SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
--------------------
FORM 10-K
--------------------
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the year ended June 30, 1996 Commission File Number:
1-373
-------------
- -----
RHI HOLDINGS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 34-1545939
- ------------------------------
- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
Washington Dulles International Airport
300 West Service Road, P.O. Box 10803
Chantilly, Virginia 20153
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(703) 478-5800
- ----------------------------------------------------
(Registrant's Telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Name of each
exchange
Title of each class on which
registered
- -----------------------------------------------
- ---------------------
11 7/8% Senior Subordinated Debentures Due 1999 New York Stock
Exchange
- -----------------------------------------------
- -----------------------
Securities registered pursuant to Section 12(g) of the Act: None
----
Indicate by check mark whether the registrant (1) has filed
all reports
required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of
1934 during the preceding 12 months (or for such shorter period
that the
registrant was required to file such reports), and (2) has been
subject to
such filing requirements for the past 90 days.
Yes X No
----
- ----
OMISSION OF CERTAIN INFORMATION
- -------------------------------
Registrant meets the conditions set forth in General
Instructions
J(1)(a) and (b) of Form 10-K and is therefore filing this Form with
the
reduced disclosure format.
DOCUMENTS INCORPORATED BY REFERENCE: None
----
The Exhibit index is located on page 63.
<PAGE>
RHI HOLDINGS, INC.
INDEX TO
ANNUAL REPORT ON FORM 10-K
FOR YEAR ENDED JUNE 30, 1995
PART I
Page
Item 1. Business . . . . . . . . . . . . . . . . . . . . .
. . 4
Item 2. Properties . . . . . . . . . . . . . . . . . . . .
. . 8
Item 3. Legal Proceedings . . . . . . . . . . . . . . . .
. . 9
Item 4. Submission of Matters to a Vote of Stockholders .
. . 11
PART II
Item 5. Market for the Company's Common Equity and Related
Stockholder Matters. . . . . . . . . . . . . . . .
. . 12
Item 6.* Selected Financial Data . . . . . . . . . . . . .
. . 12
Item 7. Management's Discussion and Analysis of Results of
Operations and Financial Condition . . . . . . . .
. . 12
Item 8. Financial Statements and Supplementary Data . . .
. . 22
Item 9. Disagreements on Accounting and Financial
Disclosure . 62
PART III
Item 10.* Directors and Executive Officers of the Registrant
. . 62
Item 11.* Executive Compensation . . . . . . . . . . . . . .
. . 62
Item 12.* Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . .
. . 62
Item 13.* Certain Relationships and Related Transactions . .
. . 62
PART IV
Item 14. Exhibits, Financial Statements Schedules and
Reports
on Form 8-K . . . . . . . . . . . . . . . . . . .
. . 63
*Item of Form 10-K is omitted in accordance with General
Instruction J,
Omission of Information by Certain Wholly-Owned Subsidiaries.
<PAGE>
PART I
------
ITEM 1. BUSINESS
- -----------------
Item 1 of Form 10-K is omitted in accordance with General
Instruction
J(2)(d), Omission of Information by Certain Wholly-Owned
Subsidiaries. A
brief description of the business done by RHI Holdings, Inc. and
its
subsidiaries is furnished in lieu thereof:
(a) Brief Description
-----------------
RHI Holdings, Inc. (the "Company"), formerly known as Rexnord
Holdings
Inc., is essentially a holding company incorporated in Delaware.
It has two
principal operating subsidiaries, Fairchild Holding Corporation
("FHC") and
Banner Aerospace, Inc. ("Banner"). As used herein, the term
"Company" refers
to RHI Holdings, Inc. and its subsidiaries, unless otherwise
indicated. The
Company is a wholly-owned subsidiary of The Fairchild Corporation
("TFC").
The Company also holds significant equity interests in Shared
Technologies
Fairchild, Inc. ("STFI"), which provides telecommunications
services and
systems domestically, and Nacanco Paketleme ("Nacanco"), which
manufactures
customized cans for soft drinks and beer in Turkey.
The Company's principal operations are conducted through FHC
and Banner,
in four business segments: Aerospace Fasteners, Aerospace
Distribution,
Industrial Products, and prior to March 13, 1996, Communications
Services.
The Aerospace Fasteners segment designs, manufactures and markets
high
performance, specialty fastening systems, primarily for aerospace
applications. The Aerospace Distribution segment is a leading
international
distributor to the aerospace industry, providing a wide range of
aircraft
parts and related support services. The Industrial Products
segment designs,
manufactures and markets wet processing tools, equipment and
systems required
for the manufacture of semiconductor chips and related products.
The
Communications Services segment, which was merged into Shared
Technologies
Inc. on March 13, 1996, furnished telecommunications services and
equipment
to tenants of commercial office buildings, and sold, installed, and
maintained telecommunications systems for business and government
customers.
For a comparison of the sales of each of the Company's business
segments for
each of the last three fiscal years, see "Management Discussion and
Analysis
of Results of Operations and Financial Condition".
Fiscal 1996 Developments
- ------------------------
The Company, RHI and Fairchild Industries, Inc. ("FII," the
company's
former subsidiary), entered into an Agreement and Plan of Merger
dated as of
November 9, 1995 (as amended, the "Merger Agreement") with Shared
Technologies Inc. ("STI"). On March 13, 1996, in accordance with
the Merger
Agreement, STI succeeded to the telecommunications systems and
services
business operated by the Company's Fairchild Communications
Services Company
("FCSC").
The transaction was effected by a Merger of FII with and into
STI (the
"Merger") with the surviving company renamed STFI. Prior to the
Merger, FII
transferred all of its assets to, and all of its liabilities were
assumed by
FHC, except for the assets and liabilities of FCSC, and $223.5
million of the
FII's existing debt and preferred stock consisting of (i) the $40.0
million
liquidation value of the outstanding Series A and Series C
Preferred Stock of
FII, (ii) the $125.0 million principal amount outstanding of FII 12
1/4%
Senior Notes due 1999 (the "Senior Notes"), and (iii) an amount of
bank and
other indebtedness of approximately $58.5 million (the "Assumed
Indebtedness"). The stock of FHC was then distributed to RHI. No
taxabale
gain or loss was recognized, in the Company's view, on the transfer
of the
FII assets and liabilities to FHC, and the distribution of FHC
stock to RHI.
As part of the Merger Agreement, FII made a cash tender offer to
purchase all
of the outstanding Senior Notes and obtained such holders consent
to amend
the indenture under which the Senior Notes were issued to remove
all
covenants which could be amended or deleted by majority vote (the
"Tender
Offer"). Pursuant to the Merger, an amount sufficient to redeem
the Series
A and Series C Preferred Stock at their liquidation value ($45.00
per share
plus accrued and unpaid dividends) was placed with Chemical Mellon
Shareholder Services as Escrow Agent. Also as part of the Merger,
STFI (i)
purchased the $125.0 million aggregate principal amount of Senior
Notes
tendered pursuant to the aforesaid tender offer, and (ii) repaid in
full the
Assumed Indebtedness.
As a result of the Merger, the Company received (i) 6,000,000
shares of
Common Stock of STFI (representing approximately 41% of the
outstanding
shares after giving effect to such issuance), (ii) shares of 6%
Cumulative
Convertible Preferred Stock of STFI having an aggregate liquidation
preference of $25.0 million (subject to upward adjustment) and
which are
convertible into Common Stock of STFI at a conversion price of
$6.375 per
share (which, if converted, would represent, together with the
other Common
Stock issued to the Company, approximately 42% of the Common Stock
of STFI on
a fully diluted basis), and (iii) shares of a Special Preferred
Stock having
an initial liquidation preference of $20.0 million (which could
accrue up to
a maximum of $30.0 million over a ten-year period, if not redeemed
earlier).
In connection with its stock ownership, the Company has the right
to elect
four of the eleven members of the Board of Directors of STFI and
have agreed,
subject to certain exceptions, not to sell any of STFI's shares for
a two-
year period.
The Merger was structured as a reorganization under section
368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended. In Fiscal 1996,
the
Company recorded a $163.1 million non-recurring gain from this
transaction.
On February 22, 1996, pursuant to the Asset Purchase Agreement
dated
January 26, 1996 (the "closing date"), the Company, through its
subsidiaries,
completed the sale of certain assets, liabilities and the business
of the
D-M-E Company ("DME") to Cincinnati Milacron Inc. ("CMI") for a
sales price
of approximately $244.3 million, as adjusted. The sales price
consists of
$74.0 million in cash, and two 8% promissory notes in the aggregate
principal
amount of $170.3 million (together, the "8% CMI Notes"). The
promissory
notes were due to mature one year following the closing date;
provided that
the Company require prepayment of, and CMI had the right to prepay
the 8% CMI
Notes after the six-month anniversary of the closing date. On July
29, 1996,
CMI paid in full the 8% CMI Notes.
As a result of the sale of DME, the Company recorded an
after-tax gain
on disposal of discontinued operations of approximately $54.0
million in
Fiscal 1996.
On January 27, 1996, FII completed the sale of Fairchild Data
Corporation ("Data") to SSE Telecom, Inc. ("SSE") for book value of
approximately $4.4 million and 100,000 shares of SSE's common stock
valued at
$9.0625 per share, or $.9 million, at January 26, 1996, and
warrants to
purchase an additional 50,000 shares of SSE's common stock at
$11.09 per
share. In addition, the Company has an opportunity to earn an
additional
100,000 shares based on the future performance of SSE during the
twelve
months following the date of sale. The Company recorded a loss of
$.1
million from this transaction in Fiscal 1996.
Effective February 25, 1996, the Company completed a transfer
of Harco
to Banner in exchange for 5,386,477 shares of Banner common stock.
The
exchange has increased the Company's ownership of Banner common
stock from
approximately 47.2% to 59.3%, resulting in the Company becoming the
majority
shareholder of Banner. Accordingly, the Company consolidated
Banner on
February 25, 1996. Banner is a leading international supplier to
the
aerospace industry as a distributor, providing a wide range of
aircraft parts
and related support services. Harco is a distributor of precision
fasteners
to the aerospace industry.
Aerospace Fasteners
- -------------------
The Company, through its Aerospace Fasteners segment, is a
leading
worldwide manufacturer and supplier of fastening systems used in
the
construction and maintenance of commercial and military aircraft.
The
Aerospace Fasteners segment accounted for 42.6% of total Company
sales for
the year ended June 30, 1996.
Aerospace Distribution
- ----------------------
The Company acquired a majority ownership of Banner on
February 26,
1996. The Company, through Banner, distributes a wide variety of
aircraft
parts, which it carries in inventory. In addition to selling
products that
it has purchased on the open market, Banner also acts as a
non-exclusive,
authorized distributor of many different product lines. No single
distributor arrangement is material to the Company's financial
condition
taken as a whole. The Aerospace Distribution segment accounted for
26.1% of
total Company sales in Fiscal 1996.
Industrial Products
- -------------------
The Industrial Products segment consists primarily of three
distinct
companies operating under the trade names Fairchild Technologies
("FT"),
Fairchild Scandinavian Bellyloading Company AB ("SBC") and
Fairchild Gas
Springs Division ("Gas Springs").
Acquired by the Company in June 1994, FT is a leading
designer,
manufacturer and marketer of high performance, cost effective
production
equipment used to manufacture semiconductors, liquid crystal
displays and
compact disk products.
A Fiscal 1995 start-up operation, Gas Springs is a designer
and
manufacturer of gas springs for automotive and
industrial/commercial
applications to assist in the raising, lowering and moving of heavy
loads.
Acquired by the Company in September 1994, SBC is the designer
and
manufacturer of patented cargo loading systems, which are installed
in the
cargo area of commercial aircraft, enabling cargo to be loaded
rapidly and
efficiently.
The Industrial Products segment accounted for 13.0% of total
Company
sales for the year ended June 30, 1996. Approximately 89.1% of the
Industrial Products segment revenues is provided by FT.
Communications Services
- -----------------------
On March 13, 1996, the Company's Fairchild Communications
Services
Company was merged with STI. As a result of the Merger, the
Company is
accounting for its investment in STFI using the equity method.
Prior to
March 1996, the Company consolidated the results of FCSC. The
Communications
Services segment accounted for 18.3% of total Company sales for the
year
ended June 30, 1996. All of the Communications Services segment
sales were
domestic.
Foreign Operations
- ------------------
The Company's operations are located primarily in the United
States and
Europe. Inter-area sales are not significant to the total revenue
of any
geographic area. Export sales are made by U.S. subsidiaries and
divisions to
customers in non-U.S. countries, whereas foreign sales are made by
the
Company's non-U.S. subsidiaries. For the Company's sales results
by
geographic area and export sales, see Note 21 of the Company's
consolidated
financial statements included in Item 8, Financial Statements and
Supplementary Data.
<PAGE>
Major Customers
- ---------------
No single customer accounted for more than 10% of consolidated
sales in
any of the Company's business segments for the year ended June 30,
1996.
Backlog of Orders
- -----------------
Backlog is significant in the Company's Aerospace Fasteners
segment,
Aerospace Distribution segment and Industrial Products segments,
due to long-
term production requirements of its customers. The Company's
backlog of
orders as of June 30, 1996 in the Aerospace Fasteners, Aerospace
Distribution
segment and Industrial Products segments amounted to $109.9
million, $62.2
million, and $22.9 million, respectively. The Company anticipates
that
approximately 86.8% of the aggregate backlog at June 30, 1996 will
be
delivered by June 30, 1997.
Suppliers
- ---------
The Company does not consider itself to be materially
dependent upon any
one supplier, but is dependent upon a wide range of subcontractors,
vendors
and suppliers of materials to meet its commitments to its
customers.
Research and Patents
- --------------------
The Company's research and development activities have
included:
applied research; development of new products; testing and
evaluation of, and
improvements to, existing products; improvements in manufacturing
techniques
and processes; development of product innovations designed to meet
government
safety and environmental requirements; and development of technical
services
for manufacturing and marketing. The Company's sponsored research
and
development expenditures amounted to $.1 million, $1.0 million and
$1.4
million for the years ended June 30, 1996, 1995, and 1994,
respectively. The
Company owns patents relating to the design and manufacture of
certain of its
products and is a licensee of technology covered by the patents of
other
companies. The Company does not believe that any of its business
segments
are dependent upon any single patent.
Personnel
- ---------
As of June 30, 1996, the Company had approximately 2,800
employees.
Approximately 5% of these employees were covered by collective
bargaining
agreements. The Company believes that its relations with its
employees are
good.
<PAGE>
Environmental Matters
- ---------------------
See discussion of Environmental Matters under Item 3 "Legal
Proceedings"
below.
ITEM 2. PROPERTIES
- --------------------
As of June 30, 1996, the Company owned or leased properties
totalling
approximately 1,502,000 square feet, approximately 767,000 square
feet of
which was owned and 735,000 square feet was leased. The Aerospace
Fasteners
segment's properties consisted of approximately 563,000 square
feet, with
principal operating facilities of approximately 516,000 square feet
concentrated in Southern California and Germany. The Aerospace
Distribution
segments properties consisted of approximately 703,000 square feet,
with
principal operating facilities of approximately 473,000 square feet
located
in California, Connecticut, Florida, Texas and Utah. The
Industrial Products
segment's properties consisted of approximately 117,000 square
feet, with
principal operating facilities of approximately 82,000 square feet
located in
California and Germany.
The Company owns its corporate headquarters at
Washington-Dulles
International Airport.
The Company has several parcels of property which it is
attempting to
market, lease and/or develop, including: (i) a 68 acre parcel
located in
Farmingdale, New York, (ii) a 6 acre parcel in Temple City,
California, (iii)
an 8 acre parcel in Chatsworth, California, and (iv) several other
parcels of
real estate primarily located throughout the continental United
States.
The following table sets forth the location of the larger
properties
used in the continuing operations of the Company, their square
footage, the
business segment or groups they serve and their primary use. Each
of the
properties owned or leased by the Company is, in management's
opinion,
generally well maintained, is suitable to support the Company's
business and
is adequate for the Company's present needs. All of the Company's
occupied
properties are maintained and updated on a regular basis.
<TABLE>
<CAPTION>
Owned or Square Business Segment/
Primary
Location Leased Footage Group
Use
- -------- -------- ------- -----------------
-------
<C> <S> <S> <S>
<S>
Torrance, California Owned 284,000 Aerospace
Fasteners Manufacturing
Sun Valley, California Leased 143,000 Aerospace
Distribution Distribution
City of Industry, California Owned 140,000 Aerospace
Fasteners Manufacturing
Carrollton, Texas Leased 126,000 Aerospace
Distribution Distribution
Chantilly, Virginia Owned 125,000 Corporate
Office
West Valley City, Utah Owned 81,000 Aerospace
Distribution Distribution
Ft. Lauderdale, Florida Leased 57,000 Aerospace
Distribution Distribution
Santa Ana, California Owned 50,000 Aerospace
Fasteners Manufacturing
Vailingem Germany Leased 49,000 Industrial
Products Manufacturing
Kelkheim, Germany Leased 42,000 Aerospace
Fasteners Manufacturing
El Segundo, California Leased 36,000 Aerospace
Distribution Distribution
Fremont, California Leased 31,000 Industrial
Products Manufacturing
Suffield, Connecticut Owned 30,000 Aerospace
Distribution Distribution
</TABLE>
<PAGE>
Information concerning long-term rental obligations of the
Company at
June 30, 1996, is set forth in Note 19 to the Company's
consolidated
financial statements, included in Item 8, Financial Statements and
Supplementary Data.
ITEM 3. LEGAL PROCEEDINGS
- ---------------------------
Government Claims
- -----------------
The Corporate Administrative Contracting Officer (the "ACO"),
based upon
the advice of the United States Defense Contract Audit Agency, has
made a
determination that FII did not comply with Federal Acquisition
Regulations
and Cost Accounting Standards in accounting for (i) the 1985
reversion to FII
of certain assets of terminated defined benefit pension plans, and
(ii)
pension costs upon the closing of segments of FII's business. The
ACO has
directed FII to prepare cost impact proposals relating to such plan
terminations and segment closings and, following receipt of such
cost impact
proposals, may seek adjustments to contract prices. The ACO
alleges that
substantial amounts will be due if such adjustments are made. The
Company
believes it has properly accounted for the asset reversions in
accordance
with applicable accounting standards. The Company has held
discussions with
the government to attempt to resolve these pension accounting
issues.
Environmental Matters
- ---------------------
The Company and other aerospace fastener and industrial
product
manufacturers are subject to stringent Federal, state and local
environmental
laws and regulations concerning, among other things, the discharge
of
materials into the environment and the generation, handling,
storage,
transportation and disposal of waste and hazardous materials. To
date, such
laws and regulations have not had a material effect on the
financial
condition, results of operations, or net cash flows of the Company,
although
the Company has expended, and can be expected to expend in the
future,
significant amounts for investigation of environmental conditions
and
installation of environmental control facilities, remediation of
environmental conditions and other similar matters, particularly in
the
Aerospace Fasteners segment.
In connection with its plans to dispose of certain real
estate, the
Company must investigate environmental conditions and may be
required to take
certain corrective action prior or pursuant to any such
disposition. In
addition, management has identified several areas of potential
contamination
at or from other facilities owned, or previously owned, by the
Company, that
may require the Company either to take corrective action or to
contribute to
a clean-up. The Company is also a defendant in certain lawsuits
and
proceedings seeking to require the Company to pay for investigation
or
remediation of environmental matters and has been alleged to be a
potentially
responsible party at various "Superfund" sites. Management of the
Company
believes that it has recorded adequate reserves in its financial
statements
to complete such investigation and take any necessary corrective
actions or
make any necessary contributions. No amounts have been recorded as
due from
third parties, including insurers, or set off against, any
liability of the
Company, unless such parties are contractually obligated to
contribute and
are not disputing such liability.
As of June 30, 1996, the consolidated total recorded
liabilities of the
Company for environmental matters totalled $11.3 million, which
represented
the estimated probable exposures for these matters. It is
reasonably
possible that the Company's total exposure for these matters could
be
approximately $19.1 million.
Other Matters
- -------------
The Company is involved in various other claims and lawsuits
incidental
to its business, some of which involve substantial amounts. The
Company,
either on its own or through its insurance carriers, is contesting
these
matters.
In the opinion of management, the ultimate resolution of the
legal
proceedings, including those discussed above, will not have a
material
adverse effect on the financial condition, or future results of
operations or
net cash flows of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF STOCKHOLDERS
- --------------------------------------------------------
None
<PAGE>
PART II
-------
ITEM 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED
- ----------------------------------------------------------
STOCKHOLDER MATTERS
-------------------
All of the Company's outstanding common stock is held by TFC.
There is
no established public trading market and no dividends have been
declared for
this class of common stock.
ITEM 6. SELECTED FINANCIAL DATA
- --------------------------------
Item 6 of Form 10-K is omitted in accordance with General
Instructions
J(2)(a), Omission of Information by Certain Wholly-Owned
Subsidiaries.
ITEM 7. MANAGEMENT DISCUSSION AND ANALYSIS OF
- ----------------------------------------------
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
---------------------------------------------
Item 7 of Form 10-K is omitted in accordance with General
Instruction
J(2)(a), Omission of Information by Certain Wholly-Owned
Subsidiaries.
Management's narrative analysis of the results of operations is
furnished in
lieu thereof:
MANAGEMENT'S NARRATIVE ANALYSIS OF THE RESULTS OF OPERATIONS
- ------------------------------------------------------------
RHI Holdings, Inc. (the "Company"), formerly known as Rexnord
Holdings
Inc., is essentially a holding company incorporated in the State of
Delaware.
It has two principal operating subsidiaries, Fairchild Holding
Corporation
("FHC") and Banner Aerospace, Inc. ("Banner"). The Company is a
wholly-owned
subsidiary of The Fairchild Corporation ("TFC"). The Company also
holds a
significant equity interest in Shared Technologies Fairchild, Inc.
("STFI")
and Nacanco Paketleme ("Nacanco").
RECENT DEVELOPMENTS
The Company, TFC and Fairchild Industries, Inc. ("FII," the
company's
former subsidiary), entered into an Agreement and Plan of Merger
dated as of
November 9, 1995 (as amended, the "Merger Agreement") with Shared
Technologies Inc. ("STI"). On March 13, 1996, in accordance with
the Merger
Agreement, STI succeeded to the telecommunications systems and
services
business operated by the Company's Fairchild Communications
Services Company
("FCSC").
The transaction was effected by a Merger of FII with and into
STI (the
"Merger") with the surviving company renamed STFI. Prior to the
Merger, FII
transferred all of its assets to, and all of its liabilities were
assumed by
FHC, except for the assets and liabilities of FCSC, and $223.5
million of the
FII's existing debt and preferred stock consisting of (i) the $40.0
million
liquidation value of the outstanding Series A and Series C
Preferred Stock of
FII, (ii) the $125.0 million principal amount outstanding of FII 12
1/4%
Senior Notes due 1999 (the "Senior Notes"), and (iii) an amount of
bank and
other indebtedness of approximately $58.5 million (the "Assumed
Indebtedness"). The stock of FHC was then distributed to the
Company. No
taxable gain or loss was recognized, in the Company's view, on the
transfer
of the FII assets and liabilities to FHC, and the distribution of
FHC stock
to the Company. As part of the Merger Agreement, FII made a cash
tender
offer to purchase all of the outstanding Senior Notes and obtained
such
holders consent to amend the indenture under which the Senior Notes
were
issued to remove all covenants which could be amended or deleted by
majority
vote (the "Tender Offer"). Pursuant to the Merger, an amount
sufficient to
redeem the Series A and Series C Preferred Stock at their
liquidation value
($45.00 per share plus accrued and unpaid dividends) was placed
with Chemical
Mellon Shareholder Services as Escrow Agent. Also as part of the
Merger,
STFI (i) purchased the $125.0 million aggregate principal amount of
Senior
Notes tendered pursuant to the aforesaid tender offer and (ii)
repaid in full
the Assumed Indebtedness.
As a result of the Merger, the Company received (i) 6,000,000
shares of
Common Stock of STFI (representing approximately 41% of the
outstanding
shares after giving effect to such issuance), (ii) shares of 6%
Cumulative
Convertible Preferred Stock of STFI having an aggregate liquidation
preference of $25.0 million (subject to upward adjustment) and
which are
convertible into Common Stock of STFI at a conversion price of
$6.375 per
share (which, if converted, would represent, together with the
other Common
Stock issued to the Company, approximately 42% of the Common Stock
of STFI on
a fully diluted basis), and (iii) shares of a Special Preferred
Stock having
an initial liquidation preference of $20.0 million (which could
accrue up to
a maximum of $30.0 million over a ten-year period, if not redeemed
earlier).
In connection with its stock ownership, the Company has the right
to elect
four of the eleven members of the Board of Directors of STFI and
have agreed,
subject to certain exceptions, not to sell any of STFI's shares for
a two-
year period.
The Merger was structured as a reorganization under section
368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended. In Fiscal 1996,
the
Company recorded a $163.1 million non-recurring gain from this
transaction.
On February 22, 1996, pursuant to the Asset Purchase Agreement
dated
January 26, 1996 (the "closing date"), the Company, through its
subsidiaries,
completed the sale of certain assets, liabilities and the business
of the
D-M-E Company ("DME") to Cincinnati Milacron Inc. ("CMI") for a
sales price
of approximately $244.3 million, as adjusted. The sales price
consists of
$74.0 million in cash, and two 8% promissory notes in the aggregate
principal
amount of $170.3 million (together, the "8% CMI Notes"). The
promissory
notes were due to mature one year following the closing date;
provided that
the Company had the right to require prepayment of, and CMI had the
right to
prepay the 8% CMI Notes after the six-month anniversary of the
closing date.
On July 29, 1996, CMI paid in full the 8% CMI Notes.
As a result of the sale of DME, the Company recorded an
after-tax gain
on disposal of discontinued operations of approximately $54.0
million in
Fiscal 1996.
On January 27, 1996, FII completed the sale of Fairchild Data
Corporation ("Data") to SSE Telecom, Inc. ("SSE") for book value of
approximately $4.4 million and 100,000 shares of SSE's common stock
valued at
$9.0625 per share, or $.9 million, at January 26, 1996, and
warrants to
purchase an additional 50,000 shares of SSE's common stock at
$11.09 per
share. In addition, the Company has an opportunity to earn an
additional
100,000 shares based on the future performance of SSE during the
twelve
months following the date of sale. There was no material gain or
loss from
this transaction.
DME and Data have been accounted for as discontinued
operations and the
prior periods financial statements have been restated to reflect
the
discontinuance of these companies. The combined net sales of DME
and Data
totaled $108.1 million (through January 26, 1996), $180.8 million
and $166.5
million for Fiscal 1996, 1995 and 1994, respectively. Net earnings
from
discontinued operations was $9.2 million (through January 26,
1996), $14.0
million and $4.9 million for Fiscal 1996, 1995 and 1994,
respectively.
Effective February 25, 1996, the Company completed a transfer
of Harco
to Banner in exchange for 5,386,477 shares of Banner common stock.
The
exchange has increased the Company's ownership of Banner common
stock from
approximately 47.2% to 59.3%, resulting in the Company becoming the
majority
shareholder of Banner. Accordingly, the Company consolidated
Banner on
February 25, 1996. Banner is a leading international supplier to
the
aerospace industry as a distributor, providing a wide range of
aircraft parts
and related support services. Harco is a distributor of precision
fasteners
to the aerospace industry.
RESULTS OF OPERATIONS
During Fiscal 1996, the Company operated in four principal
business
segments: Aerospace Fasteners, Aerospace Distribution, Industrial
Products
and Communications Services. The following table illustrates the
historical
sales and operating income of the Company's continuing operations
for the
past three years.
<PAGE>
<TABLE>
<CAPTION>
For the years ended June
30,
(In thousands)
- --------------------------------
1996 1995
Sales by Business Segment: -------- --------
<S> <C> <C>
Aerospace Fasteners............... $218,059 $215,364
Aerospace Distribution (c)........ 129,973 --
Industrial Products............... 64,445 40,588
Communications Services........... 91,290 108,710
Eliminations (a).................. (5,842) --
------- -------
Total $497,925 $364,662
======= =======
Operating Income (Loss) by
Business Segment:
Aerospace Fasteners (b)........... $ 135 $(11,497)
Aerospace Distribution (c)........ 5,625 --
Industrial Products............... 749 (4,882)
Communications Services........... 14,561 18,498
------- -------
Total 21,070 2,119
Corporate administrative expense.. (10,319) (9,902)
Other corporate (expense) income.. (1,013) (321)
------- -------
Operating income (loss)............. $ 9,738 $ (8,104)
======= =======
(a) Intersegment eliminations includes $5,819 of sales from the
Aerospace
Fasteners segment to the Aerospace Distribution segment and $23 of
sales from
the Aerospace Distribution segment to the Aerospace Fasteners
segment in
Fiscal 1996.
(b) Includes restructuring charges of $2.3 million and $18.9
million in
Fiscal 1996 and Fiscal 1994, respectively, and an unusual loss from
earthquake damage and related business interruption of $4.0 million
in Fiscal
1994.
(c) The Company became the majority shareholder of the Aerospace
Distribution
segment on February 25, 1996 and, accordingly, began consolidating
their
results as of then.
</TABLE>
FISCAL 1996 VERSUS FISCAL 1995
General
- -------
Overall sales increased by 36.5% in Fiscal 1996, compared to
sales in
Fiscal 1995, which reflected strong sales performances from the
Aerospace
Fasteners, Aerospace Distribution and Industrial Products business
segments.
Operating income increased $17.8 million in Fiscal 1996,
compared to
operating losses in Fiscal 1995. During Fiscal 1996, operating
losses
decreased significantly in the Aerospace Fasteners segment
primarily due to
the results being realized from management changes, consolidation
of plants,
eliminating unprofitable product lines, pricing adjustments,
substantial work
force downsizing and new productivity programs, quality and
marketing
programs put in place. Operating income in the current year was up
in the
Industrial Products segment. The Communications Services segment
contributed
operating income of $14.6 million through March 13, 1996 when it
was
deconsolidated and merged with STFI. (See discussion below).
Aerospace Fasteners
- -------------------
Sales in the Aerospace Fasteners segment increased 1.3% in
Fiscal 1996,
compared to the Fiscal 1995 period, reflecting moderate growth in
this
industry. New orders have been strong in recent months. The Harco
division
was transferred to the Aerospace Distribution segment on February
25, 1996.
Excluding Harco's sales in both periods, sales increased 3.6% in
Fiscal 1996.
Operating income was positive in the Aerospace Fasteners
segment, which
was a $11.6 million improvement in the Fiscal 1996 period over the
corresponding Fiscal 1995 period. Management will continue to
implement
productivity improvements and reduce costs. A restructuring charge
of $2.3
million was recorded in Fiscal 1996, primarily for severance pay to
employees
terminated as a result of further downsizing.
Aerospace Distribution
- ----------------------
As a result of the transfer of Harco to Banner effective
February 25,
1996, the Company recorded four months of sales and operating
income of
Banner, including Harco, for four months, as part of the Aerospace
Distribution segment. This segment reported $130.0 million in
sales and $5.6
million in operating income for this four month period ended June
30, 1996.
The first eight months of Harco's sales and operating income are
included in
the Aerospace Fasteners Segment.
Industrial Products
- -------------------
Sales in the Industrial Products segment, which included two
start up
operations in Fiscal 1995, increased 58.8% in Fiscal 1996, compared
to the
Fiscal 1995 period. $22.3 million of the sales increase is
attributable to
the performance of Fairchild Technologies which includes Fairchild
Convac, a
semiconductor equipment manufacturer which had a strong Fiscal 1996
performance resulting from the shipment of orders included in the
prior year
end backlog. This was compared to a very slow Fiscal 1995, which
was the
first period following the acquisition of Fairchild Convac. Also
included in
this segment is the Gas Spring division, which reported sales of
$4.8 million
in Fiscal 1996, and the Fairchild Scandinavian Bellyloading Company
"SBC"
which reported sales of $2.2 million.
Operating income in the Industrial Products segment became
positive in
Fiscal 1996 and increased $5.6 million in Fiscal 1996, compared to
Fiscal
1995. $3.5 million of this net increase was contributed by
Fairchild
Technologies, primarily the result of its increase in sales and
$2.5 million
by the Gas Spring start-up which decreased its losses to breakeven.
Communications Services
- -----------------------
Sales of $91.3 million were reported for the Communications
Services
segment in Fiscal 1996 for 8 1/2 months compared to a full 12
months of
operating results in Fiscal 1995 as a result of the March 13, 1996
merger of
the Communications Services segment into STI. Operating income of
$14.6
million was reported for the Communications Services segment in
Fiscal 1996
for 8 1/2 months prior to the Merger.
Other Expenses/Income
- ---------------------
Corporate Administrative Expense - During Fiscal 1996,
corporate
administrative expense increased 4.2%. This increase resulted from
additional corporate expenses required to complete the Merger and
sale of
discontinued operations. The Fiscal 1995 expense was lower
partially due to
reversal of several accruals not required.
Other corporate expense increased $.7 million in Fiscal
1996,compared to
Fiscal 1995, primarily due to a favorable settlement of a
bankruptcy case.
Net interest expense decreased 20.8% in Fiscal 1996, compared
to the
prior year period, due primarily to lower borrowings as a result of
the sale
of DME and the Merger, and higher interest income earned on the 8%
CMI Notes.
Investment income, net, decreased by 23.2%, primarily as a
result of
losses realized on the write-off of two foreign investments.
Equity in earnings of affiliates increased $2.6 million in
Fiscal 1996,
compared to Fiscal 1995. Earnings from Nacanco, in which the
Company holds
a 26.7% interest, increased $2.3 million for the year, primarily
due to a
25.2% increase in net sales in the current year, and the prior year
being
effected by a large tax adjustment.
Minority interest expense includes dividend expense on FII's
Series C
Preferred Stock until it was redeemed on March 13, 1996, offset by
approximately 40.7% of Banner's earnings since the consolidation of
Banner on
February 25, 1996.
Non-Recurring income includes a $163.1 million nontaxable gain
resulting
from the Merger. Expenses related to other transactions are netted
against
the above gain.
Income Taxes - For Fiscal 1996, the tax benefit from the
continuing
operations loss, excluding the nontaxable non-recurring gain, was
$4.8
million.
Earnings from discontinued operations, net, include the
earnings, net of
tax from DME and Data for all periods presented.
Gain (loss) on disposal of discontinued operations resulted
primarily
from the sale of DME to CMI.
Extraordinary items, net, resulted from premiums paid,
redemption costs
and consent fees associated with the retirement of the Senior Notes
and the
write off of deferred loan fees, primarily related to Senior Notes
and bank
debt extinguished early. This totaled $10.4 million, net of a tax
benefit,
in Fiscal 1996.
The net earnings increased $224.2 million in Fiscal 1996,
compared to
Fiscal 1995, primarily due to: (i) the $17.8 million increase in
operating
income, (ii) the $162.5 million non-recurring pre-tax gain recorded
from the
Merger, and (iii) the $53.8 million gain, net of tax, from the
disposal of
discontinued operations. Partially offsetting these increases was
a $10.4
million extraordinary loss from the early extinguishment of debt.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Working capital at June 30, 1996, was $320.2 million, which
was $178.4
million higher than at June 30, 1995. The principal reasons for
this
increase included a $170.4 million receivable reflecting the 8% CMI
Notes.
In addition, due primarily to the consolidation of Banner and the
deconsolidation of FCSC, there was a net increase in accounts
receivable of
$34.5 million, and increase in inventory of $193.1 million (the
FCSC
business, a telecommunication services business had virtually no
inventory).
Offsetting this increase in working capital were net increases in
accounts
payable and accrued liabilities of $32.1 million reflecting the
reconsolidation of Banner and the deconsolidation of FCSC, and
income taxes
payable of $60.0 million. The Company's current bank debt
borrowings
increased $67.9 million reflecting the current debt on the new
interim credit
agreement at FHC discussed below. Net current assets of
discontinued
operations decreased $34.6 million reflecting the sale of DME and
Data.
The Company's principal sources of liquidity are cash
generated from
operations and borrowings under its credit agreement. The Company
also
expects to generate cash from the sale of certain assets and
liquidation of
investments. Net assets held for sale at June 30, 1996, had a book
value of
$43.6 million and included two parcels of real estate in
California, a 68
acre parcel of real estate located in Farmingdale, New York, two
landfills in
Pennsylvania, a real estate joint venture in California, and
several other
parcels elsewhere, which the Company plans to sell, lease or
develop, subject
to market conditions or, with respect to certain of the parcels,
the
resolution of environmental matters. Net assets held for sale
decreased $6.1
million primarily resulting from the sale of 20 acres of a larger
parcel of
real estate, owned by the Company, in Farmingdale, New York. The
proceeds
were applied against the carrying value of this property.
The Company's principal cash requirements include debt
service, capital
expenditures, acquisitions, and payment of other liabilities.
Property, plant and equipment ("PP&E") decreased $44.9 million
from June
30, 1995, as a result of deconsolidating FCSC and consolidating
Banner. At
March 13, 1996 FCSC had PP&E of $51.1 million which was
deconsolidated, and
Banner had $12.9 million which was consolidated.
Investments and advances in affiliated companies increased
$13.4
million. Changes in investments and advances in affiliates
included a $49.2
million increase in fair market value of the Company's investment
in TFC, by
recording a $29.0 million investment from the Merger, in which the
Company
retained a 41% interest in STFI, and recording equity earnings of
$4.6
million (primarily Nacanco) during the year, offset partially by a
$53.9
million decrease resulting from the consolidation of Banner and a
$17.8
million net decrease in the Company's investment in TFC senior
notes, which
matured in 1996.
Other liabilities that require the use of cash include
post-employment
benefits for retirees, environmental investigation and remediation
obligations, litigation settlements and related costs.
The Company maintains credit agreements (the "Credit
Agreements") with
a consortium of banks, which provides revolving credit facilities
to RHI, FHC
and Banner and term loans to FHC and Banner (collectively the
"Credit
Facilities").
On March 13, 1996, in connection with the Merger, the Company
replaced
the credit agreement of its former subsidiary, VSI Corporation,
(the "Prior
Credit Agreement") with an interim credit agreement (the "Interim
Credit
Agreement") at FHC. The Interim Credit Agreement provided FHC with
a $50.0
million revolving credit facility and a $30.0 million term loan,
both of
which generally had an interest rate of 1/2% over the prime rate,
or 1 1/2%
over the London Interbank Offered Rate ("LIBOR")and required a
commitment fee
of 1/2% on the unused portion of the revolving credit facility. The
Prior
Credit Agreement generally bore interest at 2 3/4% to 3 3/4% over
LIBOR and
required a commitment fee of 1%.
The Interim Credit Agreement required compliance with certain
financial
loan covenants, including achieving a minimum of cumulative
earnings before
interest, taxes, depreciation and amortization ("EBITDA Covenant")
at March
31, 1996, and maintaining a certain interest ratio coverage at
specified
periods. Additionally, the Interim Credit Agreement restricted
FHC's capital
expenditures during the term of the Interim Credit Agreement to
$6.0 million,
in the aggregate. The Company was in compliance with these
covenants
throughout the life of the Interim Credit Agreement.
The Interim Credit Agreement matured on July 29, 1996, at
which time the
Company repaid in full the loans made under the Interim Credit
Agreement. On
July 26, 1996, the Company amended and restated the terms and
provisions of
the Interim Credit Agreement in their entirety (the "Restated
Credit
Agreement"). The Restated Credit Agreement extends to July 28,
2000, the
maturity of FHC's revolving credit termination date, and provides
FHC with a
revolving credit facility (the "FHC Revolver") that has a borrowing
base of
up to $52.0 million. The borrowing base is determined monthly based
upon
specified percentages of FHC's accounts receivable, inventories and
the
appraised value of equipment and real property. The FHC Revolver
consists
of up to $40.0 million available for domestic operations and $12.0
million
available for European operations. The FHC Revolver generally
bears
interest at a base rate of 1 1/2% over the greater of (i) Citibank
New York's
base rate, or (ii) the Federal Funds Rate plus 1/2% for domestic
borrowings
and at 2 1/2% over Citibank London's base rate for foreign
borrowings. FHC's
Revolver is subject to a non-use commitment fee of 1/2% on the
average unused
availability; and outstanding letters of credit are subject to fees
of 2 3/4%
per annum.
The Restated Credit Agreement requires FHC to comply with
certain
financial loan covenants, including maintaining a minimum net worth
of $150.0
million and maintaining certain interest and fixed charge coverage
ratios at
the end of each Fiscal Quarter. Additionally, the Restated Credit
Agreement
restricts the FHC's annual capital expenditures to $12.0 million.
Substantially all of FHC's assets are pledged as collateral under
the
Restated Credit Agreement.
FHC may transfer available dividends to the Company.
The Credit Agreements provide RHI with a $4.3 million
revolving credit
facility (the "RHI Credit Agreement") which generally bears a base
interest
of 1/2% over the prime rate, requires a commitment fee of 1/2%,
and matures
on May 26, 1998. RHI's Credit Agreement requires RHI to comply
with
specified covenants and maintain a consolidated net worth of $175.0
million.
Additionally, RHI's capital expenditures are restricted, except for
certain
leasehold improvements, to $2.0 million per annum plus the selling
price of
fixed assets for such Fiscal Year. At June 30, 1996, the Company
was in
compliance with all the covenants under RHI's Credit Agreement.
Banner has a credit agreement (the "Banner Credit Agreement")
which
provides Banner and its subsidiaries with funds for working capital
and
potential acquisitions. On June 30, 1996, The Banner Credit
Agreement
consisted of a $55.0 million term loan and a $71.5 million
revolving credit
facility, both of which initially bear interest at prime plus 1
1/4% or LIBOR
plus 2 1/2%. Interest rates on Banner's borrowings, whether
computed at the
prime rate or LIBOR, may increase by 1/4% or decrease by up to 1%
based upon
certain performance criteria. On June 30, 1995, Banner's
performance level
resulted in borrowings under the Banner Credit Agreement being at
the
initial interest rates for the quarter ending September 30, 1996.
The Banner
Credit Agreement was amended on July 1, 1996, to provide additional
financing
with a $30.0 million seven-year term loan ("Tranche B Loan") and
requires
that loans made to Banner do not exceed a defined borrowing base,
which is
based upon a percentage of inventories and accounts receivable.
The Tranche
B Loan bears interest at Prime plus 1 3/4% or LIBOR plus 3%.
Banner's term
loans require certain semiannual loan payments. Banner's revolving
credit
facility is subject to a non-use fee of 1/2% of the unused
availability.
Substantially all of Banner's assets are pledged as collateral
under the
Banner Credit Agreement. The Banner Credit Agreement matures
August 2001.
The Banner Credit Agreement requires quarterly compliance with
various
financial and non-financial loan covenants, including maintaining
a minimum
net worth, and minimum ratios of interest coverage, fixed charge
coverage,
and debt to earnings before interest, taxes, depreciation and
amortization.
Banner also has certain limitations on the incurrence of additional
debt. As
of June 30, 1996, Banner was in compliance with all covenants
under its
credit agreement.
Banner has several interest rate hedge agreements ("Hedge
Agreements")
to manage its exposure to increases in interest rates on its
variable rate
debt. The Hedge Agreements provide interest rate protection on
$60.0 million
of debt through September 2000, by providing a cap of 7% if the
90-day LIBOR
rate exceeds 7%. If the 90-day LIBOR rate drops below 5%, Banner
will be
required to pay a floor rate of approximately 6%.
IMPACT OF FUTURE ACCOUNTING CHANGES
Accounting For The Impairment Of Long-Lived Assets
- --------------------------------------------------
And For Long-Lived Assets To Be Disposed Of
- -------------------------------------------
In March 1995, the Financial Accounting Standards Board issued
Statement
of Financial Accounting Standards No. 121 ("SFAS 121") "Accounting
for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of".
SFAS 121 establishes accounting standards for the impairment of
long-lived
assets, certain identifiable intangibles, and goodwill related to
those
assets to be held and used, and for long-lived assets and certain
identifiable intangibles to be disposed of. SFAS 121 is required
to be
implemented by the Company on, or before, July 1, 1996. The
Company's
present policy is identical to the policy prescribed by SFAS 121;
therefore
there will be no effect from implementation.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------------------------------------------------------
The following consolidated financial statements of the Company
and the
report of the Company's independent public accountants with respect
thereto,
are set forth below.
Page
- ----
Consolidated Balance Sheets as of June 30, 1996 and 1995....
23
Consolidated Statements of Earnings - The three years ended
June 30, 1996, 1995 and 1994.............................
25
Consolidated Statements of Stockholder's Equity - The three
years ended June 30, 1996, 1995 and 1994..................
26
Consolidated Statements of Cash Flows - The three years
ended June 30, 1996, 1995 and 1994........................
27
Notes to Consolidated Financial Statements..................
29
Report of Independent Public Accountants....................
61
Supplementary data regarding "Quarterly Financial Information
(Unaudited)" is
set forth under Item 8 in Note 22 to Consolidated Financial
Statements.
<PAGE>
<TABLE>
RHI HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
June 30,
June 30,
ASSETS 1996
1995
- ------ ------------
- ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents, $6,761 and
$545 restricted............................ $ 36,112 $
64,174
Short-term investments....................... 10,427
4,045
Accounts receivable-trade, less allowances
of $6,071 and $3,776....................... 96,488
61,939
Notes receivable............................. 170,384
--
Inventories:
Finished goods............................ 235,859
38,117
Work-in-process........................... 16,294
19,950
Raw materials............................. 18,586
19,531
---------
- ---------
270,739
77,598
Prepaid expenses and other current assets.... 20,248
23,621
Net current assets of discontinued operations --
34,626
---------
- ---------
Total Current Assets......................... 604,398
266,003
Property, plant and equipment, net........... 87,281
132,170
Net assets held for sale..................... 43,609
49,753
Net noncurrent assets of discontinued
operations................................ --
88,209
Cost in excess of net assets acquired,
(Goodwill) less accumulated amortization
of $31,119 and $25,475.................... 135,241
149,187
Investments and advances, affiliated
companies................................. 120,890
107,472
Prepaid pension assets....................... 57,660
59,567
Deferred loan costs.......................... 3,822
7,107
Other assets................................. 8,627
9,976
---------
- ---------
Total Assets................................. $1,061,528 $
869,444
=========
=========
The accompanying Notes to Consolidated Financial Statements are an
integral
part of these statements.
</TABLE>
<TABLE>
RHI HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
June 30,
June 30,
LIABILITIES AND STOCKHOLDER'S EQUITY 1996
1995
- ------------------------------------ ------------
- ------------
Current Liabilities:
<S> <C> <C>
Bank notes payable and current maturities
of long-term debt........................... $ 84,678 $
16,803
Accounts payable............................. 64,486
37,323
Accrued liabilities:
Salaries, wages and commissions........... 17,274
11,092
Employee benefit plan costs............... 6,373
1,064
Insurance................................. 16,134
16,595
Interest.................................. 5,342
10,031
Other..................................... 29,864
31,271
Income tax payable........................ 60,012
--
---------
- ---------
134,999
70,053
Total Current Liabilities.................... 284,163
124,179
Long-term debt............................... 194,233
336,268
Other long-term liabilities.................. 17,692
18,342
Retiree health care liabilities.............. 44,452
44,710
Noncurrent income taxes...................... 33,569
44,135
Minority interest in subsidiaries............ 58,647
24,117
Redeemable preferred stock of subsidiary..... --
17,722
-------
- -------
Total liabilities............................ 632,756
609,473
Stockholder's Equity:
Common Stock................................. 100
100
Preferred Stock.............................. 100
100
Paid-in capital.............................. 229,260
229,533
Retained earnings............................ 183,355
46,102
Cumulative translation adjustment............ 2,751
3,861
Net unrealized holding gain (loss) on
available-for-sale securities.............. 13,206
(19,725)
---------
- ---------
Total Stockholder's Equity................... 428,772
259,971
---------
- ---------
Total Liabilities and Stockholder's Equity... $1,061,528 $
869,444
=========
=========
The accompanying Notes to Consolidated Financial Statements are an
integral
part of these statements.
</TABLE>
<TABLE>
RHI HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands)
<CAPTION>
For the Years Ended June
30,
- --------------------------------
1996 1995
1994
-------- --------
- --------
<S> <C> <C>
<C>
Revenue:
Net sales of products............ $443,105 $286,929
$203,456
Revenues from services........... 54,820 77,733
74,190
Other income, net................ 507 2,854
6,106
------- -------
- -------
498,432 367,516
283,752
Costs and Expenses:
Cost of goods sold............... 343,596 244,812
175,041
Cost of services................. 39,005 54,753
52,324
Selling, general & administrative 99,141 70,700
46,381
Research and development......... 94 974
1,435
Amortization of goodwill......... 4,539 4,381
4,265
Restructuring.................... 2,319 --
18,860
Unusual items.................... -- --
6,000
------- -------
- -------
488,694 375,620
304,306
Operating income (loss)............ 9,738 (8,104)
(20,554)
Interest expense................... 40,768 43,182
43,623
Interest income.................... (10,152) (4,511)
(3,035)
------- -------
- -------
Net interest expense............... 30,616 38,671
40,588
Investment income, net............. 4,574 5,954
6,004
Equity in earnings (loss) of
affiliates....................... 4,602 2,016
(6,132)
Minority interest.................. (1,952) (2,293)
(2,500)
Non-recurring income............... 162,470 --
129,082
------- -------
- -------
Earnings (loss) from continuing
operations before income taxes... 148,816 (41,098)
65,312
Income tax provision (benefit)..... (4,783) (9,364)
29,142
------- -------
- -------
Earnings (loss) from continuing
operations........................ 153,599 (31,734)
36,170
Earnings from discontinued
operations, net................... 9,186 13,994
4,942
Gain (loss) on disposal of
discontinued operations, net...... 53,773 (290)
--
------- -------
- -------
Earnings (loss) before extraordinary
items and accounting changes....... 216,558 (18,030)
41,112
Extraordinary items, net............ (10,436) --
(243)
Cumulative effect of accounting
changes, net..................... -- --
(6,767)
------- -------
- -------
Net earnings (loss)................ $206,122 $(18,030) $
34,102
======= =======
=======
The accompanying Notes to Consolidated Financial Statements are an
integral
part of these statements.
</TABLE>
<TABLE>
RHI HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(In thousands)
<CAPTION>
Unrealized
Gain (Loss) Additional
On Minimum
Cumulative
Noncurrent Liability
Common Pref. Paid-in Retained Translation
Marketable For
Stock Stock Capital Earnings Adjustment
Securities Pensions Total
------ ----- ------- -------- -----------
- ---------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
<C> <C>
BALANCE, July 1, 1993 $100 $100 $225,879 $ 50,881 $ (625)
$(18,986) $ - $257,349
- ----------------------
Net earnings.......... - - - 34,102 -
- - 34,102
Cumulative translation
adjustment, net...... - - - - 1,497
- - 1,497
Dividends to parent... - - - (10,000) -
- - (10,000)
Net unrealized holding
gain on noncurrent
marketable securities - - - - -
721 - 721
Additional minimum
liability for
pensions............. - - - - -
- (1,405) (1,405)
Transfer of subsidiary
from parent.......... - - - (851) -
- - (851)
Capital contribution
from parent.......... - - 3,381 - -
- - 3,381
Gain on purchase of
preferred stock of
subsidiary........... - - 37 - -
- - 37
--- --- ------- ------- -----
- ------- ------ -------
BALANCE, June 30, 1994 100 100 229,297 74,132 872
(18,265) (1,405) 284,831
- ----------------------
Net loss.............. - - - (18,030) -
- - (18,030)
Cumulative translation
adjustment, net..... - - - - 2,989
- - 2,989
Dividends to parent... - - - (10,000) -
- - (10,000)
Net unrealized holding
loss on available-
for-sale securities. - - - - -
(1,460) - (1,460)
Reduction of minimum
liability for pensions- - - - -
- 1,405 1,405
Gain on purchase of
preferred stock of
subsidiary.......... - - 236 - -
- - 236
--- --- ------- ------- -----
- ------- ------ -------
BALANCE, June 30, 1995 100 100 229,533 46,102 3,861
(19,725) - 259,971
- ----------------------
Net earnings.......... - - - 206,122 -
- - 206,122
Cumulative translation
adjustment.......... - - - - (1,110)
- - (1,110)
Dividends to parent... - - - (68,869) -
- - (68,869)
Net unrealized holding
gain on available-
for-sale securities. - - - - -
32,931 - 32,931
Gain realized on
retirement of
preferred stock of
subsidiary.......... - - (273) - -
- - - (273)
--- --- ------- ------- -----
- ------- ----- -------
BALANCE, June 30, 1996$100 $100 $229,260 $183,355 $2,751 $
13,206 $ - $428,772
=== === ======= ======= =====
======= ===== =======
The accompanying Notes to Consolidated Financial Statements are an
integral
part of these statements.
</TABLE>
<TABLE>
RHI HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<CAPTION>
For the Years Ended
June 30,
- ----------------------------
1996 1995
1994
-------- --------
- --------
<S> <C> <C>
<C>
Cash flows from operation activities:
Net earnings (loss)....................... $206,122 $(18,030)
$ 34,102
Adjustments to reconcile net earnings
(loss) to net cash provided by (used for)
operating activities:
Gain on the merger of subsidiaries
(See Notes 2 & 4)..................... (162,703) --
--
Gain on the sale of discontinued
operations (See Note 5)............... (53,942) --
--
Net gain on sale of Rexnord investment.. -- --
(129,082)
Extraordinary items, net of cash charges 4,501 --
--
Cumulative effect of accounting changes,
net................................... -- --
6,767
Depreciation and amortization........... 28,571 29,798
26,810
Accretion of discount on long-term
liabilities........................... 3,705 3,713
3,288
Provision for restructuring and unusual
items (excluding cash payments of
$777 in 1996 and $6,020 in 1994)...... 1,542 --
18,840
(Gain) loss on sale of property, plant
and equipment......................... (4) 655
231
Undistributed (earnings) loss of
affiliates........................... (3,741) (2,016)
6,132
Minority interest....................... 1,952 2,293
2,500
Change in trading securities............ (5,346) 1,879
--
Change in accounts receivable........... (7,300) (14,945)
(1,540)
Change in inventories................... (11,006) (9,136)
4,281
Change in other current assets.......... (1,392) 1,648
9,824
Change in non-current assets............ (1,039) 4,928
4,265
Change in accounts payable, accrued
and other liabilities................. (16,359) 132
(7,994)
Non-cash charges and working capital of
discontinued operations............... -- 3,568
17,131
-------- --------
- --------
Net cash provided by (used for) operating
activities.............................. (16,439) 4,487
(4,445)
Cash flows from investing activities:
Net proceeds received from sale of
discontinued operations................. 71,559 --
--
Proceeds from sale of Rexnord investment.. -- --
178,089
Proceeds used for investments securities,
net..................................... (8,735) (8,396)
(1,584)
Equity investments in affiliates.......... (2,191) (13,000)
--
Acquisition of subsidiaries, net of cash
acquired................................ -- (12,061)
(1,905)
Minority interest in subsidiaries......... (2,817) --
--
Collections on notes and other receivables
related to operations sold.............. -- --
1,183
Purchase of property, plant and equipment. (15,108) (16,212)
(12,221)
Proceeds from sale of property, plant and
equipment............................... 107 151
971
Change in net assets held for sale........ 5,547 1,914
(1,291)
Investing activities of discontinued
operations.............................. -- (3,561)
(3,617)
-------- --------
- --------
Net cash (used for) provided by investing
activities................................ 48,362 (51,165)
159,625
The accompanying Notes to Consolidated Financial Statements are an
integral
part of these statements.
</TABLE>
<TABLE>
RHI HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(In thousands)
<CAPTION>
For the Years Ended
June 30,
- ----------------------------
1996 1995
1994
-------- --------
- --------
<S> <C> <C>
<C>
Cash flows from financing activities:
Proceeds from issuance of debt............ $152,847 $ 72,450
$ 68,558
Debt repayments and repurchase of
debentures.............................. (169,759) (46,932)
(176,148)
Payment of dividends...................... (42,100) (10,000)
(1,007)
Capital contribution from TFC............. -- --
3,381
-------- --------
- --------
Net cash provided by (used for) financing
activities................................ (59,012) 15,518
(105,216)
Effects of exchange rate changes on cash.... (973) 1,114
1,418
Change in cash and cash equivalents......... (28,062) (30,046)
51,382
Cash and cash equivalents, beginning of
year...................................... 64,174 94,220
42,838
-------- --------
- --------
Cash and cash equivalents, end of year...... $ 36,112 $ 64,174
$ 94,220
======== ========
========
The accompanying Notes to Consolidated Financial Statements are an
integral
part of these statements.
</TABLE>
RHI HOLDINGS, INC. AND CONSOLIDATED SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Corporate Structure: RHI Holdings, Inc. (the "Company"),
formerly known
as Rexnord Holdings Inc., is a holding company incorporated in the
State of
Delaware. It has two principal operating subsidiaries, Fairchild
Holding
Corporation ("FHC") and Banner Aerospace, Inc., ("Banner"). The
Company is
a wholly-owned subsidiary of The Fairchild Corporation ("TFC").
The Company
also holds significant equity interests in Shared Technologies
Fairchild Inc.
("STFI") and Nacanco Paketleme ("Nacanco").
Fiscal Year: The fiscal year ("Fiscal") of the Company ends
June 30.
All references herein to "1996", "1995", and "1994" mean the fiscal
years
ended June 30, 1996, 1995, and 1994, respectively.
Principles of Consolidation: The consolidated financial
statements are
prepared in accordance with generally accepted accounting
principles and
include the accounts of the Company and its wholly-owned and
majority-owned
subsidiaries. Prior period financial information has been restated
for
discontinued operations, which includes the D-M-E Company ("DME")
and
Fairchild Data Corporation ("Data"). Investments in companies in
which
ownership interest range from 20 to 50 percent are accounted for
using the
equity method (see Note 9). All significant intercompany accounts
and
transactions have been eliminated in consolidation.
Cash Equivalents/Statements of Cash Flows: For purposes of
these
statements, the Company considers all highly liquid investments
with original
maturity dates of three months or less as cash equivalents. Total
net cash
disbursements (receipts) made by the Company for income taxes and
interest
were as follows:
<TABLE>
<CAPTION>
1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Interest....................... $ 41,629 $ 39,871 $ 38,548
Income taxes................... 7,702 221 (931)
</TABLE>
Restricted Cash: On June 30, 1996 and 1995, the Company had
restricted
cash of $6,761 and $545, all of which is maintained as collateral
for certain
debt facilities. Cash investments are in high grade, short-term
certificate
of deposits.
Investments: On July 1, 1994, the Company adopted Statement
of
Financial Accounting Standards No. 115 "Accounting for Certain
Investments in
Debt and Equity Securities" ("SFAS 115"). There was no cumulative
effect as
a result of adopting SFAS 115 in Fiscal 1995.
Management determines the appropriate classification of its
investments
at the time of acquisition and reevaluates such determination at
each balance
sheet date. Trading securities are carried at fair value, with
unrealized
holding gains and losses included in earnings. Available-for-sale
securities
are carried at fair value, with unrealized holding gains and
losses, net of
tax, reported as a separate component of shareholder's equity.
Investments
in equity securities that do not have readily determinable fair
values are
stated at cost, adjusted for permanent impairment, and categorized
as other
investments. At June 30, 1994, the Company used the lower of cost
or market
method for its investments. In determining realized gains and
losses, the
cost of securities sold is based on the specific identification
method.
Interest on corporate obligations, as well as dividends on
preferred stock
are accrued at the balance sheet date.
Inventories: Inventories are stated at the lower of cost or
market.
Cost is determined using the last-in, first-out ("LIFO") method at
principal
domestic aerospace manufacturing operations and using the first-in,
first-out
("FIFO") method elsewhere. If the FIFO inventory valuation method
had been
used exclusively, inventories would have been approximately $4,756
and $5,168
higher at June 30, 1996 and 1995, respectively. Inventories from
continuing
operations are valued as follows:
<TABLE>
<CAPTION>
June 30,
June 30,
1996
1995
--------
- --------
<S> <C> <C>
Last-in, first-out (LIFO)................... $239,396 $
34,866
First-in, first-out (FIFO).................. 31,343
42,732
-------
- -------
Total inventories........................... $270,739 $
77,598
=======
=======
</TABLE>
Properties and Depreciation: Properties are stated at cost
and
depreciated over estimated useful lives, generally on a
straight-line basis.
For Federal income tax purposes, accelerated depreciation methods
are used.
No interest costs were capitalized in any of the years presented.
Property,
plant, and equipment consisted of the following:
<PAGE>
<TABLE>
<CAPTION>
June 30,
June 30,
1996
1995
--------
- --------
<S> <C> <C>
Land...................................... $ 10,408 $
9,992
Buildings and improvements................ 39,080
33,930
Machinery and equipment................... 94,406
162,594
Transportation vehicles................... 743
607
Furniture and fixtures.................... 16,498
8,851
Construction in progress.................. 2,329
2,569
-------
- -------
163,464
218,543
Less: Accumulated depreciation........... (76,183)
(86,373)
-------
- -------
Net property, plant, and equipment........ $ 87,281
$132,170
=======
=======
</TABLE>
Amortization of Goodwill: The excess of the cost of purchased
businesses over the fair value of their net assets at acquisition
dates
(goodwill) is being amortized on a straight-line basis over 40
years.
Deferred Loan Costs: Deferred loan costs associated with
various debt
issues are being amortized over the terms of the related debt,
based on the
amount of debt outstanding, using the effective interest method.
Amortization expense for these loan costs for Fiscal 1996, 1995 and
1994 was
$2,925, $2,918, and $2,948, respectively.
Impairment of Long-Lived Assets: The Company reviews its
long-lived
assets, including property, plant and equipment, identifiable
intangibles and
goodwill, for impairment whenever events or changes in
circumstances indicate
that the carrying amount of the assets may not be fully
recoverable. To
determine recoverability of its long-lived assets the Company
evaluates the
probability that future undiscounted net cash flows, without
interest
charges, will be less than the carrying amount of the assets.
Impairment is
measured based on the difference between the carrying amount of the
assets
and fair value.
In March 1995, the Financial Accounting Standards Board issued
Statement
of Financial Accounting Standards No. 121 ("SFAS 121"), "Accounting
for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of".
SFAS 121 establishes accounting standards for the impairment of
long-lived
assets, certain identifiable intangibles, and goodwill related to
those
assets to be held and used, and for long-lived assets and certain
identifiable intangibles to be disposed of. SFAS 121 is required
to be
implemented by the Company on, or before, July 1, 1996. Since the
Company's
present policy is identical to the policy prescribed by SFAS 121,
there will
be no effect from implementation.
Foreign Currency Translation: All balance sheet accounts of
foreign
subsidiaries are translated at current exchange rates at the end of
the
accounting period. Income statement items are translated at
average exchange
rates during the period. The resulting translation adjustment is
recorded as
a separate component of stockholder's equity. Foreign transaction
gains and
losses are included in other income and were not significant in
Fiscal 1996,
1995 and 1994.
Research and Development: Company-sponsored research and
development
expenditures are expensed as incurred.
Non-recurring Items: Non-recurring income for Fiscal 1996 was
$162,470
and includes a $163,130 nontaxable gain resulting from the merger
of
Fairchild Communications Services Company into Shared Technologies
Inc. (See
Note 2). Expenses related to other alternative transactions
considered were
netted against the above gain. Non-recurring income for Fiscal
1994
consisted of the net pretax gain of $129,082 on the sale of Rexnord
Corporation ("Rexnord") stock (see Note 9).
Use of Estimates: The preparation of financial statements in
conformity
with generally accepted accounting principles requires management
to make
estimates and assumptions that affect the reported amounts of
assets and
liabilities and disclosures of contingent assts and liabilities at
the date
of the financial statements and the reported amounts of revenues
and expenses
during the reported period. Actual results could differ from those
estimates.
Reclassification: Certain amounts in prior years' financial
statements
have been reclassified to conform with the 1996 presentation.
2. MERGER AGREEMENT
----------------
The Company, TFC and Fairchild Industries, Inc. ("FII", the
Company's
former subsidiary), entered into an Agreement and Plan of Merger
dated as of
November 9, 1995 (as amended, the "Merger Agreement") with Shared
Technologies Inc. ("STI"). On March 13, 1996, in accordance with
the Merger
Agreement, STI succeeded to the telecommunications systems and
services
business operated by the Company's Fairchild Communications
Services Company
("FCSC").
The transaction was effected by a Merger of FII with and into
STI (the
"Merger") with the surviving company renamed Shared Technologies
Fairchild
Inc. ("STFI"). Prior to the Merger, FII transferred all of its
assets to,
and all of its liabilities were assumed by FHC, except for the
assets and
liabilities of FCSC, and $223,500 of the FII's existing debt and
preferred
stock consisting of (i) the $40,027 liquidation value of the
outstanding
Series A and Series C Preferred Stock of FII, (ii) the $125,000
principal
amount outstanding of FII 12 1/4% Senior Notes due 1999 (the
"Senior Notes"),
and (iii) an amount of bank and other indebtedness of approximately
$58,473
(the "Assumed Indebtedness"). The stock of FHC was then
distributed to RHI.
No taxable gain or loss was recognized, in the Company's view, on
the
transfer of the FII assets and liabilities to FHC, and distribution
of FHC
stock to RHI. As part of the Merger Agreement, FII made a cash
tender offer
to purchase all of the outstanding Senior Notes and obtained such
Noteholders' consent to amend the indenture under which the Senior
Notes were
issued to remove all covenants which could be amended or deleted by
majority
vote (the "Tender Offer") (see Note 10). Pursuant to the Merger,
an amount
sufficient to redeem the Series A and Series C Preferred Stock at
their
liquidation value ($45.00 per share plus accrued and unpaid
dividends) was
placed with Chemical Mellon Shareholder Services as Escrow Agent.
Also as
part of the Merger, STFI, (i) purchased the $125,000 aggregate
principal
amount of Senior Notes tendered pursuant to the Tender Offer, and
(ii) repaid
in full the Assumed Indebtedness.
As a result of the Merger, the Company received (i) 6,000,000
shares of
Common Stock of STFI (representing approximately 41% of the
outstanding
shares after giving effect to such issuance), (ii) shares of 6%
Cumulative
Convertible Preferred Stock of STFI having an aggregate liquidation
preference of $25,000 (subject to upward adjustment), recorded at
a fair
value of $20,500, and which are convertible into Common Stock of
STFI at a
conversion price of $6.375 per share (which, if converted, would
represent,
together with the other Common Stock issued to the Company,
approximately 42%
of the Common Stock of STFI on a fully diluted basis), and (iii)
shares of a
Special Preferred Stock having an initial liquidation preference of
$20,000
(which could accrue up to a maximum of $30,000 over a ten-year
period, if not
redeemed earlier), recorded at a fair value of $8,500. In
connection with
its stock ownership, the Company has the right to elect four of the
eleven
members of the Board of Directors of STFI and have agreed, subject
to certain
exceptions, not to sell any of STFI's shares for a two-year period.
The Merger was structured as a reorganization under section
368(a)(1)(A)
of the Internal Revenue Code of 1986, as amended. In Fiscal 1996,
the
Company recorded a $163,130 non-recurring gain from this
transaction.
3. ACQUISITIONS
------------
On June 10, 1994, the Company acquired 100% of the Common
Stock of
Fairchild Convac GmbH ("Fairchild Convac")for approximately $4,700.
Fairchild Convac is a leading designer and manufacturer of high
precision
state-of-the-art wet processing tools, equipment and systems
required for the
manufacture of semiconductor chips and related products, compact
and optical
storage discs and liquid crystal displays. The Company reports the
results
of Fairchild Convac as part of its Industrial Products segment.
On September 9, 1994, the Company acquired all of the
outstanding Common
Stock of Fairchild Scandinavian Bellyloading Company AB ("SBC").
SBC is a
designer and manufacturer of a patented cargo loading system, which
is
installed in the cargo area of commercial aircraft. Several major
airlines
are expected to equip existing fleets with the SBC system over the
next two
to three years. The Company reports the results of SBC as part of
its
Industrial Products segment.
On November 28, 1994, FCSC completed the acquisition of
substantially
all of the telecommunications assets of JWP Telecom, Inc. ("JWP")
for
approximately $11,000, plus the assumption of approximately $3,000
of
liabilities. JWP is a telecommunications system integrator,
specializing in
the distribution, installation and maintenance of voice and data
communications equipment. In the first quarter of Fiscal 1995, FCSC
acquired
all the shared telecommunications assets of Eaton & Lauth Co.,
Inc., for
approximately $550.
4. MAJORITY INTEREST BUSINESS COMBINATION
--------------------------------------
Effective February 25, 1996, the Company completed a transfer
of the
Company's Harco Division ("Harco") to Banner Aerospace, Inc.
("Banner") in
exchange for 5,386,477 shares of Banner common stock. The exchange
has
increased the Company's ownership of Banner common stock from
approximately
47.2% to 59.3%, resulting in the Company becoming the majority
shareholder of
Banner. Accordingly, the Company consolidated Banner on February
25, 1996.
The Company recorded a $427 non-recurring loss from outside
expenses incurred
for this transaction in 1996. Banner is a leading international
supplier to
the aerospace industry as a distributor, providing a wide range of
aircraft
parts and related support services. Harco is a distributor of
precision
fasteners to the aerospace industry.
5. DISCONTINUED OPERATIONS AND NET ASSETS HELD FOR SALE
----------------------------------------------------
During the Fiscal 1996 second quarter, FII adopted a formal
plan to sell
DME, a mold equipment manufacturer, and Data, a satellite
communications
company.
On February 22, 1996, pursuant to the Asset Purchase Agreement
dated
January 26, 1996 (the "closing date"), the Company, through its
subsidiaries,
completed the sale of certain assets, liabilities and the business
of DME to
Cincinnati Milacron Inc. ("CMI") for a sales price of approximately
$244,331,
as adjusted. The sales price consists of $74,000 in cash, and two
8%
promissory notes in the aggregate principal amount of $170,331
(together, the
"8% CMI Notes"). The 8% CMI Notes were due to mature one year
following the
closing date; provided that the Company had the right to require
prepayment
of, and CMI had the right to prepay the 8% CMI Notes after the
six-month
anniversary of the closing date. On July 29, 1996, CMI paid in
full the 8%
CMI Notes.
As a result of the sale of DME, the Company recorded a gain on
disposal
of discontinued operations, of approximately $54,012, net of a
$61,929 tax
provision, in Fiscal 1996.
On January 27, 1996, FII completed the sale of Data to SSE
Telecom, Inc.
("SSE") for book value of approximately $4,400 and 100,000 shares
of SSE's
common stock valued at $9.0625 per share, or $906, at January 26,
1996, and
warrants to purchase an additional 50,000 shares of SSE's common
stock at
$11.09 per share. In addition, the Company has an opportunity to
earn an
additional 100,000 shares based on the future performance of SSE
during the
twelve months following the date of sale. There was no material
gain or loss
from this transaction.
DME and Data have been accounted for as discontinued
operations and the
prior periods financial statements have been restated to reflect
the
discontinuance of these companies. The combined net sales of DME
and Data
totaled $108,131, $180,773 and $166,499 for Fiscal 1996, 1995 and
1994,
respectively. Earnings from discontinued operations was $9,186,
net of
$5,695 for taxes in 1996, $13,994, net of $10,183 for taxes in
1995, and
$4,942, net of $7,317 for taxes and $9,247 for the net cumulative
effect of
accounting changes in 1994. The components of net assets of
discontinued
operations on the consolidated balance sheet are as follows:
<TABLE>
<CAPTION>
June 30,
1995
-------
<S> <C>
Accounts receivable............................... $ 28,161
Inventories....................................... 26,645
Prepaid and other current assets.................. 1,365
Accounts payable.................................. (9,801)
Other current liabilities......................... (11,744)
-------
Net current assets of discontinued operations..... $ 34,626
=======
Property, plant & equipment, net of accumulated
depreciation..................................... 37,986
Goodwill, net of accumulated amortization......... 55,664
Other assets...................................... 4,602
Retiree health care liabilities................... (4,764)
Minority interest in subsidiaries................. (416)
Cumulative translation adjustment................. (4,863)
-------
Net noncurrent assets of discontinued operations.. $ 88,209
=======
</TABLE>
The Company recorded after tax losses on the disposal of
discontinued
operations, of $259 and $368 in 1995 and 1994, respectively. These
losses
related primarily to (i) liability insurance premiums paid for
properties of
discontinued operations, and workers' compensation claims for
employees of
operations which were previously discontinued.
Net assets held for sale at June 30, 1996, includes two
parcels of real
estate in California, a 68 acre parcel of real estate located in
Farmingdale,
New York, and several other parcels of real estate located
primarily
throughout the continental United States, which the Company plans
to sell,
lease or develop, subject to the resolution of certain
environmental matters
and market conditions. Also included in net assets held for sale
are limited
partnership interests in (i) a real estate development joint
venture, and
(ii) a landfill development partnership.
Net assets held for sale are stated at the lower of cost or at
estimated
net realizable value, which reflect anticipated sales proceeds, and
other
carrying costs to be incurred during the holding period. Interest
is not
allocated to net assets held for sale.
6. PROFORMA FINANCIAL STATEMENTS (UNAUDITED)
-----------------------------------------
The following unaudited pro forma information for the twelve
months
ended June 30, 1996 and June 30, 1995, provides the results of the
Company's
operations as though (i) the disposition of DME and Data, (ii) the
Merger of
FCS, and (iii) the transfer of Harco to Banner, resulting in the
consolidation of Banner, had been in effect since the beginning of
each
period. The pro forma information is based on the historical
financial
statements of the Company, DME, FCSC and Banner, giving effect to
the
aforementioned transactions. In preparing the pro forma data,
certain
assumptions and adjustments have been made which (i) reduce
interest expense
for revised debt structures, (ii) increase interest income for
notes
receivable, (iii) reduce minority interest from Series C Preferred
Stock of
FII being redeemed, and (iv) adjust equity in earnings of
affiliates to
include the estimated results of STFI.
The following unaudited pro forma financial information is not
necessarily indicative of the results of operations that actually
would have
occurred if the transactions had been in effect since the beginning
of each
period, nor is it necessarily indicative of future results of the
Company.
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Sales................................... $598,184 $488,885
Loss from continuing operations......... (601) (16,792)
Net loss................................ (601) (17,082)
</TABLE>
The pro forma financial information has not been adjusted for
non-
recurring income and gains from disposal of discontinued operations
that have
been or are expected to be incurred from these transactions within
the
ensuing year.
7. EXTRAORDINARY ITEMS
-------------------
During Fiscal 1996, the Company used the Merger transaction
and cash
available to retire fully all of the Senior Notes, FII's 9 3/4%
subordinated
debentures due 1998, and bank loans under a credit agreement of a
former
subsidiary of the Company, VSI Corporation. The redemption of the
Senior
Notes at a premium, consent fees paid to holders of the Senior
Notes, the
write off of the original issue discount on FII 9 3/4% subordinated
debentures and the write off of the remaining deferred loan fees
associated
with the issuance of the debt retired, resulted in an extraordinary
loss of
$10,436, net of a tax benefit.
During Fiscal 1994, the Company recognized extraordinary gains
and
losses from the early extinguishment of debt resulting from
repurchases of
its debentures on the open market or in negotiated transactions,
and the
write offs of certain deferred costs associated with the issuance
of
securities repurchased. Early extinguishment of the Company's debt
resulted
in an extraordinary loss of $243, net of a $131 tax benefit, in
Fiscal 1994.
8. INVESTMENTS
-----------
Short-term investments at June 30, 1996, consist primarily of
common
stock investments in public corporations, which are classified as
trading
securities. All other short-term and all long-term investments do
not have
readily determinable fair values and primarily consist of
investments in
limited partnerships and common stocks. A summary of investments
held by the
Company consists of the following:
<TABLE>
<CAPTION>
1996 1995
------------------
- ------------------
Aggregate Aggregate
Name of Issuer or Fair Cost Fair
Cost
Title of Each Issue Value Basis Value
Basis
- ------------------- --------- ------- ---------
- -------
Short-term investments:
- -----------------------
<S> <C> <C> <C> <C>
Trading securities:
Common Stock................. $10,361 $ 5,954 $ 3,968 $
5,088
Other Investments.............. 66 66 77
77
------ ------ ------
- ------
$10,427 $ 6,020 $ 4,045 $
5,165
====== ====== ======
======
Other long-term investments:
- ----------------------------
Other investments.............. $ 93 $ 93 $ 346 $
346
------ ------ ------
- ------
$ 93 $ 93 $ 346 $
346
====== ====== ======
======
</TABLE>
Investment income is summarized as follows:
<TABLE>
<CAPTION>
1996 1995
1994
------ ------
- ------
<S> <C> <C> <C>
Gross realized gain (loss) from sales...... $(1,744) $ 3,947 $
3,919
Change in unrealized holdings loss on
trading securities....................... 5,527 (36)
- --
Lower of cost or market valuation
adjustment............................... -- --
(1,084)
Gross realized loss from impairments....... -- (402)
(186)
Dividend income............................ 791 2,445
3,355
------ ------
- ------
$ 4,574 $ 5,954 $
6,004
====== ======
======
</TABLE>
9. INVESTMENTS AND ADVANCES - AFFILIATED COMPANIES
-----------------------------------------------
The following table presents summarized financial statement
information
on a combined 100% basis of the Company's principal investments,
which are
accounted for using the equity method.
<TABLE>
<CAPTION>
For the years ended June 30,
- --------------------------------
Statement of Earnings: 1996 1995 1994
-------- --------
- --------
<S> <C> <C> <C>
Net sales..................... $351,695 $313,888
$283,055
Gross profit.................. 114,248 100,644
98,689
Earnings from continuing
operations.................. 15,183 9,623
17,231
Discontinued operations, net.. -- --
(12,996)
Net earnings.................. 15,183 9,623
4,235
Balance Sheet at June 30,:
Current assets................ $ 93,925 $257,314
Noncurrent assets............. 377,547 61,348
Total assets.................. 471,472 318,662
Current liabilities........... 87,858 61,174
Noncurrent liabilities........ 275,025 101,256
</TABLE>
On June 30, 1995 the Company owned approximately 26.7% of
Nacanco common
stock, which was effectively purchased from TFC on January 2, 1995.
The
Company recorded equity earnings from its investment in Nacanco of
$4,546 in
1996 and $2,248 for the six months ended June 30, 1995.
Since March 13, 1996, as a result of the Merger in which the
Company
received a 41% interest in STFI, the Company has accounted for its
investment
in STFI using the equity method. Prior to March 13, 1996, the
Company
consolidated the results of FCSC, which was merged into STFI (see
Note 2).
The Company recorded equity earnings of $50 from the investment in
STFI
during the final 3 1/2 months of Fiscal 1996.
On June 30, 1996, the Company's investments in STFI consisted
of (i)
$20,988 carrying value for the $25,000 face value 6% cumulative
Convertible
Preferred Stock, (ii) $9,116 carrying value for the $20,000 face
value
Special Preferred Stock, and (iii) $455 carrying value for
6,200,000 shares
of common stock of STFI. At the close of trading on June 30, 1996,
STFI's
common stock was quoted at $7.25 per share. Based on this price,
the
Company's investment in STFI common stock has an approximate market
value of
$44,950. The Company is amortizing its discounted investment in
each of the
STFI issuances over the 11 and 12 year life of the issuances.
Included in
Fiscal 1996 equity earnings was $939 from such amortization.
Effective February 25, 1996, the Company increased its
percentage of
ownership of Banner Common Stock from 47.2% to approximately 59.3%.
Since
February 25, 1996, the Company is consolidating Banner's results.
Prior to
February 25, 1996, the Company accounted for its investment in
Banner using
the equity method and held its investment in Banner as part of
investments
and advances-affiliated companies. The Company recorded equity
earnings
(loss) of $363, $138 and $(5,697) from this investment for 1996,
1995 and
1994, respectively.
On December 23, 1993, the Company completed a sale of its
43.9% stock
interest in Rexnord to BTR Dunlop Holdings, Inc. ("BTR").
Accordingly, the
Company received $181,873 in gross proceeds and realized a pre-tax
gain on
the sale of $129,082 in Fiscal 1994. Prior to the sale of Rexnord,
the
Company recorded an equity loss of $905 from this investment for
1994. The
net earnings for Fiscal 1994, were decreased by recording the
Company's 43.9%
share of the cumulative charge which resulted from the adoption of
SFAS No.
106 and SFAS No. 109 at Rexnord. (See Notes 11 and 12).
In connection with the Company's December 23, 1993 sale of its
interest
in Rexnord Corporation to BTR Dunlop Holdings, Inc. ("BTR"), the
Company
placed shares of Banner, with a fair market value of $5,000, in
escrow to
secure the Company's remaining indemnification of BTR against a
contingent
liability. Once the contingent liability is resolved, the escrow
will be
released.
The Company is accounting for an investment in a public fund,
which is
controlled by an affiliated investment group of the Company, at
market value.
The amortized cost basis of the investment was $923 and had been
written down
by $185, before tax, to market value. The Company's gross
unrealized loss
was $120, net of tax from this investment in 1995.
The Company is accounting for its investments in TFC at market
value.
As of June 30, 1996, the carrying value of the Company's investment
in
4,369,400 shares of TFC common stock was $63,902 and included an
increase of
$19,297, before tax, to market value. The Company recorded a gross
unrealized gain (loss) of $49,156 and $(2,185) from its investment
in TFC
common stock in 1996 and 1995, respectively. In addition, the
Company's
amortized cost basis of its net investment in TFC debt was $5,637
on June 30,
1996, and was increased by $1,005, before tax, to market value in
1996. The
carrying value of investments and advances, affiliated companies
consists of
the following:
<TABLE>
<CAPTION>
June 30, June 30,
1996 1995
Investment in TFC: -------- --------
<S> <C> <C>
TFC stock........................... $ 63,902 $ 14,746
TFC 12.25% senior subordinated notes
due 1996.......................... -- 17,703
TFC 12% intermediate subordinated
debentures due 2002............... 6,642 5,675
-------- --------
$ 70,544 $ 38,124
Investment in Affiliated Companies:
Banner Aerospace................... $ -- $ 53,931
Nacanco............................ 19,034 15,248
STFI............................... 30,559 --
Others............................. 753 169
-------- --------
50,346 69,348
-------- --------
$ 120,890 $ 107,472
======== ========
</TABLE>
On June 30, 1996, none of the Company's $183,355 consolidated
retained
earnings was from undistributed earnings of 50 percent or less
owned
affiliates accounted for by the equity method.
10. NOTES PAYABLE AND LONG-TERM DEBT
--------------------------------
At June 30, 1996 and 1995, notes payable and long-term debt
consisted of
the following:
<TABLE>
<CAPTION>
June 30, June
30,
1996 1995
--------
- --------
<S> <C> <C>
Short-term notes payable (weighted
average interest rates of 8.5% and
8.3% in 1996 and 1995, respectively).. $ 76,321 $
5,448
=======
=======
Bank credit agreements.................. $112,500
$126,396
9 3/4% Subordinated Debentures, due 1998 --
2,999
12 1/4% Senior secured notes due 1999... --
125,000
11 7/8% Senior Subordinated Debentures
due 1997 through 1999................. 85,769
85,687
10.65% Industrial revenue bonds......... 1,500
1,500
Capital lease obligations interest from
10.25% to 10.5%....................... 65
1,253
Other notes payable, collateralized
by property or equipment, interest
from 6% to 9.4%....................... 2,756
4,788
-------
- -------
202,590
347,623
Less: Current maturities............... (8,357)
(11,355)
-------
- -------
Net long-term debt...................... $194,233
$336,268
=======
=======
</TABLE>
On March 13, 1996, FII consummated the Tender Offer and
purchased for
cash, upon terms and subject to conditions set forth in an Offer to
Purchase
and Consent Solicitations and related Letter of Transmittal (the
"Offer to
Purchase") dated as of December 22, 1995, all $125,000 of the
Senior Notes.
Terms of the Tender Offer, as amended and restated, required a
purchase price
of $1,063.90 per $1,000.00 principal amount of the Senior Notes and
accrued
and unpaid interest up to, but not including, the payment date.
During the
Tender Offer period, FII received consents solicited (the "Tender
Offer
Consent Solicitation") of the holders of the Senior Notes to (i)
the adoption
of the proposed amendments to the indenture pursuant to which the
Senior
Notes were issued (the "Indenture"), and (ii) the release of the
collateral
securing FII's obligations under the Senior Notes and the
Indenture, upon
terms set forth in the Offer to Purchase.
In addition, independent of the Tender Offer and the Tender
Offer
Consent Solicitation, FII also solicited and received consents to
the waiver
of any and all violations of the Indenture arising out of or
relating to (i)
the transfer by VSI Corporation ("VSI"), a wholly-owned subsidiary
of FII, of
the stock of Harco to Banner (see Note 4), and (ii) the sale by VSI
of DME to
CMI (see Note 5).
As part of the consummation of the Tender Offer, FII paid
holders of
Senior Notes who validly tendered Senior Notes pursuant to the
Tender Offer
and Consent Solicitations a consent fee of $25.00 per $1,000.00
principal
amount of Senior Notes tendered. FII paid an early consent fee
consisting of
$5.00 per $1,000.00 principal amount to holders of Senior Notes who
on or
prior to January 19, 1996, validly tendered their shares.
The Company maintains credit agreements (the "Credit
Agreements") with
a consortium of banks, which provides revolving credit facilities
to the
Company, FHC and Banner and term loans to FHC and Banner
(collectively the
"Credit Facilities").
On March 13, 1996, in connection with the Merger, the Company
replaced
the credit agreement of its former subsidiary, VSI Corporation,
(the "Prior
Credit Agreement") with an interim credit agreement (the "Interim
Credit
Agreement") at FHC. The Interim Credit Agreement provided FHC with
a $50,000
revolving credit facility and a $30,000 term loan, both of which
generally
had an interest rate of 1/2% over the prime rate or 1 1/2% over the
London
Interbank Offered Rate ("LIBOR")and required a commitment fee of
1/2% on the
unused portion of the revolving credit facility. The Prior Credit
Agreement
generally bore interest at 2 3/4% to 3 3/4% over LIBOR and required
a
commitment fee of 1%.
The Interim Credit Agreement required compliance with certain
financial
loan covenants, including achieving a minimum of cumulative
earnings before
interest, taxes, depreciation and amortization ("EBITDA Covenant")
at March
31, 1996, and maintaining a certain interest ratio coverage at
specified
periods. Additionally, the Interim Credit Agreement restricted the
FHC's
capital expenditures during the term of the Interim Credit
Agreement to
$6,000, in the aggregate. The Company was in compliance with these
covenants
throughout the life of the Interim Credit Agreement.
The Interim Credit Agreement matured on July 29, 1996, at
which time the
Company repaid in full the loans made under the Interim Credit
Agreement. On
July 26, 1996, the Company amended and restated the terms and
provisions of
the Interim Credit Agreement in their entirety (the "Restated
Credit
Agreement"). The Restated Credit Agreement extends to July 28,
2000, the
maturity of FHC's revolving credit termination date, and provides
FHC with a
revolving credit facility (the "FHC Revolver") that has a borrowing
base of
up to $52,000. The borrowing base is determined monthly based upon
specified
percentages of FHCs accounts receivable, inventories and the
appraised value
of equipment and real property. The FHC Revolver consists of up to
$40,000
available for domestic operations and $12,000 available for
European
operations. The FHC Revolver generally bears interest at a base
rate of
1 1/2% over the greater of (i) Citibank New York's base rate, or
(ii) the
Federal Funds Rate plus 1/2% for domestic borrowings and at 2 1/2%
over
Citibank London's base rate for foreign borrowings. FHC's Revolver
is
subject to a non-use commitment fee of 1/2% on the average unused
availability; and outstanding letters of credit are subject to fees
of 2 3/4%
per annum.
The Restated Credit Agreement requires FHC to comply with
certain
financial loan covenants, including maintaining a minimum net worth
of
$150,000 and maintaining certain interest and fixed charge coverage
ratios at
the end of each Fiscal Quarter. Additionally, the Restated Credit
Agreement
restricts the FHC's annual capital expenditures to $12,000.
The Credit Agreements provide to the Company with a $4,250
revolving
credit facility (the "RHI Credit Agreement") which generally bears
a base
interest of 1/2% over the prime rate, requires a commitment fee of
1/2%, and
matures on May 26, 1998. RHI's Credit Agreement requires the
Company to
comply with specified covenants and maintain a consolidated net
worth of
$175,000. Additionally, the Company's capital expenditures are
restricted,
except for certain leasehold improvements, to $2,000 per annum
plus the
selling price of fixed assets for such Fiscal Year. The Company
was in
compliance with all the covenants under RHI's Credit Agreement at
June 30,
1996.
Banner has a credit agreement (the "Banner Credit Agreement")
which
provides Banner and its subsidiaries with funds for working capital
and
potential acquisitions. On June 30, 1996, The Banner Credit
Agreement
consisted of a $55,000 term loan and a $71,500 revolving credit
facility,
both of which initially bear interest at prime plus 1 1/4% or LIBOR
plus 2
1/2%. Interest rate on Banner's borrowings whether computed at the
prime
rate or LIBOR may increase by 1/4% or decrease by up to 1% based
upon certain
performance criteria. On June 30, 1995, Banner's performance level
resulted
in borrowings under the Banner Credit Agreement being at the
initial
interest rates for the quarter ending September 30, 1996. The
Banner Credit
Agreement was amended on July 1, 1996, to provide additional
financing with
a $30,000 seven-year term loan ("Tranche B Loan") and requires that
loans
made to Banner do not exceed a defined borrowing base, which is
based upon a
percentage of inventories and accounts receivable. The Tranche B
Loan bears
interest at Prime plus 1 3/4% or LIBOR plus 3%. Banner's term loans
require
certain semiannual loan payments. Banner's revolving credit
facility is
subject to a non-use fee of 1/2% of the unused availability.
Substantially
all of Banner's assets are pledged as collateral under the Banner
Credit
Agreement. The Banner Credit Agreement matures August 2001.
The Banner Credit Agreement requires quarterly compliance with
various
financial and non-financial loan covenants, including maintaining
a minimum
net worth, and minimum ratios of interest coverage, fixed charge
coverage,
and debt to earnings before interest, taxes, depreciation and
amortization.
Banner also has certain limitations on the incurrence of additional
debt. As
of June 30, 1996, Banner was in compliance with all covenants
under the
Credit Agreement.
Banner has several interest rate hedge agreements ("Hedge
Agreements")
to manage its exposure to increases in interest rates on its
variable rate
debt. The Hedge Agreements provide interest rate protection on
$60,000 of
debt through September 2000, by providing a cap of 7% if the 90-day
LIBOR
rate exceeds 7%. If the 90-day LIBOR rate drops below 5%, Banner
will be
required to pay a floor rate of approximately 6%.
The following table summarizes the credit facilities under the
credit
agreement at June 30, 1996:
<TABLE>
<CAPTION>
Outstanding
Total
as of
Available
June 30, 1996
Facilities
-------------
- ----------
<S> <C> <C>
RHI Holdings, Inc.
Revolving credit facility (a)....... $ 100 $
4,250
Fairchild Holding Corporation =======
=======
Revolving credit facility (a)....... $ 43,400 $
50,000
Term Loan (a)....................... 30,000
30,000
Banner Aerospace, Inc.
Revolving credit facility........... 61,000
71,500
Term Loan........................... 51,500
51,500
-------
- -------
$186,000
$207,250
=======
=======
Total
Revolving credit facilities......... $104,500
$125,750
Term loans.......................... 81,500
81,500
-------
- -------
$186,000
$207,250
=======
=======
(a) These amounts are included in short-term notes payable.
</TABLE>
At June 30, 1996, the Company had outstanding letters of
credit ("LC")
of $11,405, which were supported by the Credit Agreement and other
bank
facilities on an unsecured basis. At June 30, 1996, the Company
had unused
short-term bank lines of credit aggregating $9,845 at interest
rates slightly
higher than the prime rate. The Company also has short-term lines
of credit
relating to foreign operations aggregating $5,454 against which the
Company
owed $2,821 at June 30, 1996.
Summarized below are certain items and other information
relating to the
11 7/8% Senior Subordinated Debentures outstanding at June 30,
1995:
<PAGE>
<TABLE>
<CAPTION>
11 7/8%
Senior
Subordinated
Debentures
------------
<S> <C>
Date Issued.............................. March 1987
Face Value............................... $126,000
Balance, June 30, 1995................... $ 85,769
Percent Issued at........................ 99.214
Bond Discount............................ $ 990
Amortization 1996........................ $ 82
1995........................ $ 94
1994........................ $ 80
Yield to Maturity........................ 12.01%
Interest Payments........................ Semi-Annual
Sinking Fund Start Date.................. 3/1/97
Sinking Fund Installments................ $ 31,500
Fiscal Year Maturity..................... 1999
Redeemable by Company after.............. 3/1/92
</TABLE>
Under the most restrictive covenants of the 11 7/8% Senior
Subordinated
Debentures, the Company's consolidated net worth as defined must
not be less
than $125,000. At June 30, the Company's consolidated net worth
was
$428,772. The indentures also provide restrictions on the amount
of
additional borrowings by the Company.
Annual maturities of long-term debt obligations (exclusive of
capital
lease obligations) for each of the five years subsequent to June
30, 1996,
are as follows: $8,357 for 1997, $30,314 for 1998, $71,455 for
1999, $9,000
for 2000, and $13,312 for 2001.
11. PENSIONS AND POSTRETIREMENT BENEFITS
------------------------------------
Pensions
--------
The Company and its subsidiaries have defined benefit pension
plans
covering substantially all employees. Employees in foreign
subsidiaries may
participate in local pension plans, which are in the aggregate
insignificant
and are not included in the following disclosures. The Company's
funding
policy is to make the minimum annual contribution required by
applicable
regulations.
The following table provides a summary of the components of
net periodic
pension expense (income) for the plans:
<PAGE>
<TABLE>
<CAPTION>
1996 1995
1994
-------- --------
- --------
<S> <C> <C>
<C>
Service cost of benefits earned
during the period...................... $ 3,513 $ 3,917
$ 3,827
Interest cost of projected benefit
obligation............................. 14,499 14,860
14,552
Return on plan assets.................... (39,430) (14,526)
(5,051)
Amortization of prior service cost....... 81 81
126
Net amortization and deferral............ 21,495 (4,341)
(15,007)
------- -------
- -------
158 (9)
(1,553)
Net periodic pension expense (income) for
other plans including foreign plans.... (118) 78
(745)
------- -------
- -------
Net periodic pension expense (income).... $ 40 $ 69
$ (2,298)
======= =======
=======
</TABLE>
Assumptions used in accounting for the plans were:
<TABLE>
<CAPTION>
1996 1995
1994
-------- --------
- --------
<S> <C> <C>
<C>
Discount Rate............................ 8.5% 8.5%
8.5%
Expected rate of increase in salaries.... 4.5% 4.5%
4.5%
Expected long-term rate of return on
plan assets............................ 9.0% 9.0%
9.0%
</TABLE>
In Fiscal 1996, the Company recognized one-time charges of
$857 from the
divestiture of subsidiaries, which resulted in a recognition of
prior service
costs, and $84 from the early retirement window program at the
Company's
corporate office. The reduction in liabilities due from the
cessation of
future salary increases is not immediately recognizable in income,
but will
be used as an offset against existing unrecognized losses. The
Company will
have a future savings benefit from a lower net periodic pension
cost due to
the amortization of a smaller unrecognized loss.
The following table sets forth the funded status and amounts
recognized
in the Company's consolidated balance sheets at June 30, 1996, and
1995 for
the plans:
<PAGE>
<TABLE>
<CAPTION>
June 30, June
30,
1996
1995
--------
- --------
<S> <C> <C>
Projected benefit obligation:
Vested benefit obligation................. $164,819
$168,843
Non-vested benefits....................... 6,169
6,488
-------
- -------
Accumulated benefit obligation............ 170,988
175,331
Effect of projected future compensation
levels.................................. 905
5,815
-------
- -------
171,893
181,146
Plan assets at fair value................... 224,692
212,477
-------
- -------
Plan assets in excess of projected benefit
obligations............................... 52,799
31,331
Unrecognized net loss....................... 20,471
42,720
Unrecognized prior service cost............. (354)
329
Unrecognized net transition assets.......... (608)
(190)
-------
- -------
Prepaid pension cost prior to SFAS 109
implementation............................ 72,308
74,190
Effect of SFAS 109 implementation........... (14,648)
(14,623)
-------
- -------
Prepaid pension cost........................ $ 57,660 $
59,567
=======
=======
</TABLE>
Plan assets include Class A Common Stock of the Company valued
at a fair
market value of $11,094 and $2,763 at June 30, 1996 and 1995,
respectively.
Substantially all of the plan assets are invested in listed stocks
and bonds.
Postretirement Health Care Benefits
-----------------------------------
Effective July 1, 1993, the Company adopted Statement of
Financial
Accounting Standards No. 106 ("SFAS 106"), "Employers' Accounting
for
Postretirement Benefits Other than Pensions". The standard
requires that the
expected cost of postretirement benefits be accrued and charged to
expense
during the years the employees render the service. This is a
significant
change from the Company's previous policy of expensing these costs
for active
employees when paid.
The Company elected the immediate recognition method of
adoption of SFAS
106. The unamortized portion of the overstated liability for
discontinued
operations was $15,172, net of tax, which more than offset a
$10,904, net of
tax, charge relating to the transition obligation for active
employees and
retirees of continuing operations. The benefit to net earnings as
the
cumulative effect of this accounting change was $4,268, net of tax.
Included
in Fiscal 1994 earnings from discontinued operations is a net
charge of
$4,802, which represents the portion allocated to DME and Data for
the
implementation of SFAS 106. For the Fiscal year ended June 30,
1994, the
effect of the changes on pretax income from continuing operations
was not
material.
As a result of Rexnord's adoption of SFAS 106, effective July
1, 1993,
the Company recorded an after-tax charge of $7,481 to net earnings,
which
represented the Company's share of Rexnord's cumulative effect of
this change
in accounting, net of the related tax benefits from the charge.
A one-time credit of $3,938, resulting from the divestitures
of
subsidiaries, was offset by $4,361 from DME's accumulated
postretirement
benefit obligation for active employees, which was transferred to
CMI as part
of the sale. The Company recognized the net effect of $423 as an
expense in
1996.
The Company provides health care benefits for most retired
employees.
Postretirement health care expense from continuing operations
totaled $779,
$701, and $1,086 for the years ended June 30, 1996, 1995 and 1994,
respectively. The Company has accrued approximately $36,995 and
$36,732 as
of June 30, 1996 and 1995, respectively, for postretirement health
care
benefits related to discontinued operations. This represents the
cumulative
discounted value of the long-term obligation and includes interest
expense of
$3,877, $3,872, and $3,873 for the years ended June 30, 1996, 1995
and 1994,
respectively. The components of expense in Fiscal 1996 and 1995
are as
follows:
<TABLE>
<CAPTION>
1996
1995
-------
- -------
<S> <C>
<C>
Service cost of benefits earned...................$ 281
$ 321
Interest cost on liabilities...................... 4,377
4,385
Net amortization and deferral..................... (2)
(133)
-------
- -------
Net periodic postretirement benefit cost..........$ 4,656
$ 4,573
=======
=======
</TABLE>
The following table sets forth the funded status for the
Company's
postretirement health care benefit plans at June 30, 1996:
<TABLE>
<CAPTION>
1996
1995
-------
- -------
<S> <C>
<C>
Accumulated postretirement benefit obligations:
Retirees........................................$ 46,846
$ 45,970
Fully eligible active participants.............. 347
531
Other active participants....................... 1,887
977
-------
- -------
Accumulated postretirement benefit obligation..... 49,080
47,478
Unrecognized net loss............................. 2,086
223
-------
- -------
Accrued postretirement benefit liability..........$ 46,994
$ 47,255
=======
=======
</TABLE>
The accumulated postretirement benefit obligation was
determined using
a discount rate of 8.5%, and a health care cost trend rate of 7.5%
and 7.0%
for pre-age-65 and post-age-65 employees, respectively, gradually
decreasing
to 4.75% and 5.25%, respectively, in the year 2003 and thereafter.
Increasing the assumed health care cost trend rates by 1%
would increase
the accumulated postretirement benefit obligation as of June 30,
1996, by
approximately $1,169, and increase the net periodic postretirement
benefit
cost by approximately $182 for Fiscal 1996.
12. INCOME TAXES
------------
Effective July 1, 1993, the Company changed its method of
accounting for
income taxes from the deferred method to the liability method
required by
Statement of Financial Accounting Standards No. 109 ("SFAS 109"),
"Accounting
for Income Taxes".
Under the liability method, deferred tax assets and
liabilities are
determined based on differences between financial reporting and tax
bases of
assets and liabilities, and are measured using the enacted tax
rates and laws
that will be in effect when the differences are expected to
reverse. Prior
to the adoption of SFAS 109, income tax expense was determined
using the
deferred method. Deferred tax expense was based on items of income
and
expense that were reported in different years in the financial
statements and
tax returns and were measured at the tax rate in effect in the year
the
difference originated.
As permitted under SFAS 109, prior years' financial statements
have not
been restated. The Company elected the immediate recognition
method and
recorded a $3,031 charge representing the prior years' cumulative
effect, as
restated for discontinued operations. Included in 1994 earnings
from
discontinued operations, is a net charge of $4,445 represented
DME's share of
the SFAS 109 implementation. These charges represents deferred
taxes that
had to be recorded related primarily to fixed assets, prepaid
pension
expenses, and inventory basis differences.
As a result of Rexnord's adoption of SFAS 109 effective July
1, 1993,
the Company recorded an after-tax charge to net earnings of
$523,000, which
represented the Company's share of Rexnord's cumulative effect for
this
change in accounting.
The provision (benefit) for income taxes from continuing
operations is
summarized as follows:
<PAGE>
<TABLE>
<CAPTION>
1996 1995
1994
-------- --------
- --------
<S> <C> <C> <C>
Current:
Federal.................... $ (892) $ (7,959) $
8,550
State...................... 1,123 334
(616)
Foreign.................... 659 1,191
(570)
------- -------
- -------
890 (6,434)
7,364
Deferred:
Federal.................... (2,016) (2,698)
21,535
State...................... (3,657) (232)
243
------- -------
- -------
(5,673) (2,930)
21,778
------- -------
- -------
Net tax provision (benefit)... $ (4,783) $ (9,364) $
29,142
======= =======
=======
</TABLE>
The income tax provision (benefit) for continuing operations
differs
from that computed using the statutory Federal income tax rate of
35% for the
following reasons:
<TABLE>
<CAPTION>
1996 1995
1994
-------- --------
- --------
<S> <C> <C> <C>
Computed statutory amount............ $ 52,086 $(14,384) $
22,859
State income taxes, net of
applicable Federal tax benefit..... 730 (33)
(51)
Foreign Sales Corporation benefits... -- --
(350)
Nondeductible acquisition valuation
items.............................. 1,283 1,374
3,817
Tax on foreign earnings, net of tax
credits............................ 1,661 2,885
(221)
Difference between book and tax
basis of assets acquired and
liabilities assumed................ 1,040 1,366
1,366
Nontaxable gain related to the Merger (64,618) --
- --
Other................................ 3,035 (572)
1,722
------- -------
- -------
Net tax provision (benefit).......... $ (4,783) $ (9,364) $
29,142
======= =======
=======
</TABLE>
The following table is a summary of the significant components
of the
Company's deferred tax assets and liabilities, and deferred
provision or
benefit for the following periods:
<PAGE>
<TABLE>
<CAPTION>
1996
1995 1994
Deferred
Deferred Deferred
June 30, (Provision)
June 30, (Provision) (Provision)
1996 Benefit
1995 Benefit Benefit
-------- ----------
- -------- ----------- -----------
<S> <C> <C> <C>
<C> <C>
Deferred tax assets:
Accrued expenses................... $ 5,330 $ (1,603) $
6,933 $ (2,006) $ 1,801
Asset basis differences............ 4,140 2,265
1,875 (4,894) (8,927)
Employee compensation and benefits. 5,408 36
5,372 174 (856)
Environmental reserves............. 4,512 (737)
5,249 (1,202) (267)
Credit carryforwards............... 2,387 (504)
2,891 -- --
Postretirement benefits............ 19,334 (1,273)
20,607 529 (125)
Other.............................. 5,445 2,330
3,115 1,396 (3,944)
------- -------
- ------- ------- -------
46,556 514
46,042 (6,003) (12,318)
Deferred tax liabilities:
Asset basis differences............ (23,204) 16,626
(39,830) 3,951 (9)
Inventory.......................... (2,010) 4,684
(6,694) 3,176 1,310
Pensions........................... (18,243) 1,516
(19,759) 1,074 20
Other.............................. (28,336) (17,667)
(10,669) 732 (9,494)
------- -------
- ------- ------- -------
(71,793) 5,159
(76,952) 8,933 (8,173)
------- -------
- ------- ------- -------
(25,237) 5,673
(30,910) 2,930 (20,491)
Less amount related to accounting
changes............................ -- --
-- -- 1,287
------- -------
- ------- ------- -------
Net deferred tax liability........... $(25,237) $ 5,673
$(30,910) $ 2,930 $(21,778)
======= =======
======= ======= =======
</TABLE>
The amounts included in the balance sheet are as follows:
Prepaid expense and other current assets:
<TABLE>
<CAPTION>
June 30 June 30
1996 1995
------- -------
<S> <C> <C>
Current deferred................... $ 8,012 $ 9,075
Other current...................... -- 2,783
------- -------
$ 8,012 $ 11,858
======= =======
Income taxes payable:
Current deferred.................... $ 18,744 $ --
Other current....................... 41,268 --
------- -------
$ 60,012 $ --
======= =======
Noncurrent income tax liabilities:
Noncurrent deferred................. $ 14,505 $ 39,985
Other............................... 19,064 4,150
------- -------
$ 33,569 $ 44,135
======= =======
</TABLE>
Domestic income taxes, less allowable credits, are provided on
the
unremitted income of foreign subsidiaries and affiliated companies,
to the
extent that such earnings are intended to be repatriated. No
domestic income
taxes or foreign withholding taxes are provided on the
undistributed earnings
of foreign subsidiaries and affiliates that are considered
permanently
invested, or which would be offset by allowable foreign tax
credits. At June
30, 1996, the amount of domestic taxes payable upon distribution of
such
earnings was not significant.
In the opinion of management, adequate provision has been made
for all
income taxes and interest, and any liability that may arise for
prior periods
will not have a material effect on the financial condition or
results of
operations of the Company.
13. MINORITY INTEREST IN CONSOLIDATED SUBSIDIARIES
----------------------------------------------
The Company is including $58,647 of minority interest in its
balance
sheet at June 30, 1996, representing approximately 40.7% of
Banner's common
stock effectively outstanding on a consolidated basis.
The Company included $23,804 of minority interest on its
balance sheet
at June 30, 1995, representing 553,460 shares of Series C Preferred
Stock of
FII. The Series C Preferred Stock was assumed by STFI and redeemed
entirely
as part of the Merger. (See Note 2).
14. REDEEMABLE PREFERRED STOCK OF SUBSIDIARY
----------------------------------------
The Company classified 393,801 shares of Series A Preferred
Stock of FII
as a long-term liability at June 30, 1995. The Series A Preferred
Stock was
assumed by STFI and redeemed entirely as part of the Merger. (See
Note 2).
15. FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
Statement of Financial Accounting Standards No. 107, ("SFAS
107")
"Disclosures about Fair Value of Financial Instruments", requires
disclosures
of fair value information about financial instruments, whether or
not
recognized in the balance sheet, for which it is practicable to
estimate that
value. In cases where quoted market prices are not available, fair
values
are based on estimates using present value or other valuation
techniques.
Those techniques are significantly affected by the assumptions
used,
including discount rate and estimates of future cash flows. In
that regard,
the derived fair value estimates cannot be substantiated by
comparison to
independent markets and, in many cases, could not be realized in
immediate
settlement of the instrument. SFAS 107 excludes certain financial
instruments and all non-financial instruments from its disclosure
requirements. Accordingly, the aggregate fair value amounts
presented do not
represent the underlying value of the Company.
The following methods and assumptions were used by the Company
in
estimating its fair value disclosures for financial instruments:
The carrying amount reported in the balance sheet approximates
the fair
value for cash and cash equivalents, short-term borrowings, current
maturities of long-term debt, and all other variable rate debt
(including
borrowings under the Credit Agreement).
Fair values for equity securities, long-term public debt
issued by the
Company, and publicly issued preferred stock of FII are based on
quoted
market prices, where available. For equity securities not actively
traded,
fair values are estimated by using quoted market prices of
comparable
instruments or, if there are no relevant comparables, on pricing
models or
formulas using current assumptions. The fair value of limited
partnerships,
other investments, and notes receivable are estimated by
discounting expected
future cash flows using a current market rate applicable to the
yield,
considering the credit quality and maturity of the investment.
The fair value for the Company's other fixed rate long-term
debt is
estimated using discounted cash flow analyses, based on the
Company's current
incremental borrowing rates for similar types of borrowing
arrangements.
Fair values for the Company's off-balance-sheet instruments
(letters of
credit, commitments to extend credit, and lease guarantees) are
based on fees
currently charged to enter into similar agreements, taking into
account the
remaining terms of the agreements and the counter parties' credit
standing.
The fair value of the Company's off-balance-sheet instruments at
June 30,
1996, was not material.
The carrying amounts and fair values of the Company's
financial
instruments at June 30, 1996 and June 30, 1995 are as follows:
<TABLE>
<CAPTION>
June 30, 1996
June 30, 1995
------------------
------------------
Carrying Fair
Carrying Fair
Amount Value
Amount Value
-------- -----
-------- -----
<S> <C> <C>
<C> <C>
Cash and cash equivalents............... $ 36,112 $ 36,112
$ 64,174 $ 64,174
Investment Securities:
Short-term equity securities.......... 10,361 10,361
3,968 3,968
Short-term other investments.......... 66 97
77 111
Long-term limited partnerships........ 93 93
346 346
Notes Receivable:
Current............................... 170,384 170,384
-- --
Long-term............................. 2,666 2,666
-- --
Short-term debt......................... 76,321 76,321
5,448 5,448
Long-term debt:
Bank credit agreement................. 112,500 112,500
126,396 126,396
Subordinated debentures and senior
notes............................... 85,769 85,091
213,687 212,912
Industrial revenue bonds.............. 1,500 1,500
1,500 1,500
Capitalized leases.................... 65 65
1,253 1,253
Other................................. 2,756 2,756
4,788 4,788
Minority interest in Banner............. 58,647 79,855
-- --
Minority interest in FII................ -- --
23,804 20,755
Redeemable preferred stock of subsidiary -- --
17,722 14,571
</TABLE>
16. RESTRUCTURING CHARGES
---------------------
In Fiscal 1996 and 1994, the Company recorded the
restructuring charges
in the Aerospace Fasteners segment in the categories shown below.
Except for
the costs included in the other category (see note (d) below), all
costs
classified as restructuring were the direct result of formal plans
to close
plants, to terminate employees, or to exit product lines.
Substantially all
of these plans have been executed. Other than a reduction in the
Company's
existing cost structure and manufacturing capacity, none of the
restructuring
charges resulted in future increases in earnings or represented an
accrual of
future costs. The costs included in restructuring were
predominately non-
recurring in nature.
<TABLE>
<CAPTION>
SIGNIFICANT COMPONENTS 1996 1994
- ---------------------- ------ ------
<S> <C> <C>
Write off of goodwill related to discontinued
product lines................................. $ -- $ 6,959
Write down of inventory to net realizable value
related to discontinued product lines (a)...... 156 2,634
Write down of fixed assets related to
discontinued product lines..................... 270 3,000
Severance benefits for terminated employees
(substantially all paid within twelve months).. 1,368 471
Plant closings facility costs (b)............... 389 851
Relocation of business from closed plant in
New Jersey to California (c)................... -- 1,795
Contract termination claims..................... 136 128
Other (d)....................................... -- 3,022
------ ------
$ 2,319 $18,860
====== ======
(a) Write down was required because product line was discontinued.
(b) Includes lease settlements, write offs of leasehold
improvements,
maintenance, restorations and clean up costs.
(c) Principally consists of costs to move equipment, inventory,
tooling and
personnel.
(d) Includes costs associated with a requalification of product
lines by a
customer, nonrecurring costs of cellularization and
reengineering of
manufacturing processes and methods.
</TABLE>
17. UNUSUAL ITEMS
-------------
On January 17, 1994, the Company's Chatsworth, California
Aerospace
Fasteners manufacturing facility suffered extensive damage from the
Southern
California earthquake. As a result, the Company relocated the
Chatsworth
manufacturing operations to its other Southern California
facilities. This
disruption caused increased costs and reduced revenues in Fiscal
1994, and
has negatively affected Fiscal 1995 as well. While the Company
carries
insurance for both business interruption and property damage caused
by
earthquakes, the policy has a 5% deductible. The Company recorded
an unusual
pretax loss of $4,000 in Fiscal 1994 to cover the estimated net
cost of the
damages and related business interruption caused by the earthquake.
In
addition, the Company recorded a write down of $2,000 in Fiscal
1994,
relating to this real estate which is now included in net assets
held for
sale.
18. RELATED PARTY TRANSACTIONS
--------------------------
Corporate office administrative expense recorded by FHC and
its
predecessors was billed to the Company on a monthly basis during
1996, 1995
and 1994. These costs represent the cost of services incurred on
behalf of
the Company. In addition, TFC billed the Company for services
performed by
TFC on behalf of the Company in 1996 and 1995. The Company has
reimbursed
FHC and TFC for these services.
The Company and its wholly-owned subsidiaries has entered into
a tax
sharing agreement with TFC whereby the Company is included in the
consolidated federal income tax return of TFC. The Company makes
payments to
TFC based on the amount of federal income taxes, if any, it would
have paid
had it filed a separate federal income tax return.
The Industrial Products segment had intercompany sales to
direct
subsidiaries of TFC, the Company's parent, of $2,345 and $5,468 in
1996 and
1995, respectively. These sales are included in the total revenues
of the
Company.
Prior to the consolidation of Banner on February 25, 1996, the
Aerospace
Fasteners segment had sales to Banner Aerospace, Inc. a 47.2%
affiliate of
the Company, of $3,663, $5,494 and $5,680 in 1996, 1995 and 1994,
respectively.
19. COMMITMENTS AND CONTINGENCIES
-----------------------------
Lease Commitments
-----------------
The Company holds certain of its facilities and equipment
under long-
term leases. The minimum rental commitments under non-cancelable
operating
leases with lease-terms in excess of one year for each of the five
years
following June 30, 1996, was $5,935 for 1997, $3,638 for 1998,
$2,722 for
1999, $1,415 for 2000, and $1,235 for 2001. Commitments under
capital leases
were not significant to the accompanying financial statements.
Rental
expense on operating leases from continuing operations for Fiscal
1996, 1995
and 1994 was $6,197, $6,695 and $6,007, respectively.
<PAGE>
CL Motor ("CL") Freight Litigation
- ----------------------------------
The Workers Compensation Bureau of the State of Ohio is
seeking
reimbursement from the Company for up to $5,400 for CL workers
compensation
claims which were insured under a self-insured program of CL. The
Company
has contested a significant portion of this claim.
Government Claims
- -----------------
The Corporate Administrative Contracting Officer (the "ACO"),
based upon
the advice of the United States Defense Contract Audit Agency, has
made a
determination that FII did not comply with Federal Acquisition
Regulations
and Cost Accounting Standards in accounting for (i) the 1985
reversion to FII
of certain assets of terminated defined benefit pension plans, and
(ii)
pension costs upon the closing of segments of FII's business. The
ACO has
directed FII to prepare cost impact proposals relating to such plan
terminations and segment closings and, following receipt of such
cost impact
proposals, may seek adjustments to contract prices. The ACO
alleges that
substantial amounts will be due if such adjustments are made. The
Company
believes it has properly accounted for the asset reversions in
accordance
with applicable accounting standards. The Company has held
discussions with
the government to attempt to resolve these pension accounting
issues.
Environmental Matters
- ---------------------
The Company and other aerospace fastener and industrial
product
manufacturers are subject to stringent Federal, state and local
environmental
laws and regulations concerning, among other things, the discharge
of
materials into the environment and the generation, handling,
storage,
transportation and disposal of waste and hazardous materials. To
date, such
laws and regulations have not had a material effect on the
financial
condition, results of operations, or net cash flows of the Company,
although
the Company has expended, and can be expected to expend in the
future,
significant amounts for investigation of environmental conditions
and
installation of environmental control facilities, remediation of
environmental conditions and other similar matters, particularly in
the
Aerospace Fasteners segment.
In connection with its plans to dispose of certain real
estate, the
Company must investigate environmental conditions and may be
required to take
certain corrective action prior or pursuant to any such
disposition. In
addition, management has identified several areas of potential
contamination
at or from other facilities owned, or previously owned, by the
Company, that
may require the Company either to take corrective action or to
contribute to
a clean-up. The Company is also a defendant in certain lawsuits
and
proceedings seeking to require the Company to pay for investigation
or
remediation of environmental matters and has been alleged to be a
potentially
responsible party at various "Superfund" sites. Management of the
Company
believes that it has recorded adequate reserves in its financial
statements
to complete such investigation and take any necessary corrective
actions or
make any necessary contributions. No amounts have been recorded as
due from
third parties, including insurers, or set off against, any
liability of the
Company, unless such parties are contractually obligated to
contribute and
are not disputing such liability.
As of June 30, 1996, the consolidated total recorded
liabilities of the
Company for environmental matters totalled $11,287, which
represented the
estimated probable exposures for these matters. It is reasonably
possible
that the Company's total exposure for these matters could be
approximately
$19,118.
Other Matters
- -------------
The Company is involved in various other claims and lawsuits
incidental
to its business, some of which involve substantial amounts. The
Company,
either on its own or through its insurance carriers, is contesting
these
matters.
In the opinion of management, the ultimate resolution of the
legal
proceedings, including those discussed above, will not have a
material
adverse effect on the financial condition, or future results of
operations or
net cash flows of the Company.
20. BUSINESS SEGMENT INFORMATION
----------------------------
The Company's operations were conducted in four principal
business
segments during Fiscal 1996. The Aerospace Fasteners segment
includes the
manufacture of high performance specialty fasteners and fastening
systems.
The Aerospace Distribution segment distributes a wide range of
aircraft parts
and related support services to the aerospace industry. The
Industrial
Products segment is primarily engaged in the designing and
manufacturing of
wet processing tools, equipment and systems. The Communications
Services
segment provides telecommunication services to office buildings and
sells,
installs and maintains telecommunications systems for business and
government
customers.
Identifiable assets represent assets that are used in the
Company's
operations in each segment at year end. Corporate assets are
principally in
cash, marketable securities, prepaid pension costs, assets held for
sale, and
property maintained for general corporate purposes.
The Company's financial data by business segment is as
follows:
<PAGE>
<TABLE>
<CAPTION>
1996 1995
1994
--------- ---------
- ---------
<S> <C> <C>
<C>
Sales by Business Segment:
Aerospace Fasteners.............. $ 218,059 $ 215,364 $
203,456
Aerospace Distribution (c)....... 129,973 --
--
Industrial Products.............. 64,445 40,588
--
Communications Services.......... 91,290 108,710
74,190
Eliminations (a)................. (5,842) --
--
--------- ---------
- ---------
Total Segment Sales................ $ 497,925 $ 364,662 $
277,646
========= =========
=========
Operating Income (Loss) by Segment:
Aerospace Fasteners (b).......... $ 135 $ (11,497) $
(32,208)
Aerospace Distribution (c)....... 5,625 --
--
Industrial Products.............. 749 (4,882)
--
Communications Services.......... 14,561 18,498
16,483
--------- ---------
- ---------
Total Segment Operating Income..... 21,070 2,119
(15,725)
Corporate Administrative Expense. (10,319) (9,902)
(8,023)
Other Corporate Income (Expense). (1,013) (321)
3,194
--------- ---------
- ---------
Total Consolidated Operating
Income (Loss).................... $ 9,738 $ (8,104) $
(20,554)
========= =========
=========
Capital Expenditures:
Aerospace Fasteners.............. $ 3,841 $ 4,974 $
4,320
Aerospace Distribution........... 1,556 --
--
Industrial Products.............. 1,122 491
--
Communications Services.......... 8,500 10,349
7,775
Corporate and Other.............. 89 398
126
--------- ---------
- ---------
Total Capital Expenditures......... $ 15,108 $ 16,212 $
12,221
========= =========
=========
Depreciation and Amortization:
Aerospace Fasteners.............. $ 14,916 $ 15,619 $
14,373
Aerospace Distribution........... 1,341 --
--
Industrial Products.............. 865 423
--
Communications Services.......... 8,064 10,329
8,948
Corporate and Other.............. 3,385 3,427
3,489
--------- ---------
- ---------
Total Depreciation and Amortization $ 28,571 $ 29,798 $
26,810
========= =========
=========
Identifiable Assets at June 30,:
Aerospace Fasteners.............. $ 252,200 $ 290,465 $
306,008
Aerospace Distribution........... 329,477 --
--
Industrial Products.............. 31,786 32,761
16,722
Communications Services.......... -- 108,666
79,087
Corporate and Other.............. 448,065 437,552
461,463
--------- ---------
- ---------
Total Identifiable Assets.......... $1,061,528 $ 869,444 $
863,280
========= =========
=========
(a) - Intersegment eliminations includes $5,819 of sales from the
Aerospace
Fasteners segment to the Aerospace Distribution segment and $23 of
sales from
the Aerospace Distribution segment to the Aerospace Fasteners
segment.
(b) - Includes charges to reflect the cost of restructuring of
$2,319 and
$18,860 in Fiscal 1996 and 1994, respectively, and an unusual loss
from
earthquake damage and business interruption of $4,000 in Fiscal
1994.
(c) - The Company became the majority shareholder of Banner
Aerospace, Inc.
on February 25, 1996 and, accordingly, began consolidating their
results as
of then.
</TABLE>
21. FOREIGN OPERATIONS AND EXPORT SALES
-----------------------------------
The Company's operations are located primarily in the United
States and
Europe. Inter-area sales are not significant to the total sales of
any
geographic area. The Company's financial data by geographic area
is as
follows:
<TABLE>
<CAPTION>
1996 1995
1994
--------- ---------
- ---------
<S> <C> <C> <C>
Sales by Geographic Ares:
United States.................... $ 393,749 $ 283,879 $
234,626
Europe........................... 103,798 79,988
41,988
Other............................ 378 795
1,032
--------- ---------
- ---------
Total Sales $ 497,925 $ 364,662 $
277,646
========= =========
=========
Operating Income by Geographic Area:
United States.................... $ 15,360 $ 2,307 $
(20,495)
Europe........................... 5,858 (225)
4,839
Other............................ (148) 37
(69)
--------- ---------
- ---------
Total Segment Operating Income..... $ 21,070 $ 2,119 $
(15,725)
========= =========
=========
Identifiable Assets by Geographic
Area at June 30,:
United States.................... $ 546,147 $ 355,387 $
339,385
Europe........................... 74,272 81,328
47,654
Other............................ -- 892
908
Corporate and other assets....... 441,109 431,837
475,333
--------- ---------
- ---------
Total Identifiable Assets.......... $1,061,528 $ 869,444 $
863,280
========= =========
=========
</TABLE>
Export sales are defined as sales to customers in foreign
countries by
the Company's domestic operations. Export sales amounted to the
following:
<PAGE>
<TABLE>
<CAPTION>
(In thousands)
1996 1995
1994
--------- ---------
- ---------
<S> <C> <C> <C>
Export Sales
Europe........................... $ 27,330 $ 13,329 $
9,440
Asia............................. 20,878 5,666
2,661
Canada........................... 8,878 2,810
2,953
Other............................ 8,565 911
792
--------- ---------
- ---------
Total Export Sales................. $ 65,651 $ 22,716 $
15,846
========= =========
=========
</TABLE?
22. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
-------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
First Second Third
Fourth
(In thousands) Quarter Quarter Quarter
Quarter
-------- -------- --------
- --------
<S> <C> <C> <C>
<C>
1996:
Sales........................... $107,603 $102,920 $137,014
$150,388
Gross profit.................... 23,257 22,887 29,204
39,976
Earnings (loss) from continuing
operations.................... (2,208) (5,952) 160,585
1,174
Earnings from discontinued
operations, net............... 3,870 3,420 1,769
127
Gain (loss) on disposal of
discontinued operations, net.. (13) (14) 61,286
(7,486)
Extraordinary items, net........ -- -- (10,436)
--
Net earnings (loss)............. 1,649 (2,546) 213,204
(6,185)
1995:
Sales........................... $ 78,905 $ 81,849 $102,982
$100,926
Gross profit.................... 18,103 13,816 18,820
14,358
Loss from continuing operations. (5,309) (7,119) (8,160)
(10,770)
Earnings from discontinued
operations, net............... 2,997 3,193 4,389
3,039
Loss on disposal of discontinued
operations, net............... (25) (25) (215)
(25)
Net loss........................ (2,337) (3,951) (3,986)
(7,756)
</TABLE>
Earnings (loss) from continuing operations in the fourth
quarter of
Fiscal 1995, includes adjustments to inventories and receivables of
the
Company's Aerospace Fasteners Segment, to reflect required
valuation
allowances against these assets. Charges to reflect the cost of
restructuring the Company's Aerospace Fasteners Segment, of $285,
$959 and
$1,075 in the second, third and fourth quarters of Fiscal 1996,
respectively,
are included in earnings (loss) from continuing operations.
The third quarter of Fiscal 1996 includes non-recurring income
of
$162,544, primarily from the gain on the merger of FCSC with STI.
Earnings from discontinued operations includes the results of
DME and
Data in each quarter.
Extraordinary items relate to the early extinguishment of debt
by the
Company. (See Note 2).
The Fiscal 1995 four quarters and the Fiscal 1996 first
quarter data
varies from that previously reported in each of those quarters'
respective
Form 10-Q filings, and have been restated to reflect the sale of
DME and
Data. (See Note 5). The previously reported Fiscal 1996 quarters
were
restated for adjustments to inventory reserves, which resulted in
additional
income (expense), net of tax, of $(1,138), $(453) and $494 in the
first,
second, and third quarters of Fiscal 1996, respectively.
<PAGE>
Report of Independent Public Accountants
----------------------------------------
To RHI Holdings, Inc.:
We have audited the accompanying consolidated balance sheets of RHI
Holdings,
Inc. (a Delaware corporation and wholly-owned subsidiary of The
Fairchild
Corporation and formerly known as Rexnord Holdings Inc.) and
subsidiaries as
of June 30, 1996 and 1995, and the related consolidated statements
of
earnings, stockholder's equity, and cash flows for the years ended
June 30,
1996, 1995 and 1994. These financial statements are the
responsibility of
the Company's management. Our responsibility is to express an
opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing
standards. Those standards require that we plan and perform an
audit to
obtain reasonable assurance about whether the financial statements
are free
of material misstatement. An audit includes examining, on a test
basis,
evidence supporting the amounts and disclosures in the financial
statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall
financial statement presentation. We believe that our audits
provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in
all material respects, the financial position of RHI Holdings, Inc.
and
subsidiaries as of June 30, 1996 and 1995, and the results of their
operations and their cash flows for the years ended June 30, 1996,
1995 and
1994, in conformity with generally accepted accounting principles.
As discussed in Notes 11 and 12 to the consolidated financial
statements,
effective July 1, 1993, the Company changed its methods of
accounting for
postretirement benefits other than pensions, and income taxes.
Arthur Andersen LLP
Washington, D.C.
September 4, 1996
<PAGE>
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
- -------------------------------------------------------------
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- ------------------------------------------------------------
Item 10 of Form 10-K is omitted in accordance with General
Instruction
J(2)(c), Omission of Information by Certain Wholly-owned
Subsidiaries.
ITEM 11. EXECUTIVE COMPENSATION
- --------------------------------
Item 11 of Form 10-K is omitted in accordance with General
Instruction
J(2)(c), Omission of Information by Certain Wholly-owned
Subsidiaries.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
- -----------------------------------------------------------------
- -------
Item 12 of Form 10-K is omitted in accordance with General
Instruction
J(2)(c), Omission of Information by Certain Wholly-owned
Subsidiaries.
ITEM 13. CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS
- -------------------------------------------------------
Item 10 of Form 10-K is omitted in accordance with General
Instruction
J(2)(c), Omission of Information by Certain Wholly-owned
Subsidiaries.
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
- -----------------------------------------------------------------
- ----------
The following documents are filed as a part of this Form 10-K:
(a)(1) Financial Statements
All financial statements of the registrant as set forth
under Item 8
of this report on Form 10-K.
(a)(2) Financial Statement Schedules and Independent Auditors'
Report
Schedule Number Description
Page Number
--------------- -----------
- -----------
II Valuation and Qualifying Accounts
74
All other schedules are omitted because they are not required, are
inapplicable, or the information is included in the consolidated
financial
statements or notes thereto.
<PAGE>
Report of Independent Public Accountants
----------------------------------------
To RHI Holdings, Inc.:
We have audited in accordance with generally accepted auditing
standards, the
consolidated financial statements of RHI Holdings, Inc. and
subsidiaries
included in this Form 10-K and have issued our report thereon dated
September
4, 1996. Our audits were made for the purpose of forming an
opinion on the
basic financial statements taken as a whole. The schedule listed
in the
index on the preceding page is the responsibility of the Company's
management
and is presented for the purpose of complying with the Securities
and
Exchange Commission's rules and is not part of the basic financial
statements. This schedule has been subjected to the auditing
procedures
applied in the audits of the basic financial statements and, in our
opinion,
fairly states in all material respects the financial data required
to be set
forth therein in relation to the basic financial statements taken
as a whole.
Arthur Andersen LLP
Washington, D.C.
September 4, 1996
<PAGE>
(a)(3) Exhibits. (The following references to Registrant are
The
Fairchild Corporation, formerly Banner Industries, Inc.,
the
parent of RHI Holdings).
3. Articles of Incorporation and By-Laws, as amended.
4(a) Indenture between Rexnord Acquisition Corp ("RAC") and
Irving
Trust Company dated as of March 2, 1987, pursuant to
which RAC's
Senior Subordinated Debentures due 1990 (the "Rexnord
Senior
Debentures") were issued (the "Rexnord Senior
Indenture"), and
specimen of Rexnord Senior Debenture (incorporated by
reference
from the 1987 10-K).
4(b) First Supplemental Indenture between Rexnord Inc.
("Rexnord")
(as successor to RAC) and Irving Trust Company dated as
of July
1, 1987, to the Rexnord Senior Indenture (incorporated
by
reference to Registration Statement No. 33-15359 on Form
S-2).
4(c) Second Supplemental Indenture between Rexnord Holdings,
Inc.,
now known as RHI Holdings, Inc. ("RHI") (as successor to
Rexnord)
and Irving Trust Company dated as of August 16, 1988, to
the
Rexnord Senior Indenture (incorporated by reference to
the 1988
10-K).
4(d) Securities Purchase Agreement dated as of March 2, 1987,
by and
among Registrant, RAC and each of the Purchasers of the
Senior
Subordinated Debentures and other securities
(incorporated by
reference from Exhibit 4(k) of the Registration
Statement on Form
S-2 of Banner Industries, Inc. filed with the Securities
and
Exchange Commission on June 26, 1987 (No. 33-15359)).
4(e) Registration Rights Agreement dated as of March 2, 1987
by and
among Registrant, RAC and each of the Purchasers of the
Senior
Subordinated Debentures and other securities
(incorporated by
reference to Exhibit 4(d) of Report on Form 8-K of
Banner
Industries, Inc., filed with the Securities and Exchange
Commission on March 17, 1987).
4(f) Indenture between Rex-PT, Inc. ("Rex-PT") and Irving
Trust
Company dated as of August 15, 1988, pursuant to which
Rex-PT
Senior Subordinated Notes due 1988 ("Rex-PT Notes") were
issued,
and specimen of Rex-PT Note (incorporated by reference
from
Registrant's Report on Form 8-K dated August 16, 1988).
4(g) Indenture between Rexnord and First Wisconsin Trust
Company
dated as of June 1, 1983 (The "Rexnord Indenture"),
First
Supplemental Indenture between Rexnord and First
Wisconsin
Trust Company dated as of October 1, 1984, to the
Rexnord
Indenture, pursuant to which Rexnord's Debentures due
1994
(the "Rexnord Debentures") were issued, and specimen of
Rexnord Debenture (incorporated by reference to Form 8-A
of
Rexnord dated October 3, 1984).
4(h) Second Supplemental Indenture among Rexnord, RHI and
First
Wisconsin Trust Company dated as of August 16, 1988, to
the Rexnord Indenture (incorporated by reference to the
1988
10-K).
4(i) Indenture dated as of November 1, 1982, between
Fairchild
Industries, Inc. ("Fairchild") and Continental Illinois
National
Bank and Trust Company of Chicago, pursuant to which
certain debt
securities of Fairchild were issued (incorporated by
reference to
Registration Statement No. 2-80009 on Form S-3).
4(j) Indenture dated as of January 1, 1978, between Fairchild
and
Bankers Trust Company, pursuant to which Fairchild's
9-3/4%
Subordinated Debentures due April 1, 1988 were issued
(incorporated by reference to Registration Statement No.
2-60451
on Form S-7).
10(a) Restated and Amended Credit Agreement dated as of July
27, 1992
(incorporated by reference in the 1993 10-K).
10(a)(i) Amendment No. 1 dated as of June 30, 1993 to Restated
and
Amended Credit Agreement dated as of July 27, 1992
(incorporated
by reference in the 1993 10-K).
10(a)(ii) Amendment No. 2, dated as of October 1, 1993, to
Restated and
Amended Credit Agreement dated as of July 27, 1992
(incorporated
by reference in the 1994 10-K).
10(a)(iii) Amendment No. 3, dated as of December 23, 1993, to
Restated
and Amended Credit Agreement dated as of July 27, 1992
(incorporated by reference in the 1994 10-K).
10(a)(iv) Amendment No. 4, dated as of March 31, 1994, to Restated
and Amended Credit Agreement dated as of July 27, 1992
(incorporated by reference in the 1994 10-K).
10(a)(v) Amendment No. 5, dated as of July 29, 1994, Restated and
Amended Credit Agreement dated as of July 27, 1992
(incorporated by reference in the 1995 10-K).
10(a)(vi) Amendment No. 6, dated as of October 15, 1994, to
Restated and
Amended Credit Agreement dated as of July 27, 1992
(incorporated by reference in the 1995 10-K).
10(a)(vii) Amendment No. 7, dated as of January 18, 1995, to
Restated and
Amended Credit Agreement dated as of July 27, 1992
(incorporated by reference in the 1995 10-K).
10(a)(viii)Amendment No. 8, dated as of February 15, 1995, to
Restated and
Amended Credit Agreement dated as of July 27, 1992
(incorporated by reference in the 1995 10-K).
10(a)(ix) Amendment No. 9, dated as of May 25, 1995, to Restated
and
Amended Credit Agreement dated as of July 27, 1992
(incorporated by reference in the 1995 10-K).
10(a)(x) Amendment No. 10, dated as of June 30, 1995, to Restated
and
Amended Credit Agreement dated as of July 27, 1992
(incorporated by reference in the 1995 10-K).
*10(a)(xi) Amendment No. 11, dated as of September 6, 1995, to
Restated and
Amended Credit Agreement dated as of July 17, 1992.
*10(a)(xii)Amendment No. 12, dated as of January 12, 1996, to
Restated and
Amended Credit Agreement dated as of July 27, 1992.
10(b) Share Purchase Agreement dated January 13, 1989, between
Textron, Inc. and Registrant regarding sale to Textron
Inc. of
all shares of Avdel PLC held by Registrant or Rexnord
Holdings
(U.K.) PLC (incorporated by reference to the 1989 10-K).
10(c) Form of Agreement among Registrant, Transcontinental
Services
Group, N.V., Jeffrey J. Steiner, Nathaniel de
Rothschild, Robert
P. Burrow and Daniel Lebard (incorporated by reference
to
Schedule 13D of Transcontinental Services Group N.V.
dated
January 28, 1988).
10(d) Securities Purchase Agreement dated as of August 15,
1988, by
and among Registrant, Rex-PT, Inc. ("Rex-PT"), Rex-PT
Holdings
Inc. ("Rex-PT Holdings") and certain Purchasers,
including (i) as
Exhibit 2, Debt Registration Rights Agreement dated as
of August
15, 1988, by and among Rex-PT and certain Purchasers,
(ii) as
Exhibit 3, Common Stock Registration Rights Agreement
dated as of
August 16, 1988, by and among Rex-PT Holdings and
certain
Purchasers, and (iii) as Exhibit 4, Stockholders'
Agreement dated
as of August 16, 1988, by and among Registrant, Rex-PT
Holdings,
RHI and certain holders of Rex-PT Holdings common stock
(incorporated by reference to the August 16, 1988 8-K).
10(e) Form of Securities Purchase Agreement among Rex-PT
Holdings,
Rex-PT, Registrant and Rex-PT Investors Inc. ("Rex-PT
Investors")
(incorporated by reference to Registrant's Current
Report on Form
8-K dated September 29, 1988 (the "September 29, 1988
8-K")).
10(f) Form of Agreement of Merger between Rex-PT Holdings and
Rex-PT
Investors (incorporated by reference to the September
29, 1988
8-K).
10(g) Form of Securities Purchase Agreement among Rex-PT
Investors,
Rex-PT Holdings, Rex-PT, Registrant and certain
purchasers
(incorporated by reference to the September 29, 1988
8-K).
10(h) Form of Stockholders' Agreement among Rex-PT Holdings,
Registrant, RHI and Rex-PT Investors (incorporated by
reference to
the September 29, 1988 8-K).
10(i) Form of Voting Trust Agreement among certain holders of
Rex-PT
Holdings common stock (incorporated by reference to the
September
29, 1988 8-K).
10(j) Form of Amended and Restated Common Stock Registration
Rights
Agreement among Rex-PT Holdings and certain purchasers
(incorporated by reference to the September 29, 1988
8-K).
10(k) Form of Common Stock Registration Rights Agreement
between
Rex-PT Holdings and Rex-PT Investors (incorporated by
reference
to the September 29, 1988 8-K).
10(l) Form of Common Stock Registration Rights Agreement
between
Rex-PT Holdings and RHI (incorporated by reference to
the
September 29, 1988 8-K).
10(m) Form of Registration Rights Agreement between Rex-PT
Holdings,
RHI and certain purchasers (incorporated by reference to
the
September 29, 1988 8-K).
10(n) Form of Registration Rights Agreement between Rex-PT
Holdings,
RHI and certain purchasers (incorporated by reference to
the
September 29, 1988 8-K).
10(o) Form of Amended and Restated Stockholders' Agreement
between
Rex-PT Holdings, Registrant, RHI and certain investors
(incorporated by reference to the September 29, 1988
8-K).
10(p) Share Purchase Agreement dated October 4, 1988, by and
between
Rexnord Holdings, Registrant, ChemRex Inc. and SKW
Alloys, Inc.,
ABM Investments Ltd., SKW Bauchemie GmbH and SKW
Trostberg Ag
(incorporated by reference to Registrant's Current
Report on Form
8-K dated November 15, 1988 (the "November 15, 1988
8-K")).
10(q) Asset Purchase Agreement dated November 15, 1988, by and
among
RHI, ChemRex Inc. and J.W. Brett, Inc. (incorporated
by reference to the September 29, 1988 8-K).
10(r) Asset Purchase Agreement dated as of December 16, 1988,
between
RHI and Ilium Industries, Inc. (the "Ilium Agreement");
Amendment
to the Ilium Agreement dated as of February 21, 1989;
and Second
Amendment to the Ilium Agreement dated as of March 15,
1989)
(incorporated by reference to Registrant's Current
Report on Form
8-K dated March 17, 1989).
10(s) Agreement and Plan of Merger dated as of May 7, 1989,
among
Registrant, Specialty Fastener Holdings, Inc. and
Fairchild, and
Amendment thereto dated May 12, 1989 (incorporated by
reference
to Registrant's Current Report on Form 8-K dated June
19, 1989).
10(t) Assets Purchase Agreement dated May 31, 1989, among
Matra S.A.,
AERO Acquisition Corp., Registrant and Fairchild
Acquisition
Corp. ("FAC") (incorporated by reference to Exhibit
(a)(10) to
Amendment No. 2 to Tender Offer Statement on schedule
14D-1 and
Schedule 13D of Registrant and FAC, dated May 31, 1989).
10(u) Agreement dated as of June 28, 1992, between Banner
Investments,
Inc. and Registrant (incorporated by reference to 1992
10-K).
10(v) Agreement dated as of June 26, 1993, between Banner
Investments,
Inc. and Registrant (incorporated by reference to 1993
10-K).
10(w) Exchange and Standstill Agreement dated July 19, 1993,
among The
Fairchild Corporation, Registrant, RHI and Rex-PT
Holdings, Inc.
(incorporated by reference to 1993 10-K).
10(x) Registration Rights Agreement dated July 9, 1993 between
Rexnord Corporation and RHI (incorporated by reference
to 1994
10-K).
10(y) Allocation Agreement dated April 13, 1993 by and among
The
Fairchild Corporation, RHI, Rex-PT Holdings, Rexnord
Corporation,
Rexnord Puerto Rico, Inc. and Rexnord
Canada Limited (incorporated by reference to 1993 10-K).
10(z) Trademark Purchase Agreement dated April 13, 1993 by and
between Rexnord Corporation and RHI (incorporated by
reference
to 1993 10-K).
10(a)(a) Purchase Agreement by and between BTR Dunlop Holdings,
Inc., The
Fairchild Corporation and Registrant dated as of
December 2, 1993
(incorporated by reference to Registrant's Current
Report on
Form 8-K dated December 23, 1993).
10(a)(b) Agreement and Plan of Merger dated as of November 9,
1995 by and
among The Fairchild Corporation, RHI, FII and Shared
Technologies,
Inc. ("STI Merger Agreement") (incorporated by reference
from the
Registrant's Form 8-K dated as of November 9, 1995).
10(a)(b)(i) Amendment No. 1 to STI Merger Agreement dated as of
February 2,
1996 (incorporated by reference from the Registrant's
Form 8-K
dated as of March 13, 1996).
10(a)(b)(ii) Amendment No. 2 to STI Merger Agreement dated as of
February
23, 1996 (incorporated by reference from the
Registrant's Form 8-K
dated as of March 13, 1996).
10(a)(b)(iii) Amendment No. 3 to STI Merger Agreement dated as of
March 1,
1996 (incorporated by reference from the Registrant's
Form 8-K
dated as of March 13, 1996).
10(a)(c) Asset Purchase Agreement dated as of January 23, 1996,
between
The Fairchild Corporation, RHI and Cincinnati Milacron,
Inc.
(incorporated by reference from the Registrant's Form
8-K dated
as of January 26, 1996).
*10(a)(d) Credit Agreement dated as of March 13, 1996, among
Fairchild
Holding Corporation ("FHC"), Citicorp USA, Inc. and
certain
financial institutions.
*10(a)(e) Restated and Amended Credit Agreement dated as of May
27, 1996,
(the "RHI Credit Agreement"), among RHI, Citicorp USA,
Inc. and
certain financial institutions.
*10(a)(e)(i) Amendment No. 1 dated as of July 29, 1996, to the RHI
Credit
Agreement dated as of May 27, 1996.
*10(a)(f) Restated and Amended Credit Agreement dated as of July
26, 1996,
(the "FHC Credit Agreement"), among FHC, Citicorp USA,
Inc. and
certain financial institutions.
10(a)(g) Stock Exchange Agreement between The Fairchild
Corporation and
Banner Aerospace, Inc. pursuant to which the Registrant
exchanged
Harco, Inc. for shares of Banner Aerospace, Inc.
(incorporated
by reference to the Banner Aerospace, Inc. Definitive
Proxy
Statement dated and filed with the SEC on February 23,
1996
with respect to the Special Meeting of Shareholders of
Banner Aerospace, Inc. held on March 12, 1996).
*10(a)(h) Employment Agreement between RHI Holdings, Inc., and
Jacques
Moskovic, dated as of December 29, 1994.
*10(a)(i) Employment Agreement between RHI Holdings, Inc., and
Jacques
Moskovic, dated as of December 29, 1994.
*21 List of subsidiaries of RHI Holdings, Inc.
*27 Financial Data Schedules.
28(a) Form 11-K Annual Report of the Rexnord Savings and
Investment
Plan for the year ended December 31, 1987 (incorporated
by
reference to 1988 Form 10-K).
99(a) Registrant's press release, dated December 23, 1993
(incorporated by reference to Registrant's Current
Report on
Form 8-K dated December 23, 1993).
99(b) Financial statements, related notes thereto, financial
statement schedules, and Auditors' Reports of Banner
Aerospace,
Inc. for the fiscal year ended March 31, 1996
(incorporated by
reference to Banner Aerospace, Inc.'s Form 10-K for
fiscal year
ended March 31, 1996).
* Filed herewith
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the last
quarter
of 1994 fiscal year.
28(c) Financial statements, related notes thereto, financial
statements
schedules, and Auditors.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities
Exchange Act of 1934, the registrant has duly caused this report to
be signed
on its behalf by the undersigned, thereunto duly authorized.
RHI HOLDINGS, INC.
Registrant
By: Michael T. Alcox
Vice President and
Chief Financial Officer
Date: September 26, 1996
<PAGE>
Pursuant to the requirements of the Securities Act of 1934, this
report has
been signed by the following persons in the capacities and on the
dates
indicated:
Name, Title, Capacity Date
--------------------- ----
Jeffrey J. Steiner
------------------------------- September 26, 1996
Chairman, Chief Executive
Officer, President and Director
Michael T. Alcox
------------------------------- September 26, 1996
Senior Vice President, Chief
Financial Officer and Director
Frederick W. McCarthy
------------------------------- September 26, 1996
Director
Irving Levine
------------------------------- September 26, 1996
Director
<PAGE>
RHI HOLDINGS, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Changes in allowance for doubtful accounts are as follows:
<TABLE>
<CAPTION>
For the years ended June 30,
---------------------------
1996 1995 1994
----- ----- -----
<S> <C> <C> <C>
Beginning balance............ $3,776 $2,130 $ 929
Charged to costs and expenses 2,031 1,837 360
Charged to other accounts (1) 1,977 (90) 1,329
Amounts written off.......... (1,713) (101) (488)
----- ----- -----
Ending balance............... $6,071 $3,776 $2,130
===== ===== =====
(1) Recoveries of amounts written off in prior periods and foreign
currency
translation. Included in Fiscal 1996 is $2,348 relating to the
consolidation of Banner Aerospace, Inc. and $(309) from the
deconsolidation of the Fairchild Communications Services
Company
resulting from the Merger. Included in Fiscal 1994 is $1,179
relating
to the acquisition of a subsidiary.
</TABLE>
RESTATED AND AMENDED
CREDIT AGREEMENT
Dated as of May 27, 1996
Among
RHI HOLDINGS, INC.,
as Borrower
THE FINANCIAL INSTITUTIONS
LISTED ON THE
SIGNATURE PAGES HEREOF,
and
CITICORP NORTH AMERICA, INC.,
as Administrative Agent
<PAGE>
TABLE OF CONTENTS
ARTICLE IDEFINITIONS
SECTION 1.01 Certain Defined
Terms.............................2
SECTION 1.02 Computation of Time
Periods......................25
SECTION 1.03 Accounting and Commercial
Terms..................26
SECTION 1.04 Other Definitional
Provisions....................26
ARTICLE IIRESTATEMENT OF 1992 CREDIT
AGREEMENT
SECTION 2.01 Amendment and Restatement of 1992 Credit
Agreement........................................26
ARTICLE IIIAMOUNTS AND TERMS OF LOANS
SECTION 3.01 Intentionally
Omitted............................27
SECTION 3.02 Intentionally
Omitted............................27
SECTION 3.03 Intentionally
Omitted............................27
SECTION 3.04 Intentionally
Omitted............................27
SECTION 3.05 Revolving Credit
Loans...........................27
SECTION 3.06 Intentionally
omitted............................28
SECTION 3.07 Procedure for Revolving Credit
Borrowings........28
SECTION 3.08 Making of Revolving Credit
Loans.................28
SECTION 3.09 Conversion or Continuation of Base Rate Loans
and
Eurodollar Rate
Loans............................29
SECTION 3.10 Authorized Officers and Employees; Telephonic
Notices..........................................29
SECTION 3.11 Endorsement of Payments on
Note..................30
SECTION 3.12 Intentionally
omitted............................31
SECTION 3.13 Foreign Exchange Contracts; Interest Rate
Contracts........................................31
SECTION 3.14 Special Provisions Governing Eurodollar Rate
Loans............................................33
SECTION 3.15 Senior Lenders' Obligations
Several..............38
ARTICLE IVPAYMENTS AND PREPAYMENTS
SECTION 4.01
Prepayments......................................38
SECTION 4.02 Mandatory Prepayments of
Loans...................38
SECTION 4.03 Reductions of
Commitments........................39
SECTION 4.04 Intentionally
omitted............................39
SECTION 4.05 Manner and Time of
Payment.......................39
SECTION 4.06 Apportionment and Application of
Payments........40
SECTION 4.07 Required Additional Cash
Collateral..............42
ARTICLE VTHE LETTER OF CREDIT SUBFACILITY
SECTION 5.01 Obligation to
Issue..............................42
SECTION 5.02
Conditions.......................................43
SECTION 5.03 Issuance of Letters of
Credit....................43
SECTION 5.04 Reimbursement Obligations; Duties of Issuing
Banks............................................45
SECTION 5.05
Participations...................................45
SECTION 5.06 Payment of Reimbursement
Obligations.............48
SECTION 5.07
Exoneration......................................48
SECTION 5.08 Issuing Bank Reporting
Requirements..............49
ARTICLE VIINTEREST AND FEES
SECTION 6.01 Interest
Rate....................................49
SECTION 6.02 Default
Interest.................................50
SECTION 6.03 Computation of
Interest..........................50
SECTION 6.04 Interest
Payments................................50
SECTION 6.05 Administrative Agent's
Fee.......................50
SECTION 6.06 Intentionally
omitted............................50
SECTION 6.07 Non-Use
Fees.....................................51
SECTION 6.08 Letter of Credit Fees; Issuing Bank
Charges......51
SECTION 6.09 Payment of
Fees..................................51
SECTION 6.10 Changes; Legal
Restrictions......................52
SECTION 6.11 Increased
Capital................................53
ARTICLE VIICONDITIONS PRECEDENT
SECTION 7.01 Conditions to
Effectiveness......................54
SECTION 7.02 Conditions Precedent to All Loans and the
Issuance
of Letters of
Credit.............................55
ARTICLE VIIIREPRESENTATIONS AND WARRANTIES
SECTION 8.01 Organization; Corporate
Powers...................56
SECTION 8.02 Authorization;
Enforceability....................57
SECTION 8.03 No
Conflict......................................57
SECTION 8.04 Governmental
Consents............................58
SECTION 8.05 Subsidiaries and Ownership of Capital
Stock......58
SECTION 8.06 Pledge of
Collateral.............................59
SECTION 8.07 Governmental
Regulation..........................59
SECTION 8.08 Litigation; Adverse
Effects......................59
SECTION 8.09 No Material Adverse
Change.......................60
SECTION 8.10 Payment of
Taxes.................................60
SECTION 8.11 Material Adverse
Agreements......................61
SECTION 8.12
Performance......................................61
SECTION 8.13 Securities
Activities............................61
SECTION 8.14 Requirements of
Law..............................61
SECTION 8.15 Patents, Trademarks, Permits,
etc................61
SECTION 8.16 Environmental
Matters............................62
SECTION 8.17 No
Default.......................................63
SECTION 8.18
ERISA............................................63
SECTION 8.19 Tax
Examinations.................................64
SECTION 8.20 Financial
Condition..............................65
SECTION 8.21
Guaranties.......................................65
SECTION 8.22 Senior
Indebtedness..............................65
ARTICLE IXREPORTING COVENANTS
SECTION 9.01 Financial
Statements.............................66
SECTION 9.02 Certificates to Accompany Financial
Statements...67
SECTION 9.03 Intentionally
omitted............................68
SECTION 9.04 Officer's Certificates Regarding Investments
and
Indebtedness.....................................68
SECTION 9.05 Intentionally
omitted............................69
SECTION 9.06 Other Financial
Information......................69
SECTION 9.07 Environmental
Notices............................69
SECTION 9.08 Declaration of Dividends and Other
Distributions.70
SECTION 9.09 Notices Concerning Defaults, Material Adverse
Change and
Litigation............................70
SECTION 9.10 ERISA
Reporting..................................71
SECTION 9.11 Other
Reports....................................72
SECTION 9.12 Independent Certified Public
Accountants.........72
SECTION 9.13 TFC/RHI Consolidated
Liquidity...................73
ARTICLE XAFFIRMATIVE COVENANTS
SECTION 10.01 Corporate Existence,
etc........................73
SECTION 10.02 Compliance with Laws,
etc.......................74
SECTION 10.03 Payment of
Taxes................................74
SECTION 10.04 Maintenance of Properties;
Insurance............74
SECTION 10.05 Inspection of Property; Books and Records;
Discussions.....................................75
SECTION 10.06 Intentionally
omitted...........................75
SECTION 10.07 Use of
Proceeds.................................75
SECTION 10.08 Intentionally
omitte............................75
SECTION 10.09 Receipt of Certain
Funds........................76
SECTION 10.10 Maintenance of Tax Allocation
Agreement.........76
SECTION 10.11 Separate Corporate
Existence....................76
SECTION 10.12 Consolidated Net Worth of the Borrower;
Liquidity.......................................77
SECTION 10.13 Future Liens for the Benefit of the Senior
Lenders.........................................77
ARTICLE XINEGATIVE COVENANTS
SECTION 11.01
Liens...........................................78
SECTION 11.02 Conduct of
Business.............................79
SECTION 11.03 Transactions with Shareholders and
Affiliates...79
SECTION 11.04 Restriction on Fundamental
Changes..............79
SECTION 11.05
ERISA...........................................80
SECTION 11.06 Sales and
Leasebacks............................81
SECTION 11.07 Subordinated
Indebtedness.......................81
SECTION 11.08 Amendment of Charter or By-
laws...............82
SECTION 11.09 Issuance and Disposal of
Stock..................82
SECTION 11.10 Interest Exchange
Agreements....................82
SECTION 11.11 Asset
Transfers.................................82
SECTION 11.12 Consulting
Contracts............................82
SECTION 11.13 Intentionally
omitted...........................82
SECTION 11.14 Consolidated Capital
Expenditures...............83
SECTION 11.15 Intercompany
Indebtedness.......................83
SECTION 11.16
Indebtedness....................................83
SECTION 11.17 Sales of
Assets.................................85
SECTION 11.18
Investments.....................................85
SECTION 11.19 Restricted Junior
Payments......................88
SECTION 11.20 Accommodation
Obligations.......................89
SECTION 11.21 Restriction on Operating
Leases.................89
SECTION 11.22 Sale of
Accounts................................90
ARTICLE XIA INTENTIONALLY OMITTED
ARTICLE XIB INTENTIONALLY OMITTED
ARTICLE XIC INTENTIONALLY OMITTED
ARTICLE XII INTENTIONALLY OMITTED
ARTICLE XIII INTENTIONALLY OMITTED
ARTICLE XIVEVENTS OF DEFAULT; RIGHTS AND REMEDIES
SECTION 14.01 Events of
Default...............................91
SECTION 14.02 Intentionally
omitted...........................95
SECTION 14.03 Rights and
Remedies.............................96
ARTICLE XV THE ADMINISTRATIVE AGENT
SECTION 15.01
Appointment.....................................97
SECTION 15.02 Nature of
Duties................................97
SECTION 15.03 Rights, Exculpation,
etc........................98
SECTION 15.04
Reliance........................................98
SECTION 15.05
Indemnification.................................99
SECTION 15.06 The Administrative Agent
Individually...........99
SECTION 15.07 Successor Administrative
Agents.................99
SECTION 15.08 Collateral
Management..........................100
ARTICLE XVIMISCELLANEOUS
SECTION 16.01 Concerning the Collateral
Documents............100
SECTION 16.02 Assignment of Loans; Participation in the
Facilities.....................................101
SECTION 16.03
Expenses.......................................104
SECTION 16.04
Indemnity......................................105
SECTION 16.05 Change in Accounting
Principles................106
SECTION 16.06 Set-
Off......................................106
SECTION 16.07 Ratable
Sharing................................107
SECTION 16.08 Amendments and
Waivers.........................108
SECTION 16.09 Independence of
Covenants......................109
SECTION 16.10
Notices........................................110
SECTION 16.11 Survival of Warranties and Certain
Agreements..110
SECTION 16.12 Failure or Indulgence Not Waiver; Remedies
Cumulative.....................................110
SECTION 16.13 Marshalling; Payments Set
Aside................110
SECTION 16.14
Severability...................................111
SECTION 16.15 Obligations
Several............................111
SECTION 16.16
Headings.......................................111
SECTION 16.17 Governing
Law..................................111
SECTION 16.18 Limitation of
Liability........................111
SECTION 16.19 Successors and Assigns; Subsequent Holders of
Notes..........................................111
SECTION 16.20 Consent to Jurisdiction and Service of
Process;
Waiver of Jury Trial; Bankruptcy
Venue.........112
SECTION 16.21 Counterparts; Effectiveness;
Inconsistencies...112
SECTION 16.22 Performance of
Obligations.....................113
SECTION 16.23 Intentionally
omitted..........................113
SECTION 16.24 Replacement of Certain Senior
Lenders..........113
SECTION 16.25 No Default Under 1992 Credit
Agreement.........115
SCHEDULES
Schedule 1.01-A-Eurodollar Affiliates
Schedule 1.01-B-Excluded Dispositions
Schedule 1.01-C-Existing Investments
Schedule 1.01-D-Permitted Existing Indebtedness
Schedule 1.01-E-Subsidiary Guarantors
Schedule 8.05-Borrowers and their Subsidiaries; Ownership of
Borrowers' and Their Subsidiaries' Capital Stock
Schedule 8.08-Litigation
Schedule 8.16-Environmental Matters
Schedule 8.18-Post-Employment Employee Welfare Plans
Schedule 8.19-Tax Matters
Schedule 10.04-Insurance Policies
Schedule 11.03-Management Contracts and Service Agreements
with Affiliates
Schedule 11.20-Unsecured Guaranties by Fairchild Germany,
Inc. of Indebtedness of Fairchild Convac GmbH
<PAGE>
EXHIBITS
Exhibit A-Form of Assignment Agreement
Exhibit B-Form of Compliance Certificate
Exhibit C-Form of Revolving Credit Note
Exhibit D-Form of Notice of Borrowing
Exhibit E-Form of Notice of Conversion/Continuation
Exhibit F-List of Closing Documents
Exhibit G-Form of Officer's No Default Certificate
Exhibit H-Form of Officer's Certificate Regarding
Investments and Indebtedness
Exhibit I-Form of Officer's Certificate Regarding
TFC/RHI Consolidated Liquidity
RESTATED AND AMENDED CREDIT AGREEMENT
Dated as of May 27, 1996
THIS RESTATED AND AMENDED CREDIT AGREEMENT, dated as of
May 27, 1996, among RHI Holdings, Inc., a Delaware
corporation, the Senior Lenders from time to time a party
hereto, the Issuing Banks from time to time a party hereto,
and the Administrative Agent, sets forth the terms upon
which the Senior Lenders and Issuing Banks will, among other
things, (i) continue certain loans and other extensions of
credit made to the Borrower under the 1992 Credit Agreement
and (ii) make certain additional loans and/or otherwise
extend additional financial accommodations to the Borrower.
W I T N E S S E T H:
WHEREAS, pursuant to the 1992 Credit Agreement, the
Borrower incurred certain obligations and indebtedness for
loans and other financial accommodations extended to it and
issued certain Notes evidencing such indebtedness;
WHEREAS, the terms and provisions of the 1992 Credit
Agreement as they pertain to (i) all borrower parties
thereto other than the Borrower have been terminated in
their entirety, except for certain indemnities thereunder,
and (ii) all lender parties thereto other than Citicorp
North America, Inc. in its capacity as a Senior Lender to
the Borrower and Citibank, N.A. in its capacity as Issuing
Bank to the Borrower have been terminated in their entirety,
except as beneficiaries of the indemnities referenced in
clause (i) above, in each instance, as set forth in that
certain Mutual Release Agreement Agreement dated as of March
13, 1996, among VSI Corporation, Fairchild Industries, Inc.,
the Borrower, in its capacity as a guarantor of certain
obligations owing under the 1992 Credit Agreement by VSI
Corporation and Fairchild Industries, Inc., certain
Subsidiaries of VSI Corporation, Shared Technologies
Fairchild, Inc., and certain financial institutions parties
thereto;
WHEREAS, the Borrower has requested that Citicorp North
America, Inc., as the sole Senior Lender having any
commitment outstanding to the Borrower under the 1992 Credit
Agreement, and Citibank, N.A., as Issuing Bank under the
1992 Credit Agreement, modify certain of the terms and
provisions of the 1992 Credit Agreement and such Senior
Lender and Issuing Bank are willing to modify certain terms
and provisions of the 1992 Credit Agreement, in each case on
the terms and conditions set forth herein; and
WHEREAS, in view of the foregoing, the Administrative
Agent, Citicorp North America, Inc., as Senior Lender,
Citibank, N.A., as Issuing Bank, and the Borrower have
agreed to enter into this Agreement in order to (i) restate
and amend the terms and provisions of the 1992 Credit
Agreement which relate to the Borrower and (ii) set forth
the terms and conditions under which the Senior Lenders
will, on the date hereof and hereafter, extend loans and
make other financial accommodations to or for the benefit of
the Borrower;
NOW, THEREFORE, in consideration of the premises set
forth above and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged,
the Senior Lender, the Issuing Bank, the Borrower, and the
Administrative Agent hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Certain Defined Terms. The following terms
used in this Agreement shall have the following meanings:
"Accommodation Obligation," as applied to any Person,
shall mean any contractual obligation, contingent or
otherwise, of that Person with respect to any Indebtedness
or other obligation or liability of another Person,
including, without limitation, any such Indebtedness,
obligation or liability directly or indirectly guaranteed,
endorsed (otherwise than for collection or deposit in the
ordinary course of business), co-made or discounted or sold
with recourse by that Person, or in respect of which that
Person is otherwise directly or indirectly liable, including
Contractual Obligations (contingent or otherwise) arising
through any agreement to purchase, repurchase, or otherwise
acquire such Indebtedness, obligation or liability or any
security therefor, or to provide funds for the payment or
discharge thereof (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise), or to
maintain solvency, assets, level of income, or other
financial condition, or to make payment other than for value
received.
"Accounts" shall mean and include, with respect to any
Person, all of such Person's present and future rights to
payment for goods, merchandise or Inventory sold or leased
or for services rendered, including, without limitation,
those which are not evidenced by instruments or chattel
paper, and whether or not they have been earned by
performance; accounts; proceeds of any letters of credit on
which such Person is named as beneficiary; contract rights;
chattel paper; instruments; documents; insurance proceeds;
and all such obligations whatsoever owing to such Person,
together with all instruments and all documents of title
representing any of the foregoing, all rights in any goods,
merchandise or Inventory which any of the same may
represent, all rights in any returned or repossessed goods,
merchandise and Inventory, and all right, title, security
and guaranties with respect to each of the foregoing,
including, without limitation, any right of stoppage in
transit.
"Administrative Agent" shall mean Citicorp, not
individually, but in its capacity as administrative agent
for the Senior Lenders and Issuing Banks hereunder, and any
successor Administrative Agent appointed pursuant to Section
15.07.
"Aerospace" shall mean Banner Aerospace, Inc., a
Delaware corporation.
"Aerospace Credit Agreement" shall mean that certain
Credit Agreement dated as of August 2, 1995 among Aerospace,
Burbank Aircraft Supply, Inc., certain financial
institutions a party thereto as lenders and issuing banks,
and Citicorp USA, Inc., as administrative agent, as the same
may be amended, restated, modified or supplemented from time
to time.
"Aerospace Group" shall mean Aerospace and its
Subsidiaries.
"Affiliate," as applied to any Person, shall mean any
other Person directly or indirectly controlling, controlled
by, or under common control with, that Person. For purposes
of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and
"under common control with"), as applied to any Person,
means the possession, directly or indirectly, of the power
to vote ten percent (10%) or more of the Securities having
voting power for the election of directors of such Person or
otherwise to direct or cause the direction of the management
and policies of that Person, whether through the ownership
of voting securities or by contract or otherwise.
"Aggregate Foreign Exchange Exposure" shall mean the
aggregate amount of Foreign Exchange Exposure with respect
to Secured F/X Contracts to which Borrower is a party at
such time.
"Aggregate Interest Rate Exposure" shall mean the
aggregate amount of Interest Rate Exposure with respect to
Secured Interest Rate Contracts to which Borrower is a party
at such time.
"Agreement" shall mean this Restated and Amended Credit
Agreement, dated as of May 27, 1996, as it may be amended,
supplemented, restated or otherwise modified from time to
time.
"Allocation Memorandum" shall mean that certain
Memorandum for Allocating Corporate G&A Expense in FY '97
dated May 8, 1996, prepared by the Borrower and delivered to
the Administrative Agent prior to the Closing Date, as
amended, supplemented, restated or otherwise modified from
time to time for succeeding Fiscal Years.
"Applicable Eurodollar Rate Margin" shall mean one and
one-quarter percent (1.25%) per annum.
"Assignment Agreement" shall mean an Assignment and
Acceptance in substantially the form of Exhibit A hereto
pursuant to which a Senior Lender assigns all or a portion
of its rights under and in connection with this Agreement
and the Notes to another Person and such other Person
assumes all or a portion of such Senior Lender's obligations
under this Agreement, all as permitted pursuant to the
provisions of Section 16.02.
"Bankruptcy Code" shall mean Title 11 of the United
States Code (11 U.S.C 101 et seq.), as amended to the date
hereof and from time to time hereafter, and any successor
statute.
"Base Rate" shall mean, for any period, a fluctuating
interest rate per annum as shall be in effect from time to
time, which rate per annum shall at all times be equal to
the highest of:
(i) the rate of interest announced publicly by
Citibank in New York, New York, from time to time, as
Citibank's base rate;
(ii) the sum (adjusted to the nearest one-quarter of
one percent (1/4 of 1%) or, if there is no nearest one-
quarter of one percent (1/4 of 1%), to the next higher one-
quarter of one percent (1/4 of 1%)) of (A) one-half of one
percent (1/2 of 1%) per annum plus (B) the rate per annum
obtained by dividing (1) the latest three-week moving
average of secondary market morning offering rates in the
United States for three-month certificates of deposit of
major United States money market banks, such three-week
moving average being determined weekly on each Monday (or,
if any such day is not a Business Day, on the next succeed-
ing Business Day) for the three-week period ending on the
previous Friday (or, if such day is not a Business Day, on
the next succeeding Business Day) by Citibank on the basis
of such rates reported by certificate of deposit dealers to,
and published by, the Federal Reserve Bank of New York, or,
if such publication shall be suspended or terminated, on the
basis of quotations for such rates received by Citibank from
three New York certificate of deposit dealers of recognized
standing selected by Citibank by (2) a percentage equal to
one hundred percent (100%) minus the Reserve Percentage for
such three-week period plus (C) the Base Assessment Rate (as
defined below) for such three-week period. The "Reserve
Percentage" for any three-week period is the average of the
daily percentages specified during such three-week period by
the Federal Reserve Board for determining the maximum
reserve requirement (including, but not limited to, any
emergency, supplemental or other marginal reserve
requirement) for Citibank in respect of liabilities which
consist of or which include (among other liabilities) three-
month Dollar nonpersonal time deposits in the United States.
The "Base Assessment Rate" for any three-week period is the
average during such three-week period of the annual assess-
ment rates estimated by Citibank for determining the then
current annual assessment payable by Citibank to the Federal
Deposit Insurance Corporation (or any successor thereto) for
insuring Dollar deposits of Citibank in the United States;
and
(iii) the sum of (A) one half of one percent (1/2 of
1%) per annum plus (B) the Federal Funds Rate in effect from
time to time during such period.
"Base Rate Loans" shall mean those Loans outstanding
which bear interest at a rate based upon the Base Rate as
provided in subsection 6.01(b).
"Benefit Plan" shall mean, with respect to any
Borrower, any employee benefit plan defined in Section 3(3)
of ERISA, other than a Multiemployer Plan, in respect of
which such Borrower or any ERISA Affiliate of such Borrower
is, or within the immediately preceding five (5) years was,
an "employer" as defined in Section 3(5) of ERISA.
"Borrower" shall mean RHI Holdings, Inc., a Delaware
corporation.
"Borrower Pledge Agreement" shall mean the Amended and
Restated Pledge Agreement, dated as of May 27, 1996 executed
by Borrower in favor of the Administrative Agent, for the
benefit of the Senior Secured Creditors, relating to the
pledge of the stock of certain of the Subsidiaries of
Borrower as security for the Obligations, as such Amended
and Restated Pledge Agreement may be amended, supplemented,
restated or otherwise modified from time to time.
"Borrower Security Agreement" shall mean that certain
Amended and Restated Security Agreement, dated as of May 27,
1996, executed by the Borrower in favor of the
Administrative Agent for the benefit of the Senior Secured
Creditors, as the same may be amended, supplemented,
restated or otherwise modified from time to time.
"Borrowing" shall mean a borrowing consisting of Loans
of the same type (except as otherwise provided in subsection
3.14(e)), made on the same day to the Borrower by the Senior
Lenders.
"Business Day" shall mean any day excluding Saturday,
Sunday and any day which is a legal holiday under the law of
the State of New York or Illinois, or is a day on which
banking institutions located in either such state are
required or authorized by law or other governmental action
to close and, with respect to all notices, determinations,
fundings and payments in connection with the Eurodollar Rate
Loans, any day which is also a day for trading by and
between banks in the London interbank Eurodollar market.
"Capital Lease," shall mean, as applied to any Person,
any lease of any property (whether real, personal, or mixed)
by that Person as lessee which, in conformity with GAAP, is
accounted for as a capital lease on the balance sheet of
that Person.
"Cash" shall mean money, currency or a credit balance
in a Deposit Account.
"Cash Collateral Pledge Agreement" shall mean that
certain Pledge and Assignment Agreement, dated as of
September 5, 1995, executed by Borrower in favor of the
Senior Secured Creditors, relating to the pledge and
assignment of certain cash collateral as security for the
Obligations, as such Cash Collateral Pledge Agreement may be
amended, supplemented, restated or otherwise modified from
time to time and as reaffirmed pursuant to that certain
Reaffirmation Agreement and Acknowledgment dated as of May
27, 1996 executed by Borrower.
"Cash Equivalents" shall mean (i) marketable direct
obligations issued or unconditionally guaranteed by the
United States Government or issued by an agency thereof and
backed by the full faith and credit of the United States, in
each case maturing within ninety (90) days after the date of
acquisition thereof; (ii) marketable direct obligations
issued by any state of the United States of America or any
political subdivision of any such state or any public
instrumentality thereof maturing within ninety (90) days
after the date of acquisition thereof and, at the time of
acquisition, having the highest rating obtainable from
either Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc., or Moody's Investors Services, Inc. (or,
if at any time neither Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc., nor Moody's Investors
Services, Inc. shall be rating such obligations, then from
such other nationally recognized rating services as are
reasonably acceptable to the Agents); (iii) commercial paper
maturing no more than ninety (90) days after the date of
creation thereof and, at the time of acquisition, having the
highest rating from either Standard & Poor's Ratings Group,
a division of McGraw-Hill, Inc., or Moody's Investors
Services, Inc. (or, if at any time neither Standard & Poor's
Ratings Group, a division of McGraw-Hill, Inc., nor Moody's
Investors Services, Inc. shall be rating such obligations,
then the highest rating from such other nationally
recognized rating services as are reasonably acceptable to
the Agents); (iv) domestic and Eurodollar certificates of
deposit or bankers' acceptances maturing within ninety (90)
days after the date of acquisition thereof (A) issued by any
Senior Lender or (B) issued by any commercial bank organized
under the laws of the United States of America or any state
thereof or the District of Columbia having the highest
deposit rating category as published by Keefe, Bruyette &
Woods (or any successor thereto)(or, if such commercial bank
is not rated by Keefe, Bruyette & Woods or a successor
thereto, having either Standard & Poor's Ratings Group, a
division of McGraw-Hill, Inc.'s, or Moody's Investors
Services, Inc.'s highest rating); and (v) any agreement
involving U.S. Government securities, certificates of
deposit or "eligible" bankers' acceptances which provides
for the transfer of such securities against payment in funds
and which contains an agreement by the seller to repurchase
the securities at a specified date not more than one (1)
year after the date of such agreement.
"Citibank" shall mean Citibank, N.A., a national
banking association.
"Citicorp" shall mean Citicorp North America, Inc., a
Delaware corporation.
"Closing Date" shall mean May 27, 1996.
"Collateral" shall mean all property and interests in
property now owned or hereafter acquired by any Person in or
upon which a security interest, lien or mortgage is granted
under the Collateral Documents.
"Collateral Account" shall mean an account maintained
by the Administrative Agent at Citibank.
"Collateral Documents" shall mean, collectively, the
Borrower Security Agreement, the Borrower Pledge Agreement,
the Foreign Subsidiary Pledge Agreements, Cash Collateral
Pledge Agreement, and any other agreement, instrument or
document pursuant to which a security interest or lien is
granted by the Borrower (or any of its predecessors in
interest) or any Subsidiary Guarantor to the Administrative
Agent (or any of its predecessors in interest) to secure the
payment and performance of any of the Obligations.
"Commercial Letter of Credit" shall mean any documen-
tary Letter of Credit which is drawable upon presentation of
documents evidencing the sale, storage, or shipment of goods
purchased by Borrower or any of its Subsidiaries for
Inventory or Equipment in the ordinary course of its
business.
"Commission" shall mean the Securities and Exchange
Commission or any Governmental Authority succeeding to its
functions.
"Commitment" shall mean, with respect to each Senior
Lender the amount set forth below such Senior Lender's name
under the heading "Commitment" on the signature pages of
this Agreement, or, as the case may be, on the signature
page of the Assignment Agreement pursuant to which such
Senior Lender became a Senior Lender hereunder in accordance
with the provisions of Section 16.02, as such amount may be
reduced or increased (whether temporarily or permanently)
from time to time pursuant to the terms of this Agreement,
including any reduction resulting from the assignment of all
or a portion of such Senior Lender's Commitment in
accordance with Section 16.02, and "Commitments" shall mean,
collectively, the aggregate amount of the Commitments, which
aggregate amount shall not exceed at any time the lesser of
(a) $4,250,000 and (b) the amount of cash collateral then on
deposit with the Administrative Agent.
"Commitment Period" shall mean the period during which
the Senior Lenders have committed hereunder to make, subject
to the terms and conditions contained herein, Loans and the
other extensions of credit provided for herein to the
Borrower, which period shall each commence on the Closing
Date and end on May 26, 1998.
"Compliance Certificate" shall mean a certificate
substantially in the form attached hereto as Exhibit B
delivered to the Senior Lenders by Borrower pursuant to
subsection 9.02(a).
"Consolidated Capital Expenditures" shall mean, for any
period, the aggregate of all expenditures (whether paid in
cash or accrued as liabilities during that period and
including that portion of Capital Leases which is
capitalized on the balance sheet of the Borrower by the
Borrower and its Subsidiaries) during such period that, in
conformity with GAAP, are required to be included in the
property, plant or equipment or similar fixed asset accounts
reflected in the consolidated balance sheet of the Borrower
and its Subsidiaries, but excluding expenditures made in
connection with the replacement or restoration of assets, to
the extent financed from insurance proceeds paid or other
recoveries or court awards received on account of the loss
of or damage to the assets being replaced or restored, or
from awards of compensation arising from the taking by
condemnation or eminent domain of such assets being
replaced.
"Consolidated Net Income" shall mean, for any period,
the net income (or loss) of the Borrower and its
Subsidiaries on a consolidated basis for such period taken
as a single accounting period determined in conformity with
GAAP.
"Consolidated Net Worth" shall mean, as at any date of
determination, the amount by which total assets of the
Borrower and its Subsidiaries exceed total liabilities of
the Borrower and its Subsidiaries (all as determined on a
consolidated basis in conformity with GAAP), after deducting
therefrom nonrecurring gains and adding thereto nonrecurring
losses in respect of asset sales, in each case on a
cumulative basis.
"Consolidated Rental Payments" shall mean, for any
period, the aggregate amount of all rents paid or, as used
in Section 11.21, accrued during such period under all
Operating Leases of the Borrower and its Subsidiaries as
lessee (net of sublease income) (all as determined on a
consolidated basis in conformity with GAAP).
"Contractual Obligation," shall mean, as applied to any
Person, any provision of any Securities issued by that
Person or any indenture, mortgage, deed of trust, contract,
undertaking, agreement, instrument or other document to
which that Person is a party or by which it or any of its
properties is bound or to which it or any of its properties
is subject (including, without limitation, any restrictive
covenant affecting any of the properties of such Person).
"Customary Permitted Liens" shall mean
(i) Liens (other than Environmental Liens) for taxes,
assessments or governmental charges or claims not yet due or
which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or
other appropriate provisions are being maintained in
accordance with the provisions of GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed
by law created in the ordinary course of business for
amounts not yet due or which are being contested in good
faith by appropriate proceedings and with respect to which
adequate reserves or other appropriate provisions are being
maintained in accordance with the provisions of GAAP;
(iii) Liens (other than any Lien imposed by ERISA)
incurred or deposits made in the ordinary course of business
(including, without limitation, surety bonds and appeal
bonds) in connection with workers' compensation,
unemployment insurance and other types of social security
benefits or to secure the performance of tenders, bids,
leases, contracts (other than for the repayment of borrowed
money), statutory obligations and other similar obligations
or arising as a result of progress payments under government
contracts; and
(iv) easements, rights-of-way, restrictions, municipal
and zoning ordinances and other similar charges or
encumbrances not interfering with the ordinary conduct of
the business of the Borrower or its Subsidiaries.
"Defined Benefit Plan" shall mean any employee benefit
plan defined in Section 3(3) of ERISA, other than a
Multiemployer Plan, which is subject to the provisions of
Title IV of ERISA and in respect of which the Borrower or an
ERISA Affiliate of the Borrower is, or within the
immediately preceding five (5) years was, an "employer" as
defined in Section 3(5) of ERISA.
"Deposit Account" shall mean a demand, time, savings,
passbook or like account with a bank, savings and loan
association, credit union or like organization, other than
an account evidenced by a negotiable certificate of deposit.
"Determination Date" shall have the meaning ascribed to
it in subsection 6.01(d).
"Dollars" and "$" shall mean the lawful money of the
United States of America.
"Domestic Subsidiary" of a Person shall mean a Sub-
sidiary of such Person organized under the laws of the
United States of America, any state thereof, Puerto Rico or
the District of Columbia.
"ECRA" means the Environmental Cleanup and Respon-
sibility Act, as the same may be amended from time to time,
and any successor statute.
"Environmental Liabilities and Costs" shall mean all
liabilities, obligations, responsibilities, losses, damages,
punitive damages, consequential damages, treble damages,
costs and expenses (including, without limitation, attorney,
expert and consulting fees and costs of investigation and
feasibility studies), fines, penalties and monetary
sanctions, interest, direct or indirect, known or unknown,
absolute or contingent, past, present or future, in each
case arising from or relating to a breach or alleged breach
of environmental laws or regulations.
"Environmental Lien" shall mean a Lien in favor of any
governmental entity for (i) any liability under federal or
state environmental laws or regulations, or (ii) damages
arising from or costs incurred by such governmental entity
in response to a release of a hazardous or toxic waste,
substance or constituent, or other substance into the
environment.
"Equipment" shall mean, with respect to any Person, all
of such Person's goods, except Inventory, including, without
limitation, all machinery, manufacturing equipment, office
equipment, data processing equipment, vehicles, vessels,
aircraft, furniture, furnishings, appliances, fixtures, and
tools and all other equipment of every type and description,
together with any and all accessions, parts and
appurtenances thereto and replacements thereof.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended to the date hereof and from
time to time hereafter, and any successor statute.
<PAGE>
"ERISA Affiliate" shall mean (i) any corporation which
is a member of the same controlled group of corporations
(within the meaning of Section 414(b) of the Internal
Revenue Code) as the Borrower; (ii) a trade or business
(whether or not incorporated) which is under common control
(within the meaning of Section 414(c) of the Internal
Revenue Code) with the Borrower; and (iii) a member of the
same affiliated service group (within the meaning of Section
414(m) of the Internal Revenue Code) as the Borrower, any
corporation described in clause (i) above or any trade or
business described in clause (ii) above.
"Eurodollar Affiliate" shall mean, with respect to any
Senior Lender, the Senior Lender Affiliate set forth below
such Senior Lender's name on Schedule 1.01-A or on the
signature page of the Assignment Agreement pursuant to which
such Senior Lender became a Senior Lender hereunder in
accordance with the provisions of Section 16.02.
"Eurodollar Rate" shall mean, with respect to any
Interest Period applicable to a Borrowing, continuation or
conversion of Eurodollar Rate Loans, an interest rate per
annum obtained by dividing (i) the rate of interest
determined by the Administrative Agent to be the average
(rounded upward to the nearest whole multiple of
one-sixteenth of one percent (1/16 of 1%) per annum if such
average is not such a multiple) of the rate per annum
determined by Citibank to be the rate per annum at which
deposits in Dollars are offered by Citibank to major banks
in the London interbank Eurodollar market at 11:00 A.M.
(London time) on the Interest Rate Determination Date for
such Interest Period for a period equal to such Interest
Period and in an amount substantially equal to the amount of
the Eurodollar Rate Loan to be outstanding during such
Interest Period from Citicorp, by (ii) a percentage equal to
100% minus the Eurodollar Reserve Percentage in effect on
the relevant Interest Rate Determination Date.
"Eurodollar Rate Loans" shall mean those Loans out-
standing which bear interest at a rate based upon the
Eurodollar Rate as provided in Section 6.01.
"Eurodollar Reserve Percentage" shall mean for any date
that percentage (expressed as a decimal) which is in effect
on such date, as prescribed by the Federal Reserve Board for
determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the
Federal Reserve System in New York City with deposits
exceeding five billion Dollars in respect of "Eurocurrency
liabilities" (or in respect of any other category of
liabilities which includes deposits by reference to which
the interest rate on Eurodollar loans is determined or any
category of extensions of credit or other assets which
includes loans by a non-United States office of any bank to
United States residents). The Eurodollar Rate shall be
adjusted automatically on and as of the effective date of
any change in the Eurodollar Reserve Percentage.
"Event of Default" shall mean any of the occurrences
set forth in Section 14.01, after the expiration of any
applicable grace period expressly provided therein.
"Excluded Dispositions" shall mean the sale, transfer
or other disposition by Borrower or a Subsidiary of the
Borrower of all or any part of the assets and properties
listed on Schedule 1.01-B.
"Excluded ERISA Affiliates" shall mean TFC and any
Subsidiary of TFC other than the Borrower or a Subsidiary of
the Borrower.
"Existing Investments" shall mean, with respect to the
Borrower or TFC, those Investments of the Borrower reflected
on Schedule 1.01-C.
"Facility Availability" shall mean, at any time, an
amount equal to the excess, if any, of the then effective
Commitments over the Facility Outstandings at such time.
"Facility Outstandings" shall mean, at any time, an
amount equal to (i) the aggregate principal amount of all
Loans outstanding at such time, plus (ii) the Letter of
Credit Obligations at such time, plus (iii) the sum of the
Borrower's Aggregate Foreign Exchange Exposure and Aggregate
Interest Rate Exposure at such time, plus (iv) the aggregate
face amount of all Letters of Credit which the Borrower has
requested Issuing Banks to issue but which have not on such
date been issued and which will become Letters of Credit
when issued pursuant to the terms of Section 5.03, plus (v)
the aggregate amount of Foreign Exchange Exposure
corresponding to proposed Foreign Exchange Contracts which,
on such date, have not yet been entered into between a
Senior Lender and the Borrower but will become Secured F/X
Contracts when entered into pursuant to the terms of
subsection 3.13(a), plus (vi) the aggregate amount of
Interest Rate Exposure corresponding to proposed Interest
Rate Contracts which, on such date, have not yet been
entered into between a Senior Lender and the Borrower but
will become Secured Interest Rate Contracts when entered
into pursuant to the terms of subsection 3.13(b).
"Facility Termination Date" shall mean the last day of
the Commitment Period.
"Federal Funds Rate" shall mean, for any period, a
fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates on
overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average
of the quotations for such day on such transactions received
by the Administrative Agent from three (3) Federal funds
brokers of recognized standing selected by the
Administrative Agent.
"Federal Reserve Board" shall mean the Board of
Governors of the Federal Reserve System or any Governmental
Authority succeeding to its functions.
"FHC" shall mean Fairchild Holding Corp., a Delaware
corporation and wholly-owned Subsidiary of the Borrower.
"FHC Credit Agreement" shall mean that certain Credit
Agreement dated as of March 13, 1996 among FHC, certain
financial institutions as lenders, Citibank, as issuing
bank, and Citicorp USA, Inc., as administrative agent, as
the same may be amended, restated, or supplemented from time
to time.
"Fiscal Year" shall mean the fiscal year of the
Borrower, which shall be the twelve (12) month period ending
on June 30, or such other period as the Borrower may
designate and the Requisite Senior Lenders may approve in
writing.
"Fixed Assets" shall mean, with respect to any Person,
such Person's property plant and equipment under GAAP.
"Foreign Exchange Contract" shall mean any contract
between any Senior Lender or Senior Lender Affiliate and the
Borrower or any of its Subsidiaries that requires payment
in, or the delivery of, a currency other than the currency
being tendered.
"Foreign Exchange Exposure" shall mean, with respect to
any Foreign Exchange Contract, an amount equal to the
product of the amount of the foreign currency obligation
under such Foreign Exchange Contract multiplied by a
percentage determined by the contracting Senior Lender or
Senior Lender Affiliate, which percentage shall be
comparable to the percentages determined by such Senior
Lender or Senior Lender Affiliate to apply to foreign
exchange contracts of like kind and term entered into by
such Senior Lender or Senior Lender Affiliate.
"Foreign Subsidiary" of a Person shall mean a Sub-
sidiary of that Person which is not a Domestic Subsidiary.
"Foreign Subsidiary Pledge Agreements" shall mean those
several pledge agreements, in each case, executed by the
Borrower before, on, or after the Closing Date, relating to
the pledge of certain of the stock of certain of Borrower's
Foreign Subsidiaries, as such pledge agreements may be
amended, supplemented, restated or otherwise modified from
time to time.
"Funding Date" shall mean the date requested by the
Borrower to be the date on which a Loan is funded.
"GAAP" shall mean generally accepted accounting prin-
ciples set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board
or in such other statements by such other entity as may be
approved by significant segments of the accounting
profession, which are applicable to the circumstances as of
the date of determination, except as otherwise provided in
Section 16.05 hereof.
"Governmental Authority" shall mean any nation or
government, any state or other political subdivision thereof
and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government.
"Hartz-Rex Associates" shall mean Hartz-Rex Associates,
a general partnership formed under the laws of the State of
New Jersey.
"Hasbrouck Heights Lease" shall mean that certain Lease
dated as of December 27, 1995 between Hartz-Rex Associates,
as landlord, and Flaghouse, Inc., as tenant.
"Hasbrouck Heights Real Property" shall mean that
certain real property which is the subject of the Hasbrouck
Heights Lease.
"Indebtedness" shall mean, as applied to any Person,
any obligation for the payment of money created by contract
(other than trade payables and normal accruals), and shall
include, without limitation but without duplication, (i) all
indebtedness of that Person for borrowed money or for deben-
tures, bonds and other debt Securities issued; (ii) that
portion of obligations with respect to Capital Leases which
is properly classified as a liability on the balance sheet
of that Person in conformity with GAAP; (iii) notes payable
and drafts accepted representing extensions of credit to
that Person whether or not representing obligations for
borrowed money; (iv) obligations owed by that Person for all
or any part of the deferred purchase price of property or
services; (v) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of
whether the indebtedness secured thereby shall have been
assumed by or is a personal liability of that Person;
(vi) the undrawn amount of all outstanding Letters of Credit
issued for the account of such Person; and (vii) all
Accommodation Obligations in respect of Indebtedness,
obligations or liability of others of the types described in
clauses (i) through (vi) above.
"Interest Payment Date" shall mean, with respect to any
Eurodollar Rate Loan, the last day of each Interest Period
applicable to such Loan and, in the case of an Interest
Period in excess of three (3) months, each day which occurs
every three (3) months after the initial date of such
Interest Period.
"Interest Period" shall have the meaning ascribed to it
in subsection 3.14(b).
"Interest Rate Contracts" shall mean interest rate cap
agreements, interest rate swap agreements, interest rate
collar agreements, options on any of the foregoing, or any
other agreements or arrangements designed to provide
protection against fluctuations in interest rates.
"Interest Rate Determination Date" shall mean the date
on which the Administrative Agent determines the Eurodollar
Rate applicable to a Borrowing, continuation or conversion
of Eurodollar Rate Loans. The Interest Rate Determination
Date shall be the second Business Day (or such later day as
the Senior Lenders may permit) prior to the first day of the
Interest Period applicable to such Borrowing, continuation
or conversion.
"Interest Rate Exposure" shall mean, with respect to
any Interest Rate Contract between the Borrower and a Senior
Lender or Senior Lender Affiliate, an amount equal to the
product of the maximum obligation of the Borrower under such
Interest Rate Contract multiplied by a percentage determined
by the contracting Senior Lender or Senior Lender Affiliate,
which percentage shall be comparable to the percentages
determined by such Senior Lender or Senior Lender Affiliate
to apply to contracts of like kind and term entered into by
such Senior Lender or Senior Lender Affiliate.
"Internal Revenue Code" shall mean the Internal Revenue
Code of 1986, as amended to the date hereof and from time to
time hereafter, and any successor statute.
"Inventory" shall mean and include, with respect to any
Person, all of such Person's now owned and hereafter
acquired inventory, goods, materials, supplies, merchandise
and other personal property furnished under any contract of
service or intended for sale or lease, including, without
limitation, all raw materials, work in process, finished
goods and materials, parts and supplies of any kind, nature
or description which are used or consumed in such Person's
business or are or might be used in connection with the
manufacture, packing, shipping, advertising, selling or
finishing of such goods, merchandise and other personal
property, or are used in connection with the provision of
services in such Person's business, all returned or
repossessed goods now, or at any time or times hereafter, in
the possession or under the control of such Person, the
Administrative Agent or any Senior Lender, and all documents
of title or documents representing the same.
<PAGE>
"Investment" shall mean, as applied to any Person, any
direct or indirect purchase or other acquisition by that
Person of stock or other Securities, or of a beneficial
interest in stock or other Securities, of any other Person,
and any direct or indirect loan, advance (other than
deposits with financial institutions available for
withdrawal on demand, prepaid expenses and similar items
made or incurred in the ordinary course of business), or
capital contribution by that Person to, or note receivable
from, any other Person, including all Indebtedness and
Accounts owed by that other Person which are not current
assets or did not arise from sales of goods or services to
that Person in the ordinary course of business. The amount
of any Investment shall be determined in conformity with
GAAP.
"Issuing Banks" shall mean (i) Citibank and (ii) any
Senior Lender or Senior Lender Affiliate that agrees, in its
sole discretion at the request of the Borrower, and on terms
and conditions mutually acceptable to the Administrative
Agent, such Senior Lender or Senior Lender Affiliate and the
Borrower, to become an Issuing Bank for the purpose of
issuing Letters of Credit pursuant to Article V. When a
Senior Lender is referred to as an Issuing Bank hereunder,
such reference to such Senior Lender as an Issuing Bank
shall be interpreted to refer to such Senior Lender solely
in its capacity as an Issuing Bank.
"L/C Subfacility" shall mean $4,250,000 of Letter of
Credit Obligations of the Borrower which is permitted to be
outstanding under the terms of this Agreement.
"Letter(s) of Credit" shall mean, in the singular form,
any Commercial Letter of Credit or any Standby Letter of
Credit, in either case issued by an Issuing Bank for the
account of the Borrower pursuant to Article V and, in the
plural form, all such Commercial Letters of Credit and
Standby Letters of Credit issued by an Issuing Bank for the
account of the Borrower.
"Letter of Credit Obligations" shall mean, at any
particular time, the sum of (i) the Borrower's Reimbursement
Obligations plus (ii) the aggregate undrawn face amount of
all outstanding Letters of Credit issued for the account of
the Borrower, in each case as determined by the Administra-
tive Agent.
"Letter of Credit Reimbursement Agreement" shall mean,
with respect to a Letter of Credit, such form of application
therefor and form of reimbursement agreement therefor
(whether in a single or several documents, taken together)
as the Issuing Bank from which such Letter of Credit is
requested may employ in the ordinary course of business for
its own account, whether or not providing for collateral
security, with such modifications thereto as may be agreed
upon by the Issuing Bank and the account party and as are
not materially adverse to the interests of the Senior
Lenders; provided, that in the event of any conflict between
the terms of any Letter of Credit Reimbursement Agreement
and this Agreement, the terms of this Agreement shall
control; and further, provided, that any grant or purported
grant of a security interest in favor of the Issuing Bank
contained in any Letter of Credit Reimbursement Agreement
shall be void.
"Lien" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, security
interest, encumbrance (including, but not limited to,
easements, rights of way, zoning restrictions and the like),
lien (statutory or other), preference, priority or other
security agreement or preferential arrangement of any kind
or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease, any financing
lease having substantially the same economic effect as any
of the foregoing and the filing of any financing statement
(other than a financing statement filed by a "true" lessor
pursuant to 9-408 of the Uniform Commercial Code) naming the
owner of the asset to which such Lien relates as debtor,
under the Uniform Commercial Code or other comparable law of
any jurisdiction.
"Loan" shall mean (i) an advance which was made by the
Senior Lenders to the Borrower under the 1992 Credit
Agreement and which remains outstanding on the Closing Date
and (ii) an advance made to the Borrower by a Lender
pursuant to the terms of Section 3.05; and "Loans" shall
mean all of the advances described in the preceding clauses
(i) and (ii).
"Loan Documents" shall mean this Agreement, the Notes,
the Collateral Documents, the Letters of Credit (and
accompanying applications and reimbursement agreements), the
Secured F/X Contracts, the Secured Interest Rate Contracts,
and all other security agreements, mortgages, deeds of
trust, financing statements, patent and trademark security
agreements, lease assignments, assumption agreements,
guaranties and other agreements, instruments and written
indicia of Contractual Obligations between the Borrower, TFC
or any guarantor of all or any part of the Obligations and
any Senior Lender, any Issuing Bank, or the Administrative
Agent delivered to such Senior Lender, such Issuing Bank, or
the Administrative Agent by or on behalf of the Borrower,
TFC or such guarantor pursuant to or in connection with the
transactions contemplated hereby.
"Margin Stock" shall have the meaning assigned to that
term in Regulation U and Regulation G.
"Marketable Securities" shall mean any Securities which
are freely deliverable (including by book-entry transfer)
and readily traded on any nationally recognized United
States securities exchange or the London Stock Exchange or
traded overthe-counter as reported by the National
Association of Securities Dealers Automated Quotations
system or traded on the Paris Bourse.
<PAGE>
"Multiemployer Plan" shall mean a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA which is, or
within the immediately preceding five (5) years was,
contributed to by the Borrower or any ERISA Affiliate of the
Borrower.
"Net Cash Proceeds of Sale" shall mean Net Proceeds of
Sale received by the Borrower or any of its Domestic
Subsidiaries in Cash or Cash Equivalents, including, without
limitation, the principal and interest paid under any note
which constitutes Net Proceeds of Sale, but only when such
principal and interest are received.
"Net Proceeds of Sale" shall mean proceeds (including
any notes, Securities, warrants and other noncash items and
money paid into escrow accounts, together with (or reduced
by) all interest paid thereon and capital gains (or capital
losses) realized in connection with the investment thereof)
received as consideration by the Borrower or any of its
Domestic Subsidiaries (in the case of a Domestic Subsidiary,
to the extent of such Borrower's ownership interest in such
Subsidiary) from the sale, lease, assignment or other
disposition outside of the ordinary course of business to
any Person (other than the Borrower or a Subsidiary of the
Borrower) of any assets or property of the Borrower having
an aggregate fair market value in excess of $500,000, in
each Fiscal Year during the period commencing on the Closing
Date through the date on which this Agreement shall
terminate pursuant to the terms hereof, in each case net of
(A) the cost of sale, lease, assignment or other
disposition, taxes paid or payable as a result thereof, and
reasonable reserves associated therewith, (B) amounts
applied to the repayment of Indebtedness (other than the
Obligations) or any other liability assumed, indemnified or
retained by the Borrower or secured by a Lien on the asset
disposed of, and (C) amounts used to purchase or lease a
replacement asset. For this purpose, all proceeds of
insurance paid or other recoveries or awards received on
account of the loss of or damage to any such asset or
property, or group of assets or properties, and awards of
compensation for any such asset or property, or group of
assets or properties, taken by condemnation or eminent
domain shall be deemed proceeds of the disposition of that
asset or property.
"1992 Credit Agreement" shall mean that certain
Restated and Amended Credit Agreement, dated as of July 27,
1992, among Borrower, the other borrowers party thereto, the
financial institutions from time to time party thereto as
senior lenders, Citicorp, The Bank of Nova Scotia and
NationsBank, N.A. as agents for such lenders, and Citicorp,
as administrative agent, as amended prior to the Closing
Date.
"Non-Facility Letter of Credit" shall mean any letter
of credit which is not a Letter of Credit.
"Non-Facility Letter of Credit Obligations" shall mean,
at any time, the sum of (i) the Borrower's aggregate
reimbursement obligations with respect to drawings made
under Non-Facility Letters of Credit issued for the account
of the Borrower and (ii) the aggregate undrawn face amount
of all outstanding Non-Facility Letters of Credit issued for
the account of the Borrower.
"Non-Use Fee" shall have the meaning ascribed to it in
Section 6.07.
"Non-Use Fee Base" shall mean, at any time, the amount,
if any, by which the aggregate amount of the then effective
Commitments exceeds the sum of (i) the then aggregate
outstanding principal amount of the Loans and (ii) the
Letter of Credit Obligations at such time.
"Note" shall mean a promissory note substantially in
the form of Exhibit C attached hereto, issued by the
Borrower and payable to a Senior Lenders evidencing Loans
made to the Borrower pursuant to the terms hereof and all
promissory notes issued in substitution for or replacement
thereof, in each case, as the same may be modified in
writing from time to time; and "Notes" shall mean all such
Notes, collectively.
"Notice of Borrowing" shall mean a notice,
substantially in the form of Exhibit D, signed by a duly
authorized officer or employee of the Borrower.
"Notice of Conversion/Continuation" shall mean a
notice, substantially in the form of Exhibit E, signed by a
duly authorized officer or employee of the Borrower.
"Obligations" shall mean, collectively, all present and
future Indebtedness and other loans, advances, debts,
liabilities, obligations, covenants and duties owing by the
Borrower or any of its Subsidiaries to any of the Senior
Lenders, Issuing Banks, the Administrative Agent, any
Senior Lender Affiliate or any other Person entitled to
indemnification pursuant to Section 16.04, of every type and
description, present or future, whether or not evidenced by
any note, guaranty or other instrument, arising under or in
connection with this Agreement, any of the other Loan
Documents, or the transactions contemplated hereby or
thereby, whether or not for the payment of money, whether
arising by reason of any extension of credit, opening or
amendment of a Letter of Credit or payment or acceptance of
a draft drawn thereunder, loan, guaranty, indemnification,
foreign exchange or interest rate swap transactions or in
any other manner, whether direct or indirect (including
those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter acquired, and
shall include, without limitation, (i) all liability of the
Borrower for principal of and interest on Loans or under the
Notes, (ii) all liability of the Borrower or any of its
Subsidiaries to any Senior Lender or Senior Lender Affiliate
under any Secured F/X Contract between the Borrower or any
such Subsidiary and such Senior Lender or such Senior Lender
Affiliate (to the extent of the Foreign Exchange Exposure
with respect to such Secured F/X Contract), (iii) all
liability of the Borrower or any of its Subsidiaries to any
Senior Lender or Senior Lender Affiliate under any Secured
Interest Rate Contract between the Borrower or any such
Subsidiary and such Senior Lender or such Senior Lender
Affiliate (to the extent of the Interest Rate Exposure with
respect to such Secured Interest Rate Contract), (iv) all
Reimbursement Obligations of the Borrower to any Senior
Lender in its capacity as an Issuing Bank, and (v) all
liability of the Borrower for fees payable under this
Agreement to the Administrative Agent, any of the Issuing
Banks or any of the Senior Lenders, expense reimbursements
(including, without limitation, reasonable attorneys' fees
and disbursements), indemnifications, charges and other
amounts due or to become due to any of the Senior Lenders,
or the Administrative Agent under or in connection with this
Agreement, any Letter of Credit Reimbursement Agreement or
any other Loan Document.
"Officer's Certificate" shall mean, as to a corpora-
tion, a certificate executed on behalf of such corporation
by its chairman or vice-chairman of the board (if an
officer) or its president, vice-president, chief financial
officer, controller, treasurer or assistant treasurer.
"Operating Lease" shall mean, as applied to any Person,
any lease of any property (whether real, personal or mixed)
by that Person as lessee which is not a Capital Lease.
"PBGC" shall mean the Pension Benefit Guaranty Corpora-
tion, and any Person succeeding to the functions thereof.
"Permitted Existing Indebtedness" shall mean the
Indebtedness of the Borrower and its Subsidiaries reflected
on Schedule 1.01-D.
"Person" shall mean any natural person, corporation,
limited partnership, general partnership, joint stock
company, joint venture, association, company, trust, bank,
trust company, land trust, business trust or other
organization, whether or not a legal entity, and any
Governmental Authority.
"Potential Event of Default" shall mean an occurrence
which, after the giving of notice or the lapse of time, or
both, would constitute an Event of Default.
"Prohibited Investments" shall mean any Securities
issued by, or direct or indirect loans, advances or capital
contributions to, any Person which is a general partnership
or which has, as one of its primary activities, (i) the
manufacture, transportation or sale of weapons or (ii) the
ownership or management of gaming operations.
"Pro Rata Share" shall mean, as of any date of
determination, for each Senior Lender, the percentage
obtained by dividing such Senior Lender's Commitment by all
Commitments (or, following the termination of the
Commitments pursuant to the terms of this Agreement, the
percentage obtained by dividing the then outstanding
principal amount under the Note held by such Senior Lender
by the then outstanding principal amount under the Notes
held by all Senior Lenders).
"Purchase Money Indebtedness" shall mean Indebtedness,
the proceeds of which are used by the Borrower or one of its
Subsidiaries to make Consolidated Capital Expenditures
permitted by Section 11.11 and which is either unsecured or
secured solely by purchase money Liens of the type permitted
by clause (h) of Section 11.04; provided, that the amount of
such Indebtedness incurred in connection with any
Consolidated Capital Expenditure of the Borrower or any of
its Subsidiaries shall not exceed eighty percent (80%) of
the purchase price of such Consolidated Capital Expenditure.
"Regulation A" shall mean Regulation A of the Federal
Reserve Board as in effect from time to time.
"Regulation D" shall mean Regulation D of the Federal
Reserve Board as in effect from time to time.
"Regulation G" shall mean Regulation G of the Federal
Reserve Board as in effect from time to time.
"Regulation T" shall mean Regulation T of the Federal
Reserve Board as in effect from time to time.
"Regulation U" shall mean Regulation U of the Federal
Reserve Board as in effect from time to time.
"Regulation X" shall mean Regulation X of the Federal
Reserve Board as in effect from time to time.
"Reimbursement Obligations" shall mean the Borrower's
reimbursement or repayment obligations to the Issuing Banks
pursuant to this Agreement or Letter of Credit Reimbursement
Agreements with respect to drawings made under Letters of
Credit issued for the account of the Borrower.
"Requirements of Law" shall mean, as to any Person, the
charter and by-laws or other organizational or governing
documents of such Person, and any law, rule or regulation,
or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which
such Person or any of its property is subject, including,
without limitation, the Securities Act, the Securities
Exchange Act, Regulations G, T, U and X, and any certificate
of occupancy, zoning ordinance, building, environmental or
land use requirement or permit or occupational safety or
health law, rule or regulation.
"Requisite Knowledge" shall occur, with respect to any
Person and any event or fact, on the date on which a
Responsible Officer of such Person knew or reasonably should
have known of such event or fact.
"Requisite Senior Lenders" shall mean those Senior
Lenders whose aggregate Commitments are equal to fifty
percent (50%) or more of the total Commitments or, following
the termination of the Commitments pursuant to the terms of
this Agreement, Senior Lenders who hold fifty percent (50%)
or more of the aggregate principal amount outstanding under
the Notes.
"Responsible Officer" shall mean, with respect to any
Person, the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the
Controller, or any other officer of similar or higher rank
of such Person.
"Restricted Junior Payment" shall mean (i) any dividend
or other distribution, direct or indirect, on account of any
shares of any class of stock of the Borrower or any of its
Subsidiaries now or hereafter outstanding, except (A) a
dividend payable solely in shares of stock to the holders of
that class or (B) a dividend or other distribution payable
to the Borrower or to any Subsidiary of the Borrower, (ii)
any redemption, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect,
of any shares of any class of stock of the Borrower or any
of its Subsidiaries now or hereafter outstanding, (iii) any
payment or prepayment of principal of, premium, if any, or
interest on, redemption, purchase, retirement, defeasance,
sinking fund or similar payment with respect to, any
Subordinated Indebtedness, (iv) any payment made to retire,
or to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of
stock of the Borrower or any of its Subsidiaries now or
hereafter outstanding, and (v) any payment of a claim, not
reduced to final judgment after exhaustion of all available
appellate remedies, for the rescission of the purchase or
sale of, or for material damages arising from the purchase
or sale of, any Subordinated Indebtedness or any shares of
the capital stock of the Borrower or of a claim for
reimbursement, indemnification or contribution arising out
of or related to any such claim for damages or rescission.
"Secured F/X Contract" shall mean a Foreign Exchange
Contract with respect to which the Foreign Exchange Exposure
constitutes an Obligation secured by the Collateral.
"Secured Interest Rate Contract" shall mean an Interest
Rate Contract between any Senior Lender or Senior Lender
Affiliate and the Borrower or any of its Subsidiaries with
respect to which the Interest Contract Exposure constitutes
an Obligation secured by the Collateral.
"Securities" shall mean any stock, shares, voting trust
certificates, limited partnership certificates, debentures,
notes or other evidences of indebtedness, secured or
unsecured, convertible, subordinated or otherwise, or in
general any instruments commonly known as "securities,"
including, without limitation, any "security" as such term
is defined in Section 8-102 of the Uniform Commercial Code
as in effect in the State of New York, or any certificates
of interest, shares, or participations in temporary or
interim certificates for the purchase or acquisition of, or
any right to subscribe to, purchase or acquire any of the
foregoing, but shall not include the Notes, or any other
evidence of the Obligations.
"Securities Act" shall mean the Securities Act of 1933,
as amended to the date hereof and from time to time
hereafter, and any successor statute.
"Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended to the date hereof and from
time to time hereafter, and any successor statute.
"Selling Price of Fixed Assets" shall mean, for any
period, the aggregate gross cash proceeds received by the
Borrower and its Subsidiaries during such period from the
disposal of Fixed Assets.
"Senior Lender" shall mean any Person which is a holder
of a Note but shall not include any Person to which a
participation is sold pursuant to Section 16.02 unless such
Person is also the holder of a Note.
"Senior Lender Affiliate" shall mean any Affiliate of a
Senior Lender.
"Senior Secured Creditors" shall mean the
Administrative Agent, the Senior Lenders, the Issuing Banks,
and any Senior Lender Affiliate or Indemnitee to which any
Obligations are owed.
"Senior Subordinated Debenture Indenture" shall mean
the Indenture between Rexnord Acquisition Corp. and Irving
Trust Company, as trustee, dated as of March 2, 1987,
pursuant to which Senior Subordinated Debentures in the
aggregate original principal amount of $126,000,000 were
issued, as supplemented by the First Supplemental Indenture
dated as of July 1, 1987 between Rexnord and Irving Trust
Company, as trustee, and the Second Supplemental Indenture
dated as of August 16, 1988, between Borrower and Irving
Trust Company, as trustee, as the same may be further
amended, supplemented, restated or modified from time to
time.
"Senior Subordinated Debentures" shall mean Borrower's
(as successor by merger to Rexnord, Inc., which was, in
turn, successor by merger to Rexnord Acquisition Corp.)
11-7/8% Senior Subordinated Debentures due 1999 issued
pursuant to the Senior Subordinated Debenture Indenture.
"Solvent" shall mean, when used with respect to any
Person, that at the time of determination:
(i) the fair value of its assets (both at fair
valuation and present fair saleable value) is in excess of
the total amount of its liabilities, including, without
limitation, contingent liabilities;
(ii) it is then able and expects to be able to pay its
debts as they mature;
(iii) it owns property having a value (both at fair
valuation and present fair saleable value) in excess of the
total amount required to pay its debts; and
(iv) it has capital sufficient to carry on its
business as conducted and as proposed to be conducted.
"Standby Letter of Credit" shall mean any "clean" or
standby Letter of Credit issued to support obligations
(contingent or otherwise) of the Borrower or any of its
Subsidiaries.
"Subordinated Indebtedness" shall mean, (i) the
Indebtedness of the Borrower evidenced by the Senior
Subordinated Debentures, (ii) any additional Indebtedness
hereafter incurred by the Borrower which is subordinated in
right of payment and is payable on terms and conditions no
less favorable to the Senior Lenders than those set forth in
the Senior Subordinated Debenture Indenture, and (iii) any
refinancing of the Senior Subordinated Debentures, or any
such additional Indebtedness of the Borrower which is
subordinated in right of payment and is payable on terms and
conditions no less favorable to the Senior Lenders than
those set forth in the Senior Subordinated Debenture
Indenture.
"Subsidiary" of a Person shall mean any corporation,
association, partnership or other business entity of which
more than fifty percent (50%) of the total voting power of
shares of stock (or equivalent ownership or controlling
interest) entitled to vote in the election of directors,
managers, or trustees (or the equivalent governing body)
thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other
Subsidiaries of such Person or any combination thereof;
provided, that (i) none of FHC or any of its Subsidiaries
shall be considered Subsidiaries of the Borrower, (ii) no
member of the Aerospace Group shall be considered a
Subsidiary of the Borrower, and (iii) solely for purposes of
determining the Borrower's compliance with Article XI, any
Person constituting an Existing Investment (but not a
Subsidiary as of the Closing Date) of the Borrower which
becomes a Subsidiary of the Borrower pursuant to an
acquisition permitted hereunder shall not be considered a
Subsidiary of the Borrower.
"Subsidiary Guarantor" shall mean each Subsidiary of
the Borrower listed on Schedule 1.01-E.
"Subsidiary Guaranty" shall mean (i) the Amended and
Restated Subsidiary Guaranties dated as of May 27, 1996,
executed by a Subsidiary Guarantor in favor of the Senior
Secured Creditors, guaranteeing payment and performance of
the Obligations, and (ii) any other guaranty of all or a
portion of the Obligations executed after the Closing Date,
in each case as such Subsidiary Guaranty may be amended,
supplemented, restated or otherwise modified from time to
time.
"Tax Allocation Agreement" shall mean the Eighth
Amended and Restated Tax Allocation Agreement, dated as of
March 13, 1996, among TFC, Borrower and certain Affiliates
thereof, as the same may be amended from time to time with
the consent of the Requisite Senior Lenders.
"Termination Event" shall mean (i) with respect to any
Benefit Plan, a Reportable Event described in Section 4043
of ERISA and the regulations issued thereunder, or (ii) the
withdrawal of the Borrower or any ERISA Affiliate from a
Defined Benefit Plan during a plan year in which it is a
"substantial employer" as defined in Section 4001(a)(2) of
ERISA, or (iii) the filing under Section 4041 of ERISA of a
notice of intent to terminate a Defined Benefit Plan or the
treatment of a Defined Benefit Plan amendment as a
termination under Section 4041 of ERISA, or (iv) the
institution of proceedings to terminate a Defined Benefit
Plan by the PBGC or (v) any other event or condition which
might constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to
administer, any Defined Benefit Plan.
"TFC" shall mean The Fairchild Corporation, a Delaware
corporation.
"Unused L/C Subfacility" shall mean, at any time, the
amount, if any, by which the L/C Subfacility exceeds the
amount of (i) all Letter of Credit Obligations at such time,
plus (ii) the aggregate face amount of all Letters of Credit
which the Borrower has requested prior to such time but
which have not yet been issued.
"Virginia Real Property" shall mean the leasehold
estate, together with the building and improvements located
at 300 West Service Road, Chantilly, Virginia.
SECTION 1.02 Computation of Time Periods. In this
Agreement, in the computation of periods of time from a
specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until"
each means "to but excluding." Periods of days referred to
in this Agreement shall be counted in calendar days unless
Business Days are expressly prescribed.
SECTION 1.03 Accounting and Commercial Terms. For
purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to
them in conformity with GAAP. Terms not otherwise defined
herein which are defined in, or used in, Article 9 of the
Uniform Commercial Code as in effect in the State of New
York shall herein have the respective meanings given to them
in Article 9 of the Uniform Commercial code as in effect in
the State of New York.
SECTION 1.04 Other Definitional Provisions.
References to "Sections," "subsections" "Schedules" and
"Exhibits" shall be to Sections, subsections, Schedules and
Exhibits, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in Section
1.01 may, unless the context otherwise requires, be used in
the singular or the plural depending on the reference.
ARTICLE II
RESTATEMENT OF 1992 CREDIT AGREEMENT
SECTION 2.01 Amendment and Restatement of 1992 Credit
Agreement. The Borrower, the Senior Lender and the Issuing
Bank agree that, upon (i) the execution and delivery of this
Agreement by the Borrower, the Administrative Agent, and the
Senior Lender and the Issuing Bank as of the Closing Date,
and (ii) satisfaction (or waiver) of the conditions
precedent set forth in Section 7.01, the terms and
provisions of the 1992 Credit Agreement as they pertain to
loans and extensions of credit and other financial
accommodations made to or for the benefit of the Borrower by
the Administrative Agent and/or the Senior Lenders and
Issuing Bank shall be and hereby are amended, superseded and
restated in their entirety by the terms and provisions of
this Agreement. This Agreement shall not constitute a
novation. All Loans made to the Borrower under the 1992
Credit Agreement which remain outstanding on the Closing
Date shall continue as Loans under (and shall be governed by
the terms of) this Agreement. All Letters of Credit issued
for the account of the Borrower, or entered into with the
Borrower, under the 1992 Credit Agreement which remain
outstanding on the Closing Date shall continue as Letters of
Credit under (and shall be governed by the terms of) this
Agreement. Upon and after the Closing Date, all interest,
fees, charges and other amounts accruing and payable by the
Borrower to the Senior Lenders, the Issuing Banks, or the
Administrative Agent under the terms of the 1992 Credit
Agreement shall be payable in accordance with the terms and
provisions of this Agreement.
ARTICLE III
AMOUNTS AND TERMS OF LOANS
SECTION 3.01 Intentionally Omitted.
SECTION 3.02 Intentionally Omitted
SECTION 3.03 Intentionally Omitted.
SECTION 3.04 Intentionally Omitted.
SECTION 3.05 Revolving Credit Loans. (a) Subject to
the terms and conditions of this Agreement and in reliance
upon the representations and warranties of the Borrower
herein set forth, each Senior Lender hereby severally agrees
that such Senior Lender shall, from time to time during the
Facility Commitment Period, upon the Borrower's request
therefor, make advances of Loans in an amount which (i) with
respect to each such Loan considered individually, does not
exceed such Senior Lender's Pro Rata Share of the Facility
Availability on the date such Loan is made and (ii) when
combined with such Senior Lender's Pro Rata Share of the
Facility Outstandings on the date such Loan is made, does
not exceed such Senior Lender's Commitment; provided, that
in no event shall the sum of (i) the Loan proposed to be
made on any date pursuant to this Section 3.05, (ii) the
principal amount outstanding on such date of all Loans made
hereunder, (iii) Borrower's Aggregate Foreign Exchange
Exposure on such date, (iv) the aggregate amount of Foreign
Exchange Exposure corresponding to proposed Foreign Exchange
contracts which, on such date, have not yet been entered
into between a Senior Lender and the Borrower hereunder but
will become Secured F/X Contracts when entered into pursuant
to the terms of subsection 3.13(a), (v) the Borrower's
Aggregate Interest Rate Exposure on such date and (vi) the
aggregate amount of Interest Rate Exposure corresponding to
proposed Interest Rate Contracts which, on such date, have
not yet been entered into between a Senior Lender and the
Borrower hereunder but will become Secured Interest Rate
Contracts when entered into pursuant to the terms of
subsection 3.13(b), exceed $4,250,000.
(b) Loans may, on the date made and from time to time
thereafter, consist of Base Rate Loans or Eurodollar Rate
Loans or a combination thereof, as elected by the Borrower
pursuant to Section 3.09. Within the limits of the Facility
Availability, at any time and from time to time during the
Facility Commitment Period, Borrower may borrow, repay,
prepay and reborrow Loans, all in accordance with the terms
and conditions hereof.
SECTION 3.06 Intentionally omitted
SECTION 3.07 Procedure for Revolving Credit
Borrowings. Whenever Borrower desires to make a Borrowing,
Borrower shall deliver to the Administrative Agent a Notice
of Borrowing (a) in the case of such a Borrowing of Base
Rate Loans, no later than 10:00 A.M. (Chicago time) on the
Funding Date and (b) in the case of such a Borrowing of
Eurodollar Rate Loans, no later than 11:00 A.M. (Chicago
time) at least two (2) Business Days in advance of the
Funding Date. Each Notice of Borrowing under this Section
3.07 shall specify (i) the Funding Date (which shall be a
Business Day), (ii) the amount of the proposed Borrowing,
(iii) whether the proposed Borrowing will be of Base Rate
Loans or Eurodollar Rate Loans, and (iv) in the case of
Eurodollar Rate Loans, the requested Interest Period.
SECTION 3.08 Making of Revolving Credit Loans. (a)
Promptly after receipt of a Notice of Borrowing given by a
Borrower pursuant to Section 3.07 (or telephonic notice in
lieu thereof), including, without limitation, any Notice of
Borrowing relating to Loans requested to be made on the
Closing Date, the Administrative Agent shall notify each
Senior Lender by telecopy, telephone or other similar form
of transmission, of the amount and Funding Date of the
requested Loans. Except as otherwise provided in subsection
3.08(b), no later than 12:00 noon (Chicago time) on the
Funding Date for the requested Loans, each Senior Lender
shall transfer to such account of the Administrative Agent
as the Administrative Agent may designate, same day funds in
an amount equal to such Senior Lender's Pro Rata Share of
such Loans. After the Administrative Agent's receipt from
the Senior Lenders of the proceeds of such Loans and, upon
satisfaction of the applicable conditions precedent set
forth in Article VII, the Administrative Agent shall make
such proceeds available to the Borrower.
(b) Intentionally omitted.
(c) Unless the Administrative Agent shall have been
notified by any Senior Lender prior to the Funding Date for
a Loan (or, in the case of a Base Rate Loan, prior to the
funding thereof as contemplated in subsection 3.08(b)) that
such Senior Lender does not intend to make available to the
Administrative Agent such Senior Lender's Pro Rata Share of
such Borrowing, the Administrative Agent may assume that
each Senior Lender has made its Pro Rata Share of each
requested Borrowing available to the Administrative Agent on
such Funding Date as provided herein and the Administrative
Agent, in its sole discretion, may, but shall not be
obligated to, make available to the Borrower a corresponding
amount on such Funding Date. If such corresponding amount
is not in fact made available to the Administrative Agent by
any Senior Lender, then such Senior 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 was
made available by the Administrative Agent to the Borrower
until the date such amount is repaid to the Administrative
Agent at an interest rate per annum equal to (i) in the case
of the Borrower, the interest rate applicable to the
Borrowing required to be repaid and (ii) in the case of a
Senior Lender, the Federal Funds Rate; provided, that the
Administrative Agent shall demand repayment from the Senior
Lender prior to seeking repayment from the Borrower. If the
Senior Lender repays the Administrative Agent the amount
owed pursuant to this subsection 3.08(c), such amount so
repaid shall constitute such Senior Lender's Loan; if both
the Senior Lender and the Borrower repay such amount, the
Administrative Agent shall promptly return to the Borrower
such amount in same day funds. Nothing in this subsection
3.08(c) shall be deemed to relieve any Senior Lender of its
obligation hereunder, if any, to make Loans on any Funding
Date.
SECTION 3.09 Conversion or Continuation of Base Rate
Loans and Eurodollar Rate Loans. (a) Subject to the
provisions of Section 3.14, Borrower shall have the option
(i) at any time, to convert all or any part of its
outstanding Base Rate Loans to Eurodollar Rate Loans and
(ii) on the expiration date of the Interest Period therefor,
to convert all or any part of its outstanding Eurodollar
Rate Loans to Base Rate Loans or to continue all or any
portion of its outstanding Eurodollar Rate Loans as
Eurodollar Rate Loans, in which case, the succeeding
Interest Period(s) of such converted or continued Eurodollar
Rate Loans shall commence on such expiration date.
Notwithstanding the foregoing, (A) no such conversion or
continuation shall be permitted with respect to Loans in an
aggregate principal amount of less than $1,000,000 and (B)
no outstanding Loan may be continued past the expiration
date of the Interest Period therefor as, or converted into,
a Eurodollar Rate Loan when any Event of Default or
Potential Event of Default exists.
(b) Whenever Borrower desires to convert or continue a
Loan pursuant to the provisions of this Section 3.09,
Borrower shall deliver to the Administrative Agent a Notice
of Conversion/Continuation (i) in the case of a conversion
to a Base Rate Loan, no later than 10:00 A.M. (Chicago time)
on the proposed conversion date and (ii) in the case of a
conversion to, or continuation of, a Eurodollar Rate Loan,
no later than 10:00 A.M. (Chicago time) at least two (2)
Business Days in advance of the proposed conversion or
continuation date, as the case may be. A Notice of
Conversion/Continuation shall specify (i) the proposed
conversion or continuation date (which date shall be a
Business Day), (ii) the amount of the Loans to be converted
or continued, (iii) the nature of the proposed conversion or
continuation, and (iv) in the case of a conversion to, or
continuation of, a Eurodollar Rate Loan, the requested
Interest Period.
SECTION 3.10 Authorized Officers and Employees;
Telephonic Notices. (a) Borrower shall notify the
Administrative Agent in writing of the names of officers and
employees authorized to deliver a Notice of Borrowing or a
Notice of Conversion/Continuation to the Administrative
Agent on behalf of the Borrower and shall provide the
Administrative Agent with a specimen signature of each such
officer or employee. The Administrative Agent shall be
entitled to rely conclusively on such officer's or
employee's authority to deliver such Notices until the
Administrative Agent receives written notice to the
contrary. The Administrative Agent shall have no duty to
verify the authenticity of the signature appearing on any
such Notice.
(b) In lieu of delivering a Notice of Borrowing or a
Notice of Conversion/Continuation, Borrower may give the
Administrative Agent telephonic notice of the proposed
Borrowing or continuation or conversion of Loans by the time
required for such notice pursuant to Section 3.07 and
subsection 3.09(b), respectively, provided that such
telephonic notice shall be confirmed in writing by promptly
(but in no event later than the Funding Date of the
requested Borrowing or the proposed continuation or
conversion date, as the case may be) delivering to the
Administrative Agent a Notice of Borrowing or a Notice of
Conversion/Continuation, as applicable, containing the
original signature of an authorized officer or employee of
the Borrower. The Administrative Agent shall have no duty
to verify the identity of any person representing himself or
herself as one of the officers or employees authorized to
make such request on behalf of the Borrower. Neither the
Administrative Agent nor any Senior Lender shall incur any
liability to the Borrower in acting upon any telephonic
notice which the Administrative Agent believes in good faith
to have been given by an officer or employee authorized to
give such notice on behalf of such Borrower or for otherwise
acting in good faith under this Section 3.10, and upon the
funding of a Loan by any Senior Lender, or upon the
conversion or continuation of a Loan by any Senior Lender,
in each case pursuant to any such telephonic notice and in
accordance with the terms of this Agreement, the Borrower
shall have effected a Borrowing or a continuation or
conversion of a Loan, as the case may be, hereunder.
(c) Any Notice of Borrowing or Notice of Conver-
sion/Continuation (including a telephonic notice given in
lieu thereof) delivered to the Administrative Agent shall be
irrevocable and the Borrower shall be bound to make a
Borrowing or to convert or continue a Loan, as the case may
be, in accordance therewith.
SECTION 3.11 Endorsement of Payments on Note. Each
Senior Lender is hereby authorized to, and prior to any
transfer of any Note held by it a Senior Lender shall,
endorse the date and amount of each payment or prepayment of
principal of the Loans evidenced thereby on a schedule
annexed to and constituting a part of such Note, which
endorsement shall constitute prima facie evidence, absent
demonstrated error, of the accuracy of the information so
endorsed, provided that failure by any such Senior Lender to
make such endorsement, or any error with respect thereto,
shall not affect the obligations of the Borrower under such
Note. In lieu of endorsing such schedule as hereinabove
provided, prior to any transfer of a Note, a Senior Lender
is hereby authorized, at its option, to record such payments
or prepayments in its books and records, such books and
records constituting prima facie evidence, absent
demonstrated error, of the accuracy of the information
contained therein.
SECTION 3.12 Intentionally omitted.
SECTION 3.13 Foreign Exchange Contracts; Interest Rate
Contracts. (a) At any time, and from time to time, each
Senior Lender may, but shall have no obligation to, enter
into Foreign Exchange Contracts with the Borrower; provided,
that a Foreign Exchange Contract shall be a Secured F/X
Contract only if the Senior Lender complies with the
following terms and conditions and all other applicable
provisions of this Agreement.
(i) At least two (2) Business Days prior to entering
into any Foreign Exchange Contract with the Borrower which a
Senior Lender desires to be a Secured F/X Contract, such
Senior Lender shall give the Administrative Agent written
notice thereof, no later than 10:00 A.M. (Chicago time).
Such written notice shall include a summary of all material
provisions of the proposed Foreign Exchange Contract, the
Foreign Exchange Exposure with respect to such Foreign
Exchange Contract and the date on which such Senior Lender
expects to enter into such Foreign Exchange Contract. The
Administrative Agent shall determine whether, as of the
close of business on the date of the Administrative Agent's
receipt of written notice of the proposed Foreign Exchange
Contract, the amount of Foreign Exchange Exposure related to
the proposed Foreign Exchange Contract is less than or equal
to the Facility Availability. On the date the Senior Lender
and the Borrower enter into the proposed Foreign Exchange
Contract, such Foreign Exchange Contract shall become a
Secured F/X Contract unless on or before the second Business
Day prior to such date, such Senior Lender shall have
received written notice from the Administrative Agent that
there is insufficient Facility Availability to cover the
Foreign Exchange Exposure related to such Foreign Exchange
Contract.
(ii) Promptly after either entering into any Foreign
Exchange Contract with the Borrower or deciding not to enter
into a proposed Foreign Exchange Contract, the applicable
Senior Lender shall give the Administrative Agent written
notice thereof (which may be by telecopy) or telephonic
notice promptly confirmed in writing. No Senior Lender
other than the Senior Lender which is a party to such
Foreign Exchange Contract shall be entitled to any fees
and/or profits in connection with such Foreign Exchange
Contract or shall have any responsibility or obligations
with respect thereto, and the Foreign Exchange Exposure with
respect to each Secured F/X Contract shall not constitute
utilization of the Commitments for the purposes of
calculating the Non-Use Fees payable by the Borrower
pursuant to Section 6.07.
(iii) Each Senior Lender which is a party to one or
more Secured F/X Contracts with the Borrower shall advise
the Administrative Agent on the last Business Day of each
calendar month of the aggregate amount of Foreign Exchange
Exposure with respect to its Secured F/X Contracts with the
Borrower and shall advise the Administrative Agent promptly
of any increase, since the date of the last such report, in
excess of $500,000 in the aggregate amount of such Foreign
Exchange Exposure.
(iv) Any Senior Lender Affiliate may, upon compliance
with the terms and conditions of this subsection 3.13(a),
and all other applicable provisions of this Agreement, enter
into Secured F/X Contracts.
(b) At any time, and from time to time, each Senior
Lender may, but shall have no obligation to, enter into
Interest Rate Contracts with the Borrower; provided, that an
Interest Rate Contract shall be a Secured Interest Rate
Contract only if the Senior Lender complies with the
following terms and conditions and all other applicable
provisions of this Agreement:
(i) At least two (2) Business Days prior to entering
into any Interest Rate Contract with the Borrower which a
Senior Lender desires to be a Secured Interest Rate
Contract, such Senior Lender shall give the Administrative
Agent written notice thereof, no later than 10:00 A.M.
(Chicago time). Such written notice shall include a summary
of all material provisions of the proposed Interest Rate
Contract, the Interest Rate Exposure with respect to such
Interest Rate Contract and the date on which such Senior
Lender expects to enter into such Interest Rate Contract.
The Administrative Agent shall determine whether, as of the
close of business on the date of the Administrative Agent's
receipt of written notice of the proposed Interest Rate
Contract, the amount of Interest Rate Exposure related to
the proposed Interest Rate Contract is less than or equal to
the Facility Availability. On the date the Senior Lender
and the Borrower enter into the proposed Interest Rate Con-
tract, such Interest Rate Contract shall become a Secured
Interest Rate Contract unless on or before the second
Business Day prior to such date, such Senior Lender shall
have received written notice from the Administrative Agent
that there is insufficient Facility Availability to cover
the Interest Rate Exposure related to such Interest Rate
Contract.
(ii) Promptly after either entering into any Interest
Rate Contract with the Borrower or deciding not to enter
into a proposed Interest Rate Contract, the applicable
Senior Lender shall give the Administrative Agent written
notice thereof (which may be by telecopy) or telephonic
notice promptly confirmed in writing. No Senior Lender
other than the Senior Lender which is a party to such
Interest Rate Contract shall be entitled to any fees and/or
profits in connection with such Interest Rate Contract or
shall have any responsibility or obligations with respect
thereto, and the Interest Rate Exposure with respect to each
Secured Interest Rate Contract shall not constitute
utilization of the Commitments for the purposes of
calculating the Non-Use Fees payable by the Borrower
pursuant to Section 6.07.
(iii) Each Senior Lender which is a party to one or
more Secured Interest Rate Contracts with the Borrower shall
advise the Administrative Agent on the last Business Day of
each calendar month of the aggregate amount of Interest Rate
Exposure with respect to its Secured Interest Rate Contracts
with the Borrower and shall advise the Administrative Agent
promptly of any increase, since the date of the last such
report, in excess of $500,000 in the aggregate amount of
such Interest Rate Exposure.
(iv) Any Senior Lender Affiliate may, upon compliance
with the terms and conditions of this subsection 3.13(b) and
all other applicable provisions of this Agreement, enter
into Secured Interest Rate Contracts.
SECTION 3.14 Special Provisions Governing Eurodollar
Rate Loans. Notwithstanding other provisions of this
Agreement, the following provisions shall govern with
respect to Eurodollar Rate Loans as to the matters covered:
(a) Amount of Eurodollar Rate Loans. Each Eurodollar
Rate Loan shall be in a minimum amount of $1,000,000.
(b) Determination of Interest Period. By giving
notice as set forth in Section 3.07 (with respect to a
Borrowing of Eurodollar Rate Loans) or Section 3.09 (with
respect to a conversion into, or continuation of, Eurodollar
Rate Loans), the Borrower shall have the option, subject to
the other provisions of this Section 3.14, to specify an
interest period (each, an "Interest Period") to apply to the
Borrowing, conversion or continuation of Eurodollar Rate
Loans described in such notice, which Interest Period shall
be either a one-, two-, three-, four- or six-month period
(or such intermediate periods to which the applicable Senior
Lenders may agree in their sole discretion, provided that,
for purposes of computing the interest due in accordance
with Section 6.03, such period shall be rounded up to the
nearest period of full months, for example, a 14 day period
shall be rounded to a one-month period, a 45 day period
shall be rounded to a two-month period, etc.). The
determination of Interest Periods shall be subject to the
following provisions:
(i) In the case of immediately successive Interest
Periods, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires.
(ii) If any Interest Period would otherwise expire on
a day which is not a Business Day, such Interest Period
shall be extended to expire on the next succeeding Business
Day unless, with respect to an Interest Period applicable to
a Borrowing, conversion into, or continuation of Eurodollar
Rate Loans, such next succeeding Business Day is not in the
same month, in which case such Interest Period shall expire
on the immediately preceding Business Day.
(iii) Borrower may not elect an Interest Period for
any Borrowing, conversion or continuation which terminates
later than the last day of the Facility Termination Date.
(iv) Borrower may not elect an Interest Period with
respect to any portion of principal of a Eurodollar Rate
Loan which extends beyond a date on which the Borrower is
required to make a scheduled payment of that portion of
principal, it being understood and agreed that any
Eurodollar Rate Loan the Interest Period of which ends less
than one (1) month prior to such date shall be deemed
converted to a Base Rate Loan as of the last day of such
Interest Period for purposes of determining whether any
portion of principal of any Eurodollar Rate Loan is required
in order to make a mandatory payment of principal.
(v) There shall be no more than six (6) Interest
Periods in effect at any one time with respect to all
Eurodollar Rate Loans.
(c) Determination of Interest Rate. As soon as prac-
ticable after 10:00 A.M. (Chicago time) on the Interest Rate
Determination Date, the Administrative Agent shall determine
with Citibank (which determination shall, absent
demonstrated error, be presumptively correct) the interest
rate which shall apply for the applicable Interest Period to
the Eurodollar Rate Loans for which an interest rate is then
being determined and shall promptly give notice thereof (in
writing or by telephone confirmed in writing) to the
Borrower and to each Senior Lender.
(d) Interest Rate Unascertainable, Inadequate or
Unfair. If with respect to any Interest Period pertaining
to a Eurodollar Rate Loan:
(i) the Administrative Agent is advised by Citibank
that deposits in Dollars (in the applicable amounts) are not
being offered by Citibank in the relevant market for such
Interest Period; or
(ii) Senior Lenders holding at least fifty percent
(50%) of the then aggregate unpaid principal amount of the
Notes advise the Administrative Agent at that the Eurodollar
Rate as determined by the Administrative Agent is at least
fifteen (15) basis points less than the cost to such Senior
Lenders of obtaining funds in the London interbank
Eurodollar market in the amount substantially equal to such
Senior Lenders' Eurodollar Rate Loans and for a period equal
to such Interest Period;
then, the Administrative Agent shall forthwith give notice
thereof to the Borrower, whereupon until the Administrative
Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist, the right of the
Borrower to elect to have Loans bear interest based upon the
Eurodollar Rate shall be suspended, and each outstanding
Eurodollar Rate Loan owing by the Borrower shall be
converted into a Base Rate Loan on the last day of the then
current Interest Period therefor, notwithstanding any prior
election by the Borrower to the contrary. Nothing in this
subsection 3.14(d) shall limit the right of the Borrower
under Article VI to elect to have Loans bear interest based
upon the Eurodollar Rate for any Interest Period not
affected by the circumstances giving rise to a notice under
this subsection 3.14(d).
(e) Illegality. (i) In the event that on any date
any Senior Lender shall have determined in good faith (which
determination shall, absent demonstrated error, be final and
conclusive and binding upon all parties) that as a result of
such Senior Lender's compliance with any law, governmental
rule, regulation or order (whether or not having the force
of law and whether or not failure to comply therewith would
be unlawful) the making or continuation of any Eurodollar
Rate Loan has become unlawful, then, and in any such event,
that Senior Lender shall promptly give notice of such
determination (by telephone confirmed in writing) to the
Borrower and the Administrative Agent (which notice the
Administrative Agent shall promptly transmit to each other
applicable Senior Lender).
(ii) Upon the giving of the notice referred to in
subsection 3.14(e)(i), (A) the Borrower's rights to request,
and such Senior Lender's obligation to make, convert into or
continue, Eurodollar Rate Loans shall be immediately
suspended, and such Senior Lender shall make, continue or
convert a Loan as part of the requested Borrowing or
continuation of, or conversion into, Eurodollar Rate Loans
as a Base Rate Loan, which Base Rate Loan shall, for all
purposes, be considered a part of such Borrowing, conversion
or continuation, and (B) if the affected Eurodollar Rate
Loan or Loans is/are then outstanding, the Borrower shall
immediately, or if permitted by applicable law, no later
than the date permitted thereby, upon at least one (1)
Business Day's written notice to the Administrative Agent
and the affected Senior Lender, convert each such Loan into
a Base Rate Loan.
(iii) In the event that such Senior Lender determines
at any time following its giving of the notice referred to
in subsection 3.14(e)(i) that such Senior Lender may
lawfully make, continue or convert into Eurodollar Rate
Loans, such Senior Lender shall promptly give notice of that
determination (by telephone confirmed in writing) to the
Borrower and the Administrative Agent (which notice the
Administrative Agent shall promptly transmit to each other
Senior Lender), whereupon the Borrower's right to request,
and such Senior Lender's obligation to make, continue or
convert into, Eurodollar Rate Loans shall be restored.
(f) Compensation. Except for any such loss, expense
or liability incurred solely as a result of the willful
misconduct or gross negligence of the Administrative Agent
or any of the Senior Lenders, in addition to such amounts as
are required to be paid by the Borrower pursuant to Article
VI, the Borrower shall compensate each Senior Lender which
has made Eurodollar Rate Loans to the Borrower, upon written
request by such Senior Lender (which request shall set forth
in reasonable detail the basis for requesting such amounts),
for all losses, expenses and liabilities, including, without
limitation, any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds
acquired by such Senior Lender to fund or maintain such
Senior Lender's Eurodollar Rate Loans to the Borrower,
(i) if for any reason a Borrowing, conversion or
continuation of Eurodollar Rate Loans does not occur on a
date specified therefor in a Notice of Borrowing or a Notice
of Conversion/Continuation or in a telephonic request for
Borrowing or conversion/continuation or a successive
Interest Period does not commence after notice therefor is
given pursuant to Section 3.07 or 3.09, (ii) if any
prepayment of any Eurodollar Rate Loan (including, without
limitation, any mandatory prepayments required hereunder)
occurs for any reason on a date which is not the last day of
the applicable Interest Period, (iii) as a consequence of
any required conversion of a Eurodollar Rate Loan to a Base
Rate Loan as a result of any of the events indicated in
subsection 3.14(e), or (iv) as a consequence of any other
default by the Borrower in the repayment of Eurodollar Rate
Loans when required by the terms of this Agreement.
(g) Quotation of Eurodollar Rate. If on any Interest
Rate Determination Date Citibank shall have failed to
provide offered quotations to the Administrative Agent in
accordance with the definition of "Eurodollar Rate", the
Administrative Agent shall give the Borrower and each Senior
Lender prompt notice thereof and the Loans requested by the
Borrower shall be made or continued as, or converted into,
Base Rate Loans.
(h) Eurodollar Rate Taxes. The Borrower agrees that:
(i) it will pay, prior to the date on which penalties
attach thereto, all present and future income, stamp and
other taxes, levies, or costs and charges whatsoever, im-
posed, assessed, levied or collected on or in respect of a
Loan solely as a result of the interest rate being
determined by reference to the Eurodollar Rate and/or the
provisions of this Agreement relating to the Eurodollar Rate
and/or the recording, registration, notarization or other
formalization of any the foregoing and/or any payments of
principal, interest or other amounts made on or in respect
of a Loan when the interest rate is determined by reference
to the Eurodollar Rate (all such taxes, levies, costs and
charges being herein collectively called "Eurodollar Rate
Taxes"); provided that Eurodollar Rate Taxes shall not
include: taxes imposed on or measured by the overall net
income of a Senior Lender or any foreign branch or
Subsidiary of that Senior Lender by the United States of
America or any taxing authority of any jurisdiction in which
such Senior Lender or any such foreign branch or Subsidiary
conducts business. The Borrower shall also pay such
additional amounts equal to increases in taxes payable by a
Senior Lender described in the foregoing proviso, which
increases are attributable to payments made by the Borrower
described in this sentence and in the immediately preceding
sentence of this paragraph. Promptly after the date on
which payment of any such Eurodollar Rate Tax is due
pursuant to applicable law, the Borrower will, at the
reasonable request of a Senior Lender, furnish to that
Senior Lender evidence, in form and substance reasonably
satisfactory to that Senior Lender, that the Borrower has
met its obligation under this subsection 3.14(h)(i); and
(ii) it will indemnify each Senior Lender against, and
reimburse each on demand for, any Eurodollar Rate Taxes paid
by such Senior Lender, as determined by that Senior Lender
in its reasonable discretion. A Senior Lender requesting
reimbursement under this subsection 3.14(h)(ii) shall
provide the Borrower with appropriate receipts for any
payments or reimbursements made by the Borrower pursuant to
this subsection 3.14(h)(ii), together with such information
as may reasonably be required to indicate the basis for such
Eurodollar Rate Taxes; provided that if a Senior Lender
subsequently recovers, or receives a permanent net tax
benefit with respect to, any amount of Eurodollar Rate Taxes
previously paid by the Borrower pursuant to this subsection
3.14(h), such Senior Lender shall, within thirty (30) days
after receipt of such refund, and to the extent permitted by
applicable law, pay to the Borrower the amount of any such
recovery or permanent net tax benefit.
(i) Booking of Eurodollar Rate Loans. Any Senior
Lender may make, carry or transfer Eurodollar Rate Loans at,
to, or for the account of, any of its branch offices or the
office of a Senior Lender Affiliate; provided, that no such
Senior Lender shall be entitled to receive any greater
amount under subsection 3.14(f) or 3.14(h) as a result of
the transfer of any such Loan than such Senior Lender would
be entitled to immediately prior thereto unless (A) such
transfer occurred at a time when circumstances giving rise
to the claim for such greater amount did not exist and (B)
such claim would have arisen even if such transfer had not
occurred.
(j) Affiliates Not Obligated. No Eurodollar Affiliate
or other Senior Lender Affiliate shall be deemed a party to
this Agreement or shall have any liability or obligation
under or in connection with this Agreement.
SECTION 3.15 Senior Lenders' Obligations Several.
All Loans made under this Agreement shall be made by the
applicable Senior Lenders, simultaneously and propor-
tionately in accordance with their respective Pro Rata
Shares thereof, it being understood that (a) no Senior
Lender shall be responsible for any failure by any other
Senior Lender to perform its obligation to make any Loan
hereunder nor shall the commitment of any Senior Lender to
make a Loan hereunder be increased or decreased as a result
of the failure by any other Senior Lender to perform its
obligation to make a Loan hereunder and (b) no failure by
any Senior Lender to perform its obligation to make a Loan
to a Borrower hereunder shall excuse any other Senior Lender
from its obligation to make a Loan.
ARTICLE IV
PAYMENTS AND PREPAYMENTS
SECTION 4.01 Prepayments. The Borrower shall have the
right, upon notice to the Administrative Agent not later
than 10:00 A.M. (Chicago time) on the date of any such
intended prepayment, to prepay any Loans made as Base Rate
Loans in whole or in part, provided that any partial payment
shall be in an aggregate minimum amount of $500,000, or
integral multiples of $100,000 in excess thereof. Any such
notice of prepayment shall specify the date of such
prepayment and the aggregate principal amount of Loans to be
prepaid on such date.
SECTION 4.02 Mandatory Prepayments of Loans. (a) Upon
the occurrence of an Event of Default, and thereafter until
such time, if any, as such Event of Default shall be waived
in accordance with the terms of this Agreement, all funds
received by the Administrative Agent for the benefit of the
Senior Secured Creditors shall be transferred by the
Administrative Agent to the Collateral Account pending
application thereof to the Obligations in accordance with
the terms of this Agreement.
(b) The Borrower shall make prepayments of its Loans
and/or post cash collateral with the Administrative Agent
pursuant to agreements, in form and substance reasonably
acceptable to the Administrative Agent, to the extent
necessary to cause the sum of the Facility Availability
plus the Facility Outstandings to be no greater than the sum
of the Commitments plus the aggregate amount of cash
collateral posted (including cash collateral then being
posted as well as cash collateral previously posted) with
the Administrative Agent pursuant to this subsection
4.02(b).
(c) If any guarantor (other than a Subsidiary
Guarantor) of all or any portion of the Obligations
(i) revokes its guaranty of such Obligations or such
guaranty is terminated, in either case, prior to the date on
which such guaranty terminates in accordance with the terms
thereof or (ii) if one of the events described in
subsections 14.01(g), 14.01(h) or 14.01(j) occurs with
respect to such guarantor, then the Obligations which were
the subject of such guaranty shall, at the option of the
Requisite Senior Lenders, become immediately due and payable
in a principal amount equal to the maximum amount of such
guarantor's liability under such guaranty.
(d) The Borrower shall maintain, at all times, a
deposit of cash collateral with the Administrative Agent in
an amount equal to at least one hundred and five percent
(105%) of the Commitments subject to the Cash Collateral
Pledge Agreement.
(e) All payments shall be applied to payment of
accrued interest before application to principal.
SECTION 4.03 Reductions of Commitments. The Borrower
shall have the right, at any time and from time to time, to
terminate in whole or permanently reduce in part, without
premium or penalty, the Commitments in an amount up to the
Facility Availability at such time. The Borrower shall give
not less than three (3) Business Days' prior written notice
to the Administrative Agent designating the date (which
shall be a Business Day) of such termination or reduction
and the amount of any partial reduction. Promptly after
receipt of a notice of such termination or reduction, the
Administrative Agent shall notify each Senior Lender of the
proposed termination or reduction. Such termination or
partial reduction of the Commitments shall be effective on
the date specified in the Borrower's notice and shall reduce
the Commitment of each Senior Lender proportionately in
accordance with its Pro Rata Share. Any partial reduction
of a Commitment shall be in an aggregate minimum amount of
$1,000,000, and integral multiples of $1,000,000 in excess
of that amount.
SECTION 4.04 Intentionally omitted.
SECTION 4.05 Manner and Time of Payment. (a) All
payments of principal, interest, Reimbursement Obligations
and fees hereunder and under the Notes shall be made without
condition or reservation of right and in same day funds and
(except for mandatory prepayments of Loans made pursuant to
subsection 4.02(a)) delivered to the Administrative Agent
not later than 10:00 A.M. (Chicago time) on the date due to
such account of the Administrative Agent as the
Administrative Agent may designate, for the account of such
Senior Lender or such Issuing Bank, as the case may be; and
funds received by the Administrative Agent after that time
shall be deemed to have been paid on the next succeeding
Business Day. All payments of principal, interest,
Reimbursement Obligations and fees, and all reimbursements
for expenses pursuant to Section 16.03, may at the option of
the Administrative Agent and upon reasonable notice to the
Borrower, be paid from the proceeds of the Loans. The
Borrower hereby irrevocably authorizes the Senior Lenders to
make Loans to it for the purpose of paying principal,
interest, Reimbursement Obligations and fees due from it and
for the purpose of reimbursing the Administrative Agent and
the Senior Lenders for expenses pursuant to Section 16.03,
and agrees that all such Loans so made shall be Base Rate
Loans and shall be deemed to have been requested by the
Borrower.
(b) Except as provided in the immediately following
sentence, whenever any payment to be made by the Borrower
hereunder or under the Notes shall be stated to be due on a
day which is not a Business Day, payment shall be made on
the next succeeding Business Day and such extension of time
shall be included in the computation of the payment of
interest hereunder or under the Notes and of any of the fees
specified in Article VI, as the case may be. If a day on
which a payment relating to a Eurodollar Rate Loan is due is
not a Business Day and there are no subsequent Business Days
in the same month, then the due date for such payment shall
be the last Business Day of such month.
SECTION 4.06 Apportionment and Application of
Payments. (a) Subject to subsection (b) below, principal
and interest payments received by the Administrative Agent
in respect of the Loans and payments of the Non-Use Fees
shall be apportioned ratably among the Senior Lenders to
which such Loans and Non-Use Fees are owed, according to
such Senior Lenders' respective Pro Rata Shares in such
Loans and Non-Use Fees. All proceeds of Collateral received
by the Administrative Agent shall be applied, except as
otherwise provided in the other provisions of this
Agreement, first, to pay any fees, expense reimbursements or
indemnities then due to the Administrative Agent from the
Borrower hereunder; second, to pay any fees, expenses,
reimbursements or indemnities then due to the Senior Lenders
from the Borrower hereunder; third, to pay interest due in
respect of Loans and Letter of Credit Obligations; fourth,
to pay principal due in respect of all other Facility
Outstandings, and to the extent such Facility Outstandings
are contingent, to provide cash collateral therefor as
required pursuant to subsection 14.03(b), allocated, if
sufficient funds are not available to pay (or cash
collateralize) all such Facility Outstandings, to the Senior
Secured Creditors pro rata based on the aggregate amount of
all such Facility Outstandings and the respective share of
such Facility Outstandings owing to the respective Senior
Secured Creditors. The Administrative Agent shall promptly
distribute to each Senior Secured Creditor at the primary
address set forth for the applicable Senior Lender (or, in
the case of an Affiliate of a Senior Lender, the related
Senior Lender) or Issuing Bank on the appropriate signature
page hereof (or, in the case of a Senior Lender that is not
an original signatory of this Agreement, on the signature
page of the Assignment Agreement or amendment to this
Agreement executed by such Senior Lender), or at such other
address as such Senior Secured Creditor may request in
writing, such funds as it may be entitled to receive. The
foregoing apportionment of payments is solely for the
purpose of determining the obligations of the Borrower
hereunder and, notwithstanding such apportionment, any
Senior Secured Creditor may on its books and records
allocate payments received by it in a manner different from
that contemplated hereby. No such different allocation
shall alter the rights and obligations of the Borrower under
this Agreement determined in accordance with the
apportionment contemplated by this subsection 4.06(a).
Except as otherwise provided in subsection 3.14(e), each
payment and prepayment of principal on the Loans shall be
applied first to the Eurodollar Rate Loans maturing on the
date of such payment or prepayment, next to the Base Rate
Loans outstanding on the date of such payment or prepayment
and then to the other Eurodollar Rate Loans outstanding on
such date.
(b) Notwithstanding anything to the contrary contained
in this Agreement, in the event any Senior Lender fails to
fund its Pro Rata Share of any Borrowing of Loans requested
by the Borrower, which such Senior Lender is obligated to
fund under the terms of this Agreement (the funded portion
of any such Borrowing of Loans being hereinafter referred to
as a "Non Pro Rata Loan"), until the earlier of such Senior
Lender's cure of such failure and the termination of the
Commitments, the proceeds of all amounts thereafter repaid
to the Administrative Agent and otherwise required to be
applied to such Senior Lender's share of all other
Obligations pursuant to the terms of this Agreement shall be
advanced to the Borrower by the Administrative Agent on
behalf of such Senior Lender to cure, in full or in part,
such failure by such Senior Lender, but shall nevertheless
be deemed to have been paid to such Senior Lender in
satisfaction of such Obligations. The foregoing provisions
of this subsection 4.06(b) shall apply only with respect to
the proceeds of payments of Obligations and shall not affect
the conversion or continuation of Loans pursuant to Section
3.09. A Senior Lender shall be deemed to have cured its
failure to fund its Pro Rata Share of the Loans requested by
the Borrower at such time as an amount equal to such Senior
Lender's Pro Rata Share of the principal portion of the
requested Loans is fully funded to the Borrower, whether by
such Senior Lender itself or by operation of this subsection
4.06(b), and whether or not the Non Pro Rata Loan(s) with
respect thereto has been repaid, converted or continued.
Amounts advanced to the Borrower to cure, in full or in
part, any such Senior Lender's failure to fund its Pro Rata
Share of the Loans ("Cure Loans") shall bear interest at the
rate then applicable to Base Rate Loans, and for all
purposes of this Agreement shall be treated as if they were
Base Rate Loans. Regardless of whether or not an Event of
Default has occurred or is continuing, and notwithstanding
the instructions of the Borrower as to its desired
application, all repayments of principal which, in
accordance with the other terms of this Section 4.06, would
be applied to the outstanding Base Rate Loans, shall be
applied first, ratably to all such Base Rate Loans
constituting Non Pro Rata Loans, second, ratably to such
Base Rate Loans other than those constituting Non Pro Rata
Loans or Cure Loans and, third, ratably to such Base Rate
Loans constituting Cure Loans.
(c) Any accounting as to Loans, fees, Letters of
Credit or Letter of Credit Obligations which any Issuing
Bank or any Senior Lender at its option may provide to the
Borrower, including any monthly statement of account will be
presumed, rebuttably, to be correct.
SECTION 4.07 Required Additional Cash Collateral. The
Borrower shall, at all times when the principal amount of
its Obligations exceeds $4,250,000 due to Interest Rate
Exposure or Foreign Exchange Exposure, maintain a deposit of
cash collateral with the Administrative Agent (in addition
to cash collateral required under Section 4.02(d)) as part
of the Collateral securing the Obligations in an amount
equal to the amount by which its Obligations exceed
$4,250,000.
ARTICLE V
THE LETTER OF CREDIT SUBFACILITY
SECTION 5.01 Obligation to Issue. Subject to the
terms and conditions of this Agreement, and in reliance upon
the representations and warranties of the Borrower set forth
herein or in any other Loan Document, each Issuing Bank
hereby severally agrees, to issue, from time to time during
the Commitment Period, for the account of the Borrower
through such of the Issuing Bank's branches as it and the
Borrower may jointly agree, one or more Letters of Credit in
accordance with this Article V. Notwithstanding the
foregoing, no Issuing Bank shall have any obligation to
issue, and shall not issue, any Letter of Credit at any time
at which:
(a) the aggregate undrawn face amount of Letters of
Credit theretofore issued by such Issuing Bank, after giving
effect to all requested but unissued Letters of Credit,
exceeds any limit imposed by law or regulation upon such
Issuing Bank;
(b) the aggregate principal amount of Letter of Credit
Obligations with respect to Letters of Credit issued by such
Issuing Bank for the account of the Borrower (which amount
shall be calculated without giving effect to the
participation of the Senior Lenders pursuant to Section
5.05) would exceed the L/C Subfacility; or
(c) immediately after the issuance of such Letter of
Credit, the Letter of Credit Obligations would exceed the
L/C Subfacility.
No Letter of Credit shall be issued which has an expiration
date (a) more than one year after the date of issuance
(except for any Letter of Credit providing for automatic
annual extensions of the expiration date, so long as such
Letter of Credit is terminable by the Issuing Bank upon one
hundred twenty (120) days notice to the beneficiary thereof)
or (b) after the Business Day immediately preceding the
applicable Facility Termination Date.
SECTION 5.02 Conditions. The obligation of an Issuing
Bank to issue any Letter of Credit, and of each Senior
Lender to participate therein as provided in Section 5.05,
is subject to the satisfaction in full of the applicable
conditions precedent set forth in Section 5.01 and Article
VII and each of the following conditions:
(a) the Borrower shall have delivered to the Issuing
Bank, at such times and in such manner as such Issuing Bank
may prescribe, a Letter of Credit Reimbursement Agreement
and such other documents and materials as may be required
pursuant to the terms thereof and the terms of the proposed
Letter of Credit shall not be inconsistent with any term or
provision of this Agreement and otherwise shall be
satisfactory to such Issuing Bank;
(b) as of the date of issuance, no order, judgment or
decree of any court, arbitrator or Governmental Authority
shall purport by its terms to enjoin or restrain the Issuing
Bank from issuing the Letter of Credit and no law, rule or
regulation applicable to such Issuing Bank and no request or
directive (whether or not having the force of law) from any
Governmental Authority having jurisdiction over such Issuing
Bank shall prohibit or request that such Issuing Bank
refrain from the issuance of Letters of Credit generally or
the issuance of the proposed Letter of Credit; and
(c) the Administrative Agent shall have notified the
Issuing Bank, pursuant to Section 5.03, that the Unused L/C
Subfacility available to the Borrower is not less than the
amount of the requested Letter of Credit.
SECTION 5.03 Issuance of Letters of Credit. (a)The
Borrower shall give the Administrative Agent written notice
(or telephonic notice confirmed in writing by an authorized
officer or employee of the Borrower not later than the
requested issuance date of the Letter of Credit) of its
request for the issuance of a Letter of Credit no later than
10:00 A.M. (Chicago time) two (2) Business Days prior to the
date such Letter of Credit is requested to be issued. Such
notice shall be irrevocable and shall specify, with respect
to such requested Letter of Credit, the face amount,
beneficiary, effective date of issuance, expiry date (which
effective date and expiry date shall be Business Days and,
with respect to the expiry date, shall be no later than the
Business Day immediately preceding the Facility Termination
Date), the identity of the Issuing Bank selected by the
Borrower and the purpose for which such Letter of Credit is
to be issued. The Borrower shall also provide the
Administrative Agent with a copy of the form of Letter of
Credit that the proposed Issuing Bank has agreed to issue.
If the face amount of the requested Letter of Credit is less
than or equal to the Unused L/C Subfacility, as determined
by the Administrative Agent as of the close of business on
the date of its receipt of written notice of the requested
issuance, the Administrative Agent shall so notify the
proposed Issuing Bank in writing (or by telephonic notice
promptly confirmed thereafter in writing) not later than the
close of business on the second Business Day following the
Administrative Agent's receipt of the Borrower's written
notice and the Issuing Bank shall issue such Letter of
Credit on the date requested by the Borrower, unless (i) on
or before the Business Day prior to such issuance date, such
Issuing Bank shall have received written notice from the
Administrative Agent or any Senior Lender that the
conditions precedent to the issuance of a Letter of Credit
set forth in Section 5.02 have not been met or (ii) on the
requested issuance date such Issuing Bank has actual
knowledge that such conditions precedent have not been met.
If an Issuing Bank receives written notice, or has actual
knowledge, that the conditions precedent to the issuance of
a Letter of Credit have not been met, then such Issuing Bank
shall have no obligation to issue, and shall not issue, any
Letter of Credit until such notice is withdrawn or such
Issuing Bank receives a notice from the Administrative Agent
that the condition(s) described in such notice have been
waived in accordance with the provisions of this Agreement.
Any letter of credit issued by an Issuing Bank in compliance
with the provisions of this Section 5.03 shall be a Letter
of Credit. The Issuing Bank shall give the Administrative
Agent prompt written notice (or telephonic notice promptly
confirmed in writing) of the issuance of any Letter of
Credit.
(b) An Issuing Bank shall not extend or amend any
Letter of Credit unless the requirements of this Section
5.03 are met as though a new Letter of Credit was being
requested and issued.
(c) An Issuing Bank or any Senior Lender may issue
Non-Facility Letters of Credit for its own account, and at
its own risk, but without collateral security except as
permitted in subsection 11.01(e). None of the provisions of
this Article V shall apply to any such Non-Facility Letter
of Credit.
SECTION 5.04 Reimbursement Obligations; Duties of
Issuing Banks. (a) Notwithstanding any provisions to the
contrary in any Letter of Credit Reimbursement Agreement:
(i) The Borrower shall reimburse the applicable
Issuing Bank for drawings under a Letter of Credit issued by
such Issuing Bank for the account of the Borrower no later
than the earlier of (A) the time specified in the related
Letter of Credit Reimbursement Agreement, and (B) three (3)
Business Days after the payment of such drawings by such
Issuing Bank; and
(ii) the Borrower's Reimbursement Obligation with
respect to a drawing under a Letter of Credit issued for the
Borrower's account shall bear interest from the date of such
drawing to the date paid in full at the higher of (A) the
interest rate specified in the applicable Letter of Credit
Reimbursement Agreement or (B) the interest rate for past
due Base Rate Loans calculated in accordance with Section
6.02.
(b) No action taken or omitted to be taken by an
Issuing Bank in connection with any Letter of Credit shall
(i) result in any liability on the part of such Issuing Bank
to any Senior Lender, unless such Issuing Bank's action or
omission constitutes willful misconduct or gross negligence,
or (ii) relieve any Senior Lender of any of its obligations
to such Issuing Bank hereunder, unless the Letter of Credit
in question was issued in contravention of the provisions of
Section 5.03 or at a time during which a notice, described
in Section 5.03, from such Senior Lender to such Issuing
Bank remained in effect. Each Senior Lender agrees that,
prior to making any payment to a beneficiary with respect to
a drawing under a Letter of Credit, the Issuing Bank shall
be responsible only to confirm that documents required by
the terms of such Letter of Credit to be delivered as a
condition precedent to such drawing have been delivered and
that the same appear on their face to conform with the
requirements thereof. Each Senior Lender further agrees
that the Issuing Bank may assume that documents appearing on
their face to be the documents required to be delivered as a
condition precedent to a drawing do in fact comply.
SECTION 5.05 Participations. (a) Immediately upon
the issuance by an Issuing Bank, for the account of the
Borrower, of any Letter of Credit in compliance with the
provisions of Section 5.03, each Senior Lender shall be
deemed to have irrevocably and unconditionally purchased
and received from such Issuing Bank, without recourse or
warranty, an undivided interest and participation to the
extent of such Senior Lender's Pro Rata Share in such Letter
of Credit, including, without limitation, all obligations of
the Borrower with respect thereto (other than amounts owing
to the Issuing Bank under subsection 6.09(b)) and any
security therefor or guaranty pertaining thereto.
(b) An Issuing Bank shall promptly notify the
Administrative Agent, and the Administrative Agent shall
promptly notify the Senior Lenders, if the Borrower fails to
reimburse such Issuing Bank for payments made by such
Issuing Bank in respect of drawings by a beneficiary under a
Letter of Credit. Upon a Senior Lender's receipt of such
notice, such Senior Lender shall unconditionally pay to the
Administrative Agent, for the account of such Issuing Bank,
an amount equal to such Senior Lender's Pro Rata Share of
the unreimbursed payment made by such Issuing Bank under the
Letter of Credit. Such payment shall be made by such Senior
Lenders in Dollars and in same day funds on the day each
Senior Lender receives notice from the Administrative Agent
that such payment is owing, if such notice is received by
such Senior Lender prior to 10:00 A.M. (Chicago time) on a
Business Day; if such notice is not received by such time,
then such Senior Lender shall remit its payment on the next
Business Day following the day such notice is received. Any
amount payable by a Senior Lender under this subsection
5.05(b) which is not paid when due pursuant to the terms
hereof, shall be payable on demand, together with interest
thereon at the Federal Funds Rate (or, after the first three
(3) days, at the Base Rate) from the date such payment was
due until paid in full. The failure of any Senior Lender to
make any payment owing by it under this subsection 5.05(b)
shall neither relieve nor increase the obligation of any
other Senior Lender to make any payment owing by it under
this subsection 5.05(b). The Administrative Agent shall
promptly remit to the applicable Issuing Bank all amounts
received by the Administrative Agent, for the account of
such Issuing Bank, from the Senior Lenders pursuant to this
subsection 5.05(b). No payment made by a Senior Lender
pursuant to this subsection 5.05(b) shall prejudice the
ability of such Senior Lender to claim that the Issuing Bank
to which such payment is made is subject to liability under
subsection 5.04(b).
(c) Whenever an Issuing Bank receives a payment from
the Borrower with respect to a Reimbursement Obligation
(including any interest thereon) for which such Issuing Bank
has received payments from the Senior Lenders pursuant to
subsection 5.05(b), such Issuing Bank shall promptly remit
to the Administrative Agent and the Administrative Agent
shall promptly remit to each Senior Lender which has funded
its participating interest therein, in Dollars and in the
kind of funds so received, an amount equal to each such
Senior Lender's Pro Rata Share thereof. Each such payment
shall be made by the Issuing Bank or the Administrative
Agent, as the case may be, on the Business Day on which such
Person receives the funds paid to such Person pursuant to
the preceding sentence, if received prior to 10:00 A.M.
(Chicago time) on such Business Day, and otherwise on the
next succeeding Business Day.
(d) Upon the request of the Administrative Agent or
any Senior Lender, an Issuing Bank shall furnish to the
Administrative Agent or such Senior Lender copies of any
Letter of Credit, Letter of Credit Reimbursement Agreement,
and Letter of Credit application to which that Issuing Bank
is party and such other documentation as may reasonably be
requested by the Administrative Agent or such Senior Lender
with respect to Letters of Credit issued by such Issuing
Bank.
(e) The obligations of a Senior Lender under
subsection 5.05(b) to make payments to the Administrative
Agent for the account of an Issuing Bank with respect to a
Letter of Credit shall be irrevocable, not subject to any
qualification or exception whatsoever and shall be made in
accordance with, but not subject to, the terms and
conditions of this Agreement under all circumstances
(assuming that such Issuing Bank has issued such Letter of
Credit in compliance with the provisions of Section 5.03),
including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time against
a beneficiary named in a Letter of Credit or any transferee
of any Letter of Credit (or any Person for whom any such
transferee may be acting), the Administrative Agent, the
Issuing Bank, any Senior Lender, or any other Person,
whether in connection with this Agreement, any Letter of
Credit, the transactions contemplated herein or any
unrelated transactions (including any underlying
transactions between the Borrower or any Subsidiary thereof
and the beneficiary named in any Letter of Credit);
(iii) any draft, certificate of any other document
presented under the Letter of Credit proving to be forged,
fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for
the performance or observance of any of the terms of any of
the Loan Documents;
(v) any failure by the Administrative Agent or the
Issuing Bank to make any reports required pursuant to
Section 5.08; or
(vi) the occurrence of any Event of Default or
Potential Event of Default.
SECTION 5.06 Payment of Reimbursement Obligations.
(a) The Borrower agrees to pay to each Issuing Bank the
amount of all of the Reimbursement Obligations, interest and
other amounts payable to such Issuing Bank under or in
connection with any Letter of Credit issued for the account
of the Borrower immediately when due, irrespective of any
claim, set-off, defense or other right which the Borrower or
any Subsidiary thereof may have at any time against any
Issuing Bank or any other Person.
(b) In the event any payment by the Borrower or any
Subsidiary thereof received by an Issuing Bank with respect
to a Letter of Credit and distributed by the Administrative
Agent to the Senior Lenders on account of their
participations is thereafter set aside, avoided or recovered
from such Issuing Bank in connection with any receivership,
liquidation or bankruptcy proceeding, each Senior Lender
which received such distribution shall, upon demand by the
Issuing Bank, contribute such Senior Lender's Pro Rata Share
of the amount set aside, avoided or recovered together with
interest at the rate required to be paid by the Issuing Bank
upon the amount required to be repaid by it.
SECTION 5.07 Exoneration. As between the Borrower,
the Senior Lenders and each Issuing Bank issuing a Letter of
Credit for the account of the Borrower, such Borrower
assumes all risks of the acts and omissions of, or misuse of
such Letters of Credit by, the respective beneficiaries of
such Letters of Credit. In furtherance and not in
limitation of the foregoing, subject to the provisions of
the Letter of Credit applications, the Issuing Banks and the
related Senior Lenders shall not be responsible: (a) for
the form, validity, sufficiency, accuracy, genuineness or
legal effect of any document submitted by any party in
connection with the application for and issuance of a Letter
of Credit, even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent
or forged; (b) for the validity or sufficiency of any
instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any
reason; (c) for failure of the beneficiary of a Letter of
Credit to comply duly with conditions required in order to
draw upon such Letter of Credit, provided that the Issuing
Bank complies with the provisions of subsection 5.04(b); (d)
for errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable,
telegraph, telex, telecopy or otherwise, whether or not they
be in cipher; (e) for errors in interpretation of technical
terms; (f) for any loss or delay in the transmission or
otherwise of any document required in order to make a
drawing under any Letter of Credit or of the proceeds
thereof; (g) for the misapplication by the beneficiary of a
Letter of Credit of the Letter of Credit; and (h) for any
consequences arising from causes beyond the control of the
Administrative Agent, the Issuing Banks and the Senior
Lenders including, without limitation, any act or omission,
whether rightful or wrongful, of any present or future de
jure or de facto government or Governmental Authority. In
furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken
or omitted by an Issuing Bank under or in connection with
the Letters of Credit or any related certificates, if taken
or omitted in good faith and not constituting gross
negligence or willful misconduct, shall not put the Issuing
Bank, the Administrative Agent, or any Senior Lender under
any resulting liability to the Borrower or relieve the
Borrower of any of its obligations hereunder to any such
Person.
SECTION 5.08 Issuing Bank Reporting Requirements.
Each Issuing Bank shall, no later than the tenth (10th)
Business Day following the last day of each month, provide
to the Administrative Agent and the Borrower separate
schedules for Commercial Letters of Credit and Standby
Letters of Credit issued as Letters of Credit, in form and
substance reasonably satisfactory to the Administrative
Agent, showing the date of issue, beneficiary, face amount,
expiration date and the reference number of each Letter of
Credit issued for the account of the Borrower by such
Issuing Bank which was outstanding at any time during such
month and the aggregate amount payable by the Borrower
during the month pursuant to Section 6.08.
ARTICLE VI
INTEREST AND FEES
SECTION 6.01 Interest Rate. (a) All Loans shall bear
interest on the unpaid principal amount thereof from the
date made until paid in full, at a rate determined by
reference to the Base Rate or the Eurodollar Rate, as
elected by the Borrower at the time a Notice of Borrowing or
a Notice of Conversion/Continuation is given pursuant to
Sections 3.07 and 3.09, respectively. Notwithstanding the
foregoing, the Borrower may not elect the Eurodollar Rate as
the applicable basis for determining the rate of interest on
a Loan if at the time of such election a Potential Event of
Default or an Event of Default exists. If on any day a Loan
is outstanding with respect to which the Borrower has not
delivered notice to the Administrative Agent in accordance
with the terms of this Agreement specifying the basis
elected by the Borrower for determining the rate of interest
thereon, then for that day such Loan shall be a Base Rate
Loan and shall bear interest at a rate determined by
reference to the Base Rate.
(b) Loans for which the Borrower has elected an
interest rate determined by reference to the Base Rate
("Base Rate Loans") shall bear interest at the Base Rate in
effect from time to time; Loans for which the Borrower has
elected an interest rate determined by reference to the
Eurodollar Rate ("Eurodollar Rate Loans") shall bear
interest at the sum of the Eurodollar Rate for the
applicable Interest Period plus the Applicable Eurodollar
Rate Margin in effect on the first day of such Interest
Period.
(c) Upon the reasonable request of the Borrower from
time to time, the Administrative Agent shall promptly
provide to the Borrower such information with respect to the
applicable Eurodollar Rate as may be reasonably required by
the Borrower.
SECTION 6.02 Default Interest. Notwithstanding the
rates of interest specified in subsection 6.01(b), effective
immediately upon the occurrence of an Event of Default under
subsections 14.01(a), (b)(ii), (f) (except an Event of
Default under subsection 14.01(f) resulting from the gross
negligence or willful misconduct of the Administrative
Agent), (g) or (h) and for as long thereafter as such Event
of Default shall be continuing, the principal balance of all
Obligations then outstanding, including to the extent
permitted by applicable law, any interest payments on any
Loans not paid when due, shall bear interest payable upon
demand at a rate which is two percent (2%) per annum in
excess of the rate of interest otherwise payable under this
Agreement.
SECTION 6.03 Computation of Interest. Interest on the
Loans shall be computed on the basis of a year of 360 days
and the actual number of days elapsed in the period during
which interest accrues. In computing interest on any Loan,
the date of the making of the Loan or the first day of an
Interest Period, as the case may be, shall be included and
the date of payment or the expiration date of an Interest
Period, as the case may be, shall be excluded; provided that
if a Loan is repaid on the same day on which it is made, one
day's interest shall be paid on that Loan.
SECTION 6.04 Interest Payments. Interest accrued on
each Base Rate Loan shall be payable in arrears on (a) the
first Business Day of each month, commencing with the month
following the month in which such Loan was made, (b) the day
of conversion thereof to an Eurodollar Rate Loan and (c) the
maturity thereof. Interest accrued on each Eurodollar Rate
Loan shall be payable in arrears on and to each Interest
Payment Date applicable to such Loan, and in any event, at
maturity.
SECTION 6.05 Administrative Agent's Fee. The Borrower
shall pay the Administrative Agent, solely for its own
account, an agent's fee, in such amounts and at such times
as are specified in a letter agreement dated August 15, 1988
among the Administrative Agent, Rexnord Inc., Borrower and
Rexnord Corporation. No Person other than the
Administrative Agent shall have any interest in the agent's
fee described in this Section 6.05 and in such letter.
SECTION 6.06 Intentionally omitted.
SECTION 6.07 Non-Use Fees. The Borrower agrees to pay
to the Administrative Agent, for the account of the Senior
Lenders, a non-use fee (together with the non-use fees
referred to in the third sentence of this section, the "Non-
Use Fee"), calculated on a monthly basis, equal to one-half
of one percent (0.5%) per annum multiplied by the Non-Use
Fee Base. The Non-Use Fee shall accrue from (and including)
the Closing Date, shall be calculated on the basis of a 360-
day year and the actual number of days elapsed, and shall be
payable in arrears on the first Business Day of the month
immediately following the month for which such Non-Use Fee
accrues and on the Facility Termination Date.
SECTION 6.08 Letter of Credit Fees; Issuing Bank
Charges. The Borrower agrees to pay to the Administrative
Agent a letter of credit fee with respect to each of the
Letters of Credit issued for the Borrower's account equal to
one and one-half percent (1.50%) per annum, multiplied by
the average undrawn face amount of such Letters of Credit
outstanding. Such letter of credit fees shall accrue from
(and including) the Closing Date, with respect to Letters of
Credit outstanding on such date, or, with respect to Letters
of Credit issued after the Closing Date, from and including
the date of issuance of each Letter of Credit, shall be
calculated on the basis of the actual number of days
outstanding (exclusive of its expiry date) and a year of 360
days and shall be payable monthly in arrears. Such fees
shall also be applicable to and payable with respect to
Letters of Credit for which the expiry date is extended or
which are modified to increase the maximum amount available
for drawing thereunder. The Administrative Agent shall
promptly remit all letter of credit fees, when paid, to the
Senior Lenders in accordance with their Pro Rata Shares
thereof.
SECTION 6.09 Payment of Fees. The obligation of the
Borrower to pay each fee described herein shall be in
addition to, and not in lieu of, the obligation of the
Borrower to pay interest, other fees described herein and
expenses otherwise described in this Agreement. Fees shall
be payable when due in immediately available funds, and the
Administrative Agent may direct, in connection therewith,
that the Borrower's loan account be debited to effect such
payment or, in the alternative, the Administrative Agent may
direct, and is hereby authorized to so direct, that Account
No. 0000-8061 of the Borrower at Citibank in New York, New
York be debited to effect such payment. All fees shall be
nonrefundable. All fees specified or referred to in this
Agreement due to the Administrative Agent or a Senior Lender
shall bear interest, if not paid when due, at the rate then
applicable to Base Rate Loans, shall constitute Obligations
and shall be secured by all of the Collateral.
(b) Each Issuing Bank shall have the right to receive
solely for its own account such amounts as it and the
Borrower may agree, in writing, to pay to such Issuing Bank
with respect to issuance fees and for such Issuing Bank's
out-of-pocket costs of issuing and servicing Letters of
Credit.
SECTION 6.10 Changes; Legal Restrictions. Except as
provided in subsection 3.14(d) with respect to certain
determinations on Interest Rate Determination Dates, in the
event that (a) the adoption of or any change in any law,
treaty, rule, regulation, guideline or determination of a
court or Governmental Authority or any change in the
interpretation or application thereof by a court or
Governmental Authority, or (b) compliance by any Senior
Lender or Issuing Bank with any request or directive
(whether or not having the force of law) from any central
bank or other Governmental Authority or quasi-governmental
authority:
(i) does or will (A) subject a Senior Lender or Issuing
Bank (or its applicable lending office or Eurodollar
Affiliate) to any tax, duty or other charge of any kind
which such Senior Lender or Issuing Bank reasonably
determines to be applicable to this Agreement, the Notes,
the Commitments, the Loans, the Secured F/X Contracts, the
Secured Interest Rate Contracts or the Letters of Credit or
(B) change the basis of taxation of payments to that Senior
Lender or Issuing Bank of principal, fees, interest, or any
other amount payable hereunder, except, in either case, for
taxes imposed on or measured by the overall net income of
that Senior Lender or Issuing Bank or its applicable lending
office or Eurodollar Affiliate or franchise taxes imposed by
the jurisdiction in which such Senior Lender's or Issuing
Bank's principal executive office, applicable lending office
or Eurodollar Affiliate is located (all such non-excepted
taxes, duties and other charges being hereinafter referred
to as "Taxes"); or
(ii) does or will impose, modify, or hold applicable,
in the determination of a Senior Lender or Issuing Bank, any
reserve, special deposit, compulsory loan, FDIC insurance,
capital allocation or similar requirement against assets
held by, or deposits or other liabilities (including those
pertaining to Letters of Credit) in or for the account of,
advances or loans by, Commitments of, or other credit
extended by, or any other acquisition of funds by, a Senior
Lender or any applicable lending office or Eurodollar
Affiliate of that Senior Lender or Issuing Bank (except,
with respect to Base Rate Loans, to the extent that the
reserve and FDIC insurance requirements are reflected in the
definition of "Base Rate" and, with respect to Eurodollar
Rate Loans, to the extent that the reserve requirements are
reflected in the definition of "Eurodollar Rate"); or
(iii) does or will impose on that Senior Lender or
Issuing Bank any other condition materially more burdensome
in nature, extent or consequence than those in existence on
the Closing Date with respect to all Loans;
and the result of any of the foregoing is to increase the
cost to that Senior Lender or Issuing Bank of making,
renewing or maintaining the Loans, or its Commitment(s), or
issuing or participating in the Letters of Credit or to
reduce any amount receivable thereunder; then, in any such
case, the applicable Borrower shall promptly pay to that
Senior Lender or Issuing Bank, upon demand, such amount or
amounts (based upon a reasonable allocation thereof by such
Senior Lender or Issuing Bank to the financing transactions
contemplated by this Agreement and affected by this Section
6.10) as may be necessary to compensate that Senior Lender
or Issuing Bank for any such additional cost incurred or
reduced amount received. Such Senior Lender or Issuing Bank
shall deliver to the Borrower a written statement of the
costs or reductions claimed and the basis therefor, and the
reasonable allocation made by that Senior Lender or Issuing
Bank of such costs and reductions shall be conclusive,
absent demonstrated error. Each Senior Lender and Issuing
Bank further agrees that it shall deliver to the Borrower,
if applicable, either (i) a statement that it is
incorporated in or organized under the laws of the United
States of America or (ii) if it is not so organized or
incorporated, a duly completed copy of the United States
Internal Revenue Service Form 1001 or 4224 or any successor
form thereto on or before the date that any such form
expires or promptly after the occurrence of any event
requiring a change in the most recent letter or form
previously delivered to the Borrower. If a Senior Lender or
Issuing Bank subsequently recovers, or receives a net
benefit with respect to, any amount previously paid by a
Borrower pursuant to this Section 6.10, such Senior Lender
or Issuing Bank shall, within thirty (30) days after receipt
in Cash of such refund or benefit and to the extent
permitted by law, pay to the Borrower the amount of any such
recovery or permanent net benefit.
SECTION 6.11 Increased Capital. If either (a) the
introduction of or any change in or in the interpretation of
any law or regulation or (b) compliance by any Senior Lender
with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of
law) affects or would affect the amount of capital required
or expected to be maintained by such Senior Lender or any
corporation controlling such Senior Lender and such Senior
Lender reasonably determines that the amount of such capital
is increased by or based upon the existence of such Senior
Lender's Commitment(s) and other commitments of this type
then, upon demand by such Senior Lender, the Borrower shall
immediately pay to such Senior Lender, from time to time as
specified by such Senior Lender, additional amounts
sufficient to compensate such Senior Lender in the light of
such circumstances, to the extent that such Senior Lender
reasonably determines such increase in capital to be
allocable to the existence of such Senior Lender's
Commitment. A certificate as to such amounts submitted to
the Borrower by such Senior Lender shall, in the absence of
demonstrated error, be conclusive and binding for all
purposes.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.01 Conditions to Effectiveness. The
effectiveness of this Agreement is subject to the
satisfaction of the conditions precedent set forth in
Section 7.02 and the satisfaction (or waiver by each of the
Senior Lenders) of the following additional conditions
precedent as of the Closing Date:
(a) The Administrative Agent shall have received all
of the following, each dated the Closing Date (unless
otherwise indicated) fully executed and in form and
substance satisfactory to the Administrative Agent and,
except for the Notes, in sufficient copies for the
Administrative Agent and each Senior Lender:
(1) certificates of the respective Secretaries or
Assistant Secretaries of the Borrower and each Subsidiary
Guarantor certifying (A) the authorization by the Board of
Directors of such Person of the execution by such Person of
this Agreement and/or each other Loan Document to be
executed by such Person in connection herewith, (B) the
names, incumbency and signatures of the officers of (i) the
Borrower authorized to execute this Agreement and each other
Loan Document to be executed by the Borrower and (ii) each
Subsidiary Guarantor authorized to execute Loan Documents to
be executed by such Subsidiary Guarantor, in connection
herewith, and (C) the accuracy and currency of the copies of
the Borrower's and each Subsidiary Guarantor's respective
Certificates of Incorporation and By-laws attached thereto;
(2) a favorable opinion addressed to the
Administrative Agent and each of the Senior Lenders from
Donald E. Miller, General Counsel to the Borrower,
addressing such matters as the Senior Lenders may require;
(3) each of the other documents described on the List
of Closing Documents attached hereto as Exhibit F, including
a certificate of a
Responsible Officer of the Borrower certifying that the
conditions described in subsection 7.01(b) have been
satisfied.
(b) No event shall have occurred at any time after
March 31, 1996, which, in the sole discretion of any Senior
Lender materially and adversely affects (A) the business,
management, ownership, operations, properties, assets,
conditions (financial or otherwise) or prospects of the
Borrower or any of the Borrower's material Subsidiaries
individually, or of the Borrower and its Subsidiaries taken
as a whole, or (B) the ability of the Borrower to perform
its obligations under the Loan Documents or Collateral
Documents to which it is a party.
(c) The Borrower shall have paid, or shall pay
concurrently with the initial funding under this Agreement,
(A) all interest and fees which have accrued under the 1992
Credit Agreement from the last date such fees were paid
through the Closing Date and (B) all fees referred to in
Article VI which are due and payable by the Borrower on or
before the Closing Date.
Satisfaction of the condition contained in clause (b) above
shall be conclusively presumed with respect to each Senior
Lender if, as of the Closing Date, such Senior Lender has
failed to notify the Administrative Agent (in conformity
with Section 16.10) that such Senior Lender has determined
that a material adverse change has occurred.
SECTION 7.02 Conditions Precedent to All Loans and the
Issuance of Letters of Credit. (a) The obligation of each
Senior Lender to make any Loan requested to be made by it
and the agreement of each Issuing Bank to issue any Letter
of Credit pursuant to Article V, on any Funding Date,
including, without limitation, the Closing Date, is subject
to the satisfaction of the following conditions precedent as
of such date:
(i) with respect to each requested Loan, the
Administrative Agent shall have received a Notice of
Borrowing conforming with the respective requirements of
Section 3.07 and, with respect to the issuance of any Letter
of Credit, all of the conditions precedent to such issuance
set forth in Sections 5.01 and 5.02 shall have been
satisfied;
(ii) the representations and warranties contained in
Article VIII shall be true and correct in all material
respects on and as of such date as if made on and as of such
date;
(iii) no Event of Default or Potential Event of Default
shall exist or would result from the making of the requested
Loan or issuance of the requested Letter of Credit;
(iv) no law or regulation shall prohibit, and no order,
judgment or decree of any Governmental Authority shall
enjoin or restrain, any Senior Lender or Issuing Bank from
making the requested Loan or issuing or participating in the
requested Letter of Credit; and
(v) the aggregate amount of the Loans to be made on
such date shall not exceed the Facility Availability as of
such date and/or the aggregate amount of Letters of Credit
to be issued on such date shall not exceed the Facility
Availability as of such date.
(b) Each submission by the Borrower to the Adminis-
trative Agent of a Notice of Borrowing and the acceptance by
the Borrower of the proceeds of each Loan made hereunder and
each request by the Borrower for the issuance of a Letter of
Credit, shall constitute a representation and warranty by
the Borrower as of the date of such Loan or the issuance of
such Letter of Credit that all the conditions contained in
this Section 7.02 have been satisfied.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
The Borrower, in order to induce the Senior Lenders and
the Issuing Banks to enter into this Agreement and to make
Loans to, issue Letters of Credit for the account of, and
enter into Foreign Exchange Contracts and Secured Interest
Rate Contracts with, the Borrower, hereby represents and
warrants to the Administrative Agent and each Senior Lender
and Issuing Bank that, unless a representation and warranty
is stated to be given on and as of a specific date (in which
case such representation and warranty shall be true, correct
and complete as of such date), on and as of the date hereof,
and thereafter, on each Funding Date with respect to a Loan
made to the Borrower and each date on which a Letter of
Credit is issued, amended or extended for the account of the
Borrower or a Foreign Exchange Contract or Secured Interest
Rate Contract is entered into by the Borrower, the following
statements are true, correct and complete.
SECTION 8.01 Organization; Corporate Powers. Except
as otherwise permitted under Section 11.04, the Borrower and
each of its Subsidiaries (a) is a corporation or partnership
as the case may be, duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
organization, (b) is duly qualified as a foreign corporation
or partnership, as the case may be, and in good standing
under the laws of each jurisdiction in which it owns real
property or in which failure to be duly qualified and in
good standing would be likely to have a material adverse
effect on the business, management, ownership, operations,
properties, assets or condition (financial or otherwise) of
the Borrower or of the Borrower and its Subsidiaries taken
as a whole, and (c) has all requisite corporate (or
partnership) power and authority to own, operate and
encumber its property and assets and to conduct its business
as presently conducted and as proposed to be conducted in
connection with and following the consummation of the
transactions contemplated by this Agreement and the other
Loan Documents, and to execute, deliver and perform the Loan
Documents to which it is a party, and all other agreements,
documents and instruments, if any, to be executed in
connection with any of the foregoing or with the
transactions contemplated thereby.
SECTION 8.02 Authorization; Enforceability. The
execution, delivery and performance of the Loan Documents to
which the Borrower or any Subsidiary of the Borrower is a
party and the consummation of the transactions contemplated
thereby, have all been duly approved by the Board of
Directors of the Borrower and its Subsidiaries and no other
corporate, partnership or shareholder proceedings on the
part of the Borrower or any of its Subsidiaries are
necessary to consummate the transactions so contemplated.
The Loan Documents to which the Borrower or any of its
Subsidiaries is a party, have been duly executed and
delivered (or filed, as the case may be) by the Borrower or
such Subsidiaries and constitute the legal, valid and
binding obligations of the Borrower or such Subsidiaries
enforceable against the Borrower or such Subsidiaries in
accordance with their respective terms.
SECTION 8.03 No Conflict. The execution, delivery and
performance by the Borrower or respective Subsidiary
Guarantor, as applicable, of each Loan Document to which it
is a party do not and will not, and the consummation of the
transactions contemplated thereby will not (a) violate any
Requirements of Law or Contractual Obligation binding upon
the Borrower or such Subsidiary Guarantor, the consequences
of which violation, singly or in the aggregate, would be
likely to have an adverse effect on the ability of the
Borrower or such Subsidiary Guarantor to perform its
obligations under any such Loan Document or would be likely
to have a material adverse effect on the business,
management, ownership, operations, properties, assets, or
condition (financial or otherwise) of the Borrower or such
Subsidiary Guarantor or would be likely to subject the
Administrative Agent, any of the Senior Lenders, or any of
the Issuing Banks to any liability (whether criminal or
civil), (b) constitute a tortious interference with any such
Contractual Obligation or conflict with, result in a breach
of or constitute (with or without notice or lapse of time or
both) a default under any such Requirement of Law or
Contractual Obligation, the consequences of which tortious
interference, default or violation, singly or in the
aggregate, would be likely to have a material adverse effect
on the ability of the Borrower or such Subsidiary Guarantor
to perform its obligations under any such Loan Document or
would be likely to have a material adverse effect on the
business, management, ownership, operations, properties,
assets or condition (financial or otherwise) of the
Borrower, any Subsidiary Guarantor, or any of Borrower's
material Subsidiaries, individually, or the Borrower and its
Subsidiaries taken as a whole, or would be likely to subject
the Administrative Agent, any of the Senior Lenders, or any
of the Issuing Banks to any liability (whether criminal or
civil), or require the termination of any such Contractual
Obligation, (c) result in or require the creation or
imposition of any Lien whatsoever upon any of the material
properties or assets of the Borrower or any Subsidiary
Guarantor (other than Liens permitted in Section 11.01 and
Liens in favor of the Senior Lenders or in favor of the
Administrative Agent arising pursuant to the Loan
Documents), or (d) require any approval of the Borrower's
stockholders or any approval or consent of any Person under
any material Contractual Obligation of the Borrower or any
Subsidiary Guarantor, except such as have been duly obtained
or will be duly obtained in accordance with applicable law.
SECTION 8.04 Governmental Consents. The execution,
delivery and performance by the Borrower and each Subsidiary
Guarantor of the Loan Documents to which it is a party, the
use of the proceeds of the Loans made to the Borrower and
the consummation of the transactions contemplated thereby do
not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by
any Governmental Authority, except filings, consents or
notices which have been, or will in due course, be made,
obtained or given (unless the failure to obtain any such
filing, consent or notice will not have a material adverse
effect on the business, management, ownership, operations,
properties, assets or condition (financial or otherwise) of
the Borrower and its Subsidiaries taken as a whole) and
except any consents, approvals or filings required as to a
Senior Lender because of a regulatory requirement applicable
to it in its capacity as a bank or a commercial lender.
SECTION 8.05 Subsidiaries and Ownership of Capital
Stock. Schedule 8.05 accurately sets forth all the
Subsidiaries of the Borrower as of the Closing Date, and
also sets forth as of the Closing Date the number of issued
and authorized shares of each class of capital stock of the
Borrower and each of its Subsidiaries and the identity of
the holders of all shares of common stock (other than
holders holding less than five percent (5%) in the aggregate
of such shares) of any Subsidiary of the Borrower. As of
the Closing Date, no capital stock (or any securities,
instruments, warrants, option or purchase rights, conversion
or exchange rights, calls, commitments or claims of any
character convertible into or exercisable for capital stock)
of the Borrower or any of its Subsidiaries is subject to
issuance under any security, instrument, warrant, option or
purchase rights, conversion or exchange rights, call,
commitment or claim of any character. The outstanding
capital stock of the Borrower and each of its Subsidiaries
is duly authorized, validly issued, fully paid and
nonassessable and is not Margin Stock.
SECTION 8.06 Pledge of Collateral. The Borrower and
each Subsidiary Guarantor has good, sufficient and legal
title to the Collateral pledged by it under the Collateral
Documents to which it is a party, and all such Collateral is
free and clear of all Liens except as specifically permitted
or contemplated by the terms and provisions of this
Agreement or the Collateral Document(s) relating to such
Collateral. The granting and perfecting of the security
interest in the capital stock constituting a portion of the
Collateral pledged by the Borrower or any Subsidiary
Guarantor for the benefit of the Senior Secured Creditors as
contemplated by the terms of the Collateral Documents
executed by the Borrower or any Subsidiary Guarantor is not
made in violation of the registration provisions of the
Securities Act, any other applicable federal securities
laws, applicable state securities or "Blue Sky" law, or any
applicable provisions of the corporate law of any relevant
state.
SECTION 8.07 Governmental Regulation. Neither the
Borrower nor any Subsidiary Guarantor is subject to
regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act, the Interstate Commerce Act,
the Investment Company Act of 1940 or to any other federal
or state statute or regulation such that its ability to
incur indebtedness is limited or its ability to conduct its
business or to consummate the transactions contemplated by
the Loan Documents to which it is a party is materially
impaired.
SECTION 8.08 Litigation; Adverse Effects. Except as
set forth in Schedule 8.08 and except as permitted in this
Agreement, on and as of the Closing Date, there is no, and
on and as of any other date the Borrower does not have
Requisite Knowledge of any (a) action, suit, proceeding,
governmental investigation or arbitration (whether or not by
its terms purportedly on behalf of the Borrower or any of
its Subsidiaries) at law or in equity or before or by any
federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality,
domestic or foreign, pending, or to the knowledge of the
Borrower, probable of assertion against the Borrower or any
of its Subsidiaries or any property of the Borrower or any
of its Subsidiaries which could reasonably be expected (i)
to result in any material adverse change in the business,
management, ownership, operations, properties, assets or
condition (financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole, (ii) to adversely affect the
ability of the Borrower or any of its Subsidiaries, as the
case may be, to perform in any material respect its
obligations under any Loan Documents to which the Borrower
or such Subsidiary of the Borrower is a party, or (iii) to
materially and adversely affect the ability of the Senior
Lenders to enforce such obligations, and (b) there is no
material loss contingency within the meaning of GAAP which
has not been reflected in the financial statements of the
Borrower. On and as of the Closing Date, neither the
Borrower nor any of its Subsidiaries is, and on and as of
any other date, the Borrower does not have Requisite
Knowledge of any fact, event, condition or circumstance
which would cause the Borrower or any of its Subsidiaries to
be, (a) in violation of any applicable law, which violation
materially and adversely affects or is likely to materially
and adversely affect the business, management, ownership,
operations, properties, assets, or condition (financial or
otherwise) of the Borrower and its Subsidiaries, taken as a
whole, or (b) subject to or in default with respect to any
final judgment, writ, injunction, decree, rule or regulation
of any court or Governmental Authority which would have a
material adverse effect on the business, management,
ownership, operations, properties, assets condition
(financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole. On and as of the Closing
Date, there is no, and on and as of any other date, the
Borrower does not have Requisite Knowledge of any action,
suit, proceeding or investigation pending or, to the
knowledge of the Borrower, threatened against or affecting
the Borrower or any of its Subsidiaries challenging the
validity or the enforceability of any of the Loan Documents
to which the Borrower or any of its Subsidiaries is a party.
SECTION 8.09 No Material Adverse Change. Since March
31, 1996, no event has occurred which materially and
adversely affects, and there has been no material adverse
change in, the business, management, ownership, operations,
properties, assets or condition (financial or otherwise) or
prospects of the Borrower or any of its material
Subsidiaries individually, or the Borrower and its
Subsidiaries taken as a whole, or the ability of the
Borrower or any of its Subsidiaries to perform its
obligations under the Loan Documents to which the Borrower
or any of its Subsidiaries is a party.
SECTION 8.10 Payment of Taxes. All tax returns and
reports of the Borrower and its Subsidiaries required to be
filed, the failure of which to file is likely to have a
material adverse effect on the business, management,
ownership, operations, properties, assets or condition
(financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole, have been timely filed, and
all taxes, assessments, fees and other governmental charges
thereupon and upon their respective properties, assets,
income and franchises which are due and payable, the failure
of which to pay when due and payable is likely to have a
material adverse effect on the business, management,
ownership, operations, properties, assets or condition
(financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole, have been paid when due and
payable. The Borrower does not have Requisite Knowledge of
any proposed tax assessment against it or any of its
Subsidiaries that would be material to the business,
management, ownership, operations, properties, assets or
condition (financial or otherwise) of the Borrower or its
Subsidiaries, taken as a whole, which is not being actively
contested in good faith by the Borrower or any such
Subsidiary to the extent affected thereby.
SECTION 8.11 Material Adverse Agreements. Neither the
Borrower nor any of its Subsidiaries is a party to or
subject to any material Contractual Obligation or other
restriction contained in its Articles or Certificate of
Incorporation, By-laws, a resolution of its Board of
Directors, or similar governing document, as the case may
be, which materially and adversely affects the ability of
the Borrower or any Subsidiary of the Borrower to perform
its obligations under the Loan Documents to which the
Borrower or such Subsidiary is a party.
SECTION 8.12 Performance. On and as of the Closing
Date, neither the Borrower nor any of its Subsidiaries is,
and on and as of any other date, the Borrower does not have
Requisite Knowledge of any fact, event, condition or
circumstance which would cause the Borrower or any of its
Subsidiaries to be in default in the performance, observance
or fulfillment of any of the obligations, covenants or
conditions contained in any Contractual Obligation of the
Borrower or such Subsidiary and no condition exists which,
with the giving of notice or the lapse of time or both,
would constitute such a default, in each case, except where
the consequences, direct or indirect, of such default or
defaults, if any, would not have a material adverse effect
on the business, management, ownership, operations,
properties, assets or condition (financial or otherwise) of
the Borrower and its Subsidiaries, taken as a whole.
SECTION 8.13 Securities Activities. Neither the
Borrower nor any of its Subsidiaries is engaged principally
in the business of extending credit for the purpose of
purchasing or carrying any Margin Stock.
SECTION 8.14 Requirements of Law. On and as of the
Closing Date, the Borrower, its Subsidiaries, and each
Person acting on the Borrower's behalf is, and on and as of
any other date, the Borrower does not have Requisite
Knowledge of any fact, event, condition or circumstance
which would cause the Borrower or any Person acting on the
Borrower's or any such Subsidiary's behalf not to be, in
compliance with all Requirements of Law (including, without
limitation, the Securities Act and the Securities Exchange
Act, and the applicable rules and regulations thereunder,
state securities law and "Blue Sky" law) applicable to the
Borrower, its Subsidiaries or their respective businesses,
in each case where the failure to so comply would have a
materially adverse effect on the business, management,
ownership, operations, properties or assets or condition
(financial or otherwise) of the Borrower and its
Subsidiaries taken as a whole.
SECTION 8.15 Patents, Trademarks, Permits, etc. The
Borrower and each of its Subsidiaries owns, is licensed or
otherwise has the lawful right to use, or has all permits
and other governmental approvals, patents, trademarks, trade
names, copyrights, technology, know-how and processes used
in or necessary for the conduct of its businesses as
currently conducted, which are material to the business,
management, ownership, operations, properties, assets or
condition (financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole. To the best of the
knowledge of the Borrower, the use of such permits and other
governmental approvals, patents, trademarks, trade names,
copyrights, technology, know-how and processes by the
Borrower or any of its Subsidiaries does not infringe on the
rights of any Person, subject to such claims and
infringements as do not, in the aggregate, give rise to any
liability on the part of the Borrower or its Subsidiaries
which is material to the business, management, ownership,
operations, properties, assets or condition (financial or
otherwise) of the Borrower and its Subsidiaries, taken as a
whole. To the best of the Borrower's knowledge, the rights
of the Borrower and its Subsidiaries to sell, franchise or
license under such brand names then being used by any of
them may be transferred by the Borrower and its Subsidiaries
in connection with any sale of assets or stock of the
related business by the Borrower and its Subsidiaries with
only such exceptions as are not material to the business,
management, ownership, operations, properties, assets or
condition (financial or otherwise) of the Borrower and its
Subsidiaries, taken as a whole. The consummation of the
transactions contemplated by the Loan Documents to which the
Borrower or any of its Subsidiaries is a party will not in
any material manner or to any material extent impair the
ownership of or rights under (or the license or other right
to use, as the case may be) any of the permits and
governmental approvals, patents, trademarks, trade names,
copyrights, technology, know-how or processes utilized by
the Borrower or any of its Subsidiaries.
SECTION 8.16 Environmental Matters. Except as
disclosed on Schedule 8.16 or fully resolved prior to the
Closing Date: (a) neither the Borrower nor any Subsidiary
of the Borrower has received any notice from any federal,
state or local agency to the effect that its operations are
not in compliance with any of the requirements of applicable
federal, state and local environmental, health and safety
statutes and regulations or the subject of any federal or
state investigation evaluating whether any remedial action
is needed to respond to a release of any toxic or hazardous
waste, substance or constituent, or other substance into the
environment; (b) neither the Borrower nor any Subsidiary of
the Borrower has filed any notice under any federal or state
law or regulation indicating past or present treatment,
storage or disposal of a hazardous waste or reporting a
spill or release of a hazardous or toxic waste, substance or
constituent, or other substance into the environment; (c)
neither the Borrower nor any Subsidiary of the Borrower has
received notice from any federal or state governmental
agency that it is potentially liable for cleanup costs or
damages in material amounts arising out of the release of a
hazardous substance; and (d) neither the Borrower nor any
Subsidiary of the Borrower has any material contingent
liability in connection with the release of any hazardous or
toxic waste, substance or constituent, or other substance
into the environment.
SECTION 8.17 No Default. No Potential Event of
Default or Event of Default with respect to the Borrower or
any Subsidiary of the Borrower has occurred and is
continuing.
SECTION 8.18 ERISA. Neither the Borrower nor any of
its Subsidiaries maintains or contributes to any
Multiemployer Plan. The Borrower and each of its ERISA
Affiliates have made available to the Administrative Agent
copies of all Benefit Plans that are currently maintained or
contributed to in respect of their respective employees or
former employees and that are in existence as of the date
this representation and warranty is made and copies of the
most recent annual reports (Form 5500 Series), including
Schedule B thereto, for such Benefit Plans. No Defined
Benefit Plan of the Borrower or any of its Subsidiaries has
incurred any "accumulated funding deficiency," as defined in
Section 302(a)(2) of ERISA and Section 412(a) of the
Internal Revenue Code, whether or not waived, for which the
Borrower is or could be directly or indirectly liable. No
other Defined Benefit Plan (other than a Defined Benefit
Plan of an Excluded ERISA Affiliate) has outstanding any
such accumulated funding deficiency in excess of $250,000,
and the aggregate of accumulated funding deficiencies for
all such Defined Benefit Plans is not in excess of
$1,000,000. Each Benefit Plan currently maintained or
contributed to by the Borrower or any of its Subsidiaries
which is intended to be a qualified plan under Section
401(a) of the Internal Revenue Code as currently in effect
has been determined by the Internal Revenue Service or by
advice of counsel to be qualified under Section 401(a) of
the Internal Revenue (or applications for approval are
pending with the Internal Revenue Service) and the trust
related thereto is exempt from federal income tax under
Section 501(a) of the Internal Revenue Code, and nothing has
occurred since the dates of such letters which would cause
any such Benefit Plan to cease being so qualified (except to
the extent that any requirements added by such occurrence
may be satisfied by adopting retroactive amendments as
permitted by statute, regulation or other authority).
Neither the Borrower nor any of its ERISA Affiliates has any
liability to the PBGC other than the payment of premiums,
and there are no premium payments which have become due
which are unpaid. Neither the Borrower nor any of its
Subsidiaries has breached any of the responsibilities,
obligations or duties imposed on it by ERISA with respect to
any Benefit Plan in respect of which the Borrower or any
such Subsidiary has any material obligation to pay money or
would in the future have any material obligation to pay
money. No other ERISA Affiliate of the Borrower (other than
an Excluded ERISA Affiliate) has committed any such breach
which has given rise to, or which would in the future give
rise to any obligation of such ERISA Affiliate to pay money
in excess of $250,000, and the aggregate of all obligations
to pay money for all such breaches is not in excess of
$1,000,000. Neither the Borrower nor any of its
Subsidiaries nor any fiduciary of or any trustee to any
Benefit Plan of the Borrower or any of its Subsidiaries has
engaged in a nonexempt "prohibited transaction" described in
Section 406 of ERISA or Section 4975 of the Internal Revenue
Code, or taken any action with respect to any Benefit Plan,
which would constitute or result in a Termination Event with
respect to any Benefit Plan in respect of which the Borrower
or any such Subsidiary has any material obligation to pay
money or would in the future have any material obligation to
pay money. No other ERISA Affiliate (other than an Excluded
ERISA Affiliate) or fiduciary or trustee to any Benefit Plan
of any such other ERISA Affiliate of the Borrower has
engaged in such a transaction, or taken such action, which
has given rise to, or would in the future give rise to, an
obligation of such other ERISA Affiliate to pay money in
excess of $250,000, and the aggregate of all obligations to
pay money for all such transactions and actions is not in
excess of $1,000,000. Except as provided on Schedule 8.18,
neither the Borrower nor any ERISA Affiliate of the Borrower
(other than an Excluded ERISA Affiliate) maintains or
contributes to any welfare plan within the meaning of
Section 3(1) of ERISA, which provides benefits to employees
after termination of employment other than as required by
Section 601 of ERISA. Neither the Borrower nor any ERISA
Affiliate of the Borrower (other than an Excluded ERISA
Affiliate) has failed to make a required installment or any
other payment under Section 412 of the Internal Revenue Code
on or before the due date for such installment or payment.
Neither the Borrower nor any ERISA Affiliate of the Borrower
(other than an Excluded ERISA Affiliate) is required to
provide security to a Defined Benefit Plan under
Section 401(a)(29) of the Internal Revenue Code due to a
Benefit Plan amendment that results in an increase in
current liability for the plan year. With respect to all of
the representations and warranties made by the Borrower in
this Section 8.18, except any such representations and
warranties specifically stated to be made on a particular
date, such representations and warranties shall be qualified
by the Requisite Knowledge of the Borrower on and as of all
dates except for the Closing Date, in all of which cases,
such representations and warranties are made by the Borrower
on an absolute and unqualified basis.
SECTION 8.19 Tax Examinations. As of the Closing
Date, the Federal income tax returns on which the Borrower's
income is reported have been examined by the Internal
Revenue Service (or closed by applicable statutes) for all
tax periods prior to and including the taxable years shown
on Schedule 8.19, as submitted to the Senior Lenders on the
Closing Date and periodically updated thereafter, and except
as set forth on Schedule 8.19, as submitted to the Senior
Lenders on the Closing Date and periodically updated
thereafter, there are no other tax examinations in progress.
All deficiencies which have been asserted against the
Borrower as a result of such examinations have been fully
paid or finally settled or are being contested in good
faith, and, except as set forth on Schedule 8.19, no issue
has been raised in any such examinations which, by
application of similar principles, reasonably can be
expected to result in assertion of a deficiency for any
other year not so examined. The Borrower does not
anticipate any further material tax liability with respect
to the years which have not been closed, taken as a whole,
other than liability reserved for in accordance with sound
accounting practices. Except as set forth in Schedule 8.19,
there are no outstanding agreements or waivers extending the
statute of limitations with respect to, and the Borrower is
not now subject to any extension of a period for, the
assessment of any Federal income tax or other tax, domestic
or foreign.
SECTION 8.20 Financial Condition. All financial
statements (other than projections and internal reports)
included in materials furnished to any Senior Lender have
been prepared in conformity with GAAP, except as otherwise
noted therein, and fairly present the consolidated financial
position of the Borrower and its Subsidiaries as at the
respective dates thereof and the consolidated results of
operations and changes in the financial position of the
Borrower and its Subsidiaries for each of the periods
covered thereby, subject, in the case of any unaudited
interim financial statements, to changes resulting from
audit and normal year-end adjustments. The Borrower has no
Accommodation Obligation, contingent liability or liability
for any taxes, long-term lease or unusual or long-term
commitment, which based upon circumstances presently known
to management of the Borrower is materially adverse to the
business, management, ownership, operations, properties,
assets or condition (financial or otherwise) of the Borrower
and its Subsidiaries, taken as a whole. The projected
financial data of the Borrower and its Subsidiaries and
operating divisions which are included in the materials
delivered by the Borrower to the Senior Lenders have been
prepared on a basis consistent with past practices. The
internal financial reports of the Borrower and its
Subsidiaries and operating divisions which were included in
the materials delivered by the Borrower to the Senior
Lenders are consistent with past practices of the Borrower
and its Subsidiaries and operating divisions.
SECTION 8.21 Guaranties. The Borrower has not
guaranteed payment or performance of any of the material
obligations of any of the Borrower's Subsidiaries to any
Person.
SECTION 8.22 Senior Indebtedness. The obligations of
the Borrower for principal and interest on all Loans and
other extensions of credit or financial accommodations made
to it or for its account under this Agreement and, solely
with respect to the Senior Subordinated Debentures, all
fees, expenses, reimbursements, indemnities, premiums and
other amounts payable by it hereunder or under any other
document relating to this Agreement, in any case owing to
the Administrative Agent, any Senior Lender or any Issuing
Bank (whether or not such Person is then acting in its
capacity as a Senior Lender or Issuing Bank) constitute
"Senior Indebtedness" or "Senior Funded Indebtedness" within
the respective meanings ascribed to such terms, if any, in
any instrument or document governing Subordinated
Indebtedness of the Borrower.
ARTICLE IX
REPORTING COVENANTS
The Borrower covenants and agrees that so long as any
Commitment shall be in effect and until payment in full of
all Obligations and the expiration of all Letters of Credit,
unless the Requisite Senior Lenders shall otherwise give
prior written consent thereto:
SECTION 9.01 Financial Statements. The Borrower shall
maintain or cause to be maintained a system of accounting
established and administered in accordance with sound
business practices to permit preparation of financial
statements in conformity with GAAP, and each of the
financial statements described below shall be prepared from
such system and records. The Borrower shall deliver to each
of the Senior Lenders:
(a) Quarterly Financial Statements. As soon as
practicable, and in any event within fifty-five (55) days
after the end of each fiscal quarter in each Fiscal Year
(other than the fiscal quarter ending in June), commencing
with the fiscal quarter ending in September, 1996, (i) the
consolidated and consolidating balance sheets of the
Borrower and each of its consolidated Subsidiaries as at the
end of such quarter and (ii) related consolidated and
consolidating statements of income of the Borrower and its
Subsidiaries and consolidated statements of cash flow of the
Borrower and its consolidated subsidiaries, for such
quarter, setting forth in comparative form in each case the
consolidated and consolidating, as applicable, figures for
the corresponding periods of the previous Fiscal Year, all
in reasonable detail.
(b) Annual Financial Statements. As soon as
practicable, and in any event within one hundred (100) days
after the end of each Fiscal Year, (i) consolidated and
consolidating balance sheets of the Borrower and each of its
consolidated Subsidiaries as at the end of such Fiscal Year
and (ii) the related consolidated and consolidating
statements of income of the Borrower and its Subsidiaries
and consolidated statements of stockholder's equity and cash
flow of the Borrower and its consolidated subsidiaries for
such Fiscal Year, setting forth in each case in comparative
form the consolidated and consolidating, as applicable,
figures for the previous Fiscal Year, all in reasonable
detail and accompanied by a report thereon of Arthur
Andersen LLP or other independent certified public
accountants of recognized national standing satisfactory to
the Requisite Senior Lenders, which report shall be
unqualified and shall state that such consolidated financial
statements present fairly the financial position of the
Borrower and its consolidated Subsidiaries, as at the dates
indicated and the results of their operations and changes in
their financial position for the periods indicated in
conformity with GAAP applied on a basis consistent with
prior years (or, in the event of a change in accounting
principles, such accountants' concurrence with such change)
and that the examination by such accountants in connection
with such consolidated financial statements has been made in
accordance with generally accepted auditing standards.
SECTION 9.02 Certificates to Accompany Financial
Statements. (a) Together with each delivery of any
financial statements pursuant to subsections 9.01(a) and
9.01(b) the Borrower shall also deliver (i) an Officer's
Certificate of the Borrower substantially in the form of
Exhibit G executed by the chief financial officer,
treasurer, or controller of the Borrower, stating that (A)
the officer executing such certificate has reviewed the
terms of this Agreement and the other principal Loan
Documents to which the Borrower is a party, and has made, or
caused to be made under his/her supervision, a review in
reasonable detail of the transactions and condition of the
Borrower and its Subsidiaries, taken as a whole, during the
accounting period covered by such financial statements, and
that such review has not disclosed the existence during or
at the end of such accounting period, and that such officer
does not have knowledge of the existence as at the date of
such Officer's Certificate, of any condition or event which
constitutes an Event of Default or Potential Event of
Default with respect to the Borrower, or, if any such
condition or event existed or exists, specifying the nature
and period of existence thereof and what action the Borrower
or any of its Subsidiaries has taken, is taking and proposes
to take with respect thereto and (B) such financial
statements fairly present the financial condition of the
Borrower and its consolidated Subsidiaries, as at the dates
indicated, subject, in the case of financial statements
submitted under Section 9.01(a), to changes resulting from
audit and normal year-end adjustments; and (ii) a Compliance
Certificate of the Borrower demonstrating in reasonable
detail compliance during and at the end of such accounting
periods with Sections 11.01, 11.06, 11.12, 11.14 and 11.16
through 11.22.
(b) Simultaneously with the delivery of each set of
financial statements referred to in subsection 9.01(b)
above, the Borrower shall also deliver a statement of the
independent public accountants which reported on such
financial statements (i) as to whether anything has come to
their attention to cause them to believe that there existed
on the date of such financial statements any Event of
Default or Potential Event of Default and (ii) confirming
the calculations set forth in the Compliance Certificate
delivered simultaneously therewith pursuant to subsection
9.02(a) above.
SECTION 9.03 Intentionally omitted.
SECTION 9.04 Officer's Certificates Regarding
Investments and Indebtedness. (a) As soon as practicable,
and in any event within fifty-five (55) days (or, solely for
the fiscal quarter ending in June, within one hundred (100)
days) after the end of each fiscal quarter in each Fiscal
Year commencing with the fiscal quarter ending in June,
1996, the Borrower shall deliver to each Senior Lender an
Officer's Certificate of the Borrower, substantially in the
form of Exhibit H attached hereto, setting forth, as of the
last day of such fiscal quarter, (i) all outstanding
Investments of the Borrower and its Subsidiaries and of TFC,
(ii) a summary of all Indebtedness of the Borrower's Foreign
Subsidiaries (if any), setting forth the outstanding
balances of all such Indebtedness, the changes in such
balances from the last report, and the aggregate book value
of the total assets of the Borrower's Foreign Subsidiaries
which are located outside the territorial United States,
determined on a pro forma consolidated basis, (iii) the
outstanding balance of all Loans and the aggregate amount of
all Letter of Credit Obligations, (iv) the balances of the
Borrower's Cash and Cash Equivalents on the last day of such
fiscal quarter, and (v) the value (on a mark to market basis
in Dollars) of the Borrower's Marketable Securities on the
last day of such fiscal quarter.
(b) As soon as practicable, and in any event within
fifty-five (55) days (or solely for the fiscal month of
July, within seventy-five (75) days) after the end of each
fiscal month in each Fiscal Year, commencing with May, 1996,
the Borrower shall deliver to each Senior Lender an
Officer's Certificate of the Borrower setting forth, (i)
with respect to each Letter of Credit (other than Issuing
Bank's Letter of Credit No. NY-30013537) issued or otherwise
outstanding at any time during such month, or as to which
there exists any Reimbursement Obligation, (A) the date of
issuance, type (i.e., Commercial or Standby), face amount
and tenor of such Letter of Credit and (B) all amounts
available for drawing thereunder and all Reimbursement
Obligations with respect thereto, (ii) with respect to each
Non-Facility Letter of Credit issued or otherwise
outstanding for the account of the Borrower at any time
during such month, or as to which there exists any
reimbursement obligation, (A) the date of issuance, type
(i.e., Commercial or Standby), face amount and tenor of such
Non-Facility Letter of Credit and (B) all Non-Facility
Letter of Credit Obligations of the Borrower with respect
thereto, and (iii) with respect to each Secured F/X Contract
and Secured Interest Rate Contract entered into or otherwise
in existence at any time during such month to which the
Borrower is a party, (A) the date of such contract and (B) a
summary of the major terms thereof; provided, however, that
in the event no Indebtedness of the type described in
clauses (i) through (iii) above are outstanding during any
fiscal month of any Fiscal Year, no such Officer's
Certificate shall be required to be delivered hereunder for
such fiscal month.
(c) Within three (3) days after the end of each week,
the Borrower shall deliver to each Senior Lender, a report
setting forth (i) the balances of Borrower's Cash and Cash
Equivalents on the last day of such week and (ii) the value
(on a mark to market basis in Dollars) of the Borrower's
Marketable Securities on the last day of such week.
SECTION 9.05 Intentionally omitted.
SECTION 9.06 Other Financial Information. With
reasonable promptness, the Borrower shall deliver such other
information, reports, filings, projections, business plans
and data with respect to the Borrower or any of its
Subsidiaries as from time to time may be reasonably
requested by any Senior Lender, including, without
limitation, appraisals of the Borrower's assets by
appraisers satisfactory to the Requisite Senior Lenders.
SECTION 9.07 Environmental Notices. The Borrower
shall:
(a) Notify each Senior Lender in writing, promptly
upon the learning thereof by a Responsible Officer of the
Borrower, of (i) any written notice of a material claim to
the effect that the Borrower or any of its Subsidiaries is
or may be liable to any Person (including, without
limitation, any individual or government, whether national,
federal, state, county, city or municipal) as a result of
the release by the Borrower, any of its Subsidiaries, or any
other Person of any toxic or hazardous waste or substance
into the environment; (ii) any written notice that any
operations of the Borrower or any of its Subsidiaries are
not in material compliance with requirements of applicable
federal, state or local environmental, health or safety
statutes and regulations; (iii) any written notice that the
Borrower or any of its Subsidiaries is subject to any
federal or state investigation evaluating whether any
remedial action is needed to respond to the release of any
hazardous or toxic waste, substance or constituent, or other
substance into the environment, which action is likely to
subject the Borrower or any of its Subsidiaries to material
Environmental Liabilities and Costs; (iv) any written notice
that any properties or assets of the Borrower or any of its
Subsidiaries are subject to an Environmental Lien; (v) any
violation by the Borrower or any of its Subsidiaries of any
federal, state or local environmental, health or safety law
or regulation, which would, in any case, have a material
adverse effect upon the operations of the Borrower and its
Subsidiaries, taken as a whole; (vi) any new or proposed
changes to any existing environmental, health or safety
Requirement of Law that could have a material effect on the
operations of the Borrower and its Subsidiaries; (vii) any
proposed acquisition by the Borrower or any of its
Subsidiaries of stock, assets, real estate, or leasing of
property, or any other action by the Borrower or its
Subsidiaries that could subject the Borrower or its
Subsidiaries to material environmental, health or safety
Environmental Liabilities and Costs; or (viii) the
termination, cancellation or non-renewal of any insurance
policy maintained by the Borrower or any of its Subsidiaries
to insure against environmental risks of the Borrower or any
of its Subsidiaries, and the reason(s) for such termination,
cancellation or non-renewal;
(b) By December 31 of each calendar year, commencing
with December 31, 1996, submit to the Administrative Agent a
report providing an update of the status of each compliance
and contingency issue and each other potential environmental
liability related to the Borrower or any of its Subsidiaries
identified on Schedule 8.16 and each issue identified in any
report provided by the Borrower under this Section 9.07; and
(c) Permit the Administrative Agent and any of the
Senior Lenders or any of their respective agents or repre-
sentatives, to inspect during normal business hours each of
the facilities and premises owned or operated by the
Borrower or any of its Subsidiaries to confirm the matters
of which such notice is required to be given or with respect
to which such report is required to be given by the Borrower
or any of its Subsidiaries.
SECTION 9.08 Declaration of Dividends and Other
Distributions. The Borrower shall provide to the
Administrative Agent written notification (or telephonic
notice promptly confirmed in writing) of a dividend or other
distribution to be made on the Borrower's capital stock
within two (2) Business Days after a declaration by the
Board of Directors of the Borrower of such dividend or other
distribution on such Borrower's capital stock; provided,
that, the Borrower shall provide no less than ninety (90)
days prior written notice thereof to the Administrative
Agent. The Borrower shall specify in such notice the date
on which such dividend or other distribution is to be paid.
SECTION 9.09 Notices Concerning Defaults, Material
Adverse Change and Litigation. (a) Promptly upon any
officer of the Borrower (i) obtaining knowledge of any
condition or event which constitutes an Event of Default or
Potential Event of Default or becoming aware that any Senior
Lender has given any notice or taken any other action with
respect to a claimed Event of Default or Potential Event of
Default, (ii) obtaining knowledge of any condition or event
which would be required to be disclosed in a current report
filed by the Borrower with the Commission on Form 8-K
(Items 1, 2 and 4 of such Form as in effect on the Closing
Date), or (iii) obtaining knowledge of a material adverse
change in the business, management, ownership, operations,
properties, assets condition (financial or otherwise) or
prospects of any of the Borrower or its Subsidiaries, the
Borrower shall deliver to each Senior Lender an Officer's
Certificate specifying the nature and period of existence of
any such condition or event, or specifying the notice given
or action taken by such Senior Lender and the nature of such
claimed default, Event of Default, Potential Event of
Default, event or condition, and what action the Borrower
has taken, is taking and proposes to take with respect
thereto.
(b) Promptly upon any officer of the Borrower
obtaining knowledge of (i) the institution of, or threat of,
any action, suit, proceeding, governmental investigation or
arbitration against or affecting the Borrower or any of its
Subsidiaries or any property of the Borrower or any of its
Subsidiaries not previously disclosed in writing by the
Borrower to the Senior Lenders, or (ii) any material
development in any action, suit, proceeding, governmental
investigation or arbitration already disclosed, which is
likely to, in either case, materially and adversely affect
the business, operations, properties, assets, condition
(financial or otherwise) or prospects of the Borrower or any
of its Subsidiaries, the Borrower shall deliver to each
Senior Lender notice thereof and such other information as
may be reasonably available to it to enable each Senior
Lender and its counsel to evaluate such matters.
SECTION 9.10 ERISA Reporting. (a) Promptly upon
becoming aware of the occurrence of any Termination Event,
or a nonexempt "prohibited transaction", as such term is
defined in Section 4975 of the Internal Revenue Code, in
connection with (i) any Benefit Plan maintained by or
contributed to by the Borrower or any of its Subsidiaries or
any trust created thereunder, or (ii) any other Benefit Plan
or any trust created thereunder, which Termination Event or
nonexempt prohibited transaction has given rise to, or would
in the future give rise to, an obligation of the Borrower or
any of its Subsidiaries to pay money in excess of $250,000
or to pay money in a lesser amount, which when combined with
the aggregate of all other obligations to pay money for all
such Events and transactions of the Borrower or any of its
Subsidiaries, exceeds $1,000,000, a written notice
specifying the nature thereof, what action the Borrower or
any ERISA Affiliate of the Borrower, as applicable, has
taken, and, when known, any action taken or threatened by
the Internal Revenue Service, the Department of Labor or the
PBGC with respect thereto, will be provided to the
Administrative Agent.
(b) With reasonable promptness, copies of (i) all
notices received by the Borrower or any ERISA Affiliate of
the Borrower of the PBGC's intent to terminate any Defined
Benefit Plan maintained by or contributed to by the Borrower
or any of its Subsidiaries or to have a trustee appointed to
administer any such Defined Benefit Plan; (ii) upon the
reasonable request of any Senior Lender, each Schedule B
(Actuarial Information) to the annual report (Form 5500
Series) filed by the Borrower or any of its Subsidiaries
with the Internal Revenue Service and the most recent
actuarial report with respect to any or all Benefit Plans
maintained by or contributed to by the Borrower or any of
its Subsidiaries; (iii) all funding waiver requests filed by
the Borrower or any of its ERISA Affiliates with the
Internal Revenue Service with respect to any Defined Benefit
Plan maintained by or contributed to by the Borrower or any
of its Subsidiaries and all communications received by the
Borrower or any of its ERISA Affiliates from the Internal
Revenue Service with respect to any such funding waiver
request; and (iv) any unfavorable determination letter
received by the Borrower or any of its Subsidiaries from the
Internal Revenue Service regarding the qualification of a
Benefit Plan maintained by or contributed to by the Borrower
or any such Subsidiary under Section 401(a) of the Internal
Revenue Code, will be provided to the Administrative Agent.
(c) Promptly upon becoming aware of any failure by
the Borrower or any ERISA Affiliate to make a required
installment under Section 412 of the Internal Revenue Code
or any other required payment under Section 412 of the
Internal Revenue Code on or before the due date for such
installment or payment, if such failure would give rise to a
Lien under Section 412(n) of the Internal Revenue Code,
notice of such failure, will be provided to the
Administrative Agent.
SECTION 9.11 Other Reports. Promptly after the same
are available to it, the Borrower shall deliver to the
Senior Lenders (a) copies of all financial statements,
reports, notices, and proxy statements, if any, sent or made
available generally by the Borrower to its Securities
holders, and of all regular and periodic reports and other
filings made by the Borrower with any securities exchange or
the Commission and of all press releases made available
generally by the Borrower or a Subsidiary of the Borrower to
the public concerning material developments in the business
of the Borrower or any such Subsidiary and (b) copies of all
reports, if any, submitted to the Borrower or its Board of
Directors by its independent public accountants, including,
without limitation, any management report prepared in
connection with the annual audit.
SECTION 9.12 Independent Certified Public Accountants.
The Borrower authorizes (i) the Administrative Agent, after
giving the Borrower reasonable prior written notice of its
intent to do so, to communicate directly with the Borrower's
independent certified public accountants concerning any
financial statement delivered to the Administrative Agent
pursuant to subsection 9.01(b), provided that the Borrower
is not precluded by the Administrative Agent from being
present for such communication, and (ii) such independent
certified public accountants, upon the Administrative
Agent's written request with a copy to the Borrower, to
provide to the Administrative Agent copies of any financial
schedules prepared by such accountants for the Borrower.
For each of the Fiscal Years, prior to the date on which the
Borrower's independent certified public accountants begin
their audit of the Borrower's financial statements with
respect to the then closing Fiscal Year, the Borrower shall
execute and deliver to such independent certified public
accountants, a letter in form and substance satisfactory to
the Administrative Agent, indicating that it is a primary
intention of the Borrower in engaging such accountants that
the Administrative Agent and the Senior Lenders may rely
upon such financial statements.
SECTION 9.13 TFC/RHI Consolidated Liquidity. The
Borrower shall deliver to the Administrative Agent and the
Senior Lenders, within ten (10) days after the end of each
fiscal quarter of each Fiscal Year, commencing with the
fiscal quarter ending on June 30, 1996, an Officer's
Certificate of the Borrower in the form attached to this
Agreement as Exhibit I setting forth the calculation of the
sum of the amounts set forth in Section 14.01(r) for such
fiscal quarter.
ARTICLE X
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that so long as any
Commitment shall be in effect and until payment in full of
all Obligations and the expiration of all Letters of Credit,
unless the Requisite Senior Lenders shall otherwise give
prior written consent:
SECTION 10.01 Corporate Existence, etc. The Borrower
shall, and shall cause all Subsidiary Guarantors to, at all
times preserve and keep, or cause to be preserved and kept,
in full force and effect its corporate existence and rights
and franchises material to its businesses and the corporate
existence and rights and franchises material to the business
of each of its Subsidiaries, except for transactions per-
mitted pursuant to Section 11.04. The Borrower may
incorporate wholly owned, indirect Subsidiaries of the
Borrower without the consent of the Senior Lenders so long
as the aggregate amount of the capital provided to such
Subsidiaries does not exceed the amount permitted pursuant
to subsection 11.18(h); provided that the Borrower shall
deliver to the Administrative Agent within sixty (60) days
after the incorporation of such indirect Subsidiaries
written notice setting forth the complete name of such
Subsidiary, its relation to the Borrower, its state of
incorporation and the amount of capital provided to such
Subsidiary. The Borrower shall promptly provide the
Administrative Agent and each of the Senior Lenders with a
complete list of its Subsidiaries upon the occurrence of any
change in the list of such Subsidiaries as set forth on
Schedule 8.05.
SECTION 10.02 Compliance with Laws, etc. The Borrower
shall, and shall cause its Subsidiaries to, exercise all due
diligence to comply with all Requirements of Law and all
restrictive covenants binding on the Borrower and its Sub-
sidiaries, respectively, the noncompliance with which would
materially adversely affect the business, properties,
assets, operations or condition (financial or otherwise) of
the Borrower or any of its Subsidiaries, as the case may be.
SECTION 10.03 Payment of Taxes. The Borrower shall
pay, and cause each of its Subsidiaries to pay, (a) all
taxes, assessments and other governmental charges imposed
upon it or on any of its properties or assets or in respect
of any of its franchises, business, income or property
before any penalty or interest accrues thereon, and (b) all
claims (including, without limitation, claims for labor,
services, materials and supplies) for sums, material in the
aggregate to the Borrower or any such Subsidiary, as the
case may be, which have become due and payable and which by
law have or may become a Lien (other than a Customary
Permitted Lien) upon any of the Borrower's or such Sub-
sidiary's properties or assets, prior to the time when any
penalty or fine shall be incurred with respect thereto;
provided that no such taxes, assessments or governmental
charges referred to in clause (a) above or claims referred
to in clause (b) above need be paid if the same are being
contested by the Borrower or such Subsidiary in good faith
by appropriate proceedings promptly instituted and
diligently conducted and if such reserve or other
appropriate provision, if any, as shall be required in
conformity with GAAP shall have been made by the Borrower or
such Subsidiary therefor. The Borrower will not file or
consent to the filing of, or permit any of its Subsidiaries
to file or consent to the filing of, any consolidated tax
return with any Person (other than TFC or any of its
Subsidiaries or such other Person as may be reasonably
acceptable to the Requisite Senior Lenders).
SECTION 10.04 Maintenance of Properties; Insurance.
The Borrower shall maintain or cause to be maintained in
good repair, working order and condition, excepting ordinary
wear and tear and damage due to casualty, all Fixed Assets
and other properties material to the operations of the
Borrower and its Subsidiaries, and from time to time will
make or cause to be made all appropriate repairs, renewals
and replacements thereof. The Borrower shall maintain or
cause to be maintained, with financially sound and reputable
insurers, the insurance policies listed on Schedule 10.04
and covering the properties and assets of the Borrower and
its Subsidiaries or substantially similar policies and
amounts or other policies and amounts acceptable to the
Administrative Agent. Within thirty (30) days after the
renewal, replacement or material modification of any such
policy, the Borrower shall deliver to the Administrative
Agent a detailed schedule setting forth for each such
policy: (a) the amount of such policy, (b) the risks
insured against by such policy, (c) the name of the insurer
and each insured party under such policy, (d) the policy
number of such policy, and (e) such other information as any
Senior Lender shall reasonably request, which shall be
provided at such Senior Lender's expense and such other
information as the Administrative Agent shall reasonably
request, which shall be provided at the Borrower's expense.
SECTION 10.05 Inspection of Property; Books and
Records; Discussions. The Borrower shall permit, and shall
cause each of its Subsidiaries to permit, any authorized
representative(s) designated by the Administrative Agent,
any Agent or any Senior Lender to visit and inspect any of
the properties of the Borrower or any of its Subsidiaries,
including their financial and accounting records, and to
make copies and take extracts therefrom, and to discuss
their affairs, finances and accounts with their officers and
independent public accountants, all upon reasonable notice
and at such reasonable times during normal business hours,
as often as may be reasonably requested. Each such
visitation and inspection by or on behalf of (a) any Senior
Lender shall be at such Senior Lender's expense and (b) the
Administrative Agent shall be at the Borrower's expense.
The Borrower will, and will cause each of its Subsidiaries
to, keep proper books of record and account in which true
and proper entries in conformity with GAAP (and all legal
requirements) shall be made of all dealings and transactions
in relation to their businesses and activities. The
Borrower shall deliver to the Administrative Agent any
instrument necessary for the Administrative Agent to obtain
records from any service bureau maintaining records for the
Borrower.
SECTION 10.06 Intentionally omitted.
SECTION 10.07 Use of Proceeds. The proceeds of all
Loans made to the Borrower hereunder and all Letters of
Credit issued hereunder shall be used by the Borrower for
lawful and permitted corporate purposes and not for any
purpose constituting a breach of this Agreement. The
Borrower and its Subsidiaries shall use Foreign Exchange
Contracts only for their respective foreign exchange needs
in the ordinary course of their respective businesses. No
portion of the proceeds of any credit extended under this
Agreement shall be used by the Borrower in any manner which
might cause the extension of credit or the application of
such proceeds to violate Regulation G, Regulation U,
Regulation T or Regulation X or any other regulation of the
Federal Reserve Board or to violate the Securities Exchange
Act or the Securities Act, in each case as in effect on the
date or dates of such Borrowing and such use of proceeds.
SECTION 10.08 Intentionally omitted.
SECTION 10.09 Receipt of Certain Funds. Together with
the Officer's Certificate required under subsection 4.02(a),
after receipt by the Borrower or any Domestic Subsidiary of
the Borrower of any Net Cash Proceeds of Sale constituting
insurance proceeds, a condemnation or court award or other
recovery with respect to the Borrower's or such Domestic
Subsidiary's property, the Borrower shall provide to the
Administrative Agent a written notice containing a
description of the property damaged, lost or taken. The
Borrower shall specify in such notice whether or not the
property damaged, lost or taken will be restored or
replaced, and if so, the Borrower shall include a
description of its plans to restore or replace such
property.
SECTION 10.10 Maintenance of Tax Allocation Agreement.
The Borrower shall maintain or cause to be maintained, in
full force and effect, the Tax Allocation Agreement in form
and substance substantially similar to that in effect on the
Closing Date except for modifications required due to
acquisitions and dispositions otherwise permitted by this
Agreement, without amendment or modification unless
consented to by the Requisite Senior Lenders.
SECTION 10.11 Separate Corporate Existence. The
Borrower shall take all reasonable steps (including, without
limitation, all steps which the Administrative Agent or any
Senior Lender may from time to time reasonably request) to
maintain its identity as a separate legal entity and to make
it apparent to third parties that the Borrower is an entity
with assets and liabilities distinct from those of TFC, FHC,
and each member of the Aerospace Group. Without limiting
the generality of the foregoing, the Borrower shall:
(a) require that all full-time employees of the
Borrower identify themselves as such and not as employees of
TFC, FHC or any member of the Aerospace Group (including,
without limitation, by means of providing appropriate
employees with business or identification cards identifying
such employees solely as the Borrower's employees);
(b) compensate all employees, consultants and agents
directly, from the Borrower's bank accounts, for services
provided to the Borrower by such employees, consultants and
agents and, to the extent any employee, consultant or agent
of the Borrower is also an employee, consultant or agent of
TFC, FHC or a member of the Aerospace Group, allocate the
compensation of such employee, consultant or agent between
the Borrower and such other Person on a basis which reflects
the services rendered to the Borrower and such other Person
in accordance with the Allocation Memorandum;
(c) allocate all overhead expenses (including, without
limitation, telephone and other utility charges) for items
shared between the Borrower and TFC, FHC and/or a member of
the Aerospace Group on the basis of actual use to the extent
practicable and, to the extent such allocation is not
practicable, on a basis reasonably related to actual use in
accordance with the Allocation Memorandum;
(d) cause the Borrower to be named as an insured on
the insurance policy covering its property, or enter into an
agreement with the holder of such policy whereby in the
event of a loss in connection with such property, proceeds
are paid to the Borrower;
(e) maintain the Borrower's books and records complete
and separate from those of TFC, FHC and the Aerospace Group;
(f) not maintain bank accounts or other Depository
Accounts to which TFC, FHC or any member of the Aerospace
Group is an account party, into which TFC, FHC or any
member of the Aerospace Group makes deposits or from which
TFC, FHC or any member of the Aerospace Group has the power
to make withdrawals;
(g) not permit TFC, FHC or any member of the Aerospace
Group to pay any of the Borrower's operating expenses
(except when paid and charged pursuant to the Allocation
Memorandum); and
(h) (i) not permit (A) more than two-thirds of the
members of the Borrower's board of directors to simul-
taneously be members of the board of directors or officers
or employees of TFC, FHC or any member of the Aerospace
Group and (B) more than two-thirds of the officers of the
Borrower to simultaneously be members of the board of
directors or officers or employees of TFC, FHC or any member
of the Aerospace Group and (ii) at all times have at least
one member of the Borrower's board of directors who is
neither an officer or employee of any of TFC, FHC or any
member of the Aerospace Group, nor an officer or employee of
the Borrower.
SECTION 10.12 Consolidated Net Worth of the Borrower;
Liquidity. The Borrower shall at all times maintain its
assets, liabilities and income, as reported in financial
statements prepared and delivered in conformity with
subsections 9.01(a) and (b), so that the Consolidated Net
Worth of the Borrower shall at all times be equal to or
greater than $175,000,000.
SECTION 10.13 Future Liens for the Benefit of the
Senior Lenders. The Borrower shall execute and deliver to
the Administrative Agent for the benefit of the Senior
Secured Creditors, (a) immediately upon the acquisition or
leasing of any real property, a mortgage, deed of trust,
assignment or other appropriate instrument evidencing a Lien
upon any such acquired property, lease or interest, the same
to be in form and substance satisfactory to the
Administrative Agent, and (b) on the eighty-fifth (85th) day
after the date of its acquisition of any aircraft or
aircraft engine subject to registration with the Federal
Aviation Administration, if ownership of such aircraft or
aircraft engine is anticipated to continue in the name of
Borrower for more than ninety (90) days after such date of
acquisition, an aircraft mortgage or other appropriate
instrument evidencing a Lien on such property in form and
substance satisfactory to the Administrative Agent; and in
each instance under clauses (a) and (b), to be subject only
to (i) Liens permitted under Section 11.01 and (ii) such
other Liens as the Requisite Senior Lenders may reasonably
approve, it being understood that the granting of such
additional security for the Obligations is a material
inducement to the execution and delivery of this Agreement
by each Senior Lender.
ARTICLE XI
NEGATIVE COVENANTS
The Borrower covenants and agrees that so long as any
Commitment shall be in effect and until payment in full of
all Obligations and the expiration of all Letters of Credit,
unless the Requisite Senior Lenders shall otherwise give
their prior written consent:
SECTION 11.01 Liens. The Borrower shall not, and
shall not permit its Subsidiaries to, directly or
indirectly, create, incur, assume or permit to exist, any
Lien on or with respect to any of its properties or assets
(including any Collateral in which the Borrower or any such
Subsidiary has an interest) except:
(a) Liens granted to or held by the Administrative
Agent for the benefit of the Senior Secured Creditors;
(b) any interest or title of a lessor or secured by a
lessor's interest under any lease permitted by this
Agreement;
(c) Intentionally omitted
(d) Customary Permitted Liens;
(e) Liens arising in connection with Commercial
Letters of Credit issued for the account of the Borrower or
any such Subsidiary permitted by subsection 11.16(g) and
covering only the documents and goods financed by means of
such Commercial Letters of Credit;
(f) Liens on assets of a Foreign Subsidiary of the
Borrower securing Indebtedness of such Foreign Subsidiary
permitted by subsection 11.16(h);
(g) purchase money Liens (including the interest of a
lessor under a Capital Lease), not in default or
foreclosure, created in connection with the incurrence of
Indebtedness permitted by subsection 11.16(j); and
(h) Liens with respect to judgments which do not
result in an Event of Default or a Potential Event of
Default under, or other breach of, this Agreement.
For the purposes of this Section 11.01, if a Lien is
permitted under one of the exceptions set forth above, but
limited to a specified amount of Indebtedness, the same
Indebtedness shall not be taken into account in applying an
Indebtedness limitation contained in another of the
exceptions set forth in this Section 11.01.
SECTION 11.02 Conduct of Business. The Borrower shall
not engage in, or permit any of its Subsidiaries to engage
in, any business other than the business engaged in by the
Borrower or such Subsidiary on the Closing Date and any
business or activities substantially similar or related
thereto.
SECTION 11.03 Transactions with Shareholders and
Affiliates. The Borrower shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly, enter
into or permit to exist, any transaction (including, without
limitation, the purchase, sale, lease or exchange of any
property or the rendering of any service) with any Affiliate
of the Borrower or of any such Subsidiary, on terms that are
less favorable to any such Person than those that might be
obtained in an arm's-length transaction at the time from
Persons who are not such an Affiliate, other than those
management contracts and service agreements listed on
Schedule 11.03 to which the Borrower or any such Subsidiary
of the Borrower is a party, as such contracts and agreements
may be amended, supplemented or modified without materially
impairing the Borrower's ability to repay its Obligations
hereunder, provided, that, notwithstanding the foregoing,
all allocations of costs and expenses by or among the
Borrower and any of its Affiliates shall be made in
accordance with the Allocation Memorandum. Nothing
contained in this Section 11.03 shall prohibit any
transaction expressly permitted by Section 11.19 or any
other Section of this Agreement.
SECTION 11.04 Restriction on Fundamental Changes.
(a) The Borrower shall not, and shall not permit any of its
Subsidiaries to, enter into any merger or consolidation, or
liquidate, wind-up or dissolve (or suffer any liquidation or
dissolution), or convey, lease, sell, transfer or otherwise
dispose of, in one transaction or series of transactions,
all or any substantial part of its business, property or
assets, whether now or hereafter acquired, except for (i)
dispositions of assets expressly permitted under Section
11.17, (ii) the merger of a Subsidiary of the Borrower with
and into the Borrower or into another Subsidiary of the
Borrower, provided that in the case of the merger of a
Subsidiary Guarantor into a Subsidiary which is not a
Subsidiary Guarantor, the surviving corporation assumes the
obligations of such Subsidiary Guarantor under its
Subsidiary Guaranty, and (iii) with prior written notice to
the Administrative Agent, the liquidation of a Subsidiary of
the Borrower into the Borrower or another Subsidiary of the
Borrower, provided that in the case of the liquidation of a
Subsidiary Guarantor into a Subsidiary which is not a
Subsidiary Guarantor, the surviving corporation assumes the
obligations of such Subsidiary Guarantor under its
Subsidiary Guaranty.
(b) Except as permitted pursuant to subsection 11.18,
the Borrower shall not acquire, or allow any of its
Subsidiaries to acquire, by purchase or otherwise, the stock
or other evidence of beneficial ownership of any Person or
all or substantially all of the business, property or assets
of any Person, except for such acquisitions which are
permitted under subsection 11.04(a).
SECTION 11.05 ERISA. The Borrower shall not, and
shall not permit any of its Subsidiaries to:
(a) Engage in any prohibited transaction for which an
exemption is not available or has not been previously
obtained from the Department of Labor and in connection with
which the Borrower or any ERISA Affiliate of the Borrower
could be subject to either a civil penalty assessed pursuant
to Section 502(i) of ERISA in excess of $250,000 or a tax
imposed by Section 4975 of the Internal Revenue Code in
excess of $250,000 or the Borrower and all ERISA Affiliates
could be subject to aggregate penalties and taxes in excess
of $1,000,000 for all such prohibited transactions;
(b) Fail to make full payment when due of all amounts
which, under the provisions of any Defined Benefit Plan, the
Borrower or any of its Subsidiaries is required to pay as
contributions thereto, or permit to exist any accumulated
funding deficiency (as defined in Section 302(a) of ERISA
and Section 412(a) of the Internal Revenue Code), or fail to
pay any installment necessary to amortize each waived
funding deficiency, with respect to any Defined Benefit Plan
contributed to or maintained by the Borrower or any of its
Subsidiaries;
(c) Permit to exist any occurrence of any reportable
event (described in Section 4043 of ERISA), or any other
event or condition, which in the reasonable opinion of the
Agents presents a material risk of a material liability of
the Borrower and its ERISA Affiliates under ERISA or the
Internal Revenue Code; or
(d) Enter into any new Benefit Plan, or modify any
existing Benefit Plan contributed to or maintained by the
Borrower or any of its Subsidiaries, so as to materially
increase the obligations of the Borrower or any of its
Subsidiaries.
SECTION 11.06 Sales and Leasebacks. The Borrower
shall not become liable or permit any of its Subsidiaries to
become liable, directly or by way of Accommodation
Obligation, with respect to any lease, whether an Operating
Lease or a Capital Lease, of any property (whether real or
personal or mixed) whether now owned or hereafter acquired,
(a) which the Borrower or one of its Subsidiaries has sold
or transferred or is to sell or transfer to any other
Person, or (b) which the Borrower or one of its Subsidiaries
intends to use for substantially the same purposes as any
other property which has been or is to be sold or
transferred by that entity to any other Person in connection
with such lease, unless, after giving effect to each such
lease the Borrower is in compliance with subsection
11.16(d), Section 11.17 and Section 11.21.
SECTION 11.07 Subordinated Indebtedness.
(a) No Change. The Borrower shall not, and shall not
permit any of its Subsidiaries to, (i) amend, modify or
otherwise change any terms contained, as of the Closing
Date, in any agreement or document evidencing or related to
any Subordinated Indebtedness of the Borrower or Subsidiary,
if the effect of such amendment, modification or change
would adversely affect the rights of the Administrative
Agent or Senior Lenders or would be materially more
burdensome or restrictive on the Borrower and, without
limiting the generality of the foregoing, none of the
provisions of such agreements or documents relating to the
terms of subordination or definitions of Indebtedness to
which such Subordinated Indebtedness is subordinated or to
payments, whether of principal, premiums, or interest
(except to defer a payment to a later date or to waive any
default thereunder) shall be amended or modified in any
respect or (ii) make any payment required as a result of an
amendment or change thereto, in each instance, without the
prior written consent of the Requisite Senior Lenders.
(b) Notices. The Borrower shall deliver to the
Administrative Agent (i) a copy of each notice or other com-
munication delivered by or on behalf of the Borrower to any
trustee under any Subordinated Indebtedness indenture to
which the Borrower is a party, such delivery to be made at
the same time and by the same means as such notice or other
communication is delivered to such trustee, and (ii) a copy
of each notice or other communication received by the
Borrower from any trustee under any Subordinated
Indebtedness indenture to which the Borrower is a party,
such delivery to be made promptly after such notice or other
communication is received by the Borrower.
(c) Paying Agents. Neither the Borrower nor any of
its Subsidiaries shall act as paying agent under any
Subordinated Indebtedness indenture to which the Borrower is
a party, nor shall the Borrower appoint any Person as such
paying agent other than the trustee under any such
Subordinated Indebtedness indenture.
SECTION 11.08 Amendment of Charter or By-laws. The
Borrower shall not amend, or permit any of its Subsidiaries
to amend, the Borrower's or such Subsidiary's Certificate or
Articles of Incorporation or By-Laws, except upon at least
ten (10) days' prior written notice to the Senior Lenders,
and then only if no Event of Default or Potential Event of
Default then exists or would result therefrom.
SECTION 11.09 Issuance and Disposal of Stock. Except
as permitted by Section 11.17 in connection with the
formation of a new Subsidiary to effect the sale of Eagle
Environmental as described on Schedule 1.01-B, the Borrower
will not (a) directly or indirectly issue, sell, assign,
pledge, encumber or dispose of any shares of capital stock
or other equity securities of (or warrants, rights or
options to acquire shares or other equity securities of) any
of its Subsidiaries, except to qualify directors if required
by applicable law, or (b) permit any of its Subsidiaries
directly or indirectly to issue, sell, assign, pledge,
encumber or dispose of any shares of capital stock or other
Securities of (or warrants, rights or options to acquire
shares or other securities of) such Subsidiary, or any other
Subsidiary of the Borrower, except to qualify directors if
required by applicable law.
SECTION 11.10 Interest Exchange Agreements. The
Borrower shall not enter into, or permit any of its
Subsidiaries to enter into, any Interest Rate Contracts
other than Secured Interest Rate Contracts.
SECTION 11.11 Asset Transfers. Except as otherwise
permitted by Sections 11.17 and 11.04, the Borrower shall
not transfer, or permit any of its Subsidiaries to transfer,
any assets of the Borrower or any of its Subsidiaries to any
other Person, except in the ordinary course of the
Borrower's or such Subsidiary's business.
SECTION 11.12 Consulting Contracts. The Borrower
shall not become obligated, or permit any of its
Subsidiaries to become obligated, with respect to consulting
or like contracts with Persons who have been employees or
directors of the Borrower or such Subsidiary during the
immediately preceding five (5) year period, in amounts
aggregating in any Fiscal Year an amount in excess of
$1,000,000.
SECTION 11.13 Intentionally omitted.
SECTION 11.14 Consolidated Capital Expenditures.
The Borrower shall not, and shall not permit any of its
Subsidiaries to make or incur Consolidated Capital
Expenditures in any Fiscal Year, in an aggregate amount in
excess of the sum of (a) $2,000,000 plus leasehold
improvements made with respect to the Virginia Real Property
and (b) Borrower's Selling Price of Fixed Assets for such
Fiscal Year.
SECTION 11.15 Intercompany Indebtedness.
(a) Intentionally omitted.
(b) The Borrower shall not make any payments of
principal or interest on any amount of Indebtedness owing to
an Affiliate of the Borrower at any time at which an Event
of Default or a Potential Event of Default exists or would
result therefrom and interest on any amount of such
Indebtedness shall in any event not exceed at any time a per
annum rate approximating the rate then being offered in the
U.S. or European capital markets (as applicable to the
underlying Indebtedness) for credit facilities having an
equivalent commercial risk rating and tenor.
SECTION 11.16 Indebtedness. The Borrower shall not
directly or indirectly create, incur, assume or otherwise
become or remain directly or indirectly liable with respect
to, or permit any of its Subsidiaries to directly or
indirectly create, incur, assume or otherwise become or
remain directly or indirectly liable with respect to, any
Indebtedness, except:
(a) the Obligations;
(b) Permitted Existing Indebtedness of the Borrower or
any such Subsidiary;
(c) Subordinated Indebtedness of the Borrower, on
terms and conditions satisfactory in form and substance to
the Senior Lenders, the proceeds of which are applied as
prepayments of the Obligations or used to refinance then
existing Subordinated Indebtedness of the Borrower;
(d) Capital Lease obligations of the Borrower or any
such Subsidiary in an amount not exceeding (in the aggregate
for the Borrower and all such Subsidiaries) $1,000,000;
(e) Indebtedness of the Borrower or any such
Subsidiary evidenced by industrial revenue bonds in an
amount not exceeding (in the aggregate for the Borrower and
all such Subsidiaries) $500,000;
(f) Indebtedness of the Borrower to any of its
Subsidiaries or of such Subsidiaries to the Borrower;
(g) Indebtedness of the Borrower or any such
Subsidiary arising from Non-Facility Letters of Credit
issued for the account of the Borrower or such Subsidiary in
an amount not exceeding (in the aggregate for the Borrower
and all such Subsidiaries) $5,000,000;
(h) Indebtedness of a Foreign Subsidiary of the Borrower;
provided that the proceeds of such Indebtedness are used by
such Foreign Subsidiary or the Borrower in the routine
conduct of its business;
(i) trade payables, wages and other accrued expenses
incurred by the Borrower or any such Subsidiary in the
ordinary course of its business;
(j) Indebtedness of the Borrower or any such
Subsidiary constituting Purchase Money Indebtedness in an
amount not exceeding (in the aggregate for the Borrower and
all such Subsidiaries) $1,000,000;
(k) other unsecured Indebtedness of the Borrower or
any such Subsidiary not supported by a Letter of Credit in
an amount not exceeding $25,000,000; provided, that the
Borrower shall not issue commercial paper (i) at a time and
in an amount such that the sum, after the issuance of such
commercial paper, of (A) the outstanding Loans, (B) Letter
of Credit Obligations outstanding, (C) the sum of the
aggregate amount of the Borrower's Secured F/X Contracts
outstanding and the aggregate amount of the Secured Interest
Rate Contracts outstanding and (D) the aggregate outstanding
amount of commercial paper issued by the Borrower, exceeds
the Commitments and (ii) in any single maturity that exceeds
$10,000,000;
(l) Operating Lease obligations of the Borrower or any
such Subsidiary complying with limitations thereon set forth
in Section 11.21;
(m) if the Borrower is a member of the "The Fairchild
Corporation Group" (as defined in the Tax Allocation
Agreement), Indebtedness of the Borrower owing under the Tax
Allocation Agreement; and
(n) any renewal, extension or refinancing of the
foregoing Indebtedness of the Borrower or its Subsidiaries
in an amount not in excess of the amount outstanding at the
time of such renewal or extension.
No Indebtedness of the Borrower or any Subsidiary of the
Borrower for borrowed money permitted hereunder, except for
Permitted Existing Indebtedness of the Borrower or any such
Subsidiary, to the extent otherwise provided therein, shall
contain any provisions making a "default" under or in
respect of some other Indebtedness for money borrowed, a
"default" thereunder, unless such cross-default provisions
are applicable only with respect to "defaults" which have
resulted in the acceleration of payment obligations for
money borrowed in an amount not less than, in any particular
case, $3,000,000.
SECTION 11.17 Sales of Assets. Except for Excluded
Dispositions, the Borrower shall not, and shall not permit
any of its Subsidiaries to, sell, assign, transfer, lease,
convey or otherwise dispose of any of its properties or
assets, whether now owned or hereafter acquired, or any
income or profits therefrom, other than pursuant to a sale,
assignment, transfer, lease, conveyance or other disposition
(a) of the Borrower's or any such Subsidiary's Inventory in
the ordinary course of its business or Inventory of the
Borrower consisting of aircraft which has been purchased
from a member of the Aerospace Group and is re-sold to such
member of the Aerospace Group to the extent permitted under
the Aerospace Credit Agreement, (b) involving assets of the
Borrower or any such Subsidiary with a fair market value not
exceeding an aggregate amount in any Fiscal Year of
$2,000,000 (plus the Net Proceeds of Sale of any Excluded
Dispositions), provided, that the consideration received by
the Borrower, or such Subsidiary in each such transaction
constitutes at least fair market value, (c) of the
Borrower's or any such Subsidiary's Equipment to the extent
that such Equipment is traded in for credit against the
purchase price of replacement Equipment or that the proceeds
of such disposition are reasonably promptly applied to the
purchase price of such replacement Equipment, (d) of
Accounts of Foreign Subsidiaries of the Borrower by such
Subsidiaries pursuant to and in accordance with
Section 11.22, and (e) of Marketable Securities and other
Investments held by the Borrower, other than such Marketable
Securities on which perfected Liens exist in favor of the
Administrative Agent. Notwithstanding the foregoing, sales
of the Borrower's assets may be consummated provided that
(a) the Senior Lenders of the Borrower have consented
thereto, which consent shall not be unreasonably withheld,
and (b) the proceeds thereof are remitted to the
Administrative Agent for application in accordance with the
terms of this Agreement. The Borrower shall not permit
Mairoll, Inc., an indirect subsidiary of the Borrower, to
(i) sell, assign, transfer, convey or otherwise dispose of
all or any portion of its partnership interest in Hartz-Rex
Associates or (ii) permit Hartz-Rex Associates to sell,
assign, transfer, convey, lease (other than pursuant to the
Hasbrouck Heights Lease) or otherwise dispose of all or any
portion of the Hasbrouck Heights Real Property until the
Issuing Bank's Letter of Credit No. NY-30013537 or any
Letter of Credit issued hereunder in substitution therefor
is cancelled or expires or, if drawn, the Reimbursement
Obligations with respect thereto have been paid in full.
SECTION 11.18 Investments. The Borrower shall not,
and shall not permit any of its Subsidiaries to, directly or
indirectly make or own, any Investment in any Person except:
(a) Investments of the Borrower or any such Subsidiary
in Cash Equivalents; provided that the Borrower shall have
no limitation on the amount of Investments in Cash
Equivalents held by it as long as the Administrative Agent
can, if requested, perfect a security interest in all such
Investments that are delivered to the Administrative Agent
and any reinvestments of such Investments;
(b) an Investment of the Borrower or any such
Subsidiary resulting from the exchange of Securities
consisting of capital stock of Existing Investments of the
Borrower or any such Subsidiary (whether paid with respect
to and by reason of any such Investment pursuant to a
subscription and stock purchase agreement, warrant, option,
commitment, capital calls or similar agreement or
otherwise), in an amount not exceeding the amount
outstanding with respect thereto on the Closing Date, as
increased or decreased as required under GAAP as a result of
monthly adjustments made to Investments accounted for under
the equity method;
(c) an Investment of approximately $300,000 in cash to
Convac USA, Inc., a Delaware corporation and Subsidiary of
Borrower, to facilitate Convac USA, Inc.'s acquisition of
the balance of the issued and outstanding capital stock of
Fairchild Technologies USA, Inc., formerly known as Applied
Process Technology, Inc., a California corporation, a
Subsidiary of Borrower, representing ten percent (10%) of
all issued and outstanding capital stock of Fairchild
Technologies USA, Inc.;
(d) Investments of the Borrower or any such Subsidiary
which represent defaulted or extended obligations previously
contracted in the ordinary course of business and payable on
terms necessary to effectuate the collection thereof, in an
amount not to exceed at any one time outstanding (in the
aggregate for the Borrower and all of its Subsidiaries)
$2,000,000; provided that the amount of such Investments by
the Borrower in any one obligor shall not exceed $1,000,000
in the aggregate at any one time outstanding;
(e) Investments of the Borrower or any such Subsidiary
arising from Indebtedness between the Borrower and its
Subsidiaries permitted by subsection 11.16(f);
(f) Investments of the Borrower in the form of notes
or other Securities taken by the Borrower in connection with
sales of assets by the Borrower consented to by the
Requisite Senior Lenders and Investments by the Borrower in
notes or other Securities or arising under royalty
agreements which are proceeds of sales of Excluded
Dispositions or otherwise described on Schedule 1.01-B;
(g) Intentionally omitted
(h) Investments in an aggregate amount not to
exceed $100,000 at any time consisting of capital
contributions made by the Borrower or its Subsidiaries to
wholly owned direct or indirect Subsidiaries of the Borrower
formed after the Closing Date;
(i) Intentionally omitted;
(j) Investments in any Indebtedness of TFC and its
Subsidiaries;
(k) Investments (other than as permitted in subsection
11.18(b)) of up to $2,000,000 in TFC's common stock
purchased from Persons other than Affiliates of TFC; and
(l) Investments (other than Prohibited Investments) of
up to $10,000,000 in the aggregate minus Investments made as
permitted in subsection 11.18(k);
provided, to the extent that any such Investment would (A)
result in the Borrower and its Subsidiaries, on a combined
basis, owning sufficient equity in a Person to enable the
Borrower or one of its Subsidiaries to control the Board of
Directors (or comparable governing body) of such Person or
to direct the management and operations of such Person, or
(B) require the Borrower or one of its Subsidiaries to make
a public disclosure of such Investment, other than any
disclosure required to be made in the financial statements
of the Borrower or such Subsidiary, then the Borrower shall
give the Administrative Agent, to the extent practicable, at
least two (2) Business Days' notice prior to the issuance of
any form of public notice, statement or other disclosure of
or relating to such Investment, and provided that no
provisions of Section 11.18 shall be construed to prohibit
the Borrower from (a) retaining its Investment in any
Person which, as of the Closing Date, was an Affiliate of
the Borrower or (b) increasing its Investment in Aerospace
or any Person which, as of the Closing Date, was a wholly-
owned Subsidiary of the Borrower or FHC.
No provision of this Agreement shall be deemed to prohibit
any Investment which is specifically permitted by this
Section 11.18 and the Borrower shall not be deemed to be in
breach of, or default under, any other provision of this
Agreement if such breach or default is solely attributable
to the making of, or owning, an Investment which is
specifically permitted by this Section 11.18. For purposes
of this Section 11.18, a breach or default will be
considered to be "solely attributable to the making of, or
owning, an Investment" if such breach or default
(i) occurred or existed immediately upon the making of such
Investment but not prior thereto, (ii) is not attributable
to an event or transaction occurring subsequent to the
making of such Investment and (iii) would not have occurred
or would not exist if such Investment were not owned or had
not been made.
SECTION 11.19 Restricted Junior Payments. The
Borrower shall not declare or make, or permit any of its
Subsidiaries to declare or make, any Restricted Junior
Payment, except:
(a) so long as no Event of Default or Potential Event
of Default exists or would result therefrom, payments of
principal and interest (including payments made to a sinking
fund) due (on an unaccelerated basis in accordance with the
original amortization schedule) on the Borrower's
Indebtedness evidenced by the Senior Subordinated
Debentures, and other Subordinated Indebtedness of the
Borrower, except to the extent that any such payments are
prohibited by the subordination restrictions applicable
thereto;
(b) the payment of dividends or distributions on the
Borrower's or such Subsidiary's capital stock if the purpose
thereof is to provide TFC with funds necessary to service
Indebtedness (as defined in the Senior Subordinated
Debenture Indenture) of TFC, but only to the extent TFC does
not have cash, cash equivalents or readily marketable
securities available to provide funds to otherwise service
such Indebtedness, after taking into account reasonable
working capital needs of TFC and its Subsidiaries; provided,
that the exception set forth in this subsection 11.19(b)
shall not be effective if and to the extent and during the
period that the holders of TFC's 13-1/8% Subordinated
Debentures due 2006 have waived the benefits of Section 4.05
of the Indenture dated as of March 13, 1986 pursuant to
which such Subordinated Debentures were issued and the
holders of TFC's Intermediate Subordinated Debentures due
2001 have waived the benefits of Section 4.05 of the
Indenture dated as of October 15, 1986 pursuant to which
such Intermediate Subordinated Debentures were issued; and,
provided, further, that such exception shall be available in
any event only so long as at least one of the Indentures
described above remains in effect and continues to restrict
TFC from permitting any of its subsidiaries from entering
into an agreement restricting the payment of dividends or
the making of other distributions on any subsidiary's
capital stock which are necessary to service indebtedness of
TFC;
(c) the payment of dividends by the Borrower in an
aggregate amount not in excess of $10,000,000 in any Fiscal
Year; plus, in each such Fiscal Year, an amount equal to (i)
the sum of (A) fifty percent (50%) of the aggregate
Consolidated Net Income of the Borrower accrued on a
cumulative basis subsequent to August 15, 1988 and (B) the
aggregate net proceeds, including the fair market value of
property other than cash received by the Borrower from the
issue or sale after August 15, 1988 of capital stock of the
Borrower minus (ii) its aggregate amount of all dividends
paid on the capital stock of the Borrower subsequent to
August 15, 1988;
(d) dividends to the Borrower arising from the
cancellation of intercompany Indebtedness upon the sale of a
Subsidiary of the Borrower, which sale is permitted under
Section 11.17;
(e) any payment in respect of Investments permitted by
subsections 11.03(B)(i) or (j) or any prepayments or
redemptions of Indebtedness described therein; and
(f) dividends deemed paid by virtue of cancellation of
Indebtedness of the Borrower and/or TFC after the making of
an Investment therein by the Borrower as permitted by
subsection 11.18(j).
Notwithstanding anything to the contrary contained herein,
so long as a majority of the Borrower's capital stock is
owned by TFC, any payment of a dividend or other
distribution with respect to the Borrower's capital stock
shall be permitted under subsection 11.19(b) only after a
period of at least ninety (90) days has elapsed since the
declaration of such dividend or other distribution by the
Borrower's Board of Directors.
SECTION 11.20 Accommodation Obligations. The Borrower
shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly create or become or remain liable in
respect of any Accommodation Obligation except (a)
guaranties resulting from endorsement of negotiable
instruments for collection in the ordinary course of
business; (b) any guaranty of the Obligations by a
Subsidiary of the Borrower; (c) obligations, warranties and
indemnities of the Borrower or any such Subsidiary, not
relating to Indebtedness of any Person and not in default,
which are undertaken or made in the ordinary course of its
business, or in connection with Excluded Dispositions and
other dispositions of assets otherwise consented to under
the terms of this Agreement, and not in favor of an
Affiliate of the Borrower; (d) unsecured guaranties of the
Borrower guaranteeing Indebtedness of its Foreign
Subsidiaries and permitted by subsection 11.16(h); (e)
additional Accommodation Obligations of the Borrower or any
such Subsidiary which, when combined with outstanding
Indebtedness permitted under subsection 11.16(l), do not
exceed the amount permitted by such subsection; (f)
Accommodation Obligations of the Borrower with respect to
any Operating Lease obligations of the Borrower or any
Subsidiary of the Borrower to the extent permitted under
Section 11.21; and (g) unsecured guaranties of Fairchild
Germany, Inc. guaranteeing Indebtedness of Fairchild Convac
GmbH described on Schedule 11.20.
SECTION 11.21 Restriction on Operating Leases. During
any Fiscal Year, the Borrower shall not become liable in any
way, or permit any of its Subsidiaries to become liable in
any way, whether directly or by assignment or by
Accommodation Obligations, for the obligations of the lessee
under any Operating Lease unless, immediately after giving
effect to the incurrence of liability with respect to such
Operating Lease, the amount of all of the Borrower's and
such Subsidiaries' Consolidated Rental Payments for such
Fiscal Year (exclusive of any reimbursement for taxes,
insurance, maintenance or other expenses) shall not exceed
(in the aggregate) $2,000,000.
SECTION 11.22 Sale of Accounts. Except as otherwise
permitted hereunder:
(a) the Borrower shall not, and shall not permit any
of its Domestic Subsidiaries to, directly or indirectly,
transfer, with recourse or without, or discount or otherwise
sell any of its Accounts or any of its notes or obligations
receivable in any amount (other than, in the case of such
Subsidiaries, the sale of Accounts owing from foreign
account debtors (i) not to exceed $250,000 in the aggregate
during each Fiscal Year or (ii) which are otherwise included
in any asset securitization program entered into which is
contemplated or permitted by the FHC Credit Agreement), and
(b) the Borrower shall not permit any of its Foreign
Subsidiaries to, directly or indirectly, sell or discount,
or otherwise transfer to any Person, any of its Accounts or
any of its notes or obligations receivable in any amount
except (i) sales by Foreign Subsidiaries of the Borrower of
Accounts, notes or obligations receivable which result in
recourse obligations of such Foreign Subsidiaries in an
aggregate amount not in excess of $2,500,000, (ii) sales by
Foreign Subsidiaries of the Borrower of up to a total of an
additional $15,000,000 in face amount of Accounts in the
aggregate during the term of this Agreement, without
recourse, to such Foreign Subsidiaries, and (iii) sales by
Foreign Subsidiaries of the Borrower of Accounts arising
from sales of Inventory to Delta Air Lines and or any of its
Affiliates; provided that, with respect to all such sales of
Accounts, notes or other obligations receivable, whether
with or without recourse, the consideration received for
such Accounts and other assets constitutes at least the fair
market value thereof.
ARTICLE XIA
INTENTIONALLY OMITTED
ARTICLE XIB
INTENTIONALLY OMITTED
ARTICLE XIC
INTENTIONALLY OMITTED
ARTICLE XII
INTENTIONALLY OMITTED
ARTICLE XIII
INTENTIONALLY OMITTED
ARTICLE XIV
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
SECTION 14.01 Events of Default. Each of the
following occurrences shall constitute an Event of Default
under this Agreement:
(a) Failure to Make Payments When Due. The Borrower
shall fail to pay when due any Obligations, including,
without limitation, (i) any Reimbursement Obligation,
(ii) any amount payable for principal on the Loans, includ-
ing, without limitation, any mandatory prepayment payable
under Section 4.02, but excluding any voluntary prepayment
payable under Section 4.01, or (iii) any interest on any
Loan or any fee or other amount payable hereunder (other
than amounts described in clauses (i) and (ii) above),
provided, that an Event of Default shall not be deemed to
have occurred under this clause (iii) unless such failure
shall have continued for three (3) Business Days.
(b) Breach of Certain Covenants. The Borrower shall
fail to duly and punctually perform or observe any
agreement, covenant or obligation binding on the Borrower
under (i) Article XI or (ii) under Section 8 of the
applicable Security Agreement, other than an agreement,
covenant or obligation covered by subsection 14.01(a).
(c) Breach of Warranty. Any representation or
warranty made by the Borrower or any Subsidiary of the
Borrower to the Administrative Agent or a Senior Lender or
Issuing Bank herein or in any Collateral Document or any of
the other Loan Documents to which the Borrower or such
Subsidiary is a party or in any statement or certificate at
any time given by the Borrower or any of its Subsidiaries in
writing pursuant to any of the Loan Documents shall be false
or misleading in any material respect on the date as of
which made.
(d) Other Defaults. (i) The Borrower shall default in
the payment of any Obligation (other than those Obligations
referred to in subsection 14.01(a)), or (ii) the Borrower or
any of its Subsidiaries shall default in the performance of
or compliance with any term contained in this Agreement or
in any of the other Loan Documents to which the Borrower or
any such Subsidiary is a party or any default or event of
default shall occur under any of the Collateral Documents to
which the Borrower or any such Subsidiary is a party (other
than as covered by subsection 14.01(b)), and such default or
event of default shall continue for thirty (30) days after
(A) the Administrative Agent or any Senior Lender (acting
through the Administrative Agent) notifies the Borrower or
such Subsidiary of any such default, or (B) the Borrower or
such Subsidiary acknowledges such default to the
Administrative Agent in writing.
(e) Default as to Other Indebtedness. The Borrower or
any of its Subsidiaries shall fail to make any payment when
due on any Indebtedness of the Borrower or any such
Subsidiary (other than the Obligations), the aggregate
amount of which Indebtedness equals or exceeds $2,000,000,
or any breach, default or event of default shall occur under
any instrument, agreement or indenture pertaining thereto,
if the effect thereof (with or without the giving of notice
or lapse of time or both) is to accelerate, or permit the
holder(s) of such Indebtedness to accelerate, the maturity
of any such Indebtedness; or the holder of any Lien, in any
amount, shall commence foreclosure of such Lien upon
property of the Borrower or any such Subsidiary having a
value in excess of $500,000 and such foreclosure shall
continue against such property to a date less than thirty
(30) Business Days prior to the date of the proposed
foreclosure sale.
(f) Collateral Documents; Failure of Security or
Subordination. (i) On or after the date of the execution
and delivery thereof, for any reason any Collateral Document
to which the Borrower is a party ceases to be in full force
and effect with respect to the Borrower or any Subsidiary
Guaranty ceases to be in full force and effect or the Liens
on the Borrower's or any Subsidiary Guarantor's assets
intended to be created thereby cease to be or are not valid
and perfected (except to the extent perfection of such Liens
is not required pursuant to the terms of the applicable
Collateral Document or to the extent the failure to perfect
is due to the negligence of the Administrative Agent) and
remains invalid or unperfected for a period of at least
three
(3) Business Days after the Administrative Agent notifies
the Borrower thereof or the Borrower acknowledges that such
Lien has ceased to be or is not valid and perfected; or
(ii) any Lien granted by the Borrower or any Subsidiary
Guarantor on its assets in favor of the Administrative Agent
or to secure the Obligations which is contemplated by this
Agreement or the Collateral Documents to which the Borrower
is a party, or the subordination provisions of any document
or instrument evidencing any Subordinated Indebtedness of
the Borrower shall, at any time, be invalidated or otherwise
cease to be in full force and effect, or any such Liens or
Obligations shall be subordinated or shall not have the
priority contemplated by this Agreement, the Collateral
Documents or such subordination provisions, for any reason.
(g) Involuntary Bankruptcy; Appointment of Receiver;
etc. (i) An involuntary case shall be commenced against
the Borrower or any of its Subsidiaries, unless (A) the
petition is controverted within ten (10) days, and (B) the
petition is dismissed within sixty (60) days, after
commencement of the case; or a court having jurisdiction in
the premises shall enter a decree or order for relief in
respect of the Borrower or any of its Subsidiaries in an
involuntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect; or any
other similar relief shall be granted under any applicable
federal or state law; or
(ii) A decree or order of a court having jurisdiction
in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other
officer having similar powers over the Borrower or any of
its Subsidiaries, or over all or a substantial part of the
property of the Borrower or any of its Subsidiaries shall
have been entered; or an interim receiver, trustee or other
custodian of the Borrower or any of its Subsidiaries or of
all or a substantial part of the property of the Borrower or
any of its Subsidiaries shall have been appointed; or a
warrant of attachment, execution or similar process against
any substantial part of the property of the Borrower or any
of its Subsidiaries shall have been issued; and in any such
event not stayed, dismissed, bonded or discharged within
thirty (30) days of entry, appointment or issuance.
(h) Voluntary Bankruptcy; Appointment of Receiver;
etc. The Borrower or any of its Subsidiaries shall have an
order for relief entered with respect to it or commence a
voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or shall
consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall
consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a
substantial part of its property; the Borrower or any of its
Subsidiaries shall make any assignment for the benefit of
creditors or shall be unable or fail, or admit in writing
its inability, to pay its debts as such debts become due; or
the Board of Directors of the Borrower or any of its
Subsidiaries (or any committee thereof) shall adopt any
resolution or otherwise authorize action to approve any of
the foregoing.
(i) Judgments and Attachments. (i) Any money judgment
(other than a money judgment covered by insurance, but only
if the insurer has admitted liability with respect to such
money judgment), writ or warrant of attachment, or similar
process involving in any case an amount in excess of
$500,000 shall be entered or filed against the Borrower or
any of its Subsidiaries, or any of their respective assets,
and shall remain undischarged, unvacated, unbonded or
unstayed for a period in excess of thirty (30) days or in
any event later than five (5) days prior to the date of any
proposed sale thereunder or (ii) any judgment or order of
any court or administrative agency awarding material damages
shall be entered against the Borrower in any action under
the Federal securities laws seeking rescission of the
purchase or sale of, or for damages arising from the
purchase or sale of, any Subordinated Indebtedness of the
Borrower or in any action seeking reimbursement, indemni-
fication or contribution with respect to the payment of any
such claim and such judgment or order shall have become
final after exhaustion of all available appellate remedies.
(j) Dissolution. Any order, judgment or decree shall
be entered against the Borrower or any of its Subsidiaries
decreeing its involuntary dissolution or split up and such
order shall remain undischarged and unstayed for a period in
excess of sixty (60) days; or the Borrower or any of its
Subsidiaries shall otherwise dissolve or cease to exist.
(k) Change in Control. At any time a single Person or
"Group" as defined by the Commission, other than Jeffrey J.
Steiner and his "associates" (as defined in the Securities
Exchange Act), shall acquire fifty percent (50%) or more of
the stock of the Borrower (on a fully diluted basis),
directly or indirectly.
(l) Unfunded ERISA Liabilities. Any Defined Benefit
Plan maintained by the Borrower or any ERISA Affiliate shall
be terminated within the meaning of Title IV of ERISA or a
trustee shall be appointed by an appropriate United States
District Court to administer any Defined Benefit Plan of the
Borrower or the PBGC (or any successor thereto) shall
institute proceedings to terminate any such Defined Benefit
Plan or to appoint a trustee to administer any such Defined
Benefit Plan, if, as of the date of such termination,
appointment or institution of proceedings, the liability
(after giving effect to the tax consequences thereof) of the
Borrower or a Subsidiary of the Borrower or any Excluded
ERISA Affiliate to the PBGC (or any successor thereto) for
the amount of unfunded benefit liabilities (as defined in
Section 4001(a)(18) of ERISA) under the Defined Benefit Plan
exceeds (i) $500,000 in the case of a Defined Benefit Plan
of the Borrower or a Subsidiary of the Borrower, or
(ii) $2,500,000 in the case of a Defined Benefit Plan of
such Excluded ERISA Affiliate (or in the case of a
termination of a Defined Benefit Plan involving a
"substantial employer" (as defined in Section 4001(a)(2) of
ERISA), the Borrower's or any such Excluded ERISA
Affiliate's proportionate share of such excess shall exceed
(i) $250,000 in the case of the Borrower or a Subsidiary of
the Borrower, or (ii) $2,500,000 in the case of such
Excluded ERISA Affiliate) or if the aggregate of all such
liabilities for all such Defined Benefit Plans exceeds
(i) $1,000,000 in the case of all such Defined Benefit Plans
of the Borrower or a Subsidiary of the Borrower, or
(ii) $2,500,000 in the case of all such Defined Benefit
Plans of such Excluded ERISA Affiliate.
(m) Intentionally omitted.
(n) Material Adverse Change. Since March 31, 1996,
there shall have been a material adverse change in the
business, management, ownership, operations, properties,
assets, condition (financial or otherwise) or prospects of
the Borrower or any of its material Subsidiaries
individually, or the Borrower and its Subsidiaries taken as
a whole.
(o) Environmental Liabilities. The Borrower or any of
its Subsidiaries shall become subject to any Environmental
Liabilities and Costs in excess of the reserves established
therefor by the Borrower plus $5,000,000 which Environmental
Liabilities and Costs would have a material adverse impact
on the Borrower or any such Subsidiary, arising out of or
related to (i) the release of any toxic or hazardous waste,
substance or constituent or other substance into the
environment or any remedial action in response thereto, or
(ii) any violation of any environmental, health and safety
Requirements of Law.
(p) Intentionally omitted.
(q) Intentionally omitted.
(r) TFC/RHI Consolidated Liquidity. The sum, as of
any given date of determination, of (i) the amount of
consolidated Cash and Cash Equivalents of TFC and the
Borrower as of such date of determination, plus (ii) the
amount of the "Revolving Credit Availability" (as defined in
the FHC Credit Agreement) as of such date of determination
after giving effect to any requests for loans or letters of
credit received by the administrative agent under the FHC
Credit Agreement on such date of determination, minus (ii)
the amount of Cash and Cash Equivalents of TFC and the
Borrower required to secure Contractual Obligations of TFC
and the Borrower as of such date of determination shall be
less than $10,000,000.
SECTION 14.02 Intentionally omitted.
SECTION 14.03 Rights and Remedies.
(a) Acceleration. Upon the occurrence of any Event of
Default described in the foregoing subsection 14.01(g),
14.01(h) or 14.01(j), the Commitments shall automatically
and immediately terminate and the unpaid principal amount
of, and any and all accrued interest on the Loans, and all
Reimbursement Obligations shall automatically become immedi-
ately due and payable, without presentment, demand, or
protest or other requirements of any kind, all of which are
hereby expressly waived by the Borrower, and the obligation
of each Senior Lender to make any Loan hereunder and of each
Senior Lender or Issuing Bank to issue or participate in any
Letter of Credit shall thereupon terminate; and upon the
occurrence and during the continuance of any other Event of
Default, the Requisite Senior Lenders may, by written notice
to the Borrower, immediately terminate the Commitments
and/or declare all of the Loans and all Reimbursement
Obligations to be, and the same shall forthwith become,
immediately due and payable together with accrued interest
thereon, and the obligation of each Senior Lender to make
any Loan hereunder and of each Senior Lender or Issuing Bank
to issue or participate in any Letter of Credit hereunder
shall thereupon terminate.
(b) Intentionally omitted.
(c) Rescission. If at any time after acceleration of
the maturity of the Loans, the Borrower shall pay all
arrears of interest and all payments on account of principal
and Reimbursement Obligations which shall have become due
from the Borrower to the Senior Lenders and the Issuing
Banks otherwise than by acceleration (with interest on
principal and, to the extent permitted by law, on overdue
interest, at the rates specified in this Agreement) and all
Events of Default and Potential Events of Default (other
than nonpayment of principal of and accrued interest on the
Loans due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to Section 16.08, then
by written notice to the Borrower, the Requisite Senior
Lenders may elect, in the sole discretion of such Requisite
Senior Lenders, to rescind and annul the acceleration and
its consequences; but such action shall not affect any
subsequent Event of Default or Potential Event of Default or
impair any right or remedy consequent thereon. The
provisions of the preceding sentence are intended merely to
bind the Senior Lenders and the Issuing Banks to a decision
which may be made at the election of the Requisite Senior
Lenders; they are not intended to benefit the Borrower and
do not give the Borrower the right to require the Senior
Lenders to rescind or annul any acceleration hereunder, even
if the conditions set forth herein are met.
ARTICLE XV
THE ADMINISTRATIVE AGENT
SECTION 15.01 Appointment. Each Senior Lender hereby
designates and appoints the Administrative Agent as the
agent of such Senior Lender under this Agreement, the
Collateral Documents and the other Loan Documents, and each
Senior Lender hereby irrevocably authorizes, and each holder
of any Note by the acceptance thereof will be deemed
irrevocably to authorize, the Administrative Agent to take
such action on their behalf under the provisions of this
Agreement, the Collateral Documents and the other Loan
Documents and to exercise such powers as are set forth
herein or therein, together with such other powers as are
reasonably incidental thereto. The Administrative Agent
agrees to act as such on the express conditions contained in
this Article XV. The provisions of this Article XV (other
than Sections 15.07 and 15.08) are solely for the benefit of
the Administrative Agent and the Senior Lenders, and neither
the Borrower nor any Subsidiary of the Borrower shall have
any rights as a third party beneficiary of any of the
provisions hereof (other than Sections 15.07 and 15.08). In
performing its functions and duties under this Agreement,
the Administrative Agent shall act solely as the agent of
the Senior Lenders and does not assume and shall not be
deemed to have assumed any obligation toward or relationship
of agency or trust with or for the Borrower or any
Subsidiary of the Borrower. The Administrative Agent may
perform any of its duties hereunder, or under the other Loan
Documents, by or through its agents or employees.
SECTION 15.02 Nature of Duties. The Administrative
Agent shall have no duties or responsibilities except those
expressly set forth in this Agreement or in the other Loan
Documents. The duties of the Administrative Agent shall be
mechanical and administrative in nature. The Administrative
Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Senior Lender or any Issuing
Bank. Nothing in this Agreement, the Collateral Documents
or any of the other Loan Documents, expressed or implied, is
intended to or shall be construed to impose upon the
Administrative Agent any obligations in respect of this
Agreement, the Collateral Documents or any of the other Loan
Documents except as expressly set forth herein or therein.
Each Senior Lender and each Issuing Bank shall make its own
independent investigation of the financial condition and
affairs of the Borrower in connection with the making and
the continuance of the Loans hereunder and with the issuance
of the Letters of Credit and shall make its own appraisal of
the creditworthiness of the Borrower, and the Administrative
Agent shall have no duty or responsibility, either initially
or on a continuing basis, to provide any Senior Lender or
Issuing Bank with any credit or other information with
respect thereto. If the Administrative Agent seeks the
consent or approval of the Requisite Senior Lenders to the
taking or refraining from taking any action hereunder, the
Administrative Agent shall send notice thereof to each
Senior Lender. The Administrative Agent shall promptly
notify each Senior Lender at any time that the Requisite
Senior Lenders have instructed the Administrative Agent to
act or refrain from acting pursuant hereto.
SECTION 15.03 Rights, Exculpation, etc. Neither the
Administrative Agent nor any of its officers, directors,
employees or agents shall be liable to any Senior Lender or
Issuing Bank for any action taken or omitted by them
hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, except that the
Administrative Agent shall be obligated on the terms set
forth herein for performance of its express obligations
hereunder and except that no Person shall be relieved of any
liability arising solely as a result of such Person's gross
negligence or willful misconduct. The Administrative Agent
shall not be responsible to any Senior Lender or Issuing
Bank for any recitals, statements, representations or
warranties herein or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, or
sufficiency of this Agreement, any of the Collateral
Documents or any of the other Loan Documents or the
transactions contemplated hereby or thereby, or for the
financial condition of the Borrower or any of its
Subsidiaries. The Administrative Agent shall not be
required to make any inquiry concerning either the
performance or observance of any of the terms, provisions or
conditions of this Agreement, the Collateral Documents or
any of the other Loan Documents or the financial condition
of the Borrower or any of its Subsidiaries, or the existence
or possible existence of any Potential Event of Default or
Event of Default. The Administrative Agent may at any time
request instructions from the Senior Lenders with respect to
any actions or approvals which by the terms of this
Agreement or of any of the other Loan Documents the
Administrative Agent is permitted or required to take or to
grant, and if such instructions are promptly requested, the
Administrative Agent shall be absolutely entitled to refrain
from taking any action or to withhold any approval and shall
not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under
any of the Loan Documents until they shall have received
such instructions from the Requisite Senior Lenders.
Without limiting the foregoing, no Senior Lender or Issuing
Bank shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative
Agent's acting or refraining from acting under this
Agreement, the Notes, the Collateral Documents or any of the
other Loan Documents in accordance with the instructions of
the Requisite Senior Lenders.
SECTION 15.04 Reliance. The Administrative Agent
shall be entitled to rely upon any written notices,
statements, certificates, orders or other documents or any
telephone message believed by them in good faith to be
genuine and correct and to have been signed, sent or made by
the proper Person, and with respect to all matters
pertaining to this Agreement, the Collateral Documents or
any of the other Loan Documents and its duties hereunder or
thereunder, upon advice of counsel selected by it.
SECTION 15.05 Indemnification. To the extent that the
Administrative Agent is not reimbursed and indemnified by
the Borrower, the Senior Lenders will reimburse and
indemnify the Administrative Agent for and against any and
all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Administrative Agent in
any way relating to or arising out of this Agreement, the
Collateral Documents or any of the other Loan Documents or
any action taken or omitted by the Administrative Agent
under this Agreement, the Collateral Documents or any of the
other Loan Documents, in proportion to each Senior Lender's
Pro Rata Share; provided, that no Senior Lender shall be
liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful
misconduct. Without limitation of the foregoing, the Senior
Lenders hereby authorize the Administrative Agent to enter
into any indemnification agreement(s) that may be required
by the Borrower's independent certified public accountants
as a condition to access to such accountants' work papers,
books and records, and hereby agree to reimburse and
indemnify the Administrative Agent against any and all
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Administrative Agent in
connection therewith. The obligations of the Senior Lenders
under this Section 15.05 shall survive the payment in full
of the Loans and Reimbursement Obligations and the
termination of this Agreement.
SECTION 15.06 The Administrative Agent Individually.
With respect to its Pro Rata Share of the Commitments
hereunder, the Loans made by it and any Notes issued to or
held by it, the Administrative Agent shall have and may
exercise the same rights and powers hereunder and are
subject to the same obligations and liabilities as and to
the extent set forth herein for any other Senior Lender or
holder of a Note. The terms "Senior Lenders" or "Requisite
Senior Lenders" or any similar terms shall, unless the
context clearly otherwise indicates, include the
Administrative Agent in its individual capacity as Senior
Lenders or as one of the Requisite Senior Lenders. The
Administrative Agent may accept deposits from, lend money
to, and generally engage in any kind of banking, trust or
other business with the Borrower or any of its Subsidiaries
as if it were not acting as Administrative Agent pursuant
hereto.
SECTION 15.07 Successor Administrative Agents. (a)
The Administrative Agent may resign from the performance of
all its functions and duties hereunder at any time by giving
at least thirty (30) Business Days' prior written notice to
the Borrower and the Senior Lenders. Such resignation shall
take effect upon the acceptance by a successor
Administrative Agent of appointment pursuant to subsection
15.07(b) or (c) below.
(b) Upon any such notice of resignation, the Requisite
Senior Lenders shall appoint a successor Administrative
Agent which shall be satisfactory to the Borrower and shall
be an incorporated bank or trust company.
(c) If a successor Administrative Agent shall not have
been so appointed within such thirty (30) Business Day
notice period, the retiring Administrative Agent, with the
consent of the Borrower, shall then appoint a successor
Administrative Agent who shall serve as an Administrative
Agent until such time, if any, as the Requisite Senior
Lenders, with the consent of the Borrower, appoint a
successor Administrative Agent as provided above.
SECTION 15.08 Collateral Management. The Administra-
tive Agent is hereby authorized on behalf of all of the
Senior Lenders and Issuing Banks, without the necessity of
any notice to or further consent from any Senior Lender or
Issuing Bank, from time to time prior to an Event of
Default, to take any action with respect to any Collateral
or Collateral Documents, which may be necessary (i) to
perfect and maintain perfected the security interest in and
liens upon the Collateral; and (ii) to release portions of
the Collateral from the security interests and liens imposed
by the Collateral Documents in connection with any
dispositions of such portions of the Collateral permitted by
this Agreement. In the event that the Borrower desires to
sell or otherwise dispose of any assets comprising part of
the Collateral and such sale or disposition is permitted by
this Agreement, the Administrative Agent shall, upon timely
receipt from the Borrower of an Officer's Certificate of the
Borrower setting forth in reasonable detail the circum-
stances of such proposed sale or disposition (including a
description of the Collateral of the Borrower to be sold or
otherwise disposed of, the consideration to be received and
such information as may be required regarding compliance
with the relevant provisions of Article XI), the
Administrative Agent may release such portions of the
Collateral from the security interests and Liens imposed by
the Collateral Documents as may be specified by the Borrower
in order for the Borrower to consummate such proposed sale
or disposition.
ARTICLE XVI
MISCELLANEOUS
SECTION 16.01 Concerning the Collateral Documents.
Each Senior Lender and each Issuing Bank which is also a
Senior Lender consents and agrees to the terms of the
Collateral Documents and authorizes and directs the
Administrative Agent to enter into such Collateral Documents
to which the Administrative Agent is a party. Each Senior
Lender and each Issuing Bank which is also a Senior Lender
hereby agrees, and each holder of any Note, by the
acceptance thereof, will be deemed to agree, that any action
taken by the Requisite Senior Lenders in accordance with the
provisions of this Agreement or the Collateral Documents and
the exercise by the Requisite Senior Lenders of the powers
set forth herein or therein, together with such other powers
as are reasonably incidental thereto, shall be authorized
and binding upon all of the Senior Lenders and Issuing Banks
and the holders of any Note.
SECTION 16.02 Assignment of Loans; Participation in
the Facilities. (a) Each Senior Lender shall have the
right (i) at any time to contract to sell, assign, transfer
or negotiate all or any part of its Commitment and its
interest in the Obligations hereunder to one or more Senior
Lenders, commercial banks or other financial institutions
and (ii) at any time (A) upon written notice to the
Administrative Agent of its intent to do so, (1) to sell,
assign, transfer or negotiate all or any part of its
Commitment and its interest in the Obligations hereunder to
one or more Senior Lenders and (2) to sell, assign, transfer
or negotiate all or any part of its Commitment and its
interest in the Obligations hereunder to one or commercial
banks or other financial institutions (other than Senior
Lenders), if such sale, assignment, transfer or negotiation
consists of (i) an assignment by such Senior Lender of all
of its rights and obligations with respect to this
Agreement, (ii) an assignment by such Senior Lender of all
of its rights and obligations with respect to its
Commitment, if the aggregate outstanding principal balance
of the Loans made by such Senior Lender is $5,000,000 or
less, and (B) with respect to any such sale, assignment,
transfer or negotiation which is not otherwise covered by
clause (A) above, with the prior consent of the
Administrative Agent and the Borrower (which consents shall
not be unreasonably delayed or withheld), to sell, assign,
transfer or negotiate its Commitment and its interest in the
Obligations of the Borrower, to one or more commercial banks
or other financial institutions (other than Senior Lenders);
provided, that, any such sale, assignment, transfer or
negotiation under this clause (B) by a Senior Lender of any
part of its Commitment and its interest in the Obligations
hereunder to a commercial bank or other institution (other
than a Senior Lender) shall be in a minimum amount of
$5,000,000. In the case of any sale, assignment, transfer
or negotiation by any Senior Lender of all or part of its
Commitment and its interest in the Obligations hereunder
authorized under this Section 16.02, (i) such Senior Lender
shall promptly (A) notify the Borrower thereof and deliver,
or cause to be delivered, to the Borrower a statement
executed by the assignee, transferee or recipient (other
than a Senior Lender) that such assignee, transferee or
recipient is incorporated in, or organized under, the laws
of the United States of America or, if it is not so
organized or incorporated, a duly completed copy of United
States Internal Revenue Service Form 1001 or 4224 or any
successor form thereto and (B) pay to the Administrative
Agent a fee in the amount of $3,000 in consideration of its
processing such assignment and (ii) the assignee, transferee
or recipient shall have, to the extent of such sale,
assignment, transfer or negotiation, the same rights,
benefits and obligations as it would if it were a Senior
Lender hereunder and a holder of a Note, including, without
limitation, (A) the right to approve or disapprove actions
which, in accordance with the terms hereof, require the
approval of the Senior Lenders or Requisite Senior Lenders,
and (B) the right to enter into Secured F/X Contracts and
Secured Interest Rate Contracts.
(b) Each Senior Lender may grant participations in all
or any part of its Commitment, the Loans made by it
hereunder, or the Notes held by it or the Letters of Credit
issued by it to one or more other Persons; provided, that
(i) any such disposition shall not, without the consent of
the Borrower, require the Borrower to file a registration
statement with the Commission or apply to qualify the Loans
or the Notes under the "Blue Sky" law of any state; (ii) the
applicable participation agreement shall contain provisions
requiring ratable sharing by such participant with all
Senior Lenders of any funds obtained by such participant as
a result of the exercise by such participant of any right of
counterclaim, set-off, banker's lien or similar right with
respect to any Obligations, (iii) such Senior Lender shall
make and receive all payments for the account of its
participant and shall retain exclusively, and shall continue
to exercise exclusively, all rights of approval and
administration available hereunder with respect to such
Senior Lender's Commitment and Pro Rata Share of the Loans
and Letters of Credit, even after giving effect to the sale
of any such participation, and such Senior Lender shall make
such arrangements with its participants as may be necessary
to accomplish the foregoing, except that any such
participant may be given the right to require such Senior
Lender to vote such participant's interest with respect to
any amendment, modification or waiver of any provision
relating to the principal amount of the Loans and Letters of
Credit, the time or amount of any mandatory prepayments
pursuant to Section 4.02, the maturity dates of the Loans
and the Reimbursement Obligations, the interest rates borne
by the Loans or the amount of fees payable hereunder, in any
case by which such participant would be affected, and with
respect to the release of all or substantially all of the
Collateral. No holder of a participation in all or any part
of the Loans or the Notes shall be a "Senior Lender" for any
purpose under this Agreement; provided, that subject to the
following sentence, each holder of a participation shall
have the rights of a Senior Lender (including any right to
receive payment) under Sections 6.10 and 6.11 and
subsections 3.14(f) and 3.14(h). The right of each holder
of a participation to receive payment under Sections 6.10
and 6.11 and subsections 3.14(f) and 3.14(h) shall be
limited to the lesser of (i) the amounts actually incurred
by such holder for which payment is provided under said
Sections and (ii) the amounts that would have been payable
under said Sections by the Borrower to the Senior Lender
granting the participation to such holder, had such
participation not been granted.
(c) It is expressly agreed that, in connection with
offers for the sale and transfer of all or any part of any
Senior Lender's Commitment or any Senior Lender's interest
in any of the Obligations or any participation in any of the
Loans or the Notes or the Letters of Credit pursuant to this
Section 16.02, each Senior Lender may provide such informa-
tion pertaining to the Borrower or any Affiliate of the
Borrower as such Senior Lender may deem appropriate.
(d) Notwithstanding the foregoing provisions of this
Section 16.02 and the provisions of subsection 16.02(e)
below, each Senior Lender may at any time (i) sell, assign,
transfer, or negotiate all or any part of the Loans or its
interest in the L/C Subfacility to any Affiliate of such
Senior Lender and (ii) create a security interest in all or
any portion of its rights hereunder (including, without
limitation, the Loans owing to it and the Note held by it)
in favor of any Federal Reserve Bank in accordance with
Regulation A of the Board of Governors of the Federal
Reserve System; provided, that such Senior Lender and not
the Affiliate to whom such disposition has been made shall
be considered a "Senior Lender" for purposes of
Section 16.08, but such Affiliate shall be considered a
"Senior Lender" for purposes of Sections 16.06 and 16,07;
and provided, further, that the Borrower shall not incur any
additional expenses solely as a result of such sale,
assignment, transfer or negotiation.
(e) No Senior Lender shall, as between the Borrower
and that Senior Lender, be relieved of any of its
obligations hereunder as a result of any granting of
participations in all or any part of the Loans or the Notes
or the L/C Subfacility of such Senior Lender or other
Obligations owed to such Senior Lender.
(f) Upon its receipt of an Assignment Agreement
executed by an assigning Senior Lender and an assignee,
together with the payment of the aforesaid $3,000 fee and,
in the event the assignment is an assignment of all of the
assigning Senior Lender's Loans and Commitment, the Note
evidencing such assigning Senior Lender's Loans, the
Administrative Agent shall, if such Assignment Agreement has
been completed and is in substantially the form of Exhibit
A, (i) accept such Assignment Agreement, (ii) record the
information contained therein, and (iii) give prompt notice
thereof to the Borrower. Within five (5) Business Days
after the Borrower's receipt of such notice, the Borrower
shall execute and deliver to the Administrative Agent, a
Note payable to the order of such assignee in an amount
corresponding to the interest in the Loans acquired by it
pursuant to such Assignment Agreement, which Note, if the
assigning Senior Lender has retained no interest in the
Loans, shall be executed and delivered in exchange for the
assigning Senior Lender's Note. Upon exchange of any Note
issued to the assignee Senior Lender for the Note of an
assigning Senior Lender as aforesaid, the surrendered Note
shall be cancelled by the Administrative Agent and returned
to the Borrower.
SECTION 16.03 Expenses.
(a) Generally. The Borrower agrees upon demand to
pay, or reimburse the Administrative Agent for, all the
Administrative Agent's reasonable internal and external
audit, legal, appraisal, valuation and investigation
expenses and for all other reasonable out-of-pocket costs
and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements
of attorneys, including allocated costs of internal counsel,
legal assistants, auditors, accountants, appraisers,
investment bankers, printers, insurance and environmental
advisers, and other consultants and agents) incurred by the
Administrative Agent in connection with (A) its own audit
and investigation of the Borrower and its Subsidiaries; (B)
the negotiation, preparation and execution of this
Agreement, the Collateral Documents to which the Borrower is
a party and the other Loan Documents to which the Borrower
is a party, any amendments, modifications or waivers thereto
or thereof, the satisfaction or attempted satisfaction of
the conditions set forth in Article VII or Section 5.02 and
the making of the Loans to the Borrower hereunder; (C) the
creation, perfection, protection or satisfaction of the
Administrative Agent's Liens on the Collateral of the
Borrower (pursuant to the terms of the Collateral Documents
to which the Administrative Agent is a party or otherwise)
and the search for other liens (including, without
limitation, fees and expenses for title and lien searches,
local counsel in various jurisdictions, survey costs, title
commitment and insurance fees, filing and recording fees and
taxes, duplication costs and corporate search fees); and (D)
the protection, collection or enforcement of any of the
Obligations or the Collateral of the Borrower. In addition,
the Borrower shall also pay, or reimburse the Administrative
Agent, the Issuing Banks, and the Senior Lenders for all
out-of-pocket costs and expenses, including, without
limitation, reasonable attorneys' and legal assistants' fees
(including allocated costs of internal counsel, and costs of
settlement) incurred by the Administrative Agent, any
Issuing Bank or Senior Lender prior to the occurrence of an
Event of Default in commencing, defending or intervening in
any litigation or in filing a petition, complaint, answer,
motion or other pleading in any legal proceeding relating to
the Borrower and arising out of or in connection with any of
the Loan Documents.
(b) After Default. The Borrower further agrees to
pay, or reimburse the Administrative Agent, the Issuing
Banks and the Senior Lenders for all out-of-pocket costs and
expenses, including, without limitation, reasonable
attorneys' and legal assistants' fees (including allocated
costs of internal counsel, and costs of settlement) incurred
by the Administrative Agent, any Issuing Bank or Senior
Lender after the occurrence of an Event of Default (i) in
enforcing any Obligation or in foreclosing against the
Collateral or exercising or enforcing any other right or
remedy available by reason of such Event of Default; (ii) in
connection with any refinancing or restructuring of the
credit arrangements provided under this Agreement in the
nature of a "work-out" or of any insolvency or bankruptcy
proceeding; (iii) in commencing, defending or intervening in
any litigation or in filing a petition, complaint, answer,
motion or other pleading in any legal proceeding relating to
the Borrower; (iv) in taking any other action in or with
respect to any suit or proceeding (bankruptcy or otherwise)
relating to the Borrower; (v) in protecting, preserving,
collecting, leasing, selling, taking possession of, or
liquidating any of the Collateral; or (vi) attempting to
enforce or enforcing any security interest in any of the
Collateral or any other rights under the Collateral
Documents.
SECTION 16.04 Indemnity. The Borrower agrees to
defend, protect, indemnify, and hold harmless the Senior
Lenders, the Issuing Banks and the Administrative Agent and
their respective officers, directors, employees, attorneys
and agents (collectively, the "Indemnitees") from and
against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature
whatsoever (including, without limitation, the reasonable
fees and disbursements of counsel for each such Indemnitee
in connection with any investigative, administrative or
judicial proceeding, whether or not any such Indemnitee
shall be designated a party thereto), imposed on, incurred
by, or asserted against any such Indemnitees (whether
direct, indirect or consequential and whether based on any
federal or state laws or other statutory regulations,
including, without limitation, securities, environmental and
commercial laws and regulations, under common law or at
equitable cause, or on contract or otherwise) in any manner
relating to or arising out of this Agreement, the 1992
Credit Agreement or any predecessor agreement thereto, the
Collateral Documents or other Loan Documents, or any act,
event or transaction related or attendant thereto, the
Commitments, the making of and participation in the Loans is
the obligor and the issuance of and participation in Letters
of Credit issued hereunder, the entering into of Secured F/X
Contracts and Secured Interest Rate Contracts with the
Borrower, the management of such Loans or Letters of Credit
(including any liabilities or claims under Federal, state or
local environmental laws or regulations), or the use or
intended use of the proceeds of such Loans or Letters of
Credit hereunder, including, without limitation, any and all
liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against the Administrative Agent,
the Senior Lenders, the Issuing Banks, or any of them, in
connection with any indemnification agreement(s) which may
be required by the Borrower's independent certified public
accountants as a condition to access to such accountant's
work papers, books and records (collectively, the
"Indemnified Matters"); provided, that the Borrower shall
have no obligation to an Indemnitee hereunder with respect
to (i) matters for which such Indemnitee has been
compensated pursuant to Section 6.10 or (ii) Indemnified
Matters caused by or resulting from the willful misconduct
or gross negligence of such Indemnitee. An Indemnitee will
promptly notify the Borrower of the commencement of any
legal proceedings which may give rise to an Indemnified
Matter, shall permit the Borrower to participate in the
defense of the Indemnitee in such legal proceeding and shall
not settle or compromise any Indemnified Matter unless the
Borrower shall consent to such settlement or compromise. To
the extent that the Borrower's undertaking to indemnify, pay
and hold harmless set forth herein may be unenforceable
because it is violative of any law or public policy, the
Borrower shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law to the
payment and satisfaction of the Indemnified Matters and the
Indemnitees.
SECTION 16.05 Change in Accounting Principles. Except
as otherwise provided herein, if any changes in accounting
principles from those used in the preparation of the
financial statements referred to in Section 8.20 are
hereafter occasioned by the promulgation of rules,
regulations, pronouncements and opinions by or required by
the Financial Accounting Standards Board or the American
Institute of Certified Public Accountants (or successors
thereto or agencies with similar functions) which result in
a change in the method of calculation of any of the
financial covenants, standards or terms found in Article X,
Article XI, the parties hereto agree to enter into
negotiations in order to amend such provisions so as to
equitably reflect such changes with the desired result that
the criteria for evaluating the Borrower's financial
condition shall be the same after such changes as if such
changes had not been made.
SECTION 16.06 Set-Off. Subject to the rights of the
Senior Secured Creditors with respect to any Collateral in
which the Borrower has an interest, and in addition to any
Liens granted by the Borrower to the Administrative Agent or
any Senior Lender or Issuing Bank and any rights now or
hereafter granted under applicable law and not by way of
limitation of any such Lien or rights, upon the occurrence
and during the continuance of any Event of Default, each
Senior Lender (including each Person to whom such Senior
Lender has granted a participation pursuant to subsection
16.02(b)) and each subsequent holder of any Note and each
Issuing Bank, is hereby authorized by the Borrower at any
time or from time to time, without notice to the Borrower,
or to any other Person (any such notice being hereby
expressly waived) to set off and to appropriate and to apply
any and all deposits of the Borrower (general or special,
including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured but
not including trust accounts) and any other Indebtedness at
any time held or owing by that Senior Lender, participant or
subsequent holder or that Issuing Bank to or for the credit
or the account of the Borrower against and on account of the
Obligations of the Borrower to that Senior Lender or that
subsequent holder or the Issuing Bank including, but not
limited to, all Loans made and Letters of Credit issued and
all claims against the Borrower of any nature or description
arising out of or connected with this Agreement or the
Notes, irrespective of whether or not (i) that Senior Lender
(or participant) or that subsequent holder or that Issuing
Bank shall have made any demand hereunder or (ii) the
Requisite Senior Lenders shall have declared the principal
of and interest on such Loans and Notes and other amounts
due from the Borrower hereunder to be due and payable as
permitted by Article XIV and although such obligations and
liabilities, or any of them, may be contingent or unmatured.
Each Senior Lender and each Issuing Bank agrees that it
shall not, without the express consent of the Administrative
Agent, and that it shall, to the extent it is lawfully
entitled to do so, upon the request of the Requisite Senior
Lenders, exercise its set-off rights hereunder against any
accounts of the Borrower now or hereafter maintained with
such Senior Lender or the Issuing Bank.
SECTION 16.07 Ratable Sharing. Subject to subsection
4.06(b), the Senior Lenders and each subsequent holder by
acceptance of a Note and each Issuing Bank agree among
themselves that (a) with respect to all amounts received by
them which are applicable to the payment of the Obligations,
equitable adjustment will be made so that, in effect, all
such amounts will be shared among them ratably and in the
order of priority set forth in Section 4.06(a), whether
received by voluntary payment, by the exercise of the right
of set-off or banker's lien, by counterclaim or cross action
or by the enforcement of any or all of the Obligations or
any rights with respect to the Collateral, (b) if any of
them shall exercise any right of counterclaim, set-off,
banker's lien or similar right with respect to any
Obligations owed to that Senior Lender or holder or that
Issuing Bank, as the case may be, such Person shall apply
the amount recovered as a result of the exercise of such
right first to the payment of any Loans made to the extent
lawful, and thereafter to all amounts otherwise owed by the
Borrower to it, and (c) notwithstanding anything to the
contrary contained herein, if, following the occurrence and
during the continuance of an Event of Default, any of them
shall receive, whether received by voluntary payment, by the
exercise of the rights of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any or
all of the Obligations or any rights with respect to the
Collateral, payment of a proportion of the aggregate amount
of the Obligations held by it, which is greater than the
proportion received by any other of them, the one receiving
such proportionately greater payment shall purchase, without
recourse or warranty, an undivided interest and
participation (which it shall be deemed to have done
simultaneously upon the receipt of such payment) in the
Obligations of such Borrower owed to the others so that all
such recoveries with respect to the Obligations shall be
applied ratably and in the order of the priority set forth
in Section 4.06; provided, that if all or part of such
proportionately greater payment received by the purchasing
party is thereafter recovered from it, those purchases shall
be rescinded and the purchase prices paid for such
participations shall be returned to that party to the extent
necessary to adjust for such recovery, but without interest
except to the extent the purchasing party is required to pay
interest in connection with such recovery.
SECTION 16.08 Amendments and Waivers. (a) No
amendment or modification of any provision of this Agreement
or of the Notes shall be effective without the written
agreement of the Borrower and the Requisite Senior Lenders,
and no termination or waiver of any provision of this
Agreement or of the Notes, or consent to any departure by
the Borrower therefrom, shall in any event be effective
without the written concurrence of the Requisite Senior
Lenders, which the Requisite Senior Lenders shall have the
right to grant or withhold at their sole discretion; except
that
(i) any amendment, modification, or waiver of any
provision relating to (A) any renewal of the Commitments,
(B) the principal amount of the Loans made and Letters of
Credit issued, (C) the manner in which the Pro Rata Shares
of the Senior Lenders are calculated, (D) the maturity dates
of the Loans or the Reimbursement Obligations (other than as
a result of a change in the calculation or application of
prepayments, which shall only require Requisite Senior
Lender consent), (E) any reduction of the interest rates
borne by the Loans, (F) the dates interest is payable with
respect to the Loans, (G) any reduction of the amount of
fees payable to the Senior Lenders hereunder or the dates on
which such fees are payable, (H) the provisions contained in
Section 5.02 and Section 5.03, (I) the conditions set forth
in Article VII with respect to the making of Loans and the
issuance of Letters of Credit, and (J) the maximum duration
of Interest Periods shall be effective only if evidenced by
a writing signed by or on behalf of all Senior Lenders;
(ii) any amendment, modification or waiver of Section
11.18 (other than subsection 11.18(k)), Section 11.19(e),
clause (iii) of the proviso to the first paragraph of
Section 14.01 and subsection 14.01(p) (other than
subsections 14.01(p)(i) and 14.01(p)(ii)(K)), shall be
effective only if evidenced by a writing signed by or on
behalf of the Requisite Senior Lenders; and
(iii) any amendment, modification, or waiver of any
provision relating to (A) the definitions of "Requisite
Senior Lenders", (B) the maximum duration of Interest
Periods, (C) subsections 14.01(a), (g), (h) and (j) and this
Section 16.08, and (D) the number of Senior Lenders of any
Borrower or required to take any action hereunder (E) the
release of all or substantially all of the Collateral, shall
be effective only if evidenced by a writing signed by or on
behalf of all Senior Lenders.
No amendment, modification, termination or waiver of any
provision of any Note (other than provisions included
therein by cross-reference to this Agreement the amendment,
modification, termination or waiver of which is otherwise
governed by the terms of this Agreement) shall be effective
without the written concurrence of the holder of that Note.
No amendment, modification, termination, or waiver of any
provision of Article XV hereof or any other provision
identifying or referring to the Administrative Agent shall
be effective without the written concurrence of the
Administrative Agent. The Administrative Agent may, with
the concurrence of any of the Senior Lenders, but shall have
no obligation to, execute amendments, modifications, waivers
or consents on behalf of that Senior Lender. Any waiver or
consent shall be effective only in the specific instance and
for the specific purpose for which it was given. No notice
to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar
or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with
this Section 16.08 shall be binding on each holder of the
Notes at the time outstanding, each future holder of the
Notes, and, if signed by the Borrower, on the Borrower.
(b) Notwithstanding anything herein to the contrary,
in the event that the Borrower shall have requested, in
writing, that any Senior Lender agree to an amendment,
modification, waiver or consent with respect to any
particular provision or provisions of this Agreement, and
such Senior Lender shall have failed to state, in writing,
that it either agrees or disagrees (in full or in part) with
all such requests (in the case of its statement of
agreement, subject to satisfactory documentation and such
other conditions it amy specify) within thirty (30) days of
such request, then such Senior Lender hereby irrevocably
authorizes the Administrative Agent to agree or disagree, in
full or in part, and in the Administrative Agent's sole
discretion, to such requests on behalf of such Senior Lender
as such Senior Lender's attorney-in-fact and to execute and
deliver any writing approved by the Administrative Agent
which evidences such agreement as such Senior Lender's duly
authorized agent for such purposes.
SECTION 16.09 Independence of Covenants. All
covenants hereunder shall be given independent effect so
that if a particular action or condition is not permitted by
any of such covenants, the fact that it would be permitted
by an exception to, or be otherwise within the limitations
of, another covenant shall not avoid the occurrence of an
Event of Default or Potential Event of Default if such
action is taken or condition exists.
SECTION 16.10 Notices. Unless otherwise specifically
provided herein, any notice or other communication herein
required or permitted to be given shall be in writing and
may be personally served, telecopied, telexed or sent by
courier service or United States mail and shall be deemed to
have been given when delivered in person or by courier
service, upon receipt of a telecopy or telex or four (4)
Business Days after deposit in the United States mail
(registered or certified, with postage prepaid and properly
addressed). Notices to the Administrative Agent shall not
be effective until received by the Administrative Agent.
For the purposes hereof, the addresses of the parties hereto
(until notice of a change thereof is delivered as provided
in this Section 16.10) shall be as set forth below each
party's name on the signature pages hereof (or, in the case
of a Senior Lender which became a party hereto pursuant to
Subsection 16.02(a), on the signature page of the Assignment
Agreement pursuant to which such Senior Lender became a
Senior Lender); provided, that Borrower shall not be
required to send copies of notices given by the Borrower
under Article III, IV, or V to any Person designated to
receive copies of notice on the signature pages hereof.
SECTION 16.11 Survival of Warranties and Certain
Agreements. All agreements, representations and warranties
made herein shall survive the execution and delivery of this
Agreement, the Notes and the other Loan Documents, the
making and repayment of the Loans and issuance and discharge
of Letters of Credit hereunder.
SECTION 16.12 Failure or Indulgence Not Waiver;
Remedies Cumulative. No failure or delay on the part of the
Administrative Agent, any Senior Lender, any holder of a
Note or any Issuing Bank in the exercise of any power, right
or privilege under this Agreement, any of the Collateral
Documents or any of the other Loan Documents shall impair
such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or
privilege preclude any other or further exercise thereof or
of any other right, power or privilege. All rights and
remedies existing under this Agreement, the Collateral
Documents and the other Loan Documents are cumulative to and
not exclusive of any rights or remedies otherwise available.
SECTION 16.13 Marshalling; Payments Set Aside.
Neither any Senior Lender nor the Administrative Agent shall
be under any obligation to marshall any assets in favor of
the Borrower or any other party or against or in payment of
any or all of the Obligations. To the extent that the
Borrower makes a payment or payments to the Administrative
Agent or the Senior Lenders, or the Administrative Agent or
any Senior Lender enforces its security interests or
exercises its rights of setoff, and such payment or payments
or the proceeds of such enforcement or setoff or any part
thereof are subsequently invalidated, declared to be fraudu-
lent or preferential, set aside and/or required to be repaid
to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the
obligation or part thereof originally intended to be
satisfied, and all Liens, rights and remedies therefor,
shall be revived and continued in full force and effect as
if such payment had not been made or such enforcement or
set-off had not occurred.
SECTION 16.14 Severability. In case any provision in
or obligation under this Agreement or the Notes or the
Collateral Documents or the other Loan Documents shall be
invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or
obligation in any other jurisdiction, shall not in any way
be affected or impaired thereby.
SECTION 16.15 Obligations Several. The obligation of
each Senior Lender is several, and no Senior Lender shall be
responsible for the obligation or Commitment of any other
Senior Lender hereunder. Nothing contained in this
Agreement and no action taken by any Senior Lender pursuant
hereto shall be deemed to constitute the Senior Lenders to
be a partnership, an association, a joint venture or any
other kind of entity.
SECTION 16.16 Headings. Article, section and
subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 16.17 Governing Law. This Agreement and the
Notes shall be governed by, and shall be construed and
enforced in accordance with, the law of the State of New
York.
SECTION 16.18 Limitation of Liability. No claim may
be made by the Borrower or any Senior Lender against the
Administrative Agent or any other Senior Lender or the
Affiliates, directors, officers, employees, attorneys or
agents of the Administrative Agent or any other Senior
Lender for any special, indirect, consequential or punitive
damages in respect of any claim for breach of contract
arising out of or related to the transactions contemplated
by this Agreement, or any act, omission or event occurring
in connection therewith; and the Borrower and each Senior
Lender hereby waives, releases and agrees not to sue upon
any claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
SECTION 16.19 Successors and Assigns; Subsequent
Holders of Notes. This Agreement, the Collateral Documents
and the other Loan Documents shall be binding upon the
parties thereto and their respective successors and assigns
and shall inure to the benefit of the parties thereto and,
to the extent that any Senior Lender is a party thereto, to
the successors and permitted assigns of such Senior Lender.
The terms and provisions of this Agreement shall inure to
the benefit of any assignee or transferee of the Notes, and
in the event of such transfer or assignment, the rights and
privileges herein conferred upon the Senior Lenders shall
automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions hereof.
Neither the Borrower's rights nor any interest therein
hereunder may be assigned without the written consent of all
of the Senior Lenders.
SECTION 16.20 Consent to Jurisdiction and Service of
Process; Waiver of Jury Trial; Bankruptcy Venue. (a) All
judicial proceedings brought against the Borrower with
respect to this Agreement or any Note may be brought in any
state or federal court of competent jurisdiction in the
State of New York, and by execution and delivery of this
Agreement, the Borrower accepts for itself and in connection
with its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any final judgment
rendered thereby in connection with this Agreement from
which no appeal has been taken or is available. The
Borrower irrevocably designates and appoints TFC as its
agent to receive on its behalf service of all process in any
such proceedings in any such court, such service being
hereby acknowledged by the Borrower to be effective and
binding service in every respect. The Borrower irrevocably
consents to the service of process of any of the
aforementioned courts in any such action or proceeding by
the mailing of copies thereof by registered or certified
mail, postage prepaid, to its notice address specified
pursuant to Section 16.10, such service to become effective
ten (10) days after such mailing.
(b) THE BORROWER IRREVOCABLY WAIVES TRIAL BY JURY AND
ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
OF THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON
CONVENIENS WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH
JURISDICTION. Nothing herein shall affect the right to
serve process in any other manner permitted by law or shall
limit the right of the Administrative Agent or any Senior
Lender to bring proceedings against the Borrower in the
courts of any other jurisdiction.
SECTION 16.21 Counterparts; Effectiveness; Inconsis-
tencies. This Agreement shall become effective and the 1992
Credit Agreement shall be of no further effect with respect
to the Borrower and the Senior Lenders on the Closing Date.
This Agreement and any amendments, waivers, consents, or
supplements may be executed in counterparts, each of which
when so executed and delivered shall be deemed an original,
but all such counterparts together shall constitute but one
and the same instrument. This Agreement, the Collateral
Documents and the other Loan Documents shall be construed to
the extent reasonable to be consistent one with the other,
but to the extent that the terms and conditions of this
Agreement are actually inconsistent with the terms and
conditions of any Collateral Document or any other Loan
Document, this Agreement shall govern.
SECTION 16.22 Performance of Obligations. The
Borrower agrees that the Administrative Agent, the Senior
Lenders and the Issuing Banks, or any one or more of them,
may, but shall have no obligation to, make any payment or
perform any act required of the Borrower under the Loan
Documents to which the Borrower is a party or any of them,
or take any other action which such party in its reasonable
discretion deems necessary or desirable to protect or
preserve the Collateral in which the Borrower has an
interest, including, without limitation, any action to
(i) pay or discharge taxes, liens, security interests or
other encumbrances levied or placed on or threatened against
any such Collateral and (ii) effect any repairs or obtain
any insurance called for by the terms of any of the Loan
Documents and to pay all or any part of the premiums
therefor and the costs thereof.
SECTION 16.23 Intentionally omitted.
SECTION 16.24 Replacement of Certain Senior Lenders.
In the event a Senior Lender ("Affected Lender") shall have:
(i) failed to fund its Pro Rata Share of any Loans
requested by the Borrower which such Senior Lender is
obligated to fund under the terms of this Agreement and
which such failure has not been cured, (ii) failed to issue
a Letter of Credit requested hereunder which such Senior
Lender is obligated to issue as an Issuing Bank under the
terms of this Agreement, (iii) has requested compensation
from the Borrower under Sections 6.10 or 6.11 to recover
increased costs incurred by such Senior Lender which are not
being incurred generally by the other Senior Lenders, or
(iv) delivered a notice pursuant to Section 3.14(e) claiming
that such Senior Lender is unable to extend Eurodollar Rate
Loans to the Borrower for reasons not generally applicable
to the other Senior Lenders, then, in any such case, the
Borrower or the Administrative Agent may make written demand
on such Affected Lender (with a copy to the Administrative
Agent in the case of a demand by the Borrower and a copy to
the Borrower in the case of a demand by the Administrative
Agent) for the Affected Lender to assign, and such Affected
Lender shall assign pursuant to one or more duly executed
Assignment Agreements five (5) Business Days after the date
of such demand, to one or more assignees which the Borrower
or the Administrative Agent, as the case may be, shall have
engaged for such purpose, all of such Affected Lender's
rights and obligations under this Agreement (including,
without limitation, its Commitment, all Loans owing to it,
all of its participation interests in existing Letters of
Credit, and its obligation to participate in additional
Letters of Credit hereunder) in accordance with this Section
16.24. Further, with respect to such assignment:
(A) the Borrower shall have taken, or arranged for,
one or more of the following actions (as the Borrower may
elect in respect of each such Letter of Credit) with respect
to each outstanding Letter of Credit with respect to which
the Affected Lender is the Issuing Bank:
(I) the Borrower shall have provided the Affected
Lender with Cash Collateral in an amount equal to the
aggregate undrawn face amount of such Letter of Credit (such
Cash Collateral to be governed by terms and conditions as
shall be mutually agreed to by such Borrower and such
Affected Lender); or
(II) the beneficiary or beneficiaries of such Letter
of Credit shall have surrendered such Letter of Credit in
exchange for the issuance of a substitute Letter of Credit
by an Issuing Bank other than the Affected Lender or a
substitute letter of credit by another Person (not a Senior
Lender) otherwise qualifying as an assignee; or
(III) the Borrower shall have arranged for a letter of
credit with respect to such Letter of Credit (v) to be
issued by an Issuing Bank other than the Affected Lender or
another Person (not a Senior Lender) otherwise qualifying as
an assignee, (w) naming such Affected Lender as beneficiary
thereof, (x) in a face amount equal to the aggregate undrawn
face amount of such Letter of Credit, (y) having the same
expiry date (plus ten (10) days) as such Letter of Credit
issued by such Affected Lender and (z) becoming effective on
the date of replacement of the Affected Lender; or
(IV) such other arrangement in respect of such Letter
of Credit as shall be mutually acceptable to the Borrower
and such Affected Lender; and
(B) the Affected Lender shall have concurrently
received, in Cash, all amounts owed to the Affected Lender
hereunder or under any other Loan Document, including,
without limitation, the aggregate outstanding principal
amount of the Loans owed to such Senior Lender, together
with accrued interest thereon through the date of such
assignment.
Upon the replacement of any Affected Lender pursuant to this
Section 16.27, (x) each Letter of Credit issued by such
Affected Lender shall cease to be a Letter of Credit under
this Agreement, shall cease to have any participation in,
entitlement to, or other right to share in the security
interests and liens of the Administrative Agent and the
Senior Lenders in the Collateral and shall no longer be
subject to the participation provisions of Section 5.05, all
of which participations shall be deemed to have terminated
and been repurchased by the Issuing Banks hereunder and (y)
the provisions of Section 4.06(b) shall continue to apply
with respect to Loans which are then outstanding with
respect to which the Affected Lender failed to fund its Pro
Rata Share and which failure has not been cured.
SECTION 16.25 No Default Under 1992 Credit Agreement.
Notwithstanding anything to the contrary contained herein or
in the 1992 Credit Agreement, the Administrative Agent and
each of the Senior Lenders hereby acknowledge and agree that
satisfaction of any of the conditions precedent set forth in
Article VII by the Borrower, including, without limitation
the transactions described in subsections 7.02(b) and
7.02(c), shall not constitute an Event of Default.
IN WITNESS WHEREOF, this Agreement has been duly
executed on the dates set forth below.
RHI HOLDINGS, INC.
By: Karen L. Schneckenburger
Title: Treasurer
Notice Address:
300 West Service Road
Chantilly, Virginia 22021
Attn: Michael T. Alcox
<PAGE>
CITICORP NORTH AMERICA,
INC., as Administrative
Agent and as
a Senior Lender
By: Colin M. Cohen
Managing Director
Notice Address:
Citicorp North America, Inc.
200 South Wacker Drive
Chicago, Illinois 60606
Attn: Colin M. Cohen
With copies to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attn: DeVerille A. Huston
Eurodollar Affiliate:
Citibank, N.A.
Pro Rata Share Commitment
100% $4,250,000
=================================================================
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of July 26, 1996
among
FAIRCHILD HOLDING CORP.
as U.S. Borrower
KAYSEL
d/b/a/ Fairchild Finance Company
as U.K. Borrower
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS ISSUING BANKS
CITICORP USA, INC.
as Administrative Agent
and
NATIONSBANK, N.A.
as Documentation Agent
=================================================================<PAGE>
ARTICLE I
DEFINITIONS
1.01. Certain Defined
2
1.02. Computation of Time Periods
35
1.03. Accounting Terms
35
1.04. Other Terms
36
1.05. Dollar Equivalents
36
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01 Revolving Credit Facilities
37
2.02. General Terms
38
2.03. Authorized Officers and Administrative Agents On
41
2.04. Use of Proceeds of Loans
42
ARTICLE III LETTERS OF CREDIT3.01. Letters of Credit
43
3.02. Transitional Provisions
50
3.03. Obligations Several
50
ARTICLE IV PAYMENTS AND PREPAYMENTS 4.01 Prepayments; Reductions in
Commitments.51
4.02. Payments
53
4.03. Promise to Repay; Evidence of Indebtedness
57
4.04. Proceeds of Collateral; Concentration Account
Arrangements
58
4.05. Cash Collateral Account
60
4.06. Post-Default Withdrawals from the Concentration
Account and Cash Collateral Account
61
ARTICLE V
INTEREST AND FEES 5.01. Interest on the Loans and other Obligations
63
5.02. Special Provisions Governing Eurocurrency Rate Loans
65
5.03. Fees
68
<PAGE>
ARTICLE VI CONDITIONS TO LOANS AND LETTERS OF CREDIT 6.01.
Conditions Precedent to the Initial Loans and Letters of Credit
70
6.02. Conditions Precedent to All Loans and Letters of Credit
72
6.03. Conditions Precedent to Initial U.K. Borrower Loans
73
ARTICLE VII
REPRESENTATIONS AND WARRANTIES 7.01
Representations and Warranties of the Borrowers
75
ARTICLE VIII REPORTING COVENANTS
8.01. Financial Statements; Communications with Accountants
85
8.02. Events of Default
87
8.03. Lawsuits.
88
8.04. Declaration of Dividends and Other Distributions; Intercompany
Loans 88
8.05. TFC/RHI Liquidity
89
8.06. Environmental Notices
89
8.07. Other Reports
90
8.08. Other Information
90
8.09. Borrowing Base Certificates
90
ARTICLE IX AFFIRMATIVE COVENANTS
9.01. Corporate Existence, Etc
91
9.02. Corporate Powers; Conduct of Business
91
9.03. Compliance with Laws, Etc
91
9.04. Payment of Taxes and Claims; Tax Consolidation
91
9.05. Insurance
92
9.06. Inspection of Property; Books and Records; Discussions
92
9.07. Insurance and Condemnation Proceeds
93
9.08. ERISA Compliance
94
9.09. Foreign Employee Benefit Plan Compliance
94
9.10. Collection Accounts
94
9.11. Maintenance of Property
94
9.12. Condemnation
94
9.13. Tax Allocation Agreement
94
9.14. Performance of Material Contracts
95
9.15. Further Assurances
95
<PAGE>
ARTICLE X NEGATIVE COVENANTS
10.01. Indebtedness
96
10.02. Sales of Assets
98
10.03. Liens
98
10.04. Investments
99
10.05. Accommodation Obligations
100
10.06. Restricted Junior Payments
101
10.07. Conduct of Business; Accounting and Reporting Practices
102
10.08. Transactions with Shareholders and Affiliates
102
10.09. Restriction on Fundamental Changes
103
10.10. Sales and Leasebacks
103
10.11. Margin Regulations; Securities Laws
103
10.12. ERISA104
10.13. Issuance of Equity Securities
105
10.14. Organizational Documents; Material Contractual Obligations
105
10.15. Bank Accounts
105
10.16. Fiscal Year, Fiscal Months
105
ARTICLE XI FINANCIAL COVENANTS
11.01. Interest Coverage Ratio
106
11.02. Fixed Charge Coverage Ratio
106
11.03. Capital Expenditures
106
11.04. Minimum Net Worth
106
ARTICLE XII EVENTS OF DEFAULT; RIGHTS AND REMEDIES
12.01. Events of Default
107
12.02. Rights and Remedies
111
ARTICLE XIII THE ADMINISTRATIVE AGENT AND EUROPEAN AGENT 13.01 Appointment
114
13.02. Nature of Duties
114
13.03. Rights, Exculpation, Etc
115
13.04. Reliance
116
13.05. Indemnification
116
13.06. Citicorp Individually
117
13.07. Successor Administrative and European Agents
117
13.08. Relations Among Lenders
118
13.09. Concerning the Collateral and the Loan Documents
118
13.10. Documentation Agent
120
ARTICLE XIV YIELD PROTECTION 14.01 Taxes
121
14.02. Increased Capital
123
14.03. Changes; Legal Restrictions
124
14.04. Illegality
125
14.05. Compensation
125
14.06. Limitation on Additional Amounts Payable by the U.S. Borrower
126
14.07. Change in Lending Office
126
14.08. Judgment Currency
127
ARTICLE XV MISCELLANEOUS 15.01. Assignments and Participations
128
15.02. Expenses
130
15.03. Indemnity
132
15.04. Change in Accounting Principles
133
15.05. Setoff
133
15.06. Ratable Sharing
134
15.07. Amendments and Waivers
135
15.08. Notices
137
15.09. Survival of Warranties and Agreements
137
15.10. Failure or Indulgence Not Waiver; Remedies Cumulative
138
15.11. Marshalling; Payments Set Aside
138
15.12. Severability
138
15.13. Headings
138
15.14. Governing Law
138
15.15. Limitation of Liability
138
15.16. Successors and Assigns
139
15.17. Certain Consents and Waivers of the Borrowers
139
15.18. Counterparts; Effectiveness; Inconsistencies
140
15.19. Limitation on Agreements
141
15.20. Confidentiality
141
15.21. Entire Agreement
141
15.22. Advice of Counsel
141
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
This Amended and Restated Credit Agreement dated as of July 26, 1996
(as amended, supplemented or modified from time to time, the "Agreement")
is entered into among Fairchild Holding Corp., a Delaware corporation
("FHC"), Kaysel, a private unlimited liability company formed under the
laws of The Republic of Ireland d/b/a Fairchild Finance Company, the
institutions from time to time a party hereto as Lenders, whether by
execution of this Agreement or an Assignment and Acceptance, the
institutions from time to time a party hereto as Issuing Banks, whether by
execution of this Agreement or an Assignment and Acceptance, and Citicorp
USA, Inc., a Delaware corporation ("Citicorp"), in its capacity as agent
for the Lenders and the Issuing Banks hereunder (in such capacity, the
"Administrative Agent").
W I T N E S S E T H:
WHEREAS, FHC entered into that certain Credit Agreement dated as of
March 13, 1996 with certain financial institutions as "Lenders" and
"Issuing Banks" and Citicorp in the capacity as agent for such "Lenders"
and "Issuing Banks" (the "Original Credit Agreement") pursuant to which
certain loans have heretofore been made to FHC and certain letters of
credit have heretofore been issued for the account of FHC and certain of
its Subsidiaries;
WHEREAS, FHC intends to repay in full the loans made under the
Original Credit Agreement on July 29, 1996 and has requested that the
Original Credit Agreement be amended to, among other things, extend the
"Revolving Credit Termination Date" thereunder, provide for additional
loans to be made to FHC and to its Wholly-Owned Subsidiary, Kaysel, d/b/a
Fairchild Finance Company, and permit the aforesaid letters of credit
issued under the Original Credit Agreement to remain outstanding;
WHEREAS, in view of the foregoing, certain of the "Lenders" and "Issuing
Banks" under the Original Credit Agreement have agreed to enter into this
Agreement in order to (i) restate and amend the terms and provisions of
the Original Credit Agreement in their entirety and (ii) set forth the
terms and conditions under which the Lenders will hereafter extend Loans
and the Issuing Banks will continue letters of credit issued under the
Original Credit Agreement and hereafter issue Letters of Credit to or for
the benefit of the U.S. Borrower and its Subsidiaries;
NOW, THEREFORE, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms. The following terms used in this
Agreement shall have the following meanings, applicable both to the
singular and the plural forms of the terms defined:
"Accommodation Obligation" means any Contractual Obligation,
contingent or otherwise, of one Person with respect to any Indebtedness,
obligation or liability of another, if the primary purpose or intent
thereof by the Person incurring the Accommodation Obligation is to provide
assurance to the obligee of such Indebtedness, obligation or liability of
another that such Indebtedness, obligation or liability will be paid or
discharged, or that any agreements relating thereto will be complied with,
or that the holders thereof will be protected (in whole or in part)
against loss in respect thereof including, without limitation, direct and
indirect guarantees, endorsements (except for collection or deposit in the
ordinary course of business), notes co-made or discounted, recourse
agreements, take-or-pay agreements, keep-well agreements, put options,
agreements to purchase or repurchase such Indebtedness, obligation or
liability or any security therefor or to provide funds for the payment or
discharge thereof, agreements to maintain solvency, assets, level of
income, or other financial condition, and agreements to make payment other
than for value received. The amount of any Accommodation Obligation shall
be equal to the amount of the Indebtedness, obligation or liability so
guaranteed or otherwise supported; provided, that (i) if the liability of
the Person extending such guaranty or support is limited with respect
thereto to an amount less than the Indebtedness, obligation or liability
guaranteed or supported, or is limited to recourse against a particular
asset or assets of such Person, the amount of the corresponding
Accommodation Obligation shall be limited (in the case of a guaranty or
other support limited by amount) to such lesser amount or (in the case of
a guaranty or other support limited by recourse to a particular asset or
assets) to the higher of the Fair Market Value of such asset or assets at
the date for determination of the amount of the Accommodation Obligation
or the value at which such asset or assets would, in conformity with GAAP,
be reflected on or valued for the purposes of preparing a consolidated
balance sheet of such Person as at such determination date; and (ii) if
any obligation or liability is guaranteed or otherwise supported jointly
and severally by a Person and others, then the amount of the obligation or
liability of such Person with respect to such guaranty or other support to
be included in the amount of such Person's Accommodation Obligation shall
be the whole principal amount so guaranteed or otherwise supported.
"Administrative Agent" means Citicorp and each successor
Administrative Agent appointed pursuant to the terms of Article XIII of
this Agreement.
"Affiliate", as applied to any Person, means any other Person that
directly or indirectly controls, is controlled by, or is under common
control with, that Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as applied to any
Person, means the possession, directly or indirectly, of the power to vote
ten percent (10.0%) or more of the Securities having voting power for the
election of directors of such Person or otherwise to direct or cause the
direction of the management and policies of that Person, whether through
the ownership of voting Securities or by contract or otherwise.
"Agreement" is defined in the preamble hereto.
"Applicable Lending Office" means, with respect to a particular
Lender, its Eurocurrency Lending Office in respect of provisions relating
to Eurocurrency Rate Loans and its Domestic Lending Office in respect of
provisions relating to Base Rate Loans.
"Appraised Value" means the orderly liquidation value determined by
the appraisers identified on Schedule 1.01.1 attached hereto and made a
part hereof in the appraisals identified on such Schedule.
"Assignment and Acceptance" means an Assignment and Acceptance in
substantially the form of Exhibit A attached hereto and made a part hereof
(with blanks appropriately completed) delivered to the Administrative
Agent in connection with an assignment of a Lender's interest under this
Agreement in accordance with the provisions of Section 15.01.
"Bankruptcy Code" means Title 11 of the United States Code (11 U.S.C.
101 et seq.), as amended from time to time, and any successor statute.
"Base Eurocurrency Rate" means, with respect to any Eurocurrency
Interest Period applicable to a Borrowing of Eurocurrency Rate Loans, an
interest rate per annum determined by the Administrative Agent to be the
average (rounded upward to the nearest whole multiple of one sixteenth of
one percent (0.0625%) per annum if such average is not such a multiple) of
the rates per annum specified by notice to the Administrative Agent by
Citibank as the rate per annum at which deposits in Dollars or DM, as
applicable, are offered by the principal office of Citibank in London,
England to major banks in the London interbank market at approximately
11:00 a.m. (London time) on the Eurocurrency Interest Rate Determination
Date for such Eurocurrency Interest Period for a period equal to such
Eurocurrency Interest Period and in an amount substantially equal to the
amount of the Eurocurrency Rate Loan to be outstanding to Citicorp for
such Eurocurrency Interest Period.
"Base Rate" means, for any period, a fluctuating interest rate per
annum as shall be in effect from time to time, which rate per annum shall
at all times be equal to (i) the highest of:
(a) the rate of interest announced publicly by Citibank in New York,
New York from time to time, as Citibank's base rate; and
(b) the sum of (1) one-half of one percent (0.50%) per annum plus
(2) the Federal Funds Rate in effect from time to time during such period.
with respect to U.S. Borrower Loans and (ii) the rate of interest
announced publicly by Citibank London in London, England from time to
time, as Citibank London's base rate, with respect to U.K. Borrower Loans
denominated in Dollars.
"Base Rate Loans" means all Loans which bear interest at a rate
determined by reference to the Base Rate as provided in Section 5.01(a);
provided, however, no Loan denominated in DM shall be a Base Rate Loan.
"Base Rate Margin" means (i) with respect to Obligations of the U.S.
Borrower, a rate equal to one and one-half of one percent (1.50%) per
annum and (ii) with respect to Obligations of the U.K. Borrower, a rate
equal to two and one-half percent (2.50%) per annum.
"Benefit Plan" means a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan or Foreign Employee
Benefit Plan) in respect of which a Borrower or any ERISA Affiliate is, or
within the immediately preceding five (5) years was, an "employer" as
defined in Section 3(5) of ERISA.
"Borrowers" means, collectively, the U.K. Borrower and U.S. Borrower,
and, individually, either the U.K. Borrower or the U.S. Borrower.
"Borrowing" means a borrowing consisting of Loans of the same type
made, continued or converted on the same day and, in the case of
Eurocurrency Rate Loans, having the same Eurocurrency Interest Period.
"Borrowing Base Certificate" means a certificate, in substantially
the form of Exhibit B attached hereto and made a part hereof, setting
forth, as of the end of each Fiscal month, Eligible U.S. Receivables,
Eligible Inventory, the Appraised Value of Equipment and Real Property,
Eligible U.K. Receivables, the respective advance percentages with respect
to each of the foregoing, and the calculation of the resultant U.S.
Borrowing Base and U.K. Borrowing Base, in each instance, as of the date
of such certificate.
"Business Activity Report" means (A) a Notice of Business Activities
Report from the State of New Jersey Division of Taxation or (B) a
Minnesota Business Activity Report from the Minnesota Department of
Revenue.
"Business Day" means a day, in the applicable local time, which is
not a Saturday or Sunday or a legal holiday and on which banks are not
required or permitted by law or other governmental action to close (i) in
New York, New York or Chicago, Illinois and (ii) in the case of
Eurocurrency Rate Loans and U.K. Borrower Loans, in London, England and
(iii) in the case of Letter of Credit transactions for a particular
Issuing Bank, in the place where its office for issuance or administration
of the pertinent Letter of Credit is located.
"Capital Expenditures" means, for any period, the aggregate of all
expenditures (whether paid in cash or other Property or accrued as a
liability (but without duplication)) during such period that, in
conformity with GAAP, are required to be included in or reflected by the
U.S. Borrower's or any of its Subsidiaries' fixed asset accounts as
reflected in the consolidated balance sheet of the U.S. Borrower and its
Subsidiaries; provided, however, (i) Capital Expenditures shall include,
whether or not such a designation would be in conformity with GAAP, that
portion of Capital Leases which is capitalized on the consolidated balance
sheet of the U.S. Borrower and its Subsidiaries and (ii) Capital
Expenditures shall exclude, whether or not such a designation would be in
conformity with GAAP, expenditures made in connection with the replacement
or restoration of Property, to the extent reimbursed or financed from
insurance or other recoveries received on account of the loss of or damage
to the Property being replaced or restored or from condemnation awards
arising from the taking by condemnation or eminent domain of such Property
being replaced.
"Capital Lease" means any lease of any property (whether real,
personal or mixed) by a Person as lessee which, in conformity with GAAP,
is accounted for as a capital lease on the balance sheet of that Person.
"Capital Stock" means, with respect to any Person, any capital stock
of such Person, regardless of class or designation, and all warrants,
options, purchase rights, conversion or exchange rights, voting rights,
calls or claims of any character with respect thereto.
"Capitalization Date" means the date on which the U.S. Borrower
becomes the owner of ninety-nine percent (99%) of the Capital Stock of the
U.K. Borrower, which date shall be confirmed to the Administrative Agent,
in writing, within three (3) Business Days after the date on which such
event occurs.
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Collateral" means cash or Cash Equivalents held by the
Administrative Agent, any of the Issuing Banks or any of the Lenders as
security for the Obligations.
"Cash Collateral Account" means an interest bearing account at
Citibank's offices in New York, New York designated by the Administrative
Agent into which Cash Collateral shall be deposited. The Cash Collateral
Account shall be under the sole dominion and control of the Administrative
Agent, provided that all amounts deposited therein shall be held by the
Administrative Agent for the benefit of the Holders and shall be subject
to the terms of Sections 4.05 and 4.06.
"Cash Equivalents" means (i) marketable direct obligations issued or
unconditionally guaranteed by the United States government and backed by
the full faith and credit of the United States government; (ii) marketable
direct obligations issued by any state of the United States or any
political subdivision of any such state or any public instrumentality
thereof which, at the time of acquisition thereof, have the highest rating
obtainable from either Standard & Poor's Rating Group, a division of
McGraw-Hill, Inc. ("S&P") or Moody's Investors Service, Inc. (or if not
then rating such obligations, from such other nationally recognized rating
services as are reasonably acceptable to the Administrative Agent); (iii)
commercial paper which, at the time of acquisition thereof, has the
highest rating obtainable from either S & P or Moody's Investors Service,
Inc. (or if not then rating such obligations, from such other nationally
recognized rating services as are reasonably acceptable to the
Administrative Agent); (iv) domestic and Eurocurrency certificates of
deposit and time deposits, bankers' acceptances and floating rate
certificates of deposit issued by any Lender or any commercial bank
organized under the laws of the United States, any state thereof, or the
District of Columbia and having a combined capital and surplus in excess
of $250,000,000, which, at the time of acquisition, are rated A-1 (or
better) by S & P or P-1 (or better) by Moody's Investors Services, Inc.;
and (v) any agreement involving U.S. Government securities, certificates
of deposit or "eligible" bankers' acceptances which provides for the
transfer of such securities against payment in funds and which contains an
agreement by the seller to repurchase the securities at a specified date
not more than ninety (90) days after the date of such agreement; provided,
that the maturities of such Cash Equivalents shall not exceed ninety (90)
days.
"Cash Interest Expense" means, for any period, total interest expense
of the U.S. Borrower and its Subsidiaries, whether paid or accrued, but
without duplication, (including, without limitation, the interest
component of Capital Leases, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing and net of the difference between payments received by the
Borrowers on all Hedge Agreements and payments made by the Borrowers on
all Hedge Agreements other than the initial payments made to enter into
such Hedge Agreements; and excluding, interest expense not payable in cash
(including amortization of discount) and legal, commitment and closing
fees and expenses and other non-recurring fees and expenses and
transaction costs payable in cash, including, without limitation,
underwriting commissions and discounts, incurred in connection with the
execution and delivery of this Agreement and the transactions contemplated
hereby), which is payable in cash, all as determined in conformity with
GAAP. For the Fiscal Quarters ending September 29, 1996, December 29,
1996, and March 30, 1997, Cash Interest Expense shall be calculated using
annualized amounts paid or accrued to date.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. 9601 et seq., any amendments thereto,
any successor statutes, and any regulations promulgated thereunder.
"Change of Control" means any of (i) fifty percent (50%) (on a fully
diluted basis) of the voting power of the voting Capital Stock of RHI
ceasing to be owned and controlled by Jeffrey J. Steiner and his
"associates" (as defined in the Securities Exchange Act) without fifty
percent (50%) (on a fully diluted basis) of the voting power of the voting
Capital Stock of TFC continuing to be owned and controlled by Jeffrey J.
Steiner and his "associates" or (ii) one hundred percent (100%) of the
Capital Stock of the U.S. Borrower ceasing to be owned and controlled by
RHI or, if fifty percent (50%) (on a fully diluted basis) of the voting
power of the voting Capital Stock of RHI ceases to be owned and controlled
by Jeffrey J. Steiner and his "associates", by TFC, or (iii) ninety-nine
percent (99%) of the Capital Stock of the U.K. Borrower ceasing to be
owned and controlled by the U.S. Borrower after the Capitalization Date.
"Citibank" means Citibank, N.A., a national banking association.
"Citicorp" is defined in the preamble of this Agreement.
"Claim" means any claim or demand, by any Person, of whatsoever kind
or nature for any alleged Liabilities and Costs, whether based in
contract, tort, implied or express warranty, strict liability, criminal or
civil statute, Permit, ordinance or regulation, common law or otherwise.
"Closing Date" means July 26, 1996.
"Collateral" means all Property and interests in Property now owned
or hereafter acquired by the U.S. Borrower or any of its Subsidiaries upon
which a Lien is granted under any of the Loan Documents.
"Collection Account" means each lock-box and blocked depository
account maintained by a Borrower or any Guarantor subject to a Collection
Account Agreement for the collection of Receivables and other proceeds of
Collateral.
"Collection Account Agreement" means a written agreement,
substantially in the form attached hereto as Exhibit C or Exhibit D with
such modifications as the Administrative Agent, from time to time, deems
acceptable, among a Borrower or a Guarantor, the Administrative Agent,
and, as applicable, each of the banks at which a Borrower or Guarantor
maintains a Collection Account.
"Commercial Letter of Credit" means any documentary letter of credit
issued by an Issuing Bank pursuant to Section 3.01 for the account of the
U.S. Borrower or for the account of any of the U.S. Borrower's Domestic
Subsidiaries if the U.S. Borrower is jointly and severally liable for
reimbursement of amounts drawn under such letter of credit, which is
drawable upon presentation of documents evidencing the sale or shipment of
goods purchased by the U.S. Borrower or such Domestic Subsidiary in the
ordinary course of its business.
"Commission" means the Securities and Exchange Commission and any
Person succeeding to the functions thereof.
"Commitment" means, with respect to any Lender at the time of
determination thereof, the amount of such Lender's U.S. Loan Commitment or
U.K. Loan Commitment; and "Commitments" means the aggregate amount of all
U.S. Loan Commitments and U.K. Loan Commitments.
"Commitment Fee" is defined in Section 5.03(c).
"Compliance Certificate" is defined in Section 8.01(d).
"Concentration Account" means the depository account maintained at
Citibank in New York, New York, Citibank London in London, England, or
such other financial institution designated for such purpose by the
Administrative Agent into which collections of Receivables of the U.S.
Borrower and its Domestic Subsidiaries or the European Subsidiary
Borrowers, other proceeds of Collateral and other amounts are transferred
pursuant to the terms of the Collection Account Agreements or otherwise as
described in Section 4.04.
"Consolidated Loan Availability" means, at any time of determination
thereof, the lesser of (i) the sum of (a) the U.K. Borrowing Base at such
time plus (b) the U.S. Borrowing Base at such time minus the sum of (c)
the U.S. Revolving Credit Obligations at such time plus (d) the
outstanding balance of the U.K. Borrower Loans at such time or (ii) the
EBITDA Borrowing Base at such time minus the sum of (a) the U.S. Revolving
Credit Obligations at such time plus (b) the outstanding balance of the
U.K. Borrower Loans at such time.
"Contaminant" means any waste, pollutant, hazardous substance, toxic
substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, radioactive materials, asbestos (in any form or
condition), polychlorinated biphenyls (PCBs), lead paint, or any
constituent of any such substance or waste, and includes, but is not
limited to, these terms as defined in federal, state or local laws or
regulations.
"Contractual Obligation", as applied to any Person, means any
provision of any Securities issued by that Person or any indenture,
mortgage, deed of trust, security agreement, pledge agreement, guaranty,
contract, undertaking, agreement or instrument to which that Person is a
party or by which it or any of its properties is bound, or to which it or
any of its properties is subject.
"Cure Loans" is defined in Section 4.02(f)(iii).
"Customary Permitted Liens" means
(i) Liens (other than Environmental Liens and Liens in favor of the
PBGC) with respect to the payment of taxes, assessments or governmental
charges in all cases which are not yet due or which are being contested in
good faith by appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being maintained in
accordance with GAAP;
(ii) statutory Liens of landlords and Liens of suppliers, mechanics,
carriers, materialmen, warehousemen or workmen and other Liens imposed by
law created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves or other appropriate provisions
are being maintained in accordance with GAAP;
(iii) Liens (other than any Lien in favor of the PBGC) incurred or
deposits made in the ordinary course of business in connection with
worker's compensation, unemployment insurance or other types of social
security benefits or to secure the performance of bids, tenders, sales,
contracts (other than for the repayment of borrowed money), surety, appeal
and performance bonds; provided that (A) all such Liens do not in the
aggregate materially detract from the value of a Borrower's or any of its
Subsidiaries' assets or Property or materially impair the use thereof in
the operation of their respective businesses, and (B) all Liens of
attachment or judgment and Liens securing bonds to stay judgments or in
connection with appeals do not secure at any time an aggregate amount
exceeding $500,000; and
(iv) Liens arising with respect to zoning restrictions, easements,
licenses, reservations, covenants, rights-of-way, utility easements,
building restrictions and other similar charges or encumbrances on the use
of Real Property which do not interfere with the ordinary conduct of the
business of a Borrower or any of its Subsidiaries.
"Deposit Account" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate
of deposit.
"Designated Prepayment" means each mandatory prepayment required by
clauses (i), (ii), and (iii) of Section 4.01(b).
"DM" means the lawful money of the Federal Republic of Germany.
"DM Subfacility" means an amount equal to fifty percent (50%) of the
Dollar equivalent of the U.K. Loan Commitments as in effect from time to
time.
"Documentation Agent" means NationsBank, N.A.
"DOL" means the United States Department of Labor and any Person
succeeding to the functions thereof.
"Dollars" and "$" mean the lawful money of the United States.
"Domestic Lending Office" means, with respect to any Lender, such
Lender's office, located in the United States, specified as the "Domestic
Lending Office" under its name on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or such other United
States office of such Lender as it may from time to time specify by
written notice to the U.S. Borrower and the Administrative Agent.
"Domestic Subsidiaries" means those Subsidiaries of the U.S. Borrower
identified on Schedule 1.01.2 attached hereto and made a part hereof.
"EBITDA" means, for any period, the amount calculated, without
duplication, for such period as the sum of the Operating Units' Operating
Profit and Equity Income/Minority Interest plus (to the extent deducted in
the determination of such Operating Profit and Equity Income/Minority
Interest) (i) depreciation expense, (ii) amortization expense, (iii) other
non-recurring non-cash charges and expenses not requiring the use of Cash,
(iv) losses arising other than in the ordinary course of business of the
Operating Units which have been included in the determination of such
Operating Profit and Equity Income/Minority Interest, and (v) increases in
the LIFO reserve, minus (to the extent included in the determination of
such Operating Profit and Equity Income/Minority Interest) (a) gains
arising other than in the ordinary course of business of the Operating
Units, (b) decreases in the LIFO reserve, and (c) other non-recurring
credits and income not generating Cash.
"EBITDA Borrowing Base" means, as of any date of determination, an
amount equal to the EBITDA for the then most recent four fiscal quarters
of the U.S. Borrower multiplied by two (2); provided, however, (i) for the
period ending on June 30, 1996, EBITDA shall be deemed to equal
$14,000,000 until the date on which the report of the U.S. Borrower's
independent certified public accountants described in Section 8.01(c) for
such Fiscal Year is delivered to the Administrative Agent and (ii) EBITDA
for each fiscal quarter of the Fiscal Year ending June 30, 1996 shall be
deemed to equal one-fourth (1/4) of $14,000,000 until the date on which
the report of the U.S. Borrower's independent certified public accountants
described in Section 8.01(c) for such Fiscal Year is delivered to the
Administrative Agent and one-fourth (1/4) of the EBITDA calculated based
on such report thereafter.
"Effective Date" means July 29, 1996.
"11 7/8% Senior Subordinated Debenture Indenture" means the Indenture
between Rexnord Acquisition Corp. and Irving Trust Company, as trustee,
dated as of March 2, 1987, pursuant to which Senior Subordinated
Debentures in the aggregate original principal amount of $126,000,000 were
issued, as supplemented by the First Supplemental Indenture dated as of
July 1, 1987 between Rexnord Corporation and Irving Trust Company, as
trustee, and the Second Supplemental Indenture dated as of August 16,
1988, between RHI and Irving Trust Company, as trustee.
"Eligible Receivables" means, collectively, the U.K. Eligible
Receivables and the U.S. Eligible Receivables.
"Eligibility Reserves" means, as of three (3) Business Days after the
date of written notice of any determination thereof to the U.S. Borrower
by the Administrative Agent, such amounts as the Administrative Agent, in
the exercise of its reasonable credit judgment, may from time to time
establish against the gross amounts of Eligible Receivables and Eligible
Inventory to reflect material changes in risks or contingencies arising
after the Effective Date which may affect such items.
"Eligible Assignee" means (i) a Lender or any Affiliate thereof;
(ii) a commercial bank having total assets in excess of $2,500,000,000;
(iii) the central bank of any country which is a member of the
Organization for Economic Cooperation and Development; or (iv) a finance
company, insurance company, other financial institution or fund,
acceptable to the Administrative Agent, which is regularly engaged in
making, purchasing or investing in loans and having total assets in excess
of $300,000,000; provided, however, that no assignee shall be an "Eligible
Assignee" unless it has or obtains concurrently with its becoming a Lender
a U.S. Loan Commitment. In no event shall any Person which is a resident
of The Republic of Ireland or incorporated or licensed under the laws of
The Republic of Ireland be an "Eligible Assignee".
"Eligible Inventory" means, as of the date of determination therefor,
all Inventory of the U.S. Borrower and the Domestic Subsidiaries which are
Guarantors which, when scheduled to the Administrative Agent and at all
times thereafter, does not consist of:
(i) work-in-process unless specifically approved by the
Administrative Agent; or
(ii) obsolete goods or goods otherwise not currently saleable in the
ordinary course of such Person's business; or
(iii) damaged or rejected goods; or
(iv) goods not located at one of such Person's manufacturing,
warehouse or distribution facilities located within the United States and
set forth on Schedule 1.01.3 attached hereto and made a part hereof; or
(v) goods in transit; or
(vi) packaging materials, labels, name plates or supplies; or
(vii) returned goods; or
(viii) goods held on consignment or any similar arrangement,
including, without limitation, goods held by such Person but owned by a
customer of such Person; or
(ix) goods (a) with respect to which the Administrative Agent does
not have a perfected security interest senior in priority to any other,
(b) which are subject to a Lien in favor of a landlord or bailee, or (c)
which are subject to a Lien which is not permitted under Section 10.03; or
(x) goods located on premises which are not owned by the U.S.
Borrower and with respect to which the Administrative Agent has not
received, as appropriate in the circumstances, a landlord's waiver, bailee
agreement, or consignee agreement in form and substance satisfactory to
the Administrative Agent.
"Eligible U.K. Receivables" means each Receivable of the European
Subsidiary Borrowers which is pledged or assigned by way of security to
the Administrative Agent and, when scheduled to the Administrative Agent
and at all times thereafter, is not of any of the types set forth on
Schedule 1.01.4 attached hereto and made a part hereof.
"Eligible U.S. Receivables" means each Receivable of the U.S.
Borrower and the Domestic Subsidiaries which are Guarantors which, when
scheduled to the Administrative Agent and at all times thereafter, is not
of any of the types set forth on Schedule 1.01.5 attached hereto and made
a part hereof.
"Environmental, Health or Safety Requirements of Law" means all
Requirements of Law derived from or relating to any federal, state or
local law, ordinance, rule, regulation, Permit, license or other binding
determination of any Governmental Authority relating to, imposing
liability or standards concerning, or otherwise addressing, the
environment, health and/or safety, including, but not limited to the Clean
Air Act, the Clean Water Act, CERCLA, RCRA, any so-called "Superfund" or
"Superlien" law, the Toxic Substances Control Act, OSHA, and public health
codes, each as from time to time in effect.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for any (i) liabilities under any Environmental, Health or
Safety Requirement of Law, or (ii) damages arising from, or costs incurred
by such Governmental Authority in response to, a Release or threatened
Release of a Contaminant into the environment.
"Equipment" means, with respect to any Person, all of such Person's
present and future (i) equipment, including, without limitation,
machinery, manufacturing, distribution, selling, data processing and
office equipment, assembly systems, tools, molds, dies, fixtures,
appliances, furniture, furnishings, vehicles, vessels, aircraft, aircraft
engines, and trade fixtures, (ii) other tangible personal property (other
than such Person's Inventory), and (iii) any and all accessions, parts and
appurtenances attached to any of the foregoing or used in connection
therewith, and any substitutions therefor and replacements, products and
proceeds thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, 29
U.S.C. 1000 et seq., any amendments thereto, any successor statutes, and
any regulations or guidance promulgated thereunder.
"ERISA Affiliate" means (i) any corporation which is a member of the
same controlled group of corporations (within the meaning of
Section 414(b) of the Internal Revenue Code) as the U.S. Borrower; (ii) a
partnership or other trade or business (whether or not incorporated) which
is under common control (within the meaning of Section 414(c) of the
Internal Revenue Code) with the U.S. Borrower; and (iii) a member of the
same affiliated service group (within the meaning of Section 414(m) of the
Internal Revenue Code) as the U.S. Borrower, any corporation described in
clause (i) above or any partnership or trade or business described in
clause (ii) above.
"ERISA Event" means (i) the occurrence with respect to a Plan of a
Reportable Event, (ii) the provision by the administrator of any Plan of
a notice of intent to terminate such Plan, pursuant to Section 4041(a)(2)
of ERISA (including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA), (iii) the cessation of
operations at a facility of the U.S. Borrower or any ERISA Affiliate in
the circumstances described in Section 4062(e) of ERISA, (iv) the
withdrawal by the U.S. Borrower or an ERISA Affiliate from a Multiemployer
Plan during a plan year for which it was a substantial employer, as
defined in Section 4001(a)(2) of ERISA, (v) the conditions set forth in
Section 302(f)(1)(A) and (B) of ERISA to the creation of a Lien upon
Property or rights to Property of the U.S. Borrower or any ERISA Affiliate
for failure to make a required payment to a Plan are satisfied, (vi) the
adoption of an amendment to a Plan requiring the provision of security to
such Plan, pursuant to Section 307 of ERISA, or (vii) the institution by
the PBGC of proceedings to terminate a Plan, pursuant to Section 4042 of
ERISA, or the occurrence of any event or condition described in Section
4042 of ERISA that constitutes grounds for the termination of, or the
appointment of a trustee to administer, a Plan.
"Eurocurrency Affiliate" means, with respect to each Lender, the
Affiliate of such Lender (if any) set forth below such Lender's name under
the heading "Eurodollar Affiliate" on the signature pages hereof or
"Eurocurrency Affiliate" on the signature pages of the Assignment and
Acceptance by which it became a Lender or such Affiliate of a Lender as it
may from time to time specify by written notice to the U.S. Borrower and
the Administrative Agent.
"Eurocurrency Interest Payment Date" means, with respect to any
Eurocurrency Rate Loan, the last day of each Eurocurrency Interest Period
applicable to such Loan.
"Eurocurrency Interest Period" is defined in Section 5.02(b).
"Eurocurrency Interest Rate Determination Date" is defined in Section
5.02(c).
"Eurocurrency Lending Office" means, with respect to any Lender, the
office or offices of such Lender (if any) set forth below such Lender's
name under the heading "Eurodollar Lending Office" on the signature pages
hereof or "Eurocurrency Lending Office" on the signature pages of the
Assignment and Acceptance by which it became a Lender (or, if no such
office is specified, its Domestic Lending Office), or such office or
offices of such Lender as it may from time to time specify by written
notice to the U.S. Borrower and the Administrative Agent.
"Eurocurrency Rate" means, with respect to any Eurocurrency Interest
Period applicable to a Eurocurrency Rate Loan, an interest rate per annum
obtained by dividing (i) the Base Eurocurrency Rate applicable to that
Eurocurrency Interest Period by (ii) a percentage equal to 100% minus the
Eurocurrency Rate Reserve Percentage in effect on the relevant
Eurocurrency Interest Rate Determination Date.
"Eurocurrency Rate Loans" means those Loans outstanding which bear
interest at a rate determined by reference to a Eurocurrency Rate and the
Eurocurrency Rate Margin as provided in Section 5.01(a).
"Eurocurrency Rate Margin" means (i) with respect to Obligations of
the U.S. Borrower, a rate equal to two and three-quarters percent (2.75%)
per annum and (ii) with respect to Obligations of the U.K. Borrower, a
rate equal to two and one-half percent (2.50%) per annum.
"Eurodollar Rate Reserve Percentage" means, for any Lender for the
Eurocurrency Interest Period for any Eurocurrency Rate Loan denominated in
Dollars, the reserve percentage which is applicable three (3) Business
Days before the first day of such Eurocurrency Interest Period under the
regulations issued from time to time by the Federal Reserve Board for
determining the actual reserve requirement (including, without limitation,
any emergency, supplemental or other marginal reserve requirement) for a
member bank of the Federal Reserve System in New York, New York with
deposits exceeding Five Billion Dollars ($5,000,000,000) with respect to
liabilities or assets consisting of or including "Eurocurrency Liabili-
ties" (or with respect to any other category of liabilities which includes
deposits by reference to which the interest rate on Eurocurrency Rate
Loans is determined) having a term equal to such Eurocurrency Interest
Period.
"European Administrator" means Citicorp Finance Ireland Limited.
"European Agent" means Citibank London.
"European Subsidiary Borrower" means any of the Persons identified as
such on Schedule 1.01.6 attached hereto and made a part hereof.
"Event of Default" means any of the occurrences set forth in Section
12.01 after the expiration of any applicable grace period, as expressly
provided in Section 12.01.
"Exchange Rate" means, in relation to the purchase of one currency
(for the purposes of this definition the "first currency") with another
currency (for the purposes of this definition the "second currency") on a
given date, Citibank's spot rate of exchange for the amount in question in
the London interbank market at 11:00 a.m. (London time) on such date for
the purchase of the first currency with the second currency, for delivery
three (3) Business Days later.
"Fair Market Value" means, with respect to any asset, the value of
the consideration obtainable in a sale of such asset in the open market,
assuming a sale by a willing seller to a willing purchaser dealing at
arm's length and arranged in an orderly manner over a reasonable period of
time, each having reasonable knowledge of the nature and characteristics
of such asset, neither being under any compulsion to act, and, if in
excess of $3,000,000, as determined (a) in good faith by the Board of
Directors of the U.S. Borrower or (b) in an appraisal of such asset,
provided that for purposes of Section 10.02, such appraisal was performed
relatively contemporaneously with such sale by an independent third party
appraiser and the basic assumptions underlying such appraisal have not
materially changed since the date thereof.
"Federal Funds Rate" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members
of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business Day in New York,
New York, for the next preceding Business Day) in New York, New York by
the Federal Reserve Bank of New York, or if such rate is not so published
for any day which is a Business Day in New York, New York, the average of
the quotations for such day on such transactions received by the
Administrative Agent from three federal funds brokers of recognized
standing selected by the Administrative Agent.
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
"Fee Letter" means that certain fee letter addressed to Citicorp USA,
Inc. from the U.S. Borrower dated July 29, 1996.
"FII" means Fairchild Industries, Inc., a Delaware corporation.
"Financial Statements" means (i) statements of income and retained
earnings, statements of cash flow, and balance sheets, (ii) such other
financial statements as TFC, RHI, either Borrower and Subsidiaries of
either Borrower shall routinely and regularly prepare, and (iii) such
other financial statements as the Administrative Agent or the Requisite
Lenders may from time to time reasonably specify.
"Fiscal Month" means each of the month periods ending on the dates
set forth on Schedule 1.01.7 attached hereto and made a part hereof.
"Fiscal Year" means the fiscal year of the U.S. Borrower and its
Subsidiaries for accounting and tax purposes, which shall be the 12-month
period ending on June 30 of each calendar year.
"Fixed Charge Coverage Ratio" means, for any period, the ratio of (i)
EBITDA for such period minus Capital Expenditures made in such period to
(ii) the sum of (a) Cash Interest Expense for such period plus (b) the
amount paid by the U.S. Borrower in dividends (other than the dividend
described in Section 10.06(b)(i)) in such period plus (c) the aggregate
amount of loans made by the U.S. Borrower and its Subsidiaries to RHI
during such period minus the aggregate amount of payments made on such
loans during such period.
"Foreign Employee Benefit Plan" means any employee benefit plan as
defined in Section 3(3) of ERISA which is maintained or contributed to for
the benefit of the employees of a Borrower, any of its Subsidiaries or any
of its ERISA Affiliates and is not covered by ERISA pursuant to ERISA
Section 4(b)(4).
"Foreign Pension Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA which (i) is maintained or contributed to for the
benefit of employees of a Borrower, any of its Subsidiaries or any of its
ERISA Affiliates, (ii) is not covered by ERISA pursuant to Section 4(b)(4)
of ERISA, and (iii) under applicable local law, is required to be funded
through a trust or other funding vehicle.
"Fronting Fee" is defined in Section 5.03(b).
"Funding Date" means, with respect to any Loan, the date of funding
of such Loan.
"GAAP" means generally accepted accounting principles set forth in
the opinions and pronouncements of the American Institute of Certified
Public Accountants' Accounting Principles Board and Financial Accounting
Standards Board or in such other statements by such other entity as may be
in general use by significant segments of the accounting profession as in
effect on the date hereof (unless otherwise specified herein as in effect
on another date or dates).
"General Intangibles" means, with respect to any Person, all of such
Person's present and future (i) general intangibles, (ii) rights,
interests, choses in action, causes of action, claims and other intangible
Property of every kind and nature (other than Receivables), (iii)
corporate and other business records, (iv) loans, royalties, and other
obligations receivable, (v) trademarks, registered trademarks, trademark
applications, service marks, registered service marks, service mark
applications, patents, registered patents, patent applications, trade
names, rights of use of any name, labels, fictitious names, inventions,
designs, trade secrets, computer programs, software, printouts and other
computer materials, goodwill, registrations, copyrights, copyright
applications, permits, licenses, franchises, customer lists, credit files,
correspondence, and advertising materials, (vi) customer and supplier
contracts, firm sale orders, rights under license and franchise
agreements, rights under tax sharing agreements, and other contracts and
contract rights, (vii) interests in partnerships and joint ventures,
(viii) tax refunds and tax refund claims, (ix) right, title and interest
under leases, subleases, licenses and concessions and other agreements
relating to property, (x) deposit accounts (general or special) with any
bank or other financial institution, (xi) credits with and other claims
against third parties (including carriers and shippers), (xii) rights to
indemnification and with respect to support and keep-well agreements,
(xiii) reversionary interests in pension and profit sharing plans and
reversionary, beneficial and residual interests in trusts, (xiv) letters
of credit, guarantees, Liens, security interests and other security held
by or granted to such Person, (xvi) uncertificated securities and (xvii)
investment securities.
"Governmental Authority" means any nation or government, any federal,
state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantors" means each of the Subsidiaries of the U.S. Borrower
identified on Schedule 1.01.8 attached hereto and made a part hereof and
any other Person executing and delivering a guaranty of payment and
performance of all or any portion of the Obligations.
"Hedge Agreement" means any agreement, including, without limitation,
interest rate exchange, swap, collar or cap agreement, interest rate
future or option contract, currency swap agreement, currency future or
option contract, and other similar agreement, evidencing an agreement or
arrangement intended to protect against fluctuation in interest rates
and/or foreign exchange rates or conversion rates for conversion of
foreign currencies to Dollars.
"Holder" means any Person entitled to enforce any of the Obligations,
whether or not such Person holds any evidence of Indebtedness, including,
without limitation, the Administrative Agent, each Lender and each Issuing
Bank.
"Indebtedness", as applied to any Person, means, at any time, without
duplication, (a) all indebtedness, obligations or other liabilities of
such Person (i) for borrowed money or evidenced by debt Securities,
debentures, acceptances, notes or other similar instruments, and any
accrued interest, fees and charges relating thereto, (ii) under profit
payment agreements or in respect of obligations to redeem, repurchase or
exchange any Securities of such Person or to pay dividends in respect of
any Capital Stock, (iii) with respect to letters of credit issued for such
Person's account, (iv) to pay the deferred purchase price of property or
services, except accounts payable and accrued expenses arising in the
ordinary course of business, (v) in respect of Capital Leases, (vi) which
are Accommodation Obligations or (vii) under warranties and indemnities;
(b) all indebtedness, obligations or other liabilities of such Person or
others secured by a Lien on any property of such Person, whether or not
such indebtedness, obligations or liabilities are assumed by such Person,
all as of such time; (c) all indebtedness, obligations or other liabil-
ities of such Person in respect of interest rate contracts, Hedge
Agreements and foreign exchange contracts, net of liabilities owed to such
Person by the counterparties thereon; (d) all preferred stock subject
(upon the occurrence of any contingency or otherwise) to mandatory redemp-
tion; and (e) all contingent Contractual Obligations with respect to any
of the foregoing.
"Indemnified Matters" is defined in Section 15.03.
"Indemnitees" is defined in Section 15.03.
"Interest Coverage Ratio" means, for any period, the ratio of (i)
EBITDA for such period to (ii) Cash Interest Expense for such period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, any successor
statute and any regulations or guidance promulgated thereunder.
"Inventory" means, with respect to any Person, all of such Person's
present and future (i) inventory, (ii) goods, merchandise and other
personal property furnished or to be furnished under any contract of
service or intended for sale or lease, and all consigned goods and all
other items which have previously constituted Equipment of such Person but
are then currently being held for sale or lease in the ordinary course of
such Person's business, (iii) raw materials, work-in-process and finished
goods, (iv) materials and supplies of any kind, nature or description used
or consumed in such Person's business or in connection with the
manufacture, production, packing, shipping, advertising, finishing or sale
of any of the property described in clauses (i) through (iii) above, (v)
goods in which such Person has a joint or other interest or right of any
kind (including, without limitation, goods in which such Person has an
interest or right as consignee), and (vi) goods which are returned to or
repossessed by such Person; in each case whether in the possession of such
Person, a bailee, a consignee, or any other Person for sale, storage,
transit, processing, use or otherwise, and any and all documents for or
relating to any of the foregoing.
"Investment" means, with respect to any Person, (i) any purchase or
other acquisition by that Person of Securities, or of a beneficial
interest in Securities, issued by any other Person, (ii) any purchase by
that Person of all or substantially all of the assets of a business
conducted by another Person, and (iii) any loan, advance (other than
deposits with financial institutions available for withdrawal on demand,
prepaid expenses, accounts receivable, advances to employees and similar
items made or incurred in the ordinary course of business) or capital
contribution by that Person to any other Person, including all
Indebtedness to such Person arising from a sale of property by such Person
other than in the ordinary course of its business and all Indebtedness to
such Person which is not a current asset. The amount of any Investment
shall be the original cost of such Investment, plus the cost of all
additions thereto less the amount of any return of capital or principal to
the extent such return is in cash with respect to such Investment without
any adjustments for increases or decreases in value or write-ups, write-
downs or write-offs with respect to such Investment.
"IRS" means the Internal Revenue Service and any Person succeeding to
the functions thereof.
"Issuing Banks" means Citibank and each Lender designated as an
"Issuing Bank" on the signature pages hereof or the signature page of the
Assignment and Acceptance by which it became a Lender and each other
Lender approved by the Administrative Agent and the U.S. Borrower who has
agreed to become an Issuing Bank for the purpose of issuing Letters of
Credit pursuant to Section 3.01.
"Lender" means, as of the Closing Date, each financial institution a
signatory hereto as a Lender and, at any other given time, each financial
institution which is a party hereto as a Lender, whether as a signatory
hereto or pursuant to an Assignment and Acceptance.
"Letter of Credit" means any Commercial Letter of Credit or Standby
Letter of Credit.
"Letter of Credit Fee" is defined in Section 5.03(b).
"Letter of Credit Obligations" means, at any particular time, the sum
of (i) all outstanding Reimbursement Obligations, plus (ii) the aggregate
Dollar equivalent of the undrawn face amount of all outstanding Letters of
Credit, plus (iii) the aggregate Dollar equivalent of the face amount of
all Letters of Credit requested by the U.S. Borrower but not yet issued
(unless the request for an unissued Letter of Credit has been denied by
the designated Issuing Bank as referenced in Section 3.01(c)(i)).
"Letter of Credit Reimbursement Agreement" means, with respect to a
Letter of Credit, such form of application therefor and form of
reimbursement agreement therefor (whether in a single or several
documents, taken together) as the Issuing Bank from which the Letter of
Credit is requested may employ in the ordinary course of business for its
own account, with such modifications thereto as may be agreed upon by the
Issuing Bank and the U.S. Borrower and as are not materially adverse (in
the judgment of the Issuing Bank and Administrative Agent) to the
interests of the Lenders; provided, however, in the event of any conflict
between the terms of any Letter of Credit Reimbursement Agreement and this
Agreement, the terms of this Agreement shall control.
"Liabilities and Costs" means all liabilities, obligations,
responsibilities, losses, damages, personal injury, death, punitive
damages, economic damages, consequential damages, treble damages,
intentional, willful or wanton injury, damage or threat to the
environment, natural resources or public health or welfare, costs and
expenses (including, without limitation, attorney, expert and consulting
fees and costs and fees and costs associated with any investigation,
feasibility or Remedial Action studies), fines, penalties and monetary
sanctions, interest, direct or indirect, known or unknown, absolute or
contingent, past, present or future.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, conditional sale agreement, deposit arrangement, security
interest, encumbrance, lien (statutory or other and including, without
limitation, any Environmental Lien), deed of charge, preference, priority
or other security agreement or preferential arrangement of any kind or
nature whatsoever in respect of any property of a Person, whether granted
voluntarily or imposed by law, and includes the interest of a lessor under
a Capital Lease or under any financing lease having substantially the same
economic effect as any of the foregoing and the filing of any financing
statement or similar notice (other than a financing statement filed by a
"true" lessor pursuant to 9-408 of the Uniform Commercial Code), naming
the owner of such property as debtor, under the Uniform Commercial Code or
other comparable law of any jurisdiction.
"Loan Account" is defined in Section 4.03(b).
"Loan Documents" means this Agreement, the Notes, Hedge Agreements to
which any Lender or any Affiliate of a Lender is a party, foreign exchange
contracts to which any Lender or any Affiliate of a Lender is a party, and
all other instruments, agreements and written Contractual Obligations
between the Borrowers (or either of them) or any Subsidiary of a Borrower
and any of the Administrative Agent, any Lender or any Issuing Bank
delivered to either the Administrative Agent, such Lender or such Issuing
Bank pursuant to or in connection with the transactions contemplated
hereby.
"Loans" means all U.S. Borrower Loans and U.K. Borrower Loans,
whether Base Rate Loans or Eurocurrency Rate Loans.
"Margin Stock" means "margin stock" as such term is defined in
Regulation U and Regulation G.
"Material Adverse Effect" means a material adverse effect upon (i)
the financial condition, operations, assets or prospects of the Borrowers
and their Subsidiaries on a consolidated basis, (ii) the ability of a
Borrower or any of its Subsidiaries to perform their respective
obligations under the Loan Documents, (iii) the ability of the Lenders,
the Issuing Banks, or the Administrative Agent to enforce any of the Loan
Documents, or (iv) ability of the Lenders, the European Administrator, the
Administrative Agent or the U.K. Borrower to enforce any of the U.K. Loan
Documents.
"MIS" means computerized management information system for recording
and maintenance of information regarding purchases, sales, aging,
categorization, and locations of Inventory, creation and aging of
Receivables, and accounts payable (including agings thereof).
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA (other than a Foreign Employee Benefit Plan)
which (i) is, or within the immediately preceding six (6) years was,
contributed to by either a Borrower or any ERISA Affiliate or in respect
of which a Borrower or any ERISA Affiliate has assumed any liability and
(ii) is not a Foreign Employee Benefit Plan.
"Net Cash Proceeds of Issuance of Equity Securities" means (i) net
cash proceeds (including cash, equivalents readily convertible into cash,
and such proceeds of any notes received as consideration or any other non-
cash consideration) received by a Borrower or any of its Subsidiaries at
any time after the Effective Date on account of the issuance of equity
Securities of a Borrower or any of its Subsidiaries (other than (a)
Capital Stock of a Subsidiary issued to a Borrower or to a Subsidiary of
a Borrower and (b) Capital Stock issued to effect the transfer of the
Technologies Minority Interest) and (ii) proceeds received by a Borrower
at any time after the Effective Date as a contribution to its capital on
account of the issuance of equity Securities of such Borrower.
"Net Cash Proceeds of Issuance of Indebtedness" means Indebtedness
(other than Indebtedness permitted under Section 10.01) of a Borrower or
any of its Subsidiaries, in each case net of all transaction costs and
underwriters' discounts with respect thereto.
"Net Cash Proceeds of Sale" means (i) proceeds received by a Borrower
or any of its Subsidiaries in cash (including cash, equivalents readily
convertible into cash, and such proceeds of any notes received as
consideration or any other non-cash consideration) from the sale,
assignment or other disposition of (but not the lease or license of) any
Property, other than sales permitted under clauses (b) through (e) of
Section 10.02, net of (A) the costs of sale, assignment or other disposi-
tion, (B) any income, franchise, transfer or other tax liability arising
from such transaction and (C) amounts applied to the repayment of
Indebtedness (other than the Obligations) secured by a Lien permitted by
Section 10.03 on the asset disposed of, whether such net proceeds arise
from any individual sale, assignment or other disposition or from any
group of related sales, assignments or other dispositions; and (ii) to the
extent provided in Section 9.07(b), proceeds of insurance on account of
the loss of or damage to any such Property or Properties, and payments of
compensation for any such Property or Properties taken by condemnation or
eminent domain.
"Net Income" means, for any period, the net income (or loss) after
taxes of the Borrowers and their Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity
with GAAP.
"Non Pro Rata Loan" is defined in Section 4.02(f).
"Note" means a promissory note in the form attached hereto as Exhibit
E payable to a Lender, evidencing certain of the Obligations of a Borrower
to such Lender and executed by a Borrower as required by Section 4.03(a),
as the same may be amended, supplemented, modified or restated from time
to time, and any promissory note issued in substitution therefor; "Notes"
means, collectively, all of such Notes outstanding at any given time.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit F attached hereto and made a part hereof.
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit G attached hereto and made a part hereof with respect
to a proposed conversion or continuation of a Loan pursuant to Section
5.01(c).
"Obligations" means all Loans, advances, debts, liabilities,
obligations, covenants and duties owing by the Borrowers, individually or
collectively, to the Administrative Agent, any Lender, any Issuing Bank,
any Affiliate of the Administrative Agent, any Lender or any Issuing Bank,
or any Person entitled to indemnification pursuant to Section 15.03 of
this Agreement, of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, arising under this
Agreement, the Notes or any other Loan Document, whether or not for the
payment of money, whether arising by reason of an extension of credit,
opening or amendment of a Letter of Credit or payment of any draft drawn
thereunder, loan, guaranty, indemnification, foreign exchange contract,
Hedge Agreement or in any other manner, whether direct or indirect
(including those acquired by assignment), absolute or contingent, due or
to become due, now existing or hereafter arising and however acquired.
The term includes, without limitation, all interest, charges, expenses,
fees, attorneys' fees and disbursements and any other sum chargeable to
the Borrowers, or either of them, under this Agreement or any other Loan
Document.
"Officer's Certificate" means, as to a corporation, a certificate
executed on behalf of such corporation by the chairman or vice-chairman of
its board of directors (if an officer of such corporation) or its presi-
dent, any of its vice presidents, or its treasurer.
"Operating Profit and Equity Income/Minority Interest" means an
amount equal to total sales minus cost of sales minus total operating
expenses and includes other (income)/expense, investment (income)/expense,
goodwill amortization, equity (in earnings)/loss, and minority interest
(income)/loss.
"Operating Lease" means, as applied to any Person, any lease of any
property (whether real, personal or mixed) by that Person as lessee which
is not a Capital Lease.
"Operating Units" means, collectively, those segments of the U.S.
Borrower's business known as (i) Fairchild Fasteners Worldwide, (ii)
Camloc (UK) Gas Spring Division, and (iii) Fairchild Technologies and
Related U.S. Operations; and each of the foregoing is an "Operating Unit".
"Organizational Documents" means, with respect to any corporation,
limited liability company, unlimited liability company, or partnership
(i) the articles/certificate of incorporation or articles of association
(or the equivalent organizational documents) of such corporation, limited
liability company, or unlimited liability company, (ii) the partnership
agreement executed by the partners in the partnership, (iii) the by-laws
(or the equivalent governing documents) of the corporation, limited
liability company, unlimited liability company, or partnership, and
(iv) any document setting forth the designation, amount and/or relative
rights, limitations and preferences of any class or series of such
corporation's Capital Stock or such limited liability company's, unlimited
liability company's or partnership's equity or ownership interests.
"Original Credit Agreement" is defined in the premises.
"OSHA" means the Occupational Safety and Health Act of 1970, 29
U.S.C. 651 et seq., any amendments thereto, any successor statutes and
any regulations or guidance promulgated thereunder.
"PBGC" means the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"Permits" means any permit, approval, authorization license,
variance, or permission required from a Governmental Authority or other
Person under an applicable Requirement of Law.
"Permitted Dispositions" means the sale, lease, transfer or other
disposition of the operations and/or assets and/or Investments identified
on Schedule 1.01.9 attached hereto and made a part hereof.
"Permitted Equity Securities Options" means the subscriptions,
options, warrants, rights, convertible securities and other agreements or
commitments relating to the issuance of equity Securities identified on
Schedule 1.01.10 attached hereto and made a part hereof.
"Permitted Existing Accommodation Obligations" means those Accommo-
dation Obligations of the Subsidiaries of the U.S. Borrower identified on
Schedule 1.01.11 attached hereto and made a part hereof.
"Permitted Existing Indebtedness" means the Indebtedness of the U.S.
Borrower and its Subsidiaries identified on Schedule 1.01.12 attached
hereto and made a part hereof.
"Permitted Existing Investments" means those Investments identified
as such on Schedule 1.01.13 attached hereto and made a part hereof.
"Permitted Existing Liens" means the Liens on assets of the
Subsidiaries of the U.S. Borrower identified on Schedule 1.01.14 attached
hereto and made a part hereof.
"Person" means any natural person, corporation, limited liability
company, limited partnership, general partnership, joint stock company,
joint venture, association, company, trust, bank, trust company, land
trust, business trust or other organization, whether or not a legal
entity, and any Governmental Authority.
"Plan" means an employee benefit plan defined in Section 3(3) of
ERISA (other than a Foreign Employee Benefit Plan) (i) in respect of which
a Borrower or any ERISA Affiliate is, or within the immediately preceding
six (6) years was, an "employer" as defined in Section 3(5) of ERISA or a
Borrower or any ERISA Affiliate has assumed any liability and (ii) which
is not a Foreign Employee Benefit Plan.
"Potential Event of Default" means an event which, with the giving of
notice or the lapse of time, or both, would constitute an Event of
Default.
"Process Agent" is defined in Section 15.17(a)(i).
"Pro Forma" means the unaudited pro forma opening balance sheet of
U.S. Borrower and its Subsidiaries attached hereto as Exhibit H, prepared
in accordance with GAAP, dated the Closing Date, and giving effect to the
extensions of credit contemplated hereby.
"Projections" means the financial projections (including, without
limitation, capital expenditure budget) and assumptions prepared by the
U.S. Borrower dated the Closing Date and attached hereto as Exhibit I.
"Property" means any Real Property or personal property, plant,
building, facility, structure, underground storage tank or unit,
Equipment, Inventory, General Intangible, Receivable, or other asset
owned, leased or operated by a Borrower or any Subsidiary of a Borrower,
as applicable, (including any surface water thereon, and soil and
groundwater thereunder).
"Proposal Letter" means that certain letter addressed to the U.S.
Borrower from Citicorp Securities, Inc. dated June 12, 1996 and accepted
by the U.S. Borrower on June 12, 1996.
"Pro Rata Share" means, with respect to any Lender, the percentage
obtained by dividing (i) the sum of such Lender's U.S. Loan Commitments
plus such Lender's U.K. Loan Commitments (in each case, as adjusted from
time to time in accordance with the provisions of this Agreement or any
Assignment and Acceptance to which such Lender is a party) by (ii) the
aggregate amount of all of the Commitments (notwithstanding the
termination of any such Commitments).
"Protective Advance" is defined in Section 13.09(a).
"RCRA" means the Resource Conservation and Recovery Act of 1976, 42
U.S.C. 6901 et seq., any amendments thereto, any successor statutes, and
any regulations promulgated thereunder.
"Real Property" means, with respect to any Person, all of such
Person's present and future right, title and interest (including, without
limitation, any leasehold estate) in (i) any plots, pieces or parcels of
land, (ii) any improvements, buildings, structures and fixtures now or
hereafter located or erected thereon or attached thereto of every nature
whatsoever (the rights and interests described in clauses (i) and (ii)
above being the "Premises"), (iii) all easements, rights of way, gores of
land or any lands occupied by streets, ways, alleys, passages, sewer
rights, water courses, water rights and powers, and public places
adjoining such land, and any other interests in property constituting
appurtenances to the Premises, or which hereafter shall in any way belong,
relate or be appurtenant thereto, (iv) all hereditaments, gas, oil,
minerals (with the right to extract, sever and remove such gas, oil and
minerals), and easements, of every nature whatsoever, located in or on the
Premises and (v) all other rights and privileges thereunto belonging or
appertaining and all extensions, additions, improvements, betterments,
renewals, substitutions and replacements to or of any of the rights and
interests described in clauses (iii) and (iv) above.
"Receivables" means, with respect to any Person, all of such Person's
present and future (i) accounts, (ii) contract rights, chattel paper,
instruments, documents, deposit accounts, and other rights to payment of
any kind, whether or not arising out of or in connection with the sale or
lease of goods or the rendering of services, and whether or not earned by
performance, (iii) any of the foregoing which are not evidenced by
instruments or chattel paper, (iv) intercompany receivables, and any
security documents executed in connection therewith, (v) proceeds of any
letters of credit or insurance policies on which such Person is named as
beneficiary, (vi) claims against third parties for advances and other
financial accommodations and any other obligations whatsoever owing to
such Person, (vii) rights in and to all security agreements, leases,
guarantees, instruments, securities, documents of title and other
contracts securing, evidencing, supporting or otherwise relating to any of
the foregoing, together with all rights in any goods, merchandise or
Inventory which any of the foregoing may represent, and (viii) rights in
returned and repossessed goods, merchandise and Inventory which any of the
same may represent, including, without limitation, any right of stoppage
in transit.
"Register" is defined in Section 15.01(c).
"Regulation A" means Regulation A of the Federal Reserve Board as in
effect from time to time.
"Regulation G" means Regulation G of the Federal Reserve Board as in
effect from time to time.
"Regulation T" means Regulation T of the Federal Reserve Board as in
effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve Board as in
effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve Board as in
effect from time to time.
"Reimbursement Date" is defined in Section 3.01(d)(i)(A).
"Reimbursement Obligations" means the aggregate Dollar equivalent of
the non-contingent reimbursement or repayment obligations of the U.S.
Borrower with respect to amounts drawn under Letters of Credit.
"Release" means any release, spill, emission, leaking, pumping,
pouring, dumping, injection, deposit, disposal, abandonment, or discarding
of barrels, containers or other receptacles, discharge, emptying, escape,
dispersal, leaching or migration into the indoor or outdoor environment or
into or out of any Property, including the movement of Contaminants
through or in the air, soil, surface water, groundwater or Property.
"Remedial Action" means actions required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent the Release or threat of Release or minimize the
further Release of Contaminants; or (iii) investigate and determine if a
remedial response is needed and to design such a response and post-
remedial investigation, monitoring, operation and maintenance and care.
"Replacement Proceeds" means the amount of (i) proceeds of insurance
paid on account of the loss of or damage to any Property and awards of
compensation for Property taken by condemnation or eminent domain to the
extent actually used to replace, rebuild or restore the Property so lost,
damaged or taken, provided that U.S. Borrower shall have delivered written
notice to the Administrative Agent that it or its applicable Subsidiary
intends to so replace, rebuild or restore such Property within 90 days
after the Administrative Agent's receipt of the proceeds of such insurance
payment or condemnation award if such proceeds exceed $500,000 and (ii)
insurance paid on account of a business interruption occurrence to the
extent actually used in the restoration or conduct of the business
interrupted.
"Reportable Event" means any of the events described in Section
4043(c) of ERISA and the regulations promulgated thereunder as in effect
from time to time other than an event for which the thirty (30) day notice
requirement has been waived by the PBGC.
"Requirements of Law" means, as to any Person, the charter and by-
laws or other organizational or governing documents of such Person, and
any law, rule or regulation, or determination of an arbitrator or a court
or other Governmental Authority, in each case applicable to or binding
upon such Person or any of its property or to which such Person or any of
its property is subject including, without limitation, the Securities Act,
the Securities Exchange Act, Regulations G, T, U and X, ERISA, the Fair
Labor Standards Act, the Worker Adjustment and Retraining Notification
Act, Americans with Disabilities Act of 1990, and any certificate of
occupancy, zoning ordinance, building, environmental or land use
requirement or Permit and Environmental, Health or Safety Requirement of
Law.
"Requisite Lenders" means Lenders whose Pro Rata Shares, in the
aggregate, are greater than fifty-one percent (51%); provided, however,
that, in the event any of the Lenders shall have failed to fund its Pro
Rata Share of any Loan requested by a Borrower which such Lenders are
obligated to fund under the terms of this Agreement and any such failure
has not been cured, then for so long as such failure continues, "Requisite
Lenders" means Lenders (excluding all Lenders whose failure to fund their
respective Pro Rata Shares of such Loans have not been so cured) whose Pro
Rata Shares represent more than fifty-one percent (51%) of the aggregate
Pro Rata Shares of such Lenders; provided, further, however, that, in the
event that the Commitments have been terminated pursuant to the terms of
this Agreement, "Requisite Lenders" means Lenders (without regard to such
Lenders' performance of their respective obligations hereunder) whose
aggregate ratable shares (stated as a percentage) of the aggregate
outstanding principal balance of all Loans are greater than fifty-one
percent (51%).
"Restricted Junior Payment" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
Capital Stock of a Borrower or any of its Subsidiaries now or hereafter
outstanding, except a dividend payable solely in shares of that class of
stock or in any junior class of stock to the holders of that class, (ii)
any redemption, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any
class of equity Securities of a Borrower or any of its Subsidiaries now or
hereafter outstanding, (iii) any payment or prepayment of principal of,
premium, if any, or interest, fees or other charges on or with respect to,
and any redemption, purchase, retirement, defeasance, sinking fund or
similar payment and any claim for rescission with respect to, any
Indebtedness for borrowed money other than the Obligations and (iv) any
payment made to redeem, purchase, repurchase or retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of Capital Stock or other equity Securities of a
Borrower or any of its Subsidiaries now or hereafter outstanding.
"Revolving Credit Termination Date" means the earliest to occur of
(i) July 28, 2000 (or, if not a Business Day, the next preceding Business
Day), (ii) the date of termination of the Commitments pursuant to the
terms of this Agreement, and (iii) the date of acceleration of the
Obligations pursuant to Section 12.02.
"RHI" means RHI Holdings, Inc., a Delaware corporation.
"Securities" means any Capital Stock, shares, voting trust certif-
icates, limited partnership certificates, bonds, debentures, notes or
other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"investment securities" or "securities", including, without limitation,
any "security" as such term is defined in Section 8-102 of the Uniform
Commercial Code, whether certificated or uncertificated, or any
certificates of interest, shares, or participations in temporary or
interim certificates for the purchase or acquisition of, or any right to
subscribe to, purchase or acquire any of the foregoing, but shall not
include the Notes or any other evidence of the Obligations.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, and any successor statute.
"Solvent", when used with respect to any Person, means that at the
time of determination:
(i) the Fair Market Value of its assets is in excess of the total
amount of its liabilities (including, without limitation, contingent
liabilities); and
(ii) the present fair saleable value of its assets is greater than
its probable liability on its existing debts as such debts become absolute
and matured; and
(iii) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as
they mature; and
(iv) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
"Standby Letter of Credit" means any letter of credit issued by an
Issuing Bank pursuant to Section 3.01 for the account of the U.S. Borrower
or for the account of any of the U.S. Borrower's Subsidiaries if the U.S.
Borrower is jointly and severally liable for reimbursement of amounts
drawn under such letter of credit, which is not a Commercial Letter of
Credit.
"Subsidiary" of a Person means any corporation, limited liability
company, general or limited partnership, or other entity of which
securities or other ownership interests having ordinary voting power to
elect a majority of the board of directors or other Persons performing
similar functions with respect to such entity are at the time directly or
indirectly owned or controlled by such Person, one or more of the other
subsidiaries of such Person or any combination thereof. Notwithstanding
the foregoing, for purposes of this Agreement, Banner Aerospace, Inc.
shall not be included as a Subsidiary of the U.S. Borrower.
"Super-Majority Lenders" means Lenders whose Pro Rata Shares, in the
aggregate, are greater than sixty-seven percent (67%); provided, however,
that, in the event any of the Lenders shall have failed to fund its Pro
Rata Share of any Loan requested by a Borrower which such Lenders are
obligated to fund under the terms of this Agreement and any such failure
has not been cured, then for so long as such failure continues, "Super-
Majority Lenders" means Lenders (excluding all Lenders whose failure to
fund their respective Pro Rata Shares of such Loans have not been so
cured) whose Pro Rata Shares represent more than sixty-seven percent (67%)
of the aggregate Pro Rata Shares of such Lenders.
"Tax Allocation Agreement" means that certain Ninth Amended and
Restated Tax Allocation Agreement dated as of July 29, 1996 among TFC,
RHI, the U.S. Borrower and certain Affiliates thereof, as in effect on the
Effective Date.
"Taxes" is defined in Section 14.01(a).
"Technologies" means Fairchild Convac GmbH (which is changing its
name to Fairchild Technologies GmbH Gerate zur Halbleitertechnologie), a
corporation formed under the laws of the Federal Republic of Germany and
an indirect Subsidiary of the U.S. Borrower.
"Technologies Minority Interest" means (i) an interest in the Capital
Stock of Technologies issued by Technologies or transferred (whether by
sale, assignment, as the result of a merger, exchange of shares, or
otherwise) by VSI Holdings, Inc., a Delaware corporation and Wholly-Owned
Subsidiary, to a Person not an Affiliate of the Borrowers or (ii) an
interest in or the assets of Fairchild Germany, Inc. or its Subsidiaries,
Convac USA, Inc. and Fairchild Technologies USA, Inc.; Convac Equipment
for Semiconductor Technology, Ltd. (the name of which is to be changed to
Fairchild Technologies UK, Ltd.); Convac France S.A.; and Convac Dresden
(GmbH) which is permitted to be transferred (whether by sale, assignment,
as the result of a merger, exchange of shares, or otherwise) by the Person
which is the owner thereof on the Closing Date; provided that the issuance
or transfer thereof does not result in Technologies ceasing to be a
Subsidiary of the U.S. Borrower.
"Termination Event" means (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of a Borrower or any ERISA Affiliate
from a Benefit Plan during a plan year in which a Borrower or such ERISA
Affiliate was a "substantial employer" as defined in Section 4001(a)(2) of
ERISA or the cessation of operations which results in the termination of
employment of 20% of Benefit Plan participants who are employees of a
Borrower or any ERISA Affiliate; (iii) the imposition of an obligation on
a Borrower or any ERISA Affiliate under Section 4041 of ERISA to provide
affected parties written notice of intent to terminate a Benefit Plan in
a distress termination described in Section 4041(c) of ERISA; (iv) the
institution by the PBGC or any similar foreign Governmental Authority of
proceedings to terminate a Benefit Plan or a Foreign Pension Plan; (v) any
event or condition which could reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Benefit Plan; (vi) the
appointment by a foreign Governmental Authority of, or the institution of
proceedings by a foreign Governmental Authority to appoint, a trustee to
administer any Foreign Pension Plan; or (vii) the partial or complete
withdrawal of a Borrower or any ERISA Affiliate from a Multiemployer Plan
or a Foreign Pension Plan.
"TFC" means The Fairchild Corporation, a Delaware corporation.
"TFC/RHI Liquidity" means, as of any date of determination thereof,
an amount equal to (i) the amount of consolidated Cash and Cash
Equivalents of TFC, RHI and the U.S. Borrower as of such date of
determination, plus (ii) the amount of the Consolidated Loan Availability
as of such date of determination after giving effect to any requests for
Loans or Letters of Credit received by the Administrative Agent on such
date, minus (iii) the amount of Cash and Cash Equivalents of TFC, RHI, and
the U.S. Borrower required to secure Contractual Obligations of TFC, RHI
and the U.S. Borrower as of such date of determination.
"Transfer Documents" means, collectively, all corporate resolutions,
agreements and instruments executed and delivered in connection with (i)
the formation and capitalization of any Domestic Subsidiary or the U.K.
Borrower after the date of the Original Credit Agreement and on or prior
to the Effective Date and (ii) the transfer of the Capital Stock of
Fairchild Germany, Inc. by RHI to the U.S. Borrower after the date of the
Original Credit Agreement and on or prior to the Effective Date; "Transfer
Document" means any one of the Transfer Documents.
"U.K. Borrower" means, Kaysel d/b/a Fairchild Finance Company, a
Wholly-Owned Subsidiary of the U.S. Borrower formed as a private unlimited
liability company under the laws of The Republic of Ireland.
"U.K. Borrower Loans" is defined in Section 2.01(b).
"U.K. Borrowing Base" means, as of any date of determination, an
amount designated on a Borrowing Base Certificate dated as of such date of
determination, equal to the lesser of (a) the U.K. Loan Commitments then
in effect and (b) the sum of up to eighty-five percent (85%) of Eligible
U.K. Receivables as of such date. For purposes of this definition,
Eligible U.K. Receivables shall be determined after deduction of all
Eligibility Reserves then in effect.
"U.K. Lender" means any Lender having both a U.S. Loan Commitment and
a U.K. Loan Commitment designated on the signature pages hereof or the
signature page of the Assignment and Acceptance by which it became a
Lender; provided however that a Lender shall cease to be a U.K. Lender
upon an Assignment and Acceptance becoming effective whereby such Lender
has assigned its U.K. Loan Commitment in its entirety to another Person
which becomes a U.K. Lender.
"U.K. Loan Availability" means, at any date of determination, the
amount by which (i) the lesser of (a) the sum of the U.K. Borrowing Base
at such time plus the U.S. Borrowing Base at such time or (b) the EBITDA
Borrowing Base at such time exceeds (ii) the sum of the U.K. Borrower
Loans outstanding at such time plus the U.S. Revolving Credit Obligations
at such time; provided, that in no event shall the U.K. Loan Availability
at any time exceed the amount by which (c) the U.K. Loan Commitments at
such time exceeds (d) the U.K. Borrower Loans outstanding at such time.
"U.K. Loan Commitment" means, with respect to any Lender, the
obligation of such Lender to make Loans to the U.K. Borrower pursuant to
the terms and conditions of this Agreement, in an aggregate amount at any
time outstanding which shall not exceed the principal amount set forth
opposite such Lender's name under the heading "U.K. Loan Commitment" on
the signature pages hereof or the signature page of the Assignment and
Acceptance by which it became a Lender, as modified from time to time
pursuant to the terms of this Agreement or to give effect to any
applicable Assignment and Acceptance, and "U.K. Loan Commitments" means
the aggregate principal amount of the U.K. Loan Commitments of all
Lenders, the maximum amount of which shall be $12,000,000, as reduced from
time to time pursuant to Section 4.01.
"U.K. Loan Documents" means the notes, security agreements, pledge
agreements, notices to account debtors, and all other instruments,
agreements and written Contractual Obligations between any European
Subsidiary Borrower and any of the U.K. Borrower, the European
Administrator, the European Agent, any Lender or the Administrative Agent
pursuant to or in connection with loans or other advances made by the U.K.
Borrower to an European Subsidiary Borrower and the collateral securing
such loans and other advances.
"U.K. Loan Pro Rata Share" means, with respect to any U.K. Lender,
the percentage obtained by dividing (i) the sum of such U.K. Lender's U.K.
Loan Commitment (in each case, as adjusted from time to time in accordance
with the provisions of this Agreement or any Assignment and Acceptance to
which such U.K. Lender is a party) by (ii) the aggregate U.K. Loan
Commitments.
"Uniform Commercial Code" means the Uniform Commercial Code as
enacted in the State of New York, as it may be amended from time to time.
"U.S. Borrower" means Fairchild Holding Corp., a Delaware
corporation.
"U.S. Borrower Loans" is defined in Section 2.01(b).
"U.S. Borrowing Base" means, as of any date of determination, an
amount designated on a Borrowing Base Certificate dated as of such date of
determination, equal to the lesser of (a) the U.S. Loan Commitments then
in effect and (b) the sum of up to (1) eighty-five percent (85%) of
Eligible U.S. Receivables plus (2) sixty percent (60%) of Eligible
Inventory (calculated at the lesser of cost or market value on a first-in-
first-out basis) plus (3) seventy percent (70%) of the Appraised Value of
Equipment plus (4) fifty percent (50%) of the Appraised Value of Real
Property; provided, however, that during thirty (30) consecutive days in
each successive Fiscal Year ending after the Effective Date the U.S.
Borrowing Base shall be reduced by $7,000,000, each such thirty (30) day
period to be determined by the U.S. Borrower and designated in a written
notice to the Administrative Agent three (3) Business Days prior to the
commencement thereof. For purposes of this definition, Eligible U.S.
Receivables and Eligible Inventory shall be determined after deduction of
all Eligibility Reserves then in effect.
"U.S. Loan Availability" means, at any date of determination, the
amount by which (i) the lesser of (a) the U.S. Borrowing Base at such time
or (b) the EBITDA Borrowing Base at such time minus the U.K. Loans
outstanding at such time exceeds (ii) the U.S. Revolving Credit
Obligations at such time plus the amount by which the U.K. Borrower Loans
outstanding at such time exceeds the U.K. Borrowing Base at such time.
"U.S. Loan Commitment" means, with respect to any Lender, the
obligation of such Lender to make U.S. Borrower Loans and to participate
in Letters of Credit pursuant to the terms and conditions of this
Agreement, in an aggregate amount at any time outstanding which shall not
exceed the principal amount set forth opposite such Lender's name under
the heading "U.S. Loan Commitment" on the signature pages hereof or the
signature page of the Assignment and Acceptance by which it became a
Lender, as modified from time to time pursuant to the terms of this
Agreement or to give effect to any applicable Assignment and Acceptance,
and "U.S. Loan Commitments" means the aggregate principal amount of the
U.S. Loan Commitments of all the Lenders, the maximum amount of which
shall be (i) $52,000,000, as reduced from time to time pursuant to
Section 4.01, until the date on which the U.K. Loan Commitments become
effective, and (ii) $40,000,000, as reduced from time to time pursuant to
Section 4.01, from and after the date on which the U.K. Loan Commitments
become effective.
"U.S. Loan Pro Rata Share" means, with respect to any Lender, the
percentage obtained by dividing (i) the sum of such Lender's U.S. Loan
Commitment (in each case, as adjusted from time to time in accordance with
the provisions of this Agreement or any Assignment and Acceptance to which
such Lender is a party) by (ii) the aggregate U.S. Loan Commitments.
"U.S. Revolving Credit Obligations" means, at any particular time,
the sum of (i) the outstanding principal amount of the U.S. Borrower Loans
at such time, plus (ii) the Letter of Credit Obligations at such time.
"VSI" means VSI Corporation, a Delaware corporation.
"Wholly-Owned Subsidiary" means a corporation (i) one hundred percent
(100%) of the Capital Stock or other equity Securities of which is owned
by a Borrower or any Subsidiary of a Borrower or (ii) greater than ninety-
five percent (95%) of the Capital Stock or other equity Securities of
which is owned by a Borrower or a Subsidiary of a Borrower and the
remainder of which Capital Stock or other equity Securities is owned by a
nominee of such Borrower or such Subsidiary solely to comply with the
Requirements of Law of the jurisdiction governing such corporation's
organization and existence.
1.02. Computation of Time Periods. In this Agreement, in the
computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and
"until" each mean "to but excluding". Periods of days referred to in this
Agreement shall be counted in calendar days unless Business Days are
expressly prescribed. Any period determined hereunder by reference to a
month or months or year or years shall end on the day in the relevant
calendar month in the relevant year, if applicable, immediately preceding
the date numerically corresponding to the first day of such period;
provided that if such period commences on the last day of a calendar month
(or on a day for which there is no numerically corresponding day in the
calendar month during which such period is to end), such period shall,
unless otherwise expressly required by the other provisions of this
Agreement, end on the last day of the calendar month.
1.03. Accounting Terms. Subject to Section 15.04, for purposes of
this Agreement, all accounting terms not otherwise defined herein shall
have the meanings assigned to them in conformity with GAAP.
1.04. Other Terms. All other terms contained in this Agreement
shall, unless the context indicates otherwise, have the meanings assigned
to such terms by the Uniform Commercial Code to the extent the same are
defined therein.
1.05. Dollar Equivalents. For purposes of Dollar designations or
Dollar equivalent designations in this Agreement, all calculations thereof
shall be determined, with respect to amounts otherwise denominated in a
non-U.S. currency, based on the amount of Dollars required to purchase
such amount of non-U.S. currency at the Exchange Rate therefor which is in
effect on the date of determination.
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01. Revolving Credit Facilities. (a) U.S. Borrower Loans.
Subject to the terms and conditions set forth in this Agreement, each
Lender hereby severally and not jointly agrees to make revolving loans, in
Dollars (each individually, a "U.S. Borrower Loan" and, collectively, the
"U.S. Borrower Loans") to the U.S. Borrower from time to time during the
period from the Effective Date to the Business Day next preceding the
Revolving Credit Termination Date, in an amount not to exceed such
Lender's U.S. Loan Pro Rata Share of the U.S. Loan Availability at such
time. All U.S. Borrower Loans comprising the same Borrowing under this
Agreement shall be made by the Lenders simultaneously and proportionately
to their then respective U.S. Loan Pro Rata Shares, it being understood
that no Lender shall be responsible for any failure by any other Lender to
perform its obligation to make a U.S. Borrower Loan hereunder nor shall
the U.S. Loan Commitment of any Lender be increased or decreased as a
result of any such failure. Subject to the provisions of this Agreement,
the U.S. Borrower may repay any outstanding U.S. Borrower Loan on any day
which is a Business Day and any amounts so repaid may be reborrowed, up to
the amount available under this Section 2.01(a) at the time of such
Borrowing, until the Business Day next preceding the Revolving Credit
Termination Date; provided, however, the U.S. Borrower shall, without
notice or demand of any kind, immediately make such repayments of the U.S.
Borrower Loans to the extent necessary to reduce the aggregate outstanding
principal amount of the Loans to an amount no greater than the difference
between the then U.S. Loan Availability and the Letter of Credit
Obligations as of such time. Each requested Borrowing of U.S. Borrower
Loans funded on any Funding Date therefor shall be (i) if Base Rate Loans,
in a principal amount of at least $100,000 and in integral multiples of
$100,000 in excess of that amount and (ii) if Eurocurrency Rate Loans, in
a principal amount of at least $1,000,000 and in integral multiples of
$100,000 in excess of that amount.
(b) U.K. Borrower Loans. Subject to the terms and conditions set
forth in this Agreement, each U.K. Lender hereby severally and not jointly
agrees to make revolving loans, in Dollars or DM (each individually, a
"U.K. Borrower Loan" and, collectively, the "U.K. Borrower Loans") to the
U.K. Borrower from time to time during the period from the first Business
Day on which the conditions set forth in Section 6.03 have been satisfied
or waived by the U.K. Lenders to the Business Day next preceding the
Revolving Credit Termination Date, in an amount in Dollars (or, if U.K.
Borrower Loans are requested to be denominated in DM, of the DM equivalent
of the amount in Dollars (calculated based on the Exchange Rate for DM
then in effect)) not to exceed such U.K. Lender's U.K. Loan Pro Rata Share
of the U.K. Loan Availability at such time. All U.K. Borrower Loans
comprising the same Borrowing under this Agreement shall be made by the
U.K. Lenders simultaneously and proportionately to their then respective
U.K. Loan Pro Rata Shares, it being understood that no U.K. Lender shall
be responsible for any failure by any other U.K. Lender to perform its
obligation to make a U.K. Borrower Loan hereunder nor shall the U.K. Loan
Commitment of any U.K. Lender be increased or decreased as a result of any
such failure. Subject to the provisions of this Agreement, the U.K.
Borrower may repay any outstanding U.K. Borrower Loan on any day which is
a Business Day and any amounts so repaid may be reborrowed, up to the
amount available under this Section 2.01(b) at the time of such Borrowing,
until the Business Day next preceding the Revolving Credit Termination
Date; provided, however, the U.K. Borrower shall on each Eurocurrency
Interest Payment Date, without notice or demand of any kind, immediately
make such repayments of the U.K. Borrower Loans denominated in DM to the
extent necessary to reduce the aggregate outstanding principal amount of
the U.K. Borrower Loans denominated in DM on the date on which a Notice of
Conversion/Continuation is delivered to the Administrative Agent with
respect to U.K. Borrower Loans for which interest is payable on such
Eurocurrency Interest Payment Date, to an amount no greater than the DM
Subfacility. Each requested Borrowing of U.K. Borrower Loans funded on any
Funding Date therefor shall be (i) if Base Rate Loans, in a principal
amount of at least $100,000 and in integral multiples of $100,000 in
excess of that amount and (ii) if Eurocurrency Rate Loans, in a principal
amount of at least $1,000,000 and in integral multiples of $100,000 in
excess of that amount or in a principal amount of at least DM1,000,000 and
in integral multiples of DM100,000 in excess of that amount.
2.02. General Terms. (a) Notice of Borrowing. When a Borrower
desires to borrow under Section 2.01, the U.S. Borrower shall deliver to
the Administrative Agent a Notice of Borrowing, signed on behalf of such
Borrower, (i) on the Effective Date, in the case of a Borrowing of U.S.
Borrower Loans on the Effective Date, (ii) no later than 11:00 a.m. (New
York time) on the proposed Funding Date therefor, in the case of a
Borrowing of Base Rate Loans after the Effective Date which are U.S.
Borrower Loans, (iii) no later than 11:00 a.m. (New York time) on the
Business Day immediately preceding the proposed Funding Date therefor, in
the case of a Borrowing of Base Rate Loans which are U.K. Borrower Loans,
and (iv) no later than 11:00 a.m. (New York time) at least two (2)
Business Days in advance of the proposed Funding Date therefor, in the
case of a Borrowing of Eurocurrency Rate Loans after the Effective Date
which are U.S. Borrower Loans, and (v) no later than 11:00 a.m. (New York
time) at least three (3) Business Days in advance of the proposed Funding
Date therefor, in the case of a Borrowing of Eurocurrency Rate Loans which
are U.K. Borrower Loans. Such Notice of Borrowing shall specify (i) the
proposed Funding Date (which shall be a Business Day), (ii) the amount of
the proposed Borrowing (which shall be denominated in the currency
requested for such Borrowing), (iii) the U.S. Loan Availability or U.K.
Loan Availability, as applicable, as of the date of such Notice of
Borrowing, (iv) whether the proposed Borrowing will be of Base Rate Loans
or Eurocurrency Rate Loans, (v) in the case of Eurocurrency Rate Loans,
the requested Eurocurrency Interest Period, (vi) in the case of U.K.
Borrower Loans, the unused U.K. Loan Commitments, (vii) the instructions
for the disbursement of the proceeds of the proposed Borrowing, and (viii)
in the case of U.S. Borrower Loans, (A) the portion of the proposed
Borrowing, if any, which will be used to pay a dividend on the U.S.
Borrower's Capital Stock or to make a loan or other advance to any
Affiliate of the U.S. Borrower and (B) if any portion of the proposed
Borrowing will be used for the purposes described in clause (A), the
calculation of the Fixed Charge Coverage Ratio as of the Funding Date for
such Loans after giving effect to such dividend and/or loan resulting in
such Fixed Charge Coverage Ratio being no less than 1.0 to 1.0. The Loans
made on the Effective Date shall initially be Base Rate Loans and there-
after may be continued as Base Rate Loans or converted into Eurocurrency
Rate Loans, in the manner provided in Section 5.01(c) and subject to the
conditions therein set forth and in Section 5.02. In lieu of delivering
such a Notice of Borrowing (except with respect to a Borrowing of Loans on
the Effective Date), the U.S. Borrower may give the Administrative Agent
telephonic notice of any proposed Borrowing by the time required under
this Section 2.02(a), if the U.S. Borrower confirms such notice by
delivery of the required Notice of Borrowing to the Administrative Agent
by facsimile transmission promptly, but in no event later than 5:00 p.m.
(New York time) on the same day, the original of which facsimile copy
shall be delivered to the Administrative Agent within three (3) days after
the date of such transmission. Any Notice of Borrowing (or telephonic
notice in lieu thereof) given pursuant to this Section 2.02(a) shall be
irrevocable.
(b) Making of Loans. (i) Promptly after receipt of a Notice of
Borrowing under Section 2.02(a) (or telephonic notice in lieu thereof),
the Administrative Agent shall notify (A) each Lender or (B) each U.K.
Lender and the European Agent, as applicable, by telecopy, or other
similar form of transmission, of the proposed Borrowing. Each Lender
obligated to make a Loan with respect to the requested Borrowing shall
deposit an amount equal to its U.S. Loan Pro Rata Share or U.K. Loan Pro
Rata Share, as applicable, of the Loan amount requested (1) with the
Administrative Agent at its office in New York, New York, in immediately
available funds, if the requested Borrowing is a Borrowing of U.S.
Borrower Loans or (2) with the European Agent at its office in London,
England, in immediately available funds, if the requested Borrowing is a
Borrowing of U.K. Borrower Loans, not later than 1:00 p.m. (New York time)
(a) on the applicable Funding Date therefor, if the Borrowing is of U.S.
Borrower Loans and (b) on the day immediately preceding the applicable
Funding Date therefor, if the Borrowing is of U.K. Borrower Loans.
Subject to the fulfillment of the conditions precedent set forth in
Section 6.01 or Section 6.02, as applicable, the Administrative Agent
shall make the proceeds of such amounts received by it with respect to
U.S. Borrower Loans available to the U.S. Borrower at the Administrative
Agent's office in New York, New York on such Funding Date (or on the date
received if later than such Funding Date) and shall disburse such proceeds
in accordance with the U.S. Borrower's disbursement instructions set forth
in the applicable Notice of Borrowing. Subject to the fulfillment of the
conditions precedent set forth in Section 6.02 and, if applicable, Section
6.03, the European Agent shall make the proceeds of such amounts received
by it with respect to U.K. Borrower Loans available to the U.K. Borrower
at the European Agent's office in London, England on such Funding Date (or
on the date received if later than such Funding Date) and shall disburse
such proceeds in accordance with the U.S. Borrower's disbursement
instructions set forth in the applicable Notice of Borrowing. The failure
of any Lender to deposit the amount described above with the
Administrative Agent or European Agent, as applicable, on the applicable
Funding Date shall not relieve any other Lender of its obligations
hereunder to make its Loan on such Funding Date. In the event the
conditions precedent set forth in Section 6.01, 6.02, or 6.03, as
applicable, are not fulfilled as of the proposed Funding Date for any
Borrowing, the Administrative Agent or European Agent, as applicable,
shall promptly return, by wire transfer of immediately available funds,
the amount deposited by each Lender to such Lender.
(ii) Unless the Administrative Agent shall have been notified by any
Lender (A) on the Business Day immediately preceding the applicable
Funding Date in respect of any Borrowing of Loans which are Eurocurrency
Rate Loans or (B) prior to the time of funding thereof as specified in
Section 2.02(a) in respect of any Borrowing of Loans which are Base Rate
Loans, that such Lender does not intend to fund its Loan requested to be
made on such Funding Date, the Administrative Agent and European Agent may
assume that such Lender has funded its Loan and is depositing the proceeds
thereof with the Administrative Agent or European Agent, as applicable, on
the Funding Date therefor, and the Administrative Agent or European Agent,
as applicable, in its sole discretion may, but shall not be obligated to,
disburse a corresponding amount to the applicable Borrower on the
applicable Funding Date. If the Loan proceeds corresponding to that
amount are advanced to a Borrower by the Administrative Agent or European
Agent but are not in fact deposited with the Administrative Agent or
European Agent by such Lender on or prior to the applicable Funding Date,
such Lender agrees to pay, and in addition the applicable Borrower agrees
to repay, to the Administrative Agent or European Agent, as applicable,
forthwith on demand such corresponding amount, together with interest
thereon, for each day from the date such amount is disbursed to or for the
benefit of such Borrower until the date such amount is paid or repaid to
the Administrative Agent or European Agent, as applicable, (A) in the case
of a Borrower, at the interest rate applicable to such Borrowing and (B)
in the case of such Lender, at the Federal Funds Rate for the first three
(3) Business Days, and thereafter at the interest rate applicable to such
Borrowing. If such Lender shall pay to the Administrative Agent or
European Agent, as applicable, the corresponding amount, the amount so
paid shall constitute such Lender's Loan, and if both such Lender and a
Borrower shall pay and repay such corresponding amount, the Administrative
Agent or European Agent, as applicable, shall promptly pay to such
Borrower such corresponding amount. This Section 2.02(b) does not relieve
any Lender of its obligation to make its Loan on any applicable Funding
Date.
(c) Revolving Credit Termination Date. The Commitments shall
terminate on the Revolving Credit Termination Date. Each Lender's obliga-
tion to make Loans shall terminate on the Business Day next preceding the
Revolving Credit Termination Date. All outstanding Obligations shall be
paid in full (or, in the case of unmatured Letter of Credit Obligations,
provision for payment in cash shall be made to the satisfaction of the
Issuing Banks and the Requisite Lenders) (i) if the Commitments are
terminated pursuant to Section 4.01, on the date such termination is
effective, and (ii) otherwise, on the earlier to occur of (A) July 28,
2000 or, if not a Business Day, the next preceding Business Day, and (B)
the date of acceleration of the Obligations pursuant to Section 12.02.
(d) Maximum Revolving Credit Facility. Notwithstanding anything in
this Agreement to the contrary, in no event shall the sum of the aggregate
principal balance of the Loans plus the Letter of Credit Obligations
exceed the Commitments as in effect from time to time.
2.03. Authorized Officers and Administrative Agents. On the Closing
Date the U.S. Borrower shall deliver, and from time to time thereafter the
U.S. Borrower may deliver, to the Administrative Agent an Officer's
Certificate setting forth the names of the officers, employees and agents
authorized to request Loans and Letters of Credit and to request a
conversion/continuation of any Loan, in each instance containing a
specimen signature of each such officer, employee or agent. The officers,
employees and agents so authorized shall also be authorized to act for the
Borrowers in respect of all other matters relating to the Loan Documents.
The Administrative Agent, European Agent, Lenders and Issuing Banks shall
be entitled to rely conclusively on such officer's, employee's, or agent's
authority to request such Loan or Letter of Credit or such conver-
sion/continuation until the Administrative Agent, European Agent, Lenders
and Issuing Banks receive written notice to the contrary. None of the
Administrative Agent, the European Agent, the Lenders, or the Issuing
Banks shall have any duty to verify the authenticity of the signature
appearing on any such Officer's Certificate, written Notice of Borrowing
or Notice of Conversion/Continuation, or any other document, and, with
respect to an oral request for such a Loan or Letter of Credit or such
conversion/continuation, the Administrative Agent shall have no duty to
verify the identity of any person representing himself or herself as one
of the officers, employees or agents authorized to make such request or
otherwise to act on behalf of the Borrowers. None of the Administrative
Agent, European Agent, any Lender or any Issuing Bank shall incur any
liability to the Borrower or any other Person in acting upon any
telephonic or facsimile notice referred to above which the Administrative
Agent, the European Agent, such Lender, or such Issuing Bank believes to
have been given by a duly authorized officer or other person authorized to
borrow on behalf of the Borrowers.
2.04. Use of Proceeds of Loans. The proceeds of the U.S. Borrower
Loans shall be used for working capital in the ordinary course of the
respective businesses of the U.S. Borrower and its Subsidiaries or for
other lawful general corporate purposes. The proceeds of the U.K. Borrower
Loans shall be used by the U.K. Borrower to make loans and other advances
to European Subsidiary Borrowers under the U.K. Loan Documents.
Notwithstanding the foregoing, in no event may proceeds of Loans be used
(directly or indirectly) to pay dividends to RHI or make loans to RHI at
any time when the Fixed Charge Coverage Ratio as of such time, after
giving effect to such dividends and/or loans, would be less than 1.0 to
1.0.
<PAGE>
ARTICLE III
LETTERS OF CREDIT
3.01. Letters of Credit. Subject to the terms and conditions set
forth in this Agreement, each Issuing Bank hereby severally agrees to
issue for the account of the U.S. Borrower, or for the account of any of
the U.S. Borrower's Subsidiaries if the U.S. Borrower is jointly and
severally liable for reimbursement of amounts drawn under such Letter of
Credit, one or more Letters of Credit, subject to the following
provisions:
(a) Types and Amounts. An Issuing Bank shall not have any obligation
to issue, amend or extend, and shall not issue, amend or extend, any
Letter of Credit at any time:
(i)if the aggregate Letter of Credit Obligations with respect to such
Issuing Bank, after giving effect to the issuance, amendment or extension
of the Letter of Credit requested hereunder, shall exceed any limit
imposed by law or regulation upon such Issuing Bank;
(ii) if the Issuing Bank receives written notice from the
Administrative Agent at or before 11:00 a.m. (New York time) on the date
of the proposed issuance, amendment or extension of such Letter of Credit
that (A) immediately after giving effect to the issuance, amendment or
extension of such Letter of Credit, (I) the Letter of Credit Obligations
at such time would exceed $12,000,000, or (II) the U.S. Loan Availability
at such time would be less than zero, or (B) one or more of the conditions
precedent contained in Sections 6.01 or 6.02, as applicable, would not on
such date be satisfied, unless such conditions are thereafter satisfied
and written notice of such satisfaction is given to the Issuing Bank by
the Administrative Agent (and an Issuing Bank shall not otherwise be
required to determine that, or take notice whether, the conditions
precedent set forth in Sections 6.01 or 6.02, as applicable, have been
satisfied);
(iii) which is in a currency other than a currency in which such
Issuing Bank is then issuing letters of credit; or
(iv) which has an expiration date later than the date one (1) year
after the date of issuance (without regard to any automatic renewal
provisions thereof); provided, however, that on the Revolving Credit
Termination Date, Borrower shall deposit with the Administrative Agent (or
respective Issuing Bank(s) at the direction of the Administrative Agent)
Cash Collateral for deposit in the Cash Collateral Account or under other
agreements satisfactory to the Administrative Agent and Issuing Bank(s)
and in an amount equal to the then undrawn face amount of all Letters of
Credit which will continue outstanding after the Revolving Credit
Termination Date plus Letter of Credit Fees with respect to such Letters
of Credit for the period commencing on the Revolving Credit Termination
Date through the expiry date of such Letters of Credit.
For purposes of the Dollar limitations set forth above, all calculations
thereof shall be determined, with respect to Letters of Credit denominated
in a non-U.S. currency, based on the Dollar equivalent of such non-U.S.
currency at the Exchange Rate therefor which is in effect on the date of
determination.
(b) Conditions. In addition to being subject to the satisfaction of
the conditions precedent contained in Sections 6.01 and 6.02, as
applicable, the obligation of an Issuing Bank to issue, amend or extend
any Letter of Credit is subject to the satisfaction in full of the
following conditions:
(i) if the Issuing Bank so requests, the U.S. Borrower or, in the
case of Letters of Credit issued for the account of any of the U.S.
Borrower's Subsidiaries, the U.S. Borrower and such Subsidiary shall have
executed and delivered to such Issuing Bank and the Administrative Agent
a Letter of Credit Reimbursement Agreement and such other documents and
materials as may be required pursuant to the terms thereof; and
(ii) the terms of the proposed Letter of Credit shall be
satisfactory to the Issuing Bank in its sole discretion.
(c) Issuance of Letters of Credit. (i) The U.S. Borrower shall give
an Issuing Bank and the Administrative Agent written notice that it has
selected such Issuing Bank to issue a Letter of Credit not later than
11:00 a.m. (New York time) on the third (3rd) Business Day preceding the
requested date for issuance thereof under this Agreement, or such shorter
notice as may be acceptable to such Issuing Bank and the Administrative
Agent. Such notice shall be irrevocable unless and until such request is
denied by the applicable Issuing Bank and shall specify (A) that the
requested Letter of Credit is either a Commercial Letter of Credit or a
Standby Letter of Credit, (B) that such Letter of Credit is solely for the
account of the U.S. Borrower or the name of the Subsidiary of the U.S.
Borrower which is jointly and severally applying for such Letter of
Credit, (C) the stated amount of the Letter of Credit requested, (D) the
effective date (which shall be a Business Day) of issuance of such Letter
of Credit, (E) the date on which such Letter of Credit is to expire (which
shall be a Business Day and no later than the Business Day immediately
preceding the scheduled Revolving Credit Termination Date), (F) the Person
for whose benefit such Letter of Credit is to be issued, (G) other
relevant terms of such Letter of Credit, (H) the U.S. Loan Availability at
such time, and (I) the amount of the then outstanding Letter of Credit
Obligations. Such Issuing Bank shall notify the Administrative Agent
immediately upon receipt of a written notice from the U.S. Borrower
requesting that a Letter of Credit be issued, or that an existing Letter
of Credit be extended or amended and, upon the Administrative Agent's
request therefor, send a copy of such notice to the Administrative Agent.
(ii) The Issuing Bank shall give (A) the Administrative Agent
written notice, or telephonic notice confirmed promptly thereafter in
writing, of the issuance, amendment or extension of a Letter of Credit and
(B) promptly after issuance thereof, provide the Administrative Agent with
a copy of each Letter of Credit issued and each amendment thereto.
(d) Reimbursement Obligations; Duties of Issuing Banks. (i)
Notwithstanding any provisions to the contrary in any Letter of Credit
Reimbursement Agreement:
(A) the U.S. Borrower shall reimburse, or cause its Subsidiary for
whose account a Letter of Credit is issued to reimburse, the Issuing Bank
for amounts drawn under such Letter of Credit, in Dollars, no later than
the date (the "Reimbursement Date") which is the earlier of (I) the time
specified in the applicable Letter of Credit Reimbursement Agreement and
(II) one (1) Business Day after the U.S. Borrower receives written notice
from the Issuing Bank that payment has been made under such Letter of
Credit by the Issuing Bank; and
(B) all Reimbursement Obligations with respect to any Letter of
Credit shall bear interest at the rate applicable to Base Rate Loans in
accordance with Section 5.01(a) from the date of the relevant drawing
under such Letter of Credit until the Reimbursement Date and thereafter at
the rate applicable to Base Rate Loans in accordance with Section 5.01(d).
(ii) The Issuing Bank shall give the Administrative Agent written
notice, or telephonic notice confirmed promptly thereafter in writing, of
all drawings under a Letter of Credit and the payment (or the failure to
pay when due) by the U.S. Borrower or its applicable Subsidiary on account
of a Reimbursement Obligation (which notice the Administrative Agent shall
promptly transmit by telegram, telex, telecopy or similar transmission to
each Lender).
(iii) No action taken or omitted in good faith by an Issuing Bank
under or in connection with any Letter of Credit shall put such Issuing
Bank under any resulting liability to any Lender, the U.S. Borrower or any
of its Subsidiaries or, so long as it is not issued in violation of
Section 3.01(a), relieve any Lender of its obligations hereunder to such
Issuing Bank. Solely as between the Issuing Banks and the Lenders, in
determining whether to pay under any Letter of Credit, the respective
Issuing Bank shall have no obligation to the Lenders other than to confirm
that any documents required to be delivered under a respective Letter of
Credit appear to have been delivered and that they appear on their face to
comply with the requirements of such Letter of Credit.
(e) Participations. (i) Immediately upon issuance by an Issuing
Bank of any Letter of Credit in accordance with the procedures set forth
in this Section 3.01 and immediately upon conversion of a letter of credit
of an Issuing Bank to a Letter of Credit pursuant to Section 3.02, each
Lender shall be deemed to have irrevocably and unconditionally purchased
and received from that Issuing Bank, without recourse or warranty, an
undivided interest and participation in such Letter of Credit to the
extent of such Lender's U.S. Loan Pro Rata Share, including, without
limitation, all obligations of the U.S. Borrower with respect thereto
(other than amounts owing to the Issuing Bank under Section 3.01(g)) and
any security therefor and guaranty pertaining thereto.
(ii) If any Issuing Bank makes any payment under any Letter of
Credit and the U.S. Borrower or the Subsidiary of the U.S. Borrower for
whose account the Letter of Credit was issued does not repay such amount
to the Issuing Bank on the Reimbursement Date, the Issuing Bank shall
promptly notify the Administrative Agent, which shall promptly notify each
Lender, and each Lender shall promptly and unconditionally pay to the
Administrative Agent for the account of such Issuing Bank, in immediately
available funds, the amount of such Lender's U.S. Loan Pro Rata Share of
such payment (net of that portion of such payment, if any, made by such
Lender in its capacity as an Issuing Bank), and the Administrative Agent
shall promptly pay to the Issuing Bank such amounts received by it, and
any other amounts received by the Administrative Agent for the Issuing
Bank's account, pursuant to this Section 3.01(e). All amounts so paid to
the Issuing Bank shall be deemed to constitute U.S. Borrower Loans. If a
Lender does not make its U.S. Loan Pro Rata Share of the amount of such
payment available to the Administrative Agent, such Lender agrees to pay
to the Administrative Agent for the account of the Issuing Bank, forthwith
on demand, such amount together with interest thereon, for the first three
(3) Business Days after the date such payment was first due at the Federal
Funds Rate, and thereafter at the interest rate then applicable to Base
Rate Loans in accordance with Section 5.01(a). The failure of any Lender
to make available to the Administrative Agent for the account of an
Issuing Bank its U.S. Loan Pro Rata Share of any such payment shall
neither relieve any other Lender of its obligation hereunder to make
available to the Administrative Agent for the account of such Issuing Bank
such other Lender's U.S. Loan Pro Rata Share of any payment on the date
such payment is to be made nor increase the obligation of any other Lender
to make such payment to the Administrative Agent.
(iii) Whenever an Issuing Bank receives a payment on account of a
Reimbursement Obligation, including any interest thereon, as to which the
Administrative Agent has previously received payments from any Lender for
the account of such Issuing Bank pursuant to this Section 3.01(e), such
Issuing Bank shall promptly pay to the Administrative Agent and the
Administrative Agent shall promptly pay to such Lender an amount equal to
such Lender's U.S. Loan Pro Rata Share thereof. Each such payment shall
be made by such Issuing Bank or the Administrative Agent, as the case may
be, on the Business Day on which such Person receives the funds paid to
such Person pursuant to the preceding sentence, if received prior to 11:00
a.m. (New York time) on such Business Day, and otherwise on the next
succeeding Business Day.
(iv) Upon the request of any Lender, an Issuing Bank shall furnish
such Lender copies of any Letter of Credit or Letter of Credit Reimburse-
ment Agreement to which such Issuing Bank is party and such other
documentation as reasonably may be requested by such Lender.
(v) The obligations of a Lender to make payments to the
Administrative Agent for the account of any Issuing Bank with respect to
a Letter of Credit shall be irrevocable, shall not be subject to any
qualification or exception whatsoever except willful misconduct or gross
negligence of such Issuing Bank, and shall be honored in accordance with
this Article III (irrespective of the satisfaction of the conditions
described in Sections 6.01 and 6.02, as applicable) under all
circumstances, including, without limitation, any of the following
circumstances:
(A) any lack of validity or enforceability of this Agreement or any
of the other Loan Documents;
(B) the existence of any claim, setoff, defense or other right which
the U.S. Borrower may have at any time against a beneficiary named in a
Letter of Credit or any transferee of a beneficiary named in a Letter of
Credit (or any Person for whom any such transferee may be acting), the
Administrative Agent, the Issuing Bank, any Lender, or any other Person,
whether in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions (including
any underlying transactions between the account party and beneficiary
named in any Letter of Credit);
(C) any draft, certificate or any other document presented under the
Letter of Credit having been determined to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(D) the surrender or impairment of any security for the performance
or observance of any of the terms of any of the Loan Documents;
(E) any failure by that Issuing Bank to make any reports required
pursuant to Section 3.01(h) or the inaccuracy of any such report; or
(F) the occurrence of any Event of Default or Potential Event of
Default.
(f) Payment of Reimbursement Obligations. (i) The U.S. Borrower
unconditionally agrees to pay, or cause its Subsidiary for whose account
a Letter of Credit is issued to pay, to each Issuing Bank, in Dollars, the
amount of all Reimbursement Obligations, interest and other amounts
payable to such Issuing Bank under or in connection with the Letters of
Credit when such amounts are due and payable, irrespective of any claim,
setoff, defense or other right which the U.S. Borrower may have at any
time against any Issuing Bank or any other Person.
(ii) In the event any payment by the U.S. Borrower or such Subsidiary
received by an Issuing Bank with respect to a Letter of Credit and
distributed by the Administrative Agent to the Lenders on account of their
participations is thereafter set aside, avoided or recovered from such
Issuing Bank in connection with any receivership, liquidation or
bankruptcy proceeding, each such Lender which received such distribution
shall, upon demand by such Issuing Bank, contribute such Lender's U.S.
Loan Pro Rata Share of the amount set aside, avoided or recovered together
with interest at the rate required to be paid by such Issuing Bank upon
the amount required to be repaid by it.
(g) Issuing Bank Charges. The U.S. Borrower shall pay, or cause its
Subsidiary for whose account a Letter of Credit is issued to pay, to each
Issuing Bank, solely for its own account, the standard charges assessed by
such Issuing Bank in connection with the issuance, administration,
amendment and payment or cancellation of Letters of Credit and such
compensation in respect of such Letters of Credit for the U.S. Borrower's
or such Subsidiary's account, as applicable, as may be agreed upon by the
U.S. Borrower and such Issuing Bank from time to time.
(h) Issuing Bank Reporting Requirements. Each Issuing Bank shall, no
later than the tenth (10th) Business Day following the last day of each
calendar month, provide to the Administrative Agent, the U.S. Borrower,
and each Lender separate schedules for Commercial Letters of Credit and
Standby Letters of Credit issued as Letters of Credit, in form and
substance reasonably satisfactory to the Administrative Agent, setting
forth the aggregate Letter of Credit Obligations outstanding to it at the
end of each month and, to the extent not otherwise provided in accordance
with the provisions of Section 3.01(c)(ii), any information requested by
the Administrative Agent or the U.S. Borrower relating to the date of
issue, account party, amount, expiration date and reference number of each
Letter of Credit issued by it.
(i) Indemnification; Exoneration. (i) In addition to all other
amounts payable to an Issuing Bank, the U.S. Borrower hereby agrees to
defend, indemnify, and save the Administrative Agent, each Issuing Bank
and each Lender harmless from and against any and all claims, demands,
liabilities, penalties, damages, losses (other than loss of profits),
costs, charges and expenses (including reasonable attorneys' fees but
excluding taxes) which the Administrative Agent, such Issuing Bank or such
Lender may incur or be subject to as a consequence, direct or indirect, of
(A) the issuance of any Letter of Credit other than as a result of the
gross negligence or willful misconduct of the Issuing Bank, as determined
by a court of competent jurisdiction, or (B) the failure of the Issuing
Bank issuing a Letter of Credit to honor a drawing under such Letter of
Credit as a result of any act or omission, whether rightful or wrongful,
of any present or future de jure or de facto government or Governmental
Authority.
(ii) As between the U.S. Borrower and any of its Subsidiaries for
whose account a Letter of Credit is issued on the one hand and the
Administrative Agent, the Lenders and the Issuing Banks on the other hand,
the U.S. Borrower assumes all risks of the acts and omissions of, or
misuse of Letters of Credit by, the respective beneficiaries of the
Letters of Credit. In furtherance and not in limitation of the foregoing,
subject to the provisions of the Letter of Credit Reimbursement
Agreements, the Issuing Banks and the Lenders shall not be responsible
for: (A) the form, validity, legality, sufficiency, accuracy, genuineness
or legal effect of any document submitted by any party in connection with
the application for and issuance of the Letters of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) the validity, legality or suffi-
ciency of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder
or proceeds thereof, in whole or in part, which may prove to be invalid or
ineffective for any reason; (C) failure of the beneficiary of a Letter of
Credit to comply duly with conditions required in order to draw upon such
Letter of Credit; (D) errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, cable, telegraph, telex
or otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a
drawing under any Letter of Credit or of the proceeds thereof; (G) the
misapplication by the beneficiary of a Letter of Credit of the proceeds of
any drawing under such Letter of Credit; and (H) any consequences arising
from causes beyond the control of the Administrative Agent, the Issuing
Banks or the Lenders.
3.02. Transitional Provisions. Schedule 3.02 contains a schedule of
certain letters of credit issued prior to the Effective Date by Citibank
for the account of the U.S. Borrower or for the account of a Subsidiary of
the U.S. Borrower and on which the U.S. Borrower is jointly and severally
liable for reimbursement of amounts drawn thereunder. Subject to the
satisfaction of the conditions precedent contained in Section 6.01 on the
Effective Date (i) such letters of credit, to the extent still out-
standing, shall automatically and without further action of the parties
thereto be converted into Letters of Credit issued pursuant to this
Section 3.02 and subject to the provisions hereof, and for this purpose
the fees specified in Section 5.03(b) shall be payable as if such letters
of credit had been issued on the Effective Date, (ii) the face amount of
such letters of credit shall be included in the calculation of Letter of
Credit Obligations, and (iii) all liabilities of the U.S. Borrower with
respect to such letters of credit shall constitute Obligations. No letter
of credit converted in accordance with this Section 3.02 shall be amended,
extended or renewed without the prior written consent of the
Administrative Agent.
3.03. Obligations Several. The obligations of each Issuing Bank and
each Lender under this Article III are several and not joint, and no
Issuing Bank or Lender shall be responsible for the obligation to issue
Letters of Credit or participation obligation hereunder, respectively, of
any other Issuing Bank or Lender.
<PAGE>
ARTICLE IV
PAYMENTS AND PREPAYMENTS
4.01. Prepayments; Reductions in Commitments.
(a) Voluntary Prepayments/Commitment Reductions. (i) Prepayments.
The Borrowers may prepay the Loans in whole or in part, at any time and
from time to time.
(ii) Voluntary Commitment Reductions. The Borrowers, upon at least
three (3) Business Days' prior written notice to the Administrative Agent
from the U.S. Borrower (which the Administrative Agent shall promptly
transmit to each Lender), shall have the right, at any time and from time
to time, to terminate in whole or permanently reduce in part the
respective U.S. Loan Commitments and U.K. Loan Commitments; provided that,
the Borrowers shall have made whatever payment may be required to reduce
the the respective outstanding U.K. Borrower Loans and/or U.S. Borrower
Loans, as applicable, by the aggregate amount required such that, (A) in
the case of a reduction or termination of the U.S. Loan Commitments, the
U.S. Revolving Credit Obligations, after giving effect to such payment,
will equal an amount less than or equal to the U.S. Loan Commitments as
reduced or terminated and (B) in the case of a reduction or termination of
the U.K. Loan Commitments, the outstanding balance of the U.K. Borrower
Loans, after giving effect to such payment, will equal an amount less than
or equal to the U.K. Loan Commitments as reduced or terminated. Any
partial reduction of the Commitments shall be in an aggregate minimum
amount of $1,000,000 and integral multiples of $1,000,000 in excess of
that amount. Each reduction of the U.S. Loan Commitments shall reduce the
U.S. Loan Commitment of each Lender proportionately in accordance with its
U.S. Loan Pro Rata Share and each reduction of the U.K. Loan Commitments
shall reduce the U.K. Loan Commitment of each U.K. Lender proportionately
in accordance with its U.K. Loan Pro Rata Share. Any notice of
termination or reduction given to the Administrative Agent under this Sec-
tion 4.01(a)(ii) shall specify the date (which shall be a Business Day) of
such termination or reduction and, with respect to a partial reduction,
the aggregate principal amount thereof. When notice of termination or
reduction is delivered as provided herein, the principal amount of the
Loans specified in the notice shall become due and payable on the date
specified in such notice.
(iii) Commitment Adjustments. In the event the conditions set forth
in Section 6.03 are satisfied, on the initial Funding Date for U.K.
Borrower Loans, the aggregate U.S. Loan Commitments shall be reduced by
$12,000,000 and the aggregate U.K. Loan Commitments shall be deemed to
equal $12,000,000. In the event at any time thereafter the U.S. Borrower
notifies the Administrative Agent of a reduction or termination of the
U.K. Loan Commitments as provided in clause (ii) above, the U.S. Loan
Commitments shall be increased by the amount of such reduction or, in the
event of a termination, by the amount of the U.K. Loan Commitments
terminated effective the date on which such reduction or termination
occurs.
(iv) Prepayment Fee. The prepayments and payments in respect of
reductions and terminations described in this Section 4.01 may be made
without premium or penalty (except as provided in Article XIV).
(b) Mandatory Prepayments/Reductions.
(i) Net Cash Proceeds of Sale. Within three (3) Business Days after
either Borrower's or any Subsidiary of either Borrower's receipt of any
Net Cash Proceeds of Sale (A) in excess of $2,000,000 generated from any
individual transaction or (B) in excess of $10,000,000 in the aggregate
generated from transactions consummated after the Effective Date, the U.S.
Borrower shall make or cause to be made a mandatory prepayment of the
Obligations in an amount equal to one hundred percent (100%) of such Net
Cash Proceeds of Sale.
(ii) Net Cash Proceeds of Issuance of Equity Securities.
Immediately upon either Borrower's or any Subsidiary of either Borrower's
receipt of any Net Cash Proceeds of Issuance of Equity Securities, the
U.S. Borrower shall make or cause to be made a mandatory prepayment in an
amount equal to one hundred percent (100%) of such Net Cash Proceeds of
Issuance of Equity Securities.
(iii) Net Cash Proceeds of Issuance of Indebtedness. Immediately
upon either Borrower's or any Subsidiary of either Borrower's receipt of
any Net Cash Proceeds of Issuance of Indebtedness, the U.S. Borrower shall
make or cause to be made a mandatory prepayment in an amount equal to one
hundred percent (100%) of such Net Cash Proceeds of Issuance of
Indebtedness.
(iv) No Waiver or Consent. Nothing in this Section 4.01(b) shall be
construed to constitute the Lenders' consent to any transaction referenced
in clauses (i) and (iii) above which is not expressly permitted by
Article X.
(v) Notice. The U.S. Borrower shall give the Administrative Agent
prior written notice or telephonic notice promptly confirmed in writing
(each of which the Administrative Agent shall promptly transmit to each
Lender), when a Designated Prepayment will be made (which date of
prepayment shall be no later than the date on which such Designated
Payment becomes due and payable pursuant to this Section 4.01(b)).
(vi) Application of Designated Prepayments. Designated Prepayments
shall be allocated and applied to the Obligations as follows:
(A) the amount of each Designated Prepayment shall be applied to the
principal balance of the Loans ratably based on the relative outstanding
principal balances thereof as of the date of application, with each
application being made first to the Loans which are Base Rate Loans until
paid in full and then to Loans which are Eurocurrency Rate Loans and shall
permanently reduce the respective Commitments of each Lender
proportionately in accordance with its U.S. Loan Pro Rata Share or U.K.
Loan Pro Rata Share, as applicable; and
(B) following the payment in full of the Loans, the remaining
balance of each Designated Prepayment shall be applied to the principal
balance of the Letter of Credit Obligations (or, to the extent such Letter
of Credit Obligations are contingent, deposited in the Cash Collateral
Account to provide Cash Collateral in respect of such Letter of Credit
Obligations).
4.02. Payments. (a) Manner and Time of Payment. All payments of
principal of and interest on the Loans and Reimbursement Obligations and
other Obligations (including, without limitation, fees and expenses) which
are payable to the Administrative Agent, the European Agent, the European
Administrator, the Lenders or any Issuing Bank shall be made without
condition, set-off, or reservation of right, and, with respect to payments
made other than from application of deposits in a Concentration Account,
in immediately available funds in the applicable currency, delivered to
(i) the Administrative Agent (or, in the case of Reimbursement
Obligations, to the pertinent Issuing Bank), if the payment relates to
Obligations of the U.S. Borrower, not later than 11:00 a.m. (New York
time) on the date and at the place due, to such account of the
Administrative Agent (or such Issuing Bank) as it may designate or (ii)
the European Agent, if the payment relates to Obligations of the U.K.
Borrower, not later than 11:00 a.m. (London time) on the date and at the
place due, to such account of the European Agent as it may designate; in
each instance, for the account of the Administrative Agent, the European
Agent, the European Administrator, the Lenders or such Issuing Bank, as
the case may be. Funds received by the Administrative Agent or European
Agent, including, without limitation, funds in respect of any Loans to be
made on that date, not later than 11:00 a.m. (New York time or London
time, as applicable) on any given Business Day shall be credited against
payment to be made that day and funds received by the Administrative Agent
or European Agent after that time shall be deemed to have been paid on the
next succeeding Business Day. Payments actually received by the
Administrative Agent or European Agent for the account of the Lenders or
the Issuing Banks, or any of them, shall be paid to them by the
Administrative Agent or European Agent, as applicable, promptly after
receipt thereof.
(b) Pre-Default Apportionment of Payments. Subject to the provisions
of Section 4.01 and Section 4.02(f), all payments of principal and
interest in respect of outstanding Loans, all payments in respect of Reim-
bursement Obligations, all payments of fees and all other payments in
respect of any other Obligations, shall be allocated among such of the
Lenders and Issuing Banks as are entitled thereto, in proportion to their
respective U.S. Loan Pro Rata Shares or U.K. Loan Pro Rata Shares, as
applicable, or otherwise as provided herein. Except as provided in
Section 4.02(c) with respect to payments and proceeds of Collateral
received after the occurrence of an Event of Default, all other payments,
proceeds of Collateral, and other amounts received by the Administrative
Agent or European Agent from or for the benefit of the Borrowers, or
either of them, shall be applied
(i) first, to pay principal of and interest on any portion of the Loans
which the Administrative Agent or European Agent may have advanced on
behalf of any Lender other than Citicorp for which the Administrative
Agent or European Agent has not then been reimbursed by such Lender or the
applicable Borrower,
(ii) second, to pay principal of and interest on any Protective Advance
for which the Administrative Agent has not then been paid by a Borrower or
reimbursed by the Lenders,
(iii) third, to pay the principal of the Loans then due and payable in
the order described hereinbelow and interest on such Loans then due and
payable, ratably, based on the then outstanding balances of the such
Loans,
(iv) fourth, to pay all other Obligations then due and payable, ratably,
and
(v) fifth, as the U.S. Borrower so designates.
All such principal and interest payments in respect of Loans shall be
applied first, to repay outstanding Base Rate Loans and then to repay
outstanding Eurocurrency Rate Loans with those Eurocurrency Rate Loans
which have earlier expiring Eurocurrency Interest Periods being repaid
prior to those which have later expiring Eurocurrency Interest Periods.
(c) Post-Default Apportionment of Payments. After the occurrence
of an Event of Default and while the same is continuing, the
Administrative Agent or European Agent, as applicable, shall apply all
payments in respect of any Obligations and all proceeds of Collateral in
the following order:
(i) first, to pay principal of and interest on any portion of the
Loans which the Administrative Agent or European Agent may have advanced
on behalf of any Lender other than Citicorp for which the Administrative
Agent or European Agent has not then been reimbursed by such Lender or a
Borrower;
(ii) second, to pay principal of and interest on any Protective
Advance for which the Administrative Agent has not then been paid by a
Borrower or reimbursed by the Lenders;
(iii) third, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Administrative Agent,
European Agent, and/or European Administrator;
(iv) fourth, to pay principal of and interest on Letter of Credit
Obligations (or, to the extent such Obligations are contingent, deposited
in the Cash Collateral Account to provide Cash Collateral in respect of
such Obligations);
(v) fifth, to pay Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Lenders and the Issuing
Banks;
(vi) sixth, to pay interest due in respect of the Loans, ratably, in
accordance with the Lenders' respective U.S. Loan Pro Rata Shares and U.K.
Loan Pro Rata Shares, as applicable;
(vii) seventh, to the ratable payment or prepayment of principal
outstanding on all Loans and Hedge Agreements to which any of the Lenders
or any Affiliate of any of the Lenders is a party, in accordance with the
Lender's respective U.S. Loan Pro Rata Shares and U.K. Loan Pro Rata
Shares, as applicable; and
(viii) eighth, to the ratable payment of all other Obligations.
(d) Administrative Agent Authority to Apply Funds. The
Administrative Agent, in its sole discretion subject only to the terms of
this Section 4.02(d), may pay from the proceeds of Loans made to the
Borrowers hereunder, whether made following a request by the U.S. Borrower
pursuant to Section 2.02 or a deemed request as provided in this
Section 4.02(d), all amounts payable by the Borrowers hereunder,
including, without limitation, amounts payable with respect to payments of
principal, interest, Reimbursement Obligations and fees and all
reimbursements for expenses pursuant to Section 15.02. Each of the
Borrowers hereby irrevocably authorize the Lenders to make Loans to it,
which Loans shall be Base Rate Loans, in each case, upon notice from the
Administrative Agent as described in the following sentence for the
purpose of paying principal, interest, Reimbursement Obligations and fees
due from such Borrower, reimbursing expenses pursuant to Section 15.02 and
paying any and all other amounts due and payable by such Borrower
hereunder or under the Notes, and agrees that all such Loans so made shall
be deemed to have been requested by it pursuant to Section 2.02 as of the
date of the aforementioned notice. The Administrative Agent shall request
Loans on behalf of the Borrowers as described in the preceding sentence by
notifying the Lenders by telecopy, telegram or other similar form of
transmission (which notice the Administrative Agent shall thereafter
promptly transmit to the U.S. Borrower and, if applicable, European
Agent), of the amount and Funding Date of the proposed Borrowing and that
such Borrowing is being requested on the respective Borrower's behalf
pursuant to this Section 4.02(d). On the proposed Funding Date for such
Loan, the Lenders shall make the requested Loans in accordance with the
procedures and subject to the conditions specified in Section 2.02.
(e) Priorities and Distributions of Payments. The orders of
priority set forth in Sections 4.02(b) and (c) and the related provisions
of this Agreement are set forth solely to determine the rights and
priorities of the Administrative Agent, the European Agent, the European
Administrator, the Lenders, the Issuing Banks and other Holders as among
themselves. Subject to Section 4.02(f), the Administrative Agent shall
promptly distribute to each Lender and Issuing Bank at its primary address
set forth on the appropriate signature page hereof or the signature page
to the Assignment and Acceptance by which it became a Lender or Issuing
Bank, or at such other address as a Lender, an Issuing Bank or other
Holder may request in writing, such funds as such Person may be entitled
to receive, subject to the provisions of Article XIV; provided that the
Administrative Agent shall under no circumstances be bound to inquire into
or determine the validity, scope or priority of any interest or
entitlement of any Holder and may suspend all payments or seek appropriate
relief (including, without limitation, instructions from the Requisite
Lenders or an action in the nature of interpleader) in the event of any
doubt or dispute as to any apportionment or distribution contemplated
hereby.
(f) Defaulting Lenders. In the event that any Lender fails to fund
its U.S. Loan Pro Rata Share of any U.S. Borrower Loan or any U.K. Lender
fails to fund its U.K. Loan Pro Rata Share of any U.K. Borrower Loan
requested by the U.S. Borrower which such Lender is obligated to fund
under the terms of this Agreement (the funded portion of such Loan being
hereinafter referred to as a "Non Pro Rata Loan"), until the earlier of
such Lender's cure of such failure and the termination of the U.S. Loan
Commitments or U.K. Loan Commitments, as applicable, the proceeds of all
amounts thereafter repaid to the Administrative Agent by a Borrower and
otherwise required to be applied to such Lender's share of all other
Obligations pursuant to the terms of this Agreement shall be advanced to
the U.S. Borrower or U.K. Borrower, as applicable, by the Administrative
Agent or European Agent, as applicable, on behalf of such Lender to cure,
in full or in part, such failure by such Lender, but shall nevertheless be
deemed to have been paid to such Lender in satisfaction of such other
Obligations. Notwithstanding anything in this Agreement to the contrary:
(i) the foregoing provisions of this Section 4.02(f) shall apply
only with respect to the proceeds of payments of Obligations and shall not
affect the conversion or continuation of Loans pursuant to Section
5.01(c);
(ii) a Lender shall be deemed to have cured its failure to fund its
U.S. Loan Pro Rata Share or U.K. Loan Pro Rata Share of any Loan at such
time as an amount equal to such Lender's original U.S. Loan Pro Rata Share
or U.K. Loan Pro Rata Share of the requested principal portion of such
Loan is fully funded to the applicable Borrower, whether made by such
Lender itself or by operation of the terms of this Section 4.02(f), and
whether or not the Non Pro Rata Loan with respect thereto has been repaid,
converted or continued;
(iii) amounts advanced to a Borrower to cure, in full or in part,
any such Lender's failure to fund its U.S. Loan Pro Rata Share or U.K.
Loan Pro Rata Share of any Loan ("Cure Loans") shall bear interest at the
rate in effect from time to time pursuant to Section 5.01 and for all
other purposes of this Agreement shall be treated as if they were Base
Rate Loans; and
(iv) regardless of whether or not an Event of Default has occurred
or is continuing, and notwithstanding the instructions of either Borrower
as to its desired application, all repayments of principal which, in
accordance with the other terms of this Section 4.02, would be applied to
the outstanding Loans which are Base Rate Loans shall be applied first,
ratably to all such Base Rate Loans constituting Non Pro Rata Loans,
second, ratably to such Base Rate Loans other than those constituting Non
Pro Rata Loans or Cure Loans and, third, ratably to such Base Rate Loans
constituting Cure Loans.
(g) Payments on Non-Business Days. Whenever any payment to be made
by a Borrower hereunder or under the Notes is stated to be due on a day
which is not a Business Day, the payment shall instead be due on the next
succeeding Business Day (except as set forth in Section 5.02(b)(iii) with
respect to payments due on the next preceding Business Day), and any such
extension of time shall be included in the computation of the payment of
interest and fees hereunder.
4.03. Promise to Repay; Evidence of Indebtedness.
(a) Promise to Repay. Each Borrower severally and not jointly
hereby agrees to pay when due the principal amount of each Loan which is
made to it, and further agrees to pay all unpaid interest accrued thereon,
in accordance with the terms of this Agreement and the Notes. The U.S.
Borrower shall execute and deliver to each Lender on the Effective Date a
promissory note, in form and substance acceptable to the Administrative
Agent and such Lender, evidencing the U.S. Borrower Loans and thereafter
shall execute and deliver such other promissory notes as are necessary to
evidence U.S. Borrower Loans owing to the Lenders after giving effect to
any assignment thereof pursuant to Section 15.01, all in form and
substance acceptable to the Administrative Agent and the parties to such
assignment. The U.K. Borrower shall execute and deliver to each U.K.
Lender on the Effective Date a promissory note, in form and substance
acceptable to the Administrative Agent and such U.K. Lender, evidencing
the U.K. Borrower Loans and thereafter shall execute and deliver such
other promissory notes as are necessary to evidence U.K. Borrower Loans
owing to the U.K. Lenders after giving effect to any assignment thereof
pursuant to Section 15.01, all in form and substance acceptable to the
Administrative Agent and the parties to such assignment.
(b) Loan Account. Each Lender shall maintain in accordance with its
usual practice an account or accounts (a "Loan Account") evidencing the
Indebtedness of the respective Borrowers to such Lender resulting from
each Loan owing to such Lender from time to time, including the amount of
principal and interest payable and paid to such Lender from time to time
hereunder and under the Notes.
(c) Control Account. The Register maintained by the Administrative
Agent pursuant to Section 15.01(c) shall include a control account, and a
subsidiary account for each Lender, in which accounts (taken together)
shall be recorded (i) the date and amount of each Borrowing made
hereunder, the type of Loan comprising such Borrowing and any Eurocurrency
Interest Period applicable thereto, (ii) the effective date and amount of
each Assignment and Acceptance delivered to and accepted by it and the
parties thereto, (iii) the amount of any principal or interest due and
payable or to become due and payable from a Borrower to each Lender
hereunder or under the Notes, and (iv) the amount of any sum received by
the Administrative Agent or European Agent from a Borrower hereunder and
each Lender's share thereof.
(d) Entries Binding. The entries made in the Register and each Loan
Account shall be conclusive and binding for all purposes, absent manifest
error.
4.04. Proceeds of Collateral; Concentration Account Arrangements.
(a) Establishment. The Borrowers shall establish and maintain, and shall
cause the Guarantors and European Subsidiary Borrowers to establish and
maintain, Collection Accounts into which all collections of Receivables
shall be deposited. All amounts deposited in Collection Accounts
established by the U.S. Borrower and its Domestic Subsidiaries shall be
promptly transferred directly to the Concentration Account established at
Citibank in New York, New York. All amounts deposited in Collection
Accounts established by the U.K. Borrower and the European Subsidiary
Borrowers shall be promptly transferred directly to the Concentration
Account established with the European Agent in London, England. Borrowers
shall cause all other proceeds of Collateral to be deposited in the
appropriate Concentration Account or pursuant to other similar
arrangements for the collection of such amounts established by the
Borrowers and the Administrative Agent. All collections of Receivables and
other proceeds of Collateral which are received directly by either
Borrower, any Domestic Subsidiary of the U.S. Borrower, or any European
Subsidiary Borrower shall be deemed to have been received by such Borrower
or such Subsidiary as the Administrative Agent's trustee and, upon such
Borrower's or such Subsidiary's receipt thereof, such Borrower or such
Subsidiary shall immediately transfer, or cause to be transferred, all
such amounts into the appropriate Concentration Account in their original
form. All collections of Receivables, all payments, and all proceeds of
other Collateral received by the Administrative Agent or European Agent,
whether through payment, deposit in a Concentration Account as described
above, or otherwise, will be deemed received by the Administrative Agent
or European Agent, as applicable, will be the sole property of the
Administrative Agent, and will be held by the Administrative Agent, for
the benefit of the Holders (i) for application to the Obligations pursuant
to Section 4.02 and (ii) thereafter, as Cash Collateral for the
Obligations, subject to the rights of the Borrowers set forth in Section
4.04(b) and the rights of the Administrative Agent set forth in Section
4.06.
(b) Pre-Default Withdrawals from Concentration Account. If
requested by the U.S. Borrower, the Administrative Agent shall, so long as
no Event of Default shall have occurred and be continuing or unwaived,
from time to time, (i) apply funds in the Concentration Accounts (A)
promptly after deposit therein to payment of the U.S. Borrower Loans, if
such funds are deposited in the Concentration Account established at
Citibank, (B) promptly after deposit therein to payment of the U.K.
Borrower Loans, if such funds are deposited in the Concentration Account
established with the European Agent, and (C) to payment of other
Obligations of the U.S. Borrower and U.K. Borrower, as applicable, as they
become due and payable, (ii) after giving effect to the aforesaid
payments, invest funds on deposit in the Concentration Accounts and
accrued interest thereon, reinvest proceeds of any such investments which
may mature or be sold, and invest interest or other income received from
such investments, in such Cash Equivalents as the U.S. Borrower may
select, and (iii) upon the U.S. Borrower's request therefor after giving
effect to the payments described in clause (i) above, transfer funds on
deposit in the Concentration Accounts to Borrowers' or their Subsidiaries'
designated accounts. Such funds, interest, proceeds, or income which are
not so disbursed, invested or reinvested shall be deposited and held in
the Concentration Account for the benefit of the Holders as provided in
Section 4.04(a). None of the Administrative Agent, the European Agent, any
Lender or any Issuing Bank shall be liable to either Borrower or any
Subsidiary of either Borrower for, or with respect to, any decline in
value of amounts on deposit in the Concentration Accounts which shall have
been invested pursuant to this Section 4.04(b). Cash Equivalents from time
to time purchased and held pursuant to this Section 4.04(b) shall
constitute Cash Collateral and shall, for purposes of this Agreement, be
deemed to be part of the funds held in the respective Concentration
Accounts in amounts equal to their respective outstanding principal
amounts.
(c) Reasonable Care. The Administrative Agent and European Agent
shall exercise reasonable care in the custody and preservation of any
funds held in the Concentration Accounts and shall be deemed to have
exercised such care if such funds are accorded treatment substantially
equivalent to that which the Administrative Agent accords its own like
property, it being understood that neither the Administrative Agent nor
the European Agent shall have any responsibility for taking any steps
necessary to preserve rights against any parties with respect to any such
funds but may do so at its option. All reasonable expenses incurred in
connection therewith shall be for the sole account of the Borrowers and
shall constitute Obligations hereunder.
4.05. Cash Collateral Account. (a) Investments. If requested by
the U.S. Borrower, the Administrative Agent shall, so long as no Event of
Default shall have occurred and be continuing, from time to time invest
funds on deposit in the Cash Collateral Account and accrued interest
thereon, reinvest proceeds of any such investments which may mature or be
sold, and invest interest or other income received from any such
Investments, in each case in such Cash Equivalents as the U.S. Borrower
may select; provided, however, that such accrued interest and other income
received from any such Investments, upon the request of the U.S. Borrower,
shall be remitted to the U.S. Borrower. Such funds, interest, proceeds or
income which are not so invested or reinvested in Cash Equivalents shall,
except as otherwise provided above or in Section 4.05(b) and Section 4.06,
be deposited and held by the Administrative Agent in the Cash Collateral
Account. None of the Administrative Agent, any Lender or any Issuing Bank
shall be liable to the U.S. Borrower for, or with respect to, any decline
in value of amounts on deposit in the Cash Collateral Account which shall
have been invested pursuant to this Section 4.05(a) at the direction of
the U.S. Borrower. Cash Equivalents from time to time purchased and held
pursuant to this Section 4.05(a) shall constitute Cash Collateral and
shall, for purposes of this Agreement, be deemed to be part of the funds
held in the Cash Collateral Account in amounts equal to their respective
outstanding principal amounts.
(b) Withdrawal Rights. Neither of the Borrowers and no Person or
entity claiming on behalf of or through either Borrower shall have any
right to withdraw any of the funds held in the Cash Collateral Account,
except that, upon the later to occur of (i) the expiration or termination
of all of the Letters of Credit in accordance with their respective terms
and (ii) the payment in full in cash of the Obligations, any funds
remaining in the Cash Collateral Account shall be returned by the
Administrative Agent to the U.S. Borrower or paid to whomever may be
legally entitled thereto.
(c) Additional Deposits. If at any time the Administrative Agent
determines that any funds held in the Cash Collateral Account are subject
to any interest, right, claim or Lien of any Person other than the
Administrative Agent, the U.S. Borrower will, forthwith upon demand by the
Administrative Agent, pay to the Administrative Agent, as additional funds
to be deposited and held in the Cash Collateral Account, an amount equal
to the amount of funds subject to such interest, right, claim or Lien.
(d) Reasonable Care. The Administrative Agent shall exercise
reasonable care in the custody and preservation of any funds held in the
Cash Collateral Account and shall be deemed to have exercised such care if
such funds are accorded treatment substantially equivalent to that which
the Administrative Agent accords its own like property, it being
understood that the Administrative Agent shall not have any responsibility
for taking any necessary steps to preserve rights against any parties with
respect to any such funds but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account of the U.S.
Borrower and shall constitute Obligations hereunder.
(e) Foreign Exchange Requirements. In the event deposits have been
made to the Cash Collateral Account to secure Letter of Credit Obligations
denominated in a non-U.S. currency, the U.S. Borrower shall enter into a
Hedge Agreement for a forward foreign exchange contract reasonably
satisfactory to the Administrative Agent to protect against fluctuation in
the Exchange Rate for the amount of such Letter of Credit Obligations
until the same are paid in full.
4.06. Post-Default Withdrawals from the Concentration Account and
Cash Collateral Account. Notwithstanding any other provision of this
Agreement, from and after (a) the occurrence of an Event of Default
described in Section 12.01(a) and for so long as the same is continuing
unwaived or (b) the occurrence of any other Event of Default and the
Administrative Agent's receipt of written notice from the Requisite
Lenders that no further withdrawals may be made from the Concentration
Accounts other than for application on the Obligations for so long as the
same is continuing unwaived, neither Borrower and no other Person or
entity claiming on behalf of or through either Borrower shall have any
right to withdraw any of the funds held in a Concentration Account. The
Administrative Agent may, at any time during the period clause (a) or
clause (b) above is applicable, sell or cause to be sold any Cash
Equivalents being held by the Administrative Agent in the Concentration
Accounts or as Cash Collateral at any broker's board or at public or
private sale, in one or more sales or lots, at such price as the
Administrative Agent may deem best, without assumption of any credit risk,
and the purchaser of any or all such Cash Equivalents so sold shall
thereafter own the same, absolutely free from any claim, encumbrance or
right of any kind whatsoever. The Administrative Agent or any Holder may,
in its own name or in the name of a designee or nominee, buy such Cash
Equivalents at any public sale and, if permitted by applicable law, buy
such Cash Equivalents at any private sale. The Administrative Agent shall
apply the proceeds of any such sale, net of any reasonable expenses
incurred in connection therewith, and any other funds deposited in the
Concentration Accounts or Cash Collateral Account to the payment of the
Obligations in accordance with Section 4.02(c), other than amounts which
are being held as Cash Collateral for Reimbursement Obligations, which
shall be applied to such Reimbursement Obligations without regard to
Section 4.02(c). The Borrowers agree that any sale of Cash Equivalents
conducted in conformity with reasonable commercial practices of banks,
commercial finance companies, insurance companies or other financial
institutions disposing of property similar to such Cash Equivalents shall
be deemed to be commercially reasonable and any requirements of reasonable
notice shall be met if such notice is given by the Administrative Agent
within a commercially reasonable time prior to such disposition, the time
of delivery of which notice the parties hereto agree shall in no event be
required to be greater than five (5) Business Days before the date of the
intended sale or disposition. Any other requirement of notice, demand or
advertisement for sale is waived to the extent permitted by law. The
Administrative Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor and such sale
may, without further notice, be made at the time and place to which it was
so adjourned.
<PAGE>
ARTICLE V
INTEREST AND FEES
5.01. Interest on the Loans and other Obligations. (a) Rate of
Interest. (i) All Loans and the outstanding principal balance of all
other Obligations shall bear interest on the unpaid principal amount
thereof from the date such Loans are made and such other Obligations are
incurred until paid in full, except as otherwise provided in Section
5.01(d) or Section 14.04, as follows:
(A) If a Base Rate Loan or such other Obligation, at a rate per annum
equal to the sum of (1) the Base Rate, as in effect from time to time as
interest accrues plus (2) the applicable Base Rate Margin; and
(B) If a Eurocurrency Rate Loan, at a rate per annum equal to the sum
of (1) the applicable Eurocurrency Rate determined for such Eurocurrency
Rate Loan for the applicable Eurocurrency Interest Period, plus (2) the
applicable Eurocurrency Rate Margin.
(ii) The applicable basis for determining the rate of interest on
the Loans shall be selected by the U.S. Borrower at the time a Notice of
Borrowing or a Notice of Conversion/Continuation is delivered by the U.S.
Borrower to the Administrative Agent; provided, however, the U.S. Borrower
may not select a Eurocurrency Rate as the applicable basis for determining
the rate of interest on such a Loan if (A) such Loan is to be made on the
Effective Date or (B) at the time of such selection an Event of Default or
a Potential Event of Default would occur or has occurred and is
continuing. If on any day any Loan denominated in Dollars is outstanding
with respect to which notice has not been timely delivered to the
Administrative Agent in accordance with the terms of this Agreement speci-
fying the basis for determining the rate of interest on that day, then for
that day interest on that Loan shall be determined by reference to clause
(i)(A) above. If on any day any Loan denominated in DM is outstanding with
respect to which notice has not been timely delivered to the
Administrative Agent in accordance with the terms of this Agreement
specifying the basis for determining the rate of interest on that day,
then interest on that Loan shall be the applicable Eurocurrency Rate
determined therefor for the thirty (30) day period commencing on that day.
(b) Interest Payments. (i) Interest accrued on each Base Rate Loan
shall be payable in arrears (A) on the first Business Day of each calendar
quarter, commencing with the calendar quarter following the calendar
quarter in which such Loan was made and (B) if not theretofore paid in
full, at maturity (whether by acceleration or otherwise) of such Base Rate
Loan.
(ii) Interest accrued on each Eurocurrency Rate Loan shall be
payable in arrears (A) on each Eurocurrency Interest Payment Date
applicable to such Loan, (B) upon the payment or prepayment thereof in
full or in part, and (C) if not theretofore paid in full, at maturity
(whether by acceleration or otherwise) of such Eurocurrency Rate Loan.
(iii) Interest accrued on the principal balance of all other
Obligations shall be payable in arrears (A) on the first day of each
calendar quarter, commencing with the calendar quarter following the
calendar quarter in which such Obligation was incurred, (B) upon repayment
thereof in full or in part, and (C) if not theretofore paid in full, at
the time such other Obligation becomes due and payable (whether by
acceleration or otherwise).
(c) Conversion or Continuation. (i) The Borrowers shall have the
option (A) to convert at any time all or any part of outstanding Base Rate
Loans to Eurocurrency Rate Loans; (B) to convert all or any part of
outstanding Eurocurrency Rate Loans which are denominated in Dollars
having Eurocurrency Interest Periods which expire on the same date to Base
Rate Loans on such expiration date; or (C) to continue all or any part of
outstanding Eurocurrency Rate Loans having Eurocurrency Interest Periods
which expire on the same date as Eurocurrency Rate Loans, and the succeed-
ing Eurocurrency Interest Period of such continued Loans shall commence on
such expiration date; provided, however, no such outstanding Loan may be
continued as, or be converted into, a Eurocurrency Rate Loan (i) if such
continuation of, or conversion into, would violate any of the provisions
of Section 5.02 or (ii) if an Event of Default or a Potential Event of
Default would occur or has occurred and is continuing. Any conversion
into or continuation of Eurocurrency Rate Loans under this Section 5.01(c)
shall be in a minimum amount of $1,000,000 or DM1,000,000, as applicable,
and in integral multiples of $100,000 or DM100,000, as applicable, in
excess of that amount except in the case of a conversion into or a
continuation of an entire Borrowing of Non Pro Rata Loans.
(ii) To convert or continue a Loan under Section 5.01(c)(i), the
U.S. Borrower shall deliver a Notice of Conversion/Continuation to the
Administrative Agent no later than 11:00 a.m. (New York time) at least
three (3) Business Days in advance of the proposed conversion/continuation
date. A Notice of Conversion/Continuation shall specify (A) the proposed
conversion/continuation date (which shall be a Business Day), (B) the
aggregate principal amount of the respective U.S. Borrower Loans or U.K.
Borrower Loans to be converted/continued, (C) whether such Loan shall be
converted and/or continued, (D) in the case of a conversion to, or
continuation of, a Eurocurrency Rate Loan, the requested Eurocurrency
Interest Period and (E) if such notice is delivered with respect to U.K.
Borrower Loans, the Dollar equivalent as of the date of such notice of
U.K. Borrower Loans denominated in DM. In lieu of delivering a Notice of
Conversion/Continuation, the U.S. Borrower may give the Administrative
Agent telephonic notice of any proposed conversion/continuation by the
time required under this Section 5.01(c)(ii), and such notice shall be
confirmed in writing delivered to the Administrative Agent by facsimile
transmission promptly (but in no event later than 5:00 p.m. (New York
time) on the same day), the original of which facsimile copy shall be
delivered to the Administrative Agent within three (3) days after the date
of such transmission. Promptly after receipt of a Notice of
Conversion/Continuation under this Section 5.01(c)(ii) (or telephonic
notice in lieu thereof), the Administrative Agent shall notify each Lender
or U.K. Lender, as applicable, by telecopy or other similar form of trans-
mission, of the proposed conversion/continuation. Any Notice of Conver-
sion/Continuation for conversion to, or continuation of, a Loan (or
telephonic notice in lieu thereof) shall be irrevocable, and the Borrowers
shall be bound to convert or continue in accordance therewith.
(d) Default Interest. Notwithstanding the rates of interest
specified in Section 5.01(a), effective immediately upon (i) the
occurrence of an Event of Default described in Sections 12.01(a), (b) (as
it pertains to defaults under Article XI), (f), (g), (h), or (i) (except
an Event of Default under (i) resulting from the gross negligence or
willful misconduct of the Administrative Agent) or (ii) the occurrence of
any other Event of Default and notice from the Requisite Lenders of the
effectiveness of this Section 5.01(d), and for as long thereafter as such
Event of Default shall be continuing unwaived, the principal balance of
all Obligations, including, to the extent permitted by applicable law,
accrued interest unpaid when due, shall bear interest, payable on demand,
at a rate which is two percent (2.0%) per annum in excess of the rate of
interest specified in Section 5.01(a)(i).
(e) Computation of Interest. Interest on all Obligations shall be
computed on the basis of the actual number of days elapsed in the period
during which interest accrues and a year of 360 days. In computing
interest on any Loan, the date of the making of the Loan or the first day
of a Eurocurrency Interest Period, as the case may be, shall be included
and the date of payment or the expiration date of a Eurocurrency Interest
Period, as the case may be, shall be excluded; provided, however, if a
Loan is repaid on the same day on which it is made, one (1) day's interest
shall be paid on such Loan.
5.02. Special Provisions Governing Eurocurrency Rate Loans. With
respect to Eurocurrency Rate Loans:
(a) Amount of Eurocurrency Rate Loans. Each Borrowing of
Eurocurrency Rate Loans shall be for a minimum amount of $1,000,000 or
DM1,000,000, as applicable, and in integral multiples of $100,000 or
DM100,000, as applicable, in excess of that amount.
(b) Determination of Eurocurrency Interest Period. By giving notice
as set forth in Section 2.02(b) (with respect to a Borrowing of
Eurocurrency Rate Loans) or Section 5.01(c) (with respect to a conversion
into or continuation of Eurocurrency Rate Loans), the Borrowers shall have
the option, subject to the other provisions of this Section 5.02, to
select an interest period (each, a "Eurocurrency Interest Period") to
apply to the Loans described in such notice, subject to the following
provisions:
(i) The Borrowers may only select, as to a particular Borrowing of
Eurocurrency Rate Loans, a Eurocurrency Interest Period of one, two, three
or six months in duration;
(ii) In the case of immediately successive Eurocurrency Interest
Periods applicable to a Borrowing of Eurocurrency Rate Loans, each
successive Eurocurrency Interest Period shall commence on the day on which
the next preceding Eurocurrency Interest Period expires;
(iii) If any Eurocurrency Interest Period would otherwise expire on
a day which is not a Business Day, such Eurocurrency Interest Period shall
be extended to expire on the next succeeding Business Day if the next
succeeding Business Day occurs in the same calendar month, and if there
will be no succeeding Business Day in such calendar month, the
Eurocurrency Interest Period shall expire on the immediately preceding
Business Day;
(iv) The Borrowers may not select a Eurocurrency Interest Period as
to any Loan if such Eurocurrency Interest Period terminates later than the
scheduled Revolving Credit Termination Date; and
(v) There shall be no more than six (6) Eurocurrency Interest
Periods in effect at any one time.
(c) Determination of Interest Rate. As soon as practicable on the
second Business Day prior to the first day of each Eurocurrency Interest
Period (the "Eurocurrency Interest Rate Determination Date"), the
Administrative Agent shall determine (pursuant to the procedures set forth
in the definition of "Eurocurrency Rate") the interest rate which shall
apply to the Eurocurrency Rate Loans for which an interest rate is then
being determined for the applicable Eurocurrency Interest Period and shall
promptly give notice thereof (in writing or by telephone confirmed in
writing) to the U.S. Borrower and to each Lender. The Administrative
Agent's determination shall be presumed to be correct, absent manifest
error, and shall be binding upon the Borrowers.
(d) Interest Rate Unascertainable, Inadequate or Unfair. In the
event that at least one (1) Business Day before the Eurocurrency Interest
Rate Determination Date:
(i) the Administrative Agent is advised by Citibank that deposits in
Dollars or DM, as applicable (in the applicable amounts) are not being
offered by Citibank in the London interbank market for such Eurocurrency
Interest Period; or
(ii) the Administrative Agent determines that adequate and fair means
do not exist for ascertaining the applicable interest rates by reference
to which the Eurocurrency Rate then being determined is to be fixed; or
(iii) the Requisite Lenders advise the Administrative Agent that the
Eurocurrency Rate for Eurocurrency Rate Loans comprising such Borrowing
will not adequately reflect the cost to such Requisite Lenders of
obtaining funds in Dollars or DM, as applicable, in the London interbank
market in the amount substantially equal to such Lenders' Eurocurrency
Rate Loans in Dollars or DM, as applicable, and for a period equal to such
Eurocurrency Interest Period;
then the Administrative Agent shall forthwith give notice thereof to the
U.S. Borrower, whereupon (until the Administrative Agent notifies the U.S.
Borrower that the circumstances giving rise to such suspension no longer
exist) the right of the Borrowers to elect to have Loans bear interest
based upon the Eurocurrency Rate shall be suspended and each outstanding
Eurocurrency Rate Loan shall be converted into a Base Rate Loan on the
last day of the then current Eurocurrency Interest Period therefor,
notwithstanding any prior election by the Borrowers to the contrary.
(f) Booking of Eurocurrency Rate Loans. Any Lender may make, carry
or transfer Eurocurrency Rate Loans at, to, or for the account of, its
Eurocurrency Lending Office or Eurocurrency Affiliate or its other offices
or Affiliates. No Lender shall be entitled, however, to receive any
greater amount under Article XIV as a result of the transfer of any such
Eurocurrency Rate Loan to any office (other than such Eurocurrency Lending
Office) or any Affiliate (other than such Eurocurrency Affiliate) than
such Lender would have been entitled to receive immediately prior thereto,
unless (i) the transfer occurred at a time when circumstances giving rise
to the claim for such greater amount did not exist and (ii) such claim
would have arisen even if such transfer had not occurred.
(g) Affiliates Not Obligated. No Eurocurrency Affiliate or other
Affiliate of any Lender shall be deemed a party to this Agreement or shall
have any liability or obligation under this Agreement.
5.03. Fees. (a) Administrative Agent's Fee. The U.S. Borrower
shall pay to the Administrative Agent, solely for the account of the
Administrative Agent, the fee provided in the Fee Letter as and when set
forth therein during the term of this Agreement.
(b) Letter of Credit Fee. In addition to any charges paid pursuant
to Section 3.01(g), the U.S. Borrower shall pay (i) to the Issuing Bank,
a fee equal to one-quarter of one percent (0.25%) on the face amount of
each Letter of Credit issued by such Issuing Bank, upon issuance of such
Letter of Credit (the "Fronting Fee") and (ii) to the Administrative
Agent, for the account of the Lenders based on their respective U.S. Loan
Pro Rata Shares, a fee (the "Letter of Credit Fee") accruing at a per
annum rate equal to the Eurocurrency Rate Margin on the undrawn face
amount of each outstanding Letter of Credit, payable quarterly, in
arrears, on the first day of each calendar quarter and the Revolving
Credit Termination Date; provided, however, that in the event the
unsecured short term debt Securities of any Lender at any time after the
Effective Date shall be rated less than AA- by Standard & Poor's Rating
Group the amount of the Fronting Fee shall be increased to one-half of one
percent (0.50%) per annum during the period commencing on the date such
minimum rating requirement is not met for any Lender and continuing until
all Lenders shall have attained at least a rating of AA-; and provided
further that upon (A) the occurrence of an Event of Default referenced in
Section 5.01(d)(i) or (B) the occurrence of any other Event of Default and
notice from the Requisite Lenders of the effectiveness of Section 5.01(d),
and for so long thereafter as such Event of Default shall be continuing
unwaived, the rate at which the Letter of Credit Fee shall accrue and be
payable shall be equal to two percent (2.0%) per annum plus the
Eurocurrency Rate Margin.
(c) Commitment Fee. (i) The U.S. Borrower shall pay to the
Administrative Agent, for the account of the Lenders in accordance with
their respective Pro Rata Shares, a fee (the "Commitment Fee"), accruing
at the rate of one-half of one percent (0.50%) per annum on the average
amount by which the Commitments exceed the sum of the U.S. Revolving
Credit Obligations plus the U.K. Borrower Loans, such Commitment Fee being
payable (1) quarterly, in arrears, commencing on the first day of the
calendar quarter next succeeding the Effective Date and (2) on the
Revolving Credit Termination Date.
(ii) Notwithstanding the foregoing, in the event that any Lender
fails to fund its U.S. Loan Pro Rata Share of any U.S. Borrower Loan or
its U.K. Loan Pro Rata Share of any U.K. Borrower Loan which such Lender
is obligated to fund under the terms of this Agreement, (A) such Lender
shall not be entitled to any Commitment Fees with respect to its
Commitments until such failure has been cured in accordance with Section
4.02(f)(ii) and (B) until such time, the Commitment Fee shall accrue in
favor of the Lenders which have funded their respective U.S. Loan Pro Rata
Shares and U.K. Loan Pro Rata Shares of such requested Loan, shall be
allocated among such performing Lenders ratably based upon their relative
U.S. Loan Commitments or U.K. Loan Commitments, as applicable, and shall
be calculated based upon the average amount by which the aggregate of such
Commitments of such performing Lenders exceeds the sum of (1) the U.S.
Revolving Credit Obligations owing to such performing Lenders, plus (2)
the U.K. Borrower Loans owing to such performing Lenders, plus (3) the
aggregate participation interests of such performing Lenders arising
pursuant to Section 3.01(e) with respect to undrawn and outstanding
Letters of Credit.
(d) Calculation and Payment of Fees. All of the above fees shall be
calculated on the basis of the actual number of days elapsed in a 360-day
year. All such fees shall be payable in addition to, and not in lieu of,
interest, compensation, expense reimbursements, indemnification and other
Obligations payable under this Agreement, to the Administrative Agent at
its office in New York, New York in immediately available funds. All fees
shall be fully earned and nonrefundable when paid. All fees specified or
referred to in this Agreement due to the Administrative Agent, the
European Agent, the European Administrator, any Issuing Bank or any
Lender, including, without limitation, those referred to in this Section
5.03, shall bear interest, if not paid when due, at the interest rate for
Base Rate Loans set forth in Section 5.01(d), shall constitute Obligations
and shall be secured by all of the Collateral in which Liens are granted
by the U.S. Borrower and Domestic Subsidiaries.
<PAGE>
ARTICLE VI
CONDITIONS TO LOANS AND LETTERS OF CREDIT
6.01. Conditions Precedent to the Initial Loans and Letters of
Credit. The effectiveness of this Agreement, the obligation of each
Lender on the Effective Date to make the Loan requested to be made by it,
and the agreement of each Issuing Bank on the Effective Date to issue or
continue Letters of Credit, shall be subject to the satisfaction of all of
the following conditions precedent on or before the Effective Date:
(a) Documents. The Administrative Agent shall have received on or
before the Effective Date all of the following:
(i) this Agreement, the Notes and all other agreements, documents and
instruments relating to the loan and other credit transactions
contemplated by this Agreement and described in the List of Closing
Documents attached hereto as Exhibit J attached hereto and made a part
hereof, each duly executed where appropriate and in form and substance
satisfactory to the Administrative Agent; without limiting the foregoing,
the Borrowers hereby direct their counsel, A&L Goodbody and Cahill, Gordon
& Reindel, and their General Counsel, Donald E. Miller, to prepare and
deliver to the Administrative Agent, the European Agent, the European
Administrator, the Lenders, the Issuing Banks and Sidley & Austin, the
opinions referred to in such List of Closing Documents;
(ii) the Pro Forma and Projections, in form and substance
satisfactory to the Administrative Agent;
(iii) an Officer's Certificate executed and delivered by the
president or vice president of the U.S. Borrower certifying that all
conditions precedent have been met;
(iv) the Tax Allocation Agreement in form and substance satisfactory
to the Administrative Agent; and
(v) such additional documentation as the Administrative Agent may
reasonably request.
(b) Perfection of Liens; Title Insurance. Evidence that all
financing statements, mortgages, leasehold mortgages, and other required
notices relating to the Collateral located in the United States have been
filed or recorded, certificates representing Capital Stock of the Domestic
Subsidiaries have been delivered to the Administrative Agent (with duly
executed stock powers), and all title charges, recording fees and filing
taxes have been paid. Title insurance policies (or commitments therefor)
in form and substance satisfactory to the Administrative Agent and
relating to any Real Property or interests in Real Property comprising
part of the Collateral shall have been delivered to the Administrative
Agent by insurers satisfactory to the Administrative Agent.
(c) The Stock Transfers. The Capital Stock of Fairchild Germany,
Inc. shall have been contributed to the U.S. Borrower by RHI in conformity
with all applicable laws and regulatory approval requirements and all
contractual approval and consent requirements.
(d) Due Diligence. The Administrative Agent and its counsel shall
have completed their updated due diligence review of the financial
condition, business, operations, assets, liabilities (environmental, by
way of indemnification, and otherwise), pending and threatened litigation,
corporate, capital, legal and management structure and Contractual
Obligations of Borrowers and their Subsidiaries, the results of which
shall have provided the Administrative Agent, each Lender and each Issuing
Bank with results and information which, in the judgment of such Person,
are satisfactory to permit the Administrative Agent, each Lender and each
Issuing Bank to enter into the financing transactions contemplated hereby.
All Schedules to this Agreement shall be acceptable to the Administrative
Agent and Lenders.
(f) No Legal Impediments. No law, regulation, order, judgment or
decree of any Governmental Authority shall, and the Administrative Agent
shall not have received any notice that litigation is pending or
threatened which is likely to, (i) enjoin, prohibit or restrain the making
of the Loans and/or the issuance or continuation of Letters of Credit on
the Effective Date or (ii) result in a Material Adverse Effect.
(g) No Change in Condition. No change in the business, assets,
management, operations, financial condition or prospects of the Operating
Units or any business, assets, management, operations, financial condition
or prospects of the Borrowers' Subsidiaries shall have occurred since
March 31, 1996, which change, in the judgment of the Requisite Lenders,
will, or is reasonably likely to, result in a Material Adverse Effect.
(h) No Loss of Material Agreements and Licenses. No agreement or
license which, in the judgment of the Requisite Lenders, is material to
the business, operations or employee relations of the Borrowers or any
Subsidiary of a Borrower shall have been terminated, modified, revoked,
breached or declared to be in default.
(i) No Market Changes. Since June 12, 1996, no material adverse
change shall have occurred in the conditions in the capital markets or the
market for loan syndications generally.
(j) No Default. No Event of Default or Potential Event of Default
shall have occurred and be continuing or would result from the making of
the Loans and no "Event of Default" (as defined in the Original Credit
Agreement) shall have occurred and be continuing unwaived.
(k) Representations and Warranties. All of the representations and
warranties contained in Section 7.01 and in any of the other Loan
Documents shall be true and correct in all material respects on and as of
the Effective Date.
(l) Fees and Expenses Paid. There shall have been paid to the
Administrative Agent, for the accounts of the Lenders, Issuing Banks, and
the Administrative Agent, as applicable, all fees and expenses due and
payable on or before the Effective Date.
(m) Loans, Fees and Expenses Under Original Credit Agreement Paid.
All unpaid principal of the Loans made under the Original Agreement,
together with all fees and interest accrued under the terms of the
Original Credit Agreement through the Effective Date, shall have been paid
in full in immediately available funds.
(n) Appraisals. The Administrative Agent and Lenders shall have
received appraisals of the assets of each Borrower and Guarantor prepared
by independent appraisers satisfactory to the Administrative Agent and
Lenders, which appraisals shall have been determined to be satisfactory in
form and substance to the Administrative Agent and Lenders.
6.02. Conditions Precedent to All Loans and Letters of Credit. The
obligation of each Lender to make any Loan requested to be made by it on
any Funding Date and the agreement of each Issuing Bank to issue any
Letter of Credit on any date is subject to the following conditions
precedent as of each such date, both before and after giving effect to the
Loans to be made and/or the Letter of Credit to be issued on such date:
(a) Representations and Warranties. All of the representations and
warranties of the Borrowers contained in Section 7.01 and in any other
Loan Document (other than representations and warranties which expressly
speak as of a different date) shall be true and correct in all material
respects.
(b) No Defaults. No Event of Default or Potential Event of Default
shall have occurred and be continuing or would result from the making of
the requested Loan or issuance of the requested Letter of Credit.
(c) No Legal Impediments. No law, regulation, order, judgment or
decree of any Governmental Authority shall, and the Administrative Agent
shall not have received from any Lender or Issuing Bank notice that, in
the judgment of such Lender or Issuing Bank, litigation is pending or
threatened which is likely to, enjoin, prohibit or restrain, or impose or
result in the imposition of any material adverse condition upon, (i) such
Lender's making of the requested Loan or participation in the requested
Letter of Credit or (ii) such Issuing Bank's issuance of the requested
Letter of Credit.
(d) No Material Adverse Effect. No event shall have occurred since
the date of this Agreement which has resulted, or is reasonably likely to
result, in a Material Adverse Effect.
(e) Notice of Borrowing and Borrowing Base Certificate. The U.S.
Borrower shall have executed and delivered to the Administrative Agent a
Notice of Borrowing in accordance with the provisions of Section 2.02
together with a Borrowing Base Certificate dated no more than thirty (30)
calendar days prior to the date of such Notice of Borrowing.
Each submission by the U.S. Borrower to the Administrative Agent of a
Notice of Borrowing with respect to any Loan or a Notice of
Conversion/Continuation with respect to any Loan, each acceptance by a
Borrower of the proceeds of each Loan made, converted or continued
hereunder, each submission by the U.S. Borrower to an Issuing Bank of a
request for issuance of a Letter of Credit and the issuance of such Letter
of Credit, shall constitute a representation and warranty by the Borrowers
as of the Funding Date in respect of such Loan, the date of conversion or
continuation and the date of issuance of such Letter of Credit, that all
the conditions contained in this Section 6.02 have been satisfied or
waived in accordance with Section 15.07.
6.03. Conditions Precedent to Initial U.K. Borrower Loans. The
obligation of each U.K. Lender to make the initial U.K. Borrower Loan
requested to be made by it is subject to the satisfaction of the following
conditions precedent, in addition to the satisfaction of the conditions
precedent set forth in Section 6.02, as of the date such U.K. Borrower
Loan is requested to be made, both before and after giving effect to the
Loans to be made on such date:
(a) Documents. The Administrative Agent shall have received on or
before such date all of the following:
(i) Notes executed and delivered by the U.K. Borrower evidencing the
U.K. Borrower Loans;
(ii) All other agreements, documents, and instruments relating to
the U.K. Borrower Loans and the use of proceeds thereof contemplated by
this Agreement (including, without limitation, the U.K. Loan Documents)
and described in the List of Closing Documents attached hereto as Exhibit
J-1 and made a part hereof, each duly executed where appropriate and in
form and substance satisfactory to the Administrative Agent; without
limiting the foregoing, the U.K. Borrower hereby directs its counsel, A&L
Goodbody, Boesebeck, Barz & Partner, and local counsel in each "Eligible
Jurisdiction" (as defined in such List of Closing Documents) to prepare
and deliver to the Administrative Agent, the European Agent, the European
Administrator, the U.K. Lenders and Sidley & Austin the opinions referred
to in such List of Closing Documents;
(iii) An Officer's Certificate executed and delivered by the
president or vice president of the U.S. Borrower certifying that all
conditions precedent to the making of the initial U.K. Borrower Loans have
been met and no Potential Event of Default or Event of Default has
occurred or is continuing;
(iv) Written notice from the U.S. Borrower to the Administrative
Agent as required by Section 4.01(a)(ii) of the U.S. Borrower's reduction
of the U.S. Loan Commitments by $12,000,000; and
(v) A Notice of Borrowing and Borrowing Base Certificate duly
executed and delivered by the U.S. Borrower on behalf of the U.K. Borrower
dated no more than thirty (30) calendar days prior to the date on which
such Borrowing is requested to be made.
(b) Cash Management. A cash management system for the U.K. Borrower
and each of the European Subsidiary Borrowers shall have been established
which is satisfactory to the Administrative Agent and which shall include
both disbursement and collection accounts.
(c) U.K. Borrower. The U.K. Borrower shall have (i) become fully
registered and licensed as a private unlimited liability company in The
Republic of Ireland and (ii) received a contribution to its capital in
Cash from the U.S. Borrower in the amount of $1,500,000 in the aggregate
and issued shares representing ninety-nine percent (99%) of its Capital
Stock to the U.S. Borrower and one percent (1%) of its Capital Stock to
Camloc Holdings Inc., a Delaware corporation and Wholly-Owned Subsidiary
of the U.S. Borrower.
<PAGE>
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.01. Representations and Warranties of the Borrowers. In order to
induce the Lenders and the Issuing Banks to enter into this Agreement and
to make the Loans and the other financial accommodations to the Borrowers
and to issue the Letters of Credit described herein, the Borrowers hereby
represent and warrant to each Lender, each Issuing Bank and the
Administrative Agent that the following statements are true, correct and
complete:
(a) Organization; Corporate Powers. (i) Each Borrower and each
Subsidiary of a Borrower (A) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (B) is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in
which failure to be so qualified and in good standing will have or is
reasonably likely to have a Material Adverse Effect, (C) which is a
Domestic Subsidiary has filed and maintained effective (unless exempt from
the requirements for filing) a current Business Activity Report with the
appropriate Governmental Authority in the states of Minnesota and New
Jersey, and (D) has all requisite corporate power and authority to own,
operate and encumber its Property and to conduct its business as presently
conducted and as proposed to be conducted in connection with and following
the consummation of the transactions contemplated by this Agreement.
(ii) True, correct and complete copies of the Organizational
Documents identified on Schedule 7.01-A attached hereto have been
delivered to the Administrative Agent, each of which is in full force and
effect, has not been modified or amended except to the extent indicated
therein and, to the best of the Borrowers' knowledge, there are no
defaults under such Organizational Documents and no events which, with the
passage of time or giving of notice or both, would constitute a default
under such Organizational Documents.
(b) Authority. (i) Each Borrower and each Subsidiary of a Borrower
has the requisite corporate power and authority (A) to execute, deliver
and perform each of the Loan Documents which have been executed by it as
required by this Agreement on or prior to the Effective Date and (B) to
file or record the Loan Documents which have been filed or recorded by it
with any Governmental Authority as required by this Agreement on or prior
to the Effective Date.
(ii) The execution, delivery, performance and filing or recording,
as the case may be, of each of the Loan Documents which have been
executed, filed or recorded as required by this Agreement on or prior to
the Effective Date and to which either Borrower or any Subsidiary of a
Borrower is party and the consummation of the transactions contemplated
thereby, have been duly approved by the respective boards of directors (or
substantially similar governance bodies, as applicable) and, if necessary,
the shareholders of such Person and such approvals have not been
rescinded. No other corporate action or proceedings on the part of either
Borrower or any Subsidiary of a Borrower are necessary to consummate such
transactions.
(iii) Each of the Loan Documents to which either Borrower or any
Subsidiary of a Borrower is a party (A) has been duly executed, delivered,
filed or recorded, as the case may be, by it, (B) where applicable,
creates valid and perfected first Liens in the Collateral covered thereby
securing the payment of all of the Obligations purported to be secured
thereby, (C) constitutes such Person's respective legal, valid and binding
obligation, enforceable against it in accordance with its terms, and (D)
is in full force and effect and no material term or condition thereof has
been amended, modified or waived from the terms and conditions contained
therein as delivered to the Administrative Agent pursuant to
Section 6.01(a) without the prior written consent of the Requisite
Lenders. All parties to the Loan Documents have performed and complied
with all the terms, provisions, agreements and conditions set forth
therein and required to be performed or complied with by such parties on
or before the Effective Date, all filings and recordings and other actions
which are necessary or desirable to perfect and protect the Liens granted
pursuant to the Loan Documents and preserve their required priority have
been duly taken, and no Potential Event of Default, Event of Default or
breach of any covenant by any such party exists thereunder.
(c) Subsidiaries; Ownership of Equity Securities. Schedule 7.01-C
attached hereto (i) contains a diagram indicating the corporate structure
of the U.S. Borrower, its Subsidiaries and any other Person in which the
U.S. Borrower or any of its Subsidiaries holds a direct or indirect
partnership, joint venture or other equity interest and indicates the
nature of such interest with respect to each Person included in such
diagram; and (ii) accurately sets forth (A) the correct legal name of such
Person, the jurisdiction of its incorporation or organization and the
jurisdictions in which it is qualified to transact business as a foreign
corporation or otherwise and (B) the authorized, issued and outstanding
shares or interests of each class of equity Securities of the U.S.
Borrower and each of its Subsidiaries and the owners of such shares or
interests. None of such issued and outstanding equity Securities is
subject to any vesting, redemption, or repurchase agreement, and there are
no warrants, puts, or options (other than Permitted Equity Securities
Options) outstanding with respect to such equity Securities other than as
disclosed on Schedule 7.01-C. The outstanding equity Securities of the
U.S. Borrower and each of its Subsidiaries are duly authorized, validly
issued, fully paid and nonassessable free and clear of any Liens, except
for the Liens granted pursuant to the Loan Documents, and are not Margin
Stock.
(d) No Conflict. The execution, delivery and performance of each of
the Loan Documents to which either Borrower or any Subsidiary of a
Borrower is a party do not and will not (i) conflict with the
Organizational Documents of such Person, (ii) constitute a tortious
interference with any Contractual Obligation of any Person or conflict
with, result in a breach of or constitute (with or without notice or lapse
of time or both) a default under any Requirement of Law or Contractual
Obligation of such Person, or require termination of any Contractual
Obligation, the consequences of which violation, breach, default or
termination, singly or in the aggregate, will, or is reasonably likely to,
result in a Material Adverse Effect or may subject the Administrative
Agent, the European Agent, the European Administrator, any of the Lenders
or any of the Issuing Banks to any liability, (iii) result in or require
the creation or imposition of any Lien whatsoever upon any of the Property
or assets of such Person, other than Liens contemplated by the Loan
Documents, or (iv) require any approval of such Person's shareholders,
which has not been obtained.
(e) Governmental Consents. The execution, delivery and performance
of each of the Loan Documents to which either Borrower or any Subsidiary
of a Borrower is a party do not and will not require any registration
with, consent or approval of, or notice to, or other action to, with or by
any Governmental Authority, except (i) filings, consents or notices which
have been made, obtained or given and (ii) filings necessary to create or
perfect the Administrative Agent's security interests in the Collateral.
(f) Governmental Regulation. Neither Borrower, and no Subsidiary of
a Borrower, is subject to regulation under the Public Utility Holding
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
or the Investment Company Act of 1940, or any other federal or state
statute or regulation or other Requirement of Law which limits its ability
to incur indebtedness or its ability to consummate the transactions
contemplated hereby or by the Loan Documents.
(g) Restricted Junior Payments. Neither Borrower has directly or
indirectly declared, ordered, paid or made or set apart any sum or
Property for any Restricted Junior Payment or agreed to do so, except as
permitted pursuant to Section 10.06.
(h) Financial Position. Complete and accurate copies of the
following Financial Statements, materials and other information have been
delivered to the Administrative Agent: (i) the Pro Forma and Projections,
(ii) a statement as to the TFC/RHI Liquidity as of the Effective Date, and
a Borrowing Base Certificate dated as of May 26, 1996 indicating a minimum
U.S. Loan Availability of $15,000,000 as of the date thereof. All
Financial Statements included in such materials were prepared in all
material respects in conformity with GAAP, except as otherwise noted
therein, and fairly present in all material respects the respective con-
solidated financial positions, and the consolidated results of operations
and cash flows for each of the periods covered thereby of the applicable
Person as at the respective dates thereof. Neither Borrower and no
Subsidiary of a Borrower has any Accommodation Obligation, contingent
liability or liability for any taxes, long-term leases or commitments, not
disclosed in writing to the Administrative Agent and the Lenders prior to
the Closing Date, which will have or is reasonably likely to have a
Material Adverse Effect.
(i) Pro Forma Financials. The Pro Forma, copies of which have been
furnished to the Lenders on the Effective Date, fairly presents on a pro
forma basis the financial condition of the Operating Units as of the date
designated therein. The Projections and the assumptions expressed in the
Pro Forma are reasonable based on the information available to the U.S.
Borrower at the time so furnished.
(j) Indebtedness; Refinanced Indebtedness. Schedule 1.01.12 sets
forth all Indebtedness for borrowed money of the Borrowers and their
Subsidiaries and there are no defaults in the payment of principal or
interest on any such Indebtedness and no payments thereunder have been
deferred or extended beyond their stated maturity (except as disclosed on
such Schedule). The outstanding principal balance of the "Loans" made
under the Original Credit Agreement and all accrued and unpaid interest
thereon has been paid in full on the Effective Date.
(k) Litigation; Adverse Effects. Except as set forth in
Schedule 7.01-K attached hereto, there is no action, suit, proceeding,
Claim, investigation or arbitration before or by any Governmental
Authority or private arbitrator pending or, to the knowledge of the U.S.
Borrower or any of its Subsidiaries, threatened against VSI or FII (with
respect to which the U.S. Borrower or any of its Subsidiaries may have
successor liability), TFC, RHI, either Borrower or any Subsidiary of a
Borrower or any of the Property (i) challenging the validity or the
enforceability of any of the Loan Documents, (ii) which will, or is
reasonably likely to, result in any Material Adverse Effect, or (iii)
under the Racketeering Influenced and Corrupt Organizations Act or any
similar federal or state statute where such Person is a defendant in a
criminal indictment that provides for the forfeiture of assets to any
Governmental Authority as a criminal penalty. There is no material loss
contingency within the meaning of GAAP which has not been reflected in the
Pro Forma or, after the Effective Date, the consolidated Financial
Statements of the U.S. Borrower. None of TFC, RHI, either Borrower or any
Subsidiary of a Borrower is (A) in violation of any applicable
Requirements of Law which violation will result, or is reasonably likely
to result, in a Material Adverse Effect, or (B) subject to or in default
with respect to any final judgment, writ, injunction, restraining order or
order of any nature, decree, rule or regulation of any court or
Governmental Authority which will, or is reasonably likely to, result in
a Material Adverse Effect.
(l) No Material Adverse Effect. Since March 31, 1996, there has
occurred no event with respect to either Borrower or any Affiliate of
either Borrower which has resulted, or is reasonably likely to result, in
a Material Adverse Effect.
(m) Tax Examinations. The IRS has examined (or is foreclosed from
examining by applicable statutes) the consolidated federal income tax
returns of TFC for all tax periods prior to and including the taxable year
ending June 30, 1991. All deficiencies which have been asserted against
VSI or any of its Subsidiaries as a result of any federal, state, local or
foreign tax examination for each taxable year in respect of which an
examination has been conducted have been fully paid or finally settled or
are being contested in good faith, and no issue has been raised in any
such examination which, by application of similar principles, reasonably
can be expected to result in assertion of a material deficiency for any
other year not so examined which has not been reserved for in (i) VSI's
consolidated Financial Statements heretofore delivered to the
Administrative Agent and (ii) the U.S. Borrower's consolidated Financial
Statements delivered to the Administrative Agent, in each instance, to the
extent, if any, required by GAAP. Neither VSI nor either Borrower has
taken any reporting positions for which it does not have a reasonable
basis and does not anticipate any further material adverse tax liability
with respect to the years which have not been closed pursuant to
applicable law and which are not reserved in the Financial Statements
described above in clauses (i) and (ii).
(n) Payment of Taxes. All tax returns and reports of each of TFC,
the Borrowers and their Subsidiaries (or the respective predecessors in
interest of the U.S. Borrower and its Subsidiaries) required to be filed
have been timely filed, and all taxes, assessments, fees and other charges
of Governmental Authorities thereupon and upon or relating to their
respective Property, assets, income and franchises which are shown in such
returns or reports to be due and payable have been paid, except to the
extent (i) such taxes, assessments, fees and other charges are being
contested in good faith by an appropriate proceeding diligently pursued as
permitted by the terms of Section 9.04 and (ii) non-payment of the amounts
thereof would not, individually or in the aggregate, result in a Material
Adverse Effect. Neither Borrower has any knowledge of any proposed tax
assessment against TFC, either Borrower or any Subsidiary of a Borrower
(or the respective predecessors in interest of the U.S. Borrower and its
Subsidiaries) that will, or is reasonably likely to, result in a Material
Adverse Effect.
(o) Performance. No Borrower, no Subsidiary of a Borrower, and no
predecessor in interest of the U.S. Borrower or any of its Subsidiaries,
has received any notice, citation, or allegation, nor has actual
knowledge, that (i) it is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained
in any Contractual Obligation applicable to it, (ii) any Property of
either Borrower or any Subsidiary of a Borrower is in violation of any
Requirement of Law, or (iii) any condition exists which, with the giving
of notice or the lapse of time or both, would constitute a default with
respect to any such Contractual Obligation, in each case, except where
such default or defaults, if any, will not, or is not reasonably likely
to, result in a Material Adverse Effect.
(p) Disclosure. The representations and warranties of the Borrowers
and their Subsidiaries contained in the Loan Documents, and all
certificates and other documents delivered to the Administrative Agent
pursuant to the terms thereof, do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements contained herein or therein, in light of the circumstances
under which they were made, not misleading. Neither Borrower has
intentionally withheld any fact from the Administrative Agent, the Issuing
Banks or the Lenders in regard to any matter which will, or is reasonably
likely to, result in a Material Adverse Effect.
(q) Requirements of Law. Each Borrower and each Subsidiary of a
Borrower, respectively, is in compliance with all Requirements of Law
applicable to it and its respective businesses, in each case where the
failure to so comply individually or in the aggregate will, or is reason-
ably likely to, result in a Material Adverse Effect.
(r) Environmental Matters. (i) Except as disclosed on
Schedule 7.01-R attached hereto:
(A) neither the U.S. Borrower nor any Domestic Subsidiary (or any of
their respective predecessors in interest) has received any unresolved
notice from any federal, state or local agency to the effect that its
operations are not in compliance with any applicable Environmental, Health
or Safety Requirements of Law or the subject of any federal or state
investigation evaluating whether any remedial action is needed to respond
to a Release of a Contaminant into the environment;
(B) to the knowledge of the U.S. Borrower, none of the U.S. Borrower,
the Domestic Subsidiaries (or any of their respective predecessors in
interest), or any of its their respective present or past Property or
operations, are subject to or the subject of any judicial or
administrative proceeding, order, judgment, decree, dispute, negotiations,
agreement, or settlement respecting (I) any Environmental, Health or
Safety Requirements of Law, (II) any Remedial Action, (III) any Claims or
Liabilities and Costs arising from the Release or threatened Release of a
Contaminant into the environment, or (IV) any violation of or liability
under any Environmental, Health or Safety Requirement of Law that the U.S.
Borrower or Domestic Subsidiaries reasonably believe will result in a
material expenditure of money;
(C) none of the U.S. Borrower, any Domestic Subsidiary, or any of
their respective predecessors in interest has filed any notice under any
applicable Requirement of Law (I) reporting a Release of a Contaminant
where remedial action has not been conducted to the satisfaction of the
appropriate Governmental Authority; or (II) reporting a violation of any
applicable Environmental, Health or Safety Requirement of Law where such
violation has not been corrected to the satisfaction of the appropriate
Governmental Authority;
(D) none of the U.S. Borrower's or the Domestic Subsidiaries'
present or past Property is listed or, to the knowledge of the U.S.
Borrower, proposed for listing on the National Priorities List ("NPL")
pursuant to CERCLA or on the Comprehensive Environmental Response
Compensation Liability Information System List ("CERCLIS") or any similar
state list of sites requiring Remedial Action;
(E) to the knowledge of the U.S. Borrower, neither the U.S. Borrower
nor any Domestic Subsidiary has any material contingent liability in
connection with any Release or threatened Release of any Contaminants into
the environment; and
(F) no Environmental Lien has attached to any Property.
(ii) the U.S. Borrower and each Domestic Subsidiary are conducting
and will continue to conduct their respective business and operations in
an environmentally responsible manner in material compliance with
Environmental, Health or Safety Requirements of Law, and the U.S. Borrower
and its Subsidiaries, taken as a whole, have not been, and have no reason
to believe that they will be, subject to Liabilities and Costs arising out
of or relating to environmental, health or safety matters that have or
will result in material cash expenditures by the U.S. Borrower and the
Domestic Subsidiaries in the aggregate for the Fiscal Year ending June 30,
1997 in excess of the reserves established therefor.
(s) ERISA. Neither Borrower and no Subsidiary of a Borrower
contributes to any Benefit Plan, Multiemployer Plan or Foreign Pension
Plan. No ERISA Event has occurred or is reasonably expected to occur that
has resulted or is reasonably likely to result in a material liability of
either Borrower or any Subsidiary of a Borrower. Schedule B (Actuarial
Information) to the 1995 annual report (Form 5500 Series) for each Benefit
Plan, copies of which have been filed with the Internal Revenue Service
and furnished to the Administrative Agent, is complete and accurate and
fairly presents the funding status of such Benefit Plan, and since the
date of such Schedule B there has been no material adverse change in such
funding status. Neither Borrower and no ERISA Affiliate has incurred or is
reasonably expected to incur any withdrawal liability to any Multiemployer
Plan. Neither Borrower and no ERISA Affiliate has been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan is in
reorganization or has been terminated, within the meaning of Title IV of
ERISA, and no Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of Title IV of
ERISA. The aggregate annualized cost (including, without limitation, the
cost of insurance premiums) with respect to post-retirement benefits under
Benefit Plans for which either Borrower is liable does not exceed
$10,000,000.
(t) Foreign Employee Benefit Matters. Each Foreign Employee Benefit
Plan is in compliance in all material respects with all laws, regulations
and rules applicable thereto and the respective requirements of the
governing documents for such Plan. The aggregate of the liabilities to
provide all of the accrued benefits under any Foreign Pension Plan does
not exceed the current Fair Market Value of the assets held in the trust
or other funding vehicle for such Plan. With respect to any Foreign
Employee Benefit Plan maintained or contributed to by a Borrower, any of
its Subsidiaries or any ERISA Affiliate (other than a Foreign Pension
Plan), reasonable reserves have been established in accordance with
prudent business practice or where required by ordinary accounting
practices in the jurisdiction in which such Plan is maintained. The
aggregate unfunded liabilities, after giving effect to any reserves for
such liabilities, with respect to such Plans does not exceed the current
Fair Market Value of the assets held in the trust or other funding vehicle
for such Plan. There are no actions, suits or claims (other than routine
claims for benefits) pending or, to the best knowledge of the U.S.
Borrower, threatened against either Borrower, any Subsidiary of a Borrower
or any ERISA Affiliate with respect to any Foreign Employee Benefit Plan.
(u) Labor Matters. Schedule 7.01-U accurately sets forth all labor
contracts, other than national union agreements to which any Subsidiary of
the U.S. Borrower domiciled in Europe is a party, to which either Borrower
or any Subsidiary of a Borrower is a party on the date hereof and the
expiration date of each such contract. There are no strikes, lockouts or
other grievances relating to any collective bargaining or similar
agreement to which either Borrower or any Subsidiary of a Borrower is a
party.
(v) Securities Activities. Neither Borrower and no Subsidiary of a
Borrower is engaged in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.
(w) Solvency. After giving effect to the Loans to be made and
Letters of Credit to be issued or continued on the Effective Date or such
other date as Loans requested hereunder are made or Letters of Credit
requested hereunder are issued, and the disbursement of the proceeds of
such Loans pursuant to the Borrowers' instructions, each Borrower and each
Subsidiary of a Borrower is Solvent.
(x) Patents, Trademarks, Permits, Etc.; Government Approvals. (i)
Each Borrower and each Subsidiary of a Borrower, as applicable, owns, is
licensed or otherwise has the lawful right to use, or has all Permits and
other governmental approvals, patents, trademarks, trade names,
copyrights, technology, know-how, permits and processes used in or
necessary for the conduct of its respective business as currently
conducted which are material to its condition (financial or otherwise),
operations, performance and prospects, taken as a whole. Except as set
forth on Schedule 7.01-X attached hereto, no claims are pending or, to the
best of U.S. Borrower's knowledge following diligent inquiry, threatened
that either Borrower or any Subsidiary of a Borrower is infringing or
otherwise adversely affecting the rights of any Person with respect to
such Permits and other governmental approvals, patents, trademarks, trade
names, copyrights, technology, know-how, permits and processes, except for
such claims and infringements as do not, in the aggregate, give rise to
any liability on the part of either Borrower or any Subsidiary of a
Borrower which will, or is reasonably likely to, result in a Material
Adverse Effect.
(ii) The consummation of the transactions contemplated by the Loan
Documents will not impair the ownership of or rights under (or the license
or other right to use, as the case may be) any Permits and governmental
approvals, patents, trademarks, trade names, copyrights, technology, know-
how, permits or processes by either Borrower or any Subsidiary of a
Borrower in any manner which will, or is reasonably likely to, result in
a Material Adverse Effect.
(y) Assets and Properties. Each Borrower and each Subsidiary of a
Borrower has good and marketable title to all of the assets and Property
(tangible and intangible) owned by it (except insofar as marketability may
be limited by any laws or regulations of any Governmental Authority
affecting such assets), and all such assets and Property are free and
clear of all Liens except Liens securing the Obligations and Liens
permitted under Section 10.03. Substantially all of the assets and
Property owned by, leased to, or used by the Borrowers and/or each
Subsidiary of a Borrower in their respective businesses is in adequate
operating condition and repair, ordinary wear and tear excepted, is free
and clear of any known defects except such defects as do not substantially
interfere with the continued use thereof in the conduct of normal opera-
tions, and is able to serve the function for which they are currently
being used, except in each case where the failure of such asset to meet
such requirements would not, or is not reasonably likely to, result in a
Material Adverse Effect. Neither this Agreement nor any other Loan Docu-
ment, nor any transaction contemplated under any such agreement, will
affect any right, title or interest of either Borrower or any Subsidiary
of a Borrower in and to any of such assets in a manner that would, or is
reasonably likely to, result in a Material Adverse Effect.
(z) Insurance. Schedule 7.01-Z attached hereto accurately sets
forth as of the Effective Date all insurance policies and programs
currently in effect with respect to the respective Property and assets and
business of the Borrowers and their Subsidiaries, specifying for each such
policy and program, (i) the amount thereof, (ii) the risks insured against
thereby, (iii) the name of the insurer and each insured party thereunder,
(iv) the policy or other identification number thereof, and (v) the
expiration date thereof. The U.S. Borrower has delivered to the
Administrative Agent copies of all such insurance policies. Such
insurance policies and programs are currently in full force and effect, in
compliance with the requirements of Section 9.05 and are in amounts
sufficient to cover the replacement value of the respective Property and
assets of the Borrowers and their Subsidiaries.
(aa) Asset Transfers. All conditions precedent to, and all consents
necessary to the Transfer Documents' becoming effective, have been
satisfied or delivered, or waived with the prior written consent of the
Requisite Lenders, and no material breach of any term or provision of the
Transfer Documents has occurred and no action has been taken by any
competent authority which restrains, prevents or imposes material adverse
conditions upon, or seeks to restrain, prevent or impose material adverse
conditions upon, the effectiveness of the Transfer Documents.
(bb) Pledge of Capital Stock. The grant and perfection of the
security interest in the Capital Stock of the Subsidiaries of the U.S.
Borrower constituting a portion of the Collateral for the benefit of the
Holders, as contemplated by the terms of the Loan Documents, is not made
in violation of the registration provisions of the Securities Act, any
applicable provisions of other federal securities laws, state securities
or "Blue Sky" law, foreign securities law, or applicable general
corporation law or in violation of any other Requirement of Law.
<PAGE>
ARTICLE VIII
REPORTING COVENANTS
The Borrowers covenant and agree that so long as any Commitments are
outstanding and thereafter until payment in full of all of the Obligations
(other than indemnities not yet due), unless the Requisite Lenders shall
otherwise give their prior written consent thereto:
8.01. Financial Statements; Communications with Accountants. The U.S.
Borrower shall maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with
sound business practices to permit preparation of consolidated Financial
Statements in conformity with GAAP and each of the Financial Statements
described below shall be prepared from such system and records.
(a) Monthly Financial Reports. The U.S. Borrower shall deliver or
cause to be delivered to the Administrative Agent and the Lenders (i)
"flash reports" for each Operating Unit for each Fiscal Month ending in
June, July or August of each Fiscal Year as soon as practicable and in any
event within forty-five (45) days after the end of each Fiscal Month
ending in June and thirty (30) days after the end of each such Fiscal
Month ending in July or August, (ii) consolidated balance sheets of each
Operating Unit and the related consolidated statements of income for each
Fiscal Month, as soon as practicable, and in any event within (A) one
hundred (100) days after the end of each Fiscal Month ending in June, (B)
ninety (90) days after the end of each Fiscal Month ending in July, (C)
seventy-five (75) days after each Fiscal Month ending in August, and (D)
fifty-five (55) days after the end of each other Fiscal Month, in each
case for the Fiscal Month then ending.
(b) Quarterly Financial Reports. The U.S. Borrower shall deliver or
cause to be delivered to the Administrative Agent and the Lenders (i)
consolidated and consolidating balance sheets of (A) TFC and its
Subsidiaries, related consolidated and consolidating statements of income,
and related consolidated statements of cash flow and stockholders' equity
on a Fiscal Year to date basis, (B) RHI and its Subsidiaries, related
consolidated and consolidating statements of income, and related
consolidated statements of cash flow and stockholders' equity on a Fiscal
Year to date basis, and (C) the U.S. Borrower and its Subsidiaries,
related consolidated and consolidating statements of income, and related
consolidated statements of cash flow and stockholders' equity on a Fiscal
Year to date basis, and (ii) schedules of the Investments of each of TFC
and RHI as of the end of the applicable Fiscal Quarter then ending, in
each event as soon as practicable, and in any event (1) within fifty-five
(55) days after the end of each of the first three Fiscal Quarters in each
Fiscal Year for the Fiscal Quarter then ending and (2) within one hundred
(100) days after the end of the fourth Fiscal Quarter in each Fiscal Year
for the Fiscal Quarter then ending.
(c) Annual Financial Statements. The U.S. Borrower shall deliver or
cause to be delivered to the Administrative Agent and the Lenders (i) for
the Fiscal Year ending June 30, 1996, (A) consolidated and consolidating
balance sheets of each of TFC and RHI and the related consolidated and
consolidating statements of income and consolidated statements of
stockholder's equity and cash flow and (B) unaudited pro forma combined
and combining profit and loss statements including the operating income of
each Operating Unit and schedules of depreciation and amortization,
working capital account changes, and capital expenditures of each
Operating Unit, and (ii) for each Fiscal Year ending after June 30, 1996,
(A) consolidated and consolidating balance sheets of each of TFC and its
consolidated Subsidiaries, RHI and its consolidated Subsidiaries, and the
U.S. Borrower and each of its consolidated Subsidiaries as at the end of
such Fiscal Year and (B) the related consolidated and consolidating
statements of income and consolidated statements of stockholder's equity
and cash flow for such Fiscal Year, as soon as practicable and in any
event within one hundred (100) days after the end of each Fiscal Year. The
Financial Statements for Fiscal Years ending after June 30, 1997 and
described in clause (ii) (A) above shall set forth, in comparative form,
the consolidated figures for the previous Fiscal Year, all in reasonable
detail. The consolidated Financial Statements of TFC, RHI and the U.S.
Borrower shall be accompanied by a report thereon of Arthur Andersen LLP
or other independent certified public accountants of recognized national
standing satisfactory to the Requisite Lenders, which report shall be
unqualified and shall state that such consolidated financial statements
present fairly the financial position of the applicable Persons, as at the
dates indicated and the results of their operations and changes in their
financial position for the periods indicated in conformity with GAAP
applied on a basis consistent with prior years (or, in the event of a
change in accounting principles, such accountants' concurrence with such
change) and that the examination by such accountants in connection with
such consolidated financial statements has been made in accordance with
generally accepted auditing standards.
(d) An Officer's Certificate of TFC substantially in the form of
Exhibit K attached hereto and made a part hereof shall accompany the
Financial Statements referenced in clause (b) above and an Officer's
Certificate of the U.S. Borrower substantially in the form of Exhibit K
shall accompany the Financial Statements referenced in clauses (a) and (c)
above certifying that such Financial Statements fairly present the
financial position of the respective Operating Units or Persons, as
applicable, as at the dates indicated and the results of their operations
for the periods indicated in accordance with GAAP, subject to normal year
end adjustments, and stating that the officer of the U.S. Borrower
signatory thereto has reviewed the terms of the Loan Documents, and has
made, or caused to be made under his/her supervision, a review in
reasonable detail of the transactions and consolidated financial condition
of the Operating Units during the accounting period covered by such
Financial Statements, that such review has not disclosed the existence
during or at the end of such accounting period, and that such Person does
not have knowledge of the existence as at the date of such Officer's
Certificate, of any condition or event which constitutes an Event of
Default or Potential Event of Default, or, if any such condition or event
existed or exists, specifying the nature and period of existence thereof
and what action the Borrowers or their Subsidiaries has/have taken, is/are
taking and proposes/propose to take with respect thereto. The Financial
Statements referenced in clause (b) above shall also be accompanied by a
certificate (the "Compliance Certificate"), signed by the treasurer or
vice president of the U.S. Borrower, setting forth calculations (with such
specificity as the Administrative Agent may reasonably request) for the
period then ended which demonstrate compliance with the provisions of
Article XI, including, without limitation, the amount of Capital
Expenditures made, on a cumulative basis since the beginning of the
respective Fiscal Year.
(e) Other Financial Information. With reasonable promptness, the
U.S. Borrower shall deliver such other information, reports, filings,
projections, business plans and data with respect to the Borrowers and
their Subsidiaries as from time to time may be reasonably requested by any
Lender.
(f) Communications with Accountants. The Borrowers authorize (i)
the Administrative Agent and European Administrator, after giving the U.S.
Borrower reasonable prior written notice of its intent to do so, to
communicate directly with Borrowers' independent certified public
accountants concerning the Financial Statements; provided that the U.S.
Borrower is not precluded by the Administrative Agent or European
Administrator from being present for such communication and (ii) such
independent certified public accountants, upon the Administrative Agent's
written request with a copy to Borrower, to provide to the Administrative
Agent and/or European Administrator copies of any financial schedules
prepared by such accountants for either Borrower or Subsidiaries of either
Borrower.
8.02. Events of Default. Promptly upon any of the chief executive
officer, chief operating officer, or treasurer of the U.S. Borrower
obtaining knowledge (a) of any condition or event which constitutes an
Event of Default or Potential Event of Default, or becoming aware that any
Lender or the Administrative Agent has given any notice with respect to a
claimed Event of Default or Potential Event of Default under this
Agreement, (b) that any Person has given any notice to a Borrower or any
Subsidiary of a Borrower or taken any other action with respect to a
claimed default or event or condition of the type referred to in Section
12.01(e), or (c) of any condition or event which has resulted, or is
reasonably likely to result, in a Material Adverse Effect or affect the
value of, or the Administrative Agent's interest in, the Collateral in any
material respect, the U.S. Borrower shall deliver to the Administrative
Agent and the Lenders an Officer's Certificate specifying (i) the nature
and period of existence of any such claimed default, Event of Default,
Potential Event of Default, condition or event, (ii) the notice given or
action taken by such Person in connection therewith, and (iii) what action
the applicable Borrower or Subsidiary of a Borrower has taken, is taking
and proposes to take with respect thereto.
8.03. Lawsuits. Promptly upon the U.S. Borrower obtaining knowledge
of the institution of, or written threat of, any action, suit, proceeding,
governmental investigation or arbitration against or affecting either
Borrower or any Subsidiary of a Borrower or any of the Property not
previously disclosed pursuant to Section 7.01(k), which action, suit,
proceeding, governmental investigation or arbitration exposes, or in the
case of multiple actions, suits, proceedings, governmental investigations
or arbitrations arising out of the same general allegations or
circumstances which expose, in the U.S. Borrower's reasonable judgment,
either Borrower and/or any Subsidiary of a Borrower to liability in an
amount aggregating $5,000,000 or more (exclusive of claims covered by
insurance policies of the U.S. Borrower and its Subsidiaries unless the
insurers of such claims have disclaimed coverage or reserved the right to
disclaim coverage on such claims), the U.S. Borrower shall give written
notice thereof to the Administrative Agent and the Lenders and provide
such other information as may be reasonably available to enable each
Lender and the Administrative Agent and its counsel to evaluate such
matters. The U.S. Borrower upon request of the Administrative Agent or the
Requisite Lenders shall promptly give written notice of the status of any
action, suit, proceeding, governmental investigation or arbitration
covered by a report delivered in accordance herewith and provide such
other information as may be reasonably available to it to enable each
Lender and the Administrative Agent and its counsel to evaluate such
matters.
8.04. Declaration of Dividends and Other Distributions; Intercompany
Loans. Except with respect to the dividend in the amount of up to
$125,000,000 to be made on the Capital Stock of the U.S. Borrower on the
Effective Date, the U.S. Borrower shall provide to the Administrative
Agent written notification (or telephonic notice promptly confirmed in
writing) of each dividend or other distribution to be made on the Capital
Stock of either Borrower no less than thirty (30) days prior to the
payment date for such dividend or other distribution accompanied by a
calculation of the Fixed Charge Coverage Ratio as of the end of the then
most recent fiscal quarter as adjusted to give effect to such dividend or
other distribution, resulting in such Fixed Charge Coverage Ratio being no
less than 1.0 to 1.0. The U.S. Borrower shall provide to the
Administrative Agent written notification (or telephonic notice promptly
confirmed in writing) of each loan to be made by either Borrower to RHI no
less than fourteen (14) days prior to the funding date for such loan
accompanied by a calculation of the Fixed Charge Coverage Ratio as of the
end of the then most recent fiscal quarter as adjusted to give effect to
such loan, resulting in such Fixed Charge Coverage Ratio being no less
than 1.0 to 1.0.
8.05. TFC/RHI Liquidity. The U.S. Borrower shall deliver to the
Administrative Agent and the Lenders, within ten (10) days after the end
of each Fiscal Quarter, an Officer's Certificate in the form of Exhibit L
attached hereto setting forth the calculation of the TFC/RHI Liquidity as
of the end of such Fiscal Quarter.
8.06. Environmental Notices. The U.S. Borrower shall notify the
Administrative Agent and the Lenders in writing, promptly upon the U.S.
Borrower's learning thereof, of any:
(i) notice or claim to the effect that the U.S. Borrower or any
Subsidiary of the U.S. Borrower is subject to investigation or may be
subject to investigation or liable in an amount exceeding $2,000,000 to
any Person as a result of the Release or threatened Release of any
Contaminant into the environment;
(ii) notice that any Property is subject to an Environmental Lien;
and
(iii) notice to the U.S. Borrower or any Subsidiary of the U.S.
Borrower of any material violation of any Environmental, Health or Safety
Requirement of Law or the commencement or threat of any judicial or
administrative proceeding alleging such a material violation by the U.S.
Borrower or any Subsidiary of the U.S. Borrower.
Concurrently with the annual delivery to the independent accountants of
the U.S. Borrower of a letter relating to financial exposure of the U.S.
Borrower and its Subsidiaries with respect to Environmental Liabilities
and Costs substantially in the form of that letter dated March 12, 1996
addressed to Arthur Andersen & Co., a copy of which has been delivered to
the Administrative Agent prior to the Closing Date, the U.S. Borrower
shall deliver a like letter addressed to the Administrative Agent;;
provided, however, that in the event no such letter is provided to the
independent accountants of the U.S. Borrower with respect to any given
Fiscal Year, such letter shall be prepared with respect to such Fiscal
Year and delivered to the Administrative Agent on October 31 of the
calendar year in which such Fiscal Year ends.
8.07. Other Reports. The U.S. Borrower shall deliver or cause to be
delivered to the Administrative Agent and the Lenders copies of all
Financial Statements, reports and notices, if any, sent or made available
generally by TFC, RHI, or the U.S. Borrower to its Securities holders or
filed with the Commission and all press releases made available generally
by TFC, RHI, the Borrowers or any Subsidiary of a Borrower to the public
concerning material developments in the business of a Borrower or any
Subsidiary of a Borrower, and all notifications received by the U.S.
Borrower or any Subsidiary of the U.S. Borrower pursuant to the Securities
Exchange Act and the rules promulgated thereunder.
8.08. Other Information. Promptly upon receiving a request therefor
from the Administrative Agent or the Requisite Lenders, the U.S. Borrower
shall prepare and deliver to the Administrative Agent and the Lenders such
other information with respect to the Borrowers, any of their
Subsidiaries, or the Collateral, including, without limitation, schedules
identifying and describing the Collateral and any dispositions thereof, as
from time to time may be reasonably requested by the Administrative Agent
or the Requisite Lenders.
8.09. Borrowing Base Certificates. The U.S. Borrower shall prepare
and deliver to the Administrative Agent and the Lenders a Borrowing Base
Certificate dated as of the end of each Fiscal Month within fourteen (14)
calendar days after the end of such Fiscal Month.
<PAGE>
ARTICLE IX
AFFIRMATIVE COVENANTS
The U.S. Borrower covenants and agrees that so long as any
Commitments are outstanding and thereafter until payment in full of all of
the Obligations (other than indemnities not yet due), unless the Requisite
Lenders shall otherwise give prior written consent:
9.01. Corporate Existence, Etc. The U.S. Borrower shall, and shall
cause each of its Subsidiaries to, at all times maintain its corporate
existence and preserve and keep, or cause to be preserved and kept, in
full force and effect its rights and franchises material to its
businesses, except where the loss or termination of such rights and
franchises is not likely to result in a Material Adverse Effect. The U.S.
Borrower shall cause the U.K. Borrower to maintain a certificate relating
to its trading operations in the International Financial Services Centre,
Ireland, from the Minister of Finance in Ireland, pursuant to Section 39B
of the Irish Finance Act of 1980, as inserted by Section 30 of the Irish
Income Act of 1987.
9.02. Corporate Powers; Conduct of Business. The U.S. Borrower
shall, and shall cause each of its Subsidiaries to, qualify and remain
qualified to do business and maintain its good standing in each
jurisdiction in which the nature of its business and the ownership of its
Property requires it to be so qualified and in good standing.
9.03. Compliance with Laws, Etc. The U.S. Borrower shall, and shall
cause each of its Subsidiaries to, (a) comply with all Requirements of Law
and all restrictive covenants affecting it or its business, Property,
assets or operations and (b) obtain as needed all Permits necessary for
its operations and maintain such Permits in good standing, except in the
case where noncompliance with either clause (a) or (b) above is not
reasonably likely to result in a Material Adverse Effect.
9.04. Payment of Taxes and Claims; Tax Consolidation. The U.S.
Borrower shall, and shall cause each of its Subsidiaries to, pay (a) all
taxes, assessments and other governmental charges imposed upon it or on
any of its Property or assets or in respect of any of its franchises,
business, income or Property before any penalty or interest accrues
thereon, and (b) all Claims (including, without limitation, claims for
labor, services, materials and supplies) for sums which have become due
and payable and which by law have or may become a Lien (other than a Lien
permitted by Section 10.03) upon any Property or assets of a Borrower or
such Subsidiary, prior to the time when any penalty or fine shall be
incurred with respect thereto; provided, however, that no such taxes,
assessments and governmental charges referred to in clause (a) above or
Claims referred to in clause (b) above need be paid if being contested in
good faith by appropriate proceedings diligently instituted and conducted
and if such reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made therefor. The U.S.
Borrower will not, nor will it permit any of its Subsidiaries to, file or
consent to the filing of any consolidated income tax return with any
Person (other than TFC and its Subsidiaries).
9.05. Insurance. The U.S. Borrower shall maintain for itself and
its Subsidiaries, or shall cause each of its Subsidiaries to maintain, in
full force and effect the insurance policies and programs listed on
Schedule 7.01-Z or substantially similar policies and programs or other
policies and programs as are reasonably acceptable to the Administrative
Agent. All such policies and programs shall be maintained with
responsible and reputable insurance companies engaged in similar
businesses and owning similar property in the same general geographic
areas in which the Borrowers and/or their Subsidiaries operate. Each
certificate and policy relating to Property damage, boiler and machinery
and/or business interruption coverage shall contain an endorsement, in
form and substance reasonably acceptable to the Administrative Agent,
showing loss payable to the Administrative Agent, for the benefit of the
Holders, and, if required by the Administrative Agent, naming the
Administrative Agent as an additional insured under such policy. Each
certificate and policy relating to coverage other than the foregoing
shall, if required by the Administrative Agent, contain an endorsement
naming the Administrative Agent as an additional insured or mortgagee
payee, as applicable, under such policy. Such endorsement or an
independent instrument furnished to the Administrative Agent shall provide
that the insurance companies will give the Administrative Agent at least
thirty (30) days' written notice before any such policy or policies of
insurance shall be altered adversely to the interests of the Holders or
canceled and that no act, whether willful or negligent, or default of
either Borrower, any Subsidiary of a Borrower or any other Person shall
affect the right of the Administrative Agent to recover under such policy
or policies of insurance in case of loss or damage. In the event the U.S.
Borrower or any of its Subsidiaries, at any time or times hereafter shall
fail to obtain or maintain any of the policies or insurance required
herein or to pay any premium in whole or in part relating thereto, then
the Administrative Agent, without waiving or releasing any obligations or
resulting Event of Default hereunder, may at any time or times thereafter
(but shall be under no obligation to do so) obtain and maintain such
policies of insurance and pay such premiums and take any other action with
respect thereto which the Administrative Agent deems advisable. All sums
so disbursed by the Administrative Agent shall constitute Protective
Advances hereunder and be part of the Obligations, payable as provided in
this Agreement.
9.06. Inspection of Property; Books and Records; Discussions. The
U.S. Borrower shall, and shall cause each of its Subsidiaries to, permit
any authorized representative(s) designated by either the Administrative
Agent or any Lender to visit and inspect, whether by access to the U.S.
Borrower's and its Subsidiaries' MIS or otherwise, any of the Property, to
examine, audit, check and make copies of its respective financial and
accounting records, books, journals, orders, receipts and any
correspondence (other than privileged correspondence with legal counsel)
and other data relating to their respective businesses or the transactions
contemplated hereby or referenced herein (including, without limitation,
in connection with environmental compliance, hazard or liability), and to
discuss their affairs, finances and accounts with their officers,
management personnel, and independent certified public accountants, all
upon reasonable written notice and at such reasonable times during normal
business hours, as often as may be reasonably requested. Each such
visitation and inspection (i) by or on behalf of any Lender shall be at
such Lender's expense and (ii) by or on behalf of the Administrative Agent
shall be at the U.S. Borrower's expense. The U.S. Borrower shall keep and
maintain, and cause each of its Subsidiaries to keep and maintain, in all
material respects on its MIS and otherwise proper books of record and
account in which entries in conformity with GAAP shall be made of all
dealings and transactions in relation to its respective businesses and
activities, including, without limitation, transactions and other dealings
with respect to the Collateral. If an Event of Default has occurred and
is continuing, the U.S. Borrower, upon the Administrative Agent's request,
shall, and shall cause each of its Subsidiaries to, turn over any such
records to the Administrative Agent or its representatives; provided,
however, that the U.S. Borrower may, in its discretion, retain copies of
such records.
9.07. Insurance and Condemnation Proceeds. (a) Direction to
Insurers. The U.S. Borrower hereby directs (and, if applicable, shall
cause its Subsidiaries to direct) all insurers under policies of Property
damage, boiler and machinery and business interruption insurance and
payors of any condemnation claim or award relating to the Property to pay
all proceeds payable under such policies or with respect to such claim or
award directly to the Administrative Agent, for the benefit of the
Administrative Agent, the Issuing Banks and the Lenders. In no case shall
such proceeds be payable to the U.S. Borrower or one or more of its
Subsidiaries and the Administrative Agent.
(b) Application of Proceeds. The Administrative Agent shall, upon
receipt of such proceeds, apply all of the proceeds so received in
repayment of the Obligations in the manner set forth in Section
4.01(b)(vi). Notwithstanding the foregoing, in the event proceeds of
insurance received by the Administrative Agent under property damage,
boiler and machinery policies or business interruption insurance policies
(i) is less than $500,000 or (ii) constitutes Replacement Proceeds, the
Administrative Agent shall, upon receipt of such proceeds, remit the
amount so received to the U.S. Borrower or a Subsidiary of the U.S.
Borrower, as applicable provided that there shall not then exist an Event
of Default which is continuing unwaived.
9.08. ERISA Compliance. The U.S. Borrower shall, and shall cause
each of its Subsidiaries and ERISA Affiliates to, establish, maintain and
operate all Plans to comply in all material respects with the provisions
of ERISA, the Internal Revenue Code, all other applicable laws, and the
regulations and interpretations thereunder and the respective requirements
of the governing documents for such Plans.
9.09. Foreign Employee Benefit Plan Compliance. The U.S. Borrower
shall, and shall cause each of its Subsidiaries and ERISA Affiliates to,
establish, maintain and operate all Foreign Employee Benefit Plans to
comply in all material respects with all laws, regulations and rules
applicable thereto and the respective requirements of the governing
documents for such Plans.
9.10. Collection Accounts. Within one hundred twenty (120) days
after the Closing Date (but in no event later than the date the initial
Notice of Borrowing is delivered with respect to U.K. Borrower Loans), the
U.K. Borrower shall, and shall cause each of the European Subsidiary
Borrowers to, enter into Collection Account Agreements with respect to
each of their respective depository accounts into which collections of
Receivables and other proceeds of Collateral are deposited.
9.11. Maintenance of Property. The U.S. Borrower shall, and shall
cause each of its Subsidiaries to, maintain in all material respects all
of its respective owned and leased Property in good, safe and insurable
condition and repair, and not permit, commit or suffer any waste or
abandonment of any such Property and from time to time shall make or cause
to be made all material repairs, renewal and replacements thereof,
including, without limitation, any capital improvements which may be
required; provided, however, that such Property may be altered or
renovated in the ordinary course of the U.S. Borrower's or its
Subsidiaries' business.
9.12. Condemnation. Immediately upon learning of the institution of
any proceeding for the condemnation or other taking of any of the owned or
leased Real Property of the U.S. Borrower or any Subsidiary of the U.S.
Borrower, the U.S. Borrower shall notify the Administrative Agent of the
pendency of such proceeding, and permit the Administrative Agent to
participate in any such proceeding, and from time to time will deliver to
the Administrative Agent all instruments reasonably requested by the
Administrative Agent to permit such participation.
9.13. Tax Allocation Agreement. The U.S. Borrower shall maintain or
cause to be maintained, in full force and effect, the Tax Allocation
Agreement, without amendment or modification unless consented to by the
Requisite Lenders.
9.14. Performance of Material Contracts. The U.S. Borrower shall,
and shall cause each of its Subsidiaries to, perform and observe all the
terms and provisions of each material Contractual Obligation to be
performed or observed by it, maintain each such material Contractual
Obligation in full force and effect, enforce each such material
Contractual Obligation in accordance with its terms, take all such action
to such end as may be from time to time requested by the Administrative
Agent and, upon request of the Administrative Agent, make to each other
party to each such material Contractual Obligation such demands and
requests for information and reports or for action as the U.S. Borrower or
such Subsidiary is entitled to make under such material Contractual
Obligation.
9.15. Further Assurances. Upon the request of the Administrative
Agent, the U.S. Borrower shall, and shall cause the U.K. Borrower and each
Guarantor to, execute and deliver to the Administrative Agent, for the
benefit of the Holders, such other agreements, documents, and instruments
which the Administrative Agent deems necessary or desirable, in form and
substance satisfactory to the Administrative Agent, to enable the
Administrative Agent to perfect, or maintain perfected, Liens in the
Collateral. Within thirty (30) days after the Effective Date, the U.S.
Borrower shall deliver to the Administrative Agent a commitment for
mortgagee title insurance from a title insurer satisfactory to the
Administrative Agent which commitment shall pertain to the Lien granted to
the Administrative Agent against all Real Property which is part of the
Collateral and provide insurance in an amount and subject only to such
exceptions as are deemed reasonably acceptable to the Administrative
Agent. The Borrowers hereby acknowledge and agree that the Appraised Value
of such Real Property shall not be included in any determination of the
U.S. Borrowing Base unless and until such title insurance commitment is
delivered to the Administrative Agent as aforesaid and accepted thereby.
<PAGE>
ARTICLE X
NEGATIVE COVENANTS
The U.S. Borrower covenants and agrees that it shall comply with the
following covenants so long as any Commitments are outstanding and
thereafter until payment in full of all of the Obligations (other than
indemnities not yet due), unless the Requisite Lenders shall otherwise
give prior written consent:
10.01. Indebtedness. The U.S. Borrower shall not and shall not
permit any of its Subsidiaries to directly or indirectly create, incur,
assume or otherwise become or remain directly or indirectly liable with
respect to any Indebtedness, except:
(a) the Obligations;
(b) Indebtedness for trade payables, wages and other accrued
expenses incurred in the ordinary course of business;
(c) Permitted Existing Indebtedness and any extensions, renewals,
refundings or replacements thereof, provided that any such extension,
renewal, refunding or replacement is in an aggregate principal amount not
greater than the principal amount of, and is on terms no less favorable to
the applicable Borrower or its Subsidiary than the terms of, the Permitted
Existing Indebtedness so extended, renewed, refunded or replaced;
(d) to the extent permitted by Article XI and in any event in an
aggregate amount not to exceed $15,000,000 at any time, Capital Leases and
purchase money Indebtedness incurred to finance the acquisition of fixed
assets, and Indebtedness incurred to refinance such Capital Leases and
purchase money Indebtedness; provided, however, prior to incurring Capital
Lease obligations owing to any one lessor or group of affiliated or
related lessors or purchase money Indebtedness owing to any one holder or
group of affiliated or related holders thereof, which in either case
aggregate(s) more than $2,000,000, the U.S. Borrower shall obtain, or
cause such Subsidiary to obtain, from such lessor(s) or holder(s) a duly
executed intercreditor agreement in form and substance satisfactory to the
Administrative Agent;
(e) Indebtedness in respect of the Tax Allocation Agreement and
taxes, assessments, governmental charges and Claims for labor, materials
or supplies, to the extent that payment thereof is not required pursuant
to Section 9.04;
(f) Indebtedness, without duplication, constituting Accommodation
Obligations permitted by Section 10.05;
(g) Indebtedness arising from intercompany loans (i) from the U.S.
Borrower to any of its Subsidiaries which is a Guarantor or from any such
Subsidiary to the U.S. Borrower or any other such Subsidiary, (ii) from
the U.K. Borrower to any of the European Subsidiary Borrower, (iii) from
the U.K. Borrower to the U.S. Borrower in the amount of $1,450,000
evidenced by a promissory note in form and substance satisfactory to the
Administrative Agent, (iv) from RHI to the U.S. Borrower provided that
such loans are subordinated to the payment and performance of the
Obligations and are evidenced by a promissory note in form and substance
satisfactory to the Administrative Agent, and (v) in an aggregate amount
outstanding at any time not to exceed $10,000,000 from the U.S. Borrower
to any Subsidiary not described in clauses (i) through (iii) above or from
any such Subsidiary to the U.S. Borrower;
(h) Indebtedness in respect of profit sharing plans to the extent
permitted under Section 10.04;
(i) Indebtedness in respect of the Hedge Agreements in respect of
interest rates or foreign exchange contracts containing terms reasonably
acceptable to the Administrative Agent and purchased from a Lender, an
Affiliate of a Lender or such other Person reasonably acceptable as a
credit matter to the Administrative Agent;
(j) Indebtedness with respect to reasonable warranties and
indemnities made under any agreements for asset sales permitted under
Section 10.02 and Contractual Obligations of a Borrower or any Subsidiary
of a Borrower entered into in the ordinary course of its business;
(k) Indebtedness under appeal bonds in connection with judgments
which do not result in an Event of Default or a Potential Event of Default
or any other breach hereunder, or bid or performance bonds, provided that
the aggregate amount of all such Indebtedness does not exceed $2,000,000;
and
(l) in addition to the Indebtedness permitted by clauses (a)
through (k) above, other unsecured Indebtedness in an aggregate amount
which, when combined with outstanding Accommodation Obligations permitted
under Section 10.05(d), does not exceed $10,000,000 outstanding.
10.02. Sales of Assets. The U.S. Borrower shall not and shall not
permit any of its Subsidiaries to sell, assign, transfer, lease, convey or
otherwise dispose of any Property, whether now owned or hereafter acquired
by it, or any income or profits therefrom, or enter into any agreement to
do so, except:
(a) the sale, assignment, transfer, lease, conveyance or other
disposition of Property for consideration not less than the Fair Market
Value thereof so long as (i) any non-cash consideration resulting from
such sale, assignment, transfer, lease, conveyance or other disposition
shall be pledged or assigned to the Administrative Agent, for the benefit
of the Holders, pursuant to an instrument in form and substance acceptable
to the Administrative Agent and (ii) the Borrowers comply with the
mandatory prepayment provisions set forth in Section 4.01(b) and the
conditions to the release of Collateral described in Section 13.09(c);
(b) the sale of Inventory in the ordinary course of a Borrower's and
its Subsidiaries respective businesses;
(c) the disposition of Equipment if such Equipment is traded in for
credit against the purchase price of replacement Equipment or the proceeds
of such disposition are reasonably promptly applied to the purchase price
of such replacement Equipment, is obsolete, or is no longer useful in the
ordinary course of a Borrower's or a Subsidiary of a Borrower's business;
(d) the sale of Investments in Cash Equivalents permitted pursuant
to Section 10.04(a);
(e) the sale, lease, transfer or other disposition of Permitted
Dispositions;
(f) the transfer of the Capital Stock of Convac Equipment for
Semiconductor Technology, Ltd. (the name of which is changing to Fairchild
Technologies UK, Ltd.) by Technologies to Banner Investments (U.K.) PLC
for book value; and
(g) the transfer permitted pursuant to Section 10.09(c).
10.03. Liens. The U.S. Borrower shall not and shall not permit any
of its Subsidiaries to directly or indirectly create, incur, assume or
permit to exist any Lien or negative pledge on or with respect to any of
their respective Property or assets except:
(a) Liens created pursuant to the Loan Documents;
(b) Permitted Existing Liens;
(c) Customary Permitted Liens;
(d) Liens arising due to the creation of escrows of proceeds from
any sale, assignment, lease, transfer or other disposition permitted under
Section 10.02; and
(e) Liens securing appeal bonds permitted under Section 10.01(k).
10.04. Investments. The U.S. Borrower shall not and shall not
permit any of its Subsidiaries to directly or indirectly make or own any
Investment except:
(a) Investments in Cash Equivalents;
(b) Permitted Existing Investments, in each case increased or
decreased as required under GAAP as a result of annual adjustments made to
Investments accounted for under the equity method;
(c) Investments in the form of (i) advances to employees in the
ordinary course of business for moving, relocation and travel expenses and
(ii) loans to employees in an aggregate amount not to exceed $250,000 at
any time for any other purpose; provided that Investments described in
clause (ii) shall be evidenced by a promissory note;
(d) Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement or composition
of delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(e) Investments by a Borrower in its Subsidiaries which, if in the
form of intercompany loans, would be permitted under Section 10.01(g);
(f) an Investment by the U.S. Borrower, VSI Holdings, Inc. or
Technologies in connection with the acquisition of an additional fifteen
percent (15%) of the issued and outstanding Capital Stock of Voi-Shan
Diessel GmbH, a Subsidiary of Technologies; provided that a cash capital
contribution is made to the U.S. Borrower in exchange for equity
Securities of the U.S. Borrower of an existing class of Capital Stock and
on terms and conditions satisfactory to the Administrative Agent;
(g) Investments in the form of intercompany loans made by the U.S.
Borrower or its Subsidiaries to RHI prior to the occurrence of an Event of
Default or Potential Event of Default;
(h) Investments in an aggregate amount not to exceed $5,000,000 made
in connection with acquisitions of assets or equity Securities of any
Person engaged in a business substantially similar to a business in which
the U.S. Borrower and its Subsidiaries are engaged as of the Closing Date;
provided that after giving effect to the making of such Investment, no
Potential Event of Default or Event of Default would occur;
(i) an Investment by Fairchild Germany, Inc. in connection with the
acquisition of an additional ten percent (10%) of the issued and
outstanding Capital Stock of Fairchild Technologies USA, Inc.; provided
that a cash capital contribution is made to the U.S. Borrower in exchange
for equity Securities of the U.S. Borrower of an existing class of Capital
Stock and on terms and conditions satisfactory to the Administrative Agent
and such cash is used to effect such Investment;
(j) Investments in the form of notes or equity Securities payable to
the U.S. Borrower or any of its Subsidiaries in connection with a
Permitted Disposition or transaction permitted under Section 10.02(a); and
(k) Investments in an amount not to exceed $100,000 in the
aggregate in Subsidiaries of the U.S. Borrower formed after the Effective
Date.
In no event shall the U.S. Borrower or any of its Subsidiaries form,
create or establish any additional Subsidiaries or become a general
partner in any Person without the prior written consent of the Requisite
Lenders other than in connection with the sale, lease, transfer or other
disposition of Permitted Dispositions and subject to the limitations set
forth in clause (k) above. No other provision of this Agreement shall be
deemed to prohibit any Investment which is specifically permitted by this
Section 10.04.
10.05. Accommodation Obligations. The U.S. Borrower shall not and
shall not permit any of its Subsidiaries to directly or indirectly create
or become or be liable with respect to any Accommodation Obligation,
except:
(a) recourse obligations resulting from endorsement of negotiable
instruments for collection in the ordinary course of its business;
(b) Permitted Existing Accommodation Obligations and any extensions,
renewals or replacements thereof, provided that the aggregate Indebtedness
under any such extension, renewal or replacement is not greater than the
Indebtedness under, and shall be on terms no less favorable to the
applicable Borrower or Subsidiary than the terms of, the Permitted
Existing Accommodation Obligation so extended, renewed or replaced;
(c) Accommodation Obligations arising under the Loan Documents;
(d) Accommodation Obligations arising with respect to guarantees
provided by banks organized under the laws of jurisdictions outside of the
United States on behalf of Subsidiaries of the U.S. Borrower which are not
Domestic Subsidiaries in an aggregate amount not to exceed $5,000,000 at
any time outstanding;
(e) Accommodation Obligations arising with respect to appeal, bid or
performance bonds otherwise permitted under this Agreement which bonds are
supported by Letters of Credit issued under this Agreement;
(f) Accommodation Obligations arising with respect to Indebtedness
permitted under Section 10.01(j); and
(g) in addition to the Accommodation Obligations permitted by
clauses (a) through (f) above, other unsecured Accommodation Obligations
in an aggregate amount which, when combined with outstanding Indebtedness
permitted by Section 10.01(l), does not exceed $5,000,000 at any time
outstanding.
10.06. Restricted Junior Payments. The U.S. Borrower shall not and
shall not permit any of its Subsidiaries to declare or make any Restricted
Junior Payment, except:
(a) dividends or distributions to a Borrower on the Capital Stock of
any of its Wholly-Owned Subsidiaries or to any of a Borrower's Wholly-
Owned Subsidiaries from any other Wholly-Owned Subsidiary of such Borrower
or any Subsidiary of such Borrower existing on the date of this Agreement;
and
(b) dividends or distributions by the U.S. Borrower to RHI on its
Capital Stock
(i) in the amount of up to $125,000,000 on the Effective Date; and
(ii) if the purpose thereof is to provide TFC with funds necessary to
service Indebtedness (as defined in the 11 7/8% Senior Subordinated
Debenture Indenture) of TFC, but only to the extent TFC does not have
Cash, Cash Equivalents or readily marketable Securities available to
provide funds to otherwise service such Indebtedness, after taking into
account reasonable working capital needs of TFC and its Subsidiaries;
provided that the exception set forth in this clause (b) shall not be
effective if and to the extent and during the period that the holders of
TFC's 13 1/8% Subordinated Debentures due 2006 have waived the benefits of
Section 4.05 of the Indenture dated as of March 13, 1986 pursuant to which
such Debentures were issued and the holders of TFC's Intermediate
Subordinated Debentures due 2001 have waived the benefits of Section 4.05
of the Indenture dated as of October 15, 1986 pursuant to which such
Debentures were issued; and provided, further, that such exception shall
be available in any event only so long as at least one of the Indentures
described above remains in effect and continues to restrict TFC from
permitting any of its Subsidiaries from entering into an agreement
restricting the payment of dividends or the making of other distributions
on any Subsidiary's Capital Stock which are necessary to service
Indebtedness of TFC;
(c) cancellations of intercompany Indebtedness which are treated as
dividends.
Notwithstanding anything to the contrary contained herein, so long as a
majority of the U.S. Borrower's common stock is owned by RHI, any payment
of a dividend or other distribution with respect to the U.S. Borrower's
Capital Stock shall be permitted hereunder only after a period of at least
ninety (90) days has elapsed since the declaration of such dividend or
other distribution by the U.S. Borrower's Board of Directors and provided
that before and after giving effect to each such payment, the U.S.
Borrower is Solvent.
10.07. Conduct of Business; Accounting and Reporting Practices. The
U.S. Borrower shall not and shall not permit any of its Subsidiaries to
(a) engage in any business other than (i) the businesses engaged in by the
U.S. Borrower and its Subsidiaries on the Effective Date and (ii) any
business or activities which are substantially similar, related or
incidental thereto or (b) change any of its or their accounting or
financial reporting policies or practices from those in effect on the
Closing Date.
10.08. Transactions with Shareholders and Affiliates. The U.S.
Borrower shall not and shall not permit any of its Subsidiaries to
directly or indirectly enter into or permit to exist any transaction
(including, without limitation, the purchase, sale, lease or exchange of
any property or the rendering of any service) with any Affiliate on terms
that are less favorable to a Borrower or such Subsidiary, as applicable,
than those that might be obtained in an arm's length transaction at the
time from Persons who are not an Affiliate. Nothing contained in this
Section 10.08 shall prohibit (a) any transaction expressly permitted by
Sections 10.05 and 10.06; (b) increases in compensation and benefits for
officers and employees of the U.S. Borrower or any of its Subsidiaries
which are customary in the industry or consistent with the past business
practice of the U.S. Borrower or such Subsidiary, provided that no Event
of Default or Potential Event of Default has occurred and is continuing;
(c) payment of customary directors' fees and indemnities; (d) performance
of any obligations arising under the Transfer Documents or (e) performance
of any obligations arising under the Tax Allocation Agreement.
10.09. Restriction on Fundamental Changes. The U.S. Borrower shall
not and shall not permit any of its Subsidiaries to (a) enter into any
merger or consolidation, or liquidate, wind-up or dissolve (or suffer any
liquidation or dissolution), or (b) convey, lease, sell, transfer or
otherwise dispose of, in one transaction or series of transactions, all or
substantially all of such Person's business or Property, whether now or
hereafter acquired, except:
(a) the liquidation of Convac Dresden GmbH;
(b) the liquidation or dissolution of Fairchild Fastener Group Ltd.
and JJS Limited;
(c) the transfer of the Capital Stock of Camloc (U.K.) Ltd. by
Fairchild Fastener Group Ltd. to Banner Investments (U.K.) PLC;
(d) the merger or liquidation of Convac France S.A. into
Technologies;
(e) the merger or liquidation of any Subsidiary of the U.S. Borrower
with and into the U.S. Borrower or any Guarantor; and
(f) the sale, lease, transfers or other dispositions described in
Sections 10.02 (e) and (f).
10.10. Sales and Leasebacks. The U.S. Borrower shall not and shall
not permit any of its Subsidiaries to become liable, directly, by assump-
tion or by Accommodation Obligation, with respect to any lease, whether an
Operating Lease or a Capital Lease, of any Property (whether real or
personal or mixed) which it or one of its Subsidiaries (a) sold or
transferred or is to sell or transfer to any other Person, or (b) intends
to use for substantially the same purposes as any other Property which has
been or is to be sold or transferred by it or one of its Subsidiaries to
any other Person, in either instance, in connection with such lease.
10.11. Margin Regulations; Securities Laws. The U.S. Borrower shall
not or permit any of its Subsidiaries to use all or any portion of the
proceeds of any credit extended under this Agreement to purchase or carry
Margin Stock or for purposes other than those described in Section 2.04.
10.12. ERISA. The U.S. Borrower shall not:
(a) engage, or permit any of its Subsidiaries to engage, in any
prohibited transaction described in Sections 406 of ERISA or 4975 of the
Internal Revenue Code for which a statutory or class exemption is not
available or a private exemption has not been previously obtained from the
DOL;
(b) permit to exist any accumulated funding deficiency (as defined
in Sections 302 of ERISA and 412 of the Internal Revenue Code), with
respect to any Benefit Plan, whether or not waived;
(c) fail, or permit any ERISA Affiliate to fail, to pay timely
required contributions or annual installments due with respect to any
waived funding deficiency to any Benefit Plan;
(d) terminate, or permit any ERISA Affiliate to terminate, any
Benefit Plan which would result in any liability of a Borrower or any
ERISA Affiliate under Title IV of ERISA;
(e) fail to make any contribution or payment to any Multiemployer
Plan which a Borrower or any ERISA Affiliate may be required to make under
any agreement relating to such Multiemployer Plan, or any law pertaining
thereto;
(f) fail, or permit any ERISA Affiliate to fail, to pay any required
installment or any other payment required under Section 412 of the
Internal Revenue Code on or before the due date for such installment or
other payment;
(g) amend, or permit any ERISA Affiliate to amend, a Benefit Plan
resulting in an increase in current liability for the plan year such that
a Borrower or any ERISA Affiliate is required to provide security to such
Plan under Section 401(a)(29) of the Internal Revenue Code;
(h) permit any unfunded liabilities with respect to any Foreign
Pension Plan; or
(i) fail, or permit any of its Subsidiaries or ERISA Affiliates to
fail, to pay any required contributions or payments to a Foreign Pension
Plan on or before the due date for such required installment or payment
if such event results, either singly or in the aggregate, after taking
into account all other such events and any liabilities associated
therewith, in an aggregate liability in excess of $2,000,000.
10.13. Issuance of Equity Securities. The U.S. Borrower shall not
and shall not permit any of its Subsidiaries to issue any equity
Securities except equity Securities of the U.S. Borrower pursuant to
Permitted Equity Securities Options and in connection with effecting the
transfer of the Technologies Minority Interest.
10.14. Organizational Documents; Material Contractual Obligations.
The U.S. Borrower shall not and shall not permit any of its Subsidiaries
to amend, modify or otherwise change any of the terms or provisions in any
of (a) their respective Organizational Documents as in effect on the
Closing Date, except (i) with respect to which written notice shall have
been provided to the Administrative Agent no less than ten (10) days prior
to the effective date of any such amendment, modification or change and
(ii) if no Event of Default or Potential Event of Default would result
therefrom or (b) Contractual Obligations evidencing any debt Securities or
other material Contractual Obligations.
10.15. Bank Accounts. The U.S. Borrower shall not and shall not
permit any of its Subsidiaries to establish or maintain any Deposit
Account into which collections of Receivables and proceeds of other
Collateral are deposited other than those identified as existing on the
Effective Date and disclosed on Schedule 10.15 attached hereto or which
are established after the Effective Date with the prior written approval
of the Administrative Agent and which, if collections of Receivables or
proceeds of Collateral are deposited therein, are subject to Collection
Account Agreements or other arrangements satisfactory to the
Administrative Agent.
10.16. Fiscal Year; Fiscal Months. The U.S. Borrower shall not and
shall not permit any of its Subsidiaries (other than Banner Aerospace,
Inc. in the event it becomes a Subsidiary) to change its Fiscal Year for
accounting or tax purposes from a period consisting of the 12-month period
ending on June 30 of each calendar year or to change the ending dates for
any Fiscal Month.
<PAGE>
ARTICLE XI
FINANCIAL COVENANTS
The U.S. Borrower covenants and agrees that so long as any
Commitments are outstanding and thereafter until payment in full of all of
the Obligations (other than indemnities not yet due):
11.01. Interest Coverage Ratio. The U.S. Borrower and its
Subsidiaries shall have, as of the end of each Fiscal Quarter, an Interest
Coverage Ratio of no less than 4.0 to 1.0.
11.02. Fixed Charge Coverage Ratio. The U.S. Borrower and its
Subsidiaries shall have, as of the end of each Fiscal Quarter set forth
below, a Fixed Charge Coverage Ratio of no less than 1.0 to 1.0.
11.03. Capital Expenditures. The U.S. Borrower and its Subsidiaries
shall not make Capital Expenditures in any Fiscal Year, commencing with
the Fiscal Year ending June 30, 1997, in excess of $12,000,000.
11.04. Minimum Net Worth. The U.S. Borrower and its Subsidiaries
shall have, as of the end of each Fiscal Quarter, a net worth of no less
than $150,000,000.
For purposes of calculating EBITDA in determining compliance with Sections
11.01 and 11.02, EBITDA for the Fiscal Year ending June 30, 1996 shall be
deemed to equal $14,000,000 and EBITDA for each fiscal quarter of the
Fiscal Year ending June 30, 1996 shall be deemed to equal one-fourth (1/4)
of $14,000,000, in each case, until the date on which the report of the
U.S. Borrower's independent certified public accountants described in
Section 8.01(c) for such Fiscal Year is delivered to the Administrative
Agent and for each such fiscal quarter shall equal one-fourth (1/4) of the
EBITDA calculated based on such report thereafter.
<PAGE>
ARTICLE XII
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
12.01. Events of Default. Each of the following occurrences shall
constitute an Event of Default under this Agreement:
(a) Failure to Make Payments When Due. Either Borrower shall fail to
pay (i) when due any principal of any Loan or any Reimbursement Obligation
for which it is obligated hereunder or (ii) within one (1) Business Day
after the due date therefor, any other Obligation for which it is
obligated.
(b) Breach of Certain Covenants. The U.S. Borrower shall fail duly
and punctually to perform or observe any agreement, covenant or obligation
under Sections 9.01, 9.02, 9.03, 9.04, 9.06, 9.10, 9.13 or 9.15, Article X
or Article XI.
(c) Breach of Representation or Warranty. Any representation or
warranty made or deemed made by the Borrowers to the Administrative Agent,
European Agent, European Administrator, any Lender or any Issuing Bank
herein or by either Borrower or any Subsidiary of a Borrower in any of
the other Loan Documents or in any statement or certificate at any time
given by any such Person pursuant to any of the Loan Documents shall be
false or misleading in any material respect on the date as of which made
(or deemed made).
(d) Other Defaults. Either Borrower shall default in the
performance of or compliance with any term contained in this Agreement
(other than as identified in clauses (a), (b) or (c) of this Section
12.01) applicable thereto or any default or event of default shall occur
under any of the other Loan Documents, and such default or event of
default shall continue for fifteen (15) days after the occurrence thereof.
(e) Default as to Other Indebtedness. The U.S. Borrower or any of
its Subsidiaries shall fail to make any payment when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) with respect to any other Indebtedness (other than an
Obligation) of the Borrowers and their Subsidiaries aggregating $1,000,000
or more; or any breach, default or event of default shall occur, or any
other condition shall exist under any instrument, agreement or indenture
pertaining to any such Indebtedness, if the effect thereof is to cause an
acceleration, mandatory redemption or other required repurchase of such
Indebtedness, or permit the holder(s) of such Indebtedness to accelerate
the maturity of any such Indebtedness or require a redemption or other
repurchase of such Indebtedness; or any such Indebtedness shall be
otherwise declared to be due and payable (by acceleration or otherwise) or
required to be prepaid, redeemed or otherwise repurchased by a Borrower or
any of its Subsidiaries (other than by a regularly scheduled required
prepayment) prior to the stated maturity thereof.
(f) Involuntary Bankruptcy; Appointment of Receiver, Etc. (i) An
involuntary case shall be commenced against either Borrower, any
Subsidiary of a Borrower, TFC or RHI and the petition shall not be (A)
controverted within ten (10) days after the filing thereof and (B)
dismissed, stayed, bonded or discharged within sixty (60) days after
commencement of the case; or a court having jurisdiction in the premises
shall enter a decree or order for relief in respect of either Borrower,
any Subsidiary of a Borrower, TFC or RHI in an involuntary case, under any
applicable bankruptcy, insolvency or other similar law now or hereinafter
in effect; or any other similar relief shall be granted under any
applicable federal, state, local or foreign law.
(ii) A decree or order of a court having jurisdiction in the
premises for the appointment of a receiver, liquidator, sequestrator,
trustee, custodian or other officer having similar powers over either
Borrower, any Subsidiary of a Borrower, TFC or RHI or over all or a
substantial part of the Property of any such Person shall be entered; or
an interim receiver, trustee or other custodian of a Borrower, any
Subsidiary of a Borrower, TFC, or RHI or of all or a substantial part of
the Property of any such Person shall be appointed or a warrant of
attachment, execution or similar process against any substantial part of
the Property of a Borrower, any Subsidiary of a Borrower, TFC or RHI shall
be issued and any such event shall not be stayed, dismissed, bonded or
discharged within thirty (30) days after entry, appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver, Etc. Either
Borrower, any Subsidiary of a Borrower, TFC or RHI shall commence a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or shall consent to the entry of
an order for relief in an involuntary case, or to the conversion of an
involuntary case to a voluntary case, under any such law, or shall consent
to the appointment of or taking possession by a receiver, trustee or other
custodian for all or a substantial part of its Property; or any such
Person shall make any assignment for the benefit of creditors or shall be
unable or fail, or admit in writing its inability, to pay its debts as
such debts become due; or the board of directors (or equivalent) of any
such Person (or any committee thereof) adopts any resolution or otherwise
authorizes any action to approve any of the foregoing.
(h) Dissolution. Any order, judgment or decree shall be entered
against either Borrower, any Subsidiary of a Borrower, TFC, or RHI
decreeing its involuntary dissolution or split up and such order shall
remain undischarged and unstayed for a period in excess of sixty (60)
days; or any such Person shall otherwise dissolve, be dissolved, or cease
to exist except as specifically permitted by this Agreement.
(i) Loan Documents; Failure of Security. At any time, for any
reason, (i) any Loan Document ceases to be in full force and effect or
either Borrower or any of its Subsidiaries party thereto seeks to
repudiate its obligations thereunder or the Liens intended to be created
thereby are, or a Borrower or any such Subsidiary seeks to render such
Liens, invalid or unperfected, or (ii) Liens in favor of the
Administrative Agent for the benefit of the Holders contemplated by the
Loan Documents shall, at any time, for any reason, be invalidated or
otherwise cease to be in full force and effect, or such Liens shall be
subordinated or shall not have the priority contemplated by this Agreement
or the Loan Documents.
(j) Judgments and Attachments. Any money judgment (other than a
money judgment covered by insurance as to which the insurance company has
acknowledged coverage), writ or warrant of attachment, or similar process
against either Borrower or any of its Subsidiaries or any of their
respective assets involving in any case an amount in excess of $500,000 is
entered and shall remain undischarged, unvacated, unbonded or unstayed for
a period of thirty (30) days or in any event later than five (5) days
prior to the date of any proposed sale thereunder; provided, however, if
any such judgment, writ or warrant of attachment or similar process is in
excess of $7,500,000, the entry thereof shall immediately constitute an
Event of Default hereunder.
(k) Termination Event. Any Termination Event occurs which could
reasonably be expected to subject either Borrower or any ERISA Affiliate
to liability in excess of $2,000,000, for which adequate reserves are not
maintained.
(l) Waiver Application. The plan administrator of any Benefit Plan
applies under Section 412(d) of the Code for a waiver of the minimum
funding standards of Section 412(a) of the Internal Revenue Code and the
Administrative Agent believes that the substantial business hardship upon
which the application for the waiver is based could subject either
Borrower or any ERISA Affiliate to liability in excess of $2,000,000, for
which adequate reserves are not maintained.
(m) Change in Control. A Change of Control shall occur.
(n) Material Adverse Effect. An event shall occur which results in
a Material Adverse Effect.
(o) TFC/RHI Liquidity. The TFC/RHI Liquidity shall be less than
$15,000,000 at any time.
(p) Public Debt Cross-Default. TFC shall fail to make any payment
when due on any Indebtedness of TFC owing with respect to its (i) 12%
Intermediate Subordinated Debentures due 2001, (ii) 13 1/8% Subordinated
Debentures due 2006, or (iii) 13% Junior Subordinated Debentures due 2007;
or RHI shall fail to make any payment when due on any Indebtedness of RHI
with respect to the 11 7/8% Senior Subordinated Debentures due 1999; or
any breach, default or event of default shall occur under any instrument,
agreement or indenture pertaining to any Indebtedness of TFC or RHI
described above, if the effect thereof (with or without the giving of
notice or lapse of time or both) is to accelerate (as distinguished from
imposing a requirement to offer to purchase), or permit the holder(s) of
such Indebtedness to accelerate (as distinguished from imposing a
requirement to offer to purchase), the maturity of any such Indebtedness.
(q) TFC. TFC shall (i) pay dividends on or redeem any of its shares
of common stock or any Indebtedness prior to its stated maturity at any
time when the TFC/RHI Liquidity is less than $20,000,000 or after giving
effect to such dividend or redemption the TFC/RHI Liquidity would be less
than $20,000,000 or (ii) permit any of its Subsidiaries (other than RHI
and any of its Subsidiaries) to, directly or indirectly, make or own any
Investment in any Person, or redeem or pay prior to the scheduled maturity
thereof any of the Indebtedness of TFC referenced in clause (p) above,
except:
(A) Investments of TFC or any such Subsidiary in Cash Equivalents;
(B) Investments of TFC or any such Subsidiary which represent defaulted
or extended obligations previously contracted in the ordinary course of
business thereof and payable on terms necessary to effectuate the
collection thereof, in an amount not to exceed at any one time
outstanding, in the aggregate for TFC and all of its Subsidiaries (other
than RHI and any of its Subsidiaries) $20,000,000; provided that the
amount of such Investments by TFC in any one obligor shall not exceed
$10,000,000 in the aggregate at any one time outstanding;
(C) Investments of TFC or any such Subsidiary arising from Indebtedness
between TFC and its Subsidiaries;
(D) Investments of TFC in the form of notes or other Securities taken by
TFC in connection with sales of assets of TFC;
(E) Investments in the Capital Stock or Indebtedness of RHI and other
Persons identified on Schedule 12.01-Q;
(F) Investments in an aggregate amount not to exceed $500,000 at any
time, or $2,000,000 in the aggregate during the term of this Agreement,
consisting of capital contributions made by TFC or its Subsidiaries to
Wholly-Owned Subsidiaries of TFC formed after the Closing Date;
(G) Investments made by virtue of the repurchase of any Indebtedness
described in clause (p) above;
(H) other Investments in an aggregate amount not to exceed $10,000,000
during the term of this Agreement; provided, however, that in the event
any Investment described in clauses (A), (D), (E), or (F) is sold, the
$10,000,000 limitation set forth hereinabove shall be increased by the
amount of such proceeds of sale up to a maximum increase to $15,000,000.
An Event of Default shall be deemed "continuing" until cured or
waived in writing in accordance with Section 15.07.
12.02. Rights and Remedies.
(a) Acceleration and Termination. Upon the occurrence of any Event
of Default described in Sections 12.01(f) or 12.01(g), the Lenders'
respective obligations to make Loans under the Commitments shall
automatically and immediately terminate and the unpaid principal amount
of, and any and all accrued interest on, the Obligations and all accrued
fees shall automatically become immediately due and payable, without
presentment, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and of accel-
eration), all of which are hereby expressly waived by the Borrowers; and
upon the occurrence and during the continuance of any other Event of
Default, the Administrative Agent shall at the request, or may with the
consent, of the Requisite Lenders, by written notice to the U.S. Borrower,
(i) declare that the Lenders' respective obligations to make Loans under
the Commitments are terminated, whereupon such obligation of each such
Lender to make any Loan hereunder and of each such Lender or Issuing Bank
to issue or participate in any Letter of Credit not then issued shall
immediately terminate, and/or (ii) declare the unpaid principal amount of
and any and all accrued and unpaid interest on the Obligations to be, and
the same shall thereupon be, immediately due and payable, without
presentment, demand, or protest or other requirements of any kind
(including, without limitation, valuation and appraisement, diligence,
presentment, notice of intent to demand or accelerate and of
acceleration), all of which are hereby expressly waived by the Borrowers.
(b) Deposit for Letters of Credit. In addition, after the
occurrence and during the continuance of an Event of Default, the U.S.
Borrower shall, promptly upon demand by the Administrative Agent, deliver
to the Administrative Agent, Cash Collateral in such form as requested by
the Administrative Agent for deposit in the Cash Collateral Account,
together with such endorsements, and execution and delivery of such
documents and instruments, as the Administrative Agent may request in
order to perfect or protect the Administrative Agent's Lien with respect
thereto, in an aggregate principal amount equal to the then outstanding
Letter of Credit Obligations.
(c) Rescission. If at any time after termination of the Lenders'
obligations to make Loans under the Commitments and/or acceleration of the
maturity of the Loans, the Borrowers shall pay all arrears of interest and
all payments on account of principal of the Loans and Reimbursement
Obligations which shall have become due otherwise than by acceleration
(with interest on principal and, to the extent permitted by law, on
overdue interest, at the rates specified in this Agreement) and all Events
of Default and Potential Events of Default (other than nonpayment of
principal of and accrued interest on the Loans due and payable solely by
virtue of acceleration) shall be remedied or waived pursuant to Section
15.07, then upon the written consent of the Requisite Lenders and written
notice to the U.S. Borrower, the termination of the Lenders' respective
obligations to make Loans under the Commitments and the respective
Lenders' and Issuing Banks' obligations to participate in or issue Letters
of Credit and/or the aforesaid acceleration and its consequences may be
rescinded and annulled; but such action shall not affect any subsequent
Event of Default or Potential Event of Default or impair any right or
remedy consequent thereon. The provisions of the preceding sentence are
intended merely to bind the Lenders and the Issuing Banks to a decision
which may be made at the election of the Requisite Lenders; they are not
intended to benefit the Borrowers and do not give the Borrowers the right
to require the Lenders to rescind or annul any termination of the
aforesaid obligations of the Lenders or Issuing Banks or any acceleration
hereunder, even if the conditions set forth herein are met.
(d) Enforcement. The Borrowers each acknowledge that in the event
either Borrower or any of its Subsidiaries fails to perform, observe or
discharge any of their respective obligations or liabilities under this
Agreement or any other Loan Document, any remedy of law may prove to be
inadequate relief to the Administrative Agent, the European Agent, the
Issuing Banks and the Lenders; therefore, the Borrowers each agree that
the Administrative Agent, the European Agent, the Issuing Banks and the
Lenders shall be entitled to temporary and permanent injunctive relief in
any such case without the necessity of proving actual damages.
<PAGE>
ARTICLE XIII
THE ADMINISTRATIVE AGENT AND EUROPEAN AGENT
13.01. Appointment. (a) Each Lender and each Issuing Bank hereby
designates and appoints Citicorp as the Administrative Agent of such
Lender or such Issuing Bank under this Agreement and each U.K. Lender
hereby designates and appoints Citibank London as the European Agent of
such U.K. Lender, and each Lender and each Issuing Bank hereby irrevocably
authorizes the Administrative Agent, and each U.K. Lender hereby
irrevocably authorizes the European Agent, to take such action on its
behalf under the provisions of this Agreement and the Loan Documents and
to exercise such powers as are set forth herein or therein together with
such other powers as are reasonably incidental thereto. The Administrative
Agent and the European Agent hereby agree to act in the aforesaid
capacities on the express conditions contained in this Article XIII.
(b) The provisions of this Article XIII are solely for the benefit
of the Administrative Agent, the European Agent, the Lenders and Issuing
Banks, and neither Borrower and no Subsidiary of a Borrower shall have any
rights to rely on or enforce any of the provisions hereof (other than as
expressly set forth in Section 13.07). In performing its functions and
duties under this Agreement, the Administrative Agent shall act solely as
Administrative Agent of the Lenders and the Issuing Banks and the European
Agent shall act solely as European Agent of the U.K. Lenders and neither
assumes nor shall be deemed to have assumed any obligation or relationship
of agency, trustee or fiduciary with or for either Borrower or any
Affiliate of either Borrower. The Administrative Agent and the European
Agent may perform any of their respective duties hereunder, or under the
other Loan Documents, by or through their respective agents or employees.
13.02. Nature of Duties. Neither the Administrative Agent nor the
European Agent shall have any duties or responsibilities other than those
expressly set forth in this Agreement or in the Loan Documents. The
duties of the Administrative Agent and European Agent shall be mechanical
and administrative in nature. Neither the Administrative Agent nor the
European Agent shall have by reason of this Agreement any fiduciary
relationship in respect of any Holder. Nothing in this Agreement or any
of the Loan Documents, expressed or implied, is intended to or shall be
construed to impose upon the Administrative Agent or the European Agent
any obligations in respect of this Agreement or any of the other Loan
Documents other than as expressly set forth herein or therein. Each
Lender and each Issuing Bank shall make its own independent investigation
of the financial condition and affairs of the Borrowers and their
Affiliates in connection with the making and the continuance of the Loans
hereunder and with the issuance of the Letters of Credit and shall make
its own appraisal of the creditworthiness of the Borrowers and Guarantors
initially and on a continuing basis, and neither the Administrative Agent
nor the European Agent shall have any duty or responsibility, either
initially or on a continuing basis, to provide any Holder with any credit
or other information with respect thereto (except for reports required to
be delivered by the Administrative Agent under the terms of this
Agreement). If the Administrative Agent or the European Agent seeks the
consent or approval of the Lenders to the taking or refraining from taking
of any action hereunder, the Administrative Agent shall send notice
thereof to each Lender. The Administrative Agent shall promptly notify
each Lender at any time that the Lenders so required hereunder have
instructed the Administrative Agent or European Agent to act or refrain
from acting pursuant hereto. As to any matters not expressly provided for
by this Agreement (including, without limitation, enforcement or
collection of the Notes or any amount payable under any provision of
Article IV or Article V when due) or the other Loan Documents, neither the
Administrative Agent nor the European Agent shall be required to exercise
any discretion or take any action. Notwithstanding the foregoing, the
Administrative Agent and the European Agent shall be required to act or
refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Requisite Lenders
(unless the instructions or consent of all of the Lenders is required
hereunder or thereunder) and such instructions shall be binding upon all
Lenders, Issuing Banks and Holders; provided, however, neither the
Administrative Agent nor the European Agent shall be required to take any
action which (i) the Administrative Agent or European Agent reasonably
believes will expose it to personal liability unless the Administrative
Agent or European Agent, as applicable, receives an indemnification
satisfactory to it from the Lenders with respect to such action or (ii) is
contrary to this Agreement, the other Loan Documents or applicable law.
13.03. Rights, Exculpation, Etc. (a) Liabilities;
Responsibilities. None of the Administrative Agent, the European Agent,
any Affiliate of the Administrative Agent or European Agent, or any of
their respective officers, directors, employees or agents shall be liable
to any Holder for any action taken or omitted by them hereunder or under
any of the Loan Documents, or in connection therewith, except that no
Person shall be relieved of any liability imposed by law for gross
negligence or willful misconduct. Neither the Administrative Agent nor
the European Agent shall be liable for any apportionment or distribution
of payments made by it in good faith pursuant to Section 4.02(b), and, if
any such apportionment or distribution is subsequently determined to have
been made in error, the sole recourse of any Holder to whom payment was
due, but not made, shall be to recover from other Holders any payment in
excess of the amount to which they are determined to have been entitled.
Neither the Administrative Agent nor the European Agent shall be
responsible to any Holder for any recitals, statements, representations or
warranties herein or for the execution, effectiveness, genuineness, valid-
ity, legality, enforceability, collectibility, or sufficiency of this
Agreement or any of the other Loan Documents or the transactions
contemplated thereby, or for the financial condition of either Borrower or
any of its Affiliates or the Guarantors. Neither the Administrative Agent
nor the European Agent shall be required to make any inquiry concerning
either the performance or observance of any of the terms, provisions or
conditions of this Agreement or any of the other Loan Documents, or the
financial condition of either Borrower or any of its Affiliates or the
Guarantors, or the existence or possible existence of any Potential Event
of Default or Event of Default.
(b) Right to Request Instructions. The Administrative Agent and the
European Agent may at any time request instructions from the Lenders with
respect to any actions or approvals which by the terms of any of the Loan
Documents the Administrative Agent or European Agent is permitted or
required to take or to grant, and shall be absolutely entitled to refrain
from taking any action or to withhold any approval and shall not be under
any liability whatsoever to any Person for refraining from any action or
withholding any approval under any of the Loan Documents until it shall
have received such instructions from those Lenders from whom the
Administrative Agent or European Agent is required to obtain such
instructions for the pertinent matter in accordance with the Loan
Documents. Without limiting the generality of the foregoing, no Holder
shall have any right of action whatsoever against either the
Administrative Agent or the European Agent as a result of the its acting
or refraining from acting under the Loan Documents in accordance with the
instructions of the Requisite Lenders or, where required by the express
terms of this Agreement, a greater proportion of the Lenders.
13.04. Reliance. The Administrative Agent and the European Agent
shall be entitled to rely upon any written notices, statements,
certificates, orders or other documents or any telephone message believed
by it in good faith to be genuine and correct and to have been signed,
sent or made by the proper Person, and with respect to all matters
pertaining to this Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel (including counsel
for the Borrowers), independent public accountants and other experts
selected by it.
13.05. Indemnification. To the extent that the Administrative Agent
or European Agent is required to be reimbursed and indemnified by a
Borrower but is not reimbursed and indemnified by such Borrower, the
Lenders will reimburse and indemnify the Administrative Agent or European
Agent, as applicable, for and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against it in any way relating to or
arising out of the Loan Documents or any action taken or omitted by the
Administrative Agent or European Agent under the Loan Documents, in
proportion to each Lender's Pro Rata Share. The obligations of the
Lenders under this Section 13.05 shall survive the payment in full of the
Loans, the Reimbursement Obligations and all other Obligations and the
termination of this Agreement.
13.06. Citicorp Individually. With respect to its Pro Rata Share
and U.K. Loan Pro Rata Share of the Commitments hereunder, if any, and the
Loans made by it, if any, Citicorp shall have and may exercise the same
rights and powers hereunder and is subject to the same obligations and
liabilities as and to the extent set forth herein for any other Lender.
The terms "Lenders" or "Requisite Lenders" or any similar terms shall,
unless the context clearly otherwise indicates, include Citicorp in its
individual capacity as a Lender or one of the Requisite Lenders. Citicorp
and its Affiliates may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with the Borrowers
or any of their Affiliates as if it were not acting as the Administrative
Agent pursuant hereto and as if Citibank London were not acting as the
European Agent pursuant hereto.
13.07. Successor Administrative and European Agents. (a)
Resignation. The Administrative Agent and the European Agent may resign
from the performance of all its respective functions and duties hereunder
at any time by giving at least thirty (30) Business Days' prior written
notice to the U.S. Borrower and the Lenders. Such resignation shall take
effect upon the acceptance by a successor Administrative Agent or European
Agent, as applicable, of appointment pursuant to this Section 13.07.
(b) Appointment by Requisite Lenders. Upon any such notice of
resignation, the Requisite Lenders shall have the right to appoint a
successor Administrative Agent or European Agent, as applicable, selected
from among the Lenders which appointment shall be subject to the prior
written approval of the U.S. Borrower (which may not be unreasonably
withheld, and shall not be required upon the occurrence and during the
continuance of an Event of Default).
(c) Appointment by Retiring Administrative Agent or European Agent.
If a successor Administrative Agent or European Agent shall not have been
appointed within the thirty (30) Business Day period provided in clause
(a) of this Section 13.07, the retiring Administrative Agent or European
Agent, as applicable, with the consent of the U.S. Borrower (which may not
be unreasonably withheld, and shall not be required upon the occurrence
and during the continuance of an Event of Default), shall then appoint a
successor Administrative Agent or European Agent who shall serve as such
until such time, if any, as the Requisite Lenders appoint a successor
Administrative Agent or successor European Agent as provided above.
(d) Rights of the Successor and Retiring Administrative Agents and
Successor and Retiring European Agents. Upon the acceptance of any
appointment as (i) Administrative Agent hereunder by a successor
Administrative Agent or (ii) European Agent hereunder by a successor
European Agent, such successor Administrative Agent or European Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Administrative Agent or European
Agent, and the retiring Administrative Agent or European Agent shall be
discharged from its duties and obligations under this Agreement. After
any retiring Administrative Agent's resignation hereunder as
Administrative Agent or any retiring European Agent's resignation
hereunder as European Agent, the provisions of this Article XIII shall
inure to its benefit as to any actions taken or omitted to be taken by it
while it was the Administrative Agent or European Agent under this
Agreement.
13.08. Relations Among Lenders. Each Lender and each Issuing Bank
agrees (except as provided in Section 15.05) that it will not take any
legal action, nor institute any actions or proceedings, against either
Borrower or any other obligor hereunder or under the other Loan Documents
with respect to any Collateral, without the prior written consent of the
Requisite Lenders. Without limiting the generality of the foregoing, no
Lender may accelerate or otherwise enforce its portion of the Obligations,
or unilaterally terminate its Commitments except in accordance with
Section 12.02(a).
13.09. Concerning the Collateral and the Loan Documents. (a)
Protective Advances. The Administrative Agent may from time to time,
before or after the occurrence of an Event of Default, make such
disbursements and advances pursuant to the Loan Documents which the
Administrative Agent, in its sole discretion, deems necessary or desirable
to preserve or protect the Collateral or any portion thereof or to enhance
the likelihood or maximize the amount of repayment of the Loans and other
Obligations ("Protective Advances"). The Administrative Agent shall
notify the U.S. Borrower and each Lender in writing of each such
Protective Advance, which notice shall include a description of the
purpose of such Protective Advance. The U.S. Borrower agrees to pay the
Administrative Agent, upon demand, the principal amount of all outstanding
Protective Advances, together with interest thereon at the rate from time
to time applicable to Base Rate Loans from the date of such Protective
Advance until the outstanding principal balance thereof is paid in full.
If the U.S. Borrower fails to make payment in respect of any Protective
Advance within one (1) Business Day after the date the U.S. Borrower
receives written demand therefor from the Administrative Agent, the
Administrative Agent shall promptly notify each Lender and each Lender
agrees that it shall thereupon make available to the Administrative Agent,
in Dollars in immediately available funds, the amount equal to such
Lender's Pro Rata Share of such Protective Advance. If such funds are not
made available to the Administrative Agent by such Lender within one (1)
Business Day after the Administrative Agent's demand therefor, the
Administrative Agent will be entitled to recover any such amount from such
Lender together with interest thereon at the Federal Funds Rate for each
day during the period commencing on the date of such demand and ending on
the date such amount is received. The failure of any Lender to make
available to the Administrative Agent its Pro Rata Share of any such
Protective Advance shall neither relieve any other Lender of its
obligation hereunder to make available to the Administrative Agent such
other Lender's Pro Rata Share of such Protective Advance on the date such
payment is to be made nor increase the obligation of any other Lender to
make such payment to the Administrative Agent. All outstanding principal
of, and interest on, Protective Advances shall constitute Obligations
secured by the Collateral until paid in full by the U.S. Borrower.
(b) Authority. Each Lender and each Issuing Bank authorizes and
directs the Administrative Agent to enter into the Loan Documents relating
to the Collateral for the benefit of the Lenders and the Issuing Banks.
Each Lender and each Issuing Bank agrees that any action taken by the
Administrative Agent, the European Agent, or the Requisite Lenders (or,
where required by the express terms of this Agreement, a greater
proportion of the Lenders) in accordance with the provisions of this
Agreement or the other Loan Documents, and the exercise by the
Administrative Agent, the European Agent, or the Requisite Lenders (or,
where so required, such greater proportion) of the powers set forth herein
or therein, together with such other powers as are reasonably incidental
thereto, shall be authorized and binding upon all of the Lenders and
Issuing Banks. Without limiting the generality of the foregoing, the
Administrative Agent shall have the sole and exclusive right and authority
to (i) act as the disbursing and collecting agent for the Lenders and the
Issuing Banks with respect to all payments and collections of the
Obligations of the U.S. Borrower arising in connection with this Agreement
and the Loan Documents or relating to the Collateral and act, through the
European Agent if the Administrative Agent elects to do so, as the
disbursing and collecting agent for the U.K. Lenders with respect to all
payments and collections of the Obligations of the U.K. Borrower arising
in connection with this Agreement and the Loan Documents or relating to
the Collateral; (ii) execute and deliver each Loan Document relating to
the Collateral and accept delivery of each such agreement delivered by a
Borrower, any Subsidiary of a Borrower, or any Guarantor a party thereto;
(iii) act as collateral agent for the Lenders and the Issuing Banks for
purposes of the perfection of all security interests and Liens created by
such agreements and all other purposes stated therein; provided, however,
the Administrative Agent hereby appoints, authorizes and directs the
Lenders and the Issuing Banks to act as collateral sub-agent for the
Administrative Agent, the Lenders and the Issuing Banks for purposes of
the perfection of all security interests and Liens with respect to the
Property at any time in the possession of such Lender or such Issuing
Bank, including, without limitation, Deposit Accounts maintained with, and
cash and Cash Equivalents held by, such Lender or such Issuing Bank; (iv)
manage, supervise and otherwise deal with the Collateral; (v) take such
action as is necessary or desirable to maintain the perfection and
priority of the security interests and liens created or purported to be
created by the Loan Documents; and (vi) except as may be otherwise
specifically restricted by the terms of this Agreement or any other Loan
Document, exercise all remedies given to the Administrative Agent, the
Lenders or the Issuing Banks with respect to the Collateral under the Loan
Documents relating thereto, applicable law or otherwise.
(c) Release of Collateral. (i) Each Lender and each Issuing Bank
hereby directs, in accordance with the terms of this Agreement, the
Administrative Agent to release any Lien held by the Administrative Agent
for the benefit of the Holders:
(A) against all of the Collateral, upon final and indefeasible
payment in full of the Obligations and termination of this Agreement;
(B) against any part of the Collateral sold or disposed of by a
Borrower or any of its Subsidiaries, if such sale or disposition is per-
mitted by Section 10.02 or is otherwise consented to by the Requisite
Lenders, as certified to the Administrative Agent by the U.S. Borrower in
an Officer's Certificate; and/or
(C) against any part of the Collateral consisting of a promissory
note, upon final and indefeasible payment in full of the Indebtedness
evidenced thereby.
(ii) Each Lender and each Issuing Bank hereby directs the
Administrative Agent to execute and deliver or file such termination and
partial release statements and do such other things as are necessary to
release Liens to be released pursuant to this Section 13.09(c) promptly
upon the effectiveness of any such release.
13.10. Documentation Agent. The Documentation Agent, as such, shall
have no duties or obligations whatsoever under this Agreement or any Loan
Document or any other document or any matter related hereto or thereto,
but shall nevertheless be entitled to all of the indemnities and other
protection afforded to the Administrative Agent under this Article XIII.
<PAGE>
ARTICLE XIV
YIELD PROTECTION
14.01. Taxes. (a) Payment of Taxes. Any and all payments by
either Borrower hereunder or under any Note or other document evidencing
any Obligations shall be made, in accordance with Section 4.02, free and
clear of and without reduction for any and all present or future taxes,
levies, imposts, deductions, charges, withholdings, and all stamp or docu-
mentary taxes, excise taxes, ad valorem taxes and other taxes imposed on
the value of the Property, charges or levies which arise from the
execution, delivery or registration, or from payment or performance under,
or otherwise with respect to, any of the Loan Documents or the Commitments
and all other liabilities with respect thereto excluding, in the case of
each Lender, each Issuing Bank and the Administrative Agent, taxes imposed
on or measured by net income or overall gross receipts and capital and
franchise taxes imposed on it by (i) the United States, the United Kingdom
or The Republic of Ireland, (ii) the Governmental Authority of the juris-
diction in which such Lender's Applicable Lending Office is located or any
political subdivision thereof or (iii) the Governmental Authority in which
such Person is organized, managed and controlled or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deduc-
tions, charges and withholdings being hereinafter referred to as "Taxes").
If either Borrower shall be required by law to withhold or deduct any
Taxes from or in respect of any sum payable hereunder or under any such
Note or document to any Lender, any Issuing Bank or the Administrative
Agent, (x) the sum payable to such Lender, Issuing Bank, or the
Administrative Agent shall be increased as may be necessary so that after
making all required withholding or deductions (including withholding or
deductions applicable to additional sums payable under this Section 14.01)
such Lender, such Issuing Bank or the Administrative Agent (as the case
may be) receives an amount equal to the sum it would have received had no
such withholding or deductions been made, (y) such Borrower shall make
such withholding or deductions, and (z) such Borrower shall pay the full
amount withheld or deducted to the relevant taxation authority or other
authority in accordance with applicable law. In addition, each Borrower
agrees to pay any present and future stamp and documentary taxes and any
other excise and property taxes, charges and similar levies which arise
from any payment made hereunder or under the Notes or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
or the Notes ("Other Taxes").
(b) Indemnification. The U.S. Borrower will indemnify each Lender,
each Issuing Bank and the Administrative Agent against, and reimburse each
on demand for, the full amount of all Taxes and Other Taxes (including,
without limitation, any Taxes or Other Taxes imposed by any Governmental
Authority on amounts payable under this Section 14.01 and any additional
income or franchise taxes resulting therefrom) incurred or paid by such
Lender, such Issuing Bank or the Administrative Agent (as the case may be)
or any of their respective Affiliates and any liability (including
penalties, interest, and out-of-pocket expenses paid to third parties)
arising therefrom or with respect thereto, whether or not such Taxes or
Other Taxes were lawfully payable. A certificate as to any additional
amount payable to any Person under this Section 14.01 submitted by it to
the U.S. Borrower shall, absent manifest error, be final, conclusive and
binding upon all parties hereto. Each Lender and each Issuing Bank
agrees, within a reasonable time after receiving a written request from
the U.S. Borrower, to provide the U.S. Borrower and the Administrative
Agent with such certificates as are reasonably required, and take such
other actions as are reasonably necessary to claim such exemptions as such
Lender or such Issuing Bank may be entitled to claim in respect of all or
a portion of any Taxes which are otherwise required to be paid or deducted
or withheld pursuant to this Section 14.01 in respect of any payments
under this Agreement or under the Notes.
(c) Receipts. Within thirty (30) days after the date of any payment
of Taxes or Other Taxes by the U.S. Borrower, it will furnish to the
Administrative Agent, at its address referred to in Section 15.08, the
original or a certified copy of a receipt evidencing payment thereof.
(d) Foreign Bank Certifications. (i) Each Lender that is not
created or organized under the laws of the United States or a political
subdivision thereof shall deliver to the U.S. Borrower and the
Administrative Agent on the Closing Date or the date on which such Lender
becomes a Lender pursuant to Section 15.01 hereof a true and accurate
certificate executed in duplicate by a duly authorized officer of such
Lender to the effect that such Lender is eligible to receive payments
hereunder and under the Notes without deduction or withholding of United
States federal income tax (I) under the provisions of an applicable tax
treaty concluded by the United States (in which case the certificate shall
be accompanied by two duly completed copies of IRS Form 1001 (or any
successor or substitute form or forms)), (II) under Sections 1442(c)(1)
and 1442(a) of the Internal Revenue Code (in which case the certificate
shall be accompanied by two duly completed copies of IRS Form 4224 (or any
successor or substitute form or forms)), or (III) due to such Lender's not
being a "bank" as such term is used in Section 881(c)(3)(A) of the
Internal Revenue Code (in which case, the certificate shall be accompanied
by two accurate and complete original signed copies of IRS Form W-8 (or
any successor or substitute form or forms)).
(ii) Each Lender further agrees to deliver to the U.S. Borrower and
the Administrative Agent from time to time, a true and accurate
certificate executed in duplicate by a duly authorized officer of such
Lender before or promptly upon the occurrence of any event requiring a
change in the most recent certificate previously delivered by it to the
U.S. Borrower and the Administrative Agent pursuant to this
Section 14.01(d). Each certificate required to be delivered pursuant to
this Section 14.01(d)(ii) shall certify as to one of the following:
(A) that such Lender can continue to receive payments hereunder and
under the Notes without deduction or withholding of United States federal
income tax;
(B) that such Lender cannot continue to receive payments hereunder
and under the Notes without deduction or withholding of United States
federal income tax as specified therein but does not require additional
payments pursuant to Section 14.01(a) because it is entitled to recover
the full amount of any such deduction or withholding from a source other
than the U.S. Borrower; or
(C) that such Lender is no longer capable of receiving payments
hereunder and under the Notes without deduction or withholding of United
States federal income tax as specified therein and that it is not capable
of recovering the full amount of the same from a source other than the
U.S. Borrower.
Each Lender agrees to deliver to the U.S. Borrower and the Administrative
Agent further duly completed copies of the above-mentioned IRS forms on or
before the earlier of (x) the date that any such form expires or becomes
obsolete or otherwise is required to be resubmitted as a condition to
obtaining an exemption from withholding from United States federal income
tax and (y) fifteen (15) days after the occurrence of any event requiring
a change in the most recent form previously delivered by such Lender to
the U.S. Borrower and Administrative Agent, unless any change in treaty,
law, regulation, or official interpretation thereof which would render
such form inapplicable or which would prevent the Lender from duly
completing and delivering such form has occurred prior to the date on
which any such delivery would otherwise be required and the Lender
promptly advises the U.S. Borrower that it is not capable of receiving
payments hereunder and under the Notes without any deduction or
withholding of United States federal income tax.
14.02. Increased Capital. If after the date hereof any Lender or
Issuing Bank determines that (i) the adoption or implementation of or any
change in or in the interpretation or administration of any law or
regulation or any guideline or request from any central bank or other
Governmental Authority or quasi-governmental authority exercising
jurisdiction, power or control over any Lender, Issuing Bank or banks or
financial institutions generally (whether or not having the force of law),
compliance with which affects or would affect the amount of capital
required or expected to be maintained by such Lender or Issuing Bank or
any Person controlling such Lender or Issuing Bank and (ii) the amount of
such capital is increased by or based upon (A) the making or maintenance
by any Lender of its Loans, any Lender's participation in or obligation to
participate in the Loans, Letters of Credit or other advances made
hereunder or the existence of any Lender's obligation to make Loans or (B)
the issuance or maintenance by any Issuing Bank of, or the existence of
any Issuing Bank's obligation to issue, Letters of Credit, then, in any
such case, upon written demand by such Lender or Issuing Bank (with a copy
of such demand to the Administrative Agent), the U.S. Borrower shall
immediately pay to the Administrative Agent for the account of such Lender
or Issuing Bank, from time to time as specified by such Lender or Issuing
Bank, additional amounts sufficient to compensate such Lender or Issuing
Bank or such Person therefor. Such demand shall be accompanied by a
statement as to the amount of such compensation and include a brief
summary of the basis for such demand. Such statement shall be conclusive
and binding for all purposes, absent manifest error.
14.03. Changes; Legal Restrictions. If after the date hereof any
Lender or Issuing Bank determines that the adoption or implementation of
or any change in or in the interpretation or administration of any law or
regulation or any guideline or request from any central bank or other
Governmental Authority or quasi-governmental authority exercising
jurisdiction, power or control over any Lender, Issuing Bank or over banks
or financial institutions generally (whether or not having the force of
law), compliance with which:
(a) does or will subject a Lender or an Issuing Bank (or its
Applicable Lending Office or Eurocurrency Affiliate) to charges (other
than taxes) of any kind which such Lender or Issuing Bank reasonably
determines to be applicable to the Commitments of the Lenders and/or the
Issuing Banks to make Eurocurrency Rate Loans or issue and/or participate
in Letters of Credit or change the basis of taxation of payments to that
Lender or Issuing Bank of principal, fees, interest, or any other amount
payable hereunder with respect to Eurocurrency Rate Loans or Letters of
Credit; or
(b) does or will impose, modify, or hold applicable, in the
determination of a Lender or an Issuing Bank, any reserve (other than
reserves taken into account in calculating the Eurocurrency Rate), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities (including those
pertaining to Letters of Credit) in or for the account of, advances or
loans by, commitments made, or other credit extended by, or any other
acquisition of funds by, a Lender or an Issuing Bank or any Applicable
Lending Office or Eurocurrency Affiliate of that Lender or Issuing Bank;
and the result of any of the foregoing is to increase the cost to that
Lender or Issuing Bank of making, renewing or maintaining the Loans or its
Commitments with respect to, or issuing or participating in, the Letters
of Credit or to reduce any amount receivable thereunder; then, in any such
case, upon written demand by such Lender or Issuing Bank (with a copy of
such demand to the Administrative Agent), the U.S. Borrower shall
immediately pay to the Administrative Agent for the account of such Lender
or Issuing Bank, from time to time as specified by such Lender or Issuing
Bank, such amount or amounts as may be necessary to compensate such Lender
or Issuing Bank or its Eurocurrency Affiliate for any such additional cost
incurred or reduced amount received. Such demand shall be accompanied by
a statement as to the amount of such compensation and include a brief
summary of the basis for such demand. Such statement shall be conclusive
and binding for all purposes, absent manifest error.
14.04. Illegality. (i) If at any time any Lender determines (which
determination shall, absent manifest error, be final and conclusive and
binding upon all parties) that the making or continuation of or conversion
into any Eurocurrency Rate Loan has become unlawful or impermissible by
compliance by that Lender with any law, governmental rule, regulation or
order of any Governmental Authority (whether or not having the force of
law and whether or not failure to comply therewith would be unlawful or
would result in costs or penalties), then, and in any such event, such
Lender may give notice of that determination, in writing, to the U.S.
Borrower and the Administrative Agent, and the Administrative Agent shall
promptly transmit the notice to each other Lender.
(ii) When notice is given by a Lender under Section 14.04(i),
(A) the Borrowers' right to request from such Lender and such Lender's
obligation, if any, to make Eurocurrency Rate Loans shall be immediately
suspended, and such Lender shall make a Base Rate Loan as part of any
requested Borrowing of Eurocurrency Rate Loans and (B) if the affected
Eurocurrency Rate Loan or Loans are then outstanding, the U.S. Borrower
shall immediately, or if permitted by applicable law, no later than the
date permitted thereby, upon at least one (1) Business Day's prior written
notice to the Administrative Agent and the affected Lender, convert each
such Loan into a Base Rate Loan.
(iii) If at any time after a Lender gives notice under Section
14.04(i) such Lender determines that it may lawfully make Eurocurrency
Rate Loans, such Lender shall promptly give notice of that determination,
in writing, to the U.S. Borrower and the Administrative Agent, and the
Administrative Agent shall promptly transmit the notice to each other
Lender. The Borrowers' right to request, and such Lender's obligation, if
any, to make Eurocurrency Rate Loans shall thereupon be restored.
14.05. Compensation. In addition to all amounts required to be paid
by the Borrower pursuant to Section 5.01, the U.S. Borrower shall
compensate each Lender, upon demand, for all losses, expenses and
liabilities (including, without limitation, any loss or expense incurred
by reason of the liquidation or reemployment of deposits or other funds
acquired by such Lender to fund or maintain such Lender's Eurocurrency
Rate Loans to the Borrowers but excluding any loss of Applicable
Eurocurrency Rate Margin on the relevant Loans) which that Lender may
sustain (i) if for any reason a Borrowing, conversion into or continuation
of Eurocurrency Rate Loans does not occur on a date specified therefor in
a Notice of Borrowing or a Notice of Conversion/Continuation given by the
U.S. Borrower or in a telephonic request by it for borrowing or
conversion/continuation or a successive Eurocurrency Interest Period does
not commence after notice therefor is given pursuant to Section 5.01(c),
including, without limitation, pursuant to Section 5.02(e), (ii) if for
any reason any Eurocurrency Rate Loan is prepaid (including, without
limitation, mandatorily pursuant to Section 4.01) on a date which is not
the last day of the applicable Eurocurrency Interest Period, (iii) as a
consequence of a required conversion of a Eurocurrency Rate Loan to a Base
Rate Loan as a result of any of the events indicated in Section 5.02(e),
or (iv) as a consequence of any failure by the applicable Borrower to
repay Eurocurrency Rate Loans made to it when required by the terms of
this Agreement. The Lender making demand for such compensation shall
deliver to the U.S. Borrower concurrently with such demand a written
statement in reasonable detail as to such losses, expenses and
liabilities, and this statement shall be conclusive as to the amount of
compensation due to that Lender, absent manifest error.
14.06. Limitation on Additional Amounts Payable by the U.S.
Borrower. Notwithstanding the provisions of Section 14.01(a), the U.S.
Borrower shall not be required to pay any additional amounts hereunder to
a Lender or Issuing Bank if (a) the obligation to pay such additional
amounts would not have arisen but for a failure by the Lender or Issuing
Bank to comply with the requirements described in Section 14.01 or (b) the
Lender or Issuing Bank shall not have furnished the U.S. Borrower with
such forms or shall not have taken such other action as reasonably may be
available to it under applicable tax laws and any applicable tax treaty to
obtain an exemption from, or reduction (to the lowest applicable rate) of
withholding of such United States federal income tax; provided, however,
the U.S. Borrower's obligation to pay such additional amounts shall be
reinstated upon receipt of such forms or evidence that action with respect
to obtaining such exemption or reduction has been taken.
14.07. Change in Lending Office. Any Lender claiming any additional
amounts payable pursuant to Section 14.01 shall use reasonable efforts
(consistent with its internal policy and legal and regulatory
restrictions) to change the Domestic Lending Office designated by it for
purposes of this Agreement to a Domestic Lending Office in another
jurisdiction, if the making of such a change would avoid the need for, or
reduce the amount of, any such additional amounts which may thereafter
accrue and would not, in the judgment of such Lender, be otherwise
disadvantageous to such Lender.
14.08. Judgment Currency. If for the purposes of obtaining judgment
in any court it is necessary to convert a sum due under this agreement or
any Note in any currency (the "first currency") into another currency (the
"second currency"), the parties hereto agree, to the fullest extent
permitted by law, that the Exchange Rate used shall be that determined on
the Business Day preceding that on which final judgment is given. To the
fullest extent permitted by applicable law, the Obligation in respect of
any sum due in a first currency shall, notwithstanding any judgment in a
second currency, be discharged only to the extent that on the Business Day
following receipt by any of the Administrative Agent, the European Agent,
the European Administrative, any Lender or any Issuing Bank of any sum
adjudged to be so due in the second currency, such Person may purchase the
first currency with the second currency at the Exchange Rate determined on
the date of such purchase; if the amount of the first currency so
purchased is less than the sum originally due to such Person in the first
currency, each Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify such Person against such
loss, and if the amount of the first currency so purchases exceeds the sum
originally due to such Person in the first currency, such Person agrees to
remit to the relevant Borrower such excess.
<PAGE>
ARTICLE XV
MISCELLANEOUS
15.01. Assignments and Participations. (a) Assignments. No
assignments or participations of any Lender's rights or obligations under
this Agreement shall be made except in accordance with this Section 15.01.
Each Lender may assign to one or more Eligible Assignees all or a portion
of its rights and obligations under this Agreement (including all of its
rights and obligations with respect to the Loans and the Letters of
Credit) in accordance with the provisions of this Section 15.01.
(b) Limitations on Assignments. Each assignment shall be subject to
the following conditions: (i) each such assignment may be on a non-pro-
rata basis, but shall be of a constant, and not a varying, ratable
percentage of all of the assigning Lender's rights and obligations under
this Agreement which are subject to such assignment and, in the case of a
partial assignment to a Person which is not a Lender, shall be in a
minimum principal amount aggregating $5,000,000, (ii) each such assignment
shall be to an Eligible Assignee consented to by the Issuing Banks, which
consent shall not be unreasonably withheld or delayed, (iii) the U.S.
Borrower shall have the right to approve each such Eligible Assignee which
is not an Affiliate of a Lender, which approval shall not be unreasonably
withheld or delayed and (iv) the parties to each such assignment shall
execute and deliver to the Administrative Agent, for its acceptance and
recording in the Register, an Assignment and Acceptance. Upon such
execution, delivery, acceptance and recording in the Register, from and
after the effective date specified in each Assignment and Acceptance and
agreed to by the Administrative Agent, (A) the assignee thereunder shall,
in addition to any rights and obligations hereunder held by it immediately
prior to such effective date, if any, have the rights and obligations
hereunder that have been assigned to it pursuant to such Assignment and
Acceptance and shall, to the fullest extent permitted by law, have the
same rights and benefits hereunder as if it were an original Lender
hereunder, (B) the assigning Lender shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of such assigning Lender's rights
and obligations under this Agreement, the assigning Lender shall cease to
be a party hereto), and (C) the applicable Borrower shall execute and
deliver to the assignee thereunder one or more Notes, as applicable,
evidencing its obligations to such assignee with respect to the Loans.
(c) The Register. The Administrative Agent shall maintain at its
address referred to in Section 15.08 a copy of each Assignment and
Acceptance delivered to and accepted by it and a register (the "Register")
for the recordation of the names and addresses of the Lenders and their
respective Commitments, and the principal amount of the Loans owing to,
each Lender from time to time and whether such Lender is an original
Lender or the assignee of another Lender pursuant to an Assignment and
Acceptance. The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and the Borrowers and each of
their Subsidiaries, the Administrative Agent, the European Agent, and the
Lenders may treat each Person whose name is recorded in the Register as a
Lender hereunder for all purposes of this Agreement. The Register shall
be available for inspection by the U.S. Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(d) Fee. Upon its receipt of an Assignment and Acceptance executed
by the assigning Lender and an Eligible Assignee and a processing and
recordation fee of $3,000 (payable by the assigning Lender or the
assignee, as shall be agreed between them), the Administrative Agent
shall, if such Assignment and Acceptance has been completed and is in
compliance with this Agreement and in substantially the form of Exhibit A,
(i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to
the U.S. Borrower and the other Lenders.
(e) Participations. Each Lender may sell participations to one or
more other financial institutions in or to all or a portion of its rights
and obligations under and in respect of any and all facilities under this
Agreement (including, without limitation, all or a portion of any or all
of its Commitments hereunder and the Loans owing to it and its undivided
interest in the Letters of Credit); provided, however, that (i) such
Lender's obligations under this Agreement (including, without limitation,
its Commitments hereunder) shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) the Borrowers, the Administrative Agent, the
European Agent, and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and (iv) such participant's rights to
agree or to restrict such Lender's ability to agree to the modification,
waiver or release of any of the terms of the Loan Documents or to the
release of any Collateral covered by the Loan Documents, to consent to any
action or failure to act by any party to any of the Loan Documents or any
of their respective Affiliates, or to exercise or refrain from exercising
any powers or rights which any Lender may have under or in respect of the
Loan Documents or any Collateral, shall be limited to the right to consent
to (A) increase in the Commitment of the Lender from whom such participant
purchased a participation, (B) reduction of the principal of, or rate or
amount of interest on the Loans(s) subject to such participation (other
than by the payment or prepayment thereof), (C) postponement of any date
fixed for any payment of principal of, or interest on, the Loan(s) subject
to such participation and (D) release of any Guarantor or all or a
substantial portion of the Collateral except as provided in Section
13.09(c).
(f) Payment to Participants. Anything in this Agreement to the
contrary notwithstanding, in the case of any participation, all amounts
payable by the Borrowers under the Loan Documents shall be calculated and
made in the manner and to the parties required hereby as if no such
participation had been sold; provided, however, that each participant
shall be the beneficiary of the provisions of Article XIV to the extent
amounts payable thereunder do not exceed the amounts payable thereunder to
the Lender from which such participation has been purchased.
(g) Lenders' Creation of Security Interests. Notwithstanding any
other provision set forth in this Agreement, any Lender may at any time
create a security interest in all or any portion of its rights under this
Agreement (including, without limitation, Obligations owing to it and any
Notes held by it) in favor of any Federal Reserve bank in accordance with
Regulation A of the Federal Reserve Board.
(h) Assignments by Citicorp. If Citicorp ceases to be a Lender
under this Agreement by virtue of any assignment made pursuant to this
Section 15.01, then, as of the effective date of such cessation,
Citibank's obligations to issue Letters of Credit pursuant to Section 3.01
shall terminate and Citibank shall be an Issuing Bank hereunder only with
respect to outstanding Letters of Credit issued prior to such date.
(i) Information Regarding the Borrowers. Any Lender may, in
connection with any assignment or participation or proposed assignment or
participation pursuant to this Section 15.01, disclose to the assignee or
participant or proposed assignee or participant, any information relating
to the Borrowers or their Subsidiaries furnished to such Lender by the
Administrative Agent or European Agent or by or on behalf of the
Borrowers; provided that, prior to any such disclosure, such assignee or
participant, or proposed assignee or participant, shall agree to preserve
in accordance with Section 15.20 the confidentiality of any confidential
information described therein.
15.02. Expenses.
(a) Generally. The U.S. Borrower agrees upon demand to pay, or
reimburse the Administrative Agent for, all of the Administrative Agent's,
European Agent's and European Administrator's reasonable internal and
external audit, legal, appraisal, valuation, filing, document duplication
and reproduction and investigation expenses and for all other out-of-
pocket costs and expenses of every type and nature (including, without
limitation, the reasonable fees, expenses and disbursements of Sidley &
Austin, local legal counsel, auditors, accountants, appraisers, printers,
insurance and environmental advisers, and other consultants and agents)
incurred by the Administrative Agent, European Agent and European
Administrator in connection with (i) the Administrative Agent's review and
investigation of the Borrowers and their Affiliates and the Collateral in
connection with the preparation, negotiation, and execution of the Loan
Documents and the Administrative Agent's periodic reviews and audits of
the Borrowers and Guarantors; (ii) the preparation, negotiation, execution
and interpretation of this Agreement (including, without limitation, the
satisfaction or attempted satisfaction of any of the conditions set forth
in Article VI) and the other Loan Documents and the making of the Loans
hereunder; (iii) the creation, perfection or protection of the Liens under
the Loan Documents and U.K. Loan Documents (including, without limitation,
any reasonable fees and expenses for local counsel in various jurisdic-
tions); (iv) the ongoing administration of this Agreement, the other Loan
Documents, the Loans, and the U.K. Loan Documents, including, without
limitation, consultation with attorneys in connection therewith and with
respect to the Administrative Agent's and the European Agent's rights and
responsibilities under this Agreement and the other Loan Documents and the
European Administrator's rights and responsibilities under the U.K. Loan
Documents; (v) the protection, collection or enforcement of any of the
Obligations or the enforcement of any of the Loan Documents or U.K. Loan
Documents; (vi) the commencement, defense or intervention in any court
proceeding relating in any way to the Obligations, the Property, the
Borrowers, any of their Subsidiaries, this Agreement or any of the other
Loan Documents, or any of the U.K. Loan Documents; (vii) the response to,
and preparation for, any subpoena or request for document production with
which the Administrative Agent, European Agent, or European Administrator
is served or deposition or other proceeding in which the Administrative
Agent, European Agent, or European Administrator is called to testify, in
each case, relating in any way to the Obligations, the Property, the
Borrowers, any of their Subsidiaries, this Agreement or any of the other
Loan Documents, or any of the U.K. Loan Documents; and (viii) any
amendments, consents, waivers, assignments, restatements, or supplements
to any of the Loan Documents or U.K. Loan Documents and the preparation,
negotiation, and execution of the same.
(b) After Default. The U.S. Borrower further agrees to pay or
reimburse the Administrative Agent, the European Agent, the European
Administrator, the Issuing Banks and the Lenders upon demand for all out-
of-pocket costs and expenses, including, without limitation, reasonable
attorneys' fees (including allocated costs of internal counsel and costs
of settlement) incurred by any of them after the occurrence of an Event of
Default (i) in enforcing any Loan Document or U.K. Loan Document or
Obligation or any security therefor or exercising or enforcing any other
right or remedy available by reason of such Event of Default; (ii) in
connection with any refinancing or restructuring of the credit
arrangements provided under this Agreement in the nature of a "work-out"
or in any insolvency or bankruptcy proceeding; (iii) in commencing,
defending or intervening in any litigation or in filing a petition, com-
plaint, answer, motion or other pleadings in any legal proceeding relating
to the Obligations, the Property, the Borrowers or any of their
Subsidiaries and related to or arising out of the transactions
contemplated hereby or by any of the other Loan Documents; and (iv) in
taking any other action in or with respect to any suit or proceeding
(bankruptcy or otherwise) described in clauses (i) through (iii) above.
15.03. Indemnity. The U.S. Borrower further agrees (a) to defend,
protect, indemnify, and hold harmless the Administrative Agent, the
European Agent, the European Administrator, and each and all of the
Lenders and Issuing Banks and each of their respective officers, direc-
tors, employees, attorneys and agents (including, without limitation,
those retained in connection with the satisfaction or attempted
satisfaction of any of the conditions set forth in Article VI)
(collectively, the "Indemnitees") from and against any and all
liabilities, obligations, losses (other than loss of profits), damages,
penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever (excluding any taxes and
including, without limitation, the fees and disbursements of counsel for
such Indemnitees in connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnitees shall be designated
a party thereto), imposed on, incurred by, or asserted against such
Indemnitees in any manner relating to or arising out of (i) this Agreement
or the other Loan Documents or U.K. Loan Documents, or any act, event or
transaction related or attendant thereto or to the transfers evidenced by
the Transfer Documents, the making of the Loans and the issuance of and
participation in Letters of Credit hereunder, the management of such Loans
or Letters of Credit, the use or intended use of the proceeds of the Loans
or Letters of Credit hereunder, or any of the other transactions
contemplated by any of the Loan Documents or U.K. Loan Documents, or (ii)
any Liabilities and Costs relating to any violation by a Borrower, its
Subsidiaries, or the Guarantors, or their respective predecessors-in-
interest of any Environmental, Health or Safety Requirements of Law, the
past, present or future operations of a Borrower, its Subsidiaries, any
Guarantor, or any of their respective predecessors in interest, or, the
past, present or future environmental, health or safety condition of any
respective past, present or future Property of a Borrower, any of its
Subsidiaries, or any Guarantor, the presence of asbestos-containing
materials at any respective past, present or future Property of a
Borrower, any of its Subsidiaries, or any Guarantor, or the Release or
threatened Release of any Contaminant into the environment by a Borrower,
its Subsidiaries, any Guarantor, or their respective predecessors-in-
interest, or the Release or threatened Release of any Contaminant into the
environment from or at any facility to which a Borrower, any of its
Subsidiaries, or any Guarantor, or their respective predecessors-in-
interest sent or directly arranged the transport of any Contaminant
(collectively, the "Indemnified Matters"); provided, however, the U.S.
Borrower shall have no obligation to an Indemnitee hereunder with respect
to Indemnified Matters caused by or resulting from the willful misconduct
or gross negligence of such Indemnitee, as determined by a court of
competent jurisdiction and (b) not to assert any claim against any of the
Indemnified Parties on any theory of liability for special, indirect,
consequential or punitive damages arising out of, or in any way in
connection with, the Commitments, the Obligations or any other matters
governed by this Agreement and/or the other Loan Documents. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law
or public policy, the U.S. Borrower shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law, to the
payment and satisfaction of all Indemnified Matters incurred by the
Indemnitees. The Administrative Agent, Lenders and the Issuing Banks agree
to notify the U.S. Borrower of the institution or assertion of any
Indemnified Matter, but the parties hereto hereby agree that the failure
to so notify the U.S. Borrower shall not release the U.S. Borrower from
its obligations hereunder.
15.04. Change in Accounting Principles. If any change in the
accounting principles used in the preparation of the most recent Financial
Statements referred to in Section 8.01 are hereafter required or permitted
by the rules, regulations, pronouncements and opinions of the Financial
Accounting Standards Board or the American Institute of Certified Public
Accountants (or successors thereto or agencies with similar functions) and
are adopted by the U.S. Borrower with the agreement of its independent
certified public accountants and such changes result in a change in the
method of calculation of any of the covenants, standards or terms found in
Article IX, Article X, and Article XI, the parties hereto agree to enter
into negotiations in order to amend such provisions so as to equitably
reflect such changes with the desired result that the criteria for
evaluating compliance with such covenants, standards and terms by the U.S.
Borrower and its Subsidiaries shall be the same after such changes as if
such changes had not been made; provided, however, no change in GAAP that
would affect the method of calculation of any of the covenants, standards
or terms shall be given effect in such calculations until such provisions
are amended, in a manner satisfactory to the Requisite Lenders and the
Borrowers, to so reflect such change in accounting principles.
15.05. Setoff. In addition to any Liens granted under the Loan
Documents and any rights now or hereafter granted under applicable law,
upon the occurrence and during the continuance of any Event of Default,
each Lender, each Issuing Bank and any Affiliate of any Lender or Issuing
Bank is hereby authorized by each Borrower at any time or from time to
time, without notice to any Person (any such notice being hereby expressly
waived) to set off and to appropriate and to apply any and all deposits
(general or special, including, but not limited to, indebtedness evidenced
by certificates of deposit, whether matured or unmatured (but not
including trust accounts)) and any other Indebtedness at any time held or
owing by such Lender, Issuing Bank or any of their Affiliates to or for
the credit or the account of such Borrower against and on account of the
Obligations of such Borrower to such Lender, Issuing Bank or any of their
Affiliates, including, but not limited to, all Loans and Letters of Credit
and all claims of any nature or description arising out of or in con-
nection with this Agreement, irrespective of whether or not (i) such
Lender or Issuing Bank shall have made any demand hereunder or (ii) the
Administrative Agent, at the request or with the consent of the Requisite
Lenders, shall have declared the principal of and interest on the Loans
and other amounts due hereunder to be due and payable as permitted by
Article XII and even though such Obligations may be contingent or
unmatured. Each Lender and each Issuing Bank agrees that it shall not,
without the express consent of the Requisite Lenders, and that it shall,
to the extent it is lawfully entitled to do so, upon the request of the
Requisite Lenders, exercise its setoff rights hereunder against any
accounts of a Borrower, any of its Subsidiaries, or a Guarantor now or
hereafter maintained with such Lender, Issuing Bank or any Affiliate of
such Lender or Issuing Bank.
15.06. Ratable Sharing. (a) Pre-Default. The Lenders agree among
themselves that (i) with respect to all amounts received by them which are
applicable to the payment of the Obligations (excluding the fees described
in Section 5.03 and Article XIV), equitable adjustment will be made so
that, in effect, all such amounts will be shared among them ratably in
accordance with their U.S. Loan Pro Rata Shares or U.K. Loan Pro Rata
Shares, as applicable, whether received by voluntary payment, by the
exercise of the right of setoff or banker's lien, by counterclaim or
cross-action or by the enforcement of any or all of the Obligations
(excluding the fees described in Section 5.03 and Article XIV) or the
Collateral, (ii) if any of them shall by voluntary payment or by the
exercise of any right of counterclaim, setoff, banker's lien or otherwise,
receive payment of a proportion of the aggregate amount of the Obligations
held by it, which is greater than the amount which such Lender is entitled
to receive hereunder, the Lender receiving such excess payment shall
purchase, without recourse or warranty, an undivided interest and
participation (which it shall be deemed to have done simultaneously upon
the receipt of such payment) in such Obligations owed to the others so
that all such recoveries with respect to such Obligations shall be applied
ratably in accordance with their U.S. Loan Pro Rata Shares or U.K. Loan
Pro Rata Shares, as applicable; provided, however, that if all or part of
such excess payment received by the purchasing party is thereafter
recovered from it, those purchases shall be rescinded and the purchase
prices paid for such participations shall be returned to such party to the
extent necessary to adjust for such recovery, but without interest except
to the extent the purchasing party is required to pay interest in
connection with such recovery. Each Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this
Section 15.06 may, to the fullest extent permitted by law, exercise all
its rights of payment (including, subject to Section 15.05, the right of
setoff) with respect to such participation as fully as if such Lender were
the direct creditor of such Borrower in the amount of such participation.
(b) Post-Default. The Lenders agree among themselves that, after
the occurrence of an Event of Default and termination of the Commitments
as provided in Section 12.02(a), if any Loans or Letters of Credit
Obligations are then outstanding, the Lenders shall purchase and sell, as
the case may be, without recourse or warranty, such undivided interests
and participations (which shall be deemed to have been done simultaneously
with the termination of the Commitments as provided in Section 12.02(a)
and promptly evidenced by an Assignment and Acceptance) in the Loans and
Letter of Credit Obligations then outstanding so that the principal
portion of the Loans and Letter of Credit Obligations, and interest and
fees related thereto, shall be allocated ratably among the Lenders based
on the amounts of their respective Commitments.
15.07. Amendments and Waivers. (a) General Provisions. Unless
otherwise provided for or required in this Agreement, no amendment or
modification of any provision of this Agreement or any of the other Loan
Documents shall be effective without the written agreement of the
Requisite Lenders (which the Requisite Lenders shall have the right to
grant or withhold in their sole discretion) and the Borrowers. No
termination or waiver of any provision of this Agreement or any of the
other Loan Documents, or consent to any departure by either Borrower
therefrom, shall be effective without the written concurrence of the
Requisite Lenders, which the Requisite Lenders shall have the right to
grant or withhold in their sole discretion. All amendments,
modifications, waivers and consents not specifically reserved to Lenders,
Issuing Banks, and the Administrative Agent in Section 15.07(b), Section
15.07(c) and in other provisions of this Agreement shall require only the
approval of the Requisite Lenders. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for
which it was given. No notice to or demand on the Borrowers in any case
shall entitle either Borrower to any other or further notice or demand in
similar or other circumstances.
(b) Amendments, Consents and Waivers by Super- Majority Lenders.
Any amendment, modification, termination, waiver or consent with respect
to any of the provisions of Section 4.01(b) of this Agreement shall be
effective only by a written agreement signed by the Super-Majority
Lenders.
(c) Amendments, Consents and Waivers by All Lenders. Any amendment,
modification, termination, waiver or consent with respect to any of the
following provisions of this Agreement shall be effective only by a
written agreement, signed by each Lender:
(i) increase in the amount of any of the Commitments of such Lender,
(ii) reduction of the principal of, rate or amount of interest on the
Loans, the Reimbursement Obligations, or any fees or other amounts payable
to the Lenders or Issuing Banks (other than by the payment or prepayment
thereof),
(iii) postponement of the Revolving Credit Termination Date or any date
fixed for any payment of principal of, or interest on, the Loans, the
Reimbursement Obligations or any fees or other amounts payable to the
Lenders or the Issuing Banks,
(iv) the orders of priority of applications set forth in Section 4.01,
(v) change in the definitions of the U.S. Loan Commitments, U.K. Loan
Commitments, or DM Subfacility,
(vi) waiver of any of the conditions specified in Sections 6.01 or 6.02
or the covenant set forth in Section 9.15,
(vii) release of any Guarantor or all or a substantial portion of the
Collateral (except as provided in Section 13.09(c)),
(viii) change in the (A) definitions of Requisite Lenders or Super-
Majority Lenders or (B) the aggregate Pro Rata Share of the Lenders which
shall be required for the Lenders or any of them to take action under this
Agreement or the other Loan Documents,
(ix) amendment of Section 15.01 or this Section 15.07,
(x) assignment of any right or interest in or under this Agreement or
any of the other Loan Documents by the Borrower, and
(xi) waiver of any Event of Default described in Sections 12.01(a), (f),
(g), (h), and (n).
(d) Administrative Agent Authority. The Administrative Agent may,
but shall have no obligation to, with the written concurrence of any
Lender, execute amendments, modifications, waivers or consents on behalf
of that Lender. Notwithstanding anything to the contrary contained in
this Section 15.07, no amendment, modification, waiver or consent shall
affect the rights or duties of the Administrative Agent under this
Agreement or the other Loan Documents, unless made in writing and signed
by the Administrative Agent in addition to the Lenders required above to
take such action; and the order of priority set forth in clauses (A)
through (C) of Section 4.02(b) may be changed only with the prior written
consent of the Administrative Agent. Notwithstanding anything herein to
the contrary, in the event that a Borrower shall have requested, in
writing, that any Lender agree to an amendment, modification, waiver or
consent with respect to any particular provision or provisions of this
Agreement or the other Loan Documents, and such Lender shall have failed
to state, in writing, that it either agrees or disagrees (in full or in
part) with all such requests (in the case of its statement of agreement,
subject to satisfactory documentation and such other conditions it may
specify) within thirty (30) days after such request, then such Lender
shall be deemed to not have approved such amendment, modification, waiver
or consent and the Administrative Agent shall thereupon determine whether
the Lenders required above to take the requested action have approved the
same within the required time and communicate such determination to the
Borrowers and the Lenders.
15.08. Notices. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given
shall be in writing and may be personally served, sent by facsimile
transmission or courier service or United States certified mail and shall
be deemed to have been given when delivered in person or by courier
service, upon receipt of a facsimile transmission, or four (4) Business
Days after deposit in the United States mail with postage prepaid and
properly addressed. Notices to the Administrative Agent pursuant to
Articles II, IV or XIII shall not be effective until received by the
Administrative Agent. For the purposes hereof, the addresses of the
parties hereto (until notice of a change thereof is delivered as provided
in this Section 15.08) shall be as set forth below each party's name on
the signature pages hereof or the signature page of any applicable
Assignment and Acceptance, or, as to each party, at such other address as
may be designated by such party in a written notice to all of the other
parties to this Agreement.
15.09. Survival of Warranties and Agreements. All representations
and warranties made herein and all covenants and other obligations of the
Borrowers in respect of taxes, indemnification and expense reimbursement
shall survive the execution and delivery of this Agreement and the other
Loan Documents, the making and repayment of the Loans, the issuance and
discharge of Letters of Credit hereunder and the termination of this
Agreement and shall not be limited in any way by the passage of time or
occurrence of any event and shall expressly cover time periods when the
Administrative Agent, any of the Issuing Banks or any of the Lenders may
have come into possession or control of any of either Borrower's or its
Subsidiaries' Property.
15.10. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of the Administrative Agent, any Lender or
any Issuing Bank in the exercise of any power, right or privilege under
any of the Loan Documents shall impair such power, right or privilege or
be construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege. All rights and remedies existing under the Loan Documents are
cumulative to and not exclusive of any rights or remedies otherwise
available.
15.11. Marshalling; Payments Set Aside. None of the Administrative
Agent, European Agent, any Lender or any Issuing Bank shall be under any
obligation to marshall any assets in favor of either Borrower or any other
Person or against or in payment of any or all of the Obligations. To the
extent that a Borrower makes a payment or payments to the Administrative
Agent, the Lenders or the Issuing Banks or any of such Persons receives
payment from the proceeds of the Collateral or exercises its rights of
setoff, and such payment or payments or the proceeds of such enforcement
or setoff or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside or required to be repaid to a
trustee, receiver or any other party, then to the extent of such recovery,
the obligation or part thereof originally intended to be satisfied, and
all Liens, right and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.
15.12. Severability. In case any provision in or obligation under
this Agreement or the other Loan Documents shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
15.13. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part
of this Agreement or be given any substantive effect.
15.14. Governing Law. THIS AGREEMENT SHALL BE INTERPRETED, AND THE
RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED, IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
15.15. Limitation of Liability. No claim may be made by either
Borrower, any Lender, any Issuing Bank, the Administrative Agent, the
European Agent or any other Person against the Administrative Agent, the
European Agent, any other Issuing Bank or any other Lender or the
Affiliates, directors, officers, employees, attorneys or agents of any of
them for any special, consequential or punitive damages in respect of any
claim for breach of contract or any other theory of liability arising out
of or related to the transactions contemplated by this Agreement, or any
act, omission or event occurring in connection therewith; and each
Borrower, each Lender, each Issuing Bank, the Administrative Agent and the
European Agent hereby waives, releases and agrees not to sue upon any such
claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.
15.16. Successors and Assigns. This Agreement and the other Loan
Documents shall be binding upon the parties hereto and their respective
successors and assigns and shall inure to the benefit of the parties
hereto and the successors and permitted assigns of the Lenders and the
Issuing Banks. The rights hereunder of the Borrowers, or any interest
therein, may not be assigned without the written consent of all Lenders.
15.17. Certain Consents and Waivers of the Borrowers.
(a) Personal Jurisdiction. (i) EACH OF THE ADMINISTRATIVE AGENT, THE
EUROPEAN AGENT, THE LENDERS, THE ISSUING BANKS, THE U.S. BORROWER AND THE
U.K. BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS
PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY NEW YORK STATE COURT OR
FEDERAL COURT SITTING IN NEW YORK, NEW YORK, AND ANY COURT HAVING
JURISDICTION OVER APPEALS OF MATTERS HEARD IN SUCH COURTS, IN ANY ACTION
OR PROCEEDING ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT, WHETHER ARISING IN CONTRACT, TORT, EQUITY OR
OTHERWISE, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF
THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS
IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL
COURT. EACH BORROWER IRREVOCABLY DESIGNATES AND APPOINTS TFC, 110 EAST
59TH STREET, 30TH FLOOR, NEW YORK, NEW YORK 10022, AS ITS AGENT (THE
"PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT, SUCH SERVICE BEING HEREBY ACKNOWLEDGED TO BE EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT. EACH OF THE ADMINISTRATIVE AGENT, THE
EUROPEAN AGENT, THE LENDERS, THE ISSUING BANKS, THE U.S. BORROWER AND THE
U.K. BORROWER 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. EACH
BORROWER WAIVES IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(ii) EACH BORROWER AGREES THAT THE ADMINISTRATIVE AGENT SHALL HAVE
THE RIGHT TO PROCEED AGAINST IT OR ITS PROPERTY IN A COURT IN ANY LOCATION
TO ENABLE THE ADMINISTRATIVE AGENT, THE EUROPEAN AGENT, THE ISSUING BANKS
AND THE LENDERS TO REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF THE ADMINISTRATIVE AGENT, THE EUROPEAN AGENT, ANY ISSUING BANK OR
ANY LENDER. EACH BORROWER AGREES THAT IT WILL NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING BROUGHT BY THE ADMINISTRATIVE AGENT, THE
EUROPEAN AGENT, ANY LENDER OR ANY ISSUING BANK TO REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF THE ADMINISTRATIVE AGENT, ANY
LENDER OR ANY ISSUING BANK. EACH BORROWER WAIVES ANY OBJECTION THAT IT
MAY HAVE TO THE LOCATION OF THE COURT IN WHICH THE ADMINISTRATIVE AGENT,
THE EUROPEAN AGENT, ANY ISSUING BANK OR ANY LENDER MAY COMMENCE A
PROCEEDING DESCRIBED IN THIS SECTION.
(b) Service of Process. EACH BORROWER IRREVOCABLY CONSENTS TO THE
SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION
OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO THE PROCESS AGENT OR SUCH BORROWER'S NOTICE
ADDRESS SPECIFIED BELOW, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS
AFTER SUCH MAILING. EACH BORROWER IRREVOCABLY WAIVES ANY OBJECTION
(INCLUDING, WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY JURISDICTION
SET FORTH ABOVE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
ADMINISTRATIVE AGENT TO BRING PROCEEDINGS AGAINST EITHER BORROWER IN THE
COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE ADMINISTRATIVE AGENT, EUROPEAN
AGENT, LENDERS, ISSUING BANKS, AND THE BORROWERS IRREVOCABLY WAIVES TRIAL
BY JURY IN ANY ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER LOAN DOCUMENT. ANY OF THE U.S. BORROWER, THE U.K. BORROWER, THE
ADMINISTRATIVE AGENT, LENDERS, OR ISSUING BANKS MAY FILE AN ORIGINAL
COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE
OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL
BY JURY.
15.18. Counterparts; Effectiveness; Inconsistencies. This Agreement
and any amendments, waivers, consents, or supplements hereto may be
executed in counterparts, each of which when so executed and delivered
shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument. This Agreement shall become
effective against the Borrowers, each Lender, each Issuing Bank, the
European Agent, and the Administrative Agent on the Effective Date,
whereupon the terms and provisions of the Original Credit Agreement shall
be and hereby are amended, superseded and restated in their entirety by
the terms and provisions of this Agreement. This Agreement shall not
constitute a novation. This Agreement and each of the other Loan Documents
shall be construed to the extent reasonable to be consistent one with the
other, but to the extent that the terms and conditions of this Agreement
are actually inconsistent with the terms and conditions of any other Loan
Document, this Agreement shall govern.
15.19. Limitation on Agreements. All agreements between the
Borrowers, the Administrative Agent, the European Agent, each Lender and
each Issuing Bank in the Loan Documents are hereby expressly limited so
that in no event shall any of the Loans or other amounts payable by the
Borrowers under any of the Loan Documents be directly or indirectly
secured (within the meaning of Regulation U) by Margin Stock.
15.20. Confidentiality. Subject to Section 15.01(f), the Lenders
and the Issuing Banks shall hold all nonpublic information obtained pur-
suant to the requirements of this Agreement and identified as such by the
U.S. Borrower in accordance with such Lender's or such Issuing Bank's cus-
tomary procedures for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may
make disclosure (a) to its Affiliates or (b) as is reasonably required by
a bona fide offeree, transferee or participant in connection with the
contemplated transfer or participation or as required or requested by any
Governmental Authority or representative thereof or pursuant to legal
process and shall require any such offeree, transferee or participant to
agree (and require any of its offerees, transferees or participants to
agree) to comply with this Section 15.20. In no event shall any Lender or
any Issuing Bank be obligated or required to return any materials
furnished by the Borrowers; provided, however, each offeree shall be
required to agree that if it does not become a transferee or participant
it shall return all materials furnished to it by the Borrowers in
connection with this Agreement. Any and all confidentiality agreements
entered into between any Lender or any Issuing Bank and the Borrowers
shall survive the execution of this Agreement.
15.21. Entire Agreement. This Agreement, taken together with all of
the other Loan Documents, embodies the entire agreement and understanding
among the parties hereto and supersedes all prior agreements and under-
standings, written and oral, relating to the subject matter hereof.
15.22. Advice of Counsel. Each Borrower and each Lender and Issuing
Bank understand that the Administrative Agent's counsel represents only
the Administrative Agent's and its Affiliates' interests and that the
Borrowers, other Lenders and other Issuing Banks are advised to obtain
their own counsel. Each Borrower represents and warrants to the
Administrative Agent, the European Agent, and the other Holders that it
has discussed this Agreement with its counsel.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first above written.
BORROWERS: FAIRCHILD HOLDING CORP.
By: Karen L. Schneckenburger
Vice President and Treasurer
KAYSEL
By: Karen L. Schneckenburger
Attorney
Notice Address:
300 West Service Road
Chantilly, Virginia 20151
Attn: Michael T. Alcox
Telecopier No. (703) 478-5915 and
Donald E. Miller
Telecopier No. (703) 478-5775
with a copy to:
Cahill Gordon & Reindel
Eighty Pine Street
New York, New York 10005-1702
Attn: James J. Clark
Telecopier No. (212) 269-5420
<PAGE>
ADMINISTRATIVE AGENT: CITICORP USA, INC., as Administrative Agent
By: Marjorie Futornick
Title: Vice President
Notice Address:
Citicorp USA, Inc.
c/o Citicorp Securities, Inc.
200 South Wacker Drive
31st Floor
Chicago, Illinois 60606
Attn: Colin M. Cohen
Telecopier No. (312) 993-1050
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attn: DeVerille A. Huston
Telecopier No. (312) 853-7036
ISSUING BANK: CITIBANK, N.A.
By: Marjorie Futornick
Vice President
Notice Address:
Citibank, N.A.
399 Park Avenue
10th Floor, Zone 3
New York, New York 10043
Attn: Gail Rodriguez
Telecopier No. (212) 793-4806
<PAGE>
LENDERS: CITICORP USA, INC.
By: Marjorie Futornick
Title: Vice President
Notice Address:
Citicorp USA, Inc.
c/o Citicorp Securities, Inc.
200 South Wacker Drive
31st Floor
Chicago, Illinois 60606
Attn: Colin M. Cohen
Telecopier No. (312) 993-1050
Domestic Lending Office and Eurodollar
Lending Office or Eurodollar Affiliate:
Citicorp USA, Inc.
c/o Citibank, N.A.
399 Park Avenue
10th Floor, Zone 3
New York, New York 10043
Attn: Gail Rodriguez
Telecopier No. (212) 793-4806
Pro Rata Share: 50.00%
U.K. Loan Pro Rata Share: 0%
U.K. Loan Commitment: $0
U.S. Loan Pro Rata Share: 50.00%
U.S. Loan Commitment: $26,000,000
<PAGE>
NATIONSBANK, N.A.
By: Michael R. Williams
Title: Senior Vice President
Notice Address
and Domestic and Eurodollar
Lending Office:
NationsBank, N.A.
6610 Rockledge Drive
1st Floor
Bethesda, Maryland 20817-1876
Attn: John Mindnich
Telecopier No. (301) 571-0719
Pro Rata Share: 50.00%
U.K. Loan Pro Rata Share: 0%
U.K. Loan Commitment: $0
U.S. Loan Pro Rata Share: 50.00%
U.S. Loan Commitment: $26,000,000
<PAGE>
EXHIBITS
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Borrowing Base Certificate
Exhibit C -- Form of Collection Account Agreement (U.S.)
Exhibit D -- Form of Collection Account Agreement (U.K.)
Exhibit E -- Form of Notes
Exhibit F -- Form of Notice of Borrowing
Exhibit G -- Form of Notice of Conversion/Continuation
Exhibit H -- Pro Forma Financial Statements
Exhibit I -- Projections
Exhibit J -- List of Closing Documents
Exhibit J-1 - List of Supplemental Closing Documents for U.K.
Borrower Loans
Exhibit K -- Form of Officer's Certificate to Accompany Reports
Exhibit L -- Form of TFC/RHI Liquidity Calculation
<PAGE>
SCHEDULES
Schedule 1.01.1 -- Appraisals
Schedule 1.01.2 -- Domestic Subsidiaries
Schedule 1.01.3 -- Eligible Inventory Locations
Schedule 1.01.4 -- Receivables Which Are Not Eligible U.K. Receivables
Schedule 1.01.5 -- Receivables Which Are Not Eligible U.S. Receivables
Schedule 1.01.6 -- European Subsidiary Borrowers
Schedule 1.01.7 -- Fiscal Month End Dates
Schedule 1.01.8 -- Guarantors
Schedule 1.01.9 -- Permitted Dispositions
Schedule 1.01.10 -- Permitted Equity Securities Options
Schedule 1.01.11 -- Permitted Existing Accommodation
Obligations
Schedule 1.01.12 -- Permitted Existing Indebtedness
Schedule 1.01.13 -- Permitted Existing Investments
Schedule 1.01.14 -- Permitted Existing Liens
Schedule 3.02 -- Existing Letters of Credit
Schedule 7.01-A -- Organizational Documents
Schedule 7.01-C -- Organizational Structure
Schedule 7.01-E -- Governmental Consents
Schedule 7.01-K -- Pending Actions
Schedule 7.01-R -- Environmental Matters
Schedule 7.01-S -- ERISA Matters
Schedule 7.01-U -- Labor Contracts
Schedule 7.01-X -- Patent, Trademark & Permit Claims Pending
Schedule 7.01-Z -- Insurance Policies
Schedule 10.15 -- Collection Accounts
Schedule 12.01-Q -- TFC Permitted Existing Investments
EMPLOYMENT AGREEMENT WITH JACQUES S. MOSKOVIC
Parties:
FAIRCHILD FRANCE, INC. ("Fairchild France") and JACQUES S. MOSKOVIC. All
references to "you" shall mean Jacques S. Moskovic.
Position:
Your position will be Commercial Manager, reporting directly to the Chief
Operating Officer
of The Fairchild Corporation ("Fairchild").
Compensation:
Your base salary ("base salary") will be at a rate not less than $90,000 per
year, payable
bi-weekly in accordance with Fairchild's usual payroll policies.
Your base salary will be reviewed annually by Fairchild France, and adjustments,
if any,
to your base salary will be at the discretion of the Board of Directors of
Fairchild France.
Other Benefits:
You will be eligible to participate in all Fairchild France employee benefit
plans. You shall
pay the portion of French social costs and taxes required to be paid by the
employee.
Fairchild France shall pay the portion required to be paid by the employee.
Term:
The initial term of your employment shall commence as of January 15, 1995.
Termination:
If your employment shall be terminated, for any reason other than Cause
(as defined
below), you shall be entitled to receive as severance the standard and customary
severance package paid by Fairchild France to senior officers employed for a
similar time
period as you were employed by Fairchild France.
Duties:
As Commercial Manager of Fairchild France, you shall perform such reasonable
duties
with respect to Fairchild France as you shall be directed to perform by the
Chief
Operating Officer of Fairchild, the Board of Directors of Fairchild France and
the Board
of Directors of Fairchild. Your duties will include, without limitation,
making business
decisions within the limits of the corporate purpose of Fairchild France,
representing
Fairchild France before any applicable governmental office and hiring and
discharging the
necessary personnel.
Confidentiality:
You shall enter into a Confidentiality Agreement and an Agreement to Assign to
Fairchild
inventions and designs, whether patentable or not, conceived or improved by you
during
the Initial Term or during any extension thereof.
Cause:
Your employment may be terminated at any time for Cause, which shall include (i)
conduct, at any time, which has involved criminal dishonesty, conviction of any
felony, or
conviction of any lesser crime or offense involving the property of Fairchild,
or any of its
affiliates, significant conflict of interest, serious impropriety, or breach of
corporate duty,
misappropriation of any money or other assets or properties of Fairchild, or
that of its
subsidiaries or affiliates, (ii) willful violation of specific and lawful
directions form the
Fairchild's CEO or its Board of Directors, failure or refusal to perform
services customarily
performed by a person in your office, or as otherwise as specifically required
by
agreement, or willful misconduct or gross negligence in connection with the
performance
of your duties, (iii) chronic alcoholism or drug addiction, and (iv) any other
acts or
conduct inconsistent with the standards of loyalty, integrity or care reasonably
required
by Fairchild of its senior management.
Location:
You understand that your obligations under this employment arrangement will
require you
to live in or spend considerable time in France.
Conflicting
Arrangements:
You represent and warrant to Fairchild that there is no agreement to which you
are a
party or under which you are bound which would prohibit your employment by
Fairchild,
or which would in any other manner interfere with the performance by you of your
duties
for Fairchild, its affiliates and subsidiaries.
Governing Law:
Our understandings shall be governed by the laws of France, exclusive of its
choice of
law provisions.
Binding Effect:
This Agreement supersedes all prior negotiations and represents the entire
Agreement
of the parties, and our signatures hereon will bind us hereto. This Agreement
binds and
inures to the benefit of Fairchild, its successors and assigns.
Accepted: Accepted:
FAIRCHILD FRANCE, INC.
Jacques S. Moskovic John L. Flynn
Vice President
Dated:September 24, 1994 Dated:September 24, 1994
AMENDMENT NO. 12
Dated as of January 22, 1996
to
RESTATED AND AMENDED CREDIT AGREEMENT
Dated as of July 27, 1992
This Amendment No. 12 ("Amendment") dated as of January 22,
1996 is entered into among RHI Holdings, Inc., a Delaware
corporation ("RHI"), Fairchild Industries, Inc., a Delaware
corporation ("FII"), VSI Corporation, a Delaware corporation
("VSI"), and the "Senior Lenders" (as defined in the Credit
Agreement identified below) of VSI, FII and RHI signatory hereto.
Capitalized terms used herein without definition are used herein
as defined in the Credit Agreement.
PRELIMINARY STATEMENT:
RHI, VSI, and FII as Borrowers, certain financial
institutions as Senior Lenders, the Agents, and the
Administrative Agent are parties to that certain Restated and
Amended Credit Agreement dated as of July 27, 1992, as amended
(the "Credit Agreement").
VSI has notified the Administrative Agent and Senior Lenders
of its intention to sell substantially all of its assets relating
to its D-M-E Division (subject to certain liabilities) to
Cincinnati Milacron Inc. and certain of its Affiliates.
RHI has requested an extension of the Facility Termination
Date for Facility A under the Credit Agreement.
Subject to the terms and conditions stated herein, RHI, VSI
and the Senior Lenders of RHI, FII and VSI signatory hereto have
agreed to further amend the Credit Agreement as set forth in
Section 1.
SECTION 1. Amendments to the Credit Agreement. Effective
as of January 22, 1996, subject to the satisfaction of the
conditions precedent set forth in Section 2 hereof, the Credit
Agreement is hereby amended as follows:
1.1 Section 1.01 is amended to delete the definition of
"Facility Termination Date" in its entirety and substitute the
following therefor:
<PAGE>
"Facility Termination Date" shall mean, (i) with respect to
Facility A, , February 28, 1997 and (ii) with respect to Facility
G, the earlier to occur of (a) the date on which FII merges with
and into Shared Technologies, Inc. and (b) March 31, 1997.
1.2 Section 3.04 is amended to (i) add the following
provision at the end of clause (a) thereof:
Notwithstanding the foregoing or anything contained in the
Series VII Term Notes to the contrary, in the event FII merges
with and into Shared Technologies, Inc., the then unpaid
principal balance of the Series VII Term Notes, together with all
accrued and unpaid interest thereon and costs and expenses
associated therewith, shall become immediately due and payable
upon such merger becoming effective, without notice or demand.
and (ii) add the following provision at the end of clause (b)
thereof:
Notwithstanding the foregoing or anything contained in the
Series VIII Term Notes to the contrary, in the event FII merges
with and into Shared Technologies, Inc., the then unpaid
principal balance of the Series VIII Term Notes, together with
all accrued and unpaid interest thereon and costs and expenses
associated therewith, shall become immediately due and payable
upon such merger becoming effective, without notice or demand.
1.3 Section 11.03A is amended to (i) delete the provisions
of clause (a) thereof in their entirety and substitute the
following therefor:
(a) Investments of VSI or any such Subsidiary of VSI in
Cash Equivalents; provided that the aggregate amount of Cash and
Cash Equivalents of VSI and its Subsidiaries shall not exceed (i)
$8,000,000 plus, (ii) for a period of three (3) Business Days
after receipt thereof, cash proceeds of sale of Excluded
Dispositions, plus (iii) $11,000,000 of the proceeds of sale of
assets of VSI's D-M-E Division permitted by the Requisite Senior
Lenders of VSI to be retained by VSI in Europe which are held on
deposit with a Senior Lender of VSI;
and (ii) delete the provisions of clause (d) thereof in their
entirety and substitute the following therefor:
(d) Investments of VSI or any such Subsidiary which
represent defaulted or extended obligations previously contracted
in the ordinary course of business and payable on terms necessary
to effectuate the collection thereof, in an amount not to exceed
at any one time outstanding (in the aggregate for VSI and all of
its Subsidiaries) $600,000, which amount shall not include the
amount of receivables required to be repurchased under the
Cincinnati Milacron Inc. Asset Purchase Agreement; provided that
the amount of such Investments by VSI in any one obligor (other
than the obligors on receivables repurchased under the Cincinnati
Milacron Asset Purchase Agreement to the extent of such
repurchased receivables) shall not exceed $250,000 in the
aggregate at any one time outstanding;
1.4 Section 12.01 is amended to add the following provision
at the end thereof:
For purposes of this Section 12.01, the term "Consolidated
Current Assets" shall include, without limitation, Indebtedness
of Cincinnati Milacron Inc. evidenced by two certain promissory
notes executed and delivered by Cincinnati Milacron Inc. under
the Cincinnati Milacron Inc. Asset Purchase Agreement and payable
to VSI (the "CM Notes").
1.5 Section 12.06 is amended to add the following provision
at the end thereof:
For purposes of this Section 12.06, the term "Accounts" shall
include, without limitation, Indebtedness of Cincinnati Milacron
Inc. evidenced by the CM Notes.
1.6 Section 12.07 is amended to delete that portion of the
schedule of covenant test dates and amounts commencing with the
Third Quarter, 1996 and ending with the Fourth Quarter, 1996 in
its entirety and substitute the following therefor:
Third Quarter, 1996 58,500,000
Fourth Quarter, 1996 62,600,000
1.7 VSI hereby covenants that (i) VSI shall exercise, on
the first date permitted under the terms of the promissory notes
executed and delivered to VSI by Cincinnati Milacron Inc. in
connection with the sale of assets of VSI's D-M-E Division to
Cincinnati Milacron Inc. (the "CM Notes"), its right to demand
payment of the Indebtedness evidenced by the CM Notes and such
demand shall be for payment of such Indebtedness by no later than
the 30th day after the date of such notice of demand; and (ii)
VSI shall exercise, no later than the date on which payment
becomes due under the aforesaid notice, its right to draw on the
letter of credit naming VSI as beneficiary delivered to VSI in
connection with such sale by VSI of its D-M-E Division assets.
Any modification or amendment of the foregoing covenant of VSI,
or any waiver of an Event of Default occurring due to VSI's
failure to comply with such covenant, shall not be effective
unless agreed in writing by all Senior Lenders of VSI.
SECTION 2. Conditions Precedent to Effectiveness of this
Amendment.
2.1 The amendments set forth in Sections 1.1 and 1.2 of
this Amendment shall become effective as of January 22, 1996 if,
and only if, the Administrative Agent shall have received on or
before January 22, 1996 a facsimile or original executed copy of
this Amendment executed by RHI, FII, VSI and all Senior Lenders
of RHI, FII and VSI.
2.2 The amendments set forth in Sections 1.3 through 1.7 of
this Amendment shall become effective as of January 22, 1996 if,
and only if, (i) the Administrative Agent shall have received on
or before January 22, 1996 (a) a facsimile or original executed
copy of this Amendment executed by VSI and the Requisite Senior
Lenders of VSI, (b) executed counterparts of that certain consent
letter dated as of January 22, 1996, a copy of which is attached
hereto as Exhibit A and made a part hereof (the "Consent"),
signed by the Requisite Senior Lenders of FII and VSI, and (c)
payment of the fee described in condition (c) of the Consent and
(ii) the sales of the assets of the D-M-E Division of VSI
referenced in the premises to this Amendment and contemplated by
the Consent are consummated on the terms heretofore disclosed to
the Administrative Agent.
SECTION 3. Representations and Warranties. RHI, FII and
VSI hereby represent and warrant as follows:
3.1 This Amendment and the Credit Agreement as previously
executed and amended and as amended hereby constitute legal,
valid and binding obligations of RHI, FII and VSI and are
enforceable against RHI, FII and VSI in accordance with their
terms.
3.2 No Event of Default or Potential Event of Default
exists or would result from any of the transactions contemplated
by this Amendment.
3.3 Upon the effectiveness of this Amendment, RHI, FII and
VSI hereby reaffirm all covenants, representations and warranties
made by them, respectively, in the Credit Agreement to the extent
the same are not amended hereby and agree that all such
covenants, representations and warranties shall be deemed to have
been remade as of the date this Amendment becomes effective
<PAGE>
(unless a representation and warranty is stated to be given on
and as of a specific date, in which case such representation and
warranty shall be true, correct and complete as of such date).
SECTION 4. Reference to and Effect on the Credit Agreement.
4.1 Upon the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import shall
mean and be a reference to the Credit Agreement, as amended
hereby, and each reference to the Credit Agreement in any other
document, instrument or agreement executed and/or delivered in
connection with the Credit Agreement shall mean and be a
reference to the Credit Agreement as amended hereby.
4.2 Except as specifically amended above, the Credit
Agreement, the Notes and all other Loan Documents shall remain in
full force and effect and are hereby ratified and confirmed.
4.3 The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or
remedy of any Senior Lender or Agent or the Administrative Agent
under the Credit Agreement, the Notes or any of the other Loan
Documents, nor constitute a waiver of any provision contained
therein, except as specifically set forth herein.
SECTION 5. Execution in Counterparts. This Amendment may
be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same
instrument. Delivery of an executed counterpart of this Amendment
by telecopier shall be effective as delivery of a manually
executed counterpart of this Amendment.
SECTION 6. Governing Law. This Amendment shall be governed
by and construed in accordance with the laws of the State of New
York.
SECTION 7. Headings. Section headings in this Amendment
are included herein for convenience of reference only and shall
not constitute a part of this Amendment for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto
duly authorized as of the date first above written.
<PAGE>
VSI CORPORATION RHI HOLDINGS, INC.
By: Karen L. Schneckenburger By: Karen L. Schneckenburger
Title: Treasurer Title: Treasurer
FAIRCHILD INDUSTRIES, INC.
By: Karen L. Schneckenburger
Title: Treasurer
CITICORP NORTH AMERICA, INC. THE BANK OF NOVA SCOTIA
By: Colin M. Cohen By: F.C.H. Ashby
Title: Managing Director Title: Sr.Mgr.Loan Operation
CANADIAN IMPERIAL BANK OF CAISSE NATIONALE DE CREDIT
COMMERCE AGRICOLE
By: Mary Kate Miller By: David Bouhl, F.V.P.
Title: Authorized Signatory Title: Head of Corp. Banking
Chicago
NATIONSBANK, N.A. WELLS FARGO BANK, N.A.
By: John D. Mindich By: Lomora J. Sjpradley
Title: Senior Vice President Title: Vice President
GENERALE BANK NEW YORK THE MITSUBISHI BANK, LIMITED
By: E. Matthews By: Noboru Kobayashi
Title: Senior Vice President Title: Joint General Manager
THE LONG-TERM CREDIT BANK OF UNION BANK
JAPAN, LTD.
By: Brody S. Sadik By: Kristine A. Kasselman
Title: VP & Deputy General Mgr. Title: Vice President
PILGRIM PRIME RATE TRUST SENIOR DEBT PORTFOLIO
By: Howard Tiffen By: Boston Mgt.& Research
Title: Senior Vice President as Investment Adisor
<PAGE>
EXHIBIT A
to Consent and Amendment No. 12
Dated as of January 22, 1996
FORM OF CONSENT
Attached
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CREDIT AGREEMENT
Dated as of March 13, 1996
among
FAIRCHILD HOLDING CORP.
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS ISSUING BANKS
and
CITICORP USA, INC.
as Administrative Agent
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<PAGE>
CREDIT AGREEMENT
This Credit Agreement dated as of March 13, 1996 (as
amended, supplemented or modified from time to time, the
"Agreement") is entered into among Fairchild Holding Corp.,
a Delaware corporation (the "Borrower"), the institutions
from time to time a party hereto as Lenders, whether by
execution of this Agreement or an Assignment and Acceptance,
the institutions from time to time a party hereto as Issuing
Banks, whether by execution of this Agreement or an
Assignment and Acceptance, and Citicorp USA, Inc., a
Delaware corporation ("Citicorp"), in its capacity as agent
for the Lenders and the Issuing Banks hereunder (in such
capacity, the "Administrative Agent").
ARTICLE I
DEFINITIONS
1.01. Certain Defined Terms. The following terms used
in this Agreement shall have the following meanings,
applicable both to the singular and the plural forms of the
terms defined:
"Accommodation Obligation" means any Contractual
Obligation, contingent or otherwise, of one Person with
respect to any Indebtedness, obligation or liability of
another, if the primary purpose or intent thereof by the
Person incurring the Accommodation Obligation is to provide
assurance to the obligee of such Indebtedness, obligation or
liability of another that such Indebtedness, obligation or
liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders
thereof will be protected (in whole or in part) against loss
in respect thereof including, without limitation, direct and
indirect guarantees, endorsements (except for collection or
deposit in the ordinary course of business), notes co-made
or discounted, recourse agreements, take-or-pay agreements,
keep-well agreements, put options, agreements to purchase or
repurchase such Indebtedness, obligation or liability or any
security therefor or to provide funds for the payment or
discharge thereof, agreements to maintain solvency, assets,
level of income, or other financial condition, and
agreements to make payment other than for value received.
The amount of any Accommodation Obligation shall be equal to
the amount of the Indebtedness, obligation or liability so
guaranteed or otherwise supported; provided, that (i) if the
liability of the Person extending such guaranty or support
is limited with respect thereto to an amount less than the
Indebtedness, obligation or liability guaranteed or
supported, or is limited to recourse against a particular
asset or assets of such Person, the amount of the
corresponding Accommodation Obligation shall be limited (in
the case of a guaranty or other support limited by amount)
to such lesser amount or (in the case of a guaranty or other
support limited by recourse to a particular asset or assets)
to the higher of the Fair Market Value of such asset or
assets at the date for determination of the amount of the
Accommodation Obligation or the value at which such asset or
assets would, in conformity with GAAP, be reflected on or
valued for the purposes of preparing a consolidated balance
sheet of such Person as at such determination date; and
(ii) if any obligation or liability is guaranteed or
otherwise supported jointly and severally by a Person and
others, then the amount of the obligation or liability of
such Person with respect to such guaranty or other support
to be included in the amount of such Person's Accommodation
Obligation shall be the whole principal amount so guaranteed
or otherwise supported.
"Administrative Agent" means Citicorp and each
successor Administrative Agent appointed pursuant to the
terms of Article XIII of this Agreement.
"Affiliate", as applied to any Person, means any other
Person that directly or indirectly controls, is controlled
by, or is under common control with, that Person. For
purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled
by" and "under common control with"), as applied to any
Person, means the possession, directly or indirectly, of the
power to vote ten percent (10.0%) or more of the Securities
having voting power for the election of directors of such
Person or otherwise to direct or cause the direction of the
management and policies of that Person, whether through the
ownership of voting Securities or by contract or otherwise.
"Agreement" is defined in the preamble hereto.
"Applicable Lending Office" means, with respect to a
particular Lender, its Eurodollar Lending Office in respect
of provisions relating to Eurodollar Rate Loans and its
Domestic Lending Office in respect of provisions relating to
Base Rate Loans.
"Assignment and Acceptance" means an Assignment and
Acceptance in substantially the form of Exhibit A attached
hereto and made a part hereof (with blanks appropriately
completed) delivered to the Administrative Agent in
connection with an assignment of a Lender's interest under
this Agreement in accordance with the provisions of
Section 15.01.
"Bankruptcy Code" means Title 11 of the United States
Code (11 U.S.C. 101 et seq.), as amended from time to time,
and any successor statute.
"Base Eurodollar Rate" means, with respect to any Euro-
dollar Interest Period applicable to a Borrowing of
Eurodollar Rate Loans, an interest rate per annum determined
by the Administrative Agent to be the average (rounded
upward to the nearest whole multiple of one sixteenth of one
percent (0.0625%) per annum if such average is not such a
multiple) of the rates per annum specified by notice to the
Administrative Agent by Citibank as the rate per annum at
which deposits in Dollars are offered by the principal
office of Citibank in London, England to major banks in the
London interbank market at approximately 11:00 a.m. (London
time) on the Eurodollar Interest Rate Determination Date for
such Eurodollar Interest Period for a period equal to such
Eurodollar Interest Period and in an amount substantially
equal to the amount of the Eurodollar Rate Loan to be
outstanding to Citicorp for such Eurodollar Interest Period.
"Base Rate" means, for any period, a fluctuating
interest rate per annum as shall be in effect from time to
time, which rate per annum shall at all times be equal to
the highest of:
(i) the rate of interest announced publicly by Citibank
in New York, New York from time to time, as Citibank's base
rate; and
(ii) the sum of (A) one-half of one percent (0.50%)
per annum plus (B) the Federal Funds Rate in effect from
time to time during such period.
"Base Rate Loans" means all Loans which bear interest
at a rate determined by reference to the Base Rate as
provided in Section 5.01(a).
"Base Rate Margin" means a rate equal to one-half of
one percent (0.50%) per annum.
"Benefit Plan" means a defined benefit plan as defined
in Section 3(35) of ERISA (other than a Multiemployer Plan
or Foreign Employee Benefit Plan) in respect of which the
Borrower or any ERISA Affiliate is, or within the
immediately preceding five (5) years was, an "employer" as
defined in Section 3(5) of ERISA.
"Borrower" is defined in the preamble of this
Agreement.
"Borrowing" means a borrowing consisting of Loans of
the same type made, continued or converted on the same day
and, in the case of Eurodollar Rate Loans, having the same
Eurodollar Interest Period.
"Business Activity Report" means (A) a Notice of
Business Activities Report from the State of New Jersey
Division of Taxation or (B) a Minnesota Business Activity
Report from the Minnesota Department of Revenue.
"Business Day" means a day, in the applicable local
time, which is not a Saturday or Sunday or a legal holiday
and on which banks are not required or permitted by law or
other governmental action to close (i) in New York, New York
or Chicago, Illinois and (ii) in the case of Eurodollar Rate
Loans, in London, England and (iii) in the case of Letter of
Credit transactions for a particular Issuing Bank, in the
place where its office for issuance or administration of the
pertinent Letter of Credit is located.
"Capital Expenditures" means, for any period, the
aggregate of all expenditures (whether paid in cash or other
Property or accrued as a liability (but without
duplication)) during such period that, in conformity with
GAAP, are required to be included in or reflected by the
Borrower's or any of its Subsidiaries' fixed asset accounts
as reflected in the consolidated balance sheet of Borrower
and its Subsidiaries; provided, however, (i) Capital
Expenditures shall include, whether or not such a
designation would be in conformity with GAAP, that portion
of Capital Leases which is capitalized on the consolidated
balance sheet of the Borrower and its Subsidiaries and
(ii) Capital Expenditures shall exclude, whether or not such
a designation would be in conformity with GAAP, expenditures
made in connection with the replacement or restoration of
Property, to the extent reimbursed or financed from insur-
ance or other recoveries received on account of the loss of
or damage to the Property being replaced or restored or from
condemnation awards arising from the taking by condemnation
or eminent domain of such Property being replaced.
"Capital Lease" means any lease of any property
(whether real, personal or mixed) by a Person as lessee
which, in conformity with GAAP, is accounted for as a
capital lease on the balance sheet of that Person.
"Capital Stock" means, with respect to any Person, any
capital stock of such Person, regardless of class or
designation, and all warrants, options, purchase rights,
conversion or exchange rights, voting rights, calls or
claims of any character with respect thereto.
"Cash" means money, currency or a credit balance in a
Deposit Account.
"Cash Collateral" means cash or Cash Equivalents held
by the Administrative Agent, any of the Issuing Banks or any
of the Lenders as security for the Obligations.
"Cash Collateral Account" means an interest bearing
account at Citibank's offices in New York, New York
designated by the Administrative Agent into which Cash
Collateral shall be deposited. The Cash Collateral Account
shall be under the sole dominion and control of the
Administrative Agent, provided that all amounts deposited
therein shall be held by the Administrative Agent for the
benefit of the Holders and shall be subject to the terms of
Sections 4.05 and 4.06.
"Cash Equivalents" means (i) marketable direct
obligations issued or unconditionally guaranteed by the
United States government and backed by the full faith and
credit of the United States government; (ii) marketable
direct obligations issued by any state of the United States
or any political subdivision of any such state or any public
instrumentality thereof which, at the time of acquisition
thereof, have the highest rating obtainable from either
Standard & Poor's Rating Group, a division of McGraw-Hill,
Inc. ("S&P") or Moody's Investors Service, Inc. (or if not
then rating such obligations, from such other nationally
recognized rating services as are reasonably acceptable to
the Administrative Agent); (iii) commercial paper which, at
the time of acquisition thereof, has the highest rating
obtainable from either S & P or Moody's Investors Service,
Inc. (or if not then rating such obligations, from such
other nationally recognized rating services as are
reasonably acceptable to the Administrative Agent); and (iv)
domestic and Eurodollar certificates of deposit and time
deposits, bankers' acceptances and floating rate
certificates of deposit issued by any Lender or any
commercial bank organized under the laws of the United
States, any state thereof, or the District of Columbia and
having a combined capital and surplus in excess of
$250,000,000, which, at the time of acquisition, are rated
A-1 (or better) by S & P or P-1 (or better) by Moody's
Investors Services, Inc.; provided, that the maturities of
such Cash Equivalents shall not exceed ninety days.
"Cash Interest Expense" means, for any period, total
interest expense, whether paid or accrued, but without
duplication, (including, without limitation, the interest
component of Capital Leases, all commissions, discounts and
other fees and charges owed with respect to letters of
credit and bankers' acceptance financing and net of the
difference between payments received by the Borrower on all
Hedge Agreements and payments made by the Borrower on all
Hedge Agreements other than the initial payments made to
enter into such Hedge Agreements; and excluding, interest
expense not payable in cash (including amortization of
discount) and legal, commitment and closing fees and
expenses and other non-recurring fees and expenses and
transaction costs payable in cash, including, without
limitation, underwriting commissions and discounts, incurred
in connection with the execution and delivery of this
Agreement and the transactions contemplated hereby) of the
Borrower, which is payable in cash, all as determined in
conformity with GAAP.
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.
9601 et seq., any amendments thereto, any successor
statutes, and any regulations promulgated thereunder.
"Change of Control" means either (i) fifty percent
(50%) (on a fully diluted basis) of the Capital Stock of RHI
ceasing to be owned and controlled by Jeffrey J. Steiner and
his "associates" as defined in the Securities Exchange Act
or (ii) one hundred percent (100%) of the Capital Stock of
Borrower ceasing to be owned and controlled by RHI.
"Citibank" means Citibank, N.A., a national banking
association.
"Citicorp" is defined in the preamble of this
Agreement.
"Claim" means any claim or demand, by any Person, of
whatsoever kind or nature for any alleged Liabilities and
Costs, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute,
Permit, ordinance or regulation, common law or otherwise.
"Closing Date" means March 13, 1996.
"CM Letter of Credit" means that certain Irrevocable
Stand-by Letter of Credit No. S-11096 in the face amount of
$166,000,000 issued by Bankers Trust Company naming the
Borrower as beneficiary.
"CM Notes" means, collectively, (i) that certain 8%
Secured Note dated January 26, 1996 in the principal amount
of $166,000,000 payable to VSI Corporation and executed by
Cincinnati Milacron Inc. and (ii) that certain 8% Unsecured
Note dated January 26, 1996 in the principal amount of
$5,376,555 payable to VSI Corporation and executed by
Cincinnati Milacron Inc.
"Collateral" means all Property and interests in Prop-
erty now owned or hereafter acquired by the Borrower or any
of its Subsidiaries upon which a Lien is granted under any
of the Loan Documents.
"Collection Account" means each lock-box and blocked
depository account maintained by the Borrower or any of its
Subsidiaries subject to a Collection Account Agreement for
the collection of Receivables and other proceeds of
Collateral.
"Collection Account Agreement" means a written
agreement, substantially in the form attached hereto as
Exhibit B with such modifications as the Administrative
Agent, from time to time, deems acceptable, among the
Borrower or a Subsidiary of the Borrower, the Administrative
Agent, and, as applicable, each of the banks at which the
Borrower or a Subsidiary of the Borrower maintains a
Collection Account.
"Commercial Letter of Credit" means any documentary
letter of credit issued by an Issuing Bank pursuant to
Section 3.01 for the account of the Borrower or for the
account of any of the Borrower's Subsidiaries if the
Borrower is jointly and severally liable for reimbursement
of amounts drawn under such letter of credit, which is
drawable upon presentation of documents evidencing the sale
or shipment of goods purchased by the Borrower or such
Subsidiary in the ordinary course of its business.
"Commission" means the Securities and Exchange Commis-
sion and any Person succeeding to the functions thereof.
"Commitment" means, with respect to any Lender at the
time of determination thereof, the aggregate amount of such
Lender's Revolving Credit Commitment and Term Loan
Commitment and "Commitments" means the aggregate amount of
all Term Loan Commitments and Revolving Credit Commitments.
"Commitment Fee" is defined in Section 5.03(c).
"Compliance Certificate" is defined in Section 8.01(a).
"Concentration Account" means the depository account
maintained at Citibank in New York, New York, or such other
financial institution designated for such purpose by the
Administrative Agent into which collections of Receivables
of the Borrower and its Domestic Subsidiaries, other
proceeds of Collateral and other amounts are transferred
pursuant to the terms of the Collection Account Agreements
or otherwise as described in Section 4.04.
"Contaminant" means any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special waste,
petroleum or petroleum-derived substance or waste,
radioactive materials, asbestos (in any form or condition),
polychlorinated biphenyls (PCBs), lead paint, or any
constituent of any such substance or waste, and includes,
but is not limited to, these terms as defined in federal,
state or local laws or regulations.
"Contractual Obligation", as applied to any Person,
means any provision of any Securities issued by that Person
or any indenture, mortgage, deed of trust, security
agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument to which that Person is
a party or by which it or any of its properties is bound, or
to which it or any of its properties is subject.
"Convac" means Fairchild Convac GmbH, a corporation
formed under the laws of the Republic of Germany and an
indirect Subsidiary of the Borrower.
"Convac Minority Interest" means an interest in the
Capital Stock of Convac which is permitted to be issued by
Convac or transferred (whether by sale, assignment, as the
result of a merger, exchange of shares, or otherwise) by VSI
Holdings, Inc., a Delaware corporation and Wholly-Owned
Subsidiary of the Borrower, to a Person not an Affiliate of
the Borrower provided that the issuance or transfer thereof
does not result in Convac ceasing to be a Subsidiary of the
Borrower.
"Cure Loans" is defined in Section 4.02(f)(iii).
"Customary Permitted Liens" means
(i) Liens (other than Environmental Liens and Liens in
favor of the PBGC) with respect to the payment of taxes,
assessments or governmental charges in all cases which are
not yet due or which are being contested in good faith by
appropriate proceedings and with respect to which adequate
reserves or other appropriate provisions are being
maintained in accordance with GAAP;
(ii) statutory Liens of landlords and Liens of
suppliers, mechanics, carriers, materialmen, warehousemen or
workmen and other Liens imposed by law created in the
ordinary course of business for amounts not yet due or which
are being contested in good faith by appropriate proceedings
and with respect to which adequate reserves or other
appropriate provisions are being maintained in accordance
with GAAP;
(iii) Liens (other than any Lien in favor of the PBGC)
incurred or deposits made in the ordinary course of business
in connection with worker's compensation, unemployment
insurance or other types of social security benefits or to
secure the performance of bids, tenders, sales, contracts
(other than for the repayment of borrowed money), surety,
appeal and performance bonds; provided that (A) all such
Liens do not in the aggregate materially detract from the
value of the Borrower's or any of its Subsidiaries' assets
or Property or materially impair the use thereof in the
operation of their respective businesses, and (B) all Liens
of attachment or judgment and Liens securing bonds to stay
judgments or in connection with appeals do not secure at any
time an aggregate amount exceeding $500,000; and
(iv) Liens arising with respect to zoning
restrictions, easements, licenses, reservations, covenants,
rights-of-way, utility easements, building restrictions and
other similar charges or encumbrances on the use of Real
Property which do not interfere with the ordinary conduct of
the business of the Borrower or any of its Subsidiaries.
"Deposit Account" means a demand, time, savings,
passbook or like account with a bank, savings and loan
association, credit union or like organization, other than
an account evidenced by a negotiable certificate of deposit.
"Designated Prepayment" means each mandatory
prepayment required by clauses (i), (ii), and (iii) of
Section 4.01(b).
"DOL" means the United States Department of Labor and
any Person succeeding to the functions thereof.
"Dollars" and "$" mean the lawful money of the United
States.
"Domestic Lending Office" means, with respect to any
Lender, such Lender's office, located in the United States,
specified as the "Domestic Lending Office" under its name on
the signature pages hereof or on the Assignment and
Acceptance by which it became a Lender or such other United
States office of such Lender as it may from time to time
specify by written notice to the Borrower and the
Administrative Agent.
"Domestic Subsidiaries" means those Subsidiaries of the
Borrower identified on Schedule 1.01.1 attached hereto and
made a part hereof.
"EBITDA" means, for any period, the amount calculated,
without duplication, for such period as the sum of the
Operating Units' Operating Profit and Equity Income/Minority
Interest plus (to the extent deducted in the determination
of such Operating Profit and Equity Income/Minority
Interest) (i) depreciation expense, (ii) amortization
expense, (iii) other non-recurring non-cash charges and
expenses not requiring the use of Cash, (iv) losses arising
other than in the ordinary course of business of the
Operating Units which have been included in the
determination of such Operating Profit and Equity
Income/Minority Interest, and (v) increases in the LIFO
reserve minus (to the extent included in the determination
of such Operaing Profit and Equity Income/Minority Interest)
(a) gains arising other than in the ordinary course of
business of the Operating Units, (b) decreases in the LIFO
reserve, and (c) other non-recurring credits and income not
generating Cash.
"11 7/8% Senior Subordinated Debenture Indenture" means
the Indenture between Rexnord Acquisition Corp. and Irving
Trust Company, as trustee, dated as of March 2, 1987,
pursuant to which Senior Subordinated Debentures in the
aggregate original principal amount of $126,000,000 were
issued, as supplemented by the First Supplemental Indenture
dated as of July 1, 1987 between Rexnord Corporation and
Irving Trust Company, as trustee, and the Second
Supplemental Indenture dated as of August 16, 1988, between
RHI and Irving Trust Company, as trustee.
"Eligible Assignee" means (i) a Lender or any
Affiliate thereof; (ii) a commercial bank having total
assets in excess of $2,500,000,000; (iii) the central bank
of any country which is a member of the Organization for
Economic Cooperation and Development; or (iv) a finance com-
pany, insurance company, other financial institution or
fund, acceptable to the Administrative Agent, which is
regularly engaged in making, purchasing or investing in
loans and having total assets in excess of $300,000,000.
"Environmental, Health or Safety Requirements of Law"
means all Requirements of Law derived from or relating to
any federal, state or local law, ordinance, rule,
regulation, Permit, license or other binding determination
of any Governmental Authority relating to, imposing
liability or standards concerning, or otherwise addressing,
the environment, health and/or safety, including, but not
limited to the Clean Air Act, the Clean Water Act, CERCLA,
RCRA, any so-called "Superfund" or "Superlien" law, the
Toxic Substances Control Act, OSHA, and public health codes,
each as from time to time in effect.
"Environmental Lien" means a Lien in favor of any
Governmental Authority for any (i) liabilities under any
Environmental, Health or Safety Requirement of Law, or
(ii) damages arising from, or costs incurred by such
Governmental Authority in response to, a Release or
threatened Release of a Contaminant into the environment.
"Environmental Property Transfer Acts" means any
applicable Requirement of Law that conditions, restricts,
prohibits or requires any notification or disclosure
triggered by the transfer, sale, lease or closure of any
Property or deed or title for any Property for environmental
reasons, including, but not limited to, any so-called
"Industrial Site Recovery Acts" or "Responsible Property
Transfer Acts".
"Equipment" means, with respect to any Person, all of
such Person's present and future (i) equipment, including,
without limitation, machinery, manufacturing, distribution,
selling, data processing and office equipment, assembly
systems, tools, molds, dies, fixtures, appliances,
furniture, furnishings, vehicles, vessels, aircraft,
aircraft engines, and trade fixtures, (ii) other tangible
personal property (other than such Person's Inventory), and
(iii) any and all accessions, parts and appurtenances
attached to any of the foregoing or used in connection
therewith, and any substitutions therefor and replacements,
products and proceeds thereof.
"ERISA" means the Employee Retirement Income Security
Act of 1974, 29 U.S.C. 1000 et seq., any amendments
thereto, any successor statutes, and any regulations or
guidance promulgated thereunder.
"ERISA Affiliate" means (i) any corporation which is a
member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Internal Revenue Code)
as the Borrower; (ii) a partnership or other trade or
business (whether or not incorporated) which is under common
control (within the meaning of Section 414(c) of the
Internal Revenue Code) with the Borrower; and (iii) a member
of the same affiliated service group (within the meaning of
Section 414(m) of the Internal Revenue Code) as the
Borrower, any corporation described in clause (i) above or
any partnership or trade or business described in clause
(ii) above.
"ERISA Event" means (i) the occurrence with respect to
a Plan of a Reportable Event, (ii) the provision by the
administrator of any Plan of a notice of intent to terminate
such Plan, pursuant to Section 4041(a)(2) of ERISA
(including any such notice with respect to a plan amendment
referred to in Section 4041(e) of ERISA), (iii) the
cessation of operations at a facility of the Borrower or any
ERISA Affiliate in the circumstances described in Section
4062(e) of ERISA, (iv) the withdrawal by the Borrower or an
ERISA Affiliate from a Multiemployer Plan during a plan year
for which it was a substantial employer, as defined in
Section 4001(a)(2) of ERISA, (v) the conditions set forth in
Section 302(f)(1)(A) and (B) of ERISA to the creation of a
Lien upon Property or rights to Property of the Borrower or
any ERISA Affiliate for failute to make a required payment
to a Plan are satisfied, (vi) the adoption of an amendment
to a Plan requiring the provision of security to such Plan,
pursuant to Section 307 of ERISA, or (vii) the institution
by the PBGC of proceedings to terminate a Plan, pursuant to
Section 4042 of ERISA, or the occurrence of any event or
condition described in Section 4042 of ERISA that
constitutes grounds for the termination of, or the
appointment of a trustee to administer, a Plan.
"Eurodollar Affiliate" means, with respect to each
Lender, the Affiliate of such Lender (if any) set forth
below such Lender's name under the heading "Eurodollar
Affiliate" on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or
such Affiliate of a Lender as it may from time to time
specify by written notice to the Borrower and the
Administrative Agent.
"Eurodollar Interest Payment Date" means, with respect
to any Eurodollar Rate Loan, the last day of each Eurodollar
Interest Period applicable to such Loan.
"Eurodollar Interest Period" is defined in
Section 5.02(b).
"Eurodollar Interest Rate Determination Date" is
defined in Section 5.02(c).
"Eurodollar Lending Office" means, with respect to any
Lender, the office or offices of such Lender (if any) set
forth below such Lender's name under the heading "Eurodollar
Lending Office" on the signature pages hereof or on the
Assignment and Acceptance by which it became a Lender or
such office or offices of such Lender as it may from time to
time specify by written notice to the Borrower and the
Administrative Agent.
"Eurodollar Rate" means, with respect to any Eurodollar
Interest Period applicable to a Eurodollar Rate Loan, an
interest rate per annum obtained by dividing (i) the Base
Eurodollar Rate applicable to that Eurodollar Interest
Period by (ii) a percentage equal to 100% minus the
Eurodollar Reserve Percentage in effect on the relevant
Eurodollar Interest Rate Determination Date.
"Eurodollar Rate Loans" means those Loans outstanding
which bear interest at a rate determined by reference to the
Eurodollar Rate and the Eurodollar Rate Margin as provided
in Section 5.01(a).
"Eurodollar Rate Margin" means a rate equal to one and
one-half percent (1.50%) per annum.
"Eurodollar Reserve Percentage" means, for any
Eurodollar Interest Period, the reserve percentage which is
applicable two (2) Business Days before the first day of
such Eurodollar Interest Period under the regulations issued
from time to time by the Federal Reserve Board for
determining the actual reserve requirement (including,
without limitation, any emergency, supplemental or other
marginal reserve requirement) for a member bank of the
Federal Reserve System in New York, New York with deposits
exceeding Five Billion Dollars ($5,000,000,000) with respect
to liabilities or assets consisting of or including
"Eurocurrency Liabilities" (or with respect to any other
category of liabilities which includes deposits by reference
to which the interest rate on Eurodollar Rate Loans is
determined) having a term equal to such Eurodollar Interest
Period.
"Event of Default" means any of the occurrences set
forth in Section 12.01 after the expiration of any
applicable grace period, as expressly provided in Section
12.01.
"Excluded Dispositions" means (i) operations and/or
assets of the Borrower or a Subsidiary of the Borrower
located at Chatsworth, California, Farmingdale, New York,
Redondo Beach, California, and Temple City, California (the
"Natter property"); (ii) the "Greer real estate" located in
Houston, Texas; (iii) the Convac Minority Interest; and (iv)
the "Sloane Street real estate" located in London.
"Fair Market Value" means, with respect to any asset,
the value of the consideration obtainable in a sale of such
asset in the open market, assuming a sale by a willing
seller to a willing purchaser dealing at arm's length and
arranged in an orderly manner over a reasonable period of
time, each having reasonable knowledge of the nature and
characteristics of such asset, neither being under any
compulsion to act, and, if in excess of $500,000, as
determined (a) in good faith by the Board of Directors of
the Borrower or (b) in an appraisal of such asset, provided
that for purposes of Section 10.02, such appraisal was
performed relatively contemporaneously with such sale by an
independent third party appraiser and the basic assumptions
underlying such appraisal have not materially changed since
the date thereof.
"Federal Funds Rate" means, for any period, a fluctu-
ating interest rate per annum equal for each day during such
period to the weighted average of the rates on overnight
federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as
published for such day (or, if such day is not a Business
Day in New York, New York, for the next preceding Business
Day) in New York, New York by the Federal Reserve Bank of
New York, or if such rate is not so published for any day
which is a Business Day in New York, New York, the average
of the quotations for such day on such transactions received
by the Administrative Agent from three federal funds brokers
of recognized standing selected by the Administrative Agent.
"Federal Reserve Board" means the Board of Governors of
the Federal Reserve System or any Governmental Authority
succeeding to its functions.
"Fee Letter" means that certain fee letter addressed to
Citicorp Securities, Inc. from the Borrower dated January
22, 1996.
"FII" means Fairchild Industries, Inc., a Delaware
corporation.
"Financial Statements" means (i) statements of income
and retained earnings, statements of cash flow, and balance
sheets, (ii) such other financial statements as TFC, RHI,
the Borrower and its Subsidiaries shall routinely and
regularly prepare and (iii) such other financial statements
as the Administrative Agent or the Requisite Lenders may
from time to time reasonably specify.
"Fiscal Year" means the fiscal year of the Borrower and
its Subsidiaries for accounting and tax purposes, which
shall be the 12-month period ending on June 30 of each
calendar year.
"Foreign Employee Benefit Plan" means any employee
benefit plan as defined in Section 3(3) of ERISA which is
maintained or contributed to for the benefit of the
employees of the Borrower, any of its Subsidiaries or any of
its ERISA Affiliates and is not covered by ERISA pursuant to
ERISA Section 4(b)(4).
"Foreign Pension Plan" means any employee benefit plan
as defined in Section 3(3) of ERISA which (i) is maintained
or contributed to for the benefit of employees of the
Borrower, any of its Subsidiaries or any of its ERISA
Affiliates, (ii) is not covered by ERISA pursuant to Section
4(b)(4) of ERISA, and (iii) under applicable local law, is
required to be funded through a trust or other funding
vehicle.
"Fronting Fee" is defined in Section 5.03(b).
"Funding Date" means, with respect to any Loan, the
date of funding of such Loan.
"GAAP" means generally accepted accounting principles
set forth in the opinions and pronouncements of the American
Institute of Certified Public Accountants' Accounting
Principles Board and Financial Accounting Standards Board or
in such other statements by such other entity as may be in
general use by significant segments of the accounting
profession as in effect on the date hereof (unless otherwise
specified herein as in effect on another date or dates).
"General Intangibles" means, with respect to any
Person, all of such Person's present and future (i) general
intangibles, (ii) rights, interests, choses in action,
causes of action, claims and other intangible Property of
every kind and nature (other than Receivables), (iii)
corporate and other business records, (iv) loans, royalties,
and other obligations receivable, (v) trademarks, registered
trademarks, trademark applications, service marks,
registered service marks, service mark applications,
patents, registered patents, patent applications, trade
names, rights of use of any name, labels, fictitious names,
inventions, designs, trade secrets, computer programs,
software, printouts and other computer materials, goodwill,
registrations, copyrights, copyright applications, permits,
licenses, franchises, customer lists, credit files,
correspondence, and advertising materials, (vi) customer and
supplier contracts, firm sale orders, rights under license
and franchise agreements, rights under tax sharing
agreements, and other contracts and contract rights, (vii)
interests in partnerships and joint ventures, (viii) tax
refunds and tax refund claims, (ix) right, title and
interest under leases, subleases, licenses and concessions
and other agreements relating to property, (x) deposit
accounts (general or special) with any bank or other
financial institution, (xi) credits with and other claims
against third parties (including carriers and shippers),
(xii) rights to indemnification and with respect to support
and keep-well agreements, (xiii) reversionary interests in
pension and profit sharing plans and reversionary,
beneficial and residual interests in trusts, (xiv) letters
of credit, guarantees, Liens, security interests and other
security held by or granted to such Person and (xvi)
uncertificated securities.
"Governmental Authority" means any nation or
government, any federal, state, local or other political
subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantors" means each of the Subsidiaries of the
Borrower identified on Schedule 1.01.2 attached hereto and
made a part hereof and any other Person executing and
delivering a guaranty of payment and performance of all or
any portion of the Obligations.
"Hedge Agreement" means any agreement, including,
without limitation, interest rate exchange, swap, collar or
cap agreement, interest rate future or option contract,
currency swap agreement, currency future or option contract,
and other similar agreement, evidencing an agreement or
arrangement intended to protect against fluctuation in
interest rates and/or foreign exchange rates or conversion
rates for conversion of foreign currencies to Dollars.
"Holder" means any Person entitled to enforce any of
the Obligations, whether or not such Person holds any
evidence of Indebtedness, including, without limitation, the
Administrative Agent, each Lender and each Issuing Bank.
"Indebtedness", as applied to any Person, means, at any
time, without duplication, (a) all indebtedness, obligations
or other liabilities of such Person (i) for borrowed money
or evidenced by debt Securities, debentures, acceptances,
notes or other similar instruments, and any accrued
interest, fees and charges relating thereto, (ii) under
profit payment agreements or in respect of obligations to
redeem, repurchase or exchange any Securities of such Person
or to pay dividends in respect of any Capital Stock, (iii)
with respect to letters of credit issued for such Person's
account, (iv) to pay the deferred purchase price of property
or services, except accounts payable and accrued expenses
arising in the ordinary course of business, (v) in respect
of Capital Leases, (vi) which are Accommodation Obligations
or (vii) under warranties and indemnities; (b) all
indebtedness, obligations or other liabilities of such
Person or others secured by a Lien on any property of such
Person, whether or not such indebtedness, obligations or
liabilities are assumed by such Person, all as of such time;
(c) all indebtedness, obligations or other liabilities of
such Person in respect of interest rate contracts, Hedge
Agreements and foreign exchange contracts, net of
liabilities owed to such Person by the counterparties
thereon; (d) all preferred stock subject (upon the
occurrence of any contingency or otherwise) to mandatory
redemption; and (e) all contingent Contractual Obligations
with respect to any of the foregoing.
"Indemnified Matters" is defined in Section 15.03.
"Indemnitees" is defined in Section 15.03.
"Interest Coverage Ratio" means, for any period, the
ratio of (i) Borrower's interest income (accrued or
received)for such period to (ii) Cash Interest Expense for
such period.
"Internal Revenue Code" means the Internal Revenue Code
of 1986, as amended to the date hereof and from time to time
hereafter, any successor statute and any regulations or
guidance promulgated thereunder.
"Inventory" means, with respect to any Person, all of
such Person's present and future (i) inventory, (ii) goods,
merchandise and other personal property furnished or to be
furnished under any contract of service or intended for sale
or lease, and all consigned goods and all other items which
have previously constituted Equipment of such Person but are
then currently being held for sale or lease in the ordinary
course of such Person's business, (iii) raw materials,
work-in-process and finished goods, (iv) materials and
supplies of any kind, nature or description used or consumed
in such Person's business or in connection with the
manufacture, production, packing, shipping, advertising,
finishing or sale of any of the property described in
clauses (i) through (iii) above, (v) goods in which such
Person has a joint or other interest or right of any kind
(including, without limitation, goods in which such Person
has an interest or right as consignee), and (vi) goods which
are returned to or repossessed by such Person; in each case
whether in the possession of such Person, a bailee, a
consignee, or any other Person for sale, storage, transit,
processing, use or otherwise, and any and all documents for
or relating to any of the foregoing.
"Investment" means, with respect to any Person, (i) any
purchase or other acquisition by that Person of Securities,
or of a beneficial interest in Securities, issued by any
other Person, (ii) any purchase by that Person of all or
substantially all of the assets of a business conducted by
another Person, and (iii) any loan, advance (other than
deposits with financial institutions available for
withdrawal on demand, prepaid expenses, accounts receivable,
advances to employees and similar items made or incurred in
the ordinary course of business) or capital contribution by
that Person to any other Person, including all Indebtedness
to such Person arising from a sale of property by such
Person other than in the ordinary course of its business and
all Indebtedness to such Person which is not a current
asset. The amount of any Investment shall be the original
cost of such Investment, plus the cost of all additions
thereto less the amount of any return of capital or
principal to the extent such return is in cash with respect
to such Investment without any adjustments for increases or
decreases in value or write-ups, write-downs or write-offs
with respect to such Investment.
"IRS" means the Internal Revenue Service and any Person
succeeding to the functions thereof.
"Issuing Banks" means Citibank and each Lender
designated as an "Issuing Bank" on the signature pages
hereof or the signature page of the Assignment and
Acceptance by which it became a Lender and each other Lender
approved by the Administrative Agent and the Borrower who
has agreed to become an Issuing Bank for the purpose of
issuing Letters of Credit pursuant to Section 3.01.
"Lender" means, as of the Closing Date, each financial
institution a signatory hereto as a Lender and, at any other
given time, each financial institution which is a party
hereto as a Lender, whether as a signatory hereto or
pursuant to an Assignment and Acceptance.
"Letter of Credit" means any Commercial Letter of
Credit or Standby Letter of Credit.
"Letter of Credit Fee" is defined in Section 5.03(b).
"Letter of Credit Obligations" means, at any particular
time, the sum of (i) all outstanding Reimbursement
Obligations, plus (ii) the aggregate undrawn face amount of
all outstanding Letters of Credit, plus (iii) the aggregate
face amount of all Letters of Credit requested by the
Borrower but not yet issued (unless the request for an
unissued Letter of Credit has been denied by the designated
Issuing Bank as referenced in Section 3.01(c)(i)).
"Letter of Credit Reimbursement Agreement" means, with
respect to a Letter of Credit, such form of application
therefor and form of reimbursement agreement therefor
(whether in a single or several documents, taken together)
as the Issuing Bank from which the Letter of Credit is
requested may employ in the ordinary course of business for
its own account, with such modifications thereto as may be
agreed upon by the Issuing Bank and the Borrower and as are
not materially adverse (in the judgment of the Issuing Bank
and Administrative Agent) to the interests of the Lenders;
provided, however, in the event of any conflict between the
terms of any Letter of Credit Reimbursement Agreement and
this Agreement, the terms of this Agreement shall control.
"Liabilities and Costs" means all liabilities,
obligations, responsibilities, losses, damages, personal
injury, death, punitive damages, economic damages,
consequential damages, treble damages, intentional, willful
or wanton injury, damage or threat to the environment,
natural resources or public health or welfare, costs and
expenses (including, without limitation, attorney, expert
and consulting fees and costs and fees and costs associated
with any investigation, feasibility or Remedial Action
studies), fines, penalties and monetary sanctions, interest,
direct or indirect, known or unknown, absolute or
contingent, past, present or future.
"Lien" means any mortgage, deed of trust, pledge,
hypothecation, assignment, conditional sale agreement,
deposit arrangement, security interest, encumbrance, lien
(statutory or other and including, without limitation, any
Environmental Lien), preference, priority or other security
agreement or preferential arrangement of any kind or nature
whatsoever in respect of any property of a Person, whether
granted voluntarily or imposed by law, and includes the
interest of a lessor under a Capital Lease or under any
financing lease having substantially the same economic
effect as any of the foregoing and the filing of any
financing statement or similar notice (other than a
financing statement filed by a "true" lessor pursuant to 9-
408 of the Uniform Commercial Code), naming the owner of
such property as debtor, under the Uniform Commercial Code
or other comparable law of any jurisdiction.
"Loan Account" is defined in Section 4.03(b).
"Loan Documents" means this Agreement, the Notes, Hedge
Agreements to which any Lender or any Affiliate of a Lender
is a party, foreign exchange contracts to which any Lender
or any Affiliate of a Lender is a party, and all other
instruments, agreements and written Contractual Obligations
between the Borrower or any Subsidiary of the Borrower and
any of the Administrative Agent, any Lender or any Issuing
Bank delivered to either the Administrative Agent, such
Lender or such Issuing Bank pursuant to or in connection
with the transactions contemplated hereby.
"Loans" means all Term Loans and Revolving Loans,
whether Base Rate Loans or Eurodollar Rate Loans.
"Margin Stock" means "margin stock" as such term is
defined in Regulation U and Regulation G.
"Material Adverse Effect" means a material adverse
effect upon (i) the financial condition, operations, assets
or prospects of the Borrower or any of its Subsidiaries,
(ii) the ability of the Borrower or any of its Subsidiaries
to perform their respective obligations under the Loan Docu-
ments, or (iii) the ability of the Lenders, the Issuing
Banks or the Administrative Agent to enforce any of the Loan
Documents.
"MIS" means computerized management information system
for recording and maintenance of information regarding
purchases, sales, aging, categorization, and locations of
Inventory, creation and aging of Receivables, and accounts
payable (including agings thereof).
"Multiemployer Plan" means a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA (other than a Foreign
Employee Benefit Plan) which (i) is, or within the
immediately preceding six (6) years was, contributed to by
either the Borrower or any ERISA Affiliate or in respect of
which the Borrower or any ERISA Affiliate has assumed any
liability and (ii) is not a Foreign Employee Benefit Plan.
"Net Cash Proceeds of Issuance of Equity Securities"
means (i) net cash proceeds (including cash, equivalents
readily convertible into cash, and such proceeds of any
notes received as consideration or any other non-cash
consideration) received by the Borrower or any of its
Subsidiaries at any time after the Closing Date on account
of the issuance of equity Securities of the Borrower or any
of its Subsidiaries (other than (a) Capital Stock of a
Subsidiary issued to the Borrower or to a Subsidiary of the
Borrower and (b) Capital Stock issued to effect the transfer
of the Convac Minority Interest) and (ii) proceeds received
by the Borrower at any time after the Closing Date as a
contribution to its capital on account of the issuance of
equity Securities of the Borrower.
"Net Cash Proceeds of Issuance of Indebtedness" means
Indebtedness (other than Indebtedness permitted under
Section 10.01) of the Borrower or any of its Subsidiaries,
in each case net of all transaction costs and underwriters'
discounts with respect thereto.
"Net Cash Proceeds of Sale" means (i) proceeds received
by the Borrower or any of its Subsidiaries in cash
(including cash, equivalents readily convertible into cash,
and such proceeds of any notes received as consideration or
any other non-cash consideration) from the sale, assignment
or other disposition of (but not the lease or license of)
any Property, other than sales permitted under clauses (b)
through (e) of Section 10.02, net of (A) the costs of sale,
assignment or other disposition, (B) any income, franchise,
transfer or other tax liability arising from such
transaction and (C) amounts applied to the repayment of
Indebtedness (other than the Obligations) secured by a Lien
permitted by Section 10.03 on the asset disposed of, whether
such net proceeds arise from any individual sale, assignment
or other disposition or from any group of related sales,
assignments or other dispositions; and (ii) to the extent
provided in Section 9.07(b), proceeds of insurance on
account of the loss of or damage to any such Property or
Properties, and payments of compensation for any such
Property or Properties taken by condemnation or eminent
domain.
"Net Income" means, for any period, the net income (or
loss) after taxes of the Borrower and its Subsidiaries on a
consolidated basis for such period taken as a single
accounting period determined in conformity with GAAP.
"Net Insurance and Condemnation Proceeds" means
proceeds (including cash, equivalents readily convertible
into cash, and such proceeds of any notes received in lieu
of cash) of insurance policies described in Section 9.07 and
proceeds of condemnation awards described in Section 9.07
required to be remitted to the Administrative Agent as
provided in Section 9.07(b).
"1992 Credit Agreement" is defined in Section 6.01(d).
"Non Pro Rata Loan" is defined in Section 4.02(f).
"Note" means a promissory note in the form attached
hereto as Exhibit C payable to a Lender, evidencing certain
of the Obligations of the Borrower to such Lender and
executed by the Borrower as required by Section 4.03(a), as
the same may be amended, supplemented, modified or restated
from time to time, and any promissory note issued in
substitution therefor; "Notes" means, collectively, all of
such Notes outstanding at any given time.
"Notice of Borrowing" means a notice substantially in
the form of Exhibit D attached hereto and made a part
hereof.
"Notice of Conversion/Continuation" means a notice
substantially in the form of Exhibit E attached hereto and
made a part hereof with respect to a proposed conversion or
continuation of a Loan pursuant to Section 5.01(c).
"Obligations" means all Loans, advances, debts,
liabilities, obligations, covenants and duties owing by the
Borrower to the Administrative Agent, any Lender, any
Issuing Bank, any Affiliate of the Administrative Agent, any
Lender or any Issuing Bank, or any Person entitled to
indemnification pursuant to Section 15.03 of this Agreement,
of any kind or nature, present or future, whether or not
evidenced by any note, guaranty or other instrument, arising
under this Agreement, the Notes or any other Loan Document,
whether or not for the payment of money, whether arising by
reason of an extension of credit, opening or amendment of a
Letter of Credit or payment of any draft drawn thereunder,
loan, guaranty, indemnification, foreign exchange contract,
Hedge Agreement or in any other manner, whether direct or
indirect (including those acquired by assignment), absolute
or contingent, due or to become due, now existing or
hereafter arising and however acquired. The term includes,
without limitation, all interest, charges, expenses, fees,
attorneys' fees and disbursements and any other sum charge-
able to the Borrower under this Agreement or any other Loan
Document.
"Officer's Certificate" means, as to a corporation, a
certificate executed on behalf of such corporation by the
chairman or vice-chairman of its board of directors (if an
officer of such corporation) or its president, any of its
vice-presidents, its chief financial officer, or its
treasurer.
"Operating Profit and Equity Income/Minority Interest"
means an amount equal to total sales minus cost of sales
minus total operating expenses and includes other
(income)/expense, Investment (income)/expense, goodwill
amortization, equity (in earnings)/loss, and minority
interest (income)/loss.
"Operating Lease" means, as applied to any Person, any
lease of any property (whether real, personal or mixed) by
that Person as lessee which is not a Capital Lease.
"Operating Units" means, collectively, those segments
of the Borrower's business known as (i) Fairchild Fasteners
U.S., (ii) Fairchild Fasteners - Europe, (iii) Camloc (UK)
Gas Spring Division, and (iv) Convac GmbH; and each of the
foregoing is an "Operating Unit".
"Organizational Documents" means, with respect to any
corporation, limited liability company, or partnership
(i) the articles/certificate of incorporation (or the
equivalent organizational documents) of such corporation or
limited liability company, (ii) the partnership agreement
executed by the partners in the partnership, (iii) the
by-laws (or the equivalent governing documents) of the
corporation, limited liability company or partnership, and
(iv) any document setting forth the designation, amount
and/or relative rights, limitations and preferences of any
class or series of such corporation's Capital Stock or such
limited liability company's or partnership's equity or
ownership interests.
"OSHA" means the Occupational Safety and Health Act of
1970, 29 U.S.C. 651 et seq., any amendments thereto, any
successor statutes and any regulations or guidance
promulgated thereunder.
"PBGC" means the Pension Benefit Guaranty Corporation
and any Person succeeding to the functions thereof.
"Permits" means any permit, approval, authorization
license, variance, or permission required from a
Governmental Authority or other Person under an applicable
Requirement of Law.
"Permitted Equity Securities Options" means the
subscriptions, options, warrants, rights, convertible
securities and other agreements or commitments relating to
the issuance of equity Securities of the Borrower or any
Subsidiary of the Borrower identified as such on Schedule
1.01.3.
"Permitted Existing Accommodation Obligations" means
those Accommodation Obligations of the Borrower and its
Subsidiaries identified as such on Schedule 1.01.4.
"Permitted Existing Indebtedness" means the Indebted-
ness of the Borrower and its Subsidiaries identified as such
on Schedule 1.01.5.
"Permitted Existing Investments" means those Invest-
ments identified as such on Schedule 1.01.6.
"Permitted Existing Liens" means the Liens on assets of
the Borrower or any of its Subsidiaries identified as such
on Schedule 1.01.7.
"Person" means any natural person, corporation, limited
liability company, limited partnership, general partnership,
joint stock company, joint venture, association, company,
trust, bank, trust company, land trust, business trust or
other organization, whether or not a legal entity, and any
Governmental Authority.
"Plan" means an employee benefit plan defined in
Section 3(3) of ERISA (other than a Foreign Employee Benefit
Plan) (i) in respect of which the Borrower or any ERISA
Affiliate is, or within the immediately preceding six (6)
years was, an "employer" as defined in Section 3(5) of ERISA
or the Borrower or any ERISA Affiliate has assumed any
liability and (ii) which is not a Foreign Employee Benefit
Plan.
"Potential Event of Default" means an event which, with
the giving of notice or the lapse of time, or both, would
constitute an Event of Default.
"Process Agent" is defined in Section 15.17(a)(i).
"Pro Forma" means the unaudited pro forma opening
balance sheet of the Borrower and its Subsidiaries attached
hereto as Exhibit F, prepared in accordance with GAAP, dated
December 31, 1995, and giving effect to the extensions of
credit contemplated hereby, the sales of assets of the D-M-E
Division of VSI and Fairchild Data Corporation, the merger
of FII and Shared Technologies, Inc., the merger of D-M-E
Normalien GmbH and Fairchild Convac GmbH, and the transfer
of the Harco business to Banner Aerospace, Inc.
"Projections" means the financial projections
(including, without limitation, capital expenditure budget)
and assumptions prepared by the Borrower dated February 16,
1996 and attached hereto as Exhibit G.
"Property" means any Real Property or personal prop-
erty, plant, building, facility, structure, underground
storage tank or unit, Equipment, Inventory, General
Intangible, Receivable, or other asset owned, leased or
operated by the Borrower or any Subsidiary of the Borrower,
as applicable, (including any surface water thereon, and
soil and groundwater thereunder).
"Proposal Letter" means that certain letter addressed
to the Borrower from Citicorp Securities, Inc. dated January
16, 1996 and accepted by the Borrower on January 18, 1996.
"Pro Rata Share" means, with respect to any Lender, the
percentage obtained by dividing (i) the sum of such Lender's
Term Loan Commitment and Revolving Credit Commitment (in
each case, as adjusted from time to time in accordance with
the provisions of this Agreement or any Assignment and
Acceptance to which such Lender is a party) by (ii) the
aggregate amount of all of the Term Loan Commitments and
Revolving Credit Commitments (notwithstanding the
termination of any such Commitments).
"Protective Advance" is defined in Section 13.09(a).
"RCRA" means the Resource Conservation and Recovery Act
of 1976, 42 U.S.C. 6901 et seq., any amendments thereto,
any successor statutes, and any regulations promulgated
thereunder.
"Real Property" means, with respect to any Person, all
of such Person's present and future right, title and
interest (including, without limitation, any leasehold
estate) in (i) any plots, pieces or parcels of land, (ii)
any improvements, buildings, structures and fixtures now or
hereafter located or erected thereon or attached thereto of
every nature whatsoever (the rights and interests described
in clauses (i) and (ii) above being the "Premises"), (iii)
all easements, rights of way, gores of land or any lands
occupied by streets, ways, alleys, passages, sewer rights,
water courses, water rights and powers, and public places
adjoining such land, and any other interests in property
constituting appurtenances to the Premises, or which
hereafter shall in any way belong, relate or be appurtenant
thereto, (iv) all hereditaments, gas, oil, minerals (with
the right to extract, sever and remove such gas, oil and
minerals), and easements, of every nature whatsoever,
located in or on the Premises and (v) all other rights and
privileges thereunto belonging or appertaining and all
extensions, additions, improvements, betterments, renewals,
substitutions and replacements to or of any of the rights
and interests described in clauses (iii) and (iv) above.
"Receivables" means, with respect to any Person, all of
such Person's present and future (i) accounts, (ii) contract
rights, chattel paper, instruments, documents, deposit
accounts, and other rights to payment of any kind, whether
or not arising out of or in connection with the sale or
lease of goods or the rendering of services, and whether or
not earned by performance, (iii) any of the foregoing which
are not evidenced by instruments or chattel paper, (iv)
intercompany receivables, and any security documents
executed in connection therewith, (v) proceeds of any
letters of credit or insurance policies on which such Person
is named as beneficiary, (vi) claims against third parties
for advances and other financial accommodations and any
other obligations whatsoever owing to such Person, (vii)
rights in and to all security agreements, leases,
guarantees, instruments, securities, documents of title and
other contracts securing, evidencing, supporting or
otherwise relating to any of the foregoing, together with
all rights in any goods, merchandise or Inventory which any
of the foregoing may represent, and (viii) rights in
returned and repossessed goods, merchandise and Inventory
which any of the same may represent, including, without
limitation, any right of stoppage in transit.
"Refinanced Indebtedness" means the Indebtedness of the
Borrower or any of its Subsidiaries which is to be repaid or
defeased out of the proceeds of the Loans made on the
Closing Date and identified as such on Schedule 1.01.8.
"Register" is defined in Section 15.01(c).
"Regulation A" means Regulation A of the Federal
Reserve Board as in effect from time to time.
"Regulation G" means Regulation G of the Federal
Reserve Board as in effect from time to time.
"Regulation T" means Regulation T of the Federal
Reserve Board as in effect from time to time.
"Regulation U" means Regulation U of the Federal
Reserve Board as in effect from time to time.
"Regulation X" means Regulation X of the Federal
Reserve Board as in effect from time to time.
"Reimbursement Date" is defined in Section
3.01(d)(i)(A).
"Reimbursement Obligations" means the aggregate non-
contingent reimbursement or repayment obligations of the
Borrower with respect to amounts drawn under Letters of
Credit.
"Release" means any release, spill, emission, leaking,
pumping, pouring, dumping, injection, deposit, disposal,
abandonment, or discarding of barrels, containers or other
receptacles, discharge, emptying, escape, dispersal,
leaching or migration into the indoor or outdoor environment
or into or out of any Property, including the movement of
Contaminants through or in the air, soil, surface water,
groundwater or Property.
"Remedial Action" means actions required to (i) clean
up, remove, treat or in any other way address Contaminants
in the indoor or outdoor environment; (ii) prevent the
Release or threat of Release or minimize the further Release
of Contaminants; or (iii) investigate and determine if a
remedial response is needed and to design such a response
and post-remedial investigation, monitoring, operation and
maintenance and care.
"Replacement Proceeds" means the amount of (i) proceeds
of insurance paid on account of the loss of or damage to any
Property and awards of compensation for Property taken by
condemnation or eminent domain to the extent actually used
to replace, rebuild or restore the Property so lost, damaged
or taken, provided that Borrower shall have delivered
written notice to the Administrative Agent that it or its
applicable Subsidiary intends to so replace, rebuild or
restore such Property within 90 days after the
Administrative Agent's receipt of the proceeds of such
insurance payment or condemnation award if such proceeds
exceed $500,000 and (ii) insurance paid on account of a
business interruption occurrence to the extent actually used
in the restoration or conduct of the business interrupted.
"Reportable Event" means any of the events described in
Section 4043(c) of ERISA and the regulations promulgated
thereunder as in effect from time to time other than an
event for which the thirty (30) day notice requirement has
been waived by the PBGC.
"Requirements of Law" means, as to any Person, the
charter and by-laws or other organizational or governing
documents of such Person, and any law, rule or regulation,
or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or
binding upon such Person or any of its property or to which
such Person or any of its property is subject including,
without limitation, the Securities Act, the Securities
Exchange Act, Regulations G, T, U and X, ERISA, the Fair
Labor Standards Act, the Worker Adjustment and Retraining
Notification Act, Americans with Disabilities Act of 1990,
and any certificate of occupancy, zoning ordinance,
building, environmental or land use requirement or Permit
and Environmental, Health or Safety Requirement of Law.
"Requisite Lenders" means Lenders whose Pro Rata
Shares, in the aggregate, are greater than fifty-one percent
(51%); provided, however, that, in the event any of the
Lenders shall have failed to fund its Pro Rata Share of any
Revolving Loan requested by the Borrower which such Lenders
are obligated to fund under the terms of this Agreement and
any such failure has not been cured, then for so long as
such failure continues, "Requisite Lenders" means Lenders
(excluding all Lenders whose failure to fund their
respective Pro Rata Shares of such Revolving Loans have not
been so cured) whose Pro Rata Shares represent more than
fifty-one percent (51%) of the aggregate Pro Rata Shares of
such Lenders; provided, further, however, that, in the event
that the Commitments have been terminated pursuant to the
terms of this Agreement, "Requisite Lenders" means Lenders
(without regard to such Lenders' performance of their
respective obligations hereunder) whose aggregate ratable
shares (stated as a percentage) of the aggregate outstanding
principal balance of all Loans are greater than fifty-one
percent (51%).
"Restricted Junior Payment" means (i) any dividend or
other distribution, direct or indirect, on account of any
shares of any class of Capital Stock of the Borrower or any
of its Subsidiaries now or hereafter outstanding, except a
dividend payable solely in shares of that class of stock or
in any junior class of stock to the holders of that class,
(ii) any redemption, retirement, sinking fund or similar
payment, purchase or other acquisition for value, direct or
indirect, of any shares of any class of equity Securities of
the Borrower or any of its Subsidiaries now or hereafter
outstanding, (iii) any payment or prepayment of principal
of, premium, if any, or interest, fees or other charges on
or with respect to, and any redemption, purchase,
retirement, defeasance, sinking fund or similar payment and
any claim for rescission with respect to, any Indebtedness
for borrowed money other than the Obligations and (iv) any
payment made to redeem, purchase, repurchase or retire, or
to obtain the surrender of, any outstanding warrants,
options or other rights to acquire shares of any class of
Capital Stock of the Borrower or any of its Subsidiaries now
or hereafter outstanding.
"Revolving Credit Availability" means, at any
particular time, the amount by which the Revolving Credit
Commitments at such time exceed the Revolving Credit
Obligations at such time.
"Revolving Credit Commitment" means, with respect to
any Lender, the obligation of such Lender to make Revolving
Loans and to participate in Letters of Credit pursuant to
the terms and conditions of this Agreement, in an aggregate
amount at any time outstanding which shall not exceed the
principal amount set forth opposite such Lender's name under
the heading "Revolving Credit Commitment" on the signature
pages hereof or the signature page of the Assignment and
Acceptance by which it became a Lender, as modified from
time to time pursuant to the terms of this Agreement or to
give effect to any applicable Assignment and Acceptance, and
"Revolving Credit Commitments" means the aggregate principal
amount of the Revolving Credit Commitments of all the
Lenders, the maximum amount of which shall be $50,000,000,
as reduced from time to time pursuant to Section 4.01.
"Revolving Credit Obligations" means, at any particular
time, the sum of (i) the outstanding principal amount of the
Revolving Loans at such time, plus (ii) the Letter of Credit
Obligations at such time.
"Revolving Credit Pro Rata Share" means, with respect
to any Revolving Lender, the percentage obtained by dividing
(i) such Revolving Lender's Revolving Credit Commitment (in
each case, as adjusted from time to time in accordance with
the provisions of this Agreement or any Assignment and
Acceptance to which such Lender is a party) by (ii) the
aggregate amount of all of the Revolving Credit Commitments.
"Revolving Credit Termination Date" means the earliest
to occur of (i) July 29, 1996 (or, if not a Business Day,
the next preceding Business Day), (ii) the date of
termination of the Revolving Credit Commitments pursuant to
the terms of this Agreement, and (iii) the date of
acceleration of the Obligations pursuant to Section 12.02.
"Revolving Lenders" means those Lenders having a
Revolving Credit Commitment; and "Revolving Lender" means
one of the Revolving Lenders, individually.
"Revolving Loan" is defined in Section 2.02(a).
"Revolving Notes" means promissory notes executed by
Borrower and delivered to the Lenders evidencing the
Revolving Loans, as the same may be amended, supplemented,
modified or restated from time to time, and any promissory
note issued in substitution therefor, substantially in the
form attached hereto as Exhibit C-1; and "Revolving Note"
means any one of the Revolving Notes.
"RHI" means RHI Holdings, Inc., a Delaware corporation.
"Securities" means any Capital Stock, shares, voting
trust certificates, limited partnership certificates, bonds,
debentures, notes or other evidences of indebtedness,
secured or unsecured, convertible, subordinated or
otherwise, or in general any instruments commonly known as
"securities", including, without limitation, any "security"
as such term is defined in Section 8-102 of the Uniform
Commercial Code, or any certificates of interest, shares, or
participations in temporary or interim certificates for the
purchase or acquisition of, or any right to subscribe to,
purchase or acquire any of the foregoing, but shall not
include the Notes or any other evidence of the Obligations.
"Securities Act" means the Securities Act of 1933, as
amended from time to time, and any successor statute.
"Securities Exchange Act" means the Securities Exchange
Act of 1934, as amended from time to time, and any successor
statute.
"Solvent", when used with respect to any Person, means
that at the time of determination:
(i) the Fair Market Value of its assets is in excess
of the total amount of its liabilities (including, without
limitation, contingent liabilities); and
(ii) the present fair saleable value of its assets is
greater than its probable liability on its existing debts as
such debts become absolute and matured; and
(iii) it is then able and expects to be able to pay
its debts (including, without limitation, contingent debts
and other commitments) as they mature; and
(iv) it has capital sufficient to carry on its business
as conducted and as proposed to be conducted.
"Standby Letter of Credit" means any letter of credit
issued by an Issuing Bank pursuant to Section 3.01 for the
account of the Borrower or for the account of any of the
Borrower's Subsidiaries if the Borrower is jointly and
severally liable for reimbursement of amounts drawn under
such letter of credit, which is not a Commercial Letter of
Credit.
"Subsidiary" of a Person means any corporation, limited
liability company, general or limited partnership, or other
entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the
board of directors or other Persons performing similar
functions with respect to such entity are at the time
directly or indirectly owned or controlled by such Person,
one or more of the other subsidiaries of such Person or any
combination thereof. Notwithstanding the foregoing, for
purposes of this Agreement, Banner Aerospace, Inc. shall not
be included as a Subsidiary of the Borrower.
"Super-Majority Lenders" means Lenders whose Pro Rata
Shares, in the aggregate, are greater than sixty-seven
percent (67%); provided, however, that, in the event any of
the Lenders shall have failed to fund its Pro Rata Share of
any Revolving Loan requested by the Borrower which such
Lenders are obligated to fund under the terms of this
Agreement and any such failure has not been cured, then for
so long as such failure continues, "Super-Majority Lenders"
means Lenders (excluding all Lenders whose failure to fund
their respective Pro Rata Shares of such Revolving Loans
have not been so cured) whose Pro Rata Shares represent more
than sixty-seven percent (67%) of the aggregate Pro Rata
Shares of such Lenders.
"Tax Allocation Agreement" means that certain Eighth
Amended and Restated Tax Allocation Agreement dated as of
March 13, 1996 among TFC, RHI, Borrower and certain
Affiliates thereof, as in effect on the Closing Date.
"Taxes" is defined in Section 14.01(a).
"Term Lenders" means those Lenders having a Term Loan
Commitment; and "Term Lender" means one of the Term Lenders,
individually.
"Term Loan" is defined in Section 2.01(a).
"Term Loan Commitment" means, with respect to any
Lender, the obligation of such Lender to make its Term Loan
pursuant to the terms and conditions of this Agreement, in
an amount equal to the amount set forth under such Lender's
name under the heading "Term Loan Commitment" on the
signature pages hereof or the signature page of the
Assignment and Acceptance by which it became a Lender, as
modified from time to time pursuant to the terms of this
Agreement or to give effect to any applicable Assignment and
Acceptance, and "Term Loan Commitments" means the aggregate
principal amount of the Term Loan Commitments of all the
Lenders, the maximum amount of which shall be $30,000,000,
as reduced from time to time pursuant to Sections 2.01(d) or
4.01.
"Term Loan Pro Rata Share" means, with respect to any
Term Lender, the percentage obtained by dividing (i) the sum
of such Term Lender's Term Loan Commitment (in each case, as
adjusted from time to time in accordance with the provisions
of this Agreement or any Assignment and Acceptance to which
such Term Lender is a party) by (ii) the aggregate Term Loan
Commitments.
"Term Loan Termination Date" means the earlier of
(i) July 29, 1996 and (ii) the date of acceleration of the
Obligations pursuant to Section 12.02.
"Term Notes" means promissory notes executed by the
Borrower and delivered to the Lenders evidencing the Term
Loans, as the same may be amended, supplemented, modified or
restated from time to time, and any promissory not issued in
substitution therefor, substantially in the form attached
hereto as Exhibit C-2; and "Term Note" means any one of the
Term Notes.
"Termination Event" means (i) a Reportable Event with
respect to any Benefit Plan; (ii) the withdrawal of the
Borrower or any ERISA Affiliate from a Benefit Plan during a
plan year in which the Borrower or such ERISA Affiliate was
a "substantial employer" as defined in Section 4001(a)(2) of
ERISA or the cessation of operations which results in the
termination of employment of 20% of Benefit Plan
participants who are employees of the Borrower or any ERISA
Affiliate; (iii) the imposition of an obligation on the
Borrower or any ERISA Affiliate under Section 4041 of ERISA
to provide affected parties written notice of intent to
terminate a Benefit Plan in a distress termination described
in Section 4041(c) of ERISA; (iv) the institution by the
PBGC or any similar foreign Governmental Authority of
proceedings to terminate a Benefit Plan or a Foreign Pension
Plan; (v) any event or condition which could reasonably be
expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to
administer, any Benefit Plan; (vi) the appointment by a
foreign Governmental Authority of, or the institution of
proceedings by a foreign Governmental Authority to appoint,
a trustee to administer any Foreign Pension Plan; or (vii)
the partial or complete withdrawal of the Borrower or any
ERISA Affiliate from a Multiemployer Plan or a Foreign
Pension Plan.
"TFC" means The Fairchild Corporation, a Delaware
corporation.
"TFC/RHI Liquidity" means, as of any date of
determination thereof, an amount equal to (i) the amount of
consolidated Cash and Cash Equivalents of TFC and RHI as of
such date of determination, plus (ii) the amount of the
Revolving Credit Availability as of such date of
determination after giving effect to any requests for Loans
or Letters of Credit received by the Administrative Agent on
such date, minus (iii) the amount of Cash and Cash
Equivalents of TFC and RHI required to secure Contractual
Obligations of TFC and RHI as of such date of determination.
"Transaction Costs" means the fees, costs and expenses
payable by the Borrower in connection with the execution,
delivery and performance of the Loan Documents.
"Transfer Documents" means, collectively, all corporate
resolutions, agreements and instruments executed and
delivered in connection with the capitalization of the
Borrower and the transfer of assets of VSI to the Borrower;
"Transfer Document" means any one of the Transfer Documents.
"Uniform Commercial Code" means the Uniform Commercial
Code as enacted in the State of New York, as it may be
amended from time to time.
"VSI" means VSI Corporation, a Delaware corporation,
and transferor of all assets and liabilities of the Borrower
under the Transfer Documents.
"Wholly-Owned Subsidiary" means a corporation (i) one
hundred percent (100%) of the Capital Stock of which is
owned by the Borrower or any Subsidiary of the Borrower or
(ii) greater than ninety-eight percent (98%) of the Capital
Stock of which is owned by the Borrower or a Subsidiary of
the Borrower and the remainder of which Capital Stock is
owned by a nominee of the Borrower or such Subsidiary solely
to comply with the Requirements of Law of the jurisdiction
governing such corporation's organization and existence.
1.02. Computation of Time Periods. In this Agreement,
in the computation of periods of time from a specified date
to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but
excluding". Periods of days referred to in this Agreement
shall be counted in calendar days unless Business Days are
expressly prescribed. Any period determined hereunder by
reference to a month or months or year or years shall end on
the day in the relevant calendar month in the relevant year,
if applicable, immediately preceding the date numerically
corresponding to the first day of such period; provided that
if such period commences on the last day of a calendar month
(or on a day for which there is no numerically corresponding
day in the calendar month during which such period is to
end), such period shall, unless otherwise expressly required
by the other provisions of this Agreement, end on the last
day of the calendar month.
1.03. Accounting Terms. Subject to Section 15.04, for
purposes of this Agreement, all accounting terms not
otherwise defined herein shall have the meanings assigned to
them in conformity with GAAP.
1.04. Other Terms. All other terms contained in this
Agreement shall, unless the context indicates otherwise,
have the meanings assigned to such terms by the Uniform
Commercial Code to the extent the same are defined therein.
<PAGE>
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01. Term Loans. (a) Amount of Term Loans. Subject
to the terms and conditions set forth in this Agreement,
each Lender on the Closing Date hereby severally and not
jointly agrees to make on the Closing Date, a term loan, in
Dollars, to the Borrower in an amount equal to such Lender's
Term Loan Commitment (each individually, a "Term Loan" and,
collectively, the "Term Loans"). All Term Loans shall be
made by the Lenders on the Closing Date simultaneously and
proportionately to their respective Pro Rata Shares, it
being understood that no Lender shall be responsible for any
failure by any other Lender to perform its obligation to
make any Term Loan hereunder nor shall the Term Loan
Commitment of any Lender be increased or decreased as a
result of any such failure.
(b) Notice of Borrowing. The Borrower shall deliver
to the Administrative Agent a Notice of Borrowing with
respect to the Term Loans, signed by it, on the Closing
Date. Such Notice of Borrowing shall specify (i) the aggre-
gate amount of the Term Loans and (ii) instructions for the
disbursement of the proceeds of the Term Loans. The Term
Loans shall initially be Base Rate Loans and thereafter may
be continued as Base Rate Loans or converted into Eurodollar
Rate Loans in the manner provided in Section 5.01(c) and
subject to the conditions and limitations therein set forth
and set forth in Section 5.02. Any Notice of Borrowing
given pursuant to this Section 2.01(b) shall be irrevocable.
(c) Making of Term Loans. Promptly after receipt of
the Notice of Borrowing under Section 2.01(b) in respect of
the Term Loans, the Administrative Agent shall notify each
Lender by facsimile transmission, or other similar form of
transmission, of the proposed Borrowing. Each Lender shall
deposit an amount equal to its Pro Rata Share of the Term
Loans with the Administrative Agent at its office in New
York, New York, in immediately available funds, on the
Closing Date. Subject to the fulfillment of the conditions
precedent set forth in Section 6.01, the Administrative
Agent shall make the proceeds of such amounts received by it
available to the Borrower at the Administrative Agent's
office in New York, New York on the Closing Date and shall
disburse such proceeds in accordance with the Borrower's
disbursement instructions set forth in such Notice of
Borrowing. The failure of any Lender to deposit the amount
described above with the Administrative Agent on the Closing
Date shall not relieve any other Lender of its obligations
hereunder to make its Term Loan on the Closing Date. In the
event the conditions precedent set forth in Section 6.01 are
not fulfilled or duly waived as of the Closing Date, the
Administrative Agent shall promptly return, by wire transfer
of immediately available funds, the amount deposited by each
Lender to such Lender.
(d) Repayment of the Term Loans. (i) The Term Loans
shall be repayable on July 29, 1996, unless the Term Loan
Termination Date earlier occurs, and the Term Loan
Commitments shall be permanently reduced by the amount of
each installment on the date payment thereof is required to
be made hereunder.
(ii) The Borrower may make voluntary prepayments as
and when described in Section 4.01(a)(i) and shall make the
mandatory prepayments required in Section 4.01(b), for
credit against the Term Loans pursuant to the provisions of
Section 4.01(a)(ii) or Section 4.01(b)(vi), as applicable.
2.02. Revolving Credit Facility. (a) Availability.
Subject to the terms and conditions set forth in this
Agreement, each Lender hereby severally and not jointly
agrees to make revolving loans, in Dollars (each
individually, a "Revolving Loan" and, collectively, the
"Revolving Loans") to the Borrower from time to time during
the period from the Closing Date to the Business Day next
preceding the Revolving Credit Termination Date, in an
amount not to exceed such Lender's Pro Rata Share of the
Revolving Credit Availability at such time. All Revolving
Loans comprising the same Borrowing under this Agreement
shall be made by the Lenders simultaneously and
proportionately to their then respective Pro Rata Shares, it
being understood that no Lender shall be responsible for any
failure by any other Lender to perform its obligation to
make a Revolving Loan hereunder nor shall the Revolving
Credit Commitment of any Lender be increased or decreased as
a result of any such failure. Subject to the provisions of
this Agreement, the Borrower may repay any outstanding
Revolving Loan on any day which is a Business Day and any
amounts so repaid may be reborrowed, up to the amount
available under this Section 2.02(a) at the time of such
Borrowing, until the Business Day next preceding the
Revolving Credit Termination Date; provided, however, the
Borrower shall, without notice or demand of any kind,
immediately make such repayments of the Revolving Loans to
the extent necessary to reduce the aggregate outstanding
principal amount of the Revolving Loans to an amount less
than or equal to the difference between the then Revolving
Credit Availability and the Letter of Credit Obligations as
of such time. Each requested Borrowing of Revolving Loans
funded on any Funding Date for Revolving Loans shall be
(i) if Base Rate Loans, in a principal amount of at least
$100,000 and in integral multiples of $100,000 in excess of
that amount and (ii) if Eurodollar Rate Loans, in a
principal amount of at least $1,000,000 and in integral
multiples of $100,000 in excess of that amount.
(b) Notice of Borrowing. When the Borrower desires to
borrow under this Section 2.02, it shall deliver to the
Administrative Agent a Notice of Borrowing, signed by it,
(i) on the Closing Date, in the case of a Borrowing of
Revolving Loans on the Closing Date and (ii) no later than
11:00 a.m. (New York time) on the proposed Funding Date
therefor, in the case of a Borrowing of Base Rate Loans
after the Closing Date and (iii) no later than 12:00 noon
(New York time) at least two (2) Business Days in advance of
the proposed Funding Date therefor, in the case of a
Borrowing of Eurodollar Rate Loans after the Closing Date.
Such Notice of Borrowing shall specify (i) the proposed
Funding Date (which shall be a Business Day), (ii) the
amount of the proposed Borrowing, (iii) the Revolving Credit
Availability as of the date of such Notice of Borrowing,
(iv) whether the proposed Borrowing will be of Base Rate
Loans or Eurodollar Rate Loans, (v) in the case of
Eurodollar Rate Loans, the requested Eurodollar Interest
Period, (vi) instructions for the disbursement of the
proceeds of the proposed Borrowing, and (vii) the portion of
the proposed Borrowing, if any, which will be used to pay a
dividend on Borrower's Capital Stock. The Revolving Loans
made on the Closing Date shall initially be Base Rate Loans
and thereafter may be continued as Base Rate Loans or
converted into Eurodollar Rate Loans, in the manner provided
in Section 5.01(c) and subject to the conditions therein set
forth and in Section 5.02. In lieu of delivering such a
Notice of Borrowing (except with respect to a Borrowing of
Revolving Loans on the Closing Date), the Borrower may give
the Administrative Agent telephonic notice of any proposed
Borrowing by the time required under this Section 2.02(b),
if the Borrower confirms such notice by delivery of the
required Notice of Borrowing to the Administrative Agent by
facsimile transmission promptly, but in no event later than
5:00 p.m. (New York time) on the same day, the original of
which facsimile copy shall be delivered to the
Administrative Agent within three (3) days after the date of
such transmission. Any Notice of Borrowing (or telephonic
notice in lieu thereof) given pursuant to this Section
2.02(b) shall be irrevocable.
(c) Making of Revolving Loans. (i) Promptly after
receipt of a Notice of Borrowing under Section 2.02(b) (or
telephonic notice in lieu thereof), the Administrative Agent
shall notify each Revolving Lender by telex or telecopy, or
other similar form of transmission, of the proposed
Borrowing. Each Revolving Lender shall deposit an amount
equal to its Pro Rata Share of the amount requested by the
Borrower to be made as Revolving Loans with the
Administrative Agent at its office in New York, New York, in
immediately available funds, (A) on the Closing Date with
respect to the Borrowing of Revolving Loans on such date
specified in the initial Notice of Borrowing and (B) not
later than 1:00 p.m. (New York time) on any other Funding
Date for Revolving Loans. Subject to the fulfillment of the
conditions precedent set forth in Section 6.01 or Section
6.02, as applicable, the Administrative Agent shall make the
proceeds of such amounts received by it available to the
Borrower at the Administrative Agent's office in New York,
New York on such Funding Date (or on the date received if
later than such Funding Date) and shall disburse such
proceeds in accordance with the Borrower's disbursement
instructions set forth in the applicable Notice of Borrow-
ing. The failure of any Revolving Lender to deposit the
amount described above with the Administrative Agent on the
applicable Funding Date shall not relieve any other
Revolving Lender of its obligations hereunder to make its
Revolving Loan on such Funding Date. In the event the
conditions precedent set forth in Section 6.01 or 6.02, as
applicable, are not fulfilled as of the proposed Funding
Date for any Borrowing, the Administrative Agent shall
promptly return, by wire transfer of immediately available
funds, the amount deposited by each Revolving Lender to such
Lender.
(ii) Unless the Administrative Agent shall have been
notified by any Revolving Lender (A) on the Business Day
immediately preceding the applicable Funding Date in respect
of any Borrowing of Revolving Loans which are Eurodollar
Rate Loans or (B) prior to the time of funding thereof as
specified in Section 2.02(c) in respect of any Borrowing of
Revolving Loans which are Base Rate Loans, that such Lender
does not intend to fund its Revolving Loan requested to be
made on such Funding Date, the Administrative Agent may
assume that such Lender has funded its Revolving Loan and is
depositing the proceeds thereof with the Administrative
Agent on the Funding Date therefor, and the Administrative
Agent in its sole discretion may, but shall not be obligated
to, disburse a corresponding amount to the Borrower on the
applicable Funding Date. If the Revolving Loan proceeds
corresponding to that amount are advanced to the Borrower by
the Administrative Agent but are not in fact deposited with
the Administrative Agent by such Revolving Lender on or
prior to the applicable Funding Date, such Lender agrees to
pay, and in addition the Borrower agrees to repay, to the
Administrative Agent forthwith on demand such corresponding
amount, together with interest thereon, for each day from
the date such amount is disbursed to or for the benefit of
the Borrower until the date such amount is paid or repaid to
the Administrative Agent, (1) in the case of the Borrower,
at the interest rate applicable to such Borrowing and (2) in
the case of such Revolving Lender, at the Federal Funds Rate
for the first three (3) Business Days, and thereafter at the
interest rate applicable to such Borrowing. If such
Revolving Lender shall pay to the Administrative Agent the
corresponding amount, the amount so paid shall constitute
such Lender's Revolving Loan, and if both such Lender and
the Borrower shall pay and repay such corresponding amount,
the Administrative Agent shall promptly pay to the Borrower
such corresponding amount. This Section 2.02(c)(ii) does
not relieve any Revolving Lender of its obligation to make
its Revolving Loan on any applicable Funding Date.
(d) Revolving Credit Termination Date. The Revolving
Credit Commitments shall terminate on the Revolving Credit
Termination Date. Each Revolving Lender's obligation to make
Revolving Loans shall terminate on the Business Day next
preceding the Revolving Credit Termination Date. All
outstanding Revolving Credit Obligations shall be paid in
full (or, in the case of unmatured Letter of Credit Obliga-
tions, provision for payment in cash shall be made to the
satisfaction of the Issuing Banks and the Requisite Lenders)
(i) if the Revolving Credit Commitments are terminated
pursuant to Section 4.01, on the date such termination is
effective, and (ii) otherwise, on the earlier to occur of
(A) July 29, 1996 or, if not a Business Day, the next
preceding Business Day, and (B) the date of acceleration of
the Obligations pursuant to Section 12.02.
(e) Maximum Revolving Credit Facility.
Notwithstanding anything in this Agreement to the contrary,
in no event shall the aggregate principal Revolving Credit
Obligations exceed the Revolving Credit Commitments as in
effect from time to time.
2.03. Authorized Officers and Administrative
Agents. On the Closing Date the Borrower shall deliver, and
from time to time thereafter the Borrower may deliver, to
the Administrative Agent an Officer's Certificate setting
forth the names of the officers, employees and agents
authorized to request Loans and Letters of Credit and to
request a conversion/continuation of any Loan, in each
instance containing a specimen signature of each such
officer, employee or Administrative Agent. The officers,
employees and agents so authorized shall also be authorized
to act for the Borrower in respect of all other matters
relating to the Loan Documents. The Administrative Agent,
Lenders and Issuing Banks shall be entitled to rely
conclusively on such officer's, employee's, or agent's
authority to request such Loan or Letter of Credit or such
conversion/continuation until the Administrative Agent,
Lenders and Issuing Banks receive written notice to the
contrary. None of the Administrative Agent, the Lenders, or
the Issuing Banks shall have any duty to verify the
authenticity of the signature appearing on any such
Officer's Certificate, written Notice of Borrowing or Notice
of Conversion/Continuation, or any other document, and, with
respect to an oral request for such a Loan or Letter of
Credit or such conversion/continuation, the Administrative
Agent shall have no duty to verify the identity of any
person representing himself or herself as one of the
officers, employees or agents authorized to make such
request or otherwise to act on behalf of the Borrower. None
of the Administrative Agent, any Lender or any Issuing Bank
shall incur any liability to the Borrower or any other
Person in acting upon any telephonic or facsimile notice
referred to above which the Administrative Agent, such
Lender, or such Issuing Bank believes to have been given by
a duly authorized officer or other person authorized to
borrow on behalf of the Borrower.
2.04. Use of Proceeds of Loans. The proceeds of the
Loans made on the Closing Date shall be used to repay in
full the Refinanced Indebtedness and the Transactions Costs,
as well as for the purposes described in the following
sentence. The proceeds of all other Loans shall be used for
working capital in the ordinary course of the respective
businesses of the Borrower and its Subsidiaries or for other
lawful general corporate purposes.
ARTICLE III
LETTERS OF CREDIT
3.01. Letters of Credit. Subject to the terms and
conditions set forth in this Agreement, each Issuing Bank
hereby severally agrees to issue for the account of the
Borrower, or for the account of any of the Borrower's
Subsidiaries if the Borrower is jointly and severally liable
for reimbursement of amounts drawn under such Letter of
Credit, one or more Letters of Credit, subject to the
following provisions:
(a)Types and Amounts. An Issuing Bank shall not have
any obligation to issue, amend or extend, and shall not
issue, amend or extend, any Letter of Credit at any time:
(i) if the aggregate Letter of Credit Obligations with
respect to such Issuing Bank, after giving effect to the
issuance, amendment or extension of the Letter of Credit
requested hereunder, shall exceed any limit imposed by law
or regulation upon such Issuing Bank;
(ii) if the Issuing Bank receives written notice from
the Administrative Agent at or before 11:00 a.m. (New York
time) on the date of the proposed issuance, amendment or
extension of such Letter of Credit that (A) immediately
after giving effect to the issuance, amendment or extension
of such Letter of Credit, (I) the Letter of Credit
Obligations at such time would exceed $9,000,000, or
(II) the Revolving Credit Obligations at such time would
exceed the Revolving Credit Commitments in effect at such
time, or (B) one or more of the conditions precedent con-
tained in Sections 6.01 or 6.02, as applicable, would not on
such date be satisfied, unless such conditions are
thereafter satisfied and written notice of such satisfaction
is given to the Issuing Bank by the Administrative Agent
(and an Issuing Bank shall not otherwise be required to
determine that, or take notice whether, the conditions
precedent set forth in Sections 6.01 or 6.02, as applicable,
have been satisfied);
(iii) which is in a currency other than Dollars; or
(iv) which has an expiration date later than the date
one (1) year after the date of issuance (without regard to
any automatic renewal provisions thereof); provided,
however, that (A) the Letter(s) of Credit identified on
Schedule 3.01-A attached hereto are permitted to have the
expiry dates set forth on Schedule 3.01-A and (B) on the
Revolving Credit Termination Date, Borrower shall deposit
with the Administrative Agent (or respective Issuing Bank(s)
at the direction of the Administrative Agent) Cash
Collateral for deposit in the Cash Collateral Account or
under other agreements satisfactory to the Administrative
Agent and Issuing Bank(s) and in an amount equal to the
then undrawn face amount of all Letters of Credit which will
continue outstanding after the Revolving Credit Termination
Date plus Letter of Credit Fees with respect to such Letters
of Credit for the period commencing on the Revolving Credit
Termination Date through the expiry date of such Letters of
Credit.
(b) Conditions. In addition to being subject to the
satisfaction of the conditions precedent contained in
Sections 6.01 and 6.02, as applicable, the obligation of an
Issuing Bank to issue, amend or extend any Letter of Credit
is subject to the satisfaction in full of the following
conditions:
(i) if the Issuing Bank so requests, the Borrower or,
in the case of Letters of Credit issued for the account of
any of the Borrower's Subsidiaries, the Borrower and such
Subsidiary shall have executed and delivered to such Issuing
Bank and the Administrative Agent a Letter of Credit
Reimbursement Agreement and such other documents and
materials as may be required pursuant to the terms thereof;
and
(ii) the terms of the proposed Letter of Credit shall
be satisfactory to the Issuing Bank in its sole discretion.
(c) Issuance of Letters of Credit. (i) The Borrower
shall give an Issuing Bank and the Administrative Agent
written notice that it has selected such Issuing Bank to
issue a Letter of Credit not later than 11:00 a.m. (New York
time) on the third (3rd) Business Day preceding the
requested date for issuance thereof under this Agreement, or
such shorter notice as may be acceptable to such Issuing
Bank and the Administrative Agent. Such notice shall be
irrevocable unless and until such request is denied by the
applicable Issuing Bank and shall specify (A) that the
requested Letter of Credit is either a Commercial Letter of
Credit or a Standby Letter of Credit, (B) that such Letter
of Credit is solely for the account of the Borrower or the
name of the Subsidiary of the Borrower which is jointly and
severally applying for such Letter of Credit, (C) the stated
amount of the Letter of Credit requested, (D) the effective
date (which shall be a Business Day) of issuance of such
Letter of Credit, (E) the date on which such Letter of
Credit is to expire (which shall be a Business Day and no
later than the Business Day immediately preceding the
scheduled Revolving Credit Termination Date), (F) the Person
for whose benefit such Letter of Credit is to be issued, (G)
other relevant terms of such Letter of Credit, (H) the
Revolving Credit Availability at such time, and (I) the
amount of the then outstanding Letter of Credit Obligations.
Such Issuing Bank shall notify the Administrative Agent
immediately upon receipt of a written notice from the
Borrower requesting that a Letter of Credit be issued, or
that an existing Letter of Credit be extended or amended
and, upon the Administrative Agent's request therefor, send
a copy of such notice to the Administrative Agent.
(ii) The Issuing Bank shall give (A) the
Administrative Agent written notice, or telephonic notice
confirmed promptly thereafter in writing, of the issuance,
amendment or extension of a Letter of Credit and (B)
promptly after issuance thereof, provide the Administrative
Agent with a copy of each Letter of Credit issued and each
amendment thereto.
(d) Reimbursement Obligations; Duties of Issuing
Banks. (i) Notwithstanding any provisions to the contrary
in any Letter of Credit Reimbursement Agreement:
(A) the Borrower shall reimburse, or cause its
Subsidiary for whose account a Letter of Credit is issued to
reimburse, the Issuing Bank for amounts drawn under such
Letter of Credit, in Dollars, no later than the date (the
"Reimbursement Date") which is the earlier of (I) the time
specified in the applicable Letter of Credit Reimbursement
Agreement and (II) one (1) Business Day after the Borrower
receives written notice from the Issuing Bank that payment
has been made under such Letter of Credit by the Issuing
Bank; and
(B) all Reimbursement Obligations with respect to any
Letter of Credit shall bear interest at the rate applicable
to Base Rate Loans in accordance with Section 5.01(a) from
the date of the relevant drawing under such Letter of Credit
until the Reimbursement Date and thereafter at the rate
applicable to Base Rate Loans in accordance with Section
5.01(d).
(ii) The Issuing Bank shall give the Administrative
Agent written notice, or telephonic notice confirmed
promptly thereafter in writing, of all drawings under a
Letter of Credit and the payment (or the failure to pay when
due) by the Borrower or its applicable Subsidiary on account
of a Reimbursement Obligation (which notice the
Administrative Agent shall promptly transmit by telegram,
telex, telecopy or similar transmission to each Lender).
(iii) No action taken or omitted in good faith by an
Issuing Bank under or in connection with any Letter of
Credit shall put such Issuing Bank under any resulting
liability to any Lender, the Borrower or any of its
Subsidiaries or, so long as it is not issued in violation of
Section 3.01(a), relieve any Lender of its obligations
hereunder to such Issuing Bank. Solely as between the
Issuing Banks and the Lenders, in determining whether to pay
under any Letter of Credit, the respective Issuing Bank
shall have no obligation to the Lenders other than to
confirm that any documents required to be delivered under a
respective Letter of Credit appear to have been delivered
and that they appear on their face to comply with the
requirements of such Letter of Credit.
(e) Participations. (i) Immediately upon issuance by
an Issuing Bank of any Letter of Credit in accordance with
the procedures set forth in this Section 3.01 and immedi-
ately upon conversion of a letter of credit of an Issuing
Bank to a Letter of Credit pursuant to Section 3.02, each
Revolving Lender shall be deemed to have irrevocably and
unconditionally purchased and received from that Issuing
Bank, without recourse or warranty, an undivided interest
and participation in such Letter of Credit to the extent of
such Lender's Revolving Credit Pro Rata Share, including,
without limitation, all obligations of the Borrower with
respect thereto (other than amounts owing to the Issuing
Bank under Section 3.01(g)) and any security therefor and
guaranty pertaining thereto.
(ii) If any Issuing Bank makes any payment under any
Letter of Credit and the Borrower or the Subsidiary of the
Borrower for whose account the Letter of Credit was issued
does not repay such amount to the Issuing Bank on the
Reimbursement Date, the Issuing Bank shall promptly notify
the Administrative Agent, which shall promptly notify each
Revolving Lender, and each Revolving Lender shall promptly
and unconditionally pay to the Administrative Agent for the
account of such Issuing Bank, in immediately available
funds, the amount of such Lender's Revolving Credit Pro Rata
Share of such payment (net of that portion of such payment,
if any, made by such Lender in its capacity as an Issuing
Bank), and the Administrative Agent shall promptly pay to
the Issuing Bank such amounts received by it, and any other
amounts received by the Administrative Agent for the Issuing
Bank's account, pursuant to this Section 3.01(e). All
amounts so paid to the Issuing Bank shall be deemed to
constitute Revolving Loans. If a Lender does not make its
Revolving Credit Pro Rata Share of the amount of such
payment available to the Administrative Agent, such Lender
agrees to pay to the Administrative Agent for the account of
the Issuing Bank, forthwith on demand, such amount together
with interest thereon, for the first three (3) Business Days
after the date such payment was first due at the Federal
Funds Rate, and thereafter at the interest rate then
applicable to Base Rate Loans in accordance with
Section 5.01(a). The failure of any Lender to make
available to the Administrative Agent for the account of an
Issuing Bank its Pro Rata Share of any such payment shall
neither relieve any other Lender of its obligation hereunder
to make available to the Administrative Agent for the
account of such Issuing Bank such other Lender's Revolving
Credit Pro Rata Share of any payment on the date such
payment is to be made nor increase the obligation of any
other Lender to make such payment to the Administrative
Agent.
(iii) Whenever an Issuing Bank receives a payment on
account of a Reimbursement Obligation, including any
interest thereon, as to which the Administrative Agent has
previously received payments from any Lender for the account
of such Issuing Bank pursuant to this Section 3.01(e), such
Issuing Bank shall promptly pay to the Administrative Agent
and the Administrative Agent shall promptly pay to such
Lender an amount equal to such Lender's Revolving Credit Pro
Rata Share thereof. Each such payment shall be made by such
Issuing Bank or the Administrative Agent, as the case may
be, on the Business Day on which such Person receives the
funds paid to such Person pursuant to the preceding
sentence, if received prior to 11:00 a.m. (New York time) on
such Business Day, and otherwise on the next succeeding
Business Day.
(iv) Upon the request of any Lender, an Issuing Bank
shall furnish such Lender copies of any Letter of Credit or
Letter of Credit Reimbursement Agreement to which such
Issuing Bank is party and such other documentation as
reasonably may be requested by such Lender.
(v) The obligations of a Lender to make payments to
the Administrative Agent for the account of any Issuing Bank
with respect to a Letter of Credit shall be irrevocable,
shall not be subject to any qualification or exception
whatsoever except willful misconduct or gross negligence of
such Issuing Bank, and shall be honored in accordance with
this Article III (irrespective of the satisfaction of the
conditions described in Sections 6.01 and 6.02, as
applicable) under all circumstances, including, without
limitation, any of the following circumstances:
(A) any lack of validity or enforceability of this
Agreement or any of the other Loan Documents;
(B) the existence of any claim, setoff, defense or
other right which the Borrower may have at any time against
a beneficiary named in a Letter of Credit or any transferee
of a beneficiary named in a Letter of Credit (or any Person
for whom any such transferee may be acting), the
Administrative Agent, the Issuing Bank, any Lender, or any
other Person, whether in connection with this Agreement, any
Letter of Credit, the transactions contemplated herein or
any unrelated transactions (including any underlying trans-
actions between the account party and beneficiary named in
any Letter of Credit);
(C) any draft, certificate or any other document
presented under the Letter of Credit having been determined
to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate
in any respect;
(D) the surrender or impairment of any security for
the performance or observance of any of the terms of any of
the Loan Documents;
(E) any failure by that Issuing Bank to make any
reports required pursuant to Section 3.01(h) or the
inaccuracy of any such report; or
(F) the occurrence of any Event of Default or
Potential Event of Default.
(f) Payment of Reimbursement Obligations. (i) The
Borrower unconditionally agrees to pay, or cause its
Subsidiary for whose account a Letter of Credit is issued to
pay, to each Issuing Bank, in Dollars, the amount of all
Reimbursement Obligations, interest and other amounts
payable to such Issuing Bank under or in connection with the
Letters of Credit when such amounts are due and payable,
irrespective of any claim, setoff, defense or other right
which the Borrower may have at any time against any Issuing
Bank or any other Person.
(ii) In the event any payment by the Borrower or such
Subsidiary received by an Issuing Bank with respect to a
Letter of Credit and distributed by the Administrative Agent
to the Revolving Lenders on account of their participations
is thereafter set aside, avoided or recovered from such
Issuing Bank in connection with any receivership, liquida-
tion or bankruptcy proceeding, each such Lender which
received such distribution shall, upon demand by such Issu-
ing Bank, contribute such Lender's Revolving Credit Pro Rata
Share of the amount set aside, avoided or recovered together
with interest at the rate required to be paid by such
Issuing Bank upon the amount required to be repaid by it.
(g) Issuing Bank Charges. The Borrower shall pay, or
cause its Subsidiary for whose account a Letter of Credit is
issued to pay, to each Issuing Bank, solely for its own
account, the standard charges assessed by such Issuing Bank
in connection with the issuance, administration, amendment
and payment or cancellation of Letters of Credit and such
compensation in respect of such Letters of Credit for the
Borrower's or such Subsidiary's account, as applicable, as
may be agreed upon by the Borrower and such Issuing Bank
from time to time.
(h) Issuing Bank Reporting Requirements. Each Issuing
Bank shall, no later than the tenth (10th) Business Day
following the last day of each calendar month, provide to
the Administrative Agent, the Borrower, and each Lender
separate schedules for Commercial Letters of Credit and
Standby Letters of Credit issued as Letters of Credit, in
form and substance reasonably satisfactory to the
Administrative Agent, setting forth the aggregate Letter of
Credit Obligations outstanding to it at the end of each
month and, to the extent not otherwise provided in
accordance with the provisions of Section 3.01(c)(ii), any
information requested by the Administrative Agent or the
Borrower relating to the date of issue, account party,
amount, expiration date and reference number of each Letter
of Credit issued by it.
(i) Indemnification; Exoneration. (i) In addition to
all other amounts payable to an Issuing Bank, the Borrower
hereby agrees to defend, indemnify, and save the
Administrative Agent, each Issuing Bank and each Lender
harmless from and against any and all claims, demands,
liabilities, penalties, damages, losses (other than loss of
profits), costs, charges and expenses (including reasonable
attorneys' fees but excluding taxes) which the
Administrative Agent, such Issuing Bank or such Lender may
incur or be subject to as a consequence, direct or indirect,
of (A) the issuance of any Letter of Credit other than as a
result of the gross negligence or willful misconduct of the
Issuing Bank, as determined by a court of competent
jurisdiction, or (B) the failure of the Issuing Bank issuing
a Letter of Credit to honor a drawing under such Letter of
Credit as a result of any act or omission, whether rightful
or wrongful, of any present or future de jure or de facto
government or Governmental Authority.
(ii) As between the Borrower and any of its Subsidi-
aries for whose account a Letter of Credit is issued on the
one hand and the Administrative Agent, the Lenders and the
Issuing Banks on the other hand, the Borrower assumes all
risks of the acts and omissions of, or misuse of Letters of
Credit by, the respective beneficiaries of the Letters of
Credit. In furtherance and not in limitation of the
foregoing, subject to the provisions of the Letter of Credit
Reimbursement Agreements, the Issuing Banks and the Lenders
shall not be responsible for: (A) the form, validity,
legality, sufficiency, accuracy, genuineness or legal effect
of any document submitted by any party in connection with
the application for and issuance of the Letters of Credit,
even if it should in fact prove to be in any or all respects
invalid, insufficient, inaccurate, fraudulent or forged; (B)
the validity, legality or sufficiency of any instrument
transferring or assigning or purporting to transfer or
assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which
may prove to be invalid or ineffective for any reason; (C)
failure of the beneficiary of a Letter of Credit to comply
duly with conditions required in order to draw upon such
Letter of Credit; (D) errors, omissions, interruptions or
delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise, whether or not they be
in cipher; (E) errors in interpretation of technical terms;
(F) any loss or delay in the transmission or otherwise of
any document required in order to make a drawing under any
Letter of Credit or of the proceeds thereof; (G) the mis-
application by the beneficiary of a Letter of Credit of the
proceeds of any drawing under such Letter of Credit; and (H)
any consequences arising from causes beyond the control of
the Administrative Agent, the Issuing Banks or the Lenders.
3.02 Transitional Provisions. Schedule 3.02 contains
a schedule of certain letters of credit issued prior to the
Closing Date by Citibank or Union Bank for the account of
VSI, the Borrower's predecessor in interest, on which the
Borrower has become liable for reimbursement of amounts
drawn thereunder, or for the account of a Subsidiary of the
Borrower and on which the Borrower is jointly and severally
liable for reimbursement of amounts drawn thereunder.
Subject to the satisfaction of the conditions precedent
contained in Section 6.01 on the Closing Date (i) such
letters of credit, to the extent still outstanding, shall
automatically and without further action of the parties
thereto be converted into Letters of Credit issued pursuant
to this Section 3.02 and subject to the provisions hereof,
and for this purpose the fees specified in Section 5.03(b)
shall be payable as if such letters of credit had been
issued on the Closing Date, (ii) the face amount of such
letters of credit shall be included in the calculation of
Letter of Credit Obligations, and (iii) all liabilities of
the Borrower with respect to such letters of credit shall
constitute Obligations. No letter of credit converted in
accordance with this Section 3.02 shall be amended, extended
or renewed without the prior written consent of the
Administrative Agent.
3.03 Obligations Several. The obligations of each
Issuing Bank and each Revolving Lender under this Article
III are several and not joint, and no Issuing Bank or Lender
shall be responsible for the obligation to issue Letters of
Credit or participation obligation hereunder, respectively,
of any other Issuing Bank or Lender.
<PAGE>
ARTICLE IV
PAYMENTS AND PREPAYMENTS
4.01. Prepayments; Reductions in Commitments.
(a) Voluntary Prepayments/Reductions. (i) Notice.
The Borrower may, upon at least three (3) Business Days'
prior written notice to the Administrative Agent (which the
Administrative Agent shall promptly transmit to each
Lender), at any time and from time to time, prepay the Term
Loans which are Base Rate Loans, in whole or in part. Term
Loans which are Eurodollar Rate Loans may be prepaid in
whole or in part upon at least five (5) Business Days' prior
written notice to the Administrative Agent (which the
Administrative Agent shall promptly transmit to each
Lender), (A) on the expiration date of the then applicable
Eurodollar Interest Period therefor, and (B) on any other
date upon payment of the amounts described in Article XIV as
referenced in Section 4.01(a)(iv) below. Any notice of
prepayment given to the Administrative Agent under this Sec-
tion 4.01(a)(i) shall specify the date (which shall be a
Business Day) of prepayment, the aggregate principal amount
of the prepayment and any allocation of such amount among
Base Rate Loans and Eurodollar Rate Loans. When notice of
prepayment is delivered as provided herein, the principal
amount of the Term Loans specified in the notice shall
become due and payable on the prepayment date specified in
such notice. The Borrower may repay Revolving Loans, without
prior written notice to the Administrative Agent or any
Lender, at any time and from time to time.
(ii) Amount; Application; Term Loan Commitment
Reduction. Unless the aggregate outstanding principal
balance of the Term Loans is to be prepaid in full,
voluntary prepayments of the Term Loans shall be in an
aggregate minimum amount of $1,000,000 and integral
multiples of $1,000,000 in excess of that amount. Each
voluntary prepayment of the Term Loans shall be applied to
the Term Loans, ratably, and shall be allocated first to
Term Loans which are Base Rate Loans until paid in full and
then to Term Loans which are Eurodollar Rate Loans, and
shall permanently reduce the Term Loan Commitment of each
Lender proportionately in accordance with its Pro Rata
Share.
(iii) Voluntary Revolving Credit Commitment
Reductions. The Borrower, upon at least three (3) Business
Days' prior written notice to the Administrative Agent
(which the Administrative Agent shall promptly transmit to
each Lender), shall have the right, at any time and from
time to time, to terminate in whole or permanently reduce in
part the Revolving Credit Commitments; provided that the
Borrower shall have made whatever payment may be required to
reduce the Revolving Credit Obligations to an amount less
than or equal to the Revolving Credit Commitments as reduced
or terminated. Any partial reduction of the Revolving
Credit Commitments shall be in an aggregate minimum amount
of $1,000,000 and integral multiples of $1,000,000 in excess
of that amount, and shall reduce the Revolving Credit
Commitment of each Lender proportionately in accordance with
its Pro Rata Share. Any notice of termination or reduction
given to the Administrative Agent under this Sec-
tion 4.01(a)(iii) shall specify the date (which shall be a
Business Day) of such termination or reduction and, with
respect to a partial reduction, the aggregate principal
amount thereof. When notice of termination or reduction is
delivered as provided herein, the principal amount of the
Revolving Loans specified in the notice shall become due and
payable on the date specified in such notice.
(iv) Prepayment Fee. The prepayments and payments in
respect of reductions and terminations described in this
Section 4.01 may be made without premium or penalty (except
as provided in Article XIV).
(b) Mandatory Prepayments/Reductions.
(i) Net Cash Proceeds of Sale. Within three (3)
Business Days after the Borrower's or any of its
Subsidiaries' receipt of any Net Cash Proceeds of Sale in
excess of $100,000, the Borrower shall make or cause to be
made a mandatory prepayment of the Obligations in an amount
equal to one hundred percent (100%) of such Net Cash Pro-
ceeds of Sale.
(ii) Net Cash Proceeds of Issuance of Equity
Securities. Immediately upon the Borrower's or any of its
Subsidiaries' receipt of any Net Cash Proceeds of Issuance
of Equity Securities, the Borrower shall make or cause to be
made a mandatory prepayment in an amount equal to one
hundred percent (100%) of such Net Cash Proceeds of Issuance
of Equity Securities.
(iii) Net Cash Proceeds of Issuance of Indebtedness.
Immediately upon the Borrower's or any of its Subsidiaries'
receipt of any Net Cash Proceeds of Issuance of
Indebtedness, the Borrower shall make or cause to be made a
mandatory prepayment in an amount equal to one hundred
percent (100%) of such Net Cash Proceeds of Issuance of
Indebtedness.
(iv) No Waiver or Consent. Nothing in this
Section 4.01(b) shall be construed to constitute the
Lenders' consent to any transaction referenced in clauses
(i) and (iii) above which is not expressly permitted by
Article X.
(v) Notice. The Borrower shall give the
Administrative Agent prior written notice or telephonic
notice promptly confirmed in writing (each of which the
Administrative Agent shall promptly transmit to each
Lender), when a Designated Prepayment will be made (which
date of prepayment shall be no later than the date on which
such Designated Payment becomes due and payable pursuant to
this Section 4.01(b)).
(vi) Application of Designated Prepayments.
Designated Prepayments shall be allocated and applied to the
Obligations as follows:
(A) the amount of each Designated Prepayment shall be
applied to the principal balance of the Term Loans ratably
to all the Term Loans based on the relative outstanding
principal balances thereof as of the date of application,
with each application being made first to the Loans which
are Base Rate Loans until paid in full and then to Loans
which are Eurodollar Rate Loans and shall permanently reduce
the Term Loan Commitment of each Term Lender proportionately
in accordance with its Term Loan Pro Rata Share;
(B) following the payment in full of the Term Loans,
the remaining balance of each Designated Prepayment shall be
applied to the outstanding principal balance of the
Revolving Loans and shall permanently reduce the Revolving
Credit Commitment of each Revolving Lender proportionately
in accordance with its Revolving Credit Pro Rata Share; and
(C) following the payment in full of the Revolving Loans,
the remaining balance of each Designated Prepayment shall be
applied to the principal balance of the Letter of Credit
Obligations (or, to the extent such Letter of Credit
Obligations are contingent, deposited in the Cash Collateral
Account to provide Cash Collateral in respect of such Letter
of Credit Obligations).
4.02. Payments. (a) Manner and Time of Payment. All
payments of principal of and interest on the Loans and
Reimbursement Obligations and other Obligations (including,
without limitation, fees and expenses) which are payable to
the Administrative Agent, the Lenders or any Issuing Bank
shall be made without condition, set-off, or reservation of
right, and, with respect to payments made other than from
application of deposits in the Concentration Account, in
immediately available funds, delivered to the Administrative
Agent (or, in the case of Reimbursement Obligations, to the
pertinent Issuing Bank) not later than 11:00 a.m. (New York
time) on the date and at the place due, to such account of
the Administrative Agent (or such Issuing Bank) as it may
designate, for the account of the Administrative Agent, the
Lenders or such Issuing Bank, as the case may be; and funds
received by the Administrative Agent, including, without
limitation, funds in respect of any Revolving Loans to be
made on that date, not later than 11:00 a.m. (New York time)
on any given Business Day shall be credited against payment
to be made that day and funds received by the Administrative
Agent after that time shall be deemed to have been paid on
the next succeeding Business Day. Payments actually
received by the Administrative Agent for the account of the
Lenders or the Issuing Banks, or any of them, shall be paid
to them by the Administrative Agent promptly after receipt
thereof.
(b) Pre-Default Apportionment of Payments. Subject to
the provisions of Section 4.01 and Section 4.02(f), all
payments of principal and interest in respect of outstanding
Loans, all payments in respect of Reimbursement Obligations,
all payments of fees and all other payments in respect of
any other Obligations, shall be allocated among such of the
Lenders and Issuing Banks as are entitled thereto, in
proportion to their respective Revolving Credit Pro Rata
Shares, Term Loan Pro Rata Shares, as applicable, or
otherwise as provided herein. Except as provided in
Section 4.02(c) with respect to payments and proceeds of
Collateral received after the occurrence of an Event of
Default, all other payments, proceeds of Collateral, and
other amounts received by the Administrative Agent from or
for the benefit of the Borrower shall be applied
(A) first, to pay principal of and interest on any
portion of the Revolving Loans which the Administrative
Agent may have advanced on behalf of any Revolving Lender
other than Citicorp for which the Administrative Agent has
not then been reimbursed by such Lender or the Borrower,
(B) second, to pay principal of and interest on any
Protective Advance for which the Administrative Agent has
not then been paid by the Borrower or reimbursed by the
Lenders,
(C) third, to pay the principal of the Term Loans and
Revolving Loans then due and payable in the order described
hereinbelow and interest on such Loans then due and payable,
ratably, based on the then outstanding balances of the such
Loans,
(D) fourth, to pay all other Obligations then due and
payable, ratably, and
(E) fifth, as the Borrower so designates.
All such principal and interest payments in respect of Term
Loans and Revolving Loans shall be applied first, to the
Term Loans (to installments and accrued interest then due
and payable, ratably, in accordance with the Lenders'
respective Pro Rata Shares) and second, to the Revolving
Loans and accrued interest thereon; in either case, first,
to repay outstanding Base Rate Loans and then to repay
outstanding Eurodollar Rate Loans with those Eurodollar Rate
Loans which have earlier expiring Eurodollar Interest
Periods being repaid prior to those which have later
expiring Eurodollar Interest Periods.
(c) Post-Default Apportionment of Payments. After the
occurrence of an Event of Default and while the same is
continuing, the Administrative Agent shall apply all
payments in respect of any Obligations and all proceeds of
Collateral in the following order:
(A) first, to pay principal of and interest on any
portion of the Revolving Loans which the Administrative
Agent may have advanced on behalf of any Revolving Lender
other than Citicorp for which the Administrative Agent has
not then been reimbursed by such Lender or the Borrower;
(B) second, to pay principal of and interest on any
Protective Advance for which the Administrative Agent has
not then been paid by the Borrower or reimbursed by the
Lenders;
(C) third, to pay Obligations in respect of any fees,
expense reimbursements or indemnities then due to the
Administrative Agent;
(D) fourth, to pay principal of and interest on Letter
of Credit Obligations (or, to the extent such Obligations
are contingent, deposited in the Cash Collateral Account to
provide Cash Collateral in respect of such Obligations);
(E) fifth, to pay Obligations in respect of any fees,
expense reimbursements or indemnities then due to the
Lenders and the Issuing Banks;
(F) sixth, to pay interest due in respect of the
Loans, ratably, in accordance with the Lenders' respective
Revolving Credit Pro Rata Shares and Term Loan Pro Rata
Shares, as applicable;
(G) seventh, to the ratable payment or prepayment of
principal outstanding on all Loans in accordance with the
Lenders; respective Revolving Credit Pro Rata Shares and
Term Loan Pro Rata Shares, as applicable;
(H) eighth, to the ratable payment of Hedge Agreements
to which any of the Lenders or any Affiliate of any of the
Lenders is a party; and
(I) ninth, to the ratable payment of all other
Obligations.
(d) Administrative Agent Authority to Apply Funds.
The Administrative Agent, in its sole discretion subject
only to the terms of this Section 4.02(d), may pay from the
proceeds of Revolving Loans made to the Borrower hereunder,
whether made following a request by the Borrower pursuant to
Section 2.02 or a deemed request as provided in this
Section 4.02(d), all amounts payable by the Borrower
hereunder, including, without limitation, amounts payable
with respect to payments of principal, interest,
Reimbursement Obligations and fees and all reimbursements
for expenses pursuant to Section 15.02. The Borrower hereby
irrevocably authorizes the Revolving Lenders to make
Revolving Loans, which Revolving Loans shall be Base Rate
Loans, in each case, upon notice from the Administrative
Agent as described in the following sentence for the purpose
of paying principal, interest, Reimbursement Obligations and
fees due from the Borrower, reimbursing expenses pursuant to
Section 15.02 and paying any and all other amounts due and
payable by the Borrower hereunder or under the Notes, and
agrees that all such Revolving Loans so made shall be deemed
to have been requested by it pursuant to Section 2.02 as of
the date of the aforementioned notice. The Administrative
Agent shall request Revolving Loans on behalf of the
Borrower as described in the preceding sentence by notifying
the Revolving Lenders by telecopy, telegram or other similar
form of transmission (which notice the Administrative Agent
shall thereafter promptly transmit to the Borrower), of the
amount and Funding Date of the proposed Borrowing and that
such Borrowing is being requested on the Borrower's behalf
pursuant to this Section 4.02(d). On the proposed Funding
Date for such Revolving Loan, the Revolving Lenders shall
make the requested Revolving Loans in accordance with the
procedures and subject to the conditions specified in
Section 2.02.
(e) Priorities and Distributions of Payments. The
orders of priority set forth in Sections 4.02(b) and (c) and
the related provisions of this Agreement are set forth
solely to determine the rights and priorities of the
Administrative Agent, the Lenders, the Issuing Banks and
other Holders as among themselves. Subject to
Section 4.02(f), the Administrative Agent shall promptly
distribute to each Lender and Issuing Bank at its primary
address set forth on the appropriate signature page hereof
or the signature page to the Assignment and Acceptance by
which it became a Lender or Issuing Bank, or at such other
address as a Lender, an Issuing Bank or other Holder may
request in writing, such funds as such Person may be
entitled to receive, subject to the provisions of Article
XIV; provided that the Administrative Agent shall under no
circumstances be bound to inquire into or determine the
validity, scope or priority of any interest or entitlement
of any Holder and may suspend all payments or seek
appropriate relief (including, without limitation,
instructions from the Requisite Lenders or an action in the
nature of interpleader) in the event of any doubt or dispute
as to any apportionment or distribution contemplated hereby.
(f) Defaulting Lenders. In the event that any Lender
fails to fund its Pro Rata Share of any Revolving Loan
requested by the Borrower which such Lender is obligated to
fund under the terms of this Agreement (the funded portion
of such Revolving Loan being hereinafter referred to as a
"Non Pro Rata Loan"), until the earlier of such Lender's
cure of such failure and the termination of the Revolving
Credit Commitments, the proceeds of all amounts thereafter
repaid to the Administrative Agent by the Borrower and
otherwise required to be applied to such Lender's share of
all other Obligations pursuant to the terms of this
Agreement shall be advanced to the Borrower by the
Administrative Agent on behalf of such Lender to cure, in
full or in part, such failure by such Lender, but shall
nevertheless be deemed to have been paid to such Lender in
satisfaction of such other Obligations. Notwithstanding
anything in this Agreement to the contrary:
(i) the foregoing provisions of this Section 4.02(f)
shall apply only with respect to the proceeds of payments of
Obligations and shall not affect the conversion or
continuation of Loans pursuant to Section 5.01(c);
(ii) a Lender shall be deemed to have cured its
failure to fund its Pro Rata Share of any Revolving Loan at
such time as an amount equal to such Lender's original Pro
Rata Share of the requested principal portion of such
Revolving Loan is fully funded to the Borrower, whether made
by such Lender itself or by operation of the terms of this
Section 4.02(f), and whether or not the Non Pro Rata Loan
with respect thereto has been repaid, converted or
continued;
(iii) amounts advanced to the Borrower to cure, in
full or in part, any such Lender's failure to fund its Pro
Rata Share of any Revolving Loan ("Cure Loans") shall bear
interest at the rate in effect from time to time pursuant to
Section 5.01 and for all other purposes of this Agreement
shall be treated as if they were Base Rate Loans; and
(iv) regardless of whether or not an Event of Default
has occurred or is continuing, and notwithstanding the
instructions of the Borrower as to its desired application,
all repayments of principal which, in accordance with the
other terms of this Section 4.02, would be applied to the
outstanding Revolving Loans which are Base Rate Loans shall
be applied first, ratably to all such Base Rate Loans
constituting Non Pro Rata Loans, second, ratably to such
Base Rate Loans other than those constituting Non Pro Rata
Loans or Cure Loans and, third, ratably to such Base Rate
Loans constituting Cure Loans.
(g) Payments on Non-Business Days. Whenever any pay-
ment to be made by the Borrower hereunder or under the Notes
is stated to be due on a day which is not a Business Day,
the payment shall instead be due on the next succeeding
Business Day (except as set forth in Section 5.02(b)(iii)
with respect to payments due on the next preceding Business
Day), and any such extension of time shall be included in
the computation of the payment of interest and fees
hereunder.
<PAGE>
4.03. Promise to Repay; Evidence of Indebtedness.
(a) Promise to Repay. The Borrower hereby agrees to
pay when due the principal amount of each Loan which is made
to it, and further agrees to pay all unpaid interest accrued
thereon, in accordance with the terms of this Agreement and
the Notes. The Borrower shall execute and deliver to each
Lender on the Closing Date a promissory note, in form and
substance acceptable to the Administrative Agent and such
Lender, evidencing the Loans and thereafter shall execute
and deliver such other promissory notes as are necessary to
evidence Loans owing to the Lenders after giving effect to
any assignment thereof pursuant to Section 15.01, all in
form and substance acceptable to the Administrative Agent
and the parties to such assignment.
(b) Loan Account. Each Lender shall maintain in
accordance with its usual practice an account or accounts (a
"Loan Account") evidencing the Indebtedness of the Borrower
to such Lender resulting from each Loan owing to such Lender
from time to time, including the amount of principal and
interest payable and paid to such Lender from time to time
hereunder and under the Notes.
(c) Control Account. The Register maintained by the
Administrative Agent pursuant to Section 15.01(c) shall
include a control account, and a subsidiary account for each
Lender, in which accounts (taken together) shall be recorded
(i) the date and amount of each Borrowing made hereunder,
the type of Loan comprising such Borrowing and any
Eurodollar Interest Period applicable thereto, (ii) the
effective date and amount of each Assignment and Acceptance
delivered to and accepted by it and the parties thereto,
(iii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to
each Lender hereunder or under the Notes, and (iv) the
amount of any sum received by the Administrative Agent from
the Borrower hereunder and each Lender's share thereof.
(d) Entries Binding. The entries made in the Register
and each Loan Account shall be conclusive and binding for
all purposes, absent manifest error.
4.04. Proceeds of Collateral; Concentration Account
Arrangements. (a) Establishment. The Borrower shall
establish and maintain, and shall cause its Domestic
Subsidiaries to establish and maintain, Collection Accounts
into which all collections of Receivables shall be deposited
and promptly transferred directly to the Concentration
Account. Borrower shall cause all other proceeds of
Collateral to be deposited in the Concentration Account or
pursuant to other similar arrangements for the collection of
such amounts established by the Borrower and the
Administrative Agent. All collections of Receivables and
other proceeds of Collateral which are received directly by
the Borrower or any Subsidiary of the Borrower shall be
deemed to have been received by the Borrower or such
Subsidiary of the Borrower as the Administrative Agent's
trustee and, upon the Borrower's or such Subsidiary's
receipt thereof, the Borrower shall immediately transfer, or
cause to be transferred, all such amounts into the
Concentration Account in their original form. All
collections of Receivables, all payments, and all proceeds
of other Collateral received by the Administrative Agent,
whether through payment, deposit in the Concentration
Account as described above, or otherwise, will be deemed
received by the Administrative Agent, will be the sole
property of the Administrative Agent, and will be held by
the Administrative Agent, for the benefit of the Holders (i)
for application to the Obligations pursuant to Section 4.02
and (ii) thereafter, as Cash Collateral for the Obligations,
subject to the rights of the Borrower set forth in Section
4.04(b) and the rights of the Administrative Agent set forth
in Section 4.06.
(b) Pre-Default Withdrawals from Concentration
Account. If requested by the Borrower, the Administrative
Agent shall, so long as no Event of Default shall have
occurred and be continuing or unwaived, from time to time,
(i) apply funds in the Concentration Account (A) promptly
after deposit therein to payment of the Loans and (B) to
payment of other Obligations as they become due and payable,
(ii) after giving effect to the aforesaid payments, invest
funds on deposit in the Concentration Account and accrued
interest thereon, reinvest proceeds of any such investments
which may mature or be sold, and invest interest or other
income received from such investments, in such Cash
Equivalents as the Borrower may select, and (iii) upon
Borrower's request therefor after giving effect to the
payments described in clause (i) above, transfer funds on
deposit in the Concentration Account to Borrower's or its
Subsidiaries' designated accounts. Such funds, interest,
proceeds, or income which are not so disbursed, invested or
reinvested shall be deposited and held in the Concentration
Account for the benefit of the Holders as provided in
Section 4.04(a). None of the Administrative Agent, any
Lender or any Issuing Bank shall be liable to the Borrower
or any Subsidiary of the Borrower for, or with respect to,
any decline in value of amounts on deposit in the
Concentration Account which shall have been invested
pursuant to this Section 4.04(b). Cash Equivalents from time
to time purchased and held pursuant to this Section 4.04(b)
shall constitute Cash Collateral and shall, for purposes of
this Agreement, be deemed to be part of the funds held in
the Concentration Account in amounts equal to their
respective outstanding principal amounts.
(c) Reasonable Care. The Administrative Agent shall
exercise reasonable care in the custody and preservation of
any funds held in the Concentration Account and shall be
deemed to have exercised such care if such funds are
accorded treatment substantially equivalent to that which
the Administrative Agent accords its own like property, it
being understood that the Administrative Agent shall not
have any responsibility for taking any steps necessary to
preserve rights against any parties with respect to any such
funds but may do so at its option. All reasonable expenses
incurred in connection therewith shall be for the sole
account of the Borrower and shall constitute Obligations
hereunder.
4.05. Cash Collateral Account. (a) Investments. If
requested by the Borrower, the Administrative Agent shall,
so long as no Event of Default shall have occurred and be
continuing, from time to time invest funds on deposit in the
Cash Collateral Account and accrued interest thereon,
reinvest proceeds of any such investments which may mature
or be sold, and invest interest or other income received
from any such Investments, in each case in such Cash
Equivalents as the Borrower may select; provided, however,
that such accrued interest and other income received from
any such Investments, upon the request of the Borrower,
shall be remitted to the Borrower. Such funds, interest,
proceeds or income which are not so invested or reinvested
in Cash Equivalents shall, except as otherwise provided
above or in Section 4.05(b) and Section 4.06, be deposited
and held by the Administrative Agent in the Cash Collateral
Account. None of the Administrative Agent, any Lender or
any Issuing Bank shall be liable to the Borrower for, or
with respect to, any decline in value of amounts on deposit
in the Cash Collateral Account which shall have been
invested pursuant to this Section 4.05(a) at the direction
of the Borrower. Cash Equivalents from time to time
purchased and held pursuant to this Section 4.05(a) shall
constitute Cash Collateral and shall, for purposes of this
Agreement, be deemed to be part of the funds held in the
Cash Collateral Account in amounts equal to their respective
outstanding principal amounts.
(b) Withdrawal Rights. Neither the Borrower nor any
Person or entity claiming on behalf of or through the
Borrower shall have any right to withdraw any of the funds
held in the Cash Collateral Account, except that, upon the
later to occur of (i) the expiration or termination of all
of the Letters of Credit in accordance with their respective
terms and (ii) the payment in full in cash of the
Obligations, any funds remaining in the Cash Collateral
Account shall be returned by the Administrative Agent to the
Borrower or paid to whomever may be legally entitled
thereto.
(c) Additional Deposits. If at any time the
Administrative Agent determines that any funds held in the
Cash Collateral Account are subject to any interest, right,
claim or Lien of any Person other than the Administrative
Agent, the Borrower will, forthwith upon demand by the
Administrative Agent, pay to the Administrative Agent, as
additional funds to be deposited and held in the Cash
Collateral Account, an amount equal to the amount of funds
subject to such interest, right, claim or Lien.
(d) Reasonable Care. The Administrative Agent shall
exercise reasonable care in the custody and preservation of
any funds held in the Cash Collateral Account and shall be
deemed to have exercised such care if such funds are
accorded treatment substantially equivalent to that which
the Administrative Agent accords its own like property, it
being understood that the Administrative Agent shall not
have any responsibility for taking any necessary steps to
preserve rights against any parties with respect to any such
funds but may do so at its option. All expenses incurred in
connection therewith shall be for the sole account of the
Borrower and shall constitute Obligations hereunder.
4.06. Post-Default Withdrawals from the Concentration
Account and Cash Collateral Account. Notwithstanding any
other provision of this Agreement, from and after (a) the
occurrence of an Event of Default described in Section
12.01(a) and for so long as the same is continuing unwaived
or (b) the occurrence of any other Event of Default and the
Administrative Agent's receipt of written notice from the
Requisite Lenders that no further withdrawals may be made
from the Concentration Account other than for application on
the Obligations for so long as the same is continuing
unwaived, neither the Borrower nor any Person or entity
claiming on behalf of or through the Borrower shall have any
right to withdraw any of the funds held in the Concentration
Account. The Administrative Agent may, at any time during
the period clause (a) or clause (b) above is applicable,
sell or cause to be sold any Cash Equivalents being held by
the Administrative Agent in the Concentration Account or as
Cash Collateral at any broker's board or at public or
private sale, in one or more sales or lots, at such price as
the Administrative Agent may deem best, without assumption
of any credit risk, and the purchaser of any or all such
Cash Equivalents so sold shall thereafter own the same,
absolutely free from any claim, encumbrance or right of any
kind whatsoever. The Administrative Agent or any Holder may,
in its own name or in the name of a designee or nominee, buy
such Cash Equivalents at any public sale and, if permitted
by applicable law, buy such Cash Equivalents at any private
sale. The Administrative Agent shall apply the proceeds of
any such sale, net of any reasonable expenses incurred in
connection therewith, and any other funds deposited in the
Concentration Account or Cash Collateral Account to the
payment of the Obligations in accordance with Section
4.02(c), other than amounts which are being held as Cash
Collateral for Reimbursement Obligations, which shall be
applied to such Reimbursement Obligations without regard to
Section 4.02(c). The Borrower agrees that any sale of Cash
Equivalents conducted in conformity with reasonable
commercial practices of banks, commercial finance companies,
insurance companies or other financial institutions
disposing of property similar to such Cash Equivalents shall
be deemed to be commercially reasonable and any requirements
of reasonable notice shall be met if such notice is given by
the Administrative Agent within a commercially reasonable
time prior to such disposition, the time of delivery of
which notice the parties hereto agree shall in no event be
required to be greater than five (5) Business Days before
the date of the intended sale or disposition. Any other
requirement of notice, demand or advertisement for sale is
waived to the extent permitted by law. The Administrative
Agent may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor
and such sale may, without further notice, be made at the
time and place to which it was so adjourned.
<PAGE>
ARTICLE V
INTEREST AND FEES
5.01. Interest on the Loans and other
Obligations. (a) Rate of Interest. (i) All Loans and the
outstanding principal balance of all other Obligations shall
bear interest on the unpaid principal amount thereof from
the date such Loans are made and such other Obligations are
incurred until paid in full, except as otherwise provided in
Section 5.01(d) or Section 14.04, as follows:
(A) If a Base Rate Loan or such other Obligation, at a
rate per annum equal to the sum of (1) the Base Rate, as in
effect from time to time as interest accrues plus (2) the
applicable Base Rate Margin; and
(B) If a Eurodollar Rate Loan, at a rate per annum
equal to the sum of (1) the Eurodollar Rate determined for
the applicable Eurodollar Interest Period, plus (2) the
applicable Eurodollar Rate Margin.
(ii) The applicable basis for determining the rate of
interest on the Loans shall be selected by the Borrower at
the time a Notice of Borrowing or a Notice of Conver-
sion/Continuation is delivered by the Borrower to the
Administrative Agent; provided, however, the Borrower may
not select the Eurodollar Rate as the applicable basis for
determining the rate of interest on such a Loan if (A) such
Loan is to be made on the Closing Date or (B) at the time of
such selection an Event of Default or a Potential Event of
Default would occur or has occurred and is continuing. If
on any day any Loan is outstanding with respect to which
notice has not been timely delivered to the Administrative
Agent in accordance with the terms of this Agreement speci-
fying the basis for determining the rate of interest on that
day, then for that day interest on that Loan shall be
determined by reference to clause (i)(A) above.
(b) Interest Payments. (i) Interest accrued on each
Base Rate Loan shall be payable in arrears (A) on the first
Business Day of each month, commencing with the month
following the month in which such Loan was made, (B) if such
Base Rate Loan is a Term Loan, upon the payment or
prepayment thereof in full or in part, (C) upon conversion
thereof to a Eurodollar Rate Loan, and (D) if not
theretofore paid in full, at maturity (whether by
acceleration or otherwise) of such Base Rate Loan.
(ii) Interest accrued on each Eurodollar Rate Loan
shall be payable in arrears (A) on each Eurodollar Interest
Payment Date applicable to such Loan, (B) upon the payment
or prepayment thereof in full or in part, and (C) if not
theretofore paid in full, at maturity (whether by
acceleration or otherwise) of such Eurodollar Rate Loan.
(iii) Interest accrued on the principal balance of all
other Obligations shall be payable in arrears (A) on the
last day of each calendar month, commencing on the first
such day following the incurrence of such Obligation,
(B) upon repayment thereof in full or in part, and (C) if
not theretofore paid in full, at the time such other
Obligation becomes due and payable (whether by acceleration
or otherwise).
(c) Conversion or Continuation. (i) The Borrower
shall have the option (A) to convert at any time all or any
part of outstanding Base Rate Loans to Eurodollar Rate
Loans; (B) to convert all or any part of outstanding
Eurodollar Rate Loans having Eurodollar Interest Periods
which expire on the same date to Base Rate Loans on such
expiration date; or (C) to continue all or any part of
outstanding Eurodollar Rate Loans having Eurodollar Interest
Periods which expire on the same date as Eurodollar Rate
Loans, and the succeeding Eurodollar Interest Period of such
continued Loans shall commence on such expiration date; pro-
vided, however, no such outstanding Loan may be continued
as, or be converted into, a Eurodollar Rate Loan (i) if such
continuation of, or conversion into, would violate any of
the provisions of Section 5.02 or (ii) if an Event of
Default or a Potential Event of Default would occur or has
occurred and is continuing. Any conversion into or
continuation of Eurodollar Rate Loans under this Section
5.01(c) shall be in a minimum amount of $1,000,000 and in
integral multiples of $1,000,000 in excess of that amount
except in the case of a conversion into or a continuation of
an entire Borrowing of Non Pro Rata Loans.
(ii) To convert or continue a Loan under Section
5.01(c)(i), the Borrower shall deliver a Notice of Conver-
sion/Continuation to the Administrative Agent no later than
11:00 a.m. (New York time) at least two (2) Business Days in
advance of the proposed conversion/continuation date. A
Notice of Conversion/Continuation shall specify (A) the
proposed conversion/continuation date (which shall be a
Business Day), (B) the aggregate principal amount of the
Loans to be converted/continued, (C) whether such Loan shall
be converted and/or continued, and (D) in the case of a con-
version to, or continuation of, a Eurodollar Rate Loan, the
requested Eurodollar Interest Period. In lieu of delivering
a Notice of Conversion/Continuation, the Borrower may give
the Administrative Agent telephonic notice of any proposed
conversion/continuation by the time required under this
Section 5.01(c)(ii), and such notice shall be confirmed in
writing delivered to the Administrative Agent by facsimile
transmission promptly (but in no event later than 5:00 p.m.
(New York time) on the same day), the original of which
facsimile copy shall be delivered to the Administrative
Agent within three (3) days after the date of such
transmission. Promptly after receipt of a Notice of
Conversion/Continuation under this Section 5.01(c)(ii) (or
telephonic notice in lieu thereof), the Administrative Agent
shall notify each Lender by telex or telecopy, or other
similar form of transmission, of the proposed conversion/
continuation. Any Notice of Conversion/Continuation for
conversion to, or continuation of, a Loan (or telephonic
notice in lieu thereof) shall be irrevocable, and the
Borrower shall be bound to convert or continue in accordance
therewith.
(d) Default Interest. Notwithstanding the rates of
interest specified in Section 5.01(a), effective immediately
upon (i) the occurrence of an Event of Default described in
Sections 12.01(a), (b) (as it pertains to defaults under
Article XI), (f), (g), (h), or (i) (except an Event of
Default under (i) resulting from the gross negligence or
willful misconduct of the Administrative Agent) or (ii) the
occurrence of any other Event of Default and notice from the
Requisite Lenders of the effectiveness of this
Section 5.01(d), and for as long thereafter as such Event of
Default shall be continuing unwaived, the principal balance
of all Obligations, including, to the extent permitted by
applicable law, accrued interest unpaid when due, shall bear
interest, payable on demand, at a rate which is two percent
(2.0%) per annum in excess of the rate of interest specified
in Section 5.01(a)(i).
(e) Computation of Interest. Interest on all Obliga-
tions shall be computed on the basis of the actual number of
days elapsed in the period during which interest accrues and
a year of 360 days. In computing interest on any Loan, the
date of the making of the Loan or the first day of a
Eurodollar Interest Period, as the case may be, shall be
included and the date of payment or the expiration date of a
Eurodollar Interest Period, as the case may be, shall be
excluded; provided, however, if a Loan is repaid on the same
day on which it is made, one (1) day's interest shall be
paid on such Loan.
5.02. Special Provisions Governing Eurodollar Rate
Loans. With respect to Eurodollar Rate Loans:
(a) Amount of Eurodollar Rate Loans. Each Borrowing
of Eurodollar Rate Loans shall be for a minimum amount of
$1,000,000 and in integral multiples of $1,000,000 in excess
of that amount.
(b) Determination of Eurodollar Interest Period. By
giving notice as set forth in Section 2.02(b) (with respect
to a Borrowing of Eurodollar Rate Loans) or Section 5.01(c)
(with respect to a conversion into or continuation of
Eurodollar Rate Loans), the Borrower shall have the option,
subject to the other provisions of this Section 5.02, to
select an interest period (each, a "Eurodollar Interest
Period") to apply to the Loans described in such notice,
subject to the following provisions:
(i) The Borrower may only select, as to a particular
Borrowing of Eurodollar Rate Loans, a Eurodollar Interest
Period of one, two, or three months in duration;
(ii) In the case of immediately successive Eurodollar
Interest Periods applicable to a Borrowing of Eurodollar
Rate Loans, each successive Eurodollar Interest Period shall
commence on the day on which the next preceding Eurodollar
Interest Period expires;
(iii) If any Eurodollar Interest Period would
otherwise expire on a day which is not a Business Day, such
Eurodollar Interest Period shall be extended to expire on
the next succeeding Business Day if the next succeeding
Business Day occurs in the same calendar month, and if there
will be no succeeding Business Day in such calendar month,
the Eurodollar Interest Period shall expire on the
immediately preceding Business Day;
(iv) The Borrower may not select a Eurodollar Interest
Period as to any Revolving Loan if such Eurodollar Interest
Period terminates later than the scheduled Revolving Credit
Termination Date;
(v) The Borrower may not select a Eurodollar Interest
Period as to any Term Loan if such Eurodollar Interest
Period terminates later than the scheduled Term Loan
Termination Date;
(vi) The Borrower may not select a Eurodollar Interest
Period with respect to any portion of principal of a Loan
which extends beyond a date on which the Borrower is
required to make a scheduled payment of such portion of
principal; and
(vii) There shall be no more than six (6) Eurodollar
Interest Periods in effect at any one time.
(c) Determination of Interest Rate. As soon as prac-
ticable on the second Business Day prior to the first day of
each Eurodollar Interest Period (the "Eurodollar Interest
Rate Determination Date"), the Administrative Agent shall
determine (pursuant to the procedures set forth in the
definition of "Eurodollar Rate") the interest rate which
shall apply to the Eurodollar Rate Loans for which an
interest rate is then being determined for the applicable
Eurodollar Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to
the Borrower and to each Lender. The Administrative Agent's
determination shall be presumed to be correct, absent
manifest error, and shall be binding upon the Borrower.
(d) Interest Rate Unascertainable, Inadequate or
Unfair. In the event that at least one (1) Business Day
before the Eurodollar Interest Rate Determination Date:
(i) the Administrative Agent is advised by Citibank
that deposits in Dollars (in the applicable amounts) are not
being offered by Citibank in the London interbank market for
such Eurodollar Interest Period; or
(ii) the Administrative Agent determines that adequate
and fair means do not exist for ascertaining the applicable
interest rates by reference to which the Eurodollar Rate
then being determined is to be fixed; or
(iii) the Requisite Lenders advise the Administrative
Agent that the Eurodollar Rate for Eurodollar Rate Loans
comprising such Borrowing will not adequately reflect the
cost to such Requisite Lenders of obtaining funds in Dollars
in the London interbank market in the amount substantially
equal to such Lenders' Eurodollar Rate Loans in Dollars and
for a period equal to such Eurodollar Interest Period;
then the Administrative Agent shall forthwith give notice
thereof to the Borrower, whereupon (until the Administrative
Agent notifies the Borrower that the circumstances giving
rise to such suspension no longer exist) the right of the
Borrower to elect to have Loans bear interest based upon the
Eurodollar Rate shall be suspended and each outstanding
Eurodollar Rate Loan shall be converted into a Base Rate
Loan on the last day of the then current Eurodollar Interest
Period therefor, notwithstanding any prior election by the
Borrower to the contrary.
(f) Booking of Eurodollar Rate Loans. Any Lender may
make, carry or transfer Eurodollar Rate Loans at, to, or for
the account of, its Eurodollar Lending Office or Eurodollar
Affiliate or its other offices or Affiliates. No Lender
shall be entitled, however, to receive any greater amount
under Article XIV as a result of the transfer of any such
Eurodollar Rate Loan to any office (other than such
Eurodollar Lending Office) or any Affiliate (other than such
Eurodollar Affiliate) than such Lender would have been
entitled to receive immediately prior thereto, unless (i)
the transfer occurred at a time when circumstances giving
rise to the claim for such greater amount did not exist and
(ii) such claim would have arisen even if such transfer had
not occurred.
(g) Affiliates Not Obligated. No Eurodollar Affiliate
or other Affiliate of any Lender shall be deemed a party to
this Agreement or shall have any liability or obligation
under this Agreement.
5.03. Fees. (a) Administrative Agent's Fee. The
Borrower shall pay to the Administrative Agent, solely for
the account of the Administrative Agent, the fee provided in
the Fee Letter as and when set forth therein during the term
of this Agreement.
(b) Letter of Credit Fee. In addition to any charges
paid pursuant to Section 3.01(g), the Borrower shall pay (i)
to the Issuing Bank, a fee equal to one-quarter of one
percent (0.25%) on the face amount of each Letter of Credit
issued by such Issuing Bank, upon issuance of such Letter of
Credit (the "Fronting Fee") and (ii) to the Administrative
Agent, for the account of the Revolving Lenders based on
their respective Revolving Credit Pro Rata Shares, a fee
(the "Letter of Credit Fee") accruing at a per annum rate
equal to the Eurodollar Rate Margin on the undrawn face
amount of each outstanding Letter of Credit, payable
quarterly, in arrears, on the last day of each calendar
quarter and the Revolving Credit Termination Date; provided,
however, upon (A) the occurrence of an Event of Default
referenced in Section 5.01(d)(i) or (B) the occurrence of
any other Event of Default and notice from the Requisite
Lenders of the effectiveness of Section 5.01(d), and for so
long thereafter as such Event of Default shall be continuing
unwaived, the rate at which the Letter of Credit Fees shall
accrue and be payable shall be equal to two percent (2.0%)
per annum plus the Eurodollar Rate Margin.
(c) Commitment Fee. (i) The Borrower shall pay to the
Administrative Agent, for the account of the Revolving
Lenders in accordance with their respective Revolving Credit
Pro Rata Shares, a fee (the "Commitment Fee"), accruing at
the rate of one-half of one percent (0.50%) per annum on the
average amount by which the Revolving Credit Commitments
exceed the sum of (A) the outstanding principal amount of
the Revolving Loans, plus (B) the outstanding Reimbursement
Obligations, plus (C) the aggregate undrawn face amount of
all outstanding Letters of Credit for the period commencing
on the Closing Date and ending on the Revolving Credit
Termination Date, such Commitment Fee being payable (1)
quarterly, in arrears, commencing on the first day of the
calendar quarter next succeeding the Closing Date and (2) on
the Revolving Credit Termination Date.
(ii) Notwithstanding the foregoing, in the event that
any Revolving Lender fails to fund its Revolving Credit Pro
Rata Share of any Revolving Loan requested by the Borrower
which such Lender is obligated to fund under the terms of
this Agreement, (A) such Lender shall not be entitled to any
Commitment Fees with respect to its Revolving Credit
Commitment until such failure has been cured in accordance
with Section 4.02(f)(ii) and (B) until such time, the
Commitment Fee shall accrue in favor of the Revolving
Lenders which have funded their respective Revolving Credit
Pro Rata Shares of such requested Revolving Loan, shall be
allocated among such performing Revolving Lenders ratably
based upon their relative Revolving Credit Commitments, and
shall be calculated based upon the average amount by which
the aggregate Revolving Credit Commitments of such
performing Revolving Lenders exceeds the sum of (1) the
outstanding principal amount of the Revolving Loans owing to
such performing Revolving Lenders, plus (2) the outstanding
Reimbursement Obligations owing to such performing Revolving
Lenders, plus (3) the aggregate participation interests of
such performing Revolving Lenders arising pursuant to
Section 3.01(e) with respect to undrawn and outstanding
Letters of Credit.
(d) Calculation and Payment of Fees. All of the above
fees shall be calculated on the basis of the actual number
of days elapsed in a 360-day year. All such fees shall be
payable in addition to, and not in lieu of, interest,
compensation, expense reimbursements, indemnification and
other Obligations, to the Administrative Agent at its office
in New York, New York in immediately available funds. All
fees shall be fully earned and nonrefundable when paid. All
fees specified or referred to in this Agreement due to the
Administrative Agent, any Issuing Bank or any Lender,
including, without limitation, those referred to in this
Section 5.03, shall bear interest, if not paid when due, at
the interest rate for Base Rate Loans set forth in
Section 5.01(d), shall constitute Obligations and shall be
secured by all of the Collateral.
<PAGE>
ARTICLE VI
CONDITIONS TO LOANS AND LETTERS OF
CREDIT
6.01. Conditions Precedent to the Initial Loans and
Letters of Credit. The obligation of each Lender on the
Closing Date to make its Term Loan and any Revolving Loan
requested to be made by it, and the agreement of each
Issuing Bank on the Closing Date to issue Letters of Credit,
shall be subject to the satisfaction of all of the following
conditions precedent:
(a) Documents. The Administrative Agent shall have
received on or before the Closing Date all of the following:
(i) this Agreement, the Notes and all other
agreements, documents and instruments relating to the loan
and other credit transactions contemplated by this Agreement
and described in the List of Closing Documents attached
hereto as Exhibit H attached hereto and made a part hereof,
each duly executed where appropriate and in form and
substance satisfactory to the Administrative Agent; without
limiting the foregoing, the Borrower hereby directs its
counsel, Cahill, Gordon & Reindel and General Counsel,
Donald E. Miller, to prepare and deliver to the
Administrative Agent, the Lenders, the Issuing Banks and
Sidley & Austin, the opinions referred to in such List of
Closing Documents;
(ii) the Pro Forma and Projections, in form and
substance satisfactory to the Administrative Agent;
(iii) documentation deemed adequate by the
Administrative Agent demonstrating full compliance by the
Borrower and its Subsidiaries with any applicable
Environmental Property Transfer Act;
(iv) an Officer's Certificate executed and delivered
by the president or vice president of the Borrower
certifying that all conditions precedent have been met and
no Potential Event of Default or Event of Default has
occurred or is continuing;
(v) a Tax Allocation Agreement in form and substance
satisfactory to the Administrative Agent; and
(vi) such additional documentation as the
Administrative Agent may reasonably request.
(b) Perfection of Liens; Title Insurance. Evidence
that all financing statements, mortgages and leasehold
mortgages relating to the Collateral have been filed or
recorded, certificates representing Capital Stock included
in the Collateral have been delivered to the Administrative
Agent (with duly executed stock powers), the CM Letter of
Credit and CM Notes shall have been delivered to the
Administrative Agent (duly endorsed or with duly executed
transfer instructions, as applicable), and all title
charges, recording fees and filing taxes have been paid.
(c) The Asset Transfers. The Lenders shall be
satisfied in all material respects that the parties to the
Transfer Documents complied with all applicable laws and
regulatory approval requirements and all contractual
approval and consent requirements, that the transfers
contemplated thereby have been consummated, and that the CM
Letter of Credit has been received by Borrower and delivered
to the Administrative Agent.
(d) STI Merger. The merger of FII with and into
Shared Technologies, Inc. shall have become effective on
terms (including, without limitation, terms of indemnities
from TFC and its Subsidiaries) and pursuant to documentation
acceptable, in form and substance, to the Administrative
Agent and all of the obligations of FII and VSI under that
certain Restated and Amended Credit Agreement dated as of
July 27, 1992 (the "1992 Credit Agreement") which become
obligations of Shared Technologies, Inc. upon the aforesaid
merger becoming effective shall have been paid in full, in
cash.
(e) Due Diligence. The Administrative Agent and its
counsel shall have completed their updated due diligence
review of the financial condition, business, operations,
assets, liabilities (environmental, by way of
indemnification, and otherwise), pending and threatened
litigation, corporate, capital, legal and management
structure and Contractual Obligations of Borrower and each
of its Subsidiaries, the results of which shall have
provided the Administrative Agent, each Lender and each
Issuing Bank with results and information which, in the
judgment of such Person, are satisfactory to permit the
Administrative Agent, each Lender and each Issuing Bank to
enter into the financing transactions contemplated hereby.
All Schedules to this Agreement shall be acceptable to the
Administrative Agent and Lenders.
(f) No Legal Impediments. No law, regulation, order,
judgment or decree of any Governmental Authority shall, and
the Administrative Agent shall not have received any notice
that litigation is pending or threatened which is likely to,
(i) enjoin, prohibit or restrain the making of the Term
Loans and requested Revolving Loans and/or the issuance of
Letters of Credit on the Closing Date or (ii) result in a
Material Adverse Effect.
(g) No Change in Condition. No change in the
business, assets, management, operations, financial
condition or prospects of the Operating Units or any
business, assets, management, operations, financial
condition or prospects of the Borrower's Subsidiaries shall
have occurred since June 30, 1995, which change, in the
judgment of the Requisite Lenders, will, or is reasonably
likely to, result in a Material Adverse Effect.
(h) No Loss of Material Agreements and Licenses. No
agreement or license which, in the judgment of the Requisite
Lenders, is material to the business, operations or employee
relations of the Borrower or any of its Subsidiaries shall
have been terminated, modified, revoked, breached or
declared to be in default and each such Permit, agreement,
and license shall have been transferred to the Borrower
without any breach of the Contractual Obligation governing
the same.
(i) No Market Changes. Since January 16, 1996, no
material adverse change shall have occurred in the
conditions in the capital markets or the market for loan
syndications generally.
(j) No Default. No Event of Default or Potential
Event of Default shall have occurred and be continuing or
would result from the making of the Loans and no "Event of
Default" (as defined in the 1992 Credit Agreement) shall
have occurred and be continuing unwaived.
(k) Representations and Warranties. All of the repre-
sentations and warranties contained in Section 7.01 and in
any of the other Loan Documents shall be true and correct in
all material respects on and as of the Closing Date.
(l) Fees and Expenses Paid. There shall have been
paid to the Administrative Agent, for the accounts of the
Lenders, Issuing Banks, and the Administrative Agent, as
applicable, all fees and expenses due and payable on or
before the Closing Date.
6.02. Conditions Precedent to All Subsequent Loans and
Letters of Credit. The obligation of each Lender to make
any Loan requested to be made by it on any Funding Date and
the agreement of each Issuing Bank to issue any Letter of
Credit on any date is subject to the following conditions
precedent as of each such date, both before and after giving
effect to the Loans to be made and/or the Letter of Credit
to be issued on such date:
(a) Representations and Warranties. All of the
representations and warranties of the Borrower contained in
Section 7.01 and in any other Loan Document (other than
representations and warranties which expressly speak as of a
different date) shall be true and correct in all material
respects.
(b) No Defaults. No Event of Default or Potential
Event of Default shall have occurred and be continuing or
would result from the making of the requested Loan or
issuance of the requested Letter of Credit.
(c) No Legal Impediments. No law, regulation, order,
judgment or decree of any Governmental Authority shall, and
the Administrative Agent shall not have received from any
Lender or Issuing Bank notice that, in the judgment of such
Lender or Issuing Bank, litigation is pending or threatened
which is likely to, enjoin, prohibit or restrain, or impose
or result in the imposition of any material adverse condi-
tion upon, (i) such Lender's making of the requested Loan or
participation in the requested Letter of Credit or (ii) such
Issuing Bank's issuance of the requested Letter of Credit.
(d) No Material Adverse Effect. No event shall have
occurred since the date of this Agreement which has
resulted, or is reasonably likely to result, in a Material
Adverse Effect.
Each submission by the Borrower to the Administrative Agent
of a Notice of Borrowing with respect to any Loan or a
Notice of Conversion/Continuation with respect to any Loan,
each acceptance by the Borrower of the proceeds of each Loan
made, converted or continued hereunder, each submission by
the Borrower to an Issuing Bank of a request for issuance of
a Letter of Credit and the issuance of such Letter of
Credit, shall constitute a representation and warranty by
the Borrower as of the Funding Date in respect of such Loan,
the date of conversion or continuation and the date of issu-
ance of such Letter of Credit, that all the conditions
contained in this Section 6.02 have been satisfied or waived
in accordance with Section 15.07.
<PAGE>
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
7.01. Representations and Warranties of the Borrower.
In order to induce the Lenders and the Issuing Banks to
enter into this Agreement and to make the Loans and the
other financial accommodations to the Borrower and to issue
the Letters of Credit described herein, the Borrower hereby
represents and warrants to each Lender, each Issuing Bank
and the Administrative Agent that the following statements
are true, correct and complete:
(a) Organization; Corporate Powers. (i) The Borrower
and each of its Subsidiaries (A) is a corporation duly
organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (B) is duly
qualified to do business as a foreign corporation and is in
good standing under the laws of each jurisdiction in which
failure to be so qualified and in good standing will have or
is reasonably likely to have a Material Adverse Effect, (C)
which is a Domestic Subsidiary has filed and maintained
effective (unless exempt from the requirements for filing) a
current Business Activity Report with the appropriate
Governmental Authority in the states of Minnesota and New
Jersey, and (D) has all requisite corporate power and
authority to own, operate and encumber its Property and to
conduct its business as presently conducted and as proposed
to be conducted in connection with and following the
consummation of the transactions contemplated by this
Agreement.
(ii) True, correct and complete copies of the
Organizational Documents identified on Schedule 7.01-A
attached hereto have been delivered to the Administrative
Agent, each of which is in full force and effect, has not
been modified or amended except to the extent indicated
therein and, to the best of the Borrower's knowledge, there
are no defaults under such Organizational Documents and no
events which, with the passage of time or giving of notice
or both, would constitute a default under such
Organizational Documents.
(b) Authority. (i) The Borrower and each of its
Subsidiaries have the requisite corporate power and
authority (A) to execute, deliver and perform each of the
Loan Documents which have been executed by it as required by
this Agreement on or prior to the Closing Date and (B) to
file or record the Loan Documents which have been filed or
recorded by it with any Governmental Authority as required
by this Agreement on or prior to the Closing Date.
(ii) The execution, delivery, performance and filing
or recording, as the case may be, of each of the Loan
Documents which have been executed, filed or recorded as
required by this Agreement on or prior to the Closing Date
and to which the Borrower or any of its Subsidiaries is
party and the consummation of the transactions contemplated
thereby, have been duly approved by the respective boards of
directors and, if necessary, the shareholders of the
Borrower and its Subsidiaries and such approvals have not
been rescinded. No other corporate action or proceedings on
the part of the Borrower or any of its Subsidiaries are
necessary to consummate such transactions.
(iii) Each of the Loan Documents to which the Borrower
or any of its Subsidiaries is a party (A) has been duly
executed, delivered, filed or recorded, as the case may be,
by it, (B) where applicable, creates valid and perfected
first Liens in the Collateral covered thereby securing the
payment of all of the Obligations purported to be secured
thereby, (C) constitutes the Borrower's or Subsidiary's
respective legal, valid and binding obligation, enforceable
against it in accordance with its terms, and (D) is in full
force and effect and no material term or condition thereof
has been amended, modified or waived from the terms and
conditions contained therein as delivered to the
Administrative Agent pursuant to Section 6.01(a) without the
prior written consent of the Requisite Lenders. All parties
to the Loan Documents have performed and complied with all
the terms, provisions, agreements and conditions set forth
therein and required to be performed or complied with by
such parties on or before the Closing Date, all filings and
recordings and other actions which are necessary or
desirable to perfect and protect the Liens granted pursuant
to the Loan Documents and preserve their required priority
have been duly taken, and no Potential Event of Default,
Event of Default or breach of any covenant by any such party
exists thereunder.
(c) Subsidiaries; Ownership of Equity Securities.
Schedule 7.01-C attached hereto (i) contains a diagram
indicating the corporate structure of the Borrower, its
Subsidiaries and any other Person in which the Borrower or
any of its Subsidiaries holds a direct or indirect
partnership, joint venture or other equity interest and
indicates the nature of such interest with respect to each
Person included in such diagram; and (ii) accurately sets
forth (A) the correct legal name of such Person, the
jurisdiction of its incorporation or organization and the
jurisdictions in which it is qualified to transact business
as a foreign corporation or otherwise and (B) the
authorized, issued and outstanding shares or interests of
each class of equity Securities of the Borrower and each of
its Subsidiaries and the owners of such shares or interests.
None of such issued and outstanding equity Securities is
subject to any vesting, redemption, or repurchase agreement,
and there are no warrants or options (other than Permitted
Equity Securities Options) outstanding with respect to such
equity Securities. The outstanding equity Securities of the
Borrower and each of its Subsidiaries are duly authorized,
validly issued, fully paid and nonassessable free and clear
of any Liens, except for the Liens granted pursuant to the
Loan Documents, and are not Margin Stock.
(d) No Conflict. The execution, delivery and perfor-
mance of each of the Loan Documents to which the Borrower or
any of its Subsidiaries is a party do not and will not (i)
conflict with the Organizational Documents of the Borrower
or any such Subsidiary, (ii) constitute a tortious
interference with any Contractual Obligation of any Person
or conflict with, result in a breach of or constitute (with
or without notice or lapse of time or both) a default under
any Requirement of Law or Contractual Obligation of the
Borrower or any such Subsidiary, or require termination of
any Contractual Obligation, the consequences of which
violation, breach, default or termination, singly or in the
aggregate, will, or is reasonably likely to, result in a
Material Adverse Effect or may subject the Administrative
Agent, any of the Lenders or any of the Issuing Banks to any
liability, (iii) result in or require the creation or
imposition of any Lien whatsoever upon any of the Property
or assets of the Borrower or any such Subsidiary, other than
Liens contemplated by the Loan Documents, or (iv) require
any approval of the Borrower's or any such Subsidiary's
shareholders, which has not been obtained.
(e) Governmental Consents. Except as set forth on
Schedule 7.01-E attached hereto, the execution, delivery and
performance of each of the Loan Documents to which the
Borrower or any of its Subsidiaries is a party do not and
will not require any registration with, consent or approval
of, or notice to, or other action to, with or by any
Governmental Authority, except (i) filings, consents or
notices which have been made, obtained or given and (ii)
filings necessary to create or perfect security interests in
the Collateral.
(f) Governmental Regulation. Neither the Borrower,
nor any of its Subsidiaries is subject to regulation under
the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, or the Investment
Company Act of 1940, or any other federal or state statute
or regulation which limits its ability to incur indebtedness
or its ability to consummate the transactions contemplated
hereby or by the Loan Documents.
(g) Restricted Junior Payments. The Borrower has not
directly or indirectly declared, ordered, paid or made or
set apart any sum or Property for any Restricted Junior
Payment or agreed to do so, except as permitted pursuant to
Section 10.06 of this Agreement.
(h) Financial Position. Complete and accurate copies
of the following Financial Statements, materials and other
information have been delivered to the Administrative Agent:
(i) the Pro Forma and Projections and (ii) a statement as to
the TFC/RHI Liquidity as of the Closing Date. All Financial
Statements included in such materials were prepared in all
material respects in conformity with GAAP, except as
otherwise noted therein, and fairly present in all material
respects the respective consolidated financial positions,
and the consolidated results of operations and cash flows
for each of the periods covered thereby of the applicable
Person as at the respective dates thereof. Neither the
Borrower nor any of its Subsidiaries has any Accommodation
Obligation, contingent liability or liability for any taxes,
long-term leases or commitments, not disclosed in writing to
the Administrative Agent and the Lenders prior to the
Closing Date, which will have or is reasonably likely to
have a Material Adverse Effect.
(i) Pro Forma Financials. The Pro Forma, copies of
which have been furnished to the Lenders on the Closing
Date, fairly presents on a pro forma basis the financial
condition of the Operating Units as of the date designated
therein. The Projections and the assumptions expressed in
the Pro Forma are reasonable based on the information avail-
able to the Borrower at the time so furnished.
(j) Indebtedness; Refinanced Indebtedness. Schedule
1.01.5 sets forth all Indebtedness for borrowed money of the
Borrower and there are no defaults in the payment of
principal or interest on any such Indebtedness and no
payments thereunder have been deferred or extended beyond
their stated maturity (except as disclosed on such
Schedule). The Refinanced Indebtedness and all accrued and
unpaid interest thereon has been paid in full or provision
for payment has been made such that, in accordance with the
express provisions of the instruments governing such
Indebtedness, the Borrower has been or will be upon payment
in full of the Refinanced Indebtedness irrevocably released
from all liability and Contractual Obligations with respect
thereto other than customary continuing indemnities provided
for in the Contractual Obligation evidencing such Refinanced
Indebtedness, a copy of which has been delivered to the
Lenders. Any and all Liens securing the Refinanced
Indebtedness have been released or provision for release of
such Liens satisfactory to the Administrative Agent has been
made.
(k) Litigation; Adverse Effects. Except as set forth
in Schedule 7.01-K attached hereto, there is no action,
suit, proceeding, Claim, investigation or arbitration before
or by any Governmental Authority or private arbitrator
pending or, to the knowledge of the Borrower or any of its
Subsidiaries, threatened against VSI or FII (with respect to
which the Borrower or any of the Borrower's Subsidiaries may
have successor liability), TFC, RHI, the Borrower or any of
the Borrower's Subsidiaries or any of the Property (i)
challenging the validity or the enforceability of any of the
Loan Documents, (ii) which will, or is reasonably likely to,
result in any Material Adverse Effect, or (iii) under the
Racketeering Influenced and Corrupt Organizations Act or any
similar federal or state statute where such Person is a
defendant in a criminal indictment that provides for the
forfeiture of assets to any Governmental Authority as a
criminal penalty. There is no material loss contingency
within the meaning of GAAP which has not been reflected in
the Pro Forma or, after the Closing Date, the consolidated
Financial Statements of the Borrower. Neither VSI nor FII
was, prior to the Closing Date, nor are any of TFC, RHI, the
Borrower or any of its Subsidiaries (A) in violation of any
applicable Requirements of Law which violation will result,
or is reasonably likely to result, in a Material Adverse
Effect, or (B) subject to or in default with respect to any
final judgment, writ, injunction, restraining order or order
of any nature, decree, rule or regulation of any court or
Governmental Authority which will, or is reasonably likely
to, result in a Material Adverse Effect.
(l) No Material Adverse Effect. Since January 16,
1996, there has occurred no event with respect to VSI, FII
the Borrower or any Affiliate of the Borrower which has
resulted, or is reasonably likely to result, in a Material
Adverse Effect.
(m) Tax Examinations. The IRS has examined (or is
foreclosed from examining by applicable statutes) the
consolidated federal income tax returns of TFC for all tax
periods prior to and including the taxable year ending June
30, 1991. All deficiencies which have been asserted against
VSI or any of its Subsidiaries as a result of any federal,
state, local or foreign tax examination for each taxable
year in respect of which an examination has been conducted
have been fully paid or finally settled or are being
contested in good faith, and no issue has been raised in any
such examination which, by application of similar
principles, reasonably can be expected to result in
assertion of a material deficiency for any other year not so
examined which has not been reserved for in (i) VSI's
consolidated Financial Statements heretofore delivered to
the Administrative Agent and (ii) Borrower's consolidated
Financial Statements delivered to the Administrative Agent,
in each instance, to the extent, if any, required by GAAP.
Neither VSI nor the Borrower has taken any reporting
positions for which it does not have a reasonable basis and
does not anticipate any further material adverse tax
liability with respect to the years which have not been
closed pursuant to applicable law and which are not reserved
in the Financial Statements described above in clauses (i)
and (ii).
(n) Payment of Taxes. All tax returns and reports of
each of TFC, the Borrower and its Subsidiaries (or the
respective predecessors in interest of the Borrower and its
Subsidiaries) required to be filed have been timely filed,
and all taxes, assessments, fees and other charges of
Governmental Authorities thereupon and upon or relating to
their respective Property, assets, income and franchises
which are shown in such returns or reports to be due and
payable have been paid, except to the extent (i) such taxes,
assessments, fees and other charges are being contested in
good faith by an appropriate proceeding diligently pursued
as permitted by the terms of Section 9.04 and (ii) non-
payment of the amounts thereof would not, individually or in
the aggregate, result in a Material Adverse Effect. The
Borrower has no knowledge of any proposed tax assessment
against TFC, the Borrower or any of its Subsidiaries (or the
respective predecessors in interest of the Borrower and its
Subsidiaries) that will, or is reasonably likely to, result
in a Material Adverse Effect.
(o) Performance. None of the Borrower, any of its
Subsidiaries, or any predecessor in interest of the Borrower
or any of its Subsidiaries, has received any notice,
citation, or allegation, nor has actual knowledge, that
(i) it is in default in the performance, observance or
fulfillment of any of the obligations, covenants or
conditions contained in any Contractual Obligation
applicable to it, (ii) any Property of the Borrower or any
of its Subsidiaries is in violation of any Requirement of
Law, or (iii) any condition exists which, with the giving of
notice or the lapse of time or both, would constitute a
default with respect to any such Contractual Obligation, in
each case, except where such default or defaults, if any,
will not, or is not reasonably likely to, result in a
Material Adverse Effect.
(p) Disclosure. The representations and warranties of
the Borrower and its Subsidiaries contained in the Loan
Documents, and all certificates and other documents
delivered to the Administrative Agent pursuant to the terms
thereof, do not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to
make the statements contained herein or therein, in light of
the circumstances under which they were made, not
misleading. The Borrower has not intentionally withheld any
fact from the Administrative Agent, the Issuing Banks or the
Lenders in regard to any matter which will, or is reasonably
likely to, result in a Material Adverse Effect.
(q) Requirements of Law. The Borrower and each of its
Subsidiaries, respectively, are in compliance with all
Requirements of Law applicable to them and their respective
businesses, in each case where the failure to so comply
individually or in the aggregate will, or is reasonably
likely to, result in a Material Adverse Effect.
(r) Environmental Matters. (i) Except as disclosed on
Schedule 7.01-R attached hereto:
(A) neither Borrower nor any Domestic Subsidiary of the
Borrower (or any of their respective predecessors in
interest) has received any unresolved notice from any
federal, state or local agency to the effect that its
operations are not in compliance with any applicable
Environmental, Health or Safety Requirements of Law or the
subject of any federal or state investigation evaluating
whether any remedial action is needed to respond to a
Release of a Contaminant into the environment;
(B) to the knowledge of the Borrower, none of the
Borrower or its Domestic Subsidiaries (or any of their
respective predecessors in interest) or any of its their
respective present or past Property or operations, are
subject to or the subject of any judicial or administrative
proceeding, order, judgment, decree, dispute, negotiations,
agreement, or settlement respecting (I) any Environmental,
Health or Safety Requirements of Law, (II) any Remedial
Action, (III) any Claims or Liabilities and Costs arising
from the Release or threatened Release of a Contaminant into
the environment, or (IV) any violation of or liability under
any Environmental, Health or Safety Requirement of Law that
Borrower or its Domestic Subsidiaries reasonably believe
will result in a material expenditure of money;
(C) none of the Borrower, any of its Domestic
Subsidiaries, or any of their respective predecessors in
interest has filed any notice under any applicable
Requirement of Law (I) reporting a Release of a Contaminant
where remedial action has not been conducted to the
satisfaction of the appropriate Governmental Authority; or
(II) reporting a violation of any applicable Environmental,
Health or Safety Requirement of Law where such violation has
not been corrected to the satisfaction of the appropriate
Governmental Authority;
(D) none of the Borrower's or its Domestic
Subsidiaries' present or past Property is listed or, to the
knowledge of the Borrower, proposed for listing on the
National Priorities List ("NPL") pursuant to CERCLA or on
the Comprehensive Environmental Response Compensation
Liability Information System List ("CERCLIS") or any similar
state list of sites requiring Remedial Action;
(E) to the knowledge of the Borrower, neither the
Borrower nor any of its Domestic Subsidiaries has any
material contingent liability in connection with any Release
or threatened Release of any Contaminants into the
environment; and
(F) no Environmental Lien has attached to any
Property.
(ii) the Borrower and each of its Domestic
Subsidiaries are conducting and will continue to conduct
their respective business and operations in an
environmentally responsible manner in material compliance
with Environmental, Health or Safety Requirements of Law,
and the Borrower and its Subsidiaries, taken as a whole,
have not been, and have no reason to believe that they will
be, subject to Liabilities and Costs arising out of or
relating to environmental, health or safety matters that
have or will result in material cash expenditures by the
Borrower and its Domestic Subsidiaries in the aggregate for
the Fiscal Year ending June 30, 1996 in excess of the
reserves established therefor.
(s) ERISA. Except as disclosed on Schedule 7.01-S
attached hereto, (i) neither the Borrower nor any of
Borrower's Subsidiaries contributes to any Benefit Plan,
Multiemployer Plan or Foreign Pension Plan, (ii) no ERISA
Event has occurred or is reasonably expected to occur that
has resulted or is reasonably likely to result in a material
liability of the Borrower or any Subsidiary of the Borrower,
(iii) Schedule B (Actuarial Information) to the 1994 annual
report (Form 5500 Series) for each Benefit Plan, copies of
which have been filed with the Internal Revenue Service and
furnished to the Administrative Agent, is complete and
accurate and fairly presents the funding status of such
Benefit Plan, and since the date of such Schedule B there
has been no material adverse change in such funding status,
(iv) neither the Borrower nor any ERISA Affiliate has
incurred or is reasonably expected to incur any withdrawal
liability to any Multiemployer Plan, (v) neither the
Borrower nor any ERISA Affiliate has been notified by the
sponsor of a Multiemployer Plan that such Multiemployer Plan
is in reorganization or has been terminated, within the
meaning of Title IV of ERISA, and no Multiemployer Plan is
reasonably expected to be in reorganization or to be
terminated, within the meaning of Title IV of ERISA, and
(vi) the aggregate annualized cost (including, without
limitation, the cost of insurance premiums) with respect to
post-retirement benefits under Benefit Plans for which the
Borrower is liable does not exceed $5,000,000.
(t) Foreign Employee Benefit Matters. Each Foreign
Employee Benefit Plan is in compliance in all material
respects with all laws, regulations and rules applicable
thereto and the respective requirements of the governing
documents for such Plan. The aggregate of the liabilities
to provide all of the accrued benefits under any Foreign
Pension Plan does not exceed the current Fair Market Value
of the assets held in the trust or other funding vehicle for
such Plan. With respect to any Foreign Employee Benefit
Plan maintained or contributed to by the Borrower, any of
its Subsidiaries or any ERISA Affiliate (other than a
Foreign Pension Plan), reasonable reserves have been
established in accordance with prudent business practice or
where required by ordinary accounting practices in the
jurisdiction in which such Plan is maintained. The
aggregate unfunded liabilities, after giving effect to any
reserves for such liabilities, with respect to such Plans
does not exceed the current fair market value of the assets
held in the trust or other funding vehicle for such Plan.
There are no actions, suits or claims (other than routine
claims for benefits) pending or, to the best knowledge of
the Borrower, threatened against the Borrower, any of its
Subsidiaries or any ERISA Affiliate with respect to any
Foreign Employee Benefit Plan.
(u) Labor Matters. Schedule 7.01-U accurately sets
forth all labor contracts to which the Borrower or any of
its Subsidiaries is a party on the date hereof and the
expiration date of each such contract. There are no
strikes, lockouts or other grievances relating to any
collective bargaining or similar agreement to which the
Borrower or any of its Subsidiaries is a party.
(v) Securities Activities. Neither the Borrower nor
any of its Subsidiaries is engaged in the business of
extending credit for the purpose of purchasing or carrying
Margin Stock.
(w) Solvency. After giving effect to the Loans to be
made and Letters of Credit to be issued on the Closing Date
or such other date as Loans requested hereunder are made or
Letters of Credit requested hereunder are issued, and the
disbursement of the proceeds of such Loans pursuant to the
Borrower's instructions, the Borrower is and each of its
Subsidiaries are Solvent.
(x) Patents, Trademarks, Permits, Etc.; Government
Approvals. (i) The Borrower and each of its Subsidiaries,
as applicable, owns, is licensed or otherwise has the lawful
right to use, or has all Permits and other governmental
approvals, patents, trademarks, trade names, copyrights,
technology, know-how, permits and processes used in or
necessary for the conduct of its respective business as
currently conducted which are material to its condition
(financial or otherwise), operations, performance and
prospects, taken as a whole. Except as set forth on
Schedule 7.01-X attached hereto, no claims are pending or,
to the best of Borrower's knowledge following diligent
inquiry, threatened that the Borrower or any of its
Subsidiaries is infringing or otherwise adversely affecting
the rights of any Person with respect to such Permits and
other governmental approvals, patents, trademarks, trade
names, copyrights, technology, know-how, permits and
processes, except for such claims and infringements as do
not, in the aggregate, give rise to any liability on the
part of the Borrower or any of its Subsidiaries which will,
or is reasonably likely to, result in a Material Adverse
Effect.
(ii) The consummation of the transactions contemplated
by the Transfer Documents and Loan Documents will not impair
the ownership of or rights under (or the license or other
right to use, as the case may be) any Permits and
governmental approvals, patents, trademarks, trade names,
copyrights, technology, know-how, permits or processes by
the Borrower or any of its Subsidiaries in any manner which
will, or is reasonably likely to, result in a Material
Adverse Effect.
(y) Assets and Properties. The Borrower and each of
its Subsidiaries has good and marketable title to all of the
assets and Property (tangible and intangible) owned by it
(except insofar as marketability may be limited by any laws
or regulations of any Governmental Authority affecting such
assets), and all such assets and Property are free and clear
of all Liens except Liens securing the Obligations and Liens
permitted under Section 10.03. Substantially all of the
assets and Property owned by, leased to, or used by the
Borrower and/or each such Subsidiary of the Borrower is in
adequate operating condition and repair, ordinary wear and
tear excepted, is free and clear of any known defects except
such defects as do not substantially interfere with the
continued use thereof in the conduct of normal operations,
and is able to serve the function for which they are
currently being used, except in each case where the failure
of such asset to meet such requirements would not, or is not
reasonably likely to, result in a Material Adverse Effect.
Neither this Agreement nor any other Loan Document, nor any
transaction contemplated under any such agreement, will
affect any right, title or interest of the Borrower or any
Subsidiary of the Borrower in and to any of such assets in a
manner that would, or is reasonably likely to, result in a
Material Adverse Effect.
(z) Insurance. Schedule 7.01-Z attached hereto
accurately sets forth as of the Closing Date all insurance
policies and programs currently in effect with respect to
the respective Property and assets and business of the
Borrower and its Subsidiaries, specifying for each such
policy and program, (i) the amount thereof, (ii) the risks
insured against thereby, (iii) the name of the insurer and
each insured party thereunder, (iv) the policy or other
identification number thereof, and (v) the expiration date
thereof. Borrower has delivered to the Administrative Agent
copies of all such insurance policies. Such insurance
policies and programs are currently in full force and
effect, in compliance with the requirements of Section 9.05
and are in amounts sufficient to cover the replacement value
of the respective Property and assets of the Borrower and
its Subsidiaries.
(aa) Asset Transfers. All conditions precedent to,
and all consents necessary to the Transfer Documents'
becoming effective, have been satisfied or delivered, or
waived with the prior written consent of the Requisite
Lenders, and no material breach of any term or provision of
the Transfer Documents has occurred and no action has been
taken by any competent authority which restrains, prevents
or imposes material adverse conditions upon, or seeks to
restrain, prevent or impose material adverse conditions
upon, the effectiveness of the Transfer Documents.
(bb) Pledge of Capital Stock. The grant and
perfection of the security interest in the Capital Stock of
the Subsidiaries of the Borrower constituting a portion of
the Collateral for the benefit of the Holders, as
contemplated by the terms of the Loan Documents, is not made
in violation of the registration provisions of the Securi-
ties Act, any applicable provisions of other federal securi-
ties laws, state securities or "Blue Sky" law, foreign
securities law, or applicable general corporation law or in
violation of any other Requirement of Law.
<PAGE>
ARTICLE VIII
REPORTING COVENANTS
The Borrower covenants and agrees that so long as any
Commitments are outstanding and thereafter until payment in
full of all of the Obligations (other than indemnities not
yet due), unless the Requisite Lenders shall otherwise give
their prior written consent thereto:
8.01. Financial Statements; Communications with
Accountants. (a) Monthly Financial Reports. The Borrower
shall maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and
administered in accordance with sound business practices to
permit preparation of consolidated Financial Statements in
conformity with GAAP and each of the Financial Statements
described below shall be prepared from such system and
records. The Borrower shall deliver or cause to be
delivered to the Administrative Agent and the Lenders (i)
consolidated balance sheets of each Operating Unit and the
related consolidated statements of income as soon as
practicable, and in any event by May 25, 1996 with respect
to the quarter ending March 31, 1996, (ii) consolidated
balance sheets of each Operating Unit and the related
consolidated statements of income as soon as practicable,
and in any event within fifty-five (55) days after April 28,
1996 and May 26, 1996, in each instance for the month then
ending, and (iii) consolidated and consolidating balance
sheets of TFC and its Subsidiaries and related consolidated
and consolidating statements of income, cash flow and
stockholders' equity as soon as practicable, and in any
event by May 25, 1996 for the quarter ending March 31, 1996.
An Officer's Certificate of the Borrower substantially in
the form of Exhibit I attached hereto and made a part hereof
shall accompany the Financial Statements referenced in
clauses (i) and (ii) above certifying that such Financial
Statements fairly present the consolidated financial
position of the respective Operating Units as at the dates
indicated and the results of their operations for the
periods indicated in accordance with GAAP, subject to normal
year end adjustments, and stating that the chief financial
officer of the Borrower signatory thereto has reviewed the
terms of the Loan Documents, and has made, or caused to be
made under his/her supervision, a review in reasonable
detail of the transactions and consolidated financial
condition of the Operating Units during the accounting
period covered by such Financial Statements, that such
review has not disclosed the existence during or at the end
of such accounting period, and that such Person does not
have knowledge of the existence as at the date of such
Officer's Certificate, of any condition or event which
constitutes an Event of Default or Potential Event of
Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence
thereof and what action the Borrower or any of its
Subsidiaries has taken, is taking and proposes to take with
respect thereto. Such Financial Statements shall also be
accompanied by a certificate (the "Compliance Certificate"),
signed by the Borrower's chief financial officer, setting
forth calculations (with such specificity as the
Administrative Agent may reasonably request) for the period
then ended which demonstrate compliance, when applicable,
with the provisions of Article XI, including, without
limitation, the amount of Capital Expenditures made, on a
cumulative basis, since the Closing Date.
(b) Other Financial Information. With reasonable
promptness, Borrower shall deliver such other information,
reports, filings, projections, business plans and data with
respect to Borrower and its Subsidiaries as from time to
time may be reasonably requested by any Lender.
(c) Communications with Accountants. Borrower
authorizes (i) the Administrative Agent, after giving
Borrower reasonable prior written notice of its intent to do
so, to communicate directly with Borrower's independent
certified public accountants concerning the Financial
Statements; provided that Borrower is not precluded by the
Administrative Agent from being present for such
communication and (ii) such independent certified public
accountants, upon the Administrative Agent's written request
with a copy to Borrower, to provide to the Administrative
Agent copies of any financial schedules prepared by such
accountants for Borrower.
8.02. Events of Default. Promptly upon any of the
chief executive officer, chief operating officer, chief
financial officer, or treasurer of the Borrower obtaining
knowledge (a) of any condition or event which constitutes an
Event of Default or Potential Event of Default, or becoming
aware that any Lender or the Administrative Agent has given
any notice with respect to a claimed Event of Default or
Potential Event of Default under this Agreement, (b) that
any Person has given any notice to the Borrower or any
Subsidiary of the Borrower or taken any other action with
respect to a claimed default or event or condition of the
type referred to in Section 12.01(e), or (c) of any
condition or event which has resulted, or is reasonably
likely to result, in a Material Adverse Effect or affect the
value of, or the Administrative Agent's interest in, the
Collateral in any material respect, the Borrower shall
deliver to the Administrative Agent and the Lenders an
Officer's Certificate specifying (i) the nature and period
of existence of any such claimed default, Event of Default,
Potential Event of Default, condition or event, (ii) the
notice given or action taken by such Person in connection
therewith, and (iii) what action the Borrower has taken, is
taking and proposes to take with respect thereto.
8.03. Lawsuits. Promptly upon the Borrower obtaining
knowledge of the institution of, or written threat of, any
action, suit, proceeding, governmental investigation or
arbitration against or affecting the Borrower or any of its
Subsidiaries or any of the Property not previously disclosed
pursuant to Section 7.01(k), which action, suit, proceeding,
governmental investigation or arbitration exposes, or in the
case of multiple actions, suits, proceedings, governmental
investigations or arbitrations arising out of the same
general allegations or circumstances which expose, in the
Borrower's reasonable judgment, the Borrower and/or any of
its Subsidiaries to liability in an amount aggregating
$500,000 or more (exclusive of claims covered by insurance
policies of the Borrower and its Subsidiaries unless the
insurers of such claims have disclaimed coverage or reserved
the right to disclaim coverage on such claims), the Borrower
shall give written notice thereof to the Administrative
Agent and the Lenders and provide such other information as
may be reasonably available to enable each Lender and the
Administrative Agent and its counsel to evaluate such
matters. The Borrower upon request of the Administrative
Agent or the Requisite Lenders shall promptly give written
notice of the status of any action, suit, proceeding,
governmental investigation or arbitration covered by a
report delivered in accordance herewith and provide such
other information as may be reasonably available to it to
enable each Lender and the Administrative Agent and its
counsel to evaluate such matters.
8.04. Declaration of Dividends and Other
Distributions. Borrower shall provide to the Administrative
Agent written notification (or telephonic notice promptly
confirmed in writing) of a dividend or other distribution to
be made on Borrower's Capital Stock no less than sixty (60)
days prior to the payment date for such dividend or other
distribution; provided, however, that Lenders acknowledge
that a loan in the amount of DM 4,923,000 made by Fairchild
Convac GmbH to RHI prior to the merger on February 26, 1996
of Fairchild Convac GmbH with and into D-M-E Normalien GmbH
is anticipated to be recharacterized during the term of this
Agreement as a dividend and notice of such
recharacterization shall be required only upon the same
becoming effective.
8.05. TFC/RHI Liquidity. The Borrower shall deliver
to the Administrative Agent and the Lenders, within ten (10)
days after March 31, 1996, an Officer's Certificate in the
form of Exhibit J attached hereto setting forth the
calculation of the TFC/RHI Liquidity as of March 31, 1996.
8.06. Environmental Notices. The Borrower shall
notify the Administrative Agent and the Lenders in writing,
promptly upon the Borrower's learning thereof, of any:
(i) notice or claim to the effect that the Borrower or
any Subsidiary of the Borrower is subject to investigation
or may be subject to investigation or liable to any Person
as a result of the Release or threatened Release of any
Contaminant into the environment which could reasonably
result in an expenditure over $2,000,000;
(ii) notice that any Property is subject to an
Environmental Lien; and
(iii) notice to the Borrower or any Subsidiary of the
Borrower of any material violation of any Environmental,
Health or Safety Requirement of Law or the commencement or
threat of any judicial or administrative proceeding alleging
such a material violation by the Borrower or any Subsidiary
of the Borrower.
8.07. Other Reports. The Borrower shall deliver or
cause to be delivered to the Administrative Agent and the
Lenders copies of all Financial Statements, reports and
notices, if any, sent or made available generally by TFC,
RHI, or the Borrower to its Securities holders or filed with
the Commission and all press releases made available
generally by TFC, RHI, the Borrower or any Subsidiary of the
Borrower to the public concerning material developments in
the business of the Borrower or any such Subsidiary of the
Borrower, and all notifications received by the Borrower or
any Subsidiary of the Borrower pursuant to the Securities
Exchange Act and the rules promulgated thereunder.
8.08. Other Information. Promptly upon receiving a
request therefor from the Administrative Agent or the
Requisite Lenders, the Borrower shall prepare and deliver to
the Administrative Agent and the Lenders such other
information with respect to the Borrower, any of its
Subsidiaries, or the Collateral, including, without
limitation, schedules identifying and describing the
Collateral and any dispositions thereof, as from time to
time may be reasonably requested by the Administrative Agent
or the Requisite Lenders.
<PAGE>
ARTICLE IX
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as any
Commitments are outstanding and thereafter until payment in
full of all of the Obligations (other than indemnities not
yet due), unless the Requisite Lenders shall otherwise give
prior written consent:
9.01. Corporate Existence, Etc. The Borrower shall,
and shall cause each of its Subsidiaries to, at all times
maintain its corporate existence and preserve and keep, or
cause to be preserved and kept, in full force and effect its
rights and franchises material to its businesses, except
where the loss or termination of such rights and franchises
is not likely to result in a Material Adverse Effect.
9.02. Corporate Powers; Conduct of Business. The
Borrower shall, and shall cause each of its Subsidiaries to,
qualify and remain qualified to do business and maintain its
good standing in each jurisdiction in which the nature of
its business and the ownership of its Property requires it
to be so qualified and in good standing.
9.03. Compliance with Laws, Etc. The Borrower shall,
and shall cause each of its Subsidiaries to, (a) comply with
all Requirements of Law and all restrictive covenants
affecting it or its business, Property, assets or operations
and (b) obtain as needed all Permits necessary for its
operations and maintain such Permits in good standing,
except in the case where noncompliance with either clause
(a) or (b) above is not reasonably likely to result in a
Material Adverse Effect.
9.04. Payment of Taxes and Claims; Tax Consolidation.
The Borrower shall, and shall cause each of its Subsidiaries
to, pay (a) all taxes, assessments and other governmental
charges imposed upon it or on any of its Property or assets
or in respect of any of its franchises, business, income or
Property before any penalty or interest accrues thereon, and
(b) all Claims (including, without limitation, claims for
labor, services, materials and supplies) for sums which have
become due and payable and which by law have or may become a
Lien (other than a Lien permitted by Section 10.03) upon any
of the Borrower's or such Subsidiary's Property or assets,
prior to the time when any penalty or fine shall be incurred
with respect thereto; provided, however, that no such taxes,
assessments and governmental charges referred to in clause
(a) above or Claims referred to in clause (b) above need be
paid if being contested in good faith by appropriate pro-
ceedings diligently instituted and conducted and if such
reserve or other appropriate provision, if any, as shall be
required in conformity with GAAP shall have been made
therefor. The Borrower will not, nor will it permit any of
its Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any Person (other than
TFC and its Subsidiaries).
9.05. Insurance. The Borrower shall maintain for
itself and its Subsidiaries, or shall cause each of its
Subsidiaries to maintain in full force and effect the
insurance policies and programs listed on Schedule 7.01-Z or
substantially similar policies and programs or other
policies and programs as are acceptable to the
Administrative Agent. All such policies and programs shall
be maintained with responsible and reputable insurance
companies engaged in similar businesses and owning similar
property in the same general geographic areas in which the
Borrower and/or its Subsidiaries operate. Each certificate
and policy relating to Property damage, boiler and machinery
and/or business interruption coverage shall contain an
endorsement, in form and substance acceptable to the
Administrative Agent, showing loss payable to the
Administrative Agent, for the benefit of the Holders, and,
if required by the Administrative Agent, naming the
Administrative Agent as an additional insured under such
policy. Each certificate and policy relating to coverage
other than the foregoing shall, if required by the
Administrative Agent, contain an endorsement naming the
Administrative Agent as an additional insured or mortgagee
payee, as applicable, under such policy. Such endorsement
or an independent instrument furnished to the Administrative
Agent shall provide that the insurance companies will give
the Administrative Agent at least thirty (30) days' written
notice before any such policy or policies of insurance shall
be altered adversely to the interests of the Holders or
cancelled and that no act, whether willful or negligent, or
default of the Borrower, any of its Subsidiaries or any
other Person shall affect the right of the Administrative
Agent to recover under such policy or policies of insurance
in case of loss or damage. In the event the Borrower or any
of its Subsidiaries, at any time or times hereafter shall
fail to obtain or maintain any of the policies or insurance
required herein or to pay any premium in whole or in part
relating thereto, then the Administrative Agent, without
waiving or releasing any obligations or resulting Event of
Default hereunder, may at any time or times thereafter (but
shall be under no obligation to do so) obtain and maintain
such policies of insurance and pay such premiums and take
any other action with respect thereto which the
Administrative Agent deems advisable. All sums so disbursed
by the Administrative Agent shall constitute Protective
Advances hereunder and be part of the Obligations, payable
as provided in this Agreement.
9.06. Inspection of Property; Books and Records;
Discussions. The Borrower shall, and shall cause each of
its Subsidiaries to, permit any authorized representative(s)
designated by either the Administrative Agent or any Lender
to visit and inspect, whether by access to Borrower's and
its Subsidiaries' MIS or otherwise, any of the Property, to
examine, audit, check and make copies of its respective
financial and accounting records, books, journals, orders,
receipts and any correspondence (other than privileged
correspondence with legal counsel) and other data relating
to their respective businesses or the transactions
contemplated hereby or referenced herein (including, without
limitation, in connection with environmental compliance,
hazard or liability), and to discuss their affairs, finances
and accounts with their officers, management personnel, and
independent certified public accountants, all upon
reasonable written notice and at such reasonable times
during normal business hours, as often as may be reasonably
requested. Each such visitation and inspection (i) by or on
behalf of any Lender shall be at such Lender's expense and
(ii) by or on behalf of the Administrative Agent shall be at
the Borrower's expense. The Borrower shall keep and
maintain, and cause each of its Subsidiaries to keep and
maintain, in all material respects on its MIS and otherwise
proper books of record and account in which entries in
conformity with GAAP shall be made of all dealings and
transactions in relation to its respective businesses and
activities, including, without limitation, transactions and
other dealings with respect to the Collateral. If an Event
of Default has occurred and is continuing, the Borrower,
upon the Administrative Agent's request, shall, and shall
cause each of its Subsidiaries to, turn over any such
records to the Administrative Agent or its representatives;
provided, however, that the Borrower may, in its discretion,
retain copies of such records.
9.07. Insurance and Condemnation Proceeds. (a)
Direction to Insurers. The Borrower hereby directs (and, if
applicable, shall cause its Subsidiaries to direct) all
insurers under policies of Property damage, boiler and
machinery and business interruption insurance and payors of
any condemnation claim or award relating to the Property to
pay all proceeds payable under such policies or with respect
to such claim or award directly to the Administrative Agent,
for the benefit of the Administrative Agent, the Issuing
Banks and the Lenders. In no case shall such proceeds be
payable to the Borrower or one or more of its Subsidiaries
and the Administrative Agent.
(b) Application of Proceeds. The Administrative Agent
shall, upon receipt of such proceeds, apply all of the
proceeds so received in repayment of the Obligations in the
manner set forth in Section 4.01(b)(vi). Notwithstanding the
foregoing, in the event proceeds of insurance received by
the Administrative Agent under property damage, boiler and
machinery policies or business interruption insurance
policies (i) is less than $250,000 or (ii) constitutes
Replacement Proceeds, the Administrative Agent shall, upon
receipt of such proceeds, remit the amount so received to
the Borrower or a Subsidiary of the Borrower, as applicable
provided that there shall not then exist an Event of Default
which is continuing unwaived.
9.08. ERISA Compliance. The Borrower shall, and shall
cause each of its Subsidiaries and ERISA Affiliates to,
establish, maintain and operate all Plans to comply in all
material respects with the provisions of ERISA, the Internal
Revenue Code, all other applicable laws, and the regulations
and interpretations thereunder and the respective
requirements of the governing documents for such Plans.
9.09. Foreign Employee Benefit Plan Compliance. The
Borrower shall, and shall cause each of its Subsidiaries and
ERISA Affiliates to, establish, maintain and operate all
Foreign Employee Benefit Plans to comply in all material
respects with all laws, regulations and rules applicable
thereto and the respective requirements of the governing
documents for such Plans.
9.10. Collection Accounts. Within thirty (30) days
after the Closing Date, the Borrower shall, and shall cause
each of its Domestic Subsidiaries to, enter into Collection
Account Agreements with respect to each of their respective
depository accounts into which collections of Receivables
and other proceeds of Collateral are deposited or, to the
extent collection account agreements were executed and
delivered in connection with the 1992 Credit Agreement, to
amend such agreements on terms satisfactory to the
Administrative Agent to become a Collection Account
Agreement.
9.11. Maintenance of Property. The Borrower shall,
and shall cause each of its Subsidiaries to, maintain in all
material respects all of its respective owned and leased
Property in good, safe and insurable condition and repair,
and not permit, commit or suffer any waste or abandonment of
any such Property and from time to time shall make or cause
to be made all material repairs, renewal and replacements
thereof, including, without limitation, any capital
improvements which may be required; provided, however, that
such Property may be altered or renovated in the ordinary
course of Borrower's or its Subsidiaries' business.
9.12. Condemnation. Immediately upon learning of the
institution of any proceeding for the condemnation or other
taking of any of the owned or leased Real Property of the
Borrower or any Subsidiary of the Borrower, the Borrower
shall notify the Administrative Agent of the pendency of
such proceeding, and permit the Administrative Agent to
participate in any such proceeding, and from time to time
will deliver to the Administrative Agent all instruments
reasonably requested by the Administrative Agent to permit
such participation.
9.13. Tax Allocation Agreement. Borrower shall
maintain or cause to be maintained, in full force and
effect, the Tax Allocation Agreement, without amendment or
modification unless consented to by the Requisite Lenders.
9.14. Performance of Material Contracts. Borrower
shall, and shall cause each of its Subsidiaries to, perform
and observe all the terms and provisions of each material
Contractual Obligation to be performed or observed by it,
maintain each such material Contractual Obligation in full
force and effect, enforce each such material Contractual
Obligation in accordance with its terms, take all such
action to such end as may be from time to time requested by
the Administrative Agent and, upon request of the
Administrative Agent, make to each other party to each such
material Contractual Obligation such demands and requests
for information and reports or for action as the Borrower or
such Subsidiary is entitled to make under such material
Contractual Obligation.
9.15. CM Note and CM Letter of Credit. Borrower shall
exercise, on June 28, 1996, its right to demand payment of
the Indebtedness evidenced by the CM Notes and such demand
shall be for payment of such Indebtedness by no later than
July 29, 1996. Borrower shall exercise, no later than July
29, 1996, its right to draw on the CM Letter of Credit.
9.16. Real Property. Borrower shall obtain, upon the
request of the Administrative Agent, surveys of owned or
leased Real Property which is part of the Collateral and
title commitments for title insurance policies in form and
substance and from title insurers satisfactory to the
Administrative Agent with respect to mortgages and leasehold
mortgages of Real Property and/or interests in Real Property
which is part of the Collateral for the benefit of the
Administrative Agent, the Issuing Banks and the Lenders.
<PAGE>
ARTICLE X
NEGATIVE COVENANTS
Borrower covenants and agrees that it shall comply with
the following covenants so long as any Commitments are out-
standing and thereafter until payment in full of all of the
Obligations (other than indemnities not yet due), unless the
Requisite Lenders shall otherwise give prior written
consent:
10.01. Indebtedness. The Borrower shall not and shall
not permit any of its Subsidiaries to directly or indirectly
create, incur, assume or otherwise become or remain directly
or indirectly liable with respect to any Indebtedness,
except:
(a) the Obligations;
(b) Indebtedness for trade payables, wages and other
accrued expenses incurred in the ordinary course of
business;
(c) the Transaction Costs which have not been paid on
or as of the Closing Date;
(d) Permitted Existing Indebtedness and any
extensions, renewals, refundings or replacements thereof,
provided that any such extension, renewal, refunding or
replacement is in an aggregate principal amount not greater
than the principal amount of, and is on terms no less
favorable to the Borrower or its Subsidiary than the terms
of, the Permitted Existing Indebtedness so extended,
renewed, refunded or replaced;
(e) to the extent permitted by Article XI and in any
event in an aggregate amount not to exceed $1,000,000 at any
time, Capital Leases and purchase money Indebtedness
incurred to finance the acquisition of fixed assets, and
Indebtedness incurred to refinance such Capital Leases and
purchase money Indebtedness; provided, however, prior to
incurring Capital Lease obligations owing to any one lessor
or group of affiliated or related lessors or purchase money
Indebtedness owing to any one holder or group of affiliated
or related holders thereof, which in either case
aggregate(s) more than $750,000, the Borrower shall obtain,
or cause such Subsidiary to obtain, from such lessor(s) or
holder(s) a duly executed intercreditor agreement in form
and substance satisfactory to the Administrative Agent;
(f) Indebtedness in respect of taxes, assessments,
governmental charges and Claims for labor, materials or
supplies, to the extent that payment thereof is not required
pursuant to Section 9.04;
(g) Indebtedness constituting Accommodation
Obligations permitted by Section 10.05;
(h) Indebtedness arising from intercompany loans from
the Borrower to any of its Subsidiaries which is a Guarantor
or from any such Subsidiary to the Borrower or any other
such Subsidiary;
(i) Indebtedness in respect of profit sharing plans to
the extent permitted under Section 10.04;
(j) Indebtedness in respect of the Hedge Agreements in
respect of interest rates or foreign exchange contracts
containing terms reasonably acceptable to the Administrative
Agent and purchased from a Lender, an Affiliate of a Lender
or such other Person reasonably acceptable as a credit
matter to the Administrative Agent;
(k) Indebtedness with respect to reasonable warranties
and indemnities made under any agreements for asset sales
permitted under Section 10.02 and Contractual Obligations of
the Borrower or any Subsidiary of the Borrower entered into
in the ordinary course of its business;
(l) Indebtedness under appeal bonds in connection with
judgments which do not result in an Event of Default or a
Potential Event of Default or any other breach hereunder,
provided that the aggregate amount of all such Indebtedness
does not exceed $1,000,000; and
(m) in addition to the Indebtedness permitted by
clauses (a) through (l) above, other unsecured Indebtedness
in an aggregate amount which, when combined with outstanding
Accommodation Obligations permitted under Section 10.05(d),
does not to exceed $5,000,000 outstanding.
10.02. Sales of Assets. The Borrower shall not and
shall not permit any of its Subsidiaries to sell, assign,
transfer, lease, convey or otherwise dispose of any
Property, whether now owned or hereafter acquired, or any
income or profits therefrom, or enter into any agreement to
do so, except:
(a) the sale of Property for consideration not less
than the Fair Market Value thereof so long as (i) any non-
cash consideration resulting from such sale shall be pledged
or assigned to the Administrative Agent, for the benefit of
the Holders, pursuant to an instrument in form and substance
acceptable to the Administrative Agent and (ii) the Borrower
complies with the mandatory prepayment provisions set forth
in Section 4.01(b) and the conditions to the release of
Collateral described in Section 13.09(c);
(b) the sale of Inventory in the ordinary course of
Borrower's and its Subsidiaries respective businesses;
(c) the disposition of Equipment if such Equipment is
traded in for credit against the purchase price of
replacement Equipment or the proceeds of such disposition
are reasonably promptly applied to the purchase price of
such replacement Equipment, is obsolete, or is no longer
useful in the ordinary course of the Borrower's or such
Subsidiary's business;
(d) the sale of Investments in Cash Equivalents
permitted pursuant to Section 10.04(a); and
(e) the sale of Excluded Dispositions.
10.03. Liens. The Borrower shall not and shall not
permit any of its Subsidiaries to directly or indirectly
create, incur, assume or permit to exist any Lien or
negative pledge on or with respect to any of their
respective Property or assets except:
(a) Liens created pursuant to the Loan Documents;
(b) Permitted Existing Liens; and
(c) Customary Permitted Liens.
10.04. Investments. The Borrower shall not and shall
not permit any of its Subsidiaries to directly or indirectly
make or own any Investment except:
(a) Investments in Cash Equivalents;
(b) Permitted Existing Investments, in each case
increased or decreased as required under GAAP as a result of
annual adjustments made to Investments accounted for under
the equity method;
(c) Investments in the form of advances to employees
in the ordinary course of business for moving, relocation
and travel expenses;
(d) Investments received in connection with the bankruptcy
or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes
with, customers and suppliers arising in the ordinary course
of business;
(e) Investments by the Borrower in its Subsidiaries
which, if in the form of intercompany loans, would be
permitted under Section 10.01(h);
(f) an Investment by (i) the Borrower, VSI Holdings,
Inc. or Convac in connection with the acquisition of an
additional thirty percent (30%) of the issued and
outstanding Capital Stock of Voi-Shan Diessel GmbH, a
Subsidiary of VSI Holdings, Inc. and (ii) Convac in up to
sixty-nine percent (69%) of the seventy percent (70%) of the
issued and outstanding Capital Stock of Voi-Shan Diessel
GmbH owned, as of the Closing Date, by VSI Holdings, Inc.;
(f) Investments in the form of intercompany loans made
by the Borrower or its Subsidiaries to RHI or TFC prior to
the occurrence of an Event of Default or Potential Event of
Default; and
(g) Investments in an aggregate amount not to exceed
$2,500,000 made in connection with acquisitions of assets or
Capital Stock of any Person engaged in a business
substantially similar to a business in which Borrower and
its Subsidiaries are engaged as of the Closing Date;
provided that after giving effect to the making of such
Investment, no Potential Event of Default or Event of
Default would occur.
10.05. Accommodation Obligations. The Borrower shall
not and shall not permit any of its Subsidiaries to directly
or indirectly create or become or be liable with respect to
any Accommodation Obligation, except:
(a) recourse obligations resulting from endorsement of
negotiable instruments for collection in the ordinary course
of its business;
(b) Permitted Existing Accommodation Obligations and
any extensions, renewals or replacements thereof, provided
that the aggregate Indebtedness under any such extension,
renewal or replacement is not greater than the Indebtedness
under, and shall be on terms no less favorable to the
Borrower or such Subsidiary than the terms of, the Permitted
Existing Accommodation Obligation so extended, renewed or
replaced;
(c) Accommodation Obligations arising under the Loan
Documents; and
(d) in addition to the Accommodation Obligations
permitted by clauses (a) through (c) above, other unsecured
Accommodation Obligations in an aggregate amount which, when
combined with outstanding Indebtedness permitted by Section
10.01(m), does not exceed $5,000,000 at any time
outstanding.
10.06. Restricted Junior Payments. The Borrower shall
not and shall not permit any of its Subsidiaries to declare
or make any Restricted Junior Payment, except:
(a) dividends or distributions to the Borrower on the
Capital Stock of any of its Wholly-Owned Subsidiaries or to
any of the Borrower's Wholly-Owned Subsidiaries from any
other Wholly-Owned Subsidiary of the Borrower or any
Subsidiary of the Borrower existing on the date of this
Agreement; and
(b) dividends or distributions by the Borrower to RHI
on its Capital Stock if the purpose thereof is to provide
TFC with funds necessary to service Indebtedness (as defined
in the 11 7/8% Senior Subordinated Debenture Indenture) of
TFC, but only to the extent TFC does not have Cash, Cash
Equivalents or readily marketable Securities available to
provide funds to otherwise service such Intebtedness, after
taking into account reasonable working capital needs of TFC
and its Subsidiaries; provided that the exception set forth
in this clause (b) shall not be effective if and to the
extent and during the period that the holders of TFC's 12
1/4% Senior Subordinated Notes due 1996 have waived the
benefits of Section 4.05 of the Indenture dated as of March
13, 1986 pursuant to which such Notes were issued, the
holders of TFC's 13 1/8% Subordinated Debentures due 2006
have waived the benefits of Section 4.05 of the Indenture
dated as of March 13, 1986 pursuant to which such Debentures
were issued and the holders of TFC's Intermediate
Subordinated Debentures due 2001 have waived the benefits of
Section 4.05 of the Indenture dated as of October 15, 1986
pursuant to which such Debentures were issued; and provided,
further, that such exception shall be available in any event
only so long as at least one of the Indentures described
above remains in effect and continues to restrict TFC from
permitting any of its Subsidiaries from entering into an
agreement restricting the payment of dividends or the making
of other distributions on any Subsidiary's Capital Stock
which are necessary to service Indebtedness of TFC;
provided, however, such Restricted Junior Payments shall not
be permitted after the occurrence and during the continuance
of an Event of Default or a Potential Event of Default or if
an Event of Default or a Potential Event of Default would
result therefrom.
10.07. Conduct of Business. The Borrower shall not
and shall not permit any of its Subsidiaries to engage in
any business other than (a) the businesses engaged in by the
Borrower and its Subsidiaries on the date hereof and (b) any
business or activities which are substantially similar,
related or incidental thereto.
10.08. Transactions with Shareholders and Affiliates.
The Borrower shall not and shall not permit any of its
Subsidiaries to directly or indirectly enter into or permit
to exist any transaction (including, without limitation, the
purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate on terms that
are less favorable to the Borrower or such Subsidiary of the
Borrower, as applicable, than those that might be obtained
in an arm's length transaction at the time from Persons who
are not an Affiliate. Nothing contained in this Section
10.08 shall prohibit (a) any transaction expressly permitted
by Sections 10.05 and 10.06; (b) increases in compensation
and benefits for officers and employees of the Borrower or
any of its Subsidiaries which are customary in the industry
or consistent with the past business practice of the
Borrower or such Subsidiary, provided that no Event of
Default or Potential Event of Default has occurred and is
continuing; (c) payment of customary directors' fees and
indemnities; (d) performance of any obligations arising
under the Transfer Documents or (e) performance of any
obligations arising under the Tax Allocation Agreement.
10.09. Restriction on Fundamental Changes. The
Borrower shall not and shall not permit any of its
Subsidiaries to (a) enter into any merger or consolidation,
or liquidate, wind-up or dissolve (or suffer any liquidation
or dissolution), or (b) convey, lease, sell, transfer or
otherwise dispose of, in one transaction or series of trans-
actions, all or substantially all of such Person's business
or Property, whether now or hereafter acquired.
10.10. Sales and Leasebacks. The Borrower shall not
and shall not permit any of its Subsidiaries to become
liable, directly, by assumption or by Accommodation
Obligation, with respect to any lease, whether an Operating
Lease or a Capital Lease, of any Property (whether real or
personal or mixed) which it or one of its Subsidiaries (a)
sold or transferred or is to sell or transfer to any other
Person, or (b) intends to use for substantially the same
purposes as any other Property which has been or is to be
sold or transferred by it or one of its Subsidiaries to any
other Person, in either instance, in connection with such
lease.
10.11. Margin Regulations; Securities Laws. The
Borrower shall not or permit any of its Subsidiaries to use
all or any portion of the proceeds of any credit extended
under this Agreement to purchase or carry Margin Stock.
10.12. ERISA. The Borrower shall not:
(a) engage, or permit any of its Subsidiaries to
engage, in any prohibited transaction described in Sections
406 of ERISA or 4975 of the Internal Revenue Code for which
a statutory or class exemption is not available or a private
exemption has not been previously obtained from the DOL;
(b) permit to exist any accumulated funding deficiency
(as defined in Sections 302 of ERISA and 412 of the Internal
Revenue Code), with respect to any Benefit Plan, whether or
not waived;
(c) fail, or permit any ERISA Affiliate to fail, to
pay timely required contributions or annual installments due
with respect to any waived funding deficiency to any Benefit
Plan;
(d) terminate, or permit any ERISA Affiliate to
terminate, any Benefit Plan which would result in any
liability of Borrower or any ERISA Affiliate under Title IV
of ERISA;
(e) fail to make any contribution or payment to any
Multiemployer Plan which Borrower or any ERISA Affiliate may
be required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto;
(f) fail, or permit any ERISA Affiliate to fail, to
pay any required installment or any other payment required
under Section 412 of the Internal Revenue Code on or before
the due date for such installment or other payment;
(g) amend, or permit any ERISA Affiliate to amend, a
Benefit Plan resulting in an increase in current liability
for the plan year such that the Borrower or any ERISA
Affiliate is required to provide security to such Plan under
Section 401(a)(29) of the Internal Revenue Code;
(h) permit any unfunded liabilities with respect to
any Foreign Pension Plan; or
(i) fail, or permit any of its Subsidiaries or ERISA
Affiliates to fail, to pay any required contributions or
payments to a Foreign Pension Plan on or before the due date
for such required installment or payment
if such event results, either singly or in the aggregate,
after taking into account all other such events and any
liabilities associated therewith, in an aggregate liability
in excess of $2,000,000.
10.13. Issuance of Equity Securities. The Borrower
shall not and shall not permit any of its Subsidiaries to
issue any equity Securities except equity Securities of the
Borrower pursuant to Permitted Equity Securities Options and
in connection with effecting the transfer of the Convac
Minority Interest.
10.14. Organizational Documents. The Borrower shall
not and shall not permit any of its Subsidiaries to amend,
modify or otherwise change any of the terms or provisions in
any of their respective Organizational Documents as in
effect on the Closing Date, except (a) with respect to which
written notice shall have been provided to the
Administrative Agent no less than ten (10) days prior to the
effective date of any such amendment, modification or change
and (b) if no Event of Default or Potential Event of Default
would result therefrom.
10.15. Bank Accounts. The Borrower shall not and
shall not permit any of its Domestic Subsidiaries to
establish or maintain any Deposit Account into which
collections of Receivables and proceeds of other Collateral
are deposited other than those identified as existing on the
Closing Date and disclosed on Schedule 10.15 attached
hereto.
10.16. Fiscal Year. The Borrower shall not and shall
not permit any of its Subsidiaries (other than Banner
Aerospace, Inc. in the event it becomes a Subsidiary) to
change its Fiscal Year for accounting or tax purposes from a
period consisting of the 12-month period ending on June 30
of each calendar year.
<PAGE>
ARTICLE XI
FINANCIAL COVENANTS
The Borrower covenants and agrees that so long as any
Commitments are outstanding and thereafter until payment in
full of all of the Obligations (other than indemnities not
yet due):
11.01. Interest Coverage Ratio. The Borrower shall
maintain an Interest Coverage Ratio of at least 1.5 : 1.0,
as determined as of the last day of (a) April, 1996 for the
period commencing on the Closing Date and ending on April
30, 1996, and (b) May, 1996 for the period commencing on
April 1, 1996 and ending on May 31, 1996.
11.02. Minimum EBITDA. The Operating Units shall have
a minimum EBITDA of no less than $14,000,000 for the nine
(9) months ended March 31, 1996.
11.03. Capital Expenditures. The Borrower and its
Subsidiaries shall not make Capital Expenditures during the
term of this Agreement in excess of $6,000,000, in the
aggregate.
<PAGE>
ARTICLE XII
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
12.01. Events of Default. Each of the following
occurrences shall constitute an Event of Default under this
Agreement:
(a) Failure to Make Payments When Due. The Borrower
shall fail to pay (i) when due any principal of any Loan or
any Reimbursement Obligation or (ii) within one Business Day
after the due date therefor, any other Obligation.
(b) Breach of Certain Covenants. The Borrower shall
fail duly and punctually to perform or observe any agree-
ment, covenant or obligation under Sections 9.01, 9.02,
9.03, 9.04, 9.06, 9.10, 9.13 or 9.15, Article X or
Article XI.
(c) Breach of Representation or Warranty. Any repre-
sentation or warranty made or deemed made by the Borrower to
the Administrative Agent, any Lender or any Issuing Bank
herein or by the Borrower or any of its Subsidiaries in any
of the other Loan Documents or in any statement or
certificate at any time given by any such Person pursuant to
any of the Loan Documents shall be false or misleading in
any material respect on the date as of which made (or deemed
made).
(d) Other Defaults. The Borrower shall default in the
performance of or compliance with any term contained in this
Agreement (other than as identified in clauses (a), (b) or
(c) of this Section 12.01) or any default or event of
default shall occur under any of the other Loan Documents,
and such default or event of default shall continue for
fifteen (15) days after the occurrence thereof.
(e) Default as to Other Indebtedness. The Borrower or
any of its Subsidiaries shall fail to make any payment when
due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) with respect to any other
Indebtedness (other than an Obligation) of the Borrower and
its Subsidiaries aggregating $1,000,000 or more; or any
breach, default or event of default shall occur, or any
other condition shall exist under any instrument, agreement
or indenture pertaining to any such Indebtedness, if the
effect thereof is to cause an acceleration, mandatory
redemption or other required repurchase of such
Indebtedness, or permit the holder(s) of such Indebtedness
to accelerate the maturity of any such Indebtedness or
require a redemption or other repurchase of such
Indebtedness; or any such Indebtedness shall be otherwise
declared to be due and payable (by acceleration or
otherwise) or required to be prepaid, redeemed or otherwise
repurchased by the Borrower or any of its Subsidiaries
(other than by a regularly scheduled required prepayment)
prior to the stated maturity thereof.
(f) Involuntary Bankruptcy; Appointment of Receiver,
Etc. (i) An involuntary case shall be commenced against the
Borrower or any of its Subsidiaries and the petition shall
not be (A) controverted within ten (10) days after the
filing thereof and (B) dismissed, stayed, bonded or
discharged within sixty (60) days after commencement of the
case; or a court having jurisdiction in the premises shall
enter a decree or order for relief in respect of the
Borrower or any of its Subsidiaries in an involuntary case,
under any applicable bankruptcy, insolvency or other similar
law now or hereinafter in effect; or any other similar
relief shall be granted under any applicable federal, state,
local or foreign law.
(ii) A decree or order of a court having jurisdiction
in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other
officer having similar powers over the Borrower or any of
its Subsidiaries or over all or a substantial part of the
Property of the Borrower or any of its Subsidiaries shall be
entered; or an interim receiver, trustee or other custodian
of the Borrower or any of its Subsidiaries or of all or a
substantial part of the Property of the Borrower or any of
its Subsidiaries shall be appointed or a warrant of
attachment, execution or similar process against any
substantial part of the Property of the Borrower or any of
its Subsidiaries shall be issued and any such event shall
not be stayed, dismissed, bonded or discharged within thirty
(30) days after entry, appointment or issuance.
(g) Voluntary Bankruptcy; Appointment of Receiver,
Etc. The Borrower or any of its Subsidiaries shall commence
a voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or shall
consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary
case to a voluntary case, under any such law, or shall
consent to the appointment of or taking possession by a
receiver, trustee or other custodian for all or a
substantial part of its Property; or the Borrower or any of
its Subsidiaries shall make any assignment for the benefit
of creditors or shall be unable or fail, or admit in writing
its inability, to pay its debts as such debts become due; or
the board of directors (or equivalent) of the Borrower or
any of its Subsidiaries (or any committee thereof) adopts
any resolution or otherwise authorizes any action to approve
any of the foregoing.
(h) Dissolution. Any order, judgment or decree shall
be entered against the Borrower or any of its Subsidiaries
decreeing its involuntary dissolution or split up and such
order shall remain undischarged and unstayed for a period in
excess of sixty (60) days; or the Borrower or any of its
Subsidiaries shall otherwise dissolve, be dissolved, or
cease to exist except as specifically permitted by this
Agreement.
(i) Loan Documents; Failure of Security. At any time,
for any reason, (i) any Loan Document ceases to be in full
force and effect or the Borrower or any of its Subsidiaries
party thereto seeks to repudiate its obligations thereunder
or the Liens intended to be created thereby are, or the
Borrower or any such Subsidiary seeks to render such Liens,
invalid or unperfected, or (ii) Liens in favor of the
Administrative Agent for the benefit of the Holders
contemplated by the Loan Documents shall, at any time, for
any reason, be invalidated or otherwise cease to be in full
force and effect, or such Liens shall be subordinated or
shall not have the priority contemplated by this Agreement
or the Loan Documents.
(j) Judgments and Attachments. Any money judgment
(other than a money judgment covered by insurance as to
which the insurance company has acknowledged coverage), writ
or warrant of attachment, or similar process against the
Borrower or any of its Subsidiaries or any of their
respective assets involving in any case an amount in excess
of $500,000 is entered and shall remain undischarged,
unvacated, unbonded or unstayed for a period of thirty (30)
days or in any event later than five (5) days prior to the
date of any proposed sale thereunder; provided, however, if
any such judgment, writ or warrant of attachment or similar
process is in excess of $2,000,000, the entry thereof shall
immediately constitute an Event of Default hereunder.
(k) Termination Event. Any Termination Event occurs
which could reasonably be expected to subject either the
Borrower or any ERISA Affiliate to liability in excess of
$2,000,000.
(l) Waiver Application. The plan administrator of any
Benefit Plan applies under Section 412(d) of the Code for a
waiver of the minimum funding standards of Section 412(a) of
the Internal Revenue Code and the Administrative Agent
believes that the substantial business hardship upon which
the application for the waiver is based could subject either
the Borrower or any ERISA Affiliate to liability in excess
of $2,000,000.
(m) Change in Control. A Change of Control shall
occur.
(n) Material Adverse Effect. An event shall occur
which results in a Material Adverse Effect.
(o) TFC/RHI Liquidity. The TFC/RHI Liquidity as of
March 31, 1996 shall be less than $30,000,000.
(p) Public Debt Cross-Default. TFC shall fail to make
any payment when due on any Indebtedness of TFC owing with
respect to its (i) 12 1/4% Senior Subordinated Notes due
1996, (ii) 12% Intermediate Subordinated Debentures due
2001, (iii) 13 1/8% Subordinated Debentures due 2006, or
(iv) 13% Junior Subordinated Debentures due 2007; or RHI
shall fail to make any payment when due on any Indebtedness
of RHI with respect to the 11 7/8% Senior Subordinated
Debentures due 1999; or any breach, default or event of
default shall occur under any instrument, agreement or
indenture pertaining to any Indebtedness of TFC or RHI
described above, if the effect thereof (with or without the
giving of notice or lapse of time or both) is to accelerate
(as distinguished from imposing a requirement to offer to
purchase), or permit the holder(s) of such Indebtedness to
accelerate (as distinguished from imposing a requirement to
offer to purchase), the maturity of any such Indebtedness.
(q) TFC. TFC shall (i) pay dividends on or redeem any
of its shares of common stock or any Indebtedness prior to
its stated maturity at any time when the TFC/RHI Liquidity
is less than $30,000,000 or after giving effect to such
dividend or redemption the TFC/RHI Liquidity would be less
than $30,000,000 or (ii) permit any of its Subsidiaries
(other than RHI and any of its Subsidiaries) to, directly or
indirectly, make or own any Investment in any Person, or
redeem or pay prior to the scheduled maturity thereof any of
the Indebtedness of TFC referenced in clause (p) above,
except:
(A) Investments of TFC or any such Subsidiary in Cash
Equivalents;
(B) Investments of TFC or any such Subsidiary which
represent defaulted or extended obligations previously
contracted in the ordinary course of business thereof and
payable on terms necessary to effectuate the collection
thereof, in an amount not to exceed at any one time
outstanding, in the aggregate for TFC and all of its
Subsidiaries (other than RHI and any of its Subsidiaries)
$2,000,000; provided that the amount of such Investments by
TFC in any one obligor shall not exceed $1,000,000 in the
aggregate at any one time outstanding;
(C) Investments of TFC or any such Subsidiary arising
from Indebtedness between TFC and its Subsidiaries;
(D) Investments of TFC in the form of notes or other
Securites taken by TFC in connection with sales of assets of
TFC;
(E) Investments in the Capital Stock of RHI and other
Persons identified on Schedule 12.01-Q;
(F) Investments in an aggregate amount not to exceed
$100,000 at any time, or $100,000 in the aggregate during
the term of this Agreement, consisting of capital
contributions made by TFC or its Subsidiaries to Wholly-
Owned Subsidiaries of TFC formed after the Closing Date;
(G) other Investments in an aggregate amount not to
exceed $5,000,000 during the term of this Agreement.
An Event of Default shall be deemed "continuing" until
cured or waived in writing in accordance with Section 15.07.
12.02. Rights and Remedies.
(a) Acceleration and Termination. Upon the
occurrence of any Event of Default described in Sections
12.01(f) or 12.01(g), the Revolving Lenders' respective
obligations to make Revolving Loans under the Revolving
Credit Commitments shall automatically and immediately
terminate and the unpaid principal amount of, and any and
all accrued interest on, the Obligations and all accrued
fees shall automatically become immediately due and payable,
without presentment, demand, or protest or other
requirements of any kind (including, without limitation,
valuation and appraisement, diligence, presentment, notice
of intent to demand or accelerate and of acceleration), all
of which are hereby expressly waived by the Borrower; and
upon the occurrence and during the continuance of any other
Event of Default, the Administrative Agent shall at the
request, or may with the consent, of the Requisite Lenders,
by written notice to the Borrower, (i) declare that the
Revolving Lenders' respective obligations to make Revolving
Loans under the Revolving Credit Commitments are terminated,
whereupon such obligation of each such Lender to make any
Revolving Loan hereunder and of each such Lender or Issuing
Bank to issue or participate in any Letter of Credit not
then issued shall immediately terminate, and/or (ii) declare
the unpaid principal amount of and any and all accrued and
unpaid interest on the Obligations to be, and the same shall
thereupon be, immediately due and payable, without
presentment, demand, or protest or other requirements of any
kind (including, without limitation, valuation and
appraisement, diligence, presentment, notice of intent to
demand or accelerate and of acceleration), all of which are
hereby expressly waived by the Borrower.
(b) Deposit for Letters of Credit. In addition, after
the occurrence and during the continuance of an Event of
Default, the Borrower shall, promptly upon demand by the
Administrative Agent, deliver to the Administrative Agent,
Cash Collateral in such form as requested by the
Administrative Agent for deposit in the Cash Collateral
Account, together with such endorsements, and execution and
delivery of such documents and instruments, as the
Administrative Agent may request in order to perfect or
protect the Administrative Agent's Lien with respect
thereto, in an aggregate principal amount equal to the then
outstanding Letter of Credit Obligations.
(c) Rescission. If at any time after termination of
the Revolving Lenders' obligations to make Revolving Loans
under the Revolving Credit Commitments and/or acceleration
of the maturity of the Loans, the Borrower shall pay all
arrears of interest and all payments on account of principal
of the Loans and Reimbursement Obligations which shall have
become due otherwise than by acceleration (with interest on
principal and, to the extent permitted by law, on overdue
interest, at the rates specified in this Agreement) and all
Events of Default and Potential Events of Default (other
than nonpayment of principal of and accrued interest on the
Loans due and payable solely by virtue of acceleration)
shall be remedied or waived pursuant to Section 15.07, then
upon the written consent of the Requisite Lenders and
written notice to the Borrower, the termination of the
Revolving Lenders' respective obligations to make Revolving
Loans under the Revolving Credit Commitments and the
respective Revolving Lenders' and Issuing Banks' obligations
to participate in or issue Letters of Credit and/or the
aforesaid acceleration and its consequences may be rescinded
and annulled; but such action shall not affect any
subsequent Event of Default or Potential Event of Default or
impair any right or remedy consequent thereon. The
provisions of the preceding sentence are intended merely to
bind the Lenders and the Issuing Banks to a decision which
may be made at the election of the Requisite Lenders; they
are not intended to benefit the Borrower and do not give the
Borrower the right to require the Lenders to rescind or
annul any termination of the aforesaid obligations of the
Revolving Lenders or Issuing Banks or any acceleration here-
under, even if the conditions set forth herein are met.
(d) Enforcement. The Borrower acknowledges that in
the event the Borrower or any of its Subsidiaries fails to
perform, observe or discharge any of their respective
obligations or liabilities under this Agreement or any other
Loan Document, any remedy of law may prove to be inadequate
relief to the Administrative Agent, the Issuing Banks and
the Lenders; therefore, the Borrower agrees that the
Administrative Agent, the Issuing Banks and the Lenders
shall be entitled to temporary and permanent injunctive
relief in any such case without the necessity of proving
actual damages.
<PAGE>
ARTICLE XIII
THE ADMINISTRATIVE AGENT
13.01. Appointment. (a) Each Lender and each Issuing
Bank hereby designates and appoints Citicorp as the
Administrative Agent of such Lender or such Issuing Bank
under this Agreement, and each Lender and each Issuing Bank
hereby irrevocably authorizes the Administrative Agent to
take such action on its behalf under the provisions of this
Agreement and the Loan Documents and to exercise such powers
as are set forth herein or therein together with such other
powers as are reasonably incidental thereto. The
Administrative Agent agrees to act as such on the express
conditions contained in this Article XIII.
(b) The provisions of this Article XIII are solely for
the benefit of the Administrative Agent, the Lenders and
Issuing Banks, and neither the Borrower nor any Subsidiary
of the Borrower shall have any rights to rely on or enforce
any of the provisions hereof (other than as expressly set
forth in Section 13.07). In performing its functions and
duties under this Agreement, the Administrative Agent shall
act solely as Administrative Agent of the Lenders and the
Issuing Banks and does not assume and shall not be deemed to
have assumed any obligation or relationship of agency,
trustee or fiduciary with or for the Borrower or any
Affiliate of the Borrower. The Administrative Agent may
perform any of its duties hereunder, or under the other Loan
Documents, by or through its Administrative Agents or
employees.
13.02. Nature of Duties. The Administrative Agent
shall not have any duties or responsibilities except those
expressly set forth in this Agreement or in the Loan
Documents. The duties of the Administrative Agent shall be
mechanical and administrative in nature. The Administrative
Agent shall not have by reason of this Agreement a fiduciary
relationship in respect of any Holder. Nothing in this
Agreement or any of the Loan Documents, expressed or
implied, is intended to or shall be construed to impose upon
the Administrative Agent any obligations in respect of this
Agreement or any of the other Loan Documents except as
expressly set forth herein or therein. Each Lender and each
Issuing Bank shall make its own independent investigation of
the financial condition and affairs of the Borrower and
Affiliates in connection with the making and the continuance
of the Loans hereunder and with the issuance of the Letters
of Credit and shall make its own appraisal of the
creditworthiness of the Borrower and Guarantors initially
and on a continuing basis, and the Administrative Agent
shall not have any duty or responsibility, either initially
or on a continuing basis, to provide any Holder with any
credit or other information with respect thereto (except for
reports required to be delivered by the Administrative Agent
under the terms of this Agreement). If the Administrative
Agent seeks the consent or approval of the Lenders to the
taking or refraining from taking of any action hereunder,
the Administrative Agent shall send notice thereof to each
Lender. The Administrative Agent shall promptly notify each
Lender at any time that the Lenders so required hereunder
have instructed the Administrative Agent to act or refrain
from acting pursuant hereto. As to any matters not expressly
provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes or any
amount payable under any provision of Article IV when due)
or the other Loan Documents, the Administrative Agent shall
not be required to exercise any discretion or take any
action. Notwithstanding the foregoing, the Administrative
Agent shall be required to act or refrain from acting (and
shall be fully protected in so acting or refraining from
acting) upon the instructions of the Requisite Lenders
(unless the instructions or consent of all of the Lenders is
required hereunder or thereunder) and such instructions
shall be binding upon all Lenders, Issuing Banks and Holders
of Notes; provided, however, the Administrative Agent shall
not be required to take any action which (i) the
Administrative Agent reasonably believes will expose it to
personal liability unless the Administrative Agent receives
an indemnification satisfactory to it from the Lenders with
respect to such action or (ii) is contrary to this
Agreement, the other Loan Documents or applicable law.
13.03. Rights, Exculpation, Etc. (a) Liabilities;
Responsibilities. None of the Administrative Agent, any
Affiliate of the Administrative Agent, or any of their
respective officers, directors, employees or Administrative
Agents shall be liable to any Holder for any action taken or
omitted by them hereunder or under any of the Loan
Documents, or in connection therewith, except that no Person
shall be relieved of any liability imposed by law for gross
negligence or willful misconduct. The Administrative Agent
shall not be liable for any apportionment or distribution of
payments made by it in good faith pursuant to Section
4.02(b), and if any such apportionment or distribution is
subsequently determined to have been made in error the sole
recourse of any Holder to whom payment was due, but not
made, shall be to recover from other Holders any payment in
excess of the amount to which they are determined to have
been entitled. The Administrative Agent shall not be
responsible to any Holder for any recitals, statements,
representations or warranties herein or for the execution,
effectiveness, genuineness, validity, legality, enforce-
ability, collectibility, or sufficiency of this Agreement or
any of the other Loan Documents or the transactions
contemplated thereby, or for the financial condition of the
Borrower or any of its Affiliates or the Guarantors. The
Administrative Agent shall not be required to make any
inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement
or any of the other Loan Documents, or the financial
condition of the Borrower or any of its Affiliates or the
Guarantors, or the existence or possible existence of any
Potential Event of Default or Event of Default.
(b) Right to Request Instructions. The Administrative
Agent may at any time request instructions from the Lenders
with respect to any actions or approvals which by the terms
of any of the Loan Documents the Administrative Agent is
permitted or required to take or to grant, and the
Administrative Agent shall be absolutely entitled to refrain
from taking any action or to withhold any approval and shall
not be under any liability whatsoever to any Person for
refraining from any action or withholding any approval under
any of the Loan Documents until it shall have received such
instructions from those Lenders from whom the Administrative
Agent is required to obtain such instructions for the
pertinent matter in accordance with the Loan Documents.
Without limiting the generality of the foregoing, no Holder
shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative Agent
acting or refraining from acting under the Loan Documents in
accordance with the instructions of the Requisite Lenders
or, where required by the express terms of this Agreement, a
greater proportion of the Lenders.
13.04. Reliance. The Administrative Agent shall be
entitled to rely upon any written notices, statements,
certificates, orders or other documents or any telephone
message believed by it in good faith to be genuine and
correct and to have been signed, sent or made by the proper
Person, and with respect to all matters pertaining to this
Agreement or any of the Loan Documents and its duties
hereunder or thereunder, upon advice of legal counsel
(including counsel for the Borrower), independent public
accountants and other experts selected by it.
13.05. Indemnification. To the extent that the
Administrative Agent is required to be reimbursed and
indemnified by the Borrower but is not reimbursed and
indemnified by the Borrower, the Lenders will reimburse and
indemnify the Administrative Agent for and against any and
all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on,
incurred by, or asserted against it in any way relating to
or arising out of the Loan Documents or any action taken or
omitted by the Administrative Agent under the Loan
Documents, in proportion to each Lender's Pro Rata Share.
The obligations of the Lenders under this Section 13.05
shall survive the payment in full of the Loans, the
Reimbursement Obligations and all other Obligations and the
termination of this Agreement.
13.06. Citicorp Individually. With respect to its Pro
Rata Share of the Commitments hereunder, if any, and the
Loans made by it, if any, Citicorp shall have and may
exercise the same rights and powers hereunder and is subject
to the same obligations and liabilities as and to the extent
set forth herein for any other Lender. The terms "Lenders"
or "Requisite Lenders" or any similar terms shall, unless
the context clearly otherwise indicates, include Citicorp in
its individual capacity as a Lender or one of the Requisite
Lenders. Citicorp and its Affiliates may accept deposits
from, lend money to, and generally engage in any kind of
banking, trust or other business with the Borrower or any of
its Affiliates as if it were not acting as the
Administrative Agent pursuant hereto.
13.07. Successor Administrative Agents. (a)
Resignation. The Administrative Agent may resign from the
performance of all its functions and duties hereunder at any
time by giving at least thirty (30) Business Days' prior
written notice to the Borrower and the Lenders. Such
resignation shall take effect upon the acceptance by a
successor Administrative Agent of appointment pursuant to
this Section 13.07.
(b) Appointment by Requisite Lenders. Upon any
such notice of resignation, the Requisite Lenders shall have
the right to appoint a successor Administrative Agent
selected from among the Lenders which appointment shall be
subject to the prior written approval of the Borrower (which
may not be unreasonably withheld, and shall not be required
upon the occurrence and during the continuance of an Event
of Default).
(c) Appointment by Retiring Administrative Agent. If
a successor Administrative Agent shall not have been
appointed within the thirty (30) Business Day period
provided in clause (a) of this Section 13.07, the retiring
Administrative Agent, with the consent of the Borrower
(which may not be unreasonably withheld, and shall not be
required upon the occurrence and during the continuance of
an Event of Default), shall then appoint a successor
Administrative Agent who shall serve as Administrative Agent
until such time, if any, as the Requisite Lenders appoint a
successor Administrative Agent as provided above.
(d) Rights of the Successor and Retiring
Administrative Agents. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor
Administrative Agent, such successor Administrative Agent
shall thereupon 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 under
this Agreement. After any retiring Administrative Agent's
resignation hereunder as Administrative Agent, the
provisions of this Article XIII shall inure to its benefit
as to any actions taken or omitted to be taken by it while
it was the Administrative Agent under this Agreement.
13.08. Relations Among Lenders. Each Lender and each
Issuing Bank agrees (except as provided in Section 15.05)
that it will not take any legal action, nor institute any
actions or proceedings, against the Borrower or any other
obligor hereunder or with respect to any Collateral, without
the prior written consent of the Requisite Lenders. Without
limiting the generality of the foregoing, no Lender may
accelerate or otherwise enforce its portion of the
Obligations, or unilaterally terminate its Commitments
except in accordance with Section 12.02(a).
13.09. Concerning the Collateral and the Loan
Documents. (a) Protective Advances. The Administrative
Agent may from time to time, before or after the occurrence
of an Event of Default, make such disbursements and advances
pursuant to the Loan Documents which the Administrative
Agent, in its sole discretion, deems necessary or desirable
to preserve or protect the Collateral or any portion thereof
or to enhance the likelihood or maximize the amount of
repayment of the Loans and other Obligations ("Protective
Advances"). The Administrative Agent shall notify the
Borrower and each Lender in writing of each such Protective
Advance, which notice shall include a description of the
purpose of such Protective Advance. The Borrower agrees to
pay the Administrative Agent, upon demand, the principal
amount of all outstanding Protective Advances, together with
interest thereon at the rate from time to time applicable to
Base Rate Loans from the date of such Protective Advance
until the outstanding principal balance thereof is paid in
full. If the Borrower fails to make payment in respect of
any Protective Advance within one (1) Business Day after the
date the Borrower receives written demand therefor from the
Administrative Agent, the Administrative Agent shall
promptly notify each Revolving Lender and each Revolving
Lender agrees that it shall thereupon make available to the
Administrative Agent, in Dollars in immediately available
funds, the amount equal to such Revolving Lender's Pro Rata
Share of such Protective Advance. If such funds are not
made available to the Administrative Agent by such Revolving
Lender within one (1) Business Day after the Administrative
Agent's demand therefor, the Administrative Agent will be
entitled to recover any such amount from such Revolving
Lender together with interest thereon at the Federal Funds
Rate for each day during the period commencing on the date
of such demand and ending on the date such amount is
received. The failure of any Revolving Lender to make
available to the Administrative Agent its Pro Rata Share of
any such Protective Advance shall neither relieve any other
Revolving Lender of its obligation hereunder to make
available to the Administrative Agent such other Revolving
Lender's Pro Rata Share of such Protective Advance on the
date such payment is to be made nor increase the obligation
of any other Revolving Lender to make such payment to the
Administrative Agent. All outstanding principal of, and
interest on, Protective Advances shall constitute
Obligations secured by the Collateral until paid in full by
the Borrower.
(b) Authority. Each Lender and each Issuing Bank
authorizes and directs the Administrative Agent to enter
into the Loan Documents relating to the Collateral for the
benefit of the Lenders and the Issuing Banks. Each Lender
and each Issuing Bank agrees that any action taken by the
Administrative Agent or the Requisite Lenders (or, where
required by the express terms of this Agreement, a greater
proportion of the Lenders) in accordance with the provisions
of this Agreement or the other Loan Documents, and the
exercise by the Administrative Agent or the Requisite
Lenders (or, where so required, such greater proportion) of
the powers set forth herein or therein, together with such
other powers as are reasonably incidental thereto, shall be
authorized and binding upon all of the Lenders and Issuing
Banks. Without limiting the generality of the foregoing,
the Administrative Agent shall have the sole and exclusive
right and authority to (i) act as the disbursing and
collecting Administrative Agent for the Lenders and the
Issuing Banks with respect to all payments and collections
arising in connection with this Agreement and the Loan
Documents relating to the Collateral; (ii) execute and
deliver each Loan Document relating to the Collateral and
accept delivery of each such agreement delivered by the
Borrower, any of its Subsidiaries or any Guarantor a party
thereto; (iii) act as collateral agent for the Lenders and
the Issuing Banks for purposes of the perfection of all
security interests and Liens created by such agreements and
all other purposes stated therein; provided, however, the
Administrative Agent hereby appoints, authorizes and directs
the Lenders and the Issuing Banks to act as collateral sub-
agent for the Administrative Agent, the Lenders and the
Issuing Banks for purposes of the perfection of all security
interests and Liens with respect to the Property at any time
in the possession of such Lender or such Issuing Bank,
including, without limitation, Deposit Accounts maintained
with, and cash and Cash Equivalents held by, such Lender or
such Issuing Bank; (iv) manage, supervise and otherwise deal
with the Collateral; (v) take such action as is necessary or
desirable to maintain the perfection and priority of the
security interests and liens created or purported to be
created by the Loan Documents; and (vi) except as may be
otherwise specifically restricted by the terms of this
Agreement or any other Loan Document, exercise all remedies
given to the Administrative Agent, the Lenders or the
Issuing Banks with respect to the Collateral under the Loan
Documents relating thereto, applicable law or otherwise.
(c) Release of Collateral. (i) Each Lender and each
Issuing Bank hereby directs, in accordance with the terms of
this Agreement, the Administrative Agent to release any Lien
held by the Administrative Agent for the benefit of the
Holders:
(A) against all of the Collateral, upon final and
indefeasible payment in full of the Obligations and termina-
tion of this Agreement;
(B) against any part of the Collateral sold or
disposed of by the Borrower or any of its Subsidiaries, if
such sale or disposition is permitted by Section 10.02 or is
otherwise consented to by the Requisite Lenders, as
certified to the Administrative Agent by the Borrower in an
Officer's Certificate; and/or
(C) against any part of the Collateral consisting of a
promissory note, upon final and indefeasible payment in full
of the Indebtedness evidenced thereby.
(ii) Each Lender and each Issuing Bank hereby directs
the Administrative Agent to execute and deliver or file such
termination and partial release statements and do such other
things as are necessary to release Liens to be released
pursuant to this Section 13.09(c) promptly upon the
effectiveness of any such release.
<PAGE>
ARTICLE XIV
YIELD PROTECTION
14.01. Taxes. (a) Payment of Taxes. Any and all
payments by the Borrower hereunder or under any Note or
other document evidencing any Obligations shall be made, in
accordance with Section 4.02, free and clear of and without
reduction for any and all present or future taxes, levies,
imposts, deductions, charges, withholdings, and all stamp or
documentary taxes, excise taxes, ad valorem taxes and other
taxes imposed on the value of the Property, charges or
levies which arise from the execution, delivery or
registration, or from payment or performance under, or
otherwise with respect to, any of the Loan Documents or the
Commitments and all other liabilities with respect thereto
excluding, in the case of each Lender, each Issuing Bank and
the Administrative Agent, taxes imposed on or measured by
net income or overall gross receipts and capital and
franchise taxes imposed on it by (i) the United States, (ii)
the Governmental Authority of the jurisdiction in which such
Lender's Applicable Lending Office is located or any
political subdivision thereof or (iii) the Governmental
Authority in which such Person is organized, managed and
controlled or any political subdivision thereof (all such
non-excluded taxes, levies, imposts, deductions, charges and
withholdings being hereinafter referred to as "Taxes"). If
the Borrower shall be required by law to withhold or deduct
any Taxes from or in respect of any sum payable hereunder or
under any such Note or document to any Lender, any Issuing
Bank or the Administrative Agent, (x) the sum payable to
such Lender, Issuing Bank, or the Administrative Agent shall
be increased as may be necessary so that after making all
required withholding or deductions (including withholding or
deductions applicable to additional sums payable under this
Section 14.01) such Lender, such Issuing Bank or the
Administrative Agent (as the case may be) receives an amount
equal to the sum it would have received had no such
withholding or deductions been made, (y) the Borrower shall
make such withholding or deductions, and (z) the Borrower
shall pay the full amount withheld or deducted to the
relevant taxation authority or other authority in accordance
with applicable law.
(b) Indemnification. The Borrower will indemnify each
Lender, each Issuing Bank and the Administrative Agent
against, and reimburse each on demand for, the full amount
of all Taxes (including, without limitation, any Taxes
imposed by any Governmental Authority on amounts payable
under this Section 14.01 and any additional income or
franchise taxes resulting therefrom) incurred or paid by
such Lender, such Issuing Bank or the Administrative Agent
(as the case may be) or any of their respective Affiliates
and any liability (including penalties, interest, and out-
of-pocket expenses paid to third parties) arising therefrom
or with respect thereto, whether or not such Taxes were
lawfully payable. A certificate as to any additional amount
payable to any Person under this Section 14.01 submitted by
it to the Borrower shall, absent manifest error, be final,
conclusive and binding upon all parties hereto. Each Lender
and each Issuing Bank agrees, within a reasonable time after
receiving a written request from the Borrower, to provide
the Borrower and the Administrative Agent with such
certificates as are reasonably required, and take such other
actions as are reasonably necessary to claim such exemptions
as such Lender or such Issuing Bank may be entitled to claim
in respect of all or a portion of any Taxes which are
otherwise required to be paid or deducted or withheld
pursuant to this Section 14.01 in respect of any payments
under this Agreement or under the Notes.
(c) Receipts. Within thirty (30) days after the date
of any payment of Taxes by the Borrower, it will furnish to
the Administrative Agent, at its address referred to in
Section 15.08, the original or a certified copy of a receipt
evidencing payment thereof.
(d) Foreign Bank Certifications. (i) Each Lender that
is not created or organized under the laws of the United
States or a political subdivision thereof shall deliver to
the Borrower and the Administrative Agent on the Closing
Date or the date on which such Lender becomes a Lender
pursuant to Section 15.01 hereof a true and accurate certif-
icate executed in duplicate by a duly authorized officer of
such Lender to the effect that such Lender is eligible to
receive payments hereunder and under the Notes without
deduction or withholding of United States federal income tax
(I) under the provisions of an applicable tax treaty
concluded by the United States (in which case the
certificate shall be accompanied by two duly completed
copies of IRS Form 1001 (or any successor or substitute form
or forms)), (II) under Sections 1442(c)(1) and 1442(a) of
the Internal Revenue Code (in which case the certificate
shall be accompanied by two duly completed copies of IRS
Form 4224 (or any successor or substitute form or forms)),
or (III) due to such Lender's not being a "bank" as such
term is used in Section 881(c)(3)(A) of the Internal Revenue
Code (in which case, the certificate shall be accompanied by
two accurate and complete original signed copies of IRS Form
W-8 (or any successor or substitute form or forms)).
(ii) Each Lender further agrees to deliver to the Bor-
rower and the Administrative Agent from time to time, a true
and accurate certificate executed in duplicate by a duly
authorized officer of such Lender before or promptly upon
the occurrence of any event requiring a change in the most
recent certificate previously delivered by it to the
Borrower and the Administrative Agent pursuant to this
Section 14.01(d). Each certificate required to be delivered
pursuant to this Section 14.01(d)(ii) shall certify as to
one of the following:
(A) that such Lender can continue to receive payments
hereunder and under the Notes without deduction or
withholding of United States federal income tax;
(B) that such Lender cannot continue to receive
payments hereunder and under the Notes without deduction or
withholding of United States federal income tax as specified
therein but does not require additional payments pursuant to
Section 14.01(a) because it is entitled to recover the full
amount of any such deduction or withholding from a source
other than the Borrower; or
(C) that such Lender is no longer capable of receiving
payments hereunder and under the Notes without deduction or
withholding of United States federal income tax as specified
therein and that it is not capable of recovering the full
amount of the same from a source other than the Borrower.
Each Lender agrees to deliver to the Borrower and the
Administrative Agent further duly completed copies of the
above-mentioned IRS forms on or before the earlier of (x)
the date that any such form expires or becomes obsolete or
otherwise is required to be resubmitted as a condition to
obtaining an exemption from withholding from United States
federal income tax and (y) fifteen (15) days after the
occurrence of any event requiring a change in the most
recent form previously delivered by such Lender to the
Borrower and Administrative Agent, unless any change in
treaty, law, regulation, or official interpretation thereof
which would render such form inapplicable or which would
prevent the Lender from duly completing and delivering such
form has occurred prior to the date on which any such
delivery would otherwise be required and the Lender promptly
advises the Borrower that it is not capable of receiving
payments hereunder and under the Notes without any deduction
or withholding of United States federal income tax.
14.02. Increased Capital. If after the date hereof
any Lender or Issuing Bank determines that (i) the adoption
or implementation of or any change in or in the
interpretation or administration of any law or regulation or
any guideline or request from any central bank or other
Governmental Authority or quasi-governmental authority
exercising jurisdiction, power or control over any Lender,
Issuing Bank or banks or financial institutions generally
(whether or not having the force of law), compliance with
which affects or would affect the amount of capital required
or expected to be maintained by such Lender or Issuing Bank
or any Person controlling such Lender or Issuing Bank and
(ii) the amount of such capital is increased by or based
upon (A) the making or maintenance by any Lender of its
Loans, any Lender's participation in or obligation to
participate in the Loans, Letters of Credit or other
advances made hereunder or the existence of any Lender's
obligation to make Loans or (B) the issuance or maintenance
by any Issuing Bank of, or the existence of any Issuing
Bank's obligation to issue, Letters of Credit, then, in any
such case, upon written demand by such Lender or Issuing
Bank (with a copy of such demand to the Administrative
Agent), the Borrower shall immediately pay to the
Administrative Agent for the account of such Lender or
Issuing Bank, from time to time as specified by such Lender
or Issuing Bank, additional amounts sufficient to compensate
such Lender or Issuing Bank or such Person therefor. Such
demand shall be accompanied by a statement as to the amount
of such compensation and include a brief summary of the
basis for such demand. Such statement shall be conclusive
and binding for all purposes, absent manifest error.
14.03. Changes; Legal Restrictions. If after the date
hereof any Lender or Issuing Bank determines that the
adoption or implementation of or any change in or in the
interpretation or administration of any law or regulation or
any guideline or request from any central bank or other
Governmental Authority or quasi-governmental authority
exercising jurisdiction, power or control over any Lender,
Issuing Bank or over banks or financial institutions
generally (whether or not having the force of law),
compliance with which:
(a) does or will subject a Lender or an Issuing Bank
(or its Applicable Lending Office or Eurodollar Affiliate)
to charges (other than taxes) of any kind which such Lender
or Issuing Bank reasonably determines to be applicable to
the Commitments of the Lenders and/or the Issuing Banks to
make Eurodollar Rate Loans or issue and/or participate in
Letters of Credit or change the basis of taxation of
payments to that Lender or Issuing Bank of principal, fees,
interest, or any other amount payable hereunder with respect
to Eurodollar Rate Loans or Letters of Credit; or
(b) does or will impose, modify, or hold applicable,
in the determination of a Lender or an Issuing Bank, any
reserve (other than reserves taken into account in
calculating the Eurodollar Rate), special deposit,
compulsory loan, FDIC insurance or similar requirement
against assets held by, or deposits or other liabilities
(including those pertaining to Letters of Credit) in or for
the account of, advances or loans by, commitments made, or
other credit extended by, or any other acquisition of funds
by, a Lender or an Issuing Bank or any Applicable Lending
Office or Eurodollar Affiliate of that Lender or Issuing
Bank;
and the result of any of the foregoing is to increase the
cost to that Lender or Issuing Bank of making, renewing or
maintaining the Loans or its Commitments with respect to, or
issuing or participating in, the Letters of Credit or to
reduce any amount receivable thereunder; then, in any such
case, upon written demand by such Lender or Issuing Bank
(with a copy of such demand to the Administrative Agent),
the Borrower shall immediately pay to the Administrative
Agent for the account of such Lender or Issuing Bank, from
time to time as specified by such Lender or Issuing Bank,
such amount or amounts as may be necessary to compensate
such Lender or Issuing Bank or its Eurodollar Affiliate for
any such additional cost incurred or reduced amount
received. Such demand shall be accompanied by a statement
as to the amount of such compensation and include a brief
summary of the basis for such demand. Such statement shall
be conclusive and binding for all purposes, absent manifest
error.
14.04. Illegality. (i) If at any time any Lender
determines (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties)
that the making or continuation of or conversion into any
Eurodollar Rate Loan has become unlawful or impermissible by
compliance by that Lender with any law, governmental rule,
regulation or order of any Governmental Authority (whether
or not having the force of law and whether or not failure to
comply therewith would be unlawful or would result in costs
or penalties), then, and in any such event, such Lender may
give notice of that determination, in writing, to the
Borrower and the Administrative Agent, and the
Administrative Agent shall promptly transmit the notice to
each other Lender.
(ii) When notice is given by a Lender under Section
14.04(i), (A) the Borrower's right to request from such
Lender and such Lender's obligation, if any, to make
Eurodollar Rate Loans shall be immediately suspended, and
such Lender shall make a Base Rate Loan as part of any
requested Borrowing of Eurodollar Rate Loans and (B) if the
affected Eurodollar Rate Loan or Loans are then outstanding,
the Borrower shall immediately, or if permitted by appli-
cable law, no later than the date permitted thereby, upon at
least one (1) Business Day's prior written notice to the
Administrative Agent and the affected Lender, convert each
such Loan into a Base Rate Loan.
(iii) If at any time after a Lender gives notice under
Section 14.04(i) such Lender determines that it may lawfully
make Eurodollar Rate Loans, such Lender shall promptly give
notice of that determination, in writing, to the Borrower
and the Administrative Agent, and the Administrative Agent
shall promptly transmit the notice to each other Lender.
The Borrower's right to request, and such Lender's
obligation, if any, to make Eurodollar Rate Loans shall
thereupon be restored.
14.05. Compensation. In addition to all amounts
required to be paid by the Borrower pursuant to
Section 5.01, the Borrower shall compensate each Lender,
upon demand, for all losses, expenses and liabilities
(including, without limitation, any loss or expense incurred
by reason of the liquidation or reemployment of deposits or
other funds acquired by such Lender to fund or maintain such
Lender's Eurodollar Rate Loans to the Borrower but excluding
any loss of Applicable Eurodollar Rate Margin on the
relevant Loans) which that Lender may sustain (i) if for any
reason a Borrowing, conversion into or continuation of
Eurodollar Rate Loans does not occur on a date specified
therefor in a Notice of Borrowing or a Notice of Conver-
sion/Continuation given by the Borrower or in a telephonic
request by it for borrowing or conversion/continuation or a
successive Eurodollar Interest Period does not commence
after notice therefor is given pursuant to Section 5.01(c),
including, without limitation, pursuant to Section 5.02(e),
(ii) if for any reason any Eurodollar Rate Loan is prepaid
(including, without limitation, mandatorily pursuant to
Section 4.01) on a date which is not the last day of the
applicable Eurodollar Interest Period, (iii) as a
consequence of a required conversion of a Eurodollar Rate
Loan to a Base Rate Loan as a result of any of the events
indicated in Section 5.02(e), or (iv) as a consequence of
any failure by the Borrower to repay Eurodollar Rate Loans
when required by the terms of this Agreement. The Lender
making demand for such compensation shall deliver to the
Borrower concurrently with such demand a written statement
in reasonable detail as to such losses, expenses and
liabilities, and this statement shall be conclusive as to
the amount of compensation due to that Lender, absent
manifest error.
14.06. Limitation on Additional Amounts Payable by the
Borrower. Notwithstanding the provisions of Section
14.01(a), the Borrower shall not be required to pay any
additional amounts hereunder to a Lender or Issuing Bank if
(a) the obligation to pay such additional amounts would not
have arisen but for a failure by the Lender or Issuing Bank
to comply with the requirements described in Section 14.01
or (b) the Lender or Issuing Bank shall not have furnished
the Borrower with such forms or shall not have taken such
other action as reasonably may be available to it under
applicable tax laws and any applicable tax treaty to obtain
an exemption from, or reduction (to the lowest applicable
rate) of withholding of such United States federal income
tax; provided, however, the Borrower's obligation to pay
such additional amounts shall be reinstated upon receipt of
such forms or evidence that action with respect to obtaining
such exemption or reduction has been taken.
14.07. Change in Lending Office. Any Lender claiming
any additional amounts payable pursuant to Section 14.01
shall use reasonable efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the
Domestic Lending Office designated by it for purposes of
this Agreement to a Domestic Lending Office in another
jurisdiction, if the making of such a change would avoid the
need for, or reduce the amount of, any such additional
amounts which may thereafter accrue and would not, in the
judgment of such Lender, be otherwise disadvantageous to
such Lender.
<PAGE>
ARTICLE XV
MISCELLANEOUS
15.01. Assignments and Participations. (a) Assign-
ments. No assignments or participations of any Lender's
rights or obligations under this Agreement shall be made
except in accordance with this Section 15.01. Each Lender
may assign to one or more Eligible Assignees all or a
portion of its rights and obligations under this Agreement
(including all of its rights and obligations with respect to
the Term Loans, the Revolving Loans and the Letters of
Credit) in accordance with the provisions of this Section
15.01.
(b) Limitations on Assignments. Each assignment shall
be subject to the following conditions: (i) each such
assignment may be on a non-pro-rata basis, but shall be of a
constant, and not a varying, ratable percentage of all of
the assigning Lender's rights and obligations under this
Agreement which are subject to such assignment and, in the
case of a partial assignment to a Person which is not a
Lender, shall be in a minimum principal amount aggregating
$5,000,000, (ii) each such assignment shall be to an
Eligible Assignee consented to by the Issuing Banks, which
consent shall not be unreasonably withheld or delayed, (iii)
the Borrower shall have the right to approve each such
Eligible Assignee which is not an Affiliate of a Lender,
which approval shall not be unreasonably withheld or delayed
and (iv) the parties to each such assignment shall execute
and deliver to the Administrative Agent, for its acceptance
and recording in the Register, an Assignment and Acceptance.
Upon such execution, delivery, acceptance and recording in
the Register, from and after the effective date specified in
each Assignment and Acceptance and agreed to by the
Administrative Agent, (A) the assignee thereunder shall, in
addition to any rights and obligations hereunder held by it
immediately prior to such effective date, if any, have the
rights and obligations hereunder that have been assigned to
it pursuant to such Assignment and Acceptance and shall, to
the fullest extent permitted by law, have the same rights
and benefits hereunder as if it were an original Lender
hereunder, (B) the assigning Lender shall, to the extent
that rights and obligations hereunder have been assigned by
it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of such assigning
Lender's rights and obligations under this Agreement, the
assigning Lender shall cease to be a party hereto), and (C)
the Borrower shall execute and deliver to the assignee
thereunder one or more Notes, as applicable, evidencing its
obligations to such assignee with respect to the Loans.
(c) The Register. The Administrative Agent shall
maintain at its address referred to in Section 15.08 a copy
of each Assignment and Acceptance delivered to and accepted
by it and a register (the "Register") for the recordation of
the names and addresses of the Lenders and the Commitment
under each Loan of, and principal amount of the Loans under
each facility owing to, each Lender from time to time and
whether such Lender is an original Lender or the assignee of
another Lender pursuant to an Assignment and Acceptance.
The entries in the Register shall be conclusive and binding
for all purposes, absent manifest error, and the Borrower
and each of its Subsidiaries, the Administrative Agent and
the Lenders may treat each Person whose name is recorded in
the Register as a Lender hereunder for all purposes of this
Agreement. The Register shall be available for inspection
by the Borrower or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
(d) Fee. Upon its receipt of an Assignment and Accep-
tance executed by the assigning Lender and an Eligible
Assignee and a processing and recordation fee of $3,000
(payable by the assigning Lender or the assignee, as shall
be agreed between them), the Administrative Agent shall, if
such Assignment and Acceptance has been completed and is in
compliance with this Agreement and in substantially the form
of Exhibit A, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the
Register and (iii) give prompt notice thereof to the
Borrower and the other Lenders.
(e) Participations. Each Lender may sell partici-
pations to one or more other financial institutions in or to
all or a portion of its rights and obligations under and in
respect of any and all facilities under this Agreement
(including, without limitation, all or a portion of any or
all of its Commitments hereunder and the Loans owing to it
and its undivided interest in the Letters of Credit);
provided, however, that (i) such Lender's obligations under
this Agreement (including, without limitation, its
Commitments hereunder) shall remain unchanged, (ii) such
Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations, (iii) the
Borrower, the Administrative Agent and the other Lenders
shall continue to deal solely and directly with such Lender
in connection with such Lender's rights and obligations
under this Agreement and (iv) such participant's rights to
agree or to restrict such Lender's ability to agree to the
modification, waiver or release of any of the terms of the
Loan Documents or to the release of any Collateral covered
by the Loan Documents, to consent to any action or failure
to act by any party to any of the Loan Documents or any of
their respective Affiliates, or to exercise or refrain from
exercising any powers or rights which any Lender may have
under or in respect of the Loan Documents or any Collateral,
shall be limited to the right to consent to (A) increase in
the Commitment of the Lender from whom such participant
purchased a participation, (B) reduction of the principal
of, or rate or amount of interest on the Loans(s) subject to
such participation (other than by the payment or prepayment
thereof), (C) postponement of any date fixed for any payment
of principal of, or interest on, the Loan(s) subject to such
participation and (D) release of any guarantor of the
Obligations or all or a substantial portion of the
Collateral except as provided in Section 13.09(c).
(f) Payment to Participants. Anything in this Agree-
ment to the contrary notwithstanding, in the case of any
participation, all amounts payable by the Borrower under the
Loan Documents shall be calculated and made in the manner
and to the parties required hereby as if no such
participation had been sold; provided, however, that each
participant shall be the beneficiary of the provisions of
Article XIV to the extent amounts payable thereunder do not
exceed the amounts payable thereunder to the Lender from
which such participation has been purchased.
(g) Lenders' Creation of Security Interests.
Notwithstanding any other provision set forth in this
Agreement, any Lender may at any time create a security
interest in all or any portion of its rights under this
Agreement (including, without limitation, Obligations owing
to it and any Notes held by it) in favor of any Federal
Reserve bank in accordance with Regulation A of the Federal
Reserve Board.
(h) Assignments by Citicorp. If Citicorp ceases to be
a Lender under this Agreement by virtue of any assignment
made pursuant to this Section 15.01, then, as of the
effective date of such cessation, Citibank's obligations to
issue Letters of Credit pursuant to Section 3.01 shall
terminate and Citibank shall be an Issuing Bank hereunder
only with respect to outstanding Letters of Credit issued
prior to such date.
(i) Information Regarding the Borrower. Any Lender
may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this
Section 15.01, disclose to the assignee or participant or
proposed assignee or participant, any information relating
to the Borrower or its Subsidiaries furnished to such Lender
by the Administrative Agent or by or on behalf of the
Borrower; provided that, prior to any such disclosure, such
assignee or participant, or proposed assignee or
participant, shall agree to preserve in accordance with
Section 15.20 the confidentiality of any confidential
information described therein.
15.02. Expenses.
(a) Generally. The Borrower agrees upon demand to
pay, or reimburse the Administrative Agent for, all of the
Administrative Agent's reasonable internal and external
audit, legal, appraisal, valuation, filing, document
duplication and reproduction and investigation expenses and
for all other out-of-pocket costs and expenses of every type
and nature (including, without limitation, the reasonable
fees, expenses and disbursements of Sidley & Austin, local
legal counsel, auditors, accountants, appraisers, printers,
insurance and environmental advisers, and other consultants
and Administrative Agents) incurred by the Administrative
Agent in connection with (i) the Administrative Agent's
review and investigation of the Borrower and its Affiliates
and the Collateral in connection with the preparation,
negotiation, and execution of the Loan Documents and the
Administrative Agent's periodic reviews and audits of the
Borrower; (ii) the preparation, negotiation, execution and
interpretation of this Agreement (including, without
limitation, the satisfaction or attempted satisfaction of
any of the conditions set forth in Article VI) and the other
Loan Documents and the making of the Loans hereunder; (iii)
the creation, perfection or protection of the Liens under
the Loan Documents (including, without limitation, any
reasonable fees and expenses for local counsel in various
jurisdictions); (iv) the ongoing administration of this
Agreement, the other Loan Documents and the Loans, including
consultation with attorneys in connection therewith and with
respect to the Administrative Agent's rights and
responsibilities under this Agreement and the other Loan
Documents; (v) the protection, collection or enforcement of
any of the Obligations or the enforcement of any of the Loan
Documents; (vi) the commencement, defense or intervention in
any court proceeding relating in any way to the Obligations,
the Property, the Borrower, any of its Subsidiaries, this
Agreement or any of the other Loan Documents; (vii) the
response to, and preparation for, any subpoena or request
for document production with which the Administrative Agent
is served or deposition or other proceeding in which the
Administrative Agent is called to testify, in each case,
relating in any way to the Obligations, the Property, the
Borrower, any of its Subsidiaries, this Agreement or any of
the other Loan Documents; and (viii) any amendments,
consents, waivers, assignments, restatements, or supplements
to any of the Loan Documents and the preparation,
negotiation, and execution of the same.
(b) After Default. The Borrower further agrees to pay
or reimburse the Administrative Agent, the Issuing Banks and
the Lenders upon demand for all out-of-pocket costs and
expenses, including, without limitation, reasonable
attorneys' fees (including allocated costs of internal
counsel and costs of settlement) incurred by the
Administrative Agent, any Issuing Bank or any Lender after
the occurrence of an Event of Default (i) in enforcing any
Loan Document or Obligation or any security therefor or
exercising or enforcing any other right or remedy available
by reason of such Event of Default; (ii) in connection with
any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out"
or in any insolvency or bankruptcy proceeding; (iii) in
commencing, defending or intervening in any litigation or in
filing a petition, complaint, answer, motion or other
pleadings in any legal proceeding relating to the
Obligations, the Property, the Borrower or any of its
Subsidiaries and related to or arising out of the
transactions contemplated hereby or by any of the other Loan
Documents; and (iv) in taking any other action in or with
respect to any suit or proceeding (bankruptcy or otherwise)
described in clauses (i) through (iii) above.
15.03. Indemnity. The Borrower further agrees (a) to
defend, protect, indemnify, and hold harmless the
Administrative Agent and each and all of the Lenders and
Issuing Banks and each of their respective officers, direc-
tors, employees, attorneys and Administrative Agents
(including, without limitation, those retained in connection
with the satisfaction or attempted satisfaction of any of
the conditions set forth in Article VI) (collectively, the
"Indemnitees") from and against any and all liabilities,
obligations, losses (other than loss of profits), damages,
penalties, actions, judgments, suits, claims, costs,
expenses and disbursements of any kind or nature whatsoever
(excluding any taxes and including, without limitation, the
fees and disbursements of counsel for such Indemnitees in
connection with any investigative, administrative or
judicial proceeding, whether or not such Indemnitees shall
be designated a party thereto), imposed on, incurred by, or
asserted against such Indemnitees in any manner relating to
or arising out of (i) this Agreement or the other Loan
Documents, or any act, event or transaction related or
attendant thereto or to the transfers evidenced by the
Transfer Documents, the making of the Loans and the issuance
of and participation in Letters of Credit hereunder, the
management of such Loans or Letters of Credit, the use or
intended use of the proceeds of the Loans or Letters of
Credit hereunder, or any of the other transactions
contemplated by any of the Loan Documents, or (ii) any
Liabilities and Costs relating to any violation by the
Borrower, its Subsidiaries, or the Guarantors, or their
respective predecessors-in-interest of any Environmental,
Health or Safety Requirements of Law, the past, present or
future operations of the Borrower, its Subsidiaries, any
Guarantor, or any of their respective predecessors in
interest, or, the past, present or future environmental,
health or safety condition of any respective past, present
or future Property of the Borrower, any of its Subsidiaries,
or any Guarantor, the presence of asbestos-containing
materials at any respective past, present or future Property
of the Borrower, any of its Subsidiaries, or any Guarantor,
or the Release or threatened Release of any Contaminant into
the environment by the Borrower, its Subsidiaries, any
Guarantor, or their respective predecessors-in-interest, or
the Release or threatened Release of any Contaminant into
the environment from or at any facility to which the
Borrower, any of its Subsidiaries, or any Guarantor, or
their respective predecessors-in-interest sent or directly
arranged the transport of any Contaminant (collectively, the
"Indemnified Matters"); provided, however, the Borrower
shall have no obligation to an Indemnitee hereunder with
respect to Indemnified Matters caused by or resulting from
the willful misconduct or gross negligence of such
Indemnitee, as determined by a court of competent
jurisdiction and (b) not to assert any claim against any of
the Indemnified Parties on any theory of liability for
special, indirect, consequential or punitive damages arising
out of, or in any way in connection with, the Commitments,
the Obligations or any other matters governed by this
Agreement and/or the other Loan Documents. To the extent
that the undertaking to indemnify, pay and hold harmless set
forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, the Borrower
shall contribute the maximum portion which it is permitted
to pay and satisfy under applicable law, to the payment and
satisfaction of all Indemnified Matters incurred by the
Indemnitees. The Administrative Agent, Lenders and the
Issuing Banks agree to notify the Borrower of the
institution or assertion of any Indemnified Matter, but the
parties hereto hereby agree that the failure to so notify
the Borrower shall not release the Borrower from its
obligations hereunder.
15.04. Change in Accounting Principles. If any change
in the accounting principles used in the preparation of the
most recent Financial Statements referred to in Section 8.01
are hereafter required or permitted by the rules,
regulations, pronouncements and opinions of the Financial
Accounting Standards Board or the American Institute of
Certified Public Accountants (or successors thereto or
agencies with similar functions) and are adopted by the
Borrower with the agreement of its independent certified
public accountants and such changes result in a change in
the method of calculation of any of the covenants, standards
or terms found in Article IX, Article X, and Article XI, the
parties hereto agree to enter into negotiations in order to
amend such provisions so as to equitably reflect such
changes with the desired result that the criteria for
evaluating compliance with such covenants, standards and
terms by the Borrower shall be the same after such changes
as if such changes had not been made; provided, however, no
change in GAAP that would affect the method of calculation
of any of the covenants, standards or terms shall be given
effect in such calculations until such provisions are
amended, in a manner satisfactory to the Requisite Lenders
and the Borrower, to so reflect such change in accounting
principles.
15.05. Setoff. In addition to any Liens granted under
the Loan Documents and any rights now or hereafter granted
under applicable law, upon the occurrence and during the
continuance of any Event of Default, each Lender, each
Issuing Bank and any Affiliate of any Lender or Issuing Bank
is hereby authorized by the Borrower at any time or from
time to time, without notice to any Person (any such notice
being hereby expressly waived) to set off and to appropriate
and to apply any and all deposits (general or special,
including, but not limited to, indebtedness evidenced by
certificates of deposit, whether matured or unmatured (but
not including trust accounts)) and any other Indebtedness at
any time held or owing by such Lender, Issuing Bank or any
of their Affiliates to or for the credit or the account of
the Borrower against and on account of the Obligations of
the Borrower to such Lender, Issuing Bank or any of their
Affiliates, including, but not limited to, all Loans and
Letters of Credit and all claims of any nature or
description arising out of or in connection with this
Agreement, irrespective of whether or not (i) such Lender or
Issuing Bank shall have made any demand hereunder or (ii)
the Administrative Agent, at the request or with the consent
of the Requisite Lenders, shall have declared the principal
of and interest on the Loans and other amounts due hereunder
to be due and payable as permitted by Article XII and even
though such Obligations may be contingent or unmatured.
Each Lender and each Issuing Bank agrees that it shall not,
without the express consent of the Requisite Lenders, and
that it shall, to the extent it is lawfully entitled to do
so, upon the request of the Requisite Lenders, exercise its
setoff rights hereunder against any accounts of the
Borrower, any of its Subsidiaries, or Guarantor now or
hereafter maintained with such Lender, Issuing Bank or any
Affiliate of such Lender or Issuing Bank.
15.06. Ratable Sharing. The Lenders agree among them-
selves that (i) with respect to all amounts received by them
which are applicable to the payment of the Obligations
(excluding the fees described in Section 5.03 and Article
XIV), equitable adjustment will be made so that, in effect,
all such amounts will be shared among them ratably in
accordance with their Pro Rata Shares, whether received by
voluntary payment, by the exercise of the right of setoff or
banker's lien, by counterclaim or cross-action or by the
enforcement of any or all of the Obligations (excluding the
fees described in Section 5.03 and Article XIV) or the
Collateral, (ii) if any of them shall by voluntary payment
or by the exercise of any right of counterclaim, setoff,
banker's lien or otherwise, receive payment of a proportion
of the aggregate amount of the Obligations held by it, which
is greater than the amount which such Lender is entitled to
receive hereunder, the Lender receiving such excess payment
shall purchase, without recourse or warranty, an undivided
interest and participation (which it shall be deemed to have
done simultaneously upon the receipt of such payment) in
such Obligations owed to the others so that all such
recoveries with respect to such Obligations shall be applied
ratably in accordance with their Pro Rata Shares; provided,
however, that if all or part of such excess payment received
by the purchasing party is thereafter recovered from it,
those purchases shall be rescinded and the purchase prices
paid for such participations shall be returned to such party
to the extent necessary to adjust for such recovery, but
without interest except to the extent the purchasing party
is required to pay interest in connection with such
recovery. The Borrower agrees that any Lender so purchasing
a participation from another Lender pursuant to this
Section 15.06 may, to the fullest extent permitted by law,
exercise all its rights of payment (including, subject to
Section 15.05, the right of setoff) with respect to such
participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such
participation.
15.07. Amendments and Waivers. (a) General
Provisions. Unless otherwise provided for or required in
this Agreement, no amendment or modification of any
provision of this Agreement or any of the other Loan
Documents shall be effective without the written agreement
of the Requisite Lenders (which the Requisite Lenders shall
have the right to grant or withhold in their sole
discretion) and the Borrower. No termination or waiver of
any provision of this Agreement or any of the other Loan
Documents, or consent to any departure by the Borrower
therefrom, shall be effective without the written
concurrence of the Requisite Lenders, which the Requisite
Lenders shall have the right to grant or withhold in their
sole discretion. All amendments, modifications, waivers and
consents not specifically reserved to Lenders, Issuing
Banks, and the Administrative Agent in Section 15.07(b),
Section 15.07(c) and in other provisions of this Agreement
shall require only the approval of the Requisite Lenders.
Any waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it
was given. No notice to or demand on the Borrower in any
case shall entitle the Borrower to any other or further
notice or demand in similar or other circumstances.
(b) Amendments, Consents and Waivers by Super-
Majority Lenders. Any amendment, modification, termination,
waiver or consent with respect to any of the provisions of
Section 4.01(b) of this Agreement shall be effective only by
a written agreement signed by the Super-Majority Lenders.
(c) Amendments, Consents and Waivers by All Lenders.
Any amendment, modification, termination, waiver or consent
with respect to any of the following provisions of this
Agreement shall be effective only by a written agreement,
signed by each Lender:
(i) increase in the amount of any of the Commitments
of such Lender,
(ii) reduction of the principal of, rate or amount of
interest on the Loans, the Reimbursement Obligations, or any
fees or other amounts payable to the Lenders or Issuing
Banks (other than by the payment or prepayment thereof),
(iii) postponement of the Revolving Credit Termination
Date, the Term Loan Termination Date or any date fixed for
any payment of principal of, or interest on, the Loans, the
Reimbursement Obligations or any fees or other amounts
payable to the Lenders or the Issuing Banks,
(iv) the orders of priority of applications set forth
in Section 4.01,
(v) change in the definitions of Revolving Credit
Commitments or Term Loan Commitments,
(vi) waiver of any of the conditions specified in
Sections 6.01 or 6.02 or the covenant set forth in Section
9.15,
(vii) release of any guarantor of the Obligations, the
Lien on the CM Notes or CM Letter of Credit, or all or a
substantial portion of the Collateral (except as provided in
Section 13.09(c)),
(viii) change in the (A) definitions of Requisite
Lenders Super-Majority Lenders or (B) the aggregate Pro Rata
Share of the Lenders which shall be required for the Lenders
or any of them to take action under this Agreement or the
other Loan Documents,
(ix) amendment of Section 15.01 or this Section 15.07,
(x) assignment of any right or interest in or under
this Agreement or any of the other Loan Documents by the
Borrower, and
(xi) waiver of any Event of Default described in
Sections 12.01(a), (f), (g), (h), and (n).
(d) Administrative Agent Authority. The
Administrative Agent may, but shall have no obligation to,
with the written concurrence of any Lender, execute
amendments, modifications, waivers or consents on behalf of
that Lender. Notwithstanding anything to the contrary
contained in this Section 15.07, no amendment, modification,
waiver or consent shall affect the rights or duties of the
Administrative Agent under this Agreement or the other Loan
Documents, unless made in writing and signed by the
Administrative Agent in addition to the Lenders required
above to take such action; and the order of priority set
forth in clauses (A) through (C) of Section 4.02(b) may be
changed only with the prior written consent of the
Administrative Agent. Notwithstanding anything herein to
the contrary, in the event that the Borrower shall have
requested, in writing, that any Lender agree to an
amendment, modification, waiver or consent with respect to
any particular provision or provisions of this Agreement or
the other Loan Documents, and such Lender shall have failed
to state, in writing, that it either agrees or disagrees (in
full or in part) with all such requests (in the case of its
statement of agreement, subject to satisfactory
documentation and such other conditions it may specify)
within thirty (30) days after such request, then such Lender
shall be deemed to not have approved such amendment,
modification, waiver or consent and the Administrative Agent
shall thereupon determine whether the Lenders required above
to take the requested action have approved the same within
the required time and communicate such determination to the
Borrower and the Lenders.
15.08. Notices. Unless otherwise specifically pro-
vided herein, any notice or other communication herein
required or permitted to be given shall be in writing and
may be personally served, sent by facsimile transmission or
courier service or United States certified mail and shall be
deemed to have been given when delivered in person or by
courier service, upon receipt of a facsimile transmission,
or four (4) Business Days after deposit in the United States
mail with postage prepaid and properly addressed. Notices
to the Administrative Agent pursuant to Articles II, IV or
XIII shall not be effective until received by the
Administrative Agent. For the purposes hereof, the
addresses of the parties hereto (until notice of a change
thereof is delivered as provided in this Section 15.08)
shall be as set forth below each party's name on the
signature pages hereof or the signature page of any
applicable Assignment and Acceptance, or, as to each party,
at such other address as may be designated by such party in
a written notice to all of the other parties to this
Agreement.
15.09. Survival of Warranties and Agreements. All
representations and warranties made herein and all covenants
and other obligations of the Borrower in respect of taxes,
indemnification and expense reimbursement shall survive the
execution and delivery of this Agreement and the other Loan
Documents, the making and repayment of the Loans, the
issuance and discharge of Letters of Credit hereunder and
the termination of this Agreement and shall not be limited
in any way by the passage of time or occurrence of any event
and shall expressly cover time periods when the
Administrative Agent, any of the Issuing Banks or any of the
Lenders may have come into possession or control of any of
the Borrower's or its Subsidiaries' Property.
15.10. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of the
Administrative Agent, any Lender or any Issuing Bank in the
exercise of any power, right or privilege under any of the
Loan Documents shall impair such power, right or privilege
or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial
exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right,
power or privilege. All rights and remedies existing under
the Loan Documents are cumulative to and not exclusive of
any rights or remedies otherwise available.
15.11. Marshalling; Payments Set Aside. None of the
Administrative Agent, any Lender or any Issuing Bank shall
be under any obligation to marshall any assets in favor of
the Borrower or any other Person or against or in payment of
any or all of the Obligations. To the extent that the
Borrower makes a payment or payments to the Administrative
Agent, the Lenders or the Issuing Banks or any of such
Persons receives payment from the proceeds of the Collateral
or exercises its rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to
be fraudulent or preferential, set aside or required to be
repaid to a trustee, receiver or any other party, then to
the extent of such recovery, the obligation or part thereof
originally intended to be satisfied, and all Liens, right
and remedies therefor, shall be revived and continued in
full force and effect as if such payment had not been made
or such enforcement or setoff had not occurred.
15.12. Severability. In case any provision in or
obligation under this Agreement or the other Loan Documents
shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not
in any way be affected or impaired thereby.
15.13. Headings. Section headings in this Agreement
are included herein for convenience of reference only and
shall not constitute a part of this Agreement or be given
any substantive effect.
15.14. Governing Law. THIS AGREEMENT SHALL BE
INTERPRETED, AND THE RIGHTS AND LIABILITIES OF THE PARTIES
HERETO DETERMINED, IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.
15.15. Limitation of Liability. No claim may be made
by the Borrower, any Lender, any Issuing Bank, the
Administrative Agent or any other Person against the
Administrative Agent, any other Issuing Bank or any other
Lender or the Affiliates, directors, officers, employees,
attorneys or agents of any of them for any special,
consequential or punitive damages in respect of any claim
for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated
by this Agreement, or any act, omission or event occurring
in connection therewith; and each of the Borrower, each
Lender, each Issuing Bank and the Administrative Agent
hereby waives, releases and agrees not to sue upon any such
claim for any such damages, whether or not accrued and
whether or not known or suspected to exist in its favor.
15.16. Successors and Assigns. This Agreement and the
other Loan Documents shall be binding upon the parties
hereto and their respective successors and assigns and shall
inure to the benefit of the parties hereto and the
successors and permitted assigns of the Lenders and the
Issuing Banks. The rights hereunder of the Borrower, or any
interest therein, may not be assigned without the written
consent of all Lenders.
15.17. Certain Consents and Waivers of the Borrower.
(a) Personal Jurisdiction. (i) EACH OF THE
ADMINISTRATIVE AGENT, THE LENDERS, THE ISSUING BANKS AND THE
BORROWER IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF
AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF ANY
NEW YORK STATE COURT OR FEDERAL COURT SITTING IN NEW YORK,
NEW YORK, AND ANY COURT HAVING JURISDICTION OVER APPEALS OF
MATTERS HEARD IN SUCH COURTS, IN ANY ACTION OR PROCEEDING
ARISING OUT OF, CONNECTED WITH, RELATED TO OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED AMONG THEM IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, WHETHER ARISING
IN CONTRACT, TORT, EQUITY OR OTHERWISE, OR FOR RECOGNITION
OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES
HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL
CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED IN SUCH STATE COURT OR, TO THE EXTENT
PERMITTED BY LAW, IN SUCH FEDERAL COURT. THE BORROWER
IRREVOCABLY DESIGNATES AND APPOINTS TFC, 110 EAST 59TH
STREET, 30TH FLOOR, NEW YORK, NEW YORK 10022, AS ITS AGENT
(THE "PROCESS AGENT") FOR SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED TO BE EFFECTIVE AND BINDING SERVICE IN EVERY
RESPECT. EACH OF THE ADMINISTRATIVE AGENT, THE LENDERS, THE
ISSUING BANKS AND THE BORROWER 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. THE BORROWER WAIVES
IN ALL DISPUTES ANY OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING THE DISPUTE.
(ii) THE BORROWER AGREES THAT THE ADMINISTRATIVE AGENT
SHALL HAVE THE RIGHT TO PROCEED AGAINST THE BORROWER OR ITS
PROPERTY IN A COURT IN ANY LOCATION TO ENABLE THE
ADMINISTRATIVE AGENT, THE ISSUING BANKS AND THE LENDERS TO
REALIZE ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE
OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF THE ADMINISTRATIVE AGENT, ANY ISSUING
BANK OR ANY LENDER. THE BORROWER AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS IN ANY PROCEEDING
BROUGHT BY THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY
ISSUING BANK TO REALIZE ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF THE ADMINISTRATIVE AGENT, ANY
LENDER OR ANY ISSUING BANK. THE BORROWER WAIVES ANY
OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN
WHICH THE ADMINISTRATIVE AGENT, ANY ISSUING BANK OR ANY
LENDER MAY COMMENCE A PROCEEDING DESCRIBED IN THIS SECTION.
(b) Service of Process. THE BORROWER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE
AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED
MAIL, POSTAGE PREPAID, TO THE PROCESS AGENT OR THE
BORROWER'S NOTICE ADDRESS SPECIFIED BELOW, SUCH SERVICE TO
BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. THE
BORROWER IRREVOCABLY WAIVES ANY OBJECTION (INCLUDING,
WITHOUT LIMITATION, ANY OBJECTION OF THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS) WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY JURISDICTION SET FORTH ABOVE. NOTHING
HEREIN SHALL AFFECT THE RIGHT TO SERVE PROCESS IN ANY OTHER
MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
ADMINISTRATIVE AGENT TO BRING PROCEEDINGS AGAINST THE
BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
(c) Waiver of Jury Trial. EACH OF THE ADMINISTRATIVE
AGENT, LENDERS, ISSUING BANKS, AND THE BORROWER IRREVOCABLY
WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT. ANY OF
THE BORROWER, THE ADMINISTRATIVE AGENT, LENDERS, OR ISSUING
BANKS MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT
OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL
BY JURY.
15.18. Counterparts; Effectiveness; Inconsistencies.
This Agreement and any amendments, waivers, consents, or
supplements hereto may be executed in counterparts, each of
which when so executed and delivered shall be deemed an
original, but all such counterparts together shall
constitute but one and the same instrument. This Agreement
shall become effective against the Borrower, each Lender,
each Issuing Bank and the Administrative Agent on the
Closing Date. This Agreement and each of the other Loan
Documents shall be construed to the extent reasonable to be
consistent one with the other, but to the extent that the
terms and conditions of this Agreement are actually
inconsistent with the terms and conditions of any other Loan
Document, this Agreement shall govern.
15.19. Limitation on Agreements. All agreements
between the Borrower, the Administrative Agent, each Lender
and each Issuing Bank in the Loan Documents are hereby
expressly limited so that in no event shall any of the Loans
or other amounts payable by the Borrower under any of the
Loan Documents be directly or indirectly secured (within the
meaning of Regulation U) by Margin Stock.
15.20. Confidentiality. Subject to Section 15.01(f),
the Lenders and the Issuing Banks shall hold all nonpublic
information obtained pursuant to the requirements of this
Agreement and identified as such by the Borrower in
accordance with such Lender's or such Issuing Bank's cus-
tomary procedures for handling confidential information of
this nature and in accordance with safe and sound banking
practices and in any event may make disclosure reasonably
required by a bona fide offeree, transferee or participant
in connection with the contemplated transfer or
participation or as required or requested by any
Governmental Authority or representative thereof or pursuant
to legal process and shall require any such offeree,
transferee or participant to agree (and require any of its
offerees, transferees or participants to agree) to comply
with this Section 15.20. In no event shall any Lender or
any Issuing Bank be obligated or required to return any
materials furnished by the Borrower; provided, however, each
offeree shall be required to agree that if it does not
become a transferee or participant it shall return all
materials furnished to it by the Borrower in connection with
this Agreement. Any and all confidentiality agreements
entered into between any Lender or any Issuing Bank and the
Borrower shall survive the execution of this Agreement.
15.21. Entire Agreement. This Agreement, taken
together with all of the other Loan Documents, embodies the
entire agreement and understanding among the parties hereto
and supersedes all prior agreements and understandings,
written and oral, relating to the subject matter hereof.
15.22. Advice of Counsel. The Borrower and each
Lender and Issuing Bank understand that the Administrative
Agent's counsel represents only the Administrative Agent's
and its Affiliates' interests and that the Borrower, other
Lenders and other Issuing Banks are advised to obtain their
own counsel. The Borrower represents and warrants to the
Administrative Agent and the other Holders that it has
discussed this Agreement with its counsel.
IN WITNESS WHEREOF, this Agreement has been duly exe-
cuted as of the date first above written.
BORROWER:
FAIRCHILD HOLDING CORP.
By: Karen L. Schneckenburger
Title: Vice President & Treasurer
Notice Address:
300 West Service Road
Chantilly, Virginia 22021
Attn: Michael T. Alcox
Telecopier No. (703) 478-5915 and
Donald E. Miller
Telecopier No. (703) 478-5775
with a copy to:
Cahill Gordon & Reindel
Eighty Pine Street
New York, New York 10005-1702
Attn: James J. Clark
Telecopier No. (212) 269-5420
ADMINISTRATIVE AGENT:
CITICORP USA, INC., as Administrative Agent
By: Marjorie Futornick
Title: Vice President
Notice Address:
Citicorp USA, Inc.
c/o Citicorp Securities, Inc.
200 South Wacker Drive
31st Floor
Chicago, Illinois 60606
Attn: Colin M. Cohen
Telecopier No. (312) 993-1050
with a copy to:
Sidley & Austin
One First National Plaza
Chicago, Illinois 60603
Attn: DeVerille A. Huston
Telecopier No. (312) 853-7036
ISSUING BANK:
CITIBANK, N.A.
By: David L. Hains
Title: Vice President
Notice Address:
Citibank, N.A.
399 Park Avenue
10th Floor, Zone 3
New York, New York 10043
Attn: Gail Rodriguez
Telecopier No. (212) 793-4806
<PAGE>
LENDERS:
CITICORP USA, INC.
By: Marjorie Futornick
Title: Vice President
Notice Address:
Citicorp USA, Inc.
c/o Citicorp Securities, Inc.
200 South Wacker Drive
31st Floor
Chicago, Illinois 60606
Attn: Colin M. Cohen
Telecopier No. (312) 993-1050
Domestic Lending Office and Eurodollar
Lending Office or Eurodollar Affiliate:
Citicorp USA, Inc.
c/o Citibank, N.A.
399 Park Avenue
10th Floor, Zone 3
New York, New York 10043
Attn: Gail Rodriguez
Telecopier No. (212) 793-4806
Pro Rata Share: 43.75%
Term Loan Commitment: $13,125,000
Revolving Credit Commitment: $21,875,000
<PAGE>
NATIONSBANK, N.A.
By: John D. Mindnick
Title: Senior Vice President
Notice Address
and Domestic and Eurodollar
Lending Office:
NationsBank, N.A.
6610 Rockledge Drive
1st Floor
Bethesda, Maryland 20817-1876
Attn: John Mindnich
Telecopier No. (301) 571-0719
Pro Rata Share: 18.75%
Term Loan Commitment: $ 5,625,000
Revolving Credit Commitment: $ 9,375,000
<PAGE>
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.
By: Brady S. Sadek
Title: Vice President & Deputy General Manager
Notice Address
and Domestic and Eurodollar
Lending Office:
The Long-Term Credit Bank of Japan, Ltd.
190 South LaSalle Street
Suite 800
Chicago, Illinois 60603
Attn: Kris Grosshans
Telecopier No. (312) 704-8505
Pro Rata Share: 18.75%
Term Loan Commitment: $ 5,625,000
Revolving Credit Commitment: $ 9,375,000
CAISSE NATIONALE DE CREDIT AGRICOLE
By: David Bouhl F.V.P
Title: Head of Corporate Banking, Chicago
Notice Address
and Domestic Eurodollar
Lending Office:
Caisse Nationale de Credit Agricole
55 East Monroe Street
Suite 4700
Chicago, Illinois 60603
Attn: Roger H. Weis
Telecopier No. (312) 372-3724
Pro Rata Share: 6.25%
Term Loan Commitment: $ 1,875,000
Revolving Credit Commitment: $ 3,125,000
<PAGE>
THE BANK OF NOVA SCOTIA
By: F.C.H. Ashby____________
Title: Senior Manager Loan Operations
Notice Address
and Domestic and Eurodollar
Lending Office:
The Bank of Nova Scotia
181 West Madison Street
Suite 3700
Chicago, Illinois 60602-4514
Attn: Michael Manick
Telecopier No. (312) 201-4108
Pro Rata Share: 6.25%
Term Loan Commitment: $ 1,875,000
Revolving Credit Commitment: $ 3,125,000
<PAGE>
UNION BANK, as Lender and Issuing Bank
By: Kristine A. Kasselman
Title: Vice President
Notice Address
and Domestic and Eurodollar
Lending Office:
Union Bank
Multi-National Banking Dept.
445 S. Figueroa St.
12th Floor
Los Angeles, California 90071
Attn: Patrick Cassidy
Telecopier No. (213) 236-6701
and to:
Commercial Portfolio Administration
445 S. Figueroa St.
16th Floor
Los Angeles, California 90071
Attn: Kristine Kasselman
Telecopier No. (213) 236-7814
Pro Rata Share: 6.25%
Term Loan Commitment: $1,875,000
Revolving Credit Commitment $3,125,000
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
1.01. Certain Defined Terms
1
1.02. Computation of Time Periods
30
1.03. Accounting Terms
31
1.04. Other Terms
31
ARTICLE II AMOUNTS AND TERMS OF LOANS
2.01. Term Loans
32
2.02. Revolving Credit Facility
33
2.03. Authorized Officers and Administrative Agents
36
2.04. Use of Proceeds of Loans
36
ARTICLE III LETTERS OF CREDIT
3.01. Letters of Credit
37
3.02 Transitional Provisions
44
3.03 Obligations Several
44
ARTICLE IV PAYMENTS AND PREPAYMENTS
4.01. Prepayments; Reductions in Commitments
45
4.02. Payments
47
4.03. Promise to Repay; Evidence of Indebtedness
52
4.04. Proceeds of Collateral; Concentration Account
Arrangements
52
4.05. Cash Collateral Account
54
4.06. Post-Default Withdrawals from the Concentration
Account and Cash Collateral Account
55
ARTICLE V INTEREST AND FEES
5.01. Interest on the Loans and other Obligations
57
5.02. Special Provisions Governing Eurodollar Rate Loans
59
5.03. Fees
61
ARTICLE VI CONDITIONS TO LOANS AND LETTERS OF
CREDIT
6.01. Conditions Precedent to the Initial Loans and
Letters of Credit
64
6.02. Conditions Precedent to All Subsequent Loans and
Letters
of Credit
66
ARTICLE VII REPRESENTATIONS AND
WARRANTIES
7.01. Representations and Warranties of the Borrower
68
ARTICLE VIII REPORTING COVENANTS
8.01. Financial Statements; Communications with Accountants
78
8.02. Events of Default
79
8.03. Lawsuits
79
8.04. Declaration of Dividends and Other Distributions
80
8.05. TFC/RHI Liquidity
80
8.06. Environmental Notices
80
8.07. Other Reports
81
8.08. Other Information
81
ARTICLE IX AFFIRMATIVE COVENANTS
9.01. Corporate Existence, Etc
82
9.02. Corporate Powers; Conduct of Business
82
9.03. Compliance with Laws, Etc.
82
9.04. Payment of Taxes and Claims; Tax Consolidation
82
9.05. Insurance
83
9.06. Inspection of Property; Books and Records;
Discussions 83
9.07. Insurance and Condemnation Proceeds
84
9.08. ERISA Compliance
84
9.09. Foreign Employee Benefit Plan Compliance
85
9.10. Collection Accounts
85
9.11. Maintenance of Property
85
9.12. Condemnation
85
9.13. Tax Allocation Agreement
85
9.14. Performance of Material Contracts
85
9.15. CM Note and CM Letter of Credit
86
9.16. Real Property
86
ARTICLE X NEGATIVE COVENANTS
10.01. Indebtedness
87
10.02. Sales of Assets
88
10.03. Liens
89
10.04. Investments
89
10.05. Accommodation Obligations
90
10.06. Restricted Junior Payments
90
10.07. Conduct of Business
91
10.08. Transactions with Shareholders and Affiliates
91
10.09. Restriction on Fundamental Changes
92
10.10. Sales and Leasebacks
92
10.11. Margin Regulations; Securities Laws
92
10.12. ERISA
92
10.13. Issuance of Equity Securities
93
10.14. Organizational Documents
94
10.15. Bank Accounts
94
10.16. Fiscal Year
94
ARTICLE XI FINANCIAL COVENANTS
11.01. Interest Coverage Ratio
95
11.02. Minimum EBITDA
95
11.03. Capital Expenditures
95
ARTICLE XII EVENTS OF DEFAULT; RIGHTS AND
REMEDIES
12.01. Events of Default
96
12.02. Rights and Remedies
100
ARTICLE XIII THE ADMINISTRATIVE AGENT
13.01. Appointment
102
13.02. Nature of Duties
102
13.03. Rights, Exculpation, Etc.
103
13.04. Reliance
104
13.05. Indemnification
104
13.06. Citicorp Individually
104
13.07. Successor Administrative Agents
105
13.08. Relations Among Lenders
105
13.09. Concerning the Collateral and the Loan Documents
106
ARTICLE XIV YIELD PROTECTION
14.01. Taxes
109
14.02. Increased Capital
111
14.03. Changes; Legal Restrictions
112
14.04. Illegality
113
14.05. Compensation
113
14.06. Limitation on Additional Amounts Payable by the
Borrower
114
14.07. Change in Lending Office
114
ARTICLE XV MISCELLANEOUS
15.01. Assignments and Participations
115
15.02. Expenses
117
15.03. Indemnity
119
15.04. Change in Accounting Principles
120
15.05. Setoff
120
15.06. Ratable Sharing
121
15.07. Amendments and Waivers
121
15.08. Notices
123
15.09. Survival of Warranties and Agreements
124
15.10. Failure or Indulgence Not Waiver; Remedies
Cumulative124
15.11. Marshalling; Payments Set Aside
124
15.12. Severability
125
15.13. Headings
125
15.14. Governing Law
125
15.15. Limitation of Liability
125
15.16. Successors and Assigns
125
15.17. Certain Consents and Waivers of the Borrower
125
15.18. Counterparts; Effectiveness; Inconsistencies
127
15.19. Limitation on Agreements
127
15.20. Confidentiality
127
15.21. Entire Agreement
128
15.22. Advice of Counsel
128
<PAGE>
EXHIBITS
Exhibit A -- Form of Assignment and Acceptance
Exhibit B -- Form of Collection Account Agreement
Exhibit C-1 -- Form of Revolving Credit Note
Exhibit C-2 -- Form of Term Loan Note
Exhibit D -- Form of Notice of Borrowing
Exhibit E -- Form of Notice of Conversion/Continuation
Exhibit F -- Pro Forma Financial Statements
Exhibit G -- Projections
Exhibit H -- List of Closing Documents
Exhibit I -- Form of Officer's Certificate to Accompany
Reports
Exhibit J -- Form of TFC/RHI Liquidity Calculation
<PAGE>
SCHEDULES
Schedule 1.01.1 -- Domestic Subsidiaries
Schedule 1.01.2 -- Guarantors
Schedule 1.01.3 -- Permitted Equity Securities Options
Schedule 1.01.4 -- Permitted Existing Accommodation
Obligations
Schedule 1.01.5 -- Permitted Existing Indebtedness
Schedule 1.01.6 -- Permitted Existing Investments
Schedule 1.01.7 -- Permitted Existing Liens
Schedule 1.01.8 -- Refinanced Indebtedness
Schedule 3.01-A -- Letter of Credit Exceptions
Schedule 3.02 -- Existing Letters of Credit
Schedule 7.01-A -- Organizational Documents
Schedule 7.01-C -- Organizational Structure
Schedule 7.01-E -- Governmental Consents
Schedule 7.01-K -- Pending Actions
Schedule 7.01-R -- Environmental Matters
Schedule 7.01-S -- ERISA Matters
Schedule 7.01-U -- Labor Contracts
Schedule 7.01-X -- Patent, Trademark & Permit Claims
Pending
Schedule 7.01-Z -- Insurance Policies
Schedule 10.15 -- Collection Accounts
Schedule 12.01-Q -- TFC Permitted Existing Investments
AMENDMENT NO. 1
AND CONSENT
Dated as of July 29, 1996
to
RESTATED AND AMENDED CREDIT AGREEMENT
Dated as of May 27, 1996
This Amendment No. 1 and Consent ("Amendment") dated as of July 29, 1996 is
entered into between RHI Holdings, Inc., a Delaware corporation ("RHI") and
Citicorp North America, Inc., as the sole "Senior Lender" (as defined in the
Credit Agreement identified below) of RHI. Capitalized terms used herein without
definition are used herein as defined in the Credit Agreement.
PRELIMINARY STATEMENT:
RHI, certain financial institutions as Senior Lenders, and the
Administrative Agent are parties to that certain Restated and Amended Credit
Agreement dated as of May 27, 1996, as amended (the "Credit Agreement").
RHI has requested certain amendments to the Credit Agreement and the Senior
Lender's consent to (i) RHI's contribution of all issued and outstanding Capital
Stock of Fairchild Germany, Inc., a Delaware corporation and wholly-owned
Subsidiary of RHI to Fairchild Holding Corp., a Delaware corporation and wholly-
owned Subsidiary of RHI, (ii) an amendment of the Tax Allocation Agreement, and
(iii) the sale of all of the issued and outstanding Capital Stock of
Scandinavian
Bellyloading International, Inc. ("SBI") by Fairchild Scandinavian Bellyloading
Company Aktiebolag ("FSBC") to RHI in consideration of the payment of $1.00.
Subject to the terms and conditions stated herein, RHI and the sole Senior
Lender of RHI have agreed to amend the Credit Agreement as set forth in Section
1 and the sole Senior Lender of RHI has agreed to consent to the aforesaid
contribution of Capital Stock, amendment of the Tax Allocation Agreement and
sale
of SBI Capital Stock.
SECTION 1. Amendment to the Credit Agreement. Effective as of July 29,
1996, subject to the satisfaction of the conditions precedent set forth in
Section 3 hereof, the Credit Agreement is hereby amended as follows:
1.1 Section 10.13 is amended to add the following provisions at the end
thereof:
In the event the Obligations exceed $10,000,000 in the aggregate at any
time
after the Closing Date, the Borrower shall, within three (3) Business Days after
the occurrence of such event, execute and deliver to the Administrative Agent,
for the benefit of the Senior Secured Creditors, pledges of all Securities,
together with instruments evidencing the same, representing or evidencing
Investments of the Borrower not theretofore so pledged. In the event Borrower
acquires any additional equity Securities of issuers identified in the Borrower
Pledge Agreement or Foreign Subsidiary Pledge Agreements, Borrower shall
promptly
deliver the share certificates representing such Securities to the
Administrative
Agent. In the event Borrower makes any Investments by means of loans or other
advances to any Subsidiary of the Borrower, FHC or its Subsidiaries, or any
member of the Aerospace Group, such loans and other advances shall be evidenced
by a promissory note on terms satisfactory to the Administrative Agent and such
note shall be endorsed to the Administrative Agent as part of the Collateral.
1.2 Section 11.01 is amended to insert the following provision as clause
(c) thereof:
(c) Liens against Investments of the Borrower (i) which are not Permitted
Existing Investments or Investments required to be pledged to secure the
Obligations as described in Section 10.13, (ii) which do not consist of pledged
collateral as described or defined in any Loan Document, or (iii) which do not
consist of additional or incremental Investments in debt Securities issued by a
Person whose debt Securities are part of the Collateral or equity Securities
issued by a Person whose equity Securities are part of the Collateral;
1.3 Section 11.16 is amended to delete the word "and at the end of clause
(m) thereof, delete the period at the end of clause (n) thereof and substitute
"; and" therefor, and add the following provision as clause (o) thereof:
(o) Indebtedness of the Borrower to FHC.
1.4 Section 11.18 is amended to delete the provisions thereof in their
entirety.
1.5 Section 14.01(r) is amended to delete the provisions thereof in their
entirety and substitute therefor the following:
(r) TFC/RHI Consolidated Liquidity. The sum, as of any given date of
determination, of (i) the amount of consolidated Cash and Cash Equivalents of
TFC, the Borrower and FHC as of such date of determination plus (ii) the amount
of the "Consolidated Loan Availability" (as defined in the FHC Credit Agreement)
as of such date of determination after giving effect to any requests for loans
or letters of credit received by the administrative agent under the FHC Credit
Agreement on such date of determination minus (iii) the amount of Cash and Cash
Equivalents of TFC, the Borrower and FHC required to secure Contractual
Obligations of TFC, the Borrower and FHC as of such date of determination shall
be less than $10,000,000.
SECTION 2. Consents. The undersigned, as the sole Senior Lender of RHI,
hereby consents to:
2.1 the contribution by RHI of all of the issued and outstanding Capital
Stock of Fairchild Germany, Inc., a wholly-owned Subsidiary of RHI, to Fairchild
Holding Corp., a Delaware corporation and wholly-owned Subsidiary of RHI on July
29, 1996 and
2.2 the amendment of the Tax Allocation Agreement pursuant to that certain
Ninth Amended and Restated Tax Allocation Agreement dated as of July 29, 1996
among TFC, RHI, FHC and certain Affiliates thereof.
2.3 the sale by FSBC to RHI of all of the issued and outstanding Capital
Stock of SBI to RHI in consideration of the payment of $1.00.
SECTION 3. Conditions Precedent to Effectiveness of this Amendment. This
Amendment shall become effective as of July 29, 1996 if, and only if, the
Administrative Agent shall have received on or before August 6, 1996,
an original
copy of this Amendment executed by RHI and the sole Senior Lender.
SECTION 4. Representations and Warranties. RHI hereby represents and
warrants as follows:
4.1 This Amendment and the Credit Agreement as previously executed and
amended and as amended hereby constitute legal, valid and binding obligations of
RHI and are enforceable against RHI in accordance with their terms.
4.2 No Event of Default or Potential Event of Default exists or would
result from any of the transactions contemplated by this Amendment.
4.3 Upon the effectiveness of this Amendment, RHI hereby reaffirms all
covenants, representations and warranties made by it in the Credit Agreement to
the extent the same are not amended hereby and agrees that all such covenants,
representations and warranties shall be deemed to have been remade as of the
date
this Amendment becomes effective (unless a representation and warranty is stated
to be given on and as of a specific date, in which case such representation and
warranty shall be true, correct and complete as of such date).
SECTION 5. Reference to and Effect on the Credit Agreement.
5.1 Upon the effectiveness of this Amendment, each reference in the Credit
Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like
import shall mean and be a reference to the Credit Agreement, as amended hereby,
and each reference to the Credit Agreement in any other document, instrument or
agreement executed and/or delivered in connection with the Credit Agreement
shall
mean and be a reference to the Credit Agreement as amended hereby.
5.2 Except as specifically amended above or in the note modification
agreement referenced in Section 3 above, the Credit Agreement, the Notes and all
other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed.
5.3 The execution, delivery and effectiveness of this Amendment shall not
operate as a waiver of any right, power or remedy of any Senior Lender or Agent
or the Administrative Agent under the Credit Agreement, the Notes or any of the
other Loan Documents, nor constitute a waiver of any provision contained
therein,
except as specifically set forth herein.
SECTION 6. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same
instrument. Delivery of an executed counterpart of this Amendment by telecopier
shall be effective as delivery of a manually executed counterpart of this
Amendment.
SECTION 7. Governing Law. This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 8. Headings. Section headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the date
first above written.
RHI HOLDINGS, INC. CITICORP NORTH AMERICA, INC.
By: Karen L. Schneckenburger By: Colin M. Cohen
Title: Treasurer Title: Managing Director
EMPLOYMENT AGREEMENT WITH JACQUES S. MOSKOVIC
Parties:
RHI HOLDINGS, INC. ("RHI") and JACQUES S. MOSKOVIC. All references to "you"
shall
mean Jacques S. Moskovic.
Position:
Your position will be President of Fairchild's Advanced Technologies Division,
reporting
directly to the Chief Operating Officer of The Fairchild Corporation
("Fairchild").
Compensation:
Your base salary ("base salary") will be at a rate not less than $100,000 per
year, payable
bi-weekly in accordance with Fairchild's usual payroll policies. Commencing as
of July
1, 1994, but prorated from September 1, 1994 through June 30, 1995, you will be
eligible
to participate in Fairchild's Executive Incentive Compensation Plan, and to
receive
additional compensation ("incentive bonus") at a factor of 50% of your base
salary, as the
same shall be established from time to time; provided, however, any incentive
bonus to
which you may from time to time be or become entitled, shall be computed as if
your
base salary were the greater of $190,000, or $190,000 plus an amount equal to
any
increase in your actual base salary on a dollar for dollar basis.
Your base salary will be reviewed annually by the Fairchild Compensation and
Stock
Option Committee (the "Compensation Committee"), and adjustments, if any, to
your base
salary will be at the discretion of the Board of Directors.
Stock Options:
A recommendation shall be made to the Compensation Committee and to Fairchild's
board of Directors for an initial award to you of an option to acquire up to
25,000 shares
of Class A Common Stock of Fairchild, in accordance with the 1986 Non-Qualified
and
Incentive Stock Option Plan of Fairchild, as amended. This plan, provides,
inter alia, for
vesting of 25% of the shares subject to the option, on the first anniversary of
the award,
and for vesting of an additional 25% of the original number of shares subject
to the
option, on each anniversary thereafter.
Automotive Allowance:
You will be eligible to participate in the Fairchild Executive Automobile
Ownership Plan at
a reimbursement rate ($650 per month) equal to that of other senior officers of
Fairchild,
other than the CEO.
Other Benefits:
You will be eligible to participate in all Fairchild employee benefit plans but
only to the
extent that you do not receive comparable benefits under your employment
arrangement
with Fairchild France. Fairchild employee benefits include Fairchild's Group
Health
Insurance Plan, Fairchild's Pension Plan, Fairchild's Long Term Disability Plan,
and
Fairchild's Savings Plan (401(k)), and to receive Fairchild paid group life
insurance (up to
three times base salary).
Physical Examination:
You will be entitled to go the Greenbriar Clinic for an annual physical
examination at
Fairchild expense.
Vacation:
You will be entitled to four weeks vacation per year, in accordance with the
Fairchild
vacation policy.
Change of Control:
As a senior office of Fairchild, you will be covered by a "Change in Control"
provision
including the same "triggers", and at the same level as other senior officers of
Fairchild,
other than the CEO. Any benefits available to you under such provision shall be
computed as if your base salary were the greater of $190,000, or $190,000 plus
an
amount equal to any increase in your actual base salary on a dollar for dollar
basis.
Term:
The initial term of your employment shall commence as of September 1, 1994.
Termination:
If your employment shall be terminated for any reason other than Cause (as
defined
below), you shall be entitled to receive as severance the standard and customary
severance package paid by Fairchild to senior officers employed for a similar
time period
as you were employed by Fairchild.
Duties:
As President of Fairchild's Advanced Technologies Division, you shall perform
such
reasonable duties with respect to Fairchild Convac GmbH, the activities of
Fairchild
France in countries other than France, Compagnie pour le Developpment Industrial
("CDI"), Fairchild's Advanced Technologies Division and any current or future
business
ventures of Fairchild in the semiconductor equipment industry or any other high
technology enterprise as you shall be directed to perform, by the Chief
Operating Officer
and the Board of Directors. You acknowledge that your office will require your
full-time
efforts and attention, and that you shall not, during the term of your
employment, engage
in any other business activity, whether or not such other business activity is
for your own
behalf or for any other person, firm, corporation or other entity (together, a
"Person") and
whether or not such other Person is in competition with Fairchild.
Notwithstanding the
foregoing, you shall be allowed to manage and oversee passive investments in
noncompeting businesses, provided that such management and oversight does not
interfere with the performance of your duties for Fairchild.
Confidentiality:
You shall enter into a Confidentiality Agreement and an Agreement to Assign to
Fairchild
inventions and designs, whether patentable or not, conceived or improved by you
during
your employment by Fairchild or any affiliate.
Non Competition:
You agree that for a period of 2 years after the expiration or termination of
your
employment by RHI, you shall not, except with the prior written consent of
Fairchild,
engage in, be employed by or in any way advise or act for, or have any financial
interest
in any business that is a competitor of Fairchild's Advanced Technologies
Division or any
of the companies within such division, all as may be determined by the Board of
Directors
of Fairchild. Notwithstanding the foregoing, if you purchase from Fairchild all
of Fairchild's
interest in CDI under the terms of the Stock Repurchase Agreement dated the date
hereof, between Fairchild, you and certain others, you may be employed by CDI so
long
as CDI does not compete with any of the companies within the Fairchild Advanced
Technologies Division. Moreover, the ownership of 5% or less of the outstanding
voting
or other securities of any corporation whose shares are listed on a recognized
stock
exchange or traded in an over the counter market, even though such corporation
may
be a competitor of Fairchild Advanced Technologies Division or any of the
companies
within such division, shall not be deemed as constituting a financial interest
in such
competitor. Moreover, you agree that for a period of 2 years after the
expiration of the
termination of your employment by RHI, you shall not take any action or assist
any
successor employer or any other entity in recruiting any employee who had worked
for
any company in the Fairchild Advanced Technologies Division (a "Co-Worker") nor
shall
you in any way solicit, or cause to be solicited any Co-Worker to leave the
employment
of Fairchild or its Advanced Technologies Division. This includes (a)
identifying to your
successor employer or such entity any Co-Worker who has special knowledge
concerning Fairchild's inventions, processes, methods, suppliers, customers or
confidential affairs or (b) commenting to your successor employer or its agents
or such
other entity that the quantity of work, quality of work, special knowledge or
personal
characteristics of any Co-Worker. You also agree that you will not provide such
information to any prospective employer during an interview preceding possible
employment. You understand that establishing the precise amount of damages for
breach of this provision might be difficult. For that reason, you agree that if
you should
be found to have breached this provision, for each Co-Worker about whom you have
provided information in violation of this provision, liquidated damages for such
violation
shall be in the amount of the annual salary of that Co-Worker at Fairchild. You
understand that the covenants contained in this paragraph shall be deemed to be
a series
of separate covenants, one for each line of business for Fairchild Advanced
Technologies
Division. You agree that the character, duration and geographical scope of this
covenant
not to compete is reasonable in light of the circumstances as they exist as of
the date of
this Agreement. However, should a determination nonetheless be made by a court
of
competent jurisdiction that the character, duration or geographical scope of
this covenant
not to compete is unreasonable in light of the circumstances as they then exist,
then it
is your intention and agreement that this covenant not to compete shall be
construed by
the court in such a manner as to impose only those restrictions on your conduct
that are
reasonable in light of the circumstances as they then exist and necessary to
insure
Fairchild the intended benefits of this covenant not to compete. If, in any
judicial
proceeding, a court refuses to enforce all of the separate covenants deemed
included
herein because, taken together they are more extensive then necessary to insure
Fairchild
of the intended benefit of this covenant not to compete, you understand and
agree that
those of such covenants which, if eliminated, would permit the remaining
separate
covenants to be enforced in such proceeding shall, for the purpose of such
proceeding
be deemed eliminated from this section.
Cause:
Your employment may be terminated at any time for Cause, which shall include (i)
conduct, at any time, which has involved criminal dishonesty, conviction of any
felony, or
conviction of any lesser crime or offense involving the property of Fairchild,
or any of its
affiliates, significant conflict of interest, serious impropriety, or breach of
corporate duty,
misappropriation of any money or other assets or properties of Fairchild, or
that of its
subsidiaries or affiliates, (ii) willful violation of specific and lawful
directions form the
Fairchild's Chief Operating Officer or its Board of Directors, failure or
refusal to perform
services customarily performed by a person in your office, or as otherwise as
specifically
required by agreement, or willful misconduct or gross negligence in connection
with the
performance of your duties, (iii) chronic alcoholism or drug addiction, and (iv)
any other
acts or conduct inconsistent with the standards of loyalty, integrity or care
reasonably
required by Fairchild of its senior management.
Location:
You understand that your obligations under this employment arrangement will
require you
to spend considerable time in Germany and the United States. You agree to spend
such
time in Germany and the United States as is necessary to fully and timely
satisfy your
duties and obligations as President of Fairchild's Advanced Technologies
Division or as
may be requested by the Chief Operating Officer of Fairchild or the Board of
Directors of
Fairchild or RHI.
Conflicting Arrangements:
You represent and warrant to Fairchild that there is no agreement to which you
are a
party or under which you are bound which would prohibit your employment by
Fairchild,
or which would in any other manner interfere with the performance by you of your
duties
for Fairchild, its affiliates and subsidiaries.
Governing Law:
Our understandings shall be governed by the laws of the Commonwealth of
Virginia,
exclusive of its choice of law provisions.
Binding Effect:
This Agreement supersedes all prior negotiations and represents the entire
Agreement
of the parties, and our signatures hereon will bind us hereto. This Agreement
binds and
inures to the benefit of Fairchild, its successors and assigns.
Accepted: Accepted:
RHI HOLDINGS, INC.
Jacques S. Moskovic Donald E. Miller
Vice President
Dated:September 24, 1994 Dated:September 24, 1994
CONSENT AND AMENDMENT NO. 11
Dated as of September 6, 1995
to
RESTATED AND AMENDED CREDIT AGREEMENT
Dated as of July 27, 1992
This Consent and Amendment No. 11 ("Amendment") dated as of
September 6, 1995 is entered into between RHI Holdings, Inc., a
Delaware corporation ("RHI") and Citicorp North America, Inc., as
the sole "Senior Lender" (as defined in the Credit Agreement
identified below) of RHI. Capitalized terms used herein without
definition are used herein as defined in the Credit Agreement.
PRELIMINARY STATEMENT:
RHI, certain Affiliates of RHI as Borrowers, certain
financial institutions as Senior Lenders, the Agents, and the
Administrative Agent are parties to that certain Restated and
Amended Credit Agreement dated as of July 27, 1992, as amended
(the "Credit Agreement").
RHI has notified the Administrative Agent, pursuant to
Section 4.03(a) of the Credit Agreement, of its intention to
reduce the Facility A Commitments to $4,250,000 and, in
connection therewith, has requested (i) that the Credit Agreement
be amended in certain respects as more particularly described in
its letter dated August 30, 1995, a copy of which is attached
hereto as Exhibit A, and (ii) that the sole Senior Lender of RHI
consent to the release of the Liens in favor of the
Administrative Agent against capital stock of Banner Aerospace,
Inc. securing the Obligations of RHI under Facility A and
termination of the Special Increase II Pledge Agreement
concurrently with RHI's providing cash collateral for the
Facility Outstandings for Facility A in an amount equal to one
hundred five percent (105%) thereof.
Subject to the terms and conditions stated herein, RHI and
the sole Senior Lender of RHI have agreed to further amend the
Credit Agreement as set forth in Section 1.
SECTION 1. Amendments to the Credit Agreement. Effective
as of September 6, 1995, subject to the satisfaction of the
conditions precedent set forth in Section 3 hereof, the Credit
Agreement is hereby amended as follows:
1.1 Section 1.01 is amended:
(i) to delete the definition of "Facility A Cash Collateral
Amount" in its entirety and substitute therefor the following:
"Facility A Cash Collateral Amount" shall mean one hundred
and five percent (105%) of the Facility Outstandings for Facility
A."
(ii) to delete the definition of "Facility A Collateral Loan
Value" in its entirety,
(iii) for purposes of determining the Facility A Commitment of
each of the Facility A Lenders and the Facility A Commitments, to
delete clause (ii) of the definition of "Facility Commitment" in
its entirety and substitute the following therefor:
(ii) with respect to Facility A and each Facility A Lender,
the amount set forth below such Facility A Senior Lender's name
under the heading 'Facility A Commitment' on the signature page
of Consent and Amendment No. 11 to this Agreement, or, as the
case may be, on the signature pages of the Assignment Agreement
pursuant to which such Facility A Senior Lender became a Facility
A Senior Lender hereunder in accordance with the provisions of
Section 16.02, as such amount may be reduced or increased
(whether temporarily or permanently) from time to time pursuant
to the terms of this Agreement, including any reduction resulting
from the assignment of all or a portion of such Facility A Senior
Lender's Facility A Commitment in accordance with Section 16.02.
and to delete clause (iii) of the definition of "Facility
Commitments" in its entirety and substitute the following
therefor:
(iii) at any time, with respect to Facility A, the lesser of
(a) $4,250,000 and (b) the amount of cash collateral then on
deposit with the Administrative Agent as described in Section
4.02(d)
and (iv) to delete the reference to "Facility A $5,000,000"
in the definition of "L/C Subfacility" and substitute therefor a
reference to "Facility A $4,250,000".
1.2 Section 3.05(b) is amended to add the following
provision at the end thereof:
Notwithstanding the foregoing, Revolving Credit Loans made
under Facility A shall not be subject to the limitations set
forth in the immediately preceding sentence.
1.3 Section 3.06 is amended to delete the first sentence
thereof in its entirety and substitute the following therefor:
The Revolving Credit Loans made under Facility A are
evidenced by Amended and Restated Series A Revolving Credit Notes
in a maximum aggregate principal amount of $4,250,000.
1.4 Section 4.01 is amended to delete the provisions of
clause (d) thereof in their entirety.
1.5 Section 4.02(d) is amended to delete the first sentence
thereof in its entirety and to substitute the following therefor:
The Facility A Borrower shall maintain, at all times, a
deposit of cash collateral with the Administrative Agent in an
amount equal to at least the Facility A Cash Collateral Amount
subject to an agreement in the form attached to Consent and
Amendment No. 11 to this Agreement as Exhibit B thereto.
1.6 Section 4.04 is amended to delete the phrase
"$5,000,000 with respect to the Facility A Borrower" from
subsection (b) thereof in its entirety and substitute the
following therefor:
$4,250,000 with respect to the Facility A Borrower
and to add the following provision at the end of such Section:
(e) Notwithstanding the foregoing, no Temporary Subfacility
Reserves shall be effected against the Facility A Commitments.
1.7 Article IV is amended to add the following provision at
the end thereof:
SECTION 4.07 Required Additional Cash Collateral. RHI
shall, at all times when the principal amount of its Obligations
exceeds $4,250,000 due to Interest Rate Exposure or Foreign
Exchange Exposure, maintain a deposit of cash collateral with the
Administrative Agent (in addition to cash collateral required
under Section 4.02(d)) as part of the Collateral securing its
Obligations in an amount equal to the amount by which its
Obligations exceed $4,250,000.
1.8 Section 9.01 is amended to delete any requirement under
clause (a) thereof for monthly financial statements to be
delivered by RHI.
1.9 Section 9.05 is amended to add the following provision
at the end thereof:
Notwithstanding the foregoing, RHI shall only be required to
deliver such profit/loss and investment schedule quarterly within
fifty-five (55) days after the end of each fiscal quarter in each
Fiscal Year of RHI.
1.10 Section 11.14 is amended to delete the reference to
$1,250,000 in clause (a) (i) thereof in its entirety and
substitute therefor a reference to $2,000,000.
SECTION 2. Consent. The undersigned Senior Lender of RHI
hereby consents to the release of the Liens of the Administrative
Agent under the Special Increase II Pledge Agreement and
termination of such Special Increase II Pledge Agreement
concurrently with this Amendment becoming effective.
SECTION 3. Conditions Precedent to Effectiveness of this
Amendment. This Amendment shall become effective as of September
5, 1995 if, and only if, the Administrative Agent shall have
received (i) on or before September 5, 1995, a facsimile or
original executed copy of this Amendment, a Pledge Agreement in
the form attached as Exhibit B, and a Note Modification Agreement
in the form attached as Exhibit C executed by RHI and (ii) on or
before September 6, 1995, a deposit to Account No. 40639167 at
Citibank, N.A. at its office at 399 Park Avenue, New York, New
York in the amount of $3,917,500 in addition to other amounts
heretofore deposited thereto.
SECTION 4. Representations and Warranties. RHI hereby
represents and warrants as follows:
4.1 This Amendment and the Credit Agreement as previously
executed and amended and as amended hereby constitute legal,
valid and binding obligations of RHI and are enforceable against
RHI in accordance with their terms.
4.2 No Event of Default or Potential Event of Default
exists or would result from any of the transactions contemplated
by this Amendment.
4.3 Upon the effectiveness of this Amendment, RHI hereby
reaffirms all covenants, representations and warranties made by
it in the Credit Agreement to the extent the same are not amended
hereby and agrees that all such covenants, representations and
warranties shall be deemed to have been remade as of the date
this Amendment becomes effective (unless a representation and
warranty is stated to be given on and as of a specific date, in
which case such representation and warranty shall be true,
correct and complete as of such date).
SECTION 5. Reference to and Effect on the Credit Agreement.
5.1 Upon the effectiveness of this Amendment, each
reference in the Credit Agreement to "this Agreement",
"hereunder", "hereof", "herein" or words of like import shall
mean and be a reference to the Credit Agreement, as amended
hereby, and each reference to the Credit Agreement in any other
document, instrument or agreement executed and/or delivered in
connection with the Credit Agreement shall mean and be a
reference to the Credit Agreement as amended hereby.
5.2 Except as specifically amended above or in the note
modification agreement referenced in Section 3 above, the Credit
Agreement, the Notes and all other Loan Documents shall remain in
full force and effect and are hereby ratified and confirmed.
5.3 The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or
remedy of any Senior Lender or Agent or the Administrative Agent
under the Credit Agreement, the Notes or any of the other Loan
Documents, nor constitute a waiver of any provision contained
therein, except as specifically set forth herein.
SECTION 6. Execution in Counterparts. This Amendment may
be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all
of which taken together shall constitute but one and the same
instrument. Delivery of an executed counterpart of this Amendment
by telecopier shall be effective as delivery of a manually
executed counterpart of this Amendment.
SECTION 7. Governing Law. This Amendment shall be governed
by and construed in accordance with the laws of the State of New
York.
SECTION 8. Headings. Section headings in this Amendment
are included herein for convenience of reference only and shall
not constitute a part of this Amendment for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by their respective officers thereunto
duly authorized as of the date first above written.
RHI HOLDINGS, INC. CITICORP NORTH AMERICA, INC.
By: Karen L. Schneckenburger By: Colin M. Cohen
Title: Treasurer Title: Managing Director
Facility A Commitment:
$4,250,000
<PAGE>
EXHIBIT A
to Consent and Amendment No. 11
Dated as of September 6, 1995
RHI AMENDMENT AND CONSENT REQUEST
Attached
EXHIBIT B
to Consent and Amendment No. 11
Dated as of September 6, 1995
FORM OF PLEDGE AGREEMENT
Attached
EXHIBIT C
to Consent and Amendment No. 11
Dated as of September 6, 1995
FORM OF NOTE MODIFICATION AGREEMENT
Attached
RHI Holdings, Inc. EXHIBIT 21: List of Subsidiaries
RHI Holdings, Inc. [Delaware]
Banner Aerospace, Inc. [Delaware]
Adams Industries, Inc. [Connecticut]
Aero International, Inc. [Ohio]
Aerospace Bearing Support, Inc. [California]
Aircraft Bearing Corporation [California]
BAI, Inc. [California]
Banner Aerospace Foreign Sales Corporation [U.S. Virgin
Islands]
Banner Aerospace Services, Inc. [Ohio]
Banner Aerospace-Singapore, Inc. [Delaware]
Banner Distribution, Inc. [Delaware]
Burbank Aircraft Supply, Inc. [Delaware]
Burbank Aircraft International, Inc. [Delaware]
Burbank Aircraft International, GmbH
[Germany]
DAC International, Inc. [Texas]
Dallas Aerospace, Inc. [Texas]
Discontinued Aircraft, Inc. [Texas]
Discontinued Services, Inc. [Delaware]
GCCUS, Inc. [California]
Georgetown Jet Center, Inc. [Delaware]
Harco, Inc. [Delaware]
Harco Aerospace Fasteners, Ltd. [Canada]
Harco Northern Ireland, Ltd. [N. Ireland--U.K.]
Matrix Aviation, Inc. [Kansas]
Nasam Incorporated [California]
PacAero [California]
Banner Aero (Australia) Pty., Ltd. [Australia]
Professional Aviation Associates, Inc. [Georgia]
Solair, Inc. [Florida]
Solair (U.K.) Limited [United Kingdom]
Banner Industrial Distribution, Inc. [Delaware]
Banner Capital Ventures, Inc. [Delaware]
Brown Holdings Corp. [Delaware]
F. F. Handels GmbH [Germany]
Fairchild Holding Corp. [Delaware]
453A, Inc. [Delaware]
Banner Investments (U.K.) PLC [United Kingdom]
JJS Limited [United Kingdom]
Fairchild Fastener Group Ltd. [United Kingdom]
Camloc (U.K.) Ltd. [United Kingdom]
Camloc Holdings Inc. [Delaware]
Fairchild Credit Corporation [Delaware]
Fairchild Data Corporation [Delaware]
Fairchild Arms International Ltd. [Canada]
Fairchild Fasteners Corp. [Delaware]
Fairchild Realty, Inc.
Mairoll, Inc. [Delaware]
VSI Holdings, Inc. [Delaware]
Fairchild Convac GmbH [Germany]
Camloc Gmbh [Germany]
Fairchld Fasteners France S.A.R.L. [France]
Convac France S.A. [France]
Convac Dresden GmbH [Germany]
Convac Equipment for Semiconductor Technology, Ltd.
[United Kingdom]
Voi-Shan Diessel Gmbh [Germany]
Fairchild Scandinavian Bellyloading Company Aktiebolag [Sweden]
Scandinavian Bellyloading International, Inc. [California]
Fairchild Germany, Inc. [Delaware]
Convac USA, Inc. [Delaware]
Fairchild Technologies USA, Inc. [California]
Fairchlid France, Inc. [Delaware]
Northking Insurance Company Limited [Bermuda]
Recycling Investments, Inc. [Delaware]
Recycling Investments II, Inc. [Delaware]
Sovereign Air Limited [Delaware]
Transcontinental Reserves, Ltd. [British Virgin Islands]
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100 100 100 100
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<TOTAL-REVENUES> 107,921 264,571 162,065 79,142
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<TOTAL-COSTS> 104,918 266,189 161,971 76,200
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<INTEREST-EXPENSE> 10,083 28,135 18,535 9,410
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