SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934
For Quarter Ended June 30, 1997 Commission File Number 0-6611
SIMPSON INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Michigan 38-1225111
(State or other jurisdiction of IRS Employer Identification No.)
incorporation or organization)
47603 Halyard Drive, Plymouth, Michigan 48170-2429
(Address of principal executive offices) (Zip Code)
(313)207-6200
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed since last
report)
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 and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
At July 31, 1997 there were 18,128,212 outstanding shares of the registrant's
common stock, $1.00 par value each.
PAGE
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Consolidated Balance Sheets (Unaudited)
(In thousands)
June 30, 1997 and December 31, 1996
June 30 Dec. 31
ASSETS
Current Assets
Cash and cash equivalents $ 920 $ 28,902
Accounts receivable 63,589 41,032
Inventories 18,206 14,034
Customer tooling in process 6,455 4,002
Prepaid expenses and other
current assets 5,440 6,256
Total Current Assets 94,610 94,226
Property, Plant and Equipment
Cost 309,327 278,229
Less Allowance 135,460 126,152
Total Property, Plant and Equipment 173,867 152,077
Unallocated Purchase Cost 38,843 -
Other Assets 15,625 2,653
$322,945 $248,956
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Notes payable $ 490 -
Current installment of
long-term debt 3,579 $ 3,579
Accounts payable 33,307 28,455
Compensation and amounts withheld 7,573 10,203
Taxes, other than income taxes 2,326 2,597
Other accrued expenses 9,825 4,354
Total Current Liabilities 57,100 49,188
Long-term debt, excluding current
installment 116,854 58,643
Accrued Retirement Benefits 14,750 14,015
Deferred Income Taxes 12,261 11,118
Shareholders' Equity 121,980 115,992
$322,945 $248,956
PAGE
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Consolidated Statements of Operations (Unaudited)
(Dollars in thousands, except per share amounts)
Periods Ended June 30, 1997 and 1996
Six Months Three Months
1997 1996 1997 1996
Net sales $216,148 $211,470 $110,274 $110,049
Costs and expenses:
Cost of products sold 192,292 186,821 97,234 95,783
Administrative and selling 6,223 6,199 3,191 3,364
198,515 193,020 100,425 99,147
Operating Earnings 17,633 18,450 9,849 10,902
Investment and other
income, net 526 159 107 35
Interest expense (2,717) (2,724) (1,424) (1,384)
Earnings Before Income Taxes 15,442 15,885 8,532 9,553
Income taxes 5,637 5,957 3,114 3,582
Net Earnings $ 9,805 $ 9,928 $ 5,418 $ 5,971
Net Earnings Per Share $0.54 $0.55 $0.30 $0.33
Cash dividends per share $0.20 $0.20 $0.10 $0.10
Average number of common
equivalent shares 18,163,432 18,096,326 18,177,427 18,118,936
PAGE
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Consolidated Statements of Cash Flows (Unaudited)
(In thousands)
Six Months Ended June 30, 1997 and 1996
1997 1996
OPERATING ACTIVITIES
Net earnings $ 9,805 $ 9,928
Depreciation 10,556 10,192
Provision for deferred income taxes 598 552
Amortization of restricted stock 163 159
(Gain) loss on disposition of assets (85) 237
Changes in operating assets and liabilities,
net of effects of acquisition
of business (11,370) (3,053)
Cash Provided By Operating Activities 9,667 18,015
INVESTING ACTIVITIES
Acquisition of business, net of cash
acquired (74,388) -
Capital expenditures (17,699) (9,671)
Proceeds from disposal of property
and equipment 206 43
Cash Used In Investing Activities (91,881) (9,628)
FINANCING ACTIVITIES
Cash dividends paid (3,626) (3,616)
Proceeds (repayments) of long-term
debt, net 58,211 (1,788)
Cash provided by stock transactions, net - 242
Cash Provided From (Used In)
Financing Activities 54,585 (5,162)
Effect of foreign currency exchange
rate changes (353) 64
Increase (Decrease)In Cash and
Cash Equivalents (27,982) 3,289
Cash and cash equivalents at
beginning of period 28,902 13,490
Cash and Cash Equivalents at End
of Period $ 920 $16,779
Supplemental Disclosures
Cash paid during the year for:
Interest $ 2,590 $ 2,677
Income Taxes 4,207 3,673
PAGE
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Note 1. Significant Accounting Principles
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial reporting. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations for the period
ended June 30, 1997 are not necessarily indicative of the results to be
expected for the year ending December 31, 1997.
Goodwill is amortized on a straight-line basis over 40 years. Specific
intangibles are amortized on a straight-line basis over the estimated periods
benefited with periods ranging from 5 to 20 years. For further information
regarding the Company's accounting policies, refer to the Consolidated
Financial Statements and related notes included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996.
Note 2. Holset VA Acquisition
On June 27, the Company through a wholly owned subsidiary purchased the
Vibration Attenuation division of Holset Engineering Company Limited ("Holset
VA") from Cummins Engine Company. The aggregate purchase cost for the
acquisition of the Holset VA Business was $76.6 million. Funds for the Holset
VA Business acquisition, net of cash received, were provided by cash and
borrowings of $60 million under the Credit Agreements as described in Note 4.
The Holset VA Business has operations in the United Kingdom, France, Spain,
Mexico, Korea, Brazil, the United States and India. Holset VA manufactures
rubber and viscous dampers and supplies three main markets including heavy
truck, light truck and automotive and industrial.
The acquisition was accounted for as a purchase transaction. The purchase
cost of $76.6 million has been allocated to assets and liabilities acquired
based upon their preliminary estimated fair values at the acquisition date.
The excess of purchase price over estimated values for assets and liabilities
has been reflected as unallocated purchase cost which is being amortized over
forty years. The final allocation of the purchase cost to assets and
liabilities will depend on the final results of appraisals that are not yet
available and investigations into liabilities assumed that are not yet
complete. Therefore, the final allocation will probably differ from the
estimated allocation, possibly by substantial amounts. The preliminary
allocation at June 27, 1997 of the $76.6 million purchase cost is summarized
as follows:
(In thousands)
Current assets $17,748
Property, plant and equipment 15,806
Unallocated purchase cost, principally
goodwill 38,843
Intangible assets 12,728
Other noncurrent assets 841
Current liabilities (9,346)
Total purchase cost $76,620
The operations of the Holset VA Business from the acquisition date to June 30,
1997 were not material to the consolidated Statement of Income of the Company.
See Note 3 for pro forma information.
NOTE 3. Pro Forma Information
The following pro forma unaudited financial data is presented to illustrate
the estimated effects of (i) the Holset VA acquisition and (ii) the completion
of the new credit agreements (Note 4) as if the transactions had occurred as
of January 1 of each year presented (in thousands, except per share data).
_____________________________________________________________
Six Months Ended
June 30 June 30
1997 1996
Net sales 251,911 246,800
Net income 10,228 10,665
Net income per share $0.56 $0.59
_____________________________________________________________
The pro forma information above does not purport to be indicative of the
results that actually would have been achieved if the transactions had
occurred prior to the years presented, and is not intended to be a projection
of future results or trends.
Note 4. Debt
In June, 1997, the Company entered into revolving credit agreements to allow
for borrowings of up to $50 million under a five-year agreement and up to $50
million under a 364-day agreement. Borrowings outstanding under these
agreements at June 30, 1997 were $50 million at an interest rate of 6.3% and
$10 million at an interest rate of 8.25%, respectively. The 364-day agreement
is classified as long-term based on management's intent to renew it each year.
Borrowings under the credit agreements bear interest, at the election of the
Company, at a floating rate of interest equal to (a) the higher of ABN AMRO's
prime lending rate and the federal funds rate plus .5% or (b) the Eurodollar
rate plus the applicable borrowing margin.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Net sales reached a record high in the second quarter of 1997, increasing
$225,000 from the second quarter of 1996. Year-to-date sales increased 2.2%
or $4,678,000 from the first half of 1996. The increased sales for the quarter
and the first half of the year reflect strong sales to diesel engine customers
and a new wheel-end suspension program that went on line in late 1996 offset
by the effects of a decline in auto production and strikes at two key
customers.
Cost of products sold as a percent of sales for the first six months of 1997
compared to the first half of 1996 increased to 89.0% from 88.3%. Cost of
products sold as a percent of sales for the second quarter of 1997 compared to
the second quarter of 1996 increased to 88.2% from 87.0%. The increase in
cost of products sold in both the three- and six-month periods ended June 30,
1997 reflects the recovery of some out-of-period start-up costs recorded in
the second quarter of 1996.
Administrative and selling costs remained at approximately 3% of sales for the
six- and three-month periods ending June, 30 1996 and 1997. Interest expense
for the six- and three-month periods ending June 30, 1997 and 1996 remained
approximately the same.
In July the company announced the closing of its Jackson, Michigan
manufacturing plant. A pre-tax charge of approximately $4 million will be
recorded in the third quarter ending September 30, 1997. This closure is
anticipated to provide annualized savings of approximately $2.5 million a year
beginning in 1998.
In June, 1997, the Company entered into revolving credit agreements to allow
for borrowings of up to $50 million under a five-year agreement and up to $50
million under a 364-day agreement. Borrowings outstanding under these
agreements at June 30, 1997 were $50 million at an interest rate of 6.3% and
$10 million at an interest rate of 8.25%, respectively. The 364-day agreement
is classified as long-term based on management's intent to renew it each year.
Borrowings under the credit agreements bear interest, at the election of the
Company, at a floating rate of interest equal to (a) the higher of ABN AMRO's
prime lending rate and the federal funds rate plus .5% or (b) the Eurodollar
rate plus the applicable borrowing margin.
On June 27, 1997, the Company purchased the Vibration Attenuation division of
Holset Engineering Company Limited ("Holset VA") from Cummins Engine Company
for an aggregate purchase price of $76.6 million. Net funds used for the
acquisition totaled $74.4 million.
Cash flow from operations was $9.7 million for the first half of 1997. Net
cash used in investing activities was $91.9 million and $9.6 million for the
six months ending June 30, 1997 and 1996, respectively. The primary reason
for the increase in investing activities was the Holset VA acquisition, as
described above. The Company's investment in production capacity for new
automotive, light truck and diesel engine programs also increased from $9.7
million in 1996 to $17.7 million in 1997. The increase was primarily due to
the new program launches occurring in 1997.
Net cash used in investing activities and dividends paid during the six months
ended June 30, 1997, exceeded cash flows from operations and net proceeds from
borrowings, discussed above, resulting in a reduction of $28 million in cash
and cash equivalents. The Company believes that cash flows from operations
and available credit facilities will be sufficient to meet its debt service
requirements, projected capital expenditures and working capital requirements.
Certain statements in this report may be "forward-looking statements" under
the Securities Exchange Act of 1934. Statements regarding future operating
performance, new programs expected to be launched and other future prospects
and developments are based on current expectations and involve certain risks
and uncertainties that could cause the actual results and developments to
differ materially from the forward-looking statements. Potential risks and
uncertainties include such factors as demand for the Company's products,
pricing and other actions taken by competitors, and general economic
conditions affecting the markets served by the Company.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report.
Exhibit No. Description
3.1 Restated Articles of Incorporation, as amended
10.3 Amendment to Note Agreement with Travelers Life
Insurance Company, dated as of May 30, 1997
(Amendment No. 2 to original Note Agreement Dated as
of June 12, 1986 with Aetna Life Insurance Company)
10.11 Amendment to Note Agreement with Massachusetts
Mutual Life Insurance Company, dated as of May 30,
1997 (Amendment No. 1 to original Note Agreement Dated as
of August 15, 1991 with Massachusetts Mutual Life
Insurance Company)
10.15 $20,000,000 Renewal Term Note Due December 31, 2008,
with Comerica Bank, dated as of June 17, 1997
10.20 $3,230,357.07 Renewal Term Note Due January 25, 2003,
with Comerica Bank, dated as of June 17, 1997
10.21 $20,000,000 Renewal Term Note Due February 7, 2005,
with Comerica Bank, dated as of June 17, 1997
10.22 Letter Agreement with Comerica Bank, dated June 17, 1997
10.24 Credit Agreement (Five Year), dated June 17, 1997,
among Simpson Industries and certain other Borrowers,
certain Commercial Lending Institutions, ABN AMRO Bank
N.V. and Comerica Bank
10.25 Credit Agreement (364 Day), dated June 17, 1997, among
Simpson Industries and certain other Borrowers, certain
Commercial Lending Institutions, ABN AMRO Bank N.V.
and Comerica Bank
11 Computation of Earnings Per Share
27 Financial Data Schedule
(b) The following reports on Form 8-K were filed during the quarter ended
June 30, 1997.
(i) April 1, 1997 - Form 8-K relating to the Holset VA acquisition.
(ii) June 20, 1997 - Form 8-K relating to the Holset VA acquisition.
PAGE
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SIMPSON INDUSTRIES, INC.
Registrant
August 11, 1997 /S/ROY E. PARROTT
Roy E. Parrott
President and Chief
Executive Officer
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
3.1 Restated Articles of Incorporation, as amended
10.3 Amendment to Note Agreement with Travelers Life
Insurance Company, dated as of May 30, 1997
(Amendment No. 2 to original Note Agreement Dated as
of June 12, 1986 with Aetna Life Insurance Company)
10.11 Amendment to Note Agreement with Massachusetts
Mutual Life Insurance Company, dated as of May 30,
1997 (Amendment No. 1 to original Note Agreement Dated as
of August 15, 1991 with Massachusetts Mutual Life
Insurance Company)
10.15 $20,000,000 Renewal Term Note Due December 31, 2008,
with Comerica Bank, dated as of June 17, 1997
10.20 $3,230,357.07 Renewal Term Note Due January 25, 2003,
with Comerica Bank, dated as of June 17, 1997
10.21 $20,000,000 Renewal Term Note Due February 7, 2005,
with Comerica Bank, dated as of June 17, 1997
10.22 Letter Agreement with Comerica Bank, dated June 17, 1997
10.24 Credit Agreement (Five Year), dated June 17, 1997,
among Simpson Industries and certain other Borrowers,
certain Commercial Lending Institutions, ABN AMRO Bank
N.V. and Comerica Bank
10.25 Credit Agreement (364 Day), dated June 17, 1997, among
Simpson Industries and certain other Borrowers, certain
Commercial Lending Institutions, ABN AMRO Bank N.V.
and Comerica Bank
11 Computation of Earnings Per Share
27 Financial Data Schedule
CERTIFICATE OF AMENDMENT TO THE ARTICLES OF INCORPORATION
For Use By Domestic Profit and Nonprofit Corporations
Pursuant to the provisions of Act 284, Public Acts of 1972 (profit
corporations), the undersigned corporation executes the following Certificate:
1. The present name of the corporation is: Simpson Industries, Inc.
2. The identification number assigned by the Bureau is: 034-302
3. The location of the registered office is:
30600 Telegraph Road, Bingham Farms, Michigan 48025
4. Article III of the Articles of Incorporation is hereby amended to
read as follows:
The total authorized capital stock is 55,000,000 shares of
common stock, par value $1.00 per share. Holders of common stock
shall have equal voting rights and other rights and shall be
entitled to one vote per share. No holder of capital stock of the
corporation shall be entitled as such as a matter of right to
subscribe for, or to purchase, any part of a new or additional
issue of stock or any other reacquired shares of stock of any
class whatsoever or of any securities convertible into stock of
any class whatsoever, whether now or hereafter authorized and
whether issued for cash or other consideration.
5. Not applicable.
6. (For profit corporations, and for nonprofit corporations whose articles
state the corporation is organized on stock or on a membership basis.)
The foregoing amendment to the Articles of Incorporation was duly
adopted on the 22nd day of April, 1997, by the shareholders if a
profit corporation, or by the shareholders or members if a
nonprofit corporation (check one of the following)
X at a meeting. The necessary votes were cast in favor
of the amendment.
Signed this 5th day of May, 1997
/S/ ROY E. PARROTT
Roy E. Parrott
President and Chief Executive Officer
7. Not applicable.
SIMPSON INDUSTRIES, INC.
Amendment to Note Agreement
Dated as of May 30, 1997
Re: Note Agreement Dated as of June 12, 1986
and
$15,000,000 8.80% Senior Notes
Due June 15, 2001
of
Simpson Industries, Inc.
PAGE
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SIMPSON INDUSTRIES, INC.
AMENDMENT TO NOTE AGREEMENT
Re: Note Agreement Dated as of June 12, 1986
and
$15,000,000 8.80% Senior Notes
Due June 15, 2001
of
Simpson Industries, Inc.
Dated as of
May 30, l997
The Travelers Insurance Company
One Tower Square
Hartford, Connecticut 06183
Ladies and Gentlemen:
Reference is made to the Note Agreement dated as of June 12, 1986, (the
"Note Agreement"), between Simpson Industries, Inc., a Michigan corporation
(the "Company"), and you, pursuant to which $15,000,000 aggregate principal
amount of 8.80% Senior Notes due June 15, 2001 (the "Notes") of the Company
were originally issued.
The Company desires to amend certain covenants contained in the Note
Agreement and hereby requests that you accept the amendments as set forth
below in the manner herein provided.
Section 1. Amendments to Note Agreement.
Section 1.1. Amendment to Section 2.1 of Note Agreement. Section 2.1
of the Note Agreement shall be amended by the addition thereto of a new
paragraph which shall read as follows:
In the event of any prepayment made pursuant to Section 2.3 in which
less than all of the Notes shall have been prepaid by the Company, the
amount of each payment required to be made pursuant to this Section 2.1
shall be reduced by a percentage equal to the aggregate principal amount
of the Notes so prepaid pursuant to Section 2.3 divided by the aggregate
principal amount of the Notes outstanding immediately prior to such
prepayment.
Section 1.2. Amendment to Section 2.3 of Note Agreement. Section 2.3
of the Note Agreement shall be amended in its entirety so that the same shall
read as follows:
Section 2.3. Prepayment upon Change in Control. (a) Notice of Change
in Control or Control Event. The Company will, within two business days after
any Responsible Officer has knowledge of the occurrence of any Change in
Control or Control Event, give written notice of such Change in Control or
Control Event to each holder of Notes unless notice in respect of such Change
in Control (or the Change in Control contemplated by such Control Event) shall
have been given pursuant to subparagraph (b) of this Section 2.3. If a Change
in Control has occurred, such notice shall contain and constitute an offer to
prepay the Notes as described in subparagraph (c) of this Section 2.3 and
shall be accompanied by the certificate described in subparagraph (g) of this
Section 2.3.
(b) Condition to Company Action. The Company will not take any action
that consummates or finalizes a Change in Control unless (i) at least 15 days
prior to such action the Company shall have given to each holder of Notes
written notice containing and constituting an offer to prepay the Notes as
described in subparagraph (c) of this Section 2.3, accompanied by the
certificate described in subparagraph (g) of this Section 2.3, and (ii)
contemporaneously with such action, the Company prepays all Notes required to
be prepaid in accordance with this Section 2.3.
(c) Offer to Prepay Notes. The offer to prepay the Notes contemplated
by subparagraphs (a) and (b) of this Section 2.3 shall be an offer to prepay,
in accordance with and subject to this Section 2.3, all, but not less than
all, of the Notes held by each holder on a date specified in such offer (the
"Proposed Prepayment Date"). If such Proposed Prepayment Date is in
connection with an offer contemplated by subparagraph (a) of this Section 2.3,
such date shall be not less than 20 days and not more than 30 days after the
date of such offer.
(d) Acceptance; Rejection. A holder of Notes may accept or reject the
offer to prepay made pursuant to this Section 2.3 by causing a notice of such
acceptance or rejection to be delivered to the Company at least five days
prior to the Proposed Prepayment Date. A failure by a holder of Notes to
respond to an offer to prepay made pursuant to this Section 2.3 shall be
deemed to constitute acceptance of such offer by such holder.
(e) Prepayment. Prepayment of the Notes pursuant to this Section 2.3
shall be at 100% of the principal amount of all Notes held by the holder or
holders accepting the Company' offer to prepay such Notes, plus a premium
equal to the premium which would have been payable if the Notes had been
prepaid in accordance with Section 2.2(b), determined for such prepayment date
with respect to such principal amount, together with interest on such Notes
accrued to the date of prepayment. The prepayment shall be made on the
Proposed Prepayment Date except as provided in subparagraph (f) of this
Section 2.3.
(f) Deferral Pending Change in Control. The obligation of the Company
to prepay the Notes pursuant to the offers required by subparagraph (b) and
accepted in accordance with subparagraph (d) of this Section 2.3 is subject to
the occurrence of the Change in Control in respect of which such offers and
acceptances shall have been made. In the event that such Change in Control
does not occur on the Proposed Prepayment Date in respect thereof, the
prepayment shall be deferred until and shall be made on the date on which such
Change in Control occurs. The Company shall keep each holder of Notes
reasonably and timely informed of (i) any such deferral of the date of
prepayment, (ii) the date on which such Change in Control and the prepayment
are expected to occur, and (iii) any determination by the Company that efforts
to effect such Change in Control have ceased or been abandoned (in which case
the offers and acceptances made pursuant to this Section 2.3 in respect of
such Change in Control shall be deemed rescinded).
(g) Officer's Certificate. Each offer to prepay the Notes pursuant to
this Section 2.3 shall be accompanied by a certificate, executed by a Senior
Financial Officer of the Company and dated the date of such offer, specifying:
(i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to
this Section 2.3; (iii) the principal amount of each Note offered to be
prepaid; (iv) the premium due in connection with such prepayment (calculated
as if the date of such Proposed Prepayment Date were the date of the
prepayment); (v) the interest that would be due on each Note offered to be
prepaid, accrued to the Proposed Prepayment Date; (vi) that the conditions of
this Section 2.3 have been fulfilled; and (vii) in reasonable detail, the
nature and date or proposed date of the Change in Control.
(h) Effect on Required Payments. The amount of each payment of the
principal of the Notes made pursuant to this Section 2.3 shall be applied
against and reduce each of the then remaining principal payments due pursuant
to Section 2.1 by a percentage equal to the aggregate principal amount of the
Notes so paid divided by the aggregate principal amount of the Notes
outstanding immediately prior to such payment.
(i) Terms Defined. The terms set forth below shall have the
respective meanings assigned thereto:
The term "Change in Control" means each and every issue, sale or other
disposition of shares of stock of the Company which results in any Person or
group of Persons acting in concert, other than any Designated Shareholders,
beneficially owning or controlling, directly or indirectly, more than 50% (by
number of votes) of the Voting Stock of the Company.
The term "control" means the possession of power to direct or cause the
direction of management and policies of such entity, whether through the
ownership of an equity interest, by contract or otherwise.
The term "Control Event" means:
(i) the execution by the Company or any of its Restricted Subsidiaries
or Affiliates of any agreement or letter of intent with respect to any
proposed transaction or event or series of transactions or events which,
individually or in the aggregate, may reasonably be expected to result in a
Change in Control,
(ii) the execution of any written agreement which, when fully performed
by the parties thereto, would result in a Change in Control, or
(iii) the making of any written offer by any person (as such term is
used in section 13(d) and section 14(d)(2) of the Exchange Act, or related
persons constituting a group (as such term is used in Rule 13d-5 under the
Exchange Act) to the holders of the Voting Stock of the Company, which offer,
if accepted by the requisite number of holders, would result in a Change in
Control.
The term "Current Management Team" shall mean Roy E. Parrott, Kathryn L.
Williams, James A. Hug, James B. Painter and James E. Garpow.
The term "Designated Shareholders" shall mean (i) the members of the
Current Management Team; (ii) the Principal Shareholders; (iii) the spouses,
lineal descendants and spouses of the lineal descendants of the Persons named
in clause (i); (iv) the estates or legal representatives of the Persons named
in clause (i); and (v) any trust, custodianship or other fiduciary arrangement
in respect of which one or more of the Persons described in clauses (i) and
(iii) are the principal beneficiaries and such Person or Persons shall have
control of such trust, custodianship or other fiduciary arrangement.
The term "Principal Shareholders" shall mean Pioneering Management
Group, J.P. Morgan & Co., Incorporated and Farmers Group Inc.
Section 1.3. Amendment to Section 2 of Note Agreement. Section 2 of
the Note Agreement shall be amended by the addition thereto of a new Section
2.4 which shall read as follows:
Section 2.4. Partial Payment Pro Rata. If there is more than one Note
outstanding, the principal amount of each required or optional partial payment
of the Notes, other than an offer to prepay the Notes pursuant to Section 2.3
which has been declined by one or more holders of Notes, will be allocated
among the Notes at the time outstanding in proportion, as nearly as
practicable, to the respective outstanding principal amount of the Notes.
Section 1.4. Amendment to Section 3 of Note Agreement. Section 3 of
the Note Agreement shall be amended in its entirety so that the same shall
read as follows:
Section 3.1. Financial and Business Information. The Company shall
deliver to each holder of Notes:
(a) Quarterly Statements within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the
last quarterly fiscal period of each such fiscal year), duplicate copies of:
(i) a consolidated balance sheet of the Company and its Restricted
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in shareholders' equity
and cash flows of the Company and its Restricted Subsidiaries for
such quarter and (in the case of the second and third quarters)
for the portion of the fiscal year ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP applicable to
quarterly financial statements generally, and certified by a
Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported
on and their results of operations and cash flows, subject to
changes resulting from normal, recurring year-end adjustments;
(b) Annual Statements within 90 days after the end of each fiscal
year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its Restricted
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in shareholders' equity
and cash flows of the Company and its Restricted Subsidiaries, for
such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail,
prepared in accordance with GAAP, and accompanied
(A) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall
state that such financial statements present fairly, in all
material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and
have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted
auditing standards, and that such audit provides a reasonable
basis for such opinion in the circumstances, and
(B) a certificate of such accountants stating that they have
reviewed this Agreement and stating further whether, in making
their audit, they have become aware of any condition or event that
then constitutes a Default or an Event of Default, and, if they
are aware that any such condition or event then exists, specifying
the nature and period of the existence thereof (it being
understood that such accountants shall not be liable, directly or
indirectly, for any failure to obtain knowledge of any Default or
Event of Default unless such accountants should have obtained
knowledge thereof in making an audit in accordance with generally
accepted auditing standards or did not make such an audit);
(c) SEC and Other Reports promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement
sent by the Company or any Subsidiary to public securities holders generally,
and (ii) each regular or periodic report, each registration statement (without
exhibits except as expressly requested by such holder), and each prospectus
and all amendments thereto filed by the Company or any Subsidiary with the
Securities and Exchange Commission and of all press releases and other
statements made available generally by the Company or any Subsidiary to the
public concerning developments that are Material;
(d) Notice of Default or Event of Default promptly, and in any event
within five days after a Responsible Officer becoming aware of the existence
of any Default or Event of Default or that any Person has given any notice or
taken any action with respect to a claimed default hereunder or that any
Person has given any notice or taken any action with respect to a claimed
default of the type referred to in Section 5.1(f), a written notice specifying
the nature and period of existence thereof and what action the Company is
taking or proposes to take with respect thereto;
(e) ERISA Matters promptly, and in any event within five days after
a Responsible Officer becoming aware of any of the following, a written notice
setting forth the nature thereof and the action, if any, that the Company or
an ERISA Affiliate proposes to take with respect thereto:
(i) with respect to any Plan, any Reportable Event for which notice
thereof has not been waived pursuant to such regulations as in
effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the threatening
by the PBGC of the institution of, proceedings under section 4042
of ERISA for the termination of, or the appointment of a trustee
to administer, any Plan, or the receipt by the Company or any
ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such
Multiemployer Plan; or
(iii) any event, transaction or condition that could result in the
incurrence of any liability by the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, or in
the imposition of any Lien on any of the rights, properties or
assets of the Company or any ERISA Affiliate pursuant to Title I
or IV of ERISA or such penalty or excise tax provisions, if such
liability or Lien, taken together with any other such liabilities
or Liens then existing, could reasonably be expected to have a
Material Adverse Effect;
(f) Notices from Governmental Authority promptly, and in any event
within 30 days of receipt thereof, copies of any notice to the Company or any
Subsidiary from any Federal or state Governmental Authority relating to any
order, ruling, statute or other law or regulation that could reasonably be
expected to have a Material Adverse Effect;
(g) Unrestricted Subsidiaries within the respective periods provided
in Section 3.1(a) and (b) above, financial statements of the character and for
the dates and periods as provided in said Section 3.1(a) and (b) covering each
Unrestricted Subsidiary (or group of Unrestricted Subsidiaries on a
consolidated basis);
(h) Material Information with reasonable promptness, the Company
will use its best efforts to provide written notice of any Material change to
the business, operations, affairs, financial condition, assets or properties
of the Company and its Restricted Subsidiaries; and
(i) Requested Information with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its obligations hereunder
and under the Notes as from time to time may be reasonably requested by any
such holder of Notes.
Section 3.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 3.1(a) or Section 3.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 4.1 through Section 4.7 hereof,
inclusive, during the quarterly or annual period covered by the statements
then being furnished (including with respect to each such Section, where
applicable, the calculations of the maximum or minimum amount, ratio or
percentage, as the case may be, permissible under the terms of such Sections,
and the calculation of the amount, ratio or percentage then in existence); and
(b) Event of Default a statement that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and
its Restricted Subsidiaries from the beginning of the quarterly or annual
period covered by the statements then being furnished to the date of the
certificate and that such review shall not have disclosed the existence during
such period of any condition or event that constitutes a Default or an Event
of Default or, if any such condition or event existed or exists (including,
without limitation, any such event or condition resulting from the failure of
the Company or any Subsidiary to comply with any Environmental Law),
specifying the nature and period of existence thereof and what action the
Company shall have taken or proposes to take with respect thereto.
Section 3.3. Inspection. The Company shall permit the representatives
of each holder of Notes:
(a) No Default if no Default or Event of Default then exists, at the
expense of such holder and upon reasonable prior notice to the Company, to
visit the principal executive office of the Company, to discuss the affairs,
finances and accounts of the Company and its Subsidiaries with the Company's
officers, and (with the consent of the Company, which consent will not be
unreasonably withheld) its independent public accountants, and (with the
consent of the Company, which consent will not be unreasonably withheld) to
visit the other offices and properties of the Company and each Subsidiary, all
at such reasonable times and as often as may be reasonably requested in
writing; and
(b) Default if a Default or Event of Default then exists, at the
expense of the Company to visit and inspect any of the offices or properties
of the Company or any Subsidiary, to examine all their respective books of
account, records, reports and other papers, to make copies and extracts
therefrom, and to discuss their respective affairs, finances and accounts with
their respective officers and independent public accountants (and by this
provision the Company authorizes said accountants to discuss the affairs,
finances and accounts of the Company and its Subsidiaries), all at such times
and as often as may be requested.
Section 1.5. Amendment to Section 4 of Note Agreement. Section 4 of
the Note Agreement shall be amended in its entirety so that the same shall
read as follows:
The Company covenants that so long as any of the Notes are
outstanding:
Section 4.1. Consolidated Net Worth. The Company will not, at
any time, permit Consolidated Net Worth to be less than the sum of (a)
$95,000,000, plus (b) 25% of its aggregate Consolidated Net Income (but
only if a positive number) for the period beginning on July 1, 1997 and
ending at the end of the then most recently completed fiscal year of the
Company (or if such date of determination is the last day of any fiscal
year, then ending on such date), computed on a cumulative basis for such
entire period.
Section 4.2. Limitations on Debt. The Company will not, and will
not permit any Restricted Subsidiary to, create, assume or incur or in
any manner be or become liable in respect of any Consolidated Debt,
except:
(a) Debt evidenced by the Notes;
(b) Consolidated Debt of the Company and its Restricted
Subsidiaries outstanding as of the date of the First Amendment and
reflected on Exhibit A to the First Amendment; and
(c) additional Consolidated Debt of the Company and its
Restricted Subsidiaries, provided that at the time of issuance thereof
and after giving effect thereto and to the application of the proceeds
thereof:
(i) no Default or Event of Default exists;
(ii) Consolidated Debt does not exceed 3.5 times EBITDA for
the then most recently ended period of four consecutive fiscal
quarters of the Company; and
(iii) in the case any such Debt is Priority Debt, such Debt
is permitted by Section 4.3.
Any corporation which becomes a Restricted Subsidiary after the
date of this Agreement shall, for all purposes of this Section 4.2, be
deemed to have created, assumed or incurred, at the time it becomes a
Restricted Subsidiary, all Debt of such corporation existing immediately
after it becomes a Restricted Subsidiary.
Section 4.3. Limitations on Priority Debt. The Company will not
at any time permit Priority Debt to exceed 15% of Total Capitalization
as of the last day of the then most recently ended fiscal quarter of the
Company.
Section 4.4. Limitation on Liens. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly
create, incur, assume or permit to exist (upon the happening of a
contingency or otherwise) any Lien on or with respect to any Property or
asset (including, without limitation, any document or instrument in
respect of goods or accounts receivable) of the Company or any such
Restricted Subsidiary, whether now owned or held or hereafter acquired,
or any income or profits therefrom, or assign or otherwise convey any
right to receive income or profits, except:
(a) Liens for taxes, assessments or other governmental charges
which are not yet due and payable or the payment of which is not at the
time required by Section 4.13;
(b) any attachment or judgment Lien, unless the judgment it
secures shall not, within 30 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not have
been discharged within 30 days after the expiration of any such stay (or
such lesser period of time as applicable law allows a judgment creditor
to levy on such judgment);
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each
case, incurred in the ordinary course of business for sums not yet due
and payable or the payment of which is not at the time required by
Section 4.13;
(d) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (i) in connection with
workers' compensation, unemployment insurance and other types of social
security or retirement benefits, or (ii) to secure (or to obtain letters
of credit that secure) the performance of tenders, statutory
obligations, surety bonds, appeal bonds, bids, leases (other than
Capitalized Leases), performance bonds, purchase, construction or sales
contracts and other similar obligations, in each case not incurred or
made in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of
Property;
(e) Liens existing on the date of the First Amendment and
securing the Debt of the Company and its Restricted Subsidiaries
referred to in Exhibit B to the First Amendment;
(f) any Lien created to secure all or any part of the purchase
price, or to secure Debt incurred or assumed to pay all or any part of
the purchase price or cost of construction, of Property (other than
accounts receivable or inventory), or any improvement thereon, acquired
or constructed by the Company or a Restricted Subsidiary after the date
of the First Amendment, provided that
(i) any such Lien shall extend solely to the item or items
of such Property (or improvement thereon) so acquired or
constructed and, if required by the terms of the instrument
originally creating such Lien, other Property (or improvement
thereon) which is an improvement to or is acquired for specific
use in connection with such acquired or constructed Property (or
improvement thereon) or which is real Property being improved by
such acquired or constructed Property (or improvement thereon),
(ii) the principal amount of the Debt secured by any such
Lien shall at no time exceed an amount equal to the lesser of (A)
the cost to the Company or such Restricted Subsidiary of the
Property (or improvement thereon) so acquired or constructed and
(B) the fair market value (as determined in good faith by the
board of directors of the Company) of such Property (or
improvement thereon) at the time of such acquisition or
construction, and
(iii) any such Lien shall be created contemporaneously with
the acquisition or construction of such Property; and
(g) in addition to the Liens permitted by the preceding clauses
(a) through (f), inclusive, of this Section 4.4, Liens on Property
(other than accounts receivable or inventory of any Company) securing
Priority Debt of the Company or any Restricted Subsidiary, provided that
such Priority Debt shall be permitted by the applicable limitations set
forth in Section 4.2 and 4.3.
Section 4.5. Merger, Consolidation, etc. The Company will not,
and will not permit any of its Restricted Subsidiaries to, consolidate
with or merge with any other corporation or convey, transfer or lease
substantially all of its assets in a single transaction or series of
transactions to any Person (except that a Restricted Subsidiary of the
Company may (x) consolidate with or merge with, or convey, transfer or
lease substantially all of its assets in a single transaction or series
of transactions to, the Company or a Wholly-Owned Restricted Subsidiary
of the Company and (y) convey, transfer or lease all of its assets in
compliance with the provisions of Section 4.6), provided that the
foregoing restriction does not apply to the consolidation or merger of
the Company with, or the conveyance, transfer or lease of substantially
all of the assets of the Company in a single transaction or series of
transactions to, any Person so long as:
(a) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety, as
the case may be (the "Successor Corporation"), shall be a solvent
corporation organized and existing under the laws of the United States
of America, any State thereof or the District of Columbia;
(b) if the Company is not the Successor Corporation, such
corporation shall have executed and delivered to each holder of Notes
its assumption of the due and punctual performance and observance of
each covenant and condition of this Agreement and the Notes (pursuant to
such agreements and instruments as shall be reasonably satisfactory to
the Required Holders), and the Company shall have caused to be delivered
to each holder of Notes an opinion of nationally recognized independent
counsel, to the effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and comply
with the terms hereof; and
(c) immediately after giving effect to such transaction:
(i) no Default or Event of Default would exist, and
(ii) the Successor Corporation would be permitted by the
provisions of Section 4.2 hereof to incur at least $1.00 of
additional Debt owing to a Person other than a Restricted
Subsidiary of the Successor Corporation.
No such conveyance, transfer or lease of substantially all of the
assets of the Company shall have the effect of releasing the Company or
any Successor Corporation from its liability under this Agreement or the
Notes.
Section 4.6. Sales of Assets. Except as permitted under Section
4.5, the Company will not, and will not permit any of its Restricted
Subsidiaries to, make any Asset Disposition unless:
(a) in the good faith opinion of the Company, the Asset
Disposition is in exchange for consideration having a Fair Market Value
at least equal to that of the Property exchanged and is in the best
interest of the Company or such Restricted Subsidiary; and
(b) immediately after giving effect to the Asset Disposition, no
Default or Event of Default would exist; and
(c) immediately after giving effect to the Asset Disposition:
(i) the Disposition Value of all Property that was the
subject of any Asset Disposition occurring in any period of four
consecutive fiscal quarters of the Company then next ending would
not exceed 10% of Consolidated Total Assets as of the last day of
the then most recently ended fiscal quarter of the Company, and
(ii) the Disposition Value of all Property that was the
subject of any Asset Disposition occurring on or after the date of
the First Amendment would not exceed 25% of Consolidated Total
Assets as of the last day of the then most recently ended fiscal
quarter of the Company.
If the Net Proceeds Amount for any Transfer is applied to a Debt
Prepayment Application contemporaneously with such Transfer or a
Property Reinvestment Application within one year of such Transfer, then
such Transfer, only for the purpose of determining compliance with
subsection (c) of this Section 4.6 as of any date on or after the Net
Proceeds Amount is so applied, shall be deemed not to be an Asset
Disposition.
Section 4.7. Long Term Lease Rentals. The Company will not, at
any time, permit Long Term Lease Rentals for any current or future
period of 12 consecutive calendar months to exceed 10% of Total
Capitalization as of the last day of the then most recently ended fiscal
quarter of the Company.
Section 4.8. Nature of Business. Neither the Company nor any
Restricted Subsidiary will engage in any business if, as a result, the
general nature of the business, taken on a consolidated basis, which
would then be engaged in by the Company and its Restricted Subsidiaries
would be substantially changed from the general nature of the business
engaged in by the Company and its Restricted Subsidiaries on the date of
this Agreement.
Section 4.9. Transactions with Affiliates. The Company will not,
and will not permit any Restricted Subsidiary to, enter into, directly
or indirectly, any transaction or group of related transactions with any
Affiliate which, individually or in the aggregate, are Material
(including without limitation the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service), except in the
ordinary course and pursuant to the reasonable requirements of the
Company's or such Restricted Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such Restricted
Subsidiary than would be obtainable in a comparable arm's-length
transaction with a Person not an Affiliate.
Section 4.10. Compliance with Law. The Company will and will
cause each of its Restricted Subsidiaries to comply with all laws,
ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their
respective businesses, in each case to the extent necessary to ensure
that non-compliance with such laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
Section 4.11. Insurance. The Company will and will cause each of
its Restricted Subsidiaries to maintain, with financially sound and
reputable insurers, insurance with respect to their respective
properties and businesses against such casualties and contingencies, of
such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained
with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and
similarly situated.
Section 4.12. Maintenance of Properties. The Company will and
will cause each of its Restricted Subsidiaries to maintain and keep, or
cause to be maintained and kept, their respective properties in good
repair, working order and condition (other than ordinary wear and tear),
so that the business carried on in connection therewith may be properly
conducted at all times, provided that this Section shall not prevent the
Company or any Restricted Subsidiary from discontinuing the operation
and the maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Company has concluded
that such discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
Section 4.13. Payment of Taxes and Claims. The Company will and
will cause each of its Subsidiaries to file all tax returns required to
be filed in any jurisdiction and to pay and discharge all taxes shown to
be due and payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company
or any Subsidiary, provided that neither the Company nor any Subsidiary
need pay any such tax or assessment or claims if (i) the amount,
applicability or validity thereof is contested by the Company or such
Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established adequate
reserves therefor in accordance with GAAP on the books of the Company or
such Subsidiary or (ii) the nonpayment of all such taxes and assessments
in the aggregate could not reasonably be expected to have a Material
Adverse Effect.
Section 4.14. Corporate Existence, etc. Subject to Sections 4.5
and 4.6, the Company will at all times preserve and keep in full force
and effect its corporate existence and will at all times preserve and
keep in full force and effect the corporate existence of each of its
Restricted Subsidiaries and all rights and franchises of the Company and
its Restricted Subsidiaries unless, in the good faith judgment of the
Company, the termination of or failure to preserve and keep in full
force and effect such corporate existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse Effect.
Section 4.15. Designation of Unrestricted Subsidiaries. The
Company may from time to time cause any Subsidiary to be designated as
an Unrestricted Subsidiary or any Unrestricted Subsidiary to be
designated a Restricted Subsidiary, provided, however, that immediately
following such action and after giving effect thereto, (a) no Default or
Event of Default would exist under the terms of this Agreement, and (b)
the Company and its Restricted Subsidiaries would be in compliance with
all of the covenants set forth in this Section 4 if tested on the date
of such action and provided, further, that once a Restricted Subsidiary
has been designated an Unrestricted Subsidiary, it shall not thereafter
be redesignated as a Restricted Subsidiary. Within ten (10) days
following any designation described above, the Company will deliver to
you a notice of such designation accompanied by a certificate signed by
a Senior Financial Officer of the Company certifying compliance with all
requirements of this Section 4.15 and setting forth all information
required in order to establish such compliance.
Section 4.16. Financial Records. The Company will, and will
cause its Subsidiaries to, keep true and correct books of records and
accounts in which full and correct entries will be made of all of its
business transactions, and will reflect in its financial statements
adequate accruals and appropriations to reserves, all in accordance with
GAAP.
Section 4.17. Additional Guaranties. If any Restricted
Subsidiary becomes a party to any Guaranty of, or is otherwise liable
for, any Debt of the Company or any Restricted Subsidiary, the Company
will cause such Restricted Subsidiary to execute and deliver to all
holders of Notes a written Guaranty, satisfactory in scope and form to
the Required Holders, to which such Restricted Subsidiary shall
unconditionally guaranty the payment of all amounts payable hereunder by
the Company and the performance by the Company of all obligations
hereunder.
Section 1.6. Amendment to Section 5 of Note Agreement. Section 5 of
the Note Agreement shall be amended in its entirety so that the same shall
read as follows:
Section 5.1 Nature of Default. An "Event of Default" shall exist
if any of the following conditions or events shall occur and be
continuing:
(a) the Company defaults in the payment of any principal or
premium, if any, on any Note when the same becomes due and payable,
whether at maturity or at a date fixed for prepayment or by declaration
or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five business days after the same becomes due and
payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Sections 4.1 through 4.7, inclusive; or
(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 5.1) and such default is not
remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such default from any holder of a Note (any
such written notice to be identified as a "notice of default" and to
refer specifically to this paragraph (d) of Section 5.1); or
(e) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in this Agreement
or in any writing furnished in connection with the transactions
contemplated hereby proves to have been false or incorrect in any
material respect on the date as of which made; or
(f) (i) the Company or any Restricted Subsidiary is in default
(as principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any Debt
that is outstanding in an aggregate principal amount of at least
$5,000,000 beyond any period of grace provided with respect thereto, or
(ii) the Company or any Restricted Subsidiary is in default in the
performance of or compliance with any term of any evidence of any Debt
in an aggregate outstanding principal amount of at least $5,000,000 or
of any mortgage, indenture or other agreement relating thereto or any
other condition exists, and as a consequence of such default or
condition such Debt has become, or has been declared, due and payable
before its stated maturity or before its regularly scheduled dates of
payment, or (iii) as a consequence of the occurrence or continuation of
any event or condition (other than the passage of time or the right of
the holder of Debt to convert such Debt into equity interests), the
Company or Restricted any Subsidiary has become obligated to purchase or
repay Debt before its regular maturity or before its regularly scheduled
dates of payment in an aggregate outstanding principal amount of at
least $5,000,000; or
(g) the Company or any Material Restricted Subsidiary (i) is
generally not paying, or admits in writing its inability to pay, its
debts as they become due, (ii) files, or consents by answer or otherwise
to the filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization, moratorium
or other similar law of any jurisdiction, (iii) makes an assignment for
the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property,
(v) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of its
Restricted Subsidiaries, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition
in bankruptcy or for liquidation or to take advantage of any bankruptcy
or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Material
Restricted Subsidiaries, or any such petition shall be filed against the
Company or any of its Material Restricted Subsidiaries and such petition
shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $5,000,000 are rendered against one or more of
the Company and its Restricted Subsidiaries and which judgments are not,
within 60 days after entry thereof, bonded, discharged or stayed pending
appeal (or such lesser period of time as applicable law or rules of
court allow a judgment creditor to levy on such judgments), or are not
discharged within 60 days after the expiration of such stay (or such
lesser period of time as applicable law or rules of court allow a
judgment creditor to levy on such judgments); or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of intent
to terminate any Plan shall have been or is reasonably expected to be
filed with the PBGC or the PBGC shall have instituted proceedings under
ERISA section 4042 to terminate or appoint a trustee to administer any
Plan or the PBGC shall have notified the Company or any ERISA Affiliate
that a Plan may become a subject of any such proceedings, (iii) the
aggregate "amount of unfunded benefit liabilities" (within the meaning
of section 4001(a)(18) of ERISA) under all Plans, determined in
accordance with Title IV of ERISA, shall exceed $7,500,000, (iv) the
Company or any ERISA Affiliate shall have incurred or is reasonably
expected to incur any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee
benefit plans, (v) the Company or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or
amends any employee welfare benefit plan that provides post-employment
welfare benefits in a manner that would increase the liability of the
Company or any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either individually or
together with any other such event or events, could reasonably be
expected to have a Material Adverse Effect.
As used in Section 5.1(j), the terms "employee benefit plan" and
"employee welfare benefit plan" shall have the respective meanings
ssigned to such terms in Section 3 of ERISA.
Section 5.2. Notice to Holders. When any Event of Default
described in the foregoing Section 5.1 has occurred, or if the holder of
any Note or of any other evidence of Debt of the Company gives any
notice or takes any other action with respect to a claimed default, the
Company agrees to give notice within three business days of such event
to all holders of the Notes then outstanding.
Section 5.3. Default Remedies. (a) Acceleration If an Event
of Default described in paragraph (a) or (b) of Section 5.1 exists, any
holder of Notes may, at its option, exercise any right, power or remedy
permitted by law, including the right, by notice to the Company, to
declare the Notes held by such holder to be immediately due and payable.
If any Event of Default described in paragraphs (c) through (f),
inclusive, or paragraphs (i) or (j) of Section 5.1 exists, the holder or
holders of at least 51% in outstanding principal amount of the Notes
(exclusive of Notes owned by the Company, Restricted Subsidiaries and
Affiliates) may, at its or their option, exercise any right, power or
remedy permitted by law, including the right, by notice to the Company,
to declare all the outstanding Notes to be immediately due and payable.
When any Event of Default described in paragraph (g) or (h) of Section
5.1 has occurred, then all outstanding Notes shall immediately become
due and payable without presentment, demand or notice of any kind. Upon
the Notes becoming due and payable as a result of any Event of Default
as aforesaid, the Company will forthwith pay to the holders of the Notes
the entire principal and interest accrued on the Notes, determined as of
the date on which the Notes shall so become due and payable.
No course of dealing or delay or failure to exercise any right on
the part of any holder of the Notes shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers or remedies.
The Company will pay or reimburse the holders of the Notes for all costs
and expenses (including reasonable attorneys' fees) incurred by them in
collecting any sums due on the Notes or in otherwise enforcing any of
their rights.
(b) Annulment of Acceleration In the event of any declaration
pursuant to Section 5.3(a) by reason of any Event of Default described
in paragraphs (a) through (f), inclusive, or paragraphs (i) or (j) of
Section 5.1, the holder or holders of at least 75% of the outstanding
principal amount of the Notes (exclusive of Notes owned by the Company
and Affiliates) may annul such declaration and its consequences if (i)
no judgment or decree has been entered for the payment of any amount due
pursuant to such declaration, (ii) all sums payable under the Notes and
under this Agreement (except any principal or interest on the Notes
which has become payable solely by reason of such declaration) shall
have been duly paid and (iii) each and every other Default and Event of
Default shall have been made good, cured or waived pursuant to Section
8.5.
Section 1.7. Amendment to Section 6.1 of Note Agreement. Section 6.1
of the Note Agreement shall be amended in its entirety so that the same shall
read as follows:
"Acceptable Bank" means any bank or trust company (i) which is organized
under the laws of the United States of America or any State thereof or a
jurisdiction of any nation whose government is an Acceptable Foreign
Government (or any jurisdiction therein), (ii) which has capital, surplus and
undivided profits aggregating at least $250,000,000, and (iii) whose long-term
unsecured debt obligations (or the long-term unsecured debt obligations of the
bank holding company owning all of the capital stock of such bank or trust
company) shall have been given a rating of "A-" or better by Standard & Poor's
Rating Group, a division of The McGraw-Hill Companies, Inc., or "A3" or better
by Moody's Investors Service, Inc.
"Acceptable Broker-Dealer" means any Person other than a natural person
(i) which is registered as a broker or dealer pursuant to the Exchange Act,
and (ii) whose long-term unsecured debt obligations shall have been given a
rating of "A" or better by Standard & Poor's Rating Group, a division of The
McGraw-Hill Companies, Inc., "A2" or better by Moody's Investors Service, Inc.
"Acceptable Foreign Government" means the government of any foreign
nation whose debt obligations are rated at least "A-" by Standard & Poor's
Rating Group, a division of The McGraw-Hill Companies, Inc., or at least "A3"
by Moody's Investors Service, Inc.
"Acquired Business Entity" means for any period of determination
hereunder (i) any business entity the assets and related liabilities of which
have been acquired substantially as an entirety by the Company or any
Restricted Subsidiary by purchase, merger or consolidation, and (ii) any other
assets which were operated as an identifiable business unit, i.e. a branch or
division of a business entity and which have been acquired substantially as an
entirety by the Company or any Restricted Subsidiary.
"Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or
indirectly, 10% or more of any class of voting or equity interests. As used
in this definition, "Control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. Unless the context otherwise clearly requires, any reference to an
"Affiliate" is a reference to an Affiliate of the Company.
"Agreement" shall mean this Note Agreement dated as of June 12, 1986
between the Company and the original holder of Notes (including Attachments),
as amended or modified from time to time.
"Asset Disposition" means any Transfer except:
(a) any
(i) Transfer from a Restricted Subsidiary to the Company or a
Wholly-Owned Restricted Subsidiary;
(ii) Transfer from the Company to a Wholly-Owned Restricted
Subsidiary; and
(iii) Transfer from the Company to a Restricted Subsidiary (other
than a Wholly-Owned Restricted Subsidiary) or from a Restricted
Subsidiary to another Restricted Subsidiary (other than a Wholly-Owned
Restricted Subsidiary), which in either case is for Fair Market Value,
so long as immediately before and immediately after the
consummation of any such Transfer and after giving effect thereto, no
Default or Event of Default exists; and
(b) any Transfer made in the ordinary course of business and
involving only Property that is either (i) inventory held for sale or
(ii) equipment, fixtures, supplies or materials no longer required in
the operation of the business of the Company or any of its Restricted
Subsidiaries or that is obsolete.
"Capitalized Lease" shall mean any lease the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance sheet
of the lessee and its subsidiaries in accordance with GAAP.
"Closing Date" is defined in Section 1.2.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Consolidated Debt" means the total amount of all Debt of the Company
and its Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" means for any period the net income of the
Company and its Restricted Subsidiaries, determined in accordance with GAAP on
a consolidated basis.
"Consolidated Net Worth" means, as of the date of any determination
thereof,
(a) the total amount of Shareholders' Equity, minus
(b) the book value of all Restricted Investments.
"Consolidated Total Assets" means, as of the date of any determination
thereof, the total amount of assets of the Company and its Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"Debt" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of Property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including, without limitation, all
liabilities created or arising under any conditional sale or other title
retention agreement with respect to any such Property);
(c) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capitalized Leases;
(d) all liabilities for borrowed money secured by any Lien with
respect to any Property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities);
(e) all of its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (d) hereof.
Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
"Debt Prepayment Application" means, with respect to any Transfer of
Property, the application by the Company or its Restricted Subsidiaries of
cash in an amount equal to the Net Proceeds Amount with respect to such
Transfer to pay Senior Debt of the Company (other than Senior Debt owing to
the Company, any of its Restricted Subsidiaries or any Affiliate and Senior
Debt in respect of any revolving credit or similar credit facility providing
the Company or any of its Restricted Subsidiaries with the right to obtain
loans or other extensions of credit from time to time, except to the extent
that in connection with such payment of Senior Debt the availability of credit
under such credit facility is permanently reduced by an amount not less than
the amount of such proceeds applied to the payment of such Senior Debt),
provided that in the course of making such application the Company shall offer
to prepay each outstanding Note in accordance with Section 2.2(b) in a
principal amount which equals the Ratable Portion for such Note. If any
holder of a Note fails to accept such offer of prepayment, then, for purposes
of the preceding sentence only, the Company nevertheless will be deemed to
have paid Senior Debt in an amount equal to the Ratable Portion for such Note.
"Ratable Portion" for any Note means an amount equal to the product of (x) the
Net Proceeds Amount being so applied to the payment of Senior Debt multiplied
by (y) a fraction the numerator of which is the outstanding principal amount
of such Note and the denominator of which is the aggregate principal amount of
all Senior Debt of the Company.
"Default" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"Disposition Value" means, at any time, with respect to any Property
(a) in the case of Property that does not constitute Subsidiary
Stock, the book value thereof, valued at the time of such disposition in
good faith by the Company, and
(b) in the case of Property that constitutes Subsidiary Stock,
an amount equal to that percentage of book value of the assets of the
Subsidiary that issued such stock as is equal to the percentage that the
book value of such Subsidiary Stock represents of the book value of all
of the outstanding capital stock of such Subsidiary (assuming, in making
such calculations, that all Securities convertible into such capital
stock are so converted and giving full effect to all transactions that
would occur or be required in connection with such conversion)
determined at the time of the disposition thereof, in good faith by the
Company.
"Divested Business Entity" means for any period of determination
hereunder (i) any business entity the assets and related liabilities of which
have been sold, disposed of or otherwise divested substantially as an entirety
by the Company or any Restricted Subsidiary, and (ii) any other assets which
were operated as an identifiable business unit, i.e. a branch or division of a
business entity and which have been sold, disposed of or otherwise divested
substantially as an entirety by the Company or any Restricted Subsidiary.
"EBITDA" means for any period the difference between (a) sum of (i)
Consolidated Net Income during such period plus (to the extent deducted in
determining Consolidated Net Income), (ii) all provisions for any Federal,
state or other income taxes made by the Company and its Restricted
Subsidiaries during such period, (iii) all Interest Charges on Consolidated
Debt (including the interest component on Rentals on Capitalized Leases), and
(iv) all depreciation and amortization expense and all other non-cash charges
or expenses of the Company and its Restricted Subsidiaries during such period,
and (b) the sum of (to the extent included in determining Consolidated Net
Income) (i) all interest income on any particular Investment for which
calculations are being made, and (ii) all non-cash credits or income of the
Company and its Restricted Subsidiaries during such period. For purposes of
determining EBITDA in connection with the incurrence of any Debt in which the
proceeds shall be used to fund the acquisition of any Acquired Business
Entity, EBITDA shall be computed on a pro forma basis for such Acquired
Business Entity during such period. EBITDA shall exclude all amounts
attributable to any Divested Business Entity which has been divested by the
Company or any Restricted Subsidiary during such period.
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that is,
along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Sections 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"Event of Default" is defined in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, at any time and with respect to any Property,
the sale value of such Property that would be realized in an arm's-length sale
at such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).
"First Amendment" means the Amendment to Note Agreement dated as of May
30, 1997, pursuant to which certain provisions of the Agreement were amended.
"GAAP" shall mean generally accepted accounting principles at the time.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Restricted Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of the Company or any
Restricted Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Governmental Security" means any direct obligations of, or obligation
guaranteed by, the United States of America or any Acceptable Foreign
Government or any agency or instrumentality thereof, so long as such
obligation or guarantee shall have the benefit of the full faith and credit of
the United States of America or such Acceptable Foreign Government, as the
case may be.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
any indebtedness, dividend or other obligation of any other Person in any
manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the
obligor under any Guaranty, the indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.
"Interest Charges" for any period means all interest and all
amortization of debt discount and expense on any particular Debt for which
such calculations are being made, including, without limitation, all
commissions, fees and other charges owed with respect to letters of credit and
bankers' acceptances.
"Investment" means any investment, made in cash or by delivery of
property, by the Company or any of its Subsidiaries (i) in any Person, whether
by acquisition of stock, indebtedness or other obligation or Security, or by
loan, Guaranty, advance, capital contribution or otherwise, or (ii) in any
property.
"Lien" means any interest in Property securing an obligation owed to, or
a claim by, a Person other than the owner of the Property, whether the
interest is based on common law, statute or contract (including the security
interest lien arising from a mortgage, encumbrance, pledge, conditional sale
or trust receipt or a lease, consignment or bailment for security purposes).
The term "Lien" shall not include minor reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions
and other minor title exceptions affecting Property, provided that they do not
constitute security for a monetary obligation. For the purposes of this
Agreement, the Company or a Restricted Subsidiary shall be deemed to be the
owner of any Property which it has acquired or holds subject to a conditional
sale agreement, financing lease or other arrangement pursuant to which title
to the Property has been retained by or vested in some other Person for
security purposes, and such retention or vesting shall be deemed to be a Lien.
"Long Term Lease Rentals" means, with respect to any period, the sum of
the rental and other obligations required to be paid during such period by the
Company or any Restricted Subsidiary as lessee under all leases of real or
personal Property (other than Capitalized Leases) having a term (including
terms of renewal or extension at the option of the lessor or the lessee,
whether or not such option has been exercised) expiring more than one year
after the commencement of the initial term, excluding any amount required to
be paid by the lessee (whether or not therein designated as rental or
additional rental) on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges, provided that, if at the date of
determination, any such rental or other obligations are contingent or not
otherwise definitely determinable by the terms of the related lease, the
amount of such obligations (i) shall be assumed to be equal to the amount of
such obligations for the period of 12 consecutive calendar months immediately
preceding the date of determination or (ii) if the related lease was not in
effect during such preceding 12-month period, shall be the amount estimated by
a Senior Financial Officer of the Company on a reasonable basis and in good
faith.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Restricted Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of
the Company and its Restricted Subsidiaries taken as a whole, or (b) the
ability of the Company to perform its obligations under this Agreement and the
Notes, or (c) the validity or enforceability of this Agreement or the Notes.
"Material Restricted Subsidiary" means any Restricted Subsidiary which,
either individually or together with one or more Restricted Subsidiaries, (i)
accounts for 5% or more of Consolidated Total Assets, determined as of the end
of either of the two most recently ended fiscal years, or (ii) accounts for 5%
or more of Consolidated Net Income during one of the two immediately preceding
fiscal years.
"Minority Interests" means any shares of stock of any class of a
Restricted Subsidiary (other than directors' qualifying shares as required by
law) that are not owned by the Company and/or one or more of its Restricted
Subsidiaries. Minority Interests shall be valued by valuing Minority
Interests constituting preferred stock at the voluntary or involuntary
liquidating value of such preferred stock, whichever is greater, and by
valuing Minority Interests constituting common stock at the book value of
capital and surplus applicable thereto adjusted, if necessary, to reflect any
changes from the book value of such common stock required by the foregoing
method of valuing Minority Interests in preferred stock.
"Multiemployer Plan" shall have the same meaning as in ERISA.
"Net Proceeds Amount" means, with respect to any Transfer of any
Property by any Person, an amount equal to the difference of
(a) the aggregate amount of the consideration (valued at the
Fair Market Value of such consideration at the time of the consummation
of such Transfer) received by such Person in respect of such Transfer,
minus
(b) all ordinary and reasonable out-of-pocket costs and expenses
actually incurred by such Person in connection with such Transfer.
"Notes" is defined in Section 1.1.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" shall mean a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Priority Debt" means the sum of (a) all Debt of the Company secured by
Liens permitted by Section 4.4(g), and (b) all Consolidated Debt of Restricted
Subsidiaries.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Property Reinvestment Application" means, with respect to any Transfer
of Property, the application of an amount equal to the Net Proceeds Amount
with respect to such Transfer to the acquisition by the Company of Property of
a similar nature and having a value at least equal to the value of such
Property subject to such Transfer.
"Registered Notes" is defined in Section 1.1.
"Rentals" shall mean and include as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of
the property) payable by the Company or a Restricted Subsidiary, as lessee or
sublessee under a lease of real or personal property, but shall be exclusive
of any amounts required to be paid by the Company or a Restricted Subsidiary
(whether or not designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes and similar charges. Fixed rents under
any so-called "percentage leases" shall be computed solely on the basis of the
minimum rents, if any, required to be paid by the lessee regardless of sales
volume or gross revenues.
"Reportable Event" shall have the same meaning as in ERISA.
"Repurchase Agreement" means any written agreement
(a) that provides for (i) the transfer of one or more
Governmental Securities in an aggregate principal amount at least equal
to the amount of the Transfer Price (defined below) to the Company or
any of its Restricted Subsidiaries from an Acceptable Bank or an
Acceptable Broker-Dealer against a transfer of funds (the "Transfer
Price") by the Company or such Restricted Subsidiary to such Acceptable
Bank or Acceptable Broker-Dealer, and (ii) a simultaneous agreement by
the Company or such Restricted Subsidiary, in connection with such
transfer of funds, to transfer to such Acceptable Bank or Acceptable
Broker-Dealer the same or substantially similar Governmental Securities
for a price not less than the Transfer Price plus a reasonable return
thereon at a date certain not later than 365 days after such transfer of
funds,
(b) in respect of which the Company or such Restricted
Subsidiary shall have the right, whether by contract or pursuant to
applicable law, to liquidate such agreement upon the occurrence of any
default thereunder, and
(c) in connection with which the Company or such Restricted
Subsidiary, or an agent thereof, shall have taken all action required by
applicable law or regulations to perfect a Lien in such Governmental
Securities.
"Required Holders" means, at any time, the holders of at least 51% in
aggregate principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
"Restricted Investments" means all Investments except the following:
(a) Property to be used in the ordinary course of business of
the Company and its Restricted Subsidiaries;
(b) Investments in one or more Restricted Subsidiaries or any
Person that concurrently with such Investment becomes a Restricted
Subsidiary;
(c) Investments existing as of the date of the First Amendment
and disclosed in Exhibit C to such First Amendment;
(d) Investments in direct obligations of the United States of
America or any Acceptable Foreign Government or any agency or
instrumentality thereof, the payment or guarantee of which constitutes a
full faith and credit obligation of the United States of America or such
Acceptable Foreign Government, in either case, maturing within three
years for the date of acquisition thereof;
(e) Investments in certificates of deposit or time deposits
issued by an Acceptable Bank, provided that such obligations mature
within 365 days from the date of acquisition thereof;
(f) Investments in commercial paper maturing in 270 days or less
from the date of issuance which, at the time of acquisition by the
Company or any Restricted Subsidiary, are rated at least "A-1" by
Standard & Poor's Rating Group, a division of McGraw-Hill, Inc., or at
least "P-2" by Moody's Investors Service, Inc.
(g) Investments in Repurchase Agreements; and
(h) Investments other than described in the foregoing clauses
(a) through (g), above, provided that such Investments do not exceed 5%
of Consolidated Net Worth.
For purposes of this Agreement, any Investment which involves an
Acceptable Bank which is organized under the laws of a jurisdiction of a
nation whose government is an Acceptable Foreign Government, shall become a
Restricted Investment at such time as the debt obligations of such government
are not rated at least "A-" by Standard & Poor's Rating Group, a division of
The McGraw-Hill Companies, Inc., or at least "A3" by Moody's Investors
Service, Inc.
As of any date of determination, each Restricted Investment shall be
valued at the greater of:
(x) the amount at which such Restricted Investment is shown on
the books of the Company or any of its Restricted Subsidiaries (or zero
if such Restricted Investment is not shown on any such books); and
(y) either
(i) in the case of any Guaranty of the obligation of any
Person, the amount which the Company or any of its Restricted
Subsidiaries has paid on account of such obligation less any
recoupment by the Company or such Subsidiary of any such payments,
or
(ii) in the case of any other Restricted Investment, the
excess of (x) the greater of (A) the amount originally entered on
the books of the Company or any of its Restricted Subsidiaries
with respect thereto and (B) the cost thereof to the Company or
its Restricted Subsidiary over (y) any return of capital (after
income taxes applicable thereto) upon such Restricted Investment
through the sale or other liquidation thereof or part thereof or
otherwise.
"Restricted Subsidiary" shall mean any Subsidiary listed as a Restricted
Subsidiary on Attachment G hereto and any other subsidiary,
(1) organized under the laws of the United States or a
jurisdiction of any nation whose government is an Acceptable Foreign
Government (or any jurisdiction thereof);
(2) which conducts substantially all of its business and has
substantially all of its Property within the United States or the
jurisdiction of any national whose government is an Acceptable Foreign
Government;
(3) a majority of each class of common stock of which is legally
and beneficially owned by the Company and its Restricted Subsidiaries;
and
(4) which is not an Unrestricted Subsidiary.
For purposes of this Agreement, any Restricted Subsidiary which is
organized under, and conducts substantially all of its business and has
substantially all of its Property within, the jurisdiction of any nation whose
government is an Acceptable Foreign Government, shall be designated as an
Unrestricted Subsidiary at such time as the debt obligations of such
government are not rated at least "A-" by Standard & Poor's Rating Group, a
division of The McGraw-Hill Companies, Inc., or at least "A3" by Moody's
Investors Service, Inc.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Senior Debt" means all Consolidated Debt of the Company other than
Subordinated Debt.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Shareholders' Equity" means the total amount of shareholders' equity of
the Company and its Restricted Subsidiaries, determined on a consolidated
basis in accordance with GAAP.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect
thereof as of the end of the then most recently ended fiscal quarter of such
Person, based on the assumption that such Swap had terminated at the end of
such fiscal quarter, and in making such determination, if any agreement
relating to such Swap provides for the netting of amounts payable by and to
such Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount
of such obligation shall be the net amount so determined.
"Subordinated Debt" means all unsecured Debt of the Company which shall
contain or have applicable thereto subordination provisions providing for the
subordination thereof to other Debt of the Company (including, without
limitation, the Notes).
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily, in the absence
of contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if
more than a 50% interest in the profits or capital thereof is owned by such
Person or one or more of its Subsidiaries or such Person and one or more of
its Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of
its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the Company.
"Subsidiary Stock" means, with respect to any Person, the stock (or any
options or warrants to purchase stock or other Securities exchangeable for or
convertible into stock) of any Subsidiary of such Person.
"Total Capitalization" means, as of the date of any determination
thereof, the sum of Consolidated Net Worth and Consolidated Debt.
"Transfer" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its
Property, including, without limitation, Subsidiary Stock. For purposes of
determining the application of the Net Proceeds Amount in respect of any
Transfer, the Company may designate any Transfer as one or more separate
Transfers each yielding a separate Net Proceeds Amount. In any such case, (a)
the Disposition Value of any Property subject to each such separate Transfer
and (b) the amount of Consolidated Total Assets attributable to any Property
subject to each such separate Transfer shall be determined by ratably
allocating the aggregate Disposition Value of, and the aggregate Consolidated
Total Assets attributable to, all Property subject to all such separate
Transfers to each such separate Transfer on a proportionate basis.
"Unrestricted Subsidiary" shall mean any Subsidiary of the Company which
has been so designated by the Company, in accordance with Section 4.15 hereof.
"Voting Stock" shall mean Securities, the holders of which are
ordinarily, in the absence of contingencies, entitled to elect the corporate
directors (or Persons performing similar functions).
"Weighted Average Life to Maturity" is defined in Section 2.2(d).
"Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted
Subsidiary one hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests of which are owned by any
one or more of the Company and the Company's other Wholly-Owned Restricted
Subsidiaries at such time.
Section 1.8. Amendment to Section 6.2 of the Note Agreement. Section
6.2 of the Note Agreement shall be amended by changing the reference to
"generally accepted accounting principles" to "GAAP."
Section 2. Miscellaneous.
Section 2.1. Representation and Warranty. The Company represents and
warrants that it does not own any Subsidiary which is organized under the laws
of the United States or any jurisdiction therein.
Section 2.2. Requisite Approval. If the foregoing is acceptable to
you, please note your acceptance in the space provided below. Upon the
execution by the Company and the holders of 100% in aggregate principal amount
of the outstanding Notes, the Note Agreement shall be deemed to be amended as
set forth above. Except as amended herein, the terms and provisions of the
Note Agreement are hereby ratified, confirmed and approved in all respects.
Section 2.3. Successors and Assigns. This Amendment to Note Agreement
shall be binding upon the Company and its successors and assigns and shall
inure to your benefit and to the benefit of your successors and assigns,
including each successive holder or holders of any Notes.
Section 2.4. Counterparts. This Amendment to Note Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together one and the same instrument.
Section 2.5. Fees and Expenses. The Company agrees to pay all
reasonable fees and expenses of you and your special counsel in connection
with the preparation of this Amendment to Note Agreement.
Section 2.6. No Legend Required. Any and all notices, requests,
certificates and other instruments including, without limitation, the Notes,
may refer to the Note Agreement dated as of June 12, 1986 without making
specific reference to this Amendment to Note Agreement, but nevertheless all
such references shall be deemed to include this Amendment to Note Agreement
unless the context shall otherwise require.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Note Agreement as of the day and year first above written.
Simpson Industries, Inc.
By
Its
Accepted and agreed to as of the first date written above.
THE TRAVELERS INSURANCE COMPANY
By
Its
PAGE
<PAGE>
CONSOLIDATED DEBT
as of May 30, 1997
Lender Annual Interest Rate Principal Balance
Comerica Bank 6.75% 20,000,000
Comerica Bank 8.445% 20,000,000
Comerica Bank 8.82% 3,230,463
Massachusetts Mutual
Life Insurance Co. 9.98% 15,000,000
Travelers Insurance Co. 8.80% 3,750,000
61,980,463
<PAGE>
<PAGE>
EXISTING LIENS
as of May 30, 1997
NONE
PAGE
<PAGE>
EXISTING INVESTMENTS
as of May 30, 1997
COMERICA INSTITUTIONAL CASH INVESTMENT TRUST
#74094 = $11,929,886.51 (U.S. Dollars)
COMERICA INSTITUTIONAL CASH INVESTMENT TRUST
#78791 = $1,786,629.50 (U.S. Dollars)
SIMPSON INDUSTRIES, INC.
AMENDMENT TO NOTE AGREEMENT
Dated as of May 30, 1997
Re: Note Agreement Dated as of August 15, 1991
and
$15,000,000 9.98% Senior Notes
Due August 15, 2006
of
Simpson Industries, Inc.
PAGE
<PAGE>
SIMPSON INDUSTRIES, INC.
AMENDMENT TO NOTE AGREEMENT
Re: Note Agreement Dated as of August 15, 1991
and
$15,000,000 9.98% Senior Notes
Due August 15, 2006
of
Simpson Industries, Inc.
Dated as of
May 30, l997
Massachusetts Mutual Life Insurance Company
1295 State Street
Springfield, Massachusetts 01111
Ladies and Gentlemen:
Reference is made to the Note Agreement dated as of August 15, l991,
(the "Note Agreement"), between Simpson Industries, Inc., a Michigan
corporation (the "Company"), and you, pursuant to which $15,000,000 aggregate
principal amount of 9.98% Senior Notes due August 15, 2006 (the "Notes") of
the Company were originally issued.
The Company desires to amend certain covenants contained in the Note
Agreement and hereby requests that you accept the amendments as set forth
below in the manner herein provided.
Section 1. Amendments to Note Agreement.
Section 1.1. Amendment to Section 2.1 of Note Agreement. Section 2.1
of the Note Agreement shall be amended by the addition thereto of a new
paragraph which shall read as follows:
In the event of any prepayment made pursuant to Section 2.3 in which
less than all of the Notes shall have been prepaid by the Company, the amount
of each payment required to be made pursuant to this Section 2.1 shall be
reduced by a percentage equal to the aggregate principal amount of the Notes
so prepaid pursuant to Section 2.3 divided by the aggregate principal amount
of the Notes outstanding immediately prior to such prepayment.
Section 1.2. Amendment to Section 2.3 of Note Agreement. Section 2.3
of the Note Agreement shall be amended in its entirety so that the same shall
read as follows:
Section 2.3. Prepayment upon Change in Control. (a) Notice of
Change in Control or Control Event. The Company will, within two
business days after any Responsible Officer has knowledge of the
occurrence of any Change in Control or Control Event, give written
notice of such Change in Control or Control Event to each holder of
Notes unless notice in respect of such Change in Control (or the Change
in Control contemplated by such Control Event) shall have been given
pursuant to subparagraph (b) of this Section 2.3. If a Change in
Control has occurred, such notice shall contain and constitute an offer
to prepay the Notes as described in subparagraph (c) of this Section 2.3
and shall be accompanied by the certificate described in subparagraph
(g) of this Section 2.3.
(b) Condition to Company Action. The Company will not take any
action that consummates or finalizes a Change in Control unless (i) at
least 15 days prior to such action the Company shall have given to each
holder of Notes written notice containing and constituting an offer to
prepay the Notes as described in subparagraph (c) of this Section 2.3,
accompanied by the certificate described in subparagraph (g) of this
Section 2.3, and (ii) contemporaneously with such action, the Company
prepays all Notes required to be prepaid in accordance with this Section
2.3.
(c) Offer to Prepay Notes. The offer to prepay the Notes
contemplated by subparagraphs (a) and (b) of this Section 2.3 shall be
an offer to prepay, in accordance with and subject to this Section 2.3,
all, but not less than all, of the Notes held by each holder on a date
specified in such offer (the "Proposed Prepayment Date"). If such
Proposed Prepayment Date is in connection with an offer contemplated by
subparagraph (a) of this Section 2.3, such date shall be not less than
20 days and not more than 30 days after the date of such offer.
(d) Acceptance; Rejection. A holder of Notes may accept or
reject the offer to prepay made pursuant to this Section 2.3 by causing
a notice of such acceptance or rejection to be delivered to the Company
at least five days prior to the Proposed Prepayment Date. A failure by
a holder of Notes to respond to an offer to prepay made pursuant to this
Section 2.3 shall be deemed to constitute acceptance of such offer by
such holder.
(e) Prepayment. Prepayment of the Notes pursuant to this
Section 2.3 shall be at 100% of the principal amount of all Notes held
by the holder or holders accepting the Company' offer to prepay such
Notes, plus the Make-Whole Amount determined for such prepayment date
with respect to such principal amount, together with interest on such
Notes accrued to the date of prepayment. Two business days prior to
such date of prepayment, the Company shall deliver to each holder of
Notes being prepaid a statement showing the Make-Whole Amount due in
connection with such prepayment and setting forth the details of the
computation of such amount. The prepayment shall be made on the
Proposed Prepayment Date except as provided in subparagraph (f) of this
Section 2.3.
(f) Deferral Pending Change in Control. The obligation of the
Company to prepay the Notes pursuant to the offers required by
subparagraph (b) and accepted in accordance with subparagraph (d) of
this Section 2.3 is subject to the occurrence of the Change in Control
in respect of which such offers and acceptances shall have been made.
In the event that such Change in Control does not occur on the Proposed
Prepayment Date in respect thereof, the prepayment shall be deferred
until and shall be made on the date on which such Change in Control
occurs. The Company shall keep each holder of Notes reasonably and
timely informed of (i) any such deferral of the date of prepayment, (ii)
the date on which such Change in Control and the prepayment are expected
to occur, and (iii) any determination by the Company that efforts to
effect such Change in Control have ceased or been abandoned (in which
case the offers and acceptances made pursuant to this Section 2.3 in
respect of such Change in Control shall be deemed rescinded).
(g) Officer's Certificate. Each offer to prepay the Notes
pursuant to this Section 2.3 shall be accompanied by a certificate,
executed by a Senior Financial Officer of the Company and dated the date
of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that
such offer is made pursuant to this Section 2.3; (iii) the principal
amount of each Note offered to be prepaid; (iv) the estimated Make-Whole
Amount due in connection with such prepayment (calculated as if the date
of such notice were the date of the prepayment), setting forth the
details of such computation; (v) the interest that would be due on each
Note offered to be prepaid, accrued to the Proposed Prepayment Date;
(vi) that the conditions of this Section 2.3 have been fulfilled; and
(vii) in reasonable detail, the nature and date or proposed date of the
Change in Control.
(h) Effect on Required Payments. The amount of each payment of
the principal of the Notes made pursuant to this Section 2.3 shall be
applied against and reduce each of the then remaining principal payments
due pursuant to Section 2.1 by a percentage equal to the aggregate
principal amount of the Notes so paid divided by the aggregate principal
amount of the Notes outstanding immediately prior to such payment.
(i) Terms Defined. The terms set forth below shall have the
respective meanings assigned thereto:
The term "Change in Control" means each and every issue, sale or
other disposition of shares of stock of the Company which results in any
Person or group of Persons acting in concert, other than any Designated
Shareholders, beneficially owning or controlling, directly or
indirectly, more than 50% (by number of votes) of the Voting Stock of
the Company.
The term "control" means the possession of power to direct or
cause the direction of management and policies of such entity, whether
through the ownership of an equity interest, by contract or otherwise.
The term "Control Event" means:
(i) the execution by the Company or any of its Restricted
Subsidiaries or Affiliates of any agreement or letter of intent with
respect to any proposed transaction or event or series of transactions
or events which, individually or in the aggregate, may reasonably be
expected to result in a Change in Control,
(ii) the execution of any written agreement which, when fully
performed by the parties thereto, would result in a Change in Control,
or
(iii) the making of any written offer by any person (as such term
is used in section 13(d) and section 14(d)(2) of the Exchange Act, or
related persons constituting a group (as such term is used in Rule 13d-5
under the Exchange Act) to the holders of the Voting Stock of the
Company, which offer, if accepted by the requisite number of holders,
would result in a Change in Control.
The term "Current Management Team" shall mean Roy E. Parrott,
Kathryn L. Williams, James A. Hug, James B. Painter and James E. Garpow.
The term "Designated Shareholders" shall mean (i) the members of
the Current Management Team; (ii) the Principal Shareholders; (iii) the
spouses, lineal descendants and spouses of the lineal descendants of the
Persons named in clause (i); (iv) the estates or legal representatives
of the Persons named in clause (i); and (v) any trust, custodianship or
other fiduciary arrangement in respect of which one or more of the
Persons described in clauses (i) and (iii) are the principal
beneficiaries and such Person or Persons shall have control of such
trust, custodianship or other fiduciary arrangement.
The term "Principal Shareholders" shall mean Pioneering Management
Group, J.P. Morgan & Co., Incorporated and Farmers Group Inc.
Section 1.3. Amendment to Section 2 of Note Agreement. Section 2 of
the Note Agreement shall be amended by the addition thereto of a new Section
2.4 which shall read as follows:
Section 2.4. Partial Payment Pro Rata. If there is more than one
Note outstanding, the principal amount of each required or optional
partial payment of the Notes, other than an offer to prepay the Notes
pursuant to Section 2.3 which has been declined by one or more holders
of Notes, will be allocated among the Notes at the time outstanding in
proportion, as nearly as practicable, to the respective outstanding
principal amount of the Notes.
Section 1.4. Amendment to Section 3 of Note Agreement. Section 3 of
the Note Agreement shall be amended in its entirety so that the same shall
read as follows:
Section 3.1. Financial and Business Information. The Company
shall deliver to each holder of Notes:
(a) Quarterly Statements within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year), duplicate
copies of:
(i) a consolidated balance sheet of the Company and its
Restricted Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Restricted Subsidiaries for such quarter and (in the case of the
second and third quarters) for the portion of the fiscal year
ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from normal,
recurring year-end adjustments;
(b) Annual Statements within 90 days after the end of each
fiscal year of the Company, duplicate copies of,
(i) a consolidated balance sheet of the Company and its
Restricted Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Restricted Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied
(A) by an opinion thereon of independent certified public
accountants of recognized national standing, which opinion shall
state that such financial statements present fairly, in all
material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and
have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial
statements has been made in accordance with generally accepted
auditing standards, and that such audit provides a reasonable
basis for such opinion in the circumstances, and
(B) a certificate of such accountants stating that they
have reviewed this Agreement and stating further whether, in
making their audit, they have become aware of any condition or
event that then constitutes a Default or an Event of Default, and,
if they are aware that any such condition or event then exists,
specifying the nature and period of the existence thereof (it
being understood that such accountants shall not be liable,
directly or indirectly, for any failure to obtain knowledge of any
Default or Event of Default unless such accountants should have
obtained knowledge thereof in making an audit in accordance with
generally accepted auditing standards or did not make such an
audit);
(c) SEC and Other Reports promptly upon their becoming
available, one copy of (i) each financial statement, report,
notice or proxy statement sent by the Company or any Subsidiary to
public securities holders generally, and (ii) each regular or
periodic report, each registration statement (without exhibits
except as expressly requested by such holder), and each prospectus
and all amendments thereto filed by the Company or any Subsidiary
with the Securities and Exchange Commission and of all press
releases and other statements made available generally by the
Company or any Subsidiary to the public concerning developments
that are Material;
(d) Notice of Default or Event of Default promptly, and in any
event within five days after a Responsible Officer becoming aware of the
existence of any Default or Event of Default or that any Person has
given any notice or taken any action with respect to a claimed default
hereunder or that any Person has given any notice or taken any action
with respect to a claimed default of the type referred to in Section
5.1(f), a written notice specifying the nature and period of existence
thereof and what action the Company is taking or proposes to take with
respect thereto;
(e) ERISA Matters promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any,
that the Company or an ERISA Affiliate proposes to take with respect
thereto:
(i) with respect to any Plan, any Reportable Event for
which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Plan, or the receipt by the
Company or any ERISA Affiliate of a notice from a Multiemployer
Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate
pursuant to Title I or IV of ERISA or such penalty or excise tax
provisions, if such liability or Lien, taken together with any
other such liabilities or Liens then existing, could reasonably be
expected to have a Material Adverse Effect;
(f) Notices from Governmental Authority promptly, and in any
event within 30 days of receipt thereof, copies of any notice to the
Company or any Subsidiary from any Federal or state Governmental
Authority relating to any order, ruling, statute or other law or
regulation that could reasonably be expected to have a Material Adverse
Effect;
(g) Unrestricted Subsidiaries within the respective periods
provided in Section 3.1(a) and (b) above, financial statements of the
character and for the dates and periods as provided in said Section
3.1(a) and (b) covering each Unrestricted Subsidiary (or group of
Unrestricted Subsidiaries on a consolidated basis);
(h) Material Information with reasonable promptness, the
Company will use its best efforts to provide written notice of any
Material change to the business, operations, affairs, financial
condition, assets or properties of the Company and its Restricted
Subsidiaries; and
(i) Requested Information with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company or any
of its Subsidiaries or relating to the ability of the Company to perform
its obligations hereunder and under the Notes as from time to time may
be reasonably requested by any such holder of Notes.
Section 3.2. Officer's Certificate. Each set of financial
statements delivered to a holder of Notes pursuant to Section 3.1(a) or
Section 3.1(b) hereof shall be accompanied by a certificate of a Senior
Financial Officer setting forth:
(a) Covenant Compliance the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 4.1 through Section 4.7
hereof, inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
(b) Event of Default a statement that such officer has
reviewed the relevant terms hereof and has made, or caused to be made,
under his or her supervision, a review of the transactions and
conditions of the Company and its Restricted Subsidiaries from the
beginning of the quarterly or annual period covered by the statements
then being furnished to the date of the certificate and that such review
shall not have disclosed the existence during such period of any
condition or event that constitutes a Default or an Event of Default or,
if any such condition or event existed or exists (including, without
limitation, any such event or condition resulting from the failure of
the Company or any Subsidiary to comply with any Environmental Law),
specifying the nature and period of existence thereof and what action
the Company shall have taken or proposes to take with respect thereto.
Section 3.3. Inspection. The Company shall permit the
representatives of each holder of Notes:
(a) No Default if no Default or Event of Default then exists,
at the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to
discuss the affairs, finances and accounts of the Company and its
Subsidiaries with the Company's officers, and (with the consent of the
Company, which consent will not be unreasonably withheld) its
independent public accountants, and (with the consent of the Company,
which consent will not be unreasonably withheld) to visit the other
offices and properties of the Company and each Subsidiary, all at such
reasonable times and as often as may be reasonably requested in writing;
and
(b) Default if a Default or Event of Default then exists, at
the expense of the Company to visit and inspect any of the offices or
properties of the Company or any Subsidiary, to examine all their
respective books of account, records, reports and other papers, to make
copies and extracts therefrom, and to discuss their respective affairs,
finances and accounts with their respective officers and independent
public accountants (and by this provision the Company authorizes said
accountants to discuss the affairs, finances and accounts of the Company
and its Subsidiaries), all at such times and as often as may be
requested.
Section 1.5. Amendment to Section 4 of Note Agreement. Section 4 of
the Note Agreement shall be amended in its entirety so that the same shall
read as follows:
The Company covenants that so long as any of the Notes are
outstanding:
Section 4.1. Consolidated Net Worth. The Company will not, at
any time, permit Consolidated Net Worth to be less than the sum of (a)
$95,000,000, plus (b) 25% of its aggregate Consolidated Net Income (but
only if a positive number) for the period beginning on July 1, 1997 and
ending at the end of the then most recently completed fiscal year of the
Company (or if such date of determination is the last day of any fiscal
year, then ending on such date), computed on a cumulative basis for such
entire period.
Section 4.2. Limitations on Debt. The Company will not, and will
not permit any Restricted Subsidiary to, create, assume or incur or in
any manner be or become liable in respect of any Consolidated Debt,
except:
(a) Debt evidenced by the Notes;
(b) Consolidated Debt of the Company and its Restricted
Subsidiaries outstanding as of the date of the First Amendment and
reflected on Exhibit A to the First Amendment; and
(c) additional Consolidated Debt of the Company and its
Restricted Subsidiaries, provided that at the time of issuance thereof
and after giving effect thereto and to the application of the proceeds
thereof:
(i) no Default or Event of Default exists;
(ii) Consolidated Debt does not exceed 3.5 times EBITDA for
the then most recently ended period of four consecutive fiscal
quarters of the Company; and
(iii) in the case any such Debt is Priority Debt, such Debt
is permitted by Section 4.3.
Any corporation which becomes a Restricted Subsidiary after the
date of this Agreement shall, for all purposes of this Section 4.2, be
deemed to have created, assumed or incurred, at the time it becomes a
Restricted Subsidiary, all Debt of such corporation existing immediately
after it becomes a Restricted Subsidiary.
Section 4.3. Limitations on Priority Debt. The Company will not
at any time permit Priority Debt to exceed 15% of Total Capitalization
as of the last day of the then most recently ended fiscal quarter of the
Company.
Section 4.4. Limitation on Liens. The Company will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly
create, incur, assume or permit to exist (upon the happening of a
contingency or otherwise) any Lien on or with respect to any Property or
asset (including, without limitation, any document or instrument in
respect of goods or accounts receivable) of the Company or any such
Restricted Subsidiary, whether now owned or held or hereafter acquired,
or any income or profits therefrom, or assign or otherwise convey any
right to receive income or profits, except:
(a) Liens for taxes, assessments or other governmental charges
which are not yet due and payable or the payment of which is not at the
time required by Section 4.13;
(b) any attachment or judgment Lien, unless the judgment it
secures shall not, within 30 days after the entry thereof, have been
discharged or execution thereof stayed pending appeal, or shall not have
been discharged within 30 days after the expiration of any such stay (or
such lesser period of time as applicable law allows a judgment creditor
to levy on such judgment);
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each
case, incurred in the ordinary course of business for sums not yet due
and payable or the payment of which is not at the time required by
Section 4.13;
(d) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (i) in connection with
workers' compensation, unemployment insurance and other types of social
security or retirement benefits, or (ii) to secure (or to obtain letters
of credit that secure) the performance of tenders, statutory
obligations, surety bonds, appeal bonds, bids, leases (other than
Capitalized Leases), performance bonds, purchase, construction or sales
contracts and other similar obligations, in each case not incurred or
made in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of
Property;
(e) Liens existing on the date of the First Amendment and
securing the Debt of the Company and its Restricted Subsidiaries
referred to in Exhibit B to the First Amendment;
(f) any Lien created to secure all or any part of the purchase
price, or to secure Debt incurred or assumed to pay all or any part of
the purchase price or cost of construction, of Property (other than
accounts receivable or inventory), or any improvement thereon, acquired
or constructed by the Company or a Restricted Subsidiary after the date
of the First Amendment, provided that
(i) any such Lien shall extend solely to the item or items
of such Property (or improvement thereon) so acquired or
constructed and, if required by the terms of the instrument
originally creating such Lien, other Property (or improvement
thereon) which is an improvement to or is acquired for specific
use in connection with such acquired or constructed Property (or
improvement thereon) or which is real Property being improved by
such acquired or constructed Property (or improvement thereon),
(ii) the principal amount of the Debt secured by any such
Lien shall at no time exceed an amount equal to the lesser of (A)
the cost to the Company or such Restricted Subsidiary of the
Property (or improvement thereon) so acquired or constructed and
(B) the fair market value (as determined in good faith by the
board of directors of the Company) of such Property (or
improvement thereon) at the time of such acquisition or
construction, and
(iii) any such Lien shall be created contemporaneously with
the acquisition or construction of such Property; and
(g) in addition to the Liens permitted by the preceding clauses
(a) through (f), inclusive, of this Section 4.4, Liens on Property
(other than accounts receivable or inventory of any Company) securing
Priority Debt of the Company or any Restricted Subsidiary, provided that
such Priority Debt shall be permitted by the applicable limitations set
forth in Section 4.2 and 4.3.
Section 4.5. Merger, Consolidation, etc. The Company will not,
and will not permit any of its Restricted Subsidiaries to, consolidate
with or merge with any other corporation or convey, transfer or lease
substantially all of its assets in a single transaction or series of
transactions to any Person (except that a Restricted Subsidiary of the
Company may (x) consolidate with or merge with, or convey, transfer or
lease substantially all of its assets in a single transaction or series
of transactions to, the Company or a Wholly-Owned Restricted Subsidiary
of the Company and (y) convey, transfer or lease all of its assets in
compliance with the provisions of Section 4.6), provided that the
foregoing restriction does not apply to the consolidation or merger of
the Company with, or the conveyance, transfer or lease of substantially
all of the assets of the Company in a single transaction or series of
transactions to, any Person so long as:
(a) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety, as
the case may be (the "Successor Corporation"), shall be a solvent
corporation organized and existing under the laws of the United States
of America, any State thereof or the District of Columbia;
(b) if the Company is not the Successor Corporation, such
corporation shall have executed and delivered to each holder of Notes
its assumption of the due and punctual performance and observance of
each covenant and condition of this Agreement and the Notes (pursuant to
such agreements and instruments as shall be reasonably satisfactory to
the Required Holders), and the Company shall have caused to be delivered
to each holder of Notes an opinion of nationally recognized independent
counsel, to the effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and comply
with the terms hereof; and
(c) immediately after giving effect to such transaction:
(i) no Default or Event of Default would exist, and
(ii) the Successor Corporation would be permitted by the
provisions of Section 4.2 hereof to incur at least $1.00 of
additional Debt owing to a Person other than a Restricted
Subsidiary of the Successor Corporation.
No such conveyance, transfer or lease of substantially all of the
assets of the Company shall have the effect of releasing the Company or
any Successor Corporation from its liability under this Agreement or the
Notes.
Section 4.6. Sales of Assets. Except as permitted under Section
4.5, the Company will not, and will not permit any of its Restricted
Subsidiaries to, make any Asset Disposition unless:
(a) in the good faith opinion of the Company, the Asset
Disposition is in exchange for consideration having a Fair Market Value
at least equal to that of the Property exchanged and is in the best
interest of the Company or such Restricted Subsidiary; and
(b) immediately after giving effect to the Asset Disposition, no
Default or Event of Default would exist; and
(c) immediately after giving effect to the Asset Disposition:
(i) the Disposition Value of all Property that was the
subject of any Asset Disposition occurring in any period of four
consecutive fiscal quarters of the Company then next ending would
not exceed 10% of Consolidated Total Assets as of the last day of
the then most recently ended fiscal quarter of the Company, and
(ii) the Disposition Value of all Property that was the
subject of any Asset Disposition occurring on or after the date of
the First Amendment would not exceed 25% of Consolidated Total
Assets as of the last day of the then most recently ended fiscal
quarter of the Company.
If the Net Proceeds Amount for any Transfer is applied to a Debt
Prepayment Application contemporaneously with such Transfer or a
Property Reinvestment Application within one year of such Transfer, then
such Transfer, only for the purpose of determining compliance with
subsection (c) of this Section 4.6 as of any date on or after the Net
Proceeds Amount is so applied, shall be deemed not to be an Asset
Disposition.
Section 4.7. Long Term Lease Rentals. The Company will not, at
any time, permit Long Term Lease Rentals for any current or future
period of 12 consecutive calendar months to exceed 10% of Total
Capitalization as of the last day of the then most recently ended fiscal
quarter of the Company.
Section 4.8. Nature of Business. Neither the Company nor any
Restricted Subsidiary will engage in any business if, as a result, the
general nature of the business, taken on a consolidated basis, which
would then be engaged in by the Company and its Restricted Subsidiaries
would be substantially changed from the general nature of the business
engaged in by the Company and its Restricted Subsidiaries on the date of
this Agreement.
Section 4.9. Transactions with Affiliates. The Company will not,
and will not permit any Restricted Subsidiary to, enter into, directly
or indirectly, any transaction or group of related transactions with any
Affiliate which, individually or in the aggregate, are Material
(including without limitation the purchase, lease, sale or exchange of
properties of any kind or the rendering of any service), except in the
ordinary course and pursuant to the reasonable requirements of the
Company's or such Restricted Subsidiary's business and upon fair and
reasonable terms no less favorable to the Company or such Restricted
Subsidiary than would be obtainable in a comparable arm's-length
transaction with a Person not an Affiliate.
Section 4.10. Compliance with Law. The Company will and will
cause each of its Restricted Subsidiaries to comply with all laws,
ordinances or governmental rules or regulations to which each of them is
subject, including, without limitation, Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits,
franchises and other governmental authorizations necessary to the
ownership of their respective properties or to the conduct of their
respective businesses, in each case to the extent necessary to ensure
that non-compliance with such laws, ordinances or governmental rules or
regulations or failures to obtain or maintain in effect such licenses,
certificates, permits, franchises and other governmental authorizations
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
Section 4.11. Insurance. The Company will and will cause each of
its Restricted Subsidiaries to maintain, with financially sound and
reputable insurers, insurance with respect to their respective
properties and businesses against such casualties and contingencies, of
such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained
with respect thereto) as is customary in the case of entities of
established reputations engaged in the same or a similar business and
similarly situated.
Section 4.12. Maintenance of Properties. The Company will and
will cause each of its Restricted Subsidiaries to maintain and keep, or
cause to be maintained and kept, their respective properties in good
repair, working order and condition (other than ordinary wear and tear),
so that the business carried on in connection therewith may be properly
conducted at all times, provided that this Section shall not prevent the
Company or any Restricted Subsidiary from discontinuing the operation
and the maintenance of any of its properties if such discontinuance is
desirable in the conduct of its business and the Company has concluded
that such discontinuance could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
Section 4.13. Payment of Taxes and Claims. The Company will and
will cause each of its Subsidiaries to file all tax returns required to
be filed in any jurisdiction and to pay and discharge all taxes shown to
be due and payable on such returns and all other taxes, assessments,
governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become
delinquent and all claims for which sums have become due and payable
that have or might become a Lien on properties or assets of the Company
or any Subsidiary, provided that neither the Company nor any Subsidiary
need pay any such tax or assessment or claims if (i) the amount,
applicability or validity thereof is contested by the Company or such
Subsidiary on a timely basis in good faith and in appropriate
proceedings, and the Company or a Subsidiary has established adequate
reserves therefor in accordance with GAAP on the books of the Company or
such Subsidiary or (ii) the nonpayment of all such taxes and assessments
in the aggregate could not reasonably be expected to have a Material
Adverse Effect.
Section 4.14. Corporate Existence, etc. Subject to Sections 4.5
and 4.6, the Company will at all times preserve and keep in full force
and effect its corporate existence and will at all times preserve and
keep in full force and effect the corporate existence of each of its
Restricted Subsidiaries and all rights and franchises of the Company and
its Restricted Subsidiaries unless, in the good faith judgment of the
Company, the termination of or failure to preserve and keep in full
force and effect such corporate existence, right or franchise could not,
individually or in the aggregate, have a Material Adverse Effect.
Section 4.15. Designation of Unrestricted Subsidiaries. The
Company may from time to time cause any Subsidiary to be designated as
an Unrestricted Subsidiary or any Unrestricted Subsidiary to be
designated a Restricted Subsidiary, provided, however, that immediately
following such action and after giving effect thereto, (a) no Default or
Event of Default would exist under the terms of this Agreement, and (b)
the Company and its Restricted Subsidiaries would be in compliance with
all of the covenants set forth in this Section 4 if tested on the date
of such action and provided, further, that once a Restricted Subsidiary
has been designated an Unrestricted Subsidiary, it shall not thereafter
be redesignated as a Restricted Subsidiary. Within ten (10) days
following any designation described above, the Company will deliver to
you a notice of such designation accompanied by a certificate signed by
a Senior Financial Officer of the Company certifying compliance with all
requirements of this Section 4.15 and setting forth all information
required in order to establish such compliance.
Section 4.16. Financial Records. The Company will, and will
cause its Subsidiaries to, keep true and correct books of records and
accounts in which full and correct entries will be made of all of its
business transactions, and will reflect in its financial statements
adequate accruals and appropriations to reserves, all in accordance with
GAAP.
Section 4.17. Additional Guaranties. If any Restricted
Subsidiary becomes a party to any Guaranty of, or is otherwise liable
for, any Debt of the Company or any Restricted Subsidiary, the Company
will cause such Restricted Subsidiary to execute and deliver to all
holders of Notes a written Guaranty, satisfactory in scope and form to
the Required Holders, to which such Restricted Subsidiary shall
unconditionally guaranty the payment of all amounts payable hereunder by
the Company and the performance by the Company of all obligations
hereunder.
Section 1.6. Amendment to Section 5 of Note Agreement. Section 5 of
the Note Agreement shall be amended in its entirety so that the same shall
read as follows:
Section 5.1. Nature of Default. An "Event of Default" shall
exist if any of the following conditions or events shall occur and be
continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five business days after the same becomes due and
payable; or
(c) the Company defaults in the performance of or compliance
with any term contained in Sections 4.1 through 4.7, inclusive;or
(d) the Company defaults in the performance of or compliance
with any term contained herein (other than those referred to in
paragraphs (a), (b) and (c) of this Section 5.1) and such default is not
remedied within 30 days after the earlier of (i) a Responsible Officer
obtaining actual knowledge of such default and (ii) the Company
receiving written notice of such default from any holder of a Note (any
such written notice to be identified as a "notice of default" and to
refer specifically to this paragraph (d) of Section 5.1); or
(e) any representation or warranty made in writing by or on
behalf of the Company or by any officer of the Company in this Agreement
or in any writing furnished in connection with the transactions
contemplated hereby proves to have been false or incorrect in any
material respect on the date as of which made; or
(f) (i) the Company or any Restricted Subsidiary is in default
(as principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any Debt
that is outstanding in an aggregate principal amount of at least
$5,000,000 beyond any period of grace provided with respect thereto, or
(ii) the Company or any Restricted Subsidiary is in default in the
performance of or compliance with any term of any evidence of any Debt
in an aggregate outstanding principal amount of at least $5,000,000 or
of any mortgage, indenture or other agreement relating thereto or any
other condition exists, and as a consequence of such default or
condition such Debt has become, or has been declared, due and payable
before its stated maturity or before its regularly scheduled dates of
payment, or (iii) as a consequence of the occurrence or continuation of
any event or condition (other than the passage of time or the right of
the holder of Debt to convert such Debt into equity interests), the
Company or Restricted any Subsidiary has become obligated to purchase or
repay Debt before its regular maturity or before its regularly scheduled
dates of payment in an aggregate outstanding principal amount of at
least $5,000,000; or
(g) the Company or any Material Restricted Subsidiary (i) is
generally not paying, or admits in writing its inability to pay, its
debts as they become due, (ii) files, or consents by answer or otherwise
to the filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization, moratorium
or other similar law of any jurisdiction, (iii) makes an assignment for
the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property,
(v) is adjudicated as insolvent or to be liquidated, or (vi) takes
corporate action for the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of its
Restricted Subsidiaries, a custodian, receiver, trustee or other officer
with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief or
approving a petition for relief or reorganization or any other petition
in bankruptcy or for liquidation or to take advantage of any bankruptcy
or insolvency law of any jurisdiction, or ordering the dissolution,
winding-up or liquidation of the Company or any of its Material
Restricted Subsidiaries, or any such petition shall be filed against the
Company or any of its Material Restricted Subsidiaries and such petition
shall not be dismissed within 60 days; or
(i) a final judgment or judgments for the payment of money
aggregating in excess of $5,000,000 are rendered against one or more of
the Company and its Restricted Subsidiaries and which judgments are not,
within 60 days after entry thereof, bonded, discharged or stayed pending
appeal (or such lesser period of time as applicable law or rules of
court allow a judgment creditor to levy on such judgments), or are not
discharged within 60 days after the expiration of such stay (or such
lesser period of time as applicable law or rules of court allow a
judgment creditor to levy on such judgments); or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of intent
to terminate any Plan shall have been or is reasonably expected to be
filed with the PBGC or the PBGC shall have instituted proceedings under
ERISA section 4042 to terminate or appoint a trustee to administer any
Plan or the PBGC shall have notified the Company or any ERISA Affiliate
that a Plan may become a subject of any such proceedings, (iii) the
aggregate "amount of unfunded benefit liabilities" (within the meaning
of section 4001(a)(18) of ERISA) under all Plans, determined in
accordance with Title IV of ERISA, shall exceed $7,500,000, (iv) the
Company or any ERISA Affiliate shall have incurred or is reasonably
expected to incur any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee
benefit plans, (v) the Company or any ERISA Affiliate withdraws from any
Multiemployer Plan, or (vi) the Company or any Subsidiary establishes or
amends any employee welfare benefit plan that provides post-employment
welfare benefits in a manner that would increase the liability of the
Company or any Subsidiary thereunder; and any such event or events
described in clauses (i) through (vi) above, either individually or
together with any other such event or events, could reasonably be
expected to have a Material Adverse Effect.
As used in Section 5.1(j), the terms "employee benefit plan" and
"employee welfare benefit plan" shall have the respective meanings
assigned to such terms in Section 3 of ERISA.
Section 5.2. Notice to Holders. When any Event of Default
described in the foregoing Section 5.1 has occurred, or if the holder of
any Note or of any other evidence of Debt of the Company gives any
notice or takes any other action with respect to a claimed default, the
Company agrees to give notice within three business days of such event
to all holders of the Notes then outstanding.
Section 5.3. Default Remedies. (a) Acceleration If an Event
of Default described in paragraph (a) or (b) of Section 5.1 exists, any
holder of Notes may, at its option, exercise any right, power or remedy
permitted by law, including the right, by notice to the Company, to
declare the Notes held by such holder to be immediately due and payable.
If any Event of Default described in paragraphs (c) through (f),
inclusive, or paragraphs (i) or (j) of Section 5.1 exists, the holder or
holders of at least 51% in outstanding principal amount of the Notes
(exclusive of Notes owned by the Company, Restricted Subsidiaries and
Affiliates) may, at its or their option, exercise any right, power or
remedy permitted by law, including the right, by notice to the Company,
to declare all the outstanding Notes to be immediately due and payable.
When any Event of Default described in paragraph (g) or (h) of Section
5.1 has occurred, then all outstanding Notes shall immediately become
due and payable without presentment, demand or notice of any kind. Upon
the Notes becoming due and payable as a result of any Event of Default
as aforesaid, the Company will forthwith pay to the holders of the Notes
the entire principal and interest accrued on the Notes and, to the
extent not prohibited by applicable law, an amount as liquidated damages
for the loss of the bargain evidenced hereby (and not as a penalty)
equal to the Make-Whole Amount, determined as of the date on which the
Notes shall so become due and payable.
No course of dealing or delay or failure to exercise any right on
the part of any holder of the Notes shall operate as a waiver of such
right or otherwise prejudice such holder's rights, powers or remedies.
The Company will pay or reimburse the holders of the Notes for all costs
and expenses (including reasonable attorneys' fees) incurred by them in
collecting any sums due on the Notes or in otherwise enforcing any of
their rights.
(b) Annulment of Acceleration In the event of any declaration
pursuant to Section 5.3(a) by reason of any Event of Default described
in paragraphs (a) through (f), inclusive, or paragraphs (i) or (j) of
Section 5.1, the holder or holders of at least 51% of the outstanding
principal amount of the Notes (exclusive of Notes owned by the Company
and Affiliates) may annul such declaration and its consequences if (i)
no judgment or decree has been entered for the payment of any amount due
pursuant to such declaration, (ii) all sums payable under the Notes and
under this Agreement (except any principal or interest on the Notes
which has become payable solely by reason of such declaration) shall
have been duly paid and (iii) each and every other Default and Event of
Default shall have been made good, cured or waived pursuant to Section
8.5.
Section 1.7. Amendment to Section 6.1 of Note Agreement. Section 6.1
of the Note Agreement shall be amended in its entirety so that the same shall
read as follows:
"Acceptable Bank" means any bank or trust company (i) which is organized
under the laws of the United States of America or any State thereof or a
jurisdiction of any nation whose government is an Acceptable Foreign
Government (or any jurisdiction therein), (ii) which has capital, surplus and
undivided profits aggregating at least $250,000,000, and (iii) whose long-term
unsecured debt obligations (or the long-term unsecured debt obligations of the
bank holding company owning all of the capital stock of such bank or trust
company) shall have been given a rating of "A-" or better by Standard & Poor's
Rating Group, a division of The McGraw-Hill Company, Inc., or "A3" or better
by Moody's Investors Service, Inc.
"Acceptable Broker-Dealer" means any Person other than a natural person
(i) which is registered as a broker or dealer pursuant to the Exchange Act and
(ii) whose long-term unsecured debt obligations shall have been given a rating
of "A" or better by Standard & Poor's Rating Group, a division of The
McGraw-Hill Companies, Inc., "A2" or better by Moody's Investors Service, Inc.
"Acceptable Foreign Government" means the government of any foreign
nation whose debt obligations are rated at least "A-" by Standard & Poor's
Rating Group, a division of The McGraw-Hill Companies, Inc., or at least "A3"
by Moody's Investors Service, Inc.
"Acquired Business Entity" means for any period of determination
hereunder (i) any business entity the assets and related liabilities of which
have been acquired substantially as an entirety by the Company or any
Restricted Subsidiary by purchase, merger or consolidation, and (ii) any other
assets which were operated as an identifiable business unit, i.e. a branch or
division of a business entity and which have been acquired substantially as an
entirety by the Company or any Restricted Subsidiary.
"Affiliate" means, at any time, and with respect to any Person, (a) any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or
indirectly, 10% or more of any class of voting or equity interests. As used
in this definition, "Control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise. Unless the context otherwise clearly requires, any reference to an
"Affiliate" is a reference to an Affiliate of the Company.
"Agreement" shall mean this Note Agreement dated as of August 15, 1991
between the Company and you (including Attachments), as amended or modified
from time to time.
"Asset Disposition" means any Transfer except:
(a) any
(i) Transfer from a Restricted Subsidiary to the Company
or a Wholly-Owned Restricted Subsidiary;
(ii) Transfer from the Company to a Wholly-Owned Restricted
Subsidiary; and
(iii) Transfer from the Company to a Restricted Subsidiary
(other than a Wholly-Owned Restricted Subsidiary) or from a
Restricted Subsidiary to another Restricted Subsidiary (other than
a Wholly-Owned Restricted Subsidiary), which in either case is for
Fair Market Value,
so long as immediately before and immediately after the
consummation of any such Transfer and after giving effect thereto, no
Default or Event of Default exists; and
(b) any Transfer made in the ordinary course of business and
involving only Property that is either (i) inventory held for sale or (ii)
equipment, fixtures, supplies or materials no longer required in the operation
of the business of the Company or any of its Restricted Subsidiaries or that
is obsolete.
"Capitalized Lease" shall mean any lease the obligation for Rentals with
respect to which is required to be capitalized on a consolidated balance sheet
of the lessee and its subsidiaries in accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and the rules and regulations promulgated thereunder from time to time.
"Closing Date" is defined in Section 1.2.
"Consolidated Debt" means the total amount of all Debt of the Company
and its Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" means for any period the net income of the
Company and its Restricted Subsidiaries, determined in accordance with GAAP on
a consolidated basis.
"Consolidated Net Worth" means, as of the date of any determination
thereof,
(a) the total amount of Shareholders' Equity, minus
(b) the book value of all Restricted Investments.
"Consolidated Total Assets" means, as of the date of any determination
thereof, the total amount of assets of the Company and its Restricted
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"Debt" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money;
(b) its liabilities for the deferred purchase price of Property
acquired by such Person (excluding accounts payable arising in the
ordinary course of business but including, without limitation, all
liabilities created or arising under any conditional sale or other title
retention agreement with respect to any such Property);
(c) all liabilities appearing on its balance sheet in accordance
with GAAP in respect of Capitalized Leases;
(d) all liabilities for borrowed money secured by any Lien with
respect to any Property owned by such Person (whether or not it has
assumed or otherwise become liable for such liabilities);
(e) all of its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a
type described in any of clauses (a) through (d) hereof.
Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (g) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
"Debt Prepayment Application" means, with respect to any Transfer of
Property, the application by the Company or its Restricted Subsidiaries of
cash in an amount equal to the Net Proceeds Amount with respect to such
Transfer to pay Senior Debt of the Company (other than Senior Debt owing to
the Company, any of its Restricted Subsidiaries or any Affiliate and Senior
Debt in respect of any revolving credit or similar credit facility providing
the Company or any of its Restricted Subsidiaries with the right to obtain
loans or other extensions of credit from time to time, except to the extent
that in connection with such payment of Senior Debt the availability of credit
under such credit facility is permanently reduced by an amount not less than
the amount of such proceeds applied to the payment of such Senior Debt),
provided that in the course of making such application the Company shall offer
to prepay each outstanding Note in accordance with Section 2.2(b) in a
principal amount which equals the Ratable Portion for such Note. If any
holder of a Note fails to accept such offer of prepayment, then, for purposes
of the preceding sentence only, the Company nevertheless will be deemed to
have paid Senior Debt in an amount equal to the Ratable Portion for such Note.
"Ratable Portion" for any Note means an amount equal to the product of (x) the
Net Proceeds Amount being so applied to the payment of Senior Debt multiplied
by (y) a fraction the numerator of which is the outstanding principal amount
of such Note and the denominator of which is the aggregate principal amount of
all Senior Debt of the Company.
"Default" shall mean any event or condition the occurrence of which
would, with the lapse of time or the giving of notice, or both, constitute an
Event of Default.
"Disposition Value" means, at any time, with respect to any Property
(a) in the case of Property that does not constitute Subsidiary
Stock, the book value thereof, valued at the time of such disposition in
good faith by the Company, and
(b) in the case of Property that constitutes Subsidiary Stock,
an amount equal to that percentage of book value of the assets of the
Subsidiary that issued such stock as is equal to the percentage that the
book value of such Subsidiary Stock represents of the book value of all
of the outstanding capital stock of such Subsidiary (assuming, in making
such calculations, that all Securities convertible into such capital
stock are so converted and giving full effect to all transactions that
would occur or be required in connection with such conversion)
determined at the time of the disposition thereof, in good faith by the
Company.
"Divested Business Entity" means for any period of determination
hereunder (i) any business entity the assets and related liabilities of which
have been sold, disposed of or otherwise divested substantially as an entirety
by the Company or any Restricted Subsidiary, and (ii) any other assets which
were operated as an identifiable business unit, i.e. a branch or division of a
business entity and which have been sold, disposed of or otherwise divested
substantially as an entirety by the Company or any Restricted Subsidiary.
"EBITDA" means for any period the difference between (a) sum of (i)
Consolidated Net Income during such period plus (to the extent deducted in
determining Consolidated Net Income), (ii) all provisions for any Federal,
state or other income taxes made by the Company and its Restricted
Subsidiaries during such period, (iii) all Interest Charges on Consolidated
Debt (including the interest component on Rentals on Capitalized Leases), and
(iv) all depreciation and amortization expense and all other non-cash charges
or expenses of the Company and its Restricted Subsidiaries during such period,
and (b) the sum of (to the extent included in determining Consolidated Net
Income) (i) all interest income on any particular Investment for which
calculations are being made, and (ii) all non-cash credits or income of the
Company and its Restricted Subsidiaries during such period. For purposes of
determining EBITDA in connection with the incurrence of any Debt in which the
proceeds shall be used to fund the acquisition of any Acquired Business
Entity, EBITDA shall be computed on a pro forma basis for such Acquired
Business Entity during such period. EBITDA shall exclude all amounts
attributable to any Divested Business Entity which has been divested by the
Company or any Restricted Subsidiary during such period.
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including
but not limited to those related to hazardous substances or wastes, air
emissions and discharges to waste or public systems.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA Affiliate" shall mean any corporation, trade or business that is,
along with the Company, a member of a controlled group of corporations or a
controlled group of trades or businesses, as described in Sections 414(b) and
414(c), respectively, of the Code or Section 4001 of ERISA.
"Event of Default" is defined in Section 5.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Fair Market Value" means, at any time and with respect to any Property,
the sale value of such Property that would be realized in an arm's-length sale
at such time between an informed and willing buyer and an informed and willing
seller (neither being under a compulsion to buy or sell).
"First Amendment" means the Amendment to Note Agreement dated as of May
30, 1997, pursuant to which certain provisions of the Agreement were amended.
"GAAP" shall mean generally accepted accounting principles at the time.
"Governmental Authority" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Restricted Subsidiary conducts all or any part of its business, or
which asserts jurisdiction over any properties of the Company or
any Restricted Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"Governmental Security" means any direct obligations of, or obligation
guaranteed by, the United States of America or any Acceptable Foreign
Government or any agency or instrumentality thereof, so long as such
obligation or guarantee shall have the benefit of the full faith and credit of
the United States of America or such Acceptable Foreign Government, as the
case may be.
"Guaranty" means, with respect to any Person, any obligation (except the
endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing
any indebtedness, dividend or other obligation of any other Person in any
manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such indebtedness or obligation or any property
constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services
primarily for the purpose of assuring the owner of such indebtedness or
obligation of the ability of any other Person to make payment of the
indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the
obligor under any Guaranty, the indebtedness or other obligations that are the
subject of such Guaranty shall be assumed to be direct obligations of such
obligor.
"Interest Charges" for any period means all interest and all
amortization of debt discount and expense on any particular Debt for which
such calculations are being made, including, without limitation, all
commissions, fees and other charges owed with respect to letters of credit and
bankers' acceptances.
"Investment" means any investment, made in cash or by delivery of
property, by the Company or any of its Subsidiaries (i) in any Person, whether
by acquisition of stock, indebtedness or other obligation or Security, or by
loan, Guaranty, advance, capital contribution or otherwise, or (ii) in any
property.
"Lien" means any interest in Property securing an obligation owed to, or
a claim by, a Person other than the owner of the Property, whether the
interest is based on common law, statute or contract (including the security
interest lien arising from a mortgage, encumbrance, pledge, conditional sale
or trust receipt or a lease, consignment or bailment for security purposes).
The term "Lien" shall not include minor reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions
and other minor title exceptions affecting Property, provided that they do not
constitute security for a monetary obligation. For the purposes of this
Agreement, the Company or a Restricted Subsidiary shall be deemed to be the
owner of any Property which it has acquired or holds subject to a conditional
sale agreement, financing lease or other arrangement pursuant to which title
to the Property has been retained by or vested in some other Person for
security purposes, and such retention or vesting shall be deemed to be a Lien.
"Long Term Lease Rentals" means, with respect to any period, the sum of
the rental and other obligations required to be paid during such period by the
Company or any Restricted Subsidiary as lessee under all leases of real or
personal Property (other than Capitalized Leases) having a term (including
terms of renewal or extension at the option of the lessor or the lessee,
whether or not such option has been exercised) expiring more than one year
after the commencement of the initial term, excluding any amount required to
be paid by the lessee (whether or not therein designated as rental or
additional rental) on account of maintenance and repairs, insurance, taxes,
assessments, water rates and similar charges, provided that, if at the date of
determination, any such rental or other obligations are contingent or not
otherwise definitely determinable by the terms of the related lease, the
amount of such obligations (i) shall be assumed to be equal to the amount of
such obligations for the period of 12 consecutive calendar months immediately
preceding the date of determination or (ii) if the related lease was not in
effect during such preceding 12-month period, shall be the amount estimated by
a Senior Financial Officer of the Company on a reasonable basis and in good
faith.
"Make-Whole Amount" shall have the meaning assigned thereto in Section
2.2(c).
"Material" means material in relation to the business, operations,
affairs, financial condition, assets, properties, or prospects of the Company
and its Restricted Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of
the Company and its Restricted Subsidiaries taken as a whole, or (b) the
ability of the Company to perform its obligations under this Agreement and the
Notes, or (c) the validity or enforceability of this Agreement or the Notes.
"Material Restricted Subsidiary" means any Restricted Subsidiary which,
either individually or together with one or more Restricted Subsidiaries, (i)
accounts for 5% or more of Consolidated Total Assets, determined as of the end
of either of the two most recently ended fiscal years, or (ii) accounts for 5%
or more of Consolidated Net Income during one of the two immediately preceding
fiscal years.
"Minority Interests" means any shares of stock of any class of a
Restricted Subsidiary (other than directors' qualifying shares as required by
law) that are not owned by the Company and/or one or more of its Restricted
Subsidiaries. Minority Interests shall be valued by valuing Minority
Interests constituting preferred stock at the voluntary or involuntary
liquidating value of such preferred stock, whichever is greater, and by
valuing Minority Interests constituting common stock at the book value of
capital and surplus applicable thereto adjusted, if necessary, to reflect any
changes from the book value of such common stock required by the foregoing
method of valuing Minority Interests in preferred stock.
"Multiemployer Plan" shall have the same meaning as in ERISA.
"Net Proceeds Amount" means, with respect to any Transfer of any
Property by any Person, an amount equal to the difference of
(a) the aggregate amount of the consideration (valued at the
Fair Market Value of such consideration at the time of the consummation
of such Transfer) received by such Person in respect of such Transfer,
minus
(b) all ordinary and reasonable out-of-pocket costs and expenses
actually incurred by such Person in connection with such Transfer.
"Notes" is defined in Section 1.1.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
entity succeeding to any or all of its functions under ERISA.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" shall mean a "pension plan," as such term is defined in ERISA,
established or maintained by the Company or any ERISA Affiliate or as to which
the Company or any ERISA Affiliate contributed or is a member or otherwise may
have any liability.
"Priority Debt" means the sum of (a) all Debt of the Company secured by
Liens permitted by Section 4.4(g), and (b) all Consolidated Debt of Restricted
Subsidiaries.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Property Reinvestment Application" means, with respect to any Transfer
of Property, the application of an amount equal to the Net Proceeds Amount
with respect to such Transfer to the acquisition by the Company of Property of
a similar nature and having a value at least equal to the value of such
Property subject to such Transfer.
"Registered Notes" is defined in Section 1.1.
"Rentals" shall mean and include as of the date of any determination
thereof all fixed payments (including as such all payments which the lessee is
obligated to make to the lessor on termination of the lease or surrender of
the property) payable by the Company or a Restricted Subsidiary, as lessee or
sublessee under a lease of real or personal property, but shall be exclusive
of any amounts required to be paid by the Company or a Restricted Subsidiary
(whether or not designated as rents or additional rents) on account of
maintenance, repairs, insurance, taxes and similar charges. Fixed rents under
any so-called "percentage leases" shall be computed solely on the basis of the
minimum rents, if any, required to be paid by the lessee regardless of sales
volume or gross revenues.
"Reportable Event" shall have the same meaning as in ERISA.
"Repurchase Agreement" means any written agreement
(a) that provides for (i) the transfer of one or more
Governmental Securities in an aggregate principal amount at least equal
to the amount of the Transfer Price (defined below) to the Company or
any of its Restricted Subsidiaries from an Acceptable Bank or an
Acceptable Broker-Dealer against a transfer of funds (the "Transfer
Price") by the Company or such Restricted Subsidiary to such Acceptable
Bank or Acceptable Broker-Dealer, and (ii) a simultaneous agreement by
the Company or such Restricted Subsidiary, in connection with such
transfer of funds, to transfer to such Acceptable Bank or Acceptable
Broker-Dealer the same or substantially similar Governmental Securities
for a price not less than the Transfer Price plus a reasonable return
thereon at a date certain not later than 365 days after such transfer of
funds,
(b) in respect of which the Company or such Restricted
Subsidiary shall have the right, whether by contract or pursuant to
applicable law, to liquidate such agreement upon the occurrence of any
default thereunder, and
(c) in connection with which the Company or such Restricted
Subsidiary, or an agent thereof, shall have taken all action required by
applicable law or regulations to perfect a Lien in such Governmental
Securities.
"Required Holders" means, at any time, the holders of at least 51% in
aggregate principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this agreement.
"Restricted Investments" means all Investments except the following:
(a) Property to be used in the ordinary course of business of
the Company and its Restricted Subsidiaries;
(b) Investments in one or more Restricted Subsidiaries or any
Person that concurrently with such Investment becomes a Restricted
Subsidiary;
(c) Investments existing as of the date of the First Amendment
and disclosed in Exhibit C to such First Amendment;
(d) Investments in direct obligations of the United States of
America or any Acceptable Foreign Government or any agency or
instrumentality thereof, the payment or guarantee of which constitutes a
full faith and credit obligation of the United States of America or such
Acceptable Foreign Government, in either case, maturing within three
years for the date of acquisition thereof;
(e) Investments in certificates of deposit or time deposits
issued by an Acceptable Bank, provided that such obligations mature
within 365 days from the date of acquisition thereof;
(f) Investments in commercial paper maturing in 270 days or less
from the date of issuance which, at the time of acquisition by the
Company or any Restricted Subsidiary, are rated at least "A-1" by
Standard & Poor's Rating Group, a division of McGraw-Hill, Inc., or at
least "P-2" by Moody's Investors Service, Inc.
(g) Investments in Repurchase Agreements; and
(h) Investments other than described in the foregoing clauses
(a) through (g), above, provided that such Investments do not exceed 5%
of Consolidated Net Worth.
For purposes of this Agreement, any Investment which involves an
Acceptable Bank which is organized under the laws of a jurisdiction of a
nation whose government is an Acceptable Foreign Government, shall become a
Restricted Investment at such time as the debt obligations of such government
are not rated at least "A-" by Standard & Poor's Rating Group, a division of
The McGraw-Hill Companies, Inc., or at least "A3" by Moody's Investors
Service, Inc.
As of any date of determination, each Restricted Investment shall be
valued at the greater of:
(x) the amount at which such Restricted Investment is
shown on the books of the Company or any of its Restricted Subsidiaries
(or zero if such Restricted Investment is not shown on any such books);
and
(y) either
(i) in the case of any Guaranty of the obligation of any
Person, the amount which the Company or any of its Restricted
Subsidiaries has paid on account of such obligation less any recoupment
by the Company or such Subsidiary of any such payments, or
(ii) in the case of any other Restricted Investment, the
excess of (x) the greater of (A) the amount originally entered on the
books of the Company or any of its Restricted Subsidiaries with respect
thereto and (B) the cost thereof to the Company or its Restricted
Subsidiary over (y) any return of capital (after income taxes applicable
thereto) upon such Restricted Investment through the sale or other
liquidation thereof or part thereof or otherwise.
"Restricted Subsidiary" shall mean any Subsidiary listed as a Restricted
Subsidiary on Attachment G hereto and any other subsidiary,
(1) organized under the laws of the United States or a
jurisdiction of any nation whose government is an Acceptable Foreign
Government (or any jurisdiction thereof);
(2) which conducts substantially all of its business and has
substantially all of its Property within the United States or the
jurisdiction of any nation whose government is an Acceptable Foreign
Government;
(3) a majority of each class of common stock of which is legally
and beneficially owned by the Company and its Restricted Subsidiaries;
and
(4) which is not an Unrestricted Subsidiary.
For purposes of this Agreement, any Restricted Subsidiary which is
organized under, and conducts substantially all of its business and has
substantially all of its Property within, the jurisdiction of any nation whose
government is an Acceptable Foreign Government, shall be designated as an
Unrestricted Subsidiary at such time as the debt obligations of such
government are not rated at least "A-" by Standard & Poor's Rating Group, a
division of The McGraw-Hill Companies, Inc., or at least "A3" by Moody's
Investors Service, Inc.
"Security" shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
"Senior Debt" means all Consolidated Debt of the Company other than
Subordinated Debt.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer or comptroller of the Company.
"Shareholders' Equity" means the total amount of shareholders' equity of
the Company and its Restricted Subsidiaries, determined on a consolidated
basis in accordance with GAAP.
"Swaps" means, with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps and similar obligations
obligating such Person to make payments, whether periodically or upon the
happening of a contingency. For the purposes of this Agreement, the amount of
the obligation under any Swap shall be the amount determined in respect
thereof as of the end of the then most recently ended fiscal quarter of such
Person, based on the assumption that such Swap had terminated at the end of
such fiscal quarter, and in making such determination, if any agreement
relating to such Swap provides for the netting of amounts payable by and to
such Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the amount
of such obligation shall be the net amount so determined.
"Subordinated Debt" means all unsecured Debt of the Company which shall
contain or have applicable thereto subordination provisions providing for the
subordination thereof to other Debt of the Company (including, without
limitation, the Notes).
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily, in the absence
of contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if
more than a 50% interest in the profits or capital thereof is owned by such
Person or one or more of its Subsidiaries or such Person and one or more of
its Subsidiaries (unless such partnership can and does ordinarily take major
business actions without the prior approval of such Person or one or more of
its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the Company.
"Subsidiary Stock" means, with respect to any Person, the stock (or any
options or warrants to purchase stock or other Securities exchangable for or
convertible into stock) of any Subsidiary of such Person.
"Total Capitalization" means, as of the date of any determination
thereof, the sum of Consolidated Net Worth and Consolidated Debt.
"Transfer" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its
Property, including, without limitation, Subsidiary Stock. For purposes of
determining the application of the Net Proceeds Amount in respect of any
Transfer, the Company may designate any Transfer as one or more separate
Transfers each yielding a separate Net Proceeds Amount. In any such case, (a)
the Disposition Value of any Property subject to each such separate Transfer
and (b) the amount of Consolidated Total Assets attributable to any Property
subject to each such separate Transfer shall be determined by ratably
allocating the aggregate Disposition Value of, and the aggregate Consolidated
Total Assets attributable to, all Property subject to all such separate
Transfers to each such separate Transfer on a proportionate basis.
"Unrestricted Subsidiary" shall mean any Subsidiary of the Company which
has been so designated by the Company, in accordance with Section 4.15 hereof.
"Voting Stock" shall mean Securities, the holders of which are
ordinarily, in the absence of contingencies, entitled to elect the corporate
directors (or Persons performing similar functions).
"Weighted Average Life to Maturity" is defined in Section 2.2(c).
"Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted
Subsidiary one hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests of which are owned by any
one or more of the Company and the Company's other Wholly-Owned Restricted
Subsidiaries at such time.
Section 2. Miscellaneous.
Section 2.1. Representation and Warranty. The Company represents and
warrants that it does not own any Subsidiary which is organized under the laws
of the United States or any jurisdiction therein.
Section 2.2. Requisite Approval. If the foregoing is acceptable to
you, please note your acceptance in the space provided below. Upon the
execution by the Company and the holders of 100% in aggregate principal amount
of the outstanding Notes, the Note Agreement shall be deemed to be amended as
set forth above. Except as amended herein, the terms and provisions of the
Note Agreement are hereby ratified, confirmed and approved in all respects.
Section 2.3. Successors and Assigns. This Amendment to Note Agreement
shall be binding upon the Company and its successors and assigns and shall
inure to your benefit and to the benefit of your successors and assigns,
including each successive holder or holders of any Notes.
Section 2.4. Counterparts. This Amendment to Note Agreement may be
executed in any number of counterparts, each executed counterpart constituting
an original but all together one and the same instrument.
Section 2.5. Fees and Expenses. The Company agrees to pay all
reasonable fees and expenses of you and your special counsel in connection
with the preparation of this Amendment to Note Agreement.
Section 2.6. No Legend Required. Any and all notices, requests,
certificates and other instruments including, without limitation, the Notes,
may refer to the Note Agreement dated as of August 15, l991 without making
specific reference to this Amendment to Note Agreement, but nevertheless all
such references shall be deemed to include this Amendment to Note Agreement
unless the context shall otherwise require.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment to
Note Agreement as of the day and year first above written.
SIMPSON INDUSTRIES, INC.
By
Its
Accepted and agreed to as of the first date written above.
MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY
By
Its
PAGE
<PAGE>
CONSOLIDATED DEBT
as of May 30, 1997
Lender Annual Interest Rate Principal Balance
Comerica Bank 6.75% 20,000,000
Comerica Bank 8.445% 20,000,000
Comerica Bank 8.82% 3,230,463
Massachusetts Mutual
Life Insurance Co. 9.98% 15,000,000
Travelers Insurance Co. 8.80% 3,750,000
61,980,463
<PAGE>
<PAGE>
EXISTING LIENS
as of May 30, 1997
NONE
PAGE
<PAGE>
EXISTING INVESTMENTS
as of May 30, 1997
COMERICA INSTITUTIONAL CASH INVESTMENT TRUST
#74094 = $11,929,886.51 (U.S. Dollars)
COMERICA INSTITUTIONAL CASH INVESTMENT TRUST
#78791 = $1,786,629.50 (U.S. Dollars)
$20,000,000 Detroit, Michigan
June 17, 1997
RENEWAL TERM NOTE
On December 31, 2008 (the "Maturity Date"), for value received, the
undersigned promises to pay to the order of Comerica Bank ("Bank") at any
office of the Bank in the State of Michigan, Twenty Million Dollars
($20,000,000) (U.S.) with interest from the date of this Note at the rate of
six and seventy-five hundredths percent (6.75%) per annum until maturity,
whether by acceleration or otherwise, or until Default, as later defined, and
after that at a default rate equal to the rate of interest otherwise
prevailing under this Note, plus three percent (3%) per annum (but in no event
in excess of the maximum rate permitted by law). Interest shall be calculated
for the actual number of days the principal is outstanding on the basis of a
360-day year. Principal and interest under this Note shall be due and payable
as follows:
(i) commencing on September 1, 1997 and on the first day of each
calendar quarter thereafter through January 1, 1999, payments of
interest only shall be due and payable;
(ii) commencing on January 1, 2000 and on January 1 of each year
thereafter until the Maturity Date, when all amounts outstanding
under this Note shall be due and payable in full, payments of
principal shall be due and payable each in the amount of Two
Million Dollars ($2,000,000), plus accrued interest.
If any payment of principal or interest under this Note shall be payable on a
day other than a day on which the Bank is open for business, this payment
shall be extended to the next succeeding business day and interest shall be
payable at the rate specified in this Note during this extension. A late
payment charge equal to five percent (5%) of each late payment may be charged
on any payment not received by the Bank within ten (10) calendar days after
the payment due date, but acceptance of payment of this charge shall not waive
any Default under this Note.
The Bank does not have to accept any prepayment of principal under this
Note except as described below or as required under applicable law. The
undersigned may prepay principal of this Note in increments of $500,000 at any
time as long as the Bank is provided written notice of the prepayment at least
five business days prior to the date of prepayment. The notice of prepayment
shall contain the following information: (a) the date of prepayment (the
"Prepayment Date") and (b) the amount of principal to be prepaid. On the
Prepayment Date, the undersigned will pay to the Bank, in addition to the
other amounts then due on this Note, the Prepayment Amount described below.
The Bank, in its sole discretion, may accept any prepayment of principal even
if not required to do so under this Note and may deduct from the amount to be
applied against principal the other amounts required as part of the Prepayment
Amount.
The Prepaid Principal Amount (as defined below) will be applied to this
Note in the reverse order of which the principal payments would have been due
under this Note's principal amortization schedule. If the Bank exercises its
right to accelerate the payment of this Note prior to its stated maturity, the
undersigned will pay to the Bank, in addition to the other amounts then due on
this Note, on the date specified by the Bank as the Prepayment Date, the
Prepayment Amount.
The Bank's determination of the Prepayment Amount will be conclusive in
the absence of obvious error or fraud. If requested in writing by the
undersigned, the Bank will provide the undersigned a written statement
specifying the Prepayment Amount.
For purposes of this Note, the Prepayment Amount shall be equal to the
sum of: (i) the amount of principal which the undersigned has elected to
prepay or the amount of principal which the Bank has required the undersigned
to prepay because of acceleration, as the case may be (the "Prepaid Principal
Amount"), (ii) interest accruing on the Prepaid Principal Amount up to, but
not including, the Prepayment Date, (iii) Five Hundred Dollars ($500) plus
(iv) the present value, discounted at the Reinvestment Rates (as defined
below), of the positive amount by which (A) the interest the Bank would have
earned had the Prepaid Principal Amount been paid according to the Note's
amortization schedule at the Note's interest rate exceeds (B) the interest the
Bank would earn by reinvesting the Prepaid Principal Amount at the
Reinvestment Rates (defined below).
As used herein, "Reinvestment Rates" shall mean the per annum rates of
interest equal to one half percent (1/2%) above the rates of interest
reasonably determined by the Bank to be in effect not more than seven days
prior to the Prepayment Date in the secondary market for United States
Treasury Obligations in amount(s) and with maturity(ies) which correspond (as
closely as possible) to the principal installment amount(s) and the payment
date(s) against which the Prepaid Principal Amount will be applied.
If the undersigned (a) fails to pay this Note or any of the Indebtedness
when due, by maturity, acceleration or otherwise, or fails to pay any
Indebtedness owing on a demand basis upon demand; or (b) fails to comply with
any of the terms or provisions of any agreement between the undersigned and
the Bank as in effect from time to time; or (c) becomes insolvent or the
subject of a voluntary or involuntary proceeding in bankruptcy, or a
reorganization, arrangement or creditor composition proceeding, ceases doing
business as a going concern, is the subject of a dissolution, merger or
consolidation (other than a merger or consolidation in which the undersigned
is the survivor); or (d) if any warranty or representation made by the
undersigned or any guarantor in connection with this Note or any of the
Indebtedness shall be discovered to be untrue or incomplete; or (e) if there
is any termination, notice of termination, or breach of any guaranty, pledge,
collateral assignment or subordination agreement relating to all or any part
of the Indebtedness; or (f) if there is any failure by the undersigned to pay
when due, taking into account any applicable period of grace or cure, any of
its indebtedness for borrowed money (other than to the Bank) or in the
observance or performance of any term, covenant or condition in any document
evidencing, securing or relating to such indebtedness; or (g) if there occurs
an event of default under that certain $50,000,000 long term Credit Agreement
dated as of June 17, 1997 among the undersigned and certain subsidiaries of
the undersigned as borrowers, certain commercial lending institutions
(including the Bank) as lenders, ABN AMRO Bank N.V. as agent for such lenders
and the Bank as documentation agent for such lenders, that certain $50,000,000
short term Credit Agreement dated as of June 17, 1997 among the undersigned
and certain subsidiaries of the undersigned as borrowers, certain commercial
lending institutions as lenders, ABN AMRO Bank N.V. as agent for such lenders
and the Bank as documentation agent for such lenders, that certain
$3,230,357.07 (8.82%) Renewal Term Note dated June 17, 1997 issued by the
undersigned in favor of Bank or that certain $20,000,000 (8.445%) Renewal Term
Note dated June 17, 1997 issued by the undersigned in favor of Bank, each such
agreement in the form existing as of the date hereof, and notwithstanding (x)
the repayment of any indebtedness covered thereby or (y) any amendment,
supplement or termination of any such credit agreement after the date hereof;
then the Bank, upon the occurrence of any of these events (each a "Default"),
may at its option and without prior notice to the undersigned, declare any or
all of the Indebtedness to be immediately due and payable (notwithstanding any
provisions contained in the evidence of it to the contrary), sell or liquidate
all or any portion of the collateral, set off against the Indebtedness any
amounts owing by the Bank to the undersigned, charge interest at the default
rate hereunder or as provided in the document evidencing the relevant
Indebtedness and exercise any one or more of the rights and remedies granted
to the Bank by any agreement with the undersigned or given to it under
applicable law. All payments under this Note shall be in immediately available
United States funds, without setoff or counterclaim.
This Note shall bind the undersigned, and its successors and assigns.
The undersigned waives presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices, and agrees that no extension or indulgence
to the undersigned or release, substitution or nonenforcement of any security,
or release or substitution of the undersigned, any guarantor or any other
party, whether with or without notice, shall affect the obligations of the
undersigned. The undersigned waives all defenses or right to discharge
available under Section 3-606 of the Uniform Commercial Code and waives all
other suretyship defenses or right to discharge. The undersigned agrees that
the Bank has the right to sell, assign, or grant participations, or any
interest, in any or all of the Indebtedness, and that, in connection with this
right, but without limiting its ability to make other disclosures to the full
extent allowable, the Bank may disclose all documents and information which
the Bank now or later has relating to the undersigned or the Indebtedness,
other than any documents or information reasonably determined by the
undersigned to be competitive or proprietary in nature and specifically
identified as such, in writing, to Bank.
All agreements between the undersigned and Bank pertaining to the
indebtedness described herein are expressly limited so that in no event
whatsoever shall the amount of interest paid or agreed to be paid to Bank
exceed the highest rate of interest permissible under applicable law. If, from
any circumstances whatsoever, fulfillment of any provision of any of the
Agreements, this Note or any other instrument securing this Note or all or any
part of the indebtedness secured thereby, at the time performance of such
provision shall be due, shall involve exceeding the interest limitation
validly prescribed by law which a court of competent jurisdiction may deem
applicable hereto, then, the obligation to be fulfilled shall be reduced to an
amount computed at the highest rate of interest permissible under such
applicable law, and if, for any reason whatsoever, Bank shall ever receive as
interest an amount which would be deemed unlawful under such applicable law,
such interest shall be automatically applied to the payment of the principal
amount described herein or otherwise owed by the undersigned to Bank (in the
inverse order of any applicable maturities and whether or not then due and
payable) and not to the payment of interest.
The undersigned acknowledges and agrees that there are no contrary
agreements, oral or written, establishing the terms of this Note and agrees
that the terms and conditions of this Note may not be amended, waived or
modified except in a writing signed by an officer of the Bank expressly
stating that the writing constitutes an amendment, waiver or modification of
the terms of this Note. As used in this Note, the word "undersigned" means,
individually and collectively, each maker, accommodation party, indorser and
other party signing this Note in a similar capacity. If any provision of this
Note is unenforceable in whole or part for any reason, the remaining
provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN.
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY
IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
This Renewal Term Note is given in replacement and renewal of that
certain Advance/Term Note dated as of December 17, 1993 previously issued by
the undersigned to Bank pursuant to that certain Term Loan Agreement dated as
of December 17, 1993 (as amended through the date hereof, the "Term Loan
Agreement"), which Term Loan Agreement shall be replaced by this Renewal Term
Note.
SIMPSON INDUSTRIES, INC.
By:
Its:
$3,230,357.07 Detroit, Michigan
June 17, 1997
RENEWAL TERM NOTE
On January 25, 2003 (the "Maturity Date"), for value received, the
undersigned promises to pay to the order of Comerica Bank ("Bank") at any
office of the Bank in the State of Michigan, Three Million, Two Hundred
Thirty Thousand, Three Hundred Fifty-Seven Dollars and Seven Cents
($3,230,357.07) (U.S.) with interest from the date of this Note at the rate of
eight and eighty-two hundredths percent (8.82%) per annum until maturity,
whether by acceleration or otherwise, or until Default, as later defined, and
after that at a default rate equal to the rate of interest otherwise
prevailing under this Note, plus three percent (3%) per annum (but in no event
in excess of the maximum rate permitted by law). Interest shall be calculated
for the actual number of days the principal is outstanding on the basis of a
360-day year. Principal and interest under this Note shall be due and payable
as follows:
commencing on July 1, 1997 and on the first day of each month thereafter
until the Maturity Date, when all amounts outstanding under this Note
shall be due and payable in full, payments of principal shall be due and
payable each in the amount of Forty Eight Thousand Two Hundred Fourteen
and 29/100 Dollars ($48,214.29), plus accrued interest.
If any payment of principal or interest under this Note shall be payable on a
day other than a day on which the Bank is open for business, this payment
shall be extended to the next succeeding business day and interest shall be
payable at the rate specified in this Note during this extension. A late
payment charge equal to five percent (5%) of each late payment may be charged
on any payment not received by the Bank within ten (10) calendar days after
the payment due date, but acceptance of payment of this charge shall not waive
any Default under this Note.
The Bank does not have to accept any prepayment of principal under this
Note except as described below or as required under applicable law. The
undersigned may prepay principal of this Note in increments of $500,000 at any
time as long as the Bank is provided written notice of the prepayment at least
five business days prior to the date of prepayment. The notice of prepayment
shall contain the following information: (a) the date of prepayment (the
"Prepayment Date") and (b) the amount of principal to be prepaid. On the
Prepayment Date, the undersigned will pay to the Bank, in addition to the
other amounts then due on this Note, the Prepayment Amount described below.
The Bank, in its sole discretion, may accept any prepayment of principal even
if not required to do so under this Note and may deduct from the amount to be
applied against principal the other amounts required as part of the Prepayment
Amount.
The Prepaid Principal Amount (as defined below) will be applied to this
Note in the reverse order of which the principal payments would have been due
under this Note's principal amortization schedule. If the Bank exercises its
right to accelerate the payment of this Note prior to its stated maturity, the
undersigned will pay to the Bank, in addition to the other amounts then due on
this Note, on the date specified by the Bank as the Prepayment Date, the
Prepayment Amount.
The Bank's determination of the Prepayment Amount will be conclusive in
the absence of obvious error or fraud. If requested in writing by the
undersigned, the Bank will provide the undersigned a written statement
specifying the Prepayment Amount.
For purposes of this Note, the Prepayment Amount shall be equal to the
sum of: (i) the amount of principal which the undersigned has elected to
prepay or the amount of principal which the Bank has required the undersigned
to prepay because of acceleration, as the case may be (the "Prepaid Principal
Amount"), (ii) interest accruing on the Prepaid Principal Amount up to, but
not including, the Prepayment Date, (iii) Five Hundred Dollars ($500) plus
(iv) the present value, discounted at the Reinvestment Rates (as defined
below), of the positive amount by which (A) the interest the Bank would have
earned had the Prepaid Principal Amount been paid according to the Note's
amortization schedule at the Note's interest rate exceeds (B) the interest the
Bank would earn by reinvesting the Prepaid Principal Amount at the
Reinvestment Rates (defined below).
As used herein, "Reinvestment Rates" shall mean the per annum rates of
interest equal to one half percent (1/2%) above the rates of interest
reasonably determined by the Bank to be in effect not more than seven days
prior to the Prepayment Date in the secondary market for United States
Treasury Obligations in amount(s) and with maturity(ies) which correspond (as
closely as possible) to the principal installment amount(s) and the payment
date(s) against which the Prepaid Principal Amount will be applied.
If the undersigned (a) fails to pay this Note or any of the Indebtedness
when due, by maturity, acceleration or otherwise, or fails to pay any
Indebtedness owing on a demand basis upon demand; or (b) fails to comply with
any of the terms or provisions of any agreement between the undersigned and
the Bank as in effect from time to time; or (c) becomes insolvent or the
subject of a voluntary or involuntary proceeding in bankruptcy, or a
reorganization, arrangement or creditor composition proceeding, ceases doing
business as a going concern, is the subject of a dissolution, merger or
consolidation (other than a merger or consolidation in which the undersigned
is the survivor); or (d) if any warranty or representation made by the
undersigned or any guarantor in connection with this Note or any of the
Indebtedness shall be discovered to be untrue or incomplete; or (e) if there
is any termination, notice of termination, or breach of any guaranty, pledge,
collateral assignment or subordination agreement relating to all or any part
of the Indebtedness; or (f) if there is any failure by the undersigned to pay
when due, taking into account any applicable period of grace or cure, any of
its indebtedness for borrowed money (other than to the Bank) or in the
observance or performance of any term, covenant or condition in any document
evidencing, securing or relating to such indebtedness; or (g) if there occurs
an event of default under that certain $50,000,000 long term Credit Agreement
dated as of June 17, 1997 among the undersigned and certain subsidiaries of
the undersigned as borrowers, certain commercial lending institutions as
lenders, ABN AMRO Bank N.V. as agent for the lenders and the Bank as
documentation agent for the lenders, that certain $50,000,000 short Term
Credit Agreement dated as of June 17, 1997 among the undersigned and certain
subsidiaries of the undersigned as borrowers, certain commercial lending
institutions (including the Bank) as lenders, ABN AMRO Bank N.V. as agent for
the lenders and the Bank as documentation agent for the lenders, that certain
$20,000,000 (8.445%) Renewal Term Note dated June 17, 1997 issued by the
undersigned in favor of the Bank or that certain $20,000,000 (6.75%) Renewal
Term Note dated June 17, 1997 issued by the undersigned in favor of the Bank,
each such agreement in the form existing as of the date hereof, and
notwithstanding (x) the repayment of any indebtedness covered thereby or (y)
any amendment, supplement or termination of any such credit agreement after
the date hereof; then the Bank, upon the occurrence of any of these events
(each a "Default"), may at its option and without prior notice to the
undersigned, declare any or all of the Indebtedness to be immediately due and
payable (notwithstanding any provisions contained in the evidence of it to the
contrary), sell or liquidate all or any portion of the collateral, set off
against the Indebtedness any amounts owing by the Bank to the undersigned,
charge interest at the default rate hereunder or as provided in the document
evidencing the relevant Indebtedness and exercise any one or more of the
rights and remedies granted to the Bank by any agreement with the undersigned
or given to it under applicable law. All payments under this Note shall be in
immediately available United States funds, without setoff or counterclaim.
This Note shall bind the undersigned, and its successors and assigns.
The undersigned waives presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices, and agrees that no extension or indulgence
to the undersigned or release, substitution or nonenforcement of any security,
or release or substitution of the undersigned, any guarantor or any other
party, whether with or without notice, shall affect the obligations of the
undersigned. The undersigned waives all defenses or right to discharge
available under Section 3-606 of the Uniform Commercial Code and waives all
other suretyship defenses or right to discharge. The undersigned agrees that
the Bank has the right to sell, assign, or grant participations, or any
interest, in any or all of the Indebtedness, and that, in connection with this
right, but without limiting its ability to make other disclosures to the full
extent allowable, the Bank may disclose all documents and information which
the Bank now or later has relating to the undersigned or the Indebtedness,
other than any documents or information reasonably determined by the
undersigned to be competitive or proprietary in nature and specifically
identified as such, in writing, to Bank.
All agreements between the undersigned and Bank pertaining to the
indebtedness described herein are expressly limited so that in no event
whatsoever shall the amount of interest paid or agreed to be paid to Bank
exceed the highest rate of interest permissible under applicable law. If, from
any circumstances whatsoever, fulfillment of any provision of any of the
Agreements, this Note or any other instrument securing this Note or all or any
part of the indebtedness secured thereby, at the time performance of such
provision shall be due, shall involve exceeding the interest limitation
validly prescribed by law which a court of competent jurisdiction may deem
applicable hereto, then, the obligation to be fulfilled shall be reduced to an
amount computed at the highest rate of interest permissible under such
applicable law, and if, for any reason whatsoever, Bank shall ever receive as
interest an amount which would be deemed unlawful under such applicable law,
such interest shall be automatically applied to the payment of the principal
amount described herein or otherwise owed by the undersigned to Bank (in the
inverse order of any applicable maturities and whether or not then due and
payable) and not to the payment of interest.
The undersigned acknowledges and agrees that there are no contrary
agreements, oral or written, establishing the terms of this Note and agrees
that the terms and conditions of this Note may not be amended, waived or
modified except in a writing signed by an officer of the Bank expressly
stating that the writing constitutes an amendment, waiver or modification of
the terms of this Note. As used in this Note, the word "undersigned" means,
individually and collectively, each maker, accommodation party, indorser and
other party signing this Note in a similar capacity. If any provision of this
Note is unenforceable in whole or part for any reason, the remaining
provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN.
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY
IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
This Renewal Term Note is given in replacement and renewal of that
certain Renewal Term Note previously issued by the undersigned to Bank dated
October 3, 1995.
SIMPSON INDUSTRIES, INC.
By:
Its:
$20,000,000 Detroit, Michigan
June 17, 1997
RENEWAL TERM NOTE
On February 7, 2005 (the "Maturity Date"), for value received, the
undersigned promises to pay to the order of Comerica Bank ("Bank") at any
office of the Bank in the State of Michigan, Twenty Million Dollars
($20,000,000) (U.S.) with interest from the date of this Note at the rate of
eight and four hundred forty-five thousandths percent (8.445%) per annum until
maturity, whether by acceleration or otherwise, or until Default, as later
defined, and after that at a default rate equal to the rate of interest
otherwise prevailing under this Note, plus three percent (3%) per annum (but
in no event in excess of the maximum rate permitted by law). Interest shall be
calculated for the actual number of days the principal is outstanding on the
basis of a 360-day year. Principal and interest under this Note shall be due
and payable as follows:
(i) commencing on September 1, 1997 and on the first day of each
calendar quarter thereafter through April 1, 2000, payments of
interest only shall be due and payable;
(ii) thereafter, commencing on July 1, 2000 and on the first day of
each calendar quarter thereafter until the Maturity Date, when all
amounts outstanding under this Note shall be due and payable in
full, payments of principal shall be due and payable each in the
amount of One Million Dollars ($1,000,000), plus accrued interest.
If any payment of principal or interest under this Note shall be payable on a
day other than a day on which the Bank is open for business, this payment
shall be extended to the next succeeding business day and interest shall be
payable at the rate specified in this Note during this extension. A late
payment charge equal to five percent (5%) of each late payment may be charged
on any payment not received by the Bank within ten (10) calendar days after
the payment due date, but acceptance of payment of this charge shall not waive
any Default under this Note.
The Bank does not have to accept any prepayment of principal under this
Note except as described below or as required under applicable law. The
undersigned may prepay principal of this Note in increments of $500,000 at any
time as long as the Bank is provided written notice of the prepayment at least
five business days prior to the date of prepayment. The notice of prepayment
shall contain the following information: (a) the date of prepayment (the
"Prepayment Date") and (b) the amount of principal to be prepaid. On the
Prepayment Date, the undersigned will pay to the Bank, in addition to the
other amounts then due on this Note, the Prepayment Amount described below.
The Bank, in its sole discretion, may accept any prepayment of principal even
if not required to do so under this Note and may deduct from the amount to be
applied against principal the other amounts required as part of the Prepayment
Amount.
The Prepaid Principal Amount (as defined below) will be applied to this
Note in the reverse order of which the principal payments would have been due
under this Note's principal amortization schedule. If the Bank exercises its
right to accelerate the payment of this Note prior to its stated maturity, the
undersigned will pay to the Bank, in addition to the other amounts then due on
this Note, on the date specified by the Bank as the Prepayment Date, the
Prepayment Amount.
The Bank's determination of the Prepayment Amount will be conclusive in
the absence of obvious error or fraud. If requested in writing by the
undersigned, the Bank will provide the undersigned a written statement
specifying the Prepayment Amount.
For purposes of this Note, the Prepayment Amount shall be equal to the
sum of: (i) the amount of principal which the undersigned has elected to
prepay or the amount of principal which the Bank has required the undersigned
to prepay because of acceleration, as the case may be (the "Prepaid Principal
Amount"), (ii) interest accruing on the Prepaid Principal Amount up to, but
not including, the Prepayment Date, (iii) Five Hundred Dollars ($500) plus
(iv) the present value, discounted at the Reinvestment Rates (as defined
below), of the positive amount by which (A) the interest the Bank would have
earned had the Prepaid Principal Amount been paid according to the Note's
amortization schedule at the Note's interest rate exceeds (B) the interest the
Bank would earn by reinvesting the Prepaid Principal Amount at the
Reinvestment Rates (defined below).
As used herein, "Reinvestment Rates" shall mean the per annum rates of
interest equal to one half percent (1/2%) above the rates of interest reasonably
determined by the Bank to be in effect not more than seven days prior to the
Prepayment Date in the secondary market for United States Treasury Obligations
in amount(s) and with maturity(ies) which correspond (as closely as possible)
to the principal installment amount(s) and the payment date(s) against which
the Prepaid Principal Amount will be applied.
If the undersigned (a) fails to pay this Note or any of the Indebtedness
when due, by maturity, acceleration or otherwise, or fails to pay any
Indebtedness owing on a demand basis upon demand; or (b) fails to comply with
any of the terms or provisions of any agreement between the undersigned and
the Bank as in effect from time to time; or (c) becomes insolvent or the
subject of a voluntary or involuntary proceeding in bankruptcy, or a
reorganization, arrangement or creditor composition proceeding, ceases doing
business as a going concern, is the subject of a dissolution, merger or
consolidation (other than a merger or consolidation in which the undersigned
is the survivor); or (d) if any warranty or representation made by the
undersigned or any guarantor in connection with this Note or any of the
Indebtedness shall be discovered to be untrue or incomplete; or (e) if there
is any termination, notice of termination, or breach of any guaranty, pledge,
collateral assignment or subordination agreement relating to all or any part
of the Indebtedness; or (f) if there is any failure by the undersigned to pay
when due, taking into account any applicable period of grace or cure, any of
its indebtedness for borrowed money (other than to the Bank) or in the
observance or performance of any term, covenant or condition in any document
evidencing, securing or relating to such indebtedness; or (g) if there occurs
an event of default under that certain $50,000,000 long term Credit Agreement
dated as of June 17, 1997 among the undersigned and certain subsidiaries of
the undersigned as borrowers, certain commercial lending institutions
(including the Bank) as lenders, ABN AMRO Bank N.V. as agent for such lenders
and the Bank as documentation agent for such lenders, that certain $50,000,000
short term Credit Agreement dated as of June 17, 1997 among the undersigned
and certain subsidiaries of the undersigned as borrowers, certain commercial
lending institutions (including the Bank) as lenders, ABN AMRO Bank N.V. as
agent for the lenders and the Bank as documentation agent for such lenders,
that certain $3,230,357.07(8.82%) Renewal Term Note dated as of June 17, 1997
issued by the undersigned in favor of the Bank or that certain $20,000,000
(6.75%) Renewal Term Note dated as of June 17, 1997 issued by the undersigned
in favor of the Bank, each such agreement in the form existing as of the date
hereof, and notwithstanding (x) the repayment of any indebtedness covered
thereby or (y) any amendment, supplement or termination of any such credit
agreement after the date hereof; then the Bank, upon the occurrence of any of
these events (each a "Default"), may at its option and without prior notice to
the undersigned, declare any or all of the Indebtedness to be immediately due
and payable (notwithstanding any provisions contained in the evidence of it to
the contrary), sell or liquidate all or any portion of the collateral, set off
against the Indebtedness any amounts owing by the Bank to the undersigned,
charge interest at the default rate hereunder or as provided in the document
evidencing the relevant Indebtedness and exercise any one or more of the
rights and remedies granted to the Bank by any agreement with the undersigned
or given to it under applicable law. All payments under this Note shall be in
immediately available United States funds, without setoff or counterclaim.
This Note shall bind the undersigned, and its successors and assigns.
The undersigned waives presentment, demand, protest, notice of dishonor,
notice of demand or intent to demand, notice of acceleration or intent to
accelerate, and all other notices, and agrees that no extension or indulgence
to the undersigned or release, substitution or nonenforcement of any security,
or release or substitution of the undersigned, any guarantor or any other
party, whether with or without notice, shall affect the obligations of the
undersigned. The undersigned waives all defenses or right to discharge
available under Section 3-606 of the Uniform Commercial Code and waives all
other suretyship defenses or right to discharge. The undersigned agrees that
the Bank has the right to sell, assign, or grant participations, or any
interest, in any or all of the Indebtedness, and that, in connection with this
right, but without limiting its ability to make other disclosures to the full
extent allowable, the Bank may disclose all documents and information which
the Bank now or later has relating to the undersigned or the Indebtedness,
other than any documents or information reasonably determined by the
undersigned to be competitive or proprietary in nature and specifically
identified as such, in writing, to Bank.
All agreements between the undersigned and Bank pertaining to the
indebtedness described herein are expressly limited so that in no event
whatsoever shall the amount of interest paid or agreed to be paid to Bank
exceed the highest rate of interest permissible under applicable law. If, from
any circumstances whatsoever, fulfillment of any provision of any of the
Agreements, this Note or any other instrument securing this Note or all or any
part of the indebtedness secured thereby, at the time performance of such
provision shall be due, shall involve exceeding the interest limitation
validly prescribed by law which a court of competent jurisdiction may deem
applicable hereto, then, the obligation to be fulfilled shall be reduced to an
amount computed at the highest rate of interest permissible under such
applicable law, and if, for any reason whatsoever, Bank shall ever receive as
interest an amount which would be deemed unlawful under such applicable law,
such interest shall be automatically applied to the payment of the principal
amount described herein or otherwise owed by the undersigned to Bank (in the
inverse order of any applicable maturities and whether or not then due and
payable) and not to the payment of interest.
The undersigned acknowledges and agrees that there are no contrary
agreements, oral or written, establishing the terms of this Note and agrees
that the terms and conditions of this Note may not be amended, waived or
modified except in a writing signed by an officer of the Bank expressly
stating that the writing constitutes an amendment, waiver or modification of
the terms of this Note. As used in this Note, the word "undersigned" means,
individually and collectively, each maker, accommodation party, indorser and
other party signing this Note in a similar capacity. If any provision of this
Note is unenforceable in whole or part for any reason, the remaining
provisions shall continue to be effective. THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MICHIGAN.
THE UNDERSIGNED AND THE BANK ACKNOWLEDGE THAT THE RIGHT TO TRIAL BY JURY
IS A CONSTITUTIONAL ONE, BUT THAT IT MAY BE WAIVED. EACH PARTY, AFTER
CONSULTING (OR HAVING HAD THE OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR
CHOICE, KNOWINGLY AND VOLUNTARILY, AND FOR THEIR MUTUAL BENEFIT, WAIVES ANY
RIGHT TO TRIAL BY JURY IN THE EVENT OF LITIGATION REGARDING THE PERFORMANCE OR
ENFORCEMENT OF, OR IN ANY WAY RELATED TO, THIS NOTE OR THE INDEBTEDNESS.
This Renewal Term Note is given in replacement and renewal of that
certain Term Note previously issued by the undersigned to Bank dated February
7, 1995.
SIMPSON INDUSTRIES, INC.
By:
Its:
June 17, 1997
Mr. James Garpow
Simpson Industries, Inc.
47603 Halyard Drive
Plymouth, Michigan 48170-2429
Dear Jim:
Reference is made to (a) the Renewal Term Note dated June 17, 1997
and due January 25, 2003, issued by Simpson Industries, Inc. (the "Company")
in favor of Comerica Bank ("Bank"), evidencing indebtedness in the principal
amount of $3,230,357.07 and bearing interest at the fixed rate of 8.82% per
annum (the "8.82% Term Note"); (b) the Renewal Term Note dated June 17, 1997
and due February 7, 2005, issued by the Company in favor of Bank, evidencing
indebtedness in the principal amount of $20,000,000 and bearing interest at
the fixed rate of 8.445% per annum (the "8.445% Term Note"); and (c) the
Renewal Term Note dated June 17, 1997 and due December 31, 2008, issued by
the Company in favor of Bank, evidencing indebtedness in the principal amount
of $20,000,000 and bearing interest at the fixed rate of 6.75% per annum (the
"6.75% Term Note," and collectively with the 8.82% Term Note and the 8.445%
Term Note, the "Term Notes").
Reference is also made to the long term Credit Agreement (the
"Credit Agreement") dated as of June 17, 1997 among the Company, certain
commercial lending institutions (including the Bank) as lenders, ABN AMRO Bank
N.V. as agent for such lenders and the Bank as documentation agent for such
lenders, in the form existing as of the date hereof, and notwithstanding (x)
the repayment of any indebtedness covered thereby or (y) any amendment,
supplement or termination of such Credit Agreement after the date hereof.
In consideration of the Bank entering into the Term Notes, the
Company hereby agrees that whenever, as of the last day of any fiscal quarter
(determined on the basis of financial statements prepared and delivered to the
Bank in accordance with Section 8.1.2(a) and (b) of the Credit Agreement, and
beginning with the Company's fiscal quarter ending on June 30, 1998) the
Company's Funded Debt to EBITDA Ratio (as defined in the Credit Agreement)
equals or exceeds the levels set forth below, the principal balance
outstanding under each of the Term Notes shall bear additional interest
("Additional Interest") for the next succeeding fiscal quarter following the
reporting period covered by the applicable financial statements at the per
annum rates set forth below:
If Funded Debt to EBITDA Ratio is greater than 2.5 to 1, but less than 3
to 1 - Additional Interest Rate is .05%
If Funded Debt to EBITDA Ratio is equal to or greater than 3 to 1 -
Additional Interest Rate is .10%
The Additional Interest for the four preceding fiscal quarters, if applicable,
shall be paid to Bank within five (5) business days following June 30th of
each fiscal year, beginning in 1999.
In addition, this letter will confirm the Bank's receipt from the
Company of a term loan amendment fee of $12,500 and of the Company's agreement
to pay the reasonable fees and expenses incurred by the Bank in connection
with the review and execution of the Credit Agreement (and the companion short
term credit agreement) and the structuring, documentation and closing of the
Term Notes.
Except as set forth in this letter, each of the Term Notes shall remain
in full force and effect according to its terms.
COMERICA BANK
By:
Its:
Acknowledged and agreed to
as of the date first set forth above:
SIMPSON INDUSTRIES, INC.
By:
Its:
U.S. $50,000,000
CREDIT AGREEMENT,
(Five Year)
dated as of June 17, 1997
among
SIMPSON INDUSTRIES, INC.
certain other Borrowers
as the Borrowers,
CERTAIN COMMERCIAL LENDING INSTITUTIONS
as the Lenders,
ABN AMRO BANK N.V.
as the Agent for the Lenders
and
COMERICA BANK
as Documentation Agent for the Lenders
PAGE
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
I DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . . . . . . .1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . .1
1.2. Use of Defined Terms. . . . . . . . . . . . . . . . 18
1.3. Cross-References. . . . . . . . . . . . . . . . . . 18
1.4. Accounting and Financial Determinations . . . . . . 18
II COMMITMENTS, BORROWING PROCEDURES AND NOTES. . . . . . . 19
2.1. Commitments . . . . . . . . . . . . . . . . . . . . 19
2.1.1. Revolving Loan Commitment. . . . . . . . 19
2.1.2. Commitment to Issue Letters of Credit. . 19
2.1.3. Lenders Not Permitted or
Required To Make Loans or
Issue or Participate in
Letters of Credit Under Certain
Circumstances. . . . . . . . . . . . . . 19
2.2. Reduction of Commitment Amounts . . . . . . . . . . 20
2.3. Borrowing Procedure . . . . . . . . . . . . . . . . 20
2.4. Continuation and Conversion Elections . . . . . . . 21
2.5. Funding . . . . . . . . . . . . . . . . . . . . . . 22
2.6. Notes . . . . . . . . . . . . . . . . . . . . . . . 22
2.7. Swing Line Commitment . . . . . . . . . . . . . . . 22
2.8. Borrowing Procedure Swing Loans . . . . . . . . . 22
2.9. Refunding of Swing Loans. . . . . . . . . . . . . . 23
2.10. Participations in Swing Loans. . . . . . . . . . . 23
2.11. Swing Loan Participation Obligations Unconditional 24
2.12. Conditions to Swing Loans. . . . . . . . . . . . . 25
2.13. Swing Note . . . . . . . . . . . . . . . . . . . . 25
III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES. . . . . . . . 25
3.1. Repayments and Prepayments. . . . . . . . . . . . . 25
3.2. Interest Provisions . . . . . . . . . . . . . . . . 26
3.2.1. Rates. . . . . . . . . . . . . . . . . . 26
3.2.2. Post-Maturity Rates. . . . . . . . . . . 27
3.2.3. Payment Dates. . . . . . . . . . . . . . 27
3.3. Fees. . . . . . . . . . . . . . . . . . . . . . . . 28
3.3.1. Commitment Fee . . . . . . . . . . . . . 28
3.3.2. Arrangement Fee; Agent's Fee . . . . . . 28
3.3.3. Letter of Credit Face Amount Fee . . . . 28
3.3.4. Letter of Credit Fronting Fee. . . . . . 28
3.3.5. Letter of Credit Administrative Fee. . . 29
IV LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . .. 29
4.1. Issuance Requests . . . . . . . . . . . . . . . . . 29
4.2. Issuances and Extensions. . . . . . . . . . . . . . 30
4.3. Expenses. . . . . . . . . . . . . . . . . . . . . . 30
4.4. Other Lenders' Participation. . . . . . . . . . . . 30
4.5. Disbursements . . . . . . . . . . . . . . . . . . . 31
4.6. Reimbursement . . . . . . . . . . . . . . . . . . . 32
4.7. Deemed Disbursements. . . . . . . . . . . . . . . . 32
4.8. Nature of Reimbursement Obligations . . . . . . . . 33
4.9. Increased Costs; Indemnity. . . . . . . . . . . . . 34
V CERTAIN EUROCURRENCY RATE AND OTHER PROVISIONS. . . . . . 36
5.1. Eurocurrency Rate Lending Unlawful. . . . . . . . . 36
5.2. Deposits Unavailable. . . . . . . . . . . . . . . . 36
5.3. Increased Eurocurrency Rate Loan Costs, etc . . . . 36
5.4. Funding Losses. . . . . . . . . . . . . . . . . . . 37
5.5. Increased Capital Costs . . . . . . . . . . . . . . 38
5.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . 38
5.7. Payments, Computations, etc . . . . . . . . . . . . 40
5.8. Sharing of Payments . . . . . . . . . . . . . . . . 41
5.9. Setoff. . . . . . . . . . . . . . . . . . . . . . . 42
5.10. Use of Proceeds. . . . . . . . . . . . . . . . . . 42
VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . .. 42
6.1. Initial Credit Extension . . . . . . . . . . . . .. 42
6.1.1. Resolutions, etc. . . . . . . . . . . . . . 43
6.1.2. Delivery of Notes . . . . . . . . . . . . . 43
6.1.3. Outstanding Indebtedness, etc . . . . . . . 43
6.1.4 Delivery of Simpson Guaranty . . . . . . . . 44
6.1.5. Opinions of Counsel . . . . . . . . . . . . 44
6.1.6. Regulatory Restriction . . . . . .. . . . . 44
6.1.7. Closing Fees, Expenses, etc. . . .. . . . . 44
6.2. All Credit Extensions . . . . . . . . . . . . . . . 44
6.2.1. Compliance with Warranties,
No Default, etc.. . . . . . . . . . . . 44
6.2.2. Credit Request . . . . . . . . . . . . . 45
6.2.3. Satisfactory Legal Form. . . . . . . . . 45
VII REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 45
7.1. Organization, etc . . . . . . . . . . . . . . . . . 45
7.2. Due Authorization, Non-Contravention, etc . . . . . 46
7.3. Government Approval, Regulation, etc. . . . . . . . 46
7.4. Validity, etc . . . . . . . . . . . . . . . . . . . 46
7.5. Financial Information . . . . . . . . . . . . . . . 46
7.6. No Material Adverse Change. . . . . . . . . . . . . 47
7.7. Environmental Warranties. . . . . . . . . . . . . . 47
7.8. Litigation, Labor Controversies, etc. . . . . . . . 48
7.9. Subsidiaries. . . . . . . . . . . . . . . . . . . . 48
7.10. Ownership of Properties. . . . . . . . . . . . . . 49
7.11. Taxes. . . . . . . . . . . . . . . . . . . . . . . 49
7.12. Pension and Welfare Plans. . . . . . . . . . . . . 49
7.13. Regulations G, U and X . . . . . . . . . . . . . . 49
7.14. Accuracy of Information. . . . . . . . . . . . . . 50
7.15. Solvency . . . . . . . . . . . . . . . . . . . . . 50
VIII COVENANTS. . . . . . . . . . . . . . . . . . . . . . . .. 50
8.1. Affirmative Covenants . . . . . . . . . . . . . . . 50
8.1.1. Legal Existence. . . . . . . . . . . . .. . 50
8.1.2. Financial Information, Reports, Notices, etc50
8.1.3. Compliance with Laws, etc. . . . . . . . .. 53
8.1.4. Maintenance of Properties. . . . . . . .. . 53
8.1.5. Insurance. . . . . . . . . . . . . . .. . . 53
8.1.6. Books, Records and Access. . . . . . . .. . 53
8.1.7. Environmental Covenant . . . . . . . . .. . 54
8.1.8. Guaranty . . . . . . . . . . . . . . . .. . 54
8.2. Negative Covenants. . . . . . . . . . . . . . . . . 54
8.2.1. Business Activities. . . . . . . . .. . . . 54
8.2.2. Liens. . . . . . . . . . . . . . . . . .. . 54
8.2.3. Financial Condition. . . . . . . . . . .. . 55
8.2.4. Acquisitions . . . . . .. . . . . . . . . . 56
8.2.5. Investments. . . . . . . . . .. . . . . . . 56
8.2.6. Indebtedness . . . . . . . . .. . . . . . . 57
8.2.7. Subordinated Debt. . . . . . . . . .. . . . 58
8.2.8. Capital Expenditures, etc. . . . . .. . . . 58
8.2.9. Rental Obligations . . . . . . . . . . . .. 59
8.2.10. Sale/Leaseback. . . . . . . . .. . . . . . 59
8.2.11. Consolidation, Merger, Etc. . . . . .. . . 59
8.2.12. Asset Dispositions, etc.. . . . . . . .. . 59
8.2.13. Transactions with Affiliates. . . .. . . . 60
IX EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . .. 60
9.1. Listing of Events of Default. . . . . . . . . . . . 60
9.1.1. NonPayment of Obligations. . . . . . . . .. 60
9.1.2. Breach of Warranty . . . . . . . . . .. . . 60
9.1.3. Non-Performance of Certain
Covenants and Obligations. . . . . . . . . .60
9.1.4. Non-Performance of Other Covenants
and Obligations. . . . . . . . . . . . . . .61
9.1.5. Default on Other Indebtedness. . .. . . . . 61
9.1.6. Judgments. . . . . . . . . . . . .. . . . . 61
9.1.7. Pension Plans. . . . . . . . . . .. . . . . 61
9.1.8. Change in Control. . . . . . . . . . . .. . 61
9.1.9. Bankruptcy, Insolvency, etc. . . .. . . . . 62
9.2. Action if Bankruptcy. . . . . . . . . . . . . . . . 63
9.3. Action if Other Event of Default. . . . . . . . . . 63
X THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . 63
10.1. Actions. . . . . . . . . . . . . . . . . . . . . . 63
10.2. Funding Reliance, etc. . . . . . . . . . . . . . . 64
10.3. Exculpation. . . . . . . . . . . . . . . . . . . . 64
10.4. Successor. . . . . . . . . . . . . . . . . . . . . 65
10.5. Loans or Letters of Credit Issued by ABN . . . . . 65
10.6. Credit Decisions . . . . . . . . . . . . . . . . . 66
10.7. Copies, etc. . . . . . . . . . . . . . . . . . . . 66
10.8. Documentation Agent. . . . . . . . . . . . . . . . 66
XI MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . 66
11.1. Waivers, Amendments, etc . . . . . . . . . . . . . 66
11.2. Notices. . . . . . . . . . . . . . . . . . . . . . 67
11.3. Payment of Costs and Expenses. . . . . . . . . . . 68
11.4. Indemnification. . . . . . . . . . . . . . . . . . 68
11.5. Survival . . . . . . . . . . . . . . . . . . . . . 69
11.6. Severability . . . . . . . . . . . . . . . . . . . 70
11.7. Headings . . . . . . . . . . . . . . . . . . . . . 70
11.8. Execution in Counterparts, Effectiveness, etc. . . 70
11.9. Governing Law; Entire Agreement. . . . . . . . . . 70
11.10. Successors and Assigns. . . . . . . . . . . . . 70
11.11. Sale and Transfer of Loans and
Notes; Participations in Loans
and Notes. . . . . . . . . . . . . . . . . . . . 70
11.11.1. Assignments. . . . . . . . . . . . . . 71
11.11.2. Participations . . . . . . . . . . . . 72
11.11.3. Information. . . . . . . . . . . . . . 73
11.11.4. Confidentiality. . . . . . . . . . . . 73
11.12. Additional Borrowers. . . . . . . . . . . . . . . 74
11.13. Joint and Several Liability . . . . . . . . . . . 74
11.14. Judgment Currency . . . . . . . . . . . . . . . . 76
11.15. Other Transactions. . . . . . . . . . . . . . . . 76
11.16. Consent to Jurisdiction . . . . . . . . . . . . . 76
11.17. Waiver of Jury Trial. . . . . . . . . . . . . . . 77
PAGE
<PAGE>
SCHEDULE I - Disclosure Schedule
EXHIBIT A - Form of Additional Borrower Certificate
EXHIBIT B - Form of Revolving Note
EXHIBIT C - Form of Swing Note
EXHIBIT D - Form of Irrevocable Standby Letter of Credit
EXHIBIT E - Form of Borrowing Request
EXHIBIT F - Form of Continuation/Conversion Notice
EXHIBIT G - Form of Issuance Request
EXHIBIT H - Form of Lender Assignment Agreement
EXHIBIT I - Form of Opinion of Counsel to Simpson
EXHIBIT J - Form of Compliance Certificate
EXHIBIT K - Form of Guaranty
EXHIBIT L - Form of Simpson Guaranty
PAGE
<PAGE>
CREDIT AGREEMENT
(Five Year)
THIS CREDIT AGREEMENT, dated as of June 17, 1997 among SIMPSON
INDUSTRIES, INC. ("Simpson"), a Michigan corporation, certain subsidiaries
that from time to time become a party hereto pursuant to Section 11.13 (such
subsidiaries, together with Simpson, the "Borrowers"), the commercial lending
institutions as are or may become parties hereto (the "Lenders"), ABN AMRO
BANK N.V. ("ABN"), as agent (the "Agent") for the Lenders, and COMERICA BANK,
as documentation agent (the "Documentation Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrowers desire to obtain Commitments from the Lenders
pursuant to which
(a) Loans will be made to the Borrowers from time to time prior
to the Commitment Termination Date; and
(b) Letters of Credit will be issued by the Issuer for the
accounts of the Borrowers from time to time prior to the Commitment
Termination Date;
in aggregate principal amount for Loans plus Letter of Credit Outstandings at
any one time not to exceed $50,000,000 in the aggregate; and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article VI), to extend such
Commitments, make such Loans to the Borrowers and issue and participate in
such Letters of Credit;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following
meanings (such meanings to be equally applicable to the singular and plural
forms thereof):
"ABN" is defined in the preamble.
"Additional Borrower Certificate" means a certificate in the form of
Exhibit A hereto.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors; or
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Agent" is defined in the preamble and includes each other Person as
shall have subsequently been appointed as the successor Agent pursuant to
Section 10.4.
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on
such date.
"Assignee Lender" is defined in Section 11.12.1.
"Assignment Effective Date" is defined in Section 11.12.1.
"Authorized Officer" means, as to any Borrower, those of its officers
whose signatures and incumbency shall have been certified to the Agent and the
Lenders pursuant to Section 6.1.1.
"Available Currency" means Dollars, Pounds Sterling, French Francs,
Spanish Peseta and such other currencies as the Lenders agree to make
available from time to time and which the Agent determines in its sole
discretion are freely transferable.
"Borrower" means any of Simpson and any Subsidiary that from time to
time becomes a party hereto pursuant to Section 11.13.
"Borrowing" means a borrowing made hereunder consisting of the aggregate
amount of the several Loans made by the Lenders to the applicable Borrower on
the same Borrowing Date, in the same currency, for the same Rate Option and
for the same Interest Period.
"Borrowing Date" means any Business Day on which a Borrowing is made.
"Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of the applicable Borrower, substantially in the form
of Exhibit E hereto.
"Business Day" means any day
(a) other than
(i) a Saturday or Sunday; or
(ii) a legal holiday on which banks are authorized or
required to be closed in Chicago, Illinois or New York, New York;
and
(b) with respect to Eurocurrency Rate Loans on which dealings in
the applicable Available Currency are being carried on in
the interbank eurocurrency market.
"Capital Expenditures" means, for any period, the sum of
(a) the aggregate amount of all expenditures of Simpson and its
Subsidiaries for fixed or capital assets made during such period which,
in accordance with GAAP, would be classified as capital expenditures;
and
(b) the aggregate amount of all Capitalized Lease Liabilities
incurred during such period;
less any expenditures pursuant to an acquisition transaction of the type
described in Section 8.2.4.
"Capitalized Lease Liabilities" means all monetary obligations of a
Person under any leasing or similar arrangement which, in accordance with
GAAP, would be classified as capitalized leases, and, for purposes of this
Agreement and each other Loan Document, the amount of such obligations shall
be the capitalized amount thereof, determined in accordance with GAAP, and the
stated maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one
year after such time, issued or guaranteed by the United States
Government;
(b) commercial paper, maturing not more than nine months from the
date of issue, which is issued by
(i) a corporation (other than an Affiliate of a Borrower)
organized under the laws of any state of the United States or of
the District of Columbia and rated at least A-1 by Standard &
Poor's Corporation or P-1 by Moody's Investors Service, Inc., or
(ii) any Lender (or its holding company);
(c) any certificate of deposit or bankers acceptance, maturing
not more than one year after such time, which is issued by either
(i) a commercial banking institution that is a member of
the Federal Reserve System and has a combined capital and surplus
and undivided profits of not less than $500,000,000, or
(ii) any Lender; or
(d) any repurchase agreement entered into with any Lender (or
other commercial banking institution of the stature referred to in
clause (c)(i)) which
(i) is secured by a fully perfected security interest in
any obligation of the type described in any of clauses (a) through
(c); and
(ii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the repurchase
obligation of such Lender (or other commercial banking
institution) thereunder.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means
(a) the acquisition by any Person, or two or more Persons acting
in concert, of beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Securities Exchange Act
of 1934) of 20% or more of the outstanding shares of voting stock of
Simpson; or
(b) any Borrower (other than Simpson) shall not be 100% owned,
directly or indirectly by Simpson.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, relative to any Lender, such Lender's obligation to
make Loans pursuant to Section 2.1.2 and to issue (in the case of the Issuer)
or participate in (in the case of all Lenders) Letters of Credit pursuant to
Section 2.1.3.
"Commitment Amount" means, on any date, $50,000,000, as such amount may
be reduced from time to time pursuant to Section 2.2.
"Commitment Termination Date" means the earliest of
(a) June 17, 2002;
(b) the date on which the Commitment Amount is terminated in full
or reduced to zero pursuant to Section 2.2; and
(c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in clause (b) or (c), the
Commitments shall terminate automatically and without any further action.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses (a)
through (d) of Section 9.1.9; or
(b) the occurrence and continuance of any other Event of Default
and either
(i) the declaration of the Loans to be due and payable
pursuant to Section 9.3, or
(ii) in the absence of such declaration, the giving of
notice by the Agent, acting at the direction of the Required
Lenders, to the Borrower that the Commitments have been
terminated.
"Companion Agreement" means the Credit Agreement of even date herewith
among Simpson, certain Subsidiaries, the Lenders, ABN, as agent, and Comerica
Bank, as documentation agent, providing for a $50,000,000 364-day credit
facility.
"Compliance Certificate" means a certificate duly executed by the chief
financial officer, treasurer or assistant treasurer of Simpson, substantially
in the form of Exhibit J hereto, as the same may be amended, modified or
supplemented from time to time by the Required Lenders and Simpson, for the
purposes of monitoring Simpson's compliance herewith.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the
indebtedness, obligation or any other liability of any other Person (other
than by endorsements of instruments in the course of collection), or
guarantees the payment of dividends or other distributions upon the shares of
any other Person. The amount of any Person's obligation under any Contingent
Liability shall (subject to any limitation set forth therein) be deemed to be
the outstanding principal amount (or maximum principal amount, if larger) of
the debt, obligation or other liability guaranteed thereby.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of Simpson,
substantially in the form of Exhibit F hereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with
Simpson, are treated as a single employer under Section 414(b) or 414(c) of
the Code or Section 4001 of ERISA.
"Credit Extension" means and includes
(a) the advancing of any Loans by the Lenders in connection with
a Borrowing, and
(b) any issuance or extension by the Issuer of a Letter of
Credit.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event
of Default.
"Determination Date" means with respect to any Loan in an Available
Currency other than Dollars:
(a) the date a Loan is made;
(b) if such Loan is a Eurocurrency Rate Loan, the last Business
Day of each month, and the date such Eurocurrency Rate Loan is continued
from the current Interest Period of such Loan into a subsequent Interest
Period; or
(c) the date such outstanding Loan is converted from one type of
Loan into another or from a Eurocurrency Rate Loan in one currency into
a Eurocurrency Rate Loan in another currency.
"Disbursement" means a payment by the Issuer to a beneficiary (or its
designee) under a Letter of Credit.
"Disbursement Date" is defined in Section 4.5.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by Simpson with the written consent of the Agent and the Required
Lenders.
"Documentation Agent" is defined in the preamble.
"Dollar" and the sign "$" mean the lawful currency of the United States.
"Dollar Amount" means (a) with respect to Dollars or an amount
denominated in Dollars, such amount and (b) with respect to an amount of any
other Available Currency or an amount denominated in such Available Currency,
the amount of Dollars into which the Agent could, in accordance with its
practice from time to time in the interbank foreign exchange market, convert
such amount of Available Currency at its spot rate of exchange (inclusive of
all related costs of conversion) applicable to the relevant transaction at or
about 10:00 A.M., New York time, on the date of calculation.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the
Lender Assignment Agreement or such other office of a Lender (or any successor
or assign of such Lender) within the United States as may be designated from
time to time by notice from such Lender, as the case may be, to each other
Person party hereto.
"EBITDA" means, at the end of any Fiscal Quarter for the
four Fiscal Quarter period then ending, net earnings plus interest expense
(net of interest income), depreciation, amortization and all other non-cash
charges, and income tax expenses, excluding any non-cash gains or losses used
in determining net income, all calculated on a consolidated basis for Simpson
and its Subsidiaries.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 11.8.
"Environmental Laws" means all applicable foreign, federal, state or
local statutes, laws, ordinances, codes, rules, regulations and guidelines
(including consent decrees and administrative orders) relating to public
health and safety and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"Eurocurrency Office" means with respect to any Lender the office or
offices of such Lender which shall be making or maintaining the Eurocurrency
Loans of such Lender hereunder or such other office or offices through which
such Lender determines its Eurocurrency Rate. A Eurocurrency Office of any
Lender may be, at the option of such Lender, either a domestic or foreign
office.
"Eurocurrency Rate" means, with respect to any Eurocurrency Rate Loan
for any Interest Period, the rate per annum at which deposits in the relevant
Available Currency in immediately available funds are offered to the
Eurocurrency Office of ABN two Business Days prior to the beginning of such
Interest Period by major banks in the London interbank eurocurrency market as
at or about 11:00 A.M. London time for delivery on the first day of such
Interest Period, for the number of days comprised therein and in an amount
equal or comparable to the amount of the Eurocurrency Rate Loan of ABN for
such Interest Period.
"Eurocurrency Rate Loan" means a Loan bearing interest at a fixed rate
of interest determined by reference to the Eurocurrency Rate.
"Eurocurrency Rate (Reserve Adjusted)" means, with respect to any
Eurocurrency Rate Loan for any Interest Period, a rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the
following formula:
Eurocurrency Rate EQUALS Eurocurrency Rate
_______________________________
(Reserve Adjusted) 1-Eurocurrency Reserve Percentage
"Eurocurrency Reserve Percentage" means, with respect to any
Eurocurrency Rate Loan for any Interest Period, a percentage (expressed as a
decimal) equal to the daily average during such Interest Period of the
percentage in effect on each day of such Interest Period, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor), for
determining the aggregate maximum reserve requirements applicable to
"Eurocurrency Liabilities" pursuant to Regulation D or any other then
applicable regulation of such Board of Governors which prescribes reserve
requirements applicable to "Eurocurrency Liabilities" as presently defined in
Regulation D.
"Event of Default" is defined in Section 9.1.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers, as published for such day (or, if such day is not
a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31, references to a Fiscal Year with a number corresponding
to any calendar year (e.g. the "1997 Fiscal Year") refer to the Fiscal Year
ending on December 31 occurring during such calendar year.
"French Francs" means lawful currency of France.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"Funded Debt" means any Indebtedness as described within clauses (a),
(b), (c), (e), and (f) of the definition of "Indebtedness" and any Contingent
Liabilities with respect to any such Indebtedness.
"Funded Debt to EBITDA Ratio" means at any Fiscal Quarter end the ratio
on a consolidated basis for Simpson and its Subsidiaries of Funded Debt at
such Fiscal Quarter end to EBITDA for the four Fiscal Quarters then ending.
"GAAP" is defined in Section 1.4.
"Guaranty" means the guaranty of the U.S. Subsidiaries of Simpson
executed and delivered pursuant to Section 8.1.8, substantially in the form of
Exhibit K hereto, as amended, supplemented, restated or otherwise modified
from time to time.
"Hazardous Materials" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance within the meaning of any other
applicable foreign, federal, state or local law, regulation, ordinance
or requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning any
hazardous, toxic or dangerous waste, substance or material, all as
amended or hereafter amended.
"Hedging Obligations" means, with respect to any Person, all liabilities
of such Person under interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial
statement of any Borrower, any qualification or exception to such opinion or
certification
(a) which is of a "going concern" nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement; or
(c) which relates to the treatment or classification of any item
in such financial statement and which, as a condition to its removal,
would require an adjustment to such item the effect of which would be to
cause such Borrower to be in default of any of its obligations under
Section 8.2.3.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(b) all obligations, contingent or otherwise, relative to the
face amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases which
have been or should be, in accordance with GAAP, recorded as Capitalized
Lease Liabilities;
(d) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance sheet of
such Person as of the date at which Indebtedness is to be determined;
(e) net liabilities of such Person under all Hedging
Obligations;
(f) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price
of property or services, and indebtedness (excluding prepaid interest
thereon) secured by a Lien on property owned or being purchased by such
Person (including indebtedness arising under conditional sales or other
title retention agreements), whether or not such indebtedness shall have
been assumed by such Person or is limited in recourse; and
(g) all Contingent Liabilities of such Person in respect of any
of the foregoing.
"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
"Interest Period" means, relative to any Eurocurrency Rate Loans, the
period beginning on (and including) the date on which such Eurocurrency Rate
Loan is made or continued as, or converted into, a Eurocurrency Rate Loan
pursuant to Section 2.3, 2.4 or 2.9 and ending on (but excluding) the day
which, numerically corresponds to such date one, two, three or six months
thereafter (or, if such month has no numerically corresponding day, on the
last Business Day of such month), in each case as the Borrowers may select in
their relevant notice pursuant to Section 2.3, 2.4 or 2.9; provided, however,
that
(a) no more than 10 Interest Periods shall be outstanding at any
one time in the aggregate;
(b) if such Interest Period would otherwise end on a day which is
not a Business Day, such Interest Period shall end on the next following
Business Day (unless, such next following Business Day is the first
Business Day of a calendar month, in which case such Interest Period
shall end on the Business Day next preceding such numerically
corresponding day); and
(c) no Interest Period may end later than the date set forth in
clause (a) of the definition of "Commitment Termination Date".
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such Person in any
other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without
adjustment by reason of the financial condition of such other Person) and
shall, if made by the transfer or exchange of property other than cash, be
deemed to have been made in an original principal or capital amount equal to
the fair market value of such property.
"Issuance Request" means a properly completed application for a Letter
of Credit on the Issuer's standard form, attached hereto as Exhibit G,
executed by an Authorized Officer of the Borrower.
"Issuer" means any affiliate, unit or agency of ABN which has agreed to
issue one or more Letters of Credit at the request of the Agent.
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit H hereto.
"Lenders" is defined in the preamble.
"Letter of Credit" is defined in Section 4.1.
"Letter of Credit Availability" means, at any time, the lesser of (a)
the Dollar Amount of $5,000,000 minus the Dollar Amount of the Letter of
Credit Outstandings on such date and (b) the excess of (i) the then Commitment
Amount over (ii) the sum of (A) the Dollar Amount of the outstanding principal
amount of all Loans on such date plus (B) the Dollar Amount of the Letter of
Credit Outstandings on such date.
"Letter of Credit Outstandings" means, at any time, an amount equal to
the sum of
(a) the Dollar Amount of the aggregate Stated Amount at such time
of all Letters of Credit then outstanding and undrawn (as such aggregate
Stated Amount shall be adjusted, from time to time, as a result of
drawings, the issuance of Letters of Credit, or otherwise),
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan" means, as the context may require, either a Revolving Loan or a
Swing Loan.
"Loan Commitment Availability" means, on any date, the excess of
(a) the then Commitment Amount,
over
(b) the sum of
(i) the Dollar Amount of the outstanding principal amount
of all Revolving Loans on such date,
plus
(ii) the Dollar Amount of the Letter of Credit Outstandings
on such date.
"Loan Document" means this Agreement, the Notes, the Issuance Requests,
the Guaranty and the Simpson Guaranty.
"Margin" means, for any period beginning on (and including) a Margin
Determination Date until (but excluding) the next Margin Determination Date, a
percentage equal to the Margin set forth in the following table corresponding
to the Funded Debt to EBITDA Ratio as at the end of the Fiscal Quarter
immediately preceding such Margin Determination Date, provided that for the
period from the Effective Date through the first Margin Determination Date
after June 30, 1997, the applicable Margin set forth opposite Level II shall
be used:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
STANDBY
LETTER
MARGIN OF
FOR CREDIT COMMERCIAL
MARGIN FOR EURO- COMMIT- FACE LETTER OF
FUNDED DEBT TO PRIME CURRENCY MENT AMOUNT CREDIT FACE
LEVEL EBITDA RATIO RATE LOANS LOANS FEE FEE AMOUNT FEE
I Greater than 3.0:1.0 0.00% 0.75% 0.25% 0.73% 0.325%
II Less than or equal to
3.0:1.0, but greater
than 2.50:1.0 0.00% 0.60% 0.20% 0.58% 0.20%
III Less than or equal to
2.50:1.0, but greater
than 2.00:1.0 0.00% 0.475% 0.15% 0.455% 0.1175%
IV Less than or equal to
2.00:1.0, but greater
than 1.50:1.0 0.00% 0.325% 0.125% 0.305% 0.075%
V Less than or equal to
1.5:1.0 0.00% 0.225% 0.10% 0.205% 0.0625%
</TABLE>
Notwithstanding the foregoing, in the event Simpson fails to report the Funded
Debt to EBITDA Ratio at the end of any Fiscal Quarter by the Margin
Determination Date following such Fiscal Quarter, "Margin" shall mean the
Margin set forth in Level I. Nothing in this definition shall constitute a
waiver of the financial covenant set forth in Section 8.2.3(b) or limit the
right of the Lenders to receive interest at the rates set forth in Section
3.2.2 hereof.
"Margin Determination Date" means each date on which a quarterly
Compliance Certificate is delivered. The first Margin Determination Date
shall be the first such date after June 30, 1997.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, or
condition (financial or otherwise) of Simpson and its Subsidiaries taken as a
whole; (b) a material impairment of the ability of any Borrower to perform
under any Loan Document and to avoid any Event of Default; or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against any Borrower of any Loan Document.
"Net Worth" means, as to Simpson, the consolidated net worth of Simpson
and its Subsidiaries.
"Note" means, as the context may require, either a Revolving Note or a
Swing Note.
"Obligations" means all obligations (monetary or otherwise) of the
Borrowers arising under or in connection with this Agreement, the Notes and
each other Loan Document.
"Organic Document" means, relative to any Borrower, its certificate of
incorporation or other organizational documents comparable thereto, its by-laws
and all shareholder agreements, voting trusts and similar arrangements
applicable to any of its authorized shares of capital stock.
"Outstandings" means at any time the sum of:
(a) the aggregate Dollar Amount of the principal amount of all
Loans outstanding at such time;
(b) the aggregate Dollar Amount of the face amount of all Letters
of Credit outstanding and undrawn at such time; and
(c) the aggregate Dollar Amount at such time of Obligations to
reimburse drawings under any Letters of Credit which have been paid by
the Issuer.
"Participant" is defined in Section 11.12.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which
Simpson or any corporation, trade or business that is, along with Simpson, a
member of a Controlled Group, may have liability, including any liability by
reason of having been a substantial employer within the meaning of section
4063 of ERISA at any time during the preceding five years, or by reason of
being deemed to be a contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage set forth
opposite its signature hereto or set forth in the Lender Assignment Agreement,
as such percentage may be adjusted from time to time pursuant to Lender
Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and
delivered pursuant to Section 11.12.
"Person" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any other entity,
whether acting in an individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Pounds Sterling" means lawful currency of the United Kingdom.
"Prime Rate" means a floating rate of interest equal to the higher
(redetermined daily) of
(a) the per annum rate of interest announced by ABN at its office
in Chicago, Illinois as its prime rate for Dollar loans; and
(b) the Federal Funds Rate plus 1/2%.
(The "prime rate" is set by ABN based upon various factors and is used as a
reference for pricing some loans. It is not the best rate available to the
customers of ABN at any point in time.) Changes in the rate of interest on
that portion of any Loans maintained as Prime Rate Loans will take effect
simultaneously with each change in the Prime Rate. The Agent will give notice
promptly to the Borrowers and the Lenders of changes in the Prime Rate.
"Prime Rate Loan" means a Loan in Dollars bearing interest at a
fluctuating rate determined by reference to the Prime Rate.
"Quarterly Payment Date" means the last day of each March, June,
September, and December or, if any such day is not a Business Day, the next
succeeding Business Day.
"Rate Option" means, with respect to any Loan, a Eurocurrency Rate Loan
or Prime Rate Loan.
"Reimbursement Obligation" is defined in Section 4.6.
"Release" means a "release", as such term is defined in CERCLA.
"Required Lenders" means, at any time, any Lenders having Percentages
aggregating at least 66 2/3%.
"Revolving Loan" is defined in Section 2.1.2.
"Revolving Note" means a promissory note of any Borrower payable to the
order of any Lender, in the form of Exhibit B hereto (as such promissory notes
may be amended, endorsed or otherwise modified from time to time), evidencing
the aggregate Indebtedness of such Borrower to such Lender resulting from
outstanding Revolving Loans, and also means all other promissory notes
accepted from time to time in substitution therefor or renewal thereof.
"Significant Subsidiary" means a Subsidiary which accounted for in
excess of either 5% of the consolidated assets of Simpson and its Subsidiaries
as of the end of the last Fiscal Quarter or 5% of the consolidated revenue of
Simpson and its Subsidiaries for the four Fiscal Quarter period ending as of
the end of the last Fiscal Quarter.
"Simpson Guaranty" means the guaranty of Simpson substantially in the
form of Exhibit L hereto, as amended, supplemented, restated or otherwise
modified from time to time.
"Solvent" means, as to any Person at any time, that (a) the fair value
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code and, in the alternative, for purposes of the
Uniform Fraudulent Transfer Act or Uniform Fraudulent Conveyance Act; (b) the
present fair saleable value of the property of such Person is not less than
the amount that will be required to pay the probable liability of such Person
on its debts as they become absolute and matured; (c) such Person is able to
realize upon its property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the
normal course of business; (d) such Person does not intend to, and does not
believe that it will, incur debts of liabilities beyond such Person's ability
to pay as such debts and liabilities mature; and (e) such Person is not
engaged in business or a transaction, and is not about to engage in business
or a transaction, for which such Person's property would constitute
unreasonably small capital.
"Spanish Pesetas" means lawful currency of Spain.
"Stated Amount" of each Letter of Credit means the "Stated Amount" as
defined therein.
"Stated Expiry Date" is defined in Section 4.1.
"Stated Maturity Date" means June 17, 2002.
"Subordinated Debt" means Indebtedness of any Borrower subordinated in
form and substance satisfactory to the Agent.
"Subsidiary" means, with respect to any Person, (i) any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or
classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries of such Person,
or by one or more other Subsidiaries of such Person and (ii) any other entity
of which more than 50% of the outstanding capital interest, profit interest or
beneficial interest is at the time directly or indirectly owned by such
Person, by such Person and one or more other Subsidiaries of such Person or by
one or more other Subsidiaries of such Person.
"Subsidiary Borrower" means each Borrower other than Simpson.
"Swing Lender" means ABN in its capacity as swing lender hereunder.
"Swing Loan" is defined in Section 2.7.
"Swing Note" means a promissory note of Simpson payable to the order of
the Swing Lender, in the form of Exhibit C hereto (as such promissory note may
be amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of Simpson to the Swing Lender resulting from
outstanding Swing Loans, and also means any other promissory note accepted
from time to time in substitution therefor or renewal thereof.
"Tangible Net Worth" means, as to Simpson, the consolidated net worth of
Simpson and its Subsidiaries after subtracting therefrom the aggregate amount
of any intangible assets of Simpson and its Subsidiaries, including goodwill,
franchises, licenses, patents, trademarks, trade names, copyrights, service
marks and brand names.
"Taxes" is defined in Section 5.6.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"U.S. Subsidiary" means a Subsidiary of Simpson organized under the laws
of a state of the United States or the District of Columbia.
"Welfare Plan" means a "welfare plan", as such term is defined in
section 3(1) of ERISA, of Simpson or any member of its Controlled Group.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Continuation/Conversion Notice, Loan Document,
notice and other communication delivered from time to time in connection with
this Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article or Section
are references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in
any Article, Section or definition to any clause are references to such clause
of such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document
shall be interpreted, all accounting determinations and computations hereunder
or thereunder (including under Section 8.2.3) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared
in accordance with, those generally accepted accounting principles ("GAAP") in
the United States at the time in effect.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the conditions
of this Agreement (including Article V), each Lender severally agrees as
follows:
SECTION 2.1.1. Revolving Loan Commitment. From time to time on any
Business Day occurring prior to the Commitment Termination Date, each Lender
will make Revolving Loans in Dollars and/or other Available Currencies
(relative to such Lender, its "Revolving Loans") to any Borrower equal to such
Lender's Percentage of the aggregate amount of the Borrowing of Revolving
Loans requested by such Borrower to be made on such day; provided, however
that the aggregate Dollar Amount of the principal amount of Loans by all the
Lenders in currencies other than Dollars shall not at any time exceed
$20,000,000 at any time outstanding. On the terms and subject to the
conditions hereof, each Borrower may from time to time borrow, prepay and
reborrow Revolving Loans.
SECTION 2.1.2. Commitment to Issue Letters of Credit. From time to
time on any Business Day, the Issuer will issue, and each Lender will
participate in, the Letters of Credit, in accordance with Article IV.
SECTION 2.1.3. Lenders Not Permitted or Required To Make Loans or Issue
or Participate in Letters of Credit Under Certain Circumstances. No Lender
shall be permitted or required to
(a) make any Loan if, after giving effect thereto, an amount
equal to the Dollar Amount of the aggregate outstanding principal amount
of all Revolving Loans
(i) of all Lenders, together with the Dollar Amount of all
outstanding Swing Loans and the Dollar Amount of all Letter of
Credit Outstandings, would exceed the Commitment Amount, or
(ii) of such Lender, together with the Dollar Amount of its
Percentage of the Dollar Amount of the principal amount of all
Swing Loans and the Dollar Amount of its Percentage of all Letter
of Credit Outstandings, would exceed such Lender's Percentage of
the Commitment Amount; or
(b) issue (in the case of the Issuer), extend or participate in
(in the case of each Lender) any Letter of Credit if, after giving
effect thereto
(i) the Dollar Amount of all Letter of Credit Outstandings
together with an aggregate amount equal to the Dollar Amount of
the aggregate outstanding principal amount of all Loans would
exceed the Commitment Amount, or
(ii) the Dollar Amount of such Lender's Percentage of all
Letter of Credit Outstandings together with an aggregate amount
equal to the Dollar Amount of the aggregate outstanding principal
amount of all Revolving Loans of such Lender and such Lender's
Percentage of the Dollar Amount of the aggregate principal amount
of all Swing Loans would exceed such Lender's Percentage of the
Commitment Amount.
For the purposes of this Section 2.1.3, the Dollar Amount of any Loans
not denominated in Dollars shall be determined as of the most recent
Determination Date for each such Loan.
SECTION 2.2. Reduction of Commitment Amounts. Simpson may, from time
to time on any Business Day, voluntarily reduce the amount of the Commitment
Amount; provided, however, that Simpson shall simultaneously reduce the amount
of Commitment Amount (as such term is defined in the Companion Agreement)
under the Companion Agreement by an equal amount; provided, further, that the
Commitment Amount shall not be reduced to an amount less than the Outstandings
(after giving effect to any concurrent repayment of Loans); and provided
further, that all such reductions shall require at least 5 Business Days'
prior notice to the Agent and be permanent, and any partial reduction of such
Commitment Amount shall be in a minimum amount of $1,000,000 and in an
integral multiple of $250,000.
SECTION 2.3. Borrowing Procedure. By delivering a Borrowing Request to
the Agent on or before 11:00 A.M., New York time, on a Business Day, Simpson
may from time to time irrevocably request (on not less than three nor more
than five Business Days' notice with respect to a Eurocurrency Rate Loan, and
not less than one nor more than five Business Days' notice with respect to
Prime Rate Loan) that a Borrowing of Revolving Loans be made to the Borrower
specified by Simpson in an Available Currency, if in Dollars, in a minimum
amount of $2,000,000 and an integral multiple of $100,000 or if in another
Available Currency, in a minimum amount of the Dollar Amount of $2,000,000 and
an integral multiple of 100,000 units of such Available Currency, or in the
unused amount of the applicable Commitment. On the terms and subject to the
conditions of this Agreement, each Borrowing shall be comprised of the same
Rate Option of Loans (and, in the case of Eurocurrency Rate Loans, the same
Available Currency), and shall be made on the Business Day, specified in such
Borrowing Request. The proceeds of each Borrowing shall be advanced to the
Borrower specified in the applicable Borrowing Request. On or before 10:00
A.M., New York time, on such Business Day each Lender shall deposit with the
Agent same day funds in the applicable Available Currency in an amount equal
to such Lender's Percentage of the requested Borrowing. Such deposit will be
made to such accounts which the Agent shall specify from time to time by
notice to the Lenders. To the extent funds are received from the Lenders, the
Agent shall make such funds available to the Borrower specified by Simpson by
wire transfer to such accounts as Simpson shall have specified in its
Borrowing Request. No Lender's obligation to make any Loan shall be affected
by any other Lender's failure to make any Loan.
SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Agent on or before 11:00 A.M., New York
time, on a Business Day, Simpson may from time to time irrevocably elect (on
not less than three nor more than five Business Days' notice with respect to a
conversion into or a continuation of a Eurocurrency Loan to a Borrower
specified by Simpson and not less than one nor more than five Business Days'
notice with respect to a conversion into Prime Rate Loan) that all, or any
portion in an aggregate minimum amount, if in Dollars of $2,000,000 and an
integral multiple of $100,000 or in the case of an Available Currency other
than Dollars, in an aggregate minimum amount of the Dollar Amount of
$2,000,000 and an integral multiple of 100,000 units of such currency, of any
Revolving Loans be, in the case of Prime Rate Loans, converted into
Eurocurrency Rate Loans or, in the case of Eurocurrency Rate Loans be
converted into Prime Rate Loans or Eurocurrency Rate Loans in another
Available Currency or continued as Eurocurrency Rate Loans in the same
currency. In the absence of delivery of a Continuation/ Conversion Notice
with respect to any Revolving Loan constituting a Eurocurrency Rate Loan by
11:00 A.M. New York time at least three Business Days before the last day of
the then current Interest Period with respect thereto, such Eurocurrency Rate
Loan shall, on such last day, automatically convert to a Eurocurrency Rate
Loan in the same currency having an Interest Period equal to the shorter of
(i) one month and (ii) the number of days in the period from and including
such last day to but excluding the Commitment Termination Date; provided that
such period determined under this clause (ii) is acceptable to the Agent,
otherwise the Loan shall become due and payable. Each such conversion or
continuation shall be prorated among the applicable outstanding Loans of such
Borrower to all Lenders, and when any Default has occurred and is continuing,
no portion of the outstanding principal amount of any Loans may be continued
as, or be converted into, Eurocurrency Rate Loans.
SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert Eurocurrency Rate Loans hereunder by
causing one of its foreign branches or Affiliates (or an international
banking facility created by such Lender) to make or maintain such Eurocurrency
Rate Loan; provided, however, that such Eurocurrency Rate Loan shall
nonetheless be deemed to have been made and to be held by such Lender, and the
obligation of the Borrowers to repay such Eurocurrency Rate Loan shall
nevertheless be to such Lender for the account of such foreign branch,
Affiliate or international banking facility. In addition, the Borrowers
hereby consent and agree that, for purposes of any determination to be made
for purposes of Section 5.1, 5.2, 5.3 or 5.4, it shall be conclusively assumed
that each Lender elected to fund all Eurocurrency Rate Loans by purchasing
deposits, in the interbank eurocurrency market having a maturity corresponding
to the Interest Period for such Loan and bearing an interest rate equal to the
Eurocurrency Rate for such Loan.
SECTION 2.6. Notes. The Revolving Loans of each Lender to each
Borrower shall be evidenced by a Note of such Borrower, payable to the order
of such Lender in an amount equal to the Lender's Revolving Loans. Each
Lender shall record in its records, or at its option on the schedule attached
to its applicable Note, the date, amount and Available Currency of each Loan
made by such Lender thereunder, each repayment or prepayment thereof, and the
dates on which the Interest Period for such Loan shall begin and end. The
aggregate unpaid principal amount so recorded shall be rebuttable presumptive
evidence of the principal amount owing and unpaid on such Note. The failure
to so record or any error in so recording any such amount shall not, however,
limit or otherwise affect the obligations of any Borrower hereunder or under
any Note to repay the principal amount of each Revolving Loan, together with
all interest accruing thereon.
SECTION 2.7. Swing Line Commitment. From time to time on any Business
Day occurring prior to the Commitment Termination Date, the Swing Lender
agrees to make loans to Simpson (each such loan, a "Swing Loan") in an
aggregate principal amount not to exceed $10,000,000. All Swing Loans shall
be in Dollars. On the terms and subject to the conditions hereof, Simpson may
from time to time borrow, prepay and reborrow Swing Loans.
SECTION 2.8. Borrowing Procedure Swing Loans. By delivering a
Borrowing Request to the Swing Lender and the Agent on or before 1:00 p.m.,
New York time, on a proposed Borrowing Date, Simpson may from time to time
irrevocably request that a Borrowing be made in a minimum amount of $2,000,000
and an integral multiple of $100,000. On or before 4:00 P.M., Chicago time,
on such Borrowing Date the Swing Lender shall deposit with the Agent same day
funds in an amount equal to the requested Borrowing. Such deposit will be
made to such accounts which the Agent shall specify from time to time by
notice to the Swing Lender. To the extent funds are received from the Swing
Lender, the Agent shall make such funds available to Simpson by wire transfer
to such accounts as Simpson shall have specified in its Borrowing Request.
SECTION 2.9. Refunding of Swing Loans. The Swing Lender may, at any
time later than five Business Days after the Borrowing Date of a Swing Loan,
in its sole and absolute discretion, on behalf of Simpson (which hereby
irrevocably directs the Swing Lender to act on its behalf), request each
Lender to make a Revolving Loan in Dollars in an amount equal to such Lender's
Percentage of the Dollar Amount of the principal amount of the Swing Loans
outstanding on the date such notice is given. Unless any of the events
described in Section 9.1.9 shall have occurred (in which event the procedures
of Section 2.10 shall apply), and regardless of whether the conditions
precedent set forth in this Agreement to the making of a Revolving Loan are
then satisfied or the aggregate amount of such Revolving Loans is not in the
minimum or integral amount otherwise required hereunder, each Lender shall
make the proceeds of its Revolving Loan available to the Agent for the account
of the Swing Lender at 10:00 A.M. Chicago time in immediately available funds
on the Business Day next succeeding the date such notice is given. The
proceeds of such Revolving Loans shall be in Dollars and shall be immediately
applied to repay the outstanding Swing Loans. All Revolving Loans made
pursuant to this Section 2.9 shall be in Dollars and shall be Prime Rate Loans
(but, subject to the other provisions of this Agreement, may be converted to
Eurocurrency Rate Loans).
SECTION 2.10. Participations in Swing Loans. (a) If an event
described in Section 9.1.9 occurs (or for any reason the Lenders may not make
Revolving Loans pursuant to Section 2.9), each Lender will, upon notice from
the Agent, purchase from the Swing Lender (and the Swing Lender will sell to
each such Lender) an undivided participation interest in all outstanding Swing
Loans in an amount equal to its Percentage of the outstanding principal amount
of the Swing Loans (and each Lender will immediately transfer to the Agent,
for the account of the Swing Lender, in immediately available funds, the
amount of its participation).
(b) Whenever, at any time after the Swing Lender has received payment
for any Lender's participation interest in the Swing Loans pursuant to Section
2.10(a), the Swing Lender receives any payment on account thereof, the Swing
Lender will distribute to the Agent for the account of such Lender its
participation interest in such amount (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such Lender's
participation interest was outstanding and funded) in like funds as received;
provided, however, that in the event that such payment received by the Swing
Lender is required to be returned, such Lender will return to the Agent for
the account of the Swing Lender any portion thereof previously distributed by
the Swing Lender to it in like funds as such payment is required to be
returned by the Swing Lender.
SECTION 2.11. Swing Loan Participation Obligations Unconditional. (a)
Each Lender's obligation to make Revolving Loans pursuant to Section 2.9
and/or to purchase participation interests in Swing Loans pursuant to Section
2.10 shall be absolute and unconditional and shall not be affected by any
circumstance whatsoever, including (a) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against the Swing Lender,
Simpson or any other Person for any reason whatsoever; (b) the occurrence or
continuance of an Event of Default; (c) any adverse change in the condition
(financial or otherwise) of Simpson or any other Person; (d) any breach of
this Agreement by Simpson or any other Lender; (e) any inability of Simpson to
satisfy the conditions precedent to borrowing set forth in this Agreement on
the date upon which any Swing Loan is to be refunded or any participation
interest therein is to be purchased; or (f) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing.
(b) Notwithstanding the provisions of subsection 2.11(a), no Lender
shall be required to make any Revolving Loan to Simpson to refund a Swing Loan
pursuant to Section 2.9 or to purchase a participation interest in a Swing
Loan pursuant to Section 2.10 if, prior to the making by the Swing Lender of
such Swing Loan, the Swing Lender received written notice (i) from a Lender
specifying that such Lender believes in good faith that one or more of the
conditions precedent to the making of such Swing Loan were not satisfied and,
in fact, such conditions precedent were not satisfied at the time of the
making of such Swing Loan or (ii) from Simpson that a Default has occurred and
is continuing; provided that the obligation of such Lender to make such
Revolving Loans and to purchase such participation interests shall be
reinstated upon the earlier to occur of (x) the date on which such Lender or
Simpson, as applicable, notifies the Swing Lender that its prior notice has
been withdrawn and (y) the date on which all conditions precedent to the
making of such Swing Loan have been satisfied (or waived by the Required
Lenders or all Lenders, as applicable).
SECTION 2.12. Conditions to Swing Loans. Notwithstanding any other
provision of this Agreement, the Swing Lender shall not be obligated to make
any Swing Loan if a Default exists or would result therefrom.
SECTION 2.13. Swing Note. The Swing Loans shall be evidenced by the
Swing Note of Simpson, payable to the order of the Swing Lender in an amount
equal to the Swing Loans. The Swing Lender shall record in its records, or at
its option on the schedule attached to such Swing Note, the date and amount of
each Swing Loan and each repayment or prepayment thereof. The aggregate
unpaid principal amount so recorded shall be rebuttable presumptive evidence
of the principal amount owing and unpaid on such Swing Note. The failure to
so record or any error in so recording any such amount shall not, however,
limit or otherwise affect the obligations of Simpson hereunder or under the
Swing Note to repay the principal amount of each Swing Loan, together with all
interest accruing thereon.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrowers shall repay in
full the unpaid principal amount of each Loan upon the Stated Maturity Date.
(a) Prior thereto, any Borrower may, from time to time on any
Business Day, make a voluntary prepayment, in whole or in part without
penalty or premium, of the outstanding principal amount of any Loans;
provided, however, that
(i) any such prepayment shall be made to the Agent and
shall be applied to Loans as the prepaying Borrower may specify
and on a pro rata basis to the accounts of Loans of the same Rate
Option and having the same Interest Period of all Lenders;
(ii) no such prepayment of any Eurocurrency Rate Loan may
be made on any day other than the last day of the Interest Period
for such Loan;
(iii) all such voluntary prepayments shall require at least
three but no more than five Business Days' prior written notice to
the Agent which notice shall be irrevocable once given; and
(iv) all such voluntary partial prepayments shall be in an
aggregate minimum Dollar Amount of $2,000,000 and an integral
multiple of 100,000 units of the Available Currency;
(b) In addition, the Borrowers shall, on each date when any
reduction in the Commitment Amount shall become effective, including
pursuant to Section 2.2, make a mandatory prepayment of outstanding
Loans to the Agent equal to the excess, if any, of the aggregate
Outstandings over the Commitment Amount as so reduced;
(c) In addition, the Borrowers shall, on each Determination Date
for any Borrowing of Eurocurrency Loans on which the Dollar Amount of
the Outstandings of the Borrowers exceed (as the result of fluctuations
in applicable foreign exchange rates or otherwise) the then Commitment
Amount, make a mandatory repayment to the Agent of Loans outstanding in
an aggregate Dollar Amount equal to the excess of
(x) the aggregate Outstandings; over
(y) the then Commitment Amount;
(d) Each Borrower shall, immediately upon any acceleration of the
Stated Maturity Date of any Loans pursuant to Section 9.2 or
Section 9.3, repay all Loans, unless, pursuant to Section 9.3, only a
portion of all Loans is so accelerated.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 5.4. No voluntary
prepayment of principal of any Loans shall cause a reduction in the Commitment
Amount.
SECTION 3.2. Interest Provisions. Interest on the outstanding
principal amount of Loans shall accrue and be payable in the applicable
Available Currency in accordance with this Section 3.2.
SECTION 3.2.1. Rates. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the applicable Borrower may elect
that Loans comprising a Borrowing accrue interest at a rate per annum:
(a) on that portion of the Loans maintained from time to time as
a Prime Rate Loan, equal to the sum of the Prime Rate from time to time
in effect plus the applicable Margin; and
(b) on that portion of the Loans maintained as a Eurocurrency
Rate Loan, during each Interest Period applicable thereto, equal to the
sum of the applicable Eurocurrency Rate (Reserve Adjusted) for such
Interest Period plus the applicable Margin.
SECTION 3.2.2. Post-Maturity Rates. After the date any principal
amount of any Loan is due and payable (whether on the Stated Maturity Date or
upon acceleration), or after any other monetary Obligation of any Borrower
shall have become due and payable, the Borrowers agree to pay, but only to the
extent permitted by law, interest (after as well as before judgment) on Prime
Rate Loans at a rate per annum equal to the Prime Rate plus a margin of 2% and
on Eurocurrency Rate Loans at a rate per annum equal to 2% in excess of the
rate otherwise applicable until the end of the then applicable Interest Period
and thereafter at a rate equal to 2.75% per annum on the Eurocurrency Rate
(Reserve Adjusted) for Interest Periods not to exceed one month as determined
by the Agent; provided that any Eurocurrency Rate Loan denominated in Dollars
shall convert to a Prime Rate Loan at the end of the applicable Interest
Period.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment of any Eurocurrency
Rate Loans, in whole or in part, of principal outstanding on such
Eurocurrency Rate Loan;
(c) with respect to Prime Rate Loans, on each Quarterly Payment
Date occurring after the date of the initial Borrowing hereunder;
(d) with respect to Eurocurrency Rate Loans, on the last day of
each applicable Interest Period (and, if such Interest Period shall
exceed three months, on a date three months after the commencement of
said Interest Period, or if not a Business Day, on the next Business Day
unless said next Business Day is in the next calendar month then on the
preceding Business Day); and
(e) on that portion of any Loans the Stated Maturity Date of
which is accelerated pursuant to Section 9.2 or Section 9.3, immediately
upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable by the applicable Borrower upon demand.
SECTION 3.3. Fees. The Borrowers agree to pay the fees set forth in
this Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Commitment Fee.
(a) Simpson agrees to pay to the Agent for the account of each
Lender, for the period (including any portion thereof when its
Commitment is suspended by reason of the Borrowers' inability to satisfy
any condition of Article VI) commencing on the Effective Date and
continuing through the Commitment Termination Date, a commitment fee on
such Lender's Percentage of the average daily Dollar Amount of the
unused portion of the Loan Commitment Availability at a rate equal to
the applicable Margin;
(b) For purposes of determining the commitment fee, the average
daily Dollar Amount of all outstanding Loans and the unused portion of
the Loan Commitment Availability shall be determined as of each
applicable Determination Date; and
(c) Such fee shall be payable in Dollars in immediately available
funds in arrears on each Quarterly Payment Date.
SECTION 3.3.2. Arrangement Fee; Agent's Fee. Simpson agrees to pay to
the Agent for its own account, a non-refundable arrangement fee, and,
thereafter, a non-refundable annual fee, in such amounts and payable at such
times as has been agreed upon between the Agent and Simpson in the fee letter
dated April 4, 1997 (as amended from time to time).
SECTION 3.3.3. Letter of Credit Face Amount Fee. The applicable
Borrower agrees to pay to the Agent, for the account of the Lenders, a fee for
each Letter of Credit issued on the application of such Borrower for the
period from and including the date of the issuance of such Letter of Credit to
(but not including) the date upon which such Letter of Credit expires, at a
per annum rate equal to the applicable Margin of the face amount of such
Letter of Credit (which face amount shall be reduced by any reductions in such
Letters of Credit pursuant to Section 4.1(d) hereof). Such fee shall be
payable in immediately available funds in advance on the date of issuance of
each Letter of Credit and on each Quarterly Payment Date thereafter. No
portion of such fee shall be refunded after payment.
SECTION 3.3.4. Letter of Credit Fronting Fee. The applicable Borrower
agrees to pay to the Issuer for its own account a fronting fee for each Letter
of Credit issued on the application of such Borrower for the period from and
including the date of the issuance of such Letter of Credit to (but not
including) the date upon which each Letter of Credit expires, of 0.02% (in the
case of a standby Letter of Credit) or 0.05% (in the case of a commercial
Letter of Credit) of the face amount of such Letter of Credit (which face
amount shall be reduced by any reductions in such Letters of Credit pursuant
to Section 4.1(c) hereof). Such fee shall be payable in immediately available
funds on the date of issuance of such Letter of Credit.
SECTION 3.3.5. Letter of Credit Administrative Fee. The Borrowers
agree to pay to the Agent, for the account of the Issuer, the amounts set
forth in Section 4.3.
ARTICLE IV
LETTERS OF CREDIT
SECTION 4.1. Issuance Requests. By delivering to the Agent and the
Issuer an Issuance Request on or before 10:00 A.M., New York time, any
Borrower may request, from time to time prior to the Commitment Termination
Date and on not less than three nor more than ten Business Days' notice, that
the Issuer issue an irrevocable letter of credit in substantially the form of
Exhibit D hereto, or in such other form as may be requested by a Borrower and
approved by the Issuer (each a "Letter of Credit"), in support of financial
obligations of such Borrower incurred in such Borrower's ordinary course of
business and which are described in such Issuance Request. Upon receipt of an
Issuance Request, the Agent shall promptly notify the Lenders thereof. Each
Letter of Credit shall by its terms:
(a) be issued in Dollars;
(b) be issued in a Stated Amount which does not exceed (or would
not exceed) the then Letter of Credit Availability;
(c) be stated to expire on a date (its "Stated Expiry Date") no
later than the earlier of (i) one year from the date of issuance, or
(ii) the Commitment Termination Date; and
(d) on or prior to its Stated Expiry Date
(i) terminate immediately upon notice to the Issuer
thereof from the beneficiary thereunder that all obligations
covered thereby have been terminated, paid, or otherwise satisfied
in full, or
(ii) reduce in part immediately and to the extent the
beneficiary thereunder has notified the Issuer thereof that the
obligations covered thereby have been paid or otherwise satisfied
in part.
So long as no Default has occurred and is continuing and subject to the
conditions set forth in this Agreement, by delivery to the Issuer and the
Agent of an Issuance Request at least three but not more than ten Business
Days prior to the Stated Expiry Date of any Letter of Credit, such Borrower
may request the Issuer to extend the Stated Expiry Date of such Letter of
Credit for an additional period not to extend beyond the Commitment
Termination Date.
SECTION 4.2. Issuances and Extensions. On the terms and subject to the
conditions of this Agreement (including Article VI), the Issuer shall issue
Letters of Credit, and extend the Stated Expiry Dates of outstanding Letters
of Credit, in accordance with the Issuance Requests made therefor. The Issuer
will make available the original of each Letter of Credit which it issues in
accordance with the Issuance Request therefor to the beneficiary thereof (and
will promptly notify each of the Lenders of the issuance) and will notify the
beneficiary under any Letter of Credit of any extension of the Stated Expiry
Date thereof.
SECTION 4.3. Expenses. Each Borrower agrees to pay to the Agent for
the account of the Issuer with respect to each Letter of Credit issued on the
application of such Borrower all standard administrative expenses of the
Issuer in connection with the issuance, maintenance, modification (if any) and
administration of each Letter of Credit issued by the Issuer at the request of
the Borrower upon demand from time to time.
SECTION 4.4. Other Lenders' Participation. Each Letter of Credit
issued pursuant to Section 4.2 shall, effective upon its issuance and without
further action, be issued on behalf of all Lenders (including the Issuer
thereof) pro rata according to their respective Percentages. Each Lender
shall, to the extent of its Percentage (unless the Issuer shall have received
written notice that the conditions precedent to the issuance of such Letter of
Credit had not occurred prior to such issuance), be deemed irrevocably to have
participated in the issuance of such Letter of Credit and shall be responsible
to reimburse promptly the Issuer thereof for Reimbursement Obligations which
have not been reimbursed by the applicable Borrower in accordance with
Section 4.5, or which have been reimbursed by the applicable Borrower but must
be returned, restored or disgorged by the Issuer for any reason, and each
Lender shall, to the extent of its Percentage, be entitled to receive from the
Agent a ratable portion of the letter of credit fees received by the Agent
pursuant to Section 3.3.3, with respect to each Letter of Credit. In the
event that the applicable Borrower shall fail to reimburse the Issuer, or if
for any reason Revolving Loans shall not be made to fund any Reimbursement
Obligation, all as provided in Section 4.5 and in an amount equal to the
amount of any drawing honored by the Issuer under a Letter of Credit issued by
it, or in the event the Issuer must for any reason return or disgorge such
reimbursement, the Issuer shall promptly notify each Lender of the
unreimbursed amount of such drawing and of such Lender's respective
participation therein. Each Lender shall make available to the Issuer,
whether or not any Default shall have occurred and be continuing, an amount
equal to its respective participation in same day or immediately available
funds at the office of the Issuer specified in such notice not later than
10:00 A.M., New York time, on the Business Day after the date the Lenders are
notified by the Issuer. In the event that any Lender fails to make available
to the Issuer the amount of such Lender's participation in such Letter of
Credit as provided herein, the Issuer shall be entitled to recover such amount
on demand from such Lender together with interest at the Federal Funds Rate
for three Business Days (together with such other compensatory amounts as may
be required to be paid by such Lender to the Agent pursuant to the Rules for
Interbank Compensation of the Council on International Banking or the
Clearinghouse Compensation Committee, as the case may be, as in effect from
time to time) and thereafter at the Prime Rate plus 2%. Nothing in this
Section shall be deemed to prejudice the right of any Lender to recover from
the Issuer any amounts made available by such Lender to the Issuer pursuant to
this Section in the event that it is determined by a court of competent
jurisdiction that the payment with respect to a Letter of Credit by the Issuer
in respect of which payment was made by such Lender constituted gross
negligence or wilful misconduct on the part of the Issuer. The Issuer shall
distribute to each other Lender which has paid all amounts payable by it under
this Section with respect to any Letter of Credit issued by the Issuer such
other Lender's Percentage of all payments received by the Issuer from the
applicable Borrower in reimbursement of drawings honored by the Issuer under
such Letter of Credit when such payments are received.
SECTION 4.5. Disbursements. The Issuer will notify the applicable
Borrower and the Agent promptly of the presentment for payment of any Letter
of Credit, together with notice of the date (a "Disbursement Date") such
payment shall be made. Subject to the terms and provisions of such Letter of
Credit, the Issuer shall make such payment to the beneficiary (or its
designee) of such Letter of Credit. Prior to 10:00 A.M., New York time, on
the Disbursement Date, the applicable Borrower will reimburse the Issuer for
all amounts which it has disbursed under the Letter of Credit. To the extent
the Issuer is not reimbursed in full in accordance with the third sentence of
this Section, the Borrower's Reimbursement Obligation shall accrue interest
(i) during the three days following the Disbursement Date at the Prime Rate
and (ii) thereafter at the Prime Rate plus a margin of 2% per annum, payable
on demand. In the event the Issuer is not reimbursed by the applicable
Borrower on the Disbursement Date (other than upon a deemed Disbursement under
Section 4.7 when an actual Disbursement has not been made), or if the Issuer
must for any reason return or disgorge such reimbursement, the Lenders
(including the Issuer) shall, on the terms and subject to the conditions of
this Agreement, fund the Reimbursement Obligation therefor by making Revolving
Loans which shall be Prime Rate Loans (the applicable Borrower being deemed to
have given a timely Borrowing Request therefor for such amount); provided,
however, for the purpose of determining the availability of the Commitments to
make Revolving Loans immediately prior to giving effect to the application of
the proceeds of such Revolving Loans, such Reimbursement Obligation shall be
deemed not to be outstanding at such time.
SECTION 4.6. Reimbursement. The obligation of each Borrower (a
"Reimbursement Obligation") under Section 4.5 to reimburse the Issuer with
respect to each Disbursement (including interest thereon) with respect to each
Letter of Credit issued on such Borrower's application, and each Lender's
obligation to make participation payments in each drawing which has not been
reimbursed by the Borrower, shall be absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim, or defense to
payment which the applicable Borrower may have or have had against any Lender
or any beneficiary of a Letter of Credit, including any defense based upon the
occurrence of any Default, any draft, demand or certificate or other document
presented under a Letter of Credit proving to be forged, fraudulent, invalid
or insufficient, the failure of any Disbursement to conform to the terms of
the applicable Letter of Credit (if, in the Issuer's opinion, such
Disbursement conforms to the terms of the applicable Letter of Credit, unless
such determination is the result of the Issuer's gross negligence or wilful
misconduct) or any non-application or misapplication by the beneficiary of the
proceeds of such Disbursement, or the legality, validity, form, regularity, or
enforceability of such Letter of Credit; provided, however, that nothing
herein shall adversely affect the right of the applicable Borrower to commence
any proceeding against the Issuer for any wrongful Disbursement made by the
Issuer under a Letter of Credit as a result of acts or omissions constituting
gross negligence or wilful misconduct on the part of the Issuer.
SECTION 4.7. Deemed Disbursements. Upon the occurrence and during the
continuation of any Event of Default or the occurrence of the Commitment
Termination Date, an amount equal to that portion of Letter of Credit
Outstandings attributable to outstanding and undrawn Letters of Credit shall,
at the election of the Issuer acting on instructions from the Required
Lenders, and without demand upon or notice to the applicable Borrower, be
deemed to have been paid or disbursed by the Issuer under such Letters of
Credit (notwithstanding that such amount may not in fact have been so paid or
disbursed), and, upon notification by the Issuer to the Agent and the
applicable Borrower of its obligations under this Section, the applicable
Borrower shall be immediately obligated to reimburse the Issuer the amount
deemed to have been so paid or disbursed by the Issuer. Any amounts so
received by the Issuer from the applicable Borrower pursuant to this Section
shall be held as collateral security for the repayment of the applicable
Borrower's obligations in connection with the Letters of Credit issued by the
Issuer. At any time when such Letters of Credit shall terminate and all
Obligations of the Issuer are either terminated or paid or reimbursed to the
Issuer in full, the Obligations under this Section shall be reduced
accordingly (subject, however, to reinstatement in the event any payment in
respect of such Letters of Credit is recovered in any manner from the Issuer),
and the Issuer will return to the Borrowers the excess, if any, of
(a) the aggregate amount deposited by the applicable Borrower
with the Issuer and not theretofore applied by the Issuer to any
Reimbursement Obligation or other Obligation
over
(b) the aggregate amount of all Reimbursement Obligations to the
Issuer pursuant to this Section, as so adjusted and other Obligations.
At such time when all Events of Default shall have been cured or waived or
when all Obligations of the Borrowers shall have been terminated, paid, or
otherwise satisfied in full, the Issuer shall return to the Borrowers all
amounts then on deposit with the Issuer pursuant to this Section.
SECTION 4.8. Nature of Reimbursement Obligations. The Borrowers shall
assume all risks of the acts, omissions, or misuse of any Letter of Credit by
the beneficiary thereof. Neither the Issuer nor any Lender (except to the
extent of its own gross negligence or wilful misconduct) shall be responsible
for:
(a) the form, genuineness, or legal effect of any Letter of
Credit or the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any document submitted by any party in connection with
the application for and issuance of a Letter of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent, or forged;
(b) the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any instrument transferring or assigning or purporting
to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof in whole or in part, which may prove to
be invalid or ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions, or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex, or
otherwise; or
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under a
Letter of Credit or of the proceeds thereof.
SECTION 4.9. Increased Costs; Indemnity. If by reason of
(a) any change in applicable law, regulation, rule, decree or
regulatory requirement or any change in the interpretation or
application by any judicial or regulatory authority of any law,
regulation, rule, decree or regulatory requirement, or
(b) compliance by the Issuer or any Lender with any direction,
request or requirement (whether or not having the force of law) of any
governmental or monetary authority, including Regulation D of the F.R.S.
Board:
(i) the Issuer or any Lender shall be subject to any tax
(other than taxes on net income and franchises), levy, charge or
withholding of any nature or to any variation thereof or to any
penalty with respect to the maintenance or fulfillment of its
obligations under this Article IV, whether directly or by such
being imposed on or suffered by the Issuer or any Lender;
(ii) any reserve, deposit or similar requirement is or
shall be applicable, imposed or modified in respect of any Letters
of Credit issued by the Issuer or participations therein purchased
by any Lender; or
(iii) there shall be imposed on the Issuer or any Lender
any other condition regarding this Article IV, any Letter of
Credit or any participation therein;
and the result of the foregoing is directly or indirectly to increase the cost
to the Issuer or such Lender of issuing, making or maintaining any Letter of
Credit or of purchasing or maintaining any participation therein, or to reduce
any amount receivable in respect thereof by the Issuer or such Lender, then
and in any such case the Issuer or such Lender may, at any time after the
additional cost is incurred or the amount received is reduced, notify the
Borrower on whose application such Letter of Credit was issued thereof, and
such Borrower agrees to pay no later than three days after demand such amounts
as the Issuer or Lender may specify to be necessary to compensate the Issuer
or Lender for such additional cost or reduced receipt, together with interest
on such amount from the date due until payment in full thereof at a rate equal
at all times to the Prime Rate plus 2% per annum. The determination by the
Issuer or Lender, as the case may be, of any amount due pursuant to this
Section, as set forth in a statement setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest error, be final and
conclusive and binding on all of the parties hereto. In addition to amounts
payable as elsewhere provided in this Article IV, the Borrower on whose
application such Letter of Credit was issued agrees to protect, indemnify, pay
and save the Issuer harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees and allocated costs of internal counsel) which the
Issuer may incur or be subject to as a consequence, direct or indirect, of
(c) the issuance of any Letter of Credit, other than as a result
of the gross negligence or wilful misconduct of the Issuer as determined
by a court of competent jurisdiction or other than with respect to the
validity, sufficiency or accuracy of any Letter of Credit, or
(d) the failure of the Issuer to honor a drawing under any Letter
of Credit requested by such Borrower as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority.
SECTION 4.10. Uniform Customs. Each Letter of Credit shall be subject
to the Uniform Customs and Practice for Documentary Credits, 1993 Revisions,
ICC Publication No. 500.
ARTICLE V
CERTAIN EUROCURRENCY RATE AND OTHER PROVISIONS
SECTION 5.1. Eurocurrency Rate Lending Unlawful. If any Lender shall
determine in good faith (which determination shall, upon notice thereof to the
Borrowers and the Lenders, be conclusive and binding) that the introduction of
or any change in or in the interpretation of any law makes it unlawful, or any
central bank or other governmental authority asserts that it is unlawful, for
such Lender to make, continue or maintain any Loan as, or to convert any Loan
into, a Eurocurrency Rate Loan of a certain Available Currency, the
obligations of all Lenders to make, continue, maintain or convert into any
such Loans shall, upon such determination, forthwith be suspended until such
Lender shall notify the Agent that the circumstances causing such suspension
no longer exist, and all Eurocurrency Rate Loans of such Available Currency
shall automatically convert into Prime Rate in an amount equal to the Dollar
Amount thereof at the end of the then current Interest Periods with respect
thereto or sooner, if required by such law or assertion.
SECTION 5.2. Deposits Unavailable. If the Agent shall have determined
that
(a) deposits in the relevant Available Currency in the relevant
amount and for the relevant Interest Period are not available to ABN in
its relevant market; or
(b) by reason of circumstances affecting ABN's relevant market,
adequate means do not exist for ascertaining the interest rate
applicable hereunder to Eurocurrency Rate Loans of such type,
then, upon notice from the Agent to the Borrowers and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 2.4 to make or
continue any Loans as, or to convert any Loans into, Eurocurrency Rate Loans
of such Available Currency shall forthwith be suspended until the Agent shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.
SECTION 5.3. Increased Eurocurrency Rate Loan Costs, etc. Each
Borrower agrees to reimburse any Lender if, as a result of any change in any
law, regulation, treaty or directive, or in any regulatory interpretation or
application thereof or compliance by such Lender with any request or directive
(whether or not having the force of law) from any court or governmental
authority, agency or central bank
(i) the basis of taxation of payments to such Lender of the
principal of or interest on any Eurocurrency Rate Loan (other than taxes
imposed on the overall net income of such Lender by the jurisdiction in
which such Lender has its principal office) is changed;
(ii) any reserve, special deposit or similar requirements against
assets of, deposits with or for the account of, or credit extended by,
such Lender are imposed, modified or deemed applicable; or
(iii) any other condition affecting this Agreement or any
Eurocurrency Rate Loan is imposed on the interbank eurocurrency market;
and such Lender determines that, by reason thereof, the cost to such Lender of
making or maintaining any of the Eurocurrency Rate Loans is actually
increased, or the amount of any sum receivable by such Lender hereunder in
respect of any of the Eurocurrency Rate Loans is actually reduced; then the
applicable Borrower shall pay to such Lender within three Business Days after
demand (which demand shall be accompanied by a statement setting forth the
basis for the calculation thereof but only to the extent not theretofore
provided to the applicable Borrower) such additional amount or amounts as will
compensate such Lender for such additional cost or reduction to the extent
such cost or reduction has not been provided for in the calculation of the
Eurocurrency Reserve Percentage. Determinations by such Lender for purposes
of this section of the additional amounts required to compensate such Lender
in respect of the foregoing shall be rebuttably presumed to be correct.
SECTION 5.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a
Eurocurrency Rate Loan) as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any Eurocurrency Rate Loans on a date other than the scheduled
last day of the Interest Period applicable thereto, whether pursuant to
Section 3.1 or otherwise;
(b) any Loans not being made as Eurocurrency Rate Loans in
accordance with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into,
Eurocurrency Rate Loans in accordance with the Continuation/Conversion
Notice therefor,
then, the applicable Borrower agrees that upon the written notice of such
Lender (with a copy to the Agent), such Borrower shall pay directly to such
Lender upon demand such amount as will (in the reasonable determination of
such Lender) reimburse such Lender for such loss or expense. Such written
notice (which shall include calculations in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on the Borrower.
SECTION 5.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in its sole and absolute discretion)
that the rate of return on its or such controlling Person's capital as a
consequence of its Commitments, issuance of or participation in Letters of
Credit or the Loans made by such Lender is reduced to a level below that which
such Lender or such controlling Person could have achieved but for the
occurrence of any such circumstance, then, in any such case upon notice from
time to time by such Lender, the Borrowers agree immediately to pay directly
to such Lender additional amounts sufficient to compensate such Lender or such
controlling Person for such reduction in rate of return. A statement of such
Lender as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Borrowers. In determining such amount, such
Lender may use any method of averaging and attribution that it (in its sole
and absolute discretion) shall deem applicable.
SECTION 5.6. Taxes. All payments by any of the Borrowers of principal
of, and interest on, the Loans and all other amounts payable hereunder shall
be made free and clear of and without deduction for any present or future
income, excise, stamp or franchise taxes and other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority, but excluding franchise taxes and taxes imposed on or measured by
any Lender's net income or receipts (such non-excluded items being called
"Taxes"). In the event that any withholding or deduction from any payment to
be made by a Borrower hereunder is required in respect of any Taxes pursuant
to any applicable law, rule or regulation, then the applicable Borrower agrees
to
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Lenders such
additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount such
Lender would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder,
the Agent or such Lender may pay such Taxes and the applicable Borrower agrees
to promptly pay such additional amounts (including any penalties, interest or
expenses) as is necessary in order that the net amount received by such person
after the payment of such Taxes (including any Taxes on such additional
amount) shall equal the amount such person would have received had not such
Taxes been asserted.
If the applicable Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fail to remit to the Agent, for the account of
the respective Lenders, the required receipts or other required documentary
evidence, the applicable Borrower shall indemnify the Lenders for any
incremental Taxes, interest or penalties that may become payable by any Lender
as a result of any such failure. For purposes of this Section 5.6, a
distribution hereunder by the Agent or any Lender to or for the account of any
Lender shall be deemed a payment by the Borrower.
Upon the request of Simpson or the Agent, each Lender that is organized
under the laws of a jurisdiction other than the United States shall, prior to
the due date of any payments under the Notes, execute and deliver to Simpson
and the Agent, on or about the first scheduled payment date in each Fiscal
Year, one or more (as Simpson or the Agent may reasonably request) United
States Internal Revenue Service Forms 4224 or Forms 1001 or such other forms
or documents (or successor forms or documents), appropriately completed, as
may be applicable to establish the extent, if any, to which a payment to such
Lender is exempt from withholding or deduction of Taxes.
Notwithstanding anything to the contrary herein, the Borrowers shall not
be responsible for any Taxes on the transfer by assignment or sale of a
participation of any interest herein, nor shall the liability of the Borrowers
under this Section 5.6 be increased by reason of any assignment or sale of a
participation, except upon any change in law arising after said assignment or
sale.
SECTION 5.7. Payments, Computations, etc.
(a) Currency of Payments. Each payment on account of an amount
due from any Borrower hereunder shall be made by such Borrower to the
Agent for the pro rata account of the Lenders entitled to receive such
payment in the currency in which such amount is denominated and in such
funds as are customary at the place and time of payment for the
settlement of international payments in such currency. Upon request,
the Agent will give the applicable Borrower a statement showing the
computation used in calculating such amount, which statement shall be
conclusive in the absence of manifest error. The obligation of the
Borrowers to make each payment on account of such amount in the currency
in which such amount is denominated shall not be discharged or satisfied
by any tender, or any recovery pursuant to any judgment, which is
expressed in or converted into any other currency, except to the extent
such tender or recovery shall result in the actual receipt by the Agent
of the full amount in the appropriate currency payable hereunder. Each
Borrower agrees that its obligation to make each payment on account of
such amount in the currency in which such amount is denominated shall be
enforceable as an additional or alternative claim for recovery in such
currency of the amount (if any) by which such actual receipt shall fall
short of the full amount of such currency payable hereunder, and shall
not be affected by judgment being obtained for such amount.
(b) Conversion of Currencies. If for the purpose of obtaining
judgment in any court it is necessary to convert an amount in any
currency due from the Borrowers hereunder (hereinafter called the
"Original Currency") into another currency (hereinafter called the
"Other Currency"), the rate of exchange which shall be applied shall, to
the fullest extent permitted by applicable law, be that at which the
Agent could purchase, in Chicago, Illinois, in accordance with normal
banking procedures, the Original Currency with the Other Currency on the
Business Day preceding that on which final judgment is given.
(c) Remittance to Lenders; Basis for Payments. The Agent shall
promptly remit in same day funds to each Lender its share, if any, of
such payments received by the Agent for the account of such Lender. All
interest and fees shall be computed on the basis of the actual number of
days (including the first day but excluding the last day) occurring
during the period for which such interest or fee is payable over a year
comprised of 360 days (or, in the case of interest on Prime Rate Loan
(other than when calculated with respect to the Federal Funds Rate) or
Eurocurrency Rate Loans denominated in Pounds Sterling, 365 days or, if
appropriate, 366 days). Whenever any payment to be made shall otherwise
be due on a day which is not a Business Day, such payment shall (except
as otherwise required by clause (c) of the definition of the term
"Interest Period" with respect to Eurocurrency Rate Loans) be made on
the next succeeding Business Day and such extension of time shall be
included in computing interest and fees, if any, in connection with such
payment.
(d) Place of Payment. All payments hereunder shall be made to
Agent in immediately available funds prior to 10:00 A.M., Chicago time
on the date due at its office at 335 Madison Ave., N.Y., N.Y. 10017, or
at such other place as may be designated by the Agent to Simpson in
writing. Any payments received after such time shall be deemed received
on the next succeeding Business Day. The Agent may, but shall not be
obligated to, charge the account of any Borrower for the payment when
due of all amounts payable by such Borrower hereunder.
SECTION 5.8. Sharing of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan (other than pursuant to the terms
of Sections 5.3, 5.4 and 5.5) or Letter of Credit in excess of its pro rata
share of payments then or therewith obtained by all Lenders, such Lender shall
purchase from the other Lenders such participations in Loans made by them
and/or Letters of Credit as shall be necessary to cause such purchasing Lender
to share the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Lender, the purchase
shall be rescinded and each Lender which has sold a participation to the
purchasing Lender shall repay to the purchasing Lender the purchase price to
the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of
(a) the amount of such selling Lender's required repayment to the
purchasing Lender
to
(b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrowers agree that any Lender
so purchasing a participation from another Lender pursuant to this Section
may, to the fullest extent permitted by law, exercise all its rights of
payment (including pursuant to Section 5.9) with respect to such
participation as fully as if such Lender were the direct creditor of the
applicable Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section to share in the benefits of any recovery on such secured
claim.
SECTION 5.9. Setoff. Each Lender shall, upon the occurrence of any
Default described in clauses (a) through (d) of Section 9.1.9 or any other
Event of Default, have the right to appropriate and apply to the payment of
the Obligations owing to it (whether or not then due), and (as security for
such Obligations) each Borrower hereby grants to each Lender a continuing
security interest in, any and all balances, credits, deposits, accounts or
moneys of each such Borrower then or thereafter maintained with or otherwise
held by such Lender; provided, however, that any such appropriation and
application shall be subject to the provisions of Section 5.8. Each Lender
agrees promptly to notify the applicable Borrower and the Agent after any such
setoff and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section are in addition to
other rights and remedies (including other rights of setoff under applicable
law or otherwise) which such Lender may have.
SECTION 5.10. Use of Proceeds. The Borrowers shall use the proceeds of
each Borrowing to finance acquisitions and for general corporate purposes.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Initial Credit Extension. The obligations of the Lenders
to make the initial Credit Extension shall be subject to the prior or
concurrent satisfaction of each of the conditions precedent set forth in this
Section 6.1.
SECTION 6.1.1. Resolutions, etc. The Agent shall have received from
each Borrower a certificate, dated the date of the initial Borrowing, of its
Secretary or Assistant Secretary as to
(a) certified copies of its articles of incorporation and by-laws
or comparable documentation in the case of foreign Borrowers;
(b) resolutions of its board of directors then in full force and
effect authorizing the execution, delivery and performance of this
Agreement, the Notes and each other Loan Document to be executed by it;
(c) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement, the Notes and each
other Loan Document executed by it; and
(d) the incumbency and signature of the chief financial officer,
the treasurer and any assistant treasurer of Simpson;
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary of such Borrower canceling or
amending such prior certificate.
SECTION 6.1.2. Delivery of Notes. The Agent shall have received, for
the account of each Lender, its Notes duly executed and delivered by the
Borrowers.
SECTION 6.1.3. Outstanding Indebtedness, etc. (a) All Indebtedness
under that Third Amended and Restated Revolving Credit Agreement, dated as of
August 1, 1996, between the Borrower and Comerica Bank, a Michigan Banking
Corporation, together with all interest, all prepayment premiums and other
amounts due and payable with respect thereto, shall have been paid in full
(including, to the extent necessary, from proceeds of the initial Borrowing)
and the related commitments terminated; and all Liens securing payment of any
such Indebtedness have been released and the Agent shall have received all
Uniform Commercial Code Form UCC-3 termination statements or other instruments
as may be suitable or appropriate in connection therewith.
(b) The Borrowers shall have obtained and delivered any amendments to
agreements regarding Indebtedness existing as of the Effective Date which are
necessary to permit the transactions contemplated by this Agreement.
SECTION 6.1.4. Delivery of Simpson Guaranty. The Agent shall have
received the Simpson Guaranty duly executed and delivered by Simpson.
SECTION 6.1.5. Opinions of Counsel. The Agent shall have received the
opinion, dated the date of the initial Borrowing and addressed to the Agent
and all Lenders, from Dykema Gossett PLLC, substantially in the form of
Exhibit I hereto.
SECTION 6.1.6. Regulatory Restriction. All regulatory approvals and
licenses necessary to the execution, delivery and performance of the Agreement
and the Loan Documents shall have been obtained and be in full force and
effect and such execution, delivery and performance shall not be prohibited or
restricted in any material way pursuant to any law or regulation.
SECTION 6.1.7. Closing Fees, Expenses, etc. The Agent shall have
received for its own account, or for the account of each Lender, as the case
may be, all fees, costs and expenses due and payable pursuant to Sections 3.3
and 11.3, if then invoiced.
SECTION 6.2. All Credit Extensions. The obligation of each Lender
to make any Credit Extension (including the initial Credit Extension) shall be
subject to the satisfaction of each of the conditions precedent set forth in
this Section 6.2.
SECTION 6.2.1. Compliance with Warranties, No Default, etc. Both
before and after giving effect to any Credit Extension (but, if any Default of
the nature referred to in Section 9.1.5 shall have occurred with respect to
any other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds of any Borrowing) the following statements shall
be true and correct
(a) the representations and warranties set forth in Article VII
(excluding, however, those contained in Section 7.8) shall be true and
correct with the same effect as if then made (unless stated to relate
solely to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date);
(b) except as disclosed by the Borrowers to the Agent and the
Lenders pursuant to Section 7.8
(i) no litigation, arbitration, or governmental
investigation, proceeding or inquiry shall be pending or, to the
knowledge of the Borrowers, threatened against any Borrower which,
if adversely determined, would materially adversely affect the
business, operations, assets, revenues or financial condition of
Simpson and its Subsidiaries taken as a whole; and
(ii) no development shall have occurred in any such
litigation, arbitration or governmental investigation, proceeding
or inquiry so disclosed, which, if adversely determined, would
materially adversely affect the business, operations, assets,
revenues or financial condition of Simpson and its Subsidiaries
taken as a whole.
(c) no Default shall have then occurred and be continuing, and
neither Simpson nor any of its Subsidiaries are in violation of any
applicable law or governmental regulation or court order or decree which
would materially adversely affect the business, operations, assets,
revenues or financial condition of Simpson and its Subsidiaries taken as
a whole.
SECTION 6.2.2. Credit Request. The Agent shall have received the
related Borrowing Request or Issuance Request, as the case may be, for such
Credit Extension, which Borrowing Request or Issuance Request will include a
statement that all conditions to such Borrowing have been met. Each of the
delivery of a Borrowing Request or an Issuance Request and the acceptance by
any Borrower of the proceeds of the Borrowing or the issuance of the Letter of
Credit, as applicable, shall constitute a representation and warranty by the
Borrowers that on the date of such Borrowing (both immediately before and
after giving effect to such Borrowing and the application of the proceeds
thereof) or the issuance of the Letter of Credit, as applicable, the
statements made in Section 6.2.1 are true and correct.
SECTION 6.2.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of any Borrower or any other
Subsidiary shall be satisfactory in form and substance to the Agent and its
counsel; the Agent and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Agent or its counsel may
reasonably request.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Agreement and to make Loans and issue Letters of Credit hereunder, the
Borrowers represent and warrant unto the Agent and each Lender as set forth in
this Article VII.
SECTION 7.1. Organization, etc. Each of the Borrowers is a corporation
validly organized and existing and in good standing under the laws of the
jurisdiction of its incorporation, is duly qualified to do business and is in
good standing as a foreign corporation in each jurisdiction where the nature
of its business or properties requires such qualification, and has full power
and authority and holds all requisite governmental licenses, permits and other
approvals to enter into and perform its Obligations under this Agreement, the
Notes and each other Loan Document to which it is a party and to own and hold
under lease its property and to conduct its business substantially as
currently conducted by it.
SECTION 7.2. Due Authorization, Non-Contravention, etc. The execution,
delivery and performance by each of the Borrowers of this Agreement, the Notes
and each other Loan Document executed or to be executed by it, are within each
such Borrower's powers, have been duly authorized by all necessary action, and
do not
(a) contravene such Borrower's Organic Documents;
(b) contravene any contractual restriction, law or governmental
regulation or court decree or order binding on or affecting such
Borrower; or
(c) result in, or require the creation or imposition of, any Lien
on any of such Borrower's properties.
SECTION 7.3. Government Approval, Regulation, etc. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due
execution, delivery or performance by any of the Borrowers of this Agreement,
the Notes or any other Loan Document to which it is a party. No Borrower nor
any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 7.4. Validity, etc. This Agreement constitutes, and the Notes
and each other Loan Document executed by each of the Borrowers will, on the
due execution and delivery thereof, constitute, the legal, valid and binding
obligations of such Borrower enforceable in accordance with their respective
terms.
SECTION 7.5. Financial Information. The consolidated balance sheets of
Simpson as at December 31, 1996, and the related consolidated statements of
earnings and cash flow of Simpson, copies of which have been furnished to the
Agent and each Lender, have been prepared in accordance with GAAP consistently
applied, and present fairly the consolidated financial condition of the
corporations covered thereby as at the dates thereof and the results of their
operations for the periods then ended.
SECTION 7.6. No Material Adverse Change. Since the date of the
financial statements described in Section 7.5, there has been no material
adverse change in the financial condition, operations, assets, business or
properties of Simpson and its Subsidiaries taken as a whole.
SECTION 7.7. Environmental Warranties. Except as set forth in Item 7.7
("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying
groundwater) owned or leased by Simpson or any of its Subsidiaries have
been, and continue to be, owned or leased by Simpson and its
Subsidiaries in material compliance with all Environmental Laws;
(b) there have been no past, and there are no pending or to
Simpson's knowledge threatened
(i) claims, complaints, notices or requests for
information received by Simpson or any of its Subsidiaries with
respect to any alleged violation of any Environmental Law, or
(ii) complaints, notices or inquiries to Simpson or any
of its Subsidiaries regarding potential liability under any
Environmental Law;
(c) there have been no Releases of Hazardous Materials at, on or
under any property now or previously owned or leased by Simpson or any
of its Subsidiaries that, singly or in the aggregate, have, or may
reasonably be expected to have, a material adverse effect on the
financial condition, operations, assets, business or properties of
Simpson and its Subsidiaries;
(d) Simpson and its Subsidiaries have been issued and are in
material compliance with all permits, certificates, approvals, licenses
and other authorizations relating to environmental matters and necessary
or desirable for their businesses;
(e) no property now or previously owned or leased by Simpson or
any of its Subsidiaries is listed or proposed for listing (with respect
to owned property only) on the National Priorities List pursuant to
CERCLA, on the CERCLIS or on any similar state list of sites requiring
investigation or clean-up;
(f) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or
previously owned or leased by Simpson or any of its Subsidiaries that,
singly or in the aggregate, have, or may reasonably be expected to have,
a material adverse effect on the financial condition, operations,
assets, business or properties of Simpson and its Subsidiaries;
(g) neither Simpson nor any of its Subsidiaries has directly
transported or directly arranged for the transportation of any Hazardous
Material to any location which is listed or proposed for listing on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to material
claims against Simpson or such Subsidiary thereof for any remedial work,
damage to natural resources or personal injury, including claims under
CERCLA;
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by Simpson or
any of its Subsidiaries that, singly or in the aggregate, have, or may
reasonably be expected to have, a material adverse effect on the
financial condition, operations, assets, business or properties of
Simpson and its Subsidiaries; and
(i) no conditions exist at, on or, to Simpson's knowledge,
under any property now or previously owned or leased by Simpson or any
of its Subsidiaries which, with the passage of time, or the giving of
notice or both, would give rise to liability under any Environmental
Law.
SECTION 7.8. Litigation, Labor Controversies, etc. There is no pending
or, to the knowledge of any Borrower, threatened litigation, action,
proceeding, or labor controversy affecting Simpson or its Subsidiaries, or any
of their respective properties, businesses, assets or revenues, which may
materially adversely affect the financial condition, operations, assets,
business or properties of Simpson and its Subsidiaries taken as a whole or
which purports to affect the legality, validity or enforceability of this
Agreement, the Notes or any other Loan Document, except as disclosed in
Item 7.8 ("Litigation") of the Disclosure Schedule.
SECTION 7.9. Subsidiaries. Neither Simpson nor any other Borrower has
any Subsidiaries or Significant Subsidiaries other than those
(a) which are identified in Item 7.9 ("Existing Subsidiaries")
of the Disclosure Schedule; or
(b) which are permitted to have been acquired in accordance with
Section 8.2.4 or 8.2.5.
SECTION 7.10. Ownership of Properties. Each Borrower and each of its
Subsidiaries owns good and marketable title to all of its properties and
assets, real and personal, tangible and intangible, of any nature whatsoever
(including patents, trademarks, trade names, service marks and copyrights),
free and clear of all Liens, charges or claims (including infringement claims
with respect to patents, trademarks, copyrights and the like) except as
permitted pursuant to Section 8.2.2.
SECTION 7.11. Taxes. Each Borrower and each of its Subsidiaries has
filed all tax returns and reports required by law to have been filed by it
(unless any extension period properly obtained with respect thereto shall not
have expired) and has paid all taxes and governmental charges thereby shown to
be owing, except any such taxes or charges which are being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books.
SECTION 7.12. Pension and Welfare Plans. During the twelve-consecutive
- -month period prior to the date of the execution and delivery of
this Agreement and prior to the date of any Borrowing hereunder, no steps have
been taken to terminate any Pension Plan, and no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under section 302(f) of ERISA. No condition exists or event or transaction
has occurred with respect to any Pension Plan which might result in the
incurrence by Simpson or any member of the Controlled Group of any material
liability, fine or penalty. Except as disclosed in Item 7.12 ("Employee
Benefit Plans") of the Disclosure Schedule, neither Simpson nor any member of
the Controlled Group has any contingent liability with respect to any post-
retirement benefit under a Welfare Plan, other than liability for continuation
coverage described in Part 6 of Title I of ERISA.
SECTION 7.13. Regulations G, U and X. No Borrower is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loans will be used for a purpose which violates,
or would be inconsistent with, F.R.S. Board Regulation G, U or X. Terms for
which meanings are provided in F.R.S. Board Regulation G, U or X or any
regulations substituted therefor, as from time to time in effect, are used in
this Section with such meanings.
SECTION 7.14. Accuracy of Information. All material factual
information heretofore or contemporaneously furnished by or on behalf of any
Borrower in writing to the Agent or any Lender for purposes of or in
connection with this Agreement is, and all other such material factual
information hereafter furnished by or on behalf of such Borrower to the Agent
or any Lender will be, true and accurate in every material respect on the date
as of which such information is dated or certified and as of the date of
execution and delivery of this Agreement by the Agent and such Lender, and
such information is not, or shall not be, as the case may be, incomplete by
omitting to state any material fact necessary to make such information not
misleading.
SECTION 7.15. Solvency. Each Subsidiary Borrower is Solvent.
ARTICLE VIII
COVENANTS
SECTION 8.1. Affirmative Covenants. The Borrowers agree with the Agent
and each Lender that, until all Commitments have terminated and all
Obligations have been paid and performed in full, the Borrowers will perform
the obligations set forth in this Section 8.1.
SECTION 8.1.1. Legal Existence. Each Borrower shall, and shall cause
each Subsidiary to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction
of incorporation;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses,
franchises and contracts necessary or desirable in the normal conduct of
its business;
(c) use reasonable efforts, in the ordinary course of business,
to preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.
SECTION 8.1.2. Financial Information, Reports, Notices, etc. Simpson
will furnish, or will cause to be furnished, to each Lender and the Agent
copies of the following financial statements, reports, notices and
information:
(a) as soon as available and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year
of Simpson, consolidated balance sheets of Simpson and its Subsidiaries
as of the end of such Fiscal Quarter and consolidated statements of
earnings and cash flow of Simpson and its Subsidiaries for such Fiscal
Quarter and for the period commencing at the end of the previous Fiscal
Year and ending with the end of such Fiscal Quarter, certified by the
chief financial officer, treasurer or assistant treasurer of Simpson;
(b) as soon as available and in any event within 90 days after
the end of each Fiscal Year of Simpson a copy of the annual audit report
for such Fiscal Year for Simpson and its Subsidiaries, including therein
consolidated balance sheets of Simpson and its Subsidiaries as of the
end of such Fiscal Year and consolidated statements of earnings and cash
flow of Simpson and its Subsidiaries for such Fiscal Year, in each case
certified (without any Impermissible Qualification) in a manner
reasonably acceptable to the Agent and the Required Lenders by KPMG Peat
Marwick or other independent public accountants reasonably acceptable to
the Agent and the Required Lenders, together with a report from such
accountants containing a computation of, and showing compliance with,
each of the financial ratios and restrictions contained in Section 8.2.3
and to the effect that, in making the examination necessary for the
signing of such annual report by such accountants, they have not become
aware of any Default that has occurred and is continuing, or, if they
have become aware of such Default, describing such Default and the
steps, if any, being taken to cure it;
(c) as soon as available and in any event within 90 days after
the end of each Fiscal Year of Simpson, consolidating balance sheets of
Simpson and its Subsidiaries as of the end of such Fiscal Year and
consolidating statements of earnings and cash flow of Simpson and its
Subsidiaries for such Fiscal Year, in each case certified by the chief
financial officer, treasurer or assistant treasurer of Simpson.
(d) as soon as possible and in any event within 90 days after the
end of each Fiscal Year of Simpson, annual financial projections for the
following three Fiscal Years;
(e) together with the delivery of financial statements in
clauses (a) and (b) above, a Compliance Certificate showing (in
reasonable detail and with appropriate calculations and computations in
all respects satisfactory to the Agent) compliance with the financial
covenants set forth in Section 8.2.3 and stating that no Default has
occurred and is continuing;
(f) as soon as possible and in any event within five days after
any officer of a Borrower shall be aware of the occurrence of each
Default (other than a Default described in Section 9.1.1 or Section
9.1.5), a statement of the chief financial officer, treasurer or
assistant treasurer of Simpson setting forth details of such Default and
the action which the applicable Borrower has taken and proposes to take
with respect thereto;
(g) immediately upon the occurrence of any Default described in
Section 9.1.1 or Section 9.1.5, a statement of the chief financial
officer, treasurer or assistant treasurer of Simpson setting forth
details of such Default and the action which Simpson has taken and
proposes to take with respect thereto;
(h) within ten days after the sending or filing thereof, copies
of all reports which Simpson sends to any of its securityholders, and
all reports and registration statements which Simpson or any of its
Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange;
(i) as soon as possible and in any event within five days after
(x) the occurrence of any material adverse development with respect to
any litigation, action, proceeding, or labor controversy described in
Section 7.8 or (y) the commencement of, and if and when applicable, the
subsequent occurrence of any material adverse development with respect
to, any labor controversy, litigation, action, proceeding, in each case,
of the type described in Section 7.8, notice thereof and copies of all
documentation relating thereto;
(j) immediately upon becoming aware of the institution of any
steps by any Borrower or any other Person to terminate any Pension Plan,
or the failure to make a required contribution to any Pension Plan if
such failure is sufficient to give rise to a Lien under section 302(f)
of ERISA, or the taking of any action with respect to a Pension Plan
which could result in the requirement that the Borrower or Subsidiary
furnish a bond or other security to the PBGC or such Pension Plan, or
the occurrence of any event with respect to any Pension Plan which could
result in the incurrence by any Borrower or any Subsidiary of any
material liability, fine or penalty, or any material increase in the
contingent liability of any Borrower or any Subsidiary with respect to
any post-retirement Welfare Plan benefit, notice thereof and copies of
all documentation relating thereto;
(k) such other information respecting the condition or
operations, financial or otherwise, of any Borrower or any of its
Subsidiaries as any Lender through the Agent may from time to time
reasonably request.
SECTION 8.1.3. Compliance with Laws, etc. Each Borrower will, and will
cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders, where noncompliance would
result in a material adverse effect on the financial condition, operations,
assets, business or properties of Simpson and its Subsidiaries taken as a
whole, such compliance to include (without limitation):
(a) the maintenance and preservation of its legal existence and
qualification as a foreign corporation; and
(b) the payment, before the same become delinquent, of all taxes,
assessments and governmental charges imposed upon it or upon its
property except to the extent being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books.
SECTION 8.1.4. Maintenance of Properties. Each Borrower will, and will
cause each of its Subsidiaries to, maintain, preserve, protect and keep its
properties in good repair, working order and condition, and make necessary and
proper repairs, renewals and replacements so that its business carried on in
connection therewith may be properly conducted at all times unless such
Borrower determines in good faith that the continued maintenance of any of
its, or its Subsidiaries' properties is no longer economically desirable.
SECTION 8.1.5. Insurance. Each Borrower will, and will cause each of
its Subsidiaries to, maintain or cause to be maintained with responsible
insurance companies insurance with respect to its properties and business
(including business interruption insurance) against such casualties and
contingencies and of such types, in such amounts and with such deductibles as
is customary in the case of similar businesses and will, upon request of the
Agent, furnish to each Lender at reasonable intervals a certificate of an
Authorized Officer of Simpson setting forth the nature and extent of all
insurance maintained by Simpson and its Subsidiaries in accordance with this
Section.
SECTION 8.1.6. Books, Records and Access. Subject to Section 8.1.2,
each Borrower will maintain, and cause each of its Subsidiaries to maintain,
complete and accurate books and records in which full and correct entries in
conformity with GAAP shall be made of all dealings and transactions in
relation to its respective business and activities. Each Borrower will
permit, and cause each of its Subsidiaries to permit, access by the Lenders to
the books and records of each Borrower and each of its Subsidiaries during
normal business hours and permit, and cause each Subsidiary to permit, the
Lenders to make copies of such books and records.
SECTION 8.1.7. Environmental Covenant. Each Borrower will, and will
cause each of its Subsidiaries to,
(a) use and operate all of its facilities and properties in
material compliance with all Environmental Laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;
(b) immediately notify the Agent and provide copies upon receipt
of all material written claims, complaints, notices or inquiries
relating to the condition of its facilities and properties or compliance
with Environmental Laws; and
(c) provide such information and certifications which the Agent
may reasonably request from time to time to evidence compliance with
this Section 8.1.7.
SECTION 8.1.8. Guaranty. The Borrowers shall cause each U.S.
Subsidiary which is a Significant Subsidiary to deliver a Guaranty.
SECTION 8.2. Negative Covenants. Each Borrower agrees with the Agent
and each Lender that, until all Commitments have terminated and all
Obligations have been paid and performed in full, the Borrowers will perform
the obligations set forth in this Section 8.2.
SECTION 8.2.1. Business Activities. The Borrowers will not, and will
not permit any of their Subsidiaries to, engage, to any material extent, in
any business activity except business activities similar to present lines of
business and such activities as may be incidental or related thereto.
SECTION 8.2.2. Liens. Simpson will not, and will not permit any of its
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
asset, whether now owned or hereafter acquired, except:
(a) Liens existing on the date of this Agreement and identified
on Item 8.2.6(a)(iii) ("Ongoing Indebtedness") of the Disclosure
Schedule, securing Indebtedness outstanding on the date of this
Agreement described in said Item;
(b) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty
or being diligently contested in good faith by appropriate proceedings
and not for which adequate reserves in accordance with GAAP shall have
been set aside on its books;
(c) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not
overdue or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(d) Liens incurred in the ordinary course of business other than
in connection with borrowed money;
(e) judgment Liens in existence less than 15 days after the entry
thereof or with respect to which execution has been stayed or the
payment of which is covered in full (subject to a customary deductible)
by insurance maintained with responsible insurance companies;
(f) Liens in connection with Capitalized Lease Liabilities in
amounts permitted hereunder; and
(g) Liens on newly acquired assets of, and stock of, special
purpose entities.
SECTION 8.2.3. Financial Condition. Simpson shall not permit:
(a) the ratio, on a consolidated basis for Simpson and its
Subsidiaries as at the end of any Fiscal Quarter for the four Fiscal
Quarters then ending, of EBITDA to interest expense to be less than 3.0
to 1.0;
(b) the Funded Debt to EBITDA Ratio to exceed 3.5 to 1.0; or
(c) the Net Worth of Simpson at any time to be less than
$100,000,000 plus 50% of net income (if any) for each Fiscal Quarter
after the date hereof plus 50% of the proceeds of any equity issuance by
Simpson or any Subsidiary after the date hereof less non-cash charges
for plant closings in the U.S. after the date hereof in an amount not to
exceed $5,000,000.
SECTION 8.2.4. Acquisitions. The Borrowers will not, and will not
permit any of their Subsidiaries to, acquire all or substantially all of the
stock (or other ownership interests) or, all or substantially all of the
assets of any Person except the acquisition of stock (or other ownership
interests) or assets in an entity which is in a business that is the same,
similar, related or incidental to the business activities described in
Section 8.2.1 hereof pursuant to a transaction which is approved by the Board
of Directors of the acquired entity, with respect to which a Borrower is the
surviving entity and with respect to which the resulting entity would be in
pro forma compliance with this Agreement as evidenced by a certificate of the
chief financial officer, treasurer or assistant treasurer of Simpson in form
satisfactory to the Required Lenders, which certificate shall have been
delivered at least fourteen days prior to the consummation of such
transaction.
SECTION 8.2.5. Investments. The Borrowers will not, and will not
permit any of their Subsidiaries to, make, incur, assume or suffer to exist
any Investment in any other Person, except:
(a) Investments existing on the Effective Date and identified in
Item 8.2.5(a) ("Ongoing Investments") of the
Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as Indebtedness
pursuant to Section 8.2.6;
(d) without duplication, Investments permitted as Capital
Expenditures pursuant to Section 8.2.8;
(e) without duplication, Investments permitted under Section
8.2.4;
(f) in the ordinary course of business, Investments at any time
outstanding by any Borrower in any of its Subsidiaries, or by any such
Subsidiary in any of its Subsidiaries, by way of contributions to
capital or loans or advances, not to exceed in the aggregate 50% of the
Tangible Net Worth of Simpson and its Subsidiaries; and
(g) other Investments in an aggregate amount at any one time not
to exceed $10,000,000;
provided, however, that
(x) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent Investment"
may continue to be held notwithstanding that such Investment if made
thereafter would not comply with such requirements; and
(y) no Investment otherwise permitted by clause (e) or (f) shall
be permitted to be made if, immediately before or after giving effect
thereto, any Default shall have occurred and be continuing.
SECTION 8.2.6. Indebtedness. (a) The Borrowers will not, and will not
permit any of their Subsidiaries to, create, incur, assume or suffer to exist
or otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
(i) Indebtedness in respect of the Loans and other
Obligations;
(ii) until the date of the initial Borrowing,
Indebtedness identified in Item 8.2.6(a)(ii) ("Indebtedness to be
Paid") of the Disclosure Schedule;
(iii) Indebtedness existing as of the Effective Date
which is identified in Item 8.2.6(a)(iii) ("Ongoing Indebtedness")
of the Disclosure Schedule;
(iv) Indebtedness in an aggregate principal amount not to
exceed $10,000,000 at any time outstanding which is incurred by
any Borrower or any of its Subsidiaries to a vendor of any assets
to finance its acquisition of such assets;
(v) unsecured Indebtedness incurred in the ordinary
course of business (including open accounts extended by suppliers
on normal trade terms in connection with purchases of goods and
services, but excluding Indebtedness incurred through the
borrowing of money or Contingent Liabilities);
(vi) Indebtedness in respect of Capitalized Lease
Liabilities in amounts not in excess of $10,000,000 at any time
outstanding;
(vii) Subordinated Debt;
(viii) other Indebtedness of the Borrowers and their
Subsidiaries in an aggregate amount not to exceed $10,000,000; and
(ix) other Indebtedness, provided that the net proceeds
of such other Indebtedness are used to repay, on a pro rata basis,
Indebtedness under this Agreement and the Companion Agreement, and
further provided, that the Commitments under this Agreement and
the Commitments (as defined in the Companion Agreement) shall be
reduced, on a pro rata basis, by the amount of the net proceeds in
excess of $50,000,000 of such other Indebtedness;
provided, however, that no Indebtedness otherwise permitted by clauses (iv),
(v), (vi), (vii), (viii) or (ix) shall be permitted if, after giving effect to
the incurrence thereof, any Default shall have occurred and be continuing.
(b) Simpson shall not permit any Indebtedness of any of its
Subsidiaries to exist except:
(i) Indebtedness to Simpson or another Subsidiary; and
(ii) Indebtedness in an amount which, when added to the
amount of Indebtedness of Simpson subject to Liens (other than
Liens described in Sections 8.2.2(b) and (c)), shall not exceed
15% of the sum of the total Indebtedness of Simpson and its
Subsidiaries and the Net Worth of Simpson and its Subsidiaries.
SECTION 8.2.7. Subordinated Debt. On and at all times after the
Effective Date the Borrowers will not make any prepayments on any Subordinated
Debt.
SECTION 8.2.8. Capital Expenditures, etc. The Borrowers will not, and
will not permit any of their Subsidiaries to, make or commit to make Capital
Expenditures in any Fiscal Year, except Capital Expenditures which do not
aggregate in excess of the amount set forth below opposite such Fiscal Year:
1997 $45,000,000
1998 $45,000,000
1999 $50,000,000
2000 and
each Fiscal
Year
thereafter $55,000,000;
provided, however, that the Borrowers may make additional Capital Expenditures
for new plant openings in an aggregate amount not to exceed $20,000,000.
SECTION 8.2.9. Rental Obligations. The Borrowers will not, and will
not permit any of their Subsidiaries to, enter into at any time any
arrangement which does not create a Capitalized Lease Liability and which
involves the leasing by any Borrower or any of its Subsidiaries from any
lessor of any real or personal property (or any interest therein), except
arrangements which, together with all other such arrangements which shall then
be in effect, will not require the payment of an aggregate amount of rentals
by the Borrowers and their Subsidiaries in excess of $5,000,000 for any Fiscal
Year; provided, however, that any calculation made for purposes of this
Section shall exclude any amounts required to be expended for maintenance and
repairs, insurance, taxes, assessments, and other similar charges.
SECTION 8.2.10. Sale/Leaseback. The Borrowers will not, and will not
permit any of their Subsidiaries to, sell or otherwise transfer any assets
with the intent to lease such assets as lessee other than the transfer of
Simpson's headquarters so long as the headquarters so transferred shall have a
value not in excess of $15,000,000.
SECTION 8.2.11. Consolidation, Merger, Etc. The Borrowers will not,
and will not permit any of their Subsidiaries to, liquidate or dissolve,
consolidate with, or merge into or with, any other corporation, or purchase or
otherwise acquire all or substantially all of the assets of any Person (or of
any division thereof) except any such Subsidiary may liquidate or dissolve
voluntarily into, and may merge with and into, a Borrower or any other
Subsidiary, and the assets or stock of any Subsidiary may be purchased or
otherwise acquired by a Borrower or any other Subsidiary except that a
Borrower and any Subsidiary may enter into a consolidation, merger or
acquisition so long as a Borrower (if a party) or a Subsidiary (if no Borrower
is a party) shall be the surviving entity and the surviving entity would be in
pro forma compliance with this Agreement as evidenced by a certificate of the
chief financial officer, treasurer or assistant treasurer of Simpson in form
satisfactory to the Required Lenders.
SECTION 8.2.12. Asset Dispositions, etc. The Borrowers will not, and
will not permit any of their Subsidiaries to, sell, transfer, lease,
contribute or otherwise convey, or grant options, warrants or other rights
with respect to, all or any substantial part of its assets (including accounts
receivable and capital stock of Subsidiaries) to any Person, unless
(a) such sale, transfer, lease, contribution or conveyance is in
the ordinary course of its business; or
(b) the net book value of such assets, together with the net
book value of all other assets sold, transferred, leased, contributed or
conveyed otherwise than in the ordinary course of business by the
Borrower or any of its Subsidiaries pursuant to this clause in any
Fiscal Year, does not exceed $10,000,000 in addition to any transfer in
connection with a sale and leaseback permitted pursuant to Section
8.2.10.
SECTION 8.2.13. Transactions with Affiliates. The Borrowers will not,
and will not permit any of their Subsidiaries to, enter into, or cause, suffer
or permit to exist any arrangement or contract with any of its other
Affiliates unless such arrangement or contract is fair and equitable to such
Borrower or such Subsidiary and is an arrangement or contract of the kind
which would be entered into by a prudent Person in the position of such
Borrower or such Subsidiary with a Person which is not one of its Affiliates.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1. Listing of Events of Default. Each of the following
events or occurrences described in this Section 9.1 shall constitute an "Event
of Default".
SECTION 9.1.1. Non-Payment of Obligations. Any Borrower shall default
in the payment or prepayment when due of any principal of any Loan, any
Borrower shall default in the payment when due of any Reimbursement
Obligation, or any Borrower shall default (and such default shall continue
unremedied for a period of two days) in the payment when due of any interest
on any Loan, of any fee or of any other Obligation.
SECTION 9.1.2. Breach of Warranty. Any representation or warranty of
any Borrower made or deemed to be made hereunder or in any other Loan Document
or any other writing or certificate furnished by or on behalf of any Borrower
to the Agent or any Lender for the purposes of or in connection with this
Agreement or any such other Loan Document (including any certificates
delivered pursuant to Article VI) is or shall be incorrect when made in any
material respect.
SECTION 9.1.3. Non-Performance of Certain Covenants and Obligations.
Any Borrower shall default in the due performance and observance of any of its
obligations under Sections 8.1.2 or 8.2.
SECTION 9.1.4. Non-Performance of Other Covenants and Obligations. Any
Borrower shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document, and such default
shall continue unremedied for a period of 30 days after written notice thereof
shall have been given to any Borrower by the Agent or any Lender.
SECTION 9.1.5. Default on Other Indebtedness. A default shall occur in
the payment when due (subject to any applicable grace period or unless there
shall have been a waiver of such default by the applicable creditor), whether
by acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in Section 9.1.1) of any Borrower or any of its Subsidiaries having
a principal amount, individually or in the aggregate, in excess of $5,000,000,
or a default shall occur in the performance or observance of any obligation or
condition with respect to such Indebtedness if the effect of such default is
to accelerate the maturity of any such Indebtedness or such default shall
continue unremedied for any applicable period of time sufficient to permit the
holder or holders of such Indebtedness, or any trustee or agent for such
holders, to cause such Indebtedness to become due and payable prior to its
expressed maturity.
SECTION 9.1.6. Judgments. Any judgment or order for the payment of
money in excess of $5,000,000 shall be rendered against any Borrower or any of
its Subsidiaries and there shall be any period of 10 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
SECTION 9.1.7. Pension Plans. Any of the following events shall occur
with respect to any Pension Plan and shall continue for a period of 30 days
(a) the institution of any steps by Simpson, any member of its
Controlled Group or any other Person to terminate a Pension Plan if, as
a result of such termination, the Borrower or any such member could be
required to make a contribution to such Pension Plan, or could
reasonably expect to incur a liability or obligation to such Pension
Plan; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION 9.1.8. Change in Control. Any Change in Control shall occur.
SECTION 9.1.9. Bankruptcy, Insolvency, etc. Any Borrower or any of its
Subsidiaries shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for such Borrower or
such Subsidiary or any property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for such Borrower or such Subsidiary or
for a substantial part of the property of any thereof, and such trustee,
receiver, sequestrator or other custodian shall not be discharged within
60 days, provided that such Borrower, and each of its Subsidiaries
hereby expressly authorizes the Agent and each Lender to appear in any
court conducting any relevant proceeding during such 60- day period to
preserve, protect and defend their rights under the Loan Documents;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or
liquidation proceeding, in respect of such Borrower or such Subsidiary,
and, if any such case or proceeding is not commenced by such Borrower or
such Subsidiary, such case or proceeding shall be consented to or
acquiesced in by such Borrower or such Subsidiary or shall result in the
entry of an order for relief or shall remain for 60 days undismissed or
any order of attachment is issued against any substantial part of the
assets of such Borrower, any of its Subsidiaries which is not released
within 30 days of service provided, that each Borrower and each of its
Subsidiaries hereby expressly authorizes the Agent and each Lender to
appear in any court conducting any such case or proceeding during such
60-day period to preserve, protect and defend their rights under the
Loan Documents; or
(e) take any action authorizing, or in furtherance of, any of the
foregoing.
SECTION 9.1.10. Impairment of Security, etc. Any Loan Document, or any
Lien granted thereunder, shall (except in accordance with its terms), in whole
or in part, terminate, cease to be effective or cease to be the legally valid,
binding and enforceable obligation of any party thereto; any Borrower, or any
other party shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability; or any Lien
securing any Obligation shall, in whole or in part, cease to be a perfected
first priority Lien.
SECTION 9.1.11. Governmental Approvals. Any material approval or
license granted to any Borrower with respect to this Agreement, any Loan
Document or the business of such Borrower shall not be in full force and
effect.
SECTION 9.2. Action if Bankruptcy. If any Event of Default described
in clauses (a) through (d) of Section 9.1.9 shall occur with respect to any
Borrower or any of its Subsidiaries, the Commitments (if not theretofore
terminated) shall automatically terminate and the outstanding principal amount
of all outstanding Loans and all other Obligations shall automatically be and
become immediately due and payable, without notice or demand.
SECTION 9.3. Action if Other Event of Default. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of
Section 9.1.9 with respect to any Borrower or any of its Subsidiaries) shall
occur for any reason, and be continuing, the Agent, upon the direction of the
Required Lenders, shall by notice to Simpson declare all or any portion of the
outstanding principal amount of the Loans and other Obligations to be due and
payable and/or the Commitments (if not theretofore terminated) to be
terminated, whereupon the full unpaid amount of such Loans and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, the Commitments shall terminate.
ARTICLE X
THE AGENT
SECTION 10.1. Actions. Each Lender hereby appoints ABN as its Agent
under and for purposes of this Agreement, the Notes and each other Loan
Document. Each Lender authorizes the Agent to act on behalf of such Lender
under this Agreement, the Notes and each other Loan Document and, in the
absence of other written instructions from the Required Lenders received from
time to time by the Agent (with respect to which the Agent agrees that it will
comply, except as otherwise provided in this Section or as otherwise advised
by counsel), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto.
Each Lender hereby indemnifies (which indemnity shall survive any termination
of this Agreement) the Agent, pro rata according to such Lender's Percentage,
from and against any and all liabilities, obligations, losses, damages,
claims, costs or expenses of any kind or nature whatsoever which may at any
time be imposed on, incurred by, or asserted against, the Agent in any way
relating to or arising out of this Agreement, the Notes and any other Loan
Document, including reasonable attorneys' fees, and as to which the Agent is
not reimbursed by the Borrowers; provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations,
losses, damages, claims, costs or expenses which are determined by a court of
competent jurisdiction in a final proceeding to have resulted solely from the
Agent's gross negligence or wilful misconduct. The Agent shall not be
required to take any action hereunder, under the Notes or under any other Loan
Document, or to prosecute or defend any suit in respect of this Agreement, the
Notes or any other Loan Document, unless it is indemnified hereunder to its
satisfaction. If any indemnity in favor of the Agent shall be or become, in
the Agent's determination, inadequate, the Agent may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given.
SECTION 10.2. Funding Reliance, etc. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 P.M., New
York time, on the Business Day prior to a Borrowing with respect to Borrowings
in Dollars and by 9:00 A.M., New York time, two Business Days prior to a
Borrowing in any other currency that such Lender will not make available the
amount which would constitute its Percentage of such Borrowing on the date
specified therefor, the Agent may assume that such Lender has made such amount
available to the Agent and, in reliance upon such assumption, make available
to the applicable Borrower a corresponding amount. If and to the extent that
such Lender shall not have made such amount available to the Agent, such
Lender and the applicable Borrower agrees to repay the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date the Agent made such amount available to such Borrower to the
date such amount is repaid to the Agent, at the interest rate applicable at
the time to Loans comprising such Borrowing.
SECTION 10.3. Exculpation. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for any action
taken or omitted to be taken by it under this Agreement or any other Loan
Document, or in connection herewith or therewith, except for gross negligence
or wilful misconduct, nor responsible for any recitals or warranties herein or
therein, nor for the effectiveness, enforceability, validity or due execution
of this Agreement or any other Loan Document, nor to make any inquiry
respecting the performance by any Borrower of its obligations hereunder or
under any other Loan Document. Any such inquiry which may be made by the
Agent shall not obligate it to make any further inquiry or to take any action.
The Agent shall be entitled to rely upon advice of counsel concerning legal
matters and upon any notice, consent, certificate, statement or writing which
the Agent believes to be genuine and to have been presented by a proper
Person.
SECTION 10.4. Successor. The Agent may resign as such at any time upon
at least 30 days' prior notice to the Borrowers and all Lenders, so long as a
successor Agent shall have been appointed as of the effectiveness of such
resignation. If the Agent at any time shall resign, the Required Lenders may
appoint another Lender (with the consent of Simpson which shall not be
unreasonably withheld) as a successor Agent which shall thereupon become the
Agent hereunder. If no successor Agent shall have been so appointed by the
Required Lenders within 30 days after the retiring Agent's giving notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent (with the consent of Simpson which shall not be unreasonably
withheld), which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State thereof) or a
U.S. branch or agency of a commercial banking institution, and having a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall be entitled to receive from the retiring Agent such documents of
transfer and assignment as such successor Agent may reasonably request, and
shall thereupon succeed to and become vested with all rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation hereunder as the Agent, the provisions of
(a) this Article X shall inure to its benefit as to, and the
Agent shall continue to be responsible hereunder for, any actions taken
or omitted to be taken by it while it was the Agent under this
Agreement; and
(b) Section 11.3, Section 11.4 and Section 11.5 shall continue to
inure to its benefit.
The Borrowers shall not be responsible for payment of any costs related to the
resignation of the Agent and the substitution of a new Agent. The resigning
Agent shall pay to the successor Agent any portion of the Agent's annual fee
paid to it applicable to the period after the effectiveness of such
resignation.
SECTION 10.5. Loans or Letters of Credit Issued by ABN. ABN shall have
the same rights and powers with respect to (x) the Loans made by it or any of
its Affiliates, (y) the Notes held by it or any of its Affiliates, and (z) its
participating interests in the Letters of Credit as any other Lender and may
exercise the same as if it were not the Agent. ABN and its Affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with any Borrower or any Subsidiary or Affiliate of any Borrower as
if ABN were not the Agent hereunder.
SECTION 10.6. Credit Decisions. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrowers, this Agreement, the
other Loan Documents (the terms and provisions of which being satisfactory to
such Lender) and such other documents, information and investigations as such
Lender has deemed appropriate, made its own credit decision to extend its
Commitments. Each Lender also acknowledges that it will, independently of the
Agent and each other Lender, and based on such other documents, information
and investigations as it shall deem appropriate at any time, continue to make
its own credit decisions as to exercising or not exercising from time to time
any rights and privileges available to it under this Agreement or any other
Loan Document.
SECTION 10.7. Copies, etc. The Agent shall give prompt notice to each
Lender of each notice or request required or permitted to be given to the
Agent by any Borrower pursuant to the terms of this Agreement (unless
concurrently delivered to the Lenders by such Borrower). The Agent will
distribute to each Lender such financial statements and compliance
certificates received by the Agent from any Borrower for distribution to the
Lenders by the Agent in accordance with the terms of this Agreement.
SECTION 10.8. Documentation Agent. Each Lender hereby appoints Comerica
Bank as Documentation Agent for the Lenders. The Documentation Agent shall
have no rights, powers, obligations, liabilities, responsibilities or duties
under this Agreement other than those applicable to all Lenders as such. Each
Lender acknowledges that it has not relied and will not rely on the
Documentation Agent in deciding to enter into this Agreement or in taking or
not taking action hereunder.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing
and consented to by Simpson and the Required Lenders; provided, however, that
no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action
be taken by all the Lenders or by the Required Lenders shall be
effective unless consented to by each Lender;
(b) modify this Section 11.1, change the definition of "Required
Lenders", increase any Commitment Amount or the Percentage of any
Lender, reduce any fees described in Article III, or extend the
Commitment Termination Date shall be made without the consent of each
Lender and each holder of a Note;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment or prepayment of principal of or interest on any
Loan (or reduce the principal amount of or rate of interest on any Loan)
shall be made without the consent of the holder of that Note evidencing
such Loan;
(d) affect adversely the interests, rights or obligations of the
Issuer in its capacity as the Issuer shall be made without the consent
of the Issuer;
(e) affect adversely the interests, rights or obligations of the
Agent in its capacity as the Agent shall be made without consent of the
Agent; or
(f) change the definitions of "Available Currency",
"Determination Date" or "Dollar Amount" without the consent of each
Lender.
No failure or delay on the part of the Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand
on any Borrower in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by the Agent, any
Lender or the holder of any Note under this Agreement or any other Loan
Document shall, except as may be otherwise stated in such waiver or approval,
be applicable to subsequent transactions. No waiver or approval hereunder
shall require any similar or dissimilar waiver or approval thereafter to be
granted hereunder.
SECTION 11.2. Notices. All notices and other communications provided
to any party hereto under this Agreement or any other Loan Document shall be
in writing or by facsimile and addressed, delivered or transmitted to such
party at its address or facsimile number set forth below its signature hereto
or set forth in the Lender Assignment Agreement or at such other address or
facsimile number as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid or
if properly addressed and sent by pre-paid courier service, shall be deemed
given when received; any notice, if transmitted by facsimile, shall be deemed
given when transmitted. Any notice to a Borrower other than Simpson shall
also be sent to Simpson.
SECTION 11.3. Payment of Costs and Expenses. Simpson agrees to pay on
demand all reasonable out-of-pocket expenses of the Agent (including the
reasonable fees and out-of-pocket expenses of counsel to the Agent and of
local counsel, if any, who may be retained by counsel to the Agent) in
connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from
time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated; and
(b) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
Simpson further agrees to pay, and to save the Agent and the Lenders harmless
from all liability for, any stamp or other taxes which may be payable in
connection with the execution or delivery of this Agreement, the borrowings
hereunder, the issuance of the Notes, the issuance of the Letters of Credit,
or any other Loan Documents. Simpson agrees to reimburse the Agent and each
Lender upon demand for all reasonable out-of-pocket expenses (including
attorneys' fees and legal expenses) incurred by the Agent or such Lender in
connection with the enforcement of any Obligations.
SECTION 11.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the
Commitments, Simpson hereby indemnifies, exonerates and holds harmless the
Agent, the Issuer and each Lender and each of their respective officers,
directors, employees and agents (collectively, the "Indemnified Parties") free
and harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to
the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan or the use
of any Letter of Credit;
(b) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties;
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by any Borrower or any of its
Subsidiaries of all or any portion of the stock or assets of any Person,
whether or not the Agent or such Lender is party thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the Release by any Borrower or any of
its Subsidiaries of any Hazardous Material; or
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by any Borrower or any Subsidiary thereof of
any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the
control of, the Borrower or such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
gross negligence or wilful misconduct. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, Simpson hereby
agrees to make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
SECTION 11.5. Survival. The obligations of the Borrower under
Sections 5.3, 5.4, 5.5, 5.6, 11.3, and 11.4, and the obligations of the
Lenders under Section 10.1, shall in each case survive any termination of this
Agreement, the payment in full of all Obligations and the termination of all
Commitments. The representations and warranties made by the Borrower in this
Agreement and in each other Loan Document shall survive the execution and
delivery of this Agreement and each such other Loan Document.
SECTION 11.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or such Loan Document or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 11.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or such other Loan
Document or any provisions hereof or thereof.
SECTION 11.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each
of which shall be executed by the Borrowers and the Agent and be deemed to be
an original and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrowers and each Lender (or notice thereof
satisfactory to the Agent) shall have been received by the Agent and notice
thereof shall have been given by the Agent to each Borrower and each Lender.
SECTION 11.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE
NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. This
Agreement, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter
hereof and supersede any prior agreements, written or oral, with respect
thereto.
SECTION 11.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) the Borrowers may not assign or transfer their rights or
obligations hereunder without the prior written consent of the Agent and
all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders
are subject to Section 11.11.
SECTION 11.11. Sale and Transfer of Loans and Notes; Participations in
Loans and Notes. Each Lender may assign, or sell participations in, its Loans
and Commitments to one or more commercial banks in accordance with this
Section 11.11.
SECTION 11.11.1. Assignments. Any Lender, with the written consents of
Simpson and the Agent (which consents shall not be unreasonably delayed or
withheld and which consent, in the case of Simpson, shall be deemed to have
been given in the absence of a written notice delivered by Simpson to the
Agent, on or before the seventh Business Day after receipt by Simpson of such
Lender's request for consent, stating, in reasonable detail, the reasons why
Simpson proposes to withhold such consent and which consent of Simpson shall
not be required, if a Default shall have occurred and be continuing) may at
any time assign and delegate to one or more financial institutions, (each
Person described in either of the foregoing clauses as being the Person to
whom such assignment and delegation is to be made, being hereinafter referred
to as an "Assignee Lender"), all or any fraction of such Lender's total Loans
and Commitments (which assignment and delegation shall be of a constant, and
not a varying, percentage of all the assigning Lender's Loans and Commitments)
in a minimum aggregate amount of $10,000,000; provided, however, that any such
Assignee Lender will comply, if applicable, with the provisions contained in
the last sentence of Section 5.6 and further, provided, however, that, each
Borrower and the Agent shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests so assigned and
delegated to an Assignee Lender until the Assignment Effective Date (the
"Assignment Effective Date").
The Assignment Effective Date shall be the date when all the following
conditions shall have been met:
(i) five Business Days shall have passed after written notice of
such assignment and delegation, together with payment instructions,
addresses and related information with respect to such Assignee Lender,
shall have been given to Simpson and the Agent by such Lender and such
Assignee Lender,
(ii) such Assignee Lender shall have executed and delivered to
Simpson and the Agent a Lender Assignment Agreement, accepted by the
Agent, and
(iii) the processing fees described below shall have been paid.
From and after the date that the Agent accepts such Lender Assignment
Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to
have become a party hereto and to the extent that rights and obligations
hereunder have been assigned and delegated to such Assignee Lender in
connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and
(y) the assignor Lender, to the extent that rights and obligations hereunder
have been assigned and delegated by it in connection with such Lender
Assignment Agreement, shall be released from its obligations hereunder and
under the other Loan Documents. Within five Business Days after receipt of
notice that the Agent has received an executed Lender Assignment Agreement,
the Borrowers shall execute and deliver to the Agent (for delivery to the
relevant Assignee Lender) new Notes evidencing such Assignee Lender's assigned
Loans and Commitments and, if the assignor Lender has retained Loans and
Commitments hereunder, replacement Notes in the principal amount of the Loans
and Commitments retained by the assignor Lender hereunder (such Notes to be in
exchange for, but not in payment of, those Notes then held by such assignor
Lender). Each such Note shall be dated the date of the predecessor Notes.
The assignor Lender shall mark the predecessor Notes "exchanged" and deliver
them to such Borrower. Accrued interest on that part of the predecessor Notes
evidenced by the new Notes, and accrued fees, shall be paid as provided in the
Lender Assignment Agreement. Accrued interest on that part of the predecessor
Notes evidenced by the replacement Notes shall be paid to the assignor Lender.
Accrued interest and accrued fees shall be paid at the same time or times
provided in the predecessor Notes and in this Agreement. Such assignor Lender
or such Assignee Lender must also pay a processing fee to the Agent upon
delivery of any Lender Assignment Agreement in the amount of $3500. Any
attempted assignment and delegation not made in accordance with this Section
11.11.1 shall be null and void. Nothing herein shall prohibit any Lender from
pledging or assigning any Note or any of its rights under this Agreement to
any Federal Reserve Bank in accordance with applicable law.
SECTION 11.11.2. Participations. Any Lender may at any time sell to
one or more commercial banks (each of such commercial banks being herein
called a "Participant") participating interests (or a sub-participating
interest, in the case of a Lender's participating interest in a Letter of
Credit) in any of the Loans, Commitments, or other interests of such Lender
hereunder; provided, however, that
(a) no participation or sub-participation contemplated in this
Section 11.11 shall relieve such Lender from its Commitments or its
other obligations hereunder or under any other Loan Document,
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations,
(c) each Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and each of the other Loan Documents,
(d) no Participant, unless such Participant is an Affiliate of
such Lender, or is itself a Lender, shall be entitled to require such
Lender to take or refrain from taking any action hereunder or under any
other Loan Document, except that such Lender may agree with any
Participant that such Lender will not, without such Participant's
consent, take any actions of the type described in clause (b) or (c) of
Section 11.1, and
(e) no Borrower shall be required to pay any amount under
Section 5.6 that is greater than the amount which it would have been
required to pay had no participating interest been sold.
The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 5.3, 5.4, 5.5, 5.6, 5.8, 5.9, 11.3 and 11.4 shall be considered a
Lender.
SECTION 11.11.3. Information. Each Lender is hereby authorized to
disclose all information concerning the Borrowers to assignees, participants,
potential assignees and potential participants.
SECTION 11.11.4. Confidentiality. The Lenders shall hold all non-public
information (which has been identified as such by a Borrower) obtained
pursuant to the requirements of this Agreement in accordance with their
customary procedures for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure to any of their examiners, Affiliates, outside auditors, counsel
and other professional advisors in connection with this Agreement or as
reasonably required by any bona fide transferee, participant or assignee or as
required or requested by any governmental agency or representative thereof or
pursuant to legal process; provided however, that
(a) unless specifically prohibited by applicable law or court
order, each Lender shall notify the Borrowers of any request by any
governmental agency or representative thereof (other than any such
request in connection with an examination of the financial condition of
such Lender by such governmental agency) for disclosure of any such non-
public information prior to disclosure of such information;
(b) prior to any such disclosure pursuant to this Section
11.11.4, each Lender shall require any such bona fide transferee,
participant and assignee receiving a disclosure of non-public
information to agree in writing
(i) to be bound by this Section 11.11.4; and
(ii) to require such Person to require any other Person to
whom such Person discloses such non-public information to be
similarly bound by this Section 11.11.4; and
(c) except as may be required by an order of a court of competent
jurisdiction and to the extent set forth therein, no Lender shall be
obligated or required to return any materials furnished by the Borrowers
or any Subsidiary.
SECTION 11.12. Additional Borrowers.
Each Subsidiary of Simpson may become a Borrower hereunder upon
becoming such a Subsidiary. Simpson shall deliver an Additional
Borrower Certificate executed by any such Subsidiary and Simpson
together with such supporting resolutions, incumbency certificates and
opinions of counsel as the Agent may reasonably request. Such
Subsidiary shall thereupon become a party hereto and a Borrower
hereunder and shall be (i) entitled to all rights and benefits of a
Borrower hereunder and under each instrument executed pursuant hereto
and (ii) subject to all obligations of a Borrower hereunder and
thereunder.
SECTION 11.13. Joint and Several Liability.
(a) The Obligations of the Borrowers are joint and several;
except that each Subsidiary Borrower which is not a U.S. Subsidiary of
Simpson shall be liable only for Loans made to it and with respect to
Letters of Credit issued for its account.
(b) Each Borrower acknowledges and agrees that it is the intent
of the parties that each Borrower be primarily liable for the
Obligations as a joint and several obligor (except as specifically set
forth in this Section 11.13). It is the intention of the parties that
with respect to liability of any Borrower hereunder arising solely by
reason of its being jointly and severally liable for Borrowings and
Loans taken by other Borrowers, the obligations of such Borrower shall
be absolute, unconditional and irrevocable irrespective of:
(i) any lack of validity, legality or enforceability of
this Agreement or any Note as to any other Borrower;
(ii) the failure of any Lender or any holder of any Note
(A) to enforce any right or remedy against any
Borrower or any other Person (including any guarantor) under
the provisions of this Agreement, the Note, or otherwise, or
(B) to exercise any right or remedy against any
guarantor of, or collateral securing, any Obligations;
(iii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any
other extension, compromise or renewal of any Obligations;
(iv) any reduction, limitation, impairment or termination
of any Obligations with respect to any other Borrower for any
reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and each
Borrower hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event
or occurrence affecting, any Obligations with respect to any other
Borrower;
(v) any addition, exchange, release, surrender or
nonperfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to departure from, any
guaranty, held by any Lender or any holder of the Note securing
any of the Obligations; or
(vi) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable
discharge of, any other Borrower, any surety or any guarantor.
Each Borrower agrees that its joint and several liability
hereunder shall continue to be effective or be reinstated, as the case
may be, if at any time any payment (in whole or in part) of any of the
Obligations is rescinded or must be restored by any Lender or any holder
of any Note, upon the insolvency, bankruptcy or reorganization of any
Borrower as though such payment had not been made.
Each Borrower hereby expressly waives: (a) notice of the Lenders'
acceptance of this Agreement; (b) notice of the existence or creation or
non payment of all or any of the Obligations; (e) presentment, demand,
notice of dishonor, protest, and all other notices whatsoever other than
notices expressly provided for in this Agreement; and (d) all diligence
in collection or protection of or realization upon the Obligations or
any thereof, any obligation hereunder, or any security for or guaranty
of any of the foregoing.
No delay on any of the Lenders' part in the exercise of any right
or remedy shall operate as a waiver thereof, and no single or partial
exercise by any of the Lenders of any right or remedy shall preclude
other or further exercise thereof or the exercise of any other right or
remedy. No action of any of the Lenders permitted hereunder shall in
any way affect or impair any such Lenders' rights or any Borrower's
obligations under this Agreement.
Notwithstanding the foregoing, each Borrower other than Simpson
shall be liable for the Obligations for the maximum amount of such
liability that can be hereby incurred without rendering this Agreement,
any Note or any other Loan Document voidable under applicable law,
including applicable law relating to fraudulent conveyance or fraudulent
transfer, and not for any greater amount.
Each Borrower hereby represents and warrants to each of the
Lenders that it now has and will continue to have independent means of
obtaining information concerning the Borrowers' affairs, financial
condition and business. Lenders shall not have any duty or
responsibility to provide any Borrower with any credit or other
information concerning the Borrowers' affairs, financial condition or
business which may come into the Lenders' possession.
11.14. Judgment Currency. Each Borrower, the Agent and each Lender
hereby agree that if, in the event that a judgment is given in relation to any
sum due to the Agent or any Lender hereunder, such judgment is given in a
currency (the "Judgment Currency") other than that in which such sum was
originally denominated (the "Original Currency"), the Borrower jointly and
severally agree to indemnify the Agent or such Lender, as the case may be, to
the extent that the amount of the Original Currency which could have been
purchased by the Agent in accordance with normal banking procedures on the
Business Day following receipt of such sum is less than the sum which could
have been so purchased by the Agent had such purchase been made on the day on
which such judgment was given or, if such day is not a Business Day, on the
Business Day immediately preceding the giving of such judgment. The
agreements in this Section shall survive payment of all other Obligations.
SECTION 11.15. Other Transactions. Nothing contained herein shall
preclude the Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with any Borrower or any of its Affiliates in which any Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 11.16. Consent to Jurisdiction. THE BORROWERS HEREBY
ABSOLUTELY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS OR THE UNITED STATES OF AMERICA FOR THE
NORTHERN DISTRICT OF ILLINOIS IN CONNECTION WITH ANY ACTIONS OR PROCEEDINGS
BROUGHT AGAINST ANY OF THE BORROWERS BY THE AGENT OR THE LENDER ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE NOTES OR THE BANKING RELATIONSHIP GIVING
RISE TO THIS AGREEMENT, AND HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY
SUCH COURT. THE BORROWERS HEREBY WAIVE AND AGREE NOT TO ASSERT IN SUCH ACTION
OR PROCEEDING, IN EACH CASE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY CLAIM THAT (a) ANY BORROWER IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT; (b) ANY BORROWER IS IMMUNE FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO IT OR
ITS PROPERTY; (c) ANY SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM; OR (d) THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. IN ANY SUCH ACTION OR PROCEEDING, ANY BORROWER HEREBY ABSOLUTELY
AND IRREVOCABLY WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, DECLARATION
OR OTHER PROCESS AND HEREBY ABSOLUTELY AND IRREVOCABLY AGREES THAT THE SERVICE
THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED AIRMAIL, POSTAGE PREPAID,
DIRECTED TO SUCH BORROWER AT THE ADDRESS SHOWN ON THE SIGNATURE PAGE HEREOF
(OR AT SUCH OTHER ADDRESS AS SUCH BORROWER SHALL LAST SPECIFY TO THE AGENT IN
WRITING). NOTHING CONTAINED IN THIS AGREEMENT OR THE NOTES SHALL AFFECT ANY
RIGHT THAT THE AGENT, THE LENDERS OR ANY BORROWER MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR THE
BANKING RELATIONSHIP GIVING RISE TO THIS AGREEMENT AGAINST ANY BORROWER, THE
AGENT OR THE LENDERS, AS THE CASE MAY BE, OR THEIR PROPERTIES IN THE COURTS OF
ANY OTHER JURISDICTION, OR ANY RIGHT THAT THE LENDERS, THE AGENT OR ANY
BORROWER MAY HAVE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 11.17. Waiver of Jury Trial. THE AGENT, THE LENDERS AND THE
BORROWERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWERS. THE
BORROWERS ACKNOWLEDGE AND AGREE THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH
SUCH OTHER LOAN DOCUMENT.
PAGE
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
SIMPSON INDUSTRIES, INC.
By:
Its:
Address: 47603 Halyard Drive
Plymouth, Michigan 48170
Facsimile No.: (313) 207-6680
Attention: James E. Garpow
with a copy to
Mr. Frank Zinn
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
ABN AMRO BANK N.V., CHICAGO BRANCH,
AS AGENT
By
Title:
By
Title:
Address: 135 South LaSalle Street
Chicago, Illinois 60674
Facsimile No.: (312) 606-8425
Attention: Laurie Flom
COMERICA BANK,
AS DOCUMENTATION AGENT
By
Title
By
Title
Address: 500 Woodward Avenue
Detroit, Michigan 48226
Facsimile No.: (313) 222-3776
Attention: Louis A. Zedan
PERCENTAGE LENDERS
30.0% ABN AMRO BANK N.V., CHICAGO BRANCH
By
Title:
By
Title:
Domestic/
Eurodollar
Office: 135 South LaSalle Street
Chicago, Illinois 60674
Facsimile No.: (312) 606-8425
Attention: Laurie Flom
30.0% COMERICA BANK
By
Title:
By
Title:
Address: 500 Woodward Avenue
Detroit, Michigan 48226
Facsimile No.: (313) 222-3776
Attention: Louis A. Zedan
20.0% HARRIS TRUST AND SAVINGS BANK
By
Title:
By
Title:
Address: 111 West Monroe Street
Chicago, Illinois 60603
Facsimile No.: (312) 461-2591
Attention: Peter Dancy<PAGE>
20.0% THE BANK OF NEW YORK
By
Title:
By
Title:
Address: One Wall Street, 22nd Floor
New York, New York 10286
Facsimile No.: (212) 635-6434
Attention: William Barnum
U.S. $50,000,000
CREDIT AGREEMENT,
(364 Day)
dated as of June 17, 1997
among
SIMPSON INDUSTRIES, INC.
certain other Borrowers
as the Borrowers,
CERTAIN COMMERCIAL LENDING INSTITUTIONS
as the Lenders,
ABN AMRO BANK N.V.
as the Agent for the Lenders
and
COMERICA BANK
as Documentation Agent for the Lenders
PAGE
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
I DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . . . . . . .1
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . .1
1.2. Use of Defined Terms. . . . . . . . . . . . . . . . 19
1.3. Cross-References. . . . . . . . . . . . . . . . . . 19
1.4. Accounting and Financial Determinations . . . . . . 19
IICOMMITMENTS, BORROWING PROCEDURES AND NOTES. . . . . . . . . 19
2.1. Commitments . . . . . . . . . . . . . . . . . . . . 19
2.1.1. Revolving Loan Commitment. . . . . . . . 19
2.1.2. Commitment to Issue Letters of Credit. . 20
2.1.3. Lenders Not Permitted or
Required To Make Loans or
Issue or Participate in Letters
of Credit Under Certain
Circumstances. . . . . . . . . . . . . . 20
2.2. Reduction of Commitment Amounts . . . . . . . . . . 21
2.3. Borrowing Procedure . . . . . . . . . . . . . . . . 21
2.4. Continuation and Conversion Elections . . . . . . . 22
2.5. Funding . . . . . . . . . . . . . . . . . . . . . . 22
2.6. Notes . . . . . . . . . . . . . . . . . . . . . . . 23
2.7. Swing Line Commitment . . . . . . . . . . . . . . . 23
2.8. Borrowing Procedure Swing Loans . . . . . . . . . 23
2.9. Refunding of Swing Loans. . . . . . . . . . . . . . 23
2.10. Participations in Swing Loans. . . . . . . . . . . 24
2.11. Swing Loan Participation Obligations Unconditional 24
2.12. Conditions to Swing Loans. . . . . . . . . . . . . 25
2.13. Swing Note . . . . . . . . . . . . . . . . . . . . 25
2.14. Stated Maturity Date Extension . . . . . . . . . . 26
III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES. . . . . . . . 27
3.1. Repayments and Prepayments. . . . . . . . . . . . . 27
3.2. Interest Provisions . . . . . . . . . . . . . . . . 28
3.2.1. Rates. . . . . . . . . . . . . . . . . . 28
3.2.2. Post-Maturity Rates. . . . . . . . . . . 28
3.2.3. Payment Dates. . . . . . . . . . . . . . 29
3.3. Fees. . . . . . . . . . . . . . . . . . . . . . . . 29
3.3.1. Commitment Fee . . . . . . . . . . . . . 29
3.3.2. Arrangement Fee; Agent's Fee . . . . . . 30
3.3.3. Letter of Credit Face Amount Fee . . . . 30
3.3.4. Letter of Credit Fronting Fee. . . . . . 30
3.3.5. Letter of Credit Administrative Fee. . . 31
IV LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . .. 31
4.1. Issuance Requests . . . . . . . . . . . . . . . . . 31
4.2. Issuances and Extensions. . . . . . . . . . . . . . 32
4.3. Expenses. . . . . . . . . . . . . . . . . . . . . . 32
4.4. Other Lenders' Participation. . . . . . . . . . . . 32
4.5. Disbursements . . . . . . . . . . . . . . . . . . . 33
4.6. Reimbursement . . . . . . . . . . . . . . . . . . . 34
4.7. Deemed Disbursements. . . . . . . . . . . . . . . . 34
4.8. Nature of Reimbursement Obligations . . . . . . . . 35
4.9. Increased Costs; Indemnity. . . . . . . . . . . . . 36
V GCERTAIN EUROCURRENCY RATE AND OTHER PROVISIONS. . . . . 37
5.1. Eurocurrency Rate Lending Unlawful. . . . . . . . . 37
5.2. Deposits Unavailable. . . . . . . . . . . . . . . . 38
5.3. Increased Eurocurrency Rate Loan Costs, etc . . . . 38
5.4. Funding Losses. . . . . . . . . . . . . . . . . . . 39
5.5. Increased Capital Costs . . . . . . . . . . . . . . 40
5.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . 40
5.7. Payments, Computations, etc . . . . . . . . . . . . 41
5.8. Sharing of Payments . . . . . . . . . . . . . . . . 43
5.9. Setoff. . . . . . . . . . . . . . . . . . . . . . . 44
5.10. Use of Proceeds. . . . . . . . . . . . . . . . . . 44
VI CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . .. 44
6.1. Initial Credit Extension. . . . . . . . . . . . . . 44
6.1.1. Resolutions, etc . . . . . . . . . . . . .. 44
6.1.2. Delivery of Notes. . . . . . .. . . . . . . 45
6.1.3. Outstanding Indebtedness, etc. . . .. . . . 45
6.1.4 Delivery of Simpson Guaranty . . . . .. . . 45
6.1.5. Opinions of Counsel. . . . . . . . . . .. . 45
6.1.6. Regulatory Restriction . . . . . . .. . . . 45
6.1.7. Closing Fees, Expenses, etc. . . .. . . . . 46
6.2. All Credit Extensions. . . . . . . . . . . . .. . . 46
6.2.1. Compliance with Warranties, No Default, etc.46
6.2.2. Credit Request . . . . . . . . . . . . . .. 47
6.2.3. Satisfactory Legal Form. . . . . . . . .. . 47
VII REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . 47
7.1. Organization, etc . . . . . . . . . . . . . . . . . 47
7.2. Due Authorization, NonContravention, etc. . . . . . 47
7.3. Government Approval, Regulation, etc. . . . . . . . 48
7.4. Validity, etc . . . . . . . . . . . . . . . . . . . 48
7.5. Financial Information . . . . . . . . . . . . . . . 48
7.6. No Material Adverse Change. . . . . . . . . . . . . 48
7.7. Environmental Warranties. . . . . . . . . . . . . . 48
7.8. Litigation, Labor Controversies, etc. . . . . . . . 50
7.9. Subsidiaries. . . . . . . . . . . . . . . . . . . . 50
7.10. Ownership of Properties. . . . . . . . . . . . . . 50
7.11. Taxes. . . . . . . . . . . . . . . . . . . . . . . 51
7.12. Pension and Welfare Plans. . . . . . . . . . . . . 51
7.13. Regulations G, U and X . . . . . . . . . . . . . . 51
7.14. Accuracy of Information. . . . . . . . . . . . . . 51
7.15. Solvency . . . . . . . . . . . . . . . . . . . . 52
VIII COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . 52
8.1. Affirmative Covenants . . . . . . . . . . . . . . . 52
8.1.1. Legal Existence. . . . . . . . . . . . . .. 52
8.1.2. Financial Information, Reports, Notices etc 52
8.1.3. Compliance with Laws, etc. . . .. . . . . . 54
8.1.4. Maintenance of Properties. . . .. . . . . . 55
8.1.5. Insurance. . . . . . . . . . . . . . .. . . 55
8.1.6. Books, Records and Access. . . . . . .. . . 55
8.1.7. Environmental Covenant . . . . . .. . . . . 55
8.1.8. Guaranty . . . . . . . . . . . . .. . . . . 56
8.2. Negative Covenants. . . . . . . . . . . . . . . . . 56
8.2.1. Business Activities. . . .. . . . . . . . . 56
8.2.2. Liens. . . . . . . . . . .. . . . . . . . . 56
8.2.3. Financial Condition. . . . . . .. . . . . . 57
8.2.4. Acquisitions . . . . . . . . . .. . . . . . 57
8.2.5. Investments. . . . . . . . . . . .. . . . . 58
8.2.6. Indebtedness . . . . . . . . . . . . . .. . 58
8.2.7. Subordinated Debt. . . . . . . . . . . .. . 60
8.2.8 Capital Expenditures, etc .. . . . . . . . 60
8.2.9. Rental Obligations . . . . . .. . . . . . . 60
8.2.10 Sale/Leaseback. . . . . . . . . .. . . . . 61
8.2.11 Consolidation, Merger, Etc. . . . . .. .. . 61
8.2.12 Asset Dispositions, etc.. . . . . . ... . . 61
8.2.13 Transactions with Affiliates. . . . . .. .. 61
IX EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . 62
9.1. Listing of Events of Default. . . . . . . . . . . . 62
9.1.1. NonPayment of Obligations. . . . . . . .. . 62
9.1.2. Breach of Warranty . . . . . . . . . .. . . 62
9.1.3. Non-Performance of Certain Covenants
and Obligations. . . . . . . . . . . . . . .62
9.1.4. Non-Performance of Other Covenants
and Obligations. . . . . . . . . . . . . . .62
9.1.5. Default on Other Indebtedness. . . . .. . . 62
9.1.6. Judgments. . . . . . . . . . . . . . . .. . 63
9.1.7. Pension Plans. . . . . . . . . . . . .. . . 63
9.1.8. Change in Control. . . . . . . . . . . .. . 63
9.1.9. Bankruptcy, Insolvency, etc. . . . . . . .. 63
9.2. Action if Bankruptcy. . . . . . . . . . . . . . . . 64
9.3. Action if Other Event of Default. . . . . . . . . . 65
X THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . 65
10.1. Actions. . . . . . . . . . . . . . . . . . . . . . 65
10.2. Funding Reliance, etc. . . . . . . . . . . . . . . 66
10.3. Exculpation. . . . . . . . . . . . . . . . . . . . 66
10.4. Successor. . . . . . . . . . . . . . . . . . . . . 66
10.5. Loans or Letters of Credit Issued by ABN . . . . . 67
10.6. Credit Decisions . . . . . . . . . . . . . . . . . 67
10.7. Copies, etc. . . . . . . . . . . . . . . . . . . . 68
10.8. Documentation Agent. . . . . . . . . . . . . . . . 68
XI MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . .. 68
11.1. Waivers, Amendments, etc . . . . . . . . . . . . . 68
11.2. Notices. . . . . . . . . . . . . . . . . . . . . . 69
11.3. Payment of Costs and Expenses. . . . . . . . . . . 69
11.4. Indemnification. . . . . . . . . . . . . . . . . . 70
11.5. Survival . . . . . . . . . . . . . . . . . . . . . 71
11.6. Severability . . . . . . . . . . . . . . . . . . . 71
11.7. Headings . . . . . . . . . . . . . . . . . . . . . 71
11.8. Execution in Counterparts, Effectiveness, etc. . . 72
11.9. Governing Law; Entire Agreement. . . . . . . . . . 72
11.10 Successors and Assigns. . . . . . . . . . . . .. . 72
11.11 Sale and Transfer of Loans and Notes;
Participations in Loans
and Notes. . . . . . .. . . . . . . . . . . . . .. 72
11.11.1. Assignments. . . . . . . . . . . . .. . 72
11.11.2. Participations . . . . . . . . . . . . . 74
11.12 Additional Borrowers. . . . . . . . . . . . . . . 75
11.13 Joint and Several Liability . . . . . . . . . . . 76
11.14 Judgment Currency . . . . . . . . . . . . . . . . 78
11.15 Other Transactions. . . . . . . . . . . . . . . . 78
11.16 Consent to Jurisdiction . . . . . . . . . . . . . 78
11.17 Waiver of Jury Trial. . . . . . . . . . . . . . . 79
PAGE
<PAGE>
SCHEDULE I - Disclosure Schedule
EXHIBIT A - Form of Additional Borrower Certificate
EXHIBIT B - Form of Revolving Note
EXHIBIT C - Form of Swing Note
EXHIBIT D - Form of Irrevocable Standby Letter of Credit
EXHIBIT E - Form of Borrowing Request
EXHIBIT F - Form of Continuation/Conversion Notice
EXHIBIT G - Form of Issuance Request
EXHIBIT H - Form of Lender Assignment Agreement
EXHIBIT I - Form of Opinion of Counsel to Simpson
EXHIBIT J - Form of Compliance Certificate
EXHIBIT K - Form of Guaranty
EXHIBIT L - Form of Simpson Guaranty
PAGE
<PAGE>
CREDIT AGREEMENT
(364 Day)
THIS CREDIT AGREEMENT, dated as of June 17, 1997 among SIMPSON
INDUSTRIES, INC. ("Simpson"), a Michigan corporation, certain subsidiaries
that from time to time become a party hereto pursuant to Section 11.13 (such
subsidiaries, together with Simpson, the "Borrowers"), the commercial lending
institutions as are or may become parties hereto (the "Lenders"), ABN AMRO
BANK N.V. ("ABN"), as agent (the "Agent") for the Lenders, and COMERICA BANK,
as documentation agent (the "Documentation Agent") for the Lenders.
W I T N E S S E T H:
WHEREAS, the Borrowers desire to obtain Commitments from the Lenders
pursuant to which
(a) Loans will be made to the Borrowers from time to time
prior to the Commitment Termination Date; and
(b) Letters of Credit will be issued by the Issuer for the
accounts of the Borrowers from time to time prior to the Commitment
Termination Date;
in aggregate principal amount for Loans plus Letter of Credit Outstandings at
any one time not to exceed $50,000,000 in the aggregate; and
WHEREAS, the Lenders are willing, on the terms and subject to the
conditions hereinafter set forth (including Article VI), to extend such
Commitments, make such Loans to the Borrowers and issue and participate in
such Letters of Credit;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE XII
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. Defined Terms. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following
meanings (such meanings to be equally applicable to the singular and plural
forms thereof):
"ABN" is defined in the preamble.
"Additional Borrower Certificate" means a certificate in the form of
Exhibit A hereto.
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of
directors; or
(b) to direct or cause the direction of the management and
policies of such Person whether by contract or otherwise.
"Agent" is defined in the preamble and includes each other Person as
shall have subsequently been appointed as the successor Agent pursuant to
Section 10.4.
"Agreement" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on
such date.
"Assignee Lender" is defined in Section 11.12.1.
"Assignment Effective Date" is defined in Section 11.12.1.
"Authorized Officer" means, as to any Borrower, those of its officers
whose signatures and incumbency shall have been certified to the Agent and the
Lenders pursuant to Section 6.1.1.
"Available Currency" means Dollars, Pounds Sterling, French Francs,
Spanish Peseta and such other currencies as the Lenders agree to make
available from time to time and which the Agent determines in its sole
discretion are freely transferable.
"Borrower" means any of Simpson and any Subsidiary that from time to
time becomes a party hereto pursuant to Section 11.13.
"Borrowing" means a borrowing made hereunder consisting of the aggregate
amount of the several Loans made by the Lenders to the applicable Borrower on
the same Borrowing Date, in the same currency, for the same Rate Option and
for the same Interest Period.
"Borrowing Date" means any Business Day on which a Borrowing is made.
"Borrowing Request" means a loan request and certificate duly executed
by an Authorized Officer of the applicable Borrower, substantially in the form
of Exhibit E hereto.
"Business Day" means any day
(a) other than
(i) a Saturday or Sunday; or
(ii) a legal holiday on which banks are authorized or
required to be closed in Chicago, Illinois or New York, New
York; and
(b) with respect to Eurocurrency Rate Loans on which
dealings in the applicable Available Currency are being carried on in
the interbank eurocurrency market.
"Capital Expenditures" means, for any period, the sum of
(a) the aggregate amount of all expenditures of Simpson and
its Subsidiaries for fixed or capital assets made during such period
which, in accordance with GAAP, would be classified as capital
expenditures; and
(b) the aggregate amount of all Capitalized Lease Liabilities
incurred during such period;
less any expenditures pursuant to an acquisition transaction of the type
described in Section 8.2.4.
"Capitalized Lease Liabilities" means all monetary obligations of a
Person under any leasing or similar arrangement which, in accordance with
GAAP, would be classified as capitalized leases, and, for purposes of this
Agreement and each other Loan Document, the amount of such obligations shall
be the capitalized amount thereof, determined in accordance with GAAP, and the
stated maturity thereof shall be the date of the last payment of rent or any
other amount due under such lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a penalty.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one
year after such time, issued or guaranteed by the United States
Government;
(b) commercial paper, maturing not more than nine months from
the date of issue, which is issued by
(i) a corporation (other than an Affiliate of a Borrower)
organized under the laws of any state of the United States or
of the District of Columbia and rated at least A-1 by
Standard & Poor's Corporation or P-1 by Moody's Investors
Service, Inc., or
(ii) any Lender (or its holding company);
(c) any certificate of deposit or bankers acceptance,
maturing not more than one year after such time, which is issued by
either
(i) a commercial banking institution that is a member of
the Federal Reserve System and has a combined capital and
surplus and undivided profits of not less than $500,000,000,
or
(ii) any Lender; or
(d) any repurchase agreement entered into with any Lender
(or other commercial banking institution of the stature referred to in
clause (c)(i)) which
(i) is secured by a fully perfected security interest in
any obligation of the type described in any of clauses (a)
through (c); and
(ii) has a market value at the time such repurchase
agreement is entered into of not less than 100% of the
repurchase obligation of such Lender (or other commercial
banking institution) thereunder.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means
(a) the acquisition by any Person, or two or more Persons
acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934) of 20% or more of the outstanding shares of voting
stock of Simpson; or
(b) any Borrower (other than Simpson) shall not be
100% owned, directly or indirectly by Simpson.
"Code" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"Commitment" means, relative to any Lender, such Lender's obligation to
make Loans pursuant to Section 2.1.2 and to issue (in the case of the Issuer)
or participate in (in the case of all Lenders) Letters of Credit pursuant to
Section 2.1.3.
"Commitment Amount" means, on any date, $50,000,000, as such amount may
be reduced from time to time pursuant to Section 2.2.
"Commitment Termination Date" means the earliest of
(a) the Stated Maturity Date;
(b) the date on which the Commitment Amount is terminated in
full or reduced to zero pursuant to Section 2.2; and
(c) the date on which any Commitment Termination Event
occurs.
Upon the occurrence of any event described in clause (b) or (c), the
Commitments shall terminate automatically and without any further action.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses (a)
through (d) of Section 9.1.9; or
(b) the occurrence and continuance of any other Event of
Default and either
(i) the declaration of the Loans to be due and payable
pursuant to Section 9.3, or
(ii) in the absence of such declaration, the giving of
notice by the Agent, acting at the direction of the Required
Lenders, to the Borrower that the Commitments have been
terminated.
"Companion Agreement" means the Credit Agreement of even date herewith
among Simpson, certain Subsidiaries, the Lenders, ABN, as agent, and Comerica
Bank, as documentation agent, providing for a $50,000,000 364-day credit
facility.
"Compliance Certificate" means a certificate duly executed by the chief
financial officer, treasurer or assistant treasurer of Simpson, substantially
in the form of Exhibit J hereto, as the same may be amended, modified or
supplemented from time to time by the Required Lenders and Simpson, for the
purposes of monitoring Simpson's compliance herewith.
"Contingent Liability" means any agreement, undertaking or arrangement
by which any Person guarantees, endorses or otherwise becomes or is
contingently liable upon (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the
indebtedness, obligation or any other liability of any other Person (other
than by endorsements of instruments in the course of collection), or
guarantees the payment of dividends or other distributions upon the shares of
any other Person. The amount of any Person's obligation under any Contingent
Liability shall (subject to any limitation set forth therein) be deemed to be
the outstanding principal amount (or maximum principal amount, if larger) of
the debt, obligation or other liability guaranteed thereby.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of Simpson,
substantially in the form of Exhibit F hereto.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with
Simpson, are treated as a single employer under Section 414(b) or 414(c) of
the Code or Section 4001 of ERISA.
"Credit Extension" means and includes
(a) the advancing of any Loans by the Lenders in connection
with a Borrowing, and
(b) any issuance or extension by the Issuer of a Letter of
Credit.
"Default" means any Event of Default or any condition, occurrence or
event which, after notice or lapse of time or both, would constitute an Event
of Default.
"Determination Date" means with respect to any Loan in an Available
Currency other than Dollars:
(a) the date a Loan is made;
(b) if such Loan is a Eurocurrency Rate Loan, the last
Business Day of each month, and the date such Eurocurrency Rate Loan is
continued from the current Interest Period of such Loan into a
subsequent Interest Period; or
(c) the date such outstanding Loan is converted from
one type of Loan into another or from a Eurocurrency Rate Loan in one
currency into a Eurocurrency Rate Loan in another currency.
"Disbursement" means a payment by the Issuer to a beneficiary (or its
designee) under a Letter of Credit.
"Disbursement Date" is defined in Section 4.5.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by Simpson with the written consent of the Agent and the Required
Lenders.
"Documentation Agent" is defined in the preamble.
"Dollar" and the sign "$" mean the lawful currency of the United States.
"Dollar Amount" means (a) with respect to Dollars or an amount
denominated in Dollars, such amount and (b) with respect to an amount of any
other Available Currency or an amount denominated in such Available Currency,
the amount of Dollars into which the Agent could, in accordance with its
practice from time to time in the interbank foreign exchange market, convert
such amount of Available Currency at its spot rate of exchange (inclusive of
all related costs of conversion) applicable to the relevant transaction at or
about 10:00 A.M., New York time, on the date of calculation.
"Domestic Office" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the
Lender Assignment Agreement or such other office of a Lender (or any successor
or assign of such Lender) within the United States as may be designated from
time to time by notice from such Lender, as the case may be, to each other
Person party hereto.
"EBITDA" means, at the end of any Fiscal Quarter for the
four Fiscal Quarter period then ending, net earnings plus interest expense
(net of interest income), depreciation, amortization and all other non-cash
charges, and income tax expenses, excluding any non-cash gains or losses used
in determining net income, all calculated on a consolidated basis for Simpson
and its Subsidiaries.
"Effective Date" means the date this Agreement becomes effective
pursuant to Section 11.8.
"Environmental Laws" means all applicable foreign, federal, state or
local statutes, laws, ordinances, codes, rules, regulations and guidelines
(including consent decrees and administrative orders) relating to public
health and safety and protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA also refer to any successor sections.
"Eurocurrency Office" means with respect to any Lender the office or
offices of such Lender which shall be making or maintaining the Eurocurrency
Loans of such Lender hereunder or such other office or offices through which
such Lender determines its Eurocurrency Rate. A Eurocurrency Office of any
Lender may be, at the option of such Lender, either a domestic or foreign
office.
"Eurocurrency Rate" means, with respect to any Eurocurrency Rate Loan
for any Interest Period, the rate per annum at which deposits in the relevant
Available Currency in immediately available funds are offered to the
Eurocurrency Office of ABN two Business Days prior to the beginning of such
Interest Period by major banks in the London interbank eurocurrency market as
at or about 11:00 A.M. London time for delivery on the first day of such
Interest Period, for the number of days comprised therein and in an amount
equal or comparable to the amount of the Eurocurrency Rate Loan of ABN for
such Interest Period.
"Eurocurrency Rate Loan" means a Loan bearing interest at a fixed rate
of interest determined by reference to the Eurocurrency Rate.
"Eurocurrency Rate (Reserve Adjusted)" means, with respect to any
Eurocurrency Rate Loan for any Interest Period, a rate per annum (rounded
upwards, if necessary, to the nearest 1/100 of 1%) determined pursuant to the
following formula:
Eurocurrency Rate EQUALS Eurocurrency Rate
__________________________
(Reserve Adjusted) 1-Eurocurrency Reserve Percentage
"Eurocurrency Reserve Percentage" means, with respect to any
Eurocurrency Rate Loan for any Interest Period, a percentage (expressed as a
decimal) equal to the daily average during such Interest Period of the
percentage in effect on each day of such Interest Period, as prescribed by the
Board of Governors of the Federal Reserve System (or any successor), for
determining the aggregate maximum reserve requirements applicable to
"Eurocurrency Liabilities" pursuant to Regulation D or any other then
applicable regulation of such Board of Governors which prescribes reserve
requirements applicable to "Eurocurrency Liabilities" as presently defined in
Regulation D.
"Event of Default" is defined in Section 9.1.
"Federal Funds Rate" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to
(a) the weighted average of the rates on overnight federal
funds transactions with members of the Federal Reserve System arranged
by federal funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York; or
(b) if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
"Fiscal Quarter" means any quarter of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months
ending on December 31, references to a Fiscal Year with a number corresponding
to any calendar year (e.g. the "1997 Fiscal Year") refer to the Fiscal Year
ending on December 31 occurring during such calendar year.
"French Francs" means lawful currency of France.
"F.R.S. Board" means the Board of Governors of the Federal Reserve
System or any successor thereto.
"Funded Debt" means any Indebtedness as described within clauses (a),
(b), (c), (e), and (f) of the definition of "Indebtedness" and any Contingent
Liabilities with respect to any such Indebtedness.
"Funded Debt to EBITDA Ratio" means at any Fiscal Quarter end the ratio
on a consolidated basis for Simpson and its Subsidiaries of Funded Debt at
such Fiscal Quarter end to EBITDA for the four Fiscal Quarters then ending.
"GAAP" is defined in Section 1.4.
"Guaranty" means the guaranty of the U.S. Subsidiaries of Simpson
executed and delivered pursuant to Section 8.1.8, substantially in the form of
Exhibit K hereto, as amended, supplemented, restated or otherwise modified
from time to time.
"Hazardous Materials" means
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource
Conservation and Recovery Act, as amended;
(c) any petroleum product; or
(d) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material or substance within the meaning of any other
applicable foreign, federal, state or local law, regulation, ordinance
or requirement (including consent decrees and administrative orders)
relating to or imposing liability or standards of conduct concerning any
hazardous, toxic or dangerous waste, substance or material, all as
amended or hereafter amended.
"Hedging Obligations" means, with respect to any Person, all liabilities
of such Person under interest rate swap agreements, interest rate cap
agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in interest
rates or currency exchange rates.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such
other Loan Document, as the case may be, as a whole and not to any particular
Section, paragraph or provision of this Agreement or such other Loan Document.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial
statement of any Borrower, any qualification or exception to such opinion or
certification
(a) which is of a "going concern" nature;
(b) which relates to the limited scope of examination of
matters relevant to such financial statement; or
(c) which relates to the treatment or classification of any
item in such financial statement and which, as a condition to its
removal, would require an adjustment to such item the effect of which
would be to cause such Borrower to be in default of any of its
obligations under Section 8.2.3.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and
all obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(b) all obligations, contingent or otherwise, relative to
the face amount of all letters of credit, whether or not drawn, and
banker's acceptances issued for the account of such Person;
(c) all obligations of such Person as lessee under leases
which have been or should be, in accordance with GAAP, recorded as
Capitalized Lease Liabilities;
(d) all other items which, in accordance with GAAP, would be
included as liabilities on the liability side of the balance sheet of
such Person as of the date at which Indebtedness is to be determined;
(e) net liabilities of such Person under all Hedging
Obligations;
(f) whether or not so included as liabilities in accordance
with GAAP, all obligations of such Person to pay the deferred purchase
price of property or services, and indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being purchased
by such Person (including indebtedness arising under conditional sales
or other title retention agreements), whether or not such indebtedness
shall have been assumed by such Person or is limited in recourse; and
(g) all Contingent Liabilities of such Person in respect of
any of the foregoing.
"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
"Interest Period" means, relative to any Eurocurrency Rate Loans, the
period beginning on (and including) the date on which such Eurocurrency Rate
Loan is made or continued as, or converted into, a Eurocurrency Rate Loan
pursuant to Section 2.3, 2.4 or 2.9 and ending on (but excluding) the day
which, numerically corresponds to such date one, two, three or six months
thereafter (or, if such month has no numerically corresponding day, on the
last Business Day of such month), in each case as the Borrowers may select in
their relevant notice pursuant to Section 2.3, 2.4 or 2.9; provided, however,
that
(a) no more than 10 Interest Periods shall be outstanding at
any one time in the aggregate;
(b) if such Interest Period would otherwise end on a day
which is not a Business Day, such Interest Period shall end on the next
following Business Day (unless, such next following Business Day is the
first Business Day of a calendar month, in which case such Interest
Period shall end on the Business Day next preceding such numerically
corresponding day); and
(c) no Interest Period may end later than the date set forth
in clause (a) of the definition of "Commitment Termination Date".
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other
Person (excluding commission, travel and similar advances to officers
and employees made in the ordinary course of business);
(b) any Contingent Liability of such Person; and
(c) any ownership or similar interest held by such Person in
any other Person.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without
adjustment by reason of the financial condition of such other Person) and
shall, if made by the transfer or exchange of property other than cash, be
deemed to have been made in an original principal or capital amount equal to
the fair market value of such property.
"Issuance Request" means a properly completed application for a Letter
of Credit on the Issuer's standard form, attached hereto as Exhibit G,
executed by an Authorized Officer of the Borrower.
"Issuer" means any affiliate, unit or agency of ABN which has agreed to
issue one or more Letters of Credit at the request of the Agent.
"Lender Assignment Agreement" means a Lender Assignment Agreement
substantially in the form of Exhibit H hereto.
"Lenders" is defined in the preamble.
"Letter of Credit" is defined in Section 4.1.
"Letter of Credit Availability" means, at any time, the lesser of (a)
the Dollar Amount of $5,000,000 minus the Dollar Amount of the Letter of
Credit Outstandings on such date and (b) the excess of (i) the then Commitment
Amount over (ii) the sum of (A) the Dollar Amount of the outstanding principal
amount of all Loans on such date plus (B) the Dollar Amount of the Letter of
Credit Outstandings on such date.
"Letter of Credit Outstandings" means, at any time, an amount equal to
the sum of
(a) the Dollar Amount of the aggregate Stated Amount at such
time of all Letters of Credit then outstanding and undrawn (as such
aggregate Stated Amount shall be adjusted, from time to time, as a
result of drawings, the issuance of Letters of Credit, or otherwise),
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"Lien" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"Loan" means, as the context may require, either a Revolving Loan or a
Swing Loan.
"Loan Commitment Availability" means, on any date, the excess of
(a) the then Commitment Amount,
over
(b) the sum of
(i) the Dollar Amount of the outstanding principal amount
of all Revolving Loans on such date,
plus
(ii) the Dollar Amount of the Letter of Credit
Outstandings on such date.
"Loan Document" means this Agreement, the Notes, the Issuance Requests,
the Guaranty and the Simpson Guaranty.
"Margin" means, for any period beginning on (and including) a Margin
Determination Date until (but excluding) the next Margin Determination Date, a
percentage equal to the Margin set forth in the following table corresponding
to the Funded Debt to EBITDA Ratio as at the end of the Fiscal Quarter
immediately preceding such Margin Determination Date, provided that for the
period from the Effective Date through the first Margin Determination Date
after June 30, 1997, the applicable Margin set forth opposite Level II shall
be used:
<TABLE>
<S> <C> <C> <C> <C> <C>
STANDBY
LETTER
MARGIN OF
FOR CREDIT COMMERCIAL
MARGIN FOR EURO- FACE LETTER OF
FUNDED DEBT TO PRIME CURRENCY AMOUNT CREDIT FACE
LEVEL EBITDA RATIO RATE LOANS LOANS FEE AMOUNT FEE
I Greater than 3.0:1.0 0.00% 0.75% 0.73% 0.325%
II Less than or equal
to 3.0:1.0, but
greater than 2.50:1.0 0.00% 0.60% 0.58% 0.20%
III Less than or equal
to 2.50:1.0, but
greater than 2.00:1.0 0.00% 0.475% 0.455% 0.1175%
IV Less than or equal
to 2.00:1.0, but
greater than 1.50:1.0 0.00% 0.325% 0.305% 0.075%
V Less than or equal
to 1.5:1.0 0.00% 0.225% 0.205% 0.0625%
</TABLE>
Notwithstanding the foregoing, in the event Simpson fails to report the Funded
Debt to EBITDA Ratio at the end of any Fiscal Quarter by the Margin
Determination Date following such Fiscal Quarter, "Margin" shall mean the
Margin set forth in Level I. Nothing in this definition shall constitute a
waiver of the financial covenant set forth in Section 8.2.3(b) or limit the
right of the Lenders to receive interest at the rates set forth in Section
3.2.2 hereof.
"Margin Determination Date" means each date on which a quarterly
Compliance Certificate is delivered. The first Margin Determination Date
shall be the first such date after June 30, 1997.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, or
condition (financial or otherwise) of Simpson and its Subsidiaries taken as a
whole; (b) a material impairment of the ability of any Borrower to perform
under any Loan Document and to avoid any Event of Default; or (c) a material
adverse effect upon the legality, validity, binding effect or enforceability
against any Borrower of any Loan Document.
"Net Worth" means, as to Simpson, the consolidated net worth of Simpson
and its Subsidiaries.
"Note" means, as the context may require, either a Revolving Note or a
Swing Note.
"Obligations" means all obligations (monetary or otherwise) of the
Borrowers arising under or in connection with this Agreement, the Notes and
each other Loan Document.
"Organic Document" means, relative to any Borrower, its certificate of
incorporation or other organizational documents comparable thereto, its by-laws
and all shareholder agreements, voting trusts and similar arrangements
applicable to any of its authorized shares of capital stock.
"Outstandings" means at any time the sum of:
(a) the aggregate Dollar Amount of the principal amount of
all Loans outstanding at such time;
(b) the aggregate Dollar Amount of the face amount of all
Letters of Credit outstanding and undrawn at such time; and
(c) the aggregate Dollar Amount at such time of Obligations
to reimburse drawings under any Letters of Credit which have been paid
by the Issuer.
"Participant" is defined in Section 11.12.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Pension Plan" means a "pension plan", as such term is defined in
section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multiemployer plan as defined in section 4001(a)(3) of ERISA), and to which
Simpson or any corporation, trade or business that is, along with Simpson, a
member of a Controlled Group, may have liability, including any liability by
reason of having been a substantial employer within the meaning of section
4063 of ERISA at any time during the preceding five years, or by reason of
being deemed to be a contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage set forth
opposite its signature hereto or set forth in the Lender Assignment Agreement,
as such percentage may be adjusted from time to time pursuant to Lender
Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and
delivered pursuant to Section 11.12.
"Person" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any other entity,
whether acting in an individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Pounds Sterling" means lawful currency of the United Kingdom.
"Prime Rate" means a floating rate of interest equal to the higher
(redetermined daily) of
(a) the per annum rate of interest announced by ABN at its
office in Chicago, Illinois as its prime rate for Dollar loans; and
(b) the Federal Funds Rate plus 1/2%.
(The "prime rate" is set by ABN based upon various factors and is used as a
reference for pricing some loans. It is not the best rate available to the
customers of ABN at any point in time.) Changes in the rate of interest on
that portion of any Loans maintained as Prime Rate Loans will take effect
simultaneously with each change in the Prime Rate. The Agent will give notice
promptly to the Borrowers and the Lenders of changes in the Prime Rate.
"Prime Rate Loan" means a Loan in Dollars bearing interest at a
fluctuating rate determined by reference to the Prime Rate.
"Quarterly Payment Date" means the last day of each March, June,
September, and December or, if any such day is not a Business Day, the next
succeeding Business Day.
"Rate Option" means, with respect to any Loan, a Eurocurrency Rate Loan
or Prime Rate Loan.
"Reimbursement Obligation" is defined in Section 4.6.
"Release" means a "release", as such term is defined in CERCLA.
"Required Lenders" means, at any time, any Lenders having Percentages
aggregating at least 66 2/3%.
"Revolving Loan" is defined in Section 2.1.2.
"Revolving Note" means a promissory note of any Borrower payable to the
order of any Lender, in the form of Exhibit B hereto (as such promissory notes
may be amended, endorsed or otherwise modified from time to time), evidencing
the aggregate Indebtedness of such Borrower to such Lender resulting from
outstanding Revolving Loans, and also means all other promissory notes
accepted from time to time in substitution therefor or renewal thereof.
"Significant Subsidiary" means a Subsidiary which accounted for in
excess of either 5% of the consolidated assets of Simpson and its Subsidiaries
as of the end of the last Fiscal Quarter or 5% of the consolidated revenue of
Simpson and its Subsidiaries for the four Fiscal Quarter period ending as of
the end of the last Fiscal Quarter.
"Simpson Guaranty" means the guaranty of Simpson substantially in the
form of Exhibit L hereto, as amended, supplemented, restated or otherwise
modified from time to time.
"Solvent" means, as to any Person at any time, that (a) the fair value
of the property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code and, in the alternative, for purposes of the
Uniform Fraudulent Transfer Act or Uniform Fraudulent Conveyance Act; (b) the
present fair saleable value of the property of such Person is not less than
the amount that will be required to pay the probable liability of such Person
on its debts as they become absolute and matured; (c) such Person is able to
realize upon its property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the
normal course of business; (d) such Person does not intend to, and does not
believe that it will, incur debts of liabilities beyond such Person's ability
to pay as such debts and liabilities mature; and (e) such Person is not
engaged in business or a transaction, and is not about to engage in business
or a transaction, for which such Person's property would constitute
unreasonably small capital.
"Spanish Pesetas" means lawful currency of Spain.
"Stated Amount" of each Letter of Credit means the "Stated Amount" as
defined therein.
"Stated Expiry Date" is defined in Section 4.1.
"Stated Maturity Date" means June 16, 1998, as such date may be extended
pursuant to Section 2.14.
"Subordinated Debt" means Indebtedness of any Borrower subordinated in
form and substance satisfactory to the Agent.
"Subsidiary" means, with respect to any Person, (i) any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or
classes of such corporation shall or might have voting power upon the
occurrence of any contingency) is at the time directly or indirectly owned by
such Person, by such Person and one or more other Subsidiaries of such Person,
or by one or more other Subsidiaries of such Person and (ii) any other entity
of which more than 50% of the outstanding capital interest, profit interest or
beneficial interest is at the time directly or indirectly owned by such
Person, by such Person and one or more other Subsidiaries of such Person or by
one or more other Subsidiaries of such Person.
"Subsidiary Borrower" means each Borrower other than Simpson.
"Swing Lender" means ABN in its capacity as swing lender hereunder.
"Swing Loan" is defined in Section 2.7.
"Swing Note" means a promissory note of Simpson payable to the order of
the Swing Lender, in the form of Exhibit C hereto (as such promissory note may
be amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of Simpson to the Swing Lender resulting from
outstanding Swing Loans, and also means any other promissory note accepted
from time to time in substitution therefor or renewal thereof.
"Tangible Net Worth" means, as to Simpson, the consolidated net worth of
Simpson and its Subsidiaries after subtracting therefrom the aggregate amount
of any intangible assets of Simpson and its Subsidiaries, including goodwill,
franchises, licenses, patents, trademarks, trade names, copyrights, service
marks and brand names.
"Taxes" is defined in Section 5.6.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"U.S. Subsidiary" means a Subsidiary of Simpson organized under the laws
of a state of the United States or the District of Columbia.
"Welfare Plan" means a "welfare plan", as such term is defined in
section 3(1) of ERISA, of Simpson or any member of its Controlled Group.
SECTION 1.2. Use of Defined Terms. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Continuation/Conversion Notice, Loan Document,
notice and other communication delivered from time to time in connection with
this Agreement or any other Loan Document.
SECTION 1.3. Cross-References. Unless otherwise specified, references
in this Agreement and in each other Loan Document to any Article or Section
are references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in
any Article, Section or definition to any clause are references to such clause
of such Article, Section or definition.
SECTION 1.4. Accounting and Financial Determinations. Unless
otherwise specified, all accounting terms used herein or in any other Loan
Document shall be interpreted, all accounting determinations and computations
hereunder or thereunder (including under Section 8.2.3) shall be made, and all
financial statements required to be delivered hereunder or thereunder shall be
prepared in accordance with, those generally accepted accounting principles
("GAAP") in the United States at the time in effect.
ARTICLE II
COMMITMENTS, BORROWING PROCEDURES AND NOTES
SECTION 2.1. Commitments. On the terms and subject to the conditions
of this Agreement (including Article V), each Lender severally agrees as
follows:
SECTION 2.1.1. Revolving Loan Commitment. From time to time on any
Business Day occurring prior to the Commitment Termination Date, each Lender
will make Revolving Loans in Dollars and/or other Available Currencies
(relative to such Lender, its "Revolving Loans") to any Borrower equal to such
Lender's Percentage of the aggregate amount of the Borrowing of Revolving
Loans requested by such Borrower to be made on such day; provided, however
that the aggregate Dollar Amount of the principal amount of Loans by all the
Lenders in currencies other than Dollars shall not at any time exceed
$20,000,000 at any time outstanding. On the terms and subject to the
conditions hereof, each Borrower may from time to time borrow, prepay and
reborrow Revolving Loans.
SECTION 2.1.2. Commitment to Issue Letters of Credit. From time to
time on any Business Day, the Issuer will issue, and each Lender will
participate in, the Letters of Credit, in accordance with Article IV.
SECTION 2.1.3. Lenders Not Permitted or Required To Make Loans or
Issue or Participate in Letters of Credit Under Certain Circumstances. No
Lender shall be permitted or required to
(a) make any Loan if, after giving effect thereto, an amount
equal to the Dollar Amount of the aggregate outstanding principal amount
of all Revolving Loans
(i) of all Lenders, together with the Dollar Amount of all
outstanding Swing Loans and the Dollar Amount of all Letter of
Credit Outstandings, would exceed the Commitment Amount, or
(ii) of such Lender, together with the Dollar Amount of its
Percentage of the Dollar Amount of the principal amount of all
Swing Loans and the Dollar Amount of its Percentage of all Letter
of Credit Outstandings, would exceed such Lender's Percentage of
the Commitment Amount; or
(b) issue (in the case of the Issuer), extend or participate in
(in the case of each Lender) any Letter of Credit if, after giving
effect thereto
(i) the Dollar Amount of all Letter of Credit Outstandings
together with an aggregate amount equal to the Dollar Amount of
the aggregate outstanding principal amount of all Loans would
exceed the Commitment Amount, or
(ii) the Dollar Amount of such Lender's Percentage of all
Letter of Credit Outstandings together with an aggregate amount
equal to the Dollar Amount of the aggregate outstanding principal
amount of all Revolving Loans of such Lender and such Lender's
Percentage of the Dollar Amount of the aggregate principal amount
of all Swing Loans would exceed such Lender's Percentage of the
Commitment Amount.
For the purposes of this Section 2.1.3, the Dollar Amount of any Loans
not denominated in Dollars shall be determined as of the most recent
Determination Date for each such Loan.
SECTION 2.2. Reduction of Commitment Amounts. Simpson may, from time
to time on any Business Day, voluntarily reduce the amount of the Commitment
Amount; provided, however, that Simpson shall simultaneously reduce the amount
of Commitment Amount (as such term is defined in the Companion Agreement)
under the Companion Agreement by an equal amount; provided, further, that the
Commitment Amount shall not be reduced to an amount less than the Outstandings
(after giving effect to any concurrent repayment of Loans); and provided
further, that all such reductions shall require at least 5 Business Days'
prior notice to the Agent and be permanent, and any partial reduction of such
Commitment Amount shall be in a minimum amount of $1,000,000 and in an
integral multiple of $250,000.
SECTION 2.3. Borrowing Procedure. By delivering a Borrowing Request
to the Agent on or before 11:00 A.M., New York time, on a Business Day,
Simpson may from time to time irrevocably request (on not less than three nor
more than five Business Days' notice with respect to a Eurocurrency Rate Loan,
and not less than one nor more than five Business Days' notice with respect to
Prime Rate Loan) that a Borrowing of Revolving Loans be made to the Borrower
specified by Simpson in an Available Currency, if in Dollars, in a minimum
amount of $2,000,000 and an integral multiple of $100,000 or if in another
Available Currency, in a minimum amount of the Dollar Amount of $2,000,000 and
an integral multiple of 100,000 units of such Available Currency, or in the
unused amount of the applicable Commitment. On the terms and subject to the
conditions of this Agreement, each Borrowing shall be comprised of the same
Rate Option of Loans (and, in the case of Eurocurrency Rate Loans, the same
Available Currency), and shall be made on the Business Day, specified in such
Borrowing Request. The proceeds of each Borrowing shall be advanced to the
Borrower specified in the applicable Borrowing Request. On or before 10:00
A.M., New York time, on such Business Day each Lender shall deposit with the
Agent same day funds in the applicable Available Currency in an amount equal
to such Lender's Percentage of the requested Borrowing. Such deposit will be
made to such accounts which the Agent shall specify from time to time by
notice to the Lenders. To the extent funds are received from the Lenders, the
Agent shall make such funds available to the Borrower specified by Simpson by
wire transfer to such accounts as Simpson shall have specified in its
Borrowing Request. No Lender's obligation to make any Loan shall be affected
by any other Lender's failure to make any Loan.
SECTION 2.4. Continuation and Conversion Elections. By delivering a
Continuation/Conversion Notice to the Agent on or before 11:00 A.M., New York
time, on a Business Day, Simpson may from time to time irrevocably elect (on
not less than three nor more than five Business Days' notice with respect to a
conversion into or a continuation of a Eurocurrency Loan to a Borrower
specified by Simpson and not less than one nor more than five Business Days'
notice with respect to a conversion into Prime Rate Loan) that all, or any
portion in an aggregate minimum amount, if in Dollars of $2,000,000 and an
integral multiple of $100,000 or in the case of an Available Currency other
than Dollars, in an aggregate minimum amount of the Dollar Amount of
$2,000,000 and an integral multiple of 100,000 units of such currency, of any
Revolving Loans be, in the case of Prime Rate Loans, converted into
Eurocurrency Rate Loans or, in the case of Eurocurrency Rate Loans be
converted into Prime Rate Loans or Eurocurrency Rate Loans in another
Available Currency or continued as Eurocurrency Rate Loans in the same
currency. In the absence of delivery of a Continuation/ Conversion Notice
with respect to any Revolving Loan constituting a Eurocurrency Rate Loan by
11:00 A.M. New York time at least three Business Days before the last day of
the then current Interest Period with respect thereto, such Eurocurrency Rate
Loan shall, on such last day, automatically convert to a Eurocurrency Rate
Loan in the same currency having an Interest Period equal to the shorter of
(i) one month and (ii) the number of days in the period from and including
such last day to but excluding the Commitment Termination Date; provided that
such period determined under this clause (ii) is acceptable to the Agent,
otherwise the Loan shall become due and payable. Each such conversion or
continuation shall be prorated among the applicable outstanding Loans of such
Borrower to all Lenders, and when any Default has occurred and is continuing,
no portion of the outstanding principal amount of any Loans may be continued
as, or be converted into, Eurocurrency Rate Loans.
SECTION 2.5. Funding. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert Eurocurrency Rate Loans hereunder by
causing one of its foreign branches or Affiliates (or an international
banking facility created by such Lender) to make or maintain such Eurocurrency
Rate Loan; provided, however, that such Eurocurrency Rate Loan shall
nonetheless be deemed to have been made and to be held by such Lender, and the
obligation of the Borrowers to repay such Eurocurrency Rate Loan shall
nevertheless be to such Lender for the account of such foreign branch,
Affiliate or international banking facility. In addition, the Borrowers
hereby consent and agree that, for purposes of any determination to be made
for purposes of Section 5.1, 5.2, 5.3 or 5.4, it shall be conclusively assumed
that each Lender elected to fund all Eurocurrency Rate Loans by purchasing
deposits, in the interbank eurocurrency market having a maturity corresponding
to the Interest Period for such Loan and bearing an interest rate equal to the
Eurocurrency Rate for such Loan.
SECTION 2.6. Notes. The Revolving Loans of each Lender to each
Borrower shall be evidenced by a Note of such Borrower, payable to the order
of such Lender in an amount equal to the Lender's Revolving Loans. Each
Lender shall record in its records, or at its option on the schedule attached
to its applicable Note, the date, amount and Available Currency of each Loan
made by such Lender thereunder, each repayment or prepayment thereof, and the
dates on which the Interest Period for such Loan shall begin and end. The
aggregate unpaid principal amount so recorded shall be rebuttable presumptive
evidence of the principal amount owing and unpaid on such Note. The failure
to so record or any error in so recording any such amount shall not, however,
limit or otherwise affect the obligations of any Borrower hereunder or under
any Note to repay the principal amount of each Revolving Loan, together with
all interest accruing thereon.
SECTION 2.7. Swing Line Commitment. From time to time on any Business
Day occurring prior to the Commitment Termination Date, the Swing Lender
agrees to make loans to Simpson (each such loan, a "Swing Loan") in an
aggregate principal amount not to exceed $10,000,000. All Swing Loans shall
be in Dollars. On the terms and subject to the conditions hereof, Simpson may
from time to time borrow, prepay and reborrow Swing Loans.
SECTION 2.8. Borrowing Procedure Swing Loans. By delivering a
Borrowing Request to the Swing Lender and the Agent on or before 1:00 p.m.,
New York time, on a proposed Borrowing Date, Simpson may from time to time
irrevocably request that a Borrowing be made in a minimum amount of $2,000,000
and an integral multiple of $100,000. On or before 4:00 P.M., Chicago time,
on such Borrowing Date the Swing Lender shall deposit with the Agent same day
funds in an amount equal to the requested Borrowing. Such deposit will be
made to such accounts which the Agent shall specify from time to time by
notice to the Swing Lender. To the extent funds are received from the Swing
Lender, the Agent shall make such funds available to Simpson by wire transfer
to such accounts as Simpson shall have specified in its Borrowing Request.
SECTION 2.9. Refunding of Swing Loans. The Swing Lender may, at any
time later than five Business Days after the Borrowing Date of a Swing Loan,
in its sole and absolute discretion, on behalf of Simpson (which hereby
irrevocably directs the Swing Lender to act on its behalf), request each
Lender to make a Revolving Loan in Dollars in an amount equal to such Lender's
Percentage of the Dollar Amount of the principal amount of the Swing Loans
outstanding on the date such notice is given. Unless any of the events
described in Section 9.1.9 shall have occurred (in which event the procedures
of Section 2.10 shall apply), and regardless of whether the conditions
precedent set forth in this Agreement to the making of a Revolving Loan are
then satisfied or the aggregate amount of such Revolving Loans is not in the
minimum or integral amount otherwise required hereunder, each Lender shall
make the proceeds of its Revolving Loan available to the Agent for the account
of the Swing Lender at 10:00 A.M. Chicago time in immediately available funds
on the Business Day next succeeding the date such notice is given. The
proceeds of such Revolving Loans shall be in Dollars and shall be immediately
applied to repay the outstanding Swing Loans. All Revolving Loans made
pursuant to this Section 2.9 shall be in Dollars and shall be Prime Rate Loans
(but, subject to the other provisions of this Agreement, may be converted to
Eurocurrency Rate Loans).
SECTION 2.10. Participations in Swing Loans. (a) If an event
described in Section 9.1.9 occurs (or for any reason the Lenders may not make
Revolving Loans pursuant to Section 2.9), each Lender will, upon notice from
the Agent, purchase from the Swing Lender (and the Swing Lender will sell to
each such Lender) an undivided participation interest in all outstanding Swing
Loans in an amount equal to its Percentage of the outstanding principal amount
of the Swing Loans (and each Lender will immediately transfer to the Agent,
for the account of the Swing Lender, in immediately available funds, the
amount of its participation).
(b) Whenever, at any time after the Swing Lender has received payment
for any Lender's participation interest in the Swing Loans pursuant to Section
2.10(a), the Swing Lender receives any payment on account thereof, the Swing
Lender will distribute to the Agent for the account of such Lender its
participation interest in such amount (appropriately adjusted, in the case of
interest payments, to reflect the period of time during which such Lender's
participation interest was outstanding and funded) in like funds as received;
provided, however, that in the event that such payment received by the Swing
Lender is required to be returned, such Lender will return to the Agent for
the account of the Swing Lender any portion thereof previously distributed by
the Swing Lender to it in like funds as such payment is required to be
returned by the Swing Lender.
SECTION 2.11. Swing Loan Participation Obligations Unconditional. (a)
Each Lender's obligation to make Revolving Loans pursuant to Section 2.9
and/or to purchase participation interests in Swing Loans pursuant to Section
2.10 shall be absolute and unconditional and shall not be affected by any
circumstance whatsoever, including (a) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against the Swing Lender,
Simpson or any other Person for any reason whatsoever; (b) the occurrence or
continuance of an Event of Default; (c) any adverse change in the condition
(financial or otherwise) of Simpson or any other Person; (d) any breach of
this Agreement by Simpson or any other Lender; (e) any inability of Simpson to
satisfy the conditions precedent to borrowing set forth in this Agreement on
the date upon which any Swing Loan is to be refunded or any participation
interest therein is to be purchased; or (f) any other circumstance, happening
or event whatsoever, whether or not similar to any of the foregoing.
(b) Notwithstanding the provisions of subsection 2.11(a), no Lender
shall be required to make any Revolving Loan to Simpson to refund a Swing Loan
pursuant to Section 2.9 or to purchase a participation interest in a Swing
Loan pursuant to Section 2.10 if, prior to the making by the Swing Lender of
such Swing Loan, the Swing Lender received written notice (i) from a Lender
specifying that such Lender believes in good faith that one or more of the
conditions precedent to the making of such Swing Loan were not satisfied and,
in fact, such conditions precedent were not satisfied at the time of the
making of such Swing Loan or (ii) from Simpson that a Default has occurred and
is continuing; provided that the obligation of such Lender to make such
Revolving Loans and to purchase such participation interests shall be
reinstated upon the earlier to occur of (x) the date on which such Lender or
Simpson, as applicable, notifies the Swing Lender that its prior notice has
been withdrawn and (y) the date on which all conditions precedent to the
making of such Swing Loan have been satisfied (or waived by the Required
Lenders or all Lenders, as applicable).
SECTION 2.12. Conditions to Swing Loans. Notwithstanding any other
provision of this Agreement, the Swing Lender shall not be obligated to make
any Swing Loan if a Default exists or would result therefrom.
SECTION 2.13. Swing Note. The Swing Loans shall be evidenced by the
Swing Note of Simpson, payable to the order of the Swing Lender in an amount
equal to the Swing Loans. The Swing Lender shall record in its records, or at
its option on the schedule attached to such Swing Note, the date and amount of
each Swing Loan and each repayment or prepayment thereof. The aggregate
unpaid principal amount so recorded shall be rebuttable presumptive evidence
of the principal amount owing and unpaid on such Swing Note. The failure to
so record or any error in so recording any such amount shall not, however,
limit or otherwise affect the obligations of Simpson hereunder or under the
Swing Note to repay the principal amount of each Swing Loan, together with all
interest accruing thereon.
SECTION 2.14. Stated Maturity Date Extension. (a) Simpson may,
by notice to the Agent given not more than 60 days and not less than 45 days
prior to the scheduled Stated Maturity Date (the "Extension Request Date"),
request that the Lenders extend the Stated Maturity Date for 364 days from the
then scheduled Stated Maturity Date. The Agent shall notify the Lenders of
its receipt of any notice given pursuant to this Section 2.14(a) within two
Business Days after the Agent's receipt thereof. Each Lender (a "Consenting
Lender") may, by irrevocable notice to Simpson and the Agent delivered to
Simpson and the Agent not later than 30 days after the Extension Request Date
(the "Consent Period"), consent to such extension of the Stated Maturity Date,
which consent may be given or withheld by each Lender in its absolute and sole
discretion. No extension shall be effective (i) unless consented to by
Lenders holding at least 66 % of the Commitments and (ii) if as of the Stated
Maturity Date, prior to the effectiveness of the extension, (i) any
representation or warranty set forth in Article VII hereof shall not be true
and correct with the same effect as if then made or (ii) any Default shall
have occurred and be continuing.
(b) Withdrawing Lenders. No extension pursuant to Section 2.14(a)
shall be effective with respect to a Lender that either (i) by a notice (a
"Withdrawal Notice") delivered to Simpson and the Agent, declines to consent
to such extension or (ii) has failed to respond to Simpson and the Agent
within the Consent Period (each such Lender giving a Withdrawal Notice or
failing to respond in a timely manner being "Withdrawing Lender").
(c) Replacement of Withdrawing Lender. Simpson shall have the right
during the period following the end of the Consent Period until the then
scheduled Stated Maturity Date to replace the Withdrawing Lender with an
existing Lender or a new Lender who consents to the extension of the Stated
maturity Date (a "Replacement Lender"), in the case of a new Lender, with the
prior written consent of the Agent, which consent shall not be unreasonably
withheld or delayed. In the event Simpson has not replaced the Withdrawing
Lender within said period, the Stated Maturity Date shall not be extended.
(d) Assignment by Withdrawing Lender. A Withdrawing Lender shall be
obliged, at the request of Simpson and subject to the Withdrawing Lender
receiving payment in full of all amounts owing to it under this Agreement
concurrently with the effectiveness of an assignment, to assign, without
recourse or warranty and pursuant to the terms of Section 11.11.1 hereof, all
of its rights and obligations hereunder to any Replacement Lender nominated by
the Borrower and willing to accept such assignment provided that if the
Replacement Lender or the Withdrawing Lender shall suffer any loss as a result
of such assignment during an Interest Period, Simpson shall reimburse such
Lender therefor. The amount of any such loss shall be certified to Simpson by
such Lender, which certificate shall be conclusive absent manifest error.
(e) Scheduled Stated Maturity Date. If the scheduled Stated Maturity
Date shall have been extended in respect of Consenting Lenders and any
Replacement Lender in accordance with Section 2.14, all references herein and
in any Note to the "Stated Maturity Date" shall refer to the Stated Maturity
Date as so extended.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. Repayments and Prepayments. The Borrowers shall repay in
full the unpaid principal amount of each Loan upon the Stated Maturity Date.
(a) Prior thereto, any Borrower may, from time to time on any
Business Day, make a voluntary prepayment, in whole or in part without
penalty or premium, of the outstanding principal amount of any Loans;
provided, however, that
(i) any such prepayment shall be made to the Agent and
shall be applied to Loans as the prepaying Borrower may specify
and on a pro rata basis to the accounts of Loans of the same Rate
Option and having the same Interest Period of all Lenders;
(ii) no such prepayment of any Eurocurrency Rate Loan may
be made on any day other than the last day of the Interest Period
for such Loan;
(iii) all such voluntary prepayments shall require at least
three but no more than five Business Days' prior written notice to
the Agent which notice shall be irrevocable once given; and
(iv) all such voluntary partial prepayments shall be in an
aggregate minimum Dollar Amount of $2,000,000 and an integral
multiple of 100,000 units of the Available Currency;
(b) In addition, the Borrowers shall, on each date when any
reduction in the Commitment Amount shall become effective, including
pursuant to Section 2.2, make a mandatory prepayment of outstanding
Loans to the Agent equal to the excess, if any, of the aggregate
Outstandings over the Commitment Amount as so reduced;
(c) In addition, the Borrowers shall, on each Determination Date
for any Borrowing of Eurocurrency Loans on which the Dollar Amount of
the Outstandings of the Borrowers exceed (as the result of fluctuations
in applicable foreign exchange rates or otherwise) the then Commitment
Amount, make a mandatory repayment to the Agent of Loans outstanding in
an aggregate Dollar Amount equal to the excess of
(x) the aggregate Outstandings; over
(y) the then Commitment Amount;
(d) Each Borrower shall, immediately upon any acceleration of the
Stated Maturity Date of any Loans pursuant to Section 9.2 or
Section 9.3, repay all Loans, unless, pursuant to Section 9.3, only a
portion of all Loans is so accelerated.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by Section 5.4. No voluntary
prepayment of principal of any Loans shall cause a reduction in the Commitment
Amount.
SECTION 3.2. Interest Provisions. Interest on the outstanding
principal amount of Loans shall accrue and be payable in the applicable
Available Currency in accordance with this Section 3.2.
SECTION 3.2.1. Rates. Pursuant to an appropriately delivered
Borrowing Request or Continuation/Conversion Notice, the applicable Borrower
may elect that Loans comprising a Borrowing accrue interest at a rate per
annum:
(a) on that portion of the Loans maintained from time to time as
a Prime Rate Loan, equal to the sum of the Prime Rate from time to time
in effect plus the applicable Margin; and
(b) on that portion of the Loans maintained as a Eurocurrency
Rate Loan, during each Interest Period applicable thereto, equal to the
sum of the applicable Eurocurrency Rate (Reserve Adjusted) for such
Interest Period plus the applicable Margin.
SECTION 3.2.2. Post-Maturity Rates. After the date any principal
amount of any Loan is due and payable (whether on the Stated Maturity Date or
upon acceleration), or after any other monetary Obligation of any Borrower
shall have become due and payable, the Borrowers agree to pay, but only to the
extent permitted by law, interest (after as well as before judgment) on Prime
Rate Loans at a rate per annum equal to the Prime Rate plus a margin of 2% and
on Eurocurrency Rate Loans at a rate per annum equal to 2% in excess of the
rate otherwise applicable until the end of the then applicable Interest Period
and thereafter at a rate equal to 2.75% per annum on the Eurocurrency Rate
(Reserve Adjusted) for Interest Periods not to exceed one month as determined
by the Agent; provided that any Eurocurrency Rate Loan denominated in Dollars
shall convert to a Prime Rate Loan at the end of the applicable Interest
Period.
SECTION 3.2.3. Payment Dates. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date therefor;
(b) on the date of any payment or prepayment of any Eurocurrency
Rate Loans, in whole or in part, of principal outstanding on such
Eurocurrency Rate Loan;
(c) with respect to Prime Rate Loans, on each Quarterly Payment
Date occurring after the date of the initial Borrowing hereunder;
(d) with respect to Eurocurrency Rate Loans, on the last day of
each applicable Interest Period (and, if such Interest Period shall
exceed three months, on a date three months after the commencement of
said Interest Period, or if not a Business Day, on the next Business Day
unless said next Business Day is in the next calendar month then on the
preceding Business Day); and
(e) on that portion of any Loans the Stated Maturity Date of
which is accelerated pursuant to Section 9.2 or Section 9.3, immediately
upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable by the applicable Borrower upon demand.
SECTION 3.3. Fees. The Borrowers agree to pay the fees set forth in
this Section 3.3. All such fees shall be non-refundable.
SECTION 3.3.1. Commitment Fee.
(a) Simpson agrees to pay to the Agent for the account of each
Lender, for the period (including any portion thereof when its
Commitment is suspended by reason of the Borrowers' inability to satisfy
any condition of Article VI) commencing on the Effective Date and
continuing through the Commitment Termination Date, a commitment fee on
such Lender's Percentage of the average daily Dollar Amount of the
unused portion of the Loan Commitment Availability at the rate of 0.10%
per annum;
(b) For purposes of determining the commitment fee, the average
daily Dollar Amount of all outstanding Loans and the unused portion of
the Loan Commitment Availability shall be determined as of each
applicable Determination Date; and
(c) Such fee shall be payable in Dollars in immediately available
funds in arrears on each Quarterly Payment Date.
SECTION 3.3.2. Arrangement Fee; Agent's Fee. Simpson agrees to pay to
the Agent for its own account, a non-refundable arrangement fee, and,
thereafter, a non-refundable annual fee, in such amounts and payable at such
times as has been agreed upon between the Agent and Simpson in the fee letter
dated April 4, 1997 (as amended from time to time).
SECTION 3.3.3. Letter of Credit Face Amount Fee. The applicable
Borrower agrees to pay to the Agent, for the account of the Lenders, a fee for
each Letter of Credit issued on the application of such Borrower for the
period from and including the date of the issuance of such Letter of Credit to
(but not including) the date upon which such Letter of Credit expires, at a
per annum rate equal to the applicable Margin of the face amount of such
Letter of Credit (which face amount shall be reduced by any reductions in such
Letters of Credit pursuant to Section 4.1(d) hereof). Such fee shall be
payable in immediately available funds in advance on the date of issuance of
each Letter of Credit and on each Quarterly Payment Date thereafter. No
portion of such fee shall be refunded after payment.
SECTION 3.3.4. Letter of Credit Fronting Fee. The applicable Borrower
agrees to pay to the Issuer for its own account a fronting fee for each Letter
of Credit issued on the application of such Borrower for the period from and
including the date of the issuance of such Letter of Credit to (but not
including) the date upon which each Letter of Credit expires, of 0.02% (in the
case of a standby Letter of Credit) or 0.05% (in the case of a commercial
Letter of Credit) of the face amount of such Letter of Credit (which face
amount shall be reduced by any reductions in such Letters of Credit pursuant
to Section 4.1(c) hereof). Such fee shall be payable in immediately available
funds on the date of issuance of such Letter of Credit.
SECTION 3.3.5. Letter of Credit Administrative Fee. The Borrowers
agree to pay to the Agent, for the account of the Issuer, the amounts set
forth in Section 4.3.
ARTICLE IV
LETTERS OF CREDIT
SECTION 4.1. Issuance Requests. By delivering to the Agent and the
Issuer an Issuance Request on or before 10:00 A.M., New York time, any
Borrower may request, from time to time prior to the Commitment Termination
Date and on not less than three nor more than ten Business Days' notice, that
the Issuer issue an irrevocable letter of credit in substantially the form of
Exhibit D hereto, or in such other form as may be requested by a Borrower and
approved by the Issuer (each a "Letter of Credit"), in support of financial
obligations of such Borrower incurred in such Borrower's ordinary course of
business and which are described in such Issuance Request. Upon receipt of an
Issuance Request, the Agent shall promptly notify the Lenders thereof. Each
Letter of Credit shall by its terms:
(a) be issued in Dollars;
(b) be issued in a Stated Amount which does not exceed (or would
not exceed) the then Letter of Credit Availability;
(c) be stated to expire on a date (its "Stated Expiry Date") no
later than the earlier of (i) one year from the date of issuance, or
(ii) the Commitment Termination Date; and
(d) on or prior to its Stated Expiry Date
(i) terminate immediately upon notice to the Issuer
thereof from the beneficiary thereunder that all obligations
covered thereby have been terminated, paid, or otherwise satisfied
in full, or
(ii) reduce in part immediately and to the extent the
beneficiary thereunder has notified the Issuer thereof that the
obligations covered thereby have been paid or otherwise satisfied
in part.
So long as no Default has occurred and is continuing and subject to the
conditions set forth in this Agreement, by delivery to the Issuer and the
Agent of an Issuance Request at least three but not more than ten Business
Days prior to the Stated Expiry Date of any Letter of Credit, such Borrower
may request the Issuer to extend the Stated Expiry Date of such Letter of
Credit for an additional period not to extend beyond the Commitment
Termination Date.
SECTION 4.2. Issuances and Extensions. On the terms and subject to
the conditions of this Agreement (including Article VI), the Issuer shall
issue Letters of Credit, and extend the Stated Expiry Dates of outstanding
Letters of Credit, in accordance with the Issuance Requests made therefor.
The Issuer will make available the original of each Letter of Credit which it
issues in accordance with the Issuance Request therefor to the beneficiary
thereof (and will promptly notify each of the Lenders of the issuance) and
will notify the beneficiary under any Letter of Credit of any extension of the
Stated Expiry Date thereof.
SECTION 4.3. Expenses. Each Borrower agrees to pay to the Agent for
the account of the Issuer with respect to each Letter of Credit issued on the
application of such Borrower all standard administrative expenses of the
Issuer in connection with the issuance, maintenance, modification (if any) and
administration of each Letter of Credit issued by the Issuer at the request of
the Borrower upon demand from time to time.
SECTION 4.4. Other Lenders' Participation. Each Letter of Credit
issued pursuant to Section 4.2 shall, effective upon its issuance and without
further action, be issued on behalf of all Lenders (including the Issuer
thereof) pro rata according to their respective Percentages. Each Lender
shall, to the extent of its Percentage (unless the Issuer shall have received
written notice that the conditions precedent to the issuance of such Letter of
Credit had not occurred prior to such issuance), be deemed irrevocably to have
participated in the issuance of such Letter of Credit and shall be responsible
to reimburse promptly the Issuer thereof for Reimbursement Obligations which
have not been reimbursed by the applicable Borrower in accordance with
Section 4.5, or which have been reimbursed by the applicable Borrower but must
be returned, restored or disgorged by the Issuer for any reason, and each
Lender shall, to the extent of its Percentage, be entitled to receive from the
Agent a ratable portion of the letter of credit fees received by the Agent
pursuant to Section 3.3.3, with respect to each Letter of Credit. In the
event that the applicable Borrower shall fail to reimburse the Issuer, or if
for any reason Revolving Loans shall not be made to fund any Reimbursement
Obligation, all as provided in Section 4.5 and in an amount equal to the
amount of any drawing honored by the Issuer under a Letter of Credit issued by
it, or in the event the Issuer must for any reason return or disgorge such
reimbursement, the Issuer shall promptly notify each Lender of the
unreimbursed amount of such drawing and of such Lender's respective
participation therein. Each Lender shall make available to the Issuer,
whether or not any Default shall have occurred and be continuing, an amount
equal to its respective participation in same day or immediately available
funds at the office of the Issuer specified in such notice not later than
10:00 A.M., New York time, on the Business Day after the date the Lenders are
notified by the Issuer. In the event that any Lender fails to make available
to the Issuer the amount of such Lender's participation in such Letter of
Credit as provided herein, the Issuer shall be entitled to recover such amount
on demand from such Lender together with interest at the Federal Funds Rate
for three Business Days (together with such other compensatory amounts as may
be required to be paid by such Lender to the Agent pursuant to the Rules for
Interbank Compensation of the Council on International Banking or the
Clearinghouse Compensation Committee, as the case may be, as in effect from
time to time) and thereafter at the Prime Rate plus 2%. Nothing in this
Section shall be deemed to prejudice the right of any Lender to recover from
the Issuer any amounts made available by such Lender to the Issuer pursuant to
this Section in the event that it is determined by a court of competent
jurisdiction that the payment with respect to a Letter of Credit by the Issuer
in respect of which payment was made by such Lender constituted gross
negligence or wilful misconduct on the part of the Issuer. The Issuer shall
distribute to each other Lender which has paid all amounts payable by it under
this Section with respect to any Letter of Credit issued by the Issuer such
other Lender's Percentage of all payments received by the Issuer from the
applicable Borrower in reimbursement of drawings honored by the Issuer under
such Letter of Credit when such payments are received.
SECTION 4.5. Disbursements. The Issuer will notify the applicable
Borrower and the Agent promptly of the presentment for payment of any Letter
of Credit, together with notice of the date (a "Disbursement Date") such
payment shall be made. Subject to the terms and provisions of such Letter of
Credit, the Issuer shall make such payment to the beneficiary (or its
designee) of such Letter of Credit. Prior to 10:00 A.M., New York time, on
the Disbursement Date, the applicable Borrower will reimburse the Issuer for
all amounts which it has disbursed under the Letter of Credit. To the extent
the Issuer is not reimbursed in full in accordance with the third sentence of
this Section, the Borrower's Reimbursement Obligation shall accrue interest
(i) during the three days following the Disbursement Date at the Prime Rate
and (ii) thereafter at the Prime Rate plus a margin of 2% per annum, payable
on demand. In the event the Issuer is not reimbursed by the applicable
Borrower on the Disbursement Date (other than upon a deemed Disbursement under
Section 4.7 when an actual Disbursement has not been made), or if the Issuer
must for any reason return or disgorge such reimbursement, the Lenders
(including the Issuer) shall, on the terms and subject to the conditions of
this Agreement, fund the Reimbursement Obligation therefor by making Revolving
Loans which shall be Prime Rate Loans (the applicable Borrower being deemed to
have given a timely Borrowing Request therefor for such amount); provided,
however, for the purpose of determining the availability of the Commitments to
make Revolving Loans immediately prior to giving effect to the application of
the proceeds of such Revolving Loans, such Reimbursement Obligation shall be
deemed not to be outstanding at such time.
SECTION 4.6. Reimbursement. The obligation of each Borrower (a
"Reimbursement Obligation") under Section 4.5 to reimburse the Issuer with
respect to each Disbursement (including interest thereon) with respect to each
Letter of Credit issued on such Borrower's application, and each Lender's
obligation to make participation payments in each drawing which has not been
reimbursed by the Borrower, shall be absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim, or defense to
payment which the applicable Borrower may have or have had against any Lender
or any beneficiary of a Letter of Credit, including any defense based upon the
occurrence of any Default, any draft, demand or certificate or other document
presented under a Letter of Credit proving to be forged, fraudulent, invalid
or insufficient, the failure of any Disbursement to conform to the terms of
the applicable Letter of Credit (if, in the Issuer's opinion, such
Disbursement conforms to the terms of the applicable Letter of Credit, unless
such determination is the result of the Issuer's gross negligence or wilful
misconduct) or any non-application or misapplication by the beneficiary of the
proceeds of such Disbursement, or the legality, validity, form, regularity, or
enforceability of such Letter of Credit; provided, however, that nothing
herein shall adversely affect the right of the applicable Borrower to commence
any proceeding against the Issuer for any wrongful Disbursement made by the
Issuer under a Letter of Credit as a result of acts or omissions constituting
gross negligence or wilful misconduct on the part of the Issuer.
SECTION 4.7. Deemed Disbursements. Upon the occurrence and during the
continuation of any Event of Default or the occurrence of the Commitment
Termination Date, an amount equal to that portion of Letter of Credit
Outstandings attributable to outstanding and undrawn Letters of Credit shall,
at the election of the Issuer acting on instructions from the Required
Lenders, and without demand upon or notice to the applicable Borrower, be
deemed to have been paid or disbursed by the Issuer under such Letters of
Credit (notwithstanding that such amount may not in fact have been so paid or
disbursed), and, upon notification by the Issuer to the Agent and the
applicable Borrower of its obligations under this Section, the applicable
Borrower shall be immediately obligated to reimburse the Issuer the amount
deemed to have been so paid or disbursed by the Issuer. Any amounts so
received by the Issuer from the applicable Borrower pursuant to this Section
shall be held as collateral security for the repayment of the applicable
Borrower's obligations in connection with the Letters of Credit issued by the
Issuer. At any time when such Letters of Credit shall terminate and all
Obligations of the Issuer are either terminated or paid or reimbursed to the
Issuer in full, the Obligations under this Section shall be reduced
accordingly (subject, however, to reinstatement in the event any payment in
respect of such Letters of Credit is recovered in any manner from the Issuer),
and the Issuer will return to the Borrowers the excess, if any, of
(a) the aggregate amount deposited by the applicable Borrower
with the Issuer and not theretofore applied by the Issuer to any
Reimbursement Obligation or other Obligation
over
(b) the aggregate amount of all Reimbursement Obligations to the
Issuer pursuant to this Section, as so adjusted and other Obligations.
At such time when all Events of Default shall have been cured or waived or
when all Obligations of the Borrowers shall have been terminated, paid, or
otherwise satisfied in full, the Issuer shall return to the Borrowers all
amounts then on deposit with the Issuer pursuant to this Section.
SECTION 4.8. Nature of Reimbursement Obligations. The Borrowers shall
assume all risks of the acts, omissions, or misuse of any Letter of Credit by
the beneficiary thereof. Neither the Issuer nor any Lender (except to the
extent of its own gross negligence or wilful misconduct) shall be responsible
for:
(a) the form, genuineness, or legal effect of any Letter of
Credit or the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any document submitted by any party in connection with
the application for and issuance of a Letter of Credit, even if it
should in fact prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent, or forged;
(b) the form, validity, sufficiency, accuracy, genuineness, or
legal effect of any instrument transferring or assigning or purporting
to transfer or assign a Letter of Credit or the rights or benefits
thereunder or proceeds thereof in whole or in part, which may prove to
be invalid or ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
(d) errors, omissions, interruptions, or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex, or
otherwise; or
(e) any loss or delay in the transmission or otherwise of any
document or draft required in order to make a Disbursement under a
Letter of Credit or of the proceeds thereof.
SECTION 4.9. Increased Costs; Indemnity. If by reason of
(a) any change in applicable law, regulation, rule, decree or
regulatory requirement or any change in the interpretation or
application by any judicial or regulatory authority of any law,
regulation, rule, decree or regulatory requirement, or
(b) compliance by the Issuer or any Lender with any direction,
request or requirement (whether or not having the force of law) of any
governmental or monetary authority, including Regulation D of the F.R.S.
Board:
(i) the Issuer or any Lender shall be subject to any tax
(other than taxes on net income and franchises), levy, charge or
withholding of any nature or to any variation thereof or to any
penalty with respect to the maintenance or fulfillment of its
obligations under this Article IV, whether directly or by such
being imposed on or suffered by the Issuer or any Lender;
(ii) any reserve, deposit or similar requirement is or
shall be applicable, imposed or modified in respect of any Letters
of Credit issued by the Issuer or participations therein purchased
by any Lender; or
(iii) there shall be imposed on the Issuer or any Lender
any other condition regarding this Article IV, any Letter of
Credit or any participation therein;
and the result of the foregoing is directly or indirectly to increase the cost
to the Issuer or such Lender of issuing, making or maintaining any Letter of
Credit or of purchasing or maintaining any participation therein, or to reduce
any amount receivable in respect thereof by the Issuer or such Lender, then
and in any such case the Issuer or such Lender may, at any time after the
additional cost is incurred or the amount received is reduced, notify the
Borrower on whose application such Letter of Credit was issued thereof, and
such Borrower agrees to pay no later than three days after demand such amounts
as the Issuer or Lender may specify to be necessary to compensate the Issuer
or Lender for such additional cost or reduced receipt, together with interest
on such amount from the date due until payment in full thereof at a rate equal
at all times to the Prime Rate plus 2% per annum. The determination by the
Issuer or Lender, as the case may be, of any amount due pursuant to this
Section, as set forth in a statement setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest error, be final and
conclusive and binding on all of the parties hereto. In addition to amounts
payable as elsewhere provided in this Article IV, the Borrower on whose
application such Letter of Credit was issued agrees to protect, indemnify, pay
and save the Issuer harmless from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including
reasonable attorneys' fees and allocated costs of internal counsel) which the
Issuer may incur or be subject to as a consequence, direct or indirect, of
(c) the issuance of any Letter of Credit, other than as a result
of the gross negligence or wilful misconduct of the Issuer as determined
by a court of competent jurisdiction or other than with respect to the
validity, sufficiency or accuracy of any Letter of Credit, or
(d) the failure of the Issuer to honor a drawing under any Letter
of Credit requested by such Borrower as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority.
SECTION 4.10. Uniform Customs. Each Letter of Credit shall be subject
to the Uniform Customs and Practice for Documentary Credits, 1993 Revisions,
ICC Publication No. 500.
ARTICLE V
CERTAIN EUROCURRENCY RATE AND OTHER PROVISIONS
SECTION 5.1. Eurocurrency Rate Lending Unlawful. If any Lender shall
determine in good faith (which determination shall, upon notice thereof to the
Borrowers and the Lenders, be conclusive and binding) that the introduction of
or any change in or in the interpretation of any law makes it unlawful, or any
central bank or other governmental authority asserts that it is unlawful, for
such Lender to make, continue or maintain any Loan as, or to convert any Loan
into, a Eurocurrency Rate Loan of a certain Available Currency, the
obligations of all Lenders to make, continue, maintain or convert into any
such Loans shall, upon such determination, forthwith be suspended until such
Lender shall notify the Agent that the circumstances causing such suspension
no longer exist, and all Eurocurrency Rate Loans of such Available Currency
shall automatically convert into Prime Rate in an amount equal to the Dollar
Amount thereof at the end of the then current Interest Periods with respect
thereto or sooner, if required by such law or assertion.
SECTION 5.2. Deposits Unavailable. If the Agent shall have determined
that
(a) deposits in the relevant Available Currency in the relevant
amount and for the relevant Interest Period are not available to ABN in
its relevant market; or
(b) by reason of circumstances affecting ABN's relevant market,
adequate means do not exist for ascertaining the interest rate
applicable hereunder to Eurocurrency Rate Loans of such type,
then, upon notice from the Agent to the Borrowers and the Lenders, the
obligations of all Lenders under Section 2.3 and Section 2.4 to make or
continue any Loans as, or to convert any Loans into, Eurocurrency Rate Loans
of such Available Currency shall forthwith be suspended until the Agent shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.
SECTION 5.3. Increased Eurocurrency Rate Loan Costs, etc. Each
Borrower agrees to reimburse any Lender if, as a result of any change in any
law, regulation, treaty or directive, or in any regulatory interpretation or
application thereof or compliance by such Lender with any request or directive
(whether or not having the force of law) from any court or governmental
authority, agency or central bank
(i) the basis of taxation of payments to such Lender of the
principal of or interest on any Eurocurrency Rate Loan (other than taxes
imposed on the overall net income of such Lender by the jurisdiction in
which such Lender has its principal office) is changed;
(ii) any reserve, special deposit or similar requirements against
assets of, deposits with or for the account of, or credit extended by,
such Lender are imposed, modified or deemed applicable; or
(iii) any other condition affecting this Agreement or any
Eurocurrency Rate Loan is imposed on the interbank eurocurrency market;
and such Lender determines that, by reason thereof, the cost to such Lender of
making or maintaining any of the Eurocurrency Rate Loans is actually
increased, or the amount of any sum receivable by such Lender hereunder in
respect of any of the Eurocurrency Rate Loans is actually reduced; then the
applicable Borrower shall pay to such Lender within three Business Days after
demand (which demand shall be accompanied by a statement setting forth the
basis for the calculation thereof but only to the extent not theretofore
provided to the applicable Borrower) such additional amount or amounts as will
compensate such Lender for such additional cost or reduction to the extent
such cost or reduction has not been provided for in the calculation of the
Eurocurrency Reserve Percentage. Determinations by such Lender for purposes
of this section of the additional amounts required to compensate such Lender
in respect of the foregoing shall be rebuttably presumed to be correct.
SECTION 5.4. Funding Losses. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any Loan
as, or to convert any portion of the principal amount of any Loan into, a
Eurocurrency Rate Loan) as a result of
(a) any conversion or repayment or prepayment of the principal
amount of any Eurocurrency Rate Loans on a date other than the scheduled
last day of the Interest Period applicable thereto, whether pursuant to
Section 3.1 or otherwise;
(b) any Loans not being made as Eurocurrency Rate Loans in
accordance with the Borrowing Request therefor; or
(c) any Loans not being continued as, or converted into,
Eurocurrency Rate Loans in accordance with the Continuation/Conversion
Notice therefor,
then, the applicable Borrower agrees that upon the written notice of such
Lender (with a copy to the Agent), such Borrower shall pay directly to such
Lender upon demand such amount as will (in the reasonable determination of
such Lender) reimburse such Lender for such loss or expense. Such written
notice (which shall include calculations in reasonable detail) shall, in the
absence of manifest error, be conclusive and binding on the Borrower.
SECTION 5.5. Increased Capital Costs. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in its sole and absolute discretion)
that the rate of return on its or such controlling Person's capital as a
consequence of its Commitments, issuance of or participation in Letters of
Credit or the Loans made by such Lender is reduced to a level below that which
such Lender or such controlling Person could have achieved but for the
occurrence of any such circumstance, then, in any such case upon notice from
time to time by such Lender, the Borrowers agree immediately to pay directly
to such Lender additional amounts sufficient to compensate such Lender or such
controlling Person for such reduction in rate of return. A statement of such
Lender as to any such additional amount or amounts (including calculations
thereof in reasonable detail) shall, in the absence of manifest error, be
conclusive and binding on the Borrowers. In determining such amount, such
Lender may use any method of averaging and attribution that it (in its sole
and absolute discretion) shall deem applicable.
SECTION 5.6. Taxes. All payments by any of the Borrowers of principal
of, and interest on, the Loans and all other amounts payable hereunder shall
be made free and clear of and without deduction for any present or future
income, excise, stamp or franchise taxes and other taxes, fees, duties,
withholdings or other charges of any nature whatsoever imposed by any taxing
authority, but excluding franchise taxes and taxes imposed on or measured by
any Lender's net income or receipts (such non-excluded items being called
"Taxes"). In the event that any withholding or deduction from any payment to
be made by a Borrower hereunder is required in respect of any Taxes pursuant
to any applicable law, rule or regulation, then the applicable Borrower agrees
to
(a) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Lenders such
additional amount or amounts as is necessary to ensure that the net
amount actually received by each Lender will equal the full amount such
Lender would have received had no such withholding or deduction been
required.
Moreover, if any Taxes are directly asserted against the Agent or any Lender
with respect to any payment received by the Agent or such Lender hereunder,
the Agent or such Lender may pay such Taxes and the applicable Borrower agrees
to promptly pay such additional amounts (including any penalties, interest or
expenses) as is necessary in order that the net amount received by such person
after the payment of such Taxes (including any Taxes on such additional
amount) shall equal the amount such person would have received had not such
Taxes been asserted.
If the applicable Borrower fails to pay any Taxes when due to the
appropriate taxing authority or fail to remit to the Agent, for the account of
the respective Lenders, the required receipts or other required documentary
evidence, the applicable Borrower shall indemnify the Lenders for any
incremental Taxes, interest or penalties that may become payable by any Lender
as a result of any such failure. For purposes of this Section 5.6, a
distribution hereunder by the Agent or any Lender to or for the account of any
Lender shall be deemed a payment by the Borrower.
Upon the request of Simpson or the Agent, each Lender that is organized
under the laws of a jurisdiction other than the United States shall, prior to
the due date of any payments under the Notes, execute and deliver to Simpson
and the Agent, on or about the first scheduled payment date in each Fiscal
Year, one or more (as Simpson or the Agent may reasonably request) United
States Internal Revenue Service Forms 4224 or Forms 1001 or such other forms
or documents (or successor forms or documents), appropriately completed, as
may be applicable to establish the extent, if any, to which a payment to such
Lender is exempt from withholding or deduction of Taxes.
Notwithstanding anything to the contrary herein, the Borrowers shall not
be responsible for any Taxes on the transfer by assignment or sale of a
participation of any interest herein, nor shall the liability of the Borrowers
under this Section 5.6 be increased by reason of any assignment or sale of a
participation, except upon any change in law arising after said assignment or
sale.
SECTION 5.7. Payments, Computations, etc.
(a) Currency of Payments. Each payment on account of an amount
due from any Borrower hereunder shall be made by such Borrower to the
Agent for the pro rata account of the Lenders entitled to receive such
payment in the currency in which such amount is denominated and in such
funds as are customary at the place and time of payment for the
settlement of international payments in such currency. Upon request,
the Agent will give the applicable Borrower a statement showing the
computation used in calculating such amount, which statement shall be
conclusive in the absence of manifest error. The obligation of the
Borrowers to make each payment on account of such amount in the currency
in which such amount is denominated shall not be discharged or satisfied
by any tender, or any recovery pursuant to any judgment, which is
expressed in or converted into any other currency, except to the extent
such tender or recovery shall result in the actual receipt by the Agent
of the full amount in the appropriate currency payable hereunder. Each
Borrower agrees that its obligation to make each payment on account of
such amount in the currency in which such amount is denominated shall be
enforceable as an additional or alternative claim for recovery in such
currency of the amount (if any) by which such actual receipt shall fall
short of the full amount of such currency payable hereunder, and shall
not be affected by judgment being obtained for such amount.
(b) Conversion of Currencies. If for the purpose of obtaining
judgment in any court it is necessary to convert an amount in any
currency due from the Borrowers hereunder (hereinafter called the
"Original Currency") into another currency (hereinafter called the
"Other Currency"), the rate of exchange which shall be applied shall, to
the fullest extent permitted by applicable law, be that at which the
Agent could purchase, in Chicago, Illinois, in accordance with normal
banking procedures, the Original Currency with the Other Currency on the
Business Day preceding that on which final judgment is given.
(c) Remittance to Lenders; Basis for Payments. The Agent shall
promptly remit in same day funds to each Lender its share, if any, of
such payments received by the Agent for the account of such Lender. All
interest and fees shall be computed on the basis of the actual number of
days (including the first day but excluding the last day) occurring
during the period for which such interest or fee is payable over a year
comprised of 360 days (or, in the case of interest on Prime Rate Loan
(other than when calculated with respect to the Federal Funds Rate) or
Eurocurrency Rate Loans denominated in Pounds Sterling, 365 days or, if
appropriate, 366 days). Whenever any payment to be made shall otherwise
be due on a day which is not a Business Day, such payment shall (except
as otherwise required by clause (c) of the definition of the term
"Interest Period" with respect to Eurocurrency Rate Loans) be made on
the next succeeding Business Day and such extension of time shall be
included in computing interest and fees, if any, in connection with such
payment.
(d) Place of Payment. All payments hereunder shall be made to
Agent in immediately available funds prior to 10:00 A.M., Chicago time
on the date due at its office at 335 Madison Ave., N.Y., N.Y. 10017, or
at such other place as may be designated by the Agent to Simpson in
writing. Any payments received after such time shall be deemed received
on the next succeeding Business Day. The Agent may, but shall not be
obligated to, charge the account of any Borrower for the payment when
due of all amounts payable by such Borrower hereunder.
SECTION 5.8. Sharing of Payments. If any Lender shall obtain any
payment or other recovery (whether voluntary, involuntary, by application of
setoff or otherwise) on account of any Loan (other than pursuant to the terms
of Sections 5.3, 5.4 and 5.5) or Letter of Credit in excess of its pro rata
share of payments then or therewith obtained by all Lenders, such Lender shall
purchase from the other Lenders such participations in Loans made by them
and/or Letters of Credit as shall be necessary to cause such purchasing Lender
to share the excess payment or other recovery ratably with each of them;
provided, however, that if all or any portion of the excess payment or other
recovery is thereafter recovered from such purchasing Lender, the purchase
shall be rescinded and each Lender which has sold a participation to the
purchasing Lender shall repay to the purchasing Lender the purchase price to
the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of
(a) the amount of such selling Lender's required repayment to the
purchasing Lender
to
(b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid or payable by the purchasing Lender in
respect of the total amount so recovered. The Borrowers agree that any Lender
so purchasing a participation from another Lender pursuant to this Section
may, to the fullest extent permitted by law, exercise all its rights of
payment (including pursuant to Section 5.9) with respect to such
participation as fully as if such Lender were the direct creditor of the
applicable Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a setoff to which this Section applies, such Lender
shall, to the extent practicable, exercise its rights in respect of such
secured claim in a manner consistent with the rights of the Lenders entitled
under this Section to share in the benefits of any recovery on such secured
claim.
SECTION 5.9. Setoff. Each Lender shall, upon the occurrence of any
Default described in clauses (a) through (d) of Section 9.1.9 or any other
Event of Default, have the right to appropriate and apply to the payment of
the Obligations owing to it (whether or not then due), and (as security for
such Obligations) each Borrower hereby grants to each Lender a continuing
security interest in, any and all balances, credits, deposits, accounts or
moneys of each such Borrower then or thereafter maintained with or otherwise
held by such Lender; provided, however, that any such appropriation and
application shall be subject to the provisions of Section 5.8. Each Lender
agrees promptly to notify the applicable Borrower and the Agent after any such
setoff and application made by such Lender; provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of each Lender under this Section are in addition to
other rights and remedies (including other rights of setoff under applicable
law or otherwise) which such Lender may have.
SECTION 5.10. Use of Proceeds. The Borrowers shall use the proceeds
of each Borrowing to finance acquisitions and for general corporate purposes.
ARTICLE VI
CONDITIONS PRECEDENT
SECTION 6.1. Initial Credit Extension. The obligations of the Lenders
to make the initial Credit Extension shall be subject to the prior or
concurrent satisfaction of each of the conditions precedent set forth in this
Section 6.1.
SECTION 6.1.1. Resolutions, etc. The Agent shall have received from
each Borrower a certificate, dated the date of the initial Borrowing, of its
Secretary or Assistant Secretary as to
(a) certified copies of its articles of incorporation and by-laws
or comparable documentation in the case of foreign Borrowers;
(b) resolutions of its board of directors then in full force and
effect authorizing the execution, delivery and performance of this
Agreement, the Notes and each other Loan Document to be executed by it;
(c) the incumbency and signatures of those of its officers
authorized to act with respect to this Agreement, the Notes and each
other Loan Document executed by it; and
(d) the incumbency and signature of the chief financial officer,
the treasurer and any assistant treasurer of Simpson;
upon which certificate each Lender may conclusively rely until it shall have
received a further certificate of the Secretary of such Borrower canceling or
amending such prior certificate.
SECTION 6.1.2. Delivery of Notes. The Agent shall have received, for
the account of each Lender, its Notes duly executed and delivered by the
Borrowers.
SECTION 6.1.3. Outstanding Indebtedness, etc. (a) All Indebtedness
under that Third Amended and Restated Revolving Credit Agreement, dated as of
August 1, 1996, between the Borrower and Comerica Bank, a Michigan Banking
Corporation, together with all interest, all prepayment premiums and other
amounts due and payable with respect thereto, shall have been paid in full
(including, to the extent necessary, from proceeds of the initial Borrowing)
and the related commitments terminated; and all Liens securing payment of any
such Indebtedness have been released and the Agent shall have received all
Uniform Commercial Code Form UCC-3 termination statements or other instruments
as may be suitable or appropriate in connection therewith.
(b) The Borrowers shall have obtained and delivered any amendments to
agreements regarding Indebtedness existing as of the Effective Date which are
necessary to permit the transactions contemplated by this Agreement.
SECTION 6.1.4. Delivery of Simpson Guaranty. The Agent shall have
received the Simpson Guaranty duly executed and delivered by Simpson.
SECTION 6.1.5. Opinions of Counsel. The Agent shall have received the
opinion, dated the date of the initial Borrowing and addressed to the Agent
and all Lenders, from Dykema Gossett PLLC, substantially in the form of
Exhibit I hereto.
SECTION 6.1.6. Regulatory Restriction. All regulatory approvals and
licenses necessary to the execution, delivery and performance of the Agreement
and the Loan Documents shall have been obtained and be in full force and
effect and such execution, delivery and performance shall not be prohibited or
restricted in any material way pursuant to any law or regulation.
SECTION 6.1.7. Closing Fees, Expenses, etc. The Agent shall have
received for its own account, or for the account of each Lender, as the case
may be, all fees, costs and expenses due and payable pursuant to Sections 3.3
and 11.3, if then invoiced.
SECTION 6.2. All Credit Extensions. The obligation of each Lender
to make any Credit Extension (including the initial Credit Extension) shall be
subject to the satisfaction of each of the conditions precedent set forth in
this Section 6.2.
SECTION 6.2.1. Compliance with Warranties, No Default, etc. Both
before and after giving effect to any Credit Extension (but, if any Default of
the nature referred to in Section 9.1.5 shall have occurred with respect to
any other Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds of any Borrowing) the following statements shall
be true and correct
(a) the representations and warranties set forth in Article VII
(excluding, however, those contained in Section 7.8) shall be true and
correct with the same effect as if then made (unless stated to relate
solely to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date);
(b) except as disclosed by the Borrowers to the Agent and the
Lenders pursuant to Section 7.8
(i) no litigation, arbitration, or governmental
investigation, proceeding or inquiry shall be pending or, to the
knowledge of the Borrowers, threatened against any Borrower which,
if adversely determined, would materially adversely affect the
business, operations, assets, revenues or financial condition of
Simpson and its Subsidiaries taken as a whole; and
(ii) no development shall have occurred in any such
litigation, arbitration or governmental investigation, proceeding
or inquiry so disclosed, which, if adversely determined, would
materially adversely affect the business, operations, assets,
revenues or financial condition of Simpson and its Subsidiaries
taken as a whole.
(c) no Default shall have then occurred and be continuing, and
neither Simpson nor any of its Subsidiaries are in violation of any
applicable law or governmental regulation or court order or decree which
would materially adversely affect the business, operations, assets,
revenues or financial condition of Simpson and its Subsidiaries taken as
a whole.
SECTION 6.2.2. Credit Request. The Agent shall have received the
related Borrowing Request or Issuance Request, as the case may be, for such
Credit Extension, which Borrowing Request or Issuance Request will include a
statement that all conditions to such Borrowing have been met. Each of the
delivery of a Borrowing Request or an Issuance Request and the acceptance by
any Borrower of the proceeds of the Borrowing or the issuance of the Letter of
Credit, as applicable, shall constitute a representation and warranty by the
Borrowers that on the date of such Borrowing (both immediately before and
after giving effect to such Borrowing and the application of the proceeds
thereof) or the issuance of the Letter of Credit, as applicable, the
statements made in Section 6.2.1 are true and correct.
SECTION 6.2.3. Satisfactory Legal Form. All documents executed or
submitted pursuant hereto by or on behalf of any Borrower or any other
Subsidiary shall be satisfactory in form and substance to the Agent and its
counsel; the Agent and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Agent or its counsel may
reasonably request.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Agreement and to make Loans and issue Letters of Credit hereunder, the
Borrowers represent and warrant unto the Agent and each Lender as set forth in
this Article VII.
SECTION 7.1. Organization, etc. Each of the Borrowers is a
corporation validly organized and existing and in good standing under the laws
of the jurisdiction of its incorporation, is duly qualified to do business and
is in good standing as a foreign corporation in each jurisdiction where the
nature of its business or properties requires such qualification, and has full
power and authority and holds all requisite governmental licenses, permits and
other approvals to enter into and perform its Obligations under this
Agreement, the Notes and each other Loan Document to which it is a party and
to own and hold under lease its property and to conduct its business
substantially as currently conducted by it.
SECTION 7.2. Due Authorization, Non-Contravention, etc. The
execution, delivery and performance by each of the Borrowers of this
Agreement, the Notes and each other Loan Document executed or to be executed
by it, are within each such Borrower's powers, have been duly authorized by
all necessary action, and do not
(a) contravene such Borrower's Organic Documents;
(b) contravene any contractual restriction, law or governmental
regulation or court decree or order binding on or affecting such
Borrower; or
(c) result in, or require the creation or imposition of, any Lien
on any of such Borrower's properties.
SECTION 7.3. Government Approval, Regulation, etc. No authorization
or approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other Person is required for the
due execution, delivery or performance by any of the Borrowers of this
Agreement, the Notes or any other Loan Document to which it is a party. No
Borrower nor any of its Subsidiaries is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, or a "holding
company", or a "subsidiary company" of a "holding company", or an "affiliate"
of a "holding company" or of a "subsidiary company" of a "holding company",
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
SECTION 7.4. Validity, etc. This Agreement constitutes, and the Notes
and each other Loan Document executed by each of the Borrowers will, on the
due execution and delivery thereof, constitute, the legal, valid and binding
obligations of such Borrower enforceable in accordance with their respective
terms.
SECTION 7.5. Financial Information. The consolidated balance sheets
of Simpson as at December 31, 1996, and the related consolidated statements of
earnings and cash flow of Simpson, copies of which have been furnished to the
Agent and each Lender, have been prepared in accordance with GAAP consistently
applied, and present fairly the consolidated financial condition of the
corporations covered thereby as at the dates thereof and the results of their
operations for the periods then ended.
SECTION 7.6. No Material Adverse Change. Since the date of the
financial statements described in Section 7.5, there has been no material
adverse change in the financial condition, operations, assets, business or
properties of Simpson and its Subsidiaries taken as a whole.
SECTION 7.7. Environmental Warranties. Except as set forth in Item
7.7 ("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and property (including underlying
groundwater) owned or leased by Simpson or any of its Subsidiaries have
been, and continue to be, owned or leased by Simpson and its
Subsidiaries in material compliance with all Environmental Laws;
(b) there have been no past, and there are no pending or to
Simpson's knowledge threatened
(i) claims, complaints, notices or requests for
information received by Simpson or any of its Subsidiaries with
respect to any alleged violation of any Environmental Law, or
(ii) complaints, notices or inquiries to Simpson or any
of its Subsidiaries regarding potential liability under any
Environmental Law;
(c) there have been no Releases of Hazardous Materials at, on or
under any property now or previously owned or leased by Simpson or any
of its Subsidiaries that, singly or in the aggregate, have, or may
reasonably be expected to have, a material adverse effect on the
financial condition, operations, assets, business or properties of
Simpson and its Subsidiaries;
(d) Simpson and its Subsidiaries have been issued and are in
material compliance with all permits, certificates, approvals, licenses
and other authorizations relating to environmental matters and necessary
or desirable for their businesses;
(e) no property now or previously owned or leased by Simpson or
any of its Subsidiaries is listed or proposed for listing (with respect
to owned property only) on the National Priorities List pursuant to
CERCLA, on the CERCLIS or on any similar state list of sites requiring
investigation or clean-up;
(f) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or
previously owned or leased by Simpson or any of its Subsidiaries that,
singly or in the aggregate, have, or may reasonably be expected to have,
a material adverse effect on the financial condition, operations,
assets, business or properties of Simpson and its Subsidiaries;
(g) neither Simpson nor any of its Subsidiaries has directly
transported or directly arranged for the transportation of any Hazardous
Material to any location which is listed or proposed for listing on the
National Priorities List pursuant to CERCLA, on the CERCLIS or on any
similar state list or which is the subject of federal, state or local
enforcement actions or other investigations which may lead to material
claims against Simpson or such Subsidiary thereof for any remedial work,
damage to natural resources or personal injury, including claims under
CERCLA;
(h) there are no polychlorinated biphenyls or friable asbestos
present at any property now or previously owned or leased by Simpson or
any of its Subsidiaries that, singly or in the aggregate, have, or may
reasonably be expected to have, a material adverse effect on the
financial condition, operations, assets, business or properties of
Simpson and its Subsidiaries; and
(i) no conditions exist at, on or, to Simpson's knowledge,
under any property now or previously owned or leased by Simpson or any
of its Subsidiaries which, with the passage of time, or the giving of
notice or both, would give rise to liability under any Environmental
Law.
SECTION 7.8. Litigation, Labor Controversies, etc. There is no
pending or, to the knowledge of any Borrower, threatened litigation, action,
proceeding, or labor controversy affecting Simpson or its Subsidiaries, or any
of their respective properties, businesses, assets or revenues, which may
materially adversely affect the financial condition, operations, assets,
business or properties of Simpson and its Subsidiaries taken as a whole or
which purports to affect the legality, validity or enforceability of this
Agreement, the Notes or any other Loan Document, except as disclosed in
Item 7.8 ("Litigation") of the Disclosure Schedule.
SECTION 7.9. Subsidiaries. Neither Simpson nor any other Borrower has
any Subsidiaries or Significant Subsidiaries other than those
(a) which are identified in Item 7.9 ("Existing Subsidiaries")
of the Disclosure Schedule; or
(b) which are permitted to have been acquired in accordance with
Section 8.2.4 or 8.2.5.
SECTION 7.10. Ownership of Properties. Each Borrower and each of its
Subsidiaries owns good and marketable title to all of its properties and
assets, real and personal, tangible and intangible, of any nature whatsoever
(including patents, trademarks, trade names, service marks and copyrights),
free and clear of all Liens, charges or claims (including infringement claims
with respect to patents, trademarks, copyrights and the like) except as
permitted pursuant to Section 8.2.2.
SECTION 7.11. Taxes. Each Borrower and each of its Subsidiaries has
filed all tax returns and reports required by law to have been filed by it
(unless any extension period properly obtained with respect thereto shall not
have expired) and has paid all taxes and governmental charges thereby shown to
be owing, except any such taxes or charges which are being diligently
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside on its books.
SECTION 7.12. Pension and Welfare Plans. During the twelve-consecutive-
month period prior to the date of the execution and delivery of
this Agreement and prior to the date of any Borrowing hereunder, no steps have
been taken to terminate any Pension Plan, and no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under section 302(f) of ERISA. No condition exists or event or transaction
has occurred with respect to any Pension Plan which might result in the
incurrence by Simpson or any member of the Controlled Group of any material
liability, fine or penalty. Except as disclosed in Item 7.12 ("Employee
Benefit Plans") of the Disclosure Schedule, neither Simpson nor any member of
the Controlled Group has any contingent liability with respect to any post-
retirement benefit under a Welfare Plan, other than liability for continuation
coverage described in Part 6 of Title I of ERISA.
SECTION 7.13. Regulations G, U and X. No Borrower is engaged in the
business of extending credit for the purpose of purchasing or carrying margin
stock, and no proceeds of any Loans will be used for a purpose which violates,
or would be inconsistent with, F.R.S. Board Regulation G, U or X. Terms for
which meanings are provided in F.R.S. Board Regulation G, U or X or any
regulations substituted therefor, as from time to time in effect, are used in
this Section with such meanings.
SECTION 7.14. Accuracy of Information. All material factual
information heretofore or contemporaneously furnished by or on behalf of any
Borrower in writing to the Agent or any Lender for purposes of or in
connection with this Agreement is, and all other such material factual
information hereafter furnished by or on behalf of such Borrower to the Agent
or any Lender will be, true and accurate in every material respect on the date
as of which such information is dated or certified and as of the date of
execution and delivery of this Agreement by the Agent and such Lender, and
such information is not, or shall not be, as the case may be, incomplete by
omitting to state any material fact necessary to make such information not
misleading.
SECTION 7.15. Solvency. Each Subsidiary Borrower is Solvent.
ARTICLE VIII
COVENANTS
SECTION 8.1. Affirmative Covenants. The Borrowers agree with the
Agent and each Lender that, until all Commitments have terminated and all
Obligations have been paid and performed in full, the Borrowers will perform
the obligations set forth in this Section 8.1.
SECTION 8.1.1. Legal Existence. Each Borrower shall, and shall cause
each Subsidiary to:
(a) preserve and maintain in full force and effect its corporate
existence and good standing under the laws of its state or jurisdiction
of incorporation;
(b) preserve and maintain in full force and effect all
governmental rights, privileges, qualifications, permits, licenses,
franchises and contracts necessary or desirable in the normal conduct of
its business;
(c) use reasonable efforts, in the ordinary course of business,
to preserve its business organization and goodwill; and
(d) preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could
reasonably be expected to have a Material Adverse Effect.
SECTION 8.1.2. Financial Information, Reports, Notices, etc. Simpson
will furnish, or will cause to be furnished, to each Lender and the Agent
copies of the following financial statements, reports, notices and
information:
(a) as soon as available and in any event within 45 days after
the end of each of the first three Fiscal Quarters of each Fiscal Year
of Simpson, consolidated balance sheets of Simpson and its Subsidiaries
as of the end of such Fiscal Quarter and consolidated statements of
earnings and cash flow of Simpson and its Subsidiaries for such Fiscal
Quarter and for the period commencing at the end of the previous Fiscal
Year and ending with the end of such Fiscal Quarter, certified by the
chief financial officer, treasurer or assistant treasurer of Simpson;
(b) as soon as available and in any event within 90 days after
the end of each Fiscal Year of Simpson a copy of the annual audit report
for such Fiscal Year for Simpson and its Subsidiaries, including therein
consolidated balance sheets of Simpson and its Subsidiaries as of the
end of such Fiscal Year and consolidated statements of earnings and cash
flow of Simpson and its Subsidiaries for such Fiscal Year, in each case
certified (without any Impermissible Qualification) in a manner
reasonably acceptable to the Agent and the Required Lenders by KPMG Peat
Marwick or other independent public accountants reasonably acceptable to
the Agent and the Required Lenders, together with a report from such
accountants containing a computation of, and showing compliance with,
each of the financial ratios and restrictions contained in Section 8.2.3
and to the effect that, in making the examination necessary for the
signing of such annual report by such accountants, they have not become
aware of any Default that has occurred and is continuing, or, if they
have become aware of such Default, describing such Default and the
steps, if any, being taken to cure it;
(c) as soon as available and in any event within 90 days after
the end of each Fiscal Year of Simpson, consolidating balance sheets of
Simpson and its Subsidiaries as of the end of such Fiscal Year and
consolidating statements of earnings and cash flow of Simpson and its
Subsidiaries for such Fiscal Year, in each case certified by the chief
financial officer, treasurer or assistant treasurer of Simpson.
(d) as soon as possible and in any event within 90 days after the
end of each Fiscal Year of Simpson, annual financial projections for the
following three Fiscal Years;
(e) together with the delivery of financial statements in
clauses (a) and (b) above, a Compliance Certificate showing (in
reasonable detail and with appropriate calculations and computations in
all respects satisfactory to the Agent) compliance with the financial
covenants set forth in Section 8.2.3 and stating that no Default has
occurred and is continuing;
(f) as soon as possible and in any event within five days after
any officer of a Borrower shall be aware of the occurrence of each
Default (other than a Default described in Section 9.1.1 or Section
9.1.5), a statement of the chief financial officer, treasurer or
assistant treasurer of Simpson setting forth details of such Default and
the action which the applicable Borrower has taken and proposes to take
with respect thereto;
(g) immediately upon the occurrence of any Default described in
Section 9.1.1 or Section 9.1.5, a statement of the chief financial
officer, treasurer or assistant treasurer of Simpson setting forth
details of such Default and the action which Simpson has taken and
proposes to take with respect thereto;
(h) within ten days after the sending or filing thereof, copies
of all reports which Simpson sends to any of its securityholders, and
all reports and registration statements which Simpson or any of its
Subsidiaries files with the Securities and Exchange Commission or any
national securities exchange;
(i) as soon as possible and in any event within five days after
(x) the occurrence of any material adverse development with respect to
any litigation, action, proceeding, or labor controversy described in
Section 7.8 or (y) the commencement of, and if and when applicable, the
subsequent occurrence of any material adverse development with respect
to, any labor controversy, litigation, action, proceeding, in each case,
of the type described in Section 7.8, notice thereof and copies of all
documentation relating thereto;
(j) immediately upon becoming aware of the institution of any
steps by any Borrower or any other Person to terminate any Pension Plan,
or the failure to make a required contribution to any Pension Plan if
such failure is sufficient to give rise to a Lien under section 302(f)
of ERISA, or the taking of any action with respect to a Pension Plan
which could result in the requirement that the Borrower or Subsidiary
furnish a bond or other security to the PBGC or such Pension Plan, or
the occurrence of any event with respect to any Pension Plan which could
result in the incurrence by any Borrower or any Subsidiary of any
material liability, fine or penalty, or any material increase in the
contingent liability of any Borrower or any Subsidiary with respect to
any post-retirement Welfare Plan benefit, notice thereof and copies of
all documentation relating thereto;
(k) such other information respecting the condition or
operations, financial or otherwise, of any Borrower or any of its
Subsidiaries as any Lender through the Agent may from time to time
reasonably request.
SECTION 8.1.3. Compliance with Laws, etc. Each Borrower will, and
will cause each of its Subsidiaries to, comply in all material respects with
all applicable laws, rules, regulations and orders, where noncompliance would
result in a material adverse effect on the financial condition, operations,
assets, business or properties of Simpson and its Subsidiaries taken as a
whole, such compliance to include (without limitation):
(a) the maintenance and preservation of its legal existence and
qualification as a foreign corporation; and
(b) the payment, before the same become delinquent, of all taxes,
assessments and governmental charges imposed upon it or upon its
property except to the extent being diligently contested in good faith
by appropriate proceedings and for which adequate reserves in accordance
with GAAP shall have been set aside on its books.
SECTION 8.1.4. Maintenance of Properties. Each Borrower will, and
will cause each of its Subsidiaries to, maintain, preserve, protect and keep
its properties in good repair, working order and condition, and make necessary
and proper repairs, renewals and replacements so that its business carried on
in connection therewith may be properly conducted at all times unless such
Borrower determines in good faith that the continued maintenance of any of
its, or its Subsidiaries' properties is no longer economically desirable.
SECTION 8.1.5. Insurance. Each Borrower will, and will cause each of
its Subsidiaries to, maintain or cause to be maintained with responsible
insurance companies insurance with respect to its properties and business
(including business interruption insurance) against such casualties and
contingencies and of such types, in such amounts and with such deductibles as
is customary in the case of similar businesses and will, upon request of the
Agent, furnish to each Lender at reasonable intervals a certificate of an
Authorized Officer of Simpson setting forth the nature and extent of all
insurance maintained by Simpson and its Subsidiaries in accordance with this
Section.
SECTION 8.1.6. Books, Records and Access. Subject to Section 8.1.2,
each Borrower will maintain, and cause each of its Subsidiaries to maintain,
complete and accurate books and records in which full and correct entries in
conformity with GAAP shall be made of all dealings and transactions in
relation to its respective business and activities. Each Borrower will
permit, and cause each of its Subsidiaries to permit, access by the Lenders to
the books and records of each Borrower and each of its Subsidiaries during
normal business hours and permit, and cause each Subsidiary to permit, the
Lenders to make copies of such books and records.
SECTION 8.1.7. Environmental Covenant. Each Borrower will, and will
cause each of its Subsidiaries to,
(a) use and operate all of its facilities and properties in
material compliance with all Environmental Laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;
(b) immediately notify the Agent and provide copies upon receipt
of all material written claims, complaints, notices or inquiries
relating to the condition of its facilities and properties or compliance
with Environmental Laws; and
(c) provide such information and certifications which the Agent
may reasonably request from time to time to evidence compliance with
this Section 8.1.7.
SECTION 8.1.8. Guaranty. The Borrowers shall cause each U.S.
Subsidiary which is a Significant Subsidiary to deliver a Guaranty.
SECTION 8.2. Negative Covenants. Each Borrower agrees with the Agent
and each Lender that, until all Commitments have terminated and all
Obligations have been paid and performed in full, the Borrowers will perform
the obligations set forth in this Section 8.2.
SECTION 8.2.1. Business Activities. The Borrowers will not, and will
not permit any of their Subsidiaries to, engage, to any material extent, in
any business activity except business activities similar to present lines of
business and such activities as may be incidental or related thereto.
SECTION 8.2.2. Liens. Simpson will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon
any asset, whether now owned or hereafter acquired, except:
(a) Liens existing on the date of this Agreement and identified
on Item 8.2.6(a)(iii) ("Ongoing Indebtedness") of the Disclosure
Schedule, securing Indebtedness outstanding on the date of this
Agreement described in said Item;
(b) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty
or being diligently contested in good faith by appropriate proceedings
and not for which adequate reserves in accordance with GAAP shall have
been set aside on its books;
(c) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not
overdue or being diligently contested in good faith by appropriate
proceedings and for which adequate reserves in accordance with GAAP
shall have been set aside on its books;
(d) Liens incurred in the ordinary course of business other than
in connection with borrowed money;
(e) judgment Liens in existence less than 15 days after the entry
thereof or with respect to which execution has been stayed or the
payment of which is covered in full (subject to a customary deductible)
by insurance maintained with responsible insurance companies;
(f) Liens in connection with Capitalized Lease Liabilities in
amounts permitted hereunder; and
(g) Liens on newly acquired assets of, and stock of, special
purpose entities.
SECTION 8.2.3. Financial Condition. Simpson shall not permit:
(a) the ratio, on a consolidated basis for Simpson and its
Subsidiaries as at the end of any Fiscal Quarter for the four Fiscal
Quarters then ending, of EBITDA to interest expense to be less than 3.0
to 1.0;
(b) the Funded Debt to EBITDA Ratio to exceed 3.5 to 1.0; or
(c) the Net Worth of Simpson at any time to be less than
$100,000,000 plus 50% of net income (if any) for each Fiscal Quarter
after the date hereof plus 50% of the proceeds of any equity issuance by
Simpson or any Subsidiary after the date hereof less non-cash charges
for plant closings in the U.S. after the date hereof in an amount not to
exceed $5,000,000.
SECTION 8.2.4. Acquisitions. The Borrowers will not, and will not
permit any of their Subsidiaries to, acquire all or substantially all of the
stock (or other ownership interests) or, all or substantially all of the
assets of any Person except the acquisition of stock (or other ownership
interests) or assets in an entity which is in a business that is the same,
similar, related or incidental to the business activities described in
Section 8.2.1 hereof pursuant to a transaction which is approved by the Board
of Directors of the acquired entity, with respect to which a Borrower is the
surviving entity and with respect to which the resulting entity would be in
pro forma compliance with this Agreement as evidenced by a certificate of the
chief financial officer, treasurer or assistant treasurer of Simpson in form
satisfactory to the Required Lenders, which certificate shall have been
delivered at least fourteen days prior to the consummation of such
transaction.
SECTION 8.2.5. Investments. The Borrowers will not, and will not
permit any of their Subsidiaries to, make, incur, assume or suffer to exist
any Investment in any other Person, except:
(a) Investments existing on the Effective Date and identified in
Item 8.2.5(a) ("Ongoing Investments") of the
Disclosure Schedule;
(b) Cash Equivalent Investments;
(c) without duplication, Investments permitted as Indebtedness
pursuant to Section 8.2.6;
(d) without duplication, Investments permitted as Capital
Expenditures pursuant to Section 8.2.8;
(e) without duplication, Investments permitted under Section
8.2.4;
(f) in the ordinary course of business, Investments at any time
outstanding by any Borrower in any of its Subsidiaries, or by any such
Subsidiary in any of its Subsidiaries, by way of contributions to
capital or loans or advances, not to exceed in the aggregate 50% of the
Tangible Net Worth of Simpson and its Subsidiaries; and
(g) other Investments in an aggregate amount at any one time not
to exceed $10,000,000;
provided, however, that
(x) any Investment which when made complies with the
requirements of the definition of the term "Cash Equivalent Investment"
may continue to be held notwithstanding that such Investment if made
thereafter would not comply with such requirements; and
(y) no Investment otherwise permitted by clause (e) or (f) shall
be permitted to be made if, immediately before or after giving effect
thereto, any Default shall have occurred and be continuing.
SECTION 8.2.6. Indebtedness. (a) The Borrowers will not, and will not
permit any of their Subsidiaries to, create, incur, assume or suffer to exist
or otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
(i) Indebtedness in respect of the Loans and other
Obligations;
(ii) until the date of the initial Borrowing,
Indebtedness identified in Item 8.2.6(a)(ii) ("Indebtedness to be
Paid") of the Disclosure Schedule;
(iii) Indebtedness existing as of the Effective Date
which is identified in Item 8.2.6(a)(iii) ("Ongoing Indebtedness")
of the Disclosure Schedule;
(iv) Indebtedness in an aggregate principal amount not to
exceed $10,000,000 at any time outstanding which is incurred by
any Borrower or any of its Subsidiaries to a vendor of any assets
to finance its acquisition of such assets;
(v) unsecured Indebtedness incurred in the ordinary
course of business (including open accounts extended by suppliers
on normal trade terms in connection with purchases of goods and
services, but excluding Indebtedness incurred through the
borrowing of money or Contingent Liabilities);
(vi) Indebtedness in respect of Capitalized Lease
Liabilities in amounts not in excess of $10,000,000 at any time
outstanding;
(vii) Subordinated Debt;
(viii) other Indebtedness of the Borrowers and their
Subsidiaries in an aggregate amount not to exceed $10,000,000; and
(ix) other Indebtedness, provided that the net proceeds
of such other Indebtedness are used to repay, on a pro rata basis,
Indebtedness under this Agreement and the Companion Agreement, and
further provided, that the Commitments under this Agreement and
the Commitments (as defined in the Companion Agreement) shall be
reduced, on a pro rata basis, by the amount of the net proceeds in
excess of $50,000,000 of such other Indebtedness;
provided, however, that no Indebtedness otherwise permitted by clauses (iv),
(v), (vi), (vii), (viii) or (ix) shall be permitted if, after giving effect to
the incurrence thereof, any Default shall have occurred and be continuing.
(b) Simpson shall not permit any Indebtedness of any of its
Subsidiaries to exist except:
(i) Indebtedness to Simpson or another Subsidiary; and
(ii) Indebtedness in an amount which, when added to the
amount of Indebtedness of Simpson subject to Liens (other than
Liens described in Sections 8.2.2(b) and (c)), shall not exceed
15% of the sum of the total Indebtedness of Simpson and its
Subsidiaries and the Net Worth of Simpson and its Subsidiaries.
SECTION 8.2.7. Subordinated Debt. On and at all times after the
Effective Date the Borrowers will not make any prepayments on any Subordinated
Debt.
SECTION 8.2.8. Capital Expenditures, etc. The Borrowers will not, and
will not permit any of their Subsidiaries to, make or commit to make Capital
Expenditures in any Fiscal Year, except Capital Expenditures which do not
aggregate in excess of the amount set forth below opposite such Fiscal Year:
1997 $45,000,000
1998 $45,000,000
1999 $50,000,000
2000 and each
Fiscal Year
thereafter $55,000,000;
provided, however, that the Borrowers may make additional Capital Expenditures
for new plant openings in an aggregate amount not to exceed $20,000,000.
SECTION 8.2.9. Rental Obligations. The Borrowers will not, and will
not permit any of their Subsidiaries to, enter into at any time any
arrangement which does not create a Capitalized Lease Liability and which
involves the leasing by any Borrower or any of its Subsidiaries from any
lessor of any real or personal property (or any interest therein), except
arrangements which, together with all other such arrangements which shall then
be in effect, will not require the payment of an aggregate amount of rentals
by the Borrowers and their Subsidiaries in excess of $5,000,000 for any Fiscal
Year; provided, however, that any calculation made for purposes of this
Section shall exclude any amounts required to be expended for maintenance and
repairs, insurance, taxes, assessments, and other similar charges.
SECTION 8.2.10. Sale/Leaseback. The Borrowers will not, and will not
permit any of their Subsidiaries to, sell or otherwise transfer any assets
with the intent to lease such assets as lessee other than the transfer of
Simpson's headquarters so long as the headquarters so transferred shall have a
value not in excess of $15,000,000.
SECTION 8.2.11. Consolidation, Merger, Etc. The Borrowers will not,
and will not permit any of their Subsidiaries to, liquidate or dissolve,
consolidate with, or merge into or with, any other corporation, or purchase or
otherwise acquire all or substantially all of the assets of any Person (or of
any division thereof) except any such Subsidiary may liquidate or dissolve
voluntarily into, and may merge with and into, a Borrower or any other
Subsidiary, and the assets or stock of any Subsidiary may be purchased or
otherwise acquired by a Borrower or any other Subsidiary except that a
Borrower and any Subsidiary may enter into a consolidation, merger or
acquisition so long as a Borrower (if a party) or a Subsidiary (if no Borrower
is a party) shall be the surviving entity and the surviving entity would be in
pro forma compliance with this Agreement as evidenced by a certificate of the
chief financial officer, treasurer or assistant treasurer of Simpson in form
satisfactory to the Required Lenders.
SECTION 8.2.12. Asset Dispositions, etc. The Borrowers will not, and
will not permit any of their Subsidiaries to, sell, transfer, lease,
contribute or otherwise convey, or grant options, warrants or other rights
with respect to, all or any substantial part of its assets (including accounts
receivable and capital stock of Subsidiaries) to any Person, unless
(a) such sale, transfer, lease, contribution or conveyance is in
the ordinary course of its business; or
(b) the net book value of such assets, together with the net
book value of all other assets sold, transferred, leased, contributed or
conveyed otherwise than in the ordinary course of business by the
Borrower or any of its Subsidiaries pursuant to this clause in any
Fiscal Year, does not exceed $10,000,000 in addition to any transfer in
connection with a sale and leaseback permitted pursuant to Section
8.2.10.
SECTION 8.2.13. Transactions with Affiliates. The Borrowers will not,
and will not permit any of their Subsidiaries to, enter into, or cause, suffer
or permit to exist any arrangement or contract with any of its other
Affiliates unless such arrangement or contract is fair and equitable to such
Borrower or such Subsidiary and is an arrangement or contract of the kind
which would be entered into by a prudent Person in the position of such
Borrower or such Subsidiary with a Person which is not one of its Affiliates.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1. Listing of Events of Default. Each of the following
events or occurrences described in this Section 9.1 shall constitute an "Event
of Default".
SECTION 9.1.1. Non-Payment of Obligations. Any Borrower shall default
in the payment or prepayment when due of any principal of any Loan, any
Borrower shall default in the payment when due of any Reimbursement
Obligation, or any Borrower shall default (and such default shall continue
unremedied for a period of two days) in the payment when due of any interest
on any Loan, of any fee or of any other Obligation.
SECTION 9.1.2. Breach of Warranty. Any representation or warranty of
any Borrower made or deemed to be made hereunder or in any other Loan Document
or any other writing or certificate furnished by or on behalf of any Borrower
to the Agent or any Lender for the purposes of or in connection with this
Agreement or any such other Loan Document (including any certificates
delivered pursuant to Article VI) is or shall be incorrect when made in any
material respect.
SECTION 9.1.3. Non-Performance of Certain Covenants and Obligations.
Any Borrower shall default in the due performance and observance of any of its
obligations under Sections 8.1.2 or 8.2.
SECTION 9.1.4. Non-Performance of Other Covenants and Obligations.
Any Borrower shall default in the due performance and observance of any other
agreement contained herein or in any other Loan Document, and such default
shall continue unremedied for a period of 30 days after written notice thereof
shall have been given to any Borrower by the Agent or any Lender.
SECTION 9.1.5. Default on Other Indebtedness. A default shall occur
in the payment when due (subject to any applicable grace period or unless
there shall have been a waiver of such default by the applicable creditor),
whether by acceleration or otherwise, of any Indebtedness (other than
Indebtedness described in Section 9.1.1) of any Borrower or any of its
Subsidiaries having a principal amount, individually or in the aggregate, in
excess of $5,000,000, or a default shall occur in the performance or
observance of any obligation or condition with respect to such Indebtedness if
the effect of such default is to accelerate the maturity of any such
Indebtedness or such default shall continue unremedied for any applicable
period of time sufficient to permit the holder or holders of such
Indebtedness, or any trustee or agent for such holders, to cause such
Indebtedness to become due and payable prior to its expressed maturity.
SECTION 9.1.6. Judgments. Any judgment or order for the payment of
money in excess of $5,000,000 shall be rendered against any Borrower or any of
its Subsidiaries and there shall be any period of 10 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect.
SECTION 9.1.7. Pension Plans. Any of the following events shall occur
with respect to any Pension Plan and shall continue for a period of 30 days
(a) the institution of any steps by Simpson, any member of its
Controlled Group or any other Person to terminate a Pension Plan if, as
a result of such termination, the Borrower or any such member could be
required to make a contribution to such Pension Plan, or could
reasonably expect to incur a liability or obligation to such Pension
Plan; or
(b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION 9.1.8. Change in Control. Any Change in Control shall occur.
SECTION 9.1.9. Bankruptcy, Insolvency, etc. Any Borrower or any of
its Subsidiaries shall
(a) become insolvent or generally fail to pay, or admit in
writing its inability or unwillingness to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for such Borrower or
such Subsidiary or any property of any thereof, or make a general
assignment for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for such Borrower or such Subsidiary or
for a substantial part of the property of any thereof, and such trustee,
receiver, sequestrator or other custodian shall not be discharged within
60 days, provided that such Borrower, and each of its Subsidiaries
hereby expressly authorizes the Agent and each Lender to appear in any
court conducting any relevant proceeding during such 60- day period to
preserve, protect and defend their rights under the Loan Documents;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or
liquidation proceeding, in respect of such Borrower or such Subsidiary,
and, if any such case or proceeding is not commenced by such Borrower or
such Subsidiary, such case or proceeding shall be consented to or
acquiesced in by such Borrower or such Subsidiary or shall result in the
entry of an order for relief or shall remain for 60 days undismissed or
any order of attachment is issued against any substantial part of the
assets of such Borrower, any of its Subsidiaries which is not released
within 30 days of service provided, that each Borrower and each of its
Subsidiaries hereby expressly authorizes the Agent and each Lender to
appear in any court conducting any such case or proceeding during such
60-day period to preserve, protect and defend their rights under the
Loan Documents; or
(e) take any action authorizing, or in furtherance of, any of the
foregoing.
SECTION 9.1.10. Impairment of Security, etc. Any Loan Document, or
any Lien granted thereunder, shall (except in accordance with its terms), in
whole or in part, terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of any party thereto; any Borrower,
or any other party shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability; or any Lien
securing any Obligation shall, in whole or in part, cease to be a perfected
first priority Lien.
SECTION 9.1.11. Governmental Approvals. Any material approval or
license granted to any Borrower with respect to this Agreement, any Loan
Document or the business of such Borrower shall not be in full force and
effect.
SECTION 9.2. Action if Bankruptcy. If any Event of Default described
in clauses (a) through (d) of Section 9.1.9 shall occur with respect to any
Borrower or any of its Subsidiaries, the Commitments (if not theretofore
terminated) shall automatically terminate and the outstanding principal amount
of all outstanding Loans and all other Obligations shall automatically be and
become immediately due and payable, without notice or demand.
SECTION 9.3. Action if Other Event of Default. If any Event of
Default (other than any Event of Default described in clauses (a) through (d)
of Section 9.1.9 with respect to any Borrower or any of its Subsidiaries)
shall occur for any reason, and be continuing, the Agent, upon the direction
of the Required Lenders, shall by notice to Simpson declare all or any portion
of the outstanding principal amount of the Loans and other Obligations to be
due and payable and/or the Commitments (if not theretofore terminated) to be
terminated, whereupon the full unpaid amount of such Loans and other
Obligations which shall be so declared due and payable shall be and become
immediately due and payable, without further notice, demand or presentment,
and/or, as the case may be, the Commitments shall terminate.
ARTICLE X
THE AGENT
SECTION 10.1. Actions. Each Lender hereby appoints ABN as its Agent
under and for purposes of this Agreement, the Notes and each other Loan
Document. Each Lender authorizes the Agent to act on behalf of such Lender
under this Agreement, the Notes and each other Loan Document and, in the
absence of other written instructions from the Required Lenders received from
time to time by the Agent (with respect to which the Agent agrees that it will
comply, except as otherwise provided in this Section or as otherwise advised
by counsel), to exercise such powers hereunder and thereunder as are
specifically delegated to or required of the Agent by the terms hereof and
thereof, together with such powers as may be reasonably incidental thereto.
Each Lender hereby indemnifies (which indemnity shall survive any termination
of this Agreement) the Agent, pro rata according to such Lender's Percentage,
from and against any and all liabilities, obligations, losses, damages,
claims, costs or expenses of any kind or nature whatsoever which may at any
time be imposed on, incurred by, or asserted against, the Agent in any way
relating to or arising out of this Agreement, the Notes and any other Loan
Document, including reasonable attorneys' fees, and as to which the Agent is
not reimbursed by the Borrowers; provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations,
losses, damages, claims, costs or expenses which are determined by a court of
competent jurisdiction in a final proceeding to have resulted solely from the
Agent's gross negligence or wilful misconduct. The Agent shall not be
required to take any action hereunder, under the Notes or under any other Loan
Document, or to prosecute or defend any suit in respect of this Agreement, the
Notes or any other Loan Document, unless it is indemnified hereunder to its
satisfaction. If any indemnity in favor of the Agent shall be or become, in
the Agent's determination, inadequate, the Agent may call for additional
indemnification from the Lenders and cease to do the acts indemnified against
hereunder until such additional indemnity is given.
SECTION 10.2. Funding Reliance, etc. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 P.M., New
York time, on the Business Day prior to a Borrowing with respect to Borrowings
in Dollars and by 9:00 A.M., New York time, two Business Days prior to a
Borrowing in any other currency that such Lender will not make available the
amount which would constitute its Percentage of such Borrowing on the date
specified therefor, the Agent may assume that such Lender has made such amount
available to the Agent and, in reliance upon such assumption, make available
to the applicable Borrower a corresponding amount. If and to the extent that
such Lender shall not have made such amount available to the Agent, such
Lender and the applicable Borrower agrees to repay the Agent forthwith on
demand such corresponding amount together with interest thereon, for each day
from the date the Agent made such amount available to such Borrower to the
date such amount is repaid to the Agent, at the interest rate applicable at
the time to Loans comprising such Borrowing.
SECTION 10.3. Exculpation. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for any action
taken or omitted to be taken by it under this Agreement or any other Loan
Document, or in connection herewith or therewith, except for gross negligence
or wilful misconduct, nor responsible for any recitals or warranties herein or
therein, nor for the effectiveness, enforceability, validity or due execution
of this Agreement or any other Loan Document, nor to make any inquiry
respecting the performance by any Borrower of its obligations hereunder or
under any other Loan Document. Any such inquiry which may be made by the
Agent shall not obligate it to make any further inquiry or to take any action.
The Agent shall be entitled to rely upon advice of counsel concerning legal
matters and upon any notice, consent, certificate, statement or writing which
the Agent believes to be genuine and to have been presented by a proper
Person.
SECTION 10.4. Successor. The Agent may resign as such at any time upon
at least 30 days' prior notice to the Borrowers and all Lenders, so long as a
successor Agent shall have been appointed as of the effectiveness of such
resignation. If the Agent at any time shall resign, the Required Lenders may
appoint another Lender (with the consent of Simpson which shall not be
unreasonably withheld) as a successor Agent which shall thereupon become the
Agent hereunder. If no successor Agent shall have been so appointed by the
Required Lenders within 30 days after the retiring Agent's giving notice of
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent (with the consent of Simpson which shall not be unreasonably
withheld), which shall be one of the Lenders or a commercial banking
institution organized under the laws of the U.S. (or any State thereof) or a
U.S. branch or agency of a commercial banking institution, and having a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall be entitled to receive from the retiring Agent such documents of
transfer and assignment as such successor Agent may reasonably request, and
shall thereupon succeed to and become vested with all rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations under this Agreement. After any
retiring Agent's resignation hereunder as the Agent, the provisions of
(a) this Article X shall inure to its benefit as to, and the
Agent shall continue to be responsible hereunder for, any actions taken
or omitted to be taken by it while it was the Agent under this
Agreement; and
(b) Section 11.3, Section 11.4 and Section 11.5 shall continue to
inure to its benefit.
The Borrowers shall not be responsible for payment of any costs related to the
resignation of the Agent and the substitution of a new Agent. The resigning
Agent shall pay to the successor Agent any portion of the Agent's annual fee
paid to it applicable to the period after the effectiveness of such
resignation.
SECTION 10.5. Loans or Letters of Credit Issued by ABN. ABN shall have
the same rights and powers with respect to (x) the Loans made by it or any of
its Affiliates, (y) the Notes held by it or any of its Affiliates, and (z) its
participating interests in the Letters of Credit as any other Lender and may
exercise the same as if it were not the Agent. ABN and its Affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with any Borrower or any Subsidiary or Affiliate of any Borrower as
if ABN were not the Agent hereunder.
SECTION 10.6. Credit Decisions. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrowers, this Agreement, the
other Loan Documents (the terms and provisions of which being satisfactory to
such Lender) and such other documents, information and investigations as such
Lender has deemed appropriate, made its own credit decision to extend its
Commitments. Each Lender also acknowledges that it will, independently of the
Agent and each other Lender, and based on such other documents, information
and investigations as it shall deem appropriate at any time, continue to make
its own credit decisions as to exercising or not exercising from time to time
any rights and privileges available to it under this Agreement or any other
Loan Document.
SECTION 10.7. Copies, etc. The Agent shall give prompt notice to each
Lender of each notice or request required or permitted to be given to the
Agent by any Borrower pursuant to the terms of this Agreement (unless
concurrently delivered to the Lenders by such Borrower). The Agent will
distribute to each Lender such financial statements and compliance
certificates received by the Agent from any Borrower for distribution to the
Lenders by the Agent in accordance with the terms of this Agreement.
SECTION 10.8. Documentation Agent. Each Lender hereby appoints Comerica
Bank as Documentation Agent for the Lenders. The Documentation Agent shall
have no rights, powers, obligations, liabilities, responsibilities or duties
under this Agreement other than those applicable to all Lenders as such. Each
Lender acknowledges that it has not relied and will not rely on the
Documentation Agent in deciding to enter into this Agreement or in taking or
not taking action hereunder.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. Waivers, Amendments, etc. The provisions of this
Agreement and of each other Loan Document may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing
and consented to by Simpson and the Required Lenders; provided, however, that
no such amendment, modification or waiver which would:
(a) modify any requirement hereunder that any particular action
be taken by all the Lenders or by the Required Lenders shall be
effective unless consented to by each Lender;
(b) modify this Section 11.1, change the definition of "Required
Lenders", increase any Commitment Amount or the Percentage of any
Lender, reduce any fees described in Article III, or extend the
Commitment Termination Date shall be made without the consent of each
Lender and each holder of a Note;
(c) extend the due date for, or reduce the amount of, any
scheduled repayment or prepayment of principal of or interest on any
Loan (or reduce the principal amount of or rate of interest on any Loan)
shall be made without the consent of the holder of that Note evidencing
such Loan;
(d) affect adversely the interests, rights or obligations of the
Issuer in its capacity as the Issuer shall be made without the consent
of the Issuer;
(e) affect adversely the interests, rights or obligations of the
Agent in its capacity as the Agent shall be made without consent of the
Agent; or
(f) change the definitions of "Available Currency",
"Determination Date" or "Dollar Amount" without the consent of each
Lender.
No failure or delay on the part of the Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand
on any Borrower in any case shall entitle it to any notice or demand in
similar or other circumstances. No waiver or approval by the Agent, any
Lender or the holder of any Note under this Agreement or any other Loan
Document shall, except as may be otherwise stated in such waiver or approval,
be applicable to subsequent transactions. No waiver or approval hereunder
shall require any similar or dissimilar waiver or approval thereafter to be
granted hereunder.
SECTION 11.2. Notices. All notices and other communications provided
to any party hereto under this Agreement or any other Loan Document shall be
in writing or by facsimile and addressed, delivered or transmitted to such
party at its address or facsimile number set forth below its signature hereto
or set forth in the Lender Assignment Agreement or at such other address or
facsimile number as may be designated by such party in a notice to the other
parties. Any notice, if mailed and properly addressed with postage prepaid or
if properly addressed and sent by pre-paid courier service, shall be deemed
given when received; any notice, if transmitted by facsimile, shall be deemed
given when transmitted. Any notice to a Borrower other than Simpson shall
also be sent to Simpson.
SECTION 11.3. Payment of Costs and Expenses. Simpson agrees to pay on
demand all reasonable out-of-pocket expenses of the Agent (including the
reasonable fees and out-of-pocket expenses of counsel to the Agent and of
local counsel, if any, who may be retained by counsel to the Agent) in
connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from
time to time hereafter be required, whether or not the transactions
contemplated hereby are consummated; and
(b) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
Simpson further agrees to pay, and to save the Agent and the Lenders harmless
from all liability for, any stamp or other taxes which may be payable in
connection with the execution or delivery of this Agreement, the borrowings
hereunder, the issuance of the Notes, the issuance of the Letters of Credit,
or any other Loan Documents. Simpson agrees to reimburse the Agent and each
Lender upon demand for all reasonable out-of-pocket expenses (including
attorneys' fees and legal expenses) incurred by the Agent or such Lender in
connection with the enforcement of any Obligations.
SECTION 11.4. Indemnification. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the
Commitments, Simpson hereby indemnifies, exonerates and holds harmless the
Agent, the Issuer and each Lender and each of their respective officers,
directors, employees and agents (collectively, the "Indemnified Parties") free
and harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether any such Indemnified Party is a party to
the action for which indemnification hereunder is sought), including
reasonable attorneys' fees and disbursements (collectively, the "Indemnified
Liabilities"), incurred by the Indemnified Parties or any of them as a result
of, or arising out of, or relating to
(a) any transaction financed or to be financed in whole or in
part, directly or indirectly, with the proceeds of any Loan or the use
of any Letter of Credit;
(b) the entering into and performance of this Agreement and any
other Loan Document by any of the Indemnified Parties;
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by any Borrower or any of its
Subsidiaries of all or any portion of the stock or assets of any Person,
whether or not the Agent or such Lender is party thereto;
(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to the
protection of the environment or the Release by any Borrower or any of
its Subsidiaries of any Hazardous Material; or
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any real
property owned or operated by any Borrower or any Subsidiary thereof of
any Hazardous Material (including any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under any
Environmental Law), regardless of whether caused by, or within the
control of, the Borrower or such Subsidiary,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's
gross negligence or wilful misconduct. If and to the extent that the
foregoing undertaking may be unenforceable for any reason, Simpson hereby
agrees to make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
SECTION 11.5. Survival. The obligations of the Borrower under
Sections 5.3, 5.4, 5.5, 5.6, 11.3, and 11.4, and the obligations of the
Lenders under Section 10.1, shall in each case survive any termination of this
Agreement, the payment in full of all Obligations and the termination of all
Commitments. The representations and warranties made by the Borrower in this
Agreement and in each other Loan Document shall survive the execution and
delivery of this Agreement and each such other Loan Document.
SECTION 11.6. Severability. Any provision of this Agreement or any
other Loan Document which is prohibited or unenforceable in any jurisdiction
shall, as to such provision and such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or such Loan Document or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 11.7. Headings. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not
affect the meaning or interpretation of this Agreement or such other Loan
Document or any provisions hereof or thereof.
SECTION 11.8. Execution in Counterparts, Effectiveness, etc. This
Agreement may be executed by the parties hereto in several counterparts, each
of which shall be executed by the Borrowers and the Agent and be deemed to be
an original and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrowers and each Lender (or notice thereof
satisfactory to the Agent) shall have been received by the Agent and notice
thereof shall have been given by the Agent to each Borrower and each Lender.
SECTION 11.9. Governing Law; Entire Agreement. THIS AGREEMENT, THE
NOTES AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE
UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. This
Agreement, the Notes and the other Loan Documents constitute the entire
understanding among the parties hereto with respect to the subject matter
hereof and supersede any prior agreements, written or oral, with respect
thereto.
SECTION 11.10. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) the Borrowers may not assign or transfer their rights or
obligations hereunder without the prior written consent of the Agent and
all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders
are subject to Section 11.11.
SECTION 11.11. Sale and Transfer of Loans and Notes; Participations in
Loans and Notes. Each Lender may assign, or sell participations in, its Loans
and Commitments to one or more commercial banks in accordance with this
Section 11.11.
SECTION 11.11.1. Assignments. Any Lender, with the written consents of
Simpson and the Agent (which consents shall not be unreasonably delayed or
withheld and which consent, in the case of Simpson, shall be deemed to have
been given in the absence of a written notice delivered by Simpson to the
Agent, on or before the seventh Business Day after receipt by Simpson of such
Lender's request for consent, stating, in reasonable detail, the reasons why
Simpson proposes to withhold such consent and which consent of Simpson shall
not be required, if a Default shall have occurred and be continuing) may at
any time assign and delegate to one or more financial institutions, (each
Person described in either of the foregoing clauses as being the Person to
whom such assignment and delegation is to be made, being hereinafter referred
to as an "Assignee Lender"), all or any fraction of such Lender's total Loans
and Commitments (which assignment and delegation shall be of a constant, and
not a varying, percentage of all the assigning Lender's Loans and Commitments)
in a minimum aggregate amount of $10,000,000; provided, however, that any such
Assignee Lender will comply, if applicable, with the provisions contained in
the last sentence of Section 5.6 and further, provided, however, that, each
Borrower and the Agent shall be entitled to continue to deal solely and
directly with such Lender in connection with the interests so assigned and
delegated to an Assignee Lender until the Assignment Effective Date (the
"Assignment Effective Date").
The Assignment Effective Date shall be the date when all the following
conditions shall have been met:
(i) five Business Days shall have passed after written notice of
such assignment and delegation, together with payment instructions,
addresses and related information with respect to such Assignee Lender,
shall have been given to Simpson and the Agent by such Lender and such
Assignee Lender,
(ii) such Assignee Lender shall have executed and delivered to
Simpson and the Agent a Lender Assignment Agreement, accepted by the
Agent, and
(iii) the processing fees described below shall have been paid.
From and after the date that the Agent accepts such Lender Assignment
Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to
have become a party hereto and to the extent that rights and obligations
hereunder have been assigned and delegated to such Assignee Lender in
connection with such Lender Assignment Agreement, shall have the rights and
obligations of a Lender hereunder and under the other Loan Documents, and
(y) the assignor Lender, to the extent that rights and obligations hereunder
have been assigned and delegated by it in connection with such Lender
Assignment Agreement, shall be released from its obligations hereunder and
under the other Loan Documents. Within five Business Days after receipt of
notice that the Agent has received an executed Lender Assignment Agreement,
the Borrowers shall execute and deliver to the Agent (for delivery to the
relevant Assignee Lender) new Notes evidencing such Assignee Lender's assigned
Loans and Commitments and, if the assignor Lender has retained Loans and
Commitments hereunder, replacement Notes in the principal amount of the Loans
and Commitments retained by the assignor Lender hereunder (such Notes to be in
exchange for, but not in payment of, those Notes then held by such assignor
Lender). Each such Note shall be dated the date of the predecessor Notes.
The assignor Lender shall mark the predecessor Notes "exchanged" and deliver
them to such Borrower. Accrued interest on that part of the predecessor Notes
evidenced by the new Notes, and accrued fees, shall be paid as provided in the
Lender Assignment Agreement. Accrued interest on that part of the predecessor
Notes evidenced by the replacement Notes shall be paid to the assignor Lender.
Accrued interest and accrued fees shall be paid at the same time or times
provided in the predecessor Notes and in this Agreement. Such assignor Lender
or such Assignee Lender must also pay a processing fee to the Agent upon
delivery of any Lender Assignment Agreement in the amount of $3500. Any
attempted assignment and delegation not made in accordance with this
Section 11.11.1 shall be null and void. Nothing herein shall prohibit any
Lender from pledging or assigning any Note or any of its rights under this
Agreement to any Federal Reserve Bank in accordance with applicable law.
SECTION 11.11.2. Participations. Any Lender may at any time sell to
one or more commercial banks (each of such commercial banks being herein
called a "Participant") participating interests (or a sub-participating
interest, in the case of a Lender's participating interest in a Letter of
Credit) in any of the Loans, Commitments, or other interests of such Lender
hereunder; provided, however, that
(a) no participation or sub-participation contemplated in this
Section 11.11 shall relieve such Lender from its Commitments or its
other obligations hereunder or under any other Loan Document,
(b) such Lender shall remain solely responsible for the
performance of its Commitments and such other obligations,
(c) each Borrower and the Agent shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and each of the other Loan Documents,
(d) no Participant, unless such Participant is an Affiliate of
such Lender, or is itself a Lender, shall be entitled to require such
Lender to take or refrain from taking any action hereunder or under any
other Loan Document, except that such Lender may agree with any
Participant that such Lender will not, without such Participant's
consent, take any actions of the type described in clause (b) or (c) of
Section 11.1, and
(e) no Borrower shall be required to pay any amount under
Section 5.6 that is greater than the amount which it would have been
required to pay had no participating interest been sold.
The Borrower acknowledges and agrees that each Participant, for purposes of
Sections 5.3, 5.4, 5.5, 5.6, 5.8, 5.9, 11.3 and 11.4 shall be considered a
Lender.
SECTION 11.11.3. Information. Each Lender is hereby authorized to
disclose all information concerning the Borrowers to assignees, participants,
potential assignees and potential participants.
SECTION 11.11.4. Confidentiality. The Lenders shall hold all non-
public information (which has been identified as such by a Borrower) obtained
pursuant to the requirements of this Agreement in accordance with their
customary procedures for handling confidential information of this nature and
in accordance with safe and sound banking practices and in any event may make
disclosure to any of their examiners, Affiliates, outside auditors, counsel
and other professional advisors in connection with this Agreement or as
reasonably required by any bona fide transferee, participant or assignee or as
required or requested by any governmental agency or representative thereof or
pursuant to legal process; provided however, that
(a) unless specifically prohibited by applicable law or court
order, each Lender shall notify the Borrowers of any request by any
governmental agency or representative thereof (other than any such
request in connection with an examination of the financial condition of
such Lender by such governmental agency) for disclosure of any such non-
public information prior to disclosure of such information;
(b) prior to any such disclosure pursuant to this Section
11.11.4, each Lender shall require any such bona fide transferee,
participant and assignee receiving a disclosure of non-public
information to agree in writing
(i) to be bound by this Section 11.11.4; and
(ii) to require such Person to require any other Person to
whom such Person discloses such non-public information to be
similarly bound by this Section 11.11.4; and
(c) except as may be required by an order of a court of competent
jurisdiction and to the extent set forth therein, no Lender shall be
obligated or required to return any materials furnished by the Borrowers
or any Subsidiary.
SECTION 11.12. Additional Borrowers.
Each Subsidiary of Simpson may become a Borrower hereunder upon
becoming such a Subsidiary. Simpson shall deliver an Additional
Borrower Certificate executed by any such Subsidiary and Simpson
together with such supporting resolutions, incumbency certificates and
opinions of counsel as the Agent may reasonably request. Such
Subsidiary shall thereupon become a party hereto and a Borrower
hereunder and shall be (i) entitled to all rights and benefits of a
Borrower hereunder and under each instrument executed pursuant hereto
and (ii) subject to all obligations of a Borrower hereunder and
thereunder.
SECTION 11.13. Joint and Several Liability.
(a) The Obligations of the Borrowers are joint and several;
except that each Subsidiary Borrower which is not a U.S. Subsidiary of
Simpson shall be liable only for Loans made to it and with respect to
Letters of Credit issued for its account.
(b) Each Borrower acknowledges and agrees that it is the intent
of the parties that each Borrower be primarily liable for the
Obligations as a joint and several obligor (except as specifically set
forth in this Section 11.13). It is the intention of the parties that
with respect to liability of any Borrower hereunder arising solely by
reason of its being jointly and severally liable for Borrowings and
Loans taken by other Borrowers, the obligations of such Borrower shall
be absolute, unconditional and irrevocable irrespective of:
(i) any lack of validity, legality or enforceability of
this Agreement or any Note as to any other Borrower;
(ii) the failure of any Lender or any holder of any Note
(A) to enforce any right or remedy against any
Borrower or any other Person (including any guarantor) under
the provisions of this Agreement, the Note, or otherwise, or
(B) to exercise any right or remedy against any
guarantor of, or collateral securing, any Obligations;
(iii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any
other extension, compromise or renewal of any Obligations;
(iv) any reduction, limitation, impairment or termination
of any Obligations with respect to any other Borrower for any
reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to (and each
Borrower hereby waives any right to or claim of) any defense or
setoff, counterclaim, recoupment or termination whatsoever by
reason of the invalidity, illegality, nongenuineness,
irregularity, compromise, unenforceability of, or any other event
or occurrence affecting, any Obligations with respect to any other
Borrower;
(v) any addition, exchange, release, surrender or
nonperfection of any collateral, or any amendment to or waiver or
release or addition of, or consent to departure from, any
guaranty, held by any Lender or any holder of the Note securing
any of the Obligations; or
(vi) any other circumstance which might otherwise
constitute a defense available to, or a legal or equitable
discharge of, any other Borrower, any surety or any guarantor.
Each Borrower agrees that its joint and several liability
hereunder shall continue to be effective or be reinstated, as the case
may be, if at any time any payment (in whole or in part) of any of the
Obligations is rescinded or must be restored by any Lender or any holder
of any Note, upon the insolvency, bankruptcy or reorganization of any
Borrower as though such payment had not been made.
Each Borrower hereby expressly waives: (a) notice of the Lenders'
acceptance of this Agreement; (b) notice of the existence or creation or
non payment of all or any of the Obligations; (e) presentment, demand,
notice of dishonor, protest, and all other notices whatsoever other than
notices expressly provided for in this Agreement; and (d) all diligence
in collection or protection of or realization upon the Obligations or
any thereof, any obligation hereunder, or any security for or guaranty
of any of the foregoing.
No delay on any of the Lenders' part in the exercise of any right
or remedy shall operate as a waiver thereof, and no single or partial
exercise by any of the Lenders of any right or remedy shall preclude
other or further exercise thereof or the exercise of any other right or
remedy. No action of any of the Lenders permitted hereunder shall in
any way affect or impair any such Lenders' rights or any Borrower's
obligations under this Agreement.
Notwithstanding the foregoing, each Borrower other than Simpson
shall be liable for the Obligations for the maximum amount of such
liability that can be hereby incurred without rendering this Agreement,
any Note or any other Loan Document voidable under applicable law,
including applicable law relating to fraudulent conveyance or fraudulent
transfer, and not for any greater amount.
Each Borrower hereby represents and warrants to each of the
Lenders that it now has and will continue to have independent means of
obtaining information concerning the Borrowers' affairs, financial
condition and business. Lenders shall not have any duty or
responsibility to provide any Borrower with any credit or other
information concerning the Borrowers' affairs, financial condition or
business which may come into the Lenders' possession.
SECTION 11.14. Judgment Currency. Each Borrower, the Agent and each Lender
hereby agree that if, in the event that a judgment is given in relation to any
sum due to the Agent or any Lender hereunder, such judgment is given in a
currency (the "Judgment Currency") other than that in which such sum was
originally denominated (the "Original Currency"), the Borrower jointly and
severally agree to indemnify the Agent or such Lender, as the case may be, to
the extent that the amount of the Original Currency which could have been
purchased by the Agent in accordance with normal banking procedures on the
Business Day following receipt of such sum is less than the sum which could
have been so purchased by the Agent had such purchase been made on the day on
which such judgment was given or, if such day is not a Business Day, on the
Business Day immediately preceding the giving of such judgment. The
agreements in this Section shall survive payment of all other Obligations.
SECTION 11.15. Other Transactions. Nothing contained herein shall
preclude the Agent or any other Lender from engaging in any transaction, in
addition to those contemplated by this Agreement or any other Loan Document,
with any Borrower or any of its Affiliates in which any Borrower or such
Affiliate is not restricted hereby from engaging with any other Person.
SECTION 11.16. Consent to Jurisdiction. THE BORROWERS HEREBY
ABSOLUTELY AND IRREVOCABLY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF ILLINOIS OR THE UNITED STATES OF AMERICA FOR THE
NORTHERN DISTRICT OF ILLINOIS IN CONNECTION WITH ANY ACTIONS OR PROCEEDINGS
BROUGHT AGAINST ANY OF THE BORROWERS BY THE AGENT OR THE LENDER ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE NOTES OR THE BANKING RELATIONSHIP GIVING
RISE TO THIS AGREEMENT, AND HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY
SUCH COURT. THE BORROWERS HEREBY WAIVE AND AGREE NOT TO ASSERT IN SUCH ACTION
OR PROCEEDING, IN EACH CASE, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, ANY CLAIM THAT (a) ANY BORROWER IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT; (b) ANY BORROWER IS IMMUNE FROM ANY LEGAL
PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION, EXECUTION OR OTHERWISE) WITH RESPECT TO IT OR
ITS PROPERTY; (c) ANY SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM; OR (d) THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING IS
IMPROPER. IN ANY SUCH ACTION OR PROCEEDING, ANY BORROWER HEREBY ABSOLUTELY
AND IRREVOCABLY WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT, DECLARATION
OR OTHER PROCESS AND HEREBY ABSOLUTELY AND IRREVOCABLY AGREES THAT THE SERVICE
THEREOF MAY BE MADE BY CERTIFIED OR REGISTERED AIRMAIL, POSTAGE PREPAID,
DIRECTED TO SUCH BORROWER AT THE ADDRESS SHOWN ON THE SIGNATURE PAGE HEREOF
(OR AT SUCH OTHER ADDRESS AS SUCH BORROWER SHALL LAST SPECIFY TO THE AGENT IN
WRITING). NOTHING CONTAINED IN THIS AGREEMENT OR THE NOTES SHALL AFFECT ANY
RIGHT THAT THE AGENT, THE LENDERS OR ANY BORROWER MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR THE NOTES OR THE
BANKING RELATIONSHIP GIVING RISE TO THIS AGREEMENT AGAINST ANY BORROWER, THE
AGENT OR THE LENDERS, AS THE CASE MAY BE, OR THEIR PROPERTIES IN THE COURTS OF
ANY OTHER JURISDICTION, OR ANY RIGHT THAT THE LENDERS, THE AGENT OR ANY
BORROWER MAY HAVE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW.
SECTION 11.17. Waiver of Jury Trial. THE AGENT, THE LENDERS AND THE
BORROWERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWERS. THE
BORROWERS ACKNOWLEDGE AND AGREE THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH
SUCH OTHER LOAN DOCUMENT.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
SIMPSON INDUSTRIES, INC.
By:
Its:
Address: 47603 Halyard Drive
Plymouth, Michigan 48170
Facsimile No.: (313) 207-6680
Attention: James E. Garpow
with a copy to
Mr. Frank Zinn
Dykema Gossett PLLC
400 Renaissance Center
Detroit, Michigan 48243
ABN AMRO BANK N.V., CHICAGO BRANCH,
AS AGENT
By
Title:
By
Title:
Address: 135 South LaSalle Street
Chicago, Illinois 60674
Facsimile No.: (312) 606-8425
Attention: Laurie Flom
COMERICA BANK,
AS DOCUMENTATION AGENT
By
Title
By
Title
Address: 500 Woodward Avenue
Detroit, Michigan 48226
Facsimile No.: (313) 222-3776
Attention: Louis A. Zedan
PERCENTAGE LENDERS
30.0% ABN AMRO BANK N.V., CHICAGO BRANCH
By
Title:
By
Title:
Domestic/
Eurodollar
Office: 135 South LaSalle Street
Chicago, Illinois 60674
Facsimile No.: (312) 606-8425
Attention: Laurie Flom
30.0% COMERICA BANK
By
Title:
By
Title:
Address: 500 Woodward Avenue
Detroit, Michigan 48226
Facsimile No.: (313) 222-3776
Attention: Louis A. Zedan
20.0% HARRIS TRUST AND SAVINGS BANK
By
Title:
By
Title:
Address: 111 West Monroe Street
Chicago, Illinois 60603
Facsimile No.: (312) 461-2591
Attention: Peter Dancy
20.0% THE BANK OF NEW YORK
By
Title:
By
Title:
Address: One Wall Street, 22nd Floor
New York, New York 10286
Facsimile No.: (212) 635-6434
Six Months Ended Three Months Ended
June 30 June 30
1997 1997 1997 1996
Primary
Average number of
common shares
outstanding 18,116,990 18,057,121 18,133,025 18,078,413
Dilutive stock
options outstanding 46,442 39,205 44,402 40,523
Average number of
common and common
equivalent shares 18,163,432 18,096,326 18,177,427 18,118,936
Net earnings appli-
cable to common
stock and common
stock equivalents $9,805,000 $9,928,000 $5,418,000 $5,971,000
Primary earnings
per share $0.54 $0.55 $0.30 $0.33
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE COMPANY'S
UNAUDITED FINANCIAL STATEMENTS AS OF AND
FOR THE PERIOD ENDING JUNE 30, 1997, AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS
<MULTIPLIER> 1,000
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<PERIOD-TYPE> 6-MOS
<CASH> 920
<SECURITIES> 0
<RECEIVABLES> 63,589
<ALLOWANCES> 0
<INVENTORY> 18,206
<CURRENT-ASSETS> 94,610
<PP&E> 309,327
<DEPRECIATION> 135,460
<TOTAL-ASSETS> 322,945
<CURRENT-LIABILITIES> 57,100
<BONDS> 0
<COMMON> 18,128
0
0
<OTHER-SE> 103,852
<TOTAL-LIABILITY-AND-EQUITY> 322,945
<SALES> 216,148
<TOTAL-REVENUES> 216,674
<CGS> 192,292
<TOTAL-COSTS> 6,223
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,717
<INCOME-PRETAX> 15,442
<INCOME-TAX> 5,637
<INCOME-CONTINUING> 9,805
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,805
<EPS-PRIMARY> 0.54
<EPS-DILUTED> 0.54
</TABLE>
