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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
__________________________
Date of Report (Date of earliest event reported) FEBRUARY 9, 1995
------------------
HEXCEL CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 94-1109521
------------------------ -----------------
(State or other jurisdic- (I.R.S. Employer
tion of incorporation or Identification No.)
organization)
1-8472
----------------------
(Commission File Number)
5794 West Las Positas Boulevard
Pleasanton, California 94588
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(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (510) 847-9500
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ITEM 5. OTHER EVENTS.
On February 9, 1995 (the "Effective Date"), the First Amended Plan
of Reorganization Proposed by Hexcel Corporation (the "Registrant") and the
Official Committee of Equity Security Holders of the Registrant (the "Equity
Committee"), dated as of November 7, 1994, as modified (the "Plan"), became
effective. The Registrant previously described the provisions of the Plan in a
report on Form 8-K filed by the Registrant with the Securities and Exchange
Commission on January 23, 1995.
The Effective Date was the record date for determining those holders
(the "Record Holders") of common stock, par value $.01 per share, of the
Registrant, issued prior to the Effective Date (the "Old Common Stock"), who are
entitled under the Plan to receive rights (the "Rights") to subscribe for shares
of the Registrant's common stock, par value $.01 per share, issued on or after
the Effective Date (the "New Common Stock"). A copy of the Subscription Rights
Plan, which governs the terms of the Rights and the exercise and transfer
thereof, is attached hereto as Exhibit 4.1, and is incorporated herein by
reference.
Pursuant to the Plan, on the Effective Date all of the Old Common
Stock was cancelled and each Record Holder received, in exchange for each share
of Old Common Stock held of record on the Effective Date, one share of New
Common Stock plus 1.21273 Rights. Stockholders are not required to turn in
their stock certificates evidencing the Old Common Stock, and such certificates
continue to represent an equal number of shares of New Common Stock. Any
stockholder who desires a new stock certificate may, however, surrender his or
her old stock certificate to the Company's transfer agent, Chemical Trust
Company of California, and receive a new stock certificate in exchange. On the
Effective Date, a new Corporate Cusip Number, 428291 10 8, was assigned to the
shares of New Common Stock.
The following events, which the Registrant deems of importance to
its stockholders, also occurred on the Effective Date:
(a) The Registrant closed under a $45 million revolving credit
facility provided by a lending group (the "Lenders") consisting of
Citicorp USA, Inc.
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("Citicorp"), Heller Financial, Inc. ("Heller")
and Transamerica Business Credit Corporation ("Transamerica"), with
Citicorp acting as the agent for the Lenders. In connection
therewith, the Registrant entered into a Credit Agreement, dated as
of February 8, 1995, among the Registrant, Citicorp, Heller,
Transamerica, and Citibank N.A., which is attached hereto as Exhibit
99.1 and is incorporated herein by reference.
(b) The Registrant entered into a Restated and Amended
Reimbursement Agreement, dated as of February 1, 1995, between the
Registrant and Banque Nationale de Paris ("BNP"), a copy of which is
attached hereto as Exhibit 99.2, and is incorporated herein by
reference. BNP is the bank which provides letters of credit
supporting certain industrial development revenue bonds which
benefit the Registrant.
(c) The first closing was held under the Standby Purchase
Commitment, dated October 24, 1994 (the "Standby Purchase
Commitment"), entered into by Mutual Series Fund Inc. ("Mutual
Series"), with the Registrant and the Equity Committee. At the
closing, Mutual Series purchased from the Registrant 1,945,946
shares of New Common Stock for a purchase price of $9,000,000
($4.625 per share) and loaned the Registrant $41,000,000 (the
"Advance"). As required by the Standby Purchase Commitment, the
Registrant paid Mutual Series a $500,000 commitment fee and
reimbursed Mutual Series for approximately $506,000 of out-of-pocket
expenses. The Advance is secured by the proceeds from the Rights
offering.
(d) The Registrant's Board of Directors was reconstituted, and now
consists of the following eight persons, all of whom were designated
in accordance with the terms of the Plan and the Standby Purchase
Commitment: John J. Lee and Peter A. Langerman, who were designated
by Mutual Series, Joseph L. Harrosh, Robert L. Witt and Peter D.
Wolfson, who were designated by the Equity Committee, and Dr. George
S. Springer, Franklin S. Wimer and Marshall S. Geller, who were
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designated by joint selection of the Equity Committee and Mutual
Series. A ninth seat on the Board is reserved for a new Chief
Executive Officer to be selected to succeed John J. Lee, who will
join the Board immediately upon commencement of his or her
employment. In addition, if upon the consummation of the Rights
offering Mutual Series owns more than 50% of the shares of New
Common Stock, Mutual Series will designate one additional director;
if upon the consummation of the Rights offering Mutual Series owns
less than 25% of the shares of New Common Stock, then one additional
director will be designated by mutual agreement of those directors
previously designated by the Equity Committee, on the one hand, and
those directors previously designated by mutual agreement of the
Equity Committee and Mutual Series, on the other hand.
(e) Pursuant to the Plan, the Registrant's Certificate of
Incorporation was amended and restated as provided in Exhibit C to
the Plan and the Registrant's Bylaws were amended and restated as
provided in Exhibit D to the Plan.
These events, as well as other recent events affecting the
Registrant, are more fully described in an Information
Statement, dated February 15, 1995 (the "Information Statement"), which is being
furnished to the Record Holders in connection with the distribution of Rights.
The Information Statement is attached hereto as Exhibit 99.3, and is
incorporated herein by reference.
ITEM 7. EXHIBITS.
(c) EXHIBITS.
2.1 - The First Amended Plan of Reorganization proposed by the Debtor and
the Official Committee of Equity Security Holders, dated as of
November 7, 1994, which was filed as Exhibit A to Exhibit 2.1 to the
report on Form 8-K filed by Registrant with the Securities and
Exchange Commission on January 23, 1995, and is incorporated herein
by reference.
4.1 - Subscription Rights Plan.
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99.1 - Credit Agreement, dated as of February 8, 1995, among the
Registrant, Citicorp USA, Inc., Heller Financial, Inc., Transamerica
Business Credit Corporation, and Citibank N.A.
99.2 - Restated and Amended Reimbursement Agreement, dated as of February
1, 1995, between the Registrant and Banque Nationale de Paris.
99.3 - Information Statement, dated February 15, 1995.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 22, 1995
HEXCEL CORPORATION
(Registrant)
By: /s/ Rodney P. Jenks, Jr.
------------------------------
Rodney P. Jenks, Jr.
Vice President and General Counsel
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EXHIBIT INDEX
PAGE
2.1 - The First Amended Plan of Reorganization Proposed by the
Debtor and the Official Committee of Equity Security
Holders, dated as of November 7, 1994, was filed as
Exhibit A to Exhibit 2.1 to the report on Form 8-K filed
by Registrant with the Securities and Exchange Commission
on January 23, 1995, and is incorporated herein by reference.
4.1 - Subscription Rights Plan.
99.1 - Credit Agreement, dated as of February 8, 1995,
among the Registrant, Citicorp USA, Inc., Heller
Financial, Inc., Transamerica Business Credit Corporation,
and Citibank N.A.
99.2 - Restated and Amended Reimbursement Agreement, dated
as of February 1, 1995, between the Registrant and
Banque Nationale de Paris.
99.3 - Information Statement, Dated February 15, 1995.
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HEXCEL CORPORATION
SUBSCRIPTION RIGHTS PLAN
DATED FEBRUARY 1995
RECITAL
This Subscription Rights Plan (this "Plan") is adopted by Hexcel Corporation
("Hexcel") pursuant to, and as of the Effective Date of, the First Amended Plan
of Reorganization proposed by the Debtor and the Official Committee of Equity
Security Holders under Chapter 11 of the Bankruptcy Code, dated November 7, 1994
(the "Chapter 11 Plan"), as confirmed by the Bankruptcy Court in Hexcel's
Chapter 11 case. Except as otherwise provided herein, capitalized terms used in
this Plan have the meanings assigned to them in the Chapter 11 Plan.
TERMS OF PLAN
1. THE SUBSCRIPTION RIGHTS.
1.1 This Plan authorizes the distribution of 1.21273 rights to subscribe
for additional shares of Reorganized Hexcel Common Stock as described below
("Subscription Right"), with respect to each share of Hexcel Common Stock, par
value $.01 per share (the "Common Stock"), issued and outstanding as of the
close of business on the Effective Date (the "Record Date"), other than shares
of Reorganized Hexcel Common Stock issued by Reorganized Hexcel on the Effective
Date. Each Subscription Right entitles the holder to purchase one share of
Reorganized Hexcel Common Stock for an aggregate of approximately 8,854,143
shares of Reorganized Hexcel Common Stock (the "Offered Shares"), subject to
rounding as provided herein. Each holder of record of Common Stock (other than
shares of Reorganized Hexcel Common Stock issued by Reorganized Hexcel on the
Effective Date) on the Record Date (an "Original Holder") shall be deemed to
have received a distribution of such Subscription Rights. Original Holders and
transferees of the Basic Subscription Rights of Original Holders are referred to
herein as "Holders."
1.2 Each Subscription Right entitles the Holder thereof:
1.2.1
to the right (each, a "Basic Subscription Right") to purchase one
Offered Share at a purchase price of $4.625 per share; plus
1.2.2
in the case of Original Holders, conditioned upon such Original
Holder's qualifying as an Eligible Rights Holder (as defined in
Section 1.3(c) of this Plan), such Original Holder also has the right
to purchase any desired number of Offered Shares from the Stockholder
Pool at a purchase price of $4.625 per share (the "Oversubscription
Rights"), subject to Proration as provided herein. OVERSUBSCRIPTION
RIGHTS ARE NOT TRANSFERABLE AND MAY NOT BE EXERCISED BY ANY HOLDER
OTHER THAN AN ELIGIBLE RIGHTS HOLDER.
The "Oversubscription Pool" consists of all Offered Shares subject to Basic
Subscription Rights that expire unexercised. The "Standby Pool" consists of 25%
of the Oversubscription Pool remaining after the first 108,108 shares of
Reorganized Hexcel Common Stock have been allocated for purchase by John J. Lee
pursuant to the Chapter 11 Plan (the "Designated Shares"). The "Stockholder
Pool" consists of the Oversubscription Pool remaining after excluding the
Standby Pool and the Designated Shares.
1.3 For purposes of this Plan:
(a) "BENEFICIAL RIGHTS HOLDER" means a person or entity who is listed on
the records of any Nominee as the beneficial owner of any Common Stock held in
the name of such Nominee (either of record or through another Nominee) as of the
close of business on the Record Date.
(b) "ELIGIBLE BENEFICIAL RIGHTS HOLDER" means a Beneficial Rights Holder on
whose behalf a Nominee has, at such Beneficial Rights Holder's direction,
exercised in accordance with the terms of this Plan, all Basic Subscription
Rights issued to or for the account of such Nominee by Reorganized Hexcel
pursuant to this Plan with respect to Common Stock beneficially owned by such
Beneficial Rights Holder.
(c) "ELIGIBLE RIGHTS HOLDER" means (i) an Original Holder, other than a
Nominee, who has exercised, in accordance with the terms of this Plan, all Basic
Subscription Rights issued to such holder by Reorganized Hexcel pursuant to the
Chapter 11 Plan, and (ii) a Nominee to the extent acting on behalf of an
Eligible Beneficial Rights Holder, regardless of whether such Nominee has
exercised less than all of the Basic Subscription Rights issued to it pursuant
to the Chapter 11 Plan.
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(d) "NOMINEE" means any bank, trust company, depositary or securities
broker or dealer which holds Common Stock, either of record or beneficially
through another Nominee, on the Record Date otherwise than as the beneficial
owner thereof.
1.4 A Nominee may only exercise Oversubscription Rights on behalf of
Eligible Beneficial Rights Holders who beneficially own Basic Subscription
Rights registered in that Nominee's name. Hexcel may prescribe the procedures
for verifying that Nominees are exercising Oversubscription Rights only on
behalf of Eligible Beneficial Rights Holders. All questions concerning the
validity of any exercise of Basic Subscription Rights or Oversubscription Rights
and the proper Proration of shares in the Stockholder Pool, will be determined
by Hexcel or by the Subscription Agent, and such determinations shall be final
and binding. For purposes of administering this Plan, including without
limitation for purposes of determining whether Oversubscription Rights have been
properly exercised and for purposes of Proration, (i) in the event that any
person or entity has accounts with more than one Nominee through which such
person or entity is listed as the beneficial owner of Common Stock as of the
close of business on the Record Date, then each account or group of accounts of
that person or entity with each different Nominee will be treated by Hexcel or
by the Subscription Agent as a separate Beneficial Rights Holder, and (ii) in
the event that a Beneficial Rights Holder is also a Record Holder of Hexcel
Common Stock, then Hexcel and the Subscription Agent will treat that person or
entity in its capacity as a Record Holder of Hexcel Common Stock as being
separate from that person or entity in its capacity as a Beneficial Rights
Holder; accordingly, a person or entity which owns shares of Common Stock either
through separate Nominees or both of record and through one or more Nominees may
be treated by Hexcel and the Subscription Agent as multiple persons or entities
for purposes of Proration and other matters under this Plan.
2. SUBSCRIPTION PRICE.
The Subscription Price for each share of Reorganized Hexcel Common Stock is
$4.625. The aggregate Subscription Price for any subscription shall be rounded
up to the nearest whole cent.
3. PRORATION.
3.1 The number of shares of Reorganized Hexcel Common Stock issuable upon
the exercise of Basic Subscriptions Rights shall not be subject to proration.
3.2 If the aggregate number of shares of Reorganized Hexcel Common Stock
subscribed for through the exercise of Oversubscription Rights is more than the
number of shares available in the Stockholder Pool, the available shares will be
apportioned among the Eligible Rights Holders who exercised their
Oversubscription Rights in proportion to the number of Basic Subscription Rights
originally issued by Hexcel to, and exercised by, each Eligible Rights Holder
through repeated application of the proration procedure described in the next
paragraph, and subject to rounding as provided in Section 6.2 of this Plan.
Each time the following procedure is applied, the "number of shares of
Reorganized Hexcel Common Stock remaining in the Stockholder Pool" shall mean
the number of shares in the Stockholder Pool not apportioned by prior
applications of the procedures described in this paragraph. The number of shares
of Reorganized Hexcel Common Stock remaining in the Stockholder Pool shall be
apportioned among all those Eligible Rights Holders who have not yet been
apportioned (through previous applications of this procedure) the full number of
shares subscribed for by them in their respective exercises of Oversubscription
Rights. Apportionment among them shall be based on the ratio of the number of
Basic Subscription Rights originally issued by Hexcel to, and exercised by, each
Eligible Rights Holder; provided, that if the number of shares so apportioned to
any Eligible Rights Holder exceeds the number of shares subscribed for by that
Eligible Rights Holder's exercise of Oversubscription Rights, then the excess
shall not be apportioned, and that Eligible Rights Holder shall thereafter not
be apportioned any additional shares should there be further applications of
this procedure. This procedure shall be repeated until either (i) all of the
shares in the Stockholder Pool shall have been apportioned and there are no
shares left in the Stockholder Pool for further apportionment, or (ii) a
sufficient number of shares has been apportioned to all Eligible Rights Holders
to satisfy all of their exercised Oversubscription Rights, whichever occurs
first.
4. SUBSCRIPTION PERIOD.
The Subscription Rights will be exercisable only during the period (the
"Subscription Period") commencing 15 days after the Effective Date and expiring
at 5:00 P.M., New York City Time, on the first Business Day that occurs not less
than 45 days after the Effective Date (the "Subscription Rights Expiration
Date"). After the Subscription Rights Expiration Date, unexercised Subscription
Rights will be null and void. Hexcel shall not be obligated to
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honor any purported exercise of Subscription Rights received after the
Subscription Rights Expiration Date, regardless of when the documents relating
to such exercise were sent, except pursuant to the Guaranteed Delivery
Procedures described below.
5. DISTRIBUTION OF CERTIFICATES.
5.1 As soon as practicable after the Effective Date, but not later than 15
days thereafter, Hexcel shall distribute to Original Holders transferable
certificates ("Subscription Rights Certificates") substantially in the form
attached to and governed by this Plan, representing the Subscription Rights
issued to Original Holders pursuant to this Plan.
5.2 As soon as practicable after the Subscription Rights Expiration Date,
Hexcel shall distribute to Holders who have duly exercised their Subscription
Rights stock certificates representing that number of shares of Reorganized
Hexcel Common Stock subscribed for and to be issued in accordance with the terms
of this Plan.
5.3 Subscription Rights Certificates shall be executed on behalf of Hexcel
by its Chairman, Vice Chairman, Chief Executive Officer or President, under its
corporate seal reproduced thereon attested by its Secretary or an Assistant
Secretary. The signature of any of these officers on the certificate may be
manual or facsimile.
6. NO FRACTIONAL REORGANIZED HEXCEL COMMON STOCK.
6.1 The number of Basic Subscription Rights issuable to any Holder will be
rounded to the nearest whole number, with .50 Basic Subscription Right being
rounded up to the next whole Basic Subscription Right.
6.2 No fractional shares of Reorganized Hexcel Common Stock will be issued.
The number of shares of Reorganized Hexcel Common Stock issuable to any Holder
pursuant to the exercise of Oversubscription Rights will be rounded down to the
next lowest whole number of shares.
6.3 No Subscription Rights may be divided in such a way as to permit the
holder to receive a greater number of shares of Reorganized Hexcel Common Stock
than the number to which such Subscription Rights entitles its Holder, except
that a depositary, bank, trust company, or securities broker or dealer holding
shares of Common Stock on the Record Date for more than one beneficial owner
may, upon proper showing to the Subscription Agent, exchange its Subscription
Rights Certificate to obtain a replacement Subscription Rights Certificate that
reflects the result of rounding computations for individual Beneficial Rights
Holders as described in Section 6.1 above.
7. SUBSCRIPTION AND OTHER AGENTS.
7.1 Hexcel shall appoint an agent to act in administering the Subscription
Rights (the "Subscription Agent") under this Plan. Hexcel may also appoint an
escrow agent for the receipt of funds on exercise of Subscription Rights and a
transfer agent for the registration and transfer of the Subscription Rights and
Reorganized Hexcel Common Stock. The terms of Hexcel's agreements with such
agents, regarding the form of certificates, countersignatures, procedures for
assignment or exercise, or the like, shall be deemed adopted by Hexcel as part
of this Plan.
7.2 All questions concerning the Subscription Rights will be determined by
Hexcel (or the Subscription Agent, as permitted below), whose determinations
will be final and binding. Hexcel may waive any defect or irregularity, or
permit a defect or irregularity to be corrected within such time as it may
determine, or reject the purported exercise of any Subscription Right. The
Subscription Agent may exercise all the rights of Hexcel under this Plan,
including determination of the timeliness, validity, form and eligibility of any
exercise of Subscription Rights, calculation of shares of Reorganized Hexcel
Common Stock subscribed for, calculation of any required proration and any other
actions required for the orderly distribution of the Subscription Rights and
Reorganized Hexcel Common Stock. Subscriptions will not be deemed to have been
received or accepted until all irregularities have been waived or cured within
such time as Hexcel or the Subscription Agent determines in its sole discretion.
Neither Hexcel nor the Subscription Agent will be under any duty to give
notification of any defect or irregularity in connection with the submission of
Subscription Rights Certificates or incur any liability for failure to give such
notification.
8. RESERVATION OF REORGANIZED HEXCEL COMMON STOCK.
Hexcel shall at all times reserve and hold available for issuance the number
of shares of Reorganized Hexcel Common Stock required to be issued pursuant to
the Subscription Rights.
9. EXERCISE OF SUBSCRIPTION RIGHTS.
9.1 ONCE A HOLDER HAS EXERCISED THE SUBSCRIPTION RIGHTS IN THE MANNER
PROVIDED BELOW, THE SUBSCRIPTION IS IRREVOCABLE.
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9.2 Subscription Rights may be exercised by delivering to the Subscription
Agent during the Subscription Period, the properly completed and executed
Subscription Rights Certificate, with any required signature guarantees,
together with payment in full of the aggregate Subscription Price for all shares
subscribed for pursuant to the Subscription Rights (whether through the exercise
of Basic Subscription Rights or Oversubscription Rights). Such payment in full
must be by (a) check or bank draft drawn upon a U.S. bank or postal, telegraphic
or express money order payable to the Subscription Agent or the Escrow Agent, as
set forth in the Instructions, or (b) wire transfer of funds to the account
specified for such purpose designated in the Subscription Rights Certificates.
The Subscription Agent has the right to deem the Subscription Price to have been
received only upon (i) clearance of any uncertified check, (ii) receipt by the
Subscription Agent or Escrow Agent of any certified check or bank draft drawn
upon a U.S. bank or of any postal, telegraphic or express money order or (iii)
receipt of good funds in the account designated in the Subscription Rights
Certificates. If paying by uncertified personal check, please note that the
funds paid thereby may take at least five Business Days to clear. ACCORDINGLY,
HOLDERS WHO WISH TO PAY THE SUBSCRIPTION PRICE BY MEANS OF UNCERTIFIED PERSONAL
CHECK ARE URGED TO MAKE PAYMENT SUFFICIENTLY IN ADVANCE OF THE SUBSCRIPTION
RIGHTS EXPIRATION DATE TO ENSURE THAT SUCH PAYMENT IS RECEIVED AND CLEARS BY
SUCH DATE AND ARE URGED TO CONSIDER PAYMENT BY MEANS OF CERTIFIED OR CASHIER'S
CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
9.3 The Subscription Agent may elect to treat subscriptions accompanied by
payment of an insufficient amount as a subscription for the number of shares of
Reorganized Hexcel Common Stock whose Subscription Price is paid by the amount
received. Payments in an amount greater than the aggregate Subscription Price
required by the stated Basic Subscription and Oversubscription shall be treated
as subscriptions for the amounts stated on the Subscription Rights Certificate
only; excess amounts shall be refunded in due course after the Subscription
Rights Expiration Date.
9.4 The permitted methods of delivery and the address to which Subscription
Rights Certificates and payment of the Subscription Price should be delivered
shall be set forth in the Instructions which will be delivered with the
Subscription Rights Certificates.
9.5 If a Holder wishes to exercise Subscription Rights, but time will not
permit such Holder to cause the Subscription Rights Certificate to reach the
Subscription Agent on or prior to the Subscription Rights Expiration Date, such
Subscription Rights may nevertheless be exercised if all of the following
conditions (the "Guaranteed Delivery Procedures") are met:
9.5.1
such Holder has caused payment in full of the aggregate Subscription
Price for all shares being subscribed for pursuant to the Basic
Subscription Rights or Oversubscription Rights to be received (in the
manner set forth above) by the Subscription Agent on or prior to the
Subscription Rights Expiration Date;
9.5.2
the Subscription Agent receives, on or prior to the Subscription
Rights Expiration Date, a guarantee notice (a "Notice of Guaranteed
Delivery"), substantially in the form provided with the Instructions,
from a member of a registered national securities exchange or a
member of the National Association of Securities Dealers, Inc. (the
"NASD"), or from a commercial bank or trust company having an office
or correspondent in the United States (each, an "Eligible
Institution"), stating the name of the exercising Holder, the number
of Rights represented by the Subscription Rights Certificate or
Subscription Rights Certificates held by such exercising Holder, the
number of shares being subscribed for pursuant to the Subscription
Rights, and guaranteeing the delivery to the Subscription Agent of
any Subscription Rights Certificate evidencing such Subscription
Rights within five New York Stock Exchange ("NYSE") trading days
following the date of the Notice of Guaranteed Delivery; and
9.5.3
the properly completed Subscription Rights Certificate evidencing the
Subscription Rights being exercised, with any required signature
guarantees, is received by the Subscription Agent within five NYSE
trading days following the date of the Notice of Guaranteed Delivery
relating thereto.
The Notice of Guaranteed Delivery may be delivered to the Subscription Agent as
set forth in the Instructions, or may be transmitted to the Subscription Agent
by telegram or facsimile transmission, as permitted by the Subscription Agent
and set forth in the Instructions.
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9.6 Unless a Subscription Rights Certificate (i) provides that the shares
to be issued pursuant to the exercise of Subscription Rights represented thereby
are to be delivered to the Holder or (ii) is submitted for the account of an
Eligible Institution, signatures on such Subscription Rights Certificate must be
guaranteed by an Eligible Institution.
9.7 Nominees and others who hold shares of Common Stock for the account of
others, should notify the respective beneficial owners of such shares as soon as
possible to ascertain such beneficial owners' intentions and to obtain
instructions with respect to the Subscription Rights. If the beneficial owner so
instructs, the record holder of such Subscription Rights should complete its
Subscription Rights Certificate and submit it to the Subscription Agent with the
proper payment. Beneficial owners of Common Stock or Subscription Rights held
through such a Holder should contact the Holder and request the Holder to effect
transactions in accordance with the beneficial owner's instructions.
9.8 The Instructions should be read carefully and followed in detail. DO
NOT SEND SUBSCRIPTION CERTIFICATES TO HEXCEL CORPORATION. BENEFICIAL RIGHTS
HOLDERS SHOULD PROMPTLY SUBMIT INSTRUCTIONS TO THEIR NOMINEE AS TO THE EXERCISE
OF THEIR SUBSCRIPTION RIGHTS WITH APPROPRIATE PAYMENT, AND SHOULD NOT SEND THEM
TO HEXCEL OR THE SUBSCRIPTION AGENT.
THE METHOD OF DELIVERY OF SUBSCRIPTION RIGHTS CERTIFICATES AND PAYMENT OF
THE SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION AND
RISK OF THE HOLDERS, BUT IF SENT BY MAIL, IT IS RECOMMENDED THAT SUCH
CERTIFICATES AND PAYMENTS BE SENT PROPERLY INSURED, WITH RETURN RECEIPT
REQUESTED, AND THAT A SUFFICIENT NUMBER OF DAYS BE ALLOWED TO ENSURE DELIVERY TO
THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE SUBSCRIPTION RIGHTS EXPIRATION DATE. BECAUSE UNCERTIFIED
PERSONAL CHECKS MAY TAKE AT LEAST FIVE BUSINESS DAYS TO CLEAR, HOLDERS ARE
STRONGLY URGED TO PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR
CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
10. METHOD OF TRANSFERRING RIGHTS.
10.1 Basic Subscription Rights and the corresponding Subscription Rights
Certificates may be transferred by Holders. Subject to compliance with
applicable securities laws, the Basic Subscription Rights evidenced by a
Subscription Rights Certificate may be transferred in whole by endorsing the
Subscription Rights Certificate for transfer in accordance with the
Instructions. A portion of the Basic Subscription Rights evidenced by a single
Subscription Rights Certificate (but not fractional Basic Subscription Rights)
may be transferred by delivering to the Subscription Agent a Subscription Rights
Certificate properly endorsed for transfer, with instructions to register such
portion of the Basic Subscription Rights evidenced thereby in the name of the
transferee (and to issue a new Subscription Rights Certificate to the transferee
evidencing such transferred Basic Subscription Rights). In such event, a new
Subscription Rights Certificate evidencing the balance of the Basic Subscription
Rights will be issued to the holder or, if the holder so instructs, to an
additional transferee. THE OVERSUBSCRIPTION RIGHTS ARE NOT TRANSFERABLE.
10.2 Holders wishing to transfer all or a portion of their Basic
Subscription Rights (but not fractional Basic Subscription Rights) should allow
a sufficient amount of time prior to the Subscription Rights Expiration Date for
(i) the transfer instructions to be received and processed by the Subscription
Agent, (ii) a new Subscription Rights Certificate to be issued and transmitted
to the transferee or transferees with respect to transferred Basic Subscription
Rights, and to the Holder with respect to retained Basic Subscription Rights, if
any, and (iii) the Basic Subscription Rights evidenced by such new Subscription
Certificates to be exercised or sold by the recipients thereof. Neither Hexcel
nor the Subscription Agent shall have any liability to a transferee or
transferor of Rights if Subscription Rights Certificates are not received in
time for exercise prior to the Subscription Rights Expiration Date.
10.3 Except for the fees charged by the Subscription Agent, the transfer
agent and the Escrow Agent, if any (all of which will be paid by Hexcel), all
commissions, fees and other expenses (including brokerage commissions and
transfer taxes) incurred in connection with the purchase, sale or exercise of
Subscription Rights will be for the account of the Holder, and none of such
commissions, fees or expenses will be paid by Hexcel or the Subscription Agent.
11. AMENDMENTS TO PLAN.
Hexcel reserves the right to amend the terms, procedures for subscription,
form of Subscription Rights Certificate and other provisions of this Plan prior
to the distribution of the Subscription Rights Certificates, provided, that such
amendment shall not affect the number of shares of Reorganized Hexcel Common
Stock purchasable hereunder by the Holders or reduce the Subscription Period
below 30 days.
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EXECUTION COPY
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CREDIT AGREEMENT
Dated as of February 8, 1995
among
HEXCEL CORPORATION
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS ISSUING BANKS
and
CITICORP USA, INC.
as Agent
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms......................................... 1
1.02. Computation of Time Periods................................... 41
1.03. Accounting Terms.............................................. 41
1.04. Other Definitional Provisions................................. 41
1.05. Other Terms................................................... 42
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01. Revolving Credit Facility..................................... 42
2.02. Swing Loans................................................... 44
2.03. Letters of Credit............................................. 45
2.04. Promise to Repay; Evidence of Indebtedness.................... 53
2.05. Settlement.................................................... 53
2.06. Authorized Officers and Agents................................ 54
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. Prepayments; Reductions in Revolving Credit
Commitments................................................ 55
3.02. Payments...................................................... 57
3.03. Taxes......................................................... 62
3.04. Increased Capital............................................. 65
3.05. Cash Management............................................... 65
ARTICLE IV
INTEREST AND FEES
4.01. Interest on the Loans and Other Obligations................... 67
4.02. Special Provisions Governing Eurodollar Rate
Loans...................................................... 70
4.03. Fees.......................................................... 73
ARTICLE V
CONDITIONS TO LOANS AND LETTERS OF CREDIT
5.01. Conditions Precedent to the Initial Loans and
Letters of Credit.......................................... 74
5.02. Conditions Precedent to All Subsequent Revolving
Loans, Swing Loans and Letters of Credit................... 78
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. Representations and Warranties of the Borrower................ 80
ARTICLE VII
REPORTING COVENANTS
7.01. Financial Statements.......................................... 94
7.02. Borrowing Base Certificate.................................... 97
7.03. Events of Default............................................. 97
7.04. Lawsuits...................................................... 97
7.05. Insurance..................................................... 98
7.06. ERISA Notices................................................. 98
7.07. Environmental Notices........................................ 100
7.08. Labor Matters................................................ 101
7.09. Public Filings and Reports................................... 101
7.10. Bank Accounts................................................ 102
7.11. Government Contracts......................................... 102
7.12. Other Information............................................ 102
ARTICLE VIII
AFFIRMATIVE COVENANTS
8.01. Corporate Existence, Etc......................................102
8.02. Corporate Powers; Conduct of Business, Etc....................103
8.03. Compliance with Laws, Etc.....................................103
8.04. Payment of Taxes and Claims; Tax Consolidation................103
8.05. Insurance.....................................................103
8.06. Inspection of Property; Books and Records;
Discussions................................................104
8.07. Insurance and Condemnation Proceeds...........................105
8.08. ERISA Compliance..............................................106
8.09. Foreign Employee Benefit Plan Compliance......................106
8.10. Maintenance of Property.......................................106
8.11. Condemnation..................................................106
8.12. Future Liens on Real Property.................................106
8.13. Future Liens on Personal Property.............................107
8.14. Rights Offering...............................................107
8.15. Landlord Waivers..............................................108
8.16. Government Contracts..........................................108
8.17. Environmental Compliance......................................108
8.18. Interest Rate Contracts.......................................108
8.19. Hexcel Lyon Subordinated Note.................................108
8.20. Post-Closing Deliveries.......................................108
ARTICLE IX
NEGATIVE COVENANTS
9.01. Indebtedness..................................................109
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PAGE
9.02. Sales of Assets...............................................111
9.03. Liens.........................................................112
9.04. Investments...................................................113
9.05. Accommodation Obligations.....................................114
9.06. Restricted Junior Payments....................................115
9.07. Conduct of Business...........................................115
9.08. Transactions with Affiliates..................................116
9.09. Restriction on Fundamental Changes............................116
9.10. Sales and Leasebacks; Operating Leases........................116
9.11. Margin Regulations; Securities Laws...........................117
9.12. ERISA.........................................................117
9.13. Issuance or Sale of Capital Stock.............................118
9.14. Constituent Documents.........................................118
9.15. Fiscal Year...................................................118
9.16. Cancellation of Debt; Prepayment..............................119
9.17. Environmental Matters.........................................119
9.18. Cash Management...............................................119
9.19. Unrestricted Subsidiary.......................................119
9.20. Accounting Changes............................................119
ARTICLE X
FINANCIAL COVENANTS
10.01. Minimum Net Worth............................................120
10.02. Minimum Fixed Charge Coverage Ratio..........................120
10.03. Minimum Interest Coverage Ratio..............................121
10.04. Minimum Cash Flow............................................121
10.05. Maximum Capital Expenditures.................................122
ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01. Events of Default............................................122
11.02. Rights and Remedies..........................................126
11.03. The Cash Collateral Account; the Investment
Account..................................................127
ARTICLE XII
THE AGENT
12.01. Appointment..................................................129
12.02. Nature of Duties.............................................130
12.03. Rights, Exculpation, Etc.....................................131
12.04. Reliance.....................................................131
12.05. Indemnification..............................................132
12.06. Citicorp Individually........................................132
12.07. Successor Agent; Resignation of Agent........................132
12.08. Relations Among Lenders......................................133
12.09. Concerning the Collateral and the Loan
Documents................................................133
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ARTICLE XIII
MISCELLANEOUS
13.01. Assignments..................................................136
13.02. Expenses.....................................................140
13.03. Indemnity....................................................141
13.04. Change in Accounting Principles..............................142
13.05. Setoff.......................................................142
13.06. Ratable Sharing..............................................143
13.07. Amendments and Waivers.......................................144
13.08. Notices......................................................146
13.09. Survival of Warranties and Agreements........................146
13.10. Failure or Indulgence Not Waiver; Remedies
Cumulative...............................................146
13.11. Marshalling; Payments Set Aside..............................147
13.12. Severability.................................................147
13.13. Headings.....................................................147
13.14. Governing Law................................................147
13.15. Limitation of Liability......................................147
13.16. Successors and Assigns.......................................148
13.17. Certain Consents and Waivers.................................148
13.18. Counterparts; Effectiveness; Inconsistencies.................149
13.19. Limitation on Agreements.....................................149
13.20. Confidentiality..............................................149
13.21. Entire Agreement.............................................150
13.22. Termination..................................................150
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EXHIBITS
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Collection Account Agreement
Exhibit C -- Form of Borrowing Base Certificate
Exhibit D -- Form of Notice of Borrowing
Exhibit E -- Form of Notice of Conversion/Continuation
Exhibit F -- List of Closing Documents
Exhibit G -- Form of Officer's Certificate to Accompany Reports
Exhibit H -- Form of Swing Loan Note
Exhibit I -- Form of Revolving Loan Note
Exhibit J -- Form of Borrower Security Agreement
Exhibit K -- Form of Subsidiary Guaranty
Exhibit L -- Form of Borrower Trademark Security Agreement
Exhibit M -- Form of Borrower Patent Security Agreement
Exhibit N -- Form of Borrower Pledge Agreement
Exhibit O -- Form of Subsidiary Security Agreement
Exhibit P -- Form of Hexcel Lyon Subordinated Note
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SCHEDULES
Schedule 1.01.1 -- Initial Projections
Schedule 1.01.2 -- Sources and Uses
Schedule 1.01.3 -- Permitted Existing Accommodation Obligations
Schedule 1.01.4 -- Permitted Existing Indebtedness
Schedule 1.01.5 -- Permitted Existing Investments
Schedule 1.01.6 -- Permitted Existing Liens
Schedule 1.01.7 -- Existing Industrial Revenue Development Bonds
Schedule 6.01-C -- Authorized, Issued and Outstanding Capital Stock;
Subsidiaries
Schedule 6.01-D -- Conflicts with Contractual Obligations and
Requirements of Law
Schedule 6.01-E -- Governmental Consents
Schedule 6.01-I -- Litigation; Adverse Effects
Schedule 6.01-K -- Tax Payments
Schedule 6.01-O -- Environmental Matters
Schedule 6.01-P -- ERISA Matters
Schedule 6.01-R -- Labor Matters
Schedule 6.01-U -- Patent, Trademark & Permits
Schedule 6.01-V -- Assets and Properties
Schedule 6.01-W -- Insurance
Schedule 6.01-Y -- Transactions with Affiliates
Schedule 6.01-Z -- Collection Account Banks; Bank Accounts
Schedule 6.01-AA -- Outstanding Letters of Credit
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Schedule 6.01-BB -- Government Contracts
Schedule 9.01 -- BNP Letters of Credit
Schedule 9.02 -- Properties to be Sold
Schedule 9.13 -- Management Incentive Plans
Schedule 9.16 -- Existing Industrial Revenue Bond Payments
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EXECUTION COPY
CREDIT AGREEMENT
This Credit Agreement dated as of February 8, 1995 (as amended,
supplemented or otherwise modified from time to time, this "AGREEMENT") is
entered into among Hexcel Corporation, a Delaware corporation (with its
successors and permitted assigns, the "BORROWER"), the institutions from time
to time party hereto as Lenders, whether by execution of this Agreement or an
Assignment and Acceptance, the institutions from time to time party hereto as
Issuing Banks, whether by execution of this Agreement or an Assignment and
Acceptance and Citicorp USA, Inc. ("Citicorp"), in its separate capacity
as agent for the Lenders and Issuing Banks (with its successors in such
capacity, the AGENT").
ARTICLE I
DEFINITIONS
1.01. CERTAIN DEFINED TERMS. In addition to the terms defined
above, the following terms used herein shall have the following meanings,
applicable both to the singular and the plural forms of the terms defined:
"ACCOMMODATION OBLIGATION" means any Contractual Obligation,
contingent or otherwise, of one Person with respect to any Indebtedness,
obligation or liability of another, if the primary purpose or intent thereof by
the Person incurring the Accommodation Obligation is to provide assurance to the
obligee of such Indebtedness, obligation or liability of another that such
Indebtedness, obligation or liability shall be paid or discharged, or that any
agreements relating thereto shall be complied with, or that the holders thereof
shall be protected (in whole or in part) against loss in respect thereof
including, without limitation, direct and indirect guarantees, endorsements
(except for collection or deposit in the ordinary course of business), notes
co-made or discounted, recourse agreements, take-or-pay agreements, keep-well
agreements, agreements to purchase security therefor (other than such agreements
to purchase in the ordinary course of business) or to provide funds for the
payment or discharge thereof, agreements to maintain solvency, assets, level of
income, or other financial condition, and agreements to make payment other than
for value received.
"ADVANCE" means advance in the principal amount of $41,000,000 to
be made to the Borrower by Mutual Series pursuant to the terms of the Standby
Commitment Documents.
"AFFILIATE" of any specified Person means any other Person (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common
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control with, such specified Person, (ii) which beneficially owns or holds 5% or
more of any class of the Voting Stock or other equity interest of such specified
Person or (iii) of which 5% or more of the Voting Stock or other equity interest
is beneficially owned or held by such specified Person or a Subsidiary of such
specified Person; PROVIDED, HOWEVER, that American Body Armor and Equipment,
Inc. shall not be deemed an Affiliate of the Borrower for purposes of this
definition and PROVIDED, FURTHER, that Hexcel Foundation shall not be deemed
an Affiliate of the Borrower for so long as it maintains its status as a
not-for-profit corporation for purposes of California law. For the purposes of
this definition, "control" when used with respect to any specified Person means
the power to direct the management and policies of such Person directly or
indirectly, whether through the ownership of Voting Stock, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"AGENT" is defined in the preamble hereto and shall include any
successor Agent appointed pursuant to SECTION 12.07.
"AGENT'S ACCOUNT" means the Agent's account number 4058-5488
(CUSA funding account re: Hexcel Corporation) maintained at the office of
Citibank at 399 Park Avenue, 10th Floor, New York, New York 10043, Attention:
Patricia Ellis or such other deposit account as the Agent may from time to time
specify in writing to the Borrower and the Lenders.
"ALTERNATIVE CURRENCY" means lawful currency other than Dollars
which is freely convertible into Dollars.
"APPLICABLE LENDING OFFICE" means, with respect to a particular
Lender, its Eurodollar Lending Office in respect of provisions relating to
Eurodollar Rate Loans and its Domestic Lending Office in respect of provisions
relating to Base Rate Loans.
"APPRAISED VALUE" means, with respect to any Equipment, personal
property or Real Property of the Borrower or any of the Restricted Subsidiaries,
the value of such Property as set forth on (i) the fixed asset appraisal dated
January, 1995 prepared by Binswanger with respect to personal property and
Equipment and (ii) the fixed asset appraisal dated December, 1994 prepared by
Accuval Associates Incorporated with respect to Real Property, or on any
subsequent fixed asset appraisals with respect to personal property, Equipment
and Real Property delivered to the Agent by the Borrower prepared by such firms
or another appraisal firm acceptable to the Agent in form, scope and substance
satisfactory to the Agent or as otherwise determined by the Agent in its sole
discretion.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance in
substantially the form of EXHIBIT A attached hereto
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and made a part hereof (with blanks appropriately completed) delivered to the
Agent in connection with an assignment of a Lender's interest hereunder in
accordance with the provisions of SECTION 13.01.
"ASSIGNMENT OF CLAIMS ACT" has the meaning ascribed to such term
in SECTION 8.16.
"AVAILABILITY RESERVES" means, at any time, as of three days after
the date of written notice of any determination thereof to the Borrower by the
Agent (or such later date set forth in such notice), such amounts as the Agent,
in the exercise of its sole discretion exercised in a commercially reasonable
manner, may from time to time establish against the Revolving Credit
Availability that are needed to (i) preserve the value of, or the Agent's Lien
on, the Collateral or (ii) reflect future liabilities of the Borrower.
Availability Reserves shall include (A) at all times an amount equal to the
aggregate amount of interest payable with respect to each of the Existing IRDBs
on the next interest payment date for each such Existing IRDB as reported to the
Agent by the Borrower on or prior to the Closing Date and following each
interest payment made with respect thereto at all times after the Closing Date,
and (B) an amount (determined in a manner acceptable to the Agent) equal to the
lower of (I) the Fair Market Value of any portion of Eligible Real Property or
Eligible Equipment purchased with proceeds of the Existing IRDBs (or industrial
development bonds refinanced with the Existing IRDBs) and (II) the aggregate
amount of outstanding principal and interest payable with respect to the
Existing IRDBs issued in connection with Eligible Real Property.
"BANKRUPTCY CODE" means Title 11 of the United States Code (11
U.S.C. Sections 101 ET SEQ.), as amended from time to time, and any successor
statute.
"BANKRUPTCY COURT" means the United States Bankruptcy Court for
the Northern District of California.
"BASE RATE" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall at all
times be equal to the highest of:
(i) the rate of interest announced publicly by Citibank in New
York, New York from time to time, as Citibank's base rate; and
(ii) the sum (adjusted to the nearest one quarter of one percent
(0.25%) or, if there is no nearest one quarter of one percent (0.25%), to
the next higher one quarter of one percent (0.25%)) of (A) one half of one
percent (0.50%) per annum PLUS (B) the rate per annum obtained by
dividing (I) the latest three-week moving average of secondary market
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morning offering rates in the United States for three-month certificates
of deposit of major United States money market banks, such three-week
moving average (adjusted to the basis of a year of 360 days) being
determined weekly on each Monday (or, if such day is not a Business Day,
on the next succeeding Business Day) for the three-week period ending on
the previous Friday (or, if such day is not a Business Day, on the next
preceding Business Day) by Citibank on the basis of such rates reported by
certificate of deposit dealers to, and published by, the Federal Reserve
Bank of New York, or, if such publication shall be suspended or
terminated, on the basis of quotations for such rates received by Citibank
from three (3) New York certificate of deposit dealers of recognized
standing selected by Citibank, by (II) a percentage equal to 100% minus
the average of the daily percentages specified during such three-week
period by the Federal Reserve Board (or any successor) for determining the
maximum reserve requirement (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) for Citibank in
respect of liabilities which consist of or which include (among other
liabilities) three-month Dollar nonpersonal time deposits in the United
States PLUS (C) the average during such three-week period of the annual
assessment rates estimated by Citibank for determining the then current
annual assessment payable by Citibank to the Federal Deposit Insurance
Corporation (or any successor) for insuring Dollar deposits of Citibank in
the United States; and
(iii) the sum of (A) one half of one percent (0.50%) per annum
PLUS (B) the Federal Funds Rate in effect from time to time during such
period.
"BASE RATE LOANS" means all Loans which bear interest at a rate
determined by reference to the Base Rate as provided in SECTION 4.01(a).
"BASE RATE MARGIN" means one and one-half percent (1.5%) per
annum; PROVIDED, HOWEVER, so long as no Event of Default has occurred and is
continuing under the Loan Documents, the Base Rate Margin shall be reduced (i)
to 1.25% per annum beginning on the first day of the month following the month
during which financial statements are required to be delivered pursuant to
SECTION 7.01 covering any fiscal period in which the Borrower maintains a
Level I Status and ending on the last day of the month during which financial
statements are required to be delivered pursuant to SECTION 7.01 covering any
fiscal period in which the Borrower no longer maintains a Level I Status and
(ii) to one percent ( 1.0%) per annum beginning on the first day of the
month following the month during which financial statements are required to be
delivered pursuant to SECTION 7.01 covering any fiscal period in which the
Borrower maintains a Level II Status and ending on the last day of the month
during which
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financial statements are required to be delivered pursuant to SECTION 7.01
covering any fiscal period in which the Borrower no longer maintains a Level II
Status.
"BENEFIT PLAN" means a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which the
Borrower or any ERISA Affiliate is, or within the immediately preceding three
(3) years was, an "employer" as defined in Section 3(5) of ERISA.
"BNP" means Banque Nationale de Paris acting through its San
Francisco agency and its successors.
"BNP COLLATERAL AGREEMENT" means the Collateral Agreement dated as
of the Reorganization Effective Date between the Borrower and BNP as the same
may be amended, supplemented or otherwise modified from time to time.
"BNP LETTERS OF CREDIT" means the letters of credit issued by BNP
for the account of the Borrower as credit support for the Existing IRDBs, as
such letters of credit have been modified or extended through the Closing Date.
"BNP LETTER OF CREDIT REIMBURSEMENT AGREEMENT" means the Restated
and Amended Reimbursement Agreement dated as of the Reorganization Effective
Date between BNP and the Borrower as the same may be amended, supplemented or
otherwise modified from time to time.
"BNP LETTER OF CREDIT DOCUMENTS" means the BNP Letters of Credit,
the BNP Letter of Credit Reimbursement Agreement, the BNP Collateral
Agreement, the Escrow Agreement (as defined in the BNP Collateral Agreement) and
all other documents or instruments entered into in connection with the BNP
Letter of Credit Reimbursement Agreement.
"BORROWER PATENT SECURITY AGREEMENT" means the patent security
agreement by and between the Borrower and the Agent substantially in the form
of Exhibit M hereto, as such patent security agreement may be amended,
supplemented or otherwise modified from time to time.
"BORROWER PLEDGE AGREEMENT" means the pledge agreement by and
between the Borrower and the Agent substantially in the form of Exhibit N
hereto, as such pledge agreement may be amended, supplemented or otherwise
modified from time to time.
"BORROWER SECURITY AGREEMENT" means the security agreement by and
between the Borrower and the Agent substantially in the form of Exhibit J
hereto, as such security agreement may be amended, supplemented or otherwise
modified from time to time.
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"BORROWER TRADEMARK SECURITY AGREEMENT" means the trademark
security agreement by and between the Borrower and the Agent substantially in
the form of Exhibit L hereto, as such trademark security agreement may be
amended, supplemented or otherwise modified from time to time.
"BORROWING" means a borrowing consisting of Loans of the same type
made on the same day.
"BORROWING BASE" means, as of any date of determination, an amount
equal to the sum of the following:
(i) up to eighty-five percent (85%) of the face amount of Eligible
Receivables (net of maximum discounts, allowances, retainage and any other
amounts adjusted or deferred with respect thereto) of the Borrower at such time;
(ii) the lesser of (A) $16,500,000 and (B) up to the percentages
set forth opposite each type of Eligible Inventory set forth below:
TYPE OF ELIGIBLE INVENTORY PERCENTAGE
Eligible Finished Goods 50 %
Eligible Raw Materials 55 %
Eligible Work in Process 10 %;
PROVIDED, HOWEVER, in connection with Eligible Inventory manufactured
or used in the manufacturing process at the Borrower's Seguin, Texas
plant, such percentages for Eligible Finished Goods, Eligible Raw
Materials and Eligible Work in Process shall be up to 55%, 65% and 30%,
respectively.
(iii) (A) up to seventy percent (70%) of the Appraised Value of
Eligible Equipment owned by the Borrower as of the review date contained
in the most recent fixed asset appraisals delivered to the Agent prior to
the Closing Date and at such time, PLUS (B) up to seventy percent
(70%) of the Appraised Value of Eligible Equipment purchased by the
Borrower during the period beginning immediately after the review date
contained in the most recent fixed asset appraisals delivered to the Agent
prior to the Closing Date and ending 18 months after the Closing Date and
owned at such time, PLUS (C) up to fifty percent (50%) of the Appraised
Value of Eligible Real Property of the Borrower in which the Borrower has
a fee, leasehold or equitable interest on the Closing Date and at such
time, PLUS (D) up to the lesser of (a) $3,000,000 and (b) fifty
percent (50%) of (I) EBITDA of Hexcel Lyon for the most recently ended
four fiscal quarter period ending on the last day of the second fiscal
quarter and the fourth fiscal quarter of each Fiscal Year (or such interim
rolling four fiscal quarter
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period as the Agent may select in its sole discretion) MULTIPLIED BY two
(2) MINUS (II) the average Indebtedness for borrowed money and any
guarantees of Indebtedness for borrowed money outstanding of Hexcel Lyon
during the four fiscal quarter period ending on such date, all as
calculated by the Agent in its sole discretion based on the average
exchange rates in effect during such four fiscal quarter period;
PROVIDED, HOWEVER, in no case shall the aggregate amount of this
clause (iii) exceed the Maximum Fixed Asset Availability applicable at
such time.
For purposes of this definition, Eligible Receivables, Eligible Equipment,
Eligible Real Property, each type of Eligible Inventory and the Hexcel Lyon
Capital Stock Valuation, as of any date of determination, shall be determined
after deduction of all Eligibility Reserves then in effect with respect to such
items.
"BORROWING BASE CERTIFICATE" means a certificate, in substantially
the form of Exhibit C attached hereto and made a part hereof, setting forth
Eligible Receivables, Eligible Equipment, Eligible Real Property, each type of
Eligible Inventory and the Hexcel Lyon Capital Stock Valuation.
"BUSINESS DAY" means a day, in the applicable local time, which is
not a Saturday or Sunday or a legal holiday and on which banks are not required
or permitted by law or other governmental action to close (i) in New York, New
York or (ii) in the case of Eurodollar Rate Loans, in London, England or (iii)
in the case of Letter of Credit transactions for a particular Issuing Bank, in
the place where its office for issuance or administration of the pertinent
Letter of Credit is located.
"CAPITAL EXPENDITURES" means, for any period, the aggregate of all
expenditures (whether payable in cash or other Property or accrued as a
liability (but without duplication)) during such period that, in conformity with
GAAP, are required to be included in or reflected by the Borrower's or any of
the Restricted Subsidiaries' fixed asset accounts as reflected in any of their
respective balance sheets; PROVIDED, HOWEVER, (i) Capital Expenditures shall
include (A) that portion of Capital Leases which is incurred and capitalized
during such period on the balance sheet of the Borrower and the Restricted
Subsidiaries and (B) expenditures for Equipment which is purchased
simultaneously with the trade-in or disposal of existing Equipment owned by the
Borrower or any of the Restricted Subsidiaries, to the extent the gross purchase
price of the purchased Equipment exceeds the actual value attributed to such
Equipment at the time of such trade-in or disposal; and (ii) Capital
Expenditures shall exclude expenditures made in connection with the replacement
or restoration of Property, to the extent reimbursed or financed from insurance
or condemnation proceeds and permitted pursuant to SECTION 8.07.
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"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CAPITAL STOCK", with respect to any Person, means any capital
stock of such Person, regardless of class or designation, and all warrants,
options, purchase rights, conversion or exchange rights, voting rights, calls or
claims of any character with respect thereto.
"CASE" means the case under Chapter 11 of the Bankruptcy Code
commenced by the Borrower in the Bankruptcy Court, styled In re Hexcel
Corporation, Case No. 93-48535 T (Chapter 11), in respect of which the Borrower
will seek to obtain the Confirmation Order.
"CASH COLLATERAL" means cash or Cash Equivalents held by the
Agent, any of the Issuing Banks or any of the Lenders as security for the
Obligations.
"CASH COLLATERAL ACCOUNT" means an interest bearing account at
Citibank's offices in New York, New York in which Cash Collateral of the
Borrower shall be deposited. The Cash Collateral Account shall be under the
sole dominion and control of the Agent, PROVIDED that all amounts deposited
therein shall be held by the Agent for the benefit of the Agent, the Lenders and
the Issuing Banks and shall be subject to the terms of SECTION 11.03.
"CASH EQUIVALENTS" means (i) marketable direct obligations issued
or unconditionally guaranteed by the United States government and backed by the
full faith and credit of the United States government; (ii) domestic and
Eurodollar certificates of deposit and time deposits, bankers' acceptances and
floating rate certificates of deposit issued by any commercial bank organized
under the laws of the United States, any state thereof, the District of
Columbia, any foreign bank, or its branches or agencies (fully protected against
currency fluctuations), which, at the time of acquisition, are rated A-1 (or
better) by Standard & Poor's Corporation (or its successors) or P-1 (or better)
by Moody's Investors Service, Inc. (or its successors); (iii) commercial paper
of United States and foreign banks and bank holding companies and their
subsidiaries and United States and foreign finance, commercial industrial or
utility companies which, at the time of acquisition, are rated A-1 (or better)
by Standard & Poor's Corporation (or its successors) or P-1 (or better) by
Moody's Investors Service, Inc. (or its successors); (iv) marketable direct
obligations of any state of the United States of America or any political
subdivision of any such state given on the date of such investment the highest
credit rating by Moody's Investor Service, Inc. (or its successors) and Standard
& Poor's Corporation (or
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its successors); and (v) reverse purchase agreements covering obligations of the
type specified in clause (i); PROVIDED, that the maturities of any such Cash
Equivalents referred to in clauses (i) through (v) shall not exceed one hundred
eighty (180) days.
"CASH INTEREST EXPENSE" means, for any period on a combined
basis for any Person, all of the following as determined in conformity with
GAAP, (i) total interest expense, whether paid or accrued (without duplication)
(including the interest component of Capital Lease obligations for such period),
including, without limitation, all commissions, discounts and other fees and
charges owed with respect to letters of credit and net costs under Interest Rate
Contracts, but excluding, however, (w) interest accrued prior to the
Reorganization Effective Date and paid on the Reorganization Effective Date in
respect of Indebtedness repaid or extinguished on the Reorganization Effective
Date, (x) amortization of discount, (y) interest paid in property other than
cash and (z) any other interest expense not payable in cash, MINUS (ii) any
net payments received during such period under Interest Rate Contracts.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601 ET SEQ., as
amended, any successor statutes, and any regulations or legally enforceable
guidelines promulgated thereunder.
"CERCLIS" is defined in SECTION 6.01(o).
"CHANGE OF CONTROL" means (i) a Person or entity or group of
Persons or entities (other than Mutual Series) acting in concert, shall, as a
result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, have become the beneficial owner (within the
meaning of Rule 13d.3 under the Securities Exchange Act of 1934, as amended) of
securities of the Borrower representing more than the greater of (a) 20% of the
Borrower's Voting Stock and (b) the percentage of the Borrower's Voting Stock
beneficially owned by Mutual Series after giving effect to such purchases; or
(ii) the Borrower shall cease to own and control 100% of the outstanding Capital
Stock of each Guarantor.
"CHANGE OF CONTROL EVENT" means the occurrence and continuance of
a Change of Control; PROVIDED, HOWEVER, if a Change of Control of the type
described in CLAUSE (i) of the definition of Change of Control shall have
occurred and be continuing, such Change of Control shall not constitute a Change
of Control Event until the earlier to occur of the following: (i) 60 days after
the Agent or the Requisite Lenders shall have given written notice to the
Borrower that a Change of Control Event will occur in 60 days and (ii) 90 days
after the Borrower knows of such Change of Control.
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"CITIBANK" means Citibank, N.A., a national banking association,
and its successors and Subsidiaries.
"CLAIM" means any claim or demand, by any Person, of whatsoever
kind or nature for any alleged Liabilities and Costs, whether based in contract,
tort, implied or express warranty, strict liability, criminal or civil statute,
Permit, ordinance or regulation, common law or otherwise.
"CLASS" shall have the meaning ascribed to such term in the Plan
of Reorganization.
"CLOSING DATE" means the initial Funding Date of the Loans.
"COLLATERAL" means all Property and interests in Property now
owned or hereafter acquired by the Borrower or any of its Subsidiaries upon
which a Lien is granted under any of the Loan Documents.
"COLLECTION ACCOUNT AGREEMENT" means a collection account
agreement executed by each Collection Account Bank, the Borrower and the Agent
substantially in the form of EXHIBIT B (with such changes thereto requested by
the Collection Account Bank as may be acceptable to the Agent and the Borrower),
as such agreement may be amended, supplemented or otherwise modified from time
to time.
"COLLECTION ACCOUNT BANK" means each bank identified as such on
SCHEDULE 6.01-Z, as such schedule may be modified from time to time pursuant
to SECTION 7.10, that has executed a Collection Account Agreement, at which
the Borrower deposits proceeds of Collateral.
"COLLECTION ACCOUNTS" means, collectively, the collection accounts
established at the Collection Account Banks; and "COLLECTION ACCOUNT" means
any one of the Collection Accounts.
"COMMERCIAL LETTER OF CREDIT" means any documentary letter of
credit issued by an Issuing Bank pursuant to SECTION 2.03 for the account of
the Borrower, which is drawable upon presentation of documents evidencing the
sale or shipment of goods purchased by the Borrower in the ordinary course of
its business.
"COMPLIANCE CERTIFICATE" is defined in SECTION 7.01(d).
"CONCENTRATION ACCOUNT" means account number 4066-6421
(CUSA-f.a.o. Hexcel Corporation) of the Borrower at the offices of Citibank at
399 Park Avenue, 10th Floor, New York, New York 10043, Attention: Patricia
Ellis, into which all funds from the
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Collection Accounts shall be transferred on a daily basis in accordance with
SECTION 3.05. The Concentration Account shall be under the sole dominion and
control of the Agent; PROVIDED that all amounts deposited therein shall be
held by the Agent as Cash Collateral for the benefit of the Agent, the Lenders,
the Issuing Banks and the other Holders and shall be subject to the terms of
this Agreement.
"CONFIRMATION ORDER" means an order of the Bankruptcy Court
entered pursuant to Sections 1129 and 1141 of the Bankruptcy Code confirming the
Plan of Reorganization.
"CONSTITUENT DOCUMENT" means, with respect to any entity, (i) the
articles/certificate of incorporation (or the equivalent organizational
documents) of such entity, (ii) the by-laws (or the equivalent governing
documents) of such entity and (iii) any document setting forth the designation,
amount and/or relative rights, limitations and preferences of any class or
series of such entity's Capital Stock.
"CONTAMINANT" means any pollutant, hazardous substance,
radioactive substance, toxic substance, hazardous waste, radioactive waste,
special waste, petroleum or petroleum-derived substance or waste, asbestos in
any form or condition, polychlorinated biphenyls (PCBs), or any hazardous or
toxic constituent thereof and includes, but is not limited to, as these terms
are defined under Environmental, Health or Safety Requirements of Law.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument to which that Person is a party or by which
it or any of its properties is bound, or to which it or any of its properties is
subject.
"CUMULATIVE CASH FLOW" means, with respect to the Borrower and the
Restricted Subsidiaries for any period, (i) EBITDA of the Borrower and the
Restricted Subsidiaries for such period, MINUS (ii) current federal, state and
local income taxes accrued by the Borrower and the Restricted Subsidiaries
during such period, MINUS (iii) increases (or PLUS decreases) in Working
Capital of the Borrower and the Restricted Subsidiaries during such period;
PROVIDED, that (A) liabilities subject to compromise that are reinstated on
the Effective Date and (B) any changes in the classification of liabilities
relating to DIC shall not be considered changes in Working Capital, MINUS
(iv) cash charges taken by the Borrower and the Restricted Subsidiaries against
restructuring reserves during such period, MINUS (v) bankruptcy reorganization
charges taken by the Borrower and the Restricted Subsidiaries in connection with
the Case during such period,
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MINUS (vi) any extraordinary cash losses of the Borrower and the Restricted
Subsidiaries during such period.
"CURE LOANS" is defined in SECTION 3.02(b)(v)(C).
"CURRENCY AGREEMENT" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement.
"CUSTOMARY PERMITTED LIENS" means Liens (other than Environmental
Liens and Liens in favor of the PBGC)
(i) with respect to the payment of taxes, assessments or
governmental charges in all cases which are not yet due or which are being
contested in good faith by appropriate proceedings and with respect to
which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP;
(ii) of landlords arising by statute and Liens of suppliers,
mechanics, carriers, materialmen, warehousemen or workmen and other Liens
imposed by law created in the ordinary course of business for amounts not
yet due or which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance with GAAP;
(iii) incurred or deposits made in the ordinary course of business
in connection with worker's compensation, unemployment insurance or other
types of social security benefits or to secure the performance of bids,
tenders, sales, contracts (other than for the repayment of borrowed
money), deposits for utility services and operating Leases, surety,
appeal, customs and performance bonds; PROVIDED that all such Liens do
not in the aggregate materially detract from the value of the Borrower's
or such Subsidiary's assets or Property or materially impair the use
thereof in the operation of the Borrower's and its Subsidiaries'
businesses;
(iv) arising as a result of progress payments under Government
Contracts;
(v) arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar charges or encumbrances on the use
of Real Property which do not materially interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;
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(vi) arising as a result of leases or subleases of Real Property
in effect on the Closing Date and any other leases or subleases of Real
Property approved by the Agent, PROVIDED that all such Liens do not in
the aggregate materially detract from the value of the Borrower's or such
Subsidiary's assets or Property or materially impair the use thereof in
the operation of the businesses; and
(vii) constituting the filing of notice financing statements of a
lessor's rights in and to personal property leased to the Borrower in the
ordinary course of the Borrower's business.
"DECISION PERIOD" is defined in SECTION 8.07.
"DEFAULT" means an event which, with the giving of notice or the
lapse of time, or both, would constitute an Event of Default.
"DIC" means the joint venture entered into between the Borrower
and Dainippon Ink & Chemicals, Inc. ("Dainippon"), pursuant to that certain
Parent Company Agreement dated as of April 17, 1990 under which the Borrower and
Dainippon caused Hexcel Technologies, Inc. and DIC Technologies, Inc.,
(wholly-owned subsidiaries of the Borrower and Dainippon Ink & Chemicals, Inc.,
respectively) to enter into that certain Participants Agreement dated as of
September 14, 1990 pursuant to which Hexcel Technologies, Inc. and DIC
Technologies, Inc. formed Hexcel-DIC Partnership ("HDP") and pursuant to which
Hexcel Technologies, Inc. and DIC Technologies Inc., caused HDP to form
DIC-Hexcel, Ltd. as a wholly-owned subsidiary of HDP.
"DIP FACILITY" means the Borrower's existing debtor-in-possession
facility with The CIT Group/Business Credit, Inc. ("CIT") pursuant to the Debtor
in Possession Credit Agreement dated as of December 8, 1993 between the Borrower
and CIT, as amended, supplemented or otherwise modified from time to time.
"DISBURSEMENT ACCOUNT" means the disbursement account of the
Borrower designated as such by the Borrower by written notice to the Agent.
"DISCLOSURE STATEMENT" means the written statement, dated November
7, 1994, as amended, supplemented, or modified from time to time, describing the
Plan of Reorganization (and the transactions and events contemplated thereby)
that is prepared and distributed in accordance with Sections 1125 and 1126(b) of
the Bankruptcy Code and Rule 3018 promulgated thereunder, as amended.
"DOL" means the United States Department of Labor and any
successor department or agency.
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"DOLLARS" and "$" mean the lawful money of the United States.
"DOLLAR EQUIVALENT" means, with respect to any Alternative
Currency at the time of determination thereof, the equivalent of such currency
in Dollars determined at the rate of exchange quoted by the Agent in New York,
New York at 11:00 a.m. (New York time) on the date of determination, to prime
banks in New York for the spot purchase in the New York foreign exchange market
of such amount of Dollars with such Alternative Currency.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, such
Lender's office, located in the United States, specified as the "Domestic
Lending Office" under its name on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such other United
States office of such Lender as it may from time to time specify by written
notice to the Borrower and the Agent.
"EBITDA" means, for any period on a combined basis for any
Person, (i) the sum of the amounts for such period for such Person of (A) Net
Income, (B) depreciation and amortization expense, (C) total interest expense,
(D) charges for federal, state, local and foreign income taxes and (E)
extraordinary losses (including restructuring charges and bankruptcy
reorganization charges in connection with the Case and charges in connection
with DIC) which have been deducted in the determination of Net Income, MINUS
(ii) the sum of (A) extraordinary gains not already excluded from the
determination of Net Income (including, without limitation, gains in connection
with the sale of Property and gains based upon market valuation, GAAP valuation
or sale of Securities) and (B) interest and other income, including without
limitation, equity income from Unrestricted Subsidiaries (or minus equity loss
from Unrestricted Subsidiaries).
"EQUITY COMMITTEE" means the Official Committee of Equity Security
Holders of Hexcel Corporation.
"ELIGIBILITY RESERVES" means, as of five (5) days after the date
of written notice of any determination thereof to the Borrower by the Agent, or
to the Borrower and the Agent by the Requisite Lenders, such amounts as the
Agent, or the Requisite Lenders, as the case may be, in the exercise of its or
their reasonable credit judgment and in accordance with its or their customary
criteria, may from time to time establish against the gross amounts of Eligible
Receivables, Eligible Equipment, Eligible Real Property and each type of
Eligible Inventory or against the Hexcel Lyon Capital Stock Valuation to reflect
risks or contingencies arising after the Closing Date which may affect such
items and which have not already been taken into account in the determination of
Eligible Receivables, Eligible Equipment,
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Eligible Real Property, each type of Eligible Inventory, or the Hexcel Lyon
Capital Stock Valuation, as the case may be.
"ELIGIBLE ASSIGNEE" means (i) a Lender or any Affiliate thereof;
(ii) a commercial bank having total assets in excess of $500,000,000; (iii) a
finance company, insurance company, other financial institution or fund,
reasonably acceptable to the Agent, which is regularly engaged in making,
purchasing or investing in loans and having total assets in excess of
$500,000,000; (iv) a savings and loan association or savings bank organized
under the laws of the United States or any state thereof which has a net worth,
determined in accordance with GAAP, in excess of $350,000,000; or (v) a finance
company, insurance company, bank, other financial institution or fund acceptable
to the Agent which acceptance shall not be unreasonably withheld.
"ELIGIBLE EQUIPMENT" means any Equipment of the Borrower (i) with
respect to which the Agent has a valid and perfected first priority Lien, (ii)
with respect to which no warranty contained in any of the Loan Documents has
been breached and (iii) which the Agent deems to be Eligible Equipment, based on
such credit and collateral considerations as the Agent may deem appropriate.
"ELIGIBLE FINISHED GOODS" means Inventory of the Borrower which
is classified, consistent with past practice, on the Borrower's accounting
system as Finished Goods, which is otherwise Eligible Inventory.
"ELIGIBLE INVENTORY" means Inventory of the Borrower (other than
any Inventory which has been consigned to the Borrower) (i) with respect to
which the Agent has a valid and perfected first priority Lien, (ii) with respect
to which no warranty contained in any of the Loan Documents has been breached,
(iii) which is not in the reasonable opinion of the Agent, obsolete or
unmerchantable and (iv) which the Agent deems to be Eligible Inventory, based on
such credit and collateral considerations as the Agent may deem appropriate.
Eligible Inventory shall be valued at the lower of cost on a first-in, first-out
basis or Fair Market Value. No Inventory of the Borrower shall be Eligible
Inventory if such Inventory is located, stored, used or held at the premises of
a third party unless (A) the Agent shall have received a landlord, bailee or
similar letter from such third party in form and substance satisfactory to the
Agent and (B) an appropriate UCC-1 financing statement shall have been executed
with respect to such location. The Agent reserves the right, in accordance with
its customary practices, to create, from time to time, additional categories of
ineligible Inventory.
"ELIGIBLE RAW MATERIALS" means Inventory of the Borrower which
is classified, consistent with past practice, on
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the Borrower's accounting system as Raw Materials, which is otherwise Eligible
Inventory.
"ELIGIBLE REAL PROPERTY" means any Real Property of the Borrower
(i) with respect to which the Agent has a valid and perfected first priority
Lien, (ii) with respect to which no warranty contained in any of the Loan
Documents has been breached, (iii) with respect to which the Agent has received
a fixed asset appraisal in form, scope and substance satisfactory to the Agent
and (iv) which the Agent deems to be Eligible Real Property, based on such
credit and collateral considerations as the Agent may deem appropriate.
"ELIGIBLE RECEIVABLE" means each Receivable of the Borrower which,
when scheduled to the Agent and at all times thereafter, is not, except as
otherwise agreed by the Agent in its sole discretion, of any of the following
types:
(i) (A) it arises out of a sale the original terms of which provide
for payment more than 90 days after the date of the original invoice
issued by the Borrower in connection with such sale or (B) it is
more than 60 days past due, according to the original terms of sale;
or
(ii) it arises out of a sale not made in the ordinary course of the
Borrower's business or a sale to a Person which is an Affiliate of
the Borrower or controlled by an Affiliate of the Borrower;
PROVIDED, HOWEVER, that directors of the Borrower shall not be
deemed to be Affiliates for purposes of this clause (ii); or
(iii) it fails to meet or violates any warranty, representation or
covenant contained in this Agreement or any of the other Loan
Documents; or
(iv) the account debtor is also the Borrower's supplier or creditor
and (A) the Receivable is or may become subject to any right of
setoff by the account debtor, if such account debtor has not entered
into an agreement, in form and substance satisfactory to the Agent,
with the Agent with respect to the waiver of rights of setoff or (B)
the account debtor has disputed liability with respect to such
Receivable, or made any claim with respect to any other Receivable
due from such account debtor to the Borrower in which case the
Receivable shall be ineligible to the extent of such dispute, claim
or setoff; or
(v) the account debtor has filed a petition for bankruptcy or any
other petition for relief under the Bankruptcy Code or any similar
statute, made an assignment for the benefit of creditors, or if any
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petition or other application for relief under the Bankruptcy Code
or any similar statute has been filed against the account debtor, or
if the account debtor has failed, suspended its business operations,
become insolvent, suffered a receiver or a trustee to be appointed
for any of its assets or affairs, or is generally failing to pay its
debts as they become due; provided that the Agent may, in its sole
discretion, deem any such Receivable to be an Eligible Receivable if
the relevant account debtor has entered into postpetition financing
arrangements satisfactory to the Agent; or
(vi) it arises in respect of a sale to an account debtor outside the
United States, unless the account debtor's obligations (or that
portion of such obligations which is acceptable to the Agent) with
respect to such sale are secured by a letter of credit, guaranty or
eligible bankers' acceptance having terms, and from such issuers and
confirming banks, as are reasonably acceptable to the Agent; or
(vii) the sale is on a bill-and-hold, sale conditioned upon future
delivery of products, guaranteed sale, sale-and-return, sale on
approval, consignment, or any other repurchase or return basis; or
(viii) the Agent determines and advises the Borrower in writing
that, in the exercise of the Agent's reasonable credit judgment,
that collection of such Receivable is insecure or that such
Receivable may not be paid by reason of the account debtor's
financial inability to pay; or
(ix) the account debtor is the United States of America or any
department, agency or instrumentality thereof, unless the Borrower
or its applicable Subsidiary assigns its right to payment of such
Receivable to the Agent pursuant to the Assignment of Claims Act; or
(x) the goods, the delivery of which has given rise to such
Receivable, have not been delivered to and accepted by the account
debtor, or the services, the performance of which has given rise to
such Receivable, have not been performed by the Borrower and
accepted by the account debtor; or
(xi) the Receivable(s) of the respective account debtor exceed(s) a
credit limit determined by the Agent, in the exercise of its
reasonable credit judgment, at any time or times hereafter, in which
case such Receivable(s) shall be ineligible to the extent such
Receivable(s) exceed(s) such limit; or
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(xii) the Agent does not have a senior, perfected security interest
in such Receivable or such Receivable is subject to a Lien which is
not permitted under SECTION 9.03; or
(xiii) the account debtor is located in either of the states of New
Jersey or Minnesota and the Borrower has not filed and maintained
effective a current Business Activity Report with the appropriate
Governmental Authority in the state of New Jersey or Minnesota, as
applicable, or, with respect to the State of New Jersey, the
Borrower has not received and maintained effective a certificate of
authority to do business in such state; or
(xiv) the sale is to an account debtor with respect to which fifty
percent (50%) or more of all Receivables owing by such account
debtor are ineligible for any reason; or
(xv) it arises out of or in connection with a retainage or similar
arrangement; or
(xvi) it is deemed ineligible by the Agent in accordance with the
Agent's customary criteria.
"ELIGIBLE WORK IN PROCESS" means Inventory (net of any inventory
where progress payments are being received) of the Borrower which is classified,
consistent with past practice, on the Borrower's accounting system as Work in
Process or Goods in Process, which is otherwise Eligible Inventory.
"EMT SALE" means the sale by the Borrower of its Chandler, Arizona
plant and its EMT technology pursuant to the Asset Purchase Agreement dated as
of November 3, 1994 by and between the Borrower and Northrop Grumman
Corporation.
"ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all
Requirements of Law derived from or relating to federal, state and local laws or
regulations relating to or addressing the environment, health or safety,
including but not limited to any law, regulation, or order relating to the use,
handling, or disposal of any Contaminant, any law, regulation, or order relating
to Remedial Action and any law, regulation, or order relating to workplace or
worker safety and health, and such Requirements as are promulgated by the
specifically authorized Governmental Authority responsible for administering
such Requirements, each as from time to time hereafter in effect.
"ENVIRONMENTAL LIEN" means a Lien in favor of any Governmental
Authority for any (i) liabilities under any Environmental, Health or Safety
Requirements of Law, or (ii) damages arising from, or costs incurred by such
Governmental
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Authority in response to, a Release or threatened Release of a Contaminant into
the environment.
"ENVIRONMENTAL PROPERTY TRANSFER ACTS" means any applicable
Requirement of Law that conditions, restricts, prohibits or requires any
notification or disclosure triggered by the closure of any Property or the
transfer, sale or lease of any Property or deed or title for any Property for
environmental reasons, including, but not limited to, any so-called
"Environmental Cleanup Responsibility Acts" or "Responsible Transfer Acts".
"EQUIPMENT" means all of the Borrower's and its Subsidiaries'
present and future (i) equipment, including, without limitation, machinery,
manufacturing, distribution, selling, data processing and office equipment,
assembly systems, tools, molds, dies, fixtures, appliances, furniture,
furnishings, vehicles, vessels, aircraft, aircraft engines, and trade fixtures,
(ii) other tangible personal Property (other than the Borrower's and its
Subsidiaries' Inventory), and (iii) any and all accessions, parts and
appurtenances attached to any of the foregoing or used in connection therewith,
and any substitutions therefor and replacements, products and proceeds thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and any successor statute.
"ERISA AFFILIATE" means any (i) corporation which is a member of
the same controlled group of corporations (within the meaning of Section 414(b)
of the Internal Revenue Code) as the Borrower, (ii) partnership or other trade
or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the Internal Revenue Code) with the Borrower, and
(iii) member of the same affiliated service group (within the meaning of section
414(m) of the Internal Revenue Code) as the Borrower, any corporation described
in clause (i) above or any partnership or trade or business described in clause
(ii) above.
"EURODOLLAR AFFILIATE" means, with respect to each Lender, the
Affiliate of such Lender (if any) set forth below such Lender's name under the
heading "Eurodollar Affiliate" on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such Affiliate of a
Lender as it may from time to time specify by written notice to the Borrower and
the Agent.
"EURODOLLAR INTEREST PAYMENT DATE" means (i) with respect to any
Eurodollar Rate Loan, the last day of each Interest Period applicable to such
Loan and (ii) with respect to any Eurodollar Rate Loan having an Interest Period
in excess of three (3) calendar months, the last day of each three (3) calendar
month interval during such Interest Period.
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"EURODOLLAR LENDING OFFICE" means, with respect to any Lender, the
office or offices of such Lender (if any) set forth below such Lender's name
under the heading "Eurodollar Lending Office" on the signature pages hereof or
on the Assignment and Acceptance by which it became a Lender or such office or
offices of such Lender as it may from time to time specify by written notice to
the Borrower and the Agent.
"EURODOLLAR RATE" shall mean, with respect to any Interest Period
applicable to a Borrowing of Eurodollar Rate Loans, (a) an interest rate per
annum obtained by DIVIDING (i) the interest rate per annum determined by the
Agent to be the average (rounded upward to the nearest whole multiple of
one-sixteenth of one percent (0.0625%) per annum if such average is not such a
multiple) of the rates per annum specified by notice to the Agent by Citibank as
the rates per annum at which deposits in Dollars are offered by the principal
office of Citibank in London, England to major banks in the London interbank
market at approximately 11:00 a.m. (London time) on the Eurodollar Interest Rate
Determination Date for such Interest Period for a period equal to such Interest
Period and in an amount substantially equal to the amount of the Eurodollar Rate
Loan to be outstanding to Citicorp for such Interest Period, BY (ii) a
percentage equal to 100% MINUS the Eurodollar Reserve Percentage PLUS (b)
the Eurodollar Rate Margin to such Interest Period. The Eurodollar Rate shall
be adjusted automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"EURODOLLAR RATE MARGIN" means two and one-half percent (2.50%)
per annum; PROVIDED, HOWEVER, so long as no Event of Default has occurred
and is continuing, the Eurodollar Rate Margin shall be reduced (i) to two and
one-quarter percent (2.25%) per annum beginning on the first day of the
month following the month during which financial statements are required to be
delivered pursuant to SECTION 7.01 covering any fiscal period in which the
Borrower maintains a Level I Status and ending on the last day of the month
during which financial statements are delivered pursuant to SECTION 7.01
covering any fiscal period in which the Borrower no longer maintains a Level I
Status and (ii) to two percent ( 2.0%) per annum beginning on the first day
of the month following the month during which financial statements are delivered
pursuant to SECTION 7.01 covering any fiscal period in which the Borrower
maintains a Level II Status and ending on the last day of the month during which
financial statements are required to be delivered pursuant to SECTION 7.01
covering any fiscal period in which the Borrower no longer maintains a Level II
Status.
"EURODOLLAR RATE LOANS" means those Loans outstanding which bear
interest at a rate determined by reference to the Eurodollar Rate and the
Eurodollar Rate Margin as provided in SECTION 4.01(a).
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"EURODOLLAR RESERVE PERCENTAGE" means, for any day, that
percentage which is in effect on such day, as prescribed by the Federal Reserve
Board for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for a member bank of the Federal Reserve System in New York, New York with
deposits exceeding five billion Dollars in respect of "Certificate of Deposit
Liabilities" (or in respect of any other category of liabilities which includes
deposits by reference to which the interest rate on Eurodollar Rate Loans is
determined or any category of extensions of credit or other assets which
includes loans by a non-United States office of any bank to United States
residents).
"EUROPEAN RESINS SALE" means the sale by the Borrower of its
resins business in France, Germany, Italy and Spain to an investor group
sponsored by management pursuant to the Stock Purchase Agreement dated as of
December 27, 1994 by and between the Borrower and Axson S.A.
"EVENT OF DEFAULT" means any of the occurrences set forth in
SECTION 11.01 after the expiration of any applicable grace period and the
giving of any applicable notice, in each case as expressly provided in SECTION
11.01.
"EXISTING IRDBS" means the industrial revenue development bonds
identified on SCHEDULE 1.01.7.
"EXISTING JOINT VENTURE" means (i) Knytex, (ii) DIC and (iii)
Fyfe.
"FAIR MARKET VALUE" means, with respect to any asset or group of
assets, the value of the consideration obtainable in a sale of such asset in the
open market, assuming a sale by a willing seller to a willing purchaser dealing
at arm's length and arranged in an orderly manner over a reasonable period of
time, each having reasonable knowledge of the nature and characteristics of such
asset, neither being under any compulsion to act, determined (a) in good faith
by the board of directors of the Borrower, PROVIDED that the value of any
asset or group of assets with a book value of less than $500,000 shall be
determined in good faith by the management of the Borrower or (b) in an
appraisal of such asset, PROVIDED that such appraisal was performed relatively
contemporaneously with such determination of the fair market value by an
independent third party appraiser and the basic assumptions underlying such
appraisal have not materially changed since the date thereof.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
rate per annum 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,
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if such day is not a Business Day in New York, New York, for the next preceding
Business Day) in New York, New York by the Federal Reserve Bank of New York, or
if such rate is not so published for any day which is a Business Day in New
York, New York, the average of the quotations for such day on such transactions
received by Citibank from three federal funds brokers of recognized standing
selected by the Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System or any Governmental Authority succeeding to its
functions.
"FINAL ORDER" shall have the meaning set forth in the Plan of
Reorganization.
"FISCAL YEAR" means the fiscal year of the Borrower, which shall
be the four fiscal quarter period ending on the closest Sunday to December 31 of
each calendar year.
"FIXED CHARGES" means, for any period for any Person, the sum of
the amounts for such period of (i) Cash Interest Expense of such Person, (ii)
the higher of scheduled or actual payments of principal on Indebtedness of such
Person, including, without limitation, the principal component of Capital Lease
obligations, the amount of cash payments or sinking fund deposits made or
Letters of Credit issued in connection with the BNP Reimbursement Agreement and
the amount of payments made to DIC, but excluding Indebtedness repaid or
extinguished on the Reorganization Effective Date and (iii) cash dividends paid
by the Borrower.
"FIXED CHARGE COVERAGE RATIO" means, with respect to any period,
the ratio of (i) EBITDA of the Borrower and the Restricted Subsidiaries for such
period, MINUS Capital Expenditures paid by the Borrower and the Restricted
Subsidiaries during such period, MINUS current federal, state and local income
taxes accrued by the Borrower and the Restricted Subsidiaries during such
period, MINUS Investments made by the Borrower and the Restricted Subsidiaries
in Unrestricted Subsidiaries, PLUS Net Cash Proceeds of the type set forth in
clause (i) of the definition thereof received after the Closing Date (including,
without limitation, Net Cash Proceeds received after the Closing Date in respect
of the EMT Sale, the Borrower's domestic resins business and the Graham, Texas
Real Property) received during such period to the extent not included in the
calculation of EBITDA for such period to (ii) Fixed Charges of the
Borrower and the Restricted Subsidiaries for such period.
"FOREIGN EMPLOYEE BENEFIT PLAN" means any employee benefit plan
as defined in Section 3(3) of ERISA which is maintained or contributed to for
the benefit of the employees of the Borrower, any of its Subsidiaries or any of
its ERISA
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Affiliates, but which is not covered by ERISA pursuant to ERISA Section 4(b)(4).
"FOREIGN PENSION PLAN" means any Foreign Employee Benefit Plan
which under applicable local law, is required to be funded through a trust or
other funding vehicle other than a trust or funding vehicle maintained by a
Governmental Authority.
"FUNDING DATE" means, with respect to any Loan, the date of the
funding of such Loan.
"FYFE" means the joint venture entered into between the Borrower
and Fyfe Associates pursuant to an Agreement dated as of October 13, 1992 for
the sale and installation of high strength architectural wrap.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board, the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board or in such other statements by such other entity as may be in general use
by significant segments of the accounting profession as in effect on the date
hereof (unless otherwise specified pursuant to SECTION 13.04).
"GENERAL INTANGIBLES" means all of the Borrower's and its
Subsidiaries' present and future choses in action, causes of action, and all
other intangible personal property of every kind and nature (other than
Receivables), including, without limitation, corporate, partnership and other
business records, inventions, designs, patents, patent applications, trademarks,
service marks, trademark and service mark applications and registrations, trade
names, trade secrets, goodwill, registrations, copyrights and copyright
applications, licenses, franchises, customer lists, tax refunds, tax refund
claims, rights and claims against carriers, shippers, franchisees, lessors, and
lessees, and rights to indemnification.
"GOVERNMENT CONTRACT" means any bid, quotation, proposal,
contract, agreement, work authorization, lease, commitment or sale or purchase
order of Borrower or its Subsidiaries that is with the United States Government,
or any state, local or foreign government, including, without limitation, all
contracts and work authorizations to supply goods and services to the United
States Government or its agencies.
"GOVERNMENTAL AUTHORITY" means any nation or government, any
federal, state or local government or other political subdivision thereof and
any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to such government or political
subdivision.
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"GUARANTOR" means each Restricted Subsidiary party to the
Subsidiary Guaranty.
"HEXCEL ALPHA" means Hexcel Alpha Corp., a Delaware corporation.
"HEXCEL BETA" means Hexcel Beta Corp., a Delaware corporation.
"HEXCEL LYON" means Hexcel S.A., a French corporation.
"HEXCEL LYON CAPITAL STOCK VALUATION" means the value attributable
to the Capital Stock of Hexcel Lyon based on the calculations set forth in
CLAUSE (iii) (D) of the definition of "BORROWING BASE".
"HEXCEL LYON SUBORDINATED NOTE" means the subordinated
promissory note substantially in the form of EXHIBIT P hereto in the principal
amount of $2,613,000, dated the Reorganization Effective Date, payable by the
Borrower to Hexcel Lyon and subordinated to the payment of the Obligations, to
be delivered to Hexcel Lyon pursuant to SECTION 8.19.
"HOLDER" means any Person entitled to enforce any of the
Obligations, whether or not such Person holds any evidence of Indebtedness,
including, without limitation, the Agent, each Lender and each Issuing Bank.
"INDEBTEDNESS", as applied to any Person, at any time, shall mean
any obligation for the payment of money which is a Contractual Obligation, and
shall include, without limitation but without duplication, (a) all indebtedness,
obligations or other liabilities of such Person (i) for borrowed money or
evidenced by debt securities, debentures, acceptances, notes or other similar
instruments, and any accrued interest, fees and charges relating thereto, (ii)
in respect of obligations to redeem, repurchase or exchange any Securities of
such Person or to pay cash dividends in respect of any stock, (iii) with respect
to letters of credit issued for such Person's account, (iv) to pay the deferred
purchase price of property or services, except accounts payable and accrued
expenses arising in the ordinary course of business, (v) in respect of Capital
Leases, (vi) which are Accommodation Obligations, (vii) upon which interest
charges are customarily paid (including zero coupon instruments) or (viii) under
conditional sale or other title retention agreements relating to property
purchased by such Person; (b) all indebtedness, obligations or other liabilities
of such Person or others secured by a Lien on any property of such Person,
whether or not such indebtedness, obligations or liabilities are assumed by such
Person, all as of such time; (c) all indebtedness, obligations or other
liabilities of such Person in respect of Interest Rate Contracts and Currency
Agreements, net of liabilities owed to
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such Person by the counterparts thereon; and (d) all contingent Contractual
Obligations with respect to any of the foregoing.
"INDEMNITEE" is defined in SECTION 13.03.
"INDEMNIFIED MATTER" is defined in SECTION 13.03.
"INITIAL PROJECTIONS" means the financial projections dated as of
February 2, 1995 and set forth on SCHEDULE 1.01.1 prepared by the management
of the Borrower with respect to the Borrower and the Restricted Subsidiaries on
a combined basis and on a quarterly basis for Fiscal Years 1995 through 1997 and
supporting materials delivered in connection therewith, delivered by the
Borrower to the Lenders prior to the Closing Date.
"INTERCREDITOR AGREEMENT" means the Intercreditor Agreement dated
as of the Reorganization Effective Date among Mutual Series, the Lenders and the
Agent.
"INTEREST COVERAGE RATIO" means, with respect to any period, the
ratio of (i) EBITDA of the Borrower and the Restricted Subsidiaries for such
period to (ii) Cash Interest Expense of the Borrower and the Restricted
Subsidiaries for such period.
"INTEREST PERIOD" is defined in SECTION 4.02(b).
"INTEREST RATE CONTRACTS" means interest rate exchange, swap,
collar or cap or similar agreements providing interest rate protection.
"INTEREST RATE DETERMINATION DATE" is defined in SECTION
4.02(c).
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986,
as amended to the date hereof and from time to time hereafter, any successor
statute and any regulations or guidance promulgated thereunder.
"INVENTORY" means all of the Borrower's and each of the Restricted
Subsidiaries' present and future (i) inventory (including unbilled accounts
receivable), (ii) goods, merchandise and other personal Property furnished or to
be furnished under any contract of service or intended for sale or lease, and
all goods consigned by the Borrower or such Restricted Subsidiary and all other
items which have previously constituted Equipment but are then currently being
held for sale or lease in the ordinary course of the Borrower's or such
Restricted Subsidiary's business, (iii) raw materials, work-in-process and
finished goods, (iv) materials and supplies of any kind, nature or description
used or consumed in the Borrower's or such Restricted Subsidiary's business or
in connection with the manufacture, production, packing, shipping, advertising,
finishing or sale of
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any of the Property described in CLAUSES (i) through (iii) above, (v) goods
in which the Borrower or such Restricted Subsidiary has a joint or other
interest to the extent of the Borrower's or such Restricted Subsidiary's
interest therein or right of any kind (including, without limitation, goods in
which the Borrower or such Restricted Subsidiary has an interest or right as
consignee), and (vi) goods which are returned to or repossessed by the Borrower
or such Restricted Subsidiary; in each case whether in the possession of the
Borrower or such Restricted Subsidiary, a bailee, a consignee, or any other
Person for sale, storage, transit, processing, use or otherwise, and any and all
documents for or relating to any of the foregoing.
"INVESTMENT" means, with respect to any Person, (i) any purchase
or other acquisition by that Person of Securities, or of a beneficial interest
in Securities issued by or other equity ownership interest in any other Person,
(ii) any purchase by that Person of all or a significant part of the assets of a
business conducted by another Person, (iii) any loan, advance (other than
prepaid expenses, accounts receivable, advances to employees and similar items
made or incurred in the ordinary course of business as presently conducted), or
capital contribution by that Person to any other Person, including all
Indebtedness to such Person arising from a sale of property by such Person other
than in the ordinary course of its business and (iv) any deposit and cash
collateral accounts with financial institutions.
"INVESTMENT ACCOUNT" means account number 4066-7301 of the
Borrower at the Citibank's offices in New York, New York into which certain cash
proceeds of Collateral may be transferred in accordance with SECTION 3.02(b).
The Investment Account shall be under the sole dominion and control of the
Agent; PROVIDED that all amounts deposited therein shall be held by the Agent
as Cash Collateral for the benefit of the Agent, the Lenders, the Issuing Banks
and the other Holders and shall be subject to the terms of SECTION 11.03.
"ISSUE" means, with respect to any Letter of Credit, either to
issue, or to extend the expiry of, or to renew, or to increase the amount of,
such Letter of Credit and the terms "ISSUED" and "ISSUANCE" shall have
corresponding meanings.
"ISSUING BANKS" means Citibank and each other Lender (or Affiliate
of a Lender) approved by the Agent and the Borrower who has agreed to become an
Issuing Bank for the purpose of issuing Letters of Credit pursuant to SECTION
2.03.
"KNYTEX" means the joint venture entered into between the Borrower
and Owens-Corning Fiberglas Corporation pursuant to a Limited Liability Company
Agreement dated as of June 14, 1993 for the production and marketing of
stitchbonded fabrics.
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"KNYTEX CREDIT FACILITY" means that certain $4,500,000 revolving
credit facility to be entered into between Knytex and Creekwood Capital
Corporation in connection with which the Borrower will agree, among other
things, to subordinate certain amounts payable to it by Knytex upon the
occurrence of an event of default under the loan documents relating thereto.
"LEASES" means those leases, tenancies or occupancies entered into
by the Borrower or one of its Subsidiaries, as tenant, sublessor or sublessee
either directly or as the successor in interest to the Borrower or any of the
Restricted Subsidiaries.
"LENDER" means, as of the Closing Date, Citicorp and each other
institution (other than the Borrower) which is a signatory hereto and, at any
other given time, each institution which is a party hereto as a Lender, whether
as a signatory hereto or pursuant to an Assignment and Acceptance.
"LETTER AGREEMENT" means the fee letter dated January 6, 1995 from
Citicorp and accepted and agreed to by the Borrower.
"LETTER OF CREDIT" means any Commercial Letter of Credit or
Standby Letter of Credit.
"LETTER OF CREDIT AVAILABILITY" means, at any particular time, the
amount by which the Letter of Credit Sublimit exceeds the Letter of Credit
Obligations outstanding at such time.
"LETTER OF CREDIT FEE" is defined in SECTION 4.03(a).
"LETTER OF CREDIT OBLIGATIONS" means, at any particular time, the
sum of (i) all outstanding Reimbursement Obligations, PLUS (ii) the aggregate
undrawn face amount of all outstanding Letters of Credit, PLUS (iii) the
aggregate face amount of all Letters of Credit requested by the Borrower but not
yet issued (unless the request for an unissued Letter of Credit has been denied
pursuant to SECTION 2.03(c)(i)). For purposes of determining the amount of
Letter of Credit Obligations (or any component thereof) in respect of any Letter
of Credit which is denominated in an Alternative Currency, such amount shall
equal the Dollar Equivalent of the amount of such Alternative Currency at the
time of determination thereof.
"LETTER OF CREDIT REIMBURSEMENT AGREEMENT" means, with respect to
a Letter of Credit, such form of application therefor and form of reimbursement
agreement therefor (whether in a single or several documents, taken together) as
the Issuing Bank from which the Letter of Credit is requested may employ in the
ordinary course of business for its own account, with such modifications thereto
as may be agreed upon by the Issuing Bank and the Borrower and as are not
materially adverse (in the
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judgment of the Issuing Bank) to the interests of the Lenders; PROVIDED,
HOWEVER, in the event of any conflict between the terms hereof and of any
Letter of Credit Reimbursement Agreement, the terms hereof shall control.
"LETTER OF CREDIT SUBLIMIT" means Twenty Million Dollars
($20,000,000).
"LEVEL I STATUS" means any fiscal quarter during which the Fixed
Charge Coverage Ratio as determined as of the last day of such fiscal quarter
for the four quarter fiscal period ending on such last day (or if the period
from the Closing Date to such last day is less than four full fiscal quarters,
such shorter period) is at least 1.3 to 1.
"LEVEL II STATUS" means any fiscal quarter during which the
Fixed Charge Coverage Ratio as determined as of the last day of such fiscal
quarter for the four quarter fiscal period ending on such last day (or if the
period from the Closing Date to such last day is less than four full fiscal
quarters, such shorter period) is at least 2 to 1.
"LIABILITIES AND COSTS" means all liabilities, obligations,
responsibilities, losses and damages with respect to or arising out of any of
the following: personal injury, death, punitive damages, economic damages,
consequential damages, treble damages, intentional, willful or wanton injury,
damage or threat to the environment or public health or welfare, costs and
expenses (including, without limitation, attorney, expert and consulting fees
and costs of investigation, feasibility or Remedial Action studies), fines,
penalties and monetary sanctions, voluntary disclosures made to, or settlements
with, the United States Government, interest, direct or indirect, known or
unknown, absolute or contingent, past, present or future, including interest, if
any, thereon.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security interest,
encumbrance, lien (statutory or other), preference, priority or other security
agreement or preferential arrangement (including, without limitation, any
negative pledge arrangement and any agreement to provide equal and ratable
security) of any kind or nature whatsoever in respect of any property of a
Person intended to assure payment of any Indebtedness, obligation or other
liability, whether granted voluntarily or imposed by law, and includes the
interest of a lessor under a Capital Lease or under any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement or similar notice (other than a financing statement
filed by a "true" lessor pursuant to Section 9-408 of the Uniform Commercial
naming the owner of such property as debtor, under the Uniform Commercial
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Code or other comparable law of any jurisdiction, but does not include the
interest of a lessor under an Operating Lease.
"LOAN ACCOUNT" is defined in SECTION 2.04(b).
"LOAN DOCUMENTS" means this Agreement, the Notes, the Subsidiary
Guaranty, the Borrower Security Agreement, the Subsidiary Security Agreement,
the Borrower Patent Security Agreement, the Borrower Trademark Security
Agreement, the Borrower Pledge Agreement, the Letter Agreement, the Letter of
Credit Reimbursement Agreements, the Collection Account Agreements, the other
documents executed or delivered pursuant to SECTIONS 5.01(a) by the Borrower,
any Guarantor or any other Subsidiary of the Borrower, any Currency Agreements
to which the Agent or any Affiliate of the Agent is a party, any Interest Rate
Contracts to which the Agent or any Affiliate of the Agent is a party, and all
other instruments, agreements and written Contractual Obligations between the
Borrower or any Subsidiary of the Borrower, on the one hand, and any of the
Agent, the Lenders or the Issuing Banks, on the other hand, in each case
delivered to either the Agent, such Lender or such Issuing Bank pursuant to or
in connection with the transactions contemplated hereby.
"LOANS" means all the Revolving Loans, the Swing Loans and all
Base Rate Loans and Eurodollar Rate Loans.
"LOCKBOXES" means, collectively, the lockboxes established at the
Collection Account Banks for collection of payments in respect of Receivables or
other Collateral; and "LOCKBOX" means any one of the Lockboxes.
"MARGIN STOCK" means "margin stock" as such term is defined in
Regulation U and Regulation G.
"MATERIAL ADVERSE EFFECT" means a material adverse effect upon (i)
the business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrower or Hexcel Lyon, individually, or the
Borrower and the Guarantors, taken as a whole, or the Borrower and its
Subsidiaries, taken as a whole, (ii) the ability of the Borrower and the
Guarantors to perform their obligations under the Loan Documents or (iii) the
ability of the Lenders, the Issuing Banks, or the Agent to enforce the Loan
Documents.
"MAXIMUM FIXED ASSET AVAILABILITY" means, at any time, the lesser
of (i) $12,000,000 less (but not less than zero) the amount of Net Cash Proceeds
received by the Borrower resulting in a reduction in the Revolving Credit
Commitments pursuant to SECTION 3.01(b)(i) and (ii) an amount equal to (A)
$12,000,000 less (but not less than zero) the amount of Net Cash Proceeds
received by the Borrower resulting in a reduction in the Revolving Credit
Commitments pursuant to SECTION 3.01(b)(i) MINUS (B) $250,000 multiplied by
the number of full fiscal quarters of
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the Borrower ended prior to such time since the Closing Date PLUS (C) the
amount by which the Borrowing Base has been increased as a result of purchases
of Eligible Equipment purchased by the Borrower during the period beginning
immediately after the review date contained in the most recent fixed asset
appraisals delivered to the Agent prior to the Closing Date and ending 18 months
after the Closing Date.
"MAXIMUM REVOLVING CREDIT AMOUNT" means, at any particular time,
an amount equal to (i) the lesser of (A) the Revolving Credit Commitments and
(B) the Borrowing Base at such time MINUS (ii) the amount of any Availability
Reserves in effect at such time.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding three
(3) years was, contributed to by either the Borrower or any ERISA Affiliate.
"MUTUAL SERIES" means Mutual Series Fund Inc.
"NET CASH PROCEEDS" means (i) proceeds received by the Borrower or
any of its Restricted Subsidiaries in cash or Cash Equivalents from the sale
(including, without limitation, any Sale and Leaseback Transaction but excluding
any payments or proceeds received by or for the account of the Borrower with
respect to the YIP Transaction to the extent required to be remitted to First
Trust of California, as trustee or escrow agent for the Industrial Development
Authority of the County of Los Angeles), assignment or other disposition, of any
Property, other than sales, assignments and other dispositions of Property
between the Borrower and wholly owned Restricted Subsidiaries of the Borrower to
the extent permitted hereunder and sales, assignments and other dispositions
permitted under CLAUSES (i) through (v) of SECTION 9.02, net of (A) the
reasonable cash costs of sale, assignment or other disposition (B) taxes paid or
payable as a result thereof and (C) the amount of any Indebtedness (other than
the Obligations) secured by such Property (to the extent permitted hereunder)
and repaid in connection with such sale; PROVIDED that evidence of each of
(A), (B) and (C) are provided to the Agent; (ii) proceeds of insurance on
account of the loss of or damage to any such Property or Properties, and
payments of compensation for any such Property or Properties taken by
condemnation or eminent domain, to the extent such proceeds or payments are
required pursuant to SECTION 8.07 to be applied to prepay the Loans, and (iii)
proceeds received after the Closing Date by the Borrower or any of the
Borrower's Restricted Subsidiaries in cash or Cash Equivalents from (A) the
issuance of any Capital Stock by the Borrower (other than any such issuance
occurring in the ordinary course of business to any member of the management of
the Borrower in connection with such member's employment with the Borrower or in
connection with the Rights Offering), or any other additions to the equity of
the
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Borrower (other than retained earnings) or any contributions to capital of the
Borrower or (B) issuance of any Indebtedness by the Borrower or any Restricted
Subsidiary (except for such Indebtedness permitted under SECTION 9.01 and any
such Indebtedness incurred in connection with Currency Agreements or Interest
Rate Contracts to the extent the Borrower is permitted to enter into such
contracts pursuant to the terms hereof), in each case net of reasonable costs
incurred in connection with such transaction; PROVIDED that evidence of such
costs is provided to the Agent.
"NET INCOME" means, for any period for any Person, the net
income (or loss) after taxes for such period taken as a single accounting
period, determined in conformity with GAAP.
"NET WORTH" means, with respect to any Person, at any time, (i)
total consolidated assets of such Person PLUS (ii) any negative (or MINUS
any positive) cumulative foreign currency translation adjustments applicable to
such Person in accordance with GAAP MINUS (iii) total consolidated liabilities
of such Person PLUS any negative (or MINUS any positive) in minimum pension
obligation adjustment included in the shareholders' equity account of such
Person in accordance with GAAP. Assets and liabilities shall be determined in
accordance with GAAP.
"NON PRO RATA LOAN" is defined in SECTION 3.02(b)(v).
"NOTE" is defined in SECTION 2.04(a).
"NOTICE OF BORROWING" means a notice substantially in the form of
EXHIBIT D.
"NOTICE OF CONTINUATION/CONVERSION" means a notice substantially
in the form of EXHIBIT E.
"NPL" is defined in SECTION 6.01(o).
"OBLIGATIONS" means, to the extent arising hereunder, under the
Notes or under any other Loan Document, all Loans, advances, debts, liabilities,
obligations, covenants and duties owing by the Borrower to the Agent, any
Lender, any Issuing Bank, any Affiliate of the Agent, any Lender or any Issuing
Bank, or any Person entitled to indemnification pursuant to SECTION 13.03, of
any kind or nature, present or future, whether or not evidenced by any note,
guaranty or other instrument, whether or not for the payment of money, whether
arising (i) under or in connection with (A) a Currency Agreement with the Agent
or any Affiliate of the Agent, (B) an Interest Rate Contract with the Agent or
any Affiliate of the Agent or (C) any cash management services provided by the
Agent or any Affiliate of the Agent, or (ii) by reason of (A) an extension of
credit, (B) opening or amendment of a Letter of Credit or payment of any draft
drawn thereunder, (C) loan, (D) guaranty or (E) indemnification or
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(iii) in any other manner, whether direct or indirect (including those acquired
by assignment), absolute or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes, without limitation,
all interest, charges, expenses, fees, reasonable attorneys' fees and
disbursements and any other sum chargeable to the Borrower hereunder or under
any other Loan Document.
"OFFICER'S CERTIFICATE" means, as to a corporation, a certificate
executed on behalf of such corporation by an officer or director of such
corporation.
"OPERATING LEASE" means, as applied to any Person, any lease of
any property (whether real, personal or mixed) by that Person as lessee which is
not a Capital Lease.
"PBGC" means the Pension Benefit Guaranty Corporation and any
Person succeeding to the functions thereof.
"PERMITS" means any permit, approval, authorization license,
variance, or permission required from a Governmental Authority under an
applicable Requirement of Law.
"PERMITTED EXISTING ACCOMMODATION OBLIGATIONS" means those
Accommodation Obligations of the Borrower and its Subsidiaries identified as
such on SCHEDULE 1.01.3.
"PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the
Borrower and its Subsidiaries identified as such on SCHEDULE 1.01.4.
"PERMITTED EXISTING INVESTMENTS" means those Investments
identified as such on SCHEDULE 1.01.5.
"PERMITTED EXISTING LIENS" means the Liens on assets of the
Borrower or any of the Restricted Subsidiaries identified as such on SCHEDULE
1.01.6.
"PERMITTED SUBORDINATED INDEBTEDNESS" means Indebtedness evidenced
by, or in respect of, principal and interest on (i) the Subordinated Debentures
not in excess of a principal amount of $28,500,000, (ii) the Hexcel Lyon
Subordinated Note and (iii) prior to the closing of the Rights Offering, the
obligations of the Borrower in respect of the Advance not in excess of a
principal amount of $41,000,000.
"PERSON" means any natural person, corporation, limited
partnership, limited liability company, general partnership, joint stock
company, joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal entity, and
any Governmental Authority.
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"PLAN" means an employee benefit plan defined in Section 3(2) of
ERISA in respect of which the Borrower or any ERISA Affiliate is, or within the
immediately preceding three (3) years was, an "employer" as defined in Section
3(5) of ERISA.
"PLAN OF REORGANIZATION" means the First Amended Plan of
Reorganization Jointly Proposed by the Borrower and certain of its Subsidiaries
and the Official Joint Committee of Unsecured Creditors attached as Appendix A
to the Disclosure Statement, as amended or modified from time to time.
"PLAN OF REORGANIZATION DOCUMENTS" means the Plan of
Reorganization, the Confirmation Order, the Disclosure Statement and all other
documents, instruments or agreements distributed, filed or consummated in
connection with the Plan of Reorganization, as the same may be amended,
supplemented or modified from time to time.
"PRO RATA SHARE" means, with respect to any Lender, the percentage
obtained by dividing (a) such Lender's Revolving Credit Commitment at such time
by (b) the aggregate amount of all Revolving Credit Commitments at such time;
PROVIDED, HOWEVER, if all of the Revolving Credit Commitments are terminated
pursuant to the terms hereof, then "PRO RATA SHARE" means the percentage
obtained by dividing (x) such Lender's Revolving Credit Obligations by (y) the
aggregate amount of all Revolving Credit Obligations.
"PROCESS AGENT" is defined in SECTION 13.17.
"PROPERTY" means any Real Property or personal property, plant,
building, facility, structure, underground storage tank or unit, Equipment,
Inventory, General Intangible, Receivable, or other asset owned, leased or
operated by the Borrower or any of its Subsidiaries, as applicable (including
any surface water thereon or adjacent thereto, and soil and groundwater
thereunder).
"PROTECTIVE ADVANCE" is defined in SECTION 12.09.
"REAL PROPERTY" means all of the Borrower's and each of its
Subsidiaries' respective present and future right, title and interest
(including, without limitation, any leasehold estate) in (i) any plots, pieces
or parcels of land, (ii) any improvements, buildings, structures and fixtures
now or hereafter located or erected thereon or attached thereto of every nature
whatsoever (the rights and interests described in CLAUSES (i) and (ii) above
being the "Premises"), (iii) all easements, rights of way, gores of land or any
lands occupied by streets, ways, alleys, passages, sewer rights, water courses,
water and mineral rights and powers, and public places adjoining such land, and
any other interests in property constituting appurtenances to the Premises, or
which hereafter shall in any way belong, relate or be appurtenant
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thereto, (iv) all hereditaments, gas, oil, minerals (with the right to extract,
sever and remove such gas, oil and minerals), and easements, of every nature
whatsoever, located in or on the Premises and (v) all other rights and
privileges thereunto belonging or appertaining and all extensions, additions,
improvements, betterments, renewals, substitutions and replacements to or of any
of the rights and interests described in CLAUSES (iii) and (iv) above.
"RECEIVABLES" means all of the Borrower's and its Subsidiaries
present and future (i) accounts, (ii) accounts receivable, (iii) rights to
payment for goods sold or leased or for services rendered (except those
evidenced by instruments or chattel paper), whether or not earned by
performance, (iv) all rights in any merchandise or goods which any of the same
may represent, and (v) all rights, title, security and guaranties with respect
to each of the foregoing, including, without limitation, any right of stoppage
in transit.
"REGISTER" is defined in SECTION 13.01(c).
"REGULATION A" means Regulation A of the Federal Reserve Board as
in effect from time to time.
"REGULATION D" means Regulation D of the Federal Reserve Board as
in effect from time to time.
"REGULATION G" means Regulation G of the Federal Reserve Board as
in effect from time to time.
"REGULATION U" means Regulation U of the Federal Reserve Board as
in effect from time to time.
"REGULATION X" means Regulation X of the Federal Reserve Board as
in effect from time to time.
"REIMBURSEMENT DATE" is defined in SECTION 2.03(d)(i)(A).
"REIMBURSEMENT OBLIGATIONS" means, as to the Borrower, the
aggregate non-contingent reimbursement or repayment obligations of the Borrower
with respect to amounts drawn under Letters of Credit.
"RELEASE" means release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment or into or out of any Property, including the
movement of Contaminants through or in the air, soil, surface water, groundwater
or Property.
"REMEDIAL ACTION" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the
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indoor or outdoor environment; (ii) prevent the Release or threat of Release or
minimize the further Release of Contaminants; or (iii) investigate and determine
if a remedial response is needed and to design such a response and post-remedial
investigation, monitoring, operation and maintenance and care.
"REORGANIZATION EFFECTIVE DATE" means the first date on which (i)
the Confirmation Order shall have become a Final Order and the Agent has
received a certified copy of such Final Order and (ii) all conditions precedent
to the confirmation of the Plan of Reorganization, as set forth in the Plan of
Reorganization, shall have occurred or have been waived by the Borrower and the
Equity Committee.
"REORGANIZED COMMON STOCK" means the Common Stock, par value $.01
per share, of the Borrower to be issued on and after the Reorganization
Effective Date.
"REPORTABLE EVENT" means any of the events described in Section
4043 of ERISA, the reporting of which has not been waived pursuant to
regulations promulgated thereunder.
"REQUIREMENTS OF LAW" means, as to any Person, the charter and
by-laws or other organizational or governing documents of such Person, and any
law, rule or regulation, or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is subject
including, without limitation, the Securities Act, the Securities Exchange Act,
Regulations G, U and X, ERISA, the Fair Labor Standards Act and any certificate
of occupancy, zoning ordinance, building, or land use requirement or Permit or
labor or employment rule or regulation, including Environmental, Health or
Safety Requirements of Law.
"REQUISITE LENDERS" means, at any time, Lenders holding, in the
aggregate, at least fifty-five percent (55%) of the then aggregate amount of the
Revolving Credit Commitments in effect at such time; PROVIDED, HOWEVER,
that, in the event any of the Lenders shall have failed to fund its Pro Rata
Share, of any Revolving Loan requested by the Borrower which such Lenders are
obligated to fund under the terms hereof and any such failure has not been
cured, then for so long as such failure continues, "REQUISITE LENDERS" means
Lenders (excluding Lenders whose failure to fund their respective Pro Rata Share
of such Loans have not been so cured) whose Pro Rata Shares represent at least
fifty-five percent (55%) of the aggregate Pro Rata Shares of such Lenders;
PROVIDED, FURTHER, HOWEVER, that, in the event that the Revolving Credit
Commitments have been terminated pursuant to the terms hereof, "REQUISITE
LENDERS" means Lenders (without regard to such Lenders' performance of their
respective obligations hereunder) whose aggregate ratable shares (stated as a
percentage) of the aggregate outstanding principal balance of all
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Revolving Credit Obligations are at least fifty-five percent (55%).
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of the Borrower or any of its Subsidiaries now or hereafter
outstanding, except a dividend payable solely in (y) shares of that class of
stock and/or (z) shares of any class of stock which is junior to that class of
stock, (ii) any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of Capital Stock of the Borrower or any of the Borrower's Subsidiaries
now or hereafter outstanding, (iii) any payment made to redeem, purchase,
repurchase or retire, or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of Capital Stock of the
Borrower or any of its Subsidiaries now or hereafter outstanding and (iv) any
payment or prepayment of principal of, premium, if any, or interest, fees or
other charges on or with respect to, and any redemption, purchase, retirement,
defeasance, sinking fund or similar payment and any claim for rescission with
respect to Permitted Subordinated Indebtedness.
"RESTRICTED SUBSIDIARY" means a Subsidiary of the Borrower which
is organized and existing under the laws of the United States of America, any
State thereof, the District of Columbia, Puerto Rico or the United States Virgin
Islands.
"REVOLVING CREDIT AVAILABILITY" means, at any particular time, the
amount by which the Maximum Revolving Credit Amount exceeds the Revolving Credit
Obligations outstanding at such time.
"REVOLVING CREDIT COMMITMENT" means, with respect to any Lender,
the obligation of such Lender to make Revolving Loans and to participate in
Letters of Credit and Swing Loans pursuant to the terms and conditions hereof,
which obligation shall not exceed the principal amount set forth below such
Lender's name opposite the heading "Revolving Credit Commitment" on the
signature pages hereof or the signature page of the Assignment and Acceptance by
which it became a Lender, as modified from time to time pursuant to the terms
hereof or to give effect to any applicable Assignment and Acceptance, and
"REVOLVING CREDIT COMMITMENTS" means the aggregate principal amount of the
Revolving Credit Revolving Credit Commitments of all the Lenders, the maximum
aggregate principal amount of which shall not exceed $45,000,000, as reduced
from time to time pursuant to the terms hereof.
"REVOLVING CREDIT NOTES" means notes evidencing the Borrower's
Obligation to repay the Revolving Loans.
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"REVOLVING CREDIT OBLIGATIONS" means, at any particular time, the
sum of (i) the outstanding principal amount of the Swing Loans at such time,
PLUS (ii) the outstanding principal amount of the Revolving Loans at such
time, PLUS (iii) the Letter of Credit Obligations outstanding at such time
PLUS (iv) the aggregate principal amount of Protective Advances outstanding at
such time.
"REVOLVING CREDIT TERMINATION DATE" means the earlier to occur of
(i) the date of termination of the Revolving Credit Commitments pursuant to the
terms hereof and (ii) the third anniversary of the Closing Date.
"REVOLVING LOAN" is defined in SECTION 2.01(a).
"RIGHTS" means the transferable rights offered by the Borrower to
its existing shareholders to subscribe for and purchase an aggregate of
8,864,865 shares of Reorganized Common Stock at a price of $4.625 a share
together with certain oversubscription rights to purchase additional shares of
Reorganized Common Stock offered to each such shareholder.
"RIGHTS OFFERING" shall have the meaning
ascribed to such term in the Plan of Reorganization.
"SALE AND LEASEBACK TRANSACTION" means, with respect to any
Person, any direct or indirect arrangement pursuant to which Property is sold or
transferred by such Person and is thereafter leased back from the purchaser
thereof by such Person.
"SECURITIES" means any stock, shares, voting trust certificates,
bonds, debentures, notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or any certificates of
interest, shares, or participation in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to, purchase or acquire
any of the foregoing, but shall not include any evidence of the Obligations.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended from time to time, and any successor statute.
"SETTLEMENT DATE" is defined in SECTION 2.05(a).
"SOLVENT", when used with respect to any Person, means that at the
time of determination:
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(i) the fair market value of its assets is in excess of the total
amount of its liabilities (including, without limitation, contingent
liabilities); and
(ii) the present fair saleable value of its assets is greater than
its probable liability on its existing debts as such debts become absolute and
matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as they
mature; and
(iv) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
"SOURCES AND USES" means SCHEDULE 1.01.2, which specifies the
anticipated sources and uses of funds on the Closing Date.
"STANDBY COMMITMENT DOCUMENTS" means the Standby Purchase
Commitment dated October 24, 1994 of Mutual Series to purchase all of the shares
of Reorganized Common Stock which are offered and not sold in the Rights
Offering at a price of $4.625 per share and all documents and instruments
entered into between the Borrower and Mutual Series in connection therewith,
including, without limitation, the Note, the Security Agreement and the
Registration Rights Agreement (as such terms are defined in such Standby
Purchase Commitment).
"STANDBY LETTER OF CREDIT" means any letter of credit issued by an
Issuing Bank pursuant to SECTION 2.03 for the account of the Borrower, which
is not a Commercial Letter of Credit.
"SUBORDINATED DEBENTURES" means the 7% Convertible Subordinated
Debentures due 2011 issued by the Borrower in the aggregate original principal
amount of up to $35,000,000 and governed by the terms of the Subordinated
Debenture Indenture.
"SUBORDINATED DEBENTURE INDENTURE" means the Indenture dated as of
August 1, 1986 between the Borrower and The Bank of California, N.A., as
trustee, as such agreement may be amended, supplemented or otherwise modified
from time to time.
"SUBSIDIARY" of a Person means any corporation or other entity of
which securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other persons performing similar
functions are at the time directly or indirectly owned or controlled by such
Person, one or more of the other subsidiaries of such Person or any combination
thereof; PROVIDED, HOWEVER, that Hexcel Foundation shall not be deemed a
Subsidiary of the Borrower for
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so long as it maintains its status as a not-for-profit corporation for purposes
of California law.
"SUBSIDIARY GUARANTY" means the guaranty duly executed and
delivered to the Agent by the Guarantors substantially in the form of EXHIBIT K
hereto, as such guaranty may be amended, supplemented or otherwise modified from
time to time.
"SUBSIDIARY SECURITY AGREEMENT" means the security agreement duly
executed and delivered to the Agent by the Restricted Subsidiaries substantially
in the form of EXHIBIT O hereto, as such agreement may be amended,
supplemented or otherwise modified from time to time.
"SURVEY" means a survey of the Real Property owned by the Borrower
and the Borrower's Subsidiaries, dated no earlier than ninety (90) days prior to
the date of the delivery of mortgage or deed of trust on such property in favor
of the Agent pursuant to the terms hereof and reasonably acceptable to the
Administrative Agent, showing lot lines and monuments, building lines, easements
(both burdening and/or benefitting such Real Property), all Liens permitted by
SECTION 9.03 herein (to the extent that such items can be located by the
surveyor), access locations, the buildings and improvements thereon (including,
but not limited to, roads, streets, driveways and sidewalks), loading docks and
parking lots, acreage of such Real Property, and encroachments, if any, onto
such Real Property and over onto adjoining properties. The Survey shall contain
flood plain designation, if appropriate.
"SWING LOAN" is defined in SECTION 2.02(a).
"SWING LOAN BANK" means Citicorp, in its individual capacity or,
in the event Citicorp is not the Agent, the Agent (or any Affiliate of the Agent
designated by the Agent), in its individual capacity.
"SWING LOAN NOTE" means one or more notes evidencing the
Borrower's Obligation to repay the Swing Loans.
"TAXES" is defined in SECTION 3.03(a).
"TERMINATION EVENT" means (i) a Reportable Event with respect to
any Benefit Plan; (ii) the withdrawal of the Borrower or any ERISA Affiliate
from a Benefit Plan during a plan year in which the Borrower or such ERISA
Affiliate was a "substantial employer" as defined in Section 4001(a)(2) of ERISA
or the cessation of operations which results in the termination of employment of
20% of Benefit Plan participants who are employees of the Borrower or any ERISA
Affiliate; (iii) the imposition of an obligation on the Borrower or any ERISA
Affiliate under Section 4041 of ERISA to provide affected parties written notice
of intent to terminate a Benefit Plan in a distress termination
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described in Section 4041(c) of ERISA; (iv) the institution by the PBGC or any
similar foreign Governmental Authority of proceedings to terminate a Benefit
Plan or a Foreign Pension Plan; (v) any event or condition which would
reasonably constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Benefit Plan; (vi) a
foreign Governmental Authority shall appoint or institute proceedings to appoint
a trustee to administer any Foreign Pension Plan; or (vii) the partial or
complete withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer
Plan or a Foreign Pension Plan.
"TITLE COMPANY" means Chicago Title Insurance Company.
"TITLE POLICY" means an ALTA Mortgagee Policy (or equivalent) of
title insurance with extended coverage over the standard or general exceptions
and such endorsements reasonably required by the Agent issued by the Title
Company covering each parcel of Real Property for which the Agent will obtain a
Lien, showing title vested in either the Borrower or the Borrower's Subsidiaries
subject only to the Liens set forth in SECTION 9.03 herein, which Title Policy
shall show the Agent as the proposed insured and an insurance amount equal to
the lesser of the Loans or the Appraised Value of the Real Property covered by
the Title Policy.
"TRANSACTION COSTS" means the fees, costs and expenses payable by
the Borrower in connection with the execution, delivery and performance of the
Loan Documents and the Plan of Reorganization.
"TRANSACTION DOCUMENTS" means the Loan Documents, the Plan of
Reorganization Documents, the Subordinated Debentures, the Subordinated
Debenture Indenture, the Hexcel Lyon Subordinated Note, the Intercreditor
Agreement, the Standby Commitment Documents, the BNP Letter of Credit Documents
and all other agreements or instruments executed and delivered or to be executed
and delivered pursuant hereto or thereto or in connection herewith or therewith
or any of the transactions contemplated hereby or thereby.
"UNIFORM COMMERCIAL CODE" means the Uniform Commercial Code as
enacted in the State of New York, as it may be amended from time to time.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Borrower
other than a Restricted Subsidiary.
"UNUSED COMMITMENT FEE" is defined in SECTION 4.03(b).
"UNUSED COMMITMENT FEE RATE" means, as of any date, one-half of
one percent (0.5%) per annum.
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"VOTING STOCK" means, with respect to any Person, securities with
respect to any class or classes of Capital Stock of such Person entitling the
holders thereof (whether at all times or only so long as no senior class of
stock has voting power by reason of any contingency) to vote in the election of
members of the board of directors of such Person.
"WORKING CAPITAL" means, as at any date of determination, (i) the
Borrower's and the Restricted Subsidiaries' combined current assets (excluding
cash and Cash Equivalents and net assets held for sale in connection with the
domestic resins business of the Borrower and receivables arising from asset
sales that were consummated prior to December 31, 1994) as of such date MINUS
(ii) the Borrower's and the Restricted Subsidiaries' combined current
liabilities for such period, excluding Revolving Credit Obligations, accrued
restructuring charges and current portions of long-term Indebtedness as of such
date and all Indebtedness repaid or extinguished on the Reorganization Effective
Date.
"YIP TRANSACTION" means the transaction pursuant to which BCY
Industrial Enterprises acquired the Borrower's Real Property located in The City
of Industry, California by assuming the Borrower's obligation to repay
$2,340,000 in aggregate principal amount of Existing IRDBs issued by the
Industrial Development Authority of the County of Los Angeles to finance such
Real Property.
1.02. COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding". Periods of days referred to in this Agreement shall be
counted in calendar days unless Business Days are expressly prescribed. Any
period determined hereunder by reference to a month or months or year or years
shall end on the day in the relevant calendar month in the relevant year, if
applicable, immediately preceding the date numerically corresponding to the
first day of such period, PROVIDED that if such period commences on the last
day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month during which such period is to end),
such period shall, unless otherwise expressly required by the other provisions
of this Agreement, end on the last day of the calendar month.
1.03. ACCOUNTING TERMS. Subject to SECTION 13.04, for purposes
of this Agreement, all accounting terms not otherwise defined herein shall have
the meanings assigned to them in conformity with GAAP.
1.04. OTHER DEFINITIONAL PROVISIONS. References to "Articles",
"Sections", "subsections", "Schedules" and "Exhibits" shall be to Articles,
Sections, subsections, Schedules and
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Exhibits, respectively, of this Agreement unless otherwise specifically
provided. The words "hereof", "herein", and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement.
1.05. OTHER TERMS. All other terms contained herein shall,
unless the context indicates otherwise, have the meanings assigned to such terms
by the Uniform Commercial Code to the extent the same are defined therein.
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01. REVOLVING CREDIT FACILITY. (a) Subject to the terms and
conditions set forth herein, each Lender hereby severally and not jointly agrees
to make revolving loans, in Dollars (each individually, a "REVOLVING LOAN"
and, collectively, the "REVOLVING LOANS") to the Borrower from time to time
during the period from the Closing Date to the Business Day next preceding the
Revolving Credit Termination Date, in an amount not to exceed at any time such
Lender's Pro Rata Share of the Revolving Credit Availability at such time. All
Revolving Loans comprising the same Borrowing hereunder shall be made by such
Lenders simultaneously and proportionately to their then respective Revolving
Credit Commitments. Subject to the provisions hereof (including, without
limitation, SECTION 5.02), the Borrower may repay any outstanding Revolving
Loan on any day which is a Business Day and any amounts so repaid may be
reborrowed, up to the amount available under this SECTION 2.01(a) at the time
of such Borrowing, until the Business Day next preceding the Revolving Credit
Termination Date.
(b) NOTICE OF BORROWING. When the Borrower desires to borrow
under this SECTION 2.01, it shall deliver to the Agent an irrevocable Notice
of Borrowing, signed by it, (x) on the Closing Date, in the case of a Borrowing
of Revolving Loans on the Closing Date and (y) no later than 1:30 p.m. (New York
time) (I) on the proposed Funding Date, in the case of a Borrowing of Base Rate
Loans after the Closing Date and (II) at least three (3) Business Days in
advance of the proposed Funding Date, in the case of a Borrowing of Eurodollar
Rate Loans after the Closing Date. Such Notice of Borrowing shall specify (i)
the proposed Funding Date (which shall be a Business Day), (ii) the amount of
the proposed Borrowing, (iii) the Revolving Credit Availability as of the date
of such Notice of Borrowing (it being understood that for purposes of such
Notice of Borrowing, Revolving Credit Availability shall be calculated based
upon the Borrowing Base set forth in the most recent Borrowing Base Certificate
delivered to the Agent pursuant to SECTION 7.02), (iv) whether the proposed
Borrowing will be of Base Rate Loans or Eurodollar Rate Loans, (v) in the case
of Eurodollar Rate Loans, the requested Interest
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Period, and (vi) instructions for the disbursement of the proceeds of the
proposed Borrowing.
(c) MAKING OF REVOLVING LOANS. (i) Promptly after receipt of
a Notice of Borrowing under SECTION 2.01(b), the Agent shall notify each
Lender by telex or telecopy, or other similar form of transmission, of the
proposed Borrowing. Each Lender shall deposit an amount equal to its Pro Rata
Share of the amount requested by the Borrower to be made as Revolving Loans with
the Agent at its office in New York, New York, in immediately available funds,
(A) on the Closing Date specified in the initial Notice of Borrowing and (B) not
later than 4:00 p.m. (New York time) on any other Funding Date applicable
thereto. Subject to the fulfillment of the conditions precedent set forth in
SECTION 5.01 or SECTION 5.02, as applicable, the Agent shall make the
proceeds of such amounts received by it available to the Borrower at the Agent's
office in New York, New York on such Funding Date (or on the date received if
later than such Funding Date) and shall disburse such proceeds to the
Disbursement Account. The failure of any Lender to deposit the amount described
above with the Agent on the applicable Funding Date shall not relieve any other
Lender of its obligations hereunder to make its Revolving Loan on such Funding
Date. No Lender shall be responsible for any failure by any other Lender to
perform its obligation to make a Revolving Loan hereunder nor shall the
Revolving Credit Commitment of any Lender be increased or decreased as a result
of any such failure.
(ii) Unless the Agent shall have been notified by any Lender on the
applicable Funding Date in respect of any Borrowing of Revolving Loans that such
Lender does not intend to fund its Revolving Loan requested to be made on such
Funding Date, the Agent may assume that such Lender has funded its Revolving
Loan and is depositing the proceeds thereof with the Agent on the Funding Date,
and the Agent in its sole discretion may, but shall not be obligated to,
disburse a corresponding amount to the Borrower on the Funding Date. If the
Revolving Loan proceeds corresponding to that amount are advanced to the
Borrower by the Agent but are not in fact deposited with the Agent by such
Lender on or prior to the applicable Funding Date, such Lender agrees to pay,
and in addition the Borrower agrees to repay, to the Agent forthwith on demand
such corresponding amount, together with interest thereon, for each day from the
date such amount is disbursed to or for the benefit of the Borrower until the
date such amount is paid or repaid to the Agent, (A) in the case of the
Borrower, at the interest rate applicable to such Borrowing and (B) in the case
of such Lender, at the Federal Funds Rate for the first Business Day, and
thereafter at the interest rate applicable to such Borrowing. If such Lender
shall pay to the Agent the corresponding amount, the amount so paid shall
constitute such Lender's Revolving Loan, and if both such Lender and the
Borrower shall pay and repay such corresponding amount, the Agent shall promptly
pay to the Borrower such corresponding
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amount. This SECTION 2.01(C)(II) does not relieve any Lender of its
obligation to make its Revolving Loan on any Funding Date.
(d) USE OF PROCEEDS OF REVOLVING LOANS. Proceeds of the
Revolving Loans shall be used (i) to fund disbursements to be made on
Reorganization Effective Date under the Plan of Reorganization and pay
Transaction Costs and (ii) to provide for ongoing working capital needs in
the ordinary course of the business of the Borrower and its Subsidiaries and for
other lawful general corporate purposes not prohibited hereunder.
Notwithstanding the foregoing, Revolving Loans made on the Closing Date shall
not exceed $15,000,000.
(e) REVOLVING CREDIT TERMINATION DATE. The Revolving Credit
Commitments shall terminate, and all outstanding Revolving Credit Obligations
shall be paid in full (or, in the case of unmatured Letter of Credit
Obligations, provision for payment of Cash Collateral shall be made to the
satisfaction of the Issuing Banks and the Agent), on the Revolving Credit
Termination Date. Each Lender's obligation to make Revolving Loans shall
terminate at the close of business in New York City on the Business Day next
preceding the Revolving Credit Termination Date.
2.02. SWING LOANS. (a) AVAILABILITY. Subject to the terms
and conditions set forth herein, the Swing Loan Bank may, in its sole
discretion, make loans (the "SWING LOANS") to the Borrower, from time to time
during the period from the Closing Date and at any time up to the Business Day
next preceding the Revolving Credit Termination Date, up to an aggregate
principal amount at any one time outstanding which shall not exceed an amount
equal to the Swing Loan Bank's Pro Rata Share of the Revolving Credit
Availability at such time or, at the Swing Loan Bank's option, up to
$5,000,000. The Swing Loan Bank shall have no duty to make or to continue to
make Swing Loans. All Swing Loans shall be payable on demand with accrued
interest thereon and shall be secured as part of the Obligations by the
Collateral and shall otherwise be subject to all the terms and conditions
applicable to Revolving Loans, except that all interest on the Swing Loans made
by the Swing Loan Bank shall be payable to the Swing Loan Bank solely for its
own account.
(b) NOTICE OF BORROWING. When the Borrower desires to borrow
under this SECTION 2.02, it shall deliver to the Agent an irrevocable Notice
of Borrowing, signed by it, no later than 1:30 p.m. (New York time) on the day
of the proposed Borrowing of a Swing Loan. Such Notice of Borrowing shall
specify (i) the proposed Funding Date (which shall be a Business Day), (ii) the
amount of the proposed Borrowing, (iii) the Revolving Credit Availability as of
the date of such Notice of Borrowing (it being understood that for purposes of
such Notice of Borrowing, Revolving Credit Availability shall be calculated
based upon the Borrowing Base set forth in the most recent Borrowing Base
Certificate delivered to the Agent pursuant to SECTION 7.02) and
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(iv) instructions for the disbursement of the proceeds of the proposed
Borrowing. Any Notice of Borrowing delivered pursuant to this SECTION 2.02(b)
shall be deemed to constitute a Notice of Borrowing under SECTION 2.01(b) for
Base Rate Loans in the event the Agent determines in its sole discretion that a
Borrowing of Swing Loans is not possible or feasible. All Swing Loans shall be
Base Rate Loans.
(c) MAKING OF SWING LOANS. The Swing Loan Bank shall deposit the
amount it intends to fund, if any, in respect of the Swing Loans requested by
the Borrower with the Agent at its office in New York, New York not later than
3:00 p.m. (New York time) in immediately available funds on the date of the
proposed Borrowing applicable thereto. The Swing Loan Bank shall not make any
Swing Loan in the period commencing on the first Business Day after it receives
written notice from any Lender that one or more of the conditions precedent
contained in SECTION 5.02 shall not on such date be satisfied, and ending when
such conditions are satisfied, and the Swing Loan Bank shall not otherwise be
required to determine that, or take notice whether, the conditions precedent set
forth in SECTION 5.02 hereof have been satisfied in connection with the making
of any Swing Loan. Subject to the preceding sentence, the Agent shall make such
proceeds of each funding of a Swing Loan available to the Borrower at the
Agent's office in New York, New York on the date of the proposed Borrowing and
shall disburse such proceeds to the Disbursement Account.
(d) REPAYMENT OF SWING LOANS. Repayment of the outstanding
Swing Loans owing to the Swing Loan Bank shall be made (i) in accordance with
SECTION 3.01(b)(iii), on a daily basis, to the extent funds are on deposit in
the Concentration Account and, if applicable, the Investment Account, (ii) on
each Settlement Date in accordance with SECTION 2.05 and (iii) in any event,
on the Revolving Credit Termination Date. In connection with the repayment of
Swing Loans pursuant to the preceding clause (i), the Borrower hereby
irrevocably authorizes the Agent to apply the withdrawn funds in accordance with
such clause.
(e) USE OF PROCEEDS OF SWING LOANS. The proceeds of the Swing
Loans may be used to provide for ongoing working capital needs in the ordinary
course of the Borrower's business and for lawful corporate purposes of the
Borrower not prohibited hereunder.
2.03. LETTERS OF CREDIT. Subject to the terms and conditions set
forth herein, each Issuing Bank hereby severally agrees to Issue for the account
of the Borrower one or more Letters of Credit, up to an aggregate face amount at
any one time outstanding equal to the Letter of Credit Availability, subject to
the following provisions:
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(a) TYPES AND AMOUNTS. An Issuing Bank shall not have any
obligation to Issue, and shall not, except as otherwise agreed by the Requisite
Lenders and Issuing Bank, Issue any Letter of Credit at any time:
(i) if the aggregate Letter of Credit Obligations with respect to
such Issuing Bank, after giving effect to the Issuance of the Letter of
Credit requested hereunder, shall exceed any limit imposed by law or
regulation upon such Issuing Bank;
(ii) if the Issuing Bank receives written notice (A) from the Agent
at or before 11:00 a.m. (New York time) on the date of the proposed
Issuance of such Letter of Credit that immediately after giving effect to
the Issuance of such Letter of Credit, the Revolving Credit Obligations at
such time would exceed the Maximum Revolving Credit Amount at such time,
or (B) from any of the Lenders at or before 11:00 a.m. (New York time) on
the date of the proposed Issuance of such Letter of Credit that one or
more of the conditions precedent contained in SECTIONS 5.01 or 5.02,
as applicable, would not on such date be satisfied (or waived pursuant to
SECTION 13.07), unless such conditions are thereafter satisfied or
waived and written notice of such satisfaction or waiver is given to the
Issuing Bank by the Agent (and an Issuing Bank shall not otherwise be
required to determine that, or take notice whether, the conditions
precedent set forth in SECTIONS 5.01 or 5.02, as applicable, have been
satisfied or waived); or
(iii) which has an expiration date later than the earlier of (A) the
date one (1) year after the date of issuance (after taking into account
any automatic renewal provisions thereof) or (B) the Business Day next
preceding the Revolving Credit Termination Date; PROVIDED, HOWEVER,
at the request of the Borrower, the Agent may, but shall not be obligated
to, cause the Issuing Bank to Issue a Letter of Credit with an expiration
date after the date in clause (A) or (B) above; or
(iv) which is in a currency other than Dollars; PROVIDED,
HOWEVER, at the request of the Borrower, the Agent may, but shall not be
obligated to, cause the Issuing Bank to Issue a Letter of Credit in an
Alternative Currency.
If the Agent decides, in its sole discretion, to cause the Issuing Bank to Issue
a Letter of Credit pursuant to clause (iii) above, the Borrower agrees that on
the Revolving Credit Termination Date it shall deposit with the Agent in the
Cash Collateral Account for the benefit of the Lenders and the Issuing
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Banks with respect to each Letter of Credit then outstanding cash or Cash
Equivalents equal to 105% of the greatest amount that such Letter of Credit may
be drawn. Such deposits shall be held as Cash Collateral by the Agent for the
benefit of the Lenders and the Issuing Banks as security for, and to provide for
the payment of, the Reimbursement Obligations.
(b) CONDITIONS. In addition to being subject to the
satisfaction of the conditions precedent contained in SECTIONS 5.01 and
5.02, as applicable, the obligation of an Issuing Bank to Issue any Letter of
Credit is subject to the satisfaction in full of the following conditions:
(i) if the Issuing Bank so requests, the Borrower shall have
executed and delivered to such Issuing Bank and the Agent a Letter of
Credit Reimbursement Agreement and such other documents and materials as
may be required pursuant to the terms thereof; and
(ii) the terms of the proposed Letter of Credit shall conform to
the customary terms of letters of credit issued by the Issuing Bank as in
existence on the date of such Issuance.
(c) ISSUANCE OF LETTERS OF CREDIT. (i) The Borrower shall give
an Issuing Bank and the Agent written notice that it has selected such Issuing
Bank to Issue a Letter of Credit not later than 11:00 a.m. (New York time) on
the third Business Day preceding the requested date for Issuance thereof
hereunder, or such shorter notice as may be acceptable to such Issuing Bank and
the Agent. Such notice shall be irrevocable unless and until such request is
denied by the applicable Issuing Bank and shall specify (A) that the requested
Letter of Credit is either a Commercial Letter of Credit or a Standby Letter of
Credit, (B) the stated amount of the Letter of Credit requested, (C) the
effective date (which shall be a Business Day) of Issuance of such Letter of
Credit, (D) the date on which such Letter of Credit is to expire, (E) the Person
for whose benefit such Letter of Credit is to be Issued, (F) other relevant
terms of such Letter of Credit and (G) the amount of the then outstanding Letter
of Credit Obligations. Such Issuing Bank shall notify the Agent immediately
upon receipt of a written notice from the Borrower requesting that a Letter of
Credit be Issued and, upon the Agent's request therefor, send a copy of such
notice to the Agent.
(ii) The Issuing Bank shall give the Agent written notice, or
telephonic notice confirmed promptly thereafter in writing, of the Issuance of a
Letter of Credit (which notice the Agent shall promptly transmit by telegram,
telex, telecopy, telephone or similar transmission to each Lender).
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(d) REIMBURSEMENT OBLIGATIONS; DUTIES OF ISSUING BANKS. (i)
Notwithstanding any provisions to the contrary in any Letter of Credit
Reimbursement Agreement:
(A) the Borrower shall reimburse the Issuing Bank for amounts
drawn under such Letter of Credit pursuant to SUBSECTION (e)(ii) below,
in Dollars, no later than the date (the "REIMBURSEMENT DATE") which is
one (1) Business Day after the Borrower receives written notice from the
Issuing Bank that payment has been made under such Letter of Credit by the
Issuing Bank; and
(B) all Reimbursement Obligations with respect to any Letter of
Credit shall bear interest at the rate applicable in accordance with
SECTION 4.01(a) from the date of the relevant drawing under such Letter
of Credit until the Reimbursement Date and thereafter at the rate
applicable in accordance with SECTION 4.01(d).
(ii) The Issuing Bank shall give the Agent written notice, or
telephonic notice confirmed promptly thereafter in writing, of all drawings
under a Letter of Credit and the payment (or the failure to pay when due) by the
Borrower on account of a Reimbursement Obligation (which notice the Agent shall
promptly transmit by telegram, telex, telecopy or similar transmission to each
Lender).
(iii) No action taken or omitted in good faith by an Issuing Bank
under or in connection with any Letter of Credit shall put such Issuing Bank
under any resulting liability to any Lender, the Borrower or, so long as such
Letter of Credit is not Issued in violation of SECTION 2.03(a), relieve any
Lender of its obligations hereunder to such Issuing Bank. Solely as between the
Issuing Banks and such Lenders, in determining whether to pay under any Letter
of Credit, the respective Issuing Bank shall have no obligation to the Lenders
other than to confirm that any documents required to be delivered under a
respective Letter of Credit appear to have been delivered and that they appear
on their face to comply with the requirements of such Letter of Credit.
(e) PARTICIPATIONS. (i) Immediately upon Issuance by an
Issuing Bank of any Letter of Credit in accordance with the procedures set forth
in this SECTION 2.03, each Lender shall be deemed to have irrevocably and
unconditionally purchased and received from that Issuing Bank, without recourse
or warranty, an undivided interest and participation in such Letter of Credit to
the extent of such Lender's Pro Rata Share, including, without limitation, all
obligations of the Borrower with respect thereto (other than amounts owing to
the Issuing Bank under SECTION 2.03(g)) and any security therefor and guaranty
pertaining thereto.
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(ii) If any Issuing Bank makes any payment under any Letter of
Credit and the Borrower does not repay such amount to the Issuing Bank on the
Reimbursement Date, the Issuing Bank shall promptly notify the Agent, which
shall either effect the settlement procedures set forth in SECTION 2.05 or
promptly notify each Lender, and each such Lender shall promptly and
unconditionally pay to the Agent for the account of such Issuing Bank, in
immediately available funds, the amount of such Lender's Pro Rata Share of such
payment (net of that portion of such payment, if any, made by such Lender in its
capacity as an Issuing Bank), and the Agent shall promptly pay to the Issuing
Bank such amounts received by it, and any other amounts received by the Agent
for the Issuing Bank's account, pursuant to this SECTION 2.03(e). All such
payments shall constitute Revolving Loans made to the Borrower pursuant to
SECTION 2.01 (irrespective of the satisfaction of the conditions in SECTION
5.02 or the requirement in SECTION 2.01(b) to deliver a Notice of Borrowing
which conditions and requirement, for the purpose of refunding any Reimbursement
Obligation owing to any Issuing Bank, the Lenders irrevocably waive) and shall
thereupon cease to be unpaid Reimbursement Obligations. If a Lender does not
make its Pro Rata Share of the amount of such payment available to the Agent,
such Lender agrees to pay to the Agent for the account of the Issuing Bank,
forthwith on demand, such amount together with interest thereon, for the first
Business Day after the date such payment was first due at the Federal Funds
Rate, and thereafter at the interest rate then applicable in accordance with
SECTION 4.01(a). The failure of any such Lender to make available to the
Agent for the account of an Issuing Bank its Pro Rata Share of any such payment
shall neither relieve any other Lender of its obligation hereunder to make
available to the Agent for the account of such Issuing Bank such other Lender's
Pro Rata Share of any payment on the date such payment is to be made nor
increase the obligation of any other Lender to make such payment to the Agent.
This Section does not relieve any Lender of its obligation to purchase Pro Rata
Share participations in Letters of Credit; nor does this Section relieve the
Borrower of its obligation to pay or repay any Issuing Bank funding its Pro Rata
Share of such payment pursuant to this Section interest on the amount of such
payment from such date such payment is to be made until the date on which
payment is repaid in full.
(iii) Whenever an Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, as to which any Lender
has made a Revolving Loan pursuant to clause (ii) of this Section, such Issuing
Bank shall promptly pay to the Agent such payment in accordance with SECTION
3.02. Whenever the Agent receives (pursuant to the immediately preceding
sentence or otherwise) a payment on account of a Reimbursement Obligation,
including any interest thereon, as to which any Lender has made a Revolving Loan
pursuant to clause (ii) of this Section, the Agent shall distribute such payment
in accordance with Section 3.02. Each such payment shall be made by
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such Issuing Bank or the Agent, as the case may be, on the Business Day on which
such Person receives the funds paid to such Person pursuant to the preceding
sentence, if received prior to 11:00 a.m. (New York time) on such Business Day,
and otherwise on the next succeeding Business Day.
(iv) Upon the request of any Lender, an Issuing Bank shall furnish
such Lender copies of any Letter of Credit or Letter of Credit Reimbursement
Agreement to which such Issuing Bank is party and such other documentation as
reasonably may be requested by such Lender.
(v) The obligations of a Lender to make payments to the Agent for
the account of any Issuing Bank with respect to a Letter of Credit shall be
irrevocable, shall not be subject to any qualification or exception whatsoever
except willful misconduct or gross negligence of such Issuing Bank as determined
in a final, non-appealable judgment by a court of competent jurisdiction, and
shall be honored in accordance with this ARTICLE II (irrespective of the
satisfaction of the conditions described in SECTIONS 5.01 and 5.02, as
applicable which conditions, for the purposes of the repayment of Letters of
Credit to the Issuing Bank, such Lenders irrevocably waive) under all
circumstances, including, without limitation, any of the following
circumstances:
(A) any lack of validity or enforceability hereof or of any of the
other Loan Documents;
(B) the existence of any claim, setoff, defense or other right
which the Borrower may have at any time against a beneficiary named in a
Letter of Credit or any transferee of a beneficiary named in a Letter of
Credit (or any Person for whom any such transferee may be acting), the
Agent, any Issuing Bank, any Lender, or any other Person, whether in
connection herewith, with any Letter of Credit, the transactions
contemplated herein or any unrelated transactions (including any
underlying transactions between the account party and beneficiary named in
any Letter of Credit);
(C) any draft, certificate or any other document presented under
the Letter of Credit having been determined to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein being
untrue or inaccurate in any respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
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(E) any failure by such Issuing Bank to make any reports required
pursuant to SECTION 2.03(h) or the inaccuracy of any such report; or
(F) the occurrence of any Event of Default or Default.
(f) PAYMENT OF REIMBURSEMENT OBLIGATIONS. (i) The Borrower
unconditionally agrees to pay to each Issuing Bank, in Dollars, the amount of
all Reimbursement Obligations, interest and other amounts payable to such
Issuing Bank under or in connection with the Letters of Credit when such amounts
are due and payable, irrespective of any claim, setoff, defense or other right
which the Borrower may have at any time against any Issuing Bank or any other
Person.
(ii) In the event any payment by the Borrower received by an
Issuing Bank with respect to a Letter of Credit and distributed by the Agent to
the Lenders on account of their participation is thereafter set aside, avoided
or recovered from such Issuing Bank in connection with any receivership,
liquidation or bankruptcy proceeding, each such Lender which received such
distribution shall, upon demand by such Issuing Bank, contribute such Lender's
Pro Rata Share of the amount set aside, avoided or recovered together with
interest at the rate required to be paid by such Issuing Bank upon the amount
required to be repaid by it.
(g) ISSUING BANK CHARGES. The Borrower shall pay to each
Issuing Bank, solely for its own account, the standard charges assessed by such
Issuing Bank in connection with the issuance, administration, amendment and
payment or cancellation of Letters of Credit and such compensation in respect of
such Letters of Credit for the Borrower's account as may be agreed upon by the
Borrower and such Issuing Bank from time to time.
(h) ISSUING BANK REPORTING REQUIREMENTS. Each Issuing Bank
shall, no later than the tenth (10th) Business Day following the last day of
each calendar month, provide to the Agent and the Borrower separate schedules
for Commercial Letters of Credit and Standby Letters of Credit Issued by it, in
form and substance reasonably satisfactory to the Agent, setting forth the
aggregate Letter of Credit Obligations outstanding to it at the end of each
month and any information requested by the Agent or the Borrower relating to the
date of issue, account party, amount, expiration date and reference number of
each Letter of Credit Issued by it.
(i) INDEMNIFICATION; EXONERATION. (A) In addition to all other
amounts payable to an Issuing Bank, the Borrower hereby agrees to defend,
indemnify, and save the Agent, each Issuing Bank and each Lender harmless from
and against any and all claims, demands, liabilities, penalties, damages, losses
(other than loss of profits), costs, charges and expenses (including
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reasonable attorneys' fees but excluding taxes) which the Agent, such Issuing
Bank or such Lender may incur or be subject to as a consequence, direct or
indirect, of (i) the Issuance of any Letter of Credit other than as a result of
the gross negligence or willful misconduct of the Issuing Bank, as determined by
a court of competent jurisdiction, or (ii) the failure of the Issuing Bank
issuing a Letter of Credit to honor a drawing under such Letter of Credit as a
result of any act or omission, whether rightful or wrongful, of any present or
future DE JURE or DE FACTO government or Governmental Authority.
(B) As between the Borrower on the one hand and the Agent, the
Lenders and the Issuing Banks on the other hand, the Borrower assumes all risks
of the acts and omissions of, or misuse of Letters of Credit by, the respective
beneficiaries of the Letters of Credit. In furtherance and not in limitation of
the foregoing, subject to the provisions of the Letter of Credit Reimbursement
Agreements, the Agent, the Issuing Banks and the Lenders shall not be
responsible for: (i) the form, validity, legality, sufficiency, accuracy,
genuineness or legal effect of any document submitted by any party in connection
with the application for and Issuance of the Letters of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (ii) the validity, legality or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason;
(iii) failure of the beneficiary of a Letter of Credit to comply duly with
conditions required in order to draw upon such Letter of Credit; (iv) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(v) errors in interpretation of technical terms; (vi) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (vii) the misapplication
by the beneficiary of a Letter of Credit of the proceeds of any drawing under
such Letter of Credit; (viii) any litigation, proceeding or charges with respect
to such Letter of Credit; and (ix) any consequences arising from causes beyond
the control of the Agent, the Issuing Banks or the Lenders.
(j) OBLIGATIONS SEVERAL. The obligations of each Issuing Bank
and each Lender under this SECTION 2.03 are several and not joint, and no
Issuing Bank or Lender shall be responsible for the obligation to Issue Letters
of Credit or participation obligation hereunder, respectively, of any other
Issuing Bank or Lender.
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2.04. PROMISE TO REPAY; EVIDENCE OF INDEBTEDNESS.
(a) PROMISE TO REPAY. The Borrower hereby agrees to pay when
due the principal amount of each Loan which is made to it, and further agrees to
pay when due all unpaid interest accrued thereon, in accordance with the terms
hereof and of the Notes. The Borrower shall execute and deliver to each Lender,
as applicable on the Closing Date, Swing Loan Notes substantially in the form of
EXHIBIT H and Revolving Credit Notes substantially in the form of EXHIBIT I
evidencing the Loans and thereafter shall execute and deliver such other
promissory notes as are necessary to evidence the Loans owing to the Lenders
after giving effect to any assignment thereof pursuant to SECTION 13.01, all
in form and substance acceptable to the Agent and the parties to such assignment
(all such promissory notes and all amendments thereto, replacements thereof and
substitutions therefor being collectively referred to as the "NOTES"; and
"NOTE" means any one of the Notes).
(b) LOAN ACCOUNT. Each Lender shall maintain in accordance with
its usual practice an account or accounts (a "LOAN ACCOUNT") evidencing the
Indebtedness of the Borrower to such Lender resulting from each Loan owing to
such Lender from time to time, including the amount of principal and interest
payable and paid to such Lender from time to time hereunder and under each of
the Notes.
2.05. SETTLEMENT. (a) The Agent shall from time to time notify
each Lender by 12:00 noon (New York time) on a date to be selected weekly or
more frequently by the Agent, in its sole discretion, of the aggregate amount of
the Revolving Credit Obligations outstanding and such Lender's Pro Rata Share
thereof as of the close of business on the Business Day immediately preceding
the date of such notice (each such Business Day and the Closing Date being a
"SETTLEMENT DATE"). Upon receipt of such notice, each Lender shall, before
3:00 p.m. (New York time) on the date of such notice unconditionally pay by
depositing in the Agent's Account immediately available funds the amount by
which the net amount of such Lender's Pro Rata Share of the Revolving Credit
Obligations outstanding on the Settlement Date referred to in such notice
exceeds the net amount of such Lender's Pro Rata Share of the Revolving Credit
Obligations on the Settlement Date immediately preceding such Settlement Date,
in each case after giving effect to the following adjustments: (i) Revolving
Loans if any, to be made by such Lender on such Settlement Date, or the purchase
by such Lender of its Pro Rata Share of any outstanding Swing Loans pursuant to
SECTION 2.02(d); (ii) any Revolving Loans to be made by such Lender on such
date pursuant to SECTION 2.01; (iii) any amount owing by such Lender pursuant
to SECTION 2.01(c)(ii) or this SECTION 2.05; (iv) any amount owing by such
Lender pursuant to SECTION 2.03(e)(ii) or to such Lender pursuant to SECTION
2.03(e)(iii); and (v) such Lender's Pro Rata Share of the net amount of all
prepayments and repayments of Revolving
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Loans made by the Borrower since the Settlement Date immediately preceding such
Settlement Date LESS the amounts applied by the Agent to the repayment of the
outstanding Swing Loans pursuant to SECTION 2.02(b) and Protective Advances
pursuant to SECTION 12.09(a). Upon each such adjustment pursuant to this
SECTION 2.05, each Lender shall then be deemed for all purposes under this
Agreement, under the Notes and the other Loan Documents to have Revolving Credit
Obligations owed to it ratably as provided above.
(b) In the event that the net amount of any Lender's Pro Rata
Share of the Revolving Credit Obligations outstanding on such Settlement Date is
less than the net amount of such Lender's Pro Rata Share of the Revolving Credit
Obligations on the Settlement Date immediately preceding such Settlement Date,
in each case after giving effect to the adjustments set forth in clauses (i)
through (v) of subsection (a) of this SECTION 2.05, the Agent shall, before
3:00 p.m. (New York time) on such Settlement Date, disburse to each Lender such
Lender's Pro Rata Share of the funds remaining in the Agent's Account.
(c) If and to the extent any Lender shall not have made available
to the Agent on any Settlement Date any amount payable by such Lender on such
Settlement Date pursuant to subsection (a) of this SECTION 2.05, such Lender
agrees to pay to the Agent forthwith on demand such amount together with
interest thereon, for each day from such Settlement Date until the date such
amount is paid to the Agent, for three (3) Business Days at the Federal Funds
Rate and thereafter at the interest rate applicable to the Loans hereunder and
under the Notes. If such Lender shall pay to the Agent such amount, such amount
so paid shall constitute such Lender's Revolving Loan for purposes of this
Agreement and such Lender's Note.
(d) The failure of any Lender to make any payment required to be
made by it on any Settlement Date shall not relieve any other Lender of its
obligation to make any payment required to be made by it on any Settlement Date.
2.06. AUTHORIZED OFFICERS AND AGENTS. On the Closing Date and
from time to time thereafter, the Borrower shall deliver to the Agent an
Officers' Certificate setting forth the names of the officers, employees and
agents authorized to request Revolving Loans, Swing Loans and Letters of Credit
and containing a specimen signature of each such officer, employee or agent.
The officers, employees and agents so authorized shall also be authorized to act
for the Borrower in respect of all other matters relating to the Loan Documents.
The Agent shall be entitled to rely conclusively on such officer's or employee's
authority to request such Loan or Letter of Credit until the Agent receives
written notice to the contrary. In addition, the Agent shall be entitled to
rely conclusively on any written notice sent to it by telecopy. The Agent shall
have no duty to
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verify the authenticity of the signature appearing on, or any telecopy or
facsimile of, any written Notice of Borrowing or any other document, and, with
respect to an oral request for such a Loan or Letter of Credit, the Agent shall
have no duty to verify the identity of any person representing himself or
herself as one of the officers, employees or agents authorized to make such
request or otherwise to act on behalf of the Borrower. None of the Agent, any
Lender or any Issuing Bank shall incur any liability to the Borrower or any
other Person in acting upon any telecopy or facsimile or telephonic notice
referred to above which the Agent reasonably believes to have been given by a
duly authorized officer or other person authorized to borrower on behalf of the
Borrower.
ARTICLE III
PAYMENTS AND PREPAYMENTS
3.01. PREPAYMENTS; REDUCTIONS IN REVOLVING CREDIT COMMITMENTS.
(a) VOLUNTARY PREPAYMENTS/REDUCTIONS. REVOLVING CREDIT
COMMITMENT. The Borrower, upon at least five (5) Business Days' (or less at
the Agent's sole discretion) prior written notice to the Agent, shall have the
right, from time to time, to terminate in whole or permanently reduce in part
the Revolving Credit Commitments, provided that the Borrower shall have made
whatever payment may be required to reduce the Revolving Credit Obligations to
an amount less than or equal to the Maximum Revolving Credit Amount after giving
effect to such reduction or termination of the Revolving Credit Commitments.
Any partial reduction of the Revolving Credit Commitments shall be in an
aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in
excess of that amount, and shall reduce the Revolving Credit Commitment of each
Lender proportionately in accordance with its Pro Rata Share. Any notice of
termination or reduction given to the Agent under this SECTION 3.01(a) shall
specify the date (which shall be a Business Day) of such termination or
reduction and, with respect to a partial reduction, the aggregate principal
amount thereof. When notice of termination or reduction is delivered as
provided herein, the principal amount of the Revolving Loans specified in the
notice shall become due and payable on the date specified in such notice. The
payments in respect of reductions and terminations described in this SECTION
3.01(a) may be made without premium or penalty (except as provided in SECTION
4.02(f)).
(b) MANDATORY PREPAYMENTS OF LOANS.
(i) Immediately after the Borrower's or any of the Restricted
Subsidiaries' receipt of any Net Cash Proceeds, the Borrower shall make or cause
to be made a mandatory prepayment of the Loans in an amount equal to one hundred
percent (100%) of
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such Net Cash Proceeds. Notwithstanding the preceding sentence, the Borrower
shall be entitled to use any Net Cash Proceeds received in respect of the sale
of the Borrower's Real Property located in Graham, Texas to repay obligations
under the Existing IRDBs issued in connection with such Real Property PROVIDED
that any such repayment shall reduce the Borrower's obligation to reduce the
contingent liability of BNP on the next Payment Date (as defined in the BNP
Reimbursement Agreement) by the amount of such repayment pursuant to the BNP
Letter of Credit Documents. On the date any mandatory prepayment is received by
the Agent pursuant to this CLAUSE (i), such prepayment shall be applied
FIRST to the outstanding principal amount of the Swing Loans, SECOND to
any remaining non-contingent Revolving Credit Obligations (with a corresponding
reduction in the Revolving Credit Commitments equal to 100% of such
prepayment) and THIRD to the extent no Obligations (other than contingent
Obligations) are outstanding, to the Investment Account to be held as Cash
Collateral in accordance with this Agreement; PROVIDED (A) that any Net Cash
Proceeds received after the Closing Date in respect of the EMT Sale (to the
extent up to $3,000,000), the European Resin Sale, the sale of the Borrower's
domestic resins business (to the extent less than $3,000,000), the sale of the
Borrower's Real Property located in Graham, Texas, indemnification obligations
owing to the Borrower pursuant to the terms of the YIP Transaction arising from
the failure of BCY Industrial Enterprises to make required payments in
connection with the Existing IRDBs and up to $1,000,000 in any Fiscal Year of
Net Cash Proceeds arising from the sale of assets in a single transaction or
series of related transactions PROVIDED that the Net Cash Proceeds of each
such single transaction or series of related transactions do not exceed
$250,000, shall not reduce the Revolving Credit Commitments and (B) after Net
Cash Proceeds applied pursuant to this clause (i) shall have caused a reduction
in the Revolving Credit Commitments of $12,000,000, any additional Net Cash
Proceeds received by the Borrower shall result in a corresponding reduction in
the Revolving Credit Commitments equal to only 50% of such additional Net Cash
Proceeds. Any such prepayments shall be applied in accordance with SECTION
3.02(b)(ii) first to Base Rate Loans and then to any Eurodollar Rate Loans with
those Loans which have earlier expiring Interest Periods being repaid prior to
those which have later expiring Interest Periods; PROVIDED, HOWEVER, so long
as no Event of Default has occurred and is continuing, the Borrower may elect to
have prepayments that would otherwise be applied to Eurodollar Rate Loans prior
to the end of the applicable Interest Period held as Cash Collateral in the Cash
Collateral Account and applied to such Loan at the expiration of the relevant
Interest Period.
(ii) Immediately, if at any time the Revolving Credit Obligations
are greater than the Maximum Revolving Credit Amount, the Borrower shall make a
mandatory repayment of the Revolving Credit Obligations in an amount equal to
such excess, such amount
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to be applied to the Obligations in accordance with SECTION 3.02. In
addition, to the extent the Maximum Revolving Credit Amount is at any time less
than the amount of contingent Letter of Credit Obligations outstanding at such
time, the Borrower shall deposit Cash Collateral in the Cash Collateral Account
in an amount equal to the amount by which such Letter of Credit Obligations
exceed such Maximum Revolving Credit Amount.
(iii) On a daily basis from funds on deposit in (x) the
Concentration Account and (y) if necessary to repay in full all such Revolving
Credit Obligations, the Investment Account, in each case prior to 1:00 p.m. on
any Business Day, the Agent shall transfer funds in accordance with SECTION
3.05 and thereby cause the Borrower to make a mandatory repayment of the
Revolving Credit Obligations on such Business Day in an amount equal to:
FIRST, any and all Non Pro Rata Loans on a pro rata basis, SECOND, any and
all outstanding Swing Loans, and THIRD, the repayment of the Revolving
Credit Obligations then outstanding in accordance with the provisions of
SECTION 3.02.
(iv) Nothing in this SECTION 3.01(b) shall be construed to
constitute the Lenders' consent to any transaction which is not expressly
permitted by ARTICLE IX.
3.02. PAYMENTS. (a) MANNER AND TIME OF PAYMENT. All payments
of principal of and interest on the Loans and Reimbursement Obligations and
other Obligations (including, without limitation, fees and expenses) which are
payable to the Agent, the Lenders or any Issuing Bank shall be made without
condition or reservation of right, in immediately available funds, delivered to
the Agent (or, in the case of Reimbursement Obligations, to the pertinent
Issuing Bank) not later than 1:00 p.m. (New York time) on the date and at the
place due, to the Agent's Account (or such account of the Issuing Bank, as it
may designate, if applicable). Thereafter, payments in respect of any Swing
Loans received by the Agent shall be distributed to the Swing Loan Bank and
payments in respect of any Revolving Loan received by the Agent shall be
distributed to each Lender in accordance with its Pro Rata Share in accordance
with the provisions of SECTION 3.02(b) on the date received, if received
prior to 1:00 p.m., and (except in the case of repayment of Swing Loans) on the
next succeeding Business Day if received thereafter, by the Agent.
(b) APPORTIONMENT OF PAYMENTS. (i) Subject to the provisions of
SECTION 3.02(b)(ii) and (v), except as otherwise provided herein (A) all
payments of principal and interest in respect of outstanding Revolving Loans,
and all payments in respect of Reimbursement Obligations, shall be allocated
among such of the Lenders and Issuing Banks as are entitled thereto, in
proportion to their respective Pro Rata Shares and (B) all payments of fees and
all other payments in respect of any other Obligations shall be allocated among
such of the Lenders and
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Issuing Banks as are entitled thereto, in proportion to their respective Pro
Rata Shares. All such payments and any other amounts received by the Agent from
or for the benefit of the Borrower shall be applied FIRST, to pay principal of
and interest on any portion of the Loans which the Agent may have advanced
pursuant to the express provisions of this Agreement on behalf of any Lender
other than the Lender then acting as Agent, for which the Agent has not then
been reimbursed by such Lender or the Borrower, SECOND, to pay principal of
and interest on any Protective Advance for which the Agent has not then been
paid by the Borrower or reimbursed by the Lenders, THIRD, to pay all other
Obligations then due and payable and FOURTH, to the Investment Account to be
held as Cash Collateral in accordance with this Agreement; PROVIDED that,
notwithstanding anything contained in this Agreement to the contrary, if no
Revolving Credit Obligations are then outstanding and no Default shall have
occurred and be continuing, all funds remaining in the Concentration Account
shall be transferred to the Investment Account and invested in accordance with
account instructions applicable thereto agreed to by the Borrower and the Agent.
The Borrower hereby grants to the Agent a security interest for the benefit of
the Agent, the Lenders and the Issuing Banks in all funds deposited in the
Investment Account. Except as set forth in SECTIONS 3.01(a) AND (b) and
unless otherwise designated by the Borrower, all principal payments in respect
of outstanding Swing Loans or Revolving Loans, as the case may be, shall be
applied FIRST, to the outstanding Swing Loans and SECOND, to the outstanding
Revolving Loans, in each case, FIRST, to repay outstanding Base Rate Loans,
and THEN to repay outstanding Eurodollar Rate Loans with those Loans which
have earlier expiring Interest Periods being repaid prior to those which have
later expiring Interest Periods.
(ii) After the occurrence and during the continuance of an Event of
Default, the Agent may, and shall upon the acceleration of the Obligations
pursuant to SECTION 11.02(a), apply all payments in respect of any Obligations
and all proceeds of Collateral (including, without limitation, all amounts held
as Cash Collateral or in the Investment Account) in the following order:
(A) FIRST, to pay interest on and then principal of any portion
of the Revolving Loans which the Agent may have advanced on behalf of any
Lender for which the Agent has not then been reimbursed by such Lender or
the Borrower;
(B) SECOND, to pay interest on and then principal of first any
outstanding Protective Advance and then any Swing Loan;
(C) THIRD, to pay Obligations in respect of any expense
reimbursements or indemnities then due to the Agent,
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including, without limitation, fees and expenses in respect of cash
management services provided to the Borrower and its Subsidiaries by the
Agent;
(D) FOURTH, to pay Obligations in respect of any expense
reimbursements or indemnities then due to the Lenders and the Issuing
Banks;
(E) FIFTH, to pay Obligations in respect of any fees then due to
the Agent, the Lenders and the Issuing Banks;
(F) SIXTH, to pay interest due in respect of the Loans and
Reimbursement Obligations;
(G) SEVENTH, to pay or prepay (or, to the extent such
Obligations are contingent, provide Cash Collateral pursuant to SECTION
11.02(b) in respect of) principal outstanding on Loans and all
outstanding Letter of Credit Obligations;
(H) EIGHTH, to the ratable payment of Interest Rate Contracts and
Currency Agreements to which the Agent or any Affiliate of the Agent is a
party;
(I) NINTH, to the ratable payment of all other Obligations;
PROVIDED, HOWEVER, if sufficient funds are not available to fund all
payments to be made in respect of any of the Obligations described in any of the
foregoing CLAUSES (A) through (H), the available funds being applied with
respect to any such Obligations referred to in any one of such clauses (unless
otherwise specified in such clause) shall be allocated to the payment of such
Obligations ratably, based on the proportion of the Agent's and each Lender's or
Issuing Bank's interest in the aggregate outstanding Obligations described in
such clauses.
The order of priority set forth in this SECTION 3.02(b)(ii) and the related
provisions hereof are set forth solely to determine the rights and priorities of
the Agent, the Lenders, the Issuing Banks and other Holders as among themselves.
The order of priority set forth in CLAUSES (A) through (H) of this SECTION
3.02(b)(ii) may at any time and from time to time be changed by the agreement
of the Requisite Lenders without necessity of notice to or consent of or
approval by the Borrower, any Holder which is not a Lender or Issuing Bank, or
any other Person; PROVIDED, HOWEVER, the order of priority set forth in
CLAUSES (A) through (E) of this SECTION 3.02(b)(ii) may not be changed
without the prior written consent of the Agent.
(iii) The Agent, in its sole discretion subject only to the terms
of this SECTION 3.02(b)(iii), may pay from the
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proceeds of Revolving Loans (which Loans have not been requested by the Borrower
pursuant to a Notice of Borrowing) made to the Borrower hereunder, whether made
following a request by the Borrower pursuant to SECTION 2.01 or 2.02 or a
deemed request as provided in this SECTION 3.20(b)(iii), all amounts then due
and payable by the Borrower hereunder, including, without limitation, amounts
payable with respect to payments of principal, interest, Reimbursement
Obligations and fees and all reimbursements for expenses pursuant to SECTION
13.02. The Borrower hereby irrevocably authorizes the Swing Loan Bank and the
Lenders to make Revolving Loans, which Revolving Loans shall be Base Rate Loans,
in each case, upon notice from the Agent as described in the following sentence
for the purpose of paying principal, interest, Reimbursement Obligations and
fees due from such Borrower, reimbursing expenses pursuant to SECTION 13.02
and paying any and all other amounts due and payable by such Borrower hereunder
or under the Notes, and agrees that all such Revolving Loans so made shall be
deemed to have been requested by it pursuant to SECTION 2.01 and 2.02 as of
the date of the aforementioned notice. The Agent shall request Revolving Loans
on behalf of the Borrower as described in the preceding sentence by notifying
the Lenders by telex, telecopy, telegram or other similar form of transmission
(which notice the Agent shall thereafter promptly transmit to such Borrower), of
the amount and Funding Date of the proposed Borrowing and that such Borrowing is
being requested on such Borrower's behalf pursuant to this SECTION
3.02(b)(iii). On the proposed Funding Date, the Lenders shall make the
requested Loans in accordance with the procedures and subject to the conditions
specified in SECTION 2.01 or 2.02 (irrespective of the satisfaction of the
conditions described in SECTION 5.02 or the requirement to deliver a Notice of
Borrowing in SECTION 2.01(b), which conditions and requirements, for the
purposes of the payment of Revolving Loans at the request of the Agent as
described in the preceding sentence, the Lenders irrevocably waive).
(v) If any Lender fails to fund its Pro Rata Share of any
Revolving Loan Borrowing requested by the Borrower which such Lender is
obligated to fund under the terms hereof (the funded portion of such Revolving
Loan Borrowing being hereinafter referred to as a "NON PRO RATA LOAN"),
excluding any such Lender who has delivered to the Agent written notice that one
or more of the conditions precedent contained in SECTION 5.02 shall not on the
date of such request be satisfied and until such conditions are satisfied, THEN
until the earlier of such Lender's cure of such failure and the termination of
the Revolving Credit Commitments, the proceeds of all amounts thereafter repaid
to the Agent by the Borrower and otherwise required to be applied to such
Lender's share of all other Obligations pursuant to the terms hereof shall be
advanced to the Borrower by the Agent on behalf of such Lender to cure, in full
or in part, such failure by such Lender, but shall nevertheless be deemed to
have been
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paid to such Lender in satisfaction of such other Obligations. Notwithstanding
anything contained herein to the contrary:
(A) the foregoing provisions of this SECTION 3.02(b)(v) shall
apply only with respect to the proceeds of payments of Obligations;
(B) a Lender shall be deemed to have cured its failure to fund its
Pro Rata Share of any Revolving Loan at such time as an amount equal to
such Lender's original Pro Rata Share of the requested principal portion
of such Revolving Loan is fully funded to the Borrower, whether made by
such Lender itself or by operation of the terms of this SECTION
3.02(b)(v), and whether or not the Non Pro Rata Loan with respect thereto
has been repaid;
(C) amounts advanced to the Borrower to cure, in full or in part,
any such Lender's failure to fund its Pro Rata Share of any Revolving Loan
Borrowing ("CURE LOANS") shall bear interest at the rate applicable to
the other Revolving Loans comprising such Borrowing and shall be treated
as Revolving Loans comprising such Borrowing for all purposes herein;
(D) regardless of whether or not an Event of Default has occurred or
is continuing, and notwithstanding the instructions of the Borrower as to
its desired application, all repayments of principal which, in accordance
with the other terms of this SECTION 3.02, would be applied to the
outstanding Revolving Loans shall be applied FIRST, ratably to all
Revolving Loans constituting Non Pro Rata Loans, SECOND, ratably to
Revolving Loans other than those constituting Non Pro Rata Loans or Cure
Loans and, THIRD, ratably to Revolving Loans constituting Cure Loans;
and
(E) No Lender shall be relieved of any obligation such Lender may
have to the Borrower under the terms of this Agreement as a result of the
provisions of this SECTION 3.02(b)(v).
(c) PAYMENTS ON NON-BUSINESS DAYS. Whenever any payment to be
made by the Borrower hereunder or under the Notes is stated to be due on a day
which is not a Business Day, the payment shall instead be due on the next
succeeding Business Day (or, as set forth in SECTION 4.02(b)(iv), the next
preceding Business Day), and any such extension of time shall be included in the
computation of the payment of interest and fees hereunder.
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3.03. TAXES.
(a) PAYMENT OF TAXES. Any and all payments by the Borrower
hereunder or under any Note or other document evidencing any Obligations shall
be made free and clear of and without reduction for any and all taxes, levies,
imposts, deductions, charges, withholdings, and all stamp or documentary taxes,
excise taxes, ad valorem taxes and other taxes imposed on the value of the
Property, charges or levies which arise from the execution, delivery or
registration, or from payment or performance under, or otherwise with respect
to, any of the Loan Documents or the Revolving Credit Commitments and all other
liabilities with respect thereto excluding, in the case of each Lender, each
Issuing Bank and the Agent, taxes imposed on its income, capital, profits or
gains and franchise taxes imposed on it by (i) the United States, except certain
withholding taxes contemplated pursuant to SECTION 3.03(d)(ii)(C), (ii) the
Governmental Authority of the jurisdiction in which such Lender's Lending Office
is located or any political subdivision thereof, (iii) the Governmental
Authority in which such Person is organized, managed and controlled or any
political subdivision thereof or (iv) any political subdivision of the United
States unless such taxes are imposed solely as a result of such Lender's
performance of any of the Loan Documents (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as "Taxes"). If the Borrower shall be required by law to withhold
or deduct any Taxes from or in respect of any sum payable hereunder or under any
such Note or document to any Lender, any Issuing Bank or the Agent, (x) the sum
payable to such Lender, such Issuing Bank or the Agent shall be increased as may
be necessary so that after making all required withholding or deductions
(including withholding or deductions applicable to additional sums payable under
this SECTION 3.03) such Lender, such Issuing Bank or the Agent (as the case
may be) receives an amount equal to the sum it would have received had no such
withholding or deductions been made, (y) the Borrower shall make such
withholding or deductions, and (z) the Borrower shall pay the full amount
withheld or deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) INDEMNIFICATION. The Borrower will indemnify each Lender,
each Issuing Bank and the Agent against, and reimburse each on demand for, the
full amount of all Taxes (including, without limitation, any Taxes imposed by
any Governmental Authority on amounts payable under this SECTION 3.03 and any
additional income or franchise taxes resulting therefrom) incurred or paid by
such Lender, such Issuing Bank or the Agent (as the case may be) or any of their
respective Affiliates and any liability (including penalties, interest, and
out-of-pocket expenses paid to third parties) arising therefrom or with respect
thereto, whether or not such Taxes were lawfully payable. A
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certificate as to any additional amount payable to any Person under this
SECTION 3.03 submitted by it to the Borrower shall, absent manifest error, be
final, conclusive and binding upon all parties hereto. Each Lender, the Agent
and each Issuing Bank agrees, within a reasonable time after receiving a written
request from the Borrower, to provide the Borrower and the Agent with such
certificates as are reasonably required, and take such other actions as are
reasonably necessary to claim such exemptions as such Lender, the Agent or such
Issuing Bank or Affiliate may be entitled to claim in respect of all or a
portion of any Taxes which are otherwise required to be paid or deducted or
withheld pursuant to this SECTION 3.03 in respect of any payments under this
Agreement or under the Notes.
(c) RECEIPTS. Within thirty (30) days after the date of any
payment of Taxes by the Borrower or any of its Subsidiaries, the Borrower will
furnish to the Agent at its request, at its address referred to in SECTION
13.08, the original or a certified copy of a receipt, if any, or other
documentation reasonably satisfactory to the Agent, evidencing payment thereof.
The Borrower shall furnish to the Agent upon the request of the Agent from time
to time an Officer's Certificate stating that all Taxes of which it is aware are
due have been paid and that no additional Taxes of which it is aware are due.
(d) FOREIGN BANK CERTIFICATIONS. (i) Each Lender or Issuing
Bank that is not created or organized under the laws of the United States or a
political subdivision thereof has delivered to the Borrower and the Agent on the
date on which such Lender became a Lender or such Issuing Bank became an Issuing
Bank or shall deliver to the Borrower on the date such Lender becomes a Lender
or such Issuing Bank becomes an Issuing Bank, if such date is after the Closing
Date, a true and accurate certificate executed in duplicate by a duly
authorized officer of such Lender or Issuing Bank to the effect that such Lender
or Issuing Bank is eligible to receive payments hereunder and under the Notes
without deduction or withholding of United States federal income tax (I) under
the provisions of an applicable tax treaty concluded by the United States (in
which case the certificate shall be accompanied by two duly completed copies of
IRS Form 1001 (or any successor or substitute form or forms)) or (II) under
Section 1441(c)(1) as modified for purposes of Section 1442(a) of the Internal
Revenue Code (in which case the certificate shall be accompanied by two duly
completed copies of IRS Form 4224 (or any successor or substitute form or
forms)).
(ii) Each Lender and each Issuing Bank further agrees to deliver to
the Borrower and the Agent from time to time, a true and accurate certificate
executed in duplicate by a duly authorized officer of such Lender or such
Issuing Bank before or promptly upon the occurrence of any event requiring a
change in
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the most recent certificate previously delivered by it to the Borrower and the
Agent pursuant to this SECTION 3.03(d) (including, but not limited to, a
change in such Lender's or such Issuing Bank's lending office). Each
certificate required to be delivered pursuant to this SECTION 3.03(d)(ii)
shall certify as to one of the following:
(A) that such Lender or such Issuing Bank can continue to receive
payments hereunder and under the Notes without deduction or withholding of
United States federal income tax;
(B) that such Lender or such Issuing Bank cannot continue to
receive payments hereunder and under the Notes without deduction or
withholding of United States federal income tax as specified therein but
does not require additional payments pursuant to SECTION 3.03(a) because
it is entitled to recover the full amount of any such deduction or
withholding from a source other than the Borrower;
(C) that such Lender or Issuing Bank is no longer capable of
receiving payments hereunder and under the Notes without deduction or
withholding of United States federal income tax as specified therein by
reason of a change in law (including the Internal Revenue Code or
applicable tax treaty) after the later of the Closing Date or the date on
which such Lender became a Lender or such Issuing Bank became an Issuing
Bank and that it is not capable of recovering the full amount of the same
from a source other than the Borrower; or
(D) that such Lender or such Issuing Bank is no longer capable of
receiving payments hereunder without deduction or withholding of United
States federal income tax as specified therein other than by reason of a
change in law (including the Internal Revenue Code or applicable tax
treaty) after the later of the Closing Date or the date on which such
Lender became a Lender or such Issuing Bank became an Issuing Bank.
Each Lender and each Issuing Bank agrees to deliver to the Borrower and the
Agent further duly completed copies of the above-mentioned IRS forms on or
before the earlier of (x) the date that any such form expires or becomes
obsolete or otherwise is required to be resubmitted as a condition to obtaining
an exemption from withholding from United States federal income tax and (y)
fifteen (15) days after the occurrence of any event requiring a change in the
most recent form previously delivered by such Lender or such Issuing Bank to the
Borrower and the Agent, unless any change in treaty, law, regulation, or
official interpretation thereof which would render such form inapplicable or
which would prevent the Lender from duly completing and
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delivering such form has occurred prior to the date on which any such delivery
would otherwise be required and the Lender or the Issuing Bank promptly advises
the Borrower that it is not capable of receiving payments hereunder or under the
Notes without any deduction or withholding of United States federal income tax.
3.04. INCREASED CAPITAL. If after the date hereof any Lender or
Issuing Bank determines that (i) the adoption or implementation of or any change
in or in the interpretation or administration of any law or regulation or any
guideline or request from any central bank or other Governmental Authority or
quasi-governmental authority exercising jurisdiction, power or control over any
Lender, Issuing Bank or banks or financial institutions generally (whether or
not having the force of law), compliance with which affects or would affect the
amount of capital required or expected to be maintained by such Lender or
Issuing Bank or any corporation controlling such Lender or Issuing Bank and (ii)
the amount of such capital is increased by or based upon (A) the making or
maintenance by any Lender of its Loans, any Lender's participation in or
obligation to participate in the Loans, Letters of Credit or other advances made
hereunder or the existence of any Lender's obligation to make Loans or (B) the
issuance or maintenance by any Issuing Bank of, or the existence of any Issuing
Bank's obligation to Issue, Letters of Credit, then, in any such case, upon
written demand by such Lender or Issuing Bank (with a copy of such demand to the
Agent), the Borrower shall immediately pay to the Agent for the account of such
Lender or Issuing Bank, from time to time as specified by such Lender or Issuing
Bank, additional amounts sufficient to compensate such Lender or Issuing Bank or
such corporation therefor. Such demand shall be accompanied by a statement as
to the amount of such compensation and include a summary of the basis for such
demand with detailed calculations. Such statement shall be conclusive and
binding for all purposes, absent manifest error.
3.05. CASH MANAGEMENT. (a) The Borrower has established the
Lockboxes listed on SCHEDULE 6.01-Z and the Collection Accounts listed on
SCHEDULE 6.01-Z. The Borrower has directed all account debtors of the
Borrower to remit all monies, checks, notes, drafts or funds received by it
including, without limitation, all payments in respect of the Receivables, other
Collateral, Net Cash Proceeds and other cash proceeds of operations directly to
a Lockbox or Collection Account; PROVIDED, HOWEVER, that nothing
contained herein shall require any payments or proceeds of the YIP Transaction
to be remitted to a Lockbox or Collection Account to the extent that such
payments or proceeds are required to be remitted by the Borrower to First Trust
of California, as trustee or escrow agent for the Industrial Development
Authority of the County of Los Angeles. The contents of each Lockbox shall
automatically be deposited into a Collection Account or be emptied and deposited
into a Collection
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Account by a representative of the Collection Account Bank at which the
applicable Collection Account has been established. Only the Agent and the
applicable Collection Account Bank, if any, shall have power of withdrawal from
each Lockbox and the related Collection Account and the Borrower acknowledges
that the Borrower shall not have any right, title or interest in such Lockbox or
Collection Account or any items deposited therein. The Borrower agrees to cause
all collections of Receivables, all proceeds of Collateral and all Net Cash
Proceeds now or hereafter received directly or indirectly by the Borrower or any
Restricted Subsidiary of the Borrower or in the possession of the Borrower or
any such Restricted Subsidiary to be held in trust for the Agent for the benefit
of the Lenders and, promptly upon receipt thereof, to be deposited into a
Collection Account or the Concentration Account on a daily basis. All of the
funds in the Collection Accounts shall be automatically transferred into the
Concentration Account. The Agent alone shall have power of withdrawal from the
Concentration Account and the Borrower acknowledges that, except as expressly
provided in this Agreement, the Borrower shall not have any right, title or
interest in the Concentration Account or the amounts at any time appearing to
the credit of the Concentration Account. Funds on deposit in the Concentration
Account FIRST, shall be applied to the outstanding Obligations in accordance
with SECTION 3.01(b)(i) (subject to the applicable provisions of SECTION
3.02); and THEN, to the extent any such funds remain after such application,
shall be transferred to the Investment Account in accordance with SECTION
3.02(b)(i). In the event that any payments or proceeds of the YIP Transaction
are received by the Agent, such payments or proceeds shall be remitted promptly
by the Agent to First Trust of California, as trustee or escrow agent for the
Industrial Development Authority of the County of Los Angeles.
(b) The Borrower agrees to pay to the Agent any and all reasonable fees,
costs and expenses which the Agent incurs in connection with opening and
maintaining the Collection Accounts, lock box or other similar payment
collection mechanism for the Borrower and depositing for collection any check or
item of payment received by and/or delivered to the Collection Account Banks or
the Agent on account of the Obligations. The Borrower agrees to reimburse the
Agent for any amounts paid to any Collection Account Bank arising out of any
required indemnification by the Agent of such Collection Account Bank against
damages incurred by the Collection Account Bank in the operation of a Collection
Account.
(c) The Borrower agrees (i) within ninety days after the Closing Date or
such longer period as may be acceptable to the Agent, to close each of its
Lockboxes and Collection Accounts with Wells Fargo Bank N.A. and The Northern
Trust Bank and (ii) within sixty days after the Closing Date, to enter into
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substitute agreements with Collection Account Banks satisfactory to the Agent.
ARTICLE IV
INTEREST AND FEES
4.01. INTEREST ON THE LOANS AND OTHER OBLIGATIONS. (a) RATE OF
INTEREST. All Loans and the outstanding principal balance of all other
Obligations shall bear interest on the unpaid principal amount thereof from the
date such Loans are made and such other Obligations are due and payable until
paid in full, except as otherwise provided in SECTION 4.01(d), as follows:
(i) If a Base Rate Loan or such other Obligation, at a rate per
annum equal to the sum of (A) the Base Rate as in effect from time to time
as interest accrues, PLUS (B) the Base Rate Margin in effect from time
to time during such Interest Period;
(ii) If a Eurodollar Rate Loan, at a rate per annum equal to the
sum of (A) the Eurodollar Rate determined for the applicable Interest
Period, PLUS (B) the Eurodollar Rate Margin in effect from time to time
during such Interest Period;
The applicable basis for determining the rate of interest on the Loans shall be
selected by the Borrower at the time a Notice of Borrowing or a Notice of
Conversion/Continuation is delivered by the Borrower to the Agent; PROVIDED,
HOWEVER, the Borrower may not select the Eurodollar Rate as the applicable
basis for determining the rate of interest on such a Loan if (x) such Loan is to
be made on the Closing Date or (y) at the time of such selection an Event of
Default or Default would occur or has occurred and is continuing. If on any day
any Loan is outstanding with respect to which notice has not been timely
delivered to the Agent in accordance with the terms hereof specifying the basis
for determining the rate of interest on that day, then for that day interest on
that Loan shall be determined by reference to the Base Rate.
(b) INTEREST PAYMENTS. (i) Interest accrued on each Base Rate
Loan shall be payable in arrears (A) on the first day of each calendar month for
the preceding calendar month, commencing on the first such day following the
making of such Base Rate Loan and (B) if not theretofore paid in full, at
maturity (whether by acceleration or otherwise) of such Base Rate Loan and
interest accrued on Swing Loans shall be payable in arrears on the first
Business Day of the immediately succeeding calendar month.
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(ii) Interest accrued on each Eurodollar Rate Loan shall be payable
in arrears (A) on the first day of each calendar month for the preceding
calendar month, commencing on the first such day following the making of such
Eurodollar Rate Loan and (B) if not theretofore paid in full, at maturity
(whether by acceleration or otherwise) of such Eurodollar Rate Loan.
(iii) Interest accrued on the principal balance of all other
Obligations shall be payable in arrears (A) on the first day of each month,
commencing on the first such day following the incurrence of such Obligation and
(B) if not theretofore paid in full, at the time such other Obligation becomes
due and payable (whether by acceleration or otherwise).
(c) CONVERSION OR CONTINUATION. (i) The Borrower shall have the
option (A) to convert at any time all or any part of outstanding Base Rate Loans
(other than Swing Loans) to Eurodollar Rate Loans; (B) to convert all or any
part of outstanding Eurodollar Rate Loans having Interest Periods which expire
on the same date to Base Rate Loans on such expiration date; or (C) to continue
all or any part of outstanding Eurodollar Rate Loans having Interest Periods
which expire on the same date as Eurodollar Rate Loans, and the succeeding
Interest Period of such continued Loans shall commence on such expiration date;
PROVIDED, HOWEVER, no such outstanding Loan may be continued as, or be
converted into, a Eurodollar Rate Loan (i) if the continuation of, or the
conversion into, would violate any of the provisions of SECTION 4.02 or (ii)
if an Event of Default or Default would occur or has occurred and is continuing.
Any conversion into or continuation of Eurodollar Rate Loans under this SECTION
4.01(c) shall be in a minimum amount of $5,000,000 and in integral multiples of
$1,000,000 in excess of that amount.
(ii) To convert or continue a Loan under SECTION 4.01(c)(i), the
Borrower shall deliver a Notice of Conversion/Continuation to the Agent no later
than 12:00 noon (New York time) at least three (3) Business Days in advance of
the proposed conversion/continuation date. A Notice of Conversion/Continuation
shall specify (A) the proposed conversion/continuation date (which shall be a
Business Day), (B) the principal amount of the Loan to be converted/continued,
(C) whether such Loan shall be converted and/or continued and (D) in the case of
a conversion to, or continuation of, a Eurodollar Rate Loan, the requested
Interest Period. Promptly after receipt of a Notice of Conversion/Continuation
under this SECTION 4.01(c)(ii), the Agent shall notify each Lender by telex or
telecopy, or other similar form of transmission, of the proposed
conversion/continuation. Any Notice of Conversion/Continuation for conversion
to, or continuation of, a Loan shall be irrevocable, and the Borrower shall be
bound to convert or continue in accordance therewith.
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(d) DEFAULT INTEREST. Notwithstanding the rates of interest
specified in SECTION 4.01(a) or elsewhere herein, effective immediately upon
the occurrence of any Event of Default and for as long thereafter as such
Event of Default shall be continuing, the principal balance of all Loans and of
all other Obligations shall bear interest at a rate which is two percent (2.0%)
per annum in excess of the rate of interest applicable to such Loans and
Obligations from time to time.
(e) COMPUTATION OF INTEREST. Interest on all Obligations shall
be computed on the basis of the actual number of days elapsed in the period
during which interest accrues and a year of 360 days. In computing interest on
any Loan, the date of the making of the Loan shall be included and the date of
payment shall be excluded.
(f) CHANGES; LEGAL RESTRICTIONS. If after the date hereof any
Lender or Issuing Bank determines that the adoption or implementation of or any
change in or in the interpretation or administration of any law or regulation or
any guideline or request from any central bank or other Governmental Authority
or quasi-governmental authority exercising jurisdiction, power or control over
any Lender, Issuing Bank or over banks or financial institutions generally
(whether or not having the force of law), compliance with which, in each case
after the date hereof:
(i) subjects a Lender or an Issuing Bank (or its Applicable Lending
Office) to charges (other than Taxes) of any kind which is applicable to
the Revolving Credit Commitments of the Lenders and/or the Issuing Banks
to make Eurodollar Rate Loans or to Issue and/or participate in Letters of
Credit; or
(ii) imposes, modifies, or holds applicable, any reserve (other than
reserves taken into account in calculating the Eurodollar Rate), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities (including those
pertaining to Letters of Credit) in or for the account of, advances or
loans by, commitments made, or other credit extended by, or any other
acquisition of funds by, a Lender or an Issuing Bank or any Applicable
Lending Office or Eurodollar Affiliate of that Lender or Issuing Bank;
and the result of any of the foregoing is to increase the cost to that Lender or
Issuing Bank of making, renewing or maintaining the Loans or its Revolving
Credit Commitments or issuing or participating in the Letters of Credit or to
reduce any amount receivable thereunder; then, in any such case, upon written
demand by such Lender or Issuing Bank (with a copy of such demand to the Agent),
the Borrower shall immediately pay to the Agent
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for the account of such Lender or Issuing Bank, from time to time as specified
by such Lender or Issuing Bank, such amount or amounts as may be necessary to
compensate such Lender or Issuing Bank or its Eurodollar Affiliate for any such
additional cost incurred or reduced amount received. Such demand shall be
accompanied by a statement as to the amount of such compensation and include a
summary of the basis for such demand. Such statement shall be conclusive and
binding for all purposes, absent manifest error.
(g) CONFIRMATION OF EURODOLLAR RATE. Upon the reasonable request
of the Borrower from time to time, the Agent shall promptly provide to the
Borrower such information with respect to the applicable Eurodollar Rate as may
be so requested.
4.02. SPECIAL PROVISIONS GOVERNING EURODOLLAR RATE LOANS. With
respect to Eurodollar Rate Loans:
(a) AMOUNT OF ADVANCE. Each Eurodollar Rate Loan shall be for a
minimum amount of $5,000,000 and in integral multiples of $1,000,000 in excess
of that amount.
(b) DETERMINATION OF INTEREST PERIOD. By giving notice as set
forth in SECTION 2.01(b) (with respect to a Borrowing of a Eurodollar Rate
Loan) or SECTION 4.01(c) (with respect to a conversion into or continuation of
a Eurodollar Rate Loan), the Borrower shall have the option, subject to the
other provisions of this SECTION 4.02, to select an interest period (each,
an "INTEREST PERIOD") to apply to the Loans described in such notice,
subject to the following provisions:
(i) The Borrower may only select, as to a particular Borrowing of
Eurodollar Rate Loans, an Interest Period of either one or three months in
duration;
(ii) In the case of immediately successive Interest Periods
applicable to a Borrowing of Eurodollar Rate Loans, each successive
Interest Period shall commence on the day on which the next preceding
Interest Period expires;
(iii) If any Interest Period would otherwise expire on a day which
is not a Business Day, such Interest Period shall be extended to expire on
the next succeeding Business Day if the next succeeding Business Day
occurs in the same calendar month, and if there shall be no succeeding
Business Day in such calendar month, such Interest Period shall expire on
the immediately preceding Business Day;
(iv) The Borrower may not select an Interest Period as to any Loan
if such Interest Period
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terminates later than the Revolving Credit Termination Date; and
(v) There shall be no more than five (5) Interest Periods in
effect at any one time.
(c) DETERMINATION OF INTEREST RATE. As soon as practicable on
the second Business Day prior to the first day of each Interest Period (the
"INTEREST RATE DETERMINATION DATE"), the Agent shall determine (pursuant to
the procedures set forth in the definition of "EURODOLLAR RATE") the
interest rate which shall apply to Eurodollar Rate Loans, for which an interest
rate is then being determined for the applicable Interest Period and shall
promptly give notice thereof (in writing or by telephone confirmed in writing)
to the Borrower and to each Lender. The Agent's determination shall be presumed
to be correct, absent manifest error, and shall be binding upon the Borrower.
(d) INTEREST RATE UNASCERTAINABLE, INADEQUATE OR UNFAIR. In the
event that at least one (1) Business Day before the Interest Rate Determination
Date:
(i) the Agent determines that adequate and fair means do not exist
for ascertaining the applicable interest rates by reference to which the
Eurodollar Rate then being determined is to be fixed;
(ii) the Requisite Lenders advise the Agent that Dollar deposits in
the principal amounts of the Eurodollar Rate Loans comprising such
Borrowing are not generally available in the London interbank market for a
period equal to such Interest Period; or
(iii) the Requisite Lenders advise the Agent that the Eurodollar Rate,
as determined by the Agent, after taking into account the adjustments for
reserves and increased costs provided for in SECTION 4.01(f), will not
adequately and fairly reflect the cost to such Lenders of funding their
Eurodollar Rate Loans;
then the Agent shall forthwith give notice thereof to the Borrower, whereupon
(until the Agent notifies the Borrower that the circumstances giving rise to
such suspension no longer exist) the right of the Borrower to elect to have
Loans bear interest based upon the Eurodollar Rate shall be suspended and each
outstanding Eurodollar Rate Loan shall be converted into a Base Rate Loan on the
last day of the then current Interest Period therefor, and any Notice of
Borrowing for which Revolving Loans have not then been made shall be deemed to
be a request for Base Rate Loans, notwithstanding any prior election by the
Borrower to the contrary.
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(e) ILLEGALITY. (i) If at any time any Lender determines (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties) that the making or continuation of any Eurodollar Rate Loan
has become unlawful or impermissible by compliance by that Lender with any law,
governmental rule, regulation or order of any Governmental Authority (whether or
not having the force of law and whether or not failure to comply therewith would
be unlawful or would result in costs or penalties), then, and in any such event,
such Lender may give notice of that determination, in writing, to the Borrower
and the Agent, and the Agent shall promptly transmit the notice to each other
Lender.
(ii) When notice is given by a Lender under SECTION 4.02(e)(i),
(A) the Borrower's right to request from such Lender and such Lender's
obligation, if any, to make Eurodollar Rate Loans shall be immediately
suspended, and such Lender shall make a Base Rate Loan as part of any requested
Borrowing of Eurodollar Rate Loans and (B) if the affected Eurodollar Rate Loan
or Loans are then outstanding, the Borrower shall immediately, or if permitted
by applicable law, no later than the date permitted thereby, upon at least one
(1) Business Day's prior written notice to the Agent and the affected Lender,
convert each such Loan into a Base Rate Loan.
(iii) If at any time after a Lender gives notice under SECTION
4.02(e)(i) in respect of a Eurodollar Rate Loan such Lender determines that it
may lawfully make Eurodollar Rate Loans, such Lender shall promptly give notice
of that determination, in writing, to the Borrower and the Agent, and the Agent
shall promptly transmit the notice to each other Lender. The Borrower's right
to request, and such Lender's obligation, if any, to make Eurodollar Rate Loans
shall thereupon be restored.
(f) COMPENSATION. In addition to all amounts required to be paid
by the Borrower pursuant to SECTION 4.01, the Borrower shall compensate each
Lender, upon demand, for all losses, expenses and liabilities (including,
without limitation, any loss or expense incurred by reason of the liquidation or
reemployment of deposits or other funds acquired by such Lender to fund or
maintain such Lender's Eurodollar Rate Loans to the Borrower but excluding any
loss of the Eurodollar Rate Margin on the relevant Loans) which that Lender may
sustain (i) if for any reason a Borrowing, conversion into or continuation of
Eurodollar Rate Loans does not occur on a date specified therefor in a Notice of
Borrowing or a Notice of Conversion/Continuation given by the Borrower or in a
telephonic request by it for borrowing or conversion/continuation or a
successive Interest Period does not commence after notice therefor is given
pursuant to SECTION 4.01(c), including, without limitation, pursuant to
SECTION 4.02(d), (ii) if for any reason any Eurodollar Rate Loan is prepaid
(including, without limitation, mandatorily pursuant to
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SECTION 3.01) on a date which is not the last day of the applicable Interest
Period, (iii) as a consequence of a required conversion of a Eurodollar Rate
Loan to a Base Rate Loan as a result of any of the events indicated in SECTION
4.02(d) or (e) or (iv) as a consequence of any failure by the Borrower to
repay Eurodollar Rate Loans when required by the terms hereof. The Lender
making demand for such compensation shall deliver to the Borrower concurrently
with such demand a written statement in reasonable detail as to such losses,
expenses and liabilities, and this statement shall be conclusive as to the
amount of compensation due to that Lender, absent manifest error.
(g) BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry
or transfer Eurodollar Rate Loans at, to, or for the account of, its Eurodollar
Lending Office or Eurodollar Affiliate or its other offices or Affiliates. No
Lender shall be entitled, however, to receive any greater amount under SECTIONS
3.03, 3.04, 4.01(f) or 4.02(f) as a result of the transfer of any such
Eurodollar Rate Loan to any office (other than such Eurodollar Lending Office)
or any Affiliate (other than such Eurodollar Affiliate) than such Lender would
have been entitled to receive immediately prior thereto, unless (i) the transfer
occurred at a time when circumstances giving rise to the claim for such greater
amount did not exist and (ii) such claim would have arisen even if such transfer
had not occurred.
(h) AFFILIATES NOT OBLIGATED. No Eurodollar Affiliate or other
Affiliate of any Lender shall be deemed a party hereto or shall have any
liability or obligation hereunder.
4.03. FEES. (a) LETTER OF CREDIT FEE. In addition to any
charges paid pursuant to SECTION 2.03(g), the Borrower shall pay to the Agent,
for the account of the Lenders as provided in the following sentence, with
respect to any Letter of Credit Issued by any Issuing Bank, a fee per annum (the
"LETTER OF CREDIT FEE") equal to the Eurodollar Rate Margin (LESS 0.25% per
annum) as of the date of each such payment on the undrawn face amount of such
Letter of Credit, payable in arrears on the first day of each calendar month for
the preceding calendar month and on the date on which such Letter of Credit
expires in accordance with its terms; PROVIDED, HOWEVER, effective
immediately upon the occurrence of any Default and for so long thereafter as
such Default shall be continuing, the rate at which the Letter of Credit Fees
shall accrue and be payable shall be equal to two percent (2.0%) per annum PLUS
the Eurodollar Rate Margin (less 0.25% per annum). The Agent shall pay each
Letter of Credit Fee to the Lenders in accordance with their respective Pro Rata
Shares.
(b) UNUSED COMMITMENT FEE. The Borrower shall pay to the Agent,
for the account of the Lenders in accordance with their respective Pro Rata
Shares, a fee (the "UNUSED COMMITMENT
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FEE"), accruing from the Closing Date at the Unused Commitment Fee Rate on the
average amount by which the Revolving Credit Commitments exceed the Revolving
Credit Obligations for the period commencing on the Closing Date and ending on
the Revolving Credit Termination Date, the accrued portion of such fee being
payable (A) monthly, in arrears, on the first day of the immediately succeeding
calendar month, commencing on the first such day after the Closing Date and (B)
on the Revolving Credit Termination Date (whether or not such date occurs on,
before or after the Closing Date). Notwithstanding the foregoing, in the event
that any Lender fails to fund its Pro Rata Share of any Loan requested by the
Borrower which such Lender is obligated to fund under the terms hereof, such
Lender shall not be entitled to any Unused Commitment Fees with respect to its
Revolving Credit Commitment until such failure has been cured in accordance with
SECTION 3.02(b)(v)(B) and the Borrower shall not be required to pay any Unused
Commitment Fees to such Lender for such period.
(c) OTHER FEES. The Borrower shall pay to the Agent solely for
its own account such other fees as are set forth in the Letter Agreement.
(d) CALCULATION AND PAYMENT OF FEES. All of the above fees shall
be calculated on the basis of the actual number of days elapsed in a 360 day
year. All such fees shall be payable in addition to, and not in lieu of,
interest, expense reimbursements, indemnification and other Obligations. Fees
shall be payable to the Agent's Account in accordance with SECTION 3.02. All
fees shall be fully earned and nonrefundable when paid. All fees specified or
referred to herein due to the Agent, any Issuing Bank or any Lender, including,
without limitation, those referred to in this SECTION 4.03, shall bear
interest, if not paid when due, at the interest rate for Loans in accordance
with SECTION 4.01(d), shall constitute Obligations and shall be secured by the
Collateral.
ARTICLE V
CONDITIONS TO LOANS AND LETTERS OF CREDIT
5.01. CONDITIONS PRECEDENT TO THE INITIAL LOANS AND LETTERS OF
CREDIT. The obligation of each Lender on the Closing Date to make its
Revolving Loan requested to be made by it and the agreement of each Issuing Bank
on the Closing Date to Issue Letters of Credit, shall be subject to the
satisfaction of all of the following conditions precedent:
(a) DOCUMENTS. The Agent (on behalf of itself and the Lenders)
shall have received on or before the Closing Date all of the following:
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(i) this Agreement, the Notes, the Borrower Security Agreement,
the Subsidiary Guaranty and all other agreements, documents and
instruments described in the List of Closing Documents attached hereto and
made a part hereof as EXHIBIT F, each duly executed where appropriate
and in form and substance satisfactory to the Lenders and in sufficient
copies for each of the Lenders; without limiting the foregoing, the
Borrower hereby directs its counsel, (A) Kronish, Lieb, Weiner & Hellman
and (B) each of its other counsel listed in such List of Closing Documents
to prepare and deliver to the Agent, the Lenders, the Issuing Banks and
Sidley & Austin, the opinions referred to in such List of Closing
Documents with respect to such counsel;
(ii) a PRO FORMA estimated balance sheet of the Borrower and
its Subsidiaries as of the Closing Date, as referred to in SECTION
6.01(h) giving effect to the transactions contemplated in the Loan
Documents and confirming the flow of funds set forth in the Sources and
Uses; and
(iii) such additional documentation as the Agent and the Lenders may
reasonably request.
(b) COLLATERAL INFORMATION; PERFECTION OF LIENS. The Agent shall
have received complete and accurate information from the Borrower with respect
to the name and the location of the principal place of business and chief
executive office for the Borrower and each of the Restricted Subsidiaries; all
Uniform Commercial Code and other filing and recording fees and taxes shall have
been paid or duly provided for; and the Agent shall have received evidence to
the satisfaction of the Lenders that all Liens granted to the Agent with respect
to all Collateral are valid and effective and, upon the filing of the duly
executed Uniform Commercial Code financing statements, which shall have been
delivered to the Agent, will be perfected and of first priority, except as
otherwise permitted under this Agreement. All certificates representing Capital
Stock included in the Collateral (it being understood that the Capital Stock of
Hexcel Lyon and Hexcel S.A., a Belgium corporation, is represented by
uncertificated securities) shall have been delivered to the Agent (with duly
executed stock powers, as appropriate) and all instruments included in the
Collateral shall have been delivered to the Agent (duly endorsed to the Agent,
as appropriate). The Agent shall have received UCC-1 Financing Statements duly
executed that shall, when filed in the appropriate jurisdictions, be sufficient
to perfect Liens on all of the Collateral.
(c) NO LEGAL IMPEDIMENTS. No law, regulation, order, judgment or
decree of any Governmental Authority shall, and the
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Agent shall not have received any notice that any action, suit, investigation,
litigation or proceeding is pending or threatened in any court or before any
arbitrator or Governmental Authority which (i) purports to enjoin, prohibit,
restrain or otherwise affect (A) the making of the Loans on the Closing Date or
(B) the consummation of the transactions contemplated pursuant to the
Transaction Documents or (ii) would be reasonably expected to impose or result
in the imposition of a Material Adverse Effect.
(d) NO CHANGE IN CONDITION. No change deemed material by the
Lenders, in their opinion, in the condition (financial or otherwise), business,
performance, assets, operations or prospects of the Borrower or any Guarantor,
individually, or of the Borrower and its Restricted Subsidiaries, taken as a
whole, shall have occurred that would (i) cause the Initial Projections to be
unreasonable in light of then current circumstances, (ii) have a material
adverse effect on the ability of the Borrower and the Guarantors to perform
their obligations under the Loan Documents or (iii) have a material adverse
affect on the ability of the Lenders, the Issuing Banks or the Agent to enforce
the Loan Documents.
(e) NO DEFAULT. No Event of Default or Default shall have
occurred and be continuing or would result from the making of the Loans.
(f) REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties contained in SECTION 6.01 and in any of the other Loan
Documents shall be true and correct on and as of the Closing Date, both before
and after giving effect to the making of the Loans.
(g) FEES AND EXPENSES PAID. There shall have been paid to the
Agent, for the account of the Lenders and the Agent, for their respective
individual accounts, all fees (including, without limitation, the reasonable
legal fees of counsel to the Agent and local counsel to the Agent for the
benefit of the Lenders) due and payable on or before the Closing Date
(including, without limitation, all such fees described in the Letter
Agreement), and all expenses (including, without limitation, legal expenses) due
and payable on or before the Closing Date.
(h) CLOSING DATE; REORGANIZATION EFFECTIVE DATE. The
Reorganization Effective Date shall have occurred and both the Closing Date and
the Reorganization Effective Date shall have occurred prior to February 28,
1995.
(i) CONSENTS, ETC. Except as set forth on SCHEDULE 6.01-E,
each of the Borrower and the Restricted Subsidiaries shall have received all
consents and authorizations required pursuant to any material Contractual
Obligation with any other
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Person and shall have obtained all consents and authorizations of, and effected
all notices to and filings with, any Governmental Authority as may be necessary
to allow each of the Borrower and the Restricted Subsidiaries lawfully (A) to
execute, deliver and perform, in all material respects, their respective
obligations hereunder, under the other Transaction Documents to which each of
them is, or shall be, a party and each other agreement or instrument to be
executed and delivered by each of them pursuant thereto or in connection
therewith and (B) to create and perfect the Liens on the Collateral to be owned
by each of them in the manner and for the purpose contemplated by the Loan
Documents. No such consent or authorization shall impose any conditions upon
the Borrower or any of its Subsidiaries that are not acceptable to the Lenders.
(j) TERMINATION OF THE DIP FACILITY. The obligations of the
Borrower under the DIP Facility shall have been terminated, all non-contingent
obligations thereunder shall have been paid in full (except for the outstanding
letters of credit set forth on SCHEDULE 6.01-AA hereto to the extent secured
by and not replaced with Letters of Credit) and the Liens on the Property of the
Borrower securing the DIP Facility shall have been released and terminated on
terms satisfactory to the Agent.
(k) CONFIRMATION ORDER. The Agent and the Lenders shall have
received and approved the Confirmation Order. The Confirmation Order shall not
contain any provision providing or purporting to provide for the retention by
the Bankruptcy Court of jurisdiction over the Lenders, the Loan Documents, any
securities issued pursuant to the Plan, the Borrower or the Borrower's
subsidiaries. No official committee or representative (including a trustee or
examiner) shall have any supervisory responsibility over the Borrower or any of
its subsidiaries after the Reorganization Effective Date. The Confirmation
Order shall have become a Final Order.
(l) PLAN OF REORGANIZATION. The terms and conditions of the Plan
of Reorganization shall not have been amended, waived or modified without the
prior written consent of the Lenders. All conditions precedent to the
effectiveness of the Plan of Reorganization shall have been satisfied (or, with
the prior written consent of the Lenders, waived) in the sole judgment of the
Lenders. The Plan shall have received sufficient acceptances by each impaired
Class to satisfy the confirmation requirements of Section 1129(a)(8) of the
Bankruptcy Code.
(m) OTHER AGREEMENTS. The Borrower shall have delivered to the
Agent and the Lenders, and the Lenders shall have approved, copies of all
documentation implementing the Plan of Reorganization, including, without
limitation, all such documents specified in the List of Closing Documents
attached hereto as EXHIBIT F, and all such documents shall not have been
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modified from the forms set forth in the Plan of Reorganization without the
prior written consent of the Lenders.
(n) IMPLEMENTATION OF THE PLAN. Mutual Series shall have (i)
invested in the Reorganized Common Stock of the Borrower cash in an amount not
less than $9,000,000 and (ii) made the Advance, the gross proceeds of which
shall not be less than $41,000,000 pursuant to the terms of the Standby
Commitment Documents. In accordance with the terms of Plan of Reorganization
and pursuant to the Confirmation Order, the Principal Mutual Claims shall have
been paid in full. In addition, the Subordinated Debenture Indenture shall have
been reinstated and no Event of Default (as defined therein) shall have occurred
and be continuing.
(o) SALE OF EMT BUSINESS. The Borrower shall have received not
less than $25,500,000 in Net Cash Proceeds from the EMT Sale.
(p) SALE OF EUROPEAN RESINS BUSINESS. The Borrower shall have
received not less than $7,100,000 in gross proceeds from the European Resins
Sale.
(q) ENVIRONMENTAL ISSUES. The environmental review report of
Environ Corporation in respect of the Borrower's compliance with Environmental,
Health or Safety Requirements of Law and Liabilities and Costs relating thereto
shall have been approved by the Lenders. The Lenders shall be satisfied with
the status of all Environmental Claims (as defined in the Plan of
Reorganization) arising in connection with the Lodi, New Jersey property
formerly owned by the Borrower.
(r) CASH PAYMENTS ON THE REORGANIZATION EFFECTIVE DATE. Cash
payments required to be made under the Plan of Reorganization at or immediately
following the Reorganization Effective Date shall not exceed $85,000,000.
5.02. CONDITIONS PRECEDENT TO ALL SUBSEQUENT REVOLVING LOANS,
SWING LOANS AND LETTERS OF CREDIT. The obligation of each Lender to make any
Revolving Loan and of the Swing Loan Bank to make any Swing Loan, requested to
be made by it on any date after the Closing Date, and the agreement of each
Issuing Bank to Issue any Letter of Credit on any date after the Closing Date is
subject to the following conditions precedent as of each such date:
(a) REPRESENTATIONS AND WARRANTIES. As of such date, both before
and after giving effect to the Loans to be made or the Letter of Credit to be
Issued on such date, all of the representations and warranties of the Borrower
and the Borrower's Subsidiaries contained in SECTION 6.01 and in any other
Loan Document (other than representations and warranties which
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expressly speak as of a different date) shall be true and correct in all
material respects.
(b) NO DEFAULT. No Event of Default or Default (other than a
Default of the type referred to in SECTION 11.01(p)) shall have occurred and
be continuing or would result from the making of the requested Loan or the
Issuance of the requested Letter of Credit.
(c) NO LEGAL IMPEDIMENTS. No law, regulation, order, judgment or
decree of any Governmental Authority shall, and the Agent shall not have
received from any Lender, the Swing Loan Bank or Issuing Bank, as the case may
be, notice that, in the judgment of such Person, any action, suit,
investigation, litigation or proceeding is pending or threatened in any court or
before any arbitrator or Governmental Authority which is likely to enjoin,
prohibit or restrain, or impose or result in the imposition of any material
adverse condition upon, (i) such Lender's making of the requested Loan or
participation in the requested Letter of Credit, (ii) the Swing Loan Bank's
making of the requested Swing Loan or (iii) such Issuing Bank's issuance of the
requested Letter of Credit.
(d) NO MATERIAL ADVERSE CHANGE. No change deemed material by the
Lenders, in their opinion, in the condition (financial or otherwise), business,
performance, assets, operations or prospects of the Borrower or any Guarantor,
individually, or of the Borrower and its Restricted Subsidiaries, taken as a
whole, shall have occurred since the Closing Date, which change has had or is
reasonably likely to have a Material Adverse Effect.
Each submission by the Borrower to the Agent of a Notice of Borrowing with
respect to a Revolving Loan or Swing Loan, each acceptance by the Borrower of
the proceeds of each such Loan so made, each submission by the Borrower to an
Issuing Bank of a request for issuance of a Letter of Credit and the issuance of
such Letter of Credit, shall constitute a representation and warranty by the
Borrower as of the Funding Date in respect of such Revolving Loan, as of the
Swing Loan Funding Date in respect of such Swing Loan, and as of the date of
issuance of such Letter of Credit, that all the conditions contained in
subsections (a), (b) and (c) of this SECTION 5.02 have been satisfied or
waived in accordance with SECTION 13.07.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.01. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. In order
to induce the Lenders and the Issuing Banks to enter into this Agreement and to
make the Loans and the other financial accommodations to the Borrower and to
Issue the Letters of Credit described herein, the Borrower represents and
warrants to each Lender, each Issuing Bank and the Agent as of the Closing Date
and thereafter on each date as required by SECTION 5.02(a) that the following
statements are true, correct and complete:
(a) ORGANIZATION; CORPORATE POWERS. Each of the Borrower and the
Borrower's Subsidiaries (i) is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
(ii) is duly qualified to do business as a foreign corporation and is in good
standing (or, with respect to the Unrestricted Subsidiaries, has maintained the
equivalent status) under the laws of each jurisdiction in which failure to be so
qualified and in good standing (or, with respect to the Unrestricted
Subsidiaries, maintain equivalent status) has or is reasonably likely to have a
Material Adverse Effect and (iii) has all requisite corporate power and
authority to own, operate and encumber its Property and to conduct its business
as presently conducted.
(b) AUTHORITY. (i) Each of the Borrower and the Restricted
Subsidiaries has the requisite corporate power and authority to execute, deliver
and perform each of the Transaction Documents to which it is a party.
(ii) The execution, delivery and performance, as the case may be,
of each of the Transaction Documents which have been executed and to which any
of the Borrower or the Restricted Subsidiaries is a party and the consummation
of the transactions contemplated thereby, have been duly approved by each of the
boards of directors and (to the extent required by law) the shareholders of the
Borrower and the Restricted Subsidiaries, respectively, and such approvals have
not been rescinded, revoked or modified in any manner. No other corporate
action or proceedings on the part of the Borrower or the Restricted Subsidiaries
is necessary to consummate such transactions.
(iii) Each of the Transaction Documents to which the Borrower or the
Restricted Subsidiaries is a party has been duly executed, or delivered on
behalf of the Borrower or the Restricted Subsidiaries, as the case may be, and
constitutes its legal, valid and binding obligation, enforceable against such
Person in accordance with its terms, is in full force and effect and no term or
condition thereof has been amended, modified or waived from the terms and
conditions contained in the Transaction Documents delivered to the Agent
pursuant to Sections 5.01(a)
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without the prior written consent of the Requisite Lenders. No default, event
of default or breach of any covenant by any of the Borrower or the Restricted
Subsidiaries that is a party to the Transaction Documents or, to the best
knowledge of the Borrower, any other party thereto, exists thereunder.
(c) SUBSIDIARIES; OWNERSHIP OF CAPITAL STOCK. SCHEDULE 6.01-C
(i) contains a diagram indicating the corporate structure of the Borrower, the
Borrower's Subsidiaries and the Existing Joint Ventures as of the Closing Date;
and (ii) accurately sets forth as of the Closing Date, (A) the correct legal
name, the jurisdiction of incorporation, and Employer Identification Number of
each of the Borrower and the Borrower's Subsidiaries, and the jurisdictions in
which each of the Borrower and the Borrower's Subsidiaries is qualified to
transact business as a foreign corporation, (B) the authorized, issued and
outstanding shares of each class of Capital Stock of the Borrower and each of
the Borrower's Subsidiaries and, with respect to the Borrower's Subsidiaries,
the owners of such shares and (C) a summary of the direct and indirect
partnership, joint venture, or other equity interests, if any, of the Borrower
and each Subsidiary of the Borrower in any Person that is not a corporation.
Except as set forth on SCHEDULE 6.01-C, none of the issued and outstanding
Capital Stock of the Borrower or the Borrower's Subsidiaries is subject to any
vesting, redemption, or repurchase agreement, and there are no warrants or
options outstanding with respect to such Capital Stock other than the Rights.
The outstanding Capital Stock of the Borrower and each of its Subsidiaries is
duly authorized, validly issued, fully paid and nonassessable and the
outstanding Capital Stock of the Borrower's Subsidiaries is not Margin Stock.
The Reorganized Common Stock has been duly authorized, and when issued and
delivered pursuant to the Rights Offering and the Standby Commitment Documents,
will be validly issued and outstanding, fully paid and nonassessable and free of
any preemptive rights.
(d) NO CONFLICT. The execution, delivery and performance of each
of the Transaction Documents to which the Borrower or any of the Restricted
Subsidiaries is a party do not and shall not (i) conflict with the Constituent
Documents of the Borrower or any Subsidiary of the Borrower, (ii) constitute a
tortious interference with any Contractual Obligation of any Person, (iii)
except as set forth on SCHEDULE 6.01-D, conflict with, result in a breach of
or constitute (with or without notice or lapse of time or both) a default under
any material Requirement of Law or under any of the Transaction Documents or any
other material Contractual Obligation of the Borrower or any Subsidiary of the
Borrower, or require the termination of any material Contractual Obligation,
(iv) result in or require the creation or imposition of any Lien whatsoever upon
any of the Property or assets of the Borrower or any Restricted Subsidiary,
other than Liens contemplated by the Loan Documents, or (v) require any approval
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of the Borrower's or any such Restricted Subsidiary's shareholders that has not
been obtained.
(e) GOVERNMENTAL CONSENTS, ETC. Except as set forth on SCHEDULE
6.01-E, the execution, delivery and performance of each of the Transaction
Documents to which the Borrower or any of the Restricted Subsidiaries is a party
do not and shall not require any registration with, consent or approval of, or
notice to, or other action to, with or by any Governmental Authority, except (i)
filings, consents or notices which have been made, obtained or given, or, in a
timely manner, shall be made, obtained, or given and (ii) filings necessary to
perfect security interests in the Collateral. The Borrower is not subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, or the Investment Company Act of 1940,
or any other federal or state statute or regulation which limits its ability to
incur indebtedness or its ability to consummate the transactions contemplated in
the Transaction Documents.
(f) ACCOMMODATION OBLIGATIONS; CONTINGENCIES. Except as set
forth on SCHEDULE 1.01.3, none of the Borrower or any of the Borrower's
Subsidiaries has any Accommodation Obligation, contingent liability or liability
for any Taxes, long-term lease or commitment, not reflected in its financial
statements delivered to the Agent on or prior to the Closing Date or otherwise
disclosed to the Agent and the Lenders in the other Schedules hereto, which has
or is reasonably likely to have a Material Adverse Effect, except as permitted
pursuant to SECTION 9.05.
(g) RESTRICTED JUNIOR PAYMENTS. Neither the Borrower nor any
Restricted Subsidiary nor Hexcel Lyon has directly or indirectly declared,
ordered, paid or made or set apart any sum or Property for any Restricted Junior
Payment or agreed to do so, except as permitted pursuant to SECTION 9.06
hereof.
(h) FINANCIAL POSITION. (i) Borrower's PRO FORMA estimated
balance sheet referred to in SECTION 5.01(a)(ii) and each of Borrower's
business plans and all other financial projections and related materials and
documents delivered to the Lenders pursuant hereto were prepared in good faith
and are based upon facts and assumptions that were reasonable in light of the
then current and foreseeable business conditions and prospects of the Borrower
and represented management's opinion of the Borrower's projected financial
performance based on the information available to the Borrower at the time so
furnished.
(ii) The Initial Projections were prepared in good faith and are
based upon facts and assumptions that were reasonable in light of the then
current and foreseeable business conditions and prospects of the Borrower and
represented
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management's opinion of the projected financial performance of the Borrower, the
Restricted Subsidiaries and the Existing Joint Ventures based on the information
available to the Borrower at the time so furnished.
(i) LITIGATION; ADVERSE EFFECTS. Except as set forth in
SCHEDULE 6.01-I, (A) there is no action, suit, audit, proceeding,
investigation or arbitration (or series of related actions, suits, proceedings,
investigations or arbitrations) before or by any Governmental Authority or
private arbitrator pending or, to the knowledge of the Borrower, threatened
against the Borrower, any of the Restricted Subsidiaries or Hexcel Lyon or any
Property of any of them (i) challenging the validity or the enforceability of
any of the Transaction Documents, (ii) which has a reasonable possibility of
resulting in or, if instituted after the Closing Date, is reasonably likely to
result in the suspension or debarment of the Borrower or any of the Restricted
Subsidiaries from any federal government contracting program or (iii) which has
had, shall have or is reasonably likely to have a Material Adverse Effect and
(B) none of the Borrower or any of the Borrower's Subsidiaries is (i) in
violation of any applicable Requirements of Law which violation shall have or is
reasonably likely to result in a Material Adverse Effect, or (ii) subject to or
in default with respect to any final judgment, writ, injunction, restraining
order or order of any nature, decree, rule or regulation of any court or
Governmental Authority, in each case which shall have or is reasonably likely to
have a Material Adverse Effect.
(j) NO MATERIAL ADVERSE CHANGE. As of the Closing Date, no
material change in the condition (financial or otherwise), business,
performance, assets, operations or prospects of the Borrower or any Guarantor,
individually, or of the Borrower and its Subsidiaries, taken as a whole, shall
have occurred that would (i) cause the Initial Projections to be unreasonable in
light of then current circumstances, (ii) have a material adverse effect on the
ability of the Borrower and the Guarantors to perform their obligations under
the Loan Documents or (iii) have a material adverse affect on the ability of the
Lenders, the Issuing Banks or the Agent to enforce the Loan Documents. After
the Closing Date, no change in the condition (financial or otherwise), business,
performance, assets, operations or prospects of the Borrower or any Guarantor,
individually, or of the Borrower and its Subsidiaries, taken as a whole, shall
have occurred since the Closing Date, which change has had or is reasonably
likely to have a Material Adverse Effect.
(k) PAYMENT OF TAXES. All tax returns and reports of each of the
Borrower, the Restricted Subsidiaries and Hexcel Lyon required to be filed have
been timely filed, and, except as otherwise provided under the Plan of
Reorganization and set forth
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on SCHEDULE 6.01-K hereto, all taxes, assessments, fees and other governmental
charges thereupon and upon their respective Property, assets, income and
franchises which are shown in such returns or reports to be due and payable have
been paid, other than such taxes, assessments, fees and other governmental
charges (i) which are being contested in good faith by the Borrower, such
Restricted Subsidiary or Hexcel Lyon, as the case may be, by appropriate
proceedings diligently instituted and conducted and without danger of any
material risk to the Collateral and
(ii) with respect to which a reserve or other appropriate provision, if any, as
is required in conformity with GAAP shall have been made. The Borrower has no
knowledge of any proposed tax assessment against the Borrower, any of the
Restricted Subsidiaries or Hexcel Lyon that shall have or is reasonably likely
to have a Material Adverse Effect.
(l) PERFORMANCE. None of the Borrower, any of Restricted
Subsidiaries or Hexcel Lyon has received notice or has actual knowledge that (i)
it is in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any Contractual Obligation
applicable to it or (ii) any condition exists which, with the giving of notice
or the lapse of time or both, would constitute a default with respect to any
such Contractual Obligation, in each case, except where such default or
defaults, if any, shall not have or are not reasonably likely to have a Material
Adverse Effect.
(m) DISCLOSURE. The representations and warranties of each of
the Borrower and the Restricted Subsidiaries contained in the Transaction
Documents, and all schedules, certificates and documents delivered to the Agent
and the Lenders pursuant to the terms hereof and the other Transaction Documents
do not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements contained herein or
therein, in light of the circumstances under which they were made, not
misleading. The Borrower has not intentionally withheld any fact from the
Agent, any Issuing Bank or any Lender in regard to any matter which shall have
or is reasonably likely to have a Material Adverse Effect.
(n) REQUIREMENTS OF LAW. Each of the Borrower, the Restricted
Subsidiaries and Hexcel Lyon is in compliance with all Requirements of Law
applicable to it and its business, in each case where the failure to so comply
individually or in the aggregate shall have or is reasonably likely to have a
Material Adverse Effect.
(o) ENVIRONMENTAL MATTERS. (i) Except as set forth in SCHEDULE
6.01-O, and, solely with respect to the Unrestricted Subsidiaries, to the
extent the Borrower knows or reasonably should know:
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(A) the operations of the Borrower and the Borrower's Subsidiaries
comply in all material respects with all applicable Environmental, Health
or Safety Requirements of Law;
(B) the Borrower and each of the Borrower's Subsidiaries have
obtained or have taken appropriate steps, as required by Environmental,
Health or Safety Requirements of Law, to obtain all material
environmental, health and safety Permits necessary for their respective
operations, and all such Permits are in good standing and each of the
Borrower and each of the Borrower's Subsidiaries are currently in
compliance in all material respects with all terms and conditions of such
Permits;
(C) none of the Borrower or the Borrower's Subsidiaries or any of
their respective operations or present or past Property are subject to any
investigation by, or any judicial or administrative proceeding, order,
judgment, settlement, decree, or other agreement alleging or addressing
(i) a material violation of any Environmental, Health or Safety
Requirement of Law; (ii) any Remedial Action; or (iii) any material Claims
or Liabilities and Costs arising from the Release or threatened Release of
a Contaminant into the environment nor has the Borrower or the Borrower's
Subsidiaries received any notice of the foregoing;
(D) none of the Borrower or the Borrower's Subsidiaries is the
owner or operator of any Property which has any of the following which
could result in a material liability:
(i) any past or present on-site generation, treatment,
recycling, storage or disposal of any hazardous waste, as that term
is defined under 40 C.F.R. Part 261 or any state or local
equivalent;
(ii) any past or present landfill, waste-pile, underground
storage tank or surface impoundment;
(iii) any asbestos-containing material; or
(iv) any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers or other Equipment;
(E) no Environmental Lien has attached to any Property of the
Borrower or any of the Borrower's Subsidiaries;
(F) there have been no Releases of any Contaminants into the
environment in reportable quantities by the
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Borrower or the Borrower's Subsidiaries that could result in a material
liability of the Borrower or any of the Borrower's Subsidiaries;
(G) the Borrower and the Borrower's Subsidiaries have no material
contingent liability in connection with any Release or threatened Release
of any Contaminants into the environment;
(H) the Borrower and the Borrower's Subsidiaries have not sent or
directly arranged for the transport of any waste to any site listed or
proposed for listing on the National Priorities List ("NPL") pursuant to
CERCLA or on the Comprehensive Environmental Response Compensation
Liability Information System List ("CERCLIS"), or any similar state
list;
(I) none of the Borrower's or the Borrower's Subsidiaries' present
or past Property is listed or proposed for listing on the NPL pursuant to
CERCLA or on the CERCLIS or any similar state list of sites requiring
Remedial Action, and the Borrower and the Borrower's Subsidiaries are
unaware of any conditions on such Property which would qualify such
Property for inclusion on any such list.
(J) none of the Borrower or the Borrower's Subsidiaries is subject
to any Environmental Property Transfer Act as a result of the transactions
contemplated by the Loan Documents or to the extent such acts are
applicable to any such property, the Borrower has fully complied with the
requirements of such acts.
(ii) the Borrower and its Subsidiaries, taken as a whole, have not
been, and have no reason to believe that they shall be, subject to Liabilities
and Costs arising out of or relating to environmental, health or safety matters
(including, but not limited to, any Release of Contaminants) that have or will
result in cash expenditures (A) by the Borrower and the Restricted Subsidiaries
in excess of $4,000,000 in the aggregate in Fiscal Year 1995, $1,900,000 in the
aggregate in Fiscal Year 1996, and $1,300,000 in Fiscal Year 1997 and (B) by
Hexcel Lyon in excess of the Dollar Equivalent of $1,000,000 in the aggregate in
Fiscal Year 1995, the Dollar Equivalent of $500,000 in the aggregate in Fiscal
Year 1996, and the Dollar Equivalent of $500,000 in Fiscal Year 1997.
(p) ERISA MATTERS. Neither the Borrower nor any ERISA Affiliate
maintains or contributes to any Plan other than those listed on SCHEDULE 6.01-P
hereto. With respect to each Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code as currently in effect, the Borrower
or an ERISA Affiliate has received or is in the process of seeking, a
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favorable determination letter that the Plan is so qualified and that each trust
related to any such Plan is exempt from federal income tax under Section 501(a)
of the Internal Revenue Code as currently in effect. Neither Borrower nor any
ERISA Affiliate knows of any reason why such Plans or trusts are not qualified.
Except as disclosed in SCHEDULE 6.01-P, neither the Borrower nor any of its
Subsidiaries maintains or contributes to any employee welfare benefit plan
within the meaning of Section 3(l) of ERISA which provides benefits to employees
after termination of employment other than as required by Section 601 of ERISA.
To the extent the Borrower knows or reasonably should know, the Borrower and all
of its ERISA Affiliates are in compliance in all material respects with the
responsibilities, obligations or duties imposed on them by ERISA, the Internal
Revenue Code and regulations promulgated thereunder with respect to all Plans.
No Benefit Plan has incurred any accumulated funding deficiency (as defined in
Sections 302(a)(2) of ERISA and 412(a) of the Internal Revenue Code) whether or
not waived which would subject the Borrower or any ERISA Affiliate to a
liability in excess of $1,000,000. Except as disclosed in SCHEDULE 6.01-P,
neither the Borrower nor any ERISA Affiliate nor, to the knowledge of the
Borrower, any fiduciary of any Plan which is not a Multiemployer Plan (i) has
engaged in a nonexempt prohibited transaction described in Sections 406 of ERISA
or 4975 of the Internal Revenue Code or (ii) has taken or failed to take any
action which would constitute or result in a Termination Event which would be
subject to the Borrower or any ERISA Affiliate to a liability in excess of
$1,000,000. Neither the Borrower nor any ERISA Affiliate has incurred any
potential liability under Sections 4063, 4064, 4069, 4204 or 4212(c) of ERISA in
excess of $1,000,000. Neither the Borrower nor any ERISA Affiliate has incurred
any liability to the PBGC which remains outstanding which would subject the
Borrower or any ERISA Affiliate to a liability in excess of $1,000,000. There
are no premium payments which have become due to the PBGC which are unpaid.
Schedule B to the most recent annual report filed with the IRS with respect to
each Benefit Plan and furnished to the Agent is complete and accurate. Since
the date of each such Schedule B, there has been no material adverse change in
the funding status or financial condition of the Benefit Plan relating to such
Schedule B. Neither the Borrower nor any ERISA Affiliate has (i) failed to
make a required contribution or payment to a Multiemployer Plan or (ii) made a
complete or partial withdrawal under Sections 4203 or 4205 of ERISA from a
Multiemployer Plan. Except as disclosed in SCHEDULE 6.01-P, neither the
Borrower nor any ERISA Affiliate has failed to make a required installment or
any other required payment under Section 412 of the Internal Revenue Code on or
before the due date for such installment or other payment. Neither the Borrower
nor any ERISA Affiliate is required to provide security to a Benefit Plan under
Section 401(a)(29) of the Internal Revenue Code due to a Plan amendment that
results in an increase in current liability for the plan year. Except as
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disclosed on SCHEDULE 6.01-P and to the extent the Borrower knows or
reasonably should know, the Borrower does not have, by reason of the
transactions contemplated hereby any obligation to make any payment to any
employee pursuant to any Plan or existing contract or arrangement. The Borrower
has made available to the Agent copies of all of the following: each Benefit
Plan and related trust agreement (including all amendments to such Plan and
trust) in existence, or for which the Borrower or any ERISA Affiliate has taken
any corporate action to authorize the adoption thereof, as of the Closing Date
and in respect of which the Borrower or any ERISA Affiliate is currently an
"employer" as defined in section 3(5) of ERISA, and the most recent summary plan
description, actuarial report, determination letter issued by the IRS and Form
5500 filed in respect of each such Benefit Plan in existence; a listing of all
of the Multiemployer Plans currently contributed to by the Borrower or any ERISA
Affiliate with the aggregate amount of the most recent annual contributions
required to be made by the Borrower and all ERISA Affiliates to each such
Multiemployer Plan, any information which has been provided to the Borrower or
an ERISA Affiliate regarding withdrawal liability under any Multiemployer Plan
and the collective bargaining agreement pursuant to which such contribution is
required to be made; each employee welfare benefit plan within the meaning of
Section 3(l) of ERISA which provides benefits to employees of the Borrower or
any of its Subsidiaries after termination of employment other than as required
by Section 601 of ERISA, the most recent summary plan description for such plan
and the aggregate amount of the most recent annual payments made to terminated
employees under each such plan.
(q) FOREIGN EMPLOYEE BENEFIT MATTERS. To the extent the
Borrower knows or should reasonably know, each Foreign Employee Benefit Plan is
in compliance in all material respects with all Requirements of Law applicable
thereto and the respective requirements of the governing documents for such
Plan. The aggregate of the liabilities to provide all of the accrued benefits
under any Foreign Pension Plan does not exceed the current fair market value of
the assets held in the trust or other funding vehicle for such Plan by an amount
in excess of $1,000,000. With respect to any Foreign Employee Benefit Plan
maintained by the Borrower, any of its subsidiaries or any ERISA Affiliate
(other than a Foreign Pension Plan), reasonable reserves have been established
in accordance with prudent business practice or where required by ordinary
accounting practices in the jurisdiction in which such Plan is maintained. The
aggregate unfunded liabilities, after giving effect to any reserves for such
liabilities, with respect to such Plans are not material. There are no actions,
suits or claims (other than routine claims for benefits) pending or threatened
against the Borrower, any of its subsidiaries or any ERISA Affiliate with
respect to any Foreign Employee Benefit Plan that would subject
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the Borrower or an ERISA Affiliate to a liability in excess of $1,000,000.
(r) LABOR MATTERS. (i) Except as set forth in SCHEDULE 6.01-R,
as of the Closing Date there is no collective bargaining agreement covering any
of the employees of the Borrower or any Restricted Subsidiary. To the knowledge
of the Borrower, except as set forth on SCHEDULE 6.01-R, as of the Closing
Date no attempt to organize the employees of Borrower or any Restricted
Subsidiary is pending, threatened, planned or contemplated.
(ii) Set forth in SCHEDULE 6.01-R or SCHEDULE 6.01-P, as the
case may be, is a list, as of the Closing Date, of all material consulting
agreements, executive employment agreements, executive compensation plans,
deferred compensation agreements, employee pension plans or retirement plans,
employee profit sharing plans, employee stock purchase and stock option plans,
severance plans, group life insurance, hospitalization insurance or other
employee benefit plans of Borrower and its Restricted Subsidiaries providing for
benefits for employees of Borrower and its Subsidiaries.
(s) SECURITIES ACTIVITIES. None of the Borrower or any of the
Borrower's Subsidiaries is engaged in the business of extending credit for the
purpose of purchasing or carrying Margin Stock.
(t) SOLVENCY. After giving effect to the transactions
contemplated in the Transaction Documents, the payment and accrual of all
Transaction Costs payable on the Closing Date, the Loans to be made on the
Closing Date or such other date as Loans requested hereunder are made and the
disbursement of the proceeds of such Loans pursuant to the Borrower's
instructions, each of the Borrower and the Borrower's Subsidiaries is Solvent.
(u) PATENTS, TRADEMARKS, PERMITS, ETC.; GOVERNMENT APPROVALS.
(i) The Borrower, each of the Restricted Subsidiaries and Hexcel Lyon own, are
licensed or otherwise have the lawful right to use, or have all permits and
other governmental approvals, patents, trademarks, service marks, trade names,
copyrights, technology, know-how and processes used in or necessary for the
conduct of their businesses as currently conducted except where the failure to
do so would not have or be reasonably likely to have a Material Adverse Effect.
Except as set forth on SCHEDULE 6.01-U, no claims are pending or, to the best
of Borrower's knowledge following diligent inquiry, threatened that the
Borrower, any of the Restricted Subsidiaries or Hexcel Lyon is infringing upon
the rights of any Person with respect to such permits and other governmental
approvals, patents, trademarks, service marks, trade names, copyrights,
technology, know-how and processes. Except as set forth on
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SCHEDULE 6.01-U, the Borrower has no knowledge after diligent inquiry of any
use by any Person that infringes upon the rights of the Borrower, any of the
Restricted Subsidiaries or Hexcel Lyon in such patents, trademarks, service
marks, trade names, copyrights, technology, know-how and processes.
(ii) Except for Liens granted to the Agent for the benefit of the
Agent, the Issuing Banks, the Lenders and the other Holders, the transactions
contemplated by the Loan Documents shall not impair the ownership of or rights
under (or the license or other right to use, as the case may be) any permits and
governmental approvals, patents, trademarks, trade names, copyrights,
technology, know-how or processes by the Borrower, any of the Restricted
Subsidiaries or Hexcel Lyon in any manner which shall have or is reasonably
likely to have a Material Adverse Effect.
(v) ASSETS AND PROPERTIES. Each of the Borrower, the Restricted
Subsidiaries and Hexcel Lyon has good, and in the case of Real Property,
marketable title to all of its assets and Property (tangible and intangible)
owned by it (other than the Real Property located in Schuylkill County,
Pennsylvania with respect to which Borrower has an equitable interest pursuant
to that certain Installment Sale Agreement dated June 13, 1980 between Borrower
and Schuylkill County Industrial Development Authority ("SCIDA"), as amended
by that certain Amendment to Installment Sale Agreement dated March 15, 1988
among SCIDA, Schuylkill Economic Development Corporation and Borrower) or a
valid leasehold interest in all of its leased assets (except insofar as
marketability may be limited by any laws or regulations of any Governmental
Authority affecting such assets), and all such assets and Property are free and
clear of all Liens, except Liens securing the Obligations and Liens permitted
under SECTION 9.03. SCHEDULE 6.01-V contains a true and complete list of
all of the Real Property owned in fee simple by each of the Borrower and the
Restricted Subsidiaries as of the Closing Date with an Appraised Value in excess
of $250,000, and a true and complete list of all Leases in effect on the Closing
Date with respect to which the annual rental payments thereunder are in excess
of $250,000. All material assets and Property owned by or leased to the
Borrower and/or each such Restricted Subsidiary or Hexcel Lyon and required to
be used by the Borrower and/or each such Restricted Subsidiary or Hexcel Lyon in
their normal operations are in adequate operating condition and repair or in the
process of being repaired, reasonable and ordinary wear and tear excepted, and
are free and clear of any known defects except such defects that do not
substantially interfere with the continued use thereof in the conduct of normal
operations. Except for Liens granted to the Agent for the benefit of the Agent,
the Issuing Banks, the Lenders and the other Holders, neither this Agreement nor
any other Transaction Document, nor any transaction contemplated herein or
therein, shall affect any
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right, title or interest of the Borrower, any Restricted Subsidiary or Hexcel
Lyon in and to any of such assets in a manner that has or is reasonably likely
to have a Material Adverse Effect.
(w) INSURANCE. SCHEDULE 6.01-W accurately sets forth as of the
Closing Date all insurance policies and programs (including self-insurance
programs) currently in effect with respect to the respective assets and business
of the Borrower and the Restricted Subsidiaries, specifying for each such policy
and program, (i) the amount thereof, (ii) the risks insured against thereby,
(iii) the name of the insurer, if any, and each insured party thereunder, (iv)
the policy or other identification number thereof, (v) the expiration date
thereof and (vi) the annual premium, if any, with respect thereto. Such
insurance policies and programs are, except as disclosed on SCHEDULE 6.01-W,
in amounts sufficient to cover the replacement value of the respective assets of
the Borrower and the Restricted Subsidiaries subject to applicable deductibles
and co-payment amounts and self-insurance.
(x) PLEDGE OF COLLATERAL. The grant and perfection of the
security interests in the Capital Stock of each of the Borrower's Subsidiaries
constituting a portion of the Collateral for the benefit of the Agent, the
Issuing Banks, the Lenders and the other Holders, as contemplated by the terms
of the Loan Documents, is not made in violation of the registration provisions
of the Securities Act, any applicable provisions of other federal securities
laws, state securities or "Blue Sky" law, foreign securities law, or applicable
general corporation law or in violation of any other Requirement of Law.
(y) TRANSACTIONS WITH AFFILIATES. SCHEDULE 6.01-Y lists as of
the Closing Date each and every existing agreement and arrangement that any of
the Borrower or the Borrower's Subsidiaries has entered into with any of their
respective Affiliates.
(z) BANK ACCOUNTS. SCHEDULE 6.01-Z sets forth as of the date
hereof (i) all of the Borrower's and the Restricted Subsidiaries' Collection
Account Banks and (ii) all other banks where funds are from time to time
deposited, including the Lockboxes, their addresses and the relevant account
numbers, and with respect to the banks referred to in clause (ii) the Borrower
has disclosed all additions, subtractions and modifications to such Schedule to
the Agent and the Lenders.
(aa) TERMINATION OF THE DIP FACILITY. The obligations of the
Borrower and its Subsidiaries under the DIP Facility have been terminated, all
non-contingent obligations thereunder have been paid in full (except for the
outstanding letters of credit set forth on SCHEDULE 5.01-J hereto to the
extent secured by and
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not replaced with Letters of Credit) and the Liens on the Property of the
Borrower and its Subsidiaries securing the DIP Facility have been terminated.
(bb) GOVERNMENT CONTRACTS. (i) None of the Borrower or any of the
Restricted Subsidiaries or any of their respective Affiliates is party to any
Contractual Obligation or subject to any Requirement of Law as a result of any
conflict of interest by, between or among the Borrower, such Restricted
Subsidiaries or such Affiliates or otherwise that would result in the
termination of any Government Contract or that would impose any material
limitation on the Borrower's or such Restricted Subsidiary's ability to perform
such contract or to continue its business as presently conducted and proposed to
be conducted.
(ii) No payment has been made by the Borrower or any of the
Restricted Subsidiaries, or by any Person authorized to act on their behalf, to
any Person in connection with any Government Contract of the Borrower or any
such Restricted Subsidiary, which payment would be a material violation of
applicable procurement laws or regulations or of the Foreign Corrupt Practices
Act or of any other material Requirement of Law.
(iii) With respect to each Government Contract to which the Borrower
or any of the Restricted Subsidiaries is a party: (A) all representations and
certifications executed, acknowledged or set forth in or pertaining to such
Government Contract were complete and correct in all material respects as of
their effective date, and the Borrower and each such Restricted Subsidiary have
complied in all material respects with all such representations and
certifications; (B) except as set forth on SCHEDULE 6.01-BB, neither the
United States Government nor any prime contractor, subcontractor or other Person
has notified Borrower or any such Restricted Subsidiary, either orally or in
writing, that Borrower or such Restricted Subsidiary has breached or violated
any material Requirement of Law, or any material certificate, representation,
clause, provision or requirement pertaining to such Government Contract; and (C)
no termination for convenience, termination for default, cure notice or show
cause notice is currently in effect pertaining to any such Government Contract.
(iv) Except as set forth on SCHEDULE 6.01-BB, (A) none of the
Borrower or any of the Restricted Subsidiaries or any of their respective
directors, officers or employees is (or during the last three (3) years has
been) under administrative, civil or criminal investigation or indictment by any
Governmental Authority, with respect to any alleged irregularity, misstatement
or omission arising under or relating to any Government Contract; and (B) during
the last three (3) years, none of the Borrower or any of the Restricted
Subsidiaries has conducted or initiated any internal investigation or made a
voluntary disclosure to the
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United States Government, with respect to any alleged irregularity, misstatement
or omission arising under or relating to a Government Contract, in each case
except (with respect to such matters occurring after the Closing Date) as
disclosed to the Lenders.
(v) Except as set forth on SCHEDULE 6.01-BB, there exist (A) no
outstanding material claims against the Borrower or any of the Restricted
Subsidiaries, either by the United States Government or by any prime contractor,
subcontractor, vendor or other third party, arising under or relating to any
Government Contract; and (B) no material disputes between the Borrower or any of
the Restricted Subsidiaries and the United States Government under the Contract
Disputes Act or any other Federal statute or between the Borrower or any of the
Restricted Subsidiaries and any prime contractor, subcontractor or vendor
arising under or relating to any such Government Contract.
(vi) None of the Borrower or any of the Restricted Subsidiaries or
any of their respective directors, officers or employees is (or during the last
three (3) years has been) suspended or debarred from doing business with the
United States Government or is (or during such period was) the subject of a
finding of nonresponsibility or ineligibility for United States Government
contracting.
(cc) PLAN OF REORGANIZATION. The Borrower has received the
Confirmation Order and the Confirmation Order has become a Final Order, unless
receipt of the Final Order has been waived with the consent of the Lenders. All
other conditions precedent to the Plan of Reorganization have been satisfied or,
with the consent of the Lenders, waived by the Borrower and the Equity
Committee, and the Plan of Reorganization has become effective in accordance
with its terms.
(dd) RIGHTS OFFERING. The Rights Offering has been duly
authorized by all necessary corporate action of the Borrower, and, when issued
in accordance with such authorization and delivered by the Borrower, the Rights
will constitute legal, valid, binding obligations of the Borrower, enforceable
in accordance with their terms.
(ee) FINANCIAL STATEMENTS. The (i) audited consolidated balance
sheets of the Borrower and its Subsidiaries as at December 31, 1993 and December
31, 1992 and the related audited consolidated statements of income and of cash
flows for the years then ended and (ii) unaudited consolidated balance sheet of
the Borrower and its Subsidiaries as at July 3, 1994 and the related
consolidated statements of income and cash flows for the periods then ended,
including the related notes and schedules thereto, are complete and correct in
all material respects, have been prepared in accordance with GAAP, and present
fairly the
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consolidated financial position, results of operations and cash flows of the
Borrower and its Subsidiaries as at the dates and for the periods indicated.
(ff) SEC FILINGS. As of their respective dates, the Borrower's
annual Report on Form 10-K for its fiscal year ended December 31, 1993 and its
quarterly reports on Form 10-Q for quarterly periods ending after that date
(collectively, the "SEC Documents") were complete and correct in all material
respects and complied in all material respect with the requirements of the
Securities Exchange Act, and the rules and regulations of the Securities and
Exchange Commission (the "SEC") promulgated thereunder applicable to such SEC
Documents. None of the SEC Documents contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading at the date such SEC Documents were
filed with the SEC.
(gg) STANDBY COMMITMENT DOCUMENTS. All of the representations
and warranties of the Borrower contained in the Standby Commitment Documents
are true and correct as of the Closing Date.
(hh) PAYMENTS ON THE REORGANIZATION EFFECTIVE DATE. The amounts
set forth in the Sources and Uses are the only payments required to be made by
the Borrower on the Reorganization Effective Date.
ARTICLE VII
REPORTING COVENANTS
The Borrower covenants and agrees that so long as any Revolving
Credit Commitment is outstanding and thereafter until payment in full of all of
the Obligations, unless the Requisite Lenders shall otherwise give prior written
consent thereto:
7.01. FINANCIAL STATEMENTS. The Borrower shall maintain, and
shall cause each of the Borrower's Subsidiaries to maintain, a system of
accounting established and administered in accordance with sound business
practices to permit preparation of consolidated and consolidating financial
statements in conformity with GAAP, and each of the financial statements
described below shall be prepared from such system and records. The Borrower
shall deliver or cause to be delivered to the Agent and the Lenders:
(a) MONTHLY REPORTS. As soon as available and in any event
within thirty (30) days after the end of each fiscal month in each Fiscal Year
(except for the monthly reports for January,
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1995 which shall be delivered within forty-five (45) days after the end of such
fiscal month), (i) balance sheets of each of (A) the Borrower and the Restricted
Subsidiaries and (B) the Unrestricted Subsidiaries and (ii) consolidating
balance sheet of the Borrower and its Subsidiaries as at the end of such period
and the related statements of income and cash flow of each of the Persons
described in clauses (i) and (ii) above for such fiscal month and for the period
from the beginning of the then current Fiscal Year to the end of such fiscal
month, and for the corresponding period during the previous Fiscal Year together
with the comparison to the current annual budget for such period, all certified
by the chief financial officer, treasurer or controller of the Borrower as
fairly presenting the financial position of such Persons as at the dates
indicated, the results of their operations and cash flow for the periods
indicated in accordance with GAAP, subject to normal year end adjustments.
(b) QUARTERLY REPORTS. As soon as available and in any event
within forty-five (45) days after the end of each of the first three fiscal
quarters of each Fiscal Year, (i) balance sheets of each of (A) the Borrower and
Restricted Subsidiaries, (B) the Unrestricted Subsidiaries and (C) Hexcel Lyon
and (ii) the consolidating balance sheets of the Borrower and its Subsidiaries
as at the end of such period and the related statements of income and cash flow
of each of the Persons described in clauses (i) and (ii) above for such fiscal
quarter and for the period from the beginning of the then current Fiscal Year to
the end of such fiscal quarter, and for the corresponding period during the
previous Fiscal Year together with the comparison to the current annual budget
for such period, all certified by the chief financial officer, treasurer or
controller of the Borrower as fairly presenting the financial position of such
Persons as at the dates indicated and the results of their operations and cash
flow for the periods indicated in accordance with GAAP (except with respect to
Hexcel Lyon, which shall be in conformity with general French accounting
standards), subject to normal year end adjustments.
(c) ANNUAL REPORTS. As soon as available and in any event within
ninety (90) days after the end of each Fiscal Year, (i) audited financial
statements of each of (A) the Borrower and the Restricted Subsidiaries, (B)
Hexcel Lyon and (C) the Borrower and its Subsidiaries certified by independent
certified public accountants of recognized national standing acceptable to the
Lenders, which report shall be certified without qualification or modification
as to the scope of the audit and as to the Borrower being a going concern and
shall state that such financial statements fairly present the financial position
of the Persons described in clauses (A) through (C) above as at the dates
indicated and the results of their operations and cash flow for the periods
indicated in conformity with GAAP (except with respect to Hexcel Lyon, which
shall be in conformity with general French
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accounting standards) applied on a basis consistent with prior years (except for
changes with which such independent certified public accountants shall concur
and which shall have been disclosed in the notes to the financial statements)
and that the examination by such accountants in connection with such
consolidated and combined financial statements has been made in accordance with
generally accepted auditing standards and (ii) annual consolidating financial
statements of the Borrower and its Subsidiaries prepared by the Company.
(d) OFFICER'S CERTIFICATE. Together with each delivery of any
financial statement pursuant to PARAGRAPHS (b) AND (c) of this SECTION 7.01,
an Officer's Certificate of the Borrower substantially in the form of EXHIBIT G
(the "COMPLIANCE CERTIFICATE"), signed by the Borrower's chief financial
officer, treasurer or controller and setting forth calculations for the period
then ended for SECTION 3.01(b) (including, without limitation, calculations of
Net Cash Proceeds and Mandatory Prepayments), the negative covenants of
ARTICLE IX and the financial covenants of ARTICLE X.
(e) BUSINESS PLANS; FINANCIAL PROJECTIONS. As soon as available
and in any event within thirty (30) days prior to the end of each Fiscal Year, a
combined annual budget (in the format customarily utilized by the Borrower for
making financial projections) of (A) the Borrower and the Restricted
Subsidiaries, (B) the Unrestricted Subsidiaries and (C) the Borrower and its
Subsidiaries for the succeeding Fiscal Year, displaying on a monthly basis
anticipated balance sheets as at the end of such period and the related
statements of income and cash flow of each of the Persons described in clauses
(A) through (C), and on a monthly basis availability forecasts for each of the
Borrower and the Restricted Subsidiaries.
(f) ACCOUNTANT'S STATEMENT. Together with each delivery of the
financial statements referred to in SECTION 7.01(c), a written statement of
the firm of independent certified public accountants of recognized national
standing acceptable to the Lenders giving the report stating (i) that their
audit examination has included a review of the terms hereof as it relates to
accounting matters and (ii) whether, in connection with their audit examination,
any condition or event which constitutes an Event of Default or Default has come
to their attention, and if such condition or event has come to their attention,
specifying the nature and period of existence thereof. The statement referred
to above shall be accompanied by a copy of the management letter or any similar
report delivered to the Borrower or to any officer or employee thereof by such
accountants in connection with such financial statements.
(g) OPENING BALANCE SHEET. As soon as available and in any
event within sixty (60) days after the Closing Date,
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balance sheets of each of (A) the Borrower and Restricted Subsidiaries, (B) the
Unrestricted Subsidiaries and (C) the Borrower and its Subsidiaries as at
January 29, 1995 giving effect to the transactions contemplated by the Sources
and Uses.
7.02. BORROWING BASE CERTIFICATE. Promptly and in any event
within five (5) days (or up to an additional five (5) days with the consent of
the Agent) after the close of each fiscal week the Borrower shall provide the
Agent and the Lenders with a Borrowing Base Certificate, together with such
supporting documents as the Agent requests (including weekly updated information
concerning Receivables of the Borrower and monthly Inventory reports of the
Borrower by the fifteenth day of each month for the preceding month or more
frequently at the Agent's discretion), all certified as being true, accurate and
complete by the chief financial officer, treasurer or controller of the
Borrower.
7.03. EVENTS OF DEFAULT. Promptly upon (and, in any event,
within five (5) Business Days of) any of the chief executive officer, chief
operating officer, chief financial officer, treasurer or controller of the
Borrower obtaining knowledge (i) of any condition or event which constitutes an
Event of Default or Default, or becoming aware that any Lender, any Issuing Bank
or the Agent has given any written notice with respect to a claimed Event of
Default or Default, (ii) that any Person has given any written notice to the
Borrower or any Subsidiary of the Borrower or taken any other action with
respect to a claimed default or event or condition of the type referred to in
SECTION 11.01(e), (iii) of any condition or event which has or is reasonably
likely to have a Material Adverse Effect or materially and adversely affect the
value of, or the Agent's interest in, the Collateral, the Borrower shall deliver
to the Agent and the Lenders an Officer's Certificate specifying (A) the nature
and period of existence of any such claimed default, Event of Default, Default,
condition or event, (B) the notice given or action taken by such Person in
connection therewith, and (C) the remedial action the Borrower has taken, is
taking and proposes to take with respect thereto or (iv) the occurrence of an
event (other than the consummation of the Rights Offering) which is likely to
result in a Change of Control.
7.04. LAWSUITS. (i) Promptly upon (and in any event, within ten
(10) Business Days of) the Borrower obtaining knowledge of the institution of,
or written threat of, any action, suit, proceeding, governmental investigation
or arbitration against or affecting the Borrower or any of the Restricted
Subsidiaries or any Property of the Borrower or any of the Borrower's
Subsidiaries not previously disclosed pursuant to SECTION 6.01(i), which
action, suit, proceeding, governmental investigation or arbitration exposes, or
in the case of multiple actions, suits, proceedings, governmental investigations
or
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arbitrations arising out of the same general allegations or circumstances which
expose, in the Borrower's reasonable judgment, the Borrower or any of the
Restricted Subsidiaries to liability in an amount aggregating $1,000,000 or more
in excess of applicable insurance coverage, the Borrower shall give written
notice thereof to the Agent, the Issuing Banks and the Lenders and provide such
other information as may be reasonably available to enable each Lender, the
Issuing Banks and Agent and its counsel to evaluate such matters; and (ii) in
addition to the requirements set forth in clause (i) of this SECTION 7.04, the
Borrower upon request of the Agent or the Requisite Lenders shall promptly give
written notice of the status of any action, suit, proceeding, governmental
investigation or arbitration covered by a report delivered pursuant to clause
(i) above and provide such other information as may be reasonably available to
it (subject to applicable attorney-client privilege) to enable each Lender, each
Issuing Bank and the Agent and its counsel to evaluate such matters.
7.05. INSURANCE. As soon as practicable and in any event within
thirty (30) days after the end of each Fiscal Year ending after the Closing Date
and within thirty (30) days of the renewal of any insurance policy, the Borrower
shall deliver to the Agent, and the Lenders (i) a report in form and substance
satisfactory to the Agent, and the Lenders outlining all material insurance
coverage (including any self-insurance provided by the Borrower) maintained as
of the date of such report by the Borrower and the Restricted Subsidiaries and
the duration of such coverage, (ii) to the extent such insurance coverage is not
provided by the Borrower, an insurance broker's statement that all premiums then
due and payable with respect to such coverage have been paid and (iii) evidence
that the Agent is named as loss payee or additional insured under each insurance
policy to the extent required pursuant to SECTION 8.07.
7.06. ERISA NOTICES. The Borrower shall deliver or cause to be
delivered to the Agent, at the Borrower's expense, the following information and
notices as soon as reasonably possible, and in any event:
(i) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or reasonably should know that a Termination
Event has occurred, a written statement of the chief financial
officer of the Borrower describing such Termination Event and the
action, if any, which the Borrower or any ERISA Affiliate has taken,
is taking or proposes to take with respect thereto, and when known,
any action taken or threatened by the IRS, DOL or PBGC with respect
thereto;
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(ii) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or reasonably should know that a prohibited
transaction (defined in Sections 406 of ERISA and 4975 of the
Internal Revenue Code) has occurred for which a statutory or class
exemption is not available or a private exemption has not been
previously obtained from the DOL, a statement of the chief financial
officer of the Borrower describing such transaction and the action
which the Borrower or any ERISA Affiliate has taken, is taking or
proposes to take with respect thereto;
(iii) within ten (10) Business Days after the filing thereof
with the DOL, IRS or PBGC, copies of each annual report (form 5500
series), including Schedule B thereto, filed with respect to each
Benefit Plan;
(iv) within ten (10) Business Days after receipt by the
Borrower or any ERISA Affiliate of each actuarial report for any
Benefit Plan or Multiemployer Plan and each annual report for any
Multiemployer Plan, copies of each such report;
(v) within ten (10) Business Days after the filing thereof
with the IRS, a copy of each funding waiver request filed with
respect to any Benefit Plan and, if requested by the Agent, all
communications received by the Borrower or any ERISA Affiliate with
respect to such request;
(vi) within ten (10) Business Days upon the occurrence
thereof, notification of any material increase in the benefits of
any existing Benefit Plan or the establishment of any new Benefit
Plan or the commencement of contributions to any Benefit Plan to
which the Borrower or any ERISA Affiliate was not previously
contributing;
(vii) within ten (10) Business Days after receipt by the
Borrower or any ERISA Affiliate of the PBGC's intention to terminate
a Benefit Plan or to have a trustee appointed to administer a
Benefit Plan, copies of each such notice;
(viii) within ten (10) Business Days after receipt by the
Borrower or any ERISA Affiliate of any unfavorable determination
letter from the IRS regarding the qualification of a Plan under
Section 401(a) of the Internal Revenue Code, copies of each such
letter;
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(ix) within ten (10) Business Days after receipt by the
Borrower or any ERISA Affiliate of a notice from a Multiemployer
Plan regarding the imposition of withdrawal liability, copies of
each such notice;
(x) within ten (10) Business Days after the Borrower or any
ERISA Affiliate fails to make a required installment or any other
required payment under Section 412 of the Internal Revenue Code on
or before the due date for such installment or payment, a
notification of such failure;
(xi) within ten (10) Business Days after the Borrower or any
ERISA Affiliate knows or reasonably should know (a) a Multiemployer
Plan has been terminated, (b) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (c)
the PBGC has instituted or will institute proceedings under Section
4042 of ERISA to terminate a Multiemployer Plan; and
(xii) within ten (10) Business Days after receipt by the
Borrower of a written notice from the Agent, copies of any Foreign
Employee Benefit Plan and related documents, reports and
correspondence as requested by the Agent in such notice.
For purposes of this SECTION 7.06, the Borrower and any ERISA Affiliate shall
be deemed to know all facts known by the administrator of any Plan of which the
Borrower or any ERISA Affiliate is the plan sponsor.
7.07. ENVIRONMENTAL NOTICES. (a) The Borrower shall notify the
Agent and the Lenders in writing, promptly and in any event within 10 Business
Days upon the Borrower's learning thereof, of any:
(i) notice or claim by a Governmental Authority or any third party
to the effect that the Borrower or any of the Borrower's Subsidiaries is
or may be liable to any Person, or is subject to an investigation by a
Governmental Authority, relating to a material Release or threatened
Release of any Contaminant into the environment;
(ii) notice that any Property of the Borrower or any of the
Borrower's Subsidiaries is subject to an Environmental Lien;
(iii) commencement or threat of any judicial or administrative
proceeding alleging a material violation by the Borrower or any of the
Borrower's Subsidiaries of any Environmental, Health or Safety Requirement
of Law;
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(iv) new and material changes to any existing Environmental, Health
or Safety Requirement of Law that would or could reasonably be expected to
have a Material Adverse Effect; or
(v) any intent to execute an agreement, letter of intent or
commitment to acquire stock, assets or real estate, or to lease property,
or to take any other action by the Borrower or any of its Subsidiaries
that would subject the Borrower or any of the Borrower's Subsidiaries to
environmental, health or safety Liabilities and Costs that would or could
reasonably be expected to have a Material Adverse Effect.
(b) The Borrower shall notify the Agent and the Lenders in
writing, promptly and in any event within 25 Business Days upon any filing or
report made by the Borrower or any of its Subsidiaries with any Governmental
Authority with respect to (i) the material violation of any Environmental,
Health or Safety Requirement of Law, (ii) any material unpermitted Release or
threatened Release of a Contaminant or (iii) any material unsafe or unhealthful
condition at any Property of the Borrower or its Subsidiaries;
(c) On March 31 of each calendar year, commencing on March 31,
1996, the Borrower shall submit to the Agent and the Lenders a report prepared
by the appropriate officers of the Borrower summarizing the status of any
environmental, health or safety non-compliance, hazard or liability issues
identified in notices required pursuant to SECTION 7.07(A), disclosed on
SCHEDULE 6.01-O or identified in any notice or report required herein. Such
report shall identify the cash expenditures for Liabilities and Costs arising
out of or relating to environmental health or safety matters made by the
Borrower and its Subsidiaries during the previous calendar year.
7.08. LABOR MATTERS. The Borrower shall notify the Agent and the
Lenders in writing, promptly after the Borrower knows thereof, of (i) any
material labor dispute to which the Borrower or any of the Restricted
Subsidiaries is or may become a party, including, without limitation, any
strikes, lockouts or other disputes relating to such Persons' plants and other
facilities and (ii) any Worker Adjustment and Retraining Notification Act or
related liability incurred with respect to the closing of any plant or other
facility of such Persons.
7.09. PUBLIC FILINGS AND REPORTS. Promptly upon the filing
thereof with any Governmental Authority (including, without limitation, the
Securities and Exchange Commission) or the mailing thereof to the public
shareholders or debtholders of the Borrower generally, the Borrower shall
deliver to the Agent and the Lenders copies of all filings or reports made in
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connection with outstanding Indebtedness and Capital Stock of the Borrower.
7.10. BANK ACCOUNTS. The Borrower shall (a) promptly notify the
Agent in writing of all additions, deletions and modifications to the Borrower's
collection accounts with banks other than the Collection Account Banks listed on
SCHEDULE 6.01-Z and (b) together with the financial statements delivered
pursuant to SECTION 7.01(B) and (c), deliver to the Agent a list of all
banks (other than Collection Account Banks) where funds of the Borrower are
deposited, including the Lockboxes, their addresses and the relevant account
numbers.
7.11. GOVERNMENT CONTRACTS. (i) The Borrower shall notify the
Agent and the Lenders in writing promptly after the Borrower knows thereof, of
any loss or threatened loss of the security clearances referenced in SECTION
8.16 unless disclosure thereof is prohibited by any Requirement of Law; and
(ii) the Borrower shall notify the Agent in writing promptly upon (and, in any
event, within five (5) Business Days of) the Borrower obtaining knowledge of any
material change in the status of any action, suit, proceeding, governmental
investigation or other matter disclosed on or arising out of the matters
disclosed on SCHEDULE 6.01-BB and shall provide such other information as may
be reasonably available to it to enable each Lender and the Agent and its
counsel to evaluate such matters.
7.12. OTHER INFORMATION. Promptly upon receipt of a request
therefor from the Agent, the Borrower shall prepare and deliver to the Agent and
the Lenders such other information with respect to the Borrower, any of the
Borrower's Subsidiaries or the Collateral including, without limitation,
schedules identifying and describing the Collateral and any dispositions thereof
and copies of each existing written agreement or arrangement set forth on
SCHEDULE 6.01-Y, as from time to time may be reasonably requested by the
Agent.
ARTICLE VIII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that so long as any Commitment is
outstanding and thereafter until payment in full of all of the Obligations,
unless the Requisite Lenders shall otherwise give prior written consent:
8.01. CORPORATE EXISTENCE, ETC. The Borrower shall, and shall
cause each of its Subsidiaries to, at all times maintain its respective
corporate existence and preserve and keep, or cause to be preserved and kept, in
full force and effect their respective rights and franchises material to their
respective businesses except for actions in the ordinary course
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of business where the Board of Directors of such Person or such Subsidiary (as
applicable) determines that the maintenance or preservation of such rights and
franchises is not in the best interest of such Person or such Subsidiary (as
applicable) and the failure to so maintain or preserve would not have or be
reasonably likely to have a Material Adverse Effect.
8.02. CORPORATE POWERS; CONDUCT OF BUSINESS, ETC. The Borrower
shall, and shall cause each of its Subsidiaries to, qualify and remain qualified
to do business in each jurisdiction in which the nature of its business requires
it to be so qualified, except where the failure to be so qualified would not
have or be reasonably likely to have a Material Adverse Effect.
8.03. COMPLIANCE WITH LAWS, ETC. The Borrower shall, and shall
cause each of its Subsidiaries to, (a) comply with all Requirements of Law and
all restrictive covenants affecting such Person or the business, Property or
operations of such Person, and (b) obtain as needed all Permits necessary for
such Person's operations and maintain such Permits in good standing, except, in
each case, where the failure to do so would not have or be reasonably likely to
have a Material Adverse Effect.
8.04. PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION. The
Borrower shall, and shall cause each of its Subsidiaries to, pay (a) all taxes,
assessments and other governmental charges imposed upon it or on any of its
Property or in respect of any of its franchises, business, income or Property
before any penalty or interest for late payment (except as such penalty or
interest relates to underpayment of estimated tax payments) accrues thereon, and
(b) all claims (including, without limitation, claims for labor, services,
materials and supplies) for sums which have become due and payable and which by
law have or may become a Lien (other than a Lien permitted by SECTION 9.03)
upon any of the Borrower's or such Subsidiary's Property, prior to the time when
any penalty or fine shall be incurred with respect thereto; PROVIDED,
HOWEVER, that no such taxes, assessments and governmental charges referred to
in CLAUSE (A) above or claims referred to in CLAUSE (B) above are required
to be paid if being contested in good faith by the Borrower or such Subsidiary,
as the case may be, by appropriate proceedings diligently instituted and
conducted and without danger of any material risk to the Collateral and if such
reserve or other appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made therefor. The Borrower shall not
permit any of its Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any Person (other than the Borrower and its
Subsidiaries).
8.05. INSURANCE. The Borrower shall maintain for itself and the
Restricted Subsidiaries, or shall cause each of the Restricted Subsidiaries to
maintain, in full force and effect
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the insurance policies and programs listed on SCHEDULE 6.01-W or substantially
similar policies and programs or other policies and programs as are acceptable
to the Agent. Each certificate and policy relating to Property damage, boiler
and machinery and/or business interruption coverage of the Borrower and the
Restricted Subsidiaries shall contain an endorsement, in form and substance
acceptable to the Agent, showing loss payable to the Agent, for the benefit of
the Agent, the Issuing Banks and the Lenders and naming the Agent as an
additional insured under such policy and providing that no act, whether willful
or negligent, or default of the Borrower, any of the Restricted Subsidiaries or
any other Person shall affect the right of the Agent to recover under such
policy or policies of insurance in case of loss or damage. Each certificate and
policy relating to general liability, umbrella and excess insurance coverages
other than the foregoing shall contain an endorsement naming the Agent as an
additional insured under such policy. Such endorsement or an independent
instrument furnished to the Agent shall provide that the insurance companies
shall give the Agent at least thirty (30) days' written notice before any such
policy or policies of insurance shall be cancelled or altered adversely to the
interests of the Agent, the Issuing Banks and the Lenders. In the event that
the Borrower or any of the Restricted Subsidiaries, at any time or times
hereafter, shall fail to obtain or maintain any of the policies or insurance
required herein or to pay any premium in whole or in part relating thereto, then
the Agent, without waiving or releasing any obligations or resulting Event of
Default hereunder, may at any time or times thereafter (but shall be under no
obligation to do so) obtain and maintain such policies of insurance and pay such
premiums and take any other action with respect thereto which the Agent deems
advisable. All sums so disbursed by the Agent shall constitute Protective
Advances and be part of the Obligations, payable as provided herein.
8.06. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
(a) The Borrower shall permit, and shall cause each of its respective
Subsidiaries to permit, subject to applicable federal Requirements of Law
concerning classified information, any authorized representative(s) designated
by the Agent to visit and inspect any of the Properties of such Person or such
Subsidiary, to examine, audit, check and make copies of their respective
financial and accounting records, books, journals, orders, receipts and any
correspondence and other data relating to their respective businesses or the
transactions contemplated hereby and by the Transaction Documents (including, in
connection with environmental compliance, hazard or liability), and to discuss
their affairs, finances and accounts with their officers and independent
certified public accountants, upon reasonable notice and at such times during
normal business hours, as often as may be reasonably requested. All costs and
expenses incurred by the Agent as a result of such inspection,
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audit or examination conducted pursuant to this SECTION 8.06 shall be paid by
the Borrower.
(b) The Borrower shall keep and maintain, and shall cause its
respective Subsidiaries to keep and maintain, in all material respects proper
books of record and account in which entries in conformity with GAAP shall be
made of all dealings and transactions in relation to their respective businesses
and activities, including, without limitation, transactions and other dealings
with respect to the Collateral. If an Event of Default has occurred and is
continuing, the Borrower, upon the Agent's request, shall promptly turn over
true, correct and complete copies of all such records to the Agent or any of its
representatives.
8.07. INSURANCE AND CONDEMNATION PROCEEDS. The Borrower hereby
directs (and, if applicable, shall cause its Restricted Subsidiaries to direct)
all insurers under policies of Property damage, boiler and machinery and
business interruption insurance and payors of any condemnation claim or award
relating to the Property to pay all proceeds payable under such policies or with
respect to such claim or award for any loss directly to the Agent, for the
benefit of the Agent, the Issuing Banks, the Lenders and the other Holders, and
in no case to the Borrower or one or more of its Subsidiaries. The Agent shall,
upon receipt of such proceeds hold such proceeds in the Investment Account as
Cash Collateral for the Obligations; PROVIDED, HOWEVER, that any proceeds
received by the Agent relating to Property of any Unrestricted Subsidiary shall
be released to the Borrower to the extent such proceeds are to be released to
such Unrestricted Subsidiary. For up to 180 days from the date of any loss (the
"Decision Period"), the Borrower may notify the Agent that it intends to
restore, rebuild or replace the Property subject to the receipt of any insurance
payment or condemnation award and shall, as soon as practicable thereafter,
provide the Agent detailed information, including a construction schedule and
cost estimates. Should the Borrower notify the Agent that it has decided not to
rebuild or replace such Property during the Decision Period, or should the
Borrower fail to notify the Agent of the Borrower's decision during the Decision
Period, then the amounts held as Cash Collateral shall automatically be applied
as a mandatory prepayment of the Loans pursuant to SECTION 3.01(b)(i).
Proceeds held as Collateral shall be disbursed as construction payments become
due; PROVIDED, HOWEVER, should an Event of Default occur after the Borrower
has notified the Agent that it intends to rebuild or replace the Property, the
Collateral may, at the Agent's discretion, or shall, upon the direction of
Requisite Lenders, be applied as a mandatory prepayment of the Loans pursuant to
SECTION 3.01(b)(i). Upon completion of the restoration, rebuilding or
replacement of such Property, the unused proceeds held as Collateral shall
constitute
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Net Cash Proceeds and shall be applied as a mandatory prepayment of the Loans
pursuant to SECTION 3.01(b)(i).
8.08. ERISA COMPLIANCE. The Borrower shall, and shall cause each
of its Subsidiaries and ERISA Affiliates to, establish, maintain and operate all
Plans to comply in all material respects with the provisions of ERISA, the
Internal Revenue Code, all other applicable laws, and the regulations and
interpretations thereunder and the respective requirements of the governing
documents for such Plans.
8.09. FOREIGN EMPLOYEE BENEFIT PLAN COMPLIANCE. The Borrower
shall, and shall cause each of its Subsidiaries and ERISA Affiliates to
establish, maintain and operate all Foreign Employee Benefit Plans to comply in
all material respects with all laws, regulations and rules applicable thereto
and the respective requirements of the governing documents for such Plans.
8.10. MAINTENANCE OF PROPERTY. The Borrower shall cause all
Property used or useful in the conduct of its business or the business of any
Restricted Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and shall cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof; PROVIDED, HOWEVER, that nothing in this Section shall prevent the
Borrower from discontinuing the operation or maintenance of any of such Property
if such discontinuance is, in the judgment of the Borrower, necessary or
appropriate in the conduct of its business or the business of any Restricted
Subsidiary and not disadvantageous to the Agent, the Issuing Banks or the
Lenders.
8.11. CONDEMNATION. Immediately upon learning of the institution
of any proceeding for the condemnation or other taking of any of the owned or
leased Real Property of the Borrower or any of the Restricted Subsidiaries, the
Borrower shall notify the Agent (who shall in turn forward such notice to the
Lenders) of the pendency of such proceeding, and permit the Agent to participate
in any such proceeding, and from time to time shall deliver to the Agent all
instruments reasonably requested by the Agent to permit such participation.
8.12. FUTURE LIENS ON REAL PROPERTY. At least fifteen (15)
Business Days prior to the entering into of any Lease with respect to which the
annual rental payments thereunder are anticipated to equal or exceed $250,000 or
the acquisition of any Real Property acquired by the Borrower or any of its
Restricted Subsidiaries after the date hereof and located in the United States
with a book value in excess of $500,000, the Borrower shall, and shall cause its
Restricted Subsidiaries to, provide the Agent written notice thereof (which
notice the Agent shall
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forward to each Lender). Upon written request of the Agent, the Borrower shall,
and shall cause its Restricted Subsidiaries to, execute and deliver to the
Agent, for the benefit of the Agent, the Issuing Banks, the Lenders and the
other Holders, (i) immediately upon the acquisition of any Real Property (other
than Real Property acquired with the proceeds of Indebtedness permitted by
SECTION 9.01(vi) and subject to a Lien permitted by SECTION 9.03(iv)) and
(ii) if the Borrower's Chatsworth, California property has not been sold within
180 days from the Closing Date, at any time thereafter, a mortgage, deed of
trust, assignment or other appropriate instrument evidencing a Lien upon any
such Real Property, together with such Title Policies, certified Surveys, and
local counsel opinions with respect thereto and such other agreements, documents
and instruments which the Agent deems necessary or desirable, the same to be in
form and substance substantially the same as the mortgages and other Loan
Documents relating to Real Property executed and delivered on the Closing Date,
and to be subject only to (A) Liens permitted under SECTION 9.03 and (B) such
other Liens as the Agent may reasonably approve, it being understood that the
granting of such additional security for the Obligations is a material
inducement to the execution and delivery of this Agreement by each Lender.
8.13. FUTURE LIENS ON PERSONAL PROPERTY. Upon written request of
the Agent, (a) the Borrower shall, and shall cause its Restricted Subsidiaries
(including, without limitation, Hexcel Foundation, to the extent it becomes a
Subsidiary of the Borrower and applicable law does not otherwise prohibit) to,
execute and deliver to the Agent, for the benefit of the Agent, the Issuing
Banks, the Lenders and the other Holders a Lien upon the assets of each
Restricted Subsidiary, the same to be in form and substance substantially the
same as the Loan Documents relating to personal Property executed and delivered
on the Closing Date, together with such other agreements, documents and
instruments which the Agent deems necessary or desirable and to be subject only
to such Liens as the Agent may reasonably approve and (b) the Borrower shall
cause any wholly owned Restricted Subsidiary (including, without limitation,
Hexcel Foundation, to the extent it becomes a Subsidiary of the Borrower and
applicable law does not otherwise prohibit) to, unless otherwise prohibited by
applicable law, become a Guarantor pursuant to the terms of the Subsidiary
Guaranty, it being understood that the granting of the additional security for
the Obligations pursuant to this SECTION 8.13 is a material inducement to the
execution and delivery of this Agreement by each Lender.
8.14. RIGHTS OFFERING. Within sixty days of the Closing Date,
the Rights Offering shall be consummated in accordance with the terms thereof.
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8.15. LANDLORD WAIVERS. On or prior to the Closing Date, the
Borrower shall obtain and deliver to the Agent landlord waivers (with copies of
the relevant leases attached) in form and substance satisfactory to the Agent
relating to the Borrower's Leases which are located in the locations set forth
on SCHEDULE 6.01-V. The Borrower shall use its best efforts to obtain and
deliver to the Agent landlord waivers (with copies of the relevant Lease
attached) with respect to any Lease not listed on SCHEDULE 6.01-V or any
Lease entered into after the Closing Date which relates to a location in which
there is, or is reasonably expected to be, Collateral with a Fair Market Value
of $250,000 or more.
8.16. GOVERNMENT CONTRACTS. The Borrower shall apply for and
maintain all facility security clearances and personnel security clearances
required of the Borrower or any of the Restricted Subsidiaries under all
Requirements of Law to perform and deliver under any and all Government
Contracts and as otherwise may be necessary to continue to perform the
Borrower's business.
8.17. ENVIRONMENTAL COMPLIANCE. The Borrower and the Borrower's
Subsidiaries shall comply in all material respects with all Environmental,
Health or Safety Requirements of Law other than with respect to those matters
set forth on SCHEDULE 6.01-O with respect to which (i) the Borrower or the
Borrower's Subsidiaries are making good faith efforts to remedy or (ii) that the
Borrower or the Borrower's Subsidiaries are appealing in good faith and with
respect to which the Borrower or the Borrower's Subsidiaries have a reasonable
basis to believe that they would prevail on appeal.
8.18. INTEREST RATE CONTRACTS. Upon the request of the Agent,
the Borrower shall take all steps necessary to arrange that payments owing to
such Loan Party from any counterparty under any Interest Rate Contract shall be
paid directly to the Agent to be applied to the Obligations and to take all such
other action with respect to each such Interest Rate Contract as the Agent may
request, including, without limitation, executing an assignment of such Interest
Rate Contract in a form satisfactory to the Agent.
8.19. HEXCEL LYON SUBORDINATED NOTE. Within 30 days after the
Closing Date, the Borrower shall cause Hexcel Lyon to substitute the $2,613,000
promissory note made by the Borrower in favor of Hexcel Lyon prior to the
Closing Date with the Hexcel Lyon Subordinated Note.
8.20. POST-CLOSING DELIVERIES. (a) Within 30 days after the
Closing Date, (i) the Borrower shall (A) pledge and deliver 100% of the issued
and outstanding stock of Hexcel Alpha and Hexcel Beta to the Agent for the
benefit of the Agent, the
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Lenders and the Issuing Banks in accordance with the terms of the Borrower
Pledge Agreement together with necessary stock powers and acknowledgements and
an opinion to the Agent, the Lenders and the Issuing Banks in connection
therewith in form and substance satisfactory to the Agent, (B) contribute 49% of
the limited liability company interests of Knytex to Hexcel Beta and deliver an
opinion to the Agent, the Lenders and the Issuing Banks in connection therewith
in form and substance satisfactory to the Agent and (C) contribute all of the
limited liability company interests of Fyfe owned by the Borrower to Hexcel Beta
and deliver an opinion to the Agent, the Lenders and the Issuing Banks in
connection therewith in form and substance satisfactory to the Agent, (ii)
Hexcel Alpha shall (A) execute and deliver to the Agent a security agreement
substantially in the form of EXHIBIT O, (B) become a Guarantor pursuant to the
terms of the Subsidiary Guaranty and (C) execute and deliver to the Agent such
other agreements, documents and instruments in connection therewith which the
Agent deems necessary or desirable, including, without limitation, an opinion of
counsel in form and substance satisfactory to the Agent, and (iii) Hexcel Beta
shall (A) execute and deliver to the Agent a security agreement substantially in
the form of EXHIBIT O, (B) become a Guarantor pursuant to the terms of the
Subsidiary Guaranty and (C) execute and deliver to the Agent such other
agreements, documents and instruments in connection therewith which the Agent
deems necessary or desirable, including, without limitation, an opinion of
counsel in form and substance satisfactory to the Agent, it being understood
that the granting of the additional security for the Obligations pursuant to
this SECTION 8.20 is a material inducement to the execution and delivery of
this Agreement by each Lender. Notwithstanding anything to the contrary set
forth herein, (i) the Borrower shall not be permitted to enter into any
transaction with or make any Investment in either Hexcel Alpha or Hexcel Beta
that would otherwise be permitted under ARTICLE IX and (ii) neither Hexcel
Alpha nor Hexcel Beta shall be permitted to enter into any transaction with or
make any Investments in any Person that would otherwise be permitted under
ARTICLE IX, until such time as the the Borrower, Hexcel Alpha and Hexcel Beta
shall have executed and delivered all of the documents and instruments provided
for in, and otherwise comply with the provisions of, this SECTION 8.20(a) to
the satisfaction of the Agent.
(b) Within 30 days after the Closing Date, (i) the Borrower shall
(i) execute and deliver to the Agent a mortgage in respect of the parcel of the
Pottsville, Pennsylvania property to be conveyed to the Borrower by SCIDA,
together with such other agreements, documents and instruments in connection
therwith which the Agent deems necessary or desirable, including, without
limitation, an opinion of counsel in form and substance satisfactory to the
Agent.
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ARTICLE IX
NEGATIVE COVENANTS
The Borrower covenants and agrees that it shall comply with the
following covenants so long as any Commitment is outstanding and thereafter
until payment in full of all of the Obligations, unless (except as otherwise
provided below) the Requisite Lenders shall otherwise give prior written consent
thereto:
9.01. INDEBTEDNESS. None of the Borrower or any of its
Subsidiaries shall directly or indirectly create, incur, assume or otherwise
become or remain directly or indirectly liable with respect to any Indebtedness,
except:
(i) the Obligations;
(ii) Permitted Existing Indebtedness, and any extensions, renewals,
refundings or replacements of Permitted Existing Indebtedness (other than
the Existing IRDBs); PROVIDED that with respect to Permitted Existing
Indebtedness of the Borrower, any Restricted Subsidiary or Hexcel Lyon,
any such extension, renewal, refunding or replacement is in an aggregate
principal amount not greater than the principal amount of, and is on terms
no less favorable to the Borrower, such Restricted Subsidiary or Hexcel
Lyon than the terms of, the Permitted Existing Indebtedness so extended,
renewed, refunded or replaced;
(iii) the BNP Letters of Credit and the obligations of the Borrower
under the BNP Letter of Credit Documents; PROVIDED, HOWEVER, the
aggregate amount available for drawing under the BNP Letters of Credit
shall not at any time exceed the amounts set forth with respect thereto on
SCHEDULE 9.01 (less any permanent reductions in contingent liability
made in accordance with the terms thereof);
(iv) Indebtedness in respect of taxes, assessments, governmental
charges and claims for labor, materials or supplies, to the extent that
payment thereof is not required pursuant to SECTION 8.04;
(v) Indebtedness constituting Accommodation Obligations permitted
by SECTION 9.05;
(vi) in addition to the Indebtedness permitted by CLAUSES (i)
through (v) hereof and CLAUSES (vii) through (xii) hereof and to
the extent permitted by ARTICLE X and in any event in an aggregate
outstanding principal amount not to exceed $22,000,000 at any time,
Capital Leases and purchase money Indebtedness incurred by the Borrower to
finance the acquisition of fixed
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assets, and Indebtedness incurred by the Borrower to refinance such
Capital Leases and purchase money Indebtedness;
(vii) Indebtedness under appeal bonds in connection with judgments
which do not result in an Event of Default or Default or any other breach
hereunder;
(viii) Indebtedness arising from intercompany loans permitted under
SECTION 9.04(v) and (vi);
(ix) Permitted Subordinated Indebtedness;
(x) Indebtedness of the Borrower arising pursuant to Interest Rate
Contracts or Currency Agreements to which the Agent or an Affiliate of
the Agent is a party;
(xi) Indebtedness not in excess of an aggregate principal amount of
$3,500,000 in connection with borrowings to finance premiums of property,
liability and directors' and officers' insurance policies maintained by
the Borrower or any of the Restricted Subsidiaries; PROVIDED, HOWEVER,
that the proceeds of such borrowings shall be used solely to pay the
premiums with respect to such insurance policies and any accrued and
unpaid interest on, and any premiums or penalties relating to, any such
borrowings and PROVIDED, FURTHER, that the terms and conditions of
such borrowings shall be in form and substance satisfactory to the Agent;
and
(xii) in addition to the Indebtedness permitted by CLAUSES (i)
through (xi) above, Indebtedness incurred by (A) Hexcel Lyon not in
excess of an aggregate principal amount of the Dollar Equivalent of
$25,000,000, up to $15,000,000 of which may be secured by a Lien on the
Property of Hexcel Lyon and (B) any Unrestricted Subsidiary other than
Hexcel Lyon (other than Indebtedness owing to the Borrower) not in excess
of an aggregate principal amount of the Dollar Equivalent of $10,000,000
in the aggregate for all Unrestricted Subsidiaries other than Hexcel Lyon
at any time.
9.02. SALES OF ASSETS. None of the Borrower or any of the
Restricted Subsidiaries shall sell, assign, transfer, lease, convey or otherwise
dispose of any Property, whether now owned or hereafter acquired, or any income
or profits therefrom, or enter into any agreement to do so, except:
(i) the sale of Inventory in the ordinary course of business;
PROVIDED, HOWEVER, the aggregate net face amount of all Receivables
arising from sales of Inventory made to Unrestricted Subsidiaries shall
not,
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when netted against the amount of accounts payable owing by the Borrower
to such Unrestricted Subsidiaries in respect of purchases of Inventory
from such Unrestricted Subsidiaries, exceed $10,000,000 at any time;
(ii) sales of assets outside of the ordinary course of business not
in excess of $250,000 in a single transaction or series of related
transactions or aggregating less than $1,000,000 in any Fiscal Year;
(iii) in addition to dispositions permitted under CLAUSES (i) and
(ii) of this SECTION 9.02, the disposition of Equipment if such
Equipment is obsolete or no longer useful in the ordinary course of the
Borrower's or such Restricted Subsidiary's business or otherwise is not
required to be maintained by the Borrower or such Restricted Subsidiary
pursuant to Section 8.10; PROVIDED that the aggregate Fair Market Value
of all such Equipment disposed of in any Fiscal Year shall not exceed
$500,000;
(iv) assignments and licenses of intellectual property of the
Borrower in the ordinary course of business;
(v) subleases of leases or leases of owned Real Property, to the
extent such leases and subleases have anticipated annual rentals of less
than $1,000,000 each;
(vi) the transfer by Hexcel Technologies, Inc. to DIC Technologies,
Inc. of up to 15% of the outstanding partnership interests in HDP in
connection with the Investments permitted pursuant to SECTION 9.04(vi);
and
(vii) the Borrower may sell the Properties constituting the
businesses described in SCHEDULE 9.02; PROVIDED that (A) the Agent
shall have approved the documentation evidencing such sales, (B) such
sales shall not be made for less than the Fair Market Value of such
Properties and for consideration other than cash and (C) the Net Cash
Proceeds arising from such sales shall not be less than the amount
specified with respect to such Property on SCHEDULE 9.02.
9.03. LIENS. None of the Borrower or any of the Restricted
Subsidiaries shall directly or indirectly create, incur, assume or permit to
exist any Lien on or with respect to any of their respective Property or assets
except:
(i) Liens created by the Loan Documents;
(ii) Permitted Existing Liens and future Liens securing any
extensions, renewals, refundings or
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replacements of Permitted Existing Indebtedness to the extent permitted
pursuant to SECTION 9.01(ii) but only if such future Lien attaches to
the same Property and secures only such permitted extensions, renewals,
refundings and replacements;
(iii) Customary Permitted Liens;
(iv) purchase money Liens granted by the Borrower (including the
interest of a lessor under a Capital Lease) and Liens to which any
Property is subject at the time of the Borrower's acquisition thereof)
securing Indebtedness permitted under SECTION 9.01(vi) and limited in
each case to the property purchased or subject to such lease;
(v) any attachment or judgment Lien the existence of which does
not constitute an Event of Default under SECTION 11.01(h);
(vi) Liens on the proceeds of the Rights Offering securing the
Borrower's obligations under the Standby Commitment Documents; and
(vii) Liens on the Collateral (as defined in the BNP Collateral
Agreement) securing the obligations of the Borrower under the BNP Letter
of Credit Documents.
9.04. INVESTMENTS. None of the Borrower or any of the Restricted
Subsidiaries shall directly or indirectly make or own any Investment or make any
contribution except:
(i) Investments in cash and Cash Equivalents (including, without
limitation, Cash Collateral) pledged to the Agent or deposited in the
Concentration Account;
(ii) Investments in the Investment Account (including any
Investments in Cash and Cash Equivalents through such Account);
(iii) Permitted Existing Investments in an amount not greater than
the amount thereof on the Closing Date;
(iv) Investments 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;
(v) cash Investments arising from (A) intercompany loans made by
the Borrower to any Restricted Subsidiary which Investments shall not
exceed $1,000,000 in the
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aggregate at any time and (B) intercompany loans made by the Borrower to
any Existing Joint Venture (other than DIC) or Unrestricted Subsidiary,
which Investments shall not exceed $3,000,000 in the aggregate at any
time; PROVIDED, HOWEVER, no such Investment under this CLAUSE (v)
may be made so long as any Default or Event of Default has occurred and is
continuing or would occur as a result of such Investment;
(vi) (A) cash Investment made by the Borrower in Hexcel
Technologies, Inc. or HDP, solely for the purpose of making Investments
in or for the benefit of DIC and (B) cash Investments by Hexcel
Technologies, Inc. in DIC, which Investments may result in a reduction
in the ownership by Hexcel Technologies, Inc. in HDP from 50% of the
outstanding partnership interests to 35% of such partnership interests
and shall not exceed $3,000,000 in Fiscal Year 1995, $2,000,000 in Fiscal
Year 1996 and $4,500,000 in Fiscal Year 1997, less any payments made by
the Borrower to Dainippon Ink & Chemicals, Inc. permitted pursuant to
SECTION 9.05(vii); PROVIDED, HOWEVER, if the maximum amount permitted for
any Fiscal Year exceeds the amount of such Investments for such Fiscal
Year, then such Investments made by the Borrower and Hexcel Technologies,
Inc. for the immediately succeeding Fiscal Year may exceed the maximum
amount set forth above with respect to such succeeding Fiscal Year by the
amount of such excess from the immediately preceding Fiscal Year (such
excess amount being treated as the last amount invested in such succeeding
Fiscal Year) but in no event shall the amount of such Investments exceed
$9,000,000 in the aggregate at any time and PROVIDED, FURTHER, no such
Investment under subclause (A) of this CLAUSE (vi) may be made so long
as any Default or Event of Default has occurred and is continuing or
would occur as a result of such Investment;
(vii) Investments in intercompany loans made by any Restricted
Subsidiary of the Borrower to the Borrower;
(viii) Investments in cash deposits with financial institutions for
payroll accounts and other deposit accounts in the ordinary course of
business not to exceed $500,000 at any one time outstanding in the
aggregate;
(ix) cash contributions to Hexcel Foundation not to exceed $50,000
in the aggregate in any Fiscal Year; and
(x) cash Investments not otherwise permitted hereby not to exceed
$1,000,000 at any one time outstanding in the aggregate.
9.05. ACCOMMODATION OBLIGATIONS. None of the Borrower or any of
the Restricted Subsidiaries shall directly or
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indirectly create or become or be liable with respect to any Accommodation
Obligation, except:
(i) Permitted Existing Accommodation Obligations;
(ii) Accommodation Obligations arising under the Loan Documents;
(iii) obligations, warranties and indemnities, not with respect to
Indebtedness of any Person, which have been or are undertaken or made in
the ordinary course of business or in connection with the sale of assets
permitted under SECTION 9.02(vi) and not for the benefit of or in favor
of an Affiliate of the Borrower or any of the Borrower's Subsidiaries;
(iv) Accommodation Obligations of any Restricted Subsidiary in
respect of obligations of the Borrower;
(v) Accommodation Obligations with respect to obligations,
warranties and indemnities (other than with respect to Indebtedness) in
the ordinary course of business and with respect to customary
representations, warranties and indemnities entered into in connection
with the sale or other disposition of assets;
(vi) Reimbursement obligations under the BNP Letters of Credit to
the extent such letters of credit are permitted under SECTION 9.01(iii);
(vii) Accommodation Obligations in respect of payments made by the
Borrower in an amount not to exceed $4,500,000 in Fiscal Year 1997 to
Dainippon Ink & Chemical, Inc.;
(viii) subordination of certain amounts payable to the Borrower by
Knytex as provided for in the Knytex Credit Facility; and
(ix) unsecured guarantees made by the Borrower in respect of
obligations of any of the Unrestricted Subsidiaries which do not exceed
$20,000,000 in the aggregate PROVIDED that any such guaranty is on terms
and conditions satisfactory to the Agent.
9.06. RESTRICTED JUNIOR PAYMENTS. Subject to SECTION 9.16,
none of the Borrower or any of the Restricted Subsidiaries shall declare or make
any Restricted Junior Payment, except:
(i) dividends or other distributions made to the Borrower or any
of the Restricted Subsidiaries by any Subsidiary of the Borrower;
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(ii) regularly scheduled payments of interest on the Subordinated
Debentures if such payments are permitted to be made under the terms of
the Indenture;
(iii) payments with respect to employee or director stock options,
stock incentive plans or restricted stock plans of the Borrower;
provided, the aggregate amount of such payments do not exceed $1,000,000
in any Fiscal Year or $3,000,000 in the aggregate; and
(iv) payment of interest and principal owing with respect to the
Advance, but only if such payment is permitted under the terms of the
Intercreditor Agreement.
9.07. CONDUCT OF BUSINESS. None of the Borrower or any of its
Subsidiaries shall engage in any business (pursuant to an Existing Joint Venture
or otherwise) other than the businesses engaged in by the Borrower or such
Subsidiaries on the date hereof and any business or activities which are
substantially similar, related or incidental thereto.
9.08. TRANSACTIONS WITH AFFILIATES. The Borrower shall not,
and shall not permit any of its Subsidiaries, except as otherwise expressly
permitted herein, to do any of the following: (i) make any Investment in an
Affiliate of the Borrower; (ii) transfer, sell, lease, assign or otherwise
dispose of any asset to any Affiliate of the Borrower; (iii) merge into or
consolidate with or purchase or acquire assets from any Affiliate of the
Borrower; (iv) repay any Indebtedness to any Affiliate of the Borrower other
than payments to Mutual Series with respect to the Advance to the extent
permitted under the Intercreditor Agreement; (v) pay any royalties to any
Affiliate of the Borrower (other than in connection with licensing arrangements
with Unrestricted Subsidiaries with respect to intellectual property); (vi) pay
any management fees to any Affiliate of the Borrower; or (vii) enter into any
other transaction directly or indirectly with or for the benefit of any
Affiliate of the Borrower (including, without limitation, guaranties and
assumptions of obligations of any such Affiliate but excluding the subrogation
agreement and related agreements entered into or to be entered into by the
Borrower in connection with the Knytex Credit Facility) except in each case for
transactions (A) in the ordinary course of business and (B) either on a basis no
less favorable to the Borrower or such Subsidiary as would be obtained in a
comparable arm's length transaction with a Person not an Affiliate, or in the
case of compensation payable to any officer or director of the Borrower or such
Subsidiary, in an amount approved by the Board of Directors of the Borrower or
such Subsidiary.
9.09. RESTRICTION ON FUNDAMENTAL CHANGES. None of the Borrower
or any of the Restricted Subsidiaries shall (i) enter
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into any merger or consolidation, or liquidate, wind-up or dissolve (or suffer
any liquidation or dissolution), except for a merger or consolidation of any
wholly owned Restricted Subsidiary into the Borrower or another wholly owned
Restricted Subsidiary (with the Borrower or such Restricted Subsidiary as the
surviving corporation); PROVIDED that, after giving effect to any such merger
or consolidation, no Default or Event of Default shall have occurred or be
continuing, (ii) enter into any partnership or joint venture or create any
Subsidiary or (iii) enter into or permit any transaction or series of
transactions in which the Borrower and/or any of the Restricted Subsidiaries
acquire all or any significant portion of the Capital Stock and/or assets of
another Person or business or division of another Person.
9.10. SALES AND LEASEBACKS; OPERATING LEASES. (a) None of the
Borrower or any of the Restricted Subsidiaries shall enter into any Sale and
Leaseback Transaction other than a Sale and Leaseback Transaction on terms and
conditions satisfactory to the Agent relating to the sale and lease of Equipment
where, after giving effect to such Sale and Leaseback Transaction, the aggregate
Appraised Value of all such Equipment sold does not exceed $10,000,000.
(b) None of the Borrower or any of the Restricted Subsidiaries
shall become liable in any way, whether directly or by assignment or by
Accommodation Obligation, for the obligations of a lessee under any Operating
Lease unless, immediately after giving effect to the incurrence of liability
with respect to such Operating Lease, the aggregate amount of all rents paid or
accrued under all Operating Leases of the Borrower and its Restricted
Subsidiaries as lessee (net of sublease income and determined in conformity with
GAAP) shall not exceed $3,000,000 in any Fiscal Year.
9.11. MARGIN REGULATIONS; SECURITIES LAWS. None of the Borrower
or any of the Borrower's Subsidiaries, shall use all or any portion of the
proceeds of any credit extended hereunder to purchase or carry Margin Stock.
9.12. ERISA AND CERTAIN EMPLOYMENT MATTERS. To the extent the
following actions, individually or in the aggregate, would subject or would be
reasonably likely to subject, the Borrower or any ERISA Affiliate to a liability
in excess of $1,000,000, the Borrower shall not:
(i) engage, or permit any ERISA Affiliate to engage, in any
prohibited transaction described in Sections 406 of ERISA or 4975 of the
Internal Revenue Code for which a statutory or class exemption is not
available or a private exemption has not been previously obtained from the
DOL;
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(ii) permit to exist any accumulated funding deficiency (as defined
in sections 302 of ERISA and 412 of the Internal Revenue Code), with
respect to any Benefit Plan, whether or not waived;
(iii) fail, or permit any ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
(iv) terminate, or permit any ERISA Affiliate to terminate, any
Benefit Plan which would result in a material liability of Borrower or any
ERISA Affiliate under Title IV of ERISA;
(v) fail to make any contribution or payment to any Multiemployer
Plan which Borrower or any ERISA Affiliate may be required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining
thereto;
(vi) fail, or permit any ERISA Affiliate to fail, to pay any
required installment or any other payment required under Section 412 of
the Internal Revenue Code on or before the due date for such installment
or other payment;
(vii) amend, or permit any ERISA Affiliate to amend, a Plan
resulting in an increase in current liability for the plan year such that
the Borrower or any ERISA Affiliate is required to provide security to
such Plan under Section 401(a)(29) of the Internal Revenue Code;
(viii) permit any unfunded liabilities with respect to any Foreign
Pension Plan other than as permitted under local law;
(ix) fail, or permit any Subsidiary or ERISA Affiliate to fail, to
pay any required contributions or payments to a Foreign Pension Plan on or
before the due date for such required installment or payment; or
(x) consent to an employee's election under an Executive Deferred
Compensation and Consulting Agreement between such employee and the
Borrower to pay benefits thereunder in the form of a lump sum or in
installments over a period of less than five years.
9.13. ISSUANCE OR SALE OF CAPITAL STOCK. None of the Borrower or
any of the Borrower's Subsidiaries shall (i) grant any rights (either preemptive
or others) to subscribe for or to purchase, or any option for the purchase of,
its Capital Stock or (ii) create calls, commitments, claims of any character
relating to any of its Capital Stock, other than as permitted pursuant to
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the management incentive plans listed on SCHEDULE 9.13 hereto or in
connection with the Rights Offering. The Borrower shall not sell or otherwise
dispose of, or permit the sale or disposition of, any shares of Capital Stock of
any of its Subsidiaries except as required by applicable law for the
qualification of directors or to satisfy minimum shareholder requirements under
French law.
9.14. CONSTITUENT DOCUMENTS. None of the Borrower or any of the
Borrower's Subsidiaries shall materially amend, modify or otherwise change any
of the terms or provisions in any of their respective Constituent Documents as
in effect on the Closing Date.
9.15. FISCAL YEAR. None of the Borrower or any of the Borrower's
Subsidiaries shall change its Fiscal Year for accounting or tax purposes from a
period consisting of the four fiscal quarter period ending on the closest Sunday
to December 31 of each calendar year.
9.16. CANCELLATION OF DEBT; PREPAYMENT; CERTAIN AMENDMENTS.
Neither the Borrower nor any of the Restricted Subsidiaries nor Hexcel Lyon
shall (i) cancel any material claim or debt or amend or modify the terms
thereof, except in the ordinary course of its business or (ii) prepay, redeem,
purchase, repurchase, defease or retire any long-term Indebtedness (other than
the Obligations and other than repayments under the Existing IRDBs made in lieu
of Issuing Letters of Credit or making sinking fund deposits pursuant to the BNP
Letters of Credit Documents, including, without limitation, those repayments
described on SCHEDULE 9.16) or (iii) amend, supplement or otherwise modify the
terms of the Transaction Documents.
9.17. ENVIRONMENTAL MATTERS. None of the Borrower nor any of
Borrower's Subsidiaries shall:
(i) become subject to any Liabilities and Costs which would have a
Material Adverse Effect arising out of or related to (a) the Release or
threatened Release at any location of any Contaminant into the environment, or
any Remedial Action in response thereto, or (b) any violation of any
Environmental, Health and Safety Requirements of Law; or
(ii) either directly or indirectly, create, incur, assume or permit
to exist any Environmental Lien on or with respect to any of its Property other
than Permitted Existing Liens.
9.18. CASH MANAGEMENT. Subject to SECTION 9.04, the Borrower or
any Restricted Subsidiary may open deposit or payroll accounts with other
financial institutions in the ordinary course of business and shall deliver to
the Agent a substitute SCHEDULE
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6.01-Z specifying the name of such financial institutions and the intended use
for such account. The Borrower shall not authorize or direct any Person to take
any action with respect to amounts deposited in the Lockboxes, the Collection
Accounts, the Investment Account or the Concentration Account in contravention
of the provisions hereof.
9.19. UNRESTRICTED SUBSIDIARY. No Unrestricted Subsidiary shall
enter into any Accommodation Obligation with respect to any Indebtedness of the
Borrower or any Restricted Subsidiary (other than the Obligations) or grant or
permit to exist any Lien on its Property to secure any such Indebtedness.
9.20. ACCOUNTING CHANGES. The Borrower shall not make, nor
permit any of its Subsidiaries to make, any material change in accounting
treatment and reporting practices or tax reporting treatment, except as required
by GAAP or law and disclosed to the Lenders and the Agent or as permitted by the
Loan Documents.
ARTICLE X
FINANCIAL COVENANTS
The Borrower covenants and agrees that so long as any Commitment is
outstanding and thereafter until payment in full of all of the Obligations,
unless the Requisite Lenders shall otherwise give prior written consent thereto:
10.01. MINIMUM NET WORTH. The Net Worth of the Borrower and the
Restricted Subsidiaries during any period from the last day of the fiscal
quarter preceding each fiscal quarter in each Fiscal Year set forth below to the
day preceding the last day of such fiscal quarter set forth below shall not be
less than the minimum amount set forth opposite such fiscal quarter:
PERIOD MINIMUM AMOUNT
Second fiscal quarter of 1995 $32,500,000
Third fiscal quarter of 1995 33,500,000
Fourth fiscal quarter of 1995 34,500,000
First fiscal quarter of 1996 35,500,000
Second fiscal quarter of 1996 38,000,000
Third fiscal quarter of 1996 40,000,000
Fourth fiscal quarter of 1996 42,000,000
First fiscal quarter of 1997 45,000,000
Second fiscal quarter of 1997 48,000,000
Third fiscal quarter of 1997 51,000,000
Fourth fiscal quarter of 1997 53,000,000
First fiscal quarter of 1998 through
the Revolving Credit Termination Date 56,000,000
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10.02. MINIMUM FIXED CHARGE COVERAGE RATIO. The Fixed Charge
Coverage Ratio of the Borrower and the Restricted Subsidiaries on a combined
basis, as determined as of the last day of each fiscal quarter of the Borrower
set forth below for the four fiscal quarter period ending on such date (or if
the period from January 1, 1995 to such last day is less than four full fiscal
quarters, such shorter period), shall not be less than the minimum ratio set
forth opposite such fiscal quarter:
FISCAL QUARTER MINIMUM RATIO
Second fiscal quarter of 1995 0.10 to 1
Third fiscal quarter of 1995 0.40 to 1
Fourth fiscal quarter of 1995 0.65 to 1
First fiscal quarter of 1996 0.80 to 1
Second fiscal quarter of 1996 0.90 to 1
Third fiscal quarter of 1996 0.90 to 1
Fourth fiscal quarter of 1996 1.00 to 1
First fiscal quarter of 1997 1.00 to 1
Second fiscal quarter of 1997 1.05 to 1
Third fiscal quarter of 1997 1.10 to 1
Fourth fiscal quarter of 1997
through the Revolving Credit
Termination Date 1.10 to 1
10.03. MINIMUM INTEREST COVERAGE RATIO. The Interest Coverage
Ratio of the Borrower and the Restricted Subsidiaries on a combined basis, as
determined as of the last day of each fiscal quarter of the Borrower set forth
below for the four fiscal quarter period ending on such date (or if the period
from January 1, 1995 to such last day is less than four full fiscal quarters,
such shorter period), shall not be less than the minimum ratio set forth
opposite such fiscal quarter:
FISCAL QUARTER MINIMUM RATIO
Second fiscal quarter of 1995 1.15 to 1
Third fiscal quarter of 1995 1.60 to 1
Fourth fiscal quarter of 1995 1.85 to 1
First fiscal quarter of 1996 2.00 to 1
Second fiscal quarter of 1996 2.25 to 1
Third fiscal quarter of 1996 2.50 to 1
Fourth fiscal quarter of 1996 2.75 to 1
First fiscal quarter of 1997 3.00 to 1
Second fiscal quarter of 1997 3.25 to 1
Third fiscal quarter of 1997 3.50 to 1
Fourth fiscal quarter of 1997
through the Revolving Credit
Termination Date 3.50 to 1
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10.04. MINIMUM CASH FLOW. The Cumulative Cash Flow of the
Borrower and the Restricted Subsidiaries on a combined basis, as determined as
of the last day of each fiscal quarter for the four fiscal quarter period ending
on such date (or if the period from January 1, 1995 to such last day is less
than four full fiscal quarters, such shorter period), shall not be less than the
minimum amount set forth opposite such fiscal quarter:
FISCAL QUARTER MINIMUM AMOUNT
January 1, 1995 through
First fiscal quarter of 1995 $(12,000,000)
Second fiscal quarter of 1995 (12,000,000)
Third fiscal quarter of 1995 (8,000,000)
Fourth fiscal quarter of 1995 (6,000,000)
First fiscal quarter of 1996 6,000,000
Second fiscal quarter of 1996 10,000,000
Third fiscal quarter of 1996 13,000,000
Fourth fiscal quarter of 1996 18,000,000
First fiscal quarter of 1997 19,000,000
Second fiscal quarter of 1997 19,500,000
Third fiscal quarter of 1997 20,000,000
Fourth fiscal quarter of 1997
through the Revolving Credit
Termination Date 21,000,000
10.05. MAXIMUM CAPITAL EXPENDITURES. Capital Expenditures made
or incurred by the Borrower and the Restricted Subsidiaries on a combined basis
during each Fiscal Year (or portion thereof) set forth below shall not exceed in
the aggregate the amount set forth opposite such Fiscal Year:
FISCAL YEAR MAXIMUM AMOUNT
Fiscal Year 1995 $8,400,000
Fiscal Year 1996 8,500,000
Fiscal Year 1997 7,000,000
Fiscal Year 1998 1,000,000
PROVIDED, HOWEVER, if the maximum amount set forth above opposite any Fiscal
Year exceeds the amount of Capital Expenditures made or incurred by the Borrower
and the Restricted Subsidiaries on a combined basis for such Fiscal Year, then
Capital Expenditures made or incurred by the Borrower and the Restricted
Subsidiaries on a combined basis for the succeeding Fiscal Year may exceed the
maximum amount set forth above opposite such succeeding Fiscal Year by the
lesser of (i) $2,000,000 and (ii) the amount of such excess from the immediately
preceding Fiscal Year (such excess amount being available only for use in such
succeeding Fiscal Year and being treated as the last amount spent in such
succeeding Fiscal Year).
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ARTICLE XI
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
11.01. EVENTS OF DEFAULT. Each of the following occurrences
shall constitute an Event of Default hereunder:
(a) FAILURE TO MAKE PAYMENTS WHEN DUE. The Borrower shall fail
to pay (i) when due any principal or interest on the Loans (including the
Reimbursement Obligations) or (ii) any other Obligation, and if such non-payment
relates to Obligations other than interest or principal, such non-payment
continues for a period of five (5) Business Days after the due date thereof.
(b) BREACH OF CERTAIN COVENANTS. The Borrower or any Guarantor
shall fail to perform or observe duly and punctually any agreement, covenant or
obligation binding on such Person under (i) SECTIONS 7.03, 7.04, 7.05,
8.01, 8.02, 8.06, 8.07; or (ii) ARTICLE IX or ARTICLE X.
(c) BREACH OF REPRESENTATION OR WARRANTY. Any representation or
warranty made or deemed made by the Borrower, any Guarantor or any other
Subsidiary of the Borrower to the Agent, any Lender or any Issuing Bank herein
or in any other Loan Document or in any statement or certificate at any time
given by any such Person pursuant to any Loan Document shall be false or
misleading in any material respect on the date made (or deemed made).
(d) OTHER DEFAULTS. The Borrower shall default in the
performance of or compliance with any term contained herein (other than as
covered by PARAGRAPHS (a), (b) or (c) of this SECTION 11.01), or the
Borrower or any of its Subsidiaries shall default in the performance of or
compliance with any term contained in any other Loan Document, and such default
shall continue for (i) ten (10) Business Days after the occurrence thereof with
respect to any term contained in SECTIONS 7.01, 7.02, 7.06
and 7.07; and (ii) thirty (30) days after the occurrence thereof with
respect to any other term.
(e) DEFAULT AS TO OTHER INDEBTEDNESS; OPERATING LEASES. The
Borrower or any of its Subsidiaries shall fail to make any payment when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) with respect to Permitted Subordinated Indebtedness, the BNP Letters
of Credit or any other Indebtedness (other than an Obligation) in excess of
$3,000,000; or any breach, default or event of default shall occur, or any other
condition shall exist under any instrument, agreement or indenture pertaining to
any other Indebtedness (other than an Obligation) in excess of $3,000,000, if
the effect thereof is (or, with the giving of notice or lapse of time or both,
would be) to cause an acceleration, mandatory redemption or other required
repurchase of such Indebtedness, or
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permit the holders of such Indebtedness to accelerate the maturity of such
Indebtedness or require the redemption or other repurchase of such Indebtedness;
or any such Indebtedness shall be otherwise declared to be due and payable (by
acceleration or otherwise) or required to be prepaid, redeemed or otherwise
repurchased by the Borrower or any of its Subsidiaries (other than by a
regularly scheduled required prepayment, mandatory redemption or required
repurchase) prior to the stated maturity thereof; or any breach, default or
event of default remaining uncured for a period of sixty (60) days on the part
of the Borrower or any of the Borrower's Subsidiaries shall occur under any
Operating Lease to which the Borrower or any of its Subsidiaries is a party
pursuant to which rental payments thereunder equal or exceed $3,000,000 per
annum.
(f) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) An involuntary case shall be commenced against the Borrower or
any of its Subsidiaries and the petition shall not be dismissed, stayed, bonded
or discharged within sixty (60) days after commencement of the case; or a court
having jurisdiction in the premises shall enter a decree or order for relief in
respect of the Borrower or any of the Borrower's Subsidiaries in an involuntary
case, under any applicable bankruptcy, insolvency or other similar law now or
hereinafter in effect; or any other similar relief shall be granted under any
applicable federal, state, local or foreign law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator, trustee,
custodian or other officer having similar powers over the Borrower or any of its
Subsidiaries or over all or a substantial part of the Property of the Borrower
or any of its Subsidiaries shall be entered; or an interim receiver, trustee or
other custodian of the Borrower or any of its Subsidiaries or of all or a
substantial part of the property of the Borrower or any of its Subsidiaries
shall be appointed or a warrant of attachment, execution or similar process
against any substantial part of the Property of the Borrower or any of its
Subsidiaries shall be issued and any such event shall not be stayed, dismissed,
bonded or discharged within sixty (60) days after entry, appointment or
issuance.
(g) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. The
Borrower or any of its Subsidiaries shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order for relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case, under any
such law, or shall consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a
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substantial part of its property; or the Borrower or any of its Subsidiaries
shall make any assignment for the benefit of creditors.
(h) JUDGMENTS. Any judgment, writ, order or warrant of
attachment, or other similar process shall be rendered against the Borrower or
any of its Restricted Subsidiaries or any of their respective assets involving
in any single case or in the aggregate an amount in excess of $1,000,000 (in
excess of applicable insurance coverage) is (are) entered and remains
undischarged, unvacated and unstayed for a period of sixty (60) days.
(i) DISSOLUTION. Any order, judgment or decree shall be entered
against the Borrower or any of its Subsidiaries, decreeing its involuntary
dissolution or other similar proceeding, and such order shall remain
undischarged and unstayed for a period in excess of sixty (60) days; or the
Borrower or any of its Subsidiaries shall otherwise dissolve or cease to exist
except as specifically permitted hereby.
(j) LOAN DOCUMENTS; FAILURE OF SECURITY. At any time, for any
reason, (i) any Loan Document ceases to be in full force and effect or the
Borrower or any of the Borrower's Subsidiaries party thereto seeks to repudiate
its obligations thereunder and the Liens intended to be created thereby are, or
the Borrower or any such Subsidiary seeks to render such Liens, invalid or
unperfected, or (ii) Liens in favor of the Agent, the Issuing Banks and/or the
Lenders contemplated by the Loan Documents shall, at any time, for any reason,
be invalidated or otherwise cease to be in full force and effect, or such Liens
shall be subordinated or shall not have the priority contemplated hereby or by
the other Loan Documents.
(k) TERMINATION EVENT. Any Termination Event occurs which the
Agent reasonably believes could subject either the Borrower or any ERISA
Affiliate to a liability in excess of $1,000,000.
(l) WAIVER OF MINIMUM FUNDING STANDARD. If the plan
administrator of any Plan applies under Section 412(d) of the Internal Revenue
Code for a waiver of the minimum funding standards of Section 412(a) of the
Internal Revenue Code and the Agent believes the substantial business hardship
upon which the application for the waiver is based could subject either the
Borrower or any ERISA Affiliate to a material liability.
(m) MATERIAL ADVERSE CHANGE. An event shall exist or occur which
has a Material Adverse Effect.
(n) PLAN OF REORGANIZATION. The Plan of Reorganization shall
have been amended or modified in any
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material respect or the Bankruptcy Court shall have retained or reasserted
jurisdiction over the Borrower after the Reorganization Effective Date for the
purpose of amending or modifying the Plan of Reorganization, in each case
without the prior written consent of the Requisite Lenders; or any of the
conditions precedent to the effectiveness of the Plan of Reorganization set
forth in Article X thereof shall have been waived without the prior written
consent of the Requisite Lenders.
(o) INTERCREDITOR AGREEMENT; STANDBY COMMITMENT DOCUMENTS.
Any of the parties to the Intercreditor Agreement (other than the Agent and the
Lenders) shall fail to perform any covenant or obligation binding on such party
or the Intercreditor Agreement shall cease to be in full force and effect.
Mutual Series shall not have purchased, pursuant to the Standby Commitment
Documents, the Reorganized Common Stock remaining unsold after the consummation
of the Rights Offering.
(p) CHANGE OF CONTROL EVENT. A Change of Control Event shall have
occurred.
An Event of Default shall be deemed "continuing" until cured or waived in
accordance with SECTION 13.07.
11.02. RIGHTS AND REMEDIES.
(a) ACCELERATION AND TERMINATION. Upon the occurrence of any
Event of Default described in SECTIONS 11.01(f) or 11.01(g), the Revolving
Credit Commitments shall automatically and immediately terminate and the unpaid
principal amount of, and any and all accrued interest on, the Obligations and
all accrued fees shall automatically become immediately due and payable, without
presentment, demand, or protest or other requirements of any kind (including,
without limitation, valuation and appraisement, diligence, presentment, notice
of intent to demand or accelerate and of acceleration), all of which are hereby
expressly waived by the Borrower; and upon the occurrence and during the
continuance of any other Event of Default, the Agent shall at the request, or
may with the consent, of the Requisite Lenders, by written notice to the
Borrower, (i) declare that all or any portion of the Revolving Credit
Commitments are terminated, whereupon the Revolving Credit Commitments and the
obligation of each Lender to make any Loan hereunder and of each Lender or
Issuing Bank to Issue or participate in any Letter of Credit not then Issued
shall immediately terminate, and/or (ii) declare the unpaid principal amount of
and any and all accrued and unpaid interest on the Obligations to be, and the
same shall thereupon be, immediately due and payable, without presentment,
demand, or protest or other requirements of any kind (including, without
limitation, valuation and appraisement, diligence, presentment, notice of intent
to demand or accelerate
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and of acceleration), all of which are hereby expressly waived by the Borrower.
(b) DEPOSIT FOR LETTERS OF CREDIT. In addition, after the
occurrence and during the continuance of an Event of Default, the Borrower
shall, promptly upon demand by the Agent (given upon the written instructions of
the Requisite Lenders or, in the absence of such instructions, in its sole
discretion), deliver to the Agent, Cash Collateral in such form as requested by
the Agent for deposit in the Cash Collateral Account, together with such
endorsements, and execution and delivery of such documents and instruments as
the Agent may request in order to perfect or protect the Agent's Lien with
respect thereto, in an aggregate principal amount equal to the then outstanding
Letter of Credit Obligations.
(c) RESCISSION. If at any time after termination of the
Revolving Credit Commitments and/or acceleration of the maturity of the Loans,
the Borrower shall pay all arrears of interest and all payments on account of
principal of the Loans and Reimbursement Obligations which shall have become due
otherwise than by acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified herein) and all
Events of Default and Defaults (other than nonpayment of principal of and
accrued interest on the Loans due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to SECTION 13.07, then upon the written
consent of the Requisite Lenders and written notice to the Borrower, the
termination of the Revolving Credit Commitments and/or the acceleration and the
consequences of such termination and/or acceleration may be rescinded and
annulled; but such action shall not affect any subsequent Event of Default or
Default or impair any right or remedy consequent thereon. The provisions of the
preceding sentence are intended merely to bind the Lenders and the Issuing Banks
to a decision which may be made at the election of the Requisite Lenders; they
are not intended to benefit the Borrower and do not give the Borrower the right
to require the Lenders to rescind or annul any acceleration hereunder, even if
the conditions set forth herein are met.
(d) ENFORCEMENT. The Borrower acknowledges that in the event the
Borrower or any of its Subsidiaries fails to perform, observe or discharge any
of its respective obligations or liabilities hereunder or under any other Loan
Document, any remedy of law may prove to be inadequate relief to the Agent, the
Issuing Banks and the Lenders; therefore, the Borrower agrees that the Agent,
the Issuing Banks and the Lenders shall be entitled after the occurrence and
during the continuance of an Event of Default to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
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11.03. THE CASH COLLATERAL ACCOUNT; THE INVESTMENT ACCOUNT. (a)
If requested by any Borrower and subject to the right of the Agent to withdraw
funds from the Cash Collateral Account and the Investment Account as provided
below, the Agent shall, so long as no Event of Default shall have occurred and
be continuing, from time to time invest funds on deposit in the Cash Collateral
Account and the Investment Account and accrued interest thereon, reinvest
proceeds of any such investments which may mature or be sold, and invest
interest or other income received from any such Investments, in each case in
such Cash Equivalents as the Borrower may select and, in the case of the
Investment Account, in such other investments as the Borrower selects and the
Agent approves ("Approved Investments"). Such funds, interest, proceeds or
income which are not so invested or reinvested in Cash Equivalents or Approved
Investments shall, except as otherwise provided in this SECTION 11.03, be
deposited and held by the Agent in the Cash Collateral Account or the Investment
Account, as applicable. None of the Agent, any Lender or any Issuing Bank shall
be liable to the Borrower for, or with respect to, any decline in value of
amounts on deposit in the Cash Collateral Account or the Investment Accounts
which shall have been invested pursuant to this SECTION 11.03(a) at the
direction of the Borrower. Cash Equivalents and Approved Investments from time
to time purchased and held pursuant to this SECTION 11.03(a) shall constitute
Cash Collateral and shall, for purposes of this Agreement, be deemed to be part
of the funds held in the Cash Collateral Account or the Investment Account, as
applicable, in amounts equal to their respective outstanding principal amounts.
(b) The Agent may, at any time after an Event of Default has
occurred and is continuing, sell or cause to be sold any Cash Equivalents or
Approved Investments being held by the Agent as Cash Collateral at any broker's
board or at public or private sale, in one or more sales or lots, at such price
as the Agent may deem best, without assumption of any credit risk, and the
purchaser of any or all such Cash Equivalents or Approved Investments so sold
shall thereafter own the same, absolutely free from any claim, encumbrance or
right of any kind whatsoever. The Agent, any of the Lenders and any of the
Issuing Banks may, in its own name or in the name of a designee or nominee, buy
such Cash Equivalents or Approved Investments at any public sale and, if
permitted by applicable law, buy such Cash Equivalents or Approved Investments
at any private sale. The Agent shall apply the proceeds of any such sale, net
of any expenses incurred in connection therewith, and any other funds deposited
in the Cash Collateral Account or the Investment Account to the payment of the
Obligations in accordance with this Agreement. The Borrower agrees that (i) any
sale of Cash Equivalents or Approved Investments conducted in conformity with
reasonable commercial practices of banks, commercial finance companies,
insurance companies or other financial institutions disposing of property
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similar to such Cash Equivalents or Approved Investments shall be deemed to be
commercially reasonable and (ii) any requirements of reasonable notice shall be
met if such notice is received by the applicable Borrower at its notice address
on the signature pages hereto at least ten (10) Business Days before the time of
the sale or disposition. Any other requirement of notice, demand or
advertisement for sale is waived to the extent permitted by law. The Agent may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
(c) Notwithstanding anything to the contrary contained in this
Agreement, none of the Borrower or any Person or entity claiming on behalf of or
through the Borrower shall have any right to withdraw any of the funds held in
the Investment Account, except, that (i) so long no Default or Event of Default
has occurred and is continuing, the Borrower may direct the Agent to apply any
funds held in the Investment Account to such Obligations as the Borrower may
designate and (ii) upon the payment in full in cash of the Obligations and
termination of the Revolving Credit Commitments, any funds remaining in any
Investment Account shall be returned by the Agent to the Borrower or paid to
whomever may be legally entitled thereto. None of the Borrower or any Person or
entity claiming on behalf of or through the Borrower shall have any right to
withdraw any of the funds held in the Cash Collateral Account, except that upon
the later to occur of (x) the expiration or termination of all of the Letters of
Credit in accordance with their respective terms and (y) the payment in full in
cash of the Obligations and termination of the Revolving Credit Commitments, any
funds remaining in the Cash Collateral Account shall be returned by the Agent to
the Borrower or paid to whomever may be legally entitled thereto.
(d) If at any time the Agent determines that any funds held in the
Cash Collateral Account or any Investment Account are subject to any interest,
right, claim or Lien of any Person other than the Agent, the Borrower will,
forthwith upon demand by the Agent, pay to the Agent, as additional funds to be
deposited and held in the Cash Collateral Account or any Investment Account, as
applicable, an amount equal to the amount of funds subject to such interest,
right, claim or Lien.
(e) The Agent shall exercise reasonable care in the custody and
preservation of any funds held in the Cash Collateral Account and the Investment
Accounts and shall be deemed to have exercised such care if such funds are
accorded treatment substantially equivalent to that which the Agent accords its
own like property, it being understood that the Agent shall not have any
responsibility for taking any necessary steps to preserve rights against any
third parties with respect to any such funds
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but may do so at its option. All expenses incurred in connection therewith
shall be for the sole account of the Borrower and shall constitute Obligations
hereunder.
ARTICLE XII
THE AGENT
12.01. APPOINTMENT. (a) Each Lender and each Issuing Bank
hereby designates and appoints Citicorp as the Agent hereunder, and each Lender
and each Issuing Bank hereby irrevocably authorizes the Agent to execute such
documents (including, without limitation, the Loan Documents to which the Agent
is a party) and to take such other action on such Person's behalf under the
provisions hereof and of the Loan Documents and to exercise such powers as are
set forth herein or therein together with such other powers as are reasonably
incidental thereto. As to any matters not expressly provided for hereby
(including, without limitation, enforcement or collection of the Notes or any
amount payable under any provision of ARTICLE III when due) or the other Loan
Documents, the Agent shall not be required to exercise any discretion or take
any action. Notwithstanding the foregoing, the Agent shall be required to act
or refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Requisite Lenders and such
instructions shall be binding upon all Lenders, Issuing Banks and Holders;
PROVIDED, HOWEVER, the Agent shall not be required to take any action which
(i) the Agent reasonably believes shall expose it to personal liability unless
the Agent receives an indemnification satisfactory to it from the Lenders with
respect to such action or (ii) is contrary hereto, to the other Loan Documents
or applicable law. The Agent agrees to act as such on the express conditions
contained in this ARTICLE XII.
(b) The provisions of this ARTICLE XII are solely for the benefit
of the Agent, the Lenders and Issuing Banks, and none of the Borrower or any
Subsidiary of the Borrower shall have any rights to rely on or enforce any of
the provisions hereof (other than as expressly set forth in SECTIONS 12.07 and
12.09). In performing its functions and duties hereunder, the Agent shall act
solely as agent of the Lenders and the Issuing Banks and does not assume and
shall not be deemed to have assumed any obligation or relationship of agency,
trustee or fiduciary with or for the Borrower or any Subsidiary of the Borrower.
The Agent may perform any of its duties hereunder, or under the Loan Documents,
by or through its agents or employees.
12.02. NATURE OF DUTIES. The Agent shall not have any duties or
responsibilities except those expressly set forth herein or in the Loan
Documents. The duties of the Agent shall be mechanical and administrative in
nature. The Agent shall not have by reason hereof a fiduciary relationship in
respect of any
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Holder. Nothing herein or in any of the Loan Documents, expressed or implied,
is intended to or shall be construed to impose upon the Agent any obligations in
respect hereof or any of the Loan Documents except as expressly set forth herein
or therein. Each Lender and each Issuing Bank shall make 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
hereunder and with the issuance of the Letters of Credit and shall make its own
appraisal of the creditworthiness of the Borrower and its Subsidiaries initially
and on a continuing basis, and the Agent shall not have any duty or
responsibility, either initially or on a continuing basis, to provide any Holder
with any credit or other information with respect thereto (except for reports
required to be delivered by the Agent under the terms hereof). If the Agent
seeks the consent or approval of any of the Lenders to the taking or refraining
from taking of any action hereunder, the Agent shall send notice thereof to each
Lender. The Agent shall promptly notify each Lender at any time that the
Lenders so required hereunder have instructed the Agent to act or refrain from
acting pursuant hereto.
12.03. RIGHTS, EXCULPATION, ETC. (a) LIABILITIES;
RESPONSIBILITIES. None of the Agent or any Affiliate of the Agent, nor any of
their respective officers, directors, employees or agents shall be liable to any
Holder for any action taken or omitted by them hereunder or under any of the
Loan Documents, or in connection therewith, except that no Person shall be
relieved of any liability imposed by law for gross negligence or willful
misconduct. The Agent shall not be liable for any apportionment or distribution
of payments made by it in good faith pursuant to SECTION 3.02(b), and if any
such apportionment or distribution is subsequently determined to have been made
in error the sole recourse of any Holder to whom payment was due, but not made,
shall be to recover from other Holders any payment in excess of the amount to
which they are determined to have been entitled. The Agent shall not be
responsible to any Holder for any recitals, statements, representations or
warranties herein or for the execution, effectiveness, genuineness, validity,
legality, enforceability, collectability, or sufficiency hereof or of any of the
other Loan Documents or the transactions contemplated thereby, or for the
financial condition of the Borrower or any of its Subsidiaries. The Agent
shall not be required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions hereof or of any of the
Loan Documents 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.
(b) RIGHT TO REQUEST INSTRUCTIONS. The Agent may at any time
request instructions from the Lenders with respect to any actions or approvals
which by the terms of any of the Loan
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Documents the Agent is permitted or required to take or to grant, and the Agent
shall be absolutely entitled to refrain from taking any action or to withhold
any approval and shall not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under any of the Loan
Documents until it shall have received such instructions from those Lenders from
whom the Agent is required to obtain such instructions for the pertinent matter
in accordance with the Loan Documents. Without limiting the generality of the
foregoing, no Holder shall have any right of action whatsoever against the Agent
as a result of the Agent acting or refraining from acting under the Loan
Documents in accordance with the instructions of the Requisite Lenders or, where
required by the express terms hereof, a greater proportion of the Lenders.
12.04. RELIANCE. The Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message believed by it in good faith to be genuine and correct and to
have been signed, sent or made by the proper Person, and with respect to all
matters pertaining hereto or to any of the Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel (including counsel for the
Borrower), independent public accountants and other experts selected by it.
12.05. INDEMNIFICATION. To the extent that the Agent is not
reimbursed and indemnified by the Borrower, the Lenders shall reimburse and
indemnify the Agent for and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of the
Loan Documents or any action taken or omitted by the Agent under the Loan
Documents, in proportion to each Lender's Pro Rata Share; PROVIDED, HOWEVER,
the Lenders shall have no obligation to the Agent with respect to the matters
indemnified pursuant to this Section resulting from the willful misconduct or
gross negligence of the Agent, as determined in a final, non-appealable judgment
by a court of competent jurisdiction. The obligations of the Lenders under this
SECTION 12.05 shall survive the payment in full of the Loans, the
Reimbursement Obligations and all other Obligations and the termination hereof.
12.06. CITICORP INDIVIDUALLY. With respect to its Pro Rata
Shares of the Revolving Credit Commitments hereunder, if any, and the Loans made
by it, if any, Citicorp shall have and may exercise the same rights and powers
hereunder and is subject to the same obligations and liabilities as and to the
extent set forth herein for any other Lender. The terms "Lenders" or "Requisite
Lenders" or any similar terms shall, unless the context clearly otherwise
indicates, include Citicorp in its
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individual capacity as a Lender or as one of the Requisite Lenders. Citicorp
and its Affiliates may accept deposits from, lend money to, and generally engage
in any kind of banking, trust or other business with the Borrower or any of its
Subsidiaries as if Citicorp were not acting as Agent pursuant hereto.
12.07. SUCCESSOR AGENT; RESIGNATION OF AGENT. (a)
RESIGNATION. The Agent may resign from the performance of its functions and
duties hereunder at any time by giving at least thirty (30) Business Days' prior
written notice to the Borrower and the Lenders. The resignation of the Agent
shall take effect upon the acceptance by a successor Agent of appointment
pursuant to this SECTION 12.07.
(b) APPOINTMENT BY REQUISITE LENDERS. Upon any such notice of
resignation by the Agent, the Requisite Lenders shall have the right to appoint
a successor Agent selected from among the Lenders which appointment shall be
subject to the prior written approval of the Borrower (which may not be
unreasonably withheld, and shall not be required upon the occurrence and during
the continuance of an Event of Default).
(c) APPOINTMENT BY RETIRING AGENT. If a successor Agent shall
not have been appointed within the thirty (30) Business Day period provided in
PARAGRAPH (a) of this SECTION 12.07, the retiring Agent, with the consent of
the Borrower (which may not be unreasonably withheld, and shall not be required
upon the occurrence and during the continuance of an Event of Default), shall
then appoint a successor Agent who shall serve as Agent until such time, if any,
as the Requisite Lenders appoint a successor Agent as provided above.
(d) RIGHTS OF THE SUCCESSOR AND RETIRING AGENTS. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations hereunder thereafter
to be performed. After any retiring Agent's resignation hereunder as Agent, the
provisions of this ARTICLE XII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was the Agent hereunder.
12.08. RELATIONS AMONG LENDERS. Each Lender and each Issuing
Bank agrees that it shall not take any legal action, nor institute any actions
or proceedings, against the Borrower or any other obligor hereunder or with
respect to any Collateral without the prior written consent of the Requisite
Lenders. Without limiting the generality of the foregoing, no Lender may
accelerate or otherwise enforce its portion of the Obligations, or terminate its
Revolving Credit Commitments except in accordance with SECTION 11.02(a) or a
setoff permitted under SECTION 13.05.
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12.09. CONCERNING THE COLLATERAL AND THE LOAN DOCUMENTS. (a)
PROTECTIVE ADVANCES. The Agent may from time to time, after the occurrence
and during the continuance of an Event of Default, make such disbursements and
advances pursuant to the Loan Documents which the Agent, in its sole discretion,
deems necessary or desirable to preserve or protect the Collateral or any
portion thereof or to enhance the likelihood or maximize the amount of repayment
of the Loans and other Obligations up to an amount not in excess of the lesser
of the Revolving Credit Availability at such time and $5,000,000 ("PROTECTIVE
ADVANCES"). The Agent shall notify the Borrower and each Lender in writing of
each such Protective Advance, which notice shall include a description of the
purpose of such Protective Advance. The Borrower agrees to pay the Agent, upon
demand, the principal amount of all outstanding Protective Advances, together
with interest thereon at the rate from time to time applicable to the Loans from
the date of such Protective Advance until the outstanding principal balance
thereof is paid in full. If the Borrower fails to make payment in respect of
any Protective Advance within one (1) Business Day after the date the Borrower
receives written demand therefor from the Agent, the Agent shall promptly notify
each Lender and each Lender agrees that it shall thereupon make available to the
Agent, in Dollars in immediately available funds, the amount equal to such
Lender's Pro Rata Share of such Protective Advance. If such funds are not made
available to the Agent by such Lender within one (1) Business Day after the
Agent's demand therefor, the Agent shall be entitled to recover any such amount
from such Lender together with interest thereon at the Federal Funds Rate for
each day during the period commencing on the date of such demand and ending on
the date such amount is received. The failure of any Lender to make available
to the Agent its Pro Rata Share of any such Protective Advance shall neither
relieve any other Lender of its obligation hereunder to make available to the
Agent such other Lender's Pro Rata Share of such Protective Advance on the date
such payment is to be made nor increase the obligation of any other Lender to
make such payment to the Agent. All outstanding principal of, and interest on,
Protective Advances shall constitute Obligations secured by the Collateral until
paid in full by the Borrower.
(b) AUTHORITY. Each Lender and each Issuing Bank authorizes and
directs the Agent to enter into the Loan Documents relating to the Collateral
for the benefit of the Lenders and the Issuing Banks. Each Lender and each
Issuing Bank agrees that any action taken by the Agent or the Requisite Lenders
(or, where required by the express terms hereof, a different proportion of the
Lenders) in accordance with the provisions hereof or of the other Loan
Documents, and the exercise by the Agent or the Requisite Lenders (or, where so
required, such different proportion) of the powers set forth herein or therein,
together with such other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders and
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Issuing Banks. Without limiting the generality of the foregoing, the Agent
shall have the sole and exclusive right and authority to (i) act as the
disbursing and collecting agent for the Lenders and the Issuing Banks with
respect to all payments and collections arising in connection herewith and with
the Loan Documents relating to the Collateral; (ii) execute and deliver each
Loan Document relating to the Collateral and accept delivery of each such
agreement delivered by the Borrower or any of its Subsidiaries; (iii) act as
collateral agent for the Lenders and the Issuing Banks for purposes of the
perfection of all security interests and Liens created by such agreements and
all other purposes stated therein, PROVIDED, HOWEVER, the Agent hereby
appoints, authorizes and directs each Lender and each Issuing Bank to act as
collateral sub-agent for the Agent, the Lenders and the Issuing Banks for
purposes of the perfection of all security interests and Liens with respect to
the Borrower's and its Subsidiaries' respective deposit accounts maintained
with, and cash and Cash Equivalents held by, such Lender or such Issuing Bank;
(iv) manage, supervise and otherwise deal with the Collateral; (v) take such
action as is necessary or desirable to maintain the perfection and priority of
the security interests and liens created or purported to be created by the Loan
Documents; and (vi) except as may be otherwise specifically restricted by the
terms hereof or of any other Loan Document, exercise all remedies given to the
Agent, the Lenders or the Issuing Banks with respect to the Collateral under the
Loan Documents relating thereto, applicable law or otherwise.
(c) RELEASE OF COLLATERAL. (i) Each of the Agent, the Lenders
and the Issuing Banks hereby directs the Agent to release any Lien held by the
Agent for the benefit of the Agent, the Issuing Banks and the other Holders:
(A) against all of the Collateral, upon final payment in full of
the Obligations and termination hereof; and
(B) against any part of the Collateral sold or disposed of by the
Borrower or any of its Subsidiaries, if such sale or disposition is
permitted by SECTION 9.02 (or permitted pursuant to a waiver or consent
of a transaction otherwise prohibited by such Section) or, if not pursuant
to such sale or disposition, (1) against any other part of the Collateral
with an Appraised Value less than or equal to $1,000,000 in the aggregate
in any twelve month period, if such release is consented to by Requisite
Lenders and (2) against any other part of the Collateral with an Appraised
Value greater than $1,000,000, if such release is consented to by Lenders
whose Pro Rata Shares, in the aggregate, are equal to 100%.
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(ii) Each of the Lenders and the Issuing Banks hereby directs the
Agent to execute and deliver or file such termination and partial release
statements and do such other things as are necessary to release Liens to be
released pursuant to this SECTION 12.09(c) promptly upon the effectiveness of
any such release.
(d) CONFIRMATION BY LENDERS. Without in any manner limiting the
Agent's authority to act without any specific or further authorization or
consent by the Lenders (as set forth in subsection (c) above), each Lender
agrees to confirm in writing, upon request by the Borrower, the authority to
release Collateral conferred upon the Agent under clauses (A) and (B) of
subsection (c) above. So long as no Event of Default is then continuing, upon
receipt by the Agent of any such written confirmation from the Lenders of the
Agent's authority to release any particular items or types of Collateral, and in
any event upon any sale and transfer of Collateral which is expressly permitted
pursuant to the terms of this Agreement, and upon at least five (5) Business
Days' prior written request by the Borrower, the Agent shall (and is hereby
irrevocably authorized by the Lenders to) execute such documents as may be
necessary to evidence the release of the Liens upon such Collateral granted to
the Agent for the benefit of Agent, the Lenders, the Issuing Banks and the other
Holders; PROVIDED, HOWEVER, that (i) the Agent shall not be required to
execute any such document on terms which, in the Agent's opinion, would expose
the Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Obligations or
any Liens upon (or obligations of the Borrower or any of its Subsidiaries in
respect of) all interests retained by the Borrower and/or any of its
Subsidiaries, including (without limitation) the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(e) NO OBLIGATION. The Agent shall not have any obligation
whatsoever to any Lender or to any other Person to assure that the Collateral
exists or is owned by the Borrower or any of its Subsidiaries or is cared for,
protected or insured or has been encumbered or that the Liens granted to the
Agent herein or pursuant to the Loan Documents have been properly or
sufficiently or lawfully created, perfected, protected or enforced or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
the Agent in this SECTION 12.09 or in any of the Loan Documents, it being
understood and agreed that in respect of the Collateral, or any act, omission or
event related thereto, the Agent may act in any manner it may deem appropriate,
in its sole discretion, given the Agent's own interests in the Collateral as one
of the Lenders
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and that the Agent shall not have any duty or liability whatsoever to any
Lender.
ARTICLE XIII
MISCELLANEOUS
13.01. ASSIGNMENTS. (a) ASSIGNMENTS. No assignments or
participations of any Lender's rights or obligations hereunder shall be made
except in accordance with this SECTION 13.01. Each Lender may assign to one
or more Eligible Assignees all or a portion of its rights and obligations
hereunder (including all of its rights and obligations with respect to the
Revolving Loans and the Letters of Credit) in accordance with the provisions of
this SECTION 13.01.
(b) LIMITATIONS ON ASSIGNMENTS. Each assignment by a Lender
shall be subject to the following conditions: (i) each assignment (other than
to a Lender or an Affiliate of a Lender) shall be approved by the Agent and the
Borrower, which approval shall not be unreasonably withheld; (ii) each such
assignment shall be to an Eligible Assignee; (iii) each such assignment shall be
in an amount at least equal to $7,500,000, except if the Eligible Assignee is a
Lender or an Affiliate of Lender or if such assignment shall constitute all the
assigning Lender's interest hereunder; (iv) any such assignment (other than any
such assignment to an Affiliate of the Assigning Lender) shall consist of the
simultaneous assignment of corresponding pro rata portions of the assigning
Lender's Revolving Credit Commitment and Revolving Credit Loans, and (v) the
parties to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance. Upon
such execution, delivery, acceptance and recording in the Register, from and
after the effective date specified in each Assignment and Acceptance and agreed
to by the Agent, (x) the assignee thereunder shall, in addition to any rights
and obligations hereunder held by it immediately prior to such effective date,
if any, have the rights and obligations hereunder that have been assigned to it
pursuant to such Assignment and Acceptance and shall, to the fullest extent
permitted by law, have the same rights and benefits hereunder as if it were an
original Lender hereunder and (y) the assigning Lender shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations hereunder (and, in the case of an Assignment and Acceptance covering
all or the remaining portion of such assigning Lender's rights and obligations
hereunder, the assigning Lender shall cease to be a party hereto).
(c) THE REGISTER. The Agent shall maintain at its address
referred to in SECTION 13.08 a copy of each Assignment
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and Acceptance delivered to and accepted by it and a register (the "REGISTER")
for the recordation of the names and addresses of the Lenders and the Revolving
Credit Commitment under each Loan of, and principal amount of the Loans under
each facility owing to, each Lender from time to time and whether such Lender is
an original Lender or the assignee of another Lender pursuant to an Assignment
and Acceptance. The Register shall include a control account, and a subsidiary
account for each Lender, in which accounts (taken together) shall be recorded
(i) the date and amount of each Borrowing made hereunder, (ii) the effective
date and amount of each Assignment and Acceptance delivered to and accepted by
it and the parties thereto, (iii) the amount of any principal or interest due
and payable or to become due and payable from the Borrower to each Lender
hereunder or under the Notes, and (iv) the amount of any sum received by the
Agent from the Borrower or any Guarantor hereunder and each Lender's share
thereof. The Agent shall deliver a statement of such account to the Borrower
whenever an Assignment and Acceptance is accepted by it and the parties hereto;
PROVIDED, HOWEVER, the Agent shall not be obligated to deliver such
statement more frequently than once a month. Each such statement shall be
deemed final, binding and conclusive upon the Borrower in all respects as to all
matters reflected therein (absent manifest error) unless the Borrower, within
thirty (30) days after the date such statement is delivered to the Borrower,
delivers to the Agent written notice of any objections which the Borrower may
have to any such statement. In that event, only those items expressly objected
to in such notice shall be deemed to be disputed by the Borrower. The entries
in the Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrower and each of its Subsidiaries, the Agent and the
Lenders may treat each Person whose name is recorded in the Register as a Lender
hereunder for all purposes hereof. The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(d) FEE. Upon its receipt of an Assignment and Acceptance
executed by the assigning Lender and an Eligible Assignee and a processing and
recordation fee of $2,500 (payable by the assigning Lender or the assignee, as
shall be agreed between them), the Agent shall, if such Assignment and
Acceptance has been completed and is in compliance herewith and in substantially
the form of EXHIBIT A hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give prompt
notice thereof to the Borrower and the other Lenders.
(e) INFORMATION REGARDING THE BORROWER. Any Lender may, in
connection with any assignment or proposed assignment pursuant to this SECTION
13.01, disclose to the assignee or proposed assignee any information relating
to the Borrower or its Subsidiaries furnished to such Lender by the Agent or by
or on
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behalf of the Borrower; PROVIDED that, prior to any such disclosure, such
assignee or proposed assignee shall agree (for the Borrower's benefit) to
preserve in accordance with SECTION 13.20 the confidentiality of any
confidential information described therein.
(f) LENDERS' CREATION OF SECURITY INTERESTS. Notwithstanding any
other provision set forth herein, any Lender may at any time create a security
interest in all or any portion of its rights hereunder (including, without
limitation, Obligations owing to it and Notes held by it) in favor of any
Federal Reserve bank in accordance with Regulation A.
(g) ASSIGNMENTS BY AN ISSUING BANK. If any Issuing Bank ceases
to be a Lender hereunder by virtue of any assignment made pursuant to this
SECTION 13.01, then, as of the effective date of such cessation, such Issuing
Bank's obligations to Issue Letters of Credit pursuant to SECTION 2.03 shall
terminate and such Issuing Bank shall be an Issuing Bank hereunder only with
respect to outstanding Letters of Credit Issued prior to such date.
(h) PARTICIPATIONS. Each Lender may sell participations to one
or more other financial institutions in or to all or a portion of its rights and
obligations under and in respect of any and all facilities hereunder (including,
without limitation, all or a portion of any or all of its Revolving Credit
Commitments hereunder and the Loans owing to it and its undivided interest in
the Letters of Credit); PROVIDED, HOWEVER, that (i) such Lender's
obligations hereunder (including, without limitation, its Revolving Credit
Commitments hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, (iii) the Borrower, the Agent and the other Lenders shall continue
to deal solely and directly with such Lender in connection with such Lender's
rights and obligations hereunder and (iv) such participant's rights to agree or
to restrict such Lender's ability to agree to the modification, waiver or
release of any of the terms of the Loan Documents or to the release of any
Collateral covered by the Loan Documents, to consent to any action or failure to
act by any party to any of the Loan Documents or any of their respective
Subsidiaries or Affiliates, or to exercise or refrain from exercising any powers
or rights which any Lender may have under or in respect of the Loan Documents or
any Collateral, shall be limited to the right to consent to (A) reduction of the
principal of, or rate or amount of interest on the Loans(s) subject to such
participation (other than by the payment or prepayment thereof), (B)
postponement of any scheduled date for any payment of principal of, or interest
on, the Loan(s) subject to such participation (except with respect to any
modifications of the applicable provisions relating to the prepayments of Loans
and other
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Obligations) and (C) release of any Guarantor or all or any portion of the
Collateral except as provided in SECTION 12.09(c). No holder of a
participation in all or any part of the Loans shall be a "Lender" or a "Holder"
for any purposes hereunder by reason of such participation; PROVIDED,
HOWEVER, that each holder of a participation shall have the rights and
obligations of a Lender (including any right to receive payment) under SECTIONS
3.03, 3.04, 4.01(f), 4.02(d), 4.02(f), 12.05, 13.02 and 13.05;
PROVIDED, HOWEVER, that all requests for any such payments shall be made by
a participant through the Lender granting such participation. The right of each
holder of a participation to receive payment under SECTIONS 3.03, 3.04,
4.01(f), 4.02(d), 4.02(f), 12.05, 13.02 and 13.05 shall be limited
to the lesser of (i) the amounts actually incurred by such holder for which
payment is provided under said Sections and (ii) the amounts that would have
been payable under said Sections by the applicable Borrower to the Lender
granting the participation in respect of the participated interest to such
holder had such participation not been granted. The Lender shall promptly
notify the Agent of the identity of any holder of a participation.
(i) PAYMENT TO PARTICIPANTS. Anything herein to the contrary
notwithstanding, in the case of any participation, all amounts payable by the
Borrower under the Loan Documents shall be calculated and made in the manner and
to the parties required hereby as if no such participation had been sold.
13.02. EXPENSES.
(a) GENERALLY. The Borrower agrees upon demand to pay, or
reimburse the Agent for, all of the Agent's internal and external audit, legal,
appraisal, valuation, filing, document duplication and reproduction and
investigation expenses and for all other out-of-pocket costs and expenses of
every type and nature (including, without limitation, the reasonable fees,
expenses and disbursements of the Agent's counsel, Sidley & Austin, local legal
counsel, auditors, accountants, appraisers, printers, insurance and
environmental advisers, and other consultants and agents incurred by the Agent
in connection with (A) the Agent's audit and investigation of the Borrower and
the Borrower's Subsidiaries in connection with the preparation, negotiation, and
execution of the Loan Documents and the Agent's periodic audits of the Borrower
or the Borrower's Subsidiaries; (B) the preparation, negotiation, execution and
interpretation hereof (including, without limitation, the satisfaction or
attempted satisfaction of any of the conditions set forth in ARTICLE V), the
other Loan Documents and any proposal letter or commitment letter issued in
connection therewith and the making of the Loans hereunder; (C) the creation,
perfection or protection of the Liens under the Loan Documents (including,
without limitation, any reasonable fees and expenses for local counsel in
various jurisdictions); (D) the ongoing administration hereof and
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of the Loans, including consultation with attorneys in connection therewith and
with respect to the Agent's rights and responsibilities hereunder and under the
other Loan Documents; (E) the protection, collection or enforcement of any of
the Obligations or the enforcement of any of the Loan Documents; (F) the
commencement, defense or intervention in any court proceeding relating in any
way to the Obligations, the Property, the Borrower, any of the Borrower's
Subsidiaries, this Agreement or any of the other Loan Documents; (G) the
response to, and preparation for, any subpoena or request for document
production with which the Agent is served or deposition or other proceeding in
which the Agent is called to testify, in each case, relating in any way to the
Obligations, the Property, the Borrower, any of the Borrower's Subsidiaries,
this Agreement or any of the other Loan Documents; and (H) any amendments,
consents, waivers, assignments, restatements, or supplements to any of the Loan
Documents and the preparation, negotiation, and execution of the same.
(b) AFTER DEFAULT. The Borrower further agrees to pay or
reimburse the Agent, the Issuing Banks and the Lenders upon demand for all
out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys' fees, incurred by the Agent, any Issuing Bank or any Lender (i) in
enforcing any Loan Document or Obligation or any security therefor or exercising
or enforcing any other right or remedy available by reason of any Event of
Default; (ii) in connection with any refinancing or restructuring of the credit
arrangements provided hereunder in the nature of a "work-out" or in any
insolvency or bankruptcy proceeding; (iii) in commencing, defending or
intervening in any litigation or in filing a petition, complaint, answer, motion
or other pleadings in any legal proceeding relating to the Obligations, the
Property, the Borrower or any of the Borrower's Subsidiaries and related to or
arising out of the transactions contemplated hereby or by any of the other Loan
Documents; and (iv) in taking any other action in or with respect to any suit or
proceeding (bankruptcy or otherwise) described in CLAUSES (i) through (iii)
above.
13.03. INDEMNITY. The Borrower further agrees to defend,
protect, indemnify, and hold harmless the Agent and each and all of the Lenders
and Issuing Banks and each of their respective Affiliates, and each of such
Agent's, Lender's, Issuing Bank's or Affiliate's respective officers, directors,
employees, attorneys and agents (including, without limitation, those retained
in connection with the satisfaction or attempted satisfaction of any of the
conditions set forth in ARTICLE V) (collectively, the "INDEMNITEES") from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees
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in connection with any investigative, administrative or judicial proceeding,
whether or not such Indemnitees shall be designated a party thereto), imposed
on, incurred by, or asserted against such Indemnitees in any manner relating to
or arising out of or in connection with (a) the Case, this Agreement, the other
Loan Documents, any of the other Transaction Documents or any act, event or
transaction related or attendant thereto, whether or not such Indemnitee is a
party thereto and whether or not such transactions are consummated, the making
of the Loans, the issuance of and participation in Letters of Credit hereunder,
the management of such Loans or Letters of Credit, the use or intended use of
the proceeds of the Loans or Letters of Credit hereunder, the execution,
delivery and/or performance of Currency Agreements or Interest Rate Contracts,
or any of the other transactions contemplated by the Transaction Documents, or
(b) any Liabilities and Costs under Environmental, Health or Safety Requirements
of Law arising from or in connection with the past, present or future operations
of the Borrower, the Borrower's Subsidiaries or any of their respective
predecessors in interest, or, the past, present or future environmental, health
or safety condition of any respective Property of the Borrower or the Borrower's
Subsidiaries, the presence of asbestos-containing materials at any respective
Property of the Borrower or such Subsidiaries or the Release or threatened
Release of any Contaminant into the environment (collectively, the "INDEMNIFIED
MATTERS"); PROVIDED, HOWEVER, the Borrower shall have no obligation to an
Indemnitee hereunder with respect to Indemnified Matters resulting from the
willful misconduct or gross negligence of such Indemnitee, as determined in a
final, non-appealable judgment by a court of competent jurisdiction.
Notwithstanding anything herein to the contrary, the Borrower understands and
hereby agrees that its obligation to indemnify pursuant to this SECTION 13.03
shall apply in the event of the sole, concurrent or contributory negligence of
any Indemnitee. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in the preceding sentence may be unenforceable because it is
violative of any law or public policy, the Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Matters incurred by the Indemnitees.
13.04. CHANGE IN ACCOUNTING PRINCIPLES. If any change in the
accounting principles used in the preparation of the most recent financial
statements referred to in SECTION 7.01 is hereafter required or permitted by
the rules, regulations, pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) and are adopted by the
Borrower with the agreement of its independent certified public accountants and
such change results in a change in the method of calculation of any of the
covenants, standards or terms found in ARTICLE IX and ARTICLE X, the parties
hereto
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agree to enter into negotiations in order to amend such provisions so as to
equitably reflect such change with the desired result that the criteria for
evaluating compliance with such covenants, standards and terms by the Borrower
shall be the same after such change as if such change had not been made;
PROVIDED, HOWEVER, no change in GAAP that would affect the method of
calculation of any of the covenants, standards or terms shall be given effect in
such calculations until such provisions are amended, in a manner satisfactory to
the Requisite Lenders and the Borrower, to so reflect such change in accounting
principles.
13.05. SETOFF. In addition to any Liens granted under the Loan
Documents and any rights now or hereafter granted under applicable law, upon the
occurrence and during the continuance of any Event of Default, and with the
prior written consent of the Requisite Lenders, each Lender, each Issuing Bank
and any Affiliate of any Lender or Issuing Bank is hereby authorized by the
Borrower at any time or from time to time, without notice to any Person (any
such notice being hereby expressly waived) to set off and to appropriate and to
apply any and all deposits (general or special, including, but not limited to,
indebtedness evidenced by certificates of deposit, whether matured or unmatured
(but not including trust accounts)) and any other Indebtedness at any time held
or owing by such Lender, Issuing Bank or any of their Affiliates to or for the
credit or the account of the Borrower against and on account of the Obligations
of the Borrower to such Lender, Issuing Bank or any of their Affiliates,
including, but not limited to, all Loans and Letters of Credit and all claims of
any nature or description arising out of or in connection herewith, irrespective
of whether or not (i) such Lender or Issuing Bank shall have made any demand
hereunder or (ii) the Agent, at the request or with the consent of the Requisite
Lenders, shall have declared the principal of and interest on the Loans and
other amounts due hereunder to be due and payable as permitted by ARTICLE XI
and even though such Obligations may be contingent or unmatured.
13.06. RATABLE SHARING. The Lenders and the Issuing Banks agree
among themselves that, except as otherwise expressly provided in any Loan
Document, (i) with respect to all amounts received by them which are applicable
to the payment of the Obligations (excluding (x) the fees described in SECTIONS
2.03(g), 3.03, 3.04, 4.01(f) and 4.02 and (y) and amounts so received
in respect of Currency Agreements and/or Interest Rate Contracts) equitable
adjustment shall be made so that, in effect, all such amounts shall be shared
among them ratably in accordance with their Pro Rata Shares, whether received by
voluntary payment, by the exercise of the right of setoff or banker's lien, by
counterclaim or cross-action or by the enforcement of any or all of such
Obligations (excluding the fees described in SECTIONS 2.03(g), 3.03, 3.04,
4.01(f) and 4.02) or the Collateral, (ii) if any of them shall by voluntary
payment or by the exercise of any
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right of counterclaim, setoff, banker's lien or otherwise, receive payment of a
proportion of the aggregate amount of such Obligations held by it which is
greater than the amount which such Lender is entitled to receive hereunder, the
Lender receiving such excess payment shall purchase, without recourse or
warranty, an undivided interest and participation (which it shall be deemed to
have done simultaneously upon the receipt of such payment) in such Obligations
owed to the others so that all such recoveries with respect to such Obligations
shall be applied ratably in accordance with their Pro Rata Shares; PROVIDED,
HOWEVER, that if all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases shall be rescinded and
the purchase prices paid for such participation shall be returned to such party
to the extent necessary to adjust for such recovery, but without interest except
to the extent the purchasing party is required to pay interest in connection
with such recovery. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this SECTION 13.06 may, to the
fullest extent permitted by law, exercise all its rights of payment (including,
subject to SECTION 13.05, the right of setoff) with respect to such
participation as fully as if such Lender were the direct creditor of the
Borrower in the amount of such participation.
13.07. AMENDMENTS AND WAIVERS. (a) GENERAL PROVISIONS. Unless
otherwise provided herein, no amendment or modification of any provision hereof
shall be effective without the written agreement of the Requisite Lenders and
the Borrower, and no termination or waiver of any provision hereof, or consent
to any departure by the Borrower therefrom, shall be effective without the
written concurrence of the Requisite Lenders, which the Requisite Lenders shall
have the right to grant or withhold in their sole discretion.
(b) AMENDMENTS, CONSENTS AND WAIVERS BY ALL LENDERS.
Notwithstanding the foregoing, any amendment, modification, termination, waiver
or consent with respect to any of the following provisions hereof shall be
effective only by a written agreement, signed by the Borrower and each Lender:
(i) waiver of any of the conditions specified in SECTION 5.01 or
5.02 (except with respect to a condition based upon another provision
hereof, the waiver of which requires only the concurrence of the Requisite
Lenders),
(ii) increase in the amount of any of the Revolving Credit
Commitments of any Lender,
(iii) reduction of the principal of, rate or amount of interest on
the Loans or Reimbursement Obligations or any fees or other amounts
payable to any Lender (including,
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without limitation, amounts so payable pursuant to SECTION 3.01(b)),
(iv) extension of the Revolving Credit Termination Date or
postponement of any date on which any payment of principal of, or interest
on, the Loans or Reimbursement Obligations or any fees or other amounts
payable to any Lender would otherwise be due,
(v) release of any Guarantor of the Obligations (except in
connection with the sale of all or substantially all of the Capital Stock
or Property of any Guarantor or a merger of a Guarantor into another
Guarantor or into the Borrower, in each case approved by the Requisite
Lenders or otherwise permitted hereunder) or all or any portion of the
Collateral (except as provided in SECTION 12.09(c)),
(vi) change in the aggregate Pro Rata Share of the Lenders which
shall be required for the Lenders or any of them to take action hereunder,
(vii) change in the definition of Requisite Lenders,
(viii) amendment of SECTIONS 12.09(c) or 13.06 or this SECTION
13.07, or
(ix) increase in the maximum amount of the advance rates set
forth in the Borrowing Base to greater than 85% with respect to Eligible
Receivables and 65% with respect to Eligible Inventory.
The Agent may, but shall have no obligation to, with the written
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given. 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. Notwithstanding anything to the contrary contained in this
SECTION 13.07, no amendment, modification, waiver or consent shall affect the
rights or duties of the Agent hereunder or under the other Loan Documents,
including this ARTICLE XIII, unless made in writing and signed by the Agent so
affected in addition to the Lenders required above to take such action.
Notwithstanding anything herein to the contrary, in the event that the Borrower
shall have requested, in writing, that any Lender agree to an amendment,
modification, waiver or consent with respect to any particular provision or
provisions hereof, and such Lender shall have failed to state, in writing, that
it either agrees or disagrees (in full or in part) with all such requests (it
being understood that any such statement of agreement may be subject to
satisfactory documentation and other
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conditions specified in such statement) within thirty (30) days of such request,
then such Lender hereby irrevocably authorizes the Agent to agree or disagree,
in full or in part, and in the Agent's sole discretion, to such requests on
behalf of such Lender as such Lender's attorney-in-fact and to execute and
deliver any writing approved by the Agent which evidences such agreement as such
Lender's duly authorized agent for such purposes. Furthermore, in the event
that any Lender fails to agree to any amendment, modification, waiver or consent
requiring the unanimous approval of the Lenders pursuant to SECTION 13.07(b),
at the joint request of the Borrower and the Agent, the Lenders who have so
agreed to such amendment, modification, waiver or consent shall have the right
(but not the obligation) to, or to cause an Eligible Assignee to, purchase from
such Lender (at the face amount thereof) all Revolving Loans, Letter of Credit
Obligations and Revolving Credit Commitments held by such Lender.
13.08. NOTICES. (a) Unless otherwise specifically provided
herein, any notice, consent or other communication herein required or permitted
to be given shall be in writing and may be personally served, telecopied, or
sent by courier service and shall be deemed to have been given when delivered in
person or by courier service, or upon receipt of a telecopy. Notices to the
Agent pursuant to ARTICLES II or III shall not be effective until received
by the Agent. For the purposes hereof, the addresses of the parties hereto
(until notice of a change thereof is delivered as provided in this SECTION
13.08) shall be as set forth below each party's name on the signature pages
hereof or the signature page of any applicable Assignment and Acceptance, or, as
to each party, at such other address as may be designated by such party in a
written notice to all of the other parties hereto.
(b) The Borrower agrees to indemnify and hold harmless each
Indemnitee from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, costs, disbursements
and expenses of any kind or nature (including, without limitation, reasonable
fees and disbursements of counsel to any such Indemnitee) which may be imposed
on, incurred by or asserted against any such Indemnitee in any manner relating
to or arising out of any action taken or omitted by such Indemnitee in good
faith in reliance on any notice or other written communication in the form of a
telecopy or facsimile purporting to be from the Borrower; PROVIDED that the
Borrower shall not have any obligation under this SECTION 13.08(b) to an
Indemnitee with respect to any indemnified matter caused by or resulting from
the gross negligence or willful misconduct of that Indemnitee, as determined by
a court of competent jurisdiction in a final non-appealable judgment or order.
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13.09. SURVIVAL OF WARRANTIES AND AGREEMENTS. All
representations and warranties made herein and all obligations of the Borrower
in respect of taxes, indemnification and expense reimbursement shall survive the
execution and delivery hereof and of the other Loan Documents, the making and
repayment of the Loans, the issuance and discharge of Letters of Credit
hereunder and the termination hereof and shall not be limited in any way by the
passage of time or occurrence of any event and shall expressly cover time
periods when the Agent, any of the Issuing Banks or any of the Lenders may have
come into possession or control of any of the Borrower's or the Borrower's
Subsidiaries' Property.
13.10. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of the Agent, any Lender or any Issuing Bank in the
exercise of any power, right or privilege under any of the Loan Documents shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of any
such power, right or privilege preclude other or further exercise thereof or of
any other right, power or privilege. All rights and remedies existing under the
Loan Documents are cumulative to and not exclusive of any rights or remedies
otherwise available.
13.11. MARSHALLING; PAYMENTS SET ASIDE. None of the Agent, any
Lender or any Issuing Bank shall be under any obligation to marshall any assets
in favor of the Borrower or any other party or against or in payment of any or
all of the Obligations. To the extent that the Borrower makes a payment or
payments to the Agent, the Lenders or the Issuing Banks or any of such Persons
receives payment from the proceeds of the Collateral or exercise their rights of
setoff, and such payment or payments or the proceeds of such enforcement or
setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a trustee,
receiver or any other party, then to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, right and
remedies therefor, shall be revived and continued in full force and effect as if
such payment had not been made or such enforcement or setoff had not occurred.
13.12. SEVERABILITY. In case any provision in or obligation
hereunder or under the other Loan Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.
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13.13. HEADINGS. Section headings herein are included herein for
convenience of reference only and shall not constitute a part hereof or be given
any substantive effect.
13.14. GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, AND
THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH
THE LAW OF THE STATE OF NEW YORK.
13.15. LIMITATION OF LIABILITY. No claim may be made by the
Borrower, any of the Borrower's Subsidiaries, any Lender, any Issuing Bank, the
Agent or any other Person against the Agent, any other Issuing Bank or any other
Lender or the Affiliates, directors, officers, employees, attorneys or agents of
any of them for any special, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out of or
related to the transactions contemplated hereby, or any act, omission or event
occurring in connection therewith; and the Borrower, each of the Borrower's
Subsidiaries, each Lender, each Issuing Bank and the Agent hereby waives,
releases and agrees not to sue upon any such claim for any such damages, whether
or not accrued and whether or not known or suspected to exist in its favor.
13.16. SUCCESSORS AND ASSIGNS. This Agreement and the other Loan
Documents shall be binding upon the parties hereto and their respective
successors and permitted assigns and shall inure to the benefit of the parties
hereto and the successors and permitted assigns of the Lenders and the Issuing
Banks. The rights hereunder and the interest herein of the Borrower may not be
assigned without the written consent of all Lenders. Any attempted assignment
without such written consent shall be void.
13.17. CERTAIN CONSENTS AND WAIVERS.
(a) PERSONAL JURISDICTION. (i) EACH OF THE AGENT, THE LENDERS,
THE ISSUING BANKS AND THE BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE
COURT OR FEDERAL COURT SITTING IN NEW YORK, NEW YORK, AND ANY COURT HAVING
JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY ACTION OR
PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT, WHETHER
ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION OR
ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND
UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE BORROWER IRREVOCABLY DESIGNATES
AND APPOINTS CT CORPORATION SYSTEM AT 1633 BROADWAY, NEW YORK, NEW YORK 10019,
AS ITS PROCESS AGENT (THE "PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
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ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. EACH OF THE
AGENT, THE LENDERS, THE ISSUING BANKS AND THE BORROWER AGREES THAT A FINAL
NON-APPEALABLE JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND
MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER
MANNER PROVIDED BY LAW. THE BORROWER WAIVES IN ALL DISPUTES ANY OBJECTION THAT
IT MAY HAVE TO THE LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(ii) THE BORROWER AGREES THAT THE AGENT SHALL HAVE THE RIGHT TO
PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A COURT IN ANY LOCATION TO
ENABLE THE AGENT, THE ISSUING BANKS AND THE LENDERS TO REALIZE ON THE COLLATERAL
OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER
COURT ORDER ENTERED IN FAVOR OF THE AGENT, ANY ISSUING BANK OR ANY LENDER. THE
BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN
WHICH THE AGENT, ANY ISSUING BANK OR ANY LENDER MAY COMMENCE A PROCEEDING
DESCRIBED IN THIS SECTION.
(b) SERVICE OF PROCESS. THE BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS 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 PROCESS AGENT OR THE BORROWER'S NOTICE ADDRESS SPECIFIED
PURSUANT TO SECTION 13.08, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER
SUCH MAILING. THE BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF
FORUM NON CONVENIENS) WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING
OF ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT
THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT OF THE AGENT TO BRING PROCEEDINGS AGAINST THE BORROWER IN THE COURTS
OF ANY OTHER JURISDICTION.
(c) WAIVER OF JURY TRIAL. EACH OF THE AGENT, THE ISSUING BANKS,
THE LENDERS AND THE BORROWER IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
13.18. COUNTERPARTS; EFFECTIVENESS; INCONSISTENCIES. This
Agreement and any amendments, waivers, consents, or supplements hereto may be
executed in counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument. This Agreement shall become effective against the
Borrower, each Lender, each Issuing Bank and the Agent on the date hereof. This
Agreement and each of the other Loan Documents shall be construed to the extent
reasonable to be consistent one with the other, but to the extent that the terms
and conditions
-149-
<PAGE>
hereof are actually inconsistent with the terms and conditions of any other Loan
Document, this Agreement shall govern.
13.19. LIMITATION ON AGREEMENTS. All agreements between the
Borrower, the Agent, each Lender and each Issuing Bank in the Loan Documents are
hereby expressly limited so that in no event shall any of the Loans or other
amounts payable by the Borrower under any of the Loan Documents be directly or
indirectly secured (within the meaning of Regulation U) by Margin Stock.
13.20. CONFIDENTIALITY. Subject to SECTION 13.01(e), the
Agent, the Lenders and the Issuing Banks shall hold all nonpublic information
obtained pursuant to the requirements hereof and identified as such by the
Borrower in accordance with such Person's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices and in any event may make disclosure reasonably required by a
bona fide offeree or assignee (or participant) in connection with the
contemplated transfer (or participation), or as required or requested by any
Governmental Authority or representative thereof, or pursuant to legal process,
or to its accountants, lawyers and other advisors, and shall require any such
offeree or assignee (or participant) to agree (and require any of its offerees,
assignees or participants to agree) to comply with this SECTION 13.20. In no
event shall the Agent, any Lender or any Issuing Bank be obligated or required
to return any materials furnished by the Borrower; PROVIDED, HOWEVER, each
offeree shall be required to agree that if it does not become a assignee (or
participant) it shall return all materials furnished to it by the Borrower in
connection herewith.
13.21. ENTIRE AGREEMENT. This Agreement, taken together with all
of the other Loan Documents embodies the entire agreement and understanding
among the parties hereto and supersedes the commitment letter dated January 6,
1995 from Citicorp and accepted and agreed to by the Borrower (except for
provisions therein specifically referred to herein) and all prior agreements and
understandings, written and oral, relating to the subject matter hereof.
13.22. TERMINATION. This Agreement shall automatically and
immediately terminate if (i) the Reorganization Effective Date has not occurred
on or prior to February 28, 1995; or (ii) the Case shall have been dismissed
prior to the confirmation of the Plan of Reorganization. Upon the termination
in whole of the Revolving Credit Commitments pursuant to the terms of this
Agreement, the Borrower shall pay to the Agent an amount equal to any and all
Obligations then outstanding.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first above written.
HEXCEL CORPORATION
By: /s/ William Meehan
--------------------------------
Name: William Meehan
Title: VP and CFO
NOTICE ADDRESS:
Hexcel Corporation
5794 W. Las Positas
Pleasanton, California 94588
Attention: William P. Meehan
Telecopier No. (510) 734-8865
Confirmation No. (510) 847-9500
WITH A COPY TO:
Kronish Lieb Weiner & Hellman
1114 Avenue of the Americas
New York, New York 10036
Attention: Steven K. Weinberg, Esq.
Telecopier No. (212) 479-6275
Confirmation No. (212) 479-6000
S-1
<PAGE>
CITICORP USA, INC., as Agent and Lender
By: /s/ Keith Karoko
--------------------------------
Name:
Title: Attorney in Fact
CITIBANK, N.A., as Issuing Bank
By: /s/ Keith Karoko
--------------------------------
Name:
Title: VP
REVOLVING CREDIT COMMITMENT
$18,750,000
NOTICE ADDRESS:
Citicorp USA, Inc.
399 Park Avenue
6th Floor
New York, New York 10043
Attention: Keith R. Karako
Telecopier No.: (212) 793-1290
Confirmation No.: (212) 559-3149
WITH A COPY TO:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: Daniel S. Dokos, Esq.
Telecopier No.: (212) 906-2021
Confirmation No.: (212) 906-2312
S-2
<PAGE>
HELLER FINANCIAL, INC.
By: /s/ John Buff
--------------------------------
Name: John Buff
Title: V.P.
REVOLVING CREDIT COMMITMENT
$18,750,000
NOTICE ADDRESS:
Heller Financial, Inc.
101 Park Avenue, 10th Floor
New York, New York 10178
Attention: John Buff
Telecopier No.: (212) 880-2060
Confirmation No.: (212) 880-2990
S-3
<PAGE>
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ Matthew N. McAlpine
--------------------------------
Name: Matthew N. McAlpine
Title: Senior Account Executive
REVOLVING CREDIT COMMITMENT
$7,500,000
NOTICE ADDRESS:
TransAmerica Business Credit Corporation
8750 West Bryn Mawr, Suite 720
Chicago, Illinois 60631
Attention: Keith J. Mason
Telecopier No.: (312) 380-6169
Confirmation No.: (212) 380-6160
S-4
<PAGE>
EXHIBIT A
TO
CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
FORM OF ASSIGNMENT AND ACCEPTANCE
ASSIGNMENT AND ACCEPTANCE
ASSIGNMENT AND ACCEPTANCE dated ____________ __, 199_, between
_______________________ (the "Assignor") and __________________________ (the
"Assignee").
PRELIMINARY STATEMENTS
A. Reference is made to the Credit Agreement dated as of February 8, 1995
among Hexcel Corporation (with its successors and permitted assigns, the
"Borrower"), the institutions from time to time party thereto as Lenders (the
"Lenders"), the institutions from time to time party thereto as Issuing Banks
(the "Issuing Banks"), and Citicorp USA, Inc., in its separate capacity as agent
for the Lenders and Issuing Banks (in such capacity, the "Agent")(as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement").
Terms defined in the Credit Agreement and not otherwise defined herein are used
herein with the meanings ascribed thereto in the Credit Agreement.
B. The Assignor is a Lender under the Credit Agreement and desires to
sell and assign to the Assignee, and the Assignee desires to purchase and assume
from the Assignor, on the terms and conditions set forth below, a ___ percent
(____%) interest in the aggregate Revolving Credit Commitments (the "Assigned
Percentage") together with the Assignor's rights and obligations under the
Credit Agreement with respect to the Assigned Percentage.
NOW, THEREFORE, the Assignor and the Assignee hereby agree as follows:
1. In consideration of the Assignee's payment to the Assignor of
$_______________, the Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, the Assigned
Percentage, together with the Assignor's rights and obligations under the Credit
Agreement with respect to such Assigned Percentage, including, without
limitation, the obligation to make Revolving Loans and to participate in Letters
of Credit.
<PAGE>
2. The Assignor (i) represents and warrants that as of the date hereof
its Pro Rata Share (without giving effect to assignments thereof which have not
yet become effective) is ____% and that such Pro Rata Share multiplied by the
aggregate Revolving Credit Commitments is equal to $_____________; (ii)
represents and warrants that it has legal and beneficial title to the interests
being assigned by it hereunder free and clear of any claim adverse to such
title; (iii) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or in
connection with the Credit Agreement or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of the Credit Agreement, any
of the other Loan Documents, or any other instrument or document furnished
pursuant thereto or executed and delivered in connection therewith; (iv) makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any of the Borrower's Subsidiaries or the
performance or observance by the Borrower or any of the Borrower's Subsidiaries
of any of such Persons' respective obligations under the Credit Agreement, any
other Loan Document or any instrument or document furnished pursuant thereto;
and (v) attaches the Revolving Loan Note delivered to it under the Credit
Agreement and has requested that the Borrower exchange such Note for the
following new Note(s):
Revolving Loan Revolving Loan
Note Payable Note Amount:
to the Order of:
---------------- ------------
[Name of Assignor] $_________
[Name of Assignee] $_________
3. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (ii) confirms that it has received
a copy of the Credit Agreement, together with copies of such other Loan
Documents, information, exhibits, reports, projections and forecasts which the
Assignee has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance; (iii) agrees that it shall have no
recourse against the Assignor with respect to any matters relating to the Credit
Agreement, any other Loan Document or this Assignment and Acceptance (except
with respect to the representations and warranties made by the Assignor in
CLAUSES (i) and (ii) of PARAGRAPH 2 above); (iv) agrees that it will,
independently and without reliance upon the Agent, any Issuing Bank, the
Assignor or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under the Credit Agreement and the other Loan
Documents; (v) appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under the Credit Agreement and the other
Loan Documents as are delegated to the Agent, by the terms
-2-
<PAGE>
thereof, together with such powers as are reasonably incidental thereto; (vi)
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement and other Loan Documents
are required to be performed by it as a Lender; (vii) confirms that it is an
Eligible Assignee; and (viii) specifies as its address for notices the address
set forth beneath its name on the signature page hereof, together with the name
and address of its Domestic Lending Office and its Eurodollar Lending Office.
4. The effective date for this Assignment and Acceptance shall be
___________ __, 199_ (the "Effective Date").(1) Following the execution of this
Assignment and Acceptance, it will be delivered to the Agent for acceptance by
the Agent and for recording in the Register by the Agent, together with a
processing and recordation fee of $2,500 to be paid to the Agent by the
[Assignor][Assignee](2).
5. As of the Effective Date, provided that the Agent accepts this
Assignment and Acceptance and the Borrower accepts the Assignee pursuant to the
terms of SECTION 13.01(b) of the Credit Agreement, (i) the Assignee shall be a
party to the Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and (ii) the
Assignor shall relinquish its rights and be released from its obligations under
the Credit Agreement with respect to the Assigned Percentage.
6. From and after the Effective Date, provided that the Agent accepts
this Assignment and Acceptance, the Agent shall make all payments under the
Credit Agreement in respect of the Assigned Percentage (including, without
limitation, all payments of principal, interest and fees with respect thereto)
to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement for periods prior to the
Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed in
accordance with, the law of the State of New York.
- ------------------
(1) Such date shall be at least two (2) Business Days after the date of
execution of this Assignment and Acceptance by the Assignor and Assignee.
(2) Insert applicable selection.
-3-
<PAGE>
IN WITNESS WHEREOF, intending to be legally bound, each of the
undersigned has caused this Assignment and Acceptance to be executed on its
behalf by its officer thereunto duly authorized, as of _________ __, 199_.
[NAME OF ASSIGNOR]
By______________________________
Name:_________________________
Title:________________________
New Pro Rata Share _______%
New Revolving
Credit Commitment $_______
[NAME OF ASSIGNEE]
By______________________________
Name:_________________________
Title:________________________
Notice Address and
Domestic Lending Office:
Eurodollar Lending Office:
Pro Rata Share _______%
Revolving Credit
Commitment $_______
-4-
<PAGE>
Agreed to and accepted this __
day of ___________, 199_
CITICORP USA, INC., as Agent
By____________________________
Title:
HEXCEL CORPORATION, as Borrower
By____________________________
Title:
-5-
<PAGE>
EXHIBIT B
TO
CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
FORM OF COLLECTION ACCOUNT AGREEMENT
To: Citicorp USA, Inc., in its capacity as agent (with its successors in such
capacity, the "Agent") for the Lenders (as defined below) and the Issuing
Banks (as defined below) under the Credit Agreement dated as of February
8, 1995 (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement") among Hexcel Corporation (the
"Borrower"), the financial institutions from time to time party thereto as
Lenders (the "Lenders"), the financial institutions from time to time
party thereto as Issuing Banks (the "Issuing Banks"), and the Agent.
RE: Collection Account[s] No[s]. _______________
maintained with ____________________________
This will confirm that the Borrower and the undersigned collection bank
(the "Bank") have agreed as follows with respect to the above-referenced deposit
account (the "Account").
1. The Borrower and the Bank acknowledge and confirm that all funds
now or at any time hereafter deposited to the Account and all of the Borrower's
rights regarding such Account constitute part of the collateral granted by the
Borrower to the Agent to secure certain obligations of the Borrower to financial
institutions for which the Agent acts as agent and that the Agent holds a
security interest in such funds.
2. A post box (the "Lock Box") has been rented in the name of the
Borrower at the ____________________ Post Office and the address to be used for
such box is: [Address]
3. Checks from the Borrower's customers will be mailed to the
foregoing address. The Bank's authorized representatives will have access to
the Lock Box under the authority given by the Borrower to the Post Office and
will make regular pick-ups from the Lock Box timed to gain the maximum benefit
of early presentation and availability of funds. Checks so received will be
processed and, where possible, started on their way through the regular
channels for payment upon receipt by the Bank. Credit for such items will be
given on the Bank's books relating to the Account. The Bank will present
checks so received for payment through the customary collection procedures and
subject to the terms of the Bank's by-laws covering the handling of items
deposited with it. Collected funds on deposit in the Account are
<PAGE>
to be electronically transferred on the date of deposit directly to the
following account (the "Concentration Account"):
ABA Number: 021000089
Citicorp USA, Inc.
399 Park Avenue, 10th Floor
New York, New York 10043
Account Name: CUSA - f.a.o. Hexcel Corporation
Concentration Account
Account Number: 4066-6421
Reference: Hexcel Corporation -- Lock Box Receipts
or to such other account as the Agent may designate in writing from time to
time.
4. The Bank may charge the amounts of deposited customer checks that
are returned for any reason to the Account.
5. All monies in the Account will become the property of the Agent
upon deposit therein and the Borrower will have no interest therein or any
control thereover. The Account will not be subject to any deductions, setoff,
banker's liens, or any other right in favor of any person other than the Agent,
except for the amount of returned checks as provided in paragraph 4 above. All
charges incurred in connection with the administration of the Account will be
payable by the Borrower. The Borrower and the Bank agree that neither will
close the Account without giving the Agent at least 60 days' prior written
notice.
6. At the end of each month, the Bank's regular statement covering the
deposits to and withdrawals from the Account is to be sent to the Borrower at
5794 West Las Positas Boulevard, Pleasanton, California, 94588, with a copy to
Citicorp USA, Inc., 399 Park Avenue, 10th Floor, New York, New York 10043,
Attention: Patricia Ellis.
7. This letter agreement is binding upon the Bank and the Borrower and
their successors and assigns and is enforceable by the Agent and its successor
and assigns. This letter agreement may not be modified except upon the mutual
consent of the Agent, the Bank, and the Borrower. The Bank and the Borrower
waive notice of acceptance hereof by the Agent and of any action taken or
omitted in reliance hereon.
8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
AND THE RIGHTS AND DUTIES OF THE PARTIES SHALL BE GOVERNED IN ALL RESPECTS IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
9. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed
-2-
<PAGE>
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
Dated this ___ day of ___________, 199_.
HEXCEL CORPORATION
By___________________________
Name:______________________
Title:_____________________
[COLLECTION ACCOUNT BANK]
By___________________________
Name:______________________
Title:_____________________
CITICORP USA, INC., as Agent
By___________________________
Name:______________________
Title:_____________________
-3-
<PAGE>
EXHIBIT C
TO
CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
FORM OF BORROWING BASE CERTIFICATE
__________ __, 19__
To: Citicorp USA, Inc., in its capacity as agent (with its successors in such
capacity, the "Agent") for the Lenders (as defined below) and the Issuing
Banks (as defined below) under the Credit Agreement dated as of February
8, 1995 (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement") among Hexcel Corporation (the
"Borrower"), the financial institutions from time to time party thereto as
Lenders (the "Lenders"), the financial institutions from time to time
party thereto as Issuing Banks (the "Issuing Banks"), and the Agent.
Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings herein.
Pursuant to the provisions of the Credit Agreement, the undersigned
officer of the Borrower hereby certifies the truth, accuracy and completeness of
the information set forth on Schedule I hereto with respect to the Inventory,
Receivables, Equipment and Real Property of the Borrower and the value of the
Hexcel Lyon Capital Stock Valuation as of the close of business on
_______________ (the "Period End Date").
Dated this ___ day of ___________, 199_.
HEXCEL CORPORATION
By___________________________
Name:______________________
Title:_____________________
<PAGE>
SCHEDULE I
HEXCEL CORPORATION
Summary of Credit Availability
AVAILABILITY
Accounts Receivable Availability
Inventory Availability
Plant, Property, Equipment & Other
(Maximum availability capped at $12,000,000) ____________
Total Availability
Less: Outstanding Loan Balance
Letter of Credit ____________
Net Availability ____________
-2-
<PAGE>
ACCOUNTS RECEIVABLE AS OF ____________________
Beginning of Period $
Sales
Cash Receipts
Credits Issued
Debit memos/misc. adj.
End of Period Balance ________
Gross Trade Accounts Receivable
Less: Ineligibles
Receivables greater than 90 days from invoice date
Credit balances greater than 90 days from invoice date
Cross-aging
Receivables from foreign accounts not backed by Letters of Credit
Receivables due from the U.S. Government
Chargebacks
Contras
Intercompany Receivables
Ineligible States - MN
Other
Total Ineligibles _________
Total Eligible Receivables _________
Available @ 85%
-3-
<PAGE>
INVENTORY
All
Others Seguin Gross Availability
Raw Materials $ $ $
Less: Reserves/
Ineligibles
Eligible Raw Materials
Eligible @ 55%(1)
Eligible @ 65%(2)
Work-in-Process
Less: Reserves/
Ineligibles
Eligible Work-in-Process
Eligible @ 10%(1)
Eligible @ 30%(2)
Finished Goods
Less: Reserves/
Ineligibles
Eligible Finished Goods
Eligible @50%(1)
Eligible @55%(2)
Total Inventory
Total Ineligible
Total Availability
(1) All others
(2) Seguin
-4-
<PAGE>
PLANT, PROPERTY, EQUIPMENT & OTHER
Book Advance
Value Eligible Rates Availability
Existing Machinery & $ $
Equipment
Existing Real Estate
Less: Amortization
($250,000 per
quarter)
Hexcel Lyon Capital
Stock(3) (Maximum
availability capped
at $3,000,000)
New Machinery &
Equipment
New Real Estate
Subtotal - Plant,
Property, Equipment &
Other
(3) Calculated as set forth in Schedule I attached hereto in accordance with
the definition of "Borrowing Base" as set forth in the Credit Agreement.
<PAGE>
SCHEDULE I
The Hexcel Lyon Capital Stock Valuation shall mean up to the lesser of (a)
$3,000,000 and (b) fifty percent (50%) of (I) EBITDA of Hexcel Lyon for the most
recently ended four fiscal quarter period ending on the last day of the second
fiscal quarter and the fourth fiscal quarter of each Fiscal Year (or such
interim rolling four fiscal quarter period as the Agent may select in its sole
discretion) MULTIPLIED BY two (2) MINUS (II) the average Indebtedness for
borrowed money and any guarantees of Indebtedness for borrowed money outstanding
of Hexcel Lyon during the four fiscal quarter period ending on such date, all
as calculated by the Agent in its sole discretion based on the average exchange
rates in effect during such four fiscal quarter period.
<PAGE>
EXHIBIT D
TO
CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
FORM OF NOTICE OF BORROWING
NOTICE OF BORROWING
To: Citicorp USA, Inc., in its capacity as agent (with its successors in such
capacity, the "Agent") for the Lenders (as defined below) and the Issuing
Banks (as defined below) under the Credit Agreement dated as of February
8, 1995 (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement") among Hexcel Corporation (the
"Borrower"), the financial institutions from time to time party thereto as
Lenders (the "Lenders"), the financial institutions from time to time
party thereto as Issuing Banks (the "Issuing Banks"), and the Agent.
Pursuant to SECTION 2.02(b) of the Credit Agreement,
this Notice of Borrowing ("Notice") represents the request of the Borrower to
borrow on [the date hereof] [_______________, 199__ ](the "Funding Date")(1)
from the Lenders the principal amount of $______________ in Swing Loans as Base
Rate Loans or, in the event that the Agent determines in its sole discretion
pursuant to SECTION 2.02(b) of the Credit Agreement that a Borrowing of Swing
Loans is not possible or feasible, in Revolving Loans as [Base Rate Loans]
[Eurodollar Rate Loans]. In the event that such Revolving Loans are Eurodollar
Rate Loans, the Interest Period for such Eurodollar Rate Loans is requested to
be a [one][three] month period. Proceeds of such Loans are to be deposited on
the Funding Date into the Borrower's Disbursement Account, in immediately
available funds. [The Revolving Credit Availability as of the date hereof is
$_____________.]
- --------------------
(1) For Borrowings of Swing Loans after the Closing Date, a Notice of Borrowing
must be given no later than 1:30 pm (New York time) on the day of the proposed
Borrowing of a Swing Loan. The Funding Date must be a Business Day.
<PAGE>
The Borrower certifies that as of the Funding Date all of the
conditions precedent contained in [SECTION 5.01 and 5.02 of the Credit
Agreement](2)[SECTION 5.02 of the Credit Agreement](3) have been
satisfied (or waived pursuant to SECTION 13.07 of the Credit Agreement) and
that all representations and warranties of the Borrower set forth in SECTION
6.01 of the Credit Agreement are true and correct in all material respects
(except for changes permitted under the Credit Agreement) on the Funding Date
(other than representations and warranties which expressly speak as of a
different date).
Unless otherwise defined herein, terms defined in the Credit
Agreement shall have the same meanings in this Notice.
Dated this ___ day of ___________, 199_.
HEXCEL CORPORATION
By___________________________
Name:______________________
Title:_____________________
- --------------------
(2) To be used for Revolving Loans to be made on the Closing Date.
(3) To be used for Revolving Loans and Swing Loans to be made after the Closing
Date.
-2-
<PAGE>
EXHIBIT E
TO
CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
FORM OF NOTICE OF CONVERSION/CONTINUATION
To: Citicorp USA, Inc., in its capacity as agent (with its successors in such
capacity, the "Agent") for the Lenders (as defined below) and the Issuing
Banks (as defined below) under the Credit Agreement dated as of February
8, 1995 (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement") among Hexcel Corporation (the
"Borrower"), the financial institutions from time to time party thereto as
Lenders (the "Lenders"), the financial institutions from time to time
party thereto as Issuing Banks (the "Issuing Banks"), and the Agent.
Pursuant to SECTION 4.01(c)(ii) of the Credit Agreement, this Notice of
Conversion/Continuation ("Notice") represents the election of the Borrower to
1. Convert $____________(1) in aggregate principal amount of Revolving
Loans consisting of Base Rate Loans from Base Rate Loans to Eurodollar Rate
Loans on ________________, 199_.(2) The initial Interest Period for such
Eurodollar Rate Loans is requested to be a [one][three] month period.
2. Convert $_____________ in aggregate principal amount of outstanding
Eurodollar Rate Loans to Base Rate Loans on ____________, 199__.(3)
3. Continue as Eurodollar Rate Loans $_______________(4) in aggregate
principal amount of Revolving Loans consisting of Eurodollar Rate Loans with a
current Interest Period ending _______________, 199_. The succeeding Interest
Period for such
- --------------------
(1) Must be in a principal amount of at least $5,000,000 and in integral
multiples of $1,000,000 in excess of that amount.
(2) Must be a Business Day at least three (3) Business Days following the
Business Day on which the Notice of Conversion/Continuation is delivered to the
Agent.
(3) Must be the date of expiration of the relevant Eurodollar Interest Periods.
(4) Must be in a principal amount of at least $5,000,000 and in integral
multiples of $1,000,000 in excess of that amount.
<PAGE>
Eurodollar Rate Loans is requested to be a [one][three] month period.
[The Borrower hereby certifies that (i) the proposed [continuation]
[conversion] would not violate any provisions of SECTION 4.02(b) AND (e) of
the Credit Agreement, (ii) no Default or Event of Default would occur or has
occurred and is continuing under the Credit Agreement and (iii) all
representations and warranties of the Borrower set forth in SECTION 6.01 of
the Credit Agreement are and will be true and correct in all material respects
(except for changes permitted under the Credit Agreement) on the date of the
proposed [continuation] [conversion] (other than representations and warranties
which expressly speak as of a different date).](5)
Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings in this Notice.
Dated this ___ day of ________, 199_.
HEXCEL CORPORATION
By__________________________
Name:_____________________
Title:____________________
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(5) To be used for continuations of, and conversions into, Eurodollar Rate
Loans.
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<PAGE>
EXHIBIT F
TO
CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
$45,000,000
SECURED CREDIT FACILITY
to
HEXCEL CORPORATION
February 8, 1995
LIST OF CLOSING DOCUMENTS(1)
A. LOAN DOCUMENTS
1. CREDIT AGREEMENT, dated as of February 8, 1995 (the
"Agreement") among Hexcel Corporation (the "Borrower"), the institutions from
time to time party thereto as lenders (the "Lenders"), the institutions from
time to time party thereto as issuing banks (the "Issuing Banks"), Citicorp USA,
Inc. ("Citicorp") in its capacity as agent for the Lenders and Issuing Banks (in
such capacity, the "Agent"), evidencing a secured revolving credit facility to
be made available to the Borrower of up to $45,000,000, with the Exhibits and
Schedules listed below attached thereto:
EXHIBITS
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Collection Account Agreement
Exhibit C -- Form of Borrowing Base Certificate
Exhibit D -- Form of Notice of Borrowing
Exhibit E -- Form of Notice of Conversion/Continuation
Exhibit F -- List of Closing Documents
Exhibit G -- Form of Officer's Certificate to Accompany Reports
Exhibit H -- Form of Swing Loan Note
Exhibit I -- Form of Revolving Loan Note
Exhibit J -- Form of Borrower Security Agreement
Exhibit K -- Form of Subsidiary Guaranty
Exhibit L -- Form of Borrower Trademark Security Agreement
Exhibit M -- Form of Borrower Patent Security Agreement
Exhibit N -- Form of Borrower Pledge Agreement
Exhibit O -- Form of Subsidiary Security Agreement
Exhibit P -- Form of Hexcel Lyon Subordinated Note
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(1) Capitalized terms used herein have the meanings ascribed to them in the
Agreement.
<PAGE>
SCHEDULES
Schedule 1.01.1 -- Initial Projection
Schedule 1.01.2 -- Sources and Uses
Schedule 1.01.3 -- Permitted Existing Accommodation
Obligations
Schedule 1.01.4 -- Permitted Existing Indebtedness
Schedule 1.01.5 -- Permitted Existing Investments
Schedule 1.01.6 -- Permitted Existing Liens
Schedule 1.01.7 -- Existing Industrial Revenue Development
Bonds
Schedule 6.01-C -- Authorized, Issued and Outstanding Capital
Stock; Subsidiaries
Schedule 6.01-D -- Conflicts with Contractual Obligations and
Requirements of Law
Schedule 6.01-E -- Governmental Consents
Schedule 6.01-I -- Litigation; Adverse Effects
Schedule 6.01-K -- Tax Payments
Schedule 6.01-O -- Environmental Matters
Schedule 6.01-P -- ERISA Matters
Schedule 6.01-R -- Labor Matters
Schedule 6.01-U -- Patent, Trademark & Permits
Schedule 6.01-V -- Assets and Properties
Schedule 6.01-W -- Insurance
Schedule 6.01-Y -- Transactions with Affiliates
Schedule 6.01-Z -- Collection Account Banks; Bank Accounts
Schedule 6.01-AA -- Outstanding Letters of Credit
Schedule 6.01-BB -- Government Contracts
Schedule 9.01 -- BNP Letters of Credit
Schedule 9.02 -- Properties to be Sold
Schedule 9.13 -- Management Incentive Plans
Schedule 9.16 -- Existing Industrial Revenue Bond Repayments
2. REVOLVING LOAN NOTES made by the Borrower in favor of the
Lenders in the aggregate principal amount of $45,000,000 evidencing the
obligation to repay Revolving Loans.
3. SWING LOAN NOTE made by the Borrower in favor of Citicorp,
as the Swing Loan Bank, in the principal amount of
$5,000,000 evidencing the obligation to repay Swing Loans.
4. LETTERS OF CREDIT to be issued for the account of the
Borrower on the Closing Date in favor of The CIT Group/Business Credit, Inc.
("CIT").
5. SUBSIDIARY GUARANTY made by each of the Restricted
Subsidiaries in favor of the Agent, the Lenders and the Issuing Banks, pursuant
to which each of the Restricted Subsidiaries guaranties the obligations of the
Borrower under the Credit Agreement.
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<PAGE>
B. SECURITY DOCUMENTS
6. BORROWER SECURITY AGREEMENT executed by the Borrower in
favor of the Agent, pursuant to which the Borrower grants to the Agent a
security interest in all of the Borrower's personal Property.
7. BORROWER PLEDGE AGREEMENT executed by the Borrower in favor
of the Agent evidencing the pledge of (i) all the issued and outstanding Capital
Stock of each of the Restricted Subsidiaries, together with the stock
certificates and appropriate stock powers undated and endorsed in blank, and
(ii) all of the Capital Stock owned by the Borrower of each of the Existing
Joint Ventures other than DIC.
8. BELGIAN PLEDGE AGREEMENT executed by the Borrower in favor
of the Agent (the "Belgian Pledge Agreement") evidencing the pledge of 65% of
the issued and outstanding Capital Stock of Hexcel S.A. (Belgium), together with
the stock certificates and appropriate stock powers undated and endorsed in
blank and a notice of pledge.
9. ENGLISH PLEDGE AGREEMENT executed by the Borrower in favor
of the Agent (the "English Pledge Agreement") evidencing the pledge of 65% of
the issued and outstanding Capital Stock of Hexcel (U.K.) Limited, together with
the share certificates and appropriate share transfer forms undated and endorsed
in blank and a certified copy of the Register of Members.
10. FRENCH PLEDGE AGREEMENT executed by the Borrower in favor of
the Agent (the "French Pledge Agreement") evidencing the pledge of 65% of the
issued and outstanding Capital Stock of Hexcel S.A. (France), together with the
stock certificates and appropriate stock powers undated and endorsed in blank.
11. TRADEMARK SECURITY AGREEMENT executed by the Borrower in
favor of the Agent pursuant to which the Borrower grants to the Agent a security
interest in all of the Borrower's trademarks, trade names and goodwill.
12. PATENT SECURITY AGREEMENT executed by the Borrower in favor
of the Agent pursuant to which the Borrower grants to the Agent a security
interest in all of the Borrower's patents and patent licenses.
13. SUBSIDIARY SECURITY AGREEMENT executed by the Restricted
Subsidiaries in favor of the Agent pursuant to which each of the Restricted
Subsidiaries grants to the Agent a security interest in all of its personal
Property.
14. COLLECTION ACCOUNT AGREEMENT among the Borrower, the Agent
and each of the following Collection Account Banks:
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<PAGE>
a. Wells Fargo Bank
b. Citibank Delaware
15. UCC LIEN SEARCH REPORTS of filings against the Borrower and
each Restricted Subsidiary in the offices set forth with respect to each such
entity on Schedule I hereto.
16. TAX LIEN AND JUDGMENT SEARCH REPORTS relating to the
Borrower and each Restricted Subsidiary in the offices set forth with respect to
each such entity on Schedule I hereto.
17. UCC-1 FINANCING STATEMENTS filed against the Borrower and
each Restricted Subsidiary with the offices set forth on Schedule II hereto.
18. LOSS PAYABLE ENDORSEMENT(S) relating to insurance policies
covering the Collateral (with copies of policies attached).
19. LANDLORD WAIVERS relating to the Collateral held on the
following properties:
a. Casa Grande, Arizona
b. Pottsville, Pennsylvania
c. Cerritos, California
d. Seguin, Texas
e. Burlington, Washington
C. REAL PROPERTY SECURITY DOCUMENTS
20. MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING FINANCING
STATEMENT AND ASSIGNMENT OF RENTS AND LEASES AND LEASEHOLD MORTGAGE, SECURITY
AGREEMENT, FIXTURE FILING FINANCING STATEMENT AND ASSIGNMENT OF RENTS AND
LEASES, executed by the Borrower in favor of the Agent in respect of the Casa
Grande, Arizona property.
a. Title Commitment/Policy
b. Survey
c. UCC-1 Fixture Filings filed against the Borrower with
County Clerk for Pinal County
21. MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING FINANCING
STATEMENT AND ASSIGNMENT OF RENTS AND LEASES, executed by the Borrower in
favor of the Agent in respect of the Livermore, California property.
a. Title Commitment/Policy
b. Survey
c. UCC-1 Fixture Filings filed against the Borrower with
County Clerk for Alameda County
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<PAGE>
22. MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING FINANCING
STATEMENT AND ASSIGNMENT OF RENTS AND LEASES, executed by the Borrower in
favor of the Agent in respect of the Dublin, California property.
a. Title Commitment/Policy
b. Survey
c. UCC-1 Fixture Filings filed against the Borrower with
County Clerk for Alameda County
23. MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING FINANCING
STATEMENT AND ASSIGNMENT OF RENTS AND LEASES, executed by the Borrower in
favor of the Agent in respect of the Lancaster, Ohio property.
a. Title Commitment/Policy
b. Survey
c. UCC-1 Fixture Filings filed against the Borrower with
County Clerk for Fairfield County
24. MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING FINANCING
STATEMENT AND ASSIGNMENT OF RENTS AND LEASES, executed by the Borrower in
favor of the Agent in respect of the Pottsville, Pennsylvania property.
a. Title Commitment/Policy
b. Survey
c. UCC-1 Fixture Filings filed against the Borrower with
County Clerk for Schuylkill County and the office of the
Secretary of State of Pennsylvania
25. MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING FINANCING
STATEMENT AND ASSIGNMENT OF RENTS AND LEASES, executed by the Borrower in
favor of the Agent in respect of the Seguin, Texas property.
a. Title Commitment/Policy
b. Survey
c. UCC-1 Fixture Filings filed against the Borrower with
County Clerk for Guadalupe County
26. LEASEHOLD MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING
FINANCING STATEMENT AND ASSIGNMENT OF RENTS AND LEASES, executed by the
Borrower in favor of the Agent in respect of the Burlington, Washington
property.
a. UCC-1 Fixture Filings filed against the Borrower with
County Clerk for Skagit County
-5-
<PAGE>
D. CORPORATE DOCUMENTS
27. CERTIFICATE OF INCORPORATION OF THE BORROWER together with
all amendments thereto certified by the Secretary of State of Delaware.
28. CERTIFICATE OF INCORPORATION OF EACH RESTRICTED SUBSIDIARY
together with all amendments thereto certified by the Secretary of State of the
such Restricted Subsidiary's jurisdiction or incorporation.
29. CERTIFICATE OF INCORPORATION (OR EQUIVALENT) OF EACH
UNRESTRICTED SUBSIDIARY, the stock of which is being pledged to the Agent
pursuant to the Loan Documents, together with all amendments thereto certified
by the appropriate Governmental Authority from the jurisdiction in which such
Unrestricted Subsidiary is incorporated.
30. GOOD STANDING CERTIFICATES FOR THE BORROWER from the
appropriate offices of the states set forth on Schedule III hereto under the
heading "Borrower Good Standing Certificates".
31. GOOD STANDING CERTIFICATES FOR EACH RESTRICTED SUBSIDIARY
from the appropriate offices of the states set forth on Schedule III hereto
under the heading "Restricted Subsidiaries Good Standing Certificates".
32. GOOD STANDING CERTIFICATES (OR EQUIVALENT) FOR HEXCEL (U.K)
LIMITED AND HEXCEL S.A. (BELGIUM) from the office of the appropriate
Governmental Authorities.
33. CERTIFICATE OF THE SECRETARY OF THE BORROWER, certifying,
among other things, (i) resolutions of the Board of Directors of the Borrower
authorizing, among other things, the Agreement, the Notes and the other Loan
Documents to which it is a party and the Transaction Documents to which it is a
party, (ii) the names and signatures of the officers of the Borrower authorized,
on behalf of the Borrower, to execute the Agreement, the Notes, the other Loan
Documents and Transaction Documents to which it is a party and the other
instruments and documents to be executed and delivered on behalf of the Borrower
during the term of the Agreement, (iii) that the copies of the Transaction
Documents to which it is party delivered to the Agent and the Lenders pursuant
to the Agreement are true and correct copies of such documents and such
documents have not been amended from the form of such documents delivered
pursuant thereto, (iv) that attached thereto is a true and correct copy of the
By-laws of the Borrower as in effect on the date of such certification and (v)
that there have been no changes in the Certificate of Incorporation of the
Borrower since the date of the most recent certification thereof by the
Secretary of State of Delaware.
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<PAGE>
34. CERTIFICATE OF THE SECRETARY OF EACH RESTRICTED SUBSIDIARY,
certifying, among other things, (i) resolutions of the Board of Directors of
such Restricted Subsidiary authorizing, among other things, the Subsidiary
Guaranty and the other Loan Documents to which it is a party and the Transaction
Documents to which it is a party, (ii) the names and signatures of the officers
of such Restricted Subsidiary authorized, on behalf of such Restricted
Subsidiary, to execute the Subsidiary Guaranty, the other Loan Documents and
Transaction Documents to which it is a party and the other instruments and
documents to be executed and delivered on behalf of such Restricted Subsidiary
during the term of the Agreement, (iii) that the copies of the Transaction
Documents to which it is party delivered to the Agent and the Lenders pursuant
to the Agreement are true and correct copies of such documents and such
documents have not been amended from the form of such documents delivered
pursuant thereto, (iv) that attached thereto is a true and correct copy of the
By-laws of such Restricted Subsidiary as in effect on the date of such
certification and (v) that there have been no changes in the Certificate of
Incorporation of such Restricted Subsidiary since the date of the most recent
certification thereof by the Secretary of State of its incorporation.
35. SHAREHOLDER CONSENTS OF THE SHAREHOLDERS OF EACH RESTRICTED
SUBSIDIARY, consenting to the resolutions adopted by the Board of Directors of
each such Restricted Subsidiary.
36. BY-LAWS OF EACH OF THE FOLLOWING UNRESTRICTED SUBSIDIARIES:
a. Hexcel (U.K) Limited
b. Hexcel S.A. (France)
c. Hexcel S.A. (Belgium)
E. OPINIONS
37. OPINION OF COUNSEL FOR THE BORROWER, Kronish, Lieb, Weiner &
Hellman, addressed to the Lenders, the Issuing Banks and the Agent.
38. OPINION OF CALIFORNIA COUNSEL FOR THE BORROWER, Wendel,
Rosen, Black & Dean, addressed to the Lenders, the Issuing Banks and the Agent.
39. OPINION OF INTELLECTUAL PROPERTY COUNSEL FOR THE BORROWER,
Townsend and Townsend Khourie and Crew, addressed to the Lenders, the Issuing
Banks and the Agent.
40. OPINION OF LOCAL COUNSEL FOR THE BORROWER from each of the
counsel of the Borrower set forth below in respect of real and personal property
matters, addressed to the Lenders, the Issuing Banks and the Agent:
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<PAGE>
a. Streich Lang (Arizona)
b. Kaufman & Cumberland Co. L.P.A. (Ohio)
c. Doepken, Keevican, Weiss & Medved (Pennsylvania)
d. Vinson & Elkins L.L.P. (Texas)
41. OPINION OF FOREIGN COUNSEL FOR THE BORROWER from each of the
foreign counsel of the Borrower set forth below in respect of the pledge of
foreign stock, addressed to the Lenders, the Issuing Banks and the Agent:
a. Baker & McKenzie (Belgium)
b. Baker & McKenzie (England)
c. S.G. Archibald (France)
42. OPINION OF FRENCH COUNSEL FOR THE AGENT, Jeantet &
Associes, in respect of the pledge of the stock of Hexcel S.A. (France),
addressed to the Lenders, the Issuing Banks and the Agent.
43. OPINION OF MCFARLIN AND ANDERSON addressed to the Borrower
and BNP, together with a supplemental memorandum regarding bond redemption
issues.
F. TRANSACTION DOCUMENTS
44. DISCLOSURE STATEMENT dated as of November 7, 1994.
45. PLAN OF REORGANIZATION dated as of November 7, 1994.
46. CONFIRMATION ORDER dated as of January 10, 1995.
47. SUBORDINATED DEBENTURE INDENTURE between the Borrower and
The Bank of California, N.A., as Trustee.
48. BNP LETTER OF CREDIT REIMBURSEMENT AGREEMENT evidencing the
BNP Letters of Credit to be issued on the Reorganization Effective Date.
49. BNP LETTERS OF CREDIT issued on the Reorganization Effective
Date.
50. ADDITIONAL BNP LETTER OF CREDIT DOCUMENTS.
51. STANDBY COMMITMENT between Mutual Series and the Borrower.
52. INTERCREDITOR AGREEMENT between Mutual Series and the Agent
acknowledged by the Borrower.
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<PAGE>
G. MISCELLANEOUS
53. PUBLICATION CONSENT executed by the Borrower and addressed
to the Lenders and the Agent.
54. BORROWING BASE CERTIFICATE executed by the Borrower on the
Closing Date, substantially in the form of EXHIBIT C.
55. LETTER FROM PROCESS AGENT accepting the appointment as the
Borrower's agent in New York, indicating such Process Agent's fees for the
longest contemplated term of the Agreement have been paid in full in advance.
56. OFFICER'S CERTIFICATE of the Borrower setting forth the
names of persons authorized to request Loans and Letters of Credit.
57. LIEN RELEASE AND TERMINATION LETTER addressed to the Lenders
and the Agent and the Borrower from CIT.
58. LIEN RELEASES executed by CIT in connnection with the
pledges by the Borrower of the stock of its foreign subsidiaries.
59. NOTICE OF SECURITY INTEREST IN DEPOSIT ACCOUNTS addressed to
Wells Fargo Bank from CIT.
60. INDEMNITY AGREEMENT executed by the Borrower in favor of
CIT.
61. BOUNCED CHECK INDEMNITY executed by the Agent in favor of
CIT.
62. NOTICE OF SECURITY INTEREST IN DEPOSIT ACCOUNTS addressed to
Wells Fargo Bank from the Agent.
63. NOTICE OF TERMINATION OF LOCKBOX AGREEMENT addressed to
Wells Fargo Bank from CIT.
64. NOTICE OF TERMINATION OF LOCKBOX AGREEMENT addressed to The
Northern Trust Company from CIT.
H. POSTCLOSING MATTERS
65. POSTCLOSING LIEN SEARCH REPORTS of filings against the
Borrower in the offices set forth with respect to the Borrower on Schedule II
hereto.
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<PAGE>
SCHEDULE I
(to Exhibit F to the Credit Agreement)
OFFICES SEARCHED
HEXCEL CORPORATION
JURISDICTIONS SEARCHED
UCC Lien, Tax Lien and Judgment Search Reports in the following
jurisdictions:
A. Borrower
ARIZONA
Secretary of State
Maricopa County
Pinal County
CALIFORNIA
Secretary of State
Alameda County
Los Angeles County
OHIO
Secretary of State
Fairfield County
PENNSYLVANIA
Secretary of State
Schuylkill County
TEXAS
Secretary of State
Tarrant County
Guadalupe County
Young County
WASHINGTON
Department of Licensing
Skagit County
B. Borrower's Restricted Subsidiaries:
HEXCEL INTERNATIONAL
CALIFORNIA
Secretary of State
Alameda County
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<PAGE>
DELAWARE
Secretary of State
HEXCEL FAR EAST
CALIFORNIA
Secretary of State
Alameda County
DELAWARE
Secretary of State
HEXCEL TECHNOLOGIES, INC.
CALIFORNIA
Secretary of State
Alameda County
DELAWARE
Secretary of State
EXPLANATION:
UCC = UCC-1s, UCC-2s and UCC-3s of Record.
FF = Fixture Filings
TL = State and Federal Tax Liens and Judgments
PSJ = Pending Suits & Judgments
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<PAGE>
SCHEDULE II
(to Exhibit F to the Credit Agreement)
FINANCING STATEMENTS FILED AGAINST THE BORROWER WITH:
a. ARIZONA
Secretary of State
b. CALIFORNIA
Secretary of State
c. DELAWARE
Secretary of State
d. GEORGIA
Gwinnett County
e. INDIANA
Lake County
f. OHIO
Secretary of State
Fairfield County
g. PENNSYLVANIA
Secretary of State
Schuylkill County
Chester County
h. TEXAS
Secretary of State
i. WASHINGTON
Secretary of State
Financing Statements filed against each Restricted Subsidiary with the
California Secretary of State.
Financing Statements filed against Hexcel Technologies, Inc. with the Delaware
Secretary of State.
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<PAGE>
SCHEDULE III
(to Exhibit F to the Credit Agreement)
BORROWER GOOD STANDING CERTIFICATES
Arizona
California
Connecticut
Delaware
Florida
Georgia
Illinois
Massachusetts
Michigan
New Jersey
Ohio
Pennsylvania
Texas
Washington
RESTRICTED SUBSIDIARY GOOD STANDING CERTIFICATES
HEXCEL INTERNATIONAL
California
HEXCEL FAR EAST
California
HEXCEL TECHNOLOGIES, INC.
Delaware
California
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<PAGE>
EXHIBIT G
TO
CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
FORM OF OFFICER'S CERTIFICATE TO ACCOMPANY REPORTS
OFFICER'S CERTIFICATE
To: Citicorp USA, Inc., in its capacity as agent (with its successors in such
capacity, the "Agent") for the Lenders (as defined below) and the Issuing
Banks (as defined below) under the Credit Agreement dated as of February
8, 1995 (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement") among Hexcel Corporation (the
"Borrower"), the financial institutions from time to time party thereto as
Lenders (the "Lenders"), the financial institutions from time to time
party thereto as Issuing Banks (the "Issuing Banks"), and the Agent.
Pursuant to SECTION 7.01(d) of the Credit Agreement, the Chief Financial
Officer of the undersigned, hereby certifies that:
1. I am the duly elected, qualified and acting [Chief Financial
Officer][Treasurer][Controller] of the Borrower.
2. Unless otherwise defined herein, terms defined in the Credit Agreement
shall have the same meanings in this Certificate.
3. There has been a review of the terms of the Loan Documents and a
review in reasonable detail of the transactions and consolidated and
consolidating financial condition of the Borrower and its Subsidiaries during
the accounting period(s) covered by the financial statements identified below.
Such review [has] [has not] disclosed the existence during or at the end of such
accounting period, and as at the date hereof the undersigned [does] [does not]
have knowledge, of any condition or event which constitutes a Default or an
Event of Default. [If such condition or event exists or existed, specify (i)
nature and period of such condition or event and (ii) action being taken and/or
proposed to be taken with respect thereto.]
4. The financial statements, reports and copies of certain instruments
and documents attached hereto, namely,
A. _______________, dated _______________
<PAGE>
B. _______________, dated _______________
C. _______________, dated _______________
D. _______________, dated _______________
are true, accurate and complete copies of the aforesaid instruments and
documents which constitute part of the customary books and records of the
Borrower.
5. The Compliance Certificate attached as Annex I hereto demonstrates
compliance by the Borrower with the provisions of the Credit Agreement referred
to in SECTION 7.01(d) thereof.
Dated this ___ day of ________, 199_.
HEXCEL CORPORATION
By__________________________
Name:_____________________
Title:____________________
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<PAGE>
EXHIBIT H
TO
CREDIT AGREEMENT
DATED AS OF FEBRUARY __, 1995
SWING LOAN NOTE
HEXCEL CORPORATION
$ 5,000,000.00 February 9, 1995
New York, New York
For value received, the undersigned, HEXCEL CORPORATION, a Delaware
corporation (the "Borrower"), promises to pay to the order of _______________
(the "Swing Loan Bank"), in accordance with SECTION 3.01(b)(iii) of the Credit
Agreement, on a daily basis, to the extent funds are on deposit in the
Concentration Account (as defined in the Credit Agreement referred to below)
and, if applicable, the Investment Account (as defined in the Credit Agreement
referred to below), or on each settlement date and, in any event, on the
Revolving Credit Termination Date (as defined in the Credit Agreement referred
to below), the lesser of (i) the principal amount of FIVE MILLION DOLLARS
($5,000,000.00) or (ii) the unpaid principal amount of all amounts loaned by the
Swing Loan Bank to the Borrower under this Note as Swing Loans under the Credit
Agreement.
The Borrower also promises to pay interest on the unpaid principal
amount borrowed hereunder from the date advanced until paid at the rates (which
shall not exceed the maximum rate permitted by applicable law) and at the times
determined in accordance with the provisions of that certain Credit Agreement
dated as of February 8, 1995 among the Borrower, the financial institutions from
time to time a party thereto as Lenders (the "Lenders"), the financial
institutions from time to time party thereto as Issuing Banks (the "Issuing
Banks"), and Citicorp USA, Inc., in its capacity as agent for the Lenders and
the Issuing Banks (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement").
This Note is issued pursuant to, and is entitled to the benefits of,
the Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Swing Loans evidenced
hereby are made and are to be repaid. Terms defined in the Credit Agreement and
not otherwise defined herein are used herein with the meanings so defined.
All payments of principal and interest in respect of this Note shall
be made to the Agent not later than 1:00 p.m. (New York time) on the date and at
the place due, to the Agent's
<PAGE>
Account in lawful money of the United States of America in same day funds.
This Note may be prepaid at any time at the option of the Borrower
without premium or penalty, and must be prepaid as provided in SECTIONS 2.02(d)
and 3.01(b) of the Credit Agreement.
The Credit Agreement and this Note shall be governed by, and shall
be construed and enforced in accordance with, the law of the State of New York.
The Swing Loan Bank shall record in accordance with its usual
practice the date and amount of each Swing Loan made hereunder and the date and
amount of each payment of principal; PROVIDED, HOWEVER, that the failure to
record any such amount shall not limit or otherwise affect the obligation of the
Borrower to repay the Swing Loan Bank the outstanding principal amount evidenced
by this Note together with accrued interest thereon in accordance with the terms
of the Credit Agreement.
Upon the occurrence of any one or more of certain Events of Default,
the unpaid balance of the principal amount of this Note may become, and upon the
occurrence and continuation of any one or more of certain other Events of
Default, such unpaid balance may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
No reference herein to the Credit Agreement and no provisions of
this Note, the Credit Agreement or the other Loan Documents shall alter or
impair the obligation of the Borrower, which is absolute and unconditional, to
pay the principal of and interest on this Note at the place, at the respective
times, and in the currency herein prescribed.
The Borrower promises to pay all costs and expenses, including
reasonable attorneys' fees and disbursements incurred in the collection and
enforcement of this Note or any appeal of a judgment rendered thereon all in
accordance with the provisions of the Credit Agreement. The Borrower hereby
waives diligence, presentment, protest, demand and notice of every kind except
as required pursuant to the Credit Agreement and to the full extent permitted by
law the right to plead any statute of limitations as a defense to any demands
hereunder.
This Note is secured by certain of the Loan Documents, and reference
is made to such Loan Documents for the terms and conditions governing the
collateral security for the Obligations of the Borrower hereunder.
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<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
and delivered by its duly authorized officer, as of the day and year and at the
place first above written.
HEXCEL CORPORATION
By_________________________
Name:
Title:
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<PAGE>
EXHIBIT I
TO
CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
REVOLVING LOAN NOTE
HEXCEL CORPORATION
$_________________ February 9, 1995
New York, New York
For value received, the undersigned, HEXCEL CORPORATION, a Delaware
corporation (the "Borrower"), promises to pay to the order of
____________________ (the "Lender"), on the Revolving Credit Termination Date
(as defined in the Credit Agreement referred to below), the lesser of (i) the
principal amount of ______________________________ DOLLARS ($_____________) or
(ii) the unpaid principal amount of all amounts loaned by the Lender to the
Borrower under this Note as Revolving Loans under the Credit Agreement.
The Borrower also promises to pay interest on the unpaid principal
amount borrowed hereunder from the date advanced until paid at the rates (which
shall not exceed the maximum rate permitted by applicable law) and at the times
determined in accordance with the provisions of that certain Credit Agreement
dated as of February 8, 1995 among the Borrower, the financial institutions from
time to time a party thereto as Lenders (the "Lenders"), the financial
institutions from time to time party thereto as Issuing Banks (the "Issuing
Banks"), and Citicorp USA, Inc., in its capacity as agent for the Lenders and
the Issuing Banks (as amended, restated, supplemented or otherwise modified from
time to time, the "Credit Agreement").
This Note is issued pursuant to, and is entitled to the benefits of,
the Credit Agreement, to which reference is hereby made for a more complete
statement of the terms and conditions under which the Revolving Loans evidenced
hereby are made and are to be repaid. Terms defined in the Credit Agreement and
not otherwise defined herein are used herein with the meanings so defined.
All payments of principal and interest in respect of this Note shall
be made to the Agent not later than 1:00 p.m. (New York time) on the date and at
the place due, to the Agent's Account in lawful money of the United States of
America in same day funds.
Subject to the terms and conditions of the Credit Agreement
(including, without limitation, SECTION 2.01 thereof),
<PAGE>
the Borrower may from time to time borrow, repay (without premium or penalty
except as provided in SECTION 4.02(f) of the Credit Agreement), and reborrow
the Revolving Loans under this Note. This Note must be prepaid as provided in
SECTION 3.01(b) of the Credit Agreement.
The Credit Agreement and this Note shall be governed by, and shall
be construed and enforced in accordance with, the law of the State of New York.
The Lender shall record in accordance with its usual practice the
date and amount of each Revolving Loan made hereunder and the date and amount of
each payment of principal; PROVIDED, HOWEVER, that the failure to record any
such amount shall not limit or otherwise affect the obligation of the Borrower
to repay the Lender the outstanding principal amount evidenced by this Note
together with accrued interest thereon in accordance with the terms of the
Credit Agreement.
Upon the occurrence of any one or more of certain Events of Default,
the unpaid balance of the principal amount of this Note may become, and upon the
occurrence and continuation of any one or more of certain other Events of
Default, such unpaid balance may be declared to be, due and payable in the
manner, upon the conditions and with the effect provided in the Credit
Agreement.
No reference herein to the Credit Agreement and no provisions of
this Note, the Credit Agreement or the other Loan Documents shall alter or
impair the obligation of the Borrower, which is absolute and unconditional, to
pay the principal of and interest on this Note at the place, at the respective
times, and in the currency herein prescribed.
The Borrower promises to pay all costs and expenses, including
reasonable attorneys' fees and disbursements incurred in the collection and
enforcement of this Note or any appeal of a judgment rendered thereon all in
accordance with the provisions of the Credit Agreement. The Borrower hereby
waives diligence, presentment, protest, demand and notice of every kind except
as required pursuant to the Credit Agreement and to the full extent permitted by
law the right to plead any statute of limitations as a defense to any demands
hereunder.
This Note is secured by certain of the Loan Documents, and reference
is made to such Loan Documents for the terms and conditions governing the
collateral security for the Obligations of the Borrower hereunder.
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<PAGE>
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
and delivered by its duly authorized officer, as of the day and year and at the
place first above written.
HEXCEL CORPORATION
By_____________________________
Name:
Title:
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<PAGE>
EXHIBIT J
TO CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
FORM OF BORROWER SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Security Agreement"), dated as of February 8,
1995, by and among Hexcel Corporation, a Delaware corporation (with its
successors and permitted assigns, the "Borrower"), and Citicorp USA, Inc., in
its capacity as agent (with its successors in such capacity, the "Agent") for
the Lenders (as defined below) and the Issuing Banks (as defined below) under
that certain Credit Agreement dated as of February 8, 1995 (as amended,
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement") among the Borrower, the Agent, the lenders from time to time a party
thereto (the "Lenders"), and the issuing banks from time to time a party thereto
(the "Issuing Banks"). Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings ascribed to such terms in the Credit
Agreement.
WITNESSETH:
WHEREAS, the Borrower is a party to the Credit Agreement, pursuant
to which the Lenders and the Issuing Banks have agreed, subject to certain
conditions precedent, to make loans and other financial accommodations to the
Borrower from time to time;
WHEREAS, in order to secure the prompt and complete payment,
observance and performance of (i) all of the Obligations and (ii) all of the
Borrower's obligations and liabilities hereunder and in connection herewith (all
the Obligations and such obligations and liabilities hereunder being hereinafter
referred to collectively as the "Liabilities"), the Agent, the Lenders and the
Issuing Banks have required as a condition, among others, to entering into the
Credit Agreement that the Borrower execute and deliver this Security Agreement;
NOW, THEREFORE, in consideration of the premises set forth above,
the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit Agreement. Unless otherwise defined herein or in the
Credit Agreement, all terms defined in Article 8 and Article 9 of the Uniform
<PAGE>
Commercial Code in effect as of the date hereof in the State of New York are
used herein as defined therein as of the date hereof.
(b) The words "hereby," "hereof," "herein" and "hereunder" and
words of like import when used in this Security Agreement shall refer to this
Security Agreement as a whole and not to any particular provision of this
Security Agreement, and section references are to this Security Agreement unless
otherwise specified.
(c) All terms defined in this Security Agreement in the singular
shall have comparable meanings when used in the plural, and VICE VERSA,
unless otherwise specified.
2. GRANT OF SECURITY INTEREST. To secure the prompt and
complete payment, observance and performance of all the Liabilities, the
Borrower hereby grants to the Agent for the benefit of the Agent, the Lenders,
the Issuing Banks and the other Holders a security interest in all of the
Borrower's rights, title and interests in and to the following property, whether
now owned or existing or hereafter arising or acquired and wheresoever located
(the "Collateral"):
(a) ACCOUNTS: All present and future accounts, accounts
receivable and other rights of the Borrower to payment for the sale or lease of
goods or the rendition of services (except those evidenced by instruments or
chattel paper), whether now existing or hereafter arising and wherever arising,
and whether or not they have been earned by performance (collectively,
"Accounts");
(b) EQUIPMENT: All of the Borrower's present and future (i)
equipment and fixtures, including, without limitation, wherever located,
printing presses and other machinery, manufacturing, distribution, selling, data
processing and office equipment, furniture, furnishings, assembly systems,
tools, tooling, molds, dies, appliances and vehicles, vessels and aircraft, (ii)
other tangible personal property (other than the Borrower's Inventory) and (iii)
any and all accessions, parts and appurtenances attached to any of the foregoing
or used in connection therewith, and any substitutions therefor and
replacements, products and proceeds thereof (collectively, "Equipment");
(c) GENERAL INTANGIBLES: All of the Borrower's present and future
general intangibles, choses in action, causes of action, and all other
intangible personal property of every kind and nature including, without
limitation, corporate, partnership and other business books and records,
inventions, designs, patents, patent applications, trademarks, service marks,
trademark applications, service mark applications, trade names, trade secrets,
goodwill, registrations, copyrights, licenses,
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<PAGE>
franchises, customer lists, computer programs, software and other computer
materials, tax refunds, tax refund claims, rights and claims against charters,
carriers, shippers, franchisees, lessors, and lessees, and rights to
indemnification, intercompany receivables, and any security documents executed
in connection therewith, deposit accounts, proceeds of any letters of credit,
indemnity, warranty or guaranty payable to the Borrower from time to time with
respect to the foregoing or proceeds of any insurance policies on which the
Borrower is named as beneficiary, claims against third parties for advances and
other financial accommodations and any other obligations whatsoever owing to the
Borrower, contract rights, customer and supplier contracts, rights in and to all
security agreements, security interests or other security held by the Borrower
to secure payment of the Borrower's accounts, all right, title and interest
under leases, subleases, and concessions and other agreements relating to real
or personal property (including, without limitation, all rents, issues and
profits related thereto), rights in and under guarantees, instruments,
securities, documents of title and other contracts securing, evidencing,
supporting or otherwise relating to any of the foregoing, together with all
rights in any goods, merchandise or Inventory (as defined below) which any of
the foregoing may represent (collectively, "General Intangibles");
(d) INVENTORY: All of the Borrower's present and future (i)
inventory, (ii) goods, merchandise and other personal property furnished or to
be furnished under any contract of service or intended for sale or lease, and
all goods consigned by the Borrower and all other items which have previously
constituted Equipment but are then currently being held for sale or lease in the
ordinary course of the Borrower's business, (iii) raw materials, work-in-process
and finished goods, (iv) materials, components and supplies of any kind, nature
or description used or consumed in the Borrower's business or in connection with
the manufacture, production, packing, shipping, advertising, finishing or sale
of any of the Property described in CLAUSES (i) through (iii) above, (v)
goods in which the Borrower has a joint or other interest to the extent of the
Borrower's interest therein or right of any kind (including, without limitation,
goods in which the Borrower has an interest or right as consignee), and (vi)
goods which are returned to or repossessed by the Borrower; in each case whether
in the possession of the Borrower, a bailee, a consignee, or any other Person
for sale, storage, transit, processing, use or otherwise, and any and all
documents for or relating to any of the foregoing (collectively, "Inventory");
(e) CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper,
all instruments (as defined in Article 9 of the Uniform Commercial Code) and
securities (as defined in Article 8 of the Uniform Commercial Code), all bills
of lading, warehouse receipts and other documents of title and documents, in
each
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<PAGE>
instance whether now owned or hereafter acquired by the Borrower (collectively,
"Chattel Paper, Instruments and Documents");
(f) OTHER PROPERTY: All property or interests in property now
owned or hereafter acquired by the Borrower whether in the possession, custody
or control of the Agent, any Lender, any Issuing Bank or any other Holder, or
any agent or affiliate of any of them in any way or for any purpose (whether for
safekeeping, deposit, custody, pledge, transmission, collection or otherwise),
including, without limitation, (i) each Lockbox, and all funds, drafts, checks
and other items deposited therein from time to time, (ii) each Collection
Account, and all funds, drafts, checks and other items deposited therein from
time to time, (iii) the Concentration Account, and all funds, drafts, checks and
other items deposited therein from time to time, and (iv) the Investment
Account, all funds, drafts, checks and other items deposited therein from time
to time, all Investments made from time to time in or through the Investment
Account, and all certificates and instruments, if any, from time to time
representing such Investments; and all rights and interests of the Borrower, now
existing or hereafter arising and however and wherever arising, in respect of
any and all (w) notes, drafts, letters of credit, stocks, bonds, and debt and
equity securities, whether or not certificated, and warrants, options, puts and
calls and other rights to acquire or otherwise relating to the same; (x) money;
(y) proceeds of loans, including, without limitation, all the Loans made to the
Borrower under the Credit Agreement; and (z) insurance proceeds and books and
records relating to any of the property covered by this Security Agreement
(collectively, "Other Property");
together with respect to each of the items set forth in paragraphs (a) through
(f) above with all accessions and additions thereto, substitutions therefor, and
replacements, proceeds and products thereof; PROVIDED, HOWEVER, that the
foregoing grant of a security interest shall not include a security interest in
any contract right, license, agreement, any lease pertaining to real or personal
property or any other document, instrument or agreement of the Borrower (each
such contract right, license agreement, lease pertaining to real or personal
property and other document, instrument or agreement of the Borrower being
hereinafter referred to as "Excluded Property"), IF the granting of a security
interest therein by the Borrower to the Agent is expressly prohibited by the
terms and provisions of the written agreement, document or instrument creating
or evidencing such Excluded Property or rights related thereto or by applicable
law (it being understood and agreed that promptly following a request by the
Agent, the Borrower shall use its best efforts to obtain from the Person in
whose favor the prohibition has been granted any necessary waiver or consent in
order to remove or terminate such prohibition or permit the Agent to have a
security interest in the Borrower's rights to any such Excluded Property subject
to such a prohibition and referred to
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<PAGE>
in such request, and that any such Excluded Property so referred to shall
constitute part of the Collateral automatically upon the execution and delivery
of the applicable waiver or consent). Notwithstanding anything set forth herein
to the contrary, the Agent will be deemed to have, and at all times from and
after the date hereof to have had, a security interest in the proceeds of such
Excluded Property to the extent that proceeds of such Excluded Property have
come into the possession of the Agent, have been deposited into any Collection
Account or the Concentration Account or otherwise constitute Collateral
hereunder.
3. CONTINUING LIABILITY. The Borrower hereby expressly agrees
that, notwithstanding anything set forth herein to the contrary, the Borrower
shall remain solely responsible under each contract, agreement, interest or
obligation as to which a Lien has been granted to the Agent hereunder for the
observance and performance of all of the conditions and obligations to be
observed and performed by the Borrower thereunder, all in accordance with and
pursuant to the terms and provisions thereof, and the exercise by the Agent, any
Lender or any Issuing Bank of any rights under this Security Agreement, the
Credit Agreement or any other Loan Document shall not release the Borrower from
any of the Borrower's duties or obligations hereunder and under each such
contract, agreement, interest or obligation. Neither the Agent nor any Lender
or Issuing Bank shall have any duty, responsibility, obligation or liability
under any such contract, agreement, interest or obligation by reason of or
arising out of this Security Agreement or the assignment thereof by the Borrower
to the Agent or the granting by the Borrower to the Agent of a Lien thereon or
the receipt by the Agent, any Lender or any Issuing Bank of any payment relating
to any such contract, agreement, interest or obligation pursuant hereto, nor
shall the Agent, any Lender or any Issuing Bank be required or obligated (nor to
the extent prohibited by the terms of such contract, agreement, interest or
obligation or applicable law, rule or regulation, shall the Agent, Lender or
Issuer be permitted), in any manner, to (a) perform or fulfill any of the
obligations of the Borrower thereunder or pursuant thereto, (b) make any
payment, or to make any inquiry as to the nature or the sufficiency of any
payment received by the Borrower or the sufficiency of any performance by any
party under any such contract, agreement, interest or obligation, or (c) present
or file any claim, or take any action to collect or enforce any performance or
payment of any amounts which may have been assigned to the Borrower, on which
the Borrower has been granted a Lien to which the Borrower may be entitled at
any time or times.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. The Borrower
hereby represents, warrants and covenants that as of the date of the execution
of this Security Agreement, and until
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<PAGE>
the termination of this Security Agreement pursuant to SECTION 14 below:
(a) All of the Equipment and Inventory (other than Inventory and
Equipment sold in accordance with the terms of the Credit Agreement,
Equipment being repaired or serviced, Inventory in transit or in the
possession and control of subcontractors of the Borrower and vehicles) are
located at the places specified in SCHEDULE 1 attached hereto and such
location is an owned, leased or bailment location as specified in
SCHEDULE 1 attached hereto. As of the date hereof, the correct
corporate name, the principal place of business, the chief executive
office, and the federal tax identification number of the Borrower and the
places where the Borrower's books and records concerning the Collateral
are currently kept are set forth in SCHEDULE 2 attached hereto and made
a part hereof, and the Borrower will not change such principal place of
business or chief executive office or remove such records without (i)
providing the Agent with at least thirty (30) days' prior written notice
of such change, and (ii) making all filings under the Uniform Commercial
Code necessary or appropriate to preserve the perfection of the security
interests described herein to the extent such security interest may be
perfected by such filings. The Borrower will not change its name,
identity or corporate structure in any manner which might make any
financing statement filed hereunder misleading, UNLESS the Borrower
shall have (A) given the Agent at least thirty (30) days' prior written
notice thereof (and received any consent that may be required under the
terms of the Credit Agreement), and (B) certified to the Agent that all
filings reflecting such new name, identity or structure have been made
which are necessary or appropriate to preserve the perfection of the
security interests described herein. The Borrower will hold and preserve
such records and chattel paper and will permit representatives of the
Agent at any time during normal business hours to inspect and make
abstracts from such records and chattel paper.
(b) The Borrower has exclusive possession and control of the
Equipment and Inventory, except for (i) Inventory in the possession and
control of a bailee or warehouseman of the Borrower as specified in
SCHEDULE 1 attached hereto; (ii) Inventory in the possession and control
of subcontractors of the Borrower; (iii) Equipment being repaired or
serviced; and (iv) Equipment and Inventory in transit with common or other
carriers.
(c) The Borrower is the legal and beneficial owner of the
Collateral free and clear of all Liens except as permitted under SECTION
9.03 of the Credit Agreement. The Borrower has not, during the five (5)
years preceding the date hereof, been known as or used any other corporate
or
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<PAGE>
fictitious name, except as disclosed on SCHEDULE 3 hereto, nor
acquired all or substantially all the assets, capital stock or operating
unit of any Person, except as disclosed on SCHEDULE 3 hereto and each
predecessor in interest of the Borrower during the five (5) years
preceding the Closing Date is disclosed on SCHEDULE 3 hereto.
(d) This Security Agreement creates in favor of the Agent a legal,
valid and enforceable security interest in the Collateral, securing the
payment of the Liabilities. When financing statements have been filed in
the appropriate offices in the locations listed on SCHEDULES 1 AND 2
hereto, the Agent will have a fully perfected first priority Lien on the
Collateral to the extent such Lien may be perfected by Uniform Commercial
Code filings, except, in the case of priority, for Liens permitted by
SECTION 9.03 of the Credit Agreement.
5. COVENANTS. The Borrower covenants and agrees with the Agent
that from and after the date of this Security Agreement and until the
termination of this Security Agreement pursuant to SECTION 14 below:
(a) At any time and from time to time, upon the Agent's written
request and at the expense of the Borrower, the Borrower will promptly and
duly execute and deliver any and all such further instruments and
documents and take such further action as the Agent reasonably may deem
desirable in order to perfect and protect any Lien granted or purported to
be granted hereby or to enable the Agent to exercise and enforce its
rights and remedies hereunder with respect to the Collateral. Without
limiting the generality of the foregoing, the Borrower will: (i) upon the
occurrence and during the continuance of an Event of Default, at the
request of the Agent, mark conspicuously each item of chattel paper
included in the Collateral and each related contract and, each of its
records pertaining to the Collateral, with a legend, in form and substance
satisfactory to the Agent, indicating that such document, chattel paper,
related contract or Collateral is subject to the security interest granted
hereby; (ii) if any Collateral shall be evidenced by a promissory note or
other instrument (other than checks or drafts received in the ordinary
course of the Borrower's business), deliver and pledge to the Agent
hereunder such note or instrument duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
satisfactory to the Agent; and (iii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments
or notices as the Agent may request, as may be necessary or desirable, in
order to perfect and preserve the security interest granted or purported
to be granted hereby. The Borrower hereby authorizes the Agent to
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<PAGE>
file any such financing or continuation statements without the signature
of the Borrower to the extent permitted by applicable law. The Borrower
hereby agrees that a carbon, photographic, photostatic or other
reproduction of this Security Agreement or of a financing statement is
sufficient as a financing statement to the extent permitted by applicable
law.
(b) The Borrower shall keep the Equipment and Inventory (other
than Inventory and Equipment sold in accordance with the terms of the
Credit Agreement, Equipment being repaired or serviced, Inventory in
transit or in the possession and control of subcontractors of the Borrower
and vehicles) at the places specified in SCHEDULE 1 hereto and deliver
written notice to the Agent at least 30 days prior to establishing any
other location at which it reasonably expects to maintain Inventory and/or
Equipment in any jurisdiction in which all action required by SECTION 5
hereof has not been taken with respect to all such Equipment and/or
Inventory. Upon the establishment of any such location, and after notice
thereof to the Agent as required in the preceding sentence, SCHEDULE 1
hereto shall be deemed amended to add such location thereto without
further action by the Agent or the Borrower and the Borrower hereby
authorizes the Agent to substitute a new SCHEDULE 1 hereto to reflect
such additional location(s).
(c) The Borrower will keep and maintain at the Borrower's own cost
and expense satisfactory and complete records of the Collateral in a
manner reasonably acceptable to the Agent, including, without limitation,
a record of all payments received and all credits granted with respect to
such Collateral and a record of the Agent's security interest in the
Collateral. Upon the occurrence and during the continuance of an Event of
Default, the Borrower shall, for the Agent's further security, deliver and
turn over to the Agent or the Agent's designated representatives at any
time upon three (3) days' notice from the Agent or the Agent's designated
representative, any such books and records (including, without limitation,
any and all computer tapes, programs and source codes relating to the
Collateral or any part or parts thereof).
(d) In any suit, proceeding or action brought by the Agent under
any account comprising part of the Collateral, the Borrower will save,
indemnify and keep the Agent, each Lender and each Issuing Bank harmless
from and against all expense, loss or damages suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the obligor thereunder, arising out of a breach by the
Borrower of any obligation or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such obligor
or its successors from
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<PAGE>
the Borrower, and all such obligations of the Borrower shall be and shall
remain enforceable against and only against the Borrower and shall not be
enforceable against the Agent, any Lender or any Issuing Bank; PROVIDED,
HOWEVER, the Borrower shall have no obligation to the Agent with respect
to the matters indemnified pursuant to this subsection (d) resulting from
the willful misconduct or gross negligence of the Agent, as determined in
a final non-appealable judgment by a court of competent jurisdiction.
(e) The Borrower will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action as is
necessary to remove, any Lien on such Collateral, other than Liens
permitted under SECTION 9.03 of the Credit Agreement, and will defend
the right, title and interest of the Agent in and to the Borrower's rights
to such Collateral, including, without limitation, the proceeds and
products thereof, against the claims and demands of all Persons whatsoever
other than claims secured by liens permitted under SECTION 9.03 of the
Credit Agreement.
(f) The Borrower will not, without the Agent's prior written
consent, except in the ordinary course of business and for amounts which
are not material to the Borrower in the aggregate, (i) grant any extension
of the time of payment of any of the Collateral or compromise, compound or
settle the same for less than the full amount thereof;
(ii) release, wholly or partly, any Person liable for the payment thereof;
or (iii) allow any credit or discount whatsoever thereon other than trade
discounts granted in the ordinary course of business.
6. COLLECTIONS. Except as otherwise provided in this SECTION
6, the Borrower shall continue to collect, at its own expense, all amounts due
or to become due to the Borrower under the Accounts. In connection with such
collections, the Borrower may take (and, after the occurrence of an Event of
Default, at the Agent's direction, must take) such action as the Borrower or,
after the occurrence and during the continuation an Event of Default, the Agent
may deem necessary or advisable to enforce collection of the Accounts;
PROVIDED, HOWEVER, that the Agent shall have the right at any time, upon the
occurrence and during the continuance of an Event of Default, to the extent
permitted by contract, agreement, interest or right giving rise to or relating
to such Account and under applicable law, rule and regulation, to require the
Borrower to prepare notices of assignment for each Government Contract and to
file such notices of assignment with the appropriate contracting officer of
the United States Government and to otherwise notify the account debtors or
obligors under any Accounts of the assignment of such Accounts to the Agent and
to direct such account debtors or obligors to make payment of all amounts due or
to become due to the Borrower thereunder directly to the Agent and, upon such
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notification and at the expense of the Borrower, to enforce collection of any
such Accounts, and to adjust, settle or compromise the amount or payment
thereof, in the same manner and to the same extent as the Borrower might have
done. After receipt by the Borrower of the notice from the Agent referred to in
the proviso to the preceding sentence, (i) all amounts and proceeds (including
instruments) received by the Borrower in respect of the Accounts shall be
received in trust for the benefit of the Agent, the Lenders, the Issuing Banks
and the other Holders hereunder, shall be segregated from other funds of the
Borrower and shall be forthwith paid over to the Agent in the same form as so
received (with any necessary endorsement) to be applied to the Obligations in
accordance with the Credit Agreement (including, without limitation, SECTION
3.02(b)(ii) thereof) and (ii) the Borrower shall not adjust, settle or
compromise the amount or payment of any Account, release wholly or partly any
account debtor or obligor thereof, or allow any credit or discount thereon.
7. REMEDIES, APPLICATION OF PROCEEDS, RIGHTS UPON EVENT OF
DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Agent may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies provided for in the Credit Agreement and all the rights
and remedies of a secured party under the Uniform Commercial Code, and all other
applicable law as in effect in any relevant jurisdiction; PROVIDED, HOWEVER,
that notwithstanding anything set forth herein to the contrary, in exercising
any rights provided in this Security Agreement or any of the other Loan
Documents the Agent shall not cause any of the Borrower's trademarks to be
abandoned by any assignment or conveyance of any such trademark separate from
the goodwill symbolized by such mark. In addition, the Agent may also:
(i) require the Borrower to, and the Borrower hereby agrees that
it will at its expense and upon request of the Agent, promptly assemble
all, or such part, of the Collateral as directed by the Agent and make
such Collateral available to the Agent at a place designated by the Agent,
which place shall be reasonably convenient to the Agent, whether at the
premises of the Borrower or otherwise;
(ii) enter, with or without process of law and without breach of
the peace, any premises where any of the Collateral or the books and
records of the Borrower related thereto are or may be located and, without
charge or liability to the Agent, seize and remove such Collateral and
such books and records from such premises, or remain upon such premises
and use the same for the purpose of enforcing any and all rights and
remedies of the Agent under this
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Security Agreement, the Credit Agreement or any of the other Loan
Documents; and
(iii) without notice, except as specified below, sell, lease,
assign, grant an option or options to purchase or otherwise dispose of all
or any part of the Collateral in one or more parcels, at public or private
sale or sales, at any exchange, broker's board or at any of the Agent's
offices or elsewhere, at such prices as the Agent may deem best, for cash,
on credit or for future delivery, and upon such other terms as the Agent
may deem commercially reasonable; PROVIDED, HOWEVER, that the Borrower
shall not be credited with the net proceeds of any such credit sale,
future delivery or lease of the Collateral until the cash proceeds thereof
are actually received by the Agent and PROVIDED, FURTHER that any such
sale, lease assignment, option to purchase or other disposition (each a
"disposition") shall be subject to any prohibition or restriction thereon
contained in any agreement, contract, interest or right comprising a part
of the Collateral subject to such disposition and any applicable law, rule
or regulation. The Borrower agrees that, to the extent notice of sale
shall be required by law, at least ten (10) Business Days' notice, or such
longer period as may be required by law, to the Borrower of the time and
place of any public sale, or the time after which any private sale is to
be made, shall constitute reasonable notification. No notification
required by law need be given to the Borrower if the Borrower has signed,
after the occurrence of an Event of Default, a statement renouncing any
right to notification of sale or other intended disposition. The Agent
shall not be obligated to make any sale of any of the Collateral
regardless of notice of sale having been given. The Agent may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned. The Agent, any Lender
and any of the Issuing Banks shall have the right upon any such public
sale or sales and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in the Borrower, which
right or equity is hereby expressly waived and released. In the event of
a sale of any Collateral, or any part thereof, to a Lender, an Issuing
Bank, or the Agent upon the occurrence and during the continuance of an
Event of Default, such Lender, Issuing Bank, or the Agent shall not deduct
or offset from any part of the purchase price to be paid therefor any
indebtedness owing to it by the Borrower. Any and all proceeds received
by the Agent with respect to any sale of, collection from or other
realization upon all or any part of the Collateral, whether consisting of
monies, checks, notes, drafts, bills of exchange, money orders or
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<PAGE>
commercial paper of any kind whatsoever, shall be held by the Agent and
distributed by the Agent in accordance with the Credit Agreement
(including, without limitation, SECTION 3.02(b)(ii) thereof) and the
Borrower shall remain liable for any deficiency following the sale of the
Collateral. Subject to the terms of any applicable license agreement to
which the Borrower is a party, the Agent is hereby granted an irrevocable
license or other right to use, without charge, the Borrower's labels,
copyrights, patents, rights of use of any name, trade names, general
intangibles, trademarks and advertising matter, or any property of a
similar nature, in completing production of, advertising for sale and
selling any Collateral.
(b) To the extent permitted by applicable law, the Borrower waives
all claims, damages and demands against the Agent, any Lender or any Issuing
Bank arising out of the repossession, retention or sale of the Collateral, or
any part or parts thereof, except any such claims, damages and awards arising
out of the gross negligence or willful misconduct of the Agent.
(c) The Borrower recognizes that in the event the Borrower fails
to perform, observe or discharge any of its obligations or liabilities under
this Security Agreement, no remedy at law will provide adequate relief to the
Agent and the Agent shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving actual damages.
(d) The rights and remedies provided under this Security Agreement
are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights and remedies provided by law or equity.
8. THE AGENT MAY PERFORM. If the Borrower fails to perform any
agreement contained herein, the Agent, upon written notice to the Borrower if
practicable, may itself perform, or cause performance of, such agreement, and
the expenses of the Agent incurred in connection therewith shall constitute
Protective Advances payable by the Borrower in accordance with the terms of the
Credit Agreement.
9. THE AGENT'S DUTY. The Agent shall have no duty with respect
to any Collateral except as set forth herein and in the Credit Agreement.
Without limiting the generality of the foregoing, the Agent shall be under no
obligation to take any steps necessary to preserve the rights of the Borrower in
the Collateral against any other parties but may do so at its option provided
that all expenses incurred in connection therewith shall be for the sole account
of the Borrower and shall be added to the Liabilities secured hereby.
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<PAGE>
10. MARSHALLING, PAYMENTS SET ASIDE; AGENT APPOINTED
ATTORNEY-IN-FACT. The Agent shall be under no obligation to marshal any assets
in favor of the Borrower or against or in payment of any or all of the
Liabilities. To the extent that the Borrower makes a payment or payments to the
Agent or the Agent receives any payment or proceeds of the Collateral for the
benefit of the Agent, any Lender, any Issuing Bank or any other Holder, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the Liabilities or any part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by the Agent.
The Borrower agrees, upon the request of the Agent and promptly
following such request, to take any action and execute any instrument which the
Agent may deem necessary or advisable to accomplish the purposes of this
Security Agreement. The Borrower hereby irrevocably constitutes and appoints
the Agent and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full power and authority in the name
of the Borrower, or in its own name, from time to time in the Agent's
discretion, for the purpose of carrying out the terms of this Security
Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes hereof and, without limiting the generality of the foregoing, hereby
gives the Agent the power and right on behalf of the Borrower, without notice to
or assent by the Borrower, to the extent permitted by applicable law, to do the
following:
(i) to obtain and adjust insurance required to be paid to the
Agent pursuant to SECTION 8.05 of the Credit Agreement;
(ii) ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipt for monies due and to become due under or
in respect of any of the Collateral;
(iii) receive, take, endorse, assign and deliver any and all checks,
notes, drafts, acceptances, documents and other negotiable and
nonnegotiable instruments, documents and chattel paper taken or received
by the Agent in connection with this Security Agreement;
(iv) to commence, file, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to the
Collateral;
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<PAGE>
(v) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of
this Security Agreement; and
(vi) to do, at its option and at the expense and for the account of
the Borrower, at any time or from time to time, all acts and things which
the Agent deems necessary to protect or preserve the Collateral and to
realize upon the Collateral.
11. SEVERABILITY. If any provision of this Security Agreement
is held to be prohibited or unenforceable in any jurisdiction the substantive
laws of which are held to be applicable hereto, such prohibition or
unenforceability shall not affect the validity or enforceability of the
remaining provisions hereof and shall not invalidate or render unenforceable
such provision in any other jurisdiction.
12. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of this Security Agreement may be waived, altered, modified or
amended, and no consent to any departure by the Borrower herefrom shall be
effective, except by or pursuant to an instrument in writing which (i) is duly
executed by the Borrower and the Agent and (ii) complies with the requirements
of the Credit Agreement. Any such waiver shall be valid only to the extent set
forth therein. A waiver by the Agent of any right or remedy under this Security
Agreement on any one occasion shall not be construed as a waiver of any right or
remedy which the Agent would otherwise have on any future occasion. No failure
to exercise or delay in exercising any right, power or privilege under this
Security Agreement on the part of the Agent shall operate as a waiver thereof;
and no single or partial exercise of any right, power or privilege under this
Security Agreement shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
13. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Security
Agreement shall be binding upon the Borrower and its successors, and upon any
assign(s) of the Borrower in accordance with SECTION 13.16 of the Credit
Agreement, and shall inure to the benefit of the Agent, the Lenders, the Issuing
Banks and the other Holders, and their respective successors and assigns.
Nothing set forth herein or in any other Loan Document is intended or shall be
construed to give any other Person any right, remedy or claim under, to or in
respect of this Security Agreement, the Credit Agreement or any other Loan
Document or any Collateral. The Borrower's successors shall include, without
limitation, a receiver, trustee or debtor-in-possession of or for the Borrower.
14. TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF
COLLATERAL.
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<PAGE>
(a) The security interest granted by the Borrower under this
Security Agreement shall terminate against all the Collateral upon final payment
in full in cash of the Obligations and termination of the Revolving Credit
Commitments. Upon such termination and at the written request of the Borrower
or its successors or assigns, and at the cost and expense of the Borrower or its
successors or assigns, the Agent shall execute in a timely manner a satisfaction
of this Security Agreement and such instruments, documents or agreements as are
necessary or desirable to terminate and remove of record any documents
constituting public notice of this Security Agreement and the security interests
and assignments granted hereunder and shall assign and transfer, or cause to be
assigned and transferred, and shall deliver or cause to be delivered to the
Borrower, all property, including all monies, instruments and securities of the
Borrower then held by the Agent.
(b) Notwithstanding anything in this Security Agreement to the
contrary, the Borrower may, to the extent permitted by SECTION 9.02 of the
Credit Agreement sell, assign, transfer or otherwise dispose of any Collateral.
In addition, the Collateral shall be subject to release from time to time (with
the Collateral referred to in the immediately preceding sentence, the "Released
Collateral") in accordance with SECTION 12.09(c) of the Credit Agreement. The
Liens under this Security Agreement shall terminate with respect to the Released
Collateral upon such sale, transfer, assignment, disposition or release, and
upon the request of the Borrower, the Agent shall execute and deliver such
instrument or document as may be necessary to release the Liens granted
hereunder; PROVIDED, HOWEVER, that (i) the Agent shall not be required to
execute any such documents on terms which, in the Agent's opinion, would expose
the Agent to liability or create any obligation or entail any consequence other
than the release of such Liens without recourse or warranty, and (ii) such
release shall not in any manner discharge, affect or impair the Liabilities or
any Liens on (or obligations of the Borrower in respect of) all interests
retained by the Borrower, including without limitation, the proceeds of any
sale, all of which shall continue to constitute part of the Collateral unless
and until applied strictly in accordance with the Loan Documents.
15. THE AGENT'S EXERCISE OF RIGHTS AND REMEDIES UPON THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT. Notwithstanding
anything set forth herein to the contrary, it is hereby expressly agreed that
upon the occurrence and during the continuance of an Event of Default, the Agent
may, and upon the written direction of the Requisite Lenders shall, exercise any
of the rights and remedies provided in this Security Agreement, the Credit
Agreement and any of the other Loan Documents.
16. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served,
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<PAGE>
given or delivered as provided in SECTION 13.08 of the Credit Agreement.
17. SECTION HEADINGS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
18. GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE GOVERNED
BY, AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK, EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS
IN OTHER JURISDICTIONS WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE
JURISDICTIONS.
19. FURTHER INDEMNIFICATION. The Borrower agrees to pay, and to
save the Agent, each Lender and each Issuing Bank harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all
excise, sales or other taxes which may be payable or determined to be payable
with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Security Agreement.
20. COUNTERPARTS. This Security Agreement may be executed in
separate counterparts, each of which shall be deemed to be an original and all
of which taken together shall constitute one and the same agreement.
21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The
Borrower agrees that the terms of SECTION 13.17 of the Credit Agreement with
respect to consent to jurisdiction and service of process shall apply equally to
this Security Agreement.
22. WAIVER OF BOND. The Borrower waives the posting of any bond
otherwise required of the Agent in connection with any judicial process or
proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Agent, or to enforce by specific performance, temporary restraining order,
or preliminary or permanent injunction, this Security Agreement or any other
agreement or document between the Agent and the Borrower.
23. ADVICE OF COUNSEL. The Borrower represents and warrants to
the Agent and the Lenders that it has discussed this Security Agreement and,
specifically, the provisions of SECTIONS 18, 21, 22 and 26 hereof,
with the Borrower's attorneys.
24. FURTHER ASSURANCES. The Borrower agrees that it will
cooperate with the Agent and will execute and deliver, or cause to be executed
and delivered, all such other stock powers, proxies, instruments and documents,
and will take all such other actions, including, without limitation, the
execution and filing of financing statements, as the Agent may reasonably
request from
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<PAGE>
time to time in order to carry out the provisions and purposes of this Security
Agreement.
25. THE AGENT'S DUTY OF CARE. The Agent shall not be liable for
any acts, omissions, errors of judgment or mistakes of fact or law including,
without limitation, acts, omissions, errors or mistakes with respect to the
Collateral, except for those arising out of or in connection with the Agent's
(i) gross negligence or willful misconduct, or (ii) failure to use reasonable
care with respect to the safe custody of the Collateral in the Agent's
possession. Without limiting the generality of the foregoing, the Agent shall
be under no obligation to take any steps necessary to preserve rights in the
Collateral against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the Borrower,
and shall constitute part of the Liabilities secured hereby.
26. WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE AGENT
WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE, BETWEEN THE AGENT AND THE BORROWER ARISING OUT OF OR RELATED
TO THE TRANSACTIONS CONTEMPLATED BY THIS SECURITY AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH.
EITHER THE BORROWER OR THE AGENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SECURITY AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement or caused this Security Agreement to be executed and delivered by
their duly authorized officers as of the date first set forth above.
HEXCEL CORPORATION
By____________________________
Name:
Title:
CITICORP USA, INC., as Agent
By____________________________
Name:
Title:
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<PAGE>
SCHEDULE 1
TO
SECURITY AGREEMENT
Dated as of February __, 1995
LOCATIONS OF INVENTORY AND EQUIPMENT
AND STATUS
LOCATION STATUS
<PAGE>
SCHEDULE 2
TO
SECURITY AGREEMENT
Dated as of February __, 1995
LOCATIONS OF BOOKS AND RECORDS
1. CORRECT CORPORATE NAME
2. CHIEF EXECUTIVE OFFICE
3. PRINCIPAL PLACE OF BUSINESS
4. FEDERAL TAX IDENTIFICATION NUMBER
5. LOCATION(S) OF THE BORROWER'S
BOOKS AND RECORDS CONCERNING THE COLLATERAL
Corporate Books and Accounting Records:
<PAGE>
SCHEDULE 3
TO
SECURITY AGREEMENT
Dated as of February __, 1995
I. PREVIOUS BORROWER NAMES
II. ACQUISITIONS OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS,
CAPITAL STOCK OR OPERATING UNIT OF ANY PERSON
(i)
(ii)
(iii)
III. PREDECESSOR IN INTEREST OF THE BORROWER
DURING THE FIVE PRECEDING YEARS
<PAGE>
EXHIBIT K
TO CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
FORM OF SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY ("Guaranty") is made as of the eighth day
of February, 1995, by HEXCEL INTERNATIONAL, a California corporation, HEXCEL FAR
EAST, a California corporation, HEXCEL TECHNOLOGIES, INC., a Delaware
corporation, and each Restricted Subsidiary of Hexcel Corporation which becomes
a party hereto pursuant to SECTION 24 hereof (each individually a "Guarantor,"
and collectively the "Guarantors"), in favor of CITICORP USA, INC., as agent
for the Lenders and the Issuing Banks (with its successors and permitted assigns
in such capacity, the "Agent") for the ratable benefit of the Agent, the Lenders
and the Issuing Banks. Unless otherwise defined herein, capitalized terms used
herein shall have the meanings ascribed to them in the Credit Agreement referred
to below.
W I T N E S S E T H
WHEREAS, Hexcel Corporation, a Delaware corporation ("Borrower"),
the financial institutions party thereto from time to time as lenders (the
"Lenders"), the institutions party thereto from time to time as issuing banks
(the "Issuing Banks"), and Citicorp USA, Inc. in its capacity as agent for the
Lenders and the Issuing Banks (the "Agent") have entered into that certain
Credit Agreement, dated as of February 8, 1995 (as the same may be amended,
restated, modified or supplemented from time to time, the "Credit Agreement");
WHEREAS, each Guarantor is a direct wholly-owned Subsidiary of
Borrower;
WHEREAS, the Lenders, the Issuing Banks and the Agent have required
as a condition, among others, to entering into the Credit Agreement, that each
Guarantor guarantee the Obligations of Borrower;
NOW THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. GUARANTY. (i) For value received and in consideration of any
loan, advance or financial accommodation of any kind whatsoever heretofore, now
or hereafter made, given or granted to the Borrower by the Lenders and the
Issuing Banks, each
<PAGE>
Guarantor jointly and severally unconditionally guarantees for the benefit of
the Agent, the Issuing Banks and the Lenders the full and prompt payment when
due, whether at maturity or earlier, by reason of acceleration or otherwise, and
at all times thereafter, of all the Obligations (including, without limitation,
interest accruing following the filing of a bankruptcy petition by or against
the Borrower, at the applicable rate specified in the Credit Agreement, whether
or not such interest is allowed as a claim in bankruptcy).
(ii) At any time after the occurrence of an Event of Default, each
Guarantor shall jointly and severally pay to the Agent, for the benefit of the
Agent, the Issuing Banks and the Lenders, on demand and in immediately available
funds, the full amount of the Obligations (including any portion thereof which
is not yet due and payable). Each Guarantor further agrees to jointly and
severally pay and reimburse the Agent, the Issuing Banks and the Lenders for, on
demand and in immediately available funds, (a) all fees, costs and expenses
(including, without limitation, all court costs and attorneys' fees, costs and
expenses) paid or incurred by the Agent, the Issuing Banks or the Lenders in:
(1) endeavoring to collect all or any part of the Obligations from, or in
prosecuting any action against, the Borrower or such Guarantor relating to the
Credit Agreement, this Guaranty or the transactions contemplated thereby; (2)
taking any action with respect to any security or collateral securing the
Obligations or such Guarantor's obligations hereunder; and (3) preserving,
protecting or defending the enforceability of, or enforcing, this Guaranty or
the Agent's rights hereunder (all such costs and expenses are hereinafter
referred to as the "Expenses") and (b) interest on (1) the Obligations which do
not constitute interest, (2) to the extent permitted by applicable law, the
Obligations which constitute interest, and (3) the Expenses, from the date of
demand under this Guaranty until paid in full at the per annum rate of interest
described in Section 4.01(d) of the Credit Agreement. Each Guarantor hereby
agrees that this Guaranty is an absolute guaranty of payment and is not a
guaranty of collection.
(iii) The Guarantors agree as between themselves and without
limiting any liability of any Guarantor hereunder to the Agent, the Issuing
Banks or the Lenders, that to the extent any payment of the Obligations of the
Borrower is required to be made under this Guaranty, each Guarantor shall be
responsible for a portion of such payment equal to the product of (a) a
fraction, the numerator of which is the net worth (determined in accordance with
GAAP) of such Guarantor on the date of such payment and the denominator of which
is the aggregate net worth (computed as aforesaid) of the Guarantors,
MULTIPLIED BY (b) the amount of such payment (such product being such
Guarantor's "Contribution Amount"). To the extent that any Guarantor (the
"Paying Guarantor") shall make a payment in respect of the Obligations of the
Borrower under this Guaranty in excess of its Contribution Amount, the other
Guarantors shall reimburse the Paying Guarantor
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<PAGE>
in an amount equal to the excess of such payment over the Paying Guarantor's
Contribution Amount, PRO RATA based on the respective net worths of such other
Guarantors at the date enforcement under this Guaranty is sought.
(iv) Notwithstanding anything contained in this Guaranty to the
contrary, the amount guaranteed by each Guarantor hereunder shall be limited to
an aggregate amount which is equal to the largest amount that would not be
subject to avoidance under Section 548 of Title 11 of the United States Code (11
U.S.C. Sections 101 ET SEQ.) (the "Bankruptcy Code") or any applicable
of any comparable state law.
2. OBLIGATIONS UNCONDITIONAL. Each Guarantor hereby agrees that
its obligations under this Guaranty shall be unconditional, irrespective of:
(i) the validity, enforceability, avoidance or subordination of any
of the Obligations or any of the Loan Documents;
(ii) the absence of any attempt by, or on behalf of, the Agent, any
of the Issuing Banks or any of the Lenders to collect, or to take any
other action to enforce, all or any part of the Obligations whether from
or against the Borrower, any Guarantor or other guarantor of the
Obligations or any other Person;
(iii) the election of any remedy by, or on behalf of, the Agent, any
of the Issuing Banks or any of the Lenders with respect to all or any part
of the Obligations;
(iv) the waiver, consent, extension, forbearance or granting of any
indulgence by, or on behalf of, the Agent, any of the Issuing Banks or any
of the Lenders with respect to any provision of any of the Loan Documents;
(v) the failure of the Agent, any of the Issuing Banks or any of the
Lenders to take any steps to perfect and maintain its security interest
in, or to preserve its rights to, any security or collateral for the
Obligations;
(vi) the election by, or on behalf of, the Agent, any of the Issuing
Banks or any of the Lenders, in any proceeding instituted under Chapter 11
of Bankruptcy Code, of the application of Section 1111(b)(2) of the
Bankruptcy Code;
(vii) any borrowing or grant of a security interest by the Borrower,
as debtor-in-possession, under Section 364 of the Bankruptcy Code;
(viii) the disallowance, under Section 502 of the Bankruptcy Code,
of all or any portion of the claims against the Borrower of any of the
Lenders, any of the Issuing Banks,
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<PAGE>
or the Agent for repayment of all or any part of the Obligations or any
Expenses; or
(ix) any other circumstance which might otherwise constitute a legal
or equitable discharge or defense of the Borrower or the Guarantors.
3. ENFORCEMENT; APPLICATION OF PAYMENTS. Upon the occurrence of
an Event of Default, the Agent, the Issuing Banks and/or the Lenders may proceed
directly and at once, without notice, against any Guarantor to obtain
performance of and to collect and recover the full amount, or any portion, of
the Obligations, without first proceeding against the Borrower or any other
Person, or against any security or collateral for the Obligations. Subject only
to the terms and provisions of the Credit Agreement, the Lenders and the Issuing
Banks shall have the exclusive right to determine the application of payments
and credits, if any, from any Guarantor's, the Borrower or from any other Person
on account of the Obligations or any other liability of the Guarantors to the
Agent, any of the Issuing Banks or any of the Lenders.
4. WAIVERS. (i) Each Guarantor hereby waives diligence,
presentment, demand of payment, filing of claims with a court in the event of
receivership or bankruptcy of the Borrower, protest or notice with respect to
the Obligations, all setoffs and counterclaims and all presentments, demands for
performance, notices of nonperformance, protests, notices of protest, notices of
dishonor and notices of acceptance of this Guaranty, the benefits of all
statutes of limitation, and all other demands whatsoever (and shall not require
that the same be made on the Borrower as a condition precedent to such
Guarantor's obligations hereunder), and covenants that this Guaranty will not be
discharged, except by complete payment (in cash) and performance of the
Obligations and any other obligations contained herein. Each Guarantor further
waives all notices of the existence, creation or incurring of new or additional
Indebtedness, arising either from additional loans extended to the Borrower or
otherwise, and also waives all notices that the principal amount, or any portion
thereof, and/or any interest on any instrument or document evidencing all or any
part of the Obligations is due, notices of any and all proceedings to collect
from the maker, any endorser or any other guarantor of all or any part of the
Obligations, or from any other Person, and, to the extent permitted by law,
notices of exchange, sale, surrender or other handling of any security or
collateral given to the Agent, any of the Issuing Banks or any of the Lenders to
secure payment of all or any part of the Obligations.
(ii) Each Guarantor understands that if all or any part of the
Obligations is secured by Real Property, such Guarantor shall be liable for the
full amount of its liability under this Guaranty, notwithstanding foreclosure of
such Real Property by trustee sale or any other reason impairing the right of
such
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<PAGE>
Guarantor or the Agent, any of the Issuing Banks or any of the Lenders to
proceed against the Borrower or the Borrower's Property. Each Guarantor hereby
waives, to the fullest extent permitted by law, all rights and benefits under
Section 2809 of the California Civil Code (or any similar law in any other
jurisdiction) purporting to reduce a guarantor's obligation in proportion to the
principal obligation. Each Guarantor hereby waives, to the fullest extent
permitted by law, all rights and benefits under: (a) Section 580a of the
California Code of Civil Procedure (or any similar law in any other
jurisdiction) purporting to limit the amount of any deficiency judgment which
might be recoverable following the occurrence of a trustee's sale under a deed
of trust, (b) Section 580b of the California Code of Civil Procedure (or any
similar law in any other jurisdiction) providing that no deficiency may be
recovered on a real property purchase money obligation, and (c) Section 726 of
the California Code of Civil Procedure (or any similar law in any other
jurisdiction) providing that only one form of action may be maintained to
enforce a mortgage on real property or indebtedness secured by a mortgage on
real property, if such sections, or any of them, have any application hereto or
any application to such Guarantor. Each Guarantor hereby waives, to the fullest
extent permitted by law, all rights and defenses arising out of an election of
remedies by the Agent, any Issuing Bank or any Lender, even though that election
of remedies, such as a nonjudicial foreclosure with respect to security for a
guaranteed obligation, has destroyed such Guarantor's rights of subrogation and
reimbursement against the Borrower by operation of Section 580d of the
California Code of Civil Procedure or otherwise (or any similar law in any other
jurisdiction). In addition, each Guarantor hereby waives, to the fullest extent
permitted by law, without limiting the generality of the foregoing or any other
provision hereof, all rights and benefits under California Civil Code Sections
2810, 2819, 2839, 2845, 2849, 2850, 2899, and 3433 (or any similar law in any
other jurisdiction).
(iii) The Agent, the Issuing Banks and/or the Lenders are hereby
authorized, without notice or demand and without affecting the liability of the
Guarantors hereunder, from time to time, (a) to renew, extend, accelerate or
otherwise change the time for payment of, or other terms relating to, all or any
part of the Obligations, or to otherwise modify, amend or change the terms of
any of the Loan Documents; (b) to accept partial payments on all or any part of
the Obligations; (c) to take and hold security or collateral for the payment of
all or any part of the Obligations, this Guaranty, or any other guaranties of
all or any part of the Obligations or other liabilities of the Borrower, (d) to
exchange, enforce, waive and release any such security or collateral; (e) to
apply such security or collateral and direct the order or manner of sale thereof
as in its discretion it may determine; (f) to settle, release, exchange,
enforce, waive, compromise or collect or otherwise liquidate all or any part of
the Obligations, this Guaranty, any other guaranty of all or any part of the
Obligations, and any security or collateral for the
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Obligations or for any such guaranty. Any of the foregoing may be done in any
manner, without affecting or impairing the obligations of the Guarantors
hereunder.
5. SETOFF. At any time after all or any part of the Obligations
have become due and payable (by acceleration or otherwise), the Lenders and the
Issuing Banks may, without notice to any Guarantor and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate and
apply toward the payment of all or any part of the Obligations (i) any
Indebtedness due or to become due from the Lenders or the Issuing Banks to such
Guarantor, and (ii) any moneys, credits or other property belonging to such
Guarantor, at any time held by or coming into the possession of the Lenders or
the Issuing Banks or their respective affiliates.
6. FINANCIAL INFORMATION. Each Guarantor hereby assumes
responsibility for keeping itself informed of the financial condition of the
Borrower and any and all other Guarantors and endorsers and/or other guarantors
of all or any part of the Obligations, and of all other circumstances bearing
upon the risk of nonpayment of the Obligations, or any part thereof, that
diligent inquiry would reveal, and such Guarantor hereby agrees that the Agent,
the Issuing Banks and the Lenders shall have no duty to advise any Guarantor of
information known to it regarding such condition or any such circumstances. In
the event the Agent, any of the Issuing Banks or any of the Lenders, in its sole
discretion, undertakes at any time or from time to time to provide any such
information to any Guarantor, the Agent, such Issuing Bank or such Lender shall
be under no obligation (i) to undertake any investigation not a part of its
regular business routine, (ii) to disclose any information which the Agent, such
Issuing Bank or such Lender, pursuant to accepted or reasonable commercial
finance or banking practices, wishes to maintain confidential or (iii) to make
any other or future disclosures of such information or any other information to
such Guarantor.
7. NO MARSHALLING; REINSTATEMENT. Each Guarantor consents and
agrees that none of the Agent, any of the Issuing Banks or any of the Lenders or
any Person acting for or on behalf of the Agent shall be under any obligation to
marshall any assets in favor of any Guarantor or against or in payment of any or
all of the Obligations. Each Guarantor further agrees that, to the extent that
the Borrower, any Guarantor or any other guarantor of all or any part of the
Obligations makes a payment or payments to the Agent or the Lenders or the
Issuing Banks, or the Agent or any Lender or Issuing Bank receives any proceeds
of Collateral, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to the Borrower, any Guarantor, such other guarantor or
any other Person, or their respective estates, trustees, receivers or any other
party, including, without limitation, such Guarantor, under any bankruptcy law,
state or
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federal law, common law or equitable cause, then, to the extent of such payment
or repayment, the part of the Obligations which has been paid, reduced or
satisfied by such amount shall be reinstated and continued in full force and
effect as of the time immediately preceding such initial payment, reduction or
satisfaction.
8. SUBROGATION. Until the Obligations shall have been paid in
full, each Guarantor hereby agrees that it (i) shall have no right of
subrogation with respect to such Obligations (under contract, Section 509 of the
Bankruptcy Code or otherwise) or any other right of indemnity, reimbursement or
contribution, and (ii) hereby waives any right to enforce any remedy which the
Agent, any of the Lenders or any of the Issuing Banks now have or may hereafter
have against the Borower, any endorser or any other guarantor of all or any part
of the Obligations or any other Person, and each Guarantor hereby waives any
benefit of, and any right to participate in, any security or collateral given to
the Agent, the Lenders and the Issuing Banks to secure the payment or
performance of all or any part of the Obligations or any other liability of the
Borrower to the Agent, the Lenders and the Issuing Banks.
9. SUBORDINATION. Each Guarantor agrees that any and all claims
of such Guarantor against the Borrower, any other Guarantor or any endorser or
other guarantor of all or any part of the Obligations, or against any of their
respective properties, shall be subordinated to all of the Obligations.
Notwithstanding any right of any Guarantor to ask, demand, sue for, take or
receive any payment from the Borrower, all rights and Liens of such Guarantor,
whether now or hereafter arising and howsoever existing, in any assets of the
Borrower (whether constituting part of the Collateral or otherwise) shall be and
hereby are subordinated to the rights of the Agent, the Issuing Banks or the
Lenders in those assets. Such Guarantor shall have no right to possession of
any such asset or to foreclose upon any such asset, whether by judicial action
or otherwise, unless and until all of the Obligations shall have been fully paid
and satisfied and all financing arrangements between the Borrower and the
Lenders and the Issuing Banks have been terminated. If all or any part of the
assets of the Borrower, or the proceeds thereof, are subject to any
distribution, division or application to the creditors of the Borrower, whether
partial or complete, voluntary or involuntary, and whether by reason of
liquidation, bankruptcy, arrangement, receivership, assignment for the benefit
of creditors or any other action or proceeding, or if the business of the
Borrower is dissolved or if substantially all of the assets of the Borrower are
sold, then, and in any such event, any payment or distribution of any kind or
character, either in cash, securities or other property, which shall be payable
or deliverable upon or with respect to any Indebtedness of the Borrower to such
Guarantor ("Borrower Indebtedness") shall be paid or delivered directly to the
Lenders and the Issuing Banks for application on any of the Obligations, due or
to become due, until such Obligations shall have first been fully paid and
satisfied. Each Guarantor
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irrevocably authorizes and empowers the Agent and each of the Lenders and each
of the Issuing Banks to demand, sue for, collect and receive every such payment
or distribution and give acquittance therefor and to make and present for and on
behalf of such Guarantor such proofs of claim and take such other action, in the
Agent's or such Lender's or Issuing Bank's own name or in the name of such
Guarantor or otherwise, as the Agent or any Lender or Issuing Bank may deem
necessary or advisable for the enforcement of this Guaranty. Each Lender and
each Issuing Bank may vote such proofs of claim in any such proceeding, receive
and collect any and all dividends or other payments or disbursements made
thereon in whatever form the same may be paid or issued and apply the same on
account of any of the Obligations. Should any payment, distribution, security
or instrument or proceeds thereof be received by any Guarantor upon or with
respect to the Borrower Indebtedness prior to the satisfaction of all of the
Obligations and the termination of all financing arrangements between the
Borrower and the Lenders and the Issuing Banks, such Guarantor shall receive and
hold the same in trust, as trustee, for the benefit of the Agent, the Issuing
Banks and the Lenders and shall forthwith deliver the same to the Agent, in
precisely the form received (except for the endorsement or assignment of such
Guarantor where necessary), for application to any of the Obligations, due or
not due, and, until so delivered, the same shall be held in trust by such
Guarantor as the property of the Agent, the Issuing Banks and the Lenders. If
any Guarantor fails to make any such endorsement or assignment to the Agent, the
Issuing Banks or the Lenders, the Agent, the Issuing Banks or the Lenders or any
of its officers or employees are hereby irrevocably authorized to make the same.
Each Guarantor agrees that until the Obligations have been paid in full (in
cash) and satisfied and all financing arrangements between the Borrower and the
Lenders and the Issuing Banks have been terminated, such Guarantor will not
assign or transfer to any Person any claim such Guarantor has or may have
against the Borrower.
10. ENFORCEMENT; AMENDMENTS; WAIVERS. No delay on the part of
the Agent, any of the Issuing Banks or any of the Lenders in the exercise of any
right or remedy arising under this Guaranty, the Credit Agreement, any of the
other Loan Documents or otherwise with respect to all or any part of the
Obligations, the Collateral or any other guaranty of or security for all or any
part of the Obligations shall operate as a waiver thereof, and no single or
partial exercise by the Agent, any of the Issuing Banks or any of the Lenders of
any such right or remedy shall preclude any further exercise thereof. No
modification or waiver of any of the provisions of this Guaranty shall be
binding upon the Agent, any of the Issuing Banks or any of the Lenders, except
as expressly set forth in a writing duly signed and delivered by the Agent.
Failure by the Agent or any of the Lenders at any time or times hereafter to
require strict performance by the Borrower, any Guarantor, any other guarantor
of all or any part of the Obligations or any other Person of any of the
provisions, warranties, terms and conditions contained in any of the Loan
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<PAGE>
Documents now or at any time or times hereafter executed by such Persons and
delivered to the Agent, any of the Issuing Banks or any of the Lenders shall not
waive, affect or diminish any right of the Agent, any of the Issuing Banks or
any of the Lenders at any time or times hereafter to demand strict performance
thereof and such right shall not be deemed to have been waived by any act or
knowledge of the Agent, any of the Issuing Banks or any of the Lenders, or its
agents, officers or employees, unless such waiver is contained in an instrument
in writing, directed and delivered to the Borrower or the Guarantors, as
applicable, specifying such waiver, and is signed by the Agent. No waiver of
any Event of Default by the Lenders shall operate as a waiver of any other Event
of Default or the same Event of Default on a future occasion, and no action by
the Agent, any of the Issuing Banks or any of the Lenders permitted hereunder
shall in any way affect or impair the Agent's, any Issuing Bank's or any
Lender's rights and remedies or the obligations of the Guarantors under this
Guaranty. Any determination by a court of competent jurisdiction of the amount
of any principal and/or interest owing by the Borrower to the Agent, the Lenders
and the Issuing Banks shall be conclusive and binding on each Guarantor
irrespective of whether such Guarantor was a party to the suit or action in
which such determination was made.
11. EFFECTIVENESS; TERMINATION. This Guaranty shall become
effective against any Guarantor upon its execution by such Guarantor and shall
continue in full force and effect and may not be terminated or otherwise revoked
until the Obligations (other than indemnities not yet due) shall have been fully
paid (in cash) and discharged and the Credit Agreement and the Revolving Credit
Commitments shall have been terminated. If, notwithstanding the foregoing, any
Guarantor shall have any right under applicable law to terminate or revoke its
obligations under this Guaranty, such Guarantor agrees that such termination or
revocation shall not be effective until a written notice of such revocation or
termination, specifically referring hereto, signed by such Guarantor, is
actually received by the Agent. Such notice shall not affect the right and
power of the Agent, any of the Issuing Banks or any of the Lenders to enforce
rights arising prior to receipt thereof by the Agent, the Issuing Banks and the
Lenders. If any of the Lenders or Issuing Banks grants loans or takes other
action after such Guarantor terminates or revokes its obligations under this
Guaranty but before such Lender or Issuing Bank receives such written notice,
the rights of such Lender or such Issuing Bank with respect thereto shall be the
same as if such termination or revocation had not occurred.
12. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon
each Guarantor and upon the successors and assigns of such Guarantor and shall
inure to the benefit of the Agent, the Issuing Banks and the Lenders and their
respective successors and assigns; all references herein to the Borrower and to
the Guarantors shall be deemed to include their respective successors and
assigns. The successors and assigns of the Guarantors and the
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Borrower shall include, without limitation, their respective receivers, trustees
or debtors-in-possession. All references to the singular shall be deemed to
include the plural where the context so requires.
13. OFFICER AUTHORITY. Each Guarantor authorizes its Chairman,
President, and each of its Executive Vice Presidents and Vice Presidents,
respectively, from time to time, severally and not jointly, on behalf and in the
name of such Guarantor from time to time in the discretion of such officer, to
take or omit to take any and all actions and to execute and deliver any and all
documents and instruments which such officer may determine to be necessary or
desirable in relation to, and perform any obligations arising in connection
with, this Guaranty and any of the transactions contemplated hereby, and,
without limiting the generality of the foregoing, hereby gives to each such
officer severally the power and right on behalf of such Guarantor, without
notice to or assent by such Guarantor, to do the following: (i) to execute and
deliver any amendment, waiver, consent, supplement, other modification or
reaffirmation of its obligations under this Guaranty or any document covering
any of the security for such Guarantor's obligations under this Guaranty, and to
perform any obligation arising in connection herewith or therewith; (ii) to
sell, transfer, assign, encumber or otherwise deal in or with the security for
such Guarantor's obligations under this Guaranty or any part thereof; (iii) to
grant liens, security interests or other encumbrances on or in respect of any
property or assets of such Guarantor, whether now owned or hereafter acquired,
in favor of the Agent; (iv) to send notices, directions, orders and other
communications to any Person relating to this Guaranty, or the security for all
or any part of the Obligations; (v) to take or omit to take any other action
contemplated by or referred to in this Guaranty or any document covering any of
the security for all or any part of the Obligations; and (vi) to take or omit to
take any action with respect to this Guaranty, any of the security for all or
any part of the Obligations or any document covering any such security, all as
such officer may determine in his or her sole discretion. The undersigned with
respect to each Guarantor hereby certifies that he/she has all necessary
authority to grant and execute this Guaranty on behalf of such Guarantor.
14. GOVERNING LAW. THIS GUARANTY SHALL BE CONSTRUED AND
ENFORCED AND THE RIGHTS AND DUTIES OF THE PARTIES SHALL BE GOVERNED IN ALL
RESPECTS IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
15. CERTAIN CONSENTS AND WAIVERS.
(a) PERSONAL JURISDICTION. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, (i) EACH OF THE AGENT AND THE GUARANTORS IRREVOCABLY AND
UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF ANY NEW YORK STATE COURT OR FEDERAL COURT SITTING IN NEW YORK,
NEW YORK, AND ANY COURT HAVING JURISDICTION OVER APPEALS OF MATTERS HEARD IN
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<PAGE>
SUCH COURTS, IN ANY ACTION OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED
TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH
THIS AGREEMENT, WHETHER ARISING IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR
RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO
IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH
ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH STATE COURT OR IN SUCH
FEDERAL COURT. EACH OF THE GUARANTORS IRREVOCABLY DESIGNATES AND APPOINTS CT
CORPORATION SYSTEMS AT 1633 BROADWAY, NEW YORK, NEW YORK 10019, AS ITS
RESPECTIVE PROCESS AGENT (THE "PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN
ANY SUCH PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED TO
BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. EACH OF THE AGENT AND THE
GUARANTORS AGREES THAT A FINAL NONAPPEALABLE JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. EACH OF THE AGENT
AND THE GUARANTORS WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE IN ANY SUCH ACTION OR PROCEEDING
IN SUCH STATE COURT OR IN SUCH FEDERAL COURT.
(ii) EACH OF THE GUARANTORS AGREES THAT THE AGENT SHALL HAVE
THE RIGHT TO PROCEED AGAINST EACH OF THE GUARANTORS OR ITS RESPECTIVE PROPERTY
IN A COURT HAVING JURISDICTION IN ANY LOCATION TO ENABLE THE AGENT, THE ISSUING
BANKS AND THE LENDERS TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
THE AGENT, ANY ISSUING BANK OR ANY LENDER. EACH OF THE GUARANTORS WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE
AGENT, ANY ISSUING BANK OR ANY LENDER MAY COMMENCE A PROCEEDING DESCRIBED IN
THIS SECTION.
(b) SERVICE OF PROCESS. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW: EACH OF THE GUARANTORS IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS 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 PROCESS AGENT OR THE GUARANTOR'S NOTICE ADDRESS SPECIFIED PURSUANT TO
SECTION 18 HEREOF, SUCH SERVICE TO BECOME EFFECTIVE TEN (10) DAYS AFTER SUCH
MAILING. EACH OF THE AGENT AND THE GUARANTORS IRREVOCABLY WAIVES ANY OBJECTION
THAT IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY
JURISDICTION SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
AGENT TO BRING PROCEEDINGS AGAINST EACH OF THE GUARANTORS IN THE COURTS OF ANY
OTHER JURISDICTION.
(c) WAIVER OF JURY TRIAL. EACH OF THE AGENT AND THE GUARANTORS
IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
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16. WAIVER OF BOND. Each Guarantor waives the posting of any
bond otherwise required of the Agent in connection with any judicial process or
proceeding to realize on the Collateral or any other security for the
Obligations, to enforce any judgment or other court order entered in favor of
the Agent, or to enforce by specific performance, temporary restraining order,
or preliminary or permanent injunction, this Guaranty or any other agreement or
document between the Agent and such Guarantor.
17. ADVICE OF COUNSEL. Each Guarantor represents and warrants to
the Agent that it has discussed this Guaranty and, specifically, the provisions
of SECTIONS 14 through 16 hereof, with such Guarantor's lawyers.
18. NOTICES. All notices and other communications required or
desired to be served, given or delivered hereunder shall be in writing or by a
telecommunications device capable of creating a printed record and shall be
addressed to the party to be notified as follows:
if to any Guarantor, at:
Hexcel Corporation
5794 West Las Positas Boulevard
Pleasanton, California 94588
Attention: Treasurer
if to the Agent, at:
Citicorp USA, Inc.
399 Park Avenue
6th Floor, Zone 4
New York, New York 10043
Attention: Keith R. Karako
Telecopier No.: (212) 793-1290
Confirmation No.: (212) 559-3149
with a copy to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: Daniel S. Dokos, Esq.
Telecopier No.: (212) 906-2021
Confirmation No.: (212) 906-2312
or, as to each party, at such other address as designated by such party in a
written notice to the other party. All such notices and communications shall be
deemed to be validly served, given or delivered (i) ten (10) days following
deposit in the United States mails, with proper postage prepaid; (ii) upon
delivery thereof if delivered by hand to the party to be notified; (iii) upon
delivery thereof to a reputable overnight courier service, with delivery
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<PAGE>
charges prepaid; or (iv) upon confirmation of receipt thereof if transmitted by
a telecommunications device.
19. SEVERABILITY. Wherever possible, each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
20. COLLATERAL. Each Guarantor hereby acknowledges and agrees
that its obligations under this Guaranty are secured pursuant to the terms and
provisions of the Loan Documents to which it is a party.
21. MERGER. This Guaranty represents the final agreement of each
Guarantor with respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous agreements, or subsequent
oral agreements, between such Guarantor and the Agent.
22. REPRESENTATIONS AND WARRANTIES; COVENANTS. (a) Each
Guarantor represents and warrants that as of the date of this Guaranty (and as
of each date the representations and warranties of the Borrower and its
Restricted Subsidiaries are made or deemed made pursuant to the Credit
Agreement), and until the termination of this Guaranty pursuant to SECTION 11
above, all of the representations and warranties contained in SECTION 6.01 and
relating to such Guarantor are true and correct in all material respects.
(b) Each Guarantor covenants and agrees with the Agent that from
and after the date of this Guaranty and until the termination of this Guaranty
pursuant to SECTION 11 above, such Guarantor will comply with all of the
covenants contained in the Credit Agreement applicable to Restricted
Subsidiaries of the Borrower.
23. EXECUTION IN COUNTERPARTS. This Guaranty may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
24. ADDITIONAL GUARANTORS. Each of the Guarantors agrees that,
if pursuant to the Credit Agreement the Borrower shall be required to cause
any Restricted Subsidiary that is not a Guarantor to become a Guarantor, such
Restricted Subsidiary shall execute and deliver a Subsidiary Guaranty Supplement
in the form of Exhibit A attached hereto and shall for all purposes be a party
hereto and have the same rights, benefits and obligations as a Guarantor party
hereto on the Closing Date.
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<PAGE>
IN WITNESS WHEREOF, this Guaranty has been duly executed by each
Guarantor as of the day and year first set forth above.
HEXCEL INTERNATIONAL
By____________________________
Name:
Title:
HEXCEL FAR EAST
By____________________________
Name:
Title:
HEXCEL TECHNOLOGIES, INC.
By____________________________
Name:
Title:
Acknowledged and agreed to
as of the __ day of February, 1995.
CITICORP USA, INC., as Agent
By:
--------------------------
Name:
Title:
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EXHIBIT A TO SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY SUPPLEMENT
The undersigned hereby agrees to be bound as a Guarantor for
purposes of the Subsidiary Guaranty dated as of February __, 1995, among certain
Restricted Subsidiaries of Hexcel Corporation listed on the signature pages
thereof and acknowledged by Citicorp USA, Inc., as Agent, and the undersigned
hereby acknowledges receipt of a copy of the Guaranty. Capitalized terms used
herein are used with the meanings given them in the Guaranty.
Agreed to this ___ day of ______________, _________.
[NAME OF GUARANTOR]
By:________________________
Name:
Title:
Notice Address:
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EXHIBIT L
TO CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
FORM OF TRADEMARK SECURITY AGREEMENT
THIS TRADEMARK SECURITY AGREEMENT ("Agreement") is made as of
February 8, 1995, by and between Hexcel Corporation, a Delaware corporation
("Borrower") and Citicorp USA, Inc. ("Citicorp"), in its separate capacity as
agent for the Lenders and the Issuing Banks (with its successors and permitted
assigns in such capacity, the "Agent") under that certain Credit Agreement dated
as of February 8, 1995 (as amended, restated, supplemented or otherwise modified
from time to time, the "Credit Agreement") among the Borrower, the financial
institutions from time to time party thereto as Lenders (the "Lenders"), the
financial institutions from time to time party thereto as Issuing Banks (the
"Issuing Banks"), and Citicorp, as Agent.
W I T N E S S E T H:
WHEREAS, the Borrower is a party to the Credit Agreement, pursuant
to which the Lenders and the Issuing Banks have agreed to make loans and other
financial accommodations to the Borrower from time to time; and
WHEREAS, the Borrower and the Agent are parties to that certain
Security Agreement of even date herewith (as the same may hereafter be amended,
restated, supplemented or otherwise modified from time to time, the "Security
Agreement"), pursuant to which the Borrower has granted a security interest in
certain of its assets to the Agent for the benefit of the Agent, the Lenders,
the Issuing Banks and the other Holders; and
WHEREAS, in order to secure the prompt and complete payment,
observance and performance of (i) all of the Obligations and (ii) all of the
Borrower's obligations and liabilities hereunder and in connection herewith (all
such obligations and liabilities hereunder and the Obligations being hereinafter
referred to as the "Liabilities"), the Agent, the Lenders and the Issuing Banks
have required as a condition, among others, to entering into the Credit
Agreement that the Borrower execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the premises set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Borrower agrees as follows:
<PAGE>
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit Agreement.
(b) The words "hereof," "herein," "hereby" and "hereunder" and
words of like import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and section
references are to this Agreement unless otherwise specified.
(c) All terms defined in this Agreement in the singular shall have
comparable meanings when used in the plural, and VICE VERSA, unless
otherwise specified.
2. INCORPORATION OF PREMISES. The premises set forth above are
incorporated into this Agreement by this reference thereto and are made a part
hereof.
3. SECURITY INTEREST IN TRADEMARKS. To secure the complete and
timely payment, performance and satisfaction of all of the Liabilities, the
Borrower hereby grants to the Agent, for the benefit of the Agent, the Lenders,
the Issuing Banks and the other Holders, a security interest in, as and by way
of a first mortgage and security interest having priority over all other
security interests, with power of sale to the extent permitted by applicable
law, all of the Borrower's now owned or existing and hereafter acquired or
arising:
(i) trademarks, registered trademarks, trademark applications,
service marks, registered service marks and service mark applications,
including, without limitation, the trademarks, registered trademarks,
trademark applications, service marks, registered service marks and
service mark applications listed on SCHEDULE A attached hereto and made
a part hereof, and (a) all renewals thereof, (b) all income, royalties,
damages and payments now and hereafter due and/or payable under and with
respect thereto, including, without limitation, payments under all
licenses entered into in connection therewith and damages and payments for
past or future infringements or dilutions thereof, (c) the right to sue
for past, present and future infringements and dilutions thereof, (d) the
goodwill of the Borrower's business symbolized by the foregoing and
connected therewith, and (e) all of the Borrower's rights corresponding
thereto throughout the world (all of the foregoing trademarks, registered
trademarks and trademark applications, and service marks, registered
service marks and service mark applications, together with the items
described in CLAUSES (a) through (e) in this PARAGRAPH 3(i), are
sometimes hereinafter individually and/or collectively referred to as the
"Trademarks"); and
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<PAGE>
(ii) rights under or interest in any trademark license agreements
or service mark license agreements with any other party, whether the
Borrower is a licensee or licensor under any such license agreement,
including, without limitation, those trademark license agreements and
service mark license agreements listed on SCHEDULE B attached hereto and
made a part hereof, in each case to the extent assignable without
violation thereof, together with any goodwill connected with and
symbolized by any such trademark license agreements or service mark
license agreements, and the right to prepare for sale and sell any and all
Inventory now or hereafter owned by the Borrower and now or hereafter
covered by such licenses (all of the foregoing are hereinafter referred to
collectively as the "Licenses").
4. RESTRICTIONS ON FUTURE AGREEMENTS. The Borrower will not,
without the Agent's prior written consent (which shall not be unreasonably
withheld), enter into any agreement, including, without limitation, any license
agreement, which is inconsistent with this Agreement, and the Borrower further
agrees that it will not take any action, and will use its best efforts not to
permit any action to be taken by others, including, without limitation,
licensees, or fail to take any action, which would in any respect affect the
validity or enforcement of the rights transferred to the Agent under this
Agreement or the rights associated with any material Trademarks or Licenses.
5. NEW TRADEMARKS AND LICENSES. The Borrower represents and
warrants that, from and after the Closing Date, to the best of its knowledge
after reasonable inquiry, (a) the Trademarks listed on SCHEDULE A include all
of the registered trademarks, trademark applications, registered service marks
and service mark applications now owned or held by the Borrower, (b) the
Licenses listed on SCHEDULE B include all of the trademark license agreements
and service mark license agreements under which the Borrower is the licensee or
licensor and which are material individually or in the aggregate to the
operation of the business of the Borrower and (c) other than the rights of any
party to the Licenses with respect to the Trademarks, no liens, claims or
security interests in such Trademarks and Licenses have been granted by the
Borrower to any Person other than the Agent. If, prior to the termination of
this Agreement, the Borrower shall (i) obtain rights to any new trademarks,
registered trademarks, trademark applications, service marks, registered service
marks or service mark applications, (ii) become entitled to the benefit of any
trademarks, registered trademarks, trademark applications, trademark licenses,
trademark license renewals, service marks, registered service marks, service
mark applications, service mark licenses or service mark license renewals,
whether as licensee or licensor, or (iii) enter into any new trademark license
agreement or service mark license agreement, the provisions of PARAGRAPH 3
above shall automatically apply thereto. The Borrower shall give to the
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<PAGE>
Agent written notice of events described in CLAUSES (i), (ii) and (iii) of
the preceding sentence not less frequently than on an annual basis. The
Borrower hereby authorizes the Agent to modify this Agreement unilaterally (i)
by amending SCHEDULE A to include any future trademarks, registered
trademarks, trademark applications, service marks, registered service marks and
service mark applications owned or held by Borrower or to prepare this Agreement
for filing with the Patent and Trademark Office and by amending SCHEDULE B to
include any trademark license agreements and service mark license agreements to
which Borrower becomes a party, which are Trademarks or Licenses under
PARAGRAPH 3 above or under this PARAGRAPH 5, and (ii) by filing, in addition
to and not in substitution for this Agreement, a duplicate original of this
Agreement containing on SCHEDULE A or B thereto, as the case may be, such
future trademarks, registered trademarks, trademark applications, service marks,
registered service marks and service mark applications, and trademark license
agreements and service mark license agreements.
6. ROYALTIES. The Borrower hereby agrees that the use by the
Agent of the Trademarks and Licenses as authorized hereunder in connection with
the Agent's exercise of its rights and remedies under PARAGRAPH 14 hereof or
pursuant to SECTION 7 of the Security Agreement shall be coextensive with the
Borrower's rights thereunder and with respect thereto and without any liability
for royalties or other related charges from the Agent, the Lenders, the Issuing
Banks or any other Holder to the Borrower.
7. RIGHT TO INSPECT; FURTHER ASSIGNMENTS AND SECURITY
INTERESTS. The Agent may at all reasonable times (and at any time when a
Default or Event of Default exists) have access to, examine, audit, make copies
(at the Borrower's expense) and extracts from and inspect the Borrower's
premises and examine the Borrower's books, records and operations relating to
the Trademarks and Licenses; PROVIDED, that in conducting such inspections and
examinations, the Agent shall use reasonable efforts not to disturb
unnecessarily the conduct of the Borrower's ordinary business operations. From
and after the occurrence of a Default or Event of Default, the Borrower agrees
that the Agent, or a conservator appointed by the Agent, shall have the right to
establish such reasonable additional product quality controls as the Agent or
such conservator, in its sole and absolute judgment, may deem necessary to
assure maintenance of the quality of products sold by the Borrower under the
Trademarks and the Licenses or in connection with which such Trademarks and
Licenses are used. The Borrower agrees (i) except as provided in SECTION 9.02
of the Credit Agreement, not to sell or assign its respective interests in, or
grant any license under, the Trademarks or the Licenses without the prior and
express written consent of the Agent, (ii) to maintain the quality of such
products as of the date hereof, and (iii) not to
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<PAGE>
change the quality of such products in any material respect without the Agent's
prior and express written consent.
8. NATURE AND CONTINUATION OF THE AGENT'S SECURITY INTEREST;
TERMINATION OF THE AGENT'S SECURITY INTEREST; RELEASE OF COLLATERAL.
(a) This Agreement is made for collateral security purposes only.
This Agreement shall create a continuing security interest in the Trademarks and
Licenses and shall terminate only when the Liabilities have been paid in full in
cash and the Credit Agreement and the Security Agreement have been terminated.
Upon such termination and at the written request of the Borrower or its
successors or assigns, and at the cost and expense of the Borrower or its
successors or assigns, the Agent shall execute in a timely manner such
instruments, documents or agreements as are necessary or desirable to terminate
the Agent's security interest in the Trademarks and the Licenses, subject to any
disposition thereof which may have been made by the Agent pursuant to this
Agreement or the Security Agreement.
(b) Notwithstanding anything in this Agreement to the contrary,
the Borrower may, to the extent permitted by SECTION 9.02 of the Credit
Agreement sell, assign, transfer or otherwise dispose of any Trademarks and any
Licenses. In addition, the Trademarks and Licenses shall be subject to release
from time to time (with the Trademarks and Licenses referred to in the
immediately preceding sentence, the "Released Collateral") in accordance with
SECTION 12.09(c) of the Credit Agreement. The Liens under this Agreement
shall terminate with respect to the Released Collateral upon such sale,
transfer, assignment, disposition or release, and upon the request of the
Borrower, the Agent shall execute and deliver such instrument or document as may
be necessary to release the Liens granted hereunder; PROVIDED, HOWEVER, that
(i) the Agent shall not be required to execute any such documents on terms
which, in the Agent's opinion, would expose the Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Liabilities or any Liens on (or obligations of
the Borrower in respect of) all interests retained by the Borrower, including
without limitation, the proceeds of any sale, all of which shall continue to
constitute part of the Trademarks and Licenses.
9. DUTIES OF THE BORROWER. The Borrower shall have the duty,
to the extent desirable in the normal conduct of the Borrower's business, to:
(i) prosecute diligently any material trademark application or service mark
application that is part of the Trademarks pending as of the date hereof or
hereafter until the termination of this Agreement, and (ii) make application for
the registration of trademarks or service marks used or adopted by the Borrower.
The Borrower further agrees (i) not to abandon
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<PAGE>
any material Trademark or License without the prior written consent of the
Agent, and (ii) to use its reasonable best efforts to obtain and maintain in
full force and effect the Trademarks and the Licenses that are or shall be
necessary or economically desirable in the operation of the Borrower's business.
Any expenses incurred in connection with the foregoing shall be borne by the
Borrower. Neither the Agent, any of the Lenders nor any of the Issuing Banks
shall have any duty with respect to the Trademarks and Licenses. Without
limiting the generality of the foregoing, neither the Agent, any of the Lenders
nor any of the Issuing Banks shall be under any obligation to take any steps
necessary to preserve rights in the Trademarks or Licenses against any other
parties, but the Agent may do so at its option from and after the occurrence of
an Event of Default, and all expenses incurred in connection therewith shall be
for the sole account of the Borrower and shall be added to the Liabilities
secured hereby.
10. THE AGENT'S RIGHT TO SUE. From and after the occurrence of
an Event of Default, the Agent shall have the right, but shall not be obligated,
to bring suit in its own name to enforce the Trademarks and the Licenses and, if
the Agent shall commence any such suit, the Borrower shall, at the request of
the Agent, do any and all lawful acts and execute any and all proper documents
required by the Agent in aid of such enforcement. The Borrower shall, upon
demand, promptly reimburse the Agent for all costs and expenses incurred by the
Agent in the exercise of its rights under this PARAGRAPH 10 (including,
without limitation, reasonable fees and expenses of attorneys for the Agent).
11. WAIVERS. The Agent's failure, at any time or times
hereafter, to require strict performance by the Borrower of any provision of
this Agreement shall not waive, affect or diminish any right of the Agent
thereafter to demand strict compliance and performance therewith nor shall any
course of dealing between the Borrower and the Agent have such effect. No
single or partial exercise of any right hereunder shall preclude any other or
further exercise thereof or the exercise of any other right. None of the
undertakings, agreements, warranties, covenants and representations of the
Borrower contained in this Agreement shall be deemed to have been suspended or
waived by the Agent unless such suspension or waiver is in writing signed by an
officer of the Agent and directed to the Borrower specifying such suspension or
waiver.
12. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but the provisions of this Agreement are severable, and if any
clause or provision shall be held invalid and unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part hereof, in such
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<PAGE>
jurisdiction, and shall not in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
13. MODIFICATION. This Agreement cannot be altered, amended or
modified in any way, except as specifically provided in PARAGRAPH 5 hereof or
by a writing signed by the parties hereto.
14. CUMULATIVE REMEDIES; POWER OF ATTORNEY. The Borrower hereby
designates, constitutes and appoints the Agent (and all Persons designated by
the Agent in its sole and absolute discretion) as the Borrower's true and lawful
attorney-in-fact, and authorizes the Agent and any of the Agent's designees, in
the Borrower's or the Agent's name, to take any action and execute any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, from and after the
occurrence of an Event of Default, to (i) endorse the Borrower's name on all
applications, documents, papers and instruments necessary or desirable for the
Agent in the use, prosecution or protection of the Trademarks or the Licenses,
(ii) assign, pledge, convey or otherwise transfer title in or dispose of the
Trademarks or the Licenses to anyone on commercially reasonable terms, (iii)
grant or issue any exclusive or nonexclusive license under the Trademarks or
under the Licenses, to anyone on commercially reasonable terms, and (iv) take
any other actions with respect to the Trademarks or, to the extent permitted,
the Licenses as the Agent, any of the Lenders or any of the Issuing Banks deems
in its or their own best interest. The Borrower hereby ratifies all that such
attorney shall lawfully do or, to the extent permitted, cause to be done by
virtue hereof. This power of attorney is coupled with an interest and shall be
irrevocable until all of the Obligations shall have been paid in full in cash
and the Credit Agreement shall have been terminated. The Borrower acknowledges
and agrees that this Agreement is not intended to limit or restrict in any way
the rights and remedies of the Agent, any of the Lenders or any of the Issuing
Banks under the Security Agreement, but rather is intended to facilitate the
exercise of such rights and remedies.
The Agent shall have, in addition to all other rights and remedies
given it by the terms of this Agreement, all rights and remedies allowed by law
and the rights and remedies of a secured party under the Uniform Commercial Code
as enacted in any jurisdiction in which the Trademarks or the Licenses may be
located or deemed located. Upon the occurrence of an Event of Default and the
election by the Agent to exercise any of its remedies under Section 9-504 or
Section 9-505 of the Uniform Commercial Code with respect to the Trademarks and
Licenses, the Borrower agrees to assign, convey and otherwise transfer title in
and to the Trademarks and the Licenses to the Agent or any transferee of the
Agent and to execute and deliver to the Agent
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<PAGE>
or any such transferee all such agreements, documents and instruments as may be
necessary, in the Agent's sole discretion, to effect such assignment, conveyance
and transfer. All of the Agent's rights and remedies with respect to the
Trademarks and the Licenses, whether established hereby, by the Security
Agreement, by any other agreements or by law, shall be cumulative and may be
exercised separately or concurrently. Notwithstanding anything set forth herein
to the contrary, it is hereby expressly agreed that upon the occurrence of an
Event of Default, the Agent may exercise any of the rights and remedies provided
in this Agreement, the Security Agreement and any of the other Loan Documents.
The Borrower agrees that any notification of intended disposition of any of the
Trademarks and Licenses required by law shall be deemed reasonably and properly
given if given at least ten (10) days before such disposition; PROVIDED,
HOWEVER, that the Agent may give any shorter notice that is commercially
reasonable under the circumstances. Further, notwithstanding anything set forth
herein to the contrary, in exercising any rights provided in this Agreement or
any of the other Loan Documents the Agent shall not cause any of the Trademarks
to be abandoned by assignment or conveyance of a Trademark separate from the
goodwill symbolized by such mark.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Borrower and its successors and assigns, and shall inure to the benefit
of each of the Agent, the Lenders and the Issuing Banks and their respective
nominees, successors and assigns. The Borrower's successors and assigns shall
include, without limitation, a receiver, trustee or debtor-in-possession of or
for the Borrower; PROVIDED, HOWEVER, that the Borrower shall not voluntarily
assign or transfer its rights or obligations hereunder without the Agent's prior
written consent.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED AND THE RIGHTS AND DUTIES OF THE PARTIES SHALL BE GOVERNED IN ALL
RESPECTS IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
17. NOTICES. All notices or other communications hereunder
shall be given in the manner and to the addresses set forth in SECTION 13.08
of the Credit Agreement.
18. SECTION TITLES. The section titles herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
19. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
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<PAGE>
20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The Borrower
agrees that the terms of SECTION 13.17 of the Credit Agreement with respect to
consent to jurisdiction and service of process shall apply equally to this
Agreement.
21. WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE AGENT
WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE, BETWEEN THE AGENT AND THE BORROWER ARISING OUT OF OR RELATED
TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EITHER THE
BORROWER OR THE AGENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
HEXCEL CORPORATION
By: ______________________________
Name:
Title:
Accepted and agreed to as of the day and
year first above written.
CITICORP USA, INC.,
as Agent
By:_______________________________
Name:
Title:
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<PAGE>
SCHEDULE A
TO
TRADEMARK SECURITY AGREEMENT
DATED AS OF FEBRUARY __, 1995
TRADEMARKS, ETC., AND APPLICATIONS
[All trademarks, registered trademarks, trademark applications,
service marks, registered service marks and service mark
applications now owned or held by the Borrower.]
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<PAGE>
SCHEDULE B
TO
TRADEMARK SECURITY AGREEMENT
DATED AS OF FEBRUARY __, 1995
LICENSE AGREEMENTS
[All trademark license agreements and service mark license
agreements under which the Borrower is the licensee or licensor.]
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<PAGE>
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
On the ___ day of February, 1995, before me personally came
________________, to me known, who being by me duly sworn, did depose and say
that he/she resides at _______________________________; that he/she is the
of Hexcel Corporation, the corporation described in and which accepted and
agreed to the foregoing instrument; and that he/she signed his/her name thereto
by authority of the board of directors of said corporation.
____________________________
Notary Public
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<PAGE>
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
On the ___ day of February, 1995, before me personally came
________________, to me known, who being by me duly sworn, did depose and say
that he/she resides at _________________________________ that he/she is the
of Citicorp USA, Inc., the corporation described in and which accepted and
agreed to the foregoing instrument; and that he/she signed his/her name thereto
by authority of the board of directors of said corporation.
_____________________________
Notary Public
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<PAGE>
EXHIBIT M
TO CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
FORM OF PATENT SECURITY AGREEMENT
THIS PATENT SECURITY AGREEMENT ("Agreement") is made as of February
8, 1995, by and between Hexcel Corporation, a Delaware corporation ("Borrower")
and Citicorp USA, Inc. ("Citicorp"), in its separate capacity as agent for the
Lenders and the Issuing Banks (with its successors and permitted assigns in such
capacity, the "Agent") under that certain Credit Agreement dated as of February
8, 1995 (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") among the Borrower, the financial institutions
from time to time party thereto as Lenders (the "Lenders"), the financial
institutions from time to time party thereto as Issuing Banks (the "Issuing
Banks"), and Citicorp, as Agent.
W I T N E S S E T H:
WHEREAS, the Borrower is a party to the Credit Agreement, pursuant
to which the Lenders and the Issuing Banks have agreed to make loans and other
financial accommodations to the Borrower from time to time; and
WHEREAS, the Borrower and the Agent are parties to that certain
Security Agreement of even date herewith (as the same has heretofore and may
hereafter be amended, restated, supplemented or otherwise modified, from time to
time, the "Security Agreement"), pursuant to which the Borrower has granted a
security interest in certain of its assets to the Agent for the benefit of the
Agent, the Lenders, the Issuing Banks and the other Holders; and
WHEREAS, in order to secure the prompt and complete
payment, observance and performance of (i) all of the Obligations and (ii) all
of the Borrower's obligations and liabilities hereunder and in connection
herewith (all such obligations liabilities hereunder and the Obligations being
referred to as the "Liabilities"), the Agent, the Lenders and the Issuing Banks
have required as a condition, among others, to entering into the Credit
Agreement that the Borrower execute and deliver this Agreement;
NOW, THEREFORE, in consideration of the premises set forth herein
and for other good and valuable consideration, the
<PAGE>
receipt and sufficiency of which are hereby acknowledged, the Borrower agrees as
follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit Agreement.
(b) The words "hereof," "herein," "hereby" and "hereunder" and
words of like import when used in this Agreement shall refer to this Agreement
as a whole and not to any particular provision of this Agreement, and section
references are to this Agreement unless otherwise specified.
(c) All terms defined in this Agreement in the singular shall have
comparable meanings when used in the plural, and VICE VERSA, unless
otherwise specified.
2. INCORPORATION OF PREMISES. The premises set forth above are
incorporated into this Agreement by this reference thereto and are made a part
hereof.
3. SECURITY INTEREST IN PATENTS. To secure the complete and
timely payment, performance and satisfaction of all of the Liabilities, the
Borrower hereby grants to the Agent, for the benefit of the Agent, the Lenders,
the Issuing Banks and the other Holders, a security interest in, as and by way
of a first mortgage and security interest having priority over all other
security interests, with power of sale to the extent permitted by applicable
law, all of the Borrower's now owned or existing and hereafter acquired or
arising:
(i) patents and patent applications, and the inventions and
improvements described and claimed therein, including, without limitation,
those patents and patent applications listed on SCHEDULE A attached
hereto and made a part hereof, and (a) the reissues, divisions,
continuations, renewals, extensions and continuations-in-part thereof, (b)
all income, royalties, damages and payments now and hereafter due and/or
payable under and with respect thereto, including, without limitation,
payments under all licenses entered into in connection therewith and
damages and payments for past or future infringements thereof, (c) the
right to sue for past, present and future infringements thereof, (d) all
patented technology and know-how, and (e) all of the Borrower's rights
corresponding thereto throughout the world (all of the foregoing patents
and applications, together with the items described in CLAUSES (a)
through (e) in this PARAGRAPH 3(i) are sometimes hereinafter
individually and/or collectively referred to as the "Patents"); and
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<PAGE>
(ii) rights under or interest in any patent license agreements with
any other party, whether the Borrower is a licensee or licensor under any
such license agreement, including, without limitation, those patent
license agreements listed on SCHEDULE B attached hereto and made a part
hereof, in each case to the extent assigned without violation thereof, and
the right to prepare for sale and sell any and all Inventory now or
hereafter owned by the Borrower and now or hereafter covered by such
licenses (all of the foregoing are hereinafter referred to collectively as
the "Licenses").
4. RESTRICTIONS ON FUTURE AGREEMENTS. The Borrower will not,
without the Agent's prior written consent (which shall not be unreasonably
withheld), enter into any agreement, including, without limitation, any license
agreement, which is inconsistent with this Agreement, and the Borrower further
agrees that it will not take any action, and will use its reasonable best
efforts not to permit any action to be taken by others, including, without
limitation, licensees, or fail to take any action, which would in any respect
affect the validity or enforcement of the rights transferred to the Agent under
this Agreement or the rights associated with any material Patents or Licenses.
5. NEW PATENTS AND LICENSES. The Borrower represents and
warrants that, from and after the Closing Date, to the best of its knowledge,
after reasonable inquiry, (a) the Patents listed on SCHEDULE A include all of
the patents and patent applications now owned or held by the Borrower, (b) the
Licenses listed on SCHEDULE B include all of the patent license agreements
under which the Borrower is the licensee or licensor which is material to the
business of the Borrower and (c) other than the rights of any party to the
Licenses with respect to the Patents, no liens, claims or security interests in
such Patents and Licenses have been granted by the Borrower to any Person other
than the Agent. If, prior to the termination of this Agreement, the Borrower
shall (i) obtain rights to any new patentable inventions, (ii) become entitled
to the benefit of any patent, patent application, license or any reissue,
division, continuation, renewal, extension or continuation-in-part of any Patent
or any improvement on any Patent or License, or (iii) enter into any new patent
license agreement, the provisions of PARAGRAPH 3 above shall automatically
apply thereto. The Borrower shall give to the Agent written notice of events
described in CLAUSES (i), (ii) and (iii) of the preceding sentence not
less frequently than on an annual basis. The Borrower hereby authorizes the
Agent to modify this Agreement unilaterally (i) by amending SCHEDULE A to
include any future patents and patent applications owned or held by Borrower,
and by amending SCHEDULE B to include any patent license agreements to which
Borrower becomes a party, which are Patents or Licenses
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<PAGE>
under PARAGRAPH 3 above or under this PARAGRAPH 5, and (ii) by filing, in
addition to and not in substitution for this Agreement, a duplicate original of
this Agreement containing on Schedule A or B thereto, as the case may be, such
future patents, patent applications and license agreements.
6. ROYALTIES. The Borrower hereby agrees that the use by the
Agent of the Patents and Licenses as authorized hereunder in connection with the
Agent's exercise of its rights and remedies under PARAGRAPH 14 hereof or
pursuant to SECTION 7 of the Security Agreement shall be coextensive with the
Borrower's rights thereunder and with respect thereto and without any liability
for royalties or other related charges from the Agent, the Lenders, the Issuing
Banks or the other Holders to the Borrower.
7. RIGHT TO INSPECT; FURTHER ASSIGNMENTS AND SECURITY
INTERESTS. The Agent may at all reasonable times (and at any time when a
Default or Event of Default exists) have access to, examine, audit, make copies
(at the Borrower's expense) and extracts from and inspect the Borrower's
premises and examine the Borrower's books, records and operations relating to
the Patents and Licenses; PROVIDED, that in conducting such inspections and
examinations, the Agent shall use reasonable efforts not to disturb
unnecessarily the conduct of the Borrower's ordinary business operations.
Except as permitted under SECTION 9.02 of the Credit Agreement, the Borrower
agrees not to sell or assign its respective interests in, or grant any license
under, the Patents or the Licenses without the prior and express written consent
of the Agent.
8. NATURE AND CONTINUATION OF THE AGENT'S SECURITY INTEREST;
TERMINATION OF THE AGENT'S SECURITY INTEREST; RELEASE OF COLLATERAL.
(a) This Agreement is made for collateral security purposes only.
This Agreement shall create a continuing security interest in the Patents and
Licenses and shall terminate only when the Obligations have been paid in full in
cash and the Credit Agreement has been terminated. Upon such termination and at
the written request of the Borrower or its successors or assigns, and at the
cost and expense of the Borrower or its successors or assigns, the Agent shall
execute in a timely manner such instruments, documents or agreements as are
necessary or desirable to terminate the Agent's security interest in the Patents
and the Licenses, subject to any disposition thereof which may have been made by
the Agent pursuant to this Agreement or the Security Agreement.
(b) Notwithstanding anything in this Agreement to the contrary,
the Borrower may, to the extent permitted by SECTION 9.02 of the Credit
Agreement sell, assign, transfer or otherwise dispose of any Patents and any
Licenses. In addition, the
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<PAGE>
Patents and Licenses shall be subject to release from time to time (with the
Patents and Licenses referred to in the immediately preceding sentence, the
"Released Collateral") in accordance with SECTION 12.09(c) of the Credit
Agreement. The Liens under this Agreement shall terminate with respect to the
Released Collateral upon such sale, transfer, assignment, disposition or
release, and upon the request of the Borrower, the Agent shall execute and
deliver such instrument or document as may be necessary to release the Liens
granted hereunder; PROVIDED, HOWEVER, that (i) the Agent shall not be
required to execute any such documents on terms which, in the Agent's opinion,
would expose the Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty,
and (ii) such release shall not in any manner discharge, affect or impair the
Liabilities or any Liens on (or obligations of the Borrower in respect of) all
interests retained by the Borrower, including without limitation, the proceeds
of any sale, all of which shall continue to constitute part of the Patents and
Licenses.
9. DUTIES OF THE BORROWER. The Borrower shall have the duty,
to the extent desirable in the normal conduct of the Borrower's business, to:
(i) prosecute diligently any material patent application that is part of the
Patents pending as of the date hereof or hereafter until the termination of this
Agreement, and (ii) make application on unpatented but patentable inventions.
The Borrower further agrees (i) not to abandon any material Patent or License
without the prior written consent of the Agent, and (ii) to use its reasonable
best efforts to obtain and maintain in full force and effect the Patents and the
Licenses that are or shall be necessary or economically desirable in the
operation of the Borrower's business. Any expenses incurred in connection with
the foregoing shall be borne by the Borrower. Neither the Agent, any of the
Lenders nor any of the Issuing Banks shall have any duty with respect to the
Patents and Licenses. Without limiting the generality of the foregoing, neither
the Agent, any of the Lenders nor any of the Issuing Banks shall be under any
obligation to take any steps necessary to preserve rights in the Patents or
Licenses against any other parties, but the Agent may do so at its option from
and after the occurrence of an Event of Default, and all expenses incurred in
connection therewith shall be for the sole account of the Borrower and shall be
added to the Liabilities secured hereby.
10. THE AGENT'S RIGHT TO SUE. From and after the occurrence of
an Event of Default, the Agent shall have the right, but shall not be obligated,
to bring suit in its own name to enforce the Patents and the Licenses and, if
the Agent shall commence any such suit, the Borrower shall, at the request of
the Agent, do any and all lawful acts and execute any and all proper documents
required by the Agent in aid of such enforcement. The Borrower shall, upon
demand, promptly reimburse the Agent for all costs and expenses incurred by the
Agent in the exercise of its
-5-
<PAGE>
rights under this PARAGRAPH 10 (including, without limitation, reasonable fees
and expenses of attorneys for the Agent).
11. WAIVERS. The Agent's failure, at any time or times
hereafter, to require strict performance by the Borrower of any provision of
this Agreement shall not waive, affect or diminish any right of the Agent
thereafter to demand strict compliance and performance therewith nor shall any
course of dealing between the Borrower and the Agent have such effect. No
single or partial exercise of any right hereunder shall preclude any other or
further exercise thereof or the exercise of any other right. None of the
undertakings, agreements, warranties, covenants and representations of the
Borrower contained in this Agreement shall be deemed to have been suspended or
waived by the Agent unless such suspension or waiver is in writing signed by an
officer of the Agent and directed to the Borrower specifying such suspension or
waiver.
12. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but the provisions of this Agreement are severable, and if any
clause or provision shall be held invalid and unenforceable in whole or in part
in any jurisdiction, then such invalidity or unenforceability shall affect only
such clause or provision, or part hereof, in such jurisdiction, and shall not in
any manner affect such clause or provision in any other jurisdiction, or any
other clause or provision of this Agreement in any jurisdiction.
13. MODIFICATION. This Agreement cannot be altered, amended or
modified in any way, except as specifically provided in PARAGRAPH 5 hereof or
by a writing signed by the parties hereto.
14. CUMULATIVE REMEDIES; POWER OF ATTORNEY. The Borrower hereby
designates, constitutes and appoints the Agent (and all Persons designated by
the Agent in its sole and absolute discretion) as the Borrower's true and lawful
attorney-in-fact, and authorizes the Agent and any of the Agent's designees, in
the Borrower's or the Agent's name, to take any action and execute any
instrument which the Agent may deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, from and after the
occurrence of an Event of Default, to (i) endorse the Borrower's name on all
applications, documents, papers and instruments necessary or desirable for the
Agent in the use, prosecution or protection of the Patents or the Licenses, (ii)
assign, pledge, convey or otherwise transfer title in or dispose of the Patents
or the Licenses to anyone on commercially reasonable terms, (iii) grant or issue
any exclusive or nonexclusive license under the Patents or, to the extent
permitted, under the Licenses, to anyone on commercially reasonable terms, and
(iv) take any other actions with respect to the Patents or the Licenses as the
Agent, any of the Lenders or
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<PAGE>
any of the Issuing Banks deems in its or their own best interest. The Borrower
hereby ratifies all that such attorney shall lawfully do or cause to be done by
virtue hereof. This power of attorney is coupled with an interest and shall be
irrevocable until all of the Obligations shall have been paid in full in cash
and the Credit Agreement shall have been terminated. The Borrower acknowledges
and agrees that this Agreement is not intended to limit or restrict in any way
the rights and remedies of the Agent, any of the Lenders or any of the Issuing
Banks under the Credit Agreement, but rather is intended to facilitate the
exercise of such rights and remedies.
The Agent shall have, in addition to all other rights and remedies
given it by the terms of this Agreement, all rights and remedies allowed by law
and the rights and remedies of a secured party under the Uniform Commercial Code
as enacted in any jurisdiction in which the Patents or the Licenses may be
located or deemed located. Upon the occurrence of an Event of Default and the
election by the Agent to exercise any of its remedies under Section 9-504 or
Section 9-505 of the Uniform Commercial Code with respect to the Patents and
Licenses, the Borrower agrees to assign, convey and otherwise transfer title in
and to the Patents and the Licenses to the Agent or any transferee of the Agent
and to execute and deliver to the Agent or any such transferee all such
agreements, documents and instruments as may be necessary, in the Agent's sole
discretion, to effect such assignment, conveyance and transfer. All of the
Agent's rights and remedies with respect to the Patents and the Licenses,
whether established hereby, by the Credit Agreement, by any other agreements or
by law, shall be cumulative and may be exercised separately or concurrently.
Notwithstanding anything set forth herein to the contrary, it is hereby
expressly agreed that upon the occurrence of an Event of Default, the Agent may
exercise any of the rights and remedies provided in this Agreement, the Credit
Agreement and any of the other Loan Documents. The Borrower agrees that any
notification of intended disposition of any of the Patents and Licenses required
by law shall be deemed reasonably and properly given if given at least ten (10)
days before such disposition; PROVIDED, HOWEVER, that the Agent may give any
shorter notice that is commercially reasonable under the circumstances.
15. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Borrower and its successors and assigns, and shall inure to the benefit
of each of the Agent, the Lenders and the Issuing Banks and their respective
nominees, successors and assigns. The Borrower's successors and assigns shall
include, without limitation, a receiver, trustee or debtor-in-possession of or
for the Borrower; PROVIDED, HOWEVER, that the Borrower shall not voluntarily
assign or transfer its rights or obligations hereunder without the Agent's prior
written consent.
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<PAGE>
16. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED AND THE RIGHTS AND DUTIES OF THE PARTIES SHALL BE GOVERNED IN ALL
RESPECTS IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
17. NOTICES. All notices or other communications hereunder
shall be given in the manner and to the addresses set forth in SECTION 13.08
of the Credit Agreement.
18. SECTION TITLES. The section titles herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
19. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The
Borrower agrees that the terms of SECTION 13.17 of the Credit Agreement with
respect to consent to jurisdiction and service of process shall apply equally to
this Agreement.
21. WAIVER OF JURY TRIAL. EACH OF THE BORROWER AND THE AGENT
WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE, BETWEEN THE AGENT AND THE BORROWER ARISING OUT OF OR
RELATED TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH.
EITHER THE BORROWER OR THE AGENT MAY FILE AN ORIGINAL COUNTERPART OR COPY OF
THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
HEXCEL CORPORATION
By: ______________________________
Name:
Title:
Accepted and agreed to as of the day and
year first above written.
CITICORP USA, INC.,
as Agent
By:_______________________________
Name:
Title:
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<PAGE>
SCHEDULE A
TO
PATENT SECURITY AGREEMENT
DATED AS OF FEBRUARY __, 1995
PATENTS AND PATENT APPLICATIONS
SERIAL/PATENT
PROJECT NO/ NO. FILING/
STATUS TITLE INVENTOR ISSUED DATE
- ------ ----- -------- -----------
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<PAGE>
SCHEDULE B
TO
PATENT SECURITY AGREEMENT
DATED AS OF FEBRUARY __, 1995
LICENSE AGREEMENTS
LICENSES FROM THE BORROWER TO OTHER COMPANIES
COMPANY SUBJECT TERM
------- ------- ----
LICENSES FROM OTHER COMPANIES TO THE BORROWER
COMPANY SUBJECT/TYPE TERM
------- ------------ ----
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<PAGE>
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
On the ___ day of February, 1995, before me personally came
________________, to me known, who being by me duly sworn, did depose and say
that he/she resides at _______________________ __________________________; that
he/she is the ____________________ of Hexcel Corporation, the corporation
described in and which accepted and agreed to the foregoing instrument; and that
he/she signed his/her name thereto by authority of the board of directors of
said corporation.
____________________________
Notary Public
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<PAGE>
STATE OF NEW YORK )
) SS
COUNTY OF NEW YORK )
On the ___ day of February, 1995, before me personally came
________________, to me known, who being by me duly sworn, did depose and say
that he/she resides at ______________________ ______________________; that
he/she is the __________________ of Citicorp USA, Inc., the corporation
described in and which accepted and agreed to the foregoing instrument; and that
he/she signed his/her name thereto by authority of the board of directors of
said corporation.
_____________________________
Notary Public
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<PAGE>
EXHIBIT N
TO CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
FORM OF BORROWER PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "Pledge Agreement"), dated as of February 8,
1995, by and between Hexcel Corporation, a Delaware corporation (with its
successors and permitted assigns, the "Pledgor"), and Citicorp USA, Inc., in its
separate capacity as Agent (with its successors and permitted assigns in such
capacity, the "Agent") for the Lenders (as defined below) and the Issuing Banks
(as defined below) party to that certain Credit Agreement dated as of February
8, 1995 among Hexcel Corporation as borrower (the "Borrower"), the financial
institutions from time to time party thereto as Lenders (the "Lenders"), the
financial institutions from time to time party thereto as Issuing Banks (the
"Issuing Banks"), and Citicorp, as Agent (as amended, restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"). Terms defined in
the Credit Agreement and not otherwise defined herein are used herein with the
meanings ascribed thereto in the Credit Agreement.
WITNESSETH:
WHEREAS, the Pledgor is a party to the Credit Agreement, pursuant to
which the Lenders have agreed, subject to certain conditions precedent, to make
loans and other financial accommodations to the Pledgor from time to time;
WHEREAS, the Pledgor owns (i) the shares of capital stock described
in EXHIBIT A hereto and issued by the issuers named therein and (ii) the
indebtedness described in EXHIBIT C hereto and issued by the obligors named
therein; and
WHEREAS, in order to secure the prompt and complete payment,
observance and performance of (i) all of the Obligations and (ii) all of the
Borrower's obligations and liabilities hereunder and in connection herewith (all
the Obligations and such obligations hereunder being hereinafter referred to
collectively as the "Liabilities"), the Agent, the Lenders and the Issuing Banks
have required, as a condition, among others, to entering into the Credit
Agreement, that the Pledgor execute and deliver this Pledge Agreement;
NOW, THEREFORE, for and in consideration of the foregoing and of any
financial accommodations or extensions of credit (including, without limitation,
any loan or advance by
<PAGE>
renewal, refinancing or extension of the agreements described hereinabove or
otherwise) heretofore, now or hereafter made to or for the benefit of the
Pledgor pursuant to the Credit Agreement or any other agreement, instrument or
document executed pursuant to or in connection therewith, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Pledgor and the Agent hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit Agreement. Unless otherwise defined herein, all
terms defined in Article 8 and Article 9 of the Uniform Commercial Code in
effect as of the date hereof in the State of New York are used herein as defined
therein.
(b) The words "hereby," "hereof," "herein" and "hereunder" and
words of like import when used in this Pledge Agreement shall refer to this
Pledge Agreement as a whole and not to any particular provision of this Pledge
Agreement, and section references are to this Pledge Agreement unless otherwise
specified.
(c) All terms defined in this Pledge Agreement in the singular
shall have comparable meanings when used in the plural, and VICE VERSA,
unless otherwise specified.
2. PLEDGE. The Pledgor hereby pledges to the Agent, for the
benefit of the Agent, the Lenders, the Issuing Banks and the other Holders and
grants to the Agent for the benefit of the Agent, the Lenders, the Issuing Banks
and the other Holders, a security interest in, the following (collectively, the
"Pledged Collateral"):
(a) The shares of the capital stock described in EXHIBIT A
hereto, and the certificates representing the shares of such capital
stock, all options and warrants for the purchase of shares of such
capital stock (all of said capital stock, options and warrants and all
capital stock held in the name of the Pledgor as a result of the exercise
of such options or warrants being hereinafter collectively referred to as
the "Pledged Stock"), herewith delivered to the Agent accompanied by stock
powers in the form of EXHIBIT B attached hereto and made a part hereof
(the "Stock Powers") duly executed in blank, and all dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, or in exchange for, any or all of the
Pledged Stock;
(b) All additional shares of stock of any issuer of the Pledged
Stock from time to time acquired by the Pledgor in any manner, and all of
the shares of the capital stock issued
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<PAGE>
to the Pledgor by any other issuer after the date hereof, and the
certificates representing such additional shares (any such additional
shares shall constitute part of the Pledged Stock and the Agent is
irrevocably authorized to amend EXHIBIT A from time to time to reflect
such additional shares), and all options, warrants, dividends, cash,
instruments and other rights and options from time to time received,
receivable or otherwise distributed in respect of or in exchange for any
or all of such shares;
(c) The indebtedness described in EXHIBIT C attached hereto (the
"Pledged Debt") and the instruments evidencing such Pledged Debt, duly
endorsed and in transferable form, all payments of principal thereof and
interest thereon, due and to become due thereunder, and all books and
records applicable thereto, herewith delivered to the Agent;
(d) All additional evidence of indebtedness from time to time owed
to the Pledgor by any obligor, duly endorsed and in transferable form, and
all payments of principal thereof and interest thereon, due and to become
due thereunder, and all books and records applicable thereto (such
additional obligations shall constitute part of the Pledged Debt and the
Agent is irrevocably authorized to amend EXHIBIT C from time to time to
reflect such additional obligations);
(e) The property and interests in property described in SECTION 4
below; and
(f) All proceeds of the foregoing.
3. SECURITY FOR OBLIGATIONS. The Pledged Collateral secures the
prompt payment, performance and observance of the Liabilities.
4. PLEDGED COLLATERAL ADJUSTMENTS. If, during the term of this
Pledge Agreement:
(a) Any stock dividend, reclassification, readjustment or other
change is declared or made in the capital structure of any issuer of
Pledged Stock, or any option included within the Pledged Collateral is
exercised, or both, or
(b) Any subscription warrants or any other rights or options shall
be issued in connection with the Pledged Collateral, or
(c) Any additional indebtedness owing to the Pledgor is incurred by
any of the obligors of the Pledged Debt,
then all new, substituted and additional shares, warrants, rights, options,
notes or other securities, issued by reason of any of the foregoing, shall be
immediately delivered to and held by the Agent under the terms of this Pledge
Agreement and shall constitute
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<PAGE>
Pledged Collateral hereunder; PROVIDED, HOWEVER, that nothing contained in
this SECTION 4 shall be deemed to permit any stock dividend, issuance of
additional stock, warrants, rights or options, reclassification, readjustment or
other change in the capital structure of any issuer of Pledged Stock which is
prohibited in the Credit Agreement.
5. SUBSEQUENT CHANGES AFFECTING PLEDGED COLLATERAL. The Pledgor
represents and warrants that it has made its own arrangements for keeping
informed of changes or potential changes affecting the Pledged Collateral
(including, but not limited to, rights to convert, rights to subscribe, payment
of dividends, reorganization or other exchanges, tender offers and voting
rights), and the Pledgor agrees that neither the Agent nor any of the Lenders,
Issuing Banks or any other Holder shall have any obligation to inform the
Pledgor of any such changes or potential changes or to take any action or omit
to take any action with respect thereto. The Agent may, upon the occurrence
and during the continuation of an Event of Default, without notice and at its
option, transfer or register the Pledged Collateral or any part thereof into its
or its nominee's name with or without any indication that such Pledged
Collateral is subject to the security interest hereunder. In addition, the
Agent may at any time exchange certificates or instruments representing or
evidencing Pledged Collateral for certificates or instruments of smaller or
larger denominations.
6. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and
warrants as follows:
(a) The Pledgor is the sole legal and beneficial owner of the
percentage of the issued and outstanding shares of capital stock of the
respective issuers thereof listed on EXHIBIT A hereto, free and clear of
any Lien except for the security interest created by this Pledge
Agreement, and the Pledged Stock constitutes that percentage of the issued
and outstanding shares of capital stock of the respective issuers thereof
set forth in EXHIBIT A hereto;
(b) The Pledgor is the sole legal and beneficial owner of the
Pledged Debt, free and clear of any Lien except for the security interest
created by this Pledge Agreement, and the Pledged Debt (i) constitutes all
of the outstanding indebtedness for money borrowed or for any deferred
purchase price of property of the respective obligors thereof owing to the
Pledgor and (ii) are each a valid and binding obligation of its respective
obligor, enforceable in accordance with its terms, except as such
enforceability may be limited by (x) bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and (y)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
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<PAGE>
(c) The Pledgor has full corporate power and authority to execute,
deliver and perform this Pledge Agreement;
(d) There are no restrictions upon the voting rights associated
with, or upon the transfer of, any of the Pledged Collateral, other than
pursuant to this Pledge Agreement;
(e) The Pledgor has the right to vote, pledge and grant a security
interest in or otherwise transfer such Pledged Collateral free of any
Liens;
(f) No authorization, approval, or other action by, and no notice
to or filing with, any governmental authority or regulatory body is
required either (i) for the pledge of the Pledged Collateral pursuant to
this Pledge Agreement or for the execution, delivery or performance of
this Pledge Agreement by the Pledgor or (ii) for the exercise by the Agent
of the voting or other rights provided for in this Pledge Agreement or the
remedies in respect of the Pledged Collateral pursuant to this Pledge
Agreement (except as may be required in connection with such disposition
by laws affecting the offering and sale of securities generally);
(g) The pledge of the Pledged Collateral pursuant to this Pledge
Agreement creates a valid and perfected first priority security interest
in the Pledged Collateral, in favor of the Agent for the benefit of the
Agent, the Lenders, the Issuing Banks and the other Holders securing the
payment and performance of the Liabilities;
(h) The Stock Powers are duly executed and give the Agent the
authority they purport to confer; and
(i) The grant and perfection of the security interests in the
Pledged Collateral for the benefit of the Agent, the Lenders, the Issuing
Banks and the other Holders, in accordance with the terms herein, are not
made in violation of the registration of the Securities Act of 1933 (the
"Securities Act"), any applicable provisions of other federal securities
laws, state securities or "Blue Sky" law, foreign securities law, or
applicable general corporation law or any other applicable law.
7. VOTING RIGHTS. During the term of this Pledge Agreement, and
except as provided in this SECTION 7 below, the Pledgor shall have the right
to vote the Pledged Stock on all corporate questions in a manner not
inconsistent with the terms of this Pledge Agreement, the Credit Agreement and
any other agreement, instrument or document executed pursuant thereto or in
connection therewith. Upon the occurrence and during the continuance of an
Event of Default, the Agent may, at the Agent's option and following written
notice from the Agent to the Pledgor, exercise all voting powers pertaining to
the Pledged Collateral, including the right to take action by shareholder
consent.
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<PAGE>
8. DIVIDENDS AND OTHER DISTRIBUTIONS. (a) So long as no Event
of Default shall have occurred and is continuing:
(i) The Pledgor shall be entitled to receive and retain any and all
dividends and interest paid in respect of the Pledged Collateral,
PROVIDED, HOWEVER, that any and all
(A) dividends and interest paid or payable other than in cash
with respect to, and instruments and other property received,
receivable or otherwise distributed with respect to, or in exchange
for, any of the Pledged Collateral;
(B) dividends and other distributions paid or payable in cash
with respect to any of the Pledged Collateral on account of a
partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in surplus; and
(C) cash paid, payable or otherwise distributed with respect
to principal of, or in redemption of, or in exchange for, any of the
Pledged Collateral;
shall be Pledged Collateral, and shall be forthwith delivered to the Agent
to hold, for the benefit of the Agent, the Lenders, the Issuing Banks and
the other Holders, as Pledged Collateral and shall, if received by the
Pledgor, be received in trust for the Agent, for the benefit of the Agent,
the Lenders, the Issuing Banks and the other Holders, be segregated from
the other property or funds of the Pledgor, and be delivered immediately
to the Agent as Pledged Collateral in the same form as so received (with
any necessary endorsement); and
(ii) The Agent shall execute and deliver (or cause to be executed
and delivered) to the Pledgor all such proxies and other instruments as
the Pledgor may reasonably request for the purpose of enabling the Pledgor
to receive the dividends or interest payments which the Pledgor is
authorized to receive and retain pursuant to CLAUSE (i) above.
(b) Upon the occurrence and during the continuance of an Event of Default:
(i) All rights of the Pledgor to receive the dividends and interest
payments which it would otherwise be authorized to receive and retain
pursuant to SECTION 8(a)(i) hereof shall cease, and all such rights
shall thereupon become vested in the Agent, for the benefit of the Agent,
the Lenders, the Issuing Banks and the other Holders, which shall
thereupon have the sole right to receive and hold as Pledged Collateral
such dividends and interest payments; and
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<PAGE>
(ii) All dividends and interest payments which are received by the
Pledgor contrary to the provisions of CLAUSE (i) of this SECTION 8(b)
shall be received in trust for the Agent, for the benefit of the Agent,
the Lenders, the Issuing Banks and the other Holders, shall be segregated
from other funds of the Pledgor and shall be paid over immediately to the
Agent as Pledged Collateral in the same form as so received (with any
necessary endorsements).
(iii) The Pledgor shall, upon the request of the Agent, at
Pledgor's expense, execute and deliver all such instruments and documents,
and do or cause to be done all such other acts and things, as may be
necessary or, in the opinion of the Agent, the Pledgor or its or their
counsel, advisable to register the applicable Pledged Collateral under the
provisions of the Securities Act, and to exercise its best efforts to
cause the registration statement relating thereto to become effective and
to remain effective for such period as prospectuses are required by law to
be furnished, and to make all amendments and supplements thereto and to
the related prospectus which, in the opinion of the Agent, the Pledgor or
its or their counsel, are necessary or advisable, all in conformity with
the requirements of the Securities Act and the rules and regulations of
the Securities and Exchange Commission applicable thereto;
(iv) The Pledgor shall, upon the request of the Agent, at Pledgor's
expense, use its best efforts to qualify the Pledged Collateral under
state securities or "Blue Sky" laws and to obtain all necessary
governmental approvals for the sale of the Pledged Collateral, as
requested by the Agent;
(v) The Pledgor shall, upon the request of the Agent, at the
Pledgor's expense, make available to the holders of its securities, as
soon as practicable, earnings statements which will satisfy the provisions
of Section 11(a) of the Securities Act; and
(vi) The Pledgor shall, upon the request of the Agent, at the
Pledgor's expense, do or cause to be done all such other acts and things
as may be necessary to make such sale of the Pledged Collateral or any
part thereof valid and binding and in compliance with applicable law.
The Pledgor will reimburse the Agent for all expenses incurred by the Agent,
including, without limitation, reasonable attorneys' and accountants' fees and
expenses in connection with the foregoing. Upon or at any time after the
occurrence and during the continuance of an Event of Default, if the Agent
determines that, prior to any public offering of any securities constituting
part of the Pledged Collateral, such securities should be registered under the
Securities Act and/or registered or qualified under any other federal or state
law and such registration and/or qualification is not practicable, then the
Pledgor agrees that it
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<PAGE>
will be commercially reasonable if a private sale, upon at least ten (10)
Business Days' notice to the Pledgor, is arranged so as to avoid a public
offering, even though the sales price established and/or obtained at such
private sale may be substantially less than prices which could have been
obtained for such security on any market or exchange or in any other public
sale.
9. TRANSFERS AND OTHER LIENS. The Pledgor agrees that it will
not (i) sell or otherwise dispose of, or grant any option with respect to, any
of the Pledged Collateral without the prior written consent of the Agent, other
than in accordance with SECTION 9.02 of the Credit Agreement, or (ii) create
or permit to exist any Lien upon or with respect to any of the Pledged
Collateral, except for the security interest under this Pledge Agreement.
10. REMEDIES; APPLICATION OF PROCEEDS. (a) The Agent shall
have, in addition to any other rights given under this Pledge Agreement or by
law, all of the rights and remedies with respect to the Pledged Collateral of a
secured party under the Uniform Commercial Code as in effect in the State of New
York. In addition, upon the occurrence and during the continuance of an Event
of Default, the Agent shall have such powers of sale and other powers as may be
conferred by applicable law. With respect to the Pledged Collateral or any part
thereof which shall then be in or shall thereafter come into the possession or
custody of the Agent or which the Agent shall otherwise have the ability to
transfer under applicable law, the Agent may, in its sole discretion, without
notice except as specified below, after the occurrence of an Event of Default,
sell or cause the same to be sold at any exchange, broker's board or at public
or private sale, in one or more sales or lots, at such price as the Agent may
deem best, for cash or on credit or for future delivery, without assumption of
any credit risk, and the purchaser of any or all of the Pledged Collateral so
sold shall thereafter own the same, absolutely free from any claim, encumbrance
or right of any kind whatsoever. The Agent, any Lender and any Issuing Bank
may, in its own name, or in the name of a designee or nominee, buy the Pledged
Collateral at any public sale and, if permitted by applicable law, buy the
Pledged Collateral at any private sale. In the event of a sale of any
Collateral, or any part thereof, to a Lender, an Issuing Bank or the Agent upon
the occurrence and during the continuance of an Event of Default, such Lender,
such Issuing Bank or the Agent, as the case may be, shall not deduct or offset
from any part of the purchase price to be paid therefor any indebtedness owing
to it by the Pledgor. The Pledgor will pay to the Agent all reasonable expenses
(including, without limitation, court costs and reasonable attorneys' expenses)
of, or incidental to, the enforcement of any of the provisions hereof. The
Agent agrees to distribute any proceeds of the sale of the Pledged Collateral in
accordance with the Credit Agreement (including, without limitation, SECTION
3.02 thereof) and the Pledgor shall
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<PAGE>
remain liable for any deficiency following the sale of the Pledged Collateral.
(b) Unless any of the Pledged Collateral threatens to decline speedily in
value or is or becomes of a type sold on a recognized market, the Agent will
give the Pledgor reasonable notice of the time and place of any public sale
thereof, or of the time after which any private sale or other intended
disposition is to be made. Any sale of the Pledged Collateral conducted in
conformity with reasonable commercial practices of banks, commercial finance
companies, insurance companies or other financial institutions disposing of
property similar to the Pledged Collateral shall be deemed to be commercially
reasonable. Notwithstanding any provision to the contrary contained herein, the
Pledgor agrees that any requirements of reasonable notice shall be met if such
notice is received by the Pledgor as provided in SECTION 20 below at least ten
(10) Business Days before the time of the sale or disposition; PROVIDED,
HOWEVER, that the Agent may give any shorter notice that is commercially
reasonable under the circumstances. Any other requirement of notice, demand or
advertisement for sale is waived, to the extent permitted by law.
(c) In view of the fact that federal and state securities laws may
impose certain restrictions on the method by which a sale of the Pledged
Collateral may be effected after an Event of Default, the Pledgor agrees that
upon the occurrence and during the continuance of an Event of Default, the Agent
may, from time to time, attempt to sell all or any part of the Pledged
Collateral by means of a private placement restricting the bidders and
prospective purchasers to those who are qualified and will represent and agree
that they are purchasing for investment only and not for distribution. In so
doing, the Agent may solicit offers to buy the Pledged Collateral, or any part
of it, from a limited number of investors deemed by the Agent, in its reasonable
judgment, to be financially responsible parties who might be interested in
purchasing the Pledged Collateral. If the Agent solicits such offers from not
less than four (4) such investors, then the acceptance by the Agent of the
highest offer obtained therefrom shall be deemed to be a commercially reasonable
method of disposing of such Pledged Collateral; PROVIDED, HOWEVER, that this
Section does not impose a requirement that the Agent solicit offers from four or
more investors in order for the sale to be commercially reasonable.
11. AGENT APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby
appoints the Agent its attorney-in-fact, with full authority, in the name of the
Pledgor or otherwise, upon the occurrence and during the continuance of an Event
of Default, from time to time in the Agent's sole discretion, to take any action
and to execute any instrument which the Agent may deem necessary or advisable to
accomplish the purposes of this Pledge Agreement, including, without limitation
(subject to SECTION 8 hereof), to receive, endorse and collect all instruments
made payable to the Pledgor representing any dividend, interest payment or other
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<PAGE>
distribution in respect of the Pledged Collateral or any part thereof and to
give full discharge for the same and to arrange for the transfer of all or any
part of the Pledged Collateral on the books of each of the issuers of such
Pledged Stock or obligors of such Pledged Debt to the name of the Agent or the
Agent's nominee.
12. WAIVERS. The Pledgor waives presentment and demand for
payment of any of the Obligations, protest and notice of dishonor or Event of
Default with respect to any of the Obligations and all other notices to which
the Pledgor might otherwise be entitled except as otherwise expressly provided
herein or in the Credit Agreement.
13. TERMINATION OF THIS SECURITY AGREEMENT; RELEASE OF
COLLATERAL. (a) The pledge made and the security interest granted by the
Pledgor under this Pledge Agreement shall terminate against all the Collateral
upon final payment in full in cash of the Obligations and termination of the
Revolving Credit Commitments under the Credit Agreement. Upon such termination
(other than as a result of the sale of the Pledged Collateral) and at the
written request of the Pledgor or its successors or assigns, and at the cost and
expense of the Pledgor or its successors or assigns, the Agent shall execute in
a timely manner such instruments, documents or agreements as are necessary or
desirable to terminate the Agent's security interest in the Pledged Collateral
and deliver the Pledged Stock, the Intercompany Notes and the Stock Powers,
subject to any disposition made by the Agent pursuant to the Pledge Agreement.
(b) Notwithstanding anything in this Pledge Agreement to the
contrary, the Pledgor may, to the extent permitted by SECTION 9.02 and 9.13
of the Credit Agreement, sell, assign, transfer or otherwise dispose of any
Pledged Collateral. In addition, the Collateral shall be subject to release
from time to time (with the Collateral referred to in the immediately preceding
sentence, the "Released Collateral") in accordance with SECTION 12.09(c) of
the Credit Agreement. The Liens under this Pledge Agreement shall terminate
with respect to the Released Collateral upon such sale, transfer, assignment,
disposition or release, and, upon the request of the Pledgor, the Agent shall
execute and deliver such instruments or documents as may be necessary to release
the Liens granted hereunder; PROVIDED, HOWEVER, that (i) the Agent shall not
be required to execute any such documents on terms which, in the Agent's
opinion, would expose the Agent to liability or create any obligation or entail
any consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Liabilities or any Liens on (or obligations of the Pledgor in respect
of) all interests retained by the Pledgor, including without limitation, the
proceeds of any sale, all of which shall continue to constitute part of the
Collateral unless and until applied strictly in accordance with the Loan
Documents.
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<PAGE>
14. SUCCESSORS AND ASSIGNS. This Pledge Agreement shall be
binding upon the Pledgor and its successors, and upon any assign(s) of the
Pledgor in accordance with SECTION 13.16 of the Credit Agreement, and shall
inure to the benefit of the Agent, the Lenders, the Issuing Banks and the other
Holders, and their respective successors and assigns. Nothing set forth
herein or in any other Loan Document is intended or shall be construed to give
any other Person any right, remedy or claim under, to or in respect of this
Pledge Agreement, the Credit Agreement or any other Loan Document or any Pledged
Collateral. The Pledgor's successors shall include, without limitation, a
receiver, trustee or debtor-in-possession of or for the Pledgor.
15. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED AND THE RIGHTS AND DUTIES OF THE PARTIES SHALL BE GOVERNED BY IN ALL
RESPECTS IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, EXCEPT FOR
PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS AND LIENS IN OTHER
JURISDICTIONS WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE JURISDICTIONS.
16. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. The
Pledgor agrees that the terms of SECTION 13.17 of the Credit Agreement with
respect to consent to jurisdiction and service of process shall apply equally to
this Pledge Agreement.
17. WAIVER OF JURY TRIAL. EACH OF THE PLEDGOR AND THE AGENT
WAIVES ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT,
TORT, OR OTHERWISE, BETWEEN THE AGENT AND THE PLEDGOR ARISING OUT OF OR RELATED
TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EITHER THE
PLEDGOR OR THE AGENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
18. WAIVER OF BOND. The Pledgor waives the posting of any bond
otherwise required of the Agent in connection with any judicial process or
proceeding to realize on the Pledged Collateral or any other security for the
Obligations, to enforce any judgment or other court order entered in favor of
the Agent, or to enforce by specific performance, temporary restraining order,
or preliminary or permanent injunction, this Pledge Agreement or any other
agreement or document between the Agent and the Pledgor.
19. ADVICE OF COUNSEL. The Pledgor represents and warrants to
the Agent and the Lenders that it has discussed this Pledge Agreement and,
specifically, the provisions of SECTIONS 15 through 18 hereof, with the
Pledgor's attorneys.
20. SEVERABILITY. Whenever possible, each provision of this
Pledge Agreement shall be interpreted in such manner as to be effective and
valid under applicable law, but, if any provision of
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<PAGE>
this Pledge Agreement shall be held to be prohibited or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Pledge Agreement.
21. FURTHER ASSURANCES. The Pledgor agrees that it will
cooperate with the Agent and will execute and deliver, or cause to be executed
and delivered, all such other stock powers, proxies, instruments and documents,
and will take all such other actions, including, without limitation, the
execution and filing of financing statements, as the Agent may reasonably
request from time to time in order to carry out the provisions and purposes of
this Pledge Agreement.
22. THE AGENT'S DUTY OF CARE. The Agent shall not be liable for
any acts, omissions, errors of judgment or mistakes of fact or law including,
without limitation, acts, omissions, errors or mistakes with respect to the
Pledged Collateral, except for those arising out of or in connection with the
Agent's (i) gross negligence or willful misconduct as determined in a final
non-appealable judgment by a court of competent jurisdiction, or (ii) failure to
use reasonable care with respect to the safe custody of the Pledged Collateral
in the Agent's possession. Without limiting the generality of the foregoing,
the Agent shall be under no obligation to take any steps necessary to preserve
rights in the Pledged Collateral against any other parties but may do so at its
option. All expenses incurred in connection therewith shall be for the sole
account of the Pledgor, and shall constitute part of the Obligations secured
hereby.
23. NOTICES. All notices and other communications hereunder
shall be given in the manner and to the addresses set forth in SECTION 13.08
of the Credit Agreement.
24. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of this Pledge Agreement may be waived, altered, modified or amended,
and no consent to any departure by the Pledgor herefrom shall be effective,
except by or pursuant to an instrument in writing which (i) is duly executed by
the Pledgor and the Agent and (ii) complies with the requirements of the Credit
Agreement. Any such waiver shall be valid only to the extent set forth therein.
A waiver by the Agent of any right or remedy under this Pledge Agreement on any
one occasion shall not be construed as a waiver of any right or remedy which the
Agent would otherwise have on any future occasion. No failure to exercise or
delay in exercising any right, power or privilege under this Pledge Agreement on
the part of the Agent shall operate as a waiver thereof; and no single or
partial exercise of any right, power or privilege under this Pledge Agreement
shall preclude any other or further exercise thereof or the exercise of any
other right, power or privilege.
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<PAGE>
25. SECTION TITLES. The section titles herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
26. EXECUTION IN COUNTERPARTS. This Pledge Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the Pledgor and the Agent have executed this
Pledge Agreement as of the date set forth above.
HEXCEL CORPORATION
By:________________________
Name:
Title:
CITICORP USA, INC., as Agent
By:_________________________
Name:
Title:
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<PAGE>
ACKNOWLEDGMENT
The undersigned hereby acknowledges receipt of a copy of the
foregoing Pledge Agreement, agrees promptly to note on its books the security
interests granted under such Pledge Agreement, and waives any rights or
requirement at any time hereafter to receive a copy of such Pledge Agreement in
connection with the registration of any Pledged Collateral in the name of the
Agent or its nominee or the exercise of voting rights by the Agent.
[SUBSIDIARIES]
By: ___________________________
Name:
Title:
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<PAGE>
EXHIBIT A
to
PLEDGE AGREEMENT
dated as of February __, 1995
PLEDGED STOCK
-------------
PERCENTAGE OF SHARES OF CAPITAL
ISSUED AND OUTSTANDING STOCK OWNED BY
CAPITAL STOCK OWNED THE PLEDGOR SUBJECT
STOCK ISSUER BY THE PLEDGOR TO PLEDGE
- ------------ -------------- ---------
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<PAGE>
EXHIBIT B
to
PLEDGE AGREEMENT
dated as of February __, 1995
FORM OF STOCK POWER
STOCK POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and
transfer to _______________________________ ___ Shares of Common Stock of
______________________ represented by Certificate[s] No. __ [and __] (the
"Stock"), standing in the name of the undersigned on the books of said
corporation and does hereby irrevocably constitute and appoint
_______________________________________________________ as the undersigned's
true and lawful attorney, for and in name and stead, to sell, assign and
transfer all or any of the Stock, and for that purpose to make and execute all
necessary acts of assignment and transfer thereof; and to substitute one or more
persons with like full power, hereby ratifying and confirming all that said
attorney or substitute or substitutes shall lawfully do by virtue hereof.
Dated: _______________
HEXCEL CORPORATION
By:_________________________
Name:
Title:
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<PAGE>
EXHIBIT C
to
PLEDGE AGREEMENT
dated as of February __, 1995
PLEDGED DEBT
DEBT ISSUER PRINCIPAL AMOUNT MATURITY
- ----------- ---------------- --------
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<PAGE>
EXHIBIT O
TO CREDIT AGREEMENT
DATED AS OF FEBRUARY 8, 1995
FORM OF SUBSIDIARY SECURITY AGREEMENT
THIS SUBSIDIARY SECURITY AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "Subsidiary Security Agreement"),
dated as of February 8, 1995 by and among HEXCEL INTERNATIONAL, a California
corporation, HEXCEL FAR EAST, a California corporation, and HEXCEL TECHNOLOGIES,
INC., a Delaware corporation (each individually and with its respective
successors and permitted assigns, a "Grantor," and collectively the "Grantors"),
and Citicorp USA, Inc., in its capacity as agent (with its successors in such
capacity, the "Agent") for the Lenders (as defined below) and the Issuing Banks
(as defined below) under that certain Credit Agreement dated as of February 8,
1995 (as amended, restated, supplemented or otherwise modified from time to
time, the "Credit Agreement") among Hexcel Corporation as borrower (the
"Borrower"), the Agent, the lenders from time to time a party thereto (the
"Lenders"), and the issuing banks from time to time a party thereto (the
"Issuing Banks").
WITNESSETH:
WHEREAS, Hexcel Corporation, a Delaware corporation, as borrower
(the "Borrower") is a party to the Credit Agreement, pursuant to which the
Lenders and the Issuing Banks have agreed, subject to certain conditions
precedent, to make loans and other financial accommodations to the Borrower from
time to time;
WHEREAS, the Grantors have directly and indirectly benefitted, and
will directly and indirectly benefit from the loans and other financial
accommodations made to the Borrower pursuant to the Credit Agreement;
WHEREAS, to induce the Lenders, the Issuing Banks, the Agent to
enter into the Credit Agreement, the Grantors each have agreed to enter into the
Subsidiary Guaranty dated as of the date hereof (the "Subsidiary Guaranty")
pursuant to which each Grantor has jointly and severally guaranteed the payment
and performance of the Obligations of the Borrower;
WHEREAS, the Lenders and the Issuing Banks have required as a
condition, among others, to entering into the Credit Agreement, that each
Grantor enter into this Subsidiary Security Agreement in order to secure the
prompt and complete payment, observance and performance of (i) all of such
Grantor's obligations under the Subsidiary Guaranty and (ii) all of such
Grantor's obligations and liabilities under this Subsidiary
<PAGE>
Security Agreement and all other Loan Documents to which such Grantor is a party
(all such obligations and liabilities of such Grantor being hereinafter referred
to collectively as such Grantor's "Liabilities");
NOW, THEREFORE, in consideration of the premises set forth above,
the terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINED TERMS.
(a) Unless otherwise defined herein, each capitalized term used
herein that is defined in the Credit Agreement shall have the meaning specified
for such term in the Credit Agreement. Unless otherwise defined herein or in the
Credit Agreement, all terms defined in Article 8 and Article 9 of the Uniform
Commercial Code in effect as of the date hereof in the State of New York are
used herein as defined therein as of the date hereof.
(b) The words "hereby," "hereof," "herein" and "hereunder" and
words of like import when used in this Subsidiary Security Agreement shall refer
to this Subsidiary Security Agreement as a whole and not to any particular
provision of this Subsidiary Security Agreement, and section references are to
this Subsidiary Security Agreement unless otherwise specified.
(c) All terms defined in this Subsidiary Security Agreement in the
singular shall have comparable meanings when used in the plural, and VICE
VERSA, unless otherwise specified.
2. GRANT OF SECURITY INTEREST. Each Grantor hereby grants to
the Agent for the benefit of the Agent, the Lenders, the Issuing Banks and the
other Holders a security interest in all of such Grantor's rights, title and
interests in and to the following property, whether now owned or existing or
hereafter arising or acquired and wheresoever located (the "Collateral"), to
secure the prompt and complete payment, observance and performance of all such
Grantor's Liabilities.
(a) ACCOUNTS: All present and future accounts, accounts
receivable and other rights of such Grantor to payment for the sale or lease of
goods or the rendition of services (except those evidenced by instruments or
chattel paper), whether now existing or hereafter arising and wherever arising,
and whether or not they have been earned by performance (collectively,
"Accounts");
(b) EQUIPMENT: All of such Grantor's present and future (i)
equipment and fixtures, including, without limitation, wherever located,
printing presses and other machinery, manufacturing, distribution, selling, data
processing and office
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<PAGE>
equipment, furniture, furnishings, assembly systems, tools, tooling, molds,
dies, appliances and vehicles, vessels and aircraft, (ii) other tangible
personal property (other than such Grantor's Inventory) and (iii) any and all
accessions, parts and appurtenances attached to any of the foregoing or used in
connection therewith, and any substitutions therefor and replacements, products
and proceeds thereof (collectively, "Equipment");
(c) GENERAL INTANGIBLES: All of such Grantor's present and future
general intangibles, choses in action, causes of action, and all other
intangible personal property of every kind and nature including, without
limitation, corporate, partnership and other business books and records,
inventions, designs, patents, patent applications, trademarks, service marks,
trademark applications, service mark applications, trade names, trade secrets,
goodwill, registrations, copyrights, licenses, franchises, customer lists,
computer programs, software and other computer materials, tax refunds, tax
refund claims, rights and claims against charters, carriers, shippers,
franchisees, lessors, and lessees, and rights to indemnification, intercompany
receivables, and any security documents executed in connection therewith,
deposit accounts, proceeds of any letters of credit, indemnity, warranty or
guaranty payable to such Grantor from time to time with respect to the foregoing
or proceeds of any insurance policies on which such Grantor is named as
beneficiary, claims against third parties for advances and other financial
accommodations and any other obligations whatsoever owing to such Grantor,
contract rights, customer and supplier contracts, rights in and to all security
agreements, security interests or other security held by such Grantor to secure
payment of such Grantor's accounts, all right, title and interest under leases,
subleases, and concessions and other agreements relating to real or personal
property (including, without limitation, all rents, issues and profits related
thereto), rights in and under guarantees, instruments, securities, documents of
title and other contracts securing, evidencing, supporting or otherwise relating
to any of the foregoing, together with all rights in any goods, merchandise or
Inventory (as defined below) which any of the foregoing may represent
(collectively, "General Intangibles");
(d) INVENTORY: All of such Grantor's present and future (i)
inventory, (ii) goods, merchandise and other personal property furnished or to
be furnished under any contract of service or intended for sale or lease, and
all goods consigned by such Grantor and all other items which have previously
constituted Equipment but are then currently being held for sale or lease in the
ordinary course of such Grantor's business, (iii) raw materials, work-in-process
and finished goods, (iv) materials, components and supplies of any kind, nature
or description used or consumed in such Grantor's business or in connection with
the manufacture, production, packing, shipping, advertising, finishing or sale
of any of the Property described in CLAUSES (i) through
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<PAGE>
(iii) above, (v) goods in which such Grantor has a joint or other interest to
the extent of such Grantor's interest therein or right of any kind (including,
without limitation, goods in which such Grantor has an interest or right as
consignee), and (vi) goods which are returned to or repossessed by such Grantor;
in each case whether in the possession of such Grantor, a bailee, a consignee,
or any other Person for sale, storage, transit, processing, use or otherwise,
and any and all documents for or relating to any of the foregoing (collectively,
"Inventory");
(e) CHATTEL PAPER, INSTRUMENTS AND DOCUMENTS: All chattel paper,
all instruments (as defined in Article 9 of the Uniform Commercial Code) and
securities (as defined in Article 8 of the Uniform Commercial Code), all bills
of lading, warehouse receipts and other documents of title and documents, in
each instance whether now owned or hereafter acquired by such Grantor
(collectively, "Chattel Paper, Instruments and Documents");
(f) OTHER PROPERTY: All property or interests in property now
owned or hereafter acquired by such Grantor whether in the possession, custody
or control of the Agent, any Lender, any Issuing Bank or any other Holder, or
any agent or affiliate of any of them in any way or for any purpose (whether for
safekeeping, deposit, custody, pledge, transmission, collection or otherwise),
including, without limitation, (i) each Lockbox, and all funds, drafts, checks
and other items deposited therein from time to time, (ii) each Collection
Account, and all funds, drafts, checks and other items deposited therein from
time to time, (iii) the Concentration Account, and all funds, drafts, checks and
other items deposited therein from time to time, and (iv) the Investment
Account, all funds, drafts, checks and other items deposited therein from time
to time, all Investments made from time to time in or through the Investment
Account, and all certificates and instruments, if any, from time to time
representing such Investments; and all rights and interests of such Grantor, now
existing or hereafter arising and however and wherever arising, in respect of
any and all (w) notes, drafts, letters of credit, stocks, bonds, and debt and
equity securities, whether or not certificated, and warrants, options, puts and
calls and other rights to acquire or otherwise relating to the same; (x) money;
(y) proceeds of loans, including, without limitation, all the intercompany loans
made to such Grantor by the Borrower; and (z) insurance proceeds and books and
records relating to any of the property covered by this Subsidiary Security
Agreement (collectively, "Other Property");
together with respect to each of the items set forth in paragraphs (a) through
(f) above with all accessions and additions thereto, substitutions therefor, and
replacements, proceeds and products thereof; PROVIDED, HOWEVER, that the
foregoing grant of a security interest shall not include a security interest in
any contract right, license, agreement, any lease pertaining to real or personal
property or any other document, instrument or agreement
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<PAGE>
of the Borrower (each such contract right, license agreement, lease pertaining
to real or personal property and other document, instrument or agreement of the
Borrower being hereinafter referred to as "Excluded Property"), IF the
granting of a security interest therein by the Borrower to the Agent is
expressly prohibited by the terms and provisions of the written agreement,
document or instrument creating or evidencing such Excluded Property or rights
related thereto or by applicable law (it being understood and agreed that
promptly following a request by the Agent, the Borrower shall use its best
efforts to obtain from the Person in whose favor the prohibition has been
granted any necessary waiver or consent in order to remove or terminate such
prohibition or permit the Agent to have a security interest in the Borrower's
rights to any such Excluded Property subject to such a prohibition and referred
to in such request, and that any such Excluded Property so referred to shall
constitute part of the Collateral automatically upon the execution and delivery
of the applicable waiver or consent). Notwithstanding anything set forth herein
to the contrary, the Agent will be deemed to have, and at all times from and
after the date hereof to have had, a security interest in the proceeds of such
Excluded Property to the extent that proceeds of such Excluded Property have
come into the possession of the Agent, have been deposited into any Collection
Account or the Concentration Account or otherwise constitute Collateral
hereunder.
3. CONTINUING LIABILITY. Each Grantor hereby expressly agrees
that, notwithstanding anything set forth herein to the contrary, such Grantor
shall remain solely responsible under each contract, agreement, interest or
obligation as to which a Lien has been granted to the Agent hereunder for the
observance and performance of all of the conditions and obligations to be
observed and performed by such Grantor thereunder, all in accordance with and
pursuant to the terms and provisions thereof, and the exercise by the Agent, any
Lender or any Issuing Bank of any rights under this Subsidiary Security
Agreement, the Subsidiary Guaranty, the Credit Agreement or any other Loan
Document shall not release such Grantor from any of such Grantor's duties or
obligations hereunder and under each such contract, agreement, interest or
obligation. Neither the Agent nor any Lender or Issuing Bank shall have any
duty, responsibility, obligation or liability under any such contract,
agreement, interest or obligation by reason of or arising out of this Subsidiary
Security Agreement or the assignment thereof by such Grantor to the Agent or the
granting by such Grantor to the Agent of a Lien thereon or the receipt by the
Agent, any Lender or any Issuing Bank of any payment relating to any such
contract, agreement, interest or obligation pursuant hereto, nor shall the
Agent, any Lender or any Issuing Bank be required or obligated (nor to the
extent prohibited by the terms of such contract, agreement, interest or
obligation or applicable law, rule or regulation, shall the Agent, Lender or
Issuer be permitted), in any manner, to (a) perform or fulfill any of the
obligations of
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<PAGE>
such Grantor thereunder or pursuant thereto, (b) make any payment, or to make
any inquiry as to the nature or the sufficiency of any payment received by such
Grantor or the sufficiency of any performance by any party under any such
contract, agreement, interest or obligation, or (c) present or file any claim,
or take any action to collect or enforce any performance or payment of any
amounts which may have been assigned to such Grantor, on which such Grantor has
been granted a Lien to which such Grantor may be entitled at any time or times.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS. Each Grantor
hereby represents, warrants and covenants that as of the date of the execution
of this Subsidiary Security Agreement, and until the termination of this
Subsidiary Security Agreement pursuant to SECTION 14 below:
(a) All of the Equipment and Inventory (other than Inventory and
Equipment sold in accordance with the terms of the Credit Agreement,
Equipment being repaired or serviced, Equipment and Inventory in transit
or in the possession and control of subcontractors of such Grantor, are
located at the places specified in SCHEDULE 1 attached hereto and such
location is an owned, leased or bailment location as specified in
SCHEDULE 1 attached hereto. As of the date hereof, the correct
corporate name, the principal place of business, the chief executive
office, and the federal tax identification number of such Grantor and the
places where such Grantor's books and records concerning the Collateral
are currently kept are set forth in SCHEDULE 2 attached hereto and made
a part hereof, and such Grantor will not change such principal place of
business or chief executive office or remove such records without (i)
providing the Agent with at least thirty (30) days' prior written notice
of such change, and (ii) making all filings under the Uniform Commercial
Code necessary or appropriate to preserve the perfection of the security
interests described herein to the extent such security interest may be
perfected by such filings. Such Grantor will not change its name,
identity or corporate structure in any manner which might make any
financing statement filed hereunder misleading, UNLESS such Grantor
shall have (A) given the Agent at least thirty (30) days' prior written
notice thereof (and received any consent that may be required under the
terms of the Credit Agreement), and (B) certified to the Agent that all
filings reflecting such new name, identity or structure have been made
which are necessary or appropriate to preserve the perfection of the
security interests described herein. The Borrower will hold and preserve
such records and chattel paper and will permit representatives of the
Agent at any time during normal business hours to inspect and make
abstracts from such records and chattel paper.
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<PAGE>
(b) Such Grantor has exclusive possession and control of the
Equipment and Inventory, except for (i) Inventory in the possession and
control of a bailee or warehouseman of such Grantor in the ordinary course
of business; (ii) Inventory in the possession and control of
subcontractors of such Grantor; (iii) Equipment being repaired or
serviced; and (iv) Equipment and Inventory in transit with common or other
carriers.
(c) Such Grantor is the legal and beneficial owner of the
Collateral free and clear of all Liens except as permitted under SECTION
9.03 of the Credit Agreement. Such Grantor has not, during the five (5)
years preceding the date hereof, been known as or used any other corporate
or fictitious name, except as disclosed on SCHEDULE 3 hereto, nor
acquired all or substantially all the assets, capital stock or operating
unit of any Person, except as disclosed on SCHEDULE 3 hereto, and each
predecessor in interest of such Grantor during the five (5) years
preceding the Closing Date is disclosed on SCHEDULE 3 hereto.
(d) This Subsidiary Security Agreement creates in favor of the
Agent a legal, valid and enforceable security interest in the Collateral,
securing the payment of the Liabilities. When financing statements have
been filed in the appropriate offices in the locations listed on
SCHEDULES 1 AND 2 hereto, the Agent will have a fully perfected first
priority Lien on the Collateral to the extent such Lien may be perfected
by Uniform Commercial Code filings, except, in the case of priority, for
Liens permitted by SECTION 9.03 of the Credit Agreement.
5. COVENANTS. Each Grantor covenants and agrees with the
Agent that from and after the date of this Subsidiary Security Agreement
and until the termination of this Subsidiary Security Agreement pursuant
to SECTION 14 below:
(a) At any time and from time to time, upon the Agent's written
request and at the expense of such Grantor, such Grantor will promptly and
duly execute and deliver any and all such further instruments and
documents and take such further action as the Agent reasonably may deem
desirable in order to perfect and protect any Lien granted or purported to
be granted hereby or to enable the Agent to exercise and enforce its
rights and remedies hereunder with respect to the Collateral. Without
limiting the generality of the foregoing, such Grantor will: (i) upon the
occurrence and during the continuance of an Event of Default, at the
request of the Agent, mark conspicuously each item of chattel paper
included in the Collateral and each related contract and, each of its
records pertaining to the Collateral, with a legend, in form and substance
satisfactory to the Agent, indicating that such document, chattel paper,
related
-7-
<PAGE>
contract or Collateral is subject to the security interest granted hereby;
(ii) if any Collateral shall be evidenced by a promissory note or other
instrument (other than checks or drafts received in the ordinary course of
such Grantor's business), deliver and pledge to the Agent hereunder such
note or instrument duly endorsed and accompanied by duly executed
instruments of transfer or assignment, all in form and substance
satisfactory to the Agent; and (iii) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments
or notices as the Agent may request, as may be necessary or desirable, in
order to perfect and preserve the security interest granted or purported
to be granted hereby. Such Grantor hereby authorizes the Agent to file
any such financing or continuation statements without the signature of
such Grantor to the extent permitted by applicable law. Such Grantor
hereby agrees that a carbon, photographic, photostatic or other
reproduction of this Subsidiary Security Agreement or of a financing
statement is sufficient as a financing statement to the extent permitted
by applicable law.
(b) Such Grantor shall keep the Equipment and Inventory (other
than Inventory and Equipment sold in accordance with the terms of the
Credit Agreement, Equipment being repaired or serviced, Inventory in
transit or in the possession and control of subcontractors of such
Grantor) at the places specified in SCHEDULE 1 hereto and shall deliver
written notice to the Agent at least 30 days prior to establishing any
other location at which it reasonably expects to maintain Inventory and/or
Equipment in any jurisdiction in which all action required by SECTION 5
hereof has not been taken with respect to all such Equipment and/or
Inventory. Upon the establishment of any such location, and after
notice thereof to the Agent as required in the preceding sentence,
SCHEDULE 1 hereto shall be deemed amended to add such location thereto
without further action by the Agent or such Grantor and such Grantor
hereby authorizes the Agent to substitute a new SCHEDULE 1 hereto to
reflect such additional location(s).
(c) Such Grantor will keep and maintain at such Grantor's own cost
and expense satisfactory and complete records of the Collateral in a
manner reasonably acceptable to the Agent, including, without limitation,
a record of all payments received and all credits granted with respect to
such Collateral and a record of the Agent's security interest in the
Collateral. Upon the occurrence and during the continuance of an Event of
Default, such Grantor shall, for the Agent's further security, deliver and
turn over to the Agent or the Agent's designated representatives at any
time upon three (3) days' notice from the Agent or the Agent's designated
representative, any such books and records (including, without limitation,
any and all computer tapes,
-8-
<PAGE>
programs and source codes relating to the Collateral or any part or parts
thereof).
(d) In any suit, proceeding or action brought by the Agent under
any account comprising part of the Collateral, such Grantor will save,
indemnify and keep the Agent, each Lender and each Issuing Bank harmless
from and against all expense, loss or damages suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction of liability
whatsoever of the obligor thereunder, arising out of a breach by such
Grantor of any obligation or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such obligor
or its successors from such Grantor, and all such obligations of such
Grantor shall be and shall remain enforceable against and only against
such Grantor and shall not be enforceable against the Agent, any Lender or
any Issuing Bank; PROVIDED, HOWEVER, such Grantor shall have no
obligation to the Agent with respect to the matters indemnified pursuant
to this subsection (d) resulting from the willful misconduct or gross
negligence of the Agent, as determined in a final non-appealable judgment
by a court of competent jurisdiction.
(e) Such Grantor will not create, permit or suffer to exist, and
will defend the Collateral against and take such other action as is
necessary to remove, any Lien on such Collateral, other than Liens
permitted under SECTION 9.03 of the Credit Agreement, and will defend
the right, title and interest of the Agent in and to such Grantor's rights
to such Collateral, including, without limitation, the proceeds and
products thereof, against the claims and demands of all Persons whatsoever
other than claims secured by liens permitted under SECTION 9.03 of the
Credit Agreement.
(f) Such Grantor will not, without the Agent's prior written
consent, except in the ordinary course of business and for amounts which
are not material to such Grantor in the aggregate, (i) grant any extension
of the time of payment of any of the Collateral or compromise, compound or
settle the same for less than the full amount thereof; (ii) release,
wholly or partly, any Person liable for the payment thereof; or (iii)
allow any credit or discount whatsoever thereon other than trade discounts
granted in the ordinary course of business.
6. COLLECTIONS. Except as otherwise provided in this SECTION
6, each Grantor shall continue to collect, at its own expense, all amounts due
or to become due to such Grantor under the Accounts. In connection with such
collections, such Grantor may take (and, after the occurrence of an Event of
Default, at the Agent's direction, must take) such action as such Grantor or,
after the occurrence and during the continuation of an Event of
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<PAGE>
Default, the Agent may deem necessary or advisable to enforce collection of the
Accounts; PROVIDED, HOWEVER, that the Agent shall have the right at any
time, upon the occurrence and during the continuance of an Event of Default to
the extent permitted by contract, agreement, interest or right giving rise to or
relating to such Account and under applicable law, rule and regulation, to
require the Borrower to prepare notices of assignment for each Government
Contract and to file such notices of assignment with the appropriate
contracting officer of the United States Government and to otherwise notify
the account debtors or obligors under any Accounts of the assignment of such
Accounts to the Agent and to direct such account debtors or obligors to make
payment of all amounts due or to become due to such Grantor thereunder directly
to the Agent and, upon such notification and at the expense of such Grantor, to
enforce collection of any such Accounts, and to adjust, settle or compromise the
amount or payment thereof, in the same manner and to the same extent as such
Grantor might have done. After receipt by such Grantor of the notice from the
Agent referred to in the proviso to the preceding sentence, (i) all amounts and
proceeds (including instruments) received by such Grantor in respect of the
Accounts shall be received in trust for the benefit of the Agent, the Lenders,
the Issuing Banks and the other Holders, shall be segregated from other funds of
such Grantor and shall be forthwith paid over to the Agent in the same form as
so received (with any necessary endorsement) to be applied to the Obligations in
accordance with the Credit Agreement (including, without limitation, SECTION
3.02(B)(II) thereof) and (ii) such Grantor shall not adjust, settle or
compromise the amount or payment of any Account, release wholly or partly any
account debtor or obligor thereof, or allow any credit or discount thereon.
7. REMEDIES, APPLICATION OF PROCEEDS, RIGHTS UPON EVENT OF
DEFAULT.
(a) Upon the occurrence and during the continuance of an Event of
Default, the Agent may exercise in respect of the Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies provided for in the Credit Agreement and all the rights
and remedies of a secured party under the Uniform Commercial Code, and all other
applicable law as in effect in any relevant jurisdiction. In addition, the
Agent may also:
(i) require such Grantor to, and such Grantor hereby agrees that
it will at its expense and upon request of the Agent, promptly assemble
all, or such part, of the Collateral as directed by the Agent and make
such Collateral available to the Agent at a place designated by the Agent,
which place shall be reasonably convenient to the Agent, whether at the
premises of such Grantor or otherwise;
-10-
<PAGE>
(ii) enter, with or without process of law and without breach of
the peace, any premises where any of the Collateral or the books and
records of such Grantor related thereto are or may be located and, without
charge or liability to the Agent, seize and remove such Collateral and
such books and records from such premises, or remain upon such premises
and use the same for the purpose of enforcing any and all rights and
remedies of the Agent under this Subsidiary Security Agreement, the Credit
Agreement or any of the other Loan Documents; and
(iii) without notice, except as specified below, sell, lease,
assign, grant an option or options to purchase or otherwise dispose of all
or any part of the Collateral in one or more parcels, at public or private
sale or sales, at any exchange, broker's board or at any of the Agent's
offices or elsewhere, at such prices as the Agent may deem best, for cash,
on credit or for future delivery, and upon such other terms as the Agent
may deem commercially reasonable; PROVIDED, HOWEVER, that such Grantor
shall not be credited with the net proceeds of any such credit sale,
future delivery or lease of the Collateral until the cash proceeds thereof
are actually received by the Agent and PROVIDED, FURTHER that any such
sale, lease assignment, option to purchase or other disposition (each a
"disposition") shall be subject to any prohibition or restriction thereon
contained in any agreement, contract, interest or right comprising a part
of the Collateral subject to such disposition and any applicable law, rule
or regulation. Such Grantor agrees that, to the extent notice of sale
shall be required by law, at least ten (10) Business Days' notice, or such
longer period as may be required by law, to such Grantor of the time and
place of any public sale, or the time after which any private sale is to
be made, shall constitute reasonable notification. No notification
required by law need be given to such Grantor if such Grantor has signed,
after the occurrence of an Event of Default, a statement renouncing any
right to notification of sale or other intended disposition. The Agent
shall not be obligated to make any sale of any of the Collateral
regardless of notice of sale having been given. The Agent may adjourn any
public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made
at the time and place to which it was so adjourned. The Agent, any Lender
and any of the Issuing Banks shall have the right upon any such public
sale or sales and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in such Grantor, which
right or equity is hereby expressly waived and released. In the event of
a sale of any Collateral, or any part thereof, to a Lender, an Issuing
Bank or the Agent upon the occurrence and during the continuance of an
Event of
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<PAGE>
Default, such Lender, Issuing Bank, or the Agent shall not deduct or
offset from any part of the purchase price to be paid therefor any
indebtedness owing to it by such Grantor. Any and all proceeds received
by the Agent with respect to any sale of, collection from or other
realization upon all or any part of the Collateral, whether consisting of
monies, checks, notes, drafts, bills of exchange, money orders or
commercial paper of any kind whatsoever, shall be held by the Agent and
distributed by the Agent in accordance with the Credit Agreement
(including, without limitation, SECTION 3.02(b)(ii) thereof) and such
Grantor shall remain liable for any deficiency following the sale of the
Collateral. Subject to the terms of any applicable license agreement to
which such Grantor is a party, the Agent is hereby granted an irrevocable
license or other right to use, without charge, such Grantor's labels,
copyrights, patents, rights of use of any name, trade names, general
intangibles, trademarks and advertising matter, or any property of a
similar nature, in completing production of, advertising for sale and
selling any Collateral.
(b) To the extent permitted by applicable law, such Grantor waives
all claims, damages and demands against the Agent, any Lender or any Issuing
Bank arising out of the repossession, retention or sale of the Collateral, or
any part or parts thereof, except any such claims, damages and awards arising
out of the gross negligence or willful misconduct of the Agent.
(c) Such Grantor recognizes that in the event such Grantor fails
to perform, observe or discharge any of its obligations or liabilities under
this Subsidiary Security Agreement, no remedy at law will provide adequate
relief to the Agent and the Agent shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
(d) The rights and remedies provided under this Subsidiary
Security Agreement are cumulative and may be exercised singly or concurrently,
and are not exclusive of any rights and remedies provided by law or equity.
8. THE AGENT MAY PERFORM. If any Grantor fails to perform any
agreement contained herein, the Agent, upon written notice to such Grantor if
practicable, may itself perform, or cause performance of, such agreement, and
the expenses of the Agent incurred in connection therewith shall constitute
Protective Advances payable by such Grantor in accordance with the terms of the
Credit Agreement.
9. THE AGENT'S DUTY. The Agent shall have no duty with respect
to any Collateral except as set forth herein and in the Credit Agreement.
Without limiting the generality of the foregoing, the Agent shall be under no
obligation to take any
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<PAGE>
steps necessary to preserve the rights of each Grantor in the Collateral against
any other parties but may do so at its option provided that all expenses
incurred in connection therewith shall be for the sole account of such Grantor
and shall be added to the Liabilities secured hereby.
10. MARSHALLING, PAYMENTS SET ASIDE; AGENT APPOINTED
ATTORNEY-IN-FACT. The Agent shall be under no obligation to marshal any assets
in favor of any Grantor or against or in payment of any or all of the
Liabilities. To the extent that any Grantor makes a payment or payments to the
Agent or the Agent receives any payment or proceeds of the Collateral for the
benefit of the Agent, any Lender, any Issuing Bank or any other Holder, which
payment(s) or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any party under any bankruptcy law, state or
federal law, common law or equitable cause, then, to the extent of such payment
or proceeds received, the Liabilities or any part thereof intended to be
satisfied shall be revived and continue in full force and effect, as if such
payment or proceeds had not been received by the Agent.
Each Grantor agrees, upon the request of the Agent and promptly
following such request, to take any action and execute any instrument which the
Agent may deem necessary or advisable to accomplish the purposes of this
Subsidiary Security Agreement. Such Grantor hereby irrevocably constitutes and
appoints the Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full power and
authority in the name of such Grantor, or in its own name, from time to time in
the Agent's discretion, for the purpose of carrying out the terms of this
Subsidiary Security Agreement, to take any and all appropriate action and to
execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes hereof and, without limiting the generality
of the foregoing, hereby gives the Agent the power and right on behalf of such
Grantor, without notice to or assent by such Grantor, to the extent permitted by
applicable law, to do the following:
(i) to obtain and adjust insurance required to be paid to the
Agent pursuant to SECTION 8.05 of the Credit Agreement;
(ii) ask, demand, collect, sue for, recover, compromise, receive
and give acquittance and receipt for monies due and to become due under or
in respect of any of the Collateral;
(iii) receive, take, endorse, assign and deliver any and all checks,
notes, drafts, acceptances, documents and other negotiable and
nonnegotiable instruments, documents and chattel paper taken or received
by the Agent in connection with this Subsidiary Security Agreement;
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<PAGE>
(iv) to commence, file, prosecute, defend, settle, compromise or
adjust any claim, suit, action or proceeding with respect to the
Collateral;
(v) to sell, transfer, assign or otherwise deal in or with the
Collateral or any part thereof pursuant to the terms and conditions of
this Subsidiary Security Agreement; and
(vi) to do, at its option and at the expense and for the account of
such Grantor, at any time or from time to time, all acts and things which
the Agent deems necessary to protect or preserve the Collateral and to
realize upon the Collateral.
11. SEVERABILITY. If any provision of this Subsidiary Security
Agreement is held to be prohibited or unenforceable in any jurisdiction the
substantive laws of which are held to be applicable hereto, such prohibition or
unenforceability shall not affect the validity or enforceability of the
remaining provisions hereof and shall not invalidate or render unenforceable
such provision in any other jurisdiction.
12. AMENDMENTS, WAIVERS AND CONSENTS. None of the terms or
provisions of this Subsidiary Security Agreement may be waived, altered,
modified or amended, and no consent to any departure by any Grantor herefrom
shall be effective, except by or pursuant to an instrument in writing which (i)
is duly executed by each Grantor and the Agent and (ii) complies with the
requirements of the Credit Agreement. Any such waiver shall be valid only to
the extent set forth therein. A waiver by the Agent of any right or remedy
under this Subsidiary Security Agreement on any one occasion shall not be
construed as a waiver of any right or remedy which the Agent would otherwise
have on any future occasion. No failure to exercise or delay in exercising any
right, power or privilege under this Subsidiary Security Agreement on the part
of the Agent shall operate as a waiver thereof; and no single or partial
exercise of any right, power or privilege under this Subsidiary Security
Agreement shall preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
13. BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Subsidiary
Security Agreement shall be binding upon each Grantor and its successors, and
upon any assign(s) of such Grantor in accordance with SECTION 13.16 of the
Credit Agreement and the Agent, the Lenders, the Issuing Banks and the other
Holders, and their respective successors and assigns. Nothing set forth
herein or in any other Loan Document is intended or shall be construed to give
any other Person any right, remedy or claim under, to or in respect of this
Subsidiary Security Agreement, the Credit Agreement or any other Loan Document
or any Collateral. Each Grantor's successors shall include, without limitation,
a receiver, trustee or debtor-in-possession of or for such Grantor.
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<PAGE>
14. TERMINATION OF THIS SUBSIDIARY SECURITY AGREEMENT; RELEASE OF
COLLATERAL.
(a) The security interest granted by each Grantor under this
Subsidiary Security Agreement shall terminate against all the Collateral upon
final payment in full in cash of the Obligations and termination of the
Revolving Credit Commitments. Upon such termination and at the written request
of such Grantor or its successors or assigns, and at the cost and expense of
such Grantor or its successors or assigns, the Agent shall execute in a timely
manner a satisfaction of this Subsidiary Security Agreement and such
instruments, documents or agreements as are necessary or desirable to terminate
and remove of record any documents constituting public notice of this Subsidiary
Security Agreement and the security interests and assignments granted hereunder
and shall assign and transfer, or cause to be assigned and transferred, and
shall deliver or cause to be delivered to such Grantor, all property, including
all monies, instruments and securities of such Grantor then held by the Agent.
(b) Notwithstanding anything in this Subsidiary Security Agreement
to the contrary, each Grantor may, to the extent permitted by SECTION 9.02 of
the Credit Agreement sell, assign, transfer or otherwise dispose of any
Collateral. In addition, the Collateral shall be subject to release from time
to time (with the Collateral referred to in the immediately preceding sentence,
the "Released Collateral") in accordance with SECTION 12.09(C) of the Credit
Agreement. The Liens under this Subsidiary Security Agreement shall terminate
with respect to the Released Collateral upon such sale, transfer, assignment,
disposition or release, and upon the request of such Grantor, the Agent shall
execute and deliver such instrument or document as may be necessary to release
the Liens granted hereunder; PROVIDED, HOWEVER, that (i) the Agent shall not
be required to execute any such documents on terms which, in the Agent's
opinion, would expose the Agent to liability or create any obligation or entail
any consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Liabilities or any Liens on (or obligations of such Grantor in
respect of) all interests retained by such Grantor, including without
limitation, the proceeds of any sale, all of which shall continue to constitute
part of the Collateral unless and until applied strictly in accordance with the
Loan Documents.
15. THE AGENT'S EXERCISE OF RIGHTS AND REMEDIES UPON THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT. Notwithstanding
anything set forth herein to the contrary, it is hereby expressly agreed that
upon the occurrence and during the continuance of an Event of Default, the Agent
may, and upon the written direction of the Requisite Lenders shall, exercise any
of the rights and remedies provided in this Subsidiary Security Agreement, the
Credit Agreement and any of the other Loan Documents.
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<PAGE>
16. NOTICES. Any notice, demand, request or any other
communication required or desired to be served, given or delivered hereunder
shall be in writing and shall be served, given or delivered as provided in
SECTION 13.08 of the Credit Agreement.
17. SECTION HEADINGS. The section headings herein are for
convenience of reference only, and shall not affect in any way the
interpretation of any of the provisions hereof.
18. GOVERNING LAW. THIS SUBSIDIARY SECURITY AGREEMENT SHALL BE
GOVERNED BY, AND BE CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE
STATE OF NEW YORK, EXCEPT FOR PERFECTION AND ENFORCEMENT OF SECURITY INTERESTS
AND LIENS IN OTHER JURISDICTIONS WHICH SHALL BE GOVERNED BY THE LAWS OF THOSE
JURISDICTIONS.
19. FURTHER INDEMNIFICATION. Each Grantor agrees to pay, and to
save the Agent, each Lender and each Issuing Bank harmless from, any and all
liabilities with respect to, or resulting from any delay in paying, any and all
excise, sales or other taxes which may be payable or determined to be payable
with respect to any of the Collateral or in connection with any of the
transactions contemplated by this Subsidiary Security Agreement.
20. COUNTERPARTS. This Subsidiary Security Agreement may be
executed in separate counterparts, each of which shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
21. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Each
Grantor agrees that the terms of SECTION 13.17 of the Credit Agreement with
respect to consent to jurisdiction and service of process shall apply equally to
this Subsidiary Security Agreement.
22. WAIVER OF BOND. Each Grantor waives the posting of any bond
otherwise required of the Agent in connection with any judicial process or
proceeding to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order entered in favor of
the Agent, or to enforce by specific performance, temporary restraining order,
or preliminary or permanent injunction, this Subsidiary Security Agreement or
any other agreement or document between the Agent and such Grantor.
23. ADVICE OF COUNSEL. Each Grantor represents and warrants to
the Agent and the Lenders that it has discussed this Subsidiary Security
Agreement and, specifically, the provisions of SECTIONS 18, 21, 22 and
26 hereof, with such Grantor's attorneys.
24. FURTHER ASSURANCES. The Borrower agrees that it will
cooperate with the Agent and will execute and deliver, or cause to be executed
and delivered, all such other stock powers, proxies, instruments and documents,
and will take all such other actions, including, without limitation, the
execution and filing
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<PAGE>
of financing statements, as the Agent may reasonably request from time to time
in order to carry out the provisions and purposes of this Security Agreement.
25. THE AGENT'S DUTY OF CARE. The Agent shall not be liable for
any acts, omissions or errors of judgment or mistakes of fact or law including,
without limitation, acts, omissions, errors or mistakes with respect to the
Collateral, except for those arising out of or in connection with the Agent's
(i) gross negligence or willful misconduct or (ii) failure to use reasonable
care with respect to the safe custody of the Collateral in the Agent's
possession. Without limiting the generality of the foregoing, the Agent shall
be under no obligation to take any steps necessary to preserve rights in the
Collateral against any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the Grantors,
and shall constitute part of the Liabilities of the Grantors secured hereby.
26. WAIVER OF JURY TRIAL. EACH GRANTOR AND THE AGENT WAIVES ANY
RIGHT TO TRIAL BY JURY IN ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN THE AGENT AND SUCH GRANTOR ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS SUBSIDIARY SECURITY AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH.
EITHER SUCH GRANTOR OR THE AGENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF
THIS SUBSIDIARY SECURITY AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
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IN WITNESS WHEREOF, the parties hereto have executed this Subsidiary
Security Agreement or caused this Subsidiary Security Agreement to be executed
and delivered by their duly authorized officers as of the date first set forth
above.
HEXCEL INTERNATIONAL
By____________________________
Name:
Title:
HEXCEL FAR EAST
By____________________________
Name:
Title:
HEXCEL TECHNOLOGIES, INC.
By____________________________
Name:
Title:
CITICORP USA, INC.,
as Agent
By____________________________
Name:
Title:
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<PAGE>
SCHEDULE 1
TO
SUBSIDIARY SECURITY AGREEMENT
dated as of February __, 1995
LOCATIONS OF INVENTORY AND EQUIPMENT
AND STATUS
LOCATION STATUS
<PAGE>
SCHEDULE 2
TO
SUBSIDIARY SECURITY AGREEMENT
dated as of February __, 1995
LOCATIONS OF BOOKS AND RECORDS
1. CORRECT CORPORATE NAME
HEXCEL INTERNATIONAL
HEXCEL FAR EAST
HEXCEL TECHNOLOGIES, INC.
2. CHIEF EXECUTIVE OFFICE OF ALL GRANTORS
5794 West Las Positas Boulevard
Pleasanton, California 94588
3. PRINCIPAL PLACE OF BUSINESS OF ALL GRANTORS
5794 West Las Positas Boulevard
Pleasanton, California 94588
4. FEDERAL TAX IDENTIFICATION NUMBER
HEXCEL INTERNATIONAL: __________
HEXCEL FAR EAST: __________
HEXCEL TECHNOLOGIES, INC.: __________
5. LOCATION(S) OF ALL GRANTORS'
BOOKS AND RECORDS CONCERNING THE COLLATERAL
Corporate Books and Accounting Records:
5794 West Las Positas Boulevard
Pleasanton, California 94588
<PAGE>
SCHEDULE 3
TO
SUBSIDIARY SECURITY AGREEMENT
dated as of February __, 1995
I. PREVIOUS GRANTOR NAMES
II. ACQUISITIONS OF ALL OR SUBSTANTIALLY ALL OF THE ASSETS,
CAPITAL STOCK OR OPERATING UNIT OF ANY PERSON
(i)
(ii)
(iii)
III. PREDECESSOR IN INTEREST OF EACH GRANTOR DURING THE FIVE
PRECEDING YEARS
<PAGE>
EXHIBIT P
$2,613,000.00 Dated: February __, 1995
New York, New York
SUBORDINATED PROMISSORY NOTE
FOR VALUE RECEIVED, the undersigned hereby promises to pay to the
order of Hexcel S.A., a French corporation (the "Payee"), in lawful money of the
United States the principal sum of Two Million Six Hundred Thirteen Thousand and
00/100 Dollars ($2,613,000), on demand; PROVIDED, such demand shall not be made
prior to December 31, 1998 (the "Maturity Date"). The amount outstanding under
this note shall bear interest at the rate of 6.9% per annum from the date
hereof. To the extent permitted under the Credit Agreement (the "Credit
Agreement") dated as of February __, 1995 by and among Hexcel Corporation, a
Delaware corporation, and each of the Lenders and Issuing Banks (each as defined
in the Credit Agreement) from time to time a party thereto and Citicorp U.S.A.,
Inc., as agent (the "Agent") for the Lenders and Issuing Banks, interest
hereunder shall be payable semi-annually in arrears and, to the extent not so
permitted, shall accrue and be payable on the Maturity Date.
I. SUBORDINATION OF THIS NOTE.
1. NOTE SUBORDINATE TO SENIOR INDEBTEDNESS.
The Maker and the Holder, by the Holder's acceptance hereof, covenant
and agree that, to the extent and in the manner hereinafter set forth in this
Paragraph I, the indebtedness represented by this Note and the payment of the
principal of and the interest on this Note and all other payments with respect
to or an account of this Note (collectively, the "Subordinated Indebtedness")
are hereby expressly made subordinate and subject in right of payment to the
prior payment in full in cash of all Senior Indebtedness.
2. PAYMENT OVER OF PROCEEDS UPON BANKRUPTCY, ETC.
In the event of (i) any insolvency or bankruptcy case or proceeding,
or any receivership, liquidation, reorganization or other similar case or
proceeding in connection therewith, relative to the Maker or its assets, or (ii)
any liquidation, dissolution or other winding up of the Maker, whether voluntary
or involuntary or whether or not involving insolvency or bankruptcy, or (iii)
any assignment for the benefit of creditors or any other marshalling of assets
or liabilities of the Maker (each such event, if any, herein sometimes referred
to as a "Proceeding"), then and in any such event the holders of all
<PAGE>
Senior Indebtedness shall first be paid in full (including, without limitation,
all Post-Commencement Interest) or provision for such payment shall be made and
agreed to in writing by the holders of Senior Indebtedness before the Holder is
entitled to receive any direct or indirect payment or distribution of any cash,
property or securities on account of or with respect to Subordinated
Indebtedness. To the extent any payment of Senior Indebtedness is declared to
be fraudulent or preferential, set aside or required to be paid to a trustee,
receiver or other similar party under any bankruptcy, insolvency, receivership
or similar law, then if such payment is recovered by, or paid over to, such
trustee, receiver or other similar party, 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.
3. NO PAYMENTS EXCEPT AS PERMITTED UNDER SENIOR INDEBTEDNESS.
(a) Except as permitted under the terms of the Senior Credit
Agreement, the Maker may not and shall not make any payment on account of or
with respect to the Subordinated Indebtedness.
(b) The Holder irrevocably authorizes and empowers the Agent (for
the benefit of each holder of the Senior Indebtedness) to demand, sue for,
collect and receive all such payment and distribution and receipt therefor, and
to file and prove all such claims (in any Proceeding or otherwise) and take all
such other action in the name of all holders of the Subordinated Indebtedness or
otherwise, as the Agent may determine to be necessary or appropriate.
4. ENFORCEMENT.
The Holder hereby agrees that, unless and until the Senior
Indebtedness shall have been paid and satisfied in full in cash, the Holder
shall not exercise or assert any right or remedy, by suit, acceleration or
otherwise, against Maker or any of its properties or assets in respect of the
Subordinated Indebtedness.
5. PROCEEDS; NO SETOFF; PAYMENTS OVER.
The Holder hereby agrees that if it receives any payment, distribution
or any cash or other property with respect to the Subordinated Indebtedness in
contravention of the terms of this Paragraph I, it shall hold the same for the
account of and for the benefit of the holders of Senior Indebtedness and shall
promptly deliver the same (in the form such payments or distributions are
received) to the Agent for the benefit of such
2
<PAGE>
holders for application to the Senior Indebtedness, with any necessary
endorsements, or as a court of competent jurisdiction may otherwise direct and,
if the Holder fails to make any such endorsement, the Agent is authorized to
make the same as agent for it and on its behalf (which authorization, being
coupled with an interest, is irrevocable).
6. SUBROGATION TO RIGHTS OF LENDERS OF SENIOR INDEBTEDNESS.
After all amounts payable under or in respect of Senior Indebtedness
are paid in full in cash, whether or not due, the Holder shall be subrogated to
the extent of the payments or distributions made to the holders of, or otherwise
applied to payment of, such Senior Indebtedness pursuant to the provisions of
this Paragraph I and to the rights of the holders of such Senior Indebtedness to
receive payments and distributions of cash, property and securities applicable
to the Senior Indebtedness until the Subordinated Indebtedness shall be paid in
full.
7. NO WAIVER OF SUBORDINATION PROVISIONS.
(a) No right of any 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 Maker or by any act or
failure to act by such holder or any agent of such holder, or by any
noncompliance by the Maker with such terms, provisions and covenants of this
Note, regardless of any knowledge thereof which any such holder may have or be
otherwise charged with.
(b) Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness, the Agent, and any of them, may,
at any time and from time to time, without the consent of, or notice to, the
Holder, without incurring any liabilities to the Holder and without impairing or
releasing the subordination and other benefits provided to them (and their
successors and assigns) in this Agreement (even if any right of subrogation or
other right or remedy of the Holder is affected, impaired or extinguished
thereby) amend, renew, exchange, extend, modify, supplement in any manner the
Senior Indebtedness, sell, exchange, release, surrender, realize upon, enforce
or otherwise deal with in any manner and in any order any part of the collateral
securing the Senior Indebtedness, settle or compromise any Senior Indebtedness
or any security therefor, exercise or delay in or refrain from exercising any
right or remedy against Maker or any security or any guarantor or any other
Person, elect any remedy an otherwise deal freely with Maker and the collateral
securing the Senior Indebtedness.
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<PAGE>
II. ASSIGNMENT.
The Payee shall not have the right to assign its rights hereunder or any
interest herein without the prior written consent of the Maker and, so long as
any Senior Indebtedness or commitment thereunder remains outstanding, the Agent.
Neither the Maker nor the Agent shall unreasonably withhold such consent.
III. CERTAIN DEFINITIONS
As used in this Note, the following terms have the following meanings
(which meanings are equally applicable to both the singular and plural forms of
the terms defined):
"AGENT" means the then acting agent or administrative agent, as the case
may be, as defined in and under the Senior Credit Agreement, or any successor
thereto.
"BUSINESS DAY" shall mean a day that is not a Saturday, Sunday or day on
which banking institutions are not required to be open in the State of New York.
"HOLDER" means the Payee or any subsequent holder of this Note.
"POST-COMMENCEMENT INTEREST" means all interest accrued or accruing after
the commencement of any Proceedings (and interest that would accrue but for the
commencement of any Proceeding) in accordance with and at the contract rate
(including, without limitation, any rate applicable upon default) specified in
the agreement or instrument creating, evidencing or governing any Senior
Indebtedness, whether or not, pursuant to applicable law or otherwise, the claim
for such interest is allowed as a claim in such Proceeding.
"SENIOR CREDIT AGREEMENT" means, collectively, the Credit Agreement dated
as of February __, 1995, among the Maker, the financial institutions from time
to time party thereto as Lenders and Issuing Banks and Citicorp USA, Inc., in
its separate capacity as agent for the Lenders and Issuing Banks, as the same
may from time to time be amended, renewed, supplemented or otherwise modified at
the option of the parties thereto and any other agreement pursuant to which any
of the indebtedness, commitments, obligations, costs, expenses, fees,
reimbursements and other indemnities payable or owing thereunder may be
refinanced, restructured, renewed, extended, refunded or increased, as any such
other agreement may from time to time at the option of the parties thereto be
amended, supplemented, renewed or otherwise modified.
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"SENIOR INDEBTEDNESS" means the principal of and premium, if any, and
interest on (including Post-Commencement Interest) and other amounts due on or
in connection with the Senior Credit Agreement and all Loan Documents (as
defined in the Senior Credit Agreement) executed in connection therewith
(including contingent obligations with respect to undrawn letters or credit
issued the Senior Credit Agreement, any obligations owed to the Lenders with
respect to interest rate protection incurred to satisfy the requirements of the
Senior Credit Agreement and commitment fees and agency fees payable thereunder
or pursuant thereto).
IV. OTHER TERMS
1. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
2. All the covenants, stipulations, promises and agreements made by or
contained in this Note on behalf of the undersigned shall bind its successors,
whether so expressed or not.
3. By accepting this Note, the Holder for itself and its successors and
assigns, agrees that it will not, without the prior written consent of the Agent
and the Maker, (i) modify or amend this Note, (ii) cancel, waive, forgive,
transfer or assign or subordinate the Subordinated Indebtedness to any other
debt of Maker, or (ii) so long as any Senior Indebtedness is outstanding,
initiate or be party to any Proceeding (other than a Proceeding initiated by the
holders of the Senior Indebtedness) pursuant to which it is sought to adjudicate
the Maker bankrupt or insolvent.
HEXCEL CORPORATION
By: ______________________________
Title:
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<PAGE>
The schedules to this agreement have been omitted and are available upon
request.
<PAGE>
RESTATED AND AMENDED
REIMBURSEMENT AGREEMENT
HEXCEL CORPORATION
BANQUE NATIONALE DE PARIS
acting through its
SAN FRANCISCO AGENCY
Relating to:
California Pollution Control Financing Authority Multi-Modal Interchangeable
Rate Pollution Control Revenue Refunding Bonds (Hexcel Corporation Project),
Series 1988;
Industrial Development Authority of the City of Casa Grande Multi-Modal
Interchangeable Rate Industrial Development Revenue Refunding Bonds (Hexcel
Corporation Project), Series 1988;
Guadalupe-Blanco River Authority Industrial Development Corporation Multi-Modal
Interchangeable Rate Industrial Development Revenue Refunding Bonds, Series 1988
(Hexcel Corporation Project);
Industrial Development Authority of the County of Los Angeles Multi-Modal
Interchangeable Rate Industrial Development Revenue Refunding Bonds (Hexcel
Corporation Project), Series 1988;
City of Lancaster Multi-Modal Interchangeable Rate Industrial Development
Revenue Refunding Bonds (Hexcel Corporation Project), Series 1988;
Young County #1 Industrial Development Corporation Multi-Modal Interchangeable
Rate Industrial Development Revenue Refunding Bonds (Hexcel Corporation
Project), Series 1988; and
Port of Skagit Industrial Development Corporation Variable Rate Demand Revenue
Bonds, 1989 (Hexcel Corporation Project)
February 1, 1995
<PAGE>
TABLE OF CONTENTS
PAGE
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ARTICLE 1.
DEFINITIONS, CONSTRUCTION, TIME PERIODS\
Section 1.1. Certain Defined Terms......................................... 2
Section 1.2. Rules of Construction......................................... 2
Section 1.3. Accounting Terms.............................................. 2
Section 1.4. Computation of Time Periods................................... 2
ARTICLE 2.
THE LETTERS OF CREDIT
Section 2.1. Amount and Term............................................... 3
Section 2.2. Alternate Credit Facility..................................... 3
Section 2.3. Fees.......................................................... 4
2.3.1.Quarterly Commission.................................... 4
2.3.2.Transfer Fee............................................ 4
2.3.3.Draw Fee................................................ 4
2.3.4.Amendment Fee........................................... 4
2.3.5.Extension Fee........................................... 5
2.3.6.Late Payment Charge..................................... 5
Section 2.4. Condition to Optional Redemption Drawings..................... 5
Section 2.5. Letter of Credit Conclusive................................... 5
ARTICLE 3.
REIMBURSEMENT
Section 3.1. Reimbursement for Debt Service Drawings....................... 6
Section 3.2. Reimbursement for Liquidity Drawings.......................... 6
Section 3.3. Payment of Liquidity Reimbursement Obligations Following the
Remarketing of Pledged Bonds.................................. 7
Section 3.4. Prepayments................................................... 7
Section 3.5. Increased Costs............................................... 8
Section 3.6. Yield Protection.............................................. 8
Section 3.7. Interest, Payments and Computations........................... 9
Section 3.8. Obligations Absolute.......................................... 9
ARTICLE 4.
CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT
Section 4.1. Conditions Precedent. ........................................ 11
Section 4.2. Other Documents............................................... 13
Section 4.3. Waiver of Events of Default................................... 14
Section 4.4. Issuance of Letter of Credit Amendments....................... 14
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ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
Section 5.1. Financial Condition; Corporate Organization................... 15
Section 5.2. Corporate Existence and Power................................. 16
Section 5.3. Corporate Authorization; No Violation......................... 16
Section 5.4. Government Authorization...................................... 17
Section 5.5. Enforceable Obligations....................................... 17
Section 5.6. Not an Investment Company or Public Utility Holding Company... 17
Section 5.7. No Litigation................................................. 17
Section 5.8. Taxes......................................................... 17
Section 5.9. ERISA......................................................... 18
Section 5.10.Unfunded Liabilities..... .................................... 18
Section 5.11.No Default.................................................... 18
Section 5.12.Pledge and Pledged Bonds...................................... 18
Section 5.13.Financial Position............................................ 18
Section 5.14.Standby Purchase Commitment; Rights Offering.................. 19
Section 5.15.Revolving Credit Agreement.................................... 19
Section 5.16.Treatment of Claims........................................... 19
Section 5.17.Conditions Precedent to the Reorganization Plan............... 19
Section 5.18.Disclosure.................................................... 19
Section 5.19.Requirements of Law........................................... 20
Section 5.20.Transactions with Affiliates.................................. 20
ARTICLE 6.
REPORTING COVENANTS
Section 6.1. Financial Statements.......................................... 21
Section 6.2. Events of Default............................................. 23
Section 6.3. Lawsuits...................................................... 23
Section 6.4. ERISA Notices................................................. 24
Section 6.5. Sale of Bond Facilities....................................... 24
Section 6.6. Public Filings and Reports.................................... 24
Section 6.7. Amendments to Documents....................................... 24
Section 6.8. Other Information............................................. 24
ARTICLE 7.
AFFIRMATIVE COVENANTS
Section 7.1. Corporate Existence, Etc...................................... 25
Section 7.2. Corporate Powers; Conduct of Business, Etc.................... 25
Section 7.3. Compliance with Laws, Etc..................................... 25
Section 7.4. Payment of Taxes and Claims; Tax Consolidation................ 26
Section 7.5. Insurance..................................................... 26
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PAGE
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Section 7.6. Inspection of Property; Books and Records; Discussions........ 26
Section 7.7. ERISA Compliance.............................................. 27
Section 7.8. Maintenance of Property....................................... 27
Section 7.9. Environmental Compliance...................................... 27
Section 7.10.Pari Passu.................................................... 27
Section 7.11.Pledge and Security Interest.................................. 27
Section 7.12.Bond Facility Proceeds........................................ 28
Section 7.13.Reduction of Contingent Liability of Bank..................... 28
Section 7.14.Further Assurances............................................ 28
ARTICLE 8.
NEGATIVE COVENANTS
Section 8.1. Debt.......................................................... 29
Section 8.2. Guaranty Obligations.......................................... 30
Section 8.3. Secured Debt.................................................. 30
Section 8.4. Transactions with Affiliates.................................. 31
Section 8.5. Restriction on Fundamental Changes............................ 31
Section 8.6. Prepayments................................................... 32
Section 8.7. Certain Amendments and Appointments........................... 32
Section 8.8. Accounting Changes............................................ 32
ARTICLE 9.
FINANCIAL COVENANTS
Section 9.1. Minimum Net Worth............................................. 33
Section 9.2. Minimum Fixed Charge Coverage Ratio........................... 33
Section 9.3. Maximum Leverage Ratio........................................ 34
Section 9.4. Maximum Capital Expenditures.................................. 34
ARTICLE 10.
EVENTS OF DEFAULT
Section 10.1. Events of Default............................................ 36
Section 10.2. Remedies Upon an Event of Default............................ 38
ARTICLE 11.
MISCELLANEOUS
Section 11.1. Amendments, Etc.............................................. 40
Section 11.2. Notices, Etc................................................. 40
Section 11.3. Wire Transfers............................................... 40
Section 11.4. No Waiver; Remedies.......................................... 41
Section 11.5. Right of Setoff.............................................. 41
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PAGE
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Section 11.6. Indemnification............................................. 42
Section 11.7. Liability of the Bank....................................... 43
Section 11.8. Costs and Expenses.......................................... 44
Section 11.9. Confirmation of Lien........................................ 44
Section 11.10. Change in Accounting Principles............................. 45
Section 11.11. Binding Effect.............................................. 45
Section 11.12. Severability................................................ 45
Section 11.13. Governing Law and Jurisdiction.............................. 45
Section 11.14. Current Rating.............................................. 45
Section 11.15. Counterparts................................................ 46
LIST OF EXHIBITS
Exhibit A --- Certain Defined Terms
Exhibit B --- Form of Collateral Agreement
Exhibit C --- Form of Letter of Credit Amendment
LIST OF SCHEDULES
Schedule 2.1 --- Letter of Credit Stated Amounts
Schedule 5.1(f) --- Existing Debt
Schedule 5.1(g) --- Existing Guaranty Obligations
Schedule 5.1(h) --- Existing Liens
Schedule 5.1(i) --- Existing Subordinated Debt
Schedule 5.1(j) --- Corporate Organization
Schedule 5.7 --- Litigation and Claims
Schedule 5.8 --- Allowed Priority Tax Claims
Schedule 5.10 --- Unfunded Liabilities
Schedule 5.20 --- Transactions with Affiliates
Schedule 5.21 --- Environmental Claims and Dispositions
iv
<PAGE>
This RESTATED AND AMENDED REIMBURSEMENT AGREEMENT (this "Agreement")
dated as of February 1, 1995, is made by and between HEXCEL CORPORATION, a
Delaware corporation (the "Company"), and BANQUE NATIONALE DE PARIS, a banking
corporation organized and existing under the laws of The Republic of France,
acting through its San Francisco Agency (the "Bank").
RECITALS
WHEREAS, the Company and the Bank previously entered into the Prior
Reimbursement Agreements, providing, among other things, for issuance by the
Bank of the Letters of Credit in order to provide the payment of the principal
and interest on the Hexcel Bonds;
WHEREAS, on December 6, 1993, the Company filed a voluntary
petition for relief under the provisions of Chapter 11 of the Bankruptcy Code
in the United States Bankruptcy Court for the Northern District of California,
Oakland Division;
WHEREAS, certain events of default under the Prior Reimbursement
Agreements have occurred and are continuing, including, but not necessarily
limited to: (a) violation of certain financial and other covenants contained in
or incorporated into the Prior Reimbursement Agreements, (b) commencement by the
Company of Chapter 11 proceedings in bankruptcy, (c) failure of the Company to
reimburse the Bank for drawings made under the Letters of Credit, and (d)
failure of the Company to make certain other payments to the Bank which are
payable under the terms of the Prior Reimbursement Agreements, including letter
of credit fees;
WHEREAS, the Company is restructuring its financial obligations and
has filed the Reorganization Plan and the Disclosure Statement with the
Bankruptcy Court;
WHEREAS, the Reorganization Plan has been confirmed by the
Bankruptcy Court and, subject to satisfaction of various conditions, including
execution of this Agreement, the Reorganization Plan is expected to become
effective on or before February 28, 1995; and
WHEREAS, the Company has requested that the Bank waive existing
defaults under the Prior Reimbursement Agreements, enter into this Agreement in
substitution for the Prior Reimbursement Agreements, and extend the maturity
dates of the Letters of Credit to December 31, 1998, and the Bank is willing to
do so subject to the terms and conditions set forth in this Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree that from
and after the Effective Date the Prior Reimbursement Agreements are hereby
consolidated, amended and restated in their entirety to read as follows:
1
<PAGE>
ARTICLE 1.
DEFINITIONS, CONSTRUCTION, TIME PERIODS
SECTION 1.1. CERTAIN DEFINED TERMS. As used in this Agreement, including
the preceding recitals, terms defined in Exhibit A hereto shall have the
meanings assigned to such terms in such exhibit.
SECTION 1.2. RULES OF CONSTRUCTION. The words "hereof", "herein",
"hereunder", "hereto", and other words of similar import refer to this Agreement
in its entirety, including the exhibits and schedules attached hereto.
References to Articles, Sections, Subsections and other subdivisions of this
Agreement are to the designated Articles, Sections, Subsections and other
subdivisions of this Agreement as originally executed. The headings of this
Agreement are for convenience only and shall not define or limit the provisions
hereof. All references made (a) in the neuter, masculine or feminine gender
shall be deemed to have been made in all such genders, and (b) in the singular
or plural number shall be deemed to have been made, respectively, in the plural
or singular as well, where appropriate to the context. Each exhibit and
schedule attached to this Agreement shall constitute an integral part of this
Agreement.
SECTION 1.3. ACCOUNTING TERMS. Subject to Section 11.10, all accounting
terms not specifically defined herein shall be construed in accordance with
GAAP, consistently applied, except as otherwise stated herein.
SECTION 1.4. COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
2
<PAGE>
ARTICLE 2.
THE LETTERS OF CREDIT
SECTION 2.1. AMOUNT AND TERM. The Stated Amount, Principal Component
and Interest Component of each Letter of Credit as of the Effective Date is as
set forth in Schedule 2.1. The Stated Amount, Principal Component and Interest
Component of each Letter of Credit shall be reduced and reinstated pursuant to
and in accordance with the provisions of such Letter of Credit. Drawings will
be permitted to the extent and as provided in each Letter of Credit. No Drawing
under any Letter of Credit shall be permitted for the payment of principal
(whether due at maturity or upon redemption or acceleration), interest or the
purchase price of Pledged Bonds unless such Pledged Bonds have been remarketed
and the Stated Amount of such Letter of Credit has been consequently reinstated
as provided in such Letter of Credit. The Letters of Credit shall expire on
December 31, 1998, and the term of any Letter of Credit may be extended as
provided therein or as otherwise agreed in writing by the parties hereto. The
Bank agrees that all Drawings honored by the Bank shall be paid from Bank funds.
SECTION 2.2. ALTERNATE CREDIT FACILITY. The Company may, at any time, at
its option and in accordance with the terms of the applicable Indenture, provide
an Alternate Credit Facility in substitution for any Letter of Credit;
PROVIDED, HOWEVER, that no substitution shall replace any Letter of Credit
unless
(a) one or more Alternate Credit Facilities shall simultaneously
be issued with respect to ALL outstanding Hexcel Bonds issued under
EACH Indenture; and
(b) all Letters of Credit shall be terminated and returned to the
Bank and all Hexcel Obligations outstanding immediately before the
substitution for the Letters of Credit, including all Liquidity
Reimbursement Obligations whether or not then due and payable, shall have
been paid in full, together with all interest accrued thereon to the date
of such payment and any and all fees, charges or other amounts owing to
the Bank pursuant to this Agreement; and
(c) if, at the time of the proposed substitution, the credit
rating issued by either Moody's or S&P on the Bank's long or, if any such
rating exists, short term senior debt obligations is not lower than the
ratings issued by either of such rating services on the long or, if such
rating exists, short term senior debt obligations for the proposed
Alternate Credit Facility issuer, the Company has first requested the Bank
to issue one or more substantially similar Alternate Credit Facilities
under substantially the same terms and conditions and the Bank has failed
to respond to such request within 30 calendar days after the request is
made or has refused such request; and
(d) if the substitution occurs on or before January 1, 1996, and
prior to the substitution the Bank has not assessed the Company for
increased costs or reduced yield as provided in Section 3.5 or 3.6 hereof,
the Company
3
<PAGE>
shall have paid to the Bank an amount equal to quarterly LOC Commissions
which would have been paid to the Bank on April 1, 1995, July 1, 1995,
October 1, 1995 and January 1, 1996, to the extent that such quarterly LOC
Commissions had not already been paid, assuming for purposes of
calculation that the Stated Amounts of the Letters of Credit would remain
equal to the Stated Amounts as of the Effective Date.
The Company hereby agrees to give the Bank calendar 30 days' prior written
notice of any proposed substitution. Notwithstanding any such substitution, so
long as any Hexcel Obligation shall remain outstanding, this Agreement shall
remain in full force and effect.
SECTION 2.3. FEES.
2.3.1. QUARTERLY COMMISSION. On each Payment Date, the Company
shall pay to the Bank the LOC Commission. The LOC Commission shall be payable
quarterly in advance and shall be non-refundable. The amount of the LOC
Commission payable on each Payment Date shall be equal to (a) the cumulative
Stated Amount of all Letters of Credit calculated as of the Payment Date, (b)
multiplied by two percent, (c) multiplied by the number of days in the LOC
Commission Period and (d) divided by 360 days. If the Company terminates any
Letter of Credit in connection with conversion to a Fixed Rate or the refunding
of Hexcel Bonds, the Company shall nonetheless continue to pay to the Bank
quarterly LOC Commissions as if such Letter of Credit were to remain in effect
up to and including the LOC Commission payable on January 1, 1996; PROVIDED,
HOWEVER, that no post-termination LOC Commission shall be paid if the Bank has
assessed the Company for increased costs or reduced yield as provided in Section
3.5 and Section 3.6, respectively, of this Agreement. For the purpose of
calculating the LOC Commission in such circumstances, the Stated Amount of a
Letter of Credit from the first Payment Date following its termination through
the payment of LOC Commission due on January 1, 1996 shall be assumed to be the
Stated Amount on the Payment Date immediately preceding the termination date.
2.3.2. TRANSFER FEE. The Company shall pay to the Bank, upon each
transfer of a Letter of Credit in accordance with its terms, a transfer fee
equal to the greater of $1,000 or the Bank's standard transfer fee at the time
of such transfer, and shall reimburse the Bank for all out-of-pocket expenses
reasonably incurred by the Bank in connection with such transfer, including the
fees and expenses of the Bank's counsel.
2.3.3. DRAW FEE. The Company shall pay to the Bank a draw fee
equal to $100 per Drawing under each Letter of Credit. The Bank shall prepare
and deliver to the Company each calendar quarter an invoice stating the amount
of draw fees currently payable. The Company shall remit such draw fees to the
Bank within 10 days of receipt of the invoice.
2.3.4. AMENDMENT FEE. The Company shall pay to the Bank an
amendment fee equal to the greater of $1,000 or the Bank's standard amendment
fee at the time of such amendment in connection with each amendment (other than
a transfer pursuant to Subsection 2.3.2, above) of any Letter of Credit, and
shall reimburse the Bank for all out-of-pocket
4
<PAGE>
expenses reasonably incurred by the Bank in connection with such amendment,
including the fees and expenses of the Bank's counsel.
2.3.5. EXTENSION FEE. The Company shall pay to the Bank an
extension fee in connection with the execution of this Agreement on or prior to
the Effective Date in the amount of $500,000.
2.3.6. LATE PAYMENT CHARGE. If payment of any Reimbursement
Obligation, any fee payable under Section 2.3 of this Agreement is received by
the Bank more than 5 Business Days after such payment is due, then the Company
shall promptly pay to the Bank upon demand a late payment charge in the amount
of $1,000 per late payment.
SECTION 2.4. CONDITION TO OPTIONAL REDEMPTION DRAWINGS. The Bank shall
not be required to make any payment to an LOC Beneficiary in connection with an
Optional Redemption Drawing unless the Company shall have notified the Bank of
the intended optional redemption at least 30 days in advance of the date on
which the Company wishes to cause the Optional Redemption Drawing to occur AND
THE BANK SHALL HAVE CONSENTED TO SUCH OPTIONAL REDEMPTION IN WRITING, WHICH
CONSENT MAY BE WITHHELD IN THE ABSOLUTE DISCRETION OF THE BANK. Failure to
obtain such written consent shall constitute a failure of a condition precedent
to the Bank's obligation to honor a request for payment of an Optional
Redemption Drawing and the Bank may in such case refuse to honor such request
for payment.
Anything to the contrary in the preceding paragraph of this Section
notwithstanding, the Bank agrees that it will permit one or more Optional
Redemption Drawings without its prior written consent on any one or more Letters
of Credit securing Hexcel Bonds; PROVIDED, HOWEVER, that in each case, not
less than 40 days prior to each such redemption, the Company (1) notifies the
Bank in writing of the exact amount and date of the proposed optional redemption
and (2) delivers to the Bank a standby letter of credit issued by Citibank, N.A.
(or another financial institution satisfactory to the Bank in its sole
discretion), which letter of credit (i) names the Bank as sole beneficiary, (ii)
is in an amount not less than the proposed Optional Redemption Drawing
(calculated as the principal amount of the bonds to be redeemed and interest
thereon to the date of redemption at the actual rate of interest applicable to
the bonds to be redeemed if such rate is then known or at the rate assumed in
the applicable Letter of Credit if the interest rate or rates through the
redemption date is/are not known when the standby letter of credit is issued),
(iii) has a termination date not earlier than 15 days after the redemption date,
and (iv) is in form and substance satisfactory to the Bank in all other
respects.
SECTION 2.5. LETTER OF CREDIT CONCLUSIVE. In case of any conflict or
discrepancy between the terms and provisions of any Letter of Credit and terms
and provisions of this Agreement, the former shall determine the actual meaning
of both such Letter of Credit and this Agreement.
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ARTICLE 3.
REIMBURSEMENT
SECTION 3.1. REIMBURSEMENT FOR DEBT SERVICE DRAWINGS. Each Debt Service
Drawing paid by the Bank shall constitute a Debt Service Reimbursement
Obligation which obligation shall be due and payable by the Company in the
amount of each such Debt Service Drawing on the date on which such Debt Service
Drawing is paid by the Bank to the LOC Beneficiary and shall bear interest from
the date such obligation becomes due until paid in full at the Overdue Rate.
SECTION 3.2. REIMBURSEMENT FOR LIQUIDITY DRAWINGS. Each Liquidity
Drawing paid by the Bank (a) during the existence of an Event of Default or a
Potential Default or (b) pursuant to a mandatory tender of any Hexcel Bonds (i)
in connection with conversion of the interest rate payable on any Hexcel Bonds
to a Fixed Rate, (ii) pursuant to Section 2.04(e) of the Indenture/Standard
Terms of any Indenture other than the Skagit Indenture, (iii) pursuant to
Section 2.06(h) of the Indenture/Standard Terms of any Indenture other than the
Skagit Indenture, or (iv) pursuant to Section 4.02 of the Skagit Indenture,
shall constitute a Debt Service Reimbursement Obligation which obligation shall
be due and payable in the amount of each such Liquidity Drawing on the date on
which such Liquidity Drawing is paid by the Bank to the LOC Beneficiary and
shall bear interest from the date such obligation becomes due until paid in full
at the Overdue Rate. Each other Liquidity Drawing paid by the Bank under a
Letter of Credit shall constitute a Liquidity Reimbursement Obligation.
The principal amount of each Liquidity Reimbursement Obligation incurred
pursuant to this Section shall be due and payable to the Bank in full not later
than the earliest of (a) the remarketing of the Pledged Bonds purchased with the
proceeds of an unreimbursed Liquidity Drawing (see Section 3.3), (b) six months
following the date on which the Liquidity Drawing which resulted in such
Liquidity Reimbursement Obligation was paid by the Bank, (c) the earliest date
on which the Pledged Bonds purchased with the proceeds of an unreimbursed
Liquidity Drawing can be redeemed, other than by an optional redemption, (d) the
maturity date of the Pledged Bonds purchased with the proceeds of an
unreimbursed Liquidity Drawing, and (e) expiration or termination of the Letter
of Credit relating to such Pledged Bonds. Each Liquidity Reimbursement
Obligation shall bear interest at the Liquidity Rate from the date of the
Liquidity Drawing resulting in such Liquidity Reimbursement Obligation until
paid in full, which interest shall be payable quarterly in arrears on each
Payment Date, beginning on the first Payment Date following the date of the
applicable Liquidity Drawing; PROVIDED, HOWEVER, that if a Liquidity
Reimbursement Obligation is not paid when due, such Liquidity Reimbursement
Obligation together with any accrued but unpaid interest thereon shall
thereafter bear interest at the Overdue Rate until paid in full, which interest
shall be payable on demand.
The LOC Beneficiary for the purposes of making Liquidity Drawings shall
use the proceeds of Liquidity Drawings only for the purpose of purchasing Hexcel
Bonds tendered or deemed tendered for purchase pursuant to Section 2.06 of the
Indenture/Standard Terms of any Indenture other than the Skagit Indenture, or
Section 4.01 or 4.02 of the Skagit Indenture. Until remarketed in accordance
with the terms of the applicable Indenture,
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Pledged Bonds shall be registered in the name of the Bank as holder of a pledge
and security interest therein. Pledged Bonds shall be entitled to all of the
rights and privileges of Hexcel Bonds outstanding under the applicable Indenture
and shall be governed by all of the terms and conditions of such Indenture;
PROVIDED, HOWEVER, that Pledged Bonds: (a) may not be tendered for purchase
pursuant to Section 2.06 of the Indenture/Standard Terms of any Indenture other
than the Skagit Indenture or Section 4.01 of the Skagit Indenture; (b) shall be
redeemed, in the event of a redemption pursuant to Section 2.18 of the
Indenture/Standard Terms of any Indenture other than the Skagit Indenture or
Section 3.01 of the Skagit Indenture or any other redemption thereunder, prior
to redemption of other Hexcel Bonds issued in connection with such Indenture;
and (c) shall not be entitled to payment of any premium upon redemption.
SECTION 3.3. PAYMENT OF LIQUIDITY REIMBURSEMENT OBLIGATIONS FOLLOWING THE
REMARKETING OF PLEDGED BONDS. Prior to or simultaneously with the remarketing
of Pledged Bonds by the Placement Agent (as provided in Section 2.07 of the
Indenture/Standard Terms of any Indenture other than the Skagit Indenture or
Section 4.04 of the Skagit Indenture), the Company shall prepay the then
outstanding Liquidity Reimbursement Obligations incurred in connection with the
purchase of such Pledged Bonds by (1) causing the Trustee or Agent, as
applicable, to pay directly to the Bank the entire purchase price for the
remarketed Pledged Bonds, consisting of:
(a) the aggregate principal amount of the remarketed Pledged
Bonds, PLUS
(b) the aggregate amount of accrued and unpaid interest on such
Pledged Bonds received by the Trustee or Agent, as applicable, upon
placement of the Pledged Bonds in the form of due bills or otherwise,
calculated to the date of placement of such Pledged Bonds; and
(2) paying to the Bank the difference between interest accrued to the date of
such payment on the Liquidity Reimbursement Obligation (calculated at the
Liquidity Rate or at the Overdue Rate, as applicable) and the amount of interest
received by the Bank from the Trustee or Agent pursuant to clause (b) of this
Section 3.3. Payments received by the Bank from the Trustee or Agent when
accompanied by a certificate completed and signed by the Agent or Trustee, as
applicable, in substantially the form of Annex G to each Letter of Credit shall
be applied by the Bank in reimbursement of Liquidity Reimbursement Obligations
in the manner described above. The Company irrevocably authorizes the Bank to
rely on such certificates and to reinstate the Letter of Credit relating to such
Pledged Bonds in accordance therewith.
SECTION 3.4. PREPAYMENTS. The Company may, upon at least five Business
Day's written notice to the Bank, prepay the outstanding amount of any Liquidity
Reimbursement Obligation in whole or in part (but not in sums of less than
$50,000 per prepayment) with accrued interest to the date of such prepayment on
the amount prepaid; PROVIDED, HOWEVER, that prepayments shall be credited
first to interest due and owing on any Debt Service Reimbursement Obligation,
then to principal due and owing on any Debt Service Reimbursement Obligation,
then to interest due and owing on any Liquidity Reimbursement
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Obligation, and finally to principal due and owing on any Liquidity
Reimbursement Obligation. The provisions of this Section 3.4 shall not apply to
prepayments made from the proceeds of the placement of Pledged Bonds as provided
in Section 3.3, or as a result of the redemption or maturity of Pledged Bonds.
SECTION 3.5. INCREASED COSTS. If the adoption of any applicable law,
rule or regulation, or any change therein or in the interpretation thereof by
any court or central bank or Governmental Authority shall:
(a) subject the Bank to any tax, duty, or other charge with
respect to any Letter of Credit (or its obligation thereunder) or
Reimbursement Obligation, or shall change the basis of taxation of
payments to the Bank with respect to any Reimbursement Obligation, other
than changes in the rate of tax on the overall net income of the Bank
imposed by the United States of America or any state of the United States
of America;
(b) impose, modify or deem applicable any reserve, special
deposit or similar requirement against or in connection with letters of
credit issued by, or assets held by, or deposits in or for the account of,
the Bank, or
(c) impose on the Bank any other condition regarding this
Agreement or the Letters of Credit,
and the result of any event referred to in clause (a), (b) or (c) above shall be
to increase the cost to the Bank of issuing or maintaining the Letters of Credit
(which increase in cost shall be determined by the Bank's reasonable allocation
of the aggregate of such cost increases resulting from such event), then, upon
demand by the Bank, the Company shall pay to the Bank, from time to time as
specified by the Bank, additional amounts which shall be sufficient to
compensate the Bank for such increased cost. A certificate setting forth such
increased cost incurred by the Bank as a result of any event mentioned in clause
(a), (b) or (c) above and giving a reasonable explanation thereof, submitted by
the Bank to the Company, shall constitute such demand and shall, in the absence
of manifest error, be conclusive and binding for purposes of payment of such
amount by the Company; PROVIDED, HOWEVER, that upon payment the Company shall
have the right to dispute the applicability or the amount of the increased cost
charge. Payment shall be made by the Company within 30 days of the Company's
receipt of the above mentioned certificate, and, to the extent that continuing
payments are required under this Section, payments shall be made quarterly on
each Payment Date. In determining the amount or amounts payable under this
Section, the Bank may use any reasonable averaging and attribution methods. All
payments pursuant to this Section shall bear interest thereon if not paid when
due hereunder until payment in full at the Overdue Rate.
SECTION 3.6. YIELD PROTECTION. If after the date hereof, the Bank shall
have determined that the adoption of any applicable law, rule or regulation
regarding capital adequacy, or any change therein, or any change in the
interpretation or administration thereof by any central bank, comparable agency
or Governmental Authority, charged with the interpretation or administration
thereof, or compliance by the Bank with any request or directive regarding
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capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank or comparable agency has or would have the
effect of reducing the rate of return on the Bank's capital as a consequence of
its obligations under the Letters of Credit to a level below that which the Bank
could have achieved but for such adoption, change or compliance (taking into
consideration the Bank's policies with respect to capital adequacy) then, upon
notice of such change by the Bank by submission to the Company of the
certificate hereinafter described, the Company shall, within 15 days of receipt
of such notice, pay to the Bank such additional amount or amounts as will
compensate such Bank for such reduction. A certificate setting forth such
additional amount or amounts as a result of any event mentioned in this Section
3.6 and giving a reasonable explanation thereof, submitted by the Bank to the
Company, shall constitute such demand and shall, in the absence of manifest
error, be conclusive and binding for purposes of payment of such amount or
amounts by the Company; PROVIDED, HOWEVER, that upon payment the Company shall
have the right to dispute the applicability or the amount of the increased cost
charge. Payment shall be made by the Company within 30 days of the Company's
receipt of the above mentioned certificate, and, to the extent that continuing
payments are required under this Section, payments shall be made quarterly on
each Payment Date. In determining the amount or amounts payable under this
Section, the Bank may use any reasonable averaging and attribution methods. All
payments pursuant to this Section shall bear interest thereon if not paid when
due hereunder until payment in full at the Overdue Rate.
SECTION 3.7. INTEREST, PAYMENTS AND COMPUTATIONS. Unless otherwise
specified herein, the Company shall make each payment hereunder not later than
1:00 p.m. (San Francisco time) on the day when due in lawful money of the United
States of America and in immediately available funds to the Bank by wire
transfer as directed in Section 11.3 of this Agreement. Computations of the
Liquidity Rate and the Overdue Rate shall be made by the Bank on the basis of a
year of 365 days for the number of days actually elapsed. Whenever any payment
to be made hereunder shall be stated to be due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of interest or commission, as the case may be. Any amount not paid when due
hereunder shall thereafter bear interest, until paid, at the Overdue Rate.
Interest payable at the Overdue Rate shall be payable on demand. All interest
payable under this Agreement, whether at the Liquidity Rate or the Overdue Rate,
and including interest payable on demand, shall compound quarterly on each
Payment Date.
SECTION 3.8. OBLIGATIONS ABSOLUTE. The payment obligations of the
Company under this Agreement shall be unconditional and irrevocable, and shall
be paid strictly in accordance with the terms of this Agreement under all
circumstances, including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of any Letter of
Credit or any Related Document (PROVIDED, HOWEVER, that, if a Letter of
Credit is determined to be invalid or unenforceable and as a result no
further Drawings may be made under such Letter of Credit, from the date of
such determination the LOC Commission shall no longer be payable with
respect to that Letter of Credit);
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(b) any amendment or waiver of or any consent to or departure
from all or any of the Related Documents;
(c) the existence of any claim, setoff, defense or other right
which the Company may have at any time against any Trustee or Agent, or
any other beneficiary, or any transferee of any Letter of Credit (or any
persons or entities for whom the Trustee, the Agent or any other
beneficiary or any transferee may be acting), the Bank, any Placement
Agent, or any other person or entity, whether in connection with this
Agreement, the transactions contemplated herein or in the Related
Documents, or any unrelated transaction;
(d) any statement, certificate, draft, 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;
(e) any non-application or misapplication by any Trustee, Agent,
Placement Agent or issuer of any Hexcel Bonds of the proceeds of any
Drawing;
(f) payment by the Bank under any Letter of Credit against
presentation of a draft or certificate which does not comply with the
terms of such Letter of Credit; PROVIDED, HOWEVER, that such payment
shall not have been the result of the gross negligence or willful
misconduct of the Bank;
(g) the surrender or impairment of security for the performance
or observance of any of the terms of this Agreement or any Related
Document; or
(h) the transfer of any Letter of Credit; PROVIDED, HOWEVER,
that such transfer shall not have been the result of the gross negligence
or willful misconduct of the Bank.
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ARTICLE 4.
CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT
SECTION 4.1. CONDITIONS PRECEDENT. This Agreement shall not become
effective, including, without limitation, the provisions of Section 4.3 hereof,
and the Bank shall be under no obligation to extend the Letters of Credit,
unless as of the Effective Date (which shall occur not later than February 28,
1995, unless the Bank consents in writing to a later Effective Date) each of the
following conditions shall have been satisfied in a manner acceptable to the
Bank or shall have been waived in writing by the Bank:
(a) the representations of the Company made in connection with
this Agreement shall be true and correct in all material respects as of
the Effective Date;
(b) no event shall have occurred and be continuing which would
constitute a Potential Default or an Event of Default under this
Agreement;
(c) no change shall have occurred in any law or regulation or in
the interpretation thereof which, in the opinion of the counsel for the
Bank, would make it illegal for the Bank to extend the Letters of Credit;
(d) the Bank shall have received the extension fee referred to in
Subsection 2.3.5 and the first payment of the LOC Commission;
(e) the Bank shall have been reimbursed in the amount of
$181,751.04 for all Pre-Petition Obligations;
(f) the Bank shall have been reimbursed in the amount of
$850,623.52 plus, if applicable, $154.46 for each day after (but not
including) February 8, 1995, through and including the Effective Date for
all Post-Petition Obligations, which amount includes interest on all
Post-Petition Obligations calculated at the rate of 1 percent per annum
above the Prime Rate from the date each obligation was incurred until the
Effective Date;
(g) the Confirmation Order shall not have been stayed and shall
have become a Final Order and all conditions to the effectiveness of the
Reorganization Plan shall have been met or shall have been waived (and, if
waived, such waiver shall have been consented to in writing by the Bank);
(h) the Bank shall have received true and complete executed
copies of the Revolving Credit Agreement and the Loan Documents (as that
term is defined in the Revolving Credit Agreement) and the Bank shall be
satisfied with the terms and conditions thereof, and (ii) one or more
letters of credit shall have been issued under the Revolving Credit
Agreement as provided therein;
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(i) (i) no default or breach shall have occurred under the
Standby Purchase Commitment, (ii) the First Closing (as that term is
defined in the Standby Purchase Commitment) shall have been completed and
the Company shall have received $9,000,000 from Mutual Series for
Reorganized Hexcel Common Stock (as defined in the Disclosure Statement)
to be purchased by Mutual Series in connection with the First Closing, and
(iii) the Company shall have received the Advance as contemplated by the
Standby Purchase Commitment;
(j) all amounts required to be paid by the Company on the
Effective Date to persons asserting claims against the Company in
connection with the bankruptcy proceedings, shall have been paid as
contemplated by the Reorganization Plan;
(k) (i) the EMT Sale shall have been consummated and the Company
shall have received not less than $25,500,000 in Net Cash Proceeds from
the EMT Sale; and (ii) the European Resins Sale shall have been
consummated and the Company shall have received not less than $7,100,000
in gross proceeds from the European Resins Sale;
(l) the Company shall have executed and delivered to the Bank the
Collateral Agreement in the form of Exhibit B attached hereto subject only
to such changes as shall be acceptable to the Bank;
(m) the Bank shall have received executed originals of the New
Placement Agent Agreements, which agreements shall be acceptable to the
Bank in all respects;
(n) the Bank shall have received reimbursement for all
out-of-pocket costs and expenses incurred by the Bank (including costs of
counsel and other professionals) in connection with the negotiation,
documentation and implementation of this Agreement, the Letter of Credit
extensions, all Related Documents and the transactions contemplated
thereby, including, without limitation, costs and expenses incurred in
connection with the Bank's due diligence investigation of the Company's
potential environmental liabilities and its "CAS" issues with the United
States government, which amount shall not exceed $200,000;
(o) the Bank shall have received a certificate executed by
Authorized Officers of the Company containing such representations and
statements as the Bank shall request;
(p) the Bank shall have received an opinion from counsel to the
Company addressed to the Bank containing such opinions as the Bank shall
request;
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(q) the Bank shall have received a substantially complete draft
of a disclosure statement prepared by the Company with respect to each
series of Hexcel Bonds prepared for distribution to the holders of Hexcel
Bonds, which disclosure statements shall be satisfactory to the Bank and
to the applicable Placement Agent;
(r) the Bank shall have received an opinion addressed to the Bank
from bond counsel acceptable to the Bank to the effect that the
transactions contemplated by this Agreement and the Collateral Agreement
and the grant by the Company of Liens on certain of the Bond Facilities
will not adversely affect the exclusion of interest received in connection
with the Hexcel Bonds from gross income for federal income tax purposes;
(s) the Bank shall have received long-form good standing
certificates and tax clearance certificates as of a recent date from the
Secretary of State and tax authorities of the States of Delaware and
California with respect to the Company;
(t) the Bank shall have received (i) a PRO FORMA estimated
balance sheet of the Company and its Subsidiaries as of the Effective Date
giving effect to the transactions contemplated to occur on or about the
Effective Date in the Reorganization Plan, the Revolving Credit Agreement
and this Agreement, and confirming the sources and uses of funds received
by the Company on or about the Effective Date pursuant to the Standby
Purchase Commitment, the Revolving Credit Agreement and from other
sources, and (ii) the Initial Projections;
(u) no change deemed material by the Bank, in its opinion, in the
condition (financial or otherwise), business, performance, assets,
operations or prospects of the Company, individually, or of the Company
and its Restricted Subsidiaries, taken as a whole, shall have occurred
that (i) would cause the Initial Projections to be unreasonable in light
of then current circumstances, or (ii) has had or is reasonably likely to
have a Material Adverse Effect;
(v) the Company shall have delivered to the Bank copies of (i)
the unaudited consolidated balance sheets of the Company and its
Subsidiaries as at November 30, 1994 and the related consolidated
statements of income and cash flow for the period then ended and (ii) its
quarterly report on Form 10-Q for the quarterly period ended October 2,
1994; and
(w) the Bank shall have received such further documentation and
certifications as the Bank may reasonably request in regard to matters
arising under this Agreement or in connection with the transaction
contemplated hereby or by any Related Document.
SECTION 4.2. OTHER DOCUMENTS. All of the opinions, certificates,
instruments and other documents required to be delivered to the Bank pursuant to
the Agreement shall be
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deemed to be in compliance with the provisions hereof if, but only if, they are
in form and substance reasonably satisfactory to the Bank.
SECTION 4.3. WAIVER OF EVENTS OF DEFAULT. Upon, but only upon,
satisfaction of each of the conditions stated in Section 4.1 of this Agreement
(PROVIDED, HOWEVER, that any one or more conditions may be waived in writing
by the Bank), all past and existing Events of Default (as that term is used in
each of the Prior Reimbursement Agreements) under each of the Prior
Reimbursement Agreements and all claims related thereto shall be deemed waived
by the Bank without further action on the part of the Bank.
SECTION 4.4. ISSUANCE OF LETTER OF CREDIT AMENDMENTS. Upon, but only
upon, satisfaction of each of the conditions stated in Section 4.1 of this
Agreement (PROVIDED, HOWEVER, that any one or more conditions may be waived in
writing by the Bank), the Bank shall execute and deliver to each Trustee or
Agent, as appropriate, with respect to each Letter of Credit, an amendment to
such Letter of Credit stating (a) the extension of the term of the Letter of
Credit to December 31, 1998, and (b) in the case of the Industrial Authority of
the County of Los Angeles Bonds, the Stated Amount, Principal Component and
Interest Component of the Letter of Credit (as shown in Schedule 2.1). The
amendments shall be in substantially the form set forth in Exhibit C hereto, and
each amendment shall be prepared in at least three counterparts and each
counterpart shall be signed by the Bank and accepted and acknowledged by the
Company.
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ARTICLE 5.
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement and to perform
its obligations hereunder, the Company makes to the Bank the representations and
warranties set forth in this Article. All representations and warranties made
herein shall be deemed made as of the Effective Date. All such representations
and warranties shall survive the Effective Date and the issuance of the
amendments to the Letters of Credit and shall remain in full force and effect
for so long as any Letter of Credit remains outstanding or any Reimbursement
Obligation remains unpaid.
SECTION 5.1. FINANCIAL CONDITION; CORPORATE ORGANIZATION.
(a) The (i) audited consolidated balance sheets of the Company
and its Subsidiaries as at December 31, 1993, and the related audited
consolidated statements of operations, shareholders' equity and cash flows
for the Fiscal Year then ended, and (ii) unaudited consolidated balance
sheets of the Company and its Subsidiaries for the quarter ending October
2, 1994, and for the month ending November 30, 1994, and the related
consolidated statements of operations and cash flows for the periods then
ended, including the related notes and schedules thereto, copies of which
have been delivered to the Bank, present fairly the consolidated financial
position of the Company and its Subsidiaries as at each such date.
(b) All such financial statements, including the related
schedules and notes thereto, have been prepared in accordance with GAAP
consistently applied (except for any changes in principles with which the
Company's audit accountants have concurred and except for any year-end
audit adjustments and for end-of-quarter adjustments in the case of
monthly statements).
(c) Neither the Company nor any of its Subsidiaries had any
asset, liability, liability for taxes, long-term lease or unusual forward
or long-term commitment material to the financial condition of the Company
and its Subsidiaries taken as a whole, which was not reflected in the
financial statements referenced in paragraphs (a) or (b) above or in the
Disclosure Statement.
(d) The Disclosure Statement contains an accurate statement of
the current and proposed business and operations of the Company and its
Subsidiaries, and, to the best knowledge of the Company, the information
contained in the Disclosure Statement is accurate in all material respects
and does not contain any material false or misleading statements.
(e) Except as otherwise contemplated in the Disclosure Statement,
since November 7, 1994, there has been no material adverse change in the
business, or prospects, operations, property or financial or other
condition of the Company which (i) would cause the Initial Projections to
be unreasonable
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in light of then current circumstances, or (ii) has had or is reasonably
likely to have a Material Adverse Effect.
(f) Attached hereto as Schedule 5.1(f) is a complete and accurate
list of all Existing Debt (other than Existing Guaranty Obligations listed
on Schedule 5.1(g) and Existing Subordinated Debt listed on Schedule
5.1(i)) of the Company and its Subsidiaries.
(g) Attached hereto as Schedule 5.1(g) is a complete and accurate
list of all Existing Guaranty Obligations of the Company and its
Subsidiaries, except for such Guaranty Obligations which are unlikely to
have a Material Adverse Effect.
(h) Attached hereto as Schedule 5.1(h) is a complete and accurate
list of all Existing Liens of the Company and its Subsidiaries.
(i) Attached hereto as Schedule 5.1(i) is a complete and accurate
list of all Existing Subordinated Debt of the Company and its
Subsidiaries.
(j) Attached hereto as Schedule 5.1(j) is a diagram indicating
the corporate structure of the Company, the Company's Subsidiaries and the
Existing Joint Ventures as of the Effective Date, including the correct
legal name, the jurisdiction of incorporation, and the jurisdictions in
which the Company and each of the Company's Subsidiaries is qualified to
transact business as a foreign corporation.
SECTION 5.2. CORPORATE EXISTENCE AND POWER. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware. The Company and each of its Subsidiaries are duly qualified
as foreign corporations to do business and are in good standing (or, with
respect to the Unrestricted Subsidiaries, have maintained the equivalent status)
in each of the jurisdictions in which the character of the properties owned or
held under lease by it or the nature of business transacted by it makes such
qualification necessary, including in the case of the Company, without
limitation, California, Arizona, Texas, Ohio and Washington, except where
failure to be so qualified or to be in good standing (or, with respect to the
Unrestricted Subsidiaries, maintain the equivalent status) would not have a
Material Adverse Effect. The Company and each of its Subsidiaries have all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on their respective businesses as now
conducted, except for such governmental licenses, authorizations, consents and
approvals the absence of which would not have a Material Adverse Effect. The
Company has all corporate powers and all material governmental licenses,
authorizations, consents and approvals required to execute, deliver and perform
this Agreement and the Collateral Agreement.
SECTION 5.3. CORPORATE AUTHORIZATION; NO VIOLATION. The execution,
delivery and performance by the Company of this Agreement and the Collateral
Agreement are within the Company's corporate powers, have been duly authorized
by all necessary corporate action, any governmental body, agency or official,
and do not (a) contravene any Require-
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ment of Law or Contractual Obligation of the Company the contravention of which
would result in a Material Adverse Effect, or (b) result in the creation or
imposition of any Lien on any asset of the Company the creation or imposition of
which would result in a Material Adverse Effect, other than, in each case, as
expressly contemplated by this Agreement or the Collateral Agreement.
SECTION 5.4. GOVERNMENT AUTHORIZATION. No authorization or approval of,
or other action by, and no notice to or filing with, any Governmental Authority
is required to be obtained or made by the Company for the due execution,
delivery and performance by the Company of this Agreement and the Collateral
Agreement other than such as have been obtained and are in full force and
effect.
SECTION 5.5. ENFORCEABLE OBLIGATIONS. This Agreement and the Collateral
Agreement each constitute, and each Related Document to which the Company is, or
is to be, a party when executed and delivered and assuming due authorization,
execution and delivery by the other parties hereto and thereto, will constitute,
a legal, valid and binding obligation of the Company enforceable against the
Company in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally.
SECTION 5.6. NOT AN INVESTMENT COMPANY OR PUBLIC UTILITY HOLDING COMPANY.
The Company is not an "investment company" within the meaning of the Investment
Company Act of 1940, as amended; the Company is not a "holding company," a
"subsidiary company" or an "affiliate" of any "holding company," within the
meaning of the Public Utility Holding Company Act of 1935.
SECTION 5.7. NO LITIGATION. Other than as disclosed in Schedule 5.7, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of the Company,
threatened by or against the Company, or against any of the Restricted
Subsidiaries, or against any properties or revenues of the Company or any
Restricted Subsidiary (i) with respect to this Agreement or any Related Document
or in connection with any Hexcel Bonds, or (ii) in which there is a reasonable
possibility of an adverse determination which would have a Material Adverse
Effect.
SECTION 5.8. TAXES. United States federal income tax returns of the
Company and its Restricted Subsidiaries have been examined and closed through
the Fiscal Year ended December 31, 1988. The Company and each Restricted
Subsidiary have filed all United States federal income tax returns and all other
tax returns which are required to be filed by it prior to the date of this
Agreement, except for such returns as to which the failure to file would not
have a Material Adverse Effect. Except for (A) those Allowed Priority Tax
Claims listed on Schedule 5.8, and (B) tax claims, the validity of which are
being diligently challenged in good faith by the Company, the Company and its
Restricted Subsidiaries have paid or caused to have been paid all taxes due
pursuant to such returns or pursuant to any assessment or claim received by the
Company or any Restricted Subsidiary. To the best of the Company's knowledge,
except for Allowed Priority Tax Claims and except for tax claims, the validity
of which are being diligently challenged in good faith by the Company, all
corporate franchise taxes and all corporate income taxes due and owing by it or
any Restrict-
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ed Subsidiary in the States of Delaware, California, Arizona, Texas, Ohio
and Washington have been fully paid, except where the failure to pay such
taxes would not have a Material Adverse Effect. The charges, accruals and
reserves on the books of the Company and each Restricted Subsidiary in respect
of taxes or other governmental charges are, in the opinion of the Company,
adequate.
SECTION 5.9. ERISA. Except as set forth in Schedule 5.10, the Company
and each member of the Controlled Group have fulfilled their obligations under
the minimum funding standards of ERISA and the Code with respect to each ERISA
Plan (or, with respect to each ERISA Plan that is a multi-employer plan as
defined in Section 4001(a)(3) of ERISA, have made all required contributions),
and are in compliance in all material respects with the applicable provisions of
ERISA and the Code and have not incurred any liability to the PBGC or an ERISA
Plan under Title IV of ERISA.
SECTION 5.10. UNFUNDED LIABILITIES. As of December 31, 1993, neither the
Company nor any Restricted Subsidiary has unfunded liabilities (actual or
contingent) with respect to any pension, benefit or health and medical plan in
connection with any of its employees, whether organized or otherwise which, in
the aggregate, exceed $21,000,000, which liabilities are described in Schedule
5.10 attached hereto.
SECTION 5.11. NO DEFAULT. Assuming waiver by the Bank of any existing
Event of Default or Potential Default under any Prior Reimbursement Agreement,
as of the Effective Date neither the Company nor any Subsidiary is in default in
any respect under or with respect to any contract, agreement, arrangement or
instrument to which it is a party or by which it or any of its assets may be
bound or affected, which default could have a Material Adverse Effect. No
Potential Default or Event of Default exists under this Agreement. Neither the
Company nor any Subsidiary is in default under or violation of any order, award
or decree of any court, arbitrator, or other Governmental Authority or other
Person binding upon or affecting it or by which any of its assets may be bound
or affected, which default or violation could have a Material Adverse Effect.
SECTION 5.12. PLEDGE AND PLEDGED BONDS. The pledges of the Hexcel Bonds
pursuant to the Pledge Agreements have been duly created. As of the Effective
Date, there are no Pledged Bonds outstanding.
SECTION 5.13. FINANCIAL POSITION.
(a) The Company's PRO FORMA balance sheet referred to in Section
4.1(t) and each of the Company's business plans and all other financial
projections and related materials and documents delivered to the Bank pursuant
hereto were prepared in good faith and are based upon facts and assumptions that
were reasonable in light of the then current and foreseeable business conditions
and prospects of the Company and represented management's opinion of the
Company's projected financial performance based upon information available to
the Company at the time so furnished. The sources and uses of funds as of the
Effective Date shall be substantially as set forth at pages E-1 through E-4 of
the Disclosure Statement, except for such adjustments as are indicated on the
above-mentioned PRO FORMA balance sheet.
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(b) The Initial Projections were prepared in good faith and are based
upon facts and assumptions that were reasonable in light of the then current and
foreseeable business conditions and prospects of the Company and represented
management's opinion of the projected financial performance of the Company, the
Restricted Subsidiaries and the Existing Joint Ventures based upon information
available to the Company at the time so furnished.
SECTION 5.14. STANDBY PURCHASE COMMITMENT; RIGHTS OFFERING. The Company
has entered into the Standby Purchase Commitment with Mutual Series and has
received from Mutual Series (a) $9,000,000 for the purchase of 1,945,946 shares
of Reorganized Hexcel Common Stock (as defined in the Disclosure Statement) and
(b) the Advance. No default or breach exists in connection with the Standby
Purchase Commitment and all conditions to performance of the obligations of
Mutual Series pursuant to the Standby Purchase Commitment have been satisfied or
waived in writing by the Company. The Rights Offering has been duly authorized
by all necessary corporate action of the Company and, when issued in accordance
with such authorization and delivered by the Company, the shares and related
rights so issued will constitute legal, valid and binding obligations of the
Company, enforceable in accordance with their terms.
SECTION 5.15. REVOLVING CREDIT AGREEMENT. The Revolving Credit Agreement
has been executed by the Revolving Credit Lender and the Company, true and
complete copies of the Revolving Credit Agreement and of the other Loan
Documents (as that term is defined in the Revolving Credit Agreement) have been
delivered to the Bank, no "Event of Default" (as defined in the Revolving Credit
Agreement) has occurred and is continuing, and all conditions to effectiveness
of the obligations of the Revolving Credit Lender have been satisfied or waived
in writing.
SECTION 5.16. TREATMENT OF CLAIMS. All Claims (as defined in the
Reorganization Plan), including all Environmental Claims, have been paid in
full, reinstated or otherwise treated as provided in the Reorganization Plan.
SECTION 5.17. CONDITIONS PRECEDENT TO THE REORGANIZATION PLAN. The
Confirmation Order has become a Final Order, and all conditions to the
effectiveness of the Reorganization Plan as set forth in the Reorganization Plan
and in the Disclosure Statement have been satisfied or waived (no such
conditions shall have been waived except for such waivers as the Bank shall have
joined in and approved in writing).
SECTION 5.18. DISCLOSURE. The representations and warranties of the
Company contained in this Agreement, the Collateral Agreement, and all
schedules, certificates and documents delivered to the Bank pursuant to the
terms hereof do not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained herein
or therein, in light of the circumstances in which they were made, not
misleading. The Company has not intentionally withheld any fact from the Bank
in regard to any matter which shall have or is reasonably likely to have a
Material Adverse Effect.
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SECTION 5.19. REQUIREMENTS OF LAW. Each of the Company and its
Subsidiaries is in compliance with all Requirements of Law applicable to it and
its business, except in each case where the failure to so comply individually or
in the aggregate would not have or is not likely to have a Material Adverse
Effect.
SECTION 5.20. TRANSACTIONS WITH AFFILIATES. Schedule 5.20 lists as of the
Effective Date, each and every material agreement and arrangement that any of
the Company or the Company's Subsidiaries has entered into with any of their
respective Affiliates (other than the Company and its Subsidiaries).
SECTION 5.21. ENVIRONMENTAL MATTERS. Schedule 5.21 is a true and correct
description of the amount and disposition of all Environmental Claims, and
correctly identifies each and every such Environmental Claim which has been
approved or otherwise addressed by the Bankruptcy Court. All matters set
forth in Article V, Section A.8 of the Disclosure Statement, as supplemented
by Schedule 5.21 are true and correct. Except as set forth in Schedule 5.21,
there is no action or proceeding pending or, to the Company's knowledge,
threatened, by any private person or entity or Governmental Authority, in
connection with any release or threatened release of any Hazardous Substances
from or onto any Real Property or Surrounding Property or which asserts any
potential or actual violation of any Hazardous Substance Law which would have a
Material Adverse Effect. Subject to the matters set forth in Schedule 5.21: (i)
the Company is not in violation of nor alleged to be in violation of any
Hazardous Substance Law, except in each case where any such violation(s)
individually or in the aggregate would not have a Material Adverse Effect; and
(ii) except as previously disclosed to the Bank in writing, neither the Company
nor, to the Company's knowledge, any third party, has ever used, generated,
manufactured, refined, produced, processed, stored or disposed of on, under or
about any Real Property or any Surrounding Property or transported to or from
any Real Property any Hazardous Substances in violation of any Hazardous
Substance Laws or any other applicable laws or regulations, nor has the Company
ever in the past used or knowingly permitted the use of any Real Property for
the purpose of generating, manufacturing, refining, producing, storing,
handling, transferring, processing or transporting of Hazardous Substances in
violation of Hazardous Substance Laws or any other applicable laws or
regulations, except in each case where any such use, etc., individually or in
the aggregate, would not have a Material Adverse Effect.
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ARTICLE 6.
REPORTING COVENANTS
Unless the Bank shall otherwise consent in writing, until the later of the
Expiration Date of each Letter of Credit and the payment in full of all amounts
due and owing or payable to the Bank under this Agreement, the Company shall
comply, and shall cause compliance, with each of the following covenants:
SECTION 6.1. FINANCIAL STATEMENTS. The Company shall maintain, and shall
cause each of the Company's Subsidiaries to maintain, a system of accounting
established and administered in accordance with sound business practices to
permit preparation of consolidated and consolidating financial statements in
conformity with GAAP, and each of the financial statements described below shall
be prepared from such system and records. The Company shall deliver or cause to
be delivered to the Bank:
(a) MONTHLY REPORTS. As soon as available and in any event
within 30 days after the end of each fiscal month in each Fiscal Year
(except for the monthly reports for January, 1995 which shall be delivered
within 45 days after the end of such fiscal month), (i) balance sheets of
each of (A) the Company and the Restricted Subsidiaries, and (B) the
Unrestricted Subsidiaries and (ii) consolidating balance sheet of the
Company and its Subsidiaries as at the end of such period and the related
statements of income and cash flow of each of the Persons described in
clauses (i) and (ii) above for such fiscal month and for the period from
the beginning of the then current Fiscal Year to the end of such fiscal
month, and for the corresponding period during the previous Fiscal Year
together with the comparison to the current annual budget for such period,
all certified by the chief financial officer, treasurer or controller of
the Company as fairly presenting the financial position of such Persons as
at the dates indicated, the results of their operations and cash flow for
the periods indicated in accordance with GAAP, subject to normal year end
adjustments.
(b) QUARTERLY REPORTS. As soon as available and in any event
within 45 days after the end of each of the first three fiscal quarters of
each Fiscal Year, (i) balance sheets of each of (A) the Company and the
Restricted Subsidiaries, (B) the Unrestricted Subsidiaries and (C) Hexcel
Lyon and (ii) the consolidating balance sheets of the Company and its
Subsidiaries as at the end of such period and the related statements of
income and cash flow of each of the Persons described in clauses (i) and
(ii) above for such fiscal quarter and for the period from the beginning
of the then current Fiscal Year to the end of such fiscal quarter, and for
the corresponding period during the previous Fiscal Year together with the
comparison to the current annual budget for such period, all certified by
the chief financial officer, treasurer or controller of the Company as
fairly presenting the financial position of such Persons as at the dates
indicated and the results of their operations and cash flow for the
periods indicated in accordance with GAAP (except with respect
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to Hexcel Lyon, which shall be in conformity with general French
accounting standards), subject to normal year end adjustments.
(c) ANNUAL REPORTS. As soon as available and in any event
within 90 days after the end of each Fiscal Year, (i) audited financial
statements of each of (A) the Company and the Restricted Subsidiaries, (B)
Hexcel Lyon and (C) the Company and its Subsidiaries certified by
independent certified public accountants of recognized national standing
acceptable to the Bank, which report shall be certified without
qualification or modification as to the scope of the audit and as to the
Company being a going concern and shall state that such financial
statements fairly present the financial position of the Persons described
in clauses (A) through (C) above as at the dates indicated and the results
of their operations and cash flow for the periods indicated in conformity
with GAAP (except with respect to Hexcel Lyon, which shall be in
conformity with general French accounting standards) applied on a basis
consistent with prior years (except for changes with which such
independent certified public accountants shall concur and which shall have
been disclosed in the notes to the financial statements) and that the
examination by such accountants in connection with such consolidated and
combined financial statements has been made in accordance with generally
accepted auditing standards and (ii) annual consolidating financial
statements of the Company and its Subsidiaries prepared by the Company.
(d) OFFICER'S CERTIFICATE. Together with each delivery of any
financial statement pursuant to paragraphs (b) and (c) of this Section
6.1, an Officer's Certificate of the Company, in form and content
satisfactory to the Bank, signed by the Company's chief financial officer,
treasurer or controller and setting forth calculations for the period then
ended for (1) compliance with the terms of Section 7.13 of this Agreement
and with the terms of the Collateral Agreement, (2) compliance with the
negative covenants of Article 8 hereof, and (4) compliance with the
financial covenants of Article 9 hereof.
(e) BUSINESS PLANS; FINANCIAL PROJECTIONS. As soon as available
and in any event within 30 days prior to the end of each Fiscal Year, a
combined annual budget (in the format customarily utilized by the Company
for making financial projections) of (A) the Company and the Restricted
Subsidiaries, (B) the Unrestricted Subsidiaries and (C) the Company and
its Subsidiaries for the succeeding Fiscal Year, displaying on a monthly
basis anticipated balance sheets as at the end of such period and the
related statements of income and cash flow of each of the Persons escribed
in clauses (A) through (C), and on a monthly basis availability forecasts
for each of the Company and the Restricted Subsidiaries.
(f) ACCOUNTANT'S STATEMENT. Together with each delivery of the
financial statements referred to in paragraphs (b) and (c) of this Section
6.1, a written statement of the firm of independent certified public
accountants of recognized national standing acceptable to the Bank giving
the report stating
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(i) that their audit examination has included a review of the terms hereof
as it relates to accounting matters and (ii) whether, in connection with
their audit examination, any condition or event which constitutes an Event
of Default or Potential Default has come to their attention, and if such
condition or event has come to their attention, specifying the nature and
period of existence thereof. The statement referred to above shall be
accompanied by a copy of the management letter or any similar report
delivered to the Company or to any officer or employee thereof by such
accountants in connection with such financial statements.
(g) OPENING BALANCE SHEET. As soon as available and in any
event within 60 days after the Effective Date, balance sheets of each of
(A) the Company and Restricted Subsidiaries, (B) the Unrestricted
Subsidiaries and (C) the Company and its Subsidiaries as at January 29,
1995, giving effect to the transactions contemplated by the sources and
uses of funds received by the Company on or about the Effective Date.
SECTION 6.2. EVENTS OF DEFAULT. Promptly upon (and, in any event, within
5 Business Days of) any of the chief executive officer, chief operating officer,
chief financial officer, treasurer or controller of the Company obtaining
knowledge (i) of any condition or event which constitutes an Event of Default or
Potential Default, (ii) that any Person has given any written notice to the
Company or any Subsidiary of the Company or taken any other action with respect
to a claimed default or event or condition of the type referred to in Section
10.1(h) or Section 10.1(i), or (iii) of any condition or event which has or is
reasonably likely to have a Material Adverse Effect, the Company shall deliver
to the Bank an Officer's Certificate specifying (A) the nature and period of
existence of any such claimed default, Event of Default, Potential Default,
condition or event, (B) the notice given or action taken by such Person in
connection therewith, and (C) the remedial action the Company has taken, is
taking and proposes to take with respect thereto.
SECTION 6.3. LAWSUITS. (a) Promptly upon (and in any event, within 10
Business Days of) the Company obtaining knowledge of the institution of, or
written threat of, any action, suit, proceeding, governmental investigation or
arbitration against or affecting the Company or any of the Restricted
Subsidiaries or any Property of the Company or any of the Company's Subsidiaries
not previously disclosed pursuant to Section 5.7 which action, suit, proceeding,
governmental investigation or arbitration exposes, or in the case of multiple
actions, suits, proceedings, governmental investigations or arbitrations arising
out of the same general allegations or circumstances which expose, in the
Company's reasonable judgment, the Company or any of the Restricted Subsidiaries
to liability in an amount aggregating $5,000,000 or more in excess of applicable
insurance coverage, the Company shall give written notice thereof to the Bank
and provide such other information as may be reasonably available to enable the
Bank and its counsel to evaluate such matters; and (b) in addition to the
requirements set forth in clause (a) of this Section, the Company upon request
of the Bank shall promptly give written notice of the status of any action,
suit, proceeding, governmental investigation or arbitration disclosed pursuant
to Section 5.7 or covered by a report delivered pursuant to clause (a) above and
provide such other information as may be
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reasonably available to it (subject to applicable attorney-client privilege) to
enable the Bank and its counsel to evaluate such matters.
SECTION 6.4. ERISA NOTICES. The Company shall deliver or cause to be
delivered to the Bank, at the Company's expense, the following information and
notices as soon as reasonably possible, and in any event within 30 days after
the Company or any Subsidiary knows or has reason to know that any Reportable
Event has occurred with respect to any ERISA Plan, a statement from the chief
financial officer of the Company setting forth details as to such Reportable
Event and the action which the Company or the affected Subsidiary proposes to
take with respect thereto, together with a copy of the notice of such Reportable
Event given to the PBGC if a copy of such notice is available to the Company or
the affected Subsidiary. For purposes of this Section, the Company and any
ERISA Affiliate shall be deemed to know all facts known by the administrator of
any Plan of which the Company or any ERISA Affiliate is the plan sponsor.
SECTION 6.5. SALE OF BOND FACILITIES. The Company shall notify the Bank
of any proposed sale, lease, condemnation or other disposition of all or any
portion of the Bond Facilities and of any proposed change in the use of any Bond
Facility which might cause interest on any Hexcel Bonds not to be excluded from
gross income for federal tax purposes.
SECTION 6.6. PUBLIC FILINGS AND REPORTS. Promptly upon the filing
thereof with any Governmental Authority (including, without limitation, the
Securities and Exchange Commission) or the mailing thereof to the public
shareholders or debtholders of the Company generally, the Company shall deliver
to the Bank copies of all filings or reports made in connection with outstanding
Debt and Capital Stock of the Company.
SECTION 6.7. AMENDMENTS TO DOCUMENTS. The Company shall notify the Bank
of any proposed material amendment, supplement or other material modification to
any Constituent Document or any Transaction Document and shall promptly deliver
to the Bank any such amendment, supplement or other modification adopted in
respect to any Constituent Document or any Transaction Document.
SECTION 6.8. OTHER INFORMATION. Promptly upon receipt of a request
therefor from the Bank, the Company shall prepare and deliver to the Bank such
other information with respect to the Company or any of the Company's
Subsidiaries as from time to time may be reasonably requested by the Bank.
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ARTICLE 7.
AFFIRMATIVE COVENANTS
Unless the Bank shall otherwise consent in writing, until the later of the
Expiration Date of each Letter of Credit and the payment in full of all amounts
due and owing or payable to the Bank under this Agreement, the Company shall
comply, and shall cause compliance, with each of the following covenants:
SECTION 7.1. CORPORATE EXISTENCE, ETC.
(a) The Company shall at all times maintain its corporate existence and
preserve and keep in full force and effect its rights and franchises material to
its businesses except (i)for actions in the ordinary course of business where
the Company determines that the maintenance or preservation of such rights and
franchises is not in the best interest of the Company or (ii) where the failure
to so maintain or preserve would not have or be reasonably likely to have a
Material Adverse Effect.
(b) The Company shall cause each of its Subsidiaries to at all times
maintain their respective corporate existences and preserve and keep, or cause
to be preserved and kept, in full force and effect their respective rights and
franchises material to their respective businesses except for actions in the
ordinary course of business where the Board of Directors of any Subsidiary (as
applicable) determines that the maintenance or preservation of such rights and
franchises is not in the best interest of such Subsidiary (as applicable) and
the failure to so maintain or preserve would not have or be reasonably likely to
have a Material Adverse Effect.
SECTION 7.2. CORPORATE POWERS; CONDUCT OF BUSINESS, ETC.
(a) The Company shall qualify and remain qualified to do business in
each jurisdiction in which the nature of its business requires it to be so
qualified, except where the failure to be so qualified would not have or be
reasonably likely to have a Material Adverse Effect.
(b) The Company shall cause each of its Subsidiaries to qualify and
remain qualified to do business in each jurisdiction in which the nature of its
business requires it to be so qualified, except where the failure to be so
qualified would not have or be reasonably likely to have a Material Adverse
Effect.
SECTION 7.3. COMPLIANCE WITH LAWS, ETC. The Company shall, and shall
cause each of its Subsidiaries to, (a) comply with all Requirements of Law and
all restrictive covenants affecting such Person or the business, Property or
operations of such Person, and (b) obtain as needed all Permits necessary for
such Person's operations and maintain such Permits in good standing (or, with
respect to the Unrestricted Subsidiaries, maintain equivalent status), except,
in each case, where the failure to do so would not have or be reasonably likely
to have a Material Adverse Effect.
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SECTION 7.4. PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION. The Company
shall, and shall cause each of its Subsidiaries to, pay (a) all taxes,
assessments and other governmental charges imposed upon it or on any of its
Property or in respect of any of its franchises, business, income or Property
before any penalty or interest for late payment (except as such penalty or
interest relates to underpayment of estimated tax payments) accrues thereon, and
(b) all claims (including, without limitation, claims for labor, services,
materials and supplies) for sums which have become due and payable and which by
law have or may become a Lien (other than a Lien permitted by Section 8.3) upon
any of the Company's or such Subsidiary's Property, prior to the time when any
penalty or fine shall be incurred with respect thereto; PROVIDED, HOWEVER,
that no such taxes, assessments and governmental charges referred to in clause
(a) above or claims referred to in clause (b) above are required to be paid if
the failure to pay such charges or claims would not result in a Material Adverse
Effect or if such charges or claims are being contested in good faith by the
Company or such Subsidiary, as the case may be, by appropriate proceedings
diligently instituted and conducted and if such reserve or other appropriate
provision, if any, as shall be required in conformity with GAAP shall have been
made therefor. The Company shall not permit any of its Subsidiaries to file or
consent to the filing of any consolidated income tax return with any Person
(other than the Company and its Subsidiaries).
SECTION 7.5. INSURANCE. The Company shall, and shall cause each
Restricted Subsidiary to, (i) maintain and keep in force insurance of the types
and in amounts customarily carried in its lines of business (including, without
limitation, fire, public liability, property damage and worker's compensation
insurance), all such insurance to be carried with reputable companies, and (ii)
deliver to the Bank from time to time, as the Bank may request, schedules
setting forth all insurance then in effect.
SECTION 7.6. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS.
(a) Subject to applicable government security clearance, the Company
shall permit, and shall cause each of its respective Subsidiaries to permit, any
authorized representative(s) designated by the Bank to visit and inspect any of
the Properties of the Company or such Subsidiary, to examine, audit, check and
make copies of their respective financial and accounting records, books,
journals, orders, receipts and any correspondence and other data relating to
their respective businesses or the transactions contemplated hereby (including,
in connection with environmental compliance, hazard or liability), and to
discuss their affairs, finances and accounts with their officers and independent
certified public accountants, upon reasonable notice and at such times during
normal business hours, as often as may be reasonably requested. All costs and
expenses incurred by the Bank as a result of such inspection, audit or
examination conducted pursuant to this Section shall be paid by the Company.
(b) The Company shall keep and maintain, and shall cause its respective
Subsidiaries to keep and maintain, in all material respects proper books of
record and account in which entries in conformity with GAAP shall be made of all
dealings and transactions in relation to their respective businesses and
activities.
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SECTION 7.7. ERISA COMPLIANCE. The Company shall, and shall cause each
of its Subsidiaries and ERISA Affiliates to, establish, maintain and operate all
Plans to comply in all material respects with the provisions of ERISA, the Code,
all other applicable laws, and the regulations and interpretations thereunder
and the respective requirements of the governing documents for such Plans.
SECTION 7.8. MAINTENANCE OF PROPERTY. The Company shall cause all
Property used or useful in the conduct of its business or the business of any
Restricted Subsidiary to be maintained and kept in good condition, repair and
working order and supplied with all necessary equipment and shall cause to be
made all necessary repairs, renewals, replacements, betterments and improvements
thereof; PROVIDED, HOWEVER, that nothing in this Section shall prevent the
Company from discontinuing the operation or maintenance of any of such Property
if such discontinuance would not, in the judgment of the Company, result in a
Material Adverse Effect.
SECTION 7.9. ENVIRONMENTAL COMPLIANCE. The Company shall at all times
comply with any and all applicable Hazardous Substance Laws, including without
limitation the timely performance of all of the Company's obligations under any
remedial action plan, consent order, or other agreement or order regarding the
remediation of any Hazardous Substance, except where the failure to comply would
not have a Material Adverse Effect. The Company shall notify the Bank promptly
upon receipt of written notice of any (i) release or threatened release of any
Hazardous Substance from or onto any Real Property or Surrounding Property; (ii)
potential or actual violation of any Hazardous Substance Law; or (iii) any
action or proceeding threatened or brought by any private person or entity or
Governmental Authority in connection with either of the matters set forth in
clauses (i) or (ii) above; PROVIDED, that such release, violation or action
would have a Material Adverse Effect. Not less than thirty days prior to (a)
taking any action in response to the existence, presence, use, storage,
generation, production, treatment, disposal, or handling of any Hazardous
Substance in, on, under or about any Real Property or any Surrounding Property,
or to the release, discharge, or transport of any Hazardous Substance onto or
from any Real Property; or (b) entering into any settlement agreement, consent
decree, or other compromise or agreement regarding any Hazardous Substance
Claims and Losses (such agreements and decrees are referred to collectively as
"Hazardous Substance Agreements") and PROVIDED, that such matters would have a
Material Adverse Effect, the Company shall provide the Bank with a written
notice describing in reasonable detail the action proposed to be taken by the
Company or the nature of the Hazardous Substance Agreement to be entered into by
the Company as described in clauses (a) and (b) above, and thereafter shall
deliver to the Bank a copy of any remedial action plan, consent order, or
Hazardous Substance Agreement in connection therewith within five days following
approval thereof by the applicable Governmental Authority or other Person.
SECTION 7.10. PARI PASSU. The Company shall assure that the obligations
of the Company hereunder rank at least PARI PASSU with the other senior
unsecured Debt of the Company.
SECTION 7.11. PLEDGE AND SECURITY INTEREST. The Company shall maintain
the assignment and security interest granted to the Bank in the Collateral
Agreement, defend, pre-
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serve and protect such assignment and security interest to the extent permitted
by law against all claims of all Persons and keep the Collateral (as that term
is defined in the Collateral Agreement) free from all Liens, except as permitted
by the Collateral Agreement.
SECTION 7.12. BOND FACILITY PROCEEDS.
(a) Subject to the rights of the Revolving Credit Lender to receive
such proceeds under the Revolving Credit Agreement, upon the sale, lease,
condemnation or other disposition of any Bond Facility or any portion thereof,
the Company shall apply all proceeds received by the Company in connection with
any such disposition to the redemption of Hexcel Bonds issued in connection with
the disposed of Bond Facility (less costs incurred by the Company in connection
with the disposition), such redemption to occur on the next practicable
redemption date for such bonds (which redemption shall reduce the obligation of
the Company to reduce the contingent liability of the Bank under Section 7.13 in
the manner provided in the Collateral Agreement).
(b) With the exception of Liens granted or to be granted by the Company
to the Revolving Credit Lender (including any successors or assigns) to secure
the Revolving Credit Obligations, the Company shall not grant or permit to exist
any Lien on any Bond Facility or any portion thereof.
(c) The Company shall not take, permit or suffer to be taken any action
which would cause or result in interest on any Hexcel Bonds not to be excluded
from gross income under applicable federal tax law; specifically, the Company
shall not cause or suffer to occur any "change in use" of any Bond Facilities
which would cause interest on any Hexcel Bonds not to be excluded from gross
income under applicable federal tax law.
SECTION 7.13. REDUCTION OF CONTINGENT LIABILITY OF BANK. The Company
agrees that it will reduce or offset the contingent liability of the Bank as
represented by the Letters of Credit by an amount equal to $600,000 per quarter,
beginning on April 1, 1995 and continuing on each Payment Date to and including
October 1, 1998. The Company will effect this agreement in the manner set forth
in and in accordance with the terms of the Collateral Agreement.
SECTION 7.14. FURTHER ASSURANCES. At any time, or from time-to-time, upon
reasonable request from the Bank, at the Company's expense, the Company shall
promptly execute, acknowledge and deliver such further documents and do such
other acts and things as shall be necessary or advisable, in the Bank's sole
judgment, in order to effect fully the purposes of this Agreement or of any
Related Document.
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ARTICLE 8.
NEGATIVE COVENANTS
Unless the Bank shall otherwise consent in writing, until the later of the
Expiration Date of each Letter of Credit and the payment in full of all amounts
due and owing or payable to the Bank under this Agreement, the Company shall
comply, and shall cause compliance, with the following negative covenants:
SECTION 8.1. DEBT. None of the Company or any of its Restricted
Subsidiaries shall directly or indirectly create, incur, assume or otherwise
become directly or indirectly liable with respect to any Debt, except:
(a) Existing Debt and any extensions, renewals, refundings or
replacements of such Existing Debt; PROVIDED, that any such extension,
renewal, refunding or replacement is in an aggregate principal amount not
greater than the principal amount (plus reasonable transaction costs) of
the Existing Debt so extended, renewed, refunding or replaced, and
PROVIDED, FURTHER, that no refunding or replacement of the Advance shall
be permitted;
(b) Existing Subordinated Debt and any extensions, renewals,
refundings or replacements of Existing Subordinated Debt; PROVIDED, that
any such extension, renewal, refunding or replacement is in an aggregate
principal amount not greater than the principal amount (plus reasonable
transaction costs) of the Existing Subordinated Debt so extended, renewed,
refunded or replaced and PROVIDED, FURTHER, that the aggregate
installments of principal due prior to December 31, 1998, under the
extended, renewed, refunded or replaced Subordinated Debt are not in an
amount greater than the aggregate principal installments due prior to
December 31, 1998 under the Existing Subordinated Debt (without any
extension, renewal, refunding or replacement);
(c) Hexcel Obligations;
(d) Revolving Credit Obligations in principal amount not in
excess of (i) $45,000,000 plus (ii) the amount of Debt permitted under
clause (e) of this Section which is in fact funded pursuant to the
Revolving Credit Agreement;
(e) secured Debt incurred under the Revolving Credit Agreement or
otherwise in connection with purchase money obligations and/or Capital
Leases to the extent permitted by Section 8.3; and
(f) other unsecured Debt not in excess at any time of $10,000,000
in aggregate principal amount; but only to the extent that the sum, at any
time, of unsecured Debt incurred pursuant to this clause (f) of Section
8.1 and Guaranty Obligations incurred pursuant to clause (b) of Section
8.2 does not exceed $10,000,000 in aggregate principal amount.
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SECTION 8.2. GUARANTY OBLIGATIONS. None of the Company or any of the
Restricted Subsidiaries shall directly or indirectly create or become liable
with respect to any Guaranty Obligation, except:
(a) Existing Guaranty Obligations and any extensions, renewals,
refundings or replacements of Existing Guaranty Obligations; PROVIDED,
that any such extension, renewal, refunding or replacement is in an
aggregate principal amount not greater than the principal amount (plus
reasonable transaction costs) of the Existing Guaranty Obligations so
extended, renewed, refunded or replaced;
(b) Guaranty Obligations not in excess at any time of $10,000,000
in aggregate principal amount; but only to the extent that the sum, at any
time, of Guaranty Obligations incurred pursuant to this clause (b) of
Section 8.2 and unsecured Debt incurred pursuant to clause (f) of Section
8.1 does not exceed $10,000,000 in aggregate principal amount;
(c) unsecured Guaranty Obligations of the Company in respect of
Debt incurred by Unrestricted Subsidiaries not in excess at any time of
$20,000,000 in aggregate principal amount; and
(d) Guaranty Obligations incurred by any Restricted Subsidiary in
respect of Debt of the Company or any other Restricted Subsidiary
permitted under this Agreement, and Guaranty Obligations incurred by the
Company in respect of Debt of any Restricted Subsidiary permitted under
this Agreement.
SECTION 8.3. SECURED DEBT. None of the Company or any of the Restricted
Subsidiaries shall directly or indirectly create, incur or assume any Lien on or
with respect to any of their respective Property or assets for the purpose of
securing payment or other obligations arising in connection with any Debt,
except:
(a) Liens securing Existing Debt and future Liens securing any
extensions, renewals, refundings or replacements of Existing Debt to the
extent permitted under Section 8.1(a), but only if such future Lien
attaches to the same Property and secures only such permitted extensions,
renewals, refundings and replacements;
(b) without duplication of clause (a) above, Liens at any time
created securing the Revolving Credit Obligations to the extent such
Revolving Credit Obligations are permitted to be incurred pursuant to
Section 8.1(d) or 8.1(e); and
(c) Liens securing Debt (including, without limitation, Capital
Lease and purchase money obligations) incurred by the Company and the
Restricted Subsidiaries to finance Capital Expenditures permitted under
Section 9.4 of this Agreement, PROVIDED, that the aggregate principal
amount of Debt secured by such Liens incurred in each of Fiscal Year 1995,
1996,
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1997 and 1998 shall not exceed $7,050,000, $7,125,000, $7,500,000 and
$7,500,000, respectively; and PROVIDED, FURTHER, that if the maximum
amount of permitted secured Debt indicated under the first PROVISO of
this clause (c) for any Fiscal Year exceeds the amount of secured Debt
incurred by the Company and the Restricted Subsidiaries to finance Capital
Expenditures in such Fiscal Year, then secured Debt incurred by the
Company and the Restricted Subsidiaries to finance Capital Expenditures
for the succeeding Fiscal Year may exceed the maximum set forth in the
first proviso of this clause (c) by the lesser of (i) $2,250,000 and (ii)
the amount of such excess of permitted secured Debt for Capital
Expenditures from the immediately preceding Fiscal Year (such excess
amount being available only for use in such succeeding Fiscal Year and
being treated as the last amount spent in such succeeding Fiscal Year).
SECTION 8.4. TRANSACTIONS WITH AFFILIATES AND EXISTING JOINT VENTURES; DIC
INVESTMENTS. The Company shall not, and shall not permit any of its Restricted
Subsidiaries, except as otherwise expressly contemplated in the Disclosure
Statement or as expressly permitted herein, to enter into any transaction with
or make any payment to any Affiliate of the Company (other than the Company and
the Restricted Subsidiaries) or any Existing Joint Venture; except in each case
for transactions or payments (A) in the ordinary course of business, (B) either
on a basis no less favorable to the Company or such Restricted Subsidiary as
would be obtained in a comparable arm's length transaction with a Person not an
Affiliate or related entity, and (C) investments in Unrestricted Subsidiaries
and Existing Joint Ventures (other than DIC). Notwithstanding the other
provisions of this Agreement, the Company shall not invest funds in DIC,
directly or through Hexcel Technologies, in excess of $3,250,000 in Fiscal Year
1995, $2,250,000 in Fiscal Year 1996 and $4,750,000 in Fiscal Year 1997, less
any payments made by the Company to Dainippon Ink & Chemicals, Inc. permitted
pursuant to Section 9.05(vii) of the Revolving Credit Agreement; PROVIDED,
HOWEVER, that if the maximum permitted investment in DIC for any Fiscal Year
exceeds the amount actually invested, directly and indirectly, then such
investments made by the Company directly or through Hexcel Technologies for the
immediately succeeding Fiscal Year may exceed the maximum amount set forth above
with respect to such succeeding Fiscal Year by the amount of such excess from
the immediately preceding Fiscal Year (such excess being treated as the last
amount invested in such succeeding Fiscal Year) but in no event shall the amount
of such investments exceed $9,750,000 in the aggregate at any time; and
PROVIDED, FURTHER, that no cash investment may be made by the Company in
Hexcel Technologies, Inc. solely for the purpose of making investments in or for
the benefit of DIC so long as any Event of Default has occurred and is
continuing.
SECTION 8.5. RESTRICTION ON FUNDAMENTAL CHANGES. The Company shall not
enter into any merger or consolidation, or liquidate, wind-up or dissolve (or
suffer any liquidation or dissolution), except for any merger or consolidation
involving the Company in which the Company is the surviving entity and any
transaction pursuant to which the Capital Stock of the Company would be held by
an intervening holding company; PROVIDED, HOWEVER, that after giving effect to
any merger or consolidation, except any merger or consolidation of any wholly
owned Restricted Subsidiary into the Company, no Potential Default arising out
of the covenants and conditions of Article 8 or Article 9 hereof or Event of
Default shall have
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occurred or be continuing The Company shall not sell all or substantially all
of its respective assets to any other Person. None of the Company or any of its
Restricted Subsidiaries shall engage in any business (pursuant to an Existing
Joint Venture or otherwise) other than the businesses engaged in by the Company,
such Restricted Subsidiaries or such Existing Joint Ventures on the date hereof
and any business or activities which are substantially similar, related or
incidental thereto if such action would, in the reasonable judgment of the
Company at the time of such action, result in a Material Adverse Effect.
SECTION 8.6. PREPAYMENTS. Neither the Company nor any of the Restricted
Subsidiaries shall voluntarily prepay, redeem, purchase, repurchase, defease or
retire any Debt of the Company or any Restricted Subsidiary which matures after
December 31, 1998, other than the Revolving Credit Obligations, the Hexcel
Bonds, the Hexcel Obligations and any installment (whether principal or
interest) of Debt of the Company or any Restricted Subsidiary which installment
is scheduled for payment prior to December 31, 1998.
SECTION 8.7. CERTAIN AMENDMENTS AND APPOINTMENTS. Neither the Company
nor any of the Restricted Subsidiaries shall amend, supplement or otherwise
modify the terms of any Related Documents. The Company shall not appoint or
consent to the appointment of any successor Trustee, Agent or Placement Agent
without the prior written consent of the Bank.
SECTION 8.8. ACCOUNTING CHANGES. The Company shall not make, nor permit
any of its Subsidiaries to make, any material change in accounting treatment and
reporting practices or tax reporting treatment, except as required by GAAP or
law and disclosed to the Bank or as permitted by this Agreement.
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ARTICLE 9.
FINANCIAL COVENANTS
Unless the Bank shall otherwise consent in writing, until the later of the
Expiration Date of each Letter of Credit and the payment in full of all amounts
due and owing or payable to the Bank under this Agreement, the Company shall
comply, and shall cause compliance, with each of the following covenants:
SECTION 9.1. MINIMUM NET WORTH. The Net Worth of the Company and the
Restricted Subsidiaries at all times during any period from the last day of the
fiscal quarter preceding each fiscal quarter in each Fiscal Year set forth below
to the day preceding the last day of such fiscal quarter set forth below shall
not be less than the minimum amount set forth opposite such fiscal quarter:
Fiscal Quarter Minimum Amount
-------------- --------------
Second fiscal quarter of 1995 28,500,000
Third fiscal quarter of 1995 29,500,000
Fourth fiscal quarter of 1995 30,500,000
First fiscal quarter of 1996 31,500,000
Second fiscal quarter of 1996 33,000,000
Third fiscal quarter of 1996 35,000,000
Fourth fiscal quarter of 1996 37,000,000
First fiscal quarter of 1997 40,000,000
Second fiscal quarter of 1997 43,000,000
Third fiscal quarter of 1997 45,000,000
Fourth fiscal quarter of 1997 47,000,000
First fiscal quarter of 1998 50,000,000
Second fiscal quarter of 1998 53,000,000
Third fiscal quarter of 1998 56,000,000
Fourth fiscal quarter of 1998 59,000,000
SECTION 9.2. MINIMUM FIXED CHARGE COVERAGE RATIO. The Fixed Charge
Coverage Ratio of the Company and the Restricted Subsidiaries on a combined
basis, as determined as of the last day of each fiscal quarter of the Company
set forth below for the four fiscal quarter period ending on such date (or if
the period from January 1, 1995, to such last day is less than four full fiscal
quarters, such shorter period), shall not be less than the minimum ratio set
forth opposite such fiscal quarter:
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Fiscal Quarter Minimum Ratio
-------------- -------------
Third fiscal quarter of 1995 0.10 to 1
Fourth fiscal quarter of 1995 0.35 to 1
First fiscal quarter of 1996 0.50 to 1
Second fiscal quarter of 1996 0.60 to 1
Third fiscal quarter of 1996 0.60 to 1
Fourth fiscal quarter of 1996 0.70 to 1
First fiscal quarter of 1997 0.70 to 1
Second fiscal quarter of 1997 0.75 to 1
Third fiscal quarter of 1997 0.80 to 1
Fourth fiscal quarter of 1997 0.80 to 1
First fiscal quarter of 1998 0.85 to 1
Second fiscal quarter of 1998 0.90 to 1
Third fiscal quarter of 1998 0.95 to 1
Fourth fiscal quarter of 1998 1.00 to 1
SECTION 9.3. MAXIMUM LEVERAGE RATIO. The Leverage Ratio of the Company
and its Restricted Subsidiaries on a combined basis, as determined as of the
last day of each fiscal quarter, shall not be greater than the maximum amount
set forth opposite such fiscal quarter:
Fiscal Quarter Maximum Ratio
-------------- -------------
Last day of:
First fiscal quarter of 1995 3.40 to 1
Second fiscal quarter of 1995 3.20 to 1
Third fiscal quarter of 1995 3.10 to 1
Fourth fiscal quarter of 1995 3.00 to 1
First fiscal quarter of 1996 2.90 to 1
Second fiscal quarter of 1996 2.80 to 1
Third fiscal quarter of 1996 2.70 to 1
Fourth fiscal quarter of 1996 2.50 to 1
First fiscal quarter of 1997 2.40 to 1
Second fiscal quarter of 1997 2.30 to 1
Third fiscal quarter of 1997 2.20 to 1
Fourth fiscal quarter of 1997 2.10 to 1
First fiscal quarter of 1998 2.00 to 1
Second fiscal quarter of 1998 2.00 to 1
Third fiscal quarter of 1998 2.00 to 1
Fourth fiscal quarter of 1998 2.00 to 1
SECTION 9.4. MAXIMUM CAPITAL EXPENDITURES. Capital Expenditures made or
incurred by the Company and the Restricted Subsidiaries on a combined basis
during each Fiscal Year (or portion thereof) set forth below shall not exceed in
the aggregate the amount set forth opposite such Fiscal Year:
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Fiscal Year Maximum Amount
----------- --------------
Effective Date through the end of
Fiscal Year 1995 $ 9,400,000
Fiscal Year 1996 9,500,000
Fiscal Year 1997 10,000,000
Fiscal Year 1998 10,000,000
PROVIDED, HOWEVER, if the maximum amount set forth above opposite any Fiscal
Year exceeds the amount of Capital Expenditures made or incurred by the Company
and the Restricted Subsidiaries on a combined basis for such Fiscal Year, then
Capital Expenditures made or incurred by the Company and the Restricted
Subsidiaries on a combined basis for the succeeding Fiscal Year may exceed the
maximum amount set forth above opposite such succeeding Fiscal Year by the
lesser of (i) $3,000,000 and (ii) the amount of such excess from the immediately
preceding Fiscal Year (such excess amount being available only for use in such
succeeding Fiscal Year and being treated as the last amount spent in such
succeeding Fiscal Year).
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ARTICLE 10.
EVENTS OF DEFAULT
SECTION 10.1. EVENTS OF DEFAULT. The occurrence of any of the following
events shall be an "Event of Default" hereunder:
(a) the Company shall fail to reimburse the Bank for any Interest
Drawing when due and such failure continues for a period of 5 Business
Days after the due date thereof; or
(b) the Company shall fail to pay when due any amount payable
under any provision of this Agreement (other than reimbursement for
Interest Drawings and for expenses the payment of which is being contested
in good faith by the Company) or any Loan Agreement and such failure
continues for a period of 30 days after the due date thereof; or
(c) the Company shall fail to satisfy any Reduction Obligation
(as that term is defined in the Collateral Agreement) on any Payment Date
and such failure continues for a period of 30 days after such Payment
Date; or
(d) any representation or warranty made by the Company in this
Agreement, in any Related Document, in the Company certificate referred to
in Section 4.1(o), or in any financial statement furnished by the Company
pursuant to this Agreement or any Related Document shall prove to have
been untrue or incomplete when made, and such untrue or incomplete
representation or warranty is in respect of matters which would have a
Material Adverse Effect; or
(e) for any reason the Collateral Agreement, the Escrow Agreement
or any Standby Letter of Credit issued pursuant to the Collateral
Agreement shall not be in effect or the benefits thereof shall not be
available to the Bank in strict accordance with their respective terms and
such situation continues for a period of 60 days; or
(f) (i) the Company shall fail to perform or observe any
covenant, condition or agreement contained in Sections 7.1(a), 8.5 or 8.6
of this Agreement, or (ii) the Company shall fail to perform or observe
any covenant, condition or agreement contained in Sections 8.1, 8.2 or 8.3
of this Agreement and such failure continues for a period of 10 Business
Days; or
(g) the Company shall fail to perform or observe any covenant,
condition or agreement contained in this Agreement or in the Collateral
Agreement (other than any provision covered in clause (a), (b), (c) or (f)
of this Section 10.1), and such failure continues for a period of 60 days;
or
(h) an event of default shall exist and be continuing under any
Related Document which event of default may, in the reasonable judgment of
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the Bank, have a Material Adverse Effect, and such situation continues for
a period of 60 days; or
(i) any material provision of this Agreement or any Related
Document shall at any time for any reason cease to be valid and binding on
the Company, or shall be declared to be null and void, or the validity or
enforceability thereof shall be contested by the Company or any
Governmental Authority or the Company shall deny that it has any or
further liability or obligation under this Agreement or such Related
Document, and, in any such instance, such circumstance shall have a
Material Adverse Effect; or
(j) any "Event of Default", as that term is defined or used in
the Revolving Credit Agreement and in the other Loan Documents (as that
term is defined in the Revolving Credit Agreement), shall exist and be
continuing under the Revolving Credit Agreement or any other Loan Document
(as such term is defined in the Revolving Credit Agreement), and (A) the
Revolving Credit Lender has notified the Company that the Revolving Credit
Lender is terminating its commitment to lend under the Revolving Credit
Agreement, or (B) the Revolving Credit Lender has declared the principal
then outstanding under the Revolving Credit Agreement to be immediately
due and payable, or (C) such "Event of Default" has continued for a period
of 60 days and the Revolving Credit Lender has not provided to the Company
either (1) a written waiver with respect to such "Event of Default", or
(2) a written forbearance with respect to such "Event of Default" which
forbearance continues in effect, and, in the case of a written
forbearance, such Event of Default has continued for an additional 30 days
after such forbearance has lapsed or been revoked by the Revolving Credit
Lender; or
(k) (i) following the expiration of the Rights Offering, Mutual
Series fails to purchase those shares of Reorganized Hexcel (as that term
is used in the Disclosure Statement) which it has committed to purchase
under the Standby Purchase Commitment AND Mutual Series demands
repayment of its Advance, and such circumstance continues for a period of
60 days, or (ii) Mutual Series declares any amounts outstanding in
connection with the Advance to be immediately due and owing; or
(l) the Company or any Restricted Subsidiary shall fail to make
any payment in excess of $5,000,000 when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise) with
respect to any Debt (other than Debt existing under this Agreement, the
Revolving Credit Agreement or in connection with the Advance, which
obligations are elsewhere referred to in this Section 10.1) in excess of
$5,000,000; or if any Debt in excess of a principal amount of $5,000,000
shall be declared to be due and payable (by acceleration or otherwise) or
required to be prepaid, redeemed or otherwise repurchased by the Company
(other than a regularly scheduled required prepayment, mandatory
redemption or required repurchase) prior to the stated maturity thereof;
or
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(m) any judgment, writ, order or warrant of attachment or similar
process shall be rendered against the Company or any of its assets
involving in any single case or in the aggregate an amount in excess of
$5,000,000 (in excess of applicable insurance coverage) is entered and
remains undischarged, unvacated and unstayed for a period of 60 days; or
(n) the Company shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization or relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it
or its debts, or (B) seeking appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or the Company shall make a general assignment for the benefit of
its creditors; or
(o) there shall be commenced against the Company any case,
proceeding or other action of a nature referred to in clause (n) of this
Section 10.1 which (A) results in the entry of an order for relief or any
such adjudication or appointment and (B) remains undismissed, undischarged
or unbonded for a period of 60 days; or
(p) a Change of Control shall occur, and such situation continues
for a period of 90 days.
SECTION 10.2. REMEDIES UPON AN EVENT OF DEFAULT. If any Event of Default
shall have occurred and be continuing, the Bank may, in its sole discretion, but
shall not be obligated to:
(a) by notice to the Company, declare any or all Liquidity
Reimbursement Obligations to be immediately due and payable (PROVIDED,
HOWEVER, that, upon the occurrence of an Event of Default described in
clauses (n) or (o) of Section 10.1, all such amounts shall automatically
become and be immediately due and payable), without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly
waived by the Company;
(b) take such action with respect to Pledged Bonds pursuant to
any Pledge Agreement as may be permitted under that agreement or at law;
(c) take such action with respect to the Escrow Account (as that
term is defined in the Escrow Agreement) and other matters as may be
permitted under the Collateral Agreement or the Escrow Agreement;
(d) demand payment under the terms of any Standby Letter of
Credit to the extent permitted thereunder and under the Collateral
Agreement;
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(e) notify any or all of the Trustees (with a copy to the
appropriate Agent or Agents) of such Event of Default and instruct such
Trustee or Trustees to declare the appropriate Hexcel Bonds to be
immediately due and payable in accordance with the terms of the applicable
Indenture;
(f) by notice sent to the Company, require the immediate deposit
of cash collateral in an amount equal to the Stated Amount of any or all
Letters of Credit and all unpaid Liquidity Reimbursement Obligations (less
the available amount of any Standby Letter of Credit at the time of the
notice), and the same shall thereupon become and be immediately due and
payable by the Company; and
(g) exercise any rights and remedies available to the Bank at law
or in equity or under any other Related Document.
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ARTICLE 11.
MISCELLANEOUS
SECTION 11.1. AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement, nor consent to any departure by the Company therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Bank and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given. No amendment to this
Agreement affecting the Hexcel Obligations of the Company hereunder or the
rights of the Bank with respect to the Pledged Bonds or any additional
collateral and no amendment to any Letter of Credit (except for substitution of
a successor beneficiary of such Letter of Credit or extension of the term of
such Letter of Credit as provided in paragraph 2 of such Letter of Credit) shall
be entered into or approved by the parties unless the parties shall have
obtained an opinion of counsel experienced in bankruptcy matters to the effect
that such amendment will not subject the Trustee or holders of Hexcel Bonds in
connection with such Letter of Credit to claims that the proceeds of the Letter
of Credit may be recoverable from the Trustee or the holders of Hexcel Bonds as
voidable preferences of the Company under Section 547(b) of the Bankruptcy Code.
SECTION 11.2. NOTICES, ETC. All notices, requests and other
communications to any party hereunder shall be in writing (including bank wire,
telex, facsimile transmission or similar writing) and shall be given to such
party at its address, telecopy or telex number set forth below or such other
address or telecopy number as such party may hereafter specify for the purpose
of notice to the other party. Each such notice, request or other communication
shall be effective (a) if given by mail, 72 hours after such communication is
deposited in the mails with first class air mail postage prepaid, addressed as
aforesaid or (b) if given by any other means, when delivered at the address
specified in this Section.
Company: Hexcel Corporation
5794 West Las Positas Boulevard
Post Office Box 8181
Pleasanton, CA 94588
Attn: Treasurer
Telephone: (510) 734-9676
Telecopy: (510) 734-9285
Bank: Banque Nationale de Paris
San Francisco Agency
180 Montgomery Street, 3rd Floor
San Francisco, California 94104
Attn: Katherine Wolfe
Telephone: (415) 956-0707
Telecopy: (415) 296-8954
SECTION 11.3. WIRE TRANSFERS. Any and all payments made to or for the
account of the Bank hereunder or under any Hexcel Bond or Letter of Credit shall
be made by deposit of funds into the account of Banque Nationale de Paris, San
Francisco Agency, maintained
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with the San Francisco office of the Federal Reserve Bank (account no.
121027234) or into such other account with a bank or other financial institution
in the United States as the Bank shall indicate by written notice to the
Company, the appropriate Trustee and, if applicable, the appropriate Agent.
SECTION 11.4. NO WAIVER; REMEDIES. No failure on the part of the Bank to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 11.5. RIGHT OF SETOFF.
(a) Upon the occurrence and during the continuance of any Event of
Default, the Bank is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all indebtedness
at any time owing by the Bank to or for the credit or the account of the Company
against any and all of the obligations of the Company now or hereafter existing
under this Agreement.
(b) Anything in clause (a) of this Section to the contrary
notwithstanding but without modifying any other provision of this Agreement, the
Bank waives any such right referred to in clause (a), and any other right which
it may have at law or otherwise to set off and apply such deposits or
indebtedness referred to in clause (a), if, when and after there shall be a
Drawing under a Letter of Credit during the pendency of any proceeding by or
against the Company seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief, or composition of it or its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or seeking the entry of an
order for relief or the appointment of a receiver, trustee, or other similar
official for it or for any substantial part of its property; PROVIDED,
HOWEVER, that such waiver shall terminate and be of no force and effect either
(i) when and to the extent the exercise of such right would not
result in the Bank's being released, prevented or restrained from or
delayed in fulfilling the Bank's obligations under any Letter of Credit or
(ii) when and if the absence of such waiver would not result in
the lowering or suspension by the Rating Agency of its rating of the
Hexcel Bonds.
(c) The Bank agrees promptly to notify the Company after any such
setoff and application referred to in clause (a) of this Section; PROVIDED,
HOWEVER, that the failure to give such notice shall not affect the validity of
such setoff and application. Subject to the provisions of clause (b) of this
Section, the rights of the Bank under this Section are in addition to other
rights and remedies (including, without limitation, other rights of setoff or
banker's Lien) which the Bank may have.
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SECTION 11.6. INDEMNIFICATION. The Company hereby indemnifies and holds
the Bank harmless from and against any and all claims, damages, losses,
liabilities, costs or expenses which the Bank may incur or which may be claimed
against the Bank by any person or entity:
(a) by reason of any inaccuracy or alleged inaccuracy in any
material respect, or any untrue statement or alleged untrue statement of
any material fact, contained in any official statement, placement
memorandum, or any amendment or supplement thereto (including, without
limitation, supplements prepared by Hexcel or any other Person and
referencing the Reorganization Plan, this Agreement or other events
roughly contemporaneous with this Agreement), or by reason of the omission
or alleged omission to state therein a material fact necessary to make
such statements, in the light of the circumstances under which they were
made, not misleading; PROVIDED, HOWEVER, that, in the case of any action
or proceeding alleging an inaccuracy in a material respect, or an untrue
statement, with respect to information supplied by and describing the Bank
in any official statement, placement memorandum or any supplement or
amendment thereto (the "Bank Information")
(i) indemnification by the Company pursuant to clause (a) of
this Section shall be limited to the costs and expenses of the Bank
(including fees and expenses of the Bank's counsel) of defending
itself against such allegation,
(ii) if in any such action or proceeding it is finally
determined that the Bank Information contained an untrue statement
in a material respect, then the Company shall not be required to
indemnify the Bank pursuant to clause (a) of this Section for any
claims, damages, losses, liabilities, costs or expenses to the
extent caused by such inaccuracy or untrue statement, and
(iii) if any such action or proceeding shall be settled by
the Bank without there being a final determination to the effect
described in the preceding sub-clause (ii), then the Company shall
be required to indemnify the Bank pursuant to clause (a) of this
Section only if such action or proceeding is settled with the
Company's consent; and
(b) by reason of or in connection with the execution, delivery or
performance of the Hexcel Bonds, any Remarketing Agreement, or any
transactions contemplated thereby; and
(c) by reason of or in connection with the execution and delivery
or transfer of, or payment or failure to make payment under, any Letter of
Credit; PROVIDED, HOWEVER, that the Company shall not be required to
indemnify
42
<PAGE>
the Bank pursuant to clause (c) of this Section for any claims, damages,
losses, liabilities, costs or expenses to the extent caused by
(i) the Bank's willful misconduct or gross negligence in
determining whether documents presented under a Letter of Credit
comply with the terms of such Letter of Credit; or
(ii) the Bank's willful failure to make lawful payment under
a Letter of Credit after the presentation to it by the LOC
Beneficiary or a transferee beneficiary under such Letter of Credit
of a draft and certificate complying with the terms and conditions
of such Letter of Credit; and
(d) by reason of or in connection with any claims, damages,
losses, liabilities, costs or expenses asserted against the Bank by or on
behalf of J.P. Morgan Securities, Inc., relating in any way to Hexcel
Bonds, including, without limitation, claims asserted in connection with
that certain letter agreement between J.P. Morgan Securities, Inc., and
the Bank dated December 30, 1993.
Nothing in this Section is intended to limit the Company's obligations
contained in Articles 2 and 3. Without prejudice to the survival of any other
obligation of the Company hereunder, the indemnities and obligations of the
Company contained in this Section shall survive payment in full of amounts
payable pursuant to Articles 2 and 3 and the termination of the Letters of
Credit.
SECTION 11.7. LIABILITY OF THE BANK. The Company assumes, with respect to
the Bank, all risks of the acts or omissions of the LOC Beneficiary and any
other beneficiary or transferee of a Letter of Credit with respect to its use of
such Letter of Credit. Neither the Bank nor any of its officers or directors
shall be liable or responsible for:
(a) the use which may be made of a Letter of Credit or any acts
or omissions of the LOC Beneficiary or any other beneficiary or transferee
in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or of
any endorsement thereon, even if such documents should prove to be in any
or all respects invalid, insufficient, fraudulent or forged;
(c) payment by the Bank against presentation of documents which
do not comply with the terms of a Letter of Credit, including failure of
any documents to bear any reference or adequate reference to such Letter
of Credit; or
(d) any other circumstances whatsoever in making or failing to
make payment under any Letter of Credit;
43
<PAGE>
EXCEPT that the Company shall have a claim against the Bank, and the Bank
shall be liable to the Company, to the extent of any direct, as opposed to
consequential, damages suffered by the Company which the Company proves were
caused by
(i) the Bank's willful misconduct or gross negligence in
determining whether documents presented under a Letter of Credit
comply with the terms of such Letter of Credit or
(ii) the Bank's willful failure to make lawful payment under
a Letter of Credit after the presentation to it by the appropriate
LOC Beneficiary or any other beneficiary or transferee under such
Letter of Credit of a draft and certificate strictly complying with
the terms and conditions of such Letter of Credit.
In furtherance and not in limitation of the foregoing, the Bank may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.
SECTION 11.8. COSTS AND EXPENSES. The Company agrees to pay on demand all
costs and expenses in connection with the administration of this Agreement, the
Collateral Agreement, the Escrow Agreement, any Standby Letter of Credit, and
any other documents which may be delivered in connection therewith, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Bank with respect thereto and with respect to advising the Bank as to
its rights and responsibilities under this Agreement, the Collateral Agreement
and the Escrow Agreement. The Company shall also pay on demand all costs and
expenses (including counsel fees and expenses) in connection with: (i)
negotiation and delivery of the Escrow Agreement, (ii) amendments to this
Agreement, the Collateral Agreement, the Escrow Agreement and the Related
Documents, any Letter of Credit or Standby Letter of Credit, or consents to or
waivers of any provision thereof requested by the Company, (iii) enforcement of
this Agreement, the Collateral Agreement, the Escrow Agreement, any Standby
Letter of Credit, or such other documents as may be delivered in connection
therewith, or (iv) any action or proceeding relating to a court order,
injunction, or other process or decree restraining or seeking to restrain the
Bank from paying any amount under any Letter of Credit.
SECTION 11.9. CONFIRMATION OF LIEN. The Company hereby grants to the
Bank, to secure payment by the Company of sums due hereunder, a Lien on moneys
or instruments (at such times as they become payable to the Company under any
Indenture) which the Company has an interest in or title to, in each case
pursuant to one of the Indentures, now or hereafter held in the Bond Fund, Bond
Purchase Fund, Construction Fund (as such terms are defined in the respective
Indentures) or are otherwise held by the Trustee or Agent under any provision of
any Indenture, and in the right of the Company to receive any such moneys or
instruments. The Bank hereby confirms that such Lien is and shall be junior and
subordinate to the Lien on such moneys in favor of the holders of the Hexcel
Bonds and the related Trustee.
44
<PAGE>
SECTION 11.10. CHANGE IN ACCOUNTING PRINCIPLES. If any change in the
accounting principles used in the preparation of the most recent financial
statements referred to in Section 6.1 is hereafter required or permitted by the
rules, regulations, pronouncements and opinions of the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) and is adopted by the
Company with the agreement of its independent certified public accountants and
such change results in a change in the method of calculation of any of the
covenants, standards or terms found in Article 8 and Article 9, the parties
hereto agree to enter into negotiations in order to amend such provisions so as
to equitably reflect such changes with the desired result that the criteria for
evaluating compliance with such covenants, standards and terms by the Company
shall be the same after such change as if such change had not been made;
PROVIDED, HOWEVER, that no change in GAAP that would affect the method of
calculation of any of the covenants, standards or terms shall be given effect in
such calculations until such provisions are amended, in a manner satisfactory to
the Bank, to so reflect such change in accounting principles.
SECTION 11.11. BINDING EFFECT. This Agreement shall become effective when
it shall have been executed by the Company and the Bank and thereafter shall be
binding upon and inure to the benefit of the Company and the Bank and their
respective successors and assigns, except that the Company shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Bank. The Bank may assign, sell or participate out to
any financial institution all or any part of, or any interest (undivided or
divided) in, the Bank's rights and benefits under this Agreement, and to the
extent of that assignment, sale or participation such transferee shall have the
same rights and benefits against the Company hereunder as it would have had if
such transferee were the Bank issuing or paying under the Letters of Credit
hereunder.
SECTION 11.12. SEVERABILITY. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
SECTION 11.13. GOVERNING LAW AND JURISDICTION. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
California. Any legal action or proceeding with respect to this Agreement, the
Collateral Agreement, the Escrow Agreement or any other Related Document may be
brought in the courts of the State of California or of the United States of
America for the Northern District of California, and, by execution and delivery
of this Agreement, the Company and the Bank each accepts, for itself and in
respect of its property, generally and unconditionally, the jurisdiction of the
aforesaid courts. Nothing herein shall prevent either party from commencing
legal proceedings or from otherwise proceeding against the other party or its
property in any other jurisdiction.
SECTION 11.14. CURRENT RATING. The Bank makes no promise, representation
or warranty that its current long and short term debt ratings with any Rating
Agency shall continue until the Expiration Date.
45
<PAGE>
SECTION 11.15. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
Hexcel Corporation
/s/ William P. Meehan
_____________________________________
By: William P. Meehan
Title: V.P. and CFO
Banque Nationale de Paris, acting
through its San Francisco Agency
/s/ Katherine Wolf
_____________________________________
By: Katherine Wolf
Title: Vice President
/s/ William J. La Herran
_____________________________________
By: William J. La Herran
Title: Assistant Vice President
<PAGE>
EXHIBIT A
to
Restated and Amended Reimbursement Agreement
CERTAIN DEFINED TERMS
"ADVANCE" means the Advance in the principal amount of $41,000,000 to be
made to the Company by Mutual Series pursuant to the terms of the Standby
Purchase Commitment.
"AFFILIATE" of any specified Person means any other Person which directly
or indirectly through one or more intermediaries controls, or is controlled by,
or is under common control with, such specified Person; PROVIDED, HOWEVER,
that in no case shall any Agent, any Trustee, any Placement Agent, the Bank, or
American Body Armor and Equipment, Inc. be deemed to be an Affiliate of the
Company or any of its subsidiaries for purposes of this Agreement and,
PROVIDED, FURTHER, that Hexcel Foundation shall not be deemed an Affiliate of
the Company for so long as it maintains its status as a not-for-profit
corporation under California law. For the purposes of this definition,
"control", when used with respect to any specified Person means the power to
direct the management and policies of such Person directly or indirectly,
whether through the ownership of Voting Stock by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"AGENT", as used in connection with any Indenture or any Hexcel Bonds,
shall have the meaning given to that Indenture; PROVIDED, that in connection
with the Skagit Indenture the term "Agent" shall refer to the "Tender Agent" as
that term is used in the Skagit Indenture.
"AGREEMENT" means this Restated and Amended Letter of Credit and
Reimbursement Agreement, dated as of February 1, 1995, between the Company and
the Bank, as amended from time to time in accordance with its terms.
"ALLOWED PRIORITY TAX CLAIMS" are those federal, state or local tax claims
the payment of which has been deferred in accordance with the Reorganization
Plan, which claims are shown on Schedule 5.8 attached to this Agreement.
"ALTERNATE CREDIT FACILITY", as used in connection with any Indenture,
shall have the meaning assigned to such term in the applicable Indenture.
"AUTHORIZED OFFICER", as used in connection with the Company, means any of
the following: the President, the Chairman of the Board, the Chief Executive
Officer, any Executive or any Senior Vice President; PROVIDED, HOWEVER, that
in connection with any financial document or certificate, "Authorized Officer"
means the Controller, Chief Accounting Officer, Treasurer or Chief Financial
Officer. In connection with any Trustee or Agent, the term "Authorized Officer"
shall also include any Trust Officer assigned responsibility for the applicable
Hexcel Bonds.
Exhibit A
-1-
<PAGE>
"BANK" means Banque Nationale de Paris, a banking corporation organized
under the laws of the Republic of France, acting through its San Francisco
Agency, its successors and assigns.
"BANK INFORMATION" has the meaning assigned to that term in Section 11.6 of
the Agreement.
"BANKRUPTCY CODE" means the Federal Bankruptcy Code, 11 U.S.C. Sections 101
ET SEQ., as amended from time to time, and any other successor federal
legislation hereafter enacted serving substantially similar purposes.
"BANKRUPTCY COURT" means the United Stated Bankruptcy Court for the
Northern District of California, Oakland Division.
"BOND FACILITY" means any land, buildings, facilities, plants,
improvements, fixtures, equipment and related Property, in whole or in part,
which was acquired, financed, purchased, constructed or improved using proceeds
from the sale of any of the Hexcel Bonds.
"BUSINESS DAY" means a day of the year which is not a Saturday or Sunday or
a day on which banking institutions located in New York or California are
required or authorized to remain closed or on which any applicable Placement
Agent or the New York Stock Exchange is closed.
"CAPITAL EXPENDITURES" means, for any period, the aggregate of all
expenditures (whether payable in cash or other Property or accrued as a
liability (but without duplication)) during such period that, in conformity with
GAAP, are required to be included in or reflected by the Company's or any of the
Restricted Subsidiaries' fixed asset accounts as reflected in any of their
respective balance sheets; PROVIDED, HOWEVER, (i) Capital Expenditures shall
include (A) that portion of Capital Leases which is incurred and capitalized
during such period on the balance sheet of the Company and the Restricted
Subsidiaries and (B) expenditures for equipment which is purchased
simultaneously with the trade-in or disposal of existing equipment owned by the
Company or any of the Restricted Subsidiaries, to the extent the gross purchase
price of the purchased equipment exceeds the actual value attributed to such
equipment at the time of such trade-in or disposal; and (ii) Capital
Expenditures shall exclude, whether or not such a designation would be in
conformity with GAAP, expenditures made in connection with the replacement or
restoration of Property, to the extent reimbursed or financed from insurance or
condemnation proceeds.
"CAPITAL LEASE", as applied to any Person, means any lease of any Property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, is accounted for as a capital lease on the balance sheet of that
Person.
"CAPITAL STOCK", with respect to any Person, means any capital stock of
such Person, regardless of class or designation , and all warrants, options,
purchase rights, conversion or exchange rights, voting rights, calls or claims
of any character with respect thereto.
Exhibit A
-2-
<PAGE>
"CASE" means the case under Chapter 11 of the Bankruptcy Code commenced by
the Company in the Bankruptcy Court, styled In Re Hexcel Corporation, Case No.
93-48535 T (Chapter 11), in respect of which the Company has obtained the
Confirmation Order.
"CASH INTEREST EXPENSE" means, for any period on a combined basis for any
Person, all of the following as determined in conformity with GAAP, (i) total
interest expense, whether paid or accrued (without duplication) (including the
interest component of Capital Lease obligations for such period), including,
without limitation, all commissions, discounts and other fees and charges owed
with respect to letters of credit and net costs under interest rate contracts,
but excluding, however, (w) interest accrued prior to the Effective Date of the
Company reorganization (as such Effective Date is defined in the Reorganization
Plan) and paid on such Effective Date of the Company reorganization in respect
of Indebtedness repaid or extinguished on the Effective Date, (x) amortization
of discount, (y) interest paid in property other than cash and (z) any other
interest expense not payable in cash, MINUS (ii) any net payments received
during such period under interest rate contracts.
"CHANGE OF CONTROL" means a Person or entity or group of Persons or
entities (other than Mutual Series) acting in concert, shall, as a result of a
tender or exchange offer, open market purchases, privately negotiated purchases
or otherwise, have become the beneficial owner (within the meaning of Rule 13d.3
under the Securities Exchange Act of 1934, as amended) of securities of the
Company (or a holding company holding all of the Capital Stock of the Company)
representing more than the greater of (a) 50% of the Company's or such holding
company's Voting Stock and (b) the percentage of the Company's or such holding
company's Voting Stock beneficially owned by Mutual Series after giving effect
to such purchases.
"CODE" means the United States Internal Revenue Code of 1986 (or any
successor statute containing the United States income tax law), as amended, and
the rulings and regulations (including temporary and proposed regulations)
promulgated thereunder.
"COMPANY" means the Hexcel Corporation, a Delaware corporation, its
successors and assigns.
"CONFIRMATION ORDER" means that certain confirmation order entered by the
Bankruptcy Court on January 10, 1995, confirming the Reorganization Plan.
"CONSTITUENT DOCUMENTS" means, with respect to any entity, (i) the
articles/certificate of incorporation (or the equivalent organization documents)
of such entity, (ii) the by-laws (or the equivalent governing documents) of such
entity, and (iii) any document setting forth the designation, amount and/or
relative rights, limitations and preferences of any class or series of such
entity's Capital Stock.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision of
any Securities issued by that Person or any indenture, mortgage, deed of trust,
security agreement, pledge agreement, guaranty, contract, undertaking, agreement
or instrument to which that Person
Exhibit A
-3-
<PAGE>
is a party or by which it or any of its properties is bound, or to which it or
any of its properties is subject.
"CONTROLLED GROUP" means all members of a controlled group of corporations
and all trades or businesses (whether or not incorporated) under common control
which, together with the Company, are treated as a single employer under Section
414(B) or 414(C) of the Code.
"DEBT", as applied to any Person, means, at any time, the principal amount
of all Indebtedness (direct or indirect) of such Person, without limitation, but
without duplication (i) in respect of borrowed money, evidenced by debt
securities, debentures, acceptances, notes or other similar instruments,
including, without limitation, term obligations incurred in connection with the
purchase of fixed assets and equipment, and (ii) in respect of Capital Lease
obligations, together, in each case, with any accrued interest, fees and charges
relating thereto.
"DEBT SERVICE DRAWING" refers to Interest, Maturity, Mandatory Redemption,
Optional Redemption, and Acceleration Drawings, as each of those terms is
defined in the Letters of Credit.
"DEBT SERVICE REIMBURSEMENT OBLIGATION" means the reimbursement obligation
of the Company to the Bank arising out of each Debt Service Drawing and, to the
extent provided in the first paragraph of Section 3.2 of the Agreement, each
Liquidity Drawing.
"DIC" means the joint venture entered into between the Company and
Dainippon Ink & Chemicals, Inc. ("Dainippon"), pursuant to that certain Parent
Company Agreement dated as of April 17, 1990 under which the Company and
Dainippon caused Hexcel Technologies, Inc. and DIC Technologies, Inc.,
(wholly-owned subsidiaries of the Company and Dainippon, respectively) to enter
into that certain Participants Agreement dated as of September 14, 1990 pursuant
to which Hexcel Technologies, Inc. and DIC Technologies, Inc. formed Hexcel-DIC
Partnership ("HDP") and pursuant to which Hexcel Technologies, Inc. and DIC
Technologies Inc., caused HDP to form DIC-Hexcel, Ltd. as a wholly-owned
subsidiary of HDP.
"DISCLOSURE STATEMENT" means the written statement, dated November 7, 1994,
as amended, supplemented, or modified from time to time, describing the
Reorganization Plan (and the transactions and events contemplated thereby) that
is prepared and distributed in accordance with Sections 1125 and 1126(b) of the
Bankruptcy Code and Rule 3018 promulgated thereunder, as amended.
"DOLLARS" and "$" means the lawful currency of the United States of
America and, in relation to any payment under this Agreement, same day or
immediately available funds.
"DRAWING" means any Debt Service Drawing or any Liquidity Drawing.
Exhibit A
-4-
<PAGE>
"EBITDA" means, for any period on a combined basis for any Person, (i) the
sum of the amounts for such period for such Person of (A) Net Income, (B)
depreciation and amortization expense, (C) total interest expense (D) charges
for federal, state, local and foreign income taxes and (E) extraordinary losses
(including restructuring charges and bankruptcy reorganization charges in
connection with the Case and charges in connection with DIC) which have been
deducted in the determination of Net Income, MINUS (ii) the sum of (A)
extraordinary gains not already excluded from the determination of Net Income
(including, without limitation, gains in connection with the sale of Property
and gains based upon market valuations of Securities) and (B) interest and other
income, including without limitation, equity income from Unrestricted
Subsidiaries (or minus equity loss from Unrestricted Subsidiaries).
"EFFECTIVE DATE" means the date on which all of the conditions set forth in
Section 4.1 of this Agreement have been satisfied or waived in writing by the
Bank, which date shall not be later than February 28, 1995, unless expressly
extended in writing by the Bank.
"EMT SALE" means the sale by the Company of its Chandler, Arizona plant and
its EMT technology pursuant to the Asset Purchase Agreement dated as of November
3, 1994 by and between the Company and Northrop Grumman Corporation.
"ENVIRONMENTAL CLAIM" means any claim filed in the Hexcel bankruptcy
proceedings regarding Hazardous Substances and/or the violation or alleged
violation of Hazardous Substance Laws, whether made by any private person or
entity or Governmental Authority.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA AFFILIATE" means any (i) corporation which is a member of the same
controlled group of corporations (within the meaning of Section 414(b) of the
Code) as the Company, (ii) partnership or other trade or business (whether or
not incorporated) under common control (within the meaning of Section 414(c) of
the Code) with the Company, and (iii) member of the same affiliated service
group (within the meaning of section 414(m) of the Code) as the Company, any
corporation described in clause (i) above or any partnership or trade or
business described in clause (ii) above.
"ERISA PLAN" means at any time an employee pension plan which is covered by
Title IV of ERISA or subject to the minimum funding standards of Section 412 of
the Code and is either (i) maintained by the Company or any member of the
Controlled Group for the employees of the Company or any member of the
Controlled Group or (ii) maintained pursuant to a collective bargaining
agreement or any other arrangement under which more than one employer makes
contributions and under which the Company or any member of the Controlled Group
is then making or within the first five plan years has made such contributions.
Exhibit A
-5-
<PAGE>
"ESCROW AGREEMENT" means that certain Escrow Agreement to be entered into
among the Bank, the Company and an escrow agent in the form attached to the
Collateral Agreement as Exhibit A thereto, subject to such changes as shall be
acceptable to the Bank, as such agreement may be amended from time to time.
"EUROPEAN RESINS SALE" means the sale by the Company of its resins business
in France, Germany, Italy and Spain to an investor group sponsored by management
pursuant to the Stock Purchase Agreement dated as of December 27, 1994 by and
between the Company and Axson S.A.
"EVENT OF DEFAULT" has the meaning assigned to that term in Section 10.1 of
this Agreement.
"EXISTING DEBT" means all Indebtedness of the Company and its Restricted
Subsidiaries which is outstanding on the Effective Date.
"EXISTING GUARANTY OBLIGATIONS" means all Guaranty Obligations of the
Company and its Restricted Subsidiaries outstanding on the Effective Date.
"EXISTING JOINT VENTURE" means each of (i) Knytex, (ii) DIC and (iii) Fyfe.
"EXISTING LIENS" means all Liens on assets of the Company or any of the
Restricted Subsidiaries to secure Debt of the Company or any of the Restricted
Subsidiaries which are outstanding as of the Effective Date.
"EXISTING SUBORDINATED DEBT" means all Indebtedness of the Company and its
Restricted Subsidiaries as of the Effective Date which is (i) subordinate in
right of payment to (A) the Hexcel Obligations and (B) the Hexcel Lyon
Subordinated Note and (ii) in an amount no greater than $25,700,000.
"EXPIRATION DATE" means, for each Letter of Credit, the date on which such
Letter of Credit shall expire in accordance with its terms, subject to extension
as provided in paragraph 2 of such Letter of Credit.
"FINAL ORDER" shall have the meaning set forth in the Reorganization Plan.
"FISCAL YEAR" means the fiscal year of the Company, which currently is the
four fiscal quarter period ending on the closest Sunday to December 31 of each
calendar year.
"FIXED CHARGES" means, for any period for any Person, the sum of the
amounts for such period of (i) Cash Interest Expense of such Person, (ii) the
higher of scheduled or actual payments of principal on Indebtedness of such
Person, including, without limitation, the principal component of Capital Lease
obligations, the amount of Reduction Obligations, as that term is defined in the
Collateral Agreement and the amount of payments made to DIC,
Exhibit A
-6-
<PAGE>
but excluding Indebtedness repaid or extinguished on the Effective Date and
(iii) cash dividends paid by the Company.
"FIXED CHARGE COVERAGE RATIO" means, with respect to any period, the ratio
of (i) EBITDA of the Company and the Restricted Subsidiaries for such period,
MINUS Capital Expenditures paid by the Company and the Restricted Subsidiaries
during such period, MINUS current federal, state and local income taxes
actually accrued by the Company and the Restricted Subsidiaries during such
period, MINUS investments made by the Company and the Restricted Subsidiaries
in Unrestricted Subsidiaries, PLUS Net Cash Proceeds received after the
Effective Date (including, without limitation, Net Cash Proceeds received after
the Effective Date in respect of the EMT Sale, the Company's domestic resins
business and the Graham Texas Real Property) received during such period to the
extent not included in the calculation of EBITDA for such period to (ii) Fixed
Charges of the Company and the Restricted Subsidiaries for such period.
"FIXED RATE", as applied to any Hexcel Bonds, has the meaning assigned to
that term in the applicable Indenture.
"FYFE" means the joint venture entered into between the Company and Fyfe
Associates pursuant to an Agreement dated as of October 13, 1992 for the sale
and installation of high strength architectural wrap.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board, the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board or in such other statements by such other entity as may be in general use
by significant segments of the accounting profession as in effect on the date
hereof (unless otherwise specified pursuant to Section 11.10).
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal, state
or local government or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to such government or political subdivision.
"GUARANTY OBLIGATION" means any Contractual Obligation, contingent or
otherwise, of one Person with respect to any Debt of another, if the primary
purpose or intent thereof by the Person incurring the Guaranty Obligation is to
provide assurance to the obligee of such Debt of another that such Debt shall be
paid or discharged, or that any agreements relating thereto shall be complied
with, or that the holders thereof shall be protected (in whole or in part)
against loss in respect thereof.
"HAZARDOUS SUBSTANCE" means any: (a) substance, product, waste or other
material of any nature whatsoever which is or becomes listed, regulated, or
addressed pursuant to any or all of the following statutes and regulations, as
the same may be amended from time to time: (i) the Comprehensive Environmental
Response, Compensation and Liability Act,
Exhibit A
-7-
<PAGE>
42 U.S.C. Sections 9601 ET SEQ.; (ii) the Hazardous Materials Transportation
Act, 49 U.S.C. Sections 1801, ET SEQ.; (iii) the Resource Conservation and
Recovery Act, 42 U.S.C. Sections 6901, ET SEQ.; (iv) the Toxic Substances
Control Act, 15 U.S.C. Sections 2601, ET SEQ.; (v) the Clean Water Act, 33
U.S.C. Sections 1251, ET SEQ.; (vi) all other existing and future federal,
state and local laws, ordinances, rules, regulations, orders, requirements, and
decrees regulating, relating to, or imposing liability or standards of conduct
concerning any hazardous, toxic or dangerous waste, substance or material; (b)
any substance, product, waste or other material of any nature whatsoever which
may give rise to liability (i) under any of the statutes or regulations
described in part (a) above; (ii) under any statutory or common law theory,
including negligence, trespass, intentional tort, nuisance or strict liability;
or (iii) under any reported decisions of any state or federal court; (c)
petroleum, petroleum products and by-products, gasoline or crude oil, other than
petroleum and petroleum products contained within regularly operated motor
vehicles; and (d) asbestos or asbestos containing materials.
"HAZARDOUS SUBSTANCE CLAIMS AND LOSSES" means all claims, damages, losses,
liabilities, legal or administrative proceedings, suits, injuries, costs, Liens,
interest, fines, charges, penalties and expenses made or assessed against the
Company and which (a) may have a material adverse effect on the Company's
ability to perform its obligations under this Agreement, and (b) directly or
indirectly arise out of or relate to any or all of the following: (i) the
existence, presence, use, storage, generation, production, treatment, disposal,
or handling of any Hazardous Substance in, on, under, or about any Real Property
or any Surrounding Property; (ii) the release, discharge, or transport of any
Hazardous Substance onto or from any Real Property; (iii) the violation of any
Hazardous Substance Laws; (iv) any repair, cleanup, remediation, removal,
closure, or decontamination activity relating to any Hazardous Substance in, on,
under or about any Real Property or any Surrounding Property; or (v) any
personal injury, death, or property damage resulting from or relating to any or
all of the matters described in clauses (i) through (iv) above.
"HAZARDOUS SUBSTANCE LAWS" means all existing and future laws, ordinances,
rules, regulations, orders and requirements of all Governmental Authorities
(including the statutes and regulations identified in part (a) of the
definition of Hazardous Substance and all licenses, permits, plans and approvals
granted or issued under or pursuant to such statutes and regulations) relating
to any Hazardous Substance, including the use, storage, generation, production,
treatment, disposal, handling, release, discharge, transportation, repair,
cleanup, remediation, removal or decontamination of any Hazardous Substance.
"HEXCEL BONDS" means any bond issued in connection with any or all of the
following series of bonds:
(a) California Pollution Control Financing Authority Multi-Modal
Interchangeable Rate Pollution Control Revenue Refunding Bonds (Hexcel
Corporation Project), Series 1988;
Exhibit A
-8-
<PAGE>
(b) Industrial Development Authority of the City of Casa Grande
Multi-Modal Interchangeable Rate Industrial Development Revenue Refunding
Bonds (Hexcel Corporation Project), Series 1988;
(c) Guadalupe-Blanco River Authority Industrial Development
Corporation Multi-Modal Interchangeable Rate Industrial Development Revenue
Refunding Bonds, Series 1988 (Hexcel Corporation Project);
(d) Industrial Development Authority of the County of Los Angeles
Multi-Modal Interchangeable Rate Industrial Development Revenue Refunding
Bonds (Hexcel Corporation Project), Series 1988;
(e) City of Lancaster Multi-Modal Interchangeable Rate Industrial
Development Revenue Refunding Bonds (Hexcel Corporation Project), Series
1988;
(f) Young County #1 Industrial Development Corporation Multi-Modal
Interchangeable Rate Industrial Development Revenue Refunding Bonds (Hexcel
Corporation Project), Series 1988; and
(g) Port of Skagit Industrial Development Corporation Variable Rate
Demand Revenue Bonds, 1989 (Hexcel Corporation Project).
"HEXCEL LYON" means Hexcel S.A., a French corporation, the Voting Stock of
which is substantially owned by the Company.
"HEXCEL LYON SUBORDINATED NOTE" means the subordinated promissory note in
the principal amount of $2,613,000, dated the Effective Date, payable by the
Company to Hexcel Lyon and subordinated as to the payment of the Revolving
Credit Obligations to be delivered to Hexcel Lyon pursuant to Section 8.19 of
the Revolving Credit Agreement.
"HEXCEL OBLIGATIONS" means any obligation of the Company arising out of or
in connection with this Agreement, the Collateral Agreement, the Escrow
Agreement or any other Related Agreement, including, without limitation,
contingent and unliquidated obligations arising out of the obligation of the
Company to reimburse the Bank for possible future payments under one or more of
the Letters of Credit.
"INDEBTEDNESS", as applied to any Person, means, at any time, any
obligation for the payment of money which is a Contractual Obligation, and shall
include, without limitation but without duplication, (a) all indebtedness,
obligations or other liabilities of such Person (i) for borrowed money or
evidenced by debt securities, debentures, acceptances, notes or other similar
instruments, and any accrued interest, fees and charges relating thereto, (ii)
under profit payment agreements or in respect of obligations to redeem,
repurchase or exchange any Securities of such Person or to pay cash dividends in
respect of any stock, (iii) with respect to letters of credit issued for such
Person's account, (iv) to pay the deferred purchase price of property or
services, except accounts payable and accrued expenses arising
Exhibit A
-9-
<PAGE>
in the ordinary course of business, (v) in respect of Capital Leases, (vi) which
are Guaranty Obligations, (vii) upon which interest charges are customarily paid
(including zero coupon instruments) or (viii) under conditional sale or other
title retention agreements relating to property purchased by such Person; (b)
all indebtedness, obligations or other liabilities of such Person or others
secured by a Lien on any property of such Person, whether or not such
indebtedness, obligations or liabilities are assumed by such Person, all as of
such time; (c) all indebtedness, obligations or other liabilities of such Person
in respect of interest rate contracts and currency agreements, net of
liabilities owed to such Person by the counterparts thereon; and (d) all
contingent Contractual Obligations with respect to any of the foregoing.
"INDENTURE" or "INDENTURES" refers to the following indentures of trust:
(a) that certain Indenture of Trust, dated as of April 1, 1988,
between the Company and the Bank of California, with respect to $750,000
California Pollution Control Financing Authority Multi-Modal Interchangeable
Rate Pollution Control Revenue Refunding Bonds (Hexcel Corporation Project),
Series 1988, including the Standard Terms incorporated therein, as amended
from to time in accordance with the terms thereof;
(b) that certain Indenture of Trust, dated as of March 1, 1988,
between the Company and the Bank of California, with respect to $2,050,000
Industrial Development Authority of the City of Casa Grande Multi-Modal
Interchangeable Rate Industrial Development Revenue Refunding Bonds (Hexcel
Corporation Project), Series 1988, including the Standard Terms incorporated
therein, as amended from time to time in accordance with the terms thereof;
(c) that certain Indenture of Trust, dated as of April 1, 1988,
between the Company and the Bank of California, with respect to $3,150,000
Guadalupe-Blanco River Authority Industrial Development Corporation
Multi-Modal Interchangeable Rate Industrial Development Revenue Refunding
Bonds, Series 1988 (Hexcel Corporation Project), including the Standard Terms
incorporated therein, as amended from time to time in accordance with the
terms thereof;
(d) that certain Indenture of Trust, dated as of March 1, 1988,
between the Company and the Bank of California, with respect to $6,200,000
Industrial Development Authority of the County of Los Angeles Multi-Modal
Interchangeable Rate Industrial Development Revenue Refunding Bonds (Hexcel
Corporation Project), Series 1988, including the Standard Terms incorporated
therein, as amended from time to time in accordance with the terms thereof;
(e) that certain Indenture of Trust, dated as of April 1, 1988,
between the Company and the Bank of California, with respect to $1,000,000
City of Lancaster Multi-Modal Interchangeable Rate Industrial Development
Revenue Refunding Bonds (Hexcel Corporation Project), Series 1988, including
the Standard Terms
Exhibit A
-10-
<PAGE>
incorporated therein, as amended from time to time in accordance with the
terms thereof;
(f) that certain Indenture of Trust, dated as of April 1, 1988,
between the Company and the Bank of California, with respect to $800,000
Young County #1 Industrial Development Corporation Multi-Modal
Interchangeable Rate Industrial Development Revenue Refunding Bonds (Hexcel
Corporation Project), Series 1988, including the Standard Terms incorporated
therein, as amended from time to time in accordance with the terms thereof;
and
(g) the Skagit Indenture.
"INDENTURE/STANDARD TERMS" means the Standard Terms and Conditions of
Trust, with respect to each of the Indentures (except the Skagit Indenture),
dated the date of the applicable Indenture, incorporated by reference into
such Indenture, as amended from time to time in accordance with the terms of
such Indenture.
"INITIAL PROJECTIONS" means the financial projections dated as of February
2, 1995, prepared by the management of the Company with respect to the Company
and the Restricted Subsidiaries on a combined basis and on a quarterly basis for
Fiscal Years 1995 through 1997 and supporting materials delivered in connection
therewith, delivered by the Company to the Bank on or prior to the Effective
Date.
"INTEREST COMPONENT", with respect to each Letter of Credit, has the
meaning given to such term in such Letter of Credit.
"INTEREST DRAWING", with respect to each Letter of Credit, has the meaning
given to such term in such Letter of Credit.
"KNYTEX" means the joint venture entered into between the Company and
Owens-Corning Fiberglas Corporation pursuant to a Limited Liability Company
Agreement dated as of June 14, 1993 for the production and marketing of
stitchbonded fabrics.
"LETTERS OF CREDIT" means those Letters of Credit issued by the Bank in
support of Hexcel Bonds, each as amended from time to time in accordance with
its terms. The Letters of Credit are described in Schedule 2.1 attached to this
Agreement.
"LEVERAGE RATIO" means, for any period, the ratio of Debt as of the end of
such period to Net Worth for such Period.
"LIEN" means any mortgage, deed of trust, pledge, security interest,
encumbrance or lien of any kind or nature whatsoever in respect of any property
of a Person intended to assure payment of any Debt, but does not include the
interest of a lessor under an operating lease.
Exhibit A
-11-
<PAGE>
"LIQUIDITY DRAWING" has the meaning assigned to that term in paragraph 3 of
the Letters of Credit.
"LIQUIDITY RATE" means the per annum rate of interest equal from time to
time to the Prime Rate plus 2 percent. The Liquidity Rate shall change on each
date that the Prime Rate changes.
"LIQUIDITY REIMBURSEMENT OBLIGATION" means the reimbursement obligation of
the Company to the Bank resulting from each Liquidity Drawing, except to the
extent that a Liquidity Drawing shall result in a Debt Service Reimbursement
Obligation as provided in the first paragraph of Section 3.2 of the Agreement.
"LOAN AGREEMENT" means each Loan Agreement as defined in each of the
Indentures.
"LOC BENEFICIARY" means (i) with respect to each Letter of Credit other
than the Letter of Credit issued in connection with the Skagit Indenture, either
of the Trustee or the Agent, as joint beneficiaries of the Letter of Credit, and
their respective transferees as provided in the Letter of Credit, and (ii) with
respect to the Letter of Credit issued in connection with the Skagit Indenture,
the Trustee.
"LOC COMMISSION" has the meaning assigned to that term in Subsection 2.3.1
of this Agreement.
"LOC COMMISSION PERIOD" shall be each of the calendar quarters beginning on
the first day of each January 1, April 1, July 1, and October 1 between the
Effective Date and the date on which the final outstanding Letter of Credit
expires or is terminated in accordance with its terms; PROVIDED, HOWEVER, that
the first LOC Commission Period shall begin on the earlier of the Effective Date
and February 1, 1995, and the last LOC Commission Period shall end on the date
on which the final outstanding Letter of Credit expires or is terminated in
accordance with its terms.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a) the
operations or financial condition of the Company alone or the Company and the
Subsidiaries on a combined basis, or (b) the ability of the Company to pay or
perform the Hexcel Obligations in accordance with the terms of this Agreement
and the other Related Documents.
"MOODY'S" means Moody's Investors Service, Inc., a Delaware corporation,
its successors and assigns and, if such corporation shall be dissolved or
liquidated or no longer perform the functions of a securities rating agency,
"Moody's" shall be deemed to refer to any other nationally recognized securities
rating agency designated by the Company with the approval of the Bank.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA which is, or within the immediately preceding three (3)
years was, contributed to by either the Company or any ERISA Affiliate.
Exhibit A
-12-
<PAGE>
"MUTUAL SERIES" means Mutual Series Fund Inc., its successors and assigns.
"NET CASH PROCEEDS" means, with respect to any sale or disposition,
including refinancing, of any asset by the Company, the aggregate consideration,
including insurance proceeds or condemnation awards, received by the Company
from such sale or disposition in cash or cash equivalents, but excluding any
payments or proceeds received by or for the account of the Company with respect
to the YIP Transaction to the extent required to be remitted to First Trust of
California, as trustee or escrow agent for the Industrial Development Authority
of the County of Los Angeles, LESS the sum of (i) the amount of liabilities
for income taxes payable by the Company in connection with such sale or
disposition (after taking into account available deductions, credit,
carry-backs, carry-forwards or similar items) and in no event based on a tax
rate higher than the standard federal corporate tax rate then in effect, (ii)
the reasonable amount of fees and commissions payable to Persons other than the
Company or any Affiliate of the Company, legal, title and recording or sales tax
expenses and other costs and expenses reasonably related to such sale or
disposition that are to be paid by the Company, and (iii) the amount of any
Indebtedness secured by a Lien on the asset sold and required to be repaid or
prepaid by the Company as a result of such sale or disposition.
"NET INCOME" means, for any period for any Person, the net income (or loss)
after taxes for such period taken as a single accounting period, determined in
conformity with GAAP.
"NET WORTH" means, with respect to any Person, at any time, (i) total
consolidated assets of such Person PLUS (ii) any negative (or MINUS any
positive) cumulative foreign currency translation adjustments applicable to such
Person in accordance with GAAP MINUS (iii) total consolidated liabilities of
such Person PLUS any negative (or minus any positive) in minimum pension
obligation adjustments included in the shareholders' equity account of such
Person in accordance with GAAP. Assets and liabilities shall be determined in
accordance with GAAP.
"NEW PLACEMENT AGENT AGREEMENTS" means the following documents:
(a) that certain Remarketing and Interest Services Agreement, dated
as of January 21, 1995, between the Company and Bear, Stearns & Co. Inc. as
Placement Agent, with respect to $750,000 California Pollution Control
Financing Authority Multi-Modal Interchangeable Rate Pollution Control
Revenue Refunding Bonds (Hexcel Corporation Project), Series 1988;
(b) that certain Remarketing and Interest Services Agreement, dated
as of January 21, 1995, between the Company and Bear, Stearns & Co. Inc. as
Placement Agent, with respect to $2,050,000 Industrial Development Authority
of the City of Casa Grande Multi-Modal Interchangeable Rate Industrial
Development Revenue Refunding Bonds (Hexcel Corporation Project), Series
1988;
Exhibit A
-13-
<PAGE>
(c) that certain Remarketing and Interest Services Agreement, dated
as of January 21, 1995, between the Company and Bear, Stearns & Co. Inc. as
Placement Agent, with respect to $3,150,000 Guadalupe-Blanco River Authority
Industrial Development Corporation Multi-Modal Interchangeable Rate
Industrial Development Revenue Refunding Bonds, Series 1988 (Hexcel
Corporation Project);
(d) that certain Remarketing and Interest Services Agreement, dated
as of January 21, 1995, between the Company and Bear, Stearns & Co. Inc. as
Placement Agent, with respect to $6,200,000 Industrial Development Authority
of the County of Los Angeles Multi-Modal Interchangeable Rate Industrial
Development Revenue Refunding Bonds (Hexcel Corporation Project), Series
1988;
(e) that certain Remarketing and Interest Services Agreement, dated
as of January 21, 1995, between the Company and Bear, Stearns & Co. Inc. as
Placement Agent, with respect to $1,000,000 City of Lancaster Multi-Modal
Interchangeable Rate Industrial Development Revenue Refunding Bonds (Hexcel
Corporation Project), Series 1988;
(f) that certain Remarketing and Interest Services Agreement, dated
as of January 21, 1995, between the Company and Bear, Stearns & Co. Inc. as
Placement Agent, with respect to $800,000 Young County #1 Industrial
Development Corporation Multi-Modal Interchangeable Rate Industrial
Development Revenue Refunding Bonds (Hexcel Corporation Project), Series
1988.
"OFFICER'S CERTIFICATE" means a certificate executed on behalf of the
Company by an Authorized Officer of the Company, unless this Agreement requires
that the certificate be executed by a particular officer.
"OPTIONAL REDEMPTION DRAWING" has the meaning given to that term in
paragraph 3 of each of the Letters of Credit.
"OVERDUE RATE" means the per annum rate of interest equal from time to time
to the Prime Rate plus 4 percent. The Overdue Rate shall change on each date
that the Prime Rate changes.
"PAYMENT DATE" means (a) the Effective Date and (b) each January 1, April
1, July 1, and October 1, between the Effective Date and the later of the date
on which the last outstanding Letter of Credit expires or is terminated in
accordance with its terms or the date on which the principal portion of the
final Liquidity Reimbursement Obligation together with interest accrued thereon
is paid.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
Exhibit A
-14-
<PAGE>
"PERMITS" means any permit, approval, authorization license, variance, or
permission required from a Governmental Authority under an applicable
Requirement of Law.
"PERSON" means an individual, partnership, corporation, business trust,
joint stock company, trust, unincorporated association, joint venture,
Governmental Authority or other entity of whatever nature.
"PLACEMENT AGENT" means (a) U.S. Bank of Washington, National Association,
with respect to the Hexcel Bonds issued pursuant to the Skagit Indenture, and
any successor Placement Agent appointed pursuant to the terms of the Skagit
Indenture and acceptable to the Bank, and (b) Bear, Stearns & Co. Inc. with
respect to the Hexcel Bonds issued pursuant to the Indentures other than the
Skagit Indenture, and any successor Placement Agent or Placement Agents
appointed pursuant to the terms of the applicable Indenture and acceptable to
the Bank.
"PLACEMENT AGREEMENTS" means the New Placement Agreements and that certain
Remarketing Agreement dated as of December 1, 1989, by and among the Company,
the Port of Skagit County Industrial Development Corporation and Security
Pacific Securities, Inc.
"PLAN" means an employee benefit plan defined in Section 3(2) of ERISA in
respect of which the Company or any ERISA Affiliate is, or within the
immediately preceding three years was, an "employer" as defined in Section 3(5)
of ERISA.
"PLEDGE AGREEMENT" or "PLEDGE AGREEMENTS" means any or all of the
following documents:
(a) that certain Pledge and Security Agreement, dated as of April 1,
1988, by and among the Company, the Bank, and Morgan Guaranty Trust Company
of New York relating to $750,000 California Pollution Control Financing
Authority Multi-Modal Interchangeable Rate Pollution Control Revenue
Refunding Bonds (Hexcel Corporation Project), Series 1988;
(b) that certain Pledge and Security Agreement, dated as of March 1,
1988, by and among the Company, the Bank, and Morgan Guaranty Trust Company
of New York relating to $2,050,000 Industrial Development Authority of the
City of Casa Grande Multi-Modal Interchangeable Rate Industrial Development
Revenue Refunding Bonds (Hexcel Corporation Project), Series 1988;
(c) that certain Pledge and Security Agreement, dated as of April 1,
1988, by and among the Company, the Bank, and Morgan Guaranty Trust Company
of New York relating to $3,150,000 Guadalupe-Blanco River Authority
Industrial Development Corporation Multi-Modal Interchangeable Rate
Industrial Development Revenue Refunding Bonds, Series 1988 (Hexcel
Corporation Project);
Exhibit A
-15-
<PAGE>
(d) that certain Pledge and Security Agreement, dated as of March 1,
1988, by and among the Company, the Bank, and Morgan Guaranty Trust Company
of New York relating to $6,200,000 Industrial Development Authority of the
County of Los Angeles Multi-Modal Interchangeable Rate Industrial Development
Revenue Refunding Bonds (Hexcel Corporation Project), Series 1988;
(e) that certain Pledge and Security Agreement, dated as of April 1,
1988, by and among the Company, the Bank, and Morgan Guaranty Trust Company
of New York relating to $1,000,000 City of Lancaster Multi-Modal
Interchangeable Rate Industrial Development Revenue Refunding Bonds (Hexcel
Corporation Project);
(f) that certain Pledge and Security Agreement, dated as of April 1,
1988, by and among the Company, the Bank, and Morgan Guaranty Trust Company
of New York relating to $800,000 Young County #1 Industrial Development
Corporation Multi-Modal Interchangeable Rate Industrial Development Revenue
Refunding Bonds (Hexcel Corporation Project), Series 1988; and
(g) that certain Pledge and Security Agreement, dated as of December
1, 1989, by and among the Company, the Bank, and Bankers Trust Company of New
York, National Association, relating to $3,000,000 Port of Skagit County
Industrial Development Corporation Variable Rate Demand Revenue Bond Series
1989 (Hexcel Corporation Project).
"PLEDGED BONDS" means the Hexcel Bonds purchased or deemed to be purchased
or otherwise acquired for the account of the Company with the proceeds of
Liquidity Drawings during any period in which the Bank has not been reimbursed
for such Liquidity Drawings.
"POST-PETITION OBLIGATIONS" means all obligations of the Company due and
owing to the Bank on or after December 6, 1993, including, but not limited to,
unreimbursed Letter of Credit Drawings, Drawing fees, Letter of Credit
commission fees, tender agent fees and any other expenses paid by the Bank to
Morgan Guaranty Trust Company of New York, and remarketing fees and any other
expenses paid by the Bank to J. P. Morgan Securities, Inc.
"POTENTIAL DEFAULT" means any event or occurrence which, given the passage
of time, the giving of notice, or both, would constitute an Event of Default.
"PRE-PETITION OBLIGATIONS" means all obligations of the Company due and
owing to the Bank prior to December 6, 1993, including, but not limited to,
unreimbursed Letter of Credit Drawings, Drawing fees, Letter of Credit
commission fees, attorney fees and costs, and remarketing fees and any other
expenses paid by the Bank to J. P. Morgan Securities, Inc.
"PRIME RATE" means the rate of interest announced from time to time by the
Bank in San Francisco, California as its prime or reference rate. Such Prime
Rate shall change as and when such announced Prime Rate changes effective as of
the opening of business on
Exhibit A
-16-
<PAGE>
the day announced. Such Prime Rate is determined by the Bank on the basis of a
variety of economic and business factors as are in the judgment of the Bank
relevant to that determination, and extensions of credit made by the Bank may
bear rates below, at or above such Prime Rate.
"PRINCIPAL COMPONENT", with respect to each Letter of Credit, has the
meaning given to such term in such Letter of Credit.
"PRIOR REIMBURSEMENT AGREEMENT" or "PRIOR REIMBURSEMENT AGREEMENTS" means
any or all of the following documents:
(a) Letter of Credit and Reimbursement Agreement dated as of April 1,
1988 relating to $750,000 California Pollution Control Financing Authority
Multi-Modal Interchangeable Rate Pollution Control Revenue Refunding Bonds
Series 1988 (Hexcel Corporation Project), as amended;
(b) Letter of Credit and Reimbursement Agreement dated as of March 1,
1988 relating to $2,050,000 Industrial Development Authority of the City of
Casa Grande, Arizona Multi-Modal Interchangeable Rate Industrial Development
Revenue Refunding Bonds Series 1988 (Hexcel Corporation Project), as amended;
(c) Letter of Credit and Reimbursement Agreement dated as of April 1,
1988 relating to $3,150,000 Guadalupe-Blanco River Authority Industrial
Development Corporation Multi-Modal Interchangeable Rate Industrial
Development Revenue Refunding Bonds, Series 1988 (Hexcel Corporation
Project), as amended;
(d) Letter of Credit and Reimbursement Agreement dated as of March 1,
1988 relating to $6,200,000 Industrial Development Authority of the County of
Los Angeles Multi-Modal Interchangeable Rate Industrial Development Revenue
Refunding Bonds Series 1988 (Hexcel Corporation Project), as amended;
(e) Letter of Credit and Reimbursement Agreement dated as of April 1,
1988 relating to $1,000,000 City of Lancaster Ohio Multi-Modal
Interchangeable Rate Industrial Development Revenue Refunding Bonds, Series
1988 (Hexcel Corporation Project), as amended;
(f) Letter of Credit and Reimbursement Agreement dated as of April 1,
1988 relating to $800,000 Young County #1 Industrial Development Corporation
Multi-Modal Interchangeable Rate Industrial Development Revenue Refunding
Bonds Series 1988 (Hexcel Corporation Project), as amended; and
(g) Letter of Credit and Reimbursement Agreement dated as of December
1, 1989 relating to $3,000,000 Port of Skagit County Industrial Development
Corporation Variable Rate Demand Revenue Bond Series 1989 (Hexcel Corporation
Project), as amended.
Exhibit A
-17-
<PAGE>
"PROPERTY" means any Real Property or personal property, plant, building,
facility, structure, underground storage tank or unit, equipment, inventory,
general intangible, receivable, or other asset owned, leased or operated by the
Company or any of its Subsidiaries, as applicable (including any surface water
thereon or adjacent thereto, and soil and groundwater thereunder).
"RATING AGENCY" means Moody's and/or S&P.
"REAL PROPERTY" means all of the Company's present and future right, title
and interest (including, without limitation, any leasehold estate) in (i) any
plots, pieces or parcels of land, (ii) any improvements, buildings, structures
and fixtures now or hereafter located or erected thereon or attached thereto of
every nature whatsoever (the rights and interests described in clauses (i) and
(ii) above being the "Premises"), (iii) all easements, rights of way, gores of
land or any lands occupied by streets, ways, alleys, passages, sewer rights,
water courses, water and mineral rights and powers, and public places adjoining
such land, and any other interests in property constituting appurtenances to the
Premises, or which hereafter shall in any way belong, relate or be appurtenant
thereto, (iv) all hereditaments, gas, oil, minerals (with the right to extract,
sever and remove such gas, oil and minerals), and easements, of every nature
whatsoever, located in or on the Premises and (v) all other rights and
privileges thereunto belonging or appertaining and all extensions, additions,
improvements, betterments, renewals, substitutions and replacements to or of any
of the rights and interests described in clauses (iii) and (iv) above.
"REIMBURSEMENT OBLIGATION" means any and all Debt Service Reimbursement
Obligations and Liquidity Reimbursement Obligations.
"RELATED DOCUMENTS" means the Indentures, the Resolutions, the Hexcel
Bonds, the Loan Agreements, the Pledge Agreements, the Placement Agreements, the
Company certificate referred to in Section 4.1(o), the Collateral Agreement, the
Escrow Agreement, and such other agreements, documents or certificates as were
or will be delivered to the Bank in connection with the issuance of the Letters
of Credit and this Agreement.
"REORGANIZATION PLAN" means the First Amended Plan of Reorganization
Proposed by the Debtor and the Official Committee of Equity Security Holders of
Hexcel, dated as of November 7, 1994.
"REPORTABLE EVENT" means any of the events described in Section 4043 of
ERISA, the reporting of which has not been waived pursuant to regulations
promulgated thereunder.
"REQUIREMENTS OF LAW" means, as to any Person, the charter and by-laws or
other organizational or governing documents of such Person, and any law, rule or
regulation, or determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or any of its
property or to which such Person or any of its property is subject including,
without limitation, the Securities Act of 1933, as amended from time to time,
and any successor statute, the Securities Exchange Act of 1934,
Exhibit A
-18-
<PAGE>
as amended from time to time, and any successor statute, Regulations G, U and X
of the Federal Reserve Board, each as in effect from time to time, ERISA, the
Fair Labor Standards Act, Hazardous Substance Laws, and any certificate of
occupancy, zoning ordinance, building, or land use requirement or Permit or
labor or employment rule or regulation.
"RESOLUTIONS" refers to each resolution adopted by the issuer of each
series of Hexcel Bonds, authorizing the issuance of such series of Hexcel Bonds.
"RESTRICTED SUBSIDIARY" means a Subsidiary of the Company which is
organized and existing under the laws of the United States of America, any State
thereof, the District of Columbia, Puerto Rico or the United States Virgin
Islands.
"REVOLVING CREDIT AGREEMENT" means, collectively, (i) the Credit Agreement
dated as of February 8, 1995, among Hexcel Corporation, the financial
institutions from time to time party thereto as "Lenders" and "Issuing Banks"
and Citicorp USA, Inc., in its separate capacity as agent for the "Lenders" and
"Issuing Banks", as the same may be amended, renewed, supplemented, or otherwise
modified at the option of the parties thereto, and (ii) any other agreement
pursuant to which any of the indebtedness, commitments, obligations, costs,
expenses, fees, reimbursements and other indemnities payable or owing thereunder
may be refinanced, restructured, renewed, extended, refunded or increased, as
any such other agreement may from time to time at the option of the parties
thereto be amended, supplemented, renewed or otherwise modified.
"REVOLVING CREDIT LENDER" means, collectively, Citicorp USA, Inc., as Agent
under the Revolving Credit Agreement (together with its successors as agent) and
each of the institutions which are from time to time party thereto in the
capacity of "Lenders" or "Issuing Banks" (together with their respective
successors and assigns).
"REVOLVING CREDIT OBLIGATIONS" shall have the meaning given to the term
"Obligations" in the Revolving Credit Agreement.
"RIGHTS OFFERING" shall have the meaning ascribed to such term in the
Reorganization Plan.
"S&P" means Standard and Poor's Corporation, a New York corporation, its
successors and assigns and, if such corporation shall be dissolved or liquidated
or no longer perform the functions of a securities rating agency, "S&P" shall be
deemed to refer to any other nationally recognized securities rating agency
designated by the Company with the approval of the Bank.
"SECURITIES" means any stock, shares, voting trust certificates, bonds,
debentures, notes or other evidences of indebtedness, secured or unsecured,
convertible, subordinated or otherwise, or any certificates of interest, shares,
or participation in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing.
Exhibit A
-19-
<PAGE>
"SKAGIT INDENTURE" means that certain Indenture of Trust, dated as of
December 1, 1989, between the Company and Bankers Trust Company of California,
with respect to $3,000,000 Port of Skagit Industrial Development Corporation
Variable Rate Demand Revenue Bonds, 1989 (Hexcel Corporation Project), as
amended from time to time in accordance with the terms thereof.
"STANDBY LETTER OF CREDIT" has the meaning assigned to that term in the
Collateral Agreement.
"STANDBY PURCHASE COMMITMENT" means the Conditional Standby Purchase
Commitment dated as of October 24, 1994 by and among the Company, Mutual Series,
and the Official Committee of Equity Security Holders of Hexcel.
"STATED AMOUNT", with respect to each Letter of Credit, has the meaning
given to such term in such Letter of Credit.
"SUBORDINATED DEBENTURES" means the 7% Convertible Subordinated Debentures
due 2011 issued by the Company in the aggregate original principal amount of up
to $35,000,000 and governed by the terms of the Subordinated Debenture
Indenture.
"SUBORDINATED DEBENTURE INDENTURE" means that certain Indenture dated as
of August 1, 1986 between the Company and The Bank of California, N.A., as
trustee (succeeded as trustee by First Trust of California, National
Association), as such agreement may be amended, supplemented or otherwise
modified from time to time.
"SUBORDINATED DEBT" means (a) Existing Subordinated Debt, (b) any
subordinated indebtedness incurred after the Effective Date which is permitted
under Section 8.1 and (c) any other subordinated Indebtedness expressly
consented to in writing by the Bank.
"SUBSIDIARY" means any corporation or other entity of which securities or
other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by the Company or a Subsidiary of the Company;
PROVIDED, HOWEVER, that Hexcel Foundation shall not be deemed a Subsidiary of
the Company for so long as it maintains its status as a not-for-profit
corporation for purposes of California law.
"SUBSIDIARY OF A PERSON" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned or controlled by such Person, one
or more of the other subsidiaries of such Person or any combination thereof.
"SURROUNDING PROPERTY" means all real property which is located adjacent to
or in the general vicinity or locale of any part of any Real Property.
Exhibit A
-20-
<PAGE>
"TRANSACTION DOCUMENTS" means the Loan Documents (as such term is defined
in the Revolving Credit Agreement), this Agreement, the Reorganization Plan, the
Subordinated Debentures, the Subordinated Debenture Indenture, the Standby
Purchase Commitment, the Hexcel Lyon Subordinated Note and all other agreements
or instruments executed and delivered or to be executed and delivered pursuant
hereto or thereto or in connection herewith or therewith or any of the
transactions contemplated hereby or thereby.
"TRUSTEE" has the meaning assigned to that term in each of the Indentures.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company other than a
Restricted Subsidiary.
"VOTING STOCK" means, with respect to any Person, securities with respect
to any class or classes of Capital Stock of such Person entitling the holders
thereof (whether at all times or only so long as no senior class of stock has
voting power by reason of any contingency) to vote in the election of members of
the board of directors of such Person.
"YIP TRANSACTION" means the transaction pursuant to which BCY Industrial
Enterprises acquired the Company's Real Property located in The City of
Industry, California by assuming the Company's obligation to repay $2,340,000 in
aggregate principal amount of industrial revenue bonds issued by the Industrial
Redevelopment Authority of the County of Los Angeles to finance such Real
Property.
Exhibit A
-21-
<PAGE>
EXHIBIT B
to
Restated and Amended Reimbursement Agreement
FORM OF COLLATERAL AGREEMENT
This Collateral Agreement (this "Agreement"), dated as of February 1,
1995, is made by and between HEXCEL CORPORATION, a Delaware corporation (the
"Company"), and BANQUE NATIONALE DE PARIS, a banking corporation organized and
existing under the laws of The Republic of France, acting through its San
Francisco Agency (the "Bank"). The parties hereby agree as follows:
SECTION 1. REIMBURSEMENT AGREEMENT. This Agreement is entered into in
connection with that certain Restated and Amended Reimbursement Agreement, dated
as of February 1, 1995, by and between the Company and the Bank (as amended from
time to time in accordance with its terms, the "Reimbursement Agreement").
Capitalized terms used in this Agreement and not defined herein shall have the
meanings assigned to those terms in the Reimbursement Agreement.
SECTION 2. REDUCTION OF BANK RISK. The Company shall reduce the
contingent liability of the Bank as represented by the Letters of Credit by
redeeming Hexcel Bonds in the principal amount of not less than $600,000 per
quarter, as more specifically set forth in Section 3. The initial reduction
shall occur not later than April 1, 1995, and each subsequent reduction shall
occur not later than each succeeding Payment Date to and including October 1,
1998. In lieu of redeeming Hexcel Bonds, the Company may, at its option, on or
before each Payment Date provide collateral in the amount of not less than
$600,000 per quarter for the actual or contingent Hexcel Obligations in the form
of a cash deposit, as more specifically set forth in Section 4, or a standby
letter of credit, as more specifically set forth in Section 5. This obligation
of the Company either to reduce the contingent liability of the Bank by
redemption of Hexcel Bonds or to collateralize the Hexcel Obligations with a
cash deposit or by a standby letter of credit, as more specifically set forth in
this Agreement, is hereafter referred to generally in this Agreement as the
"Reduction Obligation". The schedule of reduction or collateralization of the
Bank's contingent liability as represented by the Letters of Credit shall be as
follows:
Payment Date Aggregate Reduction Obligation
April 1, 1995 $ 600,000.00
July 1, 1995 1,200,000.00
October 1, 1995 1,800,000.00
January 1, 1996 2,400,000.00
April 1, 1996 3,000,000.00
July 1, 1996 3,600,000.00
Exhibit B
-1-
<PAGE>
October 1, 1996 4,200,000.00
January 1, 1997 4,800,000.00
April 1, 1997 5,400,000.00
July 1, 1997 6,000,000.00
October 1, 1997 6,600,000.00
January 1, 1998 7,200,000.00
April 1, 1998 7,800,000.00
July 1, 1998 8,400,000.00
October 1, 1998 9,000,000.00
The Reduction Obligation is subject to increase as provided in paragraph
(b) of Section 8 of this Agreement. The Reduction Obligation on any Payment
Date may be satisfied by any combination of redemption of Hexcel Bonds pursuant
to Section 3, deposit of cash into the Escrow Account pursuant to Section 4 and
delivery of a Standby Letter of Credit pursuant to Section 5.
In the event that the expiration of any Letter of Credit is extended by
the Bank at the request of the Company, unless otherwise expressly agreed in
writing by the Bank and the Company in connection with such extension, the
Company's Reduction Obligation shall likewise be extended to the Payment Date
immediately preceding the extended expiration date. Anything in this Agreement
to the contrary notwithstanding, in no event shall the Company's Reduction
Obligation or any other term or provision of this Agreement require that the
aggregate amount of the sum of (i) funds held in the Escrow Account (as defined
below), (ii) the aggregate available amounts of all outstanding Standby Letters
of Credit (as defined below), and (iii) the principal amount of Hexcel Bonds
optionally redeemed after the Effective Date, at any time be in excess of the
sum of (a) the aggregate Stated Amounts of all Letters of Credit (as reduced and
reinstated from time to time in accordance with the terms of the respective
Letters of Credit) and (b) all outstanding Reimbursement Obligations, whether or
not then due and payable.
SECTION 3. REDEMPTION OF HEXCEL BONDS. The Company may satisfy its
Reduction Obligation by causing the redemption of Hexcel Bonds in the aggregate
amounts and by the Payments Dates indicated in Section 2. Hexcel Bonds shall be
considered "redeemed" for the purposes of this Agreement when, but only when,
either (a) Hexcel Bonds have been redeemed in accordance with the terms of the
applicable Indenture (the deposit of funds with the applicable Trustee for the
purpose of redemption, whether or not coupled with notice of redemption, shall
not be sufficient to consider bonds redeemed), or (b) Hexcel Bonds have been
defeased in accordance with the terms of the applicable Indenture and the Bank
has been notified in writing by the applicable Trustee of such defeasance and of
the resulting irrevocable reduction or termination of the applicable Letter of
Credit. Hexcel Bonds redeemed prior to the Effective Date shall not be applied
toward satisfaction of the Reduction Obligation. Redemptions of Hexcel Bonds in
excess of the minimum requirements stated in Section 2 (the "Excess Payment")
may, at the option of the Company and upon written notice by the Company to the
Bank, be applied to (i) satisfy future Reduction Obligations (for example, if
$1,500,000 of Hexcel Bonds are redeemed on March 1, 1995,
Exhibit B
-2-
<PAGE>
the Company may, by written notice to the Bank, apply such redemptions to
satisfy the Company's April 1, 1995 Reduction Obligation, the Company's July 1,
1995 Reduction Obligation and $300,000 of the Company's October 1, 1995
Reduction Obligation) or (ii) replace Collateral (as defined below) previously
delivered to the Bank, whether in the form of a Standby Letter of Credit (as
defined in Section 5) or cash deposited in the Escrow Account, so that in such
event, the Company may terminate any or all Standby Letters of Credit or
withdraw cash from the Escrow Account in the aggregate amount up to the amount
of the Excess Payment.
SECTION 4. DELIVERY OF CASH DEPOSIT. In lieu of the redemption of
Hexcel Bonds in the aggregate amounts and by the Payment Dates specified in
Section 2 of this Agreement, the Company may deposit cash into the Escrow
Account (as that term is defined in the Escrow Agreement referred to below) on
or before each Payment Date in an amount equal to the difference between (A) the
aggregate Reduction Obligation as of such Payment Date and (B) the sum of (i)
the aggregate principal amount of Hexcel Bonds redeemed following the Effective
Date which the Company has elected, by written notice to the Bank, to apply
toward the Reduction Obligation, (ii) the aggregate amount deposited by the
Company into the Escrow Account (excluding any amounts withdrawn by the Company
with the consent of the Bank), and (iii) the aggregate amount available for
payment under all then outstanding Standby Letters of Credit (as defined in
Section 5). Each deposit shall be in immediately available United States
dollars (provided that payment may be made by check or other acceptable means of
payment so long as the deposit is not deemed made until the check has cleared or
"good funds" are otherwise available).
a. ESCROW AGREEMENT. The Company, the Bank and the Escrow Agent
shall enter into an Escrow Agreement in substantially the form attached to this
Agreement as Exhibit A, subject only to such modifications as are acceptable to
the Bank and the Company. The Escrow Agent shall be a financial institution
designated by the Bank and acceptable to the Company. The Bank and the Company
each agree that any of Bank of the West, Bank of America and First Trust of
California would be acceptable Escrow Agents. The Company shall not be
permitted to satisfy any Reduction Obligation by deposit of funds into the
Escrow Account pursuant to this Section 4, unless the Company, the Bank and an
Escrow Agent shall have entered into the Escrow Agreement at least 10 days prior
to the initial deposit.
b. SECURITY INTEREST. In order to secure the obligations of the
Company to the Bank pursuant to this Agreement and the Reimbursement Agreement,
including, without limitation, the payment of all Reimbursement Obligations in
full in cash when due, whether at stated maturity, by acceleration or otherwise,
the Company hereby pledges, assigns, transfers, hypothecates and sets over to
the Bank and hereby grants to the Bank a security interest in all of the
Company's right, title and interest in the Escrow Account, all cash, funds,
investments, securities, instruments and other items now or hereafter contained
in the Escrow Account, and any and all products and proceeds of the above
(collectively, the "Collateral"). The cash and investments held in the Escrow
Account shall be invested in accordance with the terms of the Escrow Agreement,
and funds may be withdrawn by the
Exhibit B
-3-
<PAGE>
Company from the Escrow Account only to the extent expressly permitted by the
Escrow Agreement.
SECTION 5. DELIVERY OF STANDBY LETTER OF CREDIT. In lieu of the
redemption of Hexcel Bonds in the aggregate amounts and by the Payment Dates
specified in Section 2 of this Agreement, the Company may deliver to the Bank an
irrevocable standby letter of credit in substantially the form attached to this
Agreement as Exhibit B (each a "Standby Letter of Credit") on or before each
Payment Date in an amount equal to the difference between (A) the aggregate
Reduction Obligation due on such Payment Date and (B) the sum of (i) the
aggregate principal amount of Hexcel Bonds redeemed following the Effective Date
which the Company has elected, by written notice to the Bank, to apply toward
the Reduction Obligation, (ii) the aggregate amount deposited by the Company
into the Escrow Account (excluding any amounts withdrawn by the Company with the
consent of the Bank), and (iii) the aggregate amount available for payment under
all then outstanding Standby Letters of Credit. Each Standby Letter of Credit
shall be for a term of not less than one year (except that in no event shall any
Standby Letter of Credit be required to expire later than 30 days after the
expiration date of the Letter of Credit having the latest expiration date), and
shall be issued by a financial institution acceptable to the Bank in its sole
and absolute discretion; provided that any financial institution with offices in
either San Francisco, California or New York, New York, having assets in excess
of $100,000,000 and having a long term and short term rating equal to or higher
than AA/A-1 with S&P and Aa/P-1 with Moody's shall be deemed acceptable to the
Bank. The Bank and Hexcel each agree that Citibank, N.A. is an acceptable
issuer of any Standby Letter of Credit.
a. EXTENSION OF STANDBY LETTERS OF CREDIT. Unless the Company
has redeemed Hexcel Bonds in a principal amount at least equal to the available
amount of a Standby Letter of Credit and/or deposited a like amount into the
Escrow Account, the Company shall from time to time arrange for the extension of
the term of such Standby Letter of Credit to and including the 30th day
following the expiration date of the Letter of Credit having the latest
expiration date. Each such extension shall be for a term of not less than one
year (except that in no event shall any Standby Letter of Credit be required to
expire later than 30 days after the expiration date of the Letter of Credit
having the latest expiration date).
b. DRAWS ON STANDBY LETTER OF CREDIT. The Bank may, but shall
not be obligated to, make demand for payment in accordance with the terms of any
Standby Letter(s) of Credit if (1) an Event of Default (as that term is defined
in the Reimbursement Agreement) has occurred and is continuing, or (2) as to any
particular Standby Letter of Credit, the Bank has not received by the 30th day
prior to the expiration of such Standby Letter of Credit an extension thereof if
and as required herein or evidence satisfactory to the Bank that the Company has
either redeemed Hexcel Bonds in a principal amount at least equal to the
available amount of the expiring Standby Letter of Credit or deposited into the
Escrow Account an amount of cash at least equal to the available amount of the
expiring Standby Letter of Credit. Upon receipt of payment under any Standby
Letter of Credit, the Bank shall, at its option, either (i) apply the funds
thereby received to any
Exhibit B
-4-
<PAGE>
Reimbursement Obligation due and payable by the Company to the Bank at such
time, (ii) deposit the funds thereby received into the Escrow Account, or (iii)
deliver the funds thereby received to one or more of the Trustees for the Hexcel
Bonds together with instructions that such funds be used solely to redeem Hexcel
Bonds, which instructions will be promptly endorsed in writing by the Company
upon the demand of the Bank. Failure for any reason by the Bank to draw or make
demand for payment under any Standby Letter of Credit shall not excuse any
obligation of the Company to the Bank to pay any Reimbursement Obligation
pursuant to the Reimbursement Agreement nor shall it excuse the obligation of
the Company to satisfy at all times the aggregate Reduction Obligations required
pursuant to Section 2 of this Agreement. If any Standby Letter of Credit shall
expire without having been drawn upon by the Bank, and unless the Company shall
have extended such Standby Letter of Credit as required herein or redeemed a
like amount of Hexcel Bonds or deposited a like amount into the Escrow Account,
then the Company shall immediately replace such Standby Letter of Credit or
deposit into the Escrow Account an amount of cash equal to the available amount
of the expired Standby Letter of Credit.
SECTION 6. REPRESENTATIONS AND WARRANTIES. In addition to the
representations and warranties of the Company set forth in the Reimbursement
Agreement, which are incorporated herein by this reference, the Company
represents and warrants to the Bank that:
a. The Company is and will continue to be the sole and complete
owner, subject to the transfer and security interest herein contained, of
the Collateral (or, in the case of after-acquired Collateral, at the time
the Company acquires rights in such Collateral), free from any Lien other
than the security interest herein granted.
b. (i) This Agreement creates a security interest which is
enforceable against the Collateral in which the Company now has rights and
will create a security interest which is enforceable against the
Collateral in which the Company hereafter acquires rights at the time the
Company acquires any such rights; (ii) this Agreement will create a
security interest which is enforceable against all amounts deposited into
the Escrow Account (and all products and proceeds thereof) by or on behalf
of the Company immediately upon each such deposit whenever made; and (iii)
the Bank has a perfected and first priority security interest in the
Collateral in which the Company now has rights, and will have a perfected
first priority security interest in the Collateral immediately upon
deposit thereof into the Escrow Account subject to no other Lien.
SECTION 7. COVENANTS. In addition to the covenants of the Company
contained in the Reimbursement Agreement, which are incorporated herein by this
reference, so long as any Hexcel Obligations or any obligation of the Company
under this Agreement remains unsatisfied or any Letter of Credit shall remain
outstanding, the Company agrees that:
Exhibit B
-5-
<PAGE>
a. The Company will appear in and defend any action, suit or
proceeding which may affect to a material extent its title to, or right,
title or interest in, or the rights, title or interest of the Bank under
or in connection with the Escrow Agreement, the Escrow Account, the
Collateral, or any material portion thereof, or any Standby Letter of
Credit, including, without limitation, the rights of the Bank to withdraw
funds from the Escrow Account as provided in this Agreement and in the
Escrow Agreement and the right of the Bank to demand and receive payment
under any Standby Letter of Credit.
b. The Company shall maintain, preserve and protect the Bank's
first priority perfected security interest in the Collateral at all times,
subject to no other Liens than the Lien herein granted to the Bank.
c. The Company shall execute and deliver to the Bank upon demand
all financing statements, continuation financing statements, notices of
security interest and all other documents and instruments, in form
satisfactory to the Bank, and take all other action as the Bank may
reasonably request to perfect and continue perfected, maintain the
priority of or provide notice of the Bank's security interest in the
Collateral and to accomplish the purposes of this Agreement and the Escrow
Agreement.
SECTION 8. LATE SATISFACTION OF REDUCTION OBLIGATION.
(a) If, for any reason, any Reduction Obligation is not satisfied
(whether by redemption, deposit into the Escrow Account, delivery of a Standby
Letter of Credit or any combination thereof) by the fifth Business Day after the
applicable Payment Date, the Company shall pay to the Bank a late payment charge
in the amount of $1,000 per instance of non-timely satisfaction of the Reduction
Obligation. This late payment charge represents liquidation of administration
fees and expenses to be incurred by the Bank in connection with the Company's
failure timely to satisfy the Reduction Obligation on the date due, and the
Company and the Bank acknowledge that this provision is not unreasonable under
the circumstances existing at the time this Agreement was entered into.
(b) In addition, if, for any reason, any Reduction Obligation is not
satisfied (whether by redemption, deposit into the Escrow Account, delivery of a
Standby Letter of Credit or any combination thereof) by the fifth Business Day
after the applicable Payment Date, the amount of the Reduction Obligation due on
the applicable Payment Date shall be increased by $50,000 for each month or
portion of a month that satisfaction of the Reduction Obligation is delayed.
The Company and the Bank acknowledge that the increase in the Reduction
Obligation provided for in this paragraph (b) does not constitute a penalty but
rather is an incentive to timely satisfaction of the Reduction Obligations which
is not unreasonable under the circumstances existing at the time this Agreement
was entered into. As with other Reduction Obligations, the proceeds of any
increase in the Reduction Obligation required by this paragraph will ultimately
be applied to outstanding Reimbursement Obligations (including interest thereon)
or will be returned to the Company, as is more
Exhibit B
-6-
<PAGE>
specifically set forth in Section 10 of this Agreement, and will not otherwise
be used by the Bank.
(c) By way of illustration of the terms of this Section, if a Reduction
Obligation due on April 1, 1996, is not satisfied until May 15, 1996, the
Company shall pay to the Bank a $1,000 late charge fee and the amount of the
Reduction Obligation due on April 1, 1996 (and satisfied, in the example, on May
15, 1996) shall be increased by $100,000 to $700,000.
SECTION 9. REMEDIES. Upon the occurrence and during the continuation of
any Event of Default (as that term is defined in the Reimbursement Agreement),
the Bank may, at any time, without prior demand for performance, notice of
nonperformance, presentment or other notice of any kind, other than such notice
as may be required pursuant to the Reimbursement Agreement with respect to the
Event of Default:
a. withdraw all or any portion of the funds, investments or
securities contained in the Escrow Account, whereupon the Bank shall, at
the option of the Bank (i) apply such funds and the proceeds thereof to
any Reimbursement Obligations then due and payable, whether upon maturity,
acceleration or otherwise, or (ii) deliver such funds to one or more of
the Trustees for the Hexcel Bonds together with instructions to apply such
funds solely to the redemption of Hexcel Bonds on the earliest date
permitted for such redemption (which instructions shall, upon the demand
of the Bank, immediately be endorsed in writing by the Company);
b. demand payment of all or any portion of one or more Standby
Letters of Credit, whereupon the Bank shall, at the option of the Bank (i)
apply such funds and the proceeds thereof to any Reimbursement Obligations
then due and payable, whether upon maturity, acceleration or otherwise, or
(ii) deposit such funds and the proceeds thereof into the Escrow Account,
or (iii) deliver such funds to one of more of the Trustees for the Hexcel
Bonds together with instructions to apply such funds solely to the
redemption of Hexcel Bonds on the earliest date permitted for such
redemption (which instructions shall, upon the demand of the Bank,
immediately be endorsed in writing by the Company);
c. exercise such other rights or remedies as the Bank may have
under this Agreement, the Escrow Agreement, the Reimbursement Agreement or
any other Related Document; or
d. exercise such other rights or remedies as the Bank may have at
law or in equity.
SECTION 10. APPLICATION OF PROCEEDS. The proceeds actually received from
the liquidation of investments contained in the Escrow Account and the
withdrawal of funds, investments, or securities therefrom, from demand for
payment pursuant to any Standby
Exhibit B
-7-
<PAGE>
Letter(s) of Credit (except for such amounts as are deposited by or on the
instruction of the Bank into the Escrow Account), and any other amounts received
in respect of Collateral the application of which is not otherwise provided for
herein, shall be applied (1) first to the payment of the costs and expenses of
obtaining such funds and of liquidating any investments, including without
limitation all reasonable fees and disbursements of attorneys for the Bank, (2)
next to payment of any fees, costs or expenses, including without limitation,
reasonable attorneys' fees and disbursements, due under the Reimbursement
Agreement, (3) next to any interest due and unpaid pursuant to the Reimbursement
Agreement, and (4) last to any other Hexcel Obligation due under the
Reimbursement Agreement. The Company shall be liable for any deficiency which
exists after any application of Collateral or Standby Letter of Credit proceeds
to Hexcel Obligations. Upon expiration or other termination of the last
outstanding Letter of Credit and satisfaction of all Hexcel Obligations, the
Bank shall (a) return any outstanding Standby Letter of Credit to the issuer
thereof and (b) instruct the Escrow Agent to transfer any funds and investments
in the Escrow Account to the Company.
SECTION 11. CERTAIN WAIVERS. Except for notices required to be given
pursuant to the Reimbursement Agreement, the Company waives, to the fullest
extent permitted by law (A) any right to require the Bank (1) to proceed against
any Person, including any issuer of any Standby Letter of Credit, (2) to exhaust
any Collateral or security for any Hexcel Obligations, (3) to pursue any remedy
in the Bank's power, or (4) to make or give any presentments, demands for
performance, notices of nonperformance, protests or notices of dishonor in
connection with any Standby Letter of Credit or any of the Collateral, and (B)
all claims, damages and demands against the Bank arising out of the possession,
retention, sale or application in accordance with the terms of this Agreement,
of any Standby Letter of Credit, any proceeds thereof and any funds or proceeds
received by the Bank from the Escrow Account, except for any such claims,
damages or demands arising out of the gross negligence or willful misconduct of
the Bank.
SECTION 12. NOTICES. All notices or other communications hereunder shall
be given in the manner and to the addresses as specified, and shall be effective
as provided, in the Reimbursement Agreement.
SECTION 13. AMENDMENTS; WAIVERS. No amendment or waiver of any provision
of this Agreement, nor consent to any departure by the Company herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Bank and, in the case of amendment, by the Company and then such amendment,
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No failure on the part of the Bank to
exercise, and no delay in exercising, any right, remedy, power or privilege
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right, remedy, power or privilege preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. Unless otherwise specified in any such waiver or consent, a waiver
or consent given hereunder shall be effective only in the specific instance and
for the specific purpose for which given.
Exhibit B
-8-
<PAGE>
SECTION 14. CUMULATIVE REMEDIES. The rights, powers and remedies of the
Bank under this Agreement are cumulative and shall be in addition to all rights,
powers and remedies available to the Bank pursuant to the Reimbursement
Agreement, the other Related Documents and at law or in equity, all of which
rights, powers and remedies shall be cumulative and may be exercised
successively or concurrently without impairing the Bank's rights hereunder.
SECTION 15. BINDING EFFECT; TRANSFERABILITY; NO THIRD PARTY BENEFICIARIES.
This Agreement shall be binding upon, inure to the benefit of and be
enforceable by the Company and the Bank, their respective successors and
assigns, provided, however, that the Company may not assign any of its rights
hereunder or interests herein without the prior written consent of the Bank.
SECTION 16. GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of California,
except as required by mandatory provisions of law and to the extent the validity
or perfection of the security interests hereunder, or the remedies hereunder, in
respect of any collateral are governed by the law of a jurisdiction other than
California, provided that the Bank shall retain all rights arising under federal
law.
SECTION 17. ENTIRE AGREEMENT. This Agreement together with the
Reimbursement Agreement contains the entire agreement of the parties with
respect to the subject matter hereof.
SECTION 18. SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
all applicable laws and regulations. If, however, any provision of this
Agreement shall be prohibited by or invalid under any such law or regulation in
any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation in any
jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform
to the minimum requirements of such law or regulation, or, if for any reason it
is not deemed so modified, it shall be ineffective and invalid only to the
extent of such prohibition or invalidity without affecting the remaining
provisions of this Agreement, or the validity or effectiveness of such provision
in any other jurisdiction.
Exhibit B
-9-
<PAGE>
SECTION 19. COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
HEXCEL CORPORATION
____________________________________________
By:
Title:
BANQUE NATIONALE DE PARIS, acting through
its San Francisco Agency
____________________________________________
By:
Title:
____________________________________________
By:
Title:
Exhibit B
-10-
<PAGE>
EXHIBIT C
to
Restated and Amended Reimbursement Agreement
FORM OF LETTER OF CREDIT AMENDMENT
BANQUE NATIONALE DE PARIS
San Francisco Agency
180 Montgomery Street
San Francisco, California 94104
IRREVOCABLE DIRECT-PAY LETTER OF CREDIT
CERTIFICATE OF ELECTION TO EXTEND
Letter of Credit No. ________
February __, 1995
First Trust of California, Morgan Guaranty Trust Company of New York
National Association 30 West Broadway, 14th Floor
101 California Street New York, N.Y. 10015
Suite 1150 Attn: Corporate Trust Department
San Francisco, CA 94111
Attn: Corporate Trust Department
Re: Letter of Credit No. _____, issued ______, relating to _________
Multi-Modal Interchangeable Rate Industrial Development Revenue
Refunding Bonds Series 1988 (Hexcel Corporation Project), as amended
(the "Letter of Credit")
Ladies and Gentlemen:
We hereby notify you, in accordance with the terms of the Letter of
Credit, that we have elected to extend the Expiration Date (as defined in the
Letter of Credit) to December 31, 1998.
Banque Nationale de Paris,
San Francisco Agency
______________________________________ _____________________________________
By By
Title Title
Consented to: Hexcel Corporation
Date: February ___, 1995
_____________________________________
By
Title
Accepted: First Trust of California, National
Association,
Date: February ___, 1995 as Trustee
_____________________________________
By
Title
Accepted: Morgan Guaranty Trust Company of New
York, as Tender Agent
Date: February ___, 1995
_____________________________________
By
Exhibit C
-11-
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The schedules to this agreement have been omitted and are available upon
request.
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HEXCEL CORPORATION
INFORMATION STATEMENT
DATED FEBRUARY 15, 1995
This Information Statement is being furnished to those persons (the "Record
Holders") who held of record on February 9, 1995 (the "Effective Date") shares
of common stock, par value $.01 per share, of Hexcel Corporation (the "Company")
issued prior to the Effective Date ("Old Common Stock"), in connection with the
distribution to the Record Holders by the Company of rights (the "Rights") to
subscribe for shares of the Company's common stock, par value $.01 per share,
issued on or after the Effective Date following the Company's emergence from
proceedings under Chapter 11 of the Bankruptcy Code ("New Common Stock").
The Rights are being distributed to Record Holders pursuant to the terms of
the First Amended Plan of Reorganization Proposed by the Debtor and the Official
Committee of Equity Security Holders (the "Equity Committee"), dated as of
November 7, 1994, as modified (the "Plan"). The Plan was approved by order of
the United States Bankruptcy Court for the Northern District of California (the
"Bankruptcy Court"), dated January 10, 1995 and entered on January 12, 1995 (the
"Confirmation Order"), and became effective on February 9, 1995. A copy of the
Confirmation Order (including the Plan) was filed with the Securities and
Exchange Commission (the "SEC") on January 23, 1995 as an exhibit to a report by
the Company on Form 8-K. The distribution of the Rights and the New Common Stock
issuable in connection with exercise of the Rights is exempt from registration
under the Securities Act of 1933, as amended, by operation of Section 1145 of
the United States Bankruptcy Code.
NEITHER THE RIGHTS NOR THE UNDERLYING SHARES OF NEW COMMON STOCK HAVE BEEN
REGISTERED WITH OR APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES REGULATORY AUTHORITY, NOR HAS THE
SEC, ANY STATE SECURITIES REGULATORY AUTHORITY OR THE UNITED STATES BANKRUPTCY
COURT PASSED UPON OR ENDORSED THE MERITS OF THE RIGHTS OFFERING OR THE ACCURACY
OR ADEQUACY OF THIS INFORMATION STATEMENT.
All holders of record of the Company's Old Common Stock on November 9, 1994
were previously sent copies of the First Amended Disclosure Statement Pursuant
to Section 1125 of the Bankruptcy Code for the First Amended Plan of
Reorganization Proposed by the Debtor and the Official Committee of Equity
Security Holders, dated as of November 7, 1994 (the "Disclosure Statement"), in
connection with the solicitation of their votes on the Plan. The Disclosure
Statement, as supplemented by this Information Statement, contains important
information about the Company. YOU ARE URGED TO CAREFULLY REVIEW THE DISCLOSURE
STATEMENT AND THIS INFORMATION STATEMENT BEFORE YOU DECIDE WHETHER TO EXERCISE
YOUR RIGHTS.
The exercise of Rights will be governed by the terms of the Subscription
Rights Plan (the "Subscription Rights Plan"), a copy of which is being delivered
to Record Holders along with this Information Statement. Chemical Bank is acting
as the Subscription Agent and Information Agent for the Rights offering. If you
were not a record holder of Old Common Stock on November 9, 1994 and you did not
receive a copy of the Disclosure Statement, you may obtain a copy of the
Disclosure Statement by contacting the Information Agent at (800) 758-4652. Any
questions about the Subscription Rights Plan or how to exercise Rights should be
directed to the Information Agent at the same telephone number.
This Information Statement describes certain significant events that
occurred after November 9, 1994, the date that the Bankruptcy Court approved the
Disclosure Statement as containing adequate information under Section 1125 of
the Bankruptcy Code. These events were anticipated by the Disclosure Statement,
and the events which occurred prior to the Effective Date have been previously
reported by the Company in press releases and filings with the SEC on Form 8-K.
They include (i) the selection, pursuant to the Plan, of the Company's initial
Board of Directors, which took office on the Effective Date, (ii) the sale of
the Company's manufacturing facility located in Chandler, Arizona and related
assets and technology, which was consummated on January 6, 1995, and (iii) the
sale of the Company's European resins business, which was consummated on
December 29, 1994. In addition, this Information Statement describes certain
events which occurred after the date of the Disclosure Statement which affect
the Company's business plan and certain other information which was disclosed at
the January 10, 1995 hearing on confirmation of the Plan.
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RECENT EVENTS
EFFECTIVENESS OF THE PLAN
The Plan became effective on February 9, 1995. On the Effective Date, the
Company (i) closed under a $45 million revolving credit facility (the "Exit
Financing Facility"), (ii) entered into an amended reimbursement agreement with
Banque Nationale de Paris (the bank which provides the letters of credit
supporting certain industrial development revenue bond issues which benefit the
Company), and (iii) held the first closing under the Standby Purchase
Commitment, dated October 24, 1994 (the "Standby Purchase Commitment"), among
the Company, the Equity Committee and Mutual Series Fund Inc. ("Mutual Series").
The Exit Financing Facility was provided by a lending group (the "Lenders")
consisting of Citicorp USA, Inc. ("Citicorp"), Heller Financial, Inc. and
TransAmerica Business Credit Corporation, with Citicorp acting as the agent for
the Lenders. In addition, prior to the Effective Date, the Company received
authorization from the New York Stock Exchange and the Pacific Stock Exchange
for the listing of the additional shares issued and to be issued pursuant to the
Plan, including the shares to be issued in connection with the Rights offering
and the Standby Purchase Commitment and the shares to be sold to John J. Lee.
ISSUANCE OF NEW COMMON STOCK AND RIGHTS TO RECORD HOLDERS
Pursuant to the Plan, on the Effective Date all of the Old Common Stock was
cancelled and each Record Holder is receiving, in exchange for each share of Old
Common Stock held of record on the Effective Date, one share of New Common Stock
plus 1.21273 Rights. STOCKHOLDERS ARE NOT REQUIRED TO EXCHANGE THEIR STOCK
CERTIFICATES EVIDENCING THE OLD COMMON STOCK, AND SUCH CERTIFICATES WILL
CONTINUE TO REPRESENT AN EQUAL NUMBER OF SHARES OF NEW COMMON STOCK. ANY
STOCKHOLDER WHO DESIRES A NEW STOCK CERTIFICATE MAY, HOWEVER, SURRENDER HIS OR
HER OLD STOCK CERTIFICATE TO THE COMPANY'S TRANSFER AGENT, CHEMICAL TRUST
COMPANY OF CALIFORNIA, AND RECEIVE A NEW STOCK CERTIFICATE IN EXCHANGE.
Each Right entitles the owner to purchase one share of New Common Stock at
an exercise price of $4.625 per share. A total of approximately 8,854,143 shares
of New Common Stock may be subscribed for and purchased from the Company
pursuant to the exercise of the Rights. In addition, each Record Holder (and
each beneficial owner of stock held of record on the Effective Date by a bank,
trust company, depositary or securities broker or dealer) who exercises all of
the Rights issued by the Company directly to such Record Holder (or to such
beneficial owner's institutional nominee for his or her account) will have the
right ("Oversubscription Right") to subscribe for the shares of New Common
Stock, if any, which are designated for the "Stockholder Pool," at an exercise
price of $4.625 per share and subject to proration in the event that there are
insufficient shares designated in the Stockholder Pool to fulfill all exercised
Oversubscription Rights. The number of shares in the Stockholder Pool will equal
75% of the excess of (i) the number of shares of New Common Stock which are
subject to Basic Subscription Rights which expire unexercised over (ii) 108,108
shares, which are to be sold to John J. Lee. The maximum aggregate number of
shares which can be acquired from the Stockholder Pool (assuming that only one
Basic Subscription Right is exercised) is approximately 6,570,000. Reference is
made to the Subscription Rights Plan for a more complete description of the
Rights, the Oversubscription Rights and the method of proration. The Rights, but
not the Oversubscription Rights, are transferable. The Rights may only be
exercised in accordance with the terms of the Subscription Rights Plan on or
after February 24, 1995 and no later than 5:00 P.M. New York City time on March
27, 1995.
CLOSING WITH MUTUAL SERIES
On the Effective Date, the first closing was held under the Standby Purchase
Commitment. At the closing, Mutual Series purchased from the Company 1,945,946
shares of New Common Stock for a purchase price of $9,000,000 ($4.625 per share)
and loaned the Company $41,000,000 (the "Advance"). As required by the Standby
Purchase Commitment, the Company paid Mutual Series a $500,000 commitment fee
and reimbursed Mutual Series for approximately $506,000 of out-of-pocket costs
and expenses. The Advance is secured by the proceeds from the Rights offering. A
copy of the Standby Purchase Commitment is included in the Disclosure Statement
as Exhibit B to the Plan.
EXIT FINANCING
The Exit Financing Facility is a three-year revolving credit facility of up
to $45,000,000 (which includes a subfacility of up to $20,000,000 for letters of
credit). The maximum credit available at any time is based on a specified
percentage of the value of the Company's eligible inventory, receivables,
equipment and real property, and 65% of the capital stock of Hexcel S.A. (Lyon),
the Company's French subsidiary. On the Effective Date, the
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maximum amount available to the Company under this Exit Financing Facility was
approximately $39,000,000. The Company may use the proceeds of loans, and the
issuance of letters of credit, pursuant to the Exit Financing Facility for the
purpose of (i) funding distributions to creditors to be made on or after the
Effective Date under the Plan and related transaction costs, fees and expenses,
and (ii) providing for the ongoing working capital needs of the Company after
the Effective Date and other general corporate purposes. Substantially all of
the assets of the Company and of certain of its domestic subsidiaries were
pledged to the Lenders to secure the Company's repayment obligations under the
Exit Financing Facility.
CHANGES TO CERTIFICATE OF INCORPORATION AND BYLAWS
Pursuant to the Plan, on the Effective Date the Company's Certificate of
Incorporation was amended and restated as provided in Exhibit C to the Plan and
its Bylaws were amended and restated as provided in Exhibit D to the Plan. The
authorized capital stock of the Company was increased to 40,000,000 shares of
New Common Stock and 1,500,000 shares of preferred stock. The Company's Board of
Directors is no longer classified. As a result, an election for the entire Board
of Directors will be held at the next annual meeting of the Company's
stockholders. The next annual meeting of stockholders will be held on a date
selected by the Board of Directors which will be no earlier than nine months
after the Effective Date, unless otherwise agreed by the directors designated by
the Equity Committee and the directors designated by Mutual Series.
NEW BOARD OF DIRECTORS
The Company's Board of Directors was reconstituted as of the Effective Date,
and now consists of the following eight persons, all of whom were designated in
accordance with the terms of the Plan and the Standby Purchase Commitment: John
J. Lee and Peter Langerman, who were designated by Mutual Series, Joseph L.
Harrosh, Robert L. Witt and Peter D. Wolfson, who were designated by the Equity
Committee, and Dr. George S. Springer, Franklin S. Wimer and Marshall S. Geller,
who were designated by joint selection of the Equity Committee and Mutual
Series. A ninth seat on the Board is reserved for the new Chief Executive
Officer, who will join the Board immediately upon commencement of his or her
employment. In addition, if upon the consummation of the Rights offering Mutual
Series owns more than 50% of the shares of New Common Stock, Mutual Series will
designate one additional director; if upon the consummation of the Rights
offering Mutual Series owns less than 25% of the shares of New Common Stock,
then one additional director will be designated by mutual agreement of those
directors previously designated by the Equity Committee, on the one hand, and
those directors previously designated by mutual agreement of the Equity
Committee and Mutual Series, on the other hand.
The following biographical information was furnished by the eight persons
who became directors of the Company on the Effective Date:
John J. Lee, age 58, has been a director of the Company since May of 1993,
Chairman of the Board and Co-Chief Executive Officer of the Company from July
1993 to December 1993, Chairman of the Board and Chief Executive Officer of the
Company from January 1994 to the Effective Date and Chief Executive Officer
since Effective Date. Mr. Lee has served as Chairman of the Executive Committee
of XTRA Corporation, a transportation equipment leasing company, since 1990, and
Chairman of the Board, President and Chief Executive Officer of Lee Development
Corporation, a merchant banking company, since 1987. Mr. Lee has been a Trustee
of Yale University since 1993. From July 1989 through April 1993, Mr. Lee served
as Chairman of the Board and Chief Executive Officer of Seminole Corporation, a
manufacturer and distributor of fertilizer. From April 1988 through April 1993,
Mr. Lee served as a Director of Tosco Corporation, a national refiner and
marketer of petroleum products and as President and Chief Operating Officer of
Tosco from 1990 through April 1993. Mr. Lee is also a director of Playtex
Products, Inc. and Aviva Petroleum Corp.
Dr. George S. Springer, age 60, has been a director of the Company since
January 1993. Dr. Springer is Professor and Chairman of the Department of
Aeronautics and Astronautics and, by courtesy, Professor of Mechanical
Engineering and Professor of Civil Engineering, at Stanford University. Dr.
Springer joined Stanford University's faculty in 1983.
Peter A. Langerman, age 39, is a director and the Executive Vice President
of Mutual Series, a diversified open-end management investment company
registered under the Investment Company Act of 1940 and a research analyst with
Heine Securities Corporation, an investment advisor. Mr. Langerman has been the
Executive Vice President of Mutual Series since March 1988 and has been a
research analyst at Heine Securities since 1986.
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Mr. Langerman has also been a director of Zenith Laboratories since 1989, and
President and a director of S-O Equities Holding Company since 1993. On the
Effective Date, Mutual Series became the single largest stockholder of the
Company.
Franklin S. Wimer, age 58, is the President and principal of UniRock
Management Corporation ("UniRock"), a private merchant banking firm based in
Denver, Colorado. Mr. Wimer has been with UniRock since January of 1987. UniRock
has acted as the Company's strategic consultant since December 27, 1993. Mr.
Wimer is currently Chairman of the Board of Vista Restaurants, Inc., a 12-unit
Perkins Family Restaurant franchisee, and a director of RAMI, Inc., Denver
Paralegal Institute, Stainless Fabrication Company, Inc., and Western Filter
Company.
Marshall S. Geller, age 55, has been a director of the Company since August
of 1994. Mr. Geller is a Senior Managing Partner of Golenberg & Geller, a
merchant banking firm. From 1989 to 1990, he was Vice Chairman of Gruntal &
Company, an investment banking firm. Mr. Geller is a director of Players
International; a director and, from 1992 to 1993, President and Chief Executive
Officer of Sports-Tech International, Inc.; Interim President and Chief
Executive Officer and a director of Lottery Enterprises; and a director of the
Angeles Corporation, Amerihost Properties, Inc., MTC Electronics, Value Vision
International, Inc., and Las Vegas Major League Sports, Inc. Mr. Geller also
serves on the Boards of the Coro Foundation, the Jewish Federation of Los
Angeles, San Francisco and Chicago, and The Center for the Partially Sighted.
Joseph L. Harrosh, age 54, is a private investor. He has been the Chairman
of the Equity Committee since its inception in December of 1993. He has also
been the Chairman of the Board of Tri-City Sporting Goods Inc. since 1971. Mr.
Harrosh is one of the five largest stockholders of the Company.
Robert L. Witt, age 54, is a member of the Equity Committee. From 1986
through 1993, he was the Chief Executive Officer of the Company and held other
offices with the Company dating back to 1969. He is a director of Bay View
Federal Bank, World Auxiliary Power Company and the Dentists Company.
Peter D. Wolfson, age 41, is an attorney and member of the firm of Marcus
Montgomery Wolfson P.C., which was founded in 1993. From 1989 through 1993, Mr.
Wolfson was a member of the law firm of Milgrim Thomajan & Lee P.C., which in
1992 changed its name to Veret Marcus & Fink P.C. Mr. Wolfson's law firm is
counsel to the Equity Committee.
OUTSTANDING STOCK
On the Effective Date, there were 9,246,947 shares of New Common Stock
issued and outstanding (7,301,001 of which were issued in exchange for the Old
Common Stock and 1,945,946 of which were purchased by Mutual Series) and Rights
to purchase approximately 8,854,143 shares of New Common Stock have been issued
pursuant to the Plan. In addition, $200,000 worth of New Common Stock, valued at
a price equal to the average of the daily average prices of the New Common Stock
for the 20 trading days beginning 30 calendar days following the expiration of
the Rights, will be distributed to holders of claims in Class 10 under the Plan.
The aggregate total of such number of shares cannot be determined at this time.
Pursuant to the Plan, upon consummation of the Rights offering, up to
approximately 8,962,251 additional shares of New Common Stock will be issued
pursuant to the exercise of Rights, the purchase of Standby Shares by Mutual
Series and the purchase of shares of New Common Stock by John J. Lee as
described above, which will result in there being an aggregate of approximately
18,209,198 outstanding shares of New Common Stock, excluding the shares issuable
to holders of Class 10 claims.
The foregoing numbers do not include shares of New Common Stock subject to
outstanding employee stock options, stock options to be granted to John J. Lee
to purchase 0.625% of the Company's outstanding shares (on a fully diluted basis
without giving effect to conversion of the 7% Convertible Subordinated
Debentures) as described in the Disclosure Statement, and the conversion of the
Company's 7% Convertible Subordinated Debentures. Currently, there are
outstanding employee stock options to purchase up to 398,297 shares of New
Common Stock at prices ranging from $5.08 to $32.06 per share. The exercise
price for John J. Lee's options will equal the average of the daily prices of
the Company's stock for the 20 trading days beginning 30 calendar days following
the expiration of the Rights offering.
SALE OF CHANDLER FACILITY AND RELATED TECHNOLOGY AND ASSETS
On January 6, 1995, pursuant to the terms of that certain Asset Purchase
Agreement dated as of November 3, 1994 (the "Chandler Purchase Agreement")
between the Company, and Northrop Grumman Corporation, a Delaware corporation
("Northrop"), the Company completed the sale to Northrop of its manufacturing
facility located in Chandler, Arizona (the "Chandler Facility") and related
assets and technology (the "EMT Technology"). The Bankruptcy Court approved the
sale of the Chandler Facility and the EMT Technology by order entered on
December 21, 1994.
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The Chandler Facility was constructed in 1988 by the Company primarily to
manufacture various materials for a classified defense program. The EMT
Technology, as developed by the Company and sold to Northrop, enables the
design, fabrication, testing and analysis of electromagnetically tailored
materials and assemblies that are used to attenuate, alter, control and/or
absorb electromagnetic energy. Under the terms of the Chandler Purchase
Agreement, the Company retained a royalty-free, non-exclusive license to use the
EMT Technology in non-military applications and will receive royalties from
Northrop on certain applications of EMT Technology.
The gross purchase price for the sale of the Chandler facility and the EMT
Technology was $30,000,000 plus the value of existing inventory and certain
contingent payments, subject to certain conditions and adjustments. The purchase
for the sale took into account certain claims that the parties had against each
other, as well as the current requirements of the related classified defense
program. To date, the Company has received from Northrop $28,988,000 in cash.
This amount includes (i) the $30,000,000 fixed purchase price, plus (ii)
$1,288,000 for the inventory purchased, less (iii) $2,300,000 withheld by
Northrop pursuant to the Chandler Purchase Agreement, all or a portion of which
amount may be returned to the Company if certain conditions are satisfied.
SALE OF EUROPEAN RESINS BUSINESS
On December 29, 1994, the Company sold its European resins business to Axson
S.A., a French corporation ("Axson"), through the sale of all of the Company's
shares in the capital stock of four of its subsidiaries, Hexcel France S.A.,
Hexcel Espana, S.A., Hexcel GmbH and Hexcel Italia S.r.1. (the "European Resins
Subsidiaries"), for a gross purchase price of $9,000,000, subject to certain
adjustments described below. Axson was formed by the management of the European
Resins Subsidiaries, Lebon Developpement, a French public company, and Midland
Montagu Investissement, a French investment fund. The Bankruptcy Court approved
the sale of the Company's European resins business by order filed on December 7,
1994.
The gross purchase price was reduced by the following adjustments: (i)
$1,579,669 for the net intercompany payables owed by the European Resins
Subsidiaries to the Company and its remaining subsidiaries as of September 30,
1994, all of which has been paid to the Company, (ii) $412,445 which was reduced
from the purchase price to compensate Axson for a dividend that was declared and
paid to the Company by Hexcel Espana, S.A. immediately prior to the closing, and
(iii) approximately $272,500 for certain transaction costs incurred by the
Company and the European Resins Subsidiaries prior to the closing date in
connection with the sale of the European resins business.
The Company is continuing discussions for the sale of its domestic resins
business which is based at its facility in Chatsworth, California. Such a sale
would complete the divestiture of the Company's resins business as envisioned by
the Disclosure Statement.
1994 FOURTH QUARTER AND YEAR END RESULTS
On February 15, 1995, the Company reported its results for the fourth
quarter and year ended December 31, 1994. The Company reported operating income
of $12,642,000 for the fourth quarter, which includes a $15,900,000 gain on the
sale of the Chandler, Arizona manufacturing facility and related assets and
technology to Northrop, as well as a $2,900,000 provision for bankruptcy claim
adjustments. This compares with an operating loss of $16,518,000 for the fourth
quarter of 1993, including a $12,638,000 charge for asset write-downs and other
expenses and a $2,600,000 restructuring charge. The net loss for the fourth
quarter of 1994 was $2,585,000 or $0.35 per share, including bankruptcy
reorganization expenses of $8,207,000, interest expenses for bankruptcy claims
and exit financing of $2,515,000, and a provision for the settlement of various
tax liabilities of $1,800,000. The net loss for the fourth quarter of 1993 was
$29,431,000 or $4.03 per share. Sales from continuing operations of $76,715,000
for the fourth quarter of 1994 were up 4% over sales from continuing operations
of $73,635,000 for the same quarter of 1993.
Operating income was $7,504,000 for 1994, including an $8,000,000 third
quarter provision to reflect the estimated cost of restructuring or liquidating
a joint venture in addition to the fourth quarter items noted above, as compared
to a 1993 operating loss of $64,345,000, which included restructuring charges of
$46,600,000 for the year, as well as the fourth quarter $12,638,000 charge for
asset write-downs and other expenses. In 1994, the net loss was $29,970,000 or
$4.10 per share, including bankruptcy reorganization expenses of $20,152,000 and
losses from discontinued operations of $1,890,000. This compares with a 1993 net
loss of $85,995,000 or $11.73 per share, including losses from discontinued
operations of $10,623,000 and the cumulative benefit of adopting a new
accounting standard for income taxes of $4,500,000. Sales from continuing
operations were $313,795,000 for 1994, essentially unchanged from the
$310,635,000 for 1993.
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Attached as Exhibit A hereto is a copy of the unaudited Condensed
Consolidated Statement of Operations of the Company and its subsidiaries for the
quarters and years ended December 31, 1994 and December 31, 1993. There can be
no assurance that such amounts will not change as a result of the completion of
the Company's 1994 audit.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
Attached as Exhibit B hereto is an unaudited Pro Forma Condensed
Consolidated Balance Sheet of the Company and its subsidiaries, which sets forth
the Company's unaudited December 31, 1994 Condensed Consolidated Balance Sheet
as if the consummation of the Plan (including the completion of the Rights
offering, the first and second closings with Mutual Series under the Standby
Purchase Commitment and the sale of 108,108 shares of New Common Stock to John
J. Lee) occurred on such date. The "pre-reorganization balances" as of December
31, 1994 reflect the unaudited results of the Company as of that date. There can
be no assurance that such amounts will not change as a result of the completion
of the Company's 1994 audit.
CHANGES TO PROJECTIONS BASED ON RECENT EVENTS
The Company has continued the process of updating its financial projections
since the Projected Condensed Consolidated Financial Statements included as
Exhibit E to the Disclosure Statement (the "Disclosure Statement Projections")
were prepared. The Disclosure Statement Projections were based on results
through the end of August 1994. The Company now has unaudited financial results
through the end of 1994 and more than four months have passed since the
Disclosure Statement Projections were prepared. Accordingly, the Company has
prepared updated financial projections which are attached as Exhibit C hereto.
While in the aggregate there have not been significant changes, the updated
financial projections reflect recent events and changes that have occurred since
the Disclosure Statement was filed.
The primary changes that have occurred include the following:
CHANGES IN CASH POSITION. The Company's cash position at the Effective Date
was higher due to better than anticipated accounts receivable collections as of
that date, higher accounts payable and accrued liabilities attributable to the
timing of payments, and settlements of various tax liabilities for less than
previously anticipated. This cash improvement was partially offset by certain
expenses caused by the delay in the Effective Date of more than a month from the
date assumed in the Disclosure Statement Projections. These expenses included
higher interest costs, higher "stay on" bonus costs to retain employees and
higher legal costs. The cash position as of the Effective Date was approximately
$3,000,000 higher than cash in the Disclosure Statement Projections.
While the working capital improvements discussed above resulted in an
improved cash position at the Effective Date, many of these improvements are
temporary and due to the timing of payments. Also, projected 1995 and 1996 cash
flows benefited from the assumed deferral of the DIC payments (discussed below).
Thus, if these timing items reverse by 1997 as expected, the outstanding
revolver balance under the Exit Financing Facility at the end of the projection
period will be higher than projected in the Disclosure Statement Projections.
This is primarily due to additional expenses which amount to more than
$3,500,000 for interest and legal costs from the delay of the Effective Date,
the transaction costs of the exit financing and Rights offering being higher
than anticipated, the fourth quarter 1994 bankruptcy costs being higher than
projected and the amount of allowed claims being higher than projected. The net
result is that if all DIC payments occur by the end of 1997, the updated
projected revolver balance is estimated to be approximately $5,000,000 higher
than was projected in the Disclosure Statement Projections.
CHANGES IN PROJECTED SALES. Boeing announced that the Boeing non-metallic
honeycomb core contract would not be extended beyond March 1, 1995. That
contract was expected to provide approximately $7.5 million per year of sales
over the projection period. In addition, there are now delays expected in the
introduction of the new high performance core to Boeing due to testing delays.
The decrease in projected sales due to loss of the Boeing non-metallic honeycomb
core contract and delays in introduction of the new high performance core have
all substantially been offset by projected increases in other sales (primarily
in the composites recreation tape line) and further cost reductions. On February
2, 1995, Boeing announced additional personnel layoffs, a scale back of
production of the 737 and 767 aircraft, and an increase in the production of the
747 wide-bodied jets (although, there will initially be a temporary decline in
the 747 production). On February 6, 1995, McDonnell Douglas also announced
possible reductions in its build rates. As of the date of this Information
Statement, sufficient details were not available to enable a complete analysis
of these announcements by Boeing and McDonnell Douglas. However, based on
preliminary information and analysis, the Company does not believe these
announcements will materially impact the
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Company's financial projections. The updated financial projections do not
reflect any adjustments as a result of these announcements. However, there can
be no assurance that either these announcements (or future announcements) will
not materially affect the Company's financial results. Sales to Boeing and its
subcontractors account for approximately 22% of the Company's worldwide sales.
CHANGES IN STOCKHOLDERS' EQUITY. Stockholders' equity as of the Effective
Date was approximately $4,165,000 lower than estimated in the Disclosure
Statement Projections. This reduction primarily comes from higher than
anticipated settlement costs of allowed claims, the delay in the Effective Date
and an increase in projected bankruptcy reorganization expenses.
REVISED DAINIPPON INK & CHEMICALS AGREEMENT. The Disclosure Statement
Projections reflect an $8,000,000 cash payout in the first quarter of 1995 to
settle the Company's obligations to either restructure or liquidate its joint
venture with Dainippon Ink & Chemicals, Inc. ("DIC"). The Company is in the
process of negotiating a revision to the joint venture arrangement which would
have the effect of limiting the Company's exposure to $9,000,000 and extending
this payout over time. Of the first $4,500,000, $1,437,500 would be payable in
the first quarter of 1995, and $437,500 would be payable in each of the next
seven quarters. In addition, as proposed, the Company or its wholly owned
subsidiary, Hexcel Technologies, Inc. ("Hexti"), may be required to pay another
$4,500,000 if before the end of 1996 there is a decision to liquidate the joint
venture, but such payment is not expected to be required, if at all, prior to
January 1997. Alternatively, if no such decision is reached and DIC is
subsequently required to make payments on account of guarantees of certain
obligations related to the joint venture, the Company or Hexti may be required
to pay up to 50% of the amount DIC pays on account of its guarantees, up to a
maximum of $4,500,000. The current proposal also requires that Hexti transfer up
to 30% of its interest (up to 15% of the total equity) in the joint venture to
DIC's subsidiary without receiving any payments. If the current proposal is put
into effect, the total payout by the Company and Hexti would be no more than
$9,000,000. Although there is no assurance that such agreement will be
finalized, the updated financial projections reflect the proposed revisions to
the DIC joint venture arrangement. Such arrangement has been approved by the
Bankruptcy Court, subject to either Equity Committee or Bankruptcy Court
approval of the final documentation. If the Company is unable to conclude this
arrangement or a similar extension of its obligations to DIC, the Company may be
in default under the Exit Financing Facility. See "Additional Risk Factors"
below.
THE PROJECTED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN EXHIBIT E TO THE
DISCLOSURE STATEMENT AND THE UPDATED PROJECTED CONSOLIDATED FINANCIAL
INFORMATION INCLUDED IN THIS INFORMATION STATEMENT REFLECT NUMEROUS ASSUMPTIONS
WITH RESPECT TO THE ANTICIPATED FUTURE PERFORMANCE OF THE COMPANY'S CONSOLIDATED
OPERATIONS, MARKETS IN WHICH IT COMPETES, GENERAL BUSINESS AND ECONOMIC
CONDITIONS, AND OTHER MATTERS WHICH ARE BEYOND THE CONTROL OF THE COMPANY.
THEREFORE, THE ACTUAL RESULTS ACHIEVED THROUGHOUT THE PROJECTION PERIOD WILL
VARY FROM THE PROJECTED RESULTS. THESE VARIATIONS MAY BE MATERIAL. WHILE THE
COMPANY BELIEVES THAT THE ASSUMPTIONS UNDERLYING THE PROJECTIONS, AS ADJUSTED BY
THE INFORMATION SET FORTH IN THIS INFORMATION STATEMENT, WHEN CONSIDERED ON AN
OVERALL BASIS, ARE REASONABLE IN LIGHT OF CURRENT CIRCUMSTANCES, NO ASSURANCES
CAN BE GIVEN THAT THE PROJECTED RESULTS WILL BE REALIZED.
ADDITIONAL RISK FACTORS
AN INVESTMENT IN THE COMPANY INVOLVES MATERIAL RISKS. BEFORE EXERCISING ANY
RIGHTS TO PURCHASE ADDITIONAL SHARES OF NEW COMMON STOCK, YOU ARE URGED TO
CAREFULLY REVIEW THE DISCLOSURE STATEMENT AND THIS INFORMATION STATEMENT. IN
PARTICULAR, YOU SHOULD REVIEW THE SECTION OF THE DISCLOSURE STATEMENT ENTITLED
"CERTAIN RISK FACTORS TO BE CONSIDERED." THE RISK FACTORS SET FORTH IN THE
DISCLOSURE STATEMENT AND THIS INFORMATION STATEMENT SHOULD NOT BE CONSIDERED
EXHAUSTIVE.
THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED IN ADDITION TO THE RISK
FACTORS DESCRIBED IN THE DISCLOSURE STATEMENT:
DILUTION. Rights holders who exercise their Rights will incur immediate and
substantial book value dilution of approximately $2.32 per share based on the
PRO FORMA net tangible book value, assuming that a total of 18,144,333 shares
will be outstanding after giving effect to the completion of the Rights
offering, the purchase of shares by Mutual Series pursuant to the Standby
Purchase Commitment, the sale of shares to John J. Lee and the issuance of
shares in settlement of Class 10 claims (assuming that the number of shares
issued to such holders is based on a price of $4.625 per share).
7
<PAGE>
CHANGE IN CONTROL. The credit agreement for the Exit Financing Facility
(the "Credit Agreement") provides that a "change in control event" will
constitute a default under the Credit Agreement, entitling the Lenders to
terminate the credit facility, accelerate the indebtedness thereunder and
enforce their remedies as secured creditors with respect to the collateral. The
Credit Agreement defines a "change in control" to mean (i) a person or entity or
group of persons or entities (other than Mutual Series) acting in concert shall,
as a result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, have become the beneficial owner (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) of
securities of the Company representing more than the greater of (a) 20% of the
Company's voting stock and (b) the percentage of the Company's voting stock
beneficially owned by Mutual Series after giving effect to such purchases; or
(ii) the Company shall cease to own and control 100% of the outstanding capital
stock of each domestic subsidiary of the Company which guaranteed the Company's
obligations with respect to the Exit Financing Facility. A "change in control
event" is defined as the occurrence and continuance of a change in control,
except that a change in control resulting from an acquisition of voting stock
(as described in clause (i) of the preceding sentence) will not constitute a
change in control event (and thus, will not constitute an event of default under
the Credit Agreement) until the earlier of (i) 60 days after Citicorp, as agent
for the Lenders, or the requisite Lenders have given notice to the Company that
a change in control event will occur in 60 days, or (ii) 90 days after the
Company has knowledge of that change in control.
Depending on the results of the Rights offering, or based upon an
accumulation of New Common Stock through negotiated transactions among
stockholders, open market purchases, a tender offer or some combination of the
foregoing, it is possible that a stockholder could acquire more than 20% of the
outstanding New Common Stock and more shares of New Common Stock than are
beneficially owned by Mutual Series. If that were to occur, there is no
assurance that the Lenders would approve such a change in control or, if they
did not, that the Company would be able to obtain a substitute credit facility
before the Exit Financing Facility became due.
RENEGOTIATION OF JOINT VENTURE ARRANGEMENTS. The Company's revised
financial projections assume that the Company will be able to finalize the
negotiations with DIC which provide for the Company's obligations with respect
to the joint venture to be limited to $9 million and extended over at least a
two-year period following the Effective Date as described above under "CHANGES
TO PROJECTIONS BASED ON RECENT EVENTS -- Revised Dainippon Ink & Chemicals
Agreement." There is no assurance that such agreement will be finalized. In the
event that the Company is unable to conclude the proposed agreement with DIC and
is required to pay between $8 million and $9 million to DIC ahead of the
proposed schedule, then the Company may default under the Exit Financing
Facility unless it is able to obtain a waiver from the Lenders.
ADVERSE AEROSPACE INDUSTRY DEVELOPMENTS. On February 2, 1995, Boeing
announced additional personnel layoffs, a scale back of production of the 737
and 767 aircraft, and an increase in the production of the 747 wide-bodied jets
(although there will initially be a temporary decline in the 747 production).
Also, on February 6, 1995, McDonnell Douglas announced possible reductions in
its build rates. As of the date of this Information Statement, sufficient
details were not available to enable a complete analysis of these announcements.
However, based on preliminary information and analysis, the Company does not
believe these announcements will materially impact the Company's financial
projections. In addition, escalating trade tensions between the United States
and China could adversely affect future build rates of United States aircraft
manufacturers. In 1994, shipments to Boeing and its subcontractors accounted for
approximately 28% of the Company's domestic sales and approximately 22% of its
worldwide sales. Declines or delays in Boeing's build rates could have a
material adverse impact on the Company's sales. Other potentially adverse
industry developments include the continuing poor financial health of the United
States airline industry and the possible consolidation of the European aerospace
industry.
EXHIBITS TO INFORMATION STATEMENT
<TABLE>
<S> <C>
Exhibit A -- Hexcel Corporation and Subsidiaries Condensed Consolidated Statements of Operations for the
Quarters and Years Ended December 31, 1994 and December 31, 1993 (Unaudited)
Exhibit B -- Hexcel Corporation and Subsidiaries Pro Forma Condensed Consolidated Balance Sheet as of
December 31, 1994 (Unaudited)
Exhibit C -- Hexcel Corporation and Subsidiaries Projected Condensed Consolidated Financial Information
(Unaudited)
</TABLE>
8
<PAGE>
EXHIBIT A
HEXCEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THE QUARTER ENDED THE YEAR ENDED
---------------------- --------------------------
DEC 31, DEC 31, DEC 31, DEC 31,
1994 1993 1994 1993
---------- ---------- ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales................................................................... $ 76,715 $ 73,635 $ 313,795 $ 310,635
Cost of sales............................................................... (65,736) (62,778) (265,367) (263,090)
---------- ---------- ------------ ------------
Gross margin................................................................ 10,979 10,857 48,428 47,545
Other operating costs and expenses:
Marketing, general and administrative expenses............................ (11,344) (12,137) (45,785) (52,510)
Other income (expenses)................................................... 13,007 (12,638) 4,861 (12,780)
Restructuring expenses.................................................... -- (2,600) -- (46,600)
---------- ---------- ------------ ------------
Operating income (loss)..................................................... 12,642 (16,518) 7,504 (64,345)
Interest expenses........................................................... (4,760) (2,245) (11,846) (8,862)
Bankruptcy reorganization expenses.......................................... (8,207) (641) (20,152) (641)
---------- ---------- ------------ ------------
Loss from continuing operations before income taxes......................... (325) (19,404) (24,494) (73,848)
Provision for income taxes.................................................. (2,217) (9,810) (3,586) (6,024)
---------- ---------- ------------ ------------
Loss from continuing operations......................................... (2,542) (29,214) (28,080) (79,872)
Discontinued operations, net of income taxes................................ (43) (217) (1,890) (10,623)
---------- ---------- ------------ ------------
Loss before cumulative effect of accounting change...................... (2,585) (29,431) (29,970) (90,495)
Cumulative effect of change in accounting for income taxes.................. -- -- -- 4,500
---------- ---------- ------------ ------------
Net loss................................................................ $ (2,585) $ (29,431) $ (29,970) $ (85,995)
---------- ---------- ------------ ------------
---------- ---------- ------------ ------------
Net income (loss) per share and equivalent share:
Primary and fully diluted:
Continuing operations..................................................... $ (0.34) $ (4.00) $ (3.84) $ (10.89)
Discontinued operations................................................... (0.01) (0.03) (0.26) (1.45)
Cumulative effect of change in accounting for income taxes................ -- -- -- 0.61
---------- ---------- ------------ ------------
Net loss................................................................ $ (0.35) $ (4.03) $ (4.10) $ (11.73)
---------- ---------- ------------ ------------
---------- ---------- ------------ ------------
Weighted average shares and equivalent shares............................... 7,310 7,309 7,310 7,330
---------- ---------- ------------ ------------
---------- ---------- ------------ ------------
</TABLE>
9
<PAGE>
EXHIBIT B
HEXCEL CORPORATION AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
(A) (C)
PRE-REORGANIZATION ASSET SALES REORGANIZATION POST-REORGANIZATION
BALANCES PROCEEDS ADJUSTMENTS BALANCES
----------------- ----------- -------------- ------------------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
Cash........................................................ $ 931 $ 23,651 $ (20,500) $ 4,082
Receivables from asset sales................................ 29,340 (27,840) (1,500) 0
Accounts receivable......................................... 64,136 64,136
Inventories................................................. 47,364 47,364
Prepaid expenses & net assets held for sale................. 6,581 6,581
----------------- ----------- -------------- ----------
Total current assets.................................... 148,352 (4,189) (22,000) 122,163
Net fixed assets............................................ 83,113 83,113
Other....................................................... 11,992 1,650 13,642
----------------- ----------- -------------- ----------
Total assets............................................ $ 243,457 $ (4,189) $ (20,350) $ 218,918
----------------- ----------- -------------- ----------
----------------- ----------- -------------- ----------
LIABILITIES & EQUITY
Notes payable and current maturities of long-term
liabilities................................................ $ 8,531(c) $ $ 2,911(d) $ 11,442
U.S. revolving debt facility................................ 0 13,478 13,478
DIP financing............................................... 4,189 (4,189) 0
Payables & accruals......................................... 50,397(e) 12,535(e) 62,932
Restructuring accrual....................................... 11,165 11,165
----------------- ----------- -------------- ----------
Total current liabilities............................... 74,282 (4,189) 28,924 99,017
Long-term notes payable 15,525(c) 35,502(d) 51,027
Long-term accrued liabilities............................... 21,758 5,250(e) 27,008
Liabilities subject to disposition in bankruptcy
reorganization............................................. 137,777 (137,777) 0
Common stock and additional paid-in capital................. 62,699 48,900 111,599
Accumulated deficit and cumulative translation adjustment... (68,584) (1,149) (69,733)
----------------- ----------- -------------- ----------
Total equity............................................ (5,885) 0 47,751 41,866
----------------- ----------- -------------- ----------
Total liabilities & equity.............................. $ 243,457 $ (4,189) $ (20,350) $ 218,918
----------------- ----------- -------------- ----------
----------------- ----------- -------------- ----------
</TABLE>
See accompanying Notes To Pro Forma Condensed Consolidated Balance Sheet.
10
<PAGE>
EXHIBIT B
HEXCEL CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The following sets forth the adjustments used in preparing the unaudited pro
forma condensed consolidated balance sheet as if the consummation of the Plan of
Reorganization occurred on December 31, 1994. The "pre-reorganization balances"
as of December 31, 1994, reflect the unaudited results of the Company as of that
date. There can be no assurances that such amounts will not change as a result
of completion of the Company's 1994 audit.
Pro forma amounts do not reflect bankruptcy reorganization expenses incurred
after January 1, 1995 and the Company anticipates that such expenses will
continue after the Effective Date. The Company has expensed and will expense
bankruptcy reorganization costs as incurred. See Exhibit C, Projected
Consolidated Income Statements, for projected bankruptcy reorganization expenses
for 1995.
(a) Represents proceeds from asset sales that were received after December
31, 1994, but before the Effective Date. The receipt of these proceeds were an
integral part of the Plan of Reorganization. These proceeds include $26,546
received on January 6, 1995 from the sale of the Chandler business. The monies
were used to repay the remaining outstanding balance on the Debtor-in-Possession
financing and the rest was held as cash. The remaining amounts include $936 from
the sale of Euro Resins, which was received by Hexcel S.A. (Lyon) as repayment
of monies previously advanced by them to Euro Resins.
(b) Sources and uses on the Effective Date are as follows:
<TABLE>
<CAPTION>
SOURCES USES
- -------------------------------------------------- --------------------------------------------------
<S> <C> <C> <C>
Reinstated Debt & Other Obligations .............. $ 38,413 Reinstated Debt & Other Obligations .............. $ 38,413
US Revolving Debt Facility ....................... 13,478 Unsecured Claims, Including Interest ............. 78,554
Additional Accrued Liabilities ................... 17,785 Claims Converted to Equity ....................... 200
Rights Offering and Stock Purchase, Net Environmental, Legal & Other Contingent
of Transaction Costs ........................... 48,700 Claims ........................................... 17,785
Equity Issued to Creditors ....................... 200 Employee & management incentives ................. 2,825
-----------
Escrow proceeds from Euro Resins Sale ............ 1,500 Liabilities Subject to Disposition in Bankruptcy 137,777
Reorganization ..................................
Excess Domestic Cash ............................. 20,500 Financing Costs of Reinstated debt ............... 1,650
1,149
Interest & Other Costs from 1/1/95 to Effective
Date ............................................
----------- -----------
TOTAL SOURCES ................................ $ 140,576 TOTAL USES ....................................... $ 140,576
----------- -----------
----------- -----------
</TABLE>
(c) The $24,056 of long term debt on the pre-reorganization condensed
consolidated balance sheet, including the current portion of long term debt,
represents the debt of European subsidiaries and $3,725 of U.S. debt reinstated
prior to the Effective Date. The $3,725 of reinstated U.S. debt includes $4,900
of IDRB obligations related to the City of Industry facility less $2,340 of
obligations assumed by the purchaser of that facility which was sold in November
1994. Such debt was reclassified from liabilities subject to disposition in
bankruptcy reorganization prior to December 31, 1994.
11
<PAGE>
EXHIBIT B
HEXCEL CORPORATION
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(DOLLARS IN THOUSANDS)
(UNAUDITED)
(d) The reorganization adjustments to long term debt (including the current
portion of long term debt) consist of the following pre-petition claims which
are either reinstated debt instruments or new deferred payment obligations:
<TABLE>
<CAPTION>
TOTAL CURRENT LONG-TERM
OBLIGATION DEBT PORTION PORTION
- --------------------------------------------------------------------------- --------- --------- -----------
<S> <C> <C> <C>
7% Subordinated Debentures................................................. $ 25,625 $ 0 $ 25,625
Industrial Development Revenue Bonds (IDRB)................................ 10,750 2,400 8,350
Mortgages.................................................................. 576 263 313
Priority Tax Deferred Payments, 5%......................................... 1,462 248 1,214
--------- --------- -----------
Totals................................................................. $ 38,413 $ 2,911 $ 35,502
--------- --------- -----------
--------- --------- -----------
</TABLE>
The above table does not reflect certain pre-petition debt which was
reinstated prior to the Effective Date, as discussed in (c) above.
(e) Pre-reorganization payables and accruals consist of liabilities incurred
by European operations and U.S. post-petition payables and accruals incurred
during the normal course of business subsequent to December 6, 1993.
Reorganization adjustments of $17,785 ($5,250 of which is in long term
liabilities) primarily represent the reinstatement of pre-petition environmental
and legal reserves, and the reserve for the Dainippon Ink and Chemicals, Inc.
contingent claim.
12
<PAGE>
EXHIBIT C
HEXCEL CORPORATION AND SUBSIDIARIES
PROJECTED CONDENSED CONSOLIDATED INCOME STATEMENTS
YEARS ENDING DECEMBER 31, 1995 THROUGH 1998
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
--------------------------------------------------
1995 1996 1997 1998
----------- ----------- ----------- -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C>
Net sales.................................................................... $ 306,925 $ 336,868 $ 357,608 $ 367,501
Cost of sales................................................................ (245,198) (261,337) (276,261) (283,811)
----------- ----------- ----------- -----------
Gross margin............................................................. 61,727 75,531 81,347 83,690
Operating expenses........................................................... (45,367) (47,810) (50,096) (51,669)
Other income (expenses)...................................................... 1,296 (980) (941) (352)
----------- ----------- ----------- -----------
Operating income......................................................... 17,656 26,741 30,310 31,669
Interest expense, net........................................................ (8,842) (8,108) (7,184) (5,871)
Bankruptcy reorganization expenses........................................... (2,662) 0 0 0
----------- ----------- ----------- -----------
Income before taxes...................................................... 6,152 18,633 23,126 25,798
Provision for income taxes................................................... (1,596) (4,363) (6,690) (7,430)
----------- ----------- ----------- -----------
Net income............................................................... $ 4,556 $ 14,270 $ 16,436 $ 18,368
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Net income per share and equivalent share:
Primary and fully diluted.................................................... $ 0.25 $ 0.79 $ 0.91 $ 1.01
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average shares and equivalent shares................................ 18,144 18,144 18,144 18,144
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
</TABLE>
See accompanying Notes and Assumptions to Projected Condensed Consolidated
Financial Statements.
These Projected Condensed Consolidated Financial Statements and the accompanying
Notes and Assumptions have not been subject to audit or review.
13
<PAGE>
EXHIBIT C
HEXCEL CORPORATION AND SUBSIDIARIES
PROJECTED CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1994 THROUGH 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
----------- ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
ASSETS
Cash........................................................... $ 4,082 $ 4,109 $ 3,853 $ 3,500 $ 6,083
Accounts receivable............................................ 64,136 64,371 69,990 74,296 76,291
Inventories.................................................... 47,364 44,662 46,555 49,122 50,651
Prepaid expenses & other assets................................ 6,581 4,247 4,457 4,672 4,817
----------- ----------- ----------- ----------- -----------
Total current assets....................................... 122,163 117,389 124,855 131,590 137,842
Net fixed assets............................................... 83,113 84,749 82,614 79,983 76,701
Other noncurrent assets........................................ 13,642 13,232 11,388 10,085 9,668
----------- ----------- ----------- ----------- -----------
Total assets............................................... $ 218,918 $ 215,370 $ 218,857 $ 221,658 $ 224,211
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
<CAPTION>
LIABILITIES & EQUITY
<S> <C> <C> <C> <C> <C>
Notes payable and current maturities of long-term
liabilities................................................... $ 11,442 $ 8,821 $ 8,176 $ 5,175 $ 1,256
U.S. revolving debt facility................................... 13,478 24,653 20,126 14,663 2,824
Payables & accruals............................................ 62,932 48,607 52,008 53,675 54,868
Restructuring accrual.......................................... 11,165 3,832 0 0 0
----------- ----------- ----------- ----------- -----------
Total current liabilities.................................. 99,017 85,913 80,310 73,513 58,948
Long-term notes payable........................................ 51,027 55,021 51,799 47,664 45,817
Long-term accrued liabilities.................................. 27,008 27,889 25,931 23,227 23,826
Common stock and additional paid-in capital.................... 111,599 111,599 111,599 111,599 111,599
Accumulated deficit and cumulative translation adjustment...... (69,733) (65,052) (50,782) (34,345) (15,979)
----------- ----------- ----------- ----------- -----------
Total equity............................................... 41,866 46,547 60,817 77,254 95,620
----------- ----------- ----------- ----------- -----------
Total liabilities & equity................................. $ 218,918 $ 215,370 $ 218,857 $ 221,658 $ 224,211
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
See accompanying Notes and Assumptions to Projected Condensed Consolidated
Financial Statements.
These Projected Condensed Consolidated Financial Statements and the accompanying
Notes and Assumptions have not been subject to audit or review.
14
<PAGE>
EXHIBIT C
HEXCEL CORPORATION AND SUBSIDIARIES
PROJECTED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDING DECEMBER 31, 1995 THROUGH 1998
(UNAUDITED)
<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31,
----------------------------------------------
1995 1996 1997 1998
---------- ---------- ---------- ----------
(IN THOUSANDS)
<S> <C> <C> <C> <C>
Cash provided by operations
Net income.................................................................... $ 4,556 $ 14,270 $ 16,436 $ 18,368
Adjustments:
Depreciation & amortization................................................. 13,084 13,984 14,767 14,874
(Gain) loss on sale of assets............................................... (2,300) 0 0 0
Changes in working capital:
(Incr.) decr. in accounts receivable...................................... (1,210) (5,619) (4,306) (1,995)
(Incr.) decr. in inventories.............................................. 790 (1,892) (2,566) (1,529)
(Incr.) decr. prepaids & other assets..................................... (367) (210) (215) (145)
Incr. (decr.) in payable & accruals....................................... 6,016 (326) (2,903) 2,018
Incr. (decr.) in other liabilities........................................ 768 1,167 2,465 (227)
---------- ---------- ---------- ----------
Total changes in working capital.......................................... 5,997 (6,880) (7,525) (1,878)
---------- ---------- ---------- ----------
Cash provided by operations............................................... 21,337 21,374 23,678 31,364
Cash used by investing activities
Capital expenditures.......................................................... (12,519) (12,736) (11,280) (11,287)
Proceeds from the disposition of assets....................................... 6,038 180 180 180
Cash restructuring costs...................................................... (6,691) (1,489) 0 0
Other investing activities.................................................... (1,979) 808 (333) (68)
---------- ---------- ---------- ----------
Cash used by investing activities......................................... (15,151) (13,237) (11,433) (11,175)
Cash used by financing activities
Net proceeds/(repayments) of debt............................................. (33,525) (8,393) (12,598) (17,606)
Other financing activities.................................................... 0 0 0 0
---------- ---------- ---------- ----------
Cash provided (used) by financing activities.............................. (33,525) (8,393) (12,598) (17,606)
---------- ---------- ---------- ----------
Net cash provided/(used)...................................................... (27,339) (256) (353) 2,583
Cash balance, beginning of period............................................. 31,448(a) 4,109 3,853 3,500
---------- ---------- ---------- ----------
Cash balance, end of period................................................... $ 4,109 $ 3,853 $ 3,500 $ 6,083
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
- ------------------------
(a) Includes cash proceeds from asset sales received in January, 1995.
See accompanying Notes and Assumptions to Projected Condensed Consolidated
Financial Statements.
These Projected Condensed Consolidated Financial Statements and the accompanying
Notes and Assumptions have not been subject to audit or review.
15
<PAGE>
Exhibit C
HEXCEL CORPORATION AND SUBSIDIARIES
PROJECTED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1995 THROUGH 1998
NOTES AND ASSUMPTIONS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
The Company continued the process of updating its financial projections
since the Projected Consolidated Financial Statements included as Exhibit E to
the Disclosure Statement (the "Disclosure Statement Projections") were prepared.
The Company now has unaudited results through December 31, 1994 and more than
four months have passed since the Disclosure Statement Projections were
prepared. While in the aggregate there have not been significant changes, the
updated projections reflect recent events and changes that have occurred since
the Disclosure Statement was filed. The updated projected condensed consolidated
financial statements for Hexcel Corporation ("Hexcel" or the "Debtor") and
Subsidiaries are presented for the four years ending December 31, 1998.
The unaudited Pro Forma Condensed Consolidated Balance Sheet as of December
31, 1994 sets forth the results as if the consummation of the Plan of
Reorganization occurred on such date. The actual Effective Date was February 9,
1995.
These projected condensed consolidated financial statements should be read
in conjunction with the "Additional Risk Factors" and "Changes to Projections
Based On Recent Events" sections of this Information Statement.
The projected condensed consolidated financial statements are presented in
accordance with generally accepted accounting principles consistent with
Hexcel's current accounting policies and practices. Fresh Start Accounting, as
defined by the American Institute of Certified Public Accountants, Statement of
Position 90-7, is not applicable to Hexcel and has not been applied to these
projected condensed consolidated financial statements.
THE PROJECTED CONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN EXHIBIT E TO THE
DISCLOSURE STATEMENT AND THE UPDATED PROJECTED FINANCIAL INFORMATION INCLUDED IN
THIS INFORMATION STATEMENT REFLECT NUMEROUS ASSUMPTIONS WITH RESPECT TO THE
ANTICIPATED FUTURE PERFORMANCE OF THE COMPANY'S CONSOLIDATED OPERATIONS, MARKETS
IN WHICH IT COMPETES, GENERAL BUSINESS AND ECONOMIC CONDITIONS, AND OTHER
MATTERS WHICH ARE BEYOND THE CONTROL OF THE COMPANY. THEREFORE, THE ACTUAL
RESULTS ACHIEVED THROUGHOUT THE PROJECTION PERIOD WILL VARY FROM THE PROJECTED
RESULTS. THESE VARIATIONS MAY BE MATERIAL. WHILE THE COMPANY BELIEVES THAT THE
ASSUMPTIONS UNDERLYING THE PROJECTIONS, AS ADJUSTED BY THE INFORMATION SET FORTH
IN THIS INFORMATION STATEMENT, WHEN CONSIDERED ON AN OVERALL BASIS, ARE
REASONABLE IN LIGHT OF CURRENT CIRCUMSTANCES, NO ASSURANCES CAN BE GIVEN THAT
THE PROJECTED RESULTS WILL BE REALIZED.
SETTLEMENT OF BANKRUPTCY CLAIMS
The projected consolidated financial statements are based on the settlement
of liabilities subject to disposition in bankruptcy reorganization as presented
in the Plan. The reader is encouraged to refer to the Plan and related
Disclosure Statement for a more detailed discussion of financial terms. A
summary of the major points of the Plan are as follows:
1. ADMINISTRATIVE EXPENSES AND PRIORITY TAX CLAIMS
Administrative expenses of $3,675 were paid in cash as of the Effective
Date. These expenses included management bonuses and certain exit financing
costs. Professional fees relating to the bankruptcy will be paid in the ordinary
course of business as allowed by the Bankruptcy Court.
Priority tax claims, including certain post-petition tax liens, paid on the
Effective Date totaled $1,247. Priority tax claims in the amount of $1,462 will
be paid in equal annual cash payments over six years, bearing a fixed annual
rate of interest of 5%.
16
<PAGE>
EXHIBIT C
2. CLASS 2 -- SECURED CLAIMS
The secured claims (defined as the Graham Industrial Mortgage, the Greater
Pottsville Mortgage and the Pottsville (Schuylkill) Mortgage) were reinstated.
Pre-petition and post-petition interest was paid in cash on the Effective Date.
3. CLASSES 3 & 4 -- INDUSTRIAL DEVELOPMENT REVENUE BONDS (IDRBS) AND BNP
LETTERS OF CREDIT
Seven of the IDRBs (including the California Pollution Control Financing
Authority Bonds, the Industrial Development Authority of the City of Casa Grande
Bonds, the Young County #1 Industrial Development Corporation Bonds, the
Guadalupe-Blanco River Authority Industrial Development Corporation Bonds, the
Port of Skagit County Industrial Development Corporation Bonds, the Industrial
Development Authority of the County of Los Angeles Bonds and the City of
Lancaster Bonds) and the letters of credit supporting them were reinstated. A
cash payment of $1,270 was made to BNP on the Effective Date for all pre- and
post-petition unreimbursed drawings, draw fees, letter of credit fees,
attorneys' fees and other fees and out of pocket expenses including those paid
by BNP to the remarketing agent. BNP also received a cash payment of $500 for
BNP's modification of covenants and commitment to extend the letters of credit
until October 1, 1998. Commencing April 1, 1995, and every 3 months thereafter
until the expiration of the BNP Letters of Credit, the Debtor will reduce by
$600 BNP's contingent liability with respect to the BNP Letters of Credit, by
either redeeming $600 of IDRBs secured thereby, obtaining a $600 backup letter
of credit in BNP's favor, or depositing $600 in a sinking fund in which BNP
and/or the trustees for the IDRBs will hold a first priority security interest.
4. CLASS 5 -- GENERAL UNSECURED CLAIMS
The general unsecured claims (including the Revolver Bank claims,
Thermoplastics note claim, trade claims and other pre-petition claims) were paid
in cash as of the Effective Date. In addition, the claimants were paid in cash
for interest of 5% on the pre-petition balance for the period December 6, 1993
through the Effective Date. The Thermoplastics note claim received the settled
amount of $1,129. This class also included the estimated Dainippon Ink and
Chemicals, Inc. contingent claim which is expected to be paid in cash over a two
year period as discussed previously in this Information Statement.
The litigation claims will be paid in cash if and when they become allowed
claims. Management estimated the cash requirements relating to these claims and
reflected these payments in the projected condensed consolidated financial
statements.
5. CLASS 6 -- PRINCIPAL MUTUAL NOTES
On the Effective Date, the Principal Mutual 10.12% Note and the 8.75% Note
were extinguished for $36,762 in cash in satisfaction of outstanding principal
and pre-petition and post-petition accrued interest on these notes and as
compensation for prepayment of both notes.
6. CLASS 7 -- ENVIRONMENTAL CLAIMS
Settlements of $137 for certain environmental claims were paid on the
Effective Date. Certain other environmental claims will be paid in cash if and
when they become allowed claims. The other environmental claims will be paid
through the ordinary course of business. Management estimated the cash
requirements relating to these claims and reflected these payments in the
projected condensed consolidated financial statements.
7. CLASS 8 -- HEXCEL S.A. (LYON) NOTE AND OTHER INTERCOMPANY PAYABLES
The holder of the Hexcel S.A. (Lyon) claim received a note for the principal
amount of the claim and accrued interest which will be due on demand after
December 31, 1998 and will bear interest at 6.9% payable semi-annually. Other
miscellaneous intercompany payables will also be paid after December 31, 1998,
and will bear no interest. As these are intercompany claims, they were not
reflected in the projected condensed consolidated financial statements.
8. CLASS 9 -- SUBORDINATED DEBENTURES
On the Effective Date, the subordinated debentures, with an interest rate of
7.0%, due August 1, 2011, were reinstated at their total principal amount of
$25,625. Bondholders, through the bond trustee, received cash on the Effective
Date totaling $2,844 for pre-petition and post-petition accrued interest.
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EXHIBIT C
9. CLASS 10 -- SECTION 510B TRADING CLAIMS
Class 10 claims include three civil actions filed against the Debtor prior
to December 6, 1993. Each holder of allowed Class 10 claims will receive his or
her pro rata share of $200 of Reorganized Hexcel Common Stock.
10. CLASS 11 -- HEXCEL EQUITY HOLDERS
Each holder of Hexcel Common Stock, as of the Effective Date, received one
share of Reorganized Hexcel Common Stock for each share of Hexcel Common Stock.
Additionally, each holder of Hexcel Common Stock, as of the Effective Date, will
receive certain Rights entitling such holder to purchase additional shares of
Reorganized Hexcel Common Stock.
11. CLASS 12 -- HEXCEL OPTIONS
All holders of issued and vested Hexcel Options retained their Hexcel
Options.
12. ASSUMED EXECUTORY CONTRACTS AND CAPITAL LEASES
The Hexcel FYFE obligation and the capital leases were assumed during the
post-petition period. The reinstated payment schedules for the capital leases
were reflected in the projected condensed consolidated financial statements.
Also, Hexcel's motion to begin immediate payment of the Hexcel FYFE obligations
was approved on June 22, 1994 and the approved payment schedule was also
reflected in the projected condensed consolidated financial statements.
SUMMARY TERMS OF POST-REORGANIZATION DEBT
Revolving Credit Facility
- Line of credit of up to $45,000
- 1.5% above prime
- Maturity of 2/9/98
- Secured by substantially all assets of Hexcel
Subordinated Debentures
- $25,625 principal
- 7.0% interest rate
- Maturity of 8/1/11
- Semi-annual interest payments
IDRBs - 7 Bonds totaling $15,650
- Fluctuating rates estimated at 4.0% to 6.0%
- Maturities ranging from 2007 through 2024
- Letters of credit supporting IDRBs require sinking
fund payments of $600 every three months beginning
April 1, 1995
Mortgages - Three secured mortgages totaling $543
- Interest rates range from 2% to 9%
- Maturities range from 1998 to 2007
Capital Leases - One capital lease was assumed during the post
petition period
- Effective date principal balances include $709 @
9.09% maturing 11/21/99
- Additional capital lease added in 1994 with
principal balance of $682 and payments through 2009
Hexcel -- FYFE - Effective date balance of $500
- 5.31% interest rate
- Quarterly principal payments of $250 plus interest
- Terms approved by Bankruptcy Court in June 1994
European Debt - Various instruments principally consisting of
revolving debt facilities outstanding at Hexcel S.A.
(Belgium) and Hexcel S.A. (Lyon)
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EXHIBIT C
OPERATING ASSUMPTIONS
NET SALES
DOMESTIC SALES. Hexcel's forecasting models were used as the basis of the
sales forecast in conjunction with significant input from Hexcel's sales and
marketing personnel and product managers. Sales were forecasted for 1995 on an
individual customer level and product line basis. The detailed sales forecast by
customer is then compared to the marketing department's top down view of
aggregate sales based on build rates, industry trends, etc. Sales for the years
1996 through 1998 were held constant from 1995 business plan levels, adjusted
for major program changes. Much of the expected increase in sales from 1996 to
1998 is due to the forecasted increase in shipments for the Boeing 777 program.
The Company's ceramics development efforts are likely to provide inroads into
the aircraft jet engines market. Several initiatives are underway to capitalize
on Hexcel's positions in the recreational markets. In addition, automotive and
siesmic retrofit products sold to the industrial segment show significant
promise beyond the time frame of this plan.
INTERNATIONAL SALES. Hexcel's international business was forecasted on a
subsidiary by subsidiary basis. Each subsidiary was responsible for forecasting
its financial performance based on local market conditions. Assumptions for
major program changes were provided by Hexcel's sales and marketing personnel
and product managers. Much of the increase in foreign sales is due to strong
demand within the electrical and decorative markets.
SALE OF RESINS. The plan assumes the sale of the U.S. Resins operations in
the first quarter of 1995. The disposition of U.S. Resins will be treated as
Discontinued Operations for financial reporting purposes in 1995. Accordingly,
U.S. Resins sales and costs for the 1st quarter of 1995 are included in other
income.
GROSS MARGINS
Variable margins in years 1995 through 1998 are based on 1994 actual margins
adjusted for process improvements and material yield opportunities that have
been identified and quantified. The U.S. business otherwise assumes no inflation
for either revenue or factory costs based on the assumption that price increases
or production improvements will be sufficient to offset any factory cost
increases. The European revenues and factory costs reflect annual inflation of
approximately 3%.
Fixed plant costs for 1995 assume no additional plant closures, other than
completing the closing of the Graham facility and the sale of U.S. Resins.
Domestic fixed plant costs for 1996 through 1998 are maintained at the fourth
quarter 1995 run rates, adjusted for the sale of the Chandler facility. European
fixed costs are adjusted for the sale of Euro-Resins and further margin
improvements are projected in Europe as a result of restructuring initiatives in
Belgium.
SALES & MARKETING EXPENSES
A reduction in personnel occurred in the sales and marketing departments in
April 1994. Sales and marketing expenses for 1995 through 1998 are held at the
same levels as the fourth quarter of 1994, adjusted for inflation of 3% per
year.
GENERAL AND ADMINISTRATIVE EXPENSES
Significant reductions in general and administrative personnel have been
made over the last two years. Most of these occurred in the summer and fall of
1993 in conjunction with the change from strategic business units to a
functional organization. Minor staff reductions were completed during April
1994. General and administrative expenses in 1995 and beyond are generally held
at the same levels as the fourth quarter of 1994, adjusted for inflation of 3%
per year.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses have been estimated at approximately 2.7%
of sales in 1995 through 1998, consistent with Hexcel's recent experience in
actual spending. Successful research and development activities are critical to
Hexcel's future, and Hexcel will need to continue to balance its needs to
effectively invest in research and development and to control its costs. Hexcel
undertook a rigorous analysis of its research and development projects in the
late summer of 1993. Based on this assessment, Hexcel significantly reduced the
number of projects in order to better focus its activities and more effectively
spend its money.
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EXHIBIT C
INCOME TAXES
Taxable income is forecasted to be substantially offset by utilization of
Net Operating Loss Carryforwards ("NOLs"). It is assumed that the total amount
of NOLs will not be materially reduced by the reorganization because the full
recoveries of creditors under the Plan do not result in taxable debt
cancellation income.
Because of the ownership change which is expected to occur under the Plan,
the utilization of NOLs in the U.S. after the Effective Date will be affected.
It is expected that the Debtor will make use of Section 382(l)(6) of the
Internal Revenue Code, whereby the annual allowable NOL deduction will be
limited to an amount equal to the product of the fair market value of the Hexcel
stock immediately following the ownership change caused by the Plan and the long
term federal tax-exempt rate (currently 6.05%). The Debtor will not qualify for
other rules permitting unlimited use of NOLs due to the makeup of the post
reorganization equity ownership.
At this time it is uncertain whether the Debtor has a net unrealized
built-in gain or loss, however, Hexcel believes that it does not have a net
unrealized built-in loss and therefore it is assumed that future tax deductions
or losses on restructuring charge items will be fully deductible. Due to the
uncertainty of the existence of a net unrealized built-in gain, no increase in
the annual limit on NOLs has been assumed.
Hexcel S.A. (Belgium) has sufficient NOLs to offset its estimated taxable
income during the period shown.
Hexcel S.A. (Lyon) does not have any NOLs.
NET INCOME PER SHARE
Net income per share is based on the estimated average number of shares
outstanding (18,144,333 shares) after giving effect to the completion of the
Rights offering, the purchase of shares by Mutual Series pursuant to the Standby
Purchase Commitment, the sale of shares to John J. Lee and the issuance of
shares in settlement of Class 10 claims (assuming that the number of shares
issued to such holders is based on a price of $4.625 per share). Fully diluted
and primary earnings per share are estimated to be the same. This assumes no
exercise of options. The actual number of shares outstanding may vary.
CAPITAL EXPENDITURES
Capital expenditures for 1990 to 1992 averaged over $18,000 per year. For
several years prior to 1990, capital expenditures were even greater due to the
addition of the Chandler facility. Due to the low cash levels in 1993, Hexcel
tightly monitored capital expenditures, and they were reduced to $6,500 in 1993
and $9,044 in 1994. Ongoing capital expenditures during the projection period
are set at levels between $11,600 and $13,000 per year. These amounts include
expenditures for process improvements, equipment replacement, environmental and
discretionary items.
CASH RESTRUCTURING COSTS
The cash restructuring costs include the Graham closure, the relocation of
certain product lines from Chandler to Casa Grande, severance, consulting fees,
certain MIS implementation costs and some relocation expenditures.
BALANCE SHEET ASSUMPTIONS
CASH
Hexcel U.S. is assumed to have a minimum cash balance of $1,000, with all
cash flow from the U.S. being swept into the revolving credit facility to repay
outstanding balances. Cash balances in Europe are assumed to remain in Europe as
working capital with the exception of proceeds from the sale of the Euro-Resins
business. The cash in Europe is generally not available to finance the U.S.
operations.
WORKING CAPITAL ACCOUNTS
Working capital accounts (inventory, accounts receivable, prepaid expenses,
accounts payable and accrued liabilities) are individually projected based on
management's estimates of underlying business trends.
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EXHIBIT C
NOTES PAYABLE AND CURRENT MATURITIES OF LONG-TERM LIABILITIES AND LONG-TERM
NOTES PAYABLE
The unaudited December 31, 1994 pro forma current and long-term portions of
long-term notes payable consist of reinstated debt instruments, new debt
instruments and new deferred payment obligations as follows:
<TABLE>
<CAPTION>
LONG-TERM
OBLIGATION TOTAL DEBT CURRENT PORTION PORTION
- ---------------------------------------------------------------------------------------- ----------- --------------- -----------
<S> <C> <C> <C>
European Debt -- various................................................................ $ 19,062 $ 7,882 $ 11,180
Subordinated Debentures, 7%............................................................. 25,625 0 $ 25,625
Industrial Development Revenue Bonds.................................................... 15,650 2,400 13,250
Less Obligation Assumed................................................................. (2,340) (2,340)
Priority Tax Deferred Payments, 5%...................................................... 1,462 248 1,214
Secured Mortgages & Capital Lease Obligations........................................... 2,510 412 2,098
Hexcel -- FYFE 5.31% Note............................................................... 500 500 0
----------- --------------- -----------
Totals.................................................................................. $ 62,469 $ 11,442 $ 51,027
----------- --------------- -----------
----------- --------------- -----------
</TABLE>
LONG-TERM ACCRUED LIABILITIES
Accrued liabilities are primarily comprised of accruals of post retirement
benefits and the long-term portion of the DIC settlement.
COMMON STOCK
Common Stock is adjusted for the rights offering and the issuance of stock
in settlement of Class 10 claims.
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