the
Administrative Agent or any Lender of any right or remedy against 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 Administrative Agent nor any Lender shall be liable
for any failure to demand, collect or realize upon all or any part of the
Collateral or for any delay in doing so, nor shall the Administrative
Agent be under any obligation to sell or otherwise dispose of any
Collateral upon the request of any Pledgor or any other Person or to take
any other action whatsoever with regard to the Collateral or any part
thereof.
8. Remedies. If an Event of Default shall occur and be
continuing, the Administrative Agent, on behalf of the Lenders, may
exercise, in addition to all other rights and remedies granted in this
Pledge Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a
secured party under the Code. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon 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
Administrative Agent or any Lender or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of
any credit risk. The Administrative Agent or any Lender shall have the
right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any
part of the Collateral so sold, free of any right or equity of redemption
in any Pledgor, which right or equity is hereby waived and released. The
Administrative 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 Administrative Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements of counsel to the Administrative Agent, to the payment in
whole or in part of the Obligations, in such order as the Administrative
Agent may elect, and only after such application and after the payment by
the Administrative Agent of any other amount required by any provision of
law, including, without limitation, Section 9-504(1)(c) of the Code, need
the Administrative Agent account for the surplus, if any, to any Pledgor.
To the extent permitted by applicable law, each Pledgor waives all claims,<PAGE>
7
damages and demands it may acquire against the Administrative Agent or any
Lender arising out of the exercise by them of any rights hereunder. If
any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if
given at least 10 days before such sale or other disposition. 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 Administrative 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
Administrative 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 Administrative 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"), 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 Administrative 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 Administrative 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 Administrative 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 Administrative Agent may
be unable to effect a public sale of any or all the Pledged Stock, by
reason of certain prohibitions contained in the Securities Act 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
Administrative Agent accepts the first offer received or offers the
Collateral or any portion thereof to only one offeree). The
Administrative Agent shall be under no obligation to delay a sale of any
of the Pledged Stock for the period of time necessary to permit any Issuer
to register such securities for public sale under the Securities Act, or<PAGE>
8
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 Administrative Agent and the Lenders, that the
Administrative Agent and the Lenders have no adequate remedy at law in
respect of such breach and, as a consequence, that each and every covenant
contained in this 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.
10. Limitation on Duties Regarding Collateral. The
Administrative Agent's sole duty with respect to the custody, safekeeping
and physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to deal with it in the
same manner as the Administrative Agent deals with similar securities and
property for its own account. Except for the duty of the Administrative
Agent described in this paragraph 10, and the accounting by the
Administrative Agent for moneys actually received by it hereunder, neither
the Administrative 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 Administrative
Agent, any Lender nor any of their respective directors, officers,
employees or agents shall be liable for failure to demand, collect or
realize upon 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
Administrative Agent nor any Lender shall by any act (except by a written<PAGE>
9
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
Administrative Agent or any Lender, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right,
power or privilege. A waiver by the Administrative Agent or any Lender of
any right or remedy hereunder on any one occasion shall not be construed
as a bar to any right or remedy which the Administrative Agent or such
Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or
concurrently and are not exclusive of any other rights or remedies
provided by law.
15. Waivers and Amendments; Successors and Assigns; Governing
Law. None of the terms or provisions of this Pledge Agreement may be
amended, supplemented or otherwise modified except 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 Administrative Agent. This Pledge Agreement shall be
binding upon the successors and assigns of each Pledgor and shall inure to
the benefit of the Administrative 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 Administrative Agent in writing
that (a) states that an Event of Default has occurred and (b) is otherwise
in accordance with the terms of this Pledge Agreement, without any other
or further instructions from such Pledgor, and such Pledgor agrees that
such Issuer shall be fully protected in so complying.
18. Authority of Administrative Agent. Each Pledgor
acknowledges that the rights and responsibilities of the Administrative
Agent under this Pledge Agreement with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative
Agent of any option, voting right, request, judgment or other right or
remedy provided for herein or resulting or arising out of this Pledge
Agreement shall, as between the Administrative Agent and the Lenders, be
governed by the Credit Agreement and by such other agreements with respect
thereto as may exist from time to time among them, but, as between the
Administrative Agent and such Pledgor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and
valid authority so to act or refrain from acting, and neither such Pledgor
nor any Issuer shall be under any obligation, or entitlement, to make any
inquiry respecting such authority.<PAGE>
10
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
Administrative 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 Administrative
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
Administrative 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 Administrative 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. 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 Administrative 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.
DIAMOND WIRE & CABLE CO.
By:____________________________
Name:
Title:
ESSEX GROUP EXPORT INC.
By:____________________________
Name:
Title:<PAGE>
11
ESSEX INTERNATIONAL, INC.
By:____________________________
Name:
Title:
US SAMICA CORPORATION
By:____________________________
Name:
Title:
INTERSTATE INDUSTRIES HOLDINGS
INC.
By:___________________________
Name:
Title:
INTERSTATE INDUSTRIES, INC.
By:__________________________
Name:
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 Administrative 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.
INTERSTATE INDUSTRIES, INC.
By_____________________________
Name:
Title:
Address for Notices:
c/o Essex Group, Inc.
1601 Wall Street
Fort Wayne, Indiana 46802
Attention: David A. Owen
Facsimile: 219-461-4762<PAGE>
SCHEDULE 1
To Pledge
Agreement
DESCRIPTION OF PLEDGED STOCK
Stock
Class of Certificate No. of State of
Issuer Stock No. Shares Incorporation
------ -------- ----------- ------ -------------
Interstate Common 37 100 Mississippi
Industries,
Inc.<PAGE>
EXHIBIT E-1
FORM OF COMPANY SECURITY AGREEMENT
COMPANY SECURITY AGREEMENT, dated as of October 31, 1996, made
by ESSEX GROUP, INC., a Michigan corporation (the "Company"), in favor of
THE CHASE MANHATTAN BANK, as administrative agent (in such capacity, the
"Administrative Agent") for the lenders (the "Lenders") parties to the
Credit Agreement, dated as of October 31, 1996 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement") among the
Company, BCP/Essex Holdings Inc., the Lenders and the Administrative
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 Administrative Agent for the ratable benefit of the
Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into the Credit
Agreement and 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 Administrative 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<PAGE>
2
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 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<PAGE>
3
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.
"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
Administrative 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 Administrative 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 Administrative 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;<PAGE>
4
(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 Administrative Agent and Lenders; Limitations on
Administrative Agent's and Lenders' Obligations; Limitation on
Administrative 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 Administrative Agent nor
any Lender shall have any obligation or liability under any Account (or
any agreement giving rise thereto) or under any Contract by reason of or
arising out of this Security Agreement or the receipt by the
Administrative Agent or any such Lender of any payment relating to such
Account or Contract pursuant hereto, nor shall the Administrative Agent or
any Lender be obligated in any manner to perform any of the obligations of
the 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 Administrative 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 Administrative
Agent for the ratable benefit of the Lenders and that payments in respect
thereof shall be made directly to the Administrative Agent. Upon the
occurrence and during the continuance of an Event of Default, the
Administrative 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 Administrative Agent shall
have the right to make test verifications of the Accounts in any manner
and through any medium that it reasonably considers advisable at any
reasonable time and as often as may reasonably be desired, and the Company
shall furnish all such assistance and information as the Administrative
Agent may reasonably require in connection therewith. If an Event of<PAGE>
5
Default shall have occurred and be continuing, then upon the
Administrative Agent's request and at the expense of the Company, the
Company shall cause independent public accountants or others satisfactory
to the Administrative Agent to furnish to the Administrative Agent reports
showing reconciliations, aging and test verifications of, and trial
balances for, the Accounts.
(d) Collections on Accounts. The Administrative Agent hereby
authorizes the Company to collect the Accounts, provided, that the
Administrative 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 Administrative Agent if
required, in a special collateral account maintained by the Administrative
Agent, subject to withdrawal by the Administrative Agent for the account
of the Administrative Agent and the Lenders only, as hereinafter provided,
and, until so turned over, shall be held by the Company in trust for the
Administrative 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 Administrative Agent (or by the Company in
trust for the Administrative 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
Administrative Agent's election, the Administrative Agent shall apply all
or any part of the funds on deposit in said special collateral account on
account of the Obligations in such order as the Administrative Agent may
elect, and any part of such funds which the Administrative Agent elects
not so to apply and deems not required as collateral security for the
Obligations shall be paid over from time to time by the Administrative
Agent to the Company or to whomsoever may be lawfully entitled to receive
the same. At the Administrative Agent's reasonable request, the Company
shall deliver to, or make available for review by, the Administrative
Agent all original and other documents evidencing, and relating to, the
agreements and transactions which gave rise to the Accounts, including,
without limitation, all original orders, invoices and shipping receipts.
(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
Administrative 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.<PAGE>
6
4. Representations and Warranties . The Company hereby
represents and warrants that:
(a) Title; No Other Liens. Except for the Lien granted
to the Administrative 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 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 Administrative 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 Administrative 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
Administrative 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).<PAGE>
7
(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)
of the Credit Agreement (to the extent, and only to the
extent, reasonably requested by the Administrative 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
Administrative 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 Administrative 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 Administrative Agent may
reasonably request for the purpose of obtaining or preserving
the full benefits of this Security Agreement and of the rights
and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the
Uniform Commercial Code in effect in any jurisdiction with
respect to the Liens created hereby. The Company also hereby<PAGE>
8
authorizes the Administrative 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 Administrative Agent, duly
endorsed in a manner satisfactory to the Administrative 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 Administrative 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 Administrative 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
Administrative 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 Administrative
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
Administrative Agent's and the Lenders' further security, the
Administrative Agent, for the ratable benefit of the Lenders,
shall have a security interest in all of the Company's books
and records pertaining to the Collateral.<PAGE>
9
(d) Right of Inspection. The Administrative 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 Administrative Agent and its
representatives may examine the same, take extracts therefrom
and make photocopies thereof, and the Company agrees to render
to the Administrative 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 Administrative
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 the Company or any of its Subsidiaries, the
Company shall use its best efforts to grant to the
Administrative Agent such right) for the purpose of inspecting
the same, observing its use or otherwise protecting the
Administrative 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
Administrative Agent, adversely affect the Administrative
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 Administrative 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<PAGE>
10
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 Administrative 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 Administrative 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 the Company over a period of time, the
Company will not, without the prior written consent of the
Administrative 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 Administrative 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 Administrative Agent, such
losses of $1 million or more shall be payable to the Company
and the Administrative Agent, for the benefit of the Lenders,
as their respective interests may appear. All such insurance
shall (i) to the extent requested by the Administrative Agent,
provide for a 30-day standard cancellation notice, (ii) name
the Administrative 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 Administrative
Agent. If reasonably requested by the Administrative Agent,
the Company shall deliver to the Administrative 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 Administrative Agent may from time to time
reasonably request.<PAGE>
11
(l) Further Identification of Collateral. The Company
will furnish to the Administrative Agent and the Lenders from
time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection
with the Collateral as the Administrative Agent may reasonably
request, all in reasonable detail.
(m) Notices. The Company will advise the
Administrative 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. 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 Administrative Agent in
connection with this Security Agreement would become seriously
misleading, unless (x) the Company shall have given the
Administrative 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 Administrative 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 Administrative 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
Administrative Agent, the Company shall execute and deliver any and
all agreements, instruments, documents, and papers as the<PAGE>
12
Administrative Agent may reasonably request to evidence the
Administrative 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 Administrative 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
Administrative 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
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 Administrative 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 Administrative Agent such assignments, notices of assignment
and other documents or information as shall be necessary or
otherwise requested by the Administrative 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. Administrative Agent's Appointment as Attorney-in-Fact.
(a) Powers. The Company hereby irrevocably constitutes and
appoints the Administrative Agent and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of the Company
and in the name of the Company or in its own name, from time to time in
the Administrative Agent's discretion, for the purpose of carrying out the
terms of this Security Agreement, to take any and all appropriate action
and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Security
Agreement, and, without limiting the generality of the foregoing, the
Company hereby gives the Administrative 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<PAGE>
13
collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due under any Account,
Instrument, General Intangible or Contract or with respect to
any other Collateral and to file any claim or to take any
other action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Administrative Agent for
the purpose of collecting any and all such moneys due under
any Account, Instrument, General Intangible or Contract or
with respect to any other Collateral whenever payable;
(ii) 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
all moneys due or to become due thereunder directly to the
Administrative Agent or as the Administrative Agent shall
direct; (B) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts
due or to become due at any time in respect of or arising out
of any Collateral; (C) to sign and endorse any invoices,
freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with
any of the Collateral; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court
of competent jurisdiction to collect the Collateral or any
thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding
brought against the 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
Administrative 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 Administrative 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 Administrative Agent were the absolute owner
thereof for all purposes, and to do, at the Administrative
Agent's option and the Company's expense, at any time, or from
time to time, all acts and things which the Administrative
Agent deems necessary to protect, preserve or realize upon the
Collateral and the Administrative Agent's and the Lenders'
Liens thereon and to effect the intent of this Security
Agreement, all as fully and effectively as the Company might
do.<PAGE>
14
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
Administrative 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 Administrative Agent or Lenders' Part. The
powers conferred on the Administrative Agent and the Lenders hereunder are
solely to protect the Administrative Agent's and the Lenders' interests in
the Collateral and shall not impose any duty upon the Administrative Agent
or any Lender to exercise any such powers. Except for the duty of the
Administrative Agent described in Section 10 hereof, and the accounting by
the Administrative Agent for moneys actually received by it hereunder,
neither the Administrative 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
Administrative 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 Administrative Agent and the Lenders hereunder, and
neither they nor any of their officers, directors, employees or agents
shall be responsible to the Company for any act or failure to act
hereunder, except for their own gross negligence or willful misconduct.
7. Performance by Administrative Agent of Company's
Obligations. If the Company fails to perform or comply with any of its
agreements contained herein and the Administrative Agent, as provided for
by the terms of this Security Agreement, shall itself perform or comply,
or otherwise cause performance or compliance, with such agreement, the
expenses of the Administrative Agent incurred in connection with such
performance or compliance, together with interest thereon at a rate per
annum equal to the Alternate Base Rate plus the Applicable Margin plus 2%,
shall be payable by the Company to the Administrative Agent on demand and
shall constitute Obligations secured hereby. The Administrative Agent
agrees to notify the Company promptly after incurring any expenses
pursuant to this Section 7, provided that the failure of the
Administrative Agent to so notify the Company shall in no way impair the
rights of the Administrative Agent under this Section 7.
8. Proceeds. In addition to the rights of the Administrative
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 Administrative 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 Administrative Agent and the Lenders, segregated from other funds of
the Company, and shall, forthwith upon receipt by the Company, be turned
over to the Administrative Agent in the exact form received by the Company
(duly endorsed by the Company to the Administrative Agent, if required),
and (b) any and all such Proceeds received by the Administrative Agent
(whether from the Company or otherwise) may, in the sole discretion of the<PAGE>
15
Administrative Agent, be held by the Administrative Agent for the ratable
benefit of the Lenders as collateral security for, and/or then or at any
time thereafter may be applied by the Administrative Agent against, the
Obligations (whether matured or unmatured), such application to be in such
order as the Administrative 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 Administrative Agent, on behalf of the Lenders, may
exercise, in addition to all other rights and remedies granted to them in
this Security Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a
secured party under the Code. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon the
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 Administrative Agent or any Lender or elsewhere
upon such terms and conditions as it may deem advisable and at such prices
as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrative Agent or any Lender
shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Company, which right or equity is hereby
waived and released. The Company further agrees, at the Administrative
Agent's request, to assemble the Collateral and make it available to the
Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at the Company's premises or elsewhere. The
Administrative 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 Administrative Agent and the
Lenders hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the
Obligations, in such order as the Administrative Agent may elect, and only
after such application and after the payment by the Administrative Agent
of any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Administrative 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 Administrative Agent or any Lender arising out of
the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days
before such sale or other disposition. The Company shall remain liable<PAGE>
16
for any deficiency if the proceeds of any sale or other disposition of the
Collateral are insufficient to pay the Obligations and the fees and
disbursements of any attorneys employed by the Administrative Agent or any
Lender to collect such deficiency.
10. Limitation on Duties Regarding Preservation of
Collateral. The Administrative Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Code or otherwise, shall be to deal
with it in the same manner as the Administrative Agent deals with similar
property for its own account. Neither the Administrative Agent, any
Lender, nor any of their respective directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all
or any part of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon
the request of the 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
affect the construction hereof or be taken into consideration in the
interpretation hereof.
14. No Waiver; Cumulative Remedies. Neither the
Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 15 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 Administrative Agent or any Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. A waiver by the Administrative Agent
or any Lender of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Administrative
Agent or such Lender would otherwise have on any future occasion. The
rights and remedies herein provided are cumulative, may be exercised
singly or concurrently and are not exclusive of any rights or remedies
provided by law.
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<PAGE>
17
be binding upon the successors and assigns of the Company and shall inure
to the benefit of the Administrative 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 Administrative Agent. The Company
acknowledges that the rights and responsibilities of the Administrative
Agent under this Security Agreement with respect to any action taken by
the Administrative Agent or the exercise or non-exercise by the
Administrative Agent of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Security Agreement shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements
with respect thereto as may exist from time to time among them, but, as
between the Administrative Agent and the Company, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Lenders with
full and valid authority so to act or refrain from acting, and the 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 Administrative 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 Agreement (other than the sales of
Inventory in the ordinary course of business), the Administrative 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 Administrative 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 Administrative 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.<PAGE>
18
ESSEX GROUP, INC.
By:____________________________
Name:
Title:<PAGE>
SCHEDULE I
to Company
Security Agreement
PATENTS AND TRADEMARKS
Patent Docket
[CAPTION]
<TABLE>
Patent
Country Number Title Issue Date
------- ------- ----- ----------
<S> <C> <C> <C>
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 4190319 Fiber Option Ribbon and Cable Made 2/26/80
Tehrefrom
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
US 4253569 Reinforced Spol 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
and Surface Character
US 4389510 Water Soluble Polymide Prepared 6/21/83
from 1,2,3,4 Butane Tetracarboxylic
Acid and Method of Preparation<PAGE>
2
Patent
Country Number Title Issue Date
------- ------- ----- ----------
CAN 1175598 Water Soluble Polymide Prepared 10/2/84
from 1,2,3,4 Butane Tetracarboxylic
Acid and Method of Preparation
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
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 4389587 Unitary Sleeving Insulation 6/21/83
US 4385436 Method of Power Inserting Nylon 5/31/83
Coated Magnet Wire
CAN 1209765 Dielectric Films from Water Soluble 8/19/86
Polyimides<PAGE>
3
Patent
Country Number Title Issue Date
------- ------- ----- ----------
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
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<PAGE>
4
Patent
Country Number Title Issue Date
------- ------- ----- ----------
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 4586415 Assembly for Effecting Vertical and 5/6/86
Rotational Motion
US 4575017 Paster Rab and Method of Use 3/11/86
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 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 4637852 Neoalkoxy Titanate in High Density 1/20/87
Mica Laminates<PAGE>
5
Patent
Country Number Title Issue Date
------- ------- ----- ----------
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
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 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 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 4635046 Wire Tangle Sensor 1/6/87
US 4695830 Wire Runtogether Sensor 9/22/87<PAGE>
6
Patent
Country Number Title Issue Date
------- ------- ----- ----------
US 4740756 Continuity Test Method and 4/26/88
Apparatus
US 4700171 Ignition Wire 10/13/87
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 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 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
US 4869199 Manifold for Distributing Wire 9/26/89
Coating Enamel<PAGE>
7
Patent
Country Number Title Issue Date
------- ------- ----- ----------
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 4821880 Palletized Structure Containing 4/18/89
Spools
US 5045136 Heat Shrinkable Article 9/3/91
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 5048572 Vibration Damping Heat Shrinkable 9/17/92
Tubing
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>
8
Duration
US--17 Years (Subject to Maintenance Fees)
CAN--17 Years<PAGE>
9
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 BROWNELL ELECTRO 1,781,418 07/13/03
INC. & Design
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
Argentina ESSEX 1,176,315 10/07/05
Brazil ESSEX 692,303 04/25/99
Canada ESSEX 193,620 08/31/03
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 496,193 03/22/05
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
India ESSEX Application
Mexico ESSEX 496,194 03/22/05
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
Renewal filed
US FEMCO 1,584,450 02/27/00
US FLEXICONE 1,330,873 04/16/05<PAGE>
10
Trademark and/or
Country Trade Name Registration Expiration
------- ---------------- ------------ ----------
<S> <C> <C> <C>
US GOPIC 969,536 10/02/03
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
Renewal filed
US IWI Inv W/O Invest 658,007 02/04/98
US LELAND FARADAY 1,827,220 03/22/04
US LF Logo 1,830,155 04/12/04
US MACALLEN & Design 833,230 08/08/07
US MAGNAPAK 628,592 06/12/06
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 & Design 537,580 12/13/01
US PARANITE & Design 535,200 12/26/00
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 SUFLEX 960,771 06/12/03
US SUFLEX Logo 1,308,019 12/04/04
Canada SX N.S. 2026 08/30/08
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 GP200 844,472 02/20/08
US UTREX 1,326,775 03/26/05
US VINYLGLAS 965,445 08/07/03
Mexico SX 496,192 03/22/05<PAGE>
11
Trademark and/or
Country Trade Name Registration Expiration
------- ---------------- ------------ ----------
<S> <C> <C> <C>
Mexico SX 496,195 03/22/05
India SX Application
US ULTRASHIELD Application
US VANGUARD 1,827,219 03/22/04
/TABLE
<PAGE>
12
PENDING APPLICATIONS
Country Serial No. Filing Date
------- ---------- -----------
US 08/317506 10/03/94
US 08/261546 06/17/94
US 08/557513 11/14/95<PAGE>
SCHEDULE II
to Security
Agreement
Locations of Inventory and Equipment
ESSEX LOCATIONS
1601 Wall Street U.S. Highway 30 W.
Fort Wayne, IN Columbia City, IN
Allen County Whitley County
Location Code: 402 Location Code: 409, 492
West Pearl Street Decker Road
Jonesboro, IN Vincennes, IN
Grant County Knox County
Location Code: 165 Location Code: 401
Youngs Lane Main St./Bay Rd.
Newmarket, NH Newmarket, NH
Rockingham County Rockingham County
Location Code: 014 Location Code: 023
3200 Earlywood Drive Southeast Parkway Dr.
Franklin, IN Franklin, TN
Johnson County Williamson County
Location Code: 447 Location Code: 450
800 W. Mitchell St. 2816 N. Main St.
Kendallville, IN Rockford, IL
Noble County Winnebago County
Location Code: 486 Location Code: 489
1904 Engineers Rd. 1417 Murray
Belle Chase, LA 70037 N. Kansas City, MO 64116
Plaquemines Parish Clay County
Location Code: 509 Location Code: 519
6808-C Cedar Ave. 3 Commerce Way
Lubbock, TX 79404 Tewksbury, MA 01876
Lubbock County Middlesex County
Location Code: 536 Location Code: 570
4232 Charter Ave. E. Union & US 52
#100 Lafayette, IN
Oklahoma City, OK 73108 Tippecanoe County
Location Code: 568 Location Code: 113
24 Spur Drive Old York Road
El Paso, TX Chester, SC
El Paso County Chester County
Location Code: 436 Location Code: 105
108 Elm 1075 N. Patt Street
Tiffin, OH Anaheim, CA
Seneca County Orange County
Location Code: 403, 046, 580
214 E. 24th St. 3959 S. Morgan<PAGE>
2
Marion, IN Chicago, IL
Grant County Cook County
Location Code: 051 Location Code: 506
Rt. 294 and Bear Creek Rd. 1230 Crestside Drive
Pana, IL Coppell, TX
Christian County Dallas County
Location Code: 099 Location Code: 410, 534<PAGE>
3
190 E. Polk St. 2172 Wharf St.
Orleans, IL Memphis, TN
Morgan County Shelby County
Location Code: 123 Location Code: 413, 556
Rt. 4 East 1900 NE 181st St.
Hoisington, KS Portland, OR
Barton County Multnomah County
Location Code: 128 Location County: 417, 566
University & East St. 1704 Westbelt Dr.
Pauline, KS Columbus, OH
Shawnee County Franklin County
Location Code: 423 Location Code: 414
950 W. 40th St. 2625 S. Wilson
Chicago, IL Suite 102
Cook County Tempe, AZ 85282
Location Code: 406 Maricopa County
Location Code: 424
6 Lee Blvd. 5405 Valley Belt
Frazer, PA Suite D
Location Code: 407, 591 Independence, OH
(Cleveland) 44131
Cuyahoga County
Location Code: 508
4600 Holly St. 23447 Cabot Blvd.
Denver, CO Hayward, CA 94545
Colorado County Location Code: 427, 581
Location Code: 411
6715 53rd St. 39065 Webb Drive
Tampa, FL Westland, MI 48185
Hillsborough County Location Code: 528
Location Code: 420, 518
6588 Marbut Rd. 3028 - 7th Ave., So.
Lithonia, GA Birmingham, AL
DeKalb County Jefferson County
Location Code: 122, 404, 569
2444 Enterprise Dr. 501 Busse Road
Mendota Heights, MN 55120 Elk Grove Village, IL
Location Code: 416 Cook County
4667 Somerton Road 5601 Anglum Court
Bensalem Twp., PA Hazelwood, MO 63042
(Trevose) St. Louis County
Bucks County
140 Southpointe Drive 7001 S. 33rd St.
Bridgeville, PA McAllen, TX
(Pittsburgh) Hidalgo County
Allegheny County<PAGE>
4
5690 Southfield Court 555 Brick Church Park Dr.
Forest Park, GA Nashville, TN
Clayton County Davidson County
376 Garden Oaks Blvd. 3713 Vineland Road
Houston, TX Orlandod, FL
Harris County Orange County<PAGE>
5
6850 NW 74th St. 3112 Northington Ct.
Miami, FL Florence, AL
Cade County Lauderdale County
Location Code: 445
933 Lakeside Drive One IGA Way
Mobile, AL Cumberland, RI
Mobile County Providence County
Location Code: 443
4855 Brookside Court 368 Rue Isabey
Norfolk, VA St. Laurent, Quebec
Norfolk City County Location Code: 446
525 Wall Street 4251 Helton Dr.
Tiffin, OH Florence, AL
Seneca County Lauderdale County
1620 East Malone Ave. 3201 Woodpark Blvd.
Sikeston, MO Charlotte, NC 23207
Scott County Mecklenburg County
Location Code: 442
4002 W. Turney Ave.
Phoenix, AZ
Maricopa County
Location Code: 444
95 Grand Ave.
Pawtucket, RI
Providence County
6050 No. 55th Ave.
Glendale, AZ
Maricopa County
NON - ESSEX LOCATIONS:
Phelps Dodge S&S Reel
41 Wawecus St. Box 448
Norwich, CT Hoisington, KS
Location Code: N/A Location Code: N/A
Sherburne Electric B.N. Yanow & Co., Inc.
40 S. Main Street 45 Johnson Lane
Sherburne, NY Braintree, MA
Location Code: N/A Location Code: 661
Southwire Company Electrical Insulation
150 Fertilla St. Suppliers
Carrollton, GA 1661 Industrial Way
Location Code: N/A Belmont, CA
Location Code: 942
Precision Steel Miller Sales Industries
3500 N. Wolfe Rd. 1111 N. Old Rand Rd.<PAGE>
6
Franklin Park, IL Wauconda, IL
Location Code: N/A Location Code: 930
Vincent - Angel Inc. MSC/Minnesota
2910 Torrence Dr. 2355 Louisiana Ave. N.
Greensboro, NC Golden Valley, MN
Location Code: 660 Location Code: 931<PAGE>
7
Clark Sales Magnetek/PEI
106 E. Airline Highway 800 Martha St.
Kenner, LA Munhall, PA
Location Code: 663 Location Code: 937
H.A. Holden, Inc. Magnetek-Century
2825 Comly Rd. 602 Red Rd.
Philadelphia, PA McMinville, TN
Location Code: 955 Location Code: 938
H.A. Holden, Inc. Electrical Insulation
6675-A Corners Industrial Suppliers
Court 412 E. 13th Ave.
Norcross, GA N. Kansas City, MO
Location Code: 956 Location Code: 940
Electrical Insulation Tecumseh Products Company
Suppliers 2700 West Wood Street
1000 Somerset Street, P.O. Box 1208
Bldg. 4-B Paris, TN
New Brunswick, NJ Location Code: 980
Location Code: 917
Electrical Insulation S&W Wire Company
Suppliers, Inc. 45 A Progress Ave.
4132 Will Rogers Parkway, Zelinenople, PA
Suite 200 Location Code: 597
Oklahoma City, OK
Location Code: 923
Eaton Corp. Triangle Trading Co.
1910 Bill Mitchell Avenue Ceramica Annex Station
Brownsville, TX Carolina, PR
Location Code: 925 Location Code: 664
Magnetek - Century Marathon Electric
Highway 22 North Highway 63 & Lanton Rd.
Lexington, TN West Plains, MO 65775
Location Code: 935 Location Code: 952
Saturn Services Corporation Camden Wire
1231 Naperville Dr. 12 Masonic Ave.
Romeoville, IL Camden, NY
Location Code: 991 Location Code: N/A
Marathon Electric Owl Wire & Cable
401 West Freemont Rd. Rt. 5
Lebanon, MO Canastota, NY
Location Code: 953 Location Code: N/A
Marathon Electric Harby Associates, Inc.
100 E. Randolph 12 Capital Drive
Wausau, WI Wallingford, CT 06492
Location Code: 951 Location Code: 622
Brazil Bros. Mid-States<PAGE>
8
250 - 260 Forrest St. 1115 Aldrich Ave. North
Metuchen, NJ Minneapolis, MN 55411
Location Code: N/A Location Code: 825
NASCO, Inc. Electrical Insulation
44 Railroad Hill St. Suppliers
Waterbury, CT 1255 Collier Road NW
Location Code: N/A Atlanta, GA 30318
Location Code: 857<PAGE>
9
Omega Wire Electrical Insulation
Rt 13 - Main St. Suppliers
Williamson, NY 155 Nowner Drive
Location Code: N/A Cincinnati, OH 45215
Location Code: 861
Albion Wire Electrical Insulation
811 Commerce Drive Suppliers
Kendallville, IN 1509 Parkway View Drive
Location Code: N/A Pittsburgh, PA 15205
Location Code: 866
Riffle & Associates, Inc. Electrical Insulation
2671 Crescentville Road Suppliers
Cincinnati, OH 45231-1578 2000 South Ninth Street
Location Code: 627 Louisville, KY 40208
Location Code: 915
Electrical Insulation Electrical Insulation
Suppliers Suppliers
3500 Fourth Avenue S 2100 Magnolia Street
Birmingham, AL 35222 Richmond, VA 23223
Location Code: 859 Location Code: 919
Electrical Insulation Suppliers Electrical Insulation
Route 720 West Suppliers
Bluefield, VA 24605 6660 East 47th avenue
Location Code: 860 Denver, CO 80216
Location Code: 927
Electrical Insulation Suppliers Electrical Insulation
19769 15 Mile Road Suppliers
Clinton Township, MI 1905 Premier Row
480035 (Detroit) Orlando, FL 32809
Location Code: 862 Location Code: 936
Electrical Insulation Suppliers Electrical Insulation
1850 E. Watkins Street Suppliers
Suite 3 12740 E. Florence Avenue
Phoenix, AZ 85034 Santa Fe, Springs, CA 90670
Location Code: 916 Location Code: 943
Electrical Insulation Suppliers Advanced Electrical Sales
4934 Distribution Drive 1717 West Grant Street
4934 Distribution Drive Phoenix, AZ 85017
Tampa, FL 33605 Location Code: 947
Location Code: 926
108 Elm Electrical Insulation
Tiffin, OH Suppliers
Seneca County 1347 S. 330 W.
Location Code: N/A Salt Lake City, UT 84115
Location Code: 969
Electrical Insulation Suppliers Electrical Insulation
4629 Crossroads Park Drive Suppliers<PAGE>
10
Liverpool, NY 13088 3549 N.W. Yeon Avenue
Location Code: 928 Portland, OR 97210
Location Code: 975
Electrical Insulation Suppliers H.A. Holden
2736 Market Street 600 W. 28th Street
Garland, TX 75041 Charlotte, NC 28206
Location Code: 941 Location Code: 994<PAGE>
11
Electrical Insulation Suppliers The T.F. Farmer Company
7354 East 38th Street U.S. Highway 90 North
Tulsa, OK 74145 Greensboro, NC 27405
Location Code: 945 Location Code: 674
H.A. Holden Michael Frisch Associates
1208 Harman Place 9650 Solar Drive
Minneapolis, MN 55403 Tampa, FL 33619-4417
Location Code: 954 Location Code: 676
H.A. Holden Allen Fields & Associates
4327 Delaware Street Building A
Denver, CO 80216 2950 Robertson Avenue
Location Code: 970 Cincinnati, OH 45209
Location Code: 679
Electrical Insulation Suppliers Electrical Materials, Inc.
Road 190 KM, 1.7 W. BO. 44262 Phoenix Drive
Sabana Abajo, PR 00630 Sterling Heights, MI 48314
Location Code: 978 Location Code: 681
Thea Enterprises, LLC Bell & McCoy
232 Entin Road 3311 Canal Street
Clifton, NJ 07014 Houston, TX 77003
Location Code: 673 Location Code: 648
Florida Electrical Sales Headline Sales, Inc.
1101 North Ward Street 7271 South Paramount Blvd.
Tampa, FL 33607 Pico Riviera, CA 90660
Location Code: 675 Location Code: 719
Berry-Elsberry Company Cascade Western
745 Trabert Avenue NW Representatives
Atlanta, GA 30325 2729 Southeast Sixth Ave
Location Code: 678 Portland, OR 97242
Location Code: 724
Hanke Company Ron Marshall Agencies
1001 Fargo Ave 101-590 Ebury Place
Elk Grove Village, IL Delta, British Columbia
60009-1166 V3M 6B7
Location Code: 680 Location Code: 635
Bell & McCoy Film X - Webb Converting
2633 Andjon Street 2272 Park Central Blvd.
Dallas, TX 75220 Decatur, GA
Location Code: 647 Location Code: N/A
Aurich Associates Electric Sales Unlimited
2210 West Alexander St 9023 Norwalk Blvd
Salt Lake City, UT 84119 Sante Fe Springs, CA
Location Code: 718
H&J Electrical Sales Essex Brownell
30047 Ahern Street 7020 Riverport Drive
Union City, CA 94587 Louisville, KY 40268<PAGE>
12
Location Code: 723 Location Code: 484
Intralec Electrical Essex Brownell
Products, Ltd. 2625 S. Wilson
Unit 1, 1200 Cardiff Suite 102
Mississauga, Ontario Tempe, AZ 85282
L5S 1P6 Location Code: 495
Location Code: 688
Electro-Tech Sales, Ltd. S-B Power Tool Company
Unit 10 250 Bolton
2166 Notre Dame Avenue Hwy 110
Winnipeg, Manitoba Heber Springs, AR 72543
R3H OK2 Location Code: 968
Location Code: 637
Electric Sales Unlimited Basler Electric
725 W. Alameda Dr. Route 67
Suite #1 Corning, AR 72422
Tempe, AZ Location Code: 786
Essex Brownell Electrical Insulation
84 Executive Avenue Suppliers
Edison, NJ 08817 2947 Interstate street
Location Code: 483 Charlotte, NC 28208
Location Code: 855
Essex Brownell Electrical Insulation
647 West 3560 South Suppliers
Salt Lake City, UT 84119 546 Penn Street
Location Code: 488 Yeadon, PA 19050
Location Code: 858
Essex Brownell Electrical Insulation
Route 2 Suppliers
Box 1730 815 Elca Lane
Bluefield, VA 24805 Suite D
Location Code: 497 Brownsville, TX 78521
Location Code: 913
Mallory Controls Electrical Insulation
Turntable Road Suppliers
Plant #2 300 N. Mannheim Road
Sparta, TN 23532 Hillside, IL 60612
Location Code: 996 Location Code: 946
Basler Electric
New York Street
Caraway, AR 72419
Location Code: 787
Electrical Insulation Suppliers
305 McCarty Road
Houston, TX 77029
Location Code: 856<PAGE>
13
In-Sink-Erator Division
Emerson Electric Co.
4700 21st Street
Racine, WI 53406-5093
Location Code: 869<PAGE>
14
Electrical Insulation Suppliers
1444 30th Street
Suite C
San Diego, CA 92154
Location Code: 924
Athens Products
2009 Tellico Avenue
Athens, TN 37303
Location Code: 979<PAGE>
EXHIBIT E-2
FORM OF HOLDINGS SECURITY AGREEMENT
HOLDINGS SECURITY AGREEMENT, dated as of October 31, 1996,
made by BCP/ESSEX HOLDINGS INC., a Delaware corporation ("Holdings"), in
favor of THE CHASE MANHATTAN BANK, as Administrative Agent (in such
capacity, the "Administrative Agent") for the lenders (the "Lenders")
parties to the Credit Agreement, dated as of October 31, 1996 (as amended,
supplemented or otherwise modified from time to time, the "Credit
Agreement") among Essex Group, Inc. (the "Company"), Holdings, the Lenders
and the Administrative 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 Administrative 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 Administrative 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 Administrative 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<PAGE>
2
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 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<PAGE>
3
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
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 Administrative 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 Administrative Agent and Lenders; Limitations on
Administrative 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<PAGE>
4
to each such Account and in accordance with and pursuant to the terms and
provisions of each such Contract. Neither the Administrative Agent nor
any Lender shall have any obligation or liability under any Account (or
any agreement giving rise thereto) or under any Contract by reason of or
arising out of this Security Agreement or the receipt by the
Administrative Agent or any such Lender of any payment relating to such
Account or Contract pursuant hereto, nor shall the Administrative Agent or
any Lender be obligated in any manner to perform any of the obligations of
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 Administrative 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 Administrative Agent
for the ratable benefit of the Lenders and that payments in respect
thereof shall be made directly to the Administrative Agent. Upon the
occurrence and during the continuance of an Event of Default, the
Administrative 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 Administrative Agent shall
have the right to make test verifications of the Accounts in any manner
and through any medium that it reasonably considers advisable, and
Holdings shall furnish all such assistance and information as the
Administrative Agent may reasonably require in connection therewith. If
an Event of Default shall have occurred and be continuing, then upon the
Administrative Agent's request and at the expense of Holdings, Holdings
shall cause independent public accountants or others satisfactory to the
Administrative Agent to furnish to the Administrative Agent reports
showing reconciliations, aging and test verifications of, and trial
balances for, the Accounts.
(d) Collections on Accounts. The Administrative Agent hereby
authorizes Holdings to collect the Accounts, provided, that the
Administrative 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 Administrative Agent if
required, in a special collateral account maintained by the Administrative
Agent, subject to withdrawal by the Administrative Agent for the account
of the Administrative Agent and the Lenders only, as hereinafter provided,
and, until so turned over, shall be held by Holdings in trust for the
Administrative Agent and the Lenders, segregated from other funds of
Holdings. Each deposit of any such Proceeds shall be accompanied by a<PAGE>
5
report identifying in reasonable detail the nature and source of the
payments included in the deposit. All Proceeds constituting collections
of Accounts while held by the Administrative Agent (or by Holdings in
trust for the Administrative 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
Administrative Agent's election, the Administrative Agent shall apply all
or any part of the funds on deposit in said special collateral account on
account of the Obligations in such order as the Administrative Agent may
elect, and any part of such funds which the Administrative Agent elects
not so to apply and deems not required as collateral security for the
Obligations shall be paid over from time to time by the Administrative
Agent to Holdings or to whomsoever may be lawfully entitled to receive the
same. At the Administrative Agent's reasonable request, Holdings shall
deliver to, or make available for review by, the Administrative Agent all
original and other documents evidencing, and relating to, the agreements
and transactions which gave rise to the Accounts, including, without
limitation, all original orders, invoices and shipping receipts.
(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 Administrative
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 Administrative 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 Administrative 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<PAGE>
6
pursuant to this Security Agreement constitute perfected Liens
on the Collateral in favor of the Administrative 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 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 Administrative 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 Administrative 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<PAGE>
7
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
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
Administrative 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 Administrative 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 Administrative Agent may reasonably
request for the purpose of obtaining or preserving the full
benefits of this Security Agreement and of the rights and
powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the
Uniform Commercial Code in effect in any jurisdiction with
respect to the Liens created hereby. Holdings also hereby
authorizes the Administrative 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 Administrative Agent,
duly endorsed in a manner satisfactory to the Administrative
Agent, to be held as Collateral pursuant to this Security
Agreement.
(b) Indemnification. Holdings agrees to pay, and to
save the Administrative 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<PAGE>
8
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 Administrative 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 Administrative 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 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
Administrative Agent's and the Lenders' further security, the
Administrative Agent, for the ratable benefit of the Lenders,
shall have a security interest in all of Holdings' books and
records pertaining to the Collateral.
(d) Right of Inspection. The Administrative 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 Administrative Agent and its representatives may examine the
same, take extracts therefrom and make photocopies thereof, and
Holdings agrees to render to the Administrative 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 Administrative 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 Administrative Agent such right) for the
purpose of inspecting the same, observing its use or otherwise
protecting the Administrative 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<PAGE>
9
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 Administrative Agent,
adversely affect the Administrative 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
Administrative 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 Administrative 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 Administrative 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 Administrative 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,<PAGE>
10
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 Administrative 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 Administrative Agent, such losses of
$1 million or more shall be payable to Holdings and the
Administrative Agent, for the benefit of the Lenders, as their
respective interests may appear. All such insurance shall (i) to
the extent requested by the Administrative Agent, provide for a 30-
day standard cancellation notice, (ii) name the Administrative
Agent, for the benefit of the Lenders, as an insured party and (iii)
be reasonably satisfactory in all other respects to the
Administrative Agent. If reasonably requested by the Administrative
Agent, Holdings shall deliver to the Administrative 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 Administrative Agent may from time to time reasonably
request.
(l) Further Identification of Collateral. Holdings will
furnish to the Administrative Agent and the Lenders from time to
time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral
as the Administrative Agent may reasonably request, all in
reasonable detail.
(m) Notices. Holdings will advise the Administrative 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 Administrative Agent in
connection with this Security Agreement would become seriously
misleading, unless (x) Holdings shall have given the Administrative
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 Administrative Agent, for the benefit
of the Lenders, shall have, and shall continue to have, a fully<PAGE>
11
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 Administrative 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
Administrative Agent, Holdings shall execute and deliver any and all
agreements, instruments, documents, and papers as the Administrative
Agent may reasonably request to evidence the Administrative 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
Administrative 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 Administrative Agent after it
learns thereof.
6. Administrative Agent's Appointment as Attorney-in-Fact.
(a) Powers. Holdings hereby irrevocably constitutes and
appoints the Administrative Agent and any officer or agent thereof, with
full power of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of Holdings
and in the name of Holdings or in its own name, from time to time in the
Administrative Agent's discretion, for the purpose of carrying out the
terms of this Security Agreement, to take any and all appropriate action
and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Security
Agreement, and, without limiting the generality of the foregoing, Holdings
hereby gives the Administrative 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 Administrative Agent for<PAGE>
12
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
Administrative Agent or as the Administrative Agent shall
direct; (B) to ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other amounts
due or to become due at any time in respect of or arising out
of any Collateral; (C) to sign and endorse any invoices,
freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with
any of the Collateral; (D) to commence and prosecute any
suits, actions or proceedings at law or in equity in any court
of competent jurisdiction to collect the Collateral or any
thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding
brought against 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 Administrative 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
Administrative 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
Administrative Agent were the absolute owner thereof for all
purposes, and to do, at the Administrative Agent's option and
Holdings' expense, at any time, or from time to time, all acts
and things which the Administrative Agent deems necessary to
protect, preserve or realize upon the Collateral and the
Administrative Agent's and the Lenders' Liens thereon and to
effect the intent of this Security Agreement, all as fully and
effectively as 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
Administrative Agent, at any time and from time to time, to execute, in<PAGE>
13
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 Administrative Agent or Lenders' Part. The
powers conferred on the Administrative Agent and the Lenders hereunder are
solely to protect the Administrative Agent's and the Lenders' interests in
the Collateral and shall not impose any duty upon the Administrative Agent
or any Lender to exercise any such powers. Except for the duty of the
Administrative Agent described in Section 10 hereof, and the accounting by
the Administrative Agent for moneys actually received by it hereunder,
neither the Administrative 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
Administrative 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 Administrative 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 Administrative Agent of Holdings'
Obligations. If Holdings fails to perform or comply with any of its
agreements contained herein and the Administrative Agent, as provided for
by the terms of this Security Agreement, shall itself perform or comply,
or otherwise cause performance or compliance, with such agreement, the
expenses of the Administrative Agent incurred in connection with such
performance or compliance, together with interest thereon at a rate per
annum equal to the Alternate Base Rate plus the Applicable Margin plus 2%,
shall be payable by Holdings to the Administrative Agent on demand and
shall constitute Obligations secured hereby. The Administrative Agent
agrees to notify Holdings promptly after incurring any expenses pursuant
to this Section 7, provided that the failure of the Administrative Agent
to so notify Holdings shall in no way impair the rights of the
Administrative Agent under this Section 7.
8. Proceeds. In addition to the rights of the Administrative
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 Administrative 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
Administrative Agent and the Lenders, 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
endorsed by Holdings to the Administrative Agent, if required), and (b)
any and all such Proceeds received by the Administrative Agent (whether
from Holdings or otherwise) may, in the sole discretion of the
Administrative Agent, be held by the Administrative Agent for the ratable
benefit of the Lenders as collateral security for, and/or then or at any
time thereafter may be applied by the Administrative Agent against, the
Obligations (whether matured or unmatured), such application to be in such
order as the Administrative Agent shall elect. Any balance of such
Proceeds remaining after the Obligations shall have been paid in full, the<PAGE>
14
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 Administrative Agent, on behalf of the Lenders, may
exercise, in addition to all other rights and remedies granted to them in
this Security Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a
secured party under the Code. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon 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 Administrative Agent or any Lender or elsewhere
upon such terms and conditions as it may deem advisable and at such prices
as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrative Agent or any Lender
shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or
equity of redemption in Holdings, which right or equity is hereby waived
and released. Holdings further agrees, at the Administrative Agent's
request, to assemble the Collateral and make it available to the
Administrative Agent at places which the Administrative Agent shall
reasonably select, whether at Holdings' premises or elsewhere. The
Administrative 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 Administrative Agent and the
Lenders hereunder, including, without limitation, reasonable attorneys'
fees and disbursements, to the payment in whole or in part of the
Obligations, in such order as the Administrative Agent may elect, and only
after such application and after the payment by the Administrative Agent
of any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the Code, need the Administrative 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 Administrative Agent or any Lender arising out of the
exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days
before such sale or other disposition. 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 Administrative 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.<PAGE>
15
10. Limitation on Duties Regarding Preservation of
Collateral. The Administrative Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Code or otherwise, shall be to deal
with it in the same manner as the Administrative Agent deals with similar
property for its own account. Neither the Administrative Agent, any
Lender, nor any of their respective directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all
or any part of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon
the request of 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
Administrative 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 Administrative Agent or any Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. A waiver by the Administrative Agent
or any Lender of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Administrative
Agent or such Lender would otherwise have on any future occasion. The
rights and remedies herein provided are cumulative, may be exercised
singly or concurrently and are not exclusive of any rights or remedies
provided by law.
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 Administrative 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.<PAGE>
16
16. Notices. All notices, requests and demands hereunder
shall be given in accordance with Section 11.2 of the Credit Agreement.
17. Authority of Administrative Agent. Holdings acknowledges
that the rights and responsibilities of the Administrative Agent under
this Security Agreement with respect to any action taken by the
Administrative Agent or the exercise or non-exercise by the Administrative
Agent of any option, right, request, judgment or other right or remedy
provided for herein or resulting or arising out of this Security Agreement
shall, as between the Administrative Agent and the Lenders, be governed by
the Credit Agreement and by such other agreements with respect thereto as
may exist from time to time among them, but, as between the Administrative
Agent and Holdings, the Administrative Agent shall be conclusively
presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and 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 Administrative 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>
17
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 Administrative 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_____________________________
Name:
Title:<PAGE>
SCHEDULE I
to Holdings
Security
Agreement
INTELLECTUAL PROPERTY
None<PAGE>
19
SCHEDULE II
to Holdings
Security
Agreement
LOCATION OF INVENTORY AND EQUIPMENT
None<PAGE>
EXHIBIT E-3
FORM OF THE SUBSIDIARY SECURITY AGREEMENT
SUBSIDIARY SECURITY AGREEMENT, dated as of October 31, 1996,
made by each of the parties signatories hereto (each, a "Subsidiary";
collectively, the "Subsidiaries"), in favor of THE CHASE MANHATTAN BANK,
as Administrative Agent (in such capacity, the "Administrative Agent") for
the lenders (the "Lenders") parties to the Credit Agreement, dated as of
October 31, 1996 (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 Administrative 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 Administrative Agent for the ratable benefit of
the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into the Credit
Agreement and 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 Administrative 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<PAGE>
2
representations, warranties and covenants made by each
Subsidiary in Paragraphs 4 and 5 hereof, each reference to
"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,<PAGE>
3
licenses and license agreements as to which any Subsidiary is the
licensee shall constitute "Intellectual Property" for the purposes
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 Administrative 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 <PAGE>
4
(x) to the extent not otherwise included, all
Proceeds and products of any and all of the foregoing.
3. Rights of Administrative Agent and Lenders; Limitations
on Administrative Agent's and Lenders' Obligations; Limitation on
Administrative 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 Administrative Agent
nor any Lender shall have any obligation or liability under any Account
(or any agreement giving rise thereto) or under any Contract by reason of
or arising out of this Security Agreement or the receipt by the
Administrative Agent or any such Lender of any payment relating to such
Account or Contract pursuant hereto, nor shall the Administrative Agent or
any Lender be obligated in any manner to perform any of the obligations of
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 Administrative 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
Administrative Agent for the ratable benefit of the Lenders and that
payments in respect thereof shall be made directly to the Administrative
Agent. Upon the occurrence and during the continuance of an Event of
Default, the Administrative 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 Administrative Agent shall
have the right to make test verifications of the Accounts in any manner
and through any medium that it reasonably considers advisable, and each
Subsidiary shall furnish all such assistance and information as the
Administrative Agent may reasonably require in connection therewith. If
an Event of Default shall have occurred and be continuing, then upon the
Administrative Agent's request and at the expense of such Subsidiary, each
Subsidiary shall cause independent public accountants or others
satisfactory to the Administrative Agent to furnish to the Administrative
Agent reports showing reconciliations, aging and test verifications of,
and trial balances for, the Accounts.
(d) Collections on Accounts. The Administrative Agent hereby
authorizes each Subsidiary to collect the Accounts, provided, that subject<PAGE>
5
to the Administrative Agent's direction and control, and the
Administrative 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 by such Subsidiary in the
exact form received, duly endorsed by such Subsidiary to the
Administrative Agent if required, in a special collateral account
maintained by the Administrative Agent, subject to withdrawal by the
Administrative Agent for the account of the Administrative Agent and the
Lenders only, as hereinafter provided, and, until so turned over, shall be
held by such Subsidiary in trust for the Administrative 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 Administrative Agent (or by any Subsidiary in trust for the
Administrative 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
Administrative Agent's election, the Administrative Agent shall apply all
or any part of the funds on deposit in said special collateral account on
account of the Obligations in such order as the Administrative Agent may
elect, and any part of such funds which the Administrative Agent elects
not so to apply and deems not required as collateral security for the
Obligations shall be paid over from time to time by the Administrative
Agent to such Subsidiary or to whomsoever may be lawfully entitled to
receive the same. At the Administrative Agent's reasonable request, each
Subsidiary shall deliver to, or make available for review by, the
Administrative Agent all original and other documents evidencing, and
relating to, the agreements and transactions which gave rise to the
Accounts, including, without limitation, all original orders, invoices and
shipping receipts.
(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
Administrative 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 Administrative 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<PAGE>
6
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 Administrative 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 Administrative 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 Administrative
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<PAGE>
7
Agreement (to the extent, and only to the extent, reasonably
requested by the Administrative 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,
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
Administrative 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 Administrative 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 Administrative Agent may reasonably request for the
purpose of obtaining or preserving the full benefits of this
Security Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing or
continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the Liens created hereby. Such
Subsidiary also hereby authorizes the Administrative 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 Administrative Agent, duly endorsed in a manner satisfactory to
the Administrative 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 Administrative 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 Administrative 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; 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 Administrative Agent.
In any suit, proceeding or action brought by the Administrative
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 Administrative 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 Administrative
Agent's and the Lenders' further security, the Administrative Agent,
for the ratable benefit of the Lenders, shall have a security
interest in all of such Subsidiary's books and records pertaining to
the Collateral.
(d) Right of Inspection. The Administrative 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 Administrative Agent and its representatives may
examine the same, take extracts therefrom and make photocopies
thereof, and such Subsidiary agrees to render to the Administrative
Agent, at such Subsidiary's cost and expense to the extent expressly<PAGE>
9
provided in Section 11.5 of the Credit Agreement, such clerical and
other assistance as may be reasonably requested with regard thereto.
The Administrative 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 Administrative
Agent such right) for the purpose of inspecting the same, observing
its use or otherwise protecting the Administrative 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
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
Administrative Agent, adversely affect the Administrative 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
Administrative 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 Administrative Agent a copy of each material demand,
notice or document received by it relating in any way to any<PAGE>
10
material agreement giving rise to an Account which affects the
interests of the Administrative 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
Administrative 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.
(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 Administrative 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 Administrative Agent, such
losses of $1 million or more shall be payable to such Subsidiary and
the Administrative Agent, for the benefit of the Lenders, as their
respective interests may appear. All such insurance shall (i) to
the extent requested by the Administrative Agent, provide for a 30-
day standard cancellation notice, (ii) name the Administrative
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 Administrative Agent. If reasonably requested by the
Administrative Agent, such Subsidiary shall deliver to the
Administrative 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 Administrative
Agent may from time to time reasonably request.
(l) Further Identification of Collateral. Such Subsidiary
will furnish to the Administrative Agent and the Lenders from time
to time statements and schedules further identifying and describing
the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all
in reasonable detail.
(m) Notices. Such Subsidiary will advise the Administrative
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<PAGE>
11
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 Administrative
Agent in connection with this Security Agreement would become
seriously misleading, unless (x) such Subsidiary shall have given
the Administrative 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
Administrative 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. 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
Administrative 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 Administrative Agent, such Subsidiary shall
execute and deliver any and all agreements, instruments, documents,
and papers as the Administrative Agent may reasonably request to
evidence the Administrative 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 Administrative
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 Administrative 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<PAGE>
12
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 Administrative 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 Administrative Agent such assignments, notices of assignment
and other documents or information as shall be necessary or
otherwise requested by the Administrative 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. Administrative Agent's Appointment as Attorney-in-Fact.
(a) Powers. Each Subsidiary hereby irrevocably constitutes
and appoints the Administrative Agent and any officer or agent thereof,
with full power of substitution, as its true and lawful attorney-in-fact
with full irrevocable power and authority in the place and stead of such
Subsidiary and in the name of such Subsidiary or in its own name, from
time to time in the Administrative Agent's discretion, for the purpose of
carrying out the terms of this Security Agreement, to take any and all
appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this
Security Agreement, and, without limiting the generality of the foregoing,
such Subsidiary hereby gives the Administrative 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
Administrative Agent for the purpose of collecting any and all such
moneys due under any Account, Instrument, General Intangible or
Contract or with respect to any other Collateral whenever payable;
(ii) 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<PAGE>
13
(iii) upon the occurrence and during the continuance of any
Event of Default, (A) to direct any party liable for any payment
under any of the Collateral to make payment of any and all moneys
due or to become due thereunder directly to the Administrative Agent
or as the Administrative Agent shall direct; (B) to ask or demand
for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in
respect of or arising out of any Collateral; (C) to sign and endorse
any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of
the Collateral; (D) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any thereof and to enforce
any other right in respect of any Collateral; (E) to defend any
suit, action or proceeding brought against 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
Administrative 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 Administrative 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 Administrative Agent were the absolute
owner thereof for all purposes, and to do, at the Administrative
Agent's option and such Subsidiary's expense, at any time, or from
time to time, all acts and things which the Administrative Agent
deems necessary to protect, preserve or realize upon the Collateral
and the Administrative Agent's and the Lenders' Liens thereon and to
effect the intent of this Security Agreement, all as fully and
effectively as 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
Administrative 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 Administrative Agent or Lenders' Part. The
powers conferred on the Administrative Agent and the Lenders hereunder are
solely to protect the Administrative Agent's and the Lenders' interests in
the Collateral and shall not impose any duty upon the Administrative Agent
or any Lender to exercise any such powers. Except for the duty of the
Administrative Agent described in Section 10 hereof, and the accounting by
the Administrative Agent for moneys actually received by it hereunder,
neither the Administrative 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<PAGE>
14
prior parties or any other rights pertaining to any Collateral). The
Administrative 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 Administrative 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 Administrative Agent of Subsidiary's
Obligations. If any Subsidiary fails to perform or comply with any of its
agreements contained herein and the Administrative Agent, as provided for
by the terms of this Security Agreement, shall itself perform or comply,
or otherwise cause performance or compliance, with such agreement, the
expenses of the Administrative Agent incurred in connection with such
performance or compliance, together with interest thereon at a rate per
annum equal to the Alternate Base Rate plus the Applicable Margin plus 2%,
shall be payable by such Subsidiary to the Administrative Agent on demand
and shall constitute Obligations secured hereby. The Administrative Agent
agrees to notify such Subsidiary promptly after incurring any expenses
pursuant to this Section 7, provided that the failure of the
Administrative Agent to so notify such Subsidiary shall in no way impair
the rights of the Administrative Agent under this Section 7.
8. Proceeds. In addition to the rights of the Administrative
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 Administrative 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 Administrative Agent and the Lenders, segregated from other
funds of such Subsidiary, and shall, forthwith upon receipt by such
Subsidiary, be turned over to the Administrative Agent in the exact form
received by such Subsidiary (duly endorsed by such Subsidiary to the
Administrative Agent, if required), and (b) any and all such Proceeds
received by the Administrative Agent (whether from any Subsidiary or
otherwise) may, in the sole discretion of the Administrative Agent, be
held by the Administrative Agent for the ratable benefit of the Lenders as
collateral security for, and/or then or at any time thereafter may be
applied by the Administrative Agent against, the Obligations (whether
matured or unmatured), such application to be in such order as the
Administrative 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 Administrative Agent, on behalf of the Lenders, may
exercise, in addition to all other rights and remedies granted to them in
this Security Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a
secured party under the Code. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind
(except any notice required by law referred to below) to or upon any
Subsidiary or any other Person (all and each of which demands, defenses,<PAGE>
15
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 Administrative Agent or any Lender or elsewhere
upon such terms and conditions as it may deem advisable and at such prices
as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrative Agent or any Lender
shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase
the whole or any part of the Collateral so sold, free of any right or
equity of redemption in any Subsidiary, which right or equity is hereby
waived and released. Each Subsidiary further agrees, at the
Administrative Agent's request, to assemble the Collateral and make it
available to the Administrative Agent at places which the Administrative
Agent shall reasonably select, whether at such Subsidiary's premises or
elsewhere. The Administrative 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 Administrative
Agent and the Lenders hereunder, including, without limitation, reasonable
attorneys' fees and disbursements, to the payment in whole or in part of
the Obligations, in such order as the Administrative Agent may elect, and
only after such application and after the payment by the Administrative
Agent of any other amount required by any provision of law, including,
without limitation, Section 9-504(1)(c) of the Code, need the
Administrative 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 Administrative
Agent or any Lender arising out of the exercise by them of any rights
hereunder. If any notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least 10 days before such sale or other
disposition. 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 Administrative 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 Administrative Agent's sole duty with respect to the
custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Code or otherwise, shall be to deal
with it in the same manner as the Administrative Agent deals with similar
property for its own account. Neither the Administrative Agent, any
Lender, nor any of their respective directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all
or any part of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon
the request of any Subsidiary or otherwise.<PAGE>
16
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
Administrative 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 Administrative Agent or any Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. A waiver by the Administrative Agent
or any Lender of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Administrative
Agent or such Lender would otherwise have on any future occasion. The
rights and remedies herein provided are cumulative, may be exercised
singly or concurrently and are not exclusive of any rights or remedies
provided by law.
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 each
Subsidiary and shall inure to the benefit of the Administrative 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 Administrative Agent. Each Subsidiary
acknowledges that the rights and responsibilities of the Administrative
Agent under this Security Agreement with respect to any action taken by
the Administrative Agent or the exercise or non-exercise by the
Administrative Agent of any option, right, request, judgment or other
right or remedy provided for herein or resulting or arising out of this
Security Agreement shall, as between the Administrative Agent and the<PAGE>
17
Lenders, be governed by the Credit Agreement and by such other agreements
with respect thereto as may exist from time to time among them, but, as
between the Administrative Agent and each Subsidiary, the Administrative
Agent shall be conclusively presumed to be acting as agent for the Lenders
with full and valid authority so to act or refrain from acting, and 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 Administrative 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
Administrative 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 Administrative
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 Administrative 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 Administrative
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.
DIAMOND WIRE & CABLE CO.<PAGE>
18
By____________________________________
Name:
Title:
ESSEX GROUP EXPORT INC.
By___________________________________
Name:
Title:
ESSEX INTERNATIONAL, INC.
By__________________________________
Name:
Title:
US SAMICA CORPORATION
By____________________________________
Name:
Title:
INTERSTATE INDUSTRIES HOLDINGS
INC.
By____________________________________
Name:
Title:
INTERSTATE INDUSTRIES, INC.
By____________________________________
Name:
Title:<PAGE>
SCHEDULE I
to Subsidiary
Security Agreement
TRADEMARKS AND TRADE NAMES
Trademark and/or
Country Trade Name Registration Expiration
------- ---------------- ------------ ----------
US FEMCO 1,584,450 02/27/00*
US ISOMICA 575,202 06/02/03**
US MICANITA and Drawing 22,623 03/07/03**
US SAMICA 558,013 04/22/02**
US SAMICAPOR 1,095,179 07/04/98**
US SAMICATHERM 995,614 03/20/03**
* Registered to Femco Magnet Wire Corporation.
** These trademarks and/or tradenames are licensed for use by
US Samica Corporation.<PAGE>
TECHNOLOGY LICENSING AGREEMENTS
<TABLE>
<CAPTION>
<S> <C>
Parties Description
------- -----------
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 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
Windings, Inc. fabricating of packages and/or Reelex
Machines.
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>
SCHEDULE II
to Subsidiary
Security Agreement
Locations of Inventory and Equipment
----------------------------------
Windcrest Rd.
Rutland, VT
Rutland County
Attala Industrial Park
Kosciusko, MS 39090
Attala County
Old Mike - Filthy Lucre Lode
Black Hills
Custer County, SD
Location Code: N/A
7 Rimini Mews Unit C
Mississauga, Ontario
Canada L5N 4K1<PAGE>
EXHIBIT F
FORM OF SUBSIDIARY GUARANTEE
SUBSIDIARY GUARANTEE, dated as of October 31, 1996, by each of
the corporations that are signatories hereto (the "Guarantors") in favor
of THE CHASE MANHATTAN BANK, a New York banking corporation, as agent (in
such capacity, the "Administrative 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 October 31, 1996,
among the Company, BCP/Essex Holdings Inc., the Administrative 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
Administrative Agent and the Lenders as follows:
1. Defined Terms. As used in this Guarantee, terms defined
in the Credit Agreement are used herein as therein defined, and the
following 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
Administrative 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 Administrative
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
Administrative Agent and the Lenders and their respective successors,
endorsees, transferees and assigns, the prompt and complete payment and<PAGE>
3
performance by the Company 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 Administrative 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 Administrative 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 Administrative 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 Administrative Agent or any
Lender on account of its liability hereunder, it will notify the
Administrative Agent in writing that such payment is made under this
Guarantee for such purpose.
3. Right of 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 Administrative Agent and the Lenders, and each Guarantor shall
remain liable to the Administrative 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<PAGE>
4
Default shall have occurred and be continuing, without notice to such
Guarantor or any other Guarantor, any such notice being expressly waived
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 Administrative
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 Administrative 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 Administrative 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 Administrative Agent and the Lenders, segregated from other
funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Administrative Agent in the exact form
received by such Guarantor (duly endorsed by such Guarantor to the
Administrative Agent, if required), to be applied against the Obligations,
whether matured or unmatured, in such order as the Administrative 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 Administrative Agent or any Lender may be rescinded by such party and
any of the Obligations continued, and the Obligations, or the liability of
any other party upon or for any part thereof, or any collateral security
or guarantee therefor or right of offset with respect thereto, may, from
time to time, in whole or in part, be renewed, extended, amended,<PAGE>
5
modified, accelerated, compromised, waived, surrendered or released by the
Administrative Agent or any Lender and this Guarantee, the Credit
Agreement, any Revolving Credit Notes, the Loan Documents, any other
collateral security document or other 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 Administrative Agent or any Lender for the payment of
the Obligations may be sold, exchanged, waived, surrendered or released.
Neither the Administrative Agent nor any Lender shall have any obligation
to protect, secure, perfect or insure any Lien at any time held as
security for the Obligations or for this Guarantee or any property subject
thereto. When making any demand hereunder against any of the Guarantors,
the Administrative 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 Administrative 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 Administrative 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 Administrative Agent or any Lender
upon this Guarantee or acceptance of this Guarantee, the Obligations, and
any of them, shall conclusively be deemed to have been created, contracted
or incurred, or renewed, extended, amended or waived, in reliance upon
this Guarantee; and all dealings between the Company or any of the
Guarantors and the Administrative 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
Administrative 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
Administrative 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 Administrative Agent and any Lender may, but shall be under
no obligation to, pursue such rights and remedies as it may have against<PAGE>
6
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 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
Administrative 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 Administrative 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 Administrative Agent without set-off or
counterclaim in U.S. Dollars at the office of the Administrative Agent
located at c/o Chase Agent Bank Services Group, Grand Central Tower, 140
East 45th Street, New York, New York 10017, Attn: Jesus Sang, Clearing
Account No. 144-816-041.
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 Administrative 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
Administrative 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<PAGE>
7
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
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
Administrative 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 Administrative Agent or any Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. A waiver by the Administrative Agent
or any Lender of any right or remedy hereunder on any one occasion shall
not be construed as a bar to any right or remedy which the Administrative
Agent or such Lender would otherwise have on any future occasion. The
rights and remedies herein provided are cumulative, may be exercised
singly or concurrently and are not exclusive of any rights or remedies
provided by law.
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 Administrative Agent or any Lender
relative to the subject matter hereof not reflected herein. None of the
terms or provisions of this Guarantee may be waived, amended or
supplemented or otherwise modified except 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 Administrative 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
Administrative Agent shall have been notified pursuant to the Credit
Agreement.<PAGE>
8
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
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
Administrative 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 Administrative 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 Administrative 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<PAGE>
9
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.
DIAMOND WIRE & CABLE CO.
By ____________________________
Name:
Title:
ESSEX GROUP EXPORT INC.
By ____________________________
Name:
Title:
ESSEX INTERNATIONAL, INC.
By ____________________________
Name:
Title:
US SAMICA CORPORATION
By ____________________________
Name:
Title:
INTERSTATE INDUSTRIES HOLDINGS
INC.
By____________________________________
Name:
Title:
INTERSTATE INDUSTRIES, INC.
By____________________________________
Name:
Title:<PAGE>
SCHEDULE I
Addresses of Guarantors
c/o Essex Group, Inc.
1601 Wall Street
Fort Wayne, IN 46802
ATTN: David A. Owen<PAGE>
EXHIBIT G-1
[CRAVATH, SWAIN & MOORE LETTERHEAD]
October 31, 1996
BCP/Essex Holdings Inc.
Credit Agreement dated as of October 31, 1996
Ladies and Gentlemen:
We have acted as New York counsel to BCP/Essex Holdings Inc.,
a Delaware corporation ("Holdings"), in connection with the Credit
Agreement dated as of October 31, 1996 (the "Credit Agreement"), among
Holdings, Essex Group, Inc., a Michigan corporation ("Essex"), the lending
institutions party thereto (the "Lenders") and The Chase Manhattan Bank,
as Administrative Agent for the Lenders ("Administrative Agent"). This
opinion is being delivered to you pursuant to Section 5.1(g)(i) of the
Credit Agreement. Capitalized terms used but not defined herein have the
meanings assigned to them in the Credit Agreement.
In that connection, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of such documents,
corporate records and other instruments as we have deemed necessary or
appropriate for purposes of this opinion, including (i) the Credit
Agreement, (ii) each Note, (iii) the Pledge Agreements, (iv) the Security
Agreements, (v) the Mortgages, (vi) the Subsidiary Guarantee, (vii) the
Certificates of Incorporation of each of the Loan Parties, as amended,
(viii) the By-laws of each of the Loan Parties, (ix) resolutions adopted
by the Boards of Directors of each of the Loan Parties on October 28, 1996
and (x) executed copies of the Form UCC-1 financing statements listed on
Schedule I hereto (the "Financing Statements"). The documents described
in clauses (iii), (iv), (v) and (vi) of the immediately preceding sentence
are sometimes referred to herein as the "Security Documents" and, together
with the documents described in clauses (i) and (ii), are sometimes
referred to herein as the "Loan Documents". We have also relied, with
respect to certain factual matters, on the representations and warranties
of the Loan Parties contained in the Loan Documents and have assumed
compliance by the Loan Parties with the terms of the Loan Documents.
In rendering our opinion, we have assumed the due
authorization, execution and delivery of the Credit Agreement and the
other Loan Documents by all parties thereto other than the Loan Documents
as executed by Holdings and Essex International, Inc. ("Essex
International").
Based on the foregoing and subject to the qualifications
hereinafter set forth, we are of opinion as follows:
1. Holdings is a corporation incorporated under the laws of
the State of Delaware, and, based solely on a certificate from the
Secretary of State of the State of Delaware, Essex International is a
corporation validly existing and in good standing under the laws of the
State of Delaware.
Each of Holdings and Essex International has all necessary
corporate power and authority to execute and deliver the Loan Documents
and to perform its obligations thereunder, and the execution and delivery
of the Loan Documents by each of them, the performance of their
obligations thereunder and the grant by them of security interests<PAGE>
2
pursuant to the Security Documents have been duly authorized by all
requisite corporate action on the part of each of Holdings and Essex
International.
2. The execution and delivery by the Loan Parties of the Loan
Documents, the performance by the Loan Parties of their obligations
thereunder and the grant by the Loan Parties of security interests
pursuant to the Security Documents (a) will not 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; and (b) will not
conflict with, result in a breach of or constitute a default under (i) the
Certificate of Incorporation or By-laws of Holdings or Essex
International, (ii) any law, rule or regulation of the United States of
America (including, without limitation, Regulations G, T, U and X of the
Board of Governors of the Federal Reserve System) or the State of New York
or the General Corporation Law of the State of Delaware, (iii) the
provisions of any agreement listed on Schedule I hereto or (iv) to our
knowledge, any order or decree of any court or government agency or
instrumentality. In connection with the foregoing, we point out that
certain of the agreements referred to in clause (b)(iii) above are or may
be governed by laws other than the laws of the State of New York. For
purposes of the opinion expressed in this paragraph, however, we have
assumed that all such agreements are governed by and would be interpreted
in accordance with the laws of the State of New York.
3. Each of Holdings and Essex International has duly executed
and delivered each of the Loan Documents to which it is a party, and each
such document constitutes a legal, valid and binding obligation of each of
Holdings and Essex International, enforceable against each of Holdings and
Essex International in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer
and other similar laws relating to or affecting creditor's rights
generally from time to time in effect and to general principles of equity
(including, without limitation, concepts of materiality, reasonableness,
good faith and fair dealing), regardless of whether considered in a
proceeding in equity or at law. The foregoing opinion is subject to the
following qualifications: (i) certain provisions of the Security Documents
(including the Mortgages) are or may be unenforceable in whole or 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
each such Security Document contains adequate provisions for the practical
realization of the principal rights and benefits intended to be 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,
(ii) insofar as provisions contained in the Loan Documents provide for
indemnification, the enforceability thereof may be limited by public
policy considerations, (iii) the availability of a decree for specific
performance or an injunction is subject to the discretion of the court
requested to issue any such decree or injunction, (iv) we express no
opinion as to the effect of the laws of any jurisdiction other than the
State of New York where any lender may be located or where enforcement of
the Security Documents may be sought that limits the rates of interest
legally chargeable or collectible and (v) 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<PAGE>
3
account debtors and any claims or defenses of such lessees or account
debtors against such Loan Party.
4. No authorization, approval or other action by, and no
notice to, consent of, order of or filing with, any United States Federal,
New York or, to the extent required under the General Corporation Law of
the State of Delaware, Delaware governmental authority is required in
connection with the execution, delivery and performance by each of the
Loan Parties of any of the Loan Documents or the grant by each of the Loan
Parties of the security interests under the Pledge Agreements and the
Security Agreements, other than (i) those that have been made or obtained
and are in full force and effect or as to which the failure to be made or
obtained or to be in full force and effect would not result, individually
or in the aggregate, in a material adverse effect on each of Holdings and
Essex International and its subsidiaries, taken as a whole, (ii) such
registrations, filings and approvals under federal or state securities
laws as may be necessary in connection with the sale of the Pledged Stock
pursuant to the Pledge Agreements and (iii) filings of Uniform Commercial
Code financing statements in appropriate offices in order to perfect
certain security interests granted under the Security Agreements.
5. No Loan Party is an "investment company" as defined in, or
subject to regulation under, the Investment Company Act of 1940. No Loan
Party is a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
6. Execution and delivery of the Pledge Agreements, together
with delivery to and the continued possession by the Collateral Agent, in
each case in the State of New York, of all the Pledged Stock, issued or
endorsed in the name of the Collateral Agent or in blank or together with
stock powers properly executed in the name of the Collateral Agent or in
blank with respect thereto, will create a valid and duly perfected lien on
and a security interest in the Pledged Stock pledged on the date hereof
under the Pledge Agreements, which security interest in such Pledged Stock
will be prior to any security interest, lien, charge or encumbrance that
must be perfected by possession or filing under the Uniform Commercial
Code of the State of New York as in effect on the date hereof (the "New
York UCC"). The opinion expressed in this paragraph 6 is based on the
assumption that the Collateral Agent and each of the Lenders have taken
delivery of, and acquired their security interest in, the Pledged Stock in
good faith and without notice of any adverse claim. For purposes of the
foregoing sentence, the terms "good faith", "notice" and "adverse claim"
shall have the meanings given to such terms in the New York UCC.
7. The provisions of each of the Security Agreements are
effective to create in favor of the Collateral Agent a valid security
interest in all right, title and interest of each Loan Party in such of
the Collateral (as defined in the relevant Security Agreement) as
constitutes "accounts", "documents", "equipment", "general intangibles",
"instruments" and "inventory" within the meaning of the New York UCC (such
of the Collateral being hereinafter referred to as the "Specified
Collateral"), to the extent that the creation of security interests in the
Specified Collateral is governed by the New York UCC.
The opinion expressed in this paragraph 7 is based on the
assumption that all filings and recordings necessary to maintain the
effectiveness of the Financing Statements will be made, including without
limitation (i) continuation statements, which are required under Article 9<PAGE>
4
of the New York UCC to be filed within the period of six months prior to
the expiration of five years from the date of the original filing of the
Financing Statements, and (ii) such other statements as may be required by
(x) any change in name, identity or corporate structure of either of
Holdings or Essex International or the Collateral Agent, (y) any change in
the location of the chief executive offices of either of Holdings or Essex
International, and (z) any change of location of any of the Collateral
(which, in the case of Collateral removed from the State of New York, will
require further action to be taken in the jurisdiction to which such
Collateral has been removed).
Our opinions expressed in paragraphs 6 and 7 are further
qualified as follows:
(a) in the case of instruments (as such term is defined in
Article 9 of the New York UCC), not constituting part of chattel
paper (as such term is defined in Article 9 of the New York UCC),
the security interests of the Collateral Agent under the Security
Agreement cannot be perfected by the filing of financing statements
but will be perfected if possession thereof is obtained or
maintained by the Collateral Agent in accordance with the provisions
of Article 9 of the New York UCC;
(b) we express no opinion as to any Loan Party's rights in or
title to the Pledged Stock or any Collateral;
(c) we express no opinion as to the validity or perfection of
any security interests in any item of collateral other than the
Pledged Stock existing on the date hereof and Specified Collateral,
in any item of Collateral which is expressly excluded from the
application of the New York UCC pursuant to Section 9-104 thereof,
in any item of Collateral which consists of fixtures (as defined in
Section 9-313 of the New York UCC) or in any item of Collateral
which is 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 title for the perfection of
a security interest therein or which specifies a place of filing
different from that specified in the New York UCC for filing to
perfect such security interest or (B) a certificate of title
statute;
(d) we express no opinion as to the perfection of any security
interest in any proceeds;
(e) except as specifically set forth in paragraph 6, we
express no opinion as to the priority of any security interest
created under the Security Documents, and we express no opinion in
paragraph 6 as to the relative priority of the security interest in
the Pledged Stock as against (i) any claim or lien in favor of the
United States of America or any agency or instrumentality thereof
(including, without limitation, Federal tax liens and liens under
Title IV of the Employee Retirement Income Security Act of 1974, as
amended) or (ii) the claim of a lien creditor to the extent set
forth in Section 9-301 of the New York UCC;
(f) 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<PAGE>
5
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;
(g) we express no opinion as to the validity or enforceability
of any security interest in goods (as defined in the New York UCC)
which have been bought by a buyer in the ordinary course of business
(as defined in Section 1-201 of the New York UCC); and
(h) we express no opinion in paragraph 7 as to what law,
pursuant to Section 9-103 of the New York UCC, would govern
perfection of the security interests granted in the Collateral.
We express no opinion herein as 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(a) 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 Agreements and the Loan Documents,
(iii) the waiver of an inconvenient forum set forth in Section 11.12(b) of
the Credit Agreement and Section 18(b) of the Subsidiary Guarantee,
(iv) Section 11.7(b) of the Credit Agreement insofar as it relates to
setoffs in respect of participations purchased in Loans or (v) any
provision in any Loan Document insofar as it provides a right of setoff in
respect of claims, credits or other obligations that are contingent or a
right of setoff in respect of Obligations against deposits, indebtedness
or other obligations of any entity other than the entity to which such
Obligations are payable.
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, and the
security interests of the Collateral Agent and the Lenders, under the Loan
Documents, and we express no opinion thereon.
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.
Our opinion in paragraph 4 as to certain consents,
authorizations, filings or any other acts, our opinion in paragraph 2 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.
In connection with this opinion, including our opinion
contained in paragraph 2 as to there being no violation of certain<PAGE>
6
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
we express no opinion as to matters governed by any laws other than the
laws of the State of New York, the General Corporation Law of the State of
Delaware and the Federal law of the United States of America. Our opinion
set forth in paragraph 6 hereof is limited to Article 8 of the New York
UCC, and our opinion set forth in paragraph 7 hereof is limited to
Article 9 of the New York UCC.
This opinion is rendered only to the Administrative Agent and
the Lenders and their permitted transferees under the Credit Agreement and
is solely for their benefit in connection with the above transactions.
This opinion may not be relied upon by any other person or for any other
purpose or used, circulated, quoted or otherwise referred to for any other
purpose.
Very truly yours,
/s/ Cravath, Swaine & Moore
The Lenders Party to the
Credit Agreement
referred to above
The Chase Manhattan Bank, as Administrative Agent
In care of Chase Securities, Inc.
10 South LaSalle Street
Chicago, IL 60603
47NS
O<PAGE>
SCHEDULE I
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 party
thereto and Chemical Bank, as administrative agent.<PAGE>
Officer's Certificate
10% Senior Notes Due 2003
----------------------
The undersigned is the Chief Financial Officer of Essex Group, Inc.
("Essex"), a Michigan corporation and a wholly owned subsidiary of
BCP/Essex Holdings Inc. ("Holdings"). 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 and NBD Bank, National Association,
in respect of the 10% Senior Notes Due 2003, (ii) 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, (iii) the Agreement and Lease dated as of April 12,
1995 (the "Lease"), between Mellon Financial Services Corporation #3 and
Essex, and (iv) the Credit Agreement dated as of October 31, 1996 (the
"Credit Agreement"), among Holdings, Essex, the Lenders named therein and
The Chase Manhattan Bank, as administrative agent. 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 Note Agreement, the Lease or the Credit
agreement, 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 Note Agreement, the Lease and the Credit Agreement, 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, $25,000,000.
4. The calculation attached hereto is true and correct and hs
been made on good faith assumptions and has been calculated in accordance
with the terms and provisions of the Indenture.
______________________________
David A. Owen
Dated: October 31, 1996<PAGE>
Essex Group, Inc. Exhibit A
Consolidated EBITDA Coverage Ratio
As defined in the Sr. Note re Section 4.04(a). Calculated on a Proforma
basis as of June 30, 1996.
Events affecting the Proforma calculation include the following:
(1) Issuance of Debt by Essex International, Inc., beginning May,
1996
(2) Asset Acquisition of Electro Brownell, October, 1995
(3) Asset Acquisition of BICC Phillips, March, 1996
(4) Asset Acquisition of Triangle Wire & Cable, October, 1996
Impact of the above:
(a) Increased interest expense from debt related to each.
Included in Proforma interest expense as if incurred at
beginning of period.
(b) EBITDA is to be increased by earnings of each acquisition for
the period. This is assumed to be zero.
Consolidated Adjusted Net Income ($million)
Actual 40.1
Proforma interest (7.1)
-----
Proforma Income 33.0 33.0
+ Consolidated Interest Expense
Actual 38.7
Proforma interest 7.1
----
Total Interest 45.8 45.8
+ Income Taxes 20.2
+ Depreciation (excluding purchase actg.) 17.7
+ Amortization 2.3
+ Other Non-Cash Charges 2.7
----
Defined EBITDA 121.7
Proforma Interest Expense 45.8
Consolidated EBITDA Coverage Ratio 2.66<PAGE>
EXHIBIT G-2
ESSEX GROUP, INC.
1601 Wall Street
Fort Wayne, Indiana 46801-1601
October 31, 1996
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 October 31, 1996 (the "Credit
Agreement"), among Holdings, Essex, the lenders party thereto (the
"Lenders") and The Chase Manhattan Bank, as Administrative Agent (in such
capacity, the "Administrative Agent").
This opinion is furnished to you pursuant to
Section 5.1(g)(ii) 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. Holdings is a corporation incorporated under the laws of
the State of Delaware. Each of Essex 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. <PAGE>
2
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
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 number of shares owned of record and beneficially
by each of Holdings and Essex. 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 Schedules III and IV hereto.<PAGE>
3
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.
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 GCL. 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
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,
/s/ Debra F. Minnott
The Lenders Party to the
Credit Agreement
referred to above
The Chase Manhattan Bank, as Administrative Agent
In care of Chase Securities, Inc.
10 South LaSalle Street
Chicago, IL 60603<PAGE>
SCHEDULE I
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 party
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>
BCP/Essex
Essex Group, Inc. (Michigan) Holdings Inc.
(Formerly UAE of Michigan, Inc.) 1,000 100 (100)
Essex Group, Inc.
Essex International, Inc. (Delaware) 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 Export Inc. (U.S. Virgin Essex Group, Inc.
Islands) 1,000 1,000 (1,000)
Essex Group, Inc.
(42.656)
Interstate Industries Holdings Inc. CMP Group, Inc.
(Delaware) 2,000 53.32 (10.664)
Interstate Industries
Interstate Industries, Inc. Holdings Inc.
(Mississippi) 500 100 (100)
</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).
There are outstanding as of the date of the attached opinion
47,237,698 shares of Class A Common 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 5,570,950 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 (as amended from time to time)
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 BCP/Essex Holdings Inc. (formerly
Acquisition Corporation).
Investors Shareholders Agreement dated as of October 9, 1992, among
BCP/Essex Holdings Inc. (formerly Acquisition Corporation), Bessemer
Holdings, L.P., DLJ, Goldman and Chase 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 BCP/Essex Holdings Inc. (formerly Acquisition
Corporation) and the Management Optionholders.
Management Stock Subscription Agreements dated as of October 9,
1992, between BCP/Essex Holdings Inc. (formerly Acquisition
Corporation) and each individual Management Investor.
Management Stockholders and Registration Rights Agreement dated as
of October 9, 1992, among BCP/Essex Holdings Inc. (formerly
Acquisition Corporation), Bessemer Holdings, L.P. and each of the
Management Investors.
Registration Rights Agreement dated as of October 9, 1992, among
BCP/Essex Holdings Inc. (formerly 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 Agreements.
The Certificate of Incorporation of Holdings, including the
Certificates of Designation relating to the Series A Cumulative
Redeemable Exchangeable Preferred Stock of Holdings.
Warrant Agreement dated as of October 9, 1992, among BCP/Essex
Holdings Inc. (formerly Acquisition Corporation), DLJ and Goldman.<PAGE>
EXHIBIT G-3
FORM OF OPINION OF LOCAL COUNSEL1/
October 31, 1996
The Lenders Parties to the
Credit Agreement
referred to below
The Chase Manhattan Bank,
as Administrative 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 Administrative 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 "Administrative 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 Administrative 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 Administrative 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 Administrative 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 Administrative 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 October 31, 1996 (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 THE CHASE MANHATTAN 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 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: October 31, 1996<PAGE>
EXHIBIT I
[FORM OF ASSIGNMENT AND ACCEPTANCE]
Reference is made to the Credit Agreement, dated as of
October 31, 1996, 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 The Chase Manhattan Bank, as
Administrative 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, an interest (the "Assigned
Interest") as specified on Schedule 1 hereto, 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 2.16 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 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<PAGE>
2
own credit decisions in taking or not taking action under the Credit
Agreement and each other 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 Credit Agreement or any
other 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
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 2.16(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 2.16, 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 Administrative Agent for
acceptance by it and recording by the Administrative 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 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 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>
1
Schedule 1 to Assignment and Acceptance Respecting
Credit Agreement, dated as of October 31, 1996, among Essex Group, Inc.,
BCP/Essex Holdings Inc., the Lenders named therein and The Chase Manhattan
Bank as Administrative Agent
Name of Assignor:
Name of Assignee:
Effective Date of Assignment:
[CAPTION]
<TABLE>
<S> <C>
Revolving Credit Commitment Percentage Assigned
(to at least fifteen decimals)
(shown as a percentage of aggregate principal
Principal Amount Assigned Commitment Percentages of all Lenders
ASSIGNEE ASSIGNOR
By:____________________ By:_____________________
Name: Name:
Title: Title:
Accepted for Recordation Consented To:
in the Register:
THE CHASE MANHATTAN BANK, ESSEX GROUP, INC.
as Administrative Agent
By:_____________________
Name:
Title:
By:____________________ THE CHASE MANHATTAN BANK,
Name: as Administrative Agent
Title:
By:______________________
Name:
Title:
COMERICA BANK, as Issuing
Lender
By:______________________
Name:
Title:
/TABLE
<PAGE>
[Indiana]
MORTGAGE
THIS MORTGAGE, dated as of October 31, 1996 is made by ESSEX
GROUP, INC., a Michigan corporation ("Mortgagor"), whose address is 1601
Wall Street, Fort Wayne, Indiana 46802, to THE CHASE MANHATTAN BANK, a New
York banking corporation, as administrative 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 banks and other
financial institutions parties thereto and Chemical Bank (as predecessor-
in-interest to Mortgagee), as agent, are parties to the Credit Agreement,
dated as of April 12, 1995 (as amended through the date hereof, the
"Existing Credit Agreement"). BCP/Essex Holdings, Inc. and Mortgagor have
requested that the Existing Credit Agreement be terminated on the
Effective Date.
B. Mortgagor has requested that (i) the Lenders make
revolving credit loans (the "Loans") to Mortgagor in an aggregate
principal amount not to exceed $ , 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
Mortgagor and its Subsidiaries, (c) to finance the acquisition and
assumption of substantially all of the assets and certain related
liabilities of certain businesses of Triangle Wire & Cable, Inc. and
related costs and expenses, (d) to pay reasonable fees and expenses in
connection with the transactions contemplated hereby and (e) for general
corporate purposes, and (ii) the Issuing Lender issue Letters of Credit
for the account of Mortgagor in an aggregate amount not to exceed
$25,000,000 at any time outstanding.
C. BCP/Essex Holdings Inc., Mortgagor, the several banks
and financial institutions from time to time parties thereto (the
"Lenders") and Mortgagee have entered into 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 2.11(d) of the Credit Agreement.
D. 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").
E. Pursuant to the terms of the Credit Agreement, the
Lenders have agreed to make the Loans and the Issuing Lender has agreed to<PAGE>
2
issue Letters of Credit, 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.
F. 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:
(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 Six
Hundred Million Dollars ($600,000,000), 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)<PAGE>
3
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;
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<PAGE>
4
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;
(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<PAGE>
5
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
(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<PAGE>
6
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".
(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. 1. 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. <PAGE>
7
(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
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<PAGE>
8
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
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 the earlier of the date the payment is required to be made
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<PAGE>
9
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
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 2.8(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<PAGE>
10
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
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<PAGE>
11
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
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<PAGE>
12
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;
(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, except for the Liens of the Security
Agreements and except for the lien of this Mortgage and the Permitted<PAGE>
13
Exceptions, 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
(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<PAGE>
14
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 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
as in any way impairing the right of Mortgagee to proceed against any<PAGE>
17
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
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<PAGE>
18
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
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<PAGE>
19
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
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<PAGE>
20
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
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<PAGE>
21
rundown charges, brokerage commissions, finders' fees, placement fees,
court costs, reasonable fees and disbursements of surveyors,
photographers, appraisers, architects, engineers, consulting
professionals, accountants and attorneys. 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.
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,<PAGE>
22
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 "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<PAGE>
23
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
Revolving Credit 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 or total release, as applicable, and such other
documents as Mortgagor may reasonably request to evidence the release of
this Mortgage with respect to such Mortgaged Property.<PAGE>
24
This Mortgage has been duly executed by Mortgagor on the date
first above written.
ESSEX GROUP, INC.
By:________________________
Name: David A. Owen
Title: Executive Vice President
This Instrument was prepared by Emily R. Steinman.<PAGE>
STATE OF NEW YORK )
) ss:
COUNTY OF NEW YORK )
Before me, a Notary Public in and for said County and State,
personally appeared ________________, 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 J
[Indiana]
[FORM OF]
MORTGAGE
from
ESSEX GROUP, INC., Mortgagor
to
THE CHASE MANHATTAN BANK, as Administrative Agent, Mortgagee
DATED AS OF OCTOBER 31, 1996
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: Emily R. Steinman, Esq.<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 October
31, 1996 (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 The Chase Manhattan Bank, as administrative agent for
the Lenders (in such capacity, the "Administrative 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>
3
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
to<PAGE>
3
(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 the Effective Date and prior to $_______
March 31, 1995 and prior to March 31, 1998,
must be less 5.00 to 1.0; on or after March
31, 1998 and prior to March 31, 1999, must
be less than 4.50 to 1.0; March 31, 1999 and prior to
March 31, 2000, must be less than 4.25 to
1.00; and March 31, 2000 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 the Effective Date and prior $_______
to March 31, 1998, must be less 3.00 to
1.0; On or after March 31, 1998 and prior
to March 31, 1999, must be less than 2.75
to 1.0; On or after March 31, 1999 and
prior to March 31, 2000, must be less
2.50 to 1.0; March 31, 2000 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 $ __________ <PAGE>
4
(B) Aggregate amount of L/C Obligations
(the sum of $ __________
(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 $10,000,000 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)
(vii) Additional indebtedness of Essex $_______
International not otherwise permitted by
Section 7.2 (may not exceed $15,000,000
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 Joint
Venture Loans, exceed $25,000,000)
(ii) Aggregate amount of surety, indemnity, $ ______<PAGE>
5
performance, release and appeal bonds and guarantees
thereof issued by the Company or any of its
Subsidiaries, as described in Section 7.4(d) (may
not exceed $10,000,000 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 $3,000,000 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
$30,000,000 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 $20,000,000 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
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 $ __________<PAGE>
6
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 any Joint Venture as described in
Section 7.10(e) (may not exceed $18,000,000 at any
time)
(iii) Aggregate amount the sum of (i) $ __________
outstanding of Loans by the
Company to any Joint Venture 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 $25,000,000 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 (including
$19,800,000 for fiscal year 1995)
(4) Amount of A(1) may not exceed $ _____
the sum of A(2) and A(3)
(provided that, unless A(1) is less than
$30,000,000, 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 <PAGE>
7
in effect)
(C) (1) Capital Expenditures and $ __________
Investment Expenditures
(excluding up to $5,000,000 of Investment
Expenditures constituting capital contributions
to any Joint Venture 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 $20,000,000 in any fiscal
year and $30,000,000 during the term of the
Credit Agreement)
(2) Investment Expenditures $ __________
constituting capital
contributions to any Joint Venture 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 $100,000,000)
(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 Collateral since
Effective Date (may not exceed $50,000,000)
IN WITNESS WHEREOF, we have hereto set our names.
Dated:
By:___________________________
Name:
Title: [Responsible Officer
of the Company]
By:___________________________
Name:
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
The Chase Manhattan 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 Credit
Agreement referred to below]
Dear Sirs:
We understand that The Chase Manhattan Bank ("Chase") is acting as
Administrative Agent under the Credit Agreement dated as of October 31,
1996 (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 Chase, 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 Loans, the Letters of Credit and the Revolving Credit
Commitments, Chase 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
Chase's, such Lender's or the Company's request, we agree to return (and
to cause such other person to return) to Chase, 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 Chase 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>
