<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
__________________________
Date of Report (Date of earliest event reported) July 12, 1996 (June 27, 1996)
-----------------------------
HEXCEL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 94-1109521
- --------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1-8472
------------------------
(Commission File Number)
Two Stamford Plaza
281 Tresser Blvd., 16th Floor
Stamford, CT 06901-3238
- ----------------------------- ----------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code (203) 969-0666
--------------
5794 West Las Positas Boulevard, Pleasanton, CA 94588-8781
-------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 27, 1996, Hexcel Corporation, a Delaware corporation ("Hexcel",
the "Company" or the "Registrant"), consummated its acquisition (the
"Hercules Acquisition") of the Composite Products Division (the "Hercules
Composites Business") of Hercules Incorporated, a Delaware corporation
("Hercules"). Pursuant to the Sale and Purchase Agreement, dated as of April
15, 1996 (as amended through June 27, 1996, the "Purchase Agreement"), among
Hexcel, Hercules, Hercules Nederland BV, a Netherlands company ("HNBV"), and
HISPAN Corporation, a Delaware corporation (together with Hercules and HNBV,
the "Sellers"), Hexcel acquired the assets and liabilities (other than
certain excluded assets and liabilities) of the Hercules Composites Business,
including all of the outstanding capital stock of HNBV's wholly-owned Spanish
subsidiary, Hercules Aerospace Espana, S.A. ("HAESA"), for cash consideration
of $135 million, subject to certain post-closing adjustments. The amount of
consideration paid by Hexcel was determined through arm's length negotiations
between Hexcel and the Sellers. Hexcel financed payment of the consideration
for the Hercules Acquisition with borrowings under a new $310 million credit
facility (the "Credit Facility") with a group of bank lenders led by Credit
Suisse. Pursuant to a letter agreement, dated as of June 27, 1996, among
Hexcel and the Sellers, Hexcel and Hercules have agreed that in the event
applicable Spanish antitrust authorities were to take certain adverse actions
in respect of Hexcel's acquisition of HAESA, Hexcel would have the option to
sell its interest in HAESA (which had sales representing approximately 19% of
the total sales of the Hercules Composites Business in 1995) back to Hercules
for the allocated purchase price Hexcel paid for HAESA on June 27, 1996. A
copy of the Registrant's press release, dated June 27, 1996, describing the
Hercules Acquisition and the Credit Facility is included as Exhibit 99.1 to
this Current Report on Form 8-K, and is incorporated herein by this reference.
The Hercules Composites Business, with facilities in Utah, Alabama and
Spain, develops, manufactures and markets prepregs and carbon fiber for
aerospace and other markets. Hexcel intends generally to continue such uses
of the plant, equipment and other physical property included in the acquired
assets. However, Hexcel also expects to eliminate excess capacity and
consolidate redundant activities in connection with the integration of the
Hercules Composites Business and the business Hexcel acquired from Ciba-Geigy
Limited ("Ciba") earlier this year with Hexcel's other businesses.
The foregoing descriptions of the Hercules Acquisition and the Credit
Facility are qualified in their entirety by reference to (a) the Purchase
Agreement, which is Exhibit 2.1 to this Current Report on Form 8-K
(incorporated by reference to Exhibit 2.2 to Hexcel's Quarterly Report on
Form 10-Q for the quarterly period ended March 31, 1996), (b) Amendment
Number One to the Purchase Agreement, dated as of June 27, 1996, which is
included as Exhibit 2.2 to this Current Report on Form 8-K, (c) Letter
Agreement, dated as of June 27, 1996, among the Registrant and the Sellers,
which is included as Exhibit 2.3 to this Current Report on Form 8-K, and (d)
the Credit Agreement, dated as of June 27, 1996, among the Registrant,
certain of its subsidiaries, the institutions from time to time party thereto
as Lenders, the institutions from time to time party thereto as Issuing Banks
and Credit Suisse, as administrative agent for the Lenders, which is included
as Exhibit 99.2 to this Current Report on Form 8-K.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
INDEX TO FINANCIAL STATEMENTS Page No.
OF THE HERCULES COMPOSITES BUSINESS --------
Report of Independent Accountants 4
Statement of Operations - For the years ended
December 31, 1995, 1994 and 1993 5
Balance Sheet - December 31, 1995 and 1994 6
Statement of Cash Flows - For the years ended
December 31, 1995, 1994 and 1993 7
Statement of Changes in Division Equity - For the years
ended December 31, 1995, 1994 and 1993 8
Notes to Financial Statements - December 31, 1995, 1994
and 1993 9
Statement of Operations (unaudited) - For the three months
ended March 31, 1996 15
Balance Sheet (unaudited) - March 31, 1996 16
Statement of Cash Flows (unaudited) - For the three months
ended March 31, 1996 17
Statement of Changes in Division Equity (unaudited) - For
the three months ended March 31, 1996 18
Notes to Unaudited Financial Statements (unaudited) 19
3
<PAGE>
[Coopers & Lybrand Letterhead]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and the Board of Directors of
Hercules Incorporated:
We have audited the accompanying balance sheets of the Composite Products
Division of Hercules Incorporated as of December 31, 1995 and 1994 and the
related statements of operations, division equity, and cash flow for each of
the three years in the period ended December 31, 1995. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Composite Products
Division of Hercules Incorporated as of December 31, 1995 and 1994 and the
results of its operations and its cash flow for each of the three years in
the period ended December 31, 1995, in conformity with generally accepted
accounting principles.
As discussed in Notes 6 and 9 to the financial statements, in 1993, the
Company changed its methods of accounting for postretirement and
postemployment benefits other than pensions.
/s/ Coopers & Lybrand L.L.P.
2400 Eleven Penn Center
Philadelphia, Pennsylvania 19103
February 26, 1996
4
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
-------------------------------------
1995 1994 1993
----------- ----------- -----------
<S> <C> <C> <C>
Net sales.................................................................. $ 100,449 $ 100,113 $ 101,448
Cost of sales.............................................................. 83,748 94,786 92,298
----------- ----------- -----------
Gross profit............................................................... 16,701 5,327 9,150
Selling, general, and administrative expenses.............................. 2,266 2,888 3,229
Allocated selling, general, and administrative expenses.................... 7,086 6,047 6,336
Research and development................................................... 2,184 2,481 2,815
Other operating (income) expenses, net..................................... (391) 1,670 1,755
----------- ----------- -----------
Income (loss) before taxes and effect of changes in accounting
principles................................................................ 5,556 (7,759) (4,985)
Provision for taxes on income.............................................. -- -- --
----------- ----------- -----------
Income (loss) before effect of changes in accounting principles............ 5,556 (7,759) (4,985)
Effect of changes in accounting principles................................. -- -- (3,916)
----------- ----------- -----------
Net income (loss).......................................................... $ 5,556 $ (7,759) $ (8,901)
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
BALANCE SHEET
(DOLLARS IN THOUSANDS)
ASSETS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
------------------------
1995 1994
----------- -----------
<S> <C> <C>
Current Assets
Cash................................................................................. $ 2,126 $ 4,905
Trade accounts receivable............................................................ 17,510 14,923
Less allowance for doubtful accounts................................................. (401) (390)
----------- -----------
Net Accounts Receivable............................................................ 17,109 14,533
Inventories
Finished products.................................................................. 11,813 13,740
Materials, supplies, and work in process........................................... 13,485 27,225
----------- -----------
Total Inventories................................................................ 25,298 40,965
----------- -----------
Total Current Assets................................................................. 44,533 60,403
Property, plant, and equipment
Land............................................................................... 1,514 1,514
Buildings and equipment............................................................ 187,185 182,494
Construction in progress........................................................... 6,772 2,231
Accumulated depreciation........................................................... (100,456) (89,459)
----------- -----------
Net Property, Plant and Equipment.................................................. 95,015 96,780
Deferred charges and other assets.................................................... 1,036 1,135
----------- -----------
TOTAL ASSETS..................................................................... $ 140,584 $ 158,318
----------- -----------
----------- -----------
<CAPTION>
LIABILITIES AND DIVISION EQUITY
<S> <C> <C>
Current liabilities
Accounts payable..................................................................... $ 2,379 $ 2,915
Accrued expenses
Payroll and employee benefits...................................................... 5,996 5,177
Other.............................................................................. 3,132 4,631
----------- -----------
Total Current Liabilities........................................................ 11,507 12,723
Other liabilities.................................................................... 1,048 1,276
Minority interest.................................................................... -- 12,000
Division Equity...................................................................... 128,029 132,319
----------- -----------
TOTAL LIABILITIES AND DIVISION EQUITY............................................ $ 140,584 $ 158,318
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
STATEMENT OF CASH FLOW
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
---------------------------------
1995 1994 1993
---------- --------- ----------
<S> <C> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss)............................................................ $ 5,556 $ (7,759) $ (8,901)
Adjustments to reconcile net income(loss) to cash provided from operations:
Depreciation and amortization.............................................. 9,395 9,452 9,522
Gain on settlement......................................................... (1,100) -- --
Loss on disposal of property, plant, and equipment......................... 65 43 (34)
Provision for inventory loss............................................... 1,300 1,561 2,642
Accruals and deferrals of cash receipts and payments:
Accounts receivable, net................................................... (2,576) (2,862) (1,594)
Inventories................................................................ 12,029 11,020 8,281
Accounts payable and accrued expenses...................................... (1,216) 156 3,622
Deferred charges and other assets.......................................... 99 (77) 113
Other liabilities.......................................................... (228) (33) 103
---------- --------- ----------
Net cash provided by operations............................................ 23,324 11,501 13,754
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures....................................................... (8,543) (1,871) (1,740)
---------- --------- ----------
Net cash used for investing activities..................................... (8,543) (1,871) (1,740)
CASH FLOW FROM FINANCING ACTIVITIES
Net Parent company capital withdrawals..................................... (17,560) (7,351) (9,540)
---------- --------- ----------
Net cash used for financing activities..................................... (17,560) (7,351) (9,540)
Increase (Decrease) in Cash................................................ (2,779) 2,279 2,474
Cash, beginning of year.................................................... 4,905 2,626 152
---------- --------- ----------
Cash, end of year.......................................................... $ 2,126 $ 4,905 $ 2,626
---------- --------- ----------
---------- --------- ----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
STATEMENT OF CHANGES IN DIVISION EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<S> <C>
BALANCE AT JANUARY 1, 1993........................................................ $ 163,220
Net loss.......................................................................... (8,901)
Net Capital withdrawal............................................................ (11,766)
---------
BALANCE AT DECEMBER 31, 1993...................................................... $ 142,553
Net loss.......................................................................... (7,759)
Net Capital withdrawal............................................................ (2,475)
---------
BALANCE AT DECEMBER 31, 1994...................................................... $ 132,319
Net income........................................................................ 5,556
Net Capital withdrawal............................................................ (9,846)
---------
BALANCE AT DECEMBER 31, 1995...................................................... $ 128,029
---------
---------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. SIGNIFICANT ACCOUNTING POLICIES:
BASIS OF PRESENTATION
The Composite Products Division (CPD) is a division of Hercules Incorporated
(the Parent). CPD serves worldwide markets for carbon fiber materials (fiber and
prepregs). These materials are used to make structural products. The division
has three major operating units which include Bacchus (Magna, UT), HISPAN
(Decatur, AL) and HAESA (Madrid, Spain). Currently, the division's geographic
scope is primarily North America, where its largest facilities are located. CPD
serves a diverse customer base which operate in several market segments. CPD
sales to the U.S. Government represented approximately 22%, 41%, and 49% of
total net sales during 1995, 1994, and 1993, respectively. CPD sales to
Construcciones Aeronauticas S.A. (Government of Spain) represented approximately
14%, 12%, and 9% of total net sales during 1995, 1994, and 1993 respectively.
CPD performs ongoing evaluations of its customers but generally does not require
collateral to support customer receivables.
The financial statements reflect the results of operations and financial
position of CPD, including certain allocations by the parent company. All
material intercompany transactions and balances have been eliminated.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
ENVIRONMENTAL EXPENDITURES
Environmental expenditures that pertain to current operations or relate to
future revenues are expensed or capitalized consistent with the Parent's
capitalization policy. Expenditures that result from the remediation of an
existing condition caused by past operations, that do not contribute to current
or future revenues, are expensed. Liabilities are recognized for remedial
activities when the cleanup is probable and the cost can be reasonably
estimated.
INVENTORIES
Inventories are stated at the lower of cost or market. Domestic inventories
are valued predominantly on the last-in, first-out (LIFO) method. Spare parts,
supplies and foreign inventories, representing approximately $6,130, and $6,270
in 1995 and 1994, respectively, are valued on the average cost method.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. HISPAN and HAESA use the
straight-line method, while Bacchus uses an accelerated depreciation method.
Effective January 1, 1993, CPD changed its estimate of the useful lives for all
processing equipment. CPD believes these new depreciation lives provide for a
better matching of costs and revenues over the life of the assets. For income
tax purposes, accelerated depreciation methods are used.
Maintenance, repairs, and minor renewals are charged to income; major
renewals and betterments are capitalized. Upon normal retirement or replacement,
the cost of property (less proceeds of sale or salvage) is charged to income.
9
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
1. SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
INCOME TAXES
CPD is not a separate tax paying entity. Accordingly, its results of
operations have been included in tax returns filed by Hercules. The accompanying
financial statements include tax computations assuming CPD filed separate
returns and reflecting the application of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes" for all periods presented.
FOREIGN CURRENCY TRANSLATION
Assets and liabilities of HASEA are translated at current exchange rates,
and related revenues and expenses are translated at average exchange rates in
effect during the period. Resulting translation adjustments are recorded as a
component of division equity.
2. SUPPLEMENTAL CASH FLOW INFORMATION:
During 1995, CPD was involved in the following non-cash activities with the
Parent:
- $7,538 of assets relating to claims were withdrawn by the Parent
- $2,000 of fixed assets were contributed by the Parent and
- $10,900 of equity was contributed by the Parent pursuant to the Parent's
buy out of the minority interest
During 1994, $4,437 of equity was contributed by the Parent through a
dividend payment to the minority shareholder.
3. INVENTORIES:
If the cost of all inventories had been valued on the average cost method,
which approximates current cost, inventories would have been $460 and $691
higher than as reported on the LIFO method at December 31, 1995, and 1994,
respectively.
During 1995 and 1994, inventory quantities were reduced, which resulted in a
liquidation of LIFO inventory layers carried at higher costs which prevailed in
prior years. The effect of the liquidations was to increase cost of goods sold
and decrease net income (increase net loss) by approximately $6,880 and $2,570
in 1995 and 1994, respectively.
4. PENSIONS:
CPD participates in various Hercules-defined benefit pension plans covering
substantially all employees. Benefits are based on average final pay and years
of service. CPD's allocation of amounts credited directly to Allocated Selling,
General and Administrative expense, based on the relationship of CPD's total
payroll to Hercules' payroll, was $1,034, $215, and $260 in 1995, 1994 and 1993,
respectively. Information on the actuarial present value of benefit obligation,
fair value of plan assets, and pension costs is not provided as such information
is not maintained separately for employees of CPD.
5. EMPLOYEE BENEFIT PLAN:
An operating unit of CPD has a noncontributory defined contribution pension
plan covering substantially all employees. This operating unit contributes
amounts equal to 6% of covered employee compensation up to the Social Security
Wage Base and amounts equal to 5% in excess of the Social Security Wage Base.
Pension expense for the years ended December 31, 1995, 1994, and 1993 was $133,
$130 and $150, respectively.
10
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
6. OTHER POSTRETIREMENT BENEFITS:
CPD participates in certain defined benefit postretirement health care and
life insurance programs provided to retired Hercules employees. Substantially
all employees are covered and become eligible for these benefits upon satisfying
the appropriate age and service requirements necessary for receipt of these
benefits.
Effective January 1, 1993, Hercules adopted Statement of Financial
Accounting Standards (SFAS) No. 106 "Employers' Accounting for Postretirement
Benefits Other than Pensions." SFAS No. 106 requires the recognition of these
benefit costs on an accrual basis. Prior to January 1, 1993, the costs of
retiree health care and life insurance were expensed as paid. The effect of
adopting this accounting standard has been recognized immediately as the effect
of a change in accounting principle and has resulted in a charge of $3,122. (No
tax benefit was realized). This represents the accumulated postretirement
benefit obligation existing at January 1, 1993. CPD's allocated portion of the
net periodic postretirement cost was $456, $556 and $746 in 1995, 1994, and
1993, respectively. The accumulated postretirement benefit expense and the
annual postretirement benefit expense were allocated based on the relationship
between CPD's number of active employees to Hercules' number of active
employees. The liability for such costs has not been reflected in these
financial statements.
7. PURCHASE OF MINORITY INTEREST:
As disclosed in Note 2, the Parent bought out the minority interest holder
in HISPAN for $10,900 in 1995. In addition, included in other (income) expense
in 1995 is a $1,100 gain related to the settlement of CPD's claim against the
minority holder.
8. CLAIMS:
During 1995, $6,840 of assets relating to a claim due to a termination for
convenience by the U.S. Government were withdrawn from CPD by the Parent, who is
entitled to the cash receipt of the claim value. The estimated profit relating
to these claims of $1,500 is included in CPD sales in 1995. In addition, $698 of
assets relating to a damaged inventory claim were withdrawn from CPD by the
Parent.
9. POSTEMPLOYMENT BENEFITS:
CPD participates in certain disability and workers' compensation benefits,
including medical benefits, provided to former or inactive Hercules employees.
Substantially all employees are covered and become eligible for these benefits
upon satisfying the appropriate age and service requirements necessary for
receipt of these benefits.
Effective January 1, 1993, Hercules adopted SFAS No. 112, "Employers'
Accounting for Postemployment Benefits." This statement requires recognition of
these benefit costs on an accrual basis. Prior to January 1, 1993, disability
benefits and workers' compensation benefits were expensed as claims were
reported. The effect of adopting SFAS No. 112 has been recognized immediately as
the effect of a change in accounting principle and has resulted in a charge of
$794. (No tax benefit was realized). The income statement impact of this
accumulated postemployment benefit expense was allocated based on the
relationship between CPD's total number of employees and Hercules' total number
of employees. The periodic postemployment benefit costs, which are included in
the corporate cost allocation, are impracticable to determine. The liability for
such costs has not been reflected in these financial statements.
11
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
10. RELATED PARTY TRANSACTIONS:
The financial statements include allocations by Hercules for certain
corporate administrative and benefit costs incurred for the benefit of all
operating divisions. These costs are allocated to operating divisions on a
variety of methodologies as follows:
a. Specific identification -- based on estimates of time and services
provided.
b. Relative identification -- based on relevant criteria that establishes
the division's relationship to the entire pool of beneficiaries.
c. Formula driven -- nonidentifiable to division but incurred for the
benefit of all.
Corporate costs include executive, legal, accounting, tax, auditing, cash
management, purchasing, safety, human resources, health and environmental,
international, and employee benefits.
Allocated costs included in selling, general, and administrative costs were
$7,086, $6,047, and $6,336 during 1995, 1994, and 1993, respectively. These
allocations, while reasonable under the circumstances, may not represent the
cost of similar activities on a separate entity basis.
11. CASH AND CAPITAL REQUIREMENTS:
Certain operating units of CPD participated in Hercules' centralized cash
management system. Accordingly, cash received from CPD operations was
administered centrally while Hercules financed operational and working capital
requirements as well as capital expenditures. These operating units had no
external sources of financing, such as available lines of credit, as may be
necessary to operate as a separate entity. The statement of cash flow is
prepared as though the cash received and disbursed on behalf of these CPD
operating units by Hercules was transacted through CPD. The cash balance
represents amounts directly held by two operating units of CPD.
12. CAPITALIZED INTEREST:
As a result of cash management and funding practices within Hercules, CPD
records capitalized interest on construction projects. These amounts are based
on Hercules' weighted average interest rate on borrowings outstanding during the
construction periods. The amortization of capitalized interest, included in
other operating income and expense for 1995, 1994, and 1993, was $650, $650, and
$650 while the unamortized balance included as a cost of facilities at December
31, 1995 and 1994 was $4,551 and $5,201, respectively.
13. TAXES ON INCOME:
The domestic and foreign components of income (loss) before taxes on income
are presented below.
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Domestic............................................................... $ 4,604 $ (7,023) $ (4,401)
Foreign................................................................ 952 (736) (584)
--------- --------- ---------
$ 5,556 $ (7,759) $ (4,985)
--------- --------- ---------
--------- --------- ---------
</TABLE>
12
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
13. TAXES ON INCOME: (CONTINUED)
Deferred tax liabilities (assets) at December 31, 1995 and 1994 consist of:
<TABLE>
<CAPTION>
1995 1994
--------- ---------
<S> <C> <C>
Depreciation..................................................................... $ 20,689 $ 21,415
--------- ---------
--------- ---------
Gross deferred tax liabilities................................................... 20,689 21,415
Net Operating Losses............................................................. (21,440) (22,598)
Accrued expenses................................................................. (24) (24)
Inventory........................................................................ (3,302) (4,792)
Accounts receivable.............................................................. (153) (149)
Deferred Assets.................................................................. 0 (176)
--------- ---------
Gross deferred tax assets........................................................ (24,919) (27,739)
Valuation allowance.............................................................. 4,230 6,324
--------- ---------
Net deferred tax liability....................................................... $ 0 $ 0
--------- ---------
--------- ---------
</TABLE>
A reconciliation of income taxes at the U.S. statutory rate with the income
taxes recorded follows:
<TABLE>
<CAPTION>
1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Computed at statutory income tax rate.................................. $ 1,941 $ (2,716) $ (1,745)
State taxes, net of federal benefit.................................... 150 (228) (142)
Valuation Allowance.................................................... (2,094) 2,942 1,886
Other.................................................................. 3 2 1
--------- --------- ---------
Provision for income taxes............................................. $ 0 $ 0 $ 0
--------- --------- ---------
--------- --------- ---------
</TABLE>
14. COMMITMENTS AND CONTINGENCIES:
OPERATING LEASES
CPD leases buildings, vehicles, and equipment under various operating leases
with third parties.
Rent expense under operating leases for the years ended December 31, 1995,
1994, and 1993 was $603, $547, and $540, respectively.
SUPPLIER AGREEMENT
CPD entered into an agreement with a customer to supply carbon fiber at a
fixed price. The price is adjusted annually based on inflation and the agreement
expires on March 15, 2000.
13
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(DOLLARS IN THOUSANDS)
15. OPERATIONS BY GEOGRAPHIC AREA:
The following table represents operating results and other financial data by
geographic area:
<TABLE>
<CAPTION>
UNITED
STATES OTHER TOTAL
------------ --------- -----------
<S> <C> <C> <C>
1995
Net sales........................................................ $ 81,447 $ 19,002 $ 100,449
Profit from operations........................................... 3,587 1,969 5,556
Identifiable assets.............................................. 118,219 19,203 137,422
1994
Net sales........................................................ 84,161 15,952 100,113
Loss from operations............................................. (9,456) 1,697 (7,759)
Identifiable assets.............................................. 133,744 18,534 152,278
1993
Net sales........................................................ 88,894 12,554 101,448
Loss from operations............................................. (5,891) 906 (4,985)
Identifiable assets.............................................. 150,302 16,701 167,003
</TABLE>
The company's foreign operations are primarily in Spain. Identifiable assets
include net trade accounts receivable, inventories, and net property, plant and
equipment.
16. PENDING SALE:
On December 20, 1995, a letter of intent was signed by the company's Parent
with a third party for the pending sale of substantially all the assets and
liabilities of the company.
14
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNAUDITED
THREE MONTHS ENDED
MARCH 31, 1996
---------------------
<S> <C>
Net sales.................................................................................. $ 22,342
Cost of sales.............................................................................. 18,495
--------
Gross profit............................................................................... 3,847
Selling, general, and administrative expenses.............................................. 296
Allocated selling, general, and administrative expenses.................................... 1,611
Research and development................................................................... 518
Other operating (income) expenses, net..................................................... 220
--------
Income (loss) before taxes................................................................. 1,202
Provision for taxes on income.............................................................. --
--------
Net income (loss).......................................................................... $ 1,202
--------
--------
</TABLE>
The accompanying notes are an integral part of the Financial Statements
15
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
BALANCE SHEET
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNAUDITED
MARCH 31, 1996
--------------
<S> <C>
ASSETS
Current Assets....................................................................................
Cash.............................................................................................. $ 603
Trade accounts receivable......................................................................... 16,451
Less allowance for doubtful accounts.............................................................. (390)
--------------
Net Accounts Receivable......................................................................... 16,061
Inventories
Finished products............................................................................... 13,228
Materials, supplies, and work in process........................................................ 14,194
--------------
Total Inventories............................................................................. 27,422
--------------
Total Current Assets.............................................................................. 44,086
Property, plant, and equipment
Land............................................................................................ 1,514
Buildings and equipment......................................................................... 188,120
Construction in progress........................................................................ 6,194
Accumulated depreciation........................................................................ (102,767)
--------------
Net Property, Plant and Equipment............................................................... 93,061
Deferred charges and other assets................................................................. 1,027
--------------
TOTAL ASSETS.................................................................................. $ 138,174
--------------
--------------
LIABILITIES AND DIVISION EQUITY
Current liabilities...............................................................................
Accounts payable.................................................................................. $ 3,979
Accrued expenses
Payroll and employee benefits................................................................... 3,581
Other........................................................................................... 2,688
--------------
Total Current Liabilities..................................................................... 10,248
Other liabilities................................................................................. 1,113
Division Equity................................................................................... 126,813
--------------
TOTAL LIABILITIES AND DIVISION EQUITY......................................................... $ 138,174
--------------
--------------
</TABLE>
The accompanying notes are an integral part of the Financial Statements
16
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
STATEMENT OF CASH FLOW
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNAUDITED
THREE MONTHS ENDED
MARCH 31, 1996
-------------------
<S> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income (loss)............................................................................ $ 1,202
Adjustments to reconcile net income(loss) to cash provided from operations:
Depreciation and amortization.............................................................. 2,495
Accruals and deferrals of cash receipts and payments:
Accounts receivable, net................................................................... 1,048
Inventories................................................................................ (2,124)
Accounts payable and accrued expenses...................................................... (1,259)
Deferred charges and other assets.......................................................... 9
Other liabilities.......................................................................... 65
-------
Net cash provided by operations............................................................ 1,436
CASH FLOW FROM INVESTING ACTIVITIES
Capital expenditures....................................................................... (782)
-------
Net cash used for investing activities..................................................... (782)
CASH FLOW FROM FINANCING ACTIVITIES
Net Parent company capital withdrawals..................................................... (2,177)
-------
Net cash used for financing activities..................................................... (2,177)
Increase (Decrease) in Cash................................................................ $ 1,523
Cash, beginning of year.................................................................... 2,126
-------
Cash, end of year.......................................................................... $ 603
-------
-------
</TABLE>
The accompanying notes are an integral part of the Financial Statements
17
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
STATEMENT OF CHANGES IN DIVISION EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
UNAUDITED
----------
<S> <C>
BALANCE AT JANUARY 1, 1996............................................................................ $ 128,029
Net Income............................................................................................ 1,202
Net Capital withdrawal................................................................................ (2,418)
----------
BALANCE AT MARCH 31, 1996............................................................................. $ 126,813
----------
----------
</TABLE>
The accompanying notes are an integral part of the Financial Statements
18
<PAGE>
COMPOSITE PRODUCTS DIVISION
HERCULES INCORPORATED
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. THE COMPOSITE PRODUCTS DIVISION (CPD) IS A DIVISION OF HERCULES INCORPORATED
(THE PARENT).
The accompanying statements are unaudited and have been prepared by CPD. The
financial statements reflect the results of operations and financial position of
CPD, including certain allocations by the parent company. All material
intercompany transactions have been eliminated. In the opinion of management
such financial statements contain all adjustments, consisting of only normal
recurring adjustments, necessary to present fairly the financial position,
results of operations and cash flows for the interim periods presented. The
aforementioned financial statements have been prepared substantially in
conformity with the accounting principles reflected in the CPD financial
statements for the year ended December 31, 1995.
19
<PAGE>
(b) PRO FORMA FINANCIAL INFORMATION.
The following unaudited pro forma combined balance sheet for the
quarter ended March 31, 1996 was prepared to illustrate the effects of (i)
the Hercules Acquisition, (ii) the acquisition of Danutec Werkstoff AG
("Danutec"), a subsidiary of Ciba by Hexcel on May 30, 1996 (the
"Danutec Closing") as part of Hexcel's acquisition (the "Ciba
Acquisition") of the composites business of Ciba (the "Ciba Composites
Business"), (iii) the initial borrowings under the Credit Facility, and
(iv) Hexcel's anticipated offering (the "Offering") of $100 million of
convertible subordinated notes (the "Notes"), pursuant to a Registration
Statement on Form S-3 (Registration No. 333-05821), as amended by
Amendment No. 1 to the Registration Statement and as such Registration
Statement may subsequently be amended, and the use of net proceeds
therefrom to repay borrowings under the Credit Facility (collectively,
the "Pro Forma Transactions"), as if the Pro Forma Transactions had
occurred on March 31, 1996. The following unaudited pro forma combined
statements of operations for the quarter ended March 31, 1996 and the year
ended December 31, 1995 were prepared to illustrate the estimated effects
of the Pro Forma Transactions as if they had occurred at the beginning of
the periods presented.
The unaudited pro forma financial information presented below is
derived from the audited financial statements of the Company, the Ciba
Composites Business and the Hercules Composites Business as of and for the
year ended December 31, 1995 and the unaudited financial statements of the
Company, the Ciba Composites Business, Danutec and the Hercules
Composites Business as of and for the quarter ended March 31, 1996. The
Ciba Acquisition (including Danutec) and the Hercules Acquisition are
accounted for using the purchase method of accounting. Accordingly, the
total purchase price for each such acquisition has been allocated to the
assets acquired and the liabilities assumed based upon their estimated
relative fair market values, subject to revision when additional
information concerning asset and liability valuations is obtained.
The unaudited pro forma financial information is not necessarily
indicative of the results of operations or financial condition that would
have been reported had the events assumed therein occurred on the dates
indicated, nor is it necessarily indicative of results of operations or
financial position that may be achieved in the future.
On May 9, 1996, Hexcel announced that its Board of Directors had
approved a plan for consolidating the Company's operations following the
Ciba Acquisition. Management currently estimates that the business
consolidation program will result in an increase in "excess of purchase
price over net assets acquired" by approximately $11 million. The
following unaudited pro forma financial information does not give effect to
any of the charges or expenses expected to be incurred in the future in
connection with the business consolidation program or to the operating,
financial and other benefits that may be realized from the business
consolidation program.
20
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF MARCH 31, 1996
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ADJUSTMENTS
FOR THE
OFFERING, THE
PRO FORMA FOR THE DANUTEC CREDIT
HISTORICAL CLOSING HISTORICAL FACILITY AND
--------------------- ------------------------- HERCULES THE HERCULES
DANUTEC ADJUSTMENTS COMPOSITES ACQUISITION PRO FORMA
HEXCEL (NOTE 1) (NOTE 2) COMBINED BUSINESS (NOTE 3) COMBINED
---------- --------- ------------- ---------- ----------- -------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents......... $ 4,675 $ 3,426 $ (196) $ 7,905 $ 603 $ (603)(g) $ 7,905
Accounts receivable, net..... 132,076 6,504 -- 138,580 16,061 (613)(h) 154,028
Inventories.................. 111,123 6,225 300(a) 117,648 27,422 1,843(i) 146,913
Prepaid expenses and other
assets...................... 1,656 51 -- 1,707 -- -- 1,707
---------- --------- ------------- ---------- ----------- -------------- ----------
Total current assets....... 249,530 16,206 104 265,840 44,086 627 310,553
---------- --------- ------------- ---------- ----------- -------------- ----------
Net property, plant and
equipment..................... 192,229 12,919 (314)(b) 204,834 93,061 7,947(j) 305,842
Excess of purchase price over
net assets acquired........... 29,230 -- 270 29,500 -- -- 29,500
Investments and other assets... 14,736 1,071 (4,533)(c) 11,274 1,027 4,100(m) 16,401
---------- --------- ------------- ---------- ----------- -------------- ----------
Total assets............... $ 485,725 $ 30,196 $ (4,473) $ 511,448 $ 138,174 $ 12,674 $ 662,296
---------- --------- ------------- ---------- ----------- -------------- ----------
---------- --------- ------------- ---------- ----------- -------------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable and current
maturities of long-term
liabilities................. $ 6,809 $ 1,689 $ 3,230(d) $ 11,728 $ -- $ -- $ 11,728
Accounts payable............. 50,385 3,473 -- 53,858 3,979 (613)(h) 57,224
Accrued liabilities.......... 54,737 5,848 -- 60,585 6,269 -- 66,854
---------- --------- ------------- ---------- ----------- -------------- ----------
Total current liabilities.. 111,931 11,010 3,230 126,171 10,248 (613) 135,806
---------- --------- ------------- ---------- ----------- -------------- ----------
Credit facility................ 69,836 -- -- 69,836 -- 41,900(l) 111,736
% Convertible Subordinated
Notes Due 2003................ -- -- -- -- -- 100,000(l) 100,000
Other long-term debt, less
current maturities............ 68,445 4,628 4,781(e) 77,854 -- -- 77,854
Deferred liabilities........... 40,097 2,074 -- 42,171 1,113 -- 43,284
---------- --------- ------------- ---------- ----------- -------------- ----------
Shareholders' equity:
Common stock & paid-in
capital..................... 257,563 12,484 (12,484)(f) 257,563 -- -- 257,563
Accumulated deficit.......... (68,133) -- -- (68,133) -- (1,800)(m) (69,933)
Minimum pension obligation
adjustment.................. (535) -- -- (535) -- -- (535)
Cumulative currency
translation adjustment...... 6,521 -- -- 6,521 -- -- 6,521
Invested capital............. -- -- -- -- 126,813 (126,813)(k) --
---------- --------- ------------- ---------- ----------- -------------- ----------
Total shareholders'
equity.................... 195,416 12,484 (12,484) 195,416 126,813 (128,613) 193,616
---------- --------- ------------- ---------- ----------- -------------- ----------
Total liabilities and
shareholders' equity...... $ 485,725 $ 30,196 $ (4,473) $ 511,448 $ 138,174 $ 12,674 $ 662,296
---------- --------- ------------- ---------- ----------- -------------- ----------
---------- --------- ------------- ---------- ----------- -------------- ----------
</TABLE>
21
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET
NOTE 1 -- DANUTEC CLOSING
The historical unaudited condensed consolidated balance sheet of the Company
excludes Danutec as of March 31, 1996 because the Danutec Closing did not occur
until May 30, 1996.
NOTE 2 -- DANUTEC PRO FORMA ADJUSTMENTS
(a) Adjustment to record acquired inventories at estimated fair value.
(b) Adjustment to record acquired property, plant and equipment at estimated
fair value.
(c) As of March 31, 1996, the Company recorded as an investment an advance of
approximately $4.5 million towards the purchase price of Danutec. This
adjustment is to eliminate the advance.
(d) Adjustment to reflect the issuance of the senior demand notes payable to
Ciba in an amount equal to the cash and equivalents on hand at Danutec on
the date of the Danutec Closing.
(e) Adjustment to reflect the issuance of the Ciba Notes attributable to the
Danutec Closing, the amount of which is subject to post-closing adjustments.
(f) Adjustment to eliminate Danutec's equity.
NOTE 3 -- PRO FORMA ADJUSTMENTS
PURCHASE PRICE ALLOCATION
The total purchase price for the Hercules Composites Business is comprised
of the purchase price of $135 million plus an estimated $1.0 million for related
transaction costs, subject to post-closing adjustments. The purchase price for
the Hercules Acquisition was financed with borrowings under the Credit Facility.
The preliminary allocation of the total purchase price to the net assets of
the Hercules Composites Business is based upon the estimated fair values of the
net assets acquired, and is summarized as follows:
<TABLE>
<CAPTION>
(IN
THOUSANDS)
<S> <C>
Accounts receivable (1).................................................................. $ 15,448
Inventories (2).......................................................................... 29,265
Net property, plant and equipment (3).................................................... 101,008
Investments and other assets (1)......................................................... 1,027
Accounts payable (4)..................................................................... (3,366)
Accrued liabilities (4).................................................................. (6,269)
Deferred liabilities (4)................................................................. (1,113)
-------------
Total purchase price................................................................... $ 136,000
-------------
-------------
</TABLE>
(1) The fair value of accounts receivable, investments and other assets is
estimated to equal respective net book value.
(2) The fair value of inventory is estimated to equal aggregate current sales
value less estimated selling costs.
(3) The Company's current estimate is that the fair value of the property, plant
and equipment is greater than the net book value. Accordingly, the excess of
purchase price over all other net assets (estimated at $7.9 million) has
been allocated to property, plant and equipment. The Company's estimate is
subject to modification based on further analysis.
(4) The fair value of the current and long-term liabilities is estimated to
equal net book value.
22
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED BALANCE SHEET (CONTINUED)
NOTE 3 -- PRO FORMA ADJUSTMENTS (CONTINUED)
HERCULES COMPOSITES BUSINESS PRO FORMA ADJUSTMENTS
(g) Adjustment to eliminate cash and equivalents held by the Hercules Composites
Business, which were not acquired in the Hercules Acquisition.
(h) Adjustment to eliminate the trade accounts receivable and payable balances
between the Hercules Composites Business and Hexcel.
(i) Adjustment to record acquired inventories of the Hercules Composites
Business at estimated fair value.
(j) Adjustment to record acquired property, plant and equipment at estimated
fair value.
(k) Adjustment to eliminate Hercules Composites Business' equity.
OFFERING AND CREDIT FACILITY PRO FORMA ADJUSTMENTS
(l) Adjustment to reflect the following:
<TABLE>
<CAPTION>
(IN
THOUSANDS)
<S> <C>
Credit Facility Borrowings:
Purchase price for Hercules Composites Business........................................ $ 135,000
Hercules Acquisition transaction costs................................................. 1,000
Credit Facility issuance costs......................................................... 2,500
Notes issuance costs................................................................... 3,400
Less: Gross proceeds from issuance of the Notes........................................ (100,000)
-------------
$ 41,900
-------------
-------------
Issuance of the Notes.................................................................... $ 100,000
-------------
-------------
</TABLE>
(m) Adjustment to reflect the capitalization and write-off of issuance costs:
<TABLE>
<CAPTION>
(IN
THOUSANDS)
-------------
<S> <C>
Notes issuance costs................................................................... $ 3,400
Credit Facility issuance costs......................................................... 2,500
Less: Write-off of capitalized debt issuance costs
related to the old credit facility................................................ (1,800)
-------------
$ 4,100
-------------
-------------
</TABLE>
23
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE QUARTER ENDED MARCH 31, 1996
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ADJUSTMENTS
FOR THE
HISTORICAL OFFERING, THE
(NOTE 1) PRO FORMA FOR THE CIBA CREDIT
----------------------- ACQUISITION HISTORICAL FACILITY AND
CIBA -------------------------- HERCULES THE HERCULES
COMPOSITES ADJUSTMENTS COMPOSITES ACQUISITION PRO FORMA
HEXCEL BUSINESS (NOTE 2) COMBINED BUSINESS (NOTE 2) COMBINED
---------- ----------- ------------- ----------- ----------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales.................. $ 126,418 $ 51,668 $ (75)(a) $ 178,011 $ 22,342 $ (1,430)(i) $ 198,923
Cost of sales.............. (99,635) (42,587) 529(b) (141,693) (18,495) 1,245(j) (158,943)
---------- ----------- ------------- ----------- ----------- ------- -----------
Gross margin............... 26,783 9,081 454 36,318 3,847 (185) 39,980
Selling, general and
administrative expenses... (17,093) (7,735) -- (24,828) (2,425) 1,351(k) (25,902)
Amortization of intangible
assets.................... (389) (572) 441(c) (520) -- -- (520)
Business acquisition and
consolidation expenses.... (5,211) -- -- (5,211) -- -- (5,211)
Other income (expense),
net....................... 2,697 (1,404) 500(d) 1,793 (220) -- 1,573
---------- ----------- ------------- ----------- ----------- ------- -----------
Operating income (loss).... 6,787 (630) 1,395 7,552 1,202 1,166 9,920
Interest expense........... (3,633) (154) (228)(e) (4,015) -- (2,465)(l) (6,480)
Minority interest.......... -- (147) 147(f) -- -- -- --
---------- ----------- ------------- ----------- ----------- ------- -----------
Income (loss) from
continuing operations
before income taxes....... 3,154 (931) 1,314 3,537 1,202 (1,299) 3,440
Provision for income
taxes..................... (1,306) (473) -- (g) (1,779) -- -- (g) (1,779)
---------- ----------- ------------- ----------- ----------- ------- -----------
Net income (loss)........ $ 1,848 $ (1,404) $ 1,314 $ 1,758 $ 1,202 $ (1,299) $ 1,661
---------- ----------- ------------- ----------- ----------- ------- -----------
---------- ----------- ------------- ----------- ----------- ------- -----------
Net income per share and
equivalent share (Note
3)........................ $ 0.07 $ 0.05 $ 0.05
---------- ----------- -----------
---------- ----------- -----------
Weighted average shares and
equivalent shares......... 24,685 36,493 36,493
---------- ----------- -----------
---------- ----------- -----------
Ratio of earnings to fixed
charges (Note 4).......... 1.50x
EBITDA (A)................. $ 19,737
-----------
-----------
Adjusted EBITDA (A)........ $ 23,375
-----------
-----------
</TABLE>
- --------------------------
(A) "EBITDA" is defined as income from continuing operations before interest,
taxes and depreciation and amortization. "Adjusted EBITDA" is defined as
EBITDA plus business acquisition and consolidation expenses, other income
(expense) and bankruptcy reorganization expenses. Hexcel believes that
EBITDA and Adjusted EBITDA provide useful information regarding Hexcel's
ability to service its indebtedness, but it should not be considered in
isolation or as a substitute for operating income or cash flow from
operations (in each case as determined in accordance with generally
accepted accounting principles) as an indicator of Hexcel's operating
performance or as a measure of Hexcel's liquidity.
24
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
ADJUSTMENTS
FOR THE
HISTORICAL OFFERING, THE
(NOTE 1) PRO FORMA FOR THE CREDIT FACILITY
--------------------------- CIBA ACQUISITION HISTORICAL AND THE
CIBA ---------------------------- HERCULES HERCULES
COMPOSITES ADJUSTMENTS COMPOSITES ACQUISITION PRO FORMA
HEXCEL BUSINESS (NOTE 2) COMBINED BUSINESS (NOTE 2) COMBINED
------------ ------------- -------------- ------------ ------------ --------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales.................. $ 350,238 $ 331,073 $ (3,207)(a) $ 678,104 $ 100,449 $ (7,228)(i) $ 771,325
Cost of sales.............. (283,148) (273,997) 5,502(b) (551,643) (83,748) 5,593(j) (629,798)
------------ ------------- -------------- ------------ ------------ --------------- -----------
Gross margin............... 67,090 57,076 2,295 126,461 16,701 (1,635) 141,527
Selling, general and
administrative expenses... (49,324) (57,966) -- (107,290) (11,536) 5,727(k) (113,099)
Amortization and write-
downs of intangible
assets.................... -- (6,930) 5,455(c) (1,475) -- -- (1,475)
Business acquisition and
consolidation expenses.... -- (2,362) -- (2,362) -- -- (2,362)
Other income (expense),
net....................... 791 (1,102) -- (311) 391 -- 80
------------ ------------- -------------- ------------ ------------ --------------- -----------
Operating income (loss).... 18,557 (11,284) 7,750 15,023 5,556 4,092 24,671
Interest expense........... (8,682) (668) (1,367) (e) (10,717) -- (9,753)(l) (20,470)
Bankruptcy reorganization
expenses.................. (3,361)(h) -- -- (3,361) -- -- (3,361)
Minority interest.......... -- (1,506) 1,506(f) -- -- -- --
------------ ------------- -------------- ------------ ------------ --------------- -----------
Income (loss) from
continuing operations
before income taxes....... 6,514 (13,458) 7,889 945 5,556 (5,661) 840
Provision for income
taxes..................... (3,313) (5,085) -- (g) (8,398) -- -- (g) (8,398)
------------ ------------- -------------- ------------ ------------ --------------- -----------
Income (loss) from
continuing
operations.......... 3,201 (18,543) 7,889 (7,453) 5,556 (5,661) (7,558)
Loss from discontinued
operations................ (468) -- -- (468) -- -- (468)
------------ ------------- -------------- ------------ ------------ --------------- -----------
Net income (loss).... $ 2,733 $ (18,543) $ 7,889 $ (7,921) $ 5,556 $ (5,661) $ (8,026)
------------ ------------- -------------- ------------ ------------ --------------- -----------
------------ ------------- -------------- ------------ ------------ --------------- -----------
Net income (loss) per
share and equivalent
share (Note 3):
Continuing
operations............ $ 0.20 $ (0.22 ) $ (0.22 )
Discontinued
operations............ (0.03 ) (0.01 ) (0.01 )
------------ ------------ -----------
Net income (loss)...... $ 0.17 $ (0.23 ) $ (0.23 )
------------ ------------ -----------
------------ ------------ -----------
Weighted average shares and
equivalent shares......... 15,742 33,764 33,764
------------ ------------ -----------
------------ ------------ -----------
Ratio of earnings to fixed
charges (Note 4).......... 1.04 x
EBITDA .................... $ 56,257
-----------
-----------
Adjusted EBITDA ........... $ 61,900
-----------
-----------
</TABLE>
25
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED
STATEMENTS OF OPERATIONS
NOTE 1 -- PRESENTATION OF HISTORICAL AMOUNTS
The condensed consolidated financial statements of Hexcel for the quarter
ended March 31, 1996 include the results of operations of the acquired portion
of the Ciba Composites Business from March 1, 1996, to March 31, 1996, and
exclude Danutec for the period then ended. The condensed combined financial
statements of Ciba Composites Business for the quarter ended March 31, 1996
include the results of operations of Danutec for the quarter and the results of
operations of the acquired portion of the Ciba Composites Business from January
1, 1996 to February 29, 1996 (the date of the Ciba Acquisition), which include
sales to Ciba Composites international distribution operations as if such sales
were third-party sales. Such international distribution operations may be
transferred to the Company at the Company's option by February 28, 1997.
The condensed combined financial statements of the Ciba Composites Business
for the year ended December 31, 1995 include the results of operations of the
Ciba Composites Business, including Danutec.
NOTE 2 -- PRO FORMA ADJUSTMENTS
CIBA COMPOSITES BUSINESS PRO FORMA ADJUSTMENTS
<TABLE>
<CAPTION>
THE THE
YEAR QUARTER
ENDED ENDED
12/31/95 3/31/96
--------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
(a) Adjustment to eliminate net sales between the Ciba Composites Business and Hexcel....... $ (3,207) $ (75)
--------- -----------
--------- -----------
(b) Adjustment to reflect the following:
Elimination of cost of sales between the Ciba Composites Business and Hexcel............ $ 2,708 $ 63
Reduction in depreciation costs resulting from the restatement at fair value of the net
property, plant and equipment of the Ciba Composites Business.......................... 2,794 466
--------- -----------
Net adjustment.......................................................................... $ 5,502 $ 529
--------- -----------
--------- -----------
(c) Adjustment to reflect the following:
Reduction in amortization expense and write-downs of intangible assets resulting from
the elimination of the intangible assets of the Ciba Composites Business in connection
with the purchase price allocation..................................................... $ 6,930 $ 687
Amortization of the excess of purchase price over net assets acquired (20 year
amortization period)................................................................... (1,475) (246)
--------- -----------
Net adjustment.......................................................................... $ 5,455 $ 441
--------- -----------
--------- -----------
(d) Adjustment to eliminate acquisition related costs that were reimbursed by Ciba and not
part of the ongoing Ciba Composites Business........................................... $ 500
-----------
-----------
(e) Adjustment to reflect the following:
Elimination of interest expense on liabilities of the Ciba Composites Business which are
not assumed by Hexcel.................................................................. $ 1,032 $ 172
Net reduction in interest expense resulting from the refinancing of certain credit
facilities with the Old Credit Facility................................................ 992 165
Estimated interest expense on the Ciba Notes............................................ (3,391) (565)
--------- -----------
Net adjustment.......................................................................... $ (1,367) $ (228)
--------- -----------
--------- -----------
(f) Adjustment to eliminate the minority interest in the operating results of the Ciba Composites Business.
</TABLE>
26
<PAGE>
NOTES TO UNAUDITED PRO FORMA COMBINED
STATEMENTS OF OPERATIONS (CONTINUED)
NOTE 2 -- PRO FORMA ADJUSTMENTS (CONTINUED)
(g) The income tax consequences of the cumulative pro forma adjustments
are estimated to be zero. This is due to the fact that the
Company has sufficient net operating loss carryforwards and other
deductions for income tax purposes to substantially eliminate any
tax liabilities arising from pro forma adjustments.
(h) On February 9, 1995, Hexcel emerged from bankruptcy reorganization
proceedings which had begun on December 6, 1993. In connection
with those proceedings, Hexcel incurred bankruptcy reorganization
expenses of approximately $3.4 million during the year ended
December 31, 1995. Although the resolution of certain
bankruptcy-related issues, including the final settlement of
disputed claims and professional fees, resulted in expenses being
incurred after February 9, 1995, Hexcel has not incurred any
significant bankruptcy-related expenses since October 1, 1995.
HERCULES COMPOSITES BUSINESS PRO FORMA ADJUSTMENTS
(i) Adjustment to eliminate net sales between the Hercules Composites
Business and Hexcel.
(j) Adjustment to reflect the following:
<TABLE>
<CAPTION>
THE THE
YEAR QUARTER
ENDED ENDED
12/31/95 3/31/96
--------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Elimination of cost of sales between the Hercules Composites Business and Hexcel...... $ 6,116 $ 1,411
Increase in depreciation costs resulting from the restatement at fair value of the net
property, plant and equipment of the Hercules Composites Business.................... (523) (166)
--------- ---------
Net adjustment........................................................................ $ 5,593 $ 1,245
--------- ---------
--------- ---------
(k) Adjustment to eliminate Hercules' allocations to the Hercules Composites Business that management believes
are not part of the ongoing business.
(l) Adjustment to reflect the following:
Interest expense on $41.9 million of borrowings under the Credit Facility at an
assumed rate of 6.0% per annum....................................................... $ (2,514) $ (629)
Interest expense on the Notes at an assumed rate of 6 1/4% per annum.................. (6,250) (1,562)
Amortization of debt issuance costs related to the Credit Facility.................... (833) (208)
Amortization of debt issuance costs related to the Notes.............................. (486) (122)
Elimination of amortization of prior debt issuance costs.............................. 330 56
--------- ---------
Net adjustment........................................................................ $ (9,753) $ (2,465)
--------- ---------
--------- ---------
For every 1/4% point change in the assumed interest rate with respect to the Notes, the annual interest
expense on the Notes would change by $250,000.
</TABLE>
NOTE 3 -- PER SHARE AMOUNTS
Primary and fully diluted net income (loss) per share for all periods
presented were the same because the fully diluted computation was antidilutive.
If the Notes were converted, pro forma income (loss) from continuing operations
per share would be $0.08 for the quarter ended March 31, 1996 and ($0.03) for
the year ended December 31, 1995.
NOTE 4 -- RATIO OF EARNINGS TO FIXED CHARGES
If pro forma earnings for the quarter ended March 31, 1996 were adjusted to
exclude business consolidation and acquisition expenses, other income (expense)
and bankruptcy reorganization expenses, the ratio of earnings to fixed charges
for such period would be 2.02x. If pro forma earnings for the year ended
December 31, 1995 were adjusted to exclude these nonrecurring items, the ratio
of earnings to fixed charges for such period would be 1.29x.
27
<PAGE>
(c) EXHIBITS.
EXHIBIT NO. DESCRIPTION
---------------- -------------------------------------------------------
2.1 Sale and Purchase Agreement, dated as of April 15,
1996, among the Registrant and the Sellers
(incorporated by reference to Exhibit 2.2 to the
Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1996).
2.2 Amendment Number One to the Sale and Purchase
Agreement, dated as of June 27, 1996, among the
Registrant and the Sellers.
2.3 Letter Agreement, dated as of June 27, 1996, among the
Registrant and the Sellers.
99.1 Press Release dated June 27, 1996.
99.2 Credit Agreement, dated as of June 27, 1996, among the
Registrant, certain of its subsidiaries, the
institutions from time to time party thereto as
Lenders, the institutions from time to time party
thereto as Issuing Banks and Credit Suisse, as
administrative agent for the Lenders.
28
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: July 12, 1996
HEXCEL CORPORATION
(Registrant)
By:/s/ Joseph H. Shaulson
----------------------
Joseph H. Shaulson
Vice President
29
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ------------------------------------------------------ --------
2.1 Sale and Purchase Agreement, dated as of April 15,
1996, among the Registrant and the Sellers
(incorporated by reference to Exhibit 2.2 to the
Company's Quarterly Report on Form 10-Q for the
quarterly period ended March 31, 1996).
2.2 Amendment Number One to the Sale and Purchase
Agreement, dated as of June 27, 1996, among the
Registrant and the Sellers.
2.3 Letter Agreement, dated as of June 27, 1996, among the
Registrant and the Sellers.
99.1 Press Release dated June 27, 1996.
99.2 Credit Agreement, dated as of June 27, 1996, among the
Registrant, certain of its subsidiaries, the
institutions from time to time party thereto as
Lenders, the institutions from time to time party
thereto as Issuing Banks and Credit Suisse, as
administrative agent for the Lenders.
<PAGE>
Exhibit 2.2
AMENDMENT NUMBER ONE
TO THE
SALE AND PURCHASE AGREEMENT
Amendment Number One, dated June 27, 1996 (the "Amendment"), to the
Sale and Purchase Agreement, dated as of April 15, 1996 (the "Agreement"),
between Hercules Incorporated, Hercules Nederland BV, HISPAN Corporation and
Hexcel Corporation. Capitalized terms used without definition herein shall have
the meanings provided in the Agreement.
1. Section 2.1 is amended by adding the following sentences after
the first sentence thereof:
Without limiting the forgoing, the term "PURCHASED ASSETS", for all
purposes of this AGREEMENT, shall include the intercompany debt owing
by HAESA, in the amount of US$10,418,064.85, to HERCULES, which shall
be in existence at the TURNOVER POINT (the "HAESA DEBT"). Prior to
the TURNOVER POINT, HERCULES shall cause SA HERCULES EUROPE NV to
transfer to HERCULES the HAESA DEBT, and notwithstanding the terms of
Section 2.9, such HAESA DEBT shall not be eliminated prior to or as of
the TURNOVER POINT.
2. Section 2.7.2 of the Agreement is amended by replacing the term
"TURNOVER POINT" both places where it is used in the first sentence of such
section with the term "as of the close of business on June 28, 1996".
3. Section 2.9 of the Agreement is amended by deleting the first
word thereof and adding "Subject to Section 2.1, prior".
4. Section 3.2.1 of the agreement is amended by deleting second
sentence thereof and replacing it with the following:
"TURNOVER WORKING CAPITAL" means WORKING CAPITAL OF THE CPD BUSINESS
as of the close of business on June 28, 1996, as reflected on the CPD
FINANCIAL STATEMENTS referred to in Section 2.7.2(B), PROVIDED, that,
notwithstanding the definition of "WORKING CAPITAL OF THE CPD
BUSINESS", a current liability (or, if the following computation
produces a negative number, a current asset equal to the absolute
value of such negative number) shall be included in computing
<PAGE>
TURNOVER POINT WORKING CAPITAL equal to US$ 2.839 million minus the
amount of any CPD capital expenditures actually spent or for which an
invoice has been received during the period from January 1, 1996 until
the TURNOVER POINT.
5. HEXCEL, in accordance with Section 7.2.1(D), hereby consents to
the capital expenditures relating to the installation of HISPAN Line A as
described in Exhibit A attached hereto.
6. Section 3.3 of the Agreement is hereby deleted in its entirety.
7. The schedule, described in Section III.B. of the TAX ANNEX,
setting forth the tax allocation of the consideration paid by HEXCEL to the
SELLERS (when prepared following the CLOSING) shall provide that the portion of
such consideration allocated to the outstanding capital of HAESA shall be US$12
million. The amounts allocated to the other PURCHASED ASSETS shall be as
determined pursuant to such Section III.B.
8. Notwithstanding the provisions of the HUMAN RESOURCES ANNEX, (a)
HERCULES shall pay or cause to be paid all HEXCEL NEW EMPLOYEES for all
compensation payable to such employees at the applicable HEXCEL rates of
compensation, which for the STUB PERIOD (as defined below) shall be current
HERCULES rates of compensation, for the period beginning on the TURNOVER POINT
and ending at 11:59 p.m. on June 30, 1996 ("STUB COMPENSATION"), (b) HERCULES
shall continue, at its sole cost and expense, all benefits for such HEXCEL NEW
EMPLOYEES under all HERCULES EMPLOYEE BENEFITS PLANS, through June 30, 1996, and
(c) promptly after receiving an invoice therefor from HERCULES, HEXCEL shall
reimburse HERCULES for all out of pocket costs paid by HERCULES or its
affiliates in respect of STUB COMPENSATION to the extent such costs are not
included in the computation of TURNOVER POINT WORKING CAPITAL.
9. The attached revised Schedules to this Amendment hereby
supplement and amend the correspondingly numbered Schedules to the Agreement.
10. Section E of HUMAN RESOURCES ANNEX is amended by the addition of
the following:
Notwithstanding anything to the contrary in the HUMAN RESOURCES ANNEX,
if HEXCEL and the Bacchus, Utah union representative have not agreed
on the provisions of a new collective bargaining agreement prior to
the CLOSING the PARTIES agree that HEXCEL shall offer employment
pursuant to this AGREEMENT, on initial terms
<PAGE>
and conditions determined solely by HEXCEL which in no event shall be
less favorable than those applicable to other employees of HEXCEL who
are in comparable positions in comparable locations (subject to the
conditions of the HUMAN RESOURCES ANNEX with respect to credited
service)."
11. The HUMAN RESOURCES ANNEX is amended by: (a) deleting the term
"CLOSING DATE" in Section 1.D and replacing it with the term "EMPLOYEE TURNOVER
TIME (as defined in Section 2.A)"; (b) deleting the term "CLOSING DATE" in
Section 2.A and replacing it with the terms "at 11:59 p.m. on the CLOSING DATE
(the "EMPLOYEE TURNOVER TIME")"; (c) deleting the term "CLOSING DATE" in Section
3.B(1)(a) and replacing it with the term "TRANSFER DATE"; and (d) deleting the
term "CLOSING DATE" and replacing it with the term "TRANSFER DATE".
12. The PARTIES agree that claims by HEXCEL for indemnification for
breach of any representation or warranty set forth in the ENVIRONMENTAL ANNEX
arising from or relating to NOX emissions at BACCHUS PLANT 3 shall be subject
only to the limitations set forth in paragraph F.2 of the ENVIRONMENTAL ANNEX
and not the limitations set forth in Section 12.5 of the Agreement.
13. This Amendment shall not constitute a waiver or amendment of any
other provision of the Agreement not referred to herein. Except as amended
hereby, the provisions of the Agreement shall remain in full force and effect
(without regard to conflicts of law principles).
14. This Amendment may be executed in counterparts, and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.
15. This Amendment shall be governed by, and construed in accordance
with, the laws of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed on the date first above written.
HERCULES INCORPORATED
By:/s/Harry J. Tucci
---------------------------
Name: Harry J. Tucci
Title: VP and GM CPD
HERCULES NEDERLAND BV
By:/s/Andrea Domenichini
---------------------------
Name: Andrea Domenichini
Title: Attorney-in-fact
HISPAN CORPORATION
By:/s/Harry J. Tucci
---------------------------
Name: Harry J. Tucci
Title: VP and GM CPD
HEXCEL CORPORATION
By:/s/Stephen C. Forsyth
---------------------------
Name: Stephen C. Forsyth
Title: SVP Finance and
Administration
<PAGE>
Exhibit 2.3
HEXCEL CORPORATION
TWO STAMFORD PLAZA
281 TRESSER BLVD., 16TH FLOOR
STAMFORD, CONNECTICUT 06961-3238
June 27, 1996
Hercules Incorporated
Hercules Plaza
1313 North Market Street
Wilmington, DE 19694-0001
Attention: Mr. Harry Tucci
Gentlemen:
This letter agreement relates to the Sale and Purchase Agreement,
dated as of April 15, 1996 (the "Agreement"), between Hercules Incorporated,
Hercules Nederland BV, HISPAN Corporation and Hexcel Corporation. Capitalized
terms used without definition herein shall have the meanings provided in the
Agreement.
The PARTIES hereby agree that notwithstanding the terms of Articles IX
and X of the Agreement, the CLOSING shall not be conditioned upon, and no
PARTY's obligation to effect its part of the TRANSACTIONS shall be subject to,
the receipt by any PARTY of an approval of the Spanish Authorities of Defense
of Competition (Autoridades espanolas de Defensa de la Competencia) (the
"AUTHORITY") or the expiration of any waiting period under applicable antitrust
law in Spain.
In addition, in consideration of the provisions of the preceding
paragraph and for value received, the receipt and sufficiency of which is hereby
acknowledged by HERCULES, HERCULES hereby unconditionally and irrevocably grants
to HEXCEL (which right is freely assignable without the consent of HERCULES by
HEXCEL to Hexcel (U.K.) Limited ("LIMITED")) an option (the "OPTION"),
exercisable upon the terms and conditions set forth in this letter agreement
upon delivery of a written notice to HERCULES within 30 days after the
occurrence of a SPANISH ACTION, as defined below, to sell to HERCULES, for
$22,418,064.85 in cash, all, but not less than all, of the outstanding capital
stock of HAESA and any intercompany and THIRD PARTY indebtedness of HAESA (the
"HAESA BUSINESS"). The closing of the purchase and sale of the HAESA BUSINESS
shall take place as soon as practicable following the receipt of such notice by
HERCULES
<PAGE>
(subject to the receipt of any AUTHORITY CONSENTS required to effect such
transaction) at the offices of Kronish, Lieb, Weiner & Hellman LLP, 1114 Avenue
of the Americas, New York, New York, at 10:00 a.m., New York time, or at such
other date, time or place as HERCULES and HEXCEL may otherwise agree.
At such closing, HEXCEL or LIMITED, as the case may be, shall sell,
transfer and deliver all of its right title and interest in and to the HAESA
BUSINESS, including, if required, certificates for shares and such other
documents and instruments reasonably necessary to effect such transfer, and
HERCULES shall deliver to HEXCEL or LIMITED, as the case may be, $22,418,064.85
in cash by certified check or wire transfer of immediately available funds to an
account designated by HEXCEL at least two business days prior to the closing;
PROVIDED, that such purchase price payable by HERCULES at the closing shall be
(i) increased if, and by the amount by which, the indebtedness of HAESA as of
the TURNOVER POINT exceeded the indebtedness of HAESA at the time of such
closing or (ii) reduced if, and by the amount by which, the indebtedness of
HAESA at the time of such closing exceeds the indebtedness of HAESA as of the
TURNOVER POINT.
For purposes of this letter agreement, a SPANISH ACTION shall be any
action taken by the AUTHORITY, or action taken by HEXCEL, LIMITED or HAESA at
the direction or request of, or pursuant to a consent decree or similar
mechanism with, the AUTHORITY, which, in HEXCEL's reasonable judgment, has the
effect of negatively impacting any of HEXCEL's or LIMITED's ownership interest
or control of HAESA, the value or prospects of HAESA, the HAESA BUSINESS,
HAESA'S operations or HAESA's assets or the value or prospects of HEXCEL's other
operations, businesses or assets (including, but not limited to, any requirement
that assets be divested, business activities be reduced or restricted, or that
HEXCEL or HAESA limit its market share in any manner); PROVIDED, that the
imposition of any mandatory cross-licensing arrangement whereby HEXCEL or any of
its AFFILIATES, including HAESA, would be required to license to any third party
the non-exclusive right to use HEXCEL's F-593 and/or HERCULES' 8552 resin
systems and associated process technologies in Europe for the manufacture of
components for Airbus 300, 310, 319, 320, 321, 330 and 340 aircraft (a "RESIN
LICENSE") shall not be deemed to be a SPANISH ACTION; and PROVIDED FURTHER, that
a SPANISH ACTION shall be deemed to have occurred on the first anniversary of
the date hereof if as of such date neither of the following has occurred: (i)
all required approvals of the AUTHORITY have been obtained or (ii) all waiting
periods under applicable antitrust law in Spain have expired. HEXCEL and
HERCULES shall use their reasonable efforts to obtain, as promptly as
practicable, all required approvals of the AUTHORITY, PROVIDED, that no PARTY or
any of its AFFILIATES shall be required to initiate or defend any litigation,
and PROVIDED FURTHER, that each Party shall pay its
2
<PAGE>
own costs and expenses associated with obtaining any such required approvals.
If HEXCEL, HERCULES or any of their AFFILIATES are required by the
AUTHORITY to enter into a RESIN LICENSE, then HEXCEL and HERCULES shall execute
and/or procure any required consents, licenses or sublicenses reasonably
required to effect such RESIN LICENSE.
If the OPTION is exercised, upon the closing of the sale of the HAESA
BUSINESS to HERCULES, HEXCEL and HAESA shall enter into a three year carbon
fiber supply agreement providing for the supply of an amount of carbon fiber
reasonably required by HAESA to operate in the ordinary course of business at
fair market prices (with customary price escalation provisions) and other
customary terms and conditions appropriate for an arm's-length carbon fiber
supply agreement.
This letter agreement shall not constitute a waiver or amendment of
any other provision of the Agreement not referred to herein. Except as
specifically provided herein, the provisions of the Agreement shall remain in
full force and effect. This letter agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware (without regard
to conflicts of law principles).
If you are in agreement with all of the foregoing, please sign and
return this letter to HEXCEL at the above address.
Very truly yours,
HEXCEL CORPORATION
By:/s/Stephen C. Forsyth
---------------------
Name: Stephen C. Forsyth
Title: SVP Finance and
Administration
3
<PAGE>
Accepted and agreed to
as of the date first
above written:
HERCULES INCORPORATED
By:/s/Harry J. Tucci
-------------------------
Name: Harry J. Tucci
Title: VP and GM CPD
HERCULES NEDERLAND BV
By:/s/Andrea Domenichini
-------------------------
Name: Andrea Domenichini
Title: Attorney-in-fact
HISPAN CORPORATION
By:/s/Harry J. Tucci
-------------------------
Name: Harry J. Tucci
Title: VP and GM CPD
4
<PAGE>
Exhibit 99.1
HEXCEL [LOGO]
- --------------------------------------------------------------------------------
NEWS RELEASE
- --------------------------------------------------------------------------------
HEXCEL CORPORATION, 5794 W. LAS POSITAS BLVD., PLEASANTON, CA 94588
(510) 847-9500
- --------------------------------------------------------------------------------
FOR IMMEDIATE RELEASE
HEXCEL CONTACT: WILLIAM P. MEEHAN
(510) 847-9500, [email protected]
HERCULES MEDIA: AMY L. BINDER
(302) 594-6905, [email protected]
HERCULES INVESTORS: JAMES R. RAPP
(302) 594-5254, [email protected]
HEXCEL COMPLETES ACQUISITION OF HERCULES
COMPOSITE PRODUCTS DIVISION
-----------------
$310 MILLION CREDIT FACILITY FINALIZED
-----------------
PLEASANTON, CA (JUNE 27, 1996) -- Hexcel Corporation (NYSE/PSE: "HXL") announced
today that it has completed its acquisition of the Composites Products
Division ("CPD") of Hercules Incorporated ("Hercules"), and entered into a new
$310 million credit facility with a group of bank lenders led by Credit Suisse.
In addition, Hexcel announced that it expects to offer $100 million of
convertible subordinated notes early in the third quarter of 1996.
Under the terms of the agreement as previously disclosed, Hexcel paid Hercules
$135 million in cash, subject to certain post-closing adjustments. CPD
develops, manufactures and markets prepregs and carbon fiber for aerospace and
other markets. Its prepregs, primarily supplied to the commercial and military
aerospace markets, complement and extend Hexcel's portfolio of existing prepreg
products. CPD's carbon fiber is sold to various customers and is used as a raw
material in Hexcel's fabrics and composite materials business units. CPD has
facilities in Salt Lake City, Utah; Decatur, Alabama; and Madrid, Spain.
Borrowings under the new $310 million credit facility were used to fund the
purchase price of the CPD acquisition and to refinance certain indebtedness,
including outstanding
-MORE-
<PAGE>
borrowings under an existing bank credit facility. The balance of the new
credit facility will be available for general corporate purposes, including
restructuring activities.
John J. Lee, Chairman and CEO of Hexcel said, " We are extremely pleased to have
concluded the CPD acquisition. This transaction not only expands the Company's
technologies and provides new customer qualifications, but also is consistent
with our long-term strategy of adding complementary product lines to Hexcel's
core businesses. In particular, the acquisition of the CPD fiber business will
enable the Company to extend its integration capabilities. At the same time,
CPD's production capacity should aid Hexcel in implementing its restructuring
programs in the United States and Europe. We are also pleased with the support
we have received from the financial community as demonstrated by the completion
of our new $310 million credit facility."
Juergen Habermeier, President and COO of Hexcel stated, "Carbon fiber is an
important addition to our product lines. It is a raw material consumed by our
fabrics and prepreg businesses. We plan to upgrade the PAN precursor, enhance
the fiber quality and improve the fiber output."
Hexcel also announced that James N. Burns will be the President of the new
Fibers Business Unit, which will consist of the existing CPD fiber facilities in
Salt Lake City, Utah and Decatur, Alabama. Previously, Mr. Burns was the
Business Director of the CPD Materials Business. The CPD prepreg operations in
Salt Lake City, Utah will become part of Hexcel's U.S. Materials Business Unit,
and the CPD prepreg facilities in Madrid, Spain will become part of the
EuroMaterials Business Unit.
Earlier this week, the 170 employees at the Salt Lake City, Utah facility,
represented by the Oil, Chemical and Atomic Workers Union (OCAW), rejected
Hexcel's wage and benefit proposal. Hexcel has, however, offered employment to
virtually all of the CPD's 450 employees.
Hexcel Corporation is an international developer and manufacturer of
lightweight, high-performance composite materials, parts and structures for
use in the commercial aerospace, space and defense, recreation and general
industrial markets.
Hercules manufactures chemical specialty products for a variety of markets
worldwide. Its businesses include Paper Technology, Resins, Fibers, Food Gums
and Aqualon water-soluble polymers. With shareholder value as its guiding
focus, the corporation concentrates on value-added, high-performance products
where it has a market or technology advantage.
###
<PAGE>
Exhibit 99.2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
HEXCEL CORPORATION
AND
CERTAIN OF ITS EUROPEAN SUBSIDIARIES
-------------------------------------
US$300,000,000 REVOLVING CREDIT FACILITIES
US$10,000,000 EUROPEAN OVERDRAFT FACILITY
-----------------
CREDIT AGREEMENT
DATED AS OF JUNE 27, 1996
-------------------------------------
CREDIT SUISSE,
AS ADMINISTRATIVE AGENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . . 1
1.2 Computation of Time Periods. . . . . . . . . . . . . . . . . . . 34
1.3 Accounting Terms . . . . . . . . . . . . . . . . . . . . . . . . 34
1.4 Other Definitional Provisions. . . . . . . . . . . . . . . . . . 34
1.5 Other Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 2. AMOUNTS AND TERMS OF DOMESTIC REVOLVING CREDIT FACILITY . . . 35
2.1 Domestic Revolving Credit Facility . . . . . . . . . . . . . . . 35
2.2 Procedure for Borrowing Domestic Revolving Loans . . . . . . . . 35
2.3 Use of Proceeds of Domestic Revolving Loans. . . . . . . . . . . 36
ARTICLE 3. AMOUNTS AND TERMS OF EXTENSIONS OF EUROPEAN REVOLVING
CREDIT FACILITY . . . . . . . . . . . . . . . . . . . . . . . 37
3.1 European Revolving Credit Facility . . . . . . . . . . . . . . . 37
3.2 Procedure for Borrowing Syndicated European Loans. . . . . . . . 38
3.3 Procedure for Borrowing Local European Loans . . . . . . . . . . 40
3.4 Matters Relating to Local European Loans . . . . . . . . . . . . 41
3.5 Use of Proceeds of European Revolving Loans. . . . . . . . . . . 43
3.6 Termination of Foreign Borrower Status . . . . . . . . . . . . . 43
3.7 Reporting by Local Lenders . . . . . . . . . . . . . . . . . . . 44
ARTICLE 4. AMOUNTS AND TERMS OF SWING LOAN FACILITY. . . . . . . . . . . 44
4.1 Swing Loan Facility. . . . . . . . . . . . . . . . . . . . . . . 44
4.2 Procedure for Borrowing Swing Loans. . . . . . . . . . . . . . . 44
4.3 Repayment of Swing Loans . . . . . . . . . . . . . . . . . . . . 45
4.4 Participations . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.5 Use of Proceeds of Swing Loans . . . . . . . . . . . . . . . . . 46
ARTICLE 5. AMOUNTS AND TERMS OF LETTER OF CREDIT FACILITY. . . . . . . . 46
5.1 Letter of Credit Facility. . . . . . . . . . . . . . . . . . . . 46
5.2 Types and Amounts. . . . . . . . . . . . . . . . . . . . . . . . 46
5.3 Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
5.4 Issuance of Letters of Credit. . . . . . . . . . . . . . . . . . 48
5.5 Reimbursement Obligations; Duties of Issuing Banks . . . . . . . 49
5.6 Participations . . . . . . . . . . . . . . . . . . . . . . . . . 50
5.7 Payment of Reimbursement Obligations . . . . . . . . . . . . . . 52
5.8 Issuing Bank Charges . . . . . . . . . . . . . . . . . . . . . . 52
5.9 Issuing Bank Reporting Requirements. . . . . . . . . . . . . . . 52
5.10 Indemnification; Exoneration . . . . . . . . . . . . . . . . . . 52
5.11 Obligations Several. . . . . . . . . . . . . . . . . . . . . . . 53
-i-
<PAGE>
Page
----
5.12 Transitional Provisions. . . . . . . . . . . . . . . . . . . . . 53
ARTICLE 6. AMOUNTS AND TERMS OF EUROPEAN OVERDRAFT FACILITY. . . . . . . 54
6.1 European Overdraft Facility. . . . . . . . . . . . . . . . . . . 54
6.2 Making of European Overdraft Loans . . . . . . . . . . . . . . . 54
6.3 Repayment of European Overdraft Loans. . . . . . . . . . . . . . 55
6.4 Use of Proceeds of European Overdraft Loans. . . . . . . . . . . 55
6.5 Adjustment of European Overdraft Commitment. . . . . . . . . . . 55
ARTICLE 7. PAYMENTS AND PREPAYMENTS. . . . . . . . . . . . . . . . . . . 55
7.1 Promise to Repay . . . . . . . . . . . . . . . . . . . . . . . . 55
7.2 Authorized Officers and Agents . . . . . . . . . . . . . . . . . 57
7.3 Revolving Credit Termination Date. . . . . . . . . . . . . . . . 57
7.4 Voluntary Prepayments/Reductions . . . . . . . . . . . . . . . . 57
7.5 Mandatory Commitment Reductions and Prepayments of Loans . . . . 58
7.6 Manner and Time of Payments. . . . . . . . . . . . . . . . . . . 59
7.7 Apportionment of Payments. . . . . . . . . . . . . . . . . . . . 60
7.8 Payments on Non-Business Days. . . . . . . . . . . . . . . . . . 64
7.9 Payment Currency . . . . . . . . . . . . . . . . . . . . . . . . 64
7.10 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
7.11 Increased Capital. . . . . . . . . . . . . . . . . . . . . . . . 68
ARTICLE 8. INTEREST AND FEES . . . . . . . . . . . . . . . . . . . . . . 69
8.1 Rate of Interest . . . . . . . . . . . . . . . . . . . . . . . . 69
8.2 Interest Payments and Participation Fees . . . . . . . . . . . . 69
8.3 Conversion or Continuation . . . . . . . . . . . . . . . . . . . 70
8.4 Default Interest . . . . . . . . . . . . . . . . . . . . . . . . 71
8.5 Computation of Interest. . . . . . . . . . . . . . . . . . . . . 71
8.6 Changes; Legal Restrictions. . . . . . . . . . . . . . . . . . . 72
8.7 Confirmation of Eurocurrency Rate. . . . . . . . . . . . . . . . 72
8.8 Overall Interest Rate for French Law . . . . . . . . . . . . . . 72
8.9 Special Provisions Governing Eurocurrency Rate Loans . . . . . . 73
8.10 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
8.11 Calculation and Payment of Fees. . . . . . . . . . . . . . . . . 77
ARTICLE 9. CONDITIONS TO LOANS AND LETTERS OF CREDIT . . . . . . . . . . 77
9.1 Conditions Precedent to the Initial Loans and Letters of
Credit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.2 Conditions Precedent to All Subsequent Revolving Loans, Swing
Loans, European Overdraft Loans and Letters of Credit . . . . 80
9.3 Conditions Precedent to the Making of Loans and the Issuance
of Letters of Credit to or for the Benefit of Additional
Borrowers . . . . . . . . . . . . . . . . . . . . . . . . . . 81
ARTICLE 10. REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 82
10.1 Organization; Corporate Powers . . . . . . . . . . . . . . . . . 82
10.2 Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
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10.3 Subsidiaries; Ownership of Capital Stock . . . . . . . . . . . . 83
10.4 No Conflict. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
10.5 Asset Purchase Agreement . . . . . . . . . . . . . . . . . . . . 84
10.6 Governmental Consents, Etc.. . . . . . . . . . . . . . . . . . . 84
10.7 Projections. . . . . . . . . . . . . . . . . . . . . . . . . . . 84
10.8 Litigation; Adverse Effects. . . . . . . . . . . . . . . . . . . 84
10.9 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . 84
10.10 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.11 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
10.12 Requirements of Law. . . . . . . . . . . . . . . . . . . . . . . 85
10.13 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . 85
10.14 ERISA Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 87
10.15 Foreign Employee Benefit Matters . . . . . . . . . . . . . . . . 88
10.16 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 88
10.17 Securities Activities. . . . . . . . . . . . . . . . . . . . . . 89
10.18 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
10.19 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
10.20 Government Contracts . . . . . . . . . . . . . . . . . . . . . . 89
10.21 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 90
ARTICLE 11. REPORTING COVENANTS . . . . . . . . . . . . . . . . . . . . . 90
11.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 90
11.2 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 92
11.3 Lawsuits . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
11.4 ERISA Notices. . . . . . . . . . . . . . . . . . . . . . . . . . 93
11.5 Environmental Notices. . . . . . . . . . . . . . . . . . . . . . 95
11.6 Labor Matters. . . . . . . . . . . . . . . . . . . . . . . . . . 96
11.7 Public Filings and Reports . . . . . . . . . . . . . . . . . . . 96
11.8 Government Contracts . . . . . . . . . . . . . . . . . . . . . . 96
11.9 Other Information. . . . . . . . . . . . . . . . . . . . . . . . 96
11.10 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . 96
ARTICLE 12. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 97
12.1 Corporate Existence, Etc.. . . . . . . . . . . . . . . . . . . . 97
12.2 Corporate Powers; Conduct of Business, Etc.. . . . . . . . . . . 97
12.3 Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . . 97
12.4 Payment of Taxes and Claims; Tax Consolidation . . . . . . . . . 97
12.5 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 98
12.6 Inspection of Property; Books and Records; Discussions . . . . . 98
12.7 ERISA Compliance . . . . . . . . . . . . . . . . . . . . . . . . 98
12.8 Foreign Employee Benefit Plan Compliance . . . . . . . . . . . . 98
12.9 Maintenance of Property. . . . . . . . . . . . . . . . . . . . . 99
12.10 Subsidiary Guarantors; Future Liens on Capital Stock . . . . . . 99
12.11 Hexcel Technologies Pledge . . . . . . . . . . . . . . . . . . . 99
ARTICLE 13. NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 100
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13.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . 100
13.2 Sales of Assets. . . . . . . . . . . . . . . . . . . . . . . . . 101
13.3 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
13.4 Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . 103
13.5 Accommodation Obligations. . . . . . . . . . . . . . . . . . . . 105
13.6 Restricted Junior Payments . . . . . . . . . . . . . . . . . . . 106
13.7 Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . 107
13.8 Transactions with Affiliates . . . . . . . . . . . . . . . . . . 107
13.9 Restriction on Fundamental Changes . . . . . . . . . . . . . . . 107
13.10 Sales and Leasebacks; Operating Leases . . . . . . . . . . . . . 108
13.11 Margin Regulations; Securities Laws. . . . . . . . . . . . . . . 108
13.12 ERISA and Certain Employment Matters . . . . . . . . . . . . . . 108
13.13 Issuance or Sale of Capital Stock. . . . . . . . . . . . . . . . 109
13.14 Constituent Documents. . . . . . . . . . . . . . . . . . . . . . 109
13.15 Fiscal Year. . . . . . . . . . . . . . . . . . . . . . . . . . . 110
13.16 Cancellation of Debt; Prepayment . . . . . . . . . . . . . . . . 110
13.17 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . 111
13.18 Accounting Changes . . . . . . . . . . . . . . . . . . . . . . . 111
13.19 No New Restrictions on Subsidiary Dividends. . . . . . . . . . . 111
ARTICLE 14. FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . . 112
14.1 Minimum Tangible Net Worth . . . . . . . . . . . . . . . . . . . 112
14.2 Minimum Fixed Charge Coverage Ratio. . . . . . . . . . . . . . . 112
14.3 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . 113
ARTICLE 15. EVENTS OF DEFAULT; RIGHTS AND REMEDIES. . . . . . . . . . . . 113
15.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 113
15.2 Rights and Remedies. . . . . . . . . . . . . . . . . . . . . . . 117
ARTICLE 16. THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT . . . . . . 118
16.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . . . 118
16.2 Nature of Duties . . . . . . . . . . . . . . . . . . . . . . . . 119
16.3 Rights, Exculpation, Etc.. . . . . . . . . . . . . . . . . . . . 119
16.4 Reliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
16.5 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . 120
16.6 Credit Suisse and Citibank, N.A. Individually. . . . . . . . . . 120
16.7 Successor Agent; Resignation of Agent. . . . . . . . . . . . . . 121
16.8 Relations Among Lenders. . . . . . . . . . . . . . . . . . . . . 121
16.9 Concerning the Collateral and the Loan Documents . . . . . . . . 122
ARTICLE 17. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 123
17.1 Assignments and Participations . . . . . . . . . . . . . . . . . 123
17.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126
17.3 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
17.4 Change in Accounting Principles. . . . . . . . . . . . . . . . . 128
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17.5 Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128
17.6 Ratable Sharing. . . . . . . . . . . . . . . . . . . . . . . . . 129
17.7 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . 129
17.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
17.9 Survival of Warranties and Agreements. . . . . . . . . . . . . . 132
17.10 Failure or Indulgence Not Waiver; Remedies Cumulative. . . . . . 132
17.11 Marshalling; Payments Set Aside. . . . . . . . . . . . . . . . . 132
17.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 132
17.13 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
17.14 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . 132
17.15 Limitation of Liability. . . . . . . . . . . . . . . . . . . . . 132
17.16 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 133
17.17 Certain Consents and Waivers . . . . . . . . . . . . . . . . . . 133
17.18 Counterparts; Effectiveness; Inconsistencies . . . . . . . . . . 134
17.19 Limitation on Agreements . . . . . . . . . . . . . . . . . . . . 135
17.20 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . 135
17.21 Judgment Currency. . . . . . . . . . . . . . . . . . . . . . . . 135
17.22 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 136
17.23 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 136
17.24 Certain Waivers. . . . . . . . . . . . . . . . . . . . . . . . . 136
SCHEDULES
Schedule 1.1-A Administrative Agent's European Accounts
Schedule 1.1-B Existing IDRBs
Schedule 5.12 Existing Letters of Credit
Schedule 7.5 Permitted Property Sales
Schedule 9.1 Required Consents
Schedule 10.3 Corporate Structure
Schedule 10.4 Conflicts with Existing Contracts or Requirements of Law
Schedule 10.6 Governmental Consents
Schedule 10.8 Litigation
Schedule 10.9 Tax and Other Assessments
Schedule 10.12 Requirements of Law
Schedule 10.13 Environmental Matters
Schedule 10.14 ERISA Plans
Schedule 10.15 Foreign Pension Plan Claims
Schedule 10.16 Labor Matters
Schedule 10.20 Government Contracts
Schedule 13.1 Permitted Existing Indebtedness
Schedule 13.3 Permitted Existing Liens
Schedule 13.4-A Permitted Existing Investments
Schedule 13.4-B Investments in Connection with the Acquisition
Schedule 13.5 Permitted Existing Accommodation Obligations
Schedule 13.6 Payments of Indebtedness
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Schedule 13.8 Transactions with Affiliates
Schedule 13.13 Management Incentive Plans
EXHIBITS
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Notice of Borrowing
Exhibit C Form of Notice of Conversion/Continuation
Exhibit D List of Closing Documents
Exhibit E Form of Officer's Certificate to Accompany Reports
Exhibit F Form of Revolving Credit Note
Exhibit G Form of Swing Loan Note
Exhibit H Form of Company Guaranty
Exhibit I Form of Domestic Subsidiary Guaranty
Exhibit J Form of Company Pledge Agreement
Exhibit K Form of European Overdraft Note
Exhibit L Form of Borrower Addendum
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CREDIT AGREEMENT, dated as of June 27, 1996 (as amended, supplemented
or otherwise modified from time to time, this "AGREEMENT"), among:
(a) Hexcel Corporation, a Delaware corporation (with its successors and
permitted assigns, the "COMPANY");
(b) the following Wholly-owned Subsidiaries of the Company (together with any
additional "Foreign Borrowers" appointed pursuant to SECTION 9.3, the
"FOREIGN BORROWERS"; each, a "FOREIGN BORROWER"): (i) Hexcel (U.K.)
Limited, a corporation organized and existing under the laws of England and
Wales ("HEXCEL U.K."), (ii) Hexcel Composites Limited, a corporation
organized and existing under the laws of the United Kingdom ("COMPOSITES-
UK"), (iii) Hexcel S.A., a French societe anonyme ("HEXCEL LYON"), (iv)
Brochier S.A., a French societe anonyme a conseil de surveillance et a
directoire ("BROCHIER"), (v) Hexcel S.A., a company organized and existing
under the laws of Belgium ("HEXCEL BELGIUM"), (vi) Salver S.r.l., a limited
liability company organized and existing under the laws of Italy
("SALVER"), (vii) Hexcel Composites GmbH, a company organized and existing
under the laws of Austria ("HEXCEL COMPOSITES"), (viii) DANUTEC Werkstoff
Aktiengesellschaft, a company organized and existing under the laws of
Austria ("DANUTEC WERKSTOFF") and (ix) Hercules Aerospace Espana, S.A., a
corporation organized and existing under the laws of Spain ("HAESA");
(c) the institutions from time to time party hereto as Lenders, whether by
execution of this Agreement or an Assignment and Acceptance;
(d) Citibank, N.A., a national banking association, in its separate capacity as
collateral agent for the Lenders (with its successors in such capacity, the
"COLLATERAL AGENT"); and
(e) Credit Suisse, a Swiss banking association ("CREDIT SUISSE"), in its
separate capacity as administrative agent for the Lenders (with its
successors in such capacity, the "ADMINISTRATIVE AGENT").
ARTICLE 1. DEFINITIONS
1.1 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 of
another, if the primary purpose or intent thereof by the Person incurring
such Contractual Obligation is to provide assurance to the obligee of such
Indebtedness of another that such Indebtedness 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)
<PAGE>
2
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.
"ACQUIRED ASSETS" means, collectively, (i) all assets and properties
of the Sellers used or held for use since December 31, 1995 in the Acquired
Businesses, but excluding the Excluded Items (as defined in the Asset
Purchase Agreement), (ii) all the capital stock of HAESA, (iii) certain
intercompany Indebtedness relating thereto.
"ACQUIRED BUSINESSES" means the business and related activities of
Hercules-CPD in the research, development, manufacture, distribution, and
sale of (a) polyacrylonitrile precursor and related materials used in the
manufacture of carbon fiber, (b) carbon fiber and related materials, (c)
carbon fiber and related materials consumed internally to manufacture
carbon fiber prepregs and (d) prepregs and related materials, including,
without limitation, the business and related activities conducted by HAESA,
but excluding any business, activity or interest in the composite
structures business and activities.
"ACQUISITION" means the acquisition by the Company and certain of its
Subsidiaries of the Acquired Businesses.
"ACQUISITION DOCUMENTS" means the Asset Purchase Agreement and any
other documents or agreements delivered thereunder or in connection
therewith.
"ACQUISITION LOAN" means, individually or collectively as the context
requires, all loans borrowed by the Company and its Subsidiaries (whether
now outstanding or hereafter incurred) the proceeds of which have been
applied to finance or refinance (i) all or any part of the purchase price
for the acquisition of any Foreign Subsidiaries and (ii) any transaction
costs relating thereto.
"ADDITIONAL BORROWER" is defined in SECTION 9.3.
"ADDITIONAL BORROWER EFFECTIVE DATE" is defined in SECTION 9.3.
"ADMINISTRATIVE AGENT" is defined in the preamble hereto.
"ADMINISTRATIVE AGENT'S U.S. ACCOUNT" means the Administrative Agent's
account number 93045801 (funding account re: Hexcel Corporation) maintained
at the office of Credit Suisse, Tower 49, 12 East 49th Street, New York,
New York 10017, Attention: Agency Administration, or such other deposit
account as the Administrative Agent may from time to time specify in
writing to the Company and the Lenders.
<PAGE>
3
"ADMINISTRATIVE AGENT'S EUROPEAN ACCOUNTS" means those certain
accounts listed on SCHEDULE 1.1-A or such other deposit account(s) as the
Administrative Agent may from time to time specify in writing to the
Company and the Lenders.
"AFFILIATE" of any specified Person means any other Person (i) that
directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, such specified Person, (ii)
that 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 is beneficially owned or held by such specified
Person or a Subsidiary of such specified Person; PROVIDED, that Hexcel
Foundation shall not be deemed an Affiliate of the Company for as 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.
"AGENTS" means the collective reference to the Administrative Agent
and the Collateral Agent, in their respective capacities as such; each (in
such capacity), an "AGENT."
"AGGREGATE PRO RATA SHARE" means, with respect to any Lender, the
percentage obtained by dividing (a) the sum of such Lender's Revolving
Credit Commitment at such time PLUS such Lender's European Overdraft
Commitment, if any, at such time by (b) the aggregate amount of all
Revolving Credit Commitments and European Overdraft Commitments at such
time; PROVIDED, that if all of the Revolving Credit Commitments and
European Overdraft Commitments are terminated pursuant to the terms hereof,
then "AGGREGATE PRO RATA SHARE" means the percentage obtained by dividing
(x) the sum of such Lender's Revolving Credit Obligations PLUS such
Lender's European Overdraft Obligations by (y) the aggregate amount of all
Revolving Credit Obligations and European Overdraft Obligations.
"APPLICABLE LENDING OFFICE" means, with respect to a particular
Lender, its European Lending Office in respect of Loans requested by
Foreign Borrowers, and its U.S. Lending Office in respect of Loans
requested by the Company.
"ASSET PURCHASE AGREEMENT" means the Sale and Purchase Agreement,
dated as of April 15, 1996, between the Sellers and the Company, including
each and all annexes, exhibits and schedules attached thereto.
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance in
substantially the form of EXHIBIT A attached hereto and made a part hereof
(with blanks appropriately completed) delivered to the Administrative Agent
in connection with an assignment of a Lender's interest hereunder in
accordance with the provisions of SECTION 17.1.
<PAGE>
4
"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.
"BASE RATE" means, (i) for any period applicable to any Base Rate Loan
denominated in Dollars, 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 higher of:
(A) the rate of interest announced publicly by Credit Suisse in
New York, New York from time to time, as Credit Suisse's base rate;
and
(B) the sum of (1) one half of one percent (0.50%) per
annum PLUS (2) the Federal Funds Rate in effect from time to time
during such period; and
(ii) for any period applicable to a European Overdraft Loan, the
Eurocurrency Base Rate applicable to the requested Optional Currency for an
Interest Period of seven (7) days, as determined on Tuesday of each week.
"BASE RATE LOANS" means all Loans that bear interest at a rate
determined by reference to the Base Rate as provided in SECTION 8.1.
"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
Company or any of its ERISA Affiliates is, or within the immediately
preceding six (6) years was, an "employer" as defined in Section 3(5) of
ERISA.
"BNP" means Banque Nationale de Paris, acting through its San
Francisco branch and its successors.
"BOND LC REIMBURSEMENT AGREEMENT" means the Third Restated and Amended
Reimbursement Agreement dated on or around June 27, 1996, by and between
the Company and BNP.
"BORROWER ADDENDUM" means an agreement in the form attached hereto as
EXHIBIT L, pursuant to which such Additional Borrower agrees to be bound by
the terms of this Agreement;
"BORROWERS" means, collectively, the Company and the Foreign
Borrowers.
"BORROWING" means a borrowing consisting of Loans of the same type
made on the same day.
"BUSINESS DAY" means a day, in the applicable local time, that 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 and (ii) in the case of Eurocurrency Rate Loans, (A) in London,
England and (B) for
<PAGE>
5
Loans denominated in Austrian shillings, in Austria, for Loans denominated
in Belgian francs, in Belgium, for Loans denominated in Dutch guilders, in
The Netherlands, for Loans denominated in French francs, in France, for
Loans denominated in German marks, in Germany, for Loans denominated in
Italian lire, in Italy, and for Loans denominated in Spanish pesetas, in
Spain, and and (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 Company's or
any of its Subsidiaries' fixed asset accounts as reflected in any of their
respective balance sheets; PROVIDED, that (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 its
Subsidiaries and (B) expenditures for Equipment that is purchased
simultaneously with the trade-in or disposal of existing Equipment owned by
the Company or any of its 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 (A) expenditures made in connection with the
replacement or restoration of Property, to the extent reimbursed or
financed from insurance or condemnation proceeds and (B) the Acquisition.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that,
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.
"CASH COLLATERAL" means cash or Cash Equivalents held by the
Administrative Agent for the benefit of the Lenders as security for the
Reimbursement Obligations pursuant to the terms of the Loan Documents.
"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 Eurocurrency 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 Ratings
Services (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
<PAGE>
6
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 Ratings Services (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 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.
"CDSR" means Confection et Diffusion de Stores et Rideaux, a societe
anonyme organized and existing under the laws of France.
"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 10.13(f).
"CHANGE OF CONTROL" means the occurrence of any of the following
events: (i)(A) any "person" (as such term is used in Section 13(d) and
14(d) of the Exchange Act), other than (x) Ciba-Geigy Limited and its
Affiliates or (y) an underwriter engaged in a firm commitment underwriting
in connection with a public offering of the Voting Stock of the Company, is
or becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act, except that a person shall be deemed to have
"beneficial ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time), directly or indirectly, of more than 25% of the total
voting power of the Voting Stock of the Company; and (B) Ciba-Geigy Limited
and its Affiliates "beneficially own" (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of the Company
than such other person "beneficially owns" (as defined in clause (A)) and
do not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors (for
the purposes of this clause (i), such other person shall be deemed to
beneficially own any Voting Stock of a specified corporation held by a
parent corporation, if such other person "beneficially owns" (as defined in
clause (A)), directly or indirectly, more than 25% of the voting power of
the Voting Stock of such parent corporation and Ciba-Geigy Limited and its
Affiliates "beneficially own" (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act), directly or indirectly, in the aggregate a lesser
percentage of the voting power of the Voting Stock of such parent
corporation than such other person "beneficially owns" (as defined in
clause (A)) and do not have the right or ability by voting power, contract
or otherwise to elect or designate for election a majority of the board of
directors of such parent corporation); (ii) during any period of two
consecutive years, individuals who at the beginning of such period
constituted the
<PAGE>
7
Board of Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Company was approved pursuant to the Governance
Agreement or by a vote of 66-2/3% of the directors of the Company then
still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors
then in office; (iii) the Company sells, conveys, leases or otherwise
transfers all or substantially all its assets to any Person pursuant to a
transaction in which any holder of the Voting Stock of the Company
immediately prior to such transaction "beneficially owns" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, a
lesser percentage of the Voting Stock of the Person that acquired such
assets immediately after such transaction; or (iv) the Company shall cease
to own and control (directly or indirectly through one or more Wholly-owned
Subsidiaries) 100% of the outstanding Capital Stock of each Subsidiary
Guarantor (excluding shares required by applicable law to be owned by
Persons other than the Company for the qualification of directors or to
satisfy minimum shareholder requirements and except as permitted pursuant
to SECTION 13.9).
"CIBA-GEIGY" means, collectively, Ciba-Geigy Limited and Ciba-Geigy
Corporation, a New York corporation, and their successors.
"CIBA-GEIGY COMPOSITES ACQUISITION" means the acquisition of the
global composites division of Ciba-Geigy, including certain related stock
and assets, pursuant to the Strategic Alliance Agreement.
"CIBA-GEIGY LIMITED" means (a) initially, Ciba-Geigy Limited, a
corporation organized and existing under the laws of Switzerland and (b)
from and after the date upon which the merger or combination of Ciba-Geigy
Limited and Sandoz Limited is consummated, Novartis Limited.
"CIBA-GEIGY TRANSACTION DOCUMENTS" means, collectively, the Strategic
Alliance Agreement, the Subordinated Notes, the Subordinated Notes
Indenture, the Governance Agreement and all other agreements contemplated
by, or entered into by the Company and its Subsidiaries pursuant to or in
connection with, the Strategic Alliance Agreement.
"CITIBANK LETTER AGREEMENT" means the fee letter dated as of the date
hereof from Citibank, N.A. and accepted and agreed to by the Company.
"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.
"CLOSING DATE" means the date of the initial funding of the Loans.
<PAGE>
8
"COLLATERAL" means all Capital Stock and interests in Capital Stock
now owned or hereafter acquired by the Company upon which a Lien is granted
under any of the Loan Documents.
"COLLATERAL AGENT" is defined in the preamble hereto.
"COMMERCIAL LETTER OF CREDIT" means any documentary letter of credit
issued by an Issuing Bank pursuant to SECTION 5.4 for the account of any of
the Borrowers that is drawable upon presentation of documents evidencing
the sale or shipment of goods purchased by such Borrower in the ordinary
course of its business.
"COMMITMENTS" means, collectively, the Revolving Credit Commitments
and the European Overdraft Commitments.
"COMPANY GUARANTY" means the guaranty duly executed and delivered to
the Collateral Agent by the Company substantially in the form of EXHIBIT H,
as such guaranty may be amended, supplemented or otherwise modified from
time to time.
"COMPANY PLEDGE AGREEMENT" means the pledge agreement by and between
the Company and the Collateral Agent, substantially in the form of EXHIBIT
J, pledging the Company's ownership interest in each of the Domestic
Subsidiaries (other than each Foreign Holding Subsidiary, Hexcel Alpha
Corporation and Knytex), as such pledge agreement may be amended,
supplemented or otherwise modified from time to time.
"COMPLIANCE CERTIFICATE" is defined in SECTION 11.1(d).
"CONSTITUENT DOCUMENTS" 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, if any) 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, these terms
as 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.
<PAGE>
9
"CONVERTIBLE NOTES" means up to $115,000,000 of convertible,
subordinated debt securities of the Company which have no scheduled
amortization prior to the Revolving Credit Termination Date and otherwise
are in form and substance reasonably acceptable to the Requisite Lenders,
and as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms of this Agreement.
"CONVERTIBLE NOTES INDENTURE" means the Indenture governing the
Convertible Notes, as such Indenture may be amended, supplemented or
otherwise modified from time to time in accordance with the terms of this
Agreement.
"CREDIT SUISSE LETTER AGREEMENT" means the fee letter dated April 12,
1996 from Credit Suisse and accepted and agreed to by the Company.
"CURE LOANS" is defined in SECTION 7.7(e)(iii).
"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 that are not yet due or that
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 that 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 Company's or
any of its Subsidiaries' assets or Property or materially impair
the use thereof in the operation of the Company's and its
Subsidiaries' businesses;
<PAGE>
10
(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 that do not materially
interfere with the ordinary conduct of the business of the
Company or any of its Subsidiaries;
(vi) arising as a result of leases or subleases of Real Property,
PROVIDED, that all such Liens do not in the aggregate materially
detract from the value of the Company's or such Subsidiary's assets or
Property or materially impair the use thereof in the operation of the
businesses;
(vii) constituting the filing of notice financing statements of a
lessor's rights in and to personal property leased to the Company in
the ordinary course of the Company's business; and
(viii) constituting the filing of notice financing statements of a
Person's rights in and to personal property delivered to the Company
and/or its Subsidiaries on a consignment basis.
"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 Company and
Dainippon Ink & Chemicals, Inc., 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 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.
"DOL" means the United States Department of Labor and any successor
department or agency.
"DOLLARS" and "$" mean the lawful money of the United States.
"DOLLAR EQUIVALENT" means, with respect to any Optional Currency at
the time of determination thereof, the equivalent of such currency in
Dollars determined at the rate of exchange quoted by the Administrative
Agent in New York, New York at 12:00 noon (New York time) on the date of
determination, to prime banks in New York City for the spot purchase in the
New York foreign exchange market of such amount of Dollars with such
Optional Currency.
<PAGE>
11
"DOMESTIC REVOLVING LOAN" is defined in SECTION 2.1.
"DOMESTIC SUBSIDIARY" means a Subsidiary of the Company that 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.
"DOMESTIC SUBSIDIARY GUARANTY" means the guaranty duly executed and
delivered to the Collateral Agent by the Domestic Subsidiaries (other than
(i) a Foreign Holding Subsidiary, (ii) Hexcel Alpha Corporation and (iii)
Hexcel Pottsville Corporation) of the Company substantially in the form of
EXHIBIT I, as such guaranty may be amended, supplemented or otherwise
modified from time to time.
"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 business
acquisition and consolidation expenses) and other nonoperating expenses
that 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 nonoperating income.
"ELIGIBLE ASSIGNEE" means (i) a Lender or any Affiliate thereof; (ii)
a commercial bank organized under the laws of the United States, or any
State thereof, and having total assets in excess of $5,000,000,000; (iii) a
finance company, insurance company, other financial institution or fund,
reasonably acceptable to the Administrative Agent, that is regularly
engaged in making, purchasing or investing in loans and having total assets
in excess of $5,000,000,000; (iv) a savings and loan association or savings
bank organized under the laws of the United States or any State thereof
that has a net worth, determined in accordance with GAAP, in excess of
$500,000,000; (v) a commercial bank organized under the laws of any other
country that is a member of the Organization for Economic Cooperation and
Development (the "OECD"), or a political subdivision of any such country,
and having total assets in excess of $5,000,000,000, as long as such bank
is acting through a branch or agency located in the country in which it is
organized or another country that is also a member of the OECD; (vi) the
central bank of any country that is a member of the OECD; or (vii) a
finance company, insurance company, bank, other financial institution or
fund acceptable to the Administrative Agent, which acceptance shall not be
unreasonably withheld; and, in each case, is capable of making Loans in
accordance with the terms hereof both in the United States and in each
country in which an Optional Currency is the national currency.
"ENVIRONMENTAL, HEALTH OR SAFETY REQUIREMENTS OF LAW" means all
Requirements of Law derived from or relating to foreign, European Union,
United States federal, state and local laws or regulations relating to or
addressing the
<PAGE>
12
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 of Law as are promulgated by the specifically
authorized Governmental Authority responsible for administering such
Requirements of Law, 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 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, for environmental reasons, conditions, restricts,
prohibits or requires any notification, Remedial Action or disclosure
triggered by the closure of any Property, the transfer, sale or lease of
any Property or deed or title for any Property or any change in the direct
or indirect ownership or control of any Property, including, but not
limited to, any so-called "Industrial Site Recovery Acts" or "Responsible
Transfer Acts".
"EQUIPMENT" means all of the Company'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 Company'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 that is a member of the
same controlled group of corporations (within the meaning of Section 414(b)
of the Internal Revenue 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 Internal Revenue Code) with
the Company, and (iii) member of the same affiliated service group (within
the meaning of Section 414(m) of the Internal Revenue Code) as the Company,
any corporation described in clause (i) above or any partnership or trade
or business described in clause (ii) above.
"EUROCURRENCY AFFILIATE" means, with respect to each Lender, each
Affiliate of such Lender (if any) which conducts eurocurrency funding
operations for such Lender.
"EUROCURRENCY BASE RATE" means the rate per annum determined by the
Administrative Agent at approximately 11:00 a.m. (London time) on the
Interest Rate
<PAGE>
13
Determination Date by reference to the British Bankers' Association
Interest Settlement Rates for deposits in Dollars or the relevant Optional
Currency (as set forth by any service selected by the Administrative Agent
which has been nominated by the British Bankers' Association as an
authorized information vendor for the purpose of displaying such rates) for
a period equal to the relevant Interest Period (rounded upward to the
nearest whole multiple of one-sixteenth of one percent (0.0625%); PROVIDED
that, (x) with respect to any European Overdraft Loans or any other
Eurocurrency Loan having an Interest Period of seven (7) days or (y) to the
extent that an interest rate is not ascertainable pursuant to the foregoing
provisions of this definition, the "Eurocurrency Base Rate" shall be the
interest rate per annum determined by the Administrative Agent (or, in the
case of the European Overdraft Loans, by the European Overdraft Bank) 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 at which deposits in Dollars or the relevant
Optional Currency are offered to major banks in the London interbank market
in London, England by the Reference Banks at approximately 11:00 a.m.
(London time) on the Interest Rate Determination Date for such Interest
Period.
"EUROCURRENCY INTEREST PAYMENT DATE" means (i) with respect to any
Eurocurrency Rate Loan, the last day of each Interest Period applicable to
such Loan and (ii) with respect to any Eurocurrency Rate Loan requested by
the Company having an Interest Period in excess of three (3) calendar
months, the last day of each three (3) month interval during such Interest
Period.
"EUROCURRENCY LIABILITIES" has the meaning assigned to such term in
Regulation D.
"EUROCURRENCY RATE" means the amount equal to the Eurocurrency Base
Rate DIVIDED BY a percentage equal to 100% MINUS (in the case of Loans
denominated in Dollars only) the Eurocurrency Reserve Percentage. The
Eurocurrency Rate shall be adjusted automatically on and as of the
effective date of any change in the Eurocurrency Reserve Percentage.
"EUROCURRENCY RATE LOANS" means those Loans outstanding that bear
interest at a rate determined by reference to the Eurocurrency Rate and the
Eurocurrency Rate Margin as provided in SECTION 8.1.
"EUROCURRENCY RATE MARGIN" means two-fifths of one percent (0.40%) per
annum PLUS, only in the case of any Multicurrency Loans, any additional
"associated reserve costs" (or analogous costs) not otherwise included in
the Eurocurrency Rate.
"EUROCURRENCY 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
<PAGE>
14
in respect of Eurocurrency Liabilities (or in respect of any other category
of liabilities which includes deposits by reference to which the interest
rate on Eurocurrency 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 LENDING OFFICE" means, with respect to Revolving Loans of a
Lender in a specific Optional Currency, the office from time to time
specified by such Lender (in writing) to the Company (on behalf of the
relevant Borrower) and the Administrative Agent as the office at which such
Lender is booking its Revolving Loans in such Optional Currency.
"EUROPEAN OVERDRAFT BANK" means Citibank, N.A., and its successors and
permitted assigns.
"EUROPEAN OVERDRAFT COMMITMENT" means, with respect to the European
Overdraft Bank, the obligation of the European Overdraft Bank to make
European Overdraft Loans pursuant to the terms and conditions hereof, which
obligation shall not exceed the Local Equivalent from time to time of
$10,000,000, as such amount may be adjusted from time to time in accordance
with the provisions of SECTION 6.5.
"EUROPEAN OVERDRAFT LOANS" is defined in SECTION 6.1.
"EUROPEAN OVERDRAFT NOTE" means one or more notes evidencing the
Borrowers' Obligation to repay the European Overdraft Loans.
"EUROPEAN OVERDRAFT OBLIGATIONS" means, at any particular time, the
outstanding principal amount of the European Overdraft Loans at such time.
For purposes of determining the amount of European Overdraft Obligations
(or any component thereof), such amount shall equal the Dollar Equivalent
of the amount of the Optional Currency in which such European Overdraft
Obligations are denominated at the time of determination thereof.
"EUROPEAN REVOLVING LOANS" is defined in SECTION 3.1.
"EVENT OF DEFAULT" means any of the occurrences set forth in SECTION
15.1 after the expiration of any applicable grace period and the giving of
any applicable notice, in each case as expressly provided in SECTION 15.1.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"EXISTING FACILITIES" means the existing credit facilities provided
for under the Credit Agreement dated as of February 29, 1996 among the
Company, Hexcel Belgium, Hexcel Lyon, Brochier, Hexcel U.K. and Composites-
UK, as borrowers thereunder, the institutions party thereto as lenders, the
institutions party thereto as issuing banks, Citibank, N.A., a national
banking association acting through its New
<PAGE>
15
York branch, in its separate capacity as administrative agent for the
lenders and issuing banks thereunder, Citibank International plc, in its
separate capacity as European administrative agent for the lenders and
issuing banks thereunder and Credit Suisse, in its separate capacity as
syndication agent for the lenders and issuing banks thereunder, as amended,
supplemented or otherwise modified to the date hereof.
"EXISTING IDRBS" means the industrial development revenue bonds
identified on SCHEDULE 1.1-B.
"EXISTING JOINT VENTURES" 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 such Person;
PROVIDED, that the value of any asset or group of assets with a book value
of less than $1,000,000 (or the Local Equivalent thereof) shall be
determined in good faith by the management of such Person 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, in respect of Loans
denominated in Dollars, 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, 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 that is a
Business Day in New York, New York, the average of the quotations for such
day on such transactions received by the Administrative Agent from three
federal funds brokers of recognized standing selected by the Administrative
Agent.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
"FINANCIAL OFFICER" of any Borrower means the chief executive officer,
chief operating officer, senior vice president for finance and
administration, chief financial officer, treasurer or controller of such
Borrower.
"FISCAL YEAR" means the fiscal year of the Company, which shall be the
four fiscal quarter period ending on December 31 of each calendar year.
<PAGE>
16
"FIXED CHARGES" means, for any period for any Person, the sum, without
duplication, of the amounts for such period of (i) Interest Expense of such
Person, (ii) the payments of principal on Indebtedness for borrowed money
required to be paid during such period by such Person, including, without
limitation, the principal component of Capital Lease obligations and (iii)
cash dividends paid in respect of Capital Stock by such Person.
"FIXED CHARGE COVERAGE RATIO" means, with respect to any period, the
ratio of (i) EBITDA of the Company and its Subsidiaries for such period,
MINUS Capital Expenditures paid by the Company and its Subsidiaries during
such period, PLUS Net Cash Proceeds of the type set forth in clause (i) of
the definition thereof received after the Closing Date 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 its Subsidiaries for such
period.
"FOREIGN CURRENCY PROTECTION AGREEMENT" means any foreign currency cap
agreement, foreign currency rate swap agreement or other similar agreements
or arrangements entered into by the Company or any Subsidiary to provide
protection against fluctuations in foreign currency rates.
"FOREIGN BORROWERS" is defined in the preamble hereto.
"FOREIGN BORROWER SUBLIMIT" means, with respect to any Foreign
Borrower, $35,000,000 (or, in the case of (x) Hexcel Composites and Danutec
Werkstoff collectively, $2,000,000 and (y) Salver, $2,000,000) at any one
time outstanding (or the Local Equivalent thereof), as such amount may be
modified from time to time for any one or more Foreign Borrowers by the
Company with the prior consent of the Administrative Agent and any affected
Local Lender.
"FOREIGN EMPLOYEE BENEFIT PLAN" means any employee benefit plan as
defined in Section 3(3) of ERISA that is maintained or contributed to for
the benefit of the employees of the Company or any of its ERISA Affiliates
or any of the Company's Subsidiaries, but which is not covered by ERISA
pursuant to ERISA Section 4(b)(4).
"FOREIGN HOLDING SUBSIDIARY" means a Domestic Subsidiary formed for
the sole purpose of holding the capital stock of one or more of the
Company's Foreign Subsidiaries.
"FOREIGN PENSION PLAN" means any Foreign Employee Benefit Plan that,
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.
"FOREIGN PLEDGE AGREEMENTS" means the pledge agreements:
(i) by and between the Company or a Domestic Subsidiary, as
applicable, and the Collateral Agent pledging 65% of the Company's
ownership
<PAGE>
17
interest (other than shares required by applicable law to be owned by
another Person for the qualification of directors or to satisfy
minimum shareholder requirements) in each of the first-tier Foreign
Subsidiaries (other than Hexcel Chemical Products (U.K.) Limited,
Hexcel Foreign Sales Corp. and Hexcel do Brasil Servicos S/C Ltda.);
and
(ii) by and between a Foreign Borrower and the Collateral Agent,
pledging each such Foreign Borrower's ownership interest (other than
shares required by applicable law to be owned by another Person for
the qualification of directors or to satisfy minimum shareholder
requirements) in its direct Subsidiaries;
as each such pledge agreement may be amended, supplemented or otherwise
modified from time to time.
"FOREIGN SUBSIDIARY" means any Subsidiary of the Company other than a
Domestic Subsidiary.
"FUNDED DEBT" means, to the extent the following would be reflected on
a consolidated balance sheet of the Company and its Subsidiaries prepared
in accordance with GAAP, the principal amount of all Indebtedness of the
Company and its Subsidiaries in respect of borrowed money, evidenced by
debt securities, debentures, acceptances, notes or other similar
instruments, in respect of Capital Leases, in respect of Reimbursement
Obligations or in respect of the deferred purchase price of Property or
services, except accounts payable and accrued expenses arising in the
ordinary course of business.
"FUNDING ACCOUNT AGREEMENT" means that certain Funding Account
Agreement, dated as of June 24, 1996, by and among the Administrative Agent
and the Borrowers.
"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 Company and
Fyfe Associates pursuant to an Agreement dated as of October 13, 1992, for
the sale and installation of, among other items, 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 17.4).
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18
"GOVERNANCE AGREEMENT" means the Governance Agreement dated as of
February 29, 1996 by and between Ciba-Geigy Limited and the Company, as the
same may be amended, supplemented or otherwise modified from time to time.
"GOVERNMENT CONTRACT" means any bid, quotation, proposal, contract,
agreement, work authorization, lease, commitment or sale or purchase order
of the Company or its Subsidiaries that is with the United States
Government, or any other Governmental Authority, 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 foreign, 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.
"HAESA" means Hercules Aerospace Espana, S.A., a Spanish corporation.
"HAESA LETTER AGREEMENT" means the letter agreement, dated on or
around the date hereof, between the Company and Hercules with respect to
certain outstanding governmental consents required for the consummation of
the acquisition of HAESA by the Company.
"HERCULES" means Hercules Incorporated, a Delaware corporation.
"HERCULES-CPD" means the Composite Products Division of Hercules.
"HEXCEL LYON SUBORDINATED NOTE" means the subordinated promissory note
in the principal amount of approximately $2,613,000, dated March 3, 1995,
payable by the Company to Hexcel Lyon and subordinated to the payment of
the Obligations.
"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 Administrative Agent and each Lender.
"INDEBTEDNESS" means, as applied to any Person, at any time, 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) that are Accommodation Obligations, (vii) upon which interest
charges are customarily paid (including zero coupon instruments) or (viii)
under conditional sale or other title
<PAGE>
19
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; and (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.
"INDEMNIFIED MATTER" is defined in SECTION 17.3.
"INDEMNITEE" is defined in SECTION 17.3.
"INTERBANK RATE" means, for any period, (i) in respect of Loans
denominated in Dollars, the Federal Funds Rate, and (ii) in respect of
Loans denominated in any Optional Currency, the rate which, in the
reasonable judgment of the Administrative Agent, reflects the cost to the
Administrative Agent of the relevant funds.
"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) amortization of
discount, (x) interest paid in property other than cash and (y) any other
interest expense not payable in cash, MINUS (ii) any net payments received
during such period under Interest Rate Contracts.
"INTEREST PERIOD" is defined in SECTION 8.9(a).
"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 8.9(b).
"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 Company's and each of its 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 Company or such Subsidiary and all other items
that have previously constituted Equipment but are then currently being
held for sale or lease in the ordinary course of the Company's or such
Subsidiary's business, (iii) raw materials, work-in-process and finished
goods (other than raw materials obtained from Ciba-Geigy or any of its
<PAGE>
20
Affiliates on consignment in connection with toll manufacturing
arrangements), (iv) materials and supplies of any kind, nature or
description used or consumed in the Company's or such Subsidiary'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 Company or such Subsidiary
has a joint or other interest to the extent of the Company's or such
Subsidiary's interest therein or right of any kind (including, without
limitation, goods in which the Company or such Subsidiary has an interest
or right as consignee), and (vi) goods that are returned to or repossessed
by the Company or such Subsidiary; in each case whether in the possession
of the Company or such 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 substantially all 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.
"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", "ISSUING" and "ISSUANCE" shall
have corresponding meanings.
"ISSUING BANK" means, (a) with respect to any Letter of Credit Issued
pursuant to SECTION 5.4, Credit Suisse or any other Syndicated Lender (or
Affiliate of a Syndicated Lender) approved by the Administrative Agent and
the Company who has agreed to become an Issuing Bank for the purpose of
issuing such Letter of Credit and (b) with respect to the letters of credit
described on SCHEDULE 5.12 which are converted into a Letter of Credit
pursuant to SECTION 5.12, the Lender listed on SCHEDULE 5.12 as the issuer
of such Letter of Credit; collectively, the "ISSUING BANKS."
"KNYTEX" means the joint venture entered into between the Company and
Owens-Corning Fiberglas Corporation pursuant to an Amended and Restated
Limited Liability Company Agreement dated as of June 30, 1993 for the
production and marketing of, among other items, stitchbonded fabrics.
"KNYTEX CREDIT FACILITY" means that certain $4,500,000 revolving
credit facility entered into between Knytex and Creekwood Capital
Corporation pursuant to a Loan Agreement dated as of January 26, 1995.
<PAGE>
21
"LEASES" means those leases, tenancies or occupancies entered into by
the Company or one of its Subsidiaries, as tenant, lessee, sublessor or
sublessee either directly or as the successor in interest to the Company or
any of its Subsidiaries.
"LENDER" means the Syndicated Lenders, the Local Lenders, the Issuing
Banks, the European Overdraft Bank or the Swing Loan Bank, as the context
shall require; collectively, the "LENDERS." For purposes hereof, the term
"Lender" shall refer to the financial institution party hereto and not to
any particular branch thereof (regardless of whether this Agreement has
been executed and delivered by a particular branch thereof).
"LETTER OF CREDIT" means any Commercial Letter of Credit or Standby
Letter of Credit.
"LETTER OF CREDIT FEE" is defined in SECTION 8.10(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 any Borrower
but not yet issued (unless the request for an unissued Letter of Credit has
been denied pursuant to SECTION 5.4(a). For purposes of determining the
amount of Letter of Credit Obligations (or any component thereof) in
respect of any Letter of Credit that is denominated in an Optional
Currency, such amount shall equal the Dollar Equivalent of the amount of
such Optional 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 applicable Borrower and as are not materially adverse
(in the judgment of the Issuing Bank) to the interests of the Lenders;
PROVIDED, that 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-Five Million Dollars
($25,000,000) (or the equivalent thereof in other currencies).
"LEVERAGE RATIO" means, for any period, the ratio of Funded Debt of
the Company and its Subsidiaries on a consolidated basis as of the end of
such period to EBITDA of the Company and its Subsidiaries for such period.
"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,
<PAGE>
22
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 Code), naming the owner of such
property as debtor, under the Uniform Commercial Code or other comparable
law of any jurisdiction, but does not include the interest of a lessor
under an Operating Lease.
"LOAN" means a Revolving Loan (including, without limitation, an
Acquisition Loan), a Swing Loan or a European Overdraft Loan, as the
context shall require; collectively, the "LOANS."
"LOAN DOCUMENTS" means this Agreement, the Notes, the Company
Guaranty, the Domestic Subsidiary Guaranty, the Company Pledge Agreement,
the Subsidiary Pledge Agreement, the Foreign Pledge Agreements, the Credit
Suisse Letter Agreement, the Letter of Credit Reimbursement Agreements
(including, without limitation, the Bond LC Reimbursement Agreement), the
other documents executed or delivered pursuant to SECTION 9.1(a) by the
Company, any Subsidiary Guarantor or any other Subsidiary of the Company,
and all other instruments, agreements and written Contractual Obligations
between the Company or any Subsidiary of the Company, on the one hand, and
any of the Administrative Agent or the Lenders, on the other hand, in each
case delivered to either the Administrative Agent or such Lender pursuant
to or in connection with the transactions contemplated hereby.
"LOCAL EQUIVALENT" means, with respect to any amount of Dollars at the
time of determination thereof, the equivalent of such currency in the
relevant Optional Currency determined at the rate of exchange quoted by the
Administrative Agent in New York, New York at 11:00 a.m. (local time) on
the date of determination, to prime banks in the jurisdiction of the
principal market for the trading of the relevant Optional Currency for the
spot purchase in such foreign exchange market of such amount of such
Optional Currency with such amount of Dollars.
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23
"LOCAL LOAN BORROWERS" means Hexcel Belgium, Salver, Danutec
Werkstoff, Hexcel Composites and HAESA; each, a "LOCAL LOAN BORROWER."
"LOCAL EUROPEAN LOANS" is defined in SECTION 3.1(b).
"LOCAL LENDER" means, with respect to Local European Loans borrowed by
(a) Hexcel Belgium, Credit Suisse (Luxembourg) S.A., (b) Salver, Istituto
Bancario San Paolo di Torino S.p.A. (or any alternate Local Lender
appointed in accordance with the terms of SECTION 3.4(d)), (c) Hexcel
Composites and Danutec Werkstoff, Credit Suisse and (d) HAESA, Banco San
Paolo S.A., in each case in such Local Lender's capacity as the lender of
such Local European Loans.
"LODI FACILITY" means that certain site located in Lodi, New Jersey
that was sold by the Company to Fine Organics Corporation in 1986.
"MANUFACTURING AND SUPPLY AGREEMENT" means that certain Manufacturing
and Supply Agreement between the Company and Ciba-Geigy Corporation dated
as of February 29, 1996.
"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 Company and its Subsidiaries, taken as a
whole, (ii) the ability of the Borrowers or of the Subsidiary Guarantors,
taken as a whole, to perform their obligations under the Loan Documents or
(iii) the ability of the Lenders or the Administrative Agent to enforce the
Loan Documents.
"MAXIMUM PARTNERSHIP/JOINT VENTURE INVESTMENT AMOUNT" means the sum,
without duplication, of (i) all cash Investments made by the Borrower after
the Closing Date, PLUS (ii) all Investments that the Borrower is under a
Contractual Obligation to make after the Closing Date, PLUS (iii) the
amount of all Accommodation Obligations incurred after the Closing Date, in
each case in or on behalf of any partnership in which such Borrower is a
general or limited partner or any joint venture (other than the Existing
Joint Ventures) to which such Borrower is a party.
"MULTICURRENCY LOAN" means a European Revolving Loan made in an
Optional Currency.
"MULTICURRENCY SUBLIMIT" means $150,000,000; PROVIDED that the
"Multicurrency Sublimit" shall be reduced by the aggregate amount of any
Indebtedness incurred by the Foreign Borrowers pursuant to SECTION 13.1(j).
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24
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding
six (6) years was, contributed to by either the Company or any ERISA
Affiliate.
"NET ASSETS" means, for any Foreign Borrower after a sale of assets of
such Foreign Borrower, the aggregate value (as would be reflected on the
balance sheets of such Foreign Borrower in accordance with ordinary
accounting practices in the jurisdiction in which such Foreign Borrower is
located) of the remaining assets of such Foreign Borrower, taking into
account assets purchased or otherwise acquired by such Foreign Borrower
with the proceeds of such asset sale.
"NET CASH PROCEEDS" means, with respect to any single transaction or
related group of transactions described below from which the Company and
its Subsidiaries receive proceeds in excess of $100,000 (or the Local
Equivalent thereof) in the aggregate:
(i) such proceeds received by the Company or any of its
Subsidiaries in cash or Cash Equivalents from the sale (including,
without limitation, any Sale and Leaseback Transaction), assignment or
other disposition, of any Property, other than sales, assignments and
other dispositions of Property between the Company and its Wholly-
owned Subsidiaries to the extent permitted hereunder and sales,
assignments and other dispositions permitted by CLAUSE (a), (c), (d),
(e), (f), (h) or (i) of SECTION 13.2, net of (A) the reasonable cash
costs of sale, assignment or other disposition (B) taxes paid or
payable as a result thereof, (C) the amount of any Indebtedness (other
than the Obligations) secured by such Property (to the extent
permitted hereunder) and, together with any premiums, interest or
fees, repaid in connection with such sale and (D) all distributions
and other payments required to be made to any Person (other than the
Company or any Subsidiary of the Company) owning a beneficial interest
in the assets subject to such sale, assignment or other disposition;
PROVIDED, that evidence of each of (A), (B) and (D) are provided to
the Administrative Agent;
(ii) proceeds of insurance (other than in respect of business
interruption insurance, protection and indemnity insurance or other
third-party liability insurance) received 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; and
(iii) proceeds received after the Closing Date by the Company or
any of its Subsidiaries in cash or Cash Equivalents from the issuance
of any Indebtedness by the Company or any of its Subsidiaries (except
for such Indebtedness permitted by SECTION 13.1 (other than proceeds
of Indebtedness permitted by SECTION 13.1(j), which shall constitute
"Net Cash Proceeds" hereunder) and any such Indebtedness incurred in
connection with Currency
<PAGE>
25
Agreements or Interest Rate Contracts to the extent the Borrowers are
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
Administrative 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.
"NON PRO RATA LOAN" is defined in SECTION 7.7(e).
"NOTE" is defined in SECTION 7.1.
"NOTICE OF BORROWING" means, in respect of Borrowings made on the
Closing Date, a notice substantially in the form of Annex A to the Funding
Account Agreement, and, in respect of all other Borrowings, a notice
substantially in the form of EXHIBIT B.
"NOTICE OF CONTINUATION/CONVERSION" means a notice substantially in
the form of EXHIBIT C.
"NPL" is defined in SECTION 10.13(f).
"OBLIGATIONS" means, to the extent arising hereunder, under the Notes
or under any other Loan Document, all Loans, advances, debts, liabilities
and obligations owing by (as applicable) the Borrowers or any Domestic
Subsidiary that has executed a Domestic Subsidiary Guaranty to the
Administrative Agent, any Lender, any Affiliate of the Administrative Agent
or any Lender or any Person entitled to indemnification pursuant to SECTION
17.3, 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 any cash management
services provided by the Administrative Agent or any Affiliate of the
Administrative 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 (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 Borrowers
hereunder or under any other Loan Document.
"OFFICER'S CERTIFICATE" means, as to a corporation or a company, a
certificate executed on behalf of such corporation or company by an
officer, director or general manager, as appropriate, of such corporation
or company.
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26
"OPERATING LEASE" means, as applied to any Person, any lease of any
Property by that Person, as lessee, that is not a Capital Lease.
"OPTIONAL CURRENCY" means any of the lawful currencies of Austria
(Austrian shillings), Belgium (Belgian francs), France (French francs),
Germany (Deutschemarks), The Netherlands (Dutch guilders), the United
Kingdom (British pounds sterling ("Euro sterling"), Italy (Italian lire) or
Spain (Spanish pesetas).
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"PERMITS" means any permit, approval, registration, authorization
license, variance, facility security clearance or personnel security
clearance, or permission required from a Governmental Authority under an
applicable Requirement of Law.
"PERMITTED BELGIAN CAPITAL" means intercompany loans made by the
Company to Hexcel Belgium and equity Investments made by the Company in
Hexcel Belgium; PROVIDED that (a) such loans and Investments are made by
the Company in order to provide sufficient capital to compensate for (and
do not exceed the aggregate amount of) restructuring charges taken by
Hexcel Belgium since the Closing Date, (b) the aggregate principal amount
of such equity Investments does not exceed $20,000,000 (or the Local
Equivalent thereof) and (c) the aggregate principal amount of such
intercompany loans does not at any one time exceed the amount equal to
$20,000,000 (or the Local Equivalent thereof) MINUS the aggregate amount of
equity Investments constituting Permitted Belgian Capital which have been
made in reliance upon the proviso to SECTION 13.4(f).
"PERMITTED EXISTING ACCOMMODATION OBLIGATIONS" means those
Accommodation Obligations of the Company and its Subsidiaries identified as
such on SCHEDULE 13.5.
"PERMITTED EXISTING INDEBTEDNESS" means the Indebtedness of the
Company and its Subsidiaries identified as such on SCHEDULE 13.1.
"PERMITTED EXISTING INVESTMENTS" means those Investments identified as
such on SCHEDULE 13.4-A.
"PERMITTED EXISTING LIENS" means the Liens on assets of the Company or
any of its Subsidiaries identified as such on SCHEDULE 13.3.
"PERMITTED SUBORDINATED INDEBTEDNESS" means Indebtedness evidenced or
to be 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) the Subordinated Notes not
in excess of an aggregate principal amount of $43,000,000 and any
adjustments to such amount made in accordance with the Strategic Alliance
Agreement.
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27
"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.
"PLAN" means an employee benefit plan defined in Section 3(3) of ERISA
in respect of which the Company or any ERISA Affiliate is, or within the
immediately preceding six (6) years was, an "employer" as defined in
Section 3(5) of ERISA.
"PROCESS AGENT" is defined in SECTION 17.17(a)(i).
"PROPERTY" means any Real Property or personal property, including
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).
"REAL PROPERTY" means all of the Company'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 that 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.
"REFERENCE BANKS" means the London branches (in the case of European
Revolving Loans) or the New York branches (otherwise) of each of Credit
Suisse and Citibank, N.A.
"REGISTER" is defined in SECTION 17.1(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.
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28
"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 5.5(a)(i)
"REIMBURSEMENT OBLIGATIONS" means, as to each of the Borrowers, the
aggregate non-contingent reimbursement or repayment obligations of the
Borrowers 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 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.
"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 Constituent
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 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-one percent (51%) of the then aggregate amount of
the Commitments in effect at such time; PROVIDED, that, in the event any of
the Lenders shall have failed to fund its Revolving Credit Pro Rata Share
of any Revolving Loan requested by any of the Borrowers that such Lenders
are obligated to fund under the terms hereof and any such
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failure has not been cured, then for as long as such failure continues,
"REQUISITE LENDERS" means Lenders (excluding Lenders whose failure to fund
their respective Revolving Credit Pro Rata Share of such Loans have not
been so cured) whose Aggregate Pro Rata Shares represent at least fifty-one
percent (51%) of the Aggregate Pro Rata Shares of such Lenders; PROVIDED,
FURTHER, that, in the event that the 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 the sum of all Revolving Credit
Obligations plus all European Overdraft Loans are at least fifty-one
percent (51%).
"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 Company 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 that 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 Company or any of its
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 Company 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.
"REVOLVING CREDIT AVAILABILITY" means, at any particular time, the
amount by which the Revolving Credit Commitments exceeds the Revolving
Credit Obligations outstanding at such time.
"REVOLVING CREDIT COMMITMENT" means, with respect to any Syndicated
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 Syndicated 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
Syndicated 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 Commitments of all the Syndicated Lenders, as adjusted
from time to time pursuant to the terms hereof.
"REVOLVING CREDIT NOTES" means notes evidencing the Borrowers'
Obligation to repay their Revolving Loans.
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30
"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 all Revolving Loans
(including, without limitation, any Local European Loans) at such time,
PLUS (iii) the Letter of Credit Obligations outstanding at such time. For
purposes of determining the amount of Revolving Credit Obligations (or any
component thereof) in respect of any Revolving Loan that is denominated in
an Optional Currency, such amount shall equal the Dollar Equivalent of the
amount of such Optional Currency at the time of determination thereof.
"REVOLVING CREDIT 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, that if all of the Revolving Credit
Commitments are terminated pursuant to the terms hereof, then "REVOLVING
CREDIT 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.
"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) February 28, 1999.
"REVOLVING LOAN" means a Domestic Revolving Loan or a European
Revolving Loan, as the context shall require; collectively, the "REVOLVING
LOANS."
"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.
"SEC" means Securities and Exchange Commission.
"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.
"SELLERS" means Hercules, Hercules Nederland BV and HISPAN
Corporation.
"SOLVENT", when used with respect to any Person, means that at the
time of determination, (A) (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
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31
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; and (B) with respect to Hexcel U.K. and
Composites-UK only, such Person is not unable to pay its debts within the
meaning of Section 123 of the Insolvency Act of 1986, and will not become
unable to pay its debts within the meaning of that Section in consequence
of its entry into the Credit Agreement and Transaction Documents.
"SPECIAL SECURITY AGREEMENT" is defined in SECTION 11.1(h).
"SPECIFIED EQUIPMENT" means the mixers (i) Myers Mod. V550/550A, 30-
15-50 H. P. Drivers, 250 Gal. Vacuum Resin Mixing Tank, Screw-Hi Shear &
Anchor w/Insulated, Heated Controls, Explosion Proof, S/N 918 and
(ii) Myers Mod. V550/550A, 50-25-75 H. P. Drivers, 500 Gal. Vacuum Resin
Mixing Tank, Insulated, Heated, Screw-Hi Shear & Anchor, Valves, Computer &
Controls, Explosion Proof, S/N 921, together with all attachments and
appurtenances thereto and any related equipment to be used by the Company
to manufacture products pursuant to the Manufacturing and Supply Agreement.
"STANDBY LETTER OF CREDIT" means any letter of credit, bank guaranty
or similar instrument issued by an Issuing Bank pursuant to SECTION 5.4 for
the account of a Borrower that is not a Commercial Letter of Credit.
"STRATEGIC ALLIANCE AGREEMENT" means the Strategic Alliance Agreement
dated as of September 29, 1995 and amended as of December 12, 1995, and as
further amended by the letter agreement dated as of February 28, 1996,
among the Company and Ciba-Geigy, as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with
SECTION 13.16.
"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 the Indenture dated as of
August 1, 1986 between the Company and The Bank of California, N.A., as
trustee, as such agreement may be amended, supplemented or otherwise
modified from time to time.
"SUBORDINATED NOTES" means the Increasing Rate Senior Subordinated
Notes, due 2003, to be issued by the Company in an aggregate principal
amount determined in accordance with the Strategic Alliance Agreement and
governed by the terms of the Subordinated Notes Indenture.
"SUBORDINATED NOTES INDENTURE" means the Indenture dated as of
February 29, 1996 between the Company and First Trust of California, N.A.,
as trustee, as such agreement has been amended pursuant to the First
Supplemental Indenture, dated on or
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32
around June 27, 1996, thereto and as such agreement may be further amended,
supplemented or otherwise modified from time to time in accordance with the
terms of this Agreement.
"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, that Hexcel Foundation shall
not be deemed a Subsidiary of the Company for as long as it maintains its
status as a not-for-profit corporation for purposes of California law.
"SUBSIDIARY GUARANTOR" means each Subsidiary of the Company party to
the Domestic Subsidiary Guaranty.
"SUBSIDIARY PLEDGE AGREEMENT" means each pledge agreement by and
between a Domestic Subsidiary of the Company and the Collateral Agent,
substantially in the form of the Company Pledge Agreement (with appropriate
revisions to reflect that a Subsidiary is pledgor and that the obligations
secured are those under the Domestic Subsidiary Guaranty executed by such
Domestic Subsidiary), pledging such Domestic Subsidiary's ownership
interest in each of its direct Domestic Subsidiaries (other than any
Foreign Holding Subsidiary), as such pledge agreement may be amended,
supplemented or otherwise modified from time to time.
"SWING LOAN" is defined in SECTION 4.1.
"SWING LOAN BANK" means Credit Suisse and its successors and permitted
assigns.
"SWING LOAN NOTE" means one or more notes evidencing the Company's
Obligation to repay the Swing Loans.
"SYNDICATED EUROPEAN LOANS" is defined in SECTION 3.1.
"SYNDICATED LENDER" means each financial institution which from time
to time holds a Revolving Credit Commitment hereunder (including, without
limitation, each such financial institution that acquires such Revolving
Credit Commitment pursuant to an Assignment and Acceptance).
"TANGIBLE NET WORTH" means, with respect to any Person, at any time,
(x) total consolidated assets of such Person PLUS (y) any negative (or
MINUS any positive) cumulative foreign currency translation adjustments
applicable to such Person MINUS (z) total consolidated liabilities of such
Person PLUS any negative (or MINUS any positive) minimum pension obligation
adjustment included in the shareholders' equity account of such Person,
each as determined in accordance with GAAP, EXCLUDING, HOWEVER, from the
determination of total assets (i) goodwill, organizational expenses,
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33
trademarks, tradenames, copyrights, patents, patent applications, licenses
and rights in any thereof, and other similar intangibles, (ii) deferred
charges or unamortized debt discount and expense, (iii) securities that are
not readily marketable, (iv) cash held in a sinking or other analogous fund
established for the purpose of redemption, retirement or prepayment of
capital stock or Indebtedness, (v) any write-up in the book value of any
asset resulting from a revaluation thereof subsequent to, in the case of
the Acquired Assets, March 31, 1996, in the case of the assets of the
Company and its Subsidiaries acquired in the Ciba-Geigy Composites
Acquisition, September 29, 1995 and, in the case of all other assets of the
Company and its Subsidiaries, December 31, 1995, and (vi) any items not
included in clauses (i) through (vi) above that are treated as intangibles
in accordance with GAAP.
"TAXES" is defined in SECTION 7.10(a).
"TERMINATION EVENT" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of the Company or any ERISA Affiliate
from a Benefit Plan during a plan year in which the Company or such ERISA
Affiliate was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA or the cessation of operations that results in the termination of
employment of 20% of Benefit Plan participants who are employees of the
Company or any ERISA Affiliate; (iii) the imposition of an obligation on
the Company 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 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 that 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
Company or any ERISA Affiliate from a Multiemployer Plan or a Foreign
Pension Plan.
"TRANSACTION COSTS" means the fees, costs and expenses payable by the
Borrowers in connection with the execution, delivery and performance of the
Transaction Documents.
"TRANSACTION DOCUMENTS" means the Loan Documents, the Acquisition
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.
"UNUSED COMMITMENT FEE" is defined in SECTION 8.10(b).
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34
"UNUSED COMMITMENT FEE RATE" means, as of any date, three-sixteenths
of one percent (0.1875%) per annum.
"U.S. LENDING OFFICE" means, with respect to any Lender, the office of
such Lender located in the United States which is from time to time
specified by such Lender (in writing) to the Company and the Administrative
Agent as the "U.S. Lending Office" of such Lender.
"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 as 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.
"WHOLLY-OWNED SUBSIDIARY" of a Person means a corporation, company
having limited liability or societe anonyme, 100% of the Capital Stock of
which is owned, directly or indirectly, by such Person (other than shares
required by applicable law to be owned by another Person for the
qualification of directors or to satisfy minimum shareholder requirements).
1.2 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.
1.3 ACCOUNTING TERMS. Subject to SECTION 17.4, for purposes of this
Agreement, all accounting terms not otherwise defined herein shall have the
meanings assigned to them in conformity with GAAP.
1.4 OTHER DEFINITIONAL PROVISIONS. References to "Articles",
"Sections", "subsections", "Schedules" and "Exhibits" shall be to Articles,
Sections, subsections, Schedules and 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.
1.5 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.
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35
ARTICLE 2. AMOUNTS AND TERMS OF DOMESTIC REVOLVING CREDIT FACILITY
2.1 DOMESTIC REVOLVING CREDIT FACILITY. Subject to the terms and
conditions set forth herein, each Lender hereby severally and not jointly agrees
to make revolving loans (each individually, a "DOMESTIC REVOLVING LOAN" and,
collectively, the "DOMESTIC REVOLVING LOANS") to the Company from time to time
during the period from the Closing Date to the Revolving Credit Termination
Date; PROVIDED that, after giving effect to the making of such Domestic
Revolving Loans and the simultaneous use of proceeds thereof, (i) such Lender's
Revolving Credit Pro Rata Share of the Revolving Credit Obligations then
outstanding shall not exceed the Revolving Credit Commitment of such Lender then
in effect, (x) the Revolving Credit Obligations then outstanding shall not
exceed the Revolving Credit Commitments then in effect, (ii) the Revolving
Credit Availability shall not be less than zero and (iii) the Revolving Credit
Obligations shall not exceed the Revolving Credit Commitments at such time.
Each Lender shall be obligated hereunder to lend its Revolving Credit Pro Rata
Share of each Revolving Loan. Subject to the provisions hereof (including,
without limitation, SECTION 8.9(e)), the Company may repay any outstanding
Domestic Revolving Loan on any day that is a Business Day and any amounts so
repaid may be reborrowed under this SECTION 2.1 up to the amount available under
this SECTION 2.1 at the time of such Borrowing, until the Revolving Credit
Termination Date. Borrowings of Domestic Revolving Loans under this SECTION 2.1
shall be in an aggregate minimum amount of $2,000,000 and integral multiples of
$1,000,000 in excess of that amount. All Domestic Revolving Loans shall be made
and maintained in Dollars.
2.2 PROCEDURE FOR BORROWING DOMESTIC REVOLVING LOANS. (a) With
respect to Domestic Revolving Loans to be made on the Closing Date pursuant to
SECTION 2.1, the Administrative Agent shall provide written notice to each
Lender of the proposed Borrowing pursuant to the terms of the Funding Account
Agreement and each Lender shall deposit an amount equal to its Revolving Credit
Pro Rata Share of the amount requested by the Company to be made as Domestic
Revolving Loans with the Administrative Agent at its office in New York, New
York, in immediately available funds, on the Closing Date specified in the
initial Notice of Borrowing in accordance with the terms of the Funding Account
Agreement.
(b) With respect to Domestic Revolving Loans to be made after the
Closing Date pursuant to SECTION 2.1, the Company shall deliver to the
Administrative Agent an irrevocable Notice of Borrowing, signed by it, no later
than (i) 11:00 a.m. (New York time) on the proposed Funding Date, in the case of
a Borrowing of Base Rate Loans and (ii) 11:00 a.m. (New York time) at least
three (3) Business Days in advance of the proposed Funding Date, in the case of
a Borrowing of Eurocurrency Rate Loans. Promptly after receipt of such Notice
of Borrowing, the Administrative Agent shall notify each Lender of the proposed
Borrowing and each Lender shall deposit an amount (in immediately available
funds) equal to its Revolving Credit Pro Rata Share of the amount requested by
the Company to be made as Domestic Revolving Loans with the Administrative Agent
at its office in New York, New York not later than 1:00 p.m. (New York time) on
the Funding Date specified in the relevant
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36
Notice of Borrowing. The proceeds of the Domestic Revolving Loans requested by
the Company in any Notice of Borrowing shall be made available to the Company,
in like funds as received from the Lenders, at the Administrative Agent's office
in New York, New York on such Funding Date (or on the date received if later
than such Funding Date). All proceeds of Domestic Revolving Loans shall be
disbursed by the Administrative Agent to the disbursement account indicated in
the applicable Notice of Borrowing. The failure of any Lender to deposit the
amount described above with the Administrative Agent on the applicable Funding
Date shall not relieve any other Lender of its obligations hereunder to make its
Domestic Revolving Loan on such Funding Date or prejudice any rights that any
Borrower may have against such Lender as a result of any such default by such
Lender. No Lender shall be responsible for any failure by any other Lender to
perform its obligation to make a Domestic Revolving Loan hereunder nor shall the
Revolving Credit Commitment of any Lender be increased or decreased as a result
of any such failure.
(c) Unless the Administrative Agent shall have been notified by any
Lender prior to or on the applicable Funding Date in respect of any Borrowing of
Domestic Revolving Loans that such Lender does not intend to fund its Domestic
Revolving Loan requested to be made on such Funding Date, the Administrative
Agent may assume that such Lender has funded its Domestic Revolving Loan and is
depositing the proceeds thereof with the Administrative Agent on the Funding
Date, and the Administrative Agent in its sole discretion may, but shall not be
obligated to, disburse, in immediately available funds, a corresponding amount
to the Company on the Funding Date. If the Domestic Revolving Loan proceeds
corresponding to that amount are advanced to the Company by the Administrative
Agent but are not in fact deposited with the Administrative Agent by such Lender
on or prior to the applicable Funding Date, such Lender agrees to pay and
(without duplication) the Company agrees to repay, to the Administrative 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
Company until the date such amount is paid or repaid to the Administrative
Agent, (A) in the case of the Company, at the interest rate applicable to such
Borrowing and (B) in the case of such Lender, at the Interbank Rate. If such
Lender shall pay to the Administrative Agent the corresponding amount, the
amount so paid shall constitute such Lender's Domestic Revolving Loan, and if
both such Lender and the Company shall pay and repay such corresponding amount,
the Administrative Agent shall promptly pay to the Company such corresponding
amount. This SECTION 2.2 does not relieve any Lender of its obligation to make
its Domestic Revolving Loan on any Funding Date or prejudice any rights that the
Company may have against such Lender as a result of any such default by such
Lender.
2.3 USE OF PROCEEDS OF DOMESTIC REVOLVING LOANS. Proceeds of the
Domestic Revolving Loans shall be used by the Company (a) on the Closing Date,
(i) to fund the cash payment to be made by the Company and its Subsidiaries to
Hercules and/or its Subsidiaries in connection with the Acquisition and (ii) to
pay Transaction Costs incurred in connection with the Acquisition and (b) on the
Closing Date or thereafter, (i) to repay certain existing Indebtedness of the
Company and certain of its Subsidiaries (including, without limitation,
repayment in full and termination of the Existing Facilities), (ii) to pay
Transaction Costs (other than those incurred in connection with the Acquisition)
and (iii) thereafter, to provide
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37
for ongoing working capital needs in the ordinary course of the business of the
Company and its Subsidiaries and for other lawful general corporate purposes not
prohibited hereunder.
ARTICLE 3. AMOUNTS AND TERMS OF EXTENSIONS OF EUROPEAN REVOLVING
CREDIT FACILITY
3.1 EUROPEAN REVOLVING CREDIT FACILITY. Subject to the terms and
conditions set forth herein:
(a) each Lender hereby severally and not jointly agrees to make
revolving loans (each individually, a "SYNDICATED EUROPEAN LOAN" and,
collectively, the "SYNDICATED EUROPEAN LOANS") to the Foreign Borrowers
(including, without limitation, the Local Loan Borrowers) in Dollars and
Optional Currencies from time to time during the period from the Closing
Date to the Revolving Credit Termination Date in accordance with the
provisions of SECTION 3.2; and
(b) each Local Lender hereby severally and not jointly agrees to make
revolving credit loans (each individually, a "LOCAL EUROPEAN LOAN" and,
collectively, the "LOCAL EUROPEAN LOANS"; together with the Syndicated
European Loans, the "EUROPEAN REVOLVING LOANS") to its respective Local
Loan Borrower in Dollars and Optional Currencies from time to time from
time to time during the period from the Closing Date to the Revolving
Credit Termination Date in accordance with the provisions of SECTION 3.3
and each Syndicated Lender hereby severally and not jointly agrees to
participate in such Local European Loans in accordance with the provisions
of SECTION 3.4(a) hereof;
PROVIDED that, after giving effect to the making of such European Revolving
Loans and the simultaneous use of proceeds thereof, (w) such Lender's Revolving
Credit Pro Rata Share of the Revolving Credit Obligations then outstanding shall
not exceed the Revolving Credit Commitment of such Lender then in effect, (x)
the Revolving Credit Obligations then outstanding shall not exceed the Revolving
Credit Commitments then in effect, (y) the aggregate outstanding amount of
Multicurrency Loans and Letter of Credit Obligations denominated in Optional
Currencies made to the Foreign Borrowers shall not exceed at any time the
Multicurrency Sublimit in effect at such time and (z) the aggregate outstanding
amount of Loans made to such Foreign Borrower shall not exceed at any time its
Foreign Borrower Sublimit in effect at such time. Each Lender shall be
obligated hereunder to lend its Revolving Credit Pro Rata Share of each
Syndicated European Loan and to purchase a participating interest in its
Revolving Credit Pro Rata Share of each Local European Loan. Subject to the
provisions hereof (including, without limitation, SECTION 8.9(e)), any of the
Foreign Borrowers may repay any of its outstanding European Revolving Loans on
any day that is a Business Day and any amounts so repaid may be reborrowed, up
to the amount available under this SECTION 3.1 at the time of such Borrowing,
until the Revolving Credit Termination Date. Borrowings of European Revolving
Loans that are denominated in Dollars shall be in an aggregate minimum amount of
$2,000,000 and integral multiples of $1,000,000 in excess of that amount.
Borrowings of Multicurrency Loans shall be denominated in a
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38
single Optional Currency in an aggregate minimum amount equal to an integral
multiple of 100,000 units in such Optional Currency and equal to or greater than
the Local Equivalent of $2,000,000; PROVIDED, that in the case of any Borrowing
of Multicurrency Loans the proceeds of which shall be used to repay a then
maturing Borrowing denominated in the same Optional Currency, such new Borrowing
may, subject to the terms and conditions otherwise set forth herein, be in an
aggregate principal amount equal to the aggregate principal amount of such
maturing Borrowing.
3.2 PROCEDURE FOR BORROWING SYNDICATED EUROPEAN LOANS. (a) With
respect to Syndicated European Loans to be made on the Closing Date pursuant to
SECTION 3.1, the Administrative Agent shall provide written notice to each
Lender of the proposed Borrowing pursuant to the terms of the Funding Account
Agreement and each Lender shall deposit an amount in the requested Optional
Currency or in Dollars (as applicable) equal to its Revolving Credit Pro Rata
Share of the amount requested by such Foreign Borrower to be made as Syndicated
European Loans with the Administrative Agent (at such office as the
Administrative Agent shall specify) in immediately available funds, on the
Closing Date specified in the initial Notice of Borrowing in accordance with the
terms of the Funding Account Agreement.
(b) With respect to Syndicated European Loans to be made after the
Closing Date, the relevant Foreign Borrower shall deliver to the Administrative
Agent an irrevocable (except to the extent set forth in SECTION 3.2(c)) Notice
of Borrowing, signed by it, no later than 11:00 a.m. (London time) at least
three (3) Business Days in advance of the proposed Funding 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 requested Interest
Period, (iv) instructions for the disbursement of the proceeds of the proposed
Borrowing and (v) whether such Syndicated European Loan is to be made in Dollars
or in an Optional Currency (and, if applicable, specifying such Optional
Currency). Promptly after receipt of such Notice of Borrowing, the
Administrative Agent shall notify each Lender of the proposed Borrowing and each
Lender shall deposit an amount in the requested Optional Currency or in Dollars
(as the case may be) equal to its Revolving Credit Pro Rata Share of the amount
requested by such Foreign Borrower to be made as Syndicated European Loans with
the Administrative Agent in immediately available funds, not later than 11:00
a.m. (London time) on the Funding Date specified in the relevant Notice of
Borrowing. All proceeds of the Syndicated European Loans requested by any
Foreign Borrower in any Notice of Borrowing shall be made available to such
Foreign Borrower, in immediately available funds, at the Administrative Agent's
office on such Funding Date (or, subject to SECTION 3.2(d), on the date received
if later than such Funding Date). All proceeds of Loans shall be disbursed by
the Administrative Agent to the disbursement account indicated in the applicable
Notice of Borrowing. The failure of any Lender to deposit the amount described
above with the Administrative Agent on the applicable Funding Date shall not
relieve any other Lender of its obligations hereunder to make its Syndicated
European Loan on such Funding Date or prejudice any rights that any Borrower may
have against such Lender as a result of any such default by such Lender. No
Lender shall be responsible for any failure by any other Lender to perform its
obligation to make a Syndicated European Loan hereunder nor shall the
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Revolving Credit Commitment of any Lender be increased or decreased as a result
of any such failure.
(c) Anything hereinabove to the contrary notwithstanding, if any
Lender shall, not later than 10:00 a.m. (London time) two Business Days before
the date of any requested Borrowing of Multicurrency Loans, notify the
Administrative Agent that such Lender is not satisfied that deposits in the
relevant Optional Currency will be freely available to it in the relevant amount
and for the relevant Interest Period, the right of the Foreign Borrowers to
request Multicurrency Loans in such Optional Currency from such Lender as part
of such Borrowing or any subsequent Borrowing of Multicurrency Loans shall be
suspended until such Lender shall notify the Administrative Agent that the
circumstances causing such suspension no longer exist, and, at the option of the
Foreign Borrowers, either (i) the applicable Notice of Borrowing may be
withdrawn and such Borrowing shall not be made, or (ii) the Multicurrency Loan
to be made by such Lender as part of such Borrowing (and the Multicurrency Loan
to be made by such Lender as part of any subsequent Borrowing of Multicurrency
Loans in respect of which such Optional Currency shall have been requested
during such period of suspension) shall be a Eurocurrency Rate Loan denominated
in Dollars and having an Interest Period coextensive with the Interest Period in
effect in respect of all other Multicurrency Loans comprising a part of such
Borrowing. If any Foreign Borrower elects to withdraw its Notice of Borrowing,
such Foreign Borrower shall be liable to each other Lender for any damages
suffered on account thereof of a nature described in SECTION 8.9(e). The
Administrative Agent shall, upon receiving notice from such Lender that the
circumstances causing any such suspension no longer apply (which notice such
Lender agrees to provide promptly upon the cessation of such circumstances),
promptly so notify the Foreign Borrowers; PROVIDED, that the failure of the
Administrative Agent to so notify the Foreign Borrowers shall not impair the
rights of the Lenders under this SECTION 3.2(c) or expose the Administrative
Agent to any liability.
(d) Unless the Administrative Agent shall have been notified by any
Lender on the applicable Funding Date in respect of any Borrowing of European
Revolving Loans that such Lender does not intend to fund its Syndicated European
Loan requested to be made on such Funding Date, the Administrative Agent may
assume that such Lender has funded its Syndicated European Loan and is
depositing the proceeds thereof with the Administrative Agent on the Funding
Date, and the Administrative Agent in its sole discretion may, but shall not be
obligated to, disburse, in immediately available funds, a corresponding amount
to the Foreign Borrowers on the Funding Date. If the Syndicated European Loan
proceeds corresponding to that amount are advanced to the Foreign Borrowers by
the Administrative Agent but are not in fact deposited with the Administrative
Agent by such Lender on or prior to the applicable Funding Date, such Lender
agrees to pay, and in addition each Foreign Borrower agrees to repay, to the
Administrative 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 Foreign Borrowers until the date such amount is paid or
repaid to the Administrative Agent, (A) in the case of the Foreign Borrowers, at
the interest rate applicable to such Borrowing and (B) in the case of such
Lender, at the Interbank Rate. If such Lender shall pay to the Administrative
Agent the corresponding amount, the amount so paid shall constitute such
Lender's Syndicated European Loan, and if both such
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Lender and the Foreign Borrowers shall pay and repay such corresponding amount,
the Administrative Agent shall promptly pay to the Foreign Borrowers such
corresponding amount. This SECTION 3.2(d) does not relieve any Lender of its
obligation to make its Syndicated European Loan on any Funding Date or prejudice
any rights that any Foreign Borrower may have against such Lender as a result of
any such default by such Lender.
3.3 PROCEDURE FOR BORROWING LOCAL EUROPEAN LOANS. (a) With respect
to Local European Loans to be made on the Closing Date pursuant to SECTION 3.1,
the Administrative Agent shall provide written notice to the relevant Local
Lender of the proposed Borrowing pursuant to the terms of the Funding Account
Agreement and such Local Lender shall make available to the relevant Local Loan
Borrower the requested Local European Loans, in immediately available funds, on
the Closing Date specified in the initial Notice of Borrowing in accordance with
the terms of the Funding Account Agreement.
(b) With respect to Local European Loans to be made to it after the
Closing Date, each Local Loan Borrower (as the case may be) shall deliver to the
Administrative Agent, no later than 11:00 a.m. (local time in the jurisdiction
in which the relevant Local European Loan is to be made) at least three (3)
Business Days in advance of the proposed Funding Date, an irrevocable (except to
the extent set forth in SECTION 3.3(c)) Notice of Borrowing, signed by such
Local Loan Borrower. 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 requested Interest Period, (iv) instructions for the
disbursement of the proceeds of the proposed Borrowing and (v) whether such
European Revolving Loan is to be made in Dollars or in an Optional Currency
(and, if applicable, specifying such Optional Currency). Promptly after receipt
of such Notice of Borrowing, the Administrative Agent shall notify the relevant
Local Lender of the proposed Borrowing. Such Local Lender shall make available
to the relevant Local Loan Borrower in the relevant Optional Currency or Dollars
(as the case may be) the amount requested to be made as Local European Loans on
the Funding Date by disbursement to the disbursement account indicated in the
applicable Notice of Borrowing.
(c) Anything hereinabove to the contrary notwithstanding, if the
relevant Local Lender shall, not later than 10:00 a.m. (local time in the
jurisdiction in which the relevant Local European Loan is to be made) two
Business Days before the date of any requested Borrowing of Multicurrency Loans,
notify the Administrative Agent that such Lender is not satisfied that deposits
in the relevant Optional Currency will be freely available to it in the relevant
amount and for the relevant Interest Period, the right of the relevant Borrower
to request Multicurrency Loans in such Optional Currency as part of such
Borrowing or any subsequent Borrowing of Multicurrency Loans shall be suspended
until such Local Lender shall notify the Administrative Agent that the
circumstances causing such suspension no longer exist, and, at the option of
such Borrower, either (i) the applicable Notice of Borrowing may be withdrawn
and such Borrowing shall not be made, or (ii) the Multicurrency Loan to be made
by the Local Lender as part of such Borrowing (and the Multicurrency Loan to be
made by the Local Lender as part of any subsequent Borrowing of Multicurrency
Loans in respect of which such Optional Currency shall have been requested
during such period of suspension) shall be a Eurocurrency Rate Loan denominated
in Dollars
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41
and having an Interest Period coextensive with the Interest Period in effect in
respect of all other Multicurrency Loans comprising a part of such Borrowing.
If such Borrower elects to withdraw its Notice of Borrowing, it shall be liable
to the Local Lender for any damages suffered on account thereof of a nature
described in SECTION 8.9(e). The Administrative Agent shall, upon receiving
notice from such Local Lender that the circumstances causing any such suspension
no longer apply (which notice such Local Lender agrees to provide promptly upon
the cessation of such circumstances), promptly so notify the relevant Borrower;
PROVIDED, that the failure of the Administrative Agent to so notify such
Borrower shall not impair the rights of the relevant Local Lender under this
SECTION 3.3(c) or expose the Administrative Agent to any liability.
3.4 MATTERS RELATING TO LOCAL EUROPEAN LOANS. (a) Each Lender
hereby unconditionally and irrevocably agrees to purchase (in the currency in
which the relevant Local European Loan is outstanding) from time to time an
undivided participating interest in its Revolving Credit Pro Rata Share of such
portion of the Local European Loans then outstanding as the Administrative Agent
may at any time request; PROVIDED that:
(i) the Administrative Agent hereby agrees that, unless an Event of
Default has occurred and is continuing, it will not request any such
purchase of participating interests unless the Administrative Agent has
given to the relevant Borrower and the affected Lenders at least three
Business Days' prior notice thereof;
(ii) the Administrative Agent hereby agrees that it will request that
the Lenders purchase such participating interest in the Local European
Loans made by any Local Lender promptly following receipt by the
Administrative Agent of a written certification from such Local Lender that
an Event of Default described in SECTION 15.1(a) has occurred and is
continuing with respect to the Local European Loans made by such Local
Lender and requesting that such request be made by the Administrative
Agent; and
(iii) in the event that any of the events specified in SECTION
15.1(f) or (g) shall have occurred with respect to any Borrower who has
Local European Loans then outstanding, each Lender shall be deemed to have
purchased, automatically and without request, such participating interest
in the Local European Loans made to such Borrower.
Any such request by the Administrative Agent shall be made in writing to each
Lender and shall specify the relevant currency and the amount thereof required
from such Lender in order to effect the purchase by such Lender of a
participating interest in the amount equal to its Revolving Credit Pro Rata
Share TIMES the aggregate then outstanding principal amount of the relevant
Local European Loans (together with accrued interest thereon and other amounts
owing in connection therewith). Promptly upon receipt of such request, each
Lender shall deliver to the Administrative Agent (in immediately available funds
and in the requested currency) the amount so specified by the Administrative
Agent. The Administrative Agent shall promptly deliver to the relevant Local
Lender all amounts actually received by the Administrative Agent in like funds
as received. Promptly following receipt thereof, such
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42
Local Lender will deliver to each Lender (through the Administrative Agent) a
certificate evidencing the participating interest in the Local European Loans
purchased by such Lender. From and after such purchase, all amounts from time
to time accruing, and all amounts from time to time payable, on account of such
Local European Loans (including, without limitation, any interest and other
amounts which were accrued but unpaid on the date of such purchase) shall (other
than with respect to the portion of the Applicable Margin which, pursuant to
SECTION 8.2(d), is expressly stated to be paid for the account of the Local
Lender) be distributed by such Local Lender to the Administrative Agent, for the
accounts of the Lenders, on account of such participating interests. The
failure of any Lender to deposit the amount described above with the
Administrative Agent on the date when due shall not relieve any other Lender of
its obligations hereunder to purchase its participating interest or prejudice
any rights that the relevant Local Lender may have against such Lender as a
result of any such default by such Lender. No Lender shall be responsible for
any failure by any other Lender to perform its obligation to purchase such
participating interest hereunder nor shall the Revolving Credit Commitment of
any Lender be increased or decreased as a result of any such failure.
(b) Whenever, at any time after a Local Lender has received from any
Lender such Lender's participating interest in a Local European Loan pursuant to
SECTION 3.4(a), such Local Lender receives any payment on account thereof, such
Local Lender will distribute to the Administrative Agent, for the account of
such Lender, such Lender's participating interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Lender's participating interest was outstanding) in like funds as
received; PROVIDED, HOWEVER, that in the event that such payment received by
such Local Lender is required to be returned, such Lender will return to such
Local Lender any portion thereof previously distributed by such Local Lender for
the account of such Lender in like funds as such payment is required to be
returned by such Local Lender.
(c) Each Lender's obligation to purchase participating interests
pursuant to clause (a) above shall be irrevocable, shall not be subject to any
qualification or exception whatsoever except willful misconduct or gross
negligence of the Local Lender as determined in a final, non-appealable judgment
by a court of competent jurisdiction, and shall be honored in accordance with
this ARTICLE 3 (irrespective of the satisfaction of the conditions described in
SECTIONS 9.1 and 9.2, as applicable) under all circumstances, including, without
limitation, (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 that any Borrower may have at any time against the Local Lender, the
Administrative Agent, any Lender or any other Person, whether in connection
herewith, or with any Local European Loan, the transactions contemplated herein
or any unrelated transactions, (C) the surrender or impairment of any security
for the performance or observance of any of the terms of any of the Loan
Documents; (D) the occurrence of any Event of Default or Default or (E) any
other circumstance, happening or event whatsoever, whether or not similar to any
of the foregoing.
(d) Notwithstanding anything to the contrary contained herein, (i)
each Local European Loan borrowed by Salver shall be due and payable (but any
such payment need not be accompanied by a reduction of Revolving Credit
Commitments) on the date that is 17
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43
months from the date of its borrowing hereunder and (ii) the Local Lender with
respect to Salver shall be entitled to terminate its commitment to serve as such
Local Lender on the date which is 17 months after the Closing Date and on each
date which is 17 months thereafter by giving written notice to the Company,
Salver and the Administrative Agent not less than 30 days prior to the effective
date of such termination. In the event that the Administrative Agent receives
notice from such Local Lender of its election to terminate its commitment to
serve as such, then either (x) the Administrative Agent may, prior to the
effective date of such termination, designate an alternate Local Lender to serve
in such capacity (which alternate Local Lender must be willing, in its sole
discretion, to serve in such capacity in accordance with the terms of this
Agreement and must provide to the Administrative Agent such alternate Local
Lender's written agreement to perform the obligations of the Local Lender with
respect to Salver hereunder and to be bound hereby) or (y) the right of Salver
to receive Local European Loans shall be terminated (subject to reinstatement in
the event that an alternate Local Lender is at any time thereafter appointed)
and all Local European Loans then outstanding to Salver shall be due and payable
on such date of termination. From and after the date upon which an alternate
Local Lender is appointed in accordance with the terms hereof, such alternate
Local Lender shall be deemed to be the Local Lender to Salver for all purposes
under this Agreement and the other Loan Documents.
3.5 USE OF PROCEEDS OF EUROPEAN REVOLVING LOANS. Proceeds of the
European Revolving Loans shall be used:
(a) to the extent that such European Revolving Loans constitute
Acquisition Loans, (i) to fund the cash payment to be made by the relevant
Foreign Borrower and its Subsidiaries to Hercules and its Subsidiaries in
connection with the Acquisition, (ii) to refinance any Acquisition Loans
outstanding under (and as defined in) the Existing Facilities relating to
the Ciba-Geigy Composites Acquisition and (iii) to pay Transaction Costs
incurred in connection with the Acquisition and such refinancing; and
(b) otherwise, (i) to repay certain Permitted Existing Indebtedness of
the Foreign Borrowers and their respective Subsidiaries (including, without
limitation, repayment in full and termination of the portion of the
Existing Facilities which does not constitute Acquisition Loans
thereunder), (ii) to pay Transaction Costs (other than those incurred in
connection with the Acquisition) and (iii) to provide for ongoing working
capital needs in the ordinary course of the business of the Foreign
Borrowers and their Subsidiaries and for other lawful general corporate
purposes not prohibited hereunder;
PROVIDED, that Multicurrency Loans made to Danutec Werkstoff, Composites-UK,
Brochier and HAESA shall not be used to repay the Acquisition Loan used to
acquire Danutec Werkstoff, Composites-UK, Brochier and HAESA, respectively.
3.6 TERMINATION OF FOREIGN BORROWER STATUS. The Company may
terminate its designation of a Foreign Borrower as a Borrower, by written notice
to the Administrative Agent, which notice shall be executed by the Company and
the relevant Foreign Borrower.
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44
Once notice of such termination is received by the Administrative Agent (and all
amounts owing by such Foreign Borrower have been paid in full), such Foreign
Borrower shall immediately cease to be subject to the terms of this Agreement
(other than any indemnities and similar obligations of such Foreign Borrower
which expressly survive the termination of this Agreement).
3.7 REPORTING BY LOCAL LENDERS. Within five Business Days following
the last day of each March, June, September and December, each Local Lender
shall deliver to the Administrative Agent a statement showing the average daily
principal amount of Local European Loans in each currency during the calendar
quarter most recently ended and the
principal amount of Local European Loans in each currency which was outstanding
on the last day of such quarter. Promptly following receipt thereof, the
Administrative Agent shall provide to each Syndicated Lender a report containing
such information.
ARTICLE 4. AMOUNTS AND TERMS OF SWING LOAN FACILITY
4.1 SWING LOAN FACILITY. 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 Company, from time to time during the period from the day
immediately following the Closing Date to the day immediately preceding the
Revolving Credit Termination Date, up to an aggregate principal amount at any
one time outstanding which shall not exceed at any time outstanding an amount
equal to the lesser of (a) $ 10,000,000 and (b) the Revolving Credit
Availability at such time; PROVIDED that, after giving effect to the making of
such Swing Loans and the simultaneous use of proceeds thereof, (i) each Lender's
Revolving Credit Pro Rata Share of the Revolving Credit Obligations then
outstanding shall not exceed the Revolving Credit Commitment of such Lender then
in effect, (ii) the Revolving Credit Availability shall not be less than zero
and (iii) the Revolving Credit Obligations shall not exceed the Revolving Credit
Commitments at such time. The Swing Loan Bank shall have no duty to make or to
continue to make Swing Loans. All Swing Loans shall be secured as part of the
Obligations by the Collateral and shall, except as expressly provided in this
ARTICLE 4, otherwise be subject to all the terms and conditions applicable to
Domestic Revolving Loans, except that (x) Swing Loans shall be in minimum
amounts of $1,000,000, (y) 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 and
(z) all Swing Loans shall be maintained at all times as Base Rate Loans
denominated in Dollars.
4.2 PROCEDURE FOR BORROWING SWING LOANS. When the Company desires to
borrow under SECTION 4.1, it shall deliver to the Administrative 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, and (iii) instructions for the
disbursement of the proceeds of the proposed Borrowing. The Swing Loan Bank
shall deposit the amount it intends to fund, if any, in respect of the Swing
Loans requested by the Company with the Administrative Agent at its office in
New York, New York not later than 2:30 p.m. (New York time) in immediately
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45
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 has received written notice from one or more of the
Lenders that one or more of the conditions precedent contained in SECTION 9.2
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 9.2
hereof have been satisfied in connection with the making of any Swing Loan.
Subject to the preceding sentence, the Administrative Agent shall make such
proceeds of each funding of a Swing Loan available to the Company in immediately
available funds at the Administrative Agent's office in New York, New York on
the date of the proposed Borrowing and shall disburse such proceeds to the
disbursement account in the applicable Notice of Borrowing.
4.3 REPAYMENT OF SWING LOANS. The Company shall repay the
outstanding Swing Loans owing to the Swing Loan Bank, with accrued interest
thereon, (i) upon the earlier of (A) each date upon which the aggregate
outstanding principal amount of Swing Loans is at least $10,000,000 and (B) the
Revolving Credit Termination Date. In the event that the Company fails to repay
any Swing Loan, together with interest thereon, as set forth in the first
sentence of this paragraph, then, upon the request of the Swing Loan Bank, each
Lender shall make Domestic Revolving Loans to the Company (irrespective of the
satisfaction of the conditions in SECTION 9.2 or the requirement to deliver a
Notice of Borrowing in SECTION 4.2, which conditions and requirement such
Lenders irrevocably waive) in an amount equal to such Lender's Revolving Credit
Pro Rata Share of the aggregate amount of the Swing Loans then outstanding (net
of that portion of such Swing Loan, if any, owing to such Lender in its capacity
as a Swing Loan Bank) after giving effect to any prepayments and repayments made
by the Company, and the Company hereby authorizes the Administrative Agent to
apply the proceeds of such Domestic Revolving Loans to the repayment of such
Swing Loans. To the extent the Administrative Agent receives any amounts in
prepayment or repayment of outstanding Domestic Revolving Loans prior to such
request, the Administrative Agent shall apply such amounts when received to the
repayment of the Swing Loans then outstanding. The failure of any Lender to
make available to the Administrative Agent its Revolving Credit Pro Rata Share
of such Domestic Revolving Loans shall not relieve any other Lender of its
obligation hereunder to make available to the Administrative Agent such other
Lender's Revolving Credit Pro Rata Share of such Domestic Revolving Loans on the
date of such request or prejudice any rights that any Borrower may have against
such Lender as a result of any such default by such Lender. No Lender shall be
responsible for any failure by any other Lender to perform its obligations to
make such Domestic Revolving Loans hereunder nor shall the Revolving Credit
Commitment of any Lender be increased or decreased as a result of such failure.
4.4 PARTICIPATIONS. If, prior to making the Domestic Revolving Loans
contemplated by SECTION 4.3 above, one of the events described in SECTION
15.1(f) or (g) shall have occurred, each Lender shall (in lieu of making such
Domestic Revolving Loans and on the date upon which such Domestic Revolving
Loans otherwise would have been made) purchase an undivided participating
interest in the then outstanding Swing Loans in an amount equal to such Lender's
Revolving Credit Pro Rata Share of the aggregate amount thereof (net of that
portion of such Swing Loans, if any, owing to such Lender in its capacity
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46
as a Swing Loan Bank) after giving effect to any prepayments and repayments made
by the Company. Each Lender will immediately transfer to the Administrative
Agent (for the account of the Swing Loan Bank), in immediately available funds,
the amount of its participation and upon receipt thereof the Administrative
Agent will (on behalf of the Swing Loan Bank) deliver to such Lender a
certificate evidencing the participating interest so purchased (which
certificate shall be dated the date of receipt of such funds). Whenever, at any
time after the Administrative Agent has received from any Lender such Lender's
participating interest in a Swing Loan which has been refunded pursuant to this
SECTION 4.4. the Administrative Agent receives any payment on account thereof,
the Administrative Agent will distribute to such Lender its participating
interest in such amount (appropriately adjusted, in the case of interest
payments, to reflect the period of time during which such Lender's participating
interest was outstanding and funded) in like funds as received; PROVIDED,
HOWEVER, that in the event that such payment received by the Administrative
Agent is required to be returned, such Lender will return to the Administrative
Agent any portion thereof previously distributed by the Administrative Agent to
it in like funds as such payment is required to be returned by the
Administrative Agent.
4.5 USE OF PROCEEDS OF SWING LOANS. The proceeds of the Swing Loans
may be used to provide for the short-term working capital needs of the Company
and its Subsidiaries and for any other lawful corporate purposes not prohibited
hereunder.
ARTICLE 5. AMOUNTS AND TERMS OF LETTER OF CREDIT FACILITY
5.1 LETTER OF CREDIT FACILITY. Subject to the terms and conditions
set forth herein, each Issuing Bank hereby severally agrees to Issue from time
to time, for the account of any Borrower, one or more Letters of Credit, up to
an aggregate face amount at any one time outstanding equal to the Letter of
Credit Sublimit, subject to the other provisions of this Article 5.
5.2 TYPES AND AMOUNTS. An Issuing Bank shall not have any obligation
to Issue, and (subject to the provisions of the proviso to this SECTION 5.2)
shall not, Issue any Letter of Credit if:
(a) after giving effect to the Issuance of the Letter of
Credit requested hereunder, the aggregate Letter of Credit Obligations
with respect to such Issuing Bank shall exceed any limit imposed by
law or regulation upon such Issuing Bank;
(b) such Issuing Bank receives written notice (A) from the
Administrative Agent at or before 11:00 a.m. (New York time) on the
Business Day immediately preceding the date of the proposed Issuance
of such Letter of Credit that immediately after giving effect to the
Issuance of such Letter of Credit, (I) the Revolving Credit
Obligations at such time would exceed the Revolving Credit Commitments
at such time, (II) any Lender's Revolving
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47
Credit Pro Rata Share of the Revolving Credit Obligations then outstanding
would exceed the Revolving Credit Commitment of such Lender then in effect,
(III) the Letter of Credit Obligations at such time would exceed the Letter
of Credit Sublimit at such time, (IV) with respect to any Foreign Borrower,
the Revolving Credit Obligations of the Foreign Borrower for whose account
such Letter of Credit is being Issued would exceed its Foreign Borrower
Sublimit in effect at such time or (V) with respect to any requested Letter
of Credit which is to be denominated in an Optional Currency, the aggregate
outstanding amount of Multicurrency Loans and Letter of Credit Obligations
denominated in Optional Currencies made to the Foreign Borrowers would
exceed the Multicurrency Sublimit then in effect or (B) from the
Administrative Agent or any of the Lenders at or before 11:00 a.m. (New
York time) on the Business Day immediately preceding the date of the
proposed Issuance of such Letter of Credit that one or more of the
conditions precedent contained in SECTIONS 9.1 or 9.2, as applicable, would
not on such date be satisfied (or waived pursuant to SECTION 17.7), unless
such conditions are thereafter satisfied or waived and written notice of
such satisfaction or waiver is given to such Issuing Bank by the
Administrative Agent (it being understood that such Issuing Bank shall not
otherwise be required to determine that, or take notice whether, the
conditions precedent set forth in SECTIONS 9.1 or 9.2, as applicable, have
been satisfied or waived); or
(c) such Letter of Credit has an expiration date later than
(A) the date that is one (1) year after the date of Issuance (after
taking into account any automatic renewal provisions thereof) or
(B) the date that is five Business Days preceding the Revolving Credit
Termination Date; PROVIDED, that, at the request of any Borrower, the
Administrative Agent may, but shall not be obligated to, request such
Issuing Bank to Issue a Letter of Credit with an expiration date after
the date in clause (A) or (B) above, and PROVIDED, FURTHER, that,
subject to clause (B) above, any such Letter of Credit may, at the
request of the relevant Borrower as set forth in the applicable
application or prior to expiration thereof, be automatically renewed
on each anniversary of the issuance thereof for an additional period
of one year unless the Issuing Bank shall have given 60 days' prior
written notice to the relevant Borrower and the beneficiary of such
Letter of Credit that such Letter of Credit will not be renewed; or
(d) such Letter of Credit is in a currency other than Dollars or
an Optional Currency;
PROVIDED that if the Administrative Agent decides, in its sole discretion, to
request any Issuing Bank to Issue a Letter of Credit pursuant to the first
PROVISO in CLAUSE (c) above, the Borrower for whose account such Letter of
Credit is being Issued agrees that on the Revolving Credit Termination Date it
shall deposit with the Administrative Agent for the benefit of such Issuing Bank
with respect to such Letter of Credit cash or Cash Equivalents (in each case, in
the currency in which such Letter of Credit is denominated) equal to 105%
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48
of the greatest amount that such Letter of Credit may be drawn. Such deposits
shall be held as Cash Collateral by the Administrative Agent for the benefit of
the Lenders and any such Issuing Bank as security for, and to provide for the
payment of, the Reimbursement Obligations therefor. From and after the receipt
by the Administrative Agent of such cash collateral, each Lender shall be
released from its obligation pursuant to SECTION 5.6 to purchase participating
interests in the relevant Letter of Credit.
5.3 CONDITIONS. In addition to being subject to the satisfaction of
the conditions precedent contained in SECTIONS 9.1 and 9.2, 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:
(a) if the Issuing Bank so requests, the applicable
Borrower shall have executed and delivered to such Issuing Bank and
the Administrative Agent a Letter of Credit Reimbursement Agreement
and such other documents and materials as may be reasonably required
pursuant to the terms thereof;
(b) the terms of the proposed Letter of Credit shall
conform substantially to the customary terms of letters of credit
issued by the Issuing Bank as in existence on the date of such
Issuance; and
(c) with respect to any Letter of Credit that is in an
Optional Currency, the Issuing Bank shall be reasonably satisfied that
deposits in the relevant Optional Currency will be freely available to
it for the relevant period of time.
5.4 ISSUANCE OF LETTERS OF CREDIT. (a) Any Borrower shall give an
Issuing Bank and the Administrative Agent written notice that it has selected
such Issuing Bank to Issue a Letter of Credit (A) not later than 11:00 a.m. (New
York time) on the third Business Day preceding the requested date for Issuance
of any Letter of Credit hereunder that is in Dollars and (B) not later than
11:00 a.m. (London time) on the fourth Business Day preceding the requested date
for Issuance of any Letter of Credit hereunder that is in an Optional Currency,
or such shorter notice as may be acceptable to such Issuing Bank and the
Administrative 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, which
shall be in a minimum amount of $10,000 (or the Local Equivalent thereof),
(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)
whether such Letter of Credit is to be denominated in Dollars or an Optional
Currency (specifying the relevant Optional Currency), and (G) other relevant
terms of such Letter of Credit. Such Issuing Bank shall notify the
Administrative Agent immediately upon receipt of a written notice from any
Borrower requesting that a Letter of Credit be Issued and, upon the
Administrative Agent's request therefor, send a copy of such notice to the
Administrative Agent.
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(b) The Issuing Bank shall give the Administrative Agent written
notice, or telephonic notice confirmed promptly thereafter in writing, of the
Issuance of a Letter of Credit.
5.5 REIMBURSEMENT OBLIGATIONS; DUTIES OF ISSUING BANKS. (a) With
the exception of the reimbursement provisions contained in the Bond LC
Reimbursement Agreement, the terms of which will supersede SECTION 5.5(a)(i),
notwithstanding any provisions to the contrary in any Letter of Credit
Reimbursement Agreement:
(i) each Borrower shall reimburse the Issuing Bank for amounts
drawn under any Letter of Credit Issued for the account of such
Borrower in accordance with the provisions of SECTION 5.7, in Dollars
or the relevant Optional Currency, no later than the date (the
"REIMBURSEMENT DATE") that is one (1) Business Day after such Borrower
receives written notice from the Issuing Bank that payment has been
made under such Letter of Credit by the Issuing Bank; and
(ii) all Reimbursement Obligations with respect to any Letter of
Credit shall bear interest at the rate applicable to Base Rate Loans
(with respect to Letters of Credit denominated in Dollars) or at the
rate determined by the Administrative Agent (in its reasonable
discretion) and notified to the relevant Borrower as reflecting a
reasonable cost of funds (based upon objective standards) for the
maintenance by the Lenders of such Loan on an overnight basis (with
respect to Letters of Credit denominated in Optional Currencies) in
accordance with SECTION 8.1 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 8.5.
Except with respect to matters constituting willful misconduct or gross
negligence of the relevant Issuing Bank as determined in a final, non-appealable
judgment by a court of competent jurisdiction, the obligation of the relevant
Borrower to reimburse the Issuing Bank pursuant to this SECTION 5.5 shall be
absolute and unconditional under all circumstances, including, without
limitation, those described in SECTION 5.6(e).
(b) The Issuing Bank shall give the Administrative Agent written
notice, or telephonic notice confirmed promptly thereafter in writing, of all
drawings under Letters of Credit and the payment (or the failure to pay when
due) by each Borrower on account of Reimbursement Obligations.
(c) In the absence of gross negligence or willful misconduct on
the part of an Issuing Bank, no action taken or omitted by such Issuing Bank
under or in connection with any Letter of Credit shall (i) put such Issuing Bank
under any resulting liability to any Lender or any Borrower or (ii) unless such
Letter of Credit is Issued in violation of SECTION 5.2, 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
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any documents required to be delivered under the respective Letter of Credit
have been delivered and that they appear on their face to comply with the
requirements of such Letter of Credit.
5.6 PARTICIPATIONS. (a) Immediately upon Issuance by an Issuing
Bank of any Letter of Credit for the account of any Borrower in accordance with
the procedures set forth in this ARTICLE 5, 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 Revolving Credit Pro Rata Share,
including, without limitation, all obligations of such Borrower with respect
thereto (other than amounts owing to the Issuing Bank under SECTION 5.8) and any
security therefor and guaranty pertaining thereto.
(b) If any Issuing Bank makes any payment under any Letter of Credit
Issued for the account of any Borrower and such Borrower does not repay such
amount to the Issuing Bank on the Reimbursement Date, the Issuing Bank shall
promptly notify the Administrative Agent, which shall promptly notify each
Lender, and each such Lender shall promptly and unconditionally pay to the
Administrative Agent for the account of such Issuing Bank, in immediately
available funds, the amount of such Lender's Revolving Credit 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 Administrative Agent shall promptly
pay to the Issuing Bank such amounts received by it, and any other amounts
received by the Administrative Agent for the Issuing Bank's account, pursuant to
this SECTION 5.6(b). If a Lender does not make its Revolving Credit Pro Rata
Share of the amount of such payment available to the Administrative Agent, such
Lender agrees to pay to the Administrative 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 Interbank
Rate. The failure of any such Lender to make available to the Administrative
Agent for the account of an Issuing Bank its Revolving Credit Pro Rata Share of
any such payment shall neither relieve any other Lender of its obligation
hereunder to make available to the Administrative Agent for the account of such
Issuing Bank such other Lender's Revolving Credit 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 Administrative Agent nor prejudice any rights
that any Borrower may have against such Lender as a result of any such default
by such Lender. This Section does not relieve any Lender of its obligation to
purchase Revolving Credit Pro Rata Share participations in Letters of Credit,
nor does this Section relieve any Borrower of its obligation to pay or repay to
any Issuing Bank funding its Revolving Credit Pro Rata Share of such payment
pursuant to this Section interest on the amount of such payment from the date
such payment is to be made until the date on which payment is repaid in full.
(c) Whenever an Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, as to which any Lender
has funded the purchase of its participation pursuant to SECTION 5.6(b), such
Issuing Bank shall promptly pay to the Administrative Agent such payment in
accordance with SECTION 7.1. Whenever the Administrative Agent receives
(pursuant to the immediately preceding sentence or otherwise)
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51
a payment on account of a Reimbursement Obligation, including any interest
thereon, as to which any Lender has paid for its participating interest pursuant
to SECTION 5.6(b), the Administrative Agent shall distribute such payment in
accordance with SECTION 7.7. Each such payment shall be made by such Issuing
Bank or the Administrative 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.
(d) 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.
(e) The obligations of a Lender to make payments to the
Administrative 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 5
(irrespective of the satisfaction of the conditions described in SECTIONS 9.1
and 9.2, as applicable, which conditions, for the purpose of the payment of
Reimbursement Obligations to the Issuing Bank, such Lenders irrevocably waive)
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability hereof or of any of
the other Loan Documents;
(ii) the existence of any claim, setoff, defense or other right
that any 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 Administrative Agent, any Issuing Bank, any Lender or any
other Person, whether in connection herewith, or 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);
(iii) 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;
(iv) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents;
(v) any failure by such Issuing Bank to make any reports
required pursuant to SECTION 5.9 or the inaccuracy of any such report;
or
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(vi) the occurrence of any Event of Default or Default.
5.7 PAYMENT OF REIMBURSEMENT OBLIGATIONS. (a) Each Borrower
unconditionally agrees to pay to each Issuing Bank, in the currency in which it
is denominated, the amount of all Reimbursement Obligations, interest and other
amounts payable to such Issuing Bank under or in connection with any Letter of
Credit Issued for the account of such Borrower when such amounts are due and
payable, irrespective of any claim, setoff, defense or other right that such
Borrower may have at any time against any Issuing Bank or any other Person.
(b) In the event any payment by any Borrower received by an Issuing
Bank with respect to a Letter of Credit Issued for the account of such Borrower
and distributed by the Administrative 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 that received such distribution shall, upon demand by such
Issuing Bank, contribute such Lender's Revolving Credit 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.
5.8 ISSUING BANK CHARGES. Each 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 any Letter of Credit and such compensation in respect of such
Letter of Credit for such Borrower's account as may be agreed upon by such
Borrower and such Issuing Bank from time to time.
5.9 ISSUING BANK REPORTING REQUIREMENTS. Each Issuing Bank shall, no
later than the fifth Business Day following the last day of each calendar month
and on the last Business Day of each calendar quarter (or, to the extent that
the Administrative Agent so agrees, not more than two Business Days thereafter),
provide to the Administrative Agent and the Company separate schedules for
Commercial Letters of Credit and Standby Letters of Credit Issued by it, in form
and substance reasonably satisfactory to the Administrative Agent, setting forth
the aggregate Letter of Credit Obligations outstanding to it at the end of each
month or calendar quarter, as the case may be, and any information requested by
the Administrative Agent or the Company relating to the date of Issue, account
party, amount, expiration date and reference number of each Letter of Credit
Issued by it. Promptly following receipt by the Administrative Agent of the
quarterly schedule, the Administrative Agent shall provide to each applicable
Syndicated Lender a report containing such information.
5.10 INDEMNIFICATION; EXONERATION. (a) In addition to all other
amounts payable to an Issuing Bank, each of the Borrowers hereby agrees to
defend, indemnify and save the Administrative 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), reasonable costs,
charges and expenses (including reasonable attorneys' fees but excluding taxes)
that the Administrative 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 to
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such Borrower other than as a result of the gross negligence or willful
misconduct of the Issuing Bank, as determined in a final, non-appealable
judgment by a court of competent jurisdiction, or (ii) the failure of the
Issuing Bank Issuing a Letter of Credit to such Borrower 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 each Borrower, on the one hand, and the Administrative
Agent, the Lenders and the Issuing Banks, on the other hand, such Borrower
assumes all risks of the acts and omissions of, or misuse of Letters of Credit
Issued on its behalf 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 Administrative 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) the 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 the transmission or delivery of any messages, by mail, cable,
telegraph, telecopy, telex or otherwise; (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 consequential damages; and (x) any other consequences arising from
causes beyond the control of the Administrative Agent, the Issuing Banks or the
Lenders; except, in the cases of clauses (iv), (v) and (viii) above, for the
gross negligence or willful misconduct of the Issuing Bank, as determined in a
final, non-appealable judgment by a court of competent jurisdiction.
5.11 OBLIGATIONS SEVERAL. The obligations of each Issuing Bank and
each Lender under this ARTICLE 5 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.
5.12 TRANSITIONAL PROVISIONS. SCHEDULE 5.12 contains a schedule of
certain letters of credit issued prior to the date hereof by the Issuing Banks
for the account of the Company. On the Closing Date, (i) such letters of
credit, to the extent outstanding, shall be automatically and without further
action by the parties thereto converted to Letters of Credit Issued pursuant to
this ARTICLE 5 for the account of the Company and subject to the provisions
hereof, and for this purpose the fees specified in SECTIONS 5.8 and 8.10(a)
shall be payable (in substitution for any fees set forth in the reimbursement
agreement relating to such letters of credit) as if such letters of credit had
been issued on the Closing Date, (ii) the face amount of
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such letters of credit shall be included in the calculation of Letter of Credit
Obligations, and (iii) all liabilities of the Company with respect to such
letters of credit shall constitute Obligations. No letter of credit converted
in accordance with this SECTION 5.12 shall be amended, extended or renewed
without the prior written consent of the Administrative Agent. To the extent
that any fees with respect to the letters of credit listed on SCHEDULE 5.12 were
paid in advance to the issuing bank under such letter of credit, the
Administrative Agent shall use reasonable efforts (but shall otherwise not be
obligated) to obtain a pro rata refund for the Company of such fees to the
extent such fees were paid in respect of any time period during which such
letter of credit shall be a letter of credit on account of the provisions of
this section. Notwithstanding anything set forth in SECTION 5.2(c)(A), to the
extent that any letter of credit listed on SCHEDULE 5.12 has an expiration date
in excess of one year, such letter(s) of credit shall continue in full force and
effect pursuant to the terms hereof after the Closing Date through its stated
expiration date (but shall be cash collateralized upon terms reasonably
satisfactory to the relevant Issuing Bank during the period from the Revolving
Credit Termination Date through such stated expiration date).
ARTICLE 6. AMOUNTS AND TERMS OF EUROPEAN OVERDRAFT FACILITY
6.1 EUROPEAN OVERDRAFT FACILITY. Subject to the terms and conditions
set forth herein, the European Overdraft Bank shall make loans (the "EUROPEAN
OVERDRAFT LOANS") to the Foreign Borrowers from time to time during the period
from the day immediately following the Closing Date to the Revolving Credit
Termination Date, up to an aggregate principal amount at any time outstanding
which shall not exceed the European Overdraft Commitment then in effect;
PROVIDED that (x) Hexcel Composites and Danutec shall not, in the aggregate,
have the right to borrow more than $250,000 at any one time under the European
Overdraft Commitment and (y) except to the extent that the European Overdraft
Bank otherwise shall so agree, Salver shall not have the right to borrow any
amounts under the European Overdraft Commitment. All European Overdraft Loans
shall be payable on the Revolving Credit Termination Date with accrued interest
thereon and shall be secured as part of the Obligations by the Collateral and
shall, except as expressly provided in this ARTICLE 6, otherwise be subject to
all the terms and conditions applicable to Syndicated European Loans, except
that each European Overdraft Loan shall be denominated in a single Optional
Currency and shall not be subject to a minimum borrowing requirement.
6.2 MAKING OF EUROPEAN OVERDRAFT LOANS. All European Overdraft Loans
shall be made available to the Foreign Borrowers at the office of the European
Overdraft Bank in London in immediately available funds on the date of the
proposed Borrowing applicable thereto. The European Overdraft Bank shall not
make any European Overdraft Loan in the period commencing on the first Business
Day after it has notice that one or more of the conditions precedent contained
in SECTION 9.2 shall not on such date be satisfied, and ending when such
conditions are satisfied, and the European Overdraft Bank shall not otherwise be
required to determine that, or take notice whether, the conditions precedent set
forth in SECTION 9.2 hereof have been satisfied in connection with the making of
any European Overdraft Loan.
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6.3 REPAYMENT OF EUROPEAN OVERDRAFT LOANS. A Foreign Borrower shall
repay the outstanding European Overdraft Loans owing by it to the European
Overdraft Bank at any time, but in no event later than (i) the earlier of
(A) demand by the European Overdraft Bank and (B) the Revolving Credit
Termination Date.
6.4 USE OF PROCEEDS OF EUROPEAN OVERDRAFT LOANS. The proceeds of the
European Overdraft Loans may be used to provide for ongoing working capital
needs in the ordinary course of the business of the Foreign Borrowers and their
respective Subsidiaries and for any other lawful corporate purposes not
prohibited hereunder.
6.5 ADJUSTMENT OF EUROPEAN OVERDRAFT COMMITMENT. (a) Upon the
written request of the Company from time to time and with the consent of each of
the Administrative Agent and the European Overdraft Bank (in their respective
sole discretion) the European Overdraft Commitment of the European Overdraft
Bank may be increased to an amount not in excess of $25,000,000. Any such
increase in the European Overdraft Commitment shall be accompanied by a
reduction in the Revolving Credit Commitment of Citibank, N.A. to the extent
required by SECTION 7.5(e); PROVIDED that, after giving effect to such decrease
in the Revolving Credit Commitment of Citibank, N.A., the Aggregate Pro Rata
Share of Citibank, N.A. shall be unchanged (it being understood that such
reduction in the Revolving Credit Commitment of Citibank, N.A. shall alter the
Revolving Credit Pro Rata Share of each Syndicated Lender).
(b) Upon the written request of the Company from time to time and
with the consent of each of the Administrative Agent and the European Overdraft
Bank (such consents not to be unreasonably withheld), the European Overdraft
Commitment of the European Overdraft Bank may be reduced and the Revolving
Credit Commitment of Citibank, N.A. may be increased by an amount not to exceed
the amount of such reduction; PROVIDED that, after giving effect to such
increase in the Revolving Credit Commitment of Citibank, N.A., the Aggregate Pro
Rata Share of Citibank, N.A. shall be unchanged (it being understood that such
increase in the Revolving Credit Commitment of Citibank, N.A. shall alter the
Revolving Credit Pro Rata Share of each Syndicated Lender).
ARTICLE 7. PAYMENTS AND PREPAYMENTS
7.1 PROMISE TO REPAY. (a) The Company hereby unconditionally
promises to pay to the Administrative Agent, for the account of each Lender, the
then unpaid principal amount of each Domestic Revolving Loan of such Lender on
the Revolving Credit Termination Date. Each Foreign Borrower hereby
unconditionally promises to pay to the Administrative Agent, for the account of
each Lender, the then unpaid principal amount of each Syndicated European Loan
made by such Lender to such Foreign Borrower on the Revolving Credit Termination
Date. Each Local Loan Borrower hereby unconditionally promises to pay to each
Local Lender from which it has borrowed Local European Loans, for its own
account (or, following the funding of the purchase of participating interests
pursuant to SECTION 5.6(b), for the account of each Syndicated Lender), the then
unpaid principal amount of each Local European Loan made to it by the Local
Lender (or such Lender, as the
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case may be) on the Revolving Credit Termination Date. Each Foreign Borrower
hereby unconditionally promises to pay to the European Overdraft Bank, for its
own account, the then unpaid principal amount of each European Overdraft Loan
made to such Foreign Borrower by the European Overdraft Bank on the Revolving
Credit Termination Date. The Company hereby unconditionally promises to pay to
the Swing Loan Bank, for its own account (or, following the funding of the
purchase of participating interests pursuant to SECTION 4.4, for the account of
each Syndicated Lender), the then unpaid principal amount of each Swing Loan on
the Revolving Credit Termination Date. Each Borrower hereby further agrees to
pay interest on the unpaid principal amount of its Loans from time to time
outstanding from the date hereof until payment in full thereof at the rates per
annum, and on the dates, set forth in SECTIONS 8.1 and 8.2.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing Indebtedness of the relevant Borrowers to such
Lender resulting from each Loan of such Lender from time to time, including the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(c) The Administrative Agent shall maintain the Register pursuant to
SECTION 17.1(c), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Domestic Revolving Loan and European Revolving
Loan (including, without limitation, each participating interest which has been
funded by the Syndicated Lenders therein) made hereunder, its nature as a
Eurocurrency Rate Loan or a Base Rate Loan and each Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to
become due and payable from each Borrower to each Lender hereunder and
(iii) both the amount of any sum received by the Administrative Agent hereunder
from each Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to SECTION 7.1(b) and (c) shall, to the extent permitted by
applicable law, be PRIMA FACIE evidence of the existence and amounts of the
Obligations of the Borrower therein recorded; PROVIDED, HOWEVER, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
Obligation of the relevant Borrower to repay (with applicable interest) the
Loans made to such Borrower by such Lender in accordance with the terms of this
Agreement.
(e) Upon the request to the Administrative Agent by any Lender at any
time, (i) the Company shall execute and deliver to each Lender so requesting a
Revolving Credit Note, substantially in the form of EXHIBIT F, evidencing the
Domestic Revolving Loans of such Lender, (ii) the Company shall execute and
deliver to the Swing Loan Bank a Swing Loan Note, substantially in the form of
EXHIBIT G, evidencing the Swing Loans and (iii) each Foreign Borrower shall
execute and deliver to the European Overdraft Bank a European Overdraft Note,
substantially in the form of EXHIBIT K, evidencing the European Overdraft Loans
made to such Foreign Borrower by the European Overdraft Bank, and thereafter,
each of the Borrowers, as applicable, shall execute and deliver such other
promissory notes as are
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necessary to evidence the Loans owing to the Lenders after giving effect to any
assignment thereof pursuant to SECTION 17.1, all in form and substance
reasonably acceptable to the Administrative 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).
7.2 AUTHORIZED OFFICERS AND AGENTS. On the Closing Date (and from
time to time thereafter at the option of a Borrower or as reasonably requested
by the Administrative Agent), each of the Borrowers shall deliver to the
Administrative Agent an Officer's Certificate setting forth the names of the
officers, directors or general managers, employees and agents authorized to
request Revolving Loans, Swing Loans, European Overdraft Loans and Letters of
Credit, and containing a specimen signature of each such officer, director,
general manager, employee or agent. The officers, directors or general
managers, employees and agents so authorized shall also be authorized to act for
each such Borrower in respect of all other matters relating to the Loan
Documents to which such Borrower is a party. The Administrative Agent, the
Collateral Agent and each Lender shall be entitled to rely conclusively on such
officer's, director's or general manager's, or agent's or employee's authority
to request such Loan or Letter of Credit until the Administrative Agent receives
written notice to the contrary (which notice the Administrative Agent hereby
agrees to provide promptly to the Collateral Agent and the relevant Lenders).
In addition, the Administrative Agent, the Collateral Agent and each Lender
shall be entitled to rely conclusively on any written notice sent to it by any
Borrower by telecopy. None of the Administrative Agent, the Collateral Agent or
any Lender shall have a duty to verify the authenticity of the signature
appearing on, or any telecopy or facsimile of, any written Notice of Borrowing
or any other document. None of the Administrative Agent, the Collateral Agent
nor any Lender shall incur any liability to any Borrower or any other Person in
acting upon any telecopy or facsimile notice referred to above that such Agent
or Lender (as the case may be) reasonably believes to have been given by a duly
authorized officer or other person authorized to borrow on behalf of any of the
Borrowers.
7.3 REVOLVING CREDIT TERMINATION DATE. The Revolving Credit
Commitments shall terminate, and all outstanding Obligations shall be paid in
full in cash (or, in the case of unmatured Letter of Credit Obligations, the
Borrowers shall comply with SECTION 5.2), 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.
7.4 VOLUNTARY PREPAYMENTS/REDUCTIONS. (a) The Borrowers shall have
the right, from time to time upon not less than three (3) Business Days' notice
to the Administrative Agent, to terminate in whole or permanently reduce in part
the Revolving Credit Commitments. Any such reduction shall reduce permanently
the Revolving Credit Commitments then in effect.
(b) Each Borrower may prepay the Revolving Loans, in whole or in
part, without premium or penalty, upon at least three (3) Business Days'
irrevocable notice to the Administrative Agent (in the case of Eurocurrency Rate
Loans) or one Business Days'
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irrevocable notice to the Administrative Agent (in the case of Base Rate Loans),
specifying the date and amount of prepayment and whether the prepayment is of
Eurocurrency Rate Loans, Base Rate Loans or a combination thereof, and, if of a
combination thereof, the amount allocable to each. Upon receipt of any such
notice the Administrative Agent shall promptly notify each Lender thereof. If
any such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein, together with any amounts payable
pursuant to SECTION 8.9(e).
(c) Any partial reduction of the Revolving Credit Commitments and any
prepayment of the Revolving Loans shall be in an aggregate minimum amount of the
Local Equivalent of $1,000,000 and whole multiples 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 7.4 may be made without premium or
penalty (except as provided in SECTION 8.9(e)).
(d) Any reduction of the Revolving Credit Commitments effected
pursuant to this SECTION 7.4 shall be applied to ratably reduce the Revolving
Credit Commitments of the Syndicated Lenders.
7.5 MANDATORY COMMITMENT REDUCTIONS AND PREPAYMENTS OF LOANS. (a)
(i) Subject to CLAUSE (iii) below, immediately after the Company's or any of the
Domestic Subsidiaries' receipt of any Net Cash Proceeds, the Company shall make
or cause to be made a mandatory prepayment of the Revolving Loans (and the
Revolving Credit Commitments automatically and immediately shall be reduced) in
an amount equal to (A) fifty percent (50%) of such Net Cash Proceeds, to the
extent that such Net Cash Proceeds are derived from the issuance and sale of the
Convertible Notes or (B) one hundred percent (100%) of such Net Cash Proceeds,
otherwise. On the date any mandatory prepayment is received by the
Administrative Agent pursuant to this CLAUSE (i), such prepayment shall be
applied FIRST, to the outstanding principal amount of the Swing Loans and
SECOND, to any remaining non-contingent Revolving Credit Obligations.
(ii) Subject to CLAUSE (iii) below, immediately after the receipt by
any Foreign Borrower of any Net Cash Proceeds, such Foreign Borrower shall make
or cause to be made a mandatory prepayment of the Loans made to such Foreign
Borrower (and the Revolving Credit Commitments automatically and immediately
shall be reduced) in an amount equal to one hundred percent (100%) of such Net
Cash Proceeds; PROVIDED that, if the balance of the then outstanding balance of
the Loans made to such Foreign Borrower is less than the amount of the
prepayment that would be due, the obligation to prepay (but not the obligation
to reduce the Revolving Credit Commitments) shall be limited to the amount then
outstanding. On the date any mandatory prepayment is received by the
Administrative Agent pursuant to this CLAUSE (ii), such prepayment shall be
applied to any non-contingent Revolving Credit Obligations of such Foreign
Borrower, and the sale of assets of any Foreign Borrower resulting in a
reduction in the Net Assets of such Foreign Borrower by 90% or more shall be
deemed to be a termination of such Foreign Borrower's status as "Borrower"
pursuant to
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SECTION 3.6, unless, in either case, as otherwise agreed by the Administrative
Agent and the Requisite Lenders.
(iii) Notwithstanding the foregoing, the Revolving Credit Commitments
will not be reduced by (x) Net Cash Proceeds received from the sale of the
Properties described on SCHEDULE 7.5 and (y) up to $10,000,000 (or the Local
Equivalent thereof) in any Fiscal Year of Net Cash Proceeds arising from the
sale of assets.
(b) Subject to SECTION 8.9(e), if at any time the Revolving Credit
Obligations are greater than the Revolving Credit Commitments, the Company
shall, or shall cause one or more of the Foreign Borrowers to, make within one
Business Day a mandatory repayment of the Revolving Credit Obligations, such
that, after giving effect thereto, the Revolving Credit Obligations do not
exceed the Revolving Credit Commitments.
(c) Subject to SECTION 8.9(e), if at any time the European Overdraft
Obligations are greater than the European Overdraft Commitments, the Foreign
Borrowers shall make, within one Business Day, a mandatory repayment of the
European Overdraft Obligations such that, after giving effect thereto, the
European Overdraft Obligations do not exceed the European Overdraft Commitments.
(d) Subject to SECTION 8.9(e), if at any time any Foreign Borrower
shall cease to be a "Foreign Borrower" hereunder, all European Revolving Loans
owing by such Foreign Borrower shall be immediately due and payable (together
with accrued interest and any other amounts owing in respect thereof).
(e) Subject to SECTION 8.9(e), if at any time the European Overdraft
Commitment is increased pursuant to SECTION 6.5(a), the Revolving Credit
Commitment of Citibank, N.A. immediately shall be temporarily reduced (subject
to reinstatement in accordance with the provisions of SECTION 6.5(b)) by 100% of
the amount of such increase and the Revolving Credit Obligations owing to
Citibank, N.A. immediately shall be prepaid by the amount necessary to cause the
Revolving Credit Obligations owing to Citibank, N.A. (after giving effect to
such reduction of its Revolving Credit Commitment) to equal its Revolving Credit
Pro Rata Share then in effect.
(f) Nothing in this SECTION 7.5 shall be construed to constitute the
Lenders' consent to any transaction that is not expressly permitted by
ARTICLE 13.
(g) All prepayments made pursuant to this SECTION 7.5 shall be
applied in accordance with SECTION 7.7.
(h) The Commitments hereunder shall terminate, and all amounts owing
thereunder shall be due and payable (other than Letters of Credit which are cash
collateralized in accordance with the provisions of SECTION 5.2) on the
Revolving Credit Termination Date.
7.6 MANNER AND TIME OF PAYMENTS. (a) All payments of principal of
and interest on the Loans and Reimbursement Obligations and other Obligations
(including,
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without limitation, fees and reasonable expenses) that are payable to the
Administrative Agent or the Lenders shall be made without condition or
reservation of right, in immediately available funds, delivered to the
Administrative Agent (or, in the case of Reimbursement Obligations, to the
pertinent Issuing Bank) not later than 1:00 p.m. (New York time) (if made to the
Administrative Agent) or 1:00 p.m. (London time) (if made to the Administrative
Agent) on the date and at the place due, to the Administrative Agent's U.S.
Account or the applicable Administrative Agent's European Account, as applicable
(or, in the case of Reimbursement Obligations, such account of the Issuing Bank
as it may designate, if applicable). Payments in respect of any Swing Loans or
European Overdraft Loans received by the Administrative Agent shall be
distributed to the Swing Loan Bank or the European Overdraft Bank, as
applicable, and payments in respect of any Revolving Loan received by the
Administrative Agent shall be distributed by the Administrative Agent to each
Lender in accordance with its Revolving Credit Pro Rata Share in accordance with
the provisions of SECTION 7.7 on the date received, if received prior to 1:00
p.m. and (except in the case of repayment of Swing Loans or European Overdraft
Loans) on the next succeeding Business Day if received thereafter.
(b) For the purposes of this Agreement, the Dollar Equivalent of a
Multicurrency Loan or any Letter of Credit Obligations in an Optional Currency
shall be determined by the Administrative Agent upon receipt from any Borrower
of the Notice of Borrowing requesting a Loan or any application for a Letter of
Credit, and such Dollar Equivalent shall be recalculated on each date that it
shall be necessary to determine the unused portion of each Lender's Revolving
Credit Commitment or any or all of the Revolving Credit Obligations outstanding
on such date.
7.7 APPORTIONMENT OF PAYMENTS. (a) Except as otherwise provided
herein and subject to the provisions of SECTIONS 7.4 and 7.5, during such time
as no Default or Event of Default has occurred and is continuing:
(i) all payments of principal, interest and other amounts owing in
respect of outstanding European Overdraft Loans shall be made to the
European Overdraft Bank and shall be applied, FIRST, to the ratable payment
of all fees and interest payable on account thereof, SECOND, to the payment
of principal thereof and, THIRD, to the payment of all other Obligations of
such Foreign Borrower then due and payable;
(ii) all payments of principal, interest and other amounts owing in
respect of outstanding Local European Loans shall be made to the Local
Lender who made such Local European Loans and shall be applied, FIRST, to
the ratable payment of all fees and interest payable on account thereof,
SECOND, to the payment of principal thereof and, THIRD, to the payment of
all other Obligations of such Foreign Borrower then due and payable;
(iii) all payments of principal and interest in respect of
outstanding Loans (other than Local European Loans and European Overdraft
Loans) made to any Borrower and all payments in respect of Reimbursement
Obligations in respect of Letters of Credit Issued for the account of such
Borrower shall be made to the
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61
Administrative Agent and shall be allocated among such of the Lenders as
are entitled thereto in proportion to their respective Revolving Credit Pro
Rata Shares of the relevant Obligations on account of which such payments
are being made, with any amounts so received being applied, FIRST, to pay
principal of and interest on any portion of the Revolving Loans made to
such Borrower which the Administrative Agent may have advanced pursuant to
the express provisions of this Agreement on behalf of any Lender other than
the Lender then acting as Administrative Agent, for which the
Administrative Agent has not then been reimbursed by such Lender or the
Borrowers, and SECOND, to pay all other Obligations of such Borrower then
due and payable. Except as set forth in SECTIONS 7.4 and 7.5 and unless
otherwise designated by the Company, (A) all principal payments made by the
Company in respect of outstanding Revolving Loans (other than the Local
European Loans) shall be applied FIRST, to the outstanding Swing Loans and
SECOND, to the outstanding Revolving Loans (other than the Local European
Loans) made to the Company, with any payment of such outstanding Revolving
Loans being applied, FIRST, to repay outstanding Base Rate Loans, and THEN
to repay outstanding Eurocurrency Rate Loans, with those Loans that have
earlier expiring Interest Periods being repaid prior to those that have
later expiring Interest Periods and (B) subject to SECTION 3.5, all
principal payments made by any Foreign Borrower in respect of outstanding
Multicurrency Loans made to such Borrower shall be applied FIRST, to the
outstanding Acquisition Loans, if any, made to such Borrower, and SECOND,
to all other outstanding Revolving Loans made to such Foreign Borrower,
with those Revolving Loans that have earlier expiring Interest Periods
being repaid prior to those that have later expiring Interest Periods.
(b) After the occurrence and during the continuance of an Event of
Default, the Administrative Agent may, and shall upon the acceleration of the
Obligations pursuant to SECTION 15.2(a), apply all payments made by the Company
or any Foreign Borrower in respect of any Obligations and all proceeds of
Collateral (which proceeds promptly shall be delivered by the Collateral Agent
to the Administrative Agent) in the following order (it being understood that
the Administrative Agent shall have the right to convert at the Borrowers'
expense any of such payments or proceeds of Collateral into the currency in
which such Obligations are denominated); PROVIDED, that payments made by a
Foreign Borrower shall be applied only to the Obligations of such Foreign
Borrower:
(i) FIRST, to the payment of fees, expenses and other amounts
(including, without limitation, interest on and principal of any
portion of the Loans that the Administrative Agent may have advanced
on behalf of any Lender for which the Administrative Agent has not
then been reimbursed by such Lender or the Borrowers) due and payable
to the Administrative Agent and the Collateral Agent (in their
respective capacities as such) under and in connection with this
Agreement;
(ii) SECOND, to the payment of any then-outstanding Obligations
in respect of any expense reimbursements or indemnities due to the
Agents and the Lenders, ratably in accordance with the aggregate
amount of such payments owed thereto;
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(iii) THIRD, to the ratable payment of (x) Letter of Credit Fees,
(y) interest then due and payable on the Loans and (z) any other fees
and expenses due and payable hereunder;
(iv) FOURTH, to the payment of the principal amount of all Loans
(with any such payment of principal of Revolving Loans being applied
to repay the Acquisition Loans before being applied to any other
Loans) and Notes, and to the payment of any Letter of Credit
Obligations, regardless of whether any such amount is then due and
payable, ratably among the Lenders in accordance with the aggregate
principal amount owed to each such Lender; and
(v) FIFTH, to the ratable payment of all other Obligations;
PROVIDED, that 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 (i) through (v), 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 Aggregate Pro Rata Share of the Administrative Agent, and
each Lender in the aggregate outstanding Obligations described in such clause.
(c) The order of priority set forth in SECTIONS 7.7(a) and (b), and
the related provisions hereof, are set forth solely to determine the rights and
priorities of the Agents, the Lenders and other Holders as among themselves.
The order of priority set forth in SECTIONS 7.7(a) and (b) may at any time and
from time to time be changed by the agreement of the Administrative Agent and
the Requisite Lenders without necessity of notice to or consent of or approval
by the Borrowers, any Holder that is not a Lender or any other Person.
(d) The Administrative Agent, in its sole discretion subject only to
the terms of this SECTION 7.7(d), may pay from the proceeds of Revolving Loans
(which Loans have not been requested by any Borrower pursuant to a Notice of
Borrowing) made to the Company hereunder, whether made following a request by
the Company pursuant to SECTION 2.2, 3.2 or 4.2 or a deemed request as provided
in this SECTION 7.7(d), all amounts then due and payable by the Borrowers
hereunder, including, without limitation, amounts payable with respect to
payments of principal, interest, Reimbursement Obligations and fees and all
reimbursements for reasonable expenses pursuant to SECTION 17.2. The Company
hereby irrevocably authorizes the Swing Loan Bank and the Lenders to make Loans,
which Loans shall be Base Rate Loans, in each case, upon notice from the
Administrative Agent as described in the following sentence for the purpose of
paying principal, interest, Reimbursement Obligations and fees due from the
Borrowers, reimbursing expenses pursuant to SECTION 17.2 and paying any and all
other amounts due and payable by the Borrowers 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 2.2, 3.2 and 4.2 as of the date of the
aforementioned notice. The Administrative Agent shall request Revolving Loans
on behalf of the Company as described in the preceding sentence by notifying the
Lenders thereof (which notice the Administrative Agent shall thereafter promptly
transmit to the Company), of the amount and Funding Date of the proposed
Borrowing and that such Borrowing is being requested on the Company's behalf
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63
pursuant to this SECTION 7.7(d). 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 2.2, 3.2 or 4.2 (irrespective of the
satisfaction of the conditions described in SECTION 9.2 or the requirement to
deliver a Notice of Borrowing in SECTION 2.2, 3.2 or 4.2, which conditions and
requirements, for the purposes of the payment of Revolving Loans at the request
of the Administrative Agent as described in the preceding sentence, the Lenders
irrevocably waive).
(e) If any Lender fails to fund its Revolving Credit Pro Rata Share
of any Revolving Loan Borrowing requested by any Borrower (or deemed requested
pursuant to SECTION 2.2, 3.2, 4.2 or 7.7(d)) that 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 Administrative Agent written notice that one or
more of the conditions precedent contained in SECTION 9.2 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 Administrative Agent by such Borrower and otherwise required to be applied
to such Lender's share of all other Obligations of such Borrower pursuant to the
terms hereof shall be advanced to such Borrower by the Administrative 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 paid to such Lender in
satisfaction of such other Obligations. Notwithstanding anything contained
herein to the contrary:
(i) the foregoing provisions of this SECTION 7.7(e) shall apply
only with respect to the proceeds of payments of Obligations of such
Borrower;
(ii) a Lender shall be deemed to have cured its failure to fund
its Revolving Credit Pro Rata Share of any Revolving Loan made to such
Borrower at such time as an amount equal to such Lender's original
Revolving Credit Pro Rata Share of the requested principal portion of
such Revolving Loan is fully funded to such Borrower, whether made by
such Lender itself or by operation of the terms of this SECTION
7.7(e), and whether or not the Non Pro Rata Loan with respect thereto
has been repaid;
(iii) amounts advanced to such Borrower to cure, in full or in
part, any such Lender's failure to fund its Revolving Credit Pro Rata
Share of any Revolving Loan Borrowing ("CURE LOANS") made to such
Borrower 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;
(iv) regardless of whether or not an Event of Default has occurred or
is continuing, and notwithstanding the instructions of any Borrower as to
its desired application, all repayments of principal which, in accordance
with the other terms of this SECTION 7.7, would be applied to the
outstanding Revolving Loans made to such
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Borrower shall be applied FIRST, ratably to all Revolving Loans made to
such Borrower constituting Non Pro Rata Loans, SECOND, ratably to Revolving
Loans made to such Borrower other than those constituting Non Pro Rata
Loans or Cure Loans and, THIRD, ratably to Revolving Loans made to such
Borrower constituting Cure Loans; and
(v) No Lender shall be relieved of any obligation such Lender may
have to such Borrower under the terms of this Agreement as a result of the
provisions of this SECTION 7.7(e).
7.8 PAYMENTS ON NON-BUSINESS DAYS. Whenever any payment to be made
by any Borrower hereunder or under the Notes made by such Borrower is stated to
be due on a day that is not a Business Day, the payment shall instead be due on
the next succeeding Business Day (or, as set forth in SECTION 8.9(a)(iii), 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.
7.9 PAYMENT CURRENCY. Except as expressly set forth herein to the
contrary, all payments made by any Borrower in respect of principal and interest
on the Loans and Reimbursement Obligations shall be made (i) with respect to
Loans and Reimbursement Obligations denominated in Dollars, in Dollars, and
(ii) with respect to Multicurrency Loans or Reimbursement Obligations
denominated in an Optional Currency, in the Optional Currency in which such Loan
or the Letter of Credit giving rise to such Reimbursement Obligation was made.
7.10 TAXES. (a) PAYMENT OF TAXES. Any and all payments by the
Borrowers 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 present and future 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 that
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 Commitments and all other liabilities with respect thereto excluding, in the
case of each Lender and the Administrative 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 7.10(d)(iii)(C), (ii) the Governmental Authority of a jurisdiction in
which such Person has an office or other fixed place of business, or any
political subdivision thereof (excluding any withholding or other tax imposed on
any payment made under the Loan Documents), (iii) the Governmental Authority in
which such Person's Applicable Lending Office is located or 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 any
Borrower shall be required by law to withhold or deduct any Taxes (other than
Taxes imposed solely as a result of any participation sold by a Lender pursuant
to SECTION 17.1(h)) from or in respect of any sum payable hereunder or under any
such Note or document to any Lender or the Administrative Agent, (x) the sum
payable
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to such Lender or the Administrative 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 7.10) such Lender or the Administrative 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) such Borrower shall make such
withholding or deductions, and (z) such Borrower shall pay the full amount
withheld or deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) INDEMNIFICATION. (i) Each Borrower will indemnify each Lender
and the Administrative 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 7.10 and any
additional income or franchise taxes resulting therefrom) incurred or paid in
good faith by such Lender or the Administrative Agent (as the case may be) or
any of their respective Affiliates and any liability (including penalties,
interest and reasonable out-of-pocket expenses paid to third parties) arising
therefrom or with respect thereto, whether or not such Taxes were lawfully
payable, in each case, with respect to such Borrower; PROVIDED, that such
Borrower shall not indemnify any such Lender or Administrative Agent for Taxes,
penalties, additions to tax, interest and expenses arising as a result of such
Lender's or Administrative Agent's willful misconduct or gross negligence.
This indemnification shall be made within 15 days from the date such
Lender or the Administrative Agent (as the case may be) makes written demand
therefor, and within 15 days after the receipt of any refund of the Taxes
following final determination that the Taxes that gave rise to the
indemnification were not required to be paid, such Lender or the Administrative
Agent (as the case may be) shall repay such Borrower the amount of such paid
indemnities.
A certificate as to any additional amount payable to any Person under
this SECTION 7.10 submitted by it, with, to the extent readily available, either
a copy of any assessment thereof from the relevant taxing authority (deleting
any confidential information contained therein) or proof of payment of a tax for
which such Borrower is liable hereunder, to the Company shall, absent manifest
error, be final, conclusive and binding upon all parties hereto. Each of the
Lenders and the Administrative Agent agrees, within a reasonable time after
receiving a written request from the Company, to provide the Borrowers and the
Administrative 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 Administrative Agent or Affiliate may be entitled to claim in
respect of all or a portion of any Taxes that are otherwise required to be paid
or deducted or withheld pursuant to this SECTION 7.10 in respect of any payments
under this Agreement or under the Notes.
(ii) To the extent that the undertaking to indemnify and reimburse the
Administrative Agent and the Lenders set forth in this Section may be invalid
and/or unenforceable because it is violative of any law or public policy, such
Borrower shall
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contribute the maximum portion that it is permitted to pay under applicable law
to the payment of the Taxes imposed on the Administrative Agent and the Lenders.
(iii) If a Lender or the Administrative Agent shall become aware that
it is entitled to receive a refund (including interest and penalties, if any) in
respect of Taxes as to which it has been indemnified by a Borrower pursuant to
this SECTION 7.10(b), it shall promptly notify in writing such Borrower of the
availability of such refund (including interest and penalties, if any) and
shall, within 30 days after receipt of a request by such Borrower, apply for
such refund at such Borrower's expense.
(c) RECEIPTS. Within thirty (30) days after the date of any payment
of Taxes by the Company or any of its Subsidiaries, the Company will furnish to
the Administrative Agent at its request, at its address referred to in SECTION
17.8, the original or a certified copy of a receipt, if any, or other
documentation reasonably satisfactory to the Administrative Agent, evidencing
payment thereof. The Company shall furnish to the Administrative Agent upon the
reasonable request of the Administrative 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. The Administrative
Agent may demand payment of, and seek recourse on, any Taxes from the Company
and/or the Foreign Borrowers without any requirement that the Administrative
Agent allocate the reimbursement obligations for such Taxes among the Company
and the Foreign Borrowers; PROVIDED that, to the extent that any such payment by
a Foreign Borrower would be prohibited by applicable law (including, without
limitation, any such law which prohibits a Foreign Borrower from paying Taxes
relating to the Acquisition Loans which financed its acquisition by the
Company), the Company and the other relevant Foreign Borrowers shall be required
to pay such amounts.
(d) FOREIGN BANK CERTIFICATIONS. (i) Each of the Lenders represents
and warrants to the Administrative Agent and the Borrowers that under applicable
law and treaties in effect as of the date hereof no withholding taxes imposed by
the United States or any country in which any Lender is organized or in which
any Lender's Applicable Lending Office is located, managed, controlled or doing
business, or any political subdivision of any of the foregoing, will be required
to be withheld by the Company or the Foreign Borrowers with respect to any
payments to be made to such Lender in respect of any of the Loans or the Letters
of Credit (it being understood that no Lender makes any representation as to
whether withholding taxes imposed by any jurisdiction other than the United
States, a country in which any Lender's Applicable Lending Office is located,
managed, controlled or doing business, or any political subdivision of any of
the foregoing, would be required to be withheld with respect to payments to be
made in respect of any of the Loans or the Letters of Credit).
(ii) Each Lender that is not created or organized under the laws
of the United States or a political subdivision thereof has delivered to the
Company and the Administrative Agent on the date on which such Lender became a
Lender or shall deliver to the Company on the date such Lender becomes a Lender,
if such date is after the Closing Date, a true and accurate certificate executed
in duplicate by a duly authorized officer of such
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Lender to the effect that such Lender is eligible to receive payments hereunder,
under the Notes or under the Letters of Credit without deduction or withholding
of United States federal income tax (A) 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 (B) 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)).
(iii) Each Lender further agrees to deliver to the Company and
the Administrative Agent from time to time a true and accurate certificate
executed in duplicate by a duly authorized officer of such Lender before or
promptly upon the occurrence of any event requiring a change in the most recent
certificate previously delivered by it to the Company and the Administrative
Agent pursuant to this SECTION 7.10(d) (including, but not limited to, a change
in such Lender's lending office). Each certificate required to be delivered
pursuant to this SECTION 7.10(d)(iii) shall certify as to one of the following:
(A) that such Lender can continue to receive payments hereunder and
under the Notes without deduction or withholding of United States federal
income tax;
(B) that such Lender 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 7.10(a) because it is entitled to recover the
full amount of any such deduction or withholding from a source other than
the Borrowers; or
(C) that such Lender 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
and that it is not capable of recovering the full amount of the same from a
source other than the Borrowers.
Each Lender agrees to deliver to the Company and the Administrative 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 to the Company and the Administrative Agent,
unless any change in treaty, law, regulation or official interpretation thereof
that would render such form inapplicable or that would prevent the Lender from
duly completing and delivering such form has occurred prior to the date on which
any such delivery would otherwise be required, and the Lender promptly advises
the Company that it is not capable of receiving payments hereunder or under the
Notes without any deduction or withholding of United States federal income tax.
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Notwithstanding any provision of paragraphs (a) and (b) above to the
contrary, the Borrowers shall not have any obligation to pay any Taxes or to
indemnify any Lender for any Taxes to the extent that such Taxes result from (x)
the failure of any Lender to comply with its obligations pursuant to this
paragraph (d), or (y) any representation made on Form 1001 or 4224 or successor
applicable form or certification by the Lender incurring such Taxes proving to
have been incorrect, false or misleading in any material respect when so made or
deemed to be made.
(e) Any of the Lenders or the Administrative Agent claiming any
additional amounts payable pursuant to this SECTION 7.10 shall use reasonable
efforts (consistent with legal and regulatory restrictions) to avoid the need
for, or reduce the amount of, any such additional amounts that may thereafter
accrue, provided that such efforts would not, in the sole determination of such
Lender or Administrative Agent, as the case may be, be otherwise disadvantageous
to such Lender or Administrative Agent.
(f) In the event that any Lender changes its Applicable Lending
Office, such Lender shall not be entitled to receive any greater payment under
this SECTION 7.10 than such Lender would have been entitled to receive had such
change not occurred, unless such change in Applicable Lending Office shall have
been made at the request of a Borrower or at a time when no payment under this
SECTION 7.10 was required.
7.11 INCREASED CAPITAL. If after the date hereof any Lender
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
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 any corporation
controlling such Lender 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 (with a copy
of such demand to the Administrative Agent), the Borrowers shall immediately pay
to the Administrative Agent for the account of such Lender, from time to time as
specified by such Lender, additional amounts sufficient to compensate such
Lender 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.
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ARTICLE 8. INTEREST AND FEES
8.1 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 8.4,
as follows:
(i) If a Base Rate Loan or such other Obligation, at a rate
per annum equal to the Base Rate; or
(ii) If a Eurocurrency Rate Loan, at a rate per annum equal
to the sum of (A) the Eurocurrency Rate determined for the applicable
Interest Period and the applicable currency in effect during such
Interest Period, PLUS (B) the Eurocurrency Rate Margin.
The applicable basis for determining the rate of interest on the Loans shall be
selected by the applicable Borrower at the time a Notice of Borrowing or a
Notice of Conversion/Continuation is delivered by such Borrower to the
Administrative Agent; PROVIDED, that no Borrower may select the Eurocurrency
Rate as the applicable basis for determining the rate of interest on a Loan if
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 Administrative 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 (A) in the case of any Loan to the Company, the
applicable Base Rate and (B) in each other case, a rate determined by the
Administrative Agent (in its reasonable discretion, based upon objective
standards) and notified to the relevant Borrower as reflecting a reasonable cost
of funds for the maintenance by the Lenders of such Loan on an overnight basis.
8.2 INTEREST PAYMENTS AND PARTICIPATION FEES. (a) Interest accrued
on each:
(i) Base Rate Loan (other than Swing Loans and European Overdraft
Loans) shall be payable to the Administrative Agent for the account of the
Lenders (A) quarterly in arrears on the first Business Day of each January,
April, July and October, commencing on October 1, 1996 and (B) at maturity
(whether by acceleration or otherwise) of such Base Rate Loan;
(ii) Swing Loan shall be payable to the Swing Loan Bank for its own
account (A) quarterly in arrears on the first Business Day of each January,
April, July and October, commencing on October 1, 1996 and (B) at maturity
(whether by acceleration or otherwise) of such Swing Loan; and
(iii) European Overdraft Loans shall be payable in the currency in
which such Loan is denominated to the European Overdraft Bank for its own
account (A) quarterly in arrears on the first Business Day of each January,
April, July and October,
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commencing on October 1, 1996 and (B) at maturity (whether by acceleration
or otherwise) of such European Overdraft Loan.
(b) Interest accrued on each Eurocurrency Rate Loan (other than
Eurocurrency Rate Loans which are Local European Loans) shall be payable in
arrears in the currency in which such Loan is denominated (A) on each
Eurocurrency Interest Payment Date and (B) at maturity (whether by acceleration
or otherwise) of such Eurocurrency Rate Loan.
(c) Interest accrued on the principal balance of all other
Obligations (other than Local European Loans) shall be payable in the currency
in which such Obligation is denominated (A) quarterly in arrears on the first
Business Day of each January, April, July and October, commencing on October 1,
1996 and (B) at the time such other Obligation becomes due and payable (whether
by acceleration or otherwise).
(d) Notwithstanding the foregoing provisions of this SECTION 8.2,
interest accrued on the principal balance of all Local European Loans shall be
payable in the currency in which the relevant Local European Loan is denominated
and shall be payable to the Local Lender with respect thereto (A) on each
Eurocurrency Interest Payment Date and (B) if not theretofore paid in full, at
maturity (whether by acceleration or otherwise) of such Eurocurrency Rate Loan.
Promptly upon receipt of such interest by the relevant Local Lender and in
consideration of the agreement of the Lenders to purchase participating
interests in the Local European Loans made by it, such Local Lender shall pay to
the Administrative Agent (for the ratable account of the Lenders) a risk
participation fee in the amount equal to (x) the Eurocurrency Rate Margin on
such principal balance during the period for which payment is due MINUS (y) the
amount equal to 1/8 of 1% on the average daily principal balance upon which such
interest is being paid (which amount shall be retained by such Local Lender, for
its own account); PROVIDED, HOWEVER, that, in the event that the Lenders have
funded the purchase of participating interests in such Local European Loans
pursuant to SECTION 3.4(a), such Local Lender instead shall pay to the
Administrative Agent, for the account of each Lender which has so funded such
purchase, the amount equal to such Lender's Revolving Credit Pro Rata Share of
the full amount (other than the amount equal to 1/8 of 1% PER ANNUM on the
average daily principal amount on which such interest is being paid, which
amount shall be retained by the relevant Local Lender as an administrative fee)
of the interest paid to such Local Lender by the relevant Borrower. In addition
to the foregoing amounts, the relevant Borrower also shall pay to each Lender
any amounts due pursuant to SECTION 7.10.
8.3 CONVERSION OR CONTINUATION. (a) Any Borrower shall have the
option (A) to convert at any time all or any part of its outstanding Base Rate
Loans (other than Swing Loans or European Overdraft Loans) to Eurocurrency Rate
Loans; (B) to convert all or any part of its outstanding Eurocurrency Rate Loans
having Interest Periods that expire on the same date to Base Rate Loans on such
expiration date; or (C) to continue all or any part of its outstanding
Eurocurrency Rate Loans having Interest Periods that expire on the same date as
Eurocurrency Rate Loans, and the succeeding Interest Period of such continued
Loans shall commence on such expiration date; PROVIDED, that no such outstanding
Loan may be continued as, or be converted into, a Eurocurrency Rate Loan, (i) if
such continuation or
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conversion would violate any of the provisions of SECTION 8.9 or (ii) if an
Event of Default or Default would occur as a result thereof or has occurred and
is continuing. Any conversion into or continuation of Eurocurrency Rate Loans
under this SECTION 8.3(a) shall be in a minimum amount of $1,000,000 (or the
Local Equivalent thereof) and whole multiples thereof.
(b) To convert or continue a Loan under SECTION 8.3(a), the relevant
Borrower shall deliver a Notice of Conversion/Continuation to the Administrative
Agent (or, in the case of Local European Loans, to the relevant Local Lender,
with a copy to the Administrative Agent) no later than 11:00 a.m. (New York time
or, with respect to conversions and continuations of Loans denominated in
Optional Currencies, London 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 date of the conversion or continuation, as
applicable (which shall be a Business Day), (B) the principal amount of the Loan
to be converted or continued, (C) whether such Loan shall be converted or
continued and (D) in the case of a conversion to, or continuation of, a
Eurocurrency Rate Loan, the requested Interest Period. Promptly after receipt
of a Notice of Conversion/Continuation under this SECTION 8.3(b), the
Administrative Agent (other than in the case of a conversion or continuation of
Local European Loans in which such Lenders have not purchased participating
interests) shall notify each Lender of the proposed conversion or continuation.
Any Notice of Conversion/Continuation for conversion to, or continuation of, a
Loan shall be irrevocable, and the Borrowers shall be bound to convert or
continue in accordance therewith.
8.4 DEFAULT INTEREST. Notwithstanding the rates of interest
specified in SECTION 8.1 or elsewhere herein, effective immediately upon the
occurrence of any Event of Default set forth in SECTION 15.1(a) and for as long
thereafter as such Event of Default shall be continuing, the principal balance
of all Loans, to the extent permitted by applicable law, and of all other
Obligations shall bear interest at a rate that is two percent (2.0%) per annum
in excess of the rate of interest that would otherwise be applicable to such
Loans and Obligations from time to time (and, with respect to Obligations as to
which no such rate of interest otherwise would be applicable, the rate that is
two percent (2.0%) per annum in excess of the rate that would be applicable if
such overdue amount were a Loan hereunder in the relevant currency).
8.5 COMPUTATION OF INTEREST. Interest on all Eurocurrency Rate Loans
and, to the extent permitted by applicable law, all other Obligations except for
Base Rate Loans 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;
PROVIDED, that interest on all Eurocurrency Rate Loans denominated in Belgian
francs or British pounds sterling ("Euro sterling") shall be computed on the
basis of the actual number of days elapsed in the period during which interest
accrues and a year of 365 days. Interest on all Base Rate Loans shall be
computed on the basis of a year of 365 or 366 days, as the case may be. 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.
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8.6 CHANGES; LEGAL RESTRICTIONS. If after the date hereof any Lender
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
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 its Applicable Lending Office) to
charges (other than Taxes and taxes resulting from changes in the rate
of tax on the overall net income of such Lender) of any kind that are
applicable to the Revolving Credit Commitments of the Lenders to make
Eurocurrency 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 Eurocurrency
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 any
Applicable Lending Office or Eurocurrency Affiliate of that Lender;
and the result of any of the foregoing is to increase the cost to that Lender 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 (with a copy of such demand to the Administrative Agent), the Borrowers
shall immediately pay to the Administrative Agent for the account of such
Lender, from time to time as specified by such Lender, such amount or amounts as
may be necessary to compensate such Lender or its Eurocurrency Affiliate for any
such additional cost incurred or reduced amount received. Such written demand
shall be accompanied by a statement as to the amount of such compensation and
demonstrate in reasonable detail the calculation of such amount and a summary of
the basis for such demand. Such statement shall be conclusive and binding for
all purposes, absent manifest error.
8.7 CONFIRMATION OF EUROCURRENCY RATE. Upon the reasonable request
of any of the Borrowers from time to time, the Administrative Agent shall
promptly provide to the Borrowers such information with respect to the
applicable Eurocurrency Rate as may be so requested.
8.8 OVERALL INTEREST RATE FOR FRENCH LAW. Given the variable rates
of interest applicable to the Loans, the overall interest rate ("taux effectif
global"), as governed by the French Usury Law of December 28, 1966 and the
Decree of September 4, 1985, cannot be calculated at the time of execution of
this Agreement.
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8.9 SPECIAL PROVISIONS GOVERNING EUROCURRENCY RATE LOANS. With
respect to Eurocurrency Rate Loans:
(a) DETERMINATION OF INTEREST PERIOD. By giving notice as set forth
in SECTION 2.2 or 3.2 (with respect to a Borrowing of a Eurocurrency Rate Loan)
or SECTION 8.3 (with respect to a conversion into or continuation of a
Eurocurrency Rate Loan), each Borrower shall have the option, subject to the
other provisions of this SECTION 8.9, to select an interest period (each, an
"INTEREST PERIOD") to apply to the Loans described in such notice, subject to
the following provisions:
(i) Each Borrower may only select, as to a particular
Borrowing of Eurocurrency Rate Loans, an Interest Period of either
one, two, three or six months in duration or, with the consent of the
Lenders, seven days or nine months in duration;
(ii) In the case of immediately successive Interest Periods
applicable to a Borrowing of Eurocurrency 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
that 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) No Borrower may select an Interest Period as to any
Loan if such Interest Period terminates later than the Revolving
Credit Termination Date; and
(v) There shall be no more than ten (10) Borrowings of
Eurocurrency Loans by the Company and fifteen (15) Borrowings of
Eurocurrency Loans by the Foreign Borrowers (in the aggregate) in
effect at any one time.
(b) 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 Administrative Agent shall determine
(pursuant to the procedures set forth in the definition of "EUROCURRENCY RATE")
the interest rate that shall apply to Eurocurrency Rate Loans to be made in
Dollars or any Optional Currency, as applicable, for which an interest rate is
then being determined for the applicable Interest Period and currency, and shall
promptly give notice thereof (in writing or by telephone confirmed in writing)
to the Borrowers and to each Lender and, with respect to Loans made to French
Borrowers or in French Francs, the overall interest rate ("taux effectif
global") applicable to such Loans also shall be communicated to the Borrowers.
Each Reference Bank agrees to furnish to the
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Administrative Agent timely information for the purpose of determining the
Eurocurrency Rate. If any one or more of the Reference Banks shall not furnish
such information to the Administrative Agent, the Administrative Agent shall
determine such interest rate on the basis of timely information furnished by the
remaining Reference Banks. The Administrative Agent's determination shall be
presumed to be correct, absent manifest error, and shall be binding upon the
Borrowers and the Lenders.
(c) INTEREST RATE UNASCERTAINABLE, INADEQUATE OR UNFAIR. In the
event that at least one (1) Business Day before the Interest Rate Determination
Date:
(i) the Administrative Agent determines that adequate and
fair means do not exist for ascertaining the applicable interest rates
by reference to which the Eurocurrency Rate then being determined is
to be fixed;
(ii) any Lender advises the Administrative Agent that
deposits in Dollars or the applicable Optional Currency, as
applicable, in the principal amounts of the Eurocurrency Rate Loans
comprising such Borrowing are not generally available in the London
interbank market for a period equal to such Interest Period; or
(iii) any Lender advises the Administrative Agent that the
Eurocurrency Rate, as determined by the Administrative Agent, after taking
into account the adjustments for reserves and increased costs provided for
in SECTION 8.9(e), will not adequately and fairly reflect the cost to the
Lenders of funding their Eurocurrency Rate Loans in the currency in which
such Loans are denominated;
then the Administrative Agent shall forthwith give notice thereof to the
Company, whereupon (until the Administrative Agent notifies the Company that the
circumstances giving rise to such suspension no longer exist) the right of the
Borrowers to elect to have Loans bear interest based upon the Eurocurrency Rate
in such currency shall be suspended and each outstanding Eurocurrency Rate Loan
that is denominated in the affected currency shall be converted into a Base Rate
Loan denominated in such currency on the last day of the then current Interest
Period therefor, and any Notice of Borrowing with respect to Loans denominated
in such currency for which Revolving Loans have not then been made shall be
deemed to be a request for Base Rate Loans in such currency, notwithstanding any
prior election by any Borrower to the contrary.
(d) 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 Eurocurrency Rate Loan
in any currency 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 Company and the Administrative Agent, and the Administrative
Agent shall promptly transmit the notice to each other Lender.
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(ii) When notice is given by a Lender under SECTION 8.9(d)(i), (A) the
Borrowers' right to request from such Lender and such Lender's obligation, if
any, to make Eurocurrency Rate Loans in such currency shall be immediately
suspended, and such Lender shall make a Base Rate Loan as part of any requested
Borrowing of Eurocurrency Rate Loans in such currency and (B) if the affected
Eurocurrency Rate Loan or Loans are then outstanding, the Borrowers 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
Administrative 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 8.9(d)(i)
in respect of a Eurocurrency Rate Loan in any currency such Lender determines
that it may lawfully make Eurocurrency Rate Loans in such currency, such Lender
shall promptly give notice of that determination, in writing, to the Company and
the Administrative Agent, and the Administrative Agent shall promptly transmit
the notice to each other Lender. The Borrowers' right to request, and such
Lender's obligation, if any, to make Eurocurrency Rate Loans shall thereupon be
restored.
(e) COMPENSATION. In addition to all amounts required to be paid by
the Borrowers pursuant to SECTIONS 8.1 through 8.8, each Borrower agrees to
compensate each Lender, upon written demand therefor to such Borrower, with a
copy to the Administrative Agent, for all losses, expenses and liabilities
(including, without limitation, any loss or reasonable 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 Eurocurrency Rate Loans made to
such Borrower but excluding any loss of the Eurocurrency Rate Margin on the
relevant Loans) that Lender may sustain (i) if for any reason (other than a
default by such Lender) a Borrowing of, conversion into or continuation of such
Eurocurrency Rate Loans does not occur on a date specified therefor in a Notice
of Borrowing or a Notice of Conversion/Continuation given by such Borrower, or a
successive Interest Period does not commence after notice therefor is given
pursuant to SECTION 8.3(b), including, without limitation, pursuant to SECTION
8.9(c), (ii) if for any reason any Eurocurrency Rate Loan made to such Borrower
is prepaid (including, without limitation, mandatorily pursuant to SECTION 7.5)
on a date that is not the last day of the applicable Interest Period, (iii) as a
consequence of a required conversion of such Eurocurrency Rate Loan to a Base
Rate Loan as a result of any of the events indicated in SECTION 8.9(c) or (d) or
(iv) as a consequence of any failure by the Borrowers to repay Eurocurrency Rate
Loans when required (including, without limitation, by virtue of having given
notice of a voluntary repayment) by the terms hereof. The Lender making demand
for such compensation shall deliver to the applicable Borrower concurrently with
such demand a written statement in reasonable detail as to such losses,
reasonable expenses and liabilities, and this statement shall be conclusive as
to the amount of compensation due to that Lender, absent manifest error.
(f) BOOKING OF EUROCURRENCY RATE LOANS. Any Lender may make, carry
or transfer Eurocurrency Rate Loans at, to, or for the account of its European
Lending Office or Eurocurrency Affiliate or its other offices or Affiliates. No
Lender shall be entitled, however, to receive any greater amount under
SECTIONS 7.10, 7.11, 8.6 or 8.9(e) as a result of the transfer of any such
Eurocurrency Rate Loan to any office (other than such European Lending
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Office) or any Affiliate (other than such Eurocurrency 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.
(g) AFFILIATES NOT OBLIGATED. No Eurocurrency Affiliate or other
Affiliate of any Lender shall be deemed a party to this Agreement or shall have
any liability or obligation hereunder.
8.10 FEES. (a) LETTER OF CREDIT FEE. In addition to any charges
paid pursuant to SECTION 5.8, each Borrower shall pay to the Administrative
Agent, for the account of the Lenders as provided in the following sentence, (i)
with respect to any Commercial Letter of Credit Issued by any Issuing Bank for
the account of such Borrower, a fee per annum equal to fifty percent (50%) of
the Eurocurrency Rate Margin on the undrawn face amount of such Commercial
Letter of Credit and (ii) with respect to any Standby Letter of Credit Issued by
any Issuing Bank for the account of such Borrower, a fee per annum equal to the
Eurocurrency Rate Margin on the undrawn face amount of such Standby Letter of
Credit (the fees referred to in clauses (i) and (ii) above are collectively
referred to herein as the "LETTER OF CREDIT FEE"), in each case payable
quarterly in arrears on the first Business Day of each January, April, July and
October, commencing on October 1, 1996, and on the date on which such Letter of
Credit expires in accordance with its terms; PROVIDED that, effective
immediately upon the occurrence of any Event of Default set forth in SECTION
15.1(a) and for as long thereafter as such Event of Default shall be continuing,
the rate at which the Letter of Credit Fee shall accrue and be payable shall be
equal to two percent (2.0%) per annum in excess of the fee that would otherwise
be applicable to such Letter of Credit from time to time. The Administrative
Agent shall pay each Letter of Credit Fee to the Lenders in accordance with
their respective Revolving Credit Pro Rata Shares.
(b) UNUSED COMMITMENT FEE ON REVOLVING CREDIT COMMITMENTS. The
Borrowers shall pay to the Administrative Agent, for the account of the Lenders
in accordance with their respective Revolving Credit Pro Rata Shares, a fee (the
"UNUSED COMMITMENT 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 (net of any Swing Loans or Local European Loans
which are outstanding on any day during such period) 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) quarterly, in arrears, on the
first Business Day of each January, April, July and October, commencing on
October 1, 1996 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 Revolving Credit Pro
Rata Share of any Revolving Loan requested by any Borrower which such Lender is
obligated to fund under the terms hereof, such Lender shall not be entitled to
any Unused Commitment Fee with respect to its Revolving Credit Commitment until
such failure has been cured in accordance with SECTION 7.7(e)(ii), and the
Borrowers shall not be required to pay any Unused Commitment Fee to such Lender
for such period.
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(c) UNUSED COMMITMENT FEE ON EUROPEAN OVERDRAFT COMMITMENT. The
Borrowers shall pay to the European Overdraft Bank a fee accruing from the
Closing Date at the Unused Commitment Fee Rate on the average amount by which
the European Overdraft Commitment exceeds the European Overdraft 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) quarterly,
in arrears, on the first day of each January, April, July and October,
commencing on October 1, 1996 and (B) on the Revolving Credit Termination Date
(whether or not such date occurs on, before or after the Closing Date).
(d) CLOSING DATE UNUSED COMMITMENT FEE. In the event that the
Closing Date does not occur by June 30, 1996, the Borrowers shall pay on the
Closing Date to each Lender a fee accruing from June 30, 1996 at the Unused
Commitment Fee Rate on each such Lender's Commitment as of and for the period
commencing on June 30, 1996 and ending on the Closing Date.
(e) OTHER FEES. The Borrowers shall pay to the Administrative Agent
solely for its own account such other fees as are set forth in the Credit Suisse
Letter Agreement and the Citibank Letter Agreement.
8.11 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 Administrative Agent's U.S. Account in accordance with SECTION
7.6(a). All fees shall be fully earned and nonrefundable when paid. All fees
specified or referred to herein due to the Administrative Agent or any Lender,
including, without limitation, those referred to in this SECTION 8.11, shall
bear interest, if not paid when due, at the interest rate for Loans in
accordance with SECTION 8.4, shall constitute Obligations and shall be secured
by the Collateral.
ARTICLE 9. CONDITIONS TO LOANS AND LETTERS OF CREDIT
9.1 CONDITIONS PRECEDENT TO THE INITIAL LOANS AND LETTERS OF CREDIT.
The obligation of each Lender on the Closing Date to make its 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 Administrative Agent (on behalf of itself and the
Lenders) shall have received on or before the Closing Date all of the following:
(i) this Agreement, the Notes, the Company Pledge
Agreement, the Subsidiary Pledge Agreement, the Foreign Pledge
Agreements, the Company Guaranty, the Domestic 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
D, each duly executed where appropriate and in form and substance
satisfactory to the Lenders and in
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sufficient copies for each of the Lenders; without limiting the foregoing,
the Company hereby directs (A) each of its special counsel, (x) Skadden,
Arps, Slate, Meagher & Flom, and (y) Wendel, Rosen, Black & Dean and (B)
each of the foreign counsel to the Borrowers listed in such List of Closing
Documents to prepare and deliver to the Administrative Agent and the
Lenders, the opinions referred to in such List of Closing Documents with
respect to each such counsel;
(ii) a PRO FORMA estimated balance sheet of the Company and
its Subsidiaries as of December 31, 1995, as referred to in SECTION
10.7 giving effect to the Acquisition and the transactions
contemplated thereby and hereby;
(iii) audited financial statements of the Company and its
Subsidiaries for Fiscal Year 1995;
(iv) audited financial statements of the Acquired Businesses
for Fiscal Years 1994 and 1995, and unaudited financial statements of
the Acquired Businesses prepared by management of the Acquired
Businesses for the fiscal quarter ended on March 31, 1996;
(v) forecasts giving effect to the Acquisition and the
other transactions contemplated thereby and hereby prepared by
management of the Company displaying (A) on a quarterly basis,
anticipated balance sheets as at the end of each of the remaining
three quarterly periods in 1996 and the related statements of income
and cash flow for each such period and (B) on an annual basis, balance
sheets as of December 31, 1997 and December 31, 1998, and the related
projected statements of income and cash flow for each such period; and
(vi) such additional documentation as the Administrative
Agent and the Lenders may reasonably request.
(b) PERFECTION OF LIENS. All certificates representing shares of
Capital Stock included in the Collateral (it being understood that the Capital
Stock of each of Hexcel Composites, Hexcel Lyon, Salver, Brochier and CDSR is
represented by uncertificated securities and that the Capital Stock of Hexcel
Belgium exists in registered form) shall have been delivered to the
Administrative Agent (with duly executed stock powers, as appropriate under
applicable law) and all instruments included in the Collateral shall have been
delivered to the Administrative Agent (duly endorsed to the Administrative
Agent, as appropriate).
(c) NO LEGAL IMPEDIMENTS. No law, regulation, order, judgment or
decree of any Governmental Authority shall be in effect, and the Administrative
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, in either case that 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.
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(d) NO CHANGE IN CONDITION. No change in the business, condition
(financial or otherwise), performance, properties, or prospects of (i) any
Borrower or Subsidiary Guarantor, individually, or of the Company and its
Subsidiaries, taken as a whole, shall have occurred since December 31, 1995 or
(ii) the Acquired Businesses, taken as a whole, shall have occurred since
December 31, 1995, in each case, which change has had or is reasonably likely,
in the opinion of the Lenders, to have a Material Adverse Effect.
(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 ARTICLE 10 and in any of the other Loan Documents (other
than representations that expressly speak as of a different date) 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
Administrative Agent, for the account of the Lenders, and to the Collateral
Agent, for their respective individual accounts, all fees (including, without
limitation, the reasonable legal fees of counsel to the Agents and local counsel
to the Administrative 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 Credit Suisse Letter Agreement, the Citibank Letter Agreement
and in SECTION 8.10(d)), and all reasonable expenses (including, without
limitation, reasonable legal expenses) due and payable on or before the Closing
Date.
(h) CONSENTS, ETC. Except as set forth on SCHEDULE 9.1, each of the
Company and its Subsidiaries shall have received all consents and authorizations
required pursuant to any material Contractual Obligation with any other 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 Company and its Subsidiaries lawfully (A) to execute, deliver
and perform, in all material respects, their respective obligations hereunder,
under the other Transaction Documents to which such Person is, or shall be, a
party and each other agreement or instrument to be executed and delivered by
each of them pursuant hereto or thereto or in connection herewith or 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 Company or
any of its Subsidiaries that are reasonably likely to have a Material Adverse
Effect.
(i) TERMINATION OF THE EXISTING FACILITIES. Either (i) the
obligations of the Company and each Foreign Borrower party thereto under the
Existing Facilities shall have been terminated or shall be terminated
simultaneously with the execution hereof in accordance with the terms hereof,
all non-contingent obligations thereunder shall have been paid or shall be paid
in full in cash simultaneously with the execution hereof in accordance with the
terms hereof and the Liens on the Property of the Company and each such Foreign
Borrower securing the Existing Facilities shall have been released and
terminated on terms satisfactory to the Administrative Agent or (ii) amounts
sufficient to repay all obligations contemplated by
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clause (i) shall have been deposited in the Funding Accounts established
pursuant to (and as defined in) the Funding Account Agreement.
(j) THE ACQUISITION. The Administrative Agent and the Lenders shall
be satisfied that: (i) the Asset Purchase Agreement and all other Acquisition
Documents, including, without limitation, the agreements described in the Asset
Purchase Agreement, shall have been duly approved and executed and delivered by
the parties thereto in form and substance reasonably satisfactory to the
Administrative Agent and the Lenders, (ii) all conditions precedent to closing
under the Asset Purchase Agreement and the other Acquisition Documents shall
have been met (or, with the consent of the Requisite Lenders, waived) prior to
or simultaneous with the execution hereof (and no modification or waiver of any
such condition shall have been made without the consent of the Administrative
Agent), (iii) such documents if, by their terms, are to be entered into prior to
or simultaneously with the execution hereof, are, or simultaneously with the
execution hereof will be, in full force and effect in accordance with their
terms and (iv) the Acquisition has been, or substantially simultaneously with
the funding hereof, will be, consummated.
(k) CORPORATE STRUCTURE. The Administrative Agent and the Lenders
reasonably shall be satisfied with the corporate, capital and legal structure of
the Company and its Subsidiaries after giving effect to the Acquisition.
9.2 CONDITIONS PRECEDENT TO ALL SUBSEQUENT REVOLVING LOANS, SWING
LOANS, EUROPEAN OVERDRAFT LOANS AND LETTERS OF CREDIT. The obligation of each
Lender to make any 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
requesting such Loan or Letter of Credit and its Subsidiaries contained in
ARTICLE 10 and in any other Loan Document (other than representations and
warranties that expressly speak as of a different date) shall be true and
correct as to such Borrower and its Subsidiaries in all material respects.
(b) NO DEFAULT. No Event of Default or Default 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 Administrative Agent shall
not have received from any Lender notice that, any action, suit, investigation,
litigation or proceeding is pending or threatened in any court or before any
arbitrator or Governmental Authority that is likely to enjoin, prohibit or
restrain, or, in the reasonable judgment of such Person, impose or result in the
imposition of any material adverse condition upon, such Lender's making of the
requested Loan or participation in the requested Letter of Credit.
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81
(d) NO MATERIAL ADVERSE CHANGE. No event shall have occurred since
December 31, 1995, which has or is reasonably likely, in the opinion of the
Requisite Lenders, to have a material adverse effect on the business, condition
(financial or otherwise), performance, properties or prospects of the Borrower
requesting such Loan or Letter of Credit or the Subsidiary Guarantors, taken as
a whole, or of the Company and its Subsidiaries, taken as a whole.
Each submission by any Borrower to the Administrative Agent of a Notice of
Borrowing with respect to a Revolving Loan, Swing Loan or European Overdraft
Loan, each acceptance by any Borrower of the proceeds of each such Loan so made,
each submission by any 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 such 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, as of the European Overdraft Loan Funding Date in respect of such
European Overdraft 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 9.2 have been satisfied or waived in accordance with SECTION 17.7.
9.3 CONDITIONS PRECEDENT TO THE MAKING OF LOANS AND THE ISSUANCE OF
LETTERS OF CREDIT TO OR FOR THE BENEFIT OF ADDITIONAL BORROWERS. The obligation
of each Lender to make any Loan requested to be made by it by a Foreign
Subsidiary which is not then a Borrower (an "ADDITIONAL BORROWER") on any date
after the Closing Date, and the agreement of each Issuing Bank to Issue any
Letter of Credit to or on behalf of such Additional Borrower on any date after
the Closing Date, shall be subject to the following conditions precedent as of
each such date (the date on which such conditions precedent having been
satisfied being referred to herein as the "ADDITIONAL BORROWER EFFECTIVE DATE"
and such Additional Borrower thereafter being deemed to be a "Foreign Borrower"
for purposes hereof):
(a) DOCUMENTS. The Administrative Agent (on behalf of itself
and the Lenders) shall have received all of the following in form and substance
reasonably satisfactory to the Administrative Agent and the Requisite Lenders:
(i) a Borrower Addendum, duly executed;
(ii) the Notes required to be executed by such Additional Borrower,
each duly executed where appropriate and in sufficient copies for each of
the Lenders, and (to the extent requested by the Administrative Agent) a
legal opinion in form and substance reasonably satisfactory to the
Administrative Agent;
(iii) the Schedules to this Agreement, if amended as of the
Additional Borrower Effective Date;
(iv) the Constituent Documents of such Additional Borrower as of the
Additional Borrower Effective Date; and
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(v) additional documents and certificates similar to those provided
by the other Foreign Borrowers on the Closing Date, and such additional
documentation as the Administrative Agent and the Lenders may reasonably
request.
(b) NO DEFAULT. No Event of Default or Default shall have
occurred and be continuing or would result from the making of the Loans to such
Additional Borrower.
(c) REPRESENTATIONS AND WARRANTIES. As of the Additional
Borrower Effective 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 contained in ARTICLE 10 and in any other Loan
Document (other than representations and warranties that expressly speak as of a
different date) shall be true and correct as to such Additional Borrower and its
Subsidiaries in all material respects.
(c) IDENTITY OF ADDITIONAL BORROWER. The Foreign Subsidiary
(including, without limitation, its jurisdiction of organization and capital
structure) which is to be designated as an Additional Borrower shall be
reasonably acceptable to the Requisite Lenders and the designation of such
Foreign Subsidiary as an Additional Borrower (and its making of borrowings
hereunder) shall not violate any Requirement of Law applicable to any Lender.
ARTICLE 10. REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement and to
make the Loans and the other financial accommodations to the Borrowers and to
Issue the Letters of Credit described herein, each of the Borrowers represents
and warrants (only with respect to such Borrower and its Subsidiaries) to each
Lender and the Administrative Agent as follows:
10.1 ORGANIZATION; CORPORATE POWERS. Each of such Borrower and its
Subsidiaries (i) is a corporation or a company having limited liability which is
duly organized, validly existing and, to the extent applicable, is in good
standing under the laws of the jurisdiction of its organization, (ii) is duly
qualified to do business and is in good standing (or, with respect to the
Foreign Subsidiaries, has maintained the equivalent status) under the laws of
each such jurisdiction, except where the failure to be so qualified and in good
standing (or, with respect to the Foreign Subsidiaries, maintain equivalent
status) is not reasonably likely to have a Material Adverse Effect and (iii) has
all requisite power and authority to own, operate and encumber its Property and
to conduct its business as presently conducted.
10.2 AUTHORITY. (a) Each of such Borrower and its Subsidiaries has
the requisite power and authority to execute, deliver and perform each of the
Transaction Documents to which it is a party.
(b) The execution, delivery and performance, as the case may be, of
each of the Transaction Documents to which any of such Borrower or its
Subsidiaries is a party, and the consummation of the transactions contemplated
thereby (including, without limitation, the
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incurrence of Indebtedness and granting of guarantees and security interests),
have been duly authorized by such Person's board of directors and (to the extent
required by law) the shareholders of such Person, and such approvals have not
been rescinded, revoked or modified in any manner. No other corporate action or
proceedings on the part of such Borrower or its Subsidiaries is necessary to
consummate such transactions.
(c) Each of the Transaction Documents to which such Borrower or any
of its Subsidiaries is a party has been duly executed or delivered on behalf of
such Borrower or such Subsidiary, as the case may be, and constitutes its legal,
valid and binding obligation, enforceable against such Person in accordance with
its terms except as such enforceability may be subject to applicable bankruptcy,
insolvency and reorganization laws and similar laws or to general principles of
equity, is in full force and effect and, as of the Closing Date, no term or
condition thereof has been amended, modified or waived from the terms and
conditions contained in the Transaction Documents delivered to the
Administrative Agent pursuant to SECTION 9.1(a) without the prior written
consent of the Requisite Lenders.
10.3 SUBSIDIARIES; OWNERSHIP OF CAPITAL STOCK. SCHEDULE 10.3
(a) contains a diagram indicating the corporate structure of such Borrower and
its Subsidiaries and the Existing Joint Ventures of such Borrower as of the
Closing Date after giving effect to the Acquisition; and (b) accurately sets
forth as of the Closing Date, (i) the correct legal name, the jurisdiction of
incorporation and the Employer Identification Number (if applicable) of each of
such Borrower and its Subsidiaries, and the jurisdictions in which each of such
Borrower and its Subsidiaries is qualified to transact business as a foreign
corporation, (ii) the authorized, issued and outstanding shares of each class of
Capital Stock of such Borrower and each of its Subsidiaries and, with respect to
such Borrower's Subsidiaries, the owners of such shares and (iii) a summary of
the direct and indirect partnership, joint venture or other equity interests, if
any, of such Borrower and each Subsidiary of such Borrower in any Person that is
not a corporation. Except as set forth on SCHEDULE 10.3, none of the issued and
outstanding Capital Stock of such Borrower or such 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. The
outstanding Capital Stock of each of such Borrower and its Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and the outstanding
Capital Stock of each of such Borrower's Subsidiaries is not Margin Stock.
10.4 NO CONFLICT. The execution, delivery and performance of each of
the Transaction Documents to which such Borrower or any of its Subsidiaries is a
party, do not and shall not (i) except as set forth on SCHEDULE 10.4, 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, the Subordinated Debentures, the Subordinated
Debenture Indenture or any other material Contractual Obligation of such
Borrower or any Subsidiary of such Borrower, or require the termination of any
material Contractual Obligation of such Borrower or any of its Subsidiaries or
(ii) result in or require the creation or imposition of any Lien whatsoever upon
any of the Property or assets of such Borrower or any of its Subsidiaries, other
than Liens contemplated by the Loan Documents.
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10.5 ASSET PURCHASE AGREEMENT. Except as set forth on SCHEDULE 10.6,
the material obligations of all parties to the Asset Purchase Agreement have
been satisfied in all material respects as of the Closing Date and the Asset
Purchase Agreement is in full force and effect as of such date. No material
breach or default of any term or provision of the Asset Purchase Agreement by
the Company or any of its Subsidiaries has occurred and no breach or default of
any term or provision of the Asset Purchase Agreement by any other party thereto
which could have a Material Adverse Effect has occurred.
10.6 GOVERNMENTAL CONSENTS, ETC. The execution, delivery and
performance of each of the Transaction Documents to which such Borrower or any
of its Subsidiaries is a party do not and will 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 that have been
made, obtained or given, or, in a timely manner, will be made, obtained, or
given, (ii) filings necessary to perfect security interests in, or to realize on
pledges of, the Collateral and (iii) filings described on SCHEDULE 10.6. Such
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 that limits its ability to incur Indebtedness or its ability to
consummate the transactions contemplated in the Transaction Documents.
10.7 PROJECTIONS. The Company's PRO FORMA estimated balance sheet
referred to in SECTION 9.1(a)(ii) and each of the Company's business plans and
all other financial projections and related materials and documents delivered to
the Lenders pursuant hereto were prepared in good faith on the basis of the
assumptions accompanying them, and such projections and assumptions as of the
date of preparation thereof were, and as of the Closing Date are, reasonable in
light of the then current and foreseeable business conditions and prospects of
the Company and its Subsidiaries and represented management's opinion of the
Company's and its Subsidiaries' projected financial performance based on the
information available to the Company at the time so furnished, it being
understood that nothing contained in this Section shall constitute a
representation or warranty that such future financial performance or results of
operations will in fact be achieved.
10.8 LITIGATION; ADVERSE EFFECTS. Except as set forth on
SCHEDULE 10.8, 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 any Borrower, threatened against such Borrower
or any of its Subsidiaries or any Property of any of them (i) challenging the
validity or the enforceability of any of the Transaction Documents, or (ii) that
is reasonably likely to have a Material Adverse Effect.
10.9 PAYMENT OF TAXES. All material tax returns and reports of each
of such Borrower and its Subsidiaries required to be filed have been timely
filed. Except as set forth on SCHEDULE 10.9 hereto, all material taxes,
assessments, fees and other governmental charges thereupon and upon their
respective Property, assets, income and franchises that 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) that are being contested in
good faith by
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such Borrower or any of its Subsidiaries, as the case may be, by appropriate
proceedings conducted in good faith 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.
None of such Borrower or any of its Subsidiaries has any knowledge of any
proposed tax assessment against such Borrower or any of its Subsidiaries that
shall have or is reasonably likely to have a Material Adverse Effect.
10.10 PERFORMANCE. Neither such Borrower nor any of its Subsidiaries
has received notice or has actual knowledge that (a) 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 (b) any
condition exists that, 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.
10.11 DISCLOSURE. All factual information (taken as a whole)
furnished by or on behalf of such Borrower or its Subsidiaries in writing to the
Administrative Agent or any Lender on or prior to the Closing Date for purposes
of, or in connection with, this Agreement or any of the Loan Documents is, and
all other factual information (taken as a whole) provided in writing to the
Administrative Agent or any Lender will be true and accurate in all material
respects on the date as of which such information is dated or furnished and not
incomplete by omitting to state any material fact necessary to make such
information (taken as a whole) not misleading at such time; PROVIDED that, to
the extent that the representations and warranties contained in this SECTION
10.11 relate to information concerning the Acquired Businesses and are being
made prior to or on the date upon which the Acquisition is consummated, the
representations and warranties contained in this SECTION 10.11 shall be deemed
to be false or misleading in a material respect when made only if the additional
information needed to make the furnished information concerning the Acquired
Businesses true, accurate and not incomplete would reveal a circumstance or
event which would reasonably be expected to have a Material Adverse Effect.
10.12 REQUIREMENTS OF LAW. Except as set forth on SCHEDULE 10.12,
each of such Borrower and its Subsidiaries is in compliance with all
Requirements of Law, in each case except where the failure to so comply
individually or in the aggregate is not reasonably likely to have a Material
Adverse Effect.
10.13 ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE 10.13,
after giving effect to the acquisition by the Company of the Acquired
Businesses:
(a) neither such Borrower nor any of its Subsidiaries nor 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 such Borrower or its Subsidiaries received
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any notice of the foregoing, except, in each case, for any matter that,
individually or in the aggregate is not reasonably likely to have a
Material Adverse Effect;
(b) neither such Borrower nor any of its Subsidiaries is or has been
the owner or operator of any Property that has any of the following that
would reasonably be likely to have a Material Adverse Effect:
(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 any Contaminant;
(iv) any polychlorinated biphenyls (PCBs) used in hydraulic
oils, electrical transformers or other Equipment;
(c) no Environmental Lien has attached to any Property of such
Borrower or any of its Subsidiaries;
(d) there have been no Releases of any Contaminants into the
environment in reportable quantities by such Borrower or its Subsidiaries
or any other Person that would reasonably be likely to have a Material
Adverse Effect;
(e) neither such Borrower nor any of its Subsidiaries has any
contingent liability in connection with any Release or threatened Release
of any Contaminants into the environment that would reasonably be likely to
have a Material Adverse Effect;
(f) neither such Borrower nor any of its Subsidiaries has disposed of
or sent or directly arranged for the transport of any waste or Contaminant
at or 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, or any other location the effect of which would
reasonably be likely to have a Material Adverse Effect;
(g) neither such Borrower's nor any of its 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 such Borrower and its Subsidiaries are unaware of any
conditions on such Property that would qualify such Property for inclusion
on any such list, except, in either case, where such listing would not
reasonably be likely to have a Material Adverse Effect;
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(h) neither such Borrower nor any of its 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, such Borrower has fully complied with the
requirements of such acts, except where the failure to comply would not
reasonably be likely to have a Material Adverse Effect;
(i) neither such Borrower nor any of its Subsidiaries has assumed,
either contractually or by operation of law, any liabilities or potential
liabilities under any Environmental, Health or Safety Requirements of Law
except where (i) such assumption would not reasonably be likely to have a
Material Adverse Effect or (ii) the Company has received a written
indemnity with respect to such liabilities or potential liabilities (as the
case may be) from a Person (other than the Company or any of its
Subsidiaries) who would reasonably be expected to pay in full all
reasonable claims in respect of such indemnity; and
(j) such Borrower and each of its Subsidiaries has obtained, and is
in compliance with, all Permits required under any Environmental, Health or
Safety Requirements of Law except where the failure to obtain or comply
with such Permits would not reasonably be likely to have a Material Adverse
Effect.
10.14 ERISA MATTERS. As of the Closing Date, neither such Borrower,
nor its Subsidiaries nor any ERISA Affiliate maintains or contributes to any
Plan other than those listed on SCHEDULE 10.14 hereto. With respect to each
Plan that is intended to be qualified under Section 401(a) of the Internal
Revenue Code as currently in effect, such Borrower, its Subsidiaries or an ERISA
Affiliate has received or is in the process of seeking, a favorable
determination letter from the Internal Revenue Service 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. None of such Borrower, any of its Subsidiaries or any ERISA Affiliate
knows of any reason why such Plans or trusts are not qualified. Except as
disclosed on SCHEDULE 10.14, as of the Closing Date, neither such Borrower nor
any of its Subsidiaries maintains or contributes to any employee welfare benefit
plan within the meaning of Section 3(l) of ERISA that provides benefits to
employees after termination of employment other than as required by Section 601
of ERISA. To the extent such Borrower knows or reasonably should know, such
Borrower, its Subsidiaries 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, that would subject
such Borrower or any ERISA Affiliate to a liability in excess of $1,000,000.
Neither such Borrower, nor any of its Subsidiaries nor any ERISA Affiliate nor,
to the knowledge of such Borrower, any fiduciary of any Plan that 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 which
would subject such Borrower or its Subsidiaries or any ERISA Affiliate to any
taxes, penalties or other liabilities under Sections 409 or 502(i) of ERISA or
4975 of the Internal Revenue Code or (ii) has taken or failed to take any action
that would constitute or result in a
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Termination Event that would, in either case, subject such Borrower, any of its
Subsidiaries or any ERISA Affiliate to a liability in excess of $1,000,000.
Neither of such Borrower, nor any of its Subsidiaries or 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 of such Borrower, nor any of
its Subsidiaries or any ERISA Affiliate has incurred any liability to the PBGC
that remains outstanding that would subject such Borrower, any of its
Subsidiaries or any ERISA Affiliate to a liability in excess of $2,000,000.
There are no premium payments that have become due to the PBGC that are unpaid.
To the extent filed, Schedule B to the most recent annual report filed with the
IRS with respect to each Benefit Plan and furnished to the Administrative 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 of such Borrower, nor
any of its Subsidiaries or 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 on SCHEDULE 10.14, neither of such Borrower, nor any
of its Subsidiaries or 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 of such Borrower, nor any of its Subsidiaries or 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. To the extent such Borrower knows or
reasonably should know, such 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.
10.15 FOREIGN EMPLOYEE BENEFIT MATTERS. 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 Foreign Employee Benefit Plan. Except as set forth on
SCHEDULE 10.15 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 Foreign
Employee Benefit Plan by an amount in excess of $2,000,000. With respect to any
Foreign Employee Benefit Plan maintained by such 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 Foreign Employee Benefit Plan is maintained. The aggregate
unfunded liabilities, after giving effect to any reserves for such liabilities,
with respect to such Foreign Employee Benefit Plans are not material. Except as
set forth on SCHEDULE 10.15, there are no actions, suits or claims (other than
routine claims for benefits) pending or, to the knowledge of such Borrower,
threatened against such Borrower, any of its Subsidiaries or any ERISA Affiliate
with respect to any Foreign Employee Benefit Plan that would subject such
Borrower, any of its Subsidiaries or an ERISA Affiliate to a liability in excess
of $2,000,000.
10.16 LABOR MATTERS. (a) Except as set forth on SCHEDULE 10.16, as
of the Closing Date there is no collective bargaining agreement covering any of
the employees of
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such Borrower or any of its Subsidiaries. To the knowledge of such Borrower,
except as set forth on SCHEDULE 10.16, as of the Closing Date no attempt to
organize the employees of such Borrower or any of its Subsidiaries is pending,
threatened, planned or contemplated.
(b) There are no strikes, work stoppages, slowdowns or lockouts
pending or, to the knowledge of such Borrower or its Subsidiaries, threatened
against or involving such Borrower or any of its Subsidiaries, other than those
that in the aggregate would not have or be reasonably likely to have a Material
Adverse Effect.
(c) There are no arbitrations or grievances pending against or
involving such Borrower or any of its Subsidiaries, nor are there, to the
knowledge of such Borrower or its Subsidiaries, any arbitrations or grievances
threatened involving such Borrower or any of its Subsidiaries, other than those
that in the aggregate, if resolved adversely to such Borrower or such
Subsidiary, would not have or be reasonably likely to have a Material Adverse
Effect.
10.17 SECURITIES ACTIVITIES. None of such Borrower or any of its
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
10.18 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 such Borrower's instructions, each of such
Borrower and its Subsidiaries is or will be Solvent.
10.19 INSURANCE. On and as of the Closing Date, all policies of
insurance of any kind or nature owned by or issued to the Company and/or any of
its Subsidiaries, including, without limitation, policies of life, fire, theft,
product liability, public liability, property damage, other casualty, employee
fidelity, workers compensation and employee health and welfare insurance, are in
full force and effect and are of a nature and provide such coverage as is
sufficient in the reasonable judgment of the Company and as is customarily
carried in the same general area by companies engaged in the same or similar
businesses of the size and character of such Person.
10.20 GOVERNMENT CONTRACTS. (a) Except as set forth on SCHEDULE
10.20, none of such Borrower or any of its 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
such Borrower, such Subsidiaries or such Affiliates or otherwise that would
result in the termination of any Government Contract or that would impose any
limitation on such Borrower's or such Subsidiary's ability to perform any such
Government Contract, except where such termination or limitation is not
reasonably likely to have a Material Adverse Effect, or to continue its business
substantially as presently conducted and proposed to be conducted.
(b) Except as set forth on SCHEDULE 10.20, (A) none of such Borrower
or any of its Subsidiaries or any of their respective directors, officers or
employees is (or during the
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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 such
Borrower or any of its Subsidiaries has conducted or initiated any internal
investigation or made a voluntary disclosure to the 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.
(c) Except as set forth on SCHEDULE 10.20, there exist (A) no
outstanding claims against such Borrower or any of its 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
which, if adversely resolved against such Borrower or such Subsidiary, are
reasonably likely to have a Material Adverse Effect; and (B) no disputes between
such Borrower or any of its Subsidiaries and the United States Government under
the Contract Disputes Act or any other Federal statute or between such Borrower
or any of its Subsidiaries and any prime contractor, subcontractor or vendor
arising under or relating to any such Government Contract which, if adversely
resolved against such Borrower or such Subsidiary, are reasonably likely to have
a Material Adverse Effect.
(d) Except as set forth on SCHEDULE 10.20 or (with respect to such
matters occurring after the Closing Date) as disclosed to the Lenders, none of
such Borrower or any of its 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.
10.21 FINANCIAL STATEMENTS. The (a) audited consolidated balance
sheets of the Company and its Subsidiaries as at December 31, 1995 and the
related audited consolidated statements of income and of cash flows for the year
then ended and (b) unaudited consolidated balance sheet of the Company and its
Subsidiaries as at March 31, 1996 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 consolidated
financial position, results of operations and cash flows of the Company and its
Subsidiaries as at the dates and for the periods indicated.
ARTICLE 11. REPORTING COVENANTS
Each of the Borrowers covenants and agrees that as 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:
11.1 FINANCIAL STATEMENTS. The Company shall maintain, and shall
cause each of its Subsidiaries to maintain, a system of accounting established
and administered in
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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
Administrative 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 (other than the fiscal
month immediately following the Closing Date, in which case, within forty-
five (45) days thereafter) in each Fiscal Year, unaudited consolidated
balance sheets of the Company and its Subsidiaries, in each case as at the
end of such period, and the related statements of income and cash flow 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
consolidated financial position of the Company and its Subsidiaries 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 fiscal quarter of each Fiscal
Year, the unaudited consolidated and 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 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,
controller or the senior vice president for finance and administration of
the Company as fairly presenting the financial position of the Company and
its Subsidiaries, as at the dates indicated and the results of their
operations and cash flow for the periods indicated in accordance with GAAP,
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, audited consolidated
financial statements of the Company and its Subsidiaries, certified with
respect to such consolidated statements by a firm of independent certified
public accountants of recognized national standing reasonably acceptable to
the Administrative Agent, which report (x) shall be certified without
qualification or modification as to the scope of the audit and as to the
Company being a going concern, (y) shall state that such financial
statements fairly present the financial position of the Company and its
Subsidiaries as at the dates indicated and the results of their operations
and cash flow for the periods indicated in conformity with GAAP 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 (z) shall
state that the examination by such accountants in connection with such
consolidated financial statements has been made in accordance with
generally accepted auditing
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standards. The financial statements 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.
(d) OFFICER'S CERTIFICATE. Together with each delivery of any
financial statement pursuant to PARAGRAPHS (b) AND (c) of this SECTION
11.1, an Officer's Certificate of the Company substantially in the form of
EXHIBIT E (the "COMPLIANCE CERTIFICATE"), signed by the Company's chief
financial officer, treasurer, controller or senior vice president for
finance and administration and setting forth calculations for the period
then ended for SECTION 7.5(a) (including, without limitation, calculations
of Net Cash Proceeds and mandatory prepayments pursuant to SECTION 7.5 and
a listing of any Indebtedness outstanding under SECTION 13.1(j)), the
negative covenants of ARTICLE 13 and the financial covenants of ARTICLE 14.
(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 Company
for making financial projections) of (i) the Company and the Domestic
Subsidiaries, (ii) each Foreign Borrower and (iii) 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 described in
clauses (i) through (iii).
(f) ACCOUNTANTS' STATEMENT. Together with each delivery of the
financial statements referred to in SECTION 11.1(c), a written statement of
a firm of independent certified public accountants of recognized national
standing reasonably acceptable to the Administrative Agent, 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 Event of Default or Default
has come to their attention, and if such Event of Default or Default has
come to their attention, specifying the nature and period of existence
thereof.
(g) HEXCEL POTTSVILLE CORPORATION. Within thirty (30) days of their
delivery in accordance with Sections 9.02 and 11.08 of the Special Security
Agreement dated as of February 29, 1996, by and among Ciba-Geigy, the
Company, Hexcel Pottsville Corporation and the United States Department of
Defense (the "SPECIAL SECURITY AGREEMENT") and to the extent not prohibited
by applicable Directives, copies of the annual implementation and
compliance report and the quarterly report to Affiliates required to be
delivered pursuant to Sections 9.02 and 11.08, respectively, of the Special
Security Agreement.
11.2 EVENTS OF DEFAULT. Promptly upon (and, in any event, within ten
(10) days of) any Financial Officer of any of the Borrowers obtaining knowledge
(i) of an Event of Default or Default, or becoming aware that any Lender or the
Administrative Agent has given any written notice with respect to a claimed
Event of Default or Default, (ii) that any
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Person has given any written notice to the Company or any of its Subsidiaries or
taken any other action with respect to a claimed default or event or condition
of the type referred to in SECTION 15.1(e), or (iii) of any other condition or
event that has or is reasonably likely to have a Material Adverse Effect or
materially and adversely affect the value of, or the Administrative Agent's
interest in, the Collateral, the Company shall deliver to the Administrative
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 Company or its Subsidiary
has taken, is taking and proposes to take with respect thereto.
11.3 LAWSUITS. (a) Promptly upon (and in any event, within ten (10)
Business Days of) any of the Borrowers 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 its
Subsidiaries or any Property of the Company or any of its Subsidiaries not
previously disclosed pursuant to SECTION 10.8, which action, suit, proceeding,
governmental investigation or arbitration would reasonably be likely to have, or
in the case of multiple actions, suits, proceedings, governmental investigations
or arbitrations arising out of the same general allegations or circumstances
would reasonably be likely to have, in such Borrower's reasonable judgment, a
Material Adverse Effect, in each case after taking into effect applicable
insurance coverage, the Company shall give written notice thereof to the
Administrative Agent and the Lenders and provide such other information as may
be reasonably available to enable each Lender and Administrative Agent and its
counsel to evaluate such matters; and (b) in addition to the requirements set
forth in clause (a) of this SECTION 11.3, the Company, upon reasonable request
of the Administrative 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 (a) above and provide such other information as may be reasonably
available to it (subject to applicable attorney-client privilege) to enable each
Lender and the Administrative Agent and its counsel to evaluate such matters.
11.4 ERISA NOTICES. The Company shall deliver or cause to be
delivered to the Administrative Agent, at the Company's expense, the following
information and notices as soon as reasonably possible, and in any event:
(a) within ten (10) Business Days after the Company 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 Company
describing such Termination Event and the action, if any, that the Company
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;
(b) within ten (10) Business Days after the Company or any ERISA
Affiliate knows or reasonably should know that a prohibited transaction (as
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
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previously obtained from the DOL, a statement of the chief financial
officer of the Company describing such transaction and the action that the
Company or any ERISA Affiliate has taken, is taking or proposes to take
with respect thereto;
(c) 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;
(d) within ten (10) Business Days after receipt by the Company 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;
(e) 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 Administrative Agent, all
communications received by the Company or any ERISA Affiliate with respect
to such request;
(f) within ten (10) Business Days after 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 Company or
any ERISA Affiliate was not previously contributing;
(g) within ten (10) Business Days after receipt by the Company 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;
(h) within ten (10) Business Days after receipt by the Company 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;
(i) within ten (10) Business Days after receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan regarding the
imposition of withdrawal liability, copies of each such notice;
(j) within ten (10) Business Days after the Company 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;
(k) within ten (10) Business Days after the Company 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
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(l) within ten (10) Business Days after receipt by the Company of a
written notice from the Administrative Agent, copies of any Foreign
Employee Benefit Plan and related documents, reports and correspondence as
requested by the Administrative Agent in such notice.
For purposes of this SECTION 11.4, 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.
11.5 ENVIRONMENTAL NOTICES. (a) The Company shall notify the
Administrative Agent and the Lenders in writing, promptly and in any event
within 10 Business Days after any Borrower knows thereof, of any:
(i) notice or claim by a Governmental Authority or any third
party to the effect that the Company or any of its 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 Company or any of its
Subsidiaries is subject to an Environmental Lien;
(iii) commencement or threat of any judicial or administrative
proceeding alleging a material violation by the Company or any of its
Subsidiaries of any Environmental, Health or Safety Requirement of Law;
(iv) new and material changes to any existing Environmental,
Health or Safety Requirement of Law that would reasonably be likely to have
a Material Adverse Effect;
(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 Company or any of its Subsidiaries that
would subject the Company or any of its Subsidiaries to environmental,
health or safety Liabilities and Costs that would reasonably be likely to
have a Material Adverse Effect; or
(vi) any breach by Hercules Incorporated of the Environmental
Annex to the Asset Purchase Agreement that would reasonably be likely to
have a Material Adverse Effect.
(b) The Company shall notify the Administrative Agent and the Lenders
in writing, promptly and in any event within 25 Business Days after any filing
or report made by the Company 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 Company or its Subsidiaries.
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(c) On March 31 of each calendar year, commencing on March 31, 1997,
the Company shall submit to the Administrative Agent and the Lenders a report
prepared by the appropriate officers of the Company summarizing the status of
any environmental, health or safety non-compliance, hazard or liability issues
identified in notices required pursuant to SECTION 11.5(a), disclosed on
SCHEDULE 10.13 or identified in any notice or report required hereby. Such
report shall identify the cash expenditures for Liabilities and Costs arising
out of or relating to such environmental health or safety matters made by the
Company and its Subsidiaries during the previous calendar year.
11.6 LABOR MATTERS. The Company shall notify the Administrative
Agent and the Lenders in writing, promptly after any such Borrower knows
thereof, of (i) any material labor dispute to which such Borrower or any of its
Subsidiaries is or may become a party, including, without limitation, any
strikes, lockouts or other disputes relating to such Person's 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.
11.7 PUBLIC FILINGS AND REPORTS. Promptly upon the filing thereof
with any Governmental Authority (including, without limitation, the SEC) or the
mailing thereof to the public shareholders or debtholders of the Company
generally, the Company shall deliver to the Administrative Agent and the Lenders
copies of all filings or reports made in connection with outstanding
Indebtedness or Capital Stock of the Company.
11.8 GOVERNMENT CONTRACTS. The Company shall (a) notify the
Administrative Agent and the Lenders in writing promptly after any Borrower
knows thereof, of any loss or threatened loss of the security clearances
necessary for the operation of the Company's Government Contracts business
unless disclosure thereof is prohibited by any Requirement of Law; and (b)
notify the Administrative Agent in writing promptly upon (and, in any event,
within five (5) Business Days after) any 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 10.20 and shall provide such other information as may be
reasonably available to it to enable each Lender and the Administrative Agent
and its counsel to evaluate such matters.
11.9 OTHER INFORMATION. Promptly upon receipt of a reasonable
request therefor from the Administrative Agent (or any Lender acting through the
Administrative Agent), the Company shall prepare and deliver to the
Administrative Agent and the Lenders such other information with respect to the
Company, any of the Company'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 10.20, as from time to time may be reasonably
requested by the Administrative Agent (or any Lender acting through the
Administrative Agent).
11.10 SUBSIDIARIES. At least 10 days prior to the date upon which
any Person who is not a Subsidiary of the Company on the date hereof becomes a
Subsidiary, the Company shall deliver to the Administrative Agent a notice
indicating (a) the legal name of
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such Subsidiary, (b) the jurisdiction of its organization, (c) the name of each
holder of the Capital Stock thereof and (d) to the extent applicable, the number
of shares of such Capital Stock which are issued and outstanding. The Company
also shall provide from time to time such further information concerning such
Subsidiary as the Administrative Agent reasonably may request.
ARTICLE 12. AFFIRMATIVE COVENANTS
Each of the Borrowers covenants and agrees that as 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:
12.1 CORPORATE EXISTENCE, ETC. Such 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 (a) to the extent otherwise permitted by this
Agreement or (b) where the failure to maintain or preserve such rights and
franchises would not reasonably be likely to have a Material Adverse Effect.
12.2 CORPORATE POWERS; CONDUCT OF BUSINESS, ETC. Such 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
reasonably be likely to have a Material Adverse Effect.
12.3 COMPLIANCE WITH LAWS, ETC. Such Borrower shall, and shall cause
each of its Subsidiaries to, (a) comply with all Requirements of Law and all
restrictive covenants (except, in each case, as set forth on the Schedules
hereto) 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 reasonably be likely to have a Material
Adverse Effect.
12.4 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION. Such 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 that have become due and payable and that by
law have or may become a Lien (other than a Lien permitted by SECTION 13.3) upon
any of such Borrower's or such Subsidiary's Property, prior to the time when any
penalty or fine shall be incurred with respect thereto; PROVIDED, 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 such Borrower or such Subsidiary, as the case may be,
by appropriate proceedings conducted in good faith and without danger of any
material risk to
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the Collateral, and if such reserves or other appropriate provision, if any, as
shall be required in conformity with GAAP shall have been made therefor. Such
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
Company and its Subsidiaries).
12.5 INSURANCE. The Company shall maintain for itself and its
Subsidiaries, or shall cause each of its Subsidiaries to maintain, with
financially sound and reputable insurance companies, insurance on itself and its
Properties in at least such amounts and against at least such risks as are
customarily insured against in the same general area by companies engaged in the
same or similar business, which insurance shall in any event not provide for
materially less coverage than the insurance in effect on the Closing Date.
12.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. (a)
Such Borrower shall permit, and shall cause each of its Subsidiaries to permit,
subject to applicable Requirements of Law concerning classified information and
to the rights of any tenants or licensees of such Properties, any authorized
representative(s) designated by the Administrative Agent and, after the
occurrence and during the continuation of an Event of Default set forth in
SECTION 15.1(a), any Lender, 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, without limitation, 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 given by the Administrative Agent to a Financial Officer of such Borrower
in writing and at reasonable times during normal business hours, as often as may
be reasonably requested. All reasonable costs and expenses incurred by the
Administrative Agent as a result of such inspection, audit or examination
conducted pursuant to this SECTION 12.6 shall be paid by the Company.
(b) Such Borrower shall keep and maintain, and shall cause its
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.
12.7 ERISA COMPLIANCE. Such 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 applicable 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.
12.8 FOREIGN EMPLOYEE BENEFIT PLAN COMPLIANCE. Such 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 Foreign Employee
Benefit Plans.
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12.9 MAINTENANCE OF PROPERTY. Such Borrower shall cause all Property
used or useful in the conduct of its business or the business of any of its
Subsidiaries to be maintained and kept in good condition, repair and working
order (ordinary wear and tear and damage for which casualty insurance is
maintained excepted) and supplied with all necessary equipment and shall cause
to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof; PROVIDED, that nothing in this SECTION 12.9 shall prevent
such Borrower or any of its Subsidiaries from discontinuing the operation or
maintenance of any of such Property if such discontinuance (a) is, in the
judgment of such Borrower or such Subsidiary, necessary or appropriate in the
conduct of its business or the business of any Subsidiary, (b) is otherwise
permitted by this Agreement and (c) will not materially impair the rights of the
Administrative Agent, the Lenders hereunder or under the other Loan Documents.
12.10 SUBSIDIARY GUARANTORS; FUTURE LIENS ON CAPITAL STOCK. Upon
written request of the Administrative Agent:
(a) the Company shall cause each new Domestic Subsidiary (other than
a Foreign Holding Subsidiary) of the Company created or acquired after the
date hereof, promptly upon such creation or acquisition, to execute an
instrument in form and substance reasonably satisfactory to the Agents (it
being acknowledged and agreed that an instrument in the form attached to
the Domestic Subsidiary Guaranty as EXHIBIT A thereto shall satisfy this
requirement) pursuant to which such new Domestic Subsidiary shall become a
party to the Domestic Subsidiary Guaranty as a guarantor thereunder;
(b) the Company shall, and shall cause each of its Domestic
Subsidiaries to, provide to the Collateral Agent a pledge of (i) all of the
Capital Stock of any Domestic Subsidiary (other than Hexcel Alpha
Corporation and any Foreign Holding Subsidiaries) held by the Company or a
Domestic Subsidiary, pursuant to a pledge agreement substantially in the
form of the Company Pledge Agreement and (ii) 65% of the Capital Stock of
any first-tier Foreign Subsidiary or Foreign Holding Subsidiary held by the
Company or a Domestic Subsidiary, pursuant to a pledge agreement which is
in form and substance reasonably satisfactory to the Agents; and
(c) each Foreign Borrower shall provide to the Collateral Agent a
pledge of all of the Capital Stock held by such Foreign Borrower in each of
its direct Subsidiaries to secure such Foreign Borrower's obligations
hereunder (but not to secure the obligations of any other Borrower),
pursuant to a pledge agreement which is in form and substance reasonably
satisfactory to the Agents;
in each case, together with such other agreements, documents and instruments
that the Agents deem necessary or desirable, it being understood that the
granting of the additional security for the Obligations pursuant to this SECTION
12.10 is a material inducement to the execution and delivery of this Agreement
by each Lender.
12.11 HEXCEL TECHNOLOGIES PLEDGE. The Company shall use its best
efforts to obtain consent from DIC to the pledge by the Company to the
Collateral Agent of the shares of
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Hexcel Technologies owned by it and, immediately upon receiving such consent
from DIC, the Company shall pledge to the Collateral Agent the shares of Hexcel
Technologies owned by the Company pursuant to a pledge agreement substantially
in the form of the Company Pledge Agreement.
ARTICLE 13. NEGATIVE COVENANTS
Each of the Borrowers covenants and agrees that it shall comply with
the following covenants as 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:
13.1 INDEBTEDNESS. None of the Company 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:
(a) the Obligations (including, without limitation, Obligations
arising pursuant to Interest Rate Contracts or Currency Agreements to
which the Administrative Agent or an Affiliate of the Administrative
Agent is a party);
(b) Permitted Existing Indebtedness, and any extensions, renewals,
refundings or replacements of Permitted Existing Indebtedness (other than
the Existing IDRBs); PROVIDED, that with respect to Permitted Existing
Indebtedness of the Company or any of its Subsidiaries, 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 Company or such Subsidiary than the terms of, the Permitted Existing
Indebtedness so extended, renewed, refunded or replaced;
(c) 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 12.4;
(d) Indebtedness constituting Accommodation Obligations
permitted by SECTION 13.5;
(e) to the extent permitted by ARTICLE 14 and in any event in an
aggregate outstanding principal amount not to exceed $10,000,000 (or
the Local Equivalent thereof) at any time, Capital Leases and purchase
money Indebtedness incurred by the Company or any of its Subsidiaries
to finance the acquisition of tangible assets, and Indebtedness
incurred by the Company or any of its Subsidiaries to refinance such
Capital Leases and purchase money Indebtedness;
(f) Indebtedness under appeal bonds in connection with judgments
that do not result in an Event of Default or Default;
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(g) Indebtedness arising from intercompany loans permitted by SECTION
13.4(d), (e) and (f);
(h) Permitted Subordinated Indebtedness and the Convertible Notes of
the Company;
(i) (A) Indebtedness not in excess of the principal amount of (y) the
Local Equivalent of $10,000,000 (PLUS any additional loans made by the
Company to Hexcel Belgium which constitute Permitted Belgian Capital) in
the aggregate at any time outstanding in connection with loans made by the
Company or its Domestic Subsidiaries to any Foreign Borrower and
(z) $10,000,000 (or the Local Equivalent thereof) in the aggregate at any
time outstanding made by the Borrowers or a Borrower to any Wholly-owned
Subsidiary of the Company that is not a Borrower hereunder; and
(B) Indebtedness owing to a Foreign Borrower by another Foreign Borrower or
to any Foreign Borrower or its Subsidiaries or any Domestic Subsidiary by
the Company; PROVIDED that the amount of Indebtedness permitted from time
to time pursuant to clause (A) of this SECTION 13.1(i) shall be reduced by
the amount of any equity Investments made in reliance upon the provisions
of SECTION 13.4(f)(ii);
(j) Indebtedness incurred for the working capital purposes of any
Foreign Borrower; PROVIDED that (i) the aggregate principal amount of all
such Indebtedness incurred pursuant to this SECTION 13.1(j) shall not
exceed $125,000,000 (or the Local Equivalent thereof) at any one time
outstanding, (ii) any collateral security for such Indebtedness shall
encumber only assets of the Foreign Borrower who is the primary obligor in
respect thereof and shall encumber only assets which are located outside of
the United States of America, (iii) the Revolving Credit Commitments shall
be reduced by the amount of any Indebtedness incurred pursuant to this
SECTION 13.1(j) and (iv) during such time as any such Indebtedness is
outstanding, such Foreign Borrower shall have no outstanding European
Revolving Loans hereunder;
(k) Foreign Currency Protection Agreements entered into by the
Company or any Subsidiary in the ordinary course of business;
(l) Indebtedness of the Company in respect of unsecured standby and
commercial letters of credit issued by a Lender in an aggregate face amount
(including, without limitation, any reimbursement obligations owing in
respect thereof) not to exceed $10,000,000 (or the Local Equivalent
thereof) at any one time outstanding; and
(m) additional Indebtedness in an aggregate principal amount not to
exceed $10,000,000 (or the Local Equivalent thereof) at any time
outstanding.
13.2 SALES OF ASSETS. None of the Company or any of its Subsidiaries
shall sell, assign, transfer, lease, convey or otherwise dispose of any
Property, whether now owned
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or hereafter acquired, or any income or profits therefrom, or enter into any
agreement to do so, except:
(a) the sale of Inventory in the ordinary course of
business;
(b) sales of assets outside of the ordinary course of business
not in excess of $10,000,000 (or the Local Equivalent thereof) in any
Fiscal Year;
(c) the disposition of Equipment if such Equipment is
obsolete or no longer useful in the ordinary course of the Company's
or such Subsidiary's business or otherwise is not required to be
maintained by the Company or such Subsidiary pursuant to SECTION 12.9;
(d) assignments and licenses of intellectual property of the
Company and its Subsidiaries (i) to joint ventures, (ii) in the ordinary
course of business or (iii) pursuant to the Strategic Alliance Agreement
and (iv) as contemplated by the HAESA Letter Agreement; PROVIDED that, in
the case of any such assignment or exclusive license of intellectual
property to a joint venture, the fair market value of such property shall
be deemed to be an Investment in such joint venture for purposes of SECTION
13.4(g);
(e) leases of owned Real Property and subleases of leased Real
Property, to the extent such leases and subleases have anticipated annual
rentals of less than $1,000,000 each;
(f) 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 by SECTION 13.4(e);
(g) the Company may sell the Properties constituting the
businesses described on SCHEDULE 7.5; PROVIDED, that (A) the Administrative
Agent shall have received 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 at least 85% cash and (C) the
Net Cash Proceeds arising from such sales shall not be substantially less
than the amount specified with respect to such Property on SCHEDULE 7.5;
(h) sales permitted by SECTIONS 13.8, 13.10(a) and 13.13;
(i) the Company may sell the Specified Equipment to Ciba-Geigy
or any Affiliate of Ciba-Geigy pursuant to the Manufacturing and Supply
Agreement; and
(j) the sale by the Company of HAESA to Hercules pursuant to the
HAESA Letter Agreement.
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13.3 LIENS. None of the Company or any of its Subsidiaries shall
directly or indirectly create, incur, assume or permit to exist any Lien on or
with respect to any of their respective Properties or assets except:
(a) Liens created by the Loan Documents;
(b) Permitted Existing Liens and future Liens securing any
extensions, renewals, refundings or replacements of Permitted Existing
Indebtedness to the extent permitted by SECTION 13.1(b), but only if
such future Lien attaches to the same Property and secures only such
permitted extensions, renewals, refundings and replacements;
(c) Customary Permitted Liens;
(d) purchase money Liens granted by any of the Borrowers
(including the interest of a lessor under a Capital Lease) and Liens
to which any Property is subject at the time of a Borrower's
acquisition thereof securing Indebtedness permitted by SECTION 13.1(e)
and limited in each case to the property purchased or subject to such
lease;
(e) any attachment or judgment Lien the existence of which does
not constitute an Event of Default under SECTION 15.1(h);
(f) Liens relating to raw materials supplied by Ciba-Geigy to
the Company pursuant to the Manufacturing and Supply Agreement, and Liens
relating to the Company's inventory of raw materials and finished products
which are required to be purchased by Ciba-Geigy pursuant to the
Manufacturing and Supply Agreement upon termination thereof; and
(g) Liens securing Indebtedness permitted by SECTION 13.1(j), to
the extent that such Lien is not prohibited by SECTION 13.1(j).
13.4 INVESTMENTS. None of the Company or any of its Subsidiaries
shall directly or indirectly make or own any Investment or make any contribution
except:
(a) Investments in cash and Cash Equivalents;
(b) Permitted Existing Investments as of the Closing Date;
(c) 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;
(d) cash Investments arising from intercompany loans made by the
Company to any Existing Joint Venture (other than DIC), not to exceed
$15,000,000
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(or the Local Equivalent thereof) in the aggregate at any time outstanding;
PROVIDED, that no such Investment under this CLAUSE (iv) may be made as
long as any Default or Event of Default has occurred and is continuing or
would occur as a result of such Investment;
(e) (i) cash Investments made by the Company in Hexcel
Technologies, Inc. or HDP, solely for the purpose of making Investments in
or for the benefit of DIC and (ii) 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
$2,000,000 in Fiscal Year 1996 and $4,500,000 in the aggregate in Fiscal
Year 1997 and thereafter, less any payments made by the Company to
Dainippon Ink & Chemicals, Inc. permitted pursuant to SECTION 13.5(g);
PROVIDED, that 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 Company 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 $6,500,000 in the aggregate at
any time; and PROVIDED, FURTHER, that no such Investment under subclause
(i) of this CLAUSE (e) may be made as long as any Default or Event of
Default has occurred and is continuing or would occur as a result of such
Investment;
(f) Investments in intercompany loans or equity Investments
which (i) in the case of intercompany loans, are permitted by SECTION
13.1(i), (ii) in the case of equity Investments, do not exceed $10,000,000
(or the Local Equivalent thereof) in the aggregate or (iii) in the case of
intercompany loans and equity Investments, are made in connection with the
Acquisition in amounts not to exceed the amounts set forth on SCHEDULE
13.4-B; PROVIDED that, in addition to the intercompany loans and equity
Investments otherwise permitted by this SECTION 13.4(f), the Company may
make intercompany loans to, and equity investments in, Hexcel Belgium to
the extent that such loans and Investments constitute Permitted Belgian
Capital;
(g) Investments in partnerships and joint ventures (other than
the Existing Joint Venture) which Investments shall not cause the Maximum
Partnership/Joint Venture Investment Amount to exceed $15,000,000 (or the
Local Equivalent thereof) at any time; PROVIDED, that no such Investment
under this CLAUSE (g) may be made as long as any Default or Event of
Default has occurred and is continuing or would occur as a result of such
Investment;
(h) Investments in cash deposits with financial institutions for
payroll accounts and other deposit accounts in the ordinary course of
business not to exceed $10,000,000 in the aggregate at any one time
outstanding; PROVIDED, that there shall be no limit on the amount of such
deposits at Credit Suisse or Citibank, N.A.;
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(i) cash contributions to Hexcel Foundation not to exceed
$200,000 in the aggregate in any Fiscal Year; PROVIDED, that the unused
portion of such amount may be used in the next succeeding year;
(j) cash Investments not otherwise permitted hereby not to
exceed $1,000,000 (or the Local Equivalent thereof) in the aggregate at any
one time outstanding;
(k) Investments specifically contemplated by any Ciba-Geigy
Transaction Document or any Transaction Document;
(l) Cash Collateral invested pursuant to the Loan Documents;
(m) promissory notes and other Investments permitted by SECTION
13.2(g); and
(n) Investments relating to Environmental Claims at the Lodi
Facility permitted by SECTION 13.5(j).
13.5 ACCOMMODATION OBLIGATIONS. None of the Company or any of its
Subsidiaries shall directly or indirectly create or become or be liable with
respect to any Accommodation Obligation, except:
(a) Permitted Existing Accommodation Obligations;
(b) Accommodation Obligations arising under the Loan
Documents;
(c) obligations, warranties and indemnities, not with respect to
Indebtedness of any Person, that have been or are undertaken or made in the
ordinary course of business or in connection with the sale of assets
permitted by SECTION 13.2(g) and not for the benefit of or in favor of an
Affiliate of the Company or any of its Subsidiaries;
(d) Accommodation Obligations of any Subsidiary in respect of
obligations of the Company;
(e) Accommodation Obligations of any partnership or joint
venture (other than the Existing Joint Ventures) as long as the incurrence
of such obligations shall not cause the Maximum Partnership/Joint Venture
Investment Amount to exceed $15,000,000 (or the Local Equivalent thereof)
at any time; PROVIDED, that no such Investment under this CLAUSE (e) may be
made as long as any Default or Event of Default has occurred and is
continuing or would occur as a result of such Investment;
(f) Accommodation Obligations with respect to obligations,
warranties and indemnities (other than with respect to Indebtedness) (i) in
the ordinary course of business, (ii) arising under the Ciba-Geigy
Transaction Documents, (iii) arising under the Transaction Documents and
(iv) with respect to customary representations,
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warranties and indemnities entered into in connection with the sale or
other disposition of assets;
(g) Accommodation Obligations in respect of payments made by the
Company in Fiscal Year 1997 and thereafter to Dainippon Ink & Chemical,
Inc. in an aggregate amount not to exceed $4,500,000;
(h) subordination of certain amounts payable to the Company by
Knytex as provided for in the Knytex Credit Facility;
(i) Accommodation Obligations in respect of Indebtedness of
Subsidiaries of the Company which was incurred in reliance upon the
provisions of SECTION 13.1(l);
(j) Accommodation Obligations in connection with Environmental
Claims at the Lodi Facility not to exceed $5,000,000 in the aggregate;
(k) Accommodation Obligations of the Company in respect of
Indebtedness of Subsidiaries of the Company which was incurred in reliance
upon the provisions of SECTION 13.1(j); and
(l) additional Accommodation Obligations of the Company and its
Subsidiaries in respect of obligations not to exceed $10,000,000 at any one
time outstanding.
13.6 RESTRICTED JUNIOR PAYMENTS. Subject to SECTION 13.16, none of
the Company or any of its Subsidiaries shall declare or make any Restricted
Junior Payment, except:
(a) dividends or other distributions made to the Company or any
of its Subsidiaries by any Subsidiary of the Company;
(b) regularly scheduled payments on the Subordinated Debentures,
the Subordinated Notes and the Convertible Notes, but only if such payments
are permitted to be made under the terms of the Subordinated Debenture
Indenture, the Subordinated Notes Indenture or the Convertible Notes
Indenture, as the case may be;
(c) one or more voluntary prepayments of the senior demand notes
to be issued under the Strategic Alliance Agreement, as long as the
aggregate principal amount of such prepayments does not exceed the lesser
of (i) the cash and Cash Equivalents on the balance sheet of the businesses
acquired in the Ciba-Geigy Composites Acquisition on the closing date
thereof (or, in the case of Danutec Werkstoff, on the closing date of its
acquisition by Hexcel Composites), and (ii) $6,000,000;
(d) payments with respect to employee or director stock options,
stock incentive plans or restricted stock plans of the Company;
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(e) payment of the Hexcel Lyon Subordinated Note;
(f) payments of Indebtedness made in connection with (i) the
Ciba-Geigy Transaction Documents, (ii) the Acquisition as permitted by the
Acquisition Documents, (iii) as set forth on SCHEDULE 13.6 or (iv) as
permitted under SECTION 13.16; and
(g) the conversion of the Convertible Notes or the Subordinated
Debentures into common stock of the Company in accordance with the terms
thereof (and the payment of cash adjustments by the Company in lieu of
issuing fractional shares of common stock upon the conversion of the
Convertible Notes or the Subordinated Debentures).
13.7 CONDUCT OF BUSINESS. None of the Company 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 Company or such
Subsidiaries on the Closing Date (after giving effect to the Acquisition) and
any business or activities that are substantially similar, related or incidental
thereto.
13.8 TRANSACTIONS WITH AFFILIATES. The Company shall not, and shall
not permit any of its Subsidiaries to, except as otherwise expressly permitted
herein or as expressly contemplated by the Ciba-Geigy Transaction Documents,
enter into any transaction with an Affiliate, other than in the ordinary course
of business, unless the terms of such transaction are no less favorable to the
Company or such Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Subsidiary with an unrelated
person; PROVIDED, that the foregoing shall not be deemed to prohibit
(i) employment or compensation agreements or other arrangements with officers or
directors of the Company or any of its Subsidiaries which have been approved by
the Board of Directors of the Company (including, without limitation, any
independent directors) or any committee of the independent directors of the
Company, (ii) existing management agreements, (iii) stock options and awards
granted to employees and directors of the Company or any of its Subsidiaries
under existing Plans or other employee benefit Plans, and (iv) any contract or
transaction providing for indemnification of officers or directors of the
Company or any of its Subsidiaries from liability, or providing or maintaining
insurance or other arrangements on behalf of any such officer or director
against any liability asserted against such person and incurred in or arising
out of such capacity, (v) the subrogation agreement and related agreements
entered into or to be entered into by the Company in connection with the Knytex
Credit Facility and (vi) the transactions set forth on SCHEDULE 13.8 or
permitted by SECTION 13.9.
13.9 RESTRICTION ON FUNDAMENTAL CHANGES. None of the Company or any
of its Subsidiaries shall (a) enter 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 Subsidiary (other than
a Borrower) into the Company or another Wholly-owned Subsidiary (with the
Company or such other Subsidiary as the surviving corporation); PROVIDED, that
(i) Danutec Werkstoff may merge with or into Hexcel Composites, (ii) Brochier
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and/or CDSR may merge with or into Hexcel Lyon and (iii) CDSR may merge into
Brochier; and PROVIDED, FURTHER, that after giving effect to any such merger or
consolidation, no Default or Event of Default shall have occurred or be
continuing, or (b) enter into or permit any transaction or series of
transactions in which the Company and/or any of its Subsidiaries acquires all or
substantially all of the Capital Stock and/or assets of another Person or
business or division of another Person other than (i) the assets, business or
division of a Person who (prior to such acquisition) was a Wholly-owned
Subsidiary or (ii) the Acquisition.
13.10 SALES AND LEASEBACKS; OPERATING LEASES. (a) None of the
Company or any of its Subsidiaries shall enter into any Sale and Leaseback
Transaction other than a Sale and Leaseback Transaction on terms and conditions
satisfactory to the Administrative Agent relating to the sale and lease of
Equipment where, after giving effect to such Sale and Leaseback Transaction, the
aggregate Fair Market Value of all such Equipment sold does not exceed
$10,000,000 (or the Local Equivalent thereof).
(b) None of the Company or any of its 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 Company and its Subsidiaries as lessee (net of
sublease income and determined in conformity with GAAP) shall not exceed
$7,000,000 (or the Local Equivalent thereof) in any Fiscal Year.
13.11 MARGIN REGULATIONS; SECURITIES LAWS. None of the Company or
any of its Subsidiaries shall use all or any portion of the proceeds of any
credit extended hereunder to purchase or carry Margin Stock.
13.12 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 Company or any ERISA Affiliate to a liability
in excess of $1,000,000, the Company shall not:
(a) 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 obtained from the DOL;
(b) 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;
(c) 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;
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(d) terminate, or permit any ERISA Affiliate to terminate, any
Benefit Plan that would result in a material liability of the Company or
any ERISA Affiliate under Title IV of ERISA;
(e) fail to make any contribution or payment to any
Multiemployer Plan that the Company or any ERISA Affiliate may be required
to make under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto;
(f) 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;
(g) amend, or permit any ERISA Affiliate to amend, a Plan
resulting in an increase in current liability for the plan year such that
the Company or any ERISA Affiliate is required to provide security to such
Plan under Section 401(a)(29) of the Internal Revenue Code;
(h) permit any unfunded liabilities with respect to any Foreign
Pension Plan other than as permitted by local law;
(i) 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
(j) consent to an employee's election under an Executive
Deferred Compensation and Consulting Agreement between such employee and
the Company to pay benefits thereunder in the form of a lump sum or in
installments over a period of less than five years.
13.13 ISSUANCE OR SALE OF CAPITAL STOCK. To the maximum extent
permitted by applicable law, none of the Company or any of its 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 or claims of any character relating to any of its Capital
Stock, in each case, other than grants and issuances (a) pursuant to the
management incentive plans listed on SCHEDULE 13.13 hereto (as amended from time
to time), (b) pursuant to the Governance Agreement, (c) as set forth in SCHEDULE
13.4, (d) pursuant to the Convertible Notes or the Subordinated Debentures or
(e) as required by applicable law. To the maximum extent permitted by
applicable law, the Company 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 (x) as required by applicable law for the qualification of
directors or to satisfy minimum shareholder requirements under applicable law,
(y) as permitted by SECTION 13.9 or (z) as contemplated by the HAESA Letter
Agreement.
13.14 CONSTITUENT DOCUMENTS. None of the Company or any of its
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,
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except for amendments, modifications or changes to the Constituent Documents of
(a) Hexcel U.K., solely for the purpose of changing its corporate structure to
become an unlimited liability company, (b) Hexcel Composites and Danutec
Werkstoff, solely for the purpose of changing their respective corporate
structures to become an Aktiengesellschaft and a GmbH, respectively, (c) HAESA,
solely for the purpose of changing its name to Hexcel Composites, S.A., (d) any
Borrower and its Subsidiaries, to the extent necessary to permit any transaction
contemplated by SECTION 13.9 and (e) to change the par value of the preferred
stock of the Company from no par value to $0.01 par value.
13.15 FISCAL YEAR. None of the Company or any of its Subsidiaries
shall change its Fiscal Year for accounting or tax purposes from a period
consisting of the four fiscal quarter period ending on December 31 of each
calendar year.
13.16 CANCELLATION OF DEBT; PREPAYMENT; CERTAIN AMENDMENTS. None of
the Company or any of its Subsidiaries shall:
(a) cancel any material claim or debt or amend or modify the terms
thereof, except in the ordinary course of its business or as disclosed on
SCHEDULE 13.1;
(b) prepay, redeem, purchase, repurchase, defease or retire any long-
term Indebtedness, except that (i) the Company and its Subsidiaries may
prepay, redeem, purchase, repurchase, defease or retire (A) the
Obligations, (B) Indebtedness in respect of the Existing Facilities, (C)
the Existing IDRBs (or any related Accommodation Obligation), (D) any
intercompany Indebtedness permitted by SECTION 13.1 if an Event of Default
is not existing and would not result from giving effect to such prepayment,
(E) as permitted by SECTION 13.6, (F) voluntary prepayments of the
Subordinated Notes permitted pursuant to SECTION 13.6(c) and (G) other
scheduled payments in respect of long-term Indebtedness and (ii) the
Company may convert any intercompany Indebtedness which is owing to it from
any of its Subsidiaries and any Subsidiary of the Company may convert
Indebtedness which is owing to it from any other Subsidiary into equity of
the Subsidiary which is the obligor in respect of such Indebtedness,
PROVIDED that the Indebtedness which is so converted pursuant to this
clause (b) is permitted by SECTION 13.1 and is existing on the date hereof;
or
(c) amend, supplement or otherwise modify the terms of any
Transaction Documents, the Ciba-Geigy Transaction Documents, the Hexcel
Lyon Subordinated Note, the Subordinated Debentures, the Subordinated
Debenture Indenture, the Convertible Notes or the Convertible Notes
Indenture in any material respect, other than amendments to non-material
Ciba-Geigy Transaction Documents or Transaction Documents in a manner which
could not reasonably be expected to be adverse to the Lenders.
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13.17 ENVIRONMENTAL MATTERS. None of the Company or any of its
Subsidiaries shall:
(a) become subject to any Liabilities and Costs that 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
(b) 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.
13.18 ACCOUNTING CHANGES. The Company shall not make, or 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 Administrative Agent or as permitted by
the Loan Documents.
13.19 NO NEW RESTRICTIONS ON SUBSIDIARY DIVIDENDS. The Company will
not agree, or permit any of its Subsidiaries to agree, to create or otherwise
permit to become effective any consensual encumbrance or restriction of any kind
on the ability of any Subsidiary to:
(a) pay, directly or indirectly, dividends or make any other
distributions in respect of its Capital Stock;
(b) make any other distribution or transfer of funds or assets to the
Company; or
(c) make loans or advances to or other Investments in, or pay any
Indebtedness or other obligation owing to, the Company;
except to the extent required by (x) any applicable Requirements of Law, (y) the
Loan Documents or the Subordinated Notes Indenture or (z) to the extent
permitted (including, without limitation, by waiver of applicable restrictions
contained therein) by the Subordinated Notes Indenture, any document or
agreement governing Indebtedness which is incurred in reliance upon the
provisions of SECTION 13.1(j).
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ARTICLE 14. FINANCIAL COVENANTS
Each of the Borrowers covenants and agrees that as 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:
14.1 MINIMUM TANGIBLE NET WORTH. The Tangible Net Worth of the
Company and its Subsidiaries as determined on the last day of each fiscal
quarter commencing on September 30, 1996 and ending on the Revolving Credit
Termination Date for the fiscal quarter period ending on such date shall not be
less than the sum of (i) $85,000,000 PLUS (ii) the sum of (A) solely to the
extent that the result of such calculation is a positive number, fifty percent
(50%) of the cumulative Net Income of the Company and its Subsidiaries on a
consolidated basis for each fiscal quarter ending after the Closing Date
(without deduction for any net losses for any fiscal quarter) and (B) one
hundred percent (100%) of the Net Cash Proceeds from the issuance by the Company
of any Capital Stock.
14.2 MINIMUM FIXED CHARGE COVERAGE RATIO. The Fixed Charge Coverage
Ratio of the Company and its 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, shall not be less than the
minimum ratio set forth opposite such fiscal quarter:
Fiscal Quarter Minimum Ratio
-------------- -------------
Third fiscal quarter of 1996 1.10 to 1.0
Fourth fiscal quarter of 1996 1.50 to 1.0
First fiscal quarter of 1997 1.75 to 1.0
Second fiscal quarter of 1997 2.25 to 1.0
Third fiscal quarter of 1997 2.50 to 1.0
Fourth fiscal quarter of 1997 2.75 to 1.0
First fiscal quarter of 1998 2.75 to 1.0
Second fiscal quarter of 1998 3.00 to 1.0
Third fiscal quarter of 1998 3.25 to 1.0
and each fiscal quarter
ending thereafter
PROVIDED that (x) the Fixed Charge Coverage Ratio for fiscal quarters ending
prior to the Closing Date shall be determined on a PRO FORMA basis based on the
combined financial statements of (i) the Company and its Subsidiaries prior to
the Acquisition, (ii) to the extent not constituting a part of the Company and
its Subsidiaries for the relevant period, the businesses acquired pursuant to
the Ciba-Geigy Composites Acquisition and (iii) the Acquired Businesses and (y)
the Fixed Charge Coverage Ratio of the Acquired Businesses for the third and
fourth fiscal quarters of 1996 shall be calculated by annualizing the amounts
that
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otherwise would be included therein for the period from January 1, 1996 through
the date of calculation.
14.3 MAXIMUM LEVERAGE RATIO. The Leverage Ratio of the Company and
its 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, shall not be greater than the maximum ratio set forth
opposite such fiscal quarter:
Fiscal Quarter Maximum Ratio
-------------- -------------
Third fiscal quarter of 1996 4.50 to 1.0
Fourth fiscal quarter of 1996 4.25 to 1.0
First fiscal quarter of 1997 4.00 to 1.0
Second fiscal quarter of 1997 3.75 to 1.0
Third fiscal quarter of 1997 3.50 to 1.0
Fourth fiscal quarter of 1997 3.50 to 1.0
First fiscal quarter of 1998 3.25 to 1.0
Second fiscal quarter of 1998 3.00 to 1.0
Third fiscal quarter of 1998 2.75 to 1.0
and each fiscal quarter
ending thereafter
PROVIDED that (x) the Leverage Ratio for fiscal quarters ending prior to the
Closing Date shall be determined on a PRO FORMA basis based on the combined
financial statements of (i) the Company and its Subsidiaries prior to the
Acquisition, (ii) to the extent not constituting a part of the Company and its
Subsidiaries for the relevant period, the businesses acquired pursuant to the
Ciba-Geigy Composites Acquisition and (iii) the Acquired Businesses and (y) the
Leverage Ratio of the Acquired Businesses for the third and fourth fiscal
quarters of 1996 shall be calculated by annualizing the amounts that otherwise
would be included therein for the period from January 1, 1996 through the date
of calculation.
ARTICLE 15. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
15.1 EVENTS OF DEFAULT. Each of the following occurrences shall
constitute an Event of Default hereunder:
(a) FAILURE TO MAKE PAYMENTS WHEN DUE. Any Borrower shall fail to
pay (i) when due any principal on the Loans (including the Reimbursement
Obligations), (ii) when due any interest on the Loans (including the
Reimbursement Obligations) and such non-payment continues for a period of two
(2) Business Days after the due date thereof, or (iii) 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.
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(b) BREACH OF CERTAIN COVENANTS. Any Borrower or any of the
Subsidiary Guarantors shall fail to perform or observe duly and punctually any
agreement, covenant or obligation binding on such Person under (i) SECTIONS
11.2, 11.3, 11.4, 12.1, 12.2 or 12.6 or (ii) ARTICLE 13 or ARTICLE 14.
(c) BREACH OF REPRESENTATION OR WARRANTY. Any representation or
warranty made or deemed made by the Company or any of its Subsidiaries to the
Administrative Agent or any Lender 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. Any Borrower shall default in the performance of
or compliance with any term contained herein (other than those referred to in
PARAGRAPHS (a), (b) or (c) of this SECTION 15.1), or the Company 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 11.1, 11.5, 11.6, 11.7 and 12.7; and (ii) thirty (30) days
after the occurrence thereof with respect to any other term.
(e) DEFAULT AS TO OTHER INDEBTEDNESS; OPERATING LEASES. The Company
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 or any other Indebtedness (other
than an Obligation) in excess of $3,000,000 (or the Local Equivalent thereof)
and such default shall be continuing; or any breach, default or event of
default, 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 (or the Local Equivalent thereof), 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 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 Company 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 Company or any of its Subsidiaries shall occur under any
Operating Lease to which the Company or any of its Subsidiaries is a party
pursuant to which rental payments thereunder equal or exceed $3,000,000 (or the
Local Equivalent thereof) per annum.
(f) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
(i) An involuntary case shall be commenced against the Company
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 Company or any of its Subsidiaries in
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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 Company or any of its
Subsidiaries or over all or a substantial part of the Property of the Company or
any of its Subsidiaries shall be entered; or an interim receiver, trustee or
other custodian of the Company or any of its Subsidiaries or of all or a
substantial part of the property of the Company 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 Company 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 Company
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 substantial part of its property; or the Company
or any of its Subsidiaries shall make any assignment for the benefit of
creditors or shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due.
(h) JUDGMENTS. Any judgment, writ, order or warrant of attachment,
or other similar process shall be rendered against the Company or any of its
Subsidiaries or any of their respective assets involving in any single case or
in the aggregate an amount (after reduction for the amount of any applicable
insurance coverage) in excess of $3,000,000 (or the Local Equivalent thereof) is
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 Company 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
Company 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 (other than
in accordance with its terms) or the Company or any of its Subsidiaries party
thereto seeks to repudiate its obligations thereunder and the Liens intended to
be created thereby are, or the Company or any such Subsidiary seeks to render
such Liens, invalid or unperfected, or (ii) the Liens in favor of the
Administrative Agent and/or the Lenders contemplated by the Loan Documents
shall, at any time, 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
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Loan Documents, except, in each case, to the extent such failure, cessation or
subordination is (A) in accordance with the terms of the Loan Documents or (B) a
result of (x) the failure of the Administrative Agent to maintain possession of
the Securities representing the Collateral or (y) the gross negligence or
willful misconduct of any of the Administrative Agent or the Lenders.
(k) TERMINATION EVENT. Any Termination Event occurs that the
Administrative Agent reasonably believes could subject either the Company or any
ERISA Affiliate to a liability in excess of $3,000,000.
(l) WAIVER OF MINIMUM FUNDING STANDARD. 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 Administrative Agent believes the substantial business hardship upon
which the application for the waiver is based could reasonably be likely to have
a Material Adverse Effect.
(m) MATERIAL ADVERSE CHANGE. An event shall exist or occur that has
a material adverse effect upon (i) the business, condition (financial or
otherwise), operations, performance, properties or prospects of the Company and
its Subsidiaries, taken as a whole, (ii) the ability of the Borrowers and the
Subsidiary Guarantors, taken as a whole, to perform their obligations under the
Loan Documents or (iii) the ability of the Lenders or the Administrative Agent
to enforce the Loan Documents.
(n) CHANGE OF CONTROL. A Change of Control shall have occurred.
(o) SUBORDINATED NOTES. (A) Prior to the first to occur of (i) March
1, 1999, (ii) the payment in full of all Obligations and the termination of all
Commitments and (iii) the extension of the Revolving Credit Termination Date
without the consent of Ciba-Geigy, or (B) at any time when any Event of Default
in SECTION 15.1(a) shall have occurred and be continuing, Ciba-Geigy shall cease
to hold directly or indirectly (through one or more Wholly-owned Subsidiaries)
one hundred percent (100%) of the outstanding principal amount of the
Subordinated Notes; PROVIDED, that if a Wholly-owned Subsidiary of Ciba-Geigy
Limited becomes a holder of all or any portion of the Subordinated Notes, it
shall not constitute an Event of Default under this SECTION 15.1(o) in the event
that Ciba-Geigy Limited effects a Broad Distribution (as defined in the
Governance Agreement) of up to 20% of the Capital Stock of such Wholly-owned
Subsidiary, but only if (1) such distribution has a bona fide business purpose
(other than the sale or distribution of Subordinated Notes) and (2) the
Subordinated Notes "beneficially owned" (as defined in Rule 13d-3 under the
Exchange Act) by such Subsidiary do not constitute a material portion of the
total assets of such Subsidiary.
(p) VOTING STOCK OF THE COMPANY. Ciba-Geigy Limited shall cease to
"beneficially own" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act),
directly or indirectly, at least forty percent (40%) of the Voting Stock of the
Company.
(p) OWNERSHIP OF FOREIGN BORROWERS. The Company shall cease to own
(or shall not own), directly or indirectly, all of the issued and outstanding
capital stock of any
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Foreign Borrower (other than directors' qualifying and similar shares); PROVIDED
that, for purposes of this SECTION 15.1(p), the merger or amalgamation of any
Foreign Borrower into or with another Foreign Borrower shall not, in itself,
cause either such Foreign Borrower to cease to have all of its issued and
outstanding capital stock owned by the Company.
An Event of Default shall be deemed "continuing" until cured or waived in
accordance with SECTION 17.7.
15.2 RIGHTS AND REMEDIES.
(a) ACCELERATION AND TERMINATION. Upon the occurrence of any Event
of Default described in SECTIONS 15.1(f) or 15.1(g) as applied to any Borrower,
the 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 each of the Borrowers; and upon the occurrence and during
the continuance of any other Event of Default (including any Event of Default
described in SECTIONS 15.1(f) or 15.1(g) as applied to any Subsidiary of any
Borrower that is not itself a Borrower), the Administrative Agent shall at the
request, or may with the consent, of the Requisite Lenders, by written notice to
the Company, (i) declare that all or any portion of the Commitments are
terminated, whereupon the Commitments and the obligation of each Lender to make
any Loan hereunder and of each Lender 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 and of acceleration), all
of which are hereby expressly waived by each of the Borrowers.
(b) DEPOSIT FOR LETTERS OF CREDIT. In addition, after the occurrence
and during the continuance of an Event of Default set forth in SECTION 15.1(a),
the Borrowers shall, promptly upon demand by the Administrative Agent (given
upon the written instructions of the Requisite Lenders or, in the absence of
such instructions, in its sole discretion), to the extent permitted by
applicable law, deliver to the Administrative Agent Cash Collateral in such form
as requested by the Administrative Agent, together with such endorsements, and
execution and delivery of such documents and instruments as the Administrative
Agent may request in order to perfect or protect the Administrative 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 Commitments
and/or acceleration of the maturity of the Loans, the Borrowers shall pay all
arrears of interest and all payments on account of principal of the Loans and
Reimbursement Obligations that 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
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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 17.7, then upon the written consent of the Requisite
Lenders and written notice to the Company, the termination of the 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 to a decision that may be made at the election of the Requisite
Lenders; they are not intended to benefit the Borrowers and do not give any of
the Borrowers the right to require the Lenders to rescind or annul any
acceleration hereunder, even if the conditions set forth herein are met.
(d) ENFORCEMENT. Each of the Borrowers acknowledges that in the
event the Company 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 Administrative Agent and the Lenders; therefore, each of the Borrowers
agrees that the Administrative Agent 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.
ARTICLE 16. THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
16.1 APPOINTMENT. (a) Each Lender hereby designates and appoints
Credit Suisse as the Administrative Agent hereunder and under the other Loan
Documents and designates and appoints Citibank, N.A. as the Collateral Agent
hereunder and under the other Loan Documents. Each Lender hereby irrevocably
authorizes each such Agent to execute such documents (including, without
limitation, the Loan Documents to which such Agent is a party and the Collateral
Agency Agreement, dated as of the date hereof) and irrevocably authorizes each
such Agent 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 (including, without limitation, acting on behalf of, and for
the account of, each Lender in the creation, execution, perfection, delivery and
enforcement of the Foreign Pledge Agreements). Notwithstanding the foregoing,
the Collateral Agent shall not have authority to foreclose upon collateral
security provided under any Loan Document to which it is a party (in its
capacity as such) except as directed by the Administrative Agent or the
Requisite Lenders.
(b) 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 7 when due) or the other Loan Documents, neither
Agent shall be required to exercise any discretion or take any action.
Notwithstanding the foregoing, each 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 and Holders; PROVIDED, that, neither Agent
shall be required to take
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any action that (i) it reasonably believes shall expose it to personal liability
unless the it receives an indemnification satisfactory to it from the Lenders
with respect to such action or (ii) is contrary hereto, or to the other Loan
Documents or applicable law. Each Agent agrees to act as such on the express
conditions contained in this ARTICLE 16.
(c) The provisions of this ARTICLE 16 are solely for the benefit of
the Agents and the Lenders, and none of the Company or any Subsidiary of the
Company shall have any rights to rely on or enforce any of the provisions hereof
(other than as expressly set forth in SECTIONS 16.7 and 16.9). In performing
its functions and duties hereunder, each Agent shall act solely as agent of the
Lenders 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
Company or any Subsidiary of the Company. Each Agent may perform any of its
duties hereunder or under the Loan Documents by or through its agents or
employees.
16.2 NATURE OF DUTIES. Neither Agent shall have any duties or
responsibilities except those expressly set forth herein or in the Loan
Documents. The duties of each Agent shall be mechanical and administrative in
nature. Neither Agent shall by reason hereof have a fiduciary relationship in
respect of any Lender or any other Holder. Nothing herein or in any of the Loan
Documents, expressed or implied, is intended to or shall be construed to impose
upon either Agent any obligations in respect hereof or any of the Loan Documents
except as expressly set forth herein or therein. Each Lender shall make its own
independent investigation of the financial condition and affairs of the Company
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 Company and its Subsidiaries
initially and on a continuing basis, and neither Agent shall 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 Administrative Agent under the terms hereof).
If either Agent seeks the consent or approval of any of the Lenders to the
taking or refraining from taking of any action hereunder, such Agent shall send
notice thereof to each Lender. Each Agent shall promptly notify each Lender at
any time that the Lenders so required hereunder have instructed such Agent to
act or refrain from acting pursuant hereto.
16.3 RIGHTS, EXCULPATION, ETC. (a) LIABILITIES; RESPONSIBILITIES.
None of the Administrative Agent, the Collateral Agent or any of their
respective Affiliates, 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 resulting
from its gross negligence or willful misconduct. Neither Agent shall be liable
for any apportionment or distribution of payments made by it in good faith
pursuant to SECTION 7.7, 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. Neither Agent shall be responsible to any Holder for any
recitals, statements, representations or warranties herein or for the execution,
effectiveness, genuineness, validity, legality, enforceability, collectibility,
or sufficiency hereof or of any of the other Loan
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Documents or the transactions contemplated thereby, or for the financial
condition of the Company or any of its Subsidiaries. Neither Agent shall 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 Company or any of its Subsidiaries,
or the existence or possible existence of any Default or Event of Default.
(b) RIGHT TO REQUEST INSTRUCTIONS. Either Agent may at any time
request instructions from the Lenders with respect to any actions or approvals
that by the terms of any of the Loan Documents such Agent is permitted or
required to take or to grant, and such 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 such 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 either Agent as a result of such
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.
16.4 RELIANCE. Each 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 Borrowers),
independent public accountants and other experts selected by it.
16.5 INDEMNIFICATION. To the extent that an Agent is not reimbursed
and indemnified by the Borrowers, the Lenders shall reimburse and indemnify such
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 that may be imposed on, incurred by, or asserted
against such Agent in any way relating to or arising out of the Loan Documents
or any action taken or omitted by such Agent under the Loan Documents, in
proportion to each Lender's Aggregate Pro Rata Share; PROVIDED, that the Lenders
shall have no obligation to such Agent with respect to the matters indemnified
pursuant to this Section resulting from the willful misconduct or gross
negligence of such Agent, as determined in a final, non-appealable judgment by a
court of competent jurisdiction. The obligations of the Lenders under this
SECTION 16.5 shall survive the payment in full of the Loans, the Reimbursement
Obligations and all other Obligations and the termination hereof.
16.6 CREDIT SUISSE AND CITIBANK, N.A. INDIVIDUALLY. With respect to
its Aggregate Pro Rata Shares of the Commitments hereunder, if any, and the
Loans made by it, if any, each of Credit Suisse and Citibank, N.A. shall have
and may exercise the same rights and powers hereunder and are 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 indicates otherwise, include each of Credit
Suisse and Citibank, N.A. in its individual capacity as a Lender or as one of
the Requisite
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Lenders. Credit Suisse, Citibank, N.A. and each of their respective Affiliates
may accept deposits from, lend money to, and generally engage in any kind of
banking, trust, investment banking or other business with the Company or any of
its Subsidiaries as if Credit Suisse or Citibank, N.A. (as the case may be) were
not acting as Administrative Agent or Collateral Agent (as the case may be)
pursuant hereto.
16.7 SUCCESSOR AGENT; RESIGNATION OF AGENT. (a) RESIGNATION.
Either 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 Borrowers and the Lenders. The resignation of such Agent
shall take effect upon the acceptance by a successor Administrative Agent or
Collateral Agent (as the case may be) of appointment pursuant to this SECTION
16.7.
(b) APPOINTMENT BY REQUISITE LENDERS. Upon any such notice of
resignation by an Agent, the Requisite Lenders shall have the right to appoint a
successor Administrative Agent or Collateral Agent (as the case may be) selected
from among the Lenders, which appointment shall be subject to the prior written
approval of the Company (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 Administrative
Agent or Collateral Agent, as the case may be, shall not have been appointed
within the thirty (30) Business Day period provided in PARAGRAPH (a) of this
SECTION 16.7, the retiring Administrative Agent or Collateral Agent (as the case
may be), with the consent of the Company (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
Administrative Agent or Collateral Agent, as the case may be, who shall serve in
such capacity until such time, if any, as the Requisite Lenders appoint a
successor Agent as provided above.
(d) RIGHTS OF THE SUCCESSOR AND RETIRING AGENT. 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 such Agent, the provisions
of this ARTICLE 16 shall inure to its benefit as to any actions taken or omitted
to be taken by it while it was such Agent hereunder.
(e) DEFENSE INVESTIGATIVE SERVICE. Notwithstanding anything to the
contrary contained herein, during such time as shares of capital stock of Hexcel
Pottsville Corporation are pledged to the Collateral Agent pursuant to the terms
hereof, any successor Collateral Agent shall be a Person who is acceptable to
the Defense Investigative Service.
16.8 RELATIONS AMONG LENDERS. Each Lender agrees that it shall not
take any legal action, nor institute any actions or proceedings, against any of
the Borrowers or any other obligor hereunder with respect to the transactions
contemplated hereby or with respect to any Collateral without the prior written
consent of the Requisite Lenders. Without limiting
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the generality of the foregoing, no Lender may accelerate or otherwise enforce
its portion of the Obligations, or terminate its Commitment except in accordance
with SECTION 15.2(a) or a setoff permitted by SECTION 17.5. Notwithstanding the
foregoing, nothing contained in this SECTION 16.8 shall limit the right of the
Administrative Agent or the Collateral Agent to take any action otherwise
permitted under this Agreement or any other Loan Document without having
previously obtained the consent of the Requisite Lenders.
16.9 CONCERNING THE COLLATERAL AND THE LOAN DOCUMENTS. (a) RELEASE
OF COLLATERAL. (i) Each of the Lenders hereby directs the Collateral Agent to
release any Lien held by the Collateral Agent for the benefit of the Agents and
the other Holders:
(A) against all of the Collateral, upon final payment in full of
the Obligations and termination hereof (as confirmed in writing by the
Administrative Agent); and
(B) against any part of the Collateral sold or disposed of by the
Company or any of its Subsidiaries, if such sale or disposition is
permitted by SECTION 13.2 (or permitted pursuant to a waiver or consent of
a transaction otherwise prohibited by such Section), as confirmed in
writing by the Administrative Agent, or, if not pursuant to such sale or
disposition, (1) against less than substantially all of the Collateral, if
such release is consented to by Requisite Lenders and (2) against all or
substantially all of the Collateral, if such release is consented to by
Lenders whose Aggregate Pro Rata Shares, in the aggregate, are equal to
100%.
(ii) Each of the Lenders hereby directs the Collateral 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 16.9(b) promptly upon the effectiveness of any such release.
(b) CONFIRMATION BY LENDERS. Without in any manner limiting the
Collateral Agent's authority to act without any specific or further
authorization or consent by the Lenders (as set forth in subsection (a) above),
each Lender agrees to confirm in writing, upon request by the Administrative
Agent, the Collateral Agent or the Company, the authority to release Collateral
conferred upon the Collateral Agent under clauses (A) and (B) of subsection
(a)(i) above. As long as no Event of Default is then continuing, upon receipt
by the Collateral Agent (through the Administrative Agent) of any such written
confirmation from the Lenders of the Collateral Agent's authority to release any
particular items or types of Collateral, and in any event upon any sale and
transfer of Collateral that is expressly permitted pursuant to the terms of this
Agreement, and upon at least five (5) Business Days' prior written request by
the Company, the Collateral 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 Collateral Agent for
the benefit of the Agents, the Lenders and the other Holders; PROVIDED, that
(i) the Collateral Agent shall not be required to execute any such document on
terms that, in the Collateral Agent's opinion, would expose the Collateral 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
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release shall not in any manner discharge, affect or impair the Obligations or
any Liens upon (or obligations of the Company or any of its Subsidiaries in
respect of) all interests retained by the Company 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.
(c) NO OBLIGATION. Neither Agent shall have any obligation
whatsoever to any Lender or to any other Person to assure that the Collateral
exists or is owned by the Company or any of its Subsidiaries or is cared for,
protected or insured or has been encumbered or that the Liens granted to the
Collateral 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 Collateral Agent in this SECTION 16.9 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, each Agent may act in any manner it may deem
appropriate, in its sole discretion, given such Agent's own interests in the
Collateral as one of the Lenders and that neither Agent shall have any duty or
liability whatsoever to any Lender.
ARTICLE 17. MISCELLANEOUS
17.1 ASSIGNMENTS AND PARTICIPATIONS. (a) ASSIGNMENTS. No
assignments or participations of any Lender's rights or obligations hereunder
shall be made except in accordance with this SECTION 17.1. 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 17.1.
(b) LIMITATIONS ON ASSIGNMENTS. Each assignment by a Lender (an
"Assigning 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 Administrative Agent and the Company, 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
$10,000,000, except if the Eligible Assignee is a Lender or an Affiliate of
Lender (in which case the assignment may be in any amount) 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
Loans, and (v) the parties to each such assignment shall execute and deliver to
the Administrative Agent, for its acceptance and recording in the Register, an
Assignment and Acceptance. 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 Administrative 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
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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 Administrative Agent shall maintain at its
address referred to in SECTION 17.8 a copy of each Assignment 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, and by which Borrower
the Borrowing is made, (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 each Borrower to each Lender hereunder or under the Notes, and (iv) the
amount of any sum received by the Administrative Agent from any Borrower or any
Subsidiary Guarantor hereunder and each Lender's share thereof. The
Administrative Agent shall deliver a statement of such account to the Company
whenever an Assignment and Acceptance is accepted by it and the parties hereto;
PROVIDED, that the Administrative 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 Borrowers in all respects as to
all matters reflected therein (absent manifest error) unless the Company, within
thirty (30) days after the date such statement is delivered to the Company,
delivers to the Administrative Agent written notice of any objections that the
Borrowers 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
Borrowers. The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Company and each of its Subsidiaries,
the Administrative 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 Borrowers 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 $3,500 (payable by the Assigning Lender or the assignee, as
shall be agreed between them), the Administrative Agent shall, if such
Assignment and Acceptance has been completed and is in compliance herewith and
in substantially the form of EXHIBIT A, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register and
(iii) give prompt notice thereof to the Company.
(e) INFORMATION REGARDING THE BORROWERS. Any Lender may, in
connection with any assignment or proposed assignment pursuant to this SECTION
17.1, disclose to the
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assignee or proposed assignee any information relating to the Company or its
Subsidiaries furnished to such Lender by the Administrative Agent or by or on
behalf of the Borrowers; PROVIDED, that, prior to any such disclosure, such
assignee or proposed assignee shall agree (for the Borrowers' benefit) to
preserve in accordance with SECTION 17.20 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
17.1, then, as of the effective date of such cessation, such Issuing Bank's
obligations to Issue Letters of Credit pursuant to ARTICLE 5 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, 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
Borrowers, the Administrative Agent and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations 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, 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
that such 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 Loan(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 Obligations) and (C) release of any Subsidiary Guarantor (except as
provided in SECTION 13.9) or all or substantially all of the Collateral (except
as provided in SECTION 13.9(b)). 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, that each holder of a participation
shall be entitled to the benefits provided to a Lender (including any right to
receive payment) under SECTIONS 7.10, 7.11, 8.6, 8.9(d), 8.9(e), 16.5, 17.2 and
17.5; PROVIDED, 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 7.10, 7.11, 8.6,
8.9(d), 8.9(e), 16.5, 17.2 and 17.5 shall be limited to the lesser of (i) the
amounts actually incurred by such holder for
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which payment is provided under said Sections and (ii) the participant's share
of 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.
(i) PAYMENT TO PARTICIPANTS. Anything herein to the contrary
notwithstanding, in the case of any participation, all amounts payable by the
Borrowers 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.
17.2 EXPENSES.
(a) GENERALLY. Each of the Borrowers agrees upon demand to pay, or
reimburse each Agent for all of such Agent's and its Affiliates' internal and
external audit, legal, appraisal, valuation, filing, document duplication and
reproduction and investigation expenses and for all other reasonable out-of-
pocket costs and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements of the Agents'
respective counsel, Simpson Thacher & Bartlett and Sidley & Austin, local legal
counsel, auditors, accountants, appraisers, printers, insurance and
environmental advisers and other consultants and agents) incurred by such Agent
in connection with (to the extent any of the following is applicable to such
Borrower) (A) in the case of the Administrative Agent only, its audit and
investigation of such Borrower and its Subsidiaries in connection with the
preparation, negotiation, and execution of the Loan Documents and its periodic
audits of such Borrower or its Subsidiaries; (B) in the case of both Agents, the
preparation, negotiation, execution and interpretation hereof (including,
without limitation, the satisfaction or attempted satisfaction of any of the
conditions set forth in ARTICLE 9), and of the other Loan Documents and any
proposal letter or commitment letter issued in connection therewith and the
making of the Loans hereunder and the syndication of the Revolving Credit
Commitments; (C) in the case of both Agents, 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) and
the custody or preservation or sale of, collection from, or other realization
upon, any of the Collateral; (D) in the case of both Agents, the ongoing
administration hereof and of the Loans, including consultation with attorneys in
connection therewith and with respect to such Agent's rights and
responsibilities hereunder and under the other Loan Documents; (E) in the case
of both Agents, the protection, collection or enforcement of any of the
Obligations or the enforcement of any of the Loan Documents; (F) in the case of
both Agents, the commencement, defense or intervention in any court proceeding
relating in any way to the Obligations, the Property, the Collateral, the
Company, any of the Company's Subsidiaries, this Agreement or any of the other
Loan Documents; (G) in the case of both Agents, the response to, and preparation
for, any subpoena or request for document production with which such Agent is
served or deposition or other proceeding in which such Agent is called to
testify, in each case, relating in any way to the Obligations, the Property, the
Company, any of the Company's Subsidiaries, this Agreement or any of the other
Loan Documents; and (H) in the case of both Agents, any amendments, consents,
waivers, assignments, restatements or supplements to any of the Loan Documents
and the preparation, negotiation and execution of the same. To the extent that
the undertaking to pay
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and reimburse an Agent set forth in this Section may be unenforceable (with
respect to such Borrower) because it is violative of any law or public policy,
such Borrower shall contribute the maximum portion that it is permitted to pay
under applicable law.
(b) AFTER DEFAULT. Each of the Borrowers further agrees to pay or
reimburse the Agents and the Lenders upon demand, to the extent applicable to
such Borrower, for all out-of-pocket costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred by such Agent 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 Collateral, such Borrower or any of such 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. To the extent that the undertaking to pay and
reimburse an Agent and the Lenders set forth in this Section may be
unenforceable (with respect to a Borrower) because it is violative of any law or
public policy, such Borrower shall contribute the maximum portion that it is
permitted to pay under applicable law.
17.3 INDEMNITY. Each Borrower further agrees to defend, protect,
indemnify, and hold harmless each Agent and each and all of the Lenders and each
of their respective Affiliates, and each of such Agent's, Lender'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 9) (collectively, the "INDEMNITEES") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs, reasonable expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable fees and disbursements
of counsel for such Indemnitees 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) this Agreement, the other Loan Documents, any of the other Transaction
Documents or any act, event or transaction related or attendant thereto
applicable to such Borrower, whether or not such Indemnitee is a party thereto
and whether or not 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, are consummated or any of the other transactions
contemplated by the Transaction Documents are consummated, 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, such 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 such Borrower or its Subsidiaries, the
presence of asbestos-containing
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materials at any respective Property of such Borrower or its Subsidiaries or the
Release or threatened Release of any Contaminant into the environment
(collectively, the "INDEMNIFIED MATTERS"); PROVIDED, that (i) none of the
Borrowers shall have any 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, (ii) none of Danutec Werkstoff, Composites-UK, Brochier
or HAESA shall be liable for any Indemnified Matters to the extent such
Indemnified Matter relates to or is associated with its own acquisition by the
Company or any of its Subsidiaries and (iii) none of the Foreign Borrowers shall
have any obligation to an Indemnitee hereunder with respect to Indemnified
Matters relating to the Domestic Revolving Loans, Swing Loans or Letters of
Credit issued for the account of a Borrower other than such Foreign Borrower.
Notwithstanding anything herein to the contrary, each of the Borrowers
understands and hereby agrees that its obligation to indemnify pursuant to this
SECTION 17.3 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, each Borrower shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Matters
relating to such Borrower incurred by the Indemnitees.
17.4 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 11.1 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 are adopted by any of
the Borrowers 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 13 and ARTICLE 14, the
parties hereto 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 Borrowers shall be the same after such change as if such change had not
been made; PROVIDED, 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 reasonably
satisfactory to the Requisite Lenders and the Borrowers, to so reflect such
change in accounting principles.
17.5 SETOFF. In addition to any Liens granted under the Loan
Documents and any rights now or hereafter granted under applicable law, and to
the extent permitted by 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 and any Affiliate of any Lender is hereby
authorized by the Borrowers 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 or any of their Affiliates
to or for the credit or the account of the Borrowers against
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and on account of the Obligations of the Borrowers to such Lender or any of
their Affiliates, including, but not limited to, all Loans and Letters of Credit
(including, without limitation, any participating interests held by such Lender
or any of its Affiliates in Swing Loans, Local European 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 shall have
made any demand hereunder or (ii) the Administrative 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 15 and even though such Obligations may be contingent or
unmatured.
17.6 RATABLE SHARING. The Lenders agree among themselves that,
except as otherwise expressly provided in any Loan Document, (i) with respect to
all amounts received by them that are applicable to the payment of the
Obligations (excluding (x) the fees described in SECTIONS 5.8, 7.10, 7.11, 8.6
and 8.9 and (y) any 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
Aggregate 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 5.8, 7.10, 7.11, 8.6 and 8.9) or the Collateral, (ii)
if any of them shall by voluntary payment or by the exercise of any right of
counterclaim, setoff, banker's lien or otherwise, receive payment of a
proportion of the aggregate amount of such Obligations held by it that is
greater than the amount that 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 Aggregate Pro Rata Shares;
PROVIDED, 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. Each of the Borrowers agrees that any Lender so purchasing
a participation from another Lender pursuant to this SECTION 17.6 may, to the
fullest extent permitted by law, exercise all its rights of payment (including,
subject to SECTION 17.5, the right of setoff) with respect to such participation
as fully as if such Lender were the direct creditor of the Borrowers in the
amount of such participation.
17.7 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 Borrowers, and no termination or waiver of any provision hereof, or consent
to any departure by the Borrowers 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.
The Administrative Agent and (to the extent applicable) the Collateral
Agent may, but shall have no obligation to, with the written concurrence of any
Lender, execute
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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
Borrowers in any case shall entitle the Borrowers to any other or further notice
or demand in similar or other circumstances. Notwithstanding anything to the
contrary contained in this SECTION 17.7, no amendment, modification, waiver or
consent shall affect the rights or duties of the Administrative Agent or the
Collateral Agent hereunder or under the other Loan Documents, including this
ARTICLE 17, unless made in writing and signed by the Agent so affected in
addition to the Lenders required above to take such action. 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
17.7(b), at the joint request of the Company and the Administrative 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 any non-consenting Lender (at the face amount
thereof) all Revolving Loans, Letter of Credit Obligations and Revolving Credit
Commitments held by such Lender.
(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 each Borrower, each Syndicated Lender and each
other Lender which is directly affected thereby:
(i) waiver of any of the conditions specified in SECTION 9.1 or
9.2 (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, without limitation, amounts so payable pursuant
to SECTION 7.7),
(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 Subsidiary Guarantor from its guarantee of
the Obligations (except in connection with the sale of all or substantially
all of the Capital Stock or Property of any Subsidiary Guarantor or a
merger of a Subsidiary Guarantor with or into another Subsidiary Guarantor
or the Company, in each case approved by the Requisite Lenders or otherwise
permitted hereunder) or release all or any portion of the Collateral
(except as provided in SECTION 16.9(c)),
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131
(vi) change the Aggregate Pro Rata Share of the Lenders that
shall be required for the Lenders or any of them to take action hereunder,
(vii) change in the definition of the term "Requisite Lenders,"
"Aggregate Pro Rata Share," or
(viii) amendment of SECTIONS 16.9(c) or 17.6 or this SECTION 17.7.
(c) AMENDMENTS, CONSENTS AND WAIVERS BY EUROPEAN OVERDRAFT BANK.
Notwithstanding the foregoing, any amendment, modification, termination, waiver
or consent with respect to any provision affecting the European Overdraft
Commitment, the European Overdraft Loans or the European Overdraft Obligations
shall be effective only by a written agreement signed by each Borrower and the
European Overdraft Bank.
17.8 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
Administrative Agent pursuant to ARTICLES 2 through 7 shall not be effective
until received by the Administrative Agent. For the purposes hereof, the
addresses of the parties hereto (until notice of a change thereof is delivered
as provided in this SECTION 17.8) shall be as set forth below each party's name
on the signature pages hereof or on 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
delivered in accordance with this SECTION 17.8. Each notice which is sent to
the office of the Administrative Agent listed on its signature page hereto for
matters relating to Optional Currencies and Foreign Borrowers also shall be sent
(in accordance with the provisions of this SECTION 17.8) to the office of the
Administrative Agent listed thereon for matters relating to the Company.
(b) Each of the Borrowers agrees to indemnify and hold harmless each
Indemnitee from and against any and all claims, damages, liabilities,
obligations, losses, penalties, actions, judgments, suits, reasonable costs,
disbursements and expenses of any kind or nature (including, without limitation,
reasonable fees and disbursements of counsel to any such Indemnitee) that 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 such Borrower; PROVIDED, that
(i) such Borrower shall not have any obligation under this SECTION 17.8(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
and (ii) none of the Foreign Borrowers shall have any obligation to an
Indemnitee hereunder with respect to Indemnified Matters relating to the
Domestic Revolving Loans, Swing Loans or Letters of Credit issued for the
account of a Borrower other than such Foreign Borrower.
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132
17.9 SURVIVAL OF WARRANTIES AND AGREEMENTS. All representations and
warranties made herein and all obligations of the Borrowers 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
Administrative Agent or any of the Lenders may have come into possession or
control of any of the Company's or its Subsidiaries' Property.
17.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of either Agent or any Lender 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.
17.11 MARSHALLING; PAYMENTS SET ASIDE. The Agents and the Lenders
shall not be under any obligation to marshall any assets in favor of the
Borrowers or any other party or against or in payment of any or all of the
Obligations. To the extent that any Borrower makes a payment or payments to an
Agent or the Lenders or any of such Persons receives payment from the proceeds
of the Collateral or exercises its 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.
17.12 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.
17.13 HEADINGS. Article and Section headings herein are included
herein for convenience of reference only and shall not constitute a part hereof
or be given any substantive effect.
17.14 GOVERNING LAW. THIS AGREEMENT SHALL BE INTERPRETED, AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
17.15 LIMITATION OF LIABILITY. No claim may be made by the Company,
any of the Company's Subsidiaries, any Lender, the Administrative Agent, the
Collateral Agent or
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any other Person against the Administrative Agent, the Collateral Agent 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 Company, each of
the Company's Subsidiaries, each Lender, the Collateral Agent and the
Administrative 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.
17.16 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. The rights
hereunder and the interest herein of the Borrowers may not be assigned without
the written consent of all Lenders. Any attempted assignment without such
written consent shall be void.
17.17 CERTAIN CONSENTS AND WAIVERS.
(a) PERSONAL JURISDICTION. (i) EACH OF THE ADMINISTRATIVE AGENT,
THE COLLATERAL AGENT, THE LENDERS AND THE BORROWERS 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 OR ANY OTHER LOAN DOCUMENT, 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. EACH OF
THE BORROWERS 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 ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. EACH OF THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE LENDERS
AND THE BORROWERS 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. EACH OF THE
ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE LENDERS AND
<PAGE>
134
THE BORROWERS WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(ii) EACH OF THE BORROWERS AGREES THAT EACH OF THE ADMINISTRATIVE
AGENT AND THE COLLATERAL AGENT SHALL HAVE THE RIGHT TO PROCEED AGAINST THE
BORROWERS OR THEIR RESPECTIVE PROPERTY IN A COURT IN ANY LOCATION TO ENABLE THE
ADMINISTRATIVE AGENT, THE COLLATERAL AGENT 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 ADMINISTRATIVE AGENT, THE
COLLATERAL AGENT OR ANY LENDER. EACH OF THE BORROWERS WAIVES ANY OBJECTION THAT
IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE ADMINISTRATIVE AGENT, THE
COLLATERAL AGENT OR ANY LENDER MAY COMMENCE A PROCEEDING DESCRIBED IN THIS
SECTION.
(b) SERVICE OF PROCESS. EACH OF THE BORROWERS 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 BORROWERS' NOTICE ADDRESS SPECIFIED
IN SECTION 17.8, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH
MAILING; PROVIDED, THAT NONE OF THE BORROWERS HEREBY REPRESENTS THAT SUCH
SERVICE OF PROCESS IS ADEQUATE UNDER APPLICABLE LAW WHEN PROCEEDINGS ARE BROUGHT
AGAINST A BORROWER PURSUANT TO SECTION 17.17(a)(ii). EACH OF THE BORROWERS
IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS) 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 THE 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 ADMINISTRATIVE
AGENT OR THE COLLATERAL AGENT TO BRING PROCEEDINGS AGAINST ANY BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION.
(c) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW,
EACH OF THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE LENDERS AND THE
BORROWERS IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT.
17.18 COUNTERPARTS; EFFECTIVENESS; INCONSISTENCIES. This Agreement
and any amendments, waivers, consents, or supplements hereto may be executed in
counterparts, each
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135
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 be effective against each Borrower, each Lender, the
Collateral Agent and the Administrative Agent as of the date hereof immediately
upon the execution hereof by all such parties. 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
hereof are actually inconsistent with the terms and conditions of any other Loan
Document, this Agreement shall govern.
17.19 LIMITATION ON AGREEMENTS. All agreements between the
Borrowers, the Administrative Agent, the Collateral Agent and each Lender in the
Loan Documents are hereby expressly limited so that in no event shall any of the
Loans or other amounts payable by the Borrowers under any of the Loan Documents
be directly or indirectly secured (within the meaning of Regulation U) by Margin
Stock.
17.20 CONFIDENTIALITY. Subject to SECTION 17.1(e), the
Administrative Agent, the Collateral Agent and the Lenders shall hold all
nonpublic information obtained pursuant to the requirements hereof and
identified as such by any 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, 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 any applicable Requirement of Law, or to its accountants,
lawyers and other advisors, and shall require any such offeree, assignee or
participant to agree (and require any of its offerees, assignees or participants
to agree) to comply with this SECTION 17.20. In no event shall the
Administrative Agent, the Collateral Agent or any Lender be obligated or
required to return any materials furnished by the Borrowers; PROVIDED, that each
offeree shall be required to agree that if it does not become an assignee or
participant it shall return all materials furnished to it by the Borrowers in
connection herewith.
17.21 JUDGMENT CURRENCY. (a) If for the purposes of obtaining
judgment in any court it is necessary to convert a sum due hereunder or under
the Notes in any currency (the "Original Currency") into another currency (the
"Other Currency") the parties hereto agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which in
accordance with normal banking procedures the Administrative Agent could
purchase the Original Currency with the Other Currency at 11:00 a.m. in New
York, New York on the second Business Day preceding that on which final judgment
is given.
(b) The obligation of any Borrower in respect of any sum due in the
Original Currency from it to any Lender, the Collateral Agent or the
Administrative Agent hereunder or under the Note held by such Lender shall,
notwithstanding any judgment in any Other Currency, be discharged only to the
extent that on the Business Day following receipt by such Lender, the Collateral
Agent or the Administrative Agent (as the case may be) of any sum adjudged to be
so due in such Other Currency such Lender, the Collateral Agent or the
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136
Administrative Agent (as the case may be) may in accordance with normal banking
procedures purchase Dollars with such Other Currency; if the amount of the
Original Currency so purchased is less than the sum originally due to such
Lender, the Collateral Agent or the Administrative Agent (as the case may be) in
the Original Currency, such Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Lender, the Collateral
Agent or the Administrative Agent (as the case may be) against such loss, and if
the amount of the Original Currency so purchased exceeds the sum originally due
to any Lender or the Administrative Agent (as the case may be) in the Original
Currency, such Lender, the Collateral Agent or the Administrative Agent (as the
case may be) agrees to remit to such Borrower such excess.
17.22 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 April 12, 1996
from Credit Suisse and accepted and agreed to by the Company (except for
provisions therein specifically referred to herein) and all prior agreements and
understandings, written and oral, relating to the subject matter hereof, other
than the Confidentiality Agreement dated as of the date hereof made by Credit
Suisse, in favor of the Company, which agreement shall survive execution of this
Credit Agreement and by which all the Lenders agree to be bound.
17.23 TERMINATION. Upon the termination in whole of the Commitments
pursuant to the terms of this Agreement, the Borrowers shall pay to the
Administrative Agent an amount equal to any and all Obligations then
outstanding.
17.24 CERTAIN WAIVERS. (a) Each Lender hereby agrees that,
notwithstanding anything to the contrary contained in this Agreement, certain of
the Foreign Pledge Agreements may not be delivered prior to or on the Closing
Date. Each Lender hereby waives compliance with the provisions of this
Agreement to the extent and only to the extent necessary to permit the Closing
Date to occur without the delivery of such Foreign Pledge Agreements and other
documentation relating thereto and to permit the Borrowers to borrow under this
Agreement. The Company hereby covenants that it shall, and shall cause its
Subsidiaries to, deliver to the Collateral Agent all such Foreign Pledge
Agreements and related documentation within 30 days following the Closing Date
and that the failure to deliver any such Foreign Pledge Agreement or related
documentation within such 30 day period shall constitute an Event of Default
hereunder; PROVIDED that, with the consent of the Administrative Agent, such 30
day period may be extended by not more than an additional 30 days.
(b) Each of the undersigned hereby acknowledges and agrees that,
until such time as the Funding Deposits are disbursed in accordance with the
terms of the Funding Account Agreement, the Borrowers may owe certain
Indebtedness and obligations hereunder and under the Existing Facilities and may
have granted collateral security and issued guarantees in support of this
Agreement, the Funding Account Agreement and the Existing Facilities. Each of
the undersigned hereby further acknowledges and agrees that one or more Events
of Default (as defined herein and in the Existing Facilities) may (immediately
or with the passage of time) result therefrom.
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137
(c) Each Lender hereby waives any Events of Default hereunder to the
extent (and only to the extent) that such Events of Default are the direct
result of consummation of the transactions contemplated by this Agreement prior
to the termination of the Existing Facilities; PROVIDED that the Existing
Facilities shall be repaid and terminated immediately upon the disbursement of
the Funding Deposits from the Funding Accounts pursuant to the Funding Account
Agreement.
(d) Each Lender which is a party to the Existing Facilities (acting
in each of its respective capacities under the Existing Facilities) hereby
waives any Events of Default under (and as defined in) the Existing Facilities
to the extent (and only to the extent) that such Events of Default are the
direct result of consummation of the transactions contemplated by this Agreement
prior to the termination of the Existing Facilities; PROVIDED that such waiver
is expressly subject to the condition that (and shall cease to be effective
unless) (i) the Obligations (as defined in the Existing Facilities) (other than
any indemnities which are not then due) shall be paid in full, and the Existing
Facilities shall be terminated, by the close of business on the second Business
Day following the Closing Date hereunder and (ii) no further extensions of
credit (including, without limitation, loans and letters of credit) shall be
made or requested under the Existing Facilities.
(e) Notwithstanding anything to the contrary contained herein, the
Borrowers shall be obligated to repay all amounts owing under the Existing
Facilities and to terminate
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138
the Existing Facilities immediately upon the disbursement of the Funding
Deposits from the Funding Accounts pursuant to Section 2.A of the Funding
Account Agreement. Any failure to comply with the provisions of this
SECTION 17.24 shall constitute an Event of Default hereunder.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first above written.
HEXCEL CORPORATION
HEXCEL S.A. [Belgium]
HEXCEL S.A. [Lyon]
BROCHIER S.A.
SALVER S.R.L.
DANUTEC WERKSTOFF AKTIENGESELLSCHAFT
By: /s/: Stephen C. Forsyth
-------------------------------------
Name: Stephen C. Forsyth
Title:
HEXCEL (U.K.) LIMITED
HEXCEL COMPOSITES LIMITED
HEXCEL COMPOSITES GMBH
By: /s/: Stephen C. Forsyth
-------------------------------------
Name: Stephen C. Forsyth
Title:
HERCULES AEROSPACE ESPANA S.A.
By: /s/: Andrea Domemichini
-------------------------------------
Name: Andrea Domemichini
Title: Attorney-In-Fact
NOTICE ADDRESS:
Hexcel Corporation
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901
Attention: William P. Meehan
Telecopier No. (203) 323-7456
Confirmation No. (203) 969-0666
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139
CREDIT SUISSE, as the Administrative Agent
By: /s/: Heather Riekenberg
-------------------------------------
Name: Heather Riekenberg
Title: Member of Senior Management
By: /s/: Ira Lubinsky
-------------------------------------
Name: Ira Lubinsky
Title: Associate
ADDRESS FOR NOTICES:
Funding and Administrative Funding and Administrative Matters Relating
Matters Relating to the to any Foreign Borrower or Optional Currency:
Company:
Credit Suisse
Credit Suisse 5 Cabot Square
12 East 49th Street London E14 4QR England
New York, New York 10017 Attention: Sarah Curtis - Client Services
Attention: Steve Conroy Unit
Telephone: 212/238- Telephone: 171-888-8361
Telecopier: 212/238-5073 Telecopier: 171-888-8398
with a copy to:
Credit Suisse
12 East 49th Street
New York, New York 10017
Attention: Steve Conroy
Telephone: 212/238-
Telecopier: 212/238-5073
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140
CITIBANK, N.A.. as Collateral Agent and as a
Lender (including, without limitation, as
European Overdraft Bank)
By: /s/: William E. Clark
-------------------------------------
Name: William E. Clark
Title: Attorney-In-Fact
INITIAL REVOLVING CREDIT COMMITMENT
$25,000,000
INITIAL EUROPEAN OVERDRAFT COMMITMENT
$10,000,000
ADDRESS FOR NOTICES:
Citibank, N.A.
399 Park Avenue - 8th Floor, Zone 11A
New York, New York 10043
Attention: William E. Clark
Telephone: 212/559-5944
Telecopier: 212/793-7460
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141
CREDIT SUISSE, as the Swing Loan Bank, the
Issuing Bank and a Lender
By: /s/: Karl M. Studer
-------------------------------------
Name: Karl M. Studer
Title: Member of Senior Management
By: /s/: Daniela Hess
-------------------------------------
Name: Daniela Hess
Title: Associate
REVOLVING CREDIT COMMITMENT
$35,000,000
ADDRESS FOR NOTICES:
Credit Suisse
12 East 49th Street
New York, New York 10017
Attention: Karl Studer
Telephone: 212/238-5421
Telecopier: 212/238-5439
<PAGE>
142
THE BANK OF NEW YORK
By: /s/: Craig Rethmeyer
-------------------------------------
Name: Craig Rethmeyer
Title: Vice President
REVOLVING CREDIT COMMITMENT
$25,000,000
ADDRESS FOR NOTICES:
The Bank of New York
One Wall Street - 22nd Floor
New York, New York 10286
Attention: Lorna Alleyne
Telephone: 212/635-6737
Telecopier: 212/635-6399
WITH A COPY TO:
The Bank of New York
10990 Wilshire Boulevard - Suite 1125
Los Angeles, California 90024
Attention: Liz Ying
Telephone: 310/996-8661
Telecopier: 310/996-8667
<PAGE>
143
BANQUE NATIONALE DE PARIS, SAN FRANCISCO
BRANCH
By: /s/: Katherine Wolfe
-------------------------------------
Name: Katherine Wolfe
Title: Vice President
By: /s/: Charles Day
-------------------------------------
Name: Charles Day
Title: Assistant Vice President
REVOLVING CREDIT COMMITMENT
$33,000,000
ADDRESS FOR NOTICES:
Banque Nationale de Paris
180 Montgomery Street
San Francisco, California 94104
Attention: Katherine Wolfe
Telephone: 415/956-0707, Ext. 230
Telecopier: 415/296-8954
<PAGE>
144
THE CHASE MANHATTAN BANK, N.A.
By: /s/: Scott S. Ward
-------------------------------------
Name: Scott S. Ward
Title: Vice President
REVOLVING CREDIT COMMITMENT
$33,000,000
ADDRESS FOR NOTICES:
The Chase Manhattan Bank, N.A.
One Chase Manhattan Plaza - 4th Floor
New York, New York 10081 94104
Attention: Scott Ward
Telephone: 212/552-6332
Telecopier: 212/552-7175
<PAGE>
145
CREDIT LYONNAIS
By: /s/: Xavier Roux
-------------------------------------
Name: Xavier Roux
Title: First Vice President
REVOLVING CREDIT COMMITMENT
$25,000,000
ADDRESS FOR NOTICES:
Credit Lyonnais
1301 Avenue of the Americas
New York, New York 10019
Attention: Peter Kelly
Telephone: 212/261-7175
Telecopier: 212/459-3170
<PAGE>
146
ISTITUTO BANCARIO SAN PAOLO DI TORINO, S.P.A.
By: /s/: Roberto Gorlier
-------------------------------------
Name: Roberto Gorlier
Title: Deputy General Manager
By: /s/: Robert Wurster
-------------------------------------
Name: Robert Wurster
Title: First Vice President
REVOLVING CREDIT COMMITMENT
$25,000,000
ADDRESS FOR NOTICES:
CREDIT MATTERS: Istituto Bancario San Paolo di Torino, S.p.A.
444 South Flower Street - 45th Floor
Los Angeles, California 90071
Attention: Glen Binder
Telephone: 213/489-3100
Telecopier: 213/622-2514
FUNDING AND ADMINISTRATIVE
MATTERS: Istituto Bancario San Paolo di Torino, S.p.A.
245 Park Avenue - 35th Floor
New York, New York 10167
Attention: Alessandro Garelli
Telephone: 212/692-3170
Telecopier: 212/599-5303
WITH A COPY TO:
Istituto Bancario San Paolo di Torino, S.p.A.
444 South Flower Street - 45th Floor
Los Angeles, California 90071
Attention: Glen Binder
Telephone: 213/489-3100
Telecopier: 213/622-2514
<PAGE>
147
SOCIETE GENERALE, NEW YORK BRANCH
By: /s/: Richard Cuene-Grandidier
-------------------------------------
Name: Richard Cuene-Grandidier
Title: Vice President
REVOLVING CREDIT COMMITMENT
$33,000,000
ADDRESS FOR NOTICES:
Societe Generale, New York Branch
1221 Avenue of the Americas
New York, New York 10020
Attention: Eric Magac
Telephone: 212/278-7353
Telecopier: 212/278-7462
<PAGE>
148
SWISS BANK CORPORATION, New York and Cayman
Island Branches
By: /s/: Hanno Huber
-------------------------------------
Name: Hanno Huber
Title: Associate Director, Corporate
Clients
Switzerland
By: /s/: Guido W. Schuler
-------------------------------------
Name: Guido W. Schuler
Title: Executive Director, Corporate
Clients
Switzerland
REVOLVING CREDIT COMMITMENT
$33,000,000
ADDRESS FOR NOTICES:
Swiss Bank Corporation
222 Broadway
New York, New York 10038
Attention: Hanno Huber
Telephone: 212/574-3177
Telecopier: 212/574-3155
<PAGE>
149
UNION BANK OF SWITZERLAND
By: /s/: C.C. Glockler
-------------------------------------
Name: C.C. Glockler
Title: Vice President
By: /s/: Mary V. Turnbach
-------------------------------------
Name: Mary V. Tuurnbach
Title: Assistant Treasurer
REVOLVING CREDIT COMMITMENT
$33,000,000
ADDRESS FOR NOTICES:
Union Bank of Switzerland
299 Park Avenue - 33rd Floor
New York, New York 10171
Attention: Chris Glockler
Telephone: 212/821-3853
Telecopier: 212/821-3878
<PAGE>
150
CREDIT SUISSE (LUXEMBOURG) S.A., as a Local
Lender
By: /s/: Ernst Van Beck
-------------------------------------
Name: Ernst Van Beck
Title: Senior Management
By: /s/: Charles Denotte
-------------------------------------
Name: Charles Denotte
Title: Associate
ADDRESS FOR NOTICES:
Credit Suisse (Luxembourg) S.A.
Boite Postale 40
1660 Luxembourg
Attention: Charles Denotte - Loan Dept.
Telephone: (352) 46 00 11
Facsimile: (352) 46 32 71
<PAGE>
151
ISTITUTO BANCARIO SAN PAOLO DI TORINO S.P.A.,
as a Local Lender
By:
-------------------------------------
Name:
Title:
ADDRESS FOR NOTICES:
<PAGE>
152
CREDIT SUISSE, as a Local Lender
By: /s/: L.F. Wybraniec
-------------------------------------
Name: L.F. Wybraniec
Title: Head of Pharmaceuticals & Chemicals
By: /s/: Ian Piddock
-------------------------------------
Name: Ian Piddock
Title: Head of Client Services
ADDRESS FOR NOTICES:
Credit Suisse
5 Cabot Square
London E14 4QR
England
Attention: Sarah Curtis - Client Services Unit
Telephone: 171-888-8361
Telecopier: 171-888-8398
<PAGE>
153
BANCO SAN PAOLO S.A., as a Local Lender
By:
-------------------------------------
Name:
Title:
ADDRESS FOR NOTICES:
<PAGE>
SCHEDULE 1.1-A
ADMINISTRATIVE AGENT'S EUROPEAN ACCOUNTS
POUNDS STERLING: Royal Bank of Scotland
Correspondent Banking Branch
5-10 Great Tower Street
London EC3P 3HX
United Kingdom
Account Name: Credit Suisse London
Account No: 12302000
Sort Code: 16 52 24
UNITED STATES DOLLARS: Credit Suisse
PO Box 3700
Church Street Station
New York, New York 10008
United States of America
Account Name: Credit Suisse London
Account No: 11673401
Telex No: 420149
Swift Code: CRES U$ 33
FRENCH FRANCS: Societe Generale
Boite Postale 31709
75454 Paris
Cedex 09
France
Account Name: Credit Suisse London
Account No: 000 101 100 7 00
Swift Code: SOGE FR PP
BELGIAN FRANCS: General De Banque
3 Montagne Du Parc
1000 Brussels
Belgium
Account Name: Credit Suisse London
Account No: 1103748-001
Swift Code: GEBA BE BB36A
SPANISH PESETAS: Banco De Santander
Paseo de la Castellana 75
28046 Madrid
Spain
Account Name: Credit Suisse London
Account No: 810 684
Swift Code: BDER ES MM
<PAGE>
2
ITALIAN LIRA: Banca Commerciale Italiana
PO Box 1181-1279
1-20101 Milan
Italy
Account Name: Credit Suisse London
Account No: 09643600100
Swift Code: BCIT IT MM
AUSTRIAN SCHILLINGS: Bank of Austria AG
AM HOF 2, POB 271
1011 Vienna
Austria
Account Name: Credit Suisse London
Account Number: 126-130-217/01
Swift Code: BKAUATWW
GERMAN MARKS: Schweizerische Kreditanstalt (Deutschland) AG
Kaiserstrasse 30
Postflach 102023
D-60311, Frankfurt am Main 1
Republic of Germany
Account Name: Credit Suisse London
Account Number: 00033373-5
Swift Code: CRES DE FF
DUTCH GUILDERS: Deutsche Bank De Bary NV
P.O. Box 268
Herengracht 448-454
NL 1002 Amsterdam
The Netherland
Account Name: Credit Suisse London
Account Number: 26 53 09 670 15 2100
Swift Code: BARY NL 2A
<PAGE>
SCHEDULE 5.12
EXISTING LETTERS OF CREDIT
<TABLE>
<CAPTION>
ISSUING BANK BENEFICIARY STATED AMOUNT EXPIRY DATE L/C NUMBER
<S> <C> <C> <C> <C>
Banque Nationale de Paris First Trust of California $2,193500 12/31/98 0086057
Banque Nationale de Paris First Trust of California $802,500 12/31/98 0086063
Banque Nationale de Paris First Trust of California $3,370,500 12/31/98 0086066
Banque Nationale de Paris First Trust of California $2,598,630 12/31/98 0086166
Banque Nationale de Paris Safeco Insurance Co. $576,000 3/5/97 0086850
Banque Nationale de Paris Northrop Grumman Corp. $1,563,819 3/7/97 0189019
Banque Nationale de Paris Zurich Insurance Co. $100,000 3/7/97 0189020
Banque Nationale de Paris Home Insurance Co. $75,000 3/7/97 0189021
Banque Nationale de Paris Safeco Insurance Co. $296,925 3/7/97 0189022
Banque Nationale de Paris Self-Insurance Plans $475,247 3/7/97 0189023
Banque Nationale de Paris Zurich Reinsurance Co. $92,290 3/12/97 0189033
Banque Nationale de Paris Zurich Insurance Co. $100,000 3/24/97 0189067
Banque Nationale de Paris H.M. Customs & Excise $200,000 4/1/97 0189072
OTHERS TO COME FROM HEXCEL
</TABLE>
