<PAGE>
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-K
/ / ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE FISCAL YEAR ENDED
OR
/X/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
--FOR THE TRANSITION PERIOD FROM MAY 1, 1999 TO DECEMBER 31, 1999
COMMISSION FILE NUMBER 1-9078
------------------------
THE ALPINE GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 22-1620387
(State or other jurisdiction (I.R.S. Employer
of Identification No.)
incorporation or organization)
1790 BROADWAY
NEW YORK, NEW YORK
(Address of principal 10019-1412
executive offices) (Zip code)
</TABLE>
Registrant's telephone number, including area code 212-757-3333
------------------------
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
- - ------------------- ------------------------
<S> <C>
Common Stock, par value $.10 per share............ New York Stock Exchange
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
------------------------
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. Yes _X_ No ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /
At March 24, 2000, the registrant had 14,148,944 shares of common stock, par
value $.10 per share, outstanding, and the aggregate market value of the
outstanding shares of voting stock held by non-affiliates of the registrant on
such date was $102,906,239, based on the closing price of $9.8125 per share of
such common stock on such date.
------------------------
DOCUMENTS INCORPORATED BY REFERENCE
Proxy Statement for the Company's Annual Meeting of Stockholders in Part III of
this Form 10-K.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE>
PART I
ITEM 1. BUSINESS
The Alpine Group, Inc. (together with its subsidiaries, unless the context
otherwise requires, "Alpine" or the "Company") is an industrial holding company
with investments in three industrial manufacturing companies.
SUPERIOR TELECOM INC.
Alpine holds a 51.8% common equity interest in its consolidated subsidiary,
Superior TeleCom Inc. (together with its subsidiaries, unless the context
otherwise requires, "Superior"), a publicly traded New York Stock Exchange
listed company (NYSE: SUT) engaged in the manufacture of wire and cable
products. A description of the business of Superior is included herein.
POLYVISION CORPORATION
Alpine holds a 48% common equity interest and $19.7 million of convertible
preferred stock in its unconsolidated affiliate, PolyVision Corporation, a
publicly-traded American Stock Exchange listed company (AMEX: PLI). PolyVision
is a global manufacturer of visual communications and related products for the
education/office markets, menus and merchandising boards for food service and
banking institutions, and high performance wall systems used in the education,
transportation and select architectural markets.
COOKSON GROUP PLC
On August 6, 1999, Alpine completed the sale of its wholly-owned subsidiary,
Premier Refractories International Inc. ("Premier") to Cookson Group plc
("Cookson"), a London Stock Exchange listed company engaged in the manufacture
and sale of a variety of industrial materials.
The sale was effected through the merger of Premier with a wholly-owned
subsidiary of Cookson. In connection with the transaction, Cookson assumed all
of Premier's existing indebtedness, issued to Alpine approximately 32.3 million
shares of Cookson common stock and paid to Alpine $15.6 million in cash.
Immediately prior to the sale of Premier, Alpine acquired the 16.6% minority
equity interest in Premier for approximately $31.1 million in cash. In
connection with this transaction, Alpine recognized an after tax gain of
$35.4 million.
Alpine's current ownership in Cookson common stock approximates 4%.
Alpine was incorporated in New Jersey on May 7, 1957 and reincorporated in
Delaware on February 3, 1987. Its principal executive offices are located at
1790 Broadway, New York, New York 10019-1417 and its telephone number is
(212) 757-3333.
SUPERIOR TELECOM INC.
GENERAL
Superior is the largest wire and cable manufacturer in the United States and
the fourth largest in the world. Superior manufactures wire and cable products
for the communications, original equipment manufacturer or "OEM" and electrical
markets. Superior is a leading manufacturer and supplier of communications wire
and cable products to telephone companies, distributors and system integrators;
magnet wire and insulation materials for motors, transformers and electrical
controls as well as automotive and specialty wiring assemblies for automobiles
and trucks; and building and industrial wire for applications in commercial and
residential construction and industrial facilities. Superior operates 33
manufacturing facilities in the United States, Canada, United Kingdom and
Israel.
1
<PAGE>
ORGANIZATIONAL HISTORY
Superior was incorporated in July 1996 as a wholly-owned subsidiary of
Alpine. On October 2, 1996, Alpine completed a reorganization whereby all of the
issued and outstanding common stock of two of Alpine's wholly-owned
subsidiaries, Superior Telecommunications Inc. and DNE Systems, Inc., were
contributed to Superior.
On October 17, 1996, Superior completed an initial public offering of its
common stock, generating net proceeds of approximately $90 million which were
used to reduce outstanding bank debt and pay Alpine certain previously declared
dividends. In November 1996, the underwriters of the initial public offering
exercised their over-allotment option to purchase additional shares of Superior
common stock, resulting in additional net proceeds of approximately
$13.3 million of which $8.1 million was used to repurchase Superior common
stock, with the balance used to reduce bank debt. As a result of the initial
public offering, Alpine's common stock ownership position in Superior was
reduced to approximately 50.1%. As a result of treasury stock repurchases and
other transactions, Alpine's current common stock interest in Superior is 51.8%.
Superior effected a five-for-four stock split on February 2, 1998 and again
on February 3, 1999, and issued a 3% stock dividend on February 11, 2000.
RECENT SIGNIFICANT GROWTH
Over the past five years, Superior, including its predecessors, has led a
consolidation of the North American wire and cable industry. In May 1995,
Superior Telecommunications Inc. acquired the North American copper
telecommunications wire and cable operations of Alcatel N.A. Cable
Systems, Inc. and Alcatel Canada Wire, Inc. With this acquisition, Superior
became the largest North American manufacturer of copper telephone wire and
cable.
On November 27, 1998, a newly formed, wholly-owned subsidiary of Superior
acquired approximately 81% of the outstanding shares of common stock of Essex
International Inc. through a cash tender offer for an aggregate price of
approximately $770 million. Essex, through its subsidiaries, manufactures and
distributes wire and cable and insulation products, including magnet wire for
electromechanical devices, building wire for commercial and residential
construction applications, copper communications wire and cable, industrial wire
and automotive wire. As a result of the acquisition of Essex, Superior is now a
diversified supplier of wire and cable products and, based on current annualized
sales levels, is the largest wire and cable manufacturer in North America and
the fourth largest wire and cable manufacturer in the world.
In connection with the Essex acquisition, Superior amended and restated its
bank credit facility and entered into a new $200.0 million senior subordinated
credit agreement. These credit facilities provide for total borrowings of up to
$1.35 billion. Approximately $1.2 billion of the total proceeds available under
these credit facilities were used to finance the Essex cash tender offer,
including the refinancing of certain indebtedness of Superior and Essex, and to
pay related fees and expenses. The remaining proceeds were available to fund the
working capital requirements of Superior.
On March 31, 1999, Essex merged with a wholly-owned subsidiary of Superior.
In the merger, holders of the remaining 19% of the outstanding shares of common
stock of Essex each received 0.64 (in the aggregate $167 million liquidation
value) of an 8 1/2% trust convertible preferred security of Superior Trust I, a
Delaware trust in which Superior owns all the common equity interests, for each
share of Essex common stock owned. Upon completion of the merger, Essex became a
wholly-owned subsidiary of Superior.
During 1998, Superior expanded its presence in international markets. On
May 5, 1998, Superior acquired 51% of the issued and outstanding shares of
common stock of Cables of Zion United Works, Ltd. for approximately
$25.0 million in cash. Cables of Zion is an Israel-based cable and wire
manufacturer
2
<PAGE>
whose primary products include fiber and copper communications wire and cable
and power cable. Cables of Zion products are sold primarily into the Israeli and
European markets.
On December 31, 1998, Superior, through Cables of Zion, acquired the
business and certain operating assets of Cvalim-The Electric Wire & Cable
Company of Israel Ltd. and its wholly-owned subsidiary, Dash Cable Industries
(Israel) Ltd., for approximately $41.2 million in cash. Cvalim was the leading
Israeli manufacturer of electrical, communications and industrial wire and cable
products. Furthermore, in October 1999 Cables of Zion acquired the business and
certain operating assets of Pica Plast Limited the remaining major wire and
cable company in Israel for a purchase price of approximately $10 million. As a
result of these acquisitions, Cables of Zion, which has changed its name to
Superior Cables Limited, is the dominant wire and cable manufacturer in Israel
with an approximate 80% market share. The Company believes that expanding
Superior's operational presence in Israel will enable it to participate further
in the growing communications wire and cable markets in Europe and the Middle
East. The operations of Superior Cables Limited, including the acquired
operations of Cvalim and Pica Plast, are hereinafter referred to as "Superior
Israel".
BUSINESS LINES
Prior to the acquisitions of Essex and Superior Israel, Superior's product
sales were comprised almost entirely of communications wire and cable. With the
Essex acquisition, Superior broadened its product lines into the OEM segment,
which includes principally magnet wire, automotive wire and related products,
and into electrical wire, which includes low voltage building wire and
industrial wire. With the Superior Israel acquisition, Superior added additional
communications wire and cable product sales on an international basis, including
fiber optic cable, along with low, medium and high voltage power cable, as well
as other wire and cable product lines.
RECENT CORPORATE REORGANIZATION AND OPERATIONAL RESTRUCTURINGS
During 1999, and in connection with the Essex acquisition, Superior
initiated a significant corporate reorganization at Essex and a major
restructuring of certain operations of Essex, including the sale of
non-strategic business lines and the rationalization of certain manufacturing
assets.
In April 1999, Superior completed a corporate reorganization which included
the elimination of more than 130 corporate and divisional general and
administrative positions at Essex. Annual savings in corporate expenses from
these personnel reductions, along with other corporate general and
administrative cost reductions and synergies, approximate $25 million.
Superior has also divested non-core product lines, including the sale of the
business and operating assets of Essex's insulation products business in
October 1999 and its Interstate operations (wiring assemblies for trucks and
buses) in December 1999. Total cash proceeds from these sales amounted to
$11 million.
Additionally, Superior has substantially completed a restructuring and
rationalization of the operating assets comprising Essex's Electrical Group.
During 1999, Superior shut down or sold five electrical wire manufacturing
plants and is in negotiations to sell a sixth plant. This will result in the
Electrical Group's manufacturing being consolidated into five remaining
manufacturing facilities. This restructuring resulted in the elimination of 600
positions and a reduction of 22% in the Electrical Group's manufacturing
capacity all of which was considered excess capacity.
As a result of the above mentioned activities, Superior has eliminated
approximately 1,100 positions in the aggregate, a 25% reduction in Essex's total
workforce since the beginning of 1999.
3
<PAGE>
COMMUNICATIONS GROUP
Superior's Communications Group includes its North American communications
wire and cable operations as well as the operations of Superior Israel.
The Communications Group's North American operations manufacture and sell
the following communications wire and cable products:
(1) outside plant ("OSP") wire and cable for voice and data transmission,
including copper OSP products used in the local loop portion of the
telecommunications infrastructure, and, to a lesser degree, fiber optic OSP
products used by the local exchange carriers ("LECs"), CATV companies and
competitive local exchange carriers for both trunking and feeder
applications and OSP composite (or hybrid) cables (including fiber
optic/twisted pair cables and coaxial/twisted pair cables) for local loop,
feeder and distribution applications; and
(2) copper and fiber optic datacom, or premise, wire and cable used within homes
and offices for local area networks ("LANs"), Internet connectivity and
other applications.
Through six geographically dispersed plants, Superior has annual production
capacity in North America of approximately 165 billion conductor feet ("bcf")
for copper OSP and datacom copper wire and cable. Additionally, through Superior
Israel, Superior has seven bcf of production capacity for copper OSP and datacom
products. Superior is currently the largest manufacturer of copper
communications cable in North America, which is Superior's primary market, and
the largest worldwide manufacturer of copper OSP wire and cable products.
Superior's manufacturing capacity (based on current product mix) for fiber optic
OSP and fiber optic premise cable is 480,000 fiber kilometers ("fkm") in North
America and 450,000 fkm in Israel. Superior is currently expanding its North
American capacity for both fiber optic OSP and premise wire and cable products
as well as for copper premise wire and cable products. The Company expects that
this production capacity expansion will increase Superior's total annual sales
capacity for fiber optic and copper premise products by approximately
$100 million, based on current market prices, product mix and estimated
production rates.
The Communications Group also includes the operations of DNE Systems, Inc.
DNE designs and manufactures data communications equipment, integrated access
devices and other electronic equipment for defense, government and commercial
applications. DNE's net sales are not significant in relation to the total net
sales of the Communications Group.
For the eight month period ended December 31, 1999, net sales of copper OSP
products accounted for 68% of the Communications Group's net sales.
OSP PRODUCTS
Copper wire and cable are the most widely-used media for voice and data
transmission in the local loop portion of the traditional telecommunications
infrastructure operated by the LECs, which include the regional Bell operating
companies ("RBOCs") and the independent telephone operating companies. The local
loop is the segment of the telecommunications network that connects the
customer's premises to the nearest telephone company switching center or central
office. The Company believes that copper will continue to be a leading
transmission medium in the local loop due to factors such as:
- the installed base of copper cable and associated switches, connectors and
other accessory components represents an investment of over $150 billion
that must be maintained by the LECs;
- the lower installation and maintenance costs of copper compared to optical
fiber and other media;
- technological advances, such as digital subscriber line ("xDSL")
technologies and integrated services digital networks ("ISDN"), that
increase the bandwidth of the installed local loop copper network;
4
<PAGE>
- the increasing demand by consumers for affordable enhanced services,
which, because of technological advances, can be supported by the
copper-based local loop; and
- the increasing demand for affordable multiple residential access lines to
support fax machines, Internet access and multiple voice lines.
Demand for copper communications wire and cable is dependent on several
factors, including the rate at which new access lines are installed in homes and
businesses, the level of infrastructure spending for items such as
road-widenings and bridges, which generally necessitates replacement of existing
utilities, including telephone cable, and the level of general maintenance
spending by the LECs. The installation of new access lines is, in turn,
partially dependent on the level of new home construction and expansion of
business and, increasingly in recent years, on demand for additional telephone
lines and lines dedicated to facsimile machines and computer modems, which are
used for, among other purposes, business communications and access to the
Internet.
The local loop comprises approximately 180 million residential and business
access lines in the United States. The installed base of copper wire and cable
and associated switches and other components utilized in the local loop
represents an investment of over $150 billion that must be maintained by the
LECs. Although other media, such as fiber optic cable, are used for trunk lines
between central offices and for feeder lines connecting central offices to the
local loop, a substantial portion of all local loop lines and systems continue
to be copper-based. The Company believes that in the local loop, copper-based
networks require significantly lower installation and maintenance costs than
other alternative networks such as fiber optics. Installation of fiber optic
systems is both capital and labor intensive, and until very recently deployment
of fiber optic systems has been limited to trunk and feeder lines and wide area
network configurations, where the density of voice and data traffic make such
systems cost efficient.
Copper usage in the local loop continues to be supported by technological
advances that expand the use and bandwidth of the installed local loop copper
network. These advances include xDSL and ISDN technologies. These technologies,
together with regulatory developments and increased competition among service
providers, have accelerated the demand for and the introduction of new
high-speed and bandwidth-intensive telecommunications services, such as
integrated voice and data, broadcast and conference quality video, Internet,
high-speed LAN-to-LAN connectivity, and other specialized bandwidth-intensive
applications.
While these rapid and significant technological advances continue to
increase the use and bandwidth of the copper local loop network, there is
growing use of optical fiber in the feeder network as a funnel to support the
emerging high bandwidth digital copper loops. Superior has developed and is now
manufacturing and selling an optical fiber cable product line that includes
local loop feeder cables for OSP applications.
Superior manufactures a wide variety of OSP wire and cable products.
Superior's copper-based OSP products include distribution cable and service wire
products, ranging in size from a single twisted pair wire to a 4,200-pair cable.
The basic unit of virtually all copper OSP wire and cable is the "twisted pair,"
a pair of insulated conductors twisted around each other. Twisted pairs are
bundled together to form communications wire and cable. Superior's copper OSP
wire and cable products are differentiated by design variations, depending on
where the cable is to be installed. Copper OSP products used for direct
underground burial are designed to be water resistant and are filled with
compounds to prevent moisture from penetrating the cable structure. The
individual copper wires utilize either polyethylene or polypropylene insulation.
Copper OSP products used for underground duct or aerial applications, where
water penetration is not a major concern, are designed with polyethylene
insulation and no filling compound. Copper OSP products normally have metallic
shields for mechanical protection and electromagnetic shielding, as well as an
outer polyethylene jacket.
5
<PAGE>
To a lesser extent, Superior also manufactures fiber optic cable for OSP
applications. Superior is currently expanding its manufacturing capabilities for
fiber optic cables for OSP and premise applications. Superior's fiber optic OSP
cables can be used in a variety of installations such as aerial, buried and
underground conduit and can be configured with two to over 280 fibers, which are
typically single-mode fibers. These cables are sold to traditional customers,
such as distributors and LECs, as well as new customers, such as CATV companies,
competitive local exchange carriers, inter-exchange carriers and competitive
access providers. The first phase of this expansion, which includes plant and
equipment additions in its Brownwood, Texas facility, is expected to be
completed in the second quarter of 2000 and will increase Superior's total
manufacturing capacity for these products by over 100%.
One element of Superior's strategy in the Communications Group is to
continue to expand its offering of performance enhanced OSP wire and cable
products that provide opportunities for growth both within and outside
Superior's basic market. In addition to its recent development and current
expansion of manufacturing capabilities for fiber optic wire and cable products,
Superior has also acquired, developed or is in the process of developing other
new products including:
(1) hybrid OSP products combining twisted-pair copper wires with coaxial or
fiber optic cable for feeder and distribution service; and
(2) a broad band cable to support new technologies within the OSP segment.
Superior has historically been a key supplier of copper OSP wire and cable
to the RBOCs and the two major independent telephone companies, GTE Corporation
and Sprint Corporation. It is estimated that the RBOCs, GTE and Sprint comprise
approximately 80% of the approximately $1.4 billion North American copper OSP
market. The remaining 20% of the North American market is comprised of more than
1,200 smaller independent telephone companies. In recent years, Superior has not
been a major supplier to the smaller independent telephone companies due to
capacity constraints and lack of established distributor relationships. However,
the Essex acquisition provided Superior both the capacity and the established
distributor network to address this market.
For the eight month period ended December 31, 1999, 71% of Superior's OSP
net sales were to the RBOCs and the two major independent telephone companies,
25% of net sales were primarily to other telephone companies and data product
distributors in North America and 4% of net sales, excluding sales of Superior
Israel, were made outside of North America.
Superior sells to the RBOCs and the two major independent telephone
companies on a direct basis through a sales force of five salespersons. With the
acquisition of Essex, Superior's OSP wire and cable products are increasingly
being sold through domestic and international distributors and sales
representatives. Superior, through Superior Israel, also sells its fiber optic,
OSP and datacom copper wire and cable products to Bezeq, the Israeli telephone
company, and other customers and distributors in Israel, the United Kingdom,
Europe and South America.
Superior's sales to the major telephone operating companies are generally
pursuant to multi-year supply arrangements in which the customer agrees to have
Superior supply a certain percentage of the customer's OSP wire or cable needs
during the term of the arrangement. Typically, customers are not required to
purchase any minimum quantities of product under these arrangements. At
December 31, 1999, Superior had multi-year arrangements with three of the four
RBOCs and with the two major independent telephone companies.
In February 2000, Superior was notified that it would experience a
significant reduction in sales of copper OSP products to SBC, one of the four
RBOCs, due to price underbidding by a competitor on a rebid of a major portion
of SBC's annual OSP requirements. Superior expects to continue to sell OSP cable
to SBC on a transitional basis for a portion of 2000. Superior believes it can
recapture a portion of this lost business through increased sales with other
customers and in other markets. Superior also intends to reduce costs and, if
required, manufacturing capacity to offset the impact of these developments.
6
<PAGE>
DATACOM PRODUCTS
Datacom wire and cable is used within buildings to connect
telecommunications devices, such as telephones, facsimile machines and computer
modems, to the telecommunications network and in commercial buildings to provide
connectivity for LANs. Rapid technological advances in communication and
computer system capabilities have created increasing demand for greater
bandwidth capabilities in wire and cable products. Superior expects demand for
datacom wire and cable products to increase significantly in the future,
particularly as new office buildings are constructed, existing office buildings
are upgraded to accommodate advanced network requirements and multiple
residential access lines for facsimile machines, home offices and access to the
Internet are installed.
There are two primary applications for communications wiring systems within
buildings: voice applications, estimated at 15% of new wiring system investment,
and data applications, estimated at 85% of new wiring system investment. The
primary voice application consists of networking telephone stations. The primary
data application is LANs, which require the wired interconnection of
workstations and peripherals, such as printers, file servers, etc., to form a
network.
Four major types of cables are currently deployed in datacom applications:
(1) LAN copper twisted pair (unshielded twisted pair or "UTP" and shielded
twisted pair or "STP"), (2) LAN fiber optic cable, (3) LAN coaxial cable and
(4) voice grade twisted copper pair. Superior anticipates that UTP and fiber
optic cable will provide the most significant growth opportunities due to
increasing demands in the datacom market for cost-effective, high bandwidth
solutions.
Continued high growth for new LAN installations, as well as voice system
upgrades, have resulted in increased demand for LAN UTP cables, particularly
Category 5, advanced Category 5 and Category 6 cables. These high bandwidth
cables have made it possible for UTP to compete with fiber and LAN STP for
high-speed LAN applications. The other large component of the datacom segment is
fiber optic cable, which meets the needs of communications services requiring
bandwidth capabilities greater than can be provided by copper based
technologies.
Superior's current datacom wire and cable product offerings include voice
grade twisted pair, UTP and LAN fiber optic cable. Superior's UTP product
offerings include Category 6 cables and Category 5 cables ranging in size from
4-pair to 25-pair. These cables are designed and manufactured for use in both
plenum vertical and riser horizontal applications. Superior has recently
developed and has begun marketing and sales of LAN fiber optic cables. These
cables, which may be used for LAN trunking or distribution applications, contain
from one to 144 fibers, which are typically multi-mode fibers, and are used in
plenum and riser applications within buildings. Superior is currently expanding
its manufacturing capabilities for both copper UTP and fiber optic cable
products with an anticipated increase in sales and market share in 2000.
Superior's datacom wire and cable products are sold primarily through major
national and international distributors, smaller regional distributors and
representatives who in turn resell to contractors, international and domestic
telephone companies and private overseas contractors for installation in the
industrial, commercial and residential markets.
The datacom wire and cable market is fragmented, with nearly 25 datacom wire
and cable manufacturers in North America and more than 75 worldwide. Major
suppliers in North America include Lucent Technologies Inc., Cable Design
Technologies Corporation, Berk-Tek (an Alcatel company), Belden Inc.,
CommScope Inc. and General Cable Corporation. Superior estimates the North
American market for datacom wire and cable products similar to those
manufactured by Superior to be approximately $1.7 billion.
As previously mentioned, Superior is expanding its manufacturing
capabilities for both copper UTP and fiber optic products with an anticipated
increase in sales and market share in 2000.
7
<PAGE>
SUPERIOR ISRAEL
As previously discussed, during 1998 Superior acquired 51% of the
outstanding common stock of Cables of Zion, an Israeli wire and cable company.
Cables of Zion, in subsequent transactions, acquired the business and certain
operating assets of Cvalim and Pica Plast. With the consolidation of these three
businesses, Superior Israel is the largest Israeli wire and cable manufacturer
with an approximate 80% share of the Israeli wire and cable market.
Superior Israel's major product offerings include:
(1) communications cable including copper and optical fiber OSP and datacom
products;
(2) high and medium voltage power cable utilized by power utilities; and
(3) industrial and automotive wire and cable.
Superior Israel also owns 80% of Premier Cable Ltd., a UK-based distributor
of communications cable and related products.
Superior Israel's major customers include the two largest public utilities
in Israel: Bezeq, the largest Israeli telephone company, and IEC, the largest
Israeli power utility. Product export sales outside of Israel amounted to 21% of
total sales for the eight months ended December 31, 1999. The major export
markets include Europe, Latin America and Southeast Asia.
As a result of the combination of the operations of Cables of Zion, Cvalim
and Pica Plast, Superior has consolidated certain manufacturing facilities and
administrative functions. This restructuring resulted in closure of three
manufacturing facilities, closure of administrative offices in Rishon LeZion and
elimination of 146 personnel to date. Superior Israel currently operates five
manufacturing plants.
DNE
DNE Systems, Inc. designs and manufactures data communications equipment,
integrated access devices and other electronic equipment for defense, government
and commercial applications. It is the largest supplier to the U.S. defense
forces of data and voice multiplexers used in tactical secure military
applications. Multiplexers are integrated access devices that combine several
information-carrying channels into one line, thereby permitting simultaneous
multiple voice and data communications over a single line. DNE also produces
military avionic products, including switches, dimmers, relays and other
electronic controllers, sensors and aerial refueling amplifiers. DNE net sales
comprise less than 5% of the Communications Group's net sales.
OEM GROUP
Superior's OEM Group manufactures and sells magnet wire, automotive wiring
and other related products to major OEMs for use in motors, transformers,
electrical controls and automobile harnesses. Through its Essex Brownell
distribution business, Superior also distributes its magnet wire and certain
related accessory products to smaller OEMs and motor repair and refurbishing
contractors.
Additionally, in 1998, Essex, prior to its acquisition by Superior, acquired
BICC's UK-based magnet wire operations. This acquisition provides Superior with
European magnet wire capacity to service certain of Superior's existing North
American customers which have major European operations. This acquisition also
provides Superior an opportunity to participate in growth through an anticipated
consolidation of magnet wire manufacturers in the European market. The OEM Group
operates 12 manufacturing plants and 22 warehousing and distribution locations
in North America and the U.K.
For the eight month period ended December 31, 1999, sales of magnet wire
accounted for 68% of the OEM Group's net sales.
8
<PAGE>
MAGNET WIRE
Superior is the leading supplier of magnet wire in the North American
market. The North American market demand for magnet wire has experienced
continued growth since 1990. Sales growth in the magnet wire industry is driven
by increasing demand for electrical devices containing motors for, among other
things, home appliances and automobiles. Additionally, continuing consumer
pressure and federal government mandates for higher energy efficiency are
resulting in increased utilization of magnet wire within individual motors and
electrical converter devices such as transformers. Strong consumer demand for
greater numbers of electrical convenience items in homes, offices and vehicles
has resulted in increased sales of household appliances and increased use of
electric motors and coils in cars and trucks.
Due to the substantial initial capital costs associated with magnet wire
production, the importance of consistent quality, stringent technological
requirements and the cost efficiencies achieved by larger magnet wire producers,
significant industry consolidation has occurred during the past ten years in the
North American magnet wire industry. In addition, the percentage of domestic
magnet wire produced by independent magnet wire manufacturers, such as Superior,
has grown as the manufacturing capacity of captive magnet wire producers
(electrical equipment manufacturers who internally produce their own magnet
wire) has declined as a result of outsourcing over the last several years. It is
estimated that captive magnet wire manufacturers now represent only 7% of total
magnet wire production in North America.
Superior is currently operating its magnet wire facilities at or near full
capacity. In order to provide additional capacity for anticipated growth in
demand and in market share, as well as to service a growing number of customer
manufacturing locations in Mexico, Superior began construction during 1999 of a
new 290,000 square foot magnet wire manufacturing facility in Torreon, Mexico.
This facility is expected to be completed during the summer of 2000 and should
increase Superior's North American magnet wire production capacity by
approximately 13%.
Superior offers a comprehensive line of magnet wire products, including over
500 types of magnet wire used in a wide variety of applications. Magnet wire is
the wire that is wound into coils of electromagnetic devices including motors,
alternators, coils, transformers, control devices and power generators.
Electromagnetic devices are found in numerous industrial, household and
automotive applications.
New magnet wire products have been introduced recently that the Company
believes will further enhance Superior's position as one of the technological
and development leaders in the industry. Specifically, Superior has recently
introduced the Ultra Shield-TM- Plus wire, which is a superior rated magnet wire
now used by many global motor manufacturers in inverter drive applications where
high voltage spikes are encountered. Other new products include
Soderon-Registered Trademark-/180 and Soderex-Registered Trademark-/180, two new
magnet wires that are used in automotive and appliance controls in higher
temperature applications. These products allow for increased throughput with
faster soldering times than conventional high temperature type products. In
addition, Superior has also introduced a new DuPont
Nemon-Registered Trademark-/910 wrapped magnet wire conductor for liquid-filled
transformer applications as a replacement for low temperature paper wrap.
Superior is also a leader in product palletizing and packaging with a focus on
ease of handling, reduced freight damage, environmental disposal issues and cost
reduction.
Superior's magnet wire products are sold directly to major OEMs and, through
its Essex Brownell distribution business, to secondary OEMs, aftermarket repair
facilities, coil manufacturers and distributors. Products are also marketed
internationally through authorized distributors.
Sales to major OEMs, including, among others, Emerson, General Motors, A.O.
Smith, Howard Industries, Cooper Power and Tecumseh, are typically pursuant to
annual supply agreements based on a percentage of the customers' total
requirements and on a negotiated fixed price, subject to adjustment for the cost
of copper. For the eight months ended December 31, 1999, approximately 85% of
magnet wire
9
<PAGE>
sales were pursuant to annual supply arrangements. Sales through the Essex
Brownell distribution business are typically quoted on a daily spot price basis.
As previously mentioned, the magnet wire market in North America is
concentrated, with a small number of large manufacturers. The Company believes
that Superior is the largest supplier of magnet wire in the North American
market.
AUTOMOTIVE WIRE
Superior's automotive wire products include primary wire for use in engine
and body harnesses, ignition wire, battery cable and specialty wiring
assemblies. The automotive primary wire market has experienced growth over the
last decade due to steady production levels of new vehicles and an increase in
the installation of electrical options in vehicles, which deliver increased
safety, convenience and engine performance to the consumer. These electrical
options include power windows, supplemental restraint systems, digital displays,
keyless entry, traction control, electronic suspension and anti-lock brakes. The
Company expects the trend of additional electronic features to grow, thereby
increasing demand for automotive wire. Further, the increasing demand for copper
wire content in vehicles has made it essential to use finer-gauge, thinner wall,
higher temperature insulation coated wire, which requires significant advanced
product development and manufacturing technologies.
Superior sells automotive wire products primarily to tier-one motor vehicle
manufacturer suppliers. Automotive wire products are marketed through an
internal sales force and manufacturers' representatives.
ESSEX BROWNELL DISTRIBUTION AND ACCESSORY PRODUCTS
Through its Essex Brownell distribution operations, Superior sells magnet
wire, insulation and other related accessory products to the motor repair and
secondary OEM markets, which represent a fragmented customer base. The Essex
Brownell distribution operations include a nationwide sales force of 60 people,
supported by 26 strategically located distribution and warehouse locations.
Approximately 13% of Superior's magnet wire sales are sold through Essex
Brownell. Additionally, Essex Brownell sells insulation and other related
accessory products, as a complement to its magnet wire product sales, to the
motor repair and secondary OEM markets. The Company believes that Superior has a
distinct competitive advantage in that it is the only major North American
magnet wire producer that also distributes a full line of complementary
electrical accessory products used by the motor repair and secondary OEM
markets. Essex Brownell was formed with the acquisition of the Brownell
distribution business in 1995.
ELECTRICAL GROUP
Superior's Electrical Group manufactures and distributes a complete line of
building wire products as well as a line of industrial wire products. For the
eight months ended December 31, 1999, net sales of the Electrical Group were
$429.2 million. As discussed above in "Recent Corporate Reorganization and
Operational Restructurings", the Electrical Group has consolidated its
manufacturing operations into five manufacturing facilities in the United States
with annual production capacity of approximately 420 million pounds.
Building wire products include a wide variety of thermoplastic and thermoset
insulated wires for the commercial and industrial construction markets and
service entrance cable, underground feeder wire and nonmetallic jacketed wire
and cable for the residential construction market. These products are generally
installed behind walls, in ceilings and underground. The industrial wire product
segment (which forms a much smaller component of sales than building wire)
includes appliance wire, motor lead wire, submersible pump cable, power cable,
bulk flexible cord, power supply cord sets, welding cable and recreational
vehicle wire.
10
<PAGE>
Superior is the leading manufacturer in North America of copper building
wire products used in commercial and residential applications. The Company
estimates that the building wire market has grown, on average, approximately
2%-4% per annum over the past five years. Sales growth in the building wire
industry has resulted primarily from renovation activity, as well as new
nonresidential and residential construction. Both new construction and
renovation growth are being affected by the increased number of circuits and
amperage handling capacity needed to support the increasing demand for
electrical services. In addition, there has been a greater wiring density
required in new construction and renovation projects to provide for the
electrical needs of appliances such as trash compactors, microwave ovens, air
conditioners, entertainment centers, lighting and climate controls, specialty
and task lighting, electric garages and outdoor lighting systems. New home
automation and computer systems contribute to the increased cable and wire
density requirements in new and renovation construction as well. The average new
home is also increasing in size and thus influencing demand in this industry.
The building wire industry has experienced significant consolidation in
recent years, declining from approximately 28 manufacturers in 1980 to nine
primary manufacturers in 1999. The Company believes this consolidation is due
primarily to cost efficiencies achieved by the larger building wire producers as
they capitalize on the benefits of vertical integration and manufacturing,
purchasing and distribution economies of scale.
In the industrial wire market, Superior has a significantly smaller market
position than in the building wire industry. Factors impacting sales growth in
this market include the construction and expansion of manufacturing plants, mine
expansion and consumer spending for hard goods. Due to the diversity of product
offerings within this industry, Superior's competition is fragmented across
product lines and markets served.
Superior sells its electrical wire and cable products nationally through an
internal sales force and through manufacturers' representatives. Its customer
base is large and diverse, consisting primarily of wholesale electrical and
specialty distributors, consumer product retailers and hardware wholesalers. No
single customer accounts for more than 10% of the Electrical Group's net sales.
Notwithstanding this consolidation of suppliers, there still exists
manufacturing overcapacity for building wire, which is generally viewed as a
commodity product. As a result, the market is extremely competitive, with price
and availability being the most important factors. During 1999, market pricing
for building wire products declined substantially, with copper adjusted pricing
reaching three year lows through much of the year. As previously discussed,
Superior has responded to these conditions by eliminating excess capacity and
consolidating remaining production capacity to achieve cost reductions necessary
to offset, in part, the impact of the recent period price declines.
Prior to 1998, Superior served the wholesale electrical and specialty
distributors through a network of over 30 service centers and stocking locations
in the United States. In 1998, Essex, prior to its acquisition by Superior,
began an initiative to consolidate the service centers and stocking locations
into a smaller number of strategically located regional distribution centers
("RDCs"). These RDCs provide for centralized stocking of "off-the-shelf"
products, including substantially all of Superior's building and industrial wire
products. To a lesser degree, these RDCs provide regionally centralized
distribution for communication wire and cable, magnet wire and related
insulation products. Superior currently operates four RDCs located in Georgia,
Missouri, California and Oregon.
RAW MATERIALS AND MANUFACTURING
The principal raw materials used by Superior in the manufacture of its wire
and cable products are copper, aluminum, bronze, steel, optical fibers and
plastics, such as polyethylene and polyvinyl chloride. Copper rod is the most
significant raw material used in Superior's manufacturing process. The Company
estimates that Superior is the largest North American consumer of copper rod
with over 900 million pounds used annually in its production process. Due to the
importance of copper to its business, Superior
11
<PAGE>
maintains a centralized metals operation that manages copper procurement and
provides vertical integration in the production of copper rod and in scrap
recycling.
Superior maintains four copper rod continuous casting units, strategically
located in proximity to many of its major wire producing plants to minimize
freight costs. These facilities convert copper cathode into copper rod which is
then shipped and utilized directly in Superior's manufacturing operations.
Through these continuous casting units, Superior is able to produce
approximately 70% of its North American copper rod requirements.
In addition to converting copper cathode into copper rod, Superior's metal
processing center also processes copper scrap, both internally generated scrap
as well as scrap purchased from other copper wire producers. Copper scrap is
processed in rotary furnaces, which also have refining capability to remove
impurities. Superior uses a continuous casting process to convert scrap material
directly into copper rod. Management believes that internal reclamation of scrap
copper provides greater control over the cost to recover Superior's principal
manufacturing by-product.
Superior purchases copper cathode and, to the extent not provided
internally, copper rod from a number of copper producers and metals merchants.
Generally, copper cathode and rod purchases are pursuant to contracts which
extend for a one-year period and are normally based on the COMEX price, plus a
premium to cover transportation and payment terms. Additionally, Superior, to a
limited extent, utilizes COMEX fixed price futures contracts to manage its
commodity price risk. Superior does not hold or issue such contracts for trading
purposes.
Historically, Superior has had adequate supplies of copper and other raw
materials available to it from producers and merchants, both foreign and
domestic. In addition, competition from other users of copper has not affected
Superior's ability to meet its copper procurement requirements. Although
Superior has not experienced any shortages in the recent past, no assurance can
be given that Superior will be able to procure adequate supplies of its
essential raw materials to meet its future needs.
The cost of copper has been subject to considerable volatility over the past
several years. Fluctuations in the cost of copper have not had a material impact
on profitability due to the ability of Superior in most cases to adjust product
pricing in order to properly match the price of copper billed with the copper
cost component of its inventory shipped.
Superior's manufacturing strategy is primarily focused on maximizing product
quality and production efficiencies while maintaining a high level of vertical
integration through internal production of its principal raw materials. In
addition to copper rod, Superior is also vertically integrated in the production
of magnet wire enamels and extrudable polymeric compounds. The Company believes
one of Superior's primary cost and quality advantages in the magnet wire
business is the ability to produce most of its enamel and copper rod
requirements internally. Similarly, the Company believes that Superior's ability
to develop and produce PVC and rubber compounds, which are used as insulation
and jacketing materials for many of its building wire, communication wire,
automotive wire and industrial wire products, provides competitive advantages
because greater control over the cost and quality of essential compounds used in
production can be achieved.
EXPORT SALES
The Company's export sales during the eight months ended December 31, 1999
were $54.6 million. The Company's primary markets for export sales are Latin
America and Europe.
BACKLOG; RETURNS
Backlog in the communications wire and cable segment typically consists of
3-5 weeks of sales depending on seasonal issues. Superior's other product lines
have no significant order backlog because they follow the industry practice of
manufacturing products on an ongoing basis to meet customer demand
12
<PAGE>
on a just-in-time basis. The Company believes that the ability to supply orders
in a timely fashion is a competitive factor in the markets in which Superior
operates. Historically, sales returns have not had a material adverse effect on
the Company's results of operations.
COMPETITION
The market for wire and cable products is highly competitive. Each of
Superior's businesses competes with at least one major competitor. However, due
to the diversity of Superior's product lines as a whole, no single competitor
competes with Superior across the entire spectrum of Superior's product lines.
Many of Superior's products are made to industry specifications and,
therefore, may be interchangeable with competitors' products. Superior is
subject to competition in many markets on the basis of price, delivery time,
customer service and its ability to meet specialty needs. The Company believes
that Superior enjoys strong customer relations resulting from its long
participation in the industry, emphasis on customer service, commitment to
quality control, reliability and substantial production resources. Furthermore,
the Company believes that Superior's distribution networks enable it to compete
effectively with respect to delivery time.
RESEARCH AND DEVELOPMENT
In response to the changing requirements of the communications industry, the
Company established a product development center during the fourth quarter of
fiscal 1997. This 58,000 square foot facility is located in Kennesaw, Georgia
and is dedicated to defining and creating new wire and cable systems that meet
the needs of the evolving communications networks. Recent projects include the
development of single mode and multimode fiber optic cable products for use in
LANs as well as telephone networks. Initial sales and shipments of these
products began in 1998.
Superior also has development projects underway for performance enhanced
copper-based communications wire products that are designed to meet the existing
and future needs of telephone and datacom customers. Several of these projects
have been undertaken in conjunction with Superior's telephone company customers
and include the development of composite cables that incorporate copper twisted
pair wire and coaxial cable or optical fibers in a single cable construction.
Superior is also developing extensions of its UTP product line for certain LAN
datacom applications, including the development of Category 6 UTP products.
Superior also operates research and development facilities in Lafayette and
Fort Wayne, Indiana. Research activities at the Lafayette facility are focused
on development of improved PVC and rubber compounds, which are used as
insulation and jacketing materials for many communication, automotive, building
and industrial wire products. At the Fort Wayne facility, Superior's
metallurgical and chemical labs are focused on the development of magnet wire
metal properties and processing qualities, as well as enhancement of enamels and
their application in the magnet wire manufacturing process.
Aggregate research and development expenses of the Company during the fiscal
years ended April 30, 1997, 1998 and 1999 and the eight months ended
December 31, 1999 amounted to $2.2 million, $3.0 million, $5.1 million and
$4.1 million, respectively.
Although Superior holds certain trademarks, licenses and patents, none is
considered to be material to its business.
EMPLOYEES
As of December 31, 1999, the Company employed approximately 6,600 employees.
Approximately 2,300 persons employed by the Company are represented by unions.
Collective bargaining agreements expire at various times between 1999 and 2004,
with contracts covering approximately 36% of the
13
<PAGE>
Company's unionized work force due to expire at various times in 2000. The
Company considers relations with its employees to be satisfactory.
ENVIRONMENTAL MATTERS
The manufacturing operations of the Company's subsidiaries are subject to
extensive and evolving federal, foreign, state and local environmental laws and
regulations relating to, among other things, the storage, handling, disposal,
emission, transportation and discharge of hazardous substances, materials and
waste products, as well as the imposition of stringent permitting requirements.
The Company does not believe that compliance with environmental laws and
regulations will have a material effect on the level of capital expenditures of
the Company or its business, financial condition, liquidity or results of
operations. No material expenditures relating to these matters were made in
1997, 1998 or 1999. However, violation of, or non-compliance with, such laws,
regulations or permit requirements, even if inadvertent, could result in an
adverse impact on the operations, business, financial condition, liquidity or
results of operations of the Company.
14
<PAGE>
ITEM 2. PROPERTIES
Alpine conducts its principal operations at the facilities set forth below
which, except for corporate offices, represent the facilities of Superior:
<TABLE>
<CAPTION>
SQUARE
OPERATION LOCATION FOOTAGE LEASED/OWNED
- - --------- ------------------------------ -------- ---------------------
<S> <C> <C> <C>
COMMUNICATIONS
OSP/Datacom................. Chester, South Carolina 218,000 Owned
Hoisington, Kansas 257,000 Owned
Brownwood, Texas 328,000 Leased (expires 2013)
Tarboro, North Carolina 295,000 Owned
Winnipeg, Manitoba 190,000 Owned
Elizabethtown, Kentucky 163,000 Owned
Kennesaw, Georgia 58,000 Leased (expires 2002)
DNE......................... Wallingford, Connecticut 65,000 Leased (expires 2007)
OEM
Magnet Wire................. Charlotte, North Carolina 26,000 Leased (expires 2001)
Fort Wayne, Indiana 181,000 Owned
Franklin, Indiana 35,000 (a)
Franklin, Tennessee 289,000 Leased (expires 2008)
Kendallville, Indiana 88,000 Owned
Rockford, Illinois 319,000 Owned
Vincennes, Indiana 267,000 Owned
Automotive Wire............. Orleans, Indiana 425,000 Owned
Accessory Products.......... Athens, Georgia 30,000 Leased (expires 2016)
Clifton Park, New York 22,000 Leased (expires 2016)
Willowbrook, Illinois 60,000 Leased (expires 2016)
United Kingdom.............. Huyton Quarry, U.K. 146,000 Owned
ELECTRICAL
Building Wire............... Anaheim, California 174,000 Owned
Columbia City, Indiana 400,000 Owned
Sikeston, Missouri 189,000 Owned
Florence, Alabama 129,000 Owned
Industrial Wire............. Lafayette, Indiana 350,000 Owned
Pawtucket, Rhode Island 412,000 Owned (b)
SUPERIOR ISRAEL............... Shaar Hanegav, Israel 66,000 Owned
Eilat, Israel 53,000 Owned
Bet-Shean, Israel 51,000 Leased (expires 2002)
Maalot, Israel 10,000 Leased (expires 2003)
Nazareth, Israel 25,000 Leased (expires 2003)
METALS PROCESSING............. Columbia City, Indiana 75,000 Owned
Jonesboro, Indiana 56,000 Owned
ADMINISTRATIVE OFFICES........ New York, New York 5,400 Leased (expires 2002)
Atlanta, Georgia 31,000 Leased (expires 2001)
Fort Wayne, Indiana 295,000 Owned
</TABLE>
- - ------------------------
(a) The Franklin, Indiana facility is approximately 70,000 square feet, of
which 35,000 square feet is leased to Femco as a joint venture between
Superior and the Furukawa Electric Company, LTD., Tokyo, Japan. Femco
manufactures and markets magnet wire with special emphasis on products
required by Japanese manufacturers with production facilities in the
United States.
(b) Currently listed for sale.
15
<PAGE>
In addition to the facilities described in the table above, the Company owns
or leases 32 warehousing and distribution facilities throughout the United
States, Canada and United Kingdom to facilitate the sale and distribution of its
products.
The Company believes that its plants are generally suitable and adequate for
the business being conducted and to service the requirements of its customers.
Capital spending plans are primarily designed to keep up with current
technology, to increase capacity in existing product lines and for cost
reduction initiatives. The extent of current utilization is generally consistent
with historical patterns and, in the view of management, is satisfactory. The
Company does not view any of its plants as being underutilized. A majority of
Superior's plants operate on 24 hour-a-day schedules, on either a five day or
seven day per week basis. During the eight months ended December 31, 1999, the
Company's facilities have operated at approximately 90% capacity.
ITEM 3. LEGAL PROCEEDINGS
The Company is engaged in certain routine litigation arising in the ordinary
course of business. While the outcome of litigation can never be predicted with
certainty, the Company does not believe that any of its existing litigation,
either individually or in the aggregate, will have a material adverse effect
upon its business, financial condition, liquidity or results of operations.
Superior's operations are subject to environmental laws and regulations in
each of the jurisdictions in which it operates governing, among other things,
emissions into the air, discharges to water, the use, handling and disposal of
hazardous substances and the investigation and remediation of soil and
groundwater contamination both on-site at Superior's facilities and at off-site
disposal locations. On-site contamination at certain of Superior's facilities is
the result of historic disposal activities, including activities attributable to
Superior's operations and those occurring prior to the use of a facility by
Superior. Off-site liability includes clean-up responsibilities at various
sites, to be remedied under federal or state statutes, for which Superior has
been identified by the United States Environmental Protection Agency, or the
equivalent state agency, as a Potentially Responsible Party ("PRP").
Essex has been named as a PRP at a number of sites. Most of the sites for
which Essex is currently named as a PRP are covered by an indemnity from United
Technologies Corporation provided in connection with the February 1988 sale of
Essex by United Technologies to Essex's previous stockholders. Pursuant to the
indemnity, United Technologies agreed to indemnify Essex against losses incurred
under any environmental protection and pollution control laws or resulting from,
or in connection with, damage or pollution to the environment arising from
events, operations or activities of Essex prior to February 29, 1988, or from
conditions or circumstances existing at or prior to February 29, 1988. In order
to be covered by the indemnity, the condition, event, or circumstance must have
been known to United Technologies prior to February 29, 1988. The sites covered
by the indemnity are handled directly by United Technologies and all payments
required to be made are paid directly by United Technologies. These sites are
all mature sites where allocations have been settled and remediation is well
underway or has been completed. The Company is not aware of any inability or
refusal on the part of United Technologies to pay amounts that are owing under
the indemnity or any disputes between Essex and United Technologies concerning
matters covered by the indemnity.
United Technologies also provided an additional environmental indemnity,
referred to as the "basket indemnity." This indemnity relates to liabilities
arising from environmental events, conditions or circumstances existing at or
prior to February 29, 1988 that only became known to United Technologies in the
five-year period commencing February 29, 1988. As to such liabilities, Essex is
responsible for the first $4.0 million incurred. Thereafter, United Technologies
has agreed to indemnify Essex fully for any liabilities in excess of
$4.0 million. To date, Essex has incurred less than $0.2 million in the basket.
Apart from the indemnified sites and those subject to the basket indemnity,
Essex has been named as a PRP or a defendant in a civil lawsuit at eight sites.
Operations of Superior Telecommunications and DNE
16
<PAGE>
have resulted in releases of hazardous substances or wastes at sites currently
or formerly owned or operated by such companies. Alpine, as to one site, and
Superior Telecommunications as to one site, are presently involved in separate
investigatory and remedial activities at one site subject to the oversight of a
state governmental authority. The Company has provided a reserve in the amount
of $2.9 million to cover its environmental contingencies as of December 31,
1999. This accrual is based on 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, actual remediation costs incurred, the probable ability of
other PRPs to pay their proportionate share of remediation costs, the conditions
at each site and the number of participating parties. The Company currently does
not believe that any of the environmental proceedings in which it is involved,
and for which it may be liable, will individually, or in the aggregate, have a
material adverse effect upon its business, financial condition, liquidity or
results of operations. There can be no assurance that future developments will
not alter this conclusion. None of the sites mentioned above involves sanctions,
fines or administrative penalties against Superior.
Since approximately 1990, Essex has been named as a defendant in a number of
product liability lawsuits brought by electricians and other skilled tradesmen
claiming injury from exposure to asbestos found in electrical wire products
produced many years ago. Litigation against various past insurers of Essex who
had previously refused to defend and indemnify Essex against these lawsuits was
settled during 1999. Pursuant to the settlement, Essex was reimbursed for
substantially all of its costs and expenses incurred in the defense of these
lawsuits, and the insurers have undertaken to defend, are currently directly
defending and, if it should become necessary, will indemnify Essex against such
asbestos lawsuits, subject to the express terms and limits of the respective
policies. The Company believes that Essex's liability, if any, in these matters
will not have a material adverse effect either individually, or in the
aggregate, upon its business, financial condition, liquidity or results of
operations. There can be no assurance, however, that future developments will
not alter this conclusion.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On December 15, 1999, the Company held its annual meeting of stockholders.
At that meeting, John C. Jansing was reelected as a director of the Company by a
vote of 12,739,033 shares for and 161,744 shares against his reelection. In
addition, the appointment of Arthur Andersen LLP as the Company's independent
certified public accountants was ratified by a vote of 12,886,265 shares for and
6,334 shares against such appointment.
17
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S SECURITIES AND RELATED SECURITY HOLDER MATTERS
(a) Market Information
Alpine's common stock, $0.10 par value, is listed on the New York Stock
Exchange (the "NYSE") under the symbol AGI. The following table sets forth the
range of high and low daily closing sales prices for the Alpine common stock for
the last two complete fiscal years and the eight months ended December 31, 1999.
<TABLE>
<CAPTION>
HIGH LOW
-------- --------
<S> <C> <C>
Fiscal Year Ended April 30, 1998
First Quarter ended July 31, 1997......................... $12.69 $ 9.13
Second Quarter ended October 31, 1997..................... 15.31 11.00
Third Quarter ended January 31, 1998...................... 20.88 14.81
Fourth Quarter ended April 30, 1998....................... 21.75 18.19
Fiscal Year Ended April 30, 1999
First Quarter ended July 31, 1998......................... $21.88 $16.50
Second Quarter ended October 31, 1998..................... 18.25 13.19
Third Quarter ended January 31, 1999...................... 18.75 13.13
Fourth Quarter ended April 30, 1999....................... 14.25 9.38
Eight Months Ended December 31, 1999
First Quarter ended July 31, 1999......................... $17.63 $13.75
Second Quarter ended October 31, 1999..................... 18.63 11.44
Two month period ended December 31, 1999.................. 12.88 10.69
</TABLE>
(b) Holders
The Company's transfer agent is American Stock Transfer & Trust Company, 40
Wall Street, New York, New York 10005.
At March 24, 2000, 14,148,944 shares of Alpine common stock were issued and
outstanding, and there were approximately 1,600 record holders (exclusive of
beneficial owners of shares held in street name or other nominee form) thereof.
(c) Dividends
Alpine has no recent history of paying cash dividends and does not currently
intend to declare cash dividends on the Alpine common stock in the foreseeable
future. Any payment of future cash dividends and the amounts thereof will be
dependent upon the Company's earnings, financial requirements and other factors,
including contractual obligations.
18
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
HISTORICAL FINANCIAL DATA
Set forth below are certain selected historical consolidated financial data
of Alpine. This information should be read in conjunction with the consolidated
financial statements of Alpine and related notes thereto appearing elsewhere
herein and "Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations." The selected historical consolidated financial data
for, and as of the end of, each of the fiscal years in the five-year period
ended April 30, 1999, and for, and as the end of, the eight months ended
December 31, 1999, are derived from the audited consolidated financial
statements of Alpine.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL 30 (1) EIGHT MONTHS
---------------------------------------------------- ENDED DECEMBER
1995 1996 1997 1998 1999 31, 1999 (2)
-------- -------- -------- -------- -------- ---------------
(IN MILLIONS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Net sales................................................ $164.5 $410.4 $463.8 $516.6 $1,143.2 $1,370.4
Cost of goods sold....................................... 142.1 362.9 384.3 417.4 910.7 1,116.1
------ ------ ------ ------ -------- --------
Gross profit........................................... 22.4 47.6 79.6 99.2 232.6 254.3
Selling, general and administrative expenses............. 14.7 20.2 25.3 28.8 93.9 102.5
Nonrecurring and unusual charges......................... -- -- -- -- 7.3 4.7
Amortization of goodwill................................. 1.0 1.4 1.7 1.7 8.4 13.8
------ ------ ------ ------ -------- --------
Operating income....................................... 6.6 26.0 52.5 68.7 123.1 133.3
Interest (expense)....................................... (5.4) (19.3) (13.8) (10.8) (60.1) (85.1)
Gain on sale of subsidiary stock......................... -- -- 80.4 -- -- --
Other income, net........................................ 0.1 1.7 2.0 4.1 1.9 4.7
------ ------ ------ ------ -------- --------
Income from continuing operations before income taxes,
distributions on preferred securities of subsidiary
trust, minority interest, equity in earnings of
affiliate and extraordinary (loss)................... 1.3 8.3 121.2 62.0 64.8 52.9
Provision for income taxes............................. (0.3) (1.3) (53.9) (24.8) (28.0) (21.7)
------ ------ ------ ------ -------- --------
Income from continuing operations before distributions on
preferred securities of subsidiary trust, minority
interest, equity in earnings of affiliate and
extraordinary (loss)................................... 1.0 7.0 67.3 37.2 36.9 31.2
Distributions on preferred securities of subsidiary
trust.................................................. -- -- -- -- (1.3) (10.0)
------ ------ ------ ------ -------- --------
Income from continuing operations before minority
interest, equity in earnings of affiliate and
extraordinary (loss)................................... 1.0 7.0 67.3 37.2 35.6 21.2
Minority interest in earnings of subsidiaries, net....... -- -- (8.1) (20.3) (18.7) (11.4)
Equity in earnings of affiliate.......................... -- -- -- -- -- 2.2
------ ------ ------ ------ -------- --------
Income from continuing operations before extraordinary
(loss)................................................. 1.0 7.0 59.2 16.9 16.9 12.0
Income (loss) from discontinued operations (3)........... (7.1) (4.0) (2.3) (0.2) (2.7) 35.4
------ ------ ------ ------ -------- --------
Income (loss) before extraordinary (loss)................ (6.0) 3.0 56.8 16.7 14.2 47.4
Extraordinary (loss) on early extinguishment of debt, net
of tax................................................. -- (4.9) (20.1) (1.5) (0.6) (1.0)
------ ------ ------ ------ -------- --------
Net income (loss)........................................ $ (6.0) $ (1.9) $ 36.7 $ 15.3 $ 13.6 $ 46.4
====== ====== ====== ====== ======== ========
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR ENDED APRIL 30 (1) EIGHT MONTHS
---------------------------------------------------- ENDED DECEMBER
1995 1996 1997 1998 1999 31, 1999 (2)
-------- -------- -------- -------- -------- ---------------
(IN MILLIONS, EXCEPT PER SHARE
DATA)
<S> <C> <C> <C> <C> <C> <C>
Income (loss) per share of common stock:
BASIC
Income from continuing operations...................... $ 0.01 $ 0.33 $ 3.28 $ 0.99 $ 1.03 $ 0.81
(Loss) from discontinued operations.................... (0.39) (0.22) (0.13) (0.01) (0.17) 2.39
Extraordinary (loss) on early extinguishment of debt... -- (0.27) (1.12) (0.09) (0.04) (0.07)
Preferred stock redemption premium..................... -- -- (0.29) -- -- --
------ ------ ------ ------ -------- --------
Net income (loss) per share of common stock............ $(0.38) $(0.16) $ 1.73 $ 0.90 $ 0.82 $ 3.13
====== ====== ====== ====== ======== ========
DILUTED
Income from continuing operations...................... $ 0.01 $ 0.33 $ 2.98 $ 0.90 $ 0.91 $ 0.68
(Loss) from discontinued operations.................... (0.39) (0.22) (0.12) (0.01) (0.15) 2.17
Extraordinary (loss) on early extinguishment of debt... -- (0.27) (1.01) (0.08) (0.04) (0.06)
Preferred stock redemption premium..................... -- -- (0.26) -- -- --
------ ------ ------ ------ -------- --------
Net income (loss) per share of common stock............ $(0.38) $(0.16) $ 1.59 $ 0.81 $ 0.72 $ 2.79
====== ====== ====== ====== ======== ========
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital........................................ $ 27.1 $103.8 $ 99.0 $ 64.8 $ 247.4 $ 170.0
Total assets........................................... 140.2 318.7 303.8 320.4 2,109.0 2,183.6
Total debt............................................. 56.9 202.7 140.8 97.1 1,445.1 1,479.3
Preferred stock........................................ 17.3 11.8 1.9 0.4 0.4 0.4
Total stockholders' equity............................. 44.7 43.1 54.4 77.5 56.4 95.0
</TABLE>
- - ------------------------------
(1) Alpine's results of operations have been significantly impacted by
acquisitions. On May 11, 1995, Superior completed the acquisition of
Alcatel N.A. for $103.4 million in cash. On May 5, 1998, Superior
acquired 51% of Cables of Zion for approximately $25 million in cash. On
November 27, 1998, Superior acquired 81% of Essex for $770 million in
cash and on March 31, 1999 the remaining 19% through the issuance of
$167 million of 8 1/2% trust convertible preferred securities of Superior
Trust I. On December 31, 1998, Cables of Zion acquired Cvalim for
$41.2 million in cash.
(2) On December 20, 1999, the Company elected to change its fiscal year end
to December 31 from April 30. This change was made effective on
December 31, 1999.
(3) On August 6, 1999, the Company completed the disposition by merger of
its subsidiary Premier Refractories International Inc. In July 1995,
Alpine completed the spin-off of its information display segment,
PolyVision Corporation, which consisted of Alpine PolyVision Inc.,
Posterloid Corporation and Information Display Technologies, Inc. The
results of operations (including the gain on sale from the disposition of
Premier Refractories International Inc.) for these segments have been
reflected as discontinued operations for the periods presented. (See
Note 4 to Alpine's consolidated financial statements).
20
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Alpine Group, Inc. (together with its subsidiaries, unless the context
otherwise requires, "Alpine" or the "Company") is an industrial holding company
with investments in three industrial manufacturing companies.
SUPERIOR TELECOM INC.
Alpine holds a 51.8% common equity interest in its consolidated subsidiary,
Superior TeleCom Inc. (together with its subsidiaries, unless the context
otherwise requires, "Superior"), whose balance sheet accounts and results of
operations are consolidated with the financial statements of Alpine.
Superior manufactures a portfolio of wire and cable products grouped into
the following primary industry segments: (i) communications, (ii) original
equipment manufacturer ("OEM") and (iii) electrical. The Communications Group
includes communications wire and cable products sold to telephone companies,
distributors and systems integrators, principally in North America. In addition,
included within the Communications Group is Superior's 51% owned Israeli
subsidiary, Superior Cables Limited ("Superior Israel"), which manufactures a
range of wire and cable products in Israel, including communications cable,
power cable and other industrial and electronic wire and cable products. The OEM
Group includes magnet wire and accessory products for motors, transformers and
electrical controls sold primarily to OEMs, as well as automotive and specialty
wiring assemblies for automobiles and trucks. The Electrical Group includes
building and industrial wire for applications in commercial and residential
construction and industrial facilities.
Prior to the acquisitions of Essex and Superior Israel (see Note 5 to the
consolidated financial statements), Superior's operations consisted principally
of its North American communications wire and cable business. The Essex
acquisition, which occurred on November 27, 1998, resulted in the addition of
the OEM and Electrical Group product lines as well as incremental sales of
communications wire and cable. The May 1998 acquisition of 51% of Superior
Israel and Superior Israel's subsequent acquisition of two major Israeli
competitors, resulted in the addition to Superior's operating results of its
Israeli operations. These acquisitions were accounted for under the purchase
method of accounting with the operating results from these acquired businesses
being included in Superior's consolidated statements of operations
prospectively, from the date of acquisition. Accordingly, comparisons to results
of operations for periods prior to the date of these acquisitions will be
impacted.
Copper is one of the principal raw materials used in Superior's wire and
cable product manufacturing. Fluctuations in the price of copper do affect per
unit product pricing and related revenues. However, the cost of copper has not
had a material impact on profitability as Superior, in most cases, has the
ability to adjust prices billed for its products to properly match the copper
cost component of its inventory shipped.
POLYVISION CORPORATION
Alpine holds a 48% common equity interest and $19.7 million of convertible
preferred stock in its unconsolidated affiliate, PolyVision Corporation, a
global manufacturer of visual communications and related products for the
education/office markets, menus and merchandising boards for food service and
banking institutions, and high performance wall systems used in the education,
transportation and select architectural markets.
Alpine currently accounts for its investment in PolyVision under the equity
method of accounting resulting in recognition of Alpine's proportionate share of
PolyVision's earnings as a one-line item within the statement of operations.
Prior to November 1998, Alpine's equity interest in PolyVision was less than
20%, with such investment accounted for on the cost basis.
21
<PAGE>
DISCONTINUED OPERATIONS/COOKSON GROUP PLC
On August 6, 1999, Alpine completed the sale of its subsidiary, Premier
Refractories International Inc. ("Premier"), to Cookson Group plc ("Cookson").
The gain on the sale of Premier of $35.4 million and the historical net
operating results of Premier have been classified as discontinued operations
within the consolidated financial statements (see Note 4 to the consolidated
financial statements).
The sale of Premier was effected through the merger of Premier with a
wholly-owned subsidiary of Cookson. In connection with the transaction, Cookson
assumed all of Premier's existing indebtedness, issued to Alpine approximately
32.3 million shares of Cookson common stock and paid to Alpine $15.6 million in
cash. Immediately prior to the sale of Premier, Alpine acquired the 16.6%
minority equity interest in Premier for approximately $31.1 million in cash.
Alpine's current ownership of Cookson common stock approximates 4%, with
such investment accounted for as an available for sale investment with
unrealized holding gains and losses reflected as a component of other
comprehensive income. Dividend income on the Cookson stock is recognized in the
statement of operations, as received.
CHANGE IN ALPINE'S FISCAL YEAR-END
Alpine recently changed its year end to December 31 from April 30, effective
for the December 31, 1999 period. Accordingly, the Company has reported results
of operations for an eight month transitional period ended December 31, 1999.
RESULTS OF OPERATIONS--EIGHT MONTH PERIOD ENDED DECEMBER 31, 1999
COMPARED TO THE TWELVE MONTH PERIOD ENDED APRIL 30, 1999
The comparison of operating results for the eight month period ended
December 31, 1999 with the twelve month period ended April 30, 1999 ("fiscal
1999") is impacted by: (i) the inclusion of the acquired operations of Essex for
the entire period for the eight months ended December 31, 1999 as compared to
only five months in fiscal 1999 and (ii) the difference in comparative periods
(eight months versus twelve months).
Net sales were $1.370 billion for the eight months ended December 31, 1999
compared to net sales of $1.143 billion for fiscal 1999. The comparative
increase in net sales was due primarily to the inclusion of the acquired
operations of Essex for the full eight month period versus only five months
during fiscal 1999, partially offset by the shorter comparison period (eight
months versus twelve months).
Gross profit for the eight months ended December 31, 1999 was $254 million
as compared to $233 million for fiscal 1999. The increase in gross profit
resulted from the inclusion of gross profit contributed by the acquired
operations of Essex for eight months versus only five months during fiscal 1999.
The gross margin percentage was 18.6% for the eight months ended December 31,
1999 as compared to 20.4% for fiscal 1999. The reduction in gross margin
percentage for the December 1999 eight month period was primarily attributable
to the change in product mix resulting from the product lines acquired in the
Essex acquisition.
Selling, general and administrative expenses ("SG&A expenses") increased
from $94 million in fiscal 1999 to $103 million for the eight months ended
December 31, 1999. The increase resulted from incremental expenses associated
with the acquired operations of Essex, partially offset by corporate cost
reductions and the shorter comparison period (eight months versus twelve
months).
Goodwill amortization increased from $8.4 million for fiscal 1999 to
$13.8 million for the eight months ended December 31, 1999 with such increase
due to incremental goodwill associated with the acquisition of Essex.
22
<PAGE>
Operating income (excluding nonrecurring and unusual charges) was
$138.0 million for the eight months ended December 31, 1999 as compared to
$130.3 million for fiscal 1999. The increase reflects the impact of the acquired
operations of Essex for the full eight months versus five months during fiscal
1999, partially offset by the shorter comparison period.
The Company incurred nonrecurring and unusual charges of $4.7 million during
the eight months ended December 31, 1999 and $7.3 million during fiscal 1999.
The charges incurred during the eight months ended December 31, 1999 included
$2.1 million related to plant consolidation activities at Essex, $1.3 million
related to restructuring activities at Superior Israel, $0.9 million associated
with the evaluation of management information systems at Essex, and
$0.4 million of start-up costs for the Company's Mexican magnet wire facility.
The nonrecurring and unusual charges in fiscal 1999 consisted of a $2.9 million
restructuring charge at Superior Israel related to plant consolidations and
corporate rationalization activities and $4.4 million associated with the
evaluation of a management information system project at Essex.
Interest expense was $85.1 million for the eight months ended December 31,
1999 as compared to $60.1 million for fiscal 1999. The increase was attributable
to the debt incurred in connection with the Essex acquisition.
Distributions on preferred securities of subsidiary trust were
$10.0 million for the eight months ended December 31, 1999 and $1.3 million in
fiscal 1999. The amounts include dividends paid under the $167 million (face
amount) of 8 1/2% Mandatorily Redeemable Trust Convertible Preferred Securities
of Superior Trust I issued in connection with the Essex acquisition.
The minority interest charge of $11.4 million for the eight months ended
December 31, 1999 represented the minority stockholders' interest in Superior's
net income for such period. The minority interest charge of $18.7 million in
fiscal 1999 included the minority stockholders' interest in Superior's net
income, and the minority stockholders' interest (approximately 19%) in Essex's
net income from November 27, 1998 (the date which Superior acquired an 81%
ownership position in Essex) until March 31, 1999 (the date on which Superior
acquired the remaining 19% outstanding ownership position in Essex (Note 5).
Equity in earnings of affiliate during the eight months ended December 31,
1999 represented the Company's preferred and common equity interest in earnings
of PolyVision Corporation.
Income from continuing operations for the eight months ended December 31,
1999 was $12.0 million, or $0.68 per diluted share as compared to
$16.9 million, or $0.91 per diluted share for fiscal 1999. Excluding the impact
of nonrecurring and unusual charges, income from continuing operations was
$14.1 million, or $0.81 per diluted share, for the eight months ended
December 31, 1999 compared to $18.6 million, or $1.00 per diluted share, for
fiscal 1999.
During the eight months ended December 31, 1999, the Company completed the
sale of Premier to Cookson. The transaction resulted in an after tax gain on
disposition of discontinued operations of $35.4 million, or $2.17 per diluted
share. In fiscal 1999, the Company incurred a net loss from the discontinued
operating activities of Premier of $2.7 million, or $0.15 per diluted share.
The Company recorded after tax extraordinary charges of $1.0 million, or
$0.06 per diluted share, and $0.6 million, or $0.04 per diluted share, during
the eight months ended December 31, 1999 and fiscal 1999, respectively. The
charges represent previously capitalized deferred financing fees written off in
connection with the early extinguishment of debt.
Net income (after discontinued operations and extraordinary loss) for the
eight months ended December 1999 was $46.4 million, or $2.79 per diluted share,
as compared to $13.5 million, or $0.72 per diluted share, for fiscal 1999.
23
<PAGE>
RESULTS OF OPERATIONS--COMPARATIVE RESULTS FOR FISCAL YEARS 1999, 1998 AND 1997
In fiscal 1999, net sales were $1,143.2 million representing an increase of
$626.6 million, or 121%, as compared to fiscal 1998 net sales of
$516.6 million. The increase in net sales in fiscal 1999 was principally the
result of incremental revenues from the acquired operations of Essex and
Superior Israel along with continued demand growth in 1999 for copper
communications wire and cable products within Superior's existing communications
segment.
In fiscal 1998, net sales (which consisted entirely of sales within the
communications segment) were $516.6 million, representing an increase of
$52.8 million, or 11.4%, as compared to fiscal 1997 net sales of
$463.8 million. The increase in net sales in fiscal 1998 resulted from increased
demand due to the growth in telephone and data access lines and increased
maintenance spending by major telephone company customers, and an increase in
market share resulting from multi-year supply agreements entered into with
several of Superior's major telephone company customers during fiscal 1997 and
1998.
Along with the comparative increase in net sales in fiscal 1999 and 1998,
the Company also achieved substantial growth in gross profit and an expansion of
its gross margin percentage during such fiscal periods. In fiscal 1999, gross
profit increased $133.4 million, or 134%, to $232.6 million, as compared to
fiscal 1998. In fiscal 1998, the gross profit was $99.2 million, representing a
comparative increase of $19.7 million, or 24.7%, as compared to fiscal 1997.
The comparative increase in gross profit for fiscal 1999 included
$114.8 million in gross profit contribution from the acquired Essex and Superior
Israel operations as well as an increase in gross profit contribution from
Superior's existing communications segment operations of $18.8 million. In
fiscal 1998 the comparative increase in gross profit of $19.7 million, or 24.7%,
was wholly attributable to Superior's existing communications segment
operations.
The increase in the gross margin percentage from 17.2% in fiscal 1997 to
19.2% in fiscal 1998 and to 20.3% in fiscal 1999 was attributable to the
communications segment where the impact of substantial manufacturing cost
reductions and efficiencies coupled with copper adjusted price increases gave
rise to an approximate 5.8% increase in this segment's gross margin percentage
from fiscal 1997 period to fiscal 1999 period. The overall gross margin
percentage was negatively impacted in fiscal 1999 as a result of lower margins
associated with the acquired OEM and Electrical segments of Essex and lower
margins in the acquired Superior Israel operations.
SG&A expenses increased from $25.3 million in fiscal 1997 to $28.8 million
in fiscal 1998 and to $93.9 million in fiscal 1999. The comparative increase in
SG&A expenses of $65.1 million during fiscal 1999 was primarily due to
incremental SG&A expenses associated with the acquired operations of Essex and
Superior Israel. The increase in SG&A expenses in fiscal 1998 was attributable
to costs associated with incremental sales, marketing and administrative staff
to support the increased level of sales activity and the expansion of product
development activities, including the establishment and staffing of a product
development facility in the fourth quarter of fiscal 1997.
The Company incurred nonrecurring and unusual charges during fiscal 1999 of
$7.3 million, consisting of (i) a $2.9 million restructuring charge recorded by
Superior Israel relating to planned manufacturing plant consolidations and
overhead rationalization associated with the acquisition of Cvalim and
(ii) $4.4 million in charges associated with the review and evaluation of a
management information system at Essex.
As a result of the Essex acquisition, amortization of goodwill increased to
$8.4 million in fiscal 1999 from $1.7 million in both fiscal 1998 and 1997.
Commensurate with the growth in net sales and gross profit, the Company's
operating income increased substantially in both fiscal 1999 and fiscal 1998.
Excluding the impact of nonrecurring and unusual charges, operating income in
fiscal 1999 was $130.4 million, representing an increase of 90%, as
24
<PAGE>
compared to fiscal 1998 operating income of $68.7 million. The increase in
fiscal 1999 operating income resulted from: (i) the Essex and Superior Israel
acquisitions, which acquired operations contributed $38.6 million in operating
income and (ii) a strong comparative improvement in the existing communications
segment's gross margin percentage resulting from cost reductions and other
manufacturing and operating efficiencies achieved during the year. The increase
in operating income in fiscal 1998, as compared to fiscal 1997, was
$16.2 million, or 30.8%, which increase was attributable to the comparative
increase in the communications segment's net sales in fiscal 1998 coupled with
an expansion in the gross margin percentage resulting from copper adjusted price
increases and manufacturing cost reductions.
Interest expense in fiscal 1999 was $60.1 million representing an increase
of $49.4 million, as compared to fiscal 1998 interest expense of $10.8 million.
This comparative increase was directly attributable to acquisition-related debt
associated with the acquisition of Essex and Superior Israel. Interest expense
in fiscal 1998 was $10.8 million representing a decrease of $3.0 million, or
21.8%, as compared to fiscal 1997 interest expense of $13.8 million. The
comparative decline is attributable to debt reduction achieved through the
application of operating cash flow during such period.
In fiscal 1999, the provision for income tax expense was $28.0 million,
representing an effective tax rate of 43.1%. This compares with fiscal 1998 and
1997 income tax expense of $24.8 million and $53.9 million, respectively,
representing effective tax rates of 40.0% and 44.5%, respectively. The increase
in effective tax rate in fiscal 1999 was the result of the increase in
nondeductible goodwill associated with the Essex acquisition.
The minority interest charge of $18.7 million in fiscal 1999 represented
(i) the approximate 49% minority stockholders' interest in Superior's net
income, (ii) the approximate 49% minority stockholders' interest in Superior
Israel's net income from the date of acquisition and (iii) the approximate 19%
minority interest in Essex's net income from November 27, 1998 until the final
completion of the Essex merger on March 31, 1999. The minority interest charge
of $8.1 million in fiscal 1997 and $20.3 million in fiscal 1998 represented the
approximate 49% minority stockholders' interest in Superior's net income from
October 17, 1996 (the date of its initial public offering) through the end of
fiscal 1997 and for the full fiscal year 1998, respectively.
Loss from discontinued operations, net of tax, for fiscal 1999 was
$2.7 million, or $0.15 per diluted share. This compares to losses from
discontinued operations for fiscal 1998 of $0.2 million, or $0.01 per diluted
share, and $2.3 million, or $0.12 per diluted share, for fiscal 1997.
Income before extraordinary loss was $14.2 million in fiscal 1999,
$16.7 million in fiscal 1998 and $56.8 million in fiscal 1997. Excluding the
effect of discontinued operations and nonrecurring and unusual items, income per
diluted share was $1.00 in fiscal 1999, $0.90 in fiscal 1998 and $0.80 in fiscal
1997.
In fiscal 1999, fiscal 1998 and fiscal 1997, the Company incurred an after
tax extraordinary loss on early extinguishment of debt of $0.6 million,
$1.5 million and $20.1 million, respectively (See Note 9 to Alpine's
consolidated financial statements).
LIQUIDITY AND CAPITAL RESOURCES
GENERAL
For the eight month period ended December 31, 1999, the Company generated
$63.8 million in cash flow from continuing operating activities, consisting of
$55.1 million in income generated from operations (net income plus non-cash
charges) increased by $8.7 million in cash flow provided by net working capital
changes. The major working capital changes included a $24.4 million decrease in
inventories primarily offset by an $18.4 million decrease in accounts payable
and accrued expenses. Cash used by investing activities amounted to
$93.7 million and consisted principally of capital expenditures, pre-arranged
long-term loans ("Israel Customer Loans") made to one of Superior Israel's
principal customers and Superior Israel's acquisition of Pica Plast. Cash
provided by financing activities amounted to $16.4 million. The
25
<PAGE>
major components were a net increase in borrowings of Superior Israel of $60.0
(including $28.7 million related to Superior Israel Customer Loans), other debt
reductions of $24.0 million, and treasury stock repurchases of $26.1 million.
SUPERIOR TELECOM
As discussed in Note 5 to the accompanying consolidated financial
statements, Superior completed a cash tender offer for the acquisition of 81% of
the outstanding common shares of Essex on November 27, 1998. In connection with
this acquisition, Superior entered into a $1.15 billion amended and restated
credit agreement (the "Credit Agreement") and a $200 million senior subordinated
credit agreement (the "Sub Notes"). Proceeds from these financing arrangements
amounting to approximately $1.15 billion were used to (i) pay $770 million,
representing the cash portion of the Essex acquisition purchase price,
(ii) refinance approximately $84 million under Superior's existing credit
facility, (iii) refinance approximately $275 million of Essex's existing debt,
and (iv) pay related transaction expenses. Obligations under the Credit
Agreement and the Sub Notes are secured by substantially all of the assets of
Superior and its domestic subsidiaries, and by the common stock of Superior's
domestic subsidiaries and 65% of the common stock of its principal foreign
subsidiaries. At December 31, 1999, Superior had $167 million in excess
availability under the Credit Agreement. The Credit Agreement contains certain
performance and financial covenants. Further, in March 2000 the Credit Agreement
was amended, reducing certain prospective financial covenant thresholds related
to, among other things, operating cash flow (EBITDA) levels.
In addition to financing provided by the Credit Agreement and Sub Notes,
Superior has financing availability under a receivable securitization program
providing for up to $160 million in short term financing through the issuance of
secured commercial paper. The receivable securitization program expires on
November 30, 2000, although it may be extended for successive one-year periods,
subject to agreement. At December 31, 1999, $140.4 million was outstanding under
this program bearing an interest rate of 6.75%.
As discussed in Note 5 to the accompanying consolidated financial
statements, Superior acquired 51% of Superior Israel on May 5, 1998. On
December 31, 1998, Superior Israel completed the acquisition of all of the
business and certain operating assets of Cvalim for $41.2 million. In connection
with this acquisition, Superior Israel entered into a $83.0 million credit
facility, consisting of a $53.0 million term loan and a $30.0 million revolving
credit facility. Proceeds from this financing were used to finance the
acquisition, pay related expenses and provide for working capital requirements
of Superior Israel. Obligations under this credit facility are secured by all of
the assets of Superior Israel. The credit facility contains customary
performance and financial covenants. At December 31, 1999, Superior Israel had
$10.0 million in excess availability under its revolving credit facility.
Superior's principal debt service commitments for the next 12 months amount
to $86.0 million and capital expenditures are expected to approximate
$70.0-$80.0 million. Management anticipates that Superior will generate in
excess of $100 million in cash flows from its operating activities over the next
twelve months subject to fluctuations resulting from operating performance and
working capital changes. The Company believes that operating cash flows plus
excess funds available under Superior's credit facilities will be sufficient to
fund its aforementioned debt service and capital commitments.
ALPINE CORPORATE
As of December 31, 1999, Alpine had corporate cash, cash equivalents and
marketable securities (excluding its investments in Superior, PolyVision and
Cookson) of approximately $27.4 million. Alpine also owns approximately
10.2 million common shares (representing 51.8% common share ownership) of
Superior (NYSE:SUT) with a market value on March 24, 2000 of approximately
$131.3 million and a consolidated carrying value as recorded by the Company (net
of minority interest) of approximately $ million. Additionally, at
March 24, 2000, Alpine's investments in Cookson common stock (FTSE:
26
<PAGE>
CKSN.L) and PolyVision common stock and preferred stock amounted to
$93.2 million and $41.1 million, respectively.
Alpine's primary commitments over the next twelve month period include
funding of corporate overhead expenses and interest payments on approximately
$83.0 million in Alpine corporate debt (of which $20.0 million was incurred in
August 1999 to complete the acquisition of the minority interest of Premier--see
Note 5 to the accompanying consolidated financial statements). Total annual
funding for Alpine corporate overhead and interest expense is expected to
approximate $13-$14 million.
In November 1999, the Company refinanced and expanded its existing corporate
credit facility. The revised credit facility provides for borrowings up to
$100 million, of which $70.0 million was drawn as of December 31, 1999. The
Company has pledged substantially all of its common share and ordinary share
ownership in Superior and Cookson, respectively, as security for this credit
facility.
For the next 12 month period, Alpine expects to fund its aforementioned
annual commitments from allowable management fees payable by Superior to Alpine,
cash dividends from Superior and Cookson and from interest income, with any
shortfall funded from availability under the aforementioned corporate credit
facility or from existing corporate cash, cash equivalents and marketable
securities reserves.
YEAR 2000 UPDATES
The Company did not experience any significant disruptions in its business
operations as a result of the Year 2000 problem. The Year 2000 problem was
defined as the potential system and mechanical failures or miscalculations
resulting from the inability of computer programs to recognize dates after
December 31, 1999. Most computer programs had been written using two digits
(rather than four) to define the applicable year.
In fiscal 1997, the Company established project teams to identify and
resolve Year 2000 problems. The teams' processes included (i) the readiness
assessment of service providers, major vendors and internal operating systems
and applications; (ii) the upgrade or remediation of non-compliant items
identified; and (iii) the testing and implementation of the upgraded or
remediated items.
The Company incurred approximately $6.0 million of expenses related to the
Year 2000 project. The costs associated with code modification and testing
(approximately $5.0 million) were expensed as incurred. The personal computer
and purchased software upgrades (approximately $1.0 million) were incurred in
the ordinary course of business and capitalized.
The Company does not anticipate any future disruptions in its business
related to the Year 2000 problem.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's exposure to market risk primarily relates to interest rates on
long-term debt. The Company enters into interest rate swap agreements to manage
its exposure to interest rate changes. At December 31, 1999, the Company has an
interest rate swap on $600 million principal amount with a fixed LIBOR rate of
5.27% expiring December 10, 2000. Considering the impact of the existing
interest rate swap, a one percent increase in interest rates affecting the
Company's $1.15 billion credit agreement and its $200 million sub notes would
increase annual interest expense by approximately 4% or $5.2 million. Excluding
the impact of the existing rate swap, a one percent increase in interest rates
affecting the Company's $1.15 billion credit agreement and its $200 million sub
notes would increase annual interest expense by approximately 9% or
$11.2 million.
EXCEPT FOR THE HISTORICAL INFORMATION HEREIN, THE MATTERS DISCUSSED IN THIS
ANNUAL REPORT ON FORM 10-K INCLUDE FORWARD-LOOKING STATEMENTS THAT MAY INVOLVE A
NUMBER OF RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY VARY SIGNIFICANTLY BASED
ON A NUMBER OF FACTORS, INCLUDING, BUT NOT LIMITED TO, RISKS IN PRODUCT AND
TECHNOLOGY
27
<PAGE>
DEVELOPMENT, MARKET ACCEPTANCE OF NEW PRODUCTS AND CONTINUING PRODUCT DEMAND,
PREDICTION AND TIMING OF CUSTOMER ORDERS, THE IMPACT OF COMPETITIVE PRODUCTS AND
PRICING, CHANGING ECONOMIC CONDITIONS, INCLUDING CHANGES IN SHORT TERM INTEREST
RATES AND FOREIGN EXCHANGE RATES, AND OTHER RISK FACTORS DETAILED IN THE
COMPANY'S MOST RECENT FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Alpine's consolidated financial statements as of December 31, 1999 and
April 30, 1999 and 1998 and for the eight months ended December 31, 1999 and
each of the three years in the period ended April 30, 1999 and the report of the
independent public accountants thereon and financial statement schedules
required under Regulation S-X are submitted herein as a separate section
following Item 14 of this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NONE.
28
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
The information required by this Item is incorporated herein by reference to
Alpine's definitive Proxy Statement to be filed with the Securities and Exchange
Commission pursuant to Regulation 14A within 120 days after the end of the
fiscal year covered by this report ("Alpine's Proxy Statement").
ITEM 11. EXECUTIVE COMPENSATION
The information required by this item is incorporated herein by reference to
Alpine's Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is incorporated herein by reference to
Alpine's Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is incorporated herein by reference to
Alpine's Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a)(1),(a)(2) See the separate section of this report following Item 14 for
a list of financial statements and schedules filed herewith.
(a)(3)Exhibits as required by Item 601 of Regulation S-K are listed in Item
14(c) below.
(b) The Company filed a Current Report on Form 8-K on December 21, 1999 with
respect to Item 8 to report its change in year end to December 31 from
April 30, effective December 31, 1999.
ITEM 14(C) EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- - -------------- ------------------------------------------------------------
<C> <S>
2(a) Stock Purchase Agreement, dated February 14, 1992, by and
between Alpine and Dataproducts Corporation, relating to the
purchase of shares of capital stock of DNE Systems, Inc.
(incorporated herein by reference to Exhibit 1 to the
Current Report on Form 8-K of Alpine dated March 2, 1992).
2(b) Agreement and Plan of Merger, dated as of June 17, 1993 and
amended on September 24, 1993, by and between Alpine and
Superior TeleTec Inc. (incorporated herein by reference to
Exhibit 2 to the Registration Statement on Form S-4
(Registration No. 33-9978) of Alpine, as filed with the
Securities and Exchange Commission (the "Commission") on
October 5, 1993).
2(c) Agreement and Plan of Merger, dated as of December 21, 1994,
as amended, by and among Information Display Technology,
Inc., IDT PolyVision Acquisition Corp., IDT Posterloid
Acquisition Corp., The Alpine Group, Inc.,
Alpine/PolyVision, Inc. and Posterloid Corporation
(incorporated herein by reference to Exhibit 2 to Amendment
No. 1 to Alpine's Statement on Schedule 13D relating to its
beneficial ownership of equity securities of Information
Display Technology, Inc. dated December 28, 1994).
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- - -------------- ------------------------------------------------------------
<C> <S>
2(d) Amendment to the Agreement and Plan of Merger, dated as of
December 21, 1994, by and among Information Display
Technology, Inc., IDT PolyVision Acquisition Corp., IDT
Posterloid Acquisition Corp., Alpine, Alpine/PolyVision,
Inc. and Posterloid Corporation (incorporated herein by
reference to Exhibit 1 to Amendment No. 2 to Alpine's
Statement on Schedule 13D relating to its beneficial
ownership of equity securities of Information Display
Technology Inc. dated May 5, 1995).
2(e) Asset Purchase Agreement, dated as of March 17, 1995, by and
among Alcatel NA Cable Systems, Inc., Alcatel Canada Wire,
Inc. Superior Cable Corporation and Superior Teletec Inc.
(the "Alcatel Acquisition Agreement") (incorporated herein
by reference to Exhibit 1 to the Current Report on Form 8-K
of Alpine dated May 24, 1995).
2(f) Amendment dated May 11, 1995 to Asset Purchase Agreement by
and among Alcatel NA Cable Systems, Inc., Alcatel Canada
Wire, Inc., Superior Cable Corporation and Superior TeleTec
Inc. (incorporated herein by reference to Exhibit 2 to the
Current Report on Form 8-K of Alpine dated May 24, 1995).
2(g) Agreement Regarding Certain Employee Benefit Plans, amending
the Alcatel Acquisition Agreement, dated June 10, 1996
(incorporated herein by reference to Exhibit 2(b) to the
Annual Report on Form 10-K of Alpine for the year ended
April 30, 1996 (the "1996 10-K")).
2(h) Share Purchase Agreement, dated as of May 5, 1998, among
CLAL Industries and Investments Ltd., ISAL Holland B.V. and
Halachoh Hane'eman Hashivim Veshmona Ltd. (incorporated
herein by reference to Exhibit 1 to the Current Report on
Form 8-K of the Company dated May 5, 1998).
2(i) Agreement and Plan of Merger, dated as of October 21, 1998,
by and among Superior Telecom Inc. ("Superior TeleCom"), SUT
Acquisition Corp. and Essex International Inc. (incorporated
herein by reference to Appendix A-1 to the Joint Proxy
Statement/ Prospectus filed as part of the Registration
Statement on Form S-4 (Registration No. 333-68889) of
Superior TeleCom and Superior Trust I, as filed with the
Commission on December 14, 1998, as amended (the "Superior
Form S-4")).
2(j) Amendment No. 1 to Agreement and Plan of Merger, dated as of
February 24, 1999, by and among Superior TeleCom, SUT
Acquisition Corp. and Essex International Inc. (incorporated
herein by reference to Appendix A-2 to the Joint Proxy
Statement/ Prospectus filed as part of the Superior Form
S-4).
2(k) Asset Purchase Agreement, dated October 2, 1998, among
Cables of Zion United Works Ltd., Cvalim-The Electric Wire
and Cable Company of Israel Ltd. and Dash Cable Industries
(Israel) Ltd. (incorporated herein by reference to Exhibit 1
to the Current Report on Form 8-K of the Company dated
December 31, 1998).
2(l) Amendment No. 1 to Asset Purchase Agreement, dated December
31, 1998, among Cables of Zion United Works Ltd., Cvalim-The
Electric Wire and Cable Company of Israel Ltd. and Dash
Cable Industries (Israel) Ltd. (incorporated herein by
reference to Exhibit 2 to the Current Report on Form 8-K of
the Company dated December 31, 1998).
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- - -------------- ------------------------------------------------------------
<C> <S>
2(m) Agreement and Plan of Merger, dated as of May 28, 1999,
among Cookson Group plc, PRI Acquisition, Inc., Alpine and
Premier Refractories International Inc. (incorporated herein
by reference to Exhibit 2(o) to the Annual Report on Form
10-K of Alpine for the fiscal year ended April 30, 1999 (the
"1999 10-K")).
3(a) Certificate of Incorporation of Alpine (incorporated herein
by reference to Exhibit 3(a) to the Annual Report on Form
10-K of Alpine for the year ended April 30, 1995 (the "1995
10-K")).
3(b) Amendment to the Certificate of Incorporation of Alpine
(incorporated herein by reference to Exhibit 3(aa) of
Post-Effective Amendment No. 1 to the Registration Statement
on Form S-3 (Registration No. 33-53434) of Alpine, as filed
with the Commission on May 12, 1993).
3(c) Certificate of the Powers, Designations, Preferences and
Rights of the 9% Cumulative Convertible Preferred Stock of
Alpine (incorporated herein by reference to Exhibit 1 to the
Quarterly Report on Form 10-Q of Alpine for the quarter
ended January 31, 1989).
3(d) Certificate of the Powers, Designations, Preferences and
Rights of the 9% Cumulative Convertible Senior Preferred
Stock of Alpine (incorporated herein by reference to Exhibit
3(c) to the Annual Report on Form 10-K of Alpine for the
fiscal year ended April 30, 1992 ("1992 10-K")).
3(e) Certificate of the Powers, Designations, Preferences and
Rights of the 8.5% Cumulative Convertible Senior Preferred
Stock of Alpine (incorporated herein by reference to Exhibit
3(e) to the Annual Report on Form 10-K of Alpine for the
fiscal year ended April 30, 1994).
3(f) Certificate of the Powers, Designations, Preferences and
Rights of the 8% Cumulative Convertible Senior Preferred
Stock of the Company (incorporated herein by reference to
Exhibit 3(f) to the 1995 10-K).
3(g) By-laws of Alpine (incorporated herein by reference to
Exhibit 3(g) to the 1995 10-K).
4(a) Indenture, dated as of July 15, 1995, by and among Alpine,
Adience, Inc., Superior Telecommunications Inc. ("STI"),
Superior Cable Corporation and Marine Midland Bank ("Marine
Midland"), as trustee (incorporated herein by reference to
Exhibit 10(ee) to the 1995 10-K).
4(b) Supplemental Indenture to the above Indenture, dated as of
October 2, 1996, among Alpine, STI, Adience, Inc., Superior
Cable Corporation and Marine Midland, as trustee
(incorporated herein by reference to Exhibit 4(b) to the
Annual Report on Form 10-K of Alpine for the fiscal year
ended April 30, 1997 (the "1997 10-K")).
4(c) Second Supplemental Indenture to the above Indenture, dated
as of January 31, 1997, among Alpine, STI, Adience, Inc.,
Superior Cable Corporation and Marine Midland, as trustee
(incorporated herein by reference to Exhibit 4(c) to the
1997 10-K).
4(d) Pledge Agreement, dated as of July 21, 1995, by and between
Alpine and Marine Midland (incorporated herein by reference
to Exhibit 10(ff) to the 1995 10-K).
4(e) Amendment, dated as of October 2, 1996, between Alpine and
Marine Midland, as trustee, to the above Pledge Agreement
(incorporated herein by reference to Exhibit 4(e) to the
1997 10-K).
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- - -------------- ------------------------------------------------------------
<C> <S>
4(f) Amendment No. 2, dated as of January 27, 1997, between
Alpine and Marine Midland, as trustee, to the above Pledge
Agreement (incorporated herein by reference to Exhibit 4(f)
to the 1997 10-K).
4(g) Rights Agreement, dated as of February 17, 1999, between
Alpine and American Stock Transfer & Trust Company, as
Rights Agent (incorporated herein by reference to Exhibit
4.1 to the Form 8-A of Alpine, as filed with the Commission
on February 18, 1999).
10(a) Amended and Restated 1984 Restricted Stock Plan of Alpine
(incorporated herein by reference to Exhibit 10.5 to the
Registration Statement on Form S-4 (Registration No.
33-9978) of Alpine, as filed with the Commission on October
5, 1993 (the "S-4 Registration Statement")).
10(b) Amended and Restated 1987 Long-Term Equity Incentive Plan of
Alpine (incorporated herein by reference to Exhibit 10.4 to
the S-4 Registration Statement).
10(c) Employee Stock Purchase Plan of Alpine (incorporated herein
by reference to Exhibit B to the proxy statement of Alpine
dated August 22, 1997).
10(d) 1997 Stock Option Plan (incorporated herein by reference to
Exhibit 10(tt) to the 1997 10-K).
10(e) Stock Compensation Plan for Non-Employee Directors of Alpine
(incorporated herein by reference to Exhibit 10.1 to the
Quarterly Report on Form 10-Q of Alpine for the quarter
ended January 30, 1999).
10(f) Lease Agreement by and between ALP(TX) QRS 11-28, Inc., and
Superior TeleTec Transmission Products, Inc., dated as of
December 16, 1993 (incorporated herein by reference to
Exhibit (i) to the Quarterly Report on Form 10-Q of Alpine
for the quarter ended January 31, 1994).
10(g) First Amendment to Lease Agreement, dated as of May 10,
1995, by and between ALP (TX) QRS 11-28, Inc. and Superior
TeleTec Inc. (incorporated herein by reference to Exhibit
10(o) to the 1995 10-K).
10(h) Second Amendment to Lease Agreement, dated as of July 21,
1995, by and between ALP(TX) QRS 11-28, Inc. and Superior
Telecommunications Inc. (incorporated herein by reference to
Exhibit 10(x) to the 1995 10-K).
10(i) Third Amendment to Lease Agreement, dated as of October 2,
1996, by and between ALP(TX) QRS 11-28, Inc. and Superior
Telecommunications Inc. (incorporated herein by reference to
Exhibit 10.8 to the Registration Statement on Form S-1
(Registration No. 333-09933) of Superior TeleCom, as filed
with the Commission on August 9, 1996, as amended (the
"TeleCom S-1")).
10(j) First Amendment to Guaranty and Surety Agreement, dated as
of October 2, 1996, among the Company, Superior TeleCom and
ALP (TX) QRS 11-28, Inc. (incorporated herein by reference
to Exhibit 10.12 to the TeleCom S-1).
10(k) Employment Agreement, dated as of April 26, 1996, by and
between Alpine and Steven S. Elbaum (incorporated herein by
reference to Exhibit 10(q) to the 1996 10-K).
10(l) Employment Agreement, dated as of April 26, 1996, by and
between Alpine and Stewart H. Wahrsager (incorporated herein
by reference to Exhibit 10(r) to the 1996 10-K).
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- - -------------- ------------------------------------------------------------
<C> <S>
10(m) Employment Agreement, dated as of April 26, 1996, by and
between Alpine and Bragi F. Schut (incorporated herein by
reference to Exhibit 10(s) to the 1996 10-K).
10(n) Employment Agreement, dated as of April 26, 1996, by and
between Alpine and Stephen M. Johnson (incorporated herein
by reference to Exhibit 10(t) to the 1996 10-K).
10(o) Employment Agreement, dated as of April 26, 1996, by and
between Alpine and David S. Aldridge (incorporated herein by
reference to Exhibit 10(u) to the 1996 10-K).
10(p) Employment Agreement, dated as of April 26, 1996, between
STI and Justin F. Deedy, Jr. (incorporated herein by
reference to Exhibit 10.3 to the TeleCom S-1).
10(q) Employment Agreement, dated as of October 17, 1996, between
Superior TeleCom and Steven S. Elbaum (incorporated herein
by reference to exhibit 10(14) to the Quarterly Report on
Form 10-Q of Superior TeleCom for the quarter ended January
31, 1997).
10(r) Alpine Pledge Agreement, dated as of April 15, 1997, made by
Alpine in favor of Bankers Trust Company, as Collateral
Agent for the benefit of the Secured Creditors (as defined
therein) (incorporated herein by reference to Exhibit 4 to
Amendment No. 1 to Alpine's Current Report on Form 8-K/A
dated June 27, 1997 (the "June 1997 8-K/ A")).
10(s) First Amendment, dated as of June 11, 1997, to the Alpine
Pledge Agreement (incorporated herein by reference to
Exhibit 5 to the June 1997 8-K/A).
10(t) Guaranty, dated as of April 15, 1997, made by Alpine for the
benefit of the Secured Creditors (as defined therein)
(incorporated herein by reference to Exhibit 6 to the June
1997 8-K/A).
10(u) First Amendment, dated as of June 11, 1997, to the Guaranty
(incorporated herein by reference to Exhibit 7 to the June
1997 8-K/A).
10(v) Amended and Restated Credit Agreement, dated as of November
27, 1998, among Superior/Essex Corp., Essex Group, Inc., the
guarantors named therein, various lenders, Merrill Lynch &
Co., as Documentation Agent, Fleet National Bank, as
Syndication Agent, and Bankers Trust Company, as
Administrative Agent (incorporated herein by reference to
Exhibit 99.7 to the Schedule 13D/A of Alpine, Superior
TeleCom, Superior/Essex Corp. and SUT Acquisition Corp., as
filed with the Commission on December 7, 1998).
10(w)* Senior Subordinated Credit Agreement, dated as of May 26,
1999, among Superior/ Essex Corp., as Borrower, Superior
TeleCom, as Parent, the Subsidiary Guarantors listed
therein, the Lending Institutions listed therein, Fleet
Corporate Finance, Inc., as Syndication Agent, and Bankers
Trust Company, as Administrative Agent.
10(x) Addendum No. 1 to the Application to Open an Account, dated
December 29, 1998, between Cables of Zion United Works Ltd.
and Bank Hapoalim B.M. (incorporated herein by reference to
Exhibit 3 to the Current Report on Form 8-K of the Company
dated December 31, 1998).
10(y) Letter Agreement between the Company and Superior TeleCom,
dated October 8, 1996, relating to a capital contribution by
the Company to Superior TeleCom (incorporated herein by
reference to Exhibit 10.2 to the TeleCom S-1).
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- - -------------- ------------------------------------------------------------
<C> <S>
10(z) Letter Agreement between the Company and Superior TeleCom,
dated October 2, 1996, relating to tax indemnification
(incorporated herein by reference to Exhibit 10.5 to the
TeleCom S-1).
10(aa) Tax Allocation Agreement, dated as of October 2, 1996, among
the Company, Superior TeleCom and its subsidiaries
(incorporated herein by reference to Exhibit 10.9 to the
TeleCom S-1).
10(bb) Exchange Agreement between the Company and Superior TeleCom,
dated October 2, 1996 (incorporated herein by reference to
Exhibit 10.10 to the TeleCom S-1).
10(cc) Registration Rights Agreement, dated October 2, 1996,
between the Company and Superior TeleCom (incorporated
herein by reference to Exhibit 10.11 to the TeleCom S-1).
10(dd) Services Agreement, dated October 2, 1996, between the
Company and Superior TeleCom (incorporated herein by
reference to Exhibit 10.4 to the TeleCom S-1).
10(ee) Amendment No. 1, dated as of May 1, 1997, to the Services
Agreement (incorporated herein by reference to Exhibit
10(pp) to the 1997 10-K).
10(ff) Amendment No. 2, dated as of May 1, 1998, to the Services
Agreement (incorporated herein by reference to Exhibit
10(uu) to the Annual Report on Form 10-K of Alpine for the
fiscal year ended April 30, 1998).
10(gg) Amendment No. 1, dated as of March 15, 1999, to The Alpine
Group, Inc. 1997 Stock Option Plan (incorporated herein by
reference to Exhibit 10(ll) to the 1999 10-K).
10(hh) Amendment No. 2, dated as of April 1, 1999, to The Alpine
Group, Inc. 1997 Stock Option Plan (incorporated herein by
reference to Exhibit 10(mm) to the 1999 10-K).
10(ii) Amendment No. 3, dated as of May 14, 1999, to The Alpine
Group, Inc. 1997 Stock Option Plan (incorporated herein by
reference to Exhibit 10(nn) to the 1999 10-K).
10(jj) Credit Agreement, dated as of November 23, 1999, among The
Alpine Group, Inc., Various Lenders, Fleet Bank, N.A., as
Syndication Agent, Bank of America, N.A., as Documentation
Agent, and Bankers Trust Company, as Administrative Agent
(incorporated herein by reference to Exhibit 10.1 to the
Quarterly Report on Form 10-Q of Alpine for the quarter
ended October 31, 1999).
10(kk)* Amendment No. 1, dated as of December 10, 1999, to the
Senior Subordinated Credit Agreement, dated as of May 26,
1999, among Superior/Essex Corp., as borrower, Superior
TeleCom, as parent, the subsidiary guarantors named therein,
various lenders, Fleet Corporate Finance, Inc., as
syndication agent, and Bankers Trust Company, as
administrative agent.
10(ll)* Amendment No. 2, dated as of February 18, 2000, to the
Senior Subordinated Credit Agreement, dated as of May 26,
1999, among Superior/Essex Corp., as borrower, Superior
TeleCom, as parent, the subsidiary guarantors named therein,
various lenders, Fleet Corporate Finance, Inc., as
syndication agent, and Bankers Trust Company, as
administrative agent.
10(mm)* Fourth Amendment to Lease Agreement, dated as of November
27, 1998, between ALP (TX) QRS 11-28, Inc. and Superior
Telecommunications Inc.
10(nn)* Second Amendment to Guaranty and Suretyship Agreement, dated
as of November 27, 1998, among ALP (TX) QRS 11-28, Inc.,
Superior TeleCom and Alpine.
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION
- - -------------- ------------------------------------------------------------
<C> <S>
10(oo)* Employment Agreement, dated as of January 1, 2000, between
Superior TeleCom and Gregory R. Schriefer.
10(pp)* Credit Agreement, dated as of November 23, 1999, among The
Alpine Group, Inc., Various Lenders, Fleet Bank, N.A., as
Syndication Agent, Bank of America, N.A., as Documentation
Agent, and Bankers Trust Company, as Administrative Agent.
21* List of Subsidiaries
23(a)* Consent of Arthur Andersen LLP
27* Financial Data Schedule
</TABLE>
- - ------------------------
* Filed herewith.
35
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Dated: March 30, 2000
THE ALPINE GROUP, INC.
By: /s/ STEVEN S. ELBAUM
------------------------------------------------------------------------------
Steven S. Elbaum
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>
Chairman of the Board and
/s/ STEVEN S. ELBAUM Chief Executive Officer
------------------------------------------- (principal executive March 30, 2000
Steven S. Elbaum officer)
Chief Financial Officer and
/s/ DAVID S. ALDRIDGE Treasurer (principal
------------------------------------------- financial and accounting March 30, 2000
David S. Aldridge officer)
/s/ KENNETH G. BYERS, JR. Director
------------------------------------------- March 30, 2000
Kenneth G. Byers, Jr.
/s/ RANDOLPH HARRISON Director
------------------------------------------- March 30, 2000
Randolph Harrison
/s/ JOHN C. JANSING Director
------------------------------------------- March 30, 2000
John C. Jansing
/s/ ERNEST C. JANSON, JR. Director
------------------------------------------- March 30, 2000
Ernest C. Janson, Jr.
/s/ JAMES R. KANELY Director
------------------------------------------- March 30, 2000
James R. Kanely
/s/ BRAGI F. SCHUT Director
------------------------------------------- March 30, 2000
Bragi F. Schut
</TABLE>
36
<PAGE>
EXHIBIT 10(W)
================================================================================
SENIOR SUBORDINATED CREDIT AGREEMENT
among
SUPERIOR/ESSEX CORP.,
as Borrower,
SUPERIOR TELECOM INC.,
as Parent,
THE SUBSIDIARY GUARANTORS NAMED HEREIN,
THE LENDING INSTITUTIONS LISTED HEREIN,
FLEET CORPORATE FINANCE, INC.,
as SYNDICATION AGENT,
and
BANKERS TRUST COMPANY,
as ADMINISTRATIVE AGENT
----------------------------------
Dated as of May 26, 1999
----------------------------------
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
1. AMOUNT AND TERMS OF CREDIT.............................................1
1.01. The Commitments...............................................1
1.02. Amount of Borrowing...........................................1
1.03. Disbursement of Funds.........................................1
1.04. Notes.........................................................2
1.05. Pro Rata Borrowings...........................................3
1.06. Interest......................................................3
1.07. Increased Costs, Illegality, etc..............................3
1.08. Compensation..................................................6
1.09. Change of Lending Office......................................6
1.10. Replacement Lenders...........................................6
1.11. Fees..........................................................7
1.12 Interest Periods..............................................7
2. PREPAYMENTS; PAYMENTS; TAXES...........................................8
2.01. Voluntary Prepayments.........................................8
2.02. Mandatory Offers to Prepay and Mandatory Prepayments..........9
2.03. Notice and Procedures........................................12
2.04. Method and Place of Payment..................................14
2.05. Notation of Payment..........................................14
2.06. Net Payments.................................................14
3. CONDITIONS PRECEDENT TO THE BORROWING DATE............................17
3.01. Execution of Agreement; Notes................................17
3.02. No Default; Representations and Warranties...................17
3.03. Officers' Certificate........................................17
3.04. Opinions of Counsel..........................................17
3.05. Corporate Proceedings........................................17
3.06. Adverse Change, etc..........................................18
3.07. Litigation...................................................18
3.08. Approvals....................................................18
3.09. Payment of Fees..............................................18
3.10. Margin Regulations...........................................18
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS............................19
4.01. Corporate Status.............................................19
4.02. Corporate Power and Authority................................19
-i-
<PAGE>
Page
----
4.03. No Violation.................................................19
4.04. Use of Proceeds..............................................19
4.05. Governmental Approvals.......................................19
4.06. Investment Company Act; Public Utility Holding Company
Act........................................................20
4.07. True and Complete Disclosure.................................20
4.08. Financial Condition; Financial Statements....................20
4.09. Compliance with ERISA........................................21
4.10. Subsidiaries.................................................22
4.11. Intellectual Property........................................23
4.12. Compliance with Statutes, etc................................23
4.13. Environmental Matters........................................23
4.14. Properties...................................................24
4.15. Labor Relations..............................................24
4.16. Tax Returns and Payments.....................................25
4.17. Year 2000....................................................25
5. AFFIRMATIVE COVENANTS.................................................26
5.01. Information Covenants........................................26
5.02. Books, Records and Inspections...............................28
5.03. Insurance....................................................28
5.04. Payment of Taxes.............................................28
5.05. Compliance with Statutes, etc................................29
5.06. Corporate Franchises.........................................29
5.07. Good Repair..................................................29
5.08. Year 2000....................................................29
5.09. Exchange Notes; Shelf Registration...........................30
6. NEGATIVE COVENANTS....................................................30
6.01. Indebtedness.................................................30
6.02. Restricted Payments..........................................33
6.03. Asset Sales..................................................37
6.04. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries.....................................38
6.05. Liens........................................................39
6.06. Senior Subordinated Debt.....................................39
6.07. Merger, Consolidation and Sale of Assets.....................39
6.08. Transactions with Affiliates.................................41
6.09. Additional Guarantees........................................42
6.10. Designation of Unrestricted Subsidiaries.....................42
6.11. Conduct of Business..........................................43
6.12. Limitation of Activities of Parent...........................43
-ii-
<PAGE>
Page
----
7. EVENTS OF DEFAULT.....................................................43
7.01. Failure to Make Payments When Due............................43
7.02. Breach of Representations, etc...............................43
7.03. Breach of Covenants..........................................44
7.04. Default Under Other Agreements...............................44
7.05. Judgments....................................................44
7.06. Bankruptcy...................................................44
7.07. Guarantees...................................................45
7.08. Remedies.....................................................45
8. SUBORDINATION.........................................................46
8.01. Obligations Subordinated to Senior Indebtedness..............46
8.02. Suspension of Payment When Senior Indebtedness Is in
Default....................................................47
8.03. Loans Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or
Reorganization of Borrower.................................48
8.04. Lenders to Be Subrogated to Rights of Holders of Senior
Indebtedness...............................................50
8.05. Obligations of the Borrower Unconditional....................50
8.06. Administrative Agent Entitled to Assume Payments Not
Prohibited in Absence of Notice............................51
8.07. Application by Administrative Agent of Assets Deposited
with It....................................................51
8.08. No Waiver of Subordination Provisions........................52
8.09. Lenders Authorize Administrative Agent to Effectuate
Subordination of Loans.....................................52
8.10. Right of Administrative Agent and Lenders to Hold
Senior Indebtedness........................................53
8.11. This Section 8 Not to Prevent Events of Default..............53
8.12. No Fiduciary Duty of Administrative Agent to Holders of
Senior Indebtedness........................................53
8.13. Effect on Senior Indebtedness................................53
9. DEFINITIONS AND ACCOUNTING TERMS......................................53
9.01. Defined Terms................................................53
10. THE AGENTS...........................................................83
10.01. Appointment..................................................83
10.02. Delegation of Duties.........................................84
10.03. Exculpatory Provisions.......................................84
10.04. Reliance by Agents...........................................84
10.05. Notice of Default............................................85
10.06. Nonreliance on Agents and Other Lenders......................85
-iii-
<PAGE>
Page
----
10.07. Indemnification..............................................86
10.08. Agents in Their Individual Capacity..........................86
10.09. Holders......................................................86
10.10. Resignation of the Administrative Agent; Successor
Administrative Agent.......................................87
11. MISCELLANEOUS........................................................87
11.01. Payment of Expenses, etc.....................................87
11.02. Right of Setoff..............................................88
11.03. Notices......................................................88
11.04. Benefit of Agreement.........................................88
11.05. No Waiver; Remedies Cumulative...............................90
11.06. Payments Pro Rata............................................90
11.07. Calculations; Computations...................................91
11.08. Governing Law; Submission to Jurisdiction; Venue.............91
11.09. Counterparts.................................................92
11.10. Effectiveness................................................92
11.11. Headings Descriptive.........................................92
11.12. Amendment or Waiver; etc.....................................92
11.13. Survival.....................................................94
11.14. Domicile of Loans............................................94
11.15. Register.....................................................94
11.16. Confidentiality..............................................94
11.17. Waiver of Jury Trial.........................................95
11.18. DNE Systems..................................................95
12. GUARANTEE............................................................96
12.01. The Guarantee................................................96
12.02. Nature of Liability..........................................97
12.03. Independent Obligation.......................................98
12.04. Authorization................................................98
12.05. Reliance.....................................................99
12.06. Subordination................................................99
12.07. Waiver......................................................100
12.08. Release of Guarantee........................................100
-iv-
<PAGE>
ANNEX A Registration Rights Provisions
SCHEDULE I Commitments
SCHEDULE II Lender Addresses
SCHEDULE III Real Property
SCHEDULE IV Subsidiaries
SCHEDULE V Existing Indebtedness
SCHEDULE VI Financial Condition
SCHEDULE VII Environmental Matters
SCHEDULE VIII Existing Investments
SCHEDULE IX Tax Returns and Payments
SCHEDULE X Essex Capital Lease Facility Liens
SCHEDULE XI Credit Party Addresses
EXHIBIT A-1 Form of Senior Subordinated Term A Note
EXHIBIT A-2 Form of Senior Subordinated Term B Note
EXHIBIT B Form of Section 2.06(b)(ii) Certificate
EXHIBIT C Form of Opinion of Proskauer Rose LLP, Special Counsel to the
Credit Parties
EXHIBIT D Form of Officers' Certificate
EXHIBIT E Form of Assignment and Assumption Agreement
-v-
<PAGE>
SENIOR SUBORDINATED CREDIT AGREEMENT, dated as of May 26, 1999,
among SUPERIOR/ESSEX CORP., a Delaware corporation (the "Borrower"), SUPERIOR
TELECOM INC., a Delaware corporation (the "Parent"), the Subsidiary Guarantors
named herein (the "Guarantors"), the Lenders party hereto from time to time,
FLEET CORPORATE FINANCE, INC., as Syndication Agent, and BANKERS TRUST COMPANY,
as Administrative Agent (all capitalized terms used herein and defined in
Section 9 are used herein as therein defined).
W I T N E S S E T H :
WHEREAS, the Borrower desires to refinance in full the obligations
under the Senior Subordinated Credit Agreement, dated as of November 27, 1998,
among the Borrower, the Parent, the Guarantors, the lenders party thereto, the
Syndication Agent and the Administrative Agent (the "Existing Floating Rate
Facility);
WHEREAS, subject to and upon the terms and conditions set forth
herein, the Lenders are willing to make available to the Borrower the Loans
provided for herein for such purpose;
NOW, THEREFORE, IT IS AGREED:
1. AMOUNT AND TERMS OF CREDIT.
1.01. The Commitments. Subject to and upon the terms and conditions
set forth herein, each Lender with a Term A Loan Commitment severally agrees to
make a senior subordinated term loan (each a "Term A Loan") to the Borrower and
each Lender with a Term B Loan Commitment severally agrees to make a senior
subordinated term loan (each a "Term B Loan" and, together with the Term A
Loans, the "Loans") to the Borrower, which Loans (i) only may be incurred by the
Borrower on the Borrowing Date and (ii) shall be made by each such Lender in
that aggregate principal amount which does not exceed the Commitment of such
Lender on the Borrowing Date. Once repaid, Loans incurred hereunder may not be
reborrowed.
1.02. Amount of Borrowing. The Borrowing of the Loans will be in a
maximum aggregate amount of $200,000,000 made available in a single Borrowing on
the Borrowing Date.
1.03. Disbursement of Funds. No later than 12:00 Noon (New York
time) on the Borrowing Date, each Lender with a Commitment will make available
its pro rata portion (determined in accordance with Section 1.05) of the Loans.
All such amounts will be made available in Dollars and in immediately available
funds at the Payment Office, and the Administrative Agent will promptly make
available to the Borrower at the Payment Office the aggregate of the amounts so
made available by the Lenders. Unless the Administrative Agent shall have been
notified by any Lender prior to the Borrowing Date that such
<PAGE>
Lender does not intend to make available to the Administrative Agent such
Lender's portion of the Borrowing to be made on such date, the Administrative
Agent may assume that such Lender has made such amount available to the
Administrative Agent on the Borrowing Date and the Administrative Agent may (but
shall not be obligated to), in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Lender, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Lender. If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify the Borrower and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent. The Administrative Agent also shall be
entitled to recover on demand from such Lender or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Administrative Agent to the
Borrower until the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (i) if recovered from such
Lender, at the overnight Federal Funds Rate and (ii) if recovered from the
Borrower, the rate of interest applicable to the respective Borrowing, as
determined pursuant to Section 1.06. Nothing in this Section 1.03 shall be
deemed to relieve any Lender from its obligation to make Loans hereunder or to
prejudice any rights which the Borrower may have against any Lender as a result
of any failure by such Lender to make Loans hereunder.
1.04. Notes. (a) The Borrower's obligation to pay the principal of,
and interest on, the Loans made by each Lender shall be set forth in the
Register maintained by the Administrative Agent pursuant to Section 11.15 and
shall, if requested by any Lender, also be evidenced by a promissory note duly
executed and delivered by the Borrower and the Guarantors, in the case of the
Term A Loan, substantially in the form of Exhibit A-1, and in the case of the
Term B Loan, in the form of Exhibit A-2, in each case, with blanks appropriately
completed in conformity herewith (each a "Note" and, collectively, the "Notes").
(b) The Note issued to each Lender shall (i) be executed by the
Borrower and the Guarantors, (ii) be payable to such Lender or its registered
assigns and be dated the Borrowing Date, (iii) be in a stated principal amount
equal to the Loans made by such Lender on the Borrowing Date and be payable in
the outstanding principal amount of Loans evidenced thereby, (iv) mature on the
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.06, (vi) be subject to voluntary prepayment as provided in Section
2.01, mandatory repayments as provided in Sections 2.02(c) and (d) and mandatory
offers to prepay as provided in Section 2.02(a) and (b), and (vii) be entitled
to the benefits of this Agreement and the other Credit Documents.
(c) Each Lender will note on its internal records the amount of the
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its
-2-
<PAGE>
Notes endorse on the reverse side thereof the outstanding principal amount of
Loans evidenced thereby. Failure to make any such notation or any error in such
notation shall not affect the Borrower's obligations in respect of such Loans.
1.05. Pro Rata Borrowings. All Borrowings of the Term A Loan and
Term B Loan under this Agreement shall be incurred from the Lenders pro rata on
the basis of their Term A Loan Commitments and Term B Loan Commitments, as the
case may be. It is understood that no Lender shall be responsible for any
default by any other Lender of its obligation to make Loans hereunder and that
each Lender shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Lender to make its Loans
hereunder.
1.06. Interest. (a) The Borrower agrees to pay interest in respect
of the unpaid principal amount of each Loan from the date of Borrowing thereof
until the maturity thereof (whether by acceleration or otherwise) at a rate per
annum equal to the then applicable Interest Rate.
(b) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the rate which
is 2% in excess of the rate then borne by such Loans. Interest which accrues
under this Section 1.06(b) shall be payable on demand.
(c) Accrued (and theretofore unpaid) interest shall be payable (i)
in respect of each Loan, quarterly in arrears on each Interest Payment Date and
(ii) in respect of each Loan, on any repayment or prepayment (on the amount
repaid or prepaid), at maturity (whether by acceleration or otherwise) and,
after such maturity, on demand.
(d) Upon each Interest Determination Date, the Administrative Agent
shall determine the Interest Rate applicable to the Term A Loan and the Term B
Loan and shall promptly notify the Borrower and the applicable Lenders thereof.
Each such determination shall, absent manifest error, be final and conclusive
and binding on all parties hereto.
1.07. Increased Costs, Illegality, etc. (a) In the event that (x) in
the case of clause (i) below, the Administrative Agent or (y) in the case of
clauses (ii) and (iii) below, any Lender shall have determined (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto):
(i) on any date for determining LIBOR for any Interest Period, that,
by reason of any changes arising after the date of this Agreement
affecting LIBOR, adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the definition of
LIBOR; or
-3-
<PAGE>
(ii) at any time, that such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any LIBOR Loans (other than any increased cost or reduction in the amount
received or receivable resulting from the imposition of or a change in the
rate of net income taxes or similar charges) because of (x) any change
since the date of this Agreement in any applicable law, governmental rule,
regulation, guideline, order or request (whether or not having the force
of law), or in the interpretation or administration thereof and including
the introduction of any new law or governmental rule, regulation,
guideline, order or request (such as, for example, but not limited to, a
change in official reserve requirements) and/or (y) other circumstances
affecting such Lender or the position of such Lender in such market; or
(iii) at any time since the date of this Agreement, that the making
or continuance of any LIBOR Loan has become unlawful by compliance by such
Lender in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental rule,
regulation, guideline or order not having the force of law but with which
such Lender customarily complies even though the failure to comply
therewith would not be unlawful), or has become impracticable as a result
of a contingency occurring after the date of this Agreement which
materially and adversely affects LIBOR;
then, and in any such event, such Lender (or the Administrative Agent in the
case of clause (i) above) shall (x) within five Business Days after any such
event and (y) within five Business Days of the date on which such event no
longer exists give notice (by telephone confirmed in writing) to the Borrower
and (except in the case of clause (i)) to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other Lenders). Thereafter, (x) in the case of clause (i) above,
LIBOR Loans shall no longer be available until such time as the Administrative
Agent notifies the Borrower and the Lenders that the circumstances giving rise
to such notice by the Administrative Agent no longer exist (which notice the
Administrative Agent shall endeavor to give promptly after any express
determination thereof by the Administrative Agent), and the Loans will be
converted from LIBOR Loans to Alternate Base Rate Loans, (y) in the case of
clause (ii) above, the Borrower shall pay to such Lender, upon written demand
therefor (accompanied by the written notice referred to below), such additional
amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as shall be required to compensate such Lender for such increased
costs or reductions in amounts received or receivable hereunder (a written
notice as to the additional amounts owed to such Lender, showing the basis for
the calculation thereof, submitted to the Borrower by such Lender shall, absent
manifest error, be final and conclusive and binding upon all parties hereto) and
(z) in the case of clause (iii) above, the Borrower shall take one of the
actions specified in Sec-
-4-
<PAGE>
tion 1.07(b) as promptly as possible and, in any event, within the time period
required by law.
(b) At any time that any LIBOR Loan is affected by the circumstances
described in Section 1.07(a)(ii) or (iii), the Borrower may (and in the case of
a LIBOR Loan affected pursuant to Section 1.07(a)(iii) the Borrower shall)
either (i) if the affected LIBOR Loan is then being made pursuant to a
Borrowing, cancel said Borrowing by giving the Administrative Agent telephonic
notice (confirmed promptly in writing) thereof on the same date that the
Borrower was notified by a Lender pursuant to Section 1.07(a)(ii) or (iii)), or
(ii) if the affected LIBOR Loan is then outstanding, upon at least two Business
Days' notice to the Administrative Agent, require the affected Lender to convert
each such LIBOR Loan into an Alternate Base Rate Loan (which conversion, in the
case of the circumstances described in Section 1.07(a)(iii), shall occur no
later than the last day of the Interest Period then applicable to such LIBOR
Loan (or such earlier date as shall be required by applicable law)); provided
that if more than one Lender is affected at any time, then all affected Lenders
must be treated the same pursuant to this Section 1.07(b).
(c) If any Lender shall have determined that the adoption or
effectiveness of any applicable law, rule or regulation regarding capital
adequacy, or any change therein, or any change in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by such Lender or any corporation controlling such Lender with any request or
directive regarding capital adequacy (whether or not having the force of law) of
any such authority, central bank or comparable agency, in each case, after the
date of this Agreement, has or would have the effect of reducing the rate of
return on such Lender's or such other corporation's capital or assets as a
consequence of such Lender's Commitments or obligations hereunder to a level
below that which such Lender or such other corporation could have achieved but
for such adoption, effectiveness, change or compliance (taking into
consideration such Lender's or such other corporation's policies with respect to
capital adequacy), then from time to time, upon written demand by such Lender
(with a copy to the Administrative Agent), accompanied by the notice referred to
in the last sentence of this clause (c), the Borrower shall pay to such Lender
such additional amount or amounts as will compensate such Lender or such other
corporation for such reduction. Each Lender, upon determining in good faith that
any additional amounts will be payable pursuant to this Section 1.07(c), will
give prompt written notice thereof to the Borrower, which notice shall set forth
the basis of the calculation of such additional amounts, although the failure to
give any such notice shall not release or diminish the Borrower's obligations to
pay additional amounts pursuant to this Section 1.07(c) upon the subsequent
receipt of such notice.
1.08. Compensation. The Borrower shall compensate each Lender,
promptly upon its written request (which request shall set forth the basis for
requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limita-
-5-
<PAGE>
tion, any loss, expense or liability incurred by reason of the liquidation or
reemployment of deposits or other funds required by such Lender to fund its
LIBOR Loans but excluding loss of anticipated profit with respect to any LIBOR
Loans) which such Lender may sustain: (i) if any repayment (including any
repayment made pursuant to Section 2.01 or 2.02 or as a result of an
acceleration of the Loans pursuant to Section 7) or conversion of any LIBOR
Loans occurs on a date which is not the last day of an Interest Period
applicable thereto; (ii) if any prepayment of any LIBOR Loans is not made on any
date specified in a notice of prepayment given by the Borrower; or (iii) as a
consequence of (x) any other default by the Borrower to repay its LIBOR Loans
when required by the terms of this Agreement or (y) an election made pursuant to
Section 1.07(b). It is further understood and agreed that if any repayment of
LIBOR Loans pursuant to Section 2.01 or any conversion of LIBOR Loans in either
case occurs on a date which is not the last day of an Interest Period applicable
thereto, such repayment or conversion shall be accompanied by any amounts owing
to any Lender pursuant to this Section 1.08.
1.09. Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 1.07(a)(ii) or
(iii), 1.07(c) or 2.06 with respect to such Lender, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans affected by such
event; provided that such designation is made on such terms that, in the sole
judgment of such Lender, such Lender and its lending office suffer no economic,
legal or regulatory disadvantage, with the object of avoiding the consequences
of the event giving rise to the operation of any such Section. Nothing in this
Section 1.09 shall affect or postpone any of the obligations of the Borrower or
the right of any Lender provided in Section 1.07 or 2.06.
1.10. Replacement Lenders. (x) Upon the occurrence of any event
giving rise to the operation of Section 1.07(a)(ii) or (iii), Section 1.07(c) or
Section 2.06 with respect to any Lender which results in such Lender charging to
the Borrower increased costs in excess of those being generally charged by the
other Lenders or (y) in the case of a refusal by a Lender to consent to a
proposed change, waiver, discharge or termination with respect to this Agreement
which has been approved by the Required Lenders as provided in Section 11.12,
the Borrower shall have the right, if no Default or Event of Default then exists
or, in the case of clause (y) above, would exist after giving effect to such
replacement, to replace such Lender (the "Replaced Lender") with one or more
other Eligible Transferees (collectively, the "Replacement Lender"), each of
whom shall be acceptable to the Administrative Agent; provided that (i) at the
time of any replacement pursuant to this Section 1.10, the Replacement Lender
shall enter into one or more Assignment and Assumption Agreements pursuant to
Section 11.04(b) (and with all fees payable pursuant to said Section 11.04(b) to
be paid by the Replacement Lender) pursuant to which the Replacement Lender
shall acquire the outstanding Loans of the Replaced Lender and, in connection
therewith, shall pay to the Replaced Lender in respect thereof an amount equal
to the sum of
-6-
<PAGE>
(A) an amount equal to the principal of, and all accrued interest on, all
outstanding Loans of the Replaced Lender and (B) an amount equal to all accrued,
but theretofore unpaid, fees owing to the Replaced Lender, and (ii) all
obligations of the Borrower then owing to the Replaced Lender (other than those
specifically described in clause (i) above in respect of which the assignment
purchase price has been, or is concurrently being, paid, but including all
amounts, if any, owing under Section 1.08) shall be paid in full to such
Replaced Lender, concurrently with such replacement. Upon the execution of the
respective Assignment and Assumption Agreements, the payment of amounts referred
to in clauses (i) and (ii) above, recordation of the assignment on the Register
by the Administrative Agent pursuant to Section 11.15 and, if so requested by
the Replacement Lender, of the appropriate Note or Notes executed by the
Borrower, the Replacement Lender shall become a Lender hereunder and the
Replaced Lender shall cease to constitute a Lender hereunder, except with
respect to indemnification provisions under this Agreement (including, without
limitation, Sections 1.07, 1.08, 2.06, 11.01 and 11.06), which shall survive as
to such Replaced Lender.
1.11. Fees. On the Nine-Month Trigger Date, the Borrower shall pay
to the Administrative Agent for the account of the Lenders pro rata on the basis
of their Percentages, a fee of $6,000,000, less the amount of any prepayment
premium paid by the Borrower to the Lenders prior to the Nine-Month Trigger Date
pursuant to Section 2.02 (the "Nine-Month Fee"); provided, however, that the
Borrower may by written notice to the Administrative Agent postpone payment of
the Nine-Month Fee by no more than fifteen (15) calendar days if the Borrower
has, and represents in such notice that it has, printed and distributed offering
circulars (including any preliminary prospectus or preliminary offering
circular) to investors in connection with a good faith Qualified Offering.
1.12. Interest Periods. In connection with LIBOR Loans, the Borrower
may upon written notice to Administrative Agent that is received no later than
11:00 A.M. (New York time) at least three London Banking Days in advance of the
expiration of the preceding Interest Period, select an interest period (each an
"Interest Period") to be applicable to all LIBOR Loans, which Interest Period
shall be, at the Borrower's option, either a one, three or six month period;
provided that:
(i) the initial Interest Period for each LIBOR Loan shall commence
on the Borrowing Date;
(ii) in the case of immediately successive Interest Periods
applicable to LIBOR Loans, each successive Interest Period shall commence
on the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next
succeeding Business Day; provided that, if any Interest Period would
otherwise expire on a day that is not
-7-
<PAGE>
a Business Day but is a day of the month after which no further Business
Day occurs in such month, such Interest Period shall expire on the next
preceding Business Day;
(iv) 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;
(v) in the event Borrower fails to specify an Interest Period for
the LIBOR Loans in a written notice to Administrative Agent that is
received no later than 11:00 A.M. (New York time) at least three London
Banking Days in advance of the expiration of the preceding Interest
Period, Borrower shall be deemed to have selected the same Interest Period
as the immediately preceding Interest Period; and
(vi) no Interest Period in respect of the LIBOR Loans shall extend
beyond the Maturity Date;
provided, further, that the Interest Period for all Loans from the Borrowing
Date until 60 days after the Borrowing Date has occurred may be seven days if
the Borrower shall have provided written notice thereof to the Administrative
Agent at least three Business Days prior to the expiration of the preceding
Interest Period.
2. PREPAYMENTS; PAYMENTS; TAXES.
2.01. Voluntary Prepayments. The Borrower shall have the right to
prepay the Loans at any time and from time to time on the following terms and
conditions:
(i) prior to payment of the Nine-Month Fee, the Borrower may prepay
the Loans, in whole and not in part, (A) if solely out of the proceeds of
a Qualified Offering, at 100% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of repayment, and (B) in
all other circumstances, at 103% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of prepayment; provided,
however, that if the Borrower shall have notified the Take-Out Banks of
its intent to proceed with a Qualified Offering on a best efforts basis
and either or both of the Take-Out Banks shall have notified the Borrower
in writing that it or they elect(s) not to participate in such Qualified
Offering, then the Borrower may prepay the Loans out of the net proceeds
of any such offering on a best efforts basis, in whole and not in part, at
100% of the principal amount thereof, plus accrued and unpaid interest, if
any, to the date of repayment.
(ii) on and after payment of the Nine-Month Fee, the Borrower may
prepay the Loans, without premium or penalty, in whole or in part, at 100%
of the
-8-
<PAGE>
principal amount thereof plus accrued and unpaid interest, if any, to the
date of prepayment;
(iii) the Borrower shall give the Administrative Agent prior to 2:00
p.m. (New York time) at the Notice Office at least three Business Days'
prior written notice (or telephonic notice promptly confirmed in writing)
of its intent to prepay the Loans ("Notice of Voluntary Prepayment") and
the amount of such prepayment, which notice the Administrative Agent shall
promptly transmit to each of the Lenders; and
(iv) without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice of any prepayment of the Loans,
the Administrative Agent may act without liability upon the basis of
telephonic notice of such prepayment believed by the Administrative Agent
in good faith to be from the chairman of the board, the chief executive
officer, the president, the chief financial officer, the treasurer or any
assistant treasurer of the Borrower, or from any other authorized officer
of the Borrower designated in writing by any of the foregoing officers of
the Borrower to the Administrative Agent as being authorized to give such
notices, prior to receipt of written confirmation. The Borrower hereby
waives the right to dispute the Administrative Agent's record of the terms
of such telephonic notice of such prepayment of Loans absent manifest
error.
2.02. Mandatory Offers to Prepay and Mandatory Prepayments.
(a) Prepayments from Asset Sale. Upon the consummation of an Asset
Sale, the Borrower shall apply, or cause a Restricted Subsidiary to apply, the
Net Cash Proceeds relating to such Asset Sale within 365 days of receipt
thereof, or such later date if prior to such 365th day the Borrower or a
Restricted Subsidiary shall have entered into a binding agreement to so use such
Net Cash Proceeds within 180 days after the date of such agreement, either (A)
to repay any Senior Indebtedness of the Borrower, (B) to reinvest in assets
(including Capital Stock of a Person that directly or indirectly owns assets) of
a kind used or usable in the business of the Company and its Restricted
Subsidiaries as, or related or incidental to such business, conducted on the
Borrowing Date (hereinafter referred to as "Replacement Assets") or (C) a
combination of repayment and investment permitted by the foregoing clauses (A)
and (B). On the 366th day after an Asset Sale or such earlier date, if any, as
the Board of Directors of the Borrower or of such Restricted Subsidiary
determines not to apply the Net Cash Proceeds relating to such Asset Sale as set
forth in clauses (A), (B) and (C) of the next preceding sentence, or such later
date (which date shall not be later than the 180th day after the date of the
binding agreement referred to in the immediately preceding sentence) (each, a
"Net Proceeds Offer Trigger Date"), such aggregate amount of Net Cash Proceeds
which have not been applied on or before such Net Proceeds Offer Trigger Date as
permitted in clauses (A), (B) and (C) of the next preceding sentence (each a
-9-
<PAGE>
"Net Proceeds Offer Amount") shall be applied by the Borrower or such Restricted
Subsidiary to make an offer to prepay the Loans (the "Net Proceeds Offer") at a
price equal to (x) if such Net Proceeds Offer is made prior to payment of the
Nine-Month Fee, 103% of the aggregate principal amount thereof, plus accrued and
unpaid interest, if any, to the date of prepayment or (y) if such Net Proceeds
Offer is made after payment of the Nine-Month Fee, 100% of the aggregate
principal amount thereof, plus accrued and unpaid interest, if any, to the date
of prepayment, on a date (the "Net Proceeds Offer Payment Date") in accordance
with the procedures set forth in Sections 2.03 through 2.06. The Borrower may
defer the Net Proceeds Offer until there is an aggregate unutilized Net Proceeds
Offer Amount equal to or in excess of $7.5 million resulting from one or more
Asset Sales (at which time, the entire unutilized Net Proceeds Offer Amount, and
not just the amount in excess of $7.5 million, shall be applied as required
pursuant to this paragraph).
(b) Prepayments from Change of Control. (i) Within 30 days following
any Change of Control (each a "Change of Control Offer Trigger Date"; together
with the Net Proceeds Offer Trigger Date, the "Trigger Date"), the Borrower will
be obligated to offer to each Lender to prepay the Loans (the "Change of Control
Offer Amount"; together with the Net Proceeds Offer Amount, the "Prepayment
Amount") at a price equal to (x) if such Change of Control Offer is made prior
to payment of the Nine-Month Fee, 103% of the aggregate principal amount
thereof, plus accrued and unpaid interest, if any, to the date of prepayment
(the "Change of Control Offer"; together with the Net Proceeds Offer, the
"Mandatory Prepayment Offer") or (y) if such Change of Control Offer is made
after payment of the Nine-Month Fee, 101% of the aggregate principal amount
thereof, plus accrued and unpaid interest, if any, to the date of prepayment, on
a date (the "Change of Control Offer Payment Date"; together with the Net
Proceeds Offer Payment Date, the "Payment Date") in accordance with the
procedures set forth in Sections 2.03 through 2.06.
(ii) Prior to the mailing of the notice to the Administrative Agent
provided for in Section 2.03 below but in any event within 30 days following any
Change of Control, the Borrower hereby covenants to (i) repay in full all
Indebtedness under the Senior Secured Credit Agreement and all other Senior
Indebtedness the terms of which require a repayment upon a Change of Control and
to terminate all commitments under the Senior Secured Credit Agreement and all
such other Senior Indebtedness or to offer to repay in full all such
Indebtedness and to terminate all such commitments and to repay the Indebtedness
(and terminate the commitments) of each lender under the Senior Secured Credit
Agreement and all such other Senior Indebtedness who has accepted such offer or
(ii) obtain the requisite consents under the Senior Secured Credit Agreement and
all such other Senior Indebtedness to permit the payment of the Loans. The
Borrower shall first comply with the covenant in the preceding sentence before
it shall be required to prepay the Loans pursuant to this Section 2.02(b). The
Borrower's failure to comply with the covenant described in this clause (ii)
shall constitute an Event of Default under Section 7.03 and not Section 7.01.
-10-
<PAGE>
(c) Prepayments from Issuances of Debt. In addition to any other
mandatory repayments pursuant to this Section 2.02, on each date on or after the
Borrowing Date on which the Borrower or any of its Restricted Subsidiaries or
the Parent receives any cash proceeds from either (I) any incurrence of
Indebtedness (other than Indebtedness permitted to be incurred pursuant to
Section 6.01 or Section 6.12) by the Borrower or any of its Restricted
Subsidiaries or the Parent or (II) any Receivables Financing Agreement (to the
extent that the amount made available thereunder exceeds $150.0 million), an
amount equal to 100% of the cash proceeds (net of all underwriting discounts,
fees and commissions and other costs and expenses associated therewith), of the
respective incurrence of Indebtedness shall be applied as a mandatory repayment
of principal of outstanding Loans in accordance with Sections 2.03 through 2.06,
except to the extent required to repay Indebtedness under the Senior Secured
Credit Agreement; provided, however, that if any such incurrence of Indebtedness
occurs prior to the payment of the Nine-Month Fee, the principal of outstanding
Loans being repaid with such proceeds shall be repaid at a price of 103% of such
principal.
(d) Prepayments from Issuances of Equity. In addition to any other
mandatory repayments or commitment reductions pursuant to this Section 2.02, on
each date on or after the Borrowing Date on which the Borrower or any of its
Restricted Subsidiaries or the Parent receives any cash proceeds from any sale
or issuance of preferred or common equity of (or cash capital contributions to)
the Borrower or any of its Restricted Subsidiaries or the Parent (other than
proceeds received from (w) issuances of options to purchase the Parent Common
Stock to management, directors, non-employee consultants and employees of the
Parent and its Subsidiaries, (x) issuances of the Parent Common Stock (including
as a result of the exercise of any options with regard thereto) to management,
directors, non-employee consultants, and employees of the Parent and its
Subsidiaries, (y) issuance of Parent Common Stock as consideration for an
acquisition and (z) equity contributions to any Subsidiary of the Borrower made
by the Borrower or any other Subsidiary of the Borrower), an amount equal to 75%
of the cash proceeds (net of all underwriting discounts, fees and commissions
and other costs and expenses associated therewith), of the respective equity
issuance or capital contribution shall be applied as a mandatory repayment of
principal of outstanding Loans in accordance with Sections 2.03 through 2.06;
provided, however, that if, on the date of receipt of such cash proceeds, the
ratio of (x) total Indebtedness of the Borrower and its Restricted Subsidiaries
on a consolidated basis as of the end of the most recently completed fiscal
quarter (without treating the Trust Preferred Securities as Indebtedness) to (y)
Consolidated EBITDA for the four consecutive fiscal quarters of the Borrower
ended on or immediately prior to such date, in each case on a pro forma basis,
is less than 4.00 to 1.00, then only 50% of such cash proceeds of the respective
equity issuance or capital contribution shall be required to be applied as a
mandatory repayment of principal of outstanding Loans; provided, further,
however, that if any such equity issuance or capital contribution occurs prior
to payment of the Nine-Month Fee, the principal of outstanding Loans being
prepaid with such cash proceeds shall be repaid at a price of 103% of such
principal.
-11-
<PAGE>
(e) Each amount required to be applied to Loans pursuant to this
Section 2 shall be applied pro rata among the Loans.
2.03. Notice and Procedures. (a) With respect to each Mandatory
Prepayment Offer, the Borrower shall mail to the Administrative Agent at the
Notice Office, a notice of prepayment (the "Mandatory Prepayment Offer Notice"),
within 25 days following the Trigger Date, with a copy to each of the Lenders.
Upon receiving a Mandatory Prepayment Offer Notice, Lenders may elect to have
their Loans prepaid in whole or in part in integral multiples of $1,000 in
exchange for cash. To the extent Lenders properly accept the offer to prepay the
Loans in an amount exceeding the Net Proceeds Offer Amount pursuant to an Asset
Sale, Loans of tendering Lenders will be prepaid on a pro rata basis (based on
amounts tendered).
A Mandatory Prepayment Offer shall remain open for a period of 20
Business Days or such longer period as may be required by law.
The notice to the Administrative Agent described in the first
paragraph of this Section 2.03(a) shall contain all instructions and materials
necessary to enable the Borrower to prepay the Loans:
(i) that a Net Proceeds Offer or a Change of Control Offer, as the
case may be, is being made pursuant to Section 2.02 and that all Loans
validly tendered will be accepted for payment;
(ii) the purchase price and the purchase date, which shall be no
earlier than 30 days nor later than 40 days from the date such notice is
mailed (the "Payment Date");
(iii) that any Loan not tendered will continue to accrue interest;
(iv) that any Loan accepted for payment pursuant to the Mandatory
Prepayment Offer shall cease to accrue interest after the Payment Date
unless the Borrower shall default in the payment of the repurchase price
of the Loans;
(v) that if a Lender elects to have its Loan prepaid pursuant to the
Mandatory Prepayment Offer, it will be required to surrender any Note held
by it to the Borrower prior to 5:00 p.m. New York time on the Payment
Date;
(vi) that a Lender will be entitled to withdraw its election if the
Borrower receives, not later than 5:00 p.m. New York time on the Business
Day preceding the Payment Date, a telegram, telex, facsimile transmission
or letter setting forth the principal amount of Loans such Lender
delivered for prepayment, and a statement that such Lender is withdrawing
its election to have such Loan prepaid; and
-12-
<PAGE>
(vii) that if Loans are prepaid only in part, a new Note of the same
type will be issued in principal amount equal to the non-prepaid portion
of the Loans surrendered.
On or before the Payment Date, the Borrower shall (i) accept for
prepayment Loans or portions thereof which are to be prepaid in accordance with
the above, and (ii) deposit at the Payment Office Dollars sufficient to pay the
purchase price of all Loans to be prepaid. The Administrative Agent shall
promptly mail to the Lenders whose Loans are so accepted payment in an amount
equal to the purchase price therefor. Any Net Cash Proceeds remaining after the
Borrower has complied with its obligations under Section 2.02(a) shall be
available to the Borrower for general corporate purposes and the aggregate
unutilized Net Proceeds Offer Amount shall be reset to zero.
(b) With respect to each prepayment of Loans pursuant to Section
2.02, each prepayment of any Loans made pursuant to a Borrowing shall be applied
pro rata among such Loans. In the absence of a designation by the Borrower as
described in the previous sentence, the Administrative Agent shall make such
designation in its sole discretion.
(c) Notwithstanding anything to the contrary contained in this
Agreement or in any other Credit Document, all then outstanding Loans shall be
repaid in full on the Maturity Date.
(d) Notwithstanding anything to the contrary contained elsewhere in
this Agreement, if on the date any required prepayment or repayment hereunder
(other than on the Maturity Date) is to be made and as a result thereof breakage
costs would become due and owing under Section 1.08, so long as no Default or
Event of Default shall have occurred and be continuing, the Borrower, at its
option, may, in lieu of making any such prepayment or repayment, place any
amounts which would otherwise be required to be so prepaid or repaid in an
interest-bearing cash collateral account established with the Administrative
Agent (on terms and conditions satisfactory to the Administrative Agent) for the
benefit of the Lenders until the expiration of the Interest Periods applicable
to the subject LIBOR Loans, at which time such amounts shall be applied to such
required prepayments or repayments, as the case may be.
2.04. Method and Place of Payment. Except as otherwise specifically
provided herein, all payments under this Agreement or under any Note shall be
made to the Administrative Agent for the account of the Lender or Lenders
entitled thereto not later than 2:00 P.M. (New York time) on the date when due
and shall be made in Dollars in immediately available funds at the Payment
Office; funds received by the Administrative Agent after that time shall be
deemed to have been paid by the Borrower on the next succeeding Business Day.
Whenever any payment to be made hereunder or under any Note shall be stated to
be due on a day which is not a Business Day, the due date thereof shall be
ex-
-13-
<PAGE>
tended to the next succeeding Business Day and, with respect to payments of
principal, interest shall be payable at the applicable rate during such
extension. The Borrower hereby authorizes the Administrative Agent to charge its
account with the Administrative Agent in order to cause timely payment to be
made of all principal, interest and fees due hereunder (subject to sufficient
funds being available in its account for that purpose).
2.05. Notation of Payment. Each Lender agrees that before disposing
of any Note held by it, or any part thereof (other than by granting
participations therein), such Lender will make a notation thereon of all
principal payments previously made thereon and of the date to which interest
thereon has been paid and will notify the Borrower of the name and address of
the transferee of that Note; provided, however, that the failure to make (or any
error in the making of) such a notation or to notify the Borrower of the name
and address of such transferee shall not limit or otherwise affect the
obligation of the Borrower hereunder or under such Notes with respect to the
Loans and payments of principal or interest on any such Note.
2.06. Net Payments. (a) All payments made by the Borrower hereunder
or under any Note will be made without setoff, counterclaim or other defense
(which payment shall not be deemed a waiver of any claims under this Agreement).
Except as provided in Section 2.06, all such payments will be made free and
clear of, and without deduction or withholding for, any present or future taxes,
levies, imposts, duties, fees, assessments or other charges of whatever nature
now or hereafter imposed by any jurisdiction or by any political subdivision or
taxing authority thereof or therein with respect to such payment (but excluding,
except as provided in the second succeeding sentence, any tax (including any
franchise tax) imposed on or measured by the net income or net profits of a
Lender pursuant to the laws of the jurisdiction in which it is organized or the
jurisdiction in which the principal office or applicable lending office of such
Lender is located or any subdivision thereof or therein) and all interest,
penalties or similar liabilities with respect thereto (all such nonexcluded
taxes, levies, imposts, duties, fees, assessments or other charges being
referred to collectively as "Taxes"). If any Taxes are so levied or imposed, the
Borrower agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due under this
Agreement or under any Note, after withholding or deduction for or on account of
any Taxes, will not be less than the amount provided for herein or in such Note.
If any amounts are payable in respect of Taxes pursuant to the preceding
sentence, the Borrower agrees to reimburse each Lender, upon the written request
of such Lender, for taxes imposed on or measured by the net income or net
profits of such Lender pursuant to the laws of the jurisdiction in which the
principal office or applicable lending office of such Lender is located or under
the laws of any political subdivision or taxing authority of any such
jurisdiction in which the principal office or applicable lending office of such
Lender is located and for any withholding of taxes as such Lender shall
determine are payable by, or withheld from, such Lender in respect of such
amounts so paid to or on behalf of such Lender pursuant to the preceding
sentence and in respect of any
-14-
<PAGE>
amounts paid to or on behalf of such Lender pursuant to this sentence; provided,
however, that no such reimbursement shall be required unless such Lender
determines that the amount of such Taxes exceeds the amount of any credit,
allowance or deduction allowable to such Lender as an offset against any taxes
payable on behalf of such Lender and in such event reimbursement shall not be
required in any amount greater than such excess. The Borrower will furnish to
the Administrative Agent within 45 days after the date the payment of any Taxes
is due pursuant to applicable law certified copies of tax receipts evidencing
such payment by the Borrower. The Borrower agrees to indemnify and hold harmless
each Lender and the Administrative Agent, and reimburse such Lender and the
Administrative Agent upon its written request, for the amount of any Taxes so
levied or imposed and paid by such Lender or the Administrative Agent. A
certificate as to the amount of any such required indemnification payment
prepared by such Lender or the Administrative Agent shall be final, conclusive
and binding for all purposes absent manifest error.
(b) Each Lender that is not a United States person (as such term is
defined in Section 7701(a)(30) of the Code) agrees to deliver to the Borrower
and the Administrative Agent on or prior to the Closing Date, or in the case of
a Lender that is an assignee or transferee of an interest under this Agreement
pursuant to Section 1.10 or Section 11.04 (unless the respective Lender was
already a Lender hereunder immediately prior to such assignment or transfer), on
the date of such assignment or transfer to such Lender, (i) two accurate and
complete original signed copies of Internal Revenue Service Form 4224 or 1001
(or successor forms) certifying to such Lender's entitlement to a complete
exemption from United States withholding tax with respect to payments to be made
under this Agreement and under any Note, or (ii) if the Lender is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and cannot deliver either
Internal Revenue Service Form 1001 or 4224 pursuant to clause (i) above, (x) a
certificate substantially in the form of Exhibit B (any such certificate, a
"Section 2.06(b)(ii) Certificate") and (y) two accurate and complete original
signed copies of Internal Revenue Service Form W-8 (or successor form)
certifying to such Lender's entitlement to a complete exemption from United
States withholding tax with respect to payments of interest to be made under
this Agreement and under any Note. In addition, each Lender agrees that from
time to time after the Closing Date, when a lapse in time or change in
circumstances renders the previous certification obsolete or inaccurate in any
material respect, it will deliver promptly to the Borrower and the
Administrative Agent two new accurate and complete original signed copies of
Internal Revenue Service Form 4224 or 1001, or Form W-8 and a Section
2.06(b)(ii) Certificate, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Lender to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note, or it shall immediately
notify the Borrower and the Administrative Agent of its inability to deliver any
such Form or Certificate, in which case such Lender shall not be required to
deliver any such Form or Certificate pursuant to this Section 2.06(b).
Notwithstanding anything to the contrary contained in Section 2.06(a), but
subject to Section 11.04(b) and the immediately succeeding sentence,
-15-
<PAGE>
(x) the Borrower shall be entitled, to the extent it is required to do so by
law, to deduct or withhold income or similar taxes imposed by the United States
(or any political subdivision or taxing authority thereof or therein) from
interest, fees or other amounts payable hereunder for the account of any Lender
which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent that
such Lender has not provided to the Borrower U.S. Internal Revenue Service Forms
that establish a complete exemption from such deduction or withholding and (y)
the Borrower shall not be obligated pursuant to Section 2.06(a) hereof to gross
up payments to be made to a Lender in respect of income withholding or similar
taxes imposed by the United States if (I) such Lender has not provided to the
Borrower the Internal Revenue Service Forms required to be provided to the
Borrower pursuant to this Section 2.06(b) or (II) in the case of a payment,
other than interest, to a Lender described in clause (ii) above, to the extent
that such Forms do not establish a complete exemption from withholding of such
taxes. Notwithstanding anything to the contrary contained in the preceding
sentence or elsewhere in this Section 2.06 and except as set forth in Section
11.04(b), the Borrower agrees to pay additional amounts and to indemnify each
Lender and the Administrative Agent in the manner set forth in Section 2.06(a)
(without regard to the identity of the jurisdiction requiring the deduction or
withholding) in respect of any amounts deducted or withheld by it as described
in the immediately preceding sentence as a result of any changes after the
Closing Date in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of income or similar Taxes.
3. CONDITIONS PRECEDENT TO THE BORROWING DATE.
The obligation of each Lender to make Loans on the Borrowing Date is
subject at the time of the making of such Loans to the satisfaction of the
following conditions:
3.01. Execution of Agreement; Notes. (i) On or prior to the
Borrowing Date, the Borrower shall have delivered to the Administrative Agent
executed copies of this Agreement and (ii) on or prior to the Borrowing Date,
there shall have been delivered to the Administrative Agent for the account of
each of the Lenders that have requested a Note or Notes the appropriate Note
executed by the Borrower and the Guarantors in the amount, maturity and as
otherwise provided herein.
3.02. No Default; Representations and Warranties. On the Borrowing
Date and also after giving effect to the Loans made on the Borrowing Date, (i)
there shall exist no Default or Event of Default and (ii) all representations
and warranties contained herein and in the other Credit Documents in effect at
such time shall be true and correct in all material respects with the same
effect as though such representations and warranties had been made on and as of
the Borrowing Date, unless stated to relate to a specific earlier date, in
-16-
<PAGE>
which case such representations and warranties shall be true and correct in all
material respects as of such earlier date.
3.03. Officers' Certificate. On the Borrowing Date, the
Administrative Agent shall have received a certificate dated such date signed by
an appropriate officer of each of the Parent and the Borrower, stating that all
of the applicable conditions set forth in Sections 3.02, 3.06 (deleting the
reference to the Administrative Agent and the Lenders therein), 3.07 (deleting
the reference to the Lenders therein), 3.08 and 3.10, as such provisions relate
to such Credit Party, exist as of such date.
3.04. Opinions of Counsel. On the Borrowing Date, the Administrative
Agent shall have received an opinion, addressed to the Administrative Agent and
each of the Lenders and dated the Borrowing Date, from Proskauer Rose LLP,
counsel to the Borrower, in the form of Exhibit C.
3.05. Corporate Proceedings. (a) On the Borrowing Date, the
Administrative Agent shall have received from each Credit Party a certificate,
dated the Borrowing Date, signed by the chairman, a vice chairman, the
president, any vice-president or, in the case of a Credit Party which is not a
corporation, other senior officer of such Credit Party, and attested to by the
secretary or any assistant secretary of such Credit Party, in the form of
Exhibit D with appropriate insertions, together with copies of the Certificate
of Incorporation and By-Laws of such Credit Party and the resolutions of such
Credit Party referred to in such certificate and all of the foregoing (including
each such Certificate of Incorporation and By-Laws) shall be reasonably
satisfactory to the Administrative Agent.
(b) On the Borrowing Date, all corporate and legal proceedings and
all instruments and agreements in connection with the transactions contemplated
by the Credit Documents shall be reasonably satisfactory in form and substance
to the Administrative Agent, and the Administrative Agent shall have received
all information and copies of all certificates, documents and papers, including
good standing certificates, bring-down certificates and any other records of
corporate proceedings and governmental approvals, if any, which the
Administrative Agent reasonably may have requested in connection therewith, such
documents and papers, where appropriate, to be certified by proper corporate or
governmental authorities.
3.06. Adverse Change, etc. On the Borrowing Date and after giving
effect to the Loans made on the Borrowing Date, nothing shall have occurred
since March 31, 1999 (and neither the Lenders nor the Administrative Agent shall
have become aware of any facts or conditions not previously known), which has,
or could reasonably be expected to have, a Material Adverse Effect.
-17-
<PAGE>
3.07. Litigation. On the Borrowing Date and after giving effect to
the Loans made on the Borrowing Date, there shall be no actions, suits or
proceedings pending or threatened (a) with respect to this Agreement or any
other Credit Document or (b) which the Lenders shall have determined could
reasonably be expected to have a Material Adverse Effect.
3.08. Approvals. On or prior to the Borrowing Date, all necessary
governmental (domestic and non-U.S.) and third party approvals in connection
with the transactions contemplated by the Credit Documents and otherwise
referred to herein or therein shall have been obtained and remain in effect, and
all applicable waiting periods shall have expired without any action being taken
by any competent authority which restrains, prevents or imposes materially
adverse conditions upon the consummation of the transactions contemplated by the
Credit Documents and otherwise referred to herein or therein. Additionally,
there shall not exist any judgment, order, injunction or other restraint issued
or filed or a hearing seeking injunctive relief or other restraint pending or
notified prohibiting or imposing materially adverse conditions upon the making
of the Loans.
3.09. Payment of Fees. On or before the Borrowing Date, all costs,
fees and expenses, and all other compensation contemplated by this Agreement or
any other agreement with the Administrative Agent or any Lender due to the
Administrative Agent or the Lenders (including, without limitation, reasonable
legal fees and expenses), shall have been paid to the extent then due.
3.10. Margin Regulations. On the Borrowing Date and after giving
effect to the making of the Loans hereunder and Section 11.18, neither the
making of any Loan, nor the use of the proceeds thereof, shall have violated the
provisions of Regulation T, U or X of the Board of Governors of the Federal
Reserve System.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
In order to induce the Lenders to enter into this Agreement and to
make the Loans provided for herein, each of the Parent and the Borrower makes
the following representations, warranties and agreements with the Lenders, all
of which shall survive the execution and delivery of this Agreement and the
making of the Loans (with the occurrence of the Borrowing Date being deemed to
constitute a representation and warranty that the matters specified in this
Section 4 are true and correct in all material respects on and as of the
Borrowing Date, unless stated to relate to a specific earlier date, in which
case such representations and warranties shall be true and correct in all
material respects as of such earlier date):
4.01. Corporate Status. The Parent, the Borrower and each of their
respective Subsidiaries (i) is a duly organized and validly existing corporation
in good standing
-18-
<PAGE>
under the laws of the jurisdiction of its organization, (ii) has the requisite
corporate power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage and (iii) is
duly qualified and is authorized to do business and is in good standing in all
jurisdictions where it is required to be so qualified and where the failure to
be so qualified would have a Material Adverse Effect.
4.02. Corporate Power and Authority. Each Credit Party has the
requisite corporate power and authority to execute, deliver and carry out the
terms and provisions of the Credit Documents to which it is a party and has
taken all necessary corporate action to authorize the execution, delivery and
performance of the Credit Documents to which it is a party. Each Credit Party
has duly executed and delivered each Credit Document to which it is a party and
each such Credit Document constitutes the legal, valid and binding obligation of
such Credit Party enforceable in accordance with its terms, except to the extent
that the enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws generally affecting
creditors' rights and by equitable principles (regardless of whether enforcement
is sought in equity or at law).
4.03. No Violation. Neither the execution, delivery or performance
by any Credit Party of the Credit Documents to which it is a party nor
compliance by any Credit Party with the terms and provisions thereof, nor the
consummation of the transactions contemplated herein or therein, including,
without limitation, the making of any Loan or the use of the proceeds thereof,
(i) will contravene any applicable provision of any law, statute, rule or
regulation, or any order, writ, injunction or decree of any court or
governmental instrumentality, including, without limitation, the provisions of
Regulation T, U or X of the Board of Governors of the Federal Reserve System,
(ii) will conflict or be inconsistent with, or result in any breach of, any of
the terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to create
or impose) any Lien upon any of the property or assets of the Parent, the
Borrower or any of their respective Subsidiaries pursuant to the terms of, any
indenture, mortgage, deed of trust, loan agreement, credit agreement or any
other material agreement or instrument to which the Parent, the Borrower or any
of their respective Subsidiaries is a party or by which it or any of its
property or assets are bound or to which it may be subject or (iii) will violate
any provision of the Certificate of Incorporation or By-Laws of the Parent, the
Borrower or any of their respective Subsidiaries.
4.04. Use of Proceeds. On the Borrowing Date, all proceeds of
the Loans shall be used to refinance in full the Existing Floating Rate
Facility.
4.05. Governmental Approvals. No order, consent, approval, license,
authorization or validation of, or filing, recording or registration with, or
exemption by, any non-U.S. or domestic governmental or public body or authority,
or any subdivision thereof, is required to authorize or is required in
connection with (i) the execution, delivery
-19-
<PAGE>
and performance of any Credit Document or (ii) the legality, validity, binding
effect or enforceability of any Credit Document.
4.06. Investment Company Act; Public Utility Holding Company Act.
Neither the Parent, the Borrower nor any of their respective Subsidiaries is (a)
an "investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended, or (b) a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
4.07. True and Complete Disclosure. All factual information (taken
as a whole) heretofore or contemporaneously furnished by or on behalf of the
Parent, the Borrower or any of their respective Subsidiaries in writing to the
Administrative Agent or any Lender (including, without limitation, all
information contained in the Credit Documents) for purposes of or in connection
with the Credit Documents or any transaction contemplated therein is, and all
other such factual information (taken as a whole) hereafter furnished by or on
behalf of any such Person in writing to the Administrative Agent or any Lender
will be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
material fact necessary to make such information (taken as a whole) not
misleading at such time.
4.08. Financial Condition; Financial Statements. (a) The annual and
interim financial statements previously provided to the Administrative Agent (as
to the Parent and its Subsidiaries) (including statements of income and cash
flows and changes in shareholders' equity) present fairly in all material
respects the financial condition of the relevant Persons at the dates of said
statements and the results for the periods covered thereby. All such financial
statements have been prepared in accordance with GAAP consistently applied
(other than, in the case of such interim financial statements, the absence of
footnotes and normal year-end adjustments) and the financial statements as of
and for the fiscal years have been audited by and accompanied by the opinion of
Arthur Andersen LLP, independent public accountants of the Parent.
(b) Since March 31, 1999, nothing has occurred that has had or
could reasonably be expected to have a Material Adverse Effect.
(c) Except as fully reflected in the financial statements
described in Section 4.08(a), the Indebtedness incurred under this Agreement and
except as set forth in Schedule VI hereto, (i) there were as of the Borrowing
Date (and after giving effect to any Loans made on such date), no liabilities or
obligations (excluding obligations or liabilities incurred in the ordinary
course of business which, individually or in the aggregate, could not reasonably
be expected to have a Material Adverse Effect) with respect to the Parent,
-20-
<PAGE>
the Borrower or any of their respective Subsidiaries of any nature whatsoever
(whether absolute, accrued, contingent or otherwise and whether or not due), and
(ii) neither the Parent, the Borrower nor any of their respective Subsidiaries
knows of any basis for the assertion against the Parent, the Borrower or any of
their respective Subsidiaries of any such liability or obligation which, either
individually or in the aggregate, has, or could be reasonably likely to have, a
Material Adverse Effect.
(d) The Projections are based on good faith estimates and
assumptions made by the management of the Parent and the Borrower, and on the
Borrowing Date the management believes that the Projections were reasonable and
attainable under the facts and circumstances known to such management, it being
recognized by the Lenders, however, that projections as to future events are not
to be viewed as facts and that the actual results during the period or periods
covered by the Projections may differ from the projected results and that the
differences could be material. There is no fact known to the Parent, the
Borrower or any of their respective Subsidiaries which would have a Material
Adverse Effect which has not been disclosed herein or in such other documents,
certificates and statements furnished to the Lenders for use in connection with
the transactions contemplated hereby.
4.09. Compliance with ERISA. (a) The Parent, the Borrower, their
respective Subsidiaries and their respective ERISA Affiliates are in compliance
with all applicable provisions of ERISA and the Code and the published
regulations and interpretations thereunder with respect to all employee benefit
plans (as defined in Section 3(3) of ERISA); no Reportable Event has occurred
with respect to a Plan; no Plan is insolvent or in reorganization in excess of
$3.0 million; the aggregate Unfunded Current Liability of all Plans (excluding
Plans without Unfunded Current Liabilities) does not exceed $3,000,000; no Plan
has an accumulated or waived funding deficiency, has permitted decreases in its
funding standard account or has applied for a waiver of the minimum funding
standard or an extension of any amortization period within the meaning of
Section 412 of the Code; all contributions required to be made with respect to a
Plan and a Non-U.S. Pension Plan have been timely made; neither the Parent, the
Borrower, any Subsidiary of the Parent or the Borrower nor any ERISA Affiliate
has incurred any liability to or on account of a Plan pursuant to Section 409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or reasonably expects to
incur any liability (including any indirect, contingent or secondary liability)
under any of the foregoing Sections with respect to any Plan (other than
liabilities of any ERISA Affiliate which could not, by operation of law or
otherwise, become a liability of the Borrower or any of its Subsidiaries); no
proceedings have been instituted to terminate, or to appoint a trustee to
administer, any Plan; no condition exists which presents a material risk to the
Parent, the Borrower or any Subsidiary of the Parent or the Borrower or any
ERISA Affiliate of incurring a liability to or on account of a Plan pursuant to
the foregoing provisions of ERISA and the Code; using actuarial assumptions and
computation methods consistent with
-21-
<PAGE>
subpart 1 of subtitle E of Title IV of ERISA, the aggregate liabilities of the
Parent, the Borrower and their respective Subsidiaries and their respective
ERISA Affiliates to all Multiemployer Plans in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal year of each
such Plan ended prior to the Borrowing Date, would not, singly or in the
aggregate, result in a Material Adverse Effect; no lien imposed under the Code
or ERISA on the assets of the Parent, the Borrower or any Subsidiary of the
Parent or the Borrower or any ERISA Affiliate exists or is reasonably likely to
arise on account of any Plan; and the Parent, the Borrower and their respective
Subsidiaries do not maintain or contribute to any employee welfare benefit plan
(as defined in Section 3(1) of ERISA) which provides benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or any employee pension benefit plan (as defined in Section 3(2) of
ERISA) the obligations with respect to which could reasonably be expected,
singly or in the aggregate, to have a Material Adverse Effect.
(b) Each Non-U.S. Pension Plan has been maintained in compliance
with its terms and with the requirements of any and all applicable laws,
statutes, rules, regulations and orders and has been maintained, where required,
in good standing with applicable regulatory authorities. Neither the Parent, the
Borrower nor any of their respective Subsidiaries has incurred any obligation in
connection with the termination of or withdrawal from any Non-U.S. Pension Plan.
The present value of the accrued benefit liabilities (whether or not vested)
under each Non-U.S. Pension Plan which is funded, determined as of the end of
the most recently ended fiscal year of the Parent, the Borrower on the basis of
actuarial assumptions, each of which is reasonable, did not exceed the current
value of the assets of such Non-U.S. Pension Plan, and for each Non-U.S. Pension
Plan which is not funded, the obligations of such Non-U.S. Pension Plan are
properly accrued.
(c) Notwithstanding the foregoing, the representations, warranties
and agreements contained in this Section 4.09 are qualified such that a breach
or failure thereof shall not be treated as such unless the circumstances of such
breach or failure have resulted in or are reasonably expected to result in
either (i) a Material Adverse Effect or (ii) the imposition of a lien on the
assets of the Parent, the Borrower or any of their respective Subsidiaries.
4.10. Subsidiaries. On and as of the Borrowing Date, (i) the
Borrower has no Subsidiaries other than those Subsidiaries listed on Schedule
IV, and (ii) the Parent does not have any direct equity interest in any Person
other than the Borrower, DNE Systems and Superior Trust I. Schedule IV correctly
sets forth, as of the Borrowing Date, the percentage ownership (direct and
indirect) of the Borrower in each class of capital stock of each of its
Subsidiaries and also identifies the direct owner thereof. As of the Borrowing
Date, the Parent owns no significant assets other than all of the outstanding
Capital Stock of the Borrower, DNE Systems and Superior Trust I (other than, in
the case of Superior Trust I, the Trust Preferred Securities).
-22-
<PAGE>
4.11. Intellectual Property. The Parent, the Borrower and each of
their respective Subsidiaries owns or holds a valid license to use all the
material patents, trademarks, permits, service marks, trade names, technology,
know-how and formulas or other rights with respect to the foregoing, free from
restrictions that are materially adverse to the use thereof, that are used in
the operation of the business of the Parent, the Borrower and each of their
respective Subsidiaries as presently conducted.
4.12. Compliance with Statutes, etc. Each of the Parent, the
Borrower and their respective Subsidiaries is in compliance with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or non-U.S., in respect of the conduct of its
business and the ownership of its property (provided, however, that this Section
4.12 does not apply to (i) compliance with respect to Environmental Laws, as to
which no representation is made in this Section 4.12, but which is covered by
Section 4.13 hereof, (ii) compliance with respect to Taxes, as to which no
representation is made in this Section 4.12, but which is covered by Section
4.16 hereof, (iii) compliance with respect to ERISA, as to which no
representation is made in this Section 4.12, but which is covered by Section
4.09 hereof, and (iv) compliance with respect to labor relations matters, as to
which no representation is made in this Section 4.12, but which is covered by
Section 4.15), except such noncompliance as is not likely to, individually or in
the aggregate, have a Material Adverse Effect.
4.13. Environmental Matters. Except as set forth in Schedule VII or
as could not reasonably be expected to have a Material Adverse Effect: (a) Each
of the Parent, the Borrower and their respective Subsidiaries, and their
respective businesses and Real Property, has complied with, and on the Borrowing
Date is in compliance with, all applicable Environmental Laws and the
requirements of any permits, licenses or other authorizations issued under such
Environmental Laws. There are no pending or past or, to the best knowledge of
the Parent, the Borrower and their respective Subsidiaries, threatened
Environmental Claims against the Parent, the Borrower or any of their respective
Subsidiaries or any Real Property currently or formerly owned or operated by the
Parent, the Borrower or any of their respective Subsidiaries. There are no
facts, circumstances, conditions or occurrences on any Real Property currently
or formerly owned or operated by the Parent, the Borrower or any of their
respective Subsidiaries or, to the best knowledge of the Parent, the Borrower
and their respective Subsidiaries, on any property adjoining or in the vicinity
of any such Real Property that would reasonably be expected (i) to form the
basis of an Environmental Claim against the Parent, the Borrower or any of their
respective Subsidiaries or any such Real Property or (ii) to cause any such Real
Property to be subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Property by the Parent, the Borrower or any of
their respective Subsidiaries under any applicable Environmental Law.
-23-
<PAGE>
(b) Except as set forth in Schedule VII, Hazardous Materials have
not at any time been generated, used, treated or stored on, or transported to or
from, any Real Property currently or formerly owned or operated by the Parent,
the Borrower or any of their respective Subsidiaries where such generation, use,
treatment or storage has violated or could reasonably be expected to violate any
Environmental Law. Hazardous Materials have not at any time been Released on or
from any Real Property currently or formerly owned or operated by the Parent,
the Borrower or any of their respective Subsidiaries. There are not now any
underground storage tanks or related piping located on any Real Property
currently owned or operated by the Parent, the Borrower or any of their
respective Subsidiaries.
(c) Notwithstanding anything to the contrary in this Section 4.13,
the representations and warranties made in this Section 4.13 shall only be
untrue if either the individual or aggregate effect of all conditions, failures,
noncompliances, Environmental Claims, Releases and presence of underground
storage tanks or related piping, in each case of the types described above,
could reasonably be expected to have a Material Adverse Effect.
4.14. Properties. All Real Property owned by the Parent, the
Borrower or any of their respective Subsidiaries and all material Leaseholds of
the Parent, the Borrower or any of their respective Subsidiaries, in each case
as of the Borrowing Date and after giving effect to the incurrence of the Loans
hereunder, and the nature of the interest therein, is correctly set forth in
Schedule III. Each of the Parent, the Borrower and their respective Subsidiaries
has good and marketable title to, or a validly subsisting leasehold interest in,
all material properties owned or leased by it, including all Real Property
reflected in Schedule III or in the financial statements referred to in Section
4.08(b), free and clear of all Liens, other than Liens which are permitted by
Section 6.05.
4.15. Labor Relations. Neither the Parent, the Borrower nor any of
their respective Subsidiaries is engaged in any unfair labor practice that could
reasonably be expected to have a Material Adverse Effect. There is (i) no unfair
labor practice complaint pending against the Parent, the Borrower or any of
their respective Subsidiaries or threatened against any of them before the
National Labor Relations Board, and no grievance or arbitration proceeding
arising out of or under any collective bargaining agreement is so pending
against the Parent, the Borrower or any of their respective Subsidiaries or, to
the best knowledge of the Parent, the Borrower or any of their respective
Subsidiaries, threatened against any of them, (ii) no strike, labor dispute,
slowdown or stoppage pending against the Parent, the Borrower or any of their
respective Subsidiaries or threatened against the Parent, the Borrower or any of
their respective Subsidiaries and (iii) no union representation question
existing with respect to the employees of the Parent, the Borrower or any of
their respective Subsidiaries and no union organizing activities are taking
place, except
-24-
<PAGE>
(with respect to any matter specified in clause (i), (ii) or (iii) above, either
individually or in the aggregate) such as is not reasonably likely to have a
Material Adverse Effect.
4.16. Tax Returns and Payments. All Federal, material state and
other material returns, statements, forms and reports for taxes (the "Returns")
required to be filed by or with respect to the income, properties or operations
of the Parent, the Borrower and/or any of their respective Subsidiaries have
been timely filed with the appropriate taxing authority. The Returns accurately
reflect all liability for taxes of the Parent, the Borrower and their respective
Subsidiaries for the periods covered thereby. The Parent, the Borrower and each
of their respective Subsidiaries have paid all taxes payable by them other than
immaterial taxes and other taxes which are not yet due and payable, and other
than taxes contested in good faith and for which adequate reserves have been
established in accordance with GAAP. Except as disclosed in the financial
statements referred to in Section 4.08(b) or Schedule IX, (a) there is no
material action, suit, proceeding, investigation, audit or claim now pending or
threatened by any authority regarding any taxes relating to the Parent, the
Borrower or any of their respective Subsidiaries and (b) neither the Parent, the
Borrower nor any of their respective Subsidiaries (nor any other person on their
behalf or as part of a consolidated group) has entered into an agreement or
waiver or been requested to enter into an agreement or waiver extending any
statute of limitations relating to the payment or collection of taxes of the
Parent, the Borrower or any of their respective Subsidiaries, or is aware of any
circumstances that would cause the taxable years or other taxable periods of the
Parent, the Borrower or any of their respective Subsidiaries not to be subject
to the normally applicable statute of limitations. Neither the Parent, the
Borrower nor any of their respective Subsidiaries (nor any other person on their
behalf or as part of a consolidated group) has provided, with respect to
themselves or property held by them, any consent under Section 341 of the Code.
Neither the Parent, the Borrower nor any of their respective Subsidiaries has
incurred, or will incur, any material tax liability in connection with the
transactions contemplated hereby.
4.17. Year 2000. All Information Systems and Equipment are either
Year 2000 Compliant, or any reprogramming, remediation or any other corrective
action, including the internal testing of all such Information Systems and
Equipment, will be completed by September 30, 1999. Further, to the extent that
such reprogramming/remediation and testing action is required, the cost thereof,
as well as the cost of the reasonably foreseeable consequences of failure to
become Year 2000 Compliant, to the Parent, the Borrower and their respective
Subsidiaries (including, without limitation, reprogramming errors and the
failure of other systems or equipment) will not result in a Default or a
Material Adverse Effect.
-25-
<PAGE>
5. AFFIRMATIVE COVENANTS.
The Borrower and the Parent hereby covenant and agree that on and
after the Closing Date and until the Loans, Notes, together with interest, fees
and all other Obligations incurred hereunder and thereunder are paid in full
(other than indemnity and similar obligations that are not then due and
payable):
5.01. Information Covenants. The Borrower and the Parent will
furnish to each Lender:
(a) Monthly Reports. Within 30 days after the end of each fiscal
month of the Parent commencing with the fiscal month in which the Borrowing Date
occurs (other than the end of a fiscal quarter or fiscal year), the consolidated
and consolidating balance sheet of the Parent and its Subsidiaries as at the end
of such fiscal month and the related consolidated and consolidating statements
of income and statements of cash flows for such fiscal month and for the elapsed
portion of the fiscal year ended with the last day of such fiscal month, in each
case setting forth comparative figures for the corresponding periods in the
prior fiscal year (sales to be broken down by the sales of the original
equipment manufacturer, communications and electrical business segments) and
comparable budgeted figures for the current fiscal month and year-to-date
results, all of which shall be certified by the chief financial officer or other
Authorized Officer of the Parent, subject to normal year-end audit adjustments
and the absence of footnotes.
(b) Quarterly Financial Statements. Within 45 days after the close
of each of the first three quarterly accounting periods in each fiscal year of
the Parent commencing with the fiscal quarter in which the Borrowing Date
occurs, the consolidated and consolidating balance sheet of the Parent and its
Subsidiaries as at the end of such quarterly accounting period and the related
consolidated and consolidating statements of income, statements of changes in
stockholders equity and statements of cash flows for such quarterly accounting
period and for the elapsed portion of the fiscal year ended with the last day of
such quarterly accounting period, in each case setting forth comparative figures
for the corresponding period in the prior fiscal year (sales to be broken down
by the sales of the original equipment manufacturer, communications and
electrical business segments), and comparative budgeted figures for the current
fiscal quarter and year-to-date results, all of which shall be in reasonable
detail and certified by the chief financial officer or other Authorized Officer
of the Parent that they fairly present in all material respects the financial
condition of the Parent and its Subsidiaries as of the dates indicated and the
results of their operations and changes in their cash flows for the periods
indicated, subject to normal year-end audit adjustments and the absence of
footnotes.
(c) Annual Financial Statements. Within 90 days after the close of
each fiscal year (or if the Parent changes its fiscal year end, the "stub"
period resulting there-
-26-
<PAGE>
from) of the Parent commencing with the fiscal year in which the Borrowing Date
occurs, the consolidated and consolidating balance sheet of the Parent and its
Subsidiaries as at the end of such fiscal year and the related consolidated and
consolidating statements of income, statements of changes in stockholders equity
and statements of cash flows (sales to be broken down by the sales of the
original equipment manufacturer, communications and electrical business
segments) for such fiscal year and setting forth comparative consolidated
figures for the preceding fiscal year and comparable budgeted figures for the
current fiscal year and (except for such comparable budgeted figures and the
sales breakdown referred to above) certified (in the case of consolidated
information) by Arthur Andersen LLP or such other independent certified public
accountants of recognized national standing as shall be reasonably acceptable to
the Administrative Agent, in each case to the effect that such statements fairly
present in all material respects the financial condition of the Parent and its
Subsidiaries as of the dates indicated and the results of their operations and
cash flows, together with a certificate of such accounting firm stating that in
the course of its regular audit of the business of the Parent and its
Subsidiaries, which audit was conducted in accordance with generally accepted
auditing standards, no Default or Event of Default which has occurred and is
continuing has come to their attention insofar as such Default or Event of
Default relates to financial and accounting matters or, if such a Default or an
Event of Default has come to their attention a statement as to the nature
thereof.
(d) Budgets, etc. No more than 60 days after the commencement of
each fiscal year of the Parent, budgets of and for the Parent and its
Subsidiaries in reasonable detail for each of the four fiscal quarters of such
fiscal year and an annual budget for the immediately succeeding fiscal year, in
each case as customarily prepared by management for its internal use setting
forth, with appropriate discussion, the principal assumptions upon which such
budgets are based. Together with each delivery of financial statements pursuant
to Section 5.01(b) and (c), a comparison of the current year to date financial
results (other than in respect of the balance sheets included therein) against
the budgets required to be submitted pursuant to this clause (d) shall be
presented.
(e) Officers' Certificates. At the time of the delivery of the
financial statements provided for in Section 5.01(b) and (c), a certificate of
the chief financial officer or other Authorized Officer of the Parent and the
Borrower to the effect that no Default or Event of Default exists or, if any
Default or Event of Default does exist, specifying the nature and extent
thereof, which certificate shall (x) set forth the calculations required to
establish whether the Parent and the Borrower and its Subsidiaries were in
compliance with the provisions of Sections 2.02, 6.01, 6.02 and 6.03, as at the
end of such fiscal quarter or fiscal year, as the case may be.
(f) Notice of Default or Litigation. Promptly, and in any event
within five Business Days (or 10 Business Days in the case of clause (y) below)
after any executive or senior officer of the Parent or the Borrower obtains
actual knowledge thereof, notice of
-27-
<PAGE>
(x) the occurrence of any event which constitutes a Default or an Event of
Default, which notice shall specify the nature thereof, the period of existence
thereof and what action the Parent or the Borrower proposes to take with respect
thereto and (y) the commencement of, or threat of, any litigation or
governmental proceeding pending against the Parent or the Borrower or any of
their respective Subsidiaries which is reasonably likely to have a Material
Adverse Effect, or a material adverse effect on the ability of any Credit Party
to perform its respective obligations hereunder or under any other Credit
Document.
(g) Auditors' Reports. Promptly upon receipt thereof, a copy of
each report or "management letter" submitted to the Parent or any of its
Subsidiaries by its independent accountants in connection with any annual,
interim or special audit made by them of the books of the Parent or any of its
Subsidiaries.
(h) Other Information. Promptly upon transmission thereof, copies
of any filings and registrations with, and reports to, the SEC by the Parent or
any of its Subsidiaries and copies of all financial statements, proxy
statements, notices and reports as the Parent or any of its Subsidiaries shall
send generally to analysts or the holders of their capital stock in their
capacity as such holders (to the extent not theretofore delivered to the Lenders
pursuant to this Agreement) and, with reasonable promptness, such other
information or documents (financial or otherwise) as the Administrative Agent on
its own behalf or on behalf of the Required Lenders may reasonably request from
time to time.
5.02. Books, Records and Inspections. The Parent will, and will
cause each of its Subsidiaries to, permit, upon notice to the chief financial
officer or other Authorized Officer of the Parent, officers and designated
representatives of the Administrative Agent or the Required Lenders to visit and
inspect any of the properties or assets of the Parent and any of its
Subsidiaries in whosesoever possession, and to examine the books of account of
the Parent and of any of its Subsidiaries and discuss the affairs, finances and
accounts of the Parent and of any of its Subsidiaries with, and be advised as to
the same by, their officers and independent accountants, all at such reasonable
times and intervals and to such reasonable extent as the Administrative Agent or
the Required Lenders may desire.
5.03. Insurance. The Parent will, and will cause each of its
Subsidiaries to, at all times maintain in full force and effect insurance with
reputable and solvent insurance carriers in such amount, covering such risks and
liabilities and with such deductibles or self-insured retentions as are in
accordance with normal industry practice.
5.04. Payment of Taxes. The Parent will pay and discharge, and will
cause each of its Subsidiaries to pay and discharge, all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any properties belonging to it, prior to the date on which material
penalties attach thereto, and all lawful claims for sums that have become due
and payable which, if unpaid, might become a Lien
-28-
<PAGE>
not otherwise permitted under Section 6.05 or charge upon any properties of the
Parent or any of its Subsidiaries; provided that neither the Parent nor any of
its Subsidiaries shall be required to pay any such tax, assessment, charge, levy
or claim which is being contested in good faith and by proper proceedings if it
has maintained adequate reserves with respect thereto in accordance with GAAP.
5.05. Compliance with Statutes, etc. The Parent will, and will cause
each of its Subsidiaries to, comply with all applicable statutes, regulations
and orders of, and all applicable restrictions imposed by, all governmental
bodies, domestic or non-U.S., in respect of the conduct of its business and the
ownership of its property except for such noncompliance as would not, singly or
in the aggregate, have a Material Adverse Effect or a material adverse effect on
the ability of any Credit Party to perform its obligations under any Credit
Document to which it is a party.
5.06. Corporate Franchises. The Parent will, and will cause each of
its Subsidiaries to, do or cause to be done all things necessary to preserve and
keep in full force and effect its existence and its rights, franchises, licenses
and patents, except as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect; provided, however, that the
Parent and the Borrower shall not be required to preserve, with respect to
themselves, any right or franchise, and with respect to any of their respective
Subsidiaries, any such existence, right or franchise, if the Board of Directors
of the Parent, the Borrower or such Subsidiary, as the case may be, shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Parent and its Subsidiaries taken as a whole or the Borrower
and its Subsidiaries taken as a whole, as applicable. Nothing in this Section
5.06 shall prevent (a) sales of assets and other transactions by the Borrower or
any of its Subsidiaries in accordance with Section 6.03 or (b) the withdrawal by
the Parent, the Borrower or any of their respective Subsidiaries of its
qualification as a foreign corporation in any jurisdiction where such withdrawal
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
5.07. Good Repair. The Parent will, and will cause each of its
Subsidiaries to, ensure that its material properties and equipment used in its
business are kept in good repair, working order and condition, normal wear and
tear and damage by casualty excepted, and that from time to time there are made
to such properties and equipment all needful and proper repairs, renewals,
replacements, extensions, additions, betterments and improvements thereto, to
the extent and in the manner useful or customary for companies in similar
businesses.
5.08. Year 2000. The Parent and the Borrower will ensure that each
of their Information Systems and Equipment are at all times after September 30,
1999 Year 2000 Compliant, except insofar as the failure to do so will not result
in a Material Adverse Effect, and shall notify the Administrative Agent and any
Lender promptly upon detecting any
-29-
<PAGE>
material failure of the Information Systems and Equipment to be Year 2000
Compliant. In addition, the Parent and the Borrower shall provide the
Administrative Agent and any Lender with such information about its year 2000
computer readiness (including, without limitation, information as to contingency
plans, budgets and testing results) as the Administrative Agent or such Lender
shall reasonably request.
5.09. Exchange Notes; Shelf Registration. No later than ninety (90)
days after the later of (x) the Nine-Month Trigger Date and (y) the expiration
of the fifteen (15) calendar day postponement period with respect to payment of
the Nine-Month Fee in Section 1.11, (i) the Borrower will issue in exchange for
the Loans and Notes new notes in equal aggregate principal amount to the Notes
and guaranteed by each of the Guarantors on substantially identical terms as the
Notes and having substantially identical terms, conditions, covenants,
subordination and events of default as the Notes and Loans and bearing interest
at the Interest Rate (except that such new notes will be issued pursuant to an
indenture that is in form and substance reasonably satisfactory to the Agents
and that has been or may be qualified under the Trust Indenture Act of 1939, as
amended, and with a trustee that is reasonably satisfactory to the Agents ) (the
"Exchange Notes"); (ii) the Borrower and the Guarantors will, at their own
expense, file and use their best efforts to cause a registration statement (the
form of which shall be determined by the Parent) for an offering to be made on a
continuous basis pursuant to Rule 415 (or any successor rule) under the
Securities Act covering all of the Exchange Notes (the "Shelf Registration") to
be declared effective and will keep the Shelf Registration continuously
effective as required by the Registration Rights Provisions attached hereto as
Annex A; and (iii) the Borrower and each Guarantor will otherwise comply with
all other provisions of the Registration Rights Provisions attached hereto as
Annex A.
6. NEGATIVE COVENANTS.
The Borrower hereby covenants and agrees that until the satisfaction
in full of the Loans and the Notes and all other Obligations (other than
indemnity and similar obligations that are not then due and payable) due under
this Agreement it will fully and timely perform all covenants in this Section 6:
6.01. Indebtedness. The Borrower will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, incur any
Indebtedness, except for the following ("Permitted Indebtedness"):
(i) Indebtedness under the Loans and the Guarantees pursuant to this
Agreement, and Permitted Refinancings thereof;
(ii) Indebtedness incurred pursuant to the Senior Secured Credit
Agreement in an aggregate principal amount at any time outstanding not to
exceed $1,150
-30-
<PAGE>
million, (A) less the amount of all mandatory principal payments actually
made in respect of the term loan facilities under the Senior Secured
Credit Agreement (excluding any such repayment to the extent refinanced
and replaced at the time of payment) and (B) reduced by any required
permanent repayments actually made (which are accompanied by a
corresponding permanent commitment reduction in the case of the revolving
credit facility under the Senior Secured Credit Agreement) in respect of
the Senior Secured Credit Agreement (excluding any such repayments and
commitment reductions to the extent refinanced and replaced at the time of
payment) in each case pursuant to this clause (B) actually effected in
satisfaction of the requirement to make a Net Proceeds Offer pursuant to
Section 2.02(a);
(iii) Indebtedness (together with other obligations) of Essex
Funding or any other Receivables Subsidiary incurred pursuant to the
Receivables Financing Agreement; provided that the funded amount, together
with any other Indebtedness thereunder, does not at any time exceed $225.0
million;
(iv) Indebtedness of Essex Canada under the Essex Canadian Facility,
and any refinancings thereof; provided that the then outstanding principal
amount thereof is not increased and the terms and conditions of such
refinancings thereof are no more adverse in any material respect to the
Borrower or the Lenders than with respect to the Indebtedness being so
refinanced;
(v) Indebtedness incurred pursuant to the Essex Capital Lease
Facility, provided that the principal amount thereof at any time does not
exceed $18.0 million, and any refinancings thereof; provided that the then
outstanding principal amount thereof is not increased and the terms and
conditions of such refinancings thereof are no more adverse in any
material respect to the Borrower or the Lenders than with respect to the
Indebtedness being so refinanced;
(vi) letters of credit existing as of the date hereof as set forth
on Schedule V, and any extensions or refinancings thereof; provided that
the then outstanding face amounts thereof are not increased and the terms
and conditions of such refinancings thereof are no more adverse in any
material respect to the Borrower or the Lenders than with respect to the
Indebtedness being so refinanced;
(vii) (x) Existing Indebtedness outstanding on the Borrowing Date
and listed on Schedule V, and any Permitted Refinancings thereof, and (y)
Permitted Refinancings of Indebtedness permitted to be incurred pursuant
to clause (xvii) of this Section 6.01;
(viii) Indebtedness incurred pursuant to (x) Interest Rate
Protection Agreements entered into to protect the Borrower against
fluctuations in interest rates in re-
-31-
<PAGE>
spect of any Indebtedness permitted to be incurred under this Agreement
and not for speculative purposes, (y) Other Hedging Agreements with
respect to copper and other raw materials to be used in the business of
the Borrower and its Restricted Subsidiaries; provided that such purchases
are entered into in the ordinary course of business and for bona fide
business (and not speculative) purposes, and (z) Other Hedging Agreements
with respect to currencies in which the Borrower and its Restricted
Subsidiaries transact business; provided that such agreements are designed
to protect against fluctuations in currency values and are entered into
the ordinary course of business and for bona fide business (and not
speculative) purposes;
(ix) Indebtedness represented by (a) Capitalized Lease Obligations
and Purchase Money Indebtedness; provided that the sum of (x) the
aggregate Capitalized Lease Obligations outstanding at any time plus (y)
the aggregate principal amount of such Purchase Money Indebtedness
outstanding at such time shall not exceed $20.0 million, and (b)
Capitalized Lease Obligations referred to on Schedule V;
(x) Indebtedness of a Restricted Subsidiary that is a Guarantor to
the Borrower or to a Restricted Subsidiary that is a Guarantor for so long
as such Indebtedness is held by the Borrower, a Restricted Subsidiary that
is a Guarantor or the lenders or collateral agent under the Senior Secured
Credit Agreement, in each case subject to no Lien held by a Person other
than the Borrower, a Restricted Subsidiary that is a Guarantor or the
lenders or collateral agent under the Senior Secured Credit Agreement;
provided that if as of any date any Person other than the Borrower, a
Restricted Subsidiary that is a Guarantor or the lenders or collateral
agent under the Senior Secured Credit Agreement owns or holds any such
Indebtedness or holds a Lien in respect of such Indebtedness, such date
shall be deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the issuer of such Indebtedness pursuant to this clause
(x);
(xi) Indebtedness of the Borrower to a Restricted Subsidiary that is
a Guarantor for so long as such Indebtedness is held by a Restricted
Subsidiary that is a Guarantor or the lenders or collateral agent under
the Senior Secured Credit Agreement, in each case subject to no Lien other
than in favor of the lenders or collateral agent under the Senior Secured
Credit Agreement; provided that if as of any date any Person other than a
Restricted Subsidiary that is a Guarantor or the lenders or collateral
agent under the Senior Secured Credit Agreement owns or holds any such
Indebtedness or any Person holds a Lien in respect of such Indebtedness,
such date shall be deemed the incurrence of Indebtedness not constituting
Indebtedness permitted by this clause (xi);
-32-
<PAGE>
(xii) Indebtedness of Foreign Subsidiaries to the Borrower or any of
its Domestic Subsidiaries as a result of any Investment permitted to be
made pursuant to Section 6.02(b);
(xiii) Indebtedness consisting of guarantees (x) by the Borrower of
Indebtedness, leases and other contractual obligations permitted to be
incurred by Restricted Subsidiaries of the Borrower that are Guarantors
and (y) by Foreign Subsidiaries of Indebtedness, leases and other
contractual obligations permitted to be incurred by the Borrower and its
Restricted Subsidiaries;
(xiv) Indebtedness of the Mexican Subsidiaries as contemplated by
and in accordance with the terms of Section 6.02(b)(8) to fund the
development of certain manufacturing facilities in Mexico;
(xv) [Intentionally Omitted];
(xvi) additional Indebtedness of the Borrower and its Restricted
Subsidiaries not otherwise permitted hereunder not exceeding $30.0 million
in aggregate principal amount at any time outstanding; provided, however,
that no more than $10.0 million of such amount may be secured Indebtedness
unless it is incurred under the Senior Secured Credit Agreement; and
(xvii) so long as no Default shall have occurred and be continuing
at the time of or as a consequence of the incurrence of any such
Indebtedness, the Borrower and any Restricted Subsidiary that is a
Guarantor may incur Indebtedness (including, without limitation, Acquired
Indebtedness) if on the date of the incurrence of such Indebtedness, after
giving effect to the incurrence thereof, the Consolidated Fixed Charge
Coverage Ratio of the Borrower is greater than 2.0 to 1.0.
6.02. Restricted Payments. (a) The Borrower will not, and will not
cause or permit any Restricted Subsidiary to, directly or indirectly, (a)
declare or pay any dividend or make any distribution (other than dividends or
distributions payable in Qualified Capital Stock of the Borrower) on or in
respect of shares of the Borrower's Qualified Capital Stock to holders of such
Capital Stock, (b) redeem any Capital Stock of the Borrower or any warrants,
rights or options to purchase or acquire shares of any class of such Capital
Stock or (c) make any Investment (other than Permitted Investments) (each of the
foregoing actions set forth in clauses (a), (b) and (c) being referred to as a
"Restricted Payment"), if at the time of such Restricted Payment or immediately
after giving effect thereto, (i) a Default shall have occurred and be continuing
or (ii) the Borrower is not able to incur at least $1.00 of additional
Indebtedness pursuant to paragraph (xvii) of Section 6.01 or (iii) the aggregate
amount of Restricted Payments (including such proposed Restricted Payment but
excluding Restricted Payments pursuant to clause (2), (3), (5), (6), (7), (8),
(9), (10), (11), (12), (13)
-33-
<PAGE>
or (14) of the next paragraph) made subsequent to the January 1, 1999 shall
exceed the sum (the "Basket") of (without duplication): (v) 50% of the
cumulative Consolidated Net Income (or if cumulative Consolidated Net Income
shall be a loss, minus 100% of such loss) of the Borrower earned subsequent to
January 1, 1999 and on or prior to the date the Restricted Payment occurs (the
"Reference Date") (treating such period as a single accounting period); plus (x)
100% of the aggregate net cash proceeds received by the Borrower from any Person
(other than a Subsidiary of the Borrower) from the issuance and sale subsequent
to the Borrowing Date and on or prior to the Reference Date of Qualified Capital
Stock of the Borrower; plus (y) without duplication of any amounts included in
clause (iii)(w) above, 100% of the aggregate net cash proceeds of any equity
contribution (other than from a Subsidiary of the Borrower) received by the
Borrower from a holder of the Borrower's Capital Stock; and plus (z) without
duplication of any amounts included in the calculation of Consolidated Net
Income, the sum of (1) to the extent any Investment (other than a Permitted
Investment) that was made after the Borrowing Date is sold for cash or otherwise
liquidated or repaid for cash, the lesser of (A) the cash received with respect
to such sale, liquidation or repayment of such Investment (less the cost of any
such sale, liquidation or repayment, if any) and (B) the initial amount of such
Investment included as a Restricted Payment and (2) upon redesignation of an
Unrestricted Subsidiary as a Restricted Subsidiary (other than a Subsidiary that
is an Unrestricted Subsidiary on the Borrowing Date), the lesser of (A) the fair
market value of the net assets of such Subsidiary upon its redesignation as a
Restricted Subsidiary and (B) the Investment made in such Subsidiary that is
treated as a Restricted Payment.
(b) Notwithstanding the foregoing, the provisions set forth in the
immediately preceding paragraph will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration of such dividend if the dividend would have been permitted on
the date of declaration;
(2) the acquisition of any shares of Capital Stock of the Borrower,
either (i) solely in exchange for shares of Qualified Capital Stock of the
Borrower or (ii) through the application of net proceeds of a
substantially concurrent sale for cash (other than to a Subsidiary of the
Borrower) of shares of Qualified Capital Stock of the Borrower; provided,
however, that no transaction pursuant to this clause (2) shall increase
the Basket;
(3) the repurchase of shares of Superior Preferred Stock, provided
that the only consideration to be paid in connection therewith shall be
shares of (x) Parent Common Stock and/or (y) preferred stock of the Parent
having terms identical, in all material respects, to the Superior
Preferred Stock (including as to dividend rate and liquidation
preferences) except that the issuer thereof shall be the Parent;
-34-
<PAGE>
(4) so long as no Default or Event of Default shall have occurred
and be continuing or would result therefrom, dividends paid by the
Borrower to the Parent so long as the proceeds thereof are used at the
time of such dividend payment by the Parent to pay a dividend on or
repurchase Parent Common Stock; provided, however, that the Borrower is
permitted to pay such dividend to the Parent under the Senior Secured
Credit Agreement (as in effect on the Borrowing Date);
(5) Investments in Foreign Subsidiaries by other Foreign
Subsidiaries (other than the Israeli Subsidiaries);
(6) dividends paid by Borrower to the Parent in an aggregate amount
not to exceed $25.0 million so long as the Parent substantially
contemporaneously uses the proceeds thereof to purchase shares of Parent
Common Stock from Persons other than Affiliates of the Borrower; provided,
however, that such dividends are paid by Borrower prior to March 31, 2000;
(7) Investments by the Borrower or any Restricted Subsidiary that is
a Guarantor constituting vendor financing provided to support the local
operations of the Israeli Subsidiaries in amount not to exceed $60.0
million outstanding at any time;
(8) Investments in the Mexican Subsidiaries to fund their
development of certain manufacturing facilities in Mexico in an aggregate
amount not to exceed $80.0 million; provided that until January 31, 2001,
the amount of such Investments shall not exceed $40.0 million in the
aggregate; and provided, further, that such amount will either be funded
(A) through Indebtedness incurred by the Mexican Subsidiaries or (B)
through intercompany loans made by the Borrower, on terms satisfactory to
the Administrative Agent, provided that (i) such intercompany loans shall
be secured, on terms reasonably acceptable to the Administrative Agent, by
all of the assets of the Mexican Subsidiaries, including those
contemplated to be built or constructed, and (ii) the Mexican Subsidiaries
shall become Guarantors (it being understood that the Guarantee of the
Mexican Subsidiaries shall be subject to release pursuant to Section
12.08) or (C) through the investment of up to $16.0 million of equity or
other similar contributions or (D) through a combination of (A), (B) and
(C);
(9) Investments in Cables of Zion constituting the outstanding
equity interests of Cables of Zion that are not held by the Borrower or
any Subsidiary on the Borrowing Date; provided that the aggregate
consideration therefor does not exceed $25.0 million;
-35-
<PAGE>
(10) so long as no Default or Event of Default shall have occurred
or be continuing or would result therefrom, dividends paid by the Borrower
to the Parent not earlier than the second Business Day prior to the due
date of any scheduled interest payment on the Debentures so long as the
proceeds thereof are actually used at the time of such dividend payment by
the Parent to pay, on the scheduled quarterly interest payment date,
interest accrued on the Debentures;
(11) dividends paid by the Borrower to the Parent (x) so long as the
proceeds thereof are used at the time of such dividend payment by the
Parent to pay expenses for administrative, legal and accounting services
provided by third parties that are reasonable and customary and incurred
in the ordinary course of business by a publicly traded company for such
professional services or to pay franchise and similar costs and (y) in an
amount not to exceed the "additional amount" for any four consecutive
fiscal quarters provided that such amount is used at the time of such
dividend payment to pay actual expenses of the Parent (including
employment expenses) and the "additional amount" is otherwise treated as
an operating expense of the Borrower for purposes of determining
compliance with the financial covenants contained herein; "additional
amount" for any such period shall mean an amount not to exceed the sum of
(i) $2.5 million and (ii) that portion of the fee permitted to be paid by
Section 6.08(b)(vi) in such period that is not actually paid;
(12) dividends paid by the Borrower to the Parent so long as the
proceeds thereof are used at the time of such dividend payment by the
Parent to make the payments permitted to be made by the Borrower pursuant
to and in accordance with Sections 6.08(b)(v) and (vi);
(13) the performance by the Borrower and the Restricted Subsidiaries
of their obligations under the Essex Funding Agreement or similar
obligations under a Receivables Financing Agreement;
(14) Investments in the Norwegian Subsidiaries to fund the
acquisition of the Norsk Kabel Assets in an amount not to exceed $45.0
million; provided, that such amount will either be funded (A) through
Indebtedness incurred by the Norwegian Subsidiaries or (B) through
intercompany loans made by the Borrower, on terms satisfactory to the
Administrative Agent, provided that such intercompany loans shall be
secured, on terms reasonably acceptable to the Administrative Agent, by
all of the assets of the Norwegian Subsidiaries, including those
contemplated to be built or constructed, or (C) through the investment of
equity or other similar contributions or (D) through a combination of (A),
(B) and (C); and
(15) so long as no Default shall have occurred or be continuing or
would result therefrom, the Borrower and its Restricted Subsidiaries that
are Guarantors
-36-
<PAGE>
may make new or additional cash Investments (including, without
limitation, the Investments contemplated by Section 6.01(xv)) in an amount
not to exceed $25.0 million outstanding at any one time (giving effect to
any repayments in cash, but without giving effect to any distributions or
profits thereon, write-downs or non-cash payments).
(c) Not later than 50 days after the end of any fiscal quarter (100
days in the case of the last fiscal quarter of the fiscal year) during which any
Restricted Payment in excess of $10.0 million is made, the Borrower shall
deliver to the Administrative Agent an Officers' Certificate stating that all
Restricted Payments made during such fiscal quarter were permitted and setting
forth the basis upon which the calculations required by this covenant were
computed, together with a copy of any opinion or appraisal required by this
Agreement.
6.03. Asset Sales. The Borrower will not, and will not permit any of
its Restricted Subsidiaries to, consummate an Asset Sale unless (i) the Borrower
or the applicable Restricted Subsidiary, as the case may be, receives
consideration at the time of such Asset Sale at least equal to the fair market
value of the assets sold or otherwise disposed of (as determined in good faith
by the Borrower's Board of Directors); (ii) at least 80% of the consideration
received by the Borrower or such Restricted Subsidiary, as the case may be, from
such Asset Sale shall be cash or Cash Equivalents and is received at the time of
such disposition; provided that the amount of (x) any liabilities (as shown on
the Borrower's or such Restricted Subsidiary's most recent balance sheet or in
the notes thereto) of the Borrower or such Restricted Subsidiary (other than
liabilities that are by their terms subordinated to the Loans) that are assumed
by the transferee of any such assets and from which the Borrower and its
Restricted Subsidiaries are unconditionally released and (y) any notes or other
obligations received by the Borrower or such Restricted Subsidiary from such
transferee that are promptly, but in no event more than 30 days after receipt,
converted by the Borrower or such Restricted Subsidiary into cash or Cash
Equivalents (to the extent of the cash or Cash Equivalents received) shall be
deemed to be cash for purposes of this provision; and (iii) the Borrower shall
apply, or cause such Restricted Subsidiary to apply, the Net Cash Proceeds in
accordance with Section 2.02(a), provided, however, that if at any time any
non-cash consideration received by the Borrower or any Restricted Subsidiary of
the Borrower, as the case may be, in connection with any Asset Sale is converted
into or sold or otherwise disposed of for cash (other than interest received
with respect to any such non-cash consideration), then such conversion or
disposition shall be deemed to constitute an Asset Sale hereunder and the Net
Cash Proceeds thereof shall be applied in accordance with Section 2.02(a).
Notwithstanding clause (ii) of the immediately preceding paragraph,
the Borrower and its Restricted Subsidiaries will be permitted to consummate an
Asset Sale without complying with clause (ii) of such paragraph to the extent
that at least 80% of the consid-
-37-
<PAGE>
eration from such Asset Sale constitutes Replacement Assets and the remainder
constitutes cash or Cash Equivalents; provided that any consideration not
constituting Replacement Assets received by the Borrower or any of its
Restricted Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Cash Proceeds subject to
the provisions of the immediately preceding paragraph.
6.04. Limitation on Dividend and Other Payment Restrictions
Affecting Subsidiaries. The Borrower will not, and will not cause or permit any
of its Restricted Subsidiaries to, directly or indirectly, create or otherwise
cause or permit to exist or become effective any encumbrance or restriction on
the ability of any Restricted Subsidiary to (a) pay dividends or make any other
distributions on or in respect of its Capital Stock; (b) make loans or advances
or to pay any Indebtedness or other obligation owed to the Borrower or any other
Restricted Subsidiary; or (c) transfer any of its property or assets to the
Borrower or any other Restricted Subsidiary, except for such encumbrances or
restrictions existing under or by reason of: (1) applicable law; (2) this
Agreement; (3) customary non-assignment provisions of any contract or any lease
governing a leasehold interest of any Restricted Subsidiary; (4) any instrument
governing Acquired Indebtedness, which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person or the properties or assets of the Person so acquired as such
instrument is in effect on the date of the acquisition; (5) the Senior Secured
Credit Documents; (6) agreements existing on the Borrowing Date to the extent
and in the manner such agreements are in effect on the Borrowing Date; (7)
restrictions on the transfer of assets subject to any Lien permitted under this
Agreement imposed by the holder of such Lien; (8) restrictions imposed by any
agreement to sell assets permitted under this Agreement to any Person pending
the closing of such sale; (9) an agreement or instrument governing Indebtedness
incurred to refinance the Indebtedness incurred pursuant to an agreement
referred to in clause (2), (4), (5) or (6) above; provided, however, that the
provisions relating to such encumbrance or restriction contained in any such
refinancing Indebtedness are not materially more restrictive, taken as a whole,
than the provisions relating to such encumbrance or restriction contained in
agreements referred to in such clause (2), (4), (5) or (6); (10) customary
provisions restricting assignment of any licensing agreement entered into by the
Borrower or a Restricted Subsidiary of the Borrower in the ordinary course of
business; (11) any agreement or instrument governing Capital Stock of any Person
that is assumed in connection with the acquisition thereof and not entered into
in contemplation of such acquisition; and (12) other Indebtedness permitted to
be incurred subsequent to the Borrowing Date pursuant to the provisions of
Section 6.01; provided that (x) any such restrictions are ordinary and customary
with respect to the type of Indebtedness being incurred (under the relevant
circumstances) and (y) in no event shall such restrictions be more restrictive
in any respect than those contained in the Senior Secured Credit Agreement as in
effect on the Borrowing Date.
-38-
<PAGE>
6.05. Liens. The Borrower shall not, and shall not permit any
Restricted Subsidiary to, directly or indirectly, create, incur, assume or
suffer to exist any Lien (other than Permitted Liens) that secures any (i) trade
payables or (ii) Indebtedness of the Borrower or any Guarantor which is
expressly by its terms subordinated in right of payment to any other
Indebtedness of the Borrower or such Guarantor, unless in the case of clause
(ii) the Loans or the Guarantee of such Guarantor, as the case may be, are
secured by a Lien on such asset or property that is (x) pari passu with such
other Indebtedness if such other Indebtedness is pari passu with the Loans or
the Guarantee of such Guarantor, as the case may be, or (y) if such other
indebtedness is subordinated to the Loans or the Guarantee of such Guarantor, as
the case may be, senior in priority to the Lien securing such other
Indebtedness, in each case, until such time as such obligations are no longer
secured by a Lien.
6.06. Senior Subordinated Debt. Neither the Borrower nor any
Guarantor will incur or suffer to exist Indebtedness that is senior in right of
payment to the Loans or the Guarantee of such Guarantor, as applicable, and
expressly subordinate in right of payment to any other Indebtedness of the
Borrower or such Guarantor, as applicable.
6.07. Merger, Consolidation and Sale of Assets. (a) The Borrower
will not, in a single transaction or series of related transactions, consolidate
or merge with or into any Person, or sell, assign, transfer, lease, convey or
otherwise dispose of (or cause or permit any Restricted Subsidiary to sell,
assign, transfer, lease, convey or otherwise dispose of) all or substantially
all of the Borrower's assets (determined on a consolidated basis for the
Borrower and the Borrower's Restricted Subsidiaries) whether as an entirety or
substantially as an entirety to any Person unless: (i) either (1) the Borrower
shall be the surviving or continuing corporation or (2) the Person (if other
than the Borrower) formed by such consolidation or into which the Borrower is
merged or the Person which acquires by sale, assignment, transfer, lease,
conveyance or other disposition the properties and assets of the Borrower and of
the Borrower's Restricted Subsidiaries substantially as an entirety (the
"Surviving Entity") (x) shall be a corporation organized and validly existing
under the laws of the United States or any State thereof or the District of
Columbia and (y) shall expressly assume, by an amended subordinated credit
agreement (in form and substance reasonably satisfactory to the Administrative
Agent), executed and delivered to the Administrative Agent, the due and punctual
payment of the principal of, and premium, if any, and interest on all of the
Loans and any other Obligations hereunder and the performance of every covenant
in this Agreement on the part of the Borrower to be performed or observed; (ii)
immediately before and immediately after giving effect to such transaction and
the assumption contemplated by clause (i)(2)(y) above (including, without
limitation, giving effect to any Indebtedness incurred or anticipated to be
in-
-39-
<PAGE>
curred and any Lien granted or anticipated to be granted in connection with or
in respect of the transaction), no Default shall have occurred and be
continuing; (iii) immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (i)(2)(y) above
(including, without limitation, giving effect to any Indebtedness incurred or
anticipated to be incurred and any Lien granted or anticipated to be granted in
connection with or in respect of the transaction), the Borrower would be able to
incur $1.00 of additional Indebtedness under Section 6.01(xvii); and (iv) the
Borrower or the Surviving Entity shall have delivered to the Administrative
Agent an Officer's Certificate and an opinion of counsel, each stating that such
consolidation, merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a subordinated amended credit agreement is required in
connection with such transaction, such amended credit agreement comply with the
applicable provisions of this Agreement and that all conditions precedent in
this Agreement relating to such transaction have been satisfied.
(b) For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series of
transactions) of all or substantially all of the properties or assets of one or
more Restricted Subsidiaries of the Borrower the Capital Stock of which
constitutes all or substantially all of the properties and assets of the
Borrower, shall be deemed to be the transfer of all or substantially all of the
properties and assets of the Borrower.
(c) Upon any consolidation, combination or merger or any transfer of
all or substantially all of the assets of the Borrower in accordance with the
foregoing, in which the Borrower is not the continuing corporation, the
successor Person formed by such consolidation or into which the Borrower is
merged or to which such conveyance, lease or transfer is made shall succeed to,
and be substituted for, and may exercise every right and power of, the Borrower
under this Agreement and the Loans with the same effect as if such surviving
entity had been named as such. When a successor assumes all of the obligations
of its predecessor under this Agreement, the predecessor shall be released from
those obligations.
(d) Each Guarantor (other than any Guarantor whose Guarantee is to
be released in accordance with the terms of this Agreement or in connection with
any transaction complying with the provisions of Section 6.03) will not, and the
Borrower will not cause or permit any Guarantor to, consolidate with or merge
with or into any Person other than the Borrower or any other Guarantor unless:
(i) the entity formed by or surviving any such consolidation or merger (if other
than the Guarantor) or to which such sale, lease, conveyance or other
disposition shall have been made is a corporation organized and existing under
the laws of the United States or any State thereof or the District of Columbia;
(ii) such entity assumes by an amended subordinated credit agreement (in form
and substance reasonably satisfactory to the Administrative Agent) all of the
obligations of the Guarantor under its Guarantee and this Agreement and the
performance of every covenant in this Agreement on the part of the Guarantor to
be performed or observed; and (iii) the conditions in clauses (ii) and (iii) in
paragraph (a) (with references therein to clause (i)(2)(y) being deemed to be
references to clause (ii) of this paragraph) shall have been satisfied. Any
merger or consolidation of a Guarantor with and into the Borrower (with the
Borrower being the surviving entity) or another Guarantor that is a Wholly Owned
Restricted Subsidiary or the merger of
-40-
<PAGE>
Essex with and into Superior Telecommunications need only comply with clause
(iv) of Section 6.07(a).
6.08. Transactions with Affiliates. (a) The Borrower will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
enter into or permit to exist any transaction or series of related transactions
(including, without limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with, or for the benefit of, any of
its Affiliates (each an "Affiliate Transaction"), other than (x) Affiliate
Transactions permitted under paragraph (b) below and (y) Affiliate Transactions
on terms that are no less favorable than those that might reasonably have been
obtained in a comparable transaction at such time on an arm's-length basis from
a Person that is not an Affiliate of the Borrower or such Restricted Subsidiary.
All Affiliate Transactions (and each series of related Affiliate Transactions
which are similar or part of a common plan) involving aggregate consideration in
excess of $5.0 million shall be approved by the Board of Directors of the
Borrower or such Restricted Subsidiary, as the case may be, such approval to be
evidenced by a Board Resolution stating that such Board of Directors has
determined that such transaction complies with the foregoing provisions. If the
Borrower or any Restricted Subsidiary enters into an Affiliate Transaction (or a
series of related Affiliate Transactions which are similar or part of a common
plan) that involves an aggregate consideration of more than $20.0 million, the
Borrower or such Restricted Subsidiary, as the case may be, shall, prior to the
consummation thereof, also obtain a written opinion of an Independent Financial
Advisor to the effect that such transaction is fair to the Borrower or such
Restricted Subsidiary, as the case may be, from a financial point of view.
(b) The restrictions set forth in paragraph (a) above shall not
apply to (i) reasonable fees and compensation paid to and indemnity provided on
behalf of, officers, directors, employees or consultants of the Borrower or any
Restricted Subsidiary as determined in good faith by the Borrower's Board of
Directors or senior management; (ii) transactions exclusively between or among
the Borrower and any of its Restricted Subsidiaries or exclusively between or
among such Restricted Subsidiaries, provided such transactions are not otherwise
prohibited by this Agreement and, in the case of transactions with a Restricted
Subsidiary that is not a Guarantor, such transactions comply with clause (y) of
the first sentence of paragraph (a) of this Section 6.08; (iii) any agreement as
in effect as of the Borrowing Date or any amendment thereto or replacement
thereof or any transaction contemplated thereby (including pursuant to any
amendment thereto or replacement thereof) so long as any such amendment or
replacement is not more disadvantageous to the Lenders in any material respect
than the agreement as in effect on the Borrowing Date; (iv) Restricted Payments
and Permitted Investments permitted by this Agreement; (v) the performance of
the Services Agreement and payments thereunder, provided that (x) such payments
may not exceed $5.0 million in any four fiscal quarter period and (y) the
portion of such payment for services described in Section 3(b) thereof shall be
subject to the "arm's-length" standard described in clause (y) of paragraph (a)
of this Section 6.08; and
-41-
<PAGE>
(vi) (x) the Parent Tax Allocation Agreement and the Borrower and its Domestic
Subsidiaries may make payments thereunder and (y) the Alpine Tax Allocation
Agreement and the Borrower and its Domestic Subsidiaries may make payments
thereunder.
6.09. Additional Guarantees. If (x) the Borrower acquires or creates
any Restricted Subsidiary (including by merger) or designates any Unrestricted
Subsidiary as a Restricted Subsidiary, and such Restricted Subsidiary is not a
Foreign Subsidiary or a Receivables Subsidiary or (y) any Restricted Subsidiary
guarantees or becomes an obligor under the Senior Secured Credit Agreement, the
Borrower shall cause such Restricted Subsidiary to (i) execute and deliver to
the Administrative Agent an amendment to this Agreement in form reasonably
satisfactory to the Administrative Agent pursuant to which such Restricted
Subsidiary shall unconditionally guarantee all of the Borrower's obligations
under the Loans and this Agreement on the terms set forth in this Agreement and
(ii) deliver to the Administrative Agent an opinion of counsel, subject to
customary exceptions to the effect that such amendment has been duly authorized,
executed and delivered by such Restricted Subsidiary and constitutes a legal,
valid, binding and enforceable obligation of such Restricted Subsidiary;
provided that no such action will be required by any new Restricted Subsidiary
(that is not a Wholly Owned Restricted Subsidiary) to the extent such new
Restricted Subsidiary is a party to a preexisting agreement which prohibits such
new Restricted Subsidiary from becoming a Subsidiary Guarantor hereunder;
provided, further, such preexisting agreement was not entered into for the
purpose of avoiding the requirements of this Section 6.09 and the restrictions
contained therein are no more adverse to the Borrower and its Subsidiaries than
to the other equity owners in such new Restricted Subsidiary. In addition, each
new Restricted Subsidiary that is required to execute any Credit Document shall
execute and deliver, or cause to be executed and delivered, all other relevant
documentation of the type described in Section 3 as such new Restricted
Subsidiary would have had to deliver if such new Restricted Subsidiary were a
Credit Party on the Borrowing Date. Thereafter, such Restricted Subsidiary shall
be a Subsidiary Guarantor for all purposes of this Agreement.
6.10. Designation of Unrestricted Subsidiaries. (a) The Board of
Directors may designate any Subsidiary (including any newly acquired or newly
formed Subsidiary) to be an Unrestricted Subsidiary unless such Subsidiary owns
any Capital Stock of, or owns or holds any Lien on any property of, the Borrower
or any other Restricted Subsidiary of the Borrower that is not a Subsidiary of
the Subsidiary to be so designated; provided that (x) the Borrower certifies to
the Administrative Agent that such designation complies with the provisions of
Section 6.02 of this Agreement, (y) each Subsidiary to be so designated and each
of its Subsidiaries has not at the time of designation, and does not thereafter,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable with respect to any Indebtedness pursuant to which the lender
has recourse to any of the assets of the Borrower or any of its Restricted
Subsidiaries and (z) immediately before and after giving effect to such
designation, no Default or Event of Default shall have occurred and be
continuing.
-42-
<PAGE>
(b) The Board of Directors may designate any Unrestricted Subsidiary
to be a Restricted Subsidiary only if (x) immediately after giving effect to
such designation, the Borrower is able to incur at least $1.00 of additional
Indebtedness in compliance with Section 6.01(xvii) and (y) immediately before
and immediately after giving effect to such designation, no Default or Event of
Default shall have occurred and be continuing.
(c) Any such designation in paragraph (a) or (b) above by the Board
of Directors shall be evidenced to the Administrative Agent by promptly filing
with the Administrative Agent a copy of the Board Resolution giving effect to
such designation and an officers' certificate certifying that such designation
complied with the foregoing provisions.
6.11. Conduct of Business. The Borrower and its Restricted
Subsidiaries will not engage in any business other than the businesses in which
the Borrower and its Restricted Subsidiaries are engaged in as of the Borrowing
Date and activities incidental thereto, and similar or related businesses.
6.12. Limitation of Activities of Parent. The Parent shall not (i)
hold or acquire any assets (other than the Capital Stock of the Borrower,
Superior Trust I and DNE Systems and its Subsidiaries and insignificant assets),
(ii) incur any Indebtedness (other than the Trust Preferred Securities, its
Guarantee, its guarantee under the Senior Secured Credit Agreement and
obligations in connection with its day to day activities in the ordinary
course), or (iii) conduct any business or have any operations, other than
holding the Capital Stock and assets permitted by clause (i) above, activities
reasonably related thereto and those consistent with its status as a publicly
traded company.
7. EVENTS OF DEFAULT.
Upon the occurrence of any of the following specified events (each
an "Event of Default"):
7.01. Failure to Make Payments When Due. Failure to pay interest on
the Loans or fees when the same becomes due and payable and the default
continues for a period of 30 days (whether or not such payment shall be
prohibited by the subordination provisions of this Agreement); and failure to
pay the principal on the Loans, when such principal becomes due and payable, at
maturity, upon mandatory prepayment or otherwise (including the failure to make
a payment to purchase Loans tendered pursuant to a Change of Control Offer or a
Net Proceeds Offer) (whether or not such payment shall be prohibited by the
subordination provisions of this Agreement);
7.02. Breach of Representations, etc. Any representation, warranty
or statement made by any Credit Party in any Credit Document or in any statement
or certificate delivered pursuant thereto shall prove to be untrue in any
material respect on the date as of which made or deemed made;
-43-
<PAGE>
7.03. Breach of Covenants. Default in the observance or performance
of any other covenant or agreement contained in this Agreement which default
continues for a period of 45 days after the Borrower receives written notice
specifying the default (and demanding that such default be remedied) from the
Administrative Agent or the Lenders holding at least 25% of the outstanding
principal amount of the Loans (except in the case of a default with respect to
Section 6.07 or Section 6.12, which will constitute an Event of Default with
such notice requirement but without such passage of time requirement);
7.04. Default Under Other Agreements. Default under any mortgage,
indenture or other instrument or agreement under which there may be issued, or
by which there may be secured or evidenced, Indebtedness of the Parent, the
Borrower or any Restricted Subsidiary, whether such Indebtedness now exists or
is incurred after the Closing Date, which default (a) is caused by a failure to
pay such Indebtedness at its express final maturity within the applicable
express grace period (and such failure continues for a period of 30 days or
more) or (b) results in the acceleration of such Indebtedness prior to its
express final maturity (which acceleration is not rescinded, annulled or
otherwise cured within 30 days of receipt by the Parent, the Borrower or such
Restricted Subsidiary of such notice of acceleration) and, in each case, the
principal amount of such Indebtedness, together with any other Indebtedness with
respect to which an event described in clause (a) or (b) has occurred and is
continuing, aggregates $25.0 million or more;
7.05. Judgments. One or more judgments in an aggregate amount in
excess of $15.0 million shall have been rendered against the Parent, the
Borrower or any Restricted Subsidiary and such judgments remain undischarged,
unpaid or unstayed for a period of 60 days after such judgment or judgments
become final and non-appealable;
7.06. Bankruptcy. The Parent, the Borrower or any Significant
Subsidiary shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against the Parent, the Borrower or any Significant Subsidiary and the
petition is not controverted within 30 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of the Parent, the Borrower or any Significant Subsidiary; or the
Parent, the Borrower or any Significant Subsidiary commences any other
proceeding under any reorganization, arrangement, adjustment of debt, relief of
debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Parent, the
Borrower or any Significant Subsidiary; or there is commenced against the
Parent, the Borrower or any Significant Subsidiary any such proceeding which
remains undismissed for a period of 60 days; or the Parent, the Borrower or any
Significant Subsidiary is adjudicated insolvent or bankrupt; or any order of
relief or other order approving any such case or proceeding is entered; or the
Parent, the Borrower or any Significant Subsidiary suffers any
-44-
<PAGE>
appointment of any custodian or the like for it or any substantial part of its
property to continue undischarged or unstayed for a period of 60 days; or the
Parent, the Borrower or any Significant Subsidiary makes a general assignment
for the benefit of creditors; or any corporate action is taken by the Parent,
the Borrower or any Significant Subsidiary for the purpose of effecting any of
the foregoing.
7.07. Guarantees. Any of the Guarantees ceases to be in full force
and effect or any of the Guarantees is declared to be null and void and
unenforceable or any of the Guarantees is found to be invalid or any of the
Guarantors denies its liability under its Guarantee (other than in each case by
reason of release of a Subsidiary Guarantor in accordance with the terms of this
Agreement and the Guarantees); provided, however, that if any such Guarantee is
the Guarantee of a Subsidiary Guarantor that is not a Significant Subsidiary,
then such event shall only result in an Event of Default under this Section 7.08
if such event, together with similar events involving Subsidiary Guarantors that
are not Significant Subsidiaries, would have a Material Adverse Effect.
7.08. Remedies. If an Event of Default (other than an Event of
Default specified in Section 7.06 above with respect to the Borrower) shall
occur and be continuing, the Administrative Agent or the Lenders holding at
least 25% in principal amount of outstanding Loans may declare the principal of
and accrued interest on all the Loans to be due and payable by notice in writing
to the Borrower and the Administrative Agent specifying the respective Event of
Default and that it is a "notice of acceleration" (the "Acceleration Notice"),
and the same (i) shall become immediately due and payable or (ii) if there are
any amounts outstanding under the Senior Secured Credit Agreement, shall become
immediately due and payable upon the first to occur of an acceleration under the
Senior Secured Credit Agreement or 5 Business Days after receipt by the Borrower
and the Representative under the Senior Secured Credit Agreement of such
Acceleration Notice but only if such Event of Default is then continuing. If an
Event of Default specified in Section 7.06 above with respect to the Borrower
occurs and is continuing, then all unpaid principal of, and premium, if any, and
accrued and unpaid interest on all of the outstanding Loans shall ipso facto
become and be immediately due and payable without any declaration or other act
on the part of the Administrative Agent or any Lender.
In the event of a declaration of acceleration because an Event of
Default set forth in Section 7.04 above has occurred and is continuing, such
declaration of acceleration shall be automatically rescinded and annulled if
either (x) the holders of the Indebtedness which is the subject of such Event of
Default have waived such failure to pay at maturity or have rescinded the
acceleration in respect of such Indebtedness within 60 days of such maturity or
declaration of acceleration, as the case may be, and no other Event of Default
has occurred during such 60-day period which has not been cured or waived or (y)
such Indebtedness shall have been discharged or the maturity thereof shall have
been extended such that it is not then due and payable, or the underlying
default has been cured (and any accelera-
-45-
<PAGE>
tion based thereon of such other Indebtedness has been rescinded), within 60
days of such maturity or declaration of acceleration, as the case by be.
At any time after a declaration of acceleration with respect to the
Loans as described in the preceding paragraph, the Required Lenders may rescind
and cancel such declaration and its consequences (i) if the rescission would not
conflict with any judgment or decree, (ii) if all existing Events of Default
have been cured or waived except nonpayment of principal or interest that has
become due solely because of the acceleration, (iii) to the extent the payment
of such interest is lawful, interest on overdue installments of interest and
overdue principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) if the Borrower has paid the Administrative
Agent its reasonable compensation and reimbursed the Administrative Agent for
its expenses, disbursements and advances and (v) in the event of the cure or
waiver of an Event of Default of the type described in Section 7.06, the
Administrative Agent shall have received an officers' certificate and an opinion
of counsel that such Event of Default has been cured or waived. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.
The Required Lenders may waive any existing Default or Event of
Default under this Agreement, and its consequences, except a default in the
payment of the principal of or interest on any Loans or Notes.
The Lenders may not enforce this Agreement or the Loans except as
provided in this Agreement. Subject to the provisions of this Agreement relating
to the duties of the Administrative Agent, the Administrative Agent is under no
obligation to exercise any of its rights or powers under this Agreement at the
request, order or direction of any of the Lenders, unless such Lenders have
offered to the Administrative Agent reasonable indemnity. Subject to all
provisions of this Agreement and applicable law, the Required Lenders have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Administrative Agent or exercising any trust or power
conferred on the Administrative Agent.
The Borrower shall provide an Officers' Certificate to the
Administrative Agent promptly upon any such officer obtaining knowledge of any
Default or Event of Default (provided that such officers shall provide such
certification at least annually whether or not they know of any Default or Event
of Default) that has occurred and, if applicable, describe such Default or Event
of Default and the status thereof.
8. SUBORDINATION.
8.01. Obligations Subordinated to Senior Indebtedness. Each of the
Borrower and each Guarantor covenants and agrees, and each Lender, by its
acceptance thereof, likewise covenants and agrees, that payment of all
Obligations in respect of the
-46-
<PAGE>
Loans, Notes and Guarantees shall be subject to the provisions of this Section
8, and each Lender (including any assignee or participant thereof) accepts and
agrees that the payment of all Obligations on the Loans, the Notes and
Guarantees by the Borrower and the Guarantors shall, to the extent and in the
manner herein set forth, be subordinated and junior in right of payment to the
prior payment in full in cash or Cash Equivalents of all Obligations in respect
of Senior Indebtedness, including, without limitation, the Borrower's and the
Guarantors' obligations under the Senior Secured Credit Agreement, that the
subordination is for the benefit of, and shall be enforceable directly by, the
holders of Senior Indebtedness, and that each holder of Senior Indebtedness
whether now outstanding or hereafter created, incurred, assumed or guaranteed
shall be deemed to have acquired Senior Indebtedness in reliance upon the
covenants and provisions contained in this Agreement and the Notes.
8.02. Suspension of Payment When Senior Indebtedness Is in Default.
(a) If any default occurs and is continuing in the payment when due, whether at
maturity, upon any redemption, by declaration or otherwise, of any principal of,
interest on, unpaid drawings for letters of credit issued in respect of, or
regularly accruing fees with respect to, any Senior Indebtedness, no payment of
any kind or character shall be made by or on behalf of the Borrower, any
Guarantor or any other Person on their behalf with respect to any Obligations on
the Loans, the Guarantees or the Notes or to acquire any of the Loans, the
Guarantees or the Notes for cash or property or otherwise. In addition, if any
other event of default occurs and is continuing with respect to any Senior
Indebtedness, as such event of default is defined in the instrument creating or
evidencing such Senior Indebtedness, permitting the holders of such Senior
Indebtedness then outstanding to accelerate the maturity thereof and if the
Representative for the respective issue of Senior Indebtedness gives notice of
the event of default to the Administrative Agent (a "Default Notice"), then,
unless and until such event of default have been cured or waived or have ceased
to exist or the Administrative Agent receives notice thereof from the
Representative for the respective issue of Senior Indebtedness terminating the
Blockage Period (as defined below) or all Obligations on Senior Indebtedness
have been repaid in full in cash or Cash Equivalents, during the 180 days after
the delivery of such Default Notice (the "Blockage Period"), neither the
Borrower, nor any Guarantor nor any other Person on their behalf shall (x) make
any payment of any kind or character with respect to any Obligations on the
Loans, the Guarantees or the Notes or (y) acquire any of the Loans, the
Guarantees or the Notes for cash or property or otherwise.
(b) Notwithstanding anything herein to the contrary, in no event
will a Blockage Period extend beyond 180 days from the date any payment on the
Loans was due and only one such Blockage Period may be commenced within any 360
consecutive days. No event of default which existed or was continuing on the
date of the commencement of any Blockage Period with respect to the Senior
Indebtedness shall be, or be made, the basis for commencement of a second
Blockage Period by the Representative of such Senior Indebtedness whether or not
within a period of 360 consecutive days, unless such event of de-
-47-
<PAGE>
fault shall have been cured or waived for a period of not less than 90
consecutive days (it being acknowledged that any subsequent action, or any
breach of any financial covenants for a period commencing after the date of
commencement of such Blockage Period that, in either case, would give rise to an
event of default pursuant to any provisions under which an event of default
previously existed or was continuing shall constitute a new event of default for
this purpose).
(c) In the event that, notwithstanding the foregoing, any payment
shall be received by the Administrative Agent or any Lender when such payment is
prohibited by Section 8.02(a) or (b), such payment shall be held in trust for
the benefit of, and shall be paid over or delivered to, the holders of Senior
Indebtedness (pro rata to such holders on the basis of the respective amount of
Senior Indebtedness held by such holders) or their respective Representatives,
as their respective interests may appear. The Administrative Agent shall be
entitled to rely on information regarding amounts then due and owing on the
Senior Indebtedness, if any, received from the holders of Senior Indebtedness
(or their Representatives) or, if such information is not received from such
holders or their Representatives, from the Borrower or the Guarantors and only
amounts included in the information provided to the Administrative Agent shall
be paid to the holders of Senior Indebtedness.
(d) Nothing contained in this Section 8 shall limit the right of the
Administrative Agent or the Lenders to take any action to accelerate the
maturity of the Loans and the Notes or to pursue any rights or remedies
hereunder; provided that all Senior Indebtedness thereafter due or declared to
be due shall first be paid in full in cash or Cash Equivalents before the
Lenders are entitled to receive any payment of any kind or character with
respect to Obligations on the Loans, the Guarantees or the Notes.
8.03. Loans Subordinated to Prior Payment of All Senior Indebtedness
on Dissolution, Liquidation or Reorganization of Borrower. (a) Upon any payment
or distribution of assets of the Borrower or any Guarantor of any kind or
character, whether in cash, property or securities, to creditors upon any total
or partial liquidation, dissolution, winding-up, reorganization, assignment for
the benefit of creditors or marshaling of assets of the Borrower or such
Guarantor, as the case may be, or in a bankruptcy, reorganization, insolvency,
receivership or other similar proceeding relating to the Borrower or such
Guarantor, as the case may be, or its or their property, whether voluntary or
involuntary, all Obligations due or to become due upon all Senior Indebtedness
of the Borrower or such Guarantor, as the case may be, shall first be paid in
full in cash or Cash Equivalents, or such payment shall be duly provided for to
the satisfaction of the holders of such Senior Indebtedness, before any payment
or distribution of any kind or character is made on account of any Obligations
in respect of the Loans or the Notes, or the Guarantees of such Guarantor, as
the case may be, or for the acquisition of any of the Loans or the Notes for
cash or property or otherwise. Upon any such dissolution, winding-up,
liquidation, reorganization, receivership or similar proceeding, any payment or
distribution of assets of the Borrower or
-48-
<PAGE>
any Guarantor of any kind or character, whether in cash, property or securities,
to which the Lenders or the Administrative Agent under this Agreement would be
entitled, except for the provisions hereof, shall be paid by the Borrower or
such Guarantor, as the case may be, or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such payment or distribution,
or by the Lenders or by the Administrative Agent under this Agreement if
received by them, directly to the holders of Senior Indebtedness (pro rata to
such holders on the basis of the respective amounts of Senior Indebtedness held
by such holders) or their respective Representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, for application
to the payment of Senior Indebtedness remaining unpaid until all such Senior
Indebtedness has been paid in full in cash or Cash Equivalents after giving
effect to any concurrent payment, distribution or provision therefor to or for
the holders of Senior Indebtedness.
(b) To the extent any payment of Senior Indebtedness (whether by or
on behalf of the Borrower or any Guarantor, as proceeds of security or
enforcement of any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law,
then, if such payment is recovered by, or paid over to, such receiver, trustee
in bankruptcy, liquidating trustee, agent or other similar Person, the Senior
Indebtedness or part thereof originally intended to be satisfied shall be deemed
to be reinstated and outstanding as if such payment had not occurred.
(c) In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Borrower or any Guarantor of any kind or
character, whether in cash, property or securities, shall be received by the
Administrative Agent or any Lender when such payment or distribution is
prohibited by Section 8.03(a), such payment or distribution shall be held in
trust for the benefit of, and shall be paid over or delivered to, the holders of
Senior Indebtedness of Borrower or such Guarantor, as the case may be (pro rata
to such holders on the basis of the respective amount of Senior Indebtedness
held by such holders), or their respective Representatives, or to the trustee or
trustees under any indenture pursuant to which any of such Senior Indebtedness
may have been issued, as their respective interests may appear, for application
to the payment of such Senior Indebtedness remaining unpaid until all such
Senior Indebtedness has been paid in full in cash or Cash Equivalents, after
giving effect to any concurrent payment, distribution or provision therefor to
or for the holders of such Senior Indebtedness.
(d) The consolidation of the Borrower or any Guarantor with, or the
merger of the Borrower or any Guarantor with or into, another corporation or the
liquidation or dissolution of the Borrower following the conveyance or transfer
of all or substantially all of its assets to another corporation upon the terms
and conditions provided in Section 6.07
-49-
<PAGE>
hereof and as long as permitted under the terms of the Senior Indebtedness shall
not be deemed a dissolution, winding-up, liquidation or reorganization for the
purposes of this Section 8.03 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, assume the Borrower's or such
Guarantor's obligations, as the case may be, hereunder in accordance with
Section 6.07 hereof.
8.04. Lenders to Be Subrogated to Rights of Holders of Senior
Indebtedness. Subject to the payment in full in cash or Cash Equivalents of all
Senior Indebtedness, the Lenders shall be subrogated to the rights of the
holders of Senior Indebtedness to receive payments or distributions of cash,
property or securities of the Borrower or the applicable Guarantor, as the case
may be, applicable to the Senior Indebtedness until the Loans shall be paid in
full; and, for the purposes of such subrogation, no such payments or
distributions to the holders of the Senior Indebtedness by or on behalf of the
Borrower or any Guarantor or by or on behalf of the Lenders by virtue of this
Section 8 which otherwise would have been made to the Lenders shall, as between
the Borrower or the applicable Guarantor, as the case may be, and the Lenders,
be deemed to be a payment by the Borrower or the applicable Guarantor, as the
case may be, to or on account of the Senior Indebtedness, it being understood
that the provisions of this Section 8 are and are intended solely for the
purpose of defining the relative rights of the Lenders, on the one hand, and the
holders of the Senior Indebtedness, on the other hand.
8.05. Obligations of the Borrower Unconditional. Nothing contained
in this Section 8 or elsewhere in this Agreement or in the Notes is intended to
or shall impair, as between the Borrower and the Lenders, the obligation of the
Borrower, which is absolute and unconditional, to pay to the Lenders the
principal of and interest on the Loans as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the Lenders and creditors of the Borrower other than the
holders of the Senior Indebtedness, nor shall anything herein or therein prevent
the Administrative Agent or any Lender from exercising all remedies otherwise
permitted by applicable law upon default under this Agreement, subject to the
rights, if any, under this Section 8 of the holders of Senior Indebtedness in
respect of cash, property or securities of the Borrower received upon the
exercise of any such remedy. Upon any payment or distribution of assets or
securities of the Borrower referred to in this Section 8, the Administrative
Agent and the Lenders shall be entitled to rely upon any order or decree made by
any court of competent jurisdiction in which any liquidation, dissolution,
winding-up or reorganization proceedings are pending, or a certificate of the
receiver, trustee in bankruptcy, liquidating trustee or agent or other Person
making any payment or distribution to the Administrative Agent or to the Lenders
for the purpose of ascertaining the Persons entitled to participate in such
payment or distribution, the holders of Senior Indebtedness and other
Indebtedness of the Borrower, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Section 8. Nothing in this Section 8 shall apply to the claims of, or
payments to, the Administrative
-50-
<PAGE>
Agent, in its capacity as such. The Administrative Agent shall be entitled to
rely on the delivery to it of a written notice by a Person representing himself
or itself to be a holder of any Senior Indebtedness (or a trustee on behalf of,
or other representative of, such holder) to establish that such notice has been
given by a holder of such Senior Indebtedness or a trustee or representative on
behalf of any such holder.
In the event that the Administrative Agent determines in good faith
that any evidence is required with respect to the right of any Person as a
holder of Senior Indebtedness to participate in any payment or distribution
pursuant to this Section 8, the Administrative Agent may request such Person to
furnish evidence to the reasonable satisfaction of the Administrative Agent as
to the amount of Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Section 8, and if
such evidence is not furnished, the Administrative Agent may defer any payment
to such Person pending judicial determination as to the right of such Person to
receive such payment.
8.06. Administrative Agent Entitled to Assume Payments Not
Prohibited in Absence of Notice. The Borrower shall give prompt written notice
to the Administrative Agent of any fact known to the Borrower which would
prohibit the making of any payment to or by the Administrative Agent in respect
of the Loans, the Guarantees or the Notes pursuant to the provisions of this
Section 8. Regardless of anything to the contrary contained in this Section 8 or
elsewhere in this Agreement, the Administrative Agent shall not be charged with
knowledge of the existence of any default or event of default with respect to
any Senior Indebtedness or of any other facts which would prohibit the making of
any payment to or by the Administrative Agent unless and until the
Administrative Agent shall have received notice in writing from the Borrower or
any Guarantor, or from a holder of Senior Indebtedness or a Representative
therefor, together with proof satisfactory to the Administrative Agent of such
holding of Senior Indebtedness or of the authority of such Representative, and,
prior to the receipt of any such written notice, the Administrative Agent shall
be entitled to assume that no such facts exist.
8.07. Application by Administrative Agent of Assets Deposited with
It. Any deposit of assets or securities by or on behalf of the Borrower or any
Guarantor with the Administrative Agent (whether or not in trust) for the
payment of principal of or interest on any Loans, the Guarantees or Notes shall
be subject to the provisions of this Section 8; provided, however, that if prior
to the second Business Day preceding the date on which by the terms of this
Agreement any such assets may become distributable for any purpose (including,
without limitation, the payment of either principal of or interest on any Loan
or Note) the Administrative Agent shall not have received with respect to such
assets the notice provided for in Section 8.06, then the Administrative Agent
shall have full power and authority to receive such assets and to apply the same
to the purpose for which they were received, and shall not be affected by any
notice to the contrary received by it on or after
-51-
<PAGE>
such date. Nothing contained in this Section 8.07 shall limit the right of the
holders of Senior Indebtedness to recover payments as contemplated by this
Section 8.
8.08. No Waiver of Subordination Provisions. (a) No right of any
present or future holder of any Senior Indebtedness to enforce subordination as
herein provided shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of the Borrower or any Guarantor or by any act
or failure to act by any such holder, or by any non-compliance by the Borrower
or any Guarantor with the terms, provisions and covenants of this Agreement,
regardless of any knowledge thereof any such holder may have or be otherwise
charged with.
(b) Without limiting the generality of subsection (a) of this
Section 8.08, the holders of Senior Indebtedness may, at any time and from time
to time, without the consent of or notice to the Administrative Agent or the
Lenders, without incurring responsibility to the Administrative Agent or the
Lenders and without impairing or releasing the subordination provided in this
Section 8 or the obligations hereunder of the Lenders to the holders of Senior
Indebtedness, do any one or more of the following: (1) change the manner, place,
terms or time of payment of, or renew or alter, Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (2) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness; (3) release any
Person liable in any manner for the collection or payment of Senior
Indebtedness; and (4) exercise or refrain from exercising any rights against the
Borrower and any other Person.
8.09. Lenders Authorize Administrative Agent to Effectuate
Subordination of Loans. Each Lender authorizes and expressly directs the
Administrative Agent on such Lender's behalf to take such action as may be
necessary or appropriate to effect the subordination provisions contained in
this Section 8, and appoints the Administrative Agent such Lender's
attorney-in-fact for such purpose, including, in the event of any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of creditors
or marshaling of assets of the Borrower or any Guarantor tending towards
liquidation or reorganization of the business and assets of the Borrower or any
Guarantor, the immediate filing of a claim for the unpaid balance of such
Lender's Loans in the form required in said proceedings and cause said claim to
be approved. If the Administrative Agent does not file a proper claim or proof
of debt in the form required in such proceeding prior to 30 days before the
expiration of the time to file such claim or claims, then any of the holders of
the Senior Indebtedness or their Representative is hereby authorized to file an
appropriate claim for and on behalf of the Lenders. Nothing herein contained
shall be deemed to authorize the Administrative Agent or the holders of Senior
Indebtedness or their Representative to authorize or consent to or accept or
adopt on behalf of any Lender any plan of reorganization, arrangement,
adjustment or composition affecting the Loans or the rights of any Lender, or to
authorize the
-52-
<PAGE>
Administrative Agent or the holders of Senior Indebtedness or their
Representative to vote in respect of the claim of any Lender in any such
proceeding.
8.10. Right of Administrative Agent and Lenders to Hold Senior
Indebtedness. The Administrative Agent and each Lender shall be entitled to all
the rights set forth in this Section 8 with respect to any Senior Indebtedness
which may at any time be held by it in its individual or any other capacity to
the same extent as any other holder of Senior Indebtedness and nothing in this
Agreement shall deprive the Administrative Agent or any Lender or any such agent
of any of its rights as such holder.
8.11. This Section 8 Not to Prevent Events of Default. The failure
to make a payment on account of principal of or interest on the Loans by reason
of any provision of this Section 8 will not be construed as preventing the
occurrence of an Event of Default.
Nothing contained in this Section 8 shall limit the right of the
Administrative Agent or the Lenders to take any action to accelerate the
maturity of the Loans pursuant to Section 7 or to pursue any rights or remedies
hereunder or under applicable law, subject to the rights, if any, under this
Section 8 of the holders, from time to time, of Senior Indebtedness.
8.12. No Fiduciary Duty of Administrative Agent to Holders of Senior
Indebtedness. The Administrative Agent shall not be deemed to owe any fiduciary
duty to the holders of Senior Indebtedness, and it undertakes to perform or
observe such of its covenants and obligations as are specifically set forth in
this Section 8, and no implied covenants or obligations with respect to the
Senior Indebtedness shall be read into this Agreement against the Administrative
Agent. The Administrative Agent shall not be liable to any such holders if it
shall pay over or deliver to the Lenders or the Borrower or any other Person
money or assets in compliance with the terms of this Agreement. Nothing in this
Section 8.12 shall affect the obligation of any Person other than the
Administrative Agent and the Lenders to hold such payment for the benefit of,
and to pay such payment over to, the holders of Senior Indebtedness or their
Representative.
8.13. Effect on Senior Indebtedness. No amendment of this Agreement
shall adversely affect the rights of any holder of Senior Indebtedness under
this Section 8 of this Agreement, without the consent of such holder.
9. DEFINITIONS AND ACCOUNTING TERMS.
9.01. Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
-53-
<PAGE>
"Acquired Indebtedness" shall mean Indebtedness of a Person or any
of its Subsidiaries existing at the time such Person becomes a Restricted
Subsidiary or at the time it merges or consolidates with the Borrower or any of
its Restricted Subsidiaries or assumed in connection with the acquisition of
assets from such Person and in each case not incurred by such Person in
connection with, or in anticipation or contemplation of, such Person becoming a
Restricted Subsidiary or such acquisition, merger or consolidation.
"Adjusted Maximum Amount" shall have the meaning provided in Section
12.01(c) of this Agreement.
"Administrative Agent" shall mean BTCo, and shall include any
successor appointed pursuant to Section 10.10.
"Affiliate" shall mean, with respect to any specified Person, any
other Person who directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such specified
Person. The term "control" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative of the foregoing. A Person shall be deemed to control a corporation
if such Person possesses, directly or indirectly, the power (i) to vote 10% or
more of the securities having ordinary voting power for the election of
directors of such corporation or (ii) to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise. Without limiting the foregoing,
Alpine and its Affiliates shall be deemed to be Affiliates of the Borrower and
its Subsidiaries so long as the Service Agreement is in place.
"Agent" or "Agents" shall mean the Administrative Agent and the
Syndication Agent, collectively.
"Aggregate Payments" shall have the meaning provided in Section
12.01(c) of this Agreement.
"Agreement" shall mean this Senior Subordinated Credit Agreement, as
modified, supplemented, amended, restated (including any amendment and
restatement hereof), extended, renewed, refinanced or replaced from time to
time.
"Alpine" shall mean The Alpine Group, Inc., a Delaware
corporation, which currently owns approximately 50.1% of the outstanding
stock of the Parent.
"Alpine Tax Allocation Agreement" shall mean the tax allocation
agreement by and among Alpine, the Parent and their respective Affiliates dated
as of October 2, 1996, effective as of May 1, 1996.
-54-
<PAGE>
"Alternate Base Rate" shall mean, at any time, the higher of (i) the
Prime Lending Rate and (ii) 1/2 of 1% in excess of the Federal Funds Rate.
"Alternate Base Rate Loan" shall mean a Loan for which the Interest
Rate on such Loan is the Alternate Base Rate.
"amend" shall mean amend, modify, supplement, restate or amend and
restate, including successively; and "amending" and "amended" have correlative
meanings.
"Approved Lender" shall have the meaning provided in the definition
of "Cash Equivalents."
"Asset Acquisition" shall mean (a) an Investment by the Borrower or
any Restricted Subsidiary in any other Person pursuant to which such Person
shall become a Restricted Subsidiary of the Borrower or of any Restricted
Subsidiary of the Borrower, or shall be merged with or into the Borrower or any
Restricted Subsidiary, or (b) the acquisition by the Borrower or any Restricted
Subsidiary of the assets of any Person (other than a Restricted Subsidiary)
which constitute all or substantially all of the assets of such Person or
comprises any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" shall mean any direct or indirect sale, issuance,
conveyance, transfer, assignment or other transfer for value by the Borrower or
any of its Restricted Subsidiaries (including any sale and leaseback
transaction) to any Person other than the Borrower or a Wholly Owned Restricted
Subsidiary that is a Guarantor of (a) any Capital Stock of any Subsidiary (other
than an Unrestricted Subsidiary (excluding the Israeli Subsidiaries)); or (b)
any other property or assets of the Borrower or any Restricted Subsidiary other
than in the ordinary course of business; provided, however, that Asset Sales
shall not include (i) a transaction or series of related transactions involving
aggregate consideration of less than $500,000 in any fiscal year of the
Borrower; (ii) the sale, lease, conveyance, disposition or other transfer of all
or substantially all of the assets of the Borrower as permitted by Section 6.07;
(iii) a transaction or series of related transactions pursuant to any
foreclosure of assets or other remedy provided by applicable law to a creditor
of the Borrower or any Subsidiary with a Lien on such assets, which Lien is
permitted under this Agreement; provided that such foreclosure or other remedy
is conducted in a commercially reasonable manner or in accordance with any
Bankruptcy Law; (iv) a transaction or series of related transactions involving
only Cash Equivalents or inventory in the ordinary course of business or
obsolete, worn-out or outmoded equipment in the ordinary course of business of
the Borrower; (v) a transaction or series of related transactions involving only
the lease or sublease of any real or personal property in the ordinary course of
business or transfers for security purposes only; (vi) a transaction or series
of related transactions resulting from (a) the designation of any Restricted
Subsidiary as an Unrestricted Subsidiary, or the contribution to
-55-
<PAGE>
the capital of any Unrestricted Subsidiary, in accordance with and pursuant to
the applicable provisions of this Agreement or (b) the sale of Capital Stock of
any Unrestricted Subsidiary (other than the Israeli Subsidiaries) or the sale of
all or substantially all of the assets of any Unrestricted Subsidiary (other
than the Israeli Subsidiaries); (vii) the sale or discount, in each case without
recourse (other than recourse for a breach of a representation or warranty), of
accounts receivable arising in the ordinary course of business, but only in
connection with the compromise or collection thereof in the ordinary course of
business and not as part of a financing transaction; and (viii) the sale or
discount or other financing of accounts receivable pursuant to the Receivables
Financing Agreement.
"Assignment and Assumption Agreement" shall mean an Assignment and
Assumption Agreement substantially in the form of Exhibit F (appropriately
completed).
"Authorized Officer" shall mean any senior officer of the Borrower
or the Parent, as the case may be, designated as such in writing to the
Administrative Agent by the Borrower or the Parent to the extent reasonably
acceptable to the Administrative Agent.
"Bankruptcy Code" shall have the meaning provided in Section 7.06.
"Bankruptcy Law" shall mean Title 11, U.S. Code or any similar
Federal, state or foreign law for relief of debtors.
"Basket" shall have the meaning provided in Section 6.02(a).
"Board of Directors" shall mean as to any Person, the board of
directors of such Person or any duly authorized committee thereof.
"Board Resolution" shall mean with respect to any Person, a copy of
a resolution certified by the Secretary or an Assistant Secretary of such Person
to have been duly adopted by the Board of Directors of such Person and to be in
full force and effect on the date of such certification, and delivered to the
Administrative Agent.
"Borrower" shall have the meaning provided in the first paragraph of
this Agreement, and shall include any successor as provided in Section 6.07.
"Borrowing" shall mean the borrowing of the Loans from all the
Lenders having Commitments on the Closing Date.
"Borrowing Amount" shall mean in a maximum aggregate principal
amount of $200,000,000 available in a single borrowing on the Borrowing Date.
"Borrowing Date" shall mean the Closing Date.
-56-
<PAGE>
"BTCo" shall mean Bankers Trust Company, in its individual capacity,
and any successor corporation thereto by merger, consolidation or otherwise.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, LIBOR Loans, any day which is a Business
Day described in clause (i) and which is also a day for trading by and between
banks in U.S. dollar deposits in the LIBOR market.
"Cables of Zion" shall mean Cables of Zion United Works Ltd., a
company organized under the laws of Israel.
"Capital Lease," as applied to any Person, shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with GAAP, should be accounted for as a capital lease on the
balance sheet of that Person.
"Capital Stock" shall mean (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether or not voting) of corporate stock, including
each class of Common Stock and Preferred Stock of such Person and (ii) with
respect to any Person that is not a corporation, any and all partnership or
other equity interests of such Person, and in each case any options, warrants or
other rights to purchase or acquire such stocks, shares and interests.
"Capitalized Lease Obligations" shall mean, as to any Person, the
obligations of such Person under a lease that are required to be classified and
accounted for as capital lease obligations under GAAP and, for purposes of this
definition, the amount of such obligations at any date shall be the capitalized
amount of such obligations at such date, determined in accordance with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) or the government of any member
of the European Union having maturities of not more than twelve months from the
date of acquisition, (ii) U.S. dollar denominated and Eurocurrency time
deposits, certificates of deposit and banker acceptances of (x) any Lender or
(y) any commercial bank organized under the laws of the United States, any State
thereof, the District of Columbia, or its branches or agencies or the laws of
any member of the European Union and having capital and surplus in an aggregate
amount not less than $500,000,000 (any such bank or Lender, an "Approved
Lender"), in each case with maturities of not more than twelve months from the
date of acquisition, (iii) U.S. Dollar denomi-
-57-
<PAGE>
nated commercial paper issued by any Approved Lender or by the parent company of
any Approved Lender and commercial paper issued by, or guaranteed by, any
industrial or financial company with a short-term commercial paper rating of at
least A-1 or the equivalent thereof by S&P or at least P-1 or the equivalent
thereof by Moody's, as the case may be, and in each case maturing within twelve
months after the date of acquisition, (iv) marketable direct obligations issued
by any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within twelve months
from the date of acquisition thereof and, at the time of acquisition having one
of the two highest ratings obtainable from either S&P or Moody's, (v) any
repurchase agreement entered into with any Approved Lender which is secured by
any obligation of the type described in any of clauses (i) through (iii) and
(vi) investments in money market funds substantially all the assets of which are
comprised of securities of the types described in clauses (i) through (iv)
above.
"Change of Control" shall mean (a) the Borrower shall cease to own
directly 100% on a fully diluted basis of the economic and voting interest in
the Capital Stock of Superior Telecommunications (other than the shares of
Superior Preferred Stock), or of Essex (other than as a result of the merger of
Essex into Superior Telecommunications or another Subsidiary of the Borrower);
or (b) any Person or "group" (within the meaning of Rules 13d-3 and 13d-5 under
the Securities Exchange Act of 1934, as in effect on the Effective Date), other
than Alpine, shall have (A) acquired beneficial ownership of 20% or more on a
fully diluted basis of the voting and/or economic interest in the Parent's
Capital Stock (provided, however, such referenced percentage in this clause (A)
shall be 25% if, and so long as, Alpine directly maintains ownership of more
than 30% on a fully diluted basis of the economic and voting interests in the
Parent's capital stock) or (B) obtained the power (whether or not exercised) to
elect a majority of the Borrower's directors; (c) the Board of Directors of the
Parent shall cease to consist of a majority of Continuing Directors; or (d) the
Parent shall cease to own directly 100% on a fully diluted basis of the economic
and voting interest in the Capital Stock of the Borrower.
"Closing Date" shall have the meaning provided in Section 11.10.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code, amendatory thereof,
supplemental thereto or substituted therefor.
"Commitment" shall mean, for each Lender, the Term A Loan Commitment
and/or the Term B Loan Commitment of such Lender, as applicable.
-58-
<PAGE>
"Common Stock" of any Person shall mean any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or non-voting) of such Person's common stock, whether
outstanding on the Closing Date or issued after the Closing Date, and includes,
without limitation, all series and classes of such common stock.
"Consolidated EBIT" shall mean, for any period, Consolidated Net
Income, before total interest expense (inclusive of amortization of deferred
financing fees, premiums on Interest Rate Protection Agreements and any original
issue discount) of the Borrower and its Restricted Subsidiaries determined on a
consolidated basis and provisions for taxes based on income, whether paid or
deferred.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT,
adjusted by adding thereto the amount of all depreciation expense and
amortization expense plus non-cash compensation expenses relating to restricted
stock and stock-option grants, in each case, that were deducted in determining
Consolidated EBIT for such period.
"Consolidated Fixed Charge Coverage Ratio" shall mean the ratio of
Consolidated EBITDA of such Person during the four full fiscal quarters (the
"Four Quarter Period") ending on or prior to the date of the transaction giving
rise to the need to calculate the Consolidated Fixed Charge Coverage Ratio (the
"Transaction Date") to Consolidated Fixed Charges of such Person for the Four
Quarter Period. Notwithstanding the foregoing, for any calculation of the
Consolidated Fixed Charge Coverage Ratio occurring on or prior to the first
anniversary of the Original Loan Date, "Consolidated Fixed Charge Coverage
Ratio" shall mean the ratio of Consolidated EBITDA of such Person during the
number of full fiscal quarters ending after the Original Loan Date to
Consolidated Fixed Charges of such Person (calculated after giving effect on a
pro forma basis to the issuance of the Trust Preferred Securities as if such
issuance occurred on the Original Loan Date) for such period (with references in
the next succeeding sentence to "Four Quarter Period" being deemed to be
references to the number of full fiscal quarters ending after the Original Loan
Date). In addition to and without limitation of the foregoing, for purposes of
this definition, "Consolidated EBITDA" and "Consolidated Fixed Charges" shall be
calculated after giving effect on a pro forma basis for the period of such
calculation to (i) the incurrence or repayment of any Indebtedness of such
Person or any of its Restricted Subsidiaries (and the application of the
proceeds thereof) giving rise to the need to make such calculation and any
incurrence or repayment of other Indebtedness (and the application of the
proceeds thereof), other than the incurrence or repayment of Indebtedness in the
ordinary course of business for working capital purposes pursuant to working
capital or revolving credit facilities, occurring during the Four Quarter Period
or at any time subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such incurrence or repayment, as the case
may be (and the application of the proceeds thereof), occurred on the first day
of the Four Quarter Period and (ii) any Asset Sales or Asset Acquisitions
(including, without limitation, any
-59-
<PAGE>
Asset Acquisition giving rise to the need to make such calculation as a result
of such Person or one of its Restricted Subsidiaries (including any Person who
becomes a Restricted Subsidiary as a result of the Asset Acquisition) incurring,
Acquired Indebtedness and also including any Consolidated EBITDA attributable to
the assets which are the subject of the Asset Acquisition or Asset Sale during
the Four Quarter Period) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such Asset Sale or Asset Acquisition (including the
incurrence, assumption or liability for any such Acquired Indebtedness) occurred
on the first day of the Four Quarter Period; provided, however, that pro forma
effect shall not be given to the acquisition of Essex International and the
related financings (except as expressly provided in this definition) in
calculating "Consolidated EBITDA" and "Consolidated Interest Expense." If such
Person or any of its Restricted Subsidiaries directly or indirectly guarantees
or proposes to guarantee Indebtedness of a third Person (other than a Restricted
Subsidiary), the preceding sentence shall give effect to the incurrence of such
guaranteed Indebtedness as if such Person or any Restricted Subsidiary of such
Person had directly incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for purposes of
determining the denominator (but not the numerator) of this "Consolidated Fixed
Charge Coverage Ratio," (1) interest on outstanding Indebtedness determined on a
fluctuating basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to have accrued at a fixed rate per annum
equal to the rate of interest on such Indebtedness in effect on the Transaction
Date; (2) if interest on any Indebtedness actually incurred on the Transaction
Date may optionally be determined at an interest rate based upon a factor of a
prime or similar rate, a eurocurrency interbank offered rate, or other rates,
then the interest rate in effect on the Transaction Date will be deemed to have
been in effect during the Four Quarter Period; (3) notwithstanding clause (1)
above, interest on Indebtedness determined on a fluctuating basis, to the extent
such interest is covered by agreements relating to Interest Rate Protection
Agreements, shall be deemed to accrue at the rate per annum resulting after
giving effect to the operation of such agreements; and (4) to the extent pro
forma effect is being given to interest expense attributable to Indebtedness
denominated in a currency other than Dollars which was not outstanding for the
entire Four Quarter Period, pro forma effect shall be given based on the
relevant exchange rates applicable on the date of any determination of the
Consolidated Fixed Charge Coverage Ratio is being made.
"Consolidated Fixed Charges" shall mean, with respect to any Person
for any period, the sum, without duplication, of (i) Consolidated Interest
Expense for such period, plus (ii) the product of (x) the amount of all dividend
payments on any series of Disqualified Capital Stock of the Borrower and all
Preferred Stock of the Restricted Subsidiaries (other than dividends paid in
Qualified Capital Stock and dividends to the extent payable to the Borrower or
any Wholly Owned Restricted Subsidiary) paid, accrued or scheduled to be paid or
accrued during such period times (y) a fraction, the numerator of which is one
and
-60-
<PAGE>
the denominator of which is one minus the then current effective consolidated
federal, state and local income tax rate of such Person, expressed as a decimal.
"Consolidated Interest Expense" shall mean, with respect to any
Person for any period, the sum of, without duplication: (i) the aggregate of the
interest expense of such Person and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (a) any amortization of debt discount, but excluding any
amortization or write-off of deferred financing costs, (b) the net costs under
Interest Swap Obligations, (c) all capitalized interest and (d) the interest
portion of any deferred payment obligation, calculated in accordance with the
effective interest method; and (ii) the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by such Person
and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP. Consolidated Interest Expense of the
Borrower and its Restricted Subsidiaries shall include interest accrued by the
Parent on the Debentures.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss), after provisions for income taxes (other than with respect to net
income taxes attributable to items that are excluded from the calculation of
Consolidated Net Income in the period), of the Borrower and its Restricted
Subsidiaries on a consolidated basis for such period taken as a single
accounting period in conformity with GAAP but excluding in any event (a) any
extraordinary gains (net of extraordinary losses) but with giving effect to
gains or losses from sales of assets sold in the ordinary course of business;
(b) net earnings (or loss for purposes of determining Consolidated EBIT only) of
any other Person (other than a consolidated Restricted Subsidiary) in which the
Borrower or any consolidated Restricted Subsidiary has an ownership interest,
except to the extent such net earnings shall have actually been received by the
Borrower or such consolidated Restricted Subsidiary in the form of cash
distributions; (c) any portion of the net earnings of any consolidated
Restricted Subsidiary which is unavailable for payment of dividends to the
Borrower or any other consolidated Restricted Subsidiary by reason of the
provisions of any agreement or applicable law or regulation (including, without
limitation, those agreements referred to in the exceptions set forth in Section
6.04); (d) earnings resulting from any reappraisal, revaluation or write-up of
assets; (e) the income (or loss) of any Person accrued prior to the date it
becomes a Restricted Subsidiary of such Person or is merged into or consolidated
with such Person or any of its Restricted Subsidiaries or that Person's assets
are acquired by such Person or any of its Restricted Subsidiaries; (f) the
aggregate net gain (or loss) during such period arising from the revaluation
(but not sale) of readily marketable securities; (g) the income (or loss) from
discontinued operations; and (h) non-cash charges and cash charges (but only to
the extent such cash charges are reimbursed by a controlling Affiliate in cash
at the time of incurrence thereof), in each case, relating to the acquisition of
Essex International and repayment of Indebtedness incurred under the Essex
Credit Agreement and the Existing Superior Credit Agreement.
-61-
<PAGE>
"Continuing Directors" shall mean the directors of the Parent on the
Borrowing Date and each other director if such director's nomination for the
election to the Board of Directors of the Parent is recommended by a majority of
the then Continuing Directors.
"Credit Documents" shall mean this Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
Note and the Guarantees.
"Credit Party" shall mean the Borrower and each Guarantor.
"Debentures" shall have the meaning provided in the definition of
Trust Preferred Securities.
"Default" shall mean an event or condition the occurrence of which
is, or with the lapse of time or the giving of notice or both would be, an Event
of Default.
"Disqualified Capital Stock" shall mean with respect to any Person,
any Capital Stock of such Person or its Subsidiaries that, by its terms, by the
terms of any agreement related thereto or by the terms of any security into
which it is convertible, puttable or exchangeable, is, or upon the happening of
any event or the passage of time would be, required to be redeemed or
repurchased by such Person or its Subsidiaries, including at the option of the
holder thereof, in whole or in part, or has, or upon the happening of an event
or passage of time would have, a redemption or similar payment due on or prior
to the Maturity Date, or any other Capital Stock of such Person or its
subsidiaries designated as Disqualified Capital Stock by such Person at the time
of issuance; provided, however, that if such Capital Stock is issued to
employees of the Borrower or the Subsidiaries or to any plan for the benefit of
such employees, such Capital Stock shall not constitute Disqualified Capital
Stock unless so designated.
"DNE Systems" shall mean DNE Systems, Inc., a Delaware
corporation.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Domestic Subsidiary" shall mean each Restricted Subsidiary of the
Borrower incorporated or organized in the United States or any State or
territory thereof.
"Eligible Transferee" shall mean and include a commercial bank,
financial institution or any other "accredited investor" (as defined in
Regulation D of the Securities Act).
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance,
-62-
<PAGE>
deficiency, liability or violation, investigations or proceedings relating in
any way to any violation or liability (or alleged violation or liability) by the
Parent, the Borrower or any of their respective Subsidiaries under any
Environmental Law (hereafter "Claims") or any permit, license or other
authorization issued to the Parent, the Borrower or any of their respective
Subsidiaries under any such law, including, without limitation, (a) any and all
Claims by governmental or regulatory authorities for enforcement, cleanup,
removal, remedial, corrective, response or other actions or damages pursuant to
any Environmental Law, and (b) any and all Claims by any third party seeking
damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any non-U.S., federal, state or local
policy, statute, law, rule, regulation, ordinance, code or rule of common law
now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment (for purposes of this definition
(collectively, "Laws")), relating to the environment or Hazardous Materials, or
health and safety to the extent such health and safety issues arise under the
Occupational Safety and Health Act of 1970, as amended, or any such similar
Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and the
rulings issued thereunder. Section references to ERISA are to ERISA as in effect
at the date of this Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Parent, the Borrower or any Subsidiary thereof
would be deemed to be a "single employer" within the meaning of Section 414(b)
or (c) of the Code or (to the extent required by operation of Title IV of ERISA
or Section 412 of the Code or Section 302 of ERISA) Section 414(m) or (o) of the
Code.
"Essex" shall mean Essex Group Inc., a Michigan corporation.
"Essex Canada" shall mean Essex Canada Inc., a Delaware
corporation.
"Essex Canadian Facility" shall mean the credit facility provided
pursuant to the Credit Agreement dated as of May 30, 1996, as amended and
restated as of March 27, 1998, between Essex Canada and Bank of Montreal.
"Essex Capital Lease Facility" shall mean that facility available
pursuant to the Agreement and Lease dated as of April 12, 1995, as amended as of
June 1, 1997 and September 2, 1997, between Mellon Leasing Corporation and
Essex.
-63-
<PAGE>
"Essex Credit Agreement" shall mean the credit facility provided
pursuant to the Credit Agreement dated as of October 31, 1996, as amended and
restated as of March 27, 1998, among Essex International Inc., Essex Group,
Inc., the lenders named therein and The Chase Manhattan Bank, as Administrative
Agent.
"Essex Funding" shall mean Essex Funding Inc., a Delaware
corporation and a wholly owned subsidiary of Essex.
"Essex Funding Agreement" shall mean (i) the Loan and Security
Agreement, dated as of April 29, 1998, between Essex Funding and Three Rivers
Funding Corporation and (ii) the related Sales and Servicing Agreement dated as
of April 29, 1998.
"Essex International" shall mean Essex International Inc., a
Delaware corporation.
"Event of Default" shall have the meaning provided in Section 7.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
"Exchange Notes" shall have the meaning provided in Section 5.09.
"Existing Indebtedness" shall mean Indebtedness of the Borrower and
its Subsidiaries as of the Borrowing Date and which is to remain outstanding
after giving effect to the incurrence of Loans on such date to refinance the
Existing Floating Rate Facility as set forth on Schedule V, and other
Indebtedness which in the aggregate does not exceed $100,000.
"fair market value" shall mean, with respect to any asset or
property, the price which could be negotiated in an arm's-length, free market
transaction, for cash, between a willing seller and a willing and able buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by the Board of Directors of
the Borrower acting reasonably and in good faith and shall be evidenced by a
Board Resolution of the Board of Directors of the Borrower delivered to the
Administrative Agent.
"Fair Share" shall have the meaning provided in Section 12.01(c) of
this Agreement.
"Fair Share Shortfall" shall have the meaning provided in Section
12.01(c) of this Agreement.
-64-
<PAGE>
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate equal for each day during such period to 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 for such day (or,
if such day is not a Business Day, for the next preceding 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 such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fleet" shall mean Fleet Corporate Finance, Inc., in its
individual capacity, and any successor corporation thereto by merger,
consolidation or otherwise.
"Foreign Subsidiary" shall mean a Restricted Subsidiary that is not
a Domestic Subsidiary.
"Four Quarter Period" shall have the meaning provided in the
definition of "Consolidated Fixed Charge Coverage Ratio."
"Funding Guarantor" shall have the meaning provided in Section
12.01(c) of this Agreement.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being understood and
agreed that determinations in accordance with GAAP for purposes of Sections 2.02
and 6, including defined terms as used therein, are subject (to the extent
provided therein) to Section 11.07(a).
"Guaranteed Creditors" shall mean and include each of the
Administrative Agent and the Lenders.
"Guaranteed Obligations" shall mean the full and prompt payment when
due (whether at the stated maturity, by acceleration or otherwise) of the
principal and interest on each Note issued by the Borrower to each Lender, and
Loans made under this Agreement, together with all the other obligations
(including obligations which, but for the automatic stay under Section 362(a) of
the Bankruptcy Code, would become due) and liabilities (including, without
limitation, indemnities, fees and interest thereon) of the Borrower or any
Guarantor to such Lender and the Administrative Agent now existing or hereafter
incurred under, arising out of or in connection with any Credit Document and the
due performance and compliance with all the terms, conditions and agreements
contained in each of the Credit Documents by the Borrower.
"Guarantee" shall mean the Guarantee provided in Section 12.
"Guarantor" shall mean each of the Parent and the Subsidiary
Guarantors.
-65-
<PAGE>
"Hazardous Materials" shall mean (a) any petrochemical or petroleum
products or wastes (including crude oil or any fraction thereof), radioactive
materials, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
and (b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"restricted hazardous materials," "extremely hazardous wastes," "restrictive
hazardous wastes," "toxic substances," "toxic pollutants," "contaminants" or
"pollutants," or words of similar meaning and regulatory effect under any
Environmental Law.
"incur" shall mean, with respect to any Indebtedness or other
obligation of any Person, to create, issue, incur (including by conversion,
exchange or otherwise), assume, guarantee or otherwise become liable in respect
of such Indebtedness or other obligation or the recording, as required pursuant
to GAAP or otherwise, of any such Indebtedness or other obligation on the
balance sheet of such Person (and "incurrence," "incurred" and "incurring" shall
have meanings correlative to the foregoing). Indebtedness of a Person existing
at the time such Person becomes a Restricted Subsidiary or is merged or
consolidated with or into the Borrower or any Restricted Subsidiary shall be
deemed to be incurred at such time. The accrual of interest or the accretion of
original issue discount shall not be deemed to be an incurrence.
"Indebtedness" shall mean, with respect to any Person, without
duplication, (i) all indebtedness of such Person for borrowed money, (ii) all
indebtedness of such Person evidenced by bonds, debentures, notes or other
similar instruments, (iii) all Capitalized Lease Obligations of such Person,
(iv) all indebtedness of such Person issued or assumed as the deferred purchase
price of property or services (but excluding trade accounts payable, other
accrued liabilities arising and payable in the ordinary course of business and
deferred rent as determined in accordance with GAAP), (v) all indebtedness for
the reimbursement of any obligor on any banker's acceptance or similar credit
transaction, (vi) the face amount of all letters of credit issued for the
account of such Person and, without duplication, all drafts drawn thereunder,
(vii) guarantees and other contingent obligations in respect of indebtedness
referred to in clauses (i) through (vi) above and clause (ix) below, (viii) all
indebtedness of any other Person of the type referred to in clauses (i) through
(vii) which are secured by any lien on any property or asset of such Person, the
amount of such indebtedness being deemed to be the lesser of the fair market
value of such property or asset or the amount of the indebtedness so secured,
(ix) all indebtedness under Interest Rate Protection Agreements and Other
Hedging Agreements of such Person and (x) all Disqualified Capital Stock issued
by such Person with the amount of indebtedness represented by such Disqualified
Capital Stock being equal to the greater of its voluntary or involuntary
liquidation preference and its maximum fixed repurchase price, but excluding
accrued dividends, if any, and all Preferred Stock of Restricted Subsidiaries.
For purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed re-
-66-
<PAGE>
purchase price shall be calculated in accordance with the terms of such
Disqualified Capital Stock as if such Disqualified Capital Stock were purchased
on any date on which Indebtedness shall be required to be determined pursuant to
this Agreement, and if such price is based upon, or measured by, the fair market
value of such Disqualified Capital Stock, such fair market value shall be
determined reasonably and in good faith by the Board of Directors of the issuer
of such Disqualified Capital Stock. The Trust Preferred Securities shall
constitute Indebtedness of the Parent.
"Independent Financial Advisor" means a firm which, in the judgment
of the Board of Directors of the Borrower, is independent and qualified to
perform the task for which it is to be engaged.
"Information Systems and Equipment" shall mean all computer
hardware, firmware and software, as well as other information processing
systems, or any equipment containing embedded microchips, whether directly
owned, licensed, leased, operated or otherwise controlled by the Parent, the
Borrower or any of their respective Subsidiaries, including through third-party
service providers, and which, in whole or in part, are used, operated, relied
upon, or integral to, the Parent, the Borrower or any of their respective
Subsidiaries' conduct of their business.
"Interest Determination Date" shall mean, with respect to an
Interest Period, the second Business Day preceding the first day of such
Interest Period.
"Interest Payment Date" shall mean May 31, August 30, November 30
and February 28 of each year, commencing August 30, 1999.
"Interest Period" shall have the meaning provided in Section 1.12.
"Interest Rate" shall mean, at any date on or after the Borrowing
Date, the rate set forth opposite such date in the table below:
Day(s)
After Borrowing Date Term A Loan Term B Loan
-------------------- ----------- -----------
0-90 LIBOR + 2.50% LIBOR + 3.625%
91-180 LIBOR + 3.50% LIBOR + 3.750%
181-270 LIBOR + 4.00% LIBOR + 4.000%
271-Maturity LIBOR + 5.00% LIBOR + 5.000%;
provided, however, that if at any date on or after the Borrowing Date LIBOR rate
loans are not available (as provided in Section 1.07 hereof), then the Interest
Rate shall be the rate set forth opposite such date in the table below:
-67-
<PAGE>
Day(s)
After Borrowing Date Term A Loan Term B Loan
-------------------- ----------- -----------
0-90 Alternate Base Rate + 1.50% Alternate Base Rate +
2.625%
91-180 Alternate Base Rate + 2.50% Alternate Base Rate +
2.750%
181-270 Alternate Base Rate + 3.00% Alternate Base Rate +
3.000%
271-Maturity Alternate Base Rate + 4.00% Alternate Base Rate +
4.000%
"Interest Rate Protection Agreement" shall mean any interest rate
swap agreement, interest cap agreement, interest rate collar agreement, interest
rate hedging agreement or other similar agreement or arrangement.
"Investments" shall mean, with respect to any Person, any direct or
indirect loan or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property to others or any payment for property or services for the account or
use of others), or any purchase or acquisition by such Person of any Capital
Stock, bonds, notes, debentures or other securities or evidences of Indebtedness
issued by, any Person. "Investment" shall exclude (i) extensions of trade credit
by the Borrower and its Restricted Subsidiaries in the ordinary course of
business and (ii) loans and advances to employees and officers of the Borrower
and its Restricted Subsidiaries in the ordinary course of business for bona fide
business purposes (it being understood that the purchase of Capital Stock shall
not be deemed to occur in the ordinary course of business for purposes of this
clause). For the purposes of Section 6.02, (i) "Investment" shall include and be
valued at the fair market value of the net assets of any Restricted Subsidiary
at the time that such Restricted Subsidiary is designated an Unrestricted
Subsidiary and (ii) the amount of any Investment shall be the original cost of
such Investment plus the cost of all additional Investments by the Borrower or
any of its Restricted Subsidiaries, without any adjustments for increases or
decreases in value, or write-ups, write-downs or write-offs with respect to such
Investment, reduced by the payment of dividends or distributions in connection
with such Investment or any other amounts received in respect of such
Investment; provided that no such payment of dividends or distributions or
receipt of any such other amounts (i) shall reduce the amount of any Investment
to the extent that payment of dividends or distributions or receipt of any such
amounts would be included in the Basket or (ii) shall reduce the amount of any
Investment below the initial amount of such Investment included as a Restricted
Payment. If the Borrower or any Restricted Subsidiary sells or otherwise
disposes of any Common Stock of any direct or indirect Wholly Owned Restricted
Subsidiary that is a Guarantor such that, after giving effect to any such sale
or disposition, such Restricted Subsidiary is no longer a Wholly Owned
Restricted Subsidiary that is a Guarantor, the Borrower shall be deemed to have
made an Investment on the date of any such sale or disposition equal to the fair
market value of the Common Stock of such Restricted Subsidiary not sold or
disposed of.
-68-
<PAGE>
"Israeli Subsidiaries" shall mean Superior Cable Israel Ltd.,
Cables of Zion and their respective Subsidiaries.
"Leaseholds" of any Person shall mean all the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Lender" shall mean each financial institution listed on Schedule I,
as well as any Person which becomes a "Lender" hereunder pursuant to Section
11.04(b).
"LIBOR" shall mean, with respect to an Interest Period, (i) the rate
(expressed as a percentage per annum) for deposits in United States dollars for
a period equal to such Interest Period that appears on Telerate Page 3750 as of
11:00 a.m., London time, on the Interest Determination Date; if Telerate Page
3750 does not include such a rate or is unavailable on an Interest Determination
Date, LIBOR for the Interest Period shall be the arithmetic mean of the rates
(expressed as a percentage per annum) for deposits in a Representative Amount in
United States dollars for a period equal to such Interest Period, that appears
on Reuters Screen LIBO Page (as defined) as of 11:00 a.m., London time, on the
Interest Determination Date; if Reuters Screen LIBO Page does not include two or
more rates or is unavailable on an Interest Determination Date, the
Administrative Agent will request the principal London office of each of four
major banks in the London interbank market, as selected by the Administrative
Agent, to provide such bank's offered quotation (expressed as a percentage per
annum), as of approximately 11:00 a.m., London time, on such Interest
Determination Date, to prime banks in the London interbank market for deposits
in a Representative Amount in United States dollars for a period equal to such
Interest Period; if at least two such offered quotations are so provided, LIBOR
for the Interest Period will be the arithmetic mean of such quotations; if fewer
than two such quotations are so provided, the Administrative Agent will request
each of three major banks in New York City, as selected by the Administrative
Agent, to provide such bank's rate (expressed as a percentage per annum), as of
approximately 11:00 a.m., New York City time, on such Interest Determination
Date, for loans in a Representative Amount in United States dollars to leading
European banks for a period equal to such Interest Period; if at least two such
rates are so provided, LIBOR for the Interest Period will be the arithmetic mean
of such rates; if fewer than two such rates are so provided, then LIBOR for the
Interest Period will be LIBOR in effect with respect to the immediately
preceding Interest Period, in each case divided (and rounded upward to the next
whole multiple of 1/16 of 1%) by (ii) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable to
any member bank of the Federal Reserve System in respect of Eurocurrency funding
or liabilities as defined in Regulation D (or any successor category of
liabilities under Regulation D).
-69-
<PAGE>
"LIBOR Loan" shall mean a Loan for which the Interest Rate on such
Loan is based on LIBOR.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any similar
recording or notice statute, and any lease having substantially the same effect
as the foregoing).
"Loan" shall have the meaning provided in Section 1.01. All
references to "Loan" or "Loans" shall mean Loans and both Types of Loans, i.e.
the LIBOR Loan and the Alternate Base Rate Loan.
"London Banking Day" shall mean any day in which dealings in United
States dollars are transacted or, with respect to any future date, are expected
to be transacted in the London interbank market.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean (x) a material adverse effect
on the business, properties, assets, nature of assets, liabilities, condition
(financial or otherwise), of the Borrower and its Subsidiaries, or the Parent
and its Subsidiaries, in each case taken as a whole or (y) a material adverse
effect on the rights or remedies of the Lenders or the Administrative Agent, or
on the ability of any Credit Party to perform its obligations to them hereunder
or under any other Credit Document.
"Maturity Date" shall mean May 26, 2007.
"Mexican Subsidiaries" shall mean any Wholly Owned Restricted
Subsidiary of the Borrower or any of its respective Subsidiaries organized under
the laws of Mexico in order to make the investments contemplated by Section
6.02(b)(7).
"Minimum Condition" shall have the meaning provided in the
definition of "Tender Offer."
"Moody's" shall mean Moody's Investors Service, Inc.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents including payments in respect
of deferred payment obligations when actually received in the form of cash or
Cash Equivalents (other than the portion of any such deferred payment
constituting interest) received by the Borrower or any of its Restricted
Subsidiaries from such Asset Sale net of (a) reasonable out-of-pocket expenses
and fees relating to such Asset Sale (including, without limitation, legal,
accounting
-70-
<PAGE>
and investment banking fees and sales commissions), (b) taxes paid or payable
after taking into account any reduction in consolidated tax liability due to
available tax credits or deductions and any tax sharing arrangements, (c)
repayment of Indebtedness that is required to be repaid in connection with such
Asset Sale and (d) appropriate amounts to be provided by the Borrower or any
Restricted Subsidiary, as the case may be, as a reserve, in accordance with
GAAP, against any liabilities associated with such Asset Sale and retained by
the Borrower or any Restricted Subsidiary, as the case may be, after such Asset
Sale, including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale; provided,
however, that any amounts remaining after adjustments, revaluations or
liquidations of such reserves shall constitute Net Cash Proceeds.
"Nine-Month Fee" shall have the meaning provided in Section 1.11.
"Nine-Month Trigger Date" shall mean the 270th day after the
Borrowing Date.
"Non-U.S. Pension Plan" shall mean any plan, fund (including,
without limitation, any superannuation fund) or other similar program
established or maintained outside the United States of America by the Parent,
the Borrower or any one or more of their respective Subsidiaries primarily for
the benefit of employees of the Parent, the Borrower or such Subsidiaries
residing outside the United States of America, which plan, fund or other similar
program provides, or results in, retirement income, a deferral of income in
contemplation of retirement or payments to be made upon termination of
employment or any such plan as to which the Parent, the Borrower or any of their
respective Subsidiaries may have any liability.
"Norsk Kabel" shall mean ABB Norsk Kabel, a Norwegian company.
"Norsk Kabel Assets" shall mean the assets of Norsk Kabel
constituting the data communications cable business of Norsk Kabel as of the
Borrowing Date.
"Norwegian Subsidiaries" shall mean one or more Wholly Owned
Restricted Subsidiary of the Borrower formed to acquire the Norsk Kabel Assets.
"Note" shall have the meaning provided in Section 1.04.
"Notice of Voluntary Prepayment" shall have the meaning provided in
Section 2.01(a).
"Notice Office" shall mean the office of the Administrative Agent
located at One Bankers Trust Plaza, New York, New York 10006, or such other
office as the Administrative Agent may hereafter designate in writing as such to
the other parties hereto.
-71-
<PAGE>
"Obligations" shall mean all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing any Indebtedness.
"Officers' Certificate" shall mean a certificate, signed by the
chairman, a vice chairman, the president, or any vice president of a Credit
Party, and attested to by the secretary or any assistant secretary of such
Credit Party.
"Original Loan Date" shall mean November 27, 1998.
"Other Hedging Agreements" shall mean (x) any foreign exchange
contracts, currency swap agreements or other similar agreements or arrangements
designed to protect against fluctuations in currency values and (y) agreements
relating to the future purchase of commodities or designed to protect against
fluctuations in the prices of specific commodities.
"Parent" shall have the meaning provided in the first paragraph to
this Agreement.
"Parent Common Stock" shall mean shares of common stock, $.01 par
value per share, of the Parent.
"Parent Tax Allocation Agreement" shall mean the tax allocation
agreement by and among the Borrower and its Subsidiaries dated as of October 2,
1996, effective as of May 1, 1996.
"Payment Office" shall mean the office of the Administrative Agent
located at One Bankers Trust Plaza, New York, New York 10006, or such other
office as the Agent may hereafter designate in writing as such to the other
parties hereto.
"PBGC" shall mean the Pension Benefit Guarantee Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" shall mean a fraction (expressed as a percentage), the
numerator of which is the Commitment of such Lender and the denominator of which
is the Borrowing Amount.
"Permitted Investments" shall mean (i) Investments by the Borrower
or any Restricted Subsidiary in any Person that is or will become immediately
after such Investment a Wholly Owned Restricted Subsidiary that is a Guarantor
or that will merge or consolidate into the Borrower or a Wholly Owned Restricted
Subsidiary that is a Guarantor; (ii) Investments in the Borrower or any
Guarantor by any Restricted Subsidiary; (iii) Investments by the Borrower or any
Restricted Subsidiary in any Guarantor;
-72-
<PAGE>
(iv) Investments in cash and Cash Equivalents; provided that any such
Investments (including in cash) (other than Investments denominated in Dollars)
shall only be made to the extent necessary to fund the local operations of the
Foreign Subsidiaries; (v) Interest Rate Protection Agreements and Other Hedging
Agreements entered into in the ordinary course of the Borrower's or its
Restricted Subsidiaries' businesses and otherwise in compliance with this
Agreement; (vi) Investments in securities of trade creditors or customers
received pursuant to any plan of reorganization or similar arrangement upon the
bankruptcy or insolvency of such trade creditors or customers or in good faith
settlement or delinquent obligations and disputes with trade creditors or
customers; (vii) Investments made by the Borrower or its Restricted Subsidiaries
as a result of consideration received in connection with an Asset Sale made in
compliance with Section 6.03; (viii) guarantees of Indebtedness and other
obligations otherwise permitted under this Agreement; and (ix) Investments
identified in Schedule VIII existing on the Borrowing Date.
"Permitted Liens" shall mean (i) statutory Liens of landlords and
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen or other
like Liens arising in the ordinary course of business, deposits made to obtain
the release of such Liens, and with respect to amounts not yet delinquent for a
period of more than 60 days or being contested in good faith by an appropriate
process of law, and for which a reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made; (ii) Liens incurred or
pledges or deposits made in the ordinary course of business to secure
obligations under workers' compensation, unemployment insurance and other types
of social security or similar legislation; (iii) Liens incurred or deposits made
to secure the performance of tenders, bids, leases, statutory obligations,
surety and appeal bonds, governmental contracts, performance and return of money
bonds and other obligations of a like nature incurred in the ordinary course of
business (exclusive of obligations for the payment of borrowed money); (iv)
Liens upon specific items of inventory or other goods and proceeds of any Person
securing such Person's obligations in respect of bankers' acceptances issued or
created for the account of such Person to facilitate the purchase, shipment or
storage of such inventory or other goods in the ordinary course of business; (v)
Liens securing reimbursement obligations with respect to letters of credit which
encumber documents and other property relating to such letters of credit and the
products and proceeds thereof; (vi) Liens encumbering customary initial deposits
and margin deposits, and other Liens incurred in the ordinary course of business
that are within the general parameters customary in the industry, in each case
securing Indebtedness under Interest Rate Protection Agreements and forward
contracts, option futures contracts, futures options or similar agreements or
arrangements designed to protect the Borrower or any Restricted Subsidiary from
fluctuations in the price of commodities; (vii) Liens encumbering deposits made
in the ordinary course of business to secure nondelinquent obligations arising
from statutory, regulatory, contractual or warranty requirements of the Borrower
or the Restricted Subsidiaries for which a reserve or other appropriate
provision, if any, as shall be required by GAAP shall have been made; (viii)
Liens arising out of consignment or similar arrangements for the sale of goods
entered
-73-
<PAGE>
into by the Borrower or any Restricted Subsidiary in the ordinary course of
business in accordance with past practices; (ix) any interest or title of a
lessor in the property subject to any lease, whether characterized as
capitalized or operating other than any such interest or title resulting from or
arising out of a default by the Borrower or any Restricted Subsidiary of its
obligations under such lease; (x) Liens arising from filing UCC financing
statements for precautionary purposes in connection with true leases of personal
property that are otherwise permitted under this Agreement and under which the
Borrower or any Restricted Subsidiary is lessee; (xi) Liens securing Purchase
Money Obligations incurred pursuant to Section 6.01(ix) and other purchase money
or similar liens incurred in the ordinary course of business and consistent with
past practice; (xii) Liens in favor of the Administrative Agent; (xiii) Liens on
the receivables subject to the Receivables Financing Agreement and Receivables
Related Assets, in each case securing the Receivables Financing Agreement; (xiv)
Liens set forth on Schedule X securing Indebtedness of Essex or any of its
Subsidiaries pursuant to the Essex Capital Lease Facility; (xv) Liens on assets
of Essex Canada securing the Essex Canadian Facility and any permitted
refinancing thereof; and (xvi) Liens on the assets of the Mexican Subsidiaries
to secure Indebtedness permitted under Section 6.01(xiv).
"Permitted Refinancing" shall mean with respect to any Person,
Indebtedness of such Person issued in exchange for, or the proceeds from the
issuance and sale or disbursement of which are used to substantially
concurrently repay, redeem, refund, refinance, discharge or otherwise retire for
value, in whole or in part (collectively, "repay"), or constituting an
amendment, modification or supplement to, or a deferral or renewal of
(collectively, an "amendment"), any Indebtedness of such Person incurred in
accordance with this Agreement (a) in a principal amount (or, if such Permitted
Refinancing provides for an amount less than the principal amount thereof to be
due and payable upon the acceleration thereof, with an original issue price) not
in excess of (without duplication) (i) the principal amount or the original
issue price, as the case may be, of the Indebtedness so refinanced (or, if such
Permitted Refinancing refinances Indebtedness under a revolving credit facility
or other agreement providing a commitment for subsequent borrowings, with a
maximum commitment not to exceed the maximum commitment under such revolving
credit facility or other agreement) plus (ii) unpaid accrued interest on such
Indebtedness plus (iii) premiums, penalties, fees and expenses actually incurred
by such Person in connection with the repayment or amendment thereof and (b)
with respect to Permitted Refinancing that repays or constitutes an amendment to
Subordinated Indebtedness, such Refinancing Indebtedness (x) shall not have any
fixed mandatory redemption or sinking fund requirement in an amount greater than
or at a time prior to the amounts and times specified in such repaid or amended
Subordinated Indebtedness, except to the extent that any such requirement
applies on a date after the Maturity Date and (y) shall contain subordination
and default provisions no less favorable in any material respect to the Lenders
than those contained in such repaid or amended Subordinated Indebtedness.
-74-
<PAGE>
"Person" shall mean an individual, partnership, limited liability
corporation, corporation, unincorporated organization, trust or joint venture,
or a governmental agency or political subdivision thereof.
"Plan" shall mean any multiemployer plan or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) the Borrower, any of its
Subsidiaries or any ERISA Affiliate and each such plan for the five calendar
year period immediately following the latest date on which the Borrower, any of
its Subsidiaries or any ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan or any such plan as to which the Borrower,
any of its Subsidiaries or any ERISA Affiliate may have any liability; provided,
however, the term "Plan" shall not include any Non-U.S. Pension Plan.
"Preferred Stock" of any Person shall mean any Capital Stock of such
Person that has preferential rights to any other Capital Stock of such Person
with respect to dividends or redemptions or upon liquidation.
"Prime Lending Rate" shall mean the rate which BTCo announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. BTCo may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Projections" shall mean the financial projections dated May 14,
1999.
"Purchase Money Indebtedness" shall mean Indebtedness of the
Borrower and its Restricted Subsidiaries incurred in the normal course of
business for the purpose of financing all or any part of the purchase price, or
the cost of installation, construction or improvement, of property or equipment;
provided, however, (A) the Indebtedness shall not exceed the cost of such
property or assets and shall not be secured by any property or assets of the
Borrower or any Restricted Subsidiary other than the property and assets so
acquired or constructed and (B) any Lien securing such Indebtedness shall be
created within 360 days of such acquisition or construction or, in the case of a
refinancing of any Purchase Money Indebtedness, within 360 days of such
refinancing.
"Qualified Capital Stock" shall mean any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Offering" shall mean the public sale or private placement
of fixed rate senior unsecured or senior subordinated notes of the Parent or the
Borrower generating net proceeds to the Borrower in an amount sufficient to
repay in full all amounts outstanding under this Agreement and joint lead
managed with joint book-runner status by the Take-Out Banks with an underwriting
discount or commission of not less than 2.75%.
-75-
<PAGE>
"Real Property" of any Person shall mean all the right, title and
interest of such Person in and to land, buildings, improvements and fixtures,
including Leaseholds.
"Receivables Financing Agreement" shall mean (i) the Essex Funding
Agreement and any amendments or refinancings thereof; and (ii) a replacement
accounts receivable facility (it being understood that such replacement facility
may be in the form of a sale of receivables and Receivables Related Assets or
fractional undivided interests therein); provided that, in each case, (x) the
advance rates, discounts and other pricing terms shall be no more adverse to the
Borrower and its Subsidiaries than those governing similar facilities for
similar credits, but in no case shall such in the aggregate result in proceeds
therefrom being less than 75% of the book value (or, if greater, the fair market
value) of such receivables and Receivables Related Assets, (y) neither the
Borrower nor any of its Subsidiaries (other than a Receivables Subsidiary)
provides, directly or indirectly, any credit support with respect to such
facility, other than as described in clause (c)(ii) of the definition of
Receivables Subsidiary and (z) in the case of amendments and refinancings of the
Essex Funding Agreement, the terms thereof are no more adverse to the Borrower
and its Subsidiaries than the terms of such Agreement, as in effect on the
Borrowing Date, except as specifically permitted by clause (x) of this proviso.
"Receivables Related Assets" shall mean accounts receivable and
instruments, chattel papers, obligations, general intangibles and other similar
assets, in each case, relating to receivables subject to a Receivables Financing
Agreement, including interests in merchandise or goods, the sale or lease of
which gave rise to such receivables, related contractual rights, guarantees,
insurance proceeds, collections, other related assets and proceeds of all of the
foregoing.
"Receivables Subsidiary" shall mean (i) Essex Funding, in the case
of a Receivables Financing Agreement that meets the condition of clause (i) of
the definition thereof, or (ii) a Wholly Owned Restricted Subsidiary of the
Borrower (a) that is designated (as set forth below) as a "Receivables
Subsidiary" by the Board of Directors of the Borrower, (b) that does not engage
in, and whose charter prohibits it from engaging in, any activities other than
in connection with the Receivables Financing Agreement on the terms otherwise
permitted hereby, (c) no portion of the Indebtedness or any other obligation
(contingent or otherwise) of which under such Receivables Financing Agreement
(i) is guaranteed by the Borrower or any other Restricted Subsidiary of the
Borrower, (ii) is recourse to or obligates the Borrower or any other Restricted
Subsidiary of the Borrower in any way other than pursuant to representations,
warranties, covenants and indemnities entered into in the ordinary course of
business in connection with such Receivables Financing Agreement or (iii)
subjects any property or asset of the Borrower or any other Restricted
Subsidiary of the Borrower, directly or indirectly, contingently or otherwise,
to the satisfaction thereof, other than pursuant to representations, warranties,
covenants and indemnities entered into in the ordinary course of business in
connection with such a Receivables Financing Agree-
-76-
<PAGE>
ment, (d) with which neither the Borrower nor any other Restricted Subsidiary of
the Borrower has any material contract, agreement, arrangement or understanding
and (e) with respect to which neither the Borrower nor any other Restricted
Subsidiary of the Borrower has any obligation to maintain or preserve such
Subsidiary's financial condition or cause such Subsidiary to achieve certain
levels of operating results. Any such designation by the Board of Directors of
the Borrower shall be evidenced by filing with the Administrative Agent a
certified copy of the resolutions of the Board of Directors of the Borrower
giving effect to such designation and a certificate of the chief financial
officer of the Borrower or other Authorized Officer of the Borrower certifying
that such designation complied with the foregoing conditions.
"redeem" means redeem, repurchase, defease or otherwise acquire or
retire for value; and "redemption" and "redeemed" have correlative meanings.
"refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part. "refinanced" and "refinancing"
shall have correlative meanings.
"Register" shall have the meaning provided in Section 11.15.
"Registration Rights Provisions" shall mean the registration rights
provisions described in Annex A attached to this Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof.
"Release" means disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing, pouring and the like, into or upon any land or water or air, or
otherwise entering into the environment.
-77-
<PAGE>
"Replaced Lender" shall have the meaning provided in Section 1.10.
"Replacement Assets" shall have the meaning provided in Section
2.02(a).
"Replacement Lender" shall have the meaning provided in Section
1.10.
"Reportable Event" shall mean an event described in Section 4043(c)
of ERISA with respect to a Plan as to which the 30-day notice requirement has
not been waived by the PGBC by regulation.
"Representative" means the indenture trustee or other trustee, agent
or representative in respect of any Senior Indebtedness; provided that if, and
for so long as, any Senior Indebtedness lacks such a representative, then the
Representative for such Senior Indebtedness shall at all times constitute the
holders of a majority in outstanding principal amount of such Senior
Indebtedness in respect of any Senior Indebtedness.
"Representative Amount" shall mean a principal amount of not less
than U.S. $1,000,000 for a single transaction in the relevant market at the
relevant time.
"Required Lenders" shall mean either (a) prior to the time that
either Fleet or BTCo makes any assignment of or grants any participation in its
Obligations hereunder, the Lenders the sum of whose outstanding Loans (or, if
prior to the Borrowing Date, Commitments) represent an amount equal to 100% of
the sum of all outstanding Loans (or, if prior to the Borrowing Date, the Total
Commitment); (b) at any time after Fleet makes an assignment of or grants a
participation in its Obligations hereunder so long as such assignment or grant
of participation occurs before BTCo makes an assignment of or grants a
participation in its Obligations hereunder, the Lenders the sum of whose
outstanding Loans (or, if prior to the Borrowing Date, Commitments) represent an
amount greater than 66% of the sum of all outstanding Loans (or, if prior to the
Borrowing Date, the Total Commitment) or (c) at any time after BTCo makes an
assignment of or grants a participation in its Obligations hereunder, the
Lenders the sum of whose outstanding Loans (or, if prior to the Borrowing Date,
Commitments) represent an amount greater than 50% of the sum of all outstanding
Loans (or, if prior to the Borrowing Date, the Total Commitment).
"Restricted Payment" shall have the meaning provided in Section
6.02(a).
"Restricted Subsidiary" shall mean any Subsidiary of the Borrower
which at the time of determination is not an Unrestricted Subsidiary.
"Reuters Screen LIBO Page" shall mean the display designated as page
"LIBO" on the Reuters Monitor Money Rates Service (or such other page as may
replace the LIBO page on that service).
-78-
<PAGE>
"S&P" shall mean Standard & Poor's Ratings Services.
"SEC" shall mean the Securities and Exchange Commission and any
successor thereto.
"Section 2.06(b)(ii) Certificate" shall have the meaning provided in
Section 2.06(b)(ii).
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated thereunder.
"Senior Indebtedness" shall mean, with respect to the Borrower or
any Guarantor, the principal of, premium, if any, and interest (including any
interest accruing subsequent to the filing of a petition of bankruptcy at the
rate provided for in the documentation with respect thereto, whether or not such
interest is an allowed claim under applicable law) on any Indebtedness
(including guarantees) of the Borrower or such Guarantor, whether outstanding on
the Borrowing Date or thereafter created, incurred or assumed, in each case as
permitted hereunder pursuant to clause (ii) or subclause (x) of clause (viii)
(only to the extent relating to Indebtedness incurred under the Senior Secured
Credit Agreement) or clause (xvi) (so long as such additional Indebtedness is
incurred under the Senior Secured Credit Agreement) of Section 6.01, unless, in
the case of any particular Indebtedness, the instrument creating or evidencing
the same or pursuant to which the same is outstanding expressly provides that
such Indebtedness shall not be senior in right of payment to the Loans or the
Guarantee of such Guarantor. Notwithstanding the foregoing, "Senior
Indebtedness" shall not include (i) any Indebtedness of the Borrower or such
Guarantor to a Restricted Subsidiary of the Borrower, (ii) Indebtedness to, or
guaranteed on behalf of, any employee of the Borrower or such Guarantor or any
Subsidiary of the Borrower or such Guarantor (including, without limitation,
amounts owed for compensation), (iii) obligations for goods, materials or
services purchased in the ordinary course of business or obligations consisting
of trade payables, (iv) Indebtedness represented by Disqualified Capital Stock,
(v) any liability for federal, state, local or other taxes owed or owing by the
Borrower or such Guarantor, (vi) that portion of any Indebtedness to the extent
incurred in violation of the provisions set forth under Section 6.01 (but, as to
any such obligation, no such violation shall be deemed to exist for purposes of
this clause (vi) if the holder(s) of such obligation or their representative and
the Administrative Agent shall have received an Officers' Certificate of the
Borrower to the effect that the incurrence of such Indebtedness does not (or, in
the case of revolving credit Indebtedness, that the incurrence of the entire
committed amount thereof at the date on which the initial borrowing thereunder
is made would not) violate such provisions of this Agreement), (vii)
Indebtedness which, when incurred and without respect to
-79-
<PAGE>
any election under Section 1111(b) of Title 11, United States Code, is without
recourse to the Borrower, (viii) any Indebtedness which is, by its express
terms, subordinated in right of payment to any other Indebtedness of the
Borrower or such Guarantor and (ix) Indebtedness incurred to repurchase capital
stock of the Borrower from employees or former employees.
"Senior Secured Credit Agreement" means the Amended and Restated
Credit Agreement dated as of November 27, 1998, and as further amended as of
December 31, 1998, among the Borrower, Essex Group, Inc., the guarantors named
therein, the lenders party thereto in their capacities as lenders thereunder,
Bankers Trust Company, as administrative agent, Merrill Lynch & Co., as
documentation agent, and Fleet National Bank, as syndication agent, together
with the related documents thereto (including, without limitation, any guarantee
agreements and security documents), in each case as such agreements may be
amended (including any amendment and restatement thereof), supplemented or
otherwise modified from time to time, including any agreement extending the
maturity of, refinancing, replacing or otherwise restructuring (including
increasing the amount of available borrowings thereunder or adding Restricted
Subsidiaries of the Borrower as additional borrowers or guarantors thereunder to
the extent permitted hereunder) all or any portion of the Indebtedness under
such agreement or any successor or replacement agreement and whether by the same
or any other agent, lender or group of lenders.
"Senior Secured Credit Documents" shall mean and include each of the
documents and other agreements (including, without limitation, the Senior
Secured Credit Agreement) governing or evidencing the Senior Secured Credit
Loans, as in effect on the Borrowing Date and as the same may be amended,
modified or supplemented from time to time pursuant to the terms thereof.
"Services Agreement" shall mean the services agreement between
Alpine and the Parent, dated as of October 2, 1996, as amended May 1, 1997 and
May 1, 1998.
"Shelf Registration" shall have the meaning provided in Section
5.09.
"Significant Subsidiary," with respect to any Person, means any
Restricted Subsidiary of such Person that satisfies the criteria for a
"significant subsidiary" set forth in Rule 1.02(w) of Regulation S-X under the
Securities Act.
"Subordinated Indebtedness" means Indebtedness of the Borrower or
any Restricted Subsidiary that is expressly subordinated in right of payment to
the Loans or the Guarantee of such Restricted Subsidiary.
"Subsidiary," with respect to any Person, means (i) any corporation
of which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or
-80-
<PAGE>
indirectly, by such Person or (ii) any other Person of which at least a majority
of the voting interest under ordinary circumstances is at the time, directly or
indirectly, owned by such Person. Unless the context otherwise requires,
references herein to a Subsidiary shall refer to a Subsidiary of the Borrower.
"Subsidiary Guarantor" shall mean (i) each of the Borrower's
Domestic Subsidiaries existing on the Borrowing Date other than its Unrestricted
Subsidiaries, Essex Funding, any Receivables Subsidiary and Essex Canada, (ii)
DNE Systems and each of its Subsidiaries, (iii) each of the Borrower's Domestic
Subsidiaries that in the future executes an amendment to this Agreement in which
such Domestic Subsidiary agrees to be bound by the terms of this Agreement as a
Subsidiary Guarantor pursuant to Section 6.09 and (iv) any other Subsidiary
which guarantees the Senior Secured Credit Agreement; provided that any Person
constituting a Subsidiary Guarantor as described above shall cease to constitute
a Subsidiary Guarantor when its respective Subsidiary Guarantee is released in
accordance with the terms of this Agreement.
"Superior Preferred Stock" shall mean the 6% Cumulative Preferred
Stock, par value $1.00 per share, of Superior Telecommunications having an
aggregate liquidation preference of $20,000,000 (but shall include any Parent
preferred stock issued in exchange therefor pursuant to clause (b)(3) of Section
6.02).
"Superior Telecommunications" shall mean Superior
Telecommunications Inc., a Georgia corporation and a wholly owned Subsidiary
of the Borrower.
"Superior Trust I" shall mean Superior Trust I, a statutory business
trust formed under the laws of the State of Delaware, the common securities of
which shall be directly or indirectly wholly owned by the Parent.
"Syndication Agent" shall mean Fleet, and any successor corporation
thereto by merger or otherwise.
"Take-Out Banks" shall mean, collectively, BT Alex. Brown
Incorporated and Fleet Securities, Inc. and/or their respective Affiliates.
"Taxes" shall have the meaning provided in Section 2.06(a).
"Telerate Page 3750" shall mean the display designated as "Page
3750" on the Dow Jones Telerate Service (or such other page as may replace Page
3750 on that service).
"Term A Loan Commitment" shall mean, for each Lender, the amount set
forth opposite such Lender's name in Schedule I directly below the column
entitled "Term A Loan Commitment."
-81-
<PAGE>
"Term B Loan Commitment" shall mean, for each Lender, the amount set
forth opposite such Lender's name in Schedule I directly below the column
entitled "Term B Loan Commitment."
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Lenders.
"Transaction Date" shall have the meaning provided in the definition
of "Consolidated Fixed Charge Coverage Ratio."
"Trust Preferred Securities" shall mean collectively: (i) the shares
of Series A Cumulative Convertible Exchangeable Trust Preferred Securities of
Superior Trust I having an aggregate liquidation preference of approximately
$167,000,000; (ii) the long-term, subordinated debenture issued by the Parent
and purchased by Superior Trust I which, under certain circumstances, may be
distributed to the holders of the Series A Cumulative Convertible Exchangeable
Trust Preferred Securities (the "Debentures"); and (iii) shall include the
guarantee by the Parent of dividend, redemption and liquidation payments as in
effect on the Borrowing Date, all substantially in the form of Exhibit G hereto,
with such modifications consistent with the substantive provisions thereof, as
to which the Administrative Agent may agree, such agreement not to be
unreasonably withheld or delayed. The Guarantee of the Parent shall be pari
passu with the Debentures and the guarantee referred to in clause (iii) of the
preceding sentence.
"Type" shall mean the type of Loan determined with regard to the
interest option applicable thereto, i.e., whether a Base Rate Loan or a LIBOR
Loan.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 87, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"United States" and "U.S." shall each mean the United States of
America.
"Unrestricted Subsidiary" of any Person shall mean (i) any
Subsidiary of such Person that at the time of determination shall be or continue
to be designated an Unrestricted Subsidiary by the Board of Directors of such
Person in the manner provided in clause (iii) below; (ii) any Subsidiary of an
Unrestricted Subsidiary; and (iii) any Subsidiary of the Borrower designated as
such pursuant to Section 6.10. On the Borrowing Date, the Borrower shall have no
Unrestricted Subsidiaries other than the Israeli Subsidiaries.
-82-
<PAGE>
"Weighted Average Life to Maturity" shall mean, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Wholly Owned Restricted Subsidiary" of any Person shall mean any
Restricted Subsidiary of such Person of which all the outstanding voting
securities (other than in the case of a foreign Restricted Subsidiary,
directors' qualifying shares or an immaterial amount of shares required to be
owned by other Persons pursuant to applicable law) are owned by such Person or
any Wholly Owned Restricted Subsidiary of such Person.
"Year 2000 Compliant" shall mean that all Information Systems and
Equipment accurately process date data (including, but not limited to,
calculating, comparing and sequencing), before, during and after the year 2000,
as well as same and multi-century dates, or between the years 1999 and 2000,
taking into account all leap years, including the fact that the year 2000 is a
leap year, and further, that when used in combination with, or interfacing with,
other Information Systems and Equipment, shall accurately accept, release and
exchange date data, and shall in all material respects continue to function in
the same manner as it performs today and shall not otherwise impair the accuracy
or functionality of Information Systems and Equipment.
10. THE AGENTS.
10.01. Appointment. Each Lender hereby irrevocably designates and
appoints BTCo as Administrative Agent and Fleet as Syndication Agent of such
Lender to act as specified herein and in the other Credit Documents, and each
such Lender hereby irrevocably authorizes BTCo as the Administrative Agent to
take such action on its behalf under the provisions of the Credit Documents and
to exercise such powers and perform such duties as are expressly delegated to
the Administrative Agent by the terms of the Credit Documents, together with
such other powers as are reasonably incidental thereto. The Administrative Agent
agrees to act as such upon the express conditions contained in this Section 10.
Notwithstanding any provision to the contrary elsewhere in any Credit Document,
no Agent shall have any duties or responsibilities, except those expressly set
forth in the Credit Documents, 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 (including by
operation of law) to exist against any Agent. The provisions of this Section 10
are solely for the benefit of the Agents and the Lenders, and neither the
Parent, the Borrower nor any of their respective Subsidiaries or Affiliates
shall have any rights as a third party beneficiary of any of the provisions
hereof. In performing
-83-
<PAGE>
its functions and duties under this Agreement, the Agents shall act solely as
agents of the Lenders and the Agents do not assume and shall not be deemed to
have assumed any obligation or relationship of agency or trust with or for the
Parent, the Borrower or any of their respective Subsidiaries or Affiliates.
10.02. Delegation of Duties. The Agents may execute any of their
duties under or any Credit Document by or through agents or attorneys-in-fact
and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. The Agents shall not be responsible for the negligence or
misconduct of any agents or attorneys-in-fact selected by them with reasonable
care except to the extent otherwise required by Section 10.03.
10.03. Exculpatory Provisions. No Agent or any of its Affiliates or
any of their officers, directors, employees, agents or attorneys-in-fact shall
be (i) liable for any action lawfully taken or omitted to be taken by it or such
Person in its capacity as an Agent under or in connection with any Credit
Document (except to the extent found to have resulted from 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 Parent, the Borrower, any of their respective Subsidiaries or any of
their respective officers contained in any Credit Document, any other Document
or in any certificate, report, statement or other document referred to or
provided for in, or received by any Agent under or in connection with, any
Document or for any failure of the Parent, the Borrower or any of their
respective Subsidiaries or any of their respective officers to perform its
obligations hereunder or thereunder. No Agent shall 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 condition of, any Document, or to inspect the
properties, books or records of the Parent, the Borrower or any of their
respective Subsidiaries. No Agent shall be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of any Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statement or in
any financial or other statements, instruments, reports, certificates or any
other documents in connection herewith or therewith furnished or made by any
Agent to the Lenders or by or on behalf of the Parent, the Borrower or any of
their respective Subsidiaries to any Agent or any Lender or be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or of the existence or possible
existence of any Default or Event of Default.
10.04. Reliance by Agents. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
consent, certificate, affidavit, letter, cablegram, telegram, facsimile, telex
or teletype message, statement, order or other document or conversation
reasonably 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
-84-
<PAGE>
statements of legal counsel (including, without limitation, counsel to the
Parent, the Borrower or any of their respective Subsidiaries), independent
accountants and other experts selected by the Agents. Each Agent shall be fully
justified in failing or refusing to take any action under any Credit Document
unless it shall first receive such advice or concurrence of the Required Lenders
as it deems appropriate or it shall first be indemnified to its satisfaction by
the Lenders against any and all liability and expense which may be incurred by
it by reason of taking or continuing to take any such action. Each Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
any of the Credit Documents in accordance with a request of the Required
Lenders, and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders.
10.05. 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 actually received notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default." In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give prompt notice thereof to the Lenders. The Administrative Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders; provided that, unless and until
the Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.
10.06. Nonreliance on Agents and Other Lenders. Each Lender
expressly acknowledges that no Agent or any of its Affiliates nor any of their
respective officers, directors, employees, agents or attorneys-in-fact have made
any representations or warranties to it and that no act by any Agent hereinafter
taken, including any review of the affairs of the Parent, the Borrower or any of
their respective Subsidiaries, shall be deemed to constitute any representation
or warranty by such Agent or any such other Person to any Lender. Each Lender
represents to the Agents that it has, independently and without reliance upon
any Agent or any such other Person 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, assets, operations, property, financial
and other condition, prospects and creditworthiness of the Parent, the Borrower
and their respective Subsidiaries 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 any Agent or any such other Person
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 to make such investigation as it deems necessary to inform itself as to the
business, assets, operations, property, financial and other condition, prospects
and creditworthiness of the Parent, the Borrower and their respective
-85-
<PAGE>
Subsidiaries. No Agent shall have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
assets, property, financial and other condition, prospects or creditworthiness
of the Borrower or any of their respective Subsidiaries which may come into the
possession of any Agent or any of its Affiliates or any of their officers,
directors, employees, agents or attorneys-in-fact.
10.07. Indemnification. The Lenders agree to indemnify each Agent in
its capacity as such ratably according to their respective "percentages" as used
in determining the Required Lenders at such time, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses or disbursements of any kind whatsoever which may at
any time (including, without limitation, at any time following the payment of
the Obligations) be imposed on, incurred by or asserted against such Agent in
its capacity as such in any way relating to or arising out of any Credit
Document, or any documents contemplated by or referred to herein or therein, or
the transactions contemplated hereby or thereby or any action taken or omitted
to be taken by the Agent under or in connection with any of the foregoing, but
only to the extent that any of the foregoing is not paid by the Parent, the
Borrower or any of their respective Subsidiaries; provided that no Lender shall
be liable to any Agent for the payment of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements to the extent found to have resulted solely from the
gross negligence or willful misconduct of such Agent. If any indemnity furnished
to any Agent for any purpose shall, in the opinion of such Agent be insufficient
or become impaired, such Agent may call for additional indemnity and cease, or
not commence, to do the acts indemnified against until such additional indemnity
is furnished. The agreements in this Section 10.07 shall survive the payment of
all Obligations.
10.08. Agents in Their Individual Capacity. Each Agent and its
Affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Parent, the Borrower and their respective Subsidiaries
and Affiliates as though such Agent were not an Agent hereunder. With respect to
the Loans made by it and all Obligations owing to it, each Agent shall have the
same rights and powers under this Agreement as any Lender and may exercise the
same as though it were not an Agent and the terms "Lender" and "Lenders" shall
include such Agent in its individual capacity.
10.09. Holders. The Administrative Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person or entity who, at the time of making such
request or giving such authority or consent, is the holder of any Note shall be
conclusive and binding on any subsequent holder, transferee, assignee or
indorsee, as the case may be, of such Note or of any Note or Notes issued in
exchange therefor.
-86-
<PAGE>
10.10. Resignation of the Administrative Agent; Successor
Administrative Agent. The Administrative Agent may resign as the Administrative
Agent upon 60 days' notice to the Lenders and the Borrower. Upon the resignation
of the Administrative Agent, the Required Lenders shall appoint from among the
Lenders a successor Administrative Agent which is a bank or a trust company for
the Lenders subject to prior approval by the Borrower (such approval not to be
unreasonably withheld; provided that such approval shall not be required if a
Default or an Event of Default then exists), whereupon such successor agent
shall succeed to the rights, powers and duties of the Administrative Agent, and
the term "Administrative Agent" shall include such successor agent effective
upon its appointment, and the resigning Administrative Agent's rights, powers
and duties as the Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement. After the resignation of the Administrative Agent
hereunder, the provisions of this Section 10 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.
11. MISCELLANEOUS.
11.01. Payment of Expenses, etc. The Parent and the Borrower,
jointly and severally, agree to: (i) whether or not the transactions herein
contemplated are consummated, pay all out-of-pocket costs and expenses of the
Administrative Agent and the Syndication Agent (including, without limitation,
the reasonable fees and disbursements of Cahill Gordon & Reindel) in connection
with the negotiation, preparation, execution and delivery of the Credit
Documents and the documents and instruments referred to therein and any
amendment, waiver or consent relating thereto and in connection with the
Administrative Agent's syndication efforts with respect to this Agreement; (ii)
pay all out-of-pocket costs and expenses of the Administrative Agent and each of
the Lenders in connection with the enforcement of the Credit Documents and the
documents and instruments referred to therein and, after a Default or an Event
of Default shall have occurred and be continuing, the protection of the rights
of the Administrative Agent and each of the Lenders thereunder (including,
without limitation, the fees and disbursements of counsel for the Administrative
Agent and for each of the Lenders); (iii) pay and hold each of the Lenders
harmless from and against any and all present and future stamp and other similar
taxes with respect to the foregoing matters and save each of the Lenders
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such
Lender) to pay such taxes; and (iv) indemnify each Agent and each Lender and
each of their Affiliates, and each of their respective officers, directors,
employees, representatives and agents from and hold each of them harmless
against any and all losses, liabilities, claims, damages or expenses incurred by
any of them as a result of, or arising out of, or in any way related to, or by
reason of, any investigation, litigation or other proceeding (whether or not any
such Person is a party thereto and whether or not any such investigation,
litigation or other proceeding is between or among any such Person, or
-87-
<PAGE>
any third Person or otherwise) related to the entering into and/or performance
of any Credit Document or the use of the proceeds of any Loans hereunder or the
consummation of any other transactions contemplated in any Credit Document (but
excluding any such losses, liabilities, claims, damages or expenses to the
extent found to have been incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified), in each case, including, without
limitation, the reasonable fees and disbursements of counsel and independent
consultants incurred in connection with any such investigation, litigation or
other proceeding.
11.02. Right of Setoff. In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence of an Event of Default, the Administrative
Agent and each Lender are hereby authorized at any time or from time to time,
without presentment, demand, protest or any other notice of any kind to the
Borrower or any of its Subsidiaries or any Guarantor or any other Person, any
such notice, to the full extent permitted by applicable law, being hereby
expressly waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing by the
Administrative Agent or such Lender (including, without limitation, by branches
and agencies of the Administrative Agent and such Lender wherever located) to or
for the credit or the account of the Borrower or any Guarantor against and on
account of the Obligations of the Borrower or any Guarantor to the
Administrative Agent or such Lender under this Agreement or under any of the
other Credit Documents, including, without limitation, all interests in
Obligations of the Borrower or any Guarantor purchased by such Lender pursuant
to Section 11.06(b), and all other claims of any nature or description arising
out of or connected with any Credit Document, irrespective of whether or not the
Administrative Agent or such Lender shall have made any demand hereunder and
although said Obligations shall be contingent or unmatured.
11.03. Notices. Except as otherwise expressly provided herein, all
notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, facsimile or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered, if to any Credit Party,
at the address specified for such Credit Party on Schedule XI; if to any Lender,
at the address specified for such Lender on Schedule II; or, at such other
address as shall be designated by any party in a written notice to the other
parties hereto. All such notices and communications shall be mailed,
telegraphed, telexed, telecopied or cabled or sent by overnight courier, and
shall be effective when received.
11.04. Benefit of Agreement. (a) This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the respective successors
and assigns of the parties hereto; provided, however, neither the Borrower nor
any Guarantor may assign or transfer any of its rights, obligations or interest
under any Credit Document without the prior written consent of the Lenders; and
provided, further, that, although any Lender may
-88-
<PAGE>
transfer, assign or grant participations in its rights hereunder, such Lender
shall remain a "Lender" for all purposes hereunder (and may not transfer or
assign all or any portion of its Commitment hereunder except as provided in
Section 11.04(b)) and the transferee, assignee or participant, as the case may
be, shall not constitute a "Lender" hereunder; and provided, further, that no
Lender shall transfer or grant any participation under which the participant
shall have rights to approve any amendment to or waiver of any Credit Document
except to the extent such amendment or waiver would (i) extend the Maturity
Date, or reduce the rate or extend the time of payment of interest or fees on
Loans in which such participant is participating (except in connection with a
waiver of applicability of any post-default increase in interest rates) or
reduce the principal amount thereof (it being understood that any amendment or
modification to the financial definitions in this Agreement shall not constitute
a reduction in any rate of interest or fees for purposes of this clause (i), or
increase the amount of the participant's participation over the amount thereof,
or increase the amount of the participant's participation over the amount
thereof then in effect (it being understood that a waiver of any Default or
Event of Default shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be permitted
without the consent of any participant if the participant's participation is not
increased as a result thereof) or (ii) consent to the assignment or transfer by
the Borrower of its rights and obligations under this Agreement. In the case of
any such participation, the participant shall not have any rights under any of
the Credit Documents (the participant's rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the participant relating thereto) and all amounts payable by
the Borrower hereunder shall be determined as if such Lender had not sold such
participation.
(b) Notwithstanding the foregoing, any Lender (or any Lender
together with one or more other Lenders) may (x) assign all or a portion of its
Commitment (and related outstanding Obligations hereunder) to (i) any Affiliate
of such Lender which is at least 50% owned by such Lender or its parent company
or to one or more Lenders or (ii) in the case of any Lender that is a fund that
invests in bank loans, any other fund that invests in bank loans and is managed
by the same investment advisor of such Lender or by an Affiliate of such
investment advisor or (y) assign all, or if less than all, a portion equal to at
least $5,000,000 in the aggregate for the assigning Lender or assigning Lenders,
of such Commitment (and related outstanding Obligations hereunder) to one or
more Eligible Transferees (treating any fund that invests in bank loans and any
other fund that invests in bank loans and is managed by the same investment
advisor of such fund or by an Affiliate of such fund as a single Eligible
Transferee), each of which assignees shall become a party to this Agreement as a
Lender by execution of an Assignment and Assumption Agreement; provided that (i)
at such time Schedule I shall be deemed modified to reflect the Commitments of
such new Lender and of the existing Lenders, (ii) upon surrender of the old
Notes, new Notes will be issued, at the Borrower's expense, to such new Lender
and to the assigning Lender, such new Notes to be in conformity with the
requirements of Section 1.04 (with appropriate modifications) to the extent
needed to reflect the revised Commitments, (iii) the
-89-
<PAGE>
consent of the Administrative Agent shall be required in connection with any
such assignment (other than an assignment by Fleet) pursuant to clause (y) of
this Section 11.04(b) and (iv) the Administrative Agent shall receive at the
time of each such assignment (other than an assignment by Fleet), from the
assigning or assignee Lender, the payment of a non-refundable assignment fee of
$3,500; and provided, further, that such transfer or assignment will not be
effective until recorded by the Administrative Agent on the Register pursuant to
Section 11.15. To the extent of any assignment pursuant to this Section
11.04(b), the assigning Lender shall be relieved of its obligations hereunder
with respect to its assigned Commitment. At the time of each assignment pursuant
to this Section 11.04(b) to a Person which is not already a Lender hereunder and
which is not a United States person (as such term is defined in Section
7701(a)(30) of the Code) for Federal income tax purposes, the respective
assignee Lender shall provide to the Borrower and the Administrative Agent the
appropriate Internal Revenue Service Forms (and, if applicable, a Section
2.06(b)(ii) Certificate) described in Section 2.06(b). Notwithstanding the
foregoing, prior to payment of the Nine-Month Fee, neither BTCo nor Fleet may
make an assignment of or grant a participation in its outstanding Loans (or, if
prior to the Borrowing Date, Commitments) in an amount greater than or equal to
37.5% of its initial Commitment without the prior written consent of the
Borrower.
(c) Nothing in this Agreement shall prevent or prohibit any Lender
from pledging its Loans and Notes hereunder to a Federal Reserve Bank in support
of borrowings made by such Lender from such Federal Reserve Bank.
11.05. No Waiver; Remedies Cumulative. No failure or delay on the
part of any party in exercising any right, power or privilege under any Credit
Document and no course of dealing between any Credit Party and the
Administrative Agent or any Lender shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, power or privilege under any Credit
Document preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder or thereunder. The rights and remedies
herein expressly provided are cumulative and not exclusive of any rights or
remedies which any party would otherwise have. No notice to or demand on any
Credit Party in any case shall entitle any Credit Party to any other or further
notice or demand in similar or other circumstances or constitute a waiver of the
rights of the Administrative Agent or the Lenders to any other or further action
in any circumstances without notice or demand.
11.06. Payments Pro Rata. (a) The Administrative Agent agrees that
promptly after its receipt of each payment from or on behalf of any Credit Party
in respect of any Obligations of such Credit Party, it shall, except as
otherwise provided in this Agreement, distribute such payment to the Lenders
(other than any Lender that has consented in writing to waive its pro rata share
of such payment) pro rata based upon their respective shares, if any, of the
Obligations with respect to which such payment was received.
-90-
<PAGE>
(b) Each of the Lenders agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise) which is applicable to the payment of the principal of, or interest
on, the Loans or fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, determined in accordance with the terms of this Agreement, then such
Lender receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations of the respective
Credit Party to such Lenders in such amount as shall result in a proportional
participation by all of the Lenders in such amount; provided that if all or any
portion of such excess amount is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
11.07. Calculations; Computations. (a) The financial statements to
be furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with GAAP consistently applied throughout the periods involved
(except as set forth in the notes thereto or as otherwise disclosed in writing
by the Borrower to the Lenders); provided that except as otherwise specifically
provided herein, all computations determining compliance with Sections 2.02 and
6, including definitions used therein, shall, in each case, utilize accounting
principles and policies in effect at the time of the preparation of, and in
conformity with those used to prepare, the financial statements delivered to the
Lenders pursuant to Section 4.08(b).
(b) All computations of interest and fees hereunder shall be based
on the actual number of days elapsed over a year of 360 days.
11.08. Governing Law; Submission to Jurisdiction; Venue. (a) THIS
AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE
GOVERNED BY THE LAW OF THE STATE OF NEW YORK. Any legal action or proceeding
with respect to this Agreement or any other Credit Document may be brought in
the courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Agreement, each
Credit Party hereby irrevocably accepts for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each Credit Party hereby further irrevocably waives any claim that any
such courts lack jurisdiction over such Credit Party, and agrees not to plead or
claim, in any legal action or proceeding with respect to any Credit Document
brought in any of the aforesaid courts, that any such court lacks jurisdiction
over such Credit Party. Each Credit Party ir-
-91-
<PAGE>
revocably consents to the service of process in any such action or proceeding by
the mailing of copies thereof by registered or certified mail, postage prepaid,
to such Credit Party, at its address for notices pursuant to Section 11.03, such
service to become effective 30 days after such mailing. Each Credit Party hereby
irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced under any Credit Document that service of process was in any way
invalid or ineffective. Nothing herein shall affect the right of the
Administrative Agent, any Lender or the holder of any Note to serve process in
any other manner permitted by applicable law or to commence legal proceedings or
otherwise proceed against any Credit Party in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection
which it may now or hereafter have to the laying of venue of any of the
aforesaid actions or proceedings arising out of or in connection with any Credit
Document brought in the courts referred to in clause (a) above and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.
11.09. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts executed by all of the parties hereto shall be lodged with the
Borrower and the Administrative Agent.
11.10. Effectiveness. This Agreement shall become effective on the
date (the "Closing Date") on which the Borrower, each Guarantor, the
Administrative Agent, the Syndication Agent and each of the Lenders shall have
signed a counterpart hereof (whether the same or different counterparts) and
shall have delivered the same to the Administrative Agent at the Notice Office
or, in the case of the Lenders, shall have given to the Administrative Agent
telephonic (confirmed in writing), written, telex or facsimile notice (actually
received) at such office that the same has been signed and mailed to it. The
Administrative Agent will give the Borrower and each Lender prompt written
notice of the occurrence of the Closing Date.
11.11. Headings Descriptive. The headings of the several
sections and subsections of this Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision
of this Agreement.
11.12. Amendment or Waiver; etc. (a) Neither this Agreement nor any
other Credit Document nor any terms hereof or thereof may be changed, waived,
discharged or terminated unless such change, waiver, discharge or termination is
in writing signed by the respective Credit Parties party thereto and the
Required Lenders; provided
-92-
<PAGE>
that no such change, waiver, discharge or termination shall, without the consent
of each Lender (with Obligations being directly affected thereby in the case of
the following clause (i)), (i) extend any Maturity Date, or reduce the rate or
extend the time of payment of interest or fees (including the Nine-Month Fee) on
any Loan, or reduce the principal amount thereof (it being understood that any
amendment or modification to the financial definitions in this Agreement shall
not constitute a reduction in any rate of interest or fees for purposes of this
clause (i)), (ii) amend, modify or waive any provision of this Section 11.12,
(iii) reduce the percentage specified in or otherwise change the definition of
Required Lenders or (iv) consent to the assignment or transfer by the Company of
any of its rights and obligations under this Agreement; provided, further, that
no such change, waiver, discharge or termination shall (x) increase the
Commitment of any Lender over the amount thereof then in effect without the
consent of such Lender (it being understood that waivers or modifications of
conditions precedent, covenants, Defaults or Events of Default shall not
constitute an increase of the Commitment of any Lender, and that an increase in
the available portion of any Commitment of any Lender shall not constitute an
increase in the Commitment of such Lender) or (y) without the consent of the
Administrative Agent, amend, modify or waive any provision of Section 10 as the
same applies to the Administrative Agent or any other provision as the same
relates to the rights or obligations of the Administrative Agent.
(b) If, in connection with any proposed change, waiver, discharge
or termination to any of the provisions of this Agreement as contemplated by
clauses (i) through (iv), inclusive, of the first proviso to Section 11.12(a),
the consent of the Required Lenders is obtained but the consent of one or more
of such other Lenders whose consent is required is not obtained, then the
Borrower shall have the right, so long as all non-consenting Lenders whose
individual consent is required are treated as described in either clauses (A) or
(B) below, to either (A) replace each such non-consenting Lender or Lenders with
one or more Replacement Lenders pursuant to Section 1.10 so long as at the time
of such replacement, each such Replacement Lender consents to the proposed
change, waiver, discharge or termination or (B) repay outstanding Loans of such
Lender which gave rise to the need to obtain such Lender's consent, in
accordance with Section 2.01; provided that, unless the Loans repaid pursuant to
preceding clause (B) are immediately replaced in full at such time through the
addition of new Lenders or the increase of outstanding Loans of existing Lenders
(who in each case must specifically consent thereto), then in the case of any
action pursuant to preceding clause (B) the Required Lenders (determined before
giving effect to the proposed action) shall specifically consent thereto;
provided, further, that in any event the Borrower shall not have the right to
replace a Lender or repay its Loans solely as a result of the exercise of such
Lender's rights (and the withholding of any required consent by such Lender)
pursuant to the second proviso to Section 11.12(a).
-93-
<PAGE>
11.13. Survival. All indemnities set forth herein including, without
limitation, in Sections 1.07, 1.08, 2.06, 10.07 and 11.01 shall survive the
execution, delivery and termination of this Agreement and the Notes and the
making and repayment of the Loans.
11.14. Domicile of Loans. Each Lender may transfer and carry its
Loans at, to or for the account of any branch office, subsidiary or affiliate of
such Bank; provided that the Borrower shall not be responsible for costs arising
under Section 1.07, 1.08 or 2.06 resulting from any such transfer (other than a
transfer pursuant to Section 1.09) to the extent such costs would not otherwise
be applicable to such Lender in the absence of such transfer.
11.15. Register. The Borrower hereby designates the Administrative
Agent to serve as the Borrower's agent, solely for purposes of this Section
11.15, to maintain a register (the "Register") on which it will record the Loans
made by each of the Lenders and each repayment in respect of the principal
amount of the Loans of each Lender. Failure to make any such recordation, or any
error in such recordation, shall not affect the Borrower's obligations in
respect of such Loans. With respect to any Lender, the transfer of the rights to
the principal of, and interest on, any Loan shall not be effective until such
transfer is recorded on the Register maintained by the Administrative Agent with
respect to ownership of such Loans and prior to such recordation all amounts
owing to the transferor with respect to such Loans shall remain owing to the
transferor. The registration of assignment or transfer of all or part of any
Loans shall be recorded by the Administrative Agent on the Register only upon
the acceptance by the Administrative Agent of a properly executed and delivered
Assignment and Assumption Agreement pursuant to Section 11.04(b). Coincident
with the delivery of such an Assignment and Assumption Agreement to the
Administrative Agent for acceptance and registration of assignment or transfer
of all or part of a Loan, or as soon thereafter as practicable, the assigning or
transferor Lender shall surrender the Notes (if any) evidencing such Loans, and
thereupon one or more new Notes in the same aggregate principal amount shall be
issued to the assigning or transferor Lender and/or the new Lender upon their
request of same. The Parent and the Borrower, jointly and severally, agree to
indemnify the Administrative Agent from and against any and all losses, claims,
damages and liabilities of whatsoever nature which may be imposed on, asserted
against or incurred by the Administrative Agent in performing its duties under
this Section 11.15, except to the extent that any such losses, claims, damages
or liabilities are found to have resulted from the gross negligence or willful
misconduct of the Administrative Agent.
11.16. Confidentiality. Each of the Lenders agrees that it will use
its reasonable efforts not to disclose without the prior consent of the Borrower
(other than to Affiliates of such Lenders and their respective directors,
employees, auditors, counsel or other professional advisors) any confidential
information with respect to the Borrower or any of its Subsidiaries which is
furnished pursuant to this Agreement; provided that any Lender may disclose any
such information (a) that is or has become generally available to the public,
(b) as may be required or appropriate (x) in any report, statement or testimony
submit-
-94-
<PAGE>
ted to any municipal, state or Federal or other governmental regulatory body
having or claiming to have jurisdiction over such Lender or to the Federal
Reserve Board or the Federal Deposit Insurance Corporation or similar
organizations (whether in the United States or elsewhere) or their successors or
(y) in connection with any request or requirement of any such regulatory body,
(c) as may be required or appropriate in response to any summons or subpoena or
in connection with any litigation, (d) to comply with any law, order, regulation
or ruling applicable to such Lender, and (e) to any prospective transferee in
connection with any contemplated transfer of any of the Notes or any interest
therein by such Lender; provided that such prospective transferee agrees to be
bound by this Section 11.16 to the same extent as such Lender.
11.17. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
11.18. DNE Systems. With respect to all provisions of this Agreement
and other Credit Documents, all of the Capital Stock of DNE Systems owned by the
Parent shall be treated as if it is all owned directly by the Borrower. As an
example of the foregoing, to the extent that provisions of this Agreement and
the other Credit Documents would allow DNE Systems, as a Restricted Subsidiary
of the Borrower, to pay dividends to its shareholders or make loans, advances or
distributions to its parent company or a subsidiary of its parent company, such
dividends, loans or advances shall only be permitted hereunder or under the
other Credit Documents to the extent that they are paid to the Borrower or a
Restricted Subsidiary of the Borrower that is a Guarantor (except to the extent
this Agreement or the Credit Documents specifically would otherwise allow a
Restricted Subsidiary of the Company to make such dividends or other payments to
the Parent). Without limiting the foregoing, all financial statements and all
financial tests contained herein shall be determined as if all the Capital Stock
of DNE Systems owned by the Parent is owned by the Borrower. Notwithstanding the
other provisions of this Section 11.19, the Borrower and its Restricted
Subsidiaries may make Investments in DNE Systems or its Subsidiaries only to the
extent necessary to fund, in accordance with existing business practice, DNE
Systems' existing operations as of the Borrowing Date; provided, however, that,
notwithstanding the foregoing, the Borrower and its Restricted Subsidiaries that
are Guarantors may make Investments in DNE Systems and its Subsidiaries to the
extent that such Investments are permitted by and are in accordance with the
terms of Section 6.02(b)(15) (such Investments decreasing the basket provided in
such Section 6.02(b)(15)).
-95-
<PAGE>
12. GUARANTEE.
12.01. The Guarantee. (a) In order to induce the Lenders to enter
into this Agreement and to extend credit hereunder and in recognition of the
direct and indirect benefits to be received by each Guarantor from the proceeds
of the Loans, each Guarantor hereby agrees with the Lenders as follows: Each
Guarantor hereby unconditionally and irrevocably, jointly and severally,
guarantees, as primary obligor and not merely as surety the full and prompt
payment when due, whether upon maturity, acceleration or otherwise, of any and
all of the Guaranteed Obligations of the Borrower to the Guaranteed Creditors.
If any or all of the Guaranteed Obligations of the Borrower to the Guaranteed
Creditors becomes due and payable hereunder, each Guarantor, jointly and
severally, and unconditionally promises to pay such indebtedness to the
Guaranteed Creditors, or order, on demand, together with any and all expenses
(including reasonable legal fees and expenses) which may be incurred by the
Guaranteed Creditors in collecting or enforcing any of the Guaranteed
Obligations. If claim is ever made upon any Guaranteed Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower), then and in such event each
Guarantor agrees that any such judgment, decree, order, settlement or compromise
shall be binding upon such Guarantor, notwithstanding any revocation of this
Guarantee or any other instrument evidencing any liability of the Borrower, and
each Guarantor shall be and remain jointly and severally liable to the aforesaid
payees hereunder for the amount so repaid or recovered to the same extent as if
such amount had never originally been received by any such payee. This is a
guarantee of payment and not of collection.
(b) Anything contained in this Guarantee to the contrary
notwithstanding, the obligations of each Subsidiary Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of the Bankruptcy Code or any applicable
provisions of comparable state law (collectively, the "Fraudulent Transfer
Laws"), in each case after giving effect to all other liabilities of such
Subsidiary Guarantor, contingent or otherwise, that are relevant under the
Fraudulent Transfer Laws (specifically excluding, however, any liabilities of
such Subsidiary Guarantor in respect of intercompany Indebtedness to the
Borrower or other Affiliates of the Borrower to the extent that such
Indebtedness would be discharged in an amount equal to the amount paid by such
Subsidiary Guarantor hereunder, and after giving effect (x) to the direct and
indirect benefits received by such Subsidiary Guarantor as a result of the
Credit Documents and the Loans and (y) as assets to the value (as determined
under the applicable provisions of the Fraudulent Transfer Laws) of any rights
to subrogation, reimbursement, indemnification or contribution of such
Subsidiary Guarantor pursuant to applicable law or pursuant to
-96-
<PAGE>
the terms of any agreement (including without limitation any such right of
contribution under Section 12.01(c)).
(c) The Subsidiary Guarantors under this Guarantee together desire
to allocate among themselves in a fair and equitable manner their obligations
arising under this Guarantee. Accordingly, in the event any payment or
distribution is made on any date by any Subsidiary Guarantor under this
Guarantee (a "Funding Guarantor") that exceeds its Fair Share (as defined below)
as of such date, that Funding Guarantor shall be entitled to a contribution from
each of the other Subsidiary Guarantors in the amount of such other Subsidiary
Guarantor's Fair Share Shortfall (as defined below) as of such date, with the
result that all such contributions will cause each Subsidiary Guarantor's
Aggregate Payments (as defined below) to equal its Fair Share as of such date.
"Fair Share" means, with respect to a Subsidiary Guarantor as of any date of
determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum
Amount (as defined below) with respect to such Subsidiary Guarantor to (y) the
aggregate of the Adjusted Maximum Amounts with respect to all Subsidiary
Guarantors, multiplied by (ii) the aggregate amount paid or distributed on or
before such date by all Funding Guarantors under this Guarantee in respect of
the obligations guarantied. "Fair Share Shortfall" means, with respect to a
Subsidiary Guarantor as of any date of determination, the excess, if any, of the
Fair Share of such Subsidiary Guarantor over the Aggregate Payments of such
Subsidiary Guarantor. "Adjusted Maximum Amount" means, with respect to a
Subsidiary Guarantor as of any date of determination, the maximum aggregate
amount of the obligations of such Subsidiary Guarantor under this Guarantee,
determined as of such date in accordance with this Section 12.01; provided that,
solely for purposes of calculating the "Adjusted Maximum Amount" with respect to
any Subsidiary Guarantor for purposes of this Section 12.01(c), any assets or
liabilities of such Subsidiary Guarantor arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to or obligations of
contribution hereunder shall not be considered as assets or liabilities of such
Subsidiary Guarantor. "Aggregate Payments" means, with respect to a Subsidiary
Guarantor as of any date of determination, an amount equal to (i) the aggregate
amount of all payments and distributions made on or before such date by such
Subsidiary Guarantor in respect of this Guarantee (including, without
limitation, in respect of this Section 12.01(c)) minus (ii) the aggregate amount
of all payments received on or before such date by such Subsidiary Guarantor
from the other Subsidiary Guarantors as contributions under this Section
12.01(c). The amounts payable as contributions hereunder shall be determined as
of the date on which the related payment or distribution is made by the
applicable Funding Guarantor. The allocation among Subsidiary Guarantors of
their obligations as set forth in this Section 12.01(c) shall not be construed
in any way to limit the liability of any Subsidiary Guarantor hereunder.
12.02. Nature of Liability. The liability of each Guarantor
hereunder is joint and several and exclusive and independent of any security for
or other guarantee of the Guaranteed Obligations of the Borrower whether
executed by such Guarantor, any other
-97-
<PAGE>
Guarantor, any other guarantor or by any other party, and the liability of each
Guarantor hereunder is not affected or impaired by (a) any direction as to
application of payment by the Borrower or by any other party, or (b) any other
continuing or other guarantee, undertaking or maximum liability of a guarantor
or of any other party as to the Guaranteed Obligations of the Borrower, or (c)
any payment on or in reduction of any such other guarantee or undertaking, or
(d) any dissolution, termination or increase, decrease or change in personnel by
the Borrower, or (e) any payment made to the Guaranteed Creditors on the
Guaranteed Obligations which any such Guaranteed Creditor repays to the Borrower
pursuant to court order in any bankruptcy, reorganization, arrangement,
moratorium or other debtor relief proceeding, and each Guarantor, to the extent
permitted by applicable law, waives any right to the deferral or modification of
its obligations hereunder by reason of any such proceeding.
12.03. Independent Obligation. The obligations of each Guarantor
hereunder are independent of the obligations of any other Guarantor, any other
guarantor, any other party or the Borrower, and a separate action or actions may
be brought and prosecuted against each Guarantor whether or not action is
brought against any other Guarantor, any other guarantor, any other party or the
Borrower and whether or not any other guarantor, any other party or the Borrower
is joined in any such action or actions. Each Guarantor waives, to the full
extent permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by the Borrower or
other circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to any Guarantor.
12.04. Authorization. Each Guarantor authorizes the Guaranteed
Creditors without notice or demand (except as shall be required by applicable
statute and cannot be waived), and without affecting or impairing its liability
hereunder, from time to time to:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew, increase, accelerate or alter,
any of the Guaranteed Obligations (including any increase or decrease in
the rate of interest thereon), any security therefor, or any liability
incurred directly or indirectly in respect thereof, and the Guarantee
herein made shall apply to the Guaranteed Obligations as so changed,
extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any of
those hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset there against;
-98-
<PAGE>
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Borrower to its creditors other than
the Guaranteed Creditors;
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Guaranteed Creditors
regardless of what liability or liabilities of the Borrower remain unpaid;
(g) consent to or waive any breach of, or any act, omission or
default under, this Agreement, any other Credit Document or any of the
instruments or agreements referred to herein or therein, or otherwise
amend, modify or supplement this Agreement, any other Credit Document or
any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge of
any Guarantor from its liabilities under this Guarantee.
12.05. Reliance. It is not necessary for the Guaranteed Creditors to
inquire into the capacity or powers of the Borrower or the officers, directors,
partners or agents acting or purporting to act on its behalf, and any Guaranteed
Obligations made or created in reliance upon the professed exercise of such
powers shall be guaranteed hereunder.
12.06. Subordination. Any of the indebtedness of the Borrower now or
hereafter owing to any Guarantor is hereby subordinated to the Guaranteed
Obligations of the Borrower owing to the Guaranteed Creditors; and if the
Administrative Agent so requests at a time when an Event of Default exists, all
such indebtedness of the Borrower to any Guarantor shall be collected, enforced
and received by such Guarantor for the benefit of the Guaranteed Creditors and
be paid over to the Administrative Agent on behalf of the Guaranteed Creditors
on account of the Guaranteed Obligations of the Borrower to the Guaranteed
Creditors, but without affecting or impairing in any manner the liability of any
Guarantor under the other provisions of this Guarantee (other than the reduction
of any such liability attributable to such payment). Prior to the transfer by
any Guarantor of any note or negotiable instrument evidencing any of the
indebtedness of the Borrower to such Guarantor, such Guarantor shall mark such
note or negotiable instrument with a legend that the
-99-
<PAGE>
same is subject to this subordination. Without limiting the generality of the
foregoing, each Guarantor hereby agrees with the Guaranteed Creditors that it
will not exercise any right of subrogation which it may at any time otherwise
have as a result of this Guarantee (whether contractual, under Section 509 of
the Bankruptcy Code or otherwise) until all Guaranteed Obligations have been
irrevocably paid in full in cash.
12.08. Waiver. (a) Each Guarantor waives any right (except as shall
be required by applicable statute and cannot be waived) to require any
Guaranteed Creditor to (i) proceed against the Borrower, any other Guarantor,
any other guarantor or any other party, (ii) proceed against or exhaust any
security held from the Borrower, any other Guarantor, any other guarantor or any
other party or (iii) pursue any other remedy in any Guaranteed Creditor's power
whatsoever. Each Guarantor waives any defense based on or arising out of any
defense of the Borrower, any other Guarantor, any other guarantor or any other
party, other than payment in full of the Guaranteed Obligations, based on or
arising out of the disability of the Borrower, any other Guarantor, any other
guarantor or any other party, or the unenforceability of the Guaranteed
Obligations or any part thereof from any cause, or the cessation from any cause
of the liability of the Borrower other than payment in full of the Guaranteed
Obligations. The Guaranteed Creditors may, at their election, foreclose on any
security held by the Administrative Agent or any other Guaranteed Creditor by
one or more judicial or nonjudicial sales, whether or not every aspect of any
such sale is commercially reasonable (to the extent such sale is permitted by
applicable law), or exercise any other right or remedy the Guaranteed Creditors
may have against the Borrower or any other party, or any security, without
affecting or impairing in any way the liability of any Guarantor hereunder
except to the extent the Guaranteed Obligations have been paid. Each Guarantor
waives any defense arising out of any such election by the Guaranteed Creditors,
even though such election operates to impair or extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor against
the Borrower or any other party or any security.
(b) Each Guarantor waives all presentments, demands for
performance, protests and notices, including, without limitation, notices of
nonperformance, notices of protest, notices of dishonor, notices of acceptance
of this Guarantee, and notices of the existence, creation or incurring of new or
additional Guaranteed Obligations. Each Guarantor assumes all responsibility for
being and keeping itself informed of the Borrower's financial condition and
assets, and of all other circumstances bearing upon the risk of nonpayment of
the Guaranteed Obligations and the nature, scope and extent of the risks which
each Guarantor assumes and incurs hereunder, and agrees that the Guaranteed
Creditors shall have no duty to advise any Guarantor of information known to
them regarding such circumstances or risks.
12.09. Release of Guarantee. Upon the sale or disposition (whether
by merger, stock purchase, asset sale or otherwise) of a Subsidiary Guarantor
(or all or sub-
-100-
<PAGE>
stantially all its assets) to an entity which is not a Subsidiary of the
Borrower and which sale or disposition is otherwise in compliance with the terms
of this Agreement or the designation of a Restricted Subsidiary that is a
Subsidiary Guarantor as an Unrestricted Subsidiary in compliance with the terms
of this Agreement, such Subsidiary Guarantor shall be deemed released from all
obligations under this Section 12 without any further action required on the
part of the Administrative Agent or any Lender; provided, however, that (x) no
Default or Event of Default shall have occurred and be continuing and (y) any
such termination shall occur only to the extent that all obligations of such
Subsidiary Guarantor with respect to the Senior Secured Credit Agreement shall
also terminate upon such release, sale or transfer. In addition, if the Mexican
Subsidiaries are required to become Guarantors, the Borrower may request the
Administrative Agent, on behalf of the Lenders, to consent, effective after the
completion of the Borrower's second full fiscal year after the Initial Borrowing
Date, to the release of the Guarantee of the Mexican Subsidiaries, which consent
may not be unreasonably withhold or delayed. The Administrative Agent shall
deliver an appropriate instrument evidencing such release upon receipt of a
request by the Borrower accompanied by an Officers' Certificate certifying as to
the compliance with this Section 12.08. Any Subsidiary Guarantor not so released
remains liable for the full amount of principal of and interest on the Loans as
provided in this Section 12.
[Signature Pages Follow]
-101-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
SUPERIOR/ESSEX CORP., as Borrower
By:
----------------------------------
Name:
Title:
SUPERIOR TELECOM INC., as Guarantor
By:
----------------------------------
Name:
Title:
SUPERIOR TELECOMMUNICATIONS, INC., as
Guarantor
By:
----------------------------------
Name:
Title:
DNE SYSTEMS, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
<PAGE>
DNE MANUFACTURING & SERVICE COMPANY,
as Guarantor
By:
----------------------------------
Name:
Title:
DNE TECHNOLOGIES, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
TEXAS SUT INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX GROUP, INC., as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX INTERNATIONAL INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
<PAGE>
ACTIVE INDUSTRIES, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
DIAMOND WIRE & CABLE CO.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX GROUP, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX GROUP MEXICO INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX MEXICO HOLDINGS, L.L.C.,
as Guarantor
By:
----------------------------------
Name:
Title:
<PAGE>
ESSEX SERVICES, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX TECHNOLOGY, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX WIRE CORPORATION,
as Guarantor
By:
----------------------------------
Name:
Title:
<PAGE>
BANKERS TRUST COMPANY,
as Administrative Agent
By:
----------------------------------
Name:
Title:
FLEET CORPORATE FINANCE, INC.,
as Syndication Agent
By:
----------------------------------
Name:
Title:
<PAGE>
FLEET CORPORATE FINANCE, INC.,
as Lender
By:
----------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
as Lender
By:
----------------------------------
Name:
Title:
<PAGE>
SCHEDULE I
LOAN COMMITMENTS
Term A Loan Term B Loan
Lender Commitment Commitment Total
- - ------ ---------- ---------- -----
Bankers Trust Company $0 $80,000,000 $80,000,000
Fleet Corporate Finance, Inc. 120,000,000 0 120,000,000
------------ ----------- ------------
$120,000,000 $80,000,000 $200,000,000
<PAGE>
SCHEDULE II
LENDER ADDRESSES
Lender Address
Bankers Trust Company One Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Attention: Anthony LoGrippo
Telephone No.: (212) 250-4886
Facsimile No.: (212) 250-7218
Fleet Corporate Finance, Inc. One Federal Street
3rd Floor
Boston, Massachusetts 02110
Attention: Howard Diamond
Telephone No.: (617) 346-0042
Facsimile No.: (617) 346-5093
1185 Avenue of the Americas
16th Floor, NYNYS16D
New York, NY 10036
Attention: Robert Hornstein
Telephone No.: (212) 819-6142
Facsimile No.: (212) 819-6215
<PAGE>
Schedule XI
CREDIT PARTY ADDRESSES
Credit Party Address
- - ------------ -------
Superior/Essex Corp. 150 Interstate North Parkway
Suite 300
Atlanta, Georgia 30334
Telephone No.: (770) 953-8338
Facsimile No.: (770) 984-3218
Superior Telecommunications Inc. 150 Interstate North Parkway
Suite 300
Atlanta, Georgia 30334
Telephone No.: (770) 953-8338
Facsimile No.: (770) 984-3218
Superior Telecom Inc. 150 Interstate North Parkway
Suite 300
Atlanta, Georgia 30334
Telephone No.: (770) 953-8338
Facsimile No.: (770) 984-3218
DNE Systems, Inc. 50 Barnes Park North
Wallingford, Connecticut 06492
Telephone No.: (203)
Facsimile No.: (203) 984-3218
DNE Technologies, Inc. 50 Barnes Park North
Wallingford, Connecticut 06492
Telephone No.: (203)
Facsimile No.: (203) 265-7801
Texas SUT Inc. 150 Interstate North Parkway
Suite 300
Atlanta, Georgia 30334
Telephone No.: (770) 953-8338
Facsimile No.: (770) 984-3218
Essex Group, Inc. 1601 Wall Street
Fort Wayne, Indiana 46802
Telephone No.: (219) 461-4000
<PAGE>
Facsimile No.: (219) 461-4469
Essex International Inc. 1601 Wall Street
Fort Wayne, Indiana 46802
Telephone No.: (219) 461-4000
Facsimile No.: (219) 461-4469
Active Industries, Inc. 1601 Wall Street
Fort Wayne, Indiana 46802
Telephone No.: (219) 461-4000
Facsimile No.: (219) 461-4469
Diamond Wire & Cable Co. 1601 Wall Street
Fort Wayne, Indiana 46802
Telephone No.: (219) 461-4000
Facsimile No.: (219) 461-4469
Essex Mexico Holdings, LLC 1601 Wall Street
Fort Wayne, Indiana 46802
Telephone No.: (219) 461-4000
Facsimile No.: (219) 461-4469
Essex Group Mexico Inc. 1601 Wall Street
Fort Wayne, Indiana 46802
Telephone No.: (219) 461-4000
Facsimile No.: (219) 461-4469
Essex Wire Corporation 1601 Wall Street
Fort Wayne, Indiana 46802
Telephone No.: (219) 461-4000
Facsimile No.: (219) 461-4469
Essex Technology Inc. 1601 Wall Street
Fort Wayne, Indiana 46802
Telephone No.: (219) 461-4000
Facsimile No.: (219) 461-4469
<PAGE>
ANNEX A
REGISTRATION RIGHTS PROVISIONS
Section 1. Definitions
Advice: See the last paragraph of Section 4.
DTC: See Section 4(i).
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Holders: Any holder of the Notes.
Indemnified Parties: See Section 6(a).
Indenture: The indenture by and among the Issuers and a trustee
reasonably satisfactory to the Agents, pursuant to which the Exchange Notes have
been or may be issued.
Inspectors: See Section 4(p).
Issuers: Company and the Guarantors.
NASD: See Section 4(n).
Exchange Notes: The senior subordinated notes issued pursuant to
Section 5.09.
Prospectus: The prospectus included in any Registration Statement
(including, without limitation, any prospectus subject to completion and a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus supplement, with respect to the terms of the offering of any portion
of the Registrable Notes covered by such Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
Registrable Notes: The Exchange Notes upon original issuance thereof
and at all times subsequent thereto, until in the case of any such Exchange Note
(i) a Registration Statement covering such Exchange Note has been declared
effective and such Exchange Note has been disposed of in accordance with such
effective Registration Statement, (ii) it is
<PAGE>
A-2
sold in compliance with Rule 144, (iii) it shall have been otherwise transferred
and a new certificate for any such Exchange Note not bearing a legend
restricting further transfer shall have been delivered by the Issuers, or (iv)
it ceases to be outstanding.
Registration Statement: Any registration statement of the Issuers
filed or required to be filed with the SEC pursuant to the provisions of this
Agreement (including the Shelf Registration), including the Prospectus,
amendments and supplements to such registration statement, including
post-effective amendments, all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
Rule 144: Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the SEC.
Rule 144A: Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or any similar rule (other than Rule 144) or
regulation hereafter adopted by the SEC.
Rule 415: Rule 415 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
Shelf Registration: The registration statement covering all of the
Exchange Notes that may be issued under the Indenture which is required to be
filed and caused to become effective pursuant to Section 5.09.
Shelf Termination Date: See Section 2(b).
Subsequent Shelf Registration: See Section 2(b).
TIA: The Trust Indenture Act of 1939, as amended.
underwritten registration or underwritten offering: A registration
in which securities of any of the Issuers are sold to an underwriter for
reoffering to the public.
Section 2. Shelf Registration
(a) Shelf Registration. The Issuers shall not permit any securities
other than the Registrable Notes to be included in the Shelf Registration or any
Subsequent Shelf
<PAGE>
A-3
Registration. Each of the Issuers shall use its best efforts to keep the Shelf
Registration continuously effective under the Securities Act until the date
which is 24 months from the date that the Exchange Notes are issued under the
Indenture (subject to extension pursuant to the last paragraph of Section 4)
(the "Shelf Termination Date"), or such shorter period ending when all of the
Registrable Notes covered by such Shelf Registration have been sold in the
manner set forth and as contemplated in such Shelf Registration or when all of
the Registrable Notes covered by such Shelf Registration and eligible for resale
pursuant to Rule 144(k).
(b) Subsequent Shelf Registrations. If the Shelf Registration or any
Subsequent Shelf Registration ceases to be effective for any reason at any time
prior to the Shelf Termination Date (other than because of the sale of all
Registrable Notes covered by such Shelf Registration in the manner set forth and
as contemplated in such Shelf Registration), each of the Issuers shall use its
best efforts to obtain the prompt withdrawal of any order suspending the
effectiveness thereof, and in any event shall within 30 days of such cessation
of effectiveness amend such Shelf Registration in a manner reasonably expected
to obtain the withdrawal of the order suspending the effectiveness thereof or
file an additional "shelf" Registration Statement pursuant to Rule 415 covering
all of the Registrable Notes which were covered by such Shelf Registration that
have not been sold in the manner set forth and as contemplated in such Shelf
Registration (a "Subsequent Shelf Registration"). If a Subsequent Shelf
Registration is filed, each of the Issuers shall use its reasonable best efforts
to cause such Subsequent Shelf Registration to be declared effective as soon as
practicable after such filing and to keep such Registration Statement
continuously effective until the Shelf Termination Date. As used herein, the
term "Shelf Registration" means the Shelf Registrations and any Subsequent Shelf
Registrations.
(c) Supplements and Amendments. The Issuers shall promptly
supplement and amend a Shelf Registration if required by the rules, regulations
or instructions applicable to the registration form used for such Shelf
Registration (including, without limitation, to add the names of Holders as
selling securityholders), if required by the Securities Act, or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Registrable Notes covered by such Registration Statement or by any underwriter
of such Registrable Notes.
Section 3. Underwritten Registrations
If any of the Registrable Notes covered by any Shelf Registration
are to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Administrative Agent and the Syndication Agent and reasonably acceptable
to the Borrower. In any underwritten offering, the Borrower and Parent agree to
make their respective senior officers and repre-
<PAGE>
A-4
sentatives available for one or more road shows or investor meetings as may be
reasonably required to market the Registrable Notes is such underwritten
offering.
Section 4. Registration Procedures
In connection with the filing of any Registration Statement, the
Issuers shall as expeditiously as possible:
(a) Prepare and file with the SEC a Registration Statement as
prescribed by Section 2 hereof and use their best efforts to cause each such
Registration Statement or Registration Statements to become effective and remain
effective as provided herein; provided, however, before filing any Registration
Statement or Prospectus or any amendments or supplements thereto (not including
documents that would be incorporated or deemed to be incorporated therein by
reference), the Issuers shall afford the Holders of the Registrable Notes
covered by such Registration Statement, their counsel and the managing
underwriters, if any, an opportunity to review, promptly, copies of all such
documents proposed to be filed; provided, however, that the Issuers shall not be
required to afford such Persons an opportunity to review a copy of any
amendments or supplements to a Registration Statement or Prospectus which are
made solely as a result of any filing by the Issuers of reports required to be
filed pursuant to the Exchange Act. The Issuers shall not file any Registration
Statement or Prospectus or any amendments or supplements thereto in respect of
which the Holders must be afforded an opportunity to review prior to the filing
of such document, if the Holders of a majority in aggregate principal amount of
the Registrable Notes covered by such Registration Statement, their counsel, or
the managing underwriters, if any, shall reasonably object within five business
days after the receipt thereof.
(b) Prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement continuously effective for the time periods prescribed
hereby; cause the related Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions then in force) under the Securities Act; and comply
in all material respects with the provisions of the Securities Act, the Exchange
Act and the rules and regulations of the SEC promulgated thereunder applicable
to it with respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so supplemented.
(c) Notify the selling Holders of Registrable Notes, their counsel
and the managing underwriters, if any, promptly (but in any event within two
business days after becoming aware thereof), and confirm such notice in writing,
(i) when a Prospectus or any Prospectus supplement or post-effective amendment
has been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective (including in such
notice a written statement that any Holder may, upon request, obtain,
<PAGE>
A-5
without charge, one conformed copy of such Registration Statement or
post-effective amendment including financial statements and schedules but
excluding documents incorporated or deemed to be incorporated by reference and
exhibits), (ii) of the issuance by the SEC of any stop order suspending the
effectiveness of such Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of any
proceedings for that purpose, (iii) if at any time when a prospectus is required
by the Securities Act to be delivered in connection with sales of the
Registrable Notes covered by such Registration Statement the representations and
warranties of the Issuers contained in any underwriting agreement contemplated
by Section 4(o) cease to be true and correct, (iv) of the receipt by the Issuers
of any notification with respect to the suspension of the qualification or
exemption from qualification of such Registration Statement or any of the
Registrable Notes for offer or sale in any jurisdiction, or the initiation or
threatening of any proceeding for such purpose, (v) of the happening of any
event, the existence of any condition or any information becoming known that
makes any statement made in such Registration Statement or related Prospectus or
any document incorporated or deemed to be incorporated therein by reference
untrue in any material respect or that requires the making of any changes in
such Registration Statement, Prospectus or documents so that, in the case of
such Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, not misleading, and that in the
case of the Prospectus, it will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and (vi) of any of the Issuers' reasonable
determination that a post-effective amendment to such Registration Statement
would be appropriate.
(d) Use their best efforts to prevent the issuance of any order
suspending the effectiveness of a Registration Statement or of any order
preventing or suspending the use of a Prospectus or suspending the qualification
(or exemption from qualification) of any of the Registrable Notes for sale in
any jurisdiction, and, if any such order is issued, to use their best efforts
obtain the withdrawal of any such order at the earliest possible moment.
(e) If requested by the managing underwriters, if any, or the
Holders of a majority in aggregate principal amount of the Registrable Notes
being sold in connection with an underwritten offering, (i) promptly incorporate
in a prospectus supplement or post-effective amendment such information as the
managing underwriters, if any, or such Holders reasonably request consistent
with applicable law to be included therein, (ii) make all required filings of
such prospectus supplement or such post-effective amendment as soon as
practicable after the Issuers received notification of the matters to be
incorporated in such prospectus supplement or post-effective amendment, and
(iii) supplement or make amendments to such Registration Statement.
<PAGE>
A-6
(f) Furnish to each selling holder of Registrable Notes who so
requests and to counsel and each managing underwriter, if any, without charge,
one conformed copy of the Registration Statement and each post-effective
amendment thereto, including financial statements and schedules, and, only if
requested, all documents incorporated or deemed to be incorporated therein by
reference and all exhibits.
(g) Deliver to each selling holder of Registrable Notes, their
counsel and the underwriters, if any, without charge, as many copies of each
Prospectus (including each form of preliminary prospectus) and each amendment or
supplement thereto and, if so requested, one (1) copy of any documents
incorporated by reference therein as such Persons may reasonably request; and,
subject to the last paragraph of this Section 4, each Issuer hereby consents to
the use of such Prospectus and each amendment or supplement thereto by each of
the selling Holders of Registrable Notes and the underwriters or agents, if any,
in connection with the offering and sale of the Registrable Notes covered by
such Prospectus and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Notes, to use their
best efforts to register or qualify, and to cooperate with the selling Holders
of Registrable Notes, the underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from such
registration or qualification) of such Registrable Notes for offer and sale
under the securities or Blue Sky laws of such jurisdictions within the United
States as any selling holder, or the managing underwriters reasonably request in
writing; provided that where Registrable Notes are offered other than through an
underwritten offering, the Issuers agree to cause their counsel to perform Blue
Sky investigations and file registrations and qualifications required to be
filed pursuant to this Section 4(h); keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and all other
acts or things reasonably necessary or advisable to enable the disposition in
such jurisdictions of the Registrable Notes covered by the applicable
Registration Statement; provided, however, that none of the Issuers shall be
required to (A) qualify generally to do business in any jurisdiction where it is
not then so qualified, (B) qualify as a dealer in securities in any jurisdiction
where it would not otherwise be required to qualify, (C) take any action that
would subject it to general service of process in any such jurisdiction where it
is not then so subject or (D) become subject to taxation in any such
jurisdiction where it is not then so subject.
(i) Cooperate with the selling holders of Registrable Notes and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Notes to be sold, which certificates
shall not bear any restrictive legends (assuming the effectiveness of the
Registration Statement) and shall be in a form eligible for deposit with The
Depository Trust Company ("DTC"); and enable such Regis-
<PAGE>
A-7
trable Notes to be in such denominations and registered in such names as the
managing underwriters, if any, or selling holders of Registrable Notes may
reasonably request at least two business days prior to any sale of Registrable
Notes.
(j) Use its best efforts to cause the Registrable Notes covered by
the Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller or
sellers thereof or the underwriters, if any, to consummate the disposition of
such Registrable Notes, except as may be required solely as a consequence of the
nature of such selling holder's business, in which case the Issuers will
cooperate in all reasonable respects with the filing of such registration and
the granting of such approvals.
(k) Upon the occurrence of any event contemplated by Section
4(c)(ii), 4(c)(iv), 4(c)(v) or 4(c)(vi), as promptly as practicable prepare and
file with the SEC, at the joint and several expense of each of the Issuers, a
supplement or post-effective amendment to the Registration Statement or a
supplement to the related Prospectus or any document incorporated or deemed to
be incorporated therein by reference, or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable Notes being
sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(l) Use its best efforts to cause the Registrable Notes covered by a
Registration Statement to be rated with Moody's and S&P.
(m) Prior to the effective date of any Registration Statement
relating to the Registrable Notes, provide a CUSIP number for the Registrable
Notes.
(n) Cooperate in all reasonable respects with each selling holder of
Registrable Notes covered by any Registration Statement and each underwriter, if
any, participating in the disposition of such Registrable Notes and their
respective counsel in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. (the "NASD").
(o) If requested by Holders of a majority in aggregate principal
amount of Registrable Notes covered by the Registration Statement, enter into an
underwriting agreement in form, scope and substance as is customary in
underwritten offerings and take all such other actions as are reasonably
requested by the managing underwriters in order to expedite or facilitate the
registration or the disposition of such Registrable Notes, and in such
connection, (i) make such representations and warranties to the underwriters,
with respect to the business of the Issuers and their respective subsidiaries,
and the Registration Statement, Prospectus and documents, if any, incorporated
or deemed to be incorporated by ref-
<PAGE>
A-8
erence therein, in each case, in form, substance and scope as are customarily
made by Issuers to underwriters in underwritten offerings of debt securities
similar to the Registrable Notes, and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Issuers and updates thereof in form,
scope and substance reasonably satisfactory to the managing underwriters,
addressed to the underwriters covering the matters customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by underwriters; (iii) obtain "comfort letters" and updates
thereof in form and substance reasonably satisfactory to the managing
underwriter or underwriters from the independent certified public accountants of
the Issuers (and, if necessary, any other independent certified public
accountants of any subsidiary of any of the Issuers or of any business acquired
by any of the Issuers for which financial statements and financial data are, or
are required to be, included in the Registration Statement), addressed to each
of the underwriters, such letters to be in customary form and covering matters
of the type customarily covered in "comfort letters" in connection with
underwritten offerings of debt securities similar to the Registrable Notes; and
(iv) if an underwriting agreement is entered into, the same shall contain
indemnification provisions and procedures no less favorable to the Holders and
the underwriters than those set forth in Section 6 (or such other less favorable
provisions and procedures acceptable to Holders of a majority in aggregate
principal amount of Registrable Notes covered by such Registration Statement and
the managing underwriters or agents) with respect to all parties to be
indemnified pursuant to said Section. The above shall be done at each closing
under such underwriting agreement, or as and to the extent required thereunder.
(p) Make available for inspection by a representative of the selling
holders of Registrable Notes, any underwriter participating in any such
disposition of Registrable Notes pursuant to a Registration Statement, if any,
and any attorney or accountant or other agent retained by any such
representative of such selling holders or underwriter (collectively, the
"Inspectors"), at the offices where normally kept, during reasonable business
hours, all financial and other records, pertinent corporate documents and
properties of the Issuers and their respective subsidiaries, and cause the
officers, directors and employees of the Issuers and their respective
subsidiaries to supply all information, in each case reasonably requested by any
such Inspector in connection with such Registration Statement; provided,
however, that any information that is designated in writing by the Issuers, in
good faith, as confidential at the time of delivery of such information, shall
be kept confidential by such Inspector unless (i) disclosure of such information
is required by court or administrative order, (ii) disclosure of such
information is necessary to avoid or correct a misstatement or omission of a
material fact in the Registration Statement, Prospectus or any supplement or
post-effective amendment thereto or disclosure is otherwise required by law,
(iii) disclosure of such information is necessary in connection with any action,
claim, suit or proceeding, directly or indirectly, involving or potentially
involving such Inspector and arising out of, based upon, relating to, or
involving this Agreement, or any transactions
<PAGE>
A-9
contemplated hereby or arising hereunder, or (iv) such information becomes
generally available to the public other than as a result of a disclosure or
failure to safeguard by such Inspector. Each selling holder of such Registrable
Notes will be required to agree that information obtained by it as a result of
such inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Issuers unless and
until such is made generally available to the public. Each selling holder of
such Registrable Notes will be required to further agree that it will, upon
learning that disclosure of any such information is sought in a court of
competent jurisdiction, give notice to the Issuers and allow the Issuers to
undertake appropriate action to prevent disclosure of the information deemed
confidential at their expense.
(q) Provide an indenture trustee for the Registrable Notes, and
cause the Indenture to be qualified under the TIA not later than the effective
date of the first Registration Statement relating to the Registrable Notes; and
in connection therewith, cooperate with the trustee under any such indenture and
the selling holders of the Registrable Notes, to effect such changes to such
indenture as may be required for such Indenture to be so qualified in accordance
with the terms of the TIA; and execute, and use its best efforts to cause such
trustee to execute, all documents as may be required to effect such changes, and
all other forms and documents required to be filed with the SEC to enable such
indenture to be so qualified in a timely manner.
(r) Comply in all material respects with all applicable rules and
regulations of the SEC and make generally available to its securityholders
earnings statements satisfying the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder (or any similar rule promulgated under the
Securities Act) no later than 45 days after the end of any 12-month period (or
90 days after the end of any 12-month period if such period is a fiscal year)
(i) commencing at the end of any fiscal quarter in which Registrable Notes are
sold to underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on the
first day of the first fiscal quarter of the Issuers after the effective date of
a Registration Statement, which statements shall cover said 12-month periods.
(s) Use its best efforts to take all other steps reasonably
necessary to effect the registration of the Registrable Notes covered by a
Registration Statement contemplated hereby.
The Issuers may require each selling holder of Registrable Notes as
to which any registration is being effected to furnish to the Issuers such
information regarding such seller and the distribution of such Registrable Notes
as the Issuers may, from time to time, reasonably request in writing. The
Issuers may exclude from such registration the Registrable Notes of any seller
who unreasonably fails to furnish such information within a reason-
<PAGE>
A-10
able time after receiving such request. If the identity of a seller of
Registrable Notes is to be disclosed in a registration statement, such selling
holder shall be permitted to include all information regarding such seller as it
shall reasonably request.
Each Holder, upon receipt of any notice from any of the Issuers of
the happening of any event of the kind described in Section 4(c)(ii), 4(c)(iv),
4(c)(v) or 4(c)(vi), will forthwith discontinue disposition of such Registrable
Notes covered by such Registration Statement or Prospectus, until such Holder's
receipt of the copies of the supplemented or amended Prospectus contemplated by
Section 4(c), or until it is advised in writing by the Issuers that the use of
the applicable Prospectus may be resumed (the "Advice"). In addition, if so
directed by the Borrower, such Holder will deliver to the Borrower all copies in
its possession, other than permanent file copies then is such Holder's
possession, of the Prospectus covering such Registrable Notes current at the
time of receipt of such notice. In the event the Issuers shall give any such
notice, the Shelf Termination Date shall be extended by the number of days
during such periods from and including the date of the giving of such notice to
and including the date when each seller of Registrable Notes covered by such
Registration Statement shall have received the copies of the supplemented or
amended Prospectus contemplated by Section 4(c) or the Advice.
Section 5. Registration Expenses
(a) All reasonable fees and expenses incident to the performance of
or compliance with this Agreement by the Issuers shall be borne by the Issuers,
jointly and severally, whether or not a Registration Statement is filed or
becomes effective, including, without limitation, (i) all registration and
filing fees (including, without limitation, (A) fees with respect to filings
required to be made with the NASD in connection with an underwritten offering
and (B) fees and expenses of compliance with state securities or Blue Sky laws
(including, without limitation, reasonable fees and disbursements of counsel in
connection with Blue Sky qualifications of the Registrable Notes and
determination of the eligibility of the Registrable Notes for investment under
the laws of such jurisdictions as provided in Section 4(h))), (ii) printing
expenses (including, without limitation, expenses of printing certificates for
Registrable Notes in a form eligible for deposit with DTC and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriters, if any, or, in respect of Registrable Notes, by the Holders of a
majority in aggregate principal amount of the Registrable Notes included in the
Registration Statement), (iii) messenger, telephone, word processing, photocopy
and delivery expenses, (iv) fees and disbursements of counsel for the Issuers
and reasonable fees and disbursements of counsel for the sellers of Registrable
Notes (subject to the provisions of Section 5(b)), (v) fees and disbursements of
all independent certified public accountants referred to in Section 4(o)(iii)
(including, without limitation, the expenses of any special audit and "cold
comfort" letters required by or incident to such performance), (vi) the fees and
expenses of any "qualified
<PAGE>
A-11
independent underwriter" or other independent appraiser participating in an
offering pursuant to Rule 2720 of the Conduct Rules of the NASD, (vii) rating
agency fees, and (viii) the fees and expenses incurred in connection with the
listing of the securities to be registered on any securities exchange.
(b) In connection with any Registration Statement hereunder or any
amendment thereto, the Issuers shall reimburse the Holders of the Registrable
Notes being registered in such registration for the reasonable fees and
disbursements of not more than one counsel (together with appropriate local
counsel) chosen by the Holders of a majority in aggregate principal amount of
the Registrable Notes to be included in such Registration Statement.
(c) Notwithstanding anything herein to the contrary, in no event
shall the Issuers be responsible for underwriting discounts and commissions with
respect to any underwriting offering of Registrable Notes.
Section 6. Indemnification
(a) The Issuers agree, jointly and severally, to indemnify and hold
harmless each Holder of the Notes and each person, if any, who controls such
Holder within the meaning of the Securities Act or the Exchange Act (each Holder
and such controlling persons are referred to collectively as the "Indemnified
Parties") from and against any losses, claims, damages or liabilities, joint or
several, or any actions in respect thereof (including, but not limited to, any
losses, claims, damages, liabilities or actions relating to purchases and sales
of the Notes) to which each Indemnified Party may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration, or arise out
of, or are based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse, as incurred, the Indemnified
Parties for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action in respect thereof; provided, however, that (i) the Issuers
shall not be liable in any such case to the extent that such loss, claim, damage
or liability arises out of or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in a Registration
Statement or Prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to a Shelf Registration in reliance upon and in
conformity with written information pertaining to such Holder and furnished to
the Issuers by or on behalf of such Holder specifically for inclusion therein
and (ii) with respect to any untrue statement or omission or al-
<PAGE>
A-12
leged untrue statement or omission made in any preliminary prospectus relating
to a Shelf Registration Statement, the indemnity agreement contained in this
subsection (a) shall not inure to the benefit of any Holder from whom the person
asserting any such losses, claims, damages or liabilities purchased the Notes
concerned, to the extent that a prospectus relating to such Notes was required
to be delivered by such Holder under the Securities Act in connection with such
purchase and any such loss, claim, damage or liability of such Holder results
from the fact that there was not sent or given to such person, at or prior to
the written confirmation of the sale of such Notes to such person, a copy of the
final prospectus if the Issuers had previously furnished copies thereof to such
Holder; provided, further, however, that this indemnity agreement will be in
addition to any liability which the Issuers may otherwise have to such
Indemnified Party. The Issuers shall also indemnify the underwriters, their
officers and directors and each person who controls such underwriters within the
meaning of the Securities Act or the Exchange Act to the same extent as provided
above with respect to the indemnification of the Holders of the Notes if
requested by such Holders.
(b) Each Holder of the Notes, severally and not jointly, will
indemnify and hold harmless the Issuers and each person, if any, who controls
the Issuers within the meaning of the Securities Act or the Exchange Act from
and against any losses, claims, damages or liabilities or any actions in respect
thereof, to which the Issuers or any such controlling person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement or Prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Issuers by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Issuers for any legal or other expenses reasonably incurred by the
Issuers or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. The
liability of any Holder under this paragraph shall in no event exceed the net
proceeds received by such Holder from sales of Registrable Notes giving rise to
such obligations. This indemnity agreement will be in addition to any liability
which such Holder may otherwise have to the Issuers or any of their respective
controlling persons.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the
<PAGE>
A-13
indemnifying party under this Section 6, notify the indemnifying party of the
commencement thereof; but the omission so to notify the indemnifying party will
not, in any event, relieve the indemnifying party from any obligations to any
indemnified party other than the indemnification obligation provided in
paragraph (a) or (b) above and only if the indemnifying party is materially
prejudiced. In case any such action is brought against any indemnified party,
and it notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, with counsel reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the indemnified
party, be counsel to the indemnifying party if the named parties in any such
proceeding (including any impleaded parties) include both any Indemnifying
Person and the Indemnified Person or any affiliate thereof and such Indemnified
Person shall have been advised by counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Indemnifying Person or that representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 6 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
(d) If the indemnification provided for in this Section 6 is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof) as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Issuers on the one hand or
such
<PAGE>
A-14
Holder or such other indemnified party, as the case may be, on the other, and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding any other provision of this
Section 6(d), the Holders shall not be required to contribute any amount in
excess of the amount by which the net proceeds received by such Holders from the
sale of the Exchange Notes pursuant to a Registration Statement exceeds the
amount of damages which such Holders have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this paragraph (d), each person, if any, who controls such indemnified party
within the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as such indemnified party and each person, if any, who
controls the Issuers within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as the Issuers.
(e) The agreements contained in this Section 6 shall survive the
sale of the Exchange Notes pursuant to a Registration Statement and shall remain
in full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
Section 7. Rule 144 and 144A
Each of the Issuers covenants that it will file the reports required
to be filed by it under the Securities Act and the Exchange Act and the rules
and regulations adopted by the SEC thereunder in a timely manner and, if at any
time any of the Issuers is not required to file such reports, such Issuer will,
upon the request of any Holder of Registrable Notes, make publicly available
annual reports and such information, documents and other reports of the type
specified in Sections 13 and 15(d) of the Exchange Act. Each of the Issuers
further covenants that, for so long as any Registrable Notes remain outstanding,
to make available to any Holder or beneficial owner of Registrable Notes in
connection with any sale thereof and any prospective purchaser of such
Registrable Notes from such Holder or beneficial owner, the information required
by Rule 144A(d)(4) under the Act in order to permit resales of such Registrable
Notes pursuant to Rule 144A.
Section 8. Miscellaneous
(a) No Inconsistent Agreements. None of the Issuers has entered, as
of the date hereof, and none of the Issuers shall enter, after the date of this
Agreement, into
<PAGE>
A-15
any agreement with respect to any of its securities that is inconsistent with
the rights granted to the Holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. None of the Issuers has entered
and none of the Issuers will enter into any agreement with respect to any of its
securities which will grant to any Person piggy-back rights with respect to a
Registration Statement.
(b) Adjustments Affecting Registrable Notes. Neither the Borrower
nor the Guarantors shall, directly or indirectly, take any action with respect
to the Registrable Notes as a class (i) that would adversely affect the ability
of the Holders of Registrable Notes to include such Registrable Notes in a
registration undertaken pursuant to this Agreement or (ii) that would adversely
affect the marketability of such Registrable Notes in any such registration.
<PAGE>
EXHIBIT 10(KK)
AMENDMENT NUMBER ONE dated as of December 10, 1999 ("Amendment No.
1"), to the Senior Subordinated Credit Agreement dated as of May 26, 1999 (the
"Credit Agreement"), among SUPERIOR/ESSEX CORP., a Delaware corporation (the
"Borrower"), SUPERIOR TELECOM INC., a Delaware corporation (the "Parent"), each
of the Subsidiary Guarantors party thereto (the "Guarantors"), the lending
institutions from time to time party thereto (each a "Lender" and collectively,
the "Lenders") FLEET CORPORATE FINANCE, INC., as Syndication Agent and Bankers
Trust Company, as Administrative Agent (the "Agents"). Capitalized terms used
and not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement.
WHEREAS, the Borrower intends to merge with Superior
Telecommunications Inc., a Subsidiary Guarantor (the "Borrower Merger"), with
the Borrower as survivor; and
WHEREAS, after the Borrower Merger, the Borrower intends to change
its name to Superior Telecommunications Inc.; and
WHEREAS, the Borrower intends to issue a subordinated promissory
note to the Parent; and
WHEREAS, the Borrower intends to pay the Parent a one time fee for
guaranteeing the Borrower's Obligations under the Credit Agreement; and
WHEREAS, in connection with the foregoing the Borrower has requested
that the Agents and the Lenders amend certain provisions of the Credit
Agreement; and
WHEREAS, the Agents and the Lenders have considered and agreed to
the Borrower's requests, upon the terms and conditions set forth in this
Amendment No. 1; and
WHEREAS, the consent of the Required Lenders is necessary to effect
this Amendment No. 1;
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
<PAGE>
-2-
SECTION ONE - Amendment
The Credit Agreement is amended as hereinafter provided in this
Section One, effective as of December 10, 1999 (the "Amendment Effective Date").
1.1. Amendments to Section 6 (Negative Covenants) of the Credit Agreement.
(a) Section 6.01 shall be amended by inserting the following at clause
(xv) of such Section:
"(xv) the Intercompany Subordinated Loan;"
(b) Section 6.02(a) shall be amended by deleting the text thereof in its
entirety and replacing it with the following:
"The Borrower will not, and will not cause or permit any Restricted
Subsidiary to, directly or indirectly, (a) declare or pay any dividend or
make any distribution (other than dividends or distributions payable in
Qualified Capital Stock of the Borrower) on or in respect of shares of the
Borrower's Qualified Capital Stock to holders of such Capital Stock, (b)
redeem any Capital Stock of the Borrower or any warrants, rights or
options to purchase or acquire shares of any class of such Capital Stock,
(c) make any Investment (other than Permitted Investments) or (d) make any
payments with respect to the Intercompany Subordinated Loan (each of the
foregoing actions set forth in clauses (a), (b), (c) and (d) being
referred to as a "Restricted Payment"), if at the time of such Restricted
Payment or immediately after giving effect thereto, (i) a Default shall
have occurred and be continuing or (ii) the Borrower is not able to incur
at least $1.00 of additional Indebtedness pursuant to paragraph (xvii) of
Section 6.01 or (iii) the aggregate amount of Restricted Payments
(including such proposed Restricted Payment but excluding Restricted
Payments pursuant to clause (2), (3), (5), (6), (7), (8), (9), (10), (11),
(12), (13) or (14) of the next paragraph) made subsequent to the January
1, 1999 shall exceed the sum (the "Basket") of (without duplication): (v)
50% of the cumulative Consolidated Net Income (or if cumulative
Consolidated Net Income shall be a loss, minus 100% of such loss) of the
Borrower earned subsequent to January 1, 1999 and on or prior to the date
the Restricted Payment occurs (the
<PAGE>
-3-
"Reference Date") (treating such period as a single accounting period);
plus (x) 100% of the aggregate net cash proceeds received by the Borrower
from any Person (other than a Subsidiary of the Borrower) from the
issuance and sale subsequent to the Borrowing Date and on or prior to the
Reference Date of Qualified Capital Stock of the Borrower; plus (y)
without duplication of any amounts included in clause (iii)(w) above, 100%
of the aggregate net cash proceeds of any equity contribution (other than
from a Subsidiary of the Borrower) received by the Borrower from a holder
of the Borrower's Capital Stock; and plus (z) without duplication of any
amounts included in the calculation of Consolidated Net Income, the sum of
(1) to the extent any Investment (other than a Permitted Investment) that
was made after the Borrowing Date is sold for cash or otherwise liquidated
or repaid for cash, the lesser of (A) the cash received with respect to
such sale, liquidation or repayment of such Investment (less the cost of
any such sale, liquidation or repayment, if any) and (B) the initial
amount of such Investment included as a Restricted Payment and (2) upon
redesignation of an Unrestricted Subsidiary as a Restricted Subsidiary
(other than a Subsidiary that is an Unrestricted Subsidiary on the
Borrowing Date), the lesser of (A) the fair market value of the net assets
of such Subsidiary upon its redesignation as a Restricted Subsidiary and
(B) the Investment made in such Subsidiary that is treated as a Restricted
Payment."
Section 6.02 shall be further amended by: (x) by deleting the words
"dividends" and "dividend payment" in clause (10) and replacing such deleted
words with "Restricted Payments" and "Restricted Payment," respectively, (y)
deleting clause (11) in its entirety and (z) deleting the reference to
"6.08(b)(v)" in clause (12).
(c) Section 6.08(b) shall be amended by deleting "and" before clause (vi)
and by inserting the following at the end of such Section:
"(vii) amounts paid by the Borrower to the Parent as a supplemental
management fee so long as the proceeds thereof are used at the time of
such fee payment by the Parent (I) to make the payment permitted to be
made by the Parent pursuant to clause (v) of this Section 6.08(b) and (II)
(x) to pay expenses for ad-
<PAGE>
-4-
ministrative, legal and accounting services provided by third parties that
are reasonable and customary and incurred in the ordinary course of
business and other costs and expenses in connection with the Parent being
a publicly traded company for such professional services or to pay
franchise and similar costs and (y) in an amount not to exceed the
"additional amount" for any four consecutive fiscal quarters provided that
such amount is used at the time of such fee payment to pay actual expenses
of the Parent (including employment expenses) and the "additional amount"
is otherwise treated as an operating expense of the Borrower for purposes
of determining compliance with the financial covenants contained herein;
"additional amount" for any such period shall mean an amount not to exceed
the sum of (1) $2,500,000 and (2) that portion of the fee permitted to be
paid by clause (v) of this Section 6.08(b) in such period that is not
actually paid; and
(viii) the payment of a one time guaranty fee to the Parent in an amount
not to exceed $10,000,000 for the Parent's Guarantee; provided, such
payment shall be reduced by the amount of cash dividends paid to the
Parent with respect to the Trust Preferred Securities since November 27,
1998."
(d) Section 6.12 shall be amended by deleting clause (i) in its entirety
and replacing it with the following:
"(i) hold or acquire any assets (other than the capital stock of the
Borrower, Superior Trust I and DNE Systems and its Subsidiaries, the note
evidencing the Intercompany Subordinated Loan and insignificant assets)."
1.2. Amendments to Section 9 (Definitions and Accounting Terms) of the Credit
Agreement.
(a) Section 9 shall be amended by adding the following new definition in
appropriate alphabetical order:
"'Amendment No. 1' shall mean Amendment Number One dated as of
December 10, 1999 to this Agreement."
"'Borrower Merger' shall mean the merger of Superior Telecommunications
Inc. with and into Superior/Essex
<PAGE>
-5-
Corp. in which Superior/Essex Corp. shall be the surviving corporation."
"'Intercompany Subordinated Loan' shall mean the long-term subordinated
indebtedness (on terms satisfactory to the Administrative Agent) of the
Borrower to the Parent in an aggregate principal amount not to exceed
$167,000,000."
(b) Section 9 shall be further amended as follows:
"Senior Indebtedness" shall be amended by deleting "and" and inserting a
comma before clause (ix) in the second sentence thereof and inserting the
following after clause (ix) of the second sentence:
"and (x) the Intercompany Subordinated Loan."
"Superior Preferred Stock" shall be amended by deleting the definition
thereof and replacing it with the following:
"'Superior Preferred Stock' shall mean the 6% Cumulative Preferred
Stock, par value $1.00 per share, of the Borrower having an
aggregate liquidation preference of $20,000,000 (but shall include
any Parent preferred stock issued in exchange therefor pursuant to
clause (3)(y) of Section 6.02(b))."
"Superior Telecommunications" shall be amended by deleting the definition
thereof and replacing it with the following:
"'Superior Telecommunications' shall mean Superior
Telecommunications Inc., a Georgia corporation and Wholly-Owned
Subsidiary of the Borrower, and after the Borrower Merger shall mean
Superior Telecommunications Inc., a Delaware corporation."
SECTION TWO - REPRESENTATIONS AND WARRANTIES
Each of the Parent, Borrower and each Guarantor hereby confirms,
reaffirms and restates the representations and warranties made by it in Section
4 of the Credit Agreement and all such representations and warranties are true
and correct in all material respects as of the date hereof (it being under-
<PAGE>
-6-
stood and agreed that any representation or warranty which by its terms is made
as of a specified date shall be required to be true and correct only as of such
specified date), except such representations and warranties need not be true and
correct to the extent that changes in the facts and conditions on which such
representations and warranties are based are required or permitted under the
Credit Agreement or such changes arise out of events not prohibited by the
covenants set forth in Sections 5 and 6 of the Credit Agreement or otherwise
permitted by consents or waivers. Each Credit Party, as applicable, hereby
further represents and warrants (which representations and warranties shall
survive the execution and delivery hereof) to the Agents and each Lender that:
(a) Each Credit Party has the corporate power and authority to
execute, deliver and perform this Amendment No. 1 and has taken all
corporate actions necessary to authorize the execution, delivery and
performance of this Amendment No. 1;
(b) No consent of any person other than all of the Lenders and the
Agents parties hereto, and no consent, permit, approval or authorization
of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required in connection
with the execution, delivery, performance, validity or enforceability
against any Credit Party of this Amendment No. 1;
(c) This Amendment No. 1 has been duly executed and delivered on
behalf of each Credit Party by a duly authorized officer or
attorney-in-fact of such Credit Party, and constitutes a legal, valid and
binding obligation of each Credit Party enforceable against such Credit
Party in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, fraudulent conveyance, preferential
transfer, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting creditors' rights and
remedies generally, (b) general principles of equity (whether such
enforceability is considered in a proceeding in equity or at law), and by
the discretion of the court before which any proceeding therefor may be
brought, or (c) public policy considerations or court administrative,
regulatory or other governmental decisions that may limit rights to
indemnification or contribution or limit or affect any covenants or
agreements relating to competition or future employment; and
<PAGE>
-7-
(d) The execution, delivery and performance of this Amendment No. 1
will not violate (i) any provision of law applicable to any Credit Party
or (ii) any contractual obligation of any Credit Party, other than such
violations that would not reasonably be expected to result in, singly or
in the aggregate, a Material Adverse Effect.
(e) The transactions specifically permitted under this Amendment No.
1 are for a proper corporate purpose.
SECTION THREE - MISCELLANEOUS
(a) Except as herein expressly amended, the Credit Agreement and all
other agreements, documents, instruments and certificates executed in connection
therewith, except as otherwise provided herein, are ratified and confirmed in
all respects and shall remain in full force and effect in accordance with their
respective terms.
(b) This Amendment No. 1 may be executed by the parties hereto in
one or more counterparts, each of which shall be an original and all of which
shall constitute one and the same agreement.
(c) THIS AMENDMENT NO. 1 SHALL BE GOVERNED BY, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS.
(d) This Amendment No. 1 shall not constitute a consent or waiver to
or modification of any provision, term or condition of the Credit Agreement,
other than such terms, provisions, or conditions that are required to consummate
the transactions contemplated by this Amendment. All terms, provisions,
covenants, representations, warranties, agreements and conditions contained in
the Credit Agreement, as amended hereby, shall remain in full force and effect.
<PAGE>
Signature Pages to Amendment No. 1
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Amendment No. 1 as of the date
first above written.
SUPERIOR/ESSEX CORP., as Borrower
By:
----------------------------------
Name:
Title:
SUPERIOR TELECOM INC., as Guarantor
By:
----------------------------------
Name:
Title:
SUPERIOR TELECOMMUNICATIONS, INC., as
Guarantor
By:
----------------------------------
Name:
Title:
DNE SYSTEMS, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
<PAGE>
DNE MANUFACTURING & SERVICE COMPANY,
as Guarantor
By:
----------------------------------
Name:
Title:
DNE TECHNOLOGIES, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
TEXAS SUT INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
<PAGE>
ESSEX GROUP, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX INTERNATIONAL INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ACTIVE INDUSTRIES, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
DIAMOND WIRE & CABLE CO.,
as Guarantor
By:
----------------------------------
Name:
Title:
<PAGE>
ESSEX GROUP MEXICO INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX MEXICO HOLDINGS, L.L.C.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX SERVICES, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX TECHNOLOGY, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX WIRE CORPORATION,
as Guarantor
By:
----------------------------------
Name:
Title:
<PAGE>
BANKERS TRUST COMPANY,
as Administrative Agent
By:
----------------------------------
Name:
Title:
<PAGE>
FLEET CORPORATE FINANCE, INC.,
as Syndication Agent
By:
----------------------------------
Name:
Title:
<PAGE>
FLEET CORPORATE FINANCE, INC.,
as Lender
By:
----------------------------------
Name:
Title:
<PAGE>
BANKERS TRUST COMPANY,
as Lender
By:
----------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10(LL)
AMENDMENT NUMBER TWO dated as of February 18, 2000 ("Amendment No.
2"), to the Senior Subordinated Credit Agreement dated as of May 26, 1999 (the
"Credit Agreement"), among SUPERIOR TELECOMMUNICATIONS INC. (formerly known as
Superior/Essex Corp.), a Delaware corporation (the "Borrower"), SUPERIOR TELECOM
INC., a Delaware corporation (the "Parent"), each of the Subsidiary Guarantors
party thereto (the "Guarantors," and together with the Borrower and the Parent,
the "Credit Parties"), the lending institutions from time to time party thereto
(each a "Lender" and collectively, the "Lenders"), FLEET CORPORATE FINANCE,
INC., as Syndication Agent, and BANKERS TRUST COMPANY, as Administrative Agent
(the "Agents"). Capitalized terms used and not otherwise defined herein shall
have the meanings assigned to them in the Credit Agreement.
WHEREAS, the Agents and the Lenders desire to amend a definition in
Section 9 of the Credit Agreement;
WHEREAS, in connection with the foregoing, the Agents and the
Lenders have requested that certain provisions of the Credit Agreement be
amended; and
WHEREAS, the Credit Parties have considered and agreed to the
Agents' and the Lenders' requests, upon the terms and conditions set forth in
this Amendment No. 2; and
WHEREAS, the consent of the Credit Parties and the Required Lenders
is necessary to effect this Amendment No. 2;
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION ONE - AMENDMENT
The Credit Agreement is amended as hereinafter provided in this
Section One, effective as of February 18, 2000 (the "Amendment Effective Date").
1.1. Amendment to Section 9 (Definitions and Accounting Terms) of the Credit
Agreement.
(a) Section 9 shall be amended as follows:
"Nine-Month Trigger Date" shall be amended by deleting the definition
thereof and replacing it with the following:
<PAGE>
-2-
"'Nine-Month Trigger Date' shall mean April 21, 2000."
SECTION TWO - REPRESENTATIONS AND WARRANTIES
Each of the Parent, Borrower and each Guarantor hereby confirms,
reaffirms and restates the representations and warranties made by it in Section
4 of the Credit Agreement and all such representations and warranties are true
and correct in all material respects as of the date hereof (it being understood
and agreed that any representation or warranty which by its terms is made as of
a specified date shall be required to be true and correct only as of such
specified date), except such representations and warranties need not be true and
correct to the extent that changes in the facts and conditions on which such
representations and warranties are based are required or permitted under the
Credit Agreement or such changes arise out of events not prohibited by the
covenants set forth in Sections 5 and 6 of the Credit Agreement or otherwise
permitted by consents or waivers. Each Credit Party, as applicable, hereby
further represents and warrants (which representations and warranties shall
survive the execution and delivery hereof) to the Agents and each Lender that:
(a) Each Credit Party has the corporate power and authority to
execute, deliver and perform this Amendment No. 2 and has taken all
corporate actions necessary to authorize the execution, delivery and
performance of this Amendment No. 2;
(b) No consent of any person other than all of the Lenders and the
Agents parties hereto, and no consent, permit, approval or authorization
of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority is required in connection
with the execution, delivery, performance, validity or enforceability
against any Credit Party of this Amendment No. 2;
(c) This Amendment No. 2 has been duly executed and delivered on
behalf of each Credit Party by a duly authorized officer or
attorney-in-fact of such Credit Party, and constitutes a legal, valid and
binding obligation of each Credit Party enforceable against such Credit
Party in accordance with its terms, except as such enforceability may be
limited by (a) bankruptcy, insolvency, fraudulent conveyance, preferential
transfer, reorganization, moratorium or other similar laws now or
hereafter in effect relating
<PAGE>
-3-
to or affecting creditors' rights and remedies generally, (b) general
principles of equity (whether such enforceability is considered in a
proceeding in equity or at law), and by the discretion of the court before
which any proceeding therefor may be brought, or (c) public policy
considerations or court administrative, regulatory or other governmental
decisions that may limit rights to indemnification or contribution or
limit or affect any covenants or agreements relating to competition or
future employment; and
(d) The execution, delivery and performance of this Amendment No. 2
will not violate (i) any provision of law applicable to any Credit Party
or (ii) any contractual obligation of any Credit Party, other than such
violations that would not reasonably be expected to result in, singly or
in the aggregate, a Material Adverse Effect.
SECTION THREE - MISCELLANEOUS
(a) Except as herein expressly amended, the Credit Agreement and all
other agreements, documents, instruments and certificates executed in connection
therewith, except as otherwise provided herein, are ratified and confirmed in
all respects and shall remain in full force and effect in accordance with their
respective terms.
(b) This Amendment No. 2 may be executed by the parties hereto in
one or more counterparts, each of which shall be an original and all of which
shall constitute one and the same agreement.
(c) THIS AMENDMENT NO. 2 SHALL BE GOVERNED BY, CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICT OF LAWS.
(d) This Amendment No. 2 shall not constitute a consent or waiver to
or modification of any provision, term or condition of the Credit Agreement,
other than such terms, provisions, or conditions that are required to consummate
the transactions contemplated by this Amendment. All terms, provisions,
covenants, representations, warranties, agreements and conditions contained in
the Credit Agreement, as amended hereby, shall remain in full force and effect.
[Signature Pages Follow]
<PAGE>
Signature Pages to Amendment No. 2
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Amendment No. 2 as of the date
first above written.
SUPERIOR TELECOMMUNICATIONS, INC., as
Borrower
By:
----------------------------------
Name:
Title:
SUPERIOR TELECOM INC., as Guarantor
By:
----------------------------------
Name:
Title:
DNE SYSTEMS, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
DNE MANUFACTURING & SERVICE COMPANY,
as Guarantor
By:
----------------------------------
Name:
Title:
<PAGE>
DNE TECHNOLOGIES, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
TEXAS SUT INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
<PAGE>
ESSEX GROUP, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX INTERNATIONAL INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ACTIVE INDUSTRIES, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
DIAMOND WIRE & CABLE CO.,
as Guarantor
By:
----------------------------------
Name:
Title:
<PAGE>
ESSEX GROUP MEXICO INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX MEXICO HOLDINGS, L.L.C.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX SERVICES, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX TECHNOLOGY, INC.,
as Guarantor
By:
----------------------------------
Name:
Title:
ESSEX WIRE CORPORATION,
as Guarantor
By:
----------------------------------
Name:
Title:
<PAGE>
BANKERS TRUST COMPANY,
as Administrative Agent
By:
----------------------------------
Name:
Title:
<PAGE>
FLEET CORPORATE FINANCE, INC.,
as Syndication Agent
By:
----------------------------------
Name:
Title:
<PAGE>
FLEET CORPORATE FINANCE, INC.,
as Lender
By:
----------------------------------
Name:
Title:
<PAGE>
BANKERS TRUST COMPANY,
as Lender
By:
---------------------------------------
Name:
Title:
<PAGE>
EXHIBIT 10(MM)
FOURTH AMENDMENT TO LEASE AGREEMENT
THIS FOURTH AMENDMENT TO LEASE AGREEMENT (this "Amendment"), dated
as of November 27, 1998, between ALP (TX) QRS 11-28, INC., a Texas corporation
("Landlord"), and SUPERIOR TELECOMMUNICATIONS INC., a Georgia corporation f/k/a
Superior Teletec, Inc. and Superior TeleTec Transmission Products, Inc.
("Tenant").
W I T N E S S E T H
WHEREAS, Landlord and Tenant have entered into that certain Lease
Agreement, dated as of December 16, 1993, as amended by a First Amendment to
Lease Agreement, dated as of May 10, 1995, a Second Amendment (the "Second
Amendment") to Lease Agreement, dated as of July 21, 1995 and a Third Amendment
(the "Third Amendment") to Lease Agreement, dated as of October 3, 1996 (as
amended, the "Lease");
WHEREAS, the parties hereto are entering into this Amendment
concurrently with the closing of the Amended and Restated Credit Agreement by
and among Superior/Essex Corp., Essex Group, Inc., the Subsidiary Guarantors a
party thereto (including Tenant), the lenders from time to time a party thereto,
Merrill Lynch & Co., as Documentation Agent, Fleet National Bank, as Syndication
Agent, and Bankers Trust Company, as Administrative Agent, dated as of November
27, 1998 (the "BT Loan Agreement"); and
WHEREAS, the parties hereto have agreed to amend the Lease as
hereinafter set forth.
NOW, THEREFORE, intending to be legally bound and for good valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto covenant and agree as follows:
1. Definitions. Capitalized terms used herein and in Annex A hereto
and not otherwise defined shall have the meanings assigned to them in the Lease.
2. Waiver. Landlord hereby waives compliance by Tenant with
Financial Covenants contained in the Third Amendment in connection with the
occurrence of the transactions substantially as described on Annex A attached
hereto, including such other transactions as may be incidental to, necessary, or
desirable to give effect to such transactions.
<PAGE>
3. Financial Covenants. The Lease is hereby amended by deleting the
Financial Covenants attached to the Third Amendment as Exhibit E and inserting
the Financial Covenants attached hereto as Exhibit E in lieu thereof.
4. Representation. Tenant represents to Landlord that its leasehold
interest in the Premises is free and clear of any mortgage, lien, security
interest or encumbrance of any kind.
5. Successors and Assigns. Except as specifically amended by this
Amendment, the terms and conditions of the Lease shall remain in full force and
effect and shall be binding upon Landlord and Tenant and their respective
successors and assigns.
6. Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of Texas.
7. Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed shall be deemed an original, but all such counterparts
shall constitute but one and the same instrument.
2
<PAGE>
[Signature Page to Fourth Amendment to Lease Agreement]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the date first above written.
ATTEST ALP (TX) QRS 11-28, INC.
By:______________________ By:________________________
Name: Name:
Title: Title:
ATTEST SUPERIOR TELECOMMUNICATIONS INC.
By:______________________ By:_________________________
Name: Name:
Title: Title:
3
<PAGE>
ANNEX A
DESCRIPTION OF TRANSACTIONS
SUT Acquisition Corp. ("SUT"), a wholly owned subsidiary of Superior
TeleCom Inc. ("Superior"), will purchase up to 22,562,135 shares of the common
stock of Essex International, $.01 par value per share (the "Common Stock"),
pursuant to a tender offer for such shares of Common Stock commenced on or about
October 28, 1998 (the "Offer"), as such Offer is further described in the Offer
to Purchase dated October 28, 1998 (the "Offer to Purchase"), a copy of which is
annexed hereto. The Offer is being made pursuant to an Agreement and Plan of
Merger dated as of October 21, 1998, by and among Superior, SUT and Essex
International, whereby subsequent to the purchase of the Common Stock pursuant
to the Offer, SUT will be merged with and into Essex International, and Essex
International will continue as the surviving corporation and become a wholly
owned subsidiary of Superior (the "Merger"), as such Merger is further described
in the Offer to Purchase.
The total amount of funds required by SUT to consummate the Offer
and the Merger (including the refinancing of certain indebtedness of Superior
and Essex International) and to pay related fees and expenses is estimated to be
approximately $1.30 billion. SUT will obtain all of such funds from Superior.
Superior currently intends to provide such funds from loans available pursuant
to a (i) Senior Secured Credit Facility (the "Senior Credit Facility") to be
entered into by Superior/Essex Corp., a newly formed Delaware corporation and
wholly-owned subsidiary of Superior ("SEC"), Essex Group, Inc., a Michigan
corporation and a subsidiary of Essex International ("Essex Group"), certain
subsidiaries of Superior and Essex as guarantors, various lenders, Merrill Lynch
& Co., as documentation agent ("Merrill"), Fleet National Bank, as syndication
agent ("Fleet"), and Bankers Trust Company, as administrative agent ("Bankers
Trust") and (ii) Senior Subordinated Credit Facility (the "Subordinated Credit
Facility") to be entered into by SEC, certain subsidiaries of Superior
(including Essex International and Essex Group) as guarantors, various lenders
and Bankers Trust. Superior has received a commitment letter dated October 21,
1998 (the "Commitment Letter") in which Bankers Trust has agreed, subject to
certain conditions, to provide the credit facilities in an aggregate amount of
up to $1.45 billion in order to finance the acquisition of Essex International,
to refinance certain existing indebtedness of Superior and Essex International,
to pay related fees and expenses and to provide for the working capital
requirements of Superior or its subsidiaries (including Essex International).
The following is a summary of the anticipated material terms and
conditions of the approximately $1.15 billion Senior Credit Facility and is
subject to the detailed provisions of the loan agreement and various related
documents to be negotiated and entered into in connection with the Senior Credit
Facility:
o The Senior Credit Facility will be comprised of two tranches of
term loans and a revolving credit facility. Interest on amounts
outstanding under the Senior Credit Facility will be based upon either (i)
the Federal Reserve reported certificate of deposit rate, Bankers Trust's
prime lending rate or an adjusted certificate of deposit rate or (ii) the
Euro rate
<PAGE>
plus, in each case, an applicable margin, a variable component which, in
certain circumstances, will be subject to adjustment based on the leverage
ratio maintained by SEC. SEC and Essex Group will also pay Bankers Trust
underwriting and administrative fees, reimburse certain expenses and
provide certain indemnities. The two tranches of term loans will have five
and one-half and seven year terms, and the revolving credit facility will
have a five and one-half year term. Each of the term loans will require
periodic mandatory amortization payments.
o The obligations of each of SEC and Essex Group under the Senior
Credit Facility will be unconditionally guaranteed by the other party and
their respective obligations will be guaranteed by certain of their
respective subsidiaries. The indebtedness incurred under the Senior Credit
Facility will also be secured by a first priority lien on substantially
all the assets of SEC, Essex Group and their subsidiaries.
o SEC, Essex Group and certain of their respective subsidiaries will
be subject to certain customary affirmative and negative covenants under
the Senior Credit Facility, including, without limitation, covenants that
restrict, subject to specified exceptions, (i) the incurrence of
additional indebtedness and other obligations, (ii) mergers and
acquisitions, (iii) asset sales, (iv) the granting of liens, (v)
prepayment or repurchase of other indebtedness, (vi) engaging in
transactions with affiliates, (vii) capital expenditures, (viii) the
making of investments and (ix) dividends and other payments with respect
to equity interests.
Concurrently with the closing of the Senior Credit Facility, SEC
will also enter into the $200,000,000 Subordinated Credit Facility. The
following is a summary of the anticipated material terms and conditions of the
Subordinated Credit Facility and is subject to the detailed provisions of the
loan agreement and various related documents to be negotiated and entered into
in connection with the Subordinated Credit Facility:
o The Subordinated Credit Facility will be a general unsecured
obligation of Superior which will rank pari passu in right of payment with
all future senior subordinated indebtedness and senior to all other
subordinated indebtedness. The Subordinated Credit Facility will be
guaranteed by certain subsidiaries of Superior (including Essex), on a
joint and several basis. The Subordinated Credit Facility will mature in
2006 and will be redeemable at the option of SEC at any time after
closing. Upon a change of control (as defined in the Subordinated Credit
Facility), SEC will be required to offer to repurchase the Subordinated
Credit Facility indebtedness at a purchase price equal to 101% of the
principal amount thereof, plus accrued interest thereon to the date of
repurchase. Mandatory prepayments will required from: (i) the net proceeds
from issuances of debt and (ii) the net proceeds from equity issuances
with customary exceptions to be agreed upon, in each case to the extent
not required to repay senior indebtedness (i.e., the Senior Credit
Facility). Proceeds of the Subordinated Credit Facility will be used to
finance the Offer, to refinance certain existing indebtedness of SEC and
Essex International and to pay related fees and expenses.
2
<PAGE>
o Interest on the Subordinated Credit Facility will be payable
quarterly. For the first six months after the borrowing date, interest
will be based upon LIBOR plus 4.25% and if LIBOR rate loans are not
available, the alternate base rate (the higher of prime or 1/2 of 1% over
the Federal Funds Rate) plus 3.25%. Upon the six month anniversary of the
borrowing date, interest will be based upon LIBOR plus 4.50% and if LIBOR
rate loans are not available, the alternate base rate plus 3.50%. Upon the
12 month anniversary of the borrowing date, interest will be based upon
LIBOR plus 5.00% and if LIBOR rate loans are not available, the alternate
base rate plus 4.00%. After the interest rate increase on the 12 month
anniversary of the borrowing date, the interest rate will increase by
0.25% per quarter, but the maximum interest rate will be LIBOR plus 5.50%
and if LIBOR rate loans are not available, the alternate base rate plus
4.50%.
o The Subordinated Credit Facility will contain a cross-acceleration
to the Senior Credit Facility and will also contain covenants limiting the
ability of SEC and its subsidiaries (including Essex International) to,
among other things, pay dividends or make other restricted payments, make
investments, incur additional indebtedness, permit liens, enter into any
consolidation, merger, conveyance or lease transactions, make asset sales,
enter into transactions with affiliates and engage in unrelated lines of
business.
Subsequent to the transactions described above, Essex may be merged
with or into either Superior or any subsidiary of Superior (the "Post-Closing
Merger"). In connection with the Merger, The Alpine Group, Inc., a Delaware
corporation that owns 50.1% of Superior, will receive a $10,000,000 fee in
respect of financial advisory services rendered to Superior in connection with
the acquisition of Essex International. The transactions described above (the
"Transactions") are more particularly described in the Offer to Purchase, a copy
of which is attached hereto.
3
<PAGE>
EXHIBIT 10(NN)
SECOND AMENDMENT TO GUARANTY AND SURETYSHIP AGREEMENT
THIS SECOND AMENDMENT TO GUARANTY AND SURETYSHIP AGREEMENT (this
"Amendment"), dated as of November 27, 1998, between ALP (TX) QRS 11-28, INC., a
Texas corporation ("Landlord"), SUPERIOR TELECOM INC., a Delaware corporation
("TeleCom" or the "Company"), and THE ALPINE GROUP, INC., a Delaware corporation
("Alpine").
W I T N E S S E T H
WHEREAS, Landlord and Alpine entered into that certain Guaranty and
Suretyship Agreement, dated as of December 16, 1993, as modified by a Consent of
Guarantor instrument executed on or about May 10, 1995 and a Consent of
Guarantor instrument executed on or about October 3, 1996 (as modified, the
"Guaranty Agreement");
WHEREAS, the parties hereto are entering into this Amendment
concurrently with the closing of an Amended and Restated Credit Agreement by and
among Superior/Essex Corp., Essex Group, Inc., the Subsidiary Guarantors a party
thereto (including Tenant), the lenders from time to time a party thereto,
Merrill Lynch & Co., as Documentation Agent, Fleet National Bank, as Syndication
Agent, and Bankers Trust Company, as Administrative Agent, dated as of November
27, 1998; and
WHEREAS, the parties hereto have agreed to amend the Guaranty
Agreement as hereinafter set forth.
NOW, THEREFORE, intending to be legally bound and for good valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto covenant and agree as follows:
1. Definitions. Capitalized terms used herein and in Annex A hereto
and not otherwise defined shall have the meanings assigned to them in the
Guaranty Agreement.
2. Waiver. Landlord hereby waives compliance by Alpine with the
Covenants contained in the Third Amendment to Lease, dated October 3, 1996, in
connection with the occurrence of the transactions substantially as described on
Annex A attached hereto, including such other transactions as may be incidental
to or necessary or desirable to give effect to such transactions.
<PAGE>
3. Financial Covenants.
<PAGE>
a. Alpine shall not be bound by or obliged to comply with the
Covenants contained in the Lease or in any amendment to the Lease.
b. TeleCom covenants and agrees to observe and be bound by the
covenants annexed hereto as Exhibit E.
4. Successors and Assigns. Except as specifically amended by this
Amendment, the terms and conditions of the Guaranty Agreement shall remain in
full force and effect and shall be binding upon Landlord and Guarantor and their
respective successors and assigns.
5. Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of Texas.
6. Counterparts. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed shall be deemed an original, but all such counterparts
shall constitute but one and the same instrument.
* * *
<PAGE>
[Signature Page to Second Amendment to Guaranty and Suretyship Agreement]
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the date first above written.
ATTEST ALP (TX) QRS 11-28, INC.
By:______________________ By:________________________
Name: Name:
Title: Title:
ATTEST THE ALPINE GROUP, INC.
By:______________________ By:_________________________
Name: Name:
Title: Title:
ATTEST SUPERIOR TELECOM INC.
By:______________________ By:_________________________
Name: Name:
Title: Title:
<PAGE>
ANNEX A
DESCRIPTION OF TRANSACTIONS
SUT Acquisition Corp. ("SUT"), a wholly owned subsidiary of Superior
TeleCom Inc. ("Superior"), will purchase up to 22,562,135 shares of the common
stock of Essex International, $.01 par value per share (the "Common Stock"),
pursuant to a tender offer for such shares of Common Stock commenced on or about
October 28, 1998 (the "Offer"), as such Offer is further described in the Offer
to Purchase dated October 28, 1998 (the "Offer to Purchase"), a copy of which is
annexed hereto. The Offer is being made pursuant to an Agreement and Plan of
Merger dated as of October 21, 1998, by and among Superior, SUT and Essex
International, whereby subsequent to the purchase of the Common Stock pursuant
to the Offer, SUT will be merged with and into Essex International, and Essex
International will continue as the surviving corporation and become a wholly
owned subsidiary of Superior (the "Merger"), as such Merger is further described
in the Offer to Purchase.
The total amount of funds required by SUT to consummate the Offer
and the Merger (including the refinancing of certain indebtedness of Superior
and Essex International) and to pay related fees and expenses is estimated to be
approximately $1.30 billion. SUT will obtain all of such funds from Superior.
Superior currently intends to provide such funds from loans available pursuant
to a (i) Senior Secured Credit Facility (the "Senior Credit Facility") to be
entered into by Superior/Essex Corp., a newly formed Delaware corporation and
wholly-owned subsidiary of Superior ("SEC"), Essex Group, Inc., a Michigan
corporation and a subsidiary of Essex International ("Essex Group"), certain
subsidiaries of Superior and Essex as guarantors, various lenders, Merrill Lynch
& Co., as documentation agent ("Merrill"), Fleet National Bank, as syndication
agent ("Fleet"), and Bankers Trust Company, as administrative agent ("Bankers
Trust") and (ii) Senior Subordinated Credit Facility (the "Subordinated Credit
Facility") to be entered into by SEC, certain subsidiaries of Superior
(including Essex International and Essex Group) as guarantors, various lenders
and Bankers Trust. Superior has received a commitment letter dated October 21,
1998 (the "Commitment Letter") in which Bankers Trust has agreed, subject to
certain conditions, to provide the credit facilities in an aggregate amount of
up to $1.45 billion in order to finance the acquisition of Essex International,
to refinance certain existing indebtedness of Superior and Essex International,
to pay related fees and expenses and to provide for the working capital
requirements of Superior or its subsidiaries (including Essex International).
The following is a summary of the anticipated material terms and
conditions of the approximately $1.15 billion Senior Credit Facility and is
subject to the detailed provisions of the loan agreement and various related
documents to be negotiated and entered into in connection with the Senior Credit
Facility:
o The Senior Credit Facility will be comprised of two tranches of
term loans and a revolving credit facility. Interest on amounts
outstanding under the Senior Credit Facility will be based upon either (i)
the Federal Reserve reported certificate of deposit rate, Bankers Trust's
prime lending rate or an adjusted certificate of deposit rate or (ii) the
Euro rate
<PAGE>
plus, in each case, an applicable margin, a variable component which, in
certain circumstances, will be subject to adjustment based on the leverage
ratio maintained by SEC. SEC and Essex Group will also pay Bankers Trust
underwriting and administrative fees, reimburse certain expenses and
provide certain indemnities. The two tranches of term loans will have five
and one-half and seven year terms, and the revolving credit facility will
have a five and one-half year term. Each of the term loans will require
periodic mandatory amortization payments.
o The obligations of each of SEC and Essex Group under the Senior
Credit Facility will be unconditionally guaranteed by the other party and
their respective obligations will be guaranteed by certain of their
respective subsidiaries. The indebtedness incurred under the Senior Credit
Facility will also be secured by a first priority lien on substantially
all the assets of SEC, Essex Group and their subsidiaries.
o SEC, Essex Group and certain of their respective subsidiaries will
be subject to certain customary affirmative and negative covenants under
the Senior Credit Facility, including, without limitation, covenants that
restrict, subject to specified exceptions, (i) the incurrence of
additional indebtedness and other obligations, (ii) mergers and
acquisitions, (iii) asset sales, (iv) the granting of liens, (v)
prepayment or repurchase of other indebtedness, (vi) engaging in
transactions with affiliates, (vii) capital expenditures, (viii) the
making of investments and (ix) dividends and other payments with respect
to equity interests.
Concurrently with the closing of the Senior Credit Facility, SEC
will also enter into the $200,000,000 Subordinated Credit Facility. The
following is a summary of the anticipated material terms and conditions of the
Subordinated Credit Facility and is subject to the detailed provisions of the
loan agreement and various related documents to be negotiated and entered into
in connection with the Subordinated Credit Facility:
o The Subordinated Credit Facility will be a general unsecured
obligation of Superior which will rank pari passu in right of payment with
all future senior subordinated indebtedness and senior to all other
subordinated indebtedness. The Subordinated Credit Facility will be
guaranteed by certain subsidiaries of Superior (including Essex), on a
joint and several basis. The Subordinated Credit Facility will mature in
2006 and will be redeemable at the option of SEC at any time after
closing. Upon a change of control (as defined in the Subordinated Credit
Facility), SEC will be required to offer to repurchase the Subordinated
Credit Facility indebtedness at a purchase price equal to 101% of the
principal amount thereof, plus accrued interest thereon to the date of
repurchase. Mandatory prepayments will required from: (i) the net proceeds
from issuances of debt and (ii) the net proceeds from equity issuances
with customary exceptions to be agreed upon, in each case to the extent
not required to repay senior indebtedness (i.e., the Senior Credit
Facility). Proceeds of the Subordinated Credit Facility will be used to
finance the Offer, to refinance certain existing indebtedness of SEC and
Essex International and to pay related fees and expenses.
<PAGE>
o Interest on the Subordinated Credit Facility will be payable
quarterly. For the first six months after the borrowing date, interest
will be based upon LIBOR plus 4.25% and if LIBOR rate loans are not
available, the alternate base rate (the higher of prime or 1/2 of 1% over
the Federal Funds Rate) plus 3.25%. Upon the six month anniversary of the
borrowing date, interest will be based upon LIBOR plus 4.50% and if LIBOR
rate loans are not available, the alternate base rate plus 3.50%. Upon the
12 month anniversary of the borrowing date, interest will be based upon
LIBOR plus 5.00% and if LIBOR rate loans are not available, the alternate
base rate plus 4.00%. After the interest rate increase on the 12 month
anniversary of the borrowing date, the interest rate will increase by
0.25% per quarter, but the maximum interest rate will be LIBOR plus 5.50%
and if LIBOR rate loans are not available, the alternate base rate plus
4.50%.
o The Subordinated Credit Facility will contain a cross-acceleration
to the Senior Credit Facility and will also contain covenants limiting the
ability of SEC and its subsidiaries (including Essex International) to,
among other things, pay dividends or make other restricted payments, make
investments, incur additional indebtedness, permit liens, enter into any
consolidation, merger, conveyance or lease transactions, make asset sales,
enter into transactions with affiliates and engage in unrelated lines of
business.
Subsequent to the transactions described above, Essex may be merged
with or into either Superior or any subsidiary of Superior (the "Post-Closing
Merger"). In connection with the Merger, The Alpine Group, Inc., a Delaware
corporation that owns 50.1% of Superior, will receive a $10,000,000 fee in
respect of financial advisory services rendered to Superior in connection with
the acquisition of Essex International. The transactions described above (the
"Transactions") are more particularly described in the Offer to Purchase, a copy
of which is attached hereto.
<PAGE>
EXHIBIT E TO SECOND AMENDMENT TO GUARANTY AND SURETYSHIP AGREEMENT
<PAGE>
EXHIBIT E TO SECOND AMENDMENT TO GUARANTY AND SURETYSHIP AGREEMENT
SECTION 10. Definitions. As used in this Exhibit E, the following
terms shall have the meanings herein specified unless the context otherwise
requires. Defined terms in this Exhibit E shall include in the singular number
the plural and in the plural the singular:
"Lease Agreement shall mean the Lease Agreement, dated as of
December 16, 1993, between December 16, 1993, between ALP (TX) QRS 11-28, INC.,
a Texas corporation ("Landlord"), and Superior Telecommunications Inc., a
Georgia corporation f/k/a Superior Teletec, Inc., and Superior Teletec
Transmission Products, Inc., ("Tenant" or "Superior"), as amended.
"Acquisition" shall have the meaning provided in the recitals to the
Agreement.
"Acquisition Co" shall have the meaning provided in the recitals to
the Agreement.
"Acquisition Documents" shall mean each of the Tender Offer
Documents and the Merger Agreement.
"Additional Collateral" shall have the meaning provided in Section
7.11 of the Agreement.
"Adjusted Certificate of Deposit Rate" shall mean, on any day, the
sum (rounded to the nearest 1/100 of 1%) of (1) the rate obtained by dividing
(x) the most recent weekly average dealer offering rate for negotiable
certificates of deposit with a three-month maturity in the secondary market as
published in the most recent Federal Reserve System publication entitled "Select
Interest Rates," published weekly on Form H.15 as of the date hereof, or if such
publication or a substitute containing the foregoing rate information shall not
be published by the Federal Reserve System for any week, the weekly average
offering rate determined by the Administrative Agent on the basis of quotations
for such certificates received by it from three certificate of deposit dealers
in New York of recognized standing or, if such quotations are unavailable, then
on the basis of other sources reasonably selected by the Administrative Agent,
by (y) a percentage equal to 100% minus the stated maximum rate of all reserve
requirements as specified in Regulation D applicable on such day to a
three-month certificate of deposit of a member bank of the Federal Reserve
System in excess of $100,000 (including, without limitation, any marginal,
emergency, supplemental, special or other reserves), plus (2) the then daily net
annual assessment rate as estimated by the Administrative Agent for determining
the current annual assessment payable by BTCo to the Federal Deposit Insurance
Corporation for insuring three month certificates of deposit.
"Administrative Agent" shall have the meaning provided in the first
paragraph of the Agreement and shall include any successor to the Administrative
Agent appointed pursuant to Section 11.10 of the Agreement.
<PAGE>
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and executive officers of such Person), controlled by, or under direct or
indirect common control with such Person. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power (i) to
vote 10% or more of the securities having ordinary voting power for the election
of directors of such corporation or (ii) to direct or cause the direction of the
management and policies of such corporation, whether through the ownership of
voting securities, by contract or otherwise. Without limiting the foregoing,
Alpine and its Affiliates shall be deemed to be Affiliates of the Company and
its Subsidiaries so long as the Service Agreement is in place.
"Agent" shall mean the Administrative Agent, the Documentation Agent
and the Syndication Agent, collectively.
"Agreement" shall mean the Amended and Restated Credit Agreement,
dated as of November 27, 1998, among Superior/Essex Corp., Essex Group, Inc.,
the guarantors named therein, the lending institutions party thereto from time
to time, Merrill Lynch & Co., as Documentation Agent, Fleet National Bank, as
Syndication Agent, and Bankers Trust Company, as Administrative Agent.
"Alternate Currency" shall mean Pounds Sterling or Euros, provided
that Euros shall not be available as an Alternate Currency until January 15,
1999 (assuming commencement of the third stage of European Monetary Union).
"Alternate Currency Loan" shall mean each Revolving Loan denominated
in an Alternate Currency and bearing interest at the rates provided in Section
1.08(b).
"Alternate Currency Loan Lender" shall mean (i) BTCo or (ii) any
Affiliate of BTCo designated by it and one or more banks acceptable to BTCo and
reasonably acceptable to the Borrowers.
"Alternate Currency Loan Sublimit" shall have the meaning provided
in Section 1.01(c) of the Agreement.
"Alternate Currency Overdue Amounts" shall have the meaning provided
in Section 1.01(f) of the Agreement.
"Alpine" shall mean The Alpine Group, Inc., a Delaware corporation,
which currently owns approximately 50.1% of the outstanding stock of the Parent.
"Alpine Tax Allocation Agreement" shall mean the tax allocation
agreement by and among Alpine, the Parent and their Affiliates dated as of
October 2, 1996, effective as of May 1, 1996.
2
<PAGE>
"Applicable Base Rate Margin" shall mean (i) in the case of each of
the Revolving Loans and Tranche A Term Loans, a percentage per annum equal to
2.00% and (ii) in the case of Tranche B Term Loans, a percentage per annum equal
to 2.75%; provided that the percentage set forth in clause (i) above shall be
adjusted by the applicable Interest Reduction Discount.
"Applicable Euro Rate Margin" shall mean (i) in the case of each of
the Revolving Loans and Tranche A Term Loans, a percentage per annum equal to
3.00% and (ii) in the case of Tranche B Term Loans, a percentage per annum equal
to 3.75%; provided that the percentage set forth in clause (i) above shall be
adjusted by the applicable Interest Reduction Discount.
"Applicable Percentage" shall mean 75%, unless the Pro Forma
Leverage Ratio computed, if applicable, after giving effect to the application
of cash proceeds as a mandatory repayment, is less than 4.00:1.0, in which case
the Applicable Percentage shall mean 50%.
"Asset Sale" shall mean any sale, transfer or other disposition by
either of the Borrowers or any of their respective Subsidiaries to any Person of
any asset (including, without limitation, any capital stock or other securities
of another Person, but excluding the sale by such Person of its own capital
stock) of either of the Borrowers or such Subsidiaries other than (i) sales,
transfers or other dispositions of inventory made in the ordinary course of
business and (ii) sales of assets pursuant to Sections 8.02(d), (e), (f), (g),
(h), (i) and (n) of the Agreement.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement substantially in the form of Exhibit I (appropriately
completed) to the Agreement.
"Authorized Officer" shall mean any senior officer of the Parent,
the Company or Essex, as the case may be, designated as such in writing to the
Landlord by the Company or Essex to the extent reasonably acceptable to the
Landlord.
"Bankruptcy Code" shall have the meaning provided in Section 9.05 of
the Agreement.
"Base Rate" at any time shall mean the highest of (x) the rate which
is 1/2 of 1% in excess of the Adjusted Certificate of Deposit Rate, (y) the
Prime Lending Rate and (z) the rate which is 1/2 of 1% in excess of the Federal
Funds Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates
provided in Section 1.08(a) of the Agreement.
"Borrowers" shall mean the Company and, until the consummation of
the Merger, Essex.
"Borrowing" shall mean the borrowing of one Type of Loan of a single
Tranche from all the Lenders having Commitments of the respective Tranche on a
given date (or resulting from a
3
<PAGE>
conversion or conversions on such date) having in the case of Euro Rate Loans
the same Interest Period; provided that Base Rate Loans incurred pursuant to
Section 1.10(b) of the Agreement shall be considered part of the related
Borrowing of Euro Rate Loans.
"BTCo" shall mean Bankers Trust Company, in its individual capacity,
and any successor corporation thereto by merger, consolidation or otherwise.
"Business Day" shall mean (i) for all purposes other than as covered
by clause (ii) below, any day excluding Saturday, Sunday and any day which shall
be in the City of New York a legal holiday or a day on which banking
institutions are authorized by law or other governmental actions to close and
(ii) with respect to all notices and determinations in connection with, and
payments of principal and interest on, Euro Rate Loans, any day which is a
Business Day described in clause (i) and which is also a day for trading by and
between banks in U.S. Dollar deposits and deposits in the Alternate Currency in
the London interbank market.
"Cables of Zion" shall mean Cables of Zion United Works Ltd., a
company organized under the laws of Israel.
"Capital Expenditures" shall mean, with respect to any Person, all
expenditures by such Person which should be added to the fixed assets account on
the consolidated balance sheet of such Person in accordance with GAAP (which
shall not include interest capitalized during construction but only to the
extent included in Consolidated Interest Expense), including all such
expenditures with respect to plant, property or equipment (including, without
limitation, expenditures for maintenance and repairs which should be capitalized
in accordance with GAAP) and the amount of all Capitalized Lease Obligations
incurred by such Person.
"Capital Lease," as applied to any Person, shall mean any lease of
any property (whether real, personal or mixed) by that Person as lessee which,
in conformity with GAAP, should be accounted for as a capital lease on the
balance sheet of that Person.
"Capitalized Lease Obligations" shall mean all obligations under
Capital Leases of the Company or any of its Subsidiaries in each case taken at
the amount thereof that should be accounted for as liabilities in accordance
with GAAP.
"Cash Equivalents" shall mean (i) securities issued or directly and
fully guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) or the government of any member
of the European Union having maturities of not more than twelve months from the
date of acquisition, (ii) U.S. dollar denominated and Eurocurrency time
deposits, certificates of deposit and banker acceptances of (x) any Lender or
(y) any commercial bank organized under the laws of the United States, any state
thereof, the District of Columbia, or its branches or agencies or the laws of
any
4
<PAGE>
member of the European Union and having capital and surplus in an aggregate
amount not less than $500,000,000 (any such bank or Lender, an "Approved
Lender"), in each case with maturities of not more than twelve months from the
date of acquisition, (iii) U.S. Dollar denominated commercial paper issued by
any Approved Lender or by the parent company of any Approved Lender and
commercial paper issued by, or guaranteed by, any industrial or financial
company with a short-term commercial paper rating of at least A-1 or the
equivalent thereof by S&P or at least P-1 or the equivalent thereof by Moody's,
as the case may be, or Eurocurrency commercial paper of British banks of similar
credit quality approved for such purposes by the Administrative Agent in its
sole discretion, and in each case maturing within twelve months after the date
of acquisition, (iv) marketable direct obligations issued by any state of the
United States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within twelve months from the date of
acquisition thereof and, at the time of acquisition having one of the two
highest ratings obtainable from either S&P or Moody's, (v) any repurchase
agreement entered into with any Approved Lender which is secured by any
obligation of the type described in any of clauses (i) through (iii) and (vi)
investments in money market funds substantially all the assets of which are
comprised of securities of the types described in clauses (i) through (iv)
above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the
aggregate cash payments (including any cash received by way of deferred payment
pursuant to a note receivable issued in connection with such Asset Sale, other
than the portion of such deferred payment constituting interest, but only as and
when so received) received by the Company and/or any of its Subsidiaries from
such Asset Sale.
"Change of Control Event" shall mean (a) the Company shall cease to
own directly 100% on a fully diluted basis of the economic and voting interest
in the capital stock of Superior Telecommunications (other than the shares of
Superior Preferred Stock) or, after consummation of the Merger, of Essex (other
than as a result of the merger of Essex into Superior Telecommunications or
another Subsidiary of the Company), or (b) any Person or "group" (within the
meaning of Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as
in effect on the Effective Date), other than Alpine, shall (A) have acquired
beneficial ownership of 20% or more on a fully diluted basis of the voting
and/or economic interest in the Parent's capital stock (provided, however, such
referenced percentage in this clause (A) shall be 25% if, and so long as, Alpine
directly maintains ownership of more than 30% on a fully diluted basis of the
economic and voting interests in the Parent's capital stock) or (B) obtained the
power (whether or not exercised) to elect a majority of the Company's directors
or (C) the Board of Directors of the Parent shall cease to consist of a majority
of Continuing Directors or (D) the Parent shall cease to own directly 100% on a
fully diluted basis of the economic and voting interest in the Capital Stock of
the Company.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated and rulings issued thereunder.
Section references to the Code are to the Code, as in effect at the date of the
Agreement and any subsequent provisions of the Code
5
<PAGE>
amendatory thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all of the Pledge Agreement Collateral,
Security Agreement Collateral and Mortgaged Property.
"Collateral Agent" shall mean the Administrative Agent acting as
collateral agent for the Secured Creditors.
"commencement of the third stage of European Monetary Union" shall
mean the date of commencement of the third stage of European Monetary Union (at
the date of the Agreement expected to be January 1, 1999) or the date on which
circumstances arise which (in the reasonable judgment of the Administrative
Agent) have substantially the same effect and result in substantially the same
consequences as commencement of the third stage of European Monetary Union as
contemplated by the Treaty on European Union.
"Commitment" shall mean any of the commitments of any Lender; i.e.,
whether the Tranche A Term Loan Commitment, Tranche B Term Loan Commitment or
the Revolving Loan Commitment or the commitment of BTCo to make Swingline Loans.
"Commitment Fee" shall have the meaning provided in Section 3.01(a)
of the Agreement.
"Company" shall mean Superior/Essex Corp., a Delaware corporation.
"Condemnation" has the meaning assigned to that term in each
Mortgage.
"Consolidated Debt" shall mean, at any time, all Indebtedness of the
Company and its Subsidiaries determined on a consolidated basis; provided that
for purposes of this definition, the amount of Indebtedness in respect of
Interest Rate Protection Agreements and Other Hedging Agreements shall be at any
time equal to the unrealized net loss position, if any, of the Company and/or
its Subsidiaries thereunder on a marked to market basis determined no more than
one month prior to such time.
"Consolidated EBIT" shall mean, for any period, Consolidated Net
Income, before total interest expense (inclusive of amortization of deferred
financing fees, premiums on Interest Rate Protection Agreements and any original
issue discount) of the Company and its Subsidiaries determined on a consolidated
basis and provisions for taxes based on income, whether paid or deferred.
"Consolidated EBITDA" shall mean, for any period, Consolidated EBIT,
adjusted by adding thereto the amount of all depreciation expense and
amortization expense plus non-cash compensation expenses relating to restricted
stock and stock-option grants, in each case, that were
6
<PAGE>
deducted in determining Consolidated EBIT for such period, plus net earnings of
any Person (other than a Subsidiary) in which the Company or any consolidated
Subsidiary has an ownership interest to the extent such net earnings shall have
actually been received by the Company or such consolidated Subsidiary in the
form of cash distributions.
"Consolidated Fixed Charges" shall mean, for any period, without
duplication, the sum of Consolidated Interest Expense for such period plus (v)
all dividends paid or accrued on capital stock of the Company and its
Subsidiaries held by persons other than the Company and its Subsidiaries that
are Guarantors plus (w) the amount of all Capital Expenditures of the Company
(other than Capital Expenditures made pursuant to clause (d) or (e) of Section
8.08) and its Subsidiaries paid or accrued with respect to such period plus (x)
all cash taxes paid or accrued with respect to such period (other than with
respect to net income taxes attributable to items that are excluded from the
calculation of Consolidated Net Income in the period) plus (y) mandatory
principal payments on Indebtedness (other than with respect to Loans) required
to be made during such period pursuant to Sections 4.02(b) and (c) of the
Agreement.
"Consolidated Interest Expense" shall mean, for any period, total
interest expense (including that attributable to (A) any rent paid in respect of
Capital Leases which is or should be allocable to interest expense in accordance
with GAAP and (B) interest capitalized during the construction of any Capital
Expenditure) of the Company and its Subsidiaries determined on a consolidated
basis with respect to all outstanding Indebtedness of the Company and its
Subsidiaries, including, without limitation, all commissions, discounts and
other fees and charges owed with respect to letters of credit and bankers'
acceptance financing, all Fronting Fees and net costs or benefits under Interest
Rate Protection Agreements, but excluding, however, amortization of any payments
made to obtain any Interest Rate Protection Agreement and Other Hedging
Agreements and deferred financing costs and any interest expense on deferred
compensation arrangements to the extent included in total interest expense and,
in the case of the Company and its Subsidiaries, shall include interest accrued
by the Parent on the Trust Preferred Securities as if they were issued as of the
Initial Borrowing Date.
"Consolidated Net Income" shall mean, for any period, the net income
(or loss), after provisions for income taxes (other than with respect to net
income taxes attributable to items that are excluded from the calculation of
Consolidated Net Income in the period), of the Company and its Subsidiaries on a
consolidated basis for such period taken as a single accounting period in
conformity with GAAP but excluding in any event (a) any extraordinary gains (net
of extraordinary losses) but with giving effect to gains or losses from sales of
assets sold in the ordinary course of business; (b) net earnings of any other
Person (other than a Subsidiary) in which the Borrower or any consolidated
Subsidiary has an ownership interest, except to the extent such net earnings
shall have actually been received by the Borrower or such consolidated
Subsidiary in the form of cash distributions; (c) any portion of the net
earnings of any consolidated Subsidiary which is unavailable for payment of
dividends to the Borrowers or any other consolidated Subsidiary by reason of the
provisions of any agreement or applicable law or regulation (including, without
limitation, those agreements referred to in the exceptions
7
<PAGE>
set forth in Section 8.15 of the Agreement); (d) earnings resulting from any
reappraisal, revaluation or write-up of assets; (e) 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; (f) the
aggregate net gain (or loss) during such period arising from the revaluation
(but not sale) of readily marketable securities; (g) the income (or loss) from
discontinued operations; and (h) non- cash charges and cash charges (but only to
the extent such cash charges are reimbursed by a controlling Affiliate in cash
at the time of incurrence thereof), in each case, relating to the Transaction
and repayment of Indebtedness incurred under the Essex Credit Agreement and the
Existing Superior Credit Agreement.
"Contingent Obligations" shall mean as to any Person any obligation
of such Person guaranteeing or intended to guarantee any Indebtedness, leases,
dividends or other obligations ("primary obligations") of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent,
(a) to purchase any such primary obligation or any property constituting direct
or indirect security therefor, (b) to advance or supply funds (x) for the
purchase or payment of any such primary obligation or (y) to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency of the primary obligor, (c) to purchase property,
securities or services primarily for the purpose of assuring the owner of any
such primary obligations of the ability of the primary obligor to make payment
of such primary obligation or (d) otherwise to assure or hold harmless the owner
of such primary obligation against loss in respect thereof; provided, however,
that the term Contingent Obligation shall not include endorsements of
instruments for deposit or collection or standard contractual indemnities
entered into, in each case in the ordinary course of business. The amount of any
Contingent Obligation shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation in respect of which such
Contingent Obligation is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof (assuming such Person is
required to perform thereunder) as determined by such Person in good faith.
"Continuing Directors" shall mean the directors of the Company on
the Initial Borrowing Date and each other director if such director's nomination
for the election to the Board of Directors of the Company is recommended by a
majority of the then Continuing Directors.
"Credit Documents" shall mean the Agreement, each of the Notes and
each Security Document.
"Credit Event" shall mean the making of a Loan (other than a
Revolving Loan made pursuant to a Mandatory Borrowing) or the issuance of a
Letter of Credit.
"Credit Party" shall mean the Company, Essex and each Guarantor,
including the Parent.
8
<PAGE>
"Currency" means U.S. Dollars or any Foreign Currency.
"Cvalim" shall mean The Israeli Cable and Wire Company Limited, a
company organized under the laws of Israel.
"Cvalim Assets" shall mean all assets used or held for use in the
conduct of the cable business of Cvalim, including: fixed assets (save land and
buildings), inventory, Cvalim's rights under contracts including certain leases
for real property, licenses and purchase orders, records, trademarks and know
how, Cvalim's prepaid items and expenses, rights deriving from approved
enterprise status (save grants received by Cvalim and recorded in its books or
rights to receive grants to the extent such amounts were due to Cvalim on or
before the closing date of such sale), customer deposits (save deposits for
products shipped by Cvalim prior to the closing date), software and hardware,
goodwill and rights to the names: "Cvalim", "Cvalim - The Wire and Cable Company
of Israel Ltd.", "D.A.S.H. Cable Industries (Israel) Ltd." and "D.A.S.H." and
any derivatives of such names and casualty insurance proceeds payable as a
result of loss or destruction of equipment; provided that Cvalim Assets shall
not include cash, short term investments, customers' receivables and debit
balances, deposits and long term receivables, investment and investee companies,
other properties and deferred expenses.
"Debenture" shall have the meaning provided in the definition of
Trust Preferred Securities.
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Defaulting Lender" shall mean any Lender with respect to which a
Lender Default is in effect.
"Demand Date" shall have the meaning provided in Section 1.01(f) of
the Agreement.
"Destruction" has the meaning assigned to that term in each
Mortgage.
"Dividends" shall have the meaning provided in Section 8.06 of this
Exhibit E.
"Dividend Period" shall mean each four consecutive fiscal quarters
of the Company commencing with the fiscal quarter beginning after the Initial
Borrowing Date and each four fiscal periods thereafter commencing on the date
immediately following the last day of the immediately preceding Dividend Period.
"Documentation Agent" shall have the meaning provided in the first
paragraph of the Agreement.
9
<PAGE>
"Documents" shall mean the Credit Documents and the Acquisition
Documents.
"Dollar Equivalent" means, with respect to any Borrowing denominated
in any Foreign Currency, the amount of U.S. Dollars that would be required to
purchase the amount of the Foreign Currency of such Borrowing on the date such
Borrowing is requested based upon the spot selling rate at which BTCo offers to
sell such Foreign Currency for U.S. Dollars in the London foreign exchange
market at approximately 11:00 A.M. London time for delivery two Business Days
later.
"Domestic Subsidiary" shall mean each Subsidiary of the Company
incorporated or organized in the United States or any State or territory
thereof.
"Effective Date" shall have the meaning provided in Section 12.10 of
the Agreement.
"Eligible Transferee" shall mean a commercial bank, financial
institution or other institutional "accredited investor" (as defined in
Regulation D of the Securities Act).
"End Date" shall have the meaning provided in the definition of
Interest Reduction Discount.
"Environmental Claims" shall mean any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of non-compliance, deficiency, liability or violation, investigations or
proceedings relating in any way to any violation or liability (or alleged
violation or liability) by the Parent, the Borrowers or any of their respective
Subsidiaries under any Environmental Law (hereafter "Claims") or any permit,
license or other authorization issued to the Parent, the Borrowers or any of
their respective Subsidiaries under any such law, including, without limitation,
(a) any and all Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, remedial, corrective, response or other actions
or damages pursuant to any Environmental Law, and (b) any and all Claims by any
third party seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from Hazardous Materials or arising
from alleged injury or threat of injury to health, safety or the environment.
"Environmental Law" shall mean any non-U.S., federal, state or local
policy, statute, law, rule, regulation, ordinance, code or rule of common law
now or hereafter in effect and in each case as amended, and any judicial or
administrative interpretation thereof, including any judicial or administrative
order, consent, decree or judgment (for purposes of this definition
(collectively, "Laws")), relating to the environment or Hazardous Materials, or
health and safety to the extent such health and safety issues arise under the
Occupational Safety and Health Act of 1970, as amended, or any such similar
Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and the
rulings issued thereunder. Section
10
<PAGE>
references to ERISA are to ERISA as in effect at the date of the Agreement and
any subsequent provisions of ERISA amendatory thereof, supplemental thereto or
substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9)
of ERISA) which together with the Parent, the Company or any Subsidiary thereof
would be deemed to be a "single employer" within the meaning of Section 414(b)
or (c) of the Code or (to the extent required by operation of Title IV of ERISA
or Section 412 of the Code or Section 302 of ERISA) Section 414(m) or (o) of the
Code.
"Essex" shall mean Essex Group, Inc., a Michigan corporation.
"Essex Canada" shall mean Essex Canada Inc., a Delaware corporation.
"Essex Canadian Facility" shall mean the credit facility provided
pursuant to the Credit Agreement dated as of May 30, 1996, as amended and
restated as of March 27, 1998, between Essex Canada and Bank of Montreal.
"Essex Capital Lease Facility" shall mean that facility available
pursuant to the Agreement and Lease dated as of April 12, 1995, as amended as of
June 1, 1997 and September 2, 1997, between Mellon Leasing Corporation and
Essex.
"Essex Credit Agreement" shall mean the credit facility provided
pursuant to the Credit Agreement dated as of October 31, 1996, as amended and
restated as of March 27, 1998, among Essex International Inc., Essex Group,
Inc., the lenders named therein and The Chase Manhattan Bank, as Administrative
Agent.
"Essex Funding" shall mean Essex Funding Inc., a Delaware
corporation.
"Essex Funding Agreement" shall mean that Loan and Security
Agreement, dated as of April 29, 1998, between Essex Funding and Three Rivers
Funding Corporation.
"Essex International" shall mean Essex International Inc., a
Delaware corporation.
"Essex Sublimit" shall have the meaning provided in Section 1.01(c)
of the Agreement.
"Euro" means the single currency of participating member states of
the European Monetary Union.
"Euro Rate" shall mean, with respect to each Interest Period for a
Eurodollar Loan or an Alternate Currency Loan, (i) the arithmetic average
(rounded to the nearest 1/16 of 1%) of the offered quotation to first-class
banks in the interbank Eurodollar or Alternate Currency market by BTCo for U.S.
dollar deposits or deposits in the Alternate Currency (depending upon the
Currency in
11
<PAGE>
which the Loan is being made or maintained) of amounts in same day funds
generally comparable to the aggregate principal amount of the Euro Rate Loan for
which an interest rate is then being determined with maturities comparable to
the Interest Period to be applicable to such Euro Rate Loan, determined as of
10:00 A.M. (New York time) on the date which is two Business Days prior to the
commencement of such Interest Period divided (and rounded upward to the next
whole multiple of 1/16 of 1%) by (ii) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable to
any member bank of the Federal Reserve System in respect of Eurocurrency funding
or liabilities as defined in Regulation D (or any successor category of
liabilities under Regulation D).
"Euro Rate Loan" shall mean each Eurodollar Loan and each Alternate
Currency Loan.
"Eurodollar Loans" shall mean each Loan bearing interest at the
rates provided in Section 1.08(b) of the Agreement.
"European Monetary Union" means the European Economic and Monetary
Union as contemplated in the Treaty of Rome of March 25, 1957, as amended by the
Single European Act 1986 and the Maastricht Treaty (which was signed at
Maastricht on February 7, 1992 and became effective on November 1, 1993), as
amended from time to time (the "Treaty on European Union").
"Event of Default" shall have the meaning provided in Section 9 of
the Agreement.
"Excess Cash Flow" shall mean, for any fiscal year of the Company,
Consolidated EBITDA for such period minus Consolidated Interest Expense for such
period (to the extent paid in cash) minus the provision for income taxes for
such period (to the extent paid in cash) minus the amount of Capital
Expenditures made by the Company and its Subsidiaries during such period (to the
extent paid in cash) minus (plus) additions (reductions) to Consolidated Working
Capital for such period minus scheduled repayments of principal of outstanding
Indebtedness to the extent actually paid (including any voluntary payments of
principal of Indebtedness but excluding voluntary payments of Revolving Loans).
"Excess Cash Flow Percentage" shall mean 75% unless and so long as
the Pro Forma Leverage Ratio is (i) less than 3.75:1.0, in which case it shall
mean 50%.
"Excess Cash Payment Date" shall mean the date occurring 90 days
after the last day of each fiscal year of the Company (beginning with its fiscal
year ended April 30, 2000).
"Excess Cash Payment Period" shall mean with respect to the
repayment required on each Excess Cash Payment Date, the immediately preceding
fiscal year of the Company.
12
<PAGE>
"Existing Indebtedness" shall mean Indebtedness of the Borrowers and
their respective Subsidiaries as of the Initial Borrowing Date and which is to
remain outstanding after giving effect to the Transaction and the incurrence of
Loans on such date, but excluding the Loans, all as set forth on Annex VII to
the Agreement, and other Indebtedness which in the aggregate does not exceed
$100,000.
"Existing Superior Credit Agreement" shall have the meaning provided
in the recitals to the Agreement.
"Facing Fee" shall have the meaning provided in Section 3.01(c) of
the Agreement.
"Federal Funds Rate" shall mean, for any period, a fluctuating
interest rate equal for each day during such period to 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 for such day (or,
if such day is not a Business Day, for the next preceding 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 such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to
in, Section 3.01 of the Agreement.
"Floating Rate Facility" shall mean the $200,000,000 Senior
Subordinated Floating Rate Facility available to the Company pursuant to the
terms of that Senior Subordinated Credit Agreement dated as of the date hereof
among the Company, the guarantors named therein, the lending institutions listed
therein and Bankers Trust Company, as Administrative Agent.
"Foreign Currency" shall mean, at any time, any currency other than
U.S. Dollars.
"Foreign Currency Equivalent" shall mean, with respect to any amount
in U.S. Dollars, the amount of any Foreign Currency that could be purchased with
such amount of U.S. Dollars using the reciprocal of the foreign exchange rate(s)
specified in the definition of the term "Dollar Equivalent", as determined by
the Administrative Agent.
"Fronting Fee" shall have the meaning provided in Section 3.01(e) of
the Agreement .
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time; it being understood and
agreed that determinations in accordance with GAAP for purposes of Section 8 of
this Exhibit E and the definition of Interest Reduction Discount, including
defined terms as used therein, are subject (to the extent provided therein)
13
<PAGE>
to Section 12.07(a) of the Agreement.
"Guaranteed Creditors" shall mean and include each of the
Administrative Agent, the Collateral Agent, the Lenders and each Letter of
Credit Issuer.
"Guaranteed Obligations" shall mean the full and prompt payment when
due (whether at the stated maturity, by acceleration or otherwise) of the
principal and interest on each Note issued by the Borrowers to each Lender, and
Loans made under the Agreement and all reimbursement obligations and Unpaid
Drawings with respect to Letters of Credit, together with all the other
obligations (including obligations which, but for the automatic stay under
Section 362(a) of the Bankruptcy Code, would become due) and liabilities
(including, without limitation, indemnities, fees and interest thereon) of the
Borrowers or any Guarantor to such Lender, the Administrative Agent and the
Collateral Agent now existing or hereafter incurred under, arising out of or in
connection with any Credit Document and the due performance and compliance with
all the terms, conditions and agreements contained in each of the Credit
Documents by the Borrowers.
"Guarantor" shall mean (i) the Company, in respect of Obligations of
Essex hereunder, (ii) the Parent and (iii) each of the Subsidiary Guarantors.
"Guaranty" shall mean the Guaranty contained in Section 13 of the
Agreement.
"Hazardous Materials" shall mean (a) any petrochemical or petroleum
products or wastes (including crude oil or any fraction thereof), radioactive
materials, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
and (b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous wastes," "hazardous materials,"
"restricted hazardous materials," "extremely hazardous wastes," "restrictive
hazardous wastes," "toxic substances," "toxic pollutants," "contaminants" or
"pollutants," or words of similar meaning and regulatory effect under any
Environmental Law.
"Indebtedness" of any Person shall mean, without duplication, (i)
all indebtedness of such Person for borrowed money, (ii) the deferred purchase
price of assets or services payable to the sellers thereof or any of such
seller's assignees which in accordance with GAAP would be shown on the liability
side of the balance sheet of such Person but excluding deferred rent as
determined in accordance with GAAP, (iii) the face amount of all letters of
credit issued for the account of such Person and, without duplication, all
drafts drawn thereunder, (iv) all Indebtedness of a second Person secured by any
Lien on any property owned by such first Person, whether or not such
Indebtedness has been assumed; provided, however, that in the event that the
liability of such first Person is non-recourse to such Person and is recourse
only to specified assets of such Person, the amount of Indebtedness attributed
thereto shall not exceed the greater of the market value of such assets or the
14
<PAGE>
book value of such assets, (v) all Capitalized Lease Obligations of such Person,
(vi) all obligations of such Person to pay a specified purchase price for goods
or services whether or not delivered or accepted, i.e., take-or-pay and similar
obligations, (vii) all obligations under Interest Rate Protection Agreements and
Other Hedging Agreements and (viii) all Contingent Obligations of such Person;
provided that Indebtedness shall not include trade payables and accrued
expenses, in each case arising and payable in the ordinary course of business
(so long as so paid in the ordinary course of business and consistent with past
practice) and, in the case of the Parent, shall include the Trust Preferred
Securities and any other similar securities.
"Information Systems and Equipment" shall mean all computer
hardware, firmware and software, as well as other information processing
systems, or any equipment containing embedded microchips, whether directly
owned, licensed, leased, operated or otherwise controlled by the Parent, the
Borrowers or any of their respective Subsidiaries, including through third-party
service providers, and which, in whole or in part, are used, operated, relied
upon, or integral to, the Parent's, the Borrowers' or any of their respective
Subsidiaries' conduct of their business.
"Initial Borrowing Date" shall mean the date upon which the initial
Borrowing of Loans occurs.
"Intercompany Loan" shall have the meaning provided in Section
8.05(g) of this Exhibit E.
"Intercompany Notes" shall mean promissory notes, in the form of
Exhibit J to the Agreement, evidencing an Intercompany Loan.
"Interest Coverage Ratio" shall mean, for any period, the ratio of
Consolidated EBITDA to Consolidated Interest Expense for such period.
"Interest Period," with respect to any Euro Rate Loan, shall mean
the interest period applicable thereto, as determined pursuant to Section 1.09
of the Agreement.
"Interest Rate Protection Agreement" shall mean any interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedging agreement or other similar agreement or arrangement.
"Interest Reduction Discount" shall mean zero; provided that from
and after the first day of any Margin Reduction Period (the "Start Date") to and
including the last day of such Margin Reduction Period (the "End Date"), the
Interest Reduction Discount shall be the respective percentage per annum set
forth in clause (A), (B), (C) or (D) below if, but only if, as of the last day
of the immediately preceding fiscal quarter or fiscal year of the Company
preceding such Start Date (the "Test Date"), the applicable conditions set forth
in clause (A), (B), (C) or (D) below, as the case may be, are
15
<PAGE>
met:
(A) .25% if, but only if, as of the Test Date immediately prior to
such Start Date the Pro Forma Leverage Ratio for the Test Period ended on
such Test Date shall be less than 4.00:1.0 and none of the conditions set
forth in clause (B), (C) or (D) below, as the case may be, are satisfied;
(B) .50% if, but only if, as of the Test Date immediately prior to
such Start Date the Pro Forma Leverage Ratio for the Test Period ended on
such Test Date shall be less than 3.50:1.0 and none of the conditions set
forth in clause (C) or (D) below, as the case may be, are satisfied;
(C) .75% if, but only if, as of the Test Date immediately prior to
such Start Date the Pro Forma Leverage Ratio for the Test Period ended on
such Test Date shall be less than 3.00:1.0 and the condition set forth in
clause (D) below is not satisfied; or
(D) 1% if, but only if, as of the Test Date immediately prior to
such Start Date the Pro Forma Leverage Ratio for the Test Period ended on
such Test Date shall be less than 2.50:1.0.
Notwithstanding anything to the contrary contained above in this
definition, (x) the Interest Reduction Discount shall not be greater than zero
prior to the first Test Date to occur after the second Test Period and (y) the
Interest Reduction Discount shall be zero at any time when a Default or an Event
of Default shall exist.
"Investments" shall have the meaning provided in Section 8.05 of
this Exhibit E .
"Israeli Subsidiaries" shall mean Superior Cable Israel Ltd., Cables
of Zion and their respective Subsidiaries.
"Judgment Currency" shall have the meaning provided in Section 12.18
of the Agreement.
"Judgment Currency Conversion Date" shall have the meaning provided
in Section 12.18 of the Agreement.
"L/C Supportable Indebtedness" shall mean (i) obligations of the
Borrowers or their respective Subsidiaries incurred in the ordinary course of
business with respect to insurance obligations and workers' compensation, surety
bonds and other similar statutory obligations and (ii) such other obligations of
the Borrowers or any of their respective Subsidiaries as are reasonably
acceptable to the Administrative Agent and the Letter of Credit Issuer and
otherwise permitted to exist pursuant to the terms of the Agreement.
16
<PAGE>
"Lease" shall mean any lease, sublease, franchise agreement,
license, occupancy or concession agreement.
"Leasehold" of any Person shall mean all of the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Lender" shall have the meaning provided in the first paragraph of
the Agreement.
"Lender Default" shall mean (i) the failure or refusal (which has
not been retracted) of a Lender to make available its portion of any Borrowing
(including any Mandatory Borrowing) or to fund its portion of any unreimbursed
payment under Section 2.04(c) of the Agreement or (ii) a Lender having notified
the Administrative Agent and/or the Borrowers that it does not intend to comply
with its obligations under Section 1.01(a) through 1.01(d) or 2.04(c) of the
Agreement, in the case of either clause (i) or (ii) above as a result of the
appointment of a receiver or conservator with respect to such Lender at the
direction or request of any regulatory agency or authority.
"Letter of Credit" shall have the meaning provided in Section
2.01(a) of the Agreement.
"Letter of Credit Fees" shall have the meaning provided in Section
3.01(b) of the Agreement.
"Letter of Credit Issuer" shall mean BTCo.
"Letter of Credit Outstandings" shall mean, at any time, the sum of,
without duplication, (i) the aggregate Stated Amount of all outstanding Letters
of Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in
Section 2.02(a) of the Agreement.
"Letter of Credit Sublimit" shall mean $25,000,000.
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any agreement to give any of
the foregoing, any conditional sale or other title retention agreement, any
financing or similar statement or notice filed under the UCC or any similar
recording or notice statute, and any lease having substantially the same effect
as the foregoing).
"Loan" shall mean each Tranche A Term Loan, each Tranche B Term
Loan, each Revolving Loan and each Swingline Loan.
"Mandatory Borrowing" shall have the meaning provided in Section
1.01(e) of the Agreement.
17
<PAGE>
"Margin Reduction Period" shall mean each period which shall
commence on a date on which the financial statements are delivered pursuant to
Section 7.01(b) or (c) of the Agreement, as the case may be, and which shall end
on the earlier of (i) the date of actual delivery of the next financial
statements pursuant to Section 7.01(b) or (c) of the Agreement, as the case may
be, and (ii) the latest date on which the next financial statements are required
to be delivered pursuant to Section 7.01(b) or (c) of the Agreement, as the case
may be; provided that the first Margin Reduction Period shall commence on the
date that the financial statements are delivered for the Company's first fiscal
quarter ending April 30, 1999.
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean (x) a material adverse effect
on the Transaction or (y) a material adverse effect on the business, properties,
assets, nature of assets, liabilities, condition (financial or otherwise) (i) on
the Initial Borrowing Date, of the Parent and its Subsidiaries, the Company and
its Subsidiaries, or Essex and its Subsidiaries, in each case taken as a whole,
and both before and after giving effect to the Transaction and (ii) thereafter,
of the Company and its Subsidiaries (including Essex), or the Parent and its
Subsidiaries, in each case taken as a whole or (z) a material adverse effect on
the rights or remedies of the Lenders or the Administrative Agent, or on the
ability of any Credit party to perform its obligations to the Lenders or the
Administrative Agent hereunder or under any other Credit Document.
"Maturity Date" shall mean, with respect to any Tranche of Loans,
the Tranche A Term Loan Maturity Date, the Tranche B Term Loan Maturity Date,
the Revolving Loan Maturity Date or the Swingline Expiry Date, as the case may
be.
"Maximum Number" shall have the meaning provided in the recitals to
the Agreement.
"Maximum Swingline Amount" shall mean $35,000,000.
"Merger" shall mean the merger of Acquisition Co with and into Essex
International in which Essex International will be the surviving corporation and
remaining common stockholders of Essex International (other than Acquisition Co)
will receive Trust Preferred Securities and, to the extent less than the Maximum
Number of shares of common stock of Essex are accepted in the Tender Offer, any
of the Tender Offer Cash Consideration not paid.
"Merger Agreement" shall have the meaning provided in the recitals
to the Agreement.
"Mexican Subsidiaries" shall mean any Wholly-Owned Subsidiary of the
Company, Essex or any of their respective Subsidiaries organized under the laws
of Mexico to make the acquisitions and Investments contemplated by Section
8.02(s) of this Exhibit E.
"Minimum Borrowing Amount" shall mean the amounts set forth in
Section 1.02 of the
18
<PAGE>
Agreement.
"Minimum Condition" shall have the meaning provided in the recitals
to the Agreement.
"Moody's" shall mean Moody's Investors Service, Inc.
"Mortgage" shall mean a revolving credit mortgage, assignment of
leases, security agreement and fixture filing, or a revolving credit deed of
trust, assignment of leases, security agreement and fixture filing creating and
evidencing a Lien on a Mortgaged Real Property, which shall be substantially in
the form of Exhibit K or L (as appropriate) to the Agreement, containing such
schedules and including such additional provisions and other deviations from
such Exhibits as shall be necessary to conform such document to applicable or
local law or as shall be customary under local law and which shall be dated the
date of delivery thereof and made by the owner of the Mortgaged Real Property
described therein for the benefit of the Collateral Agent, as mortgagee (grantee
or beneficiary), assignee and secured party, as the same may at any time be
amended, modified or supplemented in accordance with the terms thereof and
hereof.
"Mortgaged Property" shall have the meaning assigned to such term in
the Mortgages.
"Mortgaged Real Property" shall mean and include the Real Properties
owned or leased by the Borrowers and the Guarantors to the extent designated as
such on Annex IV and any additional Real Property which shall be subject to a
Mortgage delivered pursuant to Section 5.10.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan
(as defined in Section 4001(a)(3) of ERISA).
"Net Award" has the meaning assigned to such term in each Mortgage.
"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the
Cash Proceeds resulting therefrom net of (a) cash expenses of sale (including,
without limitation, brokerage fees, if any, transfer taxes and payment of
principal, premium and interest of Indebtedness other than the Loans required to
be repaid as a result of such Asset Sale), (b) all federal, state, local and
non-U.S. taxes to the extent payable as a direct consequence of any such Asset
Sale and (c) deduction of reasonable amounts, determined in accordance with
GAAP, required to be provided by either of the Borrowers or any of their
respective Subsidiaries as a reserve against any liabilities retained by the
Borrowers or any such Subsidiary associated with such assets after such Asset
Sale, including, without limitation, any indemnification, pension and other
post-employment benefit liabilities, workers compensation liabilities,
liabilities associated with retiree benefits and liabilities relating to
environmental matters, except and until such reserves are reversed, in which
case the amount of such reversal shall constitute Net Cash Proceeds.
19
<PAGE>
"Net Proceeds" has the meaning assigned to that term in each
Mortgage.
"Non-Defaulting Lender" shall mean each Lender other than a
Defaulting Lender.
"Non-U.S. Pension Plan" shall mean any plan, fund (including,
without limitation, any superannuation fund) or other similar program
established or maintained outside the United States of America by the Parent,
the Company, Essex or any one or more of their respective Subsidiaries primarily
for the benefit of employees of the Parent, the Company, Essex or such
Subsidiaries residing outside the United States of America, which plan, fund or
other similar program provides, or results in, retirement income, a deferral of
income in contemplation of retirement or payments to be made upon termination of
employment or any such plan as to which the Parent, the Company, Essex or any of
their respective Subsidiaries may have any liability.
"Non-U.S. Subsidiary" shall mean each Subsidiary of the Company
other than a Domestic Subsidiary.
"Note" shall mean each Tranche A Term Note, each Tranche B Term
Note, each Revolving Note and the Swingline Note.
"Notice of Borrowing" shall have the meaning provided in Section
1.03(a) of the Agreement.
"Notice of Conversion" shall have the meaning provided in Section
1.06 of the Agreement.
"Notice Office" shall mean the office of the Administrative Agent
located at One Bankers Trust Plaza, New York, New York 10006 or such other
office as the Administrative Agent may designate to the Borrowers and the
Lenders from time to time.
"Obligation Currency" shall have the meaning provided in Section
12.18 of the Agreement.
"Obligations" shall mean all amounts, direct or indirect, contingent
or absolute, of every type or description, and at any time existing, owing to
the Administrative Agent, the Collateral Agent or any Lender pursuant to the
terms of any Credit Document.
"Other Hedging Agreements" shall mean (x) any foreign exchange
contracts, currency swap agreements or other similar agreements or arrangements
designed to protect against fluctuations in currency values and (y) agreements
relating to the future purchase of commodities or designed to protect against
fluctuations in the prices of specific commodities.
20
<PAGE>
"Parent" shall mean Superior TeleCom Inc., a Delaware corporation.
"Parent Common Stock" shall mean shares of common stock, $.01 par
value per share, of the Parent.
"Parent Tax Allocation Agreement" shall mean the tax allocation
agreement by and among the Parent and its Subsidiaries dated as of October 2,
1996, effective as of May 1, 1996.
"Participant" shall have the meaning provided in Section 2.04(a)(i)
of the Agreement.
"Payment Office" shall mean the office of the Administrative Agent
located at One Bankers Trust Plaza, New York, New York 10006 or such other
office as the Administrative Agent may designate to the Borrowers and the
Lenders from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.
"Percentage" in the case of a Revolving Loan Lender at any time
shall mean a fraction (expressed as a percentage) the numerator of which is the
Revolving Loan Commitment of such Lender at such time and the denominator of
which is the Total Revolving Loan Commitment at such time; provided that if the
Percentage of any Lender is to be determined after the applicable Total
Revolving Loan Commitment has been terminated, then the Percentages of the
Lenders shall be determined immediately prior (and without giving effect) to
such termination.
"Permitted Acquisition" shall have the meaning provided in Section
8.02(l) of this Exhibit E.
"Permitted Liens" shall have the meaning provided in Section 8.03 of
this Exhibit E.
"Person" shall mean any individual, partnership, joint venture,
firm, corporation, limited liability company or partnership, association, trust
or other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" shall mean any multiemployer plan or single-employer plan as
defined in Section 4001 of ERISA, which is maintained or contributed to by (or
to which there is an obligation to contribute of) the Company or Essex, any of
their respective Subsidiaries or any ERISA Affiliate and each such plan for the
five calendar year period immediately following the latest date on which the
Company or Essex, any of their respective Subsidiaries or any ERISA Affiliate
maintained, contributed to or had an obligation to contribute to such plan or
any such plan as to which the Company or Essex, any of their respective
Subsidiaries or any ERISA Affiliate may have any liability; provided, however,
the term "Plan" shall not include any Non- U.S. Pension Plan.
21
<PAGE>
"Pledge Agreement" shall have the meaning provided in Section
5.08(a) of the Agreement and shall include any additional pledge agreement
executed by the Borrowers or any of their respective Subsidiaries pursuant to
Section 7.11 of the Agreement.
"Pledge Agreement Collateral" shall mean all "Pledged Collateral" as
defined in the Pledge Agreement.
"Pledged Securities" shall mean all the Pledged Securities as
defined in the Pledge Agreement.
"Pounds Sterling" shall mean (i) freely transferable lawful money of
the United Kingdom and (ii) in the event that the Pounds Sterling is replaced by
the Euro, Euros having a corresponding value, calculated in accordance with the
relevant provisions of the treaty on the European Union.
"Prime Lending Rate" shall mean the rate which BTCo announces from
time to time as its prime lending rate, the Prime Lending Rate to change when
and as such prime lending rate changes. The Prime Lending Rate is a reference
rate and does not necessarily represent the lowest or best rate actually charged
to any customer. BTCo may make commercial loans or other loans at rates of
interest at, above or below the Prime Lending Rate.
"Prior Liens" shall mean Liens which, pursuant to the provisions of
any Security Document, are or may be superior to the Lien of such Security
Document.
"Pro Forma Leverage Ratio" shall mean, at any time for the
determination thereof, the ratio of (x) Consolidated Debt at such time to (y)
Consolidated EBITDA for the Test Period then last ended, with such Pro Forma
Leverage Ratio to be determined on a pro forma basis (i) in the case of a
Permitted Acquisition, as if such Permitted Acquisition (and any other Permitted
Acquisition) that occurred during such Test Period (and the incurrence,
assumption and/or repayment of any Indebtedness in connection with any such
Permitted Acquisition), as the case may be, had occurred on the first day of
such Test Period (and such Indebtedness, if any, had remained outstanding (or
had not been outstanding, as the case may be) throughout such Test Period) it
being understood that in calculating the Pro Forma Leverage Ratio in connection
with each and every Permitted Acquisition, Consolidated EBITDA shall include the
results of operations of the Person or assets acquired pursuant to each such
Permitted Acquisition on a pro forma basis as if such acquisition had occurred
on the first day of the respective Test Period and (ii) in the case of the
Transaction, for the first three quarterly Test Periods for which the Pro Forma
Leverage Ratio is being tested, Consolidated EBITDA for the purpose of
determining the Pro Forma Leverage Ratio shall be calculated (x) for the first
such Test Period as the product of Consolidated EBITDA for the fiscal quarter
ending April 30, 1999 ("First Quarter EBITDA") times 4, (y) for the second such
Test Period as the sum of (1) the product of First Quarter EBITDA times 2 plus
(2) the product of the Consolidated EBITDA for the fiscal quarter ending July
31, 1999 ("Second Quarter EBITDA") times 2 and (z) for the third such Test
Period as the
22
<PAGE>
product of (1) the sum of First Quarter EBIDTA plus Second Quarter EBITDA plus
Consolidated EBITDA for the fiscal quarter ending October 31, 1999 times (2) 1
1/3. On any date pursuant to which the Pro Forma Leverage Ratio is to be
calculated and on each date of calculation of Pro Forma Leverage Ratio, the
Company shall deliver to the Landlord a certificate of the Company's chief
financial officer setting forth in reasonable detail the pro forma calculations
required to establish the Pro Forma Leverage Ratio (with such pro forma
calculations to be made on a basis reasonably satisfactory to the Landlord and
to assume that the interest expense attributable to any Indebtedness (whether
existing or being incurred) bearing a floating interest rate shall be computed
as if the rate in effect on the date of such Permitted Acquisition (taking into
account any Interest Rate Protection Agreement applicable to such Indebtedness
if such Interest Rate Protection Agreement has a remaining term in excess of 12
months) had been the applicable rate for the entire period). For purposes of the
Pro Forma Leverage Ratio, Consolidated Debt shall not include the Trust
Preferred Securities.
"Projections" shall mean the financial projections dated November
10, 1998, which include the projected consolidated and consolidating results of
the Company and its Subsidiaries (including Essex) for at least the five fiscal
years ended after the Initial Borrowing Date.
"Quarterly Payment Date" shall mean the last Business Day of each
fiscal quarter (including the fourth fiscal quarter) of the Company.
"Real Property" of any Person shall mean all of the right, title and
interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Receivables Financing Agreement" shall mean (i) the Essex Funding
Agreement and any refinancing thereof, provided that the aggregate amount
thereunder does not exceed $225,000,000 and the then outstanding principal
amount thereof is not increased and the cost and other terms of any such
replacement facility is on market terms and conditions for similar receivables
financing and/or factoring facilities at the time of such refinancing; and (ii)
a replacement accounts receivable facility: (it being understood that such
replacement facility may be in the form of a sale of receivables and Receivables
Related Assets or fractional undivided interests therein); provided that, in
each case, (x) the proceeds of such replacement facility shall not be less than
75% of the book value (or, if applicable, the fair market value) of such
receivables and Receivables Related Assets (subject to customary advance rates
and discounts), in case such replacement facility is structured as a sale, or
the loans secured thereunder, in case such facility is structured as a loan and
(y) neither the Company nor any of its Subsidiaries (other than a Receivables
Subsidiary) provides, directly or indirectly, any credit support with respect to
such facility, other than as described in clause (c)(ii) of the definition of
Receivables Subsidiary.
"Receivables Related Assets" shall mean accounts receivable and
instruments, chattel papers, obligations, general intangibles and other similar
assets, in each case, relating to receivables subject to a Receivables Financing
Agreement, including interests in merchandise or goods, the sale or
23
<PAGE>
lease of which gave rise to such receivables, related contractual rights,
guarantees, insurance proceeds, collections, other related assets and proceeds
of all of the foregoing.
"Receivables Subsidiary" shall mean (i) Essex Funding, in the case
of a Receivables Financing Agreement that meets the condition of clause (i) of
the definition thereof, or (ii) a wholly-owned Subsidiary of the Company (a)
that is designated (as set forth below) as a "Receivables Subsidiary" by the
Board of Directors of the Company, (b) that does not engage in, and whose
charter prohibits it from engaging in, any activities other than in connection
with the Receivables Financing Agreement on the terms otherwise permitted
hereby, (c) no portion of the Indebtedness or any other obligation (contingent
or otherwise) thereof under such Receivables Financing Agreement (i) is
guaranteed by the Company or any other Subsidiary of the Company, (ii) is
recourse to or obligates the Company or any other Subsidiary of the Company in
any way other than pursuant to representations, warranties, covenants and
indemnities entered into in the ordinary course of business in connection with
such Receivables Financing Agreement or (iii) subjects any property or asset of
the Company or any other Subsidiary of the Company, directly or indirectly,
contingently or otherwise, to the satisfaction thereof, other than pursuant to
representations, warranties, covenants and indemnities entered into in the
ordinary course of business in connection such a Receivables Financing
Agreement, (d) with which neither the Company nor any other Subsidiary of the
Company has any material contract, agreement, arrangement or understanding and
(e) with respect to which neither the Company nor any other Subsidiary of the
Company has any obligation to maintain or preserve such Subsidiary's financial
condition or cause such Subsidiary to achieve certain levels of operating
results. Any such designation by the Board of Directors of the Company shall be
evidenced by filing with the Administrative Agent a certified copy of the
resolutions of the Board of Directors of the Company giving effect to such
designation and a certificate of the chief financial officer of the Company or
other Authorized Officer of the Company certifying that such designation
complied with the foregoing conditions.
"Recovery Event" shall mean the receipt by either of the Borrowers
or any of their respective Subsidiaries of any cash insurance proceeds or
condemnation award payable (i) by reason of theft, loss, physical destruction or
damage or any other similar event with respect to any property or assets of
either of the Borrowers or any of their respective Subsidiaries and (ii) under
any policy of insurance required to be maintained under Section 7.03 of the
Agreement.
"Refinancings" shall have the meaning provided in the recitals to
the Agreement.
"Register" shall have the meaning provided in Section 7.12 of the
Agreement.
"Regulation D" shall mean Regulation D of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements.
"Regulation T" shall mean Regulation T of the Board of Governors of
the Federal
24
<PAGE>
Reserve System as from time to time in effect and any successor to all or any
portion thereof.
"Regulation U" shall mean Regulation U of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or any portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of
the Federal Reserve System as from time to time in effect and any successor to
all or any portion thereof.
"Release" means disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, seeping,
placing, pouring and the like, into or upon any land or water or air, or
otherwise entering into the environment.
"Replaced Lender" shall have the meaning provided in Section 1.13 of
the Agreement.
"Replacement Lender" shall have the meaning provided in Section 1.13
of the Agreement.
"Reportable Event" shall mean an event described in Section 4043(c)
of ERISA with respect to a Plan as to which the 30-day notice requirement has
not been waived by the PGBC by regulation.
"Required Lenders" means Non-Defaulting Lenders holding at least a
majority of the outstanding Loans (after giving effect to the Percentage of
Swingline Loans of each Non-Defaulting Revolving Loan Lender), Letter of Credit
Outstandings and Total Unutilized Revolving Loan Commitments held by
Non-Defaulting Lenders.
"Returns" shall have the meaning provided in Section 6.18 of the
Agreement.
"Revolving Loan" shall have the meaning provided in Section 1.01(c)
of the Agreement and shall include a Revolving Loan denominated in U.S. Dollars
as well as an Alternate Currency Loan.
"Revolving Loan Lender" shall have the meaning provided in Section
1.01(c) of the Agreement.
"Revolving Loan Commitment" shall mean, with respect to each Lender,
the amount set forth opposite such Lender's name in Annex I to the Agreement
directly below the column entitled "Revolving Loan Commitment," as the same may
be reduced from time to time pursuant to Section 3.02, Section 3.03, Section 9
of the Agreement and/or the definition of "Total Revolving Loan Commitment."
"Revolving Loan Maturity Date" shall mean November 27, 2004.
25
<PAGE>
"Revolving Note" shall have the meaning provided in Section 1.05(a)
of the Agreement.
"Rollover Amount" shall have the meaning provided in Section 8.08(b)
of this Exhibit E.
"Scheduled Repayments" shall mean Tranche A Term Loan Scheduled
Repayments and Tranche B Term Loan Scheduled Repayments.
"SEC" shall mean the Securities and Exchange Commission or any
successor thereto.
"Section 4.04(b)(ii) Certificate" shall have the meaning provided in
Section 4.04(b)(ii) of the Agreement.
"Secured Creditors" shall mean the Administrative Agent, the
Collateral Agent, the Lenders and each Letter of Credit Issuer.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security Agreement" shall have the meaning provided in Section
5.08(b) of the Agreement and shall include any additional security agreement
executed by the Borrowers or any of their respective Subsidiaries pursuant to
Section 7.11 of the Agreement.
"Security Agreement Collateral" shall mean all the "Pledged
Collateral" as defined in the Security Agreement.
"Security Documents" shall mean and include the Security Agreement,
the Pledge Agreement and each Mortgage.
"Services Agreement" shall mean the services agreement between
Alpine and the Parent, dated as of October 2, 1996, as amended May 1, 1997 and
May 1, 1998.
"S&P" shall mean Standard & Poor's Ratings Service.
"Start Date" shall have the meaning provided in the definition of
Interest Reduction Discount.
"Stated Amount" of each Letter of Credit shall mean the maximum
amount available to be drawn thereunder (regardless of whether any conditions
for drawing could then be met).
"Subsidiary" of any Person shall mean and include (i) any
corporation more than 50% of whose stock of any class or classes having by the
terms thereof ordinary voting power to elect a majority of the directors of such
corporation (irrespective of whether or not at the time stock of any
26
<PAGE>
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time owned by such Person
directly or indirectly through Subsidiaries and (ii) any partnership,
association, joint venture or other entity (other than a corporation) in which
such Person directly or indirectly through Subsidiaries, has more than a 50%
equity interest at the time; in the case of the Company, a Subsidiary of the
Company shall include at any time after the consummation of the Tender Offer,
Essex and its Subsidiaries.
"Subsidiary Borrower" shall mean, at any time, any Subsidiary of the
Company designated as a Subsidiary Borrower by the Company in accordance with
Section 1.15 of the Agreement that has not ceased to be a Subsidiary Borrower
pursuant to such Section.
"Subsidiary Guarantor" shall mean (i) Essex, in respect of the
Obligations of the Company hereunder and (ii) each Subsidiary of each of the
Company and Essex (other than a Non-U.S. Subsidiary except to the extent
otherwise provided in Section 8.14 of this Exhibit E) except for Essex Funding,
any Receivables Subsidiary and Essex Canada.
"Superior Preferred Stock" shall mean the 6% Cumulative Preferred
Stock, par value $1.00 per share, of Superior Telecommunications having an
aggregate liquidation preference of $20,000,000 (but shall include any Company
preferred stock issued in exchange therefor pursuant to clause (ii)(y) of
Section 8.06 of this Exhibit E).
"Superior Telecommunications" shall mean Superior Telecommunications
Inc., a Georgia corporation and Wholly-Owned Subsidiary of the Company.
"Superior Trust I" shall mean Superior Trust I, a statutory business
trust formed under the laws of the State of Delaware, the common securities of
which shall be directly or indirectly wholly owned by the Parent.
"Survey" means a survey of any Mortgaged Real Property (and all
improvements thereon): (i) prepared by a surveyor or engineer licensed to
perform surveys in the state, province or country where such Mortgaged Real
Property is located, (ii) dated (or redated) not earlier than six months prior
to the date of delivery thereof unless there shall have occurred within the six
months prior to such date of delivery any exterior construction on the site of
such Mortgaged Real Property, in which event such survey shall be dated (or
redated) after the completion of such construction or if such construction shall
not have been completed as of such date of delivery, not earlier than 20 days
prior to such date of delivery, (iii) certified by the surveyor (in a manner
reasonably acceptable to the Collateral Agent) to the Collateral Agent and the
Title Company and (iv) complying in all respects with the minimum detail
requirements of the American Land Title Association as such requirements are in
effect on the date of preparation of such survey.
"Swingline Expiry Date" shall mean the date which is five Business
Days prior to the
27
<PAGE>
Revolving Loan Maturity Date.
"Swingline Loan" shall have the meaning provided in Section 1.01(d)
of the Agreement.
"Swingline Note" shall have the meaning provided in Section 1.05(a)
of the Agreement.
"Syndication Agent" shall have the meaning provided in the first
paragraph of the Agreement.
"Syndication Date" shall mean that date upon which the
Administrative Agent determines (and notifies the Borrowers and the Lenders)
that the primary syndication (and resultant addition of Persons as Lenders
pursuant to Section 12.04(b) of the Agreement) has been completed.
"Taking" has the meaning assigned to such term in each Mortgage.
"Tax Allocation Agreements" shall mean any tax sharing or tax
allocation agreements entered into, or to be entered into, by the Borrowers or
any of their respective Subsidiaries.
"Taxes" shall have the meaning provided in Section 4.04 of the
Agreement.
"Tender Offer" shall have the meaning provided in the recitals to
the Agreement.
"Tender Offer Cash Consideration" shall have the meaning provided in
the recitals to the Agreement.
"Tender Offer Documents" shall mean the Offer to Purchase, the
Schedule 14D-1 filed by the Parent and Acquisition Co, the Schedule 14D-9 filed
by Essex and all amendments and exhibits thereto and related documents filed
with the SEC or distributed to the stockholders of Essex.
"Term Loan" shall mean the Tranche A Term Loan or the Tranche B Term
Loan.
"Term Loan Commitment" shall mean each Tranche A Term Loan
Commitment and each Tranche B Term Loan Commitment, with the Term Loan
Commitment of any Lender at any time to equal the sum of its Tranche A Term Loan
Commitment and Tranche B Term Loan Commitment as then in effect.
"Test Date" shall have the meaning provided in the definition of
Interest Reduction Discount.
"Test Period" shall mean four consecutive fiscal quarters of the
Company (taken as one accounting period) ended, in the case of any determination
of Interest Reduction Discount, on the last
28
<PAGE>
day of each fiscal quarter or fiscal year of the Company and, in all other
cases, ended on the date indicated in the applicable Section hereof; provided,
with respect to the Test Periods ending prior to April 29, 2000, Consolidated
EBITDA and the Interest Coverage Ratio shall be measured in accordance with the
actual results for the period from November 1, 1998 through such last day of
such Test Period.
"Title Company" shall mean First American Title Insurance Company or
such other title insurance or abstract company as shall be designated by the
Landlord.
"Total Commitments" shall mean, at any time, the sum of the
Commitments of each of the Lenders.
"Total Consideration Amount" shall mean (with respect to any
Permitted Acquisition, or series of related Permitted Acquisitions) $50,000,000;
provided that if at least 90% of the total consideration with respect thereto
(as determined in accordance with Section 8.02(l) of this Exhibit E) is paid in
shares of Parent Common Stock, such amount shall be $[200,000,000].
"Total Revolving Loan Commitment" shall mean the sum of the then
Revolving Loan Commitments of each of the Lenders, it being understood that the
Total Revolving Loan Commitment as of the Initial Borrowing Date shall be
$225,000,000.
"Total Revolving Outstandings" shall mean, at any time, the sum of
(i) the aggregate principal amount of all Revolving Loans outstanding at such
time, (ii) the aggregate principal amount of all Swingline Loans outstanding at
such time and (iii) the aggregate amount of all Letter of Credit Outstandings at
such time.
"Total Term Loan Commitment" shall mean, at any time, the sum of the
Total Tranche A Term Loan Commitment and Total Tranche B Term Loan Commitment.
"Total Tranche A Term Loan Commitment" shall mean, at any time, the
sum of the Tranche A Term Loan Commitments of each of the Lenders.
"Total Tranche B Term Loan Commitment" shall mean, at any time, the
sum of the Tranche B Term Loan Commitments of each of the Lenders.
"Total Unutilized Revolving Loan Commitment" shall mean, at any
time, (i) the Total Revolving Loan Commitment at such time less (ii) Total
Revolving Outstandings at such time.
"Tranche" shall mean the respective facility and commitments
utilized in making Loans hereunder, with there being four separate Tranches;
i.e., Tranche A Term Loans, Tranche B Term Loans, Revolving Loans and Swingline
Loans.
29
<PAGE>
"Tranche A Term Loan" shall have the meaning provided in Section
1.01(a) of the Agreement.
"Tranche A Term Loan Commitment" shall mean, for each Lender, the
amount set forth opposite such Lender's name in Annex I to the Agreement
directly below the column entitled "Tranche A Term Loan Commitment", as same may
be (x) reduced from time to time pursuant to Sections 3.03, 4.02 and/or 9 of the
Agreement or (y) adjusted from time to time as a result of assignments to or
from such Lender pursuant to Section 1.13 or 12.04 of the Agreement.
"Tranche A Term Loan Lender" shall have the meaning provided in
Section 1.01(a) of the Agreement.
"Tranche A Term Loan Maturity Date" shall mean May 27, 2004.
"Tranche A Term Loan Scheduled Repayment" shall have the meaning
provided in Section 4.02(b) of the Agreement.
"Tranche A Term Loan Scheduled Repayment Date" shall have the
meaning provided in Section 4.02(b) of the Agreement.
"Tranche A Term Note" shall have the meaning provided in Section
1.05(a) of the Agreement.
"Tranche B Term Loan" shall have the meaning provided in Section
1.01(b) of the Agreement.
"Tranche B Term Loan Commitment" shall mean, for each Lender, the
amount set forth opposite such Lender's name in Annex I to the Agreement hereto
directly below the column entitled "Tranche B Term Loan Commitment", as same may
be (x) reduced from time to time pursuant to Sections 3.03, 4.02 and/or 9 of the
Agreement or (y) adjusted from time to time as a result of assignments to or
from such Lender pursuant to Section 1.13 or 12.04 of the Agreement.
"Tranche B Term Loan Lender" shall have the meaning provided in
Section 1.01(b) of the Agreement.
"Tranche B Term Loan Maturity Date" shall mean November 27, 2005.
"Tranche B Term Loan Scheduled Repayment" shall have the meaning
provided in Section 4.02(c) of the Agreement.
"Tranche B Term Loan Scheduled Repayment Date" shall have the
meaning provided in
30
<PAGE>
Section 4.02(c) of the Agreement.
"Tranche B Term Note" shall have the meaning provided in Section
1.05(a) of the Agreement.
"Transaction" shall have the meaning provided in the recitals to the
Agreement.
"Trust Preferred Securities" shall mean collectively: (i) the shares
of Series A Cumulative Convertible Exchangeable Trust Preferred Securities of
Superior Trust I having an aggregate liquidation preference of approximately
$167,000,000; (ii) the long-term, subordinated debenture issued by the Company
and purchased by Superior Trust I which, under certain circumstances, may be
distributed to the holders of the Series A Cumulative Convertible Exchangeable
Trust Preferred Securities (the "Debenture"); and (iii) shall include the
guarantee by the Company of dividend, redemption and liquidation payments as in
effect on the Initial Borrowing Date, all substantially in the form of Exhibit M
hereto, with such modifications consistent with the economic terms thereof, as
to which the Administrative Agent may agree, such agreement not to be
unreasonably withheld or delayed.
"Type" shall mean any type of Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or a Euro Rate Loan.
"UCC" shall mean the Uniform Commercial Code as in effect from time
to time in the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if
any, by which the actuarial present value of the accumulated plan benefits under
the Plan as of the close of its most recent plan year exceeds the fair market
value of the assets allocable thereto, each determined in accordance with
Statement of Financial Accounting Standards No. 87, based upon the actuarial
assumptions used by the Plan's actuary in the most recent annual valuation of
the Plan.
"Unpaid Drawing" shall have the meaning provided in Section 2.03(a)
of the Agreement.
"Unutilized Revolving Loan Commitment" with respect to any Revolving
Loan Lender, at any time, shall mean such Lender's Revolving Loan Commitment at
such time less the sum of (i) the aggregate outstanding principal amount of
Revolving Loans made by such Lender (plus, in the case of BTCo, the aggregate
outstanding principal amount of Swingline Loans made by BTCo) and (ii) such
Lender's Percentage of the Letter of Credit Outstandings in respect of Letters
of Credit issued under the Agreement.
"U.S. Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States of America.
31
<PAGE>
"Wholly-Owned Domestic Subsidiary" shall mean, as to any Person, any
Wholly- Owned Subsidiary of such Person which is a Domestic Subsidiary.
"Wholly-Owned Non-U.S. Subsidiary" shall mean, as to any Person, any
Wholly- Owned Subsidiary of such Person which is a Non-U.S. Subsidiary.
"Wholly-Owned Subsidiary" shall mean, as to any Person, (i) any
corporation 100% of whose capital stock (other than director's qualifying shares
and/or other nominal amounts of shares required to be held other than by such
Person under applicable law) is at the time owned by such Person and/or one or
more Wholly-Owned Subsidiaries of such Person and (ii) any partnership,
association, joint venture or other entity in which such Person and/or one or
more Wholly-Owned Subsidiaries of such Person has a 100% equity interest at such
time.
"Written" (whether lower or upper case) or "in writing" shall mean
any form of written communication or a communication by means of telex,
facsimile device, or telegraph or cable.
"Year 2000 Compliant" shall mean that all Information Systems and
Equipment accurately process date data (including, but not limited to,
calculating, comparing and sequencing), before, during and after the year 2000,
as well as same and multi-century dates, or between the years 1999 and 2000,
taking into account all leap years, including the fact that the year 2000 is a
leap year, and further, that when used in combination with, or interfacing with,
other Information Systems and Equipment, shall accurately accept, release and
exchange date data, and shall in all material respects continue to function in
the same manner as it performs today and shall not otherwise impair the accuracy
or functionality of Information Systems and Equipment.
SECTION 8. Negative Covenants. Each of the Borrowers and the Parent
hereby covenants and agrees that, unless the Landlord consents thereto in
writing, as of the Initial Borrowing Date and thereafter for so long as the
Agreement is in effect and until the Total Commitments have terminated, no
Letters of Credit (other than Letters of Credit, together with all Fees that
have accrued and will accrue thereon through the stated termination date of such
Letters of Credit, which have been supported in a manner satisfactory to the
Letter of Credit Issuer in its sole and absolute discretion) or Notes are
outstanding and the Loans, together with interest, Fees and all other
Obligations (other than any indemnities described in Section 12.13 which are not
then due and payable) incurred hereunder, are paid in full:
8.01. Changes in Business. The Parent, the Company and Essex and
their respective Subsidiaries will not engage in any business other than the
businesses in which the Parent, the Borrowers and their respective Subsidiaries
are engaged in as of the Initial Borrowing Date and activities incidental
thereto, and similar or related businesses.
8.02. Consolidation, Merger, Sale or Purchase of Assets, etc. The
Company will not,
32
<PAGE>
and will not permit any of its Subsidiaries to, wind up, liquidate or dissolve
its affairs or enter into any transaction of merger or consolidation, or convey,
sell, lease or otherwise dispose of (or agree to do any of the foregoing at any
future time) all or any part of its property or assets (other than inventory in
the ordinary course of business, including sales of inventory on consignment in
the ordinary course of business), or enter into any partnerships, joint ventures
or sale-leaseback transactions, or purchase or otherwise acquire (in one or a
series of related transactions) any part of the property or assets (other than
purchases or other acquisitions of inventory, materials and equipment in the
ordinary course of business) of any Person, except that the following shall be
permitted:
(a) the Company and its Subsidiaries may, as lessee or
lessor, enter into operating leases in the ordinary course of business
with respect to real or personal property;
(b) Capital Expenditures by the Company and its Subsidiaries to the
extent not in violation of Section 8.08 of this Exhibit E;
(c) the advances, Investments and loans permitted pursuant to
Section 8.05 of this Exhibit E;
(d) the Company and its Subsidiaries may sell assets no longer used
in the business other than Mortgaged Real Property; provided that the
aggregate sale proceeds from all assets subject to such sales pursuant to
this clause (d) shall not exceed $25,000,000 in any consecutive twelve
month period of the Company (exclusive of sale proceeds in respect of
obsolete, outmoded or worn-out machinery, equipment, furniture or
fixtures) and each such asset sale subject to this clause (d) is for at
least 85% cash and at fair market value (as determined in good faith by
the Company);
(e) the Company and its Subsidiaries may sell or discount (x)
without recourse, accounts receivable arising in the ordinary course of
business, but only in connection with the compromise or collection thereof
or (y) accounts receivable pursuant to the Receivables Financing
Agreement;
(f) without limitation to clause (d), the Company and its
Subsidiaries may sell or exchange specific items of machinery or
equipment, so long as the proceeds of each such sale or exchange is used
(or contractually committed to be used) to acquire (and results within 180
days of such sale or exchange in the acquisition of) replacement items of
machinery or equipment;
(g) the Company and its Subsidiaries may, in the ordinary course of
business, license, as licensor or licensee, patents, trademarks,
copyrights and know-how to third Persons and to one another, so long as
any such license by the Company or its Subsidiaries in its capacity as
licensor is permitted to be assigned pursuant to the Security Agreement
(to the
33
<PAGE>
extent that a security interest in such patents, trademarks, copyrights
and know-how is granted thereunder) and does not otherwise prohibit the
granting of a Lien by the Company or any of its Subsidiaries pursuant to
the Security Agreement in the intellectual property covered by such
license;
(h) the assets of any Non-U.S. Subsidiary of the Company may be
transferred to the Company or any of its Subsidiaries, and any Non-U.S.
Subsidiary of the Company may be merged with and into, or be dissolved or
liquidated into, the Company or any of its Subsidiaries so long as the
Company or such Subsidiary is the surviving corporation of any such
merger, dissolution or liquidation and, except in the case of a transfer
by the Israeli Subsidiaries, the security interests, if any, granted to
the Collateral Agent for the benefit of the Secured Creditors pursuant to
the Security Documents in the assets so transferred shall remain in full
force and effect and perfected (to at least the same extent as in effect
immediately prior to such transfer);
(i) any Domestic Subsidiary of the Company may transfer assets to
the Company or to any other Domestic Subsidiary of the Company (other than
a Receivables Subsidiary), so long as (i) if the transferee is a
Subsidiary, such Subsidiary is a Guarantor and (ii) the security interests
granted to the Collateral Agent for the benefit of the Secured Creditors
pursuant to the Security Documents in the assets so transferred shall
remain in full force and effect and perfected (to at least the same extent
as in effect immediately prior to such transfer);
(j) any Domestic Subsidiary of the Company may merge with and into,
or be dissolved or liquidated into, the Company so long as (i) the Company
is the surviving corporation of any such merger, dissolution or
liquidation and (ii) the security interests granted to the Collateral
Agent for the benefit of the Secured Creditors pursuant to the Security
Documents in the assets of such Domestic Subsidiary shall remain in full
force and effect and perfected (to at least the same extent as in effect
immediately prior to such merger, dissolution or liquidation);
(k) any Domestic Subsidiary of the Company may merge with and into,
or be dissolved or liquidated into, any Domestic Subsidiary of the Company
so long as (i) such Domestic Subsidiary is a Guarantor and is the
surviving corporation of any such merger, dissolution or liquidation and
(ii) the security interests granted to the Collateral Agent for the
benefit of the Secured Creditors pursuant to the Security Documents in the
assets of such Domestic Subsidiary shall remain in full force and effect
and perfected (to at least the same extent as in effect immediately prior
to such merger, dissolution or liquidation);
(l) so long as no Default or Event of Default then exists or would
result therefrom (including giving pro forma effect to such acquisition
and any additional Indebtedness resulting therefrom or incurred or assumed
in connection therewith as if such acquisition had occurred and such
Indebtedness had been incurred as of the first day of the most recently
completed
34
<PAGE>
Test Period (including any other Permitted Acquisition that occurred, and
related Indebtedness that was incurred, during such Test Period)), the
Company and its Wholly-Owned Subsidiaries may acquire assets or the
capital stock of any Person (any such acquisition permitted by this clause
(l), a "Permitted Acquisition"); provided that (i) such Person (or the
assets so acquired) was, immediately prior to such acquisition, engaged
(or used) primarily in the business permitted pursuant to Section 8.01 of
this Exhibit E, (ii) if such acquisition is structured as a stock or other
equity acquisition, then either (A) the Person so acquired becomes a
Wholly-Owned Subsidiary of the Company and, subject to Section 8.14 of
this Exhibit E, a Guarantor or (B) such Person is merged with and into the
Company or a Wholly-Owned Subsidiary of the Company that is a Guarantor
(with the Company or such Wholly-Owned Subsidiary being the surviving
corporation of such merger), and in any case, all of the provisions of
Section 8.14 of this Exhibit E have been complied with in respect of such
Person, (iii) any Liens or Indebtedness assumed or issued in connection
with such acquisition is otherwise permitted under Section 8.03 or 8.04 of
this Exhibit E, as the case may be, and (iv) after giving effect thereto,
the Unutilized Revolving Loan Commitment would be at least $55,000,000;
provided, further, that any such Permitted Acquisition (or series of
related Permitted Acquisitions) involving total consideration (including,
without limitation, any earn-out, non-compete or deferred compensation
arrangements and the value of any Company securities, but not including
any Indebtedness assumed that complies with Section 8.04(m) of this
Exhibit E) by the Company and its Wholly-Owned Subsidiaries in excess of
the Total Consideration Amount shall not be consummated without the prior
written consent of the Required Lenders; and provided, further, that the
Company shall have delivered to the Landlord a certificate of the Chief
Financial Officer of the Company showing compliance (in reasonable detail
as to pro forma calculations) with all of the provisions of this paragraph
(l);
(m) leases or subleases granted by the Company or any of its
Subsidiaries to third Persons not interfering in any material respect with
the business of the Company or any of its Subsidiaries;
(n) the Company and its Subsidiaries may, in the ordinary course of
business, sell, transfer or otherwise dispose of patents, trademarks,
copyrights and know-how which, in the reasonable judgment of the Company
or such Subsidiary, are determined to be uneconomical, negligible or
obsolete in the conduct of business;
(o) "inactive" or "shell" Subsidiaries may be dissolved or otherwise
liquidated;
(p) the Transaction and the merger of Essex with and into Superior
Telecommunications may be consummated;
(q) the purchase of the outstanding equity interests in Cables of
Zion that are not currently held by the Company and its Subsidiaries,
provided that the aggregate consideration
35
<PAGE>
does not exceed $25,000,000;
(r) (I) the purchase of the Cvalim Assets by the Israeli
Subsidiaries for an aggregate consideration plus related working capital,
in an aggregate amount not to exceed $90,000,000, provided such
consideration is funded either (w) through investments, including by way
of guarantee, in an amount not to exceed $15,000,000, provided that such
investment is otherwise permitted by Section 8.05(p) of this Exhibit E or
(x) of the Agreement through Indebtedness incurred by the Israeli
Subsidiaries or (y) through an intercompany loan made to the Israeli
Subsidiaries by the Company, provided that (i) such intercompany loan is
secured, on terms reasonably acceptable to the Administrative Agent, with
substantially all of the assets of the Israeli Subsidiaries (subject, in
certain cases, to Liens on assets pledged or otherwise provided as
collateral to secure governmental grants and other local obligations),
including the Cvalim Assets and (ii) such secured intercompany loan is
pledged to the Administrative Agent, on behalf of the Lenders, on terms
acceptable to the Administrative Agent or (z) through a combination of
(w), (x) and (y) and (II) vendor financing provided to support the local
operations of the Israeli Subsidiaries in an amount not to exceed
$60,000,000;
(s) Investments in the Mexican Subsidiaries to fund their
development of certain manufacturing facilities in Mexico in an aggregate
amount not to exceed $80,000,000; provided that until January 31, 2001,
the amount of such Investments shall not exceed $40,000,000 in the
aggregate; and provided, further, that such amount may either be funded
(A) through Indebtedness incurred by the Mexican Subsidiaries or (B)
through intercompany loans, on terms reasonably acceptable to the
Administrative Agent, provided that (i) such intercompany loans shall be
secured, on terms reasonably acceptable to the Administrative Agent, with
all of the assets of the Mexican Subsidiaries, including those
contemplated to be built or constructed; (ii) the Mexican Subsidiaries
shall become Guarantors (it being understood that such Guaranty is subject
to the last sentence of Section 8.14 of this Exhibit E) and (iii) such
secured intercompany loans are pledged to the Administrative Agent, on
behalf of the Lenders, on terms acceptable to the Administrative Agent or
(C) up to $16,000,000 of equity or other similar contributions, or (D)
through a combination of (A), (B) and (C); and
(t) the acquisition of assets by the Israeli Subsidiaries to the
extent they are used or useful in the business of the Israeli
Subsidiaries, provided that no credit or other support is provided thereby
by the Parent, the Company or the other Subsidiaries of the Company.
To the extent the Landlord waives the provisions of this Section 8.02 of this
Exhibit E with respect to the sale or other disposition of any Collateral, or
any Collateral is sold or otherwise disposed of as permitted by this Section
8.02 of this Exhibit E, such Collateral in each case shall be sold or otherwise
disposed of free and clear of the Liens created by the Security Documents and
the Landlord shall take such actions (including, without limitation, directing
the Collateral Agent to take such actions) as are appropriate in connection
therewith.
36
<PAGE>
8.03. Liens. The Company will not, and will not permit any Guarantor
to, create, incur, assume or suffer to exist any Lien upon or with respect to
any item constituting Collateral except for the Lien of the Security Documents
relating thereto, the Prior Liens applicable thereto and other Liens expressly
permitted by such Security Documents. The Company will not, and will not permit
any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon or with respect to any property or assets of the Company or such Subsidiary
which does not constitute Collateral, whether now owned or hereafter acquired,
or sell any such property or assets subject to an understanding or agreement,
contingent or otherwise, to repurchase such property or assets or assign any
right to receive income, or file or permit the filing of any financing statement
under the UCC or any other similar notice of Lien under any similar recording or
notice statute, except the following (collectively referred to as "Permitted
Liens"):
(a) inchoate Liens for taxes, assessments or governmental charges of
levies not yet due or Liens for taxes, assessments or governmental charges
or levies being contested in good faith and by appropriate proceedings for
which adequate reserves have been established in accordance with GAAP;
(b) Liens in respect of property or assets of the Company or any of
its Subsidiaries imposed by law which were incurred in the ordinary course
of business or in connection with any Capital Expenditure permitted by the
terms of the Agreement and which have not arisen to secure Indebtedness
for borrowed money, such as carriers', warehousemen's and mechanics'
Liens, statutory landlord's Liens, and other similar Liens arising in the
ordinary course of business, and which either (x) do not in the aggregate
materially detract from the value of such property or assets or materially
impair the use thereof in the operation of the business of the Company or
any of its Subsidiaries or (y) are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing
the forfeiture or sale of the property or asset subject to such Lien;
(c) Liens in existence on the Initial Borrowing Date which are
listed, and the property subject thereto described, in Annex III to the
Agreement, and extensions, renewals or related refinancings thereof,
provided that such extensions, renewals or related refinancings pursuant
to Section 8.04(g) of this Exhibit E (x) do not increase the obligations
so secured and (y) apply to additional assets not subject to the lien
being extended or renewed;
(d) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.09 of
the Agreement;
(e) Liens incurred or deposits made (x) in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, government
contracts, performance and return-of-money bonds and other similar
37
<PAGE>
obligations incurred in the ordinary course of business (exclusive of
obligations in respect of the payment for borrowed money); and (y) to
secure the performance of leases of Real Property, to the extent incurred
or made in the ordinary course of business;
(f) licenses, leases or subleases granted to third Persons not
interfering in any material respect with the business of the Company or
any of its Subsidiaries;
(g) easements, zoning restrictions, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of the Company or any of its Subsidiaries;
(h) Liens arising from precautionary UCC financing statements
regarding operating leases permitted by the Agreement;
(i) any interest or title of a licensor, lessor or sublessor under
any license or lease permitted by the Agreement;
(j) Liens created pursuant to Capital Leases permitted pursuant to
Section 8.04(i) of this Exhibit E;
(k) Liens arising pursuant to purchase money mortgages or security
interests securing Indebtedness representing the purchase price (or
financing of the purchase price within 90 days after the respective
purchase) of assets acquired after the Initial Borrowing Date; provided
that (i) any such Liens attach only to the assets so purchased, (ii) the
Indebtedness secured by any such Lien (including refinancings thereof)
does not exceed 100% of the lesser of the fair market value or the
purchase price of the property being purchased at the time of the
incurrence of such Indebtedness and (iii) the Indebtedness secured thereby
is permitted to be incurred pursuant to Section 8.04(i) of this Exhibit E;
(l) Liens on property or assets acquired pursuant to a Permitted
Acquisition, or on property or assets of a Subsidiary of the Company in
existence at the time such Subsidiary is acquired pursuant to a Permitted
Acquisition; provided that (i) any Indebtedness that is secured by such
Liens is permitted to exist under Section 8.04(m) of this Exhibit E, and
(ii) such Liens are not incurred in connection with, or in contemplation
or anticipation of, such Permitted Acquisition and do not attach to any
other asset of the Company or any of its Subsidiaries;
(m) Liens on the receivables subject to the Receivables Financing
Agreement and Receivables Related Assets, in each case securing the
Receivables Financing Agreement;
(n) Liens set forth on Schedule 8.03(n) to the Agreement securing
Indebtedness of Essex or any of its Subsidiaries pursuant to the Essex
Capital Lease Facility;
38
<PAGE>
(o) Liens on assets (other than the capital stock) of the Israeli
Subsidiaries to secure Indebtedness permitted under Section 8.04(n) of
this Exhibit E;
(p) Liens on assets (other than the capital stock) of Essex Canada
securing the Essex Canadian Facility and any permitted refinancing
thereof;
(q) Liens on the assets of the Mexican Subsidiaries to secure
Indebtedness permitted under Section 8.04(o) of this Exhibit E; and
(r) additional Liens (on assets other than the Collateral) incurred
by the Company and its Subsidiaries so long as the aggregate value of the
property subject to such Liens, and the Indebtedness and other obligations
secured thereby, do not exceed $15,000,000.
8.04. Indebtedness. The Company will not, and will not permit any of
its Subsidiaries to, contract, create, incur, assume or suffer to exist any
Indebtedness, except:
(a) Indebtedness incurred pursuant to the Agreement and the other
Credit Documents;
(b) the Floating Rate Facility and any extensions, refinancings,
replacements or restructurings (collectively, "refinancings") thereof;
provided that the then outstanding principal amount thereof is not
increased and the terms and conditions of such refinancings thereof are no
more adverse in any material respect to the Company or the Lenders than
with respect to the Indebtedness being so refinanced, it being understood
that a refinancing at a fixed interest rate per annum of no greater than
13% shall not be deemed more adverse;
(c) Indebtedness (together with other obligations) of Essex Funding
or any other Receivables Subsidiary incurred pursuant to the Receivables
Financing Agreement, provided that the funded amount together with any
other obligations or Indebtedness thereunder does not at any time exceed
$225,000,000;
(d) Indebtedness of Essex Canada under the Essex Canadian Facility,
and any refinancings thereof; provided that the then outstanding principal
amount thereof is not increased and the terms and conditions of such
refinancings thereof are no more adverse in any material respect to the
Company or the Lenders than with respect to the Indebtedness being so
refinanced;
(e) the Essex Capital Lease Facility, provided the principal amount
thereof at any time does not exceed $18,000,000, and any refinancings
thereof; provided that the then outstanding principal amount thereof is
not increased and the terms and conditions of such refinancings thereof
are no more adverse in any material respect to the Company or the
39
<PAGE>
Lenders than with respect to the Indebtedness being so refinanced;
(f) letters of credit existing as of the date hereof as set forth on
Annex VII to the Agreement, and any extensions or refinancings thereof;
provided that the then outstanding face amounts thereof are not increased
and the terms and conditions of such refinancings thereof are no more
adverse in any material respect to the Company or the Lenders than with
respect to the Indebtedness being so refinanced;
(g) Existing Indebtedness outstanding on the Initial Borrowing Date
and listed on Annex VII to the Agreement, and any refinancings thereof;
provided that the then outstanding principal amount thereof is not
increased and the terms and conditions of such refinancings thereof are no
more adverse in any material respect to the Company or the Lenders than
with respect to the Indebtedness being so refinanced;
(h) Indebtedness under Interest Rate Protection Agreements and Other
Hedging Agreements permitted by Section 8.05(d) of this Exhibit E;
(i) (A) Capitalized Lease Obligations and Indebtedness of the
Company and its Subsidiaries incurred after the Initial Borrowing Date to
purchase money Liens permitted under Section 8.03(k) of this Exhibit E;
provided that (i) all such Capitalized Lease Obligations are permitted
under Section 8.08 of this Exhibit E and (ii) the sum of (x) the aggregate
Capitalized Lease Obligations outstanding at any time plus (y) the
aggregate principal amount of such purchase money Indebtedness outstanding
at such time, together, shall not exceed $20,000,000 and (B) Capital Lease
Obligations existing on the Initial Borrowing Date, as set forth on Annex
VII to the Agreement;
(j) Indebtedness constituting Intercompany Loans to the extent
permitted by Section 8.05(g) of this Exhibit E;
(k) Indebtedness of Non-U.S. Subsidiaries to the Company or any of
its Domestic Subsidiaries as a result of any investment made pursuant to
Section 8.05 of this Exhibit E;
(l) Indebtedness consisting of guaranties (x) by the Company of
Indebtedness, leases and other contractual obligations permitted to be
incurred by Subsidiaries of the Company that are Guarantors and (y) by
Non-U.S. Subsidiaries of the Company of Indebtedness, leases and other
contractual obligations permitted to be incurred by the Company and its
Subsidiaries;
(m) Indebtedness of a Subsidiary acquired as a result of a Permitted
Acquisition (or Indebtedness assumed at the time of a Permitted
Acquisition of an asset securing such Indebtedness); provided that (i)
such Indebtedness was not incurred in connection with, or in
40
<PAGE>
anticipation or contemplation of, such Permitted Acquisition, (ii) at the
time of such Permitted Acquisition such Indebtedness does not exceed 25%
of the total then fair market value of the assets of the Subsidiary so
acquired, or of the asset so acquired, as the case may be, (iii) so long
as, before and after giving effect to such Permitted Acquisition, no
Default or Event of Default shall have occurred or would result therefrom
and (iv) such Indebtedness is not recourse to any assets of the Company or
its Subsidiaries other than the Subsidiary and assets so acquired;
(n) (A) the Indebtedness described in Section 8.02(r)(I) of this
Exhibit E and (B) other Indebtedness incurred by the Israeli Subsidiaries,
provided that no credit or other support is provided thereby by the
Parent, the Company or the other Subsidiaries of the Company;
(o) additional Indebtedness of the Mexican Subsidiaries in an amount
not to exceed and intercompany loans made to the Mexican Subsidiaries as
contemplated by and in accordance with the terms of Section 8.02(s) of
this Exhibit E to fund the development of certain manufacturing facilities
in Mexico;
(p) additional Indebtedness of the Company and its Subsidiaries not
otherwise permitted hereunder not exceeding $30,000,000 in aggregate
principal amount at any time outstanding; provided, however, that no more
than $10,000,000 of such amount may be secured Indebtedness.
8.05. Advances, Investments and Loans. The Company will not, and
will not permit any of its Subsidiaries to, lend money or credit or make
advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any Person, or purchase or own a futures contract or otherwise become liable for
the purchase or sale of currency or other commodities at a future date in the
nature of a futures contract, or hold any cash or Cash Equivalents
(collectively, "Investments"), except:
(a) the Company and its Subsidiaries may invest in or hold cash and
Cash Equivalents, provided that any Investments including cash other than
Investments denominated in U.S. Dollars shall only be made to the extent
necessary to fund local operations of the Non-U.S. Subsidiaries;
(b) the Company and its Subsidiaries may acquire and hold
receivables owing to it, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade
terms (including the dating of receivables) of the Company or such
Subsidiary;
(c) the Company and its Subsidiaries may acquire and own Investments
(including
41
<PAGE>
debt obligations) received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising
in the ordinary course of business;
(d) (x) Interest Rate Protection Agreements entered into to protect
the Company against fluctuations in interest rates in respect of the
Obligations and not for speculative purposes, (y) Other Hedging Agreements
with respect to copper and other raw materials to be used in the business
of the Company and its Subsidiaries; provided that such purchases are
entered into in the ordinary course of business and for bona fide business
(and not speculative) purposes and (z) Other Hedging Agreements with
respect to currencies in which the Company and its Subsidiaries transact
business; provided that such agreement are designed to protect against
fluctuations in currency values and are entered into the ordinary course
of business and for bona fide business (and not speculative) purposes;
(e) advances, loans and Investments in existence on the Initial
Borrowing Date and listed on Annex V to the Agreement shall be permitted,
without giving effect to any additions thereto or replacements thereof
(except those additions or replacements which are existing obligations as
of the Initial Borrowing Date but only to the extent such further
obligations are described on such Annex V to the Agreement);
(f) deposits made in the ordinary course of business to secure the
performance of leases or other contractual arrangements shall be
permitted;
(g) the Company may make intercompany loans and advances to any of
its Subsidiaries that are Guarantors (so long as they remain Guarantors)
and any Subsidiary of the Company may make intercompany loans and advances
to the Company or any other Subsidiary of the Company that is a Guarantor
(so long as it remains a Guarantor) (collectively, "Intercompany Loans");
(h) loans and advances by the Company and its Subsidiaries to
employees of the Company and its Subsidiaries for moving and travel
expenses and other similar expenses or in connection with stock purchases
in each case incurred in the ordinary course of business shall be
permitted in an aggregate principal amount not to exceed $5,000,000 at any
one time outstanding;
(i) Permitted Acquisitions shall be permitted;
(j) the Company and its Subsidiaries may acquire and hold promissory
notes and/or equity securities issued by the purchaser or purchasers in
connection with the sale of assets to the extent permitted under Section
8.02(d) of this Exhibit E;
42
<PAGE>
(k) Non-U.S. Subsidiaries may make Investments in other Non-U.S.
Subsidiaries (other than the Israeli Subsidiaries);
(l) the Company may contribute cash to one or more of its
Subsidiaries that are or become Guarantors formed after the Initial
Borrowing Date in accordance with Section 8.14 of this Exhibit E
(including in connection with a Permitted Acquisition) so long as such
Subsidiary remains a Guarantor;
(m) the Company may make Investments in Cables of Zion as permitted
by Section 8.02(q) of this Exhibit E;
(n) the Company may make the intercompany loans to the Israeli
Subsidiaries as permitted by Sections 8.02(r)(I)(y) and 8.02(r)(II) of
this Exhibit E;
(o) the Company may make Investments in the Mexican Subsidiaries as
permitted by Section 8.02(s) of this Exhibit E; and
(p) the Company and its Subsidiaries may make new or additional cash
Investments in or to Persons (including, without limitation, the
investments contemplated by Section 8.02(r)(I)(w) of this Exhibit E) in an
amount not to exceed $25,000,000 outstanding at any one time (giving
effect to any repayments in cash, but without giving effect to any
distributions or profits thereon, write-downs or non-cash payments);
provided that, before and after giving effect to each such Investment, no
Default or Event of Default shall have occurred or result therefrom.
8.06. Dividends, etc. The Company will not, and will not permit any
of its Subsidiaries (other than the Israeli Subsidiaries) to, declare or pay any
dividends (other than dividends payable solely in common stock of the Company or
any such Subsidiary, as the case may be) or return any capital to, its
stockholders or authorize or make any other distribution, payment or delivery of
property or cash to its stockholders as such, or redeem, retire, purchase or
otherwise acquire, directly or indirectly, for any consideration, any shares of
any class of its capital stock, now or hereafter outstanding (or any warrants
for or options or stock appreciation rights (other than such options or rights
as are granted only to employees as compensation for their employment) in
respect of any of such shares), or set aside any funds for any of the foregoing
purposes, and the Company will not permit any of its Subsidiaries (other than
the Israeli Subsidiaries) to purchase or otherwise acquire for consideration any
shares of any class of the capital stock of the Company or any Subsidiary of the
Company now or hereafter outstanding (or any options or warrants or such stock
appreciation rights issued by such Person with respect to its capital stock)
(all of the foregoing "Dividends", it being understood that the payments made in
accordance with the clauses contained in the proviso of Section 8.07 of this
Exhibit E shall not be deemed to be Dividends), except that:
43
<PAGE>
(i) any Subsidiary of the Company may pay Dividends to the Company
or any Subsidiary of the Company pro rata to the shareholders thereof;
(ii) shares of the Superior Preferred Stock and Trust Preferred
Securities may be repurchased, provided that the only consideration to be
paid in connection therewith shall be shares of (x) Parent Common Stock
and/or (y) Parent preferred stock having terms identical, in all material
respects, to the Superior Preferred Securities or the Trust Preferred
Securities (including as to dividend rate and liquidation preferences), as
the case may be, except that the issuer thereof shall be the Parent;
(iii) as long as no Default or Event of Default shall then exist or
result therefrom, regular quarterly cash dividends on the Superior
Preferred Stock and the Trust Preferred Securities in accordance with the
terms of their respective certificates of designation may be paid;
(iv) as long as no Default or Event of Default shall then exist or
result therefrom, with respect to each Dividend Period, the Company may
declare and pay a dividend on or repurchase the Company's Common Stock in
an amount not to exceed $5,700,000 plus a pro rata incremental amount to
the extent the Trust Preferred Securities have been converted into Common
Stock, based on the number of shares of Common Stock outstanding as of the
date hereof; provided that the ratio of Consolidated EBITDA of the Company
to Consolidated Fixed Charges of the Company for such Dividend Period
(determined on a pro forma basis after giving effect to such dividend)
exceeds 1.0 to 1.0, except that the amount of such dividend may exceed
$5,700,000 (but may not exceed $8,200,000) (plus the applicable
incremental pro rata amount as determined above) but only if such ratio
for such Dividend Period exceeds 1.10 to 1;
(v) so long as no Default or Event of Default shall have occurred or
be continuing or would result therefrom, Dividends paid by the Company to
the Parent not earlier than the second Business Day prior to the due date
of any scheduled Interest payment on the Debenture so long as the proceeds
thereof are actually used at the time of such dividend payment by the
Parent to pay, on the scheduled quarterly interest payment date, interest
accrued on the Debenture;
(vi) Dividends paid by the Company to the Parent so long as the
proceeds thereof are used at the time of such dividend payment by the
Parent to pay out-of-pocket expenses for administrative, legal and
accounting services provided by third parties that are reasonable and
customary and incurred in the ordinary course of business for such
professional services or to pay franchise and similar costs;
(vii) Dividends paid by the Company to the Parent so long as the
proceeds thereof
44
<PAGE>
are used at the time of such dividend payment by the Parent to make
payments under the Services Agreement, provided, however, that such
Dividends shall not exceed $5,000,000 in any four fiscal quarter period;
and
(viii) Dividends paid by the Company to the Parent so long as the
proceeds thereof are used at the time of such dividend payment by the
Parent to pay a dividend on or repurchase the Parent Common Stock.
8.07. Transactions with Affiliates. The Company will not, and will
not permit any of its Subsidiaries to, enter into any transaction or series of
transactions with any Affiliate other than in the ordinary course of business
and on terms and conditions substantially as favorable to the Company or such
Subsidiary as would be reasonably expected to be obtainable by the Company or
such Subsidiary at the time in a comparable arm's-length transaction with a
Person other than an Affiliate; provided that the following shall in any event
be permitted: (i) the Transaction substantially in accordance with the terms of
the Documents; (ii) the performance of the Services Agreement, provided that (x)
such payments may not exceed $5,000,000 in any four fiscal quarter period and
(y) the portion of such payment for services described in Section 3(b) thereof
shall be subject to the "arm's-length" standard described in this Section 8.07;
[(iii) the (x) Parent Tax Allocation Agreement and the Company and its Domestic
Subsidiaries may make payments thereunder and (y) the Alpine Tax Allocation
Agreement and the Company and its Domestic Subsidiaries may make payments
thereunder; (iv) transactions between or among the Company and its Subsidiaries
to the extent that such transactions are otherwise specifically permitted under
the Agreement and, in the case of transactions with Subsidiaries that are not
Guarantors, such transactions are on arms-length terms and (v) on the date of
consummation of the Tender Offer, the payment of a transaction fee to Alpine in
the amount of $10,000,000.
8.08. Capital Expenditures. (a) The Company will not, and will not
permit any of its Subsidiaries to, make any Capital Expenditures during the
period set forth below in excess of the amount set forth below with respect to
such period:
($ in millions)
Period Ending Amount:
------------- ------
01/31/2000 $68.0
01/31/2001 50.1
01/31/2002 45.0
01/31/2003 50.0
01/31/2004 50.0
01/31/2005 50.0
01/31/2006 50.0
(b) In the event that the amount of Capital Expenditures permitted
to be made by the Company and its Subsidiaries pursuant to clause (a) above in
any fiscal 12-month period (before
45
<PAGE>
giving effect to any increase in such permitted expenditure amount pursuant to
this clause (b)) is greater than the amount of such Capital Expenditures
actually made by the Company and its Subsidiaries during such fiscal year, such
excess (the "Rollover Amount") may be carried forward and utilized to make
Capital Expenditures in succeeding fiscal years; provided that in no event shall
the aggregate amount of Capital Expenditures made by the Company and its
Subsidiaries during any fiscal year pursuant to Section 8.08(a) of this Exhibit
E exceed 125% of the direct amount set forth for such fiscal year in such
Section 8.08(a) of this Exhibit E.
(c) Notwithstanding the proviso in Section 8.08(b) of this Exhibit
E, the Company and its Subsidiaries may make additional Capital Expenditures
with the Net Cash Proceeds of Asset Sales to the extent such proceeds are not
required to be applied to prepay the Loans pursuant to Section 4.02(d) of the
Agreement and such proceeds are reinvested as required by Section 4.02(d) of the
Agreement.
(d) The Company and its Subsidiaries may make additional Capital
Expenditures with the insurance proceeds received by the Company or any of its
Subsidiaries from any Taking or Destruction so long as such Capital Expenditures
are to replace or restore any properties or assets in respect of which such
proceeds were paid within one year following the date of the receipt of such
insurance proceeds to the extent such insurance proceeds are not required to be
applied to prepay the Loans pursuant to Section 4.02(g) of the Agreement.
(e) The Company and its Wholly-Owned Subsidiaries may make Permitted
Acquisitions.
(f) The Company may make the Capital Expenditures (x) contemplated
by Section 8.02(q) of this Exhibit E and (y) the Capital Expenditures as set
forth in Schedule 8.08(f) of this Exhibit E, and the amounts of such Capital
Expenditures shall not reduce the amount set forth in Section 8.08(a) of this
Exhibit E.
(g) The Israeli Subsidiaries may make additional Capital
Expenditures to the extent necessary to fund their operations, provided that no
credit or other support is provided thereby by the Parent, the Company or the
other Subsidiaries of the Company.
8.09. Minimum Consolidated EBITDA. The Company will not permit
Consolidated EBITDA during any Test Period set forth below to be less than the
amount set forth below with respect to such Test Period:
($ in millions)
Test Period Ending: Amount:
- - ------------------ ------
01/30/1999 $ 36.0
04/30/1999 60.0
07/31/1999 130.0
46
<PAGE>
($ in millions)
Test Period Ending: Amount:
- - ------------------ ------
10/31/1999 180.0
01/31/2000 260.0
04/30/2000 270.0
07/31/2000 280.0
10/31/2000 290.0
01/31/2001 300.0
04/30/2001 300.0
07/31/2001 310.0
10/31/2001 320.0
01/31/2002 330.0
04/30/2002 340.0
07/31/2002 350.0
10/31/2002 355.0
01/31/2003 360.0
04/30/2003 365.0
07/31/2003 370.0
10/31/2003 375.0
01/31/2004 380.0
04/30/2004 380.0
07/31/2004 380.0
10/31/2004 380.0
01/31/2005 and the last day of 380.0
each
Fiscal Quarter thereafter
8.10. Interest Coverage Ratio. The Company will not permit the
Interest Coverage Ratio for any Test Period set forth below to be equal to or
less than the ratio set forth below with respect to such Test Period:
Test Period Ending: Ratio:
- - ------------------ -----
04/30/1999 1.75x
07/31/1999 1.75x
10/31/1999 1.80x
01/31/2000 1.85x
04/30/2000 1.90x
07/31/2000 1.95x
10/31/2000 2.00x
01/31/2001 2.05x
04/30/2001 2.10x
47
<PAGE>
07/31/2001 2.15x
10/31/2001 2.25x
01/31/2002 2.35x
04/30/2002 2.50x
07/31/2002 2.75x
10/31/2002 3.00x
01/31/2003 3.00x
04/30/2003 3.25x
07/31/2003 3.25x
10/31/2003 3.50x
01/31/2004 3.50x
04/30/2004 3.50x
07/31/2004 3.50x
10/31/2004 3.50x
01/31/2005 and the last day of 3.50x
each Fiscal Quarter thereafter
8.11. Leverage Ratio. The Company will not permit the Pro Forma
Leverage Ratio at any time during the Test Period set forth below to be equal to
or more than the ratio set forth below with respect to such Test Period:
Test Period Ending: Ratio:
- - ------------------ -----
04/30/1999 5.50x
07/31/1999 5.50x
10/31/1999 5.25x
01/31/2000 5.25x
04/30/2000 5.00x
07/31/2000 5.00x
10/31/2000 4.75x
01/31/2001 4.50x
04/30/2001 4.50x
07/31/2001 4.25x
10/31/2001 4.00x
01/31/2002 4.00x
04/30/2002 3.75x
07/31/2002 3.50x
48
<PAGE>
10/31/2002 3.25x
01/31/2003 3.25x
04/30/2003 3.00x
07/31/2003 3.00x
10/31/2003 2.75x
01/31/2004 2.75x
04/30/2004 2.75x
07/31/2004 2.75x
10/31/2004 2.75x
01/31/2005 and the last day of 2.75x
each Fiscal Quarter thereafter
8.12. Limitation on Voluntary Payments and Modifications of
Indebtedness; Modifications of Certificate of Incorporation, By-Laws and Certain
Other Agreements; Issuances of Capital Stock, etc. The Company will not, and
will not permit any of its Subsidiaries to:
(i) make (or give any notice in respect of) any voluntary or
optional payment or prepayment on or redemption or acquisition for value
of (including, without limitation, by way of depositing with the trustee
with respect thereto or any other Person money or securities before due
for the purpose of paying when due) any Superior Preferred Stock or Trust
Preferred Securities except as permitted by clause (ii) of Section 8.06 of
this Exhibit E or the Floating Rate Facility except for prepayments or
refinancings otherwise permitted hereby;
(ii) amend or modify in any manner adverse to the Company or the
Lenders, or permit such an amendment or modification of, any provision of
the Superior Preferred Stock, Trust Preferred Securities or Existing
Indebtedness, including without limitation, the Essex Funding Agreement,
the Essex Capital Lease Facility and the Essex Canadian Facility, except
that the Company may repay Indebtedness pursuant to that certain lease
agreement dated as of May 10, 1995 (the "Brownwood Lease") as amended,
between Superior Telecommunications and ALP (TX) QRS-11-28, Inc.;
(iii) amend, modify or change in any way adverse to the interests of
the Lenders, any Tax Allocation Agreement, its Certificate of
Incorporation (including, without limitation, by the filing or
modification of any certificate of designation) or By- Laws; and
(iv) issue any class of capital stock other than common stock,
provided that this clause (iv) is not applicable to the Israeli
Subsidiaries.
49
<PAGE>
8.13. Limitation on Certain Restrictions on Subsidiaries. The
Company will not, and will not permit any of its Subsidiaries to, directly or
indirectly, create or otherwise cause or suffer to exist or become effective any
encumbrance or restriction on the ability of any such Subsidiary to (a) pay
dividends or make any other distributions on its capital stock or any other
interest or participation in its profits owned by the Company or any Subsidiary
of the Company, or pay any Indebtedness owed to the Company or a Subsidiary of
the Company, (b) make loans or advances to the Company or any of the Company's
Subsidiaries or (c) transfer any of its properties or assets to the Company or
any of its Subsidiaries, except for such encumbrances or restrictions existing
under or by reason of (i) applicable law, (ii) the Credit Documents, (iii)
customary provisions restricting subletting or assignment of any lease governing
a leasehold interest of the Company or a Subsidiary of the Company, (iv)
customary provisions restricting assignment of any licensing agreement entered
into by the Company or a Subsidiary of the Company in the ordinary course of
business, (v) in the case of the Company and Superior Telecommunications, the
Brownwood Lease, (vi) the restrictions contained in the Essex Funding Agreement,
the Essex Capital Lease Facility and the Essex Canadian Facility, each as in
effect as of the date hereof and any refinancing thereof so long as the terms
and conditions of any such refinancings are no more adverse in any material
respect to the Company or the Lenders than with respect to the Indebtedness
being so refinanced, (vii) customary provisions restricting the transfer of or
by those assets pursuant to, and subject to other Liens permitted under Section
8.03(h), (i), (j), (k) or (l) of this Exhibit E and (viii) restrictions or
encumbrances pursuant to Indebtedness of a Subsidiary acquired pursuant to a
Permitted Acquisition (or Indebtedness assumed at the time of a Permitted
Acquisition) or an asset securing such Indebtedness, provided that such
Indebtedness was not incurred in connection with, or in anticipation or
contemplation of, such Permitted Acquisition, provided, further, such
restrictions or encumbrances apply solely to such Subsidiary or asset so
acquired.
8.14. Limitation on the Creation of Subsidiaries. Notwithstanding
anything to the contrary contained in the Agreement, the Company will not, and
will not permit any of its Subsidiaries to, establish, create or acquire any
Subsidiary; provided that the Company and its Wholly-Owned Subsidiaries shall be
permitted to establish or create Subsidiaries so long as, in each case, (i) at
least 15 days' prior written notice thereof is given to the Administrative Agent
(or such shorter period of time as is acceptable to the Administrative Agent),
(ii) unless otherwise consented to by the Administrative Agent because such
Subsidiary is a Non-U.S. Subsidiary, the capital stock of such new Subsidiary is
promptly pledged pursuant to, and to the extent required by, the Agreement and
the Pledge Agreement and the certificates, if any, representing such stock,
together with stock powers duly executed in blank, are delivered to the
Collateral Agent, (iii) unless otherwise consented to by the Administrative
Agent because such Subsidiary is (x) a Non- U.S. Subsidiary or (y) a Receivables
Subsidiary, such new Subsidiary promptly executes a Guaranty, the Pledge
Agreement and the Security Agreement, and (iv) to the extent requested by the
Administrative Agent or the Required Lenders, all actions required pursuant to
Section 7.11 are taken; provided that no such action will be required by any new
Subsidiary (that is not a Wholly-Owned Subsidiary) to the extent such new
Subsidiary is a party to a preexisting agreement which prohibits such new
Subsidiary from executing a Guaranty; provided, further, such preexisting
agreement was not entered into for the purpose of avoiding the requirements of
50
<PAGE>
Section 8.14 and the restrictions contained therein are no more adverse to the
Company and its Subsidiaries than to the other equity owners in such new
Subsidiary. In addition, each new Subsidiary that is required to execute any
Credit Document shall execute and deliver, or cause to be executed and
delivered, all other relevant documentation of the type described in Section 5
as such new Subsidiary would have had to deliver if such new Subsidiary were a
Credit Party on the Initial Borrowing Date. The Company may request the
Administrative Agent, on behalf of the Lenders, to consent, effective after the
completion of the Company's second full fiscal year after the Initial Borrowing
Date, to the release of the Guaranty by the Mexican Subsidiaries and the
reduction of any pledged securities not to exceed 65%, which consent may not be
unreasonably withheld or delayed.
8.15. Limitation on Acquisition Co. The Company shall not permit
Acquisition Co, at any time prior to the consummation of the Merger, to engage
in any activities other than to (a) hold Margin Stock (it being understood that
Acquisition Co. may sell the outstanding common stock of Essex International for
the fair market value thereof so long as the proceeds received from such sale
are in the form of cash and/or Cash Equivalents) and (b) merge with and into
Essex International pursuant to the terms of the Merger Agreement.
8.16. Covenants of Essex. Prior to the consummation of the Merger,
Essex shall not, and shall not permit any of its Subsidiaries to, take any
action that would cause the Company to be in violation of any of the covenants
contained in Section 7 or 8 hereof.
8.17. Limitation of Activities of Parent. The Parent shall not (i)
hold or acquire any assets (other than (A) the capital stock of the Borrower and
Superior Trust I and (B) [TO COME], (ii) incur any Indebtedness (other than the
Debenture and obligations in connection with its day to day activities in the
ordinary course), or (iii) conduct any business or have any operations, other
than holding the capital stock and assets permitted by clause (i) above and
activities reasonably related thereto.
51
<PAGE>
Exhibit 10(oo)
EMPLOYMENT AGREEMENT
This AGREEMENT dated as of the 1st day of January, 2000, between Superior
TeleCom Inc., a Delaware corporation (the "Company"), and Gregory R. Schriefer
(the "Executive").
The Board of Directors of the Company (the "Board") recognizes that the
Executive's contribution to the future growth and success of the Company is
expected to be substantial. Whereas the Board desires to provide for the
continued employment of the Executive with the Company which the Board has
determined will reinforce and encourage the continued attention and dedication
of the Executive to the Company as a member of the Company's management, in the
best interest of the Company and its stockholders. Whereas the Executive is
willing to commit himself to serve the Company, on the terms and conditions
herein provided.
Moreover, the Board has determined that it is in the best interests of the
Company and its stockholders to assure that the Company will have the continued
dedication of the Executive, notwithstanding the possibility, threat or
occurrence of a Change of Control (as defined below) of the Company. The Board
believes it is imperative to diminish the inevitable distraction of the
Executive by virtue of the personal uncertainties and risks created by a pending
or threatened Change of Control and to encourage the Executive's full attention
and dedication to the Company currently and in the event of any threatened or
pending Change of Control, and to provide the Executive with compensation and
benefits arrangements upon a Change of Control which ensure that the
compensation and benefits expectations of the Executive will be satisfied and
which are competitive with those of other corporations.
In order to effect the foregoing, the Company and the Executive wish to enter
into this Agreement on the terms and conditions set forth below.
Accordingly, in consideration of the premises and the respective covenants and
agreements of the parties herein contained, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. EMPLOYMENT. The Company hereby agrees to employ the Executive, and the
Executive hereby agrees to serve the Company, on the terms and conditions set
forth herein.
2. TERM.
(a) The effective date of this Agreement is January 1, 2000 (the
"Effective Date") and will continue in effect (i) until either party gives
notice to the other, as provided in Section 8(d), that it does not wish to
continue the Executive's employment hereunder or (ii) unless terminated as
provided in Sections 8(a), (b) or (c). The "Term" shall be the period commencing
on the date hereof and ending on the earlier to occur of the events specified in
clause (i) or (ii) of the preceding sentence.
(b) Notwithstanding paragraph (a) above or the provisions of Section
8(d), the Company hereby agrees to continue the Executive in its employ, and the
Executive hereby agrees to
<PAGE>
remain in the employ of the Company subject to the terms and conditions of this
Agreement, during any Transition Period. For purposes of this Agreement, the
Term shall, unless otherwise specified, include any Transition Period.
3. CERTAIN DEFINITIONS.
(a) A "COC Transition Date" shall mean a date during the Term (as
defined in Section 2) on which a Change of Control (as defined in Section 4)
occurs. Anything in this Agreement to the contrary notwithstanding, if a Change
of Control occurs and if the Executive's employment with the Company is
terminated prior to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of employment (i)
was at the request of a third party who has taken steps reasonably calculated to
effect a Change of Control or (ii) otherwise arose in connection with or in
anticipation of a Change of Control, then for all purposes of this Agreement the
"COC Transition Date" shall mean the date immediately prior to the date of such
termination of employment.
(b) A "Transition Period" is a period commencing on a COC Transition
Date and ending on the third anniversary of such date. If a subsequent COC
Transition Date is determined to occur during a Transition Period, then such
Transition Period shall continue until the third anniversary of such subsequent
COC Transition Date. If a subsequent COC Transition Date occurs after the
expiration of a Transition Period, a new Transition Period will commence on such
date and end on the third anniversary thereof.
(c) Notwithstanding anything to the contrary in this Agreement, for
purposes of calculating payments under Section 12(f), "Applicable Bonus" means
the higher of (i) the Highest Recent Bonus (as defined in Section 12(b)(i)) and
(ii) the Annual Bonus (as defined in Section 6(c)) paid or payable, including
any bonus or portion thereof which has been earned but deferred (and annualized
for any fiscal year consisting of less than twelve full months or during which
the Executive was employed for less than twelve full months), for the most
recently completed fiscal year during the Term, if any (the "Recent Annual
Bonus") (such higher amount being referred to as the "Highest Annual Bonus").
For purposes of calculating payments under all sections of this Agreement other
than Section 12(f), Applicable Bonus means the Recent Annual Bonus.
(d) A "Stock Option" is an option to purchase a number of shares of
stock of the Company at a fixed exercise price granted to the Executive by the
Stock Option Committee of the Board or any successor committee (the "Stock
Option Committee"), whether or not exercisable.
4. CHANGE OF CONTROL. For the purpose of this Agreement, a "Change of
Control" shall mean:
(a) the acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) (a
-2-
<PAGE>
"Person") of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of voting securities of the Company where such
acquisition causes such Person to own more than 20% or more of the combined
voting power of the then outstanding voting securities of the Company entitled
to vote generally in the election of directors (the "Outstanding Company Voting
Securities"); provided, however, that for purposes of this subsection (a), the
following acquisitions shall not be deemed to result in a Change of Control: (i)
any acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored
or maintained by the Company or any corporation controlled by the Company, (iv)
any acquisition by any corporation pursuant to a transaction that complies with
clauses (i), (ii) and (iii) of subsection (c) below or (v) any acquisition by
Steven S. Elbaum, The Alpine Group, Inc. or any corporation in which Steven S.
Elbaum or The Alpine Group, Inc. own, directly or indirectly, more than 50% of
the outstanding shares of common stock or the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of
directors, as the case may be; and provided, further, that if any Person's
beneficial ownership of the Outstanding Company Voting Securities reaches or
exceeds more than 20% as a result of a transaction described in clause (i) or
(ii) above, and such Person subsequently acquires beneficial ownership of
additional voting securities of the Company, such subsequent acquisition shall
be treated as an acquisition that causes such Person to own more than 20% or
more of the Outstanding Company Voting Securities; or
(b) individuals who, as of the date hereof, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a majority
of the Board; provided, however, that any individual becoming a director
subsequent to the date hereof whose election, or nomination for election by the
Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board shall be considered as though such
individual were a member of the Incumbent Board, but excluding, for this
purpose, any such individual whose initial assumption of office occurs as a
result of an actual or threatened election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or
(c) the consummation of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another corporation ("Business
Combination"); excluding, however, such a Business Combination pursuant to which
(i) (x) all or substantially all of the individuals and entities who were the
beneficial owners of the Outstanding Company Voting Securities immediately prior
to such Business Combination, (y) Steven S. Elbaum or (z) The Alpine Group,
Inc., beneficially own, directly or indirectly, more than 50% of, respectively,
the then outstanding shares of common stock or the combined voting power of the
then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination of the Outstanding Company Voting Securities, (ii) no Person
(excluding any employee benefit plan (or related trust) of the Company or
-3-
<PAGE>
such corporation resulting from such Business Combination) beneficially owns,
directly or indirectly, more than 20% or more of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
Business Combination or the combined voting power of the then outstanding voting
securities of such corporation except to the extent that such ownership existed
prior to the Business Combination and (iii) at least a majority of the members
of the board of directors of the corporation resulting from such Business
Combination were members of the Incumbent Board at the time of the execution of
the initial agreement, or of the action of the Board, providing for such
Business Combination; or
(d) approval by the shareholders of the Company of a complete
liquidation or dissolution of the Company.
5. POSITION AND DUTIES.
(a) The Executive shall serve as an Executive Vice President of the
Company and as the President of the Industrial Products Group of the Company
with such responsibilities, duties and authority as are from time to time
assigned to the Executive by the Chief Executive Officer or the Board.
(b) During the Term, and excluding any periods of vacation and sick
leave to which the Executive is entitled, the Executive agrees to devote
reasonable attention and time during normal business hours to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Term it shall not be a violation of this Agreement
for the Executive to (A) serve on corporate, civic or charitable boards or
committees, provided that the Chief Executive Officer of the Company first
approves of such service, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions or (C) manage personal investments, so long as
such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement and are not directly competitive with the operating businesses of
the Company's subsidiaries.
6. COMPENSATION AND RELATED MATTERS.
(a) SALARY. (i) During the Term, the Company shall pay to the
Executive an annual base salary (the "Annual Base Salary") at a rate not less
than $260,000 or such higher rate as may from time to time be determined by the
Board, such salary to be paid in substantially equal installments in accordance
with the normal payroll practice of the Company. The Executive's salary will be
reviewed at least annually and shall be increased pursuant to such review by a
percentage no less than the percentage increase in the consumer price index, as
published by Bureau of Labor Statistics of the U.S. Department of Labor, for the
calendar year immediately preceding such review. Any increase in Annual Base
Salary shall not serve to limit or reduce any other obligation to the Executive
under this
-4-
<PAGE>
Agreement. Annual Base Salary shall not be reduced after any such increase and
the term Annual Base Salary as utilized in this Agreement shall refer to Annual
Base Salary as so increased.
(b) SIGN-ON BONUS. As an inducement to enter this Agreement, the
Executive shall be entitled to a one-time lump sum cash payment in the amount of
$44,288.83, payable promptly upon the execution of this Agreement
(c) ANNUAL BONUS. In addition to the Annual Base Salary, the Company
will pay the Executive an annual cash bonus (the "Annual Bonus"), up to a
maximum of 65% of Annual Base Salary, within 90 days following the last day of
the Company's fiscal year for which the Annual Bonus is awarded in an amount, if
any, determined and based upon a performance plan established by the Chief
Executive Officer and approved by the Board or the Compensation Committee of the
Board.
(d) RESTRICTED STOCK GRANT. On the Effective Date or as soon as
practicable thereafter, the Compensation Committee shall grant to the Executive
restricted shares of common stock of the Company ("Company Stock") with a fair
market value at the time of grant equal to $50,000, which restricted shares have
been set aside in the custody, control and possession of the Company and will be
released to the Executive in three equal annual installments on each of the
first, second and third anniversaries of the date of grant, provided that the
Executive is continuously employed for such three year period. Notwithstanding
the foregoing, in the event the Executive's employment is terminated by the
Company without Cause or by the Executive for Good Reason prior to the third
anniversary of the date of grant, the time based restrictions on such restricted
shares shall lapse and become fully vested. Notwithstanding anything herein to
the contrary, in the event the Executive's employment is terminated for Cause or
by Executive without Good Reason, prior to the third anniversary of the date of
grant of such Company Stock, then all subsequent scheduled releases shall be
cancelled and all restricted shares of Company Stock not theretofore released
shall be forfeited by the Executive and shall be cancelled and retired by the
Company. Shares of Company Stock granted pursuant to this Agreement shall be
made available only from issued shares of Company Stock reacquired by the
Company and held in treasury. The terms and conditions applicable to such
restricted shares shall be set forth in a separate agreement in a form
prescribed by the Company.
(e) EXPENSES. During the term of the Executive's employment
hereunder, the Executive shall be entitled to receive prompt reimbursement for
all reasonable and customary expenses incurred by the Executive in performing
services hereunder, including (i) all expenses of travel and living expenses
while away from home or business or at the request of and in the service of the
Company and (ii) a monthly cash automobile allowance of $1,000 covering all
expenses of maintaining and operating the automobile (including, without
limitation, cost, repairs, maintenance, insurance and parking), provided that
all such expenses are accounted for in accordance with the policies and
procedures established by the Company.
(f) WELFARE BENEFITS. During the Term, the Executive and/or the
Executive's family, as the case may be, shall be eligible for participation in
and shall receive all benefits
-5-
<PAGE>
under welfare benefit plans, practices, policies and programs provided by the
Company and its affiliated companies (including, without limitation, medical,
prescription, dental, disability, salary continuance, employee life, group life,
accidental death and travel accident insurance plans and programs) to the extent
applicable generally to other peer executives of the Company and its affiliated
companies, but in no event shall such plans, practices, policies and programs
provide the Executive with benefits which are materially less favorable, in the
aggregate, than the most favorable of such plans, practices, policies and
programs in effect for the Executive as of the date hereof or, if more favorable
to the Executive, those provided generally at any time to other peer executives
of the Company and its affiliated companies. As used in this Agreement, the term
"affiliated companies" shall include any company controlled by, controlling or
under common control with the Company.
(g) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During the Term, the
Executive shall be entitled to participate in all incentive, savings and
retirement plans, practices, policies and programs applicable generally to other
peer executives of the Company and its affiliated companies.
(h) FRINGE BENEFITS. During the Term:
(i) The Company shall reimburse the Executive for the
reasonable expenses incurred by the Executive in undergoing an annual physical
examination by a licensed physician.
(ii) The Company shall reimburse the Executive for the
reasonable expenses incurred by the Executive in connection with obtaining
professional tax and financial planning advice.
(i) VACATION. During the Term, the Executive shall be entitled to
paid vacation of four weeks per year, any unused portion of which shall be
forfeited as of the end of each year.
(j) DISABILITY OFFSET. Payments made to the Executive pursuant to
this Section 6 shall be reduced by the sum of the amounts, if any, payable to
the Executive at or prior to the time of any such payment under disability
benefit plans of the Company or under the Social Security disability insurance
program, and which amounts were not previously applied to reduce any such
payments.
7. OFFICES. Subject to Section 5, the Executive agrees to serve without
additional compensation, if elected or appointed thereto, as a director of the
Company and any of its subsidiaries and in one or more executive offices of any
of the Company's subsidiaries, provided that the Executive is indemnified for
serving in any and all such capacities.
8. TERMINATION. The Executive's employment hereunder may be terminated
without any breach of this Agreement only under the following circumstances:
-6-
<PAGE>
(a) DEATH OR DISABILITY. The Executive's employment shall terminate
automatically upon the Executive's death during the Term. If the Company
determines in good faith that Disability of the Executive has occurred during
the Term (pursuant to the definition of Disability set forth below), it may give
to the Executive written notice in accordance with Section 17 of this Agreement
of its intention to terminate the Executive's employment. In such event, the
Executive's employment with the Company shall terminate effective on the 30th
day after receipt of such notice by the Executive (the "Disability Effective
Date"), provided that, within the 30 days after such receipt, the Executive
shall not have returned to full-time performance of the Executive's duties. For
purposes of this Agreement, "Disability" shall mean the absence of the Executive
from the Executive's duties with the Company on a full-time basis for 180
consecutive business days (or such shorter period as will suffice for the
Executive to qualify for full disability benefits under the applicable
disability insurance policy or policies of the Company) as a result of
incapacity due to mental or physical illness which is determined to be total and
permanent by a physician selected by the Company or its insurers and reasonably
acceptable to the Executive or the Executive's legal representative.
(b) CAUSE. The Company may terminate the Executive's employment
during the Term for Cause. For purposes of this Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Executive to
perform substantially the Executive's duties pursuant to this Agreement (other
than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Executive by the Board or the Company's Chief Executive Officer which
specifically identifies the manner in which the Board or the Chief Executive
Officer believes that the Executive has not substantially performed the
Executive's duties, or
(ii) the willful engaging by the Executive in illegal conduct
or gross misconduct which is materially and demonstrably injurious to the
Company.
For purposes of this provision, no act or failure to act, on the
part of the Executive, shall be considered "willful" unless it is done, or
omitted to be done, by the Executive in bad faith or without reasonable belief
that the Executive's action or omission was in the best interests of the
Company. Any act, or failure to act, based upon authority given pursuant to a
resolution duly adopted by the Board or upon the instructions of the Chief
Executive Officer or a senior officer of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by the Executive in good faith and in the best interests of the
Company. The cessation of employment of the Executive shall not be deemed to be
for Cause unless and until there shall have been delivered to the Executive a
copy of a resolution duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board at a meeting of the Board called
and held for such purpose (after reasonable notice is provided to the Executive
and the Executive is given an opportunity, together with counsel, to be heard
before the Board), finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in subparagraph (i) or (ii) above,
and specifying the particulars thereof in detail.
-7-
<PAGE>
(c) TERMINATION BY THE EXECUTIVE FOR GOOD REASON. The Executive's
employment may be terminated by the Executive for Good Reason. For purposes of
this Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties materially
inconsistent with the Executive's position (including status, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 5(a) of this Agreement, or any other action by the Company which
results in a material diminution in such position, authority, duties or
responsibilities, excluding for this purpose isolated and inadvertent action(s)
not taken in bad faith and remedied by the Company promptly after receipt of
notice thereof given by the Executive;
(ii) any material failure by the Company to comply with any of
the provisions of Section 6 or Section 12(a) or (b) of this Agreement, other
than isolated and inadvertent failure(s) not occurring in bad faith and remedied
by the Company promptly after receipt of notice thereof given by the Executive;
(iii) any termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement;
(iv) any failure by the Company to comply with and satisfy
Section 16(a) of this Agreement; or
(v) a relocation of the Executive's principal business
location to a location which is more than fifty (50) miles from his current
principal business location.
(d) TERMINATION ELECTION. Subject to the provisions of Section 2(b):
(i) A notice to Executive by the Company will constitute an
election by the Company to terminate the Executive's employment pursuant to
Section 2(a) 60 days following the date of delivery of the notice;
(ii) A notice to the Company by the Executive will constitute
an election by the Executive to terminate Executive's employment pursuant to
Section 2(a) 90 days following the date of delivery of the notice;
(iii) In no event, however, shall the Term of the Executive's
employment hereunder extend beyond the end of the month in which the Executive's
sixty-fifth (65th) birthday occurs.
(e) NOTICE OF TERMINATION. Any termination of the Executive's
employment by the Company or by the Executive (other than termination by reason
of the Executive's death) shall be communicated by written Notice of Termination
to the other party hereto in accordance
-8-
<PAGE>
with Section 17 hereof. For purposes of this Agreement, a "Notice of
Termination" means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable, sets
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of the Executive's employment under the provision so
indicated and (iii) if the Date of Termination (as defined below) is other than
the date of receipt of such notice, specifies the termination date. The good
faith failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,
respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the Executive's or the
Company's rights hereunder.
(f) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Executive's employment is terminated by reason of death or Disability, the date
of death of the Executive or the Disability Effective Date, as the case may be,
(ii) if the Executive's employment is terminated for Cause, the date specified
in the Notice of Termination, (iii) if the Executive's employment is terminated
by either of the elections pursuant to Section 8(d) above, the applicable date
of termination determined under Section 8(d) above, and (iv) if the Executive's
employment is terminated for any other reason, the date on which a Notice of
Termination is given; provided, however, that, if within 30 days after any
Notice of Termination is given the party receiving such Notice of Termination
notifies the other party that a dispute exists concerning the termination, the
Date of Termination shall be the date on which the dispute is finally
determined, either by mutual written agreement of the parties, by a binding and
final arbitration award or by a final judgment, order or decree of a court of
competent jurisdiction (the time for appeal therefrom having expired and no
appeal having been perfected).
9. COMPENSATION UPON TERMINATION.
(a) DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Term, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations (as defined in Section 12(f)(i)a.) and the timely payment
or provision of Other Benefits (as defined in Section 12(f)(iv)). Accrued
Obligations shall be paid to the Executive in a lump sum in cash within 30 days
of the Date of Termination. Notwithstanding the foregoing, the Company shall
maintain, at the Company's sole expense, in full force and effect, for the
continued benefit of the Executive for twelve months following the Disability
Effective Date, all employee welfare benefit plans and programs in which the
Executive was entitled to participate immediately prior to the Disability
Effective Date provided that the Executive's continued participation is possible
under the general terms and provisions of such plans and programs. In the event
that the Executive's participation in any such plan or program is barred, the
Company shall arrange to provide the Executive with benefits substantially
similar to those which the Executive would otherwise have been entitled to
receive under such plans and programs from which his continued participation is
barred.
(b) DEATH. If the Executive's employment is terminated by reason of
the Executive's death during the Term, this Agreement shall terminate without
further obligations to the
-9-
<PAGE>
Executive's legal representatives under this Agreement, other than for (i)
payment of Accrued Obligations (as defined in Section 12(f)(i)a.), calculated as
if the Executive's employment had continued for a period of 12 months following
the date of death; and (ii) the timely payment or provision of Other Benefits
(as defined in Section 12(f)(iv)). Accrued Obligations shall be paid to the
Executive's estate or beneficiary, as applicable, in a lump sum in cash within
30 days of the Date of Termination.
(c) CAUSE. If the Executive's employment shall be terminated for
Cause during the Term, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to the Executive
(i) his Annual Base Salary through the Date of Termination, (ii) the amount of
any compensation previously deferred by the Executive subject to the terms of
any plan or program, and (iii) Other Benefits, in each case to the extent
theretofore unpaid.
(d) VOLUNTARY TERMINATION. If the Executive voluntarily terminates
employment during the Term, excluding a termination for Good Reason, this
Agreement shall terminate without further obligations to the Executive, other
than for Accrued Obligations and the timely payment or provision of Other
Benefits. In such case, all Accrued Obligations shall be paid to the Executive
in a lump sum in cash within 30 days of the Date of Termination.
(e) TERMINATION ELECTION BY COMPANY; TERMINATION BY EXECUTIVE FOR
GOOD REASON. If the Executive's employment is terminated by the Company under
Section 8(d)(i) hereof or by the Executive under Section 8(c) hereof, the
Company shall pay to the Executive a lump sum in cash within 10 days of the Date
of Termination in an amount equal to the sum of: (i) the Annual Base Salary in
effect immediately prior to termination plus the Applicable Bonus; and (ii) the
Accrued Obligations (as defined in Section 12(f)(i)a.).
10. NON-EXCLUSIVITY OF RIGHTS. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any plan, program,
policy or practice provided by the Company or any of its affiliated companies
and for which the Executive may qualify, nor, subject to Section 21, shall
anything herein limit or otherwise affect such rights as the Executive may have
under any contract or agreement with the Company or any of its affiliated
companies. Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Company or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
11. FULL SETTLEMENT. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement. Unless the
Executive's termination of employment gives rise to a right to payments and
benefits described in Section 12, if the Executive secures other employment, any
benefits
-10-
<PAGE>
the Company is required to provide to the Executive following termination of the
Executive's employment shall be secondary to those provided by another employer
(if any). However, if the Executive's employment is terminated such that the
Executive has a right to payments and benefits under Section 12, such amounts
shall not be reduced whether or not the Executive obtains other employment.
12. CHANGE OF CONTROL PROVISIONS. The following provisions of this Section
12 shall apply notwithstanding any contrary or inconsistent provision in any
other section of this Agreement, and all other provisions of this Agreement, to
the extent they may be contrary to or inconsistent with the provisions of this
Section 12, are hereby made subject to the provisions of this Section 12, which
shall be paramount in all respects, provided, however, that the provisions of
Section 3(c) shall apply, where applicable.
(a) POSITION AND DUTIES. During any Transition Period, the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period immediately
preceding a COC Transition Date, and the Executive's services shall be performed
at the location where the Executive was employed immediately preceding a COC
Transition Date.
(b) COMPENSATION AND RELATED MATTERS.
(i) ANNUAL BONUS. For each fiscal year ending during any
Transition Period, the Company shall pay to the Executive an Annual Bonus in
cash at least equal to the Executive's highest cash bonus under the Company's
annual cash bonus program, or any comparable cash bonus under any predecessor or
successor plan, for the last three full fiscal years prior to the latest COC
Transition Date (the "Highest Recent Bonus"). Each such Annual Bonus shall be
paid no later than 60 days following the commencement of the fiscal year next
following the fiscal year for which the Annual Bonus is awarded, unless the
Executive shall elect to defer the receipt of such Annual Bonus.
(ii) WELFARE BENEFITS. During any Transition Period, the
benefits to which the Executive and/or the Executive's family are entitled to
pursuant to Section 6(f) shall be no less favorable, in the aggregate, than the
most favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the latest
COC Transition Date or, if more favorable to the Executive, those provided
generally at any time after the latest COC Transition Date to other peer
executives of the Company and its affiliated companies.
(iii) INCENTIVE, SAVINGS AND RETIREMENT PLANS. During any
Transition Period, the plans, practices, policies and programs in which the
Executive is entitled to participate pursuant to Section 6(g) shall provide the
Executive with incentive opportunities (measured with respect to both regular
and special incentive opportunities, to the extent, if any, that such
distinction is applicable), savings opportunities and retirement benefit
opportunities, in each case, at least as favorable, in the aggregate, as the
most favorable of those provided by the Company and its affiliated
-11-
<PAGE>
companies for the Executive under such plans, practices, policies and programs
as of the date hereof or if more favorable to the Executive, those provided
generally at any time to other peer executives of the Company and its affiliated
companies.
(iv) FRINGE BENEFITS. During any Transition Period, the
Executive shall be entitled to fringe benefits, including, without limitation,
the benefits described in Section 6(h), in accordance with the most favorable
plans, practices, programs and policies of the Company and its affiliated
companies in effect for the Executive at any time during the 120-day period
immediately preceding the latest COC Transition Date or, if more favorable to
the Executive, as in effect generally at any time thereafter with respect to
other peer executives of the Company and its affiliated companies.
(v) OFFICE AND SUPPORT STAFF. During any Transition Period,
the Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the latest COC Transition Date or, if
more favorable to the Executive, as provided generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies.
(vi) VACATION. During any Transition Period, the Executive
shall be entitled to paid vacation in accordance with the most favorable plans,
policies, programs and practices of the Company and its affiliated companies as
in effect for the Executive at any time during the 120-day period immediately
preceding the latest COC Transition Date or, if more favorable to the Executive,
as in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies.
(c) GOOD REASON. During any Transition Period, for purposes of this
Agreement, "Good Reason" shall mean:
(i) the assignment to the Executive of any duties inconsistent
in any respect with the Executive's position (including status, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Sections 5(a) or 12(a) of this Agreement, or any other action by the Company
which results in a diminution in such position, authority, duties or
responsibilities, excluding for this purpose isolated, insubstantial and
inadvertent action(s) not taken in bad faith and remedied by the Company
promptly after receipt of notice thereof given by the Executive;
(ii) any failure by the Company to comply with any of the
provisions of Section 6 or Section 12(a) or (b) of this Agreement, other than
isolated, insubstantial and inadvertent failure(s) not occurring in bad faith
and remedied by the Company promptly after receipt of notice thereof given by
the Executive;
-12-
<PAGE>
(iii) any termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or
(iv) any failure by the Company to comply with and satisfy
Section 16(a) of this Agreement.
For purposes of this Section 12(c), any good faith determination of
"Good Reason" made by the Executive shall be conclusive. A termination by the
Executive for any reason during the 30-day period immediately following the date
which is six months after any COC Transition Date shall be deemed to be a
termination for Good Reason for all purposes of this Agreement.
(d) COMPENSATION UPON TERMINATION FOR DISABILITY. If the Executive's
employment is terminated by reason of the Executive's Disability during any
Transition Period, then with respect to the provision of Other Benefits, the
term Other Benefits as utilized in Section 9(a) shall include, and the Executive
shall be entitled after the Disability Effective Date to receive, disability and
other benefits at least equal to the most favorable of those generally provided
by the Company and its affiliated companies to disabled executives and/or their
families in accordance with such plans, programs, practices and policies
relating to disability, if any, as in effect generally with respect to the most
senior executives and their families at any time during the 120-day period
immediately preceding the latest COC Transition Date or, if more favorable to
the Executive and/or the Executive's family, as in effect at any time thereafter
generally with respect to other peer executives of the Company and its
affiliated companies and their families.
(e) COMPENSATION UPON TERMINATION BY DEATH. If the Executive's death
occurs during any Transition Period, then with respect to the provision of Other
Benefits, the term Other Benefits as utilized in Section 9(b) shall include,
without limitation, and the Executive's estate and/or beneficiaries shall be
entitled to receive, benefits at least equal to the most favorable benefits
provided by the Company and its affiliated companies to the estates and
beneficiaries of the most senior executives of the Company and its affiliated
companies under such plans, programs, practices and policies relating to death
benefits, if any, as in effect with respect to the most senior executives and
their beneficiaries at any time during the 120-day period immediately preceding
the latest COC Transition Date or, if more favorable to the Executive's estate
and/or the Executive's beneficiaries, as in effect on the date of the
Executive's death with respect to other peer executives of the Company and its
affiliated companies and their beneficiaries.
(f) COMPENSATION UPON TERMINATION BY THE COMPANY WITHOUT CAUSE OR
FOR GOOD REASON. If, during any Transition Period, the Company shall terminate
the Executive's employment other than for Cause or Disability or the Executive
shall terminate employment for Good Reason:
(i) the Company shall pay to the Executive in a lump sum in
cash within 30 days after the Date of Termination the aggregate of the following
amounts:
-13-
<PAGE>
a. the sum of (1) the Executive's Annual Base Salary
through the Date of Termination to the extent not theretofore paid, (2) the
product of (x) the Applicable Bonus and (y) a fraction, the numerator of which
is the number of days in the current fiscal year through the Date of
Termination, and the denominator of which is 365 and (3) any compensation
previously deferred by the Executive (together with any accrued interest or
earnings thereon) and any accrued vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts described in clauses (1), (2), and (3)
shall be referred to in this Agreement as the "Accrued Obligations"); and
b. the amount equal to the product of (1) two and (2)
the sum of (x) the Executive's Annual Base Salary and (y) the Highest Annual
Bonus; and
c. an amount equal to the excess of (a) the actuarial
equivalent of the benefit under the Company's defined benefit retirement plans,
including any excess or supplemental retirement plan in which the Executive
participates (together, the "Retirement Plans") (utilizing actuarial assumptions
no less favorable to the Executive than those in effect under the Retirement
Plans immediately prior to the latest COC Transition Date), which the Executive
would receive if the Executive's employment continued for two years after the
Date of Termination assuming for this purpose that all accrued benefits are
fully vested, and, assuming that the Executive's compensation in both of the two
years is that required by Section 6(a) and Section 6(c), over (b) the actuarial
equivalent of the Executive's actual benefit (paid or payable), if any, under
the Retirement Plans as of the Date of Termination;
(ii) for two years after the Executive's Date of Termination,
or such longer period as may be provided by the terms of the appropriate plan,
program, practice or policy, the Company shall continue benefits to the
Executive and/or the Executive's family at least equal to those which would have
been provided to them in accordance with the plans, programs, practices and
policies described in Section 6(f) of this Agreement if the Executive's
employment had not been terminated or, if more favorable to the Executive, as in
effect generally at any time thereafter with respect to other peer executives of
the Company and its affiliated companies and their families, provided, however,
that if the Executive becomes reemployed with another employer and is eligible
to receive medical or other welfare benefits under another employer provided
plan, the medical and other welfare benefits described herein shall be secondary
to those provided under such other plan during such applicable period of
eligibility. For purposes of determining eligibility (but not the time of
commencement of benefits) of the Executive for retiree benefits pursuant to such
plans, practices, programs and policies, the Executive shall be considered to
have remained employed until two years after the Date of Termination and to have
retired on the last day of such period;
(iii) the Company shall, at its sole expense as incurred,
provide the Executive with outplacement services the scope and provider of which
shall be selected by the Executive in his sole discretion, and which shall
include the provision of reasonable office space and secretarial assistance,
provided, that the Company's responsibility under this clause (iii) shall be
limited to $30,000;
-14-
<PAGE>
(iv) to the extent not theretofore paid or provided, the
Company shall timely pay or provide to the Executive any other amounts or
benefits required to be paid or provided or which the Executive is eligible to
receive under any plan, program, policy or practice or contract or agreement of
the Company and its affiliated companies (such other amounts and benefits shall
be referred to in this Agreement as the "Other Benefits"); and
(v) the Company shall cause all Stock Options and restricted
shares of Company Stock held by or for the benefit of the Executive to become
immediately fully vested and/or exercisable.
13. LEGAL FEES.
(a) Following any termination of the Executive's employment
that gives rise to a right to payments and benefits under Section 12, the
Company shall pay as incurred, to the full extent permitted by law, all legal
fees and expenses which the Executive may reasonably incur as a result of any
contest (regardless of the outcome thereof) by the Company, the Executive or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Executive about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Section 7872(f)(2)(A) of the Code.
(b) Following any termination of the Executive's employment
other than a termination of employment described in paragraph (a), above, the
Company shall promptly reimburse the Executive, to the extent permitted by law,
for all reasonable legal fees and expenses reasonably incurred by the Executive
as a result of any contest by the Company or the Executive of the validity or
enforceability of, or liability under, any provisions of this Agreement or any
guarantee of performance thereof (including as a result of any contest by the
Executive about the amount of any payment pursuant to this Agreement), plus in
each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Code, provided, that such
reimbursement shall be limited to fees and expenses incurred in connection with
the contest of issues on which the Executive substantially prevails.
14. CERTAIN ADDITIONAL PAYMENTS BY THE COMPANY.
(a) Anything in this Agreement to the contrary notwithstanding and
except as set forth below, in the event it shall be determined that any payment
or distribution by the Company to or for the benefit of the Executive (whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise, but determined without regard to any additional payments
required under this Section 14) (a "Payment") would be subject to the excise tax
imposed by Section 4999 of the Code or any interest or penalties are incurred by
the Executive with respect to such excise tax (such excise tax, together with
any such interest and penalties, are hereinafter collectively referred to as the
"Excise Tax"), then the Executive shall be entitled to receive an additional
payment (a "Gross-Up
-15-
<PAGE>
Payment") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and Excise Tax imposed upon the Gross-Up Payment,
the Executive retains an amount of the Gross-Up Payment equal to the Excise Tax
imposed upon the Payments. Notwithstanding the foregoing provisions of this
Section 14(a), if it shall be determined that the Executive is entitled to a
Gross-Up Payment, but that the Payments do not exceed 110% of the greatest
amount (the "Reduced Amount") that could be paid to the Executive such that the
receipt of Payments would not give rise to any Excise Tax, then no Gross-Up
Payment shall be made to the Executive and the Payments, in the aggregate, shall
be reduced to the Reduced Amount.
(b) Subject to the provisions of Section 14(c), all determinations
required to be made under this Section 14, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Arthur
Andersen LLP or such other certified public accounting firm as may be designated
by the Executive (the "Accounting Firm") which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint another nationally
recognized accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company.
Any Gross-Up Payment, as determined pursuant to this Section 14, shall be paid
by the Company to the Executive within 5 days of the receipt of the Accounting
Firm's determination. Any determination by the Accounting Firm shall be binding
upon the Company and the Executive. As a result of the uncertainty in the
application of Section 4999 of the Code at the time of the initial determination
by the Accounting Firm hereunder, it is possible that Gross-Up Payments which
will not have been made by the Company should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the event
that the Company exhausts its remedies pursuant to Section 14(c) and the
Executive thereafter is required to make a payment of any Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim
by the Internal Revenue Service that, if successful, would require the payment
by the Company of the Gross-Up Payment. Such notification shall be given as soon
as practicable but no later than 10 business days after the Executive is
informed in writing of such claim and shall apprise the Company of the nature of
such claim and the date on which such claim is requested to be paid. The
Executive shall not pay such claim prior to the expiration of the 30-day period
following the date on which it gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim
is due). If the Company notifies the Executive in writing prior to the
expiration of such period that it desires to contest such claim, the Executive
shall:
-16-
<PAGE>
(i) give the Company any information reasonably requested by
the Company relating to such claim,
(ii) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order
effectively to contest such claim, and
(iv) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all
costs and expenses (including additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest and penalties with respect thereto) imposed as a result of such
representation and payment of costs and expenses. Without limitation on the
foregoing provisions of this Section 14(c), the Company shall control all
proceedings taken in connection with such contest and, at its sole option, may
pursue or forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may, at its
sole option, either direct the Executive to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Executive agrees
to prosecute such contest to a determination before any administrative tribunal,
in a court of initial jurisdiction and in one or more appellate courts, as the
Company shall determine; provided, however, that if the Company directs the
Executive to pay such claim and sue for a refund, the Company shall advance the
amount of such payment to the Executive, on an interest-free basis and shall
indemnify and hold the Executive harmless, on an after-tax basis, from any
Excise Tax or income tax (including interest or penalties with respect thereto)
imposed with respect to such advance or with respect to any imputed income with
respect to such advance; and further provided that any extension of the statute
of limitations relating to payment of taxes for the taxable year of the
Executive with respect to which such contested amount is claimed to be due is
limited solely to such contested amount. Furthermore, the Company's control of
the contest shall be limited to issues with respect to which a Gross-Up Payment
would be payable hereunder and the Executive shall be entitled to settle or
contest, as the case may be, any other issue raised by the Internal Revenue
Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 14(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 14(c)) promptly pay to the
Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive
of an amount advanced by the Company pursuant to Section 14(c), a determination
is made that the Executive shall not be entitled
-17-
<PAGE>
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.
15. NONCOMPETITION.
(a) So long as the Executive is employed by the Company under this
Agreement and unless this Agreement is terminated for any reason, the Executive
agrees not to enter into competitive endeavors.
(b) During the Term and any period thereafter during which or in
respect of which the Executive receives payments from the Company under Section
9 or Section 12, the Executive shall hold in a fiduciary capacity for the
benefit of the Company all secret or confidential information, knowledge or data
relating to the Company or any of its affiliated companies, and their respective
businesses, which shall have been obtained by the Executive during the
Executive's employment by the Company or any of its affiliated companies and
which shall not be or become public knowledge (other than by acts by the
Executive or representatives of the Executive in violation of this Agreement).
After termination of the Executive's employment with the Company, the Executive
shall not, without the prior written consent of the Company or as may otherwise
be required by law or legal process, communicate or divulge any such
information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 15 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under Section 12 of this Agreement.
16. SUCCESSORS; BINDING AGREEMENT.
(a) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company, by agreement in
form and substance satisfactory to the Executive, to expressly assume and agree
to perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession had taken place.
Failure of the Company to obtain such assumption and agreement prior to the
effectiveness of any such succession shall be a breach of the Agreement and
shall entitle the Executive to compensation from the Company in the same amount
and on the same terms as he would be entitled to hereunder if he terminated his
employment for Good Reason, except that for purposes of implementing the
foregoing, the date on which any such succession becomes effective shall be
deemed the Date of Termination. As used in the Agreement, Company shall mean the
Company as herein before defined and any successor to its business and/or assets
as aforesaid which executes and delivers the agreement provided for in this
Section 16 or which otherwise becomes bound by all the terms and provisions of
this Agreement by operation of law.
-18-
<PAGE>
(b) This Agreement and all rights of the Executive hereunder shall
inure to the benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devises and legatees. If the Executive should die while any amounts would still
be payable to him hereunder if he had continued to live, all such amounts unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to the Executive's devise, legatee, or other designee or, if there be
no such designee, to the Executive's estate.
17. NOTICE. For the purposes of this Agreement, notices, demands and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered or (unless otherwise
specified) mailed by United States certified or registered mail, return receipt
requested, postage prepaid, addressed as follows:
If to the Executive: Mr. Gregory R. Schriefer
12115 Wellington Court
Fort Wayne, Indiana 46845
If to the Company: Superior TeleCom Inc.
1790 Broadway
15th Floor
New York, NY 10019-1412
Attention: Chief Executive Officer
or to such other address as any party may have furnished to the
others in writing in accordance herewith, except that notices of change of
address shall be effective only upon receipt.
18. MISCELLANEOUS. No provisions of this Agreement may be modified, waived
or discharged unless such waiver, modification or discharge is agreed to in
writing signed by the Executive and such officer of the Company as may be
authorized by the Board. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any condition or
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at any
prior or subsequent time. No agreements or representations, oral or otherwise,
express or implied, with respect to the subject matter hereof have been made by
either party which are not set forth expressly in this Agreement. The validity,
interpretation, construction and performance of this Agreement shall be governed
by the laws of New York without regard to its conflicts of law principles.
19. VALIDITY. The invalidity or unenforceability of any provision or
provisions of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.
-19-
<PAGE>
20. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
21. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement of
the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or written, by any
officers employee or representative of any party hereto; and any prior agreement
of the parties hereto in respect of the subject matter contained herein is
hereby terminated and cancelled, provided, however, that this Agreement should
not supersede any existing benefit or agreement which provides such benefit,
including, without limitation, life or disability insurance agreements and
retirement plans currently in effect.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
and year first above written.
ATTEST: SUPERIOR TELECOM INC.
- - ------------------------------ ------------------------------------
Stewart H. Wahrsager, Esq. Steven S. Elbaum
Corporate Secretary Chairman and Chief Executive Officer
(SEAL)
ATTEST: EXECUTIVE
- - ------------------------------ ------------------------------------
Stewart H. Wahrsager, Esq. Gregory R. Schriefer
Corporate Secretary
-20-
<PAGE>
EXHIBIT 10(pp)
CREDIT AGREEMENT
among
THE ALPINE GROUP, INC.,
VARIOUS LENDERS,
FLEET BANK, N.A.,
as Syndication Agent,
BANK OF AMERICA, N.A.,
as Documentation Agent,
and
BANKERS TRUST COMPANY,
as ADMINISTRATIVE AGENT
----------------------------------
Dated as of November 23, 1999
----------------------------------
<PAGE>
CREDIT AGREEMENT, dated as of November 23, 1999, among The Alpine Group,
Inc., a Delaware corporation (the "Borrower"), the Lenders party hereto from
time to time, FLEET BANK, N.A, as Syndication Agent (in such capacity, the
"Syndication Agent"), BANK OF AMERICA, N.A., as Documentation Agent (in such
capacity, the "Documentation Agent"), and BANKERS TRUST COMPANY, as
Administrative Agent (in such capacity, the "Administrative Agent") (all
capitalized terms used herein and defined in Section 11 are used herein as
therein defined).
W I T N E S S E T H :
WHEREAS, subject to and upon the terms and conditions set forth herein, the
Lenders are willing to make available to the Borrower the credit facility
provided for herein;
NOW, THEREFORE, IT IS AGREED:
SECTION 1. AMOUNT AND TERMS OF CREDIT.
1.01 THE COMMITMENTS. (a) Subject to and upon the terms and conditions set
forth herein, each Lender severally agrees to make, at any time and from time to
time on and after the Effective Date and prior to the Maturity Date, a revolving
loan or revolving loans (each a "Revolving Loan" and, collectively, the
"Revolving Loans") to the Borrower, which Revolving Loans (i) shall be made and
maintained in Dollars, (ii) shall, at the option of the Borrower, be incurred
and maintained as, and/or converted into, Base Rate Loans or Eurodollar Loans,
PROVIDED that, except as otherwise specifically provided in Section 1.10(b), all
Revolving Loans comprising the same Borrowing shall at all times be of the same
Type, (iii) may be repaid and reborrowed in accordance with the provisions
hereof, (iv) shall not exceed for any Lender at the time of the making of any
such Revolving Loans, and after giving effect thereto, that aggregate principal
amount which, when added to the sum of (I) the aggregate principal amount of all
other Revolving Loans then outstanding from such Lender and (II) the product of
(A) such Lender's Percentage and (B) the sum of (x) the aggregate amount of all
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are repaid
with the proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) at such time and (y) the aggregate principal
amount of all Swingline Loans (exclusive of Swingline Loans which are repaid
with the proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) then outstanding, the Commitment of such Lender
at such time, (v) shall not exceed for all Lenders at any time outstanding that
principal amount which, when added to the sum of (I) the aggregate amount of all
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are repaid
with the proceeds of, and simultaneously with the incurrence of, the respective
incurrence of Revolving Loans) and (II) the aggregate principal amount of all
Swingline Loans (exclusive of Swingline Loans which are repaid with the proceeds
of, and simultaneously with the incurrence of, the respective incurrence of
Revolving Loans) then outstanding, equals the Total Commitment at such time.
1
<PAGE>
(b) Subject to and upon the terms and conditions set forth herein, the
Swingline Lender agrees to make, from time to time after the Effective Date and
prior to the Swingline Expiry Date, a revolving loan or revolving loans (each a
"Swingline Loan" and, collectively, the "Swingline Loans") to the Borrower,
which Swingline Loans (i) shall be made and maintained in Dollars, (ii) shall be
made and maintained as Base Rate Loans, (iii) may be repaid and reborrowed in
accordance with the provisions hereof, (iv) shall not exceed in aggregate
principal amount at any time outstanding, when combined with the sum of (I) the
aggregate principal amount of all Revolving Loans then outstanding and (II) the
aggregate amount of all Letter of Credit Outstandings at such time, an amount
equal to the Total Commitment at such time and (v) shall not exceed in aggregate
principal amount at any time outstanding the Maximum Swingline Amount.
Notwithstanding anything to the contrary contained in this Section 1.01(b), the
Swingline Lender (x) shall not be obligated to make any Swingline Loans at a
time when a Lender Default exists unless the Swingline Lender has entered into
arrangements satisfactory to it to eliminate the Swingline Lender's risk with
respect to the Defaulting Lender's or Lenders' participation in such Swingline
Loans, including by cash collateralizing such Defaulting Lender's or Lenders'
Percentage of the outstanding Swingline Loans, and (y) the Swingline Lender
shall not make any Swingline Loan after it has received written notice from the
Borrower or the Required Lenders stating that a Default or an Event of Default
exists and is continuing until such time as the Swingline Lender shall have
received written notice (i) of rescission of all such notices from the party or
parties originally delivering such notice, (ii) of the waiver of such Default or
Event of Default by the Required Lenders or (iii) that the Administrative Agent
in good faith believes such Default or Event of Default has ceased to exist.
(c) On any Business Day, the Swingline Lender may, in its sole discretion,
give notice to the Lenders that its outstanding Swingline Loans shall be funded
with a Borrowing of Revolving Loans (PROVIDED that such notice shall be deemed
to have been automatically given upon the occurrence of a Default or an Event of
Default under Section 10.05 or upon the exercise of any of the remedies provided
in the last paragraph of Section 10), in which case a Borrowing of Revolving
Loans constituting Base Rate Loans (each such Borrowing, a "Mandatory
Borrowing") shall be made on the immediately succeeding Business Day by all
Lenders PRO RATA based on each Lender's Percentage (determined before giving
effect to any termination of the Commitments pursuant to the last paragraph of
Section 10) and the proceeds thereof shall be applied directly to repay the
Swingline Lender for such outstanding Swingline Loans. Each Lender hereby
irrevocably agrees to make Revolving Loans upon one Business Day's notice
pursuant to each Mandatory Borrowing in the amount and in the manner specified
in writing by the Swingline Lender notwithstanding (i) the amount of the
Mandatory Borrowing may not comply with the Minimum Borrowing Amount otherwise
required hereunder, (ii) whether any conditions specified in Section 6 are then
satisfied, (iii) whether a Default or an Event of Default then exists, (iv) the
date of such Mandatory Borrowing and (v) the amount of the Total Commitment at
such time. In the event that any Mandatory Borrowing cannot for any reason be
made on the date otherwise required above (including, without limitation, as a
result of the commencement of a proceeding under the Bankruptcy Code with
respect to the Borrower), then each Lender hereby agrees that it shall forthwith
purchase (as of the date the Mandatory Borrowing would otherwise have occurred,
but adjusted for any payments received from the Borrower on or after such date
and prior to such purchase) from the Swingline Lender such
2
<PAGE>
participations in the outstanding Swingline Loans as shall be necessary to cause
the Lenders to share in such Swingline Loans ratably based upon their respective
Percentages (determined before giving effect to any termination of the
Commitments pursuant to the last paragraph of Section 10), PROVIDED that (x) all
interest payable on the Swingline Loans shall be for the account of the
Swingline Lender until the date as of which the respective participation is
required to be purchased and, to the extent attributable to the purchased
participation, shall be payable to the participant from and after such date and
(y) at the time any purchase of participations pursuant to this sentence is
actually made, the purchasing Lender shall be required to pay the Swingline
Lender interest on the principal amount of participation purchased for each day
from and including the day upon which the Mandatory Borrowing would otherwise
have occurred to but excluding the date of payment for such participation, at
the overnight Federal Funds Rate for the first three days and at the rate
otherwise applicable to Revolving Loans maintained as Base Rate Loans hereunder
for each day thereafter.
1.02 MINIMUM AMOUNT OF EACH BORROWING. The aggregate principal amount
of each Borrowing of Revolving Loans or Swingline Loans shall not be less than
the Minimum Borrowing Amount applicable thereto. More than one Borrowing may
occur on the same date, but at no time shall there be outstanding more than 10
Borrowings of Eurodollar Loans.
1.03 NOTICE OF BORROWING. (a) Whenever the Borrower desires to incur
Loans hereunder (excluding Borrowings of Swingline Loans incurred pursuant to a
Mandatory Borrowing), it shall give the Administrative Agent at the Notice
Office at least one Business Day's prior written notice (or telephonic notice
promptly confirmed in writing) of each Base Rate Loan and at least two Business
Days' prior written notice (or telephonic notice promptly confirmed in writing)
of each Eurodollar Loan to be incurred hereunder, PROVIDED that any such notice
shall be deemed to have been given on a certain day only if given before 11:00
A.M. (New York time) on such day. Each such written notice or written
confirmation of telephonic notice (each, a "Notice of Borrowing"), except as
otherwise expressly provided in Section 1.10, shall be irrevocable and shall be
given by the Borrower in the form of Exhibit A, appropriately completed to
specify (i) the aggregate principal amount of the Loans to be incurred pursuant
to such Borrowing, (ii) the date of such Borrowing (which shall be a Business
Day), (iii) whether such Loans are to be incurred as Base Rate Loans or
Eurodollar Loans and (iv) in the case of Eurodollar Loans, the initial Interest
Period to be applicable thereto. The Administrative Agent shall promptly give
each Lender notice of such proposed Borrowing, of such Lender's proportionate
share thereof and of the other matters required by the immediately preceding
sentence to be specified in the Notice of Borrowing.
(b)(i) Whenever the Borrower desires to incur Swingline Loans
hereunder, it shall give the Swingline Lender no later than 12:00 P.M. (New York
time) on the date that a Swingline Loan is to be incurred hereunder, written
notice or telephonic notice promptly confirmed in writing of each Swingline Loan
to be incurred hereunder. Each such notice shall be irrevocable and specify in
each case (A) the date of Borrowing (which shall be a Business Day) and (B) the
aggregate principal amount of the Swingline Loans to be incurred pursuant to
such Borrowing.
3
<PAGE>
(ii) Mandatory Borrowings shall be made upon the notice specified in
Section 1.01(c), with the Borrower irrevocably agreeing, by its incurrence of
any Swingline Loan, to the making of the Mandatory Borrowings as set forth in
Section 1.01(c).
(c) Without in any way limiting the obligation of the Borrower to
confirm in writing any telephonic notice permitted to be given hereunder, the
Administrative Agent or Swingline Lender, as the case may be, may act without
liability upon the basis of such telephonic notice, believed by the
Administrative Agent or Swingline Lender, as the case may be, in good faith to
be from an Authorized Officer of the Borrower prior to receipt of written
confirmation. In such case, the Borrower hereby waives the right to dispute the
Administrative Agent's or Swingline Lender's record of the terms of such
telephonic notice.
1.04 DISBURSEMENT OF FUNDS. No later than 12:00 Noon (New York time)
on the date specified in each Notice of Borrowing (or (x) in the case of
Swingline Loans, no later than 2:00 P.M. (New York time) on the date specified
pursuant to Section 1.03(b)(i) or (y) in the case of Mandatory Borrowings, no
later than 12:00 Noon (New York time) on the date specified in Section 1.01(c)),
each Lender will make available its PRO RATA portion (determined in accordance
with Section 1.07) of each such Borrowing requested to be made on such date (or
in the case of Swingline Loans, the Swingline Lender will make available the
full amount thereof) in the manner provided below. All such amounts will be made
available in Dollars and in immediately available funds at the Payment Office of
the Administrative Agent, and the Administrative Agent will make available to
the Borrower at the Payment Office the aggregate of the amounts so made
available by the Lenders in the type of funds received. Unless the
Administrative Agent shall have been notified by any Lender prior to the date of
Borrowing that such Lender does not intend to make available to the
Administrative Agent such Lender's portion of the Borrowing to be made on such
date, the Administrative Agent may assume that such Lender has made such amount
available to the Administrative Agent on such date of Borrowing and the
Administrative Agent may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If such corresponding amount is not in fact
made available to the Administrative Agent by such Lender, the Administrative
Agent shall be entitled to recover such corresponding amount on demand from such
Lender. If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent's demand therefor, the Administrative Agent shall promptly
notify the Borrower and the Borrower shall immediately pay such corresponding
amount to the Administrative Agent. The Administrative Agent shall also be
entitled to recover on demand from such Lender or the Borrower, as the case may
be, interest on such corresponding amount in respect of each day from the date
such corresponding amount was made available by the Administrative Agent to the
Borrower until the date such corresponding amount is recovered by the
Administrative Agent, at a rate per annum equal to (i) if recovered from such
Lender, at the overnight Federal Funds Rate for the first three days and at the
interest rate otherwise applicable to such Loans for each day thereafter and
(ii) if recovered from the Borrower, the rate of interest applicable to the
respective Borrowing, as determined pursuant to Section 1.08. Nothing in this
Section 1.04 shall be deemed to relieve any Lender from its obligation to make
Loans hereunder or to prejudice any rights which the Borrower may have against
any Lender as a result of any failure by such Lender to make Loans hereunder.
4
<PAGE>
1.05 NOTES. (a) The Borrower's obligation to pay the principal of, and
interest on, the Loans made by each Lender shall be evidenced by (i) in the case
of Revolving Loans, a promissory note duly executed and delivered by the
Borrower substantially in the form of Exhibit B-1, with blanks appropriately
completed in conformity herewith (each a "Revolving Note" and, collectively, the
"Revolving Notes") and (ii) in the case of Swingline Loans, a promissory note
duly executed and delivered by the Borrower substantially in the form of Exhibit
B-2, with blanks appropriately completed in conformity herewith (each a
"Swingline Note" and, collectively, the "Swingline Notes").
(b) The Revolving Note issued to each Lender shall (i) be executed by
the Borrower, (ii) be payable to the order of such Lender and be dated the
Effective Date (or if issued thereafter, the date of issuance), (iii) be in a
stated principal amount equal to the Commitment of such Lender and be payable in
Dollars in the outstanding principal amount of the Revolving Loans evidenced
thereby, (iv) mature on the Maturity Date, (v) bear interest as provided in the
appropriate clause of Section 1.08 in respect of the Base Rate Loans and
Eurodollar Loans, as the case may be, evidenced thereby, (vi) be subject to
voluntary prepayment as provided in Section 4.01, and mandatory repayment as
provided in Section 4.02, and (vii) be entitled to the benefits of this
Agreement and the other Credit Documents (to the extent and in the manner
provided herein and therein).
(c) The Swingline Note issued to the Swingline Lender shall (i) be
executed by the Borrower, (ii) be payable to the Swingline Lender and be dated
the Effective Date, (iii) be in a stated principal amount equal to the Maximum
Swingline Amount and be payable in Dollars in the outstanding principal amount
of the Swingline Loans evidenced thereby from time to time, (iv) mature on the
Swingline Expiry Date, (v) bear interest as provided in the appropriate clause
of Section 1.08 in respect of the Base Rate Loans evidenced thereby, (vi) be
subject to voluntary prepayment as provided in Section 4.01, and mandatory
repayment as provided in Section 4.02, and (vii) be entitled to the benefits of
this Agreement and the other Credit Documents (to the extent and in the manner
provided herein and therein).
(d) Each Lender will note on its internal records the amount of each
Loan made by it and each payment in respect thereof and will prior to any
transfer of any of its Notes endorse on the reverse side thereof the outstanding
principal amount of Loans evidenced thereby. Failure to make any such notation
or any error in such notation shall not affect the Borrower's obligations in
respect of such Loans.
1.06 CONVERSIONS. The Borrower shall have the option to convert, on
any Business Day occurring after the Effective Date, all or a portion equal to
at least the Minimum Borrowing Amount of the outstanding principal amount of
Revolving Loans made pursuant to one or more Borrowings of one or more Types of
Revolving Loans into a Borrowing of another Type of Revolving Loan, PROVIDED
that, (i) except as otherwise provided in Section 1.10(b), Eurodollar Loans may
be converted into Base Rate Loans only on the last day of an Interest Period
applicable to the Revolving Loans being converted and no such partial conversion
of Eurodollar Loans shall reduce the outstanding principal amount of such
Eurodollar Loans made pursuant to a single Borrowing to less than the Minimum
Borrowing Amount applicable thereto, (ii) unless the Required Lenders otherwise
specifically agree, Base Rate Loans may only be
5
<PAGE>
converted into Eurodollar Loans if no Default under Section 10.01 or 10.05 and
no Event of Default is in existence on the date of the conversion, and (iii) no
conversion pursuant to this Section 1.06 shall result in a greater number of
Borrowings of Eurodollar Loans than is permitted under Section 1.02. Each such
conversion shall be effected by the Borrower by giving the Administrative Agent
at the Notice Office prior to 12:00 Noon (New York time) at least two Business
Days' prior notice (each a "Notice of Conversion") specifying the Revolving
Loans to be so converted, the Borrowing or Borrowings pursuant to which such
Revolving Loans were made and, if to be converted into Eurodollar Loans, the
Interest Period to be initially applicable thereto. The Administrative Agent
shall give each Lender prompt notice of any such proposed conversion. Upon any
such conversion the proceeds thereof will be deemed to be applied directly on
the day of such conversion to prepay the outstanding principal amount of the
Revolving Loans being converted. Swingline Loans may not be converted pursuant
to this Section 1.06.
1.07 PRO RATA BORROWINGS. All Borrowings of Revolving Loans under this
Agreement shall be incurred from the Lenders PRO RATA on the basis of their
Commitments, PROVIDED that all Borrowings of Revolving Loans made pursuant to a
Mandatory Borrowing shall be incurred from the Lenders PRO RATA on the basis of
their Percentages. It is understood that no Lender shall be responsible for any
default by any other Lender of its obligation to make Loans hereunder and that
each Lender shall be obligated to make the Loans provided to be made by it
hereunder, regardless of the failure of any other Lender to make its Loans
hereunder.
1.08 INTEREST. (a) The Borrower hereby agrees to pay interest in
respect of the unpaid principal amount of each Base Rate Loan from the date of
the Borrowing thereof until the earlier of (x) the maturity thereof (whether by
acceleration or otherwise) and (y) the conversion of such Base Rate Loan to a
Eurodollar Loan pursuant to Section 1.06, at a rate per annum which shall be
equal to the sum of the Base Rate in effect from time to time plus the relevant
Applicable Margin.
(b) The Borrower hereby agrees to pay interest in respect of the
unpaid principal amount of each Eurodollar Loan made to it from the date of the
Borrowing thereof until the earlier of (x) the maturity thereof (whether by
acceleration or otherwise) and (y) the conversion of such Eurodollar Loan to a
Base Rate Loan pursuant to Section 1.06, 1.09 or 1.10, as applicable, at a rate
per annum which shall, during each Interest Period applicable thereto, be equal
to the sum of the Eurodollar Rate for such Interest Period plus the relevant
Applicable Margin.
(c) Overdue principal and, to the extent permitted by law, overdue
interest in respect of each Loan and any other overdue amount payable hereunder
shall, in each case, bear interest at a rate per annum equal to the greater of
(x) 2% per annum in excess of the rate otherwise applicable to Base Rate Loans
from time to time and (y) the rate which is 2% in excess of the rate borne by
such Loans at the time of the payment default, in each case with such interest
to be payable on demand.
(d) Accrued (and theretofore unpaid) interest shall be payable (i) in
respect of each Base Rate Loan, quarterly in arrears on each Quarterly Payment
Date, (ii) in respect of each
6
<PAGE>
Eurodollar Loan, on the last day of each Interest Period applicable thereto and,
in the case of an Interest Period in excess of three months, on each date
occurring at three month intervals after the first day of such Interest Period
and (iii) in respect of each Loan, on any repayment or prepayment (on the amount
repaid or prepaid), at maturity (whether by acceleration or otherwise) and,
after such maturity, on demand; PROVIDED, HOWEVER, that in the case of Base Rate
Loans, interest shall not be payable pursuant to preceding clause (iii) at the
time of any repayment or prepayment thereof unless the respective repayment or
prepayment is made either in conjunction with a permanent reduction of the Total
Commitment or with a repayment or prepayment in full of all outstanding Loans.
(e) Upon each Interest Determination Date, the Administrative Agent
shall determine the Eurodollar Rate for the respective Interest Period to be
applicable to Eurodollar Loans and shall promptly notify the Borrower and the
Lenders thereof. Each such determination shall, absent manifest error, be final
and conclusive and binding on all parties hereto.
1.09 INTEREST PERIODS. At the time it gives any Notice of Borrowing or
Notice of Conversion in respect of the making of, or conversion into, any
Eurodollar Loan (in the case of the initial Interest Period applicable thereto)
or on the second Business Day prior to the expiration of an Interest Period
applicable to such Eurodollar Loan (in the case of any subsequent Interest
Period), the Borrower shall have the right to elect, by giving the
Administrative Agent notice thereof, a one, two, three or six-month interest
period (each an "Interest Period") applicable to such Eurodollar Loan, PROVIDED
that:
(i) all Eurodollar Loans comprising a single Borrowing shall at all
times have the same Interest Period;
(ii) the initial Interest Period for any Borrowing of Eurodollar Loans
shall commence on the date of such Borrowing (including the date of any
conversion thereto from a Base Rate Loan) and each Interest Period occurring
thereafter in respect of such Eurodollar Loans shall commence on the day on
which the next preceding Interest Period applicable thereto expires;
(iii) if any Interest Period for a Eurodollar Loan begins on a day for
which there is no numerically corresponding day in the calendar month at the end
of such Interest Period, such Interest Period shall end on the last Business Day
of such calendar month;
(iv) if any Interest Period for a Eurodollar Loan would otherwise
expire on a day which is not a Business Day, such Interest Period shall expire
on the next succeeding Business Day; PROVIDED, HOWEVER, that if any Interest
Period for a Eurodollar Loan would otherwise expire on a day which is not a
Business Day but is a day of the month after which no further Business Day
occurs in such month, such Interest Period shall expire on the next preceding
Business Day;
(v) unless the Required Lenders otherwise specifically agree, no
Interest Period may be selected at any time when a Default under Section 10.01
or 10.05 or an Event of Default is then in existence; and
7
<PAGE>
(vi) no Interest Period in respect of any Borrowing of Revolving Loans
shall be selected which extends beyond the Maturity Date.
If upon the expiration of any Interest Period applicable to a Borrowing of
Eurodollar Loans, the Borrower has failed to elect, or is not permitted to
elect, a new Interest Period to be applicable to such Eurodollar Loans as
provided above, the Borrower shall be deemed to have elected to convert such
Eurodollar Loans into Base Rate Loans, effective as of the expiration date of
such current Interest Period.
1.10 INCREASED COSTS, ILLEGALITY, ETC. (a) In the event that any
Lender shall have determined in good faith (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto but,
with respect to clause (i) below, may be made only by the Administrative Agent):
(i) on any Interest Determination Date that, by reason of any changes
arising after the Effective Date affecting the applicable interbank market,
adequate and fair means do not exist for ascertaining the applicable
interest rate on the basis provided for in the definition of the Eurodollar
Rate; or
(ii) at any time, that such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loan because of (x) any change arising after the Effective
Date in any applicable law or governmental rule, regulation, order,
guideline or request (whether or not having the force of law) or in the
interpretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, order, guideline or request,
such as, for example, but not limited to: (A) a change in the basis of
taxation of payment to any Lender of the principal of or interest on the
Notes or any other amounts payable hereunder (except for changes in the
rate of tax on, or determined by reference to, the net income or profits or
franchise taxes based on net income of such Lender pursuant to the laws of
the jurisdiction in which it is organized or in which its principal office
or applicable lending office is located or any subdivision thereof or
therein) or (B) a change in official reserve requirements (except to the
extent included in the computation of the Eurodollar Rate) or any special
deposit, assessment or similar requirement against assets of, deposits with
or for the account of, or credit extended by, any Lender (or its applicable
lending office) and/or (y) other circumstances since the Effective Date
affecting such Lender or the applicable interbank market or the position of
such Lender in such market; or
(iii) at any time after the date of this Agreement, that the making or
continuance of any Eurodollar Loan has been made (x) unlawful by any law or
governmental rule, regulation or order, (y) impossible by compliance by any
Lender in good faith with any governmental request (whether or not having
force of law) or (z) impracticable as a result of a contingency occurring
after the Effective Date which materially and adversely affects the
applicable interbank market;
then, and in any such event, such Lender (or the Administrative Agent, in the
case of clause (i) above) shall promptly give notice (by telephone promptly
confirmed in writing) to the Borrower
8
<PAGE>
and, except in the case of clause (i) above, to the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to
each of the other Lenders). Thereafter (x) in the case of clause (i) above,
Eurodollar Loans shall no longer be available until such time as the
Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice by the Administrative Agent no longer
exist, and any Notice of Borrowing or any Notice of Conversion given by the
Borrower with respect to Eurodollar Loans which have not yet been incurred
(including by way of conversion) shall be deemed rescinded by the Borrower, (y)
in the case of clause (ii) above, the Borrower shall, subject to the provisions
of Section 13.17 (to the extent applicable), pay to such Lender, upon its
written request therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Lender in its sole discretion shall determine) as shall be required to
compensate such Lender for such increased costs or reductions in amounts
received or receivable hereunder (a written notice as to the additional amounts
owed to such Lender, showing in reasonable detail the basis for the calculation
thereof, submitted to the Borrower by such Lender shall, absent manifest error,
be final and conclusive and binding on all the parties hereto) and (z) in the
case of clause (iii) above, the Borrower shall take one of the actions specified
in Section 1.10(b) as promptly as possible and, in any event, within the time
period required by law.
(b) At any time that any Eurodollar Loan is affected by the
circumstances described in Section 1.10(a)(ii) or (iii), the Borrower may (and
in the case of a Eurodollar Loan affected by the circumstances described in
Section 1.10(a)(iii) shall) either (x) if the affected Eurodollar Loan is then
being made initially or pursuant to a conversion, cancel the respective
Borrowing by giving the Administrative Agent telephonic notice (confirmed in
writing) on the same date that the Borrower was notified by the affected Lender
or the Administrative Agent pursuant to Section 1.10(a)(ii) or (iii) or (y) if
the affected Eurodollar Loan is then outstanding, upon at least two Business
Days' written notice to the Administrative Agent, require the affected Lender to
convert such Eurodollar Loan into a Base Rate Loan, PROVIDED that, if more than
one Lender is affected at any time as described above in this clause (b), then
all affected Lenders must be treated the same pursuant to this Section 1.10(b).
(c) If at any time after the Effective Date any Lender determines
that the introduction of or any change (which introduction or change shall have
occurred after the date of this Agreement) in any applicable law or governmental
rule, regulation, order, guideline, directive or request (whether or not having
the force of law) concerning capital adequacy, or any change in interpretation
or administration thereof by any governmental authority, central bank or
comparable agency, will have the effect of increasing the amount of capital
required or expected to be maintained by such Lender or any corporation
controlling such Lender based on the existence of such Lender's Commitment
hereunder or its obligations hereunder, then the Borrower agrees to pay, subject
to the provisions of Section 13.17 (to the extent applicable), to such Lender,
upon its written demand therefor, such additional amounts as shall be required
to compensate such Lender or such other corporation for the increased cost to
such Lender or such other corporation or the reduction in the rate of return to
such Lender or such other corporation as a result of such increase of capital.
In determining such additional amounts, each Lender will act reasonably and in
good faith and will use averaging and attribution methods which are reasonable,
PROVIDED that such Lender's determination of compensation owing under this
Section
9
<PAGE>
1.10(c) shall, absent manifest error, be final and conclusive and binding on all
the parties hereto. Each Lender, upon determining that any additional amounts
will be payable pursuant to this Section 1.10(c), will give prompt written
notice thereof to the Borrower, which notice shall show in reasonable detail the
basis for calculation of such additional amounts.
1.11 COMPENSATION. The Borrower shall, subject to the provisions of
Section 13.17 (to the extent applicable), compensate each Lender, upon its
written request (which request shall set forth in reasonable detail the basis
for requesting such compensation), for all reasonable losses, expenses and
liabilities (including, without limitation, any loss, expense or liability
incurred by reason of the liquidation or reemployment of deposits or other funds
required by such Lender to fund its Eurodollar Loans, but excluding loss of
anticipated profits) which such Lender may sustain: (i) if for any reason (other
than a default by such Lender or the Administrative Agent) a Borrowing of, or
conversion from or into, Eurodollar Loans does not occur on a date specified
therefor in the Notice of Borrowing or a Notice of Conversion (whether or not
withdrawn or deemed withdrawn pursuant to Section 1.10(a)); (ii) if any
repayment (including any repayment made pursuant to Section 4.01 or 4.02 or as a
result of an acceleration of the Loans pursuant to Section 10) or conversion of
any Eurodollar Loans occurs on a date which is not the last day of an Interest
Period with respect thereto; (iii) if any prepayment of any Eurodollar Loans is
not made on any date specified in a notice of prepayment given by the Borrower;
or (iv) as a consequence of (x) any other default by the Borrower to repay its
Loans when required by the terms of this Agreement or any Note held by such
Lender or (y) any election made pursuant to Section 1.10(b).
1.12 LENDING OFFICES; CHANGES THERETO. (a) Each Lender may at any time
or from time to time designate, by written notice to the Administrative Agent to
the extent not already reflected on Schedule II, one or more lending offices
(which, for this purpose, may include Affiliates of the respective Lender) for
the various Loans made, and Letters of Credit participated in, by such Lender
hereunder; provided that, for designations made after the Effective Date, to the
extent such designation shall result in increased costs under Section 1.10, 2.06
or 4.04 in excess of those which would be charged in the absence of such
designation of a different lending office (including a different Affiliate of
the respective Lender), then the Borrower shall not be obligated to pay such
excess increased costs (although the Borrower, in accordance with and pursuant
to the other provisions of this Agreement, shall be obligated to pay the costs
which would apply in the absence of such designation and any subsequent
increased costs of the type described above resulting from changes after the
date of the respective designation). Each lending office and Affiliate of any
Lender designated as provided above shall, for all purposes of this Agreement,
be treated in the same manner as the respective Lender (and shall be entitled to
all indemnities and similar provisions in respect of its acting as such
hereunder).
(b) Each Lender agrees that on the occurrence of any event giving
rise to the operation of Section 1.10(a)(ii) or (iii), Section 1.10(c), Section
2.06 or Section 4.04 with respect to such Lender, it will, if requested by the
Borrower, use reasonable efforts (subject to overall policy considerations of
such Lender) to designate another lending office for any Loans or Letters of
Credit affected by such event, PROVIDED that such designation is made on such
terms that such Lender and its lending office suffer no economic, legal or
regulatory disadvantage, with the object of avoiding the consequence of the
event giving rise to the operation of such Section.
10
<PAGE>
Nothing in this Section 1.12 shall affect or postpone any of the obligations of
the Borrower or the right of any Lender provided in Sections 1.10, 2.06 and
4.04.
1.13 REPLACEMENT OF LENDERS. (x) If any Lender becomes a Defaulting
Lender or otherwise defaults in its obligations to make Loans or fund Unpaid
Drawings, (y) upon the occurrence of an event giving rise to the operation of
Section 1.10(a)(ii) or (iii), Section 1.10(c), Section 2.06 or Section 4.04 with
respect to any Lender which results in such Lender charging to the Borrower
increased costs in excess of those being generally charged by the other Lenders
or (z) in the case of certain refusals by a Lender to consent to certain
proposed changes, waivers, discharges or terminations with respect to this
Agreement which have been approved by the Required Lenders as (and to the
extent) provided in Section 13.12, the Borrower shall have the right, if no
Default under Section 10.01 or 10.05 and no Event of Default then exists (or, in
the case of preceding clause (z), no Default under Section 10.01 or 10.05 and no
Event of Default will exist immediately after giving effect to such
replacement), to replace such Lender (the "Replaced Lender") with one or more
other Eligible Transferees, none of whom shall constitute a Defaulting Lender at
the time of such replacement (collectively, the "Replacement Lender"), each of
whom shall be required to be reasonably acceptable to the Administrative Agent;
PROVIDED that (i) at the time of any replacement pursuant to this Section 1.13,
the Replacement Lender shall enter into one or more Assignment and Assumption
Agreements pursuant to Section 13.04(b) (and with all fees payable pursuant to
said Section 13.04(b) to be paid by the Replacement Lender) pursuant to which
the Replacement Lender shall acquire the Commitment, and outstanding Revolving
Loans of, and participations in Letters of Credit by, the Replaced Lender and,
in connection therewith, shall pay to (x) the Replaced Lender in respect thereof
an amount equal to the sum of (I) the principal of, and all accrued interest on,
all outstanding Loans of the Replaced Lender, (II) all Unpaid Drawings that have
been funded by (and not reimbursed to) such Replaced Lender, together with all
then unpaid interest with respect thereto at such time and (III) all accrued,
but theretofore unpaid, Fees owing to the Replaced Lender pursuant to Section
3.01, (y) each Issuing Lender an amount equal to such Replaced Lender's
Percentage of any Unpaid Drawing (which at such time remains an Unpaid Drawing)
to the extent such amount was not theretofore funded by such Replaced Lender to
such Issuing Lender and (z) the Swingline Lender an amount equal to such
Replaced Lender's Percentage of any Mandatory Borrowings to the extent such
amount was not theretofore funded by such Replaced Lender to the Swingline
Lender and (ii) all obligations of the Borrower due and owing to the Replaced
Lender at such time (other than those specifically described in clause (i) above
in respect of which the assignment purchase price has been, or is concurrently
being, paid) shall be paid in full to such Replaced Lender concurrently with
such replacement. Upon the execution of the respective Assignment and Assumption
Agreements, the payment of amounts referred to in clauses (i) and (ii) above,
recordation of the assignment on the Register by the Administrative Agent
pursuant to Section 13.15 and, if so requested by the Replacement Lender,
delivery to the Replacement Lender of the appropriate Note executed by the
Borrower, the Replacement Lender shall become a Lender hereunder and the
Replaced Lender shall cease to constitute a Lender hereunder, except with
respect to indemnification provisions under this Agreement (including, without
limitation, Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 13.01), which shall
survive as to such Replaced Lender.
11
<PAGE>
SECTION 2. LETTERS OF CREDIT.
2.01 LETTERS OF CREDIT. (a) Subject to and upon the terms and
conditions set forth herein, the Borrower may request that any Issuing Lender
issue, at any time and from time to time on and after the Effective Date and
prior to the third Business Day prior to the Maturity Date, for the account of
the Borrower and for the benefit of any holder (or any trustee, agent or other
similar representative for any such holders) of L/C Supportable Obligations of
the Borrower or any of its Subsidiaries, an irrevocable sight standby letter of
credit, in a form customarily used by such Issuing Lender or in such other form
as has been approved by such Issuing Lender (each such standby letter of credit,
a "Letter of Credit") in support of such L/C Supportable Obligations. All
Letters of Credit shall be denominated in Dollars.
(b) Each Issuing Lender hereby agrees that it will (subject to terms
and conditions contained herein), at any time and from time to time on and after
the Effective Date and prior to the third Business Day prior to the Maturity
Date, following its receipt of the respective Letter of Credit Request, issue
for the account of the Borrower, subject to the terms and conditions of this
Agreement, one or more Letters of Credit in support of such L/C Supportable
Obligations of the Borrower or any of its Subsidiaries as are permitted to
remain outstanding hereunder without giving rise to a Default or an Event of
Default, PROVIDED that the Issuing Lender shall be under no obligation to issue
any Letter of Credit of the types described above if at the time of such
issuance:
(i) any order, judgment or decree of any governmental authority
or arbitrator shall purport by its terms to enjoin or restrain such Issuing
Lender from issuing such Letter of Credit or any requirement of law applicable
to such Issuing Lender or any request or directive (whether or not having the
force of law) from any governmental authority with jurisdiction over such
Issuing Lender shall prohibit, or request that such Issuing Lender refrain from,
the issuance of letters of credit generally or such Letter of Credit in
particular or shall impose upon such Issuing Lender with respect to such Letter
of Credit any restriction or reserve or capital requirement (for which such
Issuing Lender is not otherwise compensated) not in effect on the Effective
Date, or any unreimbursed loss, cost or expense which was not applicable or in
effect with respect to such Issuing Lender as of the date hereof and which such
Issuing Lender reasonably and in good faith deems material to it; or
(ii) such Issuing Lender shall have received notice from the
Required Lenders prior to the issuance of such Letter of Credit of the type
described in the penultimate sentence of Section 2.03(b).
2.02 MAXIMUM LETTER OF CREDIT OUTSTANDINGS; FINAL MATURITIES.
Notwithstanding anything to the contrary contained in this Agreement, (i) no
Letter of Credit shall be issued the Stated Amount of which, when added to the
Letter of Credit Outstandings (exclusive of Unpaid Drawings which are repaid on
the date of, and prior to the issuance of, the respective Letter of Credit) at
such time would exceed either (x) $5,000,000 or (y) when added to the sum of (I)
the aggregate principal amount of all Revolving Loans then outstanding and (II)
the aggregate principal amount of all Swingline Loans then outstanding, the
Total Commitment at such time
12
<PAGE>
and (ii) each Letter of Credit shall by its terms terminate on or before the
earlier of (x) the date which occurs 12 months after the date of the issuance
thereof (although any such Letter of Credit may be extendible for successive
periods of up to 12 months, but not beyond the third Business Day prior to the
Maturity Date, on terms acceptable to the Issuing Lender thereof).
(b) Notwithstanding the foregoing, in the event a Lender Default
exists, the Issuing Lender shall not be required to issue any Letter of Credit
unless the Issuing Lender has entered into arrangements satisfactory to it and
the Borrower to eliminate the Issuing Lender's risk with respect to the
participation in Letters of Credit of the Defaulting Lender or Lenders,
including by cash collateralizing such Defaulting Lender's or Lenders'
Percentage of the Letter of Credit Outstandings.
2.03 LETTER OF CREDIT REQUESTS; MINIMUM STATED AMOUNT. (a) Whenever
the Borrower desires that a Letter of Credit be issued for its account, the
Borrower shall give the Administrative Agent and the respective Issuing Lender
at least two Business Days' (or such shorter period as is acceptable to the
respective Issuing Lender) written (including by means of facsimile
transmission) notice thereof. Each such notice shall be in the form of Exhibit C
(each a "Letter of Credit Request").
(b) The making of each Letter of Credit Request shall be deemed to be
a representation and warranty by the Borrower that (i) such Letter of Credit may
be issued in accordance with, and will not violate the requirements of, Section
2.02 and (ii) all of the applicable conditions set forth in Section 5 and 6
shall be met at the time of such issuance. Unless the respective Issuing Lender
has received notice from the Required Lenders before it issues a Letter of
Credit that one or more of the conditions specified in Section 5 are not
satisfied on the Effective Date or Section 6 are not then satisfied, or that the
issuance of such Letter of Credit would violate Section 2.02, then such Issuing
Lender may issue the requested Letter of Credit for the account of the Borrower
in accordance with such Issuing Lender's usual and customary practices. Upon the
issuance of or amendment or modification to any Letter of Credit, the respective
Issuing Lender shall promptly notify the Borrower and the Administrative Agent,
in writing, of such issuance, amendment or modification and such notice shall be
accompanied by a copy of such issuance, amendment or modification. Upon receipt
of such notice, the Administrative Agent shall promptly notify the Lenders of
such issuance, amendment or modification.
(c) The initial Stated Amount of each Letter of Credit shall not be
less than $100,000 or such lesser amount as is acceptable to the respective
Issuing Lender.
2.04 LETTER OF CREDIT PARTICIPATIONS. (a) Immediately upon the
issuance by each Issuing Lender of any Letter of Credit, such Issuing Lender
shall be deemed to have sold and transferred to each Lender, other than such
Issuing Lender (each such Lender, in its capacity under this Section 2.04, a
"Participant"), and each such Participant shall be deemed irrevocably and
unconditionally to have purchased and received from such Issuing Lender, without
recourse or warranty, an undivided interest and participation in, to the extent
of such Participant's Percentage, such Letter of Credit, each drawing or payment
made thereunder and the obligations of the Borrower under this Agreement with
respect thereto, and any security therefor or guaranty
13
<PAGE>
pertaining thereto (although Letter of Credit Fees shall be paid directly to the
Administrative Agent for the ratable account of the Participants as provided in
Section 3.01(b) and the Participants shall have no right to receive any portion
of any Facing Fee). Upon any change in the Commitments or Percentages of the
Lenders pursuant to Section 1.13 or 13.04, it is hereby agreed that, with
respect to all outstanding Letters of Credit and Unpaid Drawings, there shall be
an automatic adjustment to the participations pursuant to this Section 2.04 to
reflect the new Percentages of the assignor and assignee Lender, as the case may
be.
(b) In determining whether to pay under any Letter of Credit issued
by it, no Issuing Lender shall have any obligation relative to the other Lenders
other than to confirm that any documents required to be delivered under such
Letter of Credit appear to have been delivered and that they appear to
substantially comply on their face with the requirements of such Letter of
Credit. Any action taken or omitted to be taken by any Issuing Lender under or
in connection with any Letter of Credit issued by it if taken or omitted in the
absence of gross negligence or willful misconduct, shall not create for such
Issuing Lender any resulting liability to the Borrower, any other Credit Party,
any Lender or any other Person.
(c) In the event that any Issuing Lender makes any payment under any
Letter of Credit issued by it and the Borrower shall not have reimbursed such
amount in full to such Issuing Lender pursuant to Section 2.05(a), such Issuing
Lender shall promptly notify the Administrative Agent, which shall promptly
notify each Participant of such failure, and each Participant shall promptly and
unconditionally pay to such Issuing Lender the amount of such Participant's
Percentage of such unreimbursed payment, in Dollars and in the same day funds.
If the Administrative Agent so notifies, prior to 11:00 A.M. (New York time) on
any Business Day, any Participant required to fund a payment under a Letter of
Credit, such Participant shall make available to the respective Issuing Lender
in Dollars such Participant's Percentage of the amount of such payment on such
Business Day in same day funds. If and to the extent such Participant shall not
have made its Percentage of the amount of such payment available to the
respective Issuing Lender on the date of the respective drawing under any Letter
of Credit, such Participant agrees to pay to such Issuing Lender, forthwith on
demand such amount, together with interest thereon, for each day from the date
of the respective drawing until the date such amount is paid to such Issuing
Lender at the overnight Federal Funds Rate until the third day after the date
upon which such Participant received notice of the respective payment from the
Administrative Agent or the respective Issuing Lender, and at the interest rate
applicable to Base Rate Loans for each day thereafter. The failure of any
Participant to make available to the respective Issuing Lender its Percentage of
any payment under any Letter of Credit shall not relieve any other Participant
of its obligation hereunder to make available to such Issuing Lender its
Percentage of any Letter of Credit on the date required, as specified above, but
no Participant shall be responsible for the failure of any other Participant to
make available to such Issuing Lender such other Participant's Percentage of any
such payment.
(d) Whenever an Issuing Lender receives a payment of a reimbursement
obligation as to which it has received any payments from the Participants
pursuant to clause (c) above, such Issuing Lender shall pay to each Participant
which has paid its Percentage thereof, in Dollars and in same day funds, an
amount equal to such Participant's share (based upon the proportionate aggregate
amount originally funded by such Participant to the aggregate
14
<PAGE>
amount funded by all Participants) of the principal amount of
such reimbursement obligation and interest thereon accruing after the purchase
of the respective participations.
(e) Upon the request of any Participant, each Issuing Lender
shall furnish to such Participant copies of any standby Letter of Credit issued
by it and such other documentation as may reasonably be requested by such
Participant.
(f) The obligations of the Participants to make payments to
each Issuing Lender with respect to Letters of Credit issued by it shall be
irrevocable and not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Credit Documents;
(ii) the existence of any claim, setoff, defense or
other right which the Borrower or any of its Subsidiaries or Affiliates
may have at any time against a beneficiary named in a Letter of Credit,
any transferee of any Letter of Credit (or any Person for whom any such
transferee may be acting), the Administrative Agent, any Participant,
or any other Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower
or any Subsidiary or Affiliate of the Borrower and the beneficiary
named in any such Letter of Credit);
(iii) any draft, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of any of the Credit
Documents; or
(v) the occurrence of any Default or Event of
Default.
2.05 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. (a) The
Borrower agrees to reimburse the respective Issuing Lender, by making payment in
Dollars directly to such Issuing Lender, for any payment or disbursement made by
such Issuing Lender under any Letter of Credit issued for the account of such
Borrower (with each such amount so paid, until reimbursed, and "Unpaid Drawing")
immediately after, and in any event on the date of, such payment or
disbursement, with interest on the amount so paid or disbursed by such Issuing
Lender, to the extent not reimbursed prior to 2:00 P.M. (New York time) on the
date of such payment or
15
<PAGE>
disbursement, from and including the date paid or disbursed to but excluding the
date such Issuing Lender was reimbursed by the Borrower therefor at a rate per
annum which shall be the Base Rate in effect from time to time plus the
Applicable Margin for Base Rate Loans; PROVIDED, HOWEVER, to the extent such
amounts are not reimbursed prior to 12:00 Noon (New York time) on the third
Business Day following the receipt by the Borrower of notice of such payment or
disbursement or upon the occurrence of a Default or an Event of Default under
Section 10.05, interest shall thereafter accrue on the amounts so paid or
disbursed by such Issuing Lender (and until reimbursed by the Borrower) at a
rate per annum which shall be the Base Rate in effect from time to time plus the
Applicable Margin for Base Rate Loans plus 2%, in each such case, with interest
to be payable on demand. The respective Issuing Lender shall give the Borrower
prompt written notice of each Drawing under any Letter of Credit (each a
"Drawing"), PROVIDED that the failure to give any such notice shall in no way
affect, impair or diminish the Borrower's obligations hereunder.
(b) The obligations of the Borrower under this Section 2.05 to
reimburse each Issuing Lender with respect to Unpaid Drawings (including, in
each case, interest thereon) shall be absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim or defense to
payment which the Borrower may have or have had against any Lender (including in
its capacity as issuer of the Letter of Credit or as Participant), including,
without limitation, any defense based upon the failure of any Drawing to conform
to the terms of the Letter of Credit or any nonapplication or misapplication by
the beneficiary of the proceeds of such Drawing; PROVIDED that any reimbursement
made by the Borrower shall be without prejudice to any claim it may have against
such Issuing Lender as a result of a such Issuing Lender's gross negligence or
willful misconduct.
2.06 INCREASED COSTS. If at any time after the Effective Date,
the introduction of or any change in any applicable law, rule, regulation,
order, guideline or request or in the interpretation or administration thereof
by any governmental authority charged with the interpretation or administration
thereof, or compliance by any Issuing Lender or any Participant with any request
or directive by any such authority (whether or not having the force of law),
shall either (i) impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against letters of credit issued by any Issuing
Lender or participated in by any Participant, or (ii) impose on any Issuing
Lender or any Participant any other conditions relating, directly or indirectly,
to this Agreement; and the result of any of the foregoing is to increase the
cost to any Issuing Lender or any Participant of issuing, maintaining or
participating in any Letter of Credit, or reduce the amount of any sum received
or receivable by any Issuing Lender or any Participant hereunder or reduce the
rate of return on its capital with respect to Letters of Credit (except for
changes in the rate of tax on, or determined by reference to, the net income or
profits of such Issuing Lender or such Participant pursuant to the laws of the
jurisdiction in which it is organized or in which its principal office or
applicable lending office is located or any subdivision thereof or therein),
then, upon written demand to the Borrower, as the case may be, by such Issuing
Lender or such Participant (a copy of which certificate shall be sent by such
Issuing Lender or such Participant to the Administrative Agent), the Borrower
shall, subject to the provisions of Section 13.17 (to extent applicable), pay to
such Issuing Lender or such Participant such additional amount or amounts as
will compensate such Lender or Participant for such increased cost or reduction
in the amount receivable or reduction on the rate of return on its capital. Any
Issuing Lender or any Participant, upon determining that any additional amounts
will be payable pursuant to this Section 2.06, will give prompt written notice
thereof to the Borrower, which notice shall include a certificate submitted to
the Borrower by such Issuing Lender or such Participant (a copy of which
certificate shall be sent by such Issuing Lender or such Participant to the
Administrative Agent), setting forth in reasonable detail the basis for the
16
<PAGE>
calculation of such additional amount or amounts necessary to compensate such
Issuing Lender or such Participant. The certificate required to be delivered
pursuant to this Section 2.06 shall, absent manifest error, be final and
conclusive and binding on the Borrower.
SECTION 3. COMMITMENT COMMISSION; FEES; REDUCTIONS OF
COMMITMENT.
3.01 FEES. (a) The Borrower agrees to pay to the
Administrative Agent in Dollars for distribution to each Lender a commitment
commission (the "Commitment Commission") for the period from and including the
Effective Date to but excluding the Maturity Date (or such earlier date as the
Total Commitment shall have been terminated), computed at a rate for each day
equal to 1/2 of 1% per annum of the daily average Unutilized Commitment of such
Lender. Accrued Commitment Commission shall be due and payable quarterly in
arrears on each Quarterly Payment Date and on the Maturity Date or such earlier
date upon which the Total Commitment is terminated.
(b) The Borrower agrees to pay to the Administrative Agent for
distribution to each Lender (based on each such Lender's respective Percentage)
in Dollars a fee in respect of each Letter of Credit issued hereunder for the
account of the Borrower (with all fees payable as described in this clause (b)
being herein referred to as "Letter of Credit Fees"), for the period from and
including the date of issuance of the respective Letter of Credit to and
including the date of termination of such Letter of Credit, computed at a rate
per annum equal to the Applicable Margin for Eurodollar Loans on the daily
Stated Amount of such Letter of Credit. Accrued Letter of Credit Fees shall be
due and payable by the Borrower quarterly in arrears on each Quarterly Payment
Date and on the first day after the termination of the Total Commitment upon
which no Letters of Credit remain outstanding.
(c) The Borrower agrees to pay to each Issuing Lender, for its
own account, a facing fee in respect of each Letter of Credit issued by such
Issuing Lender for the account of the Borrower (the "Facing Fee"), for the
period from and including the date of issuance of such Letter of Credit to and
including the date of the termination of such Letter of Credit, computed at a
rate equal to 1/4 of 1% per annum of the daily Stated Amount of such Letter of
Credit, PROVIDED that in no event shall the annual Facing Fee with respect to
any Letter of Credit be less than $500 (being herein called the "Minimum Facing
Fee Amount" for any Letter of Credit), it being agreed that, on the date of
issuance of any Letter of Credit and on each anniversary thereof prior to the
termination of such Letter of Credit, if the Minimum Facing Fee Amount will
exceed the amount of Facing Fees that will accrue with respect to such Letter of
Credit for the immediately succeeding 12 month period, the full the Minimum
Facing Fee Amount shall be payable on the date of issuance of such Letter of
Credit and on each anniversary thereof prior to the termination of such Letter
of Credit. Except as otherwise provided in the proviso to the immediately
preceding sentence, accrued Facing Fees shall be due and payable quarterly in
arrears on each Quarterly Payment Date and upon the first day after the
termination of the Total Commitment upon which no Letters of Credit remain
outstanding.
(d) The Borrower shall pay, upon each payment under, issuance
of, or amendment to, any Letter of Credit, such amount as shall at the time of
such event be the
17
<PAGE>
administrative charge and the reasonable expenses which the applicable Issuing
Lender is generally imposing in connection with such occurrence with respect to
letters of credit.
(e) The Borrower agrees to pay to the Administrative Agent,
for its own account, such other fees as have been agreed to in writing by the
Borrower and the Administrative Agent.
3.02 VOLUNTARY TERMINATION OF UNUTILIZED COMMITMENTS. Upon at
least three Business Day's prior notice to the Administrative Agent at the
Notice Office (which notice the Administrative Agent shall promptly transmit to
each of the Lenders), the Borrower shall have the right, at any time or from
time to time, without premium or penalty, to terminate the Total Unutilized
Commitment, in whole or in part, in an integral multiple of $1,000,000 in the
case of partial reductions to the Total Commitment, PROVIDED that each such
reduction shall apply proportionately to permanently reduce the Commitment of
each Lender.
3.03 MANDATORY REDUCTION OF COMMITMENTS. (a) The Total
Commitment (and the Commitment of each Lender) shall terminate in its entirety
on November 30, 1999 unless the Effective Date has occurred on or before such
date.
(b) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date on or after the Effective Date on
which the Borrower receives any cash proceeds from any sale of any Shares (other
than cash proceeds from such sales of Shares (other than the Superior Option
Shares) up to an aggregate amount which, when added to the aggregate amount of
cash proceeds received by the Borrower from the incurrence by it of Indebtedness
(other than Loans) which is not (or was not) required to be applied to reduce
the Total Commitment pursuant to Section 3.03(c), equals $10,000,000), the Total
Commitment shall be permanently reduced on such date by an amount equal to 100%
of the Net Sale Proceeds from such sale.
(c) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date on or after the Effective Date on
which the Borrower receives any cash proceeds from any incurrence of
Indebtedness for borrowed money (other than Indebtedness for borrowed money
permitted to be incurred pursuant to Section 9.04 as such Section is in effect
on the Effective Date) by the Borrower, the Total Commitment shall be
permanently reduced on such date by an amount equal to 100% of the Net Debt
Proceeds of the respective incurrence of Indebtedness.
(d) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date on or after the Effective Date on
which the Borrower receives any cash proceeds from any equity issuance or
capital contributions (other than cash proceeds received (i) from the issuance
by the Borrower of (A) options to purchase shares of its common stock or (B)
shares of its common stock as a result of the exercise of any options with
regard thereto, in either case to past or present officers, directors, employees
and consultants of the Borrower in connection with, or pursuant to, employee
stock option plans or similar incentive plans so long as the aggregate amount
excluded pursuant to this clause (i) does not exceed $20,000,000 and (ii) from
the exercise of any warrants to purchase common stock of the Borrower existing
on the Effective Date), the Total Commitment shall be permanently reduced
18
<PAGE>
on such date by an amount equal to 50% of the cash proceeds of such capital
contribution or sale or issuance (net of underwriting or placement discounts and
commissions and other costs and expenses associated therewith).
(e) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, on each date on or after the Effective Date on
which the Borrower receives any cash proceeds from any Recovery Event (other
than up to $5,000,000 in aggregate cash proceeds from all Recovery Events), the
Total Commitment shall be permanently reduced on such date by an amount equal to
100% of the Net Insurance Proceeds of such Recovery Event.
(f) In addition to any other mandatory commitment reductions
pursuant to this Section 3.03, the Total Commitment (and the Commitment of each
Lender) shall terminate in its entirety on the earlier of (i) the date on which
a Change of Control occurs and (ii) the Maturity Date.
(g) Each reduction to the Total Commitment pursuant to this
Section 3.03 shall apply proportionately to permanently reduce the Commitment of
each Lender.
SECTION 4. PREPAYMENTS; PAYMENTS; TAXES.
4.01 VOLUNTARY PREPAYMENTS. The Borrower shall have the right
to prepay the Loans, without premium or penalty, in whole or in part at any time
and from time to time on the following terms and conditions: (i) the Borrower
shall give the Administrative Agent prior to 12:00 Noon (New York time) at the
Notice Office (x) in the case of Base Rate Loans, at least one Business Day's
prior written notice (or telephonic notice promptly confirmed in writing) of its
intent to prepay such Base Rate Loans (or same day notice in the case of a
prepayment of Swingline Loans) and (y) in the case of Eurodollar Loans, at least
two Business Days' prior written notice (or telephonic notice promptly confirmed
in writing) of its intent to prepay such Eurodollar Loans, the principal amount
of such prepayment and the Types of Loans to be prepaid and, in the case of
Eurodollar Loans, the specific Borrowing or Borrowings pursuant to which made,
which notice the Administrative Agent shall, except in the case of Swingline
Loans, promptly transmit to each of the Lenders; (ii) each prepayment of
Revolving Loans pursuant to this Section 4.01(a) shall be in an aggregate
principal amount of at least $500,000 and each prepayment of Swingline Loans
pursuant to this Section 4.01(a) shall be in an aggregate principal amount of at
least $50,000, PROVIDED that if any partial prepayment of Eurodollar Loans made
pursuant to any Borrowing shall reduce the outstanding Eurodollar Loans made
pursuant to such Borrowing to an amount less than the Minimum Borrowing Amount
applicable thereto, then such Borrowing may not be continued as a Borrowing of
Eurodollar Loans and any election of an Interest Period with respect thereto
given by the Borrower, shall have no force or effect, (iii) each prepayment
pursuant to this Section 4.01, in respect of any Revolving Loans made pursuant
to a Borrowing shall be applied PRO RATA among such Revolving Loans and (iv)
each prepayment of Eurodollar Loans made pursuant to this Section 4.01 on a day
which is not the last day of an Interest Period applicable thereto shall be
accompanied by the payment of all amounts owing in connection therewith pursuant
to Section 1.11.
19
<PAGE>
4.02 MANDATORY REPAYMENTS. (a) On any day on which the sum of
(I) the aggregate outstanding principal amount of all Revolving Loans (after
giving effect to all other repayments thereof on such date), (II) the aggregate
outstanding principal amount of all Swingline Loans (after giving effect to all
other repayments thereof on such date) and (III) the aggregate amount of all
Letter of Credit Outstandings, exceeds the Total Commitment as then in effect,
the Borrower shall prepay on such day the principal of Swingline Loans and,
after all Swingline Loans have been repaid in full or no Swingline Loans are
outstanding, Revolving Loans in an amount equal to such excess. If, after giving
effect to the prepayment of all outstanding Swingline Loans and Revolving Loans,
the aggregate amount of the Letter of Credit Outstandings exceeds the Total
Commitment as then in effect, the Borrower shall pay to the Administrative Agent
at the Payment Office on such day an amount of cash equal to the amount of such
excess (up to a maximum amount equal to the Letter of Credit Outstandings at
such time), such cash to be held as security for all obligations of the Borrower
to the Issuing Lender and the Lenders hereunder in a cash collateral account to
be established by the Administrative Agent.
(b) Notwithstanding anything to the contrary contained in this
Agreement or in any other Credit Document, (i) all then outstanding Revolving
Loans shall be repaid in full on the Maturity Date, (ii) all then outstanding
Swingline Loans shall be repaid in full on the Swingline Expiry Date and (iii)
all then outstanding Loans shall be repaid in full on the date on which a Change
of Control occurs.
(c) On any day on which the Asset Coverage Ratio is less than
2.00:1.00 (based on the most recently delivered Valuation Certificate, subject
to adjustments contemplated by Section 8.01(j)), the Borrower shall prepay
principal of outstanding Loans and/or cash collateralize outstanding Letters of
Credit, in accordance with the immediately following sentence, in an aggregate
amount necessary to increase the Asset Coverage Ratio to at least 2.00:1.00. Any
prepayment required by the immediately preceding sentence shall be applied (x)
first, to prepay outstanding Swingline Loans, (y) second, to the extent all
Swingline Loans have been prepaid in full, to prepay outstanding Revolving Loans
and (z) third, to the extent all Loans have been prepaid in full, to cash
collateralize outstanding Letters of Credit. For purposes of calculating the
Asset Coverage Ratio under this Section 4.02(c), (i) the Value of the Pledged
Shares shall be based on the most recent Valuation Certificate delivered
pursuant to Section 8.01(j), subject to the adjustments contemplated by said
Section 8.01(j) and (ii) the aggregate amount of Letter of Credit Outstandings
shall be deemed to be reduced by the Stated Amount of outstanding Letters of
Credit cash collateralized pursuant to clause (z) of the immediately preceding
sentence (so long as all outstanding Loans have been repaid in full).
(d) With respect to each repayment of Revolving Loans required
by this Section 4.02, the Borrower may designate the Types of Revolving Loans
which are to be repaid and, in the case of Eurodollar Loans, the specific
Borrowing or Borrowings pursuant to which made, PROVIDED that: (i) repayments of
Eurodollar Loans pursuant to this Section 4.02 may only be made on the last day
of an Interest Period applicable thereto unless all Eurodollar Loans with
Interest Periods ending on such date of required repayment and all Base Rate
Loans have been paid in full; (ii) if any repayment of Eurodollar Loans made
pursuant to a single Borrowing shall reduce the outstanding Loans made pursuant
to such Borrowing to an amount less than the
20
<PAGE>
relevant Minimum Borrowing Amount, such Borrowing shall be converted at the end
of the then current Interest Period into a Borrowing of Base Rate Loans; and
(iii) each repayment of any Loans made pursuant to a Borrowing shall be applied
PRO RATA among such Loans. In the absence of a designation by the Borrower as
described in the preceding sentence, the Administrative Agent shall, subject to
the above, make such designation in its sole discretion.
4.03 METHOD AND PLACE OF PAYMENT. Except as otherwise
specifically provided herein, all payments under this Agreement or any Note
shall be made to the Administrative Agent for the account of the Lender or
Lenders entitled thereto not later than 12:00 Noon (New York time) on the date
when due and shall be made in Dollars in immediately available funds at the
Payment Office. The Administrative Agent will thereafter cause to be distributed
on the same day (if payment was actually received by the Administrative Agent
prior to 12:00 Noon (New York time)) like funds relating to the payment of
principal or interest ratably to the Lenders entitled thereto. Any payments
under this Agreement which are made later than 12:00 Noon (New York time) shall
be deemed to have been made on the next succeeding Business Day. Whenever any
payment to be made hereunder or under any Note shall be stated to be due on a
day which is not a Business Day, the due date thereof shall be extended to the
next succeeding Business Day and, with respect to payments of principal,
interest shall be payable at the applicable rate during such extension.
4.04 NET PAYMENTS. (a) All payments made by the Borrower
hereunder or under any Note will be made without setoff, counterclaim or other
defense. Except as provided in Section 4.04(b), all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payments
(but excluding, except as provided in the second succeeding sentence, any tax
imposed on or measured by the net income or profits or franchise taxes based on
net income of a Lender pursuant to the laws of the jurisdiction in which it is
organized or the jurisdiction in which the principal office or applicable
lending office of such Lender is located or any subdivision thereof or therein)
and all interest, penalties or similar liabilities with respect thereto (all
such non-excluded taxes, levies, imposts, duties, fees, assessments or other
charges being referred to collectively as "Taxes"). If any Taxes are so levied
or imposed, the Borrower agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every payment of all amounts due
under this Agreement or under any Note, after withholding or deduction for or on
account of any Taxes, will not be less than the amount provided for herein or in
such Note. If any amounts are payable in respect of Taxes pursuant to the
preceding sentence, the Borrower agrees to reimburse each Lender, upon the
written request of such Lender, for taxes imposed on or measured by the net
income or profits of such Lender pursuant to the laws of the jurisdiction in
which the principal office or applicable lending office of such Lender is
located or under the laws of any political subdivision or taxing authority of
any such jurisdiction in which the principal office or applicable lending office
of such Lender is located and for any withholding of taxes as such Lender shall
determine are payable by, or withheld from, such Lender in respect of such
amounts so paid to or on behalf of such Lender pursuant to the preceding
sentence and in respect of any amounts paid to or on behalf of such Lender
pursuant to this sentence. If the Borrower pays any additional amount under this
Section 4.04 to a Lender and such Lender determines in its sole discretion that
21
<PAGE>
it has actually received or realized in connection therewith any refund or any
reduction of, or credit against, its Tax liabilities in or with respect to the
taxable year in which the additional amount is paid, such Lender shall pay to
the Borrower an amount that the Lender shall, in its sole discretion, determine
is equal to the net benefit, after tax, which was obtained by the Lender in such
year as a consequence of such refund, reduction or credit. The Borrower will
furnish to the Administrative Agent within 45 days after the date the payment of
any Taxes is due pursuant to applicable law certified copies of tax receipts
evidencing such payment by the Borrower. The Borrower agrees to indemnify and
hold harmless each Lender, and reimburse such Lender upon its written request,
for the amount of any Taxes so levied or imposed and paid by such Lender.
(b) Each Lender that is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) agrees to deliver to the
Borrower and the Administrative Agent on or prior to the Effective Date, or in
the case of a Lender that is an assignee or transferee of an interest under this
Agreement pursuant to Section 1.13 or 13.04 (unless the respective Lender was
already a Lender hereunder immediately prior to such assignment or transfer), on
the date of such assignment or transfer to such Lender, (i) two accurate and
complete original signed copies of Internal Revenue Service Form W-8ECI or Form
W-8BEN (with respect to a complete exemption under an income tax treaty) (or
successor forms) certifying to such Lender's entitlement as of such date to a
complete exemption from United States withholding tax with respect to payments
to be made under this Agreement and under any Note, or (ii) if the Lender is not
a "bank" within the meaning of Section 881(c)(3)(A) of the Code and cannot
deliver either Internal Revenue Service Form W-8ECI or Form W-8BEN (with respect
to a complete exemption under an income tax treaty) (or successor forms)
pursuant to clause (i) above, (x) a certificate substantially in the form of
Exhibit D (any such certificate, a "Section 4.04(b)(ii) Certificate") and (y)
two accurate and complete original signed copies of Internal Revenue Service
Form W-8BEN (with respect to the portfolio interest exemption) (or successor
form) certifying to such Lender's entitlement to a complete exemption from
United States withholding tax with respect to payments of interest to be made
under this Agreement and under any Note. In addition, each Lender agrees that
from time to time after the Effective Date, when a lapse in time or change in
circumstances renders the previous certification obsolete or inaccurate in any
material respect, it will deliver to the Borrower or the Administrative Agent
two new accurate and complete original signed copies of Internal Revenue Service
Form W-8ECI, Form W-8BEN (with respect to the benefits of any income tax
treaty), Form W-8BEN (with respect to the portfolio interest exemption), and a
Section 4.04(b)(ii) Certificate, as the case may be, and such other forms as may
be required in order to confirm or establish the entitlement of such Lender to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note, or it shall immediately
notify the Borrower and the Administrative Agent of its inability to deliver any
such Form or Certificate in which case such Lender shall not be required to
deliver any such Form or Certificate pursuant to this Section 4.04(b).
Notwithstanding anything to the contrary contained in Section 4.04(a), but
subject to Section 13.04(b) and the immediately succeeding sentence, (x) the
Borrower shall be entitled, to the extent it is required to do so by law, to
deduct or withhold income or similar taxes imposed by the United States (or any
political subdivision or taxing authority thereof or therein) from interest,
fees or other amounts payable hereunder for the account of any Lender which is
not a United States person (as such term is defined in Section 7701(a)(30) of
the Code) for U.S.
22
<PAGE>
Federal income tax purposes to the extent that such Lender has not provided to
the Borrower U.S. Internal Revenue Service Forms that establish a complete
exemption from such deduction or withholding and (y) the Borrower shall not be
obligated pursuant to Section 4.04(a) hereof to gross-up payments to be made to
a Lender in respect of income or similar taxes imposed by the United States if
(I) such Lender has not provided to the Borrower the Internal Revenue Service
Forms required to be provided to the Borrower pursuant to this Section 4.04(b)
or (II) in the case of a payment, other than interest, to a Lender described in
clause (ii) above, to the extent that such forms do not establish a complete
exemption from withholding of such taxes. Notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this Section 4.04
and except as set forth in Section 13.04(b), the Borrower agrees to pay
additional amounts and to indemnify each Lender in the manner set forth in
Section 4.04(a) (without regard to the identity of the jurisdiction requiring
the deduction or withholding) in respect of any amounts deducted or withheld by
it as described in the immediately preceding sentence as a result of any changes
that are effective after the Effective Date in any applicable law, treaty,
governmental rule, regulation, guideline or order, or in the interpretation
thereof, relating to the deducting or withholding of income or similar Taxes.
SECTION 5. CONDITIONS PRECEDENT. The occurrence of the
Effective Date is subject to the satisfaction of the following conditions:
5.01 EXECUTION OF AGREEMENT; NOTES. On or prior to the
Effective Date (i) this Agreement shall have been executed and delivered and
(ii) there shall have been delivered to (x) the Administrative Agent for the
account of each of the Lenders which has requested the same, the appropriate
Revolving Notes executed by the Borrower and (y) the Swingline Lender, the
Swingline Note executed by the Borrower in the amount, maturity and as otherwise
provided herein.
5.02 OPINIONS OF COUNSEL. On the Effective Date, the
Administrative Agent shall have received from (i) Proskauer Rose LLP, U.S.
counsel to the Borrower, an opinion addressed to the Administrative Agent, the
Collateral Agent and each of the Lenders and dated the Effective Date covering
the matters set forth in Exhibit E-1 and (ii) Irwin Mitchell Solicitors, special
U.K. counsel to the Borrower, an opinion addressed to the Administrative Agent,
the Collateral Agent and each of the Lenders and dated the Effective Date
covering the matters set forth in Exhibit E-2.
5.03 CORPORATE DOCUMENTS; PROCEEDINGS; ETC. (a) On the
Effective Date, the Administrative Agent shall have received a certificate,
dated the Effective Date, signed by an Authorized Officer of the Borrower, and
attested to by the Secretary or any Assistant Secretary of the Borrower, in the
form of Exhibit F with appropriate insertions, together with copies of the
certificate of incorporation (or equivalent organizational document) and by-laws
of the Borrower and the resolutions of the Borrower referred to in such
certificate, and all of the foregoing shall be reasonably acceptable to the
Administrative Agent.
(b) All corporate and legal proceedings and all instruments
and agreements in connection with the transactions contemplated by this
Agreement and the other Credit Documents shall be reasonably satisfactory in
form and substance to the Administrative Agent
23
<PAGE>
and the Required Lenders, and the Administrative Agent shall have received all
information and copies of all documents and papers, including records of
corporate proceedings, governmental approvals, good standing certificates and
bring-down telegrams or facsimiles, if any, which the Administrative Agent
reasonably may have requested in connection therewith, such documents and papers
where appropriate to be certified by proper corporate or governmental
authorities.
5.04 EXISTING CREDIT FACILITIES. On the Effective Date, the
total commitments under the Existing Credit Facilities shall have been
terminated, and all loans and notes issued thereunder shall have been repaid in
full, together with interest thereon, all letters of credit issued thereunder
shall have been terminated, or cash collateralized in a manner satisfactory to
the Administrative Agent, and all other amounts owing pursuant to the Existing
Credit Facilities shall have been repaid in full and all documents in respect of
the Existing Credit Facilities and all guaranties with respect thereto shall
have been terminated, and be of no further force or effect except for continuing
indemnification obligations described therein. In addition, the creditors in
respect of each of the Existing Credit Facilities shall have terminated and
released all security interests in and Liens on the assets of the Borrower
created pursuant to the security documentation relating to the respective
Existing Credit Facility, and such creditors shall have returned all such assets
(including any Shares) to the Borrower. The Administrative Agent shall have
received evidence that the matters set forth in this Section 5.04 have been
satisfied on such date.
5.05 ADVERSE CHANGE, ETC. (a) On or prior to the Effective
Date, nothing shall have occurred (and neither the Administrative Agent nor the
Lenders shall have become aware of any facts, conditions or other information
not previously known) which the Administrative Agent or the Required Lenders
shall determine could reasonably be expected to have a material adverse effect
on the rights or remedies of the Administrative Agent or the Lenders, or on the
ability of the Borrower to perform its obligations to the Administrative Agent
and the Lenders or which could reasonably be expected to have a Material Adverse
Effect.
(b) All necessary governmental (domestic and foreign) and
third party approvals and/or consents in connection with the transactions
contemplated by the Credit Documents and otherwise referred to herein or therein
(excluding governmental approvals and/or consents not required to be obtained on
or prior to the Effective Date) shall have been obtained and remain in effect,
and all applicable waiting periods shall have expired without any action being
taken by any competent authority which restrains, prevents, or imposes
materially adverse conditions upon, the consummation of the transactions
contemplated by the Credit Documents or otherwise referred to herein or therein.
Additionally, there shall not exist any judgment, order, injunction or other
restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon the transactions contemplated by the Credit Documents.
5.06 LITIGATION. On the Effective Date, no litigation by any
entity (private or governmental) shall be pending or threatened with respect to
this Agreement, any other Credit Document or any documentation executed in
connection herewith or therewith or the transactions contemplated hereby or
thereby, or which the Administrative Agent or the Required Lenders
24
<PAGE>
shall determine could reasonably be expected to have a material adverse effect
on the transactions contemplated hereby or a Material Adverse Effect.
5.07 PLEDGE AGREEMENTS; DELIVERY OF SHARES. (a) On the
Effective Date, the Borrower shall have duly authorized, executed and delivered
a pledge agreement in the form of Exhibit G-1 (as amended, modified or
supplemented from time to time, the "US Pledge Agreement") and shall have
delivered to the Collateral Agent, as Pledgee thereunder, all of the "Pledged
Stock" referred to therein, together with executed and undated stock powers.
(b) On the Effective Date, the Borrower shall have duly
authorized, executed and delivered a pledge agreement in the form of Exhibit G-2
(as amended, modified or supplemented from time to time, the "UK Pledge
Agreement") and shall have delivered to the Collateral Agent, as Collateral
Agent thereunder, all of the Original Shares referred to therein, together with
executed and undated blank stock transfer forms as provided therein.
5.08 FINANCIAL STATEMENTS. On or prior to the Effective Date,
the Administrative Agent shall have received true and correct copies of the
historical financial statements referred to in Section 7.05(a), which historical
financial statements shall be in form and substance satisfactory to the
Administrative Agent and the Required Lenders.
5.09 SOLVENCY CERTIFICATE. On the Effective Date, the Borrower
shall have delivered to the Administrative Agent a solvency certificate from the
chief financial officer of the Borrower in the form of Exhibit H.
5.10 INITIAL VALUATION CERTIFICATE. On the Effective Date, the
Borrower shall have delivered to the Administrative Agent the initial Valuation
Certificate meeting the requirements of Section 8.01(j).
5.11 FEES, ETC. On the Effective Date, the Borrower shall have
paid to the Administrative Agent and each Lender all costs, fees and expenses
(including, without limitation, reasonable legal fees and expenses) payable to
the Administrative Agent and such Lender to the extent then due.
5.12 REGULATION U. On or prior to the Effective Date, the
Borrower shall have delivered to each Lender a duly completed Form G-3 or Form
U-1, as appropriate, referred to in Regulation U. Each Lender shall be able in
good faith to complete said Form G-3 and Form U-1, as the case may be, showing
that Loans may be extended by the Lenders in an aggregate amount equal to the
Total Commitment, and that said Loans (and the collateral therefor) shall
satisfy the collateral valuation requirements of Regulation U.
The acceptance of the proceeds of the Loans or the making of
any Letter of Credit Request on the Effective Date shall constitute a
representation and warranty by the Borrower to the Administrative Agent and each
of the Lenders that all conditions specified in this Section 5 exist as of that
time. All of the Notes, certificates, legal opinions and other documents and
papers referred to in this Section 5, unless otherwise specified, shall be
delivered to the Administrative Agent at the Notice Office for the account of
each of the Lenders and, except for
25
<PAGE>
the Notes, in sufficient counterparts or copies for each of the Lenders and
shall be in form and substance satisfactory to the Administrative Agent and the
Required Lenders.
SECTION 6. CONDITIONS PRECEDENT TO ALL CREDIT EVENTS. The
obligation of each Lender to make Loans (including Loans made on the Effective
Date, but excluding Mandatory Borrowings to be made thereafter, which shall be
made as provided in Section 1.01(c)), and the obligation of any Issuing Lender
to issue any Letter of Credit, is subject, at the time of each such Credit Event
(except as hereinafter indicated), to the satisfaction of the following
conditions:
6.01 EFFECTIVE DATE. The Effective Date shall have occurred.
6.02 NO DEFAULT; REPRESENTATIONS AND WARRANTIES. At the time
of each such Credit Event and also after giving effect to thereto, (i) there
shall exist no Default or Event of Default and (ii) all representations and
warranties contained herein and in the other Credit Documents shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on such date (it being understood
and agreed that any representation or warranty which by its terms is made as of
a specified date shall be required to be true and correct in all material
respects only as of such specified date).
6.03 NOTICE OF BORROWING; LETTER CREDIT REQUEST. (a) Prior to
the making of each Loan (excluding Swingline Loans), the Administrative Agent
shall have received a Notice of Borrowing meeting the requirements of Section
1.03(a). Prior to the making of any Swingline Loan, the Swingline Lender shall
have received the notice required by Section 1.03(b)(i).
(b) Prior to the issuance of each Letter of Credit, the
Administrative Agent and the respective Issuing Lender shall have received a
Letter of Credit Request meeting the requirements of Section 2.03.
6.04 VALUATION CERTIFICATES. Prior to the making of each Loan
and the issuance of each Letter of Credit, the Administrative Agent shall have
received a Valuation Certificate meeting the requirements of Section 8.01(j).
The acceptance of the proceeds of each Loan or the making of
each Letter of Credit Request occurring on or after the Effective Date shall
constitute a representation and warranty by the Borrower to the Administrative
Agent and each of the Lenders that all conditions specified in this Section 6
exist as of that time.
SECTION 7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In
order to induce the Lenders to enter into this Agreement and to make the Loans
hereunder and issue (or participate in) the Letters of Credit as provided
herein, the Borrower makes the following representations, warranties and
agreements all of which shall survive the execution and delivery of this
Agreement and the Notes and the making of the Loans and issuance of the Letters
of Credit, with the occurrence of each Credit Event on or after the Effective
Date being deemed to constitute a representation and warranty that the matters
specified in this Section 7 are true and correct on and as of the Effective Date
and in all material respects on the date of each such Credit Event (it being
understood and agreed that any representation or warranty which by its terms is
26
<PAGE>
made as of a specified date shall be required to be true and correct in all
material respects only as of such specified date).
7.01 CORPORATE AND OTHER STATUS. Each of the Borrower and
Superior (i) is a duly organized and validly existing corporation in good
standing under the laws of the jurisdiction of its incorporation, (ii) has the
requisite corporate power and authority to own its property and assets and to
transact the business in which it is engaged and presently proposes to engage
and (iii) is duly qualified and is authorized to do business and is in good
standing in each jurisdiction where the ownership, leasing or operation of its
property or the conduct of its business requires such qualifications except for
failures to be so qualified which, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
7.02 CORPORATE POWER AND AUTHORITY. The Borrower has the
requisite corporate power and authority to execute, deliver and perform the
terms and provisions of each of the Credit Documents to which it is party and
has taken all necessary corporate action to authorize the execution, delivery
and performance by it of each of such Credit Documents. The Borrower has duly
executed and delivered each of the Credit Documents to which it is party, and
each of such Credit Documents constitutes its legal, valid and binding
obligation enforceable in accordance with its terms, except to the extent that
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws generally affecting creditors'
rights and by equitable principles (regardless of whether enforcement is sought
in equity or at law).
7.03 NO VIOLATION. Neither the execution, delivery or
performance by the Borrower of the Credit Documents to which it is a party, nor
the occurrence of any Credit Event, nor compliance by the Borrower with the
terms and provisions thereof, (i) will contravene any provision of any law,
statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict with or result in any
breach of any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien (except pursuant to the Pledge
Agreements) upon any of the property or assets of the Borrower or Superior
pursuant to the terms of, any indenture, mortgage, deed of trust, credit
agreement or loan agreement, or any other material agreement, contract or
instrument, to which the Borrower or Superior is a party or by which it or any
of its property or assets is bound or to which it may be subject or (iii) will
violate any provision of the certificate of incorporation or by-laws (or
equivalent organizational documents) of the Borrower or Superior.
7.04 GOVERNMENTAL APPROVALS. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with (except as have been obtained or made on or prior to the Effective Date),
or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance of any Credit Document or (ii)
the legality, validity, binding effect or enforceability of any such Credit
Document.
7.05 FINANCIAL STATEMENTS; FINANCIAL CONDITION; UNDISCLOSED
LIABILITIES; ETC. (a) The consolidated balance sheet of the Borrower for the
fiscal year ended on April 30, 1999 and
27
<PAGE>
the three-month period ending July 31, 1999 and the related consolidated
statements of income, cash flows and shareholders' equity of the Borrower for
the respective fiscal year and three-month period ended on such dates, copies of
which have been furnished to the Administrative Agent prior to the Effective
Date, present fairly in all material respects the consolidated financial
position of the Borrower and its Subsidiaries at the date of such balance sheets
and the consolidated results of the operations of the Borrower and its
Subsidiaries for the periods covered thereby. All of the foregoing historical
financial statements have been prepared in accordance with generally accepted
accounting principles consistently applied (except, in the case of the
aforementioned three-month interim financial statements, for normal year-end
audit adjustments and the absence of footnotes). After giving effect to the
transactions contemplated in this Agreement (but assuming for this purpose that
such transactions and the sale of the Borrower's refractories business which
occurred on or about August 6, 1999 had occurred on April 30, 1999), since April
30, 1999, there has been no material adverse change in the business, operations,
property, assets, liabilities, condition (financial or otherwise) or prospects
of the Borrower and its Subsidiaries taken as a whole.
(b) (i) On and as of the Effective Date, after giving effect
to the transactions contemplated in this Agreement (including the repayment of
Indebtedness under the Existing Credit Facilities) and to all Indebtedness
(including the Loans) being incurred or assumed by the Borrower and Liens
created by the Borrower in connection therewith, (a) the sum of the assets, at a
fair valuation, of each of the Borrower and its Subsidiaries taken as a whole
and the Borrower on a stand-alone basis will exceed their respective debts; (b)
each of the Borrower and its Subsidiaries taken as a whole and the Borrower on a
stand-alone basis have not incurred and do not intend to incur, and do not
believe that they will incur, debts beyond their ability to pay such debts as
such debts mature; and (c) each of the Borrower and its Subsidiaries taken as a
whole and the Borrower on a stand-alone basis will have sufficient capital with
which to conduct their respective businesses. For purposes of this Section
7.05(b), "debt" means any liability on a claim, and "claim" means (i) 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 (ii) right to an equitable remedy for
breach of performance if such breach gives rise to a payment, whether or not
such right to an equitable remedy is reduced to judgment, fixed, contingent,
matured, unmatured, disputed, undisputed, secured or unsecured.
(c) Except (i) as disclosed in the financial statements
referred to in Section 7.05(a), (ii) for liabilities arising in the ordinary
course of business since July 31, 1999 and (iii) any liabilities arising in
connection with the transactions contemplated in this Agreement, there were as
of the Effective Date no liabilities or obligations with respect to the Borrower
or any of its Subsidiaries of any nature whatsoever (whether absolute, accrued,
contingent or otherwise and whether or not due) which, either individually or in
aggregate, would be material to the Borrower and its Subsidiaries taken as a
whole. As of the Effective Date, the Borrower does not know of any basis for the
assertion against it or any of its Subsidiaries of any liability or obligation
of any nature whatsoever that is not disclosed in the financial statements
referred to in Section 7.05(a) which, either individually or in the aggregate,
could reasonably be expected to be material to the Borrower, or the Borrower and
its Subsidiaries taken as a whole.
28
<PAGE>
7.06 LITIGATION. There are no actions, suits or proceedings
(including, without limitation, any Environment Claims) pending or, to the best
knowledge of the Borrower, threatened (i) with respect to any Credit Document or
(ii) that are reasonably likely to result in a Material Adverse Effect.
7.07 TRUE AND COMPLETE DISCLOSURE. All factual information
(taken as a whole) furnished by the Borrower in writing to the Administrative
Agent or any Lender (including, without limitation, all information contained in
the Credit Documents) for purposes of or in connection with this Agreement, the
other Credit Documents or any transaction contemplated herein or therein is, and
all other such factual information (taken as a whole) hereafter furnished by or
on behalf of the Borrower in writing to the Administrative Agent or any Lender
will be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting to state any
fact necessary to make such information (taken as a whole) not misleading in any
material respect at such time in light of the circumstances under which such
information was provided.
7.08 USE OF PROCEEDS; MARGIN REGULATIONS. (a) All proceeds of
the Loans will be used by the Borrower (i) to repay outstanding Indebtedness
under the Existing Credit Facilities, (ii) to pay fees and expenses incurred in
connection therewith and in connection with this Agreement, (iii) for general
investment purposes, PROVIDED that no more than $5,000,000 of proceeds from
Revolving Loans may be used to repurchase outstanding capital stock of Superior,
and (iv) for its general corporate purposes.
(b) Neither the making of any Loan nor the use of the proceeds
thereof will violate or be inconsistent with the provisions of Regulation T, U
or X.
7.09 TAX RETURNS AND PAYMENTS. The Borrower and each of its
Subsidiaries have timely filed or caused to be timely filed with the appropriate
taxing authority, all material Federal, state, local, foreign and other returns,
statements, forms and reports for taxes required to be filed by or with respect
to the income, properties or operations of the Borrower and/or any of its
Subsidiaries. The Borrower and each of its Subsidiaries have paid all material
taxes payable by them other than taxes contested in good faith and for which
adequate reserves have been established in accordance with generally accepted
accounting principles. Except as set forth on Schedule III, there is no action,
suit, proceeding, investigation, audit, or claim now pending or, to the
knowledge of the Borrower, threatened by any authority regarding any taxes
relating to the Borrower or any of its Subsidiaries.
7.10 THE PLEDGE AGREEMENTS. Subject to the terms of each
Pledge Agreement, the security interests created in favor of the Collateral
Agent, as Pledgee, for the benefit of the Secured Creditors under such Pledge
Agreement constitute first priority perfected security interests in the
Collateral described in such Pledge Agreement, subject to no security interests
of any other Person. Other than filings with the Companies House in London,
England in connection with the UK Pledge Agreement (which filings shall have
been made within 21 days from the Effective Date), no filings or recordings are
required in order to perfect (or maintain the perfection or priority of) the
security interests created in the Pledged Shares under either Pledge Agreement.
29
<PAGE>
7.11 SUBSIDIARIES. Schedule IV correctly sets forth, as of the
Effective Date, each direct Subsidiary of the Borrower.
7.12 COMPLIANCE WITH STATUTES, ETC. Each of the Borrower and
Superior is in compliance with all applicable statutes, regulations and orders
of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property (including, without limitation, all Environmental Laws), except
such noncompliances as could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
7.13 INVESTMENT COMPANY ACT. The Borrower is not an
"investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
7.14 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the Borrower
nor any of its Subsidiaries is a "holding company," or a "subsidiary company" of
a "holding company," or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company" within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
7.15 INDEBTEDNESS. Schedule V sets forth a true and complete
list of all Indebtedness of the Borrower (other than the Loans) as of the
Effective Date and which is to remain outstanding after the effectiveness of
this Agreement, in each case, showing the aggregate principal amount thereof.
7.16 LIMITATIONS ON DISPOSITIONS OF SHARES. Schedule VI sets
forth a true and complete list of any restrictions (contractual or otherwise)
known to the Borrower which would limit its ability (or the ability of a pledgee
which has a security interest in any Shares) to dispose of any of the Shares,
including, without limitation, the provisions of any applicable shareholders
agreement, standstill agreement, provisions contained in the Articles of
Incorporation or By-laws (or analogous organizational documents) of Superior or
Cookson, provisions of relevant state anti-takeover laws and other agreements or
laws restricting such dispositions; provided that Schedule VI need not list
compliance with United States federal, state or United Kingdom securities laws
which may be applicable in connection with any such disposition.
SECTION 8. AFFIRMATIVE COVENANTS. The Borrower hereby
covenants and agrees that on and after the Effective Date and until the Total
Commitment and all Letters of Credit have terminated and the Loans, Notes and
Unpaid Drawings (in each case together with interest thereon) and all other
Obligations incurred hereunder and thereunder, are paid in full:
8.01 INFORMATION COVENANTS. The Borrower will furnish to each
Lender:
(a) MONTHLY REPORTS. Within 30 days after the end of each
fiscal month of the Borrower (excluding any fiscal month which ends on the last
day of a fiscal quarter or fiscal year of Borrower), the consolidated and
consolidating balance sheet of each of Borrower and its Subsidiaries, each as at
the end of such fiscal month and the related consolidated and consolidating
statements of income for such fiscal month and for the elapsed portion of the
fiscal
30
<PAGE>
year ended with the last day of such fiscal month, in each case, setting forth
comparative figures for the corresponding fiscal month in the prior fiscal year
and comparable budgeted figures for such fiscal month.
(b) QUARTERLY FINANCIAL STATEMENTS. Within 45 days after the
close of each of the first three quarterly accounting periods in each fiscal
year of Borrower, (i) the consolidated and consolidating balance sheets of the
Borrower and its Subsidiaries, each as at the end of such quarterly accounting
period and the related consolidated and consolidating statements of income and
consolidated retained earnings and statement of cash flows for such quarterly
accounting period and for the elapsed portion of the fiscal year ended with the
last day of such quarterly accounting period, in each case setting forth
comparative figures for the related periods in the prior fiscal year, all of
which shall be certified by the chief financial officer of Borrower, subject to
normal year-end audit adjustments and the absence of footnotes and (ii)
management's discussion and analysis of the important operational and financial
developments during the quarterly and year-to-date periods.
(c) ANNUAL FINANCIAL STATEMENTS. Within 90 days after the
close of each fiscal year of Borrower, (i) the consolidated and consolidating
balance sheets of the Borrower and its Subsidiaries, each as at the end of such
fiscal year and the related consolidated and consolidating statements of income
and consolidated retained earnings and of cash flows for such fiscal year
setting forth comparative figures for the preceding fiscal year and certified
(x) in the case of the consolidating financial statements, by the chief
financial officer of Borrower and (y) in the case of the consolidated financial
statements, by Arthur Anderson LLP or such other independent certified public
accountants of recognized national standing reasonably acceptable to the
Administrative Agent, together with a report of such accounting firm stating
that in the course of its regular audit of the respective financial statements,
which audit was conducted in accordance with generally accepted auditing
standards, such accounting firm obtained no knowledge of any Event of Default
which has occurred and is continuing or, if in the opinion of such accounting
firm such an Event of Default has occurred and is continuing, a statement as to
the nature thereof and (ii) management's discussion and analysis of the
important operational and financial developments during the respective fiscal
year.
(d) MANAGEMENT LETTERS. Promptly after the Borrower's or any
of its Subsidiaries' receipt thereof, a copy of any "management letter"
addressed to the board of directors of the Borrower or such Subsidiary from its
certified public accountants and management's responses thereto.
(e) BUDGETS. No later than 30 days after the first day of each
fiscal year of the Borrower, budgets in form reasonably satisfactory to the
Administrative Agent (including budgeted statements of income and sources and
uses of cash and balance sheets) prepared by the Borrower for (x) each of the
months of such fiscal year prepared in reasonable detail and (y) the immediately
following fiscal year prepared in summary form, in each case accompanied by the
statement of the chief financial officer of the Borrower to the effect that, to
the best of his knowledge, the respective budget is a reasonable estimate for
the period covered thereby.
31
<PAGE>
(f) OFFICER'S CERTIFICATES. (i) At the time of the delivery of
the financial statements provided for in Section 8.01(a), (b) and (c), a
certificate of the chief financial officer of the Borrower to the effect that,
to the best of such officer's knowledge, no Default or Event of Default has
occurred and is continuing or, if any Default or Event of Default has occurred
and is continuing, specifying the nature and extent thereof.
(ii) At the time of the delivery of the financial statements
provided for in Section 8.01(b) and (c), a certificate of the chief financial
officer of the Borrower to the effect that the Borrower has sufficient liquidity
(after giving effect to regularly scheduled ordinary dividends received or
reasonably anticipated, interest income and management fees and reimbursement
payments paid to Borrower by Superior or its Subsidiaries pursuant to
contractual arrangements among such Persons existing on the Effective Date) from
its cash on hand, its Cash Equivalents and/or the Total Unutilized Commitment to
pay for all reasonably anticipated operating expenses of the Borrower for the
immediately succeeding twelve month period.
(g) NOTICE OF DEFAULT OR LITIGATION. Promptly, and in any
event within three Business Days (or five Business Days in the case of following
clause (ii)) after an executive or financial officer of the Borrower obtains
actual knowledge thereof, notice of (i) the occurrence of any event which
constitutes a Default or an Event of Default and (ii) any litigation or
governmental investigation or proceeding (including, without limitation, any
Environmental Claim) pending (x) against the Borrower which, if adversely
determined, could reasonably be expected to have a Material Adverse Effect, (y)
with respect to any material Indebtedness of the Borrower or (z) with respect to
any Credit Document.
(h) OTHER REPORTS AND FILINGS. Promptly after the filing or
delivery thereof, copies of all other financial information, proxy materials and
reports, if any, which the Borrower or any of its Subsidiaries shall publicly
file with the Securities and Exchange Commission or any successor thereto (the
"SEC") or shall deliver to its shareholders or to holders of its Indebtedness
pursuant to the terms of the documentation governing such Indebtedness (or any
trustee, agent or other representative therefor).
(i) SHARES. Promptly after any executive or financial officer
of the Borrower obtains actual knowledge thereof, notice of any event or
occurrence which relates to the business, operations or affairs of the Borrower
or any of its Subsidiaries which could reasonably be expected to have a material
adverse effect on the current market value of any Shares (other than events or
occurrences such as general economic, market or industry-wide conditions).
(j) VALUATION CERTIFICATES. (i) On the Effective Date, (ii) on
the date of any sale or purchase by the Borrower of any Pledged Shares, (iii) on
the date of each Credit Event, (iv) on the date the Borrower gives any notice
pursuant to Section 8.01(g) or (i) and (v) no later than the fifth Business Day
after the end of each calendar month, a certificate in the form of Exhibit I
(each, a "Valuation Certificate"). Each Valuation Certificate shall set forth
(1) the aggregate amount of the Pledged Shares, (2) the aggregate Value of the
Pledged Shares (v) as of the Business Day immediately preceding the Effective
Date in the case of the initial Valuation Certificate, (w) as of the Business
Day immediately preceding the date of any such sale or purchase of any Pledged
Shares, in each case after giving effect to such event, (x) as of the date
32
<PAGE>
of any Credit Event, (y) as of the date of the delivery of either notice
referred to in clause (iv) of the immediately preceding sentence, and (z) as of
the close of business on the last Business Day of each such calendar month in
the case of a Valuation Certificate delivered pursuant to clause (v) of the
immediately preceding sentence, and (3) the calculations (in reasonable detail)
required to establish whether the Borrower was in compliance with Section 9.07
as of each such Determination Date. Each Valuation Certificate shall be
certified by the chief financial officer of the Borrower. If the Administrative
Agent or the Required Lenders in good faith believes (or believe) that the most
recently delivered Valuation Certificate does not accurately reflect the Pledged
Shares or the Values thereof (whether at the date as of which the respective
Valuation Certificate was prepared or because of changes in the Pledged Shares
or the Values thereof after the date of said Valuation Certificate and prior to
the date of the delivery by the Borrower of the next Valuation Certificate
pursuant to this Section 8.01(j)), then the Administrative Agent or the Required
Lenders, as the case may be, may, at its, or their, option, either (x) notify
the Borrower of the changes to the Valuation Certificate last delivered which
the Administrative Agent or Required Lenders, as the case may be, believe are
needed to reflect an accurate schedule of Pledged Shares and the Values thereof
or (y) request the Borrower to prepare a new Valuation Certificate as at the
date of the respective request, which certificate the Borrower hereby agrees to
prepare and submit to the Administrative Agent and the Lenders within two
Business Days after receiving such request. For all purposes of this Agreement
(including without limitation Sections 4.02(c) and 9.07), from and after any
notification pursuant to clause (x) of the immediately preceding sentence, the
changes so notified to the Borrower by the Administrative Agent or Required
Lenders shall be deemed made to the Valuation Certificate last delivered. In
addition to any changes made as contemplated above, if at any time after the
delivery of a Valuation Certificate and before the preparation of a new
Valuation Certificate, any Dividends are paid with respect to any Pledged Shares
(which Dividends are not at such time retained by the Collateral Agent pursuant
to the respective Pledge Agreement), then the amount (or value (as determined,
to the reasonable satisfaction of the Administrative Agent, by the Board of
Directors of the Borrower in good faith) in the case of non-cash Dividends) of
such Dividends shall be deducted from the Values as shown in the last delivered
Valuation Certificate until such time as a new Valuation Certificate is prepared
showing the Value of the Pledged Shares after giving effect to the respective
Dividend, PROVIDED that no such deduction shall be required if such Dividend is
a payment ordinary cash dividends in respect of any Pledged Shares.
(k) OTHER INFORMATION. From time to time, such other
information or documents (financial or otherwise) with respect to the Borrower
or any of its Subsidiaries as any Lender may reasonably request.
8.02 BOOKS, RECORDS AND INSPECTIONS. The Borrower will keep
proper books of record and accounts in which full, true and correct entries in
conformity with generally accepted accounting principles and all requirements of
law shall be made of all dealings and transactions in relation to its business
and activities. Upon prior notice, the Borrower will permit officers and
designated representatives of the Administrative Agent or any Lender to visit
and inspect, during regular business hours and under guidance of officers of the
Borrower, any of the properties of the Borrower, and to examine the books of
account of the Borrower and discuss the affairs, finances and accounts of the
Borrower with, and be advised as to the same by, its officers and
33
<PAGE>
independent accountants, all at such reasonable times and intervals and to such
reasonable extent as the Administrative Agent or such Lender may request.
8.03 MAINTENANCE OF PROPERTY; INSURANCE. The Borrower will,
and will cause Superior to, (i) keep all property necessary to the business of
the Borrower and Superior in reasonably good working order and condition,
ordinary wear and tear excepted and (ii) maintain insurance on all such property
in at least such amounts and against at least such risks as is consistent and in
accordance with industry practice for companies similarly situated owning
similar properties in the same general areas in which the Borrower or Superior
operates.
8.04 CORPORATE FRANCHISES. The Borrower will, and will cause
each of its Subsidiaries to, do or cause to be done, all things necessary to
preserve and keep in full force and effect its existence and its material
rights, franchises, licenses and patents; PROVIDED, HOWEVER, that (i) nothing in
this Section 8.04 shall prevent the withdrawal by the Borrower or any of its
Subsidiaries of its qualification as a foreign corporation in any jurisdiction
where such withdrawal could not reasonably be expected to have a Material
Adverse Effect and (ii) neither the Borrower nor any of its Subsidiaries shall
be obligated to maintain any such right, franchise, license or patent in the
event the Borrower or such Subsidiary, as the case may be, has determined in its
reasonable business judgment, that the maintenance of such right, franchise,
license or patent is no longer necessary or desirable in the conduct of its
business.
8.05 COMPLIANCE WITH STATUTES, ETC. The Borrower will, and
will cause each of its Subsidiaries to, comply with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (including, without limitation
Environmental Laws), except such noncompliances as could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
8.06 PERFORMANCE OF OBLIGATIONS. The Borrower will, and will
cause Superior to, perform all of its obligations under the terms of each
mortgage, indenture, security agreement and other debt instrument by which it is
bound, except such non-performances as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
8.07 PAYMENT OF TAXES. The Borrower will, and will cause
Superior to, pay and discharge, or cause to be paid and discharged, all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits, or upon any properties belonging to it, in each case on a
timely basis, and all lawful claims which, if unpaid, might become a Lien upon
any properties of the Borrower or Superior; PROVIDED that neither the Borrower
nor Superior will be required to pay any such tax, assessment, charge, levy or
claim which is being contested in good faith and by appropriate proceedings if
it has maintained adequate reserves with respect thereto in accordance with
generally accepted accounting principles.
8.08 YEAR 2000 COMPATIBILITY. The Borrower shall use its best
efforts to ensure that the Borrower's and its Subsidiaries' computer-based
systems are able to operate and effectively process data including dates on or
after January 1, 2000, and that none of the products and services sold,
licensed, rendered, or otherwise provided by the Borrower or any of its
34
<PAGE>
Subsidiaries will malfunction or will cease to function as a
result of the Year 2000. At the request of the Administrative Agent, the
Borrower and its Subsidiaries shall provide the Administrative Agent reasonable
assurance of the Borrower's and its Subsidiaries' compliance with this Section
8.08.
8.09 USE OF PROCEEDS. The Borrower shall use all proceeds
from each Credit Event only as provided in Section 7.08.
8.10 MINIMUM CASH AND CASH EQUIVALENTS. The Borrower shall at
all times possess cash and/or Cash Equivalents (subject to no Lien) in an
aggregate amount of at least $5,000,000.
SECTION 9. NEGATIVE COVENANTS. The Borrower hereby covenants
and agrees that on and after the Effective Date and until the Total Commitment
and all Letters of Credit have terminated and the Loans, Notes and Unpaid
Drawings (in each case together with interest thereon) and all other Obligations
incurred hereunder and thereunder, are paid in full:
9.01 LIENS. The Borrower will not create, incur, assume or
suffer to exist any Lien upon any of the Collateral or any of the Shares
(including for this purpose all classes of capital stock of Cookson and Superior
now or hereafter owned by the Borrower), except:
(i) Liens created pursuant to the Pledge Agreements; and
(ii) Liens on the Shares (other than the Collateral) arising
in connection with the incurrence by the Borrower of Indebtedness permitted
pursuant to Section 9.04(vi) so long as the Value of the Shares subject to any
such Lien (as determined at the time of the creation of such Lien) does not
exceed the aggregate principal amount of Indebtedness secured thereby.
9.02 CONSOLIDATION; MERGER. The Borrower will not merge or
consolidate with or into any other Person.
9.03 DIVIDENDS. The Borrower will not authorize, declare, pay
or make any Dividends in the form of any Pledged Shares or proceeds representing
a liquidation or other distribution in return of capital of any Pledged Shares.
9.04 INDEBTEDNESS. The Borrower will not contract, create,
incur, assume or suffer to exist any Indebtedness except:
(i) Indebtedness incurred pursuant to this Agreement and
the other Credit Documents;
(ii) Existing Indebtedness outstanding on the Effective Date
and listed on Schedule V, without giving effect to any subsequent
extension, renewal or refinancing thereof except to the extent set
forth on Schedule V, PROVIDED that the aggregate principal amount of
the Indebtedness to be extended, renewed or refinanced does not
increase from that amount outstanding at the time of any such
extension, renewal or refinancing;
35
<PAGE>
(iii) Indebtedness under Interest Rate Protection Agreements
entered into with respect to other Indebtedness permitted under this
Section 9.04 so long as the terms and conditions are reasonably
satisfactory to the Administrative Agent;
(iv) Indebtedness under Other Hedging Agreements providing
protection against fluctuations in currency values in connection with
the Borrower's business so long as management of the Borrower has
determined that entering into such Other Hedging Agreements are
bonafide hedging activities and are not speculative in nature;
(v) Indebtedness with respect to performance bonds, surety
bonds, appeal bonds or custom bonds required in the ordinary course of
business or in connection with the enforcement of rights or claims of
the Borrower or any of its Subsidiaries or in connection with judgments
that do not result in a Default or an Event of Default; and
(vi) additional Indebtedness incurred by the Borrower in an
aggregate principal amount not to exceed at any time outstanding such
amount which, when added to the aggregate amount of cash proceeds
received by the Borrower from any sale of Shares (other than the
Superior Option Shares) which is not (or was not) required to be
applied to reduce the Total Commitment as provided in Section 3.03(b),
equals $10,000,000.
9.05 LIMITATION ON VOLUNTARY PAYMENTS AND MODIFICATIONS OF
INDEBTEDNESS; MODIFICATIONS OF CERTIFICATE OF INCORPORATION, BY-LAWS AND CERTAIN
OTHER AGREEMENTS; ETC. The Borrower will not, and will not permit any of its
Subsidiaries to, (i) amend or modify, or permit the amendment or modification
of, any provision of any Senior Note Document other than any amendments or
modifications which (x) do not in any way adversely affect the interests of the
Lenders or (ii) amend, modify or change its certificate of incorporation
(including, without limitation, by the filing or modification of any certificate
of designation) or by-laws (or equivalent organizational document) or any
agreement entered into by it, with respect to its capital stock, or enter into
any new agreement with respect to its capital stock unless such amendment,
modification, change or other action contemplated by this clause (ii) could not
be reasonably expected to have a Material Adverse Effect.
9.06 SHARES. The Borrower will not, and with respect to
clause (a) and (b) below, will not permit Superior to:
(a) sell or agree to sell any Shares, in either such case
which would, at the time of any such agreement or after the
consummation of any such sale, result in an Event of Default, PROVIDED
that in the case of any sale of Shares in compliance with this clause
(a), (i) 100% of the consideration therefor shall be in cash, paid to
the Borrower at the closing of such sale and in an amount equal to at
least the fair market value (based on the definition of "Value"
contained in Section 11) for any such sale and (ii) the Net Sale
Proceeds from any such sale shall be applied as a mandatory reduction
to the Total Commitment as (and to the extent) provided in Section
3.03(b) and (to the extent required by Section 4.02(a)) to repay
outstanding Loans or cash collateralize outstanding Letters of Credit;
36
<PAGE>
(b) enter into or agree to enter into any agreement concerning
the liquidation, dissolution or sale of substantially all or any
substantial portion of the assets of either Superior or Cookson; or
(c) vote any Shares, whether or not such Shares constitute
Pledged Shares, in favor of (i) any liquidation, dissolution, merger,
consolidation or sale of substantially all or any substantial portion
of the assets of Superior or Cookson with and into any other Person or
(ii) any transaction intended to cause Superior or Cookson to become a
privately held entity, unless as a result thereof the Borrower would
receive cash or Cash Equivalents in respect of Pledged Shares at the
time of the consummation of such transaction in an aggregate amount
sufficient to (and which is actually applied to) repay in full all
Loans and all other amounts owing hereunder (and so long as the Total
Commitment is then terminated and all outstanding Letters of Credit are
fully cash collateralized to the satisfaction of the Administrative
Agent).
9.07 ASSET COVERAGE RATIO. The Borrower will not permit the
Asset Coverage Ratio at any time to be less than 2.00:1.00.
9.08 REGULATION U. Notwithstanding anything to the contrary
contained elsewhere in this Agreement or in any other Credit Document, the
Borrower shall not permit any withdrawal or substitution of Collateral pursuant
to the Pledge Agreements unless same complies with the applicable rules set
forth in Regulation U (with the amount of the credit pursuant to this Agreement
at any time for purposes of Regulation U to be the amount determined in
accordance with the requirements of said Regulation U or, if greater, the
greater of (x) the Total Commitment as then in effect or (y) the aggregate
principal amount of all outstanding Loans and the amount of Letter of Credit
Outstandings at such time).
9.09 RESTRICTIONS ON DISPOSITIONS OF SHARES. The Borrower
shall not agree to any additional restrictions on its ability (or the ability of
a pledgee which has a security interest in any Shares) to sell, transfer or
otherwise liquidate the Shares from time to time owned by it (including without
limitation the Pledged Shares), in each case excluding such restrictions to the
extent in effect prior to the Effective Date and listed on Schedule VI.
SECTION 10. EVENTS OF DEFAULT. Upon the occurrence of any of
the following specified events (each an "Event of Default"):
10.01 PAYMENTS. The Borrower shall (i) default in the payment
when due of any principal of any Loan or any Note or (ii) default, and such
default shall continue unremedied for three or more Business Days, in the
payment when due of any interest on any Loan or Note or any other amounts owing
hereunder or thereunder; or
10.02 REPRESENTATIONS, ETC. Any representation, warranty or
statement made by the Borrower herein or in any other Credit Document or in any
certificate delivered to the Administrative Agent or any Lender pursuant hereto
or thereto shall prove to be untrue in any material respect on the date as of
which made or deemed made; or
37
<PAGE>
10.03 COVENANTS. The Borrower shall (i) default in the due
performance or observance by it of any term, covenant or agreement contained in
Section 8.01(g)(i), 8.09 or Section 9 or (ii) default in the due performance or
observance by it of any other term, covenant or agreement contained in this
Agreement or any other Credit Document (other than those set forth in Sections
10.01 and 10.02 and clause (i) of this Section 10.03) and such default as
described in this clause (ii) shall continue unremedied for a period of 30 days
after written notice thereof to the defaulting party by the Administrative Agent
or the Required Lenders; or
10.04 DEFAULT UNDER OTHER AGREEMENTS. (i) The Borrower or any
of its Subsidiaries shall (x) default in any payment of any Indebtedness (other
than the Notes) beyond the period of grace, if any, provided in the instrument
or agreement under which such Indebtedness was created or (y) default in the
observance or performance of any agreement or condition relating to any
Indebtedness (other than the Notes) 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 a trustee or
agent on behalf of such holder or holders) to cause (determined without regard
to whether any notice is required), any such Indebtedness to become due prior to
its stated maturity, or (ii) any Indebtedness (other than the Notes) of the
Borrower or any of its Subsidiaries shall be declared to be (or shall become)
due and payable, or required to be prepaid other than by a regularly scheduled
required prepayment, prior to the stated maturity thereof, PROVIDED that it
shall not be a Default or an Event of Default under this Section 10.04 unless
the aggregate principal amount of all Indebtedness as described in preceding
clauses (i) and (ii) is at least (x) in the case of Indebtedness of the
Borrower, $5,000,000 and (y) in the case of Indebtedness of any of its
Subsidiaries, $15,000,000; or
10.05 BANKRUPTCY, ETC. The Borrower or any of its Significant
Subsidiaries shall commence a voluntary case concerning itself under Title 11 of
the United States Code entitled "Bankruptcy," as now or hereafter in effect, or
any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against the Borrower or any of its Significant Subsidiaries and the
petition is not controverted within 15 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian (as defined in the Bankruptcy
Code) is appointed for, or takes charge of, all or substantially all of the
property of the Borrower or any of its Significant Subsidiaries, or the Borrower
or any of its Significant Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors, dissolution,
insolvency, receivership, administration or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Borrower or any
of its Significant Subsidiaries, or there is commenced against the Borrower or
any of its Significant Subsidiaries any such proceeding which remains
undismissed for a period of 60 days, or the Borrower or any of its Significant
Subsidiaries is adjudicated insolvent or bankrupt; or any order of relief or
other order approving any such case or proceeding is entered; or the Borrower or
any of its Significant Subsidiaries suffers any appointment of any custodian,
administrator, administrative receiver or the like for it or any substantial
part of its property to continue undischarged or unstayed for a period of 60
days; or the Borrower or any of its Significant Subsidiaries makes a general
assignment for the benefit of creditors; or any corporate action is taken by the
Borrower or any of its Significant Subsidiaries for the purpose of effecting any
of the foregoing; or
38
<PAGE>
10.06 PLEDGE AGREEMENTS. At any time after the execution and
delivery thereof, either Pledge Agreement (except as expressly provided by the
terms thereof) shall cease to be in full force and effect, or shall cease to
give the Collateral Agent for the benefit of the Secured Creditors the Liens,
rights, powers and privileges purported to be created thereby (including,
without limitation, a perfected security interest in, and Lien on, all of the
Collateral, in favor of the Collateral Agent, superior to and prior to the
rights of all third Persons, and subject to no other Liens, or the Borrower
shall default in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to either Pledge
Agreement and such default shall continue beyond any grace period specifically
applicable thereto pursuant to the terms of such Pledge Agreement; or
10.07 JUDGMENTS. One or more judgments or decrees shall be
entered against the Borrower involving in the aggregate for the Borrower a
liability (not paid or fully covered by a reputable and solvent insurance
company), and such judgments and decrees either shall be final and
non-appealable or shall not be vacated, discharged or stayed or bonded pending
appeal for any period of 30 consecutive days, and the aggregate amount of all
such judgments exceeds $5,000,000; or
10.08 CHANGE OF CONTROL. A Change of Control shall occur;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written request of
the Required Lenders, shall by written notice to the Borrower, take any or all
of the following actions, without prejudice to the rights of the Administrative
Agent, any Lender or the holder of any Note to enforce its claims against the
Borrower (PROVIDED, that, if an Event of Default specified in Section 10.05
shall occur with respect to the Borrower, the result which would occur upon the
giving of written notice by the Administrative Agent as specified in clauses (i)
and (ii) below shall occur automatically without the giving of any such notice):
(i) declare the Total Commitment terminated, whereupon the Commitment of each
Lender shall forthwith terminate immediately and any Commitment Commission shall
become, forthwith due and payable without any other notice of any kind; (ii)
terminate any Letter of Credit, which may be terminated, in accordance with its
terms; (iii) declare the principal of and any accrued interest in respect of all
Loans and the Notes and all Obligations owing hereunder and thereunder to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; (iv) direct the Borrower to pay (and the Borrower agrees that upon
receipt of such notice, or upon the occurrence of an Event of Default specified
in Section 10.05 with respect to the Borrower, it will pay) to the
Administrative Agent at the Payment Office such additional amount of cash, to be
held as security by the Administrative Agent, as is equal to the aggregate
Stated Amount of all Letters of Credit then outstanding; and (v) enforce, as
Collateral Agent, the Liens and security interests created pursuant to the
Pledge Agreements.
39
<PAGE>
SECTION 11. DEFINITIONS.
11.01 DEFINED TERMS. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined):
"Administrative Agent" shall mean BTCo, in its capacity as
Administrative Agent for the Lenders hereunder, and shall include any successor
to the Administrative Agent appointed pursuant to Section 12.09.
"Affiliate" shall mean, with respect to any Person, any other
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. A Person shall be deemed to control
another Person if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such other
Person, whether through the ownership of voting securities, by contract or
otherwise.
"Agents" shall mean each of the Administrative Agent, the
Syndication Agent and the Documentation Agent and, for purposes of Sections 12
and 13.01, shall include the Collateral Agent.
"Agreement" shall mean this Credit Agreement, as modified,
supplemented, amended, restated (including any amendment and restatement
hereof), extended, renewed, refinanced or replaced from time to time.
"Applicable Margin" shall mean a percentage per annum equal
to (x) in the case of Base Rate Loans, 1.50% and (y) in the case of Eurodollar
Loans, 2.50%.
"Asset Coverage Ratio" shall mean the ratio of (x) the sum of
(i) the Value of all the Pledged Shares and (ii) all cash and Cash Equivalents
delivered to the Collateral Agent pursuant to the US Pledge Agreement to (y) the
sum of (i) the aggregate principal amount of outstanding Loans and (ii) the
aggregate amount of Letter of Credit Outstandings.
"Assignment and Assumption Agreement" shall mean an Assignment
and Assumption Agreement substantially in the form of Exhibit J (appropriately
completed).
"Authorized Officer" of the Borrower shall mean any of the
President, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
any Vice-President, the Secretary or any Assistant Secretary of the Borrower or
any other officer of the Borrower which is designated in writing to the
Administrative Agent by any of the foregoing officers as being authorized to
give such notices under this Agreement.
"Bankruptcy Code" shall have the meaning provided in Section
10.05.
"Base Rate" at any time shall mean the higher of (i) 1/2 of
1% in excess of the overnight Federal Funds Rate and (ii) the Prime Lending
Rate.
40
<PAGE>
"Base Rate Loan" shall mean each Loan designated or deemed
designated as such by the Borrower at the time of the incurrence thereof or
conversion thereto.
"Borrower" shall have the meaning provided in the first
paragraph of this Agreement.
"Borrowing" shall mean the borrowing of one Type of Loan from
all the Lenders on a given date (or resulting from a conversion or conversions
on such date) having in the case of Eurodollar Loans the same Interest Period,
PROVIDED that Base Rate Loans incurred pursuant to Section 1.10(b) shall be
considered part of the related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company in its individual
capacity.
"Business Day" shall mean (i) for all purposes other than as
covered by clause (ii) below, any day except Saturday, Sunday and any day which
shall be in New York City a legal holiday or a day on which banking institutions
are authorized or required by law or other government action to close and (ii)
with respect to all notices and determinations in connection with, and payments
of principal and interest on, Eurodollar Loans, any day which is a Business Day
described in clause (i) above and which is also a day for trading by and between
banks in the New York interbank Eurodollar market.
"Cash Equivalents" shall mean, as to any Person, (i)
securities issued or directly and fully guaranteed or insured by the United
States or any agency or instrumentality thereof (PROVIDED that the full faith
and credit of the United States is pledged in support thereof) having maturities
of not more than one year from the date of acquisition, (ii) time deposits and
certificates of deposit of any commercial bank having, or which is the principal
banking subsidiary of a bank holding company having, a long-term unsecured debt
rating of at least "A" or the equivalent thereof from Standard & Poor's Ratings
Group or "A2" or the equivalent thereof from Moody's Investors Service, Inc.
with maturities of not more than one year from the date of acquisition by such
Person, (iii) repurchase obligations with a term of not more than seven days for
underlying securities of the types described in clause (i) above entered into
with any bank meeting the qualifications specified in clause (ii) above, (iv)
commercial paper issued by any Person rated at least A-1 or the equivalent
thereof by Standard & Poor's Ratings Group or at least P-1 or the equivalent
thereof by Moody's Investors Service, Inc. and in each case maturing not more
than 270 days after the date of acquisition by such Person, (v) Eurodollar
certificates of deposit maturing within one year after the date of acquisition
thereof issued by any commercial bank organized under the laws of the United
States of America or any State thereof or the District of Columbia, or by any
foreign bank which is a Lender, or United States branches of foreign banks, and
in any case having a combined capital and surplus of not less than $100,000,000,
(vi) investments in money market funds substantially all of whose assets are
comprised of securities of the types described in clauses (i) through (v) above
and (vii) for the purposes of determining compliance with Section 8.01(f)(ii)
only, marketable securities (other than any Pledged Shares) or cash equivalents
in accordance with generally accepted accounting principles.
41
<PAGE>
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as the same may be amended from time
to time, 42 U.S.C. Section 9601 ET SEQ.
"Change of Control" shall mean (i) the Borrower shall at any
time cease to own at least 35% of the Voting Stock of Superior, (ii) any Person
or "group" (within the meaning of Rules 13d-3 or 13d-5 under the Exchange Act
(as in effect on the Effective Date)) or group of related persons, together with
any Affiliates thereof (other than the Permitted Holders) shall (A) have
acquired beneficial ownership of 30% or more on a fully diluted basis of the
voting and/or economic interest in the Borrower's capital stock or (B) have
obtained the power (whether or not exercised) to elect a majority of the
Borrower's directors, (iii) the first day on which a majority of the Persons on
the Board of Directors of the Borrower are not Continuing Directors or (iv) a
"change of control" or similar event shall occur under, and as defined in, any
Senior Note Document.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and the regulations promulgated and the rulings issued
thereunder. Section references to the Code are to the Code, as in effect on the
date of this Agreement and to any subsequent provisions of the Code, amendatory
thereof, supplemental thereto or substituted therefor.
"Collateral" shall mean all "Collateral" as defined in the US
Pledge Agreement and all "Charged Assets" as defined in the UK Pledge Agreement.
"Collateral Agent" shall mean the Administrative Agent acting
as collateral agent for the Secured Creditors pursuant to the Pledge Agreements.
"Commitment" shall mean, for each Lender, the amount set forth
opposite such Lender's name in Schedule I directly below the column entitled
"Commitment," as the same may be (x) increased from time to time pursuant to
Section 1.14, (y) reduced from time to time pursuant to Section 3.02 or 3.03
and/or 10 or (z) adjusted from time to time as a result of assignments to or
from such Lender pursuant to Section 1.13 or 13.04(b).
"Commitment Commission" shall have the meaning provided in
Section 3.01(a).
"Contingent Obligation" shall mean, as to any Person, any
obligation of such Person guaranteeing or intended to guarantee any
Indebtedness, leases, dividends or other obligations ("primary obligations") of
any other Person (the "primary obligor") in any manner, whether directly or
indirectly, including, without limitation, any obligation of such Person,
whether or not contingent, (i) to purchase any such primary obligation or any
property constituting direct or indirect security therefor, (ii) to advance or
supply funds (x) for the purchase or payment of any such primary obligation or
(y) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth 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 holder of such primary obligation against loss in respect thereof;
PROVIDED, HOWEVER, that the term Contingent Obligation shall not include
42
<PAGE>
endorsements of instruments for deposit or collection in the ordinary course of
business. The amount of any Contingent Obligation shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Continuing Directors" shall mean the directors of the
Borrower on the Effective Date and each other director if such director's
nomination for election to the Board of Directors or the Borrower is recommended
by a majority of the then Continuing Directors.
"Cookson" shall mean Cookson Group plc, a company incorporated
with limited liability under the laws of England and Wales with registered
number 251977.
"Cookson Shares" shall mean any of the issued and outstanding
ordinary shares in the capital of Cookson owned by the Borrower.
"Credit Documents" shall mean this Agreement and, after the
execution and delivery thereof pursuant to the terms of this Agreement, each
Note and each Pledge Agreement.
"Credit Event" shall mean the making of any Loan or the
issuance of any Letter of Credit.
"Default" shall mean any event, act or condition which with
notice or lapse of time, or both, would constitute an Event of Default.
"Determination Date" shall have the meaning provided in the
definition of Value contained in this Agreement.
"Defaulting Lender" shall mean any Lender with respect to
which a Lender Default is in effect.
"Dividend" with respect to any Person shall mean that such
Person has declared or paid a dividend or returned any equity capital to its
stockholders or partners or authorized or made any other distribution, payment
or delivery of property (other than common stock of such Person) or cash to its
stockholders or partners as such, or redeemed, retired, purchased or otherwise
acquired, directly or indirectly, for any consideration any shares of any class
of its capital stock or any partnership interests outstanding on or after the
Effective Date (or any options or warrants issued by such Person with respect to
its capital stock or any partnership interests), or set aside any funds for any
of the foregoing purposes, or shall have permitted any of its Subsidiaries to
purchase or otherwise acquire for a consideration any shares of any class of the
capital stock or any partnership interests of such Person outstanding on or
after the Effective Date (or any options or warrants issued by such Person with
respect to its capital stock). Without limiting the foregoing, "Dividends" with
respect to any Person shall also include all payments made or required to be
made by such Person with respect to any stock appreciation rights, plans, equity
incentive or achievement plans or any similar plans or setting aside of any
funds for the foregoing purposes.
43
<PAGE>
"Documentation Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Dollars" and the sign "$" shall each mean freely transferable
lawful money of the United States.
"Drawing" shall have the meaning provided in Section 2.05(a).
"Effective Date" shall have the meaning provided in Section
13.10.
"Eligible Transferee" shall mean and include a commercial
bank, financial institution, any fund that invests in bank loans and any other
"accredited investor" (as defined in Regulation D of the Securities Act).
"Environmental Claims" means any and all administrative,
regulatory or judicial actions, suits, demands, demand letters, directives,
claims, liens, notices of noncompliance or violation, investigations or
proceedings arising under any Environmental Law or any permit issued, or any
approval given, under any such Environmental Law (hereafter, "Claims"),
including, without limitation, (a) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (b)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief in connection
with alleged injury or threat of injury to human health, safety or the
environment due to the presence of Hazardous Materials.
"Environmental Law" shall mean any Federal, state, foreign or
local statute, law, rule, regulation, ordinance, code, guideline, written policy
and rule of common law now or hereafter in effect and in each case as amended,
and any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, relating to the
environment, employee health and safety or Hazardous Materials, including,
without limitation, CERCLA; RCRA; the Federal Water Pollution Control Act, 33
U.S.C. Section 1251 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C. Section
2601 ET SEQ.; the Clean Air Act, 42 U.S.C. Section 7401 ET SEQ.; the Safe
Drinking Water Act, 42 U.S.C. Section 3803 ET SEQ.; the Oil Pollution Act of
1990, 33 U.S.C. Section 2701 ET SEQ.; the Emergency Planning and the Community
Right-to-Know Act of 1986, 42 U.S.C. Section 11001 ET SEQ.; the Hazardous
Material Transportation Act, 49 U.S.C. Section 1801 ET SEQ. and the Occupational
Safety and Health Act, 29 U.S.C. Section 651 ET SEQ.; and any state and local or
foreign counterparts or equivalents, in each case as amended from time to time.
"Eurodollar Loan" shall mean each Loan designated as such by
the Borrower at the time of the incurrence thereof or conversion thereto.
"Eurodollar Rate" shall mean (a) the offered quotation to
first-class banks in the New York interbank Eurodollar market by BTCo for Dollar
deposits of amounts in immediately available funds comparable to the outstanding
principal amount of the Eurodollar Loan of BTCo with maturities comparable to
the Interest Period applicable to such Eurodollar Loan commencing two Business
Days thereafter as of 10:00 A.M. (New York time) on the date which
44
<PAGE>
is two Business Days prior to the commencement of such Interest Period, divided
(and rounded off to the nearest 1/16 of 1%) by (b) a percentage equal to 100%
minus the then stated maximum rate of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves required by applicable law) applicable to any member bank of the
Federal Reserve System in respect of Eurocurrency funding or liabilities as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
"Event of Default" shall have the meaning provided in Section
10.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder.
"Existing Credit Facilities" shall mean each of (i) the
Amended and Restated Master Credit Agreement, dated as of February 6, 1998, and
amended and restated as of September 28, 1998, among the Borrower, the financial
institutions from time to time party thereto and Bank Boston, N.A., as agent and
(ii) the Credit Agreement, dated as of August 6, 1999, among the Borrower,
various banks party thereto from time to time and BTCo, as administrative agent.
"Facing Fee" shall have the meaning provided in Section
3.01(c).
"Federal Funds Rate" shall mean for any period, a fluctuating
interest rate equal for each day during such period to 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 for such day (or,
if such day is not a Business Day, for the next preceding 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 such day on such
transactions received by the Administrative Agent from three Federal Funds
brokers of recognized standing selected by the Administrative Agent.
"Fees" shall mean all amounts payable pursuant to or referred
to in Section 3.01.
"Hazardous Materials" means (a) any petroleum or petroleum
products, radioactive materials, asbestos in any form that is friable, urea
formaldehyde foam insulation, transformers or other equipment that contain
dielectric fluid containing levels of polychlorinated biphenyls, and radon gas;
(b) any chemicals, materials or substances defined as or included in the
definition of "hazardous substances," "hazardous waste," "hazardous materials,"
"extremely hazardous substances," "restricted hazardous waste," "toxic
substances," "toxic pollutants," "contaminants," or "pollutants," or words of
similar import, which are regulated under any applicable Environmental Law; and
(c) any other chemical, material or substance, the Release of which is
prohibited, limited or regulated by any governmental authority.
"Indebtedness" shall mean, as to any Person, without
duplication, (i) all indebtedness (including principal, interest, fees and
charges) of such Person for borrowed money or for the deferred purchase price of
property or services, (ii) the maximum amount available to be drawn under all
letters of credit issued for the account of such Person and all unpaid drawings
45
<PAGE>
in respect of such letters of credit, (iii) all Indebtedness of the types
described in clause (i), (ii), (iv), (v), (vi) or (vii) of this definition
secured by any Lien on any property owned by such Person, whether or not such
Indebtedness has been assumed by such Person (PROVIDED, that, if the Person has
not assumed or otherwise become liable in respect of such Indebtedness, such
Indebtedness shall be deemed to be in an amount equal to the fair market value
of the property to which such Lien relates as determined in good faith by such
Person), (iv) the aggregate amount required to be capitalized under leases under
which such Person is the lessee, (v) all obligations of such person to pay a
specified purchase price for goods or services, whether or not delivered or
accepted, I.E., take-or-pay and similar obligations, (vi) all Contingent
Obligations of such Person and (vii) all obligations under any Interest Rate
Protection Agreement, any Other Hedging Agreement or under any similar type of
agreement. Notwithstanding the foregoing, Indebtedness shall not include trade
payables and accrued expenses incurred by any Person in accordance with
customary practices and in the ordinary course of business of such Person.
"Interest Determination Date" shall mean, with respect to any
Eurodollar Loan, the second Business Day prior to the commencement of any
Interest Period relating to such Eurodollar Loan.
"Interest Period" shall have the meaning provided in Section
1.09.
"Interest Rate Protection Agreement" shall mean any interest
rate swap agreement, interest rate cap agreement, interest collar agreement,
interest rate hedging agreement or other similar agreement or arrangement.
"Issuing Lender" shall mean BTCo (and/or affiliates of BTCo
(including, without limitation, Deutsche Bank AG, New York Branch) designated by
it to act as such with respect to any Letter of Credit or Letters of Credit) and
any other Lender which at the request of the Borrower and with the consent of
the Administrative Agent agrees, in such Lender's sole discretion, to become an
Issuing Lender for the purpose of issuing Letters of Credit pursuant to Section
2. The Issuing Lender on the Effective Date is BTCo.
"L/C Supportable Obligations" shall mean obligations of the
Borrower or any of its Subsidiaries incurred in the ordinary course of business.
"Leaseholds" of any Person means all the right, title and
interest of such Person as lessee or licensee in, to and under leases or
licenses of land, improvements and/or fixtures.
"Lender" shall mean each financial institution listed on
Schedule I, as well as any Person which becomes a "Lender" hereunder pursuant
to Section 1.13 or 13.04(b).
"Lender Default" shall mean (i) the refusal (which has not
been retracted) or the failure of a Lender to make available its portion of any
Borrowing (including any Mandatory Borrowing) or to fund its portion of any
unreimbursed payment under Section 2.04(c) in violation of the requirements of
this Agreement or (ii) a Lender having notified in writing any Borrower and/or
the Administrative Agent that such Lender does not intend to comply with its
obligations under Section 1.01(a), 1.01(c) or 2.
46
<PAGE>
"Letter of Credit" shall have the meaning provided in Section
2.01(a).
"Letter of Credit Fees" shall have the meaning provided in
Section 3.01(b).
"Letter of Credit Outstandings" shall mean, at any time, the
sum of (i) the aggregate Stated Amount of all outstanding Letters of Credit and
(ii) the amount of all Unpaid Drawings.
"Letter of Credit Request" shall have the meaning provided in
Section 2.03(a).
"Lien" shall mean any mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any financing or similar statement or notice filed under
the UCC or any other similar recording or notice statute, and any lease having
substantially the same effect as any of the foregoing).
"Loan" shall mean each Revolving Loan and each Swingline Loan.
"Mandatory Borrowing" shall have the meaning provided in
Section 1.01(c).
"Material Adverse Effect" shall mean any material adverse
effect on the business, operations, property, assets, liabilities, condition
(financial or otherwise) or prospects of the Borrower or the Borrower and its
Subsidiaries taken as a whole.
"Maturity Date" shall mean November 24, 2002.
"Maximum Swingline Amount" shall mean $5,000,000.
"Minimum Borrowing Amount" shall mean (i) in the case of
Base Rate Loans, $250,000, (ii) in the case of Eurodollar Loans, $500,000,
and (iii) in the case of Swingline Loans, $50,000.
"Minimum Facing Fee Amount" shall have the meaning provided in
Section 3.01(c).
"Net Debt Proceeds" shall mean, with respect to any incurrence
of Indebtedness for borrowed money, the cash proceeds (net of underwriting
discounts and commissions and other reasonable costs associated therewith)
received by the respective Person from the respective incurrence of such
Indebtedness for borrowed money.
"Net Insurance Proceeds" shall mean, with respect to any
Recovery Event, the cash proceeds (net of reasonable costs incurred in
connection with such Recovery Event) received by the respective Person in
connection with the respective Recovery Event.
"Net Sale Proceeds" shall mean for any sale of assets, the
gross cash proceeds (including any cash received by way of deferred payment
pursuant to a promissory note,
47
<PAGE>
receivable or otherwise, but only as and when received) received from such sale
of assets, net of (a) cash expenses of sale (including, without limitation,
brokerage fees, if any, transfer taxes and payment of principal, premium and
interest of Indebtedness (other than the Loans) secured by the assets sold and
required to be paid as a result of such asset sale) and (b) the marginal
increased amount of all foreign, federal, state and local taxes to the extent
actually payable in cash during (or within 120 days after) the fiscal year in
which the respective asset sale occurred as a direct consequence of any such
asset sale.
"Non-Defaulting Lender" shall mean and include each Lender
other than a Defaulting Lender.
"Note" shall mean each Revolving Loan Note and each Swingline
Note .
"Notice of Borrowing" shall have the meaning provided in
Section 1.03(a).
"Notice of Conversion" shall have the meaning provided in
Section 1.06.
"Notice Office" shall mean the office of the Administrative
Agent located at 130 Liberty Street, New York, New York 10006, Attention:
Christina Tang, or such other office as the Administrative Agent may hereafter
designate in writing as such to the other parties hereto.
"Obligations" shall mean all amounts owing to the
Administrative Agent, the Collateral Agent or any Lender pursuant to the terms
of this Agreement or any other Credit Document.
"Other Hedging Agreement" shall mean any foreign exchange
contracts, currency swap agreements, commodity agreements or other similar
agreements or arrangements designed to protect against the fluctuations in
currency values.
"Participant" shall have the meaning provided in Section
2.04(a).
"Payment Office" shall mean the office of the Administrative
Agent located at One Bankers Trust Plaza, New York, New York 10006, Attention:
Christina Tang, or such other office as the Administrative Agent may hereafter
designate in writing as such to the other parties hereto.
"Percentage" of any Lender at any time shall mean a fraction
(expressed as a percentage) the numerator of which is the Commitment of such
Lender at such time and the denominator of which is the Total Commitment at such
time, PROVIDED that if the Percentage of any Lender is to be determined after
the Total Commitment has terminated, then the Percentages of the Lenders shall
be determined immediately prior (and without giving effect) to such termination.
"Permitted Holders" shall mean each Person identified under
"Item 12. Security Ownership of Certain Beneficial Owners and Management
Beneficial Ownership of Voting Securities" as set forth in the Form 10-K/A of
the Borrower for the fiscal year ended April 30,
48
<PAGE>
1999, including the current directors and executive officers of the Borrower
(individually and as a group).
"Person" shall mean any individual, partnership, joint
venture, limited liability company, firm, corporation, association, trust or
other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
"Pledged Shares" shall mean all of the Superior Shares pledged
(and delivered for pledge) pursuant to the US Pledge Agreement and all of the
Cookson Shares pledged (and delivered for pledge) pursuant to the UK Pledge
Agreement.
"Pledge Agreements" shall mean each of (i) the US Pledge
Agreement and (ii) the UK Pledge Agreement.
"Prime Lending Rate" shall mean the rate which BTCo announces
from time to time as its prime lending rate, the Prime Lending Rate to change
when and as such prime lending rate changes. The Prime Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. BTCo may make commercial loans or other loans
at rates of interest at, above or below the Prime Lending Rate.
"Quarterly Payment Date" shall mean the last Business Day of
each December, March, June and September occurring after the Effective Date.
"RCRA" shall mean the Resource Conservation and Recovery Act,
as the same may be amended from time to time, 42 U.S.C. Section 6901 ET SEQ.
"Real Property" of any Person shall mean all the right, title
and interest of such Person in and to land, improvements and fixtures, including
Leaseholds.
"Recovery Event" shall mean the receipt by the Borrower of any
cash insurance proceeds or condemnation awards payable (i) by reason of theft,
loss, physical destruction or damage or any other similar event with respect to
any property or assets of the Borrower and (ii) under any policy of insurance
required to be maintained under Section 8.03.
"Refinancing" shall mean and include the refinancing and
repayment in full of all amounts outstanding (and any premiums owed) under, and
the termination in full of all commitments and Letters of Credit in respect of,
the Indebtedness to be Refinanced.
"Register" shall have the meaning provided in Section 13.15.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System as from time to time in effect and any
successor to all or a portion thereof establishing reserve requirements.
"Regulation T" shall mean Regulation T of the Board of
Governors of the Federal Reserve System as from time to time in effect and
any successor to all or a portion thereof.
49
<PAGE>
"Regulation U" shall mean Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect and
any successor to all or a portion thereof.
"Regulation X" shall mean Regulation X of the Board of
Governors of the Federal Reserve System as from time to time in effect and
any successor to all or a portion thereof.
"Release" means disposing, discharging, injecting, spilling,
pumping, leaking, leaching, dumping, emitting, escaping, emptying, pouring or
migrating, into or upon any land or water or air, or otherwise entering into the
environment.
"Replaced Lender" shall have the meaning provided in Section
1.13.
"Replacement Lender" shall have the meaning provided in
Section 1.13.
"Required Lenders" shall mean Non-Defaulting Lenders the sum
of whose Commitments (or after the termination thereof, outstanding Revolving
Loans and Percentages of outstanding Swingline Loans and Letter of Credit
Outstandings) represent an amount greater than 50% of the sum of the Total
Commitment less the Commitments of all Defaulting Lenders (or after the
termination thereof, the sum of the then total outstanding Revolving Loans of
Non-Defaulting Lenders and the aggregate Percentages of Non-Defaulting Lenders
of the total outstanding Swingline Loans and Letter of Credit Outstandings at
such time).
"Revolving Loan" shall have the meaning provided in Section
1.01(a).
"Revolving Note" shall have the meaning provided in Section
1.05(a).
"SEC" shall have the meaning provided in Section 8.01(h).
"Section 4.04(b)(ii) Certificate" shall have the meaning
provided in Section 4.04(b)(ii).
"Secured Creditors" shall mean the "Secured Creditors" as
defined in each Pledge Agreement.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder.
"Senior Note Document" shall mean the Senior Note Indenture,
the Senior Notes and each other document or agreement relating to the issuance
of the Senior Notes.
"Senior Note Indenture" shall mean the Indenture, dated as of
July 15, 1995, between the Borrower and Marine Midland Bank as Trustee
thereunder.
"Senior Notes" shall mean the Borrower's 12.25% Senior Notes
due 2003 issued pursuant to the Senior Note Indenture.
"Shares" shall mean each of the Superior Shares and the
Cookson Shares.
50
<PAGE>
"Significant Subsidiary" means any Subsidiary of the Borrower
that would be a "significant subsidiary" as defined in Article 1, Rule 1-02 of
Regulation S-X, promulgated pursuant to the Securities Act, as such Regulation
is in effect on the date hereof.
"Stated Amount" of each Letter of Credit shall, at any time,
mean the maximum amount then available to be drawn thereunder (in each case
determined without regard to whether any conditions to drawing could then be
met, but after giving effect to all previous drawings made thereunder).
"Subsidiary" shall mean, as to any Person, (i) any corporation
more than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person and/or one or
more Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time; it being understood
and agreed that in no event shall PolyVision Corporation be treated as a
Subsidiary of the Borrower under this Agreement hereunder regardless of whether
the Borrower acquires after the date hereof more than 50% of the Voting Stock of
PolyVision Corporation.
"Superior" shall mean Superior Telecom, Inc., a Delaware
corporation.
"Superior Option Shares" shall mean Superior Shares in an
aggregate amount not to exceed 150,000 (as adjusted for Superior stock splits
and stock dividends after the Effective Date) with respect to which certain past
or present officers, directors, employees and consultants of the Borrower have
been, or may be, granted options to purchase, including without limitation,
those certain options to purchase pursuant to those certain option agreements
entered into among the Borrower and such aforementioned Persons and dated March
23, 1999.
"Superior Shares" shall mean any of the issued and outstanding
common stock of Superior owned by the Borrower.
"Supermajority Lenders" shall mean those Non-Defaulting
Lenders which would constitute the Required Lenders under, and as defined in,
this Agreement if the percentage "50%" contained therein were changed to
"66-2/3%".
"Swingline Expiry Date" shall mean the date which is five
Business Days prior to the Maturity Date.
"Swingline Lender" shall mean BTCo.
"Swingline Loans" shall have the meaning provided in Section
1.01(b).
"Swingline Note" shall have the meaning provided in Section
1.05(a).
51
<PAGE>
"Syndication Agent" shall have the meaning provided in the
first paragraph of this Agreement.
"Taxes" shall have the meaning provided in Section 4.04(a).
"Total Commitment" shall mean, at any time, the sum of the
Commitments of each of the Lenders.
"Total Unutilized Commitment" shall mean, at any time, an
amount equal to the remainder of (x) the Total Commitment then in effect, less
(y) the sum of (I) the aggregate principal amount of Revolving Loans then
outstanding plus (II) the aggregate principal amount of Swingline Loans then
outstanding plus (III) the then aggregate amount of Letter of Credit
Outstandings.
"Type" shall mean the type of Loan determined with regard to
the interest option applicable thereto, I.E., whether a Base Rate Loan or a
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the relevant jurisdiction.
"UK Pledge Agreement" shall have the meaning provided in
Section 5.07(b).
"United States" and "U.S." shall each mean the United States
of America.
"Unpaid Drawings" shall have the meaning provided in Section
2.05(a).
"Unutilized Commitment" with respect to any Lender, at any
time, shall mean such Lender's Commitment at such time less the sum of (x) the
aggregate principal amount of Revolving Loans of such Lender then outstanding
and (y) such Lender's Percentage of the Letter of Credit Outstandings; PROVIDED
that the Unutilized Commitment of the Swingline Lender shall at any time and
from time to time be reduced (but not below zero) by the aggregate amount of
Swingline Loans made by it which are then outstanding.
"US Pledge Agreement" shall have the meaning provided in
Section 5.07(a).
"Valuation Certificate" shall have the meaning provided in
Section 8.01(j).
"Value" shall mean, on the date of determining the value of
any (i) Superior Shares pursuant to this Agreement (each such date and each date
of determining the value of Cookson Shares, a "Determination Date"), the average
of the daily market prices for such Superior Shares for the 10 consecutive
trading days preceding such date determined in accordance with the two
immediately succeeding sentences and (ii) Cookson Shares pursuant to this
Agreement, the average of the daily closing middle market quotations for such
Cookson Shares for the 10 consecutive trading days preceding such date, derived
from the London Stock Exchange Daily Official List for each such day or if such
Cookson Shares are not admitted to the Official List of the London Stock
Exchange, then the Value thereof shall be the fair market value per share of
such Shares as determined, to the reasonable satisfaction of the Administrative
52
<PAGE>
Agent, by an independent evaluation firm reasonably satisfactory to the
Administrative Agent. In the case of any determination of the Value of Superior
Shares, the market price for each such day shall be the last sale price on such
day as reported on the New York Stock Exchange consolidated tape, or, if such
Superior Shares are not listed on the New York Stock Exchange, or reported on
such consolidated tape, then the last sale price on such day on the principal
U.S. stock exchange on which such Superior Shares are then listed or admitted to
trading, or, if no sale takes place on such day on such exchange, the average of
the closing bid and asked prices on such day as officially quoted on such
exchange, or, if such Superior Shares are not then listed or admitted to trading
on any U.S. stock exchange but is quoted on the Nasdaq Stock Market's National
Market, then the Value for each such trading day shall be the last sale price on
such day as quoted on the Nasdaq Stock Market's National Market. If such
Superior Shares are neither listed or admitted to trading on any U.S. stock
exchange nor quoted on such day on the Nasdaq Stock Markets National Market,
then the Value shall be the fair market value per share of such Superior Shares
as determined, to the reasonable satisfaction of the Administrative Agent, by an
independent evaluation firm reasonably satisfactory to the Administrative Agent.
In the case of certain Dividends paid with respect to any Shares after the
delivery of a Valuation Certificate and prior to the preparation of a new
Valuation Certificate, the Value of the respective Share shall be adjusted as
provided in the last sentence of Section 8.01(j). For the purposes of any
determination of the Value of any Cookson Shares, any determination thereof
initially calculated in Pounds Sterling shall be converted into Dollars at the
spot exchange rate for purchases of Dollars with Pounds Sterling as quoted by
the Administrative Agent as of 11:00 (New York time) on the date of any such
determination.
"Voting Stock" shall mean, as to any Person, any class or
classes of capital stock of such Person pursuant to which the holders thereof
have the general voting power under ordinary circumstances to elect at least a
majority of the Board of Directors of such Person.
SECTION 12. THE AGENTS.
12.01 APPOINTMENT. The Lenders hereby designate BTCo as
Administrative Agent (for purposes of this Section 12 and Section 13.01, the
term "Administrative Agent" shall include BTCo in its capacity as Collateral
Agent pursuant to each Pledge Agreement) to act as specified herein and in the
other Credit Documents. The Lenders hereby designate Fleet Bank, N.A. as
Syndication Agent and Bank of America, N.A. as Documentation Agent in each case
to act as specified herein and in the other Credit Documents. Each Lender hereby
irrevocably authorizes, and each holder of any Note by the acceptance of such
Note shall be deemed irrevocably to authorize, the Agents to take such action on
their behalf under the provisions of this Agreement, the other Credit Documents
and any other instruments and agreements referred to herein or therein and to
exercise such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Agents by the terms hereof and
thereof and such other powers as are reasonably incidental thereto. The Agents
may perform any of their duties hereunder by or through their respective
officers, directors, agents, employees or affiliates.
12.02 NATURE OF DUTIES. No Agent shall have any duties or
responsibilities except those expressly set forth in this Agreement and in the
other Credit Documents. No Agent nor any
53
<PAGE>
of its respective officers, directors, agents, employees or affiliates shall be
liable for any action taken or omitted by it or them hereunder or under any
other Credit Document or in connection herewith or therewith, unless caused by
its or their gross negligence or willful misconduct. The duties of each Agent
shall be mechanical and administrative in nature; no Agent shall have by reason
of this Agreement or any other Credit Document a fiduciary relationship in
respect of any Lender or the holder of any Note; and nothing in this Agreement
or any other Credit Document, expressed or implied, is intended to or shall be
so construed as to impose upon any Agent any obligations in respect of this
Agreement or any other Credit Document except as expressly set forth herein or
therein.
12.03 LACK OF RELIANCE ON THE AGENTS. Independently and
without reliance upon any Agent, each Lender and the holder of each Note, to the
extent it deems appropriate, has made and shall continue to make (i) its own
independent investigation of the financial condition and affairs of the Borrower
and its Subsidiaries in connection with the making and the continuance of the
Loans and the taking or not taking of any action in connection herewith and (ii)
its own appraisal of the creditworthiness of the Borrower and its Subsidiaries
and, except as expressly provided in this Agreement, no Agent shall have any
duty or responsibility, either initially or on a continuing basis, to provide
any Lender or the holder of any Note with any credit or other information with
respect thereto, whether coming into its possession before the making of the
Loans or at any time or times thereafter. No Agent shall be responsible to any
Lender or the holder of any Note for any recitals, statements, information,
representations or warranties herein or in any document, certificate or other
writing delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority or
sufficiency of this Agreement or any other Credit Document or the financial
condition of the Borrower or any of its Subsidiaries or be required to make any
inquiry concerning either the performance or observance of any of the terms,
provisions or conditions of this Agreement or any other Credit Document, or the
financial condition of the Borrower or any of its Subsidiaries or the existence
or possible existence of any Default or Event of Default.
12.04 CERTAIN RIGHTS OF THE AGENTS. The Agents shall have the
right to request instructions from the Required Lenders at any time. If any
Agent shall request instructions from the Required Lenders with respect to any
act or action (including failure to act) in connection with this Agreement or
any other Credit Document, such Agent shall be entitled to refrain from such act
or taking such action unless and until such Agent shall have received
instructions from the Required Lenders; and such Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing, no
Lender or the holder of any Note shall have any right of action whatsoever
against any Agent as a result of such Agent acting or refraining from acting
hereunder or under any other Credit Document in accordance with the instructions
of the Required Lenders.
12.05 RELIANCE. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other document or telephone message signed, sent or made by
any Person that such Agent believed to be the proper Person, and, with respect
to all legal matters pertaining to this Agreement and any other Credit Document
and its duties hereunder and thereunder, upon advice of counsel selected by such
Agent (which may be counsel
54
<PAGE>
for the Borrower) and, with respect to other matters, upon advice of independent
public accountants or other experts selected by it.
12.06 INDEMNIFICATION. To the extent any Agent is not
reimbursed and indemnified by the Borrower or its Subsidiaries, the Lenders will
reimburse and indemnify such Agent, in proportion to their respective
"percentages" as used in determining the Required Lenders, for and against any
and all liabilities, obligations, losses, damages, penalties, claims, actions,
judgments, costs, expenses or disbursements of whatsoever kind or nature which
may be imposed on, asserted against or incurred by such Agent in performing its
respective duties hereunder or under any other Credit Document, in any way
relating to or arising out of this Agreement or any other Credit Document;
PROVIDED that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from such Agent's gross negligence or
willful misconduct.
12.07 EACH AGENT IN ITS INDIVIDUAL CAPACITY. With respect to
its obligation to make Loans under this Agreement, each Agent shall have the
rights and powers specified herein for a "Lender" and may exercise the same
rights and powers as though it were not performing the duties specified herein;
and the term "Lenders," "Required Lenders," "Supermajority Lenders," "holders of
Notes" or any similar terms shall, unless the context clearly otherwise
indicates, include such Agent in its individual capacity. Each Agent may accept
deposits from, lend money to, and generally engage in any kind of banking, trust
or other business with the Borrower or any Affiliate of the Borrower as if it
were not performing the duties specified herein, and may accept fees and other
consideration from the Borrower for services in connection with this Agreement
and otherwise without having to account for the same to the Lenders.
12.08 HOLDERS. The Administrative Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment, transfer or endorsement thereof, as the case
may be, shall have been filed with the Administrative Agent. Any request,
authority or consent of any Person who, at the time of making such request or
giving such authority or consent, is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee, assignee or indorsee, as the
case may be, of such Note or of any Note or Notes issued in exchange therefor.
12.09 RESIGNATION BY THE AGENTS. (a) The Administrative Agent
may resign from the performance of all its functions and duties hereunder and/or
under the other Credit Documents at any time by giving 15 Business Days' prior
written notice to the Lenders and the Borrower. Such resignation shall take
effect upon the appointment of a successor Administrative Agent pursuant to
clauses (b) and (c) below or as otherwise provided below.
(b) Upon any such notice of resignation, the Required Lenders
shall appoint a successor Administrative Agent hereunder or thereunder which
shall be a commercial bank or trust company reasonably acceptable to the
Borrower.
(c) If a successor Administrative Agent shall not have been so
appointed within such 15 Business Day period, the Administrative Agent, with the
consent of the Borrower (which consent shall not be unreasonably withheld or
delayed), shall then appoint a successor
55
<PAGE>
Administrative Agent which shall serve as Administrative Agent hereunder or
thereunder until such time, if any, as the Required Lenders appoint a successor
Administrative Agent as provided above.
(d) If no successor Administrative Agent has been appointed
pursuant to clause (b) or (c) above by the 20th Business Day after the date such
notice of resignation was given by the Administrative Agent, the Administrative
Agent's resignation shall become effective and the Required Lenders shall
thereafter perform all the duties of the Administrative Agent hereunder and/or
under any other Credit Document until such time, if any, as the Required Lenders
appoint a successor Administrative Agent as provided above.
(e) Each of the Syndication Agent and the Documentation Agent
may, upon five Business Days' notice to the Borrower, the Administrative Agent
and the Lenders, resign at any time (effective upon the fifth Business Day after
the giving of such notice).
(f) Upon a resignation of any Agent pursuant to this Section
12.09, such Agent shall remain indemnified to the extent provided in this
Agreement and the other Credit Documents and the provisions of this Section 12
shall continue in effect for the benefit of such Agent for all of its actions
and inactions while serving as such Agent.
SECTION 13. MISCELLANEOUS.
13.01 PAYMENT OF EXPENSES, ETC. The Borrower shall: (i)
whether or not the transactions herein contemplated are consummated, pay all
reasonable out-of-pocket costs and expenses of each Agent (including, without
limitation, the reasonable fees and disbursements of White & Case LLP) in
connection with the preparation, execution and delivery of this Agreement and
the other Credit Documents and the documents and instruments referred to herein
and therein and any amendment, waiver or consent relating hereto or thereto, of
each Agent in connection with its syndication efforts with respect to this
Agreement and of each Agent and, after the occurrence of an Event of Default,
each of the Lenders in connection with the enforcement of this Agreement and the
other Credit Documents and the documents and instruments referred to herein and
therein (including, without limitation, the reasonable fees and disbursements of
one counsel for the Agents); (ii) pay and hold each of the Lenders harmless from
and against any and all present and future stamp, excise and other similar
documentary taxes with respect to the foregoing matters and save each of the
Lenders harmless from and against any and all liabilities with respect to or
resulting from any delay or omission (other than to the extent attributable to
such Lender) to pay such taxes; and (iii) indemnify each Agent and each Lender,
and each of their respective officers, directors, employees, representatives and
agents from and hold each of them harmless against any and all liabilities,
obligations (including removal or remedial actions), losses, damages, penalties,
claims, actions, judgments, suits, costs, expenses and disbursements (including
reasonable attorneys' and consultants' fees and disbursements) incurred by,
imposed on or assessed against any of them as a result of, or arising out of, or
in any way related to, or by reason of, (a) any investigation, litigation or
other proceeding (whether or not any Agent or any Lender is a party thereto)
related to the entering into and/or performance of this Agreement or any other
Credit Document or the proceeds of any Loans hereunder or the consummation of
any transactions contemplated herein or in any other Credit Document or the
exercise of any of their
56
<PAGE>
rights or remedies provided herein or in the other Credit Documents, or (b) the
actual or alleged presence of Hazardous Materials in the air, surface, water or
groundwater or on the surface or subsurface of any Real Property owned or at any
time operated by the Borrower or any of its Subsidiaries, the generation,
storage, transportation, handling or disposal of Hazardous Materials by the
Borrower or any of its Subsidiaries at any location, whether or not owned or
operated by the Borrower or any of its Subsidiaries, the non-compliance of any
Real Property owned or at any time operated by the Borrower or any of its
Subsidiaries with foreign, federal, state and local laws, regulations, and
ordinances (including applicable permits thereunder) applicable to such Real
Property, or any Environmental Claim asserted against the Borrower, any of its
Subsidiaries or any Real Property owned or at any time operated by the Borrower
or any of its Subsidiaries, including, in each case, without limitation, the
reasonable fees and disbursements of counsel and other consultants incurred in
connection with any such investigation, litigation or other proceeding (but
excluding any losses, liabilities, claims, damages or expenses to the extent
incurred by reason of the gross negligence or willful misconduct of the Person
to be indemnified). To the extent that the undertaking to indemnify, pay or hold
harmless any Agent or any Lender set forth in the preceding sentence may be
unenforceable because it is violative of any law or public policy, the Borrower
shall make the maximum contribution to the payment and satisfaction of each of
the indemnified liabilities which is permissible under applicable law.
13.02 RIGHT OF SETOFF. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence of an Event of Default, each
Lender is hereby authorized (to the extent not prohibited by applicable law) at
any time or from time to time, without presentment, demand, protest or other
notice of any kind to the Borrower or to any other Person, any such notice being
hereby expressly waived, to set off and to appropriate and apply any and all
deposits (general or special) and any other Indebtedness at any time held or
owing by such Lender (including, without limitation, by branches and agencies of
such Lender wherever located) to or for the credit or the account of the
Borrower against and on account of the Obligations and liabilities of the
Borrower to such Lender under this Agreement or under any of the other Credit
Documents, including, without limitation, all interests in Obligations purchased
by such Lender pursuant to Section 13.06(b), and all other claims of any nature
or description arising out of or connected with this Agreement or any other
Credit Document, irrespective of whether or not such Lender shall have made any
demand hereunder and although said Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured.
13.03 NOTICES. Except as otherwise expressly provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telegraphic, telex, telecopier or cable communication) and mailed,
telegraphed, telexed, telecopied, cabled or delivered: if to the Borrower, at
the address specified opposite its signature below or in the other relevant
Credit Documents; if to any Lender, at its address specified on Schedule II; and
if to the Administrative Agent, at the Notice Office; or, as to the Borrower or
the Administrative Agent, at such other address as shall be designated by such
party in a written notice to the other parties hereto and, as to each Lender, at
such other address as shall be designated by such Lender in a written notice to
the Borrower and the Administrative Agent. All such notices and communications
shall, when mailed, telegraphed, telexed, telecopied, or cabled or sent by
overnight courier, be effective (x) three Business Days after deposited in the
mails, (y) one
57
<PAGE>
Business Day after delivered to the telegraph company, cable company or a
recognized overnight courier, as the case may be, or (z) when sent by telex or
telecopier, except that notices and communications to the Administrative Agent
shall not be effective until received by the Administrative Agent.
13.04 BENEFIT OF AGREEMENT; ASSIGNMENTS; PARTICIPATIONS. (a)
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the respective successors and assigns of the parties hereto;
PROVIDED, HOWEVER, the Borrower may not assign or transfer any of its rights,
obligations or interest hereunder without the prior written consent of the
Lenders and, PROVIDED FURTHER, that, although any Lender may transfer, assign or
grant participations in its rights hereunder, such Lender shall remain a
"Lender" for all purposes hereunder and the transferee, assignee or participant,
as the case may be, shall not constitute a "Lender" hereunder and, PROVIDED
FURTHER, that no Lender shall transfer or grant any participation under which
the participant shall have rights to approve any amendment to or waiver of this
Agreement or any other Credit Document except to the extent such amendment or
waiver would (i) extend the final scheduled maturity of any Loan or Note in
which such participant is participating, or reduce the rate or extend the time
of payment of interest thereon (except in connection with a waiver of
applicability of any post-default increase in interest rates) or reduce the
principal amount thereof, or increase the amount of the participant's
participation over the amount thereof then in effect (it being understood that a
waiver of any Default or Event of Default or of a mandatory reduction in the
Total Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Commitment or Loan shall be permitted
without the consent of any participant if the participant's participation is not
increased as a result thereof), (ii) consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement or (iii)
release all or substantially all of the Collateral under the Pledge Agreements
(except as expressly provided in the Pledge Agreements) supporting the Loans
hereunder in which such participant is participating. In the case of any such
participation, the participant shall not have any rights under this Agreement or
any of the other Credit Documents (the participant's rights against such Lender
in respect of such participation to be those set forth in the agreement executed
by such Lender in favor of the participant relating thereto) and all amounts
payable by the Borrower hereunder shall be determined as if such Lender had not
sold such participation.
(b) Notwithstanding the foregoing, any Lender (or any Lender
together with one or more other Lenders) may (x) assign all or a portion of its
Commitments and related outstanding Obligations hereunder to (i) its parent
company and/or any affiliate of such Lender which is at least 50% owned by such
Lender or its parent company or to one or more Lenders or (ii) in the case of
any Lender that is a fund that invests in bank loans, any other fund that
invests in bank loans and is managed by the same investment advisor of such
Lender or by an Affiliate of such investment advisor or (y) assign all, or if
less than all, a portion equal to at least $5,000,000 in the aggregate for the
assigning Lender or assigning Lenders, of such Commitment or Commitments and/or
outstanding Obligations hereunder to one or more Eligible Transferees, each of
which assignees shall become a party to this Agreement as a Lender by execution
of an Assignment and Assumption Agreement, PROVIDED that (i) at such time
Schedule I shall be deemed modified to reflect the Commitments of such new
Lender and of the existing Lenders, (ii) upon the surrender of the Note by the
assigning Lender (or, upon such assigning Lender's indemnifying the Borrower for
any lost Note pursuant to a customary indemnification agreement)
58
<PAGE>
new Notes will be issued, at the Borrower's expense, to such new Lender and to
the assigning Lender upon the request of such new Lender or assigning Lender,
such new Notes to be in conformity with the requirements of Section 1.05 (with
appropriate modifications) to the extent needed to reflect the revised
Commitments and/or outstanding Revolving Loans, (iii) the consent of the
Administrative Agent and, unless a Default or an Event of Default then exists,
the Borrower (which consent shall not be unreasonably withheld or delayed) shall
be required in connection with any assignment to an Eligible Transferee pursuant
to clause (y) above, (iv) the consent of each Issuing Lender (which consent
shall not be unreasonably withheld or delayed) shall be required in connection
with any assignment pursuant to this Section 13.04(b), (v) the Administrative
Agent shall receive at the time of each such assignment, from the assigning or
assignee Lender, the payment of a non-refundable assignment fee of $3,500, and
(vi) promptly after such assignment, the Borrower shall have received from the
Administrative Agent notice of any such assignment and of the identity,
nationality and applicable lending office of any such Eligible Transferee that
is not a United States person (as defined in Section 7701(a)(30) of the Code),
together with the copy of the Assignment and Assumption Agreement relating
thereto and, PROVIDED FURTHER, that such transfer or assignment will not be
effective until recorded by the Administrative Agent on the Register pursuant to
Section 13.15 hereof. To the extent of any assignment pursuant to this Section
13.04(b), the assigning Lender shall be relieved of its obligations hereunder
with respect to its assigned Commitment and outstanding Revolving Loans. At the
time of each assignment pursuant to this Section 13.04(b) to a Person which is
not already a Lender hereunder and which is not a United States person (as such
term is defined in Section 7701(a)(30) of the Code) for Federal income tax
purposes, the respective assignee Lender shall, to the extent legally entitled
to do so, provide to the Borrower the appropriate Internal Revenue Service Forms
(and, if applicable, a Section 4.04(b)(ii) Certificate) described in Section
4.04(b). To the extent that an assignment of all or any portion of a Lender's
Commitments and related outstanding Obligations pursuant to Section 1.13 or this
Section 13.04(b) would, at the time of such assignment, result in increased
costs under Section 1.10 or 4.04 in excess of those being charged by the
respective assigning Lender prior to such assignment, then the Borrower shall
not be obligated to pay such excess increased costs (although the Borrower, in
accordance with and pursuant to the other provisions of this Agreement, shall be
obligated to pay the costs which are not in excess of those being charged by the
respective assigning Lender prior to such assignment and any subsequent
increased costs of the type described above resulting from changes after the
date of the respective assignment).
(c) Nothing in this Agreement shall prevent or prohibit any
Lender from pledging its Loans and Notes hereunder to a Federal Reserve Bank in
support of borrowings made by such Lender from such Federal Reserve Bank and,
with the consent of the Administrative Agent, any Lender which is a fund may
pledge all or any portion of its Notes or Loans to its trustee in support of its
obligations to its trustee. No pledge pursuant to this clause (c) shall release
the transferor Lender from any of its obligations hereunder.
13.05 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on
the part of the Administrative Agent, the Collateral Agent or any Lender in
exercising any right, power or privilege hereunder or under any other Credit
Document and no course of dealing between the Borrower and the Administrative
Agent, the Collateral Agent or any Lender shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
or under any other Credit Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder
59
<PAGE>
or thereunder. The rights, powers and remedies herein or in any other Credit
Document expressly provided are cumulative and not exclusive of any rights,
powers or remedies which the Administrative Agent, the Collateral Agent or any
Lender would otherwise have. No notice to or demand on the Borrower in any case
shall entitle the Borrower to any other or further notice or demand in similar
or other circumstances or constitute a waiver of the rights of the
Administrative Agent, the Collateral Agent or any Lender to any other or further
action in any circumstances without notice or demand.
13.06 PAYMENTS PRO RATA. (a) Except as otherwise provided in
this Agreement, the Administrative Agent agrees that promptly after its receipt
of each payment from or on behalf of the Borrower in respect of any Obligations
hereunder, it shall distribute such payment to the Lenders (other than any
Lender that has consented in writing to waive its PRO RATA share of any such
payment) PRO RATA based upon their respective shares, if any, of the Obligations
with respect to which such payment was received.
(b) Each of the Lenders agrees that, if it should receive any
amount hereunder (whether by voluntary payment, by realization upon security, by
the exercise of the right of setoff or banker's lien, by counterclaim or cross
action, by the enforcement of any right under the Credit Documents, or
otherwise), which is applicable to the payment of the principal of, or interest
on, the Loans, of a sum which with respect to the related sum or sums received
by other Lenders is in a greater proportion than the total of such Obligation
then owed and due to such Lender bears to the total of such Obligation then owed
and due to all of the Lenders immediately prior to such receipt, then such
Lender receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations of the Borrower
to such Lenders in such amount as shall result in a proportional participation
by all the Lenders in such amount; PROVIDED that if all or any portion of such
excess amount is thereafter recovered from such Lender, such purchase shall be
rescinded and the purchase price restored to the extent of such recovery, but
without interest.
13.07 CALCULATIONS; COMPUTATIONS. (a) The financial statements
to be furnished to the Lenders pursuant hereto shall be made and prepared in
accordance with generally accepted accounting principles in the United States,
consistently applied throughout the periods involved (except as set forth in the
notes thereto or as otherwise disclosed in writing by the Borrower to the
Lenders).
(b) All computations of interest, Commitment Commission and
Fees hereunder shall be made on the basis of a year of 360 days for the actual
number of days (including the first day but excluding the last day) occurring in
the period for which such interest, Commitment Commission or Fees are payable.
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER
OF JURY TRIAL. (a) THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. ANY LEGAL
ACTION OR
60
<PAGE>
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE UNITED STATES
FOR THE SOUTHERN DISTRICT OF NEW YORK IN EACH CASE WHICH ARE LOCATED IN THE CITY
OF NEW YORK AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER
HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY
AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER
HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT ANY SUCH COURTS LACK PERSONAL
JURISDICTION OVER IT, AND AGREES NOT TO PLEAD OR CLAIM, IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENTS BROUGHT
IN ANY OF THE AFOREMENTIONED COURTS, THAT SUCH COURTS LACK PERSONAL JURISDICTION
OVER IT. THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT
OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE
MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO
THE BORROWER AT ITS ADDRESS SET FORTH OPPOSITE ITS SIGNATURE BELOW, SUCH SERVICE
TO BECOME EFFECTIVE 30 DAYS AFTER SUCH MAILING. THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES
AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED HEREUNDER
OR UNDER ANY OTHER CREDIT DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY
INVALID OR INEFFECTIVE. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE
ADMINISTRATIVE AGENT, ANY LENDER OR THE HOLDER OF ANY NOTE TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE
PROCEED AGAINST THE BORROWER IN ANY OTHER JURISDICTION.
(b) THE BORROWER HEREBY IRREVOCABLY WAIVES ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF THE AFORESAID
ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER CREDIT DOCUMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (a) ABOVE
AND HEREBY FURTHER IRREVOCABLY, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION
OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(c) EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
13.09 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so
61
<PAGE>
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A set of counterparts executed by all
the parties hereto shall be lodged with the Borrower and the Administrative
Agent.
13.10 EFFECTIVENESS. This Agreement shall become effective on
the date (the "Effective Date") on which (i) the Borrower, the Administrative
Agent and each Lender shall have signed a counterpart hereof (whether the same
or different counterparts) and shall have delivered the same to the
Administrative Agent at the Notice Office or, in the case of the Lenders, shall
have given to the Administrative Agent telephonic (confirmed in writing),
written or telex notice (actually received) at such office that the same has
been signed and mailed to it and (ii) the conditions contained in Section 5 are
met to the satisfaction of the Administrative Agent and the Required Lenders.
The Administrative Agent shall give the Borrower and each Lender prompt written
notice of the occurrence of the Effective Date.
13.11 HEADINGS DESCRIPTIVE. The headings of the several
sections and subsections of this Agreement are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision of this
Agreement.
13.12 AMENDMENT OR WAIVER; ETC. (a) Neither this Agreement nor
any other Credit Document nor any terms hereof or thereof may be changed,
waived, discharged or terminated unless such change, waiver, discharge or
termination is in writing signed by the Borrower and the Required Lenders,
PROVIDED that no such change, waiver, discharge or termination shall, without
the consent of each Lender with Obligations being directly modified, (i) extend
the final scheduled maturity of any Loan or Note, or reduce the rate or extend
the time of payment of interest thereon, or reduce the principal amount thereof
(except to the extent repaid in cash), (ii) release any of the Collateral
(except as expressly provided in the Credit Documents) under either Pledge
Agreement, (iii) amend, modify or waive any provision of this Section 13.12
(except for technical amendments with respect to additional extensions of credit
pursuant to this Agreement which afford the protections set forth in the proviso
below to such additional extensions of credit), (iv) reduce the percentage
specified in the definition of Required Lenders (it being understood that, with
the consent of the Required Lenders, additional extensions of credit pursuant to
this Agreement may be included in the determination of the Required Lenders on
substantially the same basis as the extensions of Loans are included on the
Effective Date) or (v) consent to the assignment or transfer by the Borrower of
any of its rights and obligations under this Agreement; PROVIDED FURTHER, that
no such change, waiver, discharge or termination shall (1) increase the
Commitment of any Lender over the amount thereof then in effect without the
consent of such Lender (it being understood that waivers or modifications of
conditions precedent, covenants or Defaults or Events of Default shall not
constitute an increase of the Commitment of any Lender), (2) without the consent
of the Administrative Agent, amend, modify or waive any provision of Section 12
or any other provision as same relates to the rights or obligations of the
Administrative Agent, (3) without the consent of the Collateral Agent, amend,
modify or waive any provision relating to the rights or obligations of the
Collateral Agent or (4) without the consent of the Supermajority Lenders, amend,
modify or waive any provision of Section 4.02(c), 8.01(j), 9.01, 9.03, 9.07, or
10.09 or the definition of "Asset Coverage Ratio" or "Value".
62
<PAGE>
(b) If, in connection with any proposed change, waiver,
discharge or termination to any of the provisions of this Agreement as
contemplated by clauses (i) through (v), inclusive, of the first proviso to
Section 13.12(a), the consent of the Required Lenders is obtained but the
consent of one or more of such other Lenders whose consent is required is not
obtained, then the Borrower shall have the right, so long as all non-consenting
Lenders whose individual consent is required are treated as described below, to
replace each such non-consenting Lender or Lenders with one or more Replacement
Lenders pursuant to Section 1.13 so long as at the time of such replacement,
each such Replacement Lender consents to the proposed change, waiver, discharge
or termination, PROVIDED, that in any event the Borrower shall not have the
right to replace a Lender or repay its Loans solely as a result of the exercise
of such Lender's rights (and the withholding of any required consent by such
Lender) pursuant to the second proviso to Section 13.12(a).
13.13 SURVIVAL. All indemnities set forth herein including,
without limitation, in Sections 1.10, 1.11, 2.06, 4.04, 12.06 and 13.01 shall
survive the execution, delivery and termination of this Agreement and the Notes
and the making and repayment of the Obligations.
13.14 DOMICILE OF LOANS. Each Lender may transfer and carry
its Loans at, to or for the account of any office, Subsidiary or Affiliate of
such Lender. Notwithstanding anything to the contrary contained herein, to the
extent that a transfer of Loans pursuant to this Section 13.14 would, at the
time of such transfer, result in increased costs under Section 1.10, 1.11, 2.06
or 4.04 in excess of those being charged by the respective Lender prior to such
transfer, then the Borrower shall not be obligated to pay such excess increased
costs (although the Borrower, in accordance with and pursuant to the other
provisions of this Agreement, shall be obligated to pay the costs which would
apply in the absence of such designation and any subsequent increased costs of
the type described above resulting from changes after the date of the respective
transfer).
13.15 REGISTER. The Borrower hereby designates the
Administrative Agent to serve as the Borrower's agent, solely for purposes of
this Section 13.15, to maintain a register (the "Register") on which it will
record the Loans made by each of the Lenders and each repayment in respect of
the principal amount of the Loans of each Lender. Failure to make any such
recordation, or any error in such recordation shall not affect the Borrower's
obligations in respect of such Loans. With respect to any Lender, the transfer
of the Commitment of such Lender and the rights to the principal of, and
interest on, any Loan made pursuant to this Agreement shall not be effective
until such transfer is recorded on the Register maintained by the Administrative
Agent with respect to ownership of such Commitment and Loans and prior to such
recordation all amounts owing to the transferor with respect to such Loans shall
remain owing to the transferor. The registration of assignment or transfer of
all or part of any Loans shall be recorded by the Administrative Agent on the
Register only upon the acceptance by the Administrative Agent of a properly
executed and delivered Assignment and Assumption Agreement pursuant to Section
13.04(b). Coincident with the delivery of such an Assignment and Assumption
Agreement to the Administrative Agent for acceptance and registration of
assignment or transfer of all or part of a Commitment and any related Loan, or
as soon thereafter as practicable, the assigning or transferor Lender shall
surrender the Note evidencing such Loan, and thereupon one or more new Notes in
the same aggregate principal amount shall be issued to the assigning or
transferor Lender and/or the new Lender at the request of such Lender. The
63
<PAGE>
Borrower agrees to indemnify the Administrative Agent from and against any and
all losses, claims, damages and liabilities of whatsoever nature which may be
imposed on, asserted against or incurred by the Administrative Agent in
performing its duties under this Section 13.15.
13.16 CONFIDENTIALITY. (a) Subject to the provisions of clause
(b) of this Section 13.16, each Lender agrees that it will use its reasonable
efforts not to disclose without the prior consent of the Borrower (other than to
its employees, auditors, advisors or counsel or to another Lender if the Lender
or such Lender's holding or parent company in its sole discretion determines
that any such party should have access to such information, provided such
Persons shall be subject to the provisions of this Section 13.16 to the same
extent as such Lender) any information with respect to the Borrower or any of
its Subsidiaries which is now or in the future furnished pursuant to this
Agreement or any other Credit Document and which is designated by the Borrower
to the Lenders in writing as confidential, PROVIDED that any Lender may disclose
any such information (a) as has become generally available to the public, (b) as
may be required or appropriate in any report, statement or testimony submitted
to any municipal, state or Federal regulatory body having or claiming to have
jurisdiction over such Lender or to the Federal Reserve Board or the Federal
Deposit Insurance Corporation or similar organizations (whether in the United
States or elsewhere) or their successors, (c) as may be required or appropriate
in respect to any summons or subpoena or in connection with any litigation, (d)
in order to comply with any law, order, regulation or ruling applicable to such
Lender, (e) to the Administrative Agent or the Collateral Agent or any other
Lender and (f) to any prospective or actual transferee or participant in
connection with any contemplated transfer or participation of any of the Notes
or Commitments or any interest therein by such Lender, PROVIDED, that such
prospective transferee shall be subject to the provisions of this Section
13.16(a).
(b) The Borrower hereby acknowledges and agrees that each
Lender may share with any of its affiliates any information related to the
Borrower or any of its Subsidiaries (including, without limitation, any
nonpublic customer information regarding the creditworthiness of the Borrower
and its Subsidiaries, provided such Persons shall be subject to the provisions
of this Section 13.16 to the same extent as such Lender).
13.17 LIMITATION ON ADDITIONAL AMOUNTS, ETC. Notwithstanding
anything to the contrary contained in Section 1.10, 1.11 or 2.06 of this
Agreement, unless a Lender gives notice to the Borrower that it is obligated to
pay an amount under the respective Section within one year after the later of
(x) the date the Lender incurs the respective increased costs, loss, expense or
liability, reduction in amounts received or receivable or reduction in return on
capital or (y) the date such Lender has actual knowledge of its incurrence of
the respective increased costs, loss, expense or liability, reductions in
amounts received or receivable or reduction in return on capital, then such
Lender shall only be entitled to be compensated for such amount by the Borrower
pursuant to said Section 1.10, 1.11 or 2.06, as the case may be, to the extent
the costs, loss, expense or liability, reduction in amounts received or
receivable or reduction in return on capital are incurred or suffered on or
after the date which occurs one year prior to such Lender giving notice to the
Borrower that it is obligated to pay the respective amounts pursuant to said
Section 1.10, 1.11 or 2.06, as the case may be. This Section 13.17 shall have no
applicability to any Section of this Agreement other than said Sections 1.10,
1.11 or 2.06.
64
<PAGE>
13.18 TREATMENT OF PROCEEDS FROM CREDIT EVENTS. Each party
hereto hereby agrees that all proceeds from all Credit Events pursuant to this
Agreement shall be deemed to be "purpose loans" under, and as defined in
Regulation U (whether or not such proceeds are in fact used to purchase or carry
margin stock).
13.19 NO THIRD PARTY BENEFICIARY. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respected permitted successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
65
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized officers to execute and deliver this Agreement as of the date first
above written.
ADDRESS:
1790 Broadway THE ALPINE GROUP, INC.
New York, New York 10019
Attn: Stewart H. Wahrsager,
Senior Vice President
and General Counsel By:
-------------------------------
Name:
Title:
Telephone: (212) 757-3333
Facsimile: (212) 757-3423
BANKERS TRUST COMPANY,
Individually and as Administrative
Agent
By:
-------------------------------
Name:
Title:
FLEET NATIONAL BANK, Individually
and as Syndication Agent
By:
-------------------------------
Name:
Title:
BANK OF AMERICA, N.A.,
Individually and as Documentation
Agent
By:
-----------------------------
Name:
Title:
66
<PAGE>
THE BANK OF NOVA SCOTIA
By:
-------------------------------
Name:
Title:
67
<PAGE>
SCHEDULE I
COMMITMENTS
<TABLE>
<CAPTION>
LENDER COMMITMENT
------ ----------
<S> <C>
BANKERS TRUST COMPANY $25,000,000
BANK OF AMERICA, N.A. $25,000,000
FLEET BANK, N.A. $25,000,000
THE BANK OF NOVA SCOTIA $25,000,000
-----------
Total $100,000,000
</TABLE>
68
<PAGE>
SCHEDULE II
BANK ADDRESSES AND APPLICABLE LENDING OFFICES
<TABLE>
<S> <C>
BANKERS TRUST COMPANY 130 Liberty Street
New York, NY 10006
Attention: David Bell
Tel: (212) 250-9048
Fax: (212) 250-7218
FLEET NATIONAL BANK 100 Federal Street
Boston, MA 02110
Attention: Howard Diamond
Tel: (617) 434-2539
Fax: (617) 434-4929
BANK OF AMERICA, N.A. 100 N. Tryon Street
Charlotte, NC 28255-0001
Attention: Tonya Green
Tel: (704) 386-4199
Fax: (704) 409-0062
THE BANK OF NOVA SCOTIA Suite 2700
600 Peachtree St., N.E.
Atlanta, GA 30308
Attention: Pat Brown
Tel: (404) 877-1506
Fax: (404) 888-8998
</TABLE>
69
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
SECTION 1. Amount and Terms of Credit............................................................................1
1.01 The Commitments....................................................................................1
1.02 Minimum Amount of Each Borrowing...................................................................3
1.03 Notice of Borrowing................................................................................3
1.04 Disbursement of Funds..............................................................................4
1.05 Notes..............................................................................................5
1.06 Conversions........................................................................................5
1.07 Pro Rata Borrowings................................................................................6
1.08 Interest...........................................................................................6
1.09 Interest Periods...................................................................................7
1.10 Increased Costs, Illegality, etc...................................................................8
1.11 Compensation......................................................................................10
1.12 Lending Offices; Changes Thereto..................................................................10
1.13 Replacement of Lenders............................................................................11
SECTION 2.Letters of Credit......................................................................................12
2.01 Letters of Credit.................................................................................12
2.02 Maximum Letter of Credit Outstandings; Final Maturities...........................................13
2.03 Letter of Credit Requests; Minimum Stated Amount..................................................13
2.04 Letter of Credit Participations...................................................................14
2.05 Agreement to Repay Letter of Credit Drawings......................................................15
2.06 Increased Costs...................................................................................16
SECTION 3. Commitment Commission; Fees; Reductions of Commitment................................................17
3.01 Fees..............................................................................................17
3.02 Voluntary Termination of Unutilized Commitments...................................................18
3.03 Mandatory Reduction of Commitments................................................................18
SECTION 4. Prepayments; Payments; Taxes.........................................................................19
4.01 Voluntary Prepayments.............................................................................19
4.02 Mandatory Repayments..............................................................................20
4.03 Method and Place of Payment.......................................................................21
4.04 Net Payments......................................................................................21
SECTION 5. Conditions Precedent.................................................................................23
5.01 Execution of Agreement; Notes.....................................................................23
5.02 Opinions of Counsel...............................................................................23
5.03 Corporate Documents; Proceedings; etc.............................................................24
5.04 Existing Credit Facilities........................................................................24
5.05 Adverse Change, etc...............................................................................24
5.06 Litigation........................................................................................25
i
<PAGE>
5.07 Pledge Agreements; Delivery of Shares.............................................................25
5.08 Financial Statements..............................................................................25
5.09 Solvency Certificate..............................................................................25
5.10 Initial Valuation Certificate.....................................................................26
5.11 Fees, etc.........................................................................................26
5.12 Regulation U......................................................................................26
SECTION 6. Conditions Precedent to All Credit Events.............................................................26
6.01 Effective Date....................................................................................26
6.02 No Default; Representations and Warranties........................................................26
6.03 Notice of Borrowing; Letter Credit Request........................................................26
6.04 Valuation Certificates............................................................................27
SECTION 7. Representations, Warranties and Agreements...........................................................27
7.01 Corporate and Other Status........................................................................27
7.02 Corporate Power and Authority.....................................................................27
7.03 No Violation......................................................................................28
7.04 Governmental Approvals............................................................................28
7.05 Financial Statements; Financial Condition; Undisclosed Liabilities; etc...........................28
7.06 Litigation........................................................................................29
7.07 True and Complete Disclosure......................................................................29
7.08 Use of Proceeds; Margin Regulations...............................................................29
7.09 Tax Returns and Payments..........................................................................30
7.10 The Pledge Agreements.............................................................................30
7.11 Subsidiaries......................................................................................30
7.12 Compliance with Statutes, etc.....................................................................30
7.13 Investment Company Act............................................................................30
7.14 Public Utility Holding Company Act................................................................30
7.15 Indebtedness......................................................................................30
7.16 Limitations on Dispositions of Shares.............................................................31
SECTION 8. Affirmative Covenants................................................................................31
8.01 Information Covenants.............................................................................31
(a) Monthly Reports.......................................................................31
(b) Quarterly Financial Statements........................................................31
(c) Annual Financial Statements...........................................................31
(d) Management Letters....................................................................32
(e) Budgets...............................................................................32
(f) Officer's Certificates................................................................32
(g) Notice of Default or Litigation.......................................................32
(h) Other Reports and Filings.............................................................33
(i) Shares................................................................................33
(j) Valuation Certificates................................................................33
(k) Other Information.....................................................................34
ii
<PAGE>
8.02 Books, Records and Inspections....................................................................34
8.03 Maintenance of Property; Insurance................................................................34
8.04 Corporate Franchises..............................................................................34
8.05 Compliance with Statutes, etc.....................................................................35
8.06 Performance of Obligations........................................................................35
8.07 Payment of Taxes..................................................................................35
8.08 Year 2000 Compatibility...........................................................................35
8.09 Use of Proceeds...................................................................................35
SECTION 9. Negative Covenants...................................................................................35
9.01 Liens.............................................................................................35
9.02 Consolidation; Merger.............................................................................36
9.03 Dividends.........................................................................................36
9.04 Indebtedness......................................................................................36
9.05 Limitation on Voluntary Payments and Modifications of Indebtedness; Modifications
of Certificate of Incorporation, By-Laws and Certain Other Agreements; etc.....................37
9.06 Shares............................................................................................37
9.07 Asset Coverage Ratio..............................................................................37
9.08 Regulation U......................................................................................37
9.09 Restrictions on Dispositions of Shares............................................................38
SECTION 10. Events of Default...................................................................................38
10.01 Payments.........................................................................................38
10.02 Representations, etc.............................................................................38
10.03 Covenants........................................................................................38
10.04 Default Under Other Agreements...................................................................38
10.05 Bankruptcy, etc..................................................................................39
10.06 Pledge Agreements................................................................................39
10.07 Judgments........................................................................................39
10.08 Change of Control................................................................................39
SECTION 11. Definitions.........................................................................................40
11.01 Defined Terms....................................................................................40
SECTION 12. The Agents..........................................................................................54
12.01 Appointment......................................................................................54
12.02 Nature of Duties.................................................................................54
12.03 Lack of Reliance on the Agents...................................................................54
12.04 Certain Rights of the Agents.....................................................................55
12.05 Reliance.........................................................................................55
12.06 Indemnification..................................................................................55
12.07 Each Agent in its Individual Capacity............................................................55
12.08 Holders..........................................................................................56
iii
<PAGE>
12.09 Resignation by the Agents........................................................................56
SECTION 13. Miscellaneous.......................................................................................57
13.01 Payment of Expenses, etc.........................................................................57
13.02 Right of Setoff..................................................................................58
13.03 Notices..........................................................................................58
13.04 Benefit of Agreement; Assignments; Participations................................................58
13.05 No Waiver; Remedies Cumulative...................................................................60
13.06 Payments Pro Rata................................................................................60
13.07 Calculations; Computations.......................................................................61
13.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF JURY TRIAL...........................61
13.09 Counterparts.....................................................................................62
13.10 Effectiveness....................................................................................62
13.11 Headings Descriptive.............................................................................62
13.12 Amendment or Waiver; etc.........................................................................63
13.13 Survival.........................................................................................63
13.14 Domicile of Loans................................................................................64
13.15 Register.........................................................................................64
13.16 Confidentiality..................................................................................64
13.17 Limitation on Additional Amounts, etc............................................................65
13.18 Treatment of Proceeds from Credit Events.........................................................65
13.19 No Third Party Beneficiary.......................................................................65
</TABLE>
<TABLE>
<S> <C>
SCHEDULE I Commitments
SCHEDULE II Lender Addresses and Applicable Lending Offices
SCHEDULE III Tax Matters
SCHEDULE IV Subsidiaries
SCHEDULE V Existing Indebtedness
SCHEDULE VI Limitations on Dispositions of Shares
EXHIBIT A Form of Notice of Borrowing
EXHIBIT B-1 Form of Revolving Note
EXHIBIT B-2 Form of Swingline Note
EXHIBIT C Form of Letter of Credit Request
EXHIBIT D Form of Section 4.04(b)(ii) Certificate
EXHIBIT E-1 Form of Opinion of Proskauer Rose LLP,
counsel to the Borrower
EXHIBIT E-2 Form of Opinion of Irwin Mitchell Solicitors
EXHIBIT F Form of Officers' Certificate
EXHIBIT G-1 Form of US Pledge Agreement
EXHIBIT G-2 Form of UK Pledge Agreement
</TABLE>
iv
<PAGE>
<TABLE>
<S> <C>
EXHIBIT H Form of Solvency Certificate
EXHIBIT I Form of Valuation Certificate
EXHIBIT J Form of Assignment and Assumption Agreement
</TABLE>
v
<PAGE>
EXHIBIT 21
<TABLE>
<CAPTION>
JURISDICTION
SUBSIDIARY OF ORGANIZATION
<S> <C>
Superior TeleCom Inc........................................ Delaware
Superior Trust I............................................ Delaware
DNE Systems, Inc............................................ Delaware
DNE Manufacturing & Service Company......................... Delaware
DNE Technologies, Inc....................................... Delaware
Superior Telecommunications Inc............................. Delaware
Superior Cable Corporation ................................. Ontario
Texas SUT Inc............................................... Texas
Superior Cable Ltd. ........................................ Israel
Superior Cable Holdings (1997) Ltd.......................... Israel
Essex International Inc. ................................... Delaware
Essex Group Inc............................................. Delaware
Essex Group Inc. ........................................... Michigan
Essex Services Inc. ........................................ Delaware
FEMCO (50%) ................................................ Indiana
Diamond Wire Corporation.................................... Illinois
Essex Technology Inc. ...................................... Delaware
Essex International Ltd. ................................... U.K.
Temple Electrical Company Ltd. ............................. U.K.
Essex Pension Trustees Ltd.................................. U.K.
Interstate Industries Holdings, Inc. ....................... Delaware
Interstate Industries, Inc. ................................ Mississippi
Essex Group Export Inc. .................................... Barbados
Essex Canada Inc. .......................................... Delaware
SX Mauritius Holding, Inc. ................................. Mauritius
Finolex Essex Industries Ltd. (50%)......................... India
Active Industries Inc. ..................................... Delaware
Essex Funding Inc. ......................................... Delaware
Raychem-Essex Ltd. (50%).................................... Delaware
Essex Group Mexico, Inc. ................................... Delaware
Essex Mexico Holdings, LLC. ................................ Delaware
Essex Group Mexico, S.A. de C.V. ........................... Mexico
Grupo Essex de Mexico, S. de R.L. de C.V. .................. Mexico
Essex Telecom Inc. ......................................... Delaware
</TABLE>
<PAGE>
Exhibit 23(a)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our reports dated March 3, 2000, included in this Form 10-K, into The Alpine
Group, Inc.'s previously filed Registration Statements on Forms S-8 (File Nos.
333-16703, 2-70015, 33-62544 and 333-60071) and on Forms S-3 (File Nos.33-30246,
33-53434, 333-60073, 333-00301, 33-63819 and 33-81996).
Arthur Andersen LLP
Atlanta, Georgia
March 28, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> US
<S> <C>
<PERIOD-TYPE> 8-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> MAY-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 19,542
<SECURITIES> 7,841
<RECEIVABLES> 264,456
<ALLOWANCES> (3,193)
<INVENTORY> 313,571
<CURRENT-ASSETS> 644,479
<PP&E> 594,066
<DEPRECIATION> (78,303)
<TOTAL-ASSETS> 2,183,629
<CURRENT-LIABILITIES> 474,458
<BONDS> 1,253,020
133,959
427
<COMMON> 2,166
<OTHER-SE> 92,390
<TOTAL-LIABILITY-AND-EQUITY> 2,183,629
<SALES> 1,370,385
<TOTAL-REVENUES> 1,370,385
<CGS> 1,116,091
<TOTAL-COSTS> 1,116,091
<OTHER-EXPENSES> 13,778
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85,116
<INCOME-PRETAX> 52,959
<INCOME-TAX> (21,746)
<INCOME-CONTINUING> 12,007
<DISCONTINUED> 35,369
<EXTRAORDINARY> (990)
<CHANGES> 0
<NET-INCOME> 46,386
<EPS-BASIC> 3.13
<EPS-DILUTED> 2.79
</TABLE>
