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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the year ended December 31, 1994 Commission file number: 0-20416
EAGLE INDUSTRIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 13-3384361
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
TWO NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
(Address of Principal Executive Office)
(312) 906-8700
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained
to the best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
State the aggregate market value of the voting stock held by
nonaffiliates of the Registrant.
Not Applicable
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date.
1,860,000 shares of Common Stock as of March 20, 1995
Documents Incorporated by Reference: None
The Registrant meets the conditions set forth in General Instruction
(J)(1)(a) and (b) of Form 10-K and is therefore filing this
form with the reduced disclosure format.
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EAGLE INDUSTRIES, INC.
TABLE OF CONTENTS
<TABLE>
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PART I. PAGE
<S> <C> <C>
Item 1. Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . . . 9
PART II.
Item 5. Market for the Registrant's Common Stock and Related Stockholder Matters . . . . . . . 10
Item 6. Selected Financial Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. 11
Item 8. Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . 19
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 45
PART III.
Item 10. Directors and Executive Officers of the Registrant . . . . . . . . . . . . . . . . . . 45
Item 11. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Item 12. Security Ownership of Certain Beneficial Owners and Management . . . . . . . . . . . . 46
Item 13. Certain Relationships and Related Transactions . . . . . . . . . . . . . . . . . . . . 46
PART IV.
Item 14. Exhibits, Financial Statements and Schedules, and Reports on Form 8-K . . . . . . . . 48
</TABLE>
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PART I
ITEM 1. BUSINESS
THE COMPANY
Eagle Industries, Inc. ("Eagle" or the "Company") is a Delaware corporation,
its principal executive offices are located at Two North Riverside Plaza, Suite
1100, Chicago, Illinois 60606 and its telephone number is (312) 906-8700.
Eagle has grown from revenues of approximately $250 million in 1987 to $990
million for the year ended December 31, 1994. This growth has been generated
primarily through acquisitions. Eagle is currently comprised of 10 businesses
operating in three segments. These businesses generally are low and medium
technology industrial companies in niche markets. They primarily serve the
residential and commercial construction, electric utility, automotive
aftermarket and commercial aviation markets.
<TABLE>
<CAPTION>
Company Description of Product Primary Industry(ies)
------- ---------------------- ---------------------
<S> <C> <C>
BUILDING PRODUCTS GROUP
Falcon Building Products........ HVAC Accessories; Bathroom Residential and
Fixtures and Plumbing Fittings; Commercial
and Consumer and Commercial Air Construction/
Compressors Home Improvement
ELECTRICAL PRODUCTS GROUP
Elastimold...................... Underground Medium and High Electric Utility
Voltage Cable Accessories
Hendrix......................... Power Cables and Cable Electric Utility
Accessories
IEP............................. Interconnect, Control and Timing Electrical/Electronic
Devices and Electrical
Connectors
Lapp............................ Porcelain Insulators and Electric Utility
Bushings
AUTOMOTIVE PRODUCTS GROUP
Mighty.......................... Auto Parts Distribution Automobile Aftermarket
Parts House..................... Auto Parts Distribution Automobile Aftermarket
Denman Tire..................... Specialty Pneumatic Tires Aftermarket Tires
Clevaflex....................... Multi-ply, Flexible Tubing Automotive OEM
COMMERCIAL AVIATION PRODUCTS
Burns Aerospace................. Commercial Aircraft Seating Commercial Aviation
</TABLE>
From its inception, much of the Company's growth has come from acquisitions.
The Company's acquisition philosophy has been to acquire "underperforming"
manufacturing companies that have the potential to become market leaders and
low cost producers through the application of Eagle's cost reduction and
quality improvement strategies. Eagle generally has sought companies that
serve basic industrial niche markets. To enhance its position within these
market niches, the Company has pursued and completed over 21 "add-on"
acquisitions to profitably expand product lines and geographic scope. Eagle
has also divested 20 businesses for total proceeds of over $650 million. A
substantial portion of these proceeds were used to reduce debt levels.
HISTORY
In February 1987, Great American Management and Investment, Inc. ("GAMI")
consolidated its basic manufacturing businesses by capitalizing Eagle with Lapp
Insulator Company ("Lapp") and various businesses which were previously a part
of Clevepak Corporation ("Clevepak"). In April 1987, Eagle purchased The
Pfaudler Companies, Inc. ("Pfaudler") and in February of 1988, Eagle purchased
The DeVilbiss Company ("DeVilbiss"). In
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September 1989, Eagle purchased Amerace Corporation ("Amerace"), and certain
indirect subsidiaries of GAMI acquired The Jepson Corporation ("Jepson"). In
January 1991, GAMI, through its subsidiaries, contributed Jepson to Eagle.
In September 1992, GAMI and its subsidiaries consummated a restructuring (the
"Restructuring") pursuant to which, Eagle sold the net assets of Equality
Specialties, Inc. ("Equality") to GAMI for $17 million. In addition, GAMI
contributed all of the outstanding stock owned by it in North Riverside
Holdings, Inc. ("North Riverside") to Eagle.
Pursuant to a reorganization in contemplation of a public offering to sell
common stock, Falcon Building Products, Inc. ("Falcon") was restructured and
recapitalized as an indirect wholly-owned subsidiary of Eagle. In connection
therewith, Eagle contributed to Falcon the stock and certain assets and
liabilities of the companies comprising Eagle's Building Products Group. In
November 1994, Falcon completed an initial public offering of 6,000,000 shares
(30%) of its Class A common stock at an offering price of $12.00 per share (the
"Offering") (New York Stock Exchange: "FB").
BUSINESS
Eagle is currently comprised of 10 businesses operating primarily in three
business segments. The three reportable business segments are: the Building
Products Group, the Electrical Products Group and the Automotive Products
Group. The operations of Burns Aerospace ("Burns") are included with
Corporate. These businesses generally are low to medium technology industrial
companies in niche markets. They primarily serve the residential and
commercial construction, electric utility, automotive aftermarket and
commercial aviation markets. See Note 15 to the Eagle Industries, Inc. and
Subsidiaries Consolidated Financial Statements ("Eagle Consolidated Financial
Statements") for financial information regarding industry segments and
geographic data.
BUILDING PRODUCTS GROUP
The Building Products Group consists of Falcon Building Products, Inc. which
manufactures and distributes building products primarily for the residential
and commercial construction and home improvement markets. Products
manufactured by this group include air distribution and handling equipment,
bathroom plumbing fixtures and consumer and commercial air compressors.
The building products industry relies primarily on the residential and
commercial construction markets. The residential construction market is
largely dependent on housing starts and remodeling/do-it-yourself ("DIY")
projects. Housing starts and remodeling/DIY projects are generally a function
of new household formation, mortgage rates, inflation, unemployment and gross
national product growth. The Company believes that future growth in revenue
and earnings for companies operating in this industry is dependent upon the
housing and construction markets in North America, increased international
business, quality and customer service, and further market penetration with
both new and existing products.
Air Distribution and Handling Equipment
Falcon is a manufacturer of residential and commercial air distribution and
air handling products in the North American market. Falcon manufactures more
than 6,000 items primarily for the residential and, to a lesser extent,
commercial heating, ventilating and air conditioning ("HVAC") markets,
including metal grilles, registers and diffusers, metal and plastic chimney
vent systems, flexible ducts, terminal units and electric duct heaters.
Products are generally produced on a high-volume, low cost basis, however, the
standard product line is supplemented with custom-engineered products designed
to meet specific size or performance requirements.
Residential and commercial products are marketed to HVAC contractors
primarily through wholesale distributors. In order to provide high quality
service and convenience to HVAC contractors, Falcon services its distribution
network through a direct field sales staff which is supported by a customer
service group. These products are marketed under the Hart & Cooley(R),
Metlvent(R) and Ultravent(R) trade names. Commercial/industrial registers,
grilles, diffusers, terminal units, louvers and electric duct heaters are
marketed primarily to HVAC
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contractors through manufacturers' representatives under the Tuttle & Bailey(R)
trade name. Key competitive considerations in the HVAC market are delivery
time, quality and proximity to distributors.
Bathroom Plumbing Fixtures
Falcon manufactures ceramic, vitreous china and enameled steel bathroom
plumbing fixtures, including lavatories, toilet bowls and tanks and brass and
plastic fittings. These products are sold primarily to the residential
construction and DIY markets and, to a lesser extent, to commercial markets.
Falcon competes primarily with regional manufacturers, and to a lesser
extent, with national manufacturers. Management believes that there are
approximately eight other regional competitors. As part of the Energy Policy
Act of 1992, the manufacture of 3.5 gallon per flush toilets for residential
use was prohibited after January 1, 1994. In the past four years, Falcon has
introduced four new models of ceramic toilet bowls which use 1.6 gallons per
flush, approximately 55% less than the average water volume used per flush in
existing toilet bowls, while still preserving the simplicity of conventional
plumbing fixtures.
Ceramic bathroom fixtures and brass and plastic fittings are marketed through
manufacturers' representatives to plumbing wholesalers and plumbing fixture
manufacturers, and to the retail hardware and DIY markets through wholesalers,
packagers, and mass merchants. The market is divided into: manufacturers that
distribute nationally, service all market segments and have broad product
lines; and regional manufacturers that distribute regionally, tend to emphasize
marketing at the wholesale level and have narrower product lines.
Air Products
Falcon is a supplier of consumer and commercial air compressors for home
improvement applications. Falcon manufactures a broad line of air compressors
in the 3/4 to 6 horsepower range and also sells a variety of accessories such
as paint spray guns, air hoses, pneumatic tools and other related items. These
products are primarily used for painting, stapling and nailing applications for
home improvement and construction. Falcon was the first company to introduce
oil-free technology to light-duty air compressors, and since 1979 has been the
primary supplier of Craftsman(R) air compressors to Sears Roebuck and Co.
("Sears"). Sales to Sears account for approximately 19% of the sales of the
Building Products Group.
In fiscal 1991, Falcon acquired the Energair division ("Energair") of the
Ingersoll-Rand Company, whose strong market position in the home center and
warehouse club outlets, has strengthened Falcon's position in the DIY and
refurbishing markets under such trade names as Charge Air Pro(R), Air
America(R) and Pro Air II(R). Falcon also manufactures air compressors under
private-label programs, which has further expanded its customer and
distribution base.
ELECTRICAL PRODUCTS GROUP
The Electrical Products Group consists of two broad groups of businesses,
those providing electrical power distribution products for the electric utility
market and those supplying electrical control products for electrical equipment
manufacturers. The principal products manufactured by these businesses include
porcelain insulators and bushings for electrical power transformers, medium
voltage electric cable, underground cable accessories, and interconnect and
timing devices.
The electrical products industry is largely dependent on utility transmission
and distribution expenditures, new construction and spending levels of those
manufacturers who supply electrical equipment. Spending for utility
transmission equipment has been at historically low levels for the last several
years and has not yet begun to improve. This has resulted in excess industry
capacity and continued pricing pressures. Eagle believes that future growth in
revenue and earnings in this industry is largely dependent on increased
electric utility capital spending from the currently depressed levels and
further recovery of the residential and commercial construction markets in
North America.
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Electrical Power Distribution Products
Major products manufactured by these businesses for the electrical power
distribution market include: Elastimold's pre-molded terminators, separable
connectors, cable joints and surge arrestors for underground power distribution
systems; Hendrix's residential power distribution cables, aerial cable systems
and medium voltage accessory products; and Lapp's porcelain insulators and
bushings for electrical power transformers and circuit breakers.
Elastimold is a designer, manufacturer and marketer of underground medium and
high voltage cable accessories for the electric utility industry in North
America. Many of Elastimold's products are used for power distribution systems
related to housing starts. Elastimold has established joint ventures and
partnerships in Europe and Asia to increase its distribution base.
These businesses market their products through a number of distribution
channels, including manufacturers' representatives, original equipment
manufacturers and authorized distributors, as well as through a direct sales
staff. Elastimold's electrical products are marketed directly to North
American, Canadian and European electric utilities through a direct sales
staff, manufacturers' representatives and authorized distributors. Elastimold
also maintains a world-wide presence through joint ventures in western Europe,
Japan and Taiwan. Hendrix markets its products primarily to electric utilities
and electrical equipment manufacturers through a network of manufacturers and
distributors. Lapp's products are sold principally to domestic electric
utility companies and to manufacturers of equipment used by utilities.
Since the electrical power distribution products are used primarily in the
transmission and distribution of electricity, the operating performance of
these businesses depends, in part, on the demand for residential and commercial
construction. Although not heavily dependent upon the construction of new
power plants, these companies' business prospects are closely tied to the
electric utility industry.
Industrial Electrical Products
Eagle's Industrial Electrical Products consists of four businesses,
hereinafter referred to as IEP. These businesses provide products that serve a
wide variety of markets with a number of recognized names such as: Agastat(R)
timers and protective relays; Buchanan(R) electrical terminal blocks and
electronic connectors; Russellstoll(R) medium to high amperage electrical
connectors; pin and sleeve plug and receptacle connector devices for the
world-wide refrigerated container industry. In addition, these businesses
manufacture and distribute airfield transformers, connector kits and cable
assemblies. The product lines are sold through an extensive distributor
network, supplemented with direct sales to original equipment manufacturers and
to end users in the United States, Canada and Europe.
Eagle has undertaken an extensive cost reduction program since acquiring the
IEP companies in 1989. As a major part of that plan, Eagle relocated one of
IEP's principal manufacturing facilities from New Jersey to Florida in the
first quarter of 1993 in order to improve productivity and quality control,
enhance manufacturing efficiencies and increase labor flexibility.
AUTOMOTIVE PRODUCTS GROUP
Eagle has three primary businesses which serve various sectors of the
automotive aftermarket: Mighty Distributing System of America ("Mighty"), The
Parts House ("Parts House") and Denman Tire ("Denman"). Major products
produced and/or distributed to the automotive markets include: automotive parts
and accessories and specialty pneumatic tires. Clevaflex manufactures and
distributes multi-ply flexible tubing for carburetor air ducts to original
equipment manufacturers in the automotive market.
Mighty and Parts House distribute automotive parts and accessories
principally throughout the United States. Mighty is an owner and operator of
automotive parts franchise operations and has approximately 150 franchises
nationwide and two distribution centers that sell automotive parts in the
aftermarket to professional dealers and installers. Mighty also markets new
territories and re-markets existing territories to generate franchise fee
revenues. Mighty repackages and distributes Mighty private label auto parts to
franchisees and other company locations, and owns and operates nine locations
directly. Parts House, headquartered in Jacksonville, Florida, is a
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wholesale distributor of nationally branded automotive parts and accessories
serving primarily the Southeast region of the United States and operates
through three principal distribution centers.
Denman manufactures and distributes over 1,000 different types of specialty
pneumatic tires, including tires for classic and racing automobiles,
all-terrain vehicles, motorcycles, light and medium duty trucks, farm, mining,
and other industrial vehicles. Denman's products are marketed nationally under
both the Denman brand name and the private label names of certain Denman
customers. Denman distributes its tires primarily through five major wholesale
distributors, and services its customers through a direct sales force.
Substantially all of Denman's sales are to the replacement tire market.
Clevaflex manufactures and distributes multi-ply, flexible tubing for
carburetor air ducts used in automobile emission systems and other
automotive-engine compartment applications. Clevaflex has a direct sales force
which distributes its products to original equipment manufacturers in the
automotive markets.
COMMERCIAL AVIATION PRODUCTS
Burns manufactures and distributes commercial airline seating for the
commercial aviation market. The financial difficulties experienced by the
domestic airline industry have resulted in a reduction in capital spending for
commercial aircraft and associated equipment. However, Burns derives a
significant portion of its aviation business from the foreign aviation market,
which has not been as adversely affected as the domestic industry. Eagle
believes that future revenue and earnings growth for this business is largely
dependent on worldwide capital spending in the aviation industry.
Burns manufactures and refurbishes commercial airline seating, including
passenger, observer and flight attendant seating. In addition, Burns
manufactures various spare parts, including seat cushions and covers for
aftermarket sale in the commercial aircraft markets. Burns sells its
Innovator(R), Airest(R) 5, Airest(R) 202 and Airest(R) Commuter seating
products primarily to the major air carriers in the United States and Europe.
Burns has been able to successfully diversify its customer base from a domestic
regional orientation to an international mix and currently derives
approximately 70% of its new seat revenues from foreign carriers.
COMPETITION
Eagle faces competition in each of the various product lines from numerous
firms within the United States and internationally. Eagle's businesses compete
primarily with several domestic competitors in their various markets. Eagle
strives to position its businesses as market leaders, desiring to achieve a
position as one of the top three suppliers in each of the individual markets
which its businesses serve. Eagle's businesses compete with other companies on
the basis of price, service, product quality, availability and delivery.
Certain of Eagle's competitors are larger and have greater financial resources
than Eagle.
SEASONALITY, WORKING CAPITAL AND CYCLICALITY
Sales of certain of Eagle's products are subject to seasonal variation.
Seasonal factors historically have not had a significant effect on working
capital requirements as Eagle has been able to adjust its production to meet
these seasonal demands. Sales of products manufactured within the Building
Products Group are primarily dependent on residential and commercial
construction and home improvement markets. Sales of certain products
manufactured within the Electrical Products Group are also dependent on the
construction industry. Due to seasonal factors associated with the
construction industry, sales of these products are typically lower during the
winter season than at other times of the year. Most of the industries in which
the Company competes are particularly sensitive to changes in the economy.
Future downturns in the economy would negatively affect the Company's operating
results. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
RAW MATERIALS, SUPPLIERS AND CUSTOMERS
Eagle purchases raw materials, principally steel, aluminum, alloy metals,
clay and other supplies from numerous domestic and foreign suppliers. These raw
materials and other supplies are generally available. Eagle's businesses
market their products to numerous domestic and foreign customers. As previously
discussed, Sears accounts for approximately 19% of sales in the Building
Products Group.
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RESEARCH AND DEVELOPMENT
Eagle and its subsidiaries invest in research and development of new
products. See Note 1 to the Eagle Consolidated Financial Statements for
information regarding research and development expenses.
PATENTS, TRADEMARKS, LICENSES AND FRANCHISES
There are several registered patents and trademarks used by businesses within
the Building Products Group, the Electrical Products Group and the Automotive
Products Group, none of which are individually significant to the consolidated
operations of Eagle. Eagle's businesses do not materially rely on any single
patent, license or franchise.
BACKLOG
The following table indicates the approximate backlog for each of Eagle's
business groups as of the dates indicated. Approximately $34 million of the
backlog at December 31, 1994 is expected to be shipped in 1996 or after,
substantially all of which relates to Burns.
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1993
----------- ------------
(RESTATED)
(IN MILLIONS)
<S> <C> <C>
Building Products Group........... $ 39.7 $ 25.6
Electrical Products Group......... 68.6 46.2
Automotive Products Group......... 2.6 2.9
Corporate and Other............... 72.2 93.4
------ ------
Total..................... $183.1 $168.1
====== ======
</TABLE>
OTHER MATTERS
ENVIRONMENTAL MATTERS
As manufacturing companies, Eagle's subsidiaries are subject to various
environmental laws concerning air emissions, discharges into water and the
generation, handling, storage, transportation, treatment and disposal of waste
and other materials. In addition to costs associated with regulatory
compliance, companies such as those within Eagle, which in prior years have
disposed of hazardous material at various sites, may be liable under various
federal and state laws for the costs of the clean-up of such sites. It is
impossible to predict accurately Eagle's future expenditures for environmental
matters; however, Eagle anticipates that future environmental requirements will
become more stringent, which may result in increased expenditures. It is
Eagle's policy to take all reasonable measures to control and eliminate
pollution resulting from its operations. Eagle believes that as a general
matter its policies, practices and procedures in these areas are adequate to
prevent unreasonable risk of environmental and other damage, and the resulting
financial liability.
Eagle believes, based on consultations with legal counsel and environmental
consultants and its own reviews of the nature and extent of potential
liabilities, that compliance with existing environmental protection laws,
including those requiring clean-up of hazardous waste, will not have a material
adverse effect on Eagle's financial position, results of operations or
competitive position. The Company believes that its reserves related to
environmental liabilities are adequate. The amounts spent by Eagle on
environmental expenditures were not material to Eagle's results of operations
or financial position in the years ended December 31, 1994 and 1993, the five
months ended December 31, 1992 or in fiscal 1992. It is impossible, however,
to predict with certainty the level of expenditures with respect to any such
obligations, in part because a substantial portion of any expenditure is a
function of unsettled and evolving enforcement and regulatory policies in
states where Eagle conducts its business.
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EMPLOYEES
Eagle's continuing operations employed approximately 7,000 employees as of
December 31, 1994. Approximately 2,500 employees are represented by 13 unions.
Collective bargaining is conducted on a subsidiary-by-subsidiary basis with
local unions belonging to various national and international unions.
Management believes that labor relations are satisfactory at all subsidiaries.
ITEM 2. PROPERTIES
Eagle's manufacturing, warehouse, distribution and office facilities are
located in 68 locations and total approximately 6.0 million square feet. Eagle
believes these facilities, which are summarized below, are adequate for its
current and foreseeable requirements.
<TABLE>
<CAPTION>
THOUSANDS OF SQUARE FEET
--------------------------------------
LOCATIONS LEASED OWNED TOTAL
--------- ------------ ---------- --------
<S> <C> <C> <C> <C>
Building Products Group . . . . . 14 351 2,813 3,164
Electrical Products Group . . . . 24 48 1,556 1,604
Automotive Products Group . . . . 26 500 347 847
Commercial Aviation Products . . 3 89 268 357
Corporate . . . . . . . . . . . . 1 10 -- 10
-- --- ----- -----
68 998 4,984 5,982
== === ===== =====
</TABLE>
Substantially all domestic properties owned by Eagle and its subsidiaries are
subject to mortgages granted to financial institutions under its credit
facilities. See Note 5 to the Eagle Consolidated Financial Statements for
additional information regarding indebtedness of Eagle and its subsidiaries.
ITEM 3. LEGAL PROCEEDINGS
Eagle and its subsidiaries are defendants in several lawsuits arising in the
ordinary course of business. Management does not believe, based on the advice
of counsel, that any of these lawsuits, individually or in the aggregate, will
have a material adverse effect on Eagle's financial position or results of
operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
At December 31, 1994, Eagle had 1,000 shares of common stock authorized,
issued and outstanding, all of which was held by GAMI. In March 1995, Eagle
amended and restated its Certificate of Incorporation to authorize 3,000,000
shares of common stock with a par value of $.01 per share. In addition, in
March 1995 the Company distributed, as a stock dividend, 1,860 shares of its
common stock for each share outstanding, resulting in 1,860,000 shares issued
and outstanding. Eagle does not currently intend to pay cash dividends to its
stockholder. Eagle's dividend policy will be reviewed from time to time by its
Board of Directors in light of Eagle's earnings, financial position and other
factors deemed relevant by the Board of Directors. In addition, the amount of
cash dividends, if any, which may be paid on the Eagle Common Stock is
restricted by debt agreements.
As discussed in Note 11 to the Eagle Consolidated Financial Statements, in
January 1994 the Company received $50 million from GAMI in the form of a
capital contribution.
ITEM 6. SELECTED FINANCIAL INFORMATION
The selected financial information presented below has been derived from the
audited Eagle Consolidated Financial Statements for the years ended December
31, 1994 and 1993, the five months ended December 31, 1992 and for the fiscal
years ended July 31, 1990 through 1992 and should be read in conjunction with
such financial statements and the notes thereto. The five month period ended
December 31, 1991 is unaudited and is presented only for comparative purposes.
This information has been restated to give retroactive effect to businesses
accounted for as discontinued operations.
<TABLE>
<CAPTION>
YEAR ENDED FIVE MONTHS ENDED
DECEMBER 31, DECEMBER 31, YEAR ENDED JULY 31,
-------------- ------------------ ----------------------------
1994 1993 1992 1991 1992 1991 1990
---- ---- ----- ----- ---- ---- ----
INCOME STATEMENT DATA: (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
Net sales $993.6 $ 863.2 $ 344.6 $ 303.0 $ 797.5 $ 721.3 $ 733.5
Income (loss) from
continuing operations 56.8 (17.5) (6.1) (6.2) (3.2) (4.4) 10.5
Net income (loss) 15.3 (110.6) (11.4) 12.0 25.9 27.3 41.4
BALANCE SHEET DATA
(AT END OF PERIOD):
Total assets $868.0 $1,021.8 $1,094.6 $1,184.3 $1,142.7 $1,177.3 $1,334.2
Long-term debt 367.0 642.0 646.3 620.6 613.3 653.7 727.7
Total liabilities 704.5 929.7 885.8 938.6 917.2 943.5 1,125.0
Stockholder's equity 163.5 92.1 208.8 245.7 225.5 233.8 209.2
</TABLE>
-------------------------------------
(A) Eagle adopted the new accounting standard "Employers' Accounting for
Postemployment Benefits" ("SFAS No. 112") effective December 31, 1993,
"Accounting for Income Taxes" ("SFAS No. 109") effective January 1, 1993 and
"Employers' Accounting for Postretirement Benefits Other Than Pensions"
("SFAS No. 106") effective August 1, 1991. Refer to Notes 1, 6 and 7 to the
Eagle Consolidated Financial Statements for additional information regarding
the adoption of these accounting pronouncements.
(B) See Note 3 to the Eagle Consolidated Financial Statements for information
regarding acquisitions.
(C) See Note 11 to the Eagle Consolidated Financial Statements for
information regarding certain adjustments to stockholder's equity.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following should be read in conjunction with the Eagle Consolidated
Financial Statements included herein.
GENERAL
After the sale of certain businesses in the Industrial Products Group and
Specialty Products Group the Company has three reportable segments. The
operations of Burns are now combined with Corporate. In 1993, the Company was
actively pursuing options for the sale of Lapp and reflected it as a
discontinued operation. In the fourth quarter of 1994, the Company decided
that the value of this business would be maximized by retaining Lapp as part of
its continuing operations and restructured the business. Accordingly, Lapp has
been reclassified to continuing operations as part of the Electrical Products
Group for all periods presented.
Effective December 16, 1992, Eagle changed its year end from July 31 to
December 31. Information for the year ended December 31, 1992 is unaudited and
has been presented for comparative purposes only.
As disclosed in Notes 1 and 7 to the Eagle Consolidated Financial Statements,
Eagle adopted the provisions of SFAS No. 109 effective January 1, 1993. By
adopting this standard, Eagle reduced its net deferred tax assets by $3.5
million and recorded a corresponding charge of $3.5 million.
As disclosed in Note 1 to the Eagle Consolidated Financial Statements, Eagle
adopted the provisions of SFAS No. 112 effective December 31, 1993. By
adopting this standard, Eagle increased its accrued expenses by $3.0 million
and recorded a corresponding pretax charge of $3.0 million.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1994 AS COMPARED TO YEAR ENDED DECEMBER 31, 1993
Net Sales
Following are net sales by business group:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, INCREASE/(DECREASE)
----------------------- ------------------------
1994 1993 AMOUNT PERCENTAGE
------- ----- ------ ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Building Products Group . . . . $440.7 $372.3 $ 68.4 18.4%
Electrical Products Group . . . 279.9 261.1 18.8 7.2%
Automotive Products Group . . . 182.3 164.2 18.1 11.0%
Corporate and Other . . . . . . 90.7 65.6 25.1 38.2%
------ ------ ------
Total . . . . . . . . $993.6 $863.2 $130.4 15.1%
====== ====== ====== ====
</TABLE>
Consolidated net sales for the year ended December 31, 1994 were $130.4
million or 15.1% higher than net sales for the year ended December 31, 1993.
This increase was primarily due to increased volume in most of the Company's
businesses.
Net sales of $440.7 million for the year ended December 31, 1994 for the
Building Products Group were $68.4 million or 18.4% higher than in the 1993
period. This increase resulted from an increased level of housing starts,
continued strong growth in the repair and remodeling markets and market share
gains. Sales to Sears increased due to higher volume of redesigned
Craftsman(R) air compressors. Price increases and continued market penetration
of flexible duct products, as well as geographic expansion into the Western
United States, generated higher net sales of air distribution and air handling
products. Changes in governmental regulations requiring the use of low water
volume toilets generated increased sales of ultra-low-flush toilets.
Net sales of $279.9 million for the year ended December 31, 1994 for the
Electrical Products Group were $18.8 million or 7.2% higher than in the 1993
period. This increase was primarily due to increased volume at Hendrix and
Elastimold due to an improvement in the economy, a product line acquisition at
Elastimold in 1993 and
11
<PAGE> 12
to a lesser extent, an improvement in pricing. This increase was partially
offset by decreased volume at Lapp due to soft markets and the sale of its
polymer product line.
Net sales of $182.3 million for the year ended December 31, 1994 for the
Automotive Products Group were $18.1 million or 11.0% higher than in the 1993
period. This increase was primarily due to increased volume at most businesses
within the group, due to increased market penetration and geographic expansion.
Other net sales of $90.7 million for the year ended December 31, 1994 were
$25.1 million or 38.2% higher than in the 1993 period. This increase was
primarily due to shipments under a major order from British Airways at Burns.
Gross Earnings
Consolidated gross earnings of $200.9 million for the year ended December 31,
1994 were $35.0 million higher than in the 1993 period. This increase was
primarily due to the higher volume in the 1994 period. Consolidated gross
margin was 20.2% in 1994 and 19.2% in 1993. This increase was primarily due to
increased volume and, to a lesser extent, improved pricing.
Operating Income
Following is operating income by business group:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, INCREASE/(DECREASE)
------------------------ ------------------------
1994 1993 AMOUNT PERCENTAGE
-------- ------ ------ ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Building Products Group . . . . $ 53.4 $ 47.5 $ 5.9 12.6%
Electrical Products Group . . . (7.3) 9.9 (17.2) (173.4)%
Automotive Products Group . . . 8.8 6.2 2.6 41.8%
Corporate and Other . . . . . . (21.1) (18.2) (2.9) (15.9)%
------ ------ ------
Operating Income . . . $ 33.8 $ 45.4 $ (11.6) (25.6)%
====== ====== ====== =====
</TABLE>
Consolidated operating income for the year ended December 31, 1994 was $33.8
million compared to $45.4 million in 1993. This decrease was primarily due to
the recording of $24.6 million of restructuring charges in the Electrical
Products Group for Lapp in 1994. Excluding these restructuring charges and
$2.6 million of restructuring charges in 1993, operating income increased $10.4
million or 21.4%. This increase was primarily due to the increased sales
volume, partially offset by $8.7 million of charges recorded to establish
additional insurance reserves.
Operating income for the year ended December 31, 1994 for the Building
Products Group was $5.9 million or 12.6% higher than in 1993. This increase
was primarily due to increased volume, partially offset by $3.9 million of
charges to establish self-insurance reserves.
Operating income for the Electrical Products Group of $9.9 million in 1993
declined to an operating loss of $7.3 million in 1994. The operating loss in
1994 resulted primarily from charges of $24.6 million related to Lapp's exit
from its polymer product line and the restructuring of its porcelain
operations. In 1993 IEP recorded restructuring charges of $2.0 million related
to the relocation of one of its manufacturing facilities and Elastimold
recorded restructuring charges of $0.6 million related to an early retirement
program. See Notes 4 and 8 to the Eagle Consolidated Financial Statements for
a further discussion regarding these charges. Excluding the effects of
restructuring charges in 1994 and 1993, operating income for the year ended
December 31, 1994 for the Electrical Products Group was $4.8 million or 37.6%
higher than in 1993. This increase was primarily due to increased volume and,
to a lesser extent, improved pricing at Hendrix and Elastimold partially offset
by $2.7 million of charges to establish self-insurance reserves. Excluding the
effects of restructuring charges, operating margins were 6.2% and 4.8% for the
years ended December 31, 1994 and 1993, respectively, due to the above
mentioned factors.
Operating income for the year ended December 31, 1994 for the Automotive
Products Group was $2.6 million or 41.8% higher than in 1993. This increase
was primarily due to increased volume at most businesses within this group,
partially offset by $0.5 million of charges recorded to establish
self-insurance reserves. Operating
12
<PAGE> 13
margins were 4.9% and 3.8% for the years ended December 31, 1994 and 1993,
respectively, due to the above mentioned factors.
Corporate and other expenses for the year ended December 31, 1994 were $2.9
million or 15.9% higher than in the 1993 period. This increase was primarily
due to $1.6 million of charges recorded to establish self-insurance reserves
and $5.2 million of expenses associated with the Company's asset securitization
program. These increases were partially offset by improvements at Burns due to
increased volume and the write- down of certain receivables and inventory in
1993. The 1993 period also reflects a one-time curtailment gain associated
with a pension plan of $1.3 million.
Interest Expense
Net interest expense related to continuing operations was $37.1 million for
the year ended December 31, 1994 compared to $61.8 million for the comparable
1993 period. This decrease was primarily due to the overall decrease in the
level of debt coupled with the decrease in interest rates associated with the
refinancing completed in January 1994.
Income From Continuing Operations (Before Income Taxes)
The income from continuing operations before income taxes for the year ended
December 31, 1994 was $57.7 million. This was primarily due to the $61 million
gain on the sale of Falcon's stock, partially offset by the aforementioned
$24.6 million restructuring charges for Lapp.
Income Tax Provision
The Company's tax provision for continuing operations for the year ended
December 31, 1994 reflected the tax free gain on the sale of subsidiary stock
partially offset by non-deductible expenses including goodwill amortization.
See Note 7 to the Eagle Consolidated Financial Statements for a further
analysis of the effective tax rate.
YEAR ENDED DECEMBER 31, 1993 AS COMPARED TO YEAR ENDED DECEMBER 31, 1992
Net Sales
Following are net sales by business group:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, INCREASE/(DECREASE)
----------------------------- ----------------------------
1993 1992 AMOUNT PERCENTAGE
------ ------- ------ ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Building Products Group . . . . $372.3 $345.2 $ 27.1 7.9%
Electrical Products Group . . . 261.1 257.0 4.1 1.6%
Automotive Products Group . . . 164.2 139.8 24.4 17.5%
Corporate and Other . . . . . . 65.6 97.1 (31.5) (32.4)%
------ ------ ------
Total . . . . . . . . . . . $863.2 $839.1 $ 24.1 2.9%
====== ====== ====== ======
</TABLE>
Excluding the effects of acquisitions, consolidated net sales for the year
ended December 31, 1993 were $21.7 or 2.6% higher than net sales for the year
ended December 31, 1992. This increase was primarily due to increased volume
at the Company's automotive parts distribution businesses, Denman and Falcon,
partially offset by declines at Burns and Lapp.
Net sales of $372.3 million for the year ended December 31, 1993 for the
Building Products Group were $27.1 million or 7.9% higher than in the 1992
period. This increase was primarily due to increased volume, and to a lesser
extent, improved pricing at Falcon. These increases were primarily the result
of improvement in the residential construction market.
Net sales of $261.1 million for the year ended December 31, 1993 for the
Electrical Products Group were $4.1 million or 1.6% higher than in the 1992
period. Approximately $2.4 million of the increase was due to a
13
<PAGE> 14
product line acquisition made by Elastimold. The remainder of the increase was
primarily due to increased volume and improved pricing at Hendrix and increased
international volume at Elastimold, partially offset by decreased volume and
price declines at Lapp caused by softness in the economy and lower porcelain
insulator volume.
Net sales of $164.2 million for the year ended December 31, 1993 for the
Automotive Products Group were $24.4 million or 17.5% higher than in the 1992
period. This increase was primarily due to increased volume at Denman and as a
result of an increase in the customer base at the automotive parts distribution
businesses.
Other net sales of $65.6 million were $31.5 or 32.4% lower than the 1992
period. The decrease was due to lower volume at Burns due to decreased
expenditures in the aviation industry and a large order in the 1992 period,
which was not repeated in 1993.
Gross Earnings
Consolidated gross earnings of $165.9 million for the year ended December 31,
1993 were $2.0 million lower than in the 1992 period. This decrease was
primarily due to a write down of inventory at Burns. Consolidated gross margin
of 19.2% in 1993 was down from 20.0% in the comparable 1992 period.
Operating Income
Following is operating income by business group:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, INCREASE/(DECREASE)
------------------------- ---------------------------
1993 1992 AMOUNT PERCENTAGE
----- ----- ------ ----------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Building Products Group . . . . $ 47.5 $ 44.1 $ 3.4 7.7%
Electrical Products Group . . . 9.9 17.8 (7.9) (44.0)%
Automotive Products Group . . . 6.2 3.6 2.6 72.5%
Corporate and Other . . . . . . (18.2) (9.8) (8.4) (86.3)%
------ ------ ------
Operating Income . . . . . . $ 45.4 $ 55.7 $(10.3) (18.4)%
====== ====== ====== ======
</TABLE>
Consolidated operating income for the year ended December 31, 1993 was $45.4
million compared to operating income of $55.7 million in 1992. Excluding
restructuring charges of $2.6 million, operating income decreased $7.7 million
or 13.8%. This decrease was primarily due to lower sales volume at Lapp and
Burns, and a write down of certain inventory and receivables at Burns of $6.7
million. The decline was partially offset by increased sales volume at Denman
and the Company's automotive parts distribution businesses and an increase in
price and volume at Hendrix and Falcon.
Operating income for the year ended December 31, 1993 for the Building
Products Group was $3.4 million or 7.7% higher than in 1992. This increase was
primarily due to improved pricing and increased volume of air distribution and
air handling products, partially offset by decreased pricing and higher
operating costs at the bathroom plumbing fixtures operations. Operating margin
for the group was 12.8% for the years ended December 31, 1993 and 1992.
The Electrical Products Group recorded restructuring charges totaling $2.6
million in the third and fourth quarter of 1993. Elastimold recorded charges
of $0.6 million related to an early retirement program. IEP recorded charges
of $2.0 million for additional costs associated with the relocation of one of
its manufacturing facilities from New Jersey to Florida. Excluding the effects
of restructuring charges, operating income for the Electrical Products Group
was $5.3 million or 29.4% lower than in 1992. This decrease was primarily due
to decreased volume and pricing at Lapp and declines at Elastimold caused by
decreased earnings at its European joint venture. These decreases were
partially offset by improved pricing at Hendrix and reduced manufacturing costs
at IEP. Excluding the effects of restructuring charges, operating margins were
4.8% and 6.9% for the years ended December 31, 1993 and 1992, respectively, due
to the above mentioned factors.
Operating income for the year ended December 31, 1993 for the Automotive
Products Group was $2.6 million or 72.5% higher than in 1992. This increase
was primarily due to increased sales volume at Denman and the
14
<PAGE> 15
automotive parts distribution businesses. Operating margins were 3.8% and 2.6%
for the years ended December 31, 1993 and 1992, respectively, due to the above
mentioned factors.
Corporate and other expenses for the year ended December 31, 1993 were $8.4
million or 86.3% higher than in the 1992 period. This increase was primarily
due to lower volume and prices at Burns, as well as a write-down of certain
receivables and inventory at Burns, partially offset by a one-time curtailment
gain of $1.3 million associated with a pension plan.
Interest Expense
Net interest expense related to continuing operations was $61.8 million for
the year ended December 31, 1993 compared to $58.6 million for the comparable
1992 period. This increase is primarily attributable to a decrease in interest
income.
Loss From Continuing Operations (Before Income Taxes)
The loss from continuing operations before income taxes for the year ended
December 31, 1993 was $16.4 million compared to a loss of $3.0 million in 1992.
The increase in the loss is primarily due to the write-down of certain accounts
receivable and inventory of $6.7 million at Burns and restructuring charges
totaling $2.6 million at IEP and Elastimold.
Income Tax Provision
The Company's tax benefit from continuing operations for the year ended
December 31, 1993 reflected the significant amount of non-deductible expenses
including goodwill amortization. See Note 7 to the Eagle Consolidated
Financial Statements for a further analysis of the effective tax rate.
DISCONTINUED OPERATIONS
In September 1993, the Company adopted a formal plan to sell Lapp. As a
result, Lapp was reflected as a discontinued operation. In the fourth quarter
of 1994, the Company concluded that the value of this business would be
maximized by retaining Lapp as part of its continuing operations and
restructuring the business. As a result, the net assets and results of
operations for all periods presented have been reclassified from discontinued
operations to continuing operations. See Notes 4 and 8 to the Eagle
Consolidated Financial Statements for a further discussion regarding Lapp.
In September 1994, the Company sold certain assets of Caron International,
Inc. ("Caron") for cash proceeds of $3.0 million and a $4.0 million note. In
August 1994, the Company completed the sale of certain assets and liabilities
of Hill Refrigeration, Inc. ("Hill") for cash proceeds of $8.8 million. In
addition, the Company is pursuing the sale of Gerry Sportswear, Inc. ("Gerry").
The Company recorded a pretax charge of $53.2 million and applicable tax
benefits of $12.9 million in 1994 for estimated losses from operations and the
ultimate disposition of Hill, Caron and Gerry. The Company also recorded
pretax charges in 1994 of $5.8 million and applicable tax benefits of $2.3
million to establish additional self-insurance reserves and $6.4 million of
additional reserves and applicable tax benefits of $2.2 million for costs
associated with businesses previously sold by the Company.
In June 1994, the Company sold the stock of Pfaudler, Inc. ("Pfaudler") and
Chemineer, Inc. ("Chemineer") to Robbins & Myers, Inc. The Company received
cash proceeds of $59.9 million and a $50.0 million, 5.5% subordinated note
(accreted value of $36.3 million at December 31, 1994). In addition, the
Company received stock appreciation rights with respect to 2 million shares of
common stock of Robbins & Myers, Inc. The Company recorded a pretax gain of
$21.8 million and applicable taxes of $6.7 million with respect to the sale of
Pfaudler and Chemineer.
15
<PAGE> 16
The Company sold Power Structures and certain assets of Underground
Technologies in the fourth quarter of 1993 for total proceeds of $3.5 million.
The Company made a provision of $13.4 million, net of applicable tax benefit of
$3.2 million, for estimated losses from operations and from the ultimate
disposition of these businesses.
In February, 1993, Eagle sold a 60% interest in Signet Armorlite, Inc.
("Signet") to Galileo Industrie Ottiche, S.p.A. ("Galileo"). Signet
manufactures and distributes ophthalmic lenses used for eyeglasses and also
distributes supplies used in ophthalmic lens processing. The Company received
cash proceeds of approximately $23 million from the sale, which were used to
reduce outstanding debt. The Company recorded a pretax loss of $5.0 million
with a corresponding tax benefit of $2.0 in December 1992. See Note 4 to the
Eagle Consolidated Financial Statements for a further discussion of the sale
agreement and resulting accounting treatment.
During fiscal 1992, Eagle and its subsidiaries completed the sale of its
process pump business, Pulsafeeder, Inc. and subsidiaries ("Pulsafeeder"), for
total cash and other consideration of $69.0 million, as a result of which a net
gain of approximately $10.6 million was recorded during the fourth quarter of
fiscal 1992. In addition, Eagle sold the net assets of Equality to GAMI for
approximately $17.0 million. Eagle did not record any gain on the sale of
Equality.
Interest expense allocated to these discontinued businesses primarily
represented interest expense associated with debt assumed by the buyer or debt
related to the discontinued businesses that will no longer be incurred by Eagle
or its subsidiaries. In addition, certain interest expense related to Eagle
and its subsidiaries' revolving lines of credit has also been allocated to
discontinued operations based on the percentage of net assets sold to total
consolidated net assets plus indebtedness of Eagle. Interest expense related to
Eagle's subordinated notes has not been allocated to these discontinued
operations. Eagle believes the method used to allocate interest expense to
discontinued businesses is reasonable.
The provision for income taxes reflected for discontinued businesses
recognizes the tax effects related specifically to the discontinued businesses.
Income tax benefits of $6.5 million and $7.4 million were recorded in
connection with the ultimate disposition of companies recorded as discontinued
operations in 1994 and 1993, respectively. These amounts include a provision
of $4.2 million in 1994 and a benefit of $4.2 million in 1993 related to the
classification of Lapp as a discontinued operation in 1993 and the
reclassification to continuing operations in 1994. The tax benefits recorded
differ from that computed by utilizing the U.S. federal tax rate due to certain
non-deductible losses, principally the write down of goodwill. Income tax
expense of $18.7 million was provided against the net gains on disposal of
businesses in fiscal 1992. The tax recorded on the gains recorded in fiscal
1992 differs from that computed by utilizing the U.S. federal tax rate due to
state taxes, certain non-deductible losses, the effect of net-of-tax
accounting, the effect of foreign tax credits and excess tax gain over the book
gain attributable to differences between the book and tax basis of assets
related to businesses sold.
LIQUIDITY AND CAPITAL RESOURCES
Eagle has historically met its debt service, capital expenditure requirements
and operating needs through a combination of operating cash flow and external
financing.
Operating Cash Flow
Cash flow from continuing operating activities ("Operating Cash Flow") was
$215.3 million for the year ended December 31, 1994. Excluding the effects of
the asset securitization program, Operating Cash Flow was $105.0 million
compared to $12.7 million in 1993. This increase was primarily due to improved
working capital management and a reduction in the amount of interest paid as a
result of the Refinancing (defined below).
16
<PAGE> 17
Credit Facilities
In January 1994, the Company consummated a Refinancing (the "Refinancing"),
the proceeds of which were utilized to repay and redeem all of its then
outstanding bank credit facilities, the remaining $149 million of its 13%
Senior Subordinated Notes ("13% Notes") and the 13.75% Senior Subordinated
Notes ("13.75% Notes"). A portion of the proceeds from the Refinancing were
derived from a new $425 million senior bank credit facility made available to
Eagle Industrial Products Corporation, ("Eagle Industrial"), a newly formed
wholly owned subsidiary of the Company. The Company also entered into an asset
securitization program (the "Securitization") whereby it sold certain of its
accounts receivable for approximately $110 million. In addition, the Company
received a capital contribution from GAMI of $50 million in connection with the
Refinancing. The Company recorded a pretax extraordinary charge of $26.0
million in the first quarter of 1994 related to the Refinancing. In November
1994, as a result of the Offering, this bank credit facility was bifurcated
into two separate bank credit facilities, including a $165 million facility for
Falcon and an amended and restated $177 million credit facility for Eagle
Industrial.
The Eagle Industrial credit facility consists of a $92 million term loan and
an $85 million revolving credit facility and expires in 2000. The Falcon
credit facility consists of a $115 million term loan and a $50.0 million
revolving credit facility and also expires in 2000. At December 31, 1994, an
additional $11.1 million and $21.5 million was available to borrow under the
Eagle Industrial and Falcon credit facilities, respectively. See Note 5 to the
Eagle Consolidated Financial Statements for a further discussion of the Eagle
Industrial and Falcon credit facilities.
In July 1993, the Company completed a tender offer for $151 million of its
13% Notes. The tender of the $151 million of the 13% Notes was funded through
a concurrent sale of $315 million principal amount of Senior Deferred Coupon
Notes due 2003 ("Notes"). Cash interest will be payable at a rate of 10.5% per
annum commencing on January 15, 1999 until maturity on July 15, 2003. The net
proceeds, after deducting the tender premium, consent payments, interest on the
13% Notes tendered and other fees and expenses, amounted to approximately $167
million. In connection with the tender of the 13% Notes, the Company
recognized an extraordinary charge of $8.4 million net of applicable tax
benefit of $5.8 million for call premiums and expenses.
During 1994, the Company retired $55.9 million face value ($37.8 million
accreted value) of the Notes. In conjunction with this retirement, the Company
recorded an extraordinary pretax gain of $0.5 million.
Capital Expenditures
Capital expenditures were $32.1 million and $24.9 million for the years ended
December 31, 1994 and 1993, respectively. Capital expenditures were $12.6
million for the five months ended December 31, 1992 and $20.6 million in fiscal
1992.
In addition to normal maintenance expenditures, Eagle also expects to incur
additional capital expenditures to develop new products and improve product
quality. Capital expenditures will be funded through operating cash flow and
through availability under the Eagle Industrial and Falcon credit facilities.
Eagle had no material commitments for capital expenditures at December 31,
1994.
Acquisitions and Divestitures
Although the Company has historically made a number of acquisitions, it has
not made any material acquisitions since fiscal 1990. While certain
preliminary discussions are at varying stages at this time, Eagle currently
does not have any contract or arrangement with respect to a material
acquisition.
Eagle has sold a number of businesses, realizing cash proceeds of $71.7
million in 1994, $25.9 million in 1993 and $17.0 million in the five months
ended December 31, 1992. Proceeds were $67.4 million in fiscal 1992. Eagle
has considered, and in the future will consider, proposals for the sale of some
or all of its interests in its businesses. However, it has, at this time, no
agreements or arrangements for the sale of any of its businesses.
17
<PAGE> 18
Other Liquidity Considerations
Eagle is structured as a holding company and the operations of Eagle are
conducted principally through its subsidiaries. Under the Notes, Eagle has no
principal payments due until 2003 and no cash interest payments due until
January 1999. Eagle Industrial and Falcon own all the operating subsidiaries
of the Company. Eagle Industrial and Falcon will rely almost exclusively on
income and cash flow from each of their operating subsidiaries to generate the
funds necessary to meet debt service obligations as defined in "Credit
Facilities" above. In addition, the credit facilities and agreements to which
Eagle or its subsidiaries are a party, restrict the ability of Eagle or its
subsidiaries to incur further indebtedness. See Note 5 to the Eagle
Consolidated Financial Statements. Management believes that cash flow from
continuing operations along with availability under the credit facilities and
funds available through participation in the Securitization will be sufficient
to pay interest on outstanding debt, meet current debt maturities, pay income
taxes and fund anticipated capital expenditures.
In November 1994, Falcon completed an initial public offering of 6,000,000
shares (30%) of its common stock at an offering price of $12.00 per share which
generated net cash proceeds to the Company of $63.1 million. Substantially all
of the cash proceeds were used to reduce outstanding indebtedness. The Company
recorded a tax free gain of $61.0 million in conjunction with the Offering.
Subsequent to the Offering, a separate U.S. federal income tax return will be
filed for Falcon. Primarily all of the Company's deferred tax assets of $88.0
million at December 31, 1994 relate to its non-Falcon businesses. Management
believes that future taxable income and tax planning strategies are available,
principally through the sale of certain assets, if necessary, to fully realize
the recorded net deferred tax assets and accordingly, no valuation allowance
has been recorded at December 31, 1994.
IMPACT OF INFLATION
Eagle believes that inflation has not had a significant impact on operations
during the period August 1, 1991 through December 31, 1994 in any of the
countries or industries in which Eagle competes.
18
<PAGE> 19
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
PAGE
Report of Independent Public Accountants . . . . . . . . . 20
Consolidated Balance Sheets . . . . . . . . . . . . . . . . 21
Consolidated Statements of Income . . . . . . . . . . . . . 22
Consolidated Statements of Stockholder's Equity . . . . . 23
Consolidated Statements of Cash Flows . . . . . . . . . . . 24
Notes to Consolidated Financial Statements . . . . . . . . 26
Supplementary Financial Data (Unaudited) . . . . . . . . . 44
19
<PAGE> 20
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of Eagle Industries, Inc.:
We have audited the accompanying consolidated balance sheets of Eagle
Industries, Inc. (a Delaware corporation) and Subsidiaries as of December 31,
1994 and 1993, and the related consolidated statements of income, stockholder's
equity and cash flows for the years ended December 31, 1994 and 1993, the five
months ended December 31, 1992 and the year ended July 31, 1992. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Eagle Industries, Inc. and Subsidiaries as of December 31, 1994 and 1993,
and the results of their operations and their cash flows for the years ended
December 31, 1994 and 1993, the five months ended December 31, 1992 and the
year ended July 31, 1992, in conformity with generally accepted accounting
principles.
As explained in Note 1 and Note 7 to the consolidated financial statements,
effective January 1, 1993, the Company adopted the requirements of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes". As
explained in Note 1 to the consolidated financial statements, effective
December 31, 1993, the Company adopted the requirements of Statement of
Financial Accounting Standards No. 112, "Employers' Accounting for
Postemployment Benefits". As explained in Note 6 to the consolidated financial
statements, effective August 1, 1991, the Company adopted the requirements of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions".
ARTHUR ANDERSEN LLP
Chicago, Illinois,
March 16, 1995
20
<PAGE> 21
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------
1994 1993
----- ----
(RESTATED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . $ 31.1 $ 4.8
Accounts receivable, net . . . . . . . . . . . . . . 29.4 118.4
Inventories, net . . . . . . . . . . . . . . . . . . 126.5 131.9
Other current assets . . . . . . . . . . . . . . . . 76.6 46.7
Net current assets of discontinued operations . . . 9.8 155.2
--------- --------
Total current assets . . . . . . . . . . . . . . . . 273.4 457.0
Property, plant and equipment, net . . . . . . . . . . . . . 184.9 182.8
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . 290.0 299.0
Other assets . . . . . . . . . . . . . . . . . . . . . . . . 119.7 83.0
--------- --------
Total assets . . . . . . . . . . . . . . . . . . . . $ 868.0 $1,021.8
========= ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current portion long-term debt . . . . . . . . . . . $ 24.7 $ 18.1
Accounts payable . . . . . . . . . . . . . . . . . . 64.8 54.8
Accrued liabilities . . . . . . . . . . . . . . . . 84.2 75.1
--------- --------
Total current liabilities . . . . . . . . . . . . . 173.7 148.0
Senior subordinated notes . . . . . . . . . . . . . . . . . . 180.4 421.9
Other long-term debt . . . . . . . . . . . . . . . . . . . . 186.6 220.1
Accrued employee benefit obligations . . . . . . . . . . . . 73.6 71.2
Other long-term liabilities . . . . . . . . . . . . . . . . . 90.2 68.5
--------- --------
Total liabilities . . . . . . . . . . . . . . . . . 704.5 929.7
========= ========
Stockholder's equity:
Common stock, par value $.01 per share, 3,000,000
shares authorized, 1,860,000 issued and
outstanding . . . . . . . . . . . . . . . . . . -- --
Paid-in capital . . . . . . . . . . . . . . . . . . 188.7 138.7
Retained deficit . . . . . . . . . . . . . . . . . . (21.7) (37.0)
Cumulative translation adjustments and other . . . . 1.6 (5.0)
Pension liability adjustment . . . . . . . . . . . . (5.1) (4.6)
--------- --------
Total stockholder's equity . . . . . . . . . . . . . 163.5 92.1
--------- --------
Total liabilities and stockholder's equity . . . . . $ 868.0 $1,021.8
========= ========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
21
<PAGE> 22
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED FIVE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, JULY 31,
----------------------- --------------------
1994 1993 1992 1991 1992
---- ---- ---- ---- ----
(RESTATED) (RESTATED) (RESTATED)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . $ 993.6 $ 863.2 $ 344.6 $ 303.0 $ 797.5
Cost of sales . . . . . . . . . . . . . . . . 792.7 697.3 277.7 240.9 634.4
--------- --------- --------- -------- --------
Gross earnings . . . . . . . . . . . . . . 200.9 165.9 66.9 62.1 163.1
Selling and administrative expenses . . . . . 126.2 112.9 46.7 40.2 99.7
Other (income) expense . . . . . . . . . . . 7.6 (3.8) (1.2) (0.8) (2.4)
Goodwill amortization . . . . . . . . . . . . 8.7 8.8 3.7 3.6 8.5
Restructuring charges 24.6 2.6 0.3 -- --
--------- --------- --------- -------- --------
Operating income . . . . . . . . . . . . . 33.8 45.4 17.4 19.1 57.3
Gain on sale of subsidiary stock . . . . . . 61.0 -- -- -- --
Net interest expense . . . . . . . . . . . . 37.1 61.8 25.2 25.6 59.0
--------- --------- --------- -------- --------
Income (loss) from continuing operations
before income taxes . . . . . . . . . . . . 57.7 (16.4) (7.8) (6.5) (1.7)
Provision (benefit) for income taxes from
continuing operations . . . . . . . . . . . 0.9 1.1 (1.7) (0.3) 1.5
--------- --------- --------- -------- -------
Income (loss) from continuing operations. . . 56.8 (17.5) (6.1) (6.2) (3.2)
Discontinued operations, net of taxes:
Operating income (loss) . . . . . . . . . . (4.1) (56.6) (2.3) 1.3 1.6
Gain (loss) on disposal . . . . . . . . . . (21.1) (22.1) (3.0) -- 10.6
--------- --------- --------- -------- -------
Income (loss) before extraordinary item and
cumulative effect of change in
accounting principles . . . . . . . . . . . 31.6 (96.2) (11.4) (4.9) 9.0
Extraordinary item:
Loss from early retirement of debt, net of
applicable income tax benefit of $9.2 in
1994 and $5.8 in 1993 . . . . . . . . . . (16.3) (8.4) -- -- --
--------- --------- --------- -------- -------
Income (loss) before cumulative effect of
change in accounting principles . . . . . . 15.3 (104.6) (11.4) (4.9) 9.0
Cumulative effect of change in accounting
principles net of income tax provision
(benefit) of $(1.0) in 1993 and $7.3 in
December 1991 and fiscal 1992 . . . . . . -- (6.0) -- 16.9 16.9
--------- --------- --------- -------- -------
Net income (loss) . . . . . . . . . . . . . $ 15.3 $ (110.6) $ (11.4) $ 12.0 $ 25.9
========= ========= ========= ======== =======
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
22
<PAGE> 23
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(IN MILLIONS)
<TABLE>
<CAPTION>
CUMULATIVE
RETAINED TRANSLATION PENSION
COMMON PAID-IN EARNINGS ADJUSTMENTS LIABILITY
STOCK CAPITAL (DEFICIT) AND OTHER ADJUSTMENT
------ ------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Balance at July 31, 1991 . . . . . . . . . . . $ -- $ 174.8 $ 59.1 $ (0.1) $ --
Net income . . . . . . . . . . . . . . . . . -- -- 25.9 --
Restructuring transaction
(Note 11) . . . . . . . . . . . . . . . . -- (37.7) -- -- --
Translation adjustments
and other . . . . . . . . . . . . . . . . -- -- -- 3.5 --
------ ------- ------ ------ -------
Balance at July 31, 1992 . . . . . . . . . . . -- 137.1 85.0 3.4 --
Net loss . . . . . . . . . . . . . . . . . . -- -- (11.4) -- --
Translation adjustments
and other. . . . . . . . . . . . . . . . . -- 1.6 -- (6.9) --
------ ------- ------ ------ -------
Balance at December 31, 1992 . . . . . . . . . -- 138.7 73.6 (3.5) --
Net loss . . . . . . . . . . . . . . . . . . -- -- (110.6) -- --
Pension liability adjustment . . . . . . . . -- -- -- -- (4.6)
Translation adjustments and
other . . . . . . . . . . . . . . . . . . -- -- -- (1.5) --
------ ------- ------ ------ -------
Balance at December 31, 1993 . . . . . . . . . -- 138.7 (37.0) (5.0) (4.6)
Net income . . . . . . . . . . . . . . . . . -- -- 15.3 -- --
Capital contribution from
parent . . . . . . . . . . . . . . . . . . -- 50.0 -- -- --
Pension liability adjustment . . . . . . . . -- -- -- -- (0.5)
Translation adjustments and
other . . . . . . . . . . . . . . . . . . -- -- -- 6.6 --
------ ------- ------ ------ -------
Balance at December 31, 1994 . . . . . . . . . $ -- $ 188.7 $(21.7) $ 1.6 $ (5.1)
====== ======= ====== ====== =======
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
23
<PAGE> 24
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED FIVE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, JULY 31,
----------------- -----------------
1994 1993 1992 1991 1992
---- ---- ---- ---- ----
(RESTATED) (RESTATED) (RESTATED)
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations . . . . . . . . . $ 56.8 $ (17.5) $ (6.1) $ (6.2) $ (3.2)
Adjustments to reconcile income (loss) from
continuing operations to net cash flow from operating
activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . 26.5 25.3 9.3 8.7 20.7
Amortization . . . . . . . . . . . . . . . . . . . . . . 12.4 15.8 6.8 6.2 15.6
Deferred income tax provision (benefit). . . . . . . . . 5.7 7.3 0.7 0.9 (3.3)
Accretion of discount on subordinated debt . . . . . . . 20.5 9.5 -- -- --
Net gain from sale of subsidiary stock . . . . . . . . . (61.0) -- -- -- --
Proceeds from sale of accounts receivable . . . . . . . 110.3 -- -- -- --
Restructuring charges . . . . . . . . . . . . . . . . . 24.6 2.6 0.3 -- --
Cash effects of (excluding the effects of acquisitions
or dispositions of businesses):
(Increase) decrease in accounts
receivable . . . . . . . . . . . . . . . . . . (12.6) (8.9) 11.6 1.3 (23.1)
(Increase) decrease in inventories . . . . . . . 1.8 7.8 (3.2) (15.4) (16.2)
Decrease in other current assets . . . . . . . . 5.7 1.8 3.2 7.6 6.4
Increase (decrease) in accounts payable . . . . 12.2 1.5 (10.3) 0.4 17.2
Increase (decrease) in accrued income taxes . . (1.5) (19.0) 3.5 0.1 9.8
Increase (decrease) in accrued liabilities and
accrued employee benefit obligations . . . . . 13.9 (13.5) (18.3) (5.3) (10.1)
--------- ------- ------- -------- -------
Net cash from continuing operating activities . . . . . . 215.3 12.7 (2.5) (1.7) 13.8
Net cash from (used in) discontinued operations . . . . . (21.7) 3.8 (13.6) (1.0) (4.6)
--------- ------- ------- -------- -------
Net cash from (used in) operations: . . . . . . . . . . . 193.6 16.5 (16.1) (2.7) 9.2
--------- ------- ------- -------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of businesses . . . . . . . . . . . . 71.7 25.9 17.0 -- 67.4
Proceeds from issuance of subsidiary stock . . . . . . . 63.1 -- -- -- --
Capital expenditures . . . . . . . . . . . . . . . . . . (32.1) (24.9) (12.6) (6.3) (20.6)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . (16.4) (4.1) (7.8) (13.9) (12.2)
--------- ------- ------- -------- -------
Net cash from (used in) investing activities: . . . . . . 86.3 (3.1) (3.4) (20.2) 34.6
--------- ------- ------- -------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on long-term debt . . . . . . . . . . . . . (90.5) (0.5) (3.6) (0.3) (13.8)
Net borrowings (repayments) on revolving
credit facilities . . . . . . . . . . . . . . . . . . . (41.4) (44.6) 35.4 17.0 (24.0)
Issuance (retirement) of senior deferred
coupon notes, net . . . . . . . . . . . . . . . . . . . (36.4) 184.0 -- -- --
Repayment of senior subordinated debt . . . . . . . . . . (234.1) (161.0) -- -- --
Proceeds from bank credit facility, net . . . . . . . . . 319.9 -- -- -- --
Repayment of senior credit facilities . . . . . . . . . . (221.1) -- -- -- --
Capital contribution from parent . . . . . . . . . . . . 50.0 -- -- -- --
Net (payments to) advances from affiliates . . . . . . . -- -- (13.5) 0.1 (14.1)
--------- ------- ------- -------- -------
Net cash from (used in) financing activities: . . . . . . (253.6) (22.1) 18.3 16.8 (51.9)
--------- ------- ------- -------- -------
CHANGE IN CASH AND CASH EQUIVALENTS . . . . . . . . . . . . 26.3 (8.7) (1.2) (6.1) (8.1)
CASH AND CASH EQUIVALENTS, BEGINNING OF
PERIOD . . . . . . . . . . . . . . . . . . . . . . . . . 4.8 13.5 14.7 22.8 22.8
--------- ------- ------- -------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD . . . . . . . . . $ 31.1 $ 4.8 $ 13.5 $ 16.7 $ 14.7
========= ======= ======= ======== =======
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
24
<PAGE> 25
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - (CONTINUED)
(IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED FIVE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, JULY 31,
----------------- -----------------
1994 1993 1992 1991 1992
---- ---- ---- ---- ----
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET CASH PAID (RECEIVED) DURING THE
PERIOD FOR (RELATING TO CONTINUING AND
DISCONTINUED OPERATIONS):
Interest . . . . . . . . . . . . . . . . . . . . . . . . . $ 27.3 $ 62.2 $ 33.0 $ 37.4 $ 74.1
Income taxes . . . . . . . . . . . . . . . . . . . . . . . (5.3) (1.5) 15.6 (10.5) (6.8)
NONCASH TRANSACTIONS:
Equity transactions:
Adjustment decreasing additional paid-in capital . . . . $ -- $ -- $ -- $ -- $ (37.7)
Adjustment decreasing other long-term assets . . . . . . -- -- -- -- 37.7
------- ------- ------- ------- -------
$ -- $ -- $ -- $ -- $ --
======= ======= ======= ======= =======
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
25
<PAGE> 26
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION:
Eagle Industries, Inc. (the "Company" or "Eagle") is a wholly-owned
subsidiary of Great American Management and Investment, Inc. ("GAMI"). The
Consolidated Financial Statements include the accounts of the Company and its
subsidiaries. All significant intercompany accounts and transactions have been
eliminated in consolidation.
Effective December 16, 1992, Eagle changed its year end from July 31 to
December 31.
SALE OF SUBSIDIARY STOCK:
In November 1994, Falcon Building Products, Inc. ("Falcon"), a wholly-owned
subsidiary of the Company, completed an initial public offering of 6,000,000
shares (30%) of its common stock (the "Offering"). The Company recorded a tax
free gain of $61.0 million in conjunction with the Offering. Substantially all
of the cash proceeds were used to reduce outstanding indebtedness. Falcon is a
domestic manufacturer and distributor for the residential and commercial
construction and home improvement markets and is comprised of the Company's
Building Products Group.
CASH AND CASH EQUIVALENTS:
All highly liquid investment instruments with original maturities of three
months or less are considered to be cash equivalents.
INVENTORIES:
Inventories are stated at the lower of cost or market. Cost includes raw
materials, labor and manufacturing overhead. The last-in, first-out ("LIFO")
method of inventory valuation is used for 59.4% and 57.2% of inventory at
December 31, 1994 and 1993, respectively. The first-in first-out ("FIFO")
method of inventory valuation is used for the remaining inventory.
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment is stated at cost. Cost is based on appraised
fair market values when allocating the purchase price for acquisitions. The
straight-line method is generally used to provide for depreciation over the
estimated useful lives of the assets.
GOODWILL:
Goodwill represents the purchase price associated with acquired businesses in
excess of the fair value of the net assets acquired. Goodwill is amortized on
a straight-line basis primarily over forty years. Accumulated amortization was
$46.0 million and $37.3 million at December 31, 1994 and 1993, respectively.
The Company assesses the recoverability of unamortized goodwill allocated to
each of its individual acquired businesses as follows: A) continuing
operations - whenever current operating income is not sufficient to recover
current amortization of goodwill or when events and circumstances indicate that
future operating income and cash flow may be negatively affected, the
recoverability is evaluated based upon the estimated future operating income
and undiscounted cash flow of the related entity during the remaining period of
goodwill amortization, and; B) entities to be divested - the carrying value of
the net assets of each entity, including the amount of goodwill assigned
thereto, is compared to the expected divestiture proceeds. If a loss is
indicated, it is recorded when known; gains are recorded when the divestiture
occurs.
26
<PAGE> 27
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
REVENUE RECOGNITION:
The Company recognizes revenues as products are shipped.
POSTEMPLOYMENT BENEFITS:
The Company adopted the provisions of Statement of Financial Accounting
Standard ("SFAS") No. 112 "Employers' Accounting for Postemployment Benefits"
effective December 31, 1993. By adopting this standard, the Company increased
its accrued expenses by $3.0 million and recorded a corresponding pretax charge
of $3.0 million and applicable tax benefits of $1.0 million reflected as a
"Cumulative effect of change in accounting principle".
RESEARCH AND DEVELOPMENT:
Research, product development and engineering facilities are maintained at
various subsidiary locations. Research and development efforts center on
developing improved materials and designs for existing products and the
creation of new products and equipment. Research and development costs are
expensed as incurred. Research and development costs were $2.5 million and
$1.3 million for the years ended December 31, 1994 and 1993, respectively, $0.8
million for the five months ended December 31, 1992 and $1.6 million in fiscal
1992.
INCOME TAXES:
The Company is included in GAMI's consolidated U.S. federal income tax
return. Under the terms of a tax sharing arrangement with GAMI, the Company
computes and pays to GAMI its liability for U.S. federal income taxes as if the
Company filed a separate U.S. federal income tax return. Falcon was included
in this tax sharing arrangement until consummation of the Offering in November,
1994. For periods subsequent to the Offering, a separate U.S. federal income
tax return will be filed for Falcon. The Company files separate U.S. state and
non-U.S. income tax returns.
The Company adopted the provisions of SFAS No. 109, "Accounting for Income
Taxes" effective January 1, 1993. This new standard changed the Company's
method of accounting for income taxes from the deferred method required under
APB No. 11 to the asset and liability method. If it is more likely than not
that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recognized. (See Note 7.)
INTEREST EXPENSE RELATED TO DISCONTINUED OPERATIONS:
Interest expense allocated to the discontinued businesses principally
represents interest expense related to debt assumed by the buyer or debt
related to the discontinued businesses that will no longer be incurred by the
Company or its subsidiaries. In addition, certain interest expense related to
the Company and its subsidiaries' revolving lines of credit has also been
allocated to discontinued operations based on the percentage of net assets sold
or to be sold to total consolidated net assets plus indebtedness of the
Company. Interest expense related to the Company's subordinated notes has not
been allocated to the discontinued businesses. The Company believes the method
used to allocate interest to discontinued businesses is reasonable.
(2) ACCOUNTS RECEIVABLE
In January 1994 the Company entered into an asset securitization program (the
"Securitization") whereby it sold certain of its accounts receivable for
proceeds of $110.3 million and a residual interest in a trust to which the
receivables are transferred. In connection with the Securitization, the
Company entered into a receivable sale agreement whereby it will sell, with
limited recourse, on a continuous basis, an undivided interest in substantially
all
27
<PAGE> 28
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
of its accounts receivable. Under the agreement, which expires in 1999, the
maximum amount of proceeds which may be accessed through this agreement at any
one time is $145 million and is subject to change based on the level of
eligible receivables and restrictions on concentration of receivables. At
December 31, 1994, uncollected receivables sold under the agreement were $114.3
million. The cost related to the sale of receivables under this program was
$5.2 million in the year ended December 31, 1994, and is included in selling
and administrative expenses. The residual interest in the trust of $28.4
million is reflected in other current assets.
(3) ACQUISITIONS
In September 1992, GAMI contributed all of the outstanding capital stock of
North Riverside Holdings, Inc. ("North Riverside") to Eagle. Substantially all
of North Riverside's operations are conducted through two automotive
aftermarket parts distributors. The contribution of North Riverside to the
Company has been accounted for in a manner similar to a pooling-of-interests
under the provisions of APB No. 16.
(4) DISCONTINUED OPERATIONS
In September 1993, the Company adopted a formal plan to sell Lapp Insulator
Company ("Lapp"). As a result, Lapp was reflected as a discontinued operation.
In the fourth quarter of 1994, the Company concluded that the value of this
business would be maximized by retaining Lapp as part of its continuing
operations and restructured the business. As a result, the net assets and
results of operations for all periods presented have been reclassified from
discontinued operations to continuing operations. See Note 8 for a further
discussion regarding Lapp.
In September 1994, the Company sold certain assets of Caron International,
Inc. ("Caron") for cash proceeds of $3.0 million and a $4.0 million note. In
August 1994, the Company completed the sale of certain assets and liabilities
of Hill Refrigeration, Inc. ("Hill") for cash proceeds of $8.8 million. In
addition, the Company is pursuing the sale of Gerry Sportswear, Inc. ("Gerry").
The Company recorded a pretax provision of $53.2 million and applicable tax
benefits of $12.9 million in 1994 for estimated losses from operations and the
ultimate disposition of Hill, Caron and Gerry. The Company also recorded
pretax charges in 1994 of $5.8 million and applicable tax benefits of $2.3
million to establish additional self-insurance reserves and $6.4 million of
additional reserves and applicable tax benefits of $2.2 million for costs
associated with businesses previously sold by the Company.
In June 1994, the Company sold the stock of Pfaudler, Inc. ("Pfaudler") and
Chemineer, Inc. ("Chemineer") to Robbins & Myers, Inc. The Company received
cash proceeds of $59.9 million and a $50.0 million, 5.5% subordinated note.
The accreted value of the note was $36.3 million at December 31, 1994 and is
included in other assets. In addition, the Company received stock appreciation
rights with respect to 2 million shares of common stock of Robbins & Myers,
Inc. The Company recorded a pretax gain of $21.8 million and applicable taxes
of $6.7 million with respect to the sale of Pfaudler and Chemineer.
The Company sold Power Structures and certain assets of Underground
Technologies in the fourth quarter of 1993 for total proceeds of $3.5 million.
The Company recorded a provision of $13.4 million, net of applicable tax
benefit of $3.2 million, for estimated losses from operations and from the
ultimate disposition of these businesses.
28
<PAGE> 29
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
In February 1993, the Company sold a 60% interest in Signet Armorlite, Inc.
("Signet") to Galileo Industrie Ottiche, S.p.A. ("Galileo"). The Company
received cash proceeds of approximately $23 million and recorded a pretax loss
of $5.0 million with a corresponding tax benefit of $2.0 million in December
1992. Under the terms of the sale agreement, the Company has the right to put
(the "Put") its remaining 40% interest in Signet to Galileo on February 26,
1998. Galileo has the right to acquire the remaining 40% interest (the "Call")
held by the Company any time prior to February 26, 1998. While the Company
retains a 40% interest: it has no obligation to fund future losses or make
additional investments; it has a less than majority board representation; it
has given up substantially all of its rights to future earnings or appreciation
related to its 40% interest; and it intends to exercise its Put in the event
that Galileo does not exercise its Call. The price under either the Put or
Call is $14.9 million. Under the terms of the sale agreement, Galileo also has
the right to put certain of Signet's plant and equipment to the Company from
February 26, 1997 through February 26, 1998 for $10.0 million.
In September 1992, Eagle sold Equality Specialties, Inc. ("Equality") to GAMI
for $17 million in cash. No gain or loss was recorded as a result of the sale
of Equality. In May, 1992, the Company sold substantially all of the assets of
Pulsafeeder, Inc. and its wholly owned subsidiaries ("Pulsafeeder"). Total
consideration received by the Company was $69.0 million. The Company recorded
a pretax gain of $29.3 million with a corresponding tax provision of $18.7
million during the fourth quarter of fiscal 1992.
The following table summarizes key financial data related to the discontinued
operations of Pfaudler, Chemineer, Hill, Caron, Gerry, Power Structures,
Underground Technologies, Signet, Pulsafeeder and Equality.
<TABLE>
<CAPTION>
FIVE
YEAR ENDED MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, JULY 31,
------------------
1994 1993 1992 1992
---- ---- ---- ----
(RESTATED) (RESTATED)
(IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . $ 162.9 $ 381.7 $ 187.8 $ 521.0
Operating income (loss) . . . . . . . . . . . . . . . . . . . (3.0) (64.7) 2.1 18.3
Allocated interest expense . . . . . . . . . . . . . . . . . 2.0 8.4 4.3 13.1
Income tax provision (benefit) applicable to
discontinued businesses . . . . . . . . . . . . . . . . . (0.9) (16.0) 0.1 3.6
Cumulative effect of change in accounting
principle . . . . . . . . . . . . . . . . . . . . . . . . -- 0.5 -- --
Income (loss) from operations of discontinued
businesses net of applicable income taxes . . . . . . . . (4.1) (56.6) (2.3) 1.6
</TABLE>
The net current assets of discontinued operations included in the
Consolidated Balance Sheet at December 31, 1994 amounted to $9.8 million, and
consisted primarily of receivables, inventories and property, plant and
equipment, net of accrued liabilities. These amounts have all been classified
as current based on the intent to dispose of them within one year. The net
current assets of discontinued operations at December 31, 1993 amounted to
$155.2 million and consisted primarily of receivables, goodwill, property,
plant, and equipment and inventories net of accounts payable and accrued
liabilities.
29
<PAGE> 30
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
(5) DEBT
In January 1994 the Company consummated a refinancing (the "Refinancing"),
the proceeds of which were utilized to repay and redeem of all of its
subsidiaries senior bank credit facilities, its 13% Senior Subordinated Notes
("13% Notes") and the 13.75% Senior Subordinated Notes ("13.75% Notes"). A
portion of the proceeds were derived from a new senior bank credit facility
made available to Eagle Industrial Products Corporation, ("Eagle Industrial") a
newly formed, wholly-owned subsidiary of the Company which owns all of the
operating subsidiaries of the Company. As a result of the Refinancing, the
Company recorded a pretax charge of $26.0 million net of a tax benefit of $9.4
million in the first quarter of 1994. In November 1994, as a result of the
Offering, this bank credit facility was bifurcated into two separate bank
credit facilities, including a $165 million facility for Falcon ("Falcon Credit
Facility") and an amended and restated $177 million facility for Eagle
Industrial ("Eagle Industrial Credit Facility").
SENIOR SUBORDINATED NOTES:
Amounts outstanding under the Company's Senior Subordinated Notes are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1993
---- ----
(IN MILLIONS)
<S> <C> <C>
Senior Deferred Coupon Notes . . . . . . . . . . . . . . . . . . . . . . $ 180.4 $ 197.9
13% Senior Subordinated Notes . . . . . . . . . . . . . . . . . . . . . -- 149.0
13.75% Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . -- 75.0
-------- -------
$ 180.4 $ 421.9
======= =======
</TABLE>
Senior Deferred Coupon Notes:
The Company's $315 million original principal amount of Senior Deferred
Coupon Notes (the "Notes") issued pursuant to an indenture (the "Indenture"),
dated July 1, 1993, mature on July 15, 2003. The issue price of each Note was
$598.97 per $1,000 principal amount at maturity, which represents a yield to
July 15, 1998 of 10.5% per annum. Cash interest will not accrue on the Notes
prior to July 15, 1998. Cash interest will be payable on January 15 and July
15 of each year at a rate of 10.5% per annum commencing January 15, 1999 until
maturity. The Notes are general unsecured obligations of the Company and rank
pari pasu in right of payment with all senior indebtedness of the Company. The
Notes are redeemable at the Company's option on or after July 15, 1998 at par
value, plus accrued interest. In addition, prior to July 15, 1996, up to 35%
of the Notes may be redeemed out of the proceeds of certain equity offerings at
110% of accreted amount to July 15, 1994 and decreasing by 1% per annum each
July 14 thereafter, until July 14, 1996. The Notes have a change of control
provision which, under certain conditions, may require the Company to
repurchase such holders' Notes at 101% of the accreted amount plus accrued
interest, if any.
The Notes contain restrictive covenants, the more significant requirements
being: a limitation on dividend payments and distributions on capital stock;
restrictions on distributions from subsidiaries; limitations on sales of assets
and subsidiary stock; and limitations on the creation of additional
indebtedness.
During 1994, the Company retired $55.9 million face value ($37.8 million
accreted value) of the Notes. In conjunction with this retirement, the Company
recorded an extraordinary pretax gain of $0.5 million.
30
<PAGE> 31
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
13% Senior Subordinated Notes:
The Company's $300 million 13% Notes issued pursuant to an indenture dated
October 1, 1988 were due in October 1998. In July 1993, the Company,
concurrent with the offering of the Notes, consummated a tender offer of $151
million aggregate principal amount of the 13% Notes at a price of $1,049 per
$1,000 principal amount. In February 1994, the Company redeemed the remaining
$149 million of 13% Notes at 104% of their principal amount plus accrued
interest. Proceeds for the redemption were derived from the Refinancing.
13.75% Notes:
The $75 million 13.75% Notes were issued pursuant to an indenture dated March
15, 1988. In January 1994, all of the 13.75% Notes were called for redemption
on March 15, 1994 at 105.5% of their principal amount plus accrued interest.
Proceeds for the redemption were derived from the Refinancing.
OTHER LONG-TERM DEBT:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------
1994 1993
---- ----
(RESTATED)
(IN MILLIONS)
<S> <C> <C>
Eagle Industrial Credit Facility . . . . . . . . . . . . . . . . . . $ 89.5 $ --
Falcon Credit Facility . . . . . . . . . . . . . . . . . . . . . . . 112.5 --
Senior Bank Credit Facilities . . . . . . . . . . . . . . . . . . . -- 224.0
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.3 14.2
------- -------
211.3 238.2
Less current portion . . . . . . . . . . . . . . . . . . . . . . . (24.7) (18.1)
------- -------
Other long-term debt . . . . . . . . . . . . . . . . . . . . . . . . $ 186.6 $ 220.1
======= =======
</TABLE>
The aggregate long-term debt maturities over the next five years are as
follows: 1995 - $24.7 million; 1996 - $33.2; 1997 - $35.5 million; 1998 -
$37.4 million and 1999 - $42.7 million.
Eagle Industrial Credit Facility:
The Eagle Industrial Credit Facility consists of a $92 million term loan due
in quarterly installments increasing from $2.5 million per quarter beginning in
December 31, 1994 to $5.5 million per quarter beginning in December 1999 and an
$85.0 million revolving credit facility (subject to borrowing base
availability) that expires in 2000, which may be extended through 2001.
Borrowings bear interest at alternative floating rate structures, at
management's option (7.7% at December 31, 1994), and are secured by
substantially all domestic property, plant, equipment, inventory and certain
receivables of Eagle Industrial and its subsidiaries. The facility requires an
annual commitment fee of 0.5% on the average daily unused amount of the
revolving portion of the facility. At December 31, 1994, the revolving credit
portion was unused and $89.5 million was outstanding under the term loan
portion of the facility. The facility provides for a letter of credit facility
of up to $50 million. Borrowing availability under the revolving credit
portion of the facility is reduced by the outstanding amount of letters of
credit. At December 31, 1994, $11.1 million was available to borrow under this
facility.
31
<PAGE> 32
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
The Eagle Industrial Credit Facility contains various financial covenants,
the more restrictive requirements being: the maintenance of minimum levels of
net worth; limitations on incurring additional indebtedness; restrictions on
the payment of dividends or the making of loans to the Company; maintenance of
certain ratios of cash flow to interest expense and indebtedness; maintenance
of a minimum level of cash flow to fixed charges; and a prohibition on payments
to the Company for management services in excess of $3 million per year. The
Company has provided a guarantee as to the repayment of amounts outstanding
under this credit facility. The facility also requires that: the Zell
interests (as defined in the credit agreement) directly or indirectly maintain
at least 20% of the voting power to elect members of the board of directors of
the Company; that no other person owns 30% or more of the Company's common
stock if such ownership represents a greater percentage ownership than the Zell
interests; and that the Company directly own 100% of Eagle Industrial.
Falcon Credit Facility:
The Falcon Credit Facility consists of a $115.0 million term loan due in
quarterly installments increasing from $2.5 million per quarter beginning
December 31, 1994 to $6.3 million per quarter in December 1998 and a $50.0
million revolving credit facility (subject to borrowing base availability) that
expires in 2000, which may be extended through 2001. Borrowings bear interest
at alternative floating rate structures, and are secured by substantially all
property, plant, equipment and inventory of Falcon. At December 31, 1994 the
borrowings under the facility bore interest at 7.3%. The facility requires an
annual commitment fee of 0.375% on the average daily unused amount of the
revolving credit facility. At December 31, 1994, the revolving credit portion
was unused and $112.5 million was outstanding under the term loan portion of
the facility. The facility also contains a $25.0 million letter of credit
facility. Borrowing availability under the revolving credit portion of the
facility is reduced by outstanding letters of credit. At December 31, 1994,
$21.5 million was available to borrow under the revolving credit portion of
this facility.
The Falcon Credit Facility contains various financial covenants, the more
restrictive requirements being: the maintenance of minimum levels of net
worth; limitations on incurring additional indebtedness; restriction on the
payment of dividends; maintenance of certain ratios of cash flow to interest
expense and indebtedness; and maintenance of a minimum level of cash flow to
fixed charges. The facility also requires that the Zell interests (as defined
in the credit agreement) and affiliates directly or indirectly maintain at
least 20% of the voting power to elect members to the Falcon board of directors
and that no other person owns 30% or more of the Falcon common stock if such
ownership represents a greater percentage ownership than the Zell interests.
Senior Bank Credit Facilities:
The Company had four senior credit facilities which were available to four
subsidiary groups of the Company prior to the Refinancing (the "Senior Bank
Credit Facilities"). A portion of the proceeds of the Refinancing were
utilized to fully repay the Senior Bank Credit Facilities in January 1994. The
aggregate amount available under the revolving portion of the Senior Bank
Credit Facilities (subject to borrowing base availability) amounted to $350.0
million at December 31, 1993. Additionally, the Senior Bank Credit Facilities
at December 31, 1993 included $69.6 million in outstanding term loans.
Borrowings under the Senior Bank Credit Facilities bore interest at alternative
floating rate structures, at management's option (5.6% at December 31, 1993),
and were secured by substantially all domestic property, plant, equipment,
inventory and receivables of the Company's subsidiaries.
32
<PAGE> 33
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
(6) EMPLOYEE RETIREMENT AND BENEFIT PLANS
PENSION:
Substantially all employees are covered by Company or union sponsored defined
benefit pension plans. Plans covering salaried and management employees
provide pension benefits that are based on the employee's years of service with
the Company and average compensation during the five years before retirement.
For other employees, pension benefits are provided based on a stated amount for
each year of service. The Company's funding policy for all plans is to make no
less than the minimum annual contributions required by applicable governmental
regulations. Plan assets generally consist of common stocks and fixed income
instruments.
The following table sets forth the funded status for all U.S. defined benefit
pension plans and related amounts recognized in the Company's Consolidated
Financial Statements:
<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1993
--------------------------------- ---------------------------------
PLANS WHOSE PLANS WHOSE PLANS WHOSE PLANS WHOSE
ASSETS EXCEED ACCUMULATED ASSETS EXCEED ACCUMULATED
ACCUMULATED BENEFITS ACCUMULATED BENEFITS
BENEFITS EXCEED ASSETS BENEFITS EXCEED ASSETS
-------------- -------------- ------------- ----------------
(RESTATED)
<S> <C> <C> <C> <C>
(IN MILLIONS)
Actuarial present value of:
Accumulated benefit obligation .......... $ 37.0 $ 59.4 $ 31.6 $ 59.8
====== ====== ====== ======
Vested benefits ......................... $ 35.0 $ 57.0 $ 30.0 $ 57.0
====== ====== ====== ======
Plan assets at fair value.................. $ 39.8 $ 42.1 $ 40.0 $ 46.7
Projected benefit obligation .............. 37.0 59.4 31.6 61.4
------ ------ ------ ------
Plan assets in excess of (less than)
projected benefit obligation............. 2.8 (17.3) 8.4 (14.7)
Net unrecognized (gain) loss .............. (1.3) 7.9 (5.9) 5.3
Net unrecognized prior service costs....... (0.6) 1.9 (1.7) 2.1
Unrecognized liability at August 1,
1987..................................... -- 0.2 -- 0.3
Additional minimum liability .............. -- (10.1) -- (7.4)
------ ------ ------ ------
Pension asset (liability) recognized
in Consolidated Financial Statements..... $ 0.9 $(17.4) $ 0.8 $(14.4)
====== ====== ====== ======
</TABLE>
In accordance with SFAS No. 87, "Employers' Accounting for Pensions", the
Company has recorded an additional minimum pension liability for underfunded
plans of $10.1 million and $7.4 million at December 31, 1994 and 1993,
respectively, representing the excess of unfunded accumulated benefit
obligations over previously recorded pension cost liabilities. A corresponding
amount is recognized as an intangible asset except to the extent that these
additional liabilities exceed related unrecognized prior service costs and net
transition obligations, in which case the increase in liabilities is charged
directly to stockholder's equity. At December 1994 and 1993, the excess
minimum pension liability resulted in a net reduction of equity of $5.1 million
and $4.6 million, respectively.
33
<PAGE> 34
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31,1994
Net periodic pension cost for defined benefit pension plans included in the
above table was:
<TABLE>
<CAPTION>
YEAR ENDED FIVE
DECEMBER 31, MONTHS ENDED YEAR ENDED
------------------- DECEMBER 31, JULY 31,
1994 1993 1992 1992
---- ---- ---- ----
(RESTATED) (RESTATED)
(IN MILLIONS)
<S> <C> <C> <C> <C>
Service cost ........................ $ 3.8 $ 3.6 $ 1.6 $ 3.8
Interest cost ....................... 6.7 4.9 2.0 5.3
Actual return on assets ............. (0.7) (6.2) (2.3) (4.7)
Net amortization and deferral ....... (7.2) 1.9 0.6 (0.1)
---- ---- ---- ----
Net periodic pension cost ....... $ 2.6 $ 4.2 $ 1.9 $ 4.3
===== ===== ===== =====
</TABLE>
The following assumptions were used in determining the actuarial present
value of the projected benefit obligation for the Company's U.S. defined
benefit plans for the years ended December 31, 1994 and 1993: weighted-average
discount rate of 7.5%; rate of increase in future compensation levels of 4.0%;
and expected long-term rate of return on assets of 9.0%.
The Company and its subsidiaries also have several defined contribution plans
for certain U.S. employees. Company contributions to these plans were $4.5
million and $3.8 million in the years ended December 31, 1994 and 1993,
respectively, $0.8 million in the five months ended December 31, 1992 and $3.5
million in fiscal 1992. Contributions to these plans by the Company are
determined under a variety of methods including those based on years employed
or a percentage of the contribution made by the employee.
OTHER POSTRETIREMENT BENEFITS:
The Company provides certain postretirement life and health-care benefits to
certain of its employees. For most business units providing these benefits,
employees retiring from the Company on or after attaining age 55 who have
rendered at least 15 years of active service to the Company are entitled to
postretirement benefits coverage. Most of these plans are non-contributory,
while there are a few in which employees and retirees contribute towards their
coverage. The Company has not funded any of this postretirement benefits
liability. Contributions to the postretirement plans are made by the Company
as claims are incurred.
The Company adopted the provisions of SFAS No. 106 in the first quarter of
fiscal 1992 by adjusting its postretirement benefits liability recognized as of
August 1, 1991 to the discounted present value of expected future benefits
attributed to employees' service rendered prior to August 1, 1991. The
accumulated postretirement benefit obligation was determined using an assumed
discount rate of 7.5% for the years ended December 31, 1994 and 1993, and a
health care cost trend rate of 12% for the year ended December 31, 1993 and
10.5% for the year ended December 31, 1994, with the assumption that the health
care cost trend rate would decrease ratably to 6.0% by the year 1997. The
effect of a one percent increase in the health care cost trend rate assumption
would be to increase the accumulated postretirement benefit obligation, the
annual service cost and interest expense components by approximately $4.3
million, $0.1 million and $0.3 million, respectively. In adopting the
provisions of SFAS No. 106, the Company evaluated the assumptions used
previously in estimating its postretirement benefits obligation under the
unfunded accrual method. Based on its experience and the results of this
evaluation, the Company revised certain of these previous assumptions when
adopting SFAS No. 106. Trend rates used in adopting SFAS No. 106 reflect the
Company's prior experience and expectation that future rates will trend
downward. In conjunction with the adoption of SFAS No. 106, the Company
recorded a reduction of its postretirement benefit obligation of $24.2 million
and recognized a corresponding $24.2 million pretax benefit as a "Cumulative
effect of change in accounting principle", with a related tax provision of $7.3
million.
34
<PAGE> 35
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
In the fourth quarter of 1993, the Company curtailed certain of its
postretirement benefits for its non-bargaining employees. In general, the
curtailment affects employees who retire after December 1994 with exception for
employees who meet certain age plus years of service requirements. The
curtailment resulted in a reduction of the postretirement benefit liability of
$4.2 million. The effect of the curtailment was offset by a charge in the
fourth quarter of 1993 of $4.2 million related to the Company's self-insurance
costs.
The following table sets forth postretirement benefits recognized in the
Company's Consolidated Financial Statements:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1993
---- ----
(RESTATED)
(IN MILLIONS)
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees ........................................ $54.7 $52.2
Other fully eligible participants ............... 6.2 4.9
Other active participants ....................... 8.7 8.2
----- -----
69.6 65.3
Unrecognized actuarial loss...................... (9.9) (3.4)
Unrecognized prior service cost ................. 0.5 0.1
----- -----
Postretirement benefit liability recognized in
Consolidated Financial Statements ............... $60.2 $62.0
===== =====
</TABLE>
Net postretirement benefit cost included the following components:
<TABLE>
<CAPTION>
YEAR ENDED FIVE
DECEMBER 31, MONTHS ENDED YEAR ENDED
------------------- DECEMBER 31, JULY 31,
1994 1993 1992 1992
---- ---- ------------- -----------
(RESTATED) (RESTATED)
(IN MILLIONS)
<S> <C> <C> <C> <C>
Service cost ................................. $ 0.7 $ 1.0 $ 0.4 $ 0.9
Interest cost ................................ 3.2 3.9 1.6 4.0
------ ------ ------ ------
Net postretirement benefit cost....... 3.9 4.9 2.0 4.9
Effect of curtailment ........................ (0.2) (3.5) -- --
------ ------ ------ ------
Adjusted net postretirement
benefit cost ....................... $ 3.7 $ 1.4 $ 2.0 $ 4.9
====== ====== ====== ======
</TABLE>
(7) INCOME TAXES
The Company adopted the provisions of SFAS No. 109 effective January 1, 1993.
The December 31, 1993 Consolidated Financial Statements reflect a decrease in
the net deferred tax assets of $3.5 million and a corresponding charge of $3.5
million, reflected as a "Cumulative effect of change in accounting principle".
As part of the adoption of SFAS No. 109, various "gross up" adjustments were
made to the balance sheet in order to adjust amounts which were originally
recorded on a net of tax basis as part of purchase accounting. These
adjustments resulted in increases to net property, plant and equipment, accrued
liabilities, accrued employee benefit obligations and other long-term
liabilities of approximately $21.4 million, $1.9 million, $19.3 million and
$12.2 million, respectively. These increases were offset by a corresponding
increase to deferred taxes of approximately $12.0 million.
35
<PAGE> 36
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
The Company's Consolidated Financial Statements reflect the following deferred
tax assets and liabilities (in millions):
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1993
------------- ------------
<S> <C> <C>
Deferred tax assets: (RESTATED)
Inventory and bad debt reserves . . . . . . . . . . $ 5.1 $ 4.4
Accrued employee benefit obligations . . . . . . . . 25.3 24.3
Net operating loss carryforwards . . . . . . . . . . 1.6 5.5
Insurance reserves . . . . . . . . . . . . . . . . . 14.5 8.4
Divestiture reserves . . . . . . . . . . . . . . . . 12.1 8.1
Restructuring reserves . . . . . . . . . . . . . . . 3.3 0.7
Legal and environmental reserves . . . . . . . . . . 9.3 7.0
Other . . . . . . . . . . . . . . . . . . . . . . . 16.8 12.4
------ ------
$ 88.0 $ 70.8
====== ======
Deferred tax liabilities:
Property, plant and equipment basis difference $ 25.8 $ 28.9
Other . . . . . . . . . . . . . . . . . . . . . . . 3.8 4.6
------ ------
$ 29.6 $ 33.5
====== ======
</TABLE>
As discussed in Note 1, subsequent to the Offering, a separate U.S. federal
income tax return will be filed for Falcon. Primarily all of the Company's
deferred tax assets relate to its non-Falcon businesses. Management believes
that future taxable income and tax planning strategies are available,
principally related to the sale of certain assets, if necessary, to fully
realize the recorded net deferred tax assets and accordingly, no valuation
allowance has been recorded at December 31, 1994.
The U.S. and non-U.S. components of income from continuing operations before
income taxes and the components of the provision for income taxes are as
follows:
<TABLE>
<CAPTION>
YEAR ENDED FIVE
DECEMBER 31, MONTHS ENDED YEAR ENDED
--------------------- DECEMBER 31, JULY 31,
1994 1993 1992 1992
---- ---- ---- ----
(RESTATED) (RESTATED)
(IN MILLIONS)
<S> <C> <C> <C> <C>
Income (loss) from continuing operations
before income taxes:
U.S. . . . . . . . . . . . . . . . . . . . . . . . . $ 55.6 $(18.0) $ (8.2) $ (3.3)
Non-U.S. . . . . . . . . . . . . . . . . . . . . . . 2.1 1.6 0.4 1.6
------ ------ ------ ------
Total . . . . . . . . . . . . . . . . . . . . . . . $ 57.7 $(16.4) $ (7.8) $ (1.7)
====== ====== ====== ======
Provision (benefit) for income taxes:
Current:
U.S. federal . . . . . . . . . . . . . . . . . . . . . $ (5.2) $(11.1) $ (3.2) $ 0.9
U.S. state . . . . . . . . . . . . . . . . . . . . . (0.5) 3.8 0.6 3.2
Non-U.S. . . . . . . . . . . . . . . . . . . . . . . 0.9 1.1 0.2 0.7
------ ------ ------ ------
(4.8) (6.2) (2.4) 4.8
------ ------ ------ ------
Deferred:
U.S. federal . . . . . . . . . . . . . . . . . . . . . 2.9 7.2 0.6 (2.3)
U.S. state . . . . . . . . . . . . . . . . . . . . . 2.8 0.1 0.1 (1.0)
------ ------ ------ ------
5.7 7.3 0.7 (3.3)
------ ------ ------ ------
Total . . . . . . . . . . . . . . . . . . . . . . $ 0.9 $ 1.1 $ (1.7) $ 1.5
====== ====== ====== ======
</TABLE>
36
<PAGE> 37
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
Deferred tax provisions/(benefits) for the five months ended December 31,
1992 and for the fiscal year ended July 31, 1992, resulted principally from
expenditures related to divestitures, non-cash accrued employee benefits and
depreciation.
Reconciliation of income taxes computed at the U.S. federal statutory rate to
the consolidated provision (benefit) for income taxes from continuing
operations:
<TABLE>
<CAPTION>
YEAR ENDED FIVE
DECEMBER 31, MONTHS ENDED YEAR ENDED
--------------------- DECEMBER 31, JULY 31,
1994 1993 1992 1992
---- ---- ---- ----
(RESTATED) (RESTATED)
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
U.S. federal statutory rate ........................... 35.0% 35.0% 34.0% 34.0%
Income taxes at U.S. federal statutory rate ........... $ 20.2 $ (5.7) $ (2.7) $ (0.6)
U.S. state income taxes, net of U.S. federal tax
benefit ............................................. 1.5 2.5 0.5 1.9
Foreign dividend ...................................... -- 3.5 -- --
Nondeductible book depreciation and amortization ...... 2.9 3.0 1.8 4.2
Benefits related to differences in basis
between book and tax ................................ (3.6) (3.2) (0.7) --
Gain on sale of subsidiary stock ...................... (22.1) -- -- --
Other.................................................. 2.0 1.0 (0.6) (4.0)
------- ------ ------ ------
Provision (benefit) for income taxes ................ $ 0.9 $ 1.1 $ (1.7) $ 1.5
======= ====== ====== ======
Effective income tax rate ........................... 1.5% (6.9)% 21.8% (85.4)%
======= ====== ====== ======
</TABLE>
(8) RESTRUCTURING CHARGES
In 1993, the Company adopted a formal plan to sell Lapp and recorded an $18.8
million pretax charge, net of income tax benefits of $5.0 million, for the
estimated disposal costs and operating losses through the disposition date.
During the second quarter of 1994, the Company recorded a $6.8 million pretax
charge, net of income tax benefits of $2.5 million, for additional expected
operating losses. In the fourth quarter of 1994, the Company concluded that
Lapp's value would be maximized by retaining Lapp and restructuring its
operations. Accordingly, estimated costs of $7.8 million were reversed and a
pretax restructuring charge of $24.6 million was recorded in the fourth quarter
of 1994. The restructuring charges included costs related to Lapp's exit from
its polymer product line and the restructuring of its porcelain operations.
Lapp's results of operations were reclassified to continuing operations for all
periods presented. Total assets and total liabilities excluding intercompany
payables were $55.5 million and $16.8 million at December 31, 1993,
respectively. Net sales were $79.8 million and $84.2 million for the years
ended December 31, 1994 and 1993, respectively. Operating losses before
restructuring charges were $4.2 million and $4.8 million, for the years ended
December 31, 1994 and 1993, respectively.
37
<PAGE> 38
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
Restructuring charges totaling $2.6 million were recorded in the third and
fourth quarter of 1993. In conjunction with the relocation of one of IEP's
manufacturing facilities in the first quarter of 1993, costs were incurred
which exceeded previously established reserves. Accordingly, the Company
recorded $2.0 million in charges in the fourth quarter of 1993. Elastimold
recorded charges of $0.6 million related to an early retirement program.
The cash and non-cash components of these charges are as follows (in
millions):
<TABLE>
<CAPTION>
CASH NON-CASH
CHARGES CHARGES TOTAL
------- -------- -----
<S> <C> <C> <C>
Year Ended December 31, 1994:
Lapp
Property, plant and equipment write down . . . . . . $ -- $ 4.6 $ 4.6
Inventory write down . . . . . . . . . . . . . . . . -- 4.9 4.9
Goodwill write-off . . . . . . . . . . . . . . . . . -- 4.2 4.2
Shut down expenses . . . . . . . . . . . . . . . . . 10.9 -- 10.9
------ ------ -----
$ 10.9 $ 13.7 $24.6
====== ====== =====
Year Ended December 31, 1993:
IEP relocation costs . . . . . . . . . . . . . . . . . . $ 2.0 $ -- $ 2.0
Elastimold early retirement costs . . . . . . . . . . . 0.6 -- 0.6
------ ------ -----
$ 2.6 $ -- $ 2.6
====== ====== =====
</TABLE>
In 1993, Hill, Caron and Pfaudler recorded restructuring charges totaling
$69.2 million. As discussed in Note 4, these businesses were sold in 1994 and
are reflected as discontinued operations. These restructuring charges are
included in operating loss from discontinued operations.
38
<PAGE> 39
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
(9) BALANCE SHEET DETAIL
<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1994 1993
---- ----
(RESTATED)
(IN MILLIONS)
<S> <C> <C>
Inventories:
Raw materials and supplies .................................... $ 46.4 $ 43.7
Work in process .............................................. 25.2 28.6
Finished goods ............................................... 54.9 59.6
------- -------
Total ....................................................... $ 126.5 $ 131.9
======= =======
Excess of replacement cost over LIFO inventory cost ........... $ 5.2 $ 4.9
======= =======
Other current assets:
Deferred taxes ................................................ $ 24.4 $ 20.5
Residual interest in accounts receivable ...................... 28.4 --
Other ......................................................... 23.8 26.2
------- -------
Total ....................................................... $ 76.6 $ 46.7
======= =======
Property, plant and equipment:
Land .......................................................... $ 15.6 $ 15.6
Buildings ..................................................... 83.5 80.5
Machinery and equipment ....................................... 201.8 189.1
Construction in progress ...................................... 19.3 11.5
Less accumulated depreciation ................................. (135.3) (113.9)
------- -------
Total ....................................................... $ 184.9 $ 182.8
======= =======
Accrued liabilities:
Divestiture reserves .......................................... $ 16.2 $ 14.5
Wages and benefits ............................................ 31.8 23.0
Interest ...................................................... 1.3 8.0
Other ......................................................... 34.9 29.6
------- -------
Total ...................................................... $ 84.2 $ 75.1
======= =======
</TABLE>
(10) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate
that value:
Cash, cash equivalents and long-term investments
The carrying amount of cash and cash equivalents approximates fair value
because of the short maturity of those instruments. Long-term investments are
stated at the lower of cost or market.
Long-term notes receivable
Long-term notes receivable are stated at the lower of cost or market.
Subordinated Notes
The fair value of the Company's 13% Notes and the 13.75% Notes at December
31, 1993 is based on the call price at January 31, 1994. The fair value of the
Company's Notes is based on quoted market prices at December 31, 1994 and 1993.
39
<PAGE> 40
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
Credit Facilities
The carrying amount approximates fair value as the rates are tied to the
prime rate and LIBOR which fluctuate based on current market conditions.
Other Debt
The carrying amount approximates fair value as rates approximate borrowing
rates currently available to the Company for similar loans.
The estimated fair values of the Company's financial instruments are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1994 DECEMBER 31, 1993
----------------------- ---------------------
CARRYING FAIR CARRYING FAIR
AMOUNT VALUE AMOUNT VALUE
--------- ----- -------- -----
(RESTATED)
(IN MILLIONS)
<S> <C> <C> <C> <C>
Cash, cash equivalents and long-term
investments ............................ $ 32.6 $ 32.6 $ 6.1 $ 6.1
Long term notes receivable ............. 40.2 40.2 -- --
Subordinated Notes ..................... 180.4 168.4 421.9 438.8
Eagle Industrial Credit Facility ....... 89.5 89.5 -- --
Falcon Credit Facility ................. 112.5 112.5 -- --
Senior Bank Credit Facilities .......... -- -- 224.0 224.0
Other Debt 9.3 9.3 14.2 14.2
</TABLE>
(11) STOCKHOLDER'S EQUITY
COMMON STOCK:
In March 1995, the Company distributed, as a stock dividend, 1,860 shares of
its common stock for each share outstanding. The accompanying financial
statements and related footnotes have been restated to give retroactive effect
to this stock dividend.
PAID IN CAPITAL:
As part of the Refinancing discussed in Note 5, GAMI made a capital
contribution of $50.0 million to the Company.
Restructuring
In connection with the sale of Eagle's Hedstrom business in January 1991, a
portion of the consideration received included a $32.5 million note receivable,
which bears interest at 9.0% payable quarterly, with principal payments due in
varying installments through January 1998, ("Hedstrom Note"). Under the terms
of the note, through January 16, 1996, any acceleration resulting from a
default under the Hedstrom Note may, at the option of the buyer ("GAI
Partners"), be satisfied solely by the preferred stock (the "Class C Preferred
Stock") GAI Partners holds in Great American Financial Group, Inc., a
subsidiary of GAMI ("GAFG").
Eagle declared and paid to GAFG, its sole shareholder at the time, a non-cash
dividend consisting of the benefits conferred by Eagle's execution of a
disaffiliation agreement (the "Disaffiliation Agreement"), effective as of
September 25, 1992. Although the dividend was paid by the execution of the
Disaffiliation Agreement, the economic benefit of the dividend will be
received, if at all, only upon the satisfaction of certain conditions.
Pursuant to the Disaffiliation Agreement, among other things:
40
<PAGE> 41
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
* Eagle agreed that if it or any of its subsidiaries becomes the owner of any
Class C Preferred Stock, it will transfer or cause to be transferred (the
"Transfer") such Class C Preferred Stock to GAFG without the payment of any
amount by GAFG, provided that certain conditions are satisfied; and
* Eagle agreed to reimburse GAFG if GAFG pays any amount, to Eagle or its
subsidiaries (or any transferee of Eagle or its subsidiaries), for redemption
of, or as a liquidation preference in respect of, any Class C Preferred
Stock, provided that certain conditions are satisfied.
To account for the reorganization and the above transactions, Eagle reduced
paid-in capital at July 31, 1992 by the amount of the Hedstrom Note and related
accrued interest thereon, pursuant to the dividend of the benefits conferred on
GAFG through execution of the Disaffiliation Agreement.
(12) STOCK OPTION PLAN
The Company adopted the Eagle Industries, Inc. Employee Stock Incentive Plan
(the "Plan") effective December 1, 1994. The Plan is administered by the
Compensation Committee of the Company's Board of Directors. Under the Plan,
the Compensation Committee may grant incentive awards to eligible employees in
a number of forms, including stock options, stock grants and appreciation
rights and shall establish the number of shares and other terms of each grant.
Generally, the exercise price of any option or stock appreciation right shall
not be less than the fair market value of the shares as of the date of grant.
Under the plan, 300,000 shares may be issued pursuant to the Plan.
During 1994, 157,679 stock options were granted under the Plan at an average
price of $93.01 per share. All of these options were outstanding at December
31, 1994. At December 31, 1994, options for 55,880 shares were exercisable.
(13) RELATED PARTY TRANSACTIONS
The Company has in the past entered into agreements or arrangements with
affiliates of directors or officers relating to acquisition and divestiture
services, financing services, legal services and consulting arrangements which
are described below. In addition, the Company has entered into arrangements
for certain administrative services in which the amount involved did not exceed
$60,000 for any one agreement. The Company believes that the terms and
resulting costs of all related party transactions and agreements are no more or
less favorable than those which could have been obtained from non-affiliated
parties.
The Company leases office space from an affiliate of GAMI. The Company
incurred expenses of $0.4 million in the year ended December 31, 1994, $0.3
million in the year ended December 31, 1993, $0.2 million in the five months
ended December 31, 1992 and $0.4 million in fiscal 1992 for this office space
and related expenses. Affiliates of GAMI provide general corporate computer
and printing services to the Company for which the Company paid these
affiliates $0.2 million in the years ended December 31, 1994 and 1993, the five
months ended December 31, 1992 and in fiscal 1992. GAMI's internal audit
department provides certain audit services to the Company for which GAMI was
paid $0.2 million in the year ended December 31, 1994, $0.2 million in the year
ended December 31, 1993, $0.1 million in the five months ended December 31,
1992 and $0.7 million in fiscal 1992.
The law firm of Rosenberg & Liebentritt P.C., of which a Company Director and
former Officer is a member, has rendered legal services to the Company. The
Company paid this law firm $1.5 million in the year ended December 31, 1994,
$0.6 million in the year ended December 31, 1993, $0.3 million in the five
months ended December 31, 1992 and $1.0 million in fiscal 1992. The fees paid
to Rosenberg & Liebentritt P.C. in the year ended December 31, 1994 related to
services for divestiture activity, the Offering, financing agreements and other
general corporate services.
41
<PAGE> 42
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
The Company has, from time to time, entered into revolving credit facilities
with GAMI. There were no outstanding advances from GAMI at December 31, 1994
and 1993.
Also see Notes 3, 4 and 11 for other information regarding related party
transactions.
(14) COMMITMENTS AND CONTINGENCIES
The Company conducts manufacturing operations at various leased facilities
and also leases warehouses, office space, computers and office equipment. Most
of the realty leases contain renewal options and escalation clauses. Total
rent expense, including related real estate taxes, amounted to $10.4 million in
the year ended December 31, 1994, $9.9 million in the year ended December 31,
1993, $4.0 in the five months ended December 31, 1992 and $7.9 million in
fiscal 1992.
The Company and certain of its subsidiaries are involved in several lawsuits
and environmental matters arising in the ordinary course of business. However,
it is the opinion of the Company's management, based upon the advice of
counsel, that these lawsuits and environmental matters are either without
merit, are covered by insurance, or are adequately reserved for in the
Consolidated Financial Statements, and that the ultimate disposition of pending
litigation will not be material in relation to the Company's consolidated
financial position or results of operations.
(15) SEGMENT AND GEOGRAPHIC DATA
After of the sale of certain businesses in the Industrial Products Group and
Specialty Products Group in 1994, Eagle is now organized into three business
segments: the Building Products Group, the Electrical Products Group and the
Automotive Products Group. The operations of Burns Aerospace ("Burns") are now
combined with Corporate.
The Building Products Group consists of Falcon Building Products, Inc. which
manufactures and distributes building fixtures for the residential and
commercial construction and home improvement markets. Products manufactured
include air distribution and handling equipment, bathroom plumbing fixtures and
air compressors.
The Electrical Products Group consists of two broad groups of businesses,
those providing electrical power distribution products for the electric utility
market and those supplying industrial electrical products for electrical
equipment manufacturers. The principal products manufactured by this group
include porcelain insulators, bushings for electrical power transformers,
medium voltage electric cable, underground cable accessories, and interconnect
and timing devices.
The Automotive Products Group consists of four businesses which manufacture
and distribute products primarily to the automotive aftermarket. Major
products include automotive aftermarket parts and accessories.
Burns manufactures and distributes commercial airline seating for the
commercial aviation market.
42
<PAGE> 43
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
DECEMBER 31, 1994
<TABLE>
<CAPTION>
YEAR ENDED FIVE
DECEMBER 31, MONTHS ENDED YEAR ENDED
---------------------- DECEMBER 31, JULY 31,
1994 1993 1992 1992
---- ---- ---- ----
(RESTATED) (RESTATED) (RESTATED)
(IN MILLIONS)
<S> <C> <C> <C> <C>
Net sales:
Building Products Group . . . . . . . . . . . . $ 440.7 $ 372.3 $ 150.1 $ 323.9
Electrical Products Group . . . . . . . . . . 279.9 261.1 102.1 251.6
Automotive Products Group . . . . . . . . . . 182.3 164.2 58.9 127.9
Corporate and other . . . . . . . . . . . . . . 90.7 65.6 33.5 94.1
------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . $ 993.6 $ 863.2 $ 344.6 $ 797.5
======= ======== ======== ========
Operating income:
Building Products Group . . . . . . . . . . . $ 53.4 $ 47.5 $ 18.6 $ 41.4
Electrical Products Group . . . . . . . . . . (7.3) 9.9 4.0 18.4
Automotive Products Group . . . . . . . . . . 8.8 6.2 0.5 4.2
Corporate expenses and other . . . . . . . . . (21.1) (18.2) (5.7) (6.7)
------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . $ 33.8 $ 45.4 $ 17.4 $ 57.3
======= ======== ======== ========
Depreciation and amortization:
Building Products Group . . . . . . . . . . . $ 12.8 $ 12.1 $ 5.0 $ 10.9
Electrical Products Group . . . . . . . . . . 16.2 16.5 6.3 15.0
Automotive Products Group . . . . . . . . . . 3.6 3.6 1.3 3.0
Corporate and other . . . . . . . . . . . . . 6.3 8.9 3.5 7.4
------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . . $ 38.9 $ 41.1 $ 16.1 $ 36.3
======= ======== ======== ========
Capital expenditures:
Building Products Group . . . . . . . . . . . . $ 19.7 $ 10.1 $ 2.5 $ 8.6
Electrical Products Group . . . . . . . . . . . 8.4 11.3 7.1 8.0
Automotive Products Group . . . . . . . . . . . 3.1 2.4 2.4 2.2
Corporate and other . . . . . . . . . . . . . . 0.9 1.1 0.6 1.8
------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . $ 32.1 $ 24.9 $ 12.6 $ 20.6
======= ======== ======== ========
Identifiable assets:
Building Products Group . . . . . . . . . . . . $ 167.7 $ 203.7 $ 208.6 $ 213.0
Electrical Products Group . . . . . . . . . . . 298.9 343.7 348.6 350.4
Automotive Products Group . . . . . . . . . . . 102.5 109.8 100.5 99.8
Net assets of discontinued operations . . . . . 9.8 155.2 242.9 279.4
------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . 578.9 812.4 900.6 942.6
Corporate and other . . . . . . . . . . . . . . 289.1 209.4 194.0 200.1
------- -------- -------- --------
Total . . . . . . . . . . . . . . . . . . . $ 868.0 $1,021.8 $1,094.6 $1,142.7
======= ======== ======== ========
</TABLE>
Corporate and other depreciation and amortization includes amortization of
debt issuance costs at Corporate and depreciation expense and goodwill
amortization for Burns. Corporate assets are principally cash and cash
equivalents, debt issuance costs and taxes receivable from affiliate.
The Company's revenues and identifiable assets related to its continuing
operations are predominantly related to its U.S. operations and no one other
geographic area accounts for more than 10% of total revenue or 10% of total
assets. Export sales from the United States to other geographic areas were
$23.8 million in the year ended December 31, 1994, $29.3 million in the year
ended December 31, 1993, $12.4 million for the five months ended December 31,
1992 and $70.7 million in fiscal 1992.
43
<PAGE> 44
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
SUPPLEMENTARY FINANCIAL DATA (UNAUDITED)
(IN MILLIONS)
QUARTERLY FINANCIAL DATA
The following is a summary of the unaudited interim results of operations for
the years ended December 31, 1994 and 1993. Quarterly data has been restated
to reflect discontinued operations. Refer to Note 4 in the Company's
Consolidated Financial Statements.
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Quarter Ended Quarter Ended
March 31, June 30, September 30, December 31,
-------------------- ------------------ ------------------- ------------------
1994 1993 1994 1993 1994 1993 1994 1993
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales . . . . . . . $226.2 $189.1 $253.5 $212.5 $264.1 $221.2 $249.8 $240.4
Gross earnings . . . . . 45.7 36.2 53.0 43.3 51.2 43.4 51.0 43.0
Income (loss)
from continuing
operations . . . . . . (1.0) (4.2) 2.0 (0.7) 2.4 4.3 53.4 (16.9)
Income (loss)
before
extraordinary
item and
cumulative
effect of
change
in accounting
principle . . . . . . 1.1 (3.9) (28.0) (0.4) 7.2 (32.6) 51.3 (59.3)
Net income (loss) (15.5) (7.9) (28.0) (0.4) 7.5 (41.0) 51.3 (61.3)
</TABLE>
44
<PAGE> 45
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
DIRECTORS OF EAGLE
The chart below sets forth the name of each director of Eagle as of March 15,
1995 and, for each, the year during which each director was first elected,
information relating to the director's principal occupation and business
experience during the last five years, and any other directorships held by the
director in publicly held companies, and certain other information.
YEAR FIRST OTHER
ELECTED A INFORMATION ABOUT
NAME DIRECTOR DIRECTORS
---- ---------- -----------------
Sam A. Cottone 1993 See "EXECUTIVE OFFICERS OF EAGLE"
Rod Dammeyer 1992 Chairman of the Board of Eagle since 1994; Director
and President since 1985, and Chief Executive Officer
since 1993 of Itel Corporation, a diversified holding
company; President and Chief Executive Officer since
1994 and director since 1992 of GAMI; Director of
Falcon, Lomas Financial Corporation, ANTEC
Corporation, The Vigoro Corporation, Capsure Holdings
Corp., Jacor Communications, Inc., Revco D.S., Inc.,
and Santa Fe Energy Resources, Inc.; and Trustee of
Van Kampen American Capital's closed-end mutual
funds. Mr. Dammeyer is 54 years old.
William K. Hall 1988 See "EXECUTIVE OFFICERS OF EAGLE."
Sheli Z. Rosenberg 1987 President of the law firm Rosenberg & Liebentritt,
P.C.; President and Chief Executive Officer since
1994 of Equity Group Investments, Inc. and its
subsidiary Equity Financial and Management Company,
both real estate investment firms, and director and
executive officer for more than the past five years
of these companies and GAMI; Vice President and
Assistant Secretary of Eagle from February 1987
until September 1992; Co-trustee of the Robert H.
and Ann Lurie Trust which is one of two general
partners of Equity Holdings Limited which owns
approximately 83% of GAMI; Director of Capture
Holdings Corp., Falcon, Itel Corporation, The
Vigoro Corporation, American Classic Voyages Co.,
Revco D.S., Inc. and CFI Industries, Inc.; Trustee
of Equity Residential Properties Trust; Executive
officer and director until October 4, 1994 of
Madison Management Group, Inc. which filed a
petition under the Federal Bankruptcy laws in
November 1991; and Vice President of First Capital
Benefit Administrators, Inc. which filed a petition
under the Federal Bankruptcy laws in January 1995.
Mrs. Rosenberg is 53 years old.
Eagle's Amended and Restated By-Laws (the "Eagle Bylaws") provide that the
number of directors shall not be less than one nor more than eleven, with the
precise number to be determined by resolution of the Board of Directors or the
stockholders from time to time. The Board of Directors has fixed the number of
directors at four. Each director is elected to serve until the next annual
meeting or until his successor is duly elected and qualified.
45
<PAGE> 46
EXECUTIVE OFFICERS OF EAGLE
The chart below sets forth the age and position of each executive officer of
Eagle at March 15, 1995:
NAME AGE POSITION
---- --- --------
William K. Hall...... 51 President and Chief Executive Officer
Gus J. Athas ........ 58 Senior Vice President, General Counsel and
Secretary
Sam A. Cottone ...... 54 Senior Vice President - Finance, Chief Financial
Officer and Treasurer
Mr. Hall has served as President of Eagle since August 1988, as a Director of
GAMI since March 1994, and as Chief Executive Officer of Eagle since July 1990.
From August 1988 until September 1992, Mr. Hall also served as Chief Operating
Officer and Treasurer of Eagle. Mr. Hall has been a Director, President and
Chief Executive Officer of Falcon since 1994. Mr. Hall is a Director of Huffy
Corporation, a manufacturer of bicycles and recreational products, and A.M.
Castle & Co., a metals distribution company.
Mr. Athas has served as Senior Vice President, General Counsel and Secretary
of the Company since May 1993. From September 1992 to May 1993, Mr. Athas was
Vice President, General Counsel and Secretary. Mr. Athas has been Senior Vice
President, General Counsel and Secretary of Falcon since 1994. From November
1987 to September 1992, Mr. Athas served as Vice President, General Counsel and
Assistant Secretary.
Mr. Cottone has served as Senior Vice President - Finance, Chief Financial
Officer and Treasurer of the Company since March 1994. From May 1993 to March
1994, Mr. Cottone served as Senior Vice President - Finance and Chief Financial
Officer. Mr. Cottone has been a Director and Senior Vice President-Finance and
Treasurer of Falcon since 1994. Mr. Cottone was a partner with Arthur Andersen
& Co. from 1973 to 1993.
ITEM 11. EXECUTIVE COMPENSATION
Omitted pursuant to conditions set forth in General Instruction (J)(1)(a) and
(b) of Form 10-K.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Omitted pursuant to conditions set forth in General Instruction (J)(1)(a) and
(b) of Form 10-K.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
EAGLE/GAMI TAX AGREEMENT
Eagle and its U.S. subsidiaries are included with GAMI in its consolidated
U.S. federal income tax returns for the taxable periods during which, pursuant
to applicable U.S. federal income tax laws, they qualify as members of GAMI's
affiliated group (the "Affiliation Years"). GAMI has entered into tax sharing
agreements with Eagle and each of its U.S. subsidiaries. Collectively, these
tax sharing agreements (i) provide for the manner of determining the allocation
and payment of U.S. federal, state and foreign income tax liabilities and
benefits among members of each subsidiary group for the Affiliation Years, (ii)
detail the procedure for determining the allocation of payments by, or refunds
to, members of each subsidiary group as a result of adjustments to the U.S.
federal or state income tax liabilities of any or all members of such
subsidiary group with respect to any Affiliation Year and (iii) define the
post-affiliation obligations of GAMI and any member that becomes disaffiliated
with any of the subsidiary groups (a "Former Member") with respect to
post-affiliation years in which the tax liability of GAMI, such Former Member
or subsidiaries of such Former Member may be affected by the former
affiliation. Under the tax sharing agreements, each member is to benefit fully
from any loss, deduction or credit attributable to such member.
FALCON/GAMI DISAFFILIATION AGREEMENT
Upon consummation of the Offering, Falcon was no longer permitted to be
included in GAMI's consolidated federal income tax return. Instead, Falcon,
together with its subsidiaries, will file its own consolidated federal income
tax returns and pay its own federal income taxes. GAMI and Falcon have entered
into a
46
<PAGE> 47
disaffiliation tax sharing agreement (the "Falcon Disaffiliation Agreement"),
pursuant to which, Falcon will pay an amount to GAMI equal to the federal
income tax liability of Falcon and its domestic subsidiaries, on a stand alone
basis, for taxable periods, or portions thereof, ending on or prior to the
consummation of the Offering. Falcon and its subsidiaries will pay all other
taxes incurred by them including, but not limited to, state income taxes,
sales, use, payroll, real and personal property and franchise taxes accruing or
owing prior to and after the completion of the Offering, and federal income
taxes incurred by them for taxable periods ending after the consummation of the
Offering. After the consummation of the Offering, the Company will be subject,
under existing U.S. Treasury Regulations, to joint and several liability for
the consolidated federal income tax liability of GAMI incurred prior to the
consummation of the Offering. Pursuant to the Falcon Disaffiliation Agreement,
GAMI will pay, indemnify and hold Falcon and its subsidiaries harmless from,
all consolidated federal income taxes of GAMI, except to the extent Falcon is
obligated to make payments to GAMI under the Falcon Disaffiliation Agreement.
ONGOING TRANSACTIONS WITH GAMI AFFILIATES
Eagle has in the past entered into agreements or arrangements with affiliates
of directors or officers of Eagle relating to acquisition and divestiture
services, financing services, and consulting arrangements which are described
below. In addition, Eagle has entered into arrangements for certain
administrative services in which the amount involved did not exceed $60,000 for
any one agreement. Eagle may enter into similar agreements or arrangements
from time to time in the future. Eagle believes that the terms of the
transactions described below are no less favorable than those which could have
been obtained from non-affiliated parties.
LEASES WITH AFFILIATES
Eagle currently leases corporate office space at the rate of $28,000 per
month from an affiliate of GAMI. The Company incurred expenses of $0.4 million
in the year ended December 31, 1994.
MANAGEMENT SERVICES
Affiliates of GAMI provide general corporate computer and printing services
to Eagle for which Eagle paid $0.2 million in the year ended December 31, 1994.
Eagle will continue to utilize such services from time to time in the future.
INTERNAL AUDIT SERVICES
GAMI's internal audit department has provided Eagle with various audit
services in the past, including review of operational and financial controls
and assistance to outside auditors during Eagle's annual audit. These services
have been provided to Eagle and its subsidiaries during the year ended December
31, 1994 at a cost of $0.2 million. Eagle will continue to utilize such
services from time to time in the future.
LEGAL SERVICES
The law firm of Rosenberg & Liebentritt, P.C., of which Mrs. Rosenberg is a
member, has rendered legal services to Eagle and its subsidiaries. Eagle paid
this law firm $1.5 million in the year ended December 31, 1994.
47
<PAGE> 48
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES, AND REPORTS ON FORM 8-K
(A) Financial Statements and Schedules
Description Page No.
Report of Independent Public Accountants . . . . . . . . . . . . . . . . 20
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . 21
Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . 22
Consolidated Statements of Stockholder's Equity . . . . . . . . . . . . . 23
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . 24
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . 26
Report of Independent Public Accountants on Supplemental Schedules. . . . 49
Schedule III-Condensed Financial Information of Registrant . . . . . . . 50
All other schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions, or are inapplicable, or the information called for
therein is included elsewhere in the financial statements or the notes thereto.
Accordingly, such schedules have been omitted.
(B) Reports on Form 8-K
None.
(C) Exhibits
Exhibits required by Item 601 of Regulation S-K are listed in the Index to
Exhibits, which is incorporated herein by reference.
48
<PAGE> 49
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
ON SUPPLEMENTAL SCHEDULES
To the Board of Directors of Eagle Industries, Inc.
We have audited, in accordance with generally accepted auditing standards,
the consolidated financial statements of Eagle Industries, Inc. and
Subsidiaries included in this Annual Report on Form 10-K, and have issued our
report thereon dated March 16, 1995. Our report on the consolidated financial
statements includes an explanatory paragraph with respect to the adoption of
Statements of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions", No. 112, "Employers'
Accounting for Postemployment Benefits", and No. 109, "Accounting for Income
Taxes", as discussed in Note 1, Note 6 and Note 7 to the consolidated financial
statements. Our audits were made for the purpose of forming an opinion on the
basic consolidated financial statements taken as a whole. Supplemental
Schedule III is the responsibility of the Company's management and is presented
for purposes of complying with the Securities and Exchange Commission's rules
and is not part of the basic consolidated financial statements. This schedule
has been subjected to the auditing procedures applied in the audits of the
basic consolidated financial statements and, in our opinion, fairly states in
all material respects the consolidated financial data required to be set forth
therein in relation to the basic consolidated financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Chicago, Illinois,
March 16, 1995
49
<PAGE> 50
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE III-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
EAGLE INDUSTRIES, INC. (PARENT COMPANY)
BALANCE SHEETS
(DOLLARS IN MILLIONS)
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1994 1993
---- ----
(RESTATED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................ $ 10.4 $ 0.1
Other current assets, including tax receivable from
affiliate........................................... 18.7 17.3
------ ------
Total current assets................................ 29.1 17.4
Property, net................................................. -- 1.4
Investment in and advances to subsidiaries, net............... 305.8 435.2
Other noncurrent assets....................................... 22.9 10.7
------ ------
Total assets........................................ $357.8 $464.7
====== ======
LIABILITIES AND STOCKHOLDER'S EQUITY
Accrued expenses.............................................. $ 0.2 $ 10.4
Senior subordinated notes..................................... 180.4 346.9
Other noncurrent liabilities, including deferred income
taxes.................................................... 13.7 15.3
------ ------
Total liabilities................................... 194.3 372.6
------ ------
Stockholder's equity:
Common stock, par value $.01 per share (3,000,000 shares
authorized, 1,860,000 shares issued and outstanding)..... -- --
Paid-in-capital............................................... 188.7 138.7
Retained deficit.............................................. (21.7) (37.0)
Cumulative translation adjustment............................. 1.6 (5.0)
Pension liability adjustment.................................. (5.1) (4.6)
------ ------
Total stockholder's equity.......................... 163.5 92.1
------ ------
Total liabilities and stockholder's equity.......... $357.8 $464.7
====== ======
</TABLE>
The accompanying notes to these financial statements
are an integral part of these statements.
50
<PAGE> 51
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE III-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
EAGLE INDUSTRIES, INC. (PARENT COMPANY)
STATEMENTS OF INCOME
(IN MILLIONS)
<TABLE>
<CAPTION>
YEAR ENDED FIVE
DECEMBER 31, MONTHS ENDED YEAR ENDED
------------------ DECEMBER 31, JULY 31,
1994 1993 1992 1992
---- ---------- --------- ---------
(RESTATED) (RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
Revenues:
Interest income, including intercompany.......... $ 0.8 $ 1.5 $ 1.5 $ 9.2
Management fees, intercompany.................... -- 15.6 6.8 16.9
------ ------- ------ ------
0.8 17.1 8.3 26.1
------ ------- ------ ------
Expenses:
Interest......................................... 23.3 41.4 17.1 43.3
General and administrative....................... 2.4 15.2 3.8 9.7
------ ------- ------ ------
25.7 56.6 20.9 53.0
------ ------- ------ ------
Loss from operations before income taxes and
equity in net income of subsidiaries............. (24.9) (39.5) (12.6) (26.9)
Income tax benefit.................................... 9.7 13.3 4.1 10.0
Equity in net income of continuing subsidiaries....... 61.6 4.3 2.3 13.7
Equity in net income (loss) from operations of
discontinued subsidiaries........................ (4.1) (56.6) (2.2) 1.6
Equity in net gain (loss) on disposal of businesses... (21.1) (22.1) (3.0) 10.6
Loss from early retirement of debt, net of taxes...... (5.9) (8.2) -- --
Cumulative effect of change in accounting
principle, net of taxes.......................... -- (1.8) -- 16.9
------ ------- ------ ------
Net income (loss)........................... $ 15.3 $(110.6) $(11.4) $ 25.9
====== ======= ====== ======
</TABLE>
The accompanying notes to these financial statements
are an integral part of these statements.
51
<PAGE> 52
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE III-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
EAGLE INDUSTRIES, INC. (PARENT COMPANY)
STATEMENTS OF CASH FLOWS
(IN MILLIONS)
<TABLE>
<CAPTION> YEAR ENDED
DECEMBER 31, FIVE MONTHS ENDED YEAR ENDED
------------------ DECEMBER 31, JULY 31,
1994 1993 1992 1992
---- ---------- ---------- ----------
(RESTATED) (RESTATED) (RESTATED)
<S> <C> <C> <C> <C>
Operating activities:
Net income (loss)................................. $ 15.3 $(110.6) $(11.4) $ 25.9
Adjustments to reconcile net income (loss) to
net cash used by operating activities:
Depreciation and amortization..................... 0.7 1.4 0.6 1.6
Accretion of discount on subordinated debt........ 20.3 9.2 -- --
Cumulative effect of change in
accounting principle......................... -- 1.8 -- (16.9)
Extraordinary loss................................ 5.9 8.3 -- --
Equity in net (earnings) loss of subsidiaries..... (36.4) 74.4 2.9 (25.9)
Changes in accrued income taxes................... 2.9 (14.7) (0.3) (2.2)
Changes in other operating items.................. (0.1) (2.3) 2.3 4.4
------- ------- ------ ------
Net cash (used in) provided by operations......... 8.6 (32.5) (5.9) (13.1)
------- ------- ------ ------
Investing activities:
Purchases of property, net........................ -- (0.4) (0.2) (0.2)
Advances from subsidiaries, net................... 150.6 2.3 7.0 80.1
------- ------- ------ ------
Net cash provided by investing activities......... 150.6 1.9 6.8 79.9
------- ------- ------ ------
Financing activities:
Issuance/retirement of senior deferred coupon
notes........................................ (36.6) 184.0 -- --
Redemption of subordinated notes.................. (162.3) (156.3) -- --
Capital contribution from parent.................. 50.0 -- -- --
Net repayments on long-term
revolving credit facility.................... -- -- -- (57.0)
Net payment to affiliates......................... -- -- -- (14.0)
------- ------- ------ ------
Net cash used in financing activities............. (148.9) 27.7 -- (71.0)
Change in cash and cash equivalents.................... 10.3 (2.9) 0.9 (4.2)
Cash and cash equivalents at beginning of period....... 0.1 3.0 2.1 6.3
------- ------- ------ ------
Cash and cash equivalents at end of period........ $ 10.4 $ 0.1 $ 3.0 $ 2.1
======= ======= ====== ======
</TABLE>
The accompanying notes to these financial statements
are an integral part of these statements.
52
<PAGE> 53
EAGLE INDUSTRIES, INC. AND SUBSIDIARIES
SCHEDULE III-CONDENSED FINANCIAL INFORMATION OF REGISTRANT
EAGLE INDUSTRIES, INC. (PARENT COMPANY)
NOTES TO FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
In the parent company only financial statements for Eagle Industries, Inc.,
(the "Company"), the Company's investment in subsidiaries is stated at cost
plus equity in undistributed earnings of subsidiaries since the date of
acquisition. The Company's share of net income of its unconsolidated
subsidiaries is included in consolidated income using the equity method.
Pursuant to a restructuring in February 1994, Clevaflex, Inc., formerly an
operating division of Eagle, became a wholly-owned subsidiary of Eagle. Parent
company only financial statements should be read in conjunction with the
Company's Consolidated Financial Statements.
(2) DEBT
As further discussed in Note 5 to the Company's Consolidated Financial
Statements, in July 1993, the Company issued $315 million original principal
amount of Senior Deferred Coupon Notes due 2003 (the "Notes"). The issue price
of each Note was $598.97 per $1,000 principal amount at maturity, which
represents a yield to July 15, 1998 of 10.5% per annum. Cash interest will not
accrue on the Notes prior to July 15, 1998. The proceeds from the issuance of
the Notes were used to redeem $151 million principal amount of the Company's
13% Senior Subordinated Notes ("13% Notes"). The 13% Notes were redeemed
pursuant to a tender offer at a price of $1,049 per $1,000 principal amount.
In February 1994, the Company redeemed the remaining $149 million of 13% Notes
at 104% of their principal amount plus accrued interest. Proceeds for the
redemption were derived from a new senior bank credit facility made available
to Eagle Industrial Products Corporation, a newly formed wholly owned
subsidiary of the Company and a $50 million capital contribution from GAMI.
During 1994, the Company retired $55.9 million face value ($37.8 million
accreted value) of the Notes. In conjunction with this retirement, the Company
recorded an extraordinary pretax gain of $0.5 million.
(3) COMMITMENTS AND CONTINGENCIES
See Note 14 to the Company's Consolidated Financial Statements.
53
<PAGE> 54
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.
EAGLE INDUSTRIES, INC.
By: /s/ WILLIAM K. HALL
-------------------------------------
William K. Hall
President and Chief Executive Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ WILLIAM K. HALL Director, President and Chief March 29, 1995
------------------------ Executive Officer (Principal
(William K. Hall) Executive Officer)
/s/ SAM A. COTTONE Director, Senior Vice President March 29, 1995
------------------------ - Finance, Chief Financial
(Sam A. Cottone) Officer, and Treasurer
(Principal Financial and
Accounting Officer)
/s/ ROD F. DAMMEYER Director and Chairman of the March 29, 1995
------------------------ Board of Directors
(Rod F. Dammeyer)
/s/ SHELI Z. ROSENBERG Director March 29, 1995
------------------------
(Sheli Z. Rosenberg)
</TABLE>
54
<PAGE> 55
INDEX TO EXHIBITS
EXHIBIT NO. DOCUMENT DESCRIPTION
3.1 Amended and Restated Articles of Incorporation of the Registrant.
3.2 Amended and Restated By-laws of the Registrant. (Incorporated by
reference to Exhibit 2.2 of the Registrant's Registration Statement on
Form 8-A filed July 16, 1992.)
4.1 Indenture dated as of July 1, 1993, including therein the form of Note,
between the Registrant and Harris Trust and Savings Bank, as Trustee,
providing for the 10.5% Senior Deferred Coupon Notes due 2003.
(Incorporated by reference to the Registrant's quarterly report on Form
10-Q for the quarterly period ended June 30, 1993.)
4.2 Eagle Trade Receivables Master Trust Pooling and Servicing Agreement
dated as of January 1, 1994, among Centrally Held Eagle Receivables
Program, Inc., Eagle Industrial Products Corporation and Continental
Bank, National Association as trustee. (Incorporated by reference to
Exhibit 4.3 of the Registrant's Annual Report on Form 10-K for the year
ended December 31, 1993.)
4.3 Series 1994-1 Supplement, dated as of January 1, 1994 to Eagle Trade
Receivable Master Trust Pooling and Servicing Agreement. (Incorporated
by reference to Exhibit 4.4 of the Registrant's Annual Report on Form
10-K for the year ended December 31, 1993.)
4.4 Amended and Restated Credit Agreement, dated as of October 28, 1994,
among Eagle Industrial Products Corporation and Chemical Bank as
Administrative Agent, Citicorp North America, Inc. as Collateral Agent,
and the other banks named therein.
4.5 Credit Agreement, dated as of October 28, 1994, among Falcon Building
Products, Inc. and Chemical Bank as Administrative Agent, Citicorp North
America, Inc. as Collateral Agent, and the other banks named therein.
10.1 Eagle Industries, Inc. Cash Balance Pension Plan. (Incorporated by
reference to Exhibit 10.9 of the Registrant's Registration Statement on
Form S-1, File No. 33-23585.)
10.2 Advantage Retirement Savings Plan. (Incorporated by reference to Exhibit
10.10 of the Registrant's Registration Statement on Form S-1, File No.
33-23585.)
10.3 Eagle Industries, Inc. Employee Savings Plan, as amended and restated as
of January 1, 1991. (Incorporated by reference to Exhibit 10.6 of the
Registrant's Annual Report on Form 10-K for the fiscal year ended July
31, 1991.)
10.4 Eagle Industries, Inc. 1991 Long Term Incentive Plan. (Incorporated by
reference to Exhibit 10.5 of the Registrant's Annual Report on Form 10-K
for the fiscal year ended July 31, 1992.)
10.5 Letter Agreement, dated as of November 9, 1987, between the Registrant
and Gus J. Athas. (Incorporated by reference to Exhibit 10.30 of the
Registrant's Registration Statement on Form S-1, File No. 33-23585.)
10.6 Eagle Industries, Inc. Employee Stock Incentive Plan.
10.7 Purchase And Sale Agreement between Industrie Ottiche Europee, S.p.A. and
Falcon Manufacturing, Inc. (Incorporated by reference to Exhibit 2.1 of
the Registrant's Current Report on Form 8-K, dated March 10, 1993.)
55
<PAGE> 56
INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION DOCUMENT
10.8 First Amendment To Purchase And Sale Agreement between Industrie Ottiche
Europee S.p.A. and Falcon Manufacturing, Inc. (Incorporated by reference
to Exhibit 2.2 of the Registrant's Current Report on Form 8-K, dated
March 10, 1993.)
10.9 Amended and Restated Stock Purchase Agreement among Eagle Industrial
Products Corporation and O.D.E. Manufacturing, Inc. and Robbins & Myers,
Inc. (Incorporated by reference to Exhibit 2.1 of the Registrant's
Current Report on Form 8-K dated June 30, 1994.)
10.10 SAR and Registration Rights Agreement between Robbins & Myers, Inc. and
Eagle Industrial Products Corporation. (Incorporated by reference to
Exhibit 2.2 of the Registrant's Current Report on Form 8-K dated June 30,
1994.)
10.11 Robbins & Myers, Inc. Senior Subordinated Extendible Reset Note.
(Incorporated by reference to Exhibit 2.3 of the Registrant's Current
Report on Form 8-K dated June 30, 1994.)
10.12 Asset Purchase Agreement among Hill Phoenix, Inc., Refrigeration Systems,
Inc., Phoenix Refrigeration Systems, Inc., Dover Diversified, Inc., Hill
Refrigeration, Inc. and Eagle Industries, Inc. (Incorporated by
reference to Exhibit 2.1 of the Registrant's quarterly report on form
10-Q for the quarterly period ended June 30, 1994.)
10.13 Purchase Agreement among Caron International, Inc., Eagle Industrial
Products Corporation and Eagle Industries, Inc. and NSC Buyer, Inc. and
National Spinning Co., Inc. (Incorporated by reference to Exhibit 2.1 of
the Registrant's Current Report on Form 8-K dated September 2, 1994.)
10.14 Disaffiliation Tax Sharing Agreement, dated June 30, 1994 among Falcon
Building Products, Inc., Great American Management and Investment, Inc.
and Eagle Industrial Products Corporation.
27 Financial Data Schedule.
56
<PAGE> 1
Exhibit 3.1
RESTATED
CERTIFICATE OF INCORPORATION
OF
EAGLE INDUSTRIES, INC.
Eagle Industries, Inc., a corporation organized and existing under the
laws of the State of Delaware, hereby certifies as follows:
1. (a) The present name of the Corporation is Eagle Industries, Inc.
(b) The name under which the Corporation was originally
incorporated is Eagle American Industries, Inc. and the date of filing of its
original Certificate of Incorporation with the Secretary of State of the State
of Delaware was November 10, 1986.
2. This Restated Certificate of Incorporation restates and integrates
and further amends the Certificate of Incorporation of the Corporation to read
as herein set forth in full:
FIRST: The name of the Corporation is Eagle Industries, Inc.
SECOND: The address of the Corporation's registered office in the
State of Delaware is 1209 Orange Street, in the City of Wilmington, County of
New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
THIRD: The nature of the business or purpose to be conducted or
promoted by the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the General Corporation Law of the
State of Delaware.
FOURTH: The total number of shares of capital stock which the
Corporation shall have authority to issue is 80,000,000, consisting of
75,000,000 shares of Common Stock with a par value of $.01 per share and
5,000,000 shares of Preferred Stock with a par value of $.01 per share.
The Board of Directors is authorized, subject to limitations prescribed
by law, to provide for the issuance of the Preferred Stock in series, and by
filing a certificate pursuant to the applicable law of the State of Delaware,
to establish from time to time the number of shares to be included in each such
series, and to fix the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof.
<PAGE> 2
The authority of the Board of Directors with respect to each series shall
include, but not be limited to, determination of the following:
(a) The number of shares constituting that series and distinctive
designation of that series;
(b) The rate of dividend, if any, and whether (and if so, on what terms
and conditions) dividends shall be cumulative (and, if so, whether unpaid
dividends shall compound or accrue interest) or shall be payable in preference
or in any other relation to the dividends payable on any other class or classes
of stock or any other series of the Preferred Stock;
(c) Whether that series shall have voting rights in addition to the
voting rights provided by law and, if so, the terms and extent of such voting
rights;
(d) Whether the shares shall be issued with the privilege of conversion
or exchange and, if so, the terms and conditions of such conversion or exchange
(including, without limitation, the price or prices or the rate or rates of
conversion or exchange or any terms for adjustment thereof);
(e) Whether the shares may be redeemed and, if so, the terms and
conditions on which they may be redeemed (including, without limitation, the
dates upon or after which they may be redeemed and the price or prices at which
they may be redeemed, which price or prices may be different in different
circumstances or at different redemption dates);
(f) The amounts, if any, payable upon the shares in the event of
voluntary liquidation, dissolution or winding up of the Corporation in
preference of shares of any other class or series and whether the shares shall
be entitled to participate generally in distributions on the Common Stock under
such circumstances;
(g) The amounts, if any, payable under the shares thereof in the event
of involuntary liquidation, dissolution or winding up of the Corporation in
preference of shares of any other class or series and whether the shares shall
be entitled to participate generally in distributions on the Common Stock under
such circumstances;
(h) Sinking fund provisions, if any, for the redemption or purchase of
the shares (the term "sinking fund" being understood to include any similar
fund, however designated); and
(i) Any other relative rights, preferences, limitations and powers of
that series.
FIFTH: Advance notice of nominations for the election of directors,
other than nominations by the Board of Directors or a committee thereof, shall
be given to the Corporation in the manner provided in the By-laws.
SIXTH: The Corporation is to have perpetual existence.
<PAGE> 3
SEVENTH: (1) Directors of the Corporation shall have no personal
liability to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director, except (i) for any breach of a
director's duty of loyalty to the Corporation or its stockholders, (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
knowing violations of law, (iii) under Section 174 of the General Corporation
Law of the State of Delaware, or (iv) for any transaction from which a director
derived an improper personal benefit. If the General Corporation Law of the
State of Delaware is amended to authorize corporate action further eliminating
or limiting the personal liability of directors, then by virtue of this ARTICLE
SEVENTH the liability of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the General Corporation Law of the
State of Delaware, as so amended.
(2) The Corporation shall indemnify, in accordance with the By-laws of
the Corporation, to the fullest extent permitted from time to time by the
General Corporation Law of the State of Delaware or any other applicable laws
as presently or hereafter in effect, any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(including, without limitation, an action by or in the right of the
Corporation), by reason of his acting as a director or officer of the
Corporation (and the Corporation, in the discretion of the Board of Directors,
may so indemnify a person by reason of the fact that he is or was an employee
or agent of the Corporation or is or was serving at the request of the
Corporation in any other capacity for or on behalf of the Corporation) against
any liability or expense actually and reasonably incurred by such person in
respect thereof; provided, however, the Corporation shall be required to
indemnify an officer or director in connection with an action, suit or
proceeding (or part thereof) initiated by such person only if such action, suit
or proceeding (or part thereof) was authorized by the Board of Directors of the
Corporation. Such indemnification is not exclusive of any other right to
indemnification provided by law or otherwise. The right to indemnification
conferred by this Section (2) shall be deemed to be a contract between the
Corporation and each person referred to herein.
(3) If a claim under Section (2) of this ARTICLE SEVENTH is not paid in
full by the Corporation, the claimant may at any time thereafter bring suit
against the Corporation to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall be entitled to be paid also
the expense of prosecuting such claim. It shall be a defense to any such
action (other than an action brought to enforce a claim for expenses incurred
in defending any proceeding in advance of its final disposition where any
undertaking required by the By-laws of the Corporation has been tendered to the
Corporation) that the claimant has not met the standards of conduct which make
it permissible under the General Corporation Law of the State of Delaware and
Section 2 of this ARTICLE SEVENTH for the Corporation to indemnify the claimant
for the amount claimed, but the burden of proving such defense shall be on the
Corporation. Neither the failure of the Corporation (including its Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the General Corporation Law of
State of Delaware, nor an actual determination by the Corporation (including
its Board of
<PAGE> 4
Directors, independent legal counsel, or its stockholders) that the claimant
has not met such applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met the applicable
standard of conduct.
(4) The right to indemnification and the payment of expenses incurred
in defending a proceeding in advance of its final disposition conferred in this
ARTICLE SEVENTH shall not be exclusive of any other right which any person may
have or hereafter acquire under any stature, provision of this Certificate of
Incorporation, by-law, agreement, contract, vote of stockholders or
disinterested directors, or otherwise.
(5) The Corporation may purchase and maintain insurance on behalf of
any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under the provisions of this ARTICLE SEVENTH, the General
Corporation Law of the State of Delaware, or otherwise.
(6) No amendment to or repeal of all or any part of this ARTICLE
SEVENTH shall adversely affect any right or protection existing at the time of
such repeal or amendment.
EIGHTH: In furtherance and not in limitation of the powers conferred
by statute, the Board of Directors is expressly authorized to make, adopt,
alter, amend or repeal the By-laws of the Corporation.
NINTH: Meetings of the stockholders may be held at such places,
within or without the State of Delaware, as may be designated by or in the
manner provided in the By-laws. The books of the Corporation may be kept
(subject to the provisions of any law or regulation) outside the State of
Delaware at such place or places as may be designated from time to time by the
Board of Directors or in the By-laws of the Corporation. Elections of
directors need not be by written ballot unless the By-laws of the Corporation
shall so provide.
TENTH: The Corporation hereby elects not to be governed by Section
203 of the General Corporation Law of the State of Delaware, from time to time
in effect or any successor provision thereto.
ELEVENTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
4. This Restated Certificate of Incorporation was duly adopted by
unanimous written consent of the stockholders of the Corporation in accordance
with the applicable provisions of Sections 228, 242 and 245 of the General
Corporation Law of the State of Delaware.
<PAGE> 5
IN WITNESS WHEREOF, Eagle Industries, Inc., a Delaware corporation has
caused this certificate to be signed by William K. Hall, its President, Chief
Executive Officer and Treasurer, and attested by Susan Obuchowski, its
Secretary, this 16th day of July, 1992.
\s\ William K. Hall
------------------------------------
William K. Hall
President, Chief Executive Officer,
Chief Operating Officer and Treasurer
ATTEST:\s\ Susan Obuchowski
---------------------------
Susan Obuchowski
Secretary
<PAGE> 6
AMENDMENT OF RESTATED CERTIFICATE OF INCORPORATION
Eagle Industries, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation") hereby certifies as follows:
1. The restated Certificate of Incorporation of the Corporation was
filed with the Secretary of State of the State of Delaware on July
16, 1992.
2. That this Amendment of Restated Certificate of Incorporation was
duly adopted by the unanimous written consent of the stockholders
of the Corporation in accordance with the applicable provisions of
Sections 228 and 242 of the General Corporation Law of the State of
Delaware.
3. The Restated Certificate of Incorporation is hereby amended by
deleting the Article entitled Fourth therein in its entirety and by
inserting in lieu thereof the new Article entitled Fourth as
follows:
"Fourth": The total number of shares of capital stock which the
Corporation shall have authority to issue is 1,000, consisting of
1,000 shares of Common Stock with a par value of $.01 per share."
In Witness Whereof, Eagle Industries, Inc., a Delaware corporation has
caused this certificate and Amendment of Restated Certificate of Incorporation
to be signed by Gus J. Athas, its Vice President and General Counsel and
attested by Frank Bruno, its Assistant Secretary, this 28th day of December,
1993.
\s\ Gus J. Athas
-----------------------------------
Gus J. Athas, Vice President and
General Counsel
ATTEST: \s\ Frank Bruno
---------------------
Frank Bruno
Assistant Secretary
<PAGE> 7
CERTIFICATE OF AMENDMENT
OF RESTATED CERTIFICATE OF INCORPORATION
Eagle Industries, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation") hereby certifies as follows:
1. That the Restated Certificate of Incorporation of the Corporation
was filed with the Secretary of State of the State of Delaware on
July 16, 1992.
2. That an Amendment of Restated Certificate of Incorporation,
changing the number of shares of capital stock in the Corporation,
was filed with the Secretary of State of the State of Delaware on
December 29, 1993.
3. That this Amendment of Restated Certificate of Incorporation was
duly adopted by the unanimous written consent of the stockholders
of the Corporation in accordance with the applicable provisions of
Sections 228 and 242 of the General Corporation Law of the State of
Delaware.
4. That the Restated Certificate of Incorporation is hereby amended by
deleting the Article entitled Fourth therein in its entirety and by
inserting in lieu thereof the new Article entitled Fourth as
follows:
"The total number of shares of capital stock which the Corporation
shall have authority to issue is 3,000,000 consisting of 3,000,000
shares of Common Stock with a par value of $.01 per share."
In Witness Whereof, Eagle Industries, Inc., a Delaware corporation, has
caused this Amendment of Restated Certificate of Incorporation to be signed by
Gus J. Athas, its Senior Vice President and General Counsel, this 15th day of
March, 1995.
\s\ Gus J. Athas
--------------------------------------------
Gus J. Athas
Senior Vice President and General Counsel
<PAGE> 1
Exhibit 4.4
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of October 28, 1994
among
EAGLE INDUSTRIAL PRODUCTS CORPORATION
as Borrower
THE FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTY HERETO,
as Lenders,
and
CHEMICAL BANK,
as Administrative Agent
and
CITICORP NORTH AMERICA, INC.
as Collateral Agent
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
<TABLE>
<S> <C> <C>
1.01. Certain Defined Terms.......................................................... 2
1.02. Computation of Time Periods.................................................... 22
1.03. Accounting Terms............................................................... 22
1.04. Other Definitional Provisions.................................................. 22
</TABLE>
ARTICLE II
AMOUNTS AND TERMS OF LOANS
<TABLE>
<S> <C> <C>
2.01. Revolving Loans and Term Loans................................................. 22
2.02. Revolving Loan Facility Mechanics.............................................. 24
2.03. Interest on the Loans.......................................................... 26
2.04. Fees........................................................................... 28
2.05. Mandatory Prepayments.......................................................... 29
2.06. Payments....................................................................... 30
2.07. Interest Periods............................................................... 33
2.08. Special Provisions Governing Eurodollar Rate Loans............................. 33
2.09. Taxes.......................................................................... 35
2.10. Increased Capital.............................................................. 37
2.11. Use of Proceeds of the Loans................................................... 37
2.12. Authorized Officers of Borrower................................................ 37
2.13. Replacement of Certain Lenders................................................. 38
</TABLE>
ARTICLE III
LETTERS OF CREDIT
<TABLE>
<S> <C> <C>
3.01. Obligation to Issue............................................................ 39
3.02. Types and Amounts.............................................................. 39
3.03. Conditions..................................................................... 39
3.04. Issuance of Letters of Credit.................................................. 40
3.05. Reimbursement Obligations; Duties of the Issuing Bank.......................... 40
3.06. Participations................................................................. 41
3.07. Payment of Reimbursement Obligations........................................... 42
3.08. Compensation for Letters of Credit............................................. 43
3.09. Indemnification; Exoneration................................................... 43
3.10. Reporting By Issuing Banks..................................................... 44
3.11. Outstanding Letters of Credit.................................................. 44
</TABLE>
ARTICLE IV
CONDITIONS TO LOANS AND LETTERS OF CREDIT
<TABLE>
<S> <C> <C>
4.01. Conditions Precedent to the Effective Date..................................... 44
4.02. Conditions Precedent to all Loans and Letters of Credit........................ 46
4.03. Consent to Assumption Agreement................................................ 47
</TABLE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
<TABLE>
<S> <C> <C>
5.01. Representations and Warranties on the Effective Date........................... 47
5.02. Subsequent Funding Representations and Warranties.............................. 53
</TABLE>
(i)
<PAGE> 3
ARTICLE VI
REPORTING COVENANTS
<TABLE>
<S> <C> <C>
6.01. Financial Statements........................................................... 54
6.02. Environmental Notices.......................................................... 57
</TABLE>
ARTICLE VII
AFFIRMATIVE COVENANTS
<TABLE>
<S> <C> <C>
7.01. Corporate Existence, Etc. ..................................................... 58
7.02. Corporate Powers, Etc. ........................................................ 58
7.03. Compliance with Laws........................................................... 58
7.04. Payment of Taxes and Claims.................................................... 58
7.05. Maintenance of Properties; Insurance........................................... 58
7.06. Inspection of Property; Books and Records; Discussions......................... 59
7.07. Labor Matters.................................................................. 59
7.08. Maintenance of Permits......................................................... 59
7.09. Employee Benefit Matters....................................................... 59
7.10. Formation of Subsidiaries...................................................... 59
7.11. Collateral Audit............................................................... 60
7.12. Separate Corporate Existence................................................... 60
7.13. Interest Rate Hedging Contracts................................................ 61
7.14. Accountants' Reliance Letter................................................... 61
7.15. Future Liens on Real Property in Favor of the Collateral Agent................. 61
</TABLE>
ARTICLE VIII
NEGATIVE COVENANTS
<TABLE>
<S> <C> <C>
8.01. Indebtedness................................................................... 62
8.02. Sales of Assets; Liens......................................................... 62
8.03. Investments.................................................................... 63
8.04. Accommodation Obligations...................................................... 65
8.05. Restricted Junior Payments..................................................... 65
8.06. Conduct of Business............................................................ 66
8.07. Transactions with Affiliates................................................... 66
8.08. Restriction on Fundamental Changes............................................. 67
8.09. Employee Benefit Matters....................................................... 67
8.10. Environmental Liabilities...................................................... 67
8.11. Margin Regulations............................................................. 67
8.12. Change of Fiscal Year.......................................................... 68
8.13. Amendment of Certain Documents................................................. 68
8.14. Modification of Receivables Agreements......................................... 68
</TABLE>
ARTICLE IX
FINANCIAL COVENANTS
<TABLE>
<S> <C> <C>
9.01. Minimum Consolidated Net Worth................................................. 68
9.02. Ratio of Total Indebtedness to Net EBITDA...................................... 69
9.03. Interest Coverage Ratio........................................................ 69
9.04. Capital Expenditures........................................................... 69
9.05. Fixed Charges Coverage Ratio................................................... 69
</TABLE>
(ii)
<PAGE> 4
ARTICLE X
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
<TABLE>
<S> <C> <C>
10.01. Events of Default.............................................................. 70
10.02. Rights and Remedies............................................................ 72
</TABLE>
ARTICLE XI
ADMINISTRATIVE AGENT AND COLLATERAL AGENT
<TABLE>
<S> <C> <C>
11.01. Appointment.................................................................... 73
11.02. Nature of Duties............................................................... 73
11.03. Rights, Exculpation, Etc....................................................... 74
11.04. Reliance....................................................................... 75
11.05. Indemnification................................................................ 75
11.06. The Administrative Agent and the Collateral Agent Individually................. 75
11.07. Successor Administrative Agent or Collateral Agent; Resignation of
Administrative Agent or Collateral Agent....................................... 75
11.08. Collateral Matters............................................................. 76
11.09. Relations Among Lenders........................................................ 77
</TABLE>
ARTICLE XII
MISCELLANEOUS
<TABLE>
<S> <C> <C>
12.01. Survival of Warranties and Agreements.......................................... 78
12.02. Assignments and Participations................................................. 78
12.03. Expenses....................................................................... 80
12.04. Indemnification and Waiver..................................................... 81
12.05. Limitation of Liability........................................................ 82
12.06. Ratable Sharing; Defaulting Lender; Setoff..................................... 82
12.07. Amendments and Waivers......................................................... 84
12.08. Notices........................................................................ 84
12.09. Failure or Indulgence Not Waiver; Remedies Cumulative.......................... 85
12.10. Termination.................................................................... 85
12.11. Marshalling; Recourse to Security; Payments Set Aside.......................... 85
12.12. Severability................................................................... 85
12.13. Headings....................................................................... 85
12.14. GOVERNING LAW.................................................................. 85
12.15. Successors and Assigns; Subsequent Holders of Notes............................ 85
12.16. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL........................ 86
12.17. Counterparts; Effectiveness; Inconsistencies................................... 87
12.18. Performance of Obligations..................................................... 87
12.19. ENTIRE AGREEMENT............................................................... 88
</TABLE>
(iii)
<PAGE> 5
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit 1 -- Assignment and Acceptance (sec.sec.1.01, 12.02(d))
Exhibit 2 -- Borrowing Base Certificate (sec.1.01)
Exhibit 3 -- Compliance Certificate (sec.sec.1.01, 6.01(e))
Exhibit 4 -- Notice of Borrowing (sec.1.01)
Exhibit 5 -- Notice of Conversion/Continuation (sec.1.01)
Exhibit 6 -- Forms of Notes (sec.2.02)
Exhibit 7 -- List of Closing Documents (sec.4.01(a))
Exhibit 8 -- Accountants' Reliance Letter (sec.4.01(o))
Exhibit 9 -- Form of Loss Payable Endorsement (sec.7.05)
</TABLE>
SCHEDULES
<TABLE>
<S> <C> <C>
Schedule A -- List of Lenders, Issuing Banks, Commitments, Notice Addresses and
Domestic and Eurodollar Lending Offices (sec.sec.1.01, 12.02(c),
12.08)
Schedule 1.01-A -- Existing Indebtedness (sec.1.01)
Schedule 1.01-B -- Material Adverse Effect (sec.1.01)
Schedule 1.01-C -- Real Property Subject to Real Estate Mortgages (sec.1.01)
Schedule 1.01-D -- Permitted Existing Liens (sec.1.01)
Schedule 5.01(c) -- Subsidiaries (sec.sec.5.01(c), 7.01)
Schedule 5.01(d) -- Violation of Requirements of Law (sec.5.01(d))
Schedule 5.01(i) -- Capitalization (sec.5.01(i))
Schedule 5.01(j) -- Pending or Threatened Litigation (sec.5.01(j))
Schedule 5.01(l) -- Tax Assessments (sec.5.01(1))
Schedule 5.01(s) -- Environmental Matters (sec.5.01(s))
Schedule 5.01(t) -- ERISA Matters (sec.5.01(t))
Schedule 5.01(w) -- Joint Ventures (sec.5.01(w))
Schedule 5.01(x) -- Labor Matters (sec.5.01(x))
Schedule 7.05 -- Insurance (sec.7.05)
Schedule 8.08 -- Fundamental Changes (sec.8.08(a))
</TABLE>
(iv)
<PAGE> 6
AMENDED AND RESTATED
CREDIT AGREEMENT
This Amended and Restated Credit Agreement dated as of October 28, 1994 (as
amended, supplemented, modified or restated from time to time, this "AGREEMENT")
is entered into among EAGLE INDUSTRIAL PRODUCTS CORPORATION, a Delaware
corporation ("BORROWER"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE
PAGES HEREOF and each other financial institution which from time to time
becomes a party hereto in accordance with SECTION 12.02(A) (together with their
respective successors and assigns, individually, a "LENDER" and, collectively,
the "LENDERS"), CHEMICAL BANK, a New York banking corporation, in its separate
capacity as administrative agent for the Lenders hereunder (in such capacity,
the "ADMINISTRATIVE AGENT") and CITICORP NORTH AMERICA, INC. as collateral agent
for the Lenders hereunder (the "COLLATERAL AGENT").
RECITALS
A. The Borrower entered into a Credit Agreement dated as of January 31,
1994, as amended, with the Lenders and certain other financial institutions, the
Administrative Agent and the Collateral Agent (the "ORIGINAL CREDIT AGREEMENT").
Pursuant to the Original Credit Agreement, Eagle Industries, Inc. (the "PARENT")
and the Borrower's direct and indirect domestic Subsidiaries executed Guaranties
of even date therewith (the "ORIGINAL GUARANTIES") and certain other collateral
documents granting liens and security interests in and upon the assets of the
Parent and such Subsidiaries (the "ORIGINAL COLLATERAL DOCUMENTS"). Pursuant to
the Original Guaranties, the Parent and the Borrower's domestic Subsidiaries
jointly and severally guaranteed the obligations of the Borrower (the "ORIGINAL
OBLIGATIONS") under the Original Credit Agreement and the other "Loan Documents"
thereunder, and the liens and security interests granted pursuant to the
Original Collateral Documents secured the Original Obligations and the Original
Guaranties.
B. Falcon Building Products, Inc. ("FALCON"), a Subsidiary of the
Borrower, intends to effect an initial public offering of up to 47% of its
common stock (the "OFFERING"), the balance of which common stock will continue
to be owned, directly or indirectly, by the Borrower. A portion of the proceeds
to Falcon of the Offering will be used, directly or indirectly, to repay a
portion of the Original Obligations.
C. Concurrently with the consummation of the Offering and the application
of the proceeds thereof, the Borrower, Falcon, their respective domestic
Subsidiaries and the Parent will enter into the Assumption Agreement, pursuant
to which (i) Falcon will assume direct liability for a portion of the Original
Obligations, which assumed obligations (the "ASSUMED OBLIGATIONS") henceforth
shall be evidenced by a Credit Agreement of even date herewith among Falcon, the
Lenders, the Administrative Agent and the Collateral Agent (the "FALCON
AGREEMENT"), and (ii) the Borrower, the Borrower's domestic Non-Falcon
Subsidiaries and the Parent will be released from the Assumed Obligations, and
the balance of the Original Obligations henceforth shall be evidenced by this
Agreement and the other Loan Documents.
D. Immediately prior to the execution and delivery of the Assumption
Agreement and the effectiveness of this Agreement and the Falcon Agreement,
certain of the original lenders under the Original Credit Agreement will assign
their entire interests in the Original Obligations and the Original Credit
Agreement to one or more of the Lenders.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01. CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings (such meanings to be applicable, except to the extent otherwise
indicated in a definition of a particular term, both to the singular and the
plural forms of the terms defined):
"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, including, without
limitation, any such Indebtedness, obligation or liability directly or
indirectly
2
<PAGE> 7
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. For purposes of interpreting any provision of this Agreement
which refers to the Dollar amount of Accommodation Obligations of any Person,
such provision shall be deemed to mean the maximum amount of such Accommodation
Obligations or, in the case of an Accommodation Obligation to maintain solvency,
assets, level of income or other financial condition, the amount of Indebtedness
to which such Accommodation Obligation relates, or if less, the stated maximum,
if any, in the documents evidencing such Accommodation Obligation.
"ACCOUNT DEBTOR" shall mean a party that is obligated to the Borrower or a
Guarantor on or under a Receivable.
"ADMINISTRATIVE AGENT" shall have the meaning ascribed to such term in the
preamble hereto and shall include any successor Administrative Agent.
"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 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.
"AGREEMENT" shall have the meaning ascribed to such term in the preamble
hereto.
"AGREEMENT ACCOUNTING PRINCIPLES" shall mean GAAP as of the date of this
Agreement together with any changes in GAAP after the date hereof which are not
"Material Accounting Changes" (as defined below). If any changes in GAAP are
hereafter required or permitted and are adopted by the Parent or Borrower with
the agreement of its independent certified public accountants and such changes
result in a material change in method of the calculation of any of the financial
covenants, restrictions or standards herein or in the related definitions or
terms used therein ("Material Accounting Changes"), the parties hereto agree to
enter into negotiations, in good faith, in order to amend such provisions in a
credit neutral manner so as to reflect equitably such changes with the desired
result that the criteria for evaluating the Parent's and Borrower's financial
condition shall be substantially the same after such changes as if such changes
had not been made; PROVIDED, HOWEVER, that no Material Accounting Change shall
be given effect in such calculations until such provisions are amended, in a
manner reasonably satisfactory to the Requisite Lenders. In the event such
amendment is entered into, all references in this Agreement to Agreement
Accounting Principles shall mean GAAP as of the date of such amendment together
with any changes in GAAP after the date of such amendment which are not Material
Accounting Changes. Unless otherwise expressly indicated herein, all financial
covenants and ratios shall be calculated for the Consolidated Borrower Group on
a consolidated basis.
"AGREEMENT OBLIGATIONS" shall mean all Obligations other than with respect
to Eligible Hedging Contracts.
"ALTERNATE BASE RATE" shall mean, for any day, a fluctuating interest rate
per annum (rounded upwards, if necessary, to the next 1/16 of 1%) as shall be in
effect from time to time, which rate per annum shall at all times be equal to
the greatest of (a) the Prime Rate in effect on such day; (b) the sum of
one-half of one percent (0.50%) and the Federal Funds Effective Rate in effect
on such day; and (c) the sum of one percent (1.0%) and (1) the product of (x)
the Three-Month Secondary CD Rate in effect on such day and (y) Statutory
Reserves and (2) the Assessment Rate. For purposes hereof, "PRIME RATE" shall
mean the rate of interest per annum publicly announced from time to time by
Chemical Bank as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective on the date such change
is
3
<PAGE> 8
publicly announced as being effective. "THREE-MONTH SECONDARY CD RATE" shall
mean, for any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Federal Reserve Board
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Federal Reserve Board,
be published in Federal Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate shall not be so reported on such day or
such next preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in New York
City received at approximately 10:00 a.m., New York City time, on such day (or,
if such day shall not be a Business Day, on the next preceding Business Day) by
Chemical Bank from three New York City negotiable certificate of deposit dealers
of recognized standing selected by the Administrative Agent. "FEDERAL FUNDS
EFFECTIVE RATE" shall mean, for any day, a fluctuating interest rate per annum
equal 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 on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by Chemical Bank from three Federal funds brokers of
recognized standing selected by the Administrative Agent. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate or both for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms hereof, the Alternate Base
Rate shall be determined without regard to CLAUSE (B) or (C), or both, of the
first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change.
"APPLICABLE BASE RATE MARGIN" shall mean, at any date of determination, the
rate per annum set forth in the chart below which corresponds to the ratio below
as at the end of the immediately preceding fiscal quarter:
<TABLE>
<CAPTION>
APPLICABLE
BASE RATE MARGIN FREE CASH FLOW COVERAGE RATIO
------------------- -----------------------------------------------------------------------
<S> <C>
0.75% Less than 3.0 to 1.0
0.375% Equal to or greater than 3.0 to 1.0 but less than 4.0 to 1.0
0.125% Equal to or greater than 4.0 to 1.0 but less than 5.0 to 1.0
0.00% Equal to or greater than 5.0 to 1.0
</TABLE>
Notwithstanding the foregoing, the Applicable Base Rate Margin initially shall
be 0.75%, and after each fiscal quarter ending on or after March 31, 1995 shall
be adjusted as provided in SECTION 2.03(A) by reference to the table set forth
above on the basis of the Borrower's Free Cash Flow Coverage Ratio.
"APPLICABLE EURODOLLAR RATE MARGIN" shall mean, at any date of
determination, the rate per annum set forth in the chart below which corresponds
to the ratio below as at the end of the immediately preceding fiscal quarter:
<TABLE>
<CAPTION>
APPLICABLE
EURODOLLAR RATE
MARGIN FREE CASH FLOW COVERAGE RATIO
------------------- -----------------------------------------------------------------------
<S> <C>
1.75% Less than 3.0 to 1.0
1.375% Equal to or greater than 3.0 to 1.0 but less than 4.0 to 1.0
1.125% Equal to or greater than 4.0 to 1.0 but less than 5.0 to 1.0
0.875% Equal to or greater than 5.0 to 1.0 but less than 6.0 to 1.0
0.625% Equal to or greater than 6.0 to 1.0
</TABLE>
Notwithstanding the foregoing, the Applicable Eurodollar Rate Margin
initially shall be 1.75%, and after each fiscal quarter ending on or after March
31, 1995 shall be adjusted as provided in SECTION 2.03(A) by reference to the
table set forth above on the basis of the Borrower's Free Cash Flow Coverage
Ratio.
4
<PAGE> 9
"APPLICABLE LENDING OFFICE" shall mean, with respect to each Lender, such
Lender's Domestic Lending Office, in the case of a Base Rate Loan and such
Lender's Eurodollar Lending Office, in the case of a Eurodollar Rate Loan.
"APPLICABLE MARGINS" shall mean the Applicable Base Rate Margin and the
Applicable Eurodollar Rate Margin.
"ASSESSMENT RATE" shall mean for any date the annual rate (rounded upwards,
if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then-current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent or any other
Lender to the FDIC (or any successor) for insurance by the FDIC (or such
successor) of time deposits made in dollars at the Administrative Agent's or
such Lenders domestic offices.
"ASSIGNMENT AND ACCEPTANCE" shall mean an Assignment and Acceptance in the
form of EXHIBIT 1 (with blanks appropriately filled in) delivered to the
Administrative Agent in connection with an assignment of a Lender's interest
under this Agreement pursuant to SECTION 12.02.
"ASSUMPTION AGREEMENT" shall mean the Assumption and Release Agreement
dated as of the Effective Date among the Borrower, each of the Guarantors,
Falcon, each of Falcon's Subsidiaries, the Parent, the Administrative Agent and
the Collateral Agent, in the form attached as Exhibit A to the List of Closing
Documents referred to in SECTION 4.01(A).
"BASE RATE LOANS" shall mean all Loans outstanding which bear interest at a
rate determined by reference to the Alternate Base Rate, as provided in SECTION
2.03(A)(I).
"BENEFIT PLAN" shall mean a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which 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 while an ERISA Affiliate.
"BORROWER" shall have the meaning ascribed to such term in the preamble
hereto.
"BORROWER SECURITY AGREEMENT" shall mean that certain Amended and Restated
Borrower Security Agreement executed by the Borrower in favor of the Collateral
Agent for the benefit of itself and the Holders of Secured Obligations dated as
of the Effective Date, as the same may be amended, restated, supplemented or
otherwise modified from time to time.
"BORROWER SUBSIDIARY" shall mean any Subsidiary of the Borrower.
"BORROWING" shall mean a borrowing consisting of Loans of the same Type,
having the same Interest Period, in the case of Eurodollar Rate Loans, and made
on the same day by the Lenders.
"BORROWING BASE" shall mean, as of any date of calculation, an amount equal
to the sum of: (a) 85% of the face amount then outstanding under the Eligible
Receivables, (b) 45% of Eligible Inventory, valued at the lower of cost
determined on a FIFO basis or market value, and (c) 90% of the undrawn amount
then available under the R&M Letter of Credit (or such lesser percentage as may
be established by the Administrative Agent exercising its reasonable credit
judgment in the event that the terms of such R&M Letter of Credit are modified),
in each case less such reserves as the Administrative Agent elects to establish
in accordance with its reasonable credit judgment.
"BORROWING BASE CERTIFICATE" means a certificate of the chief financial
officer, treasurer or controller of Borrower substantially in the form of
EXHIBIT 2 (or another form mutually acceptable to the Administrative Agent and
Borrower) setting forth calculations of the Borrowing Base, including a
calculation of each component thereof, as at the close of business on the last
Business Day of the preceding fiscal month, all in such detail as shall be
reasonably satisfactory to the Administrative Agent.
"BUSINESS DAY" shall mean (i) for all purposes other than as described by
CLAUSE (II) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York, or is a day on which
banking institutions located in New York are required or authorized by law or
other governmental action to close and (ii) with respect to all notices,
determinations, fundings and payments in
5
<PAGE> 10
connection with Eurodollar Rate Loans, any day which is a Business Day described
in CLAUSE (I) and which is also a day for trading in dollar deposits by and
between banks in the London interbank Eurodollar market.
"CAPITAL EXPENDITURES" shall mean, with respect to any Person on a
consolidated basis for any period, the aggregate of all expenditures incurred by
such Person during such period that, in accordance with Agreement Accounting
Principles, are or should be included in "additions to property, plant or
equipment" or similar items reflected in the statement of cash flows of such
Person, excluding interest and start-up expenses that otherwise would be
included and less any cash proceeds from the disposal of property, plants or
equipment not paid to the Lenders as a mandatory prepayment; PROVIDED, HOWEVER,
that Capital Expenditures shall not include expenditures of proceeds of
insurance settlements in respect of lost, destroyed or damaged assets, equipment
or other property to the extent such expenditures are made in connection with
the replacement or repair of such lost, destroyed or damaged assets, equipment
or other property commenced within 6 months of such destruction or damage and
pursued with diligence.
"CAPITAL LEASE," as applied to any Person, shall mean any lease of any
property (whether real, personal, or mixed) by that Person as lessee which, in
conformity with Agreement Accounting Principles, is or should be accounted for
as a capital lease on the balance sheet of that Person.
"CARON NOTE" shall mean that certain promissory note issued by NSC Buyer,
Inc. in partial payment for the sale of Caron International, Inc.
"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 of
America, in each case maturing within one year after the date of acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America maturing within six months after the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("MOODY'S") (or, if at any time neither S&P nor Moody's
shall be rating such obligations, then from such other nationally recognized
rating services acceptable to the Administrative Agent) and not listed in Credit
Watch published by S&P (or a similar publication of S&P or another nationally
recognized rating service); or (iii) commercial paper (other than commercial
paper issued by Parent, Borrower or any of their respective Subsidiaries or any
of their Affiliates), domestic and Eurodollar certificates of deposit, time
deposits or bankers' acceptances, in any such case maturing no more than ninety
(90) days after the date of acquisition thereof and, at the time of the
acquisition thereof, the issuer's rating on its commercial paper is at least A-1
or P-1 from either S&P or Moody's (or, if at any time neither S&P nor Moody's
shall be rating such obligations, then the highest rating from other nationally
recognized rating services acceptable to the Administrative Agent).
"CASH INTEREST EXPENSE" shall mean, with respect to any Person on a
consolidated basis for any period, (a) interest expense of such Person for such
period determined on a consolidated basis in accordance with Agreement
Accounting Principles consistently applied, excluding the amortization of all
fees payable in connection with the execution, delivery and effectiveness of the
Original Credit Agreement and this Agreement, PLUS (b) capitalized interest paid
during such period by such Person MINUS (c) interest paid to and received by
such Person in cash in the United States during such period, except that
notwithstanding Agreement Accounting Principles, Cash Interest Expense shall not
be reduced by the amount of cash interest received on the R&M Note.
"CHANGE OF CONTROL" shall mean any of the following events: (a) the Samuel
Zell Group shall cease to own, directly or indirectly, more than 20% of the
combined voting power of the Parent's outstanding securities ordinarily having
the right to vote at elections of directors; (b) any other Person or Group (as
defined below) shall acquire or own, directly or indirectly, 30% or more of the
combined voting power of the Parent's outstanding securities ordinarily having
the right to vote at elections of directors and such percentage of securities
owned shall be greater than the percentage of securities owned by the Samuel
Zell Group or (c) the Parent shall cease to directly own 100% of the Borrower's
outstanding securities ordinarily having the right to vote at elections of
directors. "GROUP" shall mean two or more Persons that agree to act together in
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a partnership, syndicate or other group for the purpose of acquiring, holding,
voting, or disposing of the Parent's securities.
"CHEMICAL" shall mean Chemical Bank, a New York banking corporation, and
any successor thereto.
"CITICORP" shall mean Citicorp North America, Inc., and any successor
thereto.
"COLLATERAL" shall mean the stock of the Borrower and all property and
interests in property now owned or hereafter acquired by the Borrower or any of
the Borrower's Non-Falcon Subsidiaries in or upon which a security interest,
pledge, lien or mortgage is intended to be granted, or of which a collateral
assignment is intended to be made, under the Collateral Documents.
"COLLATERAL AGENT" shall have the meaning ascribed to such term in the
preamble hereto and shall include any successor Collateral Agent.
"COLLATERAL DOCUMENTS" shall mean the Borrower Security Agreement, the
Parent Guaranty, the Subsidiary Security Agreement, the Subsidiary Guaranty, the
Intellectual Property Agreements, the Pledge Agreements, the Mortgages, and all
other security agreements, mortgages, deeds of trust, collateral assignments,
financing statements and other agreements, conveyances or documents at any time
delivered to the Administrative Agent by the Parent, the Borrower or any
Non-Falcon Subsidiary which intend to create or evidence Liens to secure or to
guarantee the Obligations.
"COMMERCIAL LETTER OF CREDIT" shall mean any letter of credit which is
drawable upon presentation of a sight draft and other documents evidencing the
sale or shipment of goods purchased by Borrower or any of its domestic
Non-Falcon Subsidiaries in the ordinary course of such entity's business.
"COMMISSION" shall mean the Securities and Exchange Commission or any
Governmental Authority succeeding to the functions thereof.
"COMMITMENTS" shall mean, collectively, the Letter of Credit Commitments
and the Revolving Credit Commitments of all Lenders.
"COMMITMENT FEE" shall have the meaning ascribed to that term in SECTION
2.04(A).
"COMPLIANCE CERTIFICATE" shall mean a certificate in substantially the form
of EXHIBIT 3 delivered to the Administrative Agent by Borrower covering
Borrower's compliance with the covenants contained in ARTICLE IX and certain
other provisions of this Agreement.
"CONSOLIDATED BORROWER GROUP" shall mean the Borrower and each of its
Non-Falcon Subsidiaries.
"CONSOLIDATED NET INCOME" shall mean, with respect to any Person on a
consolidated basis for any period, net income for such period but excluding from
the definition of Consolidated Net Income the effect of any extraordinary or
non-recurring gains or losses, or gains or losses from the sale of assets in
connection with any Asset Sale Prepayment Event as defined in SECTION
2.05(B)(II) or any sale of the capital stock of Falcon other than in connection
with the Offering, all computed on a consolidated basis in accordance with
Agreement Accounting Principles consistently applied. For purposes of any
calculation of Consolidated Net Income of the Consolidated Borrower Group,
Falcon shall be accounted for on the equity basis.
"CONSOLIDATED PARENT GROUP" shall mean the Parent and each of its
Subsidiaries.
"CONTAMINANT" shall mean any pollutant, hazardous substance, hazardous
chemical, toxic substance, hazardous waste or special waste, as those terms are
defined in federal, state or local laws and regulations, radioactive material,
petroleum, including crude oil or any petroleum-derived substance, or breakdown
or decomposition product thereof, or any constituent of any such substance or
waste, including but not limited to polychlorinated biphenyls and asbestos.
"CONTRACTUAL OBLIGATION", as applied to any Person, shall mean any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, contract, undertaking, document, instrument or other agreement or
instrument to which that Person is a party or by which it or any of its
properties is bound, or to
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which it or any of its properties is subject (including, without limitation, any
restrictive covenant affecting such Person or any of its properties).
"CONTRIBUTION AGREEMENT" shall mean that certain contribution agreement
executed by Parent and each of the domestic Subsidiaries (other than the
Receivables Subsidiary and Falcon and its Subsidiaries) of the Borrower and
dated as of the Effective Date, as the same may be amended, restated,
supplemented or otherwise modified from time to time with the consent of the
Requisite Lenders.
"CUSTOMARY PERMITTED LIENS" shall mean (i) Liens (other than Environmental
Liens, Liens imposed under ERISA or Enforceable Judgments) for claims, taxes,
assessments or charges of any Governmental Authority 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, bankers, carriers,
warehousemen, mechanics, materialmen, and other Liens (other than Environmental
Liens, Liens imposed under ERISA or Enforceable Judgments) imposed by law
arising in the ordinary course of business and for amounts which (A) are not yet
due, (B) are not more than thirty (30) days past due as long as no notice of
default has been given or other action taken to enforce such Liens, or (C) (1)
are not more than thirty (30) days past due and a notice of default has been
given or other action taken to enforce such Liens, or (2) are more than thirty
(30) days past due, and, in the case of CLAUSE (1) or (2), are being contested
in good faith by appropriate proceedings which are sufficient to prevent
imminent foreclosure of such Liens and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with GAAP,
(iii) Liens (other than Environmental Liens, Liens imposed under ERISA or
Enforceable Judgments) 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
employment benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations or arising as a result of progress payments under
government contracts, (iv) easements (including, without limitation, reciprocal
easement agreements and utility agreements), rights-of-way, covenants, consents,
rights of landlords, reservations, encroachments, variations and other
restrictions, charges or encumbrances (whether or not recorded) affecting the
use of real property, which do not materially interfere with the ordinary
conduct of the business of Parent, Borrower or any of Borrower's Non-Falcon
Subsidiaries, (v) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; and (vi) precautionary filings of financing statements in
connection with Operating Leases entered into in the ordinary course of
business.
"DEBT SERVICE" shall mean, with respect to the Borrower on a consolidated
basis for any period, without duplication (i) the aggregate Cash Interest
Expense of the Borrower on a consolidated basis for such period, (ii) the
aggregate principal amount of the Term Loans that was due during such period
pursuant to SECTION 2.01(C) as the same may be adjusted from time to time,
excluding amounts paid on the Term Loans as a result of a Prepayment Event and
applied to such scheduled amortization payments and (iii) scheduled principal
payments on any other Indebtedness of Borrower for such period.
"DEFAULT RATE" shall have the meaning ascribed to that term in SECTION
2.03(D).
"DOL" shall mean the United States Department of Labor and any successor
department or agency.
"DOLLARS" and "$" shall mean the lawful money of the United States of
America.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the office of
such Lender specified as its "Domestic Lending Office" under its name on
SCHEDULE A or on the Assignment and Acceptance by which it became a Lender or
such other office of such Lender as such Lender may from time to time specify by
written notice to Borrower and the Administrative Agent.
"EBITDA" shall mean, with respect to any Person on a consolidated basis for
any period, the sum for such Person for such period of Consolidated Net Income
(excluding undistributed earnings in Falcon and its Subsidiaries and in other
Persons which are 50% or less owned, directly or indirectly, by the Borrower)
plus, to the extent reflected in the income statement of such Person for such
period for which Consolidated Net Income is determined, without duplication, (i)
consolidated Net Interest Expense, (ii) federal, state and local
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income and franchise tax expense, (iii) depreciation expense, (iv) amortization
expense, (v) Securitization Expenses, (vi) any other noncash items which had the
effect of reducing Consolidated Net Income for such period, but minus any
noncash items which had the effect of increasing Consolidated Net Income for
such period and (vii) non-recurring charges, restructuring charges and
management fees incurred prior to the Effective Date.
"EFFECTIVE DATE" shall have the meaning ascribed to that term in SECTION
4.01.
"ELIGIBLE HEDGING CONTRACT" shall mean Hedging Contracts of the Borrower or
any Guarantor with any Lender as the counterparty.
"ELIGIBLE INVENTORY" shall mean Inventory of the Borrower or any Guarantor
which is held for sale or lease or furnished under any contract of service by
the Borrower or any Guarantor and which is at all times and shall continue to be
acceptable to the Administrative Agent and the Collateral Agent in all respects
in accordance with their reasonable credit judgment. Standards of eligibility
may be established and revised from time to time by the Administrative Agent in
the Administrative Agent's reasonable credit judgment; PROVIDED, HOWEVER, in
general and without limiting the foregoing, the following Inventory is not
Eligible Inventory:
(a) Inventory which is obsolete, not in good condition, or not either
currently usable or currently salable in the ordinary course of the
business of the Borrower or any Guarantor;
(b) Inventory which the Administrative Agent determines, in the
exercise of reasonable discretion and in accordance with the Administrative
Agent's customary business practices, to be unacceptable due to age, type,
category and/or quantity; and
(c) Inventory with respect to which the Collateral Agent does not have
a first and valid fully perfected security interest for the benefit of
itself and the Holders of Secured Obligations.
"ELIGIBLE RECEIVABLES" shall mean Receivables created by the Borrower or
any Guarantor in the ordinary course of business arising out of the sale of
goods or rendition of services by the Borrower or any Guarantor, which
Receivables are and at all times shall continue to be acceptable to the
Administrative Agent and the Collateral Agent in all respects in accordance with
their reasonable credit judgment. Standards of eligibility may be established
and revised from time to time by the Administrative Agent in the Administrative
Agent's reasonable credit judgment; PROVIDED, HOWEVER, in general and without
limiting the foregoing, the following Receivables are not Eligible Receivables:
(a) Receivables which remain unpaid sixty (60) days after the due date
indicated on the applicable invoice;
(b) all Receivables owing by a single Account Debtor, including a
currently scheduled Receivable, if fifty percent (50%) of the balance owing
by such Account Debtor remains unpaid sixty (60) days after the due date
indicated on the applicable invoice;
(c) Receivables with respect to which the Account Debtor is a
director, officer, employee or Subsidiary of Borrower, Parent or any
Guarantor;
(d) Receivables with respect to which the Account Debtor is not a
resident of the United States, its territories or its commonwealths unless
the Account Debtor has supplied the Borrower or any Guarantor, as
applicable, with an irrevocable letter of credit, issued by a financial
institution reasonably satisfactory to the Administrative Agent, sufficient
to cover such Receivable in form and substance satisfactory to the
Administrative Agent;
(e) Receivables with respect to which the Account Debtor has (i)
asserted a counterclaim or (ii) a right of setoff, but only to the extent
of such counterclaim or setoff;
(f) Receivables for which the prospect of payment or performance by
the Account Debtor is or will be impaired as determined by the
Administrative Agent or the Collateral Agent in the exercise of its
reasonable credit judgment;
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(g) Receivables with respect to which the Collateral Agent does not
have a first and valid fully perfected and enforceable security interest
for the benefit of itself and the Holders of Secured Obligations;
(h) Receivables with respect to which the Account Debtor is the
subject of bankruptcy or a similar insolvency proceeding or has made an
assignment for the benefit of creditors or whose assets have been conveyed
to a receiver or trustee;
(i) Receivables with respect to which the Account Debtor's obligation
to pay the Receivable is conditional upon the Account Debtor's approval or
is otherwise subject to any repurchase obligation or return right, as with
sales made on a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval (except with respect to Receivables in connection with which
Account Debtors are entitled to return Inventory on the basis of the
quality of such Inventory) or consignment basis until such time as the
condition is waived or deemed to have been waived;
(j) Receivables with respect to which the Account Debtor is located in
Minnesota (or any other jurisdiction which adopts a statute or other
requirement with respect to which any Person that obtains business from
within such jurisdiction or is otherwise subject to such jurisdiction's tax
law requiring such Person to make any required filings in a timely manner
in order to enforce its claims in such jurisdiction's courts or arising
under such jurisdiction's laws); provided, however, such Receivables shall
nonetheless be eligible if, the Borrower or any Guarantor, as applicable,
has filed a current notice of business activities report with the
applicable state office or is qualified to do business in such jurisdiction
and, at the time the Receivable was created, was qualified to do business
in such jurisdiction or had on file with the applicable state office a
current notice of business activities report (or other applicable report);
(k) Receivables with respect to which the Account Debtor's obligation
does not constitute its legal, valid and binding obligation, enforceable
against it in accordance with its terms; and
(l) Receivables with respect to which the Borrower or any Guarantor,
as applicable, has not yet shipped the applicable goods or performed the
applicable service.
"ENFORCEABLE JUDGMENT" means a judgment or order as to which (a) the
Borrower has not demonstrated to the reasonable satisfaction of the
Administrative Agent that the Borrower is covered by third-party insurance
(other than retro-premium insurance that determines retro-premiums solely on the
basis of losses of the Borrower) therefor or that the Borrower has adequate
reserves therefor and (b) the period, if any, during which the enforcement of
such judgment or order is stayed shall have expired, it being understood that a
judgment or order which is under appeal or as to which the time in which to
perfect an appeal has not expired shall not be deemed an "ENFORCEABLE JUDGMENT"
so long as enforcement thereof is effectively stayed pending the outcome of such
appeal or the expiration of such period, as the case may be; PROVIDED that if
enforcement of a judgment or order has been stayed on condition that a bond or
collateral equal to or greater than $1,000,000 be posted or provided, such
judgment or order shall be an "ENFORCEABLE JUDGMENT."
"ENVIRONMENTAL LIEN" shall mean a Lien in favor of any Governmental
Authority for (i) any liability of Borrower or any of its Non-Falcon
Subsidiaries under federal or state environmental laws or regulations, 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" shall mean any applicable
Requirement of Law that conditions, restricts, prohibits or requires
notification or disclosure of any closure, transfer, sale, lease or mortgage of
any Property for reasons relating to environmental matters including, but not
limited to, any so-called Industrial Site Recovery Acts or Responsible Property
Transfer Acts.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA AFFILIATE" shall mean any (i) corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the IRC) as Parent, Borrower or any of their respective Subsidiaries, (ii)
partnership or other trade or business (whether or not incorporated) under
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common control (within the meaning of Section 414(c) of the IRC) with Parent,
Borrower or any of their respective Subsidiaries, and (iii) member of the same
affiliated service group (within the meaning of Section 414(m) of the IRC) as
Parent, Borrower or any of their respective Subsidiaries, any corporation
described in clause (i) above or any partnership or trade or business described
in clause (ii) above.
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender, the office
of such Lender specified as its "Eurodollar Lending Office" under its name on
SCHEDULE A or on the Assignment and Acceptance by which it became a Lender (or,
if no such office is specified, its Domestic Lending Office) or such other
office of such Lender as such Lender may from time to time specify by written
notice to Borrower and the Administrative Agent.
"EURODOLLAR RATE LOANS" shall mean those Loans outstanding which bear
interest at a rate determined by reference to the LIBO Rate as provided in
SECTION 2.03(A)(II).
"EVENT OF DEFAULT" shall mean any of the occurrences set forth in SECTION
10.01 after the expiration of any applicable grace period expressly provided
therein.
"EXCESS CASH FLOW" shall mean, with respect to the Consolidated Borrower
Group on a consolidated basis for any period, without duplication, the
difference between:
(a) the sum of (i) Consolidated Net Income (excluding undistributed
earnings in Falcon and its Subsidiaries and in other Persons which are 50%
or less owned, directly or indirectly, by the Borrower) for such period,
(ii) depreciation deducted in determining such Consolidated Net Income,
(iii) amortization deducted in determining such Consolidated Net Income,
(iv) other non-cash items (other than taxes) deducted in determining such
Consolidated Net Income and (v) federal, state and local income and
franchise tax liabilities deducted in determining such Consolidated Net
Income; and
(b) the sum of (i) scheduled payments of the principal of the Term
Loans pursuant to SECTION 2.01 made during such period and voluntary
prepayments of the principal of the Term Loans made during such period,
(ii) the aggregate amount of Capital Expenditures made by the Borrower and
its Non-Falcon Subsidiaries during such period, (iii) capitalized interest
paid during such period, (iv) other capitalized cash costs not included in
the calculation of Consolidated Net Income, including cash payments against
reserves established in any prior period, (v) dividends paid during such
period as permitted pursuant to SECTION 8.05, other than dividends
permitted by SECTION 8.05(VII), (vi) payments made on account of federal,
state and local income and franchise taxes (either directly or by way of
payments under the Tax Sharing Agreement) to the extent deducted in
determining Consolidated Net Income, excluding taxes payable in connection
with the sale of Falcon stock in the Offering and/or the sale or other
disposition of the R&M Note, (vii) principal payments on any other
Indebtedness, and (viii) the increase, if any, in Working Capital during
such period, not to exceed 5% of Working Capital at the beginning of such
period.
"EXISTING INDEBTEDNESS" shall mean the Indebtedness of the Borrower or any
of its Non-Falcon Subsidiaries reflected on SCHEDULE 1.01-A.
"FALCON" shall have the meaning ascribed to that term in the recitals
hereto.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FEDERAL RESERVE BOARD" shall mean the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
"FEE LETTERS" shall have the meaning ascribed to that term in SECTION
2.04(C).
"FISCAL YEAR" shall mean the fiscal year of Borrower, which shall be each
twelve (12) month period ending on December 31 of each calendar year or such
other period as Borrower may designate and the Requisite Lenders may approve in
writing.
"FIXED CHARGES" shall mean, with respect to the Consolidated Borrower Group
on a consolidated basis for any period, the sum of (i) Debt Service during such
period (but without duplication of payments on
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Capital Leases to the extent included in Capital Expenditures during such
period), (ii) Capital Expenditures during such period and (iii) Federal, state
and local income tax expenses paid in cash (net of any refunds on an accrued
basis for Fiscal Years 1995 and 1996 and, without double-counting, net of any
refunds received in cash thereafter) during such period, excluding taxes payable
in connection with the sale of Falcon stock in the Offering and/or the sale or
other disposition of the R&M Note.
"FIXED CHARGES COVERAGE RATIO" shall mean, for any period, the ratio of (a)
EBITDA for such period to (b) Fixed Charges for such period. For purposes of
calculating the Fixed Charges Coverage Ratio for the two fiscal quarter period
ending June 30, 1995, Capital Expenditures shall be assumed to be the lesser of
actual Capital Expenditures for such period or $10,500,000; and for purposes of
calculating the Fixed Charges Coverage Ratio for the three fiscal quarter period
ending September 30, 1995, Capital Expenditures shall be assumed to be the
lesser of actual Capital Expenditures for such period or $15,750,000.
"FREE CASH FLOW COVERAGE RATIO" shall mean, with respect to the
Consolidated Borrower Group on a consolidated basis for any period, the ratio of
(a) Net EBITDA for such period minus Capital Expenditures of the Borrower during
such period to (b) Cash Interest Expense for such period. The Borrower's Free
Cash Flow Coverage Ratio shall be calculated for the fiscal quarter ending March
31, 1995, then for the two fiscal quarter period ending June 30, 1995, then for
the three fiscal quarter period ending September 30, 1995, then for the four
fiscal quarter period ending on the last day of each fiscal quarter thereafter.
For purposes of such calculations, for the fiscal quarter ending March 31, 1995,
Capital Expenditures shall be assumed to be $5,250,000; for the two fiscal
quarter period ending June 30, 1995, Capital Expenditures shall be assumed to be
$10,500,000; and for the three fiscal quarter period ending September 30, 1995,
Capital Expenditures shall be assumed to be $15,750,000.
"FUNDING DATE" shall mean, with respect to any Loan or Letter of Credit,
the date of the funding of such Loan or issuance of such Letter of Credit.
"GAAP" shall mean generally accepted accounting principles 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 in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"GOVERNMENTAL AUTHORITY" shall mean any nation, state, sovereign, or
government, any federal, regional, state, local or political subdivision and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government including without limitation, any
central bank.
"GUARANTOR" shall mean any Borrower Subsidiary which has executed the
Subsidiary Guaranty.
"HEDGING CONTRACTS" shall mean interest rate, foreign currency or commodity
exchange, swap, collar, cap or similar agreements entered into before or after
the Effective Date by Borrower or any of its Non-Falcon Subsidiaries to hedge
its interest rate, foreign currency or commodity exposure and not for purposes
of speculation.
"HOLDERS OF SECURED OBLIGATIONS" shall mean the holders of the Obligations
from time to time and shall refer to (i) each Lender in respect of its Loans,
(ii) the Issuing Bank in respect of Reimbursement Obligations, (iii) the
Administrative Agent, the Collateral Agent, the Lenders and the Issuing Bank in
respect of all other present and future obligations and liabilities of Borrower
of every type and description arising under or in connection with this Agreement
or any other Loan Document, (iii) each other Person entitled to indemnification
pursuant to SECTION 12.04, in respect of the obligations and liabilities of
Borrower to such Person thereunder, (iv) each Lender, in respect of all
obligations and liabilities of Borrower or any Guarantor to such Lender as
exchange party or counterparty under any Eligible Hedging Contract, and (v)
their respective successors, transferees and assigns.
"INDEBTEDNESS," as applied to any Person, shall mean any obligation for the
payment of money which is a Contractual Obligation, and shall include, without
limitation but without duplication, (i) all indebtedness, obligations or other
liabilities of such Person for borrowed money or under any debt Securities,
whether or not
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subordinated, (ii) all obligations with respect to redeemable stock and
redemption or repurchase obligations under any equity securities or profit
payment agreements, (iii) all reimbursement obligations (absolute or contingent)
and other liabilities of such Person with respect to letters of credit issued
for such Person's account or for which such party is a co-applicant, (iv) all
obligations of such Person to pay the purchase price of property or services,
except trade payables and accrued expenses incurred by such Person in the
ordinary course of business as currently conducted, (v) all obligations in
respect of Capital Leases of such Person, (vi) all Accommodation Obligations of
such Person, (vii) all indebtedness, obligations or other liabilities,
contingent or otherwise, of such Person or others secured, by a Lien on any
asset of such Person, whether or not such indebtedness, obligations or
liabilities are assumed by or are a personal liability of such Person, (viii)
all obligations upon which interest charges are customarily paid (including zero
coupon instruments), (ix) all obligations under conditional sale or other title
retention agreements relating to property purchased by such person and (x)
obligations in respect of interest rate, foreign currency or commodity exchange,
swap, collar, cap or similar agreements.
"INTELLECTUAL PROPERTY AGREEMENTS" shall mean patent or trademark security
agreements executed by the Borrower and certain of its Non-Falcon Subsidiaries
in favor of the Collateral Agent on behalf of itself and the Holders of Secured
Obligations as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"INTEREST COVERAGE RATIO" shall mean, with respect to the Consolidated
Borrower Group on a consolidated basis for any period, the ratio of (a) Net
EBITDA for such period to (b) the amount of Cash Interest Expense for such
period.
"INTEREST PAYMENT DATE" shall mean, with respect to any Eurodollar Rate
Loan, (i) the last day of each Interest Period applicable to such Loan and (ii)
with respect to any Eurodollar Rate Loan having an Interest Period in excess of
three (3) calendar months, the last day of each three (3) calendar month
interval during such Interest Period and, in addition, the date of any
refinancing or conversion of such Borrowing with or to a Borrowing of a
different Type.
"INTEREST PERIOD" shall have the meaning ascribed to such term in SECTION
2.07.
"INTEREST RATE DETERMINATION DATE" shall mean the date on which the
Administrative Agent determines the LIBO Rate applicable to a Borrowing,
continuation or conversion of Euro-dollar Rate Loans. The Interest Rate
Determination Date shall be the second (2nd) Business Day prior to the first day
of the Interest Period applicable to such Borrowing, continuation or conversion.
"INVENTORY" shall mean any and all goods, including, without limitation,
goods in transit, wheresoever located, whether now owned or hereafter acquired
by the Borrower or any Guarantor, which are held for sale or lease, furnished
under any contract of service or held as raw materials, work in process or
supplies, and all materials used or consumed in Borrower's or any Guarantor's
business, and shall include such property the sale or other disposition of which
has given rise to Receivables and which has been returned to or repossessed or
stopped in transit by Borrower or any Guarantor.
"INVESTMENT" shall have the meaning ascribed to that term in SECTION 8.03.
"IRC" shall mean the Internal Revenue Code of 1986, as amended from time to
time hereafter, and any successor statute.
"IRS" shall mean the Internal Revenue Service of the United States or any
Governmental Authority succeeding to the functions thereof.
"ISSUING BANKS" shall mean the Lenders listed on SCHEDULE A hereto and any
other Lender which, at the Borrower's request, agrees, in each such Lender's
sole discretion, to become an Issuing Bank for the purpose of issuing Letters of
Credit, and their respective successors and assigns, in each case in such
Lender's separate capacity as an issuer of Standby Letters of Credit or
Commercial Letters of Credit, or both, pursuant to ARTICLE III.
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"LENDER" shall have the meaning ascribed to such term in the preamble and
each Person which at any time becomes a Lender pursuant to SECTION 12.02(A).
"LETTER OF CREDIT" shall mean any Commercial Letter of Credit or any
Standby Letter of Credit issued by an Issuing Bank for the account of Borrower,
or for the joint and several account of Borrower and any of its Non-Falcon
Subsidiaries, in accordance with the provisions of ARTICLE III.
"LETTER OF CREDIT APPLICATION" shall mean, with respect to any proposed
Letter of Credit requested to be delivered pursuant to SECTION 3.03, an
application substantially in the form of the Issuing Bank's standard form
application for letters of credit of the type to be issued.
"LETTER OF CREDIT COMMITMENT" shall mean, with respect to any Lender that
is an Issuing Bank, the obligation of such Lender to issue Letters of Credit
pursuant to the terms and conditions of this Agreement which shall not exceed
the principal amount set forth opposite such Lender's name under the heading
"Letter of 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.
"LETTER OF CREDIT OBLIGATIONS" shall mean, at any particular time, the sum
of (i) outstanding Reimbursement Obligations and (ii) the aggregate undrawn face
amount of outstanding Letters of Credit.
"LETTER OF CREDIT REIMBURSEMENT AGREEMENT" shall mean, with respect to a
Letter of Credit, such reimbursement agreement as the Issuing Bank may employ in
the ordinary course of business for its own account.
"LIABILITIES AND COSTS" shall mean all liabilities, claims, obligations,
responsibilities, losses, damages, punitive damages, consequential damages,
treble damages, charges, costs and expenses (including, without limitation,
attorneys', experts' 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.
"LIBO RATE" shall mean, with respect to any Interest Period applicable to a
Borrowing of Eurodollar Rate Loans, an interest rate per annum equal to the
product of (i) the rate of interest determined by the Administrative Agent to be
the average (rounded upwards, if necessary, to the next 1/16 of 1%) of the rate
per annum determined by each of the Reference Banks to be the rate per annum at
which deposits in Dollars are offered to the principal London office of such
Reference Bank in immediately available funds in the London interbank market at
approximately 11:00 a.m. (London time) on the Interest Rate Determination Date
for such Interest Period, in the approximate amount of such Reference Bank's
portion (or, in the case of Citibank, N.A., Citicorp USA, Inc.'s portion) of the
relevant Eurodollar Rate Loan and having a maturity comparable to such Interest
Period and (ii) Statutory Reserves.
"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 and the like), judgment, lien
(statutory or other), Environmental Lien, Enforceable Judgment, charge, security
agreement or transfer intended as security, 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, in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"LOAN" shall mean any Revolving Loan or any of the Term Loans.
"LOANS" shall mean, collectively, the Revolving Loans and the Term Loans.
"LOAN ACCOUNT" shall have the meaning ascribed to such term in SECTION
2.06(D).
"LOAN DOCUMENTS" shall mean this Agreement, the Assumption Agreement, the
Notes, the Fee Letters, the Collateral Documents, the Letters of Credit, the
Letter of Credit Applications, the Letter of Credit Reimbursement Agreements and
all other agreements delivered to the Administrative Agent, the Collateral
Agent, any Issuing Bank or any Lender by or on behalf of Parent, Borrower or any
of Borrower's Non-Falcon
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Subsidiaries in satisfaction or furtherance of the requirements of this
Agreement or any other Loan Document.
"MARGIN STOCK" shall have the meaning ascribed to such term in Regulation G
and Regulation U.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect (a) upon the
business, assets or other properties, liabilities or condition (financial or
otherwise), results of operations or prospects of Borrower, individually, or the
Consolidated Borrower Group taken as a whole; or (b) upon the ability of any of
the Parent, Borrower or any of the Non-Falcon Subsidiaries of the Borrower to
perform any of its Obligations under any Loan Document to which it is or will be
a party, including, without limitation, payment of the Obligations. In no event
shall the events or conditions described in SCHEDULE 1.01-B be deemed to have
resulted in a Material Adverse Effect or be deemed to be reasonably likely to
have a Material Adverse Effect.
"MORTGAGES" shall mean any and all mortgages, deeds of trust, collateral
assignments of beneficial interest, leasehold mortgages and leasehold deeds of
trust and covering the owned and leased real property of Borrower and its
Non-Falcon Subsidiaries identified on SCHEDULE 1.01-C, executed by Borrower or a
Non-Falcon Subsidiary of the Borrower, as applicable, in favor of the Collateral
Agent for the benefit of itself and the Holders of Secured Obligations, as the
same may be amended, supplemented or otherwise modified from time to time.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by either Borrower or any ERISA Affiliate.
"NET EBITDA" shall mean, with respect to the Person for any period (a)
EBITDA for such period minus (b) Securitization Expenses for such period.
"NET INTEREST EXPENSE" shall mean, with respect to any Person on a
consolidated basis for any period, net interest expense of such Person for such
period calculated in accordance with Agreement Accounting Principles, except
that notwithstanding Agreement Accounting Principles, Net Interest Expense shall
not be reduced by the amount of cash interest received on the R&M Note.
"NET PROCEEDS" shall mean with respect to any Prepayment Event (a) the
gross amount of cash proceeds (including in each Fiscal Year the amount of
insurance settlements and condemnation awards in such fiscal year in excess of
Amounts (it being understood that Set Aside Amounts shall not be included in
"Net Proceeds", and may be retained by the Borrower or a Non-Falcon Subsidiary
of Borrower, as applicable, for the purposes described in clause (i) of the
definition of the term "Set Aside Amount", unless and until any such amount
shall cease to be a "Set Aside Amount" as a result of any failure to meet any of
the criteria set forth in clause (i) or (ii) of such definition)) paid to or
received by the Parent, the Borrower or any Non-Falcon Subsidiary of Borrower in
respect of such Prepayment Event (including cash proceeds subsequently received
in respect of such Prepayment Event in respect of non-cash consideration
initially received or otherwise), less (b) the amount, if any, of all taxes
(other than income taxes) and the Borrower's good-faith best estimate of all
income taxes (to the extent that such amount shall have been set aside or
reserved for the purpose of paying such taxes when due), and customary fees,
commissions, costs and other expenses (excluding fees and expenses payable to
the Borrower, any Affiliate of the Borrower or any Subsidiary of Borrower, other
than the reasonable fees and expenses of Rosenberg & Liebentritt, P.C.,
Greenberg & Pociask, Equity Assets Management, Inc. or any other Affiliate of
Borrower performing services in connection with any such Prepayment Event) that
are incurred in connection with such Prepayment Event and are payable by the
seller or the transferor of the assets or property or issuer of the securities,
as the case may be, to which such Prepayment Event relates, but only to the
extent not already deducted in arriving at the amount referred to in CLAUSE (A).
"NET WORTH" shall mean, with respect to any Person on a consolidated basis,
total shareholders' equity of such Person determined in accordance with
Agreement Accounting Principles consistently applied; adjusted, however, to
exclude the effect of any valuation adjustments, which are required by GAAP or
Agreement Accounting Principles (as applicable) to be shown as a direct increase
or decrease, as the case may be, in Net Worth, including adjustments for
currency translations and unrealized gains or losses on marketable securities.
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<PAGE> 20
"NON-FALCON SUBSIDIARIES" shall mean all Subsidiaries of the Borrower other
than Falcon and its Subsidiaries.
"NOTES" shall mean the Notes executed by the Borrower and delivered to each
Lender pursuant to SECTION 2.02 or SECTION 12.02.
"NOTICE OF BORROWING" shall mean, with respect to a proposed Borrowing
pursuant to SECTION 2.02(A), or a proposed issuance of a Letter of Credit
pursuant to SECTION 3.04(A), a notice substantially in the form of EXHIBIT 4 or
other form acceptable to the Administrative Agent.
"NOTICE OF CONVERSION/CONTINUATION" shall mean, with respect to a proposed
conversion or continuation of a Loan pursuant to SECTION 2.03(C), a notice
substantially in the form of EXHIBIT 5 or other form acceptable to the
Administrative Agent.
"OBLIGATIONS" shall mean the principal of and all interest on all Loans and
Reimbursement Obligations, all fees, expense reimbursements, taxes, compensation
and indemnities payable by Borrower to the Administrative Agent, the Collateral
Agent, the Issuing Banks or any Lender pursuant to this Agreement and all other
present and future Indebtedness and other liabilities of Borrower arising
pursuant to this Agreement or any other Loan Document and owing to the
Administrative Agent, the Collateral Agent, any Issuing Bank, any Lender, or any
Person entitled to indemnification pursuant to SECTION 12.04, or any of their
respective successors, transferees or assigns, arising under or in connection
with this Agreement, any Note, the Fee Letters, any other Loan Document or any
Eligible Hedging Contract, whether or not evidenced by any note, guaranty or
other instrument, whether or not for the payment of money, whether direct or
indirect (including those acquired by assignment), absolute or contingent, due
or to become due, now existing or hereafter arising and however arising.
"OFFERING" shall mean the public offering by Falcon of its common stock
referred to in the recitals, pursuant to Falcon's Registration Statement
originally filed with the Commission on May 17, 1994, as amended.
"OFFICER'S CERTIFICATE" shall mean, as to any corporation, a certificate
executed on behalf of such corporation by (i) its chairman or vice chairman of
the board (if an officer) or its president or any vice president or (ii) by its
chief financial officer, its controller or its treasurer.
"OPERATING LEASE" shall mean, as applied to any Person, any lease of any
Property by that Person as lessee which is not a Capital Lease.
"ORIGINAL CREDIT AGREEMENT" shall have the meaning ascribed to that term in
the recitals hereto.
"ORIGINAL OBLIGATIONS" shall have the meaning ascribed to that term in the
recitals hereto.
"OTHER INDEBTEDNESS" shall mean all Indebtedness of Borrower other than the
Obligations.
"PARENT" shall mean Eagle Industries, Inc., a Delaware corporation.
"PARENT GUARANTY" shall mean that certain Amended and Restated Guaranty
executed by Parent in favor of the Lenders, the Administrative Agent and the
Collateral Agent dated as of the Effective Date, as the same may be amended,
supplemented or otherwise modified from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"PERMITS" shall mean any permit, approval, consent, authorization, license,
variance, or permission required from a Governmental Authority under an
applicable Requirement of Law.
"PERMITTED EXISTING LIENS" shall mean the Liens on any property of Parent,
Borrower or Borrower's Non-Falcon Subsidiaries, in each case 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
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organization, whether or not a legal entity, or any other non-governmental
entity, or any Governmental Authority.
"PLAN" shall mean an employee benefit plan defined in Section 3(3) of ERISA
in respect of which either 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.
"PLEDGE AGREEMENTS" shall mean the Amended and Restated Pledge Agreements
dated as of the Effective Date executed in favor of the Collateral Agent for the
benefit of itself and the Holders of Secured Obligations by (i) the Parent in
connection with the pledge of the stock of the Borrower, (ii) the Borrower in
connection with the pledge of the stock of each of the Borrower's Subsidiaries,
and (iii) certain of the Borrower's Non-Falcon Subsidiaries in connection with
the pledge of the stock of their respective Subsidiaries, as any of the same may
be amended, restated, supplemented or otherwise modified from time to time.
"POOLING AND SERVICING AGREEMENT" shall mean the Eagle Trade Receivables
Master Trust Pooling and Servicing Agreement dated as of January 1, 1994 among
Centrally Held Eagle Receivables Program, Inc., as transferor, Eagle Industrial
Products Corporation, as Master Servicer, and Continental Bank N.A., as trustee,
as such agreement may be amended, supplemented or otherwise modified from time
to time in accordance with SECTION 8.14.
"POTENTIAL EVENT OF DEFAULT" shall mean an event, condition or circumstance
which, with the giving of notice or the lapse of time, or both, would constitute
an Event of Default.
"PREPAYMENT EVENT" shall mean (i) any sale, lease, transfer, assignment,
loss, damage or destruction (in the case of loss, damage or destruction, to the
extent covered by insurance) or other disposition of assets (including
trademarks and other intangibles), business units, individual business assets or
property of the Borrower or any of its Non-Falcon Subsidiaries, including the
sale, transfer or disposition of any capital stock thereof; (ii) the incurrence,
creation or assumption by the Borrower or any of its Non-Falcon Subsidiaries of
any Indebtedness (other than Indebtedness that is permitted to be incurred
pursuant to SECTION 8.01) or the issuance or sale by the Parent, the Borrower or
any Non-Falcon Subsidiaries of the Borrower of any debt securities or other
obligations convertible into or exchangeable for, or giving any person or entity
any right, option or warrant to acquire from the Parent, the Borrower or any of
the Non-Falcon Subsidiaries of Borrower any Indebtedness or any such convertible
or exchangeable debt securities or obligations; (iii) the issuance by the Parent
of notes, debentures or other debt securities publicly offered or privately
placed in the amount of at least $75,000,000, unless and to the extent the
proceeds thereof are used to refinance the Senior Deferred Coupon Notes; (iv)
the issuance by the Parent or the Borrower of any equity securities or options
or warrants convertible into or exchangeable for such equity securities of the
Parent or the Borrower to any party other than Great American Management and
Investment, Inc., any Person in the Samuel Zell Group or Hellman & Friedman
Capital Partners II or any other Hellman & Friedman entity or in connection with
any employee stock option plan of Parent, Borrower or any of Borrower's
Non-Falcon Subsidiaries; or (v) any sale, transfer or other disposition of any
capital stock of Falcon other than in connection with the Offering; PROVIDED,
HOWEVER, that none of (a) the sale of inventory in the ordinary course of
business, (b) the sale and/or contribution of accounts receivable pursuant to
the Receivables Agreements, (c) the sale, lease, transfer, assignment or other
disposition of assets of the Borrower or any Non-Falcon Subsidiary of the
Borrower to the Borrower or any Guarantor or (d) the loss, damage or destruction
of any property (to the extent covered by insurance) to the extent that the Net
Proceeds of any single loss do not exceed $2,000,000 shall be deemed to be a
"Prepayment Event."
"PRIME RATE" shall have the meaning ascribed to such term in the definition
of "Alternate Base Rate."
"PROPERTY" shall mean with respect to any Person, any real or personal
property, plant, building, facility, structure, equipment or unit, or other
asset (tangible or intangible) owned, leased or operated by such Person.
"PRO RATA SHARE" shall mean, at any particular time and with respect to any
Lender, a fraction (expressed as a percentage), the numerator of which shall be
the then amount of such Lender's Revolving Credit Commitments, if any, plus the
outstanding balance of such Lender's Term Loan or Term Loans and
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the denominator of which shall be the then aggregate amount of all Revolving
Credit Commitments plus the outstanding balance of all Term Loans.
"R&M LETTER OF CREDIT" shall mean the Irrevocable Documentary Letter of
Credit No. 2674419219-1206 dated July 1, 1994, issued by Bank One, Dayton, NA
for the benefit of the Borrower, as the same may be renewed or extended from
time to time, but not otherwise amended without notice to the Administrative
Agent.
"R&M NOTE" shall mean the $50,000,000 subordinated note of Robbins & Myers,
Inc.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C.
6901 ET SEQ., and any successor statute, and regulations promulgated thereunder.
"RECEIVABLES" shall mean and include all of Borrower's and each Guarantor's
presently existing and hereafter arising or acquired accounts, accounts
receivable, and all present and future rights of Borrower to payment for goods
sold or leased or for services rendered (except those evidenced by instruments
or chattel paper), whether or not they have been earned by performance, and all
rights in any merchandise or goods which any of the same may represent, and all
rights, title, security and guaranties with respect to each of the foregoing,
including, without limitation, any right of stoppage in transit.
"RECEIVABLES AGREEMENTS" shall mean, collectively, the Pooling and
Servicing Agreement, each "Supplement" thereto, the "Sale and Servicing
Agreement" and the "Contribution and Sale Agreement" (as each such term is
defined in the Pooling and Servicing Agreement).
"RECEIVABLES SECURITIZATION" shall mean, collectively, (i) the sales to the
Borrower by certain of its Subsidiaries of Receivables originated by such
Subsidiaries, (ii) the sale and/or contribution by the Borrower to the
Receivables Subsidiary of such Receivables and (iii) the transfer of such
Receivables by the Receivables Subsidiary to the trust created by the Pooling
and Servicing Agreement.
"RECEIVABLES SUBSIDIARY" shall mean Centrally Held Eagle Receivables
Program, Inc., a Delaware corporation.
"REFERENCE BANKS" shall mean Chemical, Citibank, N.A. and The First
National Bank of Boston.
"REGULATION D," "REGULATION G," "REGULATION T," "REGULATION U" and
"REGULATION X" shall mean Regulation D, Regulation G, Regulation T, Regulation U
and Regulation X, respectively, of the Federal Reserve Board as in effect from
time to time.
"REIMBURSEMENT OBLIGATIONS" shall mean the reimbursement or repayment
obligations of Borrower to the Issuing Banks pursuant to any Letter of Credit
and related Letter of Credit Applications or Letter of Credit Reimbursement
Agreements issued or delivered pursuant to ARTICLE III hereof.
"RELEASE" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration from
any Property into the indoor or outdoor environment, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or
Property.
"REMEDIAL ACTION" shall mean any action required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent a Release or threat of Release or minimize the further
Release of Contaminants so they do not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment; or (iii)
perform pre-remedial studies and investigations or post-remedial monitoring and
care.
"REPORTABLE EVENT" shall mean the events described in Sections 4043(b)(1),
4043(b)(4), 4043(b)(5), 4043(b)(6) or 4043(b)(9) of ERISA or the regulations
thereunder.
"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, Permit, 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, Regulation G, Regulation T, Regulation U and Regulation X,
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and any certificate of occupancy, zoning ordinance, building, environmental or
land use, law, rule, regulation, ordinance or Permit or occupational safety or
health law, rule or regulation.
"REQUISITE LENDERS" means, except as otherwise provided in SECTION
12.06(B)(V), Lenders whose Pro Rata Shares, in the aggregate, are greater than
fifty percent (50%); PROVIDED, HOWEVER, that, in the event that the Revolving
Credit Commitments have been terminated pursuant to the terms of this Agreement,
"REQUISITE LENDERS" means, except as otherwise provided in SECTION 12.06(B)(V),
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 percent (50%); PROVIDED, FURTHER, that in the event that the Revolving
Credit Commitments have been terminated pursuant to the terms of this Agreement,
at any time when Letters of Credit are outstanding and all Loans have been
repaid, "REQUISITE LENDERS" means, except as otherwise provided in SECTION
12.06(B)(V), Lenders whose participations in the outstanding Letters of Credit,
in the aggregate, are greater than fifty percent (50%).
"RESTRICTED JUNIOR PAYMENT" shall mean (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
capital stock of Borrower or any of its Non-Falcon Subsidiaries, except a
distribution of stock as part of a stock split and 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, PROVIDED that the issuance of such stock or junior class
of stock is not an incurrence of Indebtedness, (ii) any redemption, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of capital stock of Borrower or any of
its Non-Falcon Subsidiaries now or hereafter outstanding, (iii) 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 capital stock of Borrower or any
of its Non-Falcon Subsidiaries now or hereafter outstanding, (iv) any payment of
a claim for the rescission of the purchase or sale of, or for material damages
arising from the purchase or sale of, any shares of the capital stock of
Borrower or any of its Non-Falcon Subsidiaries or of a claim for reimbursement,
indemnification or contribution arising out of or related to any such claim for
damages or rescission, (v) any payment of tax-sharing payments, allocated
corporate overhead, guaranty fees or management fees to Parent or any of its
Affiliates (other than Borrower or any Guarantor) and (vi) any payment in the
nature of a loan from Borrower or any of its Non-Falcon Subsidiaries to Parent
or any of Parent's Affiliates (other than Borrower or any Guarantor).
"REVOLVING CREDIT AVAILABILITY" shall mean, as at any particular date of
determination, the amount by which the lesser of the Revolving Credit
Commitments and the Borrowing Base exceeds Revolving Loan Usage. For purposes of
calculating Revolving Credit Availability as at any date, all Revolving Loans
requested but not yet advanced and the aggregate face amount of all Letters of
Credit requested but not yet issued will be treated as advanced and issued in
calculating Revolving Loan Usage unless the Borrower has directed that the
requested advance be disbursed to repay the Revolving Loans.
"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, and 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
determined in accordance with the provisions 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 $85,000,000.
"REVOLVING CREDIT FACILITY" shall mean the revolving credit facility
established for Revolving Loans pursuant to SECTION 2.01.
"REVOLVING CREDIT TERMINATION DATE" shall mean the earlier of (a) September
30, 2000 (or, if the Revolving Credit Facility is extended pursuant to SECTION
2.02(G), September 30, 2001) and (b) the date of termination of the Revolving
Credit Commitments pursuant to SECTION 2.02(D) or SECTION 10.02(A).
"REVOLVING LOAN" shall have the meaning ascribed to such term in SECTION
2.01(A).
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"REVOLVING LOAN USAGE" shall mean, at any given time, the sum of (i) the
aggregate outstanding principal balance of Revolving Loans and (ii) the
aggregate outstanding Letter of Credit Obligations.
"SAMUEL ZELL GROUP" shall mean Samuel Zell, Ann Lurie, any trust created
for the benefit of Samuel Zell or Ann Lurie or their families, and any of their
affiliates (as such term is defined in Rule 12b-2 of the Securities Exchange
Act).
"SECURITIES" shall mean any stock, shares, voting trust 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", 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 any 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.
"SECURITIZATION EXPENSES" shall mean with respect to any period all
payments, excluding payments with respect to the redemption of certificates, to
the "Investor Certificateholders" under the Pooling and Servicing Agreement (or
any supplement thereto) during such period.
"SENIOR DEFERRED COUPON NOTES" shall mean the Senior Deferred Coupon Notes
issued by the Parent and due in 2003.
"SET ASIDE AMOUNT" shall mean, in respect of any insurance settlement or
condemnation award which does not in the aggregate exceed $10,000,000 received
by the Borrower or any Non-Falcon Subsidiary of Borrower and (i) set aside by
the Borrower or the applicable Non-Falcon Subsidiary for the replacement or
repair of any lost, destroyed or damaged assets, equipment or other property
that were the subject of an insurable loss, destruction or damage and for which
an insurance settlement was made or (ii) set aside by the Borrower or the
applicable Non-Falcon Subsidiary for the replacement of any real property that
was the subject of a taking and in respect of which a condemnation award was
made provided such replacement or repair is commenced within six months of the
receipt of any such condemnation award or insurance proceeds related to such
loss, destruction or damage or such taking, as applicable and pursued with
diligence.
"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 at
present fair saleable value) is equal to or in excess of the total amount
of its liabilities, including, without limitation, contingent liabilities;
and
(ii) it is then able and expects to be able to pay its debts as they
mature; and
(iii) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
With respect to contingent liabilities (such as litigation, guarantees and
pension plan liabilities), such liabilities shall be computed at the amount
which, in light of all the facts and circumstances existing at the time,
represent the amount which can reasonably be expected to become an actual or
matured liability.
"STANDBY LETTER OF CREDIT" shall mean any letter of credit which is not a
Commercial Letter of Credit.
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one MINUS the aggregate of the maximum applicable reserve percentages (including
any marginal, special, emergency or supplemental reserves) expressed as a
decimal established by the Federal Reserve Board and any other banking authority
to which the Administrative Agent or any Lender is subject (a) with respect to
the Three-month Secondary CD Rate (as such term is used in the definition of
"Alternate Base Rate"), for new negotiable nonpersonal time deposits in dollars
of over $100,000 with maturities approximately equal to three months or (b) with
respect to the LIBO Rate, for Eurocurrency Liabilities (as defined in Regulation
D of the Federal Reserve Board). Such reserve percentages shall include those
imposed pursuant to such Regulation D. Eurodollar Rate Loans shall be deemed to
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<PAGE> 25
constitute Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration, exceptions or offsets
which may be available from time to time to any Lender under such Regulation D.
Statutory Reserves shall be adjusted automatically on and as of the effective
date of any change in any reserve percentage.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
partnership, trust or other entity of which a majority of the stock (or
equivalent ownership or controlling interest) having voting power to elect a
majority of the Board of Directors (if a corporation) or to select the trustee
or equivalent controlling interest is directly or indirectly owned or controlled
by such Person or one or more of the other Subsidiaries of such Person or any
combination thereof.
"SUBSIDIARY GUARANTY" shall mean the guaranties of the Borrower's
Obligations pursuant to the Amended and Restated Subsidiary Guaranty dated as of
the Effective Date executed by each of the Borrower's domestic Subsidiaries
(other than the Receivables Subsidiary and Falcon and its Subsidiaries) in favor
of the Administrative Agent, the Collateral Agent and the Lenders, as the same
may be amended, restated, supplemented or otherwise modified from time to time.
"SUBSIDIARY SECURITY AGREEMENT" shall mean the Amended and Restated
Subsidiary Security Agreement dated as of the Effective Date executed by each of
the domestic Subsidiaries of the Borrower (other than the Receivables Subsidiary
and Falcon and its Subsidiaries) in favor of the Collateral Agent, for the
benefit of itself and the Holders of Secured Obligations as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"SUPERMAJORITY LENDERS" means, except as otherwise provided in SECTION
12.06(B)(V), Lenders whose Pro Rata Shares, in the aggregate, are equal to or
greater than sixty-six and two-thirds percent (66 2/3%); PROVIDED, HOWEVER,
that, in the event that the Revolving Credit Commitments have been terminated
pursuant to the terms of this Agreement, "SUPERMAJORITY LENDERS" means, except
as otherwise provided in SECTION 12.06(B)(V), Lenders whose aggregate ratable
shares (stated as a percentage) of the aggregate outstanding principal balance
of all Loans are equal to or greater than sixty-six and two-thirds percent
(66 2/3%); PROVIDED, FURTHER, that in the event that the Revolving Credit
Commitments have been terminated pursuant to the terms of this Agreement, at any
time when Letters of Credit are outstanding and all Loans have been repaid,
"SUPERMAJORITY LENDERS" means, except as otherwise provided in SECTION
12.06(B)(V), Lenders whose participations in the outstanding Letters of Credit,
in the aggregate, are equal to or greater than sixty-six and two-thirds percent
(66- 2/3%).
"TAX SHARING AGREEMENT" shall mean, collectively, that certain Tax Sharing
Agreement among Borrower, Parent and Great American Management and Investment,
Inc. dated as of January 31, 1994, and that certain GAMI-Falcon Disaffiliation
Tax Sharing Agreement among the Borrower, Falcon, O.D.E. Manufacturing Inc.,
Amerace Corporation and Great American Management and Investment, Inc. dated as
of the Effective Date, in each case as the same may be amended, restated,
supplemented or otherwise modified from time to time (i) in any respect which
does not (a) result in the Borrower being required to make any greater payments
thereunder either in absolute amounts or percentage terms or (b) reduce either
in absolute amounts or percentage terms the benefits to the Borrower or (ii)
otherwise with the consent of the Requisite Lenders.
"TAXES" shall have the meaning ascribed to such term in Section 2.09(a).
"TERM LOANS" shall have the meaning ascribed to such term in SECTION
2.01(C).
"TERM LOAN TERMINATION DATE" shall mean the earlier of (a) September 30,
2000 and (b) the date of acceleration of the Term Loans pursuant to SECTION
10.02(A).
"TERMINATION EVENT" shall mean (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of Borrower or any ERISA Affiliate from a
Benefit Plan during a plan year in which Borrower or such ERISA Affiliate was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii) the
imposition of an obligation on 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
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<PAGE> 26
Section 4041(c) of ERISA; (iv) the institution by the PBGC of proceedings to
terminate a Benefit Plan; (v) any event or condition which might constitute
grounds under Section 4042 of ERISA for the distress termination of, or the
appointment of a trustee to administer, any Benefit Plan; or (vi) the partial or
complete withdrawal of Borrower or any ERISA Affiliate at the time the
withdrawing entity was an ERISA Affiliate from a Multiemployer Plan if such
withdrawal could result in the imposition of withdrawal liability under Section
4219 of ERISA.
"TOTAL INDEBTEDNESS" shall mean, with respect to any Person on a
consolidated basis, all Indebtedness of such Person which would be reflected as
long-term debt on a consolidated balance sheet of such Person prepared in
accordance with Agreement Accounting Principles, including all current
maturities thereof.
"TRANSACTION COSTS" shall mean the fees, costs and expenses payable by
Borrower or any of its Non-Falcon Subsidiaries pursuant hereto or in connection
herewith or in respect hereof or of the other Loan Documents.
"TRANSACTION DOCUMENTS" shall mean the Loan Documents and the Contribution
Agreement.
"TYPE" when used in respect of any Loan or Borrowing, shall refer to the
rate by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined.
"U.S. PERSON" shall mean a citizen or resident of the United States of
America, a corporation, partnership or other entity created or organized in or
under any laws of the United States of America, or any estate or trust that is
subject to Federal income taxation regardless of the source of its income.
"U.S. TAXES" shall mean any present or future tax, assessment or other
charge or levy imposed by or on behalf of the United States of America or any
taxing authority thereof.
"WORKING CAPITAL" shall mean (i) current assets less cash minus (ii)
current liabilities less the current portion of long-term debt.
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.
1.03. ACCOUNTING TERMS. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with Agreement Accounting Principles.
1.04. OTHER DEFINITIONAL PROVISIONS. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine and neuter
forms. The words "include," "includes" and "including" shall be deemed to be
followed by the phrase "without limitation." References to "Articles,"
"Sections," "subsections," "Schedules," "Exhibits," "the preamble" and "the
recitals" shall be to Articles, Sections, subsections, Schedules, Exhibits, the
preamble and the recitals, respectively, of this Agreement unless otherwise
specifically provided.
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01. REVOLVING LOANS AND TERM LOANS.
(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 Borrower and to participate in
Letters of Credit issued pursuant to Article III hereof from time to time
during the period from the Effective Date to the Business Day immediately
preceding the Revolving Credit Termination Date, in an amount which shall
not exceed such Lender's Pro Rata Share of the Revolving Credit
Availability at such time. Schedule I to the Assumption Agreement sets
forth the aggregate principal amount of the outstanding
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<PAGE> 27
Obligations deemed to be outstanding hereunder as Revolving Loans as of the
Effective Date according to the Lenders' respective Pro Rata Shares.
(b) SEVERAL COMMITMENTS. All Revolving Loans comprising the same
Borrowing under this Agreement shall be made by the Lenders 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 a Revolving Loan hereunder and
that the Commitment of any Lender shall not be increased or decreased
without the prior written consent of such Lender as a result of the failure
by any other Lender to perform its obligation to make a Revolving Loan. The
failure of any Lender to make available to the Administrative Agent any
Borrowing of the Commitments shall not relieve any other Lender of its
obligation hereunder to make available to the Administrative Agent such
other Lender's Pro Rata Share of any Borrowing of the Commitments on the
date such funds are to be made available pursuant to the terms of this
Agreement.
(c) LOANS. Pursuant to the Assumption Agreement, $92,000,000
aggregate principal amount of the outstanding Obligations are deemed to be
outstanding hereunder as Term Loans as of the Effective Date with respect
to each Lender in the principal amount set forth opposite such Lender's
name under the heading "Term Loans" on the signature pages hereof. The Term
Loans shall be payable as follows:
<TABLE>
<CAPTION>
AMOUNT OF TERM LOANS PAYABLE
PERIOD DURING SUCH PERIOD
--------------------------------------------------------------- ----------------------------
<S> <C>
Effective Date through September 30, 1995...................... $10,000,000
October 1, 1995 through September 30, 1996..................... 15,000,000
October 1, 1996 through September 30, 1997..................... 15,000,000
October 1, 1997 through September 30, 1998..................... 15,000,000
October 1, 1998 through September 30, 1999..................... 15,000,000
October 1, 1999 through September 30, 2000..................... 22,000,000
</TABLE>
Each amortization payment for each period described above shall be payable
in equal installments of principal, plus accrued interest, on the last calendar
day of each calendar quarter during such period beginning with December 31,
1994.
(d) OPTIONAL REPAYMENTS AND MATURITY. The Borrower may, at any time
and from time to time, prepay any Base Rate Loan, in whole or in part upon
at least one (1) Business Day's prior written notice to the Administrative
Agent (which the Administrative Agent shall promptly transmit to each
Lender). Eurodollar Rate Loans may be prepaid (A) in whole or in part on
the expiration date of the then applicable Eurodollar Interest Period and
(B) upon at least three (3) Business Days' prior written notice to the
Administrative Agent (which the Administrative Agent shall promptly
transmit to each Lender) and only upon payment of the amounts described in
SECTION 2.08(D). 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
shall be applied to the unpaid installments of the Term Loans in the
following order: (i) 50% of the amount of such prepayment to the unpaid
installments of the Term Loans in the order of their maturity and (ii) 50%
of the amount of such prepayment to the unpaid installments of the Term
Loans in inverse order of their maturity. Any notice of prepayment given to
the Administrative Agent under this SECTION 2.01(D) 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 Loans specified in the notice
shall become due and payable on the prepayment date specified in such
notice.
Each Lender's Revolving Credit Commitment shall expire, and each of
the Revolving Loans then outstanding shall mature and be repaid by
Borrower, without further action on the part of the Lenders, on the
Revolving Credit Termination Date; and each Lender's Term Loans then
outstanding shall mature
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and be repaid by Borrower, without further action on the part of the
Lenders, on the Term Loan Termination Date.
(e) MINIMUM AMOUNTS. Loans made on any Funding Date shall be in
integral multiples of $500,000 and in the aggregate minimum amount of
$1,000,000, in the case of Loans constituting Base Rate Loans, and in
integral multiples of $1,000,000 and in the aggregate minimum amount of
$5,000,000, in the case of Loans constituting Eurodollar Rate Loans.
2.02. REVOLVING LOAN FACILITY MECHANICS.
(a) NOTICE OF BORROWING. Whenever Borrower desires to borrow under
SECTION 2.01(A), Borrower shall deliver to the Administrative Agent a
Notice of Borrowing no later than 12:00 noon (New York City time) (i) at
least one (1) Business Day in advance of the proposed Funding Date, in the
case of a Borrowing of Base Rate Loans, and (ii) at least three (3)
Business Days in advance of the proposed Funding Date, in the case of a
Borrowing of Eurodollar Rate Loans. The Notice of Borrowing shall specify
(A) the Funding Date (which shall be a Business Day) in respect of the
Loan, (B) the amount of the proposed Borrowing, (C) whether the proposed
Borrowing will be of Base Rate Loans or Eurodollar Rate Loans, and (D) in
the case of Eurodollar Rate Loans, the requested Interest Period. In lieu
of delivering the above-described Notice of Borrowing, and only with the
consent of the Administrative Agent in its sole discretion at such time,
Borrower may give the Administrative Agent telephonic notice of any
proposed Borrowing by the time required under this SECTION 2.02(A);
PROVIDED that, in the event the Administrative Agent so consents, such
notice shall be confirmed in writing by delivery to the Administrative
Agent promptly (but in no event later than 12:00 noon on the Funding Date
of the requested Loan) of a Notice of Borrowing. Any Notice of Borrowing
(or telephonic notice in lieu thereof) pursuant to this SECTION 2.02(A)
shall be irrevocable.
(b) MAKING OF LOANS. Promptly after receipt of a Notice of Borrowing
under SECTION 2.02(A) (or telephonic notice in lieu thereof if the
Administrative Agent consents to such telephonic notice), the
Administrative Agent shall notify each Lender by telex or telecopy or other
similar form of teletransmission, of the proposed Borrowing. Each Lender
shall make the amount of its Revolving Loan available to the Administrative
Agent in Dollars and in immediately available funds, not later than 11:00
a.m. (New York City time) on the Funding Date. After the Administrative
Agent's receipt of the proceeds of such Revolving Loans, the Administrative
Agent shall (unless it has not received the Notice of Borrowing in
satisfaction of the requirements of SECTION 4.02(A) or has been informed
that any of the other conditions precedent have not been satisfied) make
the proceeds of such Revolving Loans available to Borrower on such Funding
Date and shall disburse such funds in Dollars and in immediately available
funds to an account of Borrower, designated in writing by Borrower in the
Notice of Borrowing.
(c) FAILURE TO FUND BY LENDER. Unless the Administrative Agent shall
have been notified by any Lender prior to any Funding Date in respect of
any Borrowing of Revolving Loans that such Lender does not intend to make
available to the Administrative Agent such Lender's Revolving Loan on such
Funding Date, the Administrative Agent may assume that such Lender has made
such amount available to the Administrative Agent on such Funding Date and
the Administrative Agent in its sole discretion may, but shall not be
obligated to, make available to Borrower a corresponding amount on such
Funding Date. If such corresponding amount is not in fact made available to
the Administrative Agent by such Lender on or prior to 11:00 a.m. (New York
City time) on a Funding Date, such Lender agrees to pay and 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 made available to Borrower until the date such amount is paid or
repaid to the Administrative Agent, at (i) in the case of such Lender, the
Federal Funds Effective Rate (as such term is defined in the definition of
Alternate Base Rate) for the first three (3) Business Days and thereafter
at the Alternate Base Rate, and (ii) in the case of Borrower, the interest
rate which would be applicable at the time to a Borrowing of Base Rate
Loans. If such Lender shall pay to the Administrative Agent such
corresponding amount, such amount so paid shall constitute such Lender's
Revolving Loan, and if both such Lender and Borrower shall have paid and
repaid, respectively, such corresponding amount, the Administrative Agent
shall promptly pay over to
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<PAGE> 29
Borrower such corresponding amount in same day funds, but Borrower shall
remain obligated for all interest thereon. Nothing in this SECTION 2.02(C)
shall be deemed to relieve any Lender of its obligation hereunder to make
its Revolving Loan on any Funding Date.
(d) VOLUNTARY REDUCTION OF COMMITMENTS. Borrower shall have the
right, at any time and from time to time, (i) to terminate the Revolving
Credit Commitments in whole, without premium or penalty, if no Revolving
Loans or Letters of Credit are then outstanding, and no Revolving Loans or
Letters of Credit have been requested but not yet advanced, or (ii) subject
to the second to last sentence of this SECTION 2.02(D), permanently to
reduce in part, without premium or penalty, the Revolving Credit
Commitments up to the amount by which the Revolving Credit Commitments
exceed the sum of (A) the Revolving Loan Usage, (B) the aggregate principal
amount of all Revolving Loans requested hereunder but not yet advanced and
(C) the aggregate face amount of all Letters of Credit requested hereunder
but not yet issued. Borrower shall give not fewer than five (5) 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 Lender
of the proposed termination or reduction. Such termination or partial
reduction of the Revolving Credit Commitments shall be effective on the
date specified in the Borrower's notice and shall reduce the Revolving
Credit Commitment of each Lender proportionately in accordance with its Pro
Rata Share. Any such 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. Any notice of reduction
or termination pursuant to this SECTION 2.02(D) shall be irrevocable.
(e) RETENTION OF RIGHTS AND REMEDIES. Notwithstanding the
termination of this Agreement on September 30, 2000 (or, if extended
pursuant to SECTION 2.02(G), September 30, 2001), until all of the
Obligations shall have been fully and indefeasibly paid in cash and
satisfied and all financing arrangements among Borrower and the Lenders
pursuant to any Loan Document shall have been terminated, all of the rights
and remedies under this Agreement and the other Loan Documents shall
survive and the Collateral Agent shall be entitled to retain its security
interest in and to all existing and future Collateral for the benefit of
itself and the Holders of Secured Obligations.
(f) NOTES. The Borrower shall execute and deliver to each Lender (or
to the Administrative Agent on behalf of each Lender) on or before the
Effective Date promissory notes substantially in the form of the applicable
notes in EXHIBIT 6 to evidence the aggregate amount of that Lender's Loans
and with other appropriate insertions. Each Lender is hereby authorized to,
and prior to any transfer of the Notes issued to it each Lender shall,
endorse the date and amount of each Loan made by such Lender and each
payment or prepayment of principal of the Loans evidenced thereby on the
schedule annexed to and constituting a part of such Note, which endorsement
shall constitute PRIMA FACIE evidence, absent manifest error, of the
accuracy of the information so endorsed, provided that failure by any such
Lender to make such endorsement shall not affect the obligations of the
Borrower hereunder or under such Note. In lieu of endorsing such schedule
as hereinabove provided, prior to any transfer of such Note, each Lender is
hereby authorized, at its option, to record such Loans and such payments or
prepayments in its books and records, such books and records constituting
PRIMA FACIE evidence, absent manifest error, of the accuracy of the
information contained therein; PROVIDED, HOWEVER, that if the Loan Account
differs from the information endorsed by a Lender on such Lender's Notes,
the Loan Account, absent manifest error, shall govern.
(g) EXTENSION OF REVOLVING CREDIT FACILITY. Subject to the terms and
conditions set forth in this Agreement, the Revolving Credit Facility shall
be in effect until September 30, 2000 (the "INITIAL TERMINATION DATE"),
unless it is extended pursuant hereto to September 30, 2001 (the "EXTENDED
TERMINATION DATE"). During the period from and including April 1, 1999, to
and including June 30, 1999, the Borrower may request in writing (the
"EXTENSION REQUEST") an extension of the Revolving Credit Facility to the
Extended Termination Date. The Revolving Credit Facility shall be so
extended if, after receipt of the Extension Request, the Supermajority
Lenders approve such extension within 60 days after receipt by the
Administrative Agent of the Extension Request; PROVIDED, HOWEVER, that the
failure by any
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<PAGE> 30
Lender to respond to the Extension Request shall be deemed to constitute
such Lender's denial of such Extension Request. If the Extension Request is
not made or is made but not approved by the Supermajority Lenders, the
Revolving Credit Facility shall expire on the Initial Termination Date.
Notwithstanding anything herein to the contrary, no Lender that has denied
its consent to the Extension Request ("DISSENTING LENDER") shall be bound
by the approval of the Extension Request granted by the Supermajority
Lenders, and the Revolving Credit Commitment of each Dissenting Lender, and
each Dissenting Lender's participation in the Letters of Credit, shall
expire on the Initial Termination Date. The Borrower shall have the right,
at any time, to replace a Dissenting Lender with another financial
institution reasonably acceptable to the Administrative Agent. In the event
that one or more Dissenting Lenders are not so replaced prior to the
Initial Termination Date, on such date the amount of the Revolving Credit
Commitments shall be reduced by the aggregate amount of the expiring
Revolving Credit Commitments of Dissenting Lenders not so replaced, each
remaining Lender's Pro Rata Share shall be adjusted accordingly (including
its pro rata participation in the Letters of Credit) and the Borrower shall
pay to each Dissenting Lender all amounts due and owing to such Dissenting
Lender hereunder or under any other Loan Document, including, without
limitation, the aggregate outstanding principal amount of the Revolving and
Term Loans owed to such Dissenting Lender, together with accrued interest
and fees thereon through the date of repayment and amounts payable under
SECTIONS 2.09 and 2.10, all of which amounts shall be immediately due and
payable at such time. Upon the replacement of a Dissenting Lender or
payment of a Dissenting Lender's Obligations on the Initial Termination
Date in accordance with the terms hereof, such Dissenting Lender shall
cease to be a party hereto but shall continue to be entitled to the
benefits of SECTIONS 2.08, 2.09, 2.10, 3.09, 12.03 and 12.04.
2.03. INTEREST ON THE LOANS.
(a) RATE OF INTEREST. All Loans shall bear interest on the unpaid
principal amount thereof from the date made until paid in full at a
fluctuating rate determined from time to time by reference to the Alternate
Base Rate or the LIBO Rate. The applicable basis for determining the rate
of interest shall be selected by Borrower at the time a Notice of Borrowing
is given by the Borrower or at the time a Notice of Conversion/Continuation
is delivered by Borrower pursuant to SECTION 2.03(C); PROVIDED, HOWEVER,
that Borrower may not select the LIBO Rate as the applicable basis for
determining the rate of interest on a Loan if at the time of such selection
a Potential Event of Default or Event of Default exists or if such a
selection would be otherwise prohibited by the terms of this Agreement. If
on any day a Loan is outstanding with respect to which a Notice of
Borrowing or a Notice of Conversion/Continuation has not been delivered to
the Administrative Agent in accordance with the terms of this Agreement
specifying the basis for determining the rate of interest, then for each
such day such Loan shall be a Base Rate Loan. Loans shall bear interest,
subject to SECTION 2.03(D), at the following rates:
(i) if a Base Rate Loan, then at a rate per annum equal to the sum
of (A) the Applicable Base Rate Margin and (B) the Alternate Base Rate
as in effect from time to time as interest accrues; and
(ii) if a Eurodollar Rate Loan, then at a rate per annum equal to
the sum of (A) the Applicable Eurodollar Rate Margin and (B) the LIBO
Rate determined for the applicable Interest Period.
Upon receipt by the Administrative Agent of the first set of financial
statements delivered pursuant to SECTION 6.01(B) after the fiscal quarter
ending March 31, 1995 and each set of such financial statements delivered
pursuant to SECTION 6.01(B)thereafter, the Applicable Margins shall be
adjusted, such adjustment being effective on the first Business Day after
receipt of such financial statements and the Compliance Certificate to be
delivered in connection therewith; PROVIDED, HOWEVER, if the Borrower shall
not have delivered such financial statements on a timely basis in
accordance with SECTION 6.01(B), beginning with the date upon which such
financial statements should have been delivered and continuing until such
financial statements are delivered, the Applicable Margins shall be
adjusted based on the assumption that the Free Cash Flow Coverage Ratio was
less than 3.0 to 1.0. In no event shall any adjustment which would reduce
the Applicable Margins be made pursuant to this SECTION 2.03(A) if on
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<PAGE> 31
the date such adjustment would otherwise become effective an Event of
Default or Potential Event of Default exists.
(b) INTEREST PAYMENTS. Subject to SECTION 2.03(D), (i) interest
accrued on each Base Rate Loan shall be payable in arrears (A) on the last
calendar day of each calendar quarter occurring after the Effective Date,
(B) upon the prepayment in full of the Loans and the termination of all
Commitments under this Agreement, (C) upon the date any principal of the
Loan is due or prepaid, with respect to the principal amount then due or
prepaid, and (D) on the Term Loan Termination Date, and (ii) interest
accrued on each Eurodollar Rate Loan shall be payable in arrears (A) on
each Interest Payment Date applicable to such Eurodollar Rate Loan, (B)
upon the prepayment in full of the Loans and the termination of all
Commitments under this Agreement, (C) upon the date any principal of the
Loan is due or prepaid, with respect to the principal then due or prepaid,
(d) and (D) on the Term Loan Termination Date.
(c) CONVERSION OR CONTINUATION. (i) Subject to the provisions of
SECTIONS 2.07 and 2.08, Borrower shall have the option (A) to convert at
any time all or any part of outstanding Loans which comprise part of the
same Borrowing and which, in the aggregate, equal or exceed $5,000,000 from
Base Rate Loans to Eurodollar Rate Loans; or (B) to convert all or any part
of outstanding Loans which comprise part of the same Borrowing and which,
in the aggregate, equal or exceed $1,000,000 from Eurodollar Rate Loans to
Base Rate Loans on the expiration date of any Interest Period applicable
thereto or upon the payment of compensation payable pursuant to SECTION
2.08(D); or (C) upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Rate Loans, to continue all or any portion of such
Loans equal to or in excess of $5,000,000 as Eurodollar Rate Loans of the
same type, and the succeeding Interest Period of such continued Loans shall
commence on the expiration date of the Interest Period applicable thereto;
PROVIDED that no outstanding Loan may be continued as, or be converted
into, a Eurodollar Rate Loan if any Potential Event of Default or Event of
Default exists or if such a continuation or conversion would otherwise be
prohibited by the terms of this Agreement.
(ii) In the event Borrower shall elect to convert or continue a
Loan under this SECTION 2.03(C), Borrower shall deliver a Notice of
Conversion/Continuation to the Administrative Agent no later than 12:00
noon (New York City time) (A) at least one (1) Business Day in advance
of the proposed conversion date in the case of a conversion to a Base
Rate Loan and (B) at least three (3) Business Days in advance of the
proposed conversion or continuation date in the case of a conversion to,
or a continuation of, a Eurodollar Rate Loan. A Notice of Conversion/
Continuation shall specify (1) the proposed conversion or continuation
date (which shall be a Business Day), (2) the amount of the Loan to be
converted or continued, (3) the nature of the proposed conversion or
continuation, and (4) in the case of a conversion to, or a continuation
of, a Eurodollar Rate Loan, the requested Interest Period. If no
Interest Period is specified in any such Notice of
Conversion/Continuation with respect to a Eurodollar Rate Loan, the
Borrower shall be deemed to have selected an Interest Period of one
month's duration. In lieu of delivering the above-described Notice of
Conversion/Continuation, Borrower may give the Administrative Agent
telephonic notice of any proposed conversion or continuation by the time
required under this SECTION 2.03(C); PROVIDED that such notice shall be
confirmed in writing by delivery to the Administrative Agent promptly
(but in no event later than 12:00 noon (New York City time) on the
proposed conversion or continuation date) of a Notice of
Conversion/Continuation. Promptly after receipt of a Notice of
Conversion/Continuation under this SECTION 2.03(C) (or telephonic notice
in lieu thereof), the Administrative Agent shall notify each Lender by
telex, telecopy, telephone or other similar form of transmission, of the
proposed conversion or continuation.
(iii) 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.
(iv) Any portion of a Borrowing maturing or required to be repaid
in less than one month may not be converted into or continued as a
Eurodollar Rate Loan.
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(d) DEFAULT INTEREST. Notwithstanding the rates of interest
specified in SECTION 2.03(A) and the payment dates specified in SECTION
2.03(B), from and after the occurrence of an Event of Default and for so
long thereafter as such Event of Default is continuing, the principal
balance of all Loans and other Obligations then outstanding (including,
without limitation, all amounts due and payable pursuant to SECTION
10.02(A)) and, to the extent permitted by applicable law, any interest
payments on the Loans not paid when due, shall bear interest payable upon
demand at a rate per annum equal to the sum of (A) two percent (2.0%) and
(B) the interest rate otherwise applicable thereto (the "DEFAULT RATE").
(e) COMPUTATION OF INTEREST. Interest on all Agreement Obligations
(other than those on which the interest rate is determined by reference to
the Prime Rate) 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.
Interest on all Agreement Obligations with respect to which the interest
rate is determined by reference to the Prime Rate shall be computed on the
basis of the actual number of days elapsed in the period during which
interest accrues and a year of 365 or 366 days, as applicable. 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 (1) day's interest shall be paid on that Loan.
(f) CHANGES; LEGAL RESTRICTIONS. In the event that after the date
hereof (i) the adoption of or any change in any law, treaty, rule,
regulation, guideline or determination of a Governmental Authority or any
change in the interpretation or application thereof by a Governmental
Authority, or (ii) compliance by any Lender with any request or directive
(whether or not having the force of law and whether or not the failure to
comply therewith would be unlawful) from any central bank or other
Governmental Authority or quasi-governmental authority exercising
jurisdiction, power or control over banks or financial institutions
generally, does impose, modify, or hold applicable, in the reasonable
determination of a Lender, 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 made, or other credit extended by, or any other acquisition of
funds by, a Lender or any Applicable Lending Office of such Lender (except
with respect to Base Rate Loans, so long as the Base Rate in effect at the
time is determined under CLAUSE (A) in the definition of "Alternate Base
Rate"), and the result of any of the foregoing is to increase the cost to
such Lender of making, renewing or maintaining the Loans or its Commitment
or issuing or participating in any Letter of Credit or to reduce any amount
receivable hereunder or thereunder; THEN, in any such case, Borrower shall
upon written notice from and demand by that Lender pay to such Lender,
within thirty (30) Business Days of the date specified in such notice and
demand, such amount or amounts (based upon a reasonable allocation thereof
by such Lender to the financing transactions contemplated by this Agreement
and affected by this SECTION 2.03(F)) as may be necessary to compensate
that Lender for any such additional cost incurred or reduced amount
received, but without interest. Such Lender shall deliver to the Borrower a
written statement of the costs or reductions claimed and the basis
therefor, and the reasonable allocation made by such Lender of such costs
and reductions, which statement shall, in the absence of manifest error, be
conclusive. If a Lender subsequently recovers from another Person any
amount previously paid by Borrower pursuant to this SECTION 2.03(F), such
Lender shall, within thirty (30) days after receipt of such refund and to
the extent permitted by applicable law, pay to the Borrower, without
interest, the amount of any such recovery.
2.04. FEES.
(a) COMMITMENT FEE. The Borrower shall pay to the Administrative
Agent, for the account of the Lenders in accordance with their respective
Pro Rata Shares except as set forth in SECTION 12.06(B)(VI), a fee (the
"COMMITMENT FEE"), accruing at the rate of one-half of one percent (0.50%)
per annum on the average daily amount by which the Revolving Credit
Commitments exceed Revolving Loan Usage for the period commencing on the
Effective Date and ending on the Revolving Credit Termination Date;
PROVIDED, HOWEVER, if and for so long as the Applicable Eurodollar Rate
Margin is reduced to 1.125% per annum, then the Commitment Fee shall accrue
at the rate of 0.375% per
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annum, and if and for so long as the Applicable Eurodollar Rate Margin is
reduced to 0.875% per annum or less, then the Commitment Fee shall accrue
at the rate of 0.25% per annum. The Commitment Fee is payable quarterly, in
arrears, on the last calendar day of each calendar quarter occurring after
the Effective Date, commencing December 31, 1994, and on the Revolving
Credit Termination Date.
(b) LETTER OF CREDIT FEES. Borrower shall pay to the Administrative
Agent, for the ratable account of the Lenders, a fee for each Letter of
Credit issued on behalf of Borrower, in accordance with the provisions of
SECTION 3.08(A).
(c) PAYMENT OF FEES. The fees described in this SECTION 2.04
represent compensation for services rendered and to be rendered separate
and apart from the lending of money or the provision of credit and do not
constitute compensation for the use, detention or forbearance of money, and
the obligation of Borrower to pay each fee described herein shall be in
addition to, and not in lieu of, the obligation of Borrower to pay
interest, other fees and expenses otherwise described in this Agreement.
Fees and expenses shall be payable when due in immediately available funds.
All fees and expenses shall be nonrefundable when paid. All fees and
expenses specified or referred to in this Agreement or in the letter
agreements dated September 28, 1994 between the Borrower and Chemical and
between the Borrower and Citicorp (the "FEE LETTERS") due to the
Administrative Agent, the Collateral Agent, any Issuing Bank or any Lender,
including, without limitation, amounts referred to in this SECTION 2.04 and
in SECTION 12.03, shall constitute Obligations and shall be secured by all
the Collateral. All fees described in this SECTION 2.04 (other than SECTION
2.04(B)) which are expressed as a per annum charge shall be calculated on
the basis of the actual number of days elapsed in a 365 or 366 day year, as
applicable.
2.05. MANDATORY PREPAYMENTS. (a) Borrower shall not at any time cause or
permit Revolving Loan Usage to exceed the lesser of (i) the Revolving Credit
Commitments and (ii) the Borrowing Base. If at any time any such excess exists,
Borrower shall, without demand or notice, promptly pay to the Administrative
Agent such amount as may be necessary to eliminate such excess, which prepayment
shall be applied as set forth in SECTION 2.06(B).
(b) (i) Within one hundred and five (105) days after the end of each
Fiscal Year, commencing with the Fiscal Year ending December 31, 1995, the
Borrower shall calculate Excess Cash Flow for such Fiscal Year (and at such
time the chief financial officer, treasurer or controller of the Borrower
shall deliver to the Administrative Agent a certificate setting forth such
amount and the calculation thereof) and Borrower shall promptly and, in any
event not later than five (5) Business Days after the delivery of such
certificate, pay to the Administrative Agent an amount equal to fifty
percent (50%) (or, if the Free Cash Flow Coverage Ratio as of the end of
the most recently completed fiscal quarter for which financial statements
have been delivered is equal to or greater than 4.0 to 1, thirty-three
percent (33%)) of Excess Cash Flow, which prepayment shall be applied as
set forth in SECTION 2.06(B).
(ii) In the event and on each occasion after the Effective Date
that a Prepayment Event that is an event described in clause (i) of the
definition of the term "Prepayment Event" and is not excluded from the
definition of such term pursuant to the proviso in such definition (an
"ASSET SALE PREPAYMENT EVENT") occurs, the Borrower shall, promptly upon
(and in any event not later than the third Business Day next following)
receipt by or on behalf of the Borrower or any of its Non-Falcon
Subsidiaries of the Net Proceeds from such Prepayment Event, pay an
amount equal to 100% (or, if the Applicable Base Rate Margin is 0.125%
per annum as of the date on which such Prepayment Event occurs,
seventy-five percent (75%), or, if the Applicable Base Rate Margin is
0.00% per annum as of the date on which such Prepayment Event occurs,
fifty percent (50%)) of the Net Proceeds of such Asset Sale Prepayment
Event to the Administrative Agent, which prepayment shall be applied as
set forth in SECTION 2.06(B); PROVIDED, HOWEVER, that in any Fiscal Year
such amount shall not be required to be paid to the Administrative Agent
for such application to the extent that such amount would be applied to
the Term Loans pursuant to SECTION 2.06(B), until, and except to the
extent that, the aggregate, cumulative amount of such payments during
such Fiscal Year that, but for this proviso, would be applied to the
Term Loans, exceeds $10,000,000 (or, if the Applicable Base Rate Margin
is less than 0.375% per annum at such time, then $15,000,000).
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Notwithstanding the foregoing provisions of this CLAUSE (II), in the
event of the collection or disposition of the R&M Note, the first
$9,000,000 of the Net Proceeds thereof (together with any additional
amount required pursuant to SECTION 8.05(VII)) shall be paid to the
Administrative Agent, which prepayment shall be applied as set forth in
SECTION 2.06(B).
(iii) In the event and on each occasion after the Effective Date
that a Prepayment Event described in clause (ii) or clause (iii) of the
definition of the term Prepayment Event occurs, the Borrower shall,
promptly upon (and in any event not later than the third Business Day
next following) the occurrence of such Prepayment Event, pay an amount
equal to 75% or, if the issuance of such debt is by the Parent and 100%
of the net proceeds thereof are contributed to the common equity of the
Borrower, 50% of the amount of Net Proceeds of such Prepayment Event to
the Administrative Agent, which prepayment shall be applied as set forth
in SECTION 2.06(B).
(iv) In the event and on each occasion after the Effective Date
that a Prepayment Event described in clause (iv) of the definition of
the term Prepayment Event occurs, the Borrower shall, promptly upon (and
in any event not later than the third Business Day next following) the
occurrence of such Prepayment Event, pay an amount equal to 25% of the
Net Proceeds of such Prepayment Event to the Administrative Agent, which
prepayment shall be applied as set forth in SECTION 2.06(B).
(v) In the event and on each occasion after the Effective Date
that a Prepayment Event described in clause (v) of the definition of the
term Prepayment Event occurs, the Borrower shall, promptly upon (and in
any event not later than the third Business Day next following) receipt
by or on behalf of the Borrower or any Subsidiary thereof of the Net
Proceeds from such Prepayment Event, pay an amount equal to 50% (or, if
as of the date on which such Prepayment Event occurs either (A) the
Applicable Base Rate Margin is 0.125% per annum or less or (B) the
outstanding principal balance of the Term Loans is less than
$65,000,000, 25%) of the amount of Net Proceeds of such Prepayment Event
to the Administrative Agent, which prepayment shall be applied as set
forth in SECTION 2.06(B).
(vi) In the event that the calculation of the Net Proceeds
relating to any Prepayment Event included an estimate for income taxes
that was at least $500,000 greater than the income taxes actually
payable in respect thereof, the Borrower shall, promptly after
determining the amount of income taxes actually payable, pay to the
Administrative Agent the amount by which such estimate exceeded the
amount of taxes actually payable, which prepayment shall be applied as
set forth in SECTION 2.06(B).
Any payment required by this SECTION 2.05 shall be payable without penalty or
premium, except as may be required by SECTION 2.08(D) with respect to any
Eurodollar Rate Loan prepaid as a result thereof.
2.06. PAYMENTS.
(a) MANNER AND TIME OF PAYMENT. Except as otherwise expressly set
forth herein, all payments of principal of and interest on the Loans and
other Agreement Obligations (including without limitation, fees and
expenses) payable to the Administrative Agent, the Lenders or the Issuing
Banks (or any of them) shall be made without setoff, counterclaim, defense,
condition or reservation of rights, in Dollars and in immediately available
funds, delivered to the Administrative Agent (or, in the case of
Reimbursement Obligations, the applicable Issuing Bank) not later than
12:00 noon (New York City time) on the date and at the place due, to such
account of the Administrative Agent (or the Issuing Bank) as it may
designate, for the account of the Administrative Agent or the Lenders as
the case may be; and funds received by the Administrative Agent (or the
applicable Issuing Bank) after that time and date shall be deemed to have
been paid and received on the next succeeding Business Day. Payments
actually received by the Administrative Agent for the account of the
Administrative Agent or the Lenders or the Issuing Bank or any of them,
shall be paid to them promptly after receipt thereof by the Administrative
Agent. All payments of principal, interest, Reimbursement Obligations and
fees, and all reimbursements for expenses pursuant to this Agreement and
the other Loan Documents, may at the
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option of the Administrative Agent (but without any obligation to do so)
and upon not less than fifteen (15) days advance written notice to Borrower
be paid from the proceeds of Revolving Loans made to Borrower hereunder.
Borrower hereby irrevocably and unconditionally authorizes the Lenders to
make Revolving Loans to it under the Revolving Credit Facility, which
Revolving Loans shall be Base Rate Loans, for the purpose of paying
interest, Reimbursement Obligations and fees due from it and for the
purpose of reimbursing the Administrative Agent, the Issuing Bank and each
Lender for expenses due and payable pursuant to this Agreement and the
other Loan Documents and agrees that all such Revolving Loans so made shall
be deemed to have been requested by it and at the option of the
Administrative Agent (but without any obligation to do so) may be charged
to Borrower's Loan Account; provided, however, that the Administrative
Agent has given Borrower fifteen (15) days advance written notice of the
making of such Revolving Loans. Notwithstanding anything contained in this
Agreement to the contrary, if, at any time that any payment of Agreement
Obligations shall be required hereunder as a mandatory prepayment, the
aggregate amount of such payment to the Administrative Agent for the
accounts of the Lenders is less than $250,000, so long as no Event of
Default or Potential Event of Default shall then exist, such payment may be
deferred, at the option of the Borrower exercised in writing, until the
next date on which a payment is required or made such that the combined
payment would exceed such minimum amount.
(b) APPORTIONMENT OF PAYMENTS AND PREPAYMENTS. (i) Subject to the
provisions of SECTION 12.06(B), all payments and prepayments of principal
and interest in respect of outstanding Loans and all payments of fees and
all other payments in respect of any other Agreement Obligations, shall be
allocated among such of the Lenders and the Issuing Banks as are entitled
thereto, in proportion to their Pro Rata Shares or otherwise as provided
herein. Subject to the provisions of SECTION 2.06(B)(II), all such payments
and prepayments and any other amounts received by the Administrative Agent
from or for the benefit of the Borrower shall be applied FIRST, to pay
principal of and interest on any portion of the Loans which the
Administrative Agent may have advanced on behalf of any Lender for which
the Administrative Agent has not then been reimbursed by such Lender or the
Borrower, SECOND, to pay principal of and interest on any advance made
under SECTION 12.18 for which the Administrative Agent or the Collateral
Agent has not then been paid by the Borrower or reimbursed by the Lenders,
THIRD, to pay all other Agreement Obligations (other than those referred to
in clauses FOURTH through NINTH) then due and payable, FOURTH, to pay the
principal of the Revolving Loans to the extent required pursuant to SECTION
2.05(A), FIFTH, to pay interest due in respect of the Term Loans and the
Revolving Loans ratably, SIXTH, to pay principal of the Term Loans then due
and payable, SEVENTH, to pay principal of the Term Loans not then due and
payable, EIGHTH, to pay the principal of the Revolving Loans, NINTH, to pay
principal on contingent Letter of Credit Obligations by depositing such
funds as cash collateral pursuant to SECTION 10.02(B), and TENTH, to the
ratable payment of all Obligations in respect of Eligible Hedging
Contracts. All principal payments and prepayments in respect of Loans shall
be applied FIRST, to the Eurodollar Rate Loans maturing on the date of such
payment, SECOND, to repay outstanding Base Rate Loans, and THEN to repay
outstanding Eurodollar Rate Loans with those Eurodollar Rate Loans which
have earlier expiring Interest Periods being repaid prior to those which
have later expiring Interest Periods.
Notwithstanding the above provisions of this SECTION 2.06(B), and except as
provided in the next-to-last sentence of this paragraph, all of the
mandatory prepayments required pursuant to SECTION 2.05(B) of this
Agreement to be applied to the Term Loans shall be applied until the Term
Loans are paid in full. All such prepayments (except in the case of
prepayments governed by SECTION 2.05(B)(I) above and prepayments governed
by SECTION 2.05(B)(II) above to the extent such prepayments governed by
SECTION 2.05(B)(I) and SECTION 2.05(B)(II) in any one Fiscal Year exceed
$5,000,000 in the aggregate and the prepayment required as a result of the
collection or disposition of the R&M Note) shall be applied to scheduled
principal payments in the inverse order of their maturity until the
aggregate of all such mandatory prepayments during the term of this
Agreement equals or exceeds $15,000,000; thereafter all such mandatory
prepayments shall be applied pro rata to the remaining installments of the
Term Loans; and thereafter all mandatory prepayments shall be applied to
the Revolving Loans and to the cash collateralization of outstanding
Letters of Credit pursuant to SECTION 10.02(B). Payments
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governed by SECTION 2.05(B)(I) above and payments governed by SECTION
2.05(B)(II) above to the extent such prepayments governed by SECTION
2.05(B)(I) and SECTION 2.05(B)(II) in any one Fiscal Year exceed $5,000,000
in the aggregate and the prepayment required as a result of the collection
or disposition of the R&M Note shall be applied pro rata to all remaining
scheduled principal payments of the Term Loans. The amount of any
prepayment governed by SECTION 2.05(B)(II) shall be determined (x) after
the application to the Revolving Loans of any portion of such proceeds
attributable to assets included in the Borrowing Base and (y) without
regard to any portion of such proceeds used to repurchase Receivables
previously sold pursuant to the Receivables Securitization. Payments to be
applied to the unpaid installments of the Term Loans on a pro rata basis
shall be applied to the fullest extent possible such that the unpaid
installments, after giving effect to such application, are in each case a
multiple of $10,000; if any amount of such payment remains unapplied after
such application, such unapplied amount shall be applied to the final
installment of the Term Loans.
(ii) Subject to the provisions of SECTION 12.06(B), after the
occurrence of an Event of Default and while the same is continuing, the
Administrative Agent shall, unless otherwise specified at the direction
of the Requisite Lenders which direction shall be consistent with the
last sentence of this clause (ii), apply all payments and prepayments in
respect of any Obligations and all proceeds of Collateral in the
following order:
(A) first, to pay interest on and then principal of any portion
of the Loans which the Administrative Agent may have advanced on
behalf of any Lender for which the Administrative Agent has not then
been reimbursed by such Lender or the Borrower;
(B) second, to pay interest on and then principal of any
advance made under SECTION 12.18 for which the Administrative Agent
or the Collateral Agent, as applicable, has not then been paid by the
Borrower or reimbursed by the Lenders;
(C) third, to pay Agreement Obligations in respect of any fees,
expense reimbursements or indemnities then due to the Administrative
Agent or the Collateral Agent, as applicable;
(D) fourth, to pay Agreement Obligations in respect of any
fees, expenses, reimbursements or indemnities then due to the Lenders
and any of the Issuing Banks;
(E) fifth, to pay principal of the Revolving Loans to the
extent required pursuant to SECTION 2.05(A);
(F) sixth, to the ratable payment of interest due in respect of
the Term Loans, the Revolving Loans and the Letter of Credit
Obligations;
(G) seventh, to the ratable payment or prepayment of principal
outstanding on Loans and Reimbursement Obligations;
(H) eighth, to pay principal on contingent Letter of Credit
Obligations by depositing such funds as cash collateral pursuant to
SECTION 10.02(B);
(I) ninth, to the ratable payment of all other Agreement
Obligations; and
(J) tenth, to the ratable payment of all Obligations in respect
of Eligible Hedging Contracts.
The order of priority set forth in this SECTION 2.06(B)(II) and the
related provisions of this Agreement are set forth solely to
determine the rights and priorities of the Administrative Agent, the
Lenders and the other Holders of Secured Obligations as among
themselves. The order of priority set forth in CLAUSES (A) through
(C) of this SECTION 2.06(B)(II) may be changed only with the prior
written consent of the Administrative Agent and/or Collateral Agent,
as applicable.
(iii) Subject to SECTION 12.06(B), the Administrative Agent shall
promptly distribute to each Lender at its primary address set forth on
SCHEDULE A or the signature page to the Assignment and
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Acceptance by which it became a Lender, or at such other address as a
Lender or other Holder of Secured Obligations may request in writing,
such funds as such Person may be entitled to receive in accordance with
the provisions of this SECTION 2.06(B).
(c) PAYMENTS ON NON-BUSINESS DAYS. Whenever any payment to be made
by Borrower hereunder shall be stated to be due on a day which is not a
Business Day, payments shall be made on the next succeeding Business Day,
unless such Business Day occurs in the succeeding month in which case such
payment shall be made on the immediately preceding Business Day, and such
extension of time, if any, shall be included in the computation of the
payment of interest hereunder and of any of the fees specified in SECTION
2.04, as the case may be.
(d) ADMINISTRATIVE AGENT'S AND ISSUING BANKS' ACCOUNTING. The
Administrative Agent shall maintain such accounts, books and records (a
"LOAN ACCOUNT") in which it shall record (i) the names and addresses of the
Lenders and the respective Commitments of, and principal amount of Loans
owing to, each Lender from time to time; (ii) other appropriate debits and
credits as provided in this Agreement, including, without limitation, all
interest and fees con stituting Obligations; and (iii) all payments of such
Obligations made by Borrower or for Borrower's account. Each Lender shall
maintain in accordance with its usual practices an account or accounts
evidencing the indebtedness of 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. Each of the Issuing Banks shall maintain a separate Loan Account
in which it shall record appropriate debits and credits related to the
Letter of Credit Obligations. Entries in any Loan Account made in
accordance with the Administrative Agent's or any Lender's or each Issuing
Bank's customary accounting practices as in effect from time to time shall
constitute PRIMA FACIE evidence of the matters reflected therein, absent
manifest error.
2.07. INTEREST PERIODS. By giving notice as set forth in SECTION 2.02(A)
or 2.03(C) with respect to a Borrowing of, conversion into or continuation of
Loans consisting of Eurodollar Rate Loans, Borrower shall have the option,
subject to the other provisions of this SECTION 2.07 and SECTION 2.08, to
specify an interest period (each an "INTEREST PERIOD") to apply to the Borrowing
described in such notice, which Interest Period shall be either a one (1), two
(2), three (3) or six (6) month period. The determination of Interest Periods
shall be subject to the following provisions:
(a) 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;
(b) If any Interest Period would otherwise expire on a day which is
not a Business Day, the Interest Period shall be extended to expire on the
next succeeding Business Day; PROVIDED that if any such Interest Period
would otherwise expire on a day which is not a Business Day and no further
Business Day occurs in that calendar month, that Interest Period shall
expire on the immediately preceding Business Day;
(c) Borrower may not select an Interest Period for Eurodollar Rate
Loans constituting Revolving Loans which terminates later than the
Revolving Credit Termination Date;
(d) Without the prior written consent of the Administrative Agent,
there shall be no more than eight (8) Interest Periods under this Agreement
in effect at any one time.
(e) No Interest Period may be selected for any Eurodollar Rate Loan
that would end later than a scheduled repayment date for the Term Loans
determined pursuant to SECTION 2.01(C) AND (D) if, after giving effect to
such selection, the aggregate outstanding amount of (i) the Eurodollar Rate
Loans with Interest Periods ending on or prior to such repayment date and
(ii) the Base Rate Loans would not be at least equal to the principal
amount of the Term Loans to be paid on such repayment date.
2.08. 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:
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(a) DETERMINATION OF INTEREST RATE. As soon as practicable after
11:00 a.m. (New York City time) on the Interest Rate Determination Date,
the Administrative Agent shall determine (which determination shall, absent
manifest error, be presumptively correct) the interest rate which shall
apply to the Eurodollar Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to
Borrower and to each Lender.
(b) INTEREST RATE UNASCERTAINABLE, INADEQUATE OR UNFAIR. With
respect to any Interest Period, if the Administrative Agent is advised by
any Reference Bank that deposits in Dollars (in the applicable amount) are
not being offered to such Reference Bank in the London interbank Eurodollar
market for such Interest Period, if the Administrative Agent shall have
reasonably determined that the rates at which such dollar deposits are
being offered to the Reference Banks will not adequately and fairly reflect
the cost to any Lender of making or maintaining its Eurodollar Rate Loans
during such Interest Period or if adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of LIBO Rate, then the Administrative Agent shall forthwith give
notice thereof to Borrower and each Lender, whereupon until the
Administrative Agent has determined that the circumstances giving rise to
such suspension no longer exist, (a) the right of Borrower to elect to have
Loans bear interest based upon the LIBO Rate shall be suspended, and (b)
each outstanding Eurodollar Rate Loan 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.
(c) ILLEGALITY. (i) In the event that on any date any Lender shall
have determined (which determination shall, in the absence of manifest
error, be final and conclusive and binding upon all parties) that the
making or continuation of any Eurodollar Rate Loan has become unlawful by
compliance by that Lender in good faith 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), then, and in any such event, such Lender shall promptly give
notice (by teletransmission or by telephone promptly confirmed in writing)
to Borrower and the Administrative Agent of that determination and the
reasons therefor. The Administrative Agent shall promptly forward any such
notice it receives to the other Lenders.
(ii) Upon the giving of the notice referred to in SECTION
2.08(C)(I), (A) Borrower's right to request of the Lenders and the
Lenders' obligation to make Eurodollar Rate Loans with respect to the
requested Borrowing shall be immediately suspended, and the Lenders
shall make Loans, with respect to such requested Borrowing of Eurodollar
Rate Loans as Base Rate Loans, and (B) if Eurodollar Rate Loans are then
outstanding, 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
Lenders) convert all such Loans of the same Borrowing into Base Rate
Loans without cost to the Borrower for any breakage fees or other costs.
(iii) In the event that a Lender determines at any time following
its giving of a notice referred to in SECTION 2.08(C)(I) that such
Lender may lawfully make Eurodollar Rate Loans, such Lender shall
promptly give notice (by teletransmission or by telephone promptly
confirmed in writing) to Borrower and the Administrative Agent of that
determination, whereupon Borrower's right to request of the Lenders and
the Lenders' obligation to make Eurodollar Rate Loans shall be restored.
The Administrative Agent shall promptly forward any such notice it
receives to the Lenders.
(d) COMPENSATION. In addition to such amounts as are required to be
paid by Borrower pursuant to SECTIONS 2.03(A), 2.03(D), 2.03(F), 2.04 and
each other provision of this Agreement requiring payment by Borrower,
Borrower shall compensate each Lender, upon demand, for all losses
(excluding lost profits), 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) which such
Lender may sustain (i) if for any reason a Borrowing of, conversion into or
continuation of Eurodollar Rate Loans does not occur on a date specified
therefor in a Notice of Borrowing or a Notice of Conversion/Continuation
(other than pursuant
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to SECTION 2.08(C)(I)) or in a telephonic request for borrowing or
conversion or continuation or a successive Interest Period does not
commence after notice therefor is given pursuant to SECTION 2.03(C)(II),
(ii) if any principal payment of any Eurodollar Rate Loan (including,
without limitation, any prepayment pursuant to SECTION 2.05 but excluding
any prepayment of any Eurodollar Rate Loan in connection with the
replacement of any Lender under CLAUSE (I) of SECTION 2.13) occurs for any
reason on a date which is not the last day of the applicable Interest
Period, (iii) as a consequence of an acceleration of the Obligations
pursuant to SECTION 10.02(A) or (iv) as a consequence of any other failure
by Borrower to repay Eurodollar Rate Loans when required by the terms of
this Agreement. Such Lender shall deliver to Borrower, as a condition of
Borrower's obligation to compensate such Lender, a written statement as to
such losses, expenses and liabilities which statement, in the absence of
manifest error, shall be conclusive as to such amounts.
(e) BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of, any of its
branch offices, agencies or the office of an Affiliate of that Lender;
PROVIDED that no such Lender shall be entitled to receive any greater
amount under SECTION 2.03(F) or SECTION 2.09 as a result of the transfer of
any such Loan than such Lender would be entitled to immediately prior
thereto unless (i) such transfer occurred at a time when circumstances
giving rise to the claim for such greater amount did not exist and were not
reasonably foreseeable by such Lender, or (ii) such claim would have arisen
even if such transfer had not occurred.
2.09. TAXES. (a) Any and all payments by Borrower hereunder shall be
made, in accordance with SECTION 2.06, free and clear of and without deduction
or withholding for or on account of any and all present or future taxes, levies,
imposts, deductions, charges, or withholdings, and all liabilities with respect
thereto including those arising after the date hereof as a result of the
adoption of or any change in any law, treaty, rule, regulation, guideline or
determination of a Governmental Authority or any change in the interpretation or
application thereof by a Governmental Authority but excluding, in the case of
each Lender, each Issuing Bank and the Administrative Agent, such taxes
(including income taxes, franchise taxes and branch profit taxes) as are imposed
on or measured by such Lender's, such Issuing Bank's or the Administrative
Agent's, as the case may be, income by the United States of America or any
Governmental Authority of the jurisdiction under the laws of which such Lender,
Issuing Bank or Administrative Agent, as the case may be, is organized,
maintains an Applicable Lending Office or is deemed to be engaged in trade or
business (all such non-excluded taxes, levies, imposts, deductions, charges,
withholdings, and liabilities which the Administrative Agent, any Issuing Bank
or a Lender determines to be applicable to this Agreement, the other Loan
Documents, the Commitments or the Loans or the Letters of Credit being
hereinafter referred to as "TAXES"). If Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under the
other Loan Documents to any Lender, any Issuing Bank or the Administrative
Agent, (i) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this SECTION 2.09) 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 deductions been made, (ii) Borrower shall make
such deductions, and (iii) Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law. If a withholding tax of the United States of America or any other
Governmental Authority shall be or become applicable (y) after the date of this
Agreement, to such payments by Borrower made to the Applicable Lending Office or
any other office that a Lender may claim as its Applicable Lending Office, or
(z) after such Lender's selection and designation of any other Applicable
Lending Office, to such payments made to such other Applicable Lending Office,
such Lender shall use reasonable efforts to make, fund and maintain its Loans
through another Applicable Lending Office of such Lender in another jurisdiction
so as to reduce such Borrower's liability hereunder, if the making, funding or
maintenance of such Loans through such other Applicable Lending Office of such
Lender does not, in the judgment of such Lender, otherwise materially adversely
affect such Loans, obligations under the Commitments or such Lender.
(b) In addition, Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges, or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, the other
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Loan Documents, the Commitments, the Loans or the Letters of Credit
(hereinafter referred to as "OTHER TAXES").
(c) Borrower will indemnify each Lender, each Issuing Bank, the
Administrative Agent and the Collateral Agent for the full amount of Taxes
and Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any Governmental Authority on amounts payable under this SECTION
2.09) paid by such Lender, such Issuing Bank or the Administrative Agent or
the Collateral Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within thirty (30) days after
the date such Lender, such Issuing Bank or the Administrative Agent or the
Collateral Agent (as the case may be) makes written demand therefor. A
certificate as to any additional amount payable to any Lender, any Issuing
Bank or the Administrative Agent or the Collateral Agent under this SECTION
2.09 submitted to Borrower and the Administrative Agent (if a Lender or an
Issuing Bank is so submitting) by such Lender, such Issuing Bank or the
Administrative Agent or the Collateral Agent shall show in reasonable
detail the amount payable and the calculations used to determine such
amount and shall, absent manifest error, be final, conclusive and binding
upon all parties hereto. With respect to such deduction or withholding for
or on account of any Taxes and to confirm that all such Taxes have been
paid to the appropriate Governmental Authorities, Borrower shall promptly
(and in any event not later than thirty (30) days after receipt) furnish to
each Lender, each Issuing Bank and the Administrative Agent and the
Collateral Agent such certificates, receipts and other documents as may be
required (in the judgment of such Lender, such Issuing Bank or the
Administrative Agent or the Collateral Agent) to establish any tax credit
to which such Lender, such Issuing Bank or the Administrative Agent or the
Collateral Agent may be entitled.
(d) Within thirty (30) days after the date of any payment of Taxes or
Other Taxes by Borrower, Borrower will furnish to the Administrative Agent,
at its address referred to in SECTION 12.08, the original or a certified
copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this SECTION 2.09 shall survive the payment in full of principal and
interest hereunder, expiration or termination of the Letters of Credit and
the termination of this Agreement.
(f) Without limiting the obligations of Borrower under this SECTION
2.09, each Lender that is not created or organized under the laws of the
United States of America or a political subdivision thereof shall deliver
to Borrower and the Administrative Agent on or before the Effective Date,
or, if later, the date on which such Lender becomes a Lender pursuant to
SECTION 12.02 hereof, a true and accurate certificate executed in duplicate
by a duly authorized officer of such Lender, in a form satisfactory to
Borrower and the Administrative Agent, to the effect that such Lender is
capable under the provisions of an applicable tax treaty concluded by the
United States of America (in which case the certificate shall be
accompanied by two executed copies of Form 1001 of the IRS) or under
Section 1442 of the IRC (in which case the certificate shall be accompanied
by two copies of Form 4224 of the IRS) of receiving payments of interest
hereunder without deduction or withholding of United States federal income
tax. Each such Lender further agrees to deliver to 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
substantially in a form satisfactory to Borrower and the Administrative
Agent, before or promptly upon the occurrence of any event requiring a
change in the most recent certificate previously delivered by it to
Borrower and the Administrative Agent pursuant to this SECTION 2.09(F).
Further, each Lender which delivers a certificate accompanied by Form 1001
of the IRS covenants and agrees to deliver to Borrower and the
Administrative Agent within fifteen (15) days prior to January 1, 1995, and
every third (3rd) anniversary of such date thereafter, on which this
Agreement is still in effect, another such certificate and two accurate and
complete original signed copies of Form 1001 (or any successor form or
forms required under the IRC or the applicable regulations promulgated
thereunder), and each Lender that delivers a certificate accompanied by
Form 4224 of the IRS covenants and agrees to deliver to Borrower and the
Administrative Agent within fifteen (15) days prior to the beginning of
each subsequent taxable year of
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such Lender during which this Agreement is still in effect, another such
certificate and two accurate and complete original signed copies of IRS
Form 4224 (or any successor form or forms required under the IRC or the
applicable regulations promulgated thereunder). Each such certificate shall
certify as to one of the following:
(i) that such Lender is capable of receiving payments of interest
hereunder without deduction or withholding of United States of America
federal income tax;
(ii) that such Lender is not capable of receiving payments of
interest hereunder without deduction or withholding of United States of
America federal income tax as specified therein but is capable of
recovering the full amount of any such deduction or withholding from a
source other than the Borrower and will not seek any such recovery from
Borrower; or
(iii) that, as a result of the adoption of or any change in any
law, treaty, rule, regulation, guideline or determination of a
Governmental Authority or any change in the interpretation or
application thereof by a Governmental Authority after the date such
Lender became a party hereto, such Lender is not capable of receiving
payments of interest hereunder without deduction or withholding of
United States of America 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 shall promptly furnish to Borrower and the Administrative Agent
such additional documents as may be reasonably required by Borrower or the
Administrative Agent to establish any exemption from or reduction of any Taxes
or Other Taxes required to be deducted or withheld and which may be obtained
without undue expense to such Lender.
2.10. INCREASED CAPITAL. If any Lender determines that (a) the
applicability of any law, rule, regulation, agreement or guideline adopted
pursuant to or arising out of the July 1988 report of the Basle Committee on
Banking Regulations and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards"; (b) the introduction
of or any change in any law, order or regulation or in the interpretation or
administration of any law, order or regulation by any Governmental Authority
charged with the interpretation or administration thereof after the date hereof
or (c) compliance with any guideline or request issued or made after the date
hereof from any central bank or other Governmental Authority (whether or not
having the force of law) has or would have the effect of reducing the rate of
return on the capital of such Lender or any corporation controlling such Lender,
as a consequence of or with reference to this Agreement, such Lender's
Commitments or its making or maintaining Loans, or, in the case of such Lender
acting in its capacity as the Issuing Bank, the Issuing Bank's issuance or
maintenance of any Letter of Credit, or any Lender's participation in any Letter
of Credit, below the rate which such Lender or such other corporation could have
achieved but for such compliance (taking into account the policies of such
Lender or corporation with regard to capital), then Borrower shall from time to
time, upon demand by such Lender (with a copy of such demand to the
Administrative Agent), pay to such Lender additional amounts sufficient to
compensate such Lender for such reduction, upon receipt by Borrower (with a copy
to the Administrative Agent) of a certificate as to such amounts, by such
Lender, setting forth in reasonable detail the basis for, and the calculations
used by such Lender in determining, any such amounts. Such certificate, in the
absence of manifest error shall be conclusive and binding for all purposes. Each
Lender agrees promptly to notify Borrower and the Administrative Agent of any
circumstances that would cause Borrower to pay additional amounts pursuant to
this SECTION 2.10, PROVIDED that the failure to give such notice shall not
affect Borrower's obligation to pay such additional amounts hereunder.
2.11. USE OF PROCEEDS OF THE LOANS. The proceeds of the Loans shall be
used for general corporate purposes of the Borrower and/or the Borrower's
Non-Falcon Subsidiaries, and shall not be used to pay principal on the Term
Loans.
2.12. AUTHORIZED OFFICERS OF BORROWER. Borrower shall notify the
Administrative Agent and each of the Issuing Banks in writing of the names of
the officers and employees authorized to request Loans and Letters of Credit and
to request a conversion or continuation of any Loan and shall provide the
Administrative Agent and each of the Issuing Banks with a specimen signature of
each such officer or employee. The
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Administrative Agent and each of the Issuing Banks shall be entitled to rely
conclusively on such officer's or employee's authority to request such Loan or
Letter of Credit or such Conversion or Continuation until the Administrative
Agent and the applicable Issuing Bank receives written notice to the contrary.
The Administrative Agent and the Issuing Banks shall have no duty to verify the
authenticity of the signature appearing on any written Notice of Borrowing or
Notice of Conversion/Continuation and, with respect to an oral request for such
a Loan or Letter of Credit or such Conversion or Continuation, the
Administrative Agent and the Issuing Banks shall have no duty to verify the
identity of any person representing himself as one of the officers or employees
authorized to make such request on behalf of Borrower. Neither the
Administrative Agent nor any of the Issuing Banks nor any Lender shall incur any
liability to Borrower in acting upon any telephonic notice referred to above
which the Administrative Agent believes to have been given by a duly authorized
officer or other person authorized to borrow on behalf of Borrower.
2.13. REPLACEMENT OF CERTAIN LENDERS. In the event a Lender ("AFFECTED
LENDER") shall have: (i) failed to fund its Pro Rata Share of any Borrowing
requested by the Borrower which such 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 by the Borrower which such Lender is
obligated to issue as an Issuing Bank under the terms of this Agreement, (iii)
has requested compensation from the Borrower under SECTIONS 2.03(F), 2.09 or
2.10 to recover additional costs incurred by such Lender which are not being
incurred generally by the other Lenders, or (iv) delivered a notice pursuant to
SECTION 2.08(C)(I) claiming that such Lender is unable to extend Eurodollar Rate
Loans to the Borrower for reasons not generally applicable to the other 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 and Acceptances five (5) Business Days after the date of such demand,
to one or more financial institutions which comply with the provisions of
SECTION 12.02) (and, if selected by the Borrower is reasonably acceptable to the
Administrative Agent) which the Borrower or the Administrative Agent, as the
case may be, shall have engaged for such purpose ("REPLACEMENT LENDER"), all of
such Affected Lender's rights and obligations under this Agreement and the other
Loan Documents (including, without limitation, its Commitments and all Loans
owing to it all of its participation interests in existing Letters of Credit,
and its obligations to participate in additional Letters of Credit hereunder) in
accordance with SECTION 12.02. The Administrative Agent is hereby authorized to
execute one or more Assignment and Acceptances as attorney-in-fact for any
Affected Lender failing to execute and deliver the same within five (5) Business
Days after the date of such demand. Further, with respect to such assignment,
(a) in the event the Affected Lender is the Issuing Bank, the
Borrower shall have, with respect to each outstanding Letter of Credit,
provided the Affected Lender with cash collateral, arranged for surrender
of such Letters of Credit, arranged for a back-to-back Letter of Credit or
made such other arrangements 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 due and owing 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 Lender, together
with accrued interest thereon through the date of such assignment, amounts
payable under SECTIONS 2.03(F), 2.09 and 2.10, and compensation payable
under SECTION 2.08(D) in the event of any replacement of any Affected
Lender under CLAUSE (II) or CLAUSE (III) of this SECTION 2.13 through the
date of the replacement of any Affected Lender; PROVIDED, upon such
Affected Lender's replacement, such Affected Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of SECTIONS
2.08, 2.09, 2.10, 12.03 and 12.04, as well as to any fees accrued for its
account hereunder and not yet paid.
Upon the replacement of any Affected Lender pursuant to this SECTION 2.13,
(x) each Letter of Credit issued by such Affected Lender shall cease to be a
Letter of Credit under this Agreement, each such Affected Lender shall cease to
have any participation in, entitlement to, or other right to share in the
security interests and liens of the Collateral Agent and the Holders of Secured
Obligations in the Collateral and shall no longer
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be subject to the participation provisions of SECTION 3.06, all of which
participations shall be deemed to have terminated and been repurchased by the
Issuing Bank hereunder and (y) the provisions of SECTION 12.06(B) shall continue
to apply with respect to Borrowings 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.
ARTICLE III
LETTERS OF CREDIT
3.01. OBLIGATION TO ISSUE. Subject to the terms and conditions set forth
in this Agreement, from time to time during the period commencing on the
Effective Date and ending on the Business Day which is twenty (20) Business Days
prior to the Revolving Credit Termination Date, Borrower may request any of the
Issuing Banks, and upon such request such Issuing Bank hereby agrees, to issue
for the account of Borrower, or for the joint and several account of Borrower
and any of its Non-Falcon Subsidiaries, one or more Letters of Credit.
3.02. TYPES AND AMOUNTS. Notwithstanding the provisions of SECTION 3.01,
no Issuing Bank shall have any obligation to issue any Letter of Credit at any
time:
(a) if the aggregate maximum amount then available for drawing under
Letters of Credit issued by such Issuing Bank, after giving effect to the
Letter of Credit requested hereunder, shall exceed either such Issuing
Bank's Letter of Credit Commitment or any limit imposed by law or
regulation upon such Issuing Bank;
(b) if, after giving effect to such requested Letter of Credit, (i)
Revolving Loan Usage exceeds the lesser of the Revolving Credit Commitments
or the Borrowing Base at such time or (ii) the aggregate outstanding Letter
of Credit Obligations would exceed $50,000,000; and any letter of credit
issued by an Issuing Bank in excess of any such amounts shall not, to the
extent of the excess, constitute a Letter of Credit hereunder and the
deemed purchase of participations pursuant to SECTION 3.06 shall not occur
with respect to such letter of credit; or
(c) which has an expiration date which is (i) more than (1) one year
after the date of issuance of such Letter of Credit (PROVIDED that a
Standby Letter of Credit may provide for an annual renewal, subject to
SECTION 3.02(C)(II) below, if such renewal is consented to by such Issuing
Bank and the conditions precedent to the issuance of such Standby Letter of
Credit are met at the time of such renewal) or (ii) after three (3)
Business Days immediately preceding the Revolving Credit Termination Date,
and any letter of credit issued by an Issuing Bank with an expiration date
after three (3) Business Days immediately preceding the Revolving Credit
Termination Date shall not constitute a Letter of Credit hereunder and the
deemed purchase of participations pursuant to SECTION 3.06 shall not occur
with respect to such letter of credit.
3.03. CONDITIONS. In addition to being subject to the satisfaction of the
conditions precedent contained in SECTIONS 4.01 and 4.02, the obligation of each
Issuing Bank to issue any Letter of Credit is subject to the satisfaction in
full of the following conditions:
(a) Borrower shall have delivered to the Issuing Bank, at such times
and in such manner as the Issuing Bank may prescribe, a Letter of Credit
Application and 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 be reasonably
satisfactory to the Issuing Bank and shall be consistent with the Issuing
Bank's ordinary practice with respect to terms of its letters of credit;
and
(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 such Letter of Credit and
no law, rule or regulation applicable to the Issuing Bank, and no request
or directive (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) from any Governmental
Authority with jurisdiction over the Issuing Bank shall
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prohibit or request the Issuing Bank to refrain from the issuance of
letters of credit generally or the issuance of that Letter of Credit.
3.04. ISSUANCE OF LETTERS OF CREDIT.
(a) Borrower shall give the Issuing Bank written notice (with a copy
to the Administrative Agent) not later than 12:00 noon (New York City time)
on the third (3rd) Business Day immediately preceding the requested
issuance of a Letter of Credit under this Agreement, which notice as
provided to the Administrative Agent shall be accompanied by a Notice of
Borrowing as required pursuant to SECTION 4.02. Such notice shall be
irrevocable and shall specify (i) the stated amount of the Letter of Credit
requested, (ii) the effective date (which day shall be a Business Day) of
issuance of such requested Letter of Credit, (iii) whether such Letter of
Credit is a Commercial Letter of Credit or a Standby Letter of Credit, (iv)
the date on which such requested Letter of Credit is to expire, which date
shall be a Business Day, (v) the Person for whose benefit the requested
Letter of Credit is to be issued, (vi) the amount of Letter of Credit
Obligations then outstanding and (vii) any other terms to be included in
such Letter of Credit. Prior to issuing any Letter of Credit, the Issuing
Bank shall request and the Administrative Agent shall provide confirmation
that the request for such Letter of Credit complies with the provisions of
SECTION 3.02(B). If the Administrative Agent notifies the Issuing Bank that
it is authorized to issue such Letter of Credit, and the conditions
described in SECTIONS 3.02, 3.03, and 4.02 otherwise have been satisfied,
then the Issuing Bank shall issue such Letter of Credit as requested. The
Issuing Bank shall give the Administrative Agent prompt notice of the
issuance of any such Letter of Credit.
(b) No Letter of Credit may be amended, extended, renewed, modified
or supplemented unless Borrower shall have complied with the requirements
of SECTION 3.04(A) to the same extent as if such Letter of Credit, as so
amended, extended, renewed, modified or supplemented, were requested to be
reissued hereunder. No Issuing Bank may amend, extend, renew, modify or
supplement any Letter of Credit if the issuance of a new Letter of Credit
having the same terms as such Letter of Credit as so amended, extended,
renewed, modified or supplemented would be prohibited by SECTION 3.02. Each
Issuing Bank shall provide the Administrative Agent with a copy of each
amendment, extension, renewal, modification or supplement to any Letter of
Credit.
3.05. REIMBURSEMENT OBLIGATIONS; DUTIES OF THE ISSUING BANK.
(a) Notwithstanding any provisions to the contrary in any Letter of
Credit Reimbursement Agreement or Letter of Credit Application:
(i) Borrower shall reimburse each Issuing Bank, as applicable (by
paying the Administrative Agent for the account of the Issuing Bank),
for drawings under a Letter of Credit issued by it no later than the
earlier of (a) the time specified in such Letter of Credit Reimbursement
Agreement or Letter of Credit Application, and (b) one (1) Business Day
after the payment by such Issuing Bank; and
(ii) any Reimbursement Obligation with respect to any Letter of
Credit shall bear interest from the date of the relevant drawing under
the pertinent Letter of Credit at the interest rate then applicable to
Base Rate Loans until the third (3rd) Business Day after such date on
which the Issuing Bank with respect to such Letter of Credit gives
notice of such drawing to Borrower and thereafter at the Default Rate.
(b) No action taken or omitted to be taken by any Issuing Bank under
or in connection with any Letter of Credit shall put such Issuing Bank
under any resulting liability to any Lender (except for its gross
negligence or willful misconduct in connection therewith, as determined by
the final judgment of a court of competent jurisdiction) or, subject to
SECTIONS 3.02 and 3.03, relieve that Lender of its obligations hereunder to
such Issuing Bank. In the event this Agreement and any Letter of Credit
Reimbursement Agreement or any Letter of Credit Application are
inconsistent, the terms of this Agreement shall prevail. In determining
whether to pay under any Letter of Credit, the Issuing Bank
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shall have no obligation to the Lenders other than to confirm that any
documents required to be delivered under such Letter of Credit appear to
have been delivered and that they appear on their face to comply with the
requirements of such Letter of Credit.
3.06. PARTICIPATIONS.
(a) Immediately upon issuance by one of the Issuing Banks of any
Letter of Credit for the account of Borrower in accordance with the
provisions set forth in this ARTICLE III, each Lender irrevocably and
unconditionally agrees that it shall be deemed to have purchased and
received from such Issuing Bank, without recourse or warranty, an undivided
interest in the amount of such Lender's Pro Rata Share in such Letter of
Credit (other than the fees earned with respect to such Letter of Credit
pursuant to SECTION 3.08(B)) and any security therefor or guaranty
pertaining thereto; PROVIDED, HOWEVER, that a letter of credit issued by an
Issuing Bank shall not be deemed to be a Letter of Credit for purposes of
this SECTION 3.06(A) if the Issuing Bank shall not have received the
confirmation from the Administrative Agent provided for in SECTION 3.04(A)
or shall have received written notice from the Administrative Agent or any
Lender on or before the Business Day immediately prior to the date of the
Issuing Bank's issuance of such letter of credit that one or more
conditions of this ARTICLE III are not satisfied and, in the event the
Issuing Bank receives such a notice, it shall have no further obligation to
issue any Letter of Credit until such notice is subsequently withdrawn or
it receives notice from the Administrative Agent that such conditions have
been waived in writing by the Requisite Lenders or otherwise have been
satisfied.
(b) If one of the Issuing Banks makes any payment under any Letter of
Credit and Borrower does not repay such amount to such Issuing Bank
pursuant to SECTION 3.05(A), 3.07 or 3.09, such Issuing Bank shall promptly
notify the Administrative Agent of such failure, and the Administrative
Agent shall, in turn, promptly notify each Lender of such failure, and each
Lender shall promptly and unconditionally pay to the Administrative Agent
for the account of such Issuing Bank the amount of such Lender's Pro Rata
Share of such payment, in Dollars and in immediately available funds, and
the Administrative Agent shall promptly pay such amount, and any other
amounts received by the Administrative Agent for such Issuing Bank's
account pursuant to this SECTION 3.06(B), to such Issuing Bank. If the
Administrative Agent so notifies any such Lender prior to 11:00 a.m. (New
York City time) on any Business Day of such failure, such Lender shall make
available to the Administrative Agent for the account of such Issuing Bank
its Pro Rata Share of the amount of such payment on such Business Day in
Dollars and in immediately available funds, and otherwise on the next
succeeding Business Day. If and to the extent such Lender shall not have so
made its Pro Rata Share of the amount of such payment available to the
Administrative Agent for the account of such Issuing Bank, such Lender
agrees to pay to the Administrative Agent for the account of such Issuing
Bank forthwith on demand such amount together with interest thereon, for
each day from the date such payment was first due until the date such
amount is paid to the Administrative Agent for the account of such Issuing
Bank, at the Federal Funds Effective Rate (as such term is defined in the
definition of Alternate Base Rate) for three (3) Business Days and then at
the Alternate Base Rate. The failure of any Lender to make available to the
Administrative Agent for the account of any Issuing Bank its Pro Rata Share
of any such payment shall not relieve any other Lender of its obligation
hereunder to make available to the Administrative Agent for the account of
such Issuing Bank its Pro Rata Share of any payment on the date such
payment is to be made.
(c) Whenever one of the Issuing Banks receives a payment on account
of a Reimbursement Obligation, including any interest thereon, as to which
the Administrative Agent has previously received payments from the Lenders
for such account of the Issuing Bank pursuant to this SECTION 3.06, it
shall promptly pay to the Administrative Agent and the Administrative Agent
shall promptly pay to each Lender which has funded its participating
interest therein, in Dollars, an amount equal to such 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 11:00 a.m. (New York City time) on such
Business Day, and otherwise on the next succeeding Business Day together
with interest thereon at the
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Federal Funds Effective Rate (as such term is defined in the definition of
Alternate Base Rate) unless the Issuing Bank certifies that it received
such amount later than it could be invested overnight.
(d) Promptly upon the request of any Lender, any Issuing Bank shall
furnish to such Lender copies of any documentation with respect to the
Letters of Credit as may reasonably be requested by such Lender.
(e) The obligations of a Lender to make payments to the
Administrative Agent for the account of one of the Issuing Banks with
respect to a Letter of Credit issued on behalf of the Borrower shall be
irrevocable, shall not be subject to any qualification or exception
whatsoever, and shall be honored in accordance with the terms and
conditions of this Agreement under all circumstances (subject to SECTION
3.02), including, without limitation, (i) any lack of validity or
enforceability of this Agreement or any of the other Loan Documents; (ii)
the existence of any claim, set-off, defense or other right which 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, any 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 Borrower and
the beneficiary named in any Letter of Credit); (iii) any draft,
certificate or any other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect (in the
absence of gross negligence or willful misconduct in connection therewith,
as determined by the final judgment of a court of competent jurisdiction,
on the part of the Issuing Bank); (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 any
Issuing Bank to make any reports required pursuant to SECTION 3.10; or (vi)
the occurrence of any Event of Default or Potential Event of Default.
3.07. PAYMENT OF REIMBURSEMENT OBLIGATIONS.
(a) Borrower irrevocably and unconditionally agrees to pay to each of
the Issuing Banks the amount of all Reimbursement Obligations, interest and
other amounts payable to any such Issuing Bank under or in connection with
any Letter of Credit issued on behalf of Borrower immediately when due,
irrespective of any and all events, including, without limitation, (i) any
lack of validity or enforceability of this Agreement or any of the other
Loan Documents; (ii) the existence of any claim, set-off, defense or other
right which 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, any
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 Borrower and the beneficiary named in any Letter of Credit); (iii)
any draft, certificate or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect
(in the absence of gross negligence or willful misconduct in connection
therewith, as determined by the final judgment of a court of competent
jurisdiction, on the part of the Issuing Bank); or (iv) the surrender or
impairment of any security for the performance or observance of any of the
terms of any of the Loan Documents.
(b) In the event any payment by Borrower received by an Issuing Bank
with respect to any 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 the Issuing Bank in connection with any
receivership, liquidation or bankruptcy proceeding or otherwise, each
Lender which received such distribution shall, upon demand by the Issuing
Bank, contribute such Lender's Pro Rata Share of the amount set aside,
avoided or recovered together with interest at the rate required to be paid
by the Issuing Bank upon the amount required to be repaid by it.
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3.08. COMPENSATION FOR LETTERS OF CREDIT.
(a) LENDERS' LETTER OF CREDIT FEES. Borrower shall pay, with respect
to each Letter of Credit, a Letter of Credit fee equal to one and
three-quarters of one percent (1.75%) per annum (computed based upon actual
days elapsed in a year of 360 days) of the maximum amount available to be
drawn under such Letter of Credit, provided, however, if and for so long as
the Applicable Eurodollar Rate Margin is reduced to less than 1.75% per
annum, then the letter of credit fee shall be a per annum rate equal to the
Applicable Eurodollar Rate Margin in effect from time to time. Such fee
shall be paid to the Administrative Agent, for the account of the Lenders
in proportion to their respective Pro Rata Shares, in arrears, on a
calendar quarterly basis, on the last calendar day of each March, June,
September and December occurring after the Effective Date. Each of the
Issuing Banks shall provide the Borrower and the Administrative Agent on or
before the last Business Day of each March, June, September and December
occurring after the Effective Date a statement calculating the Letter of
Credit fees payable under this SECTION 3.08(A) for the quarter then ending.
(b) ISSUING BANK FEES. In addition to the fees under CLAUSE (A)
above, Borrower shall pay to each of the Issuing Banks, (i) with respect to
each Commercial Letter of Credit payable at such time as is agreed to
between the Borrower and the applicable Issuing Bank, the customary charges
of such Issuing Bank with respect thereto for commercial letters of credit
of similar type, (ii) with respect to each Standby Letter of Credit, such
fronting fee as shall have been agreed to (both with respect to amount and
timing) between such Issuing Bank and the Borrower and (iii) with respect
to all Letters of Credit, on demand, each Issuing Bank's customary
administration fees charged in connection with its issuance,
administration, transfer or amendment of or drawing under any Letter of
Credit. Such fees shall be paid directly to and shall be solely for the
account of the Issuing Banks.
3.09. INDEMNIFICATION; EXONERATION. (a) In addition to amounts payable
as elsewhere provided in this ARTICLE III, Borrower hereby agrees to protect,
indemnify, pay and save harmless the Administrative Agent, the Issuing Banks and
each Lender from and against any and all Liabilities and Costs which the
Administrative Agent, the Issuing Banks or any Lender may incur or be subject to
as a consequence, direct or indirect, of (i) the issuance of any Letter of
Credit other than, in the case of any Issuing Bank, as a result of its gross
negligence or willful misconduct, as determined by the final judgment of a court
of competent jurisdiction or (ii) the failure of such Issuing Bank 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 Governmental
Authority (all such acts or omissions herein called "GOVERNMENTAL ACTS").
(b) As among Borrower, the Lenders, the Issuing Banks and the
Administrative Agent, Borrower assumes all risks of the acts and omissions
of, or misuse of such Letter of Credit by, the beneficiary of any Letter of
Credit. In furtherance and not in limitation of the foregoing, subject to
the provisions of the Letter of Credit Applications and Letter of Credit
Reimbursement Agreements, the Issuing Banks, the Administrative Agent and
the Lenders shall not be responsible (in the absence of gross negligence or
willful misconduct in connection therewith, as determined by the final
judgment of a court of competent jurisdiction): (i) 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 the Letters of Credit, even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii)
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; (iii) 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; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by
mail, cable, telegraph, telex, or other similar form of teletransmission or
otherwise; (v) for errors in interpretation of technical terms; (vi) 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; (vii) for the misapplication by the beneficiary of a Letter of
Credit of the proceeds of any drawing under such Letter of Credit; and
(viii) for any consequences arising from causes beyond the control of the
Administrative Agent, the Issuing Banks and the Lenders including, without
limitation, any Governmental Acts. None of
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the above shall affect, impair, or prevent the vesting of any of the
Issuing Banks' rights or powers under this SECTION 3.09.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
any Issuing Bank under or in connection with Letters of Credit issued on
behalf of the Borrower or the Borrower or any related certificates shall
not, in the absence of gross negligence or willful misconduct, as
determined by the final judgment of a court of competent jurisdiction, put
any Issuing Bank, the Administrative Agent or any Lender under any
resulting liability to Borrower or relieve Borrower of any of its
obligations hereunder to any such Person.
(d) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this SECTION 3.09 shall survive the payment in full of principal and
interest hereunder, the termination of the Letters of Credit and the
termination of this Agreement.
3.10. REPORTING BY ISSUING BANKS. On or before the thirtieth (30th) day
following the end of each calendar month ending after the Effective Date, each
of the Issuing Banks shall provide the Administrative Agent and the
Administrative Agent shall provide each Lender with a written report describing,
as of the end of such month, the then aggregate outstanding face amount of each
Letter of Credit, whether such Letter of Credit is a Standby Letter of Credit or
Commercial Letter of Credit, the beneficiary of such Letter of Credit, and any
other additional information with respect thereto which the Administrative Agent
or any Lender reasonably requests. Together with each monthly report, each of
the Issuing Banks shall provide the Administrative Agent and the Administrative
Agent shall provide each Lender with a copy of each Letter of Credit issued
during the immediately preceding month and each Letter of Credit Application
and/or Letter of Credit Reimbursement Agreement executed in connection
therewith.
3.11. OUTSTANDING LETTERS OF CREDIT. Schedule II to the Assumption
Agreement contains a schedule of certain Letters of Credit issued for the
account of Borrower prior to the Effective Date by one of the Issuing Banks,
which Letters of Credit shall be deemed to remain outstanding pursuant to this
Article III. The outstanding face amount of such Letters of Credit shall be
included in the calculation of Revolving Credit Availability and in the
calculation of letter of credit fees payable to the Lenders pursuant to SECTION
3.08(A), and all liabilities of the Borrower with respect to such Letters of
Credit shall constitute Obligations.
ARTICLE IV
CONDITIONS TO LOANS AND LETTERS OF CREDIT
4.01. CONDITIONS PRECEDENT TO THE EFFECTIVE DATE. This Agreement shall
become effective on the date (the "EFFECTIVE DATE") when all of the following
conditions precedent shall have been satisfied:
(a) DOCUMENTS. The Administrative Agent and the Collateral Agent
shall have received on or before the Effective Date (i) this Agreement, the
Notes, the other Transaction Documents and all other agreements, documents
and instruments described in the List of Closing Documents attached hereto
as EXHIBIT 7 and made a part hereof, each duly executed where appropriate
and in form and substance satisfactory to the Administrative Agent and the
Collateral Agent and (ii) such additional documentation as the
Administrative Agent or the Collateral Agent may reasonably request.
(b) PERFECTION OF LIENS. The Collateral Agent shall have received
(i) evidence that all additional and/or amended financing statements
relating to the Collateral have been filed and the Collateral Agent shall
be satisfied that arrangements for the filing and recording of all
modifications to the Mortgages have been made, (ii) title endorsements (in
form and substance acceptable to the Collateral Agent), (iii) certificates
representing capital stock constituting Collateral (together with duly
executed stock powers) and (iv) such other evidence (including, without
limitation, legal opinions from counsel to the Borrower), as the
Administrative Agent or the Collateral Agent may request, confirming that
the Collateral Agent's security interests in the Collateral for the benefit
of the Holders of Secured Obligations have been properly perfected and
constitute first and prior security interests subject only to Permitted
Existing Liens and Customary Permitted Liens. In addition, all title
charges, recording fees
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and filing taxes shall have been paid or adequate provisions for the
payment of such charges, fees and taxes shall have been made.
(c) ENVIRONMENTAL COMPLIANCE. The Borrower shall have provided
documentation reasonably satisfactory to the Administrative Agent
demonstrating compliance with applicable Environmental Property Transfer
Acts.
(d) 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
or the issuance of Letters of Credit on or after the Effective Date or (ii)
impose or result in the imposition of a Material Adverse Effect.
(e) NO CHANGE IN CONDITION. No change in the business, assets,
management, operations, financial condition or prospects of Parent, the
Borrower or the Consolidated Borrower Group taken as a whole shall have
occurred since December 31, 1993, which change, in the judgment of the
Lenders, will have or is reasonably likely to have a Material Adverse
Effect.
(f) 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 or the issuance of Letters of Credit.
(g) REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties contained in SECTION 5.01 and in any of the other Loan Documents
shall be true and correct in all material respects on and as of the
Effective Date.
(h) FEES AND EXPENSES PAID. There shall have been paid to the
Administrative Agent, for the accounts of the Lenders and the
Administrative Agent, as applicable, and to the Collateral Agent for its
own account, all fees due and payable on or before the Effective Date
(including, without limitation, all fees described in the Fee Letters), and
all expenses due and payable on or before the Effective Date.
(i) BORROWING BASE CERTIFICATE; PRO FORMA FINANCIAL STATEMENTS;
EXCESS AVAILABILITY. The Borrower shall have delivered to the
Administrative Agent a Borrowing Base Certificate and pro forma financial
statements for the Consolidated Borrower Group, and such certificate and
financial statements shall confirm that as of the Effective Date, Revolving
Credit Availability is at least $12,500,000.
(j) LEGAL MATTERS. All legal and regulatory matters shall be
reasonably satisfactory to the Administrative Agent and the Collateral
Agent.
(k) TAX SHARING AGREEMENT. The Tax Sharing Agreement shall have been
amended by the parties thereto on terms satisfactory to the Administrative
Agent and the Collateral Agent.
(l) ACCOUNTANTS' RELIANCE LETTER. The reliance letter in the form
attached hereto as EXHIBIT 8 previously received from the accounting firm
which audits the Borrower's financial statements in accordance with SECTION
6.01(A) shall not have been revoked as of the Effective Date.
(m) ORIGINAL CREDIT AGREEMENT. All accrued Original Obligations in
respect of fees and interest shall have been paid to the Effective Date,
and all other Original Obligations then due and payable shall have been
paid as of the Effective Date; no Event of Default or Potential Event of
Default (in each case, as defined in the Original Credit Agreement) shall
have occurred and be continuing under the Original Credit Agreement on the
Effective Date; and the Falcon Agreement shall have become effective in
accordance with its terms on the Effective Date concurrently with the
effectiveness of this Agreement, superseding the Original Credit Agreement.
(n) PROCEEDS OF THE OFFERING. The Offering shall have been
consummated, the net proceeds thereof to Falcon in the amount of at least
$60,000,000 shall have been received by Falcon and paid to the Borrower and
$52,000,000 of such net proceeds shall have been paid by the Borrower to
the Administrative Agent under the Original Credit Agreement to reduce the
outstanding principal amount of the Original Obligations on the Effective
Date.
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(o) NOTICE. The Borrower shall have given the Administrative Agent
five (5) Business Days' written notice of the date designated by the
Borrower to be the Effective Date, which shall not be later than November
30, 1994, unless extended by agreement of all of the Lenders; the
Administrative Agent shall have promptly notified each of the Lenders of
such designated date (which notice may be by telephone, confirmed in
writing); and the Administrative Agent shall not have received prior to the
Effective Date written notice from any Lender that one or more of the
conditions precedent to the effectiveness of this Agreement have not been
satisfied.
4.02. CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS OF CREDIT. The
obligation of each Lender to make any Loan requested to be made by it or to
convert or continue any Loan requested to be converted or continued on any date,
and of each Issuing Bank to issue any Letter of Credit on any date, is subject
to the following conditions precedent as of such date:
(a) NOTICE OF BORROWING. The Administrative Agent shall have
received in accordance with the provisions of SECTION 2.02(A), with respect
to any Revolving Loan, or SECTION 3.04(A), with respect to any Letter of
Credit, an original and duly executed Notice of Borrowing or, in accordance
with the provisions of SECTION 2.03, with respect to
conversion/continuation of any Loan, an original and duly executed Notice
of Conversion/Continuation.
(b) ADDITIONAL MATTERS. As of the Funding Date for any Loan or the
date of issuance of any Letter of Credit or as of the proposed date for
continuation/conversion, as applicable:
(i) REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties of the Borrower contained in or repeated pursuant to
SECTION 5.02 and of the Parent, the Borrower or the Non-Falcon
Subsidiaries contained in any other Loan Document (other than
representations and warranties which expressly speak only as of a
different date) shall be true and complete in all respects on and as of
such Funding Date as though made on and as of such date both before and
after taking into account the requested Loans to be made and Letters of
Credit to be issued.
(ii) 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 requested Loan or the issuance of the requested Letter of
Credit.
(iii) NO INJUNCTION. No law or regulation shall have been
adopted, no order, judgment or decree of any Governmental Authority
shall have been issued, and no litigation shall be pending or threatened
(other than as a result of any condition described in SECTION 2.08(D),
2.09 or 2.10), which in the reasonable judgment of the Requisite
Lenders, would enjoin, prohibit or restrain any Lender from making the
requested Loan or any Issuing Bank from issuing the requested Letter of
Credit or as a result of making any such Loan or issuing such Letter of
Credit impose or result in the imposition of any material adverse
condition upon any Lender or any Issuing Bank.
(iv) NO MATERIAL ADVERSE CHANGE. No event shall have occurred
after December 31, 1993 which, in the reasonable judgment of the
Requisite Lenders, has had or is reasonably likely to have a Material
Adverse Effect.
(v) NO FORFEITURE PROCEEDINGS. Neither the Borrower nor any of
its Non-Falcon Subsidiaries shall have been named as a defendant in a
criminal indictment under the Racketeering Influenced and Corrupt
Organizations Act or any similar federal or state statute which provides
for forfeiture of assets as a potential criminal penalty unless such
proceeding shall not be adverse to the interests of the Lenders.
(vi) BORROWING BASE. The Borrower shall have confirmed to the
Administrative Agent in writing that since the delivery of the most
recent Borrowing Base Certificate delivered pursuant to SECTION 6.01(C)
and, after taking into account the requested Loan or Letter of Credit,
the Borrower has been and is, in its reasonable estimate, in compliance
with the borrowing restrictions formulated in this Agreement (including,
without limitation, under SECTIONS 2.01(A), 2.05 and 3.02(B)) and the
Administrative Agent shall have no reason to believe such confirmation
is not accurate.
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The request by Borrower for any Loan made, or to be made, or any Letter of
Credit issued, or to be issued, on any Funding Date or delivery of any Notice of
Conversion/Continuation shall constitute a representation and warranty by
Borrower as of such Funding Date or as of such conversion/continuation date, as
applicable, that all the conditions contained in this SECTION 4.02 have been
satisfied or waived in writing pursuant to SECTION 12.07.
4.03. CONSENT TO ASSUMPTION AGREEMENT. Unless the Administrative Agent
shall have received from the Requisite Lenders the written notice referred to in
Section 4.01(o), each of the Lenders and the Issuing Banks shall be deemed to
have consented to the terms of the Assumption Agreement as if such Lender or
Issuing Bank were a party thereto.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. REPRESENTATIONS AND WARRANTIES ON THE EFFECTIVE DATE. To induce
each Lender, the Issuing Banks and the Administrative Agent to enter into this
Agreement and to make the Loans and to issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to each Lender, the Issuing
Banks, the Administrative Agent and the Collateral Agent that the following
statements are true and correct:
(a) ORGANIZATION; CORPORATE POWERS. The Borrower and each of its
Non-Falcon Subsidiaries (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, (ii) is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each jurisdiction in
which the nature of its business requires it to be so qualified, except
those jurisdictions where the failure to be in good standing or to so
qualify has not had and will not have a Material Adverse Effect, and (iii)
has all requisite corporate 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 the Transaction
Documents.
(b) AUTHORITY. (i) The Borrower and each of its Non-Falcon
Subsidiaries has the requisite corporate power and authority to execute,
deliver and perform its obligations under each of the Transaction Documents
executed by it, or to be executed by it.
(ii) The execution, delivery and performance (or filing or
recording, as the case may be) of each of the Transaction Documents to
which it is party and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on
the part of the Borrower and each of its Non-Falcon Subsidiaries and no
other corporate proceedings on the part of any such Person are necessary
to consummate such transactions.
(iii) Each of the Transaction Documents to which it is a party has
been duly executed and delivered (or filed or recorded, as the case may
be) by the Borrower and each of its Non-Falcon Subsidiaries and
constitutes its legal, valid and binding obligation, enforceable against
it in accordance with its terms (except as enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally
and by general equitable principles), is in full force and effect
(unless terminated in accordance with the terms thereof) and no term or
condition thereof has been amended, modified or waived from the terms
and conditions contained therein without the prior written consent of
the Administrative Agent and the Requisite Lenders or, where so
required, the Supermajority Lenders or all of the Lenders, and the
Borrower and each of its Non-Falcon Subsidiaries have performed and
complied in all material respects with all the material 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 thereof, and no default by any such party exists thereunder.
(c) SUBSIDIARIES. Neither the Borrower nor any of its Non-Falcon
Subsidiaries has any Non-Falcon Subsidiaries other than those described in
SCHEDULE 5.01(C) and those, if any, which are permitted by SECTION 8.03 to
be created after the Effective Date.
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(d) NO CONFLICT. The execution, delivery and performance of each
Transaction Document to which it is a party by the Parent, the Borrower and
each of the Borrower's Non-Falcon Subsidiaries and each of the transactions
contemplated thereby do not and will not (i) conflict with any contractual
obligation of any such Person, any liability resulting from which would
have or be reasonably expected to have a Material Adverse Effect, or (ii)
conflict with or violate such Person's Certificate or Articles of
Incorporation or By-Laws or (iii) except as set forth on SCHEDULE 5.01(D),
conflict with, result in a breach of or constitute (with or without notice
or lapse of time or both) a default under any Requirement of Law or
contractual obligation of any such Person, any liability resulting from
which would have or be reasonably expected to have a Material Adverse
Effect, or under the Receivables Agreements or the Indenture dated July 1,
1993, between Parent and Harris Trust and Savings Bank pursuant to which
the Senior Deferred Coupon Notes were issued, or (iv) result in or require
the creation or imposition of any Lien whatsoever upon any of the
properties or assets of any such Person (other than Liens in favor of the
Collateral Agent, for the benefit of itself and the Holders of Secured
Obligations, arising pursuant to the Loan Documents or Liens permitted
pursuant to SECTION 8.02(B)), or (v) require any approval of stockholders
of any such Person, unless such approval has been obtained.
(e) GOVERNMENTAL CONSENTS. The execution, delivery and performance
of each Transaction Document to which it is a party, by the Parent, the
Borrower and each of the Borrower's Non-Falcon Subsidiaries and the
transactions contemplated thereby do not and will not require any
registration with, consent or approval of, or notice to, or other action
with or by, any Governmental Authority, except filings, consents or notices
which have been made, obtained or given.
(f) GOVERNMENTAL REGULATION. None of the Parent, the Borrower or any
of the Borrower's Non-Falcon Subsidiaries is subject to regulation under
the Public Utility Holdings Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, the Investment Company Act of 1940 or any other
statute or regulation of any Governmental Authority such that its ability
to incur indebtedness is limited or its ability to consummate the
transactions contemplated hereby or by the other Transaction Documents is
materially impaired.
(g) FINANCIAL POSITION. (i) As of the Effective Date, all quarterly
and annual financial statements of the Borrower or of the Consolidated
Borrower Group delivered to the Administrative Agent were prepared in
conformity with GAAP (except as otherwise noted therein) and fairly present
the financial position of the Borrower or the consolidated financial
position of the Consolidated Borrower Group, as the case may be, as at the
respective dates thereof and the results of operations and changes in cash
flows 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.
(ii) All quarterly and annual financial statements of Consolidated
Parent Group, the Borrower or of the Consolidated Borrower Group
delivered to the Administrative Agent after the Effective Date will have
been prepared in conformity with GAAP (except as otherwise noted
therein) and will fairly present the financial position of the Borrower
or the consolidated financial position of the Consolidated Parent Group
or the Consolidated Borrower Group, as the case may be, as at the
respective dates thereof and the results of operations and changes in
cash flows 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. Except as contemplated or
disclosed in the Transaction Documents, neither the Borrower nor any of
its Non-Falcon Subsidiaries has any material obligations, material
contingent liabilities requiring disclosure under GAAP or Agreement
Accounting Principles, as the case may be or material liabilities for
taxes, long term leases or material or unusual forward or long term
commitments which are not reflected in such financial statements and the
notes thereto.
(h) PRO FORMA FINANCIALS AND PROJECTIONS. As of the Effective Date,
the PRO FORMA financial statements of Consolidated Borrower Group provided
by the Borrower and set forth in that certain Confidential Information
Memorandum dated October 1994 to the Lenders (the "Bank Book") were
reasonable estimates of the PRO FORMA financial condition of the
Consolidated Borrower Group and the
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pro forma results of operations and changes in cash flows for the periods
covered thereby in all material respects. Except as contemplated or
disclosed in the Transaction Documents, as of the date of such PRO FORMA
financial statements, neither the Borrower nor any of its Non-Falcon
Subsidiaries had any material (i) obligations, (ii) contingent liabilities
or liabilities for taxes, long-term leases or (iii) material or unusual
forward or long-term commitments which were not reflected in such PRO FORMA
financial statements or the notes thereto and requiring disclosure under
GAAP or Agreement Accounting Principles, as the case may be. As of the
Effective Date the projections (and the assumptions made in preparing such
projections) concerning the Consolidated Borrower Group set forth in the
Bank Book reflected the Borrower's best estimate of the Consolidated
Borrower Group's future performance based upon the information available to
the Borrower at the time, and the assumptions and methodology used in the
projections were, in Borrower's judgment, reasonable.
(i) CAPITALIZATION.
(i) As of the Effective Date, SCHEDULE 5.01(I) sets forth the
number of shares and the relevant percentages of capital stock held by
each shareholder of the Parent that holds in excess of 5% of the Capital
Stock of the Parent of which the Parent or the Borrower has knowledge.
(ii) There are outstanding no shares of any class of 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:
(A) the Borrower other than capital stock described on SCHEDULE
5.01(I);
(B) any Subsidiary of the Borrower other than the capital stock
held directly or indirectly by the Borrower and pledged to the
Collateral Agent for the benefit of itself and Holders of Secured
Obligations pursuant to the Pledge Agreements; or
(C) Falcon other than capital stock described on SCHEDULE
5.01(I).
The outstanding capital stock of the Borrower, of each of its Non-Falcon
Subsidiaries and of Falcon is duly authorized, validly issued, fully
paid and nonassessable.
(j) LITIGATION; ADVERSE EFFECTS. (i) Except as set forth in
SCHEDULE 5.01(J), there is no action, suit, proceeding, investigation of
any Governmental Authority or arbitration, at law or in equity, or before
or by any Governmental Authority, pending, or, to the best knowledge of the
Borrower, threatened against the Parent, the Borrower, or any of the
Borrower's Non-Falcon Subsidiaries or any Property of any of them, which if
adversely determined would be reasonably expected to have a Material
Adverse Effect.
(ii) Neither the Borrower nor any of its Non-Falcon Subsidiaries
is (A) in violation of any applicable law which violation has or might
reasonably be expected to have a Material Adverse Effect, or (B) subject
to or in default with respect to any final judgment, writ, injunction,
decree, order, rule or regulation of any court or Governmental Authority
which has or is reasonably likely to have a Material Adverse Effect.
Except as set forth in SCHEDULE 5.01(J), there is no action, suit,
proceeding or investigation pending or, to the knowledge of the
Borrower, threatened in writing against or affecting the Parent, the
Borrower, or any of the Borrower's Non-Falcon Subsidiaries (1) which
challenges the validity or the enforceability of any of the Transaction
Documents or (2) which will or would reasonably be expected to result in
any liability in the aggregate in the amount of greater than $2,000,000
with respect to any such Person (in each case net of applicable
third-party insurance coverage other than retro-premium insurance that
determines retro-premiums solely on the basis of losses of the insured
person) or (3) which involves a claim 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
potential criminal penalty.
(k) NO MATERIAL ADVERSE CHANGE. There has occurred no event since
December 31, 1993 which has or is reasonably likely to have a Material
Adverse Effect.
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(l) PAYMENT OF TAXES. All tax returns and reports of each of the
Parent, the Borrower and their respective Subsidiaries (other than Falcon
and its Subsidiaries) required to be filed (including extensions), have
been timely filed, and all taxes, assessments, fees and other charges of
Governmental Authorities thereupon and upon their respective properties,
assets, income and franchises which are shown on such returns as being due
and payable, have been paid when due and payable, except (i) taxes being
contested in good faith by appropriate proceedings and that are reserved
against in accordance with Agreement Accounting Principles, (ii) taxes
which are not yet delinquent, (iii) taxes which are payable in installments
so long as paid before any penalty accrues with respect thereto and (iv)
other taxes, assessments, fees and other charges of Governmental
Authorities which do not exceed $500,000. On the Effective Date, except as
set forth in CLAUSE (IV) above or on SCHEDULE 5.01(L), and after the
Effective Date, except as set forth in CLAUSES (I) through (IV) above or on
SCHEDULE 5.01(L), the Borrower has no knowledge of any proposed tax
assessment against the Parent, the Borrower or any of the Borrower's
Non-Falcon Subsidiaries. All tax assessments referred to in SCHEDULE
5.01(L) are being contested in good faith by the Parent, the Borrower or
such Subsidiary or a settlement with respect to any such assessment is
being negotiated in good faith by such Person and appropriate reserves have
been established in accordance with GAAP or Agreement Accounting
Principles, as applicable. As of the Effective Date, all payments due and
payable by any party to the Tax Sharing Agreement have been paid.
(m) MATERIAL ADVERSE AGREEMENTS. None of the Parent, the Borrower or
any of the Borrower's Non-Falcon Subsidiaries is a party to or subject to
any Contractual Obligation or other restriction contained in its charter or
By-laws which has or is reasonably expected to have a Material Adverse
Effect after giving effect to the consummation of the transactions
contemplated in the Transaction Documents or otherwise.
(n) PERFORMANCE. None of the Parent, the Borrower or any of the
Borrower's Non-Falcon Subsidiaries 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 under
any agreement or instrument the absence or termination of which Contractual
Obligations would be reasonably likely to have a Material Adverse Effect,
and no condition exists which, with the giving of notice or the lapse of
time, or both, would constitute a default under such Contractual
Obligation, except where the consequences, direct or indirect, of such
default or defaults, if any, would not have or are not reasonably expected
to have a Material Adverse Effect.
(o) SECURITIES ACTIVITIES. Neither the Borrower nor any of its
Non-Falcon Subsidiaries is engaged in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
(p) DISCLOSURE. Subject to changes in facts or conditions which are
required or permitted under this Agreement, the representations and
warranties of the Parent, the Borrower and any of the Borrower's Non-Falcon
Subsidiaries contained in the Transaction Documents, and all certificates
and other documents delivered to the Administrative Agent in connection
therewith, taken as a whole 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 materially misleading.
(q) REQUIREMENTS OF LAW. The Parent, the Borrower, and each of the
Borrower's Non-Falcon Subsidiaries is in compliance with all Requirements
of Law (including, without limitation, the Securities Act and the
Securities Exchange Act, the applicable rules and regulations thereunder,
and state securities laws) applicable to it and its business, where the
failure to so comply would have or would be reasonably expected to have a
Material Adverse Effect.
(r) PATENTS, TRADEMARKS, PERMITS, ETC. The Parent, the Borrower, and
each of the Borrower's Non-Falcon Subsidiaries owns, is licensed or
otherwise has the lawful right to use, or has all permits and other
approvals of Governmental Authorities, patents, trademarks, service marks,
trade names, copyrights, technology, know-how and processes used in or
necessary for the conduct of its business as currently conducted which are
material to the financial condition, business, operations, assets and
prospects of the Borrower, any such Subsidiary or the Consolidated Borrower
Group. The use of such
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permits and other approvals of Governmental Authorities, patents,
trademarks, service marks, trade names, copyrights, technology, know-how
and processes by the Parent, the Borrower or any of the Borrower's
Non-Falcon Subsidiaries does not infringe on the rights of any Person,
subject to such claims and infringements the existence of which do not have
or are not reasonably expected to have a Material Adverse Effect. The
consummation of the transactions contemplated by the Transaction 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, service marks, trade names, copyrights, technology,
know-how or processes by the Parent, the Borrower or any of the Borrower's
Non-Falcon Subsidiaries in any manner which has or is reasonably likely to
have a Material Adverse Effect.
(s) ENVIRONMENTAL MATTERS. Except where the circumstances causing
the failure of any of the representations and warranties set forth in this
subsection (s) to be true and correct are not reasonably likely to result
in a Material Adverse Effect or except as disclosed in the documents
identified in SCHEDULE 5.01(S), (i) the operations of each of the Parent,
the Borrower, and the Borrower's Non-Falcon Subsidiaries comply in all
respects with all applicable environmental, health and safety Requirements
of Law; (ii) each of the Parent, the Borrower and the Borrower's Non-Falcon
Subsidiaries has obtained all environmental, health and safety Permits
necessary for its operations, all such Permits are in good standing and
each of Parent, Borrower, and the Borrower's Non-Falcon Subsidiaries is in
compliance with all terms and conditions of such Permits; (iii) (A) none of
the Parent, the Borrower, or any of the Borrower's Non-Falcon Subsidiaries,
any of their presently owned Property or present operations and (B) none of
the Parent's, the Borrower's or the Borrower's Non-Falcon Subsidiaries'
previously owned Property or past operations is subject to any order from
or agreement with any Governmental Authority or private party or any
judicial or administrative proceeding or investigations respecting any
environmental, health or safety Requirements of Law or is the subject of
any investigation by any Governmental Authority evaluating the need for
Remedial Action to respond to a material Release or threatened Release of a
Contaminant into the environment, or is subject to any Remedial Action or
other Liabilities and Costs arising from the Release or threatened Release
of a Contaminant into the environment; (iv) none of the operations of the
Parent, the Borrower or any of the Borrower's Non-Falcon Subsidiaries is
subject to any judicial or administrative proceeding alleging a violation
of any environmental, health or safety Requirement of Law; (v) none of the
Parent, the Borrower or the Borrower's Non-Falcon Subsidiaries has sent or
directly arranged for the transport of any waste or Contaminant to any site
listed or proposed for listing on the federal national priorities list or
any state equivalent list of sites designated for Remedial Action; (vi) no
past or present property of the Parent, the Borrower or any of the
Borrower's Non-Falcon Subsidiaries is now or has ever been a storage,
treatment or disposal facility for hazardous waste, as those terms are
defined under 40 CFR Part 261 or any state equivalent; (vii) none of the
Parent, the Borrower or any of the Borrower's Non-Falcon Subsidiaries has
filed any notice under any applicable Requirement of Law reporting a
Release of a Contaminant into the environment; (viii) there is not now, nor
has there ever been, on or in the Property of the Parent, the Borrower or
any of the Borrower's Non-Falcon Subsidiaries: (A) any underground storage
tanks or surface impoundments or (B) any polychlorinated biphenyls used in
hydraulic oils, electrical transformers or other equipment; (ix) none of
the Parent, the Borrower or any of the Borrower's Non-Falcon Subsidiaries
has received any notice or claim to the effect that it is or might be
liable to any Person as a result of the Release or threatened Release of a
Contaminant into the environment, or as a result of exposure to any
Contaminant, which might result in liability in excess of workers
compensation; (x) no Environmental Lien has attached to any Property of the
Parent, the Borrower or any of the Borrower's Non-Falcon Subsidiaries; or
(xi) within the last eighteen months, each of the Parent and the Borrower
has inspected its Property and the Property of the Borrower's Non-Falcon
Subsidiaries and all asbestos containing material, if any, which is on or
part of such Property (excluding any raw materials which are used in the
manufacture of products or products themselves) is in good repair according
to the current standards and practices governing such material, and its
presence or condition does not violate any currently applicable or proposed
Requirement of Law; and (xii) none of the products which the Parent, the
Borrower or any of the Borrower's Non-Falcon Subsidiaries manufactures,
distributes or sells, or ever has manufactured, distributed or sold,
contains asbestos material.
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(t) EMPLOYEE BENEFIT MATTERS. Neither the Borrower nor any ERISA
Affiliate maintains or contributes to any Benefit Plan or Multiemployer
Plan other than those listed on SCHEDULE 5.01(T). Each Plan which is
intended to be qualified under Section 401(a) of the IRC as currently in
effect has been determined by the IRS to be so qualified (or will be
submitted to the IRS for a determination as to its qualified status within
the applicable remedial amendment period for such Plan), and each trust
related to any such Plan has been determined to be exempt from Federal
income tax under Section 501(a) of the IRC as currently in effect. Except
as disclosed in SCHEDULE 5.01(T), neither the Borrower nor any ERISA
Affiliate maintains or contributes to any employee welfare benefit plan
within the meaning of Section 3(1) of ERISA which provides benefits to
employees after termination of employment other than as required by Part 6
of Title I of ERISA. The Borrower and all of its ERISA Affiliates are in
compliance in all material respects with all of the responsibilities,
obligations or duties imposed on them by ERISA or regulations promulgated
thereunder with respect to all Plans. No Benefit Plan has incurred any
accumulated funding deficiency (as defined in Sections 302(a)(2) of ERISA
and 412(a) of the IRC) whether or not waived which has had or is reasonably
likely to have a Material Adverse Effect. Neither the Borrower nor any
ERISA Affiliate or any fiduciary of any Plan which is not a Multiemployer
Plan (i) has engaged in a nonexempt prohibited transaction described in
Section 406 of ERISA or 4975 of the IRC or (ii) has taken or failed to take
any action which would constitute or result in a Termination Event. Except
as disclosed on Schedule 5.01(t), neither the Borrower nor any ERISA
Affiliate has any potential liability under Section 4063, 4064, 4069, 4204
or 4212(c) of ERISA which has had or is reasonably likely to have a
Material Adverse Effect. Neither the Borrower nor any ERISA Affiliate has
incurred any liability to the PBGC which remains outstanding other than the
payment of premiums, and there are no premium payments which have become
due which are unpaid. Schedule B to the most recent annual report filed
with the IRS with respect to each Benefit Plan and furnished to the
Administrative Agent is complete and accurate. Since the date of each such
Schedule B, there has been no material adverse change in the funding status
or financial condition of the Benefit Plan relating to such Schedule B.
Neither the Borrower nor any ERISA Affiliate has (i) failed to make a
required contribution or payment to a Multiemployer Plan or (ii) made a
complete or partial withdrawal under Section 4203 or 4205 of ERISA from a
Multiemployer Plan in either case which has had or is reasonably likely to
have a Material Adverse Effect. Neither the Borrower nor any ERISA
Affiliate has failed to make a required installment or any other required
payment under Section 412 of the IRC on or before the due date for such
installment or other payment. Neither the Borrower nor any ERISA Affiliate
is required to provide security to a Benefit Plan under Section 401(a)(29)
of the IRC due to a Plan amendment that results in an increase in current
liability for the plan year. Neither the Borrower nor any ERISA Affiliate
has by reason of the transactions contemplated hereby any obligation to
make any payment to any employee pursuant to any Plan or existing contract
or arrangement.
(u) SOLVENCY. Each of the Parent, the Borrower, individually, and
the Consolidated Borrower Group, considered as one enterprise, is Solvent
both before and after giving effect to the transactions contemplated by
this Agreement and the other Transaction Documents and the payment and
accrual of all Transaction Costs with respect to any of the foregoing.
(v) ASSETS AND PROPERTIES. The Borrower and each of its Non-Falcon
Subsidiaries has good title to all of the assets (tangible and intangible)
owned by it, except for imperfections of title (including Liens to the
extent permitted under SECTION 8.02(B)) which in the aggregate do not have
a Material Adverse Effect; and all such assets are free and clear of all
Liens, except as otherwise specifically permitted by the terms and
provisions of this Agreement and the other Loan Documents.
(w) JOINT VENTURE; PARTNERSHIP. Except as set forth in SCHEDULE
5.01(W), neither the Borrower nor any of its Non-Falcon Subsidiaries is
engaged in any joint venture or partnership with any other Person.
(x) LABOR MATTERS. Except as listed on SCHEDULE 5.01(X), there are
no collective bargaining agreements, other labor agreements or
Multiemployer Plans covering any of the employees of the Parent, the
Borrower or any of the Borrower's Non-Falcon Subsidiaries. No attempt to
organize the employees of the Parent, the Borrower or any of the Borrower's
Non-Falcon Subsidiaries, and no labor disputes, strikes
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or walkouts affecting the operations of the Parent, the Borrower or any of
the Borrower's Non-Falcon Subsidiaries, is pending, or, to the Borrower's
knowledge, threatened, planned or contemplated which has had or is
reasonably likely to have a Material Adverse Effect.
(y) NO DEFAULT. No Potential Event of Default or Event of Default
exists.
(z) RESTRICTED JUNIOR PAYMENTS. On or after the Effective Date,
neither the Borrower nor any Non-Falcon Subsidiary of the 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 to
the extent permitted pursuant to SECTION 8.05.
(aa) ADVANCES TO PARENT. All Investments of the Borrower in the
Parent as of the Effective Date constitute Indebtedness of the Parent
extended by the Borrower on open account, and none of such Investments is
evidenced by any promissory note or other instrument.
5.02. SUBSEQUENT FUNDING REPRESENTATIONS AND WARRANTIES. To induce each
Lender, each of the Issuing Banks, the Administrative Agent and the Collateral
Agent to enter into this Agreement and to make the Loans and to issue or
participate in Letters of Credit, the Borrower hereby represents and warrants to
each Lender, each Issuing Bank, the Administrative Agent and the Collateral
Agent that the statements set forth in SECTION 5.01 (except to the extent that
such statements expressly are made only as of the Effective Date), are true,
correct and complete in all material respects on and as of the Funding Date in
respect of each Borrowing and the issuance of each Letter of Credit after the
Effective Date and on and as of the date any Notice of Continuation/Conversion
is delivered to the Administrative Agent, except that the representations and
warranties need not be true and correct to the extent that changes in the facts
and conditions on which such representations and warranties are based are
required or permitted under this Agreement or any Loan Document.
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ARTICLE VI
REPORTING COVENANTS
The Borrower covenants and agrees that, on and after the Effective Date and
so long as the Borrower shall have any outstanding Agreement Obligations or any
Lender shall have any Commitment hereunder or any Letter of Credit remains
outstanding:
6.01. FINANCIAL STATEMENTS. Each of the Parent and the Borrower shall
maintain or cause to be maintained a system of accounting established and
administered in accordance with sound business practices and consistent with
past practice to permit preparation of financial statements in conformity with
GAAP, and, if required by the terms of this Agreement in conformity with
Agreement Accounting Principles, 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:
(a) ANNUAL REPORTS. As soon as practicable, and in any event within
one hundred and five (105) days after the end of each Fiscal Year on a
consolidated basis for each of the Consolidated Parent Group and the
Consolidated Borrower Group, and on a consolidated and consolidating basis
for the Borrower and all of its Subsidiaries, annual financial statements
consisting of a balance sheet, income statement and cash flow statement,
setting forth in comparative form in each case the consolidated figures for
the corresponding periods of the previous Fiscal Year all in reasonable
detail, and accompanied, in the case of such consolidated financial
statements (other than the consolidated financial statements for the
Consolidated Borrower Group), by an opinion (unqualified as to scope or
going concern and which is not adverse and does not contain any disclaimer)
thereon of Arthur Andersen & Co. or another firm of independent certified
public accountants of recognized national standing regularly retained by
the Parent or the Borrower and acceptable to the Administrative Agent,
which report shall state that such financial statements present fairly the
financial position of the Persons covered thereby as at the dates indicated
and the results of their operations and cash flow for the periods indicated
in conformity with GAAP or Agreement Accounting Principles, as applicable,
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 such firm's audit has been conducted in accordance with
generally accepted auditing standards; provided, however, such opinion
shall only be required as to Fiscal Years commencing with the Fiscal Year
beginning January 1, 1994.
(b) QUARTERLY REPORTS.
As soon as practicable, and in any event within fifty (50) days after
the end of each of the Borrower's and the Parent's fiscal quarters, on a
consolidated basis for each of the Consolidated Parent Group and the
Consolidated Borrower Group and on a consolidated and consolidating basis
for the Borrower and all of its Subsidiaries as to the most recent fiscal
quarter and the year to date, each of the following:
(A) a balance sheet as of the end of such fiscal quarter, and as
of the end of the previous Fiscal Year;
(B) an income statement for such fiscal quarter and for the period
from the beginning of the current Fiscal Year to the end of such fiscal
quarter, setting forth in each case in comparative form and in
reasonable detail the figures for the corresponding periods of the
previous Fiscal Year and in the projected financial statements delivered
pursuant to clause (d) below; and
(C) a cash flow statement for the period from the beginning of the
current Fiscal Year to the end of such fiscal quarter, setting forth in
each case in comparative form and in reasonable detail the figures for
the corresponding period of the previous Fiscal Year;
all prepared by the Parent or the Borrower, as applicable, together with
a certification by the chief financial officer, treasurer or controller
of Borrower that they fairly represent the financial condition of the
Persons covered thereby as at the dates indicated in accordance with
GAAP or Agreement Accounting Principles, as applicable, subject to
changes resulting from audit and normal year-end adjustments.
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(c) BORROWING BASE REPORT. As soon as practicable, and in any event
within twenty (20) days after the end of each fiscal month, a Borrowing
Base Certificate as of the end of such fiscal month.
(d) BUDGET AND BUSINESS PLAN. Promptly upon completion, but in any
event not later than forty-five (45) days after the end of each Fiscal
Year, a copy of the operating budget and projections by the Borrower of the
income statement, balance sheet and cash flow of the Consolidated Borrower
Group, taken as a whole, for the next succeeding fiscal year of the
Consolidated Borrower Group, all in form customarily prepared by the
Borrower's management, and promptly after preparation of any commentary on
any such budget or projected financial statements, a copy of such
commentary, such operating budget and projected financial statements to be
accompanied by a certificate of the chief financial officer, treasurer or
controller of Borrower, to the effect that such operating budget and
projected financial statements have been prepared on the basis of sound
financial planning practice and that such officer has no reason to believe
they are incorrect or misleading in any material respect.
(e) COMPLIANCE CERTIFICATE. Together with each delivery of (i) the
financial statements pursuant to SUBSECTIONS (A) AND (B) above, (A) an
Officers' Certificate of the Borrower or the Parent, as applicable, stating
that the signers have reviewed the terms of this Agreement and the Loan
Documents, and have made, or caused to be made under their supervision, a
review in reasonable detail of the transactions and condition of Parent,
Borrower and their respective Subsidiaries 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 the signers do not have knowledge of the existence as at the date of
the 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 has taken, is taking and proposes to
take with respect thereto; and (B) a Compliance Certificate (1)
demonstrating in reasonable detail compliance during and at the end of such
accounting periods with the provisions set forth in SECTIONS 2.05, 8.01,
8.03, 8.04, 8.05 and 8.11 and ARTICLE IX and (2) in the case of the
financial statements delivered pursuant to SUBSECTION (A) or SUBSECTION (B)
above, stating that such financial statements present fairly the financial
position of the Consolidated Parent Group, the Consolidated Borrower Group
and the Borrower and all of its Subsidiaries on a consolidated basis, as at
the dates indicated and the results of their operations and changes in
their cash flow for the periods indicated in conformity with GAAP or
Agreement Accounting Principles, as applicable (except as otherwise noted
therein), consistently applied, and (ii) the financial statements pursuant
to SUBSECTION (A) above, a written discussion and analysis by the
management of the Parent or the Borrower, as applicable, of such financial
statements.
(f) ACCOUNTANTS' COMPLIANCE CERTIFICATE. Simultaneously with the
delivery of the financial statements referred to in SUBSECTION (A) above, a
statement of the firm of independent certified public accountants which
reported on such financial statements whether anything has come to their
attention to cause them to believe that there existed on the date of such
statements any Event of Default or Potential Event of Default under Article
IX hereof.
(g) REPORT OF MATERIAL EVENTS. Promptly upon the Borrower obtaining
knowledge (A) of any condition or event which constitutes an Event of
Default or Potential Event of Default, or (B) of any condition or event
which has or is reasonably likely to have a Material Adverse Effect, an
Officer's Certificate specifying the nature and period of existence of any
such condition or event and what action the Borrower has taken, is taking
and proposes to take with respect thereto.
(h) NOTICE OF CLAIMS AND PROCEEDINGS. (i) Promptly after learning
thereof, notice of the institution of, or written threat of, any action,
suit, proceeding, governmental investigation or arbitration against or
affecting the Parent, the Borrower or any of their respective Subsidiaries
(other than Falcon and its Subsidiaries) or any Property of such Person
involving claims in excess of $2,000,000 with respect to any such Person or
any Property of such Person valued in excess of $5,000,000 except where the
same is fully covered (other than any applicable deductible) by insurance
(other than insurance in the nature of retro-premium insurance or other
self insurance programs) and of any material adverse change in any existing
action, suit, proceeding, governmental investigation or arbitration; and
(ii) promptly upon
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learning thereof, notice of any investigation or proceeding before or by
any Governmental Authority, the effect of which might limit, prohibit or
restrict materially the manner in which the Borrower or any of its
Non-Falcon Subsidiaries currently conducts its business or to declare any
substance contained in the products manufactured or distributed by it to be
dangerous, if such declaration has or is reasonably likely to have a
Material Adverse Effect.
(i) ERISA MATTERS.
(i) As soon as possible, and in any event within fifteen (15)
Business Days after the Borrower or any ERISA Affiliate knows or has
reason to know that a Termination Event has occurred, a written
statement of the chief financial officer of the Borrower describing such
Termination Event and the action, if any, which the Borrower or such
ERISA Affiliate has taken, is taking or proposes to take with respect
thereto, and when known, any action taken or threatened by the IRS, DOL
or PBGC with respect thereto;
(ii) As soon as possible, and in any event within fifteen (15)
Business Days, after the Borrower or any ERISA Affiliate knows or has
reason to know that a prohibited transaction (as defined in Section 406
of ERISA and Section 4975 of the IRC) involving the Borrower or any
ERISA Affiliate has occurred, a statement of the chief financial officer
of the Borrower describing such transaction and the action which the
Borrower or such ERISA Affiliate has taken, is taking or proposes to
take with respect thereto;
(iii) Within fifteen (15) Business Days after receipt by the
Borrower or any ERISA Affiliate of a written request from the
Administrative Agent (which shall make such request at the request of
any Lender), a copy of each annual report (Form 5500 series), including
Schedule B thereto, filed after the Effective Date with respect to each
Benefit Plan;
(iv) Within fifteen (15) Business Days after the filing thereof
with the IRS, a copy of each funding waiver request filed with respect
to any Benefit Plan and within fifteen (15) Business Days after receipt,
a copy of any communications received by the Borrower or any ERISA
Affiliate with respect to such request;
(v) Within fifteen (15) Business Days after receipt by the
Borrower or any ERISA Affiliate of a written request from the
Administrative Agent (which shall make such request at the request of
any Lender), a copy of each actuarial report for any Benefit Plan or
Multiemployer Plan and each annual report for any Multiemployer Plan;
PROVIDED THAT neither the Borrower nor any ERISA Affiliate shall have an
obligation to provide a copy of any actuarial report or annual report
for any Multiemployer Plan if it is unable to obtain such documents
after good faith efforts to do so;
(vi) Within fifteen (15) Business Days after the occurrence
thereof, notification of any increases in the benefits of any existing
Benefit Plan or the establishment of any new Plan or the commencement of
contributions to any Multiemployer Plan to which the Borrower or any
ERISA Affiliate was not previously contributing;
(vii) Within fifteen (15) Business Days after receipt by the
Borrower or an ERISA Affiliate of notice of the PBGC's intention to
terminate a Benefit Plan or to have a trustee appointed to administer a
Benefit Plan, a copy of each such notice;
(viii) Within fifteen (15) Business Days after receipt by the
Borrower or any ERISA Affiliate of any unfavorable determination letter
from the IRS regarding the qualification of a Plan under Section 401(a)
of the IRC, a copy of such letter;
(ix) Within fifteen (15) Business Days after receipt by the
Borrower or an ERISA Affiliate of a notice from a Multiemployer Plan
regarding the imposition of withdrawal liability, copies of each such
notice;
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(x) Within fifteen (15) Business Days after the failure by the
Borrower or any ERISA Affiliate to make a required installment or any
other payment required under Section 412 of the IRC on or before the due
date for such installment or payment, a notification of such failure;
and
(xi) Within fifteen (15) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know (A) a Multiemployer Plan has
been terminated, (B) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (C) the
PBGC has instituted or will institute proceedings under Section 4042 of
ERISA to terminate a Multiemployer Plan, a notification of such
information.
For purposes of this SECTION 6.01(I), the Borrower and any ERISA Affiliate
shall be deemed to know all facts known by the administrator of any Plan of
which the Borrower or any ERISA Affiliate is the plan sponsor.
(j) OTHER INFORMATION. Such other information respecting the
financial condition of the Borrower or its business, operations, assets,
performance or prospects as the Administrative Agent, the Collateral Agent
or any Lender may, from time to time, reasonably request including, without
limitation, financial projections, business plans and (following written
notice to Borrower) any information such Person's accountants may have with
respect to such Person's financial condition, its business, operations,
assets, performance and prospects. The Administrative Agent and the Lenders
shall treat any non-public information so obtained as confidential.
(k) PUBLICLY DISTRIBUTED INFORMATION. On a timely basis, copies of
all financial statements, reports and notices, sent or made available
generally by the Parent or the Borrower to the holders of its publicly-held
securities, if any, or filed with the Commission, and of all press releases
made available generally by the Parent or the Borrower to the public, if
any, concerning material developments in the business of the Parent or the
Borrower.
(l) PROPERTY DAMAGE OR CONDEMNATION. Promptly after the occurrence
thereof, written notification (or telephonic notice promptly confirmed in
writing) of and a description of any Property of the Parent, the Borrower
or any of their respective Subsidiaries (other than Falcon and its
Subsidiaries) with an aggregate value in excess of $1,000,000 damaged, lost
or taken and the anticipated amount of any insurance or condemnation
proceeds in connection therewith.
6. 02. ENVIRONMENTAL NOTICES. The Borrower shall notify the
Administrative Agent in writing, promptly upon the Borrower's learning thereof,
of any:
(a) Notice or claim to the effect that the Parent, the Borrower or
any of their respective Subsidiaries (other than Falcon and its
Subsidiaries) is or may be liable to any Person as a result of the Release
or threatened Release of any Contaminant into the environment;
(b) Notice that the Parent, the Borrower or any of their respective
Subsidiaries (other than Falcon and its Subsidiaries) is subject to
investigation by any Governmental Authority evaluating whether any Remedial
Action is needed to respond to the Release or threatened Release of any
Contaminant into the environment;
(c) Notice that any Property of the Parent, the Borrower or any of
their respective Subsidiaries (other than Falcon and its Subsidiaries) is
subject to an Environmental Lien;
(d) Notice of violation to the Parent, the Borrower or any of their
respective Subsidiaries (other than Falcon and its Subsidiaries) or
awareness by the Parent, the Borrower or any of their respective
Subsidiaries (other than Falcon and its Subsidiaries) of a condition which
might reasonably be expected to result in a notice of violation of any
environmental, health or safety Requirement of Law which has or could have
a Material Adverse Effect;
(e) Commencement or threat of any judicial or administrative
proceeding alleging a violation by the Parent, the Borrower or any of their
respective Subsidiaries (other than Falcon and its Subsidiaries)
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of any environmental, health or safety Requirement of Law which, if
adversely determined, has or could have a Material Adverse Effect; or
(f) Any proposed acquisition of stock, assets, real estate, or
leasing of property, or any other action by the Parent, the Borrower or any
of their respective Subsidiaries (other than Falcon and its Subsidiaries)
that is reasonably likely to subject the Parent, the Borrower or any such
Subsidiary to environmental, health or safety Liabilities and Costs in
excess of $250,000.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, on and after the Effective Date and
so long as the Borrower shall have any outstanding Agreement Obligations or any
Lender shall have any Commitment hereunder or any Letter of Credit remains
outstanding:
7.01. CORPORATE EXISTENCE, ETC. The Borrower shall, and shall cause each
of its Non-Falcon Subsidiaries to, at all times, maintain its corporate
existence and preserve and keep in full force and effect its rights and
franchises. The Borrower shall promptly provide the Administrative Agent and the
Collateral Agent with a complete list of its Non-Falcon Subsidiaries upon the
occurrence of any change in the list set forth on SCHEDULE 5.01(C) hereto.
7.02. CORPORATE POWERS, ETC. The Borrower shall, and shall cause each of
its Non-Falcon Subsidiaries to, qualify and remain qualified to do business in
each jurisdiction in which the nature of its business requires it to be so
qualified, except in those jurisdictions where the failure to so qualify does
not have and is not reasonably likely to have a Material Adverse Effect.
7.03. COMPLIANCE WITH LAWS. The Borrower shall, and shall cause each of
its Non-Falcon Subsidiaries to, comply with all Requirements of Law, and all
Contractual Obligations affecting it or its business, properties, assets or
operations, except where the failure so to comply does not have and is not
reasonably likely to have a Material Adverse Effect.
7.04. PAYMENT OF TAXES AND CLAIMS. The Borrower shall, and shall cause
each of its Non-Falcon 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 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 its properties or assets, prior to
the time when any penalty or fine shall be incurred with respect thereto;
provided that no such taxes, assessments and governmental charges referred to in
CLAUSE (A)above or claims referred to in CLAUSE (B) above need be paid if being
contested 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 therefor.
7.05. MAINTENANCE OF PROPERTIES; INSURANCE. The Borrower shall, and shall
cause each of its Non-Falcon Subsidiaries to, maintain or cause to be maintained
in good repair, working order and condition, excepting ordinary wear and tear
and damage, due to casualty or condemnation, all Property material to its
operations (which shall in any event include each parcel of real property
subject to any Mortgage) and will make or cause to be made all appropriate
repairs, renewals and replacements thereof. The Borrower shall, and shall cause
each of its Non-Falcon Subsidiaries to, maintain with financially sound
insurance companies the insurance policies and programs, including
self-insurance retention levels, listed on SCHEDULE 7.05 hereto (or
substantially similar programs or policies and amounts or other programs,
policies and amounts) insuring all Property and other assets material to the
operations of Borrower and its Non-Falcon Subsidiaries (which shall in any event
include each parcel of real property subject to any Mortgage) against loss or
damage by fire, theft, burglary, pilferage and loss in transit and business
interruption, together with such other hazards as are reasonably consistent with
prudent industry practice, and maintain liability insurance consistent with
prudent industry practice with financially sound insurance companies. Not later
than thirty (30) days after the
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renewal, replacement or material modification of any policy or program, the
Borrower shall deliver or cause to be delivered to the Collateral Agent (which
the Collateral Agent shall promptly distribute to each Lender) a detailed
schedule setting forth for each such policy or program: (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, and (d) the policy number of
such policy. All casualty and business interruption insurance covering the
Borrower or any Non-Falcon Subsidiary of the Borrower or any Property of the
Borrower or any Non-Falcon Subsidiary of the Borrower shall contain an
endorsement in the form of EXHIBIT 9.
7.06. INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS. The
Borrower shall permit, and shall cause each of its Non-Falcon Subsidiaries to
permit, any authorized representative(s) designated by the Administrative Agent
or the Collateral Agent to visit and inspect any of its properties, including
financial and accounting records, and to make copies and take extracts
therefrom, and to discuss its affairs, finances and accounts with its officers,
employees, representatives, agents or independent certified public accountants,
all upon reasonable notice and at such reasonable time and as often as may be
reasonably requested. Each such reasonable visitation and inspection made by or
on behalf of the Administrative Agent or the Collateral Agent shall be at the
Borrower's expense.
7.07. LABOR MATTERS. The Borrower shall notify the Administrative Agent,
in writing, promptly, but in any event within two (2) Business Days after
learning thereof, of any material labor dispute to which it or any of its
Non-Falcon Subsidiaries may become a party and any strikes or walkouts relating
to any of its or their facilities.
7.08. MAINTENANCE OF PERMITS. The Borrower shall obtain and maintain, and
shall cause each of its Non-Falcon Subsidiaries to obtain and maintain, in full
force and effect all licenses, franchises, Permits or other rights necessary for
the operation of its business, except where the failure to obtain or maintain
such licenses, franchises, Permits or rights does not have and is not reasonably
likely to have a Material Adverse Effect.
7.09. EMPLOYEE BENEFIT MATTERS. The Borrower shall establish, maintain
and operate, and cause each of its Non-Falcon Subsidiaries to exercise their
best efforts to cause other ERISA Affiliates to establish, maintain and operate,
all Plans in all material respects in compliance with the applicable provisions
of ERISA, the IRC, and all other applicable laws, and the regulations and
interpretations thereunder, and the respective requirements of the governing
documents for such Plans.
7.10. FORMATION OF SUBSIDIARIES.
(a) The Borrower or any of its Non-Falcon Subsidiaries may form
additional Subsidiaries organized as corporations under the laws of one of
the states of the United States provided each of the following conditions
precedent is met in connection therewith:
(i) such Subsidiary shall have executed and delivered a
Subsidiary Guaranty, a Subsidiary Security Agreement, and if requested
by the Collateral Agent, an Intellectual Property Agreement;
(ii) such Subsidiary shall have executed and become a party to the
Contribution Agreement;
(iii) to the extent such Subsidiary has an interest of record in
real property, such Subsidiary shall execute and deliver such Mortgages
in connection therewith as shall be requested by the Collateral Agent
(with SCHEDULE 1.01-B being automatically amended as of the execution
thereof);
(iv) all financing statements and Mortgages relating to the
Collateral of such Subsidiary shall have been filed or recorded and the
Collateral Agent shall have received in form and substance reasonably
satisfactory to the Collateral Agent, such assurances, including,
without limitation, insurance policies, as the Collateral Agent may deem
appropriate to establish such Subsidiary's title, the due creation,
perfection and priority of the Collateral Agent's Liens for the benefit
of itself and the Holders of Secured Obligations on such Collateral and
the absence of any Liens which are not specifically permitted hereunder
(with SCHEDULE 1.01-C being automatically amended to reflect any
Permitted Existing Liens on such proposed Subsidiary's assets);
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(v) the Borrower shall have executed or shall have caused its
appropriate Subsidiary to execute a Pledge Agreement in respect of all
of the stock of such Subsidiary;
(vi) the Collateral Agent shall have received an opinion of
counsel, in form and substance reasonably satisfactory to the Collateral
Agent, covering such matters relating to the proposed Subsidiary and the
Collateral Documents executed and delivered to the Collateral Agent
pursuant to this SECTION 7.10 as the Collateral Agent deems necessary;
(vii) the Administrative Agent shall have received a compliance
certificate from the chief financial officer, treasurer or controller of
the Borrower certifying that after the formation of such Subsidiary, no
Event of Default or Potential Event of Default exists; and
(viii) the Lenders shall have received such other documents,
instruments or agreements as are reasonably requested by the
Administrative Agent, the Collateral Agent or the Requisite Lenders in
order to ensure that the documentation with respect to such Subsidiary
is substantially the same as that received with respect to the
Non-Falcon Subsidiaries of the Borrower existing on the Effective Date.
(b) The Borrower or any of its Non-Falcon Subsidiaries may form
additional Subsidiaries organized under the laws of jurisdictions outside
of the United States provided each of the following conditions precedent is
met in connection therewith:
(i) the majority of the outstanding shares of capital stock of
each such Subsidiary shall be owned directly or indirectly by the
Borrower or any of its Non-Falcon Subsidiaries,
(ii) immediately following the formation of each such Subsidiary,
(A) 65% of the shares (or, if the Borrower owns directly or
indirectly less than 65% of such shares, all of the shares owned
directly or indirectly by the Borrower) of such Subsidiary shall be
pledged to the Collateral Agent, for the ratable benefit of the
Holders of Secured Obligations pursuant to an amendment to the
Borrower's or the owning Subsidiary's Pledge Agreement in form and
substance reasonably satisfactory to the Administrative Agent, and
(B) the Borrower shall deliver to the Administrative Agent such
opinions of counsel with respect to, and copies of the Boards of
Directors resolutions authorizing, the execution, delivery and
performance of the agreements described in clause (A) immediately
preceding as the Administrative Agent may reasonably request, and
(iii) the aggregate investment by the Borrower in all such
Subsidiaries pursuant to this SECTION 7.10(B) shall not exceed the limit
set forth in SECTION 8.03(VII).
7.11. COLLATERAL AUDIT. The Borrower shall permit an independent auditor
satisfactory to the Administrative Agent to conduct, once each Fiscal Year, at
the request of the Administrative Agent, the Collateral Agent or the Requisite
Lenders, a review of the accounts receivable, inventory and fixed assets of the
Borrower, and its Non-Falcon Subsidiaries and will pay the fees and
disbursements of such auditor in connection therewith. Such reviews may include
verification of accounts receivable, a physical inventory and valuations of such
inventory, all to the extent included in the Borrowing Base as reasonably
determined by the Administrative Agent and the Collateral Agent in consultation
with the Borrower.
7.12. SEPARATE CORPORATE EXISTENCE. The Borrower shall take all
reasonable steps (including, without limitation, all steps which the Agent or
any Lender may from time to time reasonably request) to maintain its identity as
a separate legal entity to make it apparent to third parties that such Borrower
is an entity with assets and liabilities distinct from those of Parent. Without
limiting the generality of the foregoing, the Borrower shall:
(i) compensate all employees, consultants and agents directly, from
Borrower's or Borrower's Non-Falcon Subsidiaries' bank accounts, for
services provided to Borrower by such employees, consultants and agents
and, to the extent any employee, consultant or agent of Borrower is also an
employee,
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consultant or agent of Parent, allocate the compensation of such employee,
consultant or agent between Borrower and Parent on the basis reasonably
related to actual use of such services;
(ii) allocate all overhead expenses (including, without limitation,
telephone and other utility charges) for items shared between Borrower and
Parent on a basis reasonably related to actual use;
(iii) 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;
(iv) maintain the Borrower's books and records complete and separate
from those of Parent;
(v) ensure that any of Borrower's or Parent's consolidated financial
statements or other public information for the Borrower and its Affiliates
on a consolidated basis contain appropriate disclosures concerning the
Borrower's separate existence;
(vi) not maintain bank accounts or other depository accounts to which
Parent is an account party, into which Parent makes deposits or from which
Parent has the power to make withdrawals;
(vii) not permit Parent to pay any of the Borrower's operating
expenses (except when paid and charged pursuant to an allocation based upon
actual use, to the extent practicable and, to the extent such allocation is
not practicable, on a basis reasonably related to actual use); and
(viii) at all times have at least one member of the Borrower's board
of directors who is neither an officer or employee of Parent.
7.13. INTEREST RATE HEDGING CONTRACTS. If at any time during the term of
this Agreement (i) the aggregate outstanding principal amount of the Term Loans
is $50,000,000 or greater and (ii) either (A) the LIBO Rate for an Interest
Period of three months is greater than 8.5% per annum or (B) the yield to
maturity of United States Treasury Obligations with a maturity of approximately
three years (as reported in THE WALL STREET JOURNAL) is greater than 8.5% per
annum, then within thirty (30) days after written notice from the Administrative
Agent to the Borrower, the Borrower shall enter into interest rate Hedging
Contracts reasonably acceptable to the Administrative Agent for a notional
amount equal to at least $50,000,000, which Hedging Contracts may include a swap
at a market rate for three years or longer and/or a cap at 9% per annum or less
for three years or longer.
7.14. ACCOUNTANTS' RELIANCE LETTER. The Borrower shall cause the
accounting firm which audits the Borrower's financial statements in accordance
with SECTION 6.01(A) to renew or extend the understanding entered into pursuant
to Section 4.01(l) on terms satisfactory to the Requisite Lenders.
7.15. FUTURE LIENS ON REAL PROPERTY IN FAVOR OF THE COLLATERAL AGENT. The
Borrower shall cause each of the Guarantors to execute and deliver to the
Collateral Agent, immediately upon the acquisition or leasing of any real
property after the Effective Date, a mortgage, deed of trust, collateral
assignment or other appropriate instrument evidencing a Lien upon any such
acquired property, lease or interest, the same to be in form and substance
substantially the same as the Mortgages executed and delivered on or prior to
the Effective Date, to be subject only to such Liens as otherwise shall be
permitted by this Agreement and in all respects to be reasonably acceptable to
the Collateral Agent. The foregoing provision shall apply to the leasing of any
real property only if either (i) the term of such lease (without regard to any
extension thereof at then current market rent) is more than five years or (ii)
such lease has a material value by reason of a purchase option, below-market
rent or otherwise.
If the sale of Lapp Insulator Company contemplated by the Borrower shall
not have been consummated by December 31, 1994, then the Borrower shall cause
Lapp Insulator Company to execute and deliver to the Collateral Agent mortgages
and other appropriate instruments evidencing Liens upon its owned and leased
real property in accordance with the foregoing provisions of this SECTION 7.15.
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ARTICLE VIII
NEGATIVE COVENANTS
The Borrower covenants and agrees that, on and after the Effective Date and
so long as the Borrower shall have any outstanding Agreement Obligations or any
Lender shall have any Commitment hereunder or any Letter of Credit remains
outstanding:
8.01. INDEBTEDNESS. The Borrower shall not, and shall not permit any of
its Non-Falcon Subsidiaries to, directly or indirectly create, incur, assume or
otherwise become or remain directly or indirectly liable with respect to any
Indebtedness, except:
(i) the Obligations;
(ii) the Existing Indebtedness;
(iii) Indebtedness in respect of Accommodation Obligations permitted
by SECTION 8.04;
(iv) Indebtedness incurred by any Non-Falcon Subsidiary of the
Borrower with respect to which the Borrower or any other Non-Falcon
Subsidiary of the Borrower is the obligee;
(v) Indebtedness incurred by the Borrower with respect to which the
Parent or any Non-Falcon Subsidiary of the Borrower is the obligee;
(vi) net obligations in respect of Hedging Contracts;
(vii) Indebtedness incurred by any of the Borrower or its Non-Falcon
Subsidiaries in connection with the issuance of letters of credit
(including Letters of Credit but excluding other letters of credit fully
secured by cash collateral and letters of credit with respect to which the
reimbursement obligation is fully supported by a Letter of Credit) for
which such Person is the account party in an aggregate amount (for all such
Persons) of up to $65,000,000 at any one time MINUS the undrawn face amount
of letters of credit permitted under SECTION 8.04(V);
(viii) other Indebtedness of the Borrower and its Non-Falcon
Subsidiaries not exceeding in the aggregate $25,000,000 at any one time
outstanding;
(ix) Indebtedness with respect to Capital Leases not in excess of
$10,000,000 at any one time; and
(x) any refinancing of the Indebtedness described in clauses (i)
through (viii) of this SECTION 8.01 provided that any such refinancing is
on market terms;
PROVIDED, HOWEVER, in each case after taking such Indebtedness into account the
Consolidated Borrower Group is in full compliance with the provisions of ARTICLE
IX hereof.
Any additional Indebtedness (other than Indebtedness already permitted pursuant
to this SECTION 8.01) consented to by the Requisite Lenders shall be on terms
which shall include without limitation that the applicable interest rate shall
be at a market rate, covenants shall be no more restrictive than those contained
in this Agreement, such Indebtedness shall be unsecured, no principal payments,
sinking fund or similar payments shall be scheduled in the case of subordinated
indebtedness prior to six months after the Term Loan Termination Date or in the
case of other Indebtedness prior to two years after the Term Loan Termination
Date and such additional Indebtedness shall not result in a violation of any of
the covenants contained in this Agreement on a pro forma basis.
8.02. SALES OF ASSETS; LIENS.
(a) LIMITATION ON SALES. The Borrower shall not, and shall not
permit any of its Non-Falcon Subsidiaries to, sell, assign, transfer,
lease, convey or otherwise dispose of, in a single transaction or in a
series of related transactions, any properties or assets, including,
without limitation, any capital stock of any of their respective Non-Falcon
Subsidiaries, whether now owned or hereafter acquired, or any income or
profits therefrom, except for (i) sales of inventory in the ordinary course
of business, (ii) the disposition of equipment in the ordinary course of
business, (iii) the sales and/or contribution of Receivables pursuant to
the Receivables Agreements, (iv) so long as no Event of Default or
Potential
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Event of Default exists, any other sales or dispositions if such properties
or assets contributed less than 15% of the EBITDA of the Consolidated
Borrower Group in the immediately preceding Fiscal Year and represent, as
of the end of the most recent Fiscal Year, less than 15% of the total
assets of the Consolidated Borrower Group based on valuations reasonably
satisfactory in form and substance to the Administrative Agent and the
Collateral Agent, (v) so long as no Event of Default or Potential Event of
Default exists, the sale of the assets or capital stock of Lapp Insulator
Company or Gerry Sportswear Corporation in an arm's-length transaction, and
(vi) so long as no Event of Default or Potential Event of Default exists or
would be created thereby, the sale of capital stock of Falcon in an arm's
length transaction. In addition, neither the Borrower nor any Non-Falcon
Subsidiary shall issue any Securities for any consideration other than cash
except with the consent of the Requisite Lenders.
(b) LIENS. The Borrower shall not, and shall not permit any of its
Non-Falcon Subsidiaries to, directly or indirectly create, incur, assume or
permit to exist any Lien on or with respect to any of its Property
(including all capital stock of any Non-Falcon Subsidiary of the Borrower
and all Collateral) except:
(i) Liens granted to the Collateral Agent for the benefit of itself
and the Holders of Secured Obligations securing the Obligations;
(ii) Customary Permitted Liens;
(iii) Permitted Existing Liens;
(iv) Liens on property existing at the time of acquisition thereof
by the Borrower or any of its Non-Falcon Subsidiaries and Liens securing
purchase money Indebtedness for equipment to the extent the aggregate
outstanding principal amount of such Indebtedness is permitted under
SECTION 8.01 and the value of the equipment securing such Indebtedness
approximates the amount of such Indebtedness provided that in each case
such Liens do not apply to other property or assets of such Person;
(v) Liens with respect to judgments or attachments which do not
result in an Event of Default or Potential Event of Default hereunder;
(vi) Liens granted on cash collateral securing letters of credit
permitted pursuant to SECTION 8.01(VII) in favor of the issuer of such
letter of credit;
(vii) Liens granted to secure Indebtedness permitted under SECTION
8.01(IX); and
(viii) Liens filed to perfect the transfers of Receivables pursuant
to the Receivables Agreements or otherwise to evidence the transactions
contemplated thereunder.
8.03. INVESTMENTS. The Borrower shall not, and shall not permit any of
its Non-Falcon Subsidiaries to, directly or indirectly make or commit to make
any advance, loan, extension of credit or capital contribution to, or purchase
of any stock, bonds, notes, debentures or other Securities of, or make any other
investment in, any Person or enter into a partnership with any Person,
including, without limitation, any Affiliate of the Borrower (all such
transactions being referred to as "Investments"), except:
(i) Investments by the Borrower or any of its Non-Falcon
Subsidiaries in Cash Equivalents;
(ii) Investments by the Borrower in the Parent permitted by SECTION
8.05(I), provided each advance from the Borrower is made on open account
and is not evidenced by a promissory note or any other instrument;
(iii) Investments by the Borrower in any Guarantor and, to the extent
contemplated under the Receivables Agreements, in any other Borrower
Subsidiary in existence as of January 31, 1994;
(iv) Investments by the Borrower in any Non-Falcon Subsidiary not in
existence as of January 31, 1994 pursuant to the Receivables Agreements;
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(v) Investments by the Borrower in the Receivables Subsidiary which
are required by the Pooling and Servicing Agreement;
(vi) Investments by any Non-Falcon Subsidiary in the Borrower;
(vii) Investments by the Borrower or a Non-Falcon Subsidiary in
Subsidiaries created pursuant to SECTION 7.10, provided that Investments in
Subsidiaries created pursuant to SECTION 7.10(B) shall not exceed
$10,000,000 in the aggregate;
(viii) loans to employees and Accommodation Obligations with respect
to loans to employees in the ordinary course of business not in excess of
an aggregate amount of $1,000,000 outstanding at any one time;
(ix) Investments by the Borrower or a Non-Falcon Subsidiary in any
other Person constituting an acquisition of all or substantially all of the
capital stock or assets of such Person, PROVIDED such Investments do not
exceed an aggregate amount of $50,000,000 (including the cash and noncash
consideration for such Investment plus the amount of any liabilities,
including contingent liabilities, assumed in connection with such
Investment) during the term of this Agreement (plus an amount equal to the
amount realized by the Borrower and the Guarantors from the sale of any
such Investments and which are not required to be prepaid and applied to
the Term Loans pursuant to SECTIONS 2.05 AND 2.06) and no individual
Investment or series of related Investments shall exceed $10,000,000
(including the cash and noncash consideration for such Investment plus the
amount of any liabilities, including contingent liabilities, assumed in
connection with such Investment), and PROVIDED FURTHER that any such
Investment shall be in a Person that is in substantially the same line of
business or a reasonably related business as existing businesses of the
Borrower or any Non-Falcon Subsidiary, and the Borrower shall deliver an
Officer's Certificate confirming that after such Investment has been made
(a) on a pro forma basis the Borrower will remain in compliance with the
covenants in this Agreement, (b) as a result of such Investment neither the
Borrower nor any of its Non-Falcon Subsidiaries shall be exposed to
additional material contingent liabilities and (c) Revolving Credit
Availability shall be not less than $10,000,000;
(x) other Investments by the Borrower and its Non-Falcon Subsidiaries
not in excess of an annual amount of $2,000,000 during the term of this
Agreement;
(xi) increases in Investments arising from undistributed earnings or
changes in currency translations;
(xii) Investments by foreign Non-Falcon Subsidiaries in other foreign
Non-Falcon Subsidiaries;
(xiii) Investment by the Borrower or any Non-Falcon Subsidiary in the
R&M Note and any letters of credit delivered to the Borrower pursuant to
the R&M Stock Purchase Agreement, PROVIDED that any amended terms of the
R&M Note, the related R&M Note Agreement (as defined in the R&M Stock
Purchase Agreement) and such letters of credit shall be acceptable in form
and substance to the Administrative Agent and the Collateral Agent; and
(xiv) Investment by the Borrower or any Non-Falcon Subsidiary in the
Caron Note; PROVIDED that the outstanding principal balance of the Caron
Note shall in no event exceed $5,000,000.
Notwithstanding anything herein to the contrary, (a) there shall be excluded
from the calculation of Investments the accrual of intercompany charges incurred
in the ordinary course and (b) there shall be included in the calculation of
investments all transfers of cash or assets (other than the purchase of
inventory in the ordinary course of business and upon terms that would be
obtained in an arms-length transaction). The Borrower's Investment in Falcon as
of the Effective Date may be reduced after the Effective Date as permitted by
SECTION 8.02(A)(VI), but shall not be increased after the Effective Date (other
than non-cash accounting changes in the book value of such Investment)
regardless of any such previous reduction.
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8.04. ACCOMMODATION OBLIGATIONS. The Borrower shall not, and shall not
permit any of its Non-Falcon Subsidiaries to, directly or indirectly, create or
become or be liable with respect to any Accommodation Obligation, except:
(i) guaranties resulting from endorsement of negotiable instruments
for collection in the ordinary course of business;
(ii) Accommodation Obligations arising in connection with the
Transaction Documents;
(iii) Accommodation Obligations issued with respect to the
Indebtedness of the Borrower or any Guarantor in the ordinary course of
business of the Borrower or any of the Non-Falcon Subsidiaries;
(iv) Accommodation Obligations of any foreign Non-Falcon Subsidiary
with respect to the Indebtedness of any other foreign Non-Falcon
Subsidiary; and
(v) Accommodation Obligations issued with respect to the Indebtedness
of the Parent not to exceed $5,000,000 at any one time.
8.05. RESTRICTED JUNIOR PAYMENTS. The Borrower shall not, and shall not
permit any Non-Falcon Subsidiary of the Borrower to, declare or make any
Restricted Junior Payment, except:
(i) (a) payments of dividends to the Parent by the Borrower or
Investments by the Borrower in the Parent, PROVIDED that (1) at the time
thereof and after taking into account the payment thereof, no Event of
Default or Potential Event of Default exists or is reasonably likely to
result therefrom or occur within 30 days thereafter, (2) such dividends or
Investments are used solely to pay interest on the Senior Deferred Coupon
Notes, and (3) any such dividends or Investments can be paid only if,
immediately prior to such payment, the Borrower delivers to the
Administrative Agent an Officer's Certificate which demonstrates that,
immediately following such payment, the ratio of Total Indebtedness (other
than Accommodation Obligations) of the Consolidated Borrower Group on a
consolidated basis immediately following such payment to Net EBITDA for the
most recently completed four fiscal quarters is less than 2.0 to 1.0, and
(b) payments of dividends to the Parent by the Borrower or Investments by
the Borrower in the Parent (exclusive of dividends or Investments used
solely to pay interest on the Senior Deferred Coupon Notes), PROVIDED that
(1) at the time thereof and after taking into account the payment thereof,
no Event of Default or Potential Event of Default exists or is reasonably
likely to result therefrom or occur within 30 days thereafter, (2) no such
dividends or Investments shall be paid prior to January 1, 1997 and (3) any
such dividends or Investments can be paid only if, immediately prior to
such payment, the Borrower delivers to the Administrative Agent an
Officer's Certificate which demonstrates that, immediately following such
payment, the ratio of Total Indebtedness (other than Accommodation
Obligations) of the Consolidated Borrower Group on a consolidated basis
immediately following such payment to Net EBITDA for the most recently
completed four fiscal quarters is less than 2.0 to 1.0 and Revolving Credit
Availability is at least $15,000,000;
(ii) any wholly-owned Non-Falcon Subsidiary of the Borrower and any
Non-Falcon Subsidiary formed by the Borrower pursuant to SECTION 7.10(B)
may pay dividends to its stockholders;
(iii) payments by the Borrower to the Parent under the Tax Sharing
Agreement provided: (a) no such payments shall be made at any time with
respect to the income (whether trade or business income or passive income)
of the Borrower's Subsidiaries unless the Borrower has received a like
amount from such Subsidiaries; (b) no such payments shall be made at any
time to the extent such payments exceed the amount of taxes which would be
due and payable by the Borrower and the corporations (with the Borrower,
collectively the "BORROWER GROUP") which would be members of the
"affiliated group" (as defined in section 1504 of the IRC) of which the
Borrower would be the common parent if the Borrower were not a member of
the Parent affiliated group (as so defined) (the "PARENT GROUP") if the
Borrower Group filed a separate consolidated federal income tax return; (c)
no such payments shall be made at any time an Event of Default or Potential
Event of Default exists or is reasonably likely to result therefrom or
occur within 30 days thereafter to the extent such payments exceed the
lesser of (1) the amount of taxes which would be due and payable by the
Borrower Group, if the Borrower Group filed a separate
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consolidated federal income tax return and (2) the amount of the tax
liability actually incurred and paid by the Parent Group; and (d) no such
payment shall be made after the occurrence of an Event of Default under
SECTION 10.01(F) or 10.01(G);
(iv) payments with respect to management services and overhead
expenses by the Borrower or its Non-Falcon Subsidiaries to the Parent in an
amount not to exceed $3,000,000 in the aggregate in any Fiscal Year;
(v) repayments to the Borrower or any of its Non-Falcon Subsidiaries
of any Investments permitted under SECTION 8.03;
(vi) payments made by the Borrower to the Parent on account of the
Parent making Accommodation Obligations of the type permitted to be made by
the Borrower pursuant to SECTION 8.04 above;
(vii) notwithstanding CLAUSE (I) above, the payment by the Borrower as
a dividend to the Parent of an amount not to exceed (x) in the case of the
collection or disposition of the R&M Note, the balance of the Net Proceeds
thereof not required to be prepaid pursuant to SECTION 2.05(B)(II) and (y)
in the case of the sale or other disposition of any capital stock of
Falcon, the balance of the Net Proceeds thereof not required to be prepaid
pursuant to SECTION 2.05(B)(V), PROVIDED (a) in each case, that at the time
thereof and after taking into account the payment thereof, no Event of
Default or Potential Event of Default exists or is reasonably likely to
result therefrom or occur within 30 days thereafter, (b) in each case, that
at least two-thirds ( 2/3) of any such dividend shall be used to redeem a
portion of the Senior Deferred Coupon Notes, and the balance of such
dividend not so used, if any, shall be used to make payments to Great
American Management and Investment, Inc. under the Tax Sharing Agreement in
connection with taxes on any gain on the sale of the R&M Note or the Falcon
stock, as applicable, and (c) in the case of a dividend paid pursuant to
CLAUSE (X) above, that as of the end of the most recently completed fiscal
quarter for which financial statements have been delivered, the Free Cash
Flow Coverage Ratio for the Consolidated Borrower Group is equal to or
greater than 3.0 to 1 and the ratio of Total Indebtedness to Net EBITDA for
the Consolidated Borrower Group is equal to or less than 2.5 to 1, and
PROVIDED, FURTHER, that if the financial test in CLAUSE (C) above is not
satisfied, any dividend paid pursuant to CLAUSE (X) above shall be in an
amount not exceeding the balance of such Net Proceeds after the prepayment
of an additional $9,000,000 thereof applied in the same manner as the
prepayment required pursuant to SECTION 2.05(B)(II); and
(viii) notwithstanding CLAUSE (I) above, (x) the payment by the
Borrower on the Effective Date as a dividend to the Parent of an amount not
to exceed the excess of (a) the net proceeds of the Offering (after
expenses) paid by Falcon to the Borrower (the "Net Offering Proceeds") over
(b) $52,000,000, and (y) if the Net Offering Proceeds are less than
$85,000,000, the payment by the Borrower on the Effective Date as a
dividend to the Parent of an amount not to exceed the lesser of (a)
$85,000,000 minus the Net Offering Proceeds and (b) $15,000,000, in each
case, at least two-thirds ( 2/3) of such dividend to be used to redeem a
portion of the Senior Deferred Coupon Notes and the balance of such
dividend not so used, if any, to be used to make payments to Great American
Management and Investment, Inc. under the Tax Sharing Agreement.
8.06. CONDUCT OF BUSINESS. The Borrower shall not, and shall not permit
any of its Non-Falcon Subsidiaries to, engage in any business other than the
business engaged in by such persons on the Effective Date and any business
activities substantially similar or related thereto.
8.07. TRANSACTIONS WITH AFFILIATES. The Borrower shall not, and shall not
permit any of its Non-Falcon 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 of its Affiliates on terms that are less favorable to it than those fair and
reasonable terms that might be obtained in a comparable arms-length transaction
at the time. Without limiting the foregoing, to the extent the Borrower or any
of its Non-Falcon Subsidiaries employs any individual who is also employed by
any such Affiliate or utilizes facilities that are also utilized by any such
Affiliate, there shall be a fair and reasonable allocation of all salaries and
expenses related thereto.
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8.08. RESTRICTION ON FUNDAMENTAL CHANGES.
(a) The Borrower shall not, and shall not permit any of its
Non-Falcon Subsidiaries to, enter into any merger or consolidation, or
liquidate, wind-up or dissolve (or suffer any liquidation or dissolution),
discontinue its business or convey, lease, sell, transfer or otherwise
dispose of, in one transaction or series of transactions, all or any
substantial part of its business or Property, whether now or hereafter
acquired, except:
(i) as otherwise permitted under SECTION 8.02(A) or as disclosed
in SCHEDULE 8.08 attached hereto; and
(ii) any Non-Falcon Subsidiary of the Borrower may merge into or
convey, sell, lease or transfer all or substantially all of its assets
to the Borrower or any other Non-Falcon Subsidiary of the Borrower.
(b) Each of the Parent or the Borrower shall not, and shall not
permit their respective Subsidiaries (other than Falcon and its
Subsidiaries) to acquire by purchase or otherwise any property or assets
of, or stock or other evidence of beneficial ownership of, any Person,
except in the ordinary course of its business or to the extent permitted
pursuant to SECTION 8.03 as contemplated by the Receivables Agreements.
8.09. EMPLOYEE BENEFIT MATTERS. Each of the Parent and the Borrower shall
not, and shall not permit any of their respective Subsidiaries (other than
Falcon and its Subsidiaries) to, and will exercise their best efforts to not
permit any of their other ERISA Affiliates to:
(i) Engage in any prohibited transaction described in Section 406 of
ERISA or 4975 of the IRC for which a statutory or class exemption is not
available or a private exemption has not been previously obtained from the
DOL;
(ii) permit to exist any accumulated funding deficiency (as defined
in Sections 302 of ERISA and 412 of the IRC), whether or not waived;
(iii) fail to pay timely required contributions or annual
installments due with respect to any waived funding deficiency to any
Benefit Plan;
(iv) terminate any Benefit Plan in a distress termination under
Section 4041(c) of ERISA which would result in any liability to the Parent,
the Borrower or any ERISA Affiliate;
(v) fail to make any contribution or payment to any Multiemployer
Plan which the Borrower or any ERISA Affiliate may be required to make
under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto;
(vi) fail to pay any required installment or any other payment
required under Section 412 of the IRC on or before the due date for such
installment or other payment; or
(vii) amend a Plan resulting in an increase in current liability for
the plan year such that the Parent, the Borrower or any ERISA Affiliate is
required to provide security to such Plan under Section 401(a)(29) of the
IRC.
8.10. ENVIRONMENTAL LIABILITIES. The Borrower shall not, and shall not
permit any of its Non-Falcon Subsidiaries to, become subject to any Liabilities
and Costs, which are reasonably likely to have a Material Adverse Effect,
arising out of or related to (a) the Release or threatened Release at any
location of any Contaminant into the environment, or any Remedial Action in
response thereto, or (b) any violation of any environmental, health and safety
Requirements of Law.
8.11. MARGIN REGULATIONS. No portion of the proceeds of any credit
extended under this Agreement shall be used in any manner which might cause the
extension of credit or the application of such proceeds to violate Regulation G,
Regulation T, Regulation U 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 the use of such proceeds.
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8.12. CHANGE OF FISCAL YEAR. The Borrower shall not change its Fiscal
Year.
8.13. AMENDMENT OF CERTAIN DOCUMENTS. The Borrower and its Non-Falcon
Subsidiaries shall not permit any termination of, or any modification or
amendment that is adverse in any respect to the Lenders to be made to either the
certificate of incorporation or by-laws of the Borrower or any of its Non-Falcon
Subsidiaries or in the Tax Sharing Agreement.
8.14. MODIFICATION OF RECEIVABLES AGREEMENTS. The Borrower and the
Receivables Subsidiary shall not agree to or permit the termination of the
Receivables Agreements or any amendment, waiver or other modification thereto or
enter into a "Supplement" to the Pooling and Servicing Agreement (except in
accordance with their terms) that would (i) increase the certificate rates paid
to any investors thereunder to more than a market rate, (ii) reduce the purchase
price or the cash portion thereof received by the Borrower for receivables sold
thereunder, (iii) materially delay the timing of any payments owed thereunder to
the Borrower or the Receivables Subsidiary, (iv) render the covenants,
representations and warranties or events of termination thereunder more
restrictive in any material respect, (v) create any recourse obligations of the
Borrower or any of its Subsidiaries in excess of those contemplated by the
Receivables Agreements as in effect on January 31, 1994, or (vi) provide for the
continued transfers of Receivables after the "Amortization Period Commencement
Date" (as such term is defined in the Pooling and Servicing Agreement).
ARTICLE IX
FINANCIAL COVENANTS
The Borrower covenants and agrees that, on and after the Effective Date so
long as the Borrower shall have any outstanding Agreement Obligations or any
Lender shall have any Commitment hereunder or any Letter of Credit remains
outstanding:
9.01. MINIMUM CONSOLIDATED NET WORTH.
The Borrower shall not permit Net Worth for the Consolidated Borrower Group
determined on a consolidated basis at any time to be less than the amounts set
forth below during the periods set forth below:
<TABLE>
<CAPTION>
PERIOD MINIMUM AMOUNT
---------------------------------------------------------------------------- --------------
<S> <C>
Effective Date through December 30, 1996.................................... $235,000,000
December 31, 1996 through December 30, 1997................................. 245,000,000
December 31, 1997 through December 30, 1998................................. 255,000,000
December 31, 1998 through December 30, 1999................................. 265,000,000
December 31, 1999 and thereafter............................................ 285,000,000
</TABLE>
Each of the minimum amounts specified above for the respective periods
shall be automatically reduced on a cumulative basis by the amount of any
write-off of goodwill by the Borrower in accordance with Agreement Accounting
Principles, PROVIDED that such automatic reductions shall be limited to
$25,000,000 in any one Fiscal Year and $100,000,000 in the aggregate.
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9.02. RATIO OF TOTAL INDEBTEDNESS TO NET EBITDA.
The Borrower shall not permit the ratio of Total Indebtedness (other than
Accommodation Obligations) of the Consolidated Borrower Group on a consolidated
basis to Net EBITDA calculated at the end of each fiscal quarter during the
following periods for the fiscal quarter ending March 31, 1995, for the two
fiscal quarter period ending June 30, 1995, for the three fiscal quarter period
ending September 30, 1995, and for the period of the immediately preceding four
fiscal quarters at the end of each fiscal quarter thereafter to be greater than
the ratios set forth below:
<TABLE>
<CAPTION>
PERIOD RATIO
-------------------------------------------------------------------------------- ---------
<S> <C>
January 1, 1995 through December 30, 1995....................................... 3.00 to 1
December 31, 1995 through December 30, 1996..................................... 2.75 to 1
December 31, 1996 through December 30, 1997..................................... 2.50 to 1
December 31, 1997 through December 30, 1998..................................... 2.00 to 1
December 31, 1998 through December 30, 1999..................................... 1.75 to 1
December 31, 1999 and thereafter................................................ 1.50 to 1
</TABLE>
For purposes of calculation of the foregoing ratio at the end of each of
the first three fiscal quarters in 1995, Net EBITDA for the relevant periods
ending on such dates shall be annualized by multiplying such Net EBITDA by 4, by
2 and by 4/3, respectively.
9.03. INTEREST COVERAGE RATIO.
The Borrower shall not permit the Interest Coverage Ratio calculated at the
end of each fiscal quarter during the following periods for the period from the
Effective Date through March 31, 1995, for the period from the Effective Date
through June 30, 1995, for the period from the Effective Date through September
30, 1995, and for the period of the immediately preceding four fiscal quarters
at the end of each fiscal quarter thereafter for the Consolidated Borrower Group
to be less than the ratio set forth below:
<TABLE>
<CAPTION>
PERIOD RATIO
-------------------------------------------------------------------------------- ---------
<S> <C>
January 1, 1995 through December 31, 1995....................................... 5.00 to 1
January 1, 1996 through December 31, 1996....................................... 5.50 to 1
Thereafter...................................................................... 6.00 to 1
</TABLE>
9.04. CAPITAL EXPENDITURES.
The Borrower shall not, and shall not permit any of its Non-Falcon
Subsidiaries to, in any Fiscal Year, incur Capital Expenditures which exceed in
the aggregate the sum of (a) $21,000,000 in Fiscal Year 1995 (increasing by
$1,000,000 in each Fiscal Year thereafter) PLUS (b) the difference, if positive
(but not to exceed $5,000,000), between (1) the maximum aggregate amount of
Capital Expenditures permitted pursuant to this SECTION 9.04 for the immediately
preceding Fiscal Year and (2) the aggregate amount of Capital Expenditures
actually incurred during such preceding Fiscal Year PLUS (c) an amount equal to
(x) Excess Cash Flow as reported pursuant to SECTION 2.05(B)(I) for the
immediately preceding Fiscal Year MINUS (y) the sum of $5,000,000 and the amount
of all prepayments required pursuant to SECTION 2.05(B)(I) made during such
Fiscal Year. The Borrower and its Non-Falcon Subsidiaries shall not incur
Capital Expenditures which exceed $7,000,000 in the aggregate from the Effective
Date through December 31, 1994.
9.05. FIXED CHARGES COVERAGE RATIO.
The Borrower shall not permit the Fixed Charges Coverage Ratio at June 30,
1995 for the two fiscal quarter period ending June 30, 1995, at September 30,
1995 for the three fiscal quarter period ending September 30, 1995, and at the
end of each fiscal quarter thereafter for the period of the immediately
preceding four fiscal quarters for the Consolidated Borrower Group determined in
accordance with Agreement Accounting Principles to be less than 1.0 to 1.
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ARTICLE X
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
10.01. 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 principal of any Loan or Reimbursement Obligation or to
pay when due any interest on any Loan or Reimbursement Obligation or any
fee or other amount payable under this Agreement or any of the other Loan
Documents and such failure shall continue for three (3) calendar days.
(b) BREACH OF CERTAIN COVENANTS. The Parent, the Borrower or any of
their respective Subsidiaries (other than Falcon and its Subsidiaries)
shall fail duly and punctually to perform or observe any agreement,
covenant or obligation under SECTIONS 6.01, 7.01, 7.05 or under ARTICLES
VIII and IX or binding on the Parent, the Borrower or any of their
respective Subsidiaries (other than Falcon and its Subsidiaries) under any
section of the Collateral Documents (which failure continues after the
expiration of any grace period applicable thereto).
(c) BREACH OF REPRESENTATION OR WARRANTY. Any representation or
warranty made or deemed made by the Borrower to the Administrative Agent,
the Collateral Agent, any of the Issuing Banks or any Lender herein or by
the Parent, the Borrower or any of their respective Subsidiaries (other
than Falcon and its Subsidiaries) in any of the other Loan Documents or in
any written statement or certificate at any time given by the Parent, the
Borrower or any of their respective Subsidiaries (other than Falcon and its
Subsidiaries) pursuant to any of the Loan Documents shall be false or
misleading in any respect on the date as of which made or deemed made.
(d) OTHER DEFAULTS. The Parent, the Borrower or any of their
respective Subsidiaries (other than Falcon and its Subsidiaries) shall fail
duly and punctually to perform or observe any agreement, covenant or
obligation arising under this Agreement (except those described in SECTIONS
10.01(A), (B) and (C)) or under any of the other Loan Documents, and such
failure shall continue for thirty (30) days (or, in the case of Loan
Documents other than this Agreement, any longer period of grace expressly
set forth therein).
(e) DEFAULT AS TO OTHER INDEBTEDNESS. The Parent, the Borrower,
Falcon or any of their respective Subsidiaries shall fail to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) on any Indebtedness of such Person other
than any of the Obligations, if the aggregate outstanding amount of all
such Indebtedness is $5,000,000 (or, in the case of Falcon or any of its
Subsidiaries, $10,000,000) or more, or any breach, default or event of
default shall occur, or any other event shall occur or condition shall
exist, under any instrument, agreement or indenture pertaining thereto, if
the effect thereof is to accelerate, or permit the holder(s) of such
Indebtedness to accelerate, the maturity of any such Indebtedness; or any
such Indebtedness shall be declared to be due and payable or required to be
prepaid or mandatorily redeemed (other than by a regularly scheduled
required prepayment prior to the stated maturity thereof); or the holder of
any Lien, in any amount, shall commence foreclosure of such Lien upon
property of the Parent, the Borrower, Falcon or any of their respective
Subsidiaries having a book or fair market value in excess of $1,000,000
with respect to such Person in the aggregate.
(f) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) An
involuntary case shall be commenced against the Parent, the Borrower or any
of their respective Subsidiaries (other than Falcon and its Subsidiaries)
and the petition shall not be 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 Parent, the
Borrower or any of their respective Subsidiaries (other than Falcon and 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 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
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Parent, the Borrower or any of their respective Subsidiaries (other than
Falcon and its Subsidiaries) or over all or a substantial part of the
property of the Parent, the Borrower or any of their respective
Subsidiaries (other than Falcon and its Subsidiaries) shall be entered;
or an interim receiver, trustee or other custodian of the Parent, the
Borrower or any of their respective Subsidiaries (other than Falcon and
its Subsidiaries) or of all or a substantial part of the property of the
Parent, the Borrower or any of their respective Subsidiaries (other than
Falcon and its Subsidiaries) shall be appointed; or a warrant of
attachment, execution or similar process against any substantial part of
the property of the Parent, the Borrower or any of their respective
Subsidiaries (other than Falcon and its Subsidiaries) shall be issued
and any such event shall not be stayed, vacated, dismissed, bonded or
discharged within sixty (60) days of entry, appointment or issuance.
(g) VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. The Parent,
the Borrower or any of their respective Subsidiaries (other than Falcon and
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 of possession by a receiver, trustee or
other custodian for all or a substantial part of its property; the Parent,
the Borrower or any of their respective Subsidiaries (other than Falcon and
its Subsidiaries) shall make any assignment for the benefit of creditors or
shall be unable or generally fail, or admit in writing its inability, to
pay its debts as such debts become due; or the Board of Directors (or any
committee thereof) of the Parent, the Borrower or any of their respective
Subsidiaries (other than Falcon and its Subsidiaries) shall adopt any
resolution to authorize or approve any of the foregoing.
(h) JUDGMENTS. (i) Enforceable Judgments (other than an Enforceable
Judgment described in the proviso contained in the definition of
Enforceable Judgment) for the payment of money in an aggregate amount in
excess of $2,000,000 shall be rendered against the Parent, the Borrower or
any of their respective Subsidiaries (other than Falcon and its
Subsidiaries) and such Enforceable Judgments shall continue unsatisfied or
unstayed for a period of thirty (30) days or action shall have been
commenced to foreclose on such Enforceable Judgments, or (ii) Enforceable
Judgments described in the proviso contained in the definition of
Enforceable Judgments shall be rendered against the Parent, the Borrower or
any of their respective Subsidiaries (other than Falcon and its
Subsidiaries).
(i) DISSOLUTION. Any order, judgment or decree shall be entered
against the Parent, the Borrower or any of their respective Subsidiaries
(other than Falcon and its Subsidiaries) decreeing its involuntary
dissolution or split-up and such order shall remain undischarged and
unstayed for a period in excess of thirty (30) days; or the Parent, the
Borrower or any of their respective Subsidiaries (other than Falcon and its
Subsidiaries) shall otherwise dissolve or cease to exist except as
expressly permitted pursuant to Section 8.08.
(j) COLLATERAL DOCUMENTS; FAILURE OF SECURITY. For any reason other
than a release of Liens in accordance with the terms of the Loan Documents
or the failure of the Collateral Agent and the Lenders to take any action
available to them to maintain the perfection of the Liens created in favor
of the Collateral Agent, for the benefit of itself and the Holders of
Secured Obligations, pursuant to this Agreement and the Collateral
Documents, any Collateral Document ceases to be in full force and effect or
any Lien intended to be created thereby ceases to be or is not valid and
perfected and such lapse, invalidity or failure is not corrected within 30
days or the Parent, the Borrower or any Non-Falcon Subsidiary asserts that
any such Lien is not valid and perfected.
(k) CHANGE OF CONTROL. Any Change of Control occurs.
(l) EMPLOYEE BENEFIT RELATED LIABILITIES. (i) Any Termination Event
occurs which the Administrative Agent believes could subject the Borrower
or an ERISA Affiliate to a material liability to pay money, or (ii) the
plan administrator of any Plan applies under Section 412(d) of the IRC for
a waiver of the minimum funding standards of Section 412(a) of the IRC 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 a material liability to pay money.
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(m) PARENT GUARANTY DEFAULT. The Parent shall terminate or revoke any
of its obligations under the Parent Guaranty, breach any of the terms of
the Parent Guaranty, or the Parent Guaranty shall otherwise become
unenforceable for any reason.
(n) CONTRIBUTION AGREEMENT DEFAULT. Any party to the Contribution
Agreement shall terminate or revoke any of its obligations under the
Contribution Agreement or breach any of the terms of the Contribution
Agreement, or the Contribution Agreement shall otherwise become
unenforceable against any Guarantor for any reason or shall cease to be in
full force and effect.
(o) SUBSIDIARY GUARANTY DEFAULT. Any Guarantor shall terminate or
revoke any of its obligations under the Subsidiary Guaranty or breach any
of the terms of the Subsidiary Guaranty, or the Subsidiary Guaranty shall
otherwise become unenforceable against any Guarantor for any reason.
(p) RECEIVABLES SECURITIZATION. Either (i) any event shall have
occurred and be continuing which constitutes an "Event of Termination"
within the meaning of the Pooling and Servicing Agreement or which would
allow the "Investor Certificateholders" under the Pooling and Servicing
Agreement to declare that such an "Event of Termination" had occurred
(excluding, in either case, any such event as to which the Borrower shall
have given the Lenders prior written notice demonstrating, to the
satisfaction of the Administrative Agent, that any resulting "Early
Amortization Period" (a) has resulted from the orderly liquidation of the
receivable pool due to the contraction of the receivable base or the
planned discontinuance of the Receivables Securitization, (b) has been
provided for in the Borrower's financial plans and (c) will not, on a pro
forma basis, result in the Borrower and its Non-Falcon Subsidiaries having
insufficient liquidity for working capital purposes) or (ii) any event
shall have occurred and be continuing which constitutes a "Master Servicer
Default" within the meaning of the Pooling and Servicing Agreement.
(q) SENIOR DEFERRED COUPON NOTES. The Parent shall amend the Senior
Deferred Coupon Notes in any way that permits or requires the Parent to pay
interest on such notes in cash prior to 1999 or permits or requires the
Parent to pay interest at a rate higher than that prescribed as of the
Effective Date or permits or requires the Parent to pay or prepay or make
sinking fund payments with respect to such notes prior to 2003.
(r) FALCON STOCK. The Borrower shall cease to own, directly or
indirectly, at least 20% of the issued and outstanding capital stock of
Falcon.
For purposes of this Agreement and each of the other Loan Documents,
an Event of Default shall be deemed "continuing" until cured or waived in
writing in accordance with SECTION 11.08.
10.02. RIGHTS AND REMEDIES.
(a) ACCELERATION AND TERMINATION OF COMMITMENTS. Upon the occurrence
and during the continuance of any Event of Default described in SECTION
10.01(F) or 10.01(G) with respect to the Parent, the Borrower or any of
their respective Subsidiaries (other than Falcon and its Subsidiaries), the
Revolving Credit Commitments shall automatically and immediately terminate
and the unpaid principal amount of and any and all accrued interest on the
Loans, all Reimbursement Obligations and all other Agreement Obligations
shall automatically become immediately due and payable, with all additional
interest from time to time accrued thereon and 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 the obligation of each Lender
to make any Loan hereunder and of the Issuing Banks to issue any Letter of
Credit shall thereupon terminate; 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 Credit
Commitments are terminated, whereupon the Revolving Credit Commitments and
the obligation of each Lender to make any Loan hereunder and of the Issuing
Banks to issue any Letter of Credit shall immediately terminate, and (ii)
declare the unpaid principal amount of and any and all accrued and unpaid
interest on the Loans, and all Reimbursement Obligations and all other
Agreement Obligations to be, and the same shall thereupon be, immediately
due and payable with all additional
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interest from time to time accrued thereon and (except as expressly
provided herein) 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, upon demand by the
Administrative Agent, or any of the Issuing Banks or the Requisite Lenders
after the occurrence and during the continuance of any Event of Default,
the Borrower shall deposit with the Collateral Agent for the benefit of the
Issuing Banks with respect to each Letter of Credit then outstanding which
was issued by any Issuing Bank, cash or Cash Equivalents in an amount equal
to the greatest amount for which such Letters of Credit may then be drawn.
The Borrower grants to the Collateral Agent, for the benefit of itself and
the Holders of Secured Obligations, a security interest in and right of
setoff against any such deposit or deposits. Pending the application of
such deposit to payment of the Reimbursement Obligations, the Collateral
Agent may invest such deposit in an open account or similar immediately
available savings deposit and all interest accrued thereon shall be held
with such deposit as additional security for the Reimbursement Obligations.
Such deposits shall be held by the Collateral Agent until the Reimbursement
Obligations have been paid in full and all Letters of Credit have expired
or been cancelled.
(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 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 12.07, then by written
notice to the Borrower, the Requisite Lenders may elect, in the sole
discretion of such Requisite 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 Lenders to a decision which may be made at the election
of the Requisite Lenders; they are not intended to benefit the Borrower and
do not give the Borrower the right to require the Lenders to rescind or
annul any acceleration hereunder, even if the conditions set forth herein
are met.
ARTICLE XI
ADMINISTRATIVE AGENT AND COLLATERAL AGENT
11.01. APPOINTMENT. (a) Each of the Lenders and the Issuing Banks hereby
designates and appoints Chemical as the Administrative Agent and Citicorp as the
Collateral Agent of such Lender and such Issuing Bank under this Agreement and
the Loan Documents, and each of the Lenders and Issuing Banks hereby irrevocably
authorizes the Administrative Agent and the Collateral Agent to take such action
on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers as are set forth herein or therein,
together with such other powers as are incidental thereto. Each of the
Administrative Agent and the Collateral Agent agrees to act as such on the
express conditions contained in this ARTICLE XI.
(b) The provisions of this ARTICLE XI are solely for the benefit of
the Administrative Agent, the Collateral Agent, the Issuing Banks and the
Holders of Secured Obligations and the Borrower shall have no right to rely
on or enforce any of the provisions hereof (other than as expressly set
forth in SECTION 11.07 or in SECTION 11.08). In performing its functions
and duties under this Agreement, the Administrative Agent and the
Collateral Agent shall each act solely as agent for the Issuing Banks and
the Holders of Secured Obligations and neither assumes or shall be deemed
to have assumed any obligation toward or relationship of agency or trust
with or for Borrower or any of its Affiliates.
11.02. NATURE OF DUTIES. The Administrative Agent and the Collateral
Agent shall not have any duties or responsibilities except those expressly set
forth in this Agreement or in the other Loan Documents. The duties of the
Administrative Agent and the Collateral Agent shall be mechanical and
administrative in nature. Neither the Administrative Agent nor the Collateral
Agent shall have by reason of this Agreement a fiduciary relationship in respect
of any Holder of Secured Obligations or any Issuing Bank. Nothing in this
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Agreement or any of the other Loan Documents, expressed or implied, is intended
to or shall be construed to impose upon the Administrative Agent or the
Collateral Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein. Each
Holder of Secured Obligations and each Issuing Bank shall make its own
independent investigation of the financial condition and affairs of the Parent,
the Borrower and their respective Subsidiaries in connection with the making and
the continuance of the Loans hereunder, the issuance of Letters of Credit and
the entering into any Eligible Hedging Contract and shall make its own appraisal
of the creditworthiness of the Parent, the Borrower and their respective
Subsidiaries, and neither the Administrative Agent nor the Collateral Agent
shall have any duty or responsibility, either initially or on a continuing
basis, to provide any Holder of Secured Obligations or any Issuing Bank with any
credit or other information with respect thereto, whether coming into its
possession before the Effective Date or at any time or times thereafter. Each
Lender acknowledges that neither the Administrative Agent nor the Collateral
Agent nor any other Lender nor counsel to any of the foregoing is providing any
assurances, or shall have any responsibility, with respect to the ownership of
the Property or the absence of any prior Liens or defects of title, or the
legality, sufficiency or effect of any mortgage, certificate or notice, or any
other document, or the validity, creation, perfection or priority of any Lien,
or as to any decision to request, take, defer, omit or release any Collateral or
to investigate or not to investigate any of those matters, and each Lender
agrees to look solely to its rights as one of the Lenders with respect to any of
the foregoing. If the Administrative Agent or the Collateral Agent seeks the
consent or approval of the Requisite Lenders to the taking or refraining from
taking any action hereunder, the Administrative Agent or the Collateral Agent,
as applicable, shall send notice thereof to each Lender. The Administrative
Agent or the Collateral Agent, as applicable, shall promptly notify each Lender
at any time that the Requisite Lenders or, where expressly required, all of the
Lenders, have instructed the Administrative Agent or the Collateral Agent, as
applicable, to act or refrain from acting pursuant hereto.
11.03. RIGHTS, EXCULPATION, ETC. Neither the Administrative Agent nor the
Collateral Agent nor any of the Affiliates nor any of their officers, directors,
employees, agents, attorneys or consultants shall be liable to any Holder of
Secured Obligations or any Issuing Bank for any action taken or omitted by it or
such Person hereunder or under any of the Loan Documents, or in connection
herewith or therewith, except that (i) the Administrative Agent and the
Collateral Agent shall be obligated on the terms set forth herein for
performance of its express obligations hereunder, and (ii) no Person shall be
relieved of any liability imposed by law for its gross negligence or willful
misconduct (as determined by the final judgment of a court of competent
jurisdiction). Neither the Administrative Agent nor the Collateral Agent shall
be responsible to any Holder of Secured Obligations or any 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 any of the transactions contemplated hereby and
thereby, or of any of the Transaction Documents or any of the transactions
contemplated thereby, or for the financial condition of the Parent, the Borrower
or any of their respective Subsidiaries. Neither the Administrative Agent nor
the Collateral 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 Loan Documents or the financial condition of the Parent,
the Borrower or any of their respective Subsidiaries or the existence or
possible existence of any Potential Event of Default or Event of Default. The
Administrative Agent and the Collateral Agent may at any time request
instructions from the 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 or the Collateral Agent, as applicable, is permitted or
required to take or to grant, and if such instructions are promptly requested,
the Administrative Agent or the Collateral Agent, as applicable, 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 the Requisite
Lenders or, where expressly required, the Supermajority Lenders or all of the
Lenders. Without limiting the foregoing, no Holder of Secured Obligations or
Issuing Bank shall have any right of action whatsoever against the
Administrative Agent or the Collateral Agent, as applicable, as a result of the
Administrative Agent or the Collateral Agent, as applicable, acting or
refraining from acting under this Agreement, the Collateral
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Documents or any of the other Loan Documents in accordance with the instructions
of the Requisite Lenders or, where expressly required, all of the Lenders.
11.04. RELIANCE. The Administrative Agent and the Collateral 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, the Collateral
Documents or any of the other 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 in good faith.
11.05. INDEMNIFICATION. To the extent that the Administrative Agent or
the Collateral Agent, as applicable, is not reimbursed and indemnified by the
Borrower or the Borrower fails upon demand by the Administrative Agent or the
Collateral Agent, as applicable, to perform its obligations to reimburse or
indemnify the Administrative Agent or the Collateral Agent, as applicable, the
Lenders will reimburse and indemnify the Administrative Agent or the Collateral
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 the Administrative Agent or the Collateral Agent, as
applicable, in any way relating to or arising out of this Agreement, the
Collateral Documents or any of the other Transaction Documents or any action
taken or omitted by the Administrative Agent or the Collateral Agent, as
applicable, under this Agreement, the Collateral Documents or any of the other
Transaction Documents, in proportion to each Lender's Pro Rata Share; PROVIDED
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or willful misconduct of the
Administrative Agent or the Collateral Agent, as applicable, as determined by
the final judgment of a court of competent jurisdiction. The obligations of the
Lenders under this SECTION 11.05 shall survive the payment in full of the Loans
and Reimbursement Obligations and the termination of this Agreement.
11.06. THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
INDIVIDUALLY. With respect to its Pro Rata Share hereunder and the Loans made
by it, the Administrative Agent 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 the Administrative Agent in its individual capacity
as a Lender or one of the Requisite Lenders. The Administrative Agent and the
Collateral Agent each may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with the Borrower as if
it were not acting as Administrative Agent or Collateral Agent, respectively,
pursuant hereto.
11.07. SUCCESSOR ADMINISTRATIVE AGENT OR COLLATERAL AGENT; RESIGNATION OF
ADMINISTRATIVE AGENT OR COLLATERAL AGENT. (a) The Administrative Agent or the
Collateral Agent may resign from the performance of its functions and duties
hereunder at any time by giving at least thirty (30) days prior written notice
to the Lenders and the Borrower. In the event that the Administrative Agent or
the Collateral Agent gives notice of its desire to resign from the performance
of its functions and duties hereunder, any such resignation shall take effect
only upon the acceptance by a successor Administrative Agent or Collateral Agent
of appointment pursuant to CLAUSES (B) and (C) below.
(b) The Requisite Lenders shall appoint a successor Administrative
Agent or Collateral Agent who shall be reasonably satisfactory to the
Borrower provided no such approval of the Borrower shall be required after
the occurrence and during the continuance of an Event of Default.
(c) If a successor Administrative Agent or Collateral Agent shall not
have been so appointed within said thirty (30) day period, the retiring
Administrative Agent or Collateral Agent, with the consent of the Borrower
(which may not be withheld unreasonably), shall then appoint a successor
Administrative Agent or Collateral Agent who shall serve as such until such
time, if any, as the Requisite Lenders, with the consent of the Borrower
(which may not be withheld unreasonably), appoint a successor as provided
above. No consent of the Borrower shall be required after the occurrence
and during the continuance of an Event of Default.
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(d) Upon the appointment of a successor Administrative Agent, the
term "Administrative Agent" shall, for all purposes of this Agreement,
thereafter include such successor, except that the retiring Administrative
Agent shall reserve all rights as to Obligations accrued or due to it, in
its capacity as such, at the time of such succession and all rights
(whenever arising) under SECTION 12.04.
(e) Upon the appointment of a successor Collateral Agent, the term
"Collateral Agent" shall, for all purposes of this Agreement, thereafter
include such successor, except that the retiring Collateral Agent shall
reserve all rights as to Obligations accrued or due to it, in its capacity
as such, at the time of such succession and all rights (whenever arising)
under SECTION 12.04.
(f) Notwithstanding anything in this SECTION 11.07 to the contrary,
no Person shall serve as an Administrative Agent unless such Person is a
Lender.
11.08. COLLATERAL MATTERS. (a) Each of the Lenders and the Issuing Banks
authorizes and directs the Administrative Agent and the Collateral Agent to
enter into the Loan Documents relating to the Collateral for the benefit of
itself and the Holders of Secured Obligations. Each of the Lenders and the
Issuing Banks agrees that any action taken by the Administrative Agent or the
Collateral Agent or the Requisite Lenders (or, where required by the express
terms of this Agreement or any other Loan Document, 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 Collateral 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 the 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 arising in connection
with this Agreement and the other Loan Documents relating to the Loans or
Collateral; and (ii) execute and deliver each Loan Document relating to the
Collateral and accept delivery of each such agreement delivered by the Parent,
the Borrower or any of their respective Subsidiaries. Without limiting the
generality of the foregoing, the Collateral Agent shall have the sole and
exclusive right and authority to (i) 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 and the Issuing Banks and the Lenders for purposes of the
perfection of all security interests and Liens with respect to the Parent's, the
Borrower's and the Borrower's Non-Falcon Subsidiaries' respective deposit
accounts maintained with, and cash and Cash Equivalents held by, such Lender or
the Issuing Banks; (ii) manage, supervise and otherwise deal with the Collateral
in accordance with the terms of this Agreement and the other Loan Documents;
(iii) 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 (iv) 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 Collateral Agent, the
Lenders or the Issuing Banks with respect to the Collateral under the Loan
Documents relating thereto, under applicable law or otherwise.
(b) The Holders of Secured Obligations hereby irrevocably authorize
the Collateral Agent, at the option and in the discretion of the Collateral
Agent, to release any Lien granted to or held by the Collateral Agent upon
any Collateral (i) upon termination of the Commitments and payment and
satisfaction of all Loans, Reimbursement Obligations, other Letter of
Credit Obligations (whether or not due) and all other Agreement Obligations
which have matured and which the Administrative Agent has been notified in
writing are then due and payable; or (ii) constituting property being sold
or disposed of if Borrower certifies to the Administrative Agent and the
Collateral Agent that the sale or disposition is made in compliance with
SECTION 8.02 (and the Administrative Agent and the Collateral Agent may
rely conclusively on any such certificate, without further inquiry); or
(iii) constituting property in which none of the Parent, the Borrower or
any Non-Falcon Subsidiary of the Borrower owned any interest at the time
the Lien was granted or at any time thereafter; or (iv) if approved or
consented to by the Requisite Lenders (or, where so required, all of the
Lenders). Upon request by the Collateral Agent at any time,
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the Lenders will confirm in writing the Collateral Agent's authority to
release particular types or items of Collateral pursuant to this SECTION
11.08(B).
(c) Without in any manner limiting the Collateral Agent's authority
to act without any specific or further authorization or consent by the
Requisite Lenders (as set forth in SECTION 11.08(B)), each Lender agrees to
confirm in writing, upon request by the Borrower, the authority to release
Collateral conferred upon the Collateral Agent under CLAUSES (I) through
(IV) of SECTION 11.08(B). So long as no Event of Default is then
continuing, upon receipt by the Administrative Agent of the net cash
proceeds of any sale and transfer of Collateral which is expressly
permitted pursuant to the terms of this Agreement, and upon at least five
(5) Business Days' prior written request by Borrower, the Collateral Agent
shall (and is hereby irrevocably authorized by the Holders of Secured
Obligations to) execute such documents as may be necessary to evidence the
release of the Liens granted to the Collateral Agent for the benefit of the
Holders of Secured Obligations herein or pursuant hereto upon such
Collateral; PROVIDED, that (i) the Collateral Agent shall not be required
to execute any such document on terms which, in the Collateral Agent's
opinion, would expose the Collateral Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or
obligations of Borrower in respect of) all interests retained by the
Borrower, including, without limitation, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(d) The benefit of the Collateral Documents and of the provisions of
this Agreement relating to the Collateral shall extend to and be available
in respect of any Obligations ("RELATED OBLIGATIONS") which arise under any
Eligible Hedging Contracts or which are otherwise owed to Persons entitled
to indemnification pursuant to SECTION 12.04; PROVIDED THAT (i) the Related
Obligations shall be entitled to the benefit of the Collateral to the
extent and with the priority expressly set forth in this Agreement and the
Collateral Documents, and to such extent the Collateral Agent shall hold,
and have the right and power to act with respect to, the Collateral on
behalf of and as agent for the holders of the Related Obligations; but the
Administrative Agent and the Collateral Agent are otherwise acting solely
as agents for the Lenders and the Issuing Banks and shall have no separate
fiduciary duty, duty of loyalty, duty of care, duty of disclosure or other
obligation whatsoever to any holder of Related Obligations; and (ii) all
matters, acts and omissions relating in any manner to the Collateral, or
the omission, creation, perfection, priority, abandonment or release of any
Lien, shall be governed solely by the provisions of this Agreement and the
Collateral Documents, and no separate Lien, right, power or remedy shall
arise or exist in favor of any Holder of Secured Obligations under any
separate instrument or agreement or in respect of any Related Obligations;
and (iii) each Holder of Secured Obligations shall be bound by all actions
taken or omitted, in accordance with the provisions of this Agreement and
the Collateral Documents, by the Administrative Agent, the Collateral Agent
or the Requisite Lenders or, where expressly required, the Supermajority
Lenders or all of the Lenders, each of whom shall be entitled to act at its
sole discretion and exclusively in its own interest given its own
Commitments and its own interest in the Loans, Reimbursement Obligations,
Letter of Credit Obligations and its other Agreement Obligations, without
any duty or liability to any other Holder of Secured Obligations or as to
any Related Obligations and without regard to whether any Related
Obligations remain outstanding or are deprived of the benefit of the
Collateral or become unsecured or are otherwise affected or put in jeopardy
thereby; and (iv) no holder of Related Obligations and no other Holder of
Secured Obligations (except the Administrative Agent and the Lenders, to
the extent set forth in this Agreement) shall have any right to be notified
of, or to direct, require or be heard with respect to, any action taken or
omitted in respect of the Collateral or under this Agreement or the
Collateral Documents; and (v) no holder of any Related Obligations shall
exercise any right of setoff, banker's lien or similar right.
11.09. RELATIONS AMONG LENDERS.
(a) Each Lender agrees that it will not take any action, nor
institute any actions or proceedings, against the Borrower or any other
obligor hereunder or with respect to any Collateral or Loan Document,
without the prior written consent of the Requisite Lenders or, as may be
provided in this Agreement or the other Loan Documents, at the direction of
the Administrative Agent.
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(b) The Lenders are not partners or co-venturers, and no Lender shall
be liable for the acts or omissions of, or (except as otherwise set forth
herein in case of the Administrative Agent or the Collateral Agent, as
applicable) authorized to act for, any other Lender.
ARTICLE XII
MISCELLANEOUS
12.01. SURVIVAL OF WARRANTIES AND AGREEMENTS. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the other Loan Documents and the making of the
Loans hereunder.
12.02. ASSIGNMENTS AND PARTICIPATIONS.
(a) At any time after the Effective Date, each Lender may assign to
one or more banks or financial institutions all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or
a portion of its Commitments, Loans, participations in the Letters of
Credit and its obligations to acquire such participations) in conformity
with the following provisions:
(i) each such assignment shall be of a constant, and not a
varying, percentage of the assigning Lender's rights and obligations
under this Agreement with respect to such Lender's Revolving Credit
Commitment, Revolving Credit Loans, Term Loans, Letter of Credit
Obligations and related interests hereunder (provided, however, any
assignment by an Issuing Bank shall not include an assignment of its
obligation to issue Letters of Credit);
(ii) unless the Administrative Agent and the Borrower otherwise
consent, the aggregate amount of the Term Loans and Revolving Credit
Commitments of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance
with respect to such assignment) shall in no event be less than
$5,000,000 or, if less, the full amount of the assigning Lender's Term
Loans and Revolving Credit Commitments (PROVIDED that assignments
between Lenders shall have no minimum amount and assignments after the
occurrence and during the continuance of an Event of Default shall not
require the Borrower's consent regardless of the size of such
assignment);
(iii) the Administrative Agent and, in the case of the assignment
of Letter of Credit Obligations, the Issuing Banks shall each consent
(which consent shall not unreasonably be withheld) to each such
assignment and the parties to each such assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,000; PROVIDED, THAT
such consent of the Administrative Agent shall not be required for any
assignment made by a Lender to an Affiliate of such Lender; and
(iv) With respect to any assignment made at a time when no Event of
Default exists, the Borrower shall have consented to such assignment,
which consent shall not unreasonably be withheld or delayed; PROVIDED,
THAT such consent of the Borrower shall not be required for any
assignment made by a Lender to an Affiliate of such Lender.
Upon such execution, delivery, approval, acceptance and recording,
from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business Days
after the execution date thereof, (x) the assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have
been assigned or negotiated to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder
(including, in respect of the Collateral, all the rights and obligations of
a Holder of Secured Obligations, as fully as if such assignee had been
named as a Lender in accordance with the terms of this Agreement) and (y)
the Lender assignor thereunder shall, to the extent that rights and
obligations hereunder have been assigned or negotiated 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 an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be
a party hereto but shall continue to be entitled to the benefits of
SECTIONS 2.08, 2.09, 2.10, 12.03 and 12.04, as well as to any fees accrued
for its account hereunder and not yet paid.
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(b) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) the
assignment made under such Assignment and Acceptance is made without
recourse and, other than as provided in such Assignment and Acceptance,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any other
Loan Document or any other document, instrument or agreement executed or
delivered in connection herewith or therewith or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other Transaction Document or any other instrument or
document furnished pursuant hereto or thereto; (ii) such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Parent, the Borrower or any of
their respective Subsidiaries or the performance or observance by the
Parent, the Borrower or any of their respective Subsidiaries of any of its
obligations under any Transaction Document or any other instrument or
document furnished pursuant hereto; (iii) such assignee confirms that it
has received a copy of this Agreement, together with copies of the
financial statements most recently delivered pursuant to ARTICLE VI and
such other Loan Documents and other documents and information as it has
deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (iv) such assignee will, independently
and without reliance upon the Administrative Agent, the Collateral Agent,
the Issuing Banks, such assigning Lender or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action
under this Agreement; (v) such assignee appoints and authorizes the
Administrative Agent and the Collateral Agent, respectively, to take such
action as an Administrative Agent and the Collateral Agent, respectively,
on its behalf and to exercise such powers under this Agreement and the
other Loan Documents as are delegated to them by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto;
and (vi) such assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.
(c) The Administrative Agent shall maintain at its address referred
to on SCHEDULE A a copy of each Assignment and Acceptance delivered to and
accepted by it and shall record in the Administrative Agent's Loan Account
the names and addresses of each Lender and the Commitment of, and principal
amount of the Loans owing to, such Lender from time to time. The Borrower,
the Administrative Agent, the Collateral Agent and the Lenders may treat
each Person whose name is recorded in the Loan Account as a Lender
hereunder for all purposes of this Agreement.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and the assignee, the Administrative Agent shall, if such
Assignment and Acceptance has been properly completed and is in
substantially the form of EXHIBIT 1 and if the conditions for the
assignment referred to in the Assignment and Acceptance and set forth in
SECTION 12.02(A)have been met, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Administrative Agent's
Loan Account and (iii) give prompt notice thereof to the Borrower.
(e) Each Lender may sell participations to one or more banks or other
entities as to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its
Commitments and Loans, participations in the Letters of Credit and its
obligations to acquire such participations); PROVIDED, that (i) notice
thereof is given to the Borrower and the Administrative Agent, (ii) such
Lender's obligations under this Agreement (including, without limitation,
its Commitments to the Borrower hereunder) shall remain unchanged, (iii)
such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iv) the participating banks or other
entities shall be entitled to the benefit of the cost protection provisions
contained in SECTIONS 2.03(F), 2.08, 2.09 and 2.10 to the same extent as if
they were Lenders; PROVIDED, however, that no such participating bank or
entity shall be entitled to receive any greater amount pursuant to such
Sections than the Lender from which it purchased its participation would
have been entitled to receive in respect of the amount of the participation
transferred by such Lender to such participating bank or entity had no
transfer occurred, (v) the Borrower, the Administrative Agent, the
Collateral Agent, the Issuing Banks and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and
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obligations under this Agreement and with regard to any and all payments to
be made under this Agreement, and (vi) the holder of any such participation
shall not be entitled to voting rights under this Agreement; PROVIDED, that
the participation agreement between a Lender and its participants may
provide that such Lender will obtain the approval of such participant whose
interest would be affected thereby prior to any amendment or waiver of any
provisions of this Agreement which would (A) extend the Revolving Credit
Termination Date (except pursuant to SECTION 2.02(G)), the Term Loan
Termination Date, or the time of payment of interest or fees with respect
to the Loans or Letter of Credit Obligations, (B) reduce the interest rate
or any fees hereunder, or the principal amount of the Loans or the Letter
of Credit Obligations, (C) increase the aggregate amount of any of the
Commitments or the Loans of the Lender granting the participation, or
increase such Lender's Pro Rata Share, (D) release all or substantially all
of the Collateral, or (E) release the Parent Guaranty or the Subsidiary
Guaranty (other than in connection with the sale of any Guarantor, or all
or substantially all of the assets of such Guarantor, permitted by SECTION
8.02(A)).
(f) Upon the acceptance by the Administrative Agent of any Assignment
and Acceptance, the parties to such Assignment and Acceptance may at any
time request that new Notes be issued to the Lender assignor and the Lender
assignee by (i) providing written notice of such request to the
Administrative Agent and the Borrower and (ii) delivering to the Borrower
such assigning Lender's Notes for cancellation and substitution. Promptly
following receipt by the Borrower of any such notice, and verification from
the Administrative Agent that the applicable Assignment and Acceptance
shall have been accepted by the Administrative Agent, the Borrower
forthwith shall cause to be executed, and shall deliver to the Lender
assignee, new Notes to the order of the assignee and, if applicable,
replacement Notes to the order of the Lender assignor, and such Notes shall
equal the aggregate principal amount of such assigning Lender's Notes
issued by the Borrower immediately prior to the acceptance by the
Administrative Agent of the applicable Assignment and Acceptance. The
Borrower shall immediately upon delivery of such new Note(s), cancel the
original Notes delivered by the Lender assignor to the Borrower.
(g) Notwithstanding anything herein to the contrary, each Lender may
assign all or any portion of its rights under this Agreement as collateral
security to the Federal Reserve Bank or any Governmental Authority
succeeding to its functions.
12.03. EXPENSES.
(a) GENERALLY. Whether or not any Funding Date shall have occurred,
Borrower agrees upon demand to pay, or reimburse the Administrative Agent
and the Collateral Agent for all of their and any of their Affiliates'
out-of-pocket costs and expenses of every type and nature (including,
without limitation, the reasonable fees, expenses and disbursements of
attorneys and legal assistants, auditors, accountants, appraisers,
printers, insurance and environmental advisers, and other consultants
retained by the Administrative Agent or the Collateral Agent, and other
travel, search and filing fees and expenses and all fees, taxes (except
income and franchise taxes), assessments and duties incurred by any of
them) incurred by the Administrative Agent or the Collateral Agent or their
Affiliates in connection with (i) the negotiation, preparation and
execution of this Agreement and any amendments or waivers thereto
(including, without limitation, the satisfaction or attempted satisfaction
of any of the conditions set forth in ARTICLE IV), the Collateral Documents
and the other Transaction Documents or any amendment or waiver thereto and
the making of the Loans hereunder; (ii) the creation, perfection or
protection of the Collateral Agent's Liens in the Collateral for the
benefit of the Holders of Secured Obligations (including, without
limitation, any fees and expenses for title and lien searches, filing and
recording fees and taxes, trustee's fees, duplication costs and corporate
search fees); (iii) reasonable fees, expenses and disbursements of the
Administrative Agent's and the Collateral Agent's legal counsel in
connection with the administration of this Agreement, the Transaction
Documents, the Loans and the Collateral; and (iv) the protection,
collection or enforcement of any of the Obligations or the Collateral. In
addition, the Borrower shall pay, or reimburse the Administrative Agent,
the Collateral Agent, the Issuing Banks and the Lenders for, all
out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys' and legal assistants' fees incurred by the Administrative Agent,
the Collateral Agent, any Issuing Bank or
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any 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 Parent, the Borrower, or any of their respective
Subsidiaries and arising out of or in connection with the Transaction
Documents.
(b) AFTER DEFAULT. The Borrower further agrees to pay, or reimburse
the Administrative Agent, the Collateral Agent, the Issuing Banks and the
Lenders for all out-of-pocket costs and expenses, including, without
limitation, reasonable attorneys' and legal assistants' fees, expenses and
disbursements (including allocated costs of internal counsel and costs of
settlement) incurred by the Administrative Agent, the Collateral Agent, any
Issuing Bank or any Lender after the occurrence of an Event of Default (i)
in enforcing any of the Obligations 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 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 pleading in any
legal proceeding relating to the Parent, the Borrower or any of their
respective Subsidiaries and related to or arising out of the transactions
contemplated hereby or by any of the Transaction Documents; (iv) in taking
any other action in or with respect to any suit or proceeding (whether in
bankruptcy or otherwise); (v) in protecting, preserving, collecting,
leasing, selling, taking possession of, or liquidating any of the
Collateral; or (vi) in attempting to enforce or enforcing any security
interest in any of the Collateral or any other rights under the Collateral
Documents. Any payments made by the Borrower or received by the
Administrative Agent or the Collateral Agent and applied as reimbursements
for costs and expenses under this SECTION 12.03(B)shall be apportioned
among the Administrative Agent, the Collateral Agent, the Issuing Bank and
the Lenders in the order of priority set forth in SECTION 2.06.
12.04. INDEMNIFICATION AND WAIVER. The Borrower agrees: (a) to defend,
protect, indemnify, and hold harmless the Administrative Agent, the Collateral
Agent, the Issuing Banks and each and all of the Lenders, each of their
respective Affiliates and each of the respective officers, directors, employees
and agents of each of the foregoing (collectively called the "INDEMNITEES") from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees 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 (whether direct, indirect or consequential and
whether based on any federal or state laws or other statutory regulations,
including, without limitation, securities and commercial laws and regulations,
under common law or at equitable cause, or on contract or otherwise, including
any liabilities and costs under federal, state or local environmental, health or
safety laws, regulations, or common law principles, arising from or in
connection with the past, present or future operations of the Parent, the
Borrower or any of their respective Subsidiaries, or their respective
predecessors in interest, or the past, present or future environmental condition
of the Property of the Parent, the Borrower or any of their respective
Subsidiaries, the presence of asbestos-containing materials at any such
Property, or the Release or threatened Release of any Contaminant into the
environment from any such Property) in any manner relating to or arising out of
this Agreement, the Collateral Documents or any of the other Transaction
Documents, the capitalization of the Borrower, the Lenders' Commitments, the
making of, management of and participation in the Loans or the Letters of
Credit, or the use or intended use of the Letters of Credit and the proceeds of
the Loans hereunder (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 or for
which an exemption is provided in SECTION 2.03(F) or 2.08(D) or any other
provision of this Agreement and (ii) Indemnified Matters caused by or resulting
from the gross negligence or willful misconduct of that Indemnitee, as
determined by a final judgment of a court of competent jurisdiction; and (b) to
assert no claim against the Administrative Agent, the Collateral Agent, any of
the Lenders, any of the Issuing Banks or any other Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages, all of
which claims, if any, are hereby waived. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding CLAUSE (A) may be
unenforceable because it is
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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.
Without prejudice to the survival of any other agreement of the Borrower
hereunder, the agreements and obligations of the Borrower contained in this
SECTION 12.04 shall survive the payment in full of principal and interest
hereunder, the termination of the Letters of Credit and the termination of this
Agreement.
12.05. LIMITATION OF LIABILITY. No claim may be made by the Borrower, any
Lender or other Person against the Administrative Agent, the Collateral Agent,
any Issuing Bank, or any Lender or the Affiliates, directors, officers,
employees, or agents of any of them for any special, indirect, 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 other Transaction Document, or any act, omission or
event occurring in connection therewith, and the Borrower and each 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.
12.06. RATABLE SHARING; DEFAULTING LENDER; SETOFF.
(a) Subject to SECTIONS 2.06 and 12.06(B), the Lenders agree among
themselves that (i) with respect to all amounts received by them which are
applicable to the payment of the Agreement Obligations (excluding amounts
payable under this Agreement which are determined on a non-pro-rata basis,
including, without limitation, amounts payable under SECTIONS 2.03(F),
2.04(B), 2.08(D), 2.09, 2.10, 2.13, 12.03 and 12.04), 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 set-off or banker's
lien, by counterclaim or cross action or by the enforcement of any or all
of the Agreement Obligations (excluding amounts payable under this
Agreement which are determined on a non-pro-rata basis, including, without
limitation, amounts payable under SECTIONS 2.02(C), 2.03(F), 2.04(B),
2.08(D), 2.09, 2.10, 2.13, 12.03 and 12.04) 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 Agreement Obligations held by it
which is greater than its appropriate pro rata share of the payments on
account of the Agreement Obligations (excluding the fees described or
referred to in SECTION 2.04), the one receiving such excess payment shall
purchase, without recourse or warranty, an undivided interest and
participation (which it shall be deemed to have been done simultaneously
upon the receipt of such payment) in such Agreement Obligations owed to the
others so that all such recoveries with respect to such Agreement
Obligations shall be applied ratably in accordance with their Pro Rata
Shares; PROVIDED, that if all or part of such excess payment received by
the purchasing party is thereafter recovered from it, those purchases shall
be rescinded and the purchase prices paid for such 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. The Borrower agrees that
any Lender so purchasing a participation from another Lender pursuant to
this SECTION 12.06(A) may, to the fullest extent permitted by law, exercise
all its rights of payment with respect to such participation as fully as if
such Lender were the direct creditor of the Borrower in the amount of such
participation.
(b) In the event that any Lender fails to fund its Pro Rata Share of
any Borrowing requested or deemed requested by the Borrower which such
Lender is obligated to fund under the terms of this Agreement (the funded
portion of such Borrowing 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 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:
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(i) the foregoing provisions of this SECTION 12.06(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
2.03(C);
(ii) any such Lender shall be deemed to have cured its failure to
fund its Pro Rata Share of any Borrowing at such time as an amount equal
to such Lender's original Pro Rata Share of the requested principal
portion of such Borrowing is fully funded to the Borrower, whether made
by such Lender itself or by operation of the terms of this SECTION
12.06(B), 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
Borrowing ("CURE LOANS") shall bear interest at the rate applicable to
Base Rate Loans under SECTION 2.03 in effect from time to time, and for
all other purposes of this Agreement shall be treated as if they were
Base Rate Loans;
(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 terms of SECTION 2.06, would be applied to the
outstanding Base Rate Loans shall be applied FIRST, ratably to all Base
Rate Loans constituting Non Pro Rata Loans, SECOND, ratably to Base Rate
Loans other than those constituting Non Pro Rata Loans or Cure Loans
and, THIRD, ratably to Base Rate Loans constituting Cure Loans;
(v) for so long as and until the earlier of any such Lender's cure
of the failure to fund its Pro Rata Share of any Borrowing and the
termination of the Commitments, the term "Requisite Lenders" for
purposes of this Agreement shall mean Lenders (excluding all Lenders
whose failure to fund their respective Pro Rata Shares of such Borrowing
have not been so cured) whose Pro Rata Shares represent more than fifty
percent (50%) of the aggregate Pro Rata Shares of such Lenders, and the
term "Supermajority Lenders" for purposes of this Agreement shall mean
Lenders (excluding all Lenders whose failure to fund their respective
Pro Rata Shares if such Borrowing have not been so cured) whose Pro Rata
Shares represent at least sixty-six and two-thirds percent (66 2/3%) of
the aggregate Pro Rata Shares of such Lenders; and
(vi) for so long as and until any such Lender's failure to fund
its Pro Rata Share of any Borrowing is cured in accordance with SECTION
12.06(B)(II), (A) such Lender shall not be entitled to any Commitment
Fees with respect to its Revolving Credit Commitment and (B) the
Commitment Fee shall accrue in favor of the Lenders which have funded
their respective Pro Rata Shares of such requested Borrowing, shall be
allocated among such performing 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 Lenders exceeds the sum of (I) the
outstanding principal amount of the Loans owing to such performing
Lenders, PLUS(II) the outstanding Reimbursement Obligations owing to
such performing Lenders, PLUS, (III) the aggregate participation
interests of such performing Lenders arising pursuant to SECTION 3.06
with respect to undrawn and outstanding Letters of Credit.
(c) In addition to any Liens granted to the Collateral Agent, the
Issuing Banks or Lenders 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 Lender and 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 (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 Lender or 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 Lender or Issuing Bank
including, but not limited to, all Loans and Reimbursement Obligations and
all claims of any nature or description arising out of or connected with
this Agreement or any of the other Loan Documents, irrespective of whether
or not (i) that Lender or Issuing Bank shall have made any demand hereunder
or (ii) the Administrative Agent shall have declared the principal of and
interest on
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the Loans and other amounts due hereunder to be due and payable as
permitted by Article X and although said obligations and liabilities, or
any of them, may be contingent or unmatured.
12.07. AMENDMENTS AND WAIVERS. No amendment or modification of any
provision of this Agreement shall be effective without the written agreement of
the Requisite Lenders and the Borrower, and no termination or waiver of any
provision of this Agreement, or consent to any departure by the Borrower
therefrom, shall in any event be effective without the written concurrence of
the Requisite Lenders, which the Requisite Lenders shall have the right to grant
or withhold at their sole discretion, except that waivers or amendments with
respect to prepayments required pursuant to SECTION 2.05 (other than a
prepayment required from the proceeds of insurance upon the loss, damage or
destruction of any asset exceeding $10,000,000) shall not be effective without
the written concurrence of the Supermajority Lenders and except that any
amendment, modification, or waiver of any provision of this Agreement which
would (i) extend the time of expiration or termination of any of the Commitments
(other than pursuant to SECTION 2.02(G)) or the Term Loan Termination Date or
the time of payment of principal on any Loan or the Reimbursement Obligations,
interest thereon or fees (provided that any amendment, modification or waiver
with respect to any of the prepayments required pursuant to SECTION 2.05 that
results in a reduction in the amount of any such prepayment applied to any
particular scheduled amortization payment of the Term Loans shall be deemed not
to be such an extension of time of payment), including, without limitation by
any amendment to or waiver of SECTION 10.02(A), (ii) reduce the interest rate,
the amount of any fees, indemnities or reimbursements hereunder, or the
principal amount of the Loans or the Letters of Credit Obligations including,
without limitation by any amendment to or waiver of SECTION 10.02(A), (iii)
increase the amount of any of the Lenders' Commitments or increase any Lender's
Pro Rata Share, (iv) release the security interest of the Holders of Secured
Obligations in all or substantially all of the Collateral, (v) release the
Parent Guaranty or the Subsidiary Guaranty or any party thereto (other than in
connection with the sale of any Guarantor, or all or substantially all of the
assets of such Guarantor, permitted by SECTION 8.02(A)), or (vi) amend the
definitions of "Requisite Lenders", "Pro Rata Share", "Supermajority Lenders",
the provisions of SECTION 2.01(B), 2.02(G), 3.02, 3.04 or 3.06, the next to the
last sentence of SECTION 12.15 or the provisions contained in SECTION 12.06 or
in this SECTION 12.07 or the parties whose consent is required for action
hereunder or under the other Loan Documents, shall be effective only if
evidenced by a writing signed by or on behalf of all Lenders. Notwithstanding
the foregoing, with the written approval of the Supermajority Lenders,
individual Lenders may agree to defer interim amortization payments due to such
Lenders with respect to the Term Loans, PROVIDED, HOWEVER, that each Lender that
votes against such deferral shall receive such payments on each scheduled
interim amortization date as required pursuant to SECTION 2.01(C). No amendment,
modification, termination, or waiver of any provision of ARTICLE XI or any other
provision referring to the Administrative Agent or the Collateral Agent shall be
effective without the written concurrence of the Administrative Agent or the
Collateral Agent, as applicable. No amendment, modification, termination or
waiver of any provision of Article III shall be effective without the written
consent of all of the Issuing Banks. The Administrative Agent and the Collateral
Agent may, but shall have no obligation to, with the concurrence of any Lender,
execute amendments, modifications, waivers or consents on behalf of such 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 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 12.07
shall be binding on each assignee, transferee or recipient of a Lender's
Commitments or Loans, each future assignee, transferee, recipient of a Lender's
Commitments or Loans, and, if signed by the Borrower, on the Borrower.
12.08. 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, 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 12.08) shall
be as set forth in SCHEDULE A or on the applicable Assignment and Acceptance,
or, as to
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<PAGE> 89
each party, at such other address as may be designated by such party in a
written notice to all of the other parties.
12.09. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure
or delay on the part of the Administrative Agent, the Collateral Agent, any
Issuing Bank or any Lender in the exercise of any power, right or privilege
under any of the Loan Documents shall impair such power, right or privilege or
be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under the Loan Documents are cumulative to and not
exclusive of any rights or remedies otherwise available.
12.10. TERMINATION. Upon the termination in whole of the Commitments
pursuant to the terms of this Agreement, the Borrower shall pay to the
Administrative Agent for the benefit of the Lenders and the Issuing Banks an
amount equal to any and all Agreement Obligations then outstanding.
12.11. MARSHALLING; RECOURSE TO SECURITY; PAYMENTS SET ASIDE. Neither any
Lender nor the Collateral Agent nor the Administrative Agent shall be under any
obligation to marshal any assets in favor of Borrower or any other party or
against or in payment of any or all of the Obligations. Recourse to security
shall not be required at any time. To the extent that the Borrower makes a
payment or payments to the Administrative Agent or the Lenders, or the
Administrative Agent or the Collateral Agent or the Lenders enforce their
security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
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 setoff had not occurred.
12.12. 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.
12.13. HEADINGS. Article and Section headings in this Agreement and in
the Table of Contents hereto 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.
12.14. GOVERNING LAW. THE ADMINISTRATIVE AGENT HEREBY ACCEPTS THIS
AGREEMENT, ON BEHALF OF ITSELF, THE COLLATERAL AGENT AND THE LENDERS, AT NEW
YORK, NEW YORK BY ACKNOWLEDGING AND AGREEING TO IT THERE. ANY DISPUTE AMONG THE
BORROWER, THE PARENT AND THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE
ISSUING BANKS, ANY LENDER OR ANY OTHER HOLDER OF SECURED OBLIGATIONS ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED
AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS, AND WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE
RESOLVED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
12.15. SUCCESSORS AND ASSIGNS; SUBSEQUENT HOLDERS OF NOTES. 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. The
terms and provisions of this Agreement shall inure to the benefit of any
assignee or transferee of the Loans and the Commitments of any Lender (to the
extent such assignment or transfer is effected in accordance with SECTION
12.02), and in the event of such transfer or assignment, the rights and
privileges herein conferred upon Lenders shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. The Borrower's rights or any interest therein hereunder, and the
Borrower's duties and Obligations hereunder, may not be assigned without the
written consent of all of the Lenders. All of the
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<PAGE> 90
Borrower's obligations and duties under this Agreement and under each of the
other Loan Documents shall be binding upon each of the Borrower's successors and
assigns, including, without limitation, any receiver, trustee or
debtor-in-possession of or for the Borrower.
12.16. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B),
EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED
IN NEW YORK, NEW YORK, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS
FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK, NEW YORK. EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT
PURSUANT TO THIS SUBSECTION ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION
OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. THE BORROWER AGREES THAT THE ADMINISTRATIVE
AGENT, THE COLLATERAL AGENT, THE ISSUING BANKS OR ANY LENDER SHALL HAVE THE
RIGHT TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A COURT IN ANY
LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER THE
BORROWER OR (2) REALIZE ON THE COLLATERAL (INCLUDING, WITHOUT LIMITATION,
THE REAL PROPERTY COLLATERAL) OR ANY OTHER SECURITY FOR THE OBLIGATIONS OR
TO ENFORCE A JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF SUCH PERSON.
THE BORROWER WAIVES ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION OF THE
COURT IN WHICH SUCH PERSON HAS COMMENCED A PROCEEDING DESCRIBED IN THIS
SUBSECTION.
(C) SERVICE OF PROCESS. THE BORROWER WAIVES PERSONAL SERVICE OF ANY
PROCESS UPON IT AND, AS ADDITIONAL SECURITY FOR THE OBLIGATIONS,
IRREVOCABLY APPOINTS CT CORPORATION SYSTEM, THE BORROWER'S REGISTERED
ADMINISTRATIVE AGENT, WHOSE ADDRESS IS 1633 BROADWAY, NEW YORK, NEW YORK
10019, AS THE BORROWER'S ADMINISTRATIVE AGENT FOR THE PURPOSE OF ACCEPTING
SERVICE OF PROCESS ISSUED BY ANY COURT; PROVIDED THAT NOTICE OF ANY SUCH
SERVICE IS CONCURRENTLY THEREWITH DELIVERED TO BORROWER PURSUANT TO SECTION
12.08. 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
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED
WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM
IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES
HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY
HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH
ANY COURT AS WRITTEN
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EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
(E) WAIVER OF BOND. THE BORROWER WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL
PROCESS OR PROCEEDING TO REALIZE ON THE COLLATERAL (INCLUDING, WITHOUT
LIMITATION, THE REAL PROPERTY COLLATERAL) OR ANY OTHER SECURITY FOR THE
OBLIGATIONS OR TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT.
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER
PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF THIS SECTION 12.16, WITH ITS COUNSEL.
12.17. COUNTERPARTS; EFFECTIVENESS; INCONSISTENCIES. 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 shall become effective against each of the
Borrower, each Lender, the Collateral Agent, the Issuing Banks and the
Administrative Agent on the date when all of such parties have duly executed and
delivered this Agreement to each other (delivery by the Parent and the Borrower
to the Lenders and by any Lender to the Parent and the Borrower and any other
Lender being deemed to have been made by delivery to the Administrative Agent).
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.
12.18. PERFORMANCE OF OBLIGATIONS. The Borrower agrees that the
Administrative Agent and the Collateral Agent may each, but shall have no
obligation to, make any payment or perform any act required of the Borrower
under any Loan Document or take any other action which the Administrative Agent
or the Collateral Agent in its discretion deems necessary or desirable to
protect or preserve the Collateral, 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 Collateral, (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 and (iii) pay any rents payable by the Borrower which are more than 30
days past due, or as to which the landlord has given notice of termination,
under any lease. The Administrative Agent or the Collateral Agent, as
applicable, shall use its best efforts to give the Borrower notice of any action
taken under this SECTION 12.18 prior to the taking of such action or promptly
thereafter provided the failure to give such notice shall not affect the
Borrower's obligations in respect thereof. The Borrower agrees to pay the
Administrative Agent or the Collateral Agent, as applicable, upon demand, the
principal amount of all funds advanced by the Administrative Agent or the
Collateral Agent under this SECTION 12.18, together with interest thereon at the
rate from time to time applicable to Base Rate Loans from the date of such
advance until the outstanding principal balance thereof is paid in full. If the
Borrower fails to make payment in respect of any such advance under this SECTION
12.18 within one (1) Business Day after the date the Borrower receives written
demand therefor from the Administrative Agent or the Collateral Agent, as
applicable, the Administrative Agent or the Collateral Agent shall promptly
notify each Lender and each Lender agrees that it shall thereupon make available
to the Administrative Agent or the Collateral Agent, as applicable, in Dollars
in immediately available funds, the amount equal to such Lender's Pro Rata Share
of such advance. If such funds are not made available to the Administrative
Agent or the Collateral Agent, as applicable, by such Lender within one (1)
Business Day after the Administrative Agent's or Collateral Agent's demand
therefor, the Administrative Agent or Collateral Agent, as applicable, will be
entitled to recover any such amount from such Lender together with interest
thereon at the Federal Funds Rate (as such term is defined in the definition of
Alternate Base 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
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or Collateral Agent, as applicable, its Pro Rata Share of any such unreimbursed
advance under this SECTION 12.18 shall neither relieve any other Lender of its
obligation hereunder to make available to the Administrative Agent or Collateral
Agent, as applicable, such other Lender's Pro Rata Share of such 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 or Collateral Agent, as
applicable. All outstanding principal of, and interest on, advances made under
this SECTION 12.18 shall constitute Obligations secured by the Collateral until
paid in full by the Borrower.
12.19. ENTIRE AGREEMENT. THIS WRITTEN CREDIT AGREEMENT REPRESENTS THE
FINAL AGREEMENT AMONG THE PARTIES AS TO ITS SUBJECT MATTER AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS AMONG THE PARTIES. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES.
THIS SPACE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, this Agreement has been duly executed on the date set
forth above.
<TABLE>
<S> <C>
EAGLE INDUSTRIAL PRODUCTS CORPORATION,
as Borrower
By: /S/ ANTHONY NAVITSKY
Name: ANTHONY NAVITSKY
Title: Vice President -- Treasurer
CHEMICAL BANK,
as Administrative Agent
By: /S/ LISA D. BENITEZ
Name: LISA D. BENITEZ
Title: Vice President
CITICORP NORTH AMERICA, INC.,
as Collateral Agent
By: /S/ EMILY ROSENSTOCK
Name: EMILY ROSENSTOCK
Title: Vice President
</TABLE>
89
<PAGE> 1
Exhibit 4.5
CREDIT AGREEMENT
Dated as of October 28, 1994
among
FALCON BUILDING PRODUCTS, INC.
as Borrower
THE FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTY HERETO,
as Lenders,
and
CHEMICAL BANK,
as Administrative Agent
and
CITICORP NORTH AMERICA, INC.
as Collateral Agent
<PAGE> 2
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
<TABLE>
<S> <C> <C>
1.01. Certain Defined Terms.......................................................... 2
1.02. Computation of Time Periods.................................................... 21
1.03. Accounting Terms............................................................... 21
1.04. Other Definitional Provisions.................................................. 21
</TABLE>
ARTICLE II
AMOUNTS AND TERMS OF LOANS
<TABLE>
<S> <C> <C>
2.01. Revolving Loans and Term Loans................................................. 21
2.02. Revolving Loan Facility Mechanics.............................................. 22
2.03. Interest on the Loans.......................................................... 25
2.04. Fees........................................................................... 27
2.05. Mandatory Prepayments.......................................................... 28
2.06. Payments....................................................................... 29
2.07. Interest Periods............................................................... 31
2.08. Special Provisions Governing Eurodollar Rate Loans............................. 32
2.09. Taxes.......................................................................... 33
2.10. Increased Capital.............................................................. 35
2.11. Use of Proceeds of the Loans................................................... 36
2.12. Authorized Officers of Borrower................................................ 36
2.13. Replacement of Certain Lenders................................................. 36
</TABLE>
ARTICLE III
LETTERS OF CREDIT
<TABLE>
<S> <C> <C>
3.01. Obligation to Issue............................................................ 37
3.02. Types and Amounts.............................................................. 37
3.03. Conditions..................................................................... 38
3.04. Issuance of Letters of Credit.................................................. 38
3.05. Reimbursement Obligations; Duties of the Issuing Bank.......................... 38
3.06. Participations................................................................. 39
3.07. Payment of Reimbursement Obligations........................................... 40
3.08. Compensation for Letters of Credit............................................. 41
3.09. Indemnification; Exoneration................................................... 41
3.10. Reporting By Issuing Banks..................................................... 42
3.11. Outstanding Letters of Credit.................................................. 42
</TABLE>
ARTICLE IV
CONDITIONS TO LOANS AND LETTERS OF CREDIT
<TABLE>
<S> <C> <C>
4.01. Conditions Precedent to the Effective Date..................................... 42
4.02. Conditions Precedent to all Loans and Letters of Credit........................ 44
4.03. Consent to Assumption Agreement................................................ 45
</TABLE>
ARTICLE V
REPRESENTATIONS AND WARRANTIES
<TABLE>
<S> <C> <C>
5.01. Representations and Warranties on the Effective Date........................... 45
5.02. Subsequent Funding Representations and Warranties.............................. 50
</TABLE>
(i)
<PAGE> 3
ARTICLE VI
REPORTING COVENANTS
<TABLE>
<S> <C> <C>
6.01. Financial Statements........................................................... 51
6.02. Environmental Notices.......................................................... 54
</TABLE>
ARTICLE VII
AFFIRMATIVE COVENANTS
<TABLE>
<S> <C> <C>
7.01. Corporate Existence, Etc. ..................................................... 54
7.02. Corporate Powers, Etc. ........................................................ 55
7.03. Compliance with Laws........................................................... 55
7.04. Payment of Taxes and Claims.................................................... 55
7.05. Maintenance of Properties; Insurance........................................... 55
7.06. Inspection of Property; Books and Records; Discussions......................... 55
7.07. Labor Matters.................................................................. 55
7.08. Maintenance of Permits......................................................... 56
7.09. Employee Benefit Matters....................................................... 56
7.10. Formation of Subsidiaries...................................................... 56
7.11. Collateral Audit............................................................... 57
7.12. Liquidity...................................................................... 57
7.13. Future Liens on Real Property in Favor of the Collateral Agent................. 57
</TABLE>
ARTICLE VIII
NEGATIVE COVENANTS
<TABLE>
<S> <C> <C>
8.01. Indebtedness................................................................... 57
8.02. Sales of Assets; Liens......................................................... 58
8.03. Investments.................................................................... 59
8.04. Accommodation Obligations...................................................... 60
8.05. Restricted Junior Payments..................................................... 60
8.06. Conduct of Business............................................................ 60
8.07. Transactions with Affiliates................................................... 60
8.08. Restriction on Fundamental Changes............................................. 60
8.09. Employee Benefit Matters....................................................... 61
8.10. Environmental Liabilities...................................................... 61
8.11. Margin Regulations............................................................. 61
8.12. Change of Fiscal Year.......................................................... 61
8.13. Amendment of Certain Documents................................................. 61
8.14. Modification of Receivables Agreements......................................... 61
</TABLE>
ARTICLE IX
FINANCIAL COVENANTS
<TABLE>
<S> <C> <C>
9.01. Minimum Consolidated Net Worth................................................. 62
9.02. Ratio of Total Indebtedness to Net EBITDA...................................... 62
9.03. Interest Coverage Ratio........................................................ 62
9.04. Capital Expenditures........................................................... 63
9.05. Fixed Charges Coverage Ratio................................................... 63
</TABLE>
(ii)
<PAGE> 4
ARTICLE X
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
<TABLE>
<S> <C> <C>
10.01. Events of Default.............................................................. 63
10.02. Rights and Remedies............................................................ 65
</TABLE>
ARTICLE XI
ADMINISTRATIVE AGENT AND COLLATERAL AGENT
<TABLE>
<S> <C> <C>
11.01. Appointment.................................................................... 66
11.02. Nature of Duties............................................................... 66
11.03. Rights, Exculpation, Etc. ..................................................... 67
11.04. Reliance....................................................................... 67
11.05. Indemnification................................................................ 67
11.06. The Administrative Agent and the Collateral Agent Individually................. 68
11.07. Successor Administrative Agent or Collateral Agent; Resignation of
Administrative Agent or Collateral Agent....................................... 68
11.08. Collateral Matters............................................................. 68
11.09. Relations Among Lenders........................................................ 70
</TABLE>
ARTICLE XII
MISCELLANEOUS
<TABLE>
<S> <C> <C>
12.01. Survival of Warranties and Agreements.......................................... 70
12.02. Assignments and Participations................................................. 70
12.03. Expenses....................................................................... 73
12.04. Indemnification and Waiver..................................................... 74
12.05. Limitation of Liability........................................................ 74
12.06. Ratable Sharing; Defaulting Lender; Setoff..................................... 74
12.07. Amendments and Waivers......................................................... 76
12.08. Notices........................................................................ 77
12.09. Failure or Indulgence Not Waiver; Remedies Cumulative.......................... 77
12.10. Termination.................................................................... 77
12.11. Marshalling; Recourse to Security; Payments Set Aside.......................... 77
12.12. Severability................................................................... 78
12.13. Headings....................................................................... 78
12.14. GOVERNING LAW.................................................................. 78
12.15. Successors and Assigns; Subsequent Holders of Notes............................ 78
12.16. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL........................ 78
12.17. Counterparts; Effectiveness; Inconsistencies................................... 79
12.18. Performance of Obligations..................................................... 80
12.19. ENTIRE AGREEMENT............................................................... 80
</TABLE>
(iii)
<PAGE> 5
EXHIBITS
<TABLE>
<S> <C> <C>
Exhibit 1 -- Assignment and Acceptance (sec.sec.1.01, 12.02(d))
Exhibit 2 -- Borrowing Base Certificate (sec.1.01)
Exhibit 3 -- Compliance Certificate (sec.sec.1.01, 6.01(e))
Exhibit 4 -- Notice of Borrowing (sec.1.01)
Exhibit 5 -- Notice of Conversion/Continuation (sec.1.01)
Exhibit 6 -- Forms of Notes (sec.2.02)
Exhibit 7 -- List of Closing Documents (sec.4.01(a))
Exhibit 8 -- Form of Loss Payable Endorsement (sec.7.05)
</TABLE>
(iv)
<PAGE> 6
FALCON
SCHEDULES
<TABLE>
<S> <C> <C>
Schedule A -- List of Lenders, Issuing Banks, Commitments, Notice Addresses and
Domestic and Eurodollar Lending Offices (sec.sec.1.01, 12.02(c),
12.08)
Schedule 1.01-A -- Existing Indebtedness (sec.1.01)
Schedule 1.01-B -- Material Adverse Effect (sec.1.01)
Schedule 1.01-C -- Real Property Subject to Real Estate Mortgages (sec.1.01)
Schedule 1.01-D -- Permitted Existing Liens (sec.1.01)
Schedule 5.01(c) -- Subsidiaries (sec.sec.5.01(c), 7.01)
Schedule 5.01(d) -- Violation of Requirements of Law (sec.5.01(d))
Schedule 5.01(i) -- Capitalization (sec.5.01(i))
Schedule 5.01(j) -- Pending or Threatened Litigation (sec.5.01(j))
Schedule 5.01(l) -- Tax Assessments (sec.5.01(1))
Schedule 5.01(s) -- Environmental Matters (sec.5.01(s))
Schedule 5.01(t) -- ERISA Matters (sec.5.01(t))
Schedule 5.01(w) -- Joint Ventures (sec.5.01(w))
Schedule 5.01(x) -- Labor Matters (sec.5.01(x))
Schedule 7.05 -- Insurance (sec.7.05)
Schedule 8.08 -- Fundamental Changes (sec.8.08(a))
</TABLE>
(v)
<PAGE> 7
CREDIT AGREEMENT
This Credit Agreement dated as of October 28, 1994 (as amended,
supplemented, modified or restated from time to time, this "AGREEMENT") is
entered into among FALCON BUILDING PRODUCTS, INC., a Delaware corporation
("BORROWER"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF
and each other financial institution which from time to time becomes a party
hereto in accordance with SECTION 12.02(A) (together with their respective
successors and assigns, individually, a "LENDER" and, collectively, the
"LENDERS"), CHEMICAL BANK, a New York banking corporation, in its separate
capacity as administrative agent for the Lenders hereunder (in such capacity,
the "ADMINISTRATIVE AGENT") and CITICORP NORTH AMERICA, INC. as collateral agent
for the Lenders hereunder (the "COLLATERAL AGENT").
RECITALS
A. Eagle Industrial Products Corporation, a Delaware corporation ("EIPC"),
entered into a Credit Agreement dated as of January 31, 1994, as amended, with
the Lenders and certain other financial institutions, the Administrative Agent
and the Collateral Agent (the "ORIGINAL CREDIT AGREEMENT"). Pursuant to the
Original Credit Agreement, the Borrower and its Subsidiaries and certain other
direct and indirect Subsidiaries of EIPC executed a Guaranty of even date
therewith (the "ORIGINAL GUARANTY") and certain other collateral documents
granting liens and security interests in and upon the assets of the Borrower and
such Subsidiaries (the "ORIGINAL COLLATERAL DOCUMENTS"). Pursuant to the
Original Guaranty, the Borrower and its Subsidiaries jointly and severally
guaranteed the obligations of EIPC (the "ORIGINAL OBLIGATIONS") under the
Original Credit Agreement and the other "Loan Documents" thereunder, and the
liens and security interests granted pursuant to the Original Collateral
Documents secured the Original Obligations and the Original Guaranty.
B. The Borrower intends to effect an initial public offering of up to 47%
of its common stock (the "OFFERING"), the balance of which common stock will
continue to be owned, directly or indirectly, by EIPC. A portion of the proceeds
to the Borrower of the Offering will be used, directly or indirectly, to repay a
portion of the Original Obligations.
C. Concurrently with the consummation of the Offering and the application
of the proceeds thereof, the Borrower, EIPC and their respective Subsidiaries
(together with Eagle Industries, Inc.) will enter into the Assumption Agreement,
pursuant to which (i) the Borrower will assume direct liability for a portion of
the Original Obligations, which assumed obligations henceforth shall be
evidenced by this Agreement and the other Loan Documents, and Eagle Industries,
Inc., EIPC, and EIPC's other Subsidiaries will be released from such assumed
obligations, and (ii) the Borrower and its Subsidiaries will be released from
the balance of the Original Obligations, which henceforth shall be evidenced by
an Amended and Restated Credit Agreement of even date herewith among EIPC, the
Lenders, the Administrative Agent and the Collateral Agent (the "AMENDED EIPC
AGREEMENT").
D. Immediately prior to the execution and delivery of the Assumption
Agreement and the effectiveness of this Agreement and the Amended EIPC
Agreement, certain of the original lenders under the Original Credit Agreement
will assign their entire interests in the Original Obligations and the Original
Credit Agreement to one or more of the Lenders.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01. CERTAIN DEFINED TERMS.
The following terms used in this Agreement shall have the following
meanings (such meanings to be applicable, except to the extent otherwise
indicated in a definition of a particular term, both to the singular and the
plural forms of the terms defined):
"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
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<PAGE> 8
another, 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. For purposes of
interpreting any provision of this Agreement which refers to the Dollar amount
of Accommodation Obligations of any Person, such provision shall be deemed to
mean the maximum amount of such Accommodation Obligations or, in the case of an
Accommodation Obligation to maintain solvency, assets, level of income or other
financial condition, the amount of Indebtedness to which such Accommodation
Obligation relates, or if less, the stated maximum, if any, in the documents
evidencing such Accommodation Obligation.
"ACCOUNT DEBTOR" shall mean a party that is obligated to the Borrower or a
Guarantor on or under a Receivable.
"ADMINISTRATIVE AGENT" shall have the meaning ascribed to such term in the
preamble hereto and shall include any successor Administrative Agent.
"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 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.
"AGREEMENT" shall have the meaning ascribed to such term in the preamble
hereto.
"AGREEMENT ACCOUNTING PRINCIPLES" shall mean GAAP as of the date of this
Agreement together with any changes in GAAP after the date hereof which are not
"Material Accounting Changes" (as defined below). If any changes in GAAP are
hereafter required or permitted and are adopted by the Borrower with the
agreement of its independent certified public accountants and such changes
result in a material change in method of the calculation of any of the financial
covenants, restrictions or standards herein or in the related definitions or
terms used therein ("MATERIAL ACCOUNTING CHANGES"), the parties hereto agree to
enter into negotiations, in good faith, in order to amend such provisions in a
credit neutral manner so as to reflect equitably such changes with the desired
result that the criteria for evaluating the Borrower's financial condition shall
be substantially the same after such changes as if such changes had not been
made; PROVIDED, HOWEVER, that no Material Accounting Change shall be given
effect in such calculations until such provisions are amended, in a manner
reasonably satisfactory to the Requisite Lenders. In the event such amendment is
entered into, all references in this Agreement to Agreement Accounting
Principles shall mean GAAP as of the date of such amendment together with any
changes in GAAP after the date of such amendment which are not Material
Accounting Changes. Unless otherwise expressly indicated herein, all financial
covenants and ratios shall be calculated for the Consolidated Borrower Group on
a consolidated basis.
"AGREEMENT OBLIGATIONS" shall mean all Obligations other than with respect
to Eligible Hedging Contracts.
"ALTERNATE BASE RATE" shall mean, for any day, a fluctuating interest rate
per annum (rounded upwards, if necessary, to the next 1/16 of 1%) as shall be in
effect from time to time, which rate per annum shall at all times be equal to
the greatest of (a) the Prime Rate in effect on such day; (b) the sum of
one-half of one percent (0.50%) and the Federal Funds Effective Rate in effect
on such day; and (c) the sum of one percent (1.0%) and (1) the product of (x)
the Three-Month Secondary CD Rate in effect on such day and (y) Statutory
Reserves and (2) the Assessment Rate. For purposes hereof, "PRIME RATE" shall
mean the rate of interest per annum publicly announced from time to time by
Chemical Bank as its prime rate in effect at its principal office in New York
City; each change in the Prime Rate shall be effective on the date such change
is
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<PAGE> 9
publicly announced as being effective. "THREE-MONTH SECONDARY CD RATE" shall
mean, for any day, the secondary market rate for three-month certificates of
deposit reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Federal Reserve Board
through the public information telephone line of the Federal Reserve Bank of New
York (which rate will, under the current practices of the Federal Reserve Board,
be published in Federal Reserve Statistical Release H.15(519) during the week
following such day), or, if such rate shall not be so reported on such day or
such next preceding Business Day, the average of the secondary market quotations
for three-month certificates of deposit of major money center banks in New York
City received at approximately 10:00 a.m., New York City time, on such day (or,
if such day shall not be a Business Day, on the next preceding Business Day) by
Chemical Bank from three New York City negotiable certificate of deposit dealers
of recognized standing selected by the Administrative Agent. "FEDERAL FUNDS
EFFECTIVE RATE" shall mean, for any day, a fluctuating interest rate per annum
equal 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 on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by Chemical Bank from three Federal funds brokers of
recognized standing selected by the Administrative Agent. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate or both for any reason,
including the inability or failure of the Administrative Agent to obtain
sufficient quotations in accordance with the terms hereof, the Alternate Base
Rate shall be determined without regard to CLAUSE (B) or (C), or both, of the
first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate shall be effective on the effective date of such
change.
"AMENDED EIPC AGREEMENT" shall have the meaning ascribed to that term in
the recitals hereto.
"APPLICABLE BASE RATE MARGIN" shall mean, at any date of determination, the
rate per annum set forth in the chart below which corresponds to the ratio below
as at the end of the immediately preceding fiscal quarter:
<TABLE>
<CAPTION>
APPLICABLE
BASE RATE MARGIN FREE CASH FLOW COVERAGE RATIO
------------------- -----------------------------------------------------------------------
<S> <C>
0.75% Less than 3.0 to 1.0
0.375% Equal to or greater than 3.0 to 1.0 but less than 4.0 to 1.0
0.125% Equal to or greater than 4.0 to 1.0 but less than 5.0 to 1.0
0.00% Equal to or greater than 5.0 to 1.0
</TABLE>
The Applicable Base Rate Margin initially shall be 0.25%, and after each
fiscal quarter ending on or after March 31, 1995 shall be adjusted as provided
in SECTION 2.03(A) by reference to the table set forth above on the basis of the
Borrower's Free Cash Flow Coverage Ratio. Notwithstanding the foregoing, if the
Borrower attains at least two of the following Senior Debt Ratings, the
Applicable Base Rate Margin shall be 0.0%: (1) BBB or better from S&P; (2) Baa3
or better from Moody's; and (3) Baa3 or better from D&P.
"APPLICABLE EURODOLLAR RATE MARGIN" shall mean, at any date of
determination, the rate per annum set forth in the chart below which corresponds
to the ratio below as at the end of the immediately preceding fiscal quarter:
<TABLE>
<CAPTION>
APPLICABLE
EURODOLLAR RATE
MARGIN FREE CASH FLOW COVERAGE RATIO
------------------- -----------------------------------------------------------------------
<S> <C>
1.75% Less than 3.0 to 1.0
1.375% Equal to or greater than 3.0 to 1.0 but less than 4.0 to 1.0
1.125% Equal to or greater than 4.0 to 1.0 but less than 5.0 to 1.0
0.875% Equal to or greater than 5.0 to 1.0 but less than 6.0 to 1.0
0.625% Equal to or greater than 6.0 to 1.0
</TABLE>
The Applicable Eurodollar Rate Margin initially shall be 1.25%, and after
each fiscal quarter ending on or after March 31, 1995 shall be adjusted as
provided in SECTION 2.03(A) by reference to the table set forth above
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<PAGE> 10
on the basis of the Borrower's Free Cash Flow Coverage Ratio. Notwithstanding
the foregoing, if the Borrower attains at least two of the following Senior Debt
Ratings corresponding to an Applicable Eurodollar Rate Margin set forth below,
the Applicable Eurodollar Rate Margin shall be determined, and adjusted from
time to time, as provided in SECTION 2.03(A) by reference to the table set forth
below:
<TABLE>
<CAPTION>
APPLICABLE
EURODOLLAR RATE
MARGIN SENIOR DEBT RATINGS
------------------- -----------------------------------------------------------------------
<S> <C>
0.625% BBB- or better from S&P;
Baa3 or better from Moody's;
Baa3 or better from D&P
0.50% BBB or better from S&P;
Baa2 or better from Moody's;
Baa2 or better from D&P
</TABLE>
"APPLICABLE LENDING OFFICE" shall mean, with respect to each Lender, such
Lender's Domestic Lending Office, in the case of a Base Rate Loan and such
Lender's Eurodollar Lending Office, in the case of a Eurodollar Rate Loan.
"APPLICABLE MARGINS" shall mean the Applicable Base Rate Margin and the
Applicable Eurodollar Rate Margin.
"ASSESSMENT RATE" shall mean for any date the annual rate (rounded upwards,
if necessary, to the next 1/100 of 1%) most recently estimated by the
Administrative Agent as the then-current net annual assessment rate that will be
employed in determining amounts payable by the Administrative Agent or any other
Lender to the FDIC (or any successor) for insurance by the FDIC (or such
successor) of time deposits made in dollars at the Administrative Agent's or
such Lenders domestic offices.
"ASSIGNMENT AND ACCEPTANCE" shall mean an Assignment and Acceptance in the
form of EXHIBIT 1 (with blanks appropriately filled in) delivered to the
Administrative Agent in connection with an assignment of a Lender's interest
under this Agreement pursuant to SECTION 12.02.
"ASSUMPTION AGREEMENT" shall mean the Assumption and Release Agreement
dated as of the Effective Date among the Borrower, each of its Subsidiaries,
EIPC, each of EIPC's other domestic Subsidiaries, Eagle Industries, Inc., the
Administrative Agent and the Collateral Agent, in the form attached as Exhibit A
to the List of Closing Documents referred to in SECTION 4.01(A).
"BASE RATE LOANS" shall mean all Loans outstanding which bear interest at a
rate determined by reference to the Alternate Base Rate, as provided in SECTION
2.03(A) (I).
"BENEFIT PLAN" shall mean a defined benefit plan as defined in Section
3(35) of ERISA (other than a Multiemployer Plan) in respect of which 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 while an ERISA Affiliate.
"BORROWER" shall have the meaning ascribed to such term in the preamble
hereto.
"BORROWER SECURITY AGREEMENT" shall mean that certain Borrower Security
Agreement executed by the Borrower in favor of the Collateral Agent for the
benefit of itself and the Holders of Secured Obligations dated as of the
Effective Date, as the same may be amended, restated, supplemented or otherwise
modified from time to time.
"BORROWER SUBSIDIARY" shall mean any Subsidiary of the Borrower.
"BORROWING" shall mean a borrowing consisting of Loans of the same Type,
having the same Interest Period, in the case of Eurodollar Rate Loans, and made
on the same day by the Lenders.
"BORROWING BASE" shall mean, as of any date of calculation, an amount equal
to the sum of: (a) 85% of the face amount then outstanding under the Eligible
Receivables, and (b) 45% of Eligible Inventory, valued at the lower of cost
determined on a FIFO basis or market value, less such reserves as the
Administrative Agent elects to establish in accordance with its reasonable
credit judgment.
"BORROWING BASE CERTIFICATE" means a certificate of the chief financial
officer, treasurer or controller of Borrower substantially in the form of
EXHIBIT 2 (or another form mutually acceptable to the Administrative
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<PAGE> 11
Agent and Borrower) setting forth calculations of the Borrowing Base, including
a calculation of each component thereof, as at the close of business on the last
Business Day of the preceding fiscal month, all in such detail as shall be
reasonably satisfactory to the Administrative Agent.
"BUSINESS DAY" shall mean (i) for all purposes other than as described by
CLAUSE (II) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of New York, or is a day on which
banking institutions located in New York are required or authorized by law or
other governmental action to close and (ii) with respect to all notices,
determinations, fundings and payments in connection with Eurodollar Rate Loans,
any day which is a Business Day described in CLAUSE (I) and which is also a day
for trading in dollar deposits by and between banks in the London interbank
Eurodollar market.
"CAPITAL EXPENDITURES" shall mean, with respect to any Person on a
consolidated basis for any period, the aggregate of all expenditures incurred by
such Person during such period that, in accordance with Agreement Accounting
Principles, are or should be included in "additions to property, plant or
equipment" or similar items reflected in the statement of cash flows of such
Person, excluding interest and start-up expenses that otherwise would be
included and less any cash proceeds from the disposal of property, plants or
equipment not paid to the Lenders as a mandatory prepayment; PROVIDED, HOWEVER,
that Capital Expenditures shall not include expenditures of proceeds of
insurance settlements in respect of lost, destroyed or damaged assets, equipment
or other property to the extent such expenditures are made in connection with
the replacement or repair of such lost, destroyed or damaged assets, equipment
or other property commenced within 6 months of such destruction or damage and
pursued with diligence.
"CAPITAL LEASE," as applied to any Person, shall mean any lease of any
property (whether real, personal, or mixed) by that Person as lessee which, in
conformity with Agreement Accounting Principles, is or should be accounted for
as a capital lease on the balance sheet of that Person.
"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 of
America, in each case maturing within one year after the date of acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America maturing within six months after the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either S&P or Moody's (or, if at any time neither S&P nor
Moody's shall be rating such obligations, then from such other nationally
recognized rating services acceptable to the Administrative Agent) and not
listed in Credit Watch published by S&P (or a similar publication of S&P or
another nationally recognized rating service); or (iii) commercial paper (other
than commercial paper issued by the Borrower or any of its Subsidiaries or
Affiliates), domestic and Eurodollar certificates of deposit, time deposits or
bankers' acceptances, in any such case maturing no more than ninety (90) days
after the date of acquisition thereof and, at the time of the acquisition
thereof, the issuer's rating on its commercial paper is at least A-1 or P-1 from
either S&P or Moody's (or, if at any time neither S&P nor Moody's shall be
rating such obligations, then the highest rating from other nationally
recognized rating services acceptable to the Administrative Agent).
"CASH INTEREST EXPENSE" shall mean, with respect to any Person on a
consolidated basis for any period, (a) interest expense of such Person for such
period determined on a consolidated basis in accordance with Agreement
Accounting Principles consistently applied, excluding the amortization of all
fees payable in connection with the incurrence of the Obligations PLUS (b)
capitalized interest paid during such period by such Person MINUS (c) interest
paid to and received by such Person in cash in the United States during such
period.
"CHANGE OF CONTROL" shall mean that either (a) the Samuel Zell Group shall
cease to own, directly or indirectly, at least 20% of the combined voting power
of the Borrower's outstanding securities ordinarily having the right to vote at
elections of directors, PROVIDED that the failure by the Samuel Zell Group to
own such a minimum percentage of securities shall not be deemed a change of
control hereunder if the Borrower shall have attained at least two of the
following Senior Debt Ratings: BBB+ or better from S&P; Baa1 or better from
Moody's; and Baa1 from D&P; or (b) any other Person or Group (as defined below)
shall acquire or own, directly or indirectly, 30% or more of the combined voting
power of the Borrower's outstanding securities ordinarily having the right to
vote at elections of directors and such percentage of securities owned shall be
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<PAGE> 12
greater than the percentage of securities owned by the Samuel Zell Group.
"GROUP" shall mean two or more Persons that agree to act together as a
partnership, syndicate or other group for the purpose of acquiring, holding,
voting, or disposing of the Borrower's securities.
"CHEMICAL" shall mean Chemical Bank, a New York banking corporation, and
any successor thereto.
"CITICORP" shall mean Citicorp North America, Inc., and any successor
thereto.
"COLLATERAL" shall mean all property and interests in property now owned or
hereafter acquired by the Borrower or any of the Borrower's Subsidiaries in or
upon which a security interest, pledge, lien or mortgage is intended to be
granted, or of which a collateral assignment is intended to be made, under the
Collateral Documents.
"COLLATERAL AGENT" shall have the meaning ascribed to such term in the
preamble hereto and shall include any successor Collateral Agent.
"COLLATERAL DOCUMENTS" shall mean the Borrower Security Agreement, the
Subsidiary Security Agreement, the Subsidiary Guaranty, the Intellectual
Property Agreements, the Pledge Agreements, the Mortgages, and all other
security agreements, mortgages, deeds of trust, collateral assignments,
financing statements and other agreements, conveyances or documents at any time
delivered to the Administrative Agent by the Borrower or any Borrower Subsidiary
which intend to create or evidence Liens to secure or to guarantee the
Obligations.
"COMMERCIAL LETTER OF CREDIT" shall mean any letter of credit which is
drawable upon presentation of a sight draft and other documents evidencing the
sale or shipment of goods purchased by Borrower or any of its domestic
Subsidiaries in the ordinary course of such entity's business.
"COMMISSION" shall mean the Securities and Exchange Commission or any
Governmental Authority succeeding to the functions thereof.
"COMMITMENTS" shall mean, collectively, the Letter of Credit Commitments
and the Revolving Credit Commitments of all Lenders.
"COMMITMENT FEE" shall have the meaning ascribed to that term in SECTION
2.04(A).
"COMPLIANCE CERTIFICATE" shall mean a certificate in substantially the form
of EXHIBIT 3 delivered to the Administrative Agent by Borrower covering
Borrower's compliance with the covenants contained in ARTICLE IX and certain
other provisions of this Agreement.
"CONSOLIDATED BORROWER GROUP" shall mean the Borrower and each of its
Subsidiaries.
"CONSOLIDATED NET INCOME" shall mean, with respect to any Person on a
consolidated basis for any period, net income for such period but excluding from
the definition of Consolidated Net Income the effect of any extraordinary or
non-recurring gains or losses, or gains or losses from the sale of assets in
connection with any Asset Sale Prepayment Event as defined in SECTION
2.05(B)(II), all computed on a consolidated basis in accordance with Agreement
Accounting Principles consistently applied.
"CONTAMINANT" shall mean any pollutant, hazardous substance, hazardous
chemical, toxic substance, hazardous waste or special waste, as those terms are
defined in federal, state or local laws and regulations, radioactive material,
petroleum, including crude oil or any petroleum-derived substance, or break-down
or decomposition product thereof, or any constituent of any such substance or
waste, including but not limited to polychlorinated biphenyls and asbestos.
"CONTRACTUAL OBLIGATION", as applied to any Person, shall mean any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, contract, undertaking, document, instrument or other 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
(including, without limitation, any restrictive covenant affecting such Person
or any of its properties).
"CONTRIBUTION AGREEMENT" shall mean that certain contribution agreement
executed by each of the Subsidiaries of the Borrower dated as of the Effective
Date, as the same may be amended, restated, supplemented or otherwise modified
from time to time with the consent of the Requisite Lenders.
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<PAGE> 13
"CUSTOMARY PERMITTED LIENS" shall mean (i) Liens (other than Environmental
Liens, Liens imposed under ERISA or Enforceable Judgments) for claims, taxes,
assessments or charges of any Governmental Authority 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, bankers, carriers,
warehousemen, mechanics, materialmen, and other Liens (other than Environmental
Liens, Liens imposed under ERISA or Enforceable Judgments) imposed by law
arising in the ordinary course of business and for amounts which (A) are not yet
due, (B) are not more than thirty (30) days past due as long as no notice of
default has been given or other action taken to enforce such Liens, or (C) (1)
are not more than thirty (30) days past due and a notice of default has been
given or other action taken to enforce such Liens, or (2) are more than thirty
(30) days past due, and, in the case of CLAUSE (1) or (2), are being contested
in good faith by appropriate proceedings which are sufficient to prevent
imminent foreclosure of such Liens and with respect to which adequate reserves
or other appropriate provisions are being maintained in accordance with GAAP,
(iii) Liens (other than Environmental Liens, Liens imposed under ERISA or
Enforceable Judgments) 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
employment benefits or to secure the performance of tenders, bids, leases,
contracts (other than for the repayment of Indebtedness), statutory obligations
and other similar obligations or arising as a result of progress payments under
government contracts, (iv) easements (including, without limitation, reciprocal
easement agreements and utility agreements), rights-of-way, covenants, consents,
rights of landlords, reservations, encroachments, variations and other
restrictions, charges or encumbrances (whether or not recorded) affecting the
use of real property, which do not materially interfere with the ordinary
conduct of the business of Borrower or any of Borrower's Subsidiaries, (v) Liens
in favor of customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods; and (vi)
precautionary filings of financing statements in connection with Operating
Leases entered into in the ordinary course of business.
"D&P" shall mean Duff & Phelps Credit Rating Co. and its successors.
"DEBT SERVICE" shall mean, with respect to the Borrower on a consolidated
basis for any period, without duplication (i) the aggregate Cash Interest
Expense of the Borrower on a consolidated basis for such period, (ii) the
aggregate principal amount of the Term Loans that was due during such period
pursuant to SECTION 2.01(C) as the same may be adjusted from time to time,
excluding amounts paid on the Term Loans as a result of a Prepayment Event and
applied to such scheduled amortization payments and (iii) scheduled principal
payments on any other Indebtedness of Borrower for such period.
"DEFAULT RATE" shall have the meaning ascribed to that term in Section
2.03(d).
"DOL" shall mean the United States Department of Labor and any successor
department or agency.
"DOLLARS" and "$" shall mean the lawful money of the United States of
America.
"DOMESTIC LENDING OFFICE" means, with respect to any Lender, the office of
such Lender specified as its "Domestic Lending Office" under its name on
SCHEDULE A or on the Assignment and Acceptance by which it became a Lender or
such other office of such Lender as such Lender may from time to time specify by
written notice to Borrower and the Administrative Agent.
"EBITDA" shall mean, with respect to any Person on a consolidated basis for
any period, the sum for such Person for such period of Consolidated Net Income
(excluding undistributed earnings in Persons which are 50% or less owned,
directly or indirectly, by the Borrower) plus, to the extent reflected in the
income statement of such Person for such period for which Consolidated Net
Income is determined, without duplication, (i) consolidated Net Interest
Expense, (ii) federal, state and local income and franchise tax expense, (iii)
depreciation expense, (iv) amortization expense, (v) Securitization Expenses,
(vi) any other noncash items which had the effect of reducing Consolidated Net
Income for such period, but minus any noncash items which had the effect of
increasing Consolidated Net Income for such period and (vii) non-recurring
charges, restructuring charges and management fees incurred prior to the
Effective Date.
"EFFECTIVE DATE" shall have the meaning ascribed to that term in SECTION
4.01.
"EIPC" shall have the meaning ascribed to that term in the preamble hereto.
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<PAGE> 14
"ELIGIBLE HEDGING CONTRACT" shall mean Hedging Contracts of the Borrower or
any Guarantor with any Lender as the counterparty.
"ELIGIBLE INVENTORY" shall mean Inventory of the Borrower or any Guarantor
which is held for sale or lease or furnished under any contract of service by
the Borrower or any Guarantor and which is at all times and shall continue to be
acceptable to the Administrative Agent and the Collateral Agent in all respects
in accordance with their reasonable credit judgment. Standards of eligibility
may be established and revised from time to time by the Administrative Agent in
the Administrative Agent's reasonable credit judgment; PROVIDED, HOWEVER, in
general and without limiting the foregoing, the following Inventory is not
Eligible Inventory:
(a) Inventory which is obsolete, not in good condition, or not either
currently usable or currently salable in the ordinary course of the
business of the Borrower or any Guarantor;
(b) Inventory which the Administrative Agent determines, in the
exercise of reasonable discretion and in accordance with the Administrative
Agent's customary business practices, to be unacceptable due to age, type,
category and/or quantity; and
(c) Inventory with respect to which the Collateral Agent does not
have a first and valid fully perfected security interest for the benefit of
itself and the Holders of Secured Obligations.
"ELIGIBLE RECEIVABLES" shall mean Receivables created by the Borrower or
any Guarantor in the ordinary course of business arising out of the sale of
goods or rendition of services by the Borrower or any Guarantor, which
Receivables are and at all times shall continue to be acceptable to the
Administrative Agent and the Collateral Agent in all respects in accordance with
their reasonable credit judgment. Standards of eligibility may be established
and revised from time to time by the Administrative Agent in the Administrative
Agent's reasonable credit judgment; PROVIDED, HOWEVER, in general and without
limiting the foregoing, the following Receivables are not Eligible Receivables:
(a) Receivables which remain unpaid sixty (60) days after the due
date indicated on the applicable invoice;
(b) all Receivables owing by a single Account Debtor, including a
currently scheduled Receivable, if fifty percent (50%) of the balance owing
by such Account Debtor remains unpaid sixty (60) days after the due date
indicated on the applicable invoice;
(c) Receivables with respect to which the Account Debtor is a
director, officer, employee or Subsidiary of Borrower or any Guarantor;
(d) Receivables with respect to which the Account Debtor is not a
resident of the United States, its territories or its commonwealths unless
the Account Debtor has supplied the Borrower or any Guarantor, as
applicable, with an irrevocable letter of credit, issued by a financial
institution reasonably satisfactory to the Administrative Agent, sufficient
to cover such Receivable in form and substance satisfactory to the
Administrative Agent;
(e) Receivables with respect to which the Account Debtor has (i)
asserted a counterclaim or (ii) a right of setoff, but only to the extent
of such counterclaim or setoff;
(f) Receivables for which the prospect of payment or performance by
the Account Debtor is or will be impaired as determined by the
Administrative Agent or the Collateral Agent in the exercise of its
reasonable credit judgment;
(g) Receivables with respect to which the Collateral Agent does not
have a first and valid fully perfected and enforceable security interest
for the benefit of itself and the Holders of Secured Obligations;
(h) Receivables with respect to which the Account Debtor is the
subject of bankruptcy or a similar insolvency proceeding or has made an
assignment for the benefit of creditors or whose assets have been conveyed
to a receiver or trustee;
(i) Receivables with respect to which the Account Debtor's obligation
to pay the Receivable is conditional upon the Account Debtor's approval or
is otherwise subject to any repurchase obligation or return right, as with
sales made on a bill-and-hold, guaranteed sale, sale-and-return, sale on
approval
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(except with respect to Receivables in connection with which Account
Debtors are entitled to return Inventory on the basis of the quality of
such Inventory) or consignment basis until such time as the condition is
waived or deemed to have been waived;
(j) Receivables with respect to which the Account Debtor is located
in Minnesota (or any other jurisdiction which adopts a statute or other
requirement with respect to which any Person that obtains business from
within such jurisdiction or is otherwise subject to such jurisdiction's tax
law requiring such Person to make any required filings in a timely manner
in order to enforce its claims in such jurisdiction's courts or arising
under such jurisdiction's laws); provided, however, such Receivables shall
nonetheless be eligible if, the Borrower or any Guarantor, as applicable,
has filed a current notice of business activities report with the
applicable state office or is qualified to do business in such jurisdiction
and, at the time the Receivable was created, was qualified to do business
in such jurisdiction or had on file with the applicable state office a
current notice of business activities report (or other applicable report);
(k) Receivables with respect to which the Account Debtor's obligation
does not constitute its legal, valid and binding obligation, enforceable
against it in accordance with its terms; and
(l) Receivables with respect to which the Borrower or any Guarantor,
as applicable, has not yet shipped the applicable goods or performed the
applicable service.
"ENFORCEABLE JUDGMENT" means a judgment or order as to which (a) the
Borrower has not demonstrated to the reasonable satisfaction of the
Administrative Agent that the Borrower is covered by third-party insurance
(other than retro-premium insurance that determines retro-premiums solely on the
basis of losses of the Borrower) therefor or that the Borrower has adequate
reserves therefor and (b) the period, if any, during which the enforcement of
such judgment or order is stayed shall have expired, it being understood that a
judgment or order which is under appeal or as to which the time in which to
perfect an appeal has not expired shall not be deemed an "ENFORCEABLE JUDGMENT"
so long as enforcement thereof is effectively stayed pending the outcome of such
appeal or the expiration of such period, as the case may be; PROVIDED that if
enforcement of a judgment or order has been stayed on condition that a bond or
collateral equal to or greater than $1,000,000 be posted or provided, such
judgment or order shall be an "ENFORCEABLE JUDGMENT."
"ENVIRONMENTAL LIEN" shall mean a Lien in favor of any Governmental
Authority for (i) any liability of Borrower or any of its Subsidiaries under
federal or state environmental laws or regulations, 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" shall mean any applicable
Requirement of Law that conditions, restricts, prohibits or requires
notification or disclosure of any closure, transfer, sale, lease or mortgage of
any Property for reasons relating to environmental matters including, but not
limited to, any so-called Industrial Site Recovery Acts or Responsible Property
Transfer Acts.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA AFFILIATE" shall mean any (i) corporation which is a member of the
same controlled group of corporations (within the meaning of Section 414(b) of
the IRC) as the Borrower or any of its Subsidiaries, (ii) partnership or other
trade or business (whether or not incorporated) under common control (within the
meaning of Section 414(c) of the IRC) with the Borrower or any of its
Subsidiaries, and (iii) member of the same affiliated service group (within the
meaning of Section 414(m) of the IRC) as the Borrower or any of its
Subsidiaries, any corporation described in clause (i) above or any partnership
or trade or business described in clause (ii) above. For purposes of any
representation set forth in SECTION 5.01(T), any reporting covenant set forth in
SECTION 6.01(I), any affirmative covenant set forth in SECTION 7.09, or any
negative covenant set forth in SECTION 8.09, which relates to a GAMI Pension
Plan (as defined in the agreement attached to SCHEDULE 5.01(T), the term "ERISA
Affiliate" shall also include EIPC and all other entities which are members of
EIPC's controlled group or under common control with EIPC (within the meaning of
Sections 414(b) and (c) of the IRC), even if such entities are not otherwise
ERISA Affiliates of Borrower within the meaning of the preceding sentence, but
only until the termination of the agreement attached to SCHEDULE 5.01(T).
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<PAGE> 16
"EURODOLLAR LENDING OFFICE" means, with respect to any Lender, the office
of such Lender specified as its "Eurodollar Lending Office" under its name on
SCHEDULE A or on the Assignment and Acceptance by which it became a Lender (or,
if no such office is specified, its Domestic Lending Office) or such other
office of such Lender as such Lender may from time to time specify by written
notice to Borrower and the Administrative Agent.
"EURODOLLAR RATE LOANS" shall mean those Loans outstanding which bear
interest at a rate determined by reference to the LIBO Rate as provided in
SECTION 2.03(A) (II).
"EVENT OF DEFAULT" shall mean any of the occurrences set forth in SECTION
10.01 after the expiration of any applicable grace period expressly provided
therein.
"EXCESS CASH FLOW" shall mean, with respect to the Borrower on a
consolidated basis for any period, without duplication, the difference between:
(a) the sum of (i) Consolidated Net Income (excluding undistributed
earnings in Persons which are 50% or less owned, directly or indirectly, by
the Borrower) for such period, (ii) depreciation deducted in determining
such Consolidated Net Income, (iii) amortization deducted in determining
such Consolidated Net Income, (iv) other non-cash items (other than taxes)
deducted in determining such Consolidated Net Income and (v) federal, state
and local income and franchise tax liabilities deducted in determining such
Consolidated Net Income; and
(b) the sum of (i) scheduled payments of the principal of the Term
Loans pursuant to SECTION 2.01 made during such period and voluntary
prepayments of the principal of the Term Loans made during such period,
(ii) the aggregate amount of Capital Expenditures made by the Borrower and
its Subsidiaries during such period, (iii) capitalized interest paid during
such period, (iv) other capitalized cash costs not included in the
calculation of Consolidated Net Income, including cash payments against
reserves established in any prior period, (v) dividends paid during such
period as permitted pursuant to SECTION 8.05(I), (vi) payments made on
account of federal, state and local income and franchise taxes to the
extent deducted in determining Consolidated Net Income, (vii) principal
payments on any other Indebtedness, and (viii) the increase, if any, in
Working Capital during such period, not to exceed 5% of Working Capital at
the beginning of such period.
"EXISTING INDEBTEDNESS" shall mean the Indebtedness of the Borrower or any
of its Subsidiaries reflected on SCHEDULE 1.01-A.
"FDIC" shall mean the Federal Deposit Insurance Corporation or any
successor thereto.
"FEDERAL RESERVE BOARD" shall mean the Board of Governors of the Federal
Reserve System or any Governmental Authority succeeding to its functions.
"FEE LETTERS" shall have the meaning ascribed to that term in SECTION
2.04(C).
"FISCAL YEAR" shall mean the fiscal year of Borrower, which shall be each
twelve (12) month period ending on December 31 of each calendar year or such
other period as Borrower may designate and the Requisite Lenders may approve in
writing.
"FIXED CHARGES" shall mean, with respect to the Borrower on a consolidated
basis for any period, the sum of (i) Debt Service during such period (but
without duplication of payments on Capital Leases to the extent included in
Capital Expenditures during such period), (ii) Capital Expenditures during such
period and (iii) Federal, state and local income tax expenses paid in cash (net
of any refunds received in cash) during such period.
"FIXED CHARGES COVERAGE RATIO" shall mean, for any period, the ratio of (a)
EBITDA for such period to (b) Fixed Charges for such period. For purposes of
calculating the Fixed Charges Coverage Ratio for the two fiscal quarter period
ending June 30, 1995, Capital Expenditures shall be assumed to be the lesser of
actual Capital Expenditures for such period or $13,000,000; and for purposes of
calculating the Fixed Charges Coverage Ratio for the three fiscal quarter period
ending September 30, 1995, Capital Expenditures shall be assumed to be the
lesser of actual Capital Expenditures for such period or $19,500,000.
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<PAGE> 17
"FREE CASH FLOW COVERAGE RATIO" shall mean, with respect to the Borrower on
a consolidated basis for any period, the ratio of (a) Net EBITDA for such period
minus Capital Expenditures of the Borrower during such period to (b) Cash
Interest Expense for such period. The Borrower's Free Cash Flow Coverage Ratio
shall be calculated for the fiscal quarter ending March 31, 1995, then for the
two fiscal quarter period ending June 30, 1995, then for the three fiscal
quarter period ending September 30, 1995, then for the four fiscal quarter
period ending on the last day of each fiscal quarter thereafter. For purposes of
such calculations, for the fiscal quarter ending March 31, 1995, Capital
Expenditures shall be assumed to be $6,500,000; for the two fiscal quarter
period ending June 30, 1995, Capital Expenditures shall be assumed to be
$13,000,000; and for the three fiscal quarter period ending September 30, 1995,
Capital Expenditures shall be assumed to be $19,500,000.
"FUNDING DATE" shall mean, with respect to any Loan or Letter of Credit,
the date of the funding of such Loan or issuance of such Letter of Credit.
"GAAP" shall mean generally accepted accounting principles 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 in general use by significant segments of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"GOVERNMENTAL AUTHORITY" shall mean any nation, state, sovereign, or
government, any federal, regional, state, local or political subdivision and any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government including without limitation, any
central bank.
"GUARANTOR" shall mean any Borrower Subsidiary which has executed the
Subsidiary Guaranty.
"HEDGING CONTRACTS" shall mean interest rate, foreign currency or commodity
exchange, swap, collar, cap or similar agreements entered into before or after
the Effective Date by Borrower or any of its Subsidiaries to hedge its interest
rate, foreign currency or commodity exposure and not for purposes of
speculation.
"HOLDERS OF SECURED OBLIGATIONS" shall mean the holders of the Obligations
from time to time and shall refer to (i) each Lender in respect of its Loans,
(ii) the Issuing Bank in respect of Reimbursement Obligations, (iii) the
Administrative Agent, the Collateral Agent, the Lenders and the Issuing Bank in
respect of all other present and future obligations and liabilities of Borrower
of every type and description arising under or in connection with this Agreement
or any other Loan Document, (iii) each other Person entitled to indemnification
pursuant to SECTION 12.04, in respect of the obligations and liabilities of
Borrower to such Person thereunder, (iv) each Lender, in respect of all
obligations and liabilities of Borrower or any Guarantor to such Lender as
exchange party or counterparty under any Eligible Hedging Contract, and (v)
their respective successors, transferees and assigns.
"INDEBTEDNESS," as applied to any Person, shall mean any obligation for the
payment of money which is a Contractual Obligation, and shall include, without
limitation but without duplication, (i) all indebtedness, obligations or other
liabilities of such Person for borrowed money or under any debt Securities,
whether or not subordinated, (ii) all obligations with respect to redeemable
stock and redemption or repurchase obligations under any equity securities or
profit payment agreements, (iii) all reimbursement obligations (absolute or
contingent) and other liabilities of such Person with respect to letters of
credit issued for such Person's account or for which such party is a
co-applicant, (iv) all obligations of such Person to pay the purchase price of
property or services, except trade payables and accrued expenses incurred by
such Person in the ordinary course of business as currently conducted, (v) all
obligations in respect of Capital Leases of such Person, (vi) all Accommodation
Obligations of such Person, (vii) all indebtedness, obligations or other
liabilities, contingent or otherwise, of such Person or others secured, by a
Lien on any asset of such Person, whether or not such indebtedness, obligations
or liabilities are assumed by or are a personal liability of such Person, (viii)
all obligations upon which interest charges are customarily paid (including zero
coupon instruments), (ix) all obligations under conditional sale or other title
retention agreements relating to property purchased by such person and (x)
obligations in respect of interest rate, foreign currency or commodity exchange,
swap, collar, cap or similar agreements.
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<PAGE> 18
"INTELLECTUAL PROPERTY AGREEMENTS" shall mean patent or trademark security
agreements executed by the Borrower and certain of its Subsidiaries in favor of
the Collateral Agent on behalf of itself and the Holders of Secured Obligations
as the same may be amended, restated, supplemented or otherwise modified from
time to time.
"INTEREST COVERAGE RATIO" shall mean, with respect to the Borrower on a
consolidated basis for any period, the ratio of (a) Net EBITDA for such period
to (b) the amount of Cash Interest Expense for such period.
"INTEREST PAYMENT DATE" shall mean, with respect to any Eurodollar Rate
Loan, (i) the last day of each Interest Period applicable to such Loan and (ii)
with respect to any Eurodollar Rate Loan having an Interest Period in excess of
three (3) calendar months, the last day of each three (3) calendar month
interval during such Interest Period and, in addition, the date of any
refinancing or conversion of such Borrowing with or to a Borrowing of a
different Type.
"INTEREST PERIOD" shall have the meaning ascribed to such term in SECTION
2.07.
"INTEREST RATE DETERMINATION DATE" shall mean the date on which the
Administrative Agent determines the LIBO Rate applicable to a Borrowing,
continuation or conversion of Euro-dollar Rate Loans. The Interest Rate
Determination Date shall be the second (2nd) Business Day prior to the first day
of the Interest Period applicable to such Borrowing, continuation or conversion.
"INVENTORY" shall mean any and all goods, including, without limitation,
goods in transit, wheresoever located, whether now owned or hereafter acquired
by the Borrower or any Guarantor, which are held for sale or lease, furnished
under any contract of service or held as raw materials, work in process or
supplies, and all materials used or consumed in Borrower's or any Guarantor's
business, and shall include such property the sale or other disposition of which
has given rise to Receivables and which has been returned to or repossessed or
stopped in transit by Borrower or any Guarantor.
"INVESTMENT" shall have the meaning ascribed to that term in SECTION 8.03.
"IRC" shall mean the Internal Revenue Code of 1986, as amended from time to
time hereafter, and any successor statute.
"IRS" shall mean the Internal Revenue Service of the United States or any
Governmental Authority succeeding to the functions thereof.
"ISSUING BANKS" shall mean the Lenders listed on SCHEDULE A hereto and any
other Lender which, at the Borrower's request, agrees, in each such Lender's
sole discretion, to become an Issuing Bank for the purpose of issuing Letters of
Credit, and their respective successors and assigns, in each case in such
Lender's separate capacity as an issuer of Standby Letters of Credit or
Commercial Letters of Credit, or both, pursuant to ARTICLE III.
"LENDER" shall have the meaning ascribed to such term in the preamble and
each Person which at any time becomes a Lender pursuant to SECTION 12.02(A).
"LETTER OF CREDIT" shall mean any Commercial Letter of Credit or any
Standby Letter of Credit issued by an Issuing Bank for the account of Borrower,
or for the joint and several account of Borrower and any of its Subsidiaries, in
accordance with the provisions of ARTICLE III.
"LETTER OF CREDIT APPLICATION" shall mean, with respect to any proposed
Letter of Credit requested to be delivered pursuant to SECTION 3.03, an
application substantially in the form of the Issuing Bank's standard form
application for letters of credit of the type to be issued.
"LETTER OF CREDIT COMMITMENT" shall mean, with respect to any Lender that
is an Issuing Bank, the obligation of such Lender to issue Letters of Credit
pursuant to the terms and conditions of this Agreement which shall not exceed
the principal amount set forth opposite such Lender's name under the heading
"Letter of 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.
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"LETTER OF CREDIT OBLIGATIONS" shall mean, at any particular time, the sum
of (i) outstanding Reimbursement Obligations and (ii) the aggregate undrawn face
amount of outstanding Letters of Credit.
"LETTER OF CREDIT REIMBURSEMENT AGREEMENT" shall mean, with respect to a
Letter of Credit, such reimbursement agreement as the Issuing Bank may employ in
the ordinary course of business for its own account.
"LIABILITIES AND COSTS" shall mean all liabilities, claims, obligations,
responsibilities, losses, damages, punitive damages, consequential damages,
treble damages, charges, costs and expenses (including, without limitation,
attorneys', experts' 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.
"LIBO RATE" shall mean, with respect to any Interest Period applicable to a
Borrowing of Eurodollar Rate Loans, an interest rate per annum equal to the
product of (i) the rate of interest determined by the Administrative Agent to be
the average (rounded upwards, if necessary, to the next 1/16 of 1%) of the rate
per annum determined by each of the Reference Banks to be the rate per annum at
which deposits in Dollars are offered to the principal London office of such
Reference Bank in immediately available funds in the London interbank market at
approximately 11:00 a.m. (London time) on the Interest Rate Determination Date
for such Interest Period, in the approximate amount of such Reference Bank's
portion (or, in the case of Citibank, N.A., Citicorp USA, Inc.'s portion) of the
relevant Eurodollar Rate Loan and having a maturity comparable to such Interest
Period and (ii) Statutory Reserves.
"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 and the like), judgment, lien
(statutory or other), Environmental Lien, Enforceable Judgment, charge, security
agreement or transfer intended as security, 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, in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"LOAN" shall mean any Revolving Loan or any of the Term Loans.
"LOANS" shall mean, collectively, the Revolving Loans and the Term Loans.
"LOAN ACCOUNT" shall have the meaning ascribed to such term in SECTION
2.06(D).
"LOAN DOCUMENTS" shall mean this Agreement, the Assumption Agreement, the
Notes, the Fee Letters, the Collateral Documents, the Letters of Credit, the
Letter of Credit Applications, the Letter of Credit Reimbursement Agreements and
all other agreements delivered to the Administrative Agent, the Collateral
Agent, any Issuing Bank or any Lender by or on behalf of the Borrower or any of
the Borrower's Subsidiaries in satisfaction or furtherance of the requirements
of this Agreement or any other Loan Document.
"MARGIN STOCK" shall have the meaning ascribed to such term in Regulation G
and Regulation U.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect (a) upon the
business, assets or other properties, liabilities or condition (financial or
otherwise), results of operations or prospects of Borrower, individually, or the
Consolidated Borrower Group taken as a whole; or (b) upon the ability of the
Borrower or any of the Subsidiaries of the Borrower to perform any of its
Obligations under any Loan Document to which it is or will be a party,
including, without limitation, payment of the Obligations. In no event shall the
events or conditions described in SCHEDULE 1.01-B be deemed to have resulted in
a Material Adverse Effect or be deemed to be reasonably likely to have a
Material Adverse Effect.
"MOODY'S" shall mean Moody's Investors Service, Inc. and its successors.
"MORTGAGES" shall mean any and all mortgages, deeds of trust, collateral
assignments of beneficial interest, leasehold mortgages and leasehold deeds of
trust and covering the owned and leased real property of Borrower and its
Subsidiaries identified on SCHEDULE 1.01-C, executed by Borrower or a Subsidiary
of the Borrower, as applicable, in favor of the Collateral Agent for the benefit
of itself and the Holders of Secured Obligations, as the same may be amended,
supplemented or otherwise modified from time to time.
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<PAGE> 20
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by either Borrower or any ERISA Affiliate.
"NET EBITDA" shall mean, with respect to the Person for any period (a)
EBITDA for such period minus (b) Securitization Expenses for such period.
"NET INTEREST EXPENSE" shall mean, with respect to any Person on a
consolidated basis for any period, net interest expense of such Person for such
period calculated in accordance with Agreement Accounting Principles.
"NET PROCEEDS" shall mean with respect to any Prepayment Event (a) the
gross amount of cash proceeds (including in each Fiscal Year the amount of
insurance settlements and condemnation awards in such fiscal year in excess of
Set Aside Amounts (it being understood that Set Aside Amounts shall not be
included in "Net Proceeds", and may be retained by the Borrower or a Subsidiary
of Borrower, as applicable, for the purposes described in clause (i) of the
definition of the term "Set Aside Amount", unless and until any such amount
shall cease to be a "Set Aside Amount" as a result of any failure to meet any of
the criteria set forth in clause (i) or (ii) of such definition)) paid to or
received by the Borrower or any Subsidiary of Borrower in respect of such
Prepayment Event (including cash proceeds subsequently received in respect of
such Prepayment Event in respect of non-cash consideration initially received or
otherwise), less (bo the amount, if any, of all taxes (other than income taxes)
and the Borrower's good-faith best estimate of all income taxes (to the extent
that such amount shall have been set aside or reserved for the purpose of paying
such taxes when due), and customary fees, commissions, costs and other expenses
(excluding fees and expenses payable to the Borrower, any Affiliate of the
Borrower or any Subsidiary of Borrower, other than the reasonable fees and
expenses of Rosenberg & Liebentritt, P.C., Greenberg & Pociask, Equity Assets
Management, Inc. or any other Affiliate of Borrower performing services in
connection with any such Prepayment Event) that are incurred in connection with
such Prepayment Event and are payable by the seller or the transferor of the
assets or property or issuer of the securities, as the case may be, to which
such Prepayment Event relates, but only to the extent not already deducted in
arriving at the amount referred to in clause (a).
"NET WORTH" shall mean, with respect to any Person on a consolidated basis,
total shareholders' equity of such Person determined in accordance with
Agreement Accounting Principles consistently applied; adjusted, however, to
exclude the effect of any valuation adjustments, which are required by GAAP or
Agreement Accounting Principles (as applicable) to be shown as a direct increase
or decrease, as the case may be, in Net Worth, including adjustments for
currency translations, unrealized gains or losses on marketable securities,
receivables arising from stock purchase plans and unearned compensation.
"NOTES" shall mean the Notes executed by the Borrower and delivered to each
Lender pursuant to SECTION 2.02 or SECTION 12.02.
"NOTICE OF BORROWING" shall mean, with respect to a proposed Borrowing
pursuant to SECTION 2.02(A), or a proposed issuance of a Letter of Credit
pursuant to SECTION 3.04(A), a notice substantially in the form of EXHIBIT 4 or
other form acceptable to the Administrative Agent.
"NOTICE OF CONVERSION/CONTINUATION" shall mean, with respect to a proposed
conversion or continuation of a Loan pursuant to SECTION 2.03(C), a notice
substantially in the form of EXHIBIT 5 or other form acceptable to the
Administrative Agent.
"OBLIGATIONS" shall mean the principal of and all interest on all Loans and
Reimbursement Obligations, all fees, expense reimbursements, taxes, compensation
and indemnities payable by Borrower to the Administrative Agent, the Collateral
Agent, the Issuing Banks or any Lender pursuant to this Agreement and all other
present and future Indebtedness and other liabilities of Borrower arising
pursuant to this Agreement or any other Loan Document and owing to the
Administrative Agent, the Collateral Agent, any Issuing Bank, any Lender, or any
Person entitled to indemnification pursuant to SECTION 12.04, or any of their
respective successors, transferees or assigns, arising under or in connection
with this Agreement, any Note, the Fee Letters, any other Loan Document or any
Eligible Hedging Contract, whether or not evidenced by any note, guaranty or
other instrument, whether or not for the payment of money, whether direct or
indirect (including
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<PAGE> 21
those acquired by assignment), absolute or contingent, due or to become due, now
existing or hereafter arising and however arising.
"OFFERING" shall mean the public offering by the Borrower of its common
stock referred to in the recitals, pursuant to the Borrower's Registration
Statement originally filed with the Commission on May 17, 1994, as amended.
"OFFICER'S CERTIFICATE" shall mean, as to any corporation, a certificate
executed on behalf of such corporation by (i) its chairman or vice chairman of
the board (if an officer) or its president or any vice president or (ii) by its
chief financial officer, its controller or its treasurer.
"OPERATING LEASE" shall mean, as applied to any Person, any lease of any
Property by that Person as lessee which is not a Capital Lease.
"ORIGINAL CREDIT AGREEMENT" shall have the meaning ascribed to that term in
the recitals hereto.
"ORIGINAL OBLIGATIONS" shall have the meaning ascribed to that term in the
recitals hereto.
"OTHER INDEBTEDNESS" shall mean all Indebtedness of Borrower other than the
Obligations.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any Person
succeeding to the functions thereof.
"PERMITS" shall mean any permit, approval, consent, authorization, license,
variance, or permission required from a Governmental Authority under an
applicable Requirement of Law.
"PERMITTED EXISTING LIENS" shall mean the Liens on any property of the
Borrower or its Subsidiaries, in each case 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, or any other non-governmental entity, or any
Governmental Authority.
"PLAN" shall mean an employee benefit plan defined in Section 3(3) of ERISA
in respect of which either 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.
"PLEDGE AGREEMENTS" shall mean the Amended and Restated Pledge Agreements
dated as of the Effective Date executed in favor of the Collateral Agent for the
benefit of itself and the Holders of Secured Obligations by (i) the Borrower in
connection with the pledge of the stock of each of the Borrower's Subsidiaries,
and (ii) certain of the Borrower's Subsidiaries in connection with the pledge of
the stock of their respective Subsidiaries, as any of the same may be amended,
restated, supplemented or otherwise modified from time to time.
"POTENTIAL EVENT OF DEFAULT" shall mean an event, condition or circumstance
which, with the giving of notice or the lapse of time, or both, would constitute
an Event of Default.
"PREPAYMENT EVENT" shall mean (i) any sale, lease, transfer, assignment,
loss, damage or destruction (in the case of loss, damage or destruction, to the
extent covered by insurance) or other disposition of assets (including
trademarks and other intangibles), business units, individual business assets or
property of the Borrower or any of its Subsidiaries, including the sale,
transfer or disposition of any capital stock thereof; (ii) the incurrence,
creation or assumption by the Borrower or any of its Subsidiaries of any
Indebtedness (other than Indebtedness that is permitted to be incurred pursuant
to SECTION 8.01) or the issuance or sale by the Borrower or any of its
Subsidiaries of any debt securities or other obligations convertible into or
exchangeable for, or giving any person or entity any right, option or warrant to
acquire from the Borrower or any of its Subsidiaries any Indebtedness or any
such convertible or exchangeable debt securities or obligations; or (iii) the
issuance by the Borrower after the Effective Date of any equity securities or
options or warrants convertible into or exchangeable for such equity securities
of the Borrower to any party other than in connection with any employee stock
option, ownership or purchase plan of the Borrower or any of its Subsidiaries;
PROVIDED, HOWEVER, that none of (a) the sale of inventory in the ordinary course
of business, (b) the sale and/or contribution of accounts receivable pursuant to
the Receivables Agreement, (c) the sale,
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<PAGE> 22
lease, transfer, assignment or other disposition of assets of the Borrower or
any Subsidiary of the Borrower to the Borrower or any Guarantor or (d) the loss,
damage or destruction of any property (to the extent covered by insurance) to
the extent that the Net Proceeds of any single loss do not exceed $2,000,000
shall be deemed to be a "Prepayment Event".
"PRIME RATE" shall have the meaning ascribed to such term in the definition
of "Alternate Base Rate."
"PROPERTY" shall mean with respect to any Person, any real or personal
property, plant, building, facility, structure, equipment or unit, or other
asset (tangible or intangible) owned, leased or operated by such Person.
"PRO RATA SHARE" shall mean, at any particular time and with respect to any
Lender, a fraction (expressed as a percentage), the numerator of which shall be
the then amount of such Lender's Revolving Credit Commitments, if any, plus the
outstanding balance of such Lender's Term Loan or Term Loans and the denominator
of which shall be the then aggregate amount of all Revolving Credit Commitments
plus the outstanding balance of all Term Loans.
"RCRA" shall mean the Resource Conservation and Recovery Act, 42 U.S.C. [
6901 ET SEQ., and any successor statute, and regulations promulgated thereunder.
"RECEIVABLES" shall mean and include all of Borrower's and each Guarantor's
presently existing and hereafter arising or acquired accounts, accounts
receivable, and all present and future rights of Borrower to payment for goods
sold or leased or for services rendered (except those evidenced by instruments
or chattel paper), whether or not they have been earned by performance, and all
rights in any merchandise or goods which any of the same may represent, and all
rights, title, security and guaranties with respect to each of the foregoing,
including, without limitation, any right of stoppage in transit.
"RECEIVABLES AGREEMENT" shall mean the Amended and Restated Receivables
Sale and Servicing Agreement dated as of July 1, 1994, among EIPC, as buyer and
master servicer, and certain Subsidiaries of the Borrower, as sellers and
sub-servicers, as the same may be amended, restated, supplemented or otherwise
modified from time to time as permitted hereby.
"RECEIVABLES SECURITIZATION" shall mean the sales by certain of the
Borrower's Subsidiaries of Receivables originated by such Subsidiaries to EIPC
pursuant to the Receivables Agreement.
"REFERENCE BANKS" shall mean Chemical, Citibank, N.A. and The First
National Bank of Boston.
"REGULATION D," "REGULATION G," "REGULATION T," "REGULATION U" and
"REGULATION X" shall mean Regulation D, Regulation G, Regulation T, Regulation U
and Regulation X, respectively, of the Federal Reserve Board as in effect from
time to time.
"REIMBURSEMENT OBLIGATIONS" shall mean the reimbursement or repayment
obligations of Borrower to the Issuing Banks pursuant to any Letter of Credit
and related Letter of Credit Applications or Letter of Credit Reimbursement
Agreements issued or delivered pursuant to ARTICLE III hereof.
"RELEASE" shall mean any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration from
any Property into the indoor or outdoor environment, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or
Property.
"REMEDIAL ACTION" shall mean any action required to (i) clean up, remove,
treat or in any other way address Contaminants in the indoor or outdoor
environment; (ii) prevent a Release or threat of Release or minimize the further
Release of Contaminants so they do not migrate or endanger or threaten to
endanger public health or welfare or the indoor or outdoor environment; or (iii)
perform pre-remedial studies and investigations or post-remedial monitoring and
care.
"REPORTABLE EVENT" shall mean the events described in Sections 4043(b)(1),
4043(b)(4), 4043(b)(5), 4043(b)(6) or 4043(b)(9) of ERISA or the regulations
thereunder.
"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, Permit, 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, Regulation G, Regulation T, Regulation U and Regulation X,
17
<PAGE> 23
and any certificate of occupancy, zoning ordinance, building, environmental or
land use, law, rule, regulation, ordinance or Permit or occupational safety or
health law, rule or regulation.
"REQUISITE LENDERS" means, except as otherwise provided in SECTION
12.06(B)(V), Lenders whose Pro Rata Shares, in the aggregate, are greater than
fifty percent (50%); PROVIDED, HOWEVER, that, in the event that the Revolving
Credit Commitments have been terminated pursuant to the terms of this Agreement,
"REQUISITE LENDERS" means, except as otherwise provided in SECTION 12.06(B)(V),
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 percent (50%); PROVIDED, FURTHER, that in the event that the Revolving
Credit Commitments have been terminated pursuant to the terms of this Agreement,
at any time when Letters of Credit are outstanding and all Loans have been
repaid, "REQUISITE LENDERS" means, except as otherwise provided in SECTION
12.06(B)(V), Lenders whose participations in the outstanding Letters of Credit,
in the aggregate, are greater than fifty percent (50%).
"RESTRICTED JUNIOR PAYMENT" shall mean (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
capital stock of Borrower or any of its Subsidiaries, except a distribution of
stock as part of a stock split and 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, PROVIDED that the issuance of such stock or junior class of stock is not
an incurrence of Indebtedness, (ii) any redemption, retirement, sinking fund or
similar payment, purchase or other acquisition for value, direct or indirect, of
any shares of any class of capital stock of Borrower or any of its Subsidiaries
now or hereafter outstanding, (iii) 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 capital stock of Borrower or any of its Subsidiaries now
or hereafter outstanding, (iv) any payment of a claim for the rescission of the
purchase or sale of, or for material damages arising from the purchase or sale
of, any shares of the capital stock of Borrower or any of its Subsidiaries or of
a claim for reimbursement, indemnification or contribution arising out of or
related to any such claim for damages or rescission, (v) any payment of
tax-sharing payments, allocated corporate overhead, guaranty fees or management
fees to any of Borrower's Affiliates (other than a Guarantor) and (vi) any
payment in the nature of a loan from Borrower or any of its Subsidiaries to EIPC
or any of EIPC's other Affiliates.
"REVOLVING CREDIT AVAILABILITY" shall mean, as at any particular date of
determination, the amount by which the lesser of the Revolving Credit
Commitments and the Borrowing Base exceeds Revolving Loan Usage. For purposes of
calculating Revolving Credit Availability as at any date, all Revolving Loans
requested but not yet advanced and the aggregate face amount of all Letters of
Credit requested but not yet issued will be treated as advanced and issued in
calculating Revolving Loan Usage unless the Borrower has directed that the
requested advance be disbursed to repay the Revolving Loans.
"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, and 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
determined in accordance with the provisions 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.
"REVOLVING CREDIT FACILITY" shall mean the revolving credit facility
established for Revolving Loans pursuant to Section 2.01.
"REVOLVING CREDIT TERMINATION DATE" shall mean the earlier of (a) September
30, 2000 (or, if the Revolving Credit Facility is extended pursuant to SECTION
2.02(G), September 30, 2001) and (b) the date of termination of the Revolving
Credit Commitments pursuant to SECTION 2.02(D) or SECTION 10.02(A).
"REVOLVING LOAN" shall have the meaning ascribed to such term in SECTION
2.01(A).
"REVOLVING LOAN USAGE" shall mean, at any given time, the sum of (i) the
aggregate outstanding principal balance of Revolving Loans and (ii) the
aggregate outstanding Letter of Credit Obligations.
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<PAGE> 24
"S&P" shall mean Standard & Poor's Corporation and its successors.
"SAMUEL ZELL GROUP" shall mean Samuel Zell, Ann Lurie, any trust created
for the benefit of Samuel Zell or Ann Lurie or their families, and any of their
affiliates (as such term is defined in Rule 12b-2 of the Securities Exchange
Act).
"SECURITIES" shall mean any stock, shares, voting trust 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", 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 any 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.
"SECURITIZATION EXPENSES" shall mean, with respect to any period, the sum
of (i) the amount by which (A) the stated amount of Receivables sold by Borrower
and/or its Subsidiaries pursuant to the Receivables Agreement during such period
exceeds (B) the consideration received for such Receivables, plus (ii) ny
payments made during such period pursuant to the indemnification provisions of
the Receivables Agreement.
"SENIOR DEBT RATINGS" shall mean the publicly announced ratings of the
Borrower's senior, unsecured, non-credit enhanced long-term debt by Moody's, S&P
and D&P.
"SET ASIDE AMOUNT" shall mean, in respect of any insurance settlement or
condemnation award which does not in the aggregate exceed $10,000,000 received
by the Borrower or any Subsidiary of the Borrower and (i) set aside by the
Borrower or the applicable Subsidiary for the replacement or repair of any lost,
destroyed or damaged assets, equipment or other property that were the subject
of an insurable loss, destruction or damage and for which an insurance
settlement was made or (ii) set aside by the Borrower or the applicable
Subsidiary for the replacement of any real property that was the subject of a
taking and in respect of which a condemnation award was made provided such
replacement or repair is commenced within six months of the receipt of any such
condemnation award or insurance proceeds related to such loss, destruction or
damage or such taking, as applicable and pursued with diligence.
"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 at
present fair saleable value) is equal to or in excess of the total amount
of its liabilities, including, without limitation, contingent liabilities;
and
(ii) it is then able and expects to be able to pay its debts as they
mature; and
(iii) it has capital sufficient to carry on its business as conducted
and as proposed to be conducted.
With respect to contingent liabilities (such as litigation, guarantees and
pension plan liabilities), such liabilities shall be computed at the amount
which, in light of all the facts and circumstances existing at the time,
represent the amount which can reasonably be expected to become an actual or
matured liability.
"STANDBY LETTER OF CREDIT" shall mean any letter of credit which is not a
Commercial Letter of Credit.
"STATUTORY RESERVES" shall mean a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one MINUS the aggregate of the maximum applicable reserve percentages (including
any marginal, special, emergency or supplemental reserves) expressed as a
decimal established by the Federal Reserve Board and any other banking authority
to which the Administrative Agent or any Lender is subject (a) with respect to
the Three-month Secondary CD Rate (as such term is used in the definition of
"Alternate Base Rate"), for new negotiable nonpersonal time deposits in dollars
of over $100,000 with maturities approximately equal to three months or (b) with
respect to the LIBO Rate, for Eurocurrency Liabilities (as defined in Regulation
D of the Federal Reserve Board). Such reserve percentages shall include those
imposed pursuant to such Regulation D. Eurodollar Rate Loans shall be deemed to
constitute Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration, exceptions or offsets
which may be available from time to time to any Lender under such
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<PAGE> 25
Regulation D. Statutory Reserves shall be adjusted automatically on and as of
the effective date of any change in any reserve percentage.
"SUBSIDIARY" shall mean, with respect to any Person, any corporation,
partnership, trust or other entity of which a majority of the stock (or
equivalent ownership or controlling interest) having voting power to elect a
majority of the Board of Directors (if a corporation) or to select the trustee
or equivalent controlling interest is directly or indirectly owned or controlled
by such Person or one or more of the other Subsidiaries of such Person or any
combination thereof.
"Subsidiary Guaranty" shall mean the guaranties of the Borrower's
Obligations pursuant to the Subsidiary Guaranty dated as of the Effective Date
executed by each of the Borrower's domestic Subsidiaries in favor of the
Administrative Agent, the Collateral Agent and the Lenders, as the same may be
amended, restated, supplemented or otherwise modified from time to time.
"SUBSIDIARY SECURITY AGREEMENT" shall mean the Subsidiary Security
Agreement dated as of the Effective Date executed by each of the domestic
Subsidiaries of the Borrower in favor of the Collateral Agent, for the benefit
of itself and the Holders of Secured Obligations as the same may be amended,
restated, supplemented or otherwise modified from time to time.
"SUPERMAJORITY LENDERS" means, except as otherwise provided in SECTION
12.06(B)(V), Lenders whose Pro Rata Shares, in the aggregate, are equal to or
greater than sixty-six and two-thirds percent (66 2/3%); PROVIDED, HOWEVER,
that, in the event that the Revolving Credit Commitments have been terminated
pursuant to the terms of this Agreement, "SUPERMAJORITY LENDERS" means, except
as otherwise provided in SECTION 12.06(B)(V), Lenders whose aggregate ratable
shares (stated as a percentage) of the aggregate outstanding principal balance
of all Loans are equal to or greater than sixty-six and two-thirds percent
(66 2/3%); PROVIDED, FURTHER, that in the event that the Revolving Credit
Commitments have been terminated pursuant to the terms of this Agreement, at any
time when Letters of Credit are outstanding and all Loans have been repaid,
"SUPERMAJORITY LENDERS" means, except as otherwise provided in SECTION
12.06(B)(V), Lenders whose participations in the outstanding Letters of Credit,
in the aggregate, are equal to or greater than sixty-six and two-thirds percent
(66- 2/3%).
"TAX SHARING AGREEMENT" shall mean that certain GAMI-Falcon Disaffiliation
Tax Sharing Agreement among the Borrower, EIPC, O.D.E. Manufacturing Inc.,
Amerace Corporation and Great American Management and Investment, Inc. dated as
of the Effective Date, as the same may be amended, restated, supplemented or
otherwise modified from time to time (i) in any respect which does not (a)
result in the Borrower being required to make any greater payments thereunder
either in absolute amounts or percentage terms or (b) reduce either in absolute
amounts or percentage terms the benefits to the Borrower or (ii) otherwise with
the consent of the Requisite Lenders.
"TAXES" shall have the meaning ascribed to such term in SECTION 2.09(A).
"TERM LOANS" shall have the meaning ascribed to such term in SECTION
2.01(C).
"TERM LOAN TERMINATION DATE" shall mean the earlier of (a) September 30,
2000 and (b) the date of acceleration of the Term Loans pursuant to SECTION
10.02(A).
"TERMINATION EVENT" shall mean (i) a Reportable Event with respect to any
Benefit Plan; (ii) the withdrawal of Borrower or any ERISA Affiliate from a
Benefit Plan during a plan year in which Borrower or such ERISA Affiliate was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii) the
imposition of an obligation on 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 of proceedings to terminate a Benefit Plan; (v)
any event or condition which might constitute grounds under Section 4042 of
ERISA for the distress termination of, or the appointment of a trustee to
administer, any Benefit Plan; or (vi) the partial or complete withdrawal of
Borrower or any ERISA Affiliate at the time the withdrawing entity was an ERISA
Affiliate from a Multiemployer Plan if such withdrawal could result in the
imposition of withdrawal liability under Section 4219 of ERISA.
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"TOTAL INDEBTEDNESS" shall mean, with respect to any Person on a
consolidated basis, all Indebtedness of such Person which would be reflected as
long-term debt on a consolidated balance sheet of such Person prepared in
accordance with Agreement Accounting Principles, including all current
maturities thereof.
"TRANSACTION COSTS" shall mean the fees, costs and expenses payable by or
reasonably allocated to Borrower or any of its Subsidiaries pursuant hereto or
in connection herewith or in respect hereof or of the other Loan Documents.
"TRANSACTION DOCUMENTS" shall mean the Loan Documents and the Contribution
Agreement.
"TYPE" when used in respect of any Loan or Borrowing, shall refer to the
rate by reference to which interest on such Loan or on the Loans comprising such
Borrowing is determined.
"U.S. PERSON" shall mean a citizen or resident of the United States of
America, a corporation, partnership or other entity created or organized in or
under any laws of the United States of America, or any estate or trust that is
subject to Federal income taxation regardless of the source of its income.
"U.S. TAXES" shall mean any present or future tax, assessment or other
charge or levy imposed by or on behalf of the United States of America or any
taxing authority thereof.
"WORKING CAPITAL" shall mean (i) current assets less cash minus (ii)
current liabilities less the current portion of long-term debt.
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.
1.03. ACCOUNTING TERMS. For purposes of this Agreement, all accounting
terms not otherwise defined herein shall have the meanings assigned to them in
conformity with Agreement Accounting Principles.
1.04. OTHER DEFINITIONAL PROVISIONS. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine and neuter
forms. The words "include," "includes" and "including" shall be deemed to be
followed by the phrase "without limitation." References to "Articles,"
"Sections," "subsections," "Schedules," "Exhibits," "the preamble" and "the
recitals" shall be to Articles, Sections, subsections, Schedules, Exhibits, the
preamble and the recitals, respectively, of this Agreement unless otherwise
specifically provided.
ARTICLE II
AMOUNTS AND TERMS OF LOANS
2.01. REVOLVING LOANS AND TERM LOANS.
(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 Borrower and to participate in
Letters of Credit issued pursuant to Article III hereof from time to time
during the period from the Effective Date to the Business Day immediately
preceding the Revolving Credit Termination Date, in an amount which shall
not exceed such Lender's Pro Rata Share of the Revolving Credit
Availability at such time. Schedule I to the Assumption Agreement sets
forth the aggregate principal amount of the outstanding Obligations assumed
by the Borrower pursuant thereto as Revolving Loans and deemed to be
outstanding hereunder as of the Effective Date according to the Lenders'
respective Pro Rate Shares.
(b) SEVERAL COMMITMENTS. All Revolving Loans comprising the same
Borrowing under this Agreement shall be made by the Lenders 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 a Revolving Loan hereunder and
that the Commitment of any Lender shall not be increased or decreased
without the prior written consent of such Lender as a result of the failure
by any other Lender to perform its obligation to make a Revolving Loan. The
failure of any Lender to make available to the Administrative Agent any
Borrowing of the Commitments shall not relieve any other Lender of its
obligation hereunder to make available to the Administrative Agent such
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other Lender's Pro Rata Share of any Borrowing of the Commitments on the
date such funds are to be made available pursuant to the terms of this
Agreement.
(c) TERM LOANS. Pursuant to the Assumption Agreement, the Borrower
has assumed $115,000,000 aggregate principal amount of the outstanding
Obligations as term loans (the "TERM LOANS") which are deemed to be
outstanding hereunder as of the Effective Date with respect to each Lender
in the principal amount set forth opposite such Lender's name under the
heading "Term Loans" on the signature pages hereof. The Term Loans shall be
payable as follows:
<TABLE>
<CAPTION>
AMOUNT OF
TERM LOANS PAYABLE
PERIOD DURING SUCH PERIOD
----------------------------------------------------------------------- ------------------
<S> <C>
Effective Date through September 30, 1995.............................. $10,000,000
October 1, 1995 through September 30, 1996............................. 15,000,000
October 1, 1996 through September 30, 1997............................. 20,000,000
October 1, 1997 through September 30, 1998............................. 20,000,000
October 1, 1998 through September 30, 1999............................. 25,000,000
October 1, 1999 through September 30, 2000............................. 25,000,000
</TABLE>
Each amortization payment for each period described above shall be
payable in equal installments of principal, plus accrued interest, on the
last calendar day of each calendar quarter during such period beginning
with December 31, 1994.
(d) OPTIONAL REPAYMENTS AND MATURITY. The Borrower may, at any time
and from time to time, prepay any Base Rate Loan, in whole or in part upon
at least one (1) Business Day's prior written notice to the Administrative
Agent (which the Administrative Agent shall promptly transmit to each
Lender). Eurodollar Rate Loans may be prepaid (A) in whole or in part on
the expiration date of the then applicable Eurodollar Interest Period and
(B) upon at least three (3) Business Days' prior written notice to the
Administrative Agent (which the Administrative Agent shall promptly
transmit to each Lender) and only upon payment of the amounts described in
SECTION 2.08(D). 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
shall be applied to the unpaid installments of the Term Loans in the
following order: (i) 50% of the amount of such prepayment to the unpaid
installments of the Term Loans in the order of their maturity and (ii) 50%
of the amount of such prepayment to the unpaid installments of the Term
Loans in inverse order of their maturity. Any notice of prepayment given to
the Administrative Agent under this SECTION 2.01(D) 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 Loans specified in the notice
shall become due and payable on the prepayment date specified in such
notice.
Each Lender's Revolving Credit Commitment shall expire, and each of
the Revolving Loans then outstanding shall mature and be repaid by
Borrower, without further action on the part of the Lenders, on the
Revolving Credit Termination Date; and each Lender's Term Loans then
outstanding shall mature and be repaid by Borrower, without further action
on the part of the Lenders, on the Term Loan Termination Date.
(e) MINIMUM AMOUNTS. Loans made on any Funding Date shall be in
integral multiples of $500,000 and in the aggregate minimum amount of
$1,000,000, in the case of Loans constituting Base Rate Loans, and in
integral multiples of $1,000,000 and in the aggregate minimum amount of
$5,000,000, in the case of Loans constituting Eurodollar Rate Loans.
2.02. REVOLVING LOAN FACILITY MECHANICS.
(a) NOTICE OF BORROWING. Whenever Borrower desires to borrow under
SECTION 2.01(A), Borrower shall deliver to the Administrative Agent a
Notice of Borrowing no later than 12:00 noon (New York City time) (i) at
least one (1) Business Day in advance of the proposed Funding Date, in the
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case of a Borrowing of Base Rate Loans, and (ii) at least three (3)
Business Days in advance of the proposed Funding Date, in the case of a
Borrowing of Eurodollar Rate Loans. The Notice of Borrowing shall specify
(A) the Funding Date (which shall be a Business Day) in respect of the
Loan, (B) the amount of the proposed Borrowing, (C) whether the proposed
Borrowing will be of Base Rate Loans or Eurodollar Rate Loans, and (D) in
the case of Eurodollar Rate Loans, the requested Interest Period. In lieu
of delivering the above-described Notice of Borrowing, and only with the
consent of the Administrative Agent in its sole discretion at such time,
Borrower may give the Administrative Agent telephonic notice of any
proposed Borrowing by the time required under this SECTION 2.02(A);
PROVIDED that, in the event the Administrative Agent so consents, such
notice shall be confirmed in writing by delivery to the Administrative
Agent promptly (but in no event later than 12:00 noon on the Funding Date
of the requested Loan) of a Notice of Borrowing. Any Notice of Borrowing
(or telephonic notice in lieu thereof) pursuant to this SECTION 2.02(A)
shall be irrevocable.
(b) MAKING OF LOANS. Promptly after receipt of a Notice of Borrowing
under SECTION 2.02(A) (or telephonic notice in lieu thereof if the
Administrative Agent consents to such telephonic notice), the
Administrative Agent shall notify each Lender by telex or telecopy or other
similar form of teletransmission, of the proposed Borrowing. Each Lender
shall make the amount of its Revolving Loan available to the Administrative
Agent in Dollars and in immediately available funds, not later than 11:00
a.m. (New York City time) on the Funding Date. After the Administrative
Agent's receipt of the proceeds of such Revolving Loans, the Administrative
Agent shall (unless it has not received the Notice of Borrowing in
satisfaction of the requirements of SECTION 4.02(A) or has been informed
that any of the other conditions precedent have not been satisfied) make
the proceeds of such Revolving Loans available to Borrower on such Funding
Date and shall disburse such funds in Dollars and in immediately available
funds to an account of Borrower, designated in writing by Borrower in the
Notice of Borrowing.
(c) FAILURE TO FUND BY LENDER. Unless the Administrative Agent shall
have been notified by any Lender prior to any Funding Date in respect of
any Borrowing of Revolving Loans that such Lender does not intend to make
available to the Administrative Agent such Lender's Revolving Loan on such
Funding Date, the Administrative Agent may assume that such Lender has made
such amount available to the Administrative Agent on such Funding Date and
the Administrative Agent in its sole discretion may, but shall not be
obligated to, make available to Borrower a corresponding amount on such
Funding Date. If such corresponding amount is not in fact made available to
the Administrative Agent by such Lender on or prior to 11:00 a.m. (New York
City time) on a Funding Date, such Lender agrees to pay and 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 made available to Borrower until the date such amount is paid or
repaid to the Administrative Agent, at (i) in the case of such Lender, the
Federal Funds Effective Rate (as such term is defined in the definition of
Alternate Base Rate) for the first three (3) Business Days and thereafter
at the Alternate Base Rate, and (ii) in the case of Borrower, the interest
rate which would be applicable at the time to a Borrowing of Base Rate
Loans. If such Lender shall pay to the Administrative Agent such
corresponding amount, such amount so paid shall constitute such Lender's
Revolving Loan, and if both such Lender and Borrower shall have paid and
repaid, respectively, such corresponding amount, the Administrative Agent
shall promptly pay over to Borrower such corresponding amount in same day
funds, but Borrower shall remain obligated for all interest thereon.
Nothing in this SECTION 2.02(C) shall be deemed to relieve any Lender of
its obligation hereunder to make its Revolving Loan on any Funding Date.
(d) VOLUNTARY REDUCTION OF COMMITMENTS. Borrower shall have the
right, at any time and from time to time, (i) to terminate the Revolving
Credit Commitments in whole, without premium or penalty, if no Revolving
Loans or Letters of Credit are then outstanding, and no Revolving Loans or
Letters of Credit have been requested but not yet advanced, or (ii) subject
to the second to last sentence of this SECTION 2.02(D), permanently to
reduce in part, without premium or penalty, the Revolving Credit
Commitments up to the amount by which the Revolving Credit Commitments
exceed the sum of (A) the Revolving Loan Usage, (B) the aggregate principal
amount of all Revolving Loans requested hereunder but not yet advanced and
(C) the aggregate face amount of all Letters of Credit requested hereunder
but not yet issued. Borrower shall give not fewer than five (5) Business
Days' prior written
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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 Lender of the
proposed termination or reduction. Such termination or partial reduction of
the Revolving Credit Commitments shall be effective on the date specified
in the Borrower's notice and shall reduce the Revolving Credit Commitment
of each Lender proportionately in accordance with its Pro Rata Share. Any
such 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. Any notice of reduction or termination pursuant
to this SECTION 2.02(D) shall be irrevocable.
(e) RETENTION OF RIGHTS AND REMEDIES. Notwithstanding the
termination of this Agreement on September 30, 2000 (or, if extended
pursuant to SECTION 2.02(G), September 30, 2001), until all of the
Obligations shall have been fully and indefeasibly paid in cash and
satisfied and all financing arrangements among Borrower and the Lenders
pursuant to any Loan Document shall have been terminated, all of the rights
and remedies under this Agreement and the other Loan Documents shall
survive and the Collateral Agent shall be entitled to retain its security
interest in and to all existing and future Collateral for the benefit of
itself and the Holders of Secured Obligations.
(f) NOTES. The Borrower shall execute and deliver to each Lender (or
to the Administrative Agent on behalf of each Lender) on or before the
Effective Date promissory notes substantially in the form of the applicable
notes in EXHIBIT 6 to evidence the aggregate amount of that Lender's Loans
and with other appropriate insertions. Each Lender is hereby authorized to,
and prior to any transfer of the Notes issued to it each Lender shall,
endorse the date and amount of each Loan made by such Lender and each
payment or prepayment of principal of the Loans evidenced thereby on the
schedule annexed to and constituting a part of such Note, which endorsement
shall constitute PRIMA FACIE evidence, absent manifest error, of the
accuracy of the information so endorsed, provided that failure by any such
Lender to make such endorsement shall not affect the obligations of the
Borrower hereunder or under such Note. In lieu of endorsing such schedule
as hereinabove provided, prior to any transfer of such Note, each Lender is
hereby authorized, at its option, to record such Loans and such payments or
prepayments in its books and records, such books and records constituting
PRIMA FACIE evidence, absent manifest error, of the accuracy of the
information contained therein; PROVIDED, HOWEVER, that if the Loan Account
differs from the information endorsed by a Lender on such Lender's Notes,
the Loan Account, absent manifest error, shall govern.
(g) EXTENSION OF REVOLVING CREDIT FACILITY. Subject to the terms and
conditions set forth in this Agreement, the Revolving Credit Facility shall
be in effect until September 30, 2000 (the "INITIAL TERMINATION DATE"),
unless it is extended pursuant hereto to September 30, 2001 (the "EXTENDED
TERMINATION DATE"). During the period from and including April 1, 1999, to
and including June 30, 1999, the Borrower may request in writing (the
"EXTENSION REQUEST") an extension of the Revolving Credit Facility to the
Extended Termination Date. The Revolving Credit Facility shall be so
extended if, after receipt of the Extension Request, the Supermajority
Lenders approve such extension within 60 days after receipt by the
Administrative Agent of the Extension Request; PROVIDED, HOWEVER, that the
failure by any Lender to respond to the Extension Request shall be deemed
to constitute such Lender's denial of such Extension Request. If the
Extension Request is not made or is made but not approved by the
Supermajority Lenders, the Revolving Credit Facility shall expire on the
Initial Termination Date. Notwithstanding anything herein to the contrary,
no Lender that has denied its consent to the Extension Request ("DISSENTING
LENDER") shall be bound by the approval of the Extension Request granted by
the Supermajority Lenders, and the Revolving Credit Commitment of each
Dissenting Lender, and each Dissenting Lender's participation in the
Letters of Credit, shall expire on the Initial Termination Date. The
Borrower shall have the right, at any time, to replace a Dissenting Lender
with another financial institution reasonably acceptable to the
Administrative Agent. In the event that one or more Dissenting Lenders are
not so replaced prior to the Initial Termination Date, on such date the
amount of the Revolving Credit Commitments shall be reduced by the
aggregate amount of the expiring Revolving Credit Commitments of Dissenting
Lenders not so replaced, each remaining Lender's Pro Rata Share shall be
adjusted accordingly (including its pro rata participation in the Letters
of Credit) and the
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Borrower shall pay to each Dissenting Lender all amounts due and owing to
such Dissenting Lender hereunder or under any other Loan Document,
including, without limitation, the aggregate outstanding principal amount
of the Revolving and Term Loans owed to such Dissenting Lender, together
with accrued interest and fees thereon through the date of repayment and
amounts payable under SECTIONS 2.09 and 2.10, all of which amounts shall be
immediately due and payable at such time. Upon the replacement of a
Dissenting Lender or payment of a Dissenting Lender's Obligations on the
Initial Termination Date in accordance with the terms hereof, such
Dissenting Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of SECTIONS 2.08, 2.09, 2.10, 3.09, 12.03 and
12.04.
2.03. INTEREST ON THE LOANS.
(a) RATE OF INTEREST. All Loans shall bear interest on the unpaid
principal amount thereof from the date made until paid in full at a
fluctuating rate determined from time to time by reference to the Alternate
Base Rate or the LIBO Rate. The applicable basis for determining the rate
of interest shall be selected by Borrower at the time a Notice of Borrowing
is given by the Borrower or at the time a Notice of Conversion/Continuation
is delivered by Borrower pursuant to SECTION 2.03(C); PROVIDED, HOWEVER,
that Borrower may not select the LIBO Rate as the applicable basis for
determining the rate of interest on a Loan if at the time of such selection
a Potential Event of Default or Event of Default exists or if such a
selection would be otherwise prohibited by the terms of this Agreement. If
on any day a Loan is outstanding with respect to which a Notice of
Borrowing or a Notice of Conversion/Continuation has not been delivered to
the Administrative Agent in accordance with the terms of this Agreement
specifying the basis for determining the rate of interest, then for each
such day such Loan shall be a Base Rate Loan. Loans shall bear interest,
subject to SECTION 2.03(D), at the following rates:
(i) if a Base Rate Loan, then at a rate per annum equal to the
sum of (A) the Applicable Base Rate Margin and (B) the Alternate Base
Rate as in effect from time to time as interest accrues; and
(ii) if a Eurodollar Rate Loan, then at a rate per annum equal to
the sum of (A) the Applicable Eurodollar Rate Margin and (B) the LIBO
Rate determined for the applicable Interest Period.
Upon receipt by the Administrative Agent of the first set of financial
statements delivered pursuant to SECTION 6.01(B) after the fiscal quarter
ending March 31, 1995 and each set of such financial statements delivered
pursuant to SECTION 6.01(B)thereafter, the Applicable Margins shall be
adjusted, such adjustment being effective on the first Business Day after
receipt of such financial statements and the Compliance Certificate to be
delivered in connection therewith; provided, HOWEVER, if the Borrower shall
not have delivered such financial statements on a timely basis in
accordance with SECTION 6.01(B), beginning with the date upon which such
financial statements should have been delivered and continuing until such
financial statements are delivered, the Applicable Margins shall be
adjusted based on the assumption that the Free Cash Flow Coverage Ratio was
less than 3.0 to 1.0. Notwithstanding the foregoing, if reference is made
to the Senior Debt Ratings for determination of the Applicable Margins, the
Applicable Margins shall be adjusted without reference to the delivery of
the Borrower's financial statements, such adjustment being effective on the
first Business Day after any change in the Senior Debt Ratings. In no event
shall any adjustment which would reduce the Applicable Margins be made
pursuant to this SECTION 2.03(A) if on the date such adjustment would
otherwise become effective an Event of Default or Potential Event of
Default exists.
(b) INTEREST PAYMENTS. Subject to SECTION 2.03(D), (i) interest
accrued on each Base Rate Loan shall be payable in arrears (A) on the last
calendar day of each calendar quarter occurring after the Effective Date,
(B) upon the prepayment in full of the Loans and the termination of all
Commitments under this Agreement, (C) upon the date any principal of the
Loan is due or prepaid, with respect to the principal amount then due or
prepaid, and (D) on the Term Loan Termination Date, and (ii) interest
accrued on each Eurodollar Rate Loan shall be payable in arrears (A) on
each Interest Payment Date applicable to such Eurodollar Rate Loan, (B)
upon the prepayment in full of the Loans and the termination of all
Commitments under this Agreement, (C) upon the date any principal of the
Loan is
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due or prepaid, with respect to the principal then due or prepaid, and (D)
on the Term Loan Termination Date.
(c) CONVERSION OR CONTINUATION. (i) Subject to the provisions of
SECTIONS 2.07 and 2.08, Borrower shall have the option (A) to convert at
any time all or any part of outstanding Loans which comprise part of the
same Borrowing and which, in the aggregate, equal or exceed $5,000,000 from
Base Rate Loans to Eurodollar Rate Loans; or (B) to convert all or any part
of outstanding Loans which comprise part of the same Borrowing and which,
in the aggregate, equal or exceed $1,000,000 from Eurodollar Rate Loans to
Base Rate Loans on the expiration date of any Interest Period applicable
thereto or upon the payment of compensation payable pursuant to SECTION
2.08(D); or (C) upon the expiration of any Interest Period applicable to a
Borrowing of Eurodollar Rate Loans, to continue all or any portion of such
Loans equal to or in excess of $5,000,000 as Eurodollar Rate Loans of the
same type, and the succeeding Interest Period of such continued Loans shall
commence on the expiration date of the Interest Period applicable thereto;
PROVIDED that no outstanding Loan may be continued as, or be converted
into, a Eurodollar Rate Loan if any Potential Event of Default or Event of
Default exists or if such a continuation or conversion would otherwise be
prohibited by the terms of this Agreement.
(ii) In the event Borrower shall elect to convert or continue a
Loan under this SECTION 2.03(C), Borrower shall deliver a Notice of
Conversion/Continuation to the Administrative Agent no later than 12:00
noon (New York City time) (A) at least one (1) Business Day in advance
of the proposed conversion date in the case of a conversion to a Base
Rate Loan and (B) at least three (3) Business Days in advance of the
proposed conversion or continuation date in the case of a conversion to,
or a continuation of, a Eurodollar Rate Loan. A Notice of Conversion/
Continuation shall specify (1) the proposed conversion or continuation
date (which shall be a Business Day), (2) the amount of the Loan to be
converted or continued, (3) the nature of the proposed conversion or
continuation, and (4) in the case of a conversion to, or a continuation
of, a Eurodollar Rate Loan, the requested Interest Period. If no
Interest Period is specified in any such Notice of
Conversion/Continuation with respect to a Eurodollar Rate Loan, the
Borrower shall be deemed to have selected an Interest Period of one
month's duration. In lieu of delivering the above-described Notice of
Conversion/Continuation, Borrower may give the Administrative Agent
telephonic notice of any proposed conversion or continuation by the time
required under this SECTION 2.03(C); PROVIDED that such notice shall be
confirmed in writing by delivery to the Administrative Agent promptly
(but in no event later than 12:00 noon (New York City time) on the
proposed conversion or continuation date) of a Notice of
Conversion/Continuation. Promptly after receipt of a Notice of
Conversion/Continuation under this SECTION 2.03(C) (or telephonic notice
in lieu thereof), the Administrative Agent shall notify each Lender by
telex, telecopy, telephone or other similar form of transmission, of the
proposed conversion or continuation.
(iii) 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.
(iv) Any portion of a Borrowing maturing or required to be repaid
in less than one month may not be converted into or continued as a
Eurodollar Rate Loan.
(d) DEFAULT INTEREST. Notwithstanding the rates of interest
specified in SECTION 2.03(A) and the payment dates specified in SECTION
2.03(B), from and after the occurrence of an Event of Default and for so
long thereafter as such Event of Default is continuing, the principal
balance of all Loans and other Obligations then outstanding (including,
without limitation, all amounts due and payable pursuant to SECTION
10.02(A)) and, to the extent permitted by applicable law, any interest
payments on the Loans not paid when due, shall bear interest payable upon
demand at a rate per annum equal to the sum of (A) two percent (2.0%) and
(B) the interest rate otherwise applicable thereto (the "DEFAULT RATE").
(e) COMPUTATION OF INTEREST. Interest on all Agreement Obligations
(other than those on which the interest rate is determined by reference to
the Prime Rate) 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.
Interest on all Agreement Obligations with respect to which the interest
rate is determined by reference to the
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Prime Rate shall be computed on the basis of the actual number of days
elapsed in the period during which interest accrues and a year of 365 or
366 days, as applicable. 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 (1) day's interest
shall be paid on that Loan.
(f) CHANGES; LEGAL RESTRICTIONS. In the event that after the date
hereof (i) the adoption of or any change in any law, treaty, rule,
regulation, guideline or determination of a Governmental Authority or any
change in the interpretation or application thereof by a Governmental
Authority, or (ii) compliance by any Lender with any request or directive
(whether or not having the force of law and whether or not the failure to
comply therewith would be unlawful) from any central bank or other
Governmental Authority or quasi-governmental authority exercising
jurisdiction, power or control over banks or financial institutions
generally, does impose, modify, or hold applicable, in the reasonable
determination of a Lender, 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 made, or other credit extended by, or any other acquisition of
funds by, a Lender or any Applicable Lending Office of such Lender (except
with respect to Base Rate Loans, so long as the Base Rate in effect at the
time is determined under CLAUSE (A) in the definition of "Alternate Base
Rate"), and the result of any of the foregoing is to increase the cost to
such Lender of making, renewing or maintaining the Loans or its Commitment
or issuing or participating in any Letter of Credit or to reduce any amount
receivable hereunder or thereunder; THEN, in any such case, Borrower shall
upon written notice from and demand by that Lender pay to such Lender,
within thirty (30) Business Days of the date specified in such notice and
demand, such amount or amounts (based upon a reasonable allocation thereof
by such Lender to the financing transactions contemplated by this Agreement
and affected by this SECTION 2.03(F)) as may be necessary to compensate
that Lender for any such additional cost incurred or reduced amount
received, but without interest. Such Lender shall deliver to the Borrower a
written statement of the costs or reductions claimed and the basis
therefor, and the reasonable allocation made by such Lender of such costs
and reductions, which statement shall, in the absence of manifest error, be
conclusive. If a Lender subsequently recovers from another Person any
amount previously paid by Borrower pursuant to this SECTION 2.03(F), such
Lender shall, within thirty (30) days after receipt of such refund and to
the extent permitted by applicable law, pay to the Borrower, without
interest, the amount of any such recovery.
2.04. FEES.
(a) COMMITMENT FEE. The Borrower shall pay to the Administrative
Agent, for the account of the Lenders in accordance with their respective
Pro Rata Shares except as set forth in SECTION 12.06(B)(VI), a fee (the
"COMMITMENT FEE"), accruing at the rate of three-eighths of one percent
(0.375%) per annum on the average daily amount by which the Revolving
Credit Commitments exceed Revolving Loan Usage for the period commencing on
the Effective Date and ending on the Revolving Credit Termination Date;
PROVIDED, HOWEVER, if and for so long as the Applicable Eurodollar Rate
Margin is reduced to 0.875% per annum or less, then the Commitment Fee
shall accrue at the rate of one-quarter of one percent (0.25%) per annum.
The Commitment Fee is payable quarterly, in arrears, on the last calendar
day of each calendar quarter occurring after the Effective Date, commencing
December 31, 1994, and on the Revolving Credit Termination Date.
(b) LETTER OF CREDIT FEES. Borrower shall pay to the Administrative
Agent, for the ratable account of the Lenders, a fee for each Letter of
Credit issued on behalf of Borrower, in accordance with the provisions of
SECTION 3.08(A).
(c) PAYMENT OF FEES. The fees described in this SECTION 2.04
represent compensation for services rendered and to be rendered separate
and apart from the lending of money or the provision of credit and do not
constitute compensation for the use, detention or forbearance of money, and
the obligation of Borrower to pay each fee described herein shall be in
addition to, and not in lieu of, the obligation of Borrower to pay
interest, other fees and expenses otherwise described in this Agreement.
Fees and
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expenses shall be payable when due in immediately available funds. All fees
and expenses shall be nonrefundable when paid. All fees and expenses
specified or referred to in this Agreement or in the letter agreements
dated September 28, 1994 between the Borrower and Chemical and between the
Borrower and Citicorp (the "FEE LETTERS") due to the Administrative Agent,
the Collateral Agent, any Issuing Bank or any Lender, including, without
limitation, amounts referred to in this Section 2.04 and in SECTION 12.03,
shall constitute Obligations and shall be secured by all the Collateral.
All fees described in this Section 2.04 (other than Section 2.04(b)) which
are expressed as a per annum charge shall be calculated on the basis of the
actual number of days elapsed in a 365 or 366 day year, as applicable.
2.05. MANDATORY PREPAYMENTS. (a) Borrower shall not at any time cause or
permit Revolving Loan Usage to exceed the lesser of (i) the Revolving Credit
Commitments and (ii) the Borrowing Base. If at any time any such excess exists,
Borrower shall, without demand or notice, promptly pay to the Administrative
Agent such amount as may be necessary to eliminate such excess, which prepayment
shall be applied as set forth in SECTION 2.06(B).
(b) (i) Within one hundred and five (105) days after the end of each
Fiscal Year, commencing with the Fiscal Year ending December 31, 1995, the
Borrower shall calculate Excess Cash Flow for such Fiscal Year (and at such
time the chief financial officer, treasurer or controller of the Borrower
shall deliver to the Administrative Agent a certificate setting forth such
amount and the calculation thereof) and Borrower shall promptly and, in any
event not later than five (5) Business Days after the delivery of such
certificate, pay to the Administrative Agent an amount equal to fifty
percent (50%) (or, if the Free Cash Flow Coverage Ratio as of the end of
the most recently completed fiscal quarter for which financial statements
have been delivered is greater than or equal to 4.0 to 1, thirty-three
percent (33%)) of Excess Cash Flow, which prepayment shall be applied as
set forth in SECTION 2.06(B).
(ii) In the event and on each occasion after the Effective Date
that a Prepayment Event that is an event described in CLAUSE (I) of the
definition of the term "Prepayment Event" and is not excluded from the
definition of such term pursuant to the proviso in such definition (an
"ASSET SALE PREPAYMENT EVENT") occurs, the Borrower shall, promptly upon
(and in any event not later than the third Business Day next following)
receipt by or on behalf of the Borrower or any Subsidiary thereof of the
Net Proceeds from such Prepayment Event, pay an amount equal to 100%
(or, if the condition set forth in the following sentence is satisfied,
fifty percent (50%)) of the Net Proceeds of such Asset Sale Prepayment
Event to the Administrative Agent, which prepayment shall be applied as
set forth in SECTION 2.06(B); PROVIDED, HOWEVER, that in any Fiscal Year
such amount shall not be required to be paid to the Administrative Agent
for such application to the extent that such amount would be applied to
the Term Loans pursuant to SECTION 2.06(B), until, and except to the
extent that, the aggregate, cumulative amount of such payments during
such Fiscal Year that, but for this proviso, would be applied to the
Term Loans, exceeds $5,000,000. The percentage specified in the
foregoing sentence shall be reduced to 50% from 100% if either (A) the
Free Cash Flow Coverage Ratio as of the end of the most recently
completed fiscal quarter for which financial statements have been
delivered is greater than or equal to 6.0 to 1 or (B) on the date of
such Prepayment Event, the Borrower shall have attained at least two of
the following Senior Debt Ratings: BBB- or better from S&P; Baa3 or
better from Moody's; and Baa3 or better from D&P.
(iii) In the event and on each occasion after the Effective Date
that a Prepayment Event described in CLAUSE (II)of the definition of the
term Prepayment Event occurs, the Borrower shall, promptly upon (and in
any event not later than the third Business Day next following) the
occurrence of such Prepayment Event, pay an amount equal to 75% of the
amount of Net Proceeds of such Prepayment Event to the Administrative
Agent, which prepayment shall be applied as set forth in SECTION
2.06(B).
(iv) In the event and on each occasion after the Effective Date
that a Prepayment Event described in CLAUSE (III)of the definition of
the term Prepayment Event occurs, the Borrower shall, promptly upon (and
in any event not later than the third Business Day next following) the
occurrence of such Prepayment Event, pay an amount equal to 25% of the
Net Proceeds of such
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Prepayment Event to the Administrative Agent, which prepayment shall be
applied as set forth in SECTION 2.06(B).
(v) In the event that the calculation of the Net Proceeds relating
to any Prepayment Event included an estimate for income taxes that was
at least $500,000 greater than the income taxes actually payable in
respect thereof, the Borrower shall, promptly after determining the
amount of income taxes actually payable, pay to the Administrative Agent
the amount by which such estimate exceeded the amount of taxes actually
payable, which prepayment shall be applied as set forth in SECTION
2.06(B).
Notwithstanding the foregoing, no prepayment shall be required pursuant to
CLAUSE (I) or (IV) above if, at the time any such prepayment would otherwise be
required, either (1) the Free Cash Flow Coverage Ratio for purposes of adjusting
the Applicable Margins as of the end of the most recently completely fiscal
quarter for which financial statements have been delivered is greater than or
equal to 6.0 to 1, (2) the outstanding principal balance of the Term Loans is
less than $50,000,000, or (3) the Borrower shall have attained at least two of
the following Senior Debt Ratings: BBB - or better from S&P; Baa3 or better from
Moody's; and Baa3 or better from D&P. Any payment required by this SECTION 2.05
shall be payable without penalty or premium, except as may be required by
SECTION 2.08(D) with respect to any Eurodollar Rate Loan prepaid as a result
thereof.
2.06. PAYMENTS.
(a) MANNER AND TIME OF PAYMENT. Except as otherwise expressly set
forth herein, all payments of principal of and interest on the Loans and
other Agreement Obligations (including without limitation, fees and
expenses) payable to the Administrative Agent, the Lenders or the Issuing
Banks (or any of them) shall be made without setoff, counterclaim, defense,
condition or reservation of rights, in Dollars and in immediately available
funds, delivered to the Administrative Agent (or, in the case of
Reimbursement Obligations, the applicable Issuing Bank) not later than
12:00 noon (New York City time) on the date and at the place due, to such
account of the Administrative Agent (or the Issuing Bank) as it may
designate, for the account of the Administrative Agent or the Lenders as
the case may be; and funds received by the Administrative Agent (or the
applicable Issuing Bank) after that time and date shall be deemed to have
been paid and received on the next succeeding Business Day. Payments
actually received by the Administrative Agent for the account of the
Administrative Agent or the Lenders or the Issuing Bank or any of them,
shall be paid to them promptly after receipt thereof by the Administrative
Agent. All payments of principal, interest, Reimbursement Obligations and
fees, and all reimbursements for expenses pursuant to this Agreement and
the other Loan Documents, may at the option of the Administrative Agent
(but without any obligation to do so) and upon not less than fifteen (15)
days advance written notice to Borrower be paid from the proceeds of
Revolving Loans made to Borrower hereunder. Borrower hereby irrevocably and
unconditionally authorizes the Lenders to make Revolving Loans to it under
the Revolving Credit Facility, which Revolving Loans shall be Base Rate
Loans, for the purpose of paying interest, Reimbursement Obligations and
fees due from it and for the purpose of reimbursing the Administrative
Agent, the Issuing Bank and each Lender for expenses due and payable
pursuant to this Agreement and the other Loan Documents and agrees that all
such Revolving Loans so made shall be deemed to have been requested by it
and at the option of the Administrative Agent (but without any obligation
to do so) may be charged to Borrower's Loan Account; provided, however,
that the Administrative Agent has given Borrower fifteen (15) days advance
written notice of the making of such Revolving Loans. Notwithstanding
anything contained in this Agreement to the contrary, if, at any time that
any payment of Agreement Obligations shall be required hereunder as a
mandatory prepayment, the aggregate amount of such payment to the
Administrative Agent for the accounts of the Lenders is less than $250,000,
so long as no Event of Default or Potential Event of Default shall then
exist, such payment may be deferred, at the option of the Borrower
exercised in writing, until the next date on which a payment is required or
made such that the combined payment would exceed such minimum amount.
(b) APPORTIONMENT OF PAYMENTS AND PREPAYMENTS. (i) Subject to the
provisions of SECTION 12.06(B), all payments and prepayments of principal
and interest in respect of outstanding Loans
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and all payments of fees and all other payments in respect of any other
Agreement Obligations, shall be allocated among such of the Lenders and the
Issuing Banks as are entitled thereto, in proportion to their Pro Rata
Shares or otherwise as provided herein. Subject to the provisions of
SECTION 2.06(B)(II), all such payments and prepayments and any other
amounts received by the Administrative Agent from or for the benefit of the
Borrower shall be applied FIRST, to pay principal of and interest on any
portion of the Loans which the Administrative Agent may have advanced on
behalf of any Lender for which the Administrative Agent has not then been
reimbursed by such Lender or the Borrower, SECOND, to pay principal of and
interest on any advance made under SECTION 12.18 for which the
Administrative Agent or the Collateral Agent has not then been paid by the
Borrower or reimbursed by the Lenders, THIRD, to pay all other Agreement
Obligations (other than those referred to in clauses FOURTH through NINTH)
then due and payable, FOURTH, to pay the principal of the Revolving Loans
to the extent required pursuant to SECTION 2.05(A), FIFTH, to pay interest
due in respect of the Term Loans and the Revolving Loans ratably, SIXTH, to
pay principal of the Term Loans then due and payable, SEVENTH, to pay
principal of the Term Loans not then due and payable, EIGHTH, to pay the
principal of the Revolving Loans, NINTH, to pay principal on contingent
Letter of Credit Obligations by depositing such funds as cash collateral
pursuant to SECTION 10.02(B), and TENTH, to the ratable payment of all
Obligations in respect of Eligible Hedging Contracts. All principal
payments and prepayments in respect of Loans shall be applied FIRST, to the
Eurodollar Rate Loans maturing on the date of such payment, SECOND, to
repay outstanding Base Rate Loans, and THEN to repay outstanding Eurodollar
Rate Loans with those Eurodollar Rate Loans which have earlier expiring
Interest Periods being repaid prior to those which have later expiring
Interest Periods.
Notwithstanding the above provisions of this SECTION 2.06(B), and except as
provided in the next-to-last sentence of this paragraph, all of the mandatory
prepayments required pursuant to SECTION 2.05(B) of this Agreement to be applied
to the Term Loans shall be applied until the Term Loans are paid in full. All
such prepayments (except in the case of prepayments governed by SECTION
2.05(B)(II)) shall be applied pro rata to the remaining installments of the Term
Loans after the first four scheduled installments of the Term Loans following
the date of such prepayment, and then pro rata to such first four scheduled
installments; and thereafter all mandatory prepayments shall be applied to the
Revolving Loans and to the cash collateralization of outstanding Letters of
Credit pursuant to SECTION 10.02(B). Payments governed by SECTION 2.05(B)(II)
shall be applied pro rata to all remaining scheduled principal payments of the
Term Loans. The amount of any prepayment governed by SECTION 2.05(B)(II) shall
be determined (x) after the application to the Revolving Loans of any portion of
such proceeds attributable to assets included in the Borrowing Base and (y)
without regard to any portion of such proceeds used to repurchase Receivables
previously sold pursuant to the Receivables Securitization. Payments to be
applied to the unpaid installments of the Term Loans on a pro rata basis shall
be applied to the fullest extent possible such that the unpaid installments,
after giving effect to such application, are in each case a multiple of $10,000;
if any amount of such payment remains unapplied after such application, such
unapplied amount shall be applied to the final installment of the Term Loans.
(ii) Subject to the provisions of SECTION 12.06(B), after the
occurrence of an Event of Default and while the same is continuing, the
Administrative Agent shall, unless otherwise specified at the direction
of the Requisite Lenders which direction shall be consistent with the
last sentence of this clause (ii), apply all payments and prepayments in
respect of any Obligations and all proceeds of Collateral in the
following order:
(A) first, to pay interest on and then principal of any portion
of the Loans which the Administrative Agent may have advanced on
behalf of any Lender for which the Administrative Agent has not then
been reimbursed by such Lender or the Borrower;
(B) second, to pay interest on and then principal of any
advance made under SECTION 12.18 for which the Administrative Agent
or the Collateral Agent, as applicable, has not then been paid by the
Borrower or reimbursed by the Lenders;
(C) third, to pay Agreement Obligations in respect of any fees,
expense reimbursements or indemnities then due to the Administrative
Agent or the Collateral Agent, as applicable;
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(D) fourth, to pay Agreement Obligations in respect of any
fees, expenses, reimbursements or indemnities then due to the Lenders
and any of the Issuing Banks;
(E) fifth, to pay principal of the Revolving Loans to the
extent required pursuant to SECTION 2.05(A);
(F) sixth, to the ratable payment of interest due in respect of
the Term Loans, the Revolving Loans and the Letter of Credit
Obligations;
(G) seventh, to the ratable payment or prepayment of principal
outstanding on Loans and Reimbursement Obligations;
(H) eighth, to pay principal on contingent Letter of Credit
Obligations by depositing such funds as cash collateral pursuant to
SECTION 10.02(B);
(I) ninth, to the ratable payment of all other Agreement
Obligations; and
(J) tenth, to the ratable payment of all Obligations in respect
of Eligible Hedging Contracts.
The order of priority set forth in this SECTION 2.06(B)(II) and the
related provisions of this Agreement are set forth solely to determine
the rights and priorities of the Administrative Agent, the Lenders and
the other Holders of Secured Obligations as among themselves. The order
of priority set forth in CLAUSES (A)through (C) of this SECTION
2.06(B)(II) may be changed only with the prior written consent of the
Administrative Agent and/or Collateral Agent, as applicable.
(iii) Subject to SECTION 12.06(B), the Administrative Agent shall
promptly distribute to each Lender at its primary address set forth on
SCHEDULE A or the signature page to the Assignment and Acceptance by
which it became a Lender, or at such other address as a Lender or other
Holder of Secured Obligations may request in writing, such funds as such
Person may be entitled to receive in accordance with the provisions of
this SECTION 2.06(B).
(c) PAYMENTS ON NON-BUSINESS DAYS. Whenever any payment to be made
by Borrower hereunder shall be stated to be due on a day which is not a
Business Day, payments shall be made on the next succeeding Business Day,
unless such Business Day occurs in the succeeding month in which case such
payment shall be made on the immediately preceding Business Day, and such
extension of time, if any, shall be included in the computation of the
payment of interest hereunder and of any of the fees specified in SECTION
2.04, as the case may be.
(d) ADMINISTRATIVE AGENT'S AND ISSUING BANKS' ACCOUNTING. The
Administrative Agent shall maintain such accounts, books and records (a
"LOAN ACCOUNT") in which it shall record (i) the names and addresses of the
Lenders and the respective Commitments of, and principal amount of Loans
owing to, each Lender from time to time; (ii) other appropriate debits and
credits as provided in this Agreement, including, without limitation, all
interest and fees constituting Obligations; and (iii) all payments of such
Obligations made by Borrower or for Borrower's account. Each Lender shall
maintain in accordance with its usual practices an account or accounts
evidencing the indebtedness of 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. Each of the Issuing Banks shall maintain a separate Loan Account
in which it shall record appropriate debits and credits related to the
Letter of Credit Obligations. Entries in any Loan Account made in
accordance with the Administrative Agent's or any Lender's or each Issuing
Bank's customary accounting practices as in effect from time to time shall
constitute PRIMA FACIE evidence of the matters reflected therein, absent
manifest error.
2.07. INTEREST PERIODS. By giving notice as set forth in SECTION 2.02(A)
or 2.03(C) with respect to a Borrowing of, conversion into or continuation of
Loans consisting of Eurodollar Rate Loans, Borrower shall have the option,
subject to the other provisions of this SECTION 2.07 and SECTION 2.08, to
specify an interest period (each an "INTEREST PERIOD") to apply to the Borrowing
described in such notice, which Interest Period shall be either a one (1), two
(2), three (3) or six (6) month period. The determination of Interest Periods
shall be subject to the following provisions:
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(a) 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;
(b) If any Interest Period would otherwise expire on a day which is
not a Business Day, the Interest Period shall be extended to expire on the
next succeeding Business Day; PROVIDED that if any such Interest Period
would otherwise expire on a day which is not a Business Day and no further
Business Day occurs in that calendar month, that Interest Period shall
expire on the immediately preceding Business Day;
(c) Borrower may not select an Interest Period for Eurodollar Rate
Loans constituting Revolving Loans which terminates later than the
Revolving Credit Termination Date;
(d) Without the prior written consent of the Administrative Agent,
there shall be no more than eight (8) Interest Periods under this Agreement
in effect at any one time.
(e) No Interest Period may be selected for any Eurodollar Rate Loan
that would end later than a scheduled repayment date for the Term Loans
determined pursuant to SECTION 2.01(C) AND (D) if, after giving effect to
such selection, the aggregate outstanding amount of (i) the Eurodollar Rate
Loans with Interest Periods ending on or prior to such repayment date and
(ii) the Base Rate Loans would not be at least equal to the principal
amount of the Term Loans to be paid on such repayment date.
2.08. 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) DETERMINATION OF INTEREST RATE. As soon as practicable after
11:00 a.m. (New York City time) on the Interest Rate Determination Date,
the Administrative Agent shall determine (which determination shall, absent
manifest error, be presumptively correct) the interest rate which shall
apply to the Eurodollar Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give
notice thereof (in writing or by telephone confirmed in writing) to
Borrower and to each Lender.
(b) INTEREST RATE UNASCERTAINABLE, INADEQUATE OR UNFAIR. With
respect to any Interest Period, if the Administrative Agent is advised by
any Reference Bank that deposits in Dollars (in the applicable amount) are
not being offered to such Reference Bank in the London interbank Eurodollar
market for such Interest Period, if the Administrative Agent shall have
reasonably determined that the rates at which such dollar deposits are
being offered to the Reference Banks will not adequately and fairly reflect
the cost to any Lender of making or maintaining its Eurodollar Rate Loans
during such Interest Period or if adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in the
definition of LIBO Rate, then the Administrative Agent shall forthwith give
notice thereof to Borrower and each Lender, whereupon until the
Administrative Agent has determined that the circumstances giving rise to
such suspension no longer exist, (a) the right of Borrower to elect to have
Loans bear interest based upon the LIBO Rate shall be suspended, and (b)
each outstanding Eurodollar Rate Loan 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.
(c) ILLEGALITY. (i) In the event that on any date any Lender shall
have determined (which determination shall, in the absence of manifest
error, be final and conclusive and binding upon all parties) that the
making or continuation of any Eurodollar Rate Loan has become unlawful by
compliance by that Lender in good faith 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), then, and in any such event, such Lender shall promptly give
notice (by teletransmission or by telephone promptly confirmed in writing)
to Borrower and the Administrative Agent of that determination and the
reasons therefor. The Administrative Agent shall promptly forward any such
notice it receives to the other Lenders.
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(ii) Upon the giving of the notice referred to in SECTION
2.08(C)(I), (A) Borrower's right to request of the Lenders and the
Lenders' obligation to make Eurodollar Rate Loans with respect to the
requested Borrowing shall be immediately suspended, and the Lenders
shall make Loans, with respect to such requested Borrowing of Eurodollar
Rate Loans as Base Rate Loans, and (B) if Eurodollar Rate Loans are then
outstanding, 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
Lenders) convert all such Loans of the same Borrowing into Base Rate
Loans without cost to the Borrower for any breakage fees or other costs.
(iii) In the event that a Lender determines at any time following
its giving of a notice referred to in SECTION 2.08(C)(I) that such
Lender may lawfully make Eurodollar Rate Loans, such Lender shall
promptly give notice (by teletransmission or by telephone promptly
confirmed in writing) to Borrower and the Administrative Agent of that
determination, whereupon Borrower's right to request of the Lenders and
the Lenders' obligation to make Eurodollar Rate Loans shall be restored.
The Administrative Agent shall promptly forward any such notice it
receives to the Lenders.
(d) COMPENSATION. In addition to such amounts as are required to be
paid by Borrower pursuant to SECTIONS 2.03(A), 2.03(D), 2.03(F), 2.04 and
each other provision of this Agreement requiring payment by Borrower,
Borrower shall compensate each Lender, upon demand, for all losses
(excluding lost profits), 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) which such
Lender may sustain (i) if for any reason a Borrowing of, conversion into or
continuation of Eurodollar Rate Loans does not occur on a date specified
therefor in a Notice of Borrowing or a Notice of Conversion/Continuation
(other than pursuant to SECTION 2.08(C)(I)) or in a telephonic request for
borrowing or conversion or continuation or a successive Interest Period
does not commence after notice therefor is given pursuant to SECTION
2.03(C)(II), (ii) if any principal payment of any Eurodollar Rate Loan
(including, without limitation, any prepayment pursuant to SECTION 2.05 but
excluding any prepayment of any Eurodollar Rate Loan in connection with the
replacement of any Lender under CLAUSE (I) of SECTION 2.13) occurs for any
reason on a date which is not the last day of the applicable Interest
Period, (iii) as a consequence of an acceleration of the Obligations
pursuant to SECTION 10.02(A) or (iv) as a consequence of any other failure
by Borrower to repay Eurodollar Rate Loans when required by the terms of
this Agreement. Such Lender shall deliver to Borrower, as a condition of
Borrower's obligation to compensate such Lender, a written statement as to
such losses, expenses and liabilities which statement, in the absence of
manifest error, shall be conclusive as to such amounts.
(e) BOOKING OF EURODOLLAR RATE LOANS. Any Lender may make, carry or
transfer Eurodollar Rate Loans at, to, or for the account of, any of its
branch offices, agencies or the office of an Affiliate of that Lender;
PROVIDED that no such Lender shall be entitled to receive any greater
amount under SECTION 2.03(F)or SECTION 2.09 as a result of the transfer of
any such Loan than such Lender would be entitled to immediately prior
thereto unless (i) such transfer occurred at a time when circumstances
giving rise to the claim for such greater amount did not exist and were not
reasonably foreseeable by such Lender, or (ii) such claim would have arisen
even if such transfer had not occurred.
2.09. TAXES. (a) Any and all payments by Borrower hereunder shall be
made, in accordance with SECTION 2.06, free and clear of and without deduction
or withholding for or on account of any and all present or future taxes, levies,
imposts, deductions, charges, or withholdings, and all liabilities with respect
thereto including those arising after the date hereof as a result of the
adoption of or any change in any law, treaty, rule, regulation, guideline or
determination of a Governmental Authority or any change in the interpretation or
application thereof by a Governmental Authority but excluding, in the case of
each Lender, each Issuing Bank and the Administrative Agent, such taxes
(including income taxes, franchise taxes and branch profit taxes) as are imposed
on or measured by such Lender's, such Issuing Bank's or the Administrative
Agent's, as the case may be, income by the United States of America or any
Governmental Authority of the jurisdiction under the laws of which such Lender,
Issuing Bank or Administrative Agent, as the case may be, is organized,
maintains an Applicable Lending Office or is deemed to be engaged in trade or
business (all such non-excluded taxes,
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levies, imposts, deductions, charges, withholdings, and liabilities which the
Administrative Agent, any Issuing Bank or a Lender determines to be applicable
to this Agreement, the other Loan Documents, the Commitments or the Loans or the
Letters of Credit being hereinafter referred to as "TAXES"). If Borrower shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the other Loan Documents to any Lender, any Issuing Bank or
the Administrative Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this SECTION 2.09) 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 deductions been made, (ii)
Borrower shall make such deductions, and (iii) Borrower shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law. If a withholding tax of the United States of
America or any other Governmental Authority shall be or become applicable (y)
after the date of this Agreement, to such payments by Borrower made to the
Applicable Lending Office or any other office that a Lender may claim as its
Applicable Lending Office, or (z) after such Lender's selection and designation
of any other Applicable Lending Office, to such payments made to such other
Applicable Lending Office, such Lender shall use reasonable efforts to make,
fund and maintain its Loans through another Applicable Lending Office of such
Lender in another jurisdiction so as to reduce such Borrower's liability
hereunder, if the making, funding or maintenance of such Loans through such
other Applicable Lending Office of such Lender does not, in the judgment of such
Lender, otherwise materially adversely affect such Loans, obligations under the
Commitments or such Lender.
(b) In addition, Borrower agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges, or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, the other Loan Documents, the Commitments, the Loans or the
Letters of Credit (hereinafter referred to as "OTHER TAXES").
(c) Borrower will indemnify each Lender, each Issuing Bank, the
Administrative Agent and the Collateral Agent for the full amount of Taxes
and Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any Governmental Authority on amounts payable under this SECTION
2.09) paid by such Lender, such Issuing Bank or the Administrative Agent or
the Collateral Agent (as the case may be) and any liability (including
penalties, interest, and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within thirty (30) days after
the date such Lender, such Issuing Bank or the Administrative Agent or the
Collateral Agent (as the case may be) makes written demand therefor. A
certificate as to any additional amount payable to any Lender, any Issuing
Bank or the Administrative Agent or the Collateral Agent under this SECTION
2.09 submitted to Borrower and the Administrative Agent (if a Lender or an
Issuing Bank is so submitting) by such Lender, such Issuing Bank or the
Administrative Agent or the Collateral Agent shall show in reasonable
detail the amount payable and the calculations used to determine such
amount and shall, absent manifest error, be final, conclusive and binding
upon all parties hereto. With respect to such deduction or withholding for
or on account of any Taxes and to confirm that all such Taxes have been
paid to the appropriate Governmental Authorities, Borrower shall promptly
(and in any event not later than thirty (30) days after receipt) furnish to
each Lender, each Issuing Bank and the Administrative Agent and the
Collateral Agent such certificates, receipts and other documents as may be
required (in the judgment of such Lender, such Issuing Bank or the
Administrative Agent or the Collateral Agent) to establish any tax credit
to which such Lender, such Issuing Bank or the Administrative Agent or the
Collateral Agent may be entitled.
(d) Within thirty (30) days after the date of any payment of Taxes or
Other Taxes by Borrower, Borrower will furnish to the Administrative Agent,
at its address referred to in SECTION 12.08, the original or a certified
copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this SECTION 2.09 shall survive the payment in full of principal and
interest hereunder, expiration or termination of the Letters of Credit and
the termination of this Agreement.
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(f) Without limiting the obligations of Borrower under this SECTION
2.09, each Lender that is not created or organized under the laws of the
United States of America or a political subdivision thereof shall deliver
to Borrower and the Administrative Agent on or before the Effective Date,
or, if later, the date on which such Lender becomes a Lender pursuant to
SECTION 12.02 hereof, a true and accurate certificate executed in duplicate
by a duly authorized officer of such Lender, in a form satisfactory to
Borrower and the Administrative Agent, to the effect that such Lender is
capable under the provisions of an applicable tax treaty concluded by the
United States of America (in which case the certificate shall be
accompanied by two executed copies of Form 1001 of the IRS) or under
Section 1442 of the IRC (in which case the certificate shall be accompanied
by two copies of Form 4224 of the IRS) of receiving payments of interest
hereunder without deduction or withholding of United States federal income
tax. Each such Lender further agrees to deliver to 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
substantially in a form satisfactory to Borrower and the Administrative
Agent, before or promptly upon the occurrence of any event requiring a
change in the most recent certificate previously delivered by it to
Borrower and the Administrative Agent pursuant to this SECTION 2.09(F).
Further, each Lender which delivers a certificate accompanied by Form 1001
of the IRS covenants and agrees to deliver to Borrower and the
Administrative Agent within fifteen (15) days prior to January 1, 1995, and
every third (3rd) anniversary of such date thereafter, on which this
Agreement is still in effect, another such certificate and two accurate and
complete original signed copies of Form 1001 (or any successor form or
forms required under the IRC or the applicable regulations promulgated
thereunder), and each Lender that delivers a certificate accompanied by
Form 4224 of the IRS covenants and agrees to deliver to Borrower and the
Administrative Agent within fifteen (15) days prior to the beginning of
each subsequent taxable year of such Lender during which this Agreement is
still in effect, another such certificate and two accurate and complete
original signed copies of IRS Form 4224 (or any successor form or forms
required under the IRC or the applicable regulations promulgated
thereunder). Each such certificate shall certify as to one of the
following:
(i) that such Lender is capable of receiving payments of interest
hereunder without deduction or withholding of United States of America
federal income tax;
(ii) that such Lender is not capable of receiving payments of
interest hereunder without deduction or withholding of United States of
America federal income tax as specified therein but is capable of
recovering the full amount of any such deduction or withholding from a
source other than the Borrower and will not seek any such recovery from
Borrower; or
(iii) that, as a result of the adoption of or any change in any
law, treaty, rule, regulation, guideline or determination of a
Governmental Authority or any change in the interpretation or
application thereof by a Governmental Authority after the date such
Lender became a party hereto, such Lender is not capable of receiving
payments of interest hereunder without deduction or withholding of
United States of America 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 shall promptly furnish to Borrower and the Administrative Agent
such additional documents as may be reasonably required by Borrower or the
Administrative Agent to establish any exemption from or reduction of any Taxes
or Other Taxes required to be deducted or withheld and which may be obtained
without undue expense to such Lender.
2.10. INCREASED CAPITAL. If any Lender determines that (a) the
applicability of any law, rule, regulation, agreement or guideline adopted
pursuant to or arising out of the July 1988 report of the Basle Committee on
Banking Regulations and Supervisory Practices entitled "International
Convergence of Capital Measurement and Capital Standards"; (b) the introduction
of or any change in any law, order or regulation or in the interpretation or
administration of any law, order or regulation by any Governmental Authority
charged with the interpretation or administration thereof after the date hereof
or (c) compliance with any guideline or request issued or made after the date
hereof from any central bank or other Governmental Authority (whether or not
having the force of law) has or would have the effect of reducing the rate of
return on the capital of such Lender or any corporation controlling such Lender,
as a consequence of or with reference to this Agreement,
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such Lender's Commitments or its making or maintaining Loans, or, in the case of
such Lender acting in its capacity as the Issuing Bank, the Issuing Bank's
issuance or maintenance of any Letter of Credit, or any Lender's participation
in any Letter of Credit, below the rate which such Lender or such other
corporation could have achieved but for such compliance (taking into account the
policies of such Lender or corporation with regard to capital), then Borrower
shall from time to time, upon demand by such Lender (with a copy of such demand
to the Administrative Agent), pay to such Lender additional amounts sufficient
to compensate such Lender for such reduction, upon receipt by Borrower (with a
copy to the Administrative Agent) of a certificate as to such amounts, by such
Lender, setting forth in reasonable detail the basis for, and the calculations
used by such Lender in determining, any such amounts. Such certificate, in the
absence of manifest error shall be conclusive and binding for all purposes. Each
Lender agrees promptly to notify Borrower and the Administrative Agent of any
circumstances that would cause Borrower to pay additional amounts pursuant to
this SECTION 2.10, PROVIDED that the failure to give such notice shall not
affect Borrower's obligation to pay such additional amounts hereunder.
2.11. USE OF PROCEEDS OF THE LOANS. The proceeds of the Loans shall be
used for general corporate purposes of the Borrower and the Borrower's
Subsidiaries, and shall not be used to pay principal on the Term Loans.
2.12. AUTHORIZED OFFICERS OF BORROWER. Borrower shall notify the
Administrative Agent and each of the Issuing Banks in writing of the names of
the officers and employees authorized to request Loans and Letters of Credit and
to request a conversion or continuation of any Loan and shall provide the
Administrative Agent and each of the Issuing Banks with a specimen signature of
each such officer or employee. The Administrative Agent and each of the Issuing
Banks shall be entitled to rely conclusively on such officer's or employee's
authority to request such Loan or Letter of Credit or such Conversion or
Continuation until the Administrative Agent and the applicable Issuing Bank
receives written notice to the contrary. The Administrative Agent and the
Issuing Banks shall have no duty to verify the authenticity of the signature
appearing on any written Notice of Borrowing or Notice of
Conversion/Continuation and, with respect to an oral request for such a Loan or
Letter of Credit or such Conversion or Continuation, the Administrative Agent
and the Issuing Banks shall have no duty to verify the identity of any person
representing himself as one of the officers or employees authorized to make such
request on behalf of Borrower. Neither the Administrative Agent nor any of the
Issuing Banks nor any Lender shall incur any liability to Borrower in acting
upon any telephonic notice referred to above which the Administrative Agent
believes to have been given by a duly authorized officer or other person
authorized to borrow on behalf of Borrower.
2.13. REPLACEMENT OF CERTAIN LENDERS. In the event a Lender ("AFFECTED
LENDER") shall have: (i) failed to fund its Pro Rata Share of any Borrowing
requested by the Borrower which such 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 by the Borrower which such Lender is
obligated to issue as an Issuing Bank under the terms of this Agreement, (iii)
has requested compensation from the Borrower under SECTIONS 2.03(F), 2.09 or
2.10 to recover additional costs incurred by such Lender which are not being
incurred generally by the other Lenders, or (iv) delivered a notice pursuant to
SECTION 2.08(C)(I) claiming that such Lender is unable to extend Eurodollar Rate
Loans to the Borrower for reasons not generally applicable to the other 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 and Acceptances five (5) Business Days after the date of such demand,
to one or more financial institutions which comply with the provisions of
SECTION 12.02) (and, if selected by the Borrower is reasonably acceptable to the
Administrative Agent) which the Borrower or the Administrative Agent, as the
case may be, shall have engaged for such purpose ("REPLACEMENT LENDER"), all of
such Affected Lender's rights and obligations under this Agreement and the other
Loan Documents (including, without limitation, its Commitments and all Loans
owing to it all of its participation interests in existing Letters of Credit,
and its obligations to participate in additional Letters of Credit hereunder) in
accordance with SECTION 12.02. The Administrative Agent is hereby authorized to
execute one or more Assignment and Acceptances as attorney-in-fact for any
Affected Lender
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failing to execute and deliver the same within five (5) Business Days after the
date of such demand. Further, with respect to such assignment,
(a) in the event the Affected Lender is the Issuing Bank, the
Borrower shall have, with respect to each outstanding Letter of Credit,
provided the Affected Lender with cash collateral, arranged for surrender
of such Letters of Credit, arranged for a back-to-back Letter of Credit or
made such other arrangements 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 due and owing 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 Lender, together
with accrued interest thereon through the date of such assignment, amounts
payable under SECTIONS 2.03(F), 2.09 and 2.10, and compensation payable
under SECTION 2.08(D) in the event of any replacement of any Affected
Lender under CLAUSE (II) or CLAUSE (III) of this SECTION 2.13 through the
date of the replacement of any Affected Lender; PROVIDED, upon such
Affected Lender's replacement, such Affected Lender shall cease to be a
party hereto but shall continue to be entitled to the benefits of SECTIONS
2.08, 2.09, 2.10, 12.03 and 12.04, as well as to any fees accrued for its
account hereunder and not yet paid.
Upon the replacement of any Affected Lender pursuant to this SECTION 2.13,
(x) each Letter of Credit issued by such Affected Lender shall cease to be a
Letter of Credit under this Agreement, each such Affected Lender shall cease to
have any participation in, entitlement to, or other right to share in the
security interests and liens of the Collateral Agent and the Holders of Secured
Obligations in the Collateral and shall no longer be subject to the
participation provisions of SECTION 3.06, all of which participations shall be
deemed to have terminated and been repurchased by the Issuing Bank hereunder and
(y) the provisions of SECTION 12.06(B) shall continue to apply with respect to
Borrowings 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.
ARTICLE III
LETTERS OF CREDIT
3.01. OBLIGATION TO ISSUE. Subject to the terms and conditions set forth
in this Agreement, from time to time during the period commencing on the
Effective Date and ending on the Business Day which is twenty (20) Business Days
prior to the Revolving Credit Termination Date, Borrower may request any of the
Issuing Banks, and upon such request such Issuing Bank hereby agrees, to issue
for the account of Borrower, or for the joint and several account of Borrower
and any of its Subsidiaries, one or more Letters of Credit.
3.02. TYPES AND AMOUNTS. Notwithstanding the provisions of SECTION 3.01,
no Issuing Bank shall have any obligation to issue any Letter of Credit at any
time:
(a) if the aggregate maximum amount then available for drawing under
Letters of Credit issued by such Issuing Bank, after giving effect to the
Letter of Credit requested hereunder, shall exceed either such Issuing
Bank's Letter of Credit Commitment or any limit imposed by law or
regulation upon such Issuing Bank;
(b) if, after giving effect to such requested Letter of Credit, (i)
Revolving Loan Usage exceeds the lesser of the Revolving Credit Commitments
or the Borrowing Base at such time or (ii) the aggregate outstanding Letter
of Credit Obligations would exceed $25,000,000; and any letter of credit
issued by an Issuing Bank in excess of any such amounts shall not, to the
extent of the excess, constitute a Letter of Credit hereunder and the
deemed purchase of participations pursuant to SECTION 3.06 shall not occur
with respect to such letter of credit; or
(c) which has an expiration date which is (i) more than (1) one year
after the date of issuance of such Letter of Credit (PROVIDED that a
Standby Letter of Credit may provide for an annual renewal, subject to
SECTION 3.02(C)(II) below, if such renewal is consented to by such Issuing
Bank and the conditions precedent to the issuance of such Standby Letter of
Credit are met at the time of such renewal) or (ii) after three (3)
Business Days immediately preceding the Revolving Credit Termination Date,
and any letter of credit issued by an Issuing Bank with an expiration date
after three (3) Business
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Days immediately preceding the Revolving Credit Termination Date shall not
constitute a Letter of Credit hereunder and the deemed purchase of
participations pursuant to SECTION 3.06 shall not occur with respect to
such letter of credit.
3.03. CONDITIONS. In addition to being subject to the satisfaction of the
conditions precedent contained in SECTIONS 4.01 and 4.02, the obligation of each
Issuing Bank to issue any Letter of Credit is subject to the satisfaction in
full of the following conditions:
(a) Borrower shall have delivered to the Issuing Bank, at such times
and in such manner as the Issuing Bank may prescribe, a Letter of Credit
Application and 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 be reasonably
satisfactory to the Issuing Bank and shall be consistent with the Issuing
Bank's ordinary practice with respect to terms of its letters of credit;
and
(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 such Letter of Credit and
no law, rule or regulation applicable to the Issuing Bank, and no request
or directive (whether or not having the force of law and whether or not the
failure to comply therewith would be unlawful) from any Governmental
Authority with jurisdiction over the Issuing Bank shall prohibit or request
the Issuing Bank to refrain from the issuance of letters of credit
generally or the issuance of that Letter of Credit.
3.04. ISSUANCE OF LETTERS OF CREDIT.
(a) Borrower shall give the Issuing Bank written notice (with a copy
to the Administrative Agent) not later than 12:00 noon (New York City time)
on the third (3rd) Business Day immediately preceding the requested
issuance of a Letter of Credit under this Agreement, which notice as
provided to the Administrative Agent shall be accompanied by a Notice of
Borrowing as required pursuant to SECTION 4.02. Such notice shall be
irrevocable and shall specify (i) the stated amount of the Letter of Credit
requested, (ii) the effective date (which day shall be a Business Day) of
issuance of such requested Letter of Credit, (iii) whether such Letter of
Credit is a Commercial Letter of Credit or a Standby Letter of Credit, (iv)
the date on which such requested Letter of Credit is to expire, which date
shall be a Business Day, (v) the Person for whose benefit the requested
Letter of Credit is to be issued, (vi) the amount of Letter of Credit
Obligations then outstanding and (vii) any other terms to be included in
such Letter of Credit. Prior to issuing any Letter of Credit, the Issuing
Bank shall request and the Administrative Agent shall provide confirmation
that the request for such Letter of Credit complies with the provisions of
SECTION 3.02(B). If the Administrative Agent notifies the Issuing Bank that
it is authorized to issue such Letter of Credit, and the conditions
described in SECTIONS 3.02, 3.03, and 4.02 otherwise have been satisfied,
then the Issuing Bank shall issue such Letter of Credit as requested. The
Issuing Bank shall give the Administrative Agent prompt notice of the
issuance of any such Letter of Credit.
(b) No Letter of Credit may be amended, extended, renewed, modified
or supplemented unless Borrower shall have complied with the requirements
of SECTION 3.04(A) to the same extent as if such Letter of Credit, as so
amended, extended, renewed, modified or supplemented, were requested to be
reissued hereunder. No Issuing Bank may amend, extend, renew, modify or
supplement any Letter of Credit if the issuance of a new Letter of Credit
having the same terms as such Letter of Credit as so amended, extended,
renewed, modified or supplemented would be prohibited by SECTION 3.02. Each
Issuing Bank shall provide the Administrative Agent with a copy of each
amendment, extension, renewal, modification or supplement to any Letter of
Credit.
3.05. REIMBURSEMENT OBLIGATIONS; DUTIES OF THE ISSUING BANK.
(a) Notwithstanding any provisions to the contrary in any Letter of
Credit Reimbursement Agreement or Letter of Credit Application:
(i) Borrower shall reimburse each Issuing Bank, as applicable (by
paying the Administrative Agent for the account of the Issuing Bank),
for drawings under a Letter of Credit issued by it no
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later than the earlier of (a) the time specified in such Letter of
Credit Reimbursement Agreement or Letter of Credit Application, and (b)
one (1) Business Day after the payment by such Issuing Bank; and
(ii) any Reimbursement Obligation with respect to any Letter of
Credit shall bear interest from the date of the relevant drawing under
the pertinent Letter of Credit at the interest rate then applicable to
Base Rate Loans until the third (3rd) Business Day after such date on
which the Issuing Bank with respect to such Letter of Credit gives
notice of such drawing to Borrower and thereafter at the Default Rate.
(b) No action taken or omitted to be taken by any Issuing Bank under
or in connection with any Letter of Credit shall put such Issuing Bank
under any resulting liability to any Lender (except for its gross
negligence or willful misconduct in connection therewith, as determined by
the final judgment of a court of competent jurisdiction) or, subject to
SECTIONS 3.02 and 3.03, relieve that Lender of its obligations hereunder to
such Issuing Bank. In the event this Agreement and any Letter of Credit
Reimbursement Agreement or any Letter of Credit Application are
inconsistent, the terms of this Agreement shall prevail. In determining
whether to pay under any Letter of Credit, the Issuing Bank shall have no
obligation to the Lenders other than to confirm that any documents required
to be delivered under such Letter of Credit appear to have been delivered
and that they appear on their face to comply with the requirements of such
Letter of Credit.
3.06. PARTICIPATIONS.
(a) Immediately upon issuance by one of the Issuing Banks of any
Letter of Credit for the account of Borrower in accordance with the
provisions set forth in this ARTICLE III, each Lender irrevocably and
unconditionally agrees that it shall be deemed to have purchased and
received from such Issuing Bank, without recourse or warranty, an undivided
interest in the amount of such Lender's Pro Rata Share in such Letter of
Credit (other than the fees earned with respect to such Letter of Credit
pursuant to SECTION 3.08(B)) and any security therefor or guaranty
pertaining thereto; PROVIDED, HOWEVER, that a letter of credit issued by an
Issuing Bank shall not be deemed to be a Letter of Credit for purposes of
this SECTION 3.06(A) if the Issuing Bank shall not have received the
confirmation from the Administrative Agent provided for in SECTION 3.04(A)
or shall have received written notice from the Administrative Agent or any
Lender on or before the Business Day immediately prior to the date of the
Issuing Bank's issuance of such letter of credit that one or more
conditions of this ARTICLE III are not satisfied and, in the event the
Issuing Bank receives such a notice, it shall have no further obligation to
issue any Letter of Credit until such notice is subsequently withdrawn or
it receives notice from the Administrative Agent that such conditions have
been waived in writing by the Requisite Lenders or otherwise have been
satisfied.
(b) If one of the Issuing Banks makes any payment under any Letter of
Credit and Borrower does not repay such amount to such Issuing Bank
pursuant to SECTION 3.05(A), 3.07 or 3.09, such Issuing Bank shall promptly
notify the Administrative Agent of such failure, and the Administrative
Agent shall, in turn, promptly notify each Lender of such failure, and each
Lender shall promptly and unconditionally pay to the Administrative Agent
for the account of such Issuing Bank the amount of such Lender's Pro Rata
Share of such payment, in Dollars and in immediately available funds, and
the Administrative Agent shall promptly pay such amount, and any other
amounts received by the Administrative Agent for such Issuing Bank's
account pursuant to this SECTION 3.06(B), to such Issuing Bank. If the
Administrative Agent so notifies any such Lender prior to 11:00 a.m. (New
York City time) on any Business Day of such failure, such Lender shall make
available to the Administrative Agent for the account of such Issuing Bank
its Pro Rata Share of the amount of such payment on such Business Day in
Dollars and in immediately available funds, and otherwise on the next
succeeding Business Day. If and to the extent such Lender shall not have so
made its Pro Rata Share of the amount of such payment available to the
Administrative Agent for the account of such Issuing Bank, such Lender
agrees to pay to the Administrative Agent for the account of such Issuing
Bank forthwith on demand such amount together with interest thereon, for
each day from the date such payment was first due until the date such
amount is paid to the Administrative Agent for the account of such Issuing
Bank, at the Federal Funds Effective
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Rate (as such term is defined in the definition of Alternate Base Rate) for
three (3) Business Days and then at the Alternate Base Rate. The failure of
any Lender to make available to the Administrative Agent for the account of
any Issuing Bank its Pro Rata Share of any such payment shall not relieve
any other Lender of its obligation hereunder to make available to the
Administrative Agent for the account of such Issuing Bank its Pro Rata
Share of any payment on the date such payment is to be made.
(c) Whenever one of the Issuing Banks receives a payment on account
of a Reimbursement Obligation, including any interest thereon, as to which
the Administrative Agent has previously received payments from the Lenders
for such account of the Issuing Bank pursuant to this SECTION 3.06, it
shall promptly pay to the Administrative Agent and the Administrative Agent
shall promptly pay to each Lender which has funded its participating
interest therein, in Dollars, an amount equal to such 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 11:00 a.m. (New York City time) on such
Business Day, and otherwise on the next succeeding Business Day together
with interest thereon at the Federal Funds Effective Rate (as such term is
defined in the definition of Alternate Base Rate) unless the Issuing Bank
certifies that it received such amount later than it could be invested
overnight.
(d) Promptly upon the request of any Lender, any Issuing Bank shall
furnish to such Lender copies of any documentation with respect to the
Letters of Credit as may reasonably be requested by such Lender.
(e) The obligations of a Lender to make payments to the
Administrative Agent for the account of one of the Issuing Banks with
respect to a Letter of Credit issued on behalf of the Borrower shall be
irrevocable, shall not be subject to any qualification or exception
whatsoever, and shall be honored in accordance with the terms and
conditions of this Agreement under all circumstances (subject to SECTION
3.02), including, without limitation, (i) any lack of validity or
enforceability of this Agreement or any of the other Loan Documents; (ii)
the existence of any claim, set-off, defense or other right which 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, any 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 Borrower and
the beneficiary named in any Letter of Credit); (iii) any draft,
certificate or any other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect (in the
absence of gross negligence or willful misconduct in connection therewith,
as determined by the final judgment of a court of competent jurisdiction,
on the part of the Issuing Bank); (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 any
Issuing Bank to make any reports required pursuant to SECTION 3.10; or (vi)
the occurrence of any Event of Default or Potential Event of Default.
3.07. PAYMENT OF REIMBURSEMENT OBLIGATIONS.
(a) Borrower irrevocably and unconditionally agrees to pay to each of
the Issuing Banks the amount of all Reimbursement Obligations, interest and
other amounts payable to any such Issuing Bank under or in connection with
any Letter of Credit issued on behalf of Borrower immediately when due,
irrespective of any and all events, including, without limitation, (i) any
lack of validity or enforceability of this Agreement or any of the other
Loan Documents; (ii) the existence of any claim, set-off, defense or other
right which 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, any
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 Borrower and the beneficiary named in any Letter of Credit); (iii)
any draft, certificate or any other document presented under any Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or
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inaccurate in any respect (in the absence of gross negligence or willful
misconduct in connection therewith, as determined by the final judgment of
a court of competent jurisdiction, on the part of the Issuing Bank); or
(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Loan Documents.
(b) In the event any payment by Borrower received by an Issuing Bank
with respect to any 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 the Issuing Bank in connection with any
receivership, liquidation or bankruptcy proceeding or otherwise, each
Lender which received such distribution shall, upon demand by the Issuing
Bank, contribute such Lender's Pro Rata Share of the amount set aside,
avoided or recovered together with interest at the rate required to be paid
by the Issuing Bank upon the amount required to be repaid by it.
3.08. COMPENSATION FOR LETTERS OF CREDIT.
(a) LENDERS' LETTER OF CREDIT FEES. Borrower shall pay, with respect
to each Letter of Credit, a Letter of Credit fee equal to one and
one-quarter of one percent (1.25%) per annum (computed based upon actual
days elapsed in a year of 360 days) of the maximum amount available to be
drawn under such Letter of Credit, provided, however, if and for so long as
the Applicable Eurodollar Rate Margin is increased to more than or reduced
to less than 1.25% per annum, then the letter of credit fee shall be
increased or reduced to the same per annum rate. Such fee shall be paid to
the Administrative Agent, for the account of the Lenders in proportion to
their respective Pro Rata Shares, in arrears, on a calendar quarterly
basis, on the last calendar day of each March, June, September and December
occurring after the Effective Date. Each of the Issuing Banks shall provide
the Borrower and the Administrative Agent on or before the last Business
Day of each March, June, September and December occurring after the
Effective Date a statement calculating the Letter of Credit fees payable
under this SECTION 3.08(A) for the quarter then ending.
(b) ISSUING BANK FEES. In addition to the fees under CLAUSE (A)
above, Borrower shall pay to each of the Issuing Banks, (i) with respect to
each Commercial Letter of Credit payable at such time as is agreed to
between the Borrower and the applicable Issuing Bank, the customary charges
of such Issuing Bank with respect thereto for commercial letters of credit
of similar type, (ii) with respect to each Standby Letter of Credit, such
fronting fee as shall have been agreed to (both with respect to amount and
timing) between such Issuing Bank and the Borrower and (iii) with respect
to all Letters of Credit, on demand, each Issuing Bank's customary
administration fees charged in connection with its issuance,
administration, transfer or amendment of or drawing under any Letter of
Credit. Such fees shall be paid directly to and shall be solely for the
account of the Issuing Banks.
3.09. INDEMNIFICATION; EXONERATION. (a) In addition to amounts payable
as elsewhere provided in this ARTICLE III, Borrower hereby agrees to protect,
indemnify, pay and save harmless the Administrative Agent, the Issuing Banks and
each Lender from and against any and all Liabilities and Costs which the
Administrative Agent, the Issuing Banks or any Lender may incur or be subject to
as a consequence, direct or indirect, of (i) the issuance of any Letter of
Credit other than, in the case of any Issuing Bank, as a result of its gross
negligence or willful misconduct, as determined by the final judgment of a court
of competent jurisdiction or (ii) the failure of such Issuing Bank 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 Governmental
Authority (all such acts or omissions herein called "GOVERNMENTAL ACTS").
(b) As among Borrower, the Lenders, the Issuing Banks and the
Administrative Agent, Borrower assumes all risks of the acts and omissions
of, or misuse of such Letter of Credit by, the beneficiary of any Letter of
Credit. In furtherance and not in limitation of the foregoing, subject to
the provisions of the Letter of Credit Applications and Letter of Credit
Reimbursement Agreements, the Issuing Banks, the Administrative Agent and
the Lenders shall not be responsible (in the absence of gross negligence or
willful misconduct in connection therewith, as determined by the final
judgment of a court of competent jurisdiction): (i) 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 the Letters of Credit, even if it should in fact prove to be in any or
all respects invalid, insufficient, inaccurate, fraudulent or forged;
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(ii) 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; (iii) 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; (iv) for
errors, omissions, interruptions or delays in transmission or delivery of
any messages, by mail, cable, telegraph, telex, or other similar form of
teletransmission or otherwise; (v) for errors in interpretation of
technical terms; (vi) 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; (vii) for the misapplication
by the beneficiary of a Letter of Credit of the proceeds of any drawing
under such Letter of Credit; and (viii) for any consequences arising from
causes beyond the control of the Administrative Agent, the Issuing Banks
and the Lenders including, without limitation, any Governmental Acts. None
of the above shall affect, impair, or prevent the vesting of any of the
Issuing Banks' rights or powers under this SECTION 3.09.
(c) In furtherance and extension and not in limitation of the
specific provisions hereinabove set forth, any action taken or omitted by
any Issuing Bank under or in connection with Letters of Credit issued on
behalf of the Borrower or the Borrower or any related certificates shall
not, in the absence of gross negligence or willful misconduct, as
determined by the final judgment of a court of competent jurisdiction, put
any Issuing Bank, the Administrative Agent or any Lender under any
resulting liability to Borrower or relieve Borrower of any of its
obligations hereunder to any such Person.
(d) Without prejudice to the survival of any other agreement of
Borrower hereunder, the agreements and obligations of Borrower contained in
this SECTION 3.09 shall survive the payment in full of principal and
interest hereunder, the termination of the Letters of Credit and the
termination of this Agreement.
3.10. REPORTING BY ISSUING BANKS. On or before the thirtieth (30th) day
following the end of each calendar month ending after the Effective Date, each
of the Issuing Banks shall provide the Administrative Agent and the
Administrative Agent shall provide each Lender with a written report describing,
as of the end of such month, the then aggregate outstanding face amount of each
Letter of Credit, whether such Letter of Credit is a Standby Letter of Credit or
Commercial Letter of Credit, the beneficiary of such Letter of Credit, and any
other additional information with respect thereto which the Administrative Agent
or any Lender reasonably requests. Together with each monthly report, each of
the Issuing Banks shall provide the Administrative Agent and the Administrative
Agent shall provide each Lender with a copy of each Letter of Credit issued
during the immediately preceding month and each Letter of Credit Application
and/or Letter of Credit Reimbursement Agreement executed in connection
therewith.
3.11. OUTSTANDING LETTERS OF CREDIT. Schedule II to the Assumption
Agreement contains a schedule of certain letters of credit issued for the
account of EIPC prior to the Effective Date by one of the Issuing Banks. From
and after the Effective Date (i) such letters of credit shall be deemed to be
Letters of Credit issued pursuant to this Article III, (ii) the outstanding face
amount of such Letters of Credit shall be included in the calculation of
Revolving Credit Availability and in the calculation of letter of credit fees
payable to the Lenders pursuant to SECTION 3.08(A) and (iii) all liabilities of
the Borrower with respect to such Letters of Credit shall constitute
Obligations.
ARTICLE IV
CONDITIONS TO LOANS AND LETTERS OF CREDIT
4.01. CONDITIONS PRECEDENT TO THE EFFECTIVE DATE. This Agreement shall
become effective on the date (the "EFFECTIVE DATE") when all of the following
conditions precedent shall have been satisfied:
(a) DOCUMENTS. The Administrative Agent and the Collateral Agent
shall have received on or before the Effective Date (i) this Agreement, the
Notes, the other Transaction Documents and all other agreements, documents
and instruments described in the List of Closing Documents attached hereto
as EXHIBIT 7 and made a part hereof, each duly executed where appropriate
and in form and substance satisfactory to the Administrative Agent and the
Collateral Agent and (ii) such additional documentation as the
Administrative Agent or the Collateral Agent may reasonably request.
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(b) PERFECTION OF LIENS. The Collateral Agent shall have received
(i) evidence that all additional and/or amended financing statements
relating to the Collateral have been filed and the Collateral Agent shall
be satisfied that arrangements for the filing and recording of all
modifications to the Mortgages have been made, (ii) title endorsements (in
form and substance acceptable to the Collateral Agent), (iii) certificates
representing capital stock constituting Collateral (together with duly
executed stock powers) and (iv) such other evidence (including, without
limitation, legal opinions from counsel to the Borrower), as the
Administrative Agent or the Collateral Agent may request, confirming that
the Collateral Agent's security interests in the Collateral for the benefit
of the Holders of Secured Obligations have been properly perfected and
constitute first and prior security interests subject only to Permitted
Existing Liens and Customary Permitted Liens. In addition, all title
charges, recording fees and filing taxes shall have been paid or adequate
provisions for the payment of such charges, fees and taxes shall have been
made.
(c) ENVIRONMENTAL COMPLIANCE. The Borrower shall have provided
documentation reasonably satisfactory to the Administrative Agent
demonstrating compliance with applicable Environmental Property Transfer
Acts.
(d) 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
or the issuance of Letters of Credit on or after the Effective Date or (ii)
impose or result in the imposition of a Material Adverse Effect.
(e) NO CHANGE IN CONDITION. No change in the business, assets,
management, operations, financial condition or prospects of the Borrower or
the Consolidated Borrower Group taken as a whole shall have occurred since
December 31, 1993, which change, in the judgment of the Lenders, will have
or is reasonably likely to have a Material Adverse Effect.
(f) 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 or the issuance of Letters of Credit.
(g) REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties contained in SECTION 5.01 and in any of the other Loan Documents
shall be true and correct in all material respects on and as of the
Effective Date.
(h) FEES AND EXPENSES PAID. There shall have been paid to the
Administrative Agent, for the accounts of the Lenders and the
Administrative Agent, as applicable, and to the Collateral Agent for its
own account, all fees due and payable on or before the Effective Date
(including, without limitation, all fees described in the Fee Letters), and
all expenses due and payable on or before the Effective Date.
(i) BORROWING BASE CERTIFICATE; PRO FORMA FINANCIAL STATEMENTS;
EXCESS AVAILABILITY. The Borrower shall have delivered to the
Administrative Agent a Borrowing Base Certificate and pro forma financial
statements for the Consolidated Borrower Group, and such certificate and
financial statements shall confirm that as of the Effective Date, Revolving
Credit Availability is at least $10,000,000.
(j) LEGAL MATTERS. All legal and regulatory matters shall be
reasonably satisfactory to the Administrative Agent and the Collateral
Agent.
(k) TAX SHARING AGREEMENT. The Tax Sharing Agreement shall have been
entered into by the parties thereto on terms satisfactory to the
Administrative Agent and the Collateral Agent.
(l) ORIGINAL CREDIT AGREEMENT. All accrued Original Obligations in
respect of fees and interest shall have been paid to the Effective Date,
and all other Original Obligations then due and payable shall have been
paid as of the Effective Date; no Event of Default or Potential Event of
Default (in each case, as defined in the Original Credit Agreement) shall
have occurred and be continuing under the Original Credit Agreement on the
Effective Date; and the Amended EIPC Agreement shall have become effective
in accordance with its terms on the Effective Date concurrently with the
effectiveness of this Agreement, superseding the Original Credit Agreement.
(m) PROCEEDS OF THE OFFERING. The Offering shall have been
consummated and the net proceeds thereof to the Borrower in the amount of
at least $60,000,000 shall have been received by the Borrower and paid to
EIPC.
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(n) NOTICE. The Borrower shall have given the Administrative Agent
five (5) Business Days' written notice of the date designated by the
Borrower to be the Effective Date, which shall not be later than November
30, 1994, unless extended by agreement of all of the Lenders; the
Administrative Agent shall have promptly notified each of the Lenders of
such designated date (which notice may be by telephone, confirmed in
writing); and the Administrative Agent shall not have received prior to the
Effective Date written notice from any Lender that one or more of the
conditions precedent to the effectiveness of this Agreement have not been
satisfied.
(o) SOLVENCY OPINION. If requested by the Administrative Agent and
the Collateral Agent, the Administrative Agent shall have received a
solvency opinion with respect to the Borrower satisfactory in form and
substance to the Administrative Agent and the Collateral Agent.
4.02. CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS OF CREDIT. The
obligation of each Lender to make any Loan requested to be made by it or to
convert or continue any Loan requested to be converted or continued on any date,
and of the Issuing Banks to issue any Letter of Credit on any date, is subject
to the following conditions precedent as of such date:
(a) NOTICE OF BORROWING. The Administrative Agent shall have
received in accordance with the provisions of SECTION 2.02(A), with respect
to any Revolving Loan, or SECTION 3.04(A), with respect to any Letter of
Credit, an original and duly executed Notice of Borrowing or, in accordance
with the provisions of SECTION 2.03, with respect to
conversion/continuation of any Loan, an original and duly executed Notice
of Conversion/Continuation.
(b) ADDITIONAL MATTERS. As of the Funding Date for any Loan or the
date of issuance of any Letter of Credit or as of the proposed date for
continuation/conversion, as applicable:
(i) REPRESENTATIONS AND WARRANTIES. All of the representations
and warranties of the Borrower contained in or repeated pursuant to
SECTION 5.02 and of the Borrower or its Subsidiaries contained in any
other Loan Document (other than representations and warranties which
expressly speak only as of a different date) shall be true and complete
in all respects on and as of such Funding Date as though made on and as
of such date both before and after taking into account the requested
Loans to be made and Letters of Credit to be issued.
(ii) 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 requested Loan or the issuance of the requested Letter of
Credit.
(iii) NO INJUNCTION. No law or regulation shall have been adopted,
no order, judgment or decree of any Governmental Authority shall have
been issued, and no litigation shall be pending or threatened (other
than as a result of any condition described in SECTION 2.08(D), 2.09 or
2.10), which in the reasonable judgment of the Requisite Lenders, would
enjoin, prohibit or restrain any Lender from making the requested Loan
or any Issuing Bank from issuing the requested Letter of Credit or as a
result of making any such Loan or issuing such Letter of Credit impose
or result in the imposition of any material adverse condition upon any
Lender or any Issuing Bank.
(iv) NO MATERIAL ADVERSE CHANGE. No event shall have occurred
after December 31, 1993 which, in the reasonable judgment of the
Requisite Lenders, has had or is reasonably likely to have a Material
Adverse Effect.
(v) NO FORFEITURE PROCEEDINGS. Neither the Borrower nor any of
its Subsidiaries shall have been named as a defendant in a criminal
indictment under the Racketeering Influenced and Corrupt Organizations
Act or any similar federal or state statute which provides for
forfeiture of assets as a potential criminal penalty unless such
proceeding shall not be adverse to the interests of the Lenders.
(vi) BORROWING BASE. The Borrower shall have confirmed to the
Administrative Agent in writing that since the delivery of the most
recent Borrowing Base Certificate delivered pursuant to SECTION 6.01(C)
and, after taking into account the requested Loan or Letter of Credit,
the Borrower has been and is, in its reasonable estimate, in compliance
with the borrowing restrictions formulated
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in this Agreement (including, without limitation, under SECTIONS
2.01(A), 2.05 and 3.02(B)) and the Administrative Agent shall have no
reason to believe such confirmation is not accurate.
The request by Borrower for any Loan made, or to be made, or any Letter of
Credit issued, or to be issued, on any Funding Date or delivery of any Notice of
Conversion/Continuation shall constitute a representation and warranty by
Borrower as of such Funding Date or as of such conversion/continuation date, as
applicable, that all the conditions contained in this SECTION 4.02 have been
satisfied or waived in writing pursuant to SECTION 12.07.
4.03. CONSENT TO ASSUMPTION AGREEMENT. Unless the Administrative Agent
shall have received from the Requisite Lenders the written notice referred to in
SECTION 4.01(N), each of the Lenders and the Issuing Banks shall be deemed to
have consented to the terms of the Assumption Agreement as if such Lender or
Issuing Bank were a party thereto.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
5.01. REPRESENTATIONS AND WARRANTIES ON THE EFFECTIVE DATE. To induce
each Lender, the Issuing Banks and the Administrative Agent to enter into this
Agreement and to make the Loans and to issue or participate in the Letters of
Credit, the Borrower hereby represents and warrants to each Lender, the Issuing
Banks, the Administrative Agent and the Collateral Agent that the following
statements are true and correct:
(a) ORGANIZATION; CORPORATE POWERS. The Borrower and each of its
Subsidiaries (i) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization, (ii)
is duly qualified to do business as a foreign corporation and is in good
standing under the laws of each jurisdiction in which the nature of its
business requires it to be so qualified, except those jurisdictions where
the failure to be in good standing or to so qualify has not had and will
not have a Material Adverse Effect, and (iii) has all requisite corporate
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 the Transaction Documents.
(b) AUTHORITY. (i) The Borrower and each of its Subsidiaries has
the requisite corporate power and authority to execute, deliver and perform
its obligations under each of the Transaction Documents executed by it, or
to be executed by it.
(ii) The execution, delivery and performance (or filing or
recording, as the case may be) of each of the Transaction Documents to
which it is party and the consummation of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on
the part of the Borrower and each of its Subsidiaries and no other
corporate proceedings on the part of any such Person are necessary to
consummate such transactions.
(iii) Each of the Transaction Documents to which it is a party has
been duly executed and delivered (or filed or recorded, as the case may
be) by the Borrower and each of its Subsidiaries and constitutes its
legal, valid and binding obligation, enforceable against it in
accordance with its terms (except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles), is in full force and effect (unless
terminated in accordance with the terms thereof) and no term or
condition thereof has been amended, modified or waived from the terms
and conditions contained therein without the prior written consent of
the Administrative Agent and the Requisite Lenders or, where so
required, the Supermajority Lenders or all of the Lenders, and the
Borrower and each of its Subsidiaries have performed and complied in all
material respects with all the material 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 thereof,
and no default by any such party exists thereunder.
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(c) SUBSIDIARIES. Neither the Borrower nor any of its Subsidiaries
has any Subsidiaries other than those described in SCHEDULE 5.01(C) and
those, if any, which are permitted by SECTION 8.03 to be created after the
Effective Date.
(d) NO CONFLICT. The execution, delivery and performance of each
Transaction Document to which it is a party by the Borrower and each of its
Subsidiaries and each of the transactions contemplated thereby do not and
will not (i) conflict with any contractual obligation of any such Person,
any liability resulting from which would have or be reasonably expected to
have a Material Adverse Effect, or (ii) conflict with or violate such
Person's Certificate or Articles of Incorporation or By-Laws or (iii)
except as set forth on SCHEDULE 5.01(D), conflict with, result in a breach
of or constitute (with or without notice or lapse of time or both) a
default under any Requirement of Law or contractual obligation of any such
Person, any liability resulting from which would have or be reasonably
expected to have a Material Adverse Effect, or under the Receivables
Agreements or the Indenture dated July 1, 1993, between Eagle Industries,
Inc. and Harris Trust and Savings Bank pursuant to which the Senior
Deferred Coupon Notes due 2003 were issued, or (iv) result in or require
the creation or imposition of any Lien whatsoever upon any of the
properties or assets of any such Person (other than Liens in favor of the
Collateral Agent, for the benefit of itself and the Holders of Secured
Obligations, arising pursuant to the Loan Documents or Liens permitted
pursuant to SECTION 8.02(B)), or (v) require any approval of stockholders
of any such Person, unless such approval has been obtained.
(e) GOVERNMENTAL CONSENTS. The execution, delivery and performance
of each Transaction Document to which it is a party, by the Borrower and
each of its Subsidiaries and the transactions contemplated thereby do not
and will not require any registration with, consent or approval of, or
notice to, or other action with or by, any Governmental Authority, except
filings, consents or notices which have been made, obtained or given.
(f) GOVERNMENTAL REGULATION. Neither the Borrower nor any of its
Subsidiaries is subject to regulation under the Public Utility Holdings
Company Act of 1935, the Federal Power Act, the Interstate Commerce Act,
the Investment Company Act of 1940 or any other statute or regulation of
any Governmental Authority such that its ability to incur indebtedness is
limited or its ability to consummate the transactions contemplated hereby
or by the other Transaction Documents is materially impaired.
(g) FINANCIAL POSITION. (i) As of the Effective Date, all quarterly
and annual financial statements of the Borrower or of the Consolidated
Borrower Group delivered to the Administrative Agent were prepared in
conformity with GAAP (except as otherwise noted therein) and fairly present
the financial position of the Borrower or the consolidated financial
position of the Consolidated Borrower Group, as the case may be, as at the
respective dates thereof and the results of operations and changes in cash
flows 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.
(ii) All quarterly and annual financial statements of the Borrower
or of the Consolidated Borrower Group delivered to the Administrative
Agent after the Effective Date will have been prepared in conformity
with GAAP (except as otherwise noted therein) and will fairly present
the financial position of the Borrower or the consolidated financial
position of the Consolidated Borrower Group as at the respective dates
thereof and the results of operations and changes in cash flows 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. Except as contemplated or disclosed in the
Transaction Documents, neither the Borrower nor any of its Subsidiaries
has any material obligations, material contingent liabilities requiring
disclosure under GAAP or Agreement Accounting Principles, as the case
may be or material liabilities for taxes, long term leases or material
or unusual forward or long term commitments which are not reflected in
such financial statements and the notes thereto.
(h) PRO FORMA FINANCIALS AND PROJECTIONS. As of the Effective Date,
the PRO FORMA financial statements of Consolidated Borrower Group provided
by the Borrower and set forth in that certain Confidential Information
Memorandum dated October 1994 to the Lenders (the "Bank Book") were
reasonable estimates of the PRO FORMA financial condition of the
Consolidated Borrower Group and the
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pro forma results of operations and changes in cash flows for the periods
covered thereby in all material respects. Except as contemplated or
disclosed in the Transaction Documents, as of the date of such PRO FORMA
financial statements, neither the Borrower nor any of its Subsidiaries had
any material (i) obligations, (ii) contingent liabilities or liabilities
for taxes, long-term leases or (iii) material or unusual forward or
long-term commitments which were not reflected in such PRO FORMA financial
statements or the notes thereto and requiring disclosure under GAAP or
Agreement Accounting Principles, as the case may be. As of the Effective
Date, the projections (and the assumptions made in preparing such
projections) concerning the Consolidated Borrower Group set forth in the
Bank Book reflected the Borrower's best estimate of the Consolidated
Borrower Group's future performance based upon the information available to
the Borrower at the time, and the assumptions and methodology used in the
projections were, in Borrower's judgment, reasonable.
(i) CAPITALIZATION.
(i) As of the Effective Date, SCHEDULE 5.01(I) sets forth the
number of shares and the relevant percentages of capital stock held by
each shareholder of the Borrower that holds in excess of 5% of the
Capital Stock of the Borrower of which the Borrower has knowledge.
(ii) There are outstanding no shares of any class of 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:
(A) the Borrower other than capital stock described on SCHEDULE
5.01(I) or pursuant to the Borrower's 1994 Stock Option and
Restricted Share Plan; or
(B) any Subsidiary of the Borrower other than the capital stock
held directly or indirectly by the Borrower and pledged to the
Collateral Agent for the benefit of itself and Holders of Secured
Obligations pursuant to the Pledge Agreements.
The outstanding capital stock of the Borrower and of each of its
Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable.
(j) LITIGATION; ADVERSE EFFECTS. (i) Except as set forth in
SCHEDULE 5.01(J), there is no action, suit, proceeding, investigation of
any Governmental Authority or arbitration, at law or in equity, or before
or by any Governmental Authority, pending, or, to the best knowledge of the
Borrower, threatened against the Borrower or any of its Subsidiaries or any
Property of any of them, which if adversely determined would be reasonably
expected to have a Material Adverse Effect.
(ii) Neither the Borrower nor any of its Subsidiaries is (A) in
violation of any applicable law which violation has or might reasonably
be expected to have a Material Adverse Effect, or (B) subject to or in
default with respect to any final judgment, writ, injunction, decree,
order, rule or regulation of any court or Governmental Authority which
has or is reasonably likely to have a Material Adverse Effect. Except as
set forth in SCHEDULE 5.01(J), there is no action, suit, proceeding or
investigation pending or, to the knowledge of the Borrower, threatened
in writing against or affecting the Borrower or any of its Subsidiaries
(1) which challenges the validity or the enforceability of any of the
Transaction Documents or (2) which will or would reasonably be expected
to result in any liability in the aggregate in the amount of greater
than $2,000,000 with respect to any such Person (in each case net of
applicable third-party insurance coverage other than retro-premium
insurance that determines retro-premiums solely on the basis of losses
of the insured person) or (3) which involves a claim 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 potential criminal penalty.
(k) NO MATERIAL ADVERSE CHANGE. There has occurred no event since
December 31, 1993 which has or is reasonably likely to have a Material
Adverse Effect.
(l) PAYMENT OF TAXES. All tax returns and reports of the Borrower
and each of its Subsidiaries required to be filed (including extensions)
have been timely filed, and all taxes, assessments, fees and
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other charges of Governmental Authorities thereupon and upon their
respective properties, assets, income and franchises which are shown on
such returns as being due and payable have been paid when due and payable,
except (i) taxes being contested in good faith by appropriate proceedings
and that are reserved against in accordance with Agreement Accounting
Principles, (ii) taxes which are not yet delinquent, (iii) taxes which are
payable in installments so long as paid before any penalty accrues with
respect thereto and (iv) other taxes, assessments, fees and other charges
of Governmental Authorities which do not exceed $500,000. On the Effective
Date, except as set forth in CLAUSE (IV) above or on SCHEDULE 5.01(L), and
after the Effective Date, except as set forth in CLAUSES (I) through (IV)
above or on SCHEDULE 5.01(L), the Borrower has no knowledge of any proposed
tax assessment against the Borrower or any of its Subsidiaries. All tax
assessments referred to in SCHEDULE 5.01(L) are being contested in good
faith by the Borrower or such Subsidiary or a settlement with respect to
any such assessment is being negotiated in good faith by such Person and
appropriate reserves have been established in accordance with GAAP or
Agreement Accounting Principles, as applicable. As of the Effective Date,
all payments due and payable by any party to the Tax Sharing Agreement have
been paid.
(m) MATERIAL ADVERSE AGREEMENTS. Neither the Borrower nor any of its
Subsidiaries is a party to or subject to any Contractual Obligation or
other restriction contained in its charter or By-laws which has or is
reasonably expected to have a Material Adverse Effect after giving effect
to the consummation of the transactions contemplated in the Transaction
Documents or otherwise.
(n) PERFORMANCE. Neither the Borrower nor any of its Subsidiaries 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 under any agreement or instrument the absence
or termination of which Contractual Obligations would be reasonably likely
to have a Material Adverse Effect, and no condition exists which, with the
giving of notice or the lapse of time, or both, would constitute a default
under such Contractual Obligation, except where the consequences, direct or
indirect, of such default or defaults, if any, would not have or are not
reasonably expected to have a Material Adverse Effect.
(o) 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 any Margin Stock.
(p) DISCLOSURE. Subject to changes in facts or conditions which are
required or permitted under this Agreement, the representations and
warranties of the Borrower and any of its Subsidiaries contained in the
Transaction Documents, and all certificates and other documents delivered
to the Administrative Agent in connection therewith, taken as a whole 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
materially misleading.
(q) REQUIREMENTS OF LAW. The Borrower and each of its Subsidiaries
is in compliance with all Requirements of Law (including, without
limitation, the Securities Act and the Securities Exchange Act, the
applicable rules and regulations thereunder, and state securities laws)
applicable to it and its business, where the failure to so comply would
have or would be reasonably expected to have a Material Adverse Effect.
(r) 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 approvals of Governmental Authorities, patents,
trademarks, service marks, trade names, copyrights, technology, know-how
and processes used in or necessary for the conduct of its business as
currently conducted which are material to the financial condition,
business, operations, assets and prospects of the Borrower, any such
Subsidiary or the Consolidated Borrower Group. The use of such permits and
other approvals of Governmental Authorities, patents, trademarks, service
marks, 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 the existence of which do
not have or are not reasonably expected to have a Material Adverse Effect.
The consummation of the transactions contemplated by the Transaction
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, service marks, trade names,
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copyrights, technology, know-how or processes by the Borrower or any of its
Subsidiaries in any manner which has or is reasonably likely to have a
Material Adverse Effect.
(s) ENVIRONMENTAL MATTERS. Except where the circumstances causing
the failure of any of the representations and warranties set forth in this
subsection (s) to be true and correct are not reasonably likely to result
in a Material Adverse Effect or except as disclosed in the documents
identified in SCHEDULE 5.01(S), (i) the operations of the Borrower and its
Subsidiaries comply in all respects with all applicable environmental,
health and safety Requirements of Law; (ii) the Borrower and each of its
Subsidiaries has obtained all environmental, health and safety Permits
necessary for its operations, all such Permits are in good standing and the
Borrower and each of its Subsidiaries is in compliance with all terms and
conditions of such Permits; (iii) (A) none of the Borrower or any of its
Subsidiaries, any of their presently owned Property or present operations
and (B) none of the Borrower's or any of its Subsidiaries' previously owned
Property or past operations is subject to any order from or agreement with
any Governmental Authority or private party or any judicial or
administrative proceeding or investigations respecting any environmental,
health or safety Requirements of Law or is the subject of any investigation
by any Governmental Authority evaluating the need for Remedial Action to
respond to a material Release or threatened Release of a Contaminant into
the environment, or is subject to any Remedial Action or other Liabilities
and Costs arising from the Release or threatened Release of a Contaminant
into the environment; (iv) none of the operations of the Borrower or any of
its Subsidiaries is subject to any judicial or administrative proceeding
alleging a violation of any environmental, health or safety Requirement of
Law; (v) neither the Borrower nor any of its Subsidiaries has sent or
directly arranged for the transport of any waste or Contaminant to any site
listed or proposed for listing on the federal national priorities list or
any state equivalent list of sites designated for Remedial Action; (vi) no
past or present property of the Borrower or any of its Subsidiaries is now
or has ever been a storage, treatment or disposal facility for hazardous
waste, as those terms are defined under 40 CFR Part 261 or any state
equivalent; (vii) neither the Borrower nor any of its Subsidiaries has
filed any notice under any applicable Requirement of Law reporting a
Release of a Contaminant into the environment; (viii) there is not now, nor
has there ever been, on or in the Property of the Borrower or any of its
Subsidiaries: (A) any underground storage tanks or surface impoundments or
(B) any polychlorinated biphenyls used in hydraulic oils, electrical
transformers or other equipment; (ix) neither the Borrower nor any of its
Subsidiaries has received any notice or claim to the effect that it is or
might be liable to any Person as a result of the Release or threatened
Release of a Contaminant into the environment, or as a result of exposure
to any Contaminant, which might result in liability in excess of workers
compensation; (x) no Environmental Lien has attached to any Property of the
Borrower or any of its Subsidiaries; or (xi) within the last eighteen
months, the Borrower has inspected its Property and the Property of its
Subsidiaries and all asbestos containing material, if any, which is on or
part of such Property (excluding any raw materials which are used in the
manufacture of products or products themselves) is in good repair according
to the current standards and practices governing such material, and its
presence or condition does not violate any currently applicable or proposed
Requirement of Law; and (xii) none of the products which the Borrower or
any of its Subsidiaries manufactures, distributes or sells, or ever has
manufactured, distributed or sold, contains asbestos material.
(t) EMPLOYEE BENEFIT MATTERS. Neither the Borrower nor any ERISA
Affiliate maintains or contributes to any Benefit Plan or Multiemployer
Plan other than those listed on SCHEDULE 5.01(T). Each Plan which is
intended to be qualified under Section 401(a) of the IRC as currently in
effect has been determined by the IRS to be so qualified (or will be
submitted to the IRS for a determination as to its qualified status within
the applicable remedial amendment period for such Plan), and each trust
related to any such Plan has been determined to be exempt from Federal
income tax under Section 501(a) of the IRC as currently in effect. Except
as disclosed in SCHEDULE 5.01(T), neither the Borrower nor any ERISA
Affiliate maintains or contributes to any employee welfare benefit plan
within the meaning of Section 3(1) of ERISA which provides benefits to
employees after termination of employment other than as required by Part 6
of Title I of ERISA. The Borrower and all of its ERISA Affiliates are in
compliance in all material respects with all of the responsibilities,
obligations or duties imposed on them by ERISA or regulations promulgated
thereunder with respect to all Plans. No Benefit Plan has incurred any
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accumulated funding deficiency (as defined in Sections 302(a)(2) of ERISA
and 412(a) of the IRC) whether or not waived which has had or is reasonably
likely to have a Material Adverse Effect. Neither the Borrower nor any
ERISA Affiliate or any fiduciary of any Plan which is not a Multiemployer
Plan (i) has engaged in a nonexempt prohibited transaction described in
Section 406 of ERISA or 4975 of the IRC or (ii) has taken or failed to take
any action which would constitute or result in a Termination Event. Except
as disclosed on SCHEDULE 5.01(T), neither the Borrower nor any ERISA
Affiliate has any potential liability under Section 4063, 4064, 4069, 4204
or 4212(c) of ERISA which has had or is reasonably likely to have a
Material Adverse Effect. Neither the Borrower nor any ERISA Affiliate has
incurred any liability to the PBGC which remains outstanding other than the
payment of premiums, and there are no premium payments which have become
due which are unpaid. Schedule B to the most recent annual report filed
with the IRS with respect to each Benefit Plan and furnished to the
Administrative Agent is complete and accurate. Since the date of each such
Schedule B, there has been no material adverse change in the funding status
or financial condition of the Benefit Plan relating to such Schedule B.
Neither the Borrower nor any ERISA Affiliate has (i) failed to make a
required contribution or payment to a Multiemployer Plan or (ii) made a
complete or partial withdrawal under Section 4203 or 4205 of ERISA from a
Multiemployer Plan in either case which has had or is reasonably likely to
have a Material Adverse Effect. Neither the Borrower nor any ERISA
Affiliate has failed to make a required installment or any other required
payment under Section 412 of the IRC on or before the due date for such
installment or other payment. Neither the Borrower nor any ERISA Affiliate
is required to provide security to a Benefit Plan under Section 401(a)(29)
of the IRC due to a Plan amendment that results in an increase in current
liability for the plan year. Neither the Borrower nor any ERISA Affiliate
has by reason of the transactions contemplated hereby any obligation to
make any payment to any employee pursuant to any Plan or existing contract
or arrangement.
(u) SOLVENCY. Each of the Borrower, individually, and the
Consolidated Borrower Group, considered as one enterprise, is Solvent after
giving effect to the transactions contemplated by this Agreement and the
other Transaction Documents and the payment and accrual of all Transaction
Costs with respect to any of the foregoing.
(v) ASSETS AND PROPERTIES. The Borrower and each of its Subsidiaries
has good title to all of the assets (tangible and intangible) owned by it,
except for imperfections of title (including Liens to the extent permitted
under SECTION 8.02(B)) which in the aggregate do not have a Material
Adverse Effect; and all such assets are free and clear of all Liens, except
as otherwise specifically permitted by the terms and provisions of this
Agreement and the other Loan Documents.
(w) JOINT VENTURE; PARTNERSHIP. Except as set forth in SCHEDULE
5.01(W), neither the Borrower nor any of its Subsidiaries is engaged in any
joint venture or partnership with any other Person.
(x) LABOR MATTERS. Except as listed on SCHEDULE 5.01(X), there are
no collective bargaining agreements, other labor agreements or
Multiemployer Plans covering any of the employees of the Borrower or any of
its Subsidiaries. No attempt to organize the employees of the Borrower or
any of its Subsidiaries, and no labor disputes, strikes or walkouts
affecting the operations of the Borrower or any of its Subsidiaries, is
pending, or, to the Borrower's knowledge, threatened, planned or
contemplated which has had or is reasonably likely to have a Material
Adverse Effect.
(y) NO DEFAULT. No Potential Event of Default or Event of Default
exists.
(z) RESTRICTED JUNIOR PAYMENTS. On or after the Effective Date,
neither the Borrower nor any Subsidiary of the 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 to the extent
permitted pursuant to SECTION 8.05.
5.02. SUBSEQUENT FUNDING REPRESENTATIONS AND WARRANTIES. To induce each
Lender, each of the Issuing Banks, the Administrative Agent and the Collateral
Agent to enter into this Agreement and to make the Loans and to issue or
participate in Letters of Credit, the Borrower hereby represents and warrants to
each Lender, each Issuing Bank, the Administrative Agent and the Collateral
Agent that the statements set forth in SECTION 5.01 (except to the extent that
such statements expressly are made only as of the Effective Date), are
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true, correct and complete in all material respects on and as of the Funding
Date in respect of each Borrowing and the issuance of each Letter of Credit
after the Effective Date and on and as of the date any Notice of
Continuation/Conversion is delivered to the Administrative Agent, except that
the representations and warranties need not be true and correct to the extent
that changes in the facts and conditions on which such representations and
warranties are based are required or permitted under this Agreement or any Loan
Document.
ARTICLE VI
REPORTING COVENANTS
The Borrower covenants and agrees that, on and after the Effective Date and
so long as the Borrower shall have any outstanding Agreement Obligations or any
Lender shall have any Commitment hereunder or any Letter of Credit remains
outstanding:
6.01. FINANCIAL STATEMENTS. The Borrower shall maintain or cause to be
maintained a system of accounting established and administered in accordance
with sound business practices and consistent with past practice to permit
preparation of financial statements in conformity with GAAP, and, if required by
the terms of this Agreement in conformity with Agreement Accounting Principles,
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:
(a) ANNUAL REPORTS. As soon as practicable, and in any event within
one hundred and five (105) days after the end of each Fiscal Year on a
consolidated basis and on a consolidating basis for the Consolidated
Borrower Group, annual financial statements consisting of a balance sheet,
income statement and cash flow statement, setting forth in comparative form
in each case the consolidated figures for the corresponding periods of the
previous Fiscal Year all in reasonable detail, and accompanied, in the case
of such consolidated financial statements, by an opinion (unqualified as to
scope or going concern and which is not adverse and does not contain any
disclaimer) thereon of independent certified public accountants of
recognized national standing and acceptable to the Administrative Agent,
which report shall state that such financial statements present fairly the
financial position of the Persons covered thereby as at the dates indicated
and the results of their operations and cash flow for the periods indicated
in conformity with GAAP or Agreement Accounting Principles, as applicable,
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 such firm's audit has been conducted in accordance with
generally accepted auditing standards; provided, however, such opinion
shall only be required as to Fiscal Years commencing with the Fiscal Year
beginning January 1, 1994.
(b) QUARTERLY REPORTS.
As soon as practicable, and in any event within fifty (50) days after
the end of each of the Borrower's fiscal quarters, on a consolidated basis
and on a consolidating basis for the Consolidated Borrower Group as to the
most recent fiscal quarter and the year to date, each of the following:
(A) a balance sheet as of the end of such fiscal quarter, and as
of the end of the previous Fiscal Year;
(B) an income statement for such fiscal quarter and for the period
from the beginning of the current Fiscal Year to the end of such fiscal
quarter, setting forth in each case in comparative form and in
reasonable detail the figures for the corresponding periods of the
previous Fiscal Year and in the projected financial statements delivered
pursuant to clause (d) below; and
(C) a cash flow statement for the period from the beginning of the
current Fiscal Year to the end of such fiscal quarter, setting forth in
each case in comparative form and in reasonable detail the figures for
the corresponding period of the previous Fiscal Year;
all prepared by the Borrower, together with a certification by the chief
financial officer, treasurer or controller of Borrower that they fairly
represent the financial condition of the Persons covered thereby as at the
dates indicated in accordance with GAAP or Agreement Accounting Principles,
as applicable, subject to changes resulting from audit and normal year-end
adjustments.
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(c) BORROWING BASE REPORT. As soon as practicable, and in any event
within twenty (20) days after the end of each fiscal month, a Borrowing
Base Certificate as of the end of such fiscal month.
(d) BUDGET AND BUSINESS PLAN. Promptly upon completion, but in any
event not later than forty-five (45) days after the end of each Fiscal
Year, a copy of the operating budget and projections by the Borrower of the
income statement, balance sheet and cash flow of the Consolidated Borrower
Group, taken as a whole, for the next succeeding fiscal year of the
Consolidated Borrower Group, all in form customarily prepared by the
Borrower's management, and promptly after preparation of any commentary on
any such budget or projected financial statements, a copy of such
commentary, such operating budget and projected financial statements to be
accompanied by a certificate of the chief financial officer, treasurer or
controller of Borrower, to the effect that such operating budget and
projected financial statements have been prepared on the basis of sound
financial planning practice and that such officer has no reason to believe
they are incorrect or misleading in any material respect.
(e) COMPLIANCE CERTIFICATE. Together with each delivery of (i) the
financial statements pursuant to SUBSECTIONS (A) AND (B) above, (A) an
Officers' Certificate of the Borrower stating that the signers have
reviewed the terms of this Agreement and the Loan Documents, and have made,
or caused to be made under their supervision, a review in reasonable detail
of the transactions and condition of Borrower and its Subsidiaries 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 the signers do not have knowledge of the
existence as at the date of the 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 has taken, is
taking and proposes to take with respect thereto; and (B) a Compliance
Certificate (1) demonstrating in reasonable detail compliance during and at
the end of such accounting periods with the provisions set forth in
SECTIONS 2.05, 8.01, 8.03, 8.04, 8.05 and 8.11 and ARTICLE IX and (2) in
the case of the financial statements delivered pursuant to SUBSECTION (A)
or SUBSECTION (B) above, stating that such financial statements present
fairly the financial position of the Consolidated Borrower Group, as at the
dates indicated and the results of their operations and changes in their
cash flow for the periods indicated in conformity with GAAP or Agreement
Accounting Principles, as applicable (except as otherwise noted therein),
consistently applied, and (ii) the financial statements pursuant to
SUBSECTION (A) above, a written discussion and analysis by the management
of the Borrower of such financial statements.
(f) ACCOUNTANTS' COMPLIANCE CERTIFICATE. Simultaneously with the
delivery of the financial statements referred to in SUBSECTION (A) above, a
statement of the firm of independent certified public accountants which
reported on such financial statements whether anything has come to their
attention to cause them to believe that there existed on the date of such
statements any Event of Default or Potential Event of Default under ARTICLE
IX hereof.
(g) REPORT OF MATERIAL EVENTS. Promptly upon the Borrower obtaining
knowledge (A) of any condition or event which constitutes an Event of
Default or Potential Event of Default, or (B) of any condition or event
which has or is reasonably likely to have a Material Adverse Effect, an
Officer's Certificate specifying the nature and period of existence of any
such condition or event and what action the Borrower has taken, is taking
and proposes to take with respect thereto.
(h) NOTICE OF CLAIMS AND PROCEEDINGS. (i) Promptly after learning
thereof, notice 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 Property of such
Person) involving claims in excess of $2,000,000 with respect to any such
Person or any Property of such Person valued in excess of $5,000,000 except
where the same is fully covered (other than any applicable deductible) by
insurance (other than insurance in the nature of retro-premium insurance or
other self insurance programs) and of any material adverse change in any
existing action, suit, proceeding, governmental investigation or
arbitration; and (ii) promptly upon learning thereof, notice of any
investigation or proceeding before or by any Governmental Authority, the
effect of which might limit, prohibit or restrict materially the manner in
which the Borrower or any of its Subsidiaries currently conducts its
business or
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to declare any substance contained in the products manufactured or
distributed by it to be dangerous, if such declaration has or is reasonably
likely to have a Material Adverse Effect.
(i) ERISA MATTERS.
(i) As soon as possible, and in any event within fifteen (15)
Business Days after the Borrower or any ERISA Affiliate knows or has
reason to know that a Termination Event has occurred, a written
statement of the chief financial officer of the Borrower describing such
Termination Event and the action, if any, which the Borrower or such
ERISA Affiliate has taken, is taking or proposes to take with respect
thereto, and when known, any action taken or threatened by the IRS, DOL
or PBGC with respect thereto;
(ii) As soon as possible, and in any event within fifteen (15)
Business Days, after the Borrower or any ERISA Affiliate knows or has
reason to know that a prohibited transaction (as defined in Section 406
of ERISA and Section 4975 of the IRC) involving the Borrower or any
ERISA Affiliate has occurred, a statement of the chief financial officer
of the Borrower describing such transaction and the action which the
Borrower or such ERISA Affiliate has taken, is taking or proposes to
take with respect thereto;
(iii) Within fifteen (15) Business Days after receipt by the
Borrower or any ERISA Affiliate of a written request from the
Administrative Agent (which shall make such request at the request of
any Lender), a copy of each annual report (Form 5500 series), including
Schedule B thereto, filed after the Effective Date with respect to each
Benefit Plan;
(iv) Within fifteen (15) Business Days after the filing thereof
with the IRS, a copy of each funding waiver request filed with respect
to any Benefit Plan and within fifteen (15) Business Days after receipt,
a copy of any communications received by the Borrower or any ERISA
Affiliate with respect to such request;
(v) Within fifteen (15) Business Days after receipt by the
Borrower or any ERISA Affiliate of a written request from the
Administrative Agent (which shall make such request at the request of
any Lender), a copy of each actuarial report for any Benefit Plan or
Multiemployer Plan and each annual report for any Multiemployer Plan;
PROVIDED THAT neither the Borrower nor any ERISA Affiliate shall have an
obligation to provide a copy of any actuarial report or annual report
for any Multiemployer Plan if it is unable to obtain such documents
after good faith efforts to do so;
(vi) Within fifteen (15) Business Days after the occurrence
thereof, notification of any increases in the benefits of any existing
Benefit Plan or the establishment of any new Plan or the commencement of
contributions to any Multiemployer Plan to which the Borrower or any
ERISA Affiliate was not previously contributing;
(vii) Within fifteen (15) Business Days after receipt by the
Borrower or an ERISA Affiliate of notice of the PBGC's intention to
terminate a Benefit Plan or to have a trustee appointed to administer a
Benefit Plan, a copy of each such notice;
(viii) Within fifteen (15) Business Days after receipt by the
Borrower or any ERISA Affiliate of any unfavorable determination letter
from the IRS regarding the qualification of a Plan under Section 401(a)
of the IRC, a copy of such letter;
(ix) Within fifteen (15) Business Days after receipt by the
Borrower or an ERISA Affiliate of a notice from a Multiemployer Plan
regarding the imposition of withdrawal liability, copies of each such
notice;
(x) Within fifteen (15) Business Days after the failure by the
Borrower or any ERISA Affiliate to make a required installment or any
other payment required under Section 412 of the IRC on or before the due
date for such installment or payment, a notification of such failure;
and
(xi) Within fifteen (15) Business Days after the Borrower or any
ERISA Affiliate knows or has reason to know (A) a Multiemployer Plan has
been terminated, (B) the administrator or plan sponsor of a
Multiemployer Plan intends to terminate a Multiemployer Plan, or (C) the
PBGC has
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instituted or will institute proceedings under Section 4042 of ERISA to
terminate a Multiemployer Plan, a notification of such information.
For purposes of this SECTION 6.01(I), the Borrower and any ERISA Affiliate
shall be deemed to know all facts known by the administrator of any Plan of
which the Borrower or any ERISA Affiliate is the plan sponsor.
(j) OTHER INFORMATION. Such other information respecting the
financial condition of the Borrower or its business, operations, assets,
performance or prospects as the Administrative Agent, the Collateral Agent
or any Lender may, from time to time, reasonably request including, without
limitation, financial projections, business plans and (following written
notice to Borrower) any information such Person's accountants may have with
respect to such Person's financial condition, its business, operations,
assets, performance and prospects. The Administrative Agent and the Lenders
shall treat any non-public information so obtained as confidential.
(k) PUBLICLY DISTRIBUTED INFORMATION. On a timely basis, copies of
all financial statements, reports and notices, sent or made available
generally by the Borrower to the holders of its publicly-held securities,
if any, or filed with the Commission, and of all press releases made
available generally by the Borrower to the public, if any, concerning
material developments in the business of the Borrower.
(l) PROPERTY DAMAGE OR CONDEMNATION. Promptly after the occurrence
thereof, written notification (or telephonic notice promptly confirmed in
writing) of and a description of any Property of the Borrower or any of its
Subsidiaries with an aggregate value in excess of $1,000,000 damaged, lost
or taken and the anticipated amount of any insurance or condemnation
proceeds in connection therewith.
6.02. ENVIRONMENTAL NOTICES. The Borrower shall notify the Administrative
Agent in writing, promptly upon the Borrower's learning thereof, of any:
(a) Notice or claim to the effect that the Borrower or any of its
Subsidiaries is or may be liable to any Person as a result of the Release
or threatened Release of any Contaminant into the environment;
(b) Notice that the Borrower or any of its Subsidiaries is subject to
investigation by any Governmental Authority evaluating whether any Remedial
Action is needed to respond to the Release or threatened Release of any
Contaminant into the environment;
(c) Notice that any Property of the Borrower or any of its
Subsidiaries is subject to an Environmental Lien;
(d) Notice of violation to the Borrower or any of its Subsidiaries or
awareness by the Borrower or any of its Subsidiaries of a condition which
might reasonably be expected to result in a notice of violation of any
environmental, health or safety Requirement of Law which has or could have
a Material Adverse Effect;
(e) Commencement or threat of any judicial or administrative
proceeding alleging a violation by the Borrower or any of its Subsidiaries
of any environmental, health or safety Requirement of Law which, if
adversely determined, has or could have a Material Adverse Effect; or
(f) Any proposed acquisition of stock, assets, real estate, or
leasing of property, or any other action by the Borrower or any of its
Subsidiaries that is reasonably likely to subject the Borrower or any such
Subsidiary to environmental, health or safety Liabilities and Costs in
excess of $250,000.
ARTICLE VII
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that, on and after the Effective Date and
so long as the Borrower shall have any outstanding Agreement Obligations or any
Lender shall have any Commitment hereunder or any Letter of Credit remains
outstanding:
7.01. 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 in full force and effect its rights and franchises. The
Borrower shall promptly provide the Administrative Agent and the Collateral
Agent with
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a complete list of its Subsidiaries upon the occurrence of any change in the
list set forth on SCHEDULE 5.01(C) hereto.
7.02. CORPORATE POWERS, ETC. The Borrower shall, and shall cause each of
its Subsidiaries to, qualify and remain qualified to do business in each
jurisdiction in which the nature of its business requires it to be so qualified,
except in those jurisdictions where the failure to so qualify does not have and
is not reasonably likely to have a Material Adverse Effect.
7.03. COMPLIANCE WITH LAWS. The Borrower shall, and shall cause each of
its Subsidiaries to, comply with all Requirements of Law, and all Contractual
Obligations affecting it or its business, properties, assets or operations,
except where the failure so to comply does not have and is not reasonably likely
to have a Material Adverse Effect.
7.04. PAYMENT OF TAXES AND CLAIMS. 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 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 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 its properties or assets, prior to
the time when any penalty or fine shall be incurred with respect thereto;
provided that no such taxes, assessments and governmental charges referred to in
CLAUSE (A) above or claims referred to in CLAUSE (B) above need be paid if being
contested 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 therefor.
7.05. MAINTENANCE OF PROPERTIES; INSURANCE. The Borrower shall, and shall
cause each of the Borrower Subsidiaries to, maintain or cause to be maintained
in good repair, working order and condition, excepting ordinary wear and tear
and damage, due to casualty or condemnation, all Property material to its
operations (which shall in any event include each parcel of real property
subject to any Mortgage) and will make or cause to be made all appropriate
repairs, renewals and replacements thereof. The Borrower shall, and shall cause
each of the Borrower Subsidiaries to, maintain with financially sound insurance
companies the insurance policies and programs, including self-insurance
retention levels, listed on SCHEDULE 7.05 hereto (or substantially similar
programs or policies and amounts or other programs, policies and amounts)
insuring all Property and other assets material to the operations of Borrower
and the Borrower Subsidiaries (which shall in any event include each parcel of
real property subject to any Mortgage) against loss or damage by fire, theft,
burglary, pilferage and loss in transit and business interruption, together with
such other hazards as are reasonably consistent with prudent industry practice,
and maintain liability insurance consistent with prudent industry practice with
financially sound insurance companies. Not later than thirty (30) days after the
renewal, replacement or material modification of any policy or program, the
Borrower shall deliver or cause to be delivered to the Collateral Agent (which
the Collateral Agent shall promptly distribute to each Lender) a detailed
schedule setting forth for each such policy or program: (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, and (d) the policy number of
such policy. All casualty and business interruption insurance covering the
Borrower or any Subsidiary of the Borrower or any Property of the Borrower or
any Subsidiary of the Borrower shall contain an endorsement in the form of
EXHIBIT 8.
7.06. 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 or the
Collateral Agent to visit and inspect any of its properties, including financial
and accounting records, and to make copies and take extracts therefrom, and to
discuss its affairs, finances and accounts with its officers, employees,
representatives, agents or independent certified public accountants, all upon
reasonable notice and at such reasonable time and as often as may be reasonably
requested. Each such reasonable visitation and inspection made by or on behalf
of the Administrative Agent or the Collateral Agent shall be at the Borrower's
expense.
7.07. LABOR MATTERS. The Borrower shall notify the Administrative Agent,
in writing, promptly, but in any event within two (2) Business Days after
learning thereof, of any material labor dispute to which it or any of its
Subsidiaries may become a party and any strikes or walkouts relating to any of
its or their facilities.
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7.08. MAINTENANCE OF PERMITS. The Borrower shall obtain and maintain, and
shall cause each of its Subsidiaries to obtain and maintain, in full force and
effect all licenses, franchises, Permits or other rights necessary for the
operation of its business, except where the failure to obtain or maintain such
licenses, franchises, Permits or rights does not have and is not reasonably
likely to have a Material Adverse Effect.
7.09. EMPLOYEE BENEFIT MATTERS. The Borrower shall establish, maintain
and operate, and cause each of its Subsidiaries to exercise their best efforts
to cause other ERISA Affiliates to establish, maintain and operate, all Plans in
all material respects in compliance with the applicable provisions of ERISA, the
IRC, and all other applicable laws, and the regulations and interpretations
thereunder, and the respective requirements of the governing documents for such
Plans.
7.10. FORMATION OF SUBSIDIARIES. (a) The Borrower or any of its
Subsidiaries may form additional Subsidiaries organized as corporations under
the laws of one of the states of the United States provided each of the
following conditions precedent is met in connection therewith:
(i) such Subsidiary shall have executed and delivered a Subsidiary
Guaranty, a Subsidiary Security Agreement, and if requested by the
Collateral Agent, an Intellectual Property Agreement;
(ii) such Subsidiary shall have executed and become a party to the
Contribution Agreement;
(iii) to the extent such Subsidiary has an interest of record in
real property, such Subsidiary shall execute and deliver such Mortgages
in connection therewith as shall be requested by the Collateral Agent
(with SCHEDULE 1.01-B being automatically amended as of the execution
thereof);
(iv) all financing statements and Mortgages relating to the
Collateral of such Subsidiary shall have been filed or recorded and the
Collateral Agent shall have received in form and substance reasonably
satisfactory to the Collateral Agent, such assurances, including,
without limitation, insurance policies, as the Collateral Agent may deem
appropriate to establish such Subsidiary's title, the due creation,
perfection and priority of the Collateral Agent's Liens for the benefit
of itself and the Holders of Secured Obligations on such Collateral and
the absence of any Liens which are not specifically permitted hereunder
(with SCHEDULE 1.01-C being automatically amended to reflect any
Permitted Existing Liens on such proposed Subsidiary's assets);
(v) the Borrower shall have executed or shall have caused its
appropriate Subsidiary to execute a Pledge Agreement in respect of all
of the stock of such Subsidiary;
(vi) the Collateral Agent shall have received an opinion of
counsel, in form and substance reasonably satisfactory to the Collateral
Agent, covering such matters relating to the proposed Subsidiary and the
Collateral Documents executed and delivered to the Collateral Agent
pursuant to this SECTION 7.10 as the Collateral Agent deems necessary;
(vii) the Administrative Agent shall have received a compliance
certificate from the chief financial officer, treasurer or controller of
the Borrower certifying that after the formation of such Subsidiary, no
Event of Default or Potential Event of Default exists; and
(viii) the Lenders shall have received such other documents,
instruments or agreements as are reasonably requested by the
Administrative Agent, the Collateral Agent or the Requisite Lenders in
order to ensure that the documentation with respect to such Subsidiary
is substantially the same as that received with respect to the
Subsidiaries of the Borrower existing on the Effective Date.
(b) The Borrower or any of its Subsidiaries may form additional
Subsidiaries organized under the laws of jurisdictions outside of the
United States, provided each of the following conditions precedent is met
in connection therewith:
(i) the majority of the outstanding shares of capital stock of
each such Subsidiary shall be owned directly or indirectly by the
Borrower or any of its Subsidiaries,
(ii) immediately following the formation of each such Subsidiary,
(A) 65% of the shares (or, if the Borrower owns directly or
indirectly less than 65% of such shares, all of the shares owned
directly or indirectly by the Borrower) of such Subsidiary
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shall be pledged to the Collateral Agent, for the ratable benefit of
the Holders of Secured Obligations pursuant to an amendment to the
Borrower's or the owning Subsidiary's Pledge Agreement in form and
substance reasonably satisfactory to the Administrative Agent, and
(B) the Borrower shall deliver to the Administrative Agent such
opinions of counsel with respect to, and copies of the Boards of
Directors resolutions authorizing, the execution, delivery and
performance of the agreements described in clause (A) immediately
preceding as the Administrative Agent may reasonably request, and
(iii) the aggregate investment by the Borrower in all such
Subsidiaries pursuant to this SECTION 7.10(B) shall not exceed the limit
set forth in SECTION 8.03(IV).
7.11. COLLATERAL AUDIT. The Borrower shall permit an independent auditor
satisfactory to the Administrative Agent to conduct, once each Fiscal Year, at
the request of the Administrative Agent, the Collateral Agent or the Requisite
Lenders, a review of the accounts receivable, inventory and fixed assets of the
Borrower and its Subsidiaries and will pay the fees and disbursements of such
auditor in connection therewith. Such reviews may include verification of
accounts receivable, a physical inventory and valuations of such inventory, all
to the extent included in the Borrowing Base as reasonably determined by the
Administrative Agent and the Collateral Agent in consultation with the Borrower.
7.12. LIQUIDITY. The Borrower shall maintain at all times, and shall
cause each of its Subsidiaries to maintain at all times, sufficient liquidity
for working capital purposes, including, without limitation, financing for or
liquidity to support the accounts receivable of the Borrower and its
Subsidiaries.
7.13. FUTURE LIENS ON REAL PROPERTY IN FAVOR OF THE COLLATERAL AGENT. The
Borrower shall cause each of the Guarantors to execute and deliver to the
Collateral Agent, immediately upon the acquisition or leasing of any real
property after the Effective Date, a mortgage, deed of trust, collateral
assignment or other appropriate instrument evidencing a Lien upon any such
acquired property, lease or interest, the same to be in form and substance
substantially the same as the Mortgages executed and delivered on or prior to
the Effective Date, to be subject only to such Liens as otherwise shall be
permitted by this Agreement and in all respects to be reasonably acceptable to
the Collateral Agent. The foregoing provision shall apply to the leasing of any
real property only if either (i) the term of such lease (without regard to any
extension thereof at then current market rent) is more than five years or (ii)
such lease has a material value by reason of a purchase option, below-market
rent or otherwise.
ARTICLE VIII
NEGATIVE COVENANTS
The Borrower covenants and agrees that, on and after the Effective Date and
so long as the Borrower shall have any outstanding Agreement Obligations or any
Lender shall have any Commitment hereunder or any Letter of Credit remains
outstanding:
8.01. 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:
(i) the Obligations;
(ii) the Existing Indebtedness;
(iii) Indebtedness in respect of Accommodation Obligations permitted
by SECTION 8.04;
(iv) Indebtedness incurred by any Subsidiary of the Borrower with
respect to which the Borrower or any other Subsidiary of the Borrower is
the obligee;
(v) Indebtedness incurred by the Borrower with respect to which any
Subsidiary of the Borrower is the obligee;
(vi) net obligations in respect of Hedging Contracts;
(vii) Indebtedness incurred by the Borrower or any of its Subsidiaries
in connection with the issuance of letters of credit (including Letters of
Credit but excluding other letters of credit fully secured
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by cash collateral and letters of credit with respect to which the
reimbursement obligation is fully supported by a Letter of Credit) for
which such Person is the account party in an aggregate amount (for all such
Persons) of up to $25,000,000 at any one time;
(viii) other Indebtedness of the Borrower and its Subsidiaries not
exceeding in the aggregate $25,000,000 at any one time outstanding;
(ix) Indebtedness with respect to Capital Leases not in excess of
$10,000,000 at any one time; and
(x) any refinancing of the Indebtedness described in clauses (i)
through (viii) of this SECTION 8.01 provided that any such refinancing is
on market terms;
PROVIDED, HOWEVER, in each case after taking such Indebtedness into account
the Consolidated Borrower Group is in full compliance with the provisions
of ARTICLE IX hereof.
Any additional Indebtedness (other than Indebtedness already permitted
pursuant to this SECTION 8.01) consented to by the Requisite Lenders shall be on
terms which shall include without limitation that the applicable interest rate
shall be at a market rate, covenants shall be no more restrictive than those
contained in this Agreement, such Indebtedness shall be unsecured, no principal
payments, sinking fund or similar payments shall be scheduled in the case of
subordinated indebtedness prior to six months after the Term Loan Termination
Date or in the case of other Indebtedness prior to two years after the Term Loan
Termination Date and such additional Indebtedness shall not result in a
violation of any of the covenants contained in this Agreement on a pro forma
basis.
8.02. SALES OF ASSETS; LIENS.
(a) LIMITATION ON SALES. The Borrower shall not, and shall not
permit any of its Subsidiaries to, sell, assign, transfer, lease, convey or
otherwise dispose of, in a single transaction or in a series of related
transactions, any properties or assets, including, without limitation, any
capital stock of any of their respective Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, except for (i)
sales of inventory in the ordinary course of business, (ii) the disposition
of equipment in the ordinary course of business, (iii) the sales and/or
contribution of Receivables pursuant to the Receivables Agreement for cash
consideration not less than the fair market value of such Receivables, and
(iv) so long as no Event of Default or Potential Event of Default exists,
any other sales or dispositions if such properties or assets contributed
less than 15% of the EBITDA of the Consolidated Borrower Group in the
immediately preceding Fiscal Year and represent, as of the end of the most
recent Fiscal Year, less than 15% of the total assets of the Consolidated
Borrower Group based on valuations reasonably satisfactory in form and
substance to the Administrative Agent and the Collateral Agent. In
addition, neither the Borrower nor any Borrower Subsidiary shall issue any
Securities for any consideration other than cash except with the consent of
the Requisite Lenders.
(b) 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 on or with respect to any of its Property (including all
capital stock of any Subsidiary of the Borrower and all Collateral) except:
(i) Liens granted to the Collateral Agent for the benefit of
itself and the Holders of Secured Obligations securing the Obligations;
(ii) Customary Permitted Liens;
(iii) Permitted Existing Liens;
(iv) Liens on property existing at the time of acquisition thereof
by the Borrower or any of its Subsidiaries and Liens securing purchase
money Indebtedness for equipment to the extent the aggregate outstanding
principal amount of such Indebtedness is permitted under SECTION 8.01
and the value of the equipment securing such Indebtedness approximates
the amount of such Indebtedness provided that in each case such Liens do
not apply to other property or assets of such Person;
(v) Liens with respect to judgments or attachments which do not
result in an Event of Default or Potential Event of Default hereunder;
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(vi) Liens granted on cash collateral securing letters of credit
permitted pursuant to SECTION 8.01(VII) in favor of the issuer of such
letter of credit;
(vii) Liens granted to secure Indebtedness permitted under SECTION
8.01(IX); and
(viii) Liens filed to perfect the transfers of Receivables pursuant
to the Receivables Agreement or otherwise to evidence the transactions
contemplated thereunder.
8.03. INVESTMENTS. The Borrower shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly make or commit to make any advance,
loan, extension of credit or capital contribution to, or purchase of any stock,
bonds, notes, debentures or other Securities of, or make any other investment
in, any Person or enter into a partnership with any Person, including, without
limitation, any Affiliate of the Borrower (all such transactions being referred
to as "Investments"), except:
(i) Investments by the Borrower or any of its Subsidiaries in Cash
Equivalents;
(ii) Investments by the Borrower in any Guarantor;
(iii) Investments by any Borrower Subsidiary in the Borrower;
(iv) Investments by the Borrower or a Borrower Subsidiary in
Subsidiaries created pursuant to SECTION 7.10, PROVIDED that Investments in
Subsidiaries created pursuant to SECTION 7.10(B) shall not exceed
$10,000,000 in the aggregate;
(v) loans to employees and Accommodation Obligations with respect to
loans to employees in the ordinary course of business not in excess of an
aggregate amount of $1,000,000 outstanding at any one time;
(vi) Investments by the Borrower or a Borrower Subsidiary in any other
Person constituting an acquisition of all or substantially all of the
capital stock or assets of such Person, PROVIDED such Investments do not
exceed an aggregate amount of $75,000,000 (including the cash and noncash
consideration for such Investment plus the amount of any liabilities,
including contingent liabilities, assumed in connection with such
Investment) during the term of this Agreement (plus an amount equal to the
amount realized by the Borrower and the Guarantors from the sale of any
such Investments and which are not required to be prepaid and applied to
the Term Loans pursuant to SECTIONS 2.05 AND 2.06) and no individual
Investment or series of related Investments shall exceed $20,000,000
(including the cash and noncash consideration for such Investment plus the
amount of any liabilities, including contingent liabilities, assumed in
connection with such Investment), and PROVIDED FURTHER that any such
Investment shall be in a Person that is in substantially the same line of
business or a reasonably related business as existing businesses of the
Borrower or any Borrower Subsidiary, and the Borrower shall deliver an
Officer's Certificate confirming that after such Investment has been made
(a) on a pro forma basis the Borrower will remain in compliance with the
covenants in this Agreement, (b) as a result of such Investment neither the
Borrower nor any of its Subsidiaries shall be exposed to additional
material contingent liabilities and (c) Revolving Credit Availability shall
be not less than $7,500,000;
(vii) loans to executive officers of the Borrower for the purchase of
Class A Common Stock of the Borrower pursuant to the Borrower's Senior
Executive Stock Purchase Plan in an aggregate amount not to exceed 95% of
the purchase price of 500,000 shares of Class A Common Stock;
(viii) other Investments by the Borrower and the Borrower Subsidiaries
not in excess of an annual amount of $5,000,000 during the term of this
Agreement;
(ix) increases in Investments arising from undistributed earnings or
changes in currency translations; and
(x) Investments by foreign Borrower Subsidiaries in other foreign
Borrower Subsidiaries.
Notwithstanding anything herein to the contrary, (a) there shall be
excluded from the calculation of Investments the accrual of intercompany charges
incurred in the ordinary course and (b) there shall be included in the
calculation of investments all transfers of cash or assets (other than the
purchase of inventory in the ordinary course of business and upon terms that
would be obtained in an arms-length transaction).
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8.04. 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:
(i) guaranties resulting from endorsement of negotiable instruments
for collection in the ordinary course of business;
(ii) Accommodation Obligations arising in connection with the
Transaction Documents;
(iii) Accommodation Obligations issued with respect to the
Indebtedness of the Borrower or any Guarantor in the ordinary course of
business of the Borrower or any of the Borrower Subsidiaries; and
(iv) Accommodation Obligations of any foreign Borrower Subsidiary with
respect to the Indebtedness of any other foreign Borrower Subsidiary.
8.05. RESTRICTED JUNIOR PAYMENTS. The Borrower shall not, and shall not
permit any Subsidiary of the Borrower to, declare or make any Restricted Junior
Payment, except:
(i) dividends on and/or repurchases of the Borrower's common stock
in an aggregate, cumulative amount from and after the Effective Date not to
exceed 25% of cumulative Consolidated Net Income of the Consolidated
Borrower Group for the period from the Effective Date to the end of the
most recently ended fiscal quarter of the Borrower prior to the date of
declaration of any such dividend, treating such period as a single
accounting period, PROVIDED, HOWEVER, that the aggregate amount of
dividends paid and/or repurchases made during any Fiscal Year shall not
exceed an amount equal to 50% of Consolidated Net Income of the
Consolidated Borrower Group for the previous Fiscal Year;
(ii) any wholly-owned Subsidiary of the Borrower and any Subsidiary
formed by the Borrower pursuant to SECTION 7.10(B) may pay dividends to its
stockholders;
(iii) repayments to the Borrower or any of its Subsidiaries of any
Investments permitted under SECTION 8.03; and
(iv) payments required by the Tax Sharing Agreement when due and
payments of allocated salaries and other corporate overhead consistent with
SECTION 8.07.
8.06. CONDUCT OF BUSINESS. The Borrower shall not, and shall not permit
any of its Subsidiaries to, engage in any business other than the business
engaged in by such persons on the Effective Date and any business activities
substantially similar or related thereto.
8.07. TRANSACTIONS WITH 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 of
its Affiliates on terms that are less favorable to it than those fair and
reasonable terms that might be obtained in a comparable arms-length transaction
at the time. Without limiting the foregoing, to the extent the Borrower or any
of its Subsidiaries employs any individual who is also employed by any such
Affiliate or utilizes facilities that are also utilized by any such Affiliate,
there shall be a fair and reasonable allocation of all salaries and expenses
related thereto.
8.08. 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), discontinue
its business or convey, lease, sell, transfer or otherwise dispose of, in
one transaction or series of transactions, all or any substantial part of
its business or Property, whether now or hereafter acquired, except:
(i) as otherwise permitted under SECTION 8.02(A)or as disclosed
in SCHEDULE 8.08 attached hereto; and
(ii) any Subsidiary of the Borrower may merge into or convey,
sell, lease or transfer all or substantially all of its assets to the
Borrower or any Guarantor.
(b) The Borrower shall not, and shall not permit any of its
Subsidiaries to, acquire by purchase or otherwise any property or assets
of, or stock or other evidence of beneficial ownership of, any Person,
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except in the ordinary course of its business or to the extent permitted
pursuant to SECTION 8.03 or as contemplated by the Receivables Agreement.
8.09. EMPLOYEE BENEFIT MATTERS. The Borrower shall not, and shall not
permit any of its Subsidiaries to, and will exercise its best efforts to not
permit any of its other ERISA Affiliates to:
(i) Engage in any prohibited transaction described in Section 406 of
ERISA or 4975 of the IRC for which a statutory or class exemption is not
available or a private exemption has not been previously obtained from the
DOL;
(ii) permit to exist any accumulated funding deficiency (as defined
in Sections 302 of ERISA and 412 of the IRC), whether or not waived;
(iii) fail to pay timely required contributions or annual installments
due with respect to any waived funding deficiency to any Benefit Plan;
(iv) terminate any Benefit Plan in a distress termination under
Section 4041(c) of ERISA which would result in any liability to the
Borrower or any ERISA Affiliate;
(v) fail to make any contribution or payment to any Multiemployer
Plan which the Borrower or any ERISA Affiliate may be required to make
under any agreement relating to such Multiemployer Plan, or any law
pertaining thereto;
(vi) fail to pay any required installment or any other payment
required under Section 412 of the IRC on or before the due date for such
installment or other payment; or
(vii) amend a Plan resulting in an increase in current liability for
the plan year such that the Borrower or any ERISA Affiliate is required to
provide security to such Plan under Section 401(a)(29) of the IRC.
8.10. ENVIRONMENTAL LIABILITIES. The Borrower shall not, and shall not
permit any of its Subsidiaries to, become subject to any Liabilities and Costs,
which are reasonably likely to have a Material Adverse Effect, arising out of or
related to (a) the Release or threatened Release at any location of any
Contaminant into the environment, or any Remedial Action in response thereto, or
(b) any violation of any environmental, health and safety Requirements of Law.
8.11. MARGIN REGULATIONS. No portion of the proceeds of any credit
extended under this Agreement shall be used in any manner which might cause the
extension of credit or the application of such proceeds to violate Regulation G,
Regulation T, Regulation U 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 the use of such proceeds.
8.12. CHANGE OF FISCAL YEAR. The Borrower shall not change its Fiscal
Year.
8.13. AMENDMENT OF CERTAIN DOCUMENTS. The Borrower and its Subsidiaries
shall not permit any termination of, or any modification or amendment that is
adverse in any respect to the Lenders to be made to either the certificate of
incorporation or by-laws of the Borrower or any of its Subsidiaries.
8.14. MODIFICATION OF RECEIVABLES AGREEMENT. The Borrower shall not, and
shall not permit any of its Subsidiaries to, agree to any amendment, waiver or
other modification of the Receivables Agreement that would (i) reduce the
purchase price or the cash payment thereof received by the Borrower or any of
its Subsidiaries for receivables sold thereunder, (ii) materially delay the
timing of any payments owed thereunder to the Borrower or any of its
Subsidiaries, (iii) render the covenants, representations and warranties or
events of termination thereunder more restrictive in any material respect, or
(iv) create any recourse obligations of the Borrower or any of its Subsidiaries
in excess of those contemplated by the Receivables Agreement as in effect on the
Effective Date.
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ARTICLE IX
FINANCIAL COVENANTS
The Borrower covenants and agrees that, on and after the Effective Date so
long as the Borrower shall have any outstanding Agreement Obligations or any
Lender shall have any Commitment hereunder or any Letter of Credit remains
outstanding:
9.01. MINIMUM CONSOLIDATED NET WORTH.
The Borrower shall not permit Net Worth for the Consolidated Borrower Group
determined on a consolidated basis at any time to be less than the amounts set
forth below during the periods set forth below:
<TABLE>
<CAPTION>
PERIOD MINIMUM AMOUNT
----------------------------------------------------------------------------- --------------
<S> <C>
Effective Date through December 30, 1994..................................... $(30,000,000)
December 31, 1994 through December 30, 1995.................................. (25,000,000)
December 31, 1995 through December 30, 1996.................................. (10,000,000)
December 31, 1996 through December 30, 1997.................................. 10,000,000
December 31, 1997 through December 30, 1998.................................. 30,000,000
December 31, 1998 through December 30, 1999.................................. 50,000,000
December 31, 1999 and thereafter............................................. 70,000,000
</TABLE>
Each of the minimum amounts specified above for the respective periods
shall be automatically reduced on a cumulative basis by the amount of any
write-off of goodwill by the Borrower in accordance with Agreement Accounting
Principles, PROVIDED that such automatic reductions shall be limited to
$10,000,000 in any one Fiscal Year and $40,000,000 in the aggregate.
9.02. RATIO OF TOTAL INDEBTEDNESS TO NET EBITDA.
The Borrower shall not permit the ratio of Total Indebtedness (other than
Accommodation Obligations) of the Consolidated Borrower Group on a consolidated
basis to Net EBITDA calculated at the end of each fiscal quarter during the
following periods for the fiscal quarter ending March 31, 1995, for the two
fiscal quarter period ending June 30, 1995, for the three fiscal quarter period
ending September 30, 1995, and for the period of the immediately preceding four
fiscal quarters at the end of each fiscal quarter thereafter to be greater than
the ratios set forth below:
<TABLE>
<CAPTION>
PERIOD RATIO
---------------------------------------------------------------------------------- ---------
<S> <C>
January 1, 1995 through December 30, 1996......................................... 2.75 to 1
December 31, 1996 through December 30, 1997....................................... 2.50 to 1
December 31, 1997 through December 30, 1998....................................... 2.00 to 1
December 31, 1998 through December 30, 1999....................................... 1.50 to 1
December 31, 1999 and thereafter.................................................. 1.25 to 1
</TABLE>
For purposes of calculation of the foregoing ratio at the end of each of
the first three fiscal quarters in 1995, Net EBITDA for the relevant periods
ending on such dates shall be annualized by multiplying such Net EBITDA by 4, by
2 and by 4/3, respectively.
9.03. INTEREST COVERAGE RATIO.
The Borrower shall not permit the Interest Coverage Ratio calculated at the
end of each fiscal quarter during the following periods for the period from the
Effective Date through March 31, 1995, for the period from the Effective Date
through June 30, 1995, for the period from the Effective Date through September
30, 1995, and for the period of the immediately preceding four fiscal quarters
at the end of each fiscal quarter thereafter for the Consolidated Borrower Group
to be less than the ratio set forth below:
<TABLE>
<CAPTION>
PERIOD RATIO
---------------------------------------------------------------------------------- ---------
<S> <C>
January 1, 1995 through December 31, 1995......................................... 5.25 to 1
January 1, 1996 through December 31, 1996......................................... 5.50 to 1
Thereafter........................................................................ 6.00 to 1
</TABLE>
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9.04. CAPITAL EXPENDITURES.
The Borrower shall not, and shall not permit any of its Subsidiaries to, in
any Fiscal Year, incur Capital Expenditures which exceed in the aggregate the
sum of (a) $26,000,000 in Fiscal Year 1995 (increasing by $2,000,000 in each
Fiscal Year thereafter) PLUS (b) the difference, if positive (but not to exceed
$5,000,000), between (1) the maximum aggregate amount of Capital Expenditures
permitted pursuant to this SECTION 9.04 for the immediately preceding Fiscal
Year and (2) the aggregate amount of Capital Expenditures actually incurred
during such preceding Fiscal Year PLUS (c) an amount equal to (x) Excess Cash
Flow as reported pursuant to SECTION 2.05(B)(I) for the immediately preceding
Fiscal Year MINUS (y) the sum of $2,000,000 and the amount of all prepayments
required pursuant to SECTION 2.05(B)(I) made during such Fiscal Year. The
Borrower and its Subsidiaries shall not incur Capital Expenditures which exceed
$10,000,000 in the aggregate from the Effective Date through December 31, 1994.
9.05. FIXED CHARGES COVERAGE RATIO.
The Borrower shall not permit the Fixed Charges Coverage Ratio at June 30,
1995 for the two fiscal quarter period ending June 30, 1995, at September 30,
1995 for the three fiscal quarter period ending September 30, 1995, and at the
end of each fiscal quarter thereafter for the period of the immediately
preceding four fiscal quarters for the Consolidated Borrower Group determined in
accordance with Agreement Accounting Principles to be less than 1.0 to 1.
ARTICLE X
EVENTS OF DEFAULT; RIGHTS AND REMEDIES
10.01. 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 principal of any Loan or Reimbursement Obligation or to
pay when due any interest on any Loan or Reimbursement Obligation or any
fee or other amount payable under this Agreement or any of the other Loan
Documents and such failure shall continue for three (3) calendar days.
(b) BREACH OF CERTAIN COVENANTS. The Borrower or any of its
Subsidiaries shall fail duly and punctually to perform or observe any
agreement, covenant or obligation under SECTIONS 6.01, 7.01, 7.05 or under
ARTICLES VIII and IX or binding on the Borrower or any of its Subsidiaries
under any section of the Collateral Documents (which failure continues
after the expiration of any grace period applicable thereto).
(c) BREACH OF REPRESENTATION OR WARRANTY. Any representation or
warranty made or deemed made by the Borrower to the Administrative Agent,
the Collateral Agent, any of the Issuing Banks or any Lender herein or by
the Borrower or any of its Subsidiaries in any of the other Loan Documents
or in any written statement or certificate at any time given by the
Borrower or any of its Subsidiaries pursuant to any of the Loan Documents
shall be false or misleading in any respect on the date as of which made or
deemed made.
(d) OTHER DEFAULTS. The Borrower or any of its Subsidiaries shall
fail duly and punctually to perform or observe any agreement, covenant or
obligation arising under this Agreement (except those described in SECTIONS
10.01(A), (B) and (C)) or under any of the other Loan Documents, and such
failure shall continue for thirty (30) days (or, in the case of Loan
Documents other than this Agreement, any longer period of grace expressly
set forth therein).
(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) on any
Indebtedness of such Person other than any of the Obligations, if the
aggregate outstanding amount of all such Indebtedness is $5,000,000 or
more, or any breach, default or event of default shall occur, or any other
event shall occur or condition shall exist, under any instrument, agreement
or indenture pertaining thereto, if the effect thereof is to accelerate, or
permit the holder(s) of such Indebtedness to accelerate, the maturity of
any such Indebtedness; or any such Indebtedness shall be declared to be due
and payable or required to be prepaid or mandatorily redeemed (other than
by a regularly scheduled required prepayment prior to the stated maturity
there-of); or the holder of any
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Lien, in any amount, shall commence foreclosure of such Lien upon property
of the Borrower or any of its Subsidiaries having a book or fair market
value in excess of $1,000,000 with respect to such Person in the aggregate.
(f) INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC. (i) An
involuntary case shall be commenced against the Borrower or any of its
Subsidiaries and the petition shall not be dismissed 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 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,
vacated, dismissed, bonded or discharged within sixty (60) days of
entry, appointment or issuance.
(g) 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 of 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 generally fail, or admit
in writing its inability, to pay its debts as such debts become due; or the
Board of Directors (or any committee thereof) of the Borrower or any of its
Subsidiaries shall adopt any resolution to authorize or approve any of the
foregoing.
(h) JUDGMENTS. (i) Enforceable Judgments (other than an Enforceable
Judgment described in the proviso contained in the definition of
Enforceable Judgment) for the payment of money in an aggregate amount in
excess of $2,000,000 shall be rendered against the Borrower or any of its
Subsidiaries and such Enforceable Judgments shall continue unsatisfied or
unstayed for a period of thirty (30) days or action shall have been
commenced to foreclose on such Enforceable Judgments, or (ii) Enforceable
Judgments described in the proviso contained in the definition of
Enforceable Judgments shall be rendered against the Borrower or any of its
Subsidiaries.
(i) 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 thirty (30) days; or the Borrower or any
of its Subsidiaries shall otherwise dissolve or cease to exist except as
expressly permitted pursuant to SECTION 8.08.
(j) COLLATERAL DOCUMENTS; FAILURE OF SECURITY. For any reason other
than a release of Liens in accordance with the terms of the Loan Documents
or the failure of the Collateral Agent and the Lenders to take any action
available to them to maintain the perfection of the Liens created in favor
of the Collateral Agent, for the benefit of itself and the Holders of
Secured Obligations, pursuant to this Agreement and the Collateral
Documents, any Collateral Document ceases to be in full force and effect or
any Lien intended to be created thereby ceases to be or is not valid and
perfected and such lapse, invalidity or failure is not corrected within 30
days or the Borrower or any of its Subsidiaries asserts that any such Lien
is not valid and perfected.
(k) CHANGE OF CONTROL. Any Change of Control occurs.
(l) EMPLOYEE BENEFIT RELATED LIABILITIES. (i) Any Termination Event
occurs which the Administrative Agent believes could subject the Borrower
or any of its Subsidiaries to a material liability to pay
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money, or (ii) the plan administrator of any Plan applies under Section
412(d) of the IRC for a waiver of the minimum funding standards of Section
412(a) of the IRC and the Administrative Agent believes that the
substantial business hardship upon which the application for the waiver is
based could subject the Borrower or any of its Subsidiaries to a material
liability to pay money.
(m) CONTRIBUTION AGREEMENT DEFAULT. Any party to the Contribution
Agreement shall terminate or revoke any of its obligations under the
Contribution Agreement or breach any of the terms of the Contribution
Agreement, or the Contribution Agreement shall otherwise become
unenforceable against any Guarantor for any reason or shall cease to be in
full force and effect.
(n) SUBSIDIARY GUARANTY DEFAULT. Any Guarantor shall terminate or
revoke any of its obligations under the Subsidiary Guaranty or breach any
of the terms of the Subsidiary Guaranty, or the Subsidiary Guaranty shall
otherwise become unenforceable against any Guarantor for any reason.
For purposes of this Agreement and each of the other Loan Documents, an
Event of Default shall be deemed "continuing" until cured or waived in writing
in accordance with SECTION 11.08.
10.02. RIGHTS AND REMEDIES.
(a) ACCELERATION AND TERMINATION OF COMMITMENTS. Upon the occurrence
and during the continuance of any Event of Default described in SECTION
10.01(F) or 10.01(G) with respect to the Borrower or any of its
Subsidiaries, the Revolving Credit Commitments shall automatically and
immediately terminate and the unpaid principal amount of and any and all
accrued interest on the Loans, all Reimbursement Obligations and all other
Agreement Obligations shall automatically become immediately due and
payable, with all additional interest from time to time accrued thereon and
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 the
obligation of each Lender to make any Loan hereunder and of the Issuing
Banks to issue any Letter of Credit shall thereupon terminate; 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 Credit Commitments are terminated, whereupon the Revolving Credit
Commitments and the obligation of each Lender to make any Loan hereunder
and of the Issuing Banks to issue any Letter of Credit shall immediately
terminate, and (ii) declare the unpaid principal amount of and any and all
accrued and unpaid interest on the Loans, and all Reimbursement Obligations
and all other Agreement Obligations to be, and the same shall thereupon be,
immediately due and payable with all additional interest from time to time
accrued thereon and (except as expressly provided herein) 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, upon demand by the
Administrative Agent, or any of the Issuing Banks or the Requisite Lenders
after the occurrence and during the continuance of any Event of Default,
the Borrower shall deposit with the Collateral Agent for the benefit of the
Issuing Banks with respect to each Letter of Credit then outstanding which
was issued by any Issuing Bank, cash or Cash Equivalents in an amount equal
to the greatest amount for which such Letters of Credit may then be drawn.
The Borrower grants to the Collateral Agent, for the benefit of itself and
the Holders of Secured Obligations, a security interest in and right of
setoff against any such deposit or deposits. Pending the application of
such deposit to payment of the Reimbursement Obligations, the Collateral
Agent may invest such deposit in an open account or similar immediately
available savings deposit and all interest accrued thereon shall be held
with such deposit as additional security for the Reimbursement Obligations.
Such deposits shall be held by the Collateral Agent until the Reimbursement
Obligations have been paid in full and all Letters of Credit have expired
or been cancelled.
(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 of the Loans and Reimbursement
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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 12.07, then
by written notice to the Borrower, the Requisite Lenders may elect, in the
sole discretion of such Requisite 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 Lenders to a decision which may be
made at the election of the Requisite Lenders; they are not intended to
benefit the Borrower and do not give the Borrower the right to require the
Lenders to rescind or annul any acceleration hereunder, even if the
conditions set forth herein are met.
ARTICLE XI
ADMINISTRATIVE AGENT AND COLLATERAL AGENT
11.01. APPOINTMENT. (a) Each of the Lenders and the Issuing Banks hereby
designates and appoints Chemical as the Administrative Agent and Citicorp as the
Collateral Agent of such Lender and such Issuing Bank under this Agreement and
the Loan Documents, and each of the Lenders and Issuing Banks hereby irrevocably
authorizes the Administrative Agent and the Collateral Agent to take such action
on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers as are set forth herein or therein,
together with such other powers as are incidental thereto. Each of the
Administrative Agent and the Collateral Agent agrees to act as such on the
express conditions contained in this ARTICLE XI.
(b) The provisions of this ARTICLE XI are solely for the benefit of
the Administrative Agent, the Collateral Agent, the Issuing Banks and the
Holders of Secured Obligations and the Borrower shall have no right to rely
on or enforce any of the provisions hereof (other than as expressly set
forth in SECTION 11.07 or in SECTION 11.08). In performing its functions
and duties under this Agreement, the Administrative Agent and the
Collateral Agent shall each act solely as agent for the Issuing Banks and
the Holders of Secured Obligations and neither assumes or shall be deemed
to have assumed any obligation toward or relationship of agency or trust
with or for Borrower or any of its Affiliates.
11.02. NATURE OF DUTIES. The Administrative Agent and the Collateral
Agent shall not have any duties or responsibilities except those expressly set
forth in this Agreement or in the other Loan Documents. The duties of the
Administrative Agent and the Collateral Agent shall be mechanical and
administrative in nature. Neither the Administrative Agent nor the Collateral
Agent shall have by reason of this Agreement a fiduciary relationship in respect
of any Holder of Secured Obligations or any Issuing Bank. Nothing in this
Agreement or any of the other Loan Documents, expressed or implied, is intended
to or shall be construed to impose upon the Administrative Agent or the
Collateral Agent any obligations in respect of this Agreement or any of the
other Loan Documents except as expressly set forth herein or therein. Each
Holder of Secured Obligations and each Issuing Bank shall make its own
independent investigation of the financial condition and affairs of the Borrower
and its Subsidiaries in connection with the making and the continuance of the
Loans hereunder, the issuance of Letters of Credit and the entering into any
Eligible Hedging Contract and shall make its own appraisal of the
creditworthiness of the Borrower and its Subsidiaries, and neither the
Administrative Agent nor the Collateral Agent shall have any duty or
responsibility, either initially or on a continuing basis, to provide any Holder
of Secured Obligations or any Issuing Bank with any credit or other information
with respect thereto, whether coming into its possession before the Effective
Date or at any time or times thereafter. Each Lender acknowledges that neither
the Administrative Agent nor the Collateral Agent nor any other Lender nor
counsel to any of the foregoing is providing any assurances, or shall have any
responsibility, with respect to the ownership of the Property or the absence of
any prior Liens or defects of title, or the legality, sufficiency or effect of
any mortgage, certificate or notice, or any other document, or the validity,
creation, perfection or priority of any Lien, or as to any decision to request,
take, defer, omit or release any Collateral or to investigate or not to
investigate any of those matters, and each Lender agrees to look solely to its
rights as one of the Lenders with respect to any of the foregoing. If the
Administrative Agent or the Collateral Agent seeks the consent or approval of
the Requisite Lenders to the taking or refraining from taking any action
hereunder, the Administrative Agent or the Collateral Agent, as applicable,
shall send notice
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thereof to each Lender. The Administrative Agent or the Collateral Agent, as
applicable, shall promptly notify each Lender at any time that the Requisite
Lenders or, where expressly required, all of the Lenders, have instructed the
Administrative Agent or the Collateral Agent, as applicable, to act or refrain
from acting pursuant hereto.
11.03. RIGHTS, EXCULPATION, ETC. Neither the Administrative Agent nor the
Collateral Agent nor any of the Affiliates nor any of their officers, directors,
employees, agents, attorneys or consultants shall be liable to any Holder of
Secured Obligations or any Issuing Bank for any action taken or omitted by it or
such Person hereunder or under any of the Loan Documents, or in connection
herewith or therewith, except that (i) the Administrative Agent and the
Collateral Agent shall be obligated on the terms set forth herein for
performance of its express obligations hereunder, and (ii) no Person shall be
relieved of any liability imposed by law for its gross negligence or willful
misconduct (as determined by the final judgment of a court of competent
jurisdiction). Neither the Administrative Agent nor the Collateral Agent shall
be responsible to any Holder of Secured Obligations or any 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 any of the transactions contemplated hereby and
thereby, or of any of the Transaction Documents or any of the transactions
contemplated thereby, or for the financial condition of the Borrower or any of
its Subsidiaries. Neither the Administrative Agent nor the Collateral 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 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 and the Collateral
Agent may at any time request instructions from the 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 or the Collateral Agent, as applicable,
is permitted or required to take or to grant, and if such instructions are
promptly requested, the Administrative Agent or the Collateral Agent, as
applicable, 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 the
Requisite Lenders or, where expressly required, the Supermajority Lenders or all
of the Lenders. Without limiting the foregoing, no Holder of Secured Obligations
or Issuing Bank shall have any right of action whatsoever against the
Administrative Agent or the Collateral Agent, as applicable, as a result of the
Administrative Agent or the Collateral Agent, as applicable, acting or
refraining from acting under this Agreement, the Collateral Documents or any of
the other Loan Documents in accordance with the instructions of the Requisite
Lenders or, where expressly required, all of the Lenders.
11.04. RELIANCE. The Administrative Agent and the Collateral 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, the Collateral
Documents or any of the other 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 in good faith.
11.05. INDEMNIFICATION. To the extent that the Administrative Agent or
the Collateral Agent, as applicable, is not reimbursed and indemnified by the
Borrower or the Borrower fails upon demand by the Administrative Agent or the
Collateral Agent, as applicable, to perform its obligations to reimburse or
indemnify the Administrative Agent or the Collateral Agent, as applicable, the
Lenders will reimburse and indemnify the Administrative Agent or the Collateral
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 the Administrative Agent or the Collateral Agent, as
applicable, in any way relating to or arising out of this Agreement, the
Collateral Documents or any of the other Transaction Documents or any action
taken or omitted by the Administrative Agent or the Collateral Agent, as
applicable, under this Agreement, the Collateral Documents or any of the other
Transaction Documents, in proportion to each Lender's Pro Rata Share; PROVIDED
that no Lender shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions,
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judgments, suits, costs, expenses or disbursements resulting from the gross
negligence or willful misconduct of the Administrative Agent or the Collateral
Agent, as applicable, as determined by the final judgment of a court of
competent jurisdiction. The obligations of the Lenders under this SECTION 11.05
shall survive the payment in full of the Loans and Reimbursement Obligations and
the termination of this Agreement.
11.06. THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
INDIVIDUALLY. With respect to its Pro Rata Share hereunder and the Loans made
by it, the Administrative Agent 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 the Administrative Agent in its individual capacity
as a Lender or one of the Requisite Lenders. The Administrative Agent and the
Collateral Agent each may accept deposits from, lend money to, and generally
engage in any kind of banking, trust or other business with the Borrower as if
it were not acting as Administrative Agent or Collateral Agent, respectively,
pursuant hereto.
11.07. SUCCESSOR ADMINISTRATIVE AGENT OR COLLATERAL AGENT; RESIGNATION OF
ADMINISTRATIVE AGENT OR COLLATERAL AGENT. (a) The Administrative Agent or the
Collateral Agent may resign from the performance of its functions and duties
hereunder at any time by giving at least thirty (30) days prior written notice
to the Lenders and the Borrower. In the event that the Administrative Agent or
the Collateral Agent gives notice of its desire to resign from the performance
of its functions and duties hereunder, any such resignation shall take effect
only upon the acceptance by a successor Administrative Agent or Collateral Agent
of appointment pursuant to CLAUSES (B) and (C) below.
(b) The Requisite Lenders shall appoint a successor Administrative
Agent or Collateral Agent who shall be reasonably satisfactory to the
Borrower provided no such approval of the Borrower shall be required after
the occurrence and during the continuance of an Event of Default.
(c) If a successor Administrative Agent or Collateral Agent shall not
have been so appointed within said thirty (30) day period, the retiring
Administrative Agent or Collateral Agent, with the consent of the Borrower
(which may not be withheld unreasonably), shall then appoint a successor
Administrative Agent or Collateral Agent who shall serve as such until such
time, if any, as the Requisite Lenders, with the consent of the Borrower
(which may not be withheld unreasonably), appoint a successor as provided
above. No consent of the Borrower shall be required after the occurrence
and during the continuance of an Event of Default.
(d) Upon the appointment of a successor Administrative Agent, the
term "Administrative Agent" shall, for all purposes of this Agreement,
thereafter include such successor, except that the retiring Administrative
Agent shall reserve all rights as to Obligations accrued or due to it, in
its capacity as such, at the time of such succession and all rights
(whenever arising) under SECTION 12.04.
(e) Upon the appointment of a successor Collateral Agent, the term
"Collateral Agent" shall, for all purposes of this Agreement, thereafter
include such successor, except that the retiring Collateral Agent shall
reserve all rights as to Obligations accrued or due to it, in its capacity
as such, at the time of such succession and all rights (whenever arising)
under SECTION 12.04.
(f) Notwithstanding anything in this SECTION 11.07 to the contrary,
no Person shall serve as an Administrative Agent unless such Person is a
Lender.
11.08. COLLATERAL MATTERS. (a) Each of the Lenders and the Issuing Banks
authorizes and directs the Administrative Agent and the Collateral Agent to
enter into the Loan Documents relating to the Collateral for the benefit of
itself and the Holders of Secured Obligations. Each of the Lenders and the
Issuing Banks agrees that any action taken by the Administrative Agent or the
Collateral Agent or the Requisite Lenders (or, where required by the express
terms of this Agreement or any other Loan Document, 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 Collateral 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 the 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
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Banks with respect to all payments and collections arising in connection with
this Agreement and the other Loan Documents relating to the Loans or Collateral;
and (ii) execute and deliver each Loan Document relating to the Collateral and
accept delivery of each such agreement delivered by the Borrower or any of its
Subsidiaries. Without limiting the generality of the foregoing, the Collateral
Agent shall have the sole and exclusive right and authority to (i) 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 and the Issuing Banks and
the Lenders for purposes of the perfection of all security interests and Liens
with respect to the Borrower's and its Subsidiaries' respective deposit accounts
maintained with, and cash and Cash Equivalents held by, such Lender or the
Issuing Banks; (ii) manage, supervise and otherwise deal with the Collateral in
accordance with the terms of this Agreement and the other Loan Documents; (iii)
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 (iv) 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 Collateral Agent, the
Lenders or the Issuing Banks with respect to the Collateral under the Loan
Documents relating thereto, under applicable law or otherwise.
(b) The Holders of Secured Obligations hereby irrevocably authorize
the Collateral Agent, at the option and in the discretion of the Collateral
Agent, to release any Lien granted to or held by the Collateral Agent upon
any Collateral (i) upon termination of the Commitments and payment and
satisfaction of all Loans, Reimbursement Obligations, other Letter of
Credit Obligations (whether or not due) and all other Agreement Obligations
which have matured and which the Administrative Agent has been notified in
writing are then due and payable; or (ii) constituting property being sold
or disposed of if Borrower certifies to the Administrative Agent and the
Collateral Agent that the sale or disposition is made in compliance with
SECTION 8.02 (and the Administrative Agent and the Collateral Agent may
rely conclusively on any such certificate, without further inquiry); or
(iii) constituting property in which neither the Borrower nor any of its
Subsidiaries owned any interest at the time the Lien was granted or at any
time thereafter; or (iv) if approved or consented to by the Requisite
Lenders (or, where so required, all of the Lenders). Upon request by the
Collateral Agent at any time, the Lenders will confirm in writing the
Collateral Agent's authority to release particular types or items of
Collateral pursuant to this SECTION 11.08(B).
(c) Without in any manner limiting the Collateral Agent's authority
to act without any specific or further authorization or consent by the
Requisite Lenders (as set forth in SECTION 11.08(B)), each Lender agrees to
confirm in writing, upon request by the Borrower, the authority to release
Collateral conferred upon the Collateral Agent under CLAUSES (I) through
(IV) of SECTION 11.08(B). So long as no Event of Default is then
continuing, upon receipt by the Administrative Agent of the net cash
proceeds of any sale and transfer of Collateral which is expressly
permitted pursuant to the terms of this Agreement, and upon at least five
(5) Business Days' prior written request by Borrower, the Collateral Agent
shall (and is hereby irrevocably authorized by the Holders of Secured
Obligations to) execute such documents as may be necessary to evidence the
release of the Liens granted to the Collateral Agent for the benefit of the
Holders of Secured Obligations herein or pursuant hereto upon such
Collateral; PROVIDED, that (i) the Collateral Agent shall not be required
to execute any such document on terms which, in the Collateral Agent's
opinion, would expose the Collateral Agent to liability or create any
obligation or entail any consequence other than the release of such Liens
without recourse or warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or
obligations of Borrower in respect of) all interests retained by the
Borrower, including, without limitation, the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(d) The benefit of the Collateral Documents and of the provisions of
this Agreement relating to the Collateral shall extend to and be available
in respect of any Obligations ("RELATED OBLIGATIONS") which arise under any
Eligible Hedging Contracts or which are otherwise owed to Persons entitled
to indemnification pursuant to SECTION 12.04; PROVIDED THAT (i) the Related
Obligations shall be entitled to the benefit of the Collateral to the
extent and with the priority expressly set forth in this Agreement and
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the Collateral Documents, and to such extent the Collateral Agent shall
hold, and have the right and power to act with respect to, the Collateral
on behalf of and as agent for the holders of the Related Obligations; but
the Administrative Agent and the Collateral Agent are otherwise acting
solely as agents for the Lenders and the Issuing Banks and shall have no
separate fiduciary duty, duty of loyalty, duty of care, duty of disclosure
or other obligation whatsoever to any holder of Related Obligations; and
(ii) all matters, acts and omissions relating in any manner to the
Collateral, or the omission, creation, perfection, priority, abandonment or
release of any Lien, shall be governed solely by the provisions of this
Agreement and the Collateral Documents, and no separate Lien, right, power
or remedy shall arise or exist in favor of any Holder of Secured
Obligations under any separate instrument or agreement or in respect of any
Related Obligations; and (iii) each Holder of Secured Obligations shall be
bound by all actions taken or omitted, in accordance with the provisions of
this Agreement and the Collateral Documents, by the Administrative Agent,
the Collateral Agent or the Requisite Lenders or, where expressly required,
the Supermajority Lenders or all of the Lenders, each of whom shall be
entitled to act at its sole discretion and exclusively in its own interest
given its own Commitments and its own interest in the Loans, Reimbursement
Obligations, Letter of Credit Obligations and its other Agreement
Obligations, without any duty or liability to any other Holder of Secured
Obligations or as to any Related Obligations and without regard to whether
any Related Obligations remain outstanding or are deprived of the benefit
of the Collateral or become unsecured or are otherwise affected or put in
jeopardy thereby; and (iv) no holder of Related Obligations and no other
Holder of Secured Obligations (except the Administrative Agent and the
Lenders, to the extent set forth in this Agreement) shall have any right to
be notified of, or to direct, require or be heard with respect to, any
action taken or omitted in respect of the Collateral or under this
Agreement or the Collateral Documents; and (v) no holder of any Related
Obligations shall exercise any right of setoff, banker's lien or similar
right.
11.09. RELATIONS AMONG LENDERS.
(a) Each Lender agrees that it will not take any action, nor
institute any actions or proceedings, against the Borrower or any other
obligor hereunder or with respect to any Collateral or Loan Document,
without the prior written consent of the Requisite Lenders or, as may be
provided in this Agreement or the other Loan Documents, at the direction of
the Administrative Agent.
(b) The Lenders are not partners or co-venturers, and no Lender shall
be liable for the acts or omissions of, or (except as otherwise set forth
herein in case of the Administrative Agent or the Collateral Agent, as
applicable) authorized to act for, any other Lender.
ARTICLE XII
MISCELLANEOUS
12.01. SURVIVAL OF WARRANTIES AND AGREEMENTS. All agreements,
representations and warranties made herein shall survive the execution and
delivery of this Agreement and the other Loan Documents and the making of the
Loans hereunder.
12.02. ASSIGNMENTS AND PARTICIPATIONS.
(a) At any time after the Effective Date, each Lender may assign to
one or more banks or financial institutions all or a portion of its rights
and obligations under this Agreement (including, without limitation, all or
a portion of its Commitments, Loans, participations in the Letters of
Credit and its obligations to acquire such participations) in conformity
with the following provisions:
(i) each such assignment shall be of a constant, and not a
varying, percentage of the assigning Lender's rights and obligations
under this Agreement with respect to such Lender's Revolving Credit
Commitment, Revolving Credit Loans, Term Loans, Letter of Credit
Obligations and related interests hereunder (PROVIDED, HOWEVER, any
assignment by an Issuing Bank shall not include an assignment of its
obligation to issue Letters of Credit);
(ii) unless the Administrative Agent and the Borrower
otherwise consent, the aggregate amount of the Term Loans and Revolving
Credit Commitments of the assigning Lender being assigned pursuant to
each such assignment (determined as of the date of the Assignment and
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Acceptance with respect to such assignment) shall in no event be less
than $5,000,000 or, if less, the full amount of the assigning Lender's
Term Loans and Revolving Credit Commitments (PROVIDED that assignments
between Lenders shall have no minimum amount and assignments after the
occurrence and during the continuance of an Event of Default shall not
require the Borrower's consent regardless of the size of such
assignment);
(iii) the Administrative Agent and, in the case of the
assignment of Letter of Credit Obligations, the Issuing Banks shall each
consent (which consent shall not unreasonably be withheld) to each such
assignment and the parties to each such assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing and recordation fee of $3,000; PROVIDED, THAT
such consent of the Administrative Agent shall not be required for any
assignment made by a Lender to an Affiliate of such Lender; and
(iv) With respect to any assignment made at a time when no
Event of Default exists, the Borrower shall have consented to such
assignment, which consent shall not unreasonably be withheld or delayed;
PROVIDED, THAT such consent of the Borrower shall not be required for
any assignment made by a Lender to an Affiliate of such Lender.
Upon such execution, delivery, approval, acceptance and recording, from and
after the effective date specified in each Assignment and Acceptance, which
effective date shall be at least five (5) Business Days after the execution date
thereof, (x) the assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned or negotiated to it
pursuant to such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder (including, in respect of the Collateral, all the rights and
obligations of a Holder of Secured Obligations, as fully as if such assignee had
been named as a Lender in accordance with the terms of this Agreement) and (y)
the Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned or negotiated 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 an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to be
entitled to the benefits of SECTIONS 2.08, 2.09, 2.10, 12.03 and 12.04, as well
as to any fees accrued for its account hereunder and not yet paid.
(b) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) the
assignment made under such Assignment and Acceptance is made without
recourse and, other than as provided in such Assignment and Acceptance,
such assigning Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or any other
Loan Document or any other document, instrument or agreement executed or
delivered in connection herewith or therewith or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this
Agreement or any other Transaction Document or any other instrument or
document furnished pursuant hereto or thereto; (ii) such assigning Lender
makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower or any of its
Subsidiaries or the performance or observance by the Borrower or any of its
Subsidiaries of any of its obligations under any Transaction Document or
any other instrument or document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement, together
with copies of the financial statements most recently delivered pursuant to
ARTICLE VI and such other Loan Documents and other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Administrative
Agent, the Collateral Agent, the Issuing Banks, such assigning Lender or
any other Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement; (v) such assignee
appoints and authorizes the Administrative Agent and the Collateral Agent,
respectively, to take such action as an Administrative Agent and the
Collateral Agent, respectively, on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to them
by the terms
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hereof and thereof, together with such powers as are reasonably incidental
thereto; and (vi) such assignee agrees that it will perform in accordance
with their terms all of the obligations which by the terms of this
Agreement are required to be performed by it as a Lender.
(c) The Administrative Agent shall maintain at its address referred
to on SCHEDULE A a copy of each Assignment and Acceptance delivered to and
accepted by it and shall record in the Administrative Agent's Loan Account
the names and addresses of each Lender and the Commitment of, and principal
amount of the Loans owing to, such Lender from time to time. The Borrower,
the Administrative Agent, the Collateral Agent and the Lenders may treat
each Person whose name is recorded in the Loan Account as a Lender
hereunder for all purposes of this Agreement.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and the assignee, the Administrative Agent shall, if such
Assignment and Acceptance has been properly completed and is in
substantially the form of EXHIBIT 1 and if the conditions for the
assignment referred to in the Assignment and Acceptance and set forth in
SECTION 12.02(A)have been met, (i) accept such Assignment and Acceptance,
(ii) record the information contained therein in the Administrative Agent's
Loan Account and (iii) give prompt notice thereof to the Borrower.
(e) Each Lender may sell participations to one or more banks or other
entities as to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its
Commitments and Loans, participations in the Letters of Credit and its
obligations to acquire such participations); PROVIDED, that (i) notice
thereof is given to the Borrower and the Administrative Agent, (ii) such
Lender's obligations under this Agreement (including, without limitation,
its Commitments to the Borrower hereunder) shall remain unchanged, (iii)
such Lender shall remain solely responsible to the other parties hereto for
the performance of such obligations, (iv) the participating banks or other
entities shall be entitled to the benefit of the cost protection provisions
contained in SECTIONS 2.03(F), 2.08, 2.09 and 2.10 to the same extent as if
they were Lenders; PROVIDED, however, that no such participating bank or
entity shall be entitled to receive any greater amount pursuant to such
Sections than the Lender from which it purchased its participation would
have been entitled to receive in respect of the amount of the participation
transferred by such Lender to such participating bank or entity had no
transfer occurred, (v) the Borrower, the Administrative Agent, the
Collateral Agent, the Issuing Banks 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 with regard to any and all
payments to be made under this Agreement, and (vi) the holder of any such
participation shall not be entitled to voting rights under this Agreement;
PROVIDED, that the participation agreement between a Lender and its
participants may provide that such Lender will obtain the approval of such
participant whose interest would be affected thereby prior to any amendment
or waiver of any provisions of this Agreement which would (A) extend the
Revolving Credit Termination Date (except pursuant to SECTION 2.02(G)), the
Term Loan Termination Date, or the time of payment of interest or fees with
respect to the Loans or Letter of Credit Obligations, (B) reduce the
interest rate or any fees hereunder, or the principal amount of the Loans
or the Letter of Credit Obligations, (C) increase the aggregate amount of
any of the Commitments or the Loans of the Lender granting the
participation, or increase such Lender's Pro Rata Share, (D) release all or
substantially all of the Collateral, or (E) release the Subsidiary Guaranty
(other than in connection with the sale of any Subsidiary of the Borrower,
or all or substantially all of the assets of such Subsidiary, permitted by
SECTION 8.02(A)).
(f) Upon the acceptance by the Administrative Agent of any Assignment
and Acceptance, the parties to such Assignment and Acceptance may at any
time request that new Notes be issued to the Lender assignor and the Lender
assignee by (i) providing written notice of such request to the
Administrative Agent and the Borrower and (ii) delivering to the Borrower
such assigning Lender's Notes for cancellation and substitution. Promptly
following receipt by the Borrower of any such notice, and verification from
the Administrative Agent that the applicable Assignment and Acceptance
shall have been accepted by the Administrative Agent, the Borrower
forthwith shall cause to be executed, and shall deliver to the Lender
assignee, new Notes to the order of the assignee and, if applicable,
replacement Notes to the order of the Lender assignor, and such Notes shall
equal the aggregate principal
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amount of such assigning Lender's Notes issued by the Borrower immediately
prior to the acceptance by the Administrative Agent of the applicable
Assignment and Acceptance. The Borrower shall immediately upon delivery of
such new Note(s), cancel the original Notes delivered by the Lender
assignor to the Borrower.
(g) Notwithstanding anything herein to the contrary, each Lender may
assign all or any portion of its rights under this Agreement as collateral
security to the Federal Reserve Bank or any Governmental Authority
succeeding to its functions.
12.03. EXPENSES.
(a) GENERALLY. Whether or not any Funding Date shall have occurred,
Borrower agrees upon demand to pay, or reimburse the Administrative Agent
and the Collateral Agent for all of their and any of their Affiliates'
out-of-pocket costs and expenses of every type and nature (including,
without limitation, the reasonable fees, expenses and disbursements of
attorneys and legal assistants, auditors, accountants, appraisers,
printers, insurance and environmental advisers, and other consultants
retained by the Administrative Agent or the Collateral Agent, and other
travel, search and filing fees and expenses and all fees, taxes (except
income and franchise taxes), assessments and duties incurred by any of
them) incurred by the Administrative Agent or the Collateral Agent or their
Affiliates in connection with (i) the negotiation, preparation and
execution of this Agreement and any amendments or waivers thereto
(including, without limitation, the satisfaction or attempted satisfaction
of any of the conditions set forth in ARTICLE IV), the Collateral Documents
and the other Transaction Documents or any amendment or waiver thereto and
the making of the Loans hereunder; (ii) the creation, perfection or
protection of the Collateral Agent's Liens in the Collateral for the
benefit of the Holders of Secured Obligations (including, without
limitation, any fees and expenses for title and lien searches, filing and
recording fees and taxes, trustee's fees, duplication costs and corporate
search fees); (iii) reasonable fees, expenses and disbursements of the
Administrative Agent's and the Collateral Agent's legal counsel in
connection with the administration of this Agreement, the Transaction
Documents, the Loans and the Collateral; and (iv) the protection,
collection or enforcement of any of the Obligations or the Collateral. In
addition, the Borrower shall pay, or reimburse the Administrative Agent,
the Collateral Agent, the Issuing Banks and the Lenders for, all
out-of-pocket costs and expenses, including, without limitation, reasonable
attorneys' and legal assistants' fees incurred by the Administrative Agent,
the Collateral Agent, any Issuing Bank or any 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 or any of
its Subsidiaries and arising out of or in connection with the Transaction
Documents.
(b) AFTER DEFAULT. The Borrower further agrees to pay, or reimburse
the Administrative Agent, the Collateral Agent, the Issuing Banks and the
Lenders for all out-of-pocket costs and expenses, including, without
limitation, reasonable attorneys' and legal assistants' fees, expenses and
disbursements (including allocated costs of internal counsel and costs of
settlement) incurred by the Administrative Agent, the Collateral Agent, any
Issuing Bank or any Lender after the occurrence of an Event of Default (i)
in enforcing any of the Obligations 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 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 pleading in any
legal proceeding relating to the Borrower or any of its Subsidiaries and
related to or arising out of the transactions contemplated hereby or by any
of the Transaction Documents; (iv) in taking any other action in or with
respect to any suit or proceeding (whether in bankruptcy or otherwise); (v)
in protecting, preserving, collecting, leasing, selling, taking possession
of, or liquidating any of the Collateral; or (vi) in attempting to enforce
or enforcing any security interest in any of the Collateral or any other
rights under the Collateral Documents. Any payments made by the Borrower or
received by the Administrative Agent or the Collateral Agent and applied as
reimbursements for costs and expenses under this SECTION 12.03(B)
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shall be apportioned among the Administrative Agent, the Collateral Agent,
the Issuing Bank and the Lenders in the order of priority set forth in
SECTION 2.06.
12.04. INDEMNIFICATION AND WAIVER. The Borrower agrees: (a) to defend,
protect, indemnify, and hold harmless the Administrative Agent, the Collateral
Agent, the Issuing Banks and each and all of the Lenders, each of their
respective Affiliates and each of the respective officers, directors, employees
and agents of each of the foregoing (collectively called the "INDEMNITEES") from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees 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 (whether direct, indirect or consequential and
whether based on any federal or state laws or other statutory regulations,
including, without limitation, securities and commercial laws and regulations,
under common law or at equitable cause, or on contract or otherwise, including
any liabilities and costs under federal, state or local environmental, health or
safety laws, regulations, or common law principles, arising from or in
connection with the past, present or future operations of the Borrower or any of
its Subsidiaries, or their respective predecessors in interest, or the past,
present or future environmental condition of the Property of the Borrower or any
of its Subsidiaries, the presence of asbestos-containing materials at any such
Property, or the Release or threatened Release of any Contaminant into the
environment from any such Property) in any manner relating to or arising out of
this Agreement, the Collateral Documents or any of the other Transaction
Documents, the capitalization of the Borrower, the Lenders' Commitments, the
making of, management of and participation in the Loans or the Letters of
Credit, or the use or intended use of the Letters of Credit and the proceeds of
the Loans hereunder (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 or for
which an exemption is provided in SECTION 2.03(F) or 2.08(D) or any other
provision of this Agreement and (ii) Indemnified Matters caused by or resulting
from the gross negligence or willful misconduct of that Indemnitee, as
determined by a final judgment of a court of competent jurisdiction; and (b) to
assert no claim against the Administrative Agent, the Collateral Agent, any of
the Lenders, any of the Issuing Banks or any other Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages, all of
which claims, if any, are hereby waived. To the extent that the undertaking to
indemnify, pay and hold harmless set forth in the preceding CLAUSE (A) 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. Without prejudice to the survival of any other
agreement of the Borrower hereunder, the agreements and obligations of the
Borrower contained in this SECTION 12.04 shall survive the payment in full of
principal and interest hereunder, the termination of the Letters of Credit and
the termination of this Agreement.
12.05. LIMITATION OF LIABILITY. No claim may be made by the Borrower, any
Lender or other Person against the Administrative Agent, the Collateral Agent,
any Issuing Bank, or any Lender or the Affiliates, directors, officers,
employees, or agents of any of them for any special, indirect, 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 other Transaction Document, or any act, omission or
event occurring in connection therewith, and the Borrower and each 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.
12.06. RATABLE SHARING; DEFAULTING LENDER; SETOFF.
(a) Subject to SECTIONS 2.06 and 12.06(B), the Lenders agree among
themselves that (i) with respect to all amounts received by them which are
applicable to the payment of the Agreement Obligations (excluding amounts
payable under this Agreement which are determined on a non-pro-rata basis,
including, without limitation, amounts payable under SECTIONS 2.03(F),
2.04(B), 2.08(D), 2.09, 2.10, 2.13, 12.03 and 12.04), 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
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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
Agreement Obligations (excluding amounts payable under this Agreement which
are determined on a non-pro-rata basis, including, without limitation,
amounts payable under SECTIONS 2.02(C), 2.03(F), 2.04(B), 2.08(D), 2.09,
2.10, 2.13, 12.03 and 12.04) 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 Agreement Obligations held by it which is greater
than its appropriate pro rata share of the payments on account of the
Agreement Obligations (excluding the fees described or referred to in
SECTION 2.04), the one receiving such excess payment shall purchase,
without recourse or warranty, an undivided interest and participation
(which it shall be deemed to have been done simultaneously upon the receipt
of such payment) in such Agreement Obligations owed to the others so that
all such recoveries with respect to such Agreement Obligations shall be
applied ratably in accordance with their Pro Rata Shares; PROVIDED, that if
all or part of such excess payment received by the purchasing party is
thereafter recovered from it, those purchases shall be rescinded and the
purchase prices paid for such 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. The Borrower agrees that any
Lender so purchasing a participation from another Lender pursuant to this
SECTION 12.06(A) may, to the fullest extent permitted by law, exercise all
its rights of payment with respect to such participation as fully as if
such Lender were the direct creditor of the Borrower in the amount of such
participation.
(b) In the event that any Lender fails to fund its Pro Rata Share of
any Borrowing requested or deemed requested by the Borrower which such
Lender is obligated to fund under the terms of this Agreement (the funded
portion of such Borrowing 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 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 12.06(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
2.03(C);
(ii) any such Lender shall be deemed to have cured its failure to
fund its Pro Rata Share of any Borrowing at such time as an amount equal
to such Lender's original Pro Rata Share of the requested principal
portion of such Borrowing is fully funded to the Borrower, whether made
by such Lender itself or by operation of the terms of this SECTION
12.06(B), 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 Borrowing
("CURE LOANS") shall bear interest at the rate applicable to Base Rate
Loans under SECTION 2.03 in effect from time to time, and for all other
purposes of this Agreement shall be treated as if they were Base Rate
Loans;
(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 terms of SECTION 2.06, would be applied to the
outstanding Base Rate Loans shall be applied FIRST, ratably to all Base
Rate Loans constituting Non Pro Rata Loans, SECOND, ratably to Base Rate
Loans other than those constituting Non Pro Rata Loans or Cure Loans
and, THIRD, ratably to Base Rate Loans constituting Cure Loans;
(v) for so long as and until the earlier of any such Lender's cure
of the failure to fund its Pro Rata Share of any Borrowing and the
termination of the Commitments, the term "Requisite Lenders" for
purposes of this Agreement shall mean Lenders (excluding all Lenders
whose failure to
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fund their respective Pro Rata Shares of such Borrowing have not been so
cured) whose Pro Rata Shares represent more than fifty percent (50%) of
the aggregate Pro Rata Shares of such Lenders, and the term
"Supermajority Lenders" for purposes of this Agreement shall mean
Lenders (excluding all Lenders whose failure to fund their respective
Pro Rata Shares if such Borrowing have not been so cured) whose Pro Rata
Shares represent at least sixty-six and two-thirds percent (66 2/3%) of
the aggregate Pro Rata Shares of such Lenders; and
(vi) for so long as and until any such Lender's failure to fund its
Pro Rata Share of any Borrowing is cured in accordance with SECTION
12.06(B)(II), (A) such Lender shall not be entitled to any Commitment
Fees with respect to its Revolving Credit Commitment and (B) the
Commitment Fee shall accrue in favor of the Lenders which have funded
their respective Pro Rata Shares of such requested Borrowing, shall be
allocated among such performing 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 Lenders exceeds the sum of (I) the
outstanding principal amount of the Loans owing to such performing
Lenders, PLUS (II) the outstanding Reimbursement Obligations owing to
such performing Lenders, PLUS, (III) the aggregate participation
interests of such performing Lenders arising pursuant to SECTION 3.06
with respect to undrawn and outstanding Letters of Credit.
(c) In addition to any Liens granted to the Collateral Agent, the
Issuing Banks or Lenders 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 Lender and 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 (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 Lender or 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 Lender or Issuing Bank
including, but not limited to, all Loans and Reimbursement Obligations and
all claims of any nature or description arising out of or connected with
this Agreement or any of the other Loan Documents, irrespective of whether
or not (i) that Lender or Issuing Bank shall have made any demand hereunder
or (ii) the Administrative Agent 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 X and although said obligations and liabilities, or
any of them, may be contingent or unmatured.
12.07. AMENDMENTS AND WAIVERS. No amendment or modification of any
provision of this Agreement shall be effective without the written agreement of
the Requisite Lenders and the Borrower, and no termination or waiver of any
provision of this Agreement, or consent to any departure by the Borrower
therefrom, shall in any event be effective without the written concurrence of
the Requisite Lenders, which the Requisite Lenders shall have the right to grant
or withhold at their sole discretion, except that waivers or amendments with
respect to prepayments required pursuant to SECTION 2.05 (other than a
prepayment required from the proceeds of insurance upon the loss, damage or
destruction of any asset exceeding $10,000,000) shall not be effective without
the written concurrence of the Supermajority Lenders and except that any
amendment, modification, or waiver of any provision of this Agreement which
would (i) extend the time of expiration or termination of any of the Commitments
(other than pursuant to SECTION 2.02(G)) or the Term Loan Termination Date or
the time of payment of principal on any Loan or the Reimbursement Obligations,
interest thereon or fees (provided that any amendment, modification or waiver
with respect to any of the prepayments required pursuant to SECTION 2.05 that
results in a reduction in the amount of any such prepayment applied to any
particular scheduled amortization payment of the Term Loans shall be deemed not
to be such an extension of time of payment), including, without limitation by
any amendment to or waiver of SECTION 10.02(A), (ii) reduce the interest rate,
the amount of any fees, indemnities or reimbursements hereunder, or the
principal amount of the Loans or the Letters of Credit Obligations including,
without limitation by any amendment to or waiver of SECTION 10.02(A), (iii)
increase the amount of any of the Lenders' Commitments or increase any Lender's
Pro Rata Share, (iv) release the security interest of the Holders of Secured
Obligations in all or substantially all of the Collateral, (v) release the
Subsidiary Guaranty
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or any party thereto (other than in connection with the sale of any Subsidiary
of the Borrower, or all or substantially all of the assets of such Subsidiary,
permitted by SECTION 8.02(A)), or (vi) amend the definitions of "Requisite
Lenders", "Pro Rata Share", "Supermajority Lenders", the provisions of SECTION
2.01(B), 2.02(G), 3.02, 3.04 or 3.06, the next to the last sentence of SECTION
12.15 or the provisions contained in SECTION 12.06 or in this SECTION 12.07 or
the parties whose consent is required for action hereunder or under the other
Loan Documents, shall be effective only if evidenced by a writing signed by or
on behalf of all Lenders. Notwithstanding the foregoing, with the written
approval of the Supermajority Lenders, individual Lenders may agree to defer
interim amortization payments due to such Lenders with respect to the Term
Loans, PROVIDED, HOWEVER, that each Lender that votes against such deferral
shall receive such payments on each scheduled interim amortization date as
required pursuant to SECTION 2.01(C). No amendment, modification, termination,
or waiver of any provision of ARTICLE XI or any other provision referring to the
Administrative Agent or the Collateral Agent shall be effective without the
written concurrence of the Administrative Agent or the Collateral Agent, as
applicable. No amendment, modification, termination or waiver of any provision
of Article III shall be effective without the written consent of all of the
Issuing Banks. The Administrative Agent and the Collateral Agent may, but shall
have no obligation to, with the concurrence of any Lender, execute amendments,
modifications, waivers or consents on behalf of such 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 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 12.07 shall be binding on each
assignee, transferee or recipient of a Lender's Commitments or Loans, each
future assignee, transferee, recipient of a Lender's Commitments or Loans, and,
if signed by the Borrower, on the Borrower.
12.08. 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, 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 12.08) shall
be as set forth in SCHEDULE A or on the 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.
12.09. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No failure
or delay on the part of the Administrative Agent, the Collateral Agent, any
Issuing Bank or any Lender in the exercise of any power, right or privilege
under any of the Loan Documents shall impair such power, right or privilege or
be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege. All
rights and remedies existing under the Loan Documents are cumulative to and not
exclusive of any rights or remedies otherwise available.
12.10. TERMINATION. Upon the termination in whole of the Commitments
pursuant to the terms of this Agreement, the Borrower shall pay to the
Administrative Agent for the benefit of the Lenders and the Issuing Banks an
amount equal to any and all Agreement Obligations then outstanding.
12.11. MARSHALLING; RECOURSE TO SECURITY; PAYMENTS SET ASIDE. Neither any
Lender nor the Collateral Agent nor the Administrative Agent shall be under any
obligation to marshal any assets in favor of Borrower or any other party or
against or in payment of any or all of the Obligations. Recourse to security
shall not be required at any time. To the extent that the Borrower makes a
payment or payments to the Administrative Agent or the Lenders, or the
Administrative Agent or the Collateral Agent or the Lenders enforce their
security interests or exercise their rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
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
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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.
12.12. 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.
12.13. HEADINGS. Article and Section headings in this Agreement and in
the Table of Contents hereto 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.
12.14. GOVERNING LAW. THE ADMINISTRATIVE AGENT HEREBY ACCEPTS THIS
AGREEMENT, ON BEHALF OF ITSELF, THE COLLATERAL AGENT AND THE LENDERS, AT NEW
YORK, NEW YORK BY ACKNOWLEDGING AND AGREEING TO IT THERE. ANY DISPUTE AMONG THE
BORROWER AND THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT, THE ISSUING BANKS,
ANY LENDER OR ANY OTHER HOLDER OF SECURED OBLIGATIONS ARISING OUT OF, CONNECTED
WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM IN
CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND WHETHER
ARISING IN CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
12.15. SUCCESSORS AND ASSIGNS; SUBSEQUENT HOLDERS OF NOTES. 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. The
terms and provisions of this Agreement shall inure to the benefit of any
assignee or transferee of the Loans and the Commitments of any Lender (to the
extent such assignment or transfer is effected in accordance with SECTION
12.02), and in the event of such transfer or assignment, the rights and
privileges herein conferred upon Lenders shall automatically extend to and be
vested in such transferee or assignee, all subject to the terms and conditions
hereof. The Borrower's rights or any interest therein hereunder, and the
Borrower's duties and Obligations hereunder, may not be assigned without the
written consent of all of the Lenders. All of the Borrower's obligations and
duties under this Agreement and under each of the other Loan Documents shall be
binding upon each of the Borrower's successors and assigns, including, without
limitation, any receiver, trustee or debtor-in-possession of or for the
Borrower.
12.16. CONSENT TO JURISDICTION; SERVICE OF PROCESS; JURY TRIAL.
(A) EXCLUSIVE JURISDICTION. EXCEPT AS PROVIDED IN SUBSECTION (B),
EACH OF THE PARTIES HERETO AGREES THAT ALL DISPUTES AMONG THEM ARISING OUT
OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS WHETHER ARISING IN CONTRACT, TORT, EQUITY, OR
OTHERWISE, SHALL BE RESOLVED EXCLUSIVELY BY STATE OR FEDERAL COURTS LOCATED
IN NEW YORK, NEW YORK, BUT THE PARTIES HERETO ACKNOWLEDGE THAT ANY APPEALS
FROM THOSE COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF NEW
YORK, NEW YORK. EACH OF THE PARTIES HERETO WAIVES IN ALL DISPUTES BROUGHT
PURSUANT TO THIS SUBSECTION ANY OBJECTION THAT IT MAY HAVE TO THE LOCATION
OF THE COURT CONSIDERING THE DISPUTE.
(B) OTHER JURISDICTIONS. THE BORROWER AGREES THAT THE ADMINISTRATIVE
AGENT, THE COLLATERAL AGENT, THE ISSUING BANKS OR ANY LENDER SHALL HAVE THE
RIGHT TO PROCEED AGAINST THE BORROWER OR ITS PROPERTY IN A COURT IN ANY
LOCATION TO ENABLE SUCH PERSON TO (1) OBTAIN PERSONAL JURISDICTION OVER THE
BORROWER OR (2) REALIZE ON THE COLLATERAL (INCLUDING, WITHOUT LIMITATION,
THE REAL PROPERTY COLLATERAL) OR ANY
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OTHER SECURITY FOR THE OBLIGATIONS OR TO ENFORCE A JUDGMENT OR OTHER COURT
ORDER ENTERED IN FAVOR OF SUCH PERSON. THE BORROWER WAIVES ANY OBJECTION
THAT IT MAY HAVE TO THE LOCATION OF THE COURT IN WHICH SUCH PERSON HAS
COMMENCED A PROCEEDING DESCRIBED IN THIS SUBSECTION.
(C) SERVICE OF PROCESS. THE BORROWER WAIVES PERSONAL SERVICE OF ANY
PROCESS UPON IT AND, AS ADDITIONAL SECURITY FOR THE OBLIGATIONS,
IRREVOCABLY APPOINTS CT CORPORATION SYSTEM, THE BORROWER'S REGISTERED
ADMINISTRATIVE AGENT, WHOSE ADDRESS IS 1633 BROADWAY, NEW YORK, NEW YORK
10019, AS THE BORROWER'S ADMINISTRATIVE AGENT FOR THE PURPOSE OF ACCEPTING
SERVICE OF PROCESS ISSUED BY ANY COURT; PROVIDED THAT NOTICE OF ANY SUCH
SERVICE IS CONCURRENTLY THEREWITH DELIVERED TO BORROWER PURSUANT TO SECTION
12.08. 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 ITMAY NOW OR HEREAFTER HAVE TO THE BRINGING OF
ANY SUCH ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH IN ANY JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO IRREVOCABLY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE, ARISING OUT OF, CONNECTED
WITH, RELATED TO OR INCIDENTAL TO THE RELATIONSHIP ESTABLISHED AMONG THEM
IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH. EACH OF THE PARTIES
HERETO AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY
HERETO 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.
(E) WAIVER OF BOND. THE BORROWER WAIVES THE POSTING OF ANY BOND
OTHERWISE REQUIRED OF ANY PARTY HERETO IN CONNECTION WITH ANY JUDICIAL
PROCESS OR PROCEEDING TO REALIZE ON THE COLLATERAL (INCLUDING, WITHOUT
LIMITATION, THE REAL PROPERTY COLLATERAL) OR ANY OTHER SECURITY FOR THE
OBLIGATIONS OR TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN
FAVOR OF SUCH PARTY, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER, PRELIMINARY OR PERMANENT INJUNCTION, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT.
(F) ADVICE OF COUNSEL. EACH OF THE PARTIES REPRESENTS TO EACH OTHER
PARTY HERETO THAT IT HAS DISCUSSED THIS AGREEMENT AND, SPECIFICALLY, THE
PROVISIONS OF THIS SECTION 12.16, WITH ITS COUNSEL.
12.17. COUNTERPARTS; EFFECTIVENESS; INCONSISTENCIES. 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 shall become effective against each of the
Borrower, each Lender, the Collateral Agent, the Issuing Banks and the
Administrative Agent on the date when all of such parties have duly executed and
delivered this Agreement to each other (delivery by the Borrower to the Lenders
and by any Lender to the Borrower and any other Lender being deemed to have been
made by delivery to the Administrative Agent). 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
79
<PAGE> 85
Agreement are actually inconsistent with the terms and conditions of any other
Loan Document, this Agreement shall govern.
12.18. PERFORMANCE OF OBLIGATIONS. The Borrower agrees that the
Administrative Agent and the Collateral Agent may each, but shall have no
obligation to, make any payment or perform any act required of the Borrower
under any Loan Document or take any other action which the Administrative Agent
or the Collateral Agent in its discretion deems necessary or desirable to
protect or preserve the Collateral, 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 Collateral, (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 and (iii) pay any rents payable by the Borrower which are more than 30
days past due, or as to which the landlord has given notice of termination,
under any lease. The Administrative Agent or the Collateral Agent, as
applicable, shall use its best efforts to give the Borrower notice of any action
taken under this SECTION 12.18 prior to the taking of such action or promptly
thereafter provided the failure to give such notice shall not affect the
Borrower's obligations in respect thereof. The Borrower agrees to pay the
Administrative Agent or the Collateral Agent, as applicable, upon demand, the
principal amount of all funds advanced by the Administrative Agent or the
Collateral Agent under this SECTION 12.18, together with interest thereon at the
rate from time to time applicable to Base Rate Loans from the date of such
advance until the outstanding principal balance thereof is paid in full. If the
Borrower fails to make payment in respect of any such advance under this SECTION
12.18 within one (1) Business Day after the date the Borrower receives written
demand therefor from the Administrative Agent or the Collateral Agent, as
applicable, the Administrative Agent or the Collateral Agent shall promptly
notify each Lender and each Lender agrees that it shall thereupon make available
to the Administrative Agent or the Collateral Agent, as applicable, in Dollars
in immediately available funds, the amount equal to such Lender's Pro Rata Share
of such advance. If such funds are not made available to the Administrative
Agent or the Collateral Agent, as applicable, by such Lender within one (1)
Business Day after the Administrative Agent's or Collateral Agent's demand
therefor, the Administrative Agent or Collateral Agent, as applicable, will be
entitled to recover any such amount from such Lender together with interest
thereon at the Federal Funds Rate (as such term is defined in the definition of
Alternate Base 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 or Collateral Agent, as
applicable, its Pro Rata Share of any such unreimbursed advance under this
SECTION 12.18 shall neither relieve any other Lender of its obligation hereunder
to make available to the Administrative Agent or Collateral Agent, as
applicable, such other Lender's Pro Rata Share of such 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 or Collateral Agent, as applicable. All
outstanding principal of, and interest on, advances made under this SECTION
12.18 shall constitute Obligations secured by the Collateral until paid in full
by the Borrower.
12.19. ENTIRE AGREEMENT. THIS WRITTEN CREDIT AGREEMENT REPRESENTS THE
FINAL AGREEMENT AMONG THE PARTIES AS TO ITS SUBJECT MATTER AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS AMONG THE PARTIES. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES.
80
<PAGE> 86
THIS SPACE INTENTIONALLY LEFT BLANK
81
<PAGE> 87
IN WITNESS WHEREOF, this Agreement has been duly executed on the date set
forth above.
FALCON BUILDING PRODUCTS, INC.,
as Borrower
By: /s/ Gus Athas
Name: Gus Athas
Title: Senior Vice President
CHEMICAL BANK,
as Administrative Agent
By: /s/ Lisa D. Benitez
Name: Lisa D. Benitez
Title: Vice President
CITICORP NORTH AMERICA, INC.,
as Collateral Agent
By: /s/ Emily Rosenstock
Name: Emily Rosenstock
Title: Vice President
82
<PAGE> 1
Exhibit 10.6
EAGLE INDUSTRIES, INC. EMPLOYEE STOCK INCENTIVE PLAN
1. Purpose and Effective Date. Eagle Industries, Inc. (the "Company" has
established this Employee Stock Incentive Plan (the "Plan") to facilitate the
hiring, retention and continued motivation of key employees and consultants and
to align more closely their interests with those of the Company and its
stockholders. The effective date of the Plan shall be December 1, 1994.
2. Administration. The Plan shall be administered by the Compensation
Committee of the Company's Board of Directors or such other Board committee as
the Board may designate, provided that any committee administering the Plan
shall be comprised of directors who are both "disinterested" as provided by the
regulations of the Securities and Exchange Commission and "outside" as provided
by the regulation of the Internal Revenue Service under the provisions of the
Omnibus Budget Reconciliation Act of 1993 limiting the deductibility of
executive compensation under Section 162(m) of the U.S. Internal Revenue Code
(the "Committee"). The Committee may delegate all or any portion of its powers
and responsibilities under the Plan to one or more officers or directors of the
Company to the extent that such powers and responsibilities relate to
participation in the Plan by persons who are not subject to Section 16(b) of
the Securities Exchange Act of 1935 (the "Exchange Act"). The Committee has
the authority and responsibility for the interpretation, administration and
application of the provisions of the Plan, and the Committee's interpretations
of the Plan and all actions taken by it and determinations made by it shall be
binding on all persons. No Board or Committee member shall be liable for any
determination, decision or action made in good faith with respect to the Plan.
3. Shares Subject to Plan. The shares of Common Stock ("Shares"), par
value 1 cent per share, which may be issued pursuant to the Plan shall be
300,000 shares upon the increase of the outstanding shares from 1,000 to
1,860,000 shares by splitting each of the currently outstanding shares into
1,860 shares. The Shares may be authorized but unissued Shares or Shares
reacquired by the Company and held in its treasury. Grants of incentive awards
under the Plan will reduce the number of Shares available thereunder by the
maximum number of Shares obtainable under such grants. If all or any portion
of the Shares otherwise subject to any grant under the Plan are not delivered
for any reason including, but not limited to, the cancellation, expiration or
termination of any option right or unit, the settlement of any award in cash,
the forfeiture of any restricted stock, or the repurchase of any Shares by the
Company for the cost of the employee's investment in the Shares, such number of
Shares shall be available again for issuance under the Plan. The number of
Shares covered by or specified in the Plan, will be adjusted proportionately
for any increase or decrease in the number of issued Shares resulting from a
subdivision or consolidation of Shares or payment of stock dividends on the
Common Stock or any other increase or decrease in the number of issued Shares
made without receipt of consideration by the Company, in each case other than
the increase to 1,860,000 shares described above.
4. Eligibility. All key employees and active consultants of the Company
and its subsidiaries and its parents are eligible to be selected to receive a
grant under the Plan by the Committee. The Committee may condition eligibility
under the Plan or participation under the Plan and any grant or exercise of an
incentive award under the Plan to such conditions, limitations or
<PAGE> 2
restrictions as the Company determines to be appropriate for any reason. No
person may be granted in any period of two consecutive calendar years, awards
covering more than 150,000 Shares. No person may be granted an award which
together with awards under the Plan previously granted to such person, to the
extent such awards have not terminated without the receipt thereunder of any
Shares or cash in lieu thereof, cover more than 150,000 Shares.
5. Incentive Awards. The Committee may grant incentive awards to
eligible employees in the form of stock options (including incentive stock
options within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code), stock grants, restricted stock, stock appreciation
rights, performance shares and units and dividend equivalent rights, and shall
establish the number of Shares subject to each such grant and the terms
thereof, including any adjustments for reorganizations and dividends, subject
to the following:
A) All awards granted under the Plan shall be evidenced by
agreements or grants in such form and containing such terms
and conditions not inconsistent with the Plan as the Committee
shall prescribe.
B) Any grant under the Plan to an employee who is subject to
Section 16(b) of the Exchange Act shall not be transferable
other than by will or the laws of descent and distribution and
during the employee's lifetime shall be exercisable only by
him or by his guardian or legal representative.
C) The exercise price of any option or stock appreciation right
shall not be less than the fair market value of a
corresponding number of Shares as of the date of grant, except
that such minimum option price may be reduced (but not below
par value) in the case of options granted in consideration of
a reduction in compensation by the amount of such reduction.
D) The aggregate fair market value (determined as of the date of
grant) of Shares for which a participant may first exercise
incentive stock options granted under this Plan and all other
stock option plans of the Company and its subsidiaries in any
calendar year shall not exceed $100,000 or such other amount
or limitation as may be provided from time to time by the
Code. The extent that the aggregate fair market value with
respect to which incentive stock options would otherwise be
exercisable for the first time by an individual in any
calendar year under such plans exceeds $100,000, taking
options into account in the order in which they were granted,
such options shall be treated as options which are not
incentive stock options.
6. Amendment of the Plan. The Board of Directors or the Committee may
from time to time suspend, terminate, revise or amend the Plan or the terms of
any grant in any respect whatsoever, provided that, without the approval of the
stockholders of the Company, no such revision or amendment may increase the
number of Shares subject to the Plan, expand those eligible for grants under
the Plan or change the qualification for membership on the Committee, and
provided, further, that no suspension, discontinuation, revision or amendment
may adversely affect any grant theretofore made without the consent of the
grantee, unless necessary to comply with applicable law.
Adopted as of the 30th day of November 1994 by the Directors and
Stockholder of Eagle Industries, Inc.
<PAGE> 3
EAGLE INDUSTRIES, INC.
STOCK OPTION TERMS
1. DEFINITIONS
A) "Agreement" shall mean a stock option grant made subject to
these Terms.
B) "Board" shall mean the Board of Directors of the Corporation,
as constituted from time to time, or any committee of that
board authorized to act on matters relating to stock options.
C) "Code" shall mean the Internal Revenue Code of 1954, as
amended.
D) "Corporation" shall mean Eagle Industries, Inc. a Delaware
corporation.
E) "Date of Grant" shall mean the date as of which an Agreement
is effective as stated in the Agreement.
F) "Employee" shall mean an individual who is an employee (within
the meaning of Section 3401 (c) of the Code and the
regulations thereunder) of the Corporation or of a Subsidiary
or of a Parent or an individual who is an active consultant to
the Corporation.
G) "Employment Termination" shall mean the termination of the
Optionee's status as an Employee for any reason.
H) "Exercise Price" shall mean the amount for which one Share may
be purchased upon exercise of an Option, as specified in the
Agreement.
I) "Nonstatutory Stock Option" shall mean an option not described
in Sections 422(b), 422A(b), 423(b), or 424(b) of the Code.
J) "Option" shall mean a Nonstatutory Stock Option granted
pursuant to an Agreement.
K) "Option Period" shall mean the term of an Option, as specified
in an Agreement.
L) "Parent" shall mean any corporation which owns at least fifty
percent (50%) of the total combined voting power of all
classes of stock in the Corporation or in another Parent.
M) "Partial Exercise" shall mean an exercise with respect to less
than all of the remaining Shares exercisable pursuant to an
Option.
N) "Terms" shall mean these Eagle Industries, Inc. Stock Option
Terms.
<PAGE> 4
O) "Purchase Price" shall mean the Exercise Price multiplied by
the number of Shares with respect to which an Option is
exercised.
P) "Securities Act" shall mean the Securities Act of 1933, as
amended.
Q) "Share" shall mean one (1) share of Stock as adjusted in
accordance with Paragraph 4 of these Terms (if applicable).
R) "Stock" shall mean one the Common Stock of the Corporation or
in lieu thereof, stock described in Paragraph 16 if such stock
is designated pursuant to the provisions of Paragraph 16 to be
the "Stock."
S) "Subsidiary" shall mean any corporation, if the Corporation
and/or one or more other Subsidiaries own at least fifty
percent (50%) of the total combined voting power of all
classes of outstanding stock in such corporation.
2. RIGHT TO EXERCISE
Subject to the conditions set forth below and the exceptions set
forth in Paragraphs 3 and 4 of these Terms, an Option shall become
exercisable as specified in the Agreement. No partial Exercise of an
Option may be made for a number of Shares having an aggregate value of
less than $2500.
3. TERM OF OPTION
An option shall expire on the date specified in the Agreement. In
addition, an Option shall expire upon the termination of the Optionee's
service as an Employee, if such termination occurs first, subject to
the following provisions:
A) If the Employment Termination is caused by the Optionee's
death, then the Option (to the extent not previously
exercised) may be exercised within twelve (12) months after
the Optionee's death by the Optionee's executors or
administrators or by any person or persons who have acquired
the Option directly from the Optionee by bequest or
inheritance ("Optionee's Representative"), but only to the
extent that the Option was exercisable under Paragraph 2 of
these Terms on date of death.
<PAGE> 5
B) If Employment Termination is caused by any reason other than death or
for cause, then the Option (to the extent not previously exercised)
may be exercised within a period of seven months after the
termination, or if the Employment termination is for cause, then the
Option shall terminate on the date of such Employment Termination, but
in each case only to the extent that the option was exercisable under
Paragraph 2 of these Terms on the date of the termination. If the
Optionee dies within such period, the Option (to the extent not
previously exercised) may be exercised within twelve (12) months after
the Optionee's death by the Optionee's Representative, but only to the
extent that the option was exercisable under Paragraph 2 of these
Terms on the date of the termination.
Any other provision of an Agreement or these Terms to the contrary
notwithstanding, an Option shall not be exercisable after the expiration date
set forth in the Agreement.
For purposes of this Paragraph 3, the Employee relationship shall be deemed to
continue while the Optionee is acting as a consultant, or is on military leave,
sick leave or other bona fide leave of absence (to be determined in the sole
discretion of the Board).
4. SHARES AND ADJUSTMENT
All of the provisions of this Paragraph 4 are subject to, and are
overridden by the provisions of Paragraph 16 of these Terms.
The Exercise Price in effect at any time and the number and kind of securities
purchasable upon exercise of an Option shall be subject to adjustment from time
to time upon the happening of certain events, as follows:
A) In case the Corporation shall (i) pay a dividend in Shares of Stock or
make a distribution in Shares of Stock to its Stockholders, (ii)
subdivide its outstanding Shares of Stock, (iii) combine its
outstanding Shares of Stock into a smaller number of Shares of Stock
or (iv) issue by reclassification of its Shares of Stock other
securities of the Corporation (including any such reclassification in
connection with a consolidation or merger in which the Corporation is
the continuing corporation), the number of Shares purchasable upon
exercise of an Option immediately prior thereto shall be adjusted so
that the Optionee shall be entitled to receive the kind and number of
Shares or other securities of the Corporation which the Optionee would
have owned or have been entitled to receive after the happening of any
of the events described above, had the Option been exercised
immediately prior to the happening of such event or any record date
with respect thereto. An adjustment made pursuant to this Paragraph
(a) shall become effective immediately after the effective date of
such event retroactive to immediately after the record date, if any,
for such event.
B) In case the Corporation shall issue rights, options, or warrants to
all holders of its Shares of Stock, without any charge to such
holders, entitling them (for a period expiring within 45 days after
the record date mentioned below in this Paragraph (b) to subscribe for
or purchase Shares of Stock at a price per share which is lower at the
record date mentioned below than the then Current Market Price per
Share of Stock (as defined in Paragraph (d) below), the number of
Shares thereafter purchasable upon the exercise of an Option shall be
determined by multiplying the number of Shares theretofore purchasable
by a fraction, of which the numerator shall be the number of Shares of
Stock outstanding on such
<PAGE> 6
record date plus the number of additional Shares of Stock offered for
subscription or purchase, and of which the denominator shall be the
number of Shares of Stock outstanding on such record date plus the
number of shares which the aggregate offering price of the total
number of Shares of Stock so offered would purchase at the then
Current Market Price per Share of Stock. Such adjustment shall be
made whenever such rights, options or warrants are issued, and shall
become effective retroactively immediately after the record date for
the determination of shareholders entitled to receive such rights,
options or warrants.
C) In case the Corporation shall distribute to all holders of Shares of
Stock (i) shares of stock other than Stock, (ii) evidences of its
indebtedness, (iii) assets or cash (excluding ordinary cash dividends
payable out of consolidated earnings or retained earnings and
dividends or distributions referred to in Paragraph (a) above), or
(iv) rights, options or warrants or convertible or exchangeable
securities containing the right to subscribe for or purchase Shares of
Stock (excluding those referred to in Paragraph (b) above), then in
each case the number of Shares thereafter purchasable upon the
exercise of an Option shall be determined by multiplying the number of
Shares theretofore purchasable upon the exercise of the Option, by a
fraction, the numerator of which shall be the Current Market Price per
Share of Stock on the record date mentioned below in this Paragraph
(c), and the denominator of which shall be the Current Market Price
per Share of Stock on such record date, less the then fair value of
the portion of the shares of stock other than Stock or assets or
evidences of indebtedness so distributed or of such subscription
rights, options or warrants, or of such convertible or exchangeable
securities applicable to one Share of Stock. Such adjustment shall be
made whenever any such distribution is made, and shall become
effective on the date of distribution retroactive to immediately after
the record date for the determination of shareholders entitled to
receive such distribution.
D) For the purpose of any computation under Paragraphs (b) and (c) above,
the Current Market Price per Share of Stock at any date shall be the
average of the daily closing prices for 15 consecutive trading days
commencing 20 trading days before the date of such computation. The
closing price for each day shall be the last reported sale price or,
in case no such reported sale takes place on such day, the average of
the closing bid and asked prices for such day, in either case on the
principal national securities exchange on which the Shares are listed
or admitted to trading, or if they are not listed or admitted to
trading on any national securities exchange, but are traded in the
over-the-counter market, the closing sale price of the Stock, or in
case no sale is publicly reported, the average of the representative
closing bid and asked quotations for the Stock on NASDAQ or any
comparable system, or if the Stock is not listed on NASDAQ or any
comparable system, the closing sale price of the Stock, or in case no
sale is publicly reported, the average of the closing bid and asked
prices as furnished by two members of the National Association of
Securities Dealers, Inc. selected from time to time by the Corporation
for that purpose, or if there is no public market for the Stock, the
fair market value of the Stock as determined by the Committee or, if
the determination of the Committee is rejected by the Optionee or by
the Optionee's Representative by written notice delivered to the
Committee within seven days of being notified of the Committee's
determination, by Duff & Phelps Financial Consulting Company or
another independent appraisal firm selected by the Committee.
E) No adjustment in the number of Shares purchasable hereunder shall be
required unless such adjustment would require an increase or decrease
of at least 1% in the number of
<PAGE> 7
Shares purchasable upon the exercise of an Option; provided, however,
that any adjustments which by reason of this Paragraph (e) are not
required to be made shall be carried forward and taken into account in
any subsequent adjustment, but not later than three years after the
happening of the specified event or events. All calculations shall be
made to the nearest one thousandth of a share. Anything in these
provisions to the contrary notwithstanding, the Corporation shall be
entitled, but shall not be required to made such changes in the number
of Shares purchasable upon the exercise of an Option, in addition to
those required by this Paragraph 4, as it in its discretion shall
determine to be advisable in order that any dividend or distribution
in Shares of Stock, issuance of rights, warrants or options to
purchase Stock, or distribution of shares of stock other than Stock,
evidences of indebtedness or assets or cash (other than ordinary cash
dividends out of consolidated earnings or retained earnings) or
convertible or exchangeable securities hereafter made by the
Corporation to the holders of Stock shall not result in any tax to the
holders of Stock or securities convertible into Stock.
F) Whenever the number of Shares purchasable upon the exercise of an
Option is adjusted, as herein provided, the Exercise Price payable
upon exercise of the Option shall be adjusted by multiplying such
Exercise Price immediately prior to such adjustment by a fraction, of
which the numerator shall be the number of Shares purchasable upon the
exercise of the Option immediately prior to such adjustment, and of
which the denominator shall be the number of Shares so purchasable
immediately thereafter.
G) In the event that at any time, as a result of any adjustment made
pursuant to Paragraph (a) above, the Optionee shall become entitled to
purchase any shares of capital stock of the Corporation other than
Shares of Stock, thereafter the number of such other shares so
purchasable upon exercise of this Option and the Exercise Price of
such shares shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the
provisions with respect to the Shares contained in Paragraphs (a)
through (f) inclusive, above, and Paragraphs (h) through (k),
inclusive, below, and the provisions of these Terms with respect to
Shares shall apply on like terms to such other shares.
H) Upon the expiration of any rights, options, warrants or conversion or
exchange privileges, if any thereof shall not have been exercised, the
Exercise Price and the number of shares of Stock purchasable upon the
exercise of an Option shall, upon such expiration, be readjusted and
shall thereafter be such as it would have been had it been originally
adjusted (or had the original adjustment not been required , as the
case may be) as if (x) the only Shares of Stock so issued were the
Shares of Stock, if any, actually issued or sold upon the exercise of
such rights, options, warrants or conversion or exchange rights and
(y) such Shares of Stock, if any, were issued or sold for the
consideration actually received by the Corporation upon such exercise
plus the aggregate consideration, if any, actually received by the
Corporation for the issuance, sale or grant of all such rights,
options, warrants or conversion or exchange rights whether or not
exercised; provided, however, that no such readjustment shall have the
effect of increasing the Exercise Price by an amount in excess of the
amount of adjustment initially made in respect of the issuance, sale
or grant of such rights, options, warrants or conversion or exchange
rights.
I) Whenever the number of Shares purchasable upon the exercise of an
Option or the Exercise Price of an Option is adjusted, as herein
provided, the Corporation shall promptly mail by first class mail,
postage prepaid, to the Optionee notice of such
<PAGE> 8
adjustment or adjustments. The Corporation may retain a firm of
independent public accountants (who may be the regular accountants
employed by the Corporation) to make any computation required by these
provisions and shall cause such accountants to prepare a certificate
setting forth the number of Shares purchasable upon the exercise of
the Option and the Exercise Price of such Shares after such
adjustment, setting forth a brief statement of the facts requiring
such adjustment and setting forth the computation by which such
adjustment was made. Such certificate shall be conclusive of the
correctness of such adjustment and the Optionee shall have the right
to inspect such certificate during reasonable business hours.
J) Except as provided in these provisions, no adjustment in respect of
any dividends shall be made during the term of an Option or upon the
exercise of an Option.
K) In case of any consolidation of the Corporation with or merger of the
Corporation with or into another corporation or in case of any sale or
conveyance to another corporation of the property of the Corporation
as an entirety or substantially as an entirety, the Corporation or
such successor or purchasing corporation (or an affiliate of such
successor or purchasing corporation) as the case may be, agrees that
the Optionee shall have the right thereafter upon payment of the
Exercise Price in effect immediately prior to such action to purchase
upon exercise of an Option the kind and amount of shares and other
securities and property (including cash) which the Optionee would have
owned or have been entitled to receive after the happening of such
consolidation, merger, sale or conveyance had the option been
exercised immediately prior to such action. The provisions of this
Paragraph (k) shall similarly apply to successive consolidations,
mergers, sales or conveyances.
5. EXERCISE OF OPTION
The Optionee or the Optionee's Representative may exercise an Option
by giving written notice to the Secretary of the Corporation. The
notice shall specify the election to exercise the Option, the number
of Shares for which it is being exercised and the form of payment.
The notice shall be signed by the person or persons exercising the
option. In the event that the Option is being exercised by the
representative of the Optionee, the notice shall be accompanied by
proof satisfactory to the Corporation of the representative's right to
exercise the Option. The Optionee or the Optionee's Representative
shall deliver to the Secretary of the Corporation, at the time of
giving the notice, payment in the form which conforms to the
applicable subparagraph of Paragraph 15 of these Terms for the full
amount of the Purchase Price.
The Corporation shall thereafter cause to be issued a certificate or
certificates for the Shares as to which an Option has been exercised,
registered in the name of the person exercising the Option (or in the
names of such person and his or her spouse as community property or
as joint tenants with right of survivorship).
6. WITHHOLDING TAXES
In the event that the Corporation determines that it is required to
withhold Federal, state or local tax as a result of the exercise of an
Option, the Optionee, as a condition to the exercise of the Option,
shall make arrangements satisfactory to the Corporation to enable it
to satisfy such withholding requirements. The Optionee shall also
make arrangements
<PAGE> 9
satisfactory to the Corporation to enable it to satisfy any
withholding requirements that may arise in connection with the
disposition of Shares purchased by exercising an Option.
7. RIGHTS AS A SHAREHOLDER
Neither the Optionee nor the Optionee's Representative shall have any
rights as a shareholder with respect to any shares subject to an
Option until the Option has been properly exercised and the Shares
subject to the Option have been issued in the name of the Optionee or
the Optionee's Representative.
8. LEGALITY OF ISSUANCE
No Shares shall be issued upon the exercise of an Option unless and
until the Corporation has determined that:
a) It and the Optionee have taken all actions required to
register the Shares under the Securities Act or to perfect an
exemption from the registration requirements thereof;
b) Any applicable listing requirement of any stock exchange on
which stock is listed has been satisfied; and
c) Any other applicable provision of state or Federal law has
been satisfied.
9. RESTRICTIONS ON TRANSFER OF SHARES
Regardless of whether the offering and sale of Shares have been
registered under the Securities Act or have been registered or
qualified under the securities laws of any state, the Corporation may
impose restrictions upon the sale, pledge or other transfer of such
Shares (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Corporation and its counsel,
such restrictions are necessary or desirable in order to achieve
compliance with the provisions of the Securities Act, the securities
laws of any state or any other law.
In the event that the sale of Shares is not registered under the
Securities Act but an exemption is available which requires an
investment representation or other representation, the Optionee shall
represent and agree that the Shares to be acquired pursuant to the
exercise of an Option are being acquired for investment, and not with
a view to the sale or distribution thereof, and shall make such other
representations as are deemed necessary or appropriate by the
Corporation and its counsel.
Stock certificates evidencing Shares acquired under an Agreement in an
unregistered transaction shall bear the following restrictive legend
(and such other restrictive legends as are required or deemed
advisable under the provisions of any applicable law):
"THE SALE OF THE SECURITIES REPRESENTED HEREBY HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 ('ACT'). ANY
TRANSFER OF SUCH SECURITIES WILL BE INVALID UNLESS A
REGISTRATION STATEMENT UNDER THE ACT IS IN EFFECT AS TO
<PAGE> 10
SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR THE ISSUER SUCH
REGISTRATION IS UNNECESSARY IN ORDER FOR SUCH TRANSFER TO
COMPLY WITH THE ACT."
Any determination by the Corporation and its counsel in connection
with any of the matters set forth in this Paragraph 9 shall be
conclusive and binding on the Optionee and all other person.
10. REGISTRATION OF SECURITIES
The Corporation may, but shall not be obligated to, register or
qualify the sale of Shares under the Securities Act or any other
applicable law. The Corporation shall not be obligated to take any
affirmative action in order to cause the sale of Shares acquired under
an Agreement to comply with any law.
11. REMOVAL OF LEGENDS
If, in the opinion of the Corporation and its counsel, any legend
placed on a stock certificate representing Shares sold under an
Agreement is no longer required, the holder of such certificate shall
be entitled to exchange such certificate for a certificate
representing the same number of Shares but lacking such legend.
12. NO TRANSFER OR ASSIGNMENT OF OPTION
Except as otherwise provided in Paragraph 3(a) of these Terms, an
Option and the rights and privileges conferred thereby shall not be
transferred, assigned, pledged or hypothecated in any way (whether by
operation of law or otherwise) and shall not be subject to sale under
execution, attachment or similar process. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of an
Option, or of any right or privilege conferred hereby, contrary to the
provisions hereof, or upon any attempted sale under any execution,
attachment or similar process upon the rights and privileges conferred
hereby, the Option and the rights and privileges conferred hereby
shall immediately become null and void.
13. NO EMPLOYMENT RIGHTS
Nothing in these Terms or an Agreement shall be construed as giving
the Optionee the right to be retained as an Employee or as impairing
the right of the Corporation to terminate his or her service at any
time, with or without cause.
14. DESIGNATION OF OPTION
All Options shall be Nonstatutory Stock Options.
<PAGE> 11
15. PAYMENT FOR STOCK
a) Payment in Cash
The entire Purchase Price may be paid in U.S. dollars.
B) Surrender of Stock
All or part of the Purchase Price may be paid by the surrender
of Shares in good form for transfer. Such Shares must have
been owned by the Optionee or the Optionee's Representative
for six (6) months or more and must have a value [as
determined pursuant to Paragraph 4(d)] on the date of exercise
of an Option which, together with any amount paid in a form
other than Shares, is equal to the Purchase Price.
16. CERTAIN ADJUSTMENTS
It is understood and agreed that before any Stock is purchased
pursuant to an Option, that the number of outstanding Shares will be
increased to 1,860,000 by splitting each of the currently outstanding
shares into 1,860 shares and that no adjustment shall be made to an
Option because of such occurrence.
The Board may designate as the Stock subject to an Option, the common
stock of a parent of the Corporation or a tracking stock (using the
USX stocks as a model) of a Parent of the Corporation which will have
terms, reasonably satisfactory to the tax counsel for the Corporation
which cause such stock to track the value of the common stock of the
Corporation. In either event, such Parent shall be substituted for
the Corporation and shall thereafter be the Corporation in these
Terms, and appropriate adjustments shall be made in the number of
Shares covered by an Option and in the exercise price thereof to
continue in the opinion of the Committee, the same economic value.
17. CHANGES AND INTERPRETATION
These Terms and an Agreement may be modified only in writing
authorized by the Committee and by either the Optionee to whom the
modification is being applied or by holders of a majority of options
to purchase Stock issued to Employees by the Corporation.
Notwithstanding the foregoing, the Committee shall have the authority
to interpret and administer the provisions of these Terms and such
actions by the Committee shall be final and binding.
<PAGE> 12
IN WITNESS WHEREOF, the Corporation has caused these Terms to be executed on
its behalf by its officer duly authorized to act on behalf of the Corporation
as of this 1st day of December, 1994.
Eagle Industries, Inc.
By: /s/ Gus J. Athas
---------------------------------
Gus J. Athas
Title: Senior Vice-President
------------------------------
<PAGE> 13
OPTIONEE/STOCKHOLDER AGREEMENT
In consideration of the granting of stock options and other good and
valuable consideration, the parties hereby agree as follows:
1. All terms used in this Agreement shall have the same meaning as the
terms in the Eagle Industries, Inc. Stock Option Terms.
2. This Agreement shall apply to all Stock acquired pursuant to Options
granted at any time to an Optionee who is a party to this Agreement at any
time.
3. Upon the written request of an Optionee or the Optionee's
Representative to the Secretary of the Corporation to register under the
Securities Act all Shares which had been held by the Optionee or Optionee's
Representative for more than six months at the time of such request, the
Corporation shall use its best efforts to cause such Shares to be so registered
as soon as reasonably practicable so as to permit promptly the sale thereof.
The party requesting the registration shall provide all information as may be
in the party's control and take all such action as may be reasonably required
to permit the Corporation to comply with applicable requirements for such
registration. Notwithstanding the foregoing, the Corporation (i) shall not be
obligated to file more than one registration statement during any four-month
period, (ii) shall not be obligated to cause any special audit to be undertaken
in connection with any such registration and (iii) shall be entitled to
postpone for a reasonable period of time, but not in excess of 60 days, the
filing of any registration statement otherwise required to be prepared and
filed by the Corporation if (A) the Corporation determines that the
registration and distribution of the Shares would interfere with any pending or
imminent financing, acquisition, corporate reorganization or other transaction
involving the Corporation or any of its affiliates or (B) the Corporation
determines that it is precluded, either due to circumstances beyond its control
or because it is unable or unwilling for valid corporate purposes to make any
disclosure which would be required to be made therein, from filing any such
registration statement.
4. In lieu of complying with Paragraph 3, the Corporation may purchase
the Shares for which registration is requested at their Fair Market Value.
"Fair Market Value" shall be the value per Share as determined in accordance
with Paragraph 4(d) of the Eagle Industries, Inc. Stock Option Terms. Fair
Market Value shall be determined quarterly as of the end of each calendar
quarter. The Fair Market Value used for any purchase shall be the latest such
determination available at the time of the purchase. THE DETERMINATION
PURSUANT TO THESE PROVISIONS SHALL BE FINAL AND BINDING ON BOTH THE COMPANY AND
THE OPTIONEE AND THE OPTIONEE'S REPRESENTATIVE.
5. In the event of an Employment Termination for any reason (including
death), Shares purchased by the Optionee or the Optionee's Representative prior
or subsequent thereto may be purchased by the Corporation at its election
pursuant to the provisions of Paragraph 4 of this Agreement as if the Optionee
or Optionee's Representative had requested the registration under Paragraph 4
as of the date of the Corporation's election to purchase such Shares. The
Corporation may elect to purchase such Shares not more than 10 days after being
notified of the Employment Termination.
<PAGE> 14
6. Before selling any Shares, the Optionee or the Optionee's
Representative will first notify the Secretary of the Corporation in writing of
the identity of the proposed purchaser and the proposed purchase terms. The
Corporation by written notice to the Optionee within 10 days of its receipt of
such notification from the Optionee or the Optionee's Representative may
purchase such Shares, at the election of the Corporation, on the proposed terms
or pursuant to the provisions of Paragraph 4 of this Agreement as if the
Optionee or the Optionee's Representative had requested registration of the
Shares under Paragraph 4 as of the date of such notification by the Company.
7. As long as there is no public market for the Shares, upon the request
of an Optionee or the Optionee's Representative and simultaneous with the
exercise of an Option, the Corporation will loan the Optionee or the Optionee's
Representative, an amount sufficient to exercise the Option and to pay the
taxes and witholding for taxes triggered by the exercise when and as required.
The loan shall be secured in a manner reasonably satisfactory to the
Corporation by any Shares held by the Optionee or the Optionee's Representative
and any amounts due the Optionee or the Optionee's Representative under this
Agreement or otherwise owed to the Optionee or the Optionee's Representative by
the Corporation. The maximum period of the loan shall be 12 months and the
interest rate for the loan shall be the higher of the lowest commercial rate
then available or the applicable federal rate specified by Section 1274(d) of
the Code.
8. No rights under this Agreement shall accrue to or be exercisable to
anyone other than the parties to this Agreement, the Optionee's Representative,
the Corporation and any successor of the Corporation.
9. This Agreement may be modified only in writing authorized by the
Committee and by either the Optionee or Optionee's Representative or
Stockholder to whom the modification is being applied or by holders of a
majority of options to purchase Stock issued to Employees by the Corporation
and Shares issued pursuant to such Options. Notwithstanding the foregoing, the
Committee shall have the authority to interpret and administer the provisions
of this Agreement and such actions by the Committee shall be final and binding.
10. This Agreement may be executed in counterparts and its validity shall
not be affected by the failure of any Optionee or Stockholder to execute this
Agreement.
Dated this 1st day of December, 1994
EAGLE INDUSTRIES, INC. OPTIONEE:
By: ______________________ ______________________
Its:_______________________ _______________________
[print name]
<PAGE> 1
Exhibit 10.14
GAMI-FALCON DISAFFILIATION
TAX SHARING AGREEMENT
This GAMI-FALCON DISAFFILIATION TAX SHARING AGREEMENT ("Agreement")
made as of October 28, 1994, by and among Great American Management and
Investment, Inc., a Delaware corporation ("GAMI"); Eagle Industrial Products
Corporation, O.D.E. Manufacturing, Inc., and Amerace Corporation, all Delaware
corporations (collectively "Eagle"); and Falcon Building Products, Inc., a
Delaware corporation ("FALCON"),
WITNESSETH THAT:
WHEREAS, GAMI is the common parent corporation of the affiliated
group (as such terms are defined in Section 1504(a) of the Code) (the
"Consolidated Group") of which Eagle is a Member, and of which FALCON is a
third tier subsidiary and of which FALCON's direct and indirect subsidiaries
(the "FALCON Subsidiaries") are members; and
WHEREAS, GAMI, EAGLE and FALCON are parties to a Tax Sharing
Agreement made as of the 31st day of January, 1994 (the "Existing Tax Sharing
Agreement"); and
WHEREAS, shares of FALCON common stock will be sold pursuant to a
public offering; upon completion of the offering, GAMI and EAGLE will not own
enough of the outstanding shares of FALCON stock for FALCON to be a member of
the Consolidated Group (the "Disaffiliation":); and
WHEREAS, upon and after the consummation of the transactions pursuant
to the Disaffiliation, and as a result thereof, FALCON and the FALCON
Subsidiaries will cease to be members of the Consolidated Group (the date of
such cessation being referred to herein as the "Disaffiliation Date"); and
WHEREAS, the parties to this Agreement desire to set forth their
agreement in relation to liability for taxes (including interest and penalties
thereon) that are or may be owed by, or asserted against, FALCON and the FALCON
Subsidiaries;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants and conditions hereinafter contained, the parties hereto
agree as follows:
<PAGE> 2
1. GENERAL INTENT AND THIRD PARTY RIGHTS; INDEMNIFICATION
(a) It is the general intent of the parties to this Agreement that:
(1) GAMI and EAGLE shall economically bear the burden of all
federal income taxes imposed on the income of the
Consolidated Group excluding FALCON and the FALCON
Subsidiaries; and that FALCON shall economically bear
the burden of all federal income taxes imposed on the
income of FALCON or the FALCON Subsidiaries;
(2) FALCON shall bear the burden of all taxes imposed on
FALCON or the FALCON Subsidiaries by state and local
taxing authorities, including, but not limited to,
sales, use, occupation, franchise, excise, income, or
any other tax, fee or assessment (a "non-Federal tax")
imposed on FALCON, it being acknowledged that FALCON
and the FALCON Subsidiaries have at all times relevant
hereto filed non-Federal tax returns and paid all
non-Federal tax amounts computed on a stand-alone basis
without regard to any affiliation of FALCON with GAMI;
and
(3) FALCON shall bear the burden of all foreign income taxes
imposed on FALCON and the FALCON Subsidiaries.
This Agreement shall be construed accordingly. This Agreement
shall not create any rights in any person other than the
parties to this Agreement and the FALCON Subsidiaries.
(b) GAMI and EAGLE shall indemnify and hold FALCON harmless from
and against GAMI Taxes, and FALCON shall indemnify and hold
GAMI and EAGLE harmless from and against FALCON Taxes.
2. CONTINUATION OF EXISTING TAX SHARING AGREEMENT; TERMINATION OF ALL
OTHER TAX SHARING AGREEMENTS. The Existing Tax Sharing Agreement shall
continue to apply in accordance with its terms, except as modified by this
Agreement. To the extent a provision of the Existing Tax Sharing Agreement
is inconsistent with a provision of this Agreement, the Provision of this
Agreement shall apply.
<PAGE> 3
3. CERTAIN DEFINITIONS. Capitalized terms not defined elsewhere in this
Agreement or in the Existing Tax Sharing Agreement shall have the following
meanings:
(a) The term "Tax" means any imposed by subtitle A of the Code.
(b) The term "Period" means the period of time under applicable
law for which a Tax is imposed.
(c) The term "Return" means the return or the report, if any, to
be filed with the IRS for a Tax with respect to a Period.
(d) "Old Periods" are Periods ending on or before the
Disaffiliation Date.
(e) The "Stub Period" is the Period of FALCON commencing August
1, 1994 and ending on the date of the interim closing of the
books pursuant to the Disaffiliation as set forth in Section
4(b). The Stub Period is an Old Period.
(f) "New Periods" are Periods beginning after the Stub Period.
(g) "FALCON Taxes" are Taxes for which FALCON is liable under the
Existing Tax Sharing Agreement and this Agreement, and the
related Periods are "FALCON Periods".
(h) "GAMI Taxes" are all taxes imposed on the Consolidated Group
excluding FALCON Taxes.
(i) "IRS" shall mean the United States Internal Revenue Service.
(j) The "Maximum Applicable Corporate Tax Rate" with respect to
a Tax shall be the maximum marginal corporate tax rate
determined without regard to tax rate or tax benefit make-up
provisions such as Section 11(b)(1) (last sentence) of the
Code.
(k) "Final Computation" means the final computation of
amounts owing between the parties with respect to a Period as
such amount is determined in the ordinary course of the
preparation of the Return filed with respect to such Period,
and shall be deemed to have occurred on the later of the date
on which such Return is filed with the IRS or the
Disaffiliation Date.
(l) The term "Code" means the Internal Revenue Code of 1986, as
amended.
<PAGE> 4
4. SPECIAL RULES FOR COMPUTATION AND PAYMENT OF TAXES FOR STUB PERIOD.
Stub Period.
(a) COMPUTATION AND PAYMENT OF TAXES. The amount of the Stand
Alone Tax Liability (as such term is defined in Section 1 of the
Existing Tax Sharing Agreement) for the Stub Period of FALCON
shall be estimated and the amount of such estimate shall
be due and payable on the fifteenth day of the third calendar
month following the calendar month in which the Disaffiliation
Date occurs. Actual amounts owing between the parties with
respect to the Stub Period shall be computed on or before the
due date (with extensions) of the GAMI return which includes the
Stub Period, and FALCON shall pay to EAGLE any remaining
amounts owing, or EAGLE shall refund to FALCON any excess amount
paid by FALCON, as appropriate. Amounts owing between the
parties hereunder which are paid after the fifteenth day of the
third calendar month following the calendar month in which the
Disaffiliation Date occurs shall bear interest from such date
until the date paid at an annual rate of 2 percent (2%) per annum
over the prime rate in effect from time to time at Bank of
America Illinois.
(b) INTERIM CLOSING OF BOOKS. The computation of the Stand
Alone Tax Liability for the Stub Period shall be determined on
the basis of an interim closing of the books for financial
reporting purposes for the month end nearest the Disaffiliation
Date. In the event there is not an interim closing of the books
for financial reporting purposes, then the computation of the
Stand Alone Tax Liability for the Stub Period shall be determined
on the basis of the FALCON internal financial statements for the
month end nearest the Disaffiliation Date or on any other basis
agreed to by the parties.
(c) Any item of income or gain included in the income of the
Consolidated Group under Reg. Section 1.1502-19, relating to
"excess loss accounts", by reason of any transactions or events
occurring on the Disaffiliation Date shall not be taken into
account in computing the Stand Alone Tax Liability of FALCON but
shall be treated as an item entering into the computation of Tax
economically borne by GAMI and EAGLE.
<PAGE> 5
(d) ELECTIONS.
(1) No options otherwise available under Reg. Section
1.1502-76(b)(5) for the Stub Period of FALCON shall be
exercised without the consent of both GAMI and FALCON.
(2) With Respect to FALCON, GAMI shall not, and shall not
permit FALCON, to change any existing or adopt any new
tax accounting principle, method of accounting, or tax
election, except as provided herein or as agreed to by
FALCON.
5. ADJUSTMENTS TO TAXES SUBSEQUENT TO FINAL COMPUTATION.
(a) IN GENERAL. In the event of adjustments to Taxes for an Old
Period Subsequent to the Final Computation thereof, whether
such adjustments arise pursuant to an IRS audit, a court
proceeding, a carryback, an amended Return or otherwise ("Tax
Adjustments"), the allocation of liabilities under the
Existing Tax Sharing Agreement and this Agreement shall be
recomputed and payments between the parties shall be made as
provided in the existing Tax Sharing Agreement and this
Agreement, subject to the following modifications:
(1) The amount owing by FALCON to GAMI and EAGLE shall be
computed within 15 days after the time that GAMI or
EAGLE has notified FALCON that it has realized a "Tax
Detriment" (such Tax Detriment being equal to the
excess of: (x) the last made computation of Tax for
such Period after taking into account the Tax
Adjustments; over (y) the last made computation of Tax
for such Period determined without taking into account
such Tax Adjustments). GAMI and EAGLE are deemed to
realize a Tax Detriment by either a payment of such Tax
Detriment to the IRS, or by an application by the IRS
of such Tax Detriment against a refund, and shall be
paid 15 days after the date of such computation.
(2) If an adjustment results in additional foreign tax
imposed on FALCON, then GAMI and EAGLE shall pay FALCON
either: (a) 100% of such amount, if such amount gives
rise to a credit against tax, or (b) the Maximum
Applicable Corporate Tax Rate applied to such amount,
if such amount gives rise to a loss or
<PAGE> 6
deduction (such payment being referred to as the
"Foreign Tax Refund"). Notwithstanding the foregoing,
the maximum amount of any Foreign Tax Refund under this
Section 5(a)(2) from GAMI and EAGLE to FALCON shall not
exceed the amount of any tax benefit realized by GAMI
and EAGLE as a result of the imposition of such foreign
tax on FALCON. To the extent GAMI and EAGLE have paid
to FALCON a Foreign Tax Refund in excess of the maximum
amount payable under this Section 5(a)(2), FALCON shall
promptly return such excess to GAMI and EAGLE.
(3) If an adjustment occurs by reason of a carryback of a
loss or deduction with respect to a FALCON Tax from a
New Period to an Old Period, then GAMI shall pay FALCON
100% of such amount, if such amount is a credit against
tax, and the maximum applicable corporate tax rate
applied to such amount, if such amount is a loss or
deduction (such payment being referred to as the
"Carryback Refund"). Notwithstanding the foregoing,
the maximum amount of any carryback refund under this
Section 5(a)(3) from GAMI to FALCON shall not exceed
the amount of any tax benefit realized by GAMI as a
result of such carryback. To the extent GAMI has paid
to FALCON a Carryback Refund in excess of the maximum
amount payable under this Section 5(a)(3), FALCON shall
promptly return such excess to GAMI.
(4) Interest and penalties imposed by law on the taxpayer
or the IRS with respect to any Tax (including with
respect to the making and/or filing of the related
Return) and reasonable expenses incurred by the parties
in connection with seeking a refund of Tax or
contesting a proposed deficiency of Tax shall be
treated under the principles set forth in this
Agreement applicable to the related Tax and shall
relate to the Period to which such Tax relates. This
Section 5(a)(4) shall not be construed to modify the
provisions of the other Sections of this Agreement.
(5) Notwithstanding the foregoing, no payment shall be
required to be made under this Section 5(a) unless a
written claim for such payment, along with all
information and documentation reasonably necessary to
support such claim, is served on the party requested to
make such payment prior to the later of: (x)
<PAGE> 7
the fifth anniversary of the date of this Agreement, or
(y) the expiration of the applicable Tax statute of
limitations (including extensions) with respect to such
Period to which such claim relates.
(b) Tax refunds and payments of deficiencies in taxes shall be
treated under the foregoing principles and payments between the
parties shall be made promptly and to the extent necessary to
effectuate such principles.
6. COOPERATION/DISAGREEMENTS.
(a) The parties shall cooperate fully with each other in all
matters relating to Taxes and in the determination of amounts
payable hereunder. If the parties are unable to agree as to
the amount of any Tax owing between them under this Agreement,
then the parties shall select a mutually acceptable "Big 6"
accounting firm to determine such amount. The costs of such
determination shall be borne equally by both parties.
(b) Any party involved in any formal or informal act or proceeding
relating to Tax matters which affects the other party shall
promptly give such other party notice thereof and keep such
other party fully and timely informed of developments.
Specifically:
(1) Upon receipt by FALCON of a written notice of any
pending or threatened Tax audits of or assessments
against FALCON for Taxes allocable to GAMI or EAGLE, or
upon receipt by GAMI or EAGLE of a written notice of
any pending or threatened Tax audits of or assessments
against GAMI or EAGLE for Taxes allocable to FALCON
(either, a "Potential Tax Liability"), FALCON (or GAMI
or EAGLE, as the case may be) shall promptly give
notice thereof to GAMI or EAGLE (or FALCON, as the case
may be) (the "Tax Claim Notice"). The Tax Claim Notice
shall contain information (to the extent known to
FALCON or GAMI or EAGLE, as the case may be) describing
the Potential Tax Liability.
(2) Subject to subparagraph (3) hereof, GAMI shall have the
sole right to represent FALCON's interests in any Tax
audit or administrative or court proceeding relating to
a Potential Tax Liability, to employ counsel of its
choice at its expense and to control the conduct of
such audit or proceeding, including settlement or other
disposition thereof. If GAMI elects to so
<PAGE> 8
represent FALCON's interests, it shall within thirty
(30) days of delivery of any Tax Claim Notice (or
sooner, if the nature of the Potential Tax Liability so
requires) notify FALCON of its intent to do so, and
FALCON shall cooperate in the defense against or
compromise of any claim in any such proceeding. In that
event, GAMI shall reasonably and in good faith consult
with FALCON with respect to the defense against or
compromise of any such Potential Tax Liability, and GAMI
shall use its best efforts to vigorously defend FALCON
with respect to such Potential Tax Liability. If GAMI
elects not to represent FALCON's interests, FALCON may
pay, compromise or contest such Potential Tax Liability
in such manner as it deems appropriate (in its sole
discretion).
(3) Notwithstanding subparagraph (2) hereof, in respect of
a Potential Tax Liability relating to Returns other
than consolidated, combined or unitary Returns of GAMI
or EAGLE or their affiliates which include FALCON,
neither GAMI nor EAGLE may settle, compromise or
otherwise dispose of any such liability, without the
consent of FALCON (which consent shall not be
unreasonably withheld or delayed), if such settlement,
compromise or other disposition would have an adverse
effect on FALCON for New Periods. In that event, GAMI
or EAGLE shall permit FALCON, through counsel of its
own choosing and at the sole expense of FALCON, to
participate in the settlement, compromise or other
disposition of such Potential Tax Liability.
7. MISCELLANEOUS MATTERS.
(a) If FALCON and/or any of the FALCON Subsidiaries is required to
file a consolidated, combined, or unitary state, local or
foreign income tax return with GAMI or EAGLE, then this
Agreement shall apply with respect to such income tax in a
manner similar to its application hereunder with respect to
the federal income tax, taking into account concepts
applicable under the state, local, or foreign tax laws.
(b) Notice of any claim under this Agreement must be received by
the party against whom such claim is made no later than the
expiration of the applicable Tax statute of limitations (if
any) with respect to the Tax matter underlying such claims.
<PAGE> 9
(c) The representations, warranties, covenants and
agreements of the parties set forth in this Agreement
shall survive the Disaffiliation Date indefinitely.
(d) All notices, requests, demands and other communications
which are required or may be given under this Agreement
shall be given to GAMI at:
GREAT AMERICAN MANAGEMENT AND INVESTMENT, INC.
TWO NORTH RIVERSIDE PLAZA, SUITE 600
CHICAGO, ILLINOIS 60606
ATTN: ARTHUR A. GREENBERG
to EAGLE at:
EAGLE INDUSTRIAL PRODUCTS CORPORATION
TWO NORTH RIVERSIDE PLAZA, SUITE 1100
CHICAGO, ILLINOIS 60606
ATTN: SAM A. COTTONE
to FALCON at:
FALCON BUILDING PRODUCTS, INC.
TWO NORTH RIVERSIDE PLAZA, SUITE 1100
CHICAGO, ILLINOIS 60606
ATTN: SAM A. COTTONE
(e) In the event that disaffiliation of FALCON from the
affiliated group of which GAMI is the common parent
does not occur as contemplated by this Agreement, then
this Agreement shall be void ab initio.
(f) This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective
successors and assigns.
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.
<PAGE> 10
GREAT AMERICAN MANAGEMENT AND
INVESTMENT, INC.
By: /s/ John M. Zoeller
----------------------------------
Name: John M. Zoeller
Title: Vice President - Taxes
EAGLE INDUSTRIAL PRODUCTS CORPORATION
O.D.E. MANUFACTURING, INC.
AMERACE CORPORATION
By: /s/ Gus J. Athas
----------------------------------
Name: Gus J. Athas
Title: Vice President
FALCON BUILDING PRODUCTS, INC.
By: /s/ Gus J. Athas
----------------------------------
Name: Gus J. Athas
Title: Senior Vice-President
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the December
31, 1994 annual report on Form 10-K and is qualified in its entirety by
reference to such finanancial statements.
</LEGEND>
<MULTIPLIER> 1,000,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1994
<PERIOD-END> DEC-31-1994
<EXCHANGE-RATE> 1
<CASH> 31
<SECURITIES> 0
<RECEIVABLES> 30
<ALLOWANCES> (1)
<INVENTORY> 127
<CURRENT-ASSETS> 273
<PP&E> 320
<DEPRECIATION> (135)
<TOTAL-ASSETS> 868
<CURRENT-LIABILITIES> 174
<BONDS> 367
<COMMON> 0
0
0
<OTHER-SE> 164
<TOTAL-LIABILITY-AND-EQUITY> 868
<SALES> 994
<TOTAL-REVENUES> 994
<CGS> 793
<TOTAL-COSTS> 793
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37
<INCOME-PRETAX> 58
<INCOME-TAX> 1
<INCOME-CONTINUING> 57
<DISCONTINUED> (26)
<EXTRAORDINARY> (16)
<CHANGES> 0
<NET-INCOME> 15
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
