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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended September 30, 1996
COMMISSION FILE NO. 1-4474
--------------------------
OAK INDUSTRIES INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 36-1569000
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
1000 WINTER STREET
WALTHAM, MASSACHUSETTS 02154
(Address of principal executive offices)
(617) 890-0400
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes /X/ No / /
Indicate number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
As of October 31, 1996, the Company had outstanding 18,310,438 shares of
Common Stock, $0.01 par value per share.
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM I. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
(Unaudited)
------------------ -----------------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents.................. $ 10,623 $ 16,842
Receivables, less reserve.................. 44,829 38,314
Inventories:
Raw materials.......................... $ 12,932 $ 12,308
Work in process........................ 28,859 29,679
Finished goods......................... 10,155 51,946 6,527 48,514
--------- ---------
Deferred income taxes...................... 12,829 19,900
Other current assets....................... 3,489 3,088
--------- ---------
Total current assets................ 123,716 126,658
Plant and equipment, at cost................. 140,674 123,083
Less - accumulated depreciation.............. (76,399) 64,275 (70,009) 53,074
--------- ---------
Deferred income taxes........................ 8,392 17,242
Goodwill and other intangible assets, less
accumulated amortization of
$10,170 and $9,518........................ 76,663 79,094
Investments in affiliates.................... 8,356 20,940
Net assets of discontinued operations........ 8,727 8,438
Other assets................................. 6,458 5,827
--------- ---------
Total assets........................ $ 296,587 $ 311,273
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of long-term debt......... $ 5,098 $ 14,691
Accounts payable.......................... 14,119 15,103
Accrued liabilities....................... 27,393 22,425
--------- ---------
Total current liabilities........... 46,610 52,219
Other liabilities............................ 7,546 11,628
Long-term debt............................... 38,416 91,570
Minority interest............................ 43,254 36,643
Stockholders' Equity:
Common stock............................. 182 177
Additional paid-in capital............... 289,589 282,179
Accumulated deficit...................... (127,215) (161,528)
Other.................................... (1,795) 160,761 (1,615) 119,213
--------- --------- --------- ---------
Total liabilities and
stockholders' equity............ $ 296,587 $ 311,273
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
---------------------- ----------------------
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net sales....................................... $ 74,086 $ 59,886 $ 233,413 $ 186,338
Cost of sales................................... (44,803) (36,435) (139,826) (111,790)
--------- --------- --------- ---------
Gross profit.................................... 29,283 23,451 93,587 74,548
Selling, general and administrative expenses.... (14,303) (12,018) (47,264) (34,881)
Purchased in-process research and development... - (80,872) - (80,872)
--------- --------- --------- ---------
Operating income (loss)......................... 14,980 (69,439) 46,323 (41,205)
Interest expense................................ (990) (1,469) (4,100) (4,068)
Interest income................................. 108 451 374 1,426
Gain on sale of equity investments.............. 952 - 21,502 -
Equity in net income (loss) of
affiliated companies......................... (159) 236 (1,065) 1,171
--------- --------- --------- ---------
Income (loss) from continuing operations before
income taxes and minority interest........... 14,891 (70,221) 63,034 (42,676)
Income taxes.................................... (5,193) (4,152) (23,552) (6,617)
Minority interest in net income of subsidiaries. (1,786) (2,400) (6,611) (7,738)
--------- --------- --------- ---------
Income (loss) from continuing operations........ 7,912 (76,773) 32,871 (57,031)
Income from discontinued operations, net of
income taxes................................. 358 538 1,442 2,334
--------- --------- --------- ---------
Net income (loss) before extraordinary charge... 8,270 (76,235) 34,313 (54,697)
Extraordinary charge for early extinguishment
of debt, net of income tax benefit of $1,506
and minority interest benefit of $746........ - (1,610) - (1,610)
--------- --------- --------- ---------
Net income (loss)............................... $ 8,270 $ (77,845) $ 34,313 $ (56,307)
========= ========= ========= =========
Income (loss) per common share:
Continuing operations........................ $ .42 $ (4.11) $ 1.76 $ (3.06)
Discontinued operations...................... .02 .03 .08 .12
Extraordinary charge......................... - (.09) - (.09)
--------- --------- --------- ---------
Net income (loss)............................ $ .44 $ (4.17) $ 1.84 $ (3.03)
========= ========= ========= =========
Weighted average shares......................... 18,827 18,679 18,612 18,613
========= ========= ========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30,
----------------------
1996 1995
-------- --------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS FROM:
Operating Activities:
Net income........................................... $ 32,871 $ (57,031)
Adjustments to reconcile income (loss)
from continuing operations to net cash provided
by operations:
Purchased in-process research and
development charge........................... - 80,872
Depreciation and amortization.................. 9,498 8,400
Change in minority interest.................... 6,611 7,738
Gain on sale of equity investment.............. (21,502) -
Change in assets and liabilities............... 8,375 (9,272)
Other.......................................... (123) (1,928)
-------- ---------
Net cash provided by continuing operations.............. 35,730 28,779
-------- ---------
Investing Activities:
Capital expenditures................................. (18,798) (10,900)
Acquisition of business, net of cash acquired........ - (100,019)
Proceeds from the sale of equity investment.......... 30,871 -
Other................................................ 337 277
-------- --------
Net cash provided by (used in) investing activities..... 12,410 (110,642)
-------- --------
Financing Activities:
Long-term borrowings.................................. - 114,000
Repayment of borrowings............................... (62,747) (22,315)
Early retirement of debt.............................. - (28,610)
Exercise of options................................... 7,352 441
Other................................................. 285 (1,627)
-------- --------
Net cash provided by (used in) financing activities...... (55,110) 61,889
-------- --------
Effect of exchange rates................................. (402) 1,180
-------- --------
Net cash provided by discontinued operations............. 1,153 681
-------- --------
Cash and Cash Equivalents:
Net change during the period.......................... (6,219) (18,113)
Balance, beginning of period.......................... 16,842 37,548
-------- --------
Balance, end of period................................ $ 10,623 $ 19,435
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
<PAGE>
OAK INDUSTRIES INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated financial statements have been prepared by
Oak Industries Inc. (the "Company") without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. The Company believes that the disclosures made in this report
are adequate to make the information presented not misleading. It is
suggested that these condensed financial statements be read in conjunction
with the financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K. In the opinion of the
Company, all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the financial position of Oak Industries Inc.
and subsidiaries as of September 30, 1996 and December 31, 1995, and the
results of their operations for the three and nine month periods ending
September 30, 1996 and 1995 and cash flows for the nine month periods
ending September 30, 1996 and 1995 have been included. The results of
operations for such interim periods are not necessarily indicative of the
results for the full year.
2. Interest paid on debt for the three months ending September 30, 1996
and 1995 was $841,000 and $532,000, respectively, and for the nine months
ending September 30, 1996 and 1995 was $4,096,000 and $2,806,000,
respectively. Income taxes, consisting primarily of foreign and state,
paid during the three months ended September 30, 1996 and 1995 were
$831,000 and $960,000, respectively, and during the nine months ended
September 30, 1996 and 1995 were $5,407,000 and $2,707,000, respectively.
3. During the third quarter of 1996, the Company completed the sale of
its 45% interest in O/E/N India Ltd. for $1,471,000 in cash. As a result
of this sale the Company reported a pre-tax gain of $952,000 on the "Gain
on sale of equity investments" line of the Consolidated Statement of
Operations in the third quarter of 1996.
4. During the first quarter of 1996, the Company sold its 49% interest in
Video 44 (WSNS-TV Channel 44), a Hispanic television station located in
Chicago, and received net proceeds of $29,400,000. The Company recorded a
pre-tax gain of $20,550,000 from the sale. Proceeds of $29,000,000 were
used to reduce debt.
5. During the first quarter of 1996, the Company recorded a pre-tax
charge of $1,900,000 associated with the write down of certain assets and a
reserve for potential legal and environmental costs.
6. Certain items in the 1995 Consolidated Statement of Operations have
been reclassified to conform with 1996 presentation.
7. Subsequent events:
a) In October 1996, the Company sold its Nordco Inc. ("Nordco")
subsidiary to an affiliate of Banc One Venture Corporation and members
of Nordco management for net cash proceeds of approximately
$19,381,000. Additionally, prior to the sale, Nordco repaid
approximately $1,600,000 of cash owed to the Company. The Company
will report a gain of approximately $9,000,000 from the sale in the
fourth quarter of 1996. Because the tax basis of Nordco is greater
than the sales price, the Company will not pay income taxes nor record
an income tax provision related to this transaction.
As a result of the sale of Nordco, the Company has restated its
prior year consolidated financial statements to reflect Nordco as a
discontinued operation. The results of the discontinued operations
reflected in the consolidated statements of operations are as follows
($000s):
<TABLE>
<CAPTION>
For The Three Months For The Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
-------------------- --------------------
<S> <C> <C> <C> <C>
Net sales...................... $ 4,694 $ 5,156 $16,715 $17,236
======= ======= ======= =======
Gross profit........ $ 1,628 $ 2,086 $ 5,780 $ 6,475
======= ======= ======= =======
Earnings before income taxes $ 577 $ 882 $ 2,325 $ 2,852
Income taxes............. (219) (344) (883) (518)
------- ------- ------- -------
Net earnings from discontinued
operations............... $ 358 $ 538 $ 1,442 $ 2,334
======= ======= ======= =======
</TABLE>
The components of net assets of discontinued operations included in the
Consolidated Balance Sheet at September 30, 1996 and December 31, 1995 were
as follows ($000s):
<TABLE>
<CAPTION>
September 30, 1996 December 31, 1995
------------------ -----------------
<S> <C> <C>
Inventories...................... $ 3,719 $ 3,814
Receivables, less reserve........ 3,623 2,317
Other current assets............. 697 827
PP&E, net........................ 517 494
Intangibles, net................. 612 699
Other............................ 907 1,742
Current liabilities.............. (1,348) (1,455)
------- -------
Net assets of discontinued
operations................... $ 8,727 $ 8,438
======= =======
</TABLE>
b) On November 1, 1996, the Company purchased the 20% interest in
Connector Holding Co. ("Connector") owned by certain affiliates of
Bain Capital, Inc. ("Bain") for approximately $95,000,000 in cash,
including transaction expenses. Because Connector owns 85% of Gilbert
Engineering Co., Inc. ("Gilbert"), as a result of this transaction
the Company acquired a 17% indirect interest in Gilbert. The
acquisition will be accounted for as a purchase and accordingly the
minority interest related to Bain subsequent to the date of
acquisition will be excluded from the Company's consolidated financial
statements. Substantially all of the goodwill of approximately
$72,000,000 resulting from this acquisition will be amortized over 36
years. The purchase price was financed with the proceeds from a new
$300,000,000 revolving credit facility.
c) On November 1, 1996, the Company entered into a new credit
agreement with various lenders which provides for a $300,000,000
revolving credit facility (the "Facility"). On November 1, 1996,
proceeds of $95,000,000 from the Facility were used to purchase the
minority interest of Connector owned by Bain and $21,000,000 was used
to refinance existing indebtedness of the Company. The Company's
previously existing $200,000,000 credit agreements were terminated on
November 1, 1996. The Company will incur a non-cash, after tax charge
of approximately $949,000 in the fourth quarter of 1996 related to the
early extinguishment of the former credit facilities.
Borrowings under the Facility bear interest, at the option of the
Company, either (i) at the prime rate (or, if higher, at 1/2% above
the federal funds rate) or (ii) at a spread of (1/2% to 1%) over the
reserve-adjusted 1, 2, 3 or 6 month LIBOR rate. The spread is
initially 3/4% and is subject to adjustment based on certain financial
tests. Certain of the Company's subsidiaries have guaranteed the
obligations under the Facility. The Company is required to meet
certain financial covenants and is prohibited from paying dividends.
The Facility will be reduced by $50,000,000 on each of November
1, 1999 and November 1, 2000 and matures on December 31, 2001.
d) In November 1996, the Company announced that it has agreed to
purchase the 15% interest in Gilbert that is currently owned by
certain members of the management of Gilbert. The Company expects to
purchase 7.5% of Gilbert from Gilbert management in the fourth quarter
of 1996 at a purchase price of approximately $30,600,000. This
acquisition will be accounted for as a purchase and accordingly, the
minority interest related to the portion purchased from Gilbert
management subsequent to the date of acquisition will be excluded from
the Company's consolidated financial statements. Substantially all of
the goodwill of approximately $20,000,000 resulting from this
acquisition will be amortized over 36 years. Upon the consummation of
this transaction in the fourth quarter of 1996, the Company will own
92.5% of Gilbert. The Company will purchase the remaining 7.5% over
the next two years at a price that will be a multiple of earnings.
These transactions will be financed with working capital and the
borrowings from the new $300,000,000 revolving credit facility.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
In October 1996, the Company sold its Nordco Inc. ("Nordco") subsidiary
which was the only business included in the Other Segment. As a result of
the sale, the Company has restated prior year consolidated financial
statements to reflect Nordco as a discontinued operation. The Company now
operates entirely in one segment, the Components Segment. The Company
expects to recognize a gain of approximately $9.0 million due to its sale
of its Nordco subsidiary during the fourth quarter of 1996.
On November 1, 1996, the Company purchased the 20% interest in Connector
Holding Co. ("Connector") owned by certain affiliates of Bain Capital, Inc.
("Bain") for approximately $95 million in cash, including transaction
expenses. Because Connector owns 85% of Gilbert Engineering Co., Inc.
("Gilbert"), as a result of this transaction the Company acquired a 17%
indirect interest in Gilbert. The acquisition will be accounted for as a
purchase and accordingly the minority interest related to Bain subsequent
to the date of acquisition will be excluded from the Company's consolidated
financial statements. Substantially all of the goodwill of approximately
$72 million resulting from this acquisition will be amortized over 36
years. The purchase price was financed with the proceeds from a new $300
million revolving credit facility.
In November 1996, the Company announced that it has agreed to purchase
the 15% interest in Gilbert that is currently owned by certain members of
the management of Gilbert. The Company expects to purchase 7.5% of Gilbert
from Gilbert management in the fourth quarter of 1996 at a purchase price
of approximately $30.6 million. This acquisition will be accounted for as
a purchase and accordingly, the minority interest related to the portion
purchased from Gilbert management subsequent to the date of acquisition
will be excluded from the Company's consolidated financial statements.
Substantially all of the goodwill of approximately $20 million resulting
from this acquisition will be amortized over 36 years. Upon the
consummation of this transaction in the fourth quarter of 1996, the Company
will own 92.5% of Gilbert. The Company will purchase the remaining 7.5%
over the next two years at a price that will be a multiple of earnings.
These transactions will be financed with working capital and the borrowings
from the new $300 million revolving credit facility.
The Company's previously existing $200 million credit agreements were
terminated on November 1, 1996. The Company will incur a non-cash, after
tax charge of approximately $0.9 million in the fourth quarter of 1996
related to the early extinguishment of the former credit facilities.
Third Quarter Results
Sales for the third quarter of 1996 reached $74.1 million, an increase
of 23.7% over the $59.9 million in the same period of 1995 primarily due to
incremental sales of Lasertron Inc. ("Lasertron"), purchased in September
1995 and increased sales of Controls Components.
The Company reported net income of $8.3 million in 1996 compared to a
net loss of $77.8 million in 1995. The Company's results of operations for
the three months ended September 30, 1996 and 1995 can be summarized as
follows (in millions):
<TABLE>
<CAPTION>
For The Three Months
Ended September 30,
1996 1995
-------- -------
<S> <C> <C>
Pre-tax income excluding unusual items........ $ 13.9 $ 11.2
Income taxes.................................. (4.8) (4.3)
Minority interest............................. (1.8) (2.4)
Income from discontinued operations........... .4 .5
------ ------
Net income excluding unusual items............ 7.7 5.0
Unusual items:
Gain on the sale of equity investment (1) . .9 -
Purchased in-process research and
development (2)......................... # (80.9)
Reversal of inventory write-up required by
purchase accounting (3)................. # (.5)
Tax effect of unusual items (1), (3)....... (.3) .2
Extraordinary charge for early
extinguishment of debt (4).............. # (1.6)
------ ------
Net income as reported........................ $ 8.3 $(77.8)
====== ======
<FN>
(1) In the third quarter of 1996, the Company completed the sale of its
45% interest in O/E/N India Ltd. for $1.5 million in cash and
recorded a pre-tax gain of $0.9 million. The Company also recorded
an income tax expense of $0.3 million related to this gain.
(2) In the third quarter of 1995, the Company recorded a charge of $80.9
million related to purchased in-process research and development in
connection with the Lasertron acquisition.
(3) In the third quarter of 1995, the Company recorded a charge of $0.5
million, included in cost of goods sold, related to the partial
reversal of the write-up of Lasertron inventory required by purchase
accounting. The Company also recorded an income tax benefit of $0.2
million related to this charge.
(4) In the third quarter of 1995, the Company recorded an extraordinary
charge of $1.6 million, net of taxes and minority interest, related
to the early extinguishment of debt at Gilbert and Connector.
</TABLE>
Income from continuing operations, excluding unusual items, increased
66.3% to $7.3 million in the third quarter of 1996 from $4.5 million
recorded in the third quarter of 1995. Operating income increased $3.0
million from third quarter 1995 results due primarily to incremental
profits from higher sales volume.
COMMUNICATIONS COMPONENTS
Communications Components revenues increased 21.9% in the third quarter
of 1996 over the same period in 1995 due primarily to incremental revenues
from Lasertron, which was purchased in September 1995 and therefore
included for only one month in the third quarter 1995 results. Subsequent
to the end of the third quarter of 1996, Gilbert's single largest
customer, a domestic CATV service provider, notified the Company that it
was temporarily suspending all shipments from its vendors as part of an
inventory reduction program. The impact on the Company's fourth quarter
results cannot be reasonably estimated at this time.
CONTROLS COMPONENTS
The sales of Controls Components increased 28.3% in the third quarter of
1996 over the same period in 1995, principally as the result of increased
demand for sensing devices combined with sales growth of gas appliance
control products.
GROSS PROFIT
The gross profit margin excluding unusual items, decreased to 39.5% for
the third quarter of 1996 from 40.0% in the third quarter of 1995 due
primarily to a higher mix of lower margin control components and expenses
associated with the start up of the new Lasertron facilities in the third
quarter of 1996. Adjustments to reflect inventories at fair value,
required by purchase accounting for the acquisition of the 24.5% interest
in Gilbert previously owned by Bain and certain members of Gilbert
management, will flow through cost of sales as the inventories are assumed
to be sold during the fourth quarter of 1996.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses, excluding unusual items,
increased from $12.0 million in the third quarter of 1995 to $14.3 million
in the third quarter of 1996 due to the inclusion of Lasertron for a full
quarter in 1996 and for only one month in 1995. Despite this increase,
selling, general and administrative expenses decreased as a percentage of
sales to 19.3% in the third quarter of 1996 from 20.1% in the third quarter
of 1995. Beginning with the fourth quarter of 1996, annual amortization
expense of approximately $2.5 million relating to the goodwill from the
purchase of the 24.5% interest in Gilbert previously owned by Bain and by
certain members of Gilbert management, will be reflected in selling,
general and administrative expenses.
INTEREST
Interest expense decreased to $1.0 million in the third quarter of 1996
from $1.5 million in 1995 due to lower average debt balances. Higher
interest expense resulting from increased borrowings for the purchase of
the 24.5% interest in Gilbert previously owned by Bain and by certain
members of Gilbert management, will be reflected beginning with the fourth
quarter of 1996.
Interest income decreased to $0.1 million in 1996 from $0.5 million in
the third quarter of 1995 as average cash balances decreased. The Company
used approximately $20.0 million of cash in conjunction with its
acquisition of Lasertron in September of 1995.
EQUITY INCOME
Equity income decreased from $0.2 million in the third quarter of 1995
to a loss of $0.2 million in the third quarter of 1996. The Company sold
its 49% interest in Video 44 (WSNS-TV Channel 44), a Hispanic television
station located in Chicago, in the first quarter of 1996 and as a result,
the Company's proportionate share of Video 44's earnings was not included
in the third quarter of 1996. As a result of its acquisition of Lasertron
in September 1995, the Company has included in equity income its
proportionate share of the earnings or losses of its 50% owned Wuhan
Telecommunications Devices Company ("WTD"), located in the People's
Republic of China.
INCOME TAXES
The effective income tax rate excluding unusual items was 34.9% for the
third quarter of 1996 as compared to 39.0% in the third quarter of 1995.
This reduction in the tax rate was the result of the favorable resolution
of several state tax matters during the third quarter of 1996.
MINORITY INTEREST
Minority interest expense decreased from $2.4 million in the third
quarter of 1995 to $1.8 million in the third quarter of 1996. This
decrease is due to the fact that, as a result of a tax sharing agreement
between the Company and Gilbert, the minority interest of Gilbert benefited
from a lower cash tax rate for financial reporting purposes in the third
quarter of 1995. Beginning with the fourth quarter of 1996, minority
interest related to the purchase of the 24.5% interest in Gilbert
previously owned by Bain and by certain members of Gilbert management will
be excluded from the Company's future consolidated financial statements.
Nine Month Results
Sales for the first nine months of 1996 were $233.4 million, and
increased 25.3% from $186.3 million in the first nine months of 1995
primarily due to incremental sales of Lasertron, purchased in September
1995, and also due to growth in the Communication Components and Controls
Components businesses.
The Company reported net income of $34.3 million for the first nine
months of 1996 compared to a loss of $56.3 million in 1995. However, both
periods include unusual items as detailed below. Net income for the first
nine months of 1996 includes a net gain of $13.3 million ($21.5 million
less $8.2 million income tax expense) from the sale of the Company's 49%
interest in Video 44, a joint venture owning WSNS-TV Channel 44 and the
sale of the Company's 45% interest in O/E/N India Ltd. The first nine
months of 1996 also included the write down of certain assets and a reserve
to cover certain legal and environmental contingencies of $1.2 million.
The Company's results of operations for the first nine months of 1996
and 1995 can be summarized as follows (in millions):
<TABLE>
<CAPTION>
For The Nine Months For The Nine Months
Ended September 30, Ended September 30,
1996 1995
------------------- -------------------
<S> <C> <C>
Pre-tax income excluding unusual items......... $ 43.5 $ 38.7
Income taxes................................... (16.1) (6.8)
Minority interest.............................. (6.6) (7.7)
Income from discontinued operations............ 1.4 2.3
------ ------
Net income excluding unusual items............. 22.2 26.5
Unusual items:
Gain on the sale of equity investment....... 21.5 -
Asset write down and other reserves......... (1.9) -
Tax impact of unusual items................. (7.5) -
Purchased in-process research and
development (1).......................... - (80.9)
Reversal of inventory write-up required
by purchase accounting (2) .............. - (.5)
Tax effect of reversal of inventory
write-up (2)............................. - .2
Extraordinary charge for early
extinguishment of debt (3)............... - (1.6)
------ ------
Net income (loss) as reported.................. $ 34.3 $(56.3)
====== ======
<FN>
(1) In the third quarter of 1995, the Company recorded a charge of $80.9
million for purchased, in-process research and development in
connection with the Lasertron acquisition.
(2) In the third quarter of 1995, the Company recorded a charge of $0.5
million, included in cost of goods sold, related to the partial
reversal of the write-up of Lasertron inventory required by purchase
accounting. The Company also recorded an income tax benefit of $0.2
million related to this charge.
(3) In the third quarter of 1995, the Company recorded an extraordinary
charge of $1.6 million, net of taxes and minority interest, related
to the early extinguishment of debt at Gilbert and Connector.
</TABLE>
The first nine months of 1996 income tax provision, excluding the impact
of unusual items, increased $9.6 million over the same period in 1995
principally due to an increase in the effective tax rate for financial
reporting purposes. The annual effective income tax rate for financial
reporting purposes increased to 37% in the first nine months of 1996 from
18% in the corresponding period of the prior year reflecting the provision
of a full U.S. statutory rate beginning in the third quarter of 1995.
Minority interest decreased $1.1 million in the first nine months of 1996
as compared to the same period in 1995, due to the fact that as a result of
a tax sharing agreement between the Company and Gilbert, the minority
interest of Gilbert benefited from a lower tax rate for financial reporting
purposes in the first nine months of 1995.
Pre-tax income before minority interest and unusual items increased by
$4.8 million to $43.5 million in the first nine months of 1996 from $38.7
million recorded in 1995. Operating income, before unusual items,
increased $7.2 million from 1995 results due primarily to incremental
profits from higher sales volume and it was partially offset by decreased
interest income ($1.1 million) and decreased equity income ($1.3 million).
COMMUNICATIONS COMPONENTS
Communications Components revenues increased 31.8% in the first nine
months of 1996 over the same period in 1995. Excluding the impact of
Lasertron, which was purchased in September 1995 and therefore not included
in all of 1995 results, Communication Components revenues increased 11.1%
over the first nine months of 1995. Excluding Lasertron, Communications
Components sales increased over prior year's results due primarily to
increased construction of cable television networks in international
markets, upgrading of domestic cable systems, and expanding applications
for products in cellular, paging and personal communications systems.
CONTROLS COMPONENTS
Sales of Controls Components increased 12.2% in the first nine months of
1996 over the same period in 1995 principally as the result of increased
demand for sensing devices combined with modest sales growth of gas
appliance control products.
GROSS PROFIT
Gross profit margin, excluding unusual items, was 40.2% for the first
nine months of 1996 and 40.3% for the same period in 1995.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses, excluding unusual items,
increased as a percentage of sales to 19.9% in the first nine months of
1996 from 18.7% in the same period of 1995 due to an increase in research
and development expenditures related to the acceleration of product
prototyping activity for wireless communications and wired telephony
applications. Most of the increase was attributable to Lasertron which was
acquired in September 1995.
INTEREST EXPENSE
Interest expense was $4.1 million for both the first nine months of 1996
and 1995.
Interest income decreased to $0.4 million in 1996 from $1.4 million in
the first nine months of 1995 as average cash balances decreased. The
Company used approximately $20.0 million of cash in conjunction with its
acquisition of Lasertron in September 1995.
EQUITY INCOME
During the first nine months of 1996, the Company sold its 49% interest
in Video 44 (WSNS-TV Channel 44), a Hispanic television station located in
Chicago, and received net proceeds of $29.4 million. The Company recorded
a pre-tax gain of $20.5 million from the sale. Due to this transaction,
the Company's proportionate share of Video 44's earnings was included in
1995 results but not in the nine months of 1996 results subsequent to the
sale. In addition, as a result of its acquisition of Lasertron, the
Company has included in equity income its proportionate share of the
earnings or losses of its 50% owned Wuhan Telecommunications Devices
Company ("WTD"), located in the People's Republic of China in 1996 results.
LIQUIDITY AND CAPITAL RESOURCES
Cash flow from operations increased to $35.7 million in the first nine
months of 1996 from $28.8 million generated in the same period in 1995,
reflecting an increase in income from operations combined with a reduction
in the level of working capital. The Company accelerated its rate of
capital spending to $18.8 million in the first nine months of 1996 from
$10.9 million in the same period for 1995 due, in part, to new capacity
brought on line to support higher production volumes and new products and
in part, to additional expenditures for automation of production processes
to reduce both cost and manufacturing cycle time, expanded use of CAD
capabilities and new prototyping equipment to reduce development cycle
times.
Debt net of cash decreased to $32.9 million at September 30, 1996 from
$89.4 million at December 31, 1995. The cash proceeds from the sale of the
Company's 49% interest in Video 44 (WSNS-TV Channel 44), a Hispanic
television station located in Chicago, were used to reduce debt. In
addition, the Company repaid $33.7 of debt in the first nine months of
1996.
On November 1, 1996, the Company entered into a new credit agreement
with various lenders which provides for a $300 million revolving credit
facility (the "Facility"). On November 1, 1996, proceeds of $95 million
from the Facility were used to purchase the minority interest of Connector
held by certain affiliates of Bain and $21 million was used to refinance
existing indebtedness of the Company. The Company's previously existing
$200 million credit agreements were terminated on November 1, 1996.
Borrowings under the Facility bear interest, at the option of the
Company, either (i) at the prime rate (or, if higher, at 1/2% above the
federal funds rate) or (ii) at a spread of (1/2% to 1%) over the reserve-
adjusted 1, 2, 2 or 6 month LIBOR rate. The spread is initially 3/4% and
is subject to adjustment based on certain financial tests. Certain of the
Company's subsidiaries have guaranteed the obligations under the Facility.
The Company is required to meet certain financial covenants and is
prohibited from paying dividends.
The Facility will be reduced by $50.0 million on each of November 1,
1999 and November 1, 2000 and matures on December 31, 2001.
In November 1996, the Company announced that it has agreed to purchase
the 15% interest in Gilbert that is currently owned by certain members of
the management of Gilbert. The Company expects to purchase from Gilbert
management 7.5% of Gilbert in the fourth quarter of 1996 at a purchase
price of approximately $30.6 million. Upon the consummation of this
transaction in the fourth quarter of 1996, the Company will own 92.5% of
Gilbert The Company will purchase the remaining 7.5% over the next two
years at a price that will be a multiple of earnings. These transactions
will be financed with working capital and the borrowings from the new $300
million revolving credit facility.
In October 1996, the Company sold its Nordco Inc. subsidiary for $19.4
million in cash. These proceeds were used to further pay down debt in the
fourth quarter of 1996.
The Company believes that funds generated by operations, existing cash
balances and its available credit facility will be sufficient to fund the
Company's ongoing operations over the next year.
RISKS AND UNCERTAINTIES
Revenues from telecommunications components will account for a majority
of the Company's future revenues. Although demand for these products has
grown in recent years with the build out of telecommunications networks in
domestic and international markets, a decrease in the rate of
infrastructure construction or upgrade programs could have an adverse
impact on the Company's results of operations.
The telecommunications industry is very competitive and is characterized
by rapid technological change, new product development, product
obsolescence and evolving product specifications. Additionally, price
competition in this market is intense with significant price erosion over
the life cycle of a product. The ability of the Company to compete
successfully depends on the continued introduction of new products and
ongoing manufacturing cost reduction.
Sales of the Company's Controls Components are in large part dependent
on the production level of a few North American appliance manufacturers,
which in turn is sensitive to the strength of the economy, including
housing starts, consumer disposable income and interest rates. Adverse
changes in the economy could have a negative impact on the Company's
financial results.
The Company currently buys a number of raw materials from single
sources. In most cases there are readily available and qualified
alternative sources of supply. Although the Company does not at this time
have a qualified second source for one critical component used in the
production of fiber optic modules, management believes there are other
suppliers that could provide a like quality product on comparable terms. A
change in suppliers for this product could cause a delay in manufacturing
and adversely impact operating results.
The Company must comply with governmental regulations relating to the
environment. The cost of compliance with environmental regulations in 1995
was immaterial and is not expected to have a material effect on capital
expenditures or operating results in 1996.
Various pending or threatened legal proceedings by or against the
Company or one or more of its subsidiaries involve alleged breaches of
contract, torts and miscellaneous other causes of action arising in the
course of business. The Company's management, based upon advice of legal
counsel representing the Company with respect to each of these proceedings,
does not believe any of these proceedings will have a significant impact on
the Company's consolidated financial position.
The Company's international operations and its results could be affected
by changes in policies of foreign governments and in social and economic
conditions outside the U.S. including civil unrest, changing inflation and
foreign exchange rates, and trade restrictions or prohibitions.
Any of the foregoing could have an adverse effect on future results.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the Company's Annual Report on Form 10-K for the
year ended December 31, 1995 and to the Company's Quarterly Report on Form
10-Q for the quarters ended March 31, and June 30, 1996.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
(10) Credit agreement dated as of November 1, 1996 among Oak
Industries Inc. and the lenders from time to the time party
hereto and The Chase Manhattan Bank, as administrative agent
and issuing bank filed herewith.
(27) Financial Data Schedule (Submitted only to the Securities
and Exchange Commission in electronic format for its
information only).
(b) Reports on Form 8-K:
On October 16, 1996, the Company filed a report on Form 8-K
regarding the sale of its Nordco Inc. subsidiary.
<PAGE>
OAK INDUSTRIES INC.
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
OAK INDUSTRIES INC.
Date: November 14, 1996 /s/ Francis J. Lunger
Francis J. Lunger
Senior Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-END> Sep-30-1996
<CASH> 10,623
<SECURITIES> 0
<RECEIVABLES> 44,829
<ALLOWANCES> 0
<INVENTORY> 51,946
<CURRENT-ASSETS> 123,716
<PP&E> 140,674
<DEPRECIATION> 76,399
<TOTAL-ASSETS> 296,587
<CURRENT-LIABILITIES> 46,610
<BONDS> 0
<COMMON> 182
0
0
<OTHER-SE> 160,579
<TOTAL-LIABILITY-AND-EQUITY> 296,587
<SALES> 233,413
<TOTAL-REVENUES> 233,413
<CGS> 139,826
<TOTAL-COSTS> 139,826
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,100
<INCOME-PRETAX> 63,034
<INCOME-TAX> 23,552
<INCOME-CONTINUING> 32,871
<DISCONTINUED> 1,442
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 34,313
<EPS-PRIMARY> 1.84
<EPS-DILUTED> 1.84
</TABLE>
CREDIT AGREEMENT
Dated as of November 1, 1996
among
OAK INDUSTRIES INC.,
THE LENDERS FROM TIME TO TIME PARTY HERETO
and
THE CHASE MANHATTAN BANK, as
Administrative Agent
and Issuing Bank
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C> Article I <C>
DEFINITIONS
SECTION 1.01. Defined Terms 2
SECTION 1.02. Terms Generally 23
Article II
THE CREDITS
SECTION 2.01. Commitments 23
SECTION 2.02. Loans 24
SECTION 2.03. Revolving Borrowings Procedure 26
SECTION 2.04. Evidence of Debt; Repayment of Loans 27
SECTION 2.05. Fees 28
SECTION 2.06. Interest on Loans 30
SECTION 2.07. Default Interest 30
SECTION 2.08. Alternate Rate of Interest 31
SECTION 2.09. Termination and Reduction of Commitments 31
SECTION 2.10. Conversion and Continuation of Borrowings 32
SECTION 2.11. Competitive Bid Procedures 34
SECTION 2.12. Optional Prepayments 37
SECTION 2.13. Mandatory Prepayments 38
SECTION 2.14. Reserve Requirements;
Change in Circumstances 38
SECTION 2.15. Change in Legality 40
SECTION 2.16. Indemnity 41
SECTION 2.17. Pro Rata Treatment 42
SECTION 2.18. Sharing of Setoffs 43
SECTION 2.19. Payments 44
SECTION 2.20. Taxes 45
SECTION 2.21. Assignment of Commitments Under
Certain Circumstances; Duty to Mitigate 48
SECTION 2.22. Letters of Credit 50
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. Organization; Powers 56
SECTION 3.02. Authorization 57
SECTION 3.03. Enforceability 57
SECTION 3.04. Approvals 57
SECTION 3.05. Financial Statements 57
SECTION 3.06. No Material Adverse Change 58
SECTION 3.07. Title to Properties; Possession Under Leases 58
SECTION 3.08. Subsidiaries 58
SECTION 3.09. Litigation; Compliance with Laws 59
SECTION 3.10. Agreements 59
SECTION 3.11. Federal Reserve Regulations 59
SECTION 3.12. Investment Company Act;
Public Utility Holding Company Act 60
SECTION 3.13. Use of Proceeds 60
SECTION 3.14. Tax Returns 60
SECTION 3.15. No Material Misstatements 60
SECTION 3.16. Employee Benefit Plans 61
SECTION 3.17. Environmental Matters 61
SECTION 3.18. Insurance 62
SECTION 3.19. Capital Stock of Subsidiaries 62
SECTION 3.20. Labor Matters 62
SECTION 3.21. Solvency 63
ARTICLE IV
CONDITIONS OF LENDING
SECTION 4.01. All Credit Events 63
SECTION 4.02. Effective Date 64
ARTICLE V
AFFIRMATIVE COVENANTS
SECTION 5.01. Existence; Businesses and Properties 67
SECTION 5.02. Insurance 68
SECTION 5.03. Obligations and Taxes 68
SECTION 5.04. Financial Statements, Reports, etc. 68
SECTION 5.05. Litigation and Other Notices 71
SECTION 5.06. Employee Benefits 71
SECTION 5.07. Maintaining Records; Access to
Properties and Inspections 72
SECTION 5.08. Use of Proceeds 72
SECTION 5.09. Compliance with Environmental Laws 72
SECTION 5.10. Further Assurances 72
ARTICLE VI
Negative Covenants
SECTION 6.01. Indebtedness 73
SECTION 6.02. Liens 74
SECTION 6.03. Sale and Lease-Back Transactions 76
SECTION 6.04. Investments, Loans and Advances 76
SECTION 6.05. Mergers, Consolidations,
Sales of Assets and Acquisitions 77
SECTION 6.06. Dividends and Distributions; Restrictions
on Ability of
Subsidiaries to Pay Dividends 79
SECTION 6.07. Transactions with Affiliates 80
SECTION 6.08. Business of Borrower and Subsidiaries 80
SECTION 6.09. Amendments to Certificate of Incorporation
or By-Laws 80
SECTION 6.10. Leverage Ratio 80
SECTION 6.11. Interest Coverage Ratio 80
SECTION 6.12 Fiscal Year 81
ARTICLE VII
Events of Default 81
ARTICLE VIII
The Administrative Agent 84
ARTICLE IX
Miscellaneous
SECTION 9.01. Notices 88
SECTION 9.02. Survival of Agreement 88
SECTION 9.03. Binding Effect 89
SECTION 9.04. Successors and Assigns 89
SECTION 9.05. Expenses; Indemnity 94
SECTION 9.06. Right of Setoff 95
SECTION 9.07. Applicable Law 96
SECTION 9.08. Waivers; Amendment 96
SECTION 9.09. Interest Rate Limitation 97
SECTION 9.10. Entire Agreement 97
SECTION 9.11. Waiver of Jury Trial 98
SECTION 9.12. Severability 98
SECTION 9.13. Counterparts 98
SECTION 9.14. Headings. 98
SECTION 9.15. Jurisdiction;
Consent to Service of Process 99
SECTION 9.16. Confidentiality 99
</TABLE>
SCHEDULE 1.01 Guarantors
SCHEDULE 2.01 Commitments
SCHEDULE 3.08 Subsidiaries
SCHEDULE 3.17 Environmental Matters
SCHEDULE 6.01 Permitted Indebtedness
SCHEDULE 6.02 Permitted Liens
EXHIBIT A Form of Administrative Questionnaire
EXHIBIT B Form of Assignment and Acceptance
EXHIBIT C Form of Revolving Borrowing Request
EXHIBIT D Form of Guarantee Agreement
EXHIBIT E Form of Indemnity, Subrogation and Contribution Agreement
EXHIBIT F Form of Competitive Bid Documents
EXHIBIT G Form of Opinion of Ropes and Gray
CREDIT AGREEMENT dated as of November 1, 1996, among OAK INDUSTRIES
INC., a Delaware corporation (the "Borrower"); the Lenders (as defined in
Article I); and THE CHASE MANHATTAN BANK, a New York banking corporation,
as issuing bank and as administrative agent (in such capacity, the
"Administrative Agent") for the Lenders.
The Borrower has requested the Lenders to extend credit in the form of
Revolving Loans (such term and each other capitalized term used but not
defined herein having the meaning given it in Article I) at any time and
from time to time prior to the Maturity Date, in an aggregate principal
amount at any time outstanding not in excess of $300,000,000. The Borrower
has requested the Issuing Banks to issue trade and standby Letters of
Credit, in an aggregate face amount at any time outstanding not in excess
of $5,000,000, to support payment obligations incurred in the ordinary
course of business by the Borrower and its Subsidiaries. The Borrower has
also requested the Lenders to provide a procedure pursuant to which the
Borrower may invite the Lenders to bid on an uncommitted basis on short-
term borrowings by the Borrower. The proceeds of the Loans are to be used
(a) to finance the Connector Purchase, (b) to repay indebtedness
outstanding under the Existing Credit Agreements, (c) to finance the
Gilbert Purchase and (d) for general corporate purposes of the Borrower,
including non-hostile acquisitions otherwise permitted herein. The Letters
of Credit will be used for general corporate purposes of the Borrower.
The Lenders are willing to extend such credit to the Borrower and the
Issuing Banks are willing to issue letters of credit for the account of the
Borrower on the terms and subject to the conditions set forth herein.
Accordingly, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any Revolving Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded
upwards, if necessary, to the next 1/16 of 1 percent) equal to the product
of (a) the LIBO Rate in effect for such Interest Period and (b) Statutory
Reserves.
"Administrative Agent Fees" shall have the meaning assigned to such
term in Section 2.05(b).
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control
with the person specified.
"Aggregate Revolving Credit Exposure" shall mean the aggregate amount
of the Lenders' Revolving Credit Exposures.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1 percent) equal to the
greater of (a) the Prime Rate in effect on such day and (b) the sum of the
Federal Funds Effective Rate in effect on such day plus 1/2 of 1 percent.
If for any reason the Administrative Agent shall have determined (which
determination shall be conclusive absent manifest error) that it is unable
to ascertain the Federal Funds Effective Rate for any reason, including the
inability or failure of the Administrative Agent to obtain sufficient
quotations in accordance with the terms thereof, the Alternate Base Rate
shall be determined without regard to clause (b) of the preceding sentence,
as appropriate, until the circumstances giving rise to such inability no
longer exist. Any change in the Alternate Base Rate due to a change in the
Prime Rate or the Federal Funds Effective Rate shall be effective on the
effective date of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively. The term "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the
Administrative Agent as its prime rate in effect at its principal office in
New York City; each change in the Prime Rate shall be effective on the date
such change is publicly announced as being effective. The term "Federal
Funds Effective Rate" shall mean, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published on the next
succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day that is a Business Day, the
average of the quotations for the day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized
standing selected by it.
"Applicable Percentage" shall mean, for any day, with respect to any
Eurodollar Loan, or with respect to the Commitment Fees, as the case may
be, the applicable percentage set forth below under the caption "Eurodollar
Spread" or "Commitment Fee Percentage", as the case may be, based upon the
Leverage Ratio and Interest Coverage Ratio for the Borrower and the
Subsidiaries as of the relevant Determination Date:
<TABLE>
<CAPTION>
Eurodollar Commitment Fee
Spread Percentage
<S> <C> <C>
CATEGORY 1 0.500 percent 0.175 percent
Leverage Ratio less
than or equal to
1.25 to 1.00
AND
Interest Coverage Ratio
greater than or equal to
5.0 to 1.0
CATEGORY 2 0.625 percent 0.200 percent
Leverage Ratio less
than or equal to
1.75 to 1.0
AND
Interest Coverage Ratio
greater than or equal
to 4.5 to 1.0
Category 3 0.750 percent 0.250 percent
Leverage Ratio less
than or equal
to 2.25 to 1.00
AND
Interest Coverage Ratio
greater than or equal
to 4.0 to 1.0
Category 4 1.000 percent 0.300 percent
Leverage Ratio greater
than 2.25 to 1.00
OR
Interest Coverage Ratio
less than 4.0 to 1.0
</TABLE>
; provided that, during the period from the Effective Date through December
31, 1996, the applicable percentage in Category 1 shall not be available.
The applicable Category shall be the one with the lowest spreads for
which both the Leverage Ratio and the Interest Coverage Ratio requirements
are satisfied. Each change in the Applicable Percentage resulting from a
change in the Leverage Ratio or Interest Coverage Ratio shall be effective
with respect to all Revolving Loans, Commitments and Letters of Credit
outstanding on and after the date on which the financial statements and
certificates required by Section 5.04(a) or 5.04(b) and Section 5.04(c) are
delivered to the Administrative Agent indicating such change until the date
immediately preceding the next due date for the delivery of such financial
statements and certificates. Notwithstanding the foregoing, at any time
during which the Borrower has failed to deliver the financial statements
and certificates required by Section 5.04(a) or 5.04(b) and Section
5.04(c), the Leverage Ratio and Interest Coverage Ratio shall be deemed to
be in Category 4 for purposes of determining the Applicable Percentage.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the
Administrative Agent, in the form of Exhibit B or such other form as shall
be approved by the Administrative Agent.
"Attributable Debt" in respect of a Sale and Lease-Back Transaction
shall mean, at the time of determination, the present value (discounted at
the actual rate of interest implicit in such transaction) of the obligation
of the lessee for net rental payments during the remaining term of the
lease included in such Sale and Lease-Back Transaction (including any
period for which such lease has been extended or may, at the option of the
lessor, be extended).
"Board" shall mean the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrowing" shall mean (a) a group of Revolving Loans of the same Type
made (including by way of conversion or continuation) by the Lenders on a
single date and as to which a single Interest Period is in effect and (b) a
Competitive Loan or group of Competitive Loans of the same Type made on the
same date and as to which a single Interest Period is in effect.
"Business Day" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan, the
term "Business Day" shall also exclude any day on which banks are not open
for dealings in dollar deposits in the London interbank market.
"Capital Expenditures" means for any period, the additions to property,
plant and equipment and other capital expenditures of the Borrower and the
Subsidiaries for such period, as the same are (or would be) set forth, in
accordance with GAAP, in a consolidated statement of cash flow of the
Borrower and the Subsidiaries for such period.
"Capital Lease Obligations" of any person shall mean the obligations of
such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under
GAAP, and the amount of such obligations shall be the capitalized amount
thereof determined in accordance with GAAP.
"Capital Stock" of any person shall mean any and all shares, interests,
rights to purchase, warrants, options, participation or other equivalents
of or interests in (however designated) equity of such person, including
any limited or general partnership interest and any limited liability
company membership interest, but excluding any debt securities convertible
into such equity.
A "Change in Control" shall be deemed to have occurred if (a) any
person or group (within the meaning of Rule 13d-5 of the Securities
Exchange Act of 1934 as in effect on the date hereof) shall own directly or
indirectly, beneficially or of record, shares representing more than 30
percent of the aggregate ordinary voting power represented by the issued
and outstanding capital stock of the Borrower; (b) a majority of the seats
(other than vacant seats) on the board of directors of the Borrower shall
at any time be occupied by persons who were neither (i) nominated by the
board of directors of the Borrower, nor (ii) appointed by directors so
nominated; or (c) any change in control (or similar event, however
denominated) with respect to the Borrower or any Subsidiary shall occur
under and as defined in any indenture or agreement in respect of
Indebtedness to which the Borrower or any Subsidiary is a party.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Commitment" shall mean, with respect to any Lender, the commitment of
such Lender to make Revolving Loans hereunder and to acquire participations
in Letters of Credit hereunder, as the same may be (a) reduced from time to
time pursuant to Section 2.09 and (b) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to Section 9.04.
The initial amount of each Lender's Commitment is set forth on Schedule
2.01, or in the Assignment and Acceptance pursuant to which such Lender
assumed its Commitment, as applicable.
"Commitment Fee" shall have the meaning assigned to such term in
Section 2.05(a).
"Competitive Bid" means an offer by a Lender to make a Competitive Loan
in accordance with Section 2.11.
"Competitive Bid Rate" means, with respect to any Competitive Bid, the
Margin or the Fixed Rate, as applicable, offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" means a request by the Borrower for
Competitive Bids in accordance with Section 2.11.
"Competitive Loan" means a Loan made pursuant to Section 2.11.
"Confidential Information Memorandum" shall mean the Confidential
Information Memorandum of the Borrower dated July 1996.
"Connector" shall mean Connector Holding Company, a Delaware
corporation.
"Connector Purchase" shall mean the purchase by the Borrower of all
shares of the Capital Stock of Connector not owned by the Borrower,
pursuant to Section 1.1 or 1.2 of the Stockholders Agreement.
"Consolidated Net Income" shall mean, with respect to any person for
any period, the consolidated net income (or loss) of such person and its
subsidiaries, on a consolidated basis, for such period.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and "Controlling" and "Controlled" shall have meanings
correlative thereto.
"Credit Event" shall have the meaning assigned to such term in Section
4.01.
"Default" shall mean any event or condition which upon notice, lapse of
time or both would constitute an Event of Default.
"Determination Date" shall mean, on any date, the last day of the most
recent fiscal quarter for which financial statements and certificates have
been delivered pursuant to Section 5.04(a) or 5.04(b) and Section 5.04(c).
"dollars" or "$" shall mean lawful money of the United States of
America.
"Domestic Subsidiaries" shall mean all Subsidiaries incorporated or
organized under the laws of the United States of America, any State thereof
or the District of Columbia.
"EBITDA" shall mean, for any period, the Consolidated Net Income of the
Borrower and the Subsidiaries for such period plus, to the extent deducted
in computing such Consolidated Net Income, without duplication, the sum of
(a) income tax expense, (b) interest expense (including both cash and non-
cash interest), (c) depreciation and amortization expense, (d) any special
charges and any extraordinary or non-recurring losses, (e) non-cash charges
incurred in connection with the net after-tax write off in fiscal 1996 of
up to $1,000,000 of deferred financing costs, (f) minority interests in the
net income of Subsidiaries of the Borrower, (g) other non-cash items
reducing Consolidated Net Income and (h) purchase accounting adjustments
arising in connection with the Connector Purchase, the Gilbert Purchase or
any acquisition consummated after the date of this Agreement, minus, to the
extent added in computing such Consolidated Net Income, without
duplication, (i) interest income, (ii) extraordinary or non-recurring gains
and (iii) income of any person (other than any Subsidiary) for any period
in excess of dividends or distributions actually received in cash from such
person by the Borrower or a Subsidiary during such period.
"Effective Date" means the date on which the conditions specified in
Section 4.02 are satisfied (or waived in accordance with Section 9.08).
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface
or subsurface strata, the workplace or as otherwise defined in any
Environmental Law.
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action
or other cause of action by, or on behalf of, any Governmental Authority or
any person for damages, injunctive or equitable relief, personal injury
(including sickness, disease or death), Remedial Action costs, tangible or
intangible property damage, natural resource damages, nuisance, pollution,
any adverse effect on the environment caused by any Hazardous Material, or
for fines, penalties or restrictions, resulting from or based upon: (a) the
existence, or the continuation of the existence, of a Release (including
sudden or non-sudden, accidental or non-accidental Releases); (b) exposure
to any Hazardous Material; (c) the presence, use, handling, transportation,
storage, treatment or disposal of any Hazardous Material; or (d) the
violation or alleged violation of any Environmental Law or Environmental
Permit.
"Environmental Law" shall mean any and all applicable present and
future treaties, laws, rules, regulations, codes, ordinances, orders,
decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any
way to the environment, preservation or reclamation of natural resources,
the management, Release or threatened Release of any Hazardous Material or
to health and safety matters, including the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. Sections
9601 et seq. (collectively "CERCLA"), the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and Hazardous
and Solid Amendments of 1984, 42 U.S.C. Sections 6901 et seq., the Federal
Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33
U.S.C. Sections 1251 et seq., the Clean Air Act of 1970, as amended 42
U.S.C. Sections 7401 et seq., the Toxic Substances Control Act of 1976, 15
U.S.C. Sections 2601 et seq., the Occupational Safety and Health Act of
1970, as amended, 29 U.S.C. Sections 651 et seq., the Emergency Planning
and Community Right-to-Know Act of 1986, 42 U.S.C. Sections 11001 et seq.,
the Safe Drinking Water Act of 1974, as amended, 42 U.S.C. Sections 300(f)
et seq., the Hazardous Materials Transportation Act, 49 U.S.C. Sections
1801 et seq., and any similar or implementing state or local law, and all
amendments or regulations promulgated thereunder.
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from
any Governmental Authority pursuant to any Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code, or solely for purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
"ERISA Event" shall mean (a) any "reportable event", as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to
a Plan; (b) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or Section
307 of ERISA; (c) the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or Section 302
of ERISA), whether or not waived; (d) the filing pursuant to Section 412(d)
of the Code or Section 303(d) of ERISA of an application for a waiver of
the minimum funding standard with respect to any Plan; (e) the incurrence
of any liability under Title IV of ERISA with respect to the termination of
any Plan or the withdrawal or partial withdrawal of the Borrower or any of
its ERISA Affiliates from any Plan or Multiemployer Plan; (f) the receipt
by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to the intention to terminate any Plan
or Plans or to appoint a trustee to administer any Plan; (g) the receipt by
the Borrower or any ERISA Affiliate of any notice concerning the imposition
of Withdrawal Liability or a determination that a Multiemployer Plan is, or
is expected to be, insolvent or in reorganization, within the meaning of
Title IV of ERISA; (h) the occurrence of a "prohibited transaction" with
respect to which the Borrower or any of its Subsidiaries is a "disqualified
person" (within the meaning of Section 4975 of the Code) or with respect to
which the Borrower or any such Subsidiary could otherwise be liable; and
(i) any other event or condition with respect to a Plan or Multiemployer
Plan that could reasonably be expected to result in liability of the
Borrower, other than contributions and payments in the ordinary course of
business pursuant to the terms of such Plan or Multiemployer Plan.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Competitive Loan" shall mean any Competitive Loan bearing
interest at a rate determined by reference to the LIBO Rate in accordance
with the provisions of Article II.
"Eurodollar Loan" shall mean any Eurodollar Revolving Loan or
Eurodollar Competitive Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"Event of Default" shall have the meaning assigned to such term in
Article VII.
"Existing Credit Agreements" shall mean the Credit Agreements dated as
of August 30, 1995 of the Borrower and Gilbert under which Chemical Bank
served as administrative agent and as collateral agent for the lenders
party thereto.
"Fee Letter" shall mean the Fee Letter dated July 22, 1996, between the
Borrower and the Administrative Agent.
"Fees" shall mean the Commitment Fees, the Administrative Agent's Fees,
the LC Participation Fees and the Issuing Bank Fees.
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer, Assistant Treasurer or
Controller, or any vice president performing the functions of any such
officer, of such corporation.
"Fixed Rate" means, with respect to any Competitive Loan bearing
interest at a fixed rate, the fixed rate of interest per annum specified by
the Lender making such Competitive Loan in its related Competitive Bid.
"Fixed Rate Loan" means a Competitive Loan bearing interest at a Fixed
Rate.
"Foreign Subsidiary" shall mean any Subsidiary that is not a Domestic
Subsidiary.
"GAAP" shall mean generally accepted accounting principles applied on a
consistent basis.
"Gilbert" shall mean Gilbert Engineering Co., Inc., a Delaware
corporation.
"Gilbert Purchase" shall mean the purchase by Connector of all shares
of the Capital Stock of Gilbert not owned by Connector.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or
regulatory body.
"Guarantee" of or by any person shall mean any obligation, contingent
or otherwise, of such person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other person (the "primary obligor")
in any manner, whether directly or indirectly, and including any obligation
of such person, direct or indirect, (a) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security
for the payment of such Indebtedness, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness of the payment of such Indebtedness or (c) to maintain working
capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay
such Indebtedness; provided, however, that the term Guarantee shall not
include endorsements for collection or deposit in the ordinary course of
business.
"Guarantee Agreement" shall mean the Guarantee Agreement, substantially
in the form of Exhibit D, made by the Guarantors in favor of the
Administrative Agent for the benefit of the Lenders.
"Guarantors" shall mean each person listed on Schedule 1.01 and each
other person that becomes party to the Guarantee Agreement as a Guarantor,
and the permitted successors and assigns of each such person.
"Hazardous Materials" shall mean all explosive or radioactive
substances or wastes, hazardous or toxic substances or wastes, pollutants,
solid, liquid or gaseous wastes, including petroleum or petroleum
distillates, asbestos or asbestos-containing materials, polychlorinated
biphenyls ("PCBs") or PCB-containing materials or equipment, radon gas,
infectious or medical wastes and all other substances or wastes of any
nature regulated pursuant to any Environmental Law.
"Inactive Subsidiary" shall mean any Subsidiary that (a) does not carry
on any business and (b) has total assets of not more than $10,000.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money, (b) all obligations of such
person evidenced by bonds, debentures, notes or similar instruments, (c)
all obligations of such person upon which interest charges are customarily
paid, (d) all obligations of such person under conditional sale or other
title retention agreements relating to property or assets purchased by such
person, (e) all obligations of such person issued or assumed as the
deferred purchase price of property or services (excluding trade accounts
payable and accrued obligations incurred in the ordinary course of
business), (f) all Indebtedness of others secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise,
to be secured by) any Lien on property owned or acquired by such person,
whether or not the obligations secured thereby have been assumed, (g) all
Guarantees by such person of Indebtedness of others, (h) all Capital Lease
Obligations of such person, (i) all obligations of such person in respect
of interest rate protection agreements, foreign currency exchange
agreements or other interest or exchange rate hedging arrangements and (j)
all obligations of such person as an account party in respect of letters of
credit and bankers' acceptances. The Indebtedness of any person shall
include the Indebtedness of any partnership in which such person is a
general partner.
"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the
form of Exhibit E, among the Borrower, the Guarantors and the
Administrative Agent.
"Interest Coverage Ratio" shall mean the ratio as of the last day of
any fiscal quarter, for the four fiscal quarter period ended as of such day
of (a) EBITDA minus Capital Expenditures to (b) Interest Expense.
"Interest Expense" shall mean, with respect to the Borrower and the
Subsidiaries on a consolidated basis for any period, interest paid by the
Borrower and the Subsidiaries during such period in respect of Total Debt,
excluding (i) amortization of deferred financing charges and (ii)
amortization of accreted, zero-coupon and other non-cash interest expense.
"Interest Payment Date" shall mean, with respect to (a) any Loan, the
last day of the Interest Period applicable to the Borrowing of which such
Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months' duration, each day that would have been
an Interest Payment Date had successive Interest Periods of three months'
duration been applicable to such Borrowing, and, in addition, in the case
of a Eurodollar Borrowing, the date of any prepayment of such Borrowing or
conversion of such Borrowing to a Borrowing of a different Type and (b) any
Fixed Rate Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Fixed Rate
Borrowing with an Interest Period of more than 90 days' duration (unless
otherwise specified in the applicable Competitive Bid Request), each day
prior to the last day of such Interest Period that occurs at intervals of
90 days' duration after the first day of such Interest Period, and any
other dates that are specified in the applicable Competitive Bid Request as
Interest Payment Dates with respect to such Borrowing.
"Interest Period" shall mean (a) as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing and ending on the
numerically corresponding day (or, if there is no numerically corresponding
day, on the last day) in the calendar month that is 1, 2, 3 or 6 months
thereafter, as the Borrower may elect, (b) as to any ABR Borrowing, the
period commencing on the date of such Borrowing and ending on the earlier
of (i) the next succeeding March 31, June 30, September 30 or December 31,
and (ii) the Maturity Date and (c) with respect to any Fixed Rate
Borrowing, the period (which shall not be less than 7 days or more than 360
days) commencing on the date of such Borrowing and ending on the date
specified in the applicable Competitive Bid Request; provided that (i) if
any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day
unless, in the case of a Eurodollar Borrowing only, such next succeeding
Business Day would fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day and (ii) any
Interest Period pertaining to a Eurodollar Borrowing that commences on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of
such Interest Period. For purposes hereof, the date of a Borrowing
initially shall be the date on which such Borrowing is made and, in the
case of a Revolving Borrowing, thereafter shall be the effective date of
the most recent conversion or continuation of such Borrowing. Interest
shall accrue from and including the first day of an Interest Period to but
excluding the last day of such Interest Period.
"Issuing Bank" shall mean (a) The Chase Manhattan Bank, in its capacity
as issuer of Letters of Credit, and (b) any other Issuing Bank appointed
under Section 2.22(i).
"Issuing Bank Fees" shall have the meaning assigned to such term in
Section 2.05(c).
"LC Commitment" shall mean the commitment of each Issuing Bank to issue
Letters of Credit pursuant to Section 2.22.
"LC Disbursement" shall mean a payment or disbursement made by any
Issuing Bank pursuant to a Letter of Credit.
"LC Exposure" shall mean at any time the sum of (a) the aggregate
undrawn amount of all outstanding Letters of Credit at such time plus (b)
the aggregate principal amount of all LC Disbursements that have not yet
been reimbursed at such time. The LC Exposure of any Lender at any time
shall mean its Pro Rata Percentage of the aggregate LC Exposure at such
time.
"LC Participation Fee" shall have the meaning assigned to such term in
Section 2.05(c).
"Lenders" shall mean (a) the financial institutions listed on Schedule
2.01 (other than any such financial institution that has ceased to be a
party hereto pursuant to an Assignment and Acceptance) and (b) any
financial institution that has become a party hereto pursuant to an
Assignment and Acceptance, other than, in each case, any Lender that ceases
to be a party hereto pursuant to an Assignment and Acceptance.
"Letter of Credit" shall mean any letter of credit issued pursuant to
Section 2.22.
"Leverage Ratio" shall mean, with respect to the Borrower and the
Subsidiaries on a consolidated basis, on any date, the ratio of (a) Total
Debt as of such date to (b) EBITDA for the four fiscal quarters most
recently ended on such date (including, to the extent necessary, fiscal
quarters that shall have ended prior to the date hereof). For purposes of
computing the Leverage Ratio on any date, if the Borrower shall have
acquired any person or business during the period of four fiscal quarters
most recently ended as of such date, EBITDA shall be determined on a pro
forma basis as if such acquisition had occurred on the first day of such
period.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing, the
rate (rounded upwards, if necessary, to the next 1/16 of 1 percent) at
which dollar deposits approximately equal in principal amount to the
Administrative Agent's portion of such Eurodollar Borrowing and for a
maturity comparable to such Interest Period are offered to the principal
London office of the Administrative Agent in immediately available funds by
major banks in the London interbank market at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period.
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to
such securities.
"Loan Documents" shall mean this Agreement, the Letters of Credit, the
Guarantee Agreement and the Indemnity, Subrogation and Contribution
Agreement.
"Loan Parties" shall mean the Borrower and the Guarantors.
"Loans" shall mean the Revolving Loans and the Competitive Loans.
"Margin" means, with respect to any Competitive Loan bearing interest
at a rate based on the LIBO Rate, the marginal rate of interest, if any, to
be added to or subtracted from the LIBO Rate to determine the rate of
interest applicable to such Loan, as specified by the Lender making such
Loan in its related Competitive Bid.
"Margin Stock" shall have the meaning assigned to such term in
Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse effect on
the business, assets, operations, prospects or condition, financial or
otherwise, of the Borrower and the Subsidiaries taken as a whole, (b)
material impairment of the ability of the Borrower or any Subsidiary to
perform any of its obligations under any Loan Document to which it is or
will be a party or (c) material impairment of the rights of or benefits
available to the Lenders under any Loan Document.
"Maturity Date" shall mean December 31, 2001.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"Obligations" shall mean, collectively, (a) the principal of and
premium, if any, and interest (including interest accruing during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding)
on the Loans, when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment or otherwise, (b) each payment
required to be made by the Borrower under this Agreement in respect of any
Letter of Credit, when and as due, including payments in respect of
reimbursement of disbursements, interest thereon and obligations to provide
cash collateral, (c) all other monetary obligations, including fees, costs,
expenses and indemnities, whether primary, secondary, direct, contingent,
fixed or otherwise (including monetary obligations incurred during the
pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding),
of the Loan Parties to the Lenders under this Agreement and the other Loan
Documents, (d) unless the applicable Lender otherwise agrees, all monetary
obligations of the Borrower and the Subsidiaries under each interest rate
protection agreement, foreign currency exchange agreement and other
interest or exchange rate hedging agreement with any Lender and (e) all
covenants, agreements, obligations and liabilities of the Loan Parties
under or pursuant to this Agreement and the other Loan Documents.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
"Permitted Other Acquisitions" shall have the meaning given such term
in Section 6.05(c).
"Permitted Investments" shall mean:
(a) direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, (i) the United States of
America (or by any agency thereof to the extent such obligations are backed
by the full faith and credit of the United States of America) or (ii) any
state or municipality of the United States rated, at the date of
acquisition, A or higher by Standard and Poor's and A or higher by Moody's
Investors Service, Inc., in each case maturing within one year from the
date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, a
rating of A-1 or higher from Standard and Poor's or a rating of P-1 or
higher from Moody's Investors Service, Inc.;
(c) any mutual fund or other pooled investment vehicle rated A or
higher by Moody's Investors Service, Inc., and A or higher by Standard and
Poor's, which invests principally in obligations described above;
(d) investments in certificates of deposit, bankers' acceptances and
time deposits maturing within one year from the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts
issued or offered by, any domestic office of (i) any commercial bank
organized under the laws of the United States of America or any State
thereof which has a combined capital and surplus and undivided profits of
not less than $250,000,000 or (ii) any Lender; and
(e) other investment instruments approved in writing by the Required
Lenders and offered by financial institutions which have a combined capital
and surplus and undivided profits of not less than $250,000,000.
"person" shall mean any natural person, corporation, business trust,
joint venture, association, company, partnership, limited liability company
or government, or any agency or political subdivision thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 307 of ERISA, and in respect of which
the Borrower or any ERISA Affiliate is (or, if such plan were terminated,
would under Section 4069 of ERISA be deemed to be) an "employer" as defined
in Section 3(5) of ERISA.
"Pro Rata Percentage" of any Lender at any time shall mean the
percentage of the Total Commitment represented by such Lender's Commitment.
In the event the Commitments shall have expired or been terminated, the
Pro Rata Percentages shall be determined on the basis of the Commitments
most recently in effect, but giving effect to any assignments pursuant to
Section 9.04.
"Register" shall have the meaning given such term in Section 9.04(d).
"Regulation G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Release" shall mean any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing,
depositing, dispersing, emanating or migrating of any Hazardous Material
in, into, onto or through the environment.
"Remedial Action" shall mean: (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24) or (b) any other action
required by any Governmental Authority or voluntarily undertaken to (x)
clean up, remove, treat, abate or in any other way address any Hazardous
Material in the environment; (y) prevent the Release or threat of Release,
or minimize the further Release of any Hazardous Material so it does not
migrate or endanger or threaten to endanger public health, welfare or the
environment; or (z) perform studies and investigations in connection with,
or as a precondition to, clause (x) or (y) above.
"Reportable Event" shall mean any reportable event as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to
a Plan (other than a Plan maintained by an ERISA Affiliate that is
considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Code Section 414).
"Required Lenders" shall mean, at any time, Lenders having Revolving
Loans, LC Exposure and unused Commitments representing greater than 50
percent of the sum of all Revolving Loans outstanding, LC Exposure and
unused Commitments at such time; provided that, for purposes of declaring
the Loans to be due and payable pursuant to Article VII, and for all
purposes after the Loans become due and payable pursuant to Article VII or
if the Commitments expire or terminate, the outstanding Competitive Loans
of the Lenders shall be included in their respective Revolving Credit
Exposures in determining the Required Lenders.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement.
"Revolving Borrowing Request" shall mean a request by the Borrower in
accordance with the terms of Section 2.03 and substantially in the form of
Exhibit C.
"Revolving Borrowing" shall mean a Borrowing comprised of Revolving
Loans.
"Revolving Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender, plus the aggregate amount at such time of
such Lender's LC Exposure.
"Revolving Loans" shall mean the revolving loans made by the Lenders to
the Borrower pursuant to Section 2.01. Each Revolving Loan shall be a
Eurodollar Loan or an ABR Loan.
"Sale and Lease-Back Transaction" shall mean any arrangement, directly
or indirectly, whereby the Borrower or any Subsidiary shall sell or
transfer to any person any property, real or personal, used or useful in
its business, whether now owned or hereafter acquired, and thereafter the
Borrower or any Subsidiary shall rent or lease such property, or other
property that it intends to use for substantially the same purpose or
purposes as the property being sold or transferred, from such person or any
of its Affiliates.
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is
the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves)
expressed as a decimal established by the Board and any other banking
authority, domestic or foreign, to which the Administrative Agent or any
Lender (including any branch, Affiliate, or other fronting office making or
holding a Loan) is subject for Eurocurrency Liabilities (as defined in
Regulation D of the Board). Such reserve percentages shall include those
imposed pursuant to such Regulation D. Eurodollar Loans shall be deemed to
constitute Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration, exemptions or
offsets that may be available from time to time to any Lender under such
Regulation D. Statutory Reserves shall be adjusted automatically on and as
of the effective date of any change in any reserve percentage.
"Stockholders Agreement" shall mean the Stockholders Agreement dated as
of December 22, 1992, among Connector, the Borrower, certain investors from
time to time party thereto and Bain Venture Capital.
"subsidiary" shall mean, with respect to any person (herein referred to
as the "parent"), any corporation, partnership, association or other
business entity of which securities or other ownership interests
representing more than 50 percent of the equity or more than 50 percent of
the ordinary voting power or more than 50 percent of the general
partnership interests are, at the time any determination is being made,
owned, controlled or held by the parent.
"Subsidiary" shall mean any subsidiary of the Borrower.
"Total Commitment" shall mean, at any time, the aggregate amount of the
Commitments, as in effect at such time.
"Total Debt" shall mean, with respect to the Borrower and the
Subsidiaries on a consolidated basis at any time, all Indebtedness (other
than Indebtedness of the type referred to in clause (i) of the definition
of the term "Indebtedness" or Indebtedness of the type referred to in
clauses (f) and (g) of such definition to the extent that the Indebtedness
of the other person referred to in such clauses (f) and (g) is Indebtedness
of the type referred to in clause (i)) of the Borrower and the Subsidiaries
at such time.
"Transactions" shall have the meaning assigned to such term in Section
3.02.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans
comprising such Borrowing is determined. For purposes hereof, the term
"Rate" shall include (a) in the case of a Revolving Loan or Revolving
Borrowing, the Adjusted LIBO Rate and the Alternate Base Rate, and (b) in
the case of a Competitive Loan or Borrowing, the LIBO Rate or a Fixed Rate.
"wholly owned Subsidiary" of any person shall mean a subsidiary of such
person of which securities (except for directors' qualifying shares) or
other ownership interests representing 100 percent of the equity or 100
percent of the ordinary voting power or 100 percent of the general
partnership interests are, at the time any determination is being made,
owned, controlled or held by such person or one or more wholly owned
subsidiaries of such person or by such person and one or more wholly owned
subsidiaries of such person.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan,
as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. The words "include",
"includes" and "including" shall be deemed to be followed by the phrase
"without limitation". All references herein to Articles, Sections,
Exhibits and Schedules shall be deemed references to Articles and Sections
of, and Exhibits and Schedules to, this Agreement unless the context shall
otherwise require. Except as otherwise expressly provided herein, (a) any
reference in this Agreement to any Loan Document shall mean such document
as amended, restated, supplemented or otherwise modified from time to time
and (b) all terms of an accounting or financial nature shall be construed
in accordance with GAAP, as in effect from time to time; provided, however,
that for purposes of determining compliance with the covenants contained in
Article VI, all accounting terms herein shall be interpreted and all
accounting determinations hereunder shall be made in accordance with GAAP
as in effect on December 31, 1995, and applied on a basis consistent with
the application used in the financial statements referred to in Section
3.05(a).
ARTICLE II. THE CREDITS
SECTION 2.01. Commitments. Subject to the terms and conditions and
relying upon the representations and warranties herein set forth, each
Lender agrees, severally and not jointly, to make Revolving Loans to the
Borrower, at any time and from time to time on or after the date hereof,
and until the earlier of the Maturity Date and the termination of the
Commitment of such Lender in accordance with the terms hereof, in an
aggregate principal amount at any time outstanding that will not result in
(a) such Lender's Revolving Credit Exposure exceeding such Lender's
Commitment or (b) the sum of the total Revolving Credit Exposures plus the
aggregate principal amount of outstanding Competitive Loans plus the amount
of Loans for which notices have been delivered by the Borrower but have not
yet been made exceeding the Total Commitment. Within the foregoing limits
and subject to the terms, conditions and limitations set forth herein, the
Borrower may borrow, pay or prepay and reborrow Revolving Loans.
SECTION 2.02. Loans. (a) Each Revolving Loan shall be made as part
of a Borrowing consisting of Revolving Loans made by the Lenders ratably in
accordance with their applicable Commitments. Each Competitive Loan shall
be made in accordance with the procedures set forth in Section 2.11. The
failure of any Lender to make any Loan required to be made by it shall not
in itself relieve any other Lender of its obligation to lend hereunder;
provided that the Commitments and Competitive Bids of the Lenders hereunder
are several and no Lender shall be responsible for the failure of any other
Lender to make any Loan required to be made by such other Lender. Except
for Loans deemed made pursuant to Section 2.02(f), the Revolving Loans
comprising any Borrowing shall be in an aggregate principal amount that is
(i) an integral multiple of $1,000,000 or (ii) equal to the remaining
available balance of the applicable Commitments. Each Competitive
Borrowing shall be in an aggregate principal amount that is an integral
multiple of $1,000,000 and not less than $5,000,000.
(b) Subject to Sections 2.08 and 2.15, (i) each Revolving Borrowing
shall be comprised entirely of ABR Loans or Eurodollar Revolving Loans as
the Borrower may request pursuant to Section 2.03 and (ii) each Competitive
Borrowing shall be comprised entirely of Eurodollar Competitive Loans or
Fixed Rate Loans as the Borrower may request pursuant to Section 2.11.
Each Lender may at its option make any Eurodollar Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
provided, however, that any exercise of such option shall not affect the
obligation of the Borrower to repay such Loan in accordance with the terms
of this Agreement. Borrowings of more than one Type may be outstanding at
the same time; provided, however, that the Borrower shall not be entitled
to request any Revolving Borrowing that, if made, would result in more than
ten Eurodollar Revolving Borrowings outstanding hereunder at any time. For
purposes of the foregoing, Revolving Borrowings having different Interest
Periods, regardless of whether they commence on the same date, shall be
considered separate Revolving Borrowings.
(c) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds to
such account in New York City as the Administrative Agent may designate not
later than 12:00 (noon), New York City time, and the Administrative Agent
shall by 12:00 (noon), New York City time, credit the amounts so received
to an account with the Administrative Agent designated by the Borrower in
the applicable Borrowing Request, which account must be in the name of the
Borrower or, if a Borrowing shall not occur on such date because any
condition precedent herein specified shall not have been met, return the
amounts so received to the respective Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Revolving Borrowing that such Lender will
not make available to the Administrative Agent such Lender's portion of
such Revolving Borrowing, the Administrative Agent may assume that such
Lender has made such portion available to the Administrative Agent on the
date of such Revolving Borrowing in accordance with paragraph (c) above and
the Administrative Agent may, in reliance upon such assumption, make
available to the Borrower on such date a corresponding amount. If the
Administrative Agent shall have so made funds available then, to the extent
that such Lender shall not have made such portion available to the
Administrative Agent, such Lender and the Borrower severally agree 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
made available to the Borrower until the date such amount is repaid to the
Administrative Agent at (i) in the case of the Borrower, the interest rate
applicable at the time to the Revolving Loans comprising such Revolving
Borrowing and (ii) in the case of such Lender, a rate determined by the
Administrative Agent to represent its cost of overnight or short-term funds
(which determination shall be conclusive absent manifest error). If such
Lender shall repay to the Administrative Agent such corresponding amount,
such amount shall constitute such Lender's Revolving Loan as part of such
Revolving Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Borrowing if the Interest
Period requested with respect thereto would end after the Maturity Date.
(f) If any Issuing Bank shall not have received from the Borrower any
payment required to be made to such Issuing Bank pursuant to Section
2.22(e) within the time specified in such Section, such Issuing Bank will
promptly notify the Administrative Agent and the Administrative Agent will
promptly notify each Lender of the amount of the LC Disbursement which
shall not have been reimbursed and its Pro Rata Percentage thereof;
provided, however, that the failure of such Issuing Bank to notify each
Lender shall not relieve the Borrower of its obligation to make such
payment. Each Lender shall pay by wire transfer of immediately available
funds to the Administrative Agent not later than 2:00 p.m., New York City
time, on such date (or, if such Lender shall have received such notice
later than 12:00 (noon), New York City time, on any day, not later than
10:00 a.m., New York City time, on the immediately following Business Day),
an amount equal to such Lender's Pro Rata Percentage of such LC
Disbursement (it being understood that such amount shall be deemed to
constitute an ABR Loan of such Lender and such payment shall be deemed to
have reduced the LC Exposure), and the Administrative Agent will promptly
pay to such Issuing Bank amounts so received by it from the Lenders. The
Administrative Agent will promptly pay to such Issuing Bank any amounts
received by it from the Borrower pursuant to Section 2.22(e) prior to the
time that any Lender makes any payment pursuant to this paragraph (f); any
such amounts received by the Administrative Agent thereafter will be
promptly remitted by the Administrative Agent to the Lenders that shall
have made such payments and to such Issuing Bank, as their interests may
appear. If any Lender shall not have made its Pro Rata Percentage of such
LC Disbursement available to the Administrative Agent as provided above,
such Lender and the Borrower severally agree to pay interest on such
amount, for each day from and including the date such amount is required to
be paid in accordance with this paragraph to but excluding the date such
amount is paid, to the Administrative Agent at (i) in the case of the
Borrower, a rate per annum equal to the interest rate applicable to
Revolving Loans pursuant to Section 2.06, and (ii) in the case of such
Lender, for the first such day, the Federal Funds Effective Rate, and for
each day thereafter, the Alternate Base Rate.
SECTION 2.03. Revolving Borrowing Procedure. In order to request a
Revolving Borrowing (other than a deemed Revolving Borrowing pursuant to
Section 2.02(f), as to which this Section 2.03 shall not apply), the
Borrower shall hand deliver or telecopy to the Administrative Agent a duly
completed Revolving Borrowing Request (a) in the case of a Eurodollar
Revolving Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before a proposed Revolving Borrowing, and (b) in the case of
an ABR Borrowing, not later than 11:00 a.m., New York City time, on the
same day as the proposed Revolving Borrowing. Each Revolving Borrowing
Request shall be irrevocable, shall be signed by or on behalf of the
Borrower and shall specify the following information: (i) whether the
Borrowing then being requested is to be a Eurodollar Borrowing or an ABR
Borrowing; provided, however, that, unless the Required Lenders otherwise
agree, no Eurodollar Borrowing shall be requested or made if a Default or
Event of Default has occurred and is continuing; (ii) the date of such
Revolving Borrowing (which shall be a Business Day), (iii) the number and
location of the account to which funds are to be disbursed (which shall be
an account that complies with the requirements of Section 2.02(c)); (iv)
the amount of such Revolving Borrowing; and (v) if such Revolving Borrowing
is to be a Eurodollar Revolving Borrowing, the Interest Period with respect
thereto; provided, however, that, notwithstanding any contrary
specification in any Revolving Borrowing Request, each requested Revolving
Borrowing shall comply with the requirements set forth in Section 2.02. If
no election as to the Type of Borrowing is specified in any such notice,
then the requested Borrowing shall be an ABR Borrowing. If no Interest
Period with respect to any Eurodollar Revolving Borrowing is specified in
any such notice, then the Borrower shall be deemed to have selected an
Interest Period of one month's duration. The Administrative Agent shall
promptly advise the applicable Lenders of any notice given pursuant to this
Section 2.03 (and the contents thereof), and of each Lender's portion of
the requested Revolving Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The Borrower
hereby unconditionally promises to pay (i) to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each
Revolving Loan on the Maturity Date and (ii) to the Administrative Agent
for the account of each applicable Lender the then unpaid principal amount
of each Competitive Loan on the last day of the Interest Period applicable
to such Loan. The Administrative Agent shall distribute any such payments
received by it for the account of any other person to the appropriate
recipient promptly following receipt thereof.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender from time to time,
including the amounts of principal and interest payable and paid such
Lender from time to time under this Agreement.
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type thereof and the
Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to
each Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Lender's share
thereof.
(d) The entries made in the accounts maintained pursuant to paragraphs
(b) and (c) above shall be prima facie evidence of the existence and
amounts of the obligations therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain such accounts
or any error therein shall not in any manner affect the obligations of the
Borrower to repay the Loans in accordance with their terms.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and
deliver to such Lender a promissory note payable to such Lender and its
registered assigns and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest
thereon shall at all times (including after any assignment of all or part
of such interests pursuant to Section 9.04) be represented by one or more
promissory notes in such form payable to the payee named therein or its
registered assigns.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender,
through the Administrative Agent, on the last day of March, June, September
and December in each year and on each date on which the Commitment of such
Lender shall expire or be terminated as provided herein, a commitment fee
(a "Commitment Fee") equal to the Applicable Percentage per annum in effect
from time to time on the average daily unused amount of the Commitment of
such Lender in effect during the preceding quarter (or other period
commencing with the Effective Date or ending with the Maturity Date or the
date on which the Commitment of such Lender shall expire or be terminated).
For purposes of computing the Commitment Fee, Competitive Loans shall not
be deemed to utilize the Commitments. All Commitment Fees shall be
computed on the basis of the actual number of days elapsed (including the
first day but excluding the last day) in a year of 360 days. The
Commitment of each Lender shall be deemed to have become effective on the
Effective Date, and the Commitment Fee payable to any Lender shall cease to
accrue on the date on which the Commitment of such Lender shall expire or
be terminated as provided herein.
(b) The Borrower agrees to pay to the Administrative Agent, for its
own account, the fees set forth in the Fee Letter at the times and in the
amounts specified therein (the "Administrative Agent Fees").
(c) The Borrower agrees to pay (i) to each Lender, through the
Administrative Agent, on the last day of March, June, September and
December of each year and on the date on which the Commitment of such
Lender shall have been terminated as provided herein and no Letters of
Credit shall remain outstanding, a fee (an "LC Participation Fee") on such
Lender's Pro Rata Percentage of the average daily aggregate LC Exposure
(excluding the portion thereof attributable to unreimbursed LC
Disbursements) during the preceding quarter (or shorter period commencing
with the date hereof or ending with the Maturity Date or the date on which
no Letters of Credit shall remain outstanding and the Commitments shall
have been terminated) at a rate equal to the Applicable Percentage in
effect from time to time used to determine the interest rate on Revolving
Borrowings comprised of Eurodollar Loans pursuant to Section 2.06, and (ii)
to each Issuing Bank with respect to each Letter of Credit issued by such
Issuing Bank the fronting fees separately agreed upon by the Borrower and
such Issuing Bank and the standard issuance and drawing fees specified from
time to time by such Issuing Bank (the "Issuing Bank Fees"). All LC
Participation Fees and Issuing Bank Fees shall be computed on the basis of
the actual number of days elapsed (including the first day but excluding
the last day) in a year of 360 days.
(d) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that Issuing Bank Fees shall be paid directly to
the Issuing Bank entitled thereto. Once paid, none of the Fees shall be
refundable.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear, and the
Borrower promises to pay, interest (computed on the basis of the actual
number of days elapsed (including the first day but excluding the last day)
over a year of 365 or 366 days, as the case may be, when the Alternate Base
Rate is determined by reference to the Prime Rate and over a year of 360
days at all other times) at a rate per annum equal to the Alternate Base
Rate.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear, and the Borrower promises to pay,
interest (computed on the basis of the actual number of days elapsed
(including the first day but excluding the last day) over a year of 360
days) at a rate per annum equal to (i) in the case of a Eurodollar
Revolving Loan, the Adjusted LIBO Rate for the Interest Period in effect
for such Borrowing plus the Applicable Percentage in effect from time to
time or (ii) in the case of a Eurodollar Competitive Loan, the LIBO Rate
for the Interest Period in effect for such Borrowing plus (or minus, as
applicable) the Margin applicable to such Loan.
(c) Each Fixed Rate Loan shall bear interest at a rate per annum equal
to the Fixed Rate applicable to such Loan.
(d) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this
Agreement.
(e) The applicable Alternate Base Rate, Adjusted LIBO Rate or LIBO
Rate for each Interest Period or day within an Interest Period, as the case
may be, shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.07. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount
becoming due hereunder, by acceleration or otherwise, or under any other
Loan Document, the Borrower shall on demand from time to time pay interest,
to the extent permitted by law, on such defaulted amount to but excluding
the date of actual payment (after as well as before judgment) (a) in the
case of overdue principal prior to the end of the Interest Period
applicable to any Loan, at the rate otherwise applicable to such Loan
pursuant to Section 2.06 plus 2.00 percent per annum and (b) in all other
cases, at a rate per annum (computed on the basis of the actual number of
days elapsed (including the first day but excluding the last day) over a
year of 365 or 366 days, as the case may be, when determined by reference
to the Prime Rate and over a year of 360 days at all other times) equal to
the sum of the Alternate Base Rate plus 2.00 percent.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of
any Interest Period for a Eurodollar Borrowing the Administrative Agent
shall have determined that dollar deposits in the principal amounts of the
Loans comprising such Borrowing are not generally available in the London
interbank market, or that the rates at which such dollar deposits are being
offered will not adequately and fairly reflect the cost to any Lender of
making or maintaining its Eurodollar Loan during such Interest Period, or
that reasonable means do not exist for ascertaining the Adjusted LIBO Rate
or the LIBO Rate, the Administrative Agent shall, as soon as practicable
thereafter, give written or telecopy notice of such determination to the
Borrower and the Lenders. In the event of any such determination, until
the Administrative Agent shall have advised the Borrower and the Lenders
that the circumstances giving rise to such notice no longer exist, any
request by the Borrower for a Eurodollar Borrowing pursuant to Section 2.03
or 2.10 shall be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent hereunder shall be conclusive
absent manifest error.
SECTION 2.09. Termination and Reduction of Commitments. (a) The
Commitments and the LC Commitment shall automatically terminate on the
Maturity Date. Notwithstanding the foregoing, all the Commitments shall
automatically terminate at 5:00 p.m., New York City time, on November 29,
1996, if the first Credit Event shall not have occurred by such time.
(b) Upon at least three Business Days' prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time
in whole permanently terminate, or from time to time in part permanently
reduce, the Commitments; provided, however, that (i) each partial reduction
of the Commitments shall be in an integral multiple of $1,000,000 and in a
minimum amount of $5,000,000 and (ii) the Total Commitment shall not be
reduced to an amount that is less than the sum of the Aggregate Revolving
Credit Exposure at the time plus the aggregate principal amount of
outstanding Competitive Loans, unless Section 2.13 is complied with.
(c) The Total Commitment shall be automatically and permanently
reduced by $50,000,000 on each of the third and fourth anniversaries of the
Effective Date.
(d) Each reduction in the Commitments hereunder shall be made ratably
among the Lenders in accordance with their respective applicable
Commitments. The Borrower shall pay to the Administrative Agent for the
account of the applicable Lenders, on the date of each termination or
reduction, the Commitment Fees on the amount of the Commitments so
terminated or reduced accrued to but excluding the date of such termination
or reduction.
SECTION 2.10. Conversion and Continuation of Borrowings. The
Borrower shall have the right at any time upon prior irrevocable notice to
the Administrative Agent (a) not later than 11:00 a.m., New York City time,
on the date of conversion, to convert one or more Eurodollar Revolving
Borrowings into an ABR Borrowing, (b) not later than 11:00 a.m., New York
City time, three Business Days prior to conversion or continuation, to
convert one or more ABR Borrowings into Eurodollar Revolving Borrowings or
to continue one or more Eurodollar Revolving Borrowings as a Eurodollar
Revolving Borrowing for an additional Interest Period, and (c) not later
than 11:00 a.m., New York City time, three Business Days prior to
conversion, to convert the Interest Period with respect to any Eurodollar
Revolving Borrowing to another permissible Interest Period, subject in each
case to the following:
(i) each conversion or continuation shall be made pro rata among the
Lenders in accordance with the respective principal amounts of the Loans
comprising the converted or continued Borrowing;
(ii) if less than all the outstanding principal amount of any Borrowing
shall be converted or continued, then each resulting Borrowing shall
satisfy the limitations specified in Sections 2.02(a) and 2.02(b) regarding
the principal amount and maximum number of Borrowings of the relevant Type;
(iii) each conversion shall be effected by each Lender and the
Administrative Agent by recording for the account of such Lender the new
Loan of such Lender resulting from such conversion and reducing the Loan or
Loans (or portion thereof) of such Lender being converted by an equivalent
principal amount; provided however, that the failure of any Lender or the
Administrative Agent to so record such conversion and continuation shall
not affect the Borrowers' obligations with respect thereto; accrued
interest on any Eurodollar Revolving Loan (or portion thereof) being
converted shall be paid by the Borrower at the time of conversion;
(iv) if any Eurodollar Revolving Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower shall
pay, upon demand, any amounts due to the Lenders pursuant to Section 2.16;
(v) any portion of a Borrowing maturing or required to be repaid in
less than one month may not be converted into or continued as a Eurodollar
Revolving Borrowing;
(vi) any portion of a Eurodollar Revolving Borrowing that cannot be
converted into or continued as a Eurodollar Revolving Borrowing by reason
of the immediately preceding clause shall be automatically converted at the
end of the Interest Period in effect for such Borrowing into an ABR
Borrowing; and
(vii) no Borrowing may be converted to or continued as a Eurodollar
Revolving Borrowing (A) unless the Required Lenders otherwise consent, if
an Event of Default shall have occurred and be continuing, (B) if a Default
shall have occurred and be continuing and the Required Lenders shall have
determined that such conversion or continuation is not appropriate or (C)
if the Interest Period relating to such Eurodollar Revolving Borrowing
would end after the Maturity Date.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of
the Borrowing or Borrowings that the Borrower requests be converted or
continued, (ii) whether such Borrowing or Borrowings are to be converted to
or continued as a Eurodollar Revolving Borrowing or an ABR Borrowing, (iii)
if such notice requests a conversion, the date of such conversion (which
shall be a Business Day) and (iv) if such Borrowing or Borrowings are to be
converted to or continued as a Eurodollar Revolving Borrowing, the Interest
Period with respect thereto. If no Interest Period is specified in any
such notice with respect to any conversion to or continuation as a
Eurodollar Revolving Borrowing, the Borrower shall be deemed to have
selected an Interest Period of one month's duration. The Administrative
Agent shall advise the Lenders of any notice given pursuant to this Section
2.10 and of each Lender's portion of any converted or continued Borrowing.
If the Borrower shall not have given notice in accordance with this
Section 2.10 to continue any Eurodollar Revolving Borrowing into a
subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.10 to convert such Borrowing), such
Borrowing shall, at the end of the Interest Period applicable thereto
(unless repaid pursuant to the terms hereof), automatically be continued
into a new Interest Period as an ABR Borrowing.
SECTION 2.11. Competitive Bid Procedure. (a) Subject to the terms and
conditions set forth herein, from time to time on or after the date hereof,
and until the earlier of the Maturity Date and the termination of the
Commitments in accordance with the terms hereof, the Borrower may request
Competitive Bids and may (but shall not have any obligation to) accept
Competitive Bids and borrow Competitive Loans; provided that the sum of the
total Revolving Credit Exposures plus the aggregate principal amount of
outstanding Competitive Loans plus the amount of Loans for which notices
have been delivered by the Borrower but have not yet been made, at any time
shall not exceed the Total Commitment. In order to request Competitive
Bids, the Borrower shall notify the Administrative Agent of such request by
telephone, in the case of a Eurodollar Borrowing, not later than 11:00
a.m., New York City time, four Business Days before the date of the
proposed Borrowing and, in the case of a Fixed Rate Borrowing, not later
than 10:00 a.m., New York City time; one Business Day before the date of
the proposed Borrowing; provided that the Borrower may submit up to (but
not more than) two Competitive Bid Requests on the same day, but a
Competitive Bid Request shall not be made within five Business Days after
the date of any previous Competitive Bid Request, unless any and all such
previous Competitive Bid Requests shall have been withdrawn or all
Competitive Bids received in response thereto rejected. Each such
telephonic Competitive Bid Request shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Competitive
Bid Request in a form approved by the Administrative Agent and signed by
the Borrower. Each such telephonic and written Competitive Bid Request
shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be a Eurodollar Borrowing or a Fixed
Rate Borrowing;
(iv) the Interest Period to be applicable to such Borrowing, which shall
be a period contemplated by the definition of the term "Interest Period";
and
(v) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.02(c).
Promptly following receipt of a Competitive Bid Request in accordance with
this Section, the Administrative Agent shall notify the Lenders of the
details thereof by telecopy, inviting the Lenders to submit Competitive
Bids.
(b) Each Lender may (but shall not have any obligation to) make one or
more Competitive Bids to the Borrower in response to a Competitive Bid
Request. Each Competitive Bid by a Lender must be in a form approved by
the Administrative Agent and must be received by the Administrative Agent
by telecopy, in the case of a Eurodollar Competitive Borrowing, not later
than 9:30 a.m., New York City time, three Business Days before the proposed
date of such Competitive Borrowing, and in the case of a Fixed Rate
Borrowing, not later than 9:30 a.m., New York City time, on the proposed
date of such Competitive Borrowing. Competitive Bids that do not conform
substantially to the form approved by the Administrative Agent may be
rejected by the Administrative Agent, and the Administrative Agent shall
notify the applicable Lender as promptly as practicable. Each Competitive
Bid shall specify (i) the principal amount (which shall be a minimum of
$5,000,000 and an integral multiple of $1,000,000 and which may equal the
entire principal amount of the Competitive Borrowing requested by the
Borrower) of the Competitive Loan or Loans that the Lender is willing to
make, (ii) the Competitive Bid Rate or Rates at which the Lender is
prepared to make such Loan or Loans (expressed as a percentage rate per
annum in the form of a decimal to no more than four decimal places) and
(iii) the Interest Period applicable to each such Loan and the last day
thereof.
(c) The Administrative Agent shall promptly notify the Borrower by
telecopy of the Competitive Bid Rate and the principal amount specified in
each Competitive Bid and the identity of the Lender that shall have made
such Competitive Bid.
(d) Subject only to the provisions of this paragraph (d), the Borrower
may accept or reject any Competitive Bid. The Borrower shall notify the
Administrative Agent by telephone, confirmed by telecopy in a form approved
by the Administrative Agent, whether and to what extent it has decided to
accept or reject each Competitive Bid, in the case of a Eurodollar
Competitive Borrowing, not later than 10:30 a.m., New York City time, three
Business Days before the date of the proposed Competitive Borrowing, and in
the case of a Fixed Rate Borrowing, not later than 10:30 a.m., New York
City time, on the proposed date of the Competitive Borrowing; provided,
that (i) the failure of the Borrower to give such notice shall be deemed to
be a rejection of each Competitive Bid, (ii) the Borrower shall not accept
a Competitive Bid made at a particular Competitive Bid Rate if the Borrower
rejects a Competitive Bid at a lower Competitive Bid Rate, (iii) the
aggregate amount of the Competitive Bids accepted by the Borrower shall not
exceed the aggregate amount of the requested Competitive Borrowing
specified in the related Competitive Bid Request, (iv) to the extent
necessary to comply with clause (iii) above, the Borrower may accept
Competitive Bids at the same Competitive Bid Rate in part, which
acceptance, in the case of multiple Competitive Bids at such Competitive
Bid Rate, shall be made pro rata in accordance with the amount of each such
Competitive Bid, and (v) except pursuant to clause (iv) above, no
Competitive Bid shall be accepted for a Competitive Loan unless such
Competitive Loan is in a minimum principal amount of $5,000,000 and an
integral multiple of $1,000,000; provided further that if a Competitive
Loan must be in an amount less than $5,000,000 because of the provisions of
clause (iv) above, such Competitive Loan may be for a minimum of $1,000,000
or any integral multiple thereof, and in calculating the pro rata
allocation of acceptances of portions of multiple Competitive Bids at a
particular Competitive Bid Rate pursuant to clause (iv) the amounts shall
be rounded to integral multiples of $1,000,000 in a manner determined by
the Borrower. A notice given by the Borrower pursuant to this paragraph
(d) shall be irrevocable.
(e) The Administrative Agent shall promptly notify each bidding Lender
by telecopy whether or not its Competitive Bid has been accepted (and, if
so, the amount and Competitive Bid Rate so accepted), and each successful
bidder will thereupon become bound, subject to the terms and conditions
hereof, to make the Competitive Loan in respect of which its Competitive
Bid has been accepted.
(f) If the Administrative Agent shall elect to submit a Competitive
Bid in its capacity as a Lender, it shall submit such Competitive Bid
directly to the Borrower at least one half of an hour earlier than the time
by which the other Lenders are required to submit their Competitive Bids to
the Administrative Agent pursuant to paragraph (b) of this Section.
SECTION 2.12. Optional Prepayments. (a) The Borrower shall have the
right at any time and from time to time to prepay any Borrowing, in whole
or in part, (i) in the case of a Eurodollar Revolving Borrowing, upon at
least three Business Days' prior written or telecopy notice (or telephone
notice promptly confirmed by written or telecopy notice) to the
Administrative Agent given before 11:00 a.m., New York City time and (ii)
in the case of an ABR Borrowing, by written or telecopy notice (or
telephone notice promptly confirmed by written or telecopy notice) to the
Administrative Agent given before 11:00 a.m., New York City time, on the
date of repayment; provided that each partial prepayment shall be in an
amount that is an integral multiple of $1,000,000; provided, further, that
the Borrower shall not have the right to prepay any Competitive Loan
without the consent of the Lender thereof. Promptly following receipt of
any such notice, the Administrative Agent shall advise the Lenders of the
contents thereof.
(b) Each notice of prepayment shall specify the prepayment date and
the principal amount of each Borrowing (or portion thereof) to be prepaid,
shall be irrevocable and shall commit the Borrower to prepay such Borrowing
by the amount stated therein on the date stated therein. All prepayments
under this Section 2.12 shall be subject to Section 2.16 but otherwise
without premium or penalty. All prepayments of Eurodollar Revolving
Borrowings under this Section 2.12 shall be accompanied by accrued and
unpaid interest on the principal amount being prepaid to but excluding the
date of payment.
SECTION 2.13. Mandatory Prepayments. In the event of any termination
of all the Commitments, the Borrower shall repay or prepay all its
outstanding Borrowings on the date of such termination and cash
collateralize the entire LC Exposure pursuant to Section 2.22(j). In the
event of any reduction of the Commitments (including pursuant to Section
2.09(c)), then (i) at or prior to the effective date of such reduction, the
Administrative Agent shall notify the Borrower and the Lenders of the
Aggregate Revolving Credit Exposure after giving effect thereto and (ii) if
the Aggregate Exposure would exceed the Total Commitment after giving
effect to such reduction, then the Borrower shall, on the date of such
reduction, repay or prepay Borrowings in an amount sufficient to eliminate
such excess, and if, after giving effect to such payment or prepayment, the
aggregate LC Exposure of all the Lenders would exceed the Total Commitment,
the Borrower shall, on such date, cash collateralize, pursuant to Section
2.22(j), such excess aggregate LC Exposure or cause the termination of
outstanding Letters of Credit in an amount sufficient to eliminate such
excess.
SECTION 2.14. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision of this Agreement, if after the date of
this Agreement any change in applicable law or regulation or in the
interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof (whether or not
having the force of law) shall change the basis of taxation of payments to
any Lender or any Issuing Bank of the principal of or interest on any
Eurodollar Loan or Fixed Rate Loan made by such Lender or any Fees or other
amounts payable hereunder (other than changes in respect of taxes imposed
on the overall net income of such Lender or such Issuing Bank as a result
of a present or former connection between the Governmental Authority
imposing such tax and such Lender or such Issuing Bank (except a connection
arising solely from such Lender or such Issuing Bank having executed,
delivered or performed its obligations or received a payment under, or
enforced, this Agreement)) or shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits
with or for the account of or credit extended by any Lender or any Issuing
Bank (except any such reserve requirement which is reflected in the
Adjusted LIBO Rate) or shall impose on such Lender or such Issuing Bank or
the London interbank market any other condition affecting this Agreement or
Eurodollar Loans or Fixed Rate Loans made by such Lender or any Letter of
Credit or participation therein, and the result of any of the foregoing
shall be to increase the cost to such Lender or such Issuing Bank of making
or maintaining any Eurodollar Loan or Fixed Rate Loan or increase the cost
to any Lender or such Issuing Bank of issuing or maintaining any Letter of
Credit or purchasing or maintaining a participation therein or to reduce
the amount of any sum received or receivable by such Lender or such Issuing
Bank hereunder (whether of principal, interest or otherwise) by an amount
deemed by such Lender or such Issuing Bank to be material, then the
Borrower will pay to such Lender or such Issuing Bank, as the case may be,
upon demand such additional amount or amounts as will compensate such
Lender or such Issuing Bank, as the case may be, for such additional costs
incurred or reduction suffered. Notwithstanding the foregoing, no Lender
shall be entitled to request compensation under this paragraph with respect
to any Competitive Loan if it shall have been aware of the change giving
rise to such request at the time of submission of the Competitive Bid
pursuant to which such Competitive Loan shall have been made.
(b) If any Lender or any Issuing Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation, agreement or
guideline regarding capital adequacy, or any change after the date hereof
in any such law, rule, regulation, agreement or guideline (whether such
law, rule, regulation, agreement or guideline has been adopted) or in the
interpretation or administration thereof by any Governmental Authority
charged with the interpretation or administration thereof, or compliance by
any Lender (or any lending office of such Lender) or any Issuing Bank or
any Lender's or any Issuing Bank's holding company with any request or
directive regarding capital adequacy (whether or not having the force of
law) of any Governmental Authority has or would have the effect of reducing
the rate of return on such Lender's or such Issuing Bank's capital or on
the capital of such Lender's or such Issuing Bank's holding company, if
any, as a consequence of this Agreement or the Loans made or participations
in Letters of Credit purchased by such Lender pursuant hereto or the
Letters of Credit issued by such Issuing Bank pursuant hereto to a level
below that which such Lender or such Issuing Bank or such Lender's or such
Issuing Bank's holding company could have achieved but for such
applicability, adoption, change or compliance (taking into consideration
such Lender's or such Issuing Bank's policies and the policies of such
Lender's or such Issuing Bank's holding company with respect to capital
adequacy) by an amount deemed by such Lender or such Issuing Bank to be
material, then from time to time the Borrower shall pay to such Lender or
such Issuing Bank, as the case may be, such additional amount or amounts as
will compensate such Lender or such Issuing Bank or such Lender's or the
Issuing Bank's holding company for any such reduction suffered.
(c) A certificate of a Lender or any Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or such Issuing Bank
or its holding company, as applicable, as specified in paragraph (a) or (b)
above shall be delivered to the Borrower and shall be conclusive absent
manifest error. The Borrower shall pay such Lender or such Issuing Bank
the amount shown as due on any such certificate delivered by it within 10
days after its receipt of the same.
(d) Failure or delay on the part of any Lender or any Issuing Bank to
demand compensation for any increased costs or reduction in amounts
received or receivable or reduction in return on capital shall not
constitute a waiver of such Lender's or such Issuing Bank's right to demand
such compensation; provided, however, that any Lender or any Issuing Bank
may not demand compensation under this Section 2.14 for any period
commencing earlier than 90 days prior to such demand. The protection of
this Section 2.14 shall be available to each Lender and each Issuing Bank
regardless of any possible contention of the invalidity or inapplicability
of the law, rule, regulation, agreement, guideline or other change or
condition that shall have occurred or been imposed.
SECTION 2.15. Change in Legality. (a) Notwithstanding any other
provision of this Agreement, if, after the date hereof, any change in any
law or regulation or in the interpretation thereof by any Governmental
Authority charged with the administration or interpretation thereof shall
make it unlawful for any Lender to make or maintain any Eurodollar Loan or
to give effect to its obligations as contemplated hereby with respect to
any Eurodollar Loan, then, by written notice to the Borrower and to the
Administrative Agent:
(i) such Lender may declare that Eurodollar Loans will not thereafter
(for the duration of such unlawfulness) be made by such Lender hereunder
(or be continued for additional Interest Periods) and ABR Loans will not
thereafter (for such duration) be converted into Eurodollar Loans,
whereupon any request for a Eurodollar Borrowing (or to convert an ABR
Borrowing to a Eurodollar Borrowing or to continue a Eurodollar Borrowing
for an additional Interest Period) shall, as to such Lender only, be deemed
a request for an ABR Loan (or a request to continue an ABR Loan as such for
an additional Interest Period or to convert a Eurodollar Loan into an ABR
Loan, as the case may be), unless such declaration shall be subsequently
withdrawn; and
(ii) such Lender may require that all outstanding Eurodollar Loans
made by it be converted to ABR Loans, in which event all such Eurodollar
Loans shall be automatically converted to ABR Loans as of the effective
date of such notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under (i) or (ii) above,
all payments and prepayments of principal that would otherwise have been
applied to repay the Eurodollar Loans that would have been made by such
Lender or the converted Eurodollar Loans of such Lender shall instead be
applied to repay the ABR Loans made by such Lender in lieu of, or resulting
from the conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.15, a notice to the Borrower by any
Lender shall be effective as to each Eurodollar Loan made by such Lender,
if lawful, on the last day of the Interest Period currently applicable to
such Eurodollar Loan; in all other cases such notice shall be effective on
the date of receipt by the Borrower.
SECTION 2.16. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (a) such Lender
receiving or being deemed to receive any amount on account of the principal
of any Eurodollar Loan or Fixed Rate Loan prior to the end of the Interest
Period in effect therefor, (b) the conversion of any Eurodollar Loan to an
ABR Loan, or the conversion of the Interest Period with respect to any
Eurodollar Loan, in each case other than on the last day of the Interest
Period in effect therefor, (c) any Eurodollar Revolving Loan to be made by
such Lender (including any Eurodollar Loan to be made pursuant to a
conversion or continuation under Section 2.10) not being made after notice
of such Loan shall have been given by the Borrower hereunder, (d) the
failure to borrow any Competitive Loan after accepting the Competitive Bid
to make such Loan (e) the assignment of any Eurodollar Loan or Fixed Rate
Loan, other than on the last day of the Interest Period applicable thereto
as a result of a request by the Borrower pursuant to Section 2.21 or (f)
the failure to continue any Revolving Loan that was to be continued as a
Eurodollar Loan on the date specified in any notice delivered pursuant
hereto (any of the events referred to in this sentence being called a
"Breakage Event"). Such loss shall include an amount equal to the excess,
as reasonably determined by such Lender, of (i) its cost of obtaining funds
for the Loan that is the subject of such Breakage Event for the period from
the date of such Breakage Event to the last day of the Interest Period in
effect (or that would have been in effect) for such Loan over (ii) the
amount of interest likely to be realized by such Lender in redeploying the
funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts
which such Lender is entitled to receive pursuant to this Section 2.16
shall be delivered to the Borrower and shall be conclusive absent manifest
error.
SECTION 2.17. Pro Rata Treatment. Except as provided below with
respect to Competitive Loans or as required under Section 2.14, 2.15, 2.16
or 2.20, each Borrowing, each payment or prepayment of principal of any
Borrowing, each payment of interest on the Loans, each payment of the
Commitment Fees, each reduction of the Commitments and each refinancing of
any Borrowing with, conversion of any Borrowing to or continuation of any
Borrowing as a Borrowing of any Type shall be allocated pro rata among the
Lenders in accordance with their respective applicable Commitments (or, if
such Commitments shall have expired or been terminated, in accordance with
the respective principal amounts of their outstanding Revolving Loans).
Each payment of principal of any Competitive Borrowing shall be allocated
pro rata among the Lenders participating in such Borrowing in accordance
with the respective principal amounts of their outstanding Competitive
Loans comprising such Borrowing. Each payment of interest on any
Competitive Borrowing shall be allocated pro rata among the Lenders
participating in such Borrowing in accordance with the respective amounts
of accrued and unpaid interest on their outstanding Competitive Loans
comprising such Borrowing. For purposes of determining the available
Commitment of each Lender at any time, each outstanding Competitive
Borrowing shall be deemed to have utilized the Commitments of the Lenders
(including those Lenders which shall not have made Loans as part of such
Competitive Borrowing) pro rata in accordance with such respective
Commitments. Each Lender agrees that in computing such Lender's portion of
any Revolving Borrowing to be made hereunder, the Administrative Agent may,
in its discretion, round each Lender's percentage of such Revolving
Borrowing to the next higher or lower whole dollar amount.
SECTION 2.18. Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or
counterclaim against the Borrower, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security or
interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, obtain payment (voluntary or involuntary)
in respect of any Revolving Loan or Revolving Loans or LC Disbursement as a
result of which the unpaid principal portion of its Revolving Loans and
participations in LC Disbursements shall be proportionately less than the
unpaid principal portion of the Revolving Loans and participations in LC
Disbursements of any other Lender, it shall be deemed simultaneously to
have purchased from such other Lender at face value, and shall promptly pay
to such other Lender the purchase price for, a participation in the
Revolving Loans and LC Exposure, as the case may be of such other Lender,
so that the aggregate unpaid principal amount of the Revolving Loans and LC
Exposure and participations in Revolving Loans and LC Exposure held by each
Lender shall be in the same proportion to the aggregate unpaid principal
amount of all Revolving Loans and LC Exposure then outstanding as the
principal amount of its Revolving Loans and LC Exposure prior to such
exercise of banker's lien, setoff or counterclaim or other event was to the
principal amount of all Revolving Loans and LC Exposure outstanding prior
to such exercise of banker's lien, setoff or counterclaim or other event;
provided, however, that if any such purchase or purchases or adjustments
shall be made pursuant to this Section and the payment giving rise thereto
shall thereafter be recovered, such purchase or purchases or adjustments
shall be rescinded to the extent of such recovery and the purchase price or
prices or adjustment restored without interest. The Borrower expressly
consents to the foregoing arrangements and agrees that any Lender holding a
participation in a Revolving Loan or LC Disbursement deemed to have been so
purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by the Borrower to
such Lender by reason thereof as fully as if such Lender had made a Loan
directly to the Borrower in the amount of such participation.
SECTION 2.19. Payments. (a) The Borrower shall make each payment
(including principal of or interest on any Borrowing or any LC Disbursement
or any Fees or other amounts) hereunder and under any other Loan Document
not later than 3:00 p.m., New York City time, on the date when due in
immediately available dollars, without setoff, defense or counterclaim.
Any amounts received after such time on any date may, in the discretion of
the Administrative Agent, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. Each
such payment (other than Issuing Bank Fees, which shall be paid directly to
the Issuing Bank entitled thereto) shall be made to the Administrative
Agent at its offices at 270 Park Avenue, New York, New York. except
payments to be made directly to the Issuing Bank as expressly provided
herein and except that payments pursuant to Sections 2.15, 2.16, 2.17 and
9.04 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for
the account of any other Person to the appropriate recipient promptly
following receipt thereof.
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal,
unreimbursed LC Disbursements, interest and fees then due hereunder, such
funds shall be applied to the amounts then due hereunder in such order and
priority as the Administrative Agent may elect; provided that any funds
that the Administrative Agent elects to apply to principal, unreimbursed LC
Disbursements, interest or fees then due shall be applied ratably to all
amounts of principal, unreimbursed LC Disbursements, interest or fees (as
the case may be) then due. Whenever any payment (including principal of or
interest on any Borrowing or any Fees or other amounts) hereunder or under
any other Loan Document shall become due, or otherwise would occur, on a
day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of interest or Fees, if applicable.
SECTION 2.20. Taxes. (a) Any and all payments by the Borrower
hereunder and under any other Loan Document shall be made, in accordance
with Section 2.19, free and clear of and without deduction for any and all
current or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding (i)
income taxes imposed on the net income of the Administrative Agent, any
Lender or any Issuing Bank (or any transferee or assignee thereof,
including a participation holder (any such entity a "Transferee")) and (ii)
franchise taxes imposed on the net income of the Administrative Agent, any
Lender or any Issuing Bank (or Transferee), in each case as a result of a
present or former connection between the Governmental Authority imposing
such tax and the Administrative Agent, such Lender or such Issuing Bank (or
Transferee) (except a connection arising solely from the Administrative
Agent, such Lender or such Issuing Bank having executed, delivered or
performed its obligations or received a payment under, or enforced, this
Agreement) (all such nonexcluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities, collectively or individually, being
called "Taxes"). If the Borrower shall be required to deduct any Taxes
from or in respect of any sum payable hereunder or under any other Loan
Document to the Administrative Agent, any Lender or any Issuing Bank (or
any Transferee), (i) the sum payable shall be increased by the amount (an
"additional amount") necessary so that after making all required deductions
(including deductions applicable to additional sums payable under this
Section 2.20) the Administrative Agent, such Lender or such Issuing Bank
(or Transferee), as the case may be, shall receive an amount equal to the
sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant Governmental Authority in accordance
with applicable law.
(b) In addition, the Borrower agrees to pay to the relevant
Governmental Authority in accordance with applicable law any current or
future stamp or documentary taxes or any other excise or property taxes,
charges or similar levies that arise from any payment made hereunder or
under any other Loan Document or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other
Loan Document ("Other Taxes").
(c) The Borrower will indemnify the Administrative Agent, each Lender
and each Issuing Bank (or Transferee) for the full amount of Taxes and
Other Taxes paid by the Administrative Agent, such Lender or such Issuing
Bank (or Transferee), as the case may be, and any liability (including
penalties, interest and expenses (including reasonable attorney's fees and
expenses), other than penalties, interest or expenses arising out of the
gross negligence of such person), net of any related payments under
paragraph (a) or (b) above, arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted
by the relevant Governmental Authority. A certificate as to the amount of
such payment or liability prepared by the Administrative Agent, a Lender or
an Issuing Bank (or Transferee), or the Administrative Agent on its behalf,
absent manifest error, shall be final, conclusive and binding for all
purposes. Such indemnification shall be made within 30 days after the date
the Administrative Agent, any Lender or any Issuing Bank (or Transferee),
as the case may be, makes written demand therefor.
(d) If the Administrative Agent, any Lender or any Issuing Bank (or
Transferee) receives a refund in respect of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.20, it
shall within 30 days from the date of such receipt pay over such refund to
the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.20 with
respect to the Taxes or Other Taxes giving rise to such refund), net of all
out-of-pocket expenses of the Administrative Agent, such Lender or such
Issuing Bank (or Transferee) and without interest (other than interest paid
by the relevant Governmental Authority with respect to such refund);
provided, however, that the Borrower, upon the request of the
Administrative Agent, such Lender or such Issuing Bank (or Transferee),
shall repay the amount paid over to the Borrower (plus penalties, interest
or other charges) to the Administrative Agent, such Lender or such Issuing
Bank (or Transferee) in the event the Administrative Agent, such Lender or
such Issuing Bank (or Transferee) is required to repay such refund to such
Governmental Authority.
(e) As soon as practicable after the date of any payment of Taxes or
Other Taxes by the Borrower to the relevant Governmental Authority, the
Borrower will deliver to the Administrative Agent, at its address referred
to in Section 9.01, the original or a certified copy of a receipt issued by
such Governmental Authority evidencing payment thereof.
(f) Without prejudice to the survival of any other agreement contained
herein, the agreements and obligations contained in this Section 2.20 shall
survive the payment in full of the principal of and interest on all Loans
made hereunder, the expiration or cancellation of all Letters of Credit and
the reimbursement of all draws thereunder.
(g) Each Lender (or Transferee) that is organized under the laws of a
jurisdiction other than the United States, any State thereof or the
District of Columbia (a "Non-U.S. Lender") shall deliver to the Borrower
and the Administrative Agent two copies of either United States Internal
Revenue Service Form 1001 or Form 4224, or, in the case of a Non-U.S.
Lender claiming exemption from U.S. Federal withholding tax under Section
871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a Form W-8, or any subsequent versions thereof or successors
thereto (and, if such Non-U.S. Lender delivers a Form W-8, a certificate
representing that such Non-U.S. Lender is not a bank for purposes of
Section 881(c) of the Code, is not a 10-percent shareholder (within the
meaning of Section 871(h)(3)(B) of the Code) of the Borrower and is not a
controlled foreign corporation related to the Borrower (within the meaning
of Section 864(d)(4) of the Code)), properly completed and duly executed by
such Non-U.S. Lender claiming complete exemption from, or reduced rate of,
U.S. Federal withholding tax on payments by the Borrower under this
Agreement and the other Loan Documents. Such forms shall be delivered by
each Non-U.S. Lender on or before the date it becomes a party to this
Agreement (or, in the case of a Transferee that is a participation holder,
on or before the date such participation holder becomes a Transferee
hereunder) and on or before the date, if any, such Non-U.S. Lender changes
its applicable lending office by designating a different lending office (a
"New Lending Office"). In addition, each Non-U.S. Lender shall deliver
such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Lender. Notwithstanding any other
provision of this Section 2.20(g), a Non-U.S. Lender shall not be required
to deliver any form pursuant to this Section 2.20(g) that such Non-U.S.
Lender is not legally able to deliver.
(h) The Borrower shall not be required to indemnify any Non-U.S.
Lender or to pay any additional amounts to any Non-U.S. Lender, in respect
of United States Federal withholding tax pursuant to paragraph (a) or (c)
above to the extent that (i) the obligation to withhold amounts with
respect to United States Federal withholding tax existed on the date such
Non-U.S. Lender became a party to this Agreement (or, in the case of a
Transferee that is a participation holder, on the date such participation
holder became a Transferee hereunder) or, with respect to payments to a New
Lending Office, the date such Non-U.S. Lender designated such New Lending
Office with respect to a Loan; provided, however, that this paragraph (h)
shall not apply (x) to any Transferee or New Lending Office that becomes a
Transferee or New Lending Office as a result of an assignment,
participation, transfer or designation made at the request of the Borrower
and (y) to the extent the indemnity payment or additional amounts any
Transferee, or any Lender (or Transferee), acting through a New Lending
Office, would be entitled to receive (without regard to this paragraph (h))
do not exceed the indemnity payment or additional amounts that the person
making the assignment, participation or transfer to such Transferee, or
Lender (or Transferee) making the designation of such New Lending Office,
would have been entitled to receive in the absence of such assignment,
participation, transfer or designation or (ii) the obligation to pay such
additional amounts would not have arisen but for a failure by such Non-U.S.
Lender to comply with the provisions of paragraph (g) above.
(i) Nothing contained in this Section 2.20 shall require any Lender or
any Issuing Bank (or any Transferee) or the Administrative Agent to make
available any of its tax returns (or any other information that it deems to
be confidential or proprietary).
SECTION 2.21. Assignment of Commitments Under Certain Circumstances;
Duty to Mitigate. (a) In the event (i) any Lender or any Issuing Bank
delivers a certificate requesting compensation pursuant to Section 2.14,
(ii) any Lender or any Issuing Bank delivers a notice described in Section
2.15 or (iii) the Borrower is required to pay any additional amount to any
Lender or any Issuing Bank or any Governmental Authority on account of any
Lender or any Issuing Bank pursuant to Section 2.20, the Borrower may, at
its sole expense and effort, upon notice to such Lender or such Issuing
Bank and the Administrative Agent, require such Lender or such Issuing Bank
to transfer and assign, without recourse (in accordance with and subject to
the restrictions contained in Section 9.04), all of its interests, rights
and obligations under this Agreement (other than any outstanding
Competitive Loans held by it) to an assignee that shall assume such
assigned obligations (which assignee may be another Lender, if a Lender
accepts such assignment); provided, however, that (x) such assignment shall
not conflict with any law, rule or regulation or order of any court or
other Governmental Authority having jurisdiction, (y) the Borrower shall
have received the prior written consent of the Administrative Agent (and,
if a Commitment is being assigned, of each Issuing Bank), which consent
shall not unreasonably be withheld, and (z) the Borrower or such assignee
shall have paid to the affected Lender or Issuing Bank in immediately
available funds an amount equal to the sum of the principal of and interest
accrued to the date of such payment on the outstanding Loans (other than
Competitive Loans) and participations in LC Disbursements of such Lender or
such Issuing Bank plus all Fees and other amounts accrued for the account
of such Lender or such Issuing Bank hereunder (including any amounts under
Sections 2.14, 2.15 and 2.16); provided further that, if prior to any such
transfer and assignment the circumstances or event that resulted in such
Lender's or such Issuing Bank's claim for compensation under Section 2.14
or notice under Section 2.15 or the amounts paid pursuant to Section 2.20,
as the case may be, cease to cause such Lender or such Issuing Bank to
suffer increased costs or reductions in amounts received or receivable or
reduction in return on capital, or cease to have the consequences specified
in Section 2.15, or cease to result in amounts being payable under Section
2.20, as the case may be (including as a result of any action taken by such
Lender or such Issuing Bank pursuant to paragraph (b) below), or if such
Lender or such Issuing Bank shall waive its right to claim further
compensation under Section 2.14 in respect of such circumstances or event
or shall withdraw its notice under Section 2.15 or shall waive its right to
further payments under Section 2.20 in respect of such circumstances or
event, as the case may be, then such Lender or such Issuing Bank shall not
thereafter be required to make any such transfer and assignment hereunder.
(b) If (i) any Lender or the Issuing Bank shall request compensation
under Section 2.14, (ii) any Lender or any Issuing Bank delivers a notice
described in Section 2.15 or (iii) the Borrower is required to pay any
additional amount to any Lender or any Issuing Bank or any Governmental
Authority on account of any Lender or any Issuing Bank, pursuant to Section
2.20 (including as a result of any exercise by a Lender of its option
described in Section 2.02(b)), then such Lender or such Issuing Bank shall
use reasonable efforts (which shall not require such Lender or such Issuing
Bank to incur an unreimbursed loss or unreimbursed cost or expense or
otherwise take any action inconsistent with its internal policies or legal
or regulatory restrictions or suffer any disadvantage or burden deemed by
it to be significant) (x) to file any certificate or document reasonably
requested in writing by the Borrower or (y) to assign its rights and
delegate and transfer its obligations hereunder to another of its offices,
branches or affiliates, if such filing or assignment would reduce its
claims for compensation under Section 2.14 or enable it to withdraw its
notice pursuant to Section 2.15 or would reduce amounts payable pursuant to
Section 2.20, as the case may be, in the future. The Borrower hereby
agrees to pay all reasonable costs and expenses incurred by any Lender or
any Issuing Bank in connection with any such filing or assignment,
delegation and transfer.
SECTION 2.22. Letters of Credit. (a) General. The Borrower may
request any Issuing Bank to issue a Letter of Credit, in a form reasonably
acceptable to the Administrative Agent and such Issuing Bank, appropriately
completed, for the account of the Borrower, at any time and from time to
time while the Commitments remain in effect. This Section 2.22 shall not
be construed to impose an obligation upon any Issuing Bank to issue any
Letter of Credit that is inconsistent with the terms and conditions of this
Agreement.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. In order to request the issuance of a Letter of Credit (or to
amend, renew or extend an existing Letter of Credit), the Borrower shall
hand deliver or telecopy to the applicable Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of
issuance, amendment, renewal or extension) a notice requesting the issuance
of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, the date of issuance, amendment, renewal or extension,
the date on which such Letter of Credit is to expire (which shall comply
with paragraph (c) below), the amount of such Letter of Credit, the name
and address of the beneficiary thereof and such other information as shall
be necessary to prepare such Letter of Credit. A Letter of Credit shall be
issued, amended, renewed or extended only if, and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrower shall be deemed
to represent and warrant that, after giving effect to such issuance,
amendment, renewal or extension (A) the LC Exposure shall not exceed
$5,000,000 and (B) the Aggregate Revolving Credit Exposure plus the
aggregate principal amount of outstanding Competitive Loans plus the amount
of Loans for which notices have been delivered by the Borrower but have not
yet been made shall not exceed the Total Commitment.
(c) Expiration Date. Each Letter of Credit shall expire at the close
of business on the earlier of the date one year after the date of the
issuance of such Letter of Credit and the date that is five Business Days
prior to the Maturity Date, unless such Letter of Credit expires by its
terms on an earlier date.
(d) Participations. By the issuance of a Letter of Credit and without
any further action on the part of the applicable Issuing Bank or the
Lenders, such Issuing Bank hereby grants to each Lender, and each such
Lender hereby acquires from such Issuing Bank, a participation in such
Letter of Credit equal to such Lender's Pro Rata Percentage of the
aggregate amount available to be drawn under such Letter of Credit,
effective upon the issuance of such Letter of Credit. In consideration and
in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Administrative Agent, for the account
of any Issuing Bank, such Lender's Pro Rata Percentage of each LC
Disbursement made by such Issuing Bank and not reimbursed by the Borrower
(or, if applicable, another party pursuant to its obligations under any
other Loan Document) forthwith on the date due as provided in Section
2.02(f). Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of
Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including the occurrence and continuance of a
Default or an Event of Default, and that each such payment shall be made
without any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If any Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the Borrower shall pay to the
Administrative Agent an amount equal to such LC Disbursement not later than
two hours after the Borrower shall have received notice from the Issuing
Bank that payment of such draft will be made, or, if the Borrower shall
have received such notice later than 10:00 a.m., New York City time, on any
Business Day, not later than 10:00 a.m., New York City time, on the
immediately following Business Day.
(f) Obligations Absolute. The Borrower's obligations to reimburse LC
Disbursements as provided in paragraph (e) above shall be absolute,
unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, under any and all
circumstances whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit or
any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure from all
or any of the provisions of any Letter of Credit or any Loan Document;
(iii) the existence of any claim, setoff, defense or other right that
the Borrower, any other party guaranteeing, or otherwise obligated with,
the Borrower, any Subsidiary or other Affiliate thereof or any other person
may at any time have against the beneficiary under any Letter of Credit,
the applicable Issuing Bank, the Administrative Agent or any Lender or any
other person, whether in connection with this Agreement, any other Loan
Document or any other related or unrelated agreement or transaction;
(iv) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(v) payment by the applicable Issuing Bank under a Letter of Credit
against presentation of a draft or other document that does not comply with
the terms of such Letter of Credit; and
(vi) any other act or omission to act or delay of any kind of the
applicable Issuing Bank, the Lenders, the Administrative Agent or any other
person or any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of this
Section 2.22, constitute a legal or equitable discharge of the Borrower's
obligations hereunder.
Without limiting the generality of the foregoing, it is expressly
understood and agreed that the absolute and unconditional obligation of the
Borrower hereunder to reimburse LC Disbursements will not be excused by the
gross negligence or wilful misconduct of the applicable Issuing Bank.
However, the foregoing shall not be construed to excuse any Issuing Bank
from liability to the Borrower to the extent of any direct damages (as
opposed to consequential damages, claims in respect of which are hereby
waived by the Borrower to the extent permitted by applicable law) suffered
by the Borrower that are caused by such Issuing Bank's gross negligence or
wilful misconduct or failure to examine drafts and other documents
presented under a Letter of Credit to determine whether such drafts and
other documents presented under a Letter of Credit comply with the terms
thereof; it is understood that any Issuing Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary and,
in making any payment under any Letter of Credit (i) any Issuing Bank's
exclusive reliance on the documents presented to it under such Letter of
Credit as to any and all matters set forth therein, including reliance on
the amount of any draft presented under such Letter of Credit, whether or
not the amount due to the beneficiary thereunder equals the amount of such
draft and whether or not any document presented pursuant to such Letter of
Credit proves to be insufficient in any respect, if such document on its
face appears to be in order, and whether or not any other statement or any
other document presented pursuant to such Letter of Credit proves to be
forged or invalid or any statement therein proves to be inaccurate or
untrue in any respect whatsoever and (ii) any noncompliance in any
immaterial respect of the documents presented under such Letter of Credit
with the terms thereof shall, in each case, be deemed not to constitute
wilful misconduct or gross negligence of the applicable Issuing Bank.
(g) Disbursement Procedures. Each Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to
represent a demand for payment under a Letter of Credit issued by such
Issuing Bank. Each Issuing Bank shall as promptly as possible give
telephonic notification, confirmed by telecopy, to the Administrative Agent
and the Borrower of such demand for payment and whether such Issuing Bank
has made or will make an LC Disbursement thereunder; provided, however,
that any failure to give or delay in giving such notice shall not relieve
the Borrower of its obligation to reimburse such Issuing Bank and the
Lenders with respect to any such LC Disbursement. The Administrative Agent
shall promptly give each Lender notice thereof.
(h) Interim Interest. If any Issuing Bank shall make any LC
Disbursement in respect of a Letter of Credit, then, unless the Borrower
shall reimburse such LC Disbursement in full by 3:00 p.m. on such date, the
unpaid amount thereof shall bear interest, for each day from and including
the date of such LC Disbursement, to but excluding the date that the
Borrower reimburses such LC Disbursement, at the Alternate Base Rate.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank except that interest accrued on or after the date of payment
by any Lender pursuant to Section 2.02(f) to reimburse the Issuing Bank
shall be for the account of such Lender to the extent of such payment.
(i) Resignation or Removal of any Issuing Bank; Additional Issuing
Banks. Any Issuing Bank may resign at any time by giving 180 days' prior
written notice to the Administrative Agent, the Lenders and the Borrower,
and may be removed at any time by the Borrower by notice to such Issuing
Bank, the Administrative Agent and the Lenders. The Borrower may appoint
additional Issuing Banks reasonably satisfactory to the Administrative
Agent, and upon the acceptance of any appointment as an Issuing Bank
hereunder by a Lender that shall agree to serve as an Issuing Bank, such
successor shall succeed to and become vested with all the interests, rights
and obligations of an Issuing Bank; provided, however, that there shall not
be more than three Issuing Banks at any time. Upon resignation or removal,
an Issuing Bank shall be discharged from its obligations to issue
additional Letters of Credit hereunder. At the time such resignation or
removal shall become effective, the Borrower shall pay all accrued and
unpaid Issuing Bank Fees due to such Issuing Bank. The acceptance of any
appointment as an Issuing Bank hereunder by a Lender shall be evidenced by
an agreement entered into by such Lender, in a form satisfactory to the
Borrower and the Administrative Agent, and, from and after the effective
date of such agreement, (i) such Lender shall have all the rights and
obligations of an Issuing Bank under this Agreement and the other Loan
Documents and (ii) references herein and in the other Loan Documents to the
term "Issuing Bank" shall be deemed to refer to such additional Issuing
Bank and to any previously appointed Issuing Bank, or to such successor and
all previously appointed Issuing Banks, as the context shall require.
After the resignation or removal of an Issuing Bank hereunder, such Issuing
Bank shall remain a party hereto and shall continue to have all the rights
and obligations of an Issuing Bank under this Agreement and the other Loan
Documents with respect to Letters of Credit issued by it prior to such
resignation or removal, but shall not be required to issue additional
Letters of Credit.
(j) Cash Collateralization. If (i) any Event of Default shall occur
and be continuing and the Administrative Agent or the Required Lenders
shall demand that the LC Exposure be cash collateralized, (ii) the maturity
of the Loans shall be accelerated pursuant to Article VII or (iii) the
Borrower shall be required to provide cash collateral for a portion of the
LC Exposure pursuant to Section 2.13, the Borrower shall deposit in an
account with the Administrative Agent, for the benefit of the Lenders, an
amount in cash equal to the LC Exposure (or, in the case of a deposit
pursuant to clause (iii) above, the portion of the LC Exposure required to
be collateralized) as of such date. Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
Obligations. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account.
Other than any interest earned on the investment of such deposits in
Permitted Investments, which investments shall be made at the option and
sole discretion of the Administrative Agent, such deposits shall not bear
interest. Interest or profits, if any, on such investments shall
accumulate in such account. Moneys in such account shall (i) automatically
be applied by the Administrative Agent to reimburse each Issuing Bank for
LC Disbursements for which it has not been reimbursed, (ii) be held for the
satisfaction of the reimbursement obligations of the Borrower for the LC
Exposure at such time and, (iii) if the maturity of the Loans has been
accelerated (but subject to the consent of Lenders holding participations
in outstanding Letters of Credit representing greater than 50 percent of
the aggregate undrawn amount of all outstanding Letters of Credit), be
applied to satisfy other Obligations. If the Borrower is required to
provide an amount of cash collateral hereunder (x) as a result of the
occurrence of an Event of Default, such amount (to the extent not applied
as aforesaid) shall be returned to the Borrower within three Business Days
after all Events of Default have been cured or waived or (y) pursuant to
Section 2.13(a), such amount (to the extent not applied as aforesaid) shall
be returned to the Borrower within three Business Days after the excess of
the aggregate LC Exposure over the Total Commitment has been eliminated.
(k) Existing Letter of Credit. The letter of credit listed on
Schedule 6.01 and issued by The First National Bank of Boston shall be
deemed to be a Letter of Credit and, only as to such Letter of Credit, The
First National Bank of Boston will serve as Issuing Bank.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Administrative Agent, each
Issuing Bank and each of the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and each of
the Subsidiaries (a) is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization,
(b) has all requisite power and authority to own its property and assets
and to carry on its business as now conducted and as proposed to be
conducted, (c) is qualified to do business in, and is in good standing in,
every jurisdiction where such qualification is required, except where the
failure so to qualify could not reasonably be expected to result in a
Material Adverse Effect, and (d) has the corporate power and authority to
execute, deliver and perform its obligations under each of the Loan
Documents and each other agreement or instrument contemplated hereby to
which it is or will be a party and, in the case of the Borrower, to borrow
hereunder.
SECTION 3.02. Authorization. The execution, delivery and performance
by each Loan Party of each of the Loan Documents and the borrowings
hereunder and the Connector Purchase (collectively, the "Transactions") (a)
have been duly authorized by all requisite corporate and, if required,
stockholder action and (b) will not (i) violate (A) any provision of law,
statute, rule or regulation, or of the certificate or articles of
incorporation or other constitutive documents or by-laws of the Borrower or
any Subsidiary, (B) any order of any Governmental Authority or (C) any
provision of any indenture, agreement or other instrument to which the
Borrower or any Subsidiary is a party or by which any of them or any of
their property is or may be bound, (ii) be in conflict with, result in a
breach of or constitute (alone or with notice or lapse of time or both) a
default under, or give rise to any right to accelerate or to require the
prepayment, repurchase or redemption of any obligation under any such
indenture, agreement or other instrument or (iii) result in the creation or
imposition of any Lien upon or with respect to any property or assets now
owned or hereafter acquired by the Borrower or any Subsidiary, which
violations, individually and in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.
SECTION 3.03. Enforceability. This Agreement has been duly executed
and delivered by the Borrower and constitutes, and each other Loan Document
when executed and delivered by the each Loan Party thereto will constitute,
a legal, valid and binding obligation of such Loan Party enforceable
against such Loan Party in accordance with its terms, except as limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and general
principles of equity.
SECTION 3.04. Approvals. No action, consent or approval of,
registration or filing with or any other action by any Governmental
Authority (or any other person) is or will be required in connection with
the Transactions, except such as have been made or obtained and are in full
force and effect.
SECTION 3.05. Financial Statements. The Borrower has heretofore
furnished to the Lenders its consolidated and consolidating balance sheets
and statements of income and changes in financial condition (a) as of and
for the fiscal years ended December 31, 1995, December 31, 1994, and
December 31, 1993, audited, in the case of consolidated financial
statements, by and accompanied by the opinion of Price Waterhouse LLP,
independent public accountants, and (b) as of and for the fiscal quarter
and the portion of the fiscal year ended June 30, 1996, certified by its
chief accounting officer. Such financial statements present fairly in all
material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries as of such dates and for such
periods. Such balance sheets and the notes thereto disclose all material
liabilities, direct or contingent, of the Borrower and its consolidated
Subsidiaries as of the dates thereof required to be disclosed therein in
accordance with GAAP. Such financial statements were prepared in
accordance with GAAP applied on a consistent basis, except, in the case of
the statements referred to in clause (b) above, for the absence of
footnotes and for normal year-end adjustments.
SECTION 3.06. No Material Adverse Change. There has been no material
adverse change in the business, assets, operations, prospects, condition,
financial or otherwise, of the Borrower and the Subsidiaries, taken as a
whole, since December 31, 1995.
SECTION 3.07. Title to Properties; Possession Under Leases. (a) Each
of the Borrower and the Subsidiaries has good and marketable title to, or
valid leasehold interests in, all its material properties and assets,
except for minor defects in title that do not interfere with its ability to
conduct its business as currently conducted or to utilize such properties
and assets for their intended purposes. All such material properties and
assets are free and clear of Liens, other than Liens expressly permitted by
Section 6.02.
(b) Each of the Borrower and the Subsidiaries has complied in all
material respects with all obligations under all material leases to which
it is a party and all such leases are in full force and effect. Each of
the Borrower and the Subsidiaries enjoys peaceful and undisturbed
possession under all such material leases.
SECTION 3.08. Subsidiaries. Schedule 3.08 sets forth as of the
Closing Date a list of all Subsidiaries and the percentage ownership
interest of the Borrower therein. With respect to each person listed
thereon, Schedule 3.08 indicates whether such person is as of the Closing
Date an Inactive Subsidiary. The shares of capital stock or other
ownership interests so indicated on Schedule 3.08 are fully paid and non-
assessable and are owned by the Borrower, directly or indirectly, free and
clear of all Liens.
SECTION 3.09. Litigation; Compliance with Laws. (a) There are not
any actions, suits or proceedings at law or in equity or by or before any
Governmental Authority, or any investigations by any Governmental
Authority, now pending or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any Subsidiary or any business,
property or rights of any such person (i) that involve any Loan Document or
the Transactions or (ii) as to which there is a reasonable possibility of
an adverse determination and which, if adversely determined, could
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
(b) None of the Borrower or any of the Subsidiaries or any of their
respective material properties or assets is in violation of, nor will the
continued operation of their businesses and their material properties and
assets as currently conducted violate, any law, rule or regulation,
judgment, writ, injunction, decree or order of any Governmental Authority,
where such violation could reasonably be expected to result in a Material
Adverse Effect.
SECTION 3.10. Agreements. (a) Neither the Borrower nor any of the
Subsidiaries is a party to any agreement or instrument or subject to any
corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(b) Neither the Borrower nor any of the Subsidiaries is in default in
any manner under any provision of any indenture or other agreement or
instrument evidencing Indebtedness, or any other material agreement or
instrument to which it is a party or by which it or any of its properties
or assets are or may be bound, where such default could reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.11. Federal Reserve Regulations. (a) Neither the Borrower
nor any of the Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose
of buying or carrying Margin Stock.
(b) No part of the proceeds of any Loan or any Letter of Credit will
be used, whether directly or indirectly, and whether immediately,
incidentally or ultimately, for any purpose that entails a violation of, or
that is inconsistent with, the provisions of the Regulations of the Board,
including Regulation G, U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act. Neither the Borrower nor any Subsidiary is (a) an "investment
company" as defined in, or subject to regulation under, the Investment
Company Act of 1940 or (b) a "holding company" as defined in, or subject to
regulation under, the Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrower will use the proceeds of
the Loans and will request the issuance of Letters of Credit only for the
purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns. Each of the Borrower and the Subsidiaries
has filed or caused to be filed all Federal, state, local and foreign tax
returns or materials required to have been filed by it and has paid or
caused to be paid all taxes due and payable by it and all assessments
received by it, except taxes that are being contested in good faith by
appropriate proceedings and for which the Borrower or such Subsidiary, as
applicable, shall have set aside on its books adequate reserves.
SECTION 3.15. No Material Misstatements. None of (a) the Confidential
Information Memorandum or (b) any other information, report, financial
statement, exhibit or schedule furnished by or on behalf of the Borrower to
the Administrative Agent or any Lender in connection with the negotiation
of any Loan Document or included therein or delivered pursuant thereto
contained, contains or will contain (in each case taken as a whole) any
material misstatement of fact or omitted, omits or will omit to state any
material fact necessary to make the statements therein, in the light of the
circumstances under which they were, are or will be made, not misleading;
provided, however, that to the extent any such information, report,
financial statement, exhibit or schedule was based upon industry data from
third party sources or was based upon or constitutes a forecast or
projection, the Borrower represents only that it acted in good faith and
utilized reasonable assumptions and due care in the preparation of such
information, report, financial statement, exhibit or schedule.
SECTION 3.16. Employee Benefit Plans. Each of the Borrower and the
ERISA Affiliates is in compliance in all material respects with the
applicable provisions of ERISA and the Code and the regulations and
published interpretations thereunder. No ERISA Event has occurred or is
reasonably expected to occur that, when taken together with all other such
ERISA Events, could reasonably be expected to result in material liability
of the Borrower or any of the ERISA Affiliates. The present value of all
benefit liabilities under each Plan (based on those assumptions used to
fund such Plan) did not, as of the last annual valuation date applicable
thereto, exceed by more than $6,000,000 the fair market value of the assets
of such Plan, and the present value of all benefit liabilities of all
underfunded Plans (based on those assumptions used to fund each such Plan)
did not, as of the last annual valuation dates applicable thereto, exceed
by more than $6,000,000 the fair market value of the assets of all such
underfunded Plans.
SECTION 3.17. Environmental Matters. Except as set forth in Schedule
3.17:
(a) the properties owned or operated by the Borrower and the
Subsidiaries (the "Properties") do not contain any Hazardous Materials in
amounts or concentrations which (i) constitute, or constituted a violation
of, or (ii) is reasonably likely to give rise to liability under,
Environmental Laws, which violations and liabilities, in the aggregate,
could result in a Material Adverse Effect;
(b) the Properties and all operations of the Borrower and the
Subsidiaries are in compliance, and in the last three years have been in
compliance, with all Environmental Laws and all necessary Environmental
Permits have been obtained and are in effect, except to the extent that
such non-compliance or failure to obtain any necessary permits, in the
aggregate, could not result in a Material Adverse Effect;
(c) there have been no Releases or threatened Releases at, from, under
or proximate to the Properties or otherwise in connection with the
operations of the Borrower or the Subsidiaries, which Releases or
threatened Releases, in the aggregate, could result in a Material Adverse
Effect;
(d) neither the Borrower nor any of the Subsidiaries has received any
notice of an Environmental Claim in connection with the Properties or the
operations of the Borrower or the Subsidiaries or with regard to any person
whose liabilities for environmental matters the Borrower or the
Subsidiaries has retained or assumed, in whole or in part, contractually,
by operation of law or otherwise, which, in the aggregate, could result in
a Material Adverse Effect, nor do the Borrower or the Subsidiaries have
reason to believe that any such notice will be received or is being
threatened; and
(e) Hazardous Materials have not been transported from the Properties,
nor have Hazardous Materials been generated, treated, stored or disposed of
at, on or under any of the Properties in a manner that could give rise to
liability under any Environmental Law, nor have the Borrower or the
Subsidiaries retained or assumed any liability, contractually, by operation
of law or otherwise, with respect to the generation, treatment, storage or
disposal of Hazardous Materials, which transportation, generation,
treatment, storage or disposal, or retained or assumed liabilities, in the
aggregate, could result in a Material Adverse Effect.
SECTION 3.18. Insurance. The Borrower and its Subsidiaries have in
effect insurance in such amounts and covering such risks and liabilities as
are in accordance with normal practice in their industry.
SECTION 3.19. Capital Stock of Subsidiaries. No Liens exist on the
Capital Stock of the Subsidiaries.
SECTION 3.20. Labor Matters. There are no strikes, lockouts or
slowdowns against the Borrower or any Subsidiary pending or, to the
knowledge of the Borrower, threatened. The hours worked by and payments
made to employees of the Borrower and the Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable Federal,
state, local or foreign law dealing with such matters, other than such
violations that, individually and in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. All payments due from the
Borrower or any Subsidiary, or for which any claim may be made against the
Borrower or any Subsidiary, on account of wages and employee health and
welfare insurance and other benefits, have been paid or accruals have been
made on the books of the Borrower or such Subsidiary to cover such
payments. The consummation of the Transactions will not give rise to any
right of termination or right of renegotiation on the part of any union
under any collective bargaining agreement to which the Borrower or any
Subsidiary is bound.
SECTION 3.21. Solvency. Immediately after the consummation of the
Connector Purchase and the making of any Loans made in connection
therewith, and after giving effect to the application of the proceeds of
such Loans, (i) the fair value of the assets of each Loan Party, at a fair
valuation, will exceed its probable liability on its debts and liabilities,
subordinated, contingent or otherwise; (ii) the present fair saleable value
of the property of each Loan Party will be greater than the amount that
will be required to pay the probable liability of its debts and other
liabilities, subordinated, contingent or otherwise, as such debts and other
liabilities become absolute and matured; (iii) each Loan Party will be able
to pay its debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (iv) each Loan
Party will not have unreasonably small capital with which to conduct the
business in which it is engaged as such business is now conducted and is
proposed to be conducted following the Closing Date.
ARTICLE IV. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans and of the Issuing Banks
to issue Letters of Credit hereunder are subject to the satisfaction of the
following conditions:
SECTION 4.01. All Credit Events. On the date of each Borrowing (other
than a Borrowing that results from the conversion or continuation of an
existing Borrowing) and on the date of each issuance of a Letter of Credit
(each such event being called a "Credit Event"):
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 or Section 2.11 or, in the case of
the issuance of a Letter of Credit, the applicable Issuing Bank and the
Administrative Agent shall have received a notice requesting the issuance
of such Letter of Credit as required by Section 2.22(b).
(b) The representations and warranties set forth in Article III hereof
shall be true and correct in all material respects on and as of the date of
such Credit Event with the same effect as though made on and as of such
date, except to the extent such representations and warranties expressly
relate to an earlier date (in which case such representations and
warranties shall be true and correct in all material respects as of such
earlier date).
(c) The Borrower shall be in compliance with all the terms and
provisions set forth herein and in each other Loan Document on its part to
be observed or performed, and at the time of and immediately after such
Credit Event, no Event of Default or Default shall have occurred and be
continuing.
Except as expressly provided in paragraph (b) above, each Credit Event
shall be deemed to constitute a representation and warranty by the Borrower
on the date of such Credit Event as to the matters specified in paragraphs
(b) and (c) of this Section 4.01.
SECTION 4.02. Effective Date. The obligations of the Lenders to make
Loans and of the Issuing Banks to issue Letters of Credit hereunder shall
not become effective until the date on which each of the following
conditions is satisfied (or waived in accordance with Section 9.08):
(a) The Administrative Agent shall have received, on behalf of itself,
the Lenders and the Issuing Banks, a favorable written opinion of Ropes and
Gray, counsel for the Borrower, substantially to the effect set forth in
Exhibit G, (i) dated the Effective Date, (ii) addressed to the Issuing
Banks, the Administrative Agent and the Lenders, and (iii) covering such
other matters relating to the Loan Documents as the Administrative Agent
shall reasonably request, and the Borrower hereby requests such counsel to
deliver such opinion.
(b) All legal matters incident to this Agreement, the Borrowings and
extensions of credit hereunder and the other Loan Documents shall be
satisfactory to the Administrative Agent, the Lenders and their counsel,
the Issuing Banks and Cravath, Swaine and Moore, counsel for the
Administrative Agent.
(c) The Administrative Agent shall have received (i) a copy of the
certificate or articles of incorporation, including all amendments thereto,
of each Loan Party, certified as of a recent date by the Secretary of State
or other applicable Governmental Authority of the state of its
organization, and a certificate as to the good standing of each Loan Party
as of a recent date, from such Secretary of State; (ii) a certificate of
the Secretary or Assistant Secretary of each Loan Party dated the Effective
Date and certifying (A) that attached thereto is a true and complete copy
of the by-laws of such Loan Party as in effect on the Closing Date and at
all times since a date prior to the date of the resolutions described in
clause (B) below, (B) that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors of such Loan Party
authorizing the execution, delivery and performance of the Loan Documents
to which such person is a party and, in the case of the Borrower, the
borrowings hereunder, and that such resolutions have not been modified,
rescinded or amended and are in full force and effect, (C) that the
certificate or articles of incorporation of such Loan Party have not been
amended since the date of the last amendment thereto shown on the
certificate of good standing furnished pursuant to clause (i) above, and
(D) as to the incumbency and specimen signature of each officer executing
any Loan Document or any other document delivered in connection herewith on
behalf of such Loan Party; (iii) a certificate of another officer as to the
incumbency and specimen signature of the Secretary or Assistant Secretary
executing the certificate pursuant to (ii) above; and (iv) such other
documents as the Lenders, the Issuing Banks or Cravath, Swaine and Moore,
counsel for the Administrative Agent, may reasonably request.
(d) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by a Financial Officer of the Borrower,
confirming compliance with the conditions precedent set forth in paragraphs
(b) and (c) of Section 4.01.
(e) The Administrative Agent shall have received all Fees and other
amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all out-of-pocket expenses
required to be reimbursed or paid by the Borrower hereunder or under any
other Loan Document.
(f) Each of the Guarantee Agreement and the Indemnity, Subrogation and
Contribution Agreement shall have been duly executed by the parties thereto
and shall have been delivered to the Administrative Agent and shall be in
full force and effect.
(g) After giving effect to the Borrowings hereunder on the Effective
Date and the application of the proceeds thereof, the Borrower and the
Subsidiaries shall have no Indebtedness other than the Loans hereunder and
Indebtedness otherwise permitted under Section 6.01. All agreements,
commitments, security interests and other rights and obligations in respect
of the Existing Credit Agreements shall have been terminated and all
amounts due in respect thereof shall have been paid in full from the
proceeds of the Loans made on the Effective Date.
(h) All approvals and consents of Governmental Authorities and third
parties required in connection with the Connector Purchase shall have been
obtained (except as described in Section 3.04) and all applicable appeal
periods shall have expired, and there shall be no action, pending or
threatened, by or before any Governmental Authority that has or could have
a reasonable likelihood of restraining, preventing or imposing burdensome
conditions on the Connector Purchase or the other Transactions.
(i) The Lenders shall have received a pro forma consolidated balance
sheet of the Borrower and the Subsidiaries based upon the balance sheet of
the Borrower as of June 30, 1996, prepared as if the Connector Purchase had
occurred on such date, together with a certificate of the Borrower that
such balance sheet fairly presents the pro forma financial position of the
Borrower and the Subsidiaries at such date in accordance with GAAP. The
Administrative Agent shall be satisfied, and shall have received a
certificate of a Financial Officer of the Borrower, dated the Effective
Date, to the effect, that (a) such balance sheet has been prepared in good
faith by the Borrower, on a basis consistent with the pro forma financial
information contained in the Confidential Information Memorandum (which
consistency is believed by the Borrower on the Effective Date to be
reasonable), are based on the best information available to the Borrower as
of the date of delivery thereof and on the Effective Date, accurately
reflect all adjustments required to be made to give effect to the Connector
Purchase and the Borrowings in connection therewith and the application of
the proceeds of such Borrowings and present fairly in all material respects
on a pro forma basis the estimated consolidated financial position of the
Borrower and its consolidated Subsidiaries as of June 30, 1996, assuming
that the Connector Purchase and such Borrowings had actually occurred at
June 30, 1996, and (b) such balance sheet does not indicate that the
Borrower will be in violation of Sections 6.10 or 6.11.
(j) The Connector Purchase shall have been consummated.
ARTICLE V. AFFIRMATIVE COVENANTS
The Borrower covenants and agrees with each Lender that so long as this
Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document shall have been
paid in full and all Letters of Credit have been canceled or have expired
and all amounts drawn thereunder have been reimbursed in full, unless the
Required Lenders shall otherwise consent in writing, the Borrower will, and
will cause each of the Subsidiaries to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause
to be done all things necessary to preserve, renew and keep in full force
and effect its legal existence, except as otherwise expressly permitted
under Section 6.05.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses,
permits, franchises, authorizations, patents, copyrights, trademarks and
trade names material to the conduct of its business; maintain and operate
such business in substantially the manner in which it is presently
conducted and operated; comply in all material respects with all applicable
laws, rules, regulations and decrees and orders of any Governmental
Authority, whether now in effect or hereafter enacted; and at all times
maintain and preserve all property material to the conduct of such business
and keep such property in good repair, working order and condition and from
time to time make, or cause to be made, all needful and proper repairs,
renewals, additions, improvements and replacements thereto necessary in
order that the business carried on in connection therewith may be properly
conducted at all times.
SECTION 5.02. Insurance. Keep its insurable properties adequately
insured at all times by financially sound and reputable insurers; maintain
such other insurance, to such extent and against such risks, including fire
and other risks insured against by extended coverage, as is customary with
companies in the same or similar businesses operating in the same or
similar locations, including public liability insurance against claims for
personal injury or death or property damage occurring upon, in, about or in
connection with the use of any properties owned, occupied or controlled by
it; and maintain such other insurance as may be required by law.
SECTION 5.03. Obligations and Taxes. Pay and perform its Indebtedness
and other obligations promptly and in accordance with their terms and pay
and discharge promptly when due all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or in
respect of its property, before the same shall become delinquent or in
default, as well as all lawful claims for labor, materials and supplies or
otherwise that, if unpaid, might give rise to a Lien upon such properties
or any part thereof; provided, however, that such payment and discharge
shall not be required with respect to any such tax, assessment, charge,
levy or claim so long as the validity or amount thereof shall be contested
in good faith by appropriate proceedings and the Borrower shall have set
aside on its books adequate reserves with respect thereto in accordance
with GAAP and such contest operates to suspend collection of the contested
obligation, tax, assessment or charge and enforcement of a Lien.
SECTION 5.04. Financial Statements, Reports, etc. In the case of the
Borrower, furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, its consolidated
and consolidating balance sheets and related statements of operations,
stockholders' equity and cash flows showing the financial condition of the
Borrower and its consolidated Subsidiaries as of the close of such fiscal
year and the results of its operations and the operations of such
Subsidiaries during such year, audited, in the case of the consolidated
financial statements, by Price Waterhouse LLP or other independent public
accountants of recognized national standing acceptable to the Required
Lenders and accompanied by an opinion of such accountants (which shall not
be qualified in any material respect) to the effect that such consolidated
financial statements present fairly in all material respects the financial
condition and results of operations of the Borrower and the Subsidiaries on
a consolidated basis in accordance with GAAP consistently applied and, in
the case of the consolidating financial statements, certified by a
Financial Officer of the Borrower as presenting fairly in all material
respects the financial condition and results of operations of the Borrower
and the Subsidiaries on a consolidating basis in accordance with GAAP
consistently applied;
(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, its consolidated and consolidating balance
sheets and related statements of operations, stockholders' equity and cash
flows showing the financial condition of the Borrower and its consolidated
Subsidiaries as of the close of such fiscal quarter and the results of its
operations and the operations of such Subsidiaries during such fiscal
quarter and the then elapsed portion of the fiscal year, all certified by
one of its Financial Officers as presenting fairly in all material respects
the financial condition and results of operations of the Borrower and the
Subsidiaries on a consolidated and a consolidating basis in accordance with
GAAP consistently applied, subject to normal year-end audit adjustments and
the absence of footnotes;
(c) concurrently with any delivery of financial statements under sub-
paragraph (a) or (b) above, a certificate of the accounting firm or
Financial Officer opining on or certifying such statements (which
certificate, when furnished by an accounting firm, may be limited to
accounting matters and disclaim responsibility for legal interpretations)
(i) certifying that no Event of Default or Default has occurred or, if such
an Event of Default or Default has occurred, specifying the nature and
extent thereof and any corrective action taken or proposed to be taken with
respect thereto (it being understood that such certificate, when given by
an accounting firm, may be limited to their knowledge as obtained in the
course of their audit and without special investigation) and (ii) setting
forth computations in reasonable detail satisfactory to the Administrative
Agent showing the Leverage Ratio and the Interest Coverage Ratio as of the
last day of the fiscal year or fiscal quarter to which such statements
relate and demonstrating compliance with the covenants contained in
Sections 6.10 and 6.11 (it being understood that the information required
by this clause (ii) may be provided in a certificate of a Financial Officer
on behalf of the Borrower instead of from the accounting firm);
(d) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
the Borrower or any Subsidiary with the Securities and Exchange Commission,
or any Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, or distributed
to its shareholders, as the case may be;
(e) if, as a result of any change in accounting principles and policies
from those as in effect on the date hereof, the consolidated and
consolidating financial statements of the Borrower and the Subsidiaries
delivered pursuant to paragraph (a) or (b) above will differ in any
material respect from the consolidated or consolidating financial
statements that would have been delivered pursuant to such clauses had no
such change in accounting principles and policies been made, then together
with the first delivery of financial statements pursuant to paragraph (a)
and (b) above following such change, a schedule prepared by a Financial
Officer of the Borrower reconciling such changes to what the financial
statements would have been without such changes;
(f) concurrently with the delivery of the financial statements under
subparagraph (a) above, a copy of an operating and capital expenditure
budget for the fiscal year following the fiscal year to which such
statements relate;
(g) promptly upon the creation or acquisition of any Subsidiary or upon
any Inactive Subsidiary ceasing to be an Inactive Subsidiary (other than by
reason of dissolution of such Inactive Subsidiary), a certificate from a
Responsible Officer of the Borrower, identifying such Subsidiary and the
ownership interest of the Borrower and the Subsidiaries therein;
(h) promptly, a copy of all reports submitted in connection with any
material interim or special audit made by independent accountants of the
books of the Borrower or any Subsidiary; and
(i) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of the Borrower or any
Subsidiary, or compliance with the terms of any Loan Document, as the
Administrative Agent or any Lender may reasonably request.
SECTION 5.05. Litigation and Other Notices. Furnish to the
Administrative Agent, Issuing Bank and each Lender prompt written notice of
the following:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) taken or proposed to be taken
with respect thereto;
(b) the filing or commencement of, or any threat or notice of intention
of any person to file or commence, any action, suit or proceeding, whether
at law or in equity or by or before any Governmental Authority, against the
Borrower or any Affiliate thereof that could reasonably be expected to
result in a Material Adverse Effect; and
(c) any development that has resulted in, or could reasonably be
expected to result in, a Material Adverse Effect.
SECTION 5.06. Employee Benefits. (a) Comply in all material respects
with the applicable provisions of ERISA and the Code and (b) furnish to the
Administrative Agent as soon as possible after, and in any event within 10
days after any Responsible Officer of the Borrower or any ERISA Affiliate
knows or has reason to know that, any ERISA Event has occurred that, alone
or together with any other ERISA Event could reasonably be expected to
result in liability of the Borrower in an aggregate amount exceeding
$1,000,000 or requiring payments exceeding $500,000 in any year, a
statement of a Financial Officer of the Borrower setting forth details as
to such ERISA Event and the action, if any, that the Borrower proposes to
take with respect thereto.
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Keep proper books of record and account in which full, true
and correct entries in conformity with GAAP and all requirements of law are
made of all dealings and transactions in relation to its business and
activities. Each Loan Party will, and will cause each of its Subsidiaries
to, permit any representatives designated by the Administrative Agent or
any Lender to visit and inspect the financial records and the properties of
the Borrower or any Subsidiary at reasonable times and as often as
reasonably requested and to make extracts from and copies of such financial
records, and permit any representatives designated by the Administrative
Agent or any Lender to discuss the affairs, finances and condition of the
Borrower or any Subsidiary with the officers thereof and independent
accountants therefor.
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans and
request the issuance of Letters of Credit only for the purposes set forth
in the preamble to this Agreement.
SECTION 5.09. Compliance with Environmental Laws. Comply, and cause
all lessees and other persons occupying its Properties to comply, in all
material respects with all Environmental Laws and Environmental Permits
applicable to its operations and Properties; obtain and renew all material
Environmental Permits necessary for its operations and Properties; and
conduct any Remedial Action in accordance with Environmental Laws;
provided, however, that neither the Borrower nor any of the Subsidiaries
shall be required to undertake any Remedial Action to the extent that its
obligation to do so is being contested in good faith and by proper
proceedings and appropriate reserves are being maintained with respect to
such circumstances.
SECTION 5.10. Further Assurances. The Borrower will cause any
subsequently acquired or organized Domestic Subsidiary (other than any
Inactive Subsidiary) to become party as a Guarantor to the Guarantee
Agreement and the Indemnity, Subrogation and Contribution Agreement, each
in favor of the Administrative Agent. Notwithstanding anything to the
contrary herein, if no Default or Event of Default would exist after giving
effect to the sale of Harper-Wyman Company or the Capital Stock of any
other Subsidiary permitted to be sold under Section 6.05, the
Administrative Agent shall release the applicable Subsidiary from the
Guarantee Agreement and the Indemnity, Subrogation and Contribution
Agreement upon the closing of the sale of applicable Subsidiary. The
Borrower agrees to provide such evidence as the Administrative Agent shall
reasonably request to evidence the sale of applicable Subsidiary upon its
release from the Guarantee Agreement and the Indemnity, Subrogation and
Contribution Agreement.
ARTICLE VI. NEGATIVE COVENANTS
The Borrower covenants and agrees with each Lender that, so long as
this Agreement shall remain in effect and until the Commitments have been
terminated and the principal of and interest on each Loan, all Fees and all
other expenses or amounts payable under any Loan Document have been paid in
full and all Letters of Credit have been cancelled or have expired and all
amounts drawn thereunder have been reimbursed in full, unless the Required
Lenders shall otherwise consent in writing, the Borrower will not, and will
not cause or permit any of the Subsidiaries to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness for borrowed money existing on the date hereof and set
forth in Schedule 6.01, but not any extensions, renewals or replacements of
such Indebtedness;
(b) Indebtedness created hereunder;
(c) (i) in the case of the Borrower or any Guarantor, Indebtedness owed
to any Subsidiary and (ii) in the case of any Subsidiary that is a
Guarantor, Indebtedness owed to the Borrower or any other Subsidiary that
is a Guarantor;
(d) in the case of the Borrower, Indebtedness described in clause (i)
of the definition of "Indebtedness" entered into in the ordinary course of
business for purposes of hedging interest rate and currency exchange risk
on terms and with counterparties reasonably satisfactory to the
Administrative Agent;
(e) purchase money Indebtedness incurred in the ordinary course of
business after the date hereof to finance Capital Expenditures in a
principal amount at any time outstanding not in excess of (i) $20,000,000
less (ii) the amount of all Capital Lease Obligations incurred pursuant to
clause (f) below and outstanding at such time; provided, however, that such
Indebtedness is incurred within 90 days after the making of the Capital
Expenditure so financed;
(f) Capital Lease Obligations incurred in the ordinary course of
business after the date hereof to finance Capital Expenditures in a
principal amount at any time outstanding not in excess of (i) $20,000,000
less (ii) the principal amount of all purchase money indebtedness incurred
pursuant to clause (e) above and outstanding at such time;
(g) in the case of the Borrower or any Guarantor, Guarantees of
Indebtedness permitted under clause (d), (e) or (f) above;
(h) Indebtedness of Foreign Subsidiaries not in excess of $25,000,000
principal amount at any time outstanding;
(i) Indebtedness of Foreign Subsidiaries to Guarantors; and
(k) other unsecured Indebtedness of the Borrower and of Subsidiaries
that are Guarantors in an aggregate principal amount not in excess of
$20,000,000 at any time outstanding.
SECTION 6.02. Liens. Create, incur, assume or permit to exist any
Lien on any property or assets (including stock or other securities of any
person, including any Subsidiary) now owned or hereafter acquired by it or
on any income or revenues or rights in respect of any thereof, except:
(a) Liens on property or assets of the Borrower and its Subsidiaries
existing on the date hereof and set forth in Schedule 6.02; provided,
however, that such Liens shall secure only those obligations which they
secure on the date hereof;
(b) any Lien existing on any property or asset prior to the acquisition
thereof by the Borrower or any Subsidiary; provided, however, that (i) such
Lien is not created in contemplation of or in connection with such
acquisition and (ii) such Lien does not apply to any other property or
assets of the Borrower or any Subsidiary;
(c) Liens for taxes, assessments and other government charges not yet
due or which are being contested in compliance with Section 5.03;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business and securing
obligations that are not due and payable or which are being contested in
compliance with Section 5.03;
(e) pledges and deposits made in the ordinary course of business in
compliance with workmen's compensation, unemployment insurance and other
social security laws or regulations;
(f) deposits to secure the performance of bids, trade contracts (other
than for Indebtedness), leases (other than Capital Lease Obligations),
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business;
(g) zoning restrictions, easements, rights-of-way, restrictions on use
of real property and other similar encumbrances incurred in the ordinary
course of business which, in the aggregate, are not substantial in amount
and do not materially detract from the value of the property subject
thereto or interfere with the ordinary conduct of the business of the
Borrower or any of its Subsidiaries;
(h) purchase money security interests in real property, improvements
thereto or equipment hereafter acquired (or, in the case of improvements,
constructed) by the Borrower or any Subsidiary; provided, however, that (i)
such security interests secure Indebtedness permitted by Section 6.01(e),
(ii) such security interests are incurred, and the Indebtedness secured
thereby is created, within 90 days after such acquisition (or
construction), (iii) the Indebtedness secured thereby is not less than 50
percent nor more than 100 percent of the lesser of the cost or the fair
market value of such real property, improvements or equipment at the time
of such acquisition (or construction) and (iv) such security interests do
not apply to any other property or assets of the Borrower or any
Subsidiary;
(i) Liens represented by the interests of the lessors in respect of
Capital Lease Obligations incurred pursuant to Section 6.01(f);
(j) Liens represented by Sale and Lease-Back Transactions incurred
pursuant to Section 6.03;
(k) Liens on assets of Foreign Subsidiaries that only secure
Indebtedness permitted under Section 6.01(h); and
(l) other Liens securing obligations in an aggregate amount not to
exceed $2,500,000 at any time outstanding.
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any Sale
and Lease-Back Transaction if, after giving effect thereto, the aggregate
Attributable Debt for all outstanding Sale and Lease-Back Transactions
would exceed $20,000,000.
SECTION 6.04. Investments, Loans and Advances. Purchase, hold or
acquire any capital stock, evidences of indebtedness or other securities
of, make or permit to exist any loans or advances to, or make or permit to
exist any investment or any other interest in, any other person, except:
(a) investments by the Borrower existing on the date hereof;
(b) Permitted Investments;
(c) investments, loans or advances in or to Guarantors;
(d) Permitted Other Acquisitions;
(e) the Connector Purchase and the Gilbert Purchase;
(f) loans to officers or employees of the Borrower in the ordinary
course not in excess of $2,000,000 principal amount at any time
outstanding;
(g) additional loans and advances from the Borrower or any Guarantor to
Foreign Subsidiaries in an aggregate principal amount outstanding at any
time not in excess of $60,000,000 minus the aggregate consideration given
by the Borrower and the Subsidiaries after the date hereof in connection
with Permitted Other Acquisitions;
(h) investments in, or loans or advances to, foreign joint ventures
existing or committed to on the date hereof; and
(i) other investments in, or loans or advances to, or Guarantees of
Indebtedness of, Subsidiaries, partnerships or joint ventures (other than
passive investment vehicles) in an aggregate net amount not in excess of
$25,000,000 outstanding at any time.
SECTION 6.05. Mergers, Consolidations, Sales of Assets and
Acquisitions. Merge into or consolidate with any other person, or permit
any other person to merge into or consolidate with it, or sell, transfer,
lease or otherwise dispose of (in one transaction or in a series of
transactions) all or any substantial part of its assets (whether now owned
or hereafter acquired) or any Capital Stock of any Subsidiary, or purchase,
lease or otherwise acquire (in one transaction or a series of transactions)
all or any substantial part of the assets of any other person, except that
this Section 6.05 shall not prohibit:
(a) the purchase and sale of inventory in the ordinary course of
business by the Borrower or any Subsidiary;
(b) if at the time thereof and immediately after giving effect thereto
no Event of Default or Default shall have occurred and be continuing (i)
the merger of any wholly owned Subsidiary into the Borrower in a
transaction in which the Borrower is the surviving corporation and (ii) the
merger or consolidation of any wholly owned Subsidiary into or with any
other wholly owned Subsidiary in a transaction in which the surviving
entity is a wholly owned Subsidiary (which shall be a Domestic Subsidiary
if the non-surviving person shall be a Domestic Subsidiary) or the
dissolution or liquidation of a wholly owned Subsidiary, and, in the case
of each of clauses (i) and (ii), no person other than the Borrower or a
wholly owned Subsidiary receives any consideration;
(c) (i) the non-hostile acquisition of another person or all or a
substantial part of another person's assets in which the consideration for
such acquisition consists solely of Capital Stock of the Borrower or (ii)
other non-hostile acquisitions if, in the case of each of (i) and (ii), (v)
the acquired person is engaged in the same business as the Borrower or
another business reasonably related thereto, and (w) at the time of and
after giving effect to such acquisition, no Event of Default or Default has
occurred and is continuing, and (x) after giving effect to such
acquisition, the Borrower shall be in compliance, on a pro forma basis as
of the last day of the fiscal quarter immediately preceding the date the
acquisition was consummated (the "Pro Forma Date") as if the acquisition
had occurred on the first day of the four fiscal quarter period ending on
the Pro Forma Date, with Sections 6.10 and 6.11, and (y) such acquisition
is approved by the board of directors of the acquired person prior to the
commencement of any tender offer or the acquisition by the Borrower and any
acquiring Subsidiary of any shares of Capital Stock thereof, and (z) after
giving effect to such acquisition, the Borrower controls the dividend
policy of the Capital Stock of the acquired person and owns at least 80
percent of the common equity on a fully diluted basis thereof; provided,
however, that the aggregate consideration paid under this clause (c) after
the date hereof for acquisitions of persons or all or a substantial part of
a person's assets that are not Guarantors shall not at any time exceed
$60,000,000 minus the outstanding principal amount of loans and advances
referred to in Section 6.04(g) (the foregoing being collectively called
"Permitted Other Acquisitions");
(d) the sale by the Borrower or any Subsidiary of the assets of or
Capital Stock in O/E/N India Ltd. or Harper-Wyman Company; and
(e) sales or other dispositions by the Borrower or any Subsidiary of
assets (other than receivables, except to the extent disposed of
incidentally in connection with an asset disposition otherwise permitted
hereby), for consideration in an aggregate amount not exceeding
$25,000,000; provided, however, that (i) each such disposition shall be for
a consideration determined in good faith by the board of directors or
senior management of the Borrower to be at least equal to the fair market
value (if any) of the asset sold and (ii) no Default or Event of Default
shall have occurred and be continuing immediately prior to or after such
disposition.
SECTION 6.06. Dividends and Distributions; Restrictions on Ability of
Subsidiaries to Pay Dividends. (a) Declare or pay, directly or
indirectly, any dividend or make any other distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a
combination thereof, with respect to any shares of its Capital Stock or
directly or indirectly redeem, purchase, retire or otherwise acquire for
value (or permit any Subsidiary to purchase or acquire) any shares of any
class of its Capital Stock or set aside any amount for any such purpose;
provided, however, that (i) any Subsidiary may declare and pay dividends or
make other pro rata distributions to the Borrower, (ii) the Borrower and
the applicable Subsidiaries may complete the Connector Purchase and the
Gilbert Purchase, (iii) prior to the completion of the Gilbert Purchase,
Gilbert may declare and pay dividends and make other distributions with
respect to its Capital Stock to Gilbert Management, (iv) the Borrower may
repurchase its common stock for aggregate consideration not in excess of
$10,000,000 in any fiscal year or $25,000,000 for all such purchases after
the date hereof and (v) if at the time thereof and immediately after giving
effect thereto no Default or Event of Default shall have occurred and be
continuing, the Borrower may repurchase stock or options from former
officers and former employees (or their legal representatives) in the
ordinary course of business in accordance with any duly instituted stock
option plan.
(b) Permit its subsidiaries to, directly or indirectly, create or
otherwise cause or suffer to exist or become effective any encumbrance or
restriction on the ability of any such subsidiary to (i) pay any dividends
or make any other distributions on its Capital Stock or any other interest
or (ii) make or repay any loans or advances to the Borrower or the parent
of such subsidiary.
SECTION 6.07. Transactions with Affiliates. Sell or transfer any
property or assets to, or purchase or acquire any property or assets from,
or otherwise engage in any other transactions with, any of its Affiliates
(other than transactions between or among the Borrower and the wholly owned
Subsidiaries), except that the Borrower or any Subsidiary may engage in any
of the foregoing transactions at prices and on terms and conditions not
less favorable to the Borrower or such Subsidiary than could be obtained on
an arm's-length basis from unrelated third parties.
SECTION 6.08. Business of Borrower and Subsidiaries. Engage at any
time in any business or business activity other than the business currently
conducted by it and business activities reasonably incidental or related
thereto.
SECTION 6.09. Amendment of Certificate of Incorporation or By-Laws.
Amend or modify in any manner adverse to the Lenders the certificate of
incorporation or bylaws of the Borrower or any Subsidiary.
SECTION 6.10. Leverage Ratio. Permit the Leverage Ratio (i) as of the
Effective Date to be greater than 4.0 to 1.0 and (ii) as of the last day of
each fiscal quarter, which last day occurs in any period set forth below to
be greater than the ratio set forth below for such period:
<TABLE>
<CAPTION>
<S> <C> <C>
From and Including To and Including Leverage Ratio
Effective Date December 31, 1996 4.0 to 1.0
January 1, 1997 December 31, 1997 3.75 to 1.0
January 1, 1998 December 31, 1998 3.5 to 1.0
Thereafter 3.0 to 1.0
</TABLE>
SECTION 6.11. Interest Coverage Ratio. Permit the Interest Coverage
Ratio of the Borrower and the Subsidiaries (i) as of the Effective Date to
be less than 2.5 to 1.0, and (ii) as of the last day of each fiscal
quarter, which last day occurs in any period set forth below, to be less
than the ratio set forth below for such period:
<TABLE>
<CAPTION>
<S> <C> <C>
From and Including To and Including Interest Coverage Ratio
Effective Date December 31, 1997 2.5 to 1.0
January 1, 1998 December 31, 1998 2.75 to 1.0
Thereafter 3.0 to 1.0
</TABLE>
SECTION 6.12. Fiscal Year. Cause its fiscal year to end on other than
December 31 of each year.
ARTICLE VII. EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made in or in
connection with any Loan Document or the borrowings or issuances of Letters
of Credit hereunder, or any representation, warranty, statement or
information contained in any report, certificate, financial statement or
other instrument furnished in connection with or pursuant to any Loan
Document, shall prove to have been false or misleading in any material
respect when so made, deemed made or furnished;
(b) default shall be made in the payment of any principal of any Loan
or the reimbursement with respect to any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or by acceleration thereof or otherwise,
and, in the case of default in reimbursement, such default shall continue
unremedied for a period of one Business Day;
(c) default shall be made in the payment of any interest on any Loan or
any Fee or LC Disbursement or any other amount (other than an amount
referred to in (b) above) due under any Loan Document, when and as the same
shall become due and payable, and such default shall continue unremedied
for a period of three Business Days;
(d) default shall be made in the due observance or performance by the
Borrower or any Subsidiary of any covenant, condition or agreement
contained in Section 5.01(a), 5.05 or 5.08 or in Article VI;
(e) default shall be made in the due observance or performance by the
Borrower or any Subsidiary of any covenant, condition or agreement
contained in any Loan Document (other than those specified in (b), (c) or
(d) above) and such default shall continue unremedied for a period of 30
days after notice thereof from the Administrative Agent or any Lender to
the Borrower;
(f) the Borrower or any Subsidiary shall (i) fail to pay any principal
or interest, regardless of amount, due in respect of any Indebtedness in a
principal amount in excess of $1,000,000, when and as the same shall become
due and payable, or (ii) fail to observe or perform any other term,
covenant, condition or agreement contained in any agreement or instrument
evidencing or governing any such Indebtedness if the effect of any failure
referred to in this clause (ii) is to cause, or to permit the holder or
holders of such Indebtedness or a trustee on its or their behalf (with or
without the giving of notice, the lapse of time or both) to cause, such
Indebtedness to become due prior to its stated maturity;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of the Borrower or any Subsidiary, or of a substantial
part of the property or assets of the Borrower or a Subsidiary, under Title
11 of the United States Code, as now constituted or hereafter amended, or
any other Federal, state or foreign bankruptcy, insolvency, receivership or
similar law, (ii) the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the Borrower or any
Subsidiary or for a substantial part of the property or assets of the
Borrower or a Subsidiary or (iii) the winding-up or liquidation of the
Borrower or any Subsidiary; and such proceeding or petition shall continue
undismissed for 60 days or an order or decree approving or ordering any of
the foregoing shall be entered;
(h) the Borrower or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described
in (g) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for the
Borrower or any Subsidiary or for a substantial part of the property or
assets of the Borrower or any Subsidiary, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors, (vi) become
unable, admit in writing its inability or fail generally to pay its debts
as they become due or (vii) take any action for the purpose of effecting
any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $1,000,000 shall be rendered against the Borrower, any
Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to levy upon assets or properties of the Borrower or any
Subsidiary to enforce any such judgment;
(j) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events, could
reasonably be expected to result in liability of the Borrower and its ERISA
Affiliates in an aggregate amount exceeding $1,000,000 or requires payments
exceeding $500,000 in any year;
(k) any Loan Document shall for any reason be asserted by the Borrower
or any Loan Party not to be a legal, valid and binding obligation of any
party thereto; or
(l) there shall have occurred a Change in Control;
then, and in every such event (other than an event with respect to the
Borrower described in paragraph (g) or (h) above), and at any time
thereafter during the continuance of such event, the Administrative Agent
at the request of the Required Lenders, shall, by notice to the Borrower,
take either or both of the following actions, at the same or different
times: (i) terminate forthwith the obligations of the Lenders to make
Loans and of the Issuing Banks to issue Letters of Credit hereunder and
(ii) declare the Loans then outstanding to be forthwith due and payable in
whole or in part, whereupon the principal of the Loans so declared to be
due and payable, together with accrued interest thereon and any unpaid
accrued Fees and all other liabilities of the Borrower accrued hereunder
and under any other Loan Document, shall become forthwith due and payable,
without presentment, demand, protest or any other notice of any kind, all
of which are hereby expressly waived by the Borrower, anything contained
herein or in any other Loan Document to the contrary notwithstanding; and
in any event with respect to the Borrower described in paragraph (g) or (h)
above, the obligations of the Lenders to make Loans and of the Issuing
Banks to issue Letters of Credit hereunder shall automatically terminate
and the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of
the Borrower accrued hereunder and under any other Loan Document, shall
automatically become due and payable, without presentment, demand, protest
or any other notice of any kind, all of which are hereby expressly waived
by the Borrower, anything contained herein or in any other Loan Document to
the contrary notwithstanding.
ARTICLE VIII. THE ADMINISTRATIVE AGENT
In order to expedite the transactions contemplated by this Agreement,
The Chase Manhattan Bank is hereby appointed to act as Administrative Agent
on behalf of the Lenders and the Issuing Banks. Each of the Lenders and
each assignee of any such Lender, hereby irrevocably authorizes the
Administrative Agent to take such actions on behalf of such Lender or
assignee or such Issuing Bank and to exercise such powers as are
specifically delegated to the Administrative Agent by the terms and
provisions hereof and of the other Loan Documents, together with such
actions and powers as are reasonably incidental thereto. The
Administrative Agent is hereby expressly authorized by the Lenders and the
Issuing Banks, without hereby limiting any implied authority, (a) to
receive on behalf of the Lenders and the Issuing Banks all payments of
principal of and interest on the Loans, all payments in respect of LC
Disbursements and all other amounts due to the Lenders hereunder, and
promptly to distribute to each Lender or each Issuing Bank its proper share
of each payment so received; (b) to give notice on behalf of each of the
Lenders to the Borrower (with a copy to each Lender) of any Event of
Default specified in this Agreement of which the Administrative Agent has
actual knowledge acquired in connection with its agency hereunder; and (c)
to distribute to each Lender copies of all notices, financial statements
and other materials delivered by the Borrower pursuant to this Agreement as
received by the Administrative Agent. Without limiting the generality of
the foregoing, the Administrative Agent is hereby expressly authorized to
execute any and all documents (including releases) with respect to the
release of Harper-Wyman Company or any other Subsidiary the Capital Stock
of which has been sold as permitted under Section 6.05 from the Guarantee
Agreement and the Indemnity, Subrogation and Contribution Agreement and the
rights of the Lenders with respect thereto, as contemplated by and in
accordance with the provisions of this Agreement.
Neither the Administrative Agent nor any of its directors, officers,
employees or agents shall be liable as such for any action taken or omitted
by any of them except for its or his own gross negligence or wilful
misconduct, or be responsible for any statement, warranty or representation
herein or the contents of any document delivered in connection herewith, or
be required to ascertain or to make any inquiry concerning the performance
or observance by the Borrower or any other Loan Party of any of the terms,
conditions, covenants or agreements contained in any Loan Document. The
Administrative Agent shall not be responsible to the Lenders for the due
execution, genuineness, validity, enforceability or effectiveness of this
Agreement or any other Loan Documents, instruments or agreements. The
Administrative Agent shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by
the Required Lenders (or all the Lenders if required by Section 9.08) and,
except as otherwise specifically provided herein, such instructions and any
action or inaction pursuant thereto shall be binding on all the Lenders.
The Administrative Agent shall, in the absence of knowledge to the
contrary, be entitled to rely on any instrument or document believed by it
in good faith to be genuine and correct and to have been signed or sent by
the proper person or persons. Neither the Administrative Agent nor any of
its directors, officers, employees or agents shall have any responsibility
to the Borrower or any other Loan Party on account of the failure of or
delay in performance or breach by any Lender or any Issuing Bank of any of
its obligations hereunder or to any Lender or any Issuing Bank on account
of the failure of or delay in performance or breach by any other Lender or
any other Issuing Bank or the Borrower or any other Loan Party of any of
their respective obligations hereunder or under any other Loan Document or
in connection herewith or therewith. The Administrative Agent may execute
any and all duties hereunder by or through agents or employees and shall be
entitled to rely upon the advice of legal counsel selected by it with
respect to all matters arising hereunder and shall not be liable for any
action taken or suffered in good faith by it in accordance with the advice
of such counsel.
The Lenders hereby acknowledge that the Administrative Agent shall not
be under any duty to take any discretionary action permitted to be taken by
it pursuant to the provisions of this Agreement unless it shall be
requested in writing to do so by the Required Lenders.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided below, the Administrative Agent may resign at any time by
notifying the Lenders and the Borrower. Upon any such resignation, the
Required Lenders shall have the right to appoint a successor. If no
successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring
Administrative Agent gives notice of its resignation, then the retiring
Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in New York, New
York, having a combined capital and surplus of at least $500,000,000 or an
Affiliate of any such bank. Upon the acceptance of any appointment as
Administrative Agent hereunder by a successor bank, such successor shall
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent and the retiring Administrative
Agent shall be discharged from its duties and obligations hereunder. After
the Administrative Agent's resignation hereunder, the provisions of this
Article and Section 9.05 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was
acting as Administrative Agent.
With respect to the Loans made by it hereunder, the Administrative
Agent in its individual capacity and not as Administrative Agent shall have
the same rights and powers as any other Lender and may exercise the same as
though it were not the Administrative Agent, and the Administrative Agent
and its Affiliates may accept deposits from, lend money to and generally
engage in any kind of business with the Borrower or any Subsidiary or other
Affiliate thereof as if it were not the Administrative Agent.
Each Lender agrees (a) to reimburse the Administrative Agent, on
demand, in the amount of its pro rata share (based on its Commitments
hereunder) of any expenses incurred for the benefit of the Lenders by the
Administrative Agent, including counsel fees and compensation of agents and
employees paid for services rendered on behalf of the Lenders, that shall
not have been reimbursed by the Borrower and (b) to indemnify and hold
harmless the Administrative Agent and any of its directors, officers,
employees or agents, on demand, in the amount of such pro rata share, from
and against any and all liabilities, taxes, 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 it in its capacity as Administrative Agent or any of them
in any way relating to or arising out of this Agreement or any other Loan
Document or any action taken or omitted by it or any of them under this
Agreement or any other Loan Document, to the extent the same shall not have
been reimbursed by the Borrower; provided, however, that no Lender shall be
liable to the Administrative Agent or any such other indemnified person for
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements resulting from
the gross negligence or wilful misconduct of the Administrative Agent or
any of its directors, officers, employees or agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement. Each Lender
also acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to
make its own decisions in taking or not taking action under or based upon
this Agreement or any other Loan Document, any related agreement or any
document furnished hereunder or thereunder.
ARTICLE IX. MISCELLANEOUS
SECTION 9.01. Notices. Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight
courier service, mailed by certified or registered mail or sent by
telecopy, as follows:
(a) if to the Borrower, to it at 1000 Winter Street, Waltham, MA 02154,
Attention of Pamela F. Lenehan (Telecopy No. (617) 890-8585);
(b) if to the Administrative Agent, to The Chase Manhattan Bank Agency
Services, Grand Central Tower, 140 East 45th Street, New York, New York
10017, Attention of Winslowe Ogbourne (Telecopy No. (212) 622-0002), with a
copy to The Chase Manhattan Bank, 270 Park Avenue, New York, New York
10017, Attention of Ann B. Kerns (Telecopy No. (212) 270-2625); and
(c) if to a Lender, to it at its address (or telecopy number) set forth
in Schedule 2.01 or in the Assignment and Acceptance pursuant to which such
Lender shall have become a party hereto.
All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have
been given on the date of receipt if delivered by hand or overnight courier
service or sent by telecopy or on the date five Business Days after
dispatch by certified or registered mail if mailed, in each case delivered,
sent or mailed (properly addressed) to such party as provided in this
Section 9.01 or in accordance with the latest unrevoked direction from such
party given in accordance with this Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Borrower herein and in the
certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and the Issuing Banks
and shall survive the making by the Lenders of the Loans and the issuance
of Letters of Credit by the Issuing Banks, regardless of any investigation
made by the Lenders or the Issuing Banks or on their behalf, and shall
continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any Fee or any other amount payable under
this Agreement or any other Loan Document is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not
been terminated. The provisions of Sections 2.14, 2.16, 2.20 and 9.05
shall remain operative and in full force and effect regardless of the
expiration of the term of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the expiration of any Letter of Credit, the
invalidity or unenforceability of any term or provision of this Agreement
or any other Loan Document, or any investigation made by or on behalf of
the Administrative Agent, any Lender or any Issuing Bank.
SECTION 9.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Borrower and the Administrative
Agent and when the Administrative Agent shall have received counterparts
hereof which, when taken together, bear the signatures of each of the other
parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective permitted successors and
assigns.
SECTION 9.04. Successors and Assigns. (a) Whenever in this Agreement
any of the parties hereto is referred to, such reference shall be deemed to
include the permitted successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Borrower, the
Administrative Agent, the Issuing Banks or the Lenders that are contained
in this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations under this Agreement (including
all or a portion of its Commitment and the Loans at the time owing to it);
provided, however, that (i) except in the case of an assignment to a Lender
or an Affiliate of such Lender, (x) the Borrower and the Administrative
Agent (and, in the case of any assignment of a Commitment, each Issuing
Bank) must give their prior written consent to such assignment (which
consent shall not be unreasonably withheld) and (y) the amount of the
Commitment of the assigning Lender subject to each such assignment
(determined as of the date the Assignment and Acceptance with respect to
such assignment is delivered to the Administrative Agent) shall not be less
than $10,000,000 (or, if less, the entire remaining amount of such Lender's
Commitment) and shall not result in the Commitment of the assigning Lender
being less than $10,000,000, (ii) each such assignment shall be the same
percentage of all the assigning Lender's rights and obligations under this
Agreement, except that this clause shall not apply to rights in respect of
outstanding Competitive Loans, (iii) the parties to each such assignment
shall execute and deliver to the Administrative Agent an Assignment and
Acceptance, together with a processing and recordation fee of $3,500 and
(iv) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire. Upon acceptance and
recording pursuant to paragraph (e) below, from and after the effective
date specified in each Assignment and Acceptance, which effective date
shall be at least five Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent of the
interest assigned by such Assignment and Acceptance, have the rights and
obligations of a Lender under this Agreement and (B) the assigning Lender
thereunder shall, to the extent of the interest assigned by such Assignment
and Acceptance, be released from its obligations under this Agreement (and,
in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.14, 2.16, 2.20 and 9.05, as
well as to any Fees accrued for its account and not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as
follows: (i) such assigning Lender warrants that it is the legal and
beneficial owner of the interest being assigned thereby free and clear of
any adverse claim and that its Commitment, and the outstanding balances of
its Revolving Loans, in each case without giving effect to assignments
thereof which have not become effective, are as set forth in such
Assignment and Acceptance, (ii) except as set forth in (i) above, such
assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement, or the
execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, any other Loan Document or any other instrument or
document furnished pursuant hereto, or the financial condition of the
Borrower or any Subsidiary or the performance or observance by the Borrower
or any Subsidiary of any of its obligations under this Agreement, any other
Loan Document or any other instrument or document furnished pursuant
hereto; (iii) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; (iv) such assignee
confirms that it has received a copy of this Agreement, together with
copies of the most recent financial statements referred to in Section 3.05
or delivered pursuant to Section 5.04 and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance; (v) such
assignee will independently and without reliance upon the Administrative
Agent, such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement; (vi) such assignee appoints and authorizes the
Administrative Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the
Administrative Agent by the terms hereof, together with such powers as are
reasonably incidental thereto; and (vii) such assignee agrees that it will
perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at one of its offices in The City of New York
a copy of each Assignment and Acceptance delivered to it and a register for
the recordation of the names and addresses of the Lenders, and the
Commitment of, and principal amount of the Loans owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The
entries in the Register shall be conclusive and the Borrower, the
Administrative Agent, the Issuing Banks and the Lenders may treat each
person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary. The Register shall be available for inspection by
the Borrower, any Issuing Bank and any Lender, at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative
Questionnaire completed in respect of the assignee (unless the assignee
shall already be a Lender hereunder), the processing and recordation fee
referred to in paragraph (b) above and, if required, the written consent of
the Borrower, each Issuing Bank and the Administrative Agent to such
assignment, the Administrative Agent shall (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register
and (iii) give prompt notice thereof to the Lenders and the Issuing Bank.
No assignment shall be effective unless it has been recorded in the
Register as provided in this paragraph (e).
(f) Each Lender may without the consent of the Borrower, any Issuing
Bank or the Administrative Agent sell participations to one or more banks
or other entities in all or a portion of its rights and obligations under
this Agreement (including all or a portion of its Commitment and the
Revolving Loans owing to it); provided, however, that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the
performance of such obligations, (iii) the participating banks or other
entities shall be entitled to the benefit of the cost protection provisions
contained in Sections 2.14, 2.16 and 2.20 to the same extent as if they
were Lenders (but the liability of the Borrower under such Sections shall
not be greater than its liability thereunder to the selling Lender) and
(iv) the Borrower, the Administrative Agent, the Issuing Banks and the
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement,
and such Lender shall retain the sole right to enforce the obligations of
the Borrower relating to the Loans or LC Disbursements and to approve any
amendment, modification or waiver of any provision of this Agreement (other
than amendments, modifications or waivers increasing the principal of the
Loans, decreasing any fees payable hereunder or the rate at which interest
is payable on the Loans, extending any scheduled principal payment date,
Commitment reduction date or date fixed for the payment of interest on the
Loans or increasing or extending the Commitments or releasing any
Guarantor).
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 9.04, disclose to the assignee or participant or proposed assignee
or participant any information relating to the Borrower furnished to such
Lender by or on behalf of the Borrower; provided, however, that, prior to
any such disclosure of information designated by the Borrower as
confidential, each such assignee or participant or proposed assignee or
participant shall execute an agreement whereby such assignee or participant
shall agree (subject to customary exceptions) to preserve the
confidentiality of such confidential information on terms no less
restrictive than those applicable to the Lenders pursuant to Section 9.16.
(h) Any Lender may at any time assign all or any portion of its rights
under this Agreement to a Federal Reserve Bank to secure extensions of
credit by such Federal Reserve Bank to such Lender; provided, however, that
no such assignment shall release a Lender from any of its obligations
hereunder or substitute any such Bank for such Lender as a party hereto.
In order to facilitate such an assignment to a Federal Reserve Bank, the
Borrower shall, at the request of the assigning Lender, duly execute and
deliver to the assigning Lender a promissory note or notes evidencing the
Loans made to the Borrower by the assigning Lender hereunder.
(i) The Borrower shall not assign or delegate any of its rights or
duties hereunder without the prior written consent of the Administrative
Agent, each Issuing Bank and each Lender, and any attempted assignment
without such consent shall be null and void.
(j) In the event that Standard and Poor's Ratings Group, Moody's
Investors Service, Inc., and Thompson's BankWatch (or InsuranceWatch
Ratings Service, in the case of Lenders that are insurance companies (or
Best's Insurance Reports, if such insurance company is not rated by
InsuranceWatch Ratings Service)) shall, after the date that any Lender
becomes a Lender, downgrade the long-term certificate deposit ratings of
such Lender, and the resulting ratings shall be below BBB-, Baa3 and C (or
BB, in the case of a Lender that is an insurance company (or B, in the case
of an insurance company not rated by InsuranceWatch Ratings Service)), then
any Issuing Bank shall have the right, but not the obligation, at its own
expense, upon notice to such Lender and the Administrative Agent, to
replace (or to request the Borrower to use its reasonable efforts to
replace) such Lender with an assignee (in accordance with and subject to
the restrictions contained in paragraph (b) above), and such Lender hereby
agrees to transfer and assign without recourse (in accordance with and
subject to the restrictions contained in paragraph (b) above) all its
interests, rights and obligations in respect of its Commitment to such
assignee; provided, however, that (i) no such assignment shall conflict
with any law, rule and regulation or order of any Governmental Authority
and (ii) such Issuing Bank or such assignee, as the case may be, shall pay
to such Lender in immediately available funds on the date of such
assignment the principal of and interest accrued to the date of payment on
the Loans made by such Lender hereunder and all other amounts accrued for
such Lender's account or owned to it hereunder.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay
all reasonable out-of-pocket expenses incurred by the Administrative Agent
and the Issuing Bank in connection with the syndication of the credit
facilities provided for herein and the preparation and administration of
this Agreement and the other Loan Documents or in connection with any
amendments, modifications or waivers of the provisions hereof or of any
other Loan Document (whether or not the transactions thereby contemplated
shall be consummated) or incurred by the Administrative Agent or any Lender
in connection with the enforcement or protection of its rights in
connection with this Agreement and the other Loan Documents or in
connection with the Loans made or Letters of Credit issued hereunder,
including the reasonable fees, charges and disbursements of Cravath, Swaine
and Moore, counsel for the Administrative Agent, and, in connection with
any such enforcement or protection, the fees, charges and disbursements of
any other counsel for the Administrative Agent or any Lender.
(b) The Borrower agrees to indemnify the Administrative Agent, each
Lender and each Issuing Bank, each Affiliate of any of the foregoing
persons and each of their respective directors, officers, employees and
agents (each such person being called an "Indemnitee") against, and to hold
each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including reasonable counsel fees,
charges and disbursements, incurred by or asserted against any Indemnitee
arising out of, in any way connected with, or as a result of (i) the
execution or delivery of this Agreement or any other Loan Document or any
agreement or instrument contemplated thereby, the performance by the
parties hereto or thereto of their respective obligations hereunder or
thereunder or the consummation of the Transactions and the other
transactions contemplated thereby, (ii) the use of the proceeds of the
Loans or issuance of Letters of Credit, (iii) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or
not any Indemnitee is a party thereto, or (iv) any actual or alleged
presence or Release of Hazardous Materials on any property owned or
operated by the Borrower or any of the Subsidiaries, or any Environmental
Claim related in any way to the Borrower or the Subsidiaries; provided,
however, that such indemnity shall not, as to any Indemnitee, be available
to the extent that such losses, claims, damages, liabilities or related
expenses resulted from the gross negligence or wilful misconduct of such
Indemnitee.
(c) The provisions of this Section 9.05 shall remain operative and in
full force and effect regardless of the expiration of the term of this
Agreement, the consummation of the transactions contemplated hereby, the
repayment of any of the Loans, the expiration of the Commitments, the
expiration of any Letter of Credit, the invalidity or unenforceability of
any term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Administrative Agent, any Lender
or any Issuing Bank. All amounts due under this Section 9.05 shall be
payable on written demand therefor.
SECTION 9.06. Right of Setoff. Subject to Section 2.18, if an Event
of Default shall have occurred and be continuing, each Lender is hereby
authorized at any time and from time to time, to the fullest extent
permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Lender (or any of its affiliates) to
or for the credit or the account of the Borrower against any of and all the
obligations of the Borrower now or hereafter existing under this Agreement
and other Loan Documents held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement or such
other Loan Document and although such obligations may be unmatured. The
rights of each Lender under this Section are in addition to other rights
and remedies (including other rights of setoff) which such Lender may have.
SECTION 9.07. Applicable Law. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER
LOAN DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN
SUCH LETTER OF CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE
UNIFORM CUSTOMS AND PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION),
INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM
CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS
OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, any Lender or any Issuing Bank in exercising any
power or right hereunder or under any other Loan Document shall operate as
a waiver thereof, nor shall any single or partial exercise of any such
right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or
the exercise of any other right or power. The rights and remedies of the
Administrative Agent, the Issuing Banks and the Lenders hereunder and under
the other Loan Documents are cumulative and are not exclusive of any rights
or remedies that they would otherwise have. No waiver of any provision of
this Agreement or any other Loan Document or consent to any departure by
the Borrower therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for
which given. No notice or demand on the Borrower in any case shall entitle
the Borrower to any other or further notice or demand in similar or other
circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in
writing entered into by the Borrower and the Required Lenders; provided,
however, that no such agreement shall (i) decrease the principal amount of,
or extend the maturity of any Loan or any scheduled principal payment date
or date for the payment of any interest on any Loan or any date for
reimbursement of an LC Disbursement, or waive or excuse any such payment or
any part thereof, or decrease the rate of interest on any Loan or LC
Disbursement, without the prior written consent of each Lender directly
affected thereby, (ii) change or extend the Commitment or decrease the
Commitment Fees or other fees of any Lender without the prior written
consent of such Lender, (iii) amend or modify the provisions of Section
2.09(c), 2.17, 2.18, 9.04(i) or 4.02, the provisions of this Section 9.08,
the definition of the term "Required Lenders" or release any Guarantor from
the Guarantee Agreement and the Indemnity, Subrogation and Contribution
Agreement unless all or substantially all of the Capital Stock of such
Guarantor is sold in a transaction permitted by this Agreement, in each
case without the prior written consent of each Lender or (iv) amend, modify
or otherwise affect the rights or duties of the Administrative Agent or any
Issuing Bank hereunder or under any other Loan Document without the prior
written consent of the Administrative Agent or each Issuing Bank.
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any
Loan or participation in any LC Disbursement, together with all fees,
charges and other amounts which are treated as interest on such Loan or
participation in such LC Disbursement under applicable law (collectively
the "Charges"), shall exceed the maximum lawful rate (the "Maximum Rate")
which may be contracted for, charged, taken, received or reserved by the
Lender holding such Loan or participation in accordance with applicable
law, the rate of interest payable in respect of such Loan or participation
hereunder, together with all Charges payable in respect thereof, shall be
limited to the Maximum Rate and, to the extent lawful, the interest and
Charges that would have been payable in respect of such Loan or
participation but were not payable as a result of the operation of this
Section shall be cumulated and the interest and Charges payable to such
Lender in respect of other Loans or participations or periods shall be
increased (but not above the Maximum Rate therefor) until such cumulated
amount, together with interest thereon at the Federal Funds Effective Rate
to the date of repayment, shall have been received by such Lender.
SECTION 9.10. Entire Agreement. This Agreement, the Fee Letter and
the other Loan Documents constitute the entire contract between the parties
relative to the subject matter hereof. Any other previous agreement among
the parties with respect to the subject matter hereof is superseded by this
Agreement and the other Loan Documents. Nothing in this Agreement or in
the other Loan Documents, expressed or implied, is intended to confer upon
any party other than the parties hereto and thereto any rights, remedies,
obligations or liabilities under or by reason of this Agreement or the
other Loan Documents.
SECTION 9.11. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT
OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS
AND CERTIFICATIONS IN THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should
be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein
and therein shall not in any way be affected or impaired thereby. The
parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal
or unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts),
each of which shall constitute an original but all of which when taken
together shall constitute a single contract, and shall become effective as
provided in Section 9.03. Delivery of an executed signature page to this
Agreement by facsimile transmission shall be as effective as delivery of a
manually signed counterpart of this Agreement.
SECTION 9.14. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken
into consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) The
Borrower hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or
Federal court of the United States of America sitting in New York City, and
any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of
any such action or proceeding may be heard and determined in such New York
State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final 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. Nothing in
this Agreement shall affect any right that the Administrative Agent, any
Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement or the other Loan Documents against
the Borrower or its properties in the courts of any jurisdiction.
(b) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or the other Loan
Documents in any New York State or Federal court. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law,
the defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in
this Agreement will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
SECTION 9.16. Confidentiality. The Administrative Agent, each Issuing
Bank and each of the Lenders agrees to keep confidential (and to use its
best efforts to cause its respective agents and representatives to keep
confidential) the Information (as defined below) and all copies thereof,
extracts therefrom and analyses or other materials based thereon, except
that the Administrative Agent, each Issuing Bank or any Lender shall be
permitted to disclose Information (a) to such of its respective officers,
directors, employees, agents, affiliates and representatives as need to
know such Information, (b) to the extent requested by any regulatory
authority, (c) to the extent otherwise required by applicable laws and
regulations or by any subpoena or similar legal process, (d) in connection
with any suit, action or proceeding relating to the enforcement of its
rights hereunder or under the other Loan Documents or (e) to the extent
such Information (i) becomes publicly available other than as a result of a
breach of this Section 9.16 or (ii) becomes available to the Administrative
Agent, each Issuing Bank or any Lender on a nonconfidential basis from a
source other than the Borrower. For the purposes of this Section,
"Information" shall mean all financial statements, certificates, reports,
agreements and information (including all analyses, compilations and
studies prepared by the Administrative Agent, each Issuing Bank or any
Lender based on any of the foregoing) that are received from the Borrower
and related to the Borrower, any shareholder of the Borrower or any
employee, customer or supplier of the Borrower, other than any of the
foregoing that were available to the Administrative Agent, each Issuing
Bank or any Lender on a nonconfidential basis prior to its disclosure
thereto by the Borrower, and which are in the case of Information provided
after the date hereof, clearly identified at the time of
delivery as confidential. The provisions of this Section 9.16 shall remain
operative and in full force and effect regardless of the expiration and
term of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and
year first above written.
OAK INDUSTRIES INC.,
by /s/ Pamela F. Lenehan
Name: Pamela F. Lenehan
Title: Senior Vice President,
Corporate Development
and Treasurer
THE CHASE MANHATTAN BANK,
individually and as
Administrative Agent and Issuing Bank,
by /s/ Ann B. Kerns
Name: Ann B. Kerns
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON,
by /s/ Chris Francis
Name: Chris Francis
Title: Vice President
MELLON BANK, N.A.,
by /s/ R. Summersgill
Name: R. Summersgill
Title: First Vice President
FIRST UNION NATIONAL BANK OF NORTH CAROLINA,
by /s/ Mark M. Harden
Name: Mark M. Harden
Title: Vice President
FLEET NATIONAL BANK,
by /s/ Roger C. Boucher
Name: Roger C. Boucher
Title: Vice President
LTCB TRUST CO.,
by /s/ Noboru Kubota
Name: Noboru Kubota
Title: Senior Vice President
NATIONSBANK OF TEXAS, N.A.,
by /s/ Yousuf Omar
Name: Yousuf Omar
Title: Senior Vice President
ABN AMRO BANK N.V., Boston Branch,
by: ABN AMRO NORTH AMERICA, INC., as agent,
by: /s/ Carol A. Levine
Name: Carol A. Levine
Title: Managing Director
by /s/ James E. Davis
Name: James E. Davis
Title: Vice President
BHF-BANK AG,
by /s/ Evon Contos
Name: Evon Contos
Title: Vice President
by /s/ Linda Pace
Name: Linda Pace
Title: Assistant Vice President
CREDIT LYONNAIS NEW YORK BRANCH,
by /s/ Jacques-Yves Mulliez
Name: Jacques-Yves Mulliez
Title: Senior Vice President
THE ROYAL BANK OF SCOTLAND PLC-NEW YORK BRANCH,
by /s/ Russell M. Gibson
Name: Russell M. Gibson
Title: Vice President & Deputy Manager
83
[NYCORP:162054.12]
